House of Representatives
22 March 1956

22nd Parliament · 1st Session

Mr. Deputy SPEAKER (Mr. C. F. Adermann) took the chair at 10.30 a.m., and read prayers.

page 1021




– I direct a question to the Minister for Supply. Does the Minister not think the abnormal weather being experienced in Australia and Europe at the present time may in some way be associated with the atomic bomb experiments that have been conducted during the last few years?

Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– I answered a question about this matter in the House the other day. The best scientific advice that the Government has been able to obtain is quite emphatic that there is no connexion between the present unpleasant weather in Sydney and the atomic bomb explosions.

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– I ask the Minister for Primary Industry whether active steps are being taken to keep out of Australia cattle suspected of being carriers of the disease known as dwarfism. Is the Commonwealth Scientific and Industrial Research Organization investigating this disease, and is it keeping in touch with research being done on this subject in other parts of the world ?

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

– Some weeks ago, I interviewed representatives of sections of the Hereford Breeders Association, who referred to the problem of dwarfism in cattle in the United States of America. Subsequently, I asked that investigations be, made to ascertain whether cattle with a propensity to produce dwarf offspring could be imported into Australia. Unfortunately, the problem proved to be a little more intractable and difficult than I thought. We were advised that it was well nigh impossible to detect, in both males and females, the propensity towards dwarfism. The matter has been referred not to the Commonwealth Scientific- and Industrial Research Organization but to the relevant Standing Committee of the Australian Agricultural Council, which deals with these problems. That body has studied the problem and has referred it to a scientific committee. I hope that the scientific committee will shortly be able to make a report to the Australian Agricultural Council itself. There is one other aspect of the problem that may interest the honorable member, who is one of those who are deeply interested in the problems of cattle breeding and wool growing in this country. It sometimes happens that the misfortunes of one country can be of advantage to another, and particularly to Australia. If the honorable gentleman would like to discuss that aspect of the matter with me later, I shall be happy to tell him what I have in mind.

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– I address a question to the Minister for External Affairs. Is it a fact that the Australian Government has received from the Indian Government a note of protest about the manner in which the Kashmir dispute, which is now before the United Nations, was raised and discussed at the recent South-East Asia Treaty Organization conference at Karachi ?

Minister for External Affairs · LP

– Yes, an aide-memoire has been received. I saw it this morning for the first time, but I have not yet had an opportunity to read it. From what I am told about its contents by officers of the Department of External Affairs, it will not be a difficult document to reply to, so far as the Australian Government is concerned.

Dr Evatt:

– Will the Minister bring it before the House when be has considered it?


– I see no immediate necessity to do so. but, not yet having had an opportunity to read the document, I cannot give any offhand judgment on that request.

page 1021




– Has the Minister for Labour and National Service had an opportunity to check the accuracy of the statement made by the Leader of the Opposition, to the effect that a spokesman for the Victorian Chamber of Manufactures said that 90 per cent, of the inefficiency in industry was due to the inefficiency of manufacturers themselves?


– I have not taken any particular steps to check the statement, tt happened that the general

TnnnMgr.1- of the Victorian Chamber of Manufactures, Mr. Curphey, was listening in to the broadcast of the speeches made in this House on Tuesday night last, and, while I was sitting at the table waiting to speak when the Leader of the Opposition had concluded his speech, a message was handed to me from Mr. Curphey, the general manager, saying that the statement made by the right honorable gentleman was entirely without foundation, repudiating it in the strongest terms, and authorizing me to make that fact known to the House. When I sought to do so, in the course of my own speech, I think it was the Deputy Leader of the Opposition who interjected and said that the statement had been made by a spokesman of the Victorian Chamber of Commerce. I have since seen in the press statements attributed to Mr. Curphey, in which he repeated, in effect, precisely what he told me in the message that I received. As to the general tenor of the right honorable gentleman’s comment, I suppose we are all capable of improvement, management, labour, and governments for that matter, but I am sure that all honorable members in this House who have any first-hand knowledge of Australian industry and its development over recent years would reject any suggestion that Australian industry is not, in the main, efficiently conducted.


– I ask a short supplementary question of the Minister for Labour and National Service. I apologize to the Minister, as I was speaking to a colleague while the Minister was answering the last question. Did the Minister make it clear that the statement was made by the president of the Victorian Chamber of Commerce? He did not do so on Tuesday night.

Minister for Trade · MURRAY, VICTORIA · CP

– The right honorable gentleman did not make that clear.


– No, I did not. I made a mistake. I said the Chamber of Manufactures, but I meant to say the Chamber of Commerce.


– It is unfortunate that the right honorable gentleman was not listening when I gave my answer a few minutes ago, because I said in the course of it that when, having received the message from Mr. Curphey, I repudiated on his behalf the statement said to have been made by him, the right honorable gentleman’s colleague, the Deputy Leader of the Opposition, interjected and said that it was a spokesman for the Victorian Chamber of Commerce.

Dr Evatt:

Sir John Allison.


– I do not think the Deputy Leader of the Opposition said that.

Dr Evatt:

– Well, I say that.


– If the deputy leader did say that, I did not hear it. But I did hear him say that the statement emanated from the Victorian Chamber of Commerce.

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– I ask the Minister for Labour and National Service a question on the statement made yesterday regarding the monthly, report on employment and unemployment. The right honorable gentleman gave some figures which undoubtedly show an increase in the number of persons receiving unemployment relief since the previous monthly report was made, but he said that most of that increased unemployment was due to strike causes. How does the Minister work out the proportion of unemployment that is due to strike causes, and how many persons are, because of other reasons, unemployed and receiving unemployment relief in Australia to-day?


– I can supply the honorable member with more details, and I shall seek to do so, but I can say that the total number of persons still receiving the unemployment benefit represents only a fraction of the total work force, and what was said in my statement covering the month of February has been confirmed, in effect, by the experience of the first few weeks of March.

Mr Chambers:

– The Minister did say that the increase in unemployment was due to strikes.


– Principally due to strikes, yes. There was one quite serious strike in Queensland. The period of the waterfront strike escapes me for the monent, and that might have been one of the factors, but there have been a number of industrial disputes in the early part of this year which would have affected the position. Over the last couple of weeks, taken on the weekly statements which have reached me, there has been a tendency for the number of persons in receipt of the unemployment benefit to drop again, but the figure overall is still, I repeat, a minor fraction of the total work force.

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– Can the Minister for Trade tell us the stage to which the discussions on the proposed new international wheat agreement have progressed ?


– The discussions have rather deteriorated in respect of the prospect of having a satisfactory and acceptable international wheat agreement. The position is that importer countries, which, in this context, do not include the United Kingdom, have stipulated quantities which would be acceptable to them as quotas within an agreement, substantially lower than the existing quotas, and only within the last few hours, as a matter of fact, they have indicated an idea of prices which is not satisfactory from the point of view of exporters. There is a quite substantial disparity between what would appear at the present time to be acceptable to the importers and what would be acceptable to the major exporting countries which are parties to the present agreement and, I believe, which would be acceptable to exporting countries not parties to the present agreement but which might conceivably be prepared to join - the Argentine and Sweden. Therefore, the position is not promising at the present time, but it is by no means conclusive. The United Kingdom Government has made certain additional explanations of its original statement, and they are the subject of study at the present time.

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– In addressing my question to the Minister for External Affairs, I should like to welcome him back to these shores, despite what appears to be a rather sad home-coming for him. I ask the Minister whether it is correct that he. has publicly announced that he regards the United Nations as a broken reed. If so, is he advocating cutting the painter from that organization and relying in future solely on the negative process of regional defence pacts, or is it merely an expression of his or the Government’s sense of futility in the international sphere, and lack of will or energy to strive further for ultimate co-operation and goodwill among all the nations of the world?


– I did not. get all the undertones of the honorable gentleman’s question, but I got the general drift of it, I believe. I do not often shield myself behind the claim that I have been misquoted, but in this instance I must protest. I made no such general sweeping condemnation of the United Nations at all. I was giving an explanation to a pressman, at his request, of the reason for the formation of Seato. As I explained it, and I believe it to be the truth, it is a fact that this group of eight nations has been driven to the creation of Seato - a regional mutual defensive arrangement - by reason of the fact of the Russian veto in the .Security Council, which may be expected, I think confidently, to inhibit any possibility of joint action by the members of the United Nations in opposition to any Communist aggression that might conceivably happen in the future. Against that background, which has happened in the past, the nations have been obliged to create regional mutual defensive arrangements such as Nato, Seato, the Baghdad pact, Anzus and the rest.

Conversation being audible,


– Order ! If the honorable member for East Sydney, in particular, together with other honorable members on the Opposition front bench, does not maintain silence during question time, I will order him out of the chamber, because I shall not allow question time to be used for making a series of comments or interjections.


– I am obliged to you, Mr. Deputy Speaker. In answer to a subsequent question, I said that there was no doubt that the usefulness or perhaps the main purpose of the United Nations - the prevention of wars and the stopping of wars once they had broken out - had been broken down to a large degree by the- prolific use of the veto by the Russians. That statement was interpreted by one newspaper as my saying that the United Nations was a broken reed. I specifically stated that there were very many directions in which the United Nations still retained its original usefulness, but I further stated that there was no doubt that its ability to perform the major task to which I have referred had been broken down to a great degree. That statement, as I have already said, was bowdlerized into this all-embracing condemnation of the United Nations, which I would be the last person to give expression to.

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– Can the Minister for Trade say whether it is a fact that the President of the United States of America has asked Congress to authorize the sale to foreign countries of American farm products now in store in America? Will those products be sold below the cost of production? If so, what will be the effect upon the sale of Australian primary products overseas?


– Since the last war, the Administration of the United States of America has been making surplus agricultural products available to needy nations, but since 1953 it has been pursuing a well-defined and explicit policy of making concessional sales of such products. In some cases, it has made a gift of the products; in some cases, they have been sold on terms; and, in other cases, they have been sold for payment in the local currency of the buying country. The attitude of this Government has remained constant. The Government not only raises no objection, but also is prepared to give every encouragement to the generosity of the United States in making available such commodities as foodstuffs and cotton to needy people, who otherwise would not be in a position to acquire them. But, at the same time, we object to the distortion of normal world trade hy using any of the concessional devices that I have mentioned for the purpose of directing products into countries that normally would be able to purchase, and would purchase, those goods at the prevailing world parity. No one, I believe, can point exactly to the dividing line between the two principles to which I have referred. This Government has never sought to do other than to persuade the United States to accept the principle and then to apply it by establishing an adequate system of consultation between its own Administration and the governments of the countries that could be adversely affected. At the last conference on the General Agreement on Tariffs and Trade, which I and my colleague the then Minister for Trade and Customs attended, the United States was persuaded to adopt the principle and to make declarations, but the actual mechanism of consultation has not been adequately established. The seriousness of the situation to countries such as Australia that depend on exports is illustrated by the fact .that, since 1953, concessional sales or gifts by the United States have totalled 1,400,000,000 dollars. That represents a tremendous incursion into ordinary world trade. At the present time, we are concerned about the disposal of .American surpluses of cheese and all coarse grains, but, in particular, wheat and flour. American stocks of wheat and flour now total 1,000,000,000 bushels, and 40 per cent, of America’s exports of wheat and flour fall within the area of concessional trading that I have mentioned. I repeat that nothing that we say or do will ever be designed to deprive people who are in need, and who otherwise could not purchase such commodities, of the benefits of the generosity of the American people, hut on numerous occasions we have made most vigorous protests against concessional sales when otherwise there would have been normal trading. It is our intention to continue to press for an adequate basis of consultation between this Government and the American administration on this issue.

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– Can the Prime Minister inform me whether any consideration has been given to an alteration of the value of the unit rate of superannuation paid to former members of the

Commonwealth Public Service? I have been asked to discover, if possible, whether any such consideration has been given to that matter and, if not, whether consideration could be given to it, as it is pointed out that the present value of the unit is held to be below the value it had when present recipients became entitled to superannuation. Recipients who have approached me on the matter wonder whether there is any possibility of anything being done for them in this connexion. Can the Prime Minister say whether anything will be done in this direction ?

Prime Minister · KOOYONG, VICTORIA · LP

– I cannot answer that question offhand without consulting with the Treasurer, but I shall be very happy to discuss the whole of that problem with him.

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– I address a question to the Prime Minister. In his recent statement on economic measures the right honorable gentleman said -

We propose an additional tax of 3d. a gallon on petrol, which is expected to yield an additional £12,000,000 per annum.

The Prime Minister stated that of this amount an additional amount of approximately £4,000,000 would be paid to the States for road construction and maintenance. Will the right honorable gentleman consider the payment of that £4,000,000 to the States in accordance with the proportion in which it is derived from the individual States, instead of in accordance with the formula that is at present used in connexion with the distribution of petrol tax, under which Victoria suffers, although other States, Western Australia and Queensland especially, have difficulty in expending all the money they now receive from that source ?


– The formula under which these payments is made has lasted for many years. It does, of course, give some much-needed benefit to States with large areas and small populations. I know that there is some complaint in my own State about the division of the proceeds, but I do not share the belief that it is an unjust division. I believe that the formula is just, and we propose to maintain it.

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– Has the Prime Minister’s attention been drawn to the severe cyclonic storm which hit Lord Howe Island on Saturday of last week, damaging power and radio installations, and causing considerable damage to Leander Lei Guest House? Will the Government consider payment of a grant similar to that paid in the case of flood and storm damage in other parts of the Commonwealth ? If the Government will not grant some assistance in this particular case, will it consider exempting residents of Lord Howe Island from the payment of income tax, for the following reasons : - That the Government has refused to assist the island’s shipping service in any way; and that it has refused to consider the building of an airstrip on the island?


– I am not very well informed on this matter.

Mr Crean:

– The right honorable gentleman is now.


– Well, I am better informed on it than I was. I know nothing about the matter at present other than what I have just learned from the honorable member for West Sydney, but I shall look into it.

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– Has the Minister for External Affairs any information to give to the House on recent reports of unrest within the Soviet Union? Further, in view of the possible significance and the novelty of the reports, will the right honorable gentleman consider the preparation of a statement on the matter?


– We have no direct means of ascertaining the truth of the reports, or the extent of any trouble that may have arisen. We are dependent for that on other people. As far as it is possible to collect reliable information on the subject, I will endeavour to do what the honorable member suggests.

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– Will the Treasurer confer with the Postmaster-General on the subject of the amount of money leaving Australia each year for investment in overseas lotteries by way of money orders issued by the Postal Department? As this is a considerable amount, will he request the Postmaster-General to consider making it necessary for a declaration to be made as to the amount to be sent, a restriction which would be similar to that on money orders which are issued for many other overseas purchases ?


– I desire to assure the honorable member that the Treasury and the Postmaster-General’s Department exercise constant vigilance over the aspect of the transfer of money to which he refers.

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– I desire to ask the Minister acting for the Minister for Defence a question relating to the CourtsMartial Appeals Act. I remind the right honorable gentleman that that legislation was passed by this Parliament about twelve months ago, and has not yet been proclaimed. Can the right honorable gentleman explain the long delay and can he give any indication as to when effect will be given to that act?


– If my memory serves me correctly, this measure was passed by this House early in June of last year. Since then, there has been quite some difficulty in framing the regulations necessary under the act. From what I can gather from my inquiries in regard to progress made in the drafting of the regulations, it is proposed to proclaim the act within the next two or three weeks.

page 1026




– Is the Vice-President of the Executive Council, who is acting for the Minister for Defence, aware that, following the recent heavy rains in the Hunter River district, the bridge over Iron Bark Creek, which is a tributary of the Hunter River, has collapsed, and that there is now no means of getting to vital defence places such as Williamtown aerodrome or even to the harbour of Port Stephens which was used extensively during the last war? There is no way for vehicular traffic to reach these places except via Wallsend and then proceeding right away round through Hexham. There is no hope of getting over the Iron Bark Creek, which normally has only a one-way traffic bridge and carries only very light vehicles. In view of the fact that there is now no bridge at Stockton, will consideration be given to the construction of a bridge from the Newcastle side of the Hunter River to Stockton as a defence measure in order to ensure that defences in the area are adequate for the protection of Australia, and particularly of Newcastle, which is the Birmingham of the southern hemisphere?


– It seems to me, following the revelations made by the honorable member for Hunter, that the New South Wales Government has grievously let down the surrounding district by not taking the necessary action. Insofar as the defence content of this matter is concerned, we will certainly have a look at it. But I suggest that the need for servicing the civil population, as was mentioned by the honorable member, is something that is surely the prerogative of the State.

page 1026


Minister for Customs and Excise · Evans · LP

by leave - I have been concerned about recent complaints from businessmen and importers that some holders of import licensing quotas have been abusing their advantageous position by charging excessive commissions to import goods on behalf of other merchants who have no quotas. This practice is erroneously called “ trafficking in import licences “.

Specific complaints are carefully investigated by the department and, more generally, the knowledge that some dissatisfaction exists has been taken into account in a continuing review of the import licensing systems. However, it is not enough that the Government should be satisfied that the system is properly administered. It is also necessary that the commercial community should have confidence in it. as its satisfactory conduct depends in some measure on their co-operation.

For that reason I propose to examine the complaints in some detail and to state the steps which are being taken to counter abuses. Complaints of alleged trafficking relate almost exclusively to B category licences. B category comprises the less essential or “ luxury “ class of goods to which the heaviest cuts have been applied. Only 30 per cent, of the basic imports of B category goods are now permitted and B category itself comprises only 14 per cent, of the total volume of the country’s import trade, so the field of complaint is restricted to a small volume of nonessential goods.

Importers of essential goods frequently urge that in times of severe import restrictions luxury goods should not be admitted at all, but many people earn legitimate livings through the sale of luxuries. If they were stopped altogether many of these people would be ruined. Also, there would be no competitive check on the prices of Australian manufactures of these goods, and we have obligations to other countries, some of which are good customers for our products, not to interfere with their trade any more than we are compelled to. The present restrictions have caused difficulty enough. To prohibit the import of luxuries altogether would, in my opinion, be quite unjustifiable in times of prosperity such as we now enjoy.

A necessary characteristic of B category is that quota holders may take out licences at their choice to import any of a wide range of goods. This gives B category quotas a considerable value to their holders - a value of which some of them have taken unfair advantage.

I wish to explain the steps that are being taken to prevent this. The Customs (Import Licensing) Regulations provide that the importation of any goods is prohibited unless a licence to import them is in force at the time, and the terms and conditions of the licence are complied with. The regulations give the Minister wide discretionary powers to grant, or refuse, or cancel a licence. To overcome the necessity for individual examination of every application for an import licence - a task which would be beyond the physical capacity of the department and would result in wholesale disruption of commerce, the quota system was adopted. Regular importers were granted quotas determined by their base year imports.- A quota holder may take out licences to import specific goods up to the quarterly value of his quota.- Varying degrees of cuts are imposed from time to time as a percentage reduction of the amount of the quota.

Some goods can be, and have been from time to time, removed from the quota system and then dealt with on an administrative basis. In these cases each individual application for an import licence is examined on its merits. The quota system is a convenient administration device. Among other things, it enables a regular importer to know in advance the approximate volume of goods that he may import. It also facilitates, as I have explained, the issue , of licences. Quota holders simply apply to a Customs House and are given licences up to the value of their quota.

I must emphasize that the holder of a quota enjoys no legal right to its continuing use. It is not a right of property. It can be cancelled or reduced at the Minister’s discretion, and this is done whenever it is established that a quota was improperly obtained or that the quota holder is abusing his advantage.

Two particular difficulties arise, about which the commercial community complains. The first is that some holders of B category quotas, instead of dealing in the course of their established trade with their regular customers, go seeking some one who will pay them a high premium for their goods. This is given emphasis by advertisements from would-be importers seeking a quota holder who will import the goods they need. There is nothing illegal in this practice. It would not be practicable to make it illegal by regulation, because it is in many cases legitimate commerce. There is nothing inherently wrong in an importer seeking a buyer for goods before he imports them, and agreeing with the buyer as to the rate of commission to be paid. If this were stopped, it would be a grave interference with trade practices which existed long before import licensing was thought of, but it is wrong to use the advantage of a quota to extort an excessive commission.

Import licensing was imposed only to preserve a balance of payments abroad, without, which our economy could not function. It is justified only by necessity, it inevitably involves hardship for some individuals, and it creates opportunities for abuse which have to be carefully watched. My object in this statement is to assure the commercial community that these facts are recognized, but that steps are being taken to limit and prevent them. Import licensing is nothing less than the rationing of imported goods. If a quota holder charges an excessive commission for the goods which he imports, it is regarded by the department as an abuse of his quota, and when discovered, the quota is cancelled or reduced.

Special investigation officers of the department ‘ continuously investigate alleged abuses, and in the last year quotas to the value of approximately £3,000,000 have been cancelled. Where it is discovered that an importer who himself holds a quota has paid an excessive premium for the advantage of another’s quota, his own quota is debited in the next quarter by the amount of the advantage which he unfairly gained.

The other complaint sometimes made is that where a business fails or the owner dies or retires, the business, even though it may have no substantial assets, is sold for the value of its import quotas. It should be known that in every case of this sort, the facts are examined on their merits. An import quota is not necessarily regarded as transferable. There was recently a notable case in which negotiations for the purchase of a business in difficulties were conducted very much under the public eye. It is frequently quoted to me as an example, but the fact is that the quotas of this particular company were drastically reduced some time ago, when the department became aware that they were not being used by the company in its own normal trade.

My ministerial control of import licensing will end next week, on the 2Sth March, when it will pass to my colleague the Minister for Trade (Mr. McEwen), in accordance with the administrative arrangements of the 11th January. As a result of my experience of the last two months, and after consultation with the Comptroller-General of Customs, I have given directions that there is to be a systematic examination of all “ B “ category quotas to ensure that they are only used in legitimate and normal trade. The process of cancellation or reduction of quotas of which unfair advantage is being taken is to be continued. I have also directed that, in cases where legal action is taken to establish the respective rights of quota holder and buyer, the transaction involved is to be carefully examined, and action taken if necessary.

I must emphasize that, while the Government has an obligation to ensure that its administration measures are as effective as possible, there is an equal obligation on the commercial community to refuse to take part in transactions where excessive commissions are demanded, and to inform the department of cases of serious abuse. Only too frequently those who complain about the abuse of the quota system are the people who are themselves paying excessive premiums to other quota holders. They refuse to disclose names because they themselves intend to continue to take advantage of the practice. As I said earlier, the proper operation of the licensing system requires the cooperation of the commercial community.

Leader of the Opposition · Barton

by leave - Nine-tenths of what the Minister for Customs and Excise (Mr. Osborne) has said is, I think, well known. He has clearly stated the position. We are dealing with a class of nonessential or luxury goods. Therefore, there is no reason why the importer who does not wish to import the quota for which he has a licence should be permitted to assign the quota to someone else without the consent of the Department of Customs and Excise. I agree that one cannot get at the facts of these cases merely by examining disputed cases in the courts. It may be that those who complain are themselves guilty of similar practices. I suggest to the Minister that the quota for luxury goods be made incapable of assignment or transfer except with the consent o.l some proper officer.

Mr Osborne:

– The licence itself is not transferable.


– It is not technically transferable, but it would be possible for the quota to be assigned to some one else. If the regulations were amended to make the provision that 1 suggest, the abuse would be eliminated.

Mr Clark:

– The practice referred to adds to the cost of goods.


– I am aware that the present abuse of the system increases the cost of luxury goods and of articles on which a very large profit can be made. I suggest that the Minister adopt the course that I have proposed, and I am obliged to the House for granting me leave to make the suggestion. I wish to move that the statement be printed.


-Order! Such a motion is not in order unless the statement has been tabled.

Mr Osborne:

– I table the statement.

Mr Calwell:

– Will the Minister move that it be printed?

Mr Osborne:

– There is no need to do so.

Mr Calwell:

– We wish to have a debate on this specific matter. The Minister has tabled the paper. May I now move, Mr. Deputy Speaker, that it he printed ?


– The honorable member will have to give notice of his motion.

Mr Calwell:

– Then I ask for leave to give notice that I shall move that the paper be printed.


– Order ! The honorable member may give notice in the normal way.

Mr Calwell:

– There will not be another sitting day before the Easter recess. Therefore, I ask for leave to give notice now.


-Is leave granted ?

Mr Osborne:

– No.

Leave not granted.

page 1029



– I desire to inform the House that I have received the following telegram from the President of the Constituent Assembly of the Republic of Viet Nam: -

The Constituent Assembly of the Republic of Viet Nam, which is holding its first sitting at Saigon, sends greetings to the Speaker of the House of Representatives and to the Australian people.

Hie people of Viet Nam intend to work in close co-operation with all the other peoples of the world in the task of strengthening democracy, and in the defence of freedom and of universal peace.

Saigon, 13th March, 1050

A suitable acknowledgment will be forwarded to the President of the Constituent Assembly.

page 1029


Motion (by Sir Eric Harrison) agreed to -

That the House, at ite rising, adjourn until Tuesday, the 10th April, at 2.30 p.m.

page 1029


Motion (by Sir Eric Harrison) agreed to -

That leave pf absence be given to every member of the House of Representatives from the determination of this sitting of the House to the date of its next sitting.

page 1029


Notice of motion by Sir Earle PAGE relating to the matter of financing methods of flood prevention and providing future means of relief called on, and (on motion by Mr. Turnbull) postponed until Thursday, the 19th April.

page 1029




– I move -

That Regulation No. 3 of Regulations 1955, No. 13, being regulations under the Leases Ordinance 1918-1955 of the Australian Capital Territory, be disallowed.

At the outset, I suggest that, when the vote on this motion is taken, honorable members should exercise their votes in accordance with their knowledge of land use in the Australian Capital Territory. I suggest that it be not a matter of recording a vote to support either a decision by a government or a protest by an opposition, but that the vote be exercised by honorable members as members of a parliament charged with the responsibility of administering the national estate which is the Australian Capital Territory. It has been my duty from time to time in this House to refer to questions of land usage within the Australian Capital Territory, and, indeed, to protest from time to time at what I consider have been abuses of the ordinances and regulations that the Government is charged to administer.

The area comprising the Australian Capital Territory was ceded, of course, by the State of New South Wales in the’ early years of this century, and was formally accepted by the Commonwealth in 1911. Such lands as were Crown lands of New South Wales were ceded to the Commonwealth without charge, and the Commonwealth purchased certain freehold lands at a price of about £3 15s. an acre. At present, within the Territory there are held under leasehold 310,304 acres, and under freehold 107,081 acres, largely contained in four station properties and in smaller holdings throughout the Territory.

Dr Evatt:

– Is the honorable member referring to freehold?


– I refer to freebold in connexion with the 107,081 acres, as compared with 310,304 acres under leasehold. There are also, of course, in the Territory some hundreds of thousands of acres withheld from occupation, comprising mainly the watershed for this city’s water supply. The leasehold areas are administered by the Government and the Minister for the Interior under the Leases Ordinance and the regulations made under that ordinance. In the early days, subdivisions were made and leases granted for various purposes and for varying terms. Some short-term leases were granted. In later years the tenure was, in general, extended, so that at present the majority of rural leases, which are the leases concerned under the ordinance that we are discussing, are for periods of 25 years. In general, those leases expire in the year 1958.

There have been from time to time in the history of the Territory discussions as to land usage, and it has been suggested by rural lessees, who are associated here, that terms of leases were not long enough, and the conditions of lease were too onerous. There have been inquiries from time to time into these matters, and the records of proceedings of those inquiries are readily available. The leasehold lands held under the Leases Ordinance are controlled by the Minister through the Ordinance and the regulations. Those regulations were framed originally in 1911, and have been amended from time to time since then to provide proper safeguards so that what may be called the national estate should be administered and used in the national interest, rather than in the interest of any greedy landholder who might seek to acquire land within the Territory. A duty is laid upon the Minister for the Interior to adjudicate, from time to time, in the allocation of leases or in the transfer of leases from one lessee to another, and the Minister’s responsibilities are set out, in the main, in regulation 9, which reads as follows : -

  1. Upon receipt of an application from any person for the grant of a lease or for the consent of the Minister to the assignment of a lease the Minister after making such inquiries as he deems advisable upon any one or more of the following matters: -

    1. the ability of the applicant or proposed assignee to carry out the conditions of the lease;
    2. other lands (whether within or outside the Territory) owned, leased, or managed by the applicant or proposed assignee;
    3. whether the applicant or proposed assignee resides or intends to reside in the Territory;
    4. whether the applicant or proposed assignee is a returned soldier; and
    5. any other matters which he thinks fit, shall determine whether the applicant or the proposed assignee as the case may be is eligible to become a lessee.
  2. A lease shall not be granted to any person unless the Minister previously determines that he is eligible to become a lessee.

Regulation 20 (1.) casts the following responsibility on the Minister : -

Consent to the assignment of a lease shall not be given unless the Minister previously determines that the proposed assignee is eligible to become a lessee.

I stress the word “previously” in that regulation.

Those are the considerations that the Minister must have in mind in granting an application for a lease or for the transfer of a lease from one person to another. There is an overriding regulation, regulation 7, which has existed since the regulations were first drawn up. It places a limit of value upon the lands that may be held by any lessee. Originally the limit was an assessed value of £6,000, and that figure remained until, I think, the 7th March, 1929, when it was altered, by amendment, to £8,000. It remained at £8,000 until 1941, when a further amendment resulted in the figure being changed to £10,000. Regulation 7, as it stands at present, reads as follows: -

No person shall hold under lease land of a greater assessed value than £10,000 (exclusive of the value of buildings, fences, dams, ground tanks, wells and bores). “ Assessed value “ for the purposes of this regulation shall mean the assessed value as at the date of commencement of the lease.

I have suggested previously, and I suggest now, that the regulations I have cited have been frequently and fragrantly broken in this Territory, that leases have been granted to men who were not entitled to become lessees within the Territory in the terms both of the ordinance and the regulations, and that something has been permitted that was never envisaged when this national estate was established, that is, the aggregation of estates under leasehold. In effect, leasehold has been treated as freehold within the Territory. It was envisaged, and indeed it was laid down, in effect and in principle, that areas granted here for rural lease were to be reasonable living areas. It was intended that a rural lease should consist of an area upon which a man could expect to follow the farming pursuits of his choice and make therefrom a reasonable, comfortable living. Protests have been made from time to time by lessees that the areas that were allotted to them were not adequate as living areas, and evidence to that effect was given in 1929, when the Public Accounts Committee of this Parliament considered the use of leasehold land within the Territory. But in recent years, as I have said, some- people in the Territory have been given the opportunity to accumulate estates in leasehold far in excess of the areas that would be allowed to them under the living area provisions, and in excess of the limited value that is contained in the regulation that it is proposed now. to amend. Other conditions of lease also have been set aside.

I have from time to time in this chamber, and directly, brought to the notice of the Minister cases which in my view represented violations of the regulations that the Minister was charged to control and administer. I refer now to one case that was brought to the attention of the Department of the Interior, and subsequently of the Minister, in 1951, in which the transfer of a lease in the Tuggeranong area was approved by the Minister. The lease was one of some 1,100 acres on the Kambah-road. It had been allotted to an applicant in, I think, 1923, or about that time, as part of a soldier settlement sub-division. Admittedly, it was a living area. The lease carried certain “conditions, one of which was that the leaseholder must reside on the lease as his only bona fide habitual place of residence. The holder of that lease was not a man who earned his living from the lease; he was a man in a highly salaried position in the adjoining town of Queanbeyan. He held the lease until 1953 when, with the consent of the then Minister for the Interior, Mr. Kent Hughes, and over protests which I made, the lease was sold and transferred to the adjoining lessee.

The 1,100 acres, on which no house had been erected, was sold to the adjoining lessee for the sum of £9,500, I believe. The adjoining lessee was not then entitled to become the lessee. He already held a living area under lease and he himself was not living on the land he held. He was living on a freehold property of some 1,500 acres in the district of Bungendore. I suggest that the whole transaction violated the regulations the Minister was charged with administering.

In the first instance, the original lessee had not complied with the terms of the lease. Perhaps some dispensation had been extended to him, hut if it was, I suggest it was extended to him wrongly. He had not complied with the terms of the lease in that he had not lived on the area. The transfer of the lease to the adjoining land-holder was also, in my view, a breach of the regulations, because the adjoining land-holder was a man who held an adequate area of freehold outside the Australian Capital Territory as well as a living area inside the Territory. He was not living on his own lease. Admittedly, he had a manager living there while he resided on the property at Bungendore. That was one case.

We had a similar case a couple of years ago in connexion with the disposal of the Booroomba property in the Australian Capital Territory. Booroomba was an estate of some 13,000 acres of freehold and some 13,700 acres of leasehold land. The condition that I have quoted to the House - that is, in regulation 20, which has a bearing on the regulation we are discussing - is that consent to the assignment of the lease shall not be given unless the Minister previously determines that the proposed assignee is eligible to become a lessee. When the Booroomba Station was put up for auction, it was publicly advertised that the successful bidder for the freehold would have 13,700 acres of leasehold given in. Eventually, that property was sold over protests made in this Parliament when, indeed, the proposal was made the subject of an urgency debate. The freehold was purchased for a total of, 1 think, £122,500. The purchaser, having that money, or being presumed to have the money to purchase a freehold property, was given 13,700 acres of leasehold land !

Dr Evatt:

– What was the name of that property?


– Booroomba Station, formerly the property of the late Sir Keith Murdoch. I suggest that any man who has £122,500 in hand or in sight to purchase 13,000 acres of freehold is not entitled, and was not entitled then, to become a lessee under the terms of the regulations which the Minister was charged to uphold. There have been other cases more recently.

Not long ago, I put to the Minister the case of a small lessee in the Ginninderra area who holds some 500 acres of leasehold land and who, for years past, was able to agist his sheep on forest areas and for that reason was able to shear 1,000 sheep. The areas he had for agist ment have been withdrawn from him because of forestry development, and for other reasons, with the result that he has had to reduce his flock to between 500 and 600 sheep. He cannot secure adjacent land or, indeed, any land in the Territory unless he is in a position to pay at auction the inflated prices that are being obtained to-day. Again, that presumes that adjacent land-holders are prepared to sell. The reason why he cannot secure land is that there has been what I have referred to as the aggregation of estates in leasehold. By that, I mean that owners have spread themselves out by buying adjoining areas to the complete exclusion of the small man, thus leaving that small man without any hope of ever securing more land.

It has always been assumed in the Australian Capital Territory, and indeed it has been specifically stated, that this problem would be reviewed when leases expire in 1958. On the 20th September, 1951, the then Minister for the Interior wrote to me on this subject in these terms -

All suitable Commonwealth-owned rural land is at present under occupation and will not become available until the expiration ot leases in 105S, when it is proposed to review the conditions under which these lands will be utilised in the future.

The proposal now before the Parliament completely vitiates that promise made by the Minister. The proposal that we are discussing - regulation 3 of regulations 13 of 1955 - repeals completely regulation 7 which I have quoted to this Parliament, and that is the regulation which imposes a limit on the value of leasehold land that any one man may hold. If that regulation is repealed, there will be no bar at all to the accumulation of the national property in the private hands of land-holders in the Australian Capital Territory. It will be possible for one man, or one family, subject only to the limitations of finance, to acquire the whole of the land in the Australian Capital Territory.. That, I believe, is wrong, and should not be permitted.

I have just told the House of the promise given that these leases would be reviewed when they expired in 1958 and that the future use of the land would then be considered. The regulation we are discussing also proposes, in the place of regulation 7, to insert this regulation -

The period for which a lease may be granted for grazing, fruit-growing, horticultural, dairying or agricultural purposes is a period not exceeding fifty years.

The existing leases were granted for 25 years, and it has been the hope of those who wanted to get land in the Australian Capital Territory, who wanted to get it for purposes other than those of grazing sheep, who wanted to get it for the development of agricultural pursuits for which this land is suited and for which it should be used, that the leases would be reviewed in 1958. But the regulation - which, incidentally, was signed by the former Minister on the 5th December, 1955, five days before the general election and assented to, I think, five days after the election - proposes to extend the term to 50 years. I have no objection at all to the extension of the term to 50 years with respect to a living area, provided there is some condition that the leasehold land shall not pass to a greedy land-holder who is seeking to obtain more of the national estate than he is entitled to have. But the position is that present holders of 25-year leases are being asked by the Department of the Interior whether they will accept 50-year leases as from now.

