House of Representatives
11 April 1956

22nd Parliament · 1st Session

Mr. Deputy Speaker (Mr. C. P. Adermann) took the chair at 2.30 p.m., and read prayers.

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– I have to inform the House that the First Sea Lord, Admiral the Right Honorable Earl Mountbatten of Burma, E.G., G.C.S.I., G.C.I.E., G.C.V.O., K.C.B., D.S.O., is within the precincts. With the concurrence of honorable members, I propose to provide him with a seat on the floor of the House.

Honorable Members. - Hear, hear!

Earl Mountbatten thereupon entered the chamber, and was seated accordingly.

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– I should like to say, first of all, that we are pleased to see the Prime Minister back in his place after his recent injury. I desire to ask him one short question which is of great importance. Does the Government propose to go on with the matters concerning the meeting of representatives of all parties ‘to deal with possible alterations to the Constitution? I ask that question to-day because the Opposition has a special preparatory committee working on certain aspects of that important matter.

Prime Minister · KOOYONG, VICTORIA · LP

– I had intended to bring this matter to finality by discussion with the right honorable gentleman before the House resumed, but I regret to say that that has not been possible. I will certainly make it my business to have my discussion with him before the House meets next week.

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– My question is directed to the Minister for Primary Industry. Following some discussions certain of my colleagues and I have had with him concerning the McGarvie-Smith Animal Husbandry and Experimental Station at Badgery’s Creek, has he yet had an opportunity to visit the farm and, if so, can he inform me whether there are any ways in which the Commonwealth Go vernment can assist in the work of experimentation and demonstration in respect of water harvesting that is carried out on that farm?

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

– At the request of several honorable members I visited the McGarvie-Smith Animal Husbandry and Experimental Station and watched a demonstration field day when certain experiments were carried out in water harvesting and other agricultural experiments. It was a most interesting day and any honorable member from New South Wales who might have an opportunity to visit the farm should do so. This farm is being run by the Sydney University and, therefore, is not under the direct control of the Commonwealth Government. Nonetheless, the honorable gentleman from Robertson will be glad to know that the Commonwealth, from what is called the Commonwealth Extension Services Grant, has provided funds for one technical assistant and also for the purchase of certain types of specialist equipment for use on the farm. I give the honorable gentleman my assurance that we are interested in it. The conservation of water is one of the big problems that faces the rural community of Australia. Therefore, if we can help, we shall be eager to do so.

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– Can the Minister for the Army inform me why, although almost three months have elapsed, no report has been made to the House on the Carra Creek army fatalities? Is there any suggestion that this affair be hushed up in the same way as the Stockton Bight disaster? What help have the Army authorities given to the families of the deceased servicemen? Will the Minister say whether the scope of the inquiry covers the following matters: - (1) Why were the troops taken into an area where access roads were being frequently cut by floods ? (2) Why were the troops allowed to remain in the area during a period of such extensive rain?’ (3) Was sufficient food on hand in the camp ? If so, why were the troops moved out under such conditions? (4) Were the officers in charge of the manoeuvre, cognizant ©f the nature of the country and its vast flooding potentiality? (5) Had Carra Creek previously been crossed while in flood? If so, did officers allow a crossing to be made without ascertaining whether it was safe to do so? (6) Is it true, as rumoured, that drivers were ordered to cross the creek against their own judgment? Finally, when will the Minister be in a position to make a statement to the House on the matter?

Minister for the Army · BENNELONG, NEW SOUTH WALES · LP

– This matter is the subject of an inquiry by the department. I have not yet received a report, but I expect that it will be available this week. Immediately it has been received, I shall inform the honorable gentleman of tha circumstances and of the answers to the various questions that he has asked. If the occasion warrants it, I shall make a statement to the House on the subject.

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– Will the Minister for External Affairs indicate the major implications of the recent change of government in Ceylon, with particular reference to Australia’s defence? “Will the British naval and air bases there be lost? Will 1 hat, in conjunction with the probable curtailment or loss of similar bases in Malaya and Singapore, when those countries obtain self-government next year, necessitate a major reorientation of our defence planning? In that event, will the Government adopt a defence policy of closer co-operation between Australian and American armed forces, including such measures as the adoption by Australia of American equipment, tactical methods and communication procedures?

Minister for External Affairs · LP

– The result of the election in Ceylon is, I think, known to all honorable members. It is not easy to answer all of the honorable gentleman’s questions in detail. I point out that one of the planks of the policy of Mr. Bandaranaike, the leader of the People’s United Front in Ceylon, was that there should be no so-called foreign bases in Ceylon, and that all foreign troops there should be withdrawn. In the post-election period, during the last day or two, Mr. Bandaranaike has explained more fully various items of his policy, but in respect of that one he has repeated that he is adamant about getting rid of what he is pleased to describe as foreign bases. With regard to the broader, strategical aspect of the several questions asked by the honorable gentleman, I find myself in some difficulty about giving a precise reply at this moment. The Government is fully aware of the situation in all places to the north and north-west of Australia. I can assure the honorable gentleman that all current and prospective changes of the situation are being taken into account in the formulation of the Government’s defence policy.


– I desire to ask the Minister for External Affairs a question which is supplementary to the question that he has just answered. Does he think that it was correct of him at this stage, the future government of Ceylon having been decided by the people of that country, to make adverse comments about that government? Should he not rather seek to maintain friendly relations between Australia and Ceylon and refrain from making tendentious references to changes that may or may not occur in the strategic position or in the association of the two countries generally? As I understand the position, it is the intention of the new social democratic government of Ceylon that that country shall remain a member of the British Commonwealth. Does the Minister not think that he should applaud that intention instead of answering as he did the obviously prearranged question by the honorable member for Indi?


– I do not appreciate the Leader of the Opposition attempting to read me a lesson in international good manners. I think that the records of the right honorable gentleman and of myself in these matters speak for themselves. First, I wish to say that the question was not pre-arranged. The reply that I gave was purely factual. I made no derogatory or tendentious reference whatever to the new government of Ceylon. I gave the pure facts of a particular plank of the policy of the government, and of a simple statement that the honorable gentleman who is destined to be the Prime Minister of Ceylon had made in the last two days. I know the position very well, without having to be lectured from the other side of the House, and I think that I have conducted myself correctly in the last five years. I have taken the view that no Minister or member of this Parliament should make a derogatory reference to the government, or any member of it, of any British ‘Commonwealth or other country. To-day I have answered a purely factual question in a purely factual way. It is Australia’s policy - and I hope that policy will remain unchanged should Labour have the good fortune to form the government - to remain on internationally courteous terms with all other countries, particularly countries of the British Commonwealth. That applies no less to the incoming government of Ceylon than to the outgoing one. Australia can take no cognizance publicly of the political colour or the policy of any other government in the Commonwealth, and I do not propose to start an argument on this subject except to make it perfectly clear to honorable members and to members of the public who may be interested that I have made no reference whatsoever of a derogatory nature to th« incoming government of Ceylon.

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– Has the attention of the Minister for External Affairs been drawn to a statement alleged to have been made by a member of this House when addressing a meeting of Asian students recently, in which he urged Malaya to 3et up its own national defence force and eject all foreign troops, including Australian troops, from Malaya ?


– In expectation of a question on this subject, I have been carrying about for some little time extracts from two speeches by Tengku Abdul Rahman, the distinguished Chief Minister of Malaya, on this subject. I should like to just inform the honorable gentleman of what the Chief Minister of Malaya has said on two occasions. First of all, on the 8th February of this year Tengku Abdul Rahman said this -

I 9ay that as a member of the Commonwealth of Nations, the Federation must make her contribution to the peace and well-being not only of the Commonwealth but also of the world. I feel that if the Federation is not able to provide the armed forces (as indeed she is not at the present time), then the least we should do is to agree to provide the facilities and bases for the stationing of British and Commonwealth forces in the Federation.

Mr Ward:

– When did he say that?


– On the Sth February last, at a meeting of the Federation of Malaya Constitutional Conference at Lancaster House. To continue with the quotation -

Further 1 would remind critics of the absolute necessity of having on Federation soil sufficient forces -as a security measure in this present state of emergency in Malaya and the uncertain condition of the world to-day.

Again, on the 14th March, Tengku Abdul Rahman, Chief Minister of Malaya, said in the Federal Legislative Council of Malaya, when he was speaking of the prospective defence treaty between Great Britain and the Federation of Malaya -

This treaty will provide for defence and mutual assistance as between the two countries. By this treaty Malaya will afford Her Majesty’s Government the right to maintain in the Federation’ the forces necessary for the fulfilment of Commonwealth and international obligations and Her Majesty’s Government in United Kingdom will undertake to assist the Federation Government in the external defence of this country.

He went on to say -

It must be appreciated that with the geographical and strategical position of this country Malaya offers herself an easy target and will always be open to aggression if she is not properly guarded.


– Who said this?


– Tengku Abdul Rahman, Chief Minister of Malaya. He continued -

If we are able to get help from the United Kingdom and other Commonwealth countries in maintaining our defence, we should welcome it. … I am taking a realistic view of the situation in Malaya and I. am certain that a majority of the people will accept my view particularly because of the Communist and other enemy activities even from within our own territory which in itself requires a very large force constantly occupied.

Those two most authoritative statements - and it would not be possible to have two statements more authoritative - are couched in the most direct and forcible terms.

Mr Ward:

– How does the Minister know ?


– Order ! If the honorable member for East Sydney wants to leave the chamber he will be ordered out directly unless he amends his behaviour.


– That will be all right with me.

Mr Peters:

– I rise to order, Mr. Deputy Speaker. Does this statement by the Minister come under the heading of answers to questions without notice?


– The Chair will decide that ‘matter. The Minister’s reply is quite in order.


– I think that those two statements by the Chief Minister of Malaya, who is the greatest authority on this subject, should be conclusive enough to convince members of the Opposition, and anybody else in Australia, on this subject of the continued existence of British Commonwealth, including Australian, forces in Malaya., at the invitation of the Government of Malaya.

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– I rather regret that I have to ask a question of the Minister for External Affairs. I hope it is not too involved. Can the Minister, after his recent visit to Karachi, where he attended a meeting with leaders of South-East Asia, now give an assessment of the main effects of the visit to India recently of the two Russian leaders, Bulganin and Khrushchev ? Is there any way in which the Russians have stolen a march on u3? Is there anything more, or anything new, that Australia can do to combat Communist influences in South-East Asia?


– I regret that, owing to the noise on the south side of the House, I am not fully seised of the full purport of the honorable gentleman’s question, but I gather that he was asking about the recent visit of two Russian leaders to India. I do not think that that is a question I should be expected to answer offhand in this House, and publicly. I think the public can make up its own mind as to the plus and minus elements in that visit from the Communist and democratic points of view. I have my own ideas, but I do not think that at this moment I am called upon to express them.

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– Will the Minister for Labour and National Service indicate whether steps are being taken to build up the waterside labour quota at Tasmanian ports in order to cope with accumulated cargoes of perishable and manufactured goods awaiting shipment from that State?


– The honorable member for Franklin directed a question to me yesterday raising the same matter which the honorable member for Braddon now puts to me. Following on the information which the honorable member gave to me yesterday, I have been in touch with the Australian Stevedoring Industry Board, the Chief Secretary of the Government of Tasmania and my colleague, the Minister for Shipping and Transport, who is in Melbourne at the present time. I have discussed various aspects of this matter with each of those authorities, as well as with officers of the Department of Labour and National Service. I am aware that there is a continuing shortage of labour, particularly in Hobart, partly due to the absence of the normal volume of transfers from the mainland at this time of the year as a result of cargoes building up in other ports as a result of the recent waterfront strike, and partly due to the refusal of the branch, apparently, to increase the quota to the number prescribed by the Australian Stevedoring Industry Board. I have been informed to-day that it has now agreed to increase that number by 50. That number is quite inadequate for the purposes of the port, and if the reason for refusing to take it any higher is a fear that there will be men permanently on the strength of the port after the seasonal demand of the apple export has disappeared, it would seem that the common-sense solution is for the branch to admit on a casual basis a certain number of men who, in view of the needs of Hobart and Tasmania in general at this time would, I am sure, be willing to come forward. I can assure the honorable member that this and other aspects of the matter are being examined, and my colleague, the Minister for Shipping and Transport, has indicated to me his willingness to proceed to Tasmania to study the position at first hand.

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– My question is directed to the Treasurer, and it has been prompted by the unprecedented nature of the disastrous floods which have again devastated large areas of New South “Wales and Queensland. “Will the right honorable gentleman make additional funds available to the States concerned so that they may be able adequately to compensate those who have been affected? Further, will he provide additional grants to the States to enable local government bodies to meet the cost of the restoration of roads, bridges and other public services?


– The honorable member’s question obviously involves State responsibility. Any representations made by a State to the Commonwealth on a government to government basis will be considered.

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– I preface my question to the Minister for Immigration by reading a few lines from a letter which I received from a person in New South “Wales. The letter reads, inter alia -

In the area .1 live in (Holroyd Municipal Council) near Parramatta I have been advised by the local school teacher that many children of Maltese and Italian parentage, whose parents were born in Australia, start school unable to speak English.

The writer also indicates that he can supply the names of the teacher and the school if required. I ask the Minister first, whether the Department of Immigration can take measures to correct thi3 state of affairs; and secondly, whether it is possible for the department to take measures to prevent this sort of thing happening with future immigrants.


– The honorable member will appreciate that we would find it very difficult - and, indeed, in many respects, undesirable - to make a knowledge of English a condition precedent to admission to Australia. To do so would have the effect of excluding from Australia many desirable prospective citizens who, otherwise, would be making a valuable .contribution to the development of Australia. However, I can assure the honorable gentleman that we go to considerable pains to encourage immigrants to learn the English language. In association with the State departments of education, we maintain a system of voluntary classes in English. So far as is practicable, instruction is given to prospective immigrants before they come to Australia, and opportunities for learning the language are provided. The children present the least of our problems in this connexion, because we have found that they are readily adaptable to the Australian way of life, and quickly acquire a knowledge of the language. Certainly they do so once they begin their schooling and, indeed, the facility with which the children pick up the language often enables them to assist the parents to acquire a working knowledge of English. I think we are doing, at the moment, about as much as can reasonably be expected in connexion with the matter-


– Having in mind thefact that colonization is taking place ia Australia among immigrants from southern Europe, will the Minister for Immigration take this matter up with his department to ascertain whether there is any way in which the problem can be solved, as the effects of colonization are causing much concern in many quarters?


– The honorable member has made a general allegation without giving any details to indicate where the colonization, as he terms it, is occurring. I know of very little evidence of it myself. Certainly, there is some indication of the existence of groups in certain parts of the big cities. In Melbourne, for example, there may be seen in Carlton and North Melbourne-


– It is occurring in many places besides Carlton.


– The honorable member has not given me any details. Victoria has received, proportionately, more people of Italian descent in the postwar years. Generally speaking, there is much more ready assimilation of people of European stock, whether southern European or otherwise, in Australia than in any other immigrant-receiving country to which I could refer. Apart from the measures that are taken by the Department of Immigration and the Australiawide activity of the Good Neighbour Movement, I believe that, as citizens, we can play a large part in assisting people of foreign nationality, who are determined to become full Australian citizens, in time to become more readily assimilated. We can do that by encouraging them to enter our own homes and participate in our community life. Experience in other countries - and, perhaps, in Australia also - has shown that when immigrants are not taken up by the community, there is a natural disposition on their part to congregate with those of their own nationality. The remedy is largely in our own hands, and I hope that we will do as much as we can to apply it.

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– -Will the Minister for Labour and National Service, when considering amendments to the Commonwealth Conciliation and Arbitration Act. as a matter of public and national importance keep in mind the words of Beeby G.J. in delivering judgment on wages and production in the 1940 basic wage inquiry? His Honour said -

It may be that ultimately the legislature will establish a definite relation between wages and production.

In considering this expressed point of view, will the Minister particularly see that court precedents which have been found to be bogging down conciliation are eliminated and permit, thereby, conciliation to function properly in Australia by way of registered agreements between employer and employee without being cluttered up with considerations of ambit, public interest, court’s interpretation of standard hours application and such things ? Will he, particularly, enable the court to recognize incentive payments where such conditions are operating in industry now?


– I cannot attempt to give a detailed reply to the various points brought out by the honorable gentleman, whose experience and interest in this field are appreciated ; but I can assure him that what he has said will receive consideration in conjunction with the preparation of legislation which is now proceeding.

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– Is the PostmasterGeneral aware that although airmail postage to troops in Korea, Japan and Momote is Id. an ounce, similar postage for the forces in Malaya is 4£d. for the first ounce and 4d. for each additional half ounce, making a charge for a bundle of papers weighing 1 lb. of lis. 7-kl. as against ls. 4d. ? Will the Minister take steps to investigate this anomaly?

Postmaster-General · DAWSON, QUEENSLAND · CP

– The honorable member for Maribyrnong indicated to me several days ago that he was particularly interested in this matter and I think, speaking from memory, that the honorable member for Darling Downs has placed on the notice-paper a question dealing with a similar matter on a slightly different basis. I. therefore, obtained some information concerning this matter. The position is that troops that have been serving in Korea, Momote and Japan have been served with their mail under special arrangements which have been made by the Department of Defence. Under these arrangements, the charges were, as the honorable member for Maribyrnong has just said, at the rate of Id. an ounce. That is to say. charges normally applying to surface mail applied to airmail for the forces in those three places. On the other hand, airmail which has been flown to the troops in Malaya has been carried by the civil air services which include services that are serving countries outside Australia as well as those that operate within Australia. So far, there has been a special arrangement whereby the fee has been 4$d. for the first ounce and 4½d. for any remaining half ounces. That fee compares with a charge of ls. a half ounce for ordinary civilian overseas airmail, so it will be seen that, already, a considerable concession has been arranged for the troops serving in Malaya. Nevertheless, in response to the representations of the honorable member, it is my intention to discuss this matter with the defence departments in order to see whether arrangements can be made for forces in Malaya similar to those prevailing for those in Japan, Momote and Korea.