Mr Thompson:

– In addition to the 25 years?


– They are being asked whether they wish to convert their 25-year leases to 50-year leases as from the present time. If my assumption is correct - and I believe it is - this means that the regulations have been broken by those who are charged with the responsibility of administering them; that if estates in leasehold have been aggregated, if transactions outside the terms or spirit of the regulations have been broken, the proposed new regulation will confirm all those irregular practices for the next 50 years. What hope will there then be for the small land-holders and the sons of farmers to secure leases in this Territory? The Territory was. dedicated to the leasehold system. It was dedicated to the use of the people, and it should be so maintained.

Other honorable members will speak during this debate, but I again direct the attention of the House to the cases that I have placed before it. and to the proposals that are embodied in the regulation now under discussion. When the division bells are rung, honorable members will enter the chamber and will proceed to either the Government side or the Opposition side to vote on the question. Many honorable members who are not now in the chamber, and who have very little or perhaps no knowledge of land use within the Australian Capital Territory, will enter the chamber and will vote automatically one way or the other on this proposal, which I believe is vital to the future development of the Territory. I ask those honorable members who have not a knowledge of land use within the Territory to credit me with at least some knowledge of it, and with the sincere belief that what is now being done is wrong and that the regulation should be disallowed. If, in the final analysis, the motion is defeated, I ask the Minister to review the whole question of the leasehold tenure of land within the Territory in the light of the statements that I have made within the House and in the light of any other evidence he may obtain. If the Minister were to withdraw the regulation until an examination were made, that might be a worthy step to take. If he does not feel able to follow the course that I have mentioned, I suggest to him most strongly that the whole question of leasehold tenure within the Territory be again referred to that estimable body, the Joint Parliamentary Committee on Public Accounts. I point out that that was done originally in 1929 during the life of the Bruce-Page Government, and subsequently during the life of the Scullin Government. I shall once again state my belief quite simply. I am not speaking in any political sense, but am simply saying that, for the benefit of the Territory, and for the benefit of present and future residents, the regulation should be either withdrawn by the Minister or disallowed by the Parliament so that the practices to which I have referred shall not be allowed to continue and so that proper use will be made of land - the people’s land, the national estate - in the Australian Capital Territory.


– Is the motion seconded?

Mr Whitlam:

– I second the motion.

Minister tor the Interior and Minister for Works · Paterson · LP

– I think it will be quite understood why the honorable member for the -Australian Capital Territory (Mr. J. R. Fraser) has brought forward this particular problem. We are all appreciative of his great concern that the Territory, which he represents in this place, shall be dealt with in a way that protects the interest of the Commonwealth and the rights of the people who live within the Territory. I think we all appreciate, too, that a number of people have sought his good offices in having themselves established on the land.

The situation with which we are now dealing is not exclusive ‘to the Australian Capital Territory, because all over Australia are people who are eager to establish themselves on the land for the particular purposes to which the honorable gentleman has referred, and who find themselves prevented from so doing because the land is already occupied or because of economic barriers. The honorable member has given to the House a very valuable historical review of the development of the land tenure system in the Territory, and we are grateful to him for having directed the attention of honorable members and of the public to the background of the land problem. He has directed attention, quite rightly, to the fact that safeguards were written into the ordinances and regulations to provide for the preservation of the national interest, but, when we consider a subject like the national interest, there is room for a very wide divergence of opinion. It may well be that, in the opinion of the honorable member, closer settlement or fragmentation of the land into small living areas best serves the national interest. Doubtless there are other honorable members who will point to modern agricultural development and direct attention to the need for the aggregation of areas - to which the honorable member objects - so that a more economical use of power and mechanized farming methods may be made. It will be seen, as I have stated, that there is room for a divergence of opinion in relation to this problem.

The honorable member has directed attention to old regulation 7 and to the fact that the limit on the unimproved value of land holdings had risen from £6,000 to £8,000, and later to £10,000. There is not the slightest doubt that, if this regulation had not been repealed, there would have been very great need to raise the limit on the value of lands that could be aggregated.


– There would be no objection to that.


– I appreciate that, but the figure has never borne any real relation to a living area. It has been purely arbitrary, and I suggest that even if it were reviewed, we would still be left with an arbitrary figure which had no real relationship to any of the facts that ought to be considered. My own view is that the whole system of land tenure in an area like this, which was determined, as the honorable member has stated, in 191.1, ought not to remain frozen. It ought to be sufficiently fluid to take care of changes in industry and in agricultural practice. The best evidence of that is the fact that, from time to time, as the honorable member has again pointed out, there ha vh been great departures- from the regulations and some winking of eyes at the general application of conditions. The honorable, member directed attention to a particular case in which a leaseholder had not been compelled, as was provided by the ordinance and also in the lease, to take up residence on the block over which he had a lease. I point out that the lease in question was signed by a former Minister for the Interior who was a member of the party that is now in opposition. I do not say that in the spirit that would lead some people to say, “Well, you have done that sort of thing and we are entitled to do it too “. I am not approaching the matter in that carping manner; I am merely pointing out that it has been done by Ministers from both sides of politics. That indicates, beyond any shadow of doubt, in that respect, the regulations were too tightly drawn, and that there were conditions under which the best interests of the Commonwealth and of the residents within the Territory might have been injured if the regulations as drawn had been applied.

The honorable member also directed attention to one or two violations, as he described them, which have not so far come under my purview. I assure him that I shall be’ pleased to look at those cases and to take them into consideration in the constant review of this matter that is made by myself and officers of the Department of the Interior. Of course, I can assure the honorable member that no one on this side of the House will take second place to him in ensuring that the interests of the Commonwealth in relation to this important matter are well preserved.

Mr J eff Bate:

– And very objectively, too.


– I thank the honorable member for his interjection. The honorable member for the Australian Capital Territory also referred to an area at Ginninderra, part of which was used for grazing purposes and was withdrawn from lease. I am sure there is no argument about that. Both the leaseholder and the honorable gentleman are well aware that every lease provides that the Commonwealth may withdraw areas, or alter leases, as it requires for Commonwealth purposes. He points out that the leaseholder of that particular area, of land has not been able to secure adequate other areas for the agistment of his stock. I merely point out again that, that is a condition which is not entirely divorced, or absent, land use and land transactions of this type. It applies all over the country. People are not able to secure adequate areas of land because the land is already completely occupied. So I do not think that there is any basis for complaint in that regard.

The honorable gentleman took exception to the modifications of the rules. But this matter was looked at with particular care by my predecessor in office and I am bound to say that I find no very great objection to what has been done in this connexion.

Dr Evatt:

– The Minister said “very great “ ?


– I said “not very great “.

Dr Evatt:

– Would the Minister have “ great “ objections?


– Do not bind me down to the precise meaning of terms. Let me say that I do not object in general terms to what has been done in this matter, but I shall qualify that statement in a moment. The amendment by the Government of the regulations which prevent aggregation of land, forgetting the value for the moment, is the burden of the honorable gentleman’s complaint. He says that there will be no power at all to stop aggregation, and that it might even be possible for one individual to buy up the whole of the Australian Capital Territory. Of course, exaggerations of that type can be of little value to the honorable member’s argument. I am bound to point out to him, as is quite obvious from the whole conduct of this matter over the years, that those who have occupied the post of Minister for the Interior have always been responsible people - I hope I may be included in that description - and that the Minister for the Interior has full rights under the ordinance, which still remains in force,’ to approve, or fail to approve, the granting or transfer of leases, and the subletting of leased areas. I suggest to the honorable gentleman that we are not unaware of the dangers to which he has referred, and the mere fact that a very narrow protection has been provided does not mean that we have done away with protection of all sorts. My own belief is that it can be left to the good sense of responsibility of the Minister for the Interior for the time being, and his departmental advisers, to see that the horrible picture that the honorable gentleman has painted does not come into existence in the future.

I think it is well understood that the whole system of land tenure in the Australian ‘Capital Territory came about because it was needed to protect what the Government of the time felt to be the national interest. How is this national interest to be protected? My view is that the national interest is protected when the Treasury secures from landholders or lease-holders the economic value of their land and of their opportunities to produce, by way of rents based on valuation. When that happens, I should rather hope that the valuation will bear a very true relation to the economic capacity of the land to produce. Arising from that fact will be the incentive to the owner of the land to see that it does produce to its full economic capacity. Otherwise, he would find himself obliged to surrender his lease.

When we get down to the question of this extension of the lease period, I draw the honorable gentleman’s attention and, indeed, the attention of the House, to the fact that this matter has been looked at with particular care by the Australian Capital Territory Advisory Council. I found the members of the council to be quite responsible people who are, I think it may be claimed, as well versed in connexion with land matters in the Australian Capital Territory as is the honorable member for the Australian Capital Territory himself. The fact that the Australian Capital Territory Advisory Council has recommended the extension of the lease period is adequate ground upon which the department, the Minister and the Government are entitled to make this extension.

Dr Evatt:

– That is, as to the terms?


– Yes. Even if there were not other grounds for making this extension, we have that ground. We are in a period when the development of land and the application of better and ‘more efficient methods of agriculture, and the provision of fixed improvements, are rising in cost, and the time has come when there is a need for greater security of tenure before people can be persuaded to undertake complete natural development of the land over which they hold a lease. For my part, I believe that 25 years is all too short a period to encourage lease-holders to develop their land fully, and the one thing we must depend on at all times, and demand, is that land shall be subjected to full economic development. This is a question that has been looked at from time to time, and 1 am bound to say that the standard of land use in the Australian Capital Territory is not one whit below the general level of development in the States. So I do not think there can be much ground for argument there. I suggest that there will be great impetus to land improvement if the security of tenure is lengthened.

So it i3 on that ground, very largely, that we propose to extend the. period of leases. There is also brought into the matter the fact that if we are going to ask lease-holders to add greater improvements to their land, we must also give them greater latitude in the ultimate transfer of their equity in the improvements, if the time should come when they want to surrender their leases. If their leases are pinned down to a short period it will be found that men who have been asked to increase improvements to their properties, and have been encouraged to do so; will find themselves tremendously handicapped because the security of tenture will not be sufficient. I see every justification in the extension of the lease period. I think it ought drawn to the attention of the House that the leases which are going to be affected by this lengthened period are those which are outside the areas that are earmarked for development in the reasonably near future, and, therefore, the question of the disturbance of those leases will not arise. Every influence that can be brought to bear towards the greater development of leasehold areas ought to be put into operation.

There has been some discussion, not raised by the honorable member for Australian Capital Territory, on which I should like to make some comments. There is some concern, of course, that the equity of lease-holders in their areas is being expanded by this increase of tenure, but I want to point out that the length of lease has been taken into consideration in the assessment of rents, and therefore nothing like that will obtain. It seems to me that, having regard, to all those facts, the interests of the Commonwealth and the Australian Capital Territory have been very well preserved, and I can see no grounds on which I can reasonably suggest that the regulation should either be withdrawn or disallowed. But I shall give the honorable member for the Australian Capital Territory this undertaking, that, while I occupy the office of Minister for the Interior, he may rest assured that these matters will be looked at from the point of view of extreme responsibility.

I share, with the honorable member, some objection to the aggregation of lands beyond an aggregation which will permit economic use and reasonably easy handling under modern methods of agriculture, which include top-dressing, pasture improvement and so on. I assure the honorable member that it will be my objective to handle applications for the transfer of leases so that no untoward aggregation of lands can occur. I point out again to the honorable gentleman, in conclusion, that there are cases where the failure to have a sufficient land area in one mass for easy working may well react against the best interests of the Commonwealth and the lease-holders, and, indeed, of all the people who live in the Australian Capital Territory. Therefore, I am not prepared to embark on any segregation of those people into classifications of small and big leaseholders. I merely regard all of them as users of land, and, provided there are adequate safeguards, such as are written into, and retained, in the regulations to see that the national interests are well preserved, I am well satisfied.


.- I support the motion by the honorable member for the Australian Capital Territory (Mr. J. E. Fraser) to disallow the regulation under the Leases Ordinance which was signed by the former Minister for the Interior (Mr. Kent Hughes) on the 5th December last, and notified in the Gazette of the 15th December last. The Minister for the Interior (Mr. Fairhall) has not agreed to the motion for disallowance »;nd has not consented to withdraw the regulation. His first reason for doing so was that there are many people in Australia who desire to settle on the land and who cannot find land to settle on and that people in the Australian Capital Territory are in no worse position than are people elsewhere. I regret to say that that attitude was very reminiscent of that of the Minister’s predecessor, who seemed all too often to believe that the inhabitants of Canberra should not have anything unless the inhabitants of all the States already had it. That was shown in regard to this very matter of closer settlement just over two years ago, when the member for the Australian Capital Territory moved that the Booroomba Estate be acquired for the Commonwealth for the purposes of soldier settlement. On that occasion the former Minister said, in. effect, that because there were plenty of ex-servicemen in the States who could not get soldier settlement blocks, people in the Australian Capital Territory should not get them either.

The next point the Minister made was that, under modern conditions, the aggregation of allotments was more economical in the utilization of men, machines and power. He also said - and one would think it was a contrary consideration - that modern techniques had made farming more intensive. One would think, therefore, that smaller blocks would suffice, and more people could be settled on the land. Throughout the Minister’s speech, however, there seems to be the attitude that the onus lay on the Opposition to move for the disallowance of this regulation and to expose it and to show that it is not justified. Let it be plainly understood that this regulation followed very close, as I will presently show, on the amendment of the ordinance. It was the first time on which the ordinance had been amended in eighteen years. An ordinance in a territory is in exactly the same position as an act is in a State. However, if a bill for an act is introduced, the Government has the onus of justifying it and there is a discussion Ou the bill, as of right, in several stages. In this case, where one moves to disallow an. ordinance or regulation, there is no discussion, as of right. There would have been no discussion at all if the honorable member for the Australian Capital Territory had not initiated it. The onus does not lie on him or on any member of the Opposition to show that the regulation is not justified. Surely the onus lies on the Government, as it does in any other normal statute, to show that it is justified.

The honorable member for the Australian Capital Territory has made several very serious allegations against administration of leases in recent years. Royal commissions have been appointed in the States on several occasions to inquire into matters which are of less gravity and have been specified less precisely. This is a serious matter. Let me refer to the history of it.

The present Leases Ordinance, which, incidentally, does not apply to the city area at all but which applies only to rural leases, was first introduced in 1918, and under section 3 of the ordinance leases were granted for such periods, not exceeding 25 years, as the Minister determines. That phrase “ not exceeding 25 years “ has stood in the ordinance since 1918. It may have been in earlier ordinances. I have not checked on that. The phrase remained unaltered until the former Minister, on the 23rd November last, signed an ordinance omitting the words “ not exceeding 25 years “. After that ordinance had been amended, the regulation was signed by the Minister, as I have said, on the 5th December, and it was gazetted on the 15th December. The regulation replaces a former one, regulation 7, which was in these terms -

No person shall hold under lease land of a greater assessed value than £10,000.

The figure has stood at £10,000 since 1941. It had previously stood at £8,000 since 1929. The alteration of the amount, which might well have been justifiable because of the inflation in the intervening years, is one of the simplest processes that could have been undertaken. When it was done in 1941 by Senator Foll, it took two lines and to show how simple the process is, I will read them. They state-

Regulation 7 of the Leases Regulation 1929 is amended by omitting the figures “ 8,000 “ and inserting in their stead the figures “ 10,000 “.

If the Minister wished to bring up to date the permitted values of properties - that is if he wished to see that people were given an adequate living area - he could, by a two-line regulation in the Gazette, have brought them up to date. The whole purpose of regulation 7 has been altered, because now it bears no relation to the previous matter which was described in the marginal note as “ value of land which may be leased “. The new marginal note reads “ period of leases “. The period has been increased, now that the overriding provision of the ordinance has been removed, to a period not exceeding 50 years in the case of leases for grazing, fruit-growing, horticultural, dairying or agricultural purposes, and 99 years for other purposes which, by reading the regulations, one finds to be shopping and residential purposes.

The Minister took refuge, it seemed to me, behind the decision of the Advisory Council. Let it be quite plain that the Advisory Council, on my information, had no objection to the increase of the term of the lease from 25 to 50 years but it was never consulted on the removal of the limit of £10,000.

Mr Fairhall:

– I did not make that point. I did not extend the Advisory Council approval other than for .the extension of leases.


– I noticed- that and it is partly for that reason that I comment on it. If I understand the present Minister’s attitude, it is that he does not mind the modernization of the value but he, himself, would not have sponsored the aggregation of properties. I give him credit for that attitude. It is not his fault. It was not his regulation or ordinance. He was not responsible for the amendment of an ordinance which had stood unchanged for eighteen years and, in this respect, ever since 1918; and he was not responsible for the repeal of a regulation which has stood since 1918. He would not, I believe, have sponsored the aggregation of leases. In his administration of this regulation, if it is not disallowed, I hope that he will continue that attitude. But let it be made quite plain to the citizens of Canberra and the citizens of the Commonwealth that the Advisory Council, the Parliament of the Territory, was never consulted on the question of aggregation of leases. They were consulted, and approved the extension of the leases from 25 to 50 years. The last time that this matter was considered, it was considered very carefully by the Public Accounts Committee in 1929. On the committee, at that time, there were two men, at least, who achieved a great deal of subsequent fame, Mr. Chifley, the former Labour leader in this place, and Senator O’Halloran, the present Labour leader in South Australia. The report by the committee on the tenure of leases said -

With a view to encouraging orderly development and to promoting a feeling of security and confidence amongst lessees, the Committee recommends that, where possible, leases he extended to 25 years.

That was carried out, aud it was a very careful report. At least twenty witnesses were called before it, and reasons were given for every recommendation, but nowhere is it suggested that the aggregation of leases was necessary, or, in fact, that it was necessary to have a larger average holding than say 1,200 acres, which was regarded as a perfectly satisfactory living area at that time. The committee said that some of the earlier leases of 500 acres were insufficient but those granted later, of 1,000 to 1,200 acres, were adequate. This was carefully considered in 1929. Is there any reason at all why it should not have been considered by the present Public Accounts Committee, which has also shown its skill in such governmental matters ? This is something which again should have been considered by the same process before there was any alteration at all. The significant thing that emerges, surely, is that there has been recently, since the war probably, a considerable desire to come to Canberra by people on the land, not only for pastoral, and still less for horticultural, dairying and agricultural purposes, but for social purposes.

The provision of the regulation which requires residence has been “ winked at “, to use the Minister’s term. It has been notoriously winked at. A great number of people with leases in the Territory come here when the court is in residence at Yarralumla or when the Parliament is in session. They are not here at other times at all, and when it is too cold for the Governor-General or the parliamentarians to be in Canberra it is too bleak and frigid for them to be here either. In making reference to those matters, I am not referring in any way to any aggregation by the honorable member for Calare (Mr. Howse) or the former honorable member for Henty, Mr. Gullett, whose return to this chamber was sought, very convivially, last evening.

Now, speaking on general lines, in Australia the Commonwealth is not in the position that the Federal Government ?.s in in the United States of America, where all the land outside of the thirteen original States belongs to that government and is disposed of as it wishes. Only certain portions of Australia are at the disposal of the Australian Government. They are the Northern Territory and the Australian Capital Territory. The Northern Territory leases, as we know quite well from legislation that has been discussed in this House, are beyond the means of the individual settler. There still remains the Australian Capital Territory. The Australian Capital Territory should be a show place for the rest of Australia. The Commonwealth cannot complain of the obduracy of the States, or the irresponsibility of the Premiers, or of its own lack of powers in any action in the Australian Capital Territory, whether it is industrial conditions, financial conditions, town planning, or the development of the countryside. The development of the countryside, which the honorable member for the Australian Capital Territory has brought before the House on several -occasions - and on which he speaks with singular authority - is a matter in which we should show a lead to the whole nation. The Labour party’s attitude, as I understand it, is that if a man feels a vocation, and has the capacity, for country life, he should have the opportunity of raising his family on his own living area. In the present instance we do not object to longer leases but to larger leases.

In conclusion, I would state what should be a truism, but which has certainly ceased to be one under this Government, which relies so much upon the support of monopolists and pastoralists: no one should have too much land while anybody else who is willing and capable of working land has none, or has too little.


.- The honorable member for the Australian Capital Territory (Mr. J. R. Fraser) has moved that regulation 3 of the amended leases regulations introduced by the honorable member for Chisholm (Mr. Kent Hughes), as Minister for the Interior, on the oth December, 1955, be disallowed. This regulation contains two amendments. First, it repeals regulation 7 which provided -

No person . . . shall hold under lease land of a greater assessed value than £10,000 (exclusive of the value of buildings, fences, dams, ground tanks, well and bores).

The second alteration relates to the length of tenure. Under it, pastoral leases are to be held in the Australian Capital Territory for 50 years, and leases in the actual capital itself - that is for shops, homes and the like - for 99 years. I congratulate the honorable member for Chisholm upon this extension, which was one of his last acts as Minister. I believe, as I am sure all honorable members do, that we get greater development of land, and greater usage of land, where there is a reasonable security of tenure.


– Did it increase the value of Hill station?


– I could not tell the honorable member that one way or the other, not having it at the present moment. I believe that freehold is the best tenure. After that, I believe that a long leasehold is the best. Therefore, 1 feel that n 50-year term. such as was recommended by the Australian Capital Territory Advisory Council, is the most satisfactory because, under the old 25- year term, the people were loth to put in additional buildings, and everything else which nowadays goes to improve the landholdings. With a secure tenure for 50 years, they will certainly know that they can go ahead and put money into the land without perhaps losing the lease of it. I do not think that we could reasonably have expected anything more than a 50- year lease, because it is hard to tell what is going to happen in the Australian Capital Territory. The city is expanding and areas of land on the outskirts will have to be taken over for housing. For that reason, it would be unfair to offer too long a lease, or to convert to freehold in those areas, because the Commonwealth would be up for certain compensation if it found itself in the position of having to resume the land.

The honorable member for the Australian Capital Territory has alleged that the regulations have been flagrantly broken by the present Minister for the Interior (Mr. Fairhall) and by past Ministers. He alleges, first of all, that there are in all leases clauses under which people are .obliged to reside on the land that they have under lease. That is not so. Most of the leases in the Australian Capital Territory have no residential clause. Where they have, the Minister has a discretion as to whether his authority in regard to that clause shall be exercised. I have here a copy of a lease from the lease ordinances of 1918- 1937. Section (ifc) reads-

The lessee shall and will reside continuously and bona fide on the said land as his usual home without any other habitual residence during the whole term of the lease or, in lieu thereof, shall duly and faithfully perform any other conditions as to residence previously approved in writing by the Commonwealth.

It is quite obvious that there is no regulation binding a lease-holder in the Australian Capital Territory to live on his land. Secondly, the honorable member for the Australian Capital Territory has alleged that the Leases Ordinance has been flagrantly broken by the Minister because leases in the Australian Capital Territory have been granted to people who own land outside the Territory. There has never been any regulation providing that people who own land outside the Territory shall be prevented from obtaining land within it. That can be checked by looking through any of the past leases. Thirdly, the honorable member has alleged that the lease of 13,000 acres at Booroomba, which was “ thrown in” with the sale of the freehold land on that property should not have been thrown in at all; that it should have been given separately to people requiring land, and who did not already have it. I just want to make this point to the honorable member: The land up there, as he well knows, is of very poor economic value. The main part is in the Booroomba mountains. It is steep, heavily timbered, very poor grazing country - so poor that, for most of it, the cost of a lease is Id. per acre per year. The maximum charge is 3d. per acre per year. That is not the sort of country on which we can put a man with any hope that he will make an economic proposition of it. For that reason, I think the Minister was perfectly right in this case in saying that the freehold land from Booroomba should be sold and, when it was sold, that we should allow’ the leasehold area to run in with the freehold area.

What will happen when the new regulation comes into operation? Will there be greater aggregations? I do not think there will be. The Minister still has power to prevent that, and he has made it quite clear that he will use that power if he feels there are undue aggregations of land in the Territory. Let us face the fact that there are a number of properties in the Territory to-day, the unimproved value of which is more than £10,000. They contain some freehold areas, in respect of which the ordinance will have no effect at all. If we look at properties such as Lanyon, Cuppacumbalong and Booroomba, we see that they are well-run properties, among the be3t in the Territory. They have not been regarded as undue aggregations. Throughout Australia there are many properties of an unimproved value much greater than £10,000. Some of the best stud stock-producers in Australia - who have made their stock available to others and on whose stock the cattle and sheep populations of this country have been built up - own areas which are considerably greater than that, but their properties are not regarded as undue aggregations.

The previous system was unreal, and it was impossible to administer it fairly. I think that the Minister and the depart ment are to be congratulated for having taken a broad view. Had the system been retained, it would have been necessary to increase the value enormously. What do we think that value should be? The last leases were issued in 1933, and the last rise on that unimproved value occurred in 1941. Since that time, there has been a considerable increase of the value of land. We might find it necessary to say that, to enable a man to make a living, he must be allotted land of an unimproved value in the vicinity of £30,000.


– Or £25,000?


– Let us say £25,000. to £30,000. I say again that, if aggregations do occur, the Minister still has power to do whatever he believes to be necessary about them.

The honorable member for Werriwa (Mr. Whitlam) has mentioned the possibility of war service land settlement in the Australian Capital Territory. That matter has been looked at. In fact, the property that he mentioned, Booroomba, was looked at, before it was sold, by a person who was well qualified to decide whether it was suitable for war service land settlement. It was looked at by Mr. Colquhoun, the Director of War Service Land Settlement. He is a man who is very well qualified in agriculture. He is a master of science. On one occasion, he was a research student at the Waite Institute in Adelaide. I think he was a lecturer in biology at the Adelaide University. He is a person who is well fitted to decide whether land is suitable for war service land settlement.

His report was that Booroomba is not suitable. Are we to take his word that the land is not suitable? Or are we to take the word of the honorable member for the Australian Capital Territory or the honorable member for Werriwa that the land is suitable? Mr. Colquhoun said, first, that the leasehold area was quite hopeless from an economic point of view, and, secondly, that the freehold area would have been over-capitalized - in other words, by the time it was cut up and given to soldier settlers the value of the buildings on each block would have been far greater than a war service land settlement block could carry. We must remember that many ex-servicemen of the World War I. went on to the land in the Territory just after the end of that war. If we put new people on to the land here, probably we should have to reduce the size of the blocks held by those men, or put some of them off the land. Every person in Australia eligible for land under the war service land settlement scheme could apply for a block of land in the Territory if blocks were made available. So the chance that a resident of the Australian Capital Territory would get a block here would be about one in 1,000.- I cannot see how we could possibly exclude a person who lived in, say, Sydney from taking part in a ballot for land in the Territory.

I feel that the Government has done the right thing in this case. I am certain that the extension of the period of leases will encourage the greater development of the Territory. It will encourage people to come here and put their money into farms, which they will build up in every way possible. Nothing has been lost by taking out this provision, which was futile in any event, because the Minister has the necessary powers. I support the remarks made by the Minister, and I oppose the motion proposed by the honorable member for the Australian Capital Territory.

Leader of the Opposition · Barton

– This matter has assumed such importance that the House should look at the proposal very carefully. As to the comments of the Minister for the Interior (Mr. Fairhall) on the very effective speech made by the honorable member for the Australian Capital Territory (Mr. J. R. Fraser), I only want to say that the Minister did not appear to be unfavorably disposed to the case made by the honorable member. The Minister said that he had no very great objection to what had been done. I think those were his words. That was not exactly enthusiastic support of the action taken by the Department of the Interior in curious circumstances, just before the general election last December. I do not want to pin the Minister down to a phrase, but his speech showed that he took a rather reserved view of what had been done. Towards the end of the speech, he said that he was against what he called untoward aggregation. I am certain that, in administering whatever ordinance is in force, the Minister will act in accordance with that principle. But the purpose of the regulation now repealed is to save the Minister from the difficulty of determining what is an untoward aggregation and to establish a general rule.

The extraordinary feature of the new regulation is that it was made five days before the general election. No publicity was given to it, as far as I know, and it was not confirmed by the GovernorGeneral until later. It was only because of the vigilance of the honorable member for the Australian Capital Territory that the matter was raised and discussed at a meeting of members of the Opposition. The regulation that was passed reminds one of the notorious midnight leases that were granted just before an election in the United States of America. The regulation that was repealed dealt only with the question of aggregration. Accordingly a person would not be aware, from reading the new regulation, which deals only with the term of leases, that the old regulation restricting aggregation was gone. The old regulation provided that no person could hold, under lease, land of an assessed value greater than £10,000, exclusive of improvements. Broadly speaking, that is land to the value of £10,000 unimproved. That refers to land with high unimproved valuation. It does not include the value of improvements. It is the value of the property less the value of virtually all relevant improvements. The limit is £10,000. Is that figure too low? What evidence is there for saying that it is too low?

That was the effect of regulation 1, which dealt with aggregation and which was repealed on the 5th December. What was inserted in its place? There was no new provision about aggregation but simply a provision authorizing extension of the period of a lease. Some honorable members on this side, too, may agree that the extension of the period of a lease may be justified. But the question is whether the House is to permit the removal of a safeguard against aggregation, without substituting any other safeguard against aggregation, so leaving the matter entirely to the discretion of the Minister, who has said that he is against, untoward aggregation. I should like the word “ untoward “ to be defined. If the figure of £10,000 is considered to be too low, let that be proved.

The manner in which the matter has been handled is really very bad. It is bad for the administration. I believe that the cases cited by my colleagues, especially the honorable member for the Australian Capital Territory, suggest that there have been many breaches of the existing regulation, and the substitution of a new lease for an old lease is intended partly to waive all prior breaches of the regulations and of the terms of the lease.

For that reason I should like the House to consider this matter more carefully. There has been a very small attendance in the chamber during the debate. Very important matters were referred to by the honorable member for the Australian Capital Territory. It seems to me that the least that the House can do is to consider the matter judicially. The new Minister intends to carry out the regulations in accordance with their spirit as well as the letter in order to have an administration of these leases which will be valuable to the Territory.

What is the broad background of this matter? The Territory, compared with the great areas of the States, is of a pocket-handkerchief size. There will not be large estates in the Australian Capital Territory in the distant future. As the years go by, it will be developed to an enormous extent. We do not desire to have in 90 years, or in 50 years, enormous claims for compensation made for property which has had to be taken over and used for other purposes. A narrow view has been taken of this problem. If we were dealing with New South Wales, Queensland or South Australia, the position might be different. But the danger here is that we shall have a repetition of the same type of situation which existed in New South Wales and which led to many serious cases of maladministration of lands. Land which really belonged in the first place to the people was subject to a short lease, the lease was extended, there were all sorts of pressures, and the interests of the public were neglected. The Minister is a trustee for this land, but the members of the Parliament are also trustees. We cannot condone and explain an ordinance or regulation which tears up a provision restricting aggregation, which places nothing similar in its place but which deals with an entirely different subject-matter, that is, the extension of a lease. Indeed, this alteration would be completely unknown to most people, except those who were interested. It looks to me as if persons interested knew what was being done. I understand from the remarks of the honorable member for the Australian Capital Territory that some of these people who received the benefit of the longer leases did not want the land for development. They wanted to sell the leases, and some have sold them. Is this House to condone such action?

Debate interrupted under Standing Order 108.

Ordered -

That the time for discussion of motions be extended until 12.45 p.m.


– I have almost completed what I wish to say. I shall not analyse the Minister’s speech which, on the whole, was not unfavorable to the case put by the honorable member for the Australian Capital Territory. We must consider what action should be taken, and whether the present provision should be retained. Some inquiry should be instituted. We must not let the position be worsened by the creation of new vested interests through the medium of a regulation which was passed five days before the general election and confirmed by the Governor-General some short time after the general election. Let us see what was done after that. The public could not have been made aware of this change. Looking at the new regulation alone, one could not know what on earth the old regulation had contained. The subject-matter, as indicated by the notation at the side of the regulation is, “ Period of Leases “. The notation at the side of the regulation which was repealed simply read, “ Value of land which may be leased “, which is an entirely different topic. It seems as though the persons drafting the new regulation wanted to get rid of the provision relating to aggregation and substitute in its place this entirely different topic. It is not only confusing but it might be very deceptive.

Mr Brand:

– How many persons have sold properties since they received extensions?


– I do not know. The honorable member for the Australian Capital Territory mentioned that cases have occurred since the 5th December.

Mr Whitlam:

– The honorable member for Farrer can tell the honorable gentleman of one case.


– All I -ask is that the House examine this matter a little more carefully. I do not know whether the Public Accounts Committee is the appropriate body for the purpose. The. matter might be- better considered by a committee of the Parliament, but that is a question of detail. The Minister does not support untoward aggregation - he says so quite frankly and fairly. He was not completely satisfied with what was done. The careful language which he used was a clear illustration of that. He has to administer the ne’v provisions. How can he determine what is an untoward aggregation unless there is a general rule? Who is better qualified to determine the policy than the Parliament, members of which are trustees for the proper administration of land development in this Territory? It is not an easy task. I ask honorable members to look ahead in order to see what this Territory is to become 20, 50 or 100 years hence. Let us not allow the dead hand of long leases to interfere with the future development of the Territory, as it might easily do as natural development continues. I think that a narrow view is being taken and that the circumstances should be more fully examined. When I commenced my speech, I said that I was concerned with the action to be undertaken. What is to be done? Very few honorable members were present when the honorable member for the Australian Capital Territory presented his case or, indeed, when the Minister replied. I -thought that the Minister dealt with the matter fairly, but was bound by a sense of loyalty to decisions of the previous administration. I do not think that is the proper approach. I agree with his view that untoward aggregation must be prevented.

The figure appearing in the previous regulation was altered from time to time, but £10,000 seems to be a reasonable limit, because it excludes buildings, fences, dams, ground tanks, and so forth. Why should that figure be altered unless one can show clearly that the figure is wrong? If the House is convinced that it is wrong, it should substitute another figure, so that the Minister will not have to determine policy piecemeal but will have the general policy determined for him. I regard this matter as of great importance, Apart from the interests of the Territory, we must consider the point of view of the whole of Australia. This capital is developing rapidly, and it is bound to develop much further. In the Territory, land development in places distant from Canberra will be progressively of an agricultural character. Therefore, this unlimited power that is intended to replace the old carefully considered power should not be agreed to by the House unless it is convinced it will allow fair representation of all interests.


– I support the remarks of the Minister for the Interior (Mr. Fairhall). I thought he was most careful in the choice of his words in dealing with this matter.

Mr Calwell:

– Go thou and do likewise !


– I do not know whether the honorable member for Melbourne (Mr. Calwell) even bothered to come into the chamber to hear the Minister, who stated that he did not approach the problem in the spirit that he would do something merely because it had been done by some one else. He stated that he was acting in the manner that he believed to be correct. The administration of lands in the Australian Capital Territory has been wise, and the officers of the Department of the Interior have given wise advice to the Minister. This is evident to rural people in the Territory. Sir Ian Clunies-Ross, the head of the Commonwealth Scientific and” Industrial Research Organization, in a speech made at the Dickson Experiment Station last year, mentioned what he called the agricultural revolution in the Australian Capital Territory. He stated that we have now reached a point at which improved land will carry seven sheep to the acre. We have now passed the first phase of land development in the Territory. If honorable members take the trouble to look at the painting hanging beside the steps inside the main door of this building, they will see a representation of Canberra as it- appeared before it came under the administration of the Commonwealth and improvement began. The painting shows stony ground with sparse . vegetation growing upon it. Originally, it probably carried only one’ sheep to four acres. The best of the improved land in the Territory will now carry seven sheep to the acre. This is 28 times the original carrying capacity, and, with further improvement, it will carry even more sheep to the acre.


– Does not that mean that smaller holdings would suffice?


– I am very grateful for the intelligent interjection. One does not always get the best results from the application of scientific methods to the improvement of land by cutting it up into small areas. The honorable member for the Australian Capital Territory (Mr. J. B. Fraser), to his detriment, is a member of the socialist party. The socialists have always completely failed to get the best use from the land. Their ideas, carried to their logical conclusion, result in fiascos such as the gigantic failure of the land socialization programme in Russia, which has caused Malenkov and Bulganin to go grovelling to the people of Britain. The Russians are too weak to defend themselves, because they cannot produce enough food. Labour, being socialist, could easily make a mess of land administration in the Australian Capital Territory if it interfered with the Department of the Interior. Opposition members are socialists at heart, and they cannot get away from socialist methods. “We have been fortunate enough to have the advice of the honorable member for Farrer (Mr. Fairbairn), who is a good farmer and who knows much about the proper methods of land use. He has told us that the methods being adopted in the Territory are correct. “We should accept his advice, because he knows what he is talking about. Any one of us who take pride in the Australian soil, and who want to see it used wisely and effectively, knows that it must be improved by the application of fertilizers and by judicious grazing methods. The carrying capacity must be improved, and that has been done in the Territory. I again refer honorable members to the painting hung near the front door of this building. The worked-out soil depicted in it has been tremendously improved and now gives enormous yields of clover. The administration of this area has produced excellent results. In the first phase of land development in the Territory, large aggregations of land and considerable financial resources were necessary for the application of fertilizer and the improvement of the soil.

The sheep men came in originally, as they always do in new areas, and improved the soil. It is now rich land, owing to the adoption of the superphosphate and clover cycle of cultivation. Even more important than the addition of superphosphate is the introduction of nitrogen into the soil bv tha clever plant.

This enriches the earth tremendously. This type of cultivation has been widely adopted in the Australian Capital Territory. If honorable members wish to see the results achieved by it, I suggest that they examine the property worked by the honorable member for Farrer for several years with his delicate, almost magic, touch. The soil on that property is rich, whereas directly across the road may be seen rather bare and poor soil on another property. “We have ample evidence of the way in which the earth can be and has been improved. In the clover cultivation cycle, not only do the nitrogen and the humus from the clover transform reddishbrown poor earth into rich, black, highly productive and greatly enriched soil, but also the rich yield of clover feeds stock.

I have described the first phase of land development. The Australian Capital Territory is now entering the second phase. The population of Canberra exceeds 30,000 and we are looking forward to a population of 60,000 in this city. The greater population will require increased quantities of foods such as milk and fresh vegetables.


– “What is the use of producing more milk when one cannot sell it on three or four “ block “ days in each week?


– Milk and fresh vegetables should be produced on the spot in the Territory. Does the honorable member understand that? I have heard residents of Canberra complain that they have to pay 4s. or 5s. each for cabbages. Vegetables should be grown in the Territory for sale at lower prices. The sheep men having improved the land, we reach a stage at which we can produce more food, and especially milk.

Mr Griffiths:

– It is of no use to produce more milk if one cannot sell it.


– The House should consider the process of development. The first phase is the enrichment of the soil and the second is the settlement of small land holders. “We must undertake that second phase of development. The honorable member for the Australian Capital Territory did right to raise the matter, but his judgment on it is wrong. I support the administration of the Department of the Interior.


.- Mr. Deputy Speaker-

Motion (by Sir Eric Harrison) agreed to -

That the question be now put.

Question put -

That Regulation No. 3 of Regulations 1955, No. 13, being Regulations under the Leases Ordinance 1918-1955 of the Australian Capital Territory,be disallowed.

The House divided. (Mb. Deputy Speaker - Mr. C.F. Adermann.)

AYES: 39

NOES: 55

Majority . . 16

In division:




– Order ! Sub-section (1.) of section six of the Australian Capital Territory Representation Act 1948-1949 provides that, subject to sub-section (2.), the member representing the Australian Capital Territory shall not be entitled to vote on any question arising in the House. Sub-section (2.) provides that he may vote on any motion for the disallowance of any ordinance of the Australian Capital Territory and on any amendment of any such motion. In my view, his right to vote does not extend to a motion for the disallowance of a regulation made under an ordinance of the Australian Capital Territory, and I so rule.

Question so resolved in the negative.

Sitting suspended from 12.58 to 2.15 p.m.

page 1046



Debate resumed from the 21st March (vide page 1017). on motion by Mr. Menzies -

That the following paper be printed: -

National Economy - Economic MeasuresMinisterial 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 “.


– I wish to congratulate the Prime Minister (Mr. Menzies) upon the magnificent survey that he has made of Australia’s present economic position.I hasten to say that I entirely agree with his diagnosis of our economic ills. Ills can arise in an economy in a time of prosperity just as they can in . a time of depression. Such ills, however, as the Australian economy is suffering from arise notout of a depression, or an impending depression, but out of Australia’s great prosperity. The Prime Minister has shown his determination to take such measures as are necessary to preserve that prosperity. The Prime Minister in his statement said -

We are, as a nation, enjoying a high measure of prosperity. Our purpose is to preserve and consolidate it.

Some sections of the press have suggested that the Prime Minister is afraid of prosperity. On the contrary, he is, as he has stated, determined to preserve and consolidate it.

In examining the economic ills of Australia in a time of prosperity, we must first look to see whether our own house is in order. I think it is generally recognized as a sound economic proposition that in a time of prosperity a government should budget for a surplus, and in a time of depression it should budget for a deficit. As this is a time of prosperity, we must look to the Commonwealth revenues and expenditure to see whether the Australian Government is playing its part. The budget papers disclose that revenue for the year ending June, 1956, is expected to amount to £1,114,000.000, and estimated expenditure is £1,066,000,000. The Commonwealth, therefore, is expecting a surplus of income over expenditure to the amount of £48,000,000. Therefore, I think it can be said without fear of contradiction, that the Commonwealth, even before the introduction of the measures now being debated, has carried out a sound economic policy, not only of living within its means, but also of budgeting for a surplus in a time of prosperity. In addition, the Commonwealth is financing practically all of its loan works programme out of revenue. Whether that is sound economics or not, it is clearly safe finance in a time of prosperity. If, therefore, we could look at Commonwealth finances in isolation we could say quite definitely that the Commonwealth is following a sound economic policy, and that there is no need for additional taxes. If, however, notwithstanding our expected budget surplus, it was decided, as a deliberate policy, that the Commonwealth would save an extra £100,000,000, I certainly would not quarrel with that pro posal at a time as prosperous as the present. Therefore, I should be quite prepared to support the present tax proposals, if they did no more than provide an additional surplus, or additional savings, in a time of prosperity. Unfortunately, however, we cannot look at the finances of the Commonwealth in a state of isolation.

We live in a federal system. Our lives are controlled by Commonwealth and State governments and instrumentalities. When we examine the State finances we find that the position is not nearly so happy. Almost every State this year has budgeted for and is likely to have a deficit. Nothing could be more inflationary in a time of prosperity. The Commonwealth, however, cannot stand by and do nothing, and finance must be found from some source to meet these expected State deficits, which tend to have such a bad effect on the economy in a time of prosperity. It is obvious that the Australian Government will have to accept the odium that will be cast upon it as the authority responsible for raising taxes to meet the deficits of the States, and I suggest that an immediate review of Commonwealth and State financial relations should be made. I suggest that no time should be lost in holding a conference between Commonwealth and State representatives, for the purpose of making the States responsible for the collection of the moneys that they spend.

The position of the Australian Loan Council is highly unsatisfactory. The Loan Council is comprised of a number of members from the States and from the Commonwealth. The Commonwealth has two votes and the States have six. Therefore, for practical purposes, the Australian Loan Council is controlled by the States. They decide each year how much money they will endeavour to raise for capital works. This year they have decided that £190,000,000 should be raised from the people to finance State public works. It is quite obvious now that the people of Australia will subscribe £67,000,000 less than the Loan Council expected they would. As the Commonwealth has been paying this money to the States in monthly instalments, it is quite obvious that the Commonwealth again must carry the baby for the State capital works.

The most serious illness in. our economy co-day is lack of saving. The Prime Minister has made this perfectly clear. He said in his statement -

On the capital side, we are, in Australia, crying to spend on investment twice as much as our current savings.

That is the reason why there will he a deficit this year of £67,000,000 in loan raisings. What I suggest to the Government is that when our problem is one of lack of savings, surely the remedy is to obtain more savings. That brings us to an examination of the question of why we are not, at this time of great prosperity, saving enough. I think all will agree that taxation, at the best, can be only a temporary palliative. It cannot cure the ill of lack of savings. Next year, £250,000,000 worth of loans will mature. Are we to meet that from taxation sources? Are we to go on taxing the people more and more and more year by year because we cannot get enough savings to meet our loan commitments?

I suggest that the real problem into which we have to inquire is why savings are insufficient., The first reason is obvious. It has been referred to already by other speakers. I referred to it as far back as 1950, when I said that the means test was a blot upon our social services legislation, and that unless the Government took steps to abolish the means test, it would not be many years before we would be unable to get the savings that we require. Unhappily, we are in that position to-day. I do not blame any one government for it. The Labour party was in office for eight years, and did nothing at all about the means test.


– The Labour Government eased the means test a lot.


– The Government which I support has been in office since 1949, and I still say we have not got to the root of the problem in Australia. The real trouble is that we are not getting enough savings. We are not getting those savings because the people will not save when they realize that when they reach old age they will be penalized for having saved.

A married man would have to save £10,000 during his working life to get a return equivalent to the present age pension. The average man says that he cannot save that amount and, therefore, questions why he should save at all. We must give urgent consideration, first, to the question of a national retiring allowance on a contributory basis, free from the means test. As a means of getting out of our immediate condition of urgency, I put forward the suggestion that we should introduce a contributory scheme immediately under which we could raise £60,000,000 or £70,000,000 a year, and defer the abolition of the means test for two years. I suggest that this or any other government will always be faced with this problem of lack of capital and lack of savings so long as we penalize the thrifty person by depriving him of all benefits under our social services legislation.

If governments are not prepared to introduce a contributory scheme for national retiring allowances, I suggest that consideration should be given to methods of increasing savings by either voluntary or compulsory means. When our problem is one of lack of savings, as the Prime Minister, in his statement, has said it is, I suggest that we should adopt the measures necessary to increase savings. We should try the voluntary means first. If voluntary means are not successful, then surely a compulsory loan is better than confiscation by taxation on a continuing basis.

Even if it is suggested that the savings of the Australian community are sufficient, one thing that is perfectly clear is that those savings are not going into government bonds. It is only by attracting investment in government bonds that we can hope to obtain enough money for such State capital works as the building of schools, hospitals, and things of that kind. That being so, we must ask ourselves what is wrong with the bond market. First of all, I suggest that those who control the issue of government bonds are looking at the problem from the point of view of conditions that obtained during war-time when we had man-power control, capital control, and indeed controls of every kind. Then there was no alternative investment to government bonds. To-day, there is an alternative investment.

We can safely say that the time has now arrived when it is an investor’s market. Under war-time controls, when the Government could get all the money it wanted, the duration of bonds was from ten to fifteen years, and very often the Commonwealth had the option of paying investors off at any time it liked, or at certain specified times. Those conditions have completely altered. To-day, we must be prepared to meet the market. We have competition from finance companies, we have competition from all sorts of people who are wanting money, and we must make bonds more attractive. We need to shorten the term. Do not let us merely say, “ If you lend to us, we will pay you back in fifteen years’ time”. We should say, “Lend us your money; you can have it back in three months, six months, or twelve months, at short-term rates of interest, or you can have it back in four, five, six or seven years at the higher rate, just as you like”. The maturity of the loans has got to be shortened considerably. Then, I believe that we must give people a guarantee that if they invest money in future loans, they will not lose their capital. I agree with those honorable members who say that we must give the bondholder the option of converting his loan into any new issue that might be launched at a higher rate of interest. I also believe that we should give such investors the right to use bonds for the payment of income tax up to a limit of £100 a year. There should be some limit to this, and £100 a year is reasonable. I realize the effect of trans.fering income to capital and vice versa, but the primary objective at the moment is to induce people, who are putting their money into other avenues of less useful investment, to buy government bonds, so that it will be used for the building of schools, hospitals and other essential works.

The’ biggest investment in government bonds comes from insurance companies and superannuation schemes. That being so, let us increase the present allowable deduction for income tax purposes from £200 to £300 per annum. I believe that if we do this, we shall attract another £50,000,000 or £60,000,000 to Commonwealth loans every year.

I should have liked to deal further with these particular matters, but as time will not permit that, I shall conclude by referring to another statement made by the Prime Minister. He said -

To put it quite clearly, we cannot have increased development and increased individual consumption without increased individual production, saving and investment.

The Prime Minister has said that he will take such actions as are necessary to increase production, and we know he will, but, in addition to that, we must carry out the remainder of his advice and “ take such measures as are necessary to increase savings and investment”.


.- Any document that deals with the economic state of the nation is worthy of the very serious consideration of the House. This, of course, naturally applies to the statement which has been made by the Prime Minister (Mr. Menzies). In that statement, he has set out certain procedures to be followed which he believes will achieve certain results. In the preamble, the right honorable gentleman said -

We are, as a nation, enjoying a high measure of. prosperity. Our purpose is to preserve and consolidate it.

So one looks for ways in which that prosperity is to be preserved and consolidated, and one finds that the Government proposes to -adopt five measures to achieve that end-=-increased petrol tax, increased excise duties, increased sales tax, increased company tax, ‘ and increased interest rates. We have been assured that, as a result, the following five objectives will be attained : - Increased production, both in the mass and in the unit; lower costs; increased exports; stabilized prices; and, by the end of June, a balanced trading account. It is in the light of those five measures and those objectives that, the Prime Minister’s statement must be analysed. I hope, in the few minutes that are at my disposal, to bo able to demonstrate that none of those objectives will be attained, but that rather will we have in the year 1956 a repetition of the conditions that so seriously affected the economy in 1952 and 1953. In the main, the steps that were taken by the Government in 1952 and 1953 to correct an inflationary situation are similar to the steps that are now being taken. I regret to say - and I think that, in relation to this particular point, the Prime Minister has not- been frank by any means - that in the very near future unemployment will again raise its head in Australia as it did in 1952 and 1953.

In order to demonstrate that none of the Government’s objectives can be attained, but that rather is a downward trend bound to occur, I wish to refer briefly to some of the taxes that have been imposed. I shall deal, first, with the imposition of a further tax of 3d. on every gallon of petrol used in this country. That additional tax must inevitably cause costs to rise, because it affects, not only the primary producer, but also the transport service’s, every enterprise that uses motor vehicles, public transport in the form of buses and aeroplanes and, very adversely, the general haulage business. In addition, the costs of persons and organizations that run taxis, ambulances, and other public vehicles will be affected. I suppose the best evidence of the immediate increase of costs following the imposition of the additional petrol tax is contained in a statement made by Mr. Talbot, the secretary of the Victorian Road Transport Association, to the effect that as from the 1st April all carriers will increase their haulage charges by ls. 3d. a ton. That statement was published yesterday. Mr. Talbot- gives as the reason for that sharp rise the increase of 3d. in petrol tax, and increased sales tax on new vehicles and spare parts. At a later stage, I propose to refer again to the effect of those additional charges upon costs generally.

I now refer to the increased excise duties. Not only are the increased excise duties being passed on to the public, but also something else in addition. Although the Prime Minister stated that increased excise duties would mean a rise of 2d. in the cost of a 10-oz. glass of beer, the public is actually being charged an extra 2id. We were told, in relation to spirits, that the increased duties would mean a rise of Id. a nobbier, but the prices that have been published by the various licensed victuallers’ associations indicate that, according to the brand, the price of whisky will rise by 2d. and 3d. a nobbier ; in the case of brandy, hy

Id. and 2d. a nobbier; and, in the case of gin and rum, by 2d. a nobbier. Corresponding increases have been made in respect of bottled spirits and bottled beer. The right honorable gentleman also assured us that the increase would mean a rise of 3d. for each ounce of manufactured tobacco and each packet of cigarettes, yet the figures published in Victoria indicate that the increase will be 3d. on some kinds and 4d. on others. The price of tobacco sold as tobacco has risen, not by 6d. on a 2-oz. packet, as was indicated by the Prime Minister, but by an average of 7d. for a 2-oz. packet. Those figures indicate that, in addition to the increased duty, something else is being added to the price. How can any one . say that the increased tax on petrol or the increased excise duties on other commodities will increase production, lower costs, increase exports, stabilize prices, or balance our trading account?

Let me now refer to the increased sales tax on motor vehicles. The tax on commercial vehicles has been raised from 12^ per cent, to 16$ per cent, and, on private cars, from 16§ per cent, to 30 per cent. I shall deal, first, with commercial vehicles, which are essential to industry. No one will deny that statement. If it is the desire of the Government to effect a lowering of industrial costs, could it choose a more inappropriate means than the raising of sales tax on commercial vehicles and spare parts? The increased cost of new motor vehicles, spare parts and petrol must lead to a rise of costs generally, which will filter its way through the price structure m a thousand different ways. When we come to a consideration of the increased tax on private vehicles, we come to a matter that tests the expressed desire of the Government to preserve and consolidate prosperity. The increased sales tax on private cars has been imposed for the express purpose of reducing demand. As has been stated by the Prime Minister, the Australian motor industry is now firmly established, and its roots run deep in our economic life. Any attempt to depress that industry and to cause a reduction of the demand for cars immediately affects costs, because reduced production leads to increased costs rather than to decreased costs. In addition, a diminution of the demand for cars affects every section of industry that is associated with the production or servicing of motor cars. A falling off of the demand for cars will be followed by a falling off of the demand for employment in establishments that produce those vehicles. At least two establishments are wholly manufacturing cars in Australia, and a number of others) are assembling cars, and they give employment to large numbers of men and women. If the demand for employment in those establishments falls off, all subsidiary establishments and industries that manufacture tyres, tyre cord, upholstery, batteries and other accessories, will be affected, and a gradual ripple of unemployment will commence to pass throughout the community. If it were associated with, and restricted, to the motor car industry only, we might be able to hope that the problem could be kept within bounds. But we have to look at the Prime Minister’s economic statement, not only from the standpoint of what is being said by the Government now, but also from the aspect of what the Government has done and said during the last six to nine months. I remind the House that in September last the Prime Minister made a statement on the financial position of the nation, from which there emerged the fact that it was the intention of the Government, though this was not mentioned in last week’s statement, to trim expenditure on Commonwealth public works by £10,000.000. In addition, the Prime Minister said that the purchase of £19.000.000 worth of imports which the Government proposed to bring into the country, was to be’ cancelled. So there was an immediate increase, at any rate, of £29,000,000 in the Government’s expected surplus. We know that, as the Commonwealth will have to provide the funds for State public works, it is certain that the money made available to the States for that purpose will be treated in the same way as the Commonwealth proposes to treat its own public works expenditure - it will be reduced by i0 per cent. As a consequence of that, we shall have a further ripple of unemployment, which will run right through the Commonwealth, so far as Commonwealth construction work is concerned. This, in turn, will reflect itself in the employment position in industries that produce the raw materials used for construction.

So, in addition to the effects that may be felt in the motor car industry, there will be the effect on employment in the construction industries as the result of the curtailment of Commonwealth and State public works. But it will not end there, because we must look at the whole picture. What does the whole picture show? Two other factors are to operate. First, bank credit has been restricted. The effect that that action has had on building has already been amply demonstrated by other honorable members on this side of the House. They have shown that, as a “ result of the restriction of credit, the number of houses now being built is lower than it was twelve months ago, the number completed being also lower than it was twelve months ago. They have shown that the rate of private construction of homes is declining. It is obvious. that restriction of bank credit produces a tendency to dampen down production, to dampen down building activity, with the inevitable result that we shall have further unemployment. Whether we like it or not, the opportunities of employment will be decreased. We also have to take into consideration other factors that are part of the Government’s plan. One of those is the increase of interest rates; another is the imposition of increased company tax. As the Prime Minister made clear, the imposition of both increased company tax and increased interest rates has a common objective - the cutting down of investments in the private sector of the economy. A diminution in investment will inevitably mean that fewer people will be employed on construction work and on the production of the plant and equipment that is itself necessary to enable us to increase production. The cumulative effect of those factors - the restrictions on the motor car industry, the curtailment of public works, the increase of interest rates, the restriction of bank credit, and the imposition of higher company taxation - amounts to a general attack on employment throughout the Commonwealth in order to reduce purchasing power and achieve the effect that the Government wants to achieve. 1 simply point out that we had the same state of affairs in 1952 and 1953. We saw then, that, despite everything the Government did, prices still rose and unemployment grew. The cumulative effect of the factors I have mentioned will be that within the next twelve months we will see unemployment here on a very large scale; indeed, it is within the bounds of possibility that by the end of this year, if the Government continues with its present tactics and policy, unemployment will be the lot of between 75,000 and 150,000 people. That would be in line with what we had in this country in 1952 and 1953.

Finally, I want to say that I believe that this Government could well be described as the government of lost opportunities. It had an opportunity, in September, 1953, to stabilize the economy when the Commonwealth Court of Conciliation and Arbitration froze the basic wage. I can remember sitting in my seat here on many occasions and listening to the replies of honorable members on the Government side of the chamber to our requests for some control over the inflationary factors that were disturbing the community. The outburst that always came from the Government side was that nothing could be done until wages were pegged. The occupants of the Government benches seemed to be hypnotized by the idea of wage-pegging as the be-all and end-all of the solution to inflation. In 1953, the Government could have said, after wage-pegging had been introduced, “ Here is the opportunity, in cooperation with the States, to utilize, in a common effort, the powers of the Commonwealth and the States in an attempt to check inflation and put the community back on a stable economic footing “. But the Government did nothing. Time went on and it still did nothing. It was only when the adverse trade balance again became evident that the Government started to take some steps to try to relieve the position. Now we have the suggestion, at the last moment, that a conference be held between the States and the Commonwealth to deal with the dual question of hire purchase and capital issues. I say that the Government ha3 missed its opportunity. It has allowed inflation to grow unchecked - and the only trouble about that is that it is the great, mass of the people who have to suffer as a consequence of the Government’s policy. I conclude by saying that the measures adopted by the Government are puny in character, and are totally incapable of dealing with our economic problems.


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


.- It is always interesting to listen to the honorable member for Bendigo (Mr. Clarey), and his speech this afternoon was no exception. It is a pity that his argument was not more convincing. The trouble was, he was treading a welltrodden path. We have heard these prophecies of gloom, misery and depression in the offing since the Government took office in 1949. The cry then was, “ You’ll be mighty cool in Hytten’s pool “. I also remember that, in 1952, the honorable member for Melbourne (Mr. Calwell) said, with great glee, “ There is going to be a bigger depression this year than in 1930 “. More recently we have had the Leader of the Opposition (Dr. Evatt) talking about a manufactured depression. The theme has been consistent ‘right through the piece for the last seven years. We have not had a depression yet, and I cannot see any chance of having a depression in the future under the administration of this Government.

There is one thing that I believe we should bear in mind in these discussions, and that is that this Government is a low tax Government which has persistently pursued a low tax policy. It has steadily reduced taxation since it took office, following the Labour regime in 1949. Taxation has been steadily reduced, especially in the lower income brackets. I think that some figures that were quoted by the Minister for Immigration and Labour and National Service (Mr. Harold Holt) in this debate are worth repeating as an example of the reduction. In 1949, the last year of office of the Labour Government, the taxpayer earning £600 a year, paid £26 5s. in tax. To-day, that man would pay only £11 5s. It is indisputable that taxation, in terms of real income, has been reduced substantially since this Government took office in 1949.

In spite of the fact that the economy of the country has expanded enormously and that our commitments have also grown in the field of defence and in social services especially, we have been able to enjoy lower taxation than is paid by taxpayers in our sister country, New Zealand, and substantially lower than is paid in the United States of America or the United Kingdom. That is something for which due credit should be given to our Treasurer (Sir Arthur Fadden) and to the Government.

Prosperity has been maintained. An expanding economy has been encouraged and enterprise has been stimulated by this policy, and in spite of the fact that we have met with checks such as the Korean war, and a fall in the price of wool, we have been able to ride out these storms while still maintaining a policy of full employment and a very high standard of living. The troubles for which the Prime Minister (Mr. Menizes) has proposed some remedies in his statement, have been evident for some time. In the budget speech which the Treasurer delivered in this House last year, he told us that we were facing a difficult period. He said that labour shortages had become general, and in some fields, acute. He said -

  1. . this caused a slowing down in various works and industries. Wages and other elements in costs began to rise again and this in turu led to upward pressure on prices. The deficit in our external trade, which hat” already appeared before the financial year began, widened rapidly and our overseas ex change reserves ran down. By the end of the financial year we had around us the unmistakable signs of active inflation.

On the 29th September last, the Prime Minister pointed to these dangers even more significantly and strongly. So the public has had ample warning of the present measures which are designed to remedy this position. The obvious conclusion to be drawn from our difficulties is that Australia must consider its costs in relation to those of the rest of the world. We cannot operate in this country quite separately from other countries with whom we trade. We urgently need to keep our economy strong.

The position is apparent to every one. Japan, Germany and the great industrial nations of Europe which were affected by the war are now back in their stride, are producing at full tilt, and are bringing costs down throughout the world. That is the principal difficulty that we have to face. We cannot sell our primary products at the prices that we should like to obtain and which we need to obtain in order to produce at a profit because of the fall in world prices and also because of the price support schemes that have been operated by other primary producing nations such as the United States. These factors have tended to depress the market, and we have had great difficulty in selling any other commodity but wool for which we have a corner of the world market. I believe that that is the basic reason why we must put. our house in order. We must consolidate our position, bring down costs, and endeavour to sell our goods overseas at a lower price.

There are three steps that can be taken to remedy this position, and the Prime Minister indicated two of them. He said that we must produce more and consume less. I prefer to say that we must produce more, buy less and save more. We are taking steps to do all these things. We have applied import restrictions, so that we shall not be able to purchase so much. We have stimulated actively our primary industries, and we a’re endeavouring to open up export markets. I believe that much more could be done to save exchange by developing industries which are now either non-existent or which are in a very small and struggling state, such as the tobacco industry. I believe that tea is now being produced on an experimental basis at South Johnstone, in Queensland. If we could assist industries of that nature, we would not only diversify our agriculture and thereby strengthen it, but also save exchange on a national basis. We must produce those commodities that we now need to import and, in doing so, use our valuable foreign exchange.

One of these commodities is coffee. In 1952, we spent £7,000,000 on coffee. I was pleased to see a statement by the Minister for Territories (Mr. Hasluck) the other day to the effect that the value of coffee grown in New Guinea would be £500,000 in four years’ time. But there is a big gap between £500,000 and £7,000,000 which we expend on coffee imports. Probably, much more could be done to save exchange by stimulating the coffee industry in New Guinea. The same may be said of tea. It is proven that tea can be grown in Australia; but I believe that much more could be done to investigate its production in Australia on an economic basis. We spent £54,000,000 on tea from overseas in 1952.

Mr Beazley:

– Is the honorable member’s ultimate aim to buy nothing from anybody else?


– That is. a very good question. Obviously it is impossible for a country to isolate itself, as Germany attempted to do before the war. I do not think that at all. We must trade with other countries, but in Australia we have set out to establish secondary industries, both as a defence measure and as a means of saving ourselves from the effects of economic disturbances in other parts of the world. Unfortunately, controls beget controls. The fact that we have created a large and thriving secondary industry behind a tariff wall means that we must now take steps to encourage our primary industries, as has happened in the United States, where price support schemes have been pursued for many years. We must not only match the costs of our competitors in the markets of the world, but we must do our best to improve upon them. That applies not only to primary industry, but also to secondary industry, and it is very reassuring to know that quite a few of our secondary industries are now able to export at a good price in the face of competition from other countries. I believe that that is an indication that, by employing better methods in industry, we can sell a much wider range of commodities overseas than has been the case in the past.

It is quite obvious that the import restrictions that this Government placed upon the community, in order to stop money from going abroad, and to correct the exchange position, have resulted in too much money chasing too few goods in Australia. That, in turn, has encouraged inefficiency in industry. There has not been sufficient incentive to apply efficient methods and so bring down costs. As the result pf the measures that have been taken by the Government, the money freed by import restrictions will be absorbed, and industry will be compelled to institute efficient methods and to bring down prices, so that supply within our country matches demand.

A great deal has been said about profiteering. “Profiteering” is a very good catch-cry, but there is not much weight to it in this country because, before the introduction of import restrictions, we found that the world was able to sell goods in Australia at a very attractive price, and this provided our industrialists with effective competition. While that competition continues, and while the. tariff wall remains low, there is not much danger of profiteering in any section of the community in Australia. As my colleague, the honorable member for Hume (Mr. Anderson), pointed out last night, the average return on shareholders’ funds in Australian companies is only 8 per cent., which is substantially below that earned by companies in the United States. There is not much evidence of profiteering there.

Hire purchase has come under a great deal of fire in recent years. Most honorable members who have spoken during this debate appear to agree with the principle of hire purchase; but it has diverted a great deal of money from the loan market, and from more solid and substantial forms of investment. I believe that, in this matter of hire purchase, there is an opportunity for the Government to apply a little of the native political genius of Australia. We have demonstrated this genius in the past few years - in the broadcasting industry, in the banking industry itself, and in the aviation industry, where private enterprise is coupled with public enterprise. That system has worked extremely well. One has proved to be a check on the other, and I suggest that the system could be adapted to the hire-purchase field. Government hire-purchase facilities could compete with, and so control the interest rates of, private hire purchase. This is not so novel as it might seem, because the Commonwealth Bank has been operating a hire-purchase section for some years now. Last year it financed 20,000 retail transactions, totalling £13,800,000. Most of those transactions were to help primary producers purchase agricultural implements, earth-moving machinery and transport vehicles. There seems to be a case for a wider application of government hire purchase to other types of equipment. If the Commonwealth Bank finds it possible to offer hire purchase on agricultural machinery, surely it can enter the wider field and advance money on motor cars, wireless sets, refrigerators and all the other commodities that are now the sole prerogative of the hire-purchase firms. The Commonwealth Bank could offer money at a more satisfactory price than that at present charged by the private companies. In that way it could act as an effective check against the operations of the private companies. Any profits earned would go back into this government, or semi-government, instrumentality. Large profits would not be made, and an essential service would be provided for the community.

Although I have said that the primary cause of our troubles lies overseas - the fact that the countries with which we trade have reduced their costs - the real remedy, the long-term remedy, as opposed to the measures which the Prime Minister himself describes as short-term, is undoubtedly the raising of the level of productivity in Australia.


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


– A consideration of the financial statement read to this Parliament by the right honorable the Prime Minister (Mr. Menzies) clearly indicates this Government’s lack of consistent policy, and characterizes the conduct of this Administration since it first came to office. It is not, of course, unusual for financial statements to be made from time to time. On rare occasions supplementary, budgets are presented to the Parliament to cover emergencies and exceptional circumstances. Such was the case quite recently in the United Kingdom. We are considering now something that undoubtedly is a supplementary budget. In the course of World War II., it was found necessary to bring forward supplementary budgets in order to finance our contribution to the war and the measures necessary for our survival. I believe that the first supplementary budget to be presented to the Parliament was presented by Mr. Spender, a member of a former Liberal party administration. My predecessor in the Macquarie division also found that it was necessary during the war to present supplementary budgets to provide for the nation’s survival. But most of the financial statements of this kind which were made in the course of the recent history of the Parliament were made by Labour Treasurers, for the purpose of reducing taxation during a postwar period.

In 1949, the present Government parties, with a full knowledge of the circumstances and conditions then prevailing, promised the people glibly that they would put value back into the £1. They declared that an Australian Country party-Liberal party coalition was better fitted to rule the nation than was a Labour government. The people accepted their statements. One would have expected that, in view of those statements, this Government would have had a clearcut policy, that it would have known precisely the course it would take and that it would have legislated in accordance with that policy. I feel that I touched upon the real kernel of the matter recently when I referred to the pressure groups which exert influence upon this Government - first, the wealthy supporters of the Government who demand their pound of flesh, who want to retain their privileges, and who seek advantages; and secondly, the bureaucrats, the professors and the advisors, who feel that they know best what is required. The constant warfare between those two groups necessitates supplementary budgets and financial statements such as the one we are considering at present.

It is amazing that the members of the Australian Country party have adopted such an unfortunate attitude to this matter. Having read their utterances on the hustings and having listened to their speeches in the debate on the AddressinReply to His Excellency’s Speech, I hoped that those champions of the rural industries would declare in no uncertain terms that the’ Government’s proposals, especially the proposal to increase interest rates, were not in the best interests of the people whom they represented, and that they would fight the proposals to the last ditch. But they have chosen to talk about everything under the sun rather than to address themselves to the problems facing the country at the present time.

In the financial statement submitted to the House by the Prime Minister, there was one important statement. The right honorable gentleman said -

To achieve economic health we must, clearly, increase our output, or reduce our demand, or both.

How will production be increased by the measures we are considering at present? Do honorable members who represent farming interests and rural constituencies really believe that measures to increase the tax on motor vehicles and petrol and to raise interest rates will help to reduce production costs, so that we shall be able to produce goods at prices at which we shall be able to sell them in the markets of the world in competition with goods from other countries? I do not think that that will be the case.

We have been told that the proposals are designed to deal with an inflationary situation. It seems clear to me, and I think it must be obvious to most honorable members, that, instead of preventing inflation, they will inevitably feed inflation. They will lead to an increase of production costs. Such an increase will cause greater difficulties for those engaged in industry and will make it more difficult for the community generally to live. Wage earners will be obliged to go to the arbitration courts to seek variations of their awards. In those circumstances, it is quite obvious that commodities produced in this country will inevitably become dearer. The newly appointed Minister for Primary Industry (Mr. McMahon), addressing a sugar cane growers’ association, referred to the difficulties of primary industry when he said -

Primary producers have been caught in an unfortunate squeeze between rising costs and falling prices for their products. For the past five or six years, the interests of primary industry have been overlooked.

I think we can agree entirely with the Minister that this Government has overlooked the interests of primary industry during the last five years. There is nothing in the proposals now before the House to indicate that primary industry will get any assistance from the Government in its attempts to meet the challenge from other countries of the world.

I am particularly concerned about the attitude of this Administration to. motor vehicles. It appears to treat the motor vehicle as something that is not wanted in this country. It treats the motor vehicle with hostility, and fails to realize that people engaged in primary industry must have motor vehicles for the purpose of taking their goods to the nearest towns and taking their children to school. Motor vehicles are essential for commerce, industry and development. But, despite the importance of motor vehicles to men on the land, this Government has increased the sales tax to such a degree that it will be more difficult to obtain them. The Government’s method of assisting men on the land is to increase the excise on petrol, which will have the effect of increasing charges generally, and, last but not least, to increase interest rates. If those measures will assist men on the land in any way, I think that honorable members who represent rural constituencies should explain to their constituents at the first available opportunity how they will be assisted.

I am very concerned about the increase in interest rates. In view of the expressions of opinion by members of the Australian Country party, I thought that we should have them as our allies in this fight, standing side by side with us and voting for the amendment moved by the honorable member for Melbourne Ports (Mr. Crean).

Mr Whitlam:

– There is not a member, of the Australian Country party in the House now.


– As the honorable member for Werriwa (Mr. Whitlam) has said, they are not even in the House. They are not prepared to accept their obligations and their responsibilities in this matter. They are not prepared to accept the challenge by the Labour party to deal with this matter in the proper way. The Government has not tried to deal with the forces and pressures which, in its estimation, have rendered it necessary to increase interest rates in order to obtain money on the loan market which cannot be obtained from that source at present. Instead of coming to grips with the problem, instead of dealing with the firms which are lending money for hire-purchase transactions, the Government proposes to enter into competition with the hire-purchase companies by increasing the rate of interest paid on Government loans. It wants to share in the spoils rather than see that justice will be done to the people of this country. I have in my hand a copy of an agreement between a hire-purchase firm and one of my constituents. It records that my constituent agreed to buy a motor vehicle for £385. He paid a deposit of £85 and, in the ordinary course of straightforward business methods, one would expect that that would leave a balance of £300 to be paid, but according to the practice of the hire-purchase firm, such was not the case. Taking interest and charges into account, he was eventually called upon to pay £135 in interest and charges on an actual indebtedness of £300.

Dr Evatt:

– Over what period?