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– Is the PostmasterGeneral aware that the economic drive which is taking place in his department is placing the post office communications system in danger of breaking down? Is it a fact that instructions have been issued to postal department divisional engineers that no labour replacements are to be made due to retirements, deaths and resignations, and that a ban is to be placed on overtime? Has his attention been drawn to the public statement of the New South Wales Director of Posts and Telegraphs that up to 6,000 telephones were reported out of order daily? Is he also aware that, due to the shortage of technical staff and the ban on overtime, repair work in New South Wales is only 60 per cent, effective and is being carried out on a priority basis, and that domestic users must wait up to seven days for restoration of services? Is it also a fact that staff normally used for installation work is now being used for repair work and that applicants for telephone services who have been waiting for up to ten years may now have to wait for twenty years or. like Kathleen Mavourneen, for ever and ever ? I ask the Minister whether he will use his influence to prevent a scaling down of the communication services and to ensure a stepping up of development to meet community needs adequately.


– Honorable members are well aware that, in October last, the Prime Minister made a statement to the House in relation to the Australian economy. Part of the plan outlined by the Government, which, it will be remembered, has been responsible for the establishment of the existing high degree of prosperity and which intends to preserve that prosperity, was a reduction of the original capital works programme by £10,000,000. The department that I administer is bearing its share of that reduction, and I feel sure that the people of Australia generally will appreciate the fact that this is being done in their interests.


– I feel sure, also, that they will bear any temporary hold-up of new installations in that spirit, even if honorable members opposite cannot do so. However, there is no danger, as has been suggested by the honorable member for Banks, of any breakdown of the services of the Postal Department. Installations are still being made almost at a record rate. Being an efficient department, steps have been taken for adjustments to be made between various sections to ensure that new buildings essential to the carrying out of developmental work shall be proceeded with and, indeed, they are being proceeded with. Because of the overall economic situation, a brake certainly has been placed on some of the activities of the department. The honorable member for Banks stated that the Director, Posts and Telegraphs, in Sydney, had pointed out soma little time ago that there were 6,000 breakdowns daily. That is quite correct. In fact, approximately a fortnight ago, in Sydney, he reported that fact to me. That situation arose, not because of any inefficiency on the part of the department or a shortage of funds, but because, as the honorable member should well know, during the last few months, abnormal weather conditions which have brought unusual rainfalls to eastern Australia have placed a terrific strain on the department. In Sydney, there have been daily breakdowns of local services due entirely to abnormal weather conditions. Instead of advancing that as an instance of inefficiency on the part of the department, the honorable member should have paid tribute to officials of the department for having maintained an efficient service.

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– My question is directed to the Minister for Air. Are personnel who are trained under the apprentices scheme of the Royal Australian Air Force accepted as being fully trained within a trade or section of a trade outside the service on completion of the five-year period of training?

Minister for Air · DENISON, TASMANIA · LP

– The position varies between the States. As far as I can recall, most of the States are co-operating, and are accepting the apprentices. In the

States where they are not- accepted, we are conducting negotiations with the unions concerned. If the honorable member sees me later, I shall give him more precise information.

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– In the absence of the Prime Minister, my question is directed to the Treasurer. Is it a fact that honours bestowed by Her Majesty the Queen arise from nominations and recommendations of the heads of the governments of nations comprising the British Commonwealth? Will the Treasurer also gay whether it is the practice for the head of the government of the recommending nation further to recommend to Her Majesty the cancellation of the award in cases where the recipient has been convicted of a serious breach of the law of the country concerned? Will the Treasurer say whether it is intended to recommend to Her Majesty the cancellation of the award in the case of a person well known in musical circles, who was recently convicted of a very grave breach of Australian customs law? Will the Treasurer say whether a request will be made to the New South Wales Government to make available all the reports and papers arising from inquiries conducted by the New South Wales police, and will he obtain the reports of the customs officials, who pursued their own line of investigation, with a view to ascertaining whether there is any basis for the current rumours involving other titled persons in conduct of a reprehensible character, so that a recommendation may be forwarded to Her Majesty the Queen for the cancellation of their awards also ?


– The honorable member’s question, by its very nature, is one that should be directed to the Prime Minister.

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– Is the Minister for External Affairs aware of the reported statements by the Prime Minister of Indonesia that his Government intends to establish the province of West Irian, in Dutch New Guinea, and to include it in Indonesian territory in the near future, and that the Government of Indonesia, may at times be obliged to take steps not approved by the outside world, especially by some parts of the Western world ? As these statements are of great importance to the future of Australia and Australians, will the Minister make quite clear to the Indonesian Government, and to the Australian people, the attitude of the Australian Government to these statements ?


-In a review of his Government’s policy, the incoming Prime Minister of Indonesia certainly did refer to the matter of West New Guinea, establishing one policy plank amongst a number of others. I did not understand the reference made by the Prime Minister of Indonesia to West New Guinea to be substantially different in terms from previous references made to it by heads of governments in that country. The remarks of the Prime Minister of Indonesia seem to me to repeat Indonesia’s previous attitude towards West New Guinea. That being so, I should not think that they call for anything more on my part, on behalf of the Government, than a simple repetition of Australia’s stand on the matter. That, of course, has been made public by myself and others on numerous occasions in the past. For my part, I do not wish to dwell on this problem, because it is only one aspect of affairs affecting Indonesia and Australia. It is the only matter that is at issue between the two countries. There is a wide range of other matters on which the two countries are on terms of perfect amity and friendship, and I should hope that Dr. Ali Sastroamidjojo, the new Prime Minister of Indonesia, understands and appreciates the Australian desire to remain on the most friendly terms with Indonesia. Perhaps I may direct his attention, and the attention of others, to the very material manner in which Australia has tried to express its friendship for and it* desire to help the people of Indonesia, during these relatively early and formative years of independent government in Indonesia. Just picking one matter from a number of others, I refer to the numbers of Indonesian students, nominated by the Government of Indonesia, who have come to Australia under the Colombo plan. Their numbers are constantly and formidably increasing, and we cordially welcome them. The number of Indonesian students who came to Australia under the Colombo plan in 1954 was 67; in this year, it will be 197, and there is every prospect of these numbers increasing. I believe, in these days of a troubled world, that it is far better for all of us to emphasize the points of agreement rather than the points of disagreement, particularly when the point of disagreement in this case is one that is unlikely to yield to statements by either side.

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

– Pursuant to section 20 of the Coal Industry Act, I lay on the table the following paper : -

Coal Industry Act - Joint Coal Board - Eighth Annual Report and financial accounts, for year 1954-55.

Report of the Auditor-General of the Commonwealth on the accounts of the Joint Coal Board for year 1954-55.

The report itself is accompanied by the Auditor-General’s certificate on the accounts of the board, as required by section 26 of the act. The Joint Coal Board will, as usual, arrange for distribution of copies of the report direct to members of both Houses of the Parliament.

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Motion (by Sir Eric Harrison) - by leave - agreed to -

That leave be given to bring in a bill for an act to provide for increases of certain salaries, and for purposes connected therewith.

Bill presented, and read a first time.

Second Reading

Sir ERIC HARRISON (WentworthVicePresident of the Executive Council and Minister for Defence Production) (3.17]. - by leave - I move -

That the bill be now read a second time.

The bill serves two purposes. The first is to give legal sanction to the payment of increased salaries resulting from the judgment of the Commonwealth Court of Conciliation and Arbitration, delivered on the 16th December, 1955, regarding the appeal (against the Public Service Arbitrator’s determination to grant marginal increases to public servants over and above those awarded by the Public Service Board in December, 1954. The second is to fix, for the purposes of the Superannuation Act 1922-1955, the date upon which increased contributions shall be payable consequent upon increased salaries granted by the court.

The bill provides for a reclassification of the Public Service on and from the 10th January, 1956. The Public Service Act does not empower the board to make general reclassifications without throwing open some positions and requiring promotions and subsequent promotions appeal action. At the same time, the act does not permit adjustment to particular points within an officer’s salary range, or the date of incremental advancement provided by the court’s judgment. For these reasons, a legislative validation of the salary payments is needed. An additional reason why this reclassification process was used by the Public Service Board is that the judgment of the court did not cover all persons employed in the Commonwealth Public Service. Members of the Professional Officers Association, for example, were not covered, as that association was not a party to the court’s decision. However, it is desired that they should receive the same salary increases, as they occupy positions of the same type as those members of associations who were parties to the appeal. Also, some positions which have a direct relativity tothose covered by the judgment were not included in the judgment, but were automatically given the salary increases by the Public Service Board.

Certain statutory authorities of the Commonwealth and departments of the Parliament, which have similar powers of reclassification to those of the Public Service Board, must be covered by their reclassification in the same way that the board is covered. The bill provides this cover and the authorities and departments concerned are included in the schedule of the bill.

The bill specifies the 16th December, 1955, as the date from which increased superannuation contributions shall be payable; that is, the date upon which the court delivered its judgment. This amendment is consistent with section 13 (4c) of the Superannuation Act 1922- 1955, which now specifies, for salaries determined by the Arbitrator, the date of the determination as the date upon which salaries are increased for superannuation purposes. The amendment applies to officers of the Public Service, and to certain officers of the Commonwealth Scientific and Industrial Research Organization and the Australian Broadcasting Commission, and to certain persons employed under the Naval Defence Act 1910-1952, all of whom received higher salaries consequent upon the judgment. For like reasons, the bill also provides that the date from which increased superannuation contributions are payable by officers of the Repatriation Medical Officers Association, who were granted increases in the court’s recent judgment, shall be the 7th March, 1956. I commend the bill to the House as a machinery measure and suggest that it be given a speedy passage.

Debate (on motion by Mr. Clyde Cameron) adjourned.

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Motion (by Sir Eric Harrison) agreed to -

That the maximum period for which the Treasurer may speak on the motion to print the Ministerial Statement on the National Economy shall not exceed 45 minutes.

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Customs Tariff Amendment (No. 2) ; Excise Tariff Amendment (No. 2)

In Committee of Ways and Means:

Minister for Customs and Excise · Evans · LP
That the Schedule to the Customs Tariff 1933-1954, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the fourteenth day of March, One thousand nine hundred and fifty-six, be further amended as hereinafter set out, and that on and after the fifteenth day of March, One thousand nine hundred and fifty-six, at nine o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Customs be collected in pursuance of the Customs Tariff 1933-1954 as so amended. [Excise Tariff Amendment (No. 2).] That the Schedule to the Excise Tariff 1921-1953, as proposed to be amended by Excise Tariff Proposals introduced into the House of Representatives on the fourteenth day of March, One thousand nine hundred and fifty-six, be further amended as hereinafter set out, and that on and after the fifteenth day of March, One thousand nine hundred and fifty-six, at five o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Excise be collected in pursuance of the Excise Tariff 1921-1953 as so amended. The tariff proposals which I have just introduced are supplementary to Customs Tariff Proposals No. 1 and Excise Tariff Proposals No. 1 introduced by me on the 14th March. Honorable members will recall that the earlier proposals imposed additional duty of 3d. a gallon on all petrol and similar products, regardless of the purpose for which they are used. {: .speaker-KX7} ##### Mr Ward: -- I rise to order. I ask you, **Mr. Temporary Chairman,** whether two specific motions may be moved and dealt with by one vote of the committee. {: #subdebate-19-1-s1 .speaker-JRJ} ##### The TEMPORARY CHAIRMAN (Mr Bowden:
GIPPSLAND, VICTORIA -- I understand that it is the custom, in the case of complementary motions, to debate both of them together, but to resolve them separately. {: .speaker-KX7} ##### Mr Ward: -- But the Minister moved that they be voted on together. {: #subdebate-19-1-s2 .speaker-10000} ##### The TEMPORARY CHAIRMAN: -- Order ! They will be debated together, but they will be resolved separately. {: .speaker-KMD} ##### Mr OSBORNE: -- My motion provides for presentation of two proposals. I have moved not two motions but, one motion concerning two proposals. The Government has decided that the increased rates shall not apply to petrol used in aircraft operating within Australia. These present proposals give effect to that decision. The rates on petrol used in aircraft within Australia will now revert to those applicable immediately prior to the 15th March. Honorable members will be given an opportunity, as soon as practicable, to discuss these proposals in conjunction with those introduced on the 14th March. Progress reported. {: .page-start } page 1195 {:#debate-20} ### AUSTRALIAN ECONOMY Debate resumed from the 10th April *(ride* page 1177), on motion by Mr.MENZIES- >That the following paper be printed: - {:#subdebate-20-0} #### National Economy - Economic Measures - Ministerial Statement Upon which Mr.Crean had moved by way of amendment - >That all words after " paper " be omitted with a view to inserting the following words in place thereof: - " so far as it disclosesa policy of increasing interest rates on hank overdrafts is injurious to the large majority of the people of Australia and should be rejected ". {: #subdebate-20-0-s0 .speaker-JSS} ##### Mr BRUCE:
Leichhardt .- The Prime Minister **(Mr. Menzies)** brought before the House what is now known as the " little budget ", prepared by men whose heads were in the air and whose feet were not touching the ground. In the brief period before my leader, the right honorable member for Barton **(Dr. Evatt),** spoke on this matter there was not adequate opportunity to assess fully the amount of money that would be presented to the banks under the Prime Minister's proposals. The Leader of the Opposition mentioned the sum of £1,500,000, but a closer investigation has shown that it will be approximately £2,000,000. I stress the fact that that amount will be paid to the banks, not this year only, but annually until the Labour party takes again the reins of govern ment. The first conclusion that emerge from a consideration of the Prime Minister's statement, therefore, is that for no reason whatever, approximately £2,000,000 a year will be presented to the banks, and the second is that because the rate of interest is to be increased, the cost of housing will immediately rise. Housing is a most important factorin, the Australian economy because thousands of young couples are unable to buy or rent a home or even a flat. The Government is proud of its immigration policy, but it seems blind to the fact that although it is accommodating immigrants it is not making, for the natural increase of Australian families, the provision to which they are entitled. The Government contends that it wants to build up the Australian population, but it prefers to spend millions of pounds on bringing people from other parts of the work1 rather than take the initial step of providing accommodation for the natural increase of the Australian population. This is a matter of vital importance.I meet many young people in all walks of life who are unable to obtain a home. I have been told that, in Sydney, large sums are paid as key money to obtain possession of a flat. In those circumstances, it is impossible to expect young married couples to rear families. Apart from party politics, and speaking as a reasonable, ordinary citizen, I cannot understand how the giving of approximately £2,000,000 a year to the banks by increasing interest rates can improve the economy of Australia or cut down so-called inflation. It appears to me that the banks are being given a hand-out to the detriment of the people of Australia as a whole, and particularly of young couples who need homes. Together with food and clothing, housing is a fundamental essential on which to build a democracy. The present lack of housing is a cancer in the body politic. The general effect of this " little budget " is to aggravate existing difficulties. The Prime Minister brought down this financial statement, but it was not his own work. The right honorable gentleman ought 'to have sufficient academic knowledge to know the meaning of the word " prime ". He is the first man, politically, in Australia, but he is so feeble when it comes to doing something about the economic situation that he had to go to a body of persons outside the Government, not elected by the people, and ask them to prepare a budget for him. They are unrealistic, and, as I have already said, have their heads in the air and their feet off the ground. Most of them are in receipt of assured incomes, and later on will retire on large pensions. They are quite incapable of comprehending the wants or needs of the ordinary man. It was the Prime Minister's duty to call his Cabinet together to draft a budget, and to make certain that it was a practical plan to help Australia. Instead of that, every proposal in this financial statement hits the worker. The manufacturer, the producer, the wholesaler and the retailer refuse to pay any part of the increased taxes, which are wholly passed on to the worker. Not one group of people other than the workers will pay these taxes that were imposed, according to the Prime Minister, for the purpose of decreasing inflation. The honorable gentleman says that theN is too much money available, and that the people must stop spending it. But the Government is taking the money from the workers only. Big business concerns and individuals, who are making enormous profits, are not affected. If inflation is to be decreased, they are the people who must be dealt with primarily, and the trouble will then be automatically rectified. But the public have now realized -the effect of the Prime Minister's proposals. It was amusing, a few weeks ago, to see in the press the results of a gallup poll suggesting that the Prime Minister still maintained a high position in the esteem of the people. Only last Saturday, another gallup poll was held in the State of Western Australia, and it clearly demonstrated that the Prime Minister does not hold that high place in the people's esteem. Although much damage has already resulted from the Prime Minister's proposals, one redeeming feature is that they will assure that every State will have a Labour government in the course of the next three years. That is, of course, if he remains here as Prime Minister, although I think he will be sliding over the edge. I come now to the question of petrol. The increased price of petrol will have a definite effect on those who have small cars which they use for their own pleasure. It will also affect those people who have to pay fares on buses that use petrol for fuel. Further, it will affect the carriage of goods by motor truck from the primary producer to the point of distribution. In fact, it will affect the primary producer very greatly indeed, because the operators of the trucks will not bear any of the increased costs. The total increase will be passed on to the consumer. The primary producer will suffer seriously from the impact of the increase in the petrol tax. Petrol is essential to the maintenance of many services throughout the length and breadth of Australia to-day. Without it, many thousands of people in the back country could not receive their food and other requirements. Now those pioneers of the outback will be required to pay more for their goods because of the asinine supplementary budget which has been brought forward by this Government. {: .speaker-JLU} ##### Mr Anderson: -- What about the shearing strike? {: .speaker-JSS} ##### Mr BRUCE: -- I will tell the honorable member something about, that shortly, if I have the time. Let us consider now how the collections from this petrol tax are to be utilized. Ono-third of the tax is to be used for road building. I think every honorable member has referred to the necessity for building roads. Every honorable member should know, if he does not know it already, that roads are essential to the development of Australia. He should realize chat if we are to develop Australia, we shall have to build more roads, and at the same time maintain existing roads in good condition. I repeat that only one-third of the collections from this petrol tax is to be made available for both the building of new roads and the maintenance of existing roads. Twothirds of the collections are to go to Consolidated Revenue. I think all honorable members will agree with me when I say that the only way by which we can hope to curb inflation and to safeguard our overseas balances is by increasing production. T am confident that every honorable member is agreed on that, yet we have found, when this question has been debated previously, that some honorable members on the Government side have inanely stated that production has not increased because of industrial troubles. That statement is entirely wrong, and here it is opportune for me to point out two vital matters. First, I say that this Government does not control the country. The shipping companies control the Government. They increased freights by 10 per cent. Every honorable member who represents a country electorate - and any Labour iri eni bor who is interested in country activities-- and there are. many - knows that this increase of freights must mean an increase of 10 per cent, in the cost of primary production. The important point is that the shipping companies increase these charges irrespective of the wishes of the Government or anybody else. What is even worse is the fact that the shipping companies, although they have increased their freight charge?, have failed to provide sufficient: refrigeration space, for the carriage overseas of our perishable primary products, the «alc of which is so important to the maintenance of our overseas balances. Thousands of men. who were normally engaged by meat works:, were unemployed. Why? The ships had not sufficient refrigeration space to carry our perishable goods, and the meatworks could not operate as their cold stores were already full. Thousands of men were thrown out of employment, while pastoralists who were bringing their cattle from the. back country to be treated at the meatworks at that time, were not able to have them killed. As a matter of fact, the price of beef dropped from 100s. to 80s. per 100 lb. All this was brought about by the fact that the shipping companies failed to provide sufficient refrigeration space to lift our beef, mutton, butter and other perishable goods upon which we depend to maintain our overseas balances. Members of the Australian Country party must feel very happy indeed when they rise to defend these shipping companies, and find it necessary to say, "lt is quite all right, we take it because they are good Government supporters That is the exact set-up to-day. The Prime Minister has appointed an inner Cabinet. **Mr. Deputy Speaker,** nothing indicates more surely his early retirement than the appointment of that inner Cabinet of twelve Ministers. Those twelve men are a hard, seasoned, tough, sophisticated group, who have been appointed to make the pay-off to the big organizations which have financed this Government over the years. It would not have been wise to appoint younger and less experienced men to that Cabinet. The appointment of that inner Cabinet may be regarded as one step in the preparations that are being made for the disappearance of the Prime Minister. Who the next Prime Minister will be is in the lap of the gods, but we have a definite indication in the appointment of this group. As soon as the Prime Minister appointed those twelve men, I knew that they were to form the pay-off group. Many of these matters that I have been debating are part of that payoff, and when the total pay-off is made, the Prime Minister will disappear over the horizon. He disappeared in the bath the other day, but that was accidental. He will disappear over the horizon, an l whether a prominent member of the Australian Country party will disappear over the Australian Country party horizon and reappear in the Liberal party we do nol know. The right honorable gentleman concerned denies that any such thing is about to happen. Nor do we know whether a prominent Liberal member will take the place of the Prime Minister until *the* next general elections, when the Australian Labour party members in this Parliament will select the leader of a new government. I want to conclude by saying that any government that wished to bring down a budget to decrease the pressure of inflation- {: #subdebate-20-0-s1 .speaker-10000} ##### Mr DEPUTY SPEAKER: -Order! The honorable member has concluded now. His time has expired. {: #subdebate-20-0-s2 .speaker-DQF} ##### Mr SNEDDEN:
Bruce .- The Opposition, in this debate, has pursued ti nebulous line of criticism. On the rare occasions on which Opposition members have advanced what they consider are specific facts, they have been remarkably inaccurate. The honorable member for Leichhardt **(Mr. Bruce)** has just criticized the Government for not sponsoring sufficiently an increase of the birth-rate in Australia. The honorable member's statement was remarkably wrong. I can give definite proof of the increase of the birth-rate, from my own personal knowledge. In addition, the statistics compiled by the Commonwealth Statistician show that the birth-rate is increasing. Since the end of World War II., it has increased continually. As a result of the very grave decline of the birth-rate during the depression years, there are many fewer people reaching marriageable age at the present time. Nevertheless, the birth-rate is continually increasing. In fact, in only two years- 1.050 and 1951 - has the intake of immigrants been greater than the natural increase of the population. . Last evening, the honorable member for Melbourne **(Mr. Calwell)** made a remarkable departure from fact and advanced the proposition that there is in Australia to-day an association of banks, assurance companies and hire-purchase companies designed to defeat the undertaking given by those companies to the Government last year. He cited an illustration, which he alleged proved his point. He stated that the _ English, Scottish and Australian Bank Limited, in association with the Mutual Life and Citizens Assurance Company Limited, had formed a private company to undertake hire-purchase trading. Never was a statement so abominably wrong. I shall tell the House what really happened. The English, Scottish and Australian Bank Limited was undertaking hirepurchase activities when the undertaking was given to the Government by the companies. Shortly afterwards, the bank formed a subsidiary known as Esanda Limited, for the express purpose of conducting all the hire-purchase trading activities then 'Undertaken by the bank, amounting to approximately £2,250,000 annually. The hire-purchase agreements then current with the bank were bought from it by Esanda Limited. The terms of the undertaking given to the Government were that the companies concerned would not increase hire-purchase transactions by more than 10 per cent., which was estimated as the approximate percentage increase necessary to allow for the normal development of hire-purchase business. Esanda Limited took over the hire-purchase business of the English. Scottish and Australian Bank Limited and has not increased the amount by more than the 10 per cent, agreed on. The honorable member for Melbourne alleged that the Mutual Life and Citizens Assurance Company Limited had entered into an agreement with the bank to def ea t the terms of the agreement entered into with the Government. That is not so. Had the honorable member paid greater attention to ferreting out the facts, hp would have learned that a trustee company known as M.L.C. Nominees was formed and appointed trustees for the debenture holders in Esanda Limited. There is no association between the Mutual Life and Citizens Assurance Company Limited and Esanda Limited. The association is between Esanda. Limited and the trustee company known as M.L.O. Nominees which was formed for the sole purpose of acting as. trustee for, and safeguarding the interests of, those who hold debentures in Esanda Limited. Th, trustee company has no connexion with the assurance company. The honorable member for Melbourne put a most, unfair proposition when be alleged that the English, Scottish and Australian Bank Limited and the Mutual Life and Citizens Assurance Company Limited had entered into an agreement to defeat the undertaking given to the Government last year. His allegation is totally untrue, as can be seen from the facts that I have stated. The Prime Minister (Mi-. Menzies), in the statement that forms the subject of this debate, directed attention to the need to increase productivity. He mentioned the appointment of a functioning body - the Ministry of Labour Advisory Council - which was established largely through the efforts of the Minister for Labour and National Service **(Mr. Harold Holt).** The Prime Minister expressed the hope that that body, which now performs a very valuable service, will, in the fullness of time, develop into a productivity council. I hope that that is the ultimate aim and that it will be the ultimate achievement. A productivity council could do a very great deal, by advising both employees and employers, especially factory managements, how to reduce unit costs of production, and thereby reduce prices. " Productivity " is a word that requires clear definition. Unfortunately, it is often confused with volume of production. Productivity and volume of production are not the same thing. The volume of production can be increased by increasing the input of any of the factors that go to make up the ultimate output, and it can be measured by the number of units produced by the factory or the nation as a whole. We may state whether 260.000 units or 100,000 units are produced, and this gives the measure of the volume of production. Productivity is the ratio between the volume of production and the amount of all the factors that go to make up the output. It is a ratio between output and input. Output is the volume of production. Input comprises a whole series of factors, such as capital, skill, technical knowledge, mechanization, know-how and mineral resources. An increase of any one of those factors should result in an increase of output. During the depression and the immediate post-depression years, the mo.-it obvious way to increase the volume of production was to increase the component of labour. Honorable members will recall that the honorable member for Corio **(Mr. Opperman)** stated yesterday afternoon that, during the early 1930's, unemployment totalled 32 per cent, of the work force. Therefore, the obvious way to increase the volume of production was to increase the labour component of input. However, during the post-war years, we have had full employment - in fact, over-full employment - and it has been impossible to increase the labour component except by immigration. But as fast as the immigrants came in, they were absorbed, and the position of full employment continued. In those circumstances, the obvious way to increase the volume of production was to increase the capital component of input. An increase of this component naturally meant an increase of mechanization. I should like to make it clear that an increase in volume of production does not necessarily involve an increase of productivity. In fact, unfortunately, too often it is quite the reverse. A firm, by increasing its capital, is able to employ a greater degree of mechanization. It may, by using a machine, enable two men to do the work of five men, or to increase the volume of work formerly done by those five men, but if the capital cost of the installation of the machinery is not related to its ultimate output, the unit cost of production will rise and be passed on in increased prices, which will contribute to the inflationary spiral. So, the position faced by Australia to-day is that we must, on the one hand, increase the volume of production T.o satisfy the demand, and on the other hand increase productivity to reduce prices and so combat the inflationary spiral. It is rather difficult to rationalize these two propositions, because they are not always in consonance. The owner of a factory, raising capital, decides to mechanize, to put in new machinery, or to alter the plant. This may involve a great deal of expense. It may involve the factory being out of production for some considerable time. Therefore, it is natural that the management of that factory - or, in the collective sense, the management of Australian industry as a whole - will not install plant and machinery designed to satisfy the demand of to-day or to-morrow; it will install plant designed to satisfy the demand of the future. For the period until that demand reaches the optimum output of the machinery, there will be inflationary pressure, because the machine will not be operating at full rate. In other words, the capital cost will not be equated to the running time of the machine. If this process applies in a whole variety of industries in Australia, there will be a welling up of inflationary pressures which can be satisfied only by the ultimate increase in demand. The Government has found it necessary to check this propulsion and it has done so in three ways. First, last year it imposed import restrictions, which served the very valuable purpose of reducing the demand by reducing the supply. With the supply reduced, it channelled the demand for goods to Australian manufactured goods, and hence produced the position where progress towards the optimum demand which should accompany the machinery is accelerated by increasing the demand for Australian goods. This action secondarily served the purpose of limiting the volume of capital goods and machinery available. The measures in relation to sales tax and the bank overdraft rate that were announced in the Prime Minister's statement, which is the subject of this debate, are ancillary to the original import restrictions. Their effect is to skim off the available money in excess of that which is needed, and, by collecting it in revenue, the Government has been able to underwrite Australian Loan Council obligations and avoid deficit budgets in a manner which is not inflationary. The Government has avoided the necessity to create new money. In fact, it has been able to divert money which was to have been used for purposes other than necessary purposes. The increase in the bank overdraft rate was a natural corollary. Money is a great field for cranks, but it is a commodity which is sought in Australia to-day and the demand is greater than the supply. The Prime Minister has said that the long-term object is to increase supply, but the short-term necessity is to reduce demand by increasing the bank overdraft rate charged to those industries which are not export earners or import replacement earners. By increasing to 6 per cent, this interest rate there is a natural lessening of the demand for the money available. Increasing the interest rate on fixed deposits has the effect of channelling the available money into a source where it is marshalled and diverted to fields where it can most properly be used. Inherent in my argument is the necessity for increasing demand, which can come from two sources, external to Australia or internal to Australia. External demand is, of course, unreliable, but internal demand can be readily regulated and, in consequence, it is necessary for us to encourage the natural increase of population to even greater proportions, as the honorable member for Leichhardt has said, and to increase the population by immigration. I have heard it said in this chamber, and I know it has been said in another place, that there should be a reduction of the immigration intake. Fortunately, these counsels are all based on economic grounds. I have not yet heard of one objection to the continuation of immigration on the present scale on other than economic grounds. In all cases these counsels agree that immigration will bring to us a great advantage which we must pursue. But the detractors say that immigrants are inflationary and that to combat Australia's problems to-day we must reduce the intake immediately. I join issue on that point. I say that an intake of immigrants is, in the first instance, a deflationary pressure. I think the position may be properly described in this way: an immigrant arrives with very little money, with his personal belongings, his clothes, and his tools of trade. On arrival he has an overwhelming desire to acquire money, to find work, and by his savings be enabled to acquire those things which the rest of the Australian people enjoy so overwhelmingly to-day after six years of our Government. He looks for work. His inflationary pressure may be properly depicted by a curve, with its lowest point at his arrival. As he works and saves, his demand increases and the curve rises to its optimum, its peak point being when he is buying a house, a motor car, a refrigerator, and other expensive commodities of that kind. After he has acquired those possessions, the curve starts to fall off again to show a deflationary pressure. **His** contribution in terms of work and production is a relatively straight line, gradually rising. When the curve becomes higher tha.n the production line, his effect is inflationary, but that occurs in the future. It may be six months, twelve months, eighteen months, two years, or five years after his arrival. I admit that in the future he will be inflationary, but immediately on his Arrival and for some period thereafter he is a deflationary force. Therefore, to argue that we should have a reduction of immigrants in order to reduce the inflationary pressures is to abandon the truth that an immigrant, on arrival, is deflationary. The detractors ask, " What about the capital goods and services which have to be provided? What about public transport ? ". I do not think it will be seriously contradicted that a great cause of the losses on public transport throughout Australia is its overcapitalization compared with output. When the immigrant arrives, he is able to utilize that transport without an equivalent increase in the capital employed in that enterprise. In consequence, he is levelling up the capital employed and output provided. He lives in the closer suburban areas, from which every day we witness a migration to outer suburban areas. Are the buses, trams and trains to run empty for 2 or 3 miles of their journey? Are they to be a. wasting capital asset, or will the immigrant ride in them and increase the output? It is said that we have to house the immigrants. That is true, but when they come to live here the housing standard which they require is lower than that required by people who are Australianborn or who have been in Australia for some time. When immigrants arrive they are prepared to share a house, and in consequence the wasting capital asset of houses which are emptied as new suburban areas are developed is avoided by their occupation by immigrants. So once again their contribution towards the building of housing is far, far greater than the capital assets they absorb by living in houses. It is alleged that they have to be hospitalized. Of course, they become ill ; we all do, but because of the very strict criteria of selection overseas, and the rigid health standards they have to fulfil, they are, as a group, infinitely more healthy than are Australians. If they get sick - and I do not doubt that they get sick - they do not get sick as frequently, or as seriously, as the majority of Australians are prone to do. In regard to schooling a similar argument applies to that which I advanced on public transport. After the immigration from the inner suburban areas to the outer suburban areas, the schools in the inner areas would be left empty, a wasting asset. {: #subdebate-20-0-s3 .speaker-10000} ##### Mr ACTING DEPUTY SPEAKER:
Mr. Bowden -- Order! The honorable member's time has expired. {: #subdebate-20-0-s4 .speaker-K9M} ##### Mr L R JOHNSON:
HUGHES, NEW SOUTH WALES · ALP -- The speeches we have heard from honorable members opposite are of the type usually made at this time of the year, or at this stage of the parliamentary session, when it is possible for them conveniently to forget the speeches that they made prior to the last general election. Recently, the Prime Minister **(Mr. Menzies)** rendered to the people of Australia the type of speech he is so accustomed to making in the immediate postelection period. As on so many previous occasions, this post-election speech by the right honorable gentleman is distinctly different from and contrasts sharply with the golden orations, professing platitudes of prosperity and national wellbeing, which he delivered during the recent general election. We are now well able to appreciate that frankness on that occasion on the part of the Prime Minister would have undoubtedly resulted in a state of affairs in .this House entirely different from the one that now prevails. Probably the clearest substantiation of this contention was provided in the result of the recent Western Australian State elections. In that State, unlike in New South Wales, where the State elections were conducted without the enlightened benefit of the economic intentions of the Government, the people reacted violently, and swept Labour Premier Hawke and his colleagues back into office with a greatly enhanced majority. And this despite the great wave of sympathy and concern which swept the State following the Prime Minister's unfortunate accident in the course of his daily ablutions. There can be no question that the issue at that election was very largely the same as that which this Parliament is now considering. The Prime Minister visited that State and called and danced the tune upon which the people decided their talent quest. . Gratifyingly enough the Queensland State elections will shortly be conducted in circumstances in which there can be little doubt in the minds of the electors of the inevitable result of Liberal mismanagement. The timing of the Government's economic proposals can be described only as blatant, political expediency. If such drastic and crippling restrictive measures were so urgently and desperately needed, the Government should have turned its attention to the need for corrective and less disruptive measures during the life of the preceding Parliament. The accumulated and complex set of circumstances which inspired the Prime Minister to slash so savagely at the spending power of the people did not just descend upon and envelop the country like the darkness of the night. Surely, these factors and eventualities could have been anticipated with the same certainty that night follows day. If the situation is as threatening and as dangerous as the Government would have us believe then, in a nut-shell, the climax should never have been reached, as corrective measures should have been instituted long ago. On the other hand, if such an urgent retarding effect is nol. genuinely required, then the bringing down of the August budget is the appropriate occasion on which the Government could regulate routine fiscal arrangements. But to treat the national economy and the economic welfare of millions of well-meaning Australians as a political football, to be kicked around at the whim of the Government in order to serve sheer political expediency, deserves severe censure. To deny the economy corrective action for the expressed purpose of avoiding certain censure at the hands of the people is best described as political skullduggery. It matters not whether that attitude was adopted to lend a helping hand to Liberal-Country party candidates in the New South "Wales State, elections, or to influence the result of the Decemberfederal general election. Having waited so unjustifiably for so long, political expediency again becomes the order of the day. We can almost picture the great joy and jubilation on the part of Government members when the great master of political timing, in the person of the Prime Minister himself, announces that now is the appropriate time to curtail drastically, to cut, to tax, to restrict and generally impair the living standards of the Australian people. The contention of honorable members opposite would be that as the federal and New South Wales elections have just been concluded, if these measures were delayed until the introduction of the budget in August there would be every likelihood that a hostile Senate would treat the proposals with the contempt which the irate electors, apparently, consider they deserve. Undeniably, the Government's answers to the alleged inflationary state of the economy has inspired an unprecedented public outburst. Spokesmen representing large and important sections of the community have been loud and vocal in their condemnation of the double talk and the conflict of principles contained in the Prime Minister's address. Great emphasis has been placed on the need to reduce the cost of production, and workers have been exhorted to increase output, despite a marked decrease in remunerative purchasing power, resulting from the increase of sales tax, excise and customs duties and interest rates. A good friend and supporter of the Government, in the person of **Sir Keith** Officer, a former Australian Ambassador to Prance, and now a London director of one of our leading private banks, has conveniently arrived at the appropriate time to aid and abet the sinister intentions behind the economic proposals. This gentleman, apparently observing the similarity between the present economic trend and the dark and dismal days of Australia's depression era, re-echoed, only a few days ago, the words of a. notorious Englishman who visited this country and spoke words of unappreciated advice to the people of Australia. **Sir Keith** contended that the interest rate increase was a necessary step in stopping people from spending money. He said - >Australians are wasting far too much money on things that do not matter. I rather fear we are not .pulling our belts tight enough. If any sacrifice is to be made by any section of the community to stabilize the Australian economy, it appears that it is the clear intention of this Government that that sacrifice will be borne to a large extent by the lower-to-average incomeearner. This view is clearly supported by a reasonable interpretation of the critical remarks directed at the Government by one who would ordinarily be expected to support the Government. The president of the Australian Association of Chambers of Commerce, **Mr. K.** F. Coles, is reported in the Sydney *Sun* of the 15th March as having said - >The extra imposition of tax does nothing to help the high cost problem which is such an important factor in the drive to increase exports. The imposition on petrol and commercial vehicles will directly increase production costs. The extra company tax will be a further deterrent to increased production. Is it not fair and reasonable to say that, as a result of the various economic proposals of the Government, it is the clear intention of our bigger commercial interests to curtail highly essential production, or. alternatively, to continue to produce at the present rate or. it may be, even to increase production, provided that the extra ls. in the £1 company tax, the inflated petrol price and the increased vehicle replacement costs are passed on to the already overburdened individual consumer? It follows that the ordinary, average wage-earner will bear the brunt of the sacrifice, and that those conditions will continue to prevail until expression is given to the policy of an excess profits tax. One of the most iniquitous features of these economic proposals is the innovation, or rather the aggravation of the indirect method of transferring purchasing power from, the pockets of the people to the public or government purse. When considering ways and means of raising revenue from the people, it would obviously be far more equitable to ensure that contributions were compatible with capacity or ability to pay, having regard to the question of income in some cases and to the question of accumulated assets in other cases. To draw a. parallel, one would assume that if the Prime Minister could, influence the laws of local government, then, to be consistent with his policy of abandoning the principle to which I have referred, he would amend the provisions whereby land-holders contribute to the cost of local government administration on the basis of the unimproved capital value of holdings. No doubt he would make the owner of a small residential block contribute to the same extent as the owner of a huge acreage of profitable pastoral land or the owner of an expensive city skyscraper site. In the process of contriving ways and means of extracting an additional £115,000,000 from the already harassed taxpayers, the Government has penalized rich and poor, each to the same extent, in a great variety of matters. When the age or invalid pensioner buys his 2 oz. of fine-cut tobacco, for example, an amount of 2s. 3d., or nearly 50 per cent, of the total retail price of 4s. 7d., goes to the fast-swelling coffers of the Federal Government. When the national income is derived in that way, instead of on the proper, fair and more equitable basis of direct taxation, wealthy and privileged people make precisely the same contribution as less wealthy people. The housewife, classified for taxation purposes, as being engaged in domestic duties, makes her contribution in many ways, and on an equal basis with others, to the £115,000,000 tax grab. When she purchases her large packet of cigarettes, at a cost of 2s. 6d., excise duty swallows ls. 4d. - more' than one-half of the retail price and the equivalent, I think, of twelve cigarettes out of twenty. If the worker, who is already frothing at the mouth with indignation at the unfairness involved in this Government'" method of taxation, stops to enjoy a middy or a 10-oz. glass of beer after his day's work, he contributes, in the form of excise duty, the amount of 7id., or over a half of the retail price of ls. 1½d. It is expected that about. £29,000,000 additional revenue will be derived from the ordinary, unsuspecting citizen through the medium of his glass of beer. Significantly enough, the consumers of spirits will be required to contribute only £2.000.000 to the antiinflation fighting fund. This fund, of course, will be used hy the Government in some measure to finance ridiculous and outmoded defence projects such as the well-discredited £23,000,000 munitions factory at St. Mary's. Regardless of the inflationary pressure that such a venture creates and despite the uselessness of that cost-plus extravaganza in the event of an atomic war, apparently it is intended to sacrifice the economic welfare of this country at the altar of that notable indiscretion. A classic example of the injustice involved in these economic proposals and in the Government's denial of the principle of capacity to pay is the 3d. a gallon increase of the price of petrol. A totally and permanently incapacitated ox-serviceman residing in my electorate *has* drawn my attention to the hardship which this increase will inflict on totally and permanently incapacitated men. Many of them are completely dependent on motor transport. This fact was recognized in previous legislation which exempted totally and permanently incapacitated ex-servicemen from the payment of sales tax on motor cars, tyres and replacement components. It is apparent that a motor car is just as useless to an incapacitated citizen if he cannot afford to restore a damaged part or replace a worn-out tyre as it is if it lies idle at the kerbside through his inability to pay the new prices for petrol. As the current price of petrol has been substantially inflated by the imposition of a higher duty, equivalent to a higher sales tax, I urge the Government immediately to examine the prospect of instituting a system for the exemption from the payment of petrol tax of totally and permanently incapacitated exservicemen and other people who are similarly handicapped. The likelihood that many physically handicapped people may contribute equally with others to the £12,000,000 per annum expected to be raised by the increased tax on petrol is a matter to which the Government should give immediate attention. That circumstance also serves to emphasize the general underlying weakness of ihe whole of the economic measures proposed. Despite the Prime Minister's detailed explanation of the factors which contribute to the clamour for more federal revenue, the people are by no means convinced of the necessity for more revenue. A recent report revealed that, with less than four months of the current financial year remaining, Australia's defence expenditure is lagging well behind the budget estimate. Expenditure is lagging about. £83.000,000 behind the £190,000,000 voted for the year. Surely, with prudence and sound administration, the Australian people could be spared the great retrograde step in living standards in this country which will be the result of the Government's panic measures. One can only hope that, as time passes and the Government endeavours to hide the conditions that have developed under its administration, the people will not forget, as they have done in the past, the manner in which the Government has dealt with difficult situations at convenient times. At the next general election, which we can only hope will not be in the far-distant future, the Government will face a day of reckoning at the hands of the people. {: #subdebate-20-0-s5 .speaker-KVR} ##### Mr SWARTZ:
Darling Downs -- During this debate, the Leader of the Opposition **(Dr. Evatt)** and other members of the Opposition, particularly the honorable member for Melbourne **(Mr. Calwell),** the honorable member for Lalor **(Mr. Pollard),** the honorable member for Adelaide **(Mr. Chambers)** and the honorable member for Hughes **(Mr. L. R.** Johnson), have criticized the measures which have been introduced by this Government in recent months. They have delved into past history, but not on one occasion have they put forward a concrete proposal of an economic nature for dealing with the present situation. {: .speaker-KDA} ##### Mr Duthie: -- The honorable member has not been listening. {: .speaker-KVR} ##### Mr SWARTZ: -- What is the Opposition's policy in this matter? The Leader of the Opposition conveniently omitted to tell us or the members of his party what it was. I presume that even the honorable member for Wilmot **(Mr. Duthie),** the Whip of the Labour party, has not offered any proposals of a concrete nature in this regard. If he did so, I, fortunately, was not here to listen to them. He cannot give me an answer now. I assume that in this case, as in many other cases, the policy of the Opposition is to do nothing. I suggest that that shows complete Irresponsibility. *[Quorum formed.]* I thank the honorable member for East Sydney **(Mr. Ward)** for providing a larger, even if not a more attentive, audience for me. I was reviewing a few points that have been raised during this debate by some mem bers of the Opposition. I happened to hear the address given by the honorable member for Adelaide, who was a Minister in a Labour Government some years ago. He stated that the inflationary trend started in 1948. Tacts show that it started in 1947. But, irrespective of that, he omitted to tell us that, at that time, Labour was still in office. In fact, the Labour Government remained in office until 1949. What did Labour do then to deal with a developing problem, which the Opposition now openly admits was then present? Honorable members opposite have criticized the Government's economic measures. Last night, the honorable member for Adelaide stated specifically that the Government had not carried out its promises in relation to the rehabilitation of exservicemen. That was a strange criticism by one who was a Minister in a government which held office during the immediate post-war period and, indeed, up to the end of 1949. Rehabilitation was Labour's definite responsibility then, and members of the Opposition cannot now logically blame this Government for what the Labour Government failed to do. If there was any fault associated with rehabilitation, it lies at the door of Labour. The honorable member for Hughes suggested that the Government had delayed introducing measures to deal with our economic problem until after the federal election and the New South Wales election. Of course, he knows full well - or if he does not, the public does - that certain measures were introduced prior to the federal election. The recent additional measures certainly were introduced after the New South Wales election, but I remind the honorable member that they were introduced before the recent Western Australian election, and that another elec tion is to take place in Queensland in the near future. It is obvious that if the Government had any intention to delay action until after the State elections, it would have awaited the outcome of the Western Australian and Queensland elections. It was completely irresponsible of the honorable member to make such a statement, and I am sure the public will accept it for what it is worth. I was astounded, a moment or two ago, to hear the honorable member for Hughes say, also, that there is a similarity between the conditions of to-day and those of the early 'thirties. Obviously, he has not studied the conditions carefully, or he would know that the positions are exactly opposite. It is of no use to say that there is similarity between two dissimilar periods. The establishment of a new ammunition filling station at St. Mary's, in New South Wales, has been the subject of quite a lot of criticism by members of the Opposition. I point out, in relation to our defence policy, that it is of no use providing the services with men, material and arms unless at the same time ammunition is provided. Defence services are utterly useless without basic ammunition. It is to fill that need in the Australian services that this plan has been recommended by our defence advisers as a high priority job. The Government was certainly prepared to accept the advice of persons who understood the position fully in preference to that of honorable members opposite. I think the importance of the measure which was introduced to enable commencement of the construction of that plant was fully understood by the public, and I am sure that it was appreciated by the average thinking Australian. To-day, there is a high measure of prosperity in the Australian economy. Some of the problems facing us to-day have arisen from that very prosperity. We must understand the Australian economy and the prosperity of to-day before we can deal with the problems that have arisen and introduce measures designed to preserve our prosperity. There are certain clear indicators of the conditions that exist at the present time. The first is in relation to employment in Australia. The last report issued by the Department of Labour and- National Service a few weeks ago shows that 57,000 jobs registered at the employment offices throughout Australia had not been filled. The total number of civilian employees in Australia has risen very considerably since this Government came to office in 1949. In fact, it has increased from 2,497,000 in 1949 to 2,770,800 to-day. Those figures reflect an enormous improvement in the employment ratio within a relatively short period. At the same time, we must remember that while this improvement has been taking place our population has increased by 1,150,000 - that is, between December, 1949, and June, 1955. This increase has exerted a terrific pressure on the Australian economy, but the resilience of our economy is such that that pressure has been absorbed. Another indicator of the prosperous conditions existing at the present time is the volume of private investment in Australia, which stood at £467,000,000 in 1.952-53; increased to £760,000,000 in 1953-54; and rose still further in 1954-55 - the last year for which accurate figures are available- to £953,000,000. The progressive increase of the amount of private investment in Australia reveals the degree of confidence, both within and without Australia, in the stability of our economy and our future development. Throughout the period covered by the figures that I have cited, there has been maintained a particularly high rate of overseas investment in this country. This is vitally necessary in the expansion and development of our resources. Having said that, let us consider what are the problems that have arisen from the prosperity which we have enjoyed during the past few years, and how they can be dealt with. The first problem that we see is that related to the adverse balance of payments. The second is the internal inflationary trend. I shall deal first with the adverse balance of payments problem. In June, 1954, our London funds amounted to £570,000,000. In December, 1955- only a few months ago - they had run down to £370,000,000. So, during that relatively short period, a very dangerous trend developed. That trend continued during the first part of this year. The Prime Minister **(Mr. Menzies)** stated in this House in the course of his economic statement in September of last year tthat certain measures would be introduced to deal with that situation. The Prime Minister, in his economic statement to the House, which we are now debating, made the following comments in relation to the balance of payments situation : - >It was therefore made clear, in September, that our objective was to restore our balance of payments by the end of June this year; to assist that object by import restrictions; and to make it certain, if necessary, by adopting; fiscal or other measures which would restrain local inflation, diminish import demand, preserve our currency on the international markets and enable us to develop our position as a trading nation. As honorable members know, certain, action has been taken to implement the specific policy which was referred to later in the statement by the Prime Minister. Our overseas balances reflect not only thedifference between the value of our exports and that of our imports. They also reflect the difference between the export and import values of what are termed " invisibles ". That term covers freights, insurance, private investment overseas, the cost of overseas travel arrangements by private citizens, the repayment of loans and the use of private funds overseas. All of those are factors which tend to create pressures on our overseas balances. But, of course, there can be no suggestion of cutting some of those invisibles down in any way. In fact, the opposite is the case. To improve our trading position we must create greater pressure on our balances through those invisible items. I turn now to the second point, the inflationary trend, in order to show the relationship between spending and the availability within the country of goods and services, and the ultimate effect that this has on the cost structure and prices. The effect of the inflationary trend, which was brought into line by the methods adopted by the Government in 1951-52, and was again brought into line in 1953, and commenced to re-assert itself again in 1954, has been cushioned, to some degree, by the higher level of the average wage paid in Australia. Despite statements that I heard made in this chamber last night, the value of the real wage to-day, which is gauged by its purchasing capacity, according to the records of the Commonwealth Statistician, is 10 per cent, greater than it was in 1949, when this Government came into office. That increase is a measure of the prosperity of the country and of the individual, because the individual's prosperity is measured by the volume of goods that he can purchase with his income. I repeat, the Commonwealth Statistician's