– Over a period of two years. The name of the company is Pacific Acceptance Corporation Limited. Its associate selling organization trades under the slogan “Pacific is Terrific”. Pacific is certainly terrific when it comes to the exploitation of the people of this country! I say, and I want it to go on record, that this Administration has a responsibility to protect the people. It has a responsibility to seek the powers necessary to prevent such things, happening. It is not good enough to say that the State governments ought to deal with these matters. One knows the difficulties of the various State governments in try ing to reach a uniform policy in regard to other matters which have Australiawide application. This Government, which has responsibility in fiscal matters, should have initiated discussions with the State governments, and if agreement had not been reached the proper course was to submit the matter by referendum to the people in an effort to obtain the powers to deal with these persons who are exploiting hard-working farmers and other members of the community.

Mr Anderson:

Mr. Anderson interjecting,


– Any interjection is out of order and unfitting in a discussion of this kind, especially interjections from Australian Country party representatives, who betrayed their electors in regard to this matter. I hope that consideration will be given to my remarks. The increase in interest rates will bear heavily upon the people. When one considers that private trading banks have on loan over £700,000,000, for which they will receive at least an extra one-half of 1 per cent., one can readily appreciate that a great rake-off will be available to the financial houses. What good will that do this country? Will it produce another bale of wool, additional vegetables, or goods from our manufacturing industries ? It will produce nothing at all. It represents profits in the hands of the owners of the private banking institutions. Yet the Prime Minister, supported by representatives in this House of the Australian Country party and the Liberal party, upholds a condition of affairs like that. The division between Labour and anti-Labour forces is clearly and brilliantly defined in a debate of this character, wherein the Labour party speaks for the people against exploitation, and calls upon the Administration to legislate in the interests of the mass of the people. If this debate has done nothing else, it has given the Parliament an opportunity to consider these matters. The Prime Minister said that the average interest rate will be 5^ per cent., that the increase will be only one-half of 1 per cent. I should like to know what mechanism the Prime Minister has for regulating the interest rate. How is he to control it? What organization has he for the selection of the types of persons who are to pay, respectively, 5^ per cent, and 6 per cent. ? Does any such organization or mechanism exist in the Government? Is there any definite undertaking from the private trading banks that they will observe a certain limit with regard to interest? No such assurance has been given in this House, and I cannot believe that any assurance will be given.

I am concerned to ensure that money be found for homes. All honorable members understand just how serious and grave is the housing problem. In the course of a year, half of the representations . which are made to me relate to housing. Yet this grave problem of overcrowding and slums exists without any positive action being taken. A rise in interest rates is to be permitted, and the poor unfortunate persons who need homes will be obliged to pay increased amounts in the form of interest in order to obtain homes. One can appreciate just how heavily interest weighs upon those who purchase homes. Any responsible government would take action to ease the position. On a house worth £3,000, interest at 1 per cent, on the diminishing balance over twenty years amounts to about £311, and monthly repayments exceed £12 15s. Surely, that is a burden which should not be borne by those persons who are in search of homes. The provision of housing is one of the gravest problems facing the country, and no government worthy of the name should evade responsibility for meeting it. I consider that this Government has failed, especially because it has not been selective in handling its problems. .To increase interest rates indiscriminately is certainly bad in its effect on the whole community.

To-day’s press contains reports about the irregularity of the bond market, lt is not at all surprising that the bond market should be irregular, and that £1 00 bonds should be sold for as little as £86. A group of returned servicemen, who fought for this country, responded patriotically to the call of the Treasurer (Sir Arthur Fadden) by investing £10,000 in Government loans, believing that they were helping the country and that the country’s credit would remain good. They thought that when they wanted the money they would be able to receive it and build a club room. However, when they sought to turn into cash their £10,000 worth of bonds, they found that £100 bonds were worth only £90. Such was the experience of one group of returned servicemen. That position must now be aggravated. It must inevitably become worse as a result of the increase in interest rates, yet the Government does nothing at all. When questioned on the matter, what does the Treasurer say ? In effect, he says that those persons who invest money in bonds must accept the consequences, that they invested with their eyes open and they must be prepared to accept the current market rate if they fail to allow the bonds to mature. That is a most tragic state of affairs. The result is that the bond market has become depressed and great hardship and suffering have been caused to those who have held bonds for years. Consequently, one can only conclude that this Government is not very much concerned with such persons who helped the Government in other days, lt is more concerned at the moment with satisfying its friends who are responsible for its occupying the Government benches in the Parliament at present. If the Government were really concerned about those persons who made their money available to carry it over in the past, it certainly would not have permitted the interest rates to rise.

St. George

.- This afternoon, we have heard a number of interesting speeches made for political purposes by Opposition members. Honorable members, and those who listen to the parliamentary broadcasts, are, of course, accustomed to hearing speeches made with a view to winning votes or changing the political allegiance of the audience addressed. The honorable member for Macquarie (Mr. Luchetti) might have been a little fairer in his review of the economic problems. The debate has been in progress for some days now, and this would be an appropriate time to bring it back on to the rails by returning to the first definition given to us by the Prime Minister (Mr. Menzies). We should return to that definition and should stop talking about profiteering and the like.

Referring to a statement made by himself in September last, the Prime Minister said - . . I said that we were experiencing a high and growing moi:ey purchasing power, not capable of being satisfied by Australian production, and that wc had, therefore, developed a vast demand for imported goods, putting an immense strain upon our external balance of payments. I pointed out that our level of wages and costs, partly arising from the competition for scarce labour, generated by excessive demands, was threatening our export capacity. I added that the terms of trade were tending to move adversely to us and that, in consequence, a greater volume of exports was needed to pay for a fixed volume of imports. This led to the conclusion that our economy was tending to become unbalanced, with a disposition in favour of a permanent debit on our international trading account. We proceeded, in September, to impose further restrictions upon imports, in order to help to arrest the fall in our international reserves and therefore to check the threat that would otherwise, arise to our exchange rate.

I am sure that, when honorable members recall that that definition is the essence of this debate, they will have some difficulty in relating a number of speeches made by Opposition members to the matter that we are supposed to be discussing. We must come back to that matter, consider it and analyse it as the Prime Minister did. What is the economic problem? Why are we worrying about it ? What is the basis of the action that has been taken ?

Some Opposition members have implied that they doubt the moral integrity of the Government and of the Prime Minister and those associated with him. I should like to say at once that I very much doubt whether one Opposition member would rise in his place in this House and say specifically that he does not consider tie Prime Minister to be a man of integrity. On the contrary, all honorable members would say that the Prime Minister is a man of integrity and that, therefore, he should carry out the policies that he considers to be in the best interests of Australia. We assume that the Prime Minister and his colleagues believe the Government’s policies are in the best interests of Australia, and we should analyse those policies and determine whether they are right or wrong. But let us not question the moral, background of the Government’s effort. Let us not believe that it is acting in order to benefit profiteers and such people. That accusation has been made, not specifically, but, by implication, clearly.

The Australian problem, as I stated several weeks ago, is a problem of effort. Somehow, we must induce the nation to make greater efforts,

Mr Beazley:

– Is that not really a problem of purpose?


– The honorable member may describe it as a problem of purpose. The Prime Minister, who is not without a certain capacity to make these descriptions, stated -

An increase in national and individual output is clearly essential to the raising of the material standards of living. What does increased output mean and involve? The answer is - greater productivity per unit.

That means greater productivity from each, person, each city and each State, in all forms of industry. Greater productivity is vital. Certain aspects of the problem are of great interest. During the last 50 years, Australia has had a rare and fortunate experience. Two great world wars have passed over us and left the country unscathed. Australia has benefited enormously from the decimation of other countries and the great efforts that they were called upon to make during the wars. Those efforts served to protect Australia. In that sense, we have been particularly fortunate-


– We benefited by our own efforts, too. Many Australians suffered and made sacrifices during the two world wars.


– The honorable gentleman speaks of individuals. I do not. I speak in terms of relativity. Anyone who has the faintest conception of what Germany suffered, for example, will agree that, by comparison, Australia was untouched by the two world wars. The point I wish to make is that, on the cessation of hostilities, Australia was in a position similar to that of an athlete who receives a good start in a race. Australia could have used its opportunities to great advantage during the last tcn years, hut we have not taken the fullest advantage of them. We went some of the way, but we did not go as far as we could have gone. In the ten years since the end. of

World War II., Europe and Asia in general, and especially nations such as Germany, Japan and Prance, have rehabilitated themselves. The effect of their competition in the race for world trade is being plainly felt. They are becoming increasingly efficient and are working harder. They are producing more, and their increasing production is making itself felt more and more in competition with Australian trade. Therefore, there are good reasons why Australia must increase personal and national effort. To get on in this world, a nation must compete with other peoples. The other peoples with whom we must compete are rapidly overcoming the effects of war and increasing their efficiency.

In the Pacific area, of course, there are other factors. Australia, one might say, is a pedal extremity of Asia, which is awakening, and, in due course, will become fully conscious of Australia’s value. If we desire to retain this country for ourselves, we must meet that situation effectively. That is the aim of the policy reflected in the Government’s present economic measures. The Prime Minister and his colleagues consider that the interests of Australia and its people will be. best protected by these measures. They call for a little more effort and for the payment of a few extra pennies for a glass of beer and for a packet of cigarettes. The effort required will be, in truth, so mild that the average Australian will make it with the greatest of ease. I do not for a moment believe that the Australian who thinks of the welfare of his country will be upset by these economic measures. The late Mr. Chifley, who was the member for Macquarie in this. House, stated that the most sensitive nerve is the hip-pocket nerve, which causes people to complain for a time when their pockets are affected. But, after all, not one Opposition supporter has yet claimed that there is no problem. They all agree that a problem exists and that something must be done about it, but they will not suggest a policy that we might follow in order to overcome the problem.

There, is another aspect of this matter to which I wish to refer. If we say that taxes are too high, that our economy is crippled, that the people of Australia are carrying a great burden, then we should sec some signs of those things. The truth is, however, that consumption figures have never been higher. This economy of ours can he likened, not to an old, bent-up man, but to a vigorous young man racing around the track like John Landy. It is an economy of great prosperity, an efficient economy, but not efficient enough. It must become more efficient if we are to maintain our present standards. It is not the problem of the people living in 1956 that matters, but rather the future of the people who will live in 2,000 a.d. That is what matters, and it is the basis of the considerations of the Prime Minister and his colleagues.

If we call upon the people of Australia for greater efforts to overcome our economic problems, we should say something to them about the assistance they are receiving from the people of another country, who are also making similar efforts. When posterity writes the story of what we owe to the United States of America - and I hope that it will be written within the next 50 years - the people of this country will appreciate the enormous effort made and the burden carried by the American taxpayers. It is not because there are certain world councils to which the right honorable member for Barton (Dr. Evatt) can go and influence a few colleagues from Nicaragua or Paraguay or some other country to vote with him, that there has not been a world war; it is because of the fact that for every minute of every hour of every day in every week 40 per cent, of the aircraft in the United States Strategic Air Command have been airborne. That is the reason why there has not been a global war. It is one reason that the Russians understand. We all should bear those things in mind, and we should realize the burden that is being carried by the American taxpayer and how much is owed to him by every man, woman and child in this country. Realizing that, we should examine our own effort and see how much more we can contribute, and how much more we can do to help the team. If Australians will think as members of a team, I am confident that there will be no great threat to our future, or at least no threat that cannot be answered. Therefore, I commend the measures that have been brought forward by the Prime Minister. They call for a greater effort on the part of the people, I agree, but I believe that never before has the community been better able to carry an increased burden.


.- The Government, in recent statements, has revealed the central point of its thinking about the economic position in Australia to-day. The Prime Minister (Mr. Menzies) in his statement, said -

To achieve economic health, we must, clearly, increase our output, or reduce our demand, or both.

That statement is made much more specific when one considers the last paper, National Income and Expenditure, 1954-55, presented by the Treasurer (Sir Arthur Fadden), in which he said-

During 1054-55 gross domestic expenditure continued to outrun the value of gross national product. Table 1 shows an increase of £507,000.000 in gross domestic expenditure. In contrast gross national product increased by £272,000,000. This excess of domestic expenditure is reflected in the excess of import payments over export receipts and has been financed by the running down of international reserves and by borrowing overseas.

Both of those statements reveal a serious position of unbalance in the Australian economy. It is possible to discuss the financial proposals that are before the House as representing merely a revenueraising expedient, or it is possible to discuss them as an instrument for correcting that gravely unbalanced situation that has been described by the Prime Minister and by the Treasurer at different times. As these proposals were introduced by the Government as a means of correcting what is wrong in the Australian economy, it is quite important to be specific in analysing them against that background. If we merely look at them as revenue-producing proposals, they will produce £115,000,000, and that is’ all there is to be said about them. One may argue that one form of taxation would be better than another, but it is not a very broad subject. As an instrument for correcting what is wrong in the Australian economy, I think that the proposals deserve very close examination.

I have- been studying the budget speeches made by the Treasurer over the years since the budget of 1950-51 was introduced. It is extremely interesting to observe that in every one of his speeches the right honorable gentleman touched upon the same four problems. The first one is that we are importing more than we are exporting, which constitutes the problem of the balance of payments. The second is that there is too much investment flowing into nonessential industries. Those are two factors that have been mentioned in almost every budget speech by the Treasurer and in quite a number of statements made by the Prime Minister. The question of the balance of payments is related by the Prime Minister, in this latest statement, to the tremendous banking up of demand within Australia because of our great purchasing power. I remember that the Government justified its action in allowing an enormous inflow of imports in 1950 by saying, “ There is considerable purchasing power in Australia, and if we allow these goods to pour in they will satisfy that purchasing power, and this heavy drawing on our international reserves is an anti-inflationary step “. I quite accept that argument, as long as Government supporters will also accept the logical and necessary corollary, which is that every time we put an impediment in the way of imports by imposing restrictions, we aggravate inflation, and that, in Australia’s present circumstances, we cannot balance our overseas trade by cutting down imports without immediately aggravating inflation. It is, therefore, a selfcancelling expedient. What is more serious is that it shows the fundamental purposelessness of our economic thinking in the Western world. A representative of the Australian Country party, the honorable member for Gwydir (Mr. Ian Allan) who spoke a short while ago, remarked on the necessity to reduce our imports, and suggested that we should start producing tea. I asked him whether his ultimate purpose was to stop buying anything from anybody overseas at all. He did not answer the question. I do not think that was his ultimate purpose, but I do think it is important for us to take a look at this whole question of our trade and ask ourselves what purpose it has, because I feel that at every international conference to which we have gone, whether it is the General Agreement on Tariffs and Trade or any other conference, there has been this perpetual niggling about what this level of tariffs will be. It has almost become accepted as normal that every country tries to export its crisis and export its unemployment by devaluations and trade restrictions. If we apply the Kantian test to this question of trade restrictions - the Kantian test being if everybody was doing what I am doing, the world would be a better place - it is obvious that if every nation starts these policies of trade restrictions, the only thing that would result would be, not stability, but economic crises, and economic crises of the first order.

I think we ought to take a look occasionally at the purposes of trade. When I Bay “ we “ I mean the governments of the free world, and by “ the free world” I mean those countries which have certain qualities in their civilization such as the right to dismiss a government, which is a great safeguard against tyranny, and certain civic rights which are of such value as to be immensely worth preserving. If they are to be made stable in the face of the present world threat, we must get some kind of common purpose in trade, and some means whereby we regard our trade as a means of not merely producing a good situation within our own country but .also of transmitting economic health throughout the world, our trade being the reflection of sound economy, assisting the backward areas, and by that assistance from sound countries, transmitting sound values throughout the world. That, I think, is the ultimate purpose of trade and it certainly ought to be our approach to international trade in- the threatened world of to-day. I do not think it is. Nearly every financial debate I have heard has been an exercise in blaming - blaming the Government and blaming the Opposition and also the Minister for Trade (Mr. McEwen)., blaming the British trading methods, .and finally complaining about American gifts, which have been an immense factor in stabilizing the Western world over the last ten years. None of these things is real. None of them is a real analysis of the problem which we face to-day.

The budget speech of the Treasurer (Sir Arthur Fadden) in 1952 was one of the most interesting he has ever delivered because, in it, he looked back to what he himself called his horror budget, the budget in which he faced an inflationary crisis when the government of the time decided to increase income tax by 10 per cent!, and to increase sales tax. Looking back on that budget two years afterwards, the Treasurer had this to say, and I quote it because it shows that what we have to-day is, in some respects, a repetition of that time, but with one important difference -

May I recall briefly the history of economic developments during the past two years. At this time two years ago the Australian economy was approaching the peak of a violent inflationary boom which had been gathering strength during the preceding years. Retail prices” had risen during 1950-51 by 20 per cent, and wholesale prices by 24 per cent. All around a frenzied struggle for resources was going on, a struggle which nevertheless wag defeating itself by intensifying shortages of labour and key materials. On the financial side, defence expenditures were soaring and so were works . programmes. Worse still, even greater commitments were banked up ahead. Meanwhile, the market for public loans had collapsed and a great flood of imports from abroad was moving towards our shores.

In the budget of that year the Government faced the need to impose heavy additional taxation to reduce excessive monetary demand for goods and resources. By so doing it was able to achieve a budget surplus which was subsequently used to finance essential State works. But for that action it would have been necessary to issue treasury-hills on a huge scale, a step which, under the inflationary conditions of the time, would have led certainly and quickly to the most appalling disaster. Besides increasing ‘taxation, the Government tightened capital issues and credit controls, as important elements in a comprehensive campaign to stem the threatening tide nf inflation.

These measures were drastic and they proved to he unpopular; hut they have also proved to be wise.

That is what the Treasurer said two years later, when the inflationary crisis, he held, had been corrected by the financial proposals that he had introduced. They were certainly unpopular, and it can be said for the Treasurer that the wool levy was a straight levy on the element which supported him - the wool-growers. He was a Country party Treasurer, and he put a heavy tax on .the elements which supported him. Whether we agree or disagree with the tax, we have to admit that it was a courageous action, and that, to a considerable extent, he was politically disinterested.

The other measure which the Government took to deal with that crisis was a heavy rise in income tax. The important thing about income tax is that it is graduated according to ability to pay; that is, the wealthiest sections of the community paid the greatest price towards the Government’s then battle for stability. I, in my time, criticized those proposals, and I am not going to stand up and pretend that all the economic thinking I have ever done has been infallible. There have been many instances when, in the course of time, I have seen T was wrong; and I think that many of the lines of criticism I then directed at the Government’s proposals were wrong. T think that, in the ultimate, a certain important section of the community anyway, what we might call the decisive swinging vote, would at least appreciate that income tax was graduated according to ability to pay and at least appreciated that the Treasurer was not playing for the support of the particular economic group which the Australian Country party represents, most distinctively, by his wool levy.

These actions of the Government did produce a result. I feel that there is a certain softening of what I may call the Government’s moral fibre and determination in dealing with the present crisis, I am not saying this to score a party political point, but in an effort to analyse what is the Teal situation. The Government’s present actions do not seem to me to be as directly related to the root problem as were the proposals of the earlier budget. Take, for instance, this expedient of raising the interest rate on overdrafts. Are overdrafts an important factor in the present inflationary situation? If they are, then raising the interest rate to discourage overdrafts, provided it is sufficient to discourage them, is obviously a factor answering inflation. If overdrafts are not an important factor in the present situation, then this adjustment of the interest rate means very little.

The truth is that the private trading banks, over the last year, have lent very little by comparison with their advances in 1950-51 and 1952-53. At that time, their advances were of the order of £150,000,000 whereas, from November, 1954, to November, 1955, they totalled £60,000,000.

Mr Whitlam:

– Increased advances.


– New advances are increases, that is, t 3t advances ; and £60,000,000 in an economy with a national income of £4,000,000,000 is not a major factor. It is important to realize that the existing level of overdrafts is not new inflation. If I already owe the bank £10,000 and have done so for a number of years, and if I am paying interest on that money, that overdraft is not injecting new credit into the economy; it has already done so. If, on the other hand, I increase my overdraft from £10,000 to £12,000, it is the new advance that constitutes the new inflation. If I am already heavily in debt to the bank, it may raise the interest rates or it may try to force me to reduce my overdraft, buu that would not be a new inflationary factor. If we are speaking in particular of the landed interests - the farmers who have overdrafts - I doubt whether the raising of the interest rate will lead them to any considerable retraction of their overdrafts and to a reduction of their purchasing power by paying back their debts out of their earnings at a time when the prices obtained for agricultural products are falling. If they -were getting their maximum advances at a time when there was a wool boom, it is unlikely that they would be seeking major advances at the present time. So the raising of the interest rate, especially when the rise is very slight, is not, as was once believed by classical economists, a major weapon in countering inflation.

John Maynard Keynes once analysed the argument that to raise interest rates discouraged unsound investment. By analysing what happened following the raising of the interest rate in the United Kingdom during the ‘twenties, he d is.covered that the more irresponsible speculator who invested in luxury industries that returned a high rate of interest con: tinned to borrow, and that the direction of investment to the older, sounder and more stable industries was discouraged. If honorable members look at the rate of dividends that are paid in Australia to-day, they will note that the retail trade pays much higher dividends than do industries that are producing basic commodities like steel. In the steel industry, a manufacturer has a heavy obligation to re-invest in plant that might be colossally expensive, as in the case of the £39,000,000 plant that was opened recently. I do not believe that raising the interest rate hy 1 per cent, will discourage hirepurchase firms which make a much higher percentage of profit than the bank interest rate. It may discourage investment in certain struggling industries, but it i3 not a weapon of discrimination to encourage the things that we want to encourage, such as basic developmental works, and to discourage the things that we do not want to encourage. The Treasurer (Sir Arthur Fadden), in almost every budget speech that he has delivered, has stated that too much money is being invested in non-essential industries and that not enough investment and effort are going into essential industries. If we really want a weapon to direct investment, in the national interest, into the developmental industries, it must be the weapon of capital issues control. To raise the interest rate as an expedient is not an efficient weapon for the purpose that is sometimes suggested. I do not believe, therefore, that a reduction of imports is a weapon that may bo used to bring us back to real health. Secondly, I do not believe - not because the Government has proposed it, but for the reasons I have advanced - that raising the interest rate on overdrafts by 1 per cent, is a weapon to use in overcoming the kind of crisis that the Government says is before us.

The other proposals about which I wish to speak relate to indirect taxes. I am sorry that the Government, having diagnosed a condition of excess purchasing power in the country, has not imposed direct taxes such as additional income tax, which are the fairest form of taxes. Rather has it adopted the course of selecting certain trades that it possibly regards as being undesirable, and has placed on them an impost of Id. a nip, 2d. a glass and 3d. a packet. It seems to me to be rather a non sequitur to make a very deep diagnosis of the economic ills of the country, as did the Prime Minister, when he stated that our basic problem was the need to increase our output or reduce our demands, or both, and then to impose on the people an additional charge of Id. a nip, 2d. a glass and 3d. a packet. Let me say, to the credit of the Government, that to this degree its proposals are anti-inflationary, but I do not believe them to be the most antiinflationary proposals that could be advanced. The Government will raise additional revenue. To the degree that it uses that additional revenue to bridge the gap between what it raises in loans and what it spends on public works instead of using treasury-bills to bridge the gap, it will be adopting an antiinflationary measure; but to the degree that that becomes an impost on certain costs that are taken into account in the basic wage regimen and the C series index, the problem of inflation is aggravated.

Mr. Lawrence

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


– I listened with interest to the remarks of the honorable member for Fremantle (Mr. Beazley), and I think that the line of argument that he has taken in relation to the economic measures announced by the Prime Minister (Mr. Menzies) more or less fits into the argument that I had proposed to advance. During the course of the debate, far too much attention has been directed to the individual features of the measures that have been announced. Rather should that attention have been directed to the overall economic situation and to the best method by which the Government could deal with it. Therefore, I think it would be profitable at this late stage of the debate to examine once more the decisions with which the Government was faced. It seems to me that two obvious decisions were open to the Government. First, it was open to the Government to adopt a policy of optimism in the future of the country, to continue with a scheme of expansion and development, and to devote a considerable amount of revenue to the strengthening of the defence forces. We know that, by so doing, it would be permitting a continuance of the pressure of the inflationary forces that exist at the present time. We know, moreover, that, because of the very nature of our expansion, those pressures must and will continue to exist. But what is the alternative? I believe it is reasonable to say that the alternative would be to cut our suit according to our cloth and not only to reduce expenditure on governmental projects, but also to put a dampener on both the public and the private sides of the economy.

The Government has adopted the former policy, and history alone will reveal whether it has been right or wrong in so doing. It has stated that it will continue to adopt the policy of development, and that it has faced up to the responsibility that that policy imposes upon it. The measures that have been adopted - and I think that this statement fits in with the remarks of the honorable member for. Fremantle - are not measures of panic. Bather are they measures that have been adopted to try to adjust the circumstances of rapid expansion to the obvious existence of highly inflationary forces within the economy. I think that, looked at in those terms, having regard to the troubled state of the world to-day, and our obvious necessity to increase our population and strengthen our industrial economy and our commerce, it must be admitted that, by the use of this policy, we are probably playing just as important a part in strengthening our future security as we would be were we devoting our attention to purely defence measures as such - although both kinds of defence measures, direct and indirect, must naturally be correlated. At the same time, the Government has adopted certain fiscal and monetary policies that have been explained, not only in the statement now before us, but also by the measures that were taken during the last Parliament in regard to the restriction of imports that was considered necessary to restrain the forces of inflation from getting out of hand.

There is another consideration which ia sometimes lost sight of; that is, that we must provide from taxation revenue sufficient funds to bridge the gap between our capital works expenditure and the amount of money available from ordinary investment sources in the country to-day. I remind the House that a great portion of the finance required for capital works throughout Australia represents an obligation that the Federal Government has undertaken on behalf of the governments of the various States. Now, it could easily be argued by anybody who adopted a pessimistic view of the future that public works should be cut down, and I think that this Government has to some degree given a lead to other governments in Australia by its announcement of a 10 per cent, cut in its own capital works. I would carry that even further by saying that it seems to me also an obvious necessity, while the financial conditions in Australia are such that we have difficulty in attracting money to the loan market, that, as a corollary of that action, the Commonwealth should, in co-operation with the State governments, make another examination of the various projects under way, and planned, in the States, in order to arrive at a far more reasonable and realistic basis of priorities. The rapid expansion of our population and the necessity to overtake the backlog of works that fell into arrears during World War II. constitute a real problem, particularly for the State governments. Who, in this place, is to say whether it is a good or a bad thing that we should have more schools, more hospitals, better distribution of services and, with the growing housing problem, the building of houses and all the additional services that housing requires?

Mr Calwell:

– But it would be a good thing, would it not?


– Honorable members will realize the difficulty of trying to select from that list of items which ones should be cut out. I believe it can be done only through some form of cooperation between the various governments.

I have heard discussions here which reflect a certain amount of discredit on some honorable members. It has been said that the States are completely irresponsible in their financial measures. I am afraid I agree, to the extent that the system of uniform taxation adopted in Australia to-day, under which the Commonwealth raises money that is expended by the States, lends itself somewhat to the use, by the States, of money for ^purely political purposes. Without imputing any motives to anybody, I say that a sense of irresponsibility may creep into the disposal, within the State sphere, of funds that have been raised by this Parliament. However, whilst there are grounds for examining the whole of the State and Federal works programmes I, for one, would be loth to see any drastic cuts in those programmes at the moment. If we could get some basis for rationalization in relation to existing and future schemes I believe the immediate problem could be. solved.

During, the course of this debate, Opposition members have made some capital out of the question of interest rates and the difficulty in getting the public to invest in Commonwealth bonds. They point to the time during the war, and the immediate post-war period, when a Labour government was in office, and interest rates were strictly controlled. But I think it is reasonable for even the most one-eyed person to analyse that position and to realize that it was largely due to the patriotism of the Australian people that they were prepared to undergo, during the war period and the immediate post-war period, the strict regimentation that could be brought about by the fiscal measures that the government of the day was able to take. Everybody knows that during the war period we had such devices as capital issues control. We had the pegging of prices of shares on the stock exchange. We had a general restraint on interest rates. It was quite impossible for the ordinary private investor to break through those restrictions. That meant that the large bulk of the investing funds available from private and company sources was channelled into the one avenue of public loans. Times have changed and, I suppose, in a way, the results we are experiencing to-day reflect, to some degree, the reaction that comes from the action of the past. I would say that in this period of rising interest rates throughout the world it is unrealistic to try to persuade- our own population and, incidentally, investors from overseas to whom we might be looking for assistance with our problems, to accept a rate of interest out of keeping with world standards. Furthermore, a point brought out in the Prime Minister’s statement has reference to the responsibility of the lower rates of interest existing in Australia for the withdrawal of capital from this country to more attractive investment fields overseas. I know that if honorable gentlemen opposite were in control of the government they could put such restraints on the movement of capital that they could tie this thing up in about two minutes, and, admittedly, this Government has the power to do that if it wanted to; but I say that it would be to the great detriment of the future financial development of Australia if such measures were adopted at this time, when we know that we cannot provide sufficient money from our internal financial resources to continue with our development at the rate at which we desire to do so.

Another point made by the Opposition during the debate concerns the motor industry. My memory is not particularly long, but I seem to remember quite distinctly some most impassioned speeches made in this place by the Leader of the Opposition (Dr. Evatt) about the inequity of the Government’s assisting an organization like General Motors-Holden’s Limited. He made those speeches during the debate on either the last budget or the budget before last. So I think that that argument is of a purely political nature. Whilst I have no quarrel with the motor industry - in fact, I may be deemed to be a fair contributor to it-


– Not as much as those who have petrol-driven cars.


– A cross-thought has been introduced. I feel that the general public will realize that, to a certain extent, the motor vehicle is a luxury, and while it exists as a luxury, it must play its part in assisting in the solution of this immediate problem. So I hope that no great capital will be made out of that sort of argument.

In the course of the statement, reference was made to the particular treatment being given to primary industries. One remark that was made by the honorable member for Fremantle (Mr. Beazley) concerned the justice or injustice of a general rise in personal income tax. 1 feel that this is one direction in which the Government has adopted a wise policy. There has been no general rise in income tax because 6ne section of the community that would be hit hardest by it would bc those engaged in primary industry - those who are to-day mainly responsible for our ability to obtain overseas balances. So I think the House will agree that while there might be an argument for a general rise in income tax rates, the actual effect of it on the primary producing section of the community would be to retard the forces which alone are able, to-day, to provide overseas funds.

So I turn to the other point “that hai been made in this statement in connexion with the improvement of farms by the announcement of the extension of the 20 per cent, depreciation allowance. Having seen, at close quarters, the effect of these allowances in the building up of the capital value of farms throughout the parts of Australia that I know, 1 can assure the House that it has been of immense value in increasing the general wealth of the country, and it will have an even greater effect, I believe, in the future. In connexion with the overdraft rates, the farmer has just as much interest in the stability of the economy of Australia as any one else. I feel sure that even those who might be affected by the small rise in overdraft interest rates will be prepared to accept that it is a small price to pay if we can achieve a certain degree of stability in our overseas balances and in our internal price structure.

The honorable member for Darebin (Mr. R. W. Holt) made some mention of the plight of soldier settlers. I am afraid that the remarks he made were so much in the nature of a half-truth that I should try to correct the mind3 of honorable members on this subject. .He, if anybody, should know the condition of soldier settlers, particularly in the State in which he was a Minister concerned with soldier settlement. He knows, in fact, that on the major portion of the soldiers’ debt, that portion which concerns .the property, the interest remains fixed at 2 per cent. In actual fact, any rise in the interest rate would benefit a soldier settler by giving him a greater interest equity in his property. I admit that there is another side of the debt which may be affected. But the main’ debt for which the settler is responsible is subject to a fixed rate of interest, and I understand that this applies in the other States where the leasehold system persists. The leasehold rental is calculated on a low rate of interest basis.

I was not impressed with the remarks of the honorable member for Mackellar (Mr. Wentworth) about the kangaroo economy. I think that his imagination ran away with him when he thought of that magnificent Australian animal which takes a leap, consolidates slightly for a fractional moment, takes another leap and, in that manner, goes on its way at a great speed. I suggest that this period of rapid progress through which we are now passing may be represented as one of those fractional pauses when the kangaroo poises himself for his next spring.

Mr Turnbull:

– He is well balanced, too.


– He is well balanced on his tail. I should like to conclude with this remark. If we can proceed as successfully and as speedily as our national animal, with slight pauses for readjustment and consolidation, I believe that this country will go on to a great future.


.- I think that, at the outset, I should take up one of the last points made by the honorable member for Corangamite (Mr. Mackinnon). He considered that the motor car was, to some extent, a luxury. That one simple point outlines clearly the difference between the views of the people on this side of the House, and the people on the other side of the House. I do not accept the suggestion that was made by the honorable member for St. George (Mr. Graham) that we are attacking the integrity of the people opposite. But I do think that we can say that we attack the basis on which thenthoughts operate. We on this side of the House say that the technological advances of modern civilization should be available to every Australian and we believe that financial policy - and social policy should be directed to those ends. At this stage, to say that the motor car is a luxury is, I think, an anachronism. Such a statement will not bear analysis. What the honorable member for St. George believes is a little difficult to know, because he speaks about rationalizing public works at a time when not one constructive work has been started by this Government in six years. .

Now I should like to examine some of the C,000 words with which the Prime Minister held the nation enthralled last week. He used a lot of cliches. He said a lot of things which have been written in the language of economists. He said -

To achieve economic health, we must, clearly, increase our output, or reduce our demand, or both.

I am going to level my attack at his speech on the ground of simple logic. The actions that have taken place do not follow from the statements that have been made. I repeat the Prime Minister’s words -

To achieve economic health, we must, clearly, increase our output, or reduce our demand, or both.

Is there one single aspect of this programme which will increase the output of this country one iota ? Will one more Holden be turned out ? Will the proposals grow one more turnip? Will they make one sheep produce more wool? The Prime Minister said that we must reduce our demand, but later he based his statement on the financial measures ‘ of the Government on the fact that consumption will remain stable. He said that, consequently, the Government could estimate its revenue return. The Prime Minister said also -

An increase in national and individual output i« clearly essential to the raising of the material standards of living. What does increased output mean and involve? The answer is - greater productivity per unit. On the farms this means such things as sowing down and top dressing of pastures,” better subdivision and water supply . . .

We cannot sell the products of our farms now! The Government has had to appoint a Minister who is to start on a pilgrimage round the world in an effort to induce people to consume the commodi ties that we are already producing. A subsequent statement by the Prime Minister that “ increased productivity is of the essence “ is a contradiction of the policy that the Government has already embarked upon. One of the Prime Minister’s prettiest statements was about consumption. It was that any excess of demand over consumption gives increased inflationary pressures. Further on in his speech, he seemed to imply that quite a lot of us consumed too much - that the Bryants, the Smiths, the Browns, the Joneses and the Robinsons have too great a capacity to absorb the consumption goods in the community. This, I think is a fallacy. The people of this country are not suffering from too high a standard of living. The shops, the selling places and the markets of the country are full of goods, and the advertising columns of the newspapers are full of the notices of advertisers crying their wares. The shops of Melbourne are full of goods such as carpets and refrigerators, and it has been necessary to produce special hire-purchase systems in order to enable people to buy them. It is nonsense to suggest that the state in which this country finds itself has been produced by too great a capaciy on the part of the ordinary Australian citizen to buy things and put them in his home. I suggest that this document of 6,000 words will produce opposite effects. The Prime Minister said, “ Beer can plainly carry more taxation than it does “. I am not one of those who contribute a great deal to the profits of the breweries, but it seems to me a little illogical to single out one aspect of the community’s consumption in order to finance the ways and means of the Government. If we go right through the fifteen or sixteen pages of the Prime Minister’s statement, we find continual evidence that it is really a champion piece of word-spinning to explain the fact that the Government must have another £100,000,000 to spend. We do not mind more taxation if it results in greater productive capacity. If it is creative and constructive we are all for it: we will help the Government with it.

I think that we can summarize the objections of honorable members on this side of the House to the genera! nature of the document under a number of headings. We consider that the additional taxation imposed is inflationary. It will bring unearned increment to nonproducers - commercial houses, banks, and used-car dealers - but it will fail to demand equal effort, if effort is what is required, from rich and poor alike. It is arbitrary and capricious in its incidence and in the way in which it falls on the community generally. Moreover, the fact that it is indirect taxation only is unsound financially. We oppose it on those grounds. Let me deal first with our claim that the increase of taxes cannot defeat inflation and indeed will only accentuate it. The argument has been well outlined by honorable members on this side of the House. I was a little astonished when the Prime Minister, whose integrity is not attacked, but whose understanding of the use of the English language seems to be failing, said that he was going to defeat inflation with inflation. Webster gives a number of definitions of inflation. One is “distention” and another deals with “pomposity”, on which point I shall not elaborate. The relevant definition reads -

In accordance with the law of the quantity theory of money, inflation always produces a rise in the price level.

I understood from the general tenor of the debate, and the Government’s actions, that the budget was intended to counter inflation. I assumed that the Government meant that it intended to reduce the price level. It has been pointed out quite adequately this afternoon - for instance by the honorable member for Bendigo (Mr. Clarey) - that if we pump an extra 3d. into the price of petrol we are putting that money into the economy in such a way that it can never be taken out - certainly not as a result of anything that this Government is likely to do.

Dr Evatt:

– The Government claims that its inflation will counter inflation.


– That is so. If we reduce that argument to its fundamentals it goes like this: “We want to bring prices down. How do we do that? First of all, we put them up. This stops people from buying things. When they stop buying things the manufacturer will bring prices down in order to sell his goods again.” To the person at the receiving end, that is a rather involved argument. It will not hold water; it is illogical.

Honorable members opposite are very prone to use military metaphors to explain current situations. The Government is like a sergeant or a platoon commander drilling troops on the parade ground. Rather than issue an order to move to the right - of course, it would never be to the left - it would send out a squad to dig holes in the parade ground in front of them hoping that deviation of the troops would flow from their appreciation of the situation. Afterwards it would complain that there were holes in the parade ground. That is exactly what the Government is doing here. It is making holes in the economy. It is attacking the price structure and upsetting those whom it is always boasting are its particular care. It is upsetting people in their employment and in their business enterprises. It is not a matter that can be solved in the way in which the Government has set about it.

Secondly, an unearned increment is coming to a number of people who, no matter how laudable their activities may be, certainly cannot be ranked among the producers of the community. The situation of the banks is, I think, quite simple. The banks have made advances amounting to approximately £800,000,000. The increase of per cent, in the interest rate on that amount will produce about £4,000,000. The 1 per cent, increase in the rate on fixed deposits will cost something like £2,500,000. These figures are not denied. Even the company tax, which will impose an extra ls. in the £1 on the profits of the trading banks can only, on last year’s figures, produce £250,000 for the Government. Therefore, no matter how much one’s arithmetic may favour the trading banks, I cannot see how they can receive less than £1,000,000 of unearned increment.

Doubtless there are countless ways by which people who do not deserve to do so will gain from these changes, and those who deserve better will suffer. Let us consider the used-car industry. The average small used-car dealer keeps on his floor perhaps 20 or 25 cars of an average value of perhaps £500. I am informed by people who know that one cannot operate with fewer than that. That calls for a total capital of between £10,000 and £12,000. I am referring to the dealer who is in a small way and is merely making a living out of his business. I have been informed that already there has been a rise of approximately 10 per cent, in the used car market. In other words, the simple pronouncement by the Prime Minister on Wednesday night produced on the following morning to the small, average, used-car dealer, an unearned increment of about £1,000. He did not get it next morning, but he will do so over a. period of months. This has been one of the features of this supplementary budget

We oppose, as a general principle, the fact that the average consumer in the community will have to foot the bill to the same extent as those who can better afford to pay it. Graduated taxation, under which persons are taxed according to their ability to pay, is one of the basic concepts of our political viewpoint. Therefore, we oppose strongly the Government’s proposals. We believe that such things as beer, cigarettes, motor cars, cameras and wireless sets are normal consumption goods in an ordinary civilized community. We believe that those who buy them arc doing no moral damage to themselves so long as they do so in moderation. Certainly, the community as a whole does not frown on such purchases or question their morality.. I am sure that most Government supporters would not do so. However,, the Government has stepped into this -field and levied taxes on certain things that it chooses to call “ luxuries “, though they are merely the simple pleasures that go to make a. gracious and pleasant life.

I do- not restrict my criticism of the Government’s actions to its taxes on things such as beer and cigarettes, which have attracted public interest. Many of the other things on which there will now be an additional impost affect our way of life. It is interesting that on this occasion, so far as I have noticed, no Government supporter has claimed to be speaking this time for the Australian way of life. It is wrong to impose a tax on the man who is earning perhaps £15 a. week of the same amount as is imposed on the man who earns £50 a week. The consumption of such things as cigarettes by a man on £50 a week is generally at about the same level as that of the man of £15 a week. Therefore they will each be paying the same tax. The Government is- taking the money from the- community generally on a basis to which we are opposed. The Government’s action has been capricious. People in small businesses who sell some of the things on which extra taxation has been imposed have been badly hit by it. The first reaction is that people are restrained from buying those particular goods. That has not to happen for very many weeks before the small business man is harmed, financially. It is an off and on process. I agreed with the honorable member for Mackellar (Mr. Wentworth), for once, when he said that this was a kangaroo economy, hopping from, point to point.

We oppose the Government’s policy on several general grounds. We are opposed to an increase of indirect taxation. Once we write indirect taxation into our taxation policy there it must stay. By imposing indirect taxation, the Government is dodging the issue. If the Government must have money with which to run the country - we accept that it must - it should set about raising the money in a proper way. It should take the people into its confidence and raise the money that it requires either by taxation or by loans.

I believe that these proposals are based upon a false premise. The Government’ places a premium upon financial policy, but the basis upon which any government should operate is the basis of the social needs of human beings. The Government’s pronouncements during the past few years - it has shown no tendency to depart from them during the past few weeks - show that it takes money value, looks at trade graphs and then decides what shall happen t6 the human being. I believe that we should determine, first, the standard of living that is possible for the average Australian, bearing in mind the technological advances which will enable him to live a gracious life. We should mould our financial policy on the social needs of human beings, not on the estimates of financial experts.

If there is inflation, the Government’s policy will not deal with the root of the trouble. It is admitted, I think, that inflation is caused by rising prices. If we look very carefully at the document before us, we shall see that the Prime Minister almost admits that wages follow prices, that costs go up as profits go up. The problem facing the Government is the problem of redistributing the national income in such a way as to ensure that every person in Australia will attain the standard of living to which we all ought to be entitled.. Most of the members of the Government parties have said a great deal about the privilege of living in this country and about the advantages that we enjoy. One of them said that we had a start on other nations. Our objectives should be to make sure that we retain that start and give a higher standard of living to everybody.

It is a remarkable coincidence that the sum of money that the Government considers is desirable to take from the consumers in the community - that is, all of us - to defeat inflation is almost exactly the sum of money that it requires to meet a deficit caused by the failure of the loan market. I do not know whether I am being unkind, but it seems to me to be a little odd that all the eloquent reasons that have been advanced by the Government for raising more money are wrapped round that coincidence. I wonder whether it is a coincidence also that), after months of consideration, consultation and pleading, the Government’s proposals were not announced until the results of a couple of State elections were known.

My attack on the Government is based on its failure to adopt constructive and creative policies. The honorable member for Fremantle (Mr. Beazley) explained that, year after year,, the budget speech of the Treasurer has contained a reference to certain factors. Those factors have existed ever’ since the Government came into power, but nothing has been done about them. Each year, apparently, there are some- factors which prevent the Government from taking creative or constructive action. The result of the Government’s addiction to financial issues is that no constructive or creative works have been undertaken during its period of office. In the last six years, not one great undertaking has been embarked upon. Does the record of this Government contain anything like the Snowy

Mountains Scheme? I hope that the honorable member for St. George during his term in the Parliament, will be able to sponsor a work of the magnitude of that for which his predecessor was responsible. Does the record of this Government contain anything comparable with the creation o£ Trans-Australia Airlines, of which the present Minister for Air (Mr: Townley) is so proud? Can the Government claim that it has established an institution similar to the Australian National University?

Mr. ACTING DEPUTY SPEAKER (Mr. lawrence). - Order ! The honorable gentleman’3 time has expired.

Mr. WHEELER (Mitchell) [4.507.- In discussing the economic statement presented to the House, one finds ther is no joy for any section of the com inanity. But one despairs of the Labour party ever coming to accept the present financial position when one hear; the incessant cry for cheap money. I thought it was quite elementary that, in a time of inflation, interest rates must be subjected to an upward revision, but I find that in the federal capital there is a cry for reduced rates. Unfortunately, it seems that a political party in a State parliament does not always sing the same song as its counterpart in the Federal Parliament. In to-day’s issue of the Sydney Morning Herald there is an article headed, “Labour Premier Seeks Higher Loan Rate “. The article states -

The tabor Premier of Queensland, Mr. V. Gair, has asked the Federal Government to obtain the consent of the other States to allow the Brisbane City Council to raise a semigovernmental loan at 558 per cent.

The newspaper makes the following final comment -

The States will have to agree to a higher bond rate to make the new loan attractive under present conditions.

The whole trouble is that the Opposition will, not accept present conditions. The Government’s, proposals in relation to interest rates will not necessarily result in dear money. The fact is that, for a number of years, we have been living in an era of artificially cheap money, of which the present inflation is the inevitable consequence. By trying to finance the nation on artificially cheap money in a period of inflation, when the cost of everything else in the country is rising, we are not facing the facts. For a long time now, as a nation, we have been trying to take more out of the financial cookpot than we have been putting into it. That can end only in disaster.

I do not make these statements in the spirit of being wise after events. In fact, I dealt with the situation in an article which appeared in the Sydney Morning Herald in July, 1952. I did my best then to warn the people of the situation that was approaching. Those opinions, offered at that time, have proved, unfortunately, to be only too well-founded. That does not mean that I had second sight. I spoke simply from an experience of the bond market. The facts that I mentioned were evident to anybody with that experience. Human factors, as well as economic factors govern the bond market, but some of the economists who advise the Commonwealth Bank and the Treasury disregard human factors entirely. They do not seem to appreciate the importance of the human element.

A crucial step in dealing with the present situation in the bond market is to restore confidence in bonds. We want to secure new money,- but the raising of interest rates alone will not achieve that objective. Fifty years ago, the State savings bank in New South Wales paid 3-J per cent, interest on the savings of the people. The cut to 2 per cent, was a part of the socialists’ cheap money programme, which also prescribed a rate of about 3 per cent, for government loans. The rise that we are seeing now is not a return to dear money. It is a return to normal. There are times, of course, when cheap money is quite normal, but they are not times of expansion such as we are experiencing at present. Money is subject to the law of supply and demand. If we ignore that law, we shall be sure to have trouble. In times such as these, we can only get cheap money by constantly pumping more air into the economy by the copious issue of treasurybills. This is obviously a highly dangerous manner of combating inflation. One point which Labour advocates completely overlook is that, contrary to popular belief, the worker and the salary-earner are the principal lenders in this country.

The rich man, as a rule, is a borrower. He hopes to borrow money and employ his borrowed money to earn him more than he actually pays for it. Insurance companies, superannuation funds, provident funds, and savings banks are the principal lenders, particularly to governments, and their money, in the main, comes from people in the low and middle income groups.

Labour’s opposition to higher interest rates, therefore, would be hard to understand if Labour were really a workers’ party, but in point of fact it is a socialist party, and socialism needs cheap money to foster and finance government enterprise, and in the process it sacrifices the workers’ interests to this objective. Of course, I am aware that small, as well as large, owners of farms, businesses, and companies, as well as private individuals, borrow money providing they have the assets. Taking a short view, this section of the community - large or small - will be affected h-7 n. vise in interest rate.”. I personally r’o not like a situation in which the burden of any increase falls on those persons who are poorly equipped to shoulder it. but there are compensating gains in this situation. Credit restrictions and the shortage of money lately have made it impossible for people to borrow the money they want, and low bank overdraft rates have been something of a mockery. Often these persons have been forced to go to outside sources for accommodation, with the result that they pay very high rates of interest, probably double the prescribed rates. I think that this situation is well known to almost every honorable member. If the rise in official rates does nothing else, it will tend to attract money back to the legitimate banking system and thus increase the possibility of individuals and companies securing overdrafts.

The overriding thought, however, is that Australia’s policy of cheap money has been carried on through successive governments for a number of years, and we are now experiencing the natural consequences. People just will not save because it is not worth their while, and that is one of our basic problems. In the last decade, Australia has been made a paradise of spenders, and we are now faced with the problem of giving the thrifty some thought, because we need their help. This is the first course that Australia must adopt. It must give the thrifty a break. If we want people to save, we must treat them fairly. It is of no use to appeal to their patriotism, and at the same time to offer them a starvation rate of interest. At present the bond market has special problems of which we are all aware. Selling bonds is a business in which one of the most precious assets must be goodwill, but that goodwill has been seriously damaged. The bond rate has risen by stages to ii per cent., and there is every indication that it may rise further. Opponents of higher interest rates make much of the point that when rates have been raised, existing bonds at lower rates fall in price and the holders face capital losses if they sell them. The plight of those who subscribed to the 3-J per cent, loans is not to be passed over lightly. They are naturally resentful, particularly when they happen to be those persons who hoped that they were making’ some provision for the future, but now find that they are not only faced with capital loss if they sell, but also that their income is insufficient to keep pace with the rising cost of living.

This capital loss is not the whole cause of the trouble in the bond market, because interest rates were not raised until bonds became hard to sell and money itself became scarce. A means of meeting these victims, the holders of cheap money bonds, is difficult to suggest without upsetting the national economy. However, I repeat that confidence in bonds has been badly shaken and special steps are needed to restore it. A good deal of successful operation on the bond market is dependent upon the maintenance of a flexible interest rate to meet ruling conditions, but I offer a suggestion or two which, if accepted, might be helpful in restoring confidence. In the past I have advocated, as I still do, that one course we should adopt is to accept bonds from the estates of the original subscribers at their face value for payment of federal probate duty. “We should take this matter up with the States with a view to ensuring that they do likewise. I suggest that we might go still further and offer that, in the event of the death of the original subscribers, their estates may redeem the bonds up to a substantial amount for cash as soon as probate is granted. This may seem a form of life insurance, but it would enable holders to leave to their families a provision which would be of constant value. To restore bonds to popularity we must do some imaginative selling. We must depart from the traditional departmental attitude if we are to meet the market.

Although the Commonwealth is faced with a huge redemption programme of £873,500,000 over the next three years, it may be possible, concurrently with the general loan, to consider offering shortdated terms. Naturally, investors in time of uncertainty are wary of investing on a long-term basis, but they may be disposed to consider a short-term investment. In this connexion, I am advised from London that recently an issue was made there of £300,000,000 worth of 5 per cent, exchequer bonds payable in 1957, in effect a duration of twelve months, and a considerable proportion of this issue was taken up by governmental departments. Here in Australia, a large proportion of the deposits made with hire-purchase companies is short-dated, and the Commonwealth could well see what it can do to exploit this market. This may involve a revolution in treasury thinking and activities, but if the Government wants the money it will have to go after it.’ It will have to develop a market psychology and not rely on its unattractive form of loan prospectus, which in many cases is not readily understandable by a large section of the community. The short-dated money field was made attractive by war savings certificates, and it is now being used to advantage by the hire-purchase companies. If we lack the initiative to test this field ourselves, we should not cry if somebody else does so. It is of no use for the Commonwealth to indulge in the practice of beating its josses, when it might readily go out and do something for itself. The redemption programme is, no doubt, a formidable one, and we must retain the support of a large section of the people who subscribe their money in the first instance, if conversion operations are to be successful. I believe that we can do it, but only if there is a changed attitude in the official mind.

Further, I suggest two alterations of the means test which, although they are concerned primarily with the removal of injustices, may help the bond market. Pensioners who own their own homes do not suffer for that when assets are being assessed for the means test. However, many single people, widows, and widowers normally do not own their own homes. It is more natural for them to rent accommodation. I suggest that they are entitled to concessions similar to those given to pensioners who own their own homes. We could fairly allow them exemption from the means test for bond holdings up to a value equivalent to the average price of a- home. The second alteration concerns a condition of the means test that is unjust to the thrifty - the differential means test treatment of capital assets as compared with superannuation and other income. A full pension is paid to any one whose income from superannuation does not exceed £3 10s. a week. However, if a pensioner receives income from bonds, the rate of pension is reduced when the income from bonds exceeds about 4s. a week; that is, when the pensioner holds bonds of a face value of approximately £200 or £300. The pension disappears altogether when the income exceeds about 30s. a week; that is, when the pensioner holds bonds of a face value of approximately £1,750. As a pensioner cannot live on 30s. a week, obviously it is intended to force him to throw his bonds on the market, live on his capital until it is exhausted, and then apply for the pension. This is calculated not to help the bond market but to knock it. I suggest that we should ignore capital in assessing means, and assess only income, as is done in relation to pensioners who receive superannuation. In other words, there should be no reduction of the pension until the value of the bonds held is sufficient to earn an income of £3 10s. a week for a single person, or £7 a week for a married couple. I understand that this proposal, in some form, was advanced some time ago by Opposition members. I commend it, and suggest that it should receive the

Government’s consideration. All the suggestions that I have made have been advanced with one objective - to restore bonds to their traditional position as a repository of the savings of the people and as a ready and satisfactory means of making provision for the future.

Dir. EDMONDS (Herbert) [5.8].- When the Prime Minister (Mr. Menzies) made his statement on the Australian economy, he made it quite clear that the measures proposed by the Government were designed primarily not to collect increased taxes but to halt inflation and maintain Australia’s prosperity. On the following evening, I heard the Minister for Territories (Mr. Hasluck), in answer to an interjection made by an Opposition member, inquire whether Opposition members did not realize that we were dealing with an economic crisis. I and other Opposition members have been waiting for the- Treasurer (Sir Arthur Fadden) to express his view of the economic situation. So far, he has been conspicuous by his absence. I do not. know whether he will state his view, but, after this evening, he will not have an opportunity to do so for at least two weeks. After that time, most of the fire and venom will have died away. The Treasurer has an obligation, as the nation’s Treasurer, to state in this House exactly what his view is.

If the Government were honest - I say “ honest “ as distinct from “ sincere “ - it would have done in the last budget what it is doing now. Its present measures are precisely -the type that should be taken only by a Treasurer in his budget. Had the Government adopted these measures in its 1955-56 budget, it would have had to answer to the electorate at the general elections soon afterwards. The Government did not introduce these measures in the last budget, although, obviously, it knew that it would have to introduce them. Perhaps the Prime Minister will suggest that the position is worse now than it was before the genera] elections. 1 should like him or some other responsible spokesman for the Government to state whether the position is any worse now than it was when the Twenty-first Parliament went into recess before the general elections. If the position is no worse now, we are entitled to ask why the present measures were not made part of the Government’s election policy. Why did the Prime Minister not announce them to the people when he ~was seeking votes, and state precisely what would be done when the new Parliament was elected? He did not do so, and, therefore, I suggest that the Government has been dishonest.

Assuming that the Prime Minister honestly believes that what the Government is doing is the right thing for the economy, I take it that he considers that the additional indirect taxes will cause people to keep more money in the bank. If these measures do not have that effect, they will be of no use from the Prime Minister’s viewpoint. Surely the only inference one can draw from the Prime Minister’s statement is that he believes that a person who has saved sufficient money to buy a car costing £1,000 will now refrain from buying the car because he cannot get the additional money to pay the sales tax increase of £130, and will therefore keep his money in the bank. Surely the Prime Minister does not believe that. If the money is not spent on a car, it will be spent on something else. Likewise, does the Prime Minister suggest that the owner of a car will reduce his travelling because petrol is .going to cost an additional three pence a gallon? Does he suggest that the person who drinks beer and smokes cigarettes will drink less beer and smoke fewer cigarettes because the sales tax has been increased ? The Prime Minister suggested that these measures will have that effect and that, therefore, they will halt inflation and maintain prosperity. Of course he does not believe that any more than any other honorable member does. The House knows quite well that the only effect will be to increase the prices of the goods to which the increased sales tax applies, and that, provided the people, who pay the most in the final analysis, are able ‘to get the extra money, there will merely be more money in circulation in the community. Surely that is the position.

The honorable member for Werriwa (Mr. Whitlam), last evening, made the position perfectly clear, as he can always

Se expected to do. I do not want to parrot his words and take for myself credit for what I am about to say. I wish merely to repeat his statement that these measures will mean nothing to a person who does not drink, or who, if he does drink, drinks only brandy, who does not smoke, who owns his own home or who is already comfortably established in a business that does not depend on imports. Of course these measures will mean nothing to such a person. However, no consideration is given to the people who are unfortunate enough to drink beer and smoke cigarettes. I sometimes wish that I could talk on the subject of beer and cigarettes in the same tone and strain as the honorable member for Wills (Mr. Bryant) did in this House this afternoon. The fact of the matter is, of course, that these increased prices must be paid. 1 know that when we bring up matters of this kind we are accused of stirring up class hatred, but the fact remains that the poor old wage plug, who does not drink whisky because he cannot afford it, but who has a glass of beer, must pay an increased price, which in New South Wales amounts to an extra 2Jd. for a middy, as the glass is called. Let us assume that that person is fortunate enough to be able to take two glasses of beer at lunch-time and two on his way home from work. They will cost him an extra lOd. every day. The big business executive does not drink beer, because it is undignified for such persons to drink dirty beer. He drinks whisky instead, and if he has two whiskies at lunch-time and two on his way home, he has to pay only 4d. extra. It costs him an extra Id. for his beverage, whereas the worker, who drinks beer, must pay an extra 2£d. If the Government was intent on increasing the excise on liquor, it should have done so in an equitable fashion.

The Minister for Social Services (Mr. Roberton), who is sitting at the table, seems very eager to say something, so I shall now give him every opportunity to do so. The most interesting feature of the discussion of these proposals is the hypocritical attitude to them’ taken by members of the Australian Country party in this House. The honorable member for Hume (Mr. Anderson), in a twentyminute speech, consisting of what I would call rubbish, did find time to declare himself in regard to the matter of interest rates. I do not know whether he personally assumed the authority to speak for the Australian Country party, or whether the Treasurer (Sir Arthur Fadden), who has very conveniently kept out of this debate, deputed him to do the job in his stead. In any case, the honorable member for Hume said that he believed that it was all right to increase interest rates on overdrafts. I should like to be with the members of the Australian Country party when they go back to their electorates.

Mr Anderson:

– We have just been back.


– I should like to be with them when they admit that they voted in this House to increase overdraft interest rates. The honorable member has said that he has been back to his electorate, but I feel sure that he has not been among the people who will be affected by the proposal to increase interest rates. Of course, the people whom he saw last week-end are in a very happy position. It Would be interesting also to know what will happen when the members of this great hill-billy party go back to their constituents and say, “ By our own vote we increased the petrol tax’ by 3d. a gallon, resulting in increased revenue of £12,000,000 a year “. I suggest that they cannot justify their claim to represent the farming section of the community if they record such a vote in this chamber.

The members of the Australian country party will also be interested in this further matter to which I wish to refer. Recently, strong attacks were made on the Australian Workers union because the executives of that union had supported the shearers in their endeavour to retain a fair and just shearing rate. I can always understand the attitude adopted by members of the Liberal party. I have never tried to take from them the credit for doing a magnificent job for the people they represent, but the Australian Country party has never done a job for anybody. For a long time the people have recognized the Labour party as the true country party. It is, and always has been, the farmers’ party. The Labour party has always done the best work in the interests ‘of the farmers. Members of the Australian Country party rise in this House and attack men like Mr. Tom

Dougherty and Mr. Davis, who have led their union for years and have fought communism for years, and accuse them of being sponsored and enticed by Communists because they have backed the shearers in their strike.

If the Government wants to increase taxes, why does it not be honest and impose additional income tax, so that the person most able to bear the burden will bear it? Instead of doing that, the Government imposes the burden in an indirect way on people who are unable to bear it. A couple of years ago I went to Charleville.

Mr Bowden:

– What for?


– I went out to Charleville because I thought it would be interesting to see how these poor wool barons were faring. A two-day race meeting was held, which I attended. I saw these wool-growers at that meeting, these poor people on whom we must not impose additional tax, the fellows who get their whisky for an extra Id. while the workers must pay an extra 2d. I also saw horses that I believe could not be raced for 2 furlongs at Randwick without dropping dead, and the same wool-growers walking into the ring and betting £10,000 at a time on those horses. Tet we are told that we must not impose additional taxes on those people. Every part of the Prime Minister’s statement demonstrates the Government’s intention to attack the wage-plugs of Australia. Let the members of the Australian Country party go back to their electorates-

Mr Turnbull:

– We go back every week.


– I feel sure that when the honorable member goes back to Victoria to-morrow he will go to Flemington; he will not go near a farmer. If members of the Australian Country party can reconcile their claim to represent the farmer in this place with their agreement to an increase in overdraft interest rates, then there must be something radically wrong with them, or with the farmers, or with me, or with the lot of us. If those honorable members can go hack to their constituents and justify their votes in this House for an additional 3d. a gallon tax on petrol, then I do not know what their constituents require of Country party representatives in this chamber. The Prime Minister has said, in effect, “Do not get the idea that there is anything wrong. There is no crisis. All we are seeking to do is to maintain the prosperity that exists in the country “. The right honorable gentleman should be completely ashamed of himself, and so should every member of his Cabinet, because the trouble apparently is not in our internal economy, but in our external economy, as manifested by the deterioration of our overseas reserves. That seems to be the problem that faces the Government, despite the fact that in 1949 it inherited financial reserves in London of a higher amount than had ever previously been known. We know that the late Mr. Chifley left a very healthy bank-roll of London reserves, and we know that he amassed it because of his determination never to allow unlimited imports of nonessential goods to this country at the expense of our exportable goods. We also know that during this period when we became almost bankrupt overseas, Australia had been exporting goods which attracted the highest prices in the history of the country. We had been enjoying the best seasons we have ever experienced, and although we had all-time record, exports with all-time record prices, the Prime Minister finds himself compelled to come here and say that our overseas reserves are below the danger mark. In those circumstances, the Government stands condemned by its own action and by its own admissions in connexion with the overseas situation. Now, after all the willy nilly talk that has taken place in this Parliament about refusing to recognize red China, we find that commercial travellers are being sent over there looking for trade.

Mr Whitlam:

– Including the Prime Minister’s cousin.


– I hope he is able to do a good job, because I know that very healthy trade opportunities are offering. If this action had been taken before, perhaps the Prime Minister would not be in the invidious position in which he finds himself now. If the Prime Minister wanted to discriminate between the internal and external position, it was his duty to do so, I suppose he thought that he was not the only fish in the pond, and that he expected the Treasurer to come out at some stage and take over where he left off and tell the House and the nation what the Prime Minister had neglected to tell them. But the Treasurer did not tell us anything about those things.


– What did he tell us?


– I will tell the honorable member for Mallee (Mr. Turnbull) what he told us. He told us that because he had made such a holy “ mull “ of international trade, he had to re-impose import restrictions that should never have been taken off. Fancy going into a shop and paying 7s. for a quarter- lb. block of imported Swiss Chocolate!

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


– I rise to make a personal explanation.


– Order! Does the honorable member claim that he has been misrepresented?


– Yes. After I had said that I was going home at the weekend, the honorable member for Herbert (Mr. Edmonds) remarked, “ And when you go home, you will be at Flemington “. That is what I call a rotten insinuation. I thought the honorable member for Herbert had a higher mind, and thought on a higher plane than that.

Mr Edmonds:

– I shall have to make a personal explanation in a minute.


– I ask the honorable member to withdraw his remark because I regard it as being completely outside the scope of decent debate. I did not think that he would so demean himself.


.- Although the House may not be aware of it after hearing the speech delivered by the honorable member for Herbert (Mr. Edmonds), the matter before us at the moment is the economic statement that has been made by the Prime Minister (Mr. Menzies). Many years ago, I was taught that if one had a very weak case, it was good policy to wave the flag, bang the drums and make as much noise as one possibly could to distract people’s attention from the fact that the case was so very weak. It appears to me that this was the policy adopted by the honorable member for Herbert, for he spent a tremendous amount of time calling members of the Country party hypocrites and hillbillies, and saying that the Labour party was the true country party and that the farmer realized that the Labour party was the true country party. If that is a fact, I am surprised that the Labour party has not greater numbers in the House. I am also surprised that Labour happens to be the Opposition, and has been so since 1949.

The honorable member for Herbert also spoke about the difficulty that was confronting the man on the land, in connexion with increased interest rates. Actually, his. statement is not correct. He said he “bad seen graziers and other people putting £10,000 on horses that would have run dead - whatever that term means - at Randwick in a very short space of time. It appears to me to be a complete contradiction of the statement made by the honorable member about the difficult position of the man on the land and, indeed, a complete contradiction of hi3 speech generally.

I was extremely disappointed at the speech delivered by the Leader of the Opposition (Dr. Evatt). In our democratic system of government, we expect a leader’ of an opposition to’ put forward concrete proposals in any debate in which there is criticism of proposals submitted by the Government. I am afraid that during the whole of his speech,, the Leader of the Opposition was concerned mainly with attacking the private banks. He laid great stress upon how terrible these private banks are and what they are going- to do. On three occasions, the honorable member for Macquarie (Mr. Luchetti) made interjections in reference to primary producers. Except for those three interjections, and the right honorable gentleman’s replies to them, there are only slight and passing references to the primary producer in the speech of the Leader of the Opposition.

Mr Failes:

– He forgot all about them.


– As my friend and colleague, the honorable member for

Lawson (Mr. Failes) has said, the Leader of the Opposition evidently forgot all about them.

I wish now to make my position perfectly clear, in view of the fact that the Leader of the Opposition said that this amendment, moved by the Labour party, would give the honorable member for Lyne and other members of the Australian Country party an opportunity to show where they stood. It will be remembered that in another debate in this House I stated that I opposed an increase in interest rates because it would place an added burden upon the primary producer. I still take that stand, but the Prime Minister said in his statement that the agreement which had been made with the banks was such that the primary producer would not be saddled with an increased interest rate. In my experience with banks - and it has been an experience on the wrong side of the ledger for a great number of years - the banks have not been the ogres that the Labour party would have us believe they are. I do not think I am being unduly optimistic when I say that I am firmly convinced that the banks will play ball with the Government on this matter, and that the primary industries of the country, and those things connected with primary producers, will receive the benefit of the lower interest rate. The Prime Minister said he would see that this was done.

I can understand the doubts in the. minds of members of the Opposition because, if we are to judge from events within their party over the last few years, they do not seem to be able to trust anybody. I can appreciate that they would not be able to bring themselves to trust even some of the outstanding leaders of industry and commerce in this country. Not being placed in that position - and I do not think I am being naive in this matter - I repeat that I have faith that the banks will play ball with us in this matter, and that the primary producer will not be placed at a disadvantage in connexion with it.

Much was said about the finance that was raised by the Labour party during the war, and a great deal has been said about the wonderful things that were done in those circumstances. I think it should be emphasized - and I recollect having said, this once before in this House - that there were two principal reasons why loans could be raised with, very little trouble in war-time. The first was because of the patriotism of the people of this Commonwealth, who endeavoured to give the support they felt was needed to the men of the fighting services. That support was forthcoming, and we have no doubt that if in the future it is needed again, it will be once more forthcoming. The second point is that there were not the avenues for investment during war-time that exist during peacetime.

Mr Beale:

– There was also control of prices and wage-pegging.


– As the Minister for Supply (Mr. Beale) has said, prices control and wage-pegging were other factors which operated. The other matter that was mentioned was the rapid decline of our overseas trade balance. This has caused, a good deal of concern, but again there are certain matters that must be considered. The first, of course, is that with more spending power in the hands of the public of Australia, there is more purchasing power in relation to things which’ we import from overseas. Then, with the increase of production costs, we are confronted with difficulties in finding overseas markets. These two factors, taken together, brought about the decline of our overseas trade balance-. The Leader of the Opposition referred to the need for co-operation with the State Premiers. He said -

The fact is that the Government has run away completely from the problem of hire purchase. We agree with hire purchase. We want it to be encouraged, but we insist that the rate of interest should be lower. One pro- *posal which could be adopted if the Government were really genuine about it would be that of asking the States for the power to deal with interest rates generally, not continuing to he limited by the power that the Commonwealth already has.

Mr Ward:

– I rise to order. Is the honorable member in order in quoting from Hansard of the current session ?


– Under Standing Order 73, the- honorable member is perfectly in order.


– The honorable member for East Sydney (Mr. Ward) has been a member of this House for long enough to know that it is permissible for an honorable member to quote from a report of a speech that is relevant to a debate. The right honorable member for Barton continued - 1 think that that additional power, if sought from the States-

Of course, the honorable member for East Sydney may not think that this is relevant to the debate, although it was said by his leader - would undoubtedly bc given. If the .States would not give it, an appeal ‘could be made by this Parliament to the people for that power and whatever other powers are necessary to deal with the present inflation.

We agree that hire-purchase transactions are aggravating the economic ill’s of this country, but as the right honorable gentleman pointed out, the State Parliaments alone have legislative power to deal with interest rates and other matters pertaining to hire purchase; Therefore, the State Premiers should be called into consultation on the matter. Why did not they themselves take action at an earlier stage? As we were told by a Minister the other night, one State Premier even reduced hire-purchase deposits.

I said earlier that I was opposed to increased interest rates but that, according to the statement that we are debating, interest rates in respect of loans to primary producers would not be increased. Another reason why I, as well as other members of the Australian Country party, support the Prime Minister’s statement on the economy is that the special depreciation allowance of 20 per cent, for primary producers will be extended for three years from the 30th lune next. This allowance has been of tremendous benefit to the primary producers who have purchased plant, machinery and equipment to carry out structural improvements on, their properties, including fencing and the building of barns and various other buildings.

I come now to the additional tax on petrol. I should like to see a greater amount than £4,000,000 made available for roads purposes from the expected additional yield from the petrol tax. I do not think that the additional amount- to be distributed to the States out of petrol tax revenue should be disbursed according to the present formula, because a considerable expenditure on the roads is needed in both New South Wales and Victoria, and it has been pointed out that the Queensland authorities have been unable to spend on the roads of that State all of the money that they have received for that purpose.

From time to time, I have expressed concern in this House in relation to our, primary production, which is the foundation of the economy of this nation. A considerable increase has been achieved in secondary production, and we can be proud of the development and progress that has occurred in primary production. We should remember that if we reduce the potential of our primary production we shall undermine the economic security of this land. Statistics show that the incomes of primary producers have decreased in recent years.

At the present time, due to the abnormally bad weather that we have experienced during the last three months, the man on the land is facing great difficulty. Every consideration should he given to providing him with money to repair flood damage. It is true that certain Commonwealth and State assistance is being provided, but I think that further assistance should be provided to our primary producers in the form of special loans to enable them to repair damage caused by floods, to purchase seed, and to defray other necessary expenditure. For the reasons I have stated, although I am not completely happy about the action that has been taken by the Government, I believe that it has been taken in an effort to stop the inflationary spiral which, if allowed to continue, would have serious consequences on all sections of the community.

Mr. HAYLEN (Parkes) 5A±’.- I wish to speak to the amendment that has been moved by the honorable member for Melbourne Ports (Mr. Crean), but first I should like to say something about the remarks that have been made by the honorable member for Lyne (Mr. Lucock). It appears to me that if there is one party in this House which should not be in complete accord with the Prime

Minister’s (Mr. Menzies) statement, it is the Australian Country party. Having decided to support the right honorable gentleman, the members of that party have to see it through, and they hope that, from the point of view of the people whom they represent in this House, time will be a great healer.

The Australian Labour party is uncompromisingly opposed to the whole of the financial statement. Its major point of attack is in relation to the increase of interest rates. This issue is vital to the Labour party, and we are prepared to engage in a fight to the finish on it. As members of the Australian Country party have been talking about horses and race meetings, I intend to speak about toreadors.

Mr Lucock:

– I rise to order. The honorable member for Parkes (Mr. Haylen) says that members of the Australian Country party have been talking about racing and horses. That is not true.