figures show specifically that wages in Australia to-day are approximately 10 per cent, higher in value than they were in 1949. Considered in the light of economic circumstances, that is in itself a fairly good record, and provides a reliable indication of the general prosperity of the country. The inflationary trend has produced a very definite strain on our cost structure, which has in turn produced an adverse result in our overseas trading position, because, during the last few years particularly, we have had, and now have, to trade in markets that are more competitive than before. Our primary products, which were previously sold under bulk-buying arrangements with the United Kingdom, now have to compete with the products of other countries, sometimes on the open market where values are more competitive. So, the present inflationary trend produces a dangerous result in our overseas trading position; and that, of course, is one good reason, even if there were no other reason, why we cannot allow to develop a situation that would ultimately destroy the whole of our overseas trade. We must deal with the situation as it is now, and ensure not only that any adversity facing our trading activities is overcome, but also that the position is completely reversed, and that our overseas trade is augmented substantially in the future. We have seen, particularly over the last twelve months, that, once the freeing of 0111' overseas markets occurred, there was a decline in the prices that we received for our export commodities. This, coupled with other factors, has produced a dangerous strain on our export income and has tended, in the overall, to reduce that income to a large degree. All those factors, of course, are such that they cannot be allowed to remain unattended to. They must be dealt with. We must not, as the Opposition suggests we should do, allow them to continue to operate unrestrained. They have to be dealt with in a positive manner, and that is what the Government is now doing. Coupled with the decline in our export earnings is a tremendous increase of demand for imported goods, not only for capital goods, the import of which our tremendous development programme makes necessary, but also for consumer goods which the increased buying power in the hands of the public is. enabling the community to buy. This over-expansion of wealth within the country to-day creates pressures that must be dealt with positively, and the Government is taking responsible action to deal with these economic problems. For the first time in Australia's history the Government engaged in co-operative discussion with representatives of all sections of the Australian community. They included representatives of commerce and of primary and secondary industries, and of trade unions and other representative bodies throughout Australia. These people were brought into discussion with the Prime Minister in this very building, so that they could express their opinions and direct any criticisms they wanted to direct to the handling of the present situation, as well as to offer any suggestions that they cared to make for the achievement of a solution to these problems. This was an experiment which worked, and it is to be hoped that such experiments will be carried further in the future. In addition, the Government established an economic committee which consists of, on the one hand. Cabinet Ministers and other Ministers of the Crown and, on the other hand, of an advisory panel including the permanent head of the Treasury, the Governor of the Central Bank, the Secretary to the Cabinet, the Secretary to the Department of Trade, the Vice-Chancellor of the Australian National University, an economist from the same university, representatives of the trading banks, a former president of the National Farmers Union, and a leading retail business man. I am sure that the House will agree that that panel represents a wide range of capable and experienced views and criticisms which have been brought to bear on the economic problems facing us to-day, and will make a great contribution towards sound, sane and logical thinking by the Government, when it has to take action to deal with economic problems. It is, of course, the Government's sole responsibility to introduce measures as a result of the advice received from this advisory panel, and the Government accepts full responsibility in that regard. I mention these matters to show that the problems, .have not been accepted lightly, but that, instead, there has been a more penetrating survey made of the economic situation than has ever before been undertaken in Australia. The advisory panel established by the Government is such as has never before been established in Australia. It represents a wide range of knowledge and experience which has never before been available to a government through the medium of such an advisory body. As a result of its collective thinking, examination and criticism, the Government has decided on an economic policy that it considers can deal satisfactorily with the pressures that have arisen, and lead to the maintenance of economic stability in the future. Now let us look at the economic measures that the Government has introduced. Firstly, in order to deal with the balance of payments problem, measures were introduced in the early part of last year, and tightened again towards the end of the year, to effect import restrictions. {: .speaker-10000} ##### Mr ACTING DEPUTY SPEAKER: -- Order ! The honorable gentleman's time has expired. {: #subdebate-20-0-s6 .speaker-K5L} ##### Mr COPE:
Watson .- Most of the honorable members who have supported the Government during this debate have endeavoured to lay on the shoulders of the workers the blame for the economic crisis which confronts Australia to-day. But if those honorable members perused the records they would discover that the Australian worker of to-day is producing more than ever before in our history. Government supporters are adopting their attitude of blaming the workers for the sole purpose of diverting the minds of the people from the effects of six years of mismanagement and incompetence on the part of the Government. The claim of the Prime Minister **(Mr. Menzies)** that the proposed increase of company tax, sales tax, petrol tax, excise on beer, spirits, tobacco and cigarettes, and the increase of the bank interest rate, will serve as an antidote for inflation, will impress no intelligent person as being in accordance with the facts. Indeed, those measures will aggravate the spiral in the cost of living, thereby further reducing the fastdiminishing value of the Menzies fi. This will also make it much more difficult for the worker and the person receiving a pension to make ends meet, whilst thcmasters of this Government - the vested: interests, the monopolies and the banks- - will go on their merry way exploiting the people. It is a shocking state of affairs that only £4,000,000 out of a total of £12,000,000 to be raised by the increased petrol .tax is bo be allocated to local government bodies for the provision of better roads. Every penny of the- £12,000,000 should be diverted to that purpose. With regard to the increased bank interest rate, it is interesting to notethat already one co-operative building society in New .South Wales has notified its clients that their monthly payments are .to be increased by 37s., which amounts to approximately 9s. a week. We of the Australian Labour party believe that the one and only way of establishing economic stability and protecting the workers and pensioners against exploitation by the monopolies, is for the Australian Government to control prices, charges and interest rates. We alsf> believe that if the States will not transfer those powers to the Commonwealth, the people of Australia will say " Yes " to the proposal by a resounding majorityvote at a referendum. As a practical illustration of the soundness of that proposal, let us compare theeconomic stability of the era of federal prices control with our present-day instability. Immediately after the outbreak of World War II., in September, 1939, federal prices control came into operation. Upon the outbreak of war, the basic wage was £4 ls. a week. By November, 1940, it had increased to £4 5s. a week, and by November, 1941, to £4 9s. a week. In November, 1942, it was- £4 17s. a week, in November, 1943, £4 19s. a week, and it remained at that figure until November, 1945. However, in November, 1946, the basic wage increased to £5 ls. a week and in November, 1947, it was £5 12s. a week. On the 20th September, 1948, prices control was handed over to the States, and' the basic wage at that time remained at' £5 12s. a week. Therefore, it can be seen that despite the unavoidable inflationthat followed in the wake of the war, the basic wage had increased over nine years by a sum of only 31s. If it is considered that the £1 had a purchasing power of 20s. in 1939, its value had decreased only to 14s. 7d. during the nine years. But during that time the worker had enjoyed true margins for skill, and the State governments could balance their budgets. The members of the present Government, who were in Opposition when the prices referendum was held on the 29th March, 1948, told the people of Australia that the States could control prices; but they knew full well that the States do not possess the constitutional power to fix the price of any article entering or leaving a State. Honorable members will recall that that great Australian statesman, the late Ben Chifley, told the people that unless the Australian Government possessed the power to control prices throughout this country it would be a case of inflation running wild and wages chasing prices. In other words, it would be a case of thedog chasing his tail. We were told by the Liberal party and the Australian Country party that free and healthy competition would keep prices stable. In Sydney at the present time the only healthy competition that I know of is the football competition played every Saturday. In 1948, the basic wage increased from £5 12s. to £6 2s. a week - that was after the Australian Government relinquished prices control - and in November, 1949, the basic wage increased to £6 12s. a week. In November, 1950, it had reached £7 6s. a week and in November, 1951, just after the introduction of the infamous horror budget which was brought in to combat inflation, the basic wage increased to £10 7s. a week. Honorable members will perceive that from November, 1950, to November, 1951, tho basic wage increased by £3 ls. a week. In 1951, the horror budget was introduced to combat inflation, but in November, 1952, the basic wage increased to £11 17s., an increase of 30s., despite the claim that the horror budget would cure inflation. In November, 1953, the basic wage increased to £12 3s. a week, and the Commonwealth .Court of Conciliation and Arbitration pegged it at that figure for all workers under federal awards. " At thu present time employees in New South Wales who work under federal awards receive £12 3s. a week as a basic wage, but the State authorities have fixed a basic wage for workers under State awards at £12 15s. a week. Therefore, those who work under federal awards in Now South Wales are being cheated out of 12s. a week. In a statement which appeared in the *Sydney Morning Herald* on the 31st May, 1948, two days after the defeat of the prices referendum, the Prime Minister, who was then Leader of the Opposition, said that with the defeat of that referendum prices would not rise. Well, events have proved that that forecast is in keeping with many other inaccurate statements made by the Prime Minister. Let us now examine what has happened since federal prices control ended in September, 1948. We find that in New South Wales from September, 1948, the basic wage increased from £5 12s. a week to £12 15s. a week. That is an increase of more than £7 a week. I suggest that it has been a matter not of wages going up, but of wages chasing prices in every respect. Another of the important factors causing inflation to-day is the exorbitant interest charged on hire-purchase goods. We of the Australian Labour party believe in hire purchase, because we know that in many cases it is the only way in which people can obtain articles such as refrigerators, radios, furniture, carpets and so on. But, at the same time, we believe that the people using hire purchase should be protected against exploitation. The average interest charged on hire purchase to-day is 17 per cent. It is quite true, as the Prime Minister has stated, that control of hire-purchase interest charges is a matter for the State Premiers. {: .speaker-KGC} ##### Mr Hamilton: -- And they ran away from it. {: .speaker-K5L} ##### Mr COPE: -- The average interest charged on hire-purchase goods is 17 per cent. It is quite true that these interest charges are matters for the State Premiers, but what the Prime Minister did not tell us is that it is improbable that the various States will agree on a maximum rate of interest to be charged for hire purchase. For example, if the New South Wales Government were to set its maximum rate at, say, 7 per cent., and the Victorian Liberal Government set its rate at 9 per cent., finance would drift out of New South "Wales into Victoria.. This problem is of the same kind as the prices, problem, and it can be effectively controlled only by the National Government. As a minor illustration as to how the hire-purchase companies aic exploiting the people, I shall quote an extract from that great working man's journal, the Sydney *Bulletin,* of the 13th August, 1955. The article refers to the Custom Credit Corporation Limited, which finances hire-purchase transactions. The extract reads - >Launched only two years ago by the energetic lau M. Jacoby on the flooding tide of hirepurchase credit, the company (in which the National Bank of Australasia holds a 40 per cent, share-interest) is already third of its kind in a field of 32 whose scrip is registered on Sydney 'Change. Also, the growth lias been profitable as well as rapid. Shareholders got 10 per cent, for first year, followed by 15 per cent., with a wide margin, for the twelve months to June 30 last. And they could then see the whole of their capital intact and £248.107 besides. Altogether a commendable performance. T quite agree. That is only one of 32 companies registered, and it is not the largest, by any means. Surely a business of this sort calls for action on a national basis ! Apparently, the real reason why this Government is running away from the problem of price control and hirepurchase interest is that its masters - vested interests and monopolies - would otherwise be restricted in their profit-making schemes. If power to control hirepurchase interest rates were transferred to the Commonwealth Government, it would mean an end to -these exorbitant profits. Finally, I wish to compare our overseas balances with those which existed when the Labour Government left office. "When Labour was in office in 1948, our overseas balance was approximately £550,000,000 in our favour. At that time, wages in England were not as high as they are to-day, and that amount of £550,000,000 would purchase more in England than it could buy to-day. Despite good seasons, record prices for wheat and wool and other exports overseas, this Government has dissipated our funds until they are at a dangerously low level. We are borrowing money all over the world. Most people will agree with the sound policy of the Chifley Labour Government that it would not borrow one penny overseas. Instead, the Labour Government paid £180,000,000 off our debts. Since this Government has been in power, it has begged and borrowed from every country that would lend to it. It has borrowed 254,000,000 dollars from the International Bank for Reconstruction and Development, and has even borrowed francs from the Swiss. This Government is trying to get money wherever it can, and Australians will have to pay for it in the future. It has been a haphazard government ever since it was elected to office. We remember the great vote-catching phrase of this Government in 1949. It promised that it would put value back into the £1. We need only work out the figures by simple arithmetic to discover what happened to that promise. When prices were controlled by federal legislation, the £1 was worth 14s. 7d. as compared with 1939. The basic wage in New South Wales at present is £12 15s. a week, and the £1 is worth only 6s. 4d. The basic wage in 1939 was £4 ls., and in September, 1948, the basic wage in New South Wales was £5 12s. It needs only a few simple sums based on those figures to show that the £1 now is worth only 6s. 4d. Inflation will be accelerated because the new company tax, petrol tax. and excise charges on beer, tobacco and cigarettes will all be passed on to the public. I predict that next year the basicwage in New South Wales will be well over £13 a week, and inflation will still further devalue the fast-diminishing Menzies £1 until it is worth much less than 6s. {: #subdebate-20-0-s7 .speaker-KGC} ##### Mr HAMILTON:
Canning .- The honorable member for Watson **(Mr. Cope),** who has just concluded his speech, referred to the hire-purchase system. I am not opposed to hire purchase, but T am opposed to the way in which it is being operated in the various States. The honorable member for Watson complained about the high cost of hire purchase to the workers, but when we tried to trap him by interjection, he skirted round the subject, and declined to say who was responsible for the supervision of hire purchase. The honorable member knows very well that the State governments are responsible for the conditions under which hire-purchase systems are maintained in the various States. He knows that, at a Premiers conference not long ago, the Premiers were asked by the representatives of the Australian Government to do something about hire purchase. They dodged the issue, and, in Queensland, the Premier, **Mr. Gair,** immediately after that conference, permitted a reduction of the deposit required for the hire purchase of goods. In my home State of Western Australia, advertisements appear in the press, day after day, offering to take in an old tin kettle or some other worthless implement as a deposit on a new refrigerator or some other article. As I have said, I am not opposed to hire purchase, but I object to the manner in which it is being carried on in the various States. The State Labour governments, who are in a majority in Australia, will discover that hire-purchase practices are having a more pernicious effect upon the people than are any of the measures introduced by this Government to correct the economic situation. The honorable member for Watson referred to the borrowing of money overseas by this Government. The Chifley Labour Government could not borrow overseas. {: .speaker-KZX} ##### Mr George Lawson: -- It did not want to do so. {: .speaker-KGC} ##### Mr HAMILTON: -- No, it had capital issues control, and the country was in a state of stagnation. That was the socalled golden era, but what could one buy then? It was impossible to buy a packet of cigarettes or a pound of nails to do a little job about the place. The people had to pay black-market prices for goods that were kept under the counter. A man who went to buy nails was charged overseas prices for nails made in Australia. When capital issues controls were lifted by this Government so that Australia could progress, it was able to borrow money overseas. For whom is the Government borrowing money overseas? Not one penny of the money raised overseas has been spent by this Government. It is being spent by the States. Reverting to the economic measures that are before the House, I have noticed during the debate that the speeches from the Opposition side are similar to those that we heard some years ago when the House was debating bank nationalization. All the speeches of honorable members on the Opposition side appear to have been written by one individual, despite variations to suit the mannerisms of the various speakers. Running through ali the speeches there is the same theme. Worst of all, was the charge made by the honorable member for Melbourne **(Mr. Calwell)** last night, when he said that the Government had said nothing about these measures during the last election campaign. He charged the Government with having deceived the people. I do not object to his saying that the Government has said nothing about this, but I take exception to the charge being laid that we deceived the people. Let me quote from this admirable document which has a perfect picture of the Prime Minister **(Mr. Menzies)** on the cover. It contains the joint policy speech of the Government parties, delivered on the occasion of the general election of 1955. On page IS, at paragraph 2. the following words appear : - >One of the great purposes of this election is to enable me to make an appeal which 1 know will not fall on deaf ears once the facts are understood. But I do want to make it clear that my Government is determined to arrest this running-down of our reserves or savings by the end of the financial year, that is to say, by June 30 next. This 19 so vitally important that we will hold ourselves ready to take any other measures which may be needed if co-operation is not as successful as we now hope. Is that deceiving the people? Is that saying nothing about the Government's economic proposals? The statement continued - >What those measures may need to bo will be governed entirely by future' circumstances. But they will certainly not impair prosperity. They will preserve it. In other words, the Prime Minister said to the people, in effect, " There is not the slightest doubt that we will have to do something. You can make your choice. You can elect me, the Prime Minister of this country, who tells you that I may have to do something by means of fiscal policy; or you may elect the Leader of the Opposition **(Dr. Evatt)** who has definitely said, not once but many times in the Parliament, that this country can stand having new money pumped into the economy to the tune of £600,000,000." Let the Opposition deny that if it dares. The Leader of the Opposition has said repeatedly in this Parliament that this country can stand the creation of new money and bank credit to the extent of £600,000,000. I ask the people and the Parliament what would be the ultimate position of the working man if the Leader of the Opposition had got his chance, and had put his scheme into effect. But the people trusted the Prime Minister. They knew full well that some measures along these lines might have to be put into operation in the very near future. What is the Opposition doing? I repeat that it is completely clouding this issue, which is in two parts. One part concerns revenue and the other part is an anti-inflationary measure. Last night, and earlier in this debate, the inflationary aspect has been dealt with quite considerably in terms of demand inflation, cost inflation and so forth. But not once has any member of the Opposition come out in the open and said quite plainly that the money that is being raised by the Commonwealth by taxing the people will be used entirely by the States. Not one penny piece will go to the Federal Government. The whole of this money will go into the coffers of the State governments so that they can continue, and we hope, complete their development programmes. I notice that the honorable member for Stirling **(Mr. Webb)** is interjecting. He is evidently in agreement with this, because he has not raised his voice against it. Here is the point. The Opposition has moved an amendment in an endeavour to stop the passage of the Government's proposals. Members of the Opposition say that they represent the workers. What do they mean by this amendment? Do they mean that they want to stop the Government from raising the money which will enable the States to carry out their works programmes, so that workmen will become unemployed ? Of course, that is what the Opposition would like to see. There is not the slightest doubt about that; and there is not the slightest doubt that unless this money is raised, the States will suffer. The Opposition has dodged this issue completely. There was an election in Western Australia recently. Did anybody read or hear any comment by the members of the Labour party in Western Australia that the Western Australian Government, would benefit to the tune of £780,000 which would be spent on the roads in that State? There is a lag in road construction in Western Australia, and the Government of that State has an amount of £1,360,000 in kitty, unspent as yet. We have not heard a word about that. As I travelled around the Western Australian electorates I found that the people generally were not opposed to that money being made available in Western Australia. Some Opposition members seemed to have the idea that the Australian Country party was running away from these economic measures. We will run away from them as fast as we ran away from the horror budget. In other words, we will stay and fight to protect the Government's proposals to the bitter end. Have the State Premiers endeavoured to help the Commonwealth in these matters ? No ! Here, I take the Government to task. It is easy to be wise after the event, of course, but .in view of the way in which the States have received aid over the last six years, it is time that the Government woke up to itself. The Government has been far too lenient with the States. It is time the Government forced some sense of responsibility on to the Premiers, whether Labour, Australian Country party or Liberal party. The Prime Minister should have called the Premiers together in Canberra, admit the press to the conference, freely discuss matters, and tell the Premiers the position that the Government is in as the result of the public's response to loans. He should have told them that it will be necessary for the Government, providing that the £30,000,000 loan that will be floated shortly is successful, to find a further £67,000,000 to pay to the States in order to enable them to carry on their works programmes. If the Premiers raised any objections to the Government's proposals, the Prime Minister should have let them chase after funds and not leave the whole responsibility with the Federal Government. Unfortunately, the Government has taken to itself the responsibility of honouring an obligation to the States to supplement their loan funds. Over the last six years, the Commonwealth has found £500,000,000 for the States by means of taxation which has been levied on the people in order to supplement loan raisings. I" am reaching the stage at which my patience is sorely taxed in this matter and I. feel disposed to warn the Government that if, in future, it continues to tax the people in order to raise money for these squandering States, I will raise my voice in protest. If the States are not prepared to