– If the honorable member is worried about horses, I shall withdraw that statement. Anyway, there was not much point in it. However, he has a few explanations to make to the House, because his form - we are still talking about political horses, at any rate - has changed dramatically over the last few days. Last week, when dealing with the interest rates, he was like a lion in the House. On behalf of the Australian Country party, he mouthed the old slogan, “We, as custodians of the primary producers, will watch this situation. Any one who suggests that higher interest rates will be imposed upon the primary producer shall not pass “. Now that the decision has been made, he is a much tamer and much more humble man and, after having listened very carefully to his remarks to-day, I note that he is prepared to eat his words. If that is the position of Australian Country party members generally, they will be in for a good deal of trouble, because, following a downward trend in world trade, the primary producer is in need of sympathetic consideration. When the primary producer starts to feel the impact of falling prices the whole nation feels it. We have been told often enough, with great eloquence and at great length, by members of the Australian Country party that they are the backbone of the people. I quite agree with that statement.


– Hear, hear !


– Why does the honorable member for Hume (Mr. Anderson) not show a bit of backbone to-day in regard to interest rates ? There is nothing wrong with the physical courage of the honorable member, but his political courage makes me think that his wishbone is where his backbone is. The honorable member for Lyne made another remarkable statement in regard to interest rates, and this is a horrible picture. He said that the Prime Minister was prepared ro play ball with the banks. I have a vivid imagination, and I can imagine how crucial that would be for the Australian people. Is there any question of a deal between them in order, first, to save the Australian Country party from its responsibility towards the electors? The suggestion of playing ball or of reaching an underground arrangement is a strange and abhorrent thing to hear from the lips of the honorable member for Lyne. Ha further said, in effect. “You may rest assured that the Australian Country party is equally assured that the new interest rate will not affect the primary producer “. Of course, we have only a vague and sectional statement in support of that suggestion. If sacrifices are to be demanded, let . them be general. If as statistics show, primary producers hold one-quarter of the total amount of overdrafts held by the community, which is approximately £200,000,000, and if they are to be miraculously preserved from having to bear their share of the interest rate, that will be a pretty raw deal for Australians generally. What will happen to the other three-quarters of the overdrafts - the overdrafts of small businessmen and, in particular, nf persons buying houses? What a horrible trick it would be to impose two different rates of interest, if we can believe the prognostications of the honorable member for Lyne, who is a man of veracity.

Dr Evatt:

– But. the new rate will apply to businessmen in the country.


– Of course it will. Overdrafts that are not employed in primary production are being used by struggling Australians who are in debt to the banks. It is not a good thing for any man to be in debt to the banks, but to have a special interest rate imposed on certain sections of the community so that there may be some miraculous escape for the farmer - there may be reasons why it should be so - is something of which the Australian Country party should be ashamed. Members of that party should rise and be counted on this issue, although there are not enough of them in the House at the moment to be counted. The oracle has gone to Karachi, and the Treasurer (Sir Arthur Fadden) dare not come into the chamber. In fact, he has not been in here for more than 10 minutes, other than at question time, since the financial statement was delivered.

Mr Hulme:

– That is entirely wrong.


– Well, I have not seen the right honorable gentleman. If he has been here, I stand corrected. At any rate, he has not been in here very often.

Mr Hulme:

– The honorable member has no right to make that kind of comment.


– He is not here all the time himself.


– That may be so, but I am here now. The Treasurer has seldom been in the House since the Prime Minister presented his statement. We know that he has a very extensive portfolio to administer, but surely at some stage of the game, when a statement of such vital importance to the Australian people is being debated, the Prime Minister or the Treasurer should be in the Mouse. Let me return to the point that I was making. When the honorable member for Lyne blandly tells us that nothing will happen to the primary producers; that he has the ear of the Prime Minister and he knows it will be all right, does he realize that the rest of the Australian people must suffer a heavier impost?

Dr Evatt:

– The banks have not said that primary producers will be exempt from the higher rates.


– No, the banks have not said so. The honorable member for Lyne is believing fairy tales if he believes that that will happen. However, if it were so, the horrible fact is that interest rates on overdrafts not held by primary producers would have to be increased proportionately, because the total amount of interest on overdrafts would be the same as if the primary producers were bearing their share. As I have stated before, the Country party is in a dilemma. It is not of much use for it to pontificate and announce that it stands behind the primary producers when, having failed to obtain an advantage for them, ii does nothing at all. The proposal to increase interest rates goes far deeper than the question of how it will affect the farmer. What it will mean to the banks has been made abundantly clear. The honorable member for Melbourne Ports is a man who, when dealing with financial matters, is prone to understate the position, and honorable members may rest assured that, when presenting figures to his leader or to the House, he errs on the side of caution. When he says that the banks will obtain a rake-off of £1,250,000, honorable members may rest assured that the figure is closer to £2,000,000.


– That is denied by the Prime Minister.


– I know that, but the Prime Minister has spent many hours outside the House denying what he has said inside it. so how much reliance can we place on such a denial? He is in a state of jitters because his statement did not go over as he thought it would. Is the Minister for Supply (Mr. Beale) suggesting that the banks will be so amenable as to say, “We will be most careful. We will sit day and night studying the situation to see how we can avoid making money out of these proposals ? “

Mr Beale:

– The hanks will make no profit out of them at all.


– That remains to be seen. That statement can he tried in the crucible of experience as can the statement about the farmers not having to pay the higher interest rates. Despite the rejoinder and the disclaimer of the Minister, a very big question mark hangs over both those statements. The proposal certainly means a rake-off for the banks. What will it mean to the bondholder? As the Leader of the Opposition (Dr. Evatt) has indicated - and these remarks hear closely on the amendment that has been submitted - we have before us the tragedy that befell the small investor in 1951-52 when rates went up. Bonds that attract a lower rate of interest become a drug on the market. Why should the patriotic bondholders become the playthings of the jobbers on the stock market? If we look back at the history of the war effort, we observe that quite a number of people whose sons were fighting at the front, and who played their part by investing in war savings certificates and later in war loans, were brought into a field of investment about which they knew nothing, hut into which they were guided by the publicity and appeals of the government of the day. How have we repaid those people? One of the most disgraceful episodes in the history of the Treasury concerns the 3£ per cent. bond. Every honorable member can tell a story, characteristic of which would he the story of a little lady conducting a corner store whose two boys fought in Malaya and invested their deferred pay in bonds. When, because of sickness or of the disposition of her finances, she sought to cash the bonds, she was offered £13 less than their value of £100. These people are not traffickers in bonds. They are not keen business people, or people with any knowledge of the business world, hut they have a simple faith in the government of the day. They have been badly let down by the trend of events, not so much because of the actions of the Government - I would not suggest that - but because of things that have happened, particularly in relation to the 3£ per cent, bond issue which was referred to by the Leader of the Opposition (Dr. Evatt) in his statement regarding the interest side of the financial proposals.

Under this financial plan we are going to make confusion worse confounded in regard to the bond issue. The particular feeling of the Australian Labour party in this matter is: How are the little people who have joined in this attempt to assist, and who have subscribed to loans, going to fare? Never again, come trouble, will the Government have them as subscribers without some anxiety and trepidation, because they have been brought into a field of investment which is foreign to the ordinary worker and his wife, the man with a little- money. He usually leaves his money in the savings hank; but he was induced, by various forms of publicity, to do otherwise, and he has been the victim of the jobber on the stock exchange. “ Mr. ACTING DEPUTY SPEAKER. - - Order ! The honorable member is dodging the interest questions raised by the statement of the Prime Minister.


– But I am dealing with interest on. bonds.


– Order! A general debate on bonds is not in order.


– 1£ you will not allow ma to- proceed,. Mr. Acting Deputy Speaker, will you let me conclude with a statement in regard to those poorer members of the community who have subscribed to bonds in the past? They should watch very closely their assets in the future because of this action of the Government. To return to interest rates, if, as the honorable member for Lyne says - and he is the oracle in this matter - there is going to be special consideration for special people, what’ of the homeowner? Is it not obvious now that the highest rate of interest is going to be on securities, or on mortgages, or on anything that the banks handle, which matures over a long term of years? For instance, we may rest assured that the highest rate of interest will be charged on 35-year housing loans. I hope that the Minister for Supply (Mr. Beale) will not tell me that the Prime Minister has made another disclaimer, because if he has done so, I shall not be able to cope with it. It is pretty obvious that the interest rate will apply in that way. Therefore; do not let us talk about prosperity when we look at this position. Rather should the Government read this economic statement and be ashamed.

The man who is struggling to-day to acquire a house or to get finance for a home has a strenuous job indeed; but having achieved it, and having started to pay off his £3,000, we have assessed that the increased interest will amount to an impost on him of lis. 6d. a week. In the face of that, the Government speaks of pegged wages and the responsibility of the worker in these matters. It looks as though the operative word, from start to finish of this statement, is “ interest “.

The question of what is done temporarily - and I say this only in passing, sir - in regard to the tax on beer, whisky and petrol, is grievous enough, but the really serious thing is the raising of the interest rate, because besides giving the banks a chance for a rake-off, and besides excluding certain people, it will come down, in the finish, to the one least able to bear it having to carry the heaviest burden of interest. And if events turn out as we fear they will, so that the householder has his rent increased by lis. 6d. a week, while every effort is made to bold him in the vice of delay and evasion in the Arbitration Court, what kind of a co-operative national effort can the Government expect from the worker ? The worker begins by listening to the broadcast of the parliamentary proceedings; then he begins to read the financial statement for his own protection. He sees the skin game tactics and how they are being used against him.. Naturally, he is not going to have a wholesome feeling of participating in a great drive to restore our prosperity when he knows that, in most cases, he is so obviously the bunny.

Sitting suspended from 6 to 8 p.m.


– Before the sitting was suspended, I was summing up my arguments in relation to the amendment. I was pointing out that the vital nature of the amendment was the proposition that the Australian Labour party stood for cheap money, and that the interest rate was vital in regard to the whole of Labour’s policy and philosophy, because upon it depended the future of full employment and the development of the country. The Government has thrown down the gauge to the Australian people. Fresh from an election in which this matter was mentioned merely in passing, the Government hopes that three years will be sufficient time to blunt the impact of this assault on the economy. The mind of the general public is forgetful, and the

Government is hoping to get away with it. I have drawn attention to the dilemma of the Australian Country party, as brought to light by several of its members in regard to interest rates, which is a burning and vital question to the Australian Country party and will have a great impact on its future in this House. Its notorious habit of rail sitting and waiting for opportunity to come its way has been eliminated by the action of one of the members of the coalition, and it must stand or fall by its decision regarding the interest rate. Prior to the statement being made by the Prime Minister, members of the Australian Country party were valiant and aggressive in their party room, ‘and at joint party meetings in their opposition to any increase in the interest rate. It was a case of “ in like a lion and out like a lamb “. The speeches of Australian Country party members have been extremely moderate, almost diffident and apologetic in circumstances in which, for once, they ought to stand up and make a valid contribution on this matter.

I have also referred to overdrafts as they will be employed through the various overdraft debts of the nation. The honorable member for Lyne (Mr. Lucock) said, with some authority I take it, that there had been an arrangement whereby rural interests would not suffer any increased interest rate.

Mr Brand:

– That is tedious repetition.


– I had to mention that for the sake of informing the honorable member for Wide Bay (Mr. Brand), who surely can take a good dose of useful advice. If the Government increases the interest rate, it is obvious that the result will seep down through the economy until those least able to bear it will be affected. I refer to the small businessman in the country as well as the city; the contractor who builds the roads in the country; the whole economy outside rural activity itself; the small businessman in the city and, finally, drastically and dramatically, the home owner.


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


.- To-night,. I wish to say something about a subject which was not dealt with to any great extent by the Prime Minister (Mr.. Menzies) (in hie economic statement.. Policy in relation to this subject which has received the support of both sides of the House was first implemented by the honorable member for Melbourne (Mr, Calwell) when he was Minister for Immigration and it has been continued by thisGovernment. This is a subject which I feel has not been criticized to any great extent in the House, but nevertheless from time to time has received some element of criticism. In the public press, and in the public mind, generally, there is an impression that immigration, which has proceeded since the war, is one of the fundamental causes of inflation as we have it in Australia at the present time. I want to give some information to the House which may indicate to honorable members that immigration is not the inflationary force that some people are inclined to suggest that it is.

Quite recently, there was a suggestion that a recent meeting of the Immigration Planning Council made a recommendation to the Government that there should be an immediate reduction in immigration. I want, in the first place, to read a resolution of the Immigration Planning Council so that every honorable member and the public will be aware of what that recommendation was and what the view of the Council is. The resolution reads as follows : -

The Immigration Planning Council considered the immigration programme as projected through 1956-57. The Council is aware that there has been some suggestion that a reducation in the Immigration programme would contribute to the solution of present problems related to incipient inflation and balance of payments. The Council does not support this view. It emphasizes, moreover, that even if it were correct, the counter arguments in terms of increasing work force, increased security, improvements in production of basic materials, advance in development, &c, are at least equally strong and do not always appear to receive equal consideration. The organization of migration is a complicated business involving long-term arrangements with foreign governments, planned selection usually long ahead of movement. Migration at its present rate is working smoothly and should in the view of the Council increase as circumstances permit to reach the population targets previously endorsed by the Council. The

Council is strongly of the view that notwithstanding criticism on economic grounds it would have serious effect both short and long term if further intakes were to be reduced by executive decision below the current figures. The Council therefore resolves that the current intake should be maintained throughout 1956-57 and that its resolution should be transmitted to the Minister.

I feel that the resolution makes perfectly clear to everybody the attitude of the Immigration Planning Council. Now, perhaps, in support of the view of the council, I can place before the House some of the facts concerning the contribution that immigrants have made to the development of Australia since the war. It is mentioned that we will receive into Australia in this current year 125,000 immigrants. I think, perhaps, there are occasions when it is better to think in terms of not intake and, in this year, the net intake will be 90,000. If we compare that figure with what has happened in previous years, we find that it is a 10 per cent, reduction on the average intake over the past seven years. Therefore, I would say that if immigration contributes in any degree to inflation, then it is the intake of past years which has made the contribution, and not the present flow of immigrants to Australia.

May I also refer to the contribution to the work force in Australia? In the first place, I shall point to the percentage of immigrant workers to the total number of immigrants and show that it is higher than it is in the Australian population generally. There are 108.5 workers amongst our immigrants for every 100 immigrant dependants. In the general Australian population, there are only 68.6 workers for every 100 dependants. So I think that honorable members will easily see that, in relation to the Australian population generally, the immigrants are an anti-inflationary fore© rather than an inflationary force. The percentage of actual workers among them is much higher than among the general community. If we examine the situation in regard to skilled workers we find that of every 1,000 immigrants, 268 are skilled workers, whereas in the general workforce in Australia only .161 out of each 1,000 are skilled.


– What is the honorable member’s authority for that statement?


– My authority is the statisticians who prepare figures in relation to the Commonwealth. The immigrants are making a considerable contribution to production. It is impossible to deal with all branches of industry, but the first I shall mention is housing. From time to time, the effect of migration on Australia’s housing problem has been violently criticized in some quarters. In 1954-55, 81,600 houses and flats were completed in Australia. Of that number - speaking in round figures - 37,000 were supplied to meet new local demands, including those arising out of marriages among immigrants. Twenty thousand were allotted to immigrant families, and the balance of 24,000 represented the reduction of the shortage in housing since the end of the war. Five years ago, it was estimated that the shortage of homes in Australia was 250,000. It has been estimated, also, that in the past five years that shortage has been overtaken to the extent of 50 per cent. Immigrant labour employed in the building industry represents 42 per cent, of the work-force. If honorable members compare the number of homes required for immigrants with the total number of homes completed, they will see that the immigrants are occupying only 25 per cent, of the homes that .are built annually. Consequently, 17 per cent, of homes available for all sections of the community can be credited to immigrant workers. As an answer to the charge that immigration has an inflationary effect - which I deny - we must place on record the fact that a substantial contribution has been made by immigrants towards meeting an obvious requirement in the community.

Immigrants are employed in other industries also. In those ancillary industries related to home-building, such as brick and tile manufacture, asbestossheet production, saw-milling, and so on, the work forces contain a substantial percentage of immigrants. The production of steel is a heavy basic industry in Australia, and since the war the shortage of steel and steel products has been keenly felt. However, in the past five years, steel production has increased by 83 per cent., or 900,000 tons. In that industry 73 per cent, of the additional employees are immigrants, who have, therefore, made a substantial contribution to the output of this valuable commodity. Imported steel costs £80 a ton, and to purchase 900,000 tons at that price would involve an expenditure of £72,000,000. That is approximately the figure by which the Australian Government is trying to reduce imports at this time. The cost of producing a ton of steel in Australia is £44. Therefore, each ton that is produced in Australia represents a saving of £36. If that saving is applied to the extra 900,000 tons produced in Australia, it is seen that Australia has been saved uo less a sum than £32,000,000. I cannot imagine any one suggesting that a saving of that magnitude is a contribution to inflation. It is important that honorable members and the public should be made aware of these figures so that they may rightly assess .the value of the criticisms that have been directed against our immigration policy.

In the motor vehicle industry, a large proportion of immigrant labour is employed. Of the 250,000 cars registered in Australia last year., no fewer than 130,000 were manufactured in Australia, largely by immigrant labour. The oil refineries that have been established in Western Australia, Victoria and New South Wales also employ a large percentage of immigrant labour. In the rural industries, particularly those of a seasonal nature such as fruit-picking, cane-cutting, &c, immigrants have made a tremendous contribution. They have played a major part in the production of farm equipment, which has enabled the Australian farmer to produce much more in relation to the number of persons occupied in rural industries. All these facts emphasize that in many respects immigration is a protection against the greater inflation which could prevail in Australia.

What would be the effect of curtailing the immigration programme? First of all, a curtailment could not be effective for a considerable time. Honorable members will appreciate that a long while elapses from the time a European migrant lodges his application and is selected, screened and medically examined, and has all the formalities completed so that he can come to Australia. It takes almost six months, and in many cases nine or twelve months, before he sets foot in this country. Consequently., if the immigration programme were reduced at this point of time it would be a .long while before the effect was felt.

The second factor is that the cutting of the programme destroys the confidence of prospective migrants. At the present time an enormous number of inquiries are being made in European countries about .migration to Australia. If it were to be suggested that there were economic difficulties, or some economic instability, in Australia,’ there would be a substantial dropping-off in such inquiries. People would feel that perhaps Australia was not the place that they had been led to believe it was, and should we subsequently decide to increase the programme again, it would be a long time before we could rebuild confidence in Australia and re-awaken a desire to migrate to this country.

The third point is that a reduction of an intake of immigrants would affect considerably the attitude of other governments. Since the end of the displaced persons scheme, we have entered into immigration agreements with many of the governments of Europe and they have considerably assisted our immigration programme. If we cut that programme, we would destroy the confidence of those governments, and they would, perhaps, be more inclined to support Canada’s immigration programme.

Perhaps I could summarize what I have been saying about immigration in this way: We must consider the mobility of migrants. It will be appreciated that we are able to send them to various parts of Australia. They are preoccupied with material success. There is a high proportion of skilled tradesmen among them, and they save much more than does the average Australian. Surely these things indicate their tremendous value in relation to population, production and security.

T have only a moment or two in which to complete my remarks. I do not share the view that immigration is substantially inflationary in effect. I believe that what I have said to-night may indicate to honorable members that immigration, instead of being inflationary, is, at very many points, anti-inflationary. I support, whole-heartedly, the resolution agreed to by the planning council only a few days ago, and sent on to the Minister for Immigration. I hope that honorable members will support that resolution and that it will not be very long before we cease to speak in terms of cutting the immigration programme and speak, . instead, of increasing it, because of its great benefit to Australia.

East Sydney

.- One point upon which we can agree with the Government is that we are facing a grave economic situation. Having made that statement, I part company with the Government “because while it is true that, to a minor degree, our present situation is attributable to circumstances over which no one in this country has any control, this Government has, as a result of mismanagement, largely contributed to and accentuated our problem. The situation is not surprising because this Government claims to be a free enterprise government, and a free enterprise government is a capitalist government. Tt believes in the capitalist system and any one who believes in that system must recognize that inherent in it is the cycle of boom and then depression. Having passed through a boom period, we are now entering a depression period. Therefore, we want to criticize this Government for the mismanagement that has accentuated our present difficulties.

The Menzies Government has been fortunate. When it assumed office there was an abundance of overseas reserves, which had been built up by the prudent and wise administration of the Government led by the late Ben Chifley. The Menzies Government also discovered that high prices and ready markets were to be had for our primary products. The terms of trade were in Australia’s favour, because the figures disclosed that though the prices of imports had risen by 280 per cent., the prices of exports had risen by 400 per cent. Therefore, no matter how we look at it, this Government has been an extremely lucky government. If Australia had run into a drought or serious economic difficulties, the present situation could have been .reached much earlier in the history of this Government. It cannot argue on this occasion that the workers are responsible for the economic difficulties of this country, because only a week or two ago the Governor-General, announcing the Government’s policy, spoke of an unprecedented period of industrial peace in this country. Therefore, our troubles have not been caused by industrial disturbances. Neither are they due to under-production by the workers, because production per employee, according to the Commonwealth Statistician, has actually risen.

How did this balance of payments problem come about? The Government suggests that we have been importing too much - more than our export-income can pay for. The Prime Minister (Mr. Menzies) said that the present situation was due to a “sudden splurge of spending “, whatever that means. It is rather peculiar for a Prime Minister to suggest that the Australian people have, as a result of some urge, suddenly decided to go on a mad spending spree. Of course, nothing is further from the truth. The Prime Minister said that purchases of certain consumer goods had increased by 22 per cent, and that purchases of motor cars and houses had risen by 41 per cent. He said that the importation of consumer goods had risen by 172 per cent., but he took the year 1952-53 as his base year. He knows full well that in 1952 there were drastic import cuts, and that during that year our imports were abnormally low. Moreover, if we care to examine the matter on a different basis, we find that there has not been a tremendous increase in the consumption portion of our national product. The Institute of Public Affairs of Victoria said in its publication of December, 1955, that the proportion of the national product devoted to personal consumption goods was substantially less now than it was in 1948-49. In that year, as every one knows, this country was enjoying, under the Chifley Labour Government, prosperity of a kind that it had never previously enjoyed, and has never since experienced.


– The people did not think so.


– The Minister says that the people did not think so. I will guarantee that a lot of the people who were misled on the 10th December last would like to have another go at the ballot-box now. When the Prime Minister was speaking about the increased consumption of commodities, he did not take into account increased prices. Likewise, be did not take into account the rise in population. Of course, in volume, consumption of this type of goods has increased but, per head of population, it has actually decreased.

Let us consider the Government’s objectives. What does it propose to do? The Prime Minister has stated that the Government proposes to balance the overseas trade account by the 30th June next, and to this end it imposed import restrictions away back in April last year, and again in September. If we want to see how ineffective the Government’s policy has been up to this point, we merely have to study the figures that are published and are available to every honorable member. At the 29th February last, our overseas balances were down to £285,900,000, representing a drop of £88,000,000 for the year. In the same period of the preceding year, our balances were down by £96,200,000, so that, by its import cuts in April and September, the Government has actually improved the situation by only £8,200,000. Obviously, there must be more drastic import cuts before we can reach the balanced trade position that the Prime Minister is seeking.

What has the right honorable gentleman done on this occasion? In his statement, he did not refer to any further import cuts. They are being saved for a little later, because no one should imagine for one moment that the programme announced by the Prime Minister covered all the Government’s proposals. It was only the first step. I predict that before a year is out, we shall have widespread unemployment, and all sorts of people will be in difficulties, because this Government, which does not believe in a planned economy, has not the means by which it can extract the nation from its present difficulties.

The Government proposes to increase the sales tax on motor cars. Everybody agrees that a motor car is no longer a luxury. It is required in the country districts where the primary producers live some distance from the towns. They must have motor cars. Because of the failure of the transport system in many cities, workers who are forced to live in the outer suburbs are obliged to obtain motor cars to transport them to and from their work. In these circumstances, the additional sales tax on motor vehicles will have a marked effect upon the cost of production. Does anybody imagine that the primary producers or the workers will bear these additional imposts without making some effort to increase their own incomes? Of course not.

Let us consider the petrol tax. The Government proposes to raise an additional £12.000,000 a year from that impost and, of that amount, £4’,000,000 is to be expended on roads. To-day, honorable members have heard members of the Australian Country party - no doubt playing up to their electors - saying to the Government, “ We believe that a greater proportion of the extra £12,000,000 ought to go to the construction of roads “.

Mr Calwell:

– But they will do nothing about it.


– Of course they- will not. Australia is urgently in need of better roads, and local authorities need funds to improve the road systems, but we are sending abroad under the Colombo plan valuable road construction equipment to improve the transport systems in other countries. I believe in the Colombo plan - when this country is in a position to maintain its contribution. But in national affairs, as in domestic life, charity begins at home. It is a false policy to tell Australians who live in distant country areas that they cannot have sufficient funds to build decent roads, while we are sending out of the country valuable equipment to improve the road systems in other parts of the world.

The Government proposes also to increase interest rates. Its programme is supposed to be designed to arrest inflation. The Government was going to arrest inflation in 1949, when it was first elected to office, but this is 1956 and it has not yet achieved that objective. It is interesting- to note that the Victorian Chamber of Manufactures, which could not be described as a Labour organization, differs from the Government on whether high interest rates will effectively deal with inflation. Economic Service, the publication issued by the Victorian Chamber of Manufactures, expressed this view in one of its issues -

It appears that the market will sustain a lower interest rate, and having regard to the fact that cheaper money is a prerequisite for curbing inflation, it seems desirable that consideration be given to an early reduction in the interest rates on Commonwealth loans.

How can it be argued that this Government is introducing an anti-inflationary programme when it proposes to increase rates of interest? Must not any increase add to the difficulties of the primary producers? Why are they unable to find markets for surplus production? They cannot compete with other countries on the world markets because costs of production are lower abroad than they are in Australia. How does the Government hope to improve the capacity to increase export income by increasing interest rates which add to the costs of production in the industries concerned?

Let me return to the question of import restrictions, and the manner in which the Government applies them. I would say that if it became absolutely essential, and there was no other way out but to impose import cuts, they should be imposed to eliminate completely all luxury items before essential imports were affected at all. What did the Minister for Customs and Excise (Mr. Osborne) say in this chamber .to-day? He said that we had to protect certain luxury industries because they gave employment, and because people had invested their capital in them. In my opinion, no government of any political colour should deliberately set out to injure any section of the community, but when we are dealing with a national plan and a national emergency, somebody must be hurt, and the interests of the nation must be put first.

In imposing import restrictions, the Government has classified imports into A and B categories. The B category goods are supposed to be non-essential. According to the statement made by the Minister for Customs and Excise to-day, they comprise 14 per cent, of our total imports. Despite what the Minister has said, everybody knows that a racket exists, and that there is trafficking in B category licences. The Minister stated that it was not wrong for a person who obtained a quota, and did not want to make use of it himself, to sell it to somebody else, or to import goods and arrange for their sale before they were landed. But that is not what these people do. If a person can establish that in the base year he imported a certain quantity of a certain type of goods, he is entitled to a quota, but under the B category the goods are interchangeable. The importer need not import the same kind of goods that he previously brought into the country. He can import any kind of goods included in the B category.

As a result, under the Government’s policy, large quantities of non-essential, cheaply produced goods are imported from overseas. As an example, I point to inferior Japanese toys which are produced with cheap labour. They are being brought into Australia while, at the same time, the Prime Minister has announced that imports for the requirements of the defence departments have had to be cut from £59,000,000 to £40,000,000. Honorable members on the Government side are always talking about the defence of Australia. How can they justify cutting down the importation of defence materials while the Government allows Australia to be flooded with the products of cheaplabour countries? If the Government is proposing to impose further import cuts - and I believe it will do so - it has little scope remaining in the B category field. As the Government imposes more drastic import cuts, it will cause widespread unemployment.

What does the Government propose to do about our export income? It is going to have an advertising drive overseas, and send trade missions abroad. They will be very costly affairs, but they will not be effective in improving trade opportunities for Australian producers. Everybody knows what the situation is to-day. The wool industry, our major export industry, is still in a flourishing position, despite the fall in prices, but every other primary industry is in difficulties. According to various authorities, there is no prospect of the position improving.

But the Prime- Minister is looking into another field to improve our export income. He wants this country to reach the position in which it can export a large percentage of the production of its secondary industries. According to the right honorable gentleman, that can be done only by bringing about a reduction of costs in this country. At the moment, we are exporting to New Zealand and the adjacent islands only about 2 per cent, of the production of our secondary industries. The Prime Minister has made it quite clear that he is looking forward to the day when we can find a market overseas for a large proportion of our secondary production, but on the basis that costs of production must come down.

Let me turn for a moment to the question of the inflow of capital to this country. Members of the Government talk as though the inflow of capital to this country has been of tremendous advantage to us. It has been of advantage in the development of our secondary industries. But what impact has it had on the development of our income from export industries? Every time foreign capital is invested in a secondary industry in this country, it increases in most cases our need for imports to maintain the industry. It does not improve the position in respect to our export income.

There are certain invisible items, such as freight, that affect the balance of payments. Is the Government doing anything to stop the exploitation of the Australian primary producer by preventing the shipping combine from raising its freights? In the half year that ended on the 31st December of last year, freight charges upon our imports amounted to £51,000,000. In the corresponding period of the previous year, freight charges were £40,000,000. So £11,000,000 of our adverse trade balance is accounted for by increased payments to the shipping combine, which this Government has permitted to exploit the Australian community in general, and the Australian primary producer in particular.

Surely insurance coverage could be provided in this country. A proportion of our difficulty is due to the premiums that are being paid to overseas insurance companies. The payment of dividends to people overseas and the payment of interest upon loans raised overseas create great difficulties for the Australian community. This Government, in the years that it has been in office, has increased the national debt by £923,000,000, which represents £97 for every person living in Australia to-day.

Let me turn briefly to the question of immigration, which was mentioned by the honorable member for Petrie (Mr. Hulme). How can it be argued that immigration has not contributed in some way to the present situation in this country ? I readily concede that the intake of immigrants has led to increased production in certain industries, but it has nothad the effect of increasing production in our primary industries, upon which we depend for our export income. There are 120,000 fewer people employed in our primary industries to-day, although production is up by 20 per cent. Production has been increased by improved methods of farming. This Government knows that it has not a solution of the country’s present economic- problems. It proposes to support a policy of low wages and reduced living standards for the Australian community.


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

Minister for the Interior and Minister for Works · Paterson · LP

– The honorable member for Ea3t Sydney (Mr. Ward) has been enjoying himself immensely by wresting from their context details of the economic situation and the proposals of the Government. He has been enjoying himself doubly because he has been either looking hack to the last depression or prophesying the next one. That is the political stockintrade of our friends on the other side of the House. The plain fact is that the members of the Opposition have not made out a case in this debate. Either they do not understand the problem - which is not beyond the bounds of possibility - or, alternatively, they are out to skim off a quick, and. cheap political advantage by dealing with these things one at a time, out of their context as the honorable member for East Sydney has done for the last twenty minutes.

There is not one, but a series of elements in the particular economic problem which faces Australia. There is the question of our overseas balance, which is running down at a tragic rate. There is also the question of the tremendous demand upon labour and capital in this country. There is a great need to prevent inflation. I notice that there is a distinct and direct item of £30,000,000 of inflationary money which the Government proposes to extract. The fact is that we are suffering from a chain reaction. The running down of our overseas balance indicates, more clearly than anything else could, that we are consuming more than we produce, that we are spending next year’s income this year. That has given rise to enormous demands for finance for hire purchase, and that money has been taken from the loan market, from funds which previously were used to support public works. The Commonwealth has been left to make good deficiencies in the field of finance for the States public works, about which I shall say a few words later.

The overseas balance is not a god to be placated. Rising consumption is not a bad thing. Hire purchase is not an evil. The dependence of the States upon the Commonwealth at this stage is, of course, completely unavoidable. The position is not unmanageable, as the Prime Minister (Mr. Menzies) has pointed out. Brought under control, it will preserve the stability and prosperity of our economy, but left to get out of control, it will cause irreparable damage to the Australian economy.

Mr Calwell:

– Who created the problem ?


– I shall tell the honorable member in a moment. I shall give him some illustrations. In two years, our balance has run down by £200,000,000. It is very comforting to have money in the bank at any time, but the actual quantity of our overseas funds is not, to my mind, the matter of paramount importance. What is of tremendous importance is the fact that our balance is running down, which indicates that we are consuming more than we produce. There must be an end to that. The balance continues to fall, despite import restrictions, as the honorable member for East Sydney has pointed out. We are very much like a lottery winner. Unaccustomed to easy wealth, we are apt to spend our winnings and then, finding ourselves penniless again, to wonder how it all happened.

Prosperity in this country - there has been prosperity, whatever my friends on the other side of the table may say - has triggered off a buying boom. The figures indicate that quite plainly. That has led to the depletion of our overseas balance. There has been a demand for finance for hire-purchase trading at extremely high rates of interest. That has absorbed money which normally would find its way back into the banking system and go to provide finance for business expansion and home buying. In the circumstances of to-day’s money market, it is quite idle for the Leader of the Opposition (Dr. Evatt) to talk about a cheap money policy. Money, like any other commodity, has to be bought in the open market. When there is a scarcity, for the reasons that I have mentioned, it is inevitable that the cost of money will rise. I assure honorable members that people who are waiting to borrow money for home building will be a lot happier if they can borrow it at 5 J per cent, than they will be if they are unable to borrow it at 5 per cent.

It is true that higher rates of tax and interest will, to some extent, have an adverse influence on costs, particularly in the field of secondary industrial production. To that extent, promotion of the sale overseas of our secondary industrial production will be made more difficult. However, it is true to say that 80 per cent, of our export income comes from the sale overseas of our agricultural production. It is an unpalatable but completely inescapable fact that, under the conditions of our economy to-day, there will be no future for the sale of our secondary industrial production unless there is a complete revolution of the cost structure in our secondary industries. Let me quote Mr. Colin Clark, an economist of no mean order. He has said -

Australia’s exports must be agricultural and pastoral products, and must be so for a long time to come. Australia will not be an exporter of manufactured goods to any great extent in the present condition of the world,, unless some unheard-of reduction, of wages takes place.

To that I add, “Unless there is also a great drive for greater efficiency in the whole of our secondary and industrial production sphere “. What we need is a change on the part of management and labour in this country so that they both make a determined attack, not upon each other as we have seen in recent years, but upon this particular problem. I do not mind quoting my friend, the honorable member for Melbourne (Mr. Calwell), who, when import restrictions were eased a year or two ago, had this ‘to say -

But if, as was likely, the decision simply meant more motor cars, refrigerators, textiles, and cigarettes, all manufactured by workers working a. longer week, receiving a lower basic wage, and not having the holiday and sick leave- benefits which Australian workmen had, then the effect must be detrimental to Australian industries and workers.

That is the language of the honorable member.

Mr Calwell:

– I wanted a prohibition on. imports.


– The fact is that if we are to- have import restrictions to shield our already over-protected industries in this country, then I suggest we shall never be able to compete in the export market with more efficient and lower-cost countries. This big demand which has expressed, itself in an inordinate demand for hire-purchase finance and has created a great demand for industrial expansion, has made a great drain on developmental capital. But it is vital that we in this country should have a balanced economy as between the private and government sectors of the economy. Therefore, the Federal Government has the difficult problem of providing finance for development by way of works. One of the points that must be clearly understood about the present economic problem by the general public and by honorable members opposite is that the central theme of what the Government is doing at the moment is to raise an additional £30,000,000 of revenue to prevent that much new money being pumped into the system, all of which would be inflationary. I draw attention to the fact that the whole of this £30,000,000 of new money is of great benefit to the States through their works programmes. What the Federal Government is obliged to do at this stage of the game is purely a States benefit. We ought not to overlook that point.

We know that for the current year the States’ works programmes guarantees to them an amount of £190,000,000. The loss of the loan market has left the Federal Government to make up that deficiency. It is already supporting States works on a wide basis, works which are not based on any priority scheme at all, and works which, on the record, are wasteful in the extreme in. all too many cases.