exercise some modicum of responsibility, then the Government should completely rid itself of the responsibility of finding money for them. According to a statement that has been made by the Auditor-General of Queensland, that State has tucked away in trust funds almost £20,000,000 of the money raised by the Commonwealth that should have been spent on roads and bridges and development. According to the Auditor-General of New South Wales, that State has had about £40,000,000 stacked away. That money was raised by this Government by taxing the people in excess of its requirements so that the States could carry on with their development. When we look further, we find that the Government has been lenient in respect of tax reimbursements. Over the years, it has provided an extra £145,000,000 for the States to enable them to keep workers in employment. The Government has not done as the Opposition would have it do - refuse to implement unpalatable measures, and so put men out of work. That would be the effect of the Opposition's amendment, if it were adopted. Unless this money is given to the States between now and the end of June, some unemployment must occur. Whilst the Government has been taking these measures, the States have been allowing hire purchase amd all those other matters which are State prerogatives to go completely haywire. If a person walks into a bank to-day, at one end of the desk he will find a notice offering Commonwealth bonds at 4£ per cent.; at the other end he will see a notice urging people to invest in Custom Credit Corporation Limited or I.A.C. Finance debentures at 6 per cent, or 7 per cent. Where is a person going to put his or her money? The money will go into the investment that will give the better return. Yet the Premiers come to the Australian Loan Council and decide by six votes to two what will be the interest rate on loans. Where do we stand as a result of this procedure? This Government has found £500,000,000 by taxation to supplement the loan funds of the States and £145,000,000 to pay to the States by way of tax reimbursements. Where does it stand with bondholders? People who have lent their money to the Commonwealth in the past now say, " Our 3£ per cent, bonds maturing in 1965 are down to £87 or £S9 on the stock exchange. We are not going to lend any more ". The course for the Government to take at the next Premiers conference is clear. If the Premiers do not come into line and refer the necessary powers, particularly with respect to hire purchase, to this Parliament or do something else about it ; and if they do not get rid of some of the millions of pounds that they have stacked away in trust funds; and if they are not prepared to play ball with this Government which is all the time giving them money, the Government should say, " We will finish with you, cut the painter, a>nd let you find your own money". I defy anybody to try to convince me that men who spend money for the raising of which they are not responsible will give their constituents good government. Far from it. They will dodge the issue in respect of every little culvert, side track or road that is sought and say that they cannot get the money from "father" - the Australian Government. We have seen it happen in families, and it happens in relation to governments. Finally, we must do something about the bondholders. I am not worried very much about the big man, but about the small man who has invested a few thousand pounds in Commonwealth loans for use, not by the Commonwealth, but by the States. The patriot who has invested, say, £4,500 in Commonwealth loans is worse off than is an age pensioner who has never tried to save a " bob " during his lifetime. It is time that we recognized that fact. I should be greatly surprised if members of the Australian Labour party opposed my suggestion that very serious and early consideration should be given to an automatic adjustment of the interest rate on bonds, in which very many people in the past have so magnificently invested their savings so that we may develop the country when we are in the mood to do so. What would such an adjustment cost? In round figures, the public debt of this country is £2,800,000,000, of which £2,100,000,000 is in the 3$ per cent, and 3J per cent, bracket and £700,000,000 is in the 4 per cent, category. If interest rates were adjusted automatically, even up to 5 per cent., it would cost, in round figures, slightly less than £50,000,000 a year. I say to the Government, and particularly to the Treasurer **(Sir Arthur. Fadden)** and the department that he administers, that it would be far better for the small investors, and for the building up of patriotic sentiment, if the Government were to meet an account of £50,000,000 a year for that purpose rather than having to pay in 1951-52, £152,900,000; in L952-53, £131,500,000; in 1953-54, £74,400,000; in 1954-55, £44,500,000; and this year possibly £93,600,000 to augment the " mad hatter " spending of the States. Something should be done to protect the bondholder and to force the States to refer to the Commonwealth their powers in relation to hire-purchase finance and nonbanking interest rates. If such action is not taken, at some time in the future when this Government introduces a taxation measure for the purpose of raising money to hand to the States for them to use in a haphazard manner, I may be forced to record my vote against the Government. {: #subdebate-20-0-s8 .speaker-KZ9} ##### Mr RIORDAN:
Kennedy .- I propose to reply to the remarks of the honorable member for Canning **(Mr. Hamilton)** later in my speech. In September last, the Prime Minister **(Mr. Menzies)** made a statement to the nation about Australia's economic position. He informed the people that the Government proposed to take certain action, but that not until April of this year would the results of the Government's action be felt. April has arrived, and we are now discussing another statement by the right honorable gentleman. What a statement it has proved to be! It shows the utter incompetence of this Government to grapple with the economic problems with which the country is confronted. Outlined in the statement are the Government's proposals to curb inflation. Those proposals will do nothing of the kind; rather will they give a fillip to inflation. The honorable member for Canning stated that, because of statements made by the Prime Minister during the last general election campaign, the people were expecting the Government to take such action. All I can say to the honorable member is that, as I have moved amongst the general public, I have noted that they, to put it mildly, have been stunned and shocked by the actions of this Government, which talks about the period of prosperity into which it is leading the country. Every newspaper and columnist of note is hostile to the proposals. Now that the people have recovered from the first shock, they are indignantly demanding to know where we are going economically, because they have seen how our overseas balances have dwindled. They have observed how those funds, which had been built up laboriously and which are necessary to enable us to purchase petrol, oil, machinery and other commodities that we do not produce in this country, have been dissipated by this Government. They have noted, too, how the Government has placed Australia in pawn to overseas financiers, as was done by governments of the same political kidney prior to 1929, and how it has followed outmoded methods' of finance. The honorable member for Canning has spoken about the introduction of new capital, and has stated that the Chifley Government could not borrow money overseas. It was not necessary for the Chifley Government to borrow overseas, because our overseas balances were at a record high level. To-day they are at a record low. Is it any wonder that this Government has gone to the overseas money markets to obtain funds? The Treasurer **(Sir Arthur Fadden)** has been to the United States of America, Switzerland and Canada, to borrow money. In Canada he raised, through a financial house at Toronto, a loan on which the Australian people are paying 5 per cent. ; but the Canadian Government is able to go to the same market and obtain all the money that it wants at 3 per cent. That gives an indication of the standing of this country in the eyes of the Canadian investors. Only last year, the Minister for Labour and National Service **(Mr. Harold Holt)** and the honorable member for Chisholm **(Mr. Kent Hughes),** who was then Minister for the Interior, stated that this country was facing an economic depression, but the Government did not do too much about it. Of course, the honorable member is no longer a member of the Cabinet. The crisis is not fundamental, hut has been caused by a lack of policy and a lack of action by the Government, which has been indifferent to the difficulties that have confronted the country as a whole and the people individually. Yet the Government has the audacity to impose an added burden of £115,000,000 in the form of extra taxes. It proposes to increase interest rates substantially. The result will be, of course, that those who have borrowed money to build homes, or to run farms or small businesses, will have to pay higher interest rates on their overdrafts and. mortgages. These facts demonstrate that the control of inflation is not the real purpose of the Government's proposals. If that was their real purpose, why has the Government given a further fillip to inflation by extracting another £115,000,000 in taxes from the people of Australia? Why was the Prime Minister not honest with this House and with the country, informing us of the real motive behind these measures, and explaining the implications contained in the statement that he delivered in this chamber? The Government, no doubt, faces increased costs in the next financial year. As the honorable member for Canning has remarked, the Government must raise a loan before the 30th June. {: .speaker-JLU} ##### Mr Anderson: -- What for? {: .speaker-KZ9} ##### Mr RIORDAN: -- My friend asks, " What for ? " I hope that the Australian Government will raise sufficient money to retain in employment thousands of Commonwealth employees who are engaged on public works and are about to be dismissed. I hope that it will raise money to reinstate tens of thousands of its employees who have already been dismissed. The Prime Minister was not honest with this House when he spoke about curbing inflation, and he did not give the House or the country the real facts regarding his proposed measures. Treasury-bills on issue at the end of March of this year amounted to £280,000,000. That is the highest amount since April, 1953. During March there was an increase of £15,000,000 in the amount of treasurybills issued, and during the first nine months of this financial year the issue of treasury-bills has increased by £120,000,000. In the financial year enduing on the 30th June, 1957, the Government also faces the prospect of having to find £250,000,000 to repay loans that will become due during the year. It is quite obvious that these measures which have been adopted by the Prime Minister are designed simply to provide added income, and we can rest assured that when the budget is presented in August or September of this year there will be a. substantial increase in direct taxation, in order to bridge the gap between the £250,000,000 that the Government will require and the amount raised by loans. The history of loan-raising by this Government has been a history of failure, when compared with the history of loanraising by Labour administrations. Throughout the six years that this Government has been in office a strong inflationary trend has been evident. In 1953, the basic wage was frozen, the subsidy on tea was withdrawn, and the subsidies on butter and cheese were whittled away. All those things, of course, added to the cost of living and increased the inflationary trend. Those measures were adopted, of course, after the real value of margins had been slashed in 1950-51. At the time of the freezing of the basic wage, in September, 1953, there was talk of a crisis. After wages were pegged, the monopolist supporters of this Government went to work - and what a party they had! In the following two years, between September, 1953, and September, 1955, the profits of the monopolists of this country increased from £378,000,000 to £575,000,000. While government loans were not being fully subscribed, monopoly capitalism was at work in this country, small businesses being absorbed by larger companies in town after town and in State after State. The real causes of the industrial disturbances that have taken place in recent years are the freezing of the basic wage and, at the same time, a steady increase in company profits from £378,000,000 to £575,000,000, in a period of two years. Those two factors resulted in the cost of living increasing and the inflationary trend becoming ever intensified. Employees have been conscious of the fact that their wages have been frozen and their standards of living have accordingly declined, while these huge profits were being made. Does the Government expect that employees would sit idly by and accept that state of affairs without making some protest? Why did not the Government honour the promise made in 1949 by the Prime Minister, when he said, among other things, " We will introduce an excess profits tax " ? It is all very well for honorable members opposite to say, " This question of excess profits tax is a bit difficult; we may not have the power or the constitutional authority to introduce it ". This Government has the taxing power. If it used that taxing power properly, then these abnormal and immoral excess profits that have been filched from the consumers of this country could have been taxed, and the money that has gone to the monopolist exploiters of Australia could have been used to make up the Government's requirements that could not be raised on the loan market. Apparently, now that all the funds that monopoly capitalism required have been obtained, the Government has decided to follow a policy of credit restriction. The financial appetite of the monopolists having been satisfied, they are now setting about digesting the profits that they have made. Not one Australian newspaper has shown support for the Government's proposals. The measures that the Government has taken are not for the purpose of checking inflation. It is well known that taxes form part of commodity costs,, and the increased sales tax will be passed on to consumers in the form of higher prices, and so give another fillip to inflation. Does the Government hope, on the other hand, to curb spending by the proposed action? The Prime Minister suggested, when he was placing the matterbefore the House and when he informed, us of the increased excise duty of 2d. on a glass of beer, that the Government did not expect any fall in the consumption of beer. He stated that on the previousoccasions on which excise duty on beer had been increased, instead of consumption falling, it had risen. Apparently, the Government believes that by increasing the excise duty on beer it is giving added inducement to patriotic Australiansto drink more beer. It is obvious that the Government is not seeking to curb spending. The Prime Minister has harped on the need to increase production. Surely, the right honorable gentleman does not expect increased production to follow in the wake of these recent economic proposals, especially after the imposition of credit restrictions and higher interest rates. Why cannot the Government be honest with the people and tell them the real intention behind these measures? The policy announced by the Prime Minister in his statement represents an extension of economic and credit restrictions and is the forerunner of economic depression. As I said when replying to the honorable member for Canning, already many hundreds of men employed by the Commonwealth Department of Works have been sacked or have received notice of dismissal. In consequence, we are already seeing the first signs of the depression forecast about the middle of last year by the then Minister for Works, the honorable member for Chisholm, and the Minister for Labour and National Service. A surprising feature of the Government's economic policy is that, although the Prime Minister prates about the need to increase production, his statement contained no indication of how increased production might be achieved. Did the right honorable gentleman endeavour to secure the co-operation of the trade unions in increasing production? He did not; nor did he consult the Parliament on this question. Instead, he turned to an outside body for advice. As honorable members have gone about the country, since the Prime Minister made his statement, they have been told, " No wonder we are in the mess that exists to-day, when we have Snow White and the eleven dwarfs running the country ! " {: #subdebate-20-0-s9 .speaker-KCK} ##### Mr DOWNER:
Angas **.- Mr. Acting Deputy Speaker,** this debate revolves around as complex a series of subjects as ever an Australian government has had to deal with in peace-time and which can only be resolved by a multitude of means. Some of them may be beyond the province of this Parliament; others lie in the profounder recesses of the national character which the Government certainly should attempt to influence, but which no government can ever control. The Prime Minister **(Mr. Menzies)** in his singularly well-balanced, lucid and comprehensive statement, pointed out to the House and the nation that we are faced with two immediate problems. If I might say so in parenthesis, it is the Prime Minister's analysis of the situation which honorable members opposite, with all their declamations, will not bring themselves to face. The right honorable gentleman said, first, that we had to raise more revenue in order to finance State public works on account of insufficient support for Commonwealth loans, and on account of difficulty in borrowing overseas. Secondly, he said he was faced with the need to dampen down public demand for non-essential things which, insofar as they are imported, we may not be able to pay for. Both of these, of course, as honorable members must be very well aware, are off-shoots of the basic problem of inflation with which not only this Government has been doing its best to grapple since it came into office in 194$, but which also has faced every single country of the world since the war began, and particularly in the post-war years. Now, sir, in these matters it is unwise for any of us to be dogmatic, but I think one can fairly assume that the Govern ment will succeed in realizing its shortterm objectives. The beer and spirit drinkers, the smokers, the users of cars, the purchasers of ladies' handbags and other articles, some of which, I must confess, are hardly a fit subject for parliamentary debate, listed in the sales tax schedules - all of these consumers are being asked to pay, in effect, the outstanding balance for State public works, instead of this amount being found by treasury-bills. Surely, sir, no reasonable person, in the circumstances in which we find ourselves, can cavil at this. Again, the rise in sales tax on cars and on petrol will, I should think, most certainly reduce the sales of new cars and the use of many cars. This, in turn, will diminish imports from abroad and thereby play a not inconsiderable part in redressing the trade balance. Again I ask, can any one with any knowledge of the facts really quarrel with that? My own approach to this interim budget, while emphatically supporting it, is to -hope that it represents merely a first instalment of the Government's intentions for the longer term. All of us, members of this House, the leaders of organized labour and of primary and secondary industry - every one, indeed, throughout the whole range of employment - must go to the roots of this economic problem. So:t:r of the things I would suggest, sir, that may be required of us can be stated in a few simple propositions. First, we must all of us reduce costs by producing more, through working harder, not necessarily for longer hours but by displaying within those hours more purpose, consistency and honesty. Secondly, our principles of direct taxation should be revised so as to provide more incentives and assistance to the family man and to exact a higher contribution from those salary and wageearners without family responsibilities. It is from the young unmarried age group, as I shall try to show very briefly later on, that a fairly large proportion of the present inflationary pressure is coming. Thirdly, as a people we must become thriftier and attempt the unpleasant exercise of saving more. Fourthly, national and State governments should match their own precepts by practice. Fifthly, this Parliament must acquire more far-reaching powers capable of rapid use over certain factors of the national economy. "Within the short time allotted to me under the Standing Orders, I shall try to say a few words on each of those five propositions. First, I want to deal with production and costs. Despite the airy references of the Leader of the Opposition **(Dr. Evatt),** in his speech, to production, and his allegations of profiteering, the inescapable truth is that every section of the community could produce a good deal more per head than it is doing at the present time and more than it has done since 1945. It is the most solemn humbug, the most unpardonable hypocrisy, for members of this House to burke this issue. Every one of us knows in his heart that that is the hard corr; of the economic problem. "We can try to find as many scape-goats as we like, but unless we face the facts the truth will be pressed home on us in a cruel and relentless way. Circumstances to-day, as I see them, demand plain speaking and no half measures. Industrial tribunals, management, and the leaders of 'unions should try to make the present 40-hour week a reality. The Government, on its part, should set the example by making the Public Service work a 40-hour week instead of a nominal 37£-hour week, with the actual working week somewhat less than that. An effort should be made, on the one hand, to induce the Australian Council of Trades Unions, and the leaders of the trade unions to mark time in their present claims for wage increases in the courts and elsewhere; and, on the other hand, *to* induce private enterprise to moderate its expectancy of higher profits. I do not agree for one moment with the archaic, Fabian, completely outmoded conception of the Leader of the Opposition and some of his followers concerning this controversial subject of profits, but I feel that in the present circumstances there is a strong case for asking the leaders of private enterprise - the great companies - to decrease the volume of their profits if, at the same time, they can get an agreement with the unions and the Australian Council of Trades Unions to hold their hand until we move into smoother and safer waters. Incontestably, the result of such an arrangement - a *quid pro quo between* industry on the one hand and unions on the other - would be the lowering of costs and the enhancing of Australia's export and competitive position in the world. No one in this House or in the country could honestly gainsay that. The State governments could also play a very useful role in many ways. [ mention two minor examples. First, they could do a brave, unpopular, but useful thing, as an interim measure, by decreasing the number of public holidays in Australia. Do honorable members realize that Australia has more public holidays than any other country, and certainly more than any of our competing nations? One could reasonably expect State governments to cease permitting, for the duration of this emergency, such practices as mid-week racing - something which happens very frequently in South Australia. Most honorable members will agree that we cannot allow the luxury, at the present time, of so many people having one day off each working week. I pass now to my second proposition, that the principles of national taxation should be revised in favour of more incentives and more assistance to the family man. In saying this, I find myself in alliance with the energetic and crusading mind of my friend, the honorable member for Mackellar **(Mr. "Wentworth),** who has frequently brought this matter before the House and the people. Honorable members who study this matter must agree that a potential factor in causing inflation is the large amount of money in the hands of members of the younger age group. By that I refer to youths and young men and girls between sixteen and 21 years of age. Many of them are thriftless and extravagant, with little thought of saving and with grand ideas of spending - and spending their money on goods which may be placed in the non-essential categories. Since most of these otherwise estimable young people are without family burdens would it not be just and economically wise to ask them to contribute more than those who are older and in a more settled state of life? If the Treasurer were to do this I am sure that a noteworthy proportion of luxury spending would be diminished. My third proposition is that every one who oan do so should save more and invest a higher percentage of such savings in government loans. How can this apparently insuperable task be achieved? Not, I hasten to say, by lofty exhortations from the Prime Minister, Treasurer, or other leaders in this country. In time of war, investors are prepared, voluntarily, to make sacrifices, but they are seldom prepared to do so in times of peace. Honorable members all know that investment in Commonwealth loans has been a sacrifice for those who have done so in recent years. Continuing inflation unquestionably has temporarily destroyed confidence in the loan market, and we have to face the fact that the holders of long-dated stock feel very badly treated indeed. The Treasurer propounds an unassailable case, when he is challenged on this subject, for the legality of the Treasury's attitude towards bondholders, but that does nothing to assuage their hurt feelings and natural indignation. Still less does it do anything to attract new investments, and that is a more serious aspect. The public attitude to-day towards loans may be compared with the cry of the outraged spinster - " Once bitten twice shy ". It is obvious that the Government must make this form of investment financially attractive if Australian public works are to proceed without the imposition of additional, and what could be crushing, taxation. I admit that it would be a pity to raise the bond rate dramatically. This could engender undesirable COnsequences of many sorts in the community. Some advances are inescapable; they are decreed by the invariable law of supply and demand; but I earnestly hope that in the forthcoming loan which the Treasurer will float, and with his tremendous conversions next year, amounting to approximately £253,000,000, he will be able to keep the figure to just under 5 per cent. Indirect inducements, however, could be proffered with advantage. In an earlier debate the honorable member for Balaclava **(Mr. Joske)** suggested an increase of the rebate on taxation, and I find myself in agreement with him. I suggest that instead of the existing 2s., the Treasurer should increase the rebate to 3s. I would go further, and make it retrospective to old stock. Distasteful and costly as retrospective provisions may be, they undoubtedly involve a principle of legislation which in this case would inspire new confidence in Commonwealth bonds, and they would certainly be far cheaper than the humiliating experience of having loan after loan undersubscribed, and the balance having to be made up either by credit issues or higher taxation. My fourth proposition is that governments should match their own precepts by practice. In the Prime Minister's speech, so estimable in so many respects, there was no suggestion of stringent government economies to correspond with the burdens placed upon taxpayers. I do not say this unkindly, or without some understanding of the difficulties involved in reducing departmental expenditure and staffs, because honorable members are aware that all sections of the community are clamouring for better and more extensive services, and for the accelerated development of our national resources. Nevertheless, I am not convinced that worth-while cuts in national and administrative expenditure cannot be made. The Government, in reality, is admonishing others to economize whilst refusing to do so itself. This, inevitably, is producing a cynical reaction, and is impairing grievously the effects of the Prime Minister's moral entreaties. Is it really impossible for heads of departments to operate efficiently with fewer employees? Must we reconcile ourselves every year to an automatic increase in the number of civil servants ? Cannot some system of effective priorities in public works be evolved between the Commonwealth and the States, with a deferment of those which are less urgent? The answer to these and cognate questions is surely not just a shrug of the shoulders or passive acquiescence. I hope that the Government will reconsider its attitude towards these matters and announce substantial economies in the spring. The last thing I wish to say, but which I fear that time will not permit me to unfold, refers to the incapacity of this Parliament, as a result of its constitutional limitations, to deal decisively with urgent situations such as the one we are debating. Critics aver that the Prime Minister's measures are not sufficiently anti-inflationary, but two measures which we should adopt, and which I believe we would adopt if we had the power, are denied to us by the Constitution. I refer, firstly, to the increase of hire-purchase deposits, and, secondly, to the reimposition of capital issues control. To accomplish these quickly, this Government is cast upon the agreement of the States, but experience shows that State Premiers are not inclined to co-operate with the central government when this involves sharing the responsibility of stern, necessary, but unpopular, decisions. I believe that the Government must again press the States to legislate for increased initial hire-purchase deposits as quickly as possible. I believe, too, that were we empowered to reimpose temporarily capital issues control, it would result, however unpleasant these things are to any honorable member on this side of the House, in a channelling of investment into nationally more productive avenues. **Mr. ACTING DEPUTY SPEAKER (Mr. Timson).