Mr Calwell:

– Where?


– I shall give the honorable gentleman some examples if he cares to come to New South Wales.. I shall have more to say about that later. I find it completely astounding that the States, which have control over hire purchase, have failed to exercise that control. They have seen the demand for hire purchase devour the capacity of the loan market to sustain their works programmes. They have seen the Federal Government forced to go to these extreme measures to support their works programmes, and yet they have seen fit to join in the popular clamour of uninformed - except in their case> I suspect, it is not so uninformed - criticism of the measures that the Federal Government has been obliged to take.

There has been a good deal of attack upon the question of the petrol tax and of how much of it is being allocated to roads. Out of the £12,000,000 to be retained, £4,000,000 is to go back into roads. I think that is evidence of the opinion of. the Government that because our overseas trade is based on primary industry here is a direct contribution to lowering of the costs of primary industry..

Mr Calwell:

– Why not give- them all the petrol tax revenue?


– My friend indicates his complete ignorance of what this is all about by asking, “ Why not give them, the lot? “. If the exercise is one of raising funds for roads, we would have given them the lot; but the primary exercise is that we should raise funds to plug up the budget deficit, as the honorable gentleman knows very well, lt is high time to sound a warning that if we are going to tie the road programme to the petrol tas we will live to regret it, because this great association that is being born between the amount of the petrol tas and the fact that the petrol tax is being looked upon as the source of road finance will come back some day to haunt us. It is only a stage further before we reach the point where the petrol tax will be regarded as the only source of finance for roads, and then, instead of more of the petrol tax for the roads we shall have more tax on petrol to provide better roads. We should also ask:. If the State governments are so concerned about the state of their roads, why have they not devoted more of their public works funds to the construction of roads? Every finished mile of road will make an immediate contribution to deflation and will be immediately useful in this country. Instead of that, we have the countryside dotted with more dramatic, more expensive and certainly more wasteful public works which, for the period of their construction, are completely inflationary and useless. So, I make a suggestion along those lines. I get to the point where I seriously question how long the Commonwealth Government can tolerate a situation in which it has the odium of collecting the whole of the tax, and the responsibility for making the guarantees to the States and in which it still finds itself burdened with problems which are not of its own making but are made by the States. I return to Mr. Colin Clark’s statement. He said -

Probably the most serious single pause of over-spending in capital and current expenditure is the now almost complete financial irresponsibility nf State Governments - an irresponsibility which arises from one cause, the fact that they do not raise their own taxation.


– He is an awful old tory.


– Never mind that; he is speaking a lot of horse sense here which, on the record, is correct. When it. comes to supporting the State Governments through their works programmes, some rather interesting things- have come out of the recent State election in New South Wales. I have in my hand the front page of the Northern Daily Leader, a very reputable and respectable newspaper in that State. It contains three particularly interesting articles. On the front page is a report of an address given by the Premier of New South Wales, Mr. Cahill, at Armidale. Riding his hobby horse about the wicked Federal Government not making money available, Mr,. Cahill had this to say -

One main reason for the shortage of funds for State works is that the Commonwealth is keeping taxation high, and holding on to the proceeds for its own capital expenditures, which have grown out of all proportion to State capital expenditure.

That comes from a Premier who knows very well that the Commonwealth has surrendered its entitlement to loan funds to the States, that it has made tremendous supplementary grants to the States and is carrying not only its own works programme on revenue but is also increasing the sector of the States works programme on revenue as well. This newspaper gets more interesting, because after that we read about Mr. J. B. Renshaw, the Minister for Public Works and Local Govern: ment in New South Wales, speaking in support of the Labour candidate for Armidale. It is necessary to go back a bit in political history. In 1953, the Country party lost the seat of Armidale by a mere 13 votes-.. Tn other words, Armidale was won for Labour in the State field, but it was tremendously insecure and something had to be done to protect it. What would one expect this irresponsible Government to do? Here is the story. Mr. Renshaw pointed out that round about the Armidale State electorate, the State Government had not only spent £365.000 but had also approved of the spending qf a further sum of £375,000. The purpose, of course, was to guarantee the return of a Labour member at the recent election. So expensive is it to buy seats-. But what does that matter to the State Government when the expenditure comes out of Commonwealth revenue?

On the reverse side of the sheet there is an alarming expose- from a gentleman whom I can only regard as being politically immature, or he would not have said what he did. Under the heading, “ Mr. Mclnerney at Wee Waa “ the article reads -

Since it hail had a Country Party representative, Barwon electorate had not advanced as it should have, declared Mr. J. G. Mclnerney, Labour Party candidate for Barwon at the State election on March 3 in an address at Wee Waa.

That is so far the obvious reason that the State Labour Government was withholding expenditure there. A little farther down, the report states that Mr. Mclnerney said -

Let us contrast this lack of interest and neglect in Barwon with the position at Armidale, which changed its representative to Labour in 1953. Mr. Jim Cahill, M.L.A., recently stated that . . . the Government had allowed him upwards of £2,000,000 during his three year term and this support would continue . . . That electorate has been favorably treated because it has a Labour member A State Labour Government will give but little help to any electorate held by a Country party candidate.


– That is rubbish.


– Those are statements, as reported in the reputable press, made by a man on the hustings, about what Labour had done to buy this seat at the expense of the Australian Government. In so doing, it created the kind of problem which this Government is obliged to solve. The collapse of the loan market has left the Federal Government to provide £67,000,000 to the States and will result in a deficit of £30,000,000 in its budget for the current year. If that hole is not plugged by inflationary money, it can be done only from increased taxation, and that is why the present additional imposts have been applied. The plain fact is that these increases are not only designed to raise additional revenue. They all touch upon the other problems of the overseas balance and inflation. Our aim is to correct the adverse balance of payments, to curb over-expansion in the economy, to restore balance in this community and to reverse the trends which threaten our economy to-day. Nobody suggests for a moment that these measures will be popular. We know that they are unpopular, and the fact that the Government is prepared to take them is the best evidence that it has no interests to serve other than the security and prosperity of the Australian economy.


.- The Minister for the Interior (Mr. Fairhall), speaking on behalf of the Government, said that it is the Government’s aim to reverse the trends that are detrimental to this country. I remember when, with the greatest of confidence, supporters of the present Government claimed that they would cure inflation. They said that they needed no assistance whatsoever from anybody in order, not merely to stabilize prices, but also to enable every £1 to buy more. They were to increase the purchasing power of age pensioners and of every worker in the community. They were economic Jack the giant killers. They needed no assistance whatsoever from our side. The Treasurer (Sir Arthur Fadden), when introducing his budget in 1950, said -

This budget is designed to eliminate inflation.

Towards the end of 1950, the Prime Minister (Mr. Menzies) established the National Resources Security Board, which he said would eliminate bottlenecks in industry, determine the placement of labour as between one industry and another, and bring about a period of general progress in the community. However, in 1951, there was an election, and the Government went to the people. Inflation still existed, and Government supporters said, “ Inflation exists because in the Parliament we have a Senate with a majority of Labour members. Put us in control of both the Senate and the House of Representatives, and we will eliminate that inflation, as we said we would do in 1949 “. They were put in control of both Houses of Parliament and the Treasurer introduced a new budget, the “ horror “ budget, in 1951. He said, in effect. “Now that we have absolute power, we will no longer pull our punches. We will be ruthless in the extermination of this inflation which is destroying this country’s interests and impeding national development “.

In March, 1952, the Prime Minister announced that Australia was in danger of national insolvency. The threat of national insolvency was the result of the Government’s effort to cure inflation. The Prime Minister said -

The country is faced by an economic crisis. Wholesale restrictions must be imposed upon all types of imports. Hardships and difficulties must be endured by the Australian people and Australian business in order to protect the solvency of the Australian nation.

He went on to say that this position was not the result of our poor export income in the ordinary sense, because our export income was higher that year that it had been in most other years, and during the preceding couple of years this country had enjoyed an export income greater than ever before in history. In 1953. the Treasurer said -

Inflation is arrested. We have increasing funds.

But that was the year when the Commonwealth Arbitration Court said -

Because inflation is not arrested we must abolish the quarterly adjustments of the basic wage and suspend the hearing of the margins case.

In other words, in 1953, at a time when the Treasurer said that he had arrested inflation, that everything in the garden was lovely, that a period of steady progress lay ahead, the Commonwealth Arbitration Court froze wages in this community. That, of course, is proof that wages were not the cause of inflation, because had they been the cause, the freezing of the wages should have immediately stopped any increase in prices, but prices continued to rise.

In 1954, the Treasurer said -

There are stresses showing in our economy, and there are signs of incipient inflation.

In 1955, he said -

Inflation is again upon the march.

In 1955, just after the Treasurer had made this announcement, the Prime Minister told the people of Australia that in order to solve the problems of inflation, he was inviting to Canberra representatives of the private banking institutions and of the hire-purchase organizations in order to persuade the banks, on the one hand, not to issue credit to the same extent as they were doing, and to persuade the hire-purchase organizations, on the other hand, not to enter into so many contracts for hirepurchase commitments in this community. However, after having consulted with them, the Prime Minister came before this Parliament on the 27th September. Before that time he had had consultations with private banking institutions and hire-purchase organizations, but at that time bigger and bigger contracts in connexion with hire purchase were operating in this community, and the restriction of credit by the private banks in the interests of the community had not taken place.

On the 27th September, the Prime Minister said that our overseas funds were diminishing, and that we had to do something about that fact. He said that that, of course, was a problem of prosperity, and that his Government would grapple with the question of overseas funds and, having restored them, our prosperity would go on increasing and would be shared by all sections of the community. Having made that pronouncement, he then went out on a general election campaign and posed as the economic Jack the Giant Killer of the community. The Prime Minister and the members of his Government said that they could cure all the ills from which this country was suffering. Unfortunately, the people returned the Government once again to the treasury-bench, but the Prime Minister did not then come forward in the Parliament - or anywhere else - and say, “Here is my statement on economic affairs “. No, he put off from week to week making any such statement, and I suggest that he did that in order that the impending State election in New South Wales would be carried out before he had made a statement to this Parliament which would have destroyed his prototypes in New South Wales politics. That was a most dastardly thing to do.

Mr Aston:

– What about Western Australia ?


– Never mind that. The Prime Minister came to the Parliament and said that the Government had been in consultation with a panel of economists drawn from north, south, east and west, and that they had advised the Government along certain lines. Only a few days ago, he said, “ the statement I shall now present is the combined effort of the economists and the Government”. I should like to know whether the suggestions contained in the statement made by the Prime Minister are all the statements and all the suggestions made by the economists, or whether they are suggestions that have been hand-picked by the Government. Did the Government put before

Sis exactly what the economists told it? I do not know, but I doubt it.

I remember another occasion in the /history of this country when a nonLabour government brought economists into consultation with it. That was during the 1930’s when this country was suffering because vast quantities of goods, which were unable to be sold, were in stock. What policy was then applied as the result of the combined genius of that non-Labour government and the economists? In order that people, who could not buy the goods then available, should be able to buy them, the Government reduced by 20 per cent, pensions, wages and interest. The government of that day reduced purchasing power, because at that time there was not enough purchasing power. That happened as a result of the conferences that preceded the making of the Premiers plan, and at those conferences economists were present.

What is happening to-day, and what will be the result of the Government’s actions ? The Prime Minister said in this House words to this effect : “ We have to increase the price of petrol, we have to increase the cost of motor cars, we have to increase the rate of interest, we have to increase the sales tax on a number of other commodities, and we have to increase company taxes”. We were told that all those increases had to be made ia order to reduce prices. In other words, in order to reduce prices the Government considers that we must increase costs. That is a similar type of action to that taken by the non-Labour Government in ; the ‘thirties to which I have already referred. That action had disastrous J results, and I suggest that the present actions of the Government will have ! equally disastrous results.

The increased cost of motor cars will j increase the. cost of transportation. The i increased cost of petrol will mean that I every bale of wool and every bag of wheat brought from a farm to a railway station will cost more. Moreover, the price of 1 every pound of meat, every bag of wheat, 1 every bale of wool and of all other pri- mary products taken from railways to j depots will be ultimately increased to the consumer. Interest is already an exorbitant toll on the industry of this community. Why does that toll need to be increased? The Government thinks it should be increased to reduce inflation; but that is utter and absolute absurdity. We have not enough farms in Australia, and we have not enough people producing primary products. We have received about 2,000,000 additional people within a few years, but we have tens of thousands fewer farms now than we had in 1939. We must get more farms, but because of increased interest rates we shall perhaps not maintain our present number of farms. The Government’s actions will not cause one more person to go on to a farm. In fact they will make it more difficult for those at present on farms to remain there. Also the Government’s actions will make it almost impossible for those who are not on farms, but who want them, to acquire them. This country does not need farms in hundreds or in thousands; it needs them in tens of thousands, almost in hundreds of thousands, if this country is to survive.

I have outlined the difficulties, as I see them, that this Government’s actions will cause. In regard to manufactured goods, I suggest that the Government should attempt to retain a home market for Australian goods, because by retaining and building up that market it will build up a home market for our primary products. We shall never be able to compete with our secondary goods on the markets of the world against countries like Japan, Germany, Britain and America. We shall never build up a vast overseas market for the sale of the products of our secondary industries. Therefore, we should build up a home market for our secondary production, which will lead to an increased home market also for our primary production. If we do that we shall be able to undertake gigantic developmental schemes in this country in the fields of irrigation and power, which will develop our strength as rapidly as possible. I recall that, during World War II., the first Menzies Government could not grapple with the problem of fighting Australia’s enemies and preventing, invasion, and it abdicated. The present Menzies Administration is unable to grapple with the economic problems and the problems of development that must be solved if we are to survive as a nation, surely, therefore, another Menzies Government abdication should take place.


.- I have listened attentively throughout this debate, and I have heard all the jeers and the scoffing of Labour members - these anti-Liberals and reactionaries - who say the problems of prosperity do not exist. Their scoffing is nothing new. The annals of history show us that every empire that has reached the stage of enjoying great prosperity, and has come under the control of a group of people who have scoffed and said that there were no problems in prosperity, has fallen never to rise.


– The honorable member should read his history again.


– I am very well versed in it. The honorable gentleman knows full well that what I have said is correct. Nations have fallen into poverty and have fought their way out of it again by making a nation-wide effort to overcome their problems; but those that have scoffed at the problems of prosperity have fallen never to rise from the ashes of their former greatness. I have waited for members of the Australian Labour party, who are antagonistic to the Government’s proposals for tackling Australia’s economic problems, to offer constructive suggestions for overcoming those problems. I have waited for these Labour anti-Liberals to tell us something of their plans, if they have any, to overcome the problems caused by our spending on capital investment twice as much as we are saving each year. On that point, the socialists have been completely dumb. They have no solution to offer. Instead of making constructive suggestions, they try to make political capital out of the measures that the Government has been called upon to take in order to save the nation. Labour members refuse to bend themselves to the task of solving our problems.

The Government has, over the last six years, followed a course that has enabled Australians to enjoy living conditions that are second to none in the world today. We enjoy real peace and prosperity, but prosperity can last only if we all work to solve our economic problems. What has Labour to say about the problem of the buying boom from which Australia is suffering at the present time? lt has no solution to offer. It makes only the age-old answer: “Let it continue. We must not stop a buying boom “. Opposition members should recall the lessons that history has taught us. They entirely neglect the warnings of the economists that buying booms can be damaging. Labour members claim to represent the working classes, but they have not told us how to solve the problem caused by our not using to the full the capital equipment that we are buying. I have waited in vain for the socialists to suggest solutions of our problems, but they do not do so. The problem of relations between employers and employees is causing much concern, and I have endeavoured to glean some idea of the measures that Labour members think are necessary to solve it. How best can we improve relations between employers and employees? All I hear from Opposition members is a continual hymn of hate against the bosses. They encourage the worker to look upon the boss with suspicion and to be suspicious also of any proposals made by this Government. If that is Labour’s attitude towards the problems that confront Australia to-day, it is no wonder that Labour remains in opposition with dwindled numbers.

We must not forget that the problem of inflation is not only national but ako international. Every nation is striving, both internally and in its external activities, to overcome the current condition of inflation.


Mr. Deputy Speaker, I direct your attention to the state of the House. I ask you to note, also, that there are only five Liberal members present.


– Order ! There is no need for the honorable member to make misstatements. [Quorum formed.]


– As I have stated, all nations are confronted by the problem of inflation. They all are trying to get as much as they can of the world’s trade. There are elements in the Australian community that are selfishly seeking to get the hest they can for themselves. Under our present financial system, the State governments have no responsibility for the raising of money, and they show no responsibility in spending it. The New South Wales and Queensland Governments particularly are irresponsible. The Premiers attend conferences of Commonwealth and State Ministers and meetings of the Australian Loan Council every year and they advance not national ideas or proposals that will help to overcome our problems, but purely selfish proposals on behalf of the States. Works are in progress in a thousand and one places throughout Queensland. New works are added to the programme as every election approaches, for the express purpose of winning votes and inflating the Labour vote in certain electorates by moving in large numbers of workers. The Queensland Government, although it has been misspending money up to the present time, has been able to salt away £25,000,000 in reserve funds. Labour governments in other States also have put aside large reserves; yet, ironically enough, the Australian Government has to increase taxation in order to raise additional revenue to be handed over to the States for State works! It is high time the Labour Premiers, particularly those of New South Wales and Queensland, exhibited a sense of responsibility and approached our problems from the national viewpoint. I hope that the Premiers and their advisers will attend the next conference of Commonwealth and State Ministers and the next meeting of the Australian Loan Council not in a selfish spirit but in a national spirit, in an endeavour to do their best for the nation, in the realization that the States are integral parts of the nation and must play their part in our fight for survival in the battle against inflation being waged by Australia and the other nations of the world.

Every one faces the same problem. Businessmen also have a responsibility to fight inflation. The businessman who thinks that he can outsmart the Government by evading taxation, or by adopting a sly trick to defeat the customs regulations or import controls, is not outsmarting the Government at all; he is outsmarting the nation. It is time for those shysters in the business community to face up to their responsibilities.

Mr Calwell:

– Is the word “ shysters “ a proper word to be used, Mr. Deputy Speaker?


– Order ! The word is scarcely an appropriate parliamentary word.


– I do not know what word I could substitute for it. I withdraw the word and say that we in this Parliament know that there are sharks in the community who are not playing the game by Australia at this time. The businessmen who fail to plan for their future in complete consultation with their employees are not contributing to the future of Australia. The time has come when we must have complete co-operation and trust between employer and employee. While responsibility for bringing about such harmony rests to some extent upon employers, it also rests upon the socialists who sit opposite in this House, the antiLiberals, who, I suggest, should go among their followers in the community and tell them that this hymn of class hatred that they have been singing for years is all wrong, and that there can exist in the community to-day complete trust between employer and employee.

Mr Calwell:

– Tell that to the marines !


– I know that the honorable gentleman does not like my suggestion. He exists in this place only because of this hymn of hate. He tries to create the impression that there are class distinctions in Australia, when he knows in his own heart that it does not exist. He sets up an Aunt Sally in order to ensure his political survival. We have to work to engender in this country complete trust and co-operation between management and labour. The Australian Labour party, mis-named though it is, has a certain following, and it can do a great deal to stimulate such trust and co-operation.

I believe that profit-sharing and incentive schemes will play an important part in the industrial development of nations that survive the present inflationary boom which is evident throughout the world. In other countries where profitsharing and incentive schemes have been introduced the workers prosper, businesses prosper, and the cost of living is reduced progressively as the schemes develop. The sole factor that is preventing the establishment of these schemes in Australia is the attitude of the Labour party. I cannot understand why the Labour movement, disintegrated though it may be, does not use its influence to see that proper profit-sharing schemes arc introduced into industry, so that we may have mutual trust and mutual effort by employers and employees in order to surmount the difficulties that beset our nation. While I believe that we must convince a large number of employers of the necessity for such mutual trust and effort, we also have to persuade a large number of employees of the benefits to be gained therefrom. If every employee in Australia were to start to-morrow morning to give a fair day’s work for a fair day’s pay, the economy of Australia would be transformed almost overnight. The economic ills that face Australia would be cured almost immediately. We all know, if we face the facts, that many “ foreign “ jobs are carried out in workshops. Those of us who have had experience of workshops are fully aware of this practice. Why the practice is condoned I do not know. Why the trade union movement has not stopped this practice long ago, for its own protection and the protection of its workers. I cannot understand.


– What does the honorable member want to stop?


– I want to stop this practice of carrying out private jobs, or “ foreign “ work, as it is known, inside workshops. It is a dishonest practice. The trade union movement turns a blind eye to it, to the detriment of the workers and the nation as a whole. We all know that it goes on, and it is of no use to shut our eyes to it. It must cease. Something must be done about it.

Mr Galvin:

– It is not restricted to government workshops; it goes on in private workshops, too.


– The practice is prevalent in all sorts of workshops. It is absolutely dishonest. It is opposed to all the principles of the trade union movement and it should be stopped entirely. It is up to the gentlemen opposite, who have some experience of trade unions, to persuade the people who carry out these “ foreign “ jobs that they must cease the practice. It is time that the trade union movement realized that the stealing of time on the job amounts to thieving, just as surely as does the stealing of goods on a job. The man who sneaks away from his work for half an hour is stealing from the employer and from the nation, just as is the man who takes home a pound of beef from the meatworks and finishes up in gaol as a consequence. We must persuade employees that they should be completely honest in their dealing with their employer, and in complying with the regulations of the workshops in which they are employed. If we can cut out the “foreign” jobs, and get an honest day’s work for an honest day’s wages, then almost overnight we shall start to cure the inflation that exists in Australia. However, the anti-Liberals, the reactionaries of modern times - and we have some present here - are condoning such wasteful damaging of our reputation.

Opposition members interjecting,

Mr. ACTING DEPUTY SPEAKER (Mr. Bowden).- Order! The House must come to order. There is too much audible conversation on both sides of the House.


– The strikes by the waterside workers and the shearers are aimed at the destruction of the economy of Australia. They are being used to destroy Australia’s reputation outside the country, and they are having a shameful effect upon our nation as it battles forward. Though they have been hurting men and women in the lower income groups they are not only condoned but also supported by the anti-Liberals who sit amongst us in whittled-down numbers. We must try to reach a situation in which the trade union movement has absolute confidence in the arbitration system. Labour members should not, as they did at the last general election, advocate the extinction of the Commonwealth Arbitration Court or its control by politicians. Let us all put our shoulders to the wheel and straighten out this problem while we still have time, and before the current wave of strikes makes us all subject to the law of the industrial jungle.

Those are the major problems of the nation to-day. We are trying to spend twice as much as we are currently saving, and we must face that fact. Responsibility rests- not only upon the people who 3it on this side of the House but also upon the Opposition and upon every man and woman in Australia to seek a solution of these problems. The sooner that responsibility is recognized by each one of us, the sooner shall we start to consolidate the prosperity that abounds here at the present time. The Labour party contributes nothing to a solution of our problems by stupidly encouraging the theory of class distinction, and by saying to its followers, “We have a capitalist government which is trying to squeeze the workers “. To-day, a plea is going out to the Australian nation for complete cooperation from the people and from the Opposition, so that we may consolidate and hold the prosperity that we have to-day, that we may live on and enjoy it in peace and in plenty in the years that lie ahead.


– I wish to direct the attention of the House to some of the fundamental matters with which the economic statement of the Prime Minister (Mr. Menzies) is concerned. The problems with which we are primarily concerned is that of inflation, of excessive spending. Several times this evening the question has been asked : “Who created the problem?” At the outset I should like to try to answer that question. In 1949, total expenditure in this country amounted to £3,300,000,000. In 1954-55, expenditure had risen to £5,867,000.000, an increase of over £2,500,000,000 in six years. Since the time when the Labour party was in office and exercised control over the country’s economic policy, our expenditure has increased by 75 per cent. This increase amounts to 13 per cent, a year, and the increase in productivity about which the honorable member for Capricornia (Mr. Pearce) is so greatly concerned could not possibly match 13 per cent a year. As an inevitable consequence of this, we have continuing increases in prices. Between 1949 and 1955, prices in Australia rose by 65 per cent. With this increase in prices came a rise in the cost structure, and the problem was recog nized by the Minister for the Interior (Mr. Fairhall) a few minutes ago when he called tor a complete revolution of the cost structure and quoted that very conservative, if not reactionary economist, Mr. Colin Clark, who recommends an unheard of reduction in wages.

This conflict in the economy, upon which the honorable member for Capricornia spent so much time, has been created mainly by the inflation which this Government has failed completely to control. The first point that I suggest requires emphasis is the fact that the Government has failed. Now, after six years of inflation, and when the Government is still recognizing the evil consequences of inflation, the Minister for the Interior suggests that the Government’s proposals to-day seek to decrease expenditure by a mere £30,000,000. Even if the Government’s proposals have the desired disinflationary effect, that £30,000,000 represents only one-half of 1 per cent, of the amount of £6,000,000,000 which is likely to be the total of expenditure for the current year. Even if the Government does succeed in reducing spending by £30,000,000, that reduction represents only i per cent., and in that case, it seems to me inevitable that the Government’s present plans and proposals will fail to control inflation, just as they have failed over the last six years.

So the two main aspects of the problem with which we are concerned now are, first, excessive expenditure and, secondly, the unsatisfactory use or allocation of resources such as labour, materials and capital. Let me look at the first problem. What is excessive expenditure? The Government says that we were experiencing a high and growing purchasing power. The Government puts every one in the same class. Because the total expenditure is excessive, the Government says that every one’s expenditure is excessive. We members of the Opposition say that in any country there are at all times people whose expenditure is excessive and people whose expenditure is never excessive. The Government assumes that all it needs to do is to concern itself with the total expenditure. That is merely following the lead given by some of ite economic advisers, who think in terms of aggregations and forget altogether the importance of classes of people and individuals.

The Opposition says that it is the demand of the well-to-do that is excessive, the demand of those sharing the company profits which, in 1955, were over £500,000,000- those 129,1S0 people who, according to the most recent report of the Commissioner of Taxation, had a total income of £2S4,000,000, or 15 per cent, of the total income after paying taxation, although they represent only 3.7 per cent, of the taxpayers. We say that with a disproportionate distribution like that in a country, it is easy to recognize where excessive expenditure takes place. We say it is the demand of those people that is excessive, not that of the pensioners, or of wage-earners, 60 per cent, of whom have marginal wages, the value of which has fallen to one-half of what they were when last determined, and more than half of whom have, in their incomes, a basic wage component that has fallen in real value by 16s. since 1953.

The statistics published in the whitepaper on national income issued with the budget show the same result. Total wages and salaries since 1951-52 have risen by 23 per cent., while total company profits have risen by 33 per cent. It has to be remembered, too, that the number of workers who earned that 23 per cent, increase was increased by nearly 250,000. As this extra money has to be divided amongst nearly 250,000 more workers, the average increase must have been less than 23 per cent. It is for that reason that the Opposition calls this inflation a profiteering inflation. We do so because that is where the income has gone, and that is where the excessive spending is taking place. Instead of taking a stand based on facts, the Government adopts a very different approach.

The Prime Minister says -

To achieve economic health, we must clearly reduce . . . our demand.

I emphasize “ our “ demand. Having decided to reduce “our “ demand, the Government proposes increases in indirect taxation and interest rates which not only penalize the people who cannot afford to have their expenditure cut, but also transfers income to those people who can afford to have their expenditure cut. The Labour party opposes this method because it is unfair, and because it is more a transfer of capacity to spend from one section of the community to another rather than a method of limiting the total spending.

The conflicting position in which the Government has placed itself with these taxes can be seen from the fact that it wants the proceeds from the taxes for its own revenues. To-night, the Minister for the Interior, I consider, let the cat out of the bag when he said, in effect, that the main purpose of these measures was not to control inflation but to fill what I think he called the gap in the budget expenditure.

Dr Evatt:

– After the market for bonds collapsed.


– After the market for bonds collapsed. The Government wants the proceeds from these taxes for its own revenue, because it has a deficit to face and because it needs the money to repay bond-holders, yet at the same time it wants to use the taxes to reduce expenditure, to control inflation and to improve the balance of payments. It cannot do this because it intends to spend the money. The Government says it has to spend that money. If car imports are to be reduced - and this is one of the aims - and if car sales are to be reduced in order to improve the balance of payments and control inflation, then the revenue that the Government requires will fall considerably below its expectations. That being so, it cannot achieve the results it professes to want to achieve.

The same applies in the next example. If revenue from beer and tobacco taxes is to come up to expectations - and it is worthy of note that the Prime Minister assumes it will - then more money than before must be spent on beer and tobacco, and again, the inflationary forces will be even greater.

At all times during this debate, the Opposition has emphasized a constructive alternative. The honorable member for Capricornia, who has failed to notice that fact, must have been out of the House for a considerable amount of time. All along we have emphasized a constructive alternative. The Labour party stands for the control of expenditure and the curbing of inflation. “We did it during -the war, we did it during ‘the years after the war, and we will do so ‘again. Labour will stop inflation. .Expenditure ‘has to be cut to achieve this end, but our proposal is to cut expenditure by direct taxation, by a tax primarily -upon companies and upon individuals in proportion to their ability to stand these cuts in expenditure, and not in the opposite direction as is proposed ‘by the Government. This involves the utilization of a new income tax .structure as outlined the other night by <the -honorable member for ‘Melbourne Ports. Secondly, the Opposition opposes any increase of the interest rate, .and we have moved an amendment to that .effect. Why do we oppose an increase of the interest rate? The increase of ‘the interest rate is related to the second main aspect of the problem of inflation - unsatisfactory use or allocation of resources -of men, materials and capital. Iff you raise the interest Tate, ,you increase the cost of investment, and increase the rewards of saving, and, thereby, ‘achieve an anti-inflationary effect. Manipulation of the interest rate is an old economic weapon, as the member for Bradfield (Mr. Turner), who seems to be .an expert on old weapons, put it the other -night. But what effect does an increase of the interest rate really have? It has been -used in England, as the honorable member for Bradfield pointed out. What has been decided about its use there? Obviously, the honorable member has no knowledge of the results. Some conclusions have already been reached in England about the results. I shall tell him what they are. What was the effect, first of all, of low interest rates on inflation in England ? The late “Sir Hubert Henderson, in the Economic Journal of September, 1947, said -

My personal opinion ds that cheap money policy has been ‘only .a .minor factor in .the inflationary complex, so unimportant relatively ‘to other -factors as to be scarcely worth considcuing.

B.ut in our inflationary situation, .the (Government considers the interest rate to he important enough to make it the ‘ focal point of its policy. Mr. R. M. Macintosh, writing in -the same journal, in March, 1951, said this -

Interest rates could and did have an important effect on investment in houses, and cheap money stimulated building.

Therefore, in that inflationary period, the interest rate did not encourage inflation generally, according to these two opinions, nut it did encourage lorne building and -other low-yield investment. To bring them up to date on the effect of increases of the interest Tate ‘in England, I commend honorable members to study the words of Dr. E. W. Paish, who, in an -article in The Times Review of ‘Industry, of December,, 1’9’55. wrote -

The annual cost of ownership of any durable .physical asset consists of three parts, interest charges, depreciation and provision against risk. The more durable the asset, and ‘the .safer .its yield, the more important is .the interest element in the total coat of ownership. Thus a given rise in Interest rates is likely ‘to have -more effect an ‘restricting investment in low-yielding and durable assets, such :as houses, than less -durable and riskier forms of investment, such as industrial plant and machinery.

We may conclude from this observation ‘that increases of interest lates discourage investment an low-yield activities like housing, schools, roads, public utilities and so ;on, but if .no .other antiinflationary action is taken - and the Prime Minister recommended this in his statement - increases of interest rates are likely to increase inflation, because of .cost increases, and other .effects. Increased rates will .’certainly fail to reduce inflation. I refer again to the authority that I quoted a -moment .ago .from The Times Review of Industry, .of December, 1955. Dr. Paish said -

Thus it :is not a’t all surprising nhat, even af’tel a year ,of tighter money-

This is in England, where that expedient has been tried - its effects on the volume of home investment are still relatively slight.

By “ home “ investment he meant total investment in .England. England has already gone -through .this experience, and has not found it to be anti-inflationary. In England, it was found - .as we shall find - that it did not discourage other forms of investment. So we have the remarkable result which .the Prime Minister described in these words -

The lange growth of capital -demand .has been in the private sector .. . . The truth te that in the last four years. Government capital expenditures have remained at least constant in terms of money.

Whilst recognizing that private capital demand is excessive and that public capital demand has been at least constant in terms of money - nut falling in real terms - the Government proceeds to raise the interest Tate, -which will further discourage public investment, and perhaps encourage both the supply of, and demand for, private capital. The increase of interest rates .by the Government will aggravate the very situation that it is trying to overcome.

What ether effect will the increase of interest -.rates nave? First .of idi, it will increase the profits of the banks, -despite what the Prime Minister asserted yesterday in answer to a question. As the honorable member for Werriwa (Mir.. Whitlam) .pointed out last night, one has only to refer to .the fact .that with the trading banks advances .at a total of £784,000,000, an increased interest Tate of one-half of 1 per cent, will yield an extra £8,900.000. If we deduct, an amount of £2,600,000, representing additional interest of 1 per .cent, on interest-bearing deposits, the additional Income of the trading’ banks will be £1,300,000 per annum. It is quite obvious that the profits of the trading banks, on their advances business alone, will increase by that amount.

In addition, we know that .the trading banks are up to their ears in .the hirepurchase business. At least three of them have hire-purchase departments, and it is obvious that they will make increased profits by this means. Of course, the Commonwealth Trading Bank of Australia is now out of this type of business. In ‘consequence, there will be a transfer of income from ‘borrowers such as homebuilders, farmers, and small business people to the large financial corporations. There will be a transfer of income from people who are poor enough to have to borrow to those who are rich enough to be able to lend money, there will be a transfer of resources from essential to less essential uses.

What does the Opposition propose in this -connexion ? We .propose the reintroduction of ‘Capital issues control by agreement between the States. We believe that to be necessary. We believe that if the other parties on the government side support this proposal as they say they do, we would be able to obtain by agreement with the States a -proper system of capital issues control.

We believe also that there must be a proper system of controlling bank advances. I doubt very much, as a result of the answers given by the Prime Minister to relevant questions, whether the proposed system will be at all successful. lt seems to me that market demand, plus concessions to pressure groups such as the Australian ‘Country party, will deter., , ‘.. who gets the most favorable interest rates and who gets the worst interest rates. So I think that the proposals of the Government in this matter are clearly mrt likely to reduce inflation. There is the effect of the restriction of imports-a very strong inflationary factor. There will be cost increases in transport. The increase of the petrol tax alone will increase petrol costs in transport by 8 per cent. The increased cost of commercial motor vehicles will put up the cost of transport by 4 per cent., and so on.

There is to be no surplus in the budget accounts. There will be no debt reduction. There is likely to be a change in the distribution of resources from essential uses such as for home building and road building ito luxury activities. There is likely to be a situation in which inflation will -continue until it is brought to an end by the only thing that , car bring inflation to an end when there is a government with (the social objectives that -this Government has. So I submit that the economic statement of the Prime Minister should be rejected in its entirety,, and that the , amend ment put forward by *he Opposition should be accepted, be<cause the Go’vernment is not coming to grips with this situation any more now than it did during its previous yeaTs of office.

Minister for Health · OXLEY, QUEENSLAND · LP

– It is very easy to talk .about inflation in a rather facile and simple way. It is very easy to make statements, such as have been made during the course of this debate, that more taxes mean more inflation, but let us have a look at the whole proposition in a somewhat simpler way than that. Let us have a look at the state of affairs. Let us not be overcome by the power of words - words like inflation. What, of course, is really happening is that, for some time, we have been proceeding in Australia at a rate of development in excess of the resources that we can command. In fact, it can be seen on every hand. It is obvious in the building trade, in the transport industry, in the growth of factories, in the great demand for goods on all sides, in the high wages that are being paid and in the high salaries that are being earned, that there is in this country to-day an immense spending power. It is obvious, also, that, with the resources that we have, we are attempting to do very many things on a large scale. We are attempting to support a great immigration programme and to engage in great public works and we see before us the growth of immense private investment. All these things are good in themselves; nobody wants to see them stopped. But what is actually happening is that they are proceeding at a pace which has outrun the resources that we have to keep them going. The situation, therefore, is that accompanying this rapid development is an enormous increase of purchasing power. That purchasing power is exercised by every one in the community, and not by one class as was suggested in the highly theoretical approach of the honorable member for Yarra (Mr. Cairns) to which we have just been listening. Who in the community is buying all the goods ? The buying is not limited to one class. Who is buying all the domestic appliances, refrigerators, household goods and wirelesses? Every one in the community is buying those articles. To attempt to pass off this condition as being a profit inflation - whatever that means - or to attempt to say that it is attributable to the wealth of one class is simply to evade the obvious facts that face us on every hand.

No single measure will bring the whole situation into balance. No single measure can be employed that perhaps will not have some adverse consequences. A good example is the system of import licensing which is now being used to reduce the actual physical supply of goods, because the demand about which I have been speaking spills over from a domestic demand into a demand for imports. No honorable member would abandon import licensing. Every one must realize that although whatever measures are employed may have some adverse effects, the sum total of them will work to produce an end to the present exorbitant demand. That is the purpose of the measures that have been adopted by the Government.

Mr Beazley:

– For five years, Britain had an immense adverse trade balance with us, which was allowed to continue without being disastrous.


– What about our trade balances with other countries? To what are Britain’s efforts being directed at the present time other than to building up its gold and dollar reserves in order to correct its adverse trade balance ? In the search for measures that are necessary to control and to make possible the continued development of the country, two aspects of the matter must be considered. One is the long range aspect. If we are to have increased resources - and that, of course, means public works on a large scale - we must have co-operation from the States and co-ordination of the States’ activities. But we do not obtain that co-operation and co-ordination; they are conspicuous by their absence. Every one knows how difficult it is to get the State governments to co-operate with the Commonwealth in the development of the country. This Government has endeavoured to obtain co-operation, but on every occasion it has met with poor success. However, it continues to pursue methods for the long range development of the country.

In addition, we have an immediate problem, which the Opposition has consistently ignored, and which is largely a cash problem. It is a question of providing loans for works, of providing finance for the States, and of avoiding deficit finance. Deficit finance would nave an immensely damaging effect on the ordinary man. It is not merely an academic question; but something which produces rapidly mounting inflation and a rapidly rising cost of living. It is necessary to adopt fiscal measures to control this immediate problem, and it is to such measures that the Government is at present addressing itself. Against such a background, it is idle for honorable members to talk, as they have done during this debate, about wage justice because, if we have no fiscal measures to control a rapidly rising cost of living, and if we have no fiscal measures - which must by their very nature be unpleasant - to control a rapidly rising inflation, we will have a state of affairs in which it will be impossible to preserve what is referred to as wage justice. It is also impossible to entertain, against such a background, the theoretical idea that interest rates can be held down. It is of no use for honorable members opposite to point out, as did the Leader of the Opposition (Dr. Evatt), that in Mr. Chifley’s day interest rates were kept low. The right honorable gentleman omitted to outline the circumstances of Mr. Chifley’s day. Of course interest rates were low at that time. Nobody wants to see interest rates now rise more than is necessary, but we must take cognizance of the conditions of the times. In Mr. Chifley’s day, the stock market was pegged, and there was capital issues control.

Mr Whitlam:

– Has the Government asked the States to give it power to control capital issues?


– In Mr. Chifley’s day, wages were frozen and goods were rationed. In such circumstances, one perhaps may talk about low interest rates, but the Opposition should take notice of the facts of life. None of those conditions prevails to-day, nor does any one but an abstract theoretician imagine that State consent to the reinstitution of such things as capital issues control could be obtained, except perhaps after much argument and over a very long period. It is completely unreal, therefore, to talk about keeping interest rates down to the level that has obtained up to the present time. I address this question to the Opposition: Which is more inflationary - to allow interest rates to rise or, by some means or other, to keep them so low that it is impossible to raise public loans? The only method of keeping down interest rates is, in effect, to invite the central bank to print more money, because that is what unlimited support for the bond market would mean. When people say that interest rates used to be low, that they should be kept low, and that a rise would do damage, the only reply that one can make is that they would do a great deal more damage if they were not allowed to rise.

The same can be said of taxation. The Opposition has declared that the Government’s taxation measures are all wrong, and that such measures should not now be adopted. Again, I ask honorable members opposite to move with the times. To impose more taxation, that is, taxation per se, is not always necessarily inflationary. Which would be the more inflationary - to raise more money now by increasing taxation in order to prevent deficit finance, or to allow ourselves to be without finance for the public works that every member of the Parliament and every one outside agrees must be the basis of Australian development? That is the choice with which we are confronted. Are we to raise taxation, or are we to allow real inflation completely to have its head?

Mr Beazley:

– Why not income tax?


– The honorable member for Fremantle (Mr. Beazley) asks, “Why not income tax?” It is a new conception that members of the Australian Labour party should come into this Parliament and say, as they have said, “ The only taxation we subscribe to is personal income tax”. Are they prepared to go back to their electors and say to the people who vote for them, “We condemn all the present measures that the Government is employing. Our solution is that you personally should be taxed more”? I do not believe they are prepared to do that.

What I am going to ask the House, and particularly the Opposition, is: Are we really inflicting any grave hardship on the country by the taxation which we have outlined in the House? Are honorable members opposite prepared to say that we cannot afford 2d. more for a glass, of beer ? Arc they prepared to say that the higher excise on beer, on tobacco and on> cigarettes, and the ls. increase in company lax are sacrifices- that this country cannot pay?


– Are- they not sacrifices for the pensioners ?

Br. DONALD CAMERON.- The pensioners, are not asked to pay them. As I said when I commenced to speak, there is no single measure which will not have some adverse consequences-, but there are much more adverse consequences to be reaped from abandoning the- attempt which this. Government is: making by a> wide spread of measures over fields which can well stand it than if: we! were to leave things alone..

There are one or two other things that I want to say; and the first is this : What alternative has the Labour party offered us ?: We are entitled to ask that. Beyond some vague remarks about a new tax structure, beyond a call for a higher progressive income tax scale; which I understand they want, honorable members opposite have offered no constructivesuggestion whatever.

Dr Evatt:

– The honorable gentleman could not have listened;


– The right honorable gentleman keeps interrupting me, but I would like to recall’ that during the last election the Leader of the Opposition (Dr.. Evatt); in. fact made a proposition to the- Australian; people that if his party were returned to power it would impose a- very high rate of company taxation,, sufficient to pay for. all sorts of increased benefits, and the people’ of Australia rejected the Labour pasty by a very large majority.

Mr Whitlam:

– Because the Government did not have the courage to say then what it says now.


– Order !


– The honorable member for Werriwa (Mr. Whitlam), says we did not have the courage. I point out to him that that is completely at variance, with fact. Indeed, in. the last Parliament, in about September, the Prime Minister (Mr.

Menzies) made’ a statement in this House in which, he outlined the- measures which had been taken to- deal1 with the rising economic difficulties, in which he declared thai he would hold an election because he required a fresh mandate to- employwhatever measures were- necessary.

Mr Whitlam:

– He never mentioned sales tax, and he never mentioned’ excise.


– Order! The honorable member for Werriwa will leave the. chamber if he does, not. refrain, from- interjecting..

Mr Whitlam:

Mr.. Acting. Deputy Speaker, I direct, your attention to the state of the House: ^Quorum formed.J


-It is obvious that, the honorable, gentleman cannot take his medicine. As I was. saying when he decided- that he could, not stand any longer this exposure: of the Labour party, the Prime Minister., during the course of the last Parliament, declared in. this House, that the reason he1 intended to seek an early election was in order to receive a. mandata to. carry out whatever measures were necessary,, and in his election speech the very words he used made it plain that he required a mandate to carry out any other measures that might be needed beyond those already taken.. He also made it perfectly plain, as all of us who spoke during, the last election campaign made it plain throughout Australia, that some of those measures from which we would not shrink would be fiscal measures; and the country returned us with a large majority and indicated a very great vote of want of confidence in the Opposition.

Do not let us hear any more about the. Government being afraid to make plain what it was going to do. I say that it was clearly known last year, in the last Parliament and throughout Australia, that if this Government were returned to office it would take any measures necessary, including, if need be,, unpleasant fiscal measures to deal: with the situation. As. I said before, during this debate we have had no constructive, suggestion from the Opposition. We have, had vague references to a new taxation structure-. We have: had calls for co-operation, with the States.. Nobody should be- misled by these,, because every one. is aware how long it would take to get State co-operation. I put it to the. House that this Government has never been afraid to incur unpopularity in the national interest. It has done* so more than once,, and it has been vindicated by the votes it has received’ at four consecutive elections. Over the years its actions have given Australia the greatest prosperity it has ever known.

It may be true that prices have risen by 65 per cent. It is also true, that wages have risen by 103 per cent. It is also true that wages have risen in reaL purchasing power, and it is true that those who receive them enjoy a higher level of prosperity than they ever enjoyed before. E feel perfectly confident, sir, that no one will be misled by the attacks on the Prime Minister’s statement. I am confident, also, that the majority of people in this country realize now, as they did in the past, that the fiscal measures taken by this Government, though perhaps unpleasant at the: time,, have always been effective, and I am certain that, as a government, we. shall continue to retain the confidence of the Australian people.

Mr. WEBB (Stirling) [10.19 J .Honorable members on this side of the House ha-«’fl clearly indicated to the Government, and I think also to the general public, that the main objective of the supplementary budget that was introduced by the Prime Minister (Mr. Menzies) recently was to make the poor poorer and the rich richer.. There is nothing new in that, of course, because tory governments; no matter by what name they have gone under in the past, always have done that. The skeleton in their cupboard’ is always revealed, as attacks on the wages and conditions of the workers, and attempts to lower the standards of social services benefits, with the object of making the poor poorer.

The Prime Minister, in his economic statement last September, called upon the community to. practise restraints, as though everybody were receiving, the same quantum of prosperity. The people who could have practised restraints,, had they taken notice of what he said, were the well-to-do. in. the community who were reaping the big: profits. Nobody could, have expected restraints to be practised by the worker on the basic wage, the pensioner, and people of that standard, because they were already practising compulsory restraints. They were not getting enough to do anything else but practice restraint.

The Prime Minister (Mr. Menzies) claimed that prosperity was out of hand* as though prosperity was something that should be avoided at any cost. But he did not, during that talk, indicate the very savage methods of correction that he intended to implement. Of course he did not, at that stage, because he had in mind a federal election in December; and he knew that it would have been politically unwise for him to mention, prior to that,, his intention to increase salestax and the bank rate. He did not give any indication of his intention when the Government was returned to office, again for a very obvious reason. The elections in New South Wales and South Australia were duc, and he was particularly anxious; if he could possibly do it, to secure the defeat of the Labour Government in New South Wales, because he knew that it was the main obstacle to his economic plan. When he failed, we heard something about the supplementary budget that he brought down the other night.

He realizes, now, that the mere bringing down of this budget, at this stage, confirms for the people what the Australian Labour party told them during the recent general election campaign, that if this Government was returned to office, it intended to make very savage attacks on the community generally. And what has happened as a result of that? Ti there was any doubt, previously about the results, the Prime Minister’s proposals have assured the election of Labour governments in Western Australia and Queensland.

The Prime Minister brought in the first instalment of the second horror budget. The Minister for Social Services (Mr. Roberton) mentioned the other night, during the course of this debate1, that this will only be the first instalment. The people of Australia can rest assured that when the budget is presented next September, there willi be more to come. We shall get the second instalment of the second horror budget

I come now to the increased sales tax. Almost every authority has said that increases of sales tax will increase the cost of living and, consequently, will force the workers to fight for higher wages. There is no question about that. Then what will happen? As a matter of fact, the Review of the Bank of New South Wales, No. 24 of February, 1956, deals with this subject. The Bank of New South Wales is an organization that gives the Government very close support, but its Review says this -

  1. . increase in either direct or indirect taxes will only serve to reinforce demands for higher wages in order to maintain living standards.

That is what the Bank of New South Wales has to say about this matter and reliable sources say that the increase in the average family budget, as a result of the increase in sales tax, will amount to more than 10s. a week. An honorable member interjects that I have taken that information from the Perth Daily News. I have not done so. Other authorities have similar opinions, and figures have already been quoted in this House which indicate that that is the cost. The honorable member has not been in the chamber to-night, so he has not known much about this debate.

Another aspect of this matter is the discrimination that is being shown in connexion with sales tax. For instance, the rich man’s smoke, cigars, has been increased by 5s. 6d. per lb.; the poor man’s smoke, cigarettes and tobacco, has been increased by 6s. per lb.; the rich man’s drink, brandy, has been increased by Id. a nip; the poor man’s drink, beer, has been increased by 2d. a glass. The general manager of the Ballarat brewery drew attention to the fact that, when these increases were made, beer which cost 3s. at the brewery would cost 13s. to the consumer.

The increase of 3d. a gallon in petrol will make it more expensive for anybody to drive a car. That increase will be borne by the family man who uses his car to go to work or who may take his family for a ride when he gets some spare time to do so. But the family without a car will also be forced to meet these added costs, because it is said that the 3d. increase on each gallon of petrol will mean that bus fares will rise. .1 have here a letter which I received from the Omnibus Proprietors Association to-day. It says -

  1. . We cannot possibly carry the further Federal taxation costs as announced by the Prime Minister in his present supplementary budget.

The writer mentions the increases in petrol tax and in sales tax on motor vehicles and parts. The bus proprietors will have to pass that increase on to the travelling public. It will have some effect, too, on the standard of living of the individual, which will deteriorate a3 a result of the increase.

Then I come to the question of the increased bank rate. The Government’s proposals mean that banks will make higher profits by lending this money. The question that we should ask ourselves, as representatives of the people, is, “ Will men and women be deterred from borrowing by having to pay 5£ per cent, or 6 per cent, on overdrafts ? “ If they are not deterred as a result of the increase it simply means that inflation will rage more fiercely, because of the higher interest charges which have to be paid, and which will be passed on to the consumer in the form of increased prices.

The general opinion is, that people will not be deterred in their borrowing and that, consequently, prices will go up. But what if people are deterred in their borrowing? It simply means that, finally, a stage of unemployment will be reached because if they are deterred in their borrowing, there will be less money for the erection of houses, less money for expansion, and less money for small businesses. Consequently, the people employed in various trades will become unemployed.

So we find, in an age when we have more material promise than ever before, that the tories indicate that they cannot cope with the challenge of prosperity. At the moment, the bank rate is the highest that it has been since 1931, and everybody knows what happened in that year. We know what the state of our economy was then. The main victims of the Government’s proposals will not be the bankers who reap the higher profit, but the poor people who are trying to buy a house. Those who have not enough cash for the transaction have to borrow it, if they can get it, and, as a result of the increase in the interest rate, they will pay more each week for their houses. Even those people who already have houses may have obtained overdrafts on them, and unless they have signed agreements providing for a fixed rate of interest, they will have to pay more each week. Even those who are renting houses will be forced to pay more, because one can rest assured that landlords will want their pound of flesh, and rents will go up. As a result of all this, those who will be hit the hardest will be those who have the least.

Increased company tax, as well, will be passed on to the consumer in the form of increased prices in one way or another. The result will be a clamour for higher wages and another fillip to the inflation with which we are faced.

Actually, this Government has no policy at all. It has not had one since it has been in office. It gets its foreign policy from the United States of America, and its economic policy from Great Britain. That is the answer. The tory Government of the United Kingdom was elected to office a few months before this Government was elected by a similar subterfuge. Soon after the election, the tory Government in the United Kingdom put a heavy purchase tax on goods, increased the bank rate and withdrew subsidies from essential foodstuffs. When Mr. Butler, the Chancellor of the Exchequer, made way for Mr. MacMillan, the people got the second instalment of their horror budget and up went the bank rate again. Those measures were introduced in Australia. Another result is that in Great Britain, for the first time since the war, there are again queues of unemployed - people on the dole - and in several industries employees are working only part time. The people are being forced to drain off their meagre savings to live, and others are in the hands of the money lenders. The Daily Sketch of the 3rd March, 1956, had this to say -

The money lenders are reaping a rich harvest from people who have been refused necessary advances by their banks.

The pattern has not changed very much over the years. Now, Mr. Menzies-


– Order! The honorable member must not use names.


– The Prime Minister is going to London shortly. Everybody knows who the Prime Minister is by now. If they do not, they ought to.


– He will get some fresh ideas in London on how to get out of his economic difficulties, and when he returns there will be more cuts in federal public works, and, after June, a clamping down on State public works. The Prime Minister will be able to advance some reason for creating more unemployment. The policy of the anti-Labour parties has not changed since they were in office during the early part of the depression. Very soon there will be a pool of unemployment in this community. Earlier this evening, the honorable member for Bendigo (Mr. Clarey) pointed out that in the 1952-53 crisis there were more than 100,000 unemployed, and a similar position will soon exist again.

Some honorable members on the Government side would welcome a percentage of unemployment - not a great amount, but just sufficient to enable management to discipline the workers, and to make certain that for every worker within the factory gates there would be one or two outside to take his place. That will be the policy employed to make the worker produce to his utmost, and to bring down his wages. As I said the other night, in 1945 during a bi-election campaign in Fremantle, the Prime Minister said that there should be a pool of unemployment to discipline the worker. That statement was reported in The Wheat-grower of the 24th April, 1946, if any honorable member wishes to check it. Professor Hytten, who was appointed to the Commonwealth Bank Board, suggested a pool of unemployment of between 6 per cent, and 8 per cent. Is he not one of those now recommending an increase of bank overdraft rates? Does that not mean that there will be less money for housing, developmental works and expansion of business, and will not the result be more unemployment? The multiplier system,, which was used during the- depression to relieve unemployment, will’ now work in reverses. That, system was devised by certain economists who claimed that Tor every. 1000 workers directly engaged, 2,000 more workers would receive consequential’ employment. When- the* system works’ in- reverse; for every 1,000” workers dismissed- another 2,000 will lose their’ jobs by repercussion. Jobs, to.-day are not: as plentiful: as> they were, and more unemployed, persons are receiving social service benefits.. The employment position in Australia i3 returning to the old order of things, and soon will’ be back to what it was during the depression period of 1929-30’.

Mr Turnbull:

– What a cheerful fellow the honorable member is!’


-.- The honorable member for Mallee (Mr. Turnbull) should face the facts. As the honorable, member for Yarra ([Mr.. Cairns) pointed out,, finance is on the. wrong side- o£ the. economic fence. Consumption of all national products has. decreased under this Government; and as. the: honorable member for’ East Sydney (Mr. Ward) said, wageearners are losing. l’5s., or l’6s. a week from their pay envelope-. Workers under State awards, who have not had their basic wage adjustments restored since 1953, have lost £70 or. £80, and those covered by Commonwealth awards, have lost even more. As a result of these things,, the value of social service benefits has been drastically reduced.

But. on the other side of the economic fence, profits still continue to rise, as an examination of financial publications such, as the Financial Review, or the financial pages of the daily newspapers will show. Recently, there was a. controversy between the firms of Cox Brothers (Australia) Limited and Waltons-S’ears Limited, and according to a circular issued by Waltons-Sears, over the past five years they have paid an average dividend of 15 per cent.,, or a total of 75, per cent. Their capital appreciation over that period was 233 per cent.,, making a grand total of 308 per cent. Returns such as that to the shareholders were of no benefit to the workers, whereas the persons who profited by them had done nothing, but provide the capital for that, particular, concern. Can any one: justify such large returns, from no effort?. The economy cannot carry such high profits. Honorable members on this side of the House would like- to. see legislation to provide for an excess profits tas. It should apply to the higher incomes- so that the- wealth. o£. this’ community could be distributed in such a manner as to bring; about a better economic balance-. The attainment of such a balance would alao- be helped by increasing the value of social service benefits; and by paying basic-wage and low-margin workers an income equivalent in value to their pre?vious earnings. These are the people who spend their money on the comforts and necessaries of life; more of which are produced locally than are imported. On the other side of the economic fence, too much is spent on luxury lines by wealthy people who can afford to import them. Such a lop-sided economy will not help Australia to balance its overseas payments, although it may benefit our friends on the Government side. Honorable members on the Government side are opposed to honorable members on this side politically, and can never’ be friends on that account. The present economic situation has been created by this Government, and some day, when a book is written about the guilty men of Australia, many members on the Government side will figure in it as characters. The old saying, “ When skies are black, chickens come home to roost” will then be- true, and those honorable members who now support the Government’s policy will then get the axe in the same place as the. chickens get it.

Debate (on motion. by Mr: Opperman) adjourned.

House adjourned at 10.39 p.m. until Tuesday, the- 10th April, at 2.30 p.m.

page 1110


The. following answers to questions were circulated.: -

Government Loans, and Finance

Mr Haylen:

n asked the- Treasurer, upon notice -

  1. How many loans of under £5,000 were approved by the Commonwealth Trading Bank in the last twelve months, and what was the aggregate amount loaned?
  2. How many- loans of over £5,000 were approved and. what was the. aggregateof the higher loans?
  3. Did the Trading Bank recently find £1,000,000 for a finance company on short-term conditions whileloans for housing were reduced by about the same amount?
Sir Arthur Fadden:

– The answers to the honorable member’s questions are as follows : - 1 and. 2.. Information is not. available to me to show how many loans of under £5,000 and how many of over £5,000 were approved by the Commonwealth Trading Bank in the last twelve months. I am advised, however, that the average amount of all loans granted by the Commonwealth Trading Bank during that period was £3,089. 3.I do not propose to ask the Commonwealth Trading. Bank for information about its transactions with a particular customer. I would mention, however, that the Central Bank some time ago asked trading banks not to grant new or additional advances for the purpose of financing an expansion in hire-purchase business, and this request is, of course, being observed by the. Commonwealth Trading Bank. As far as housing loans are concerned, I am advised that for some time past the proportion of the Commonwealth Trading Bank’s funds invested in loans for housing and building purposes has been about double that of the combined major private tradingbanks.

Outstanding Treasurybills

Mr Crean:

n asked the Treasurer, upon notice -

What was the. amount of treasury bills outstanding at the 30th June and the 31st December, respectively, in each of the years 1945 to 1955, inclusive?

Sir Arthur Fadden:

– The answer to the honorable member’s question is as follows : -

War Service Homes

Mr Ward:

d asked the Treasurer, upon notice -

As approval by the War service Homes Division of an application for a loan constitutes a gilt-edged security acceptable by any money lending authority, will he consider making arrangements- whereby successful ex-servicemen applicants- may secure temporary advances through the: Commonwealth Bank, at reasonable rates of interest, to tide them over the waiting period of approximately two years between the approval of the application and the actual payment of the money, and thus prevent the exploitation of these war veterans by money lenders who are charging from 10 to 20 per cent. interest upon such loans?.

Sir Arthur Fadden:

– The answer to. the honorable member’s question is as follows : -

The Commonwealth Trading Bank has advised that it has in the past granted its own ex-servicemen customers temporary finance at normal overdraft rates pending availability of loans from the War Service Homes Division, provided the borrowerhad the division’s usual letter consenting to such’ transaction and indicating that its loan would be available within a period of nine months from the date the bank’s assistance was granted. The Commonwealth Trading Bankis continuing this practice. Due to the many calls being made on its available funds the bank has advised that it would not be possible at present for it to make such finance available for periods in excess of nine months:

Canberra Olympic Swimming Pool

Mr Leslie:

e asked the Minister for the Interior, upon notice -

  1. What was the total cost of the Canberra Olympic swimming pool?
  2. What amounts, respectively, were obtained for the project from the following sources: - (a) Commonwealth Treasury, (b) local government or its equivalent, (c) public appeals, (d) private donations and subscriptions, and. (e) any other source?
  3. In whom, and how, is the land and the pool vested?
  4. To what body or organization is the management of the pool entrusted and how is that body or. organization appointed or elected ?
  5. What is the estimated annual cost of the pool, showing separately capital redemption, interest, depreciation, maintenance, and operating costs?
  6. How is it intended this cost will be met?
  7. What rates or taxes are levied on landholders and residents within the area of the districts it is intended the pool will serve?

Mr. FAIRHALL - The answers to the honorable member’s questions are as follows : -

  1. Final figures are not yet available, but the approximate cost was £200,000.
  2. The whole of the funds were provided by the Commonwealth Treasury.
  3. The Commonwealth of Australia.
  4. The Department of the Interior.
  5. The estimated operating cost of the pool is £0,300 per annum. This figure does not include capital redemption, interest and depreciation.
  6. The costs of operation are met from Consolidated Revenue to which all collections are credited.
  7. The pool is intended to serve residents of the whole of the Australian Capital Territory. Rates in the Australian Capital Territory are payable under the Rates Ordinance which applies to occupiers, lessees, tenants, and owners of freehold. The rates are assessed annually. Residents of the Australian Capital Territory are subject to the same taxation laws as other residents of the Commonwealth.

Bankstown Post Office

Mr Costa:

a asked the PostmasterGeneral, upon notice -

I wish to refer the Postmaster-General to representations that have been made to his department for better postal facilities at Bankstown. Has he yet considered this matter ? If he has not, will he take into account the fact that the population of Bankstown is now 110,000 and that the present post office was built in 1022. when the population was only 10,000? I ask him to expedite a decision on this matter and to ensure that a new and bigger post office, in keeping with the needs, dignity and importance of the biggest municipality in New South Wales, is built at Bankstown.

Mr Davidson:
Postmaster-General · DAWSON, QUEENSLAND · CP

– The answer to the honorable member’s question is as follows : -

The municipality of Bankstown, with a total population of 123,000, is served by seven official and twenty non-official post offices. New post office buildings are in course of erection at Bankstown East and Yagoona, and it is anticipated that those offices will be ready for occupation within the next few months. At Bankstown a separate building at the rear of the post office site has been provided for the accommodation of the letter delivery staff. A new toilet block and a bicycle shed were erected during 1955. Some congestion occurs in the public space on pension pay days and in order to provide relief in that respect the practicability of arranging for such payments to be made in separate premises away from the post office is now being investigated. It is the intention to extend the Bankstown post office building, but this project will need to be considered in conjunction with the priorities of other urgent building requirements.

Telephone Services


R asked the PostmasterGeneral, upon notice -

  1. Will he look at the practice of the Post Office to connect telephone subscribers to the exchange nearest their premises, except where that exchange does not provide continuous service?
  2. Will he particularly examine the situation arising when, a new rural automatic exchange having been established, people who have for years past enjoyed direct communication within a nearby town have this line disconnected ?
  3. If such a subscriber, having joined the rural automatic exchange, wishes additionally to retain his direct line and is prepared to pay the extra cost involved, will the PostmasterGeneral allow him to do so?
  4. In considering this matter, will he personally examine specific cases I have recently submitted in which the procrustean application of the rule involves much business difficulty and loss of time?
Mr Davidson:

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

  1. The Post Office is entrusted with the responsibility for providing and maintaining a highly complex telephone service for the benefit of the community as a whole in the most economical and efficient manner practicable. To this end it has adopted universally accepted principles and practices, one of which recognizes the importance of connecting a telephone subscriber’s service to the exchange nearest his premises, the object being to keep the subscribers’ line as short as possible in order to reduce costs and maintain proper transmission standards. Where continuous service is not provided at the local exchange, the applicant may upon payment of the additional charges involved, be connected to the nearest continuous service exchange.
  2. Rural automatic exchanges which provide a full day and night service are being established as part of the overall plan for developing and improving the telephone service in country districts. It is essential that all subscribers in the defined area of such an exchange should be connected thereto not only for the reasons already indicated, but because if they were not, there might not be justification for establishing the exchange at all, since the interests of orderly development demand that each exchange be properly located in relation to adjacent exchanges.
  3. Connexions to two different exchanges are not permitted for the reason that usually they are required by the subscriber for the purpose of avoiding the payment of trunk-line fees.
  4. If exceptions were made to approved policy requiring subscribers’ services to be connected to the nearest exchange, sound planning for future telephone development would be rendered impracticable. The needs of many areas would remain unsatisfied because the number of subscribers necessary to justify the provision of the automatic facilities could be so reduced as to render certain projects completely uneconomical. However, I shall personally examine any specific cases the honorable member has submitted and furnish him with a reply in connexion therewith as soon as possible.

Telephones fob Pensioners.

Mr Webb:

4;Webb asked the PostmasterGeneral, upon notice -

As age and invalid pensioners often need to make emergency telephone calls, will he consider allowing pensioners a telephone either rent free or at a reduced rent and reduced call fee?

Mr Davidson:

– The answer to the honorable member’s question is as follows : -

The question of providing age and invalid pensioners with telephone services rent free or at a reduced rental with reduced call fees has been considered carefully on a number of occasions. However, as a public undertaking administering a communications service on behalf of and for the benefit of the community generally, the Post Office is obliged to provide telephone services on an impartial basis and it is, therefore, not practicable to discriminate between individuals in the application of the prescribed rental charges and call fees. In the circumstances, the way is not clear to waive or grant concessions on any of these charges.

Postal Department

Mr Duthie:

e asked the Postmaster* General, upon notice -

  1. Does his department keep a record of money that goes astray through the post?
  2. If so, what was the amount of money lost in transit in each year since 1045 in respect of which written complaints were made?
  3. How much was recovered?
Mr Davidson:

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

  1. No. Complaints are dealt with in the offices affected and are not listed in accordance with the stated contents of the postal article. I can say, however, that there are relatively few complaints, the total of unsatisfied inquiries being equivalent to only .007 per cent, of the articles of all classes handled each year.
  2. See reply to 1 above.
  3. It cannot be stated, but in many cases articles which have been reported as lost have been forwarded to the Dead Letter Offices due mainly to omissions on the part of the sender or addressee. Money and valuables found in postal articles sent to the Dead Letter Office amounted to £197,027 for the twelve months ended the 30th June, 1955. Almost all of this was returned to the senders.

Sale of Postage Stamps

Mr Barnard:

d asked the PostmasterGeneral, upon notice -

What was the total value in revenue received from the sale of stamps in each of the years 1950-51 to 1954-55 inclusive, at each of the following post offices: - Launceston, Launceston South, Launceston West, King’s Meadows, Young Town, Invermay, Newnham. Kawallah, Nyllavert, Riverside, and Marawaylee?

Mr Davidson:

– The answer to the honorable member’s question is as follows : -

The total value of postage stamps sold at the offices mentioned during the financial years 1950-51 to 1954-55 inclusive, is as follows: -

Launceston Postal Building

Mr Barnard:

d asked the PostmasterGeneral, upon notice -

What cost was incurred by the Commonwealth in (a) acquiring Wilcox and Mofflin’s building in St. John-street, Launceston, which is now being used as a mail room ; ( ft ) renovations, alterations, and provision of equipment in that section of the building used for postal services; and (c) providing and installing the letter sorting machine at Launceston?

Mr Davidson:

– The answers to the honorable member’s questions are as follows : - ‘(a) The Wilcox Mofflin ‘building was acquired by ^agreement on .the 20th .June, 1052, at a cost of £40,070; (5) .the -cost .of carrying .out .alterations and renovations to that portion of The building used for -postal services was £27,552; ‘(c) the provision, assembly and installation of the ‘letter -sorting machine cost £4,000.


Mr Hasluck:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

k. - Yesterday I promised to provide the honorable member for Indi (Mr. Bostock,) with some additional information about the -production of cocoa in the Territory .of Papua and New ‘Guinea. I have now Obtained the -following particulars : - fine years ago., .cocoa ^production in .Papua and New Guinea was 31-7 tons. In the current year it is expected to be about 1,500 tons - “a five-fold increase. When current plantings reach full production in the next five or six wears, -production lis expected to be in the order of 8,000 tons. This is equivalent .to about .twothirds of the total present Australian consumption of raw cocoa, -and would save Australia, at present -prices, £2,000,000 in -overseas exchange.



asked -the Minister for Territories, upon .notice -

  1. What was the number of (o) agricultural and (6) pastoral leases thrown open for .application in the Northern Territory in each of the years 1950 to 1955 inclusive? “2. ‘What was the number granted’?
Mr Hasluck:

k. - The answers te the honorable member’s questions are as follows : -


Out of the .total , of UGO agricultural and d-4 pastoral leases granted during the period Til agricultural .and ten (pastoral leases are onnversions of -existing (leaseholds.


Mr Nelson:

asked the Minister for Territories, upon notice -

What amounts for (o”) prospecting and (6) machinery and ‘equipment were made available for assistance to .mining in the Northern Territory in .each of the years 1950 to “1955 inclusive?

Mr Hasluck:

k. - - The answer to the honorable member’s question is as follows : -

The chief assistance to mining in recent years has been in forms other than those covered by the question. Separate figures for the items mentioned are not kept but the following .table -shows expenditure :(other than , expenditure on roads, water -supplies and surveys by the Bureau of Mineral Resources) of most -direct assistance to prospectors: -

In the current financial year, following the adoption of new proposals in regard to the operations of government batteries to encourage the prospector and small miner, increased .provision has .been made for .maintenance of batteries, ore sampling and purchase and treatment of tailings.

De-icing of AIRCRAFT

Mr. SWARTZ asked the Minister Tor Civil Aviation, upon notice -

  1. Has a new system for the prevention of icing of aircraft windscreens been developed in the United Kingdom?
  2. Has it been reported that the process resulting from basic research provides for the use ‘of transparent gold coating which carries warming .currents for the whole of the outer and inner surfaces?
  3. Is it known whether this valuable new development will be incorporated in the future by manufacturers of commercial aircraft?
Mr Townley:
Minister for Air · DENISON, TASMANIA · LP

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

  1. A system of windscreen de-icing for aircraft is under development in the United Kingdom by the Plessey Company in conjunction with Triples. Limited.
  2. The windscreen consists essentially of two sheets of glass with a transparent coating of gold approximately 0.000,000,2 of an inch in thickness between them. A controlled current is passed through the gold, thus increasing its temperature. This heat is transferred to both sheets of glass, thus preventing the formation of ice on the outer surface and preventing the formation of mist on the inner surface. Heating of the glass also increases its impact strength and lessens the possibility of fracture duc to collision with birds.
  3. Undoubtedly if this system proves superior to existing systems for windscreen de-icing, it will be incorporated in future commercial aircraft.

Imports of Hardwoods

Mr Duthie:

e asked the Minister for Trade, upon notice -

  1. What were the imports of Malayan and Borneo hardwoods into Australia, in millions of super, feet, during each of the years 1951 to 1955, inclusive?
  2. What shipping lines handled these imports?
  3. What were the freight charges as compared with those charged by the shipping companies operating on the England-Australia run?
  4. Does the Government propose to limit these timber imports because of the damage to the Tasmanian hardwood industry which unrestricted importation would cause?
Mr McEwen:

– I now furnish the following answers to the honorable member’s questions: -

  1. Imports of hardwood timbers from Malaya and Borneo, 1950-51 to 1954-55 (million super, feet) - 2 and 3. The main shipping lines which operate between Borneo, Malaya and Australia are - British India Steam Navigation Company, Austasia, Burns Philp, Hoegh Knutson, Royal Interocean, Blue Funnel, Norse Oriental, and New Guinea Australia. However, timber is a “ bulk “ cargo and as such is mainly handled by tramp shipping. Consequently, the freight rates charged vary from voyage to voyage and from ship to ship depending upon cargo available and the tramp shipping available to move this cargo. For this reason it is not possible to make a comparison between United KingdomAustralia rates and Borneo, MalayaAustralia rates. For import licensing purposes, timber is currently under quota control. That is to say, an importer may, if he so desire?, import timber up to the level of quotas held by him for timber. These quota levels arc determined from time to time by the Government in the light of the existing balance of payments situation. (For example, from April to October, 1954, many timber items were licensed on an N.Q.R. basis and this would largely account for the relatively high imports of 1953-54 and 1054-55.) Import licensing restrictions are imposed solely for balance of payments reasons. While the controls are in force they will inevitably have a certain incidental protective effect in so far as Australian industries are concerned. The controls are not. however, designed as measures to protect local industries and it is not intended that they should be used directly for that purpose. The appropriate medium for according protection to Australian industries is the Customs Tariff after public inquiry and report by the Tariff Board.

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