** - Order! The honorable member's time has expired. *Sitting suspended from 5.58 to 8 p.m.* **Mr. COSTA** (Banks) r8.0].- The economic measures under discussion at the present time contain many surprises a.nd have many terrifying aspects. The Government's action in increasing taxation and sanctioning increased interest charges is deceitful, and anything that is deceitful is despicable. The Government has proved its untrustworthiness in these matters. It should be put out of action like an unseaworthy ship. {: .speaker-JVA} ##### Mr MORGAN:
REID, NEW SOUTH WALES · ALP -- It should be sunk. {: #subdebate-20-0-s10 .speaker-K6T} ##### Mr COSTA: -- It should be sunk. The Prime Minister **(Mr. Menzies)** gave no hint in his policy speech at the general elections only last December that the Government intended to increase taxation or to allow interest rates to be increased. Even more recently, a speech prepared by the Government, and read by the Governor-General on the occasion of the opening of the Parliament on the 15th February last, did not mention the measures that have now been taken. All the policy speeches made on behalf of this Government indicate the opposite of what subsequently occurred. Those speeches have always been full of promises of taxation reductions. It is now clear to all the people of Australia that the Government had decided, before the general elections in December last, to take measures of this kind. That is why an election of members for this House was held nearly two years before it was due. The people of Western Australia, last Saturday, voted the Australian Labour party to an overwhelming victory and clearly indicated what would have happened to this Government had it revealed its intentions last December. Interest rates were not even mentioned by the Prime Minister during the general election campaign. Apparently they were among the secret list of items about which he had made promises to his banker friends, the money lenders, the investment brokers, and similar people. He made no promise to the people generally about interest rates. It seems that the Government yields to financial pressures, but never thinks much about social justice for the masses" of the people. When it took office, mortgages were subject to interest charges of 3$ per cent. - the lowest ever. That was the result of the policy of the Australian Labour party. The history of interest rates and their trend may be found in the annual reports of the Commonwealth Bank of Australia. Whenever Labour has been in office, interest rates have fallen, and whenever a non-Labour government has held office interest rates have increased, apparently because such governments are the friends of the people who own excess wealth. Interest rates have always been the bugbear of the nation. Primary producers well know this. There was a time when all primary producers, particularly the farmers, depended on the goodwill of the local banker for their existence. Almost all their income went to pay interest charges of about 8 per cent, on their assets. The policy of the Australian Labour party, during World War II., of stabilizing the wheat industry particularly, and also other primary industries, by assuring them of permanent markets at reasonable prices, and by giving them the benefit of initial depreciation allowances, put the farmers and the other primary producers on a sound basis that they never enjoyed previously. Interest is a charge for money to which I am totally opposed. It treats money as a commodity that may be sold. I believe it is being sold at far too high a price. It is immoral and wrong to charge high interest rates for money. This Government is the guardian and the caretaker of our monetary system. It should keep interest charges in their proper perspective in relation to the national economy. If it did so, it would not permit the present increases. If we look back into history, we see that there was a time when no such thing as money existed. Men got along without it. Lending and investment were, therefore, impossible, and, as a result, there was less dishonesty. In the Middle Ages, the charging of interest on loans was known as usury. It is still usury in my view. In the Middle Ages, it was considered un-Christian and immoral to charge interest. That belief gave rise to the expression "Money is the root of all evil ", which holds true even to-day. The judgment of the Middle Ages deserves respect. People believed, in the Middle Ages, that Christian principles forbade them to collect interest, to charge excessive prices, or to take unfair advantages of their fellow citizens. Where does the present Government stand in relation to Christian principles? It has adopted a policy of depriving the workers of wage justice, of paying inadequate pensions to aged people, inadequate child endowment to mothers, and inadequate repatriation pensions, and also of depriving aged diggers of World War I. of treatment in repatriation hospitals if they cannot prove that, for example, a heart ailment was due to war injury. The Government would do more good by helping those people than it does by increasing interest rates and reducing wages and pensions, thereby making it impossible for families to obtain homes, and reducing standards generally; for those are the consequences of the inflation that the Government has caused. When it took office, bread cost 6d. a loaf and butter ls. Sd. per lb., and a family could buy a home for £1,000. These are bread-and-butter questions. The Government's failure to honour its 1949 election undertaking to put value back into the £1 has deprived the people of proper standards and conditions. The Government lacks Christian principles. It supports the money monopolists against the masses of the people. The common people of the Middle Ages were no less human than we are. The money monopolists and selfish exploiters of early times caused the downfall of the great Roman empire. The same elements, down through the ages, have destroyed the standards of generation after generation, and I fear that the policy of the present Government will cause the destruction of our standards. We have recently enjoyed wonderful seasons and good markets for our products. We have been abundantly blessed by Providence with all kinds of bountiful production. But the poor administration of this Government has lost us our great opportunities. The old firm of Menzies and Fadden displays a peculiar genius for getting Australia into a mess. It got us into a mess in 1941, and it is getting us into another serious mess at the present time. I should like now to discuss the impact of the increased interest charges on various parts of the national economy. The Prime Minister mentioned that loans to the amount of £253,000,000 will fall due for redemption in the next financial year. This amount forms part of the £1,500,000,000 which the Labour Government borrowed to defend Australia during World War II. The Chifley and Curtin Governments were able to obtain all the money they required at the reasonably cheap interest rates of 2 per cent, and 2^ per cent. The amount which is falling due for redemption next year cost the nation £6,300,000 annually in interest when it was borrowed, but the money which we shall have to borrow next year to repay the amount originally borrowed will, at the minimum rate of interest mentioned in the Prime Minister's statement, namely, 5 per cent., cost us £12,000,000 annually in interest. Interest rates are graduated from 5 per cent, to 6 per cent., and, if I am any judge, persons who wish to exploit us will find a way of charging the maximum rate of 6 per cent. This illustrates the difference between a Labour government, which stands for the people, and a Liberal government, which stands for a very few of the people. I should like to refer to the effect of interest upon the national debt. The Treasurer, who is at the table, rarely mentions this important item, but skips over it. I hope that he will say something about it to-night. {: #subdebate-20-0-s11 .speaker-KX7} ##### Mr WARD: -- He does not understand it. {: .speaker-K6T} ##### Mr COSTA: -- He probably does not. In 1949, when the Labour Government went out of office, the national debt was £2,829,000,000. The last budget disclosed the national debt to be now £3,749,000,000, an increase of about 30 per cent. The major portion of the national debt is represented by money which we borrowed to defend Australia. World War I. cost the nation £500,000,000, and World War II. cost three times as much, £1,500,000,000. Interest on the national debt at the rate of 1 per cent, represents £37,490,000. Interest at 2-J per cent, on the £1,500,000,000 that was borrowed by Labour between 1941 and 1945 amounts to £37,500,000. At the new rate of interest which the Government permits the annual cost to the nation will be £75,000,000. I have mentioned in this House previously the serious drift in our national debt position, and I believe that the deterioration is due mainly to the fact that the Government permits interest rates to increase. I have pointed out that at the 30th June last the national debt was £3,749,000,000, or £416 a head of population. To illustrate the serious effect which interest has upon the national debt I shall mention the interest which has accrued during the last three years. Each time a budget is brought down provision has to be made for the interest accruing. In 1953, the interest on the national debt was £100,000,000; in 1954 it was £11.5,000,000 and in 1955 it was £125,000,000. These figures clearly illustrate the effect upon the national debt of the Government's decision to permit interest rates to be increased. A similar effect is apparent from an examination of the finances of our railway systems. The year before last the New South Wales Government Railways made a profit of £6,500,000 on working expenses, but taking into account interest and exchange on money borrowed overseas there was a deficit of £3,000,000. Interest has the same impact upon the whole of our national economy, including every one of the Australian railway systems. The Snowy Mountains hydro-electric undertaking, a national project which will cost £4.50,000,000, will be affected in the same way. The annual interest charge, at the rate being paid for money borrowed to complete the project, will be £22,500,000. Industry and consumers generally will have to pay dearly for that project because of the Government's policy of allowing our national projects to provide excellent rake-offs for people who have spare money. The impact of increased interest rates is being felt by people who need homes. An addition of *i* per cent, interest over a 30-year term on a home which usually costs from £2,500 to £3,000, adds from £260 to £300 to the cost of the home. Since the Government has been in power it has permitted interest rates to be increased about threefold. The home seeker, or the person who is in the process of buying a home, will pay about £900 or £1,000 more for it as the result of this policy, because mortgage agreements in relation to loans for homes include a clause which provides that the current rate of interest shall be charged. I believe that any one who dispassionately surveys the trend of events since this Government came into power must be more and more convinced that measures taken because of political expediency will not stabilize our economy, but that is the only course that the Government is following. The Government is dodging the real issue. This afternoon I heard the honorable member for Angas **(Mr. Downer)** speak of the need for the Government to have the power to handle our economic situation, but the Government will not face up to its responsibility in a. proper way. Instead, it relies upon its experts. My experience of experts is that they are very good at giving advice but they rarely provide a solution. In my opinion they must all eventually go. The Australian people elected a government of Liberal and Australian Country party members; it did not elect the experts. I would sack all of the experts, commencing at the top and not at the bottom, because I believe that they are the culprits. There is something wrong with their theories and their rules, otherwise we would not be in the mess in which we find ourselves from time to time. One has only to instance a serious factor in our economic structure to-day, namely the overseas balance of payments. In 1952, the experts said that the way to correct our adverse balance of payments was to lift the lid completely from import restrictions. This was done, and the value of our imports increased in one year from £640,000,000 to £1,329,000,000. Rubbish and luxury goods flooded the Australian markets and as a consequence we suffered seriously, and a recession, which was almost a depression, followed. We must get rid of those experts. The Government should have the courage to handle the cost structure in a proper fashion. I hope that the Treasurer, in making some verbal contribution to the debate, will throw some light on the problem, and that he will induce the Government to attack these difficulties in an honest way. {: #subdebate-20-0-s12 .speaker-JLR} ##### Mr DEPUTY SPEAKER (Mr C F Adermann:
FISHER, QUEENSLAND -- Order! The honorable gentleman's time has expired. {: #subdebate-20-0-s13 .speaker-F4T} ##### Sir ARTHUR FADDEN:
Treasurer · McPherson · CP -- In the course of this debate and in discussions in the press1 and other quarters there have been various criticisms of the economic measures which the Prime Minister **(Mr. Menzies)** as head of the Government has introduced to the House. But no one has sought to deny that there is a real and serious problem abroad. No responsible critic has denied either that this problem is due mainly to excessive levels of demand within Australia and that the Government is right in tackling it on that basis. There has been plenty of argument as to the particular forms of action the Government should take, but its basic assessment of the position has not been seriously denied. {: .speaker-KX7} ##### Mr Ward: -- Who wrote that speech? {: .speaker-F4T} ##### Sir ARTHUR FADDEN: -- Not Jock Garden. In point of fact, the Government has for a long time past been taking action over a broad front and shaping its whole economic policy to counter these) adverse tendencies in our situation. Our record in that regard makes nonsense of the charge by the Opposition that the Government should have told the public earlier what it thought of the outlook and what it was doing or intended to .do. As far back as August, 1954, I spoke in my budget speech about the signs of developing inflationary pressure. In, October, 1954, we took the first, steps to restrain the excessive rate of imports. In April last year, we brought down further import restrictions. In my budget speech last year I reviewed the whole situation in the most forthright terms. I pointed to the grave weakening that had occurred in our external balance of payments and the major fall in our international reserves during 1954-55. Quite unequivocally, I attributed this situation, with all its dire possibilities, to the emergence of a spending boom in Australia, a boom which was giving rise on the one hand to an excessive demand for imports and on the other hand was causing .serious competition for resources and a strong tendency for costs and prices to rise. I said that unless this spending boom was brought under control, we could expect all our difficulties to be accentuated, our balance of payments to go from bad to worse and the spiralling of costs and prices to go forward in real earnest. No one could have called that an electioneering speech or the budget an electioneering budget. In, the face of strong demands from all quarters for tax concessions, we refused togive any tax concessions and, except for pensions, we gave very few expenditure concessions either. We deliberately chose this course because we believed it to be the only sound and proper course under the circumstances of our economy. When the Prime Minister made his economic statement in September he gave a rigorous and lucid analysis of the position. He announced further severe import restrictions and he said that the Government would not hesitate to take further action, including fiscal action, to correct the internal disorders of the economy and restore balance in our external trade and payments. Time and again during the election campaign these warnings were reiterated and re-emphasized. If ever a government was frank about its policies and if ever a government received a mandate to do what it judged best for the country, it was the Government returned at the election last December. The Opposition charge that we tricked the electors and failed to be frank with them is shown by all the records to be absolutely without foundation. I turn now to the criticism that we could have avoided any tax increases if we had been prepared to cut public expenditure, and especially public works expenditure. As the Prime Minister has explained, we need to obtain additional resources in this financial year if we are to avoid a cash deficiency and the use of central bank credit and treasury-bills. Our budget for this year is proving to have been a sound budget. The estimates are working out well. But through difficulties in raising loans to finance the State works programmes - difficulties due to inflation and excessive competition for funds in the capital market - we would face a considerable cash deficiency unless we obtained additional resources before the end of this financial year. Furthermore, when we look ahead to 1956-57, we see the prospect that, although there will be some increase in revenues, there will also be some inescapable increases in expenditures, despite all we will most certainly do to restrain expenditure wherever it can be restrained. The loan market may not yield enough for new money requirements and we also have not less than £253,000,000 of existing loans falling due. Some part of these loans, perhaps a fairly large part, will have to be paid off and cash will be required for the purpose. Therefore, looking ahead, we have to put ourselves in a position to meet these commitments and liabilities without resort to central bank finance. If there is one thing this Government is determined to do it is to keep the public finances of this country on a sound basis. In the fight against inflation, which seems to be continually with us in these times, the national budget must be held as a strongpoint and not be a weakness and a contributor to inflationary pressures. These are the financial reasons for the proposed tax increases. The other reason, as the Prime Minister has frankly ex plained, is to assist in curbing the excessive expenditures which have been the root cause of our present economic difficulties and help to redress the serious balance of payments situation in which we find ourselves. I shall say more on this subject later on. But if we were to avoid tax increases, or even a part of the tax increases proposed, there would have to be a very large and sudden reduction in public expenditure generally and in expenditure on public works in particular. Let me ask one question. Do those critics who claim to have the interests of private enterprise at heart really believe that a heavy cut in works expenditure would be good for business and for the employees directly dependent upon works expenditure? Do they really think it would do no harm to business, either immediately or in the long run, or that it would be a wise alternative to the proposed tax increases ? After all, these tax increases are spread very widely and the greater part of them involve indirect taxation, which always has the advantage that people can largely determine for themselves how much they pay or do not pay. "What would happen if there were a major cut in works expenditure? Men would be put off jobs. Contracts would be cancelled or deferred. Orders for material and equipment would be cut back. These results would spread cumulatively throughout wide areas of industry, trade and employment. I remember that when works programmes were perforce cut back in 1952-53 we quickly had complaints from many branches of industry about the fall in orders, about unused capacity and wasted investment. "We would soon have the same thing again if the moderate current works programmes were cut drastically. The industries most affected would be basic industries and no one in his senses wants to cut back their activities or their rate of expansion. Business, however, would soon be affected in other ways. If a heavy cut were made in works, it would have to be extended to all the main types of works. It could not fail to slow up progress in power development, in rail and road transport, in postal and telegraph communications and various other fields. The effect of this would soon be felt by the business world and, indeed, by the whole community. Nothing could he worse for industry than, for example, a return to the black-outs which cut back output in factories and other establishments. But there would almost certainly be a return to black-outs were the power programme to be reduced at all heavily. On balance, it cannot be denied that a cut in works spending of the kind we would have to contemplate would do a good deal more harm to business than the tax increases, lt would certainly do a great deal more harm to the economy as a whole. That is really the core of the whole issue. If we reduced works severely, as would be the necessary alternative to tax increases, we should retard the basic development of the country. Do we want to do that? "We may do something to promote stability by cutting developmental works - though that is far from certain - but we will slow up progress in so doing. Is that what we want? Should we seek stability at the cost of stagnation or near-stagnation? Are we to say that, rather than face tax increases, unpalatable though they are, we are prepared to take the easy but irresponsible course, and slow the progress of our economy down? The Government believes not. It believes that its responsibility and the responsibility of every Australian government is to do its utmost to keep progress moving at a reasonable rate, to promote the growth of our population, our industries and our social facilities, and to maintain full employment. We have tried to do so throughout the whole time we have been in office, and we have succeeded. We were elected in 1949 on a platform which put development foremost, and ever since then, in face of all manner of difficulties, we have managed to keep development going on a sound and adequate basis. Of course, we clearly do not say that there should not be any limit to public works. We have had to cut back on our own works proposals. We are always cutting them back. There is no branch of Commonwealth activity which is so regularly and so closely watched. Further, each year the State governments bring forward programmes far larger than the Loan Council finds it possible to approve. It is the same with the semigovernmental authorities. Each year our own departments and other authorities bring forward proposals far larger than we can accept and we cut them back heavily. As a result, the total works programmes of Australia have been kepi more or less steady for four years past at a level of about £400,000,000 per annum. At that level it has been possible to make good progress in many directions but it is also possible to say that, over that four-year period, public works have made very little additional call on the resource* of the economy. What applies to public works applies also to immigration. There is the same fundamental choice to make. Do we want to see the population of this country increasing at an adequate rate or do we not? I do not hesitate on that question. The introduction and settlement in Australia of more than 1,000,000 migrants has been one of our finest national achievements in the post-war years, and Ave give full credit to our predecessors in office, particularly to the Deputy Leader of the Opposition **(Mr. Calwell),** for the work they did in laying the foundations of that achievement. Opposition Members. - Hear, hear! {: .speaker-F4T} ##### Sir ARTHUR FADDEN: -- That brought a cheer. If I repeat it, it might bring another cheer. I say again that we give full credit to our predecessors in office, particularly to the Deputy Leader of the Opposition, for the work they did in laying the foundations of that achievement. We have carried it on, and we are determined to carry it further. It is true that migration has some inflationary effects; but that is the challenge. If we are to have migration, we must face up to the economic problem it creates and overcome it. We must not run away from it. Of course, migration, like everything else, can be overdone. There was a period in 1950 and 1951 when the rate of immigration ran too high and imposed severe strains on the economy, and it had to be reduced. There is everything to be said, in my view, for stabilizing the programme at an adequate but manageable figure, and we are in the process of doing that. But we should clearly not regard a drastic cut in the migration programme as the right mean? by which to reduce inflationary pressures which are only partly attributable to migration - particularly when we know that migration must yield us enormous economic advantages in the future. I wish to take up now some of the criticisms that have been directed at our taxation proposals. The members of the Opposition seem to have only one idea - the only idea they ever have - and that is to tax profits, and keep on taxing them. What they would do when there were no more profits to tax they have never told us. This is, of course, the high road to socialization - tax business and tax industry until it is no longer worth carrying on and then socialize it. The tax measures we have proposed arc thoroughly consistent with our analysis of the economic situation. They are designed to put a brake on consumption and investment spending, the levels of which have been excessively high. They are also designed to spread the burden of the additional taxation as widely as possible. About three-quarters of the total increases take the form of indirect taxation levied on commodities. These increases are intended to moderate consumption spending, which has increased enormously in the past two or three years. We i] eli berately chose articles on which the increase in spending had been particularly great, such as drink and tobacco, motor cars and petrol. I hear it said that these tax increases will raise prices. Of course they will raise some prices - the prices of the articles to which they will apply. That is how they will secure the effect intended. By raising the prices of these articles, they will reduce consumption of them - at least they will moderate consumption. In any case, people are able to decide for themselves how far they pay these taxes. I repeat that the taxes, by their very nature, are capable of selfregulation and, consequently, nf selfassessment. But who will maintain that these tax increases will raise costs - industrial costs, as distinct from prices? About one-third of the additional taxation falls on beer and spirits. Are they to be reckoned as industrial costs? I have yet to see them included in any system of industrial cost accounts. What cam be said of beer and spirits can also be said of tobacco and cigarettes. What about taxation on petrol ? There is a good deal to be said about taxation on petrol. For one thing, petroleum products are one of the very few items, and by far the largest item, in the whole of our imports which is not restricted by import licensing. They are a tremendously large item. Is it realized that petroleum products, including freight, cost us in foreign exchange about £120,000,000 a year? There is no means of controlling petrol imports, short of rationing, and that is about the last thing any one should want to do. It was the slogan, "Fill the bowsers and empty out the socialists ", which contributed to our success in 1949. Yet we obviously must do something to limit this tremendous burden on our balance of payments. We have probably been rather lavish in our use of petrol. Certainly consumption has increased enormously. Clearances have increased from 516,000,000 gallons in 1949-50 to an estimated 950,000,000 gallons this financial year. It is true that the extra tax of 3d. a gallon will increase the cost of petrol to commercial a.nd industrial transport, and in private motoring. To secure such economies, such savings in the use of imports, is just what the Government aims to do. I shall deal further with this subject of petrol taxation when I introduce the bill to pay an additional roads grant to the States. The members of the Opposition have naturally said that the taxation falls mainly on the lower income classes. We expect them to say that. But it is not true. I have yet to learn that only the lower income classes consume beer and spirits, smoke tobacco and cigarettes, or buy motor cars. At any rate, whoever the people are, their incomes cannot have been too low. Last year they spent £202.000,000 on beer, wine and spirits, which represented an increase of just on 100 per cent, in five years. They spent £1S2,000,000 on new motor cars and cycles, not including second-hand cars or parts and petrol. That is an increase of nearly 100 per cent, in five years. We could hardly say those were signs of poverty. As the Prime Minister mentioned, consumption of beer per head of population is twice as great to-day as it was in 1938-39. There are obvious reasons for this. One is that people now have far more money to spend on beer, a far greater margin over what they need to spend on food and clothing and houseroom. Another reason is that beer is relatively cheap. Since the war began it has risen much less in price than most other things. According to the C series index of retail prices, food and groceries had, up to the December quarter, risen since 1938-39 by 215 per cent, and clothing had risen by 290 per cent., while the percentage increase in the price of beer was 150 per cent. - about half as much, that is to say, as the rise in the price of clothing. The same is true to an even greater degree of tobacco and cigarettes. Whether you call these things luxuries or necessities or anything else, the fact is that they have been relatively very cheap and, what is more, they remain relatively cheap, despite the tax increases. On the increase in company taxation, I hear two lines of criticism. One is thai the additional tax will be passed on in higher prices of the articles produced by companies. The other is that ta increases will make company operations unprofitable and so dampen down productive investment. Pretty clearly, these two arguments do not add up. If taxation is passed on in higher prices, obviously it does not reduce profits, and vice versa. The critics cannot have it both ways. The fact is that, as the Prime Minister pointed out, companies as a whole have been doing very well and they can well afford to pay some more taxation and make their contribution towards solving the basie problem of our economy. Wc have heard a lot from the Opposition about bank interest rates and th" profits of the banks. Their criticism ignores the Prime Minister's clear and deliberate statement that it is the Government's firm policy that bank profits should not rise ns a result of the counterinflationary action taken through higher interest rates. To a substantial extent the increase in bank earnings resulting from the higher overdraft rates - which on average will not rise by more than one-half per cent. - will bc offset by the increase of 1 per cent, which the banks will pay on their fixed deposits. However, since bank overdrafts amount to about three times the present total of interest-bearing deposits, these changes, unless counteracted, would be likely to result in some net increase in bank profits. Discussions about the profit effects of the interest rate changes have been held between the central bank and the trading banks. The latter have made it clear that they accept willingly the Government's objective that they should not secure increased profits by reason of the changes in bank interest rates. The extent of any potential net increase in profits is difficult to assess immediately. The banks still have to review carefully an extensive range of types of lending, and until some experience of the new arrangement has been gained the precise effects on their earnings will not be known. Although there will be cases in which the banks could charge the higher rates up to 6 per cent., there will also be many on which rates below 5£ per cent, will be applied, and it is not yet clear where or when the average of 5-J per cent, will be reached. Arrangements have been made by the central bank for the trading banks to supply information about the changes in the pattern of their interest rates and for aggregate figures to be published half-yearly. Effects of the new rates will be kept constantly under review by the central bank and the Government from time to time as information becomes available, and any action required to achieve the. Government's objective will be taken. In the meantime, as a temporary measure, the centra] bank, with the approval of the Government, has acted to offset, the immediate rise in profits resulting from higher overdraft rates by reducing the rate of interest, paid to the banks on their special accounts from 15s. per cent, per annum to f>s. per cent, per annum. This will operate from the 1st April. 1956. At present, the amount held in special accounts is £300.000,000. As information becomes available as to the effect of these measures on the profits of the banks, the possible need for wm- forms of action will be closely examined. The House will, therefore, see that there is absolutely no substance in the allegation by Opposition members that the rise in bank interest rates will enlarge the profits of the banks. Let me, in conclusion, recall a theme the Prime Minister has often dwelt upon. These measures are not an attack upon prosperity. Why should the Government want to attack prosperity? It has every reason to be proud of the prosperity that has come to this country during its years of office. Australia has never made such sound, well-balanced progress as it has during the past six and a half years. It has added well over 1,000,000 people to its population. For years past, its labour force has been fully employed. All branches of industry have expanded remarkably. Levels of production have gone higher and higher. Splendid progress has been made in housing and in all other social facilities. There never has been such all-round abundance of goods nor such widespread sharing of this abundance. Why should the Government want to attack this prosperity? Its constant aim through difficult years has been to build up and consolidate prosperity, to keep progress moving and to ensure full employment. By any test, it has succeeded in these aims. Why should it want now to overthrow its own achievement? Our problem is essentially that of a young country, growing as we all wish to see it grow, but tending, from time to time, to out-reach itself. We all want to see Australia making headway. We all want to see its people enjoying the highest possible living standards. We who have the responsibility for its national affairs must seek at all times to promote these things. But, when, *from* the very excess of its own energies, the stability of the economy is threatened and a moderating hand is needed, that is our responsibility also. We must not shirk unpopular measures when we judge them to be necessary. We have not shirked them in the past. We are not shirking them to-day, nor will we shirk them in the future. We believe that, unpalatable though they may be, time will prove them to have been wise and well conceived. **Mr. CLYDE** CAMERON f Hindmarsh) S.4S].- First of all, I should like to congratulate the Treasurer **(Sir Arthur Fadden)** on the able manner in which he read the speech prepared for him by one of the Prime Minister's officers. In a moment, I shall show the House conclusively that the speech which has been read by the Treasurer to-night does not represent his true views at all, but that they can be found in remarks that he made to a meeting of the Australian Country party in Brisbane yesterday. Before I proceed to deal with the Treasurer's remarks, perhaps I should state to the House the proposals that we are nowdebating. We are discussing the supplementary budget which the Leader of the Opposition **(Dr. Evatt)** warned the people of Australia prior to the 10th December last this Government would bring down as soon as the election was over, if it were returned to office. The Leader of the Opposition spoke the truth when he said that the Liberal party and the Australian Country party were completely dishonest in their approach to the electors on the 10th December, because they knew then that they intended to bring down the proposals which we are now debating. {: #subdebate-20-0-s14 .speaker-KWP} ##### Mr TURNBULL:
MALLEE, VICTORIA -- I rise to order. The honorable member's statement that the Liberal party and the Australian Country party were completely dishonest in. their approach to the electors is, I consider, unparliamentary and should be withdrawn. {: .speaker-JLR} ##### Mr DEPUTY SPEAKER (Mr C F Adermann: -- I take it that the honorable member for Hindmarsh **(Mr. Clyde Cameron)** is quoting what the Leader of the Opposition said at the elections, but he cannot impute improper motives ro any member of this House. {: #subdebate-20-0-s15 .speaker-2V4} ##### Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP -- I am sorry that you misunderstood me, **Mr. Deputy Speaker.** I was talking about the Liberal party and the Australian Country party which, like the Labour party, have no special privileges or protection at all in. this Parliament. [ repeat that we are now dealing with the supplementary budget about which the people were warned prior to December 10th last by the Leader of the Opposition - a warning which they did not take, much to their ill-content at this moment. The budget proposes to do the following things: - To increase the price of petrol by 3d. a gallon; to increase the sales- tax on a Holden motor car by £103; to increase the price of beer by 3d. a glass; to increase the price of a nip of whisky, which is the rich man's drink, by only 1d.; to increase the price of a large packet of cigarettes by 3d.; to increase company tax by a flat rate of1s. in the £1, regardless of whether a company is making an annual profit of £10,000,000 or only £10,000; to increase sales tax on cosmetics by 30 per cent.; and to increase, by as much as 30 per cent., sales tax on other commodities. {: .speaker-KDB} ##### Mr Edmonds: -- And add another 6d. to the price of a 2-oz. packet of tobacco. {: .speaker-2V4} ##### Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP -- Yes, that too. I wish not only to congratulate the Treasurer on the able manner in which he read a. speech that was prepared for him by the Prime Minister's officers, but also on the magnificent loyalty to the Prime Minister that he has displayed to-night; because those of us who heard the Prime Minister make his speech to the Parliament on the 14th March will remember that on that occasion it was obvious, from the expression on the face of the Treasurer, that he had not the remotest idea of what the Prime Minister intended to say to the House. Another remarkable thing was that, whereas the Treasurer on that occasion sat on the front bench agog with expectation, with eyes wide open, waiting for the next words to fall from the lips of the Prime Minister, the secretary of the Treasury, **Sir PolandWilson,** went to sleep on the officials' bench. He knew what was to come. But to-night the tables are reversed.Sir Roland Wilson sits on the bench waiting to hear what the Treasurer has to say. He does not sleep on this occasion, because he does not know what is to come. But, on the other hand, the Prime Minister has not even done the Treasurer the courtesy of coming into the House to listen to what he has to say. I want to contrast with the views of the Prime Minister the opinions of the Treasurer, when we see them in their true colours, and as expressed when the Treasurer is not reading a speech prepared for him by the Prime Minister's officers. I refer to the Brisbane *CourierMail* of to-day's date, which reports a speech made by the Treasurer to a con ference of the Australian Country party in Brisbane yesterday. This is what he had to say to that meeting - >The Australian economy was in a state of unbalance and tension. . . . > >It could produce these effects: - > >Accelerated spiralling of costs. > >Shortage of labour in vital industries. > >Weakening of confidence abroad in Australian finance leadingto less investment. > >Slowing down of development. > >Increased difficulty for the exporting industries. And so on ! That statement is in striking contrast to the tenor of the speech that the Treasurer delivered in this chamber to-night, when he repeated what the Prime Minister said in his speech to this House on the 14th March. What the Prime Minister had to tell the Parliament and the people of this country on that occasion stands in striking contrast to what the Treasurer told the Australian Country party meeting in Brisbane yesterday. These are the words that the Prime Minister used - >We are, as a nation, enjoying a high measure of prosperity. Our purpose is to preserve and consolidate it. Now let us look a little further. Let us look again at the Brisbane *CourierMail* report, and see what the Treasurer really thinks about the position. We find him telling the Australian Country party conference in Brisbane that the Australian economy is in a state of unbalance and tension. Then he went on to say - >Australia faced great difficulties and it was still doubtful if the balance of payments could be maintained even with' import restrictions now in force. Now let us turn to the possibility of getting ourselves out of the mess that the Government has got us into, and see what the Prime Minister says about it. The Treasurer indicated to the Australian Country party conference in Brisbane that we have no hope of getting out of the mess, but the Prime Minister said in his speech to the House on the 14th March, to which I have already referred - >There is every reason to suppose that our objective of balancing our external accounts by the middle of this year will be achieved. Whom are we to believe? Are we to believe the Prime Minister when he says we are going to balance our budget, or are we to believe what the Treasurer told the Australian Country party conference in Brisbane yesterday? Are we to believe the statements in the speech of the Treasurer to that conference that Australia is facing a bad future? Or are we to believe the speech by the Prime Minister in this Parliament stating that we are facing, and going through, one of the greatest periods of prosperity ever known in our history? I feel that it is necessary to remind the Parliament of another inconsistency on the side of the Government. Right throughout the last six years Government supporters, particularly Ministers, have not been able to agree on what are the causes of inflation. So, if they cannot agree on the causes of inflation, how on earth can they honestly attempt to cure something of whose cause they have absolutely no idea? A study of *Hansard* reveals that at various times various reasons have come from the Government side as the cause of inflation. The reasons include immigration, communism, coal strikes and import restrictions. Low taxation was given once as the reason. High wool prices was given once as the reason. Other reasons given were: too much money chasing too few goods; high wages: the need for higher production. Another reason given was high prices. The Government might just as well have included the real cause of inflation - the exorbitant profits being made by the people who own the great industries of this country, brought about by the fact that the Parliament *has* no power to control prices. And the reason why the Parliament has no power to control prices is that the Liberal party and the Australian Country party went to the people in 1948 and campaigned against the referendum instituted by the great Ben Chifley, in which the people were asked to give the Commonwealth Parliament power to control prices on » Commonwealth-wide basis. TThe parties now in office told the people, on that occasion, that it was not necessary for the Commonwealth to have such power. They said that the States themselves could do the joh better. Every Liberal State Premier and every Liberal State Leader of the Opposition throughout the Commonwealth echoed the sentiments expressed by the federal leaders of the Australian Country party and the Liberal party. It is perfectly plain that inflation was not caused by high wages, because the basic wage has been pegged for nearly three years, and, during the time it has been pegged, prices have continued to rise at the same rate as they did before the wage was pegged. The point I want to make here is that if it is right for the Commonwealth Arbitration Court to have power to peg the price of the only commodity that the worker has to sell - his labour - then it is equally right, surely, for the National Parliament to have the power to control the prices of the things that the worker has to buy. Surely there is nothing wrong with that! No one can say, on the other hand, that inflation has been caused by low productivity, because the English, Scottish and Australian Bank shows, in its productivity index figures, that, quantitatively, we are producing now more per unit than we have ever done in this country. It can no longer be claimed that inflation has been caused by coal strikes, because we have a surplus of coal that we cannot get rid of. It can no longer be said that high prices for wool gre the cause for inflation, because, according to the graziers, wool prices, are falling. So if, in 1951, the high price of wool was the cause of inflation, then the reduced price of wool to-day should have had the opposite effect, and should have produced some measure of deflation. Inflation is also not due to low taxation, as was said at one time, because it will be remembered that in the days of the " horror " budget, the excuse given by the Government for its punitive taxation under that budget was that it was necessary to skim off extra purchasing power, in taxation, because people were spending too much money which the Government could spend better for them. The excuse for increasing taxes then wa.s that that step would alleviate inflationary pressure. But the Government cannot claim any longer that lowtaxation is the cause oof inflation, because we now have high taxation - indeed, higher taxation on such items as petrol than ever before in our history. Incidentally, it is appropriate to point out that the hurden of that tax is passed on until it affects almost every section of the community. The price of building timber in Victoria rose last week by 12s. a hundred super, feet, as a result of increased transport costs due to the increase of petrol tax and sales tax. That may not sound much to people who have no idea of the part that building timber plays in the construction of a home in Victoria. But, in timber-framed houses such as are being built in Victoria and Queensland, and, to a lesser extent, in New South "Wales, that means an increase of £35 in the cost of building a ten and a half square house. Therefore, the increase in the price of petrol will reflect itself right throughout our economy, even in the cost of building a home. In regard to increased interest rates, not only will the Government's action in that direction increase the profits of the wealthy trading banks which handsomely support the Government at election times, but it will also oblige the worker who borrows £2,000 with which to build a home for himself, to pay an additional fis. a week to meet his interest bill. If the Commonwealth Court of Conciliation and Arbitration were to reduce the wages of the workers to-morrow by 6s. a week, there would be an industrial revolution throughout Australia, but this Government has allowed the private trading banks to do exactly the same thing by increasing the rates of interest charged by the banks to this class of borrowers. Is it any wonder that the people of Western Australia last Saturday put a socialist government back into office with, a record majority? Will it be any wonder when the people of Queensland return a Labour government to office, also with a record majority, at the next general election in that State? Is it any wonder that everybody now knows that if the people had been told the truth during the last general election campaign before the 10th December, there would have been a Labour government in office in this country to-day which would be giving effect to the promises that this Government made four years ago, but which it has done nothing to fulfil? I shall refer now to excess profits taxation. Here we have a government which, four years ago, promised that it would introduce an excess profits tax; but it has done nothing at all about that undertaking. We know that excessive profits are the cause of high prices, and the cause of the shortage of money for public borrowing. Therefore, I ask the Treasurer whether he is prepared, in view of that fact, to legislate against gross profiteering that is taking place in this country along the lines of his promise made four years ago, and along the lines advocated by the Leader of the Opposition **(Dr. Evatt)** during the last general election campaign, before the 10th December. The Treasurer has stated that he doubts whether our overseas balance of payments can be maintained. If he doubts that, is he prepared to make an all-out drive for new markets in countries like China, the countries of SouthEast Asia and the Soviet Union, as was proposed by the Labour party during the last general election campaign? I say to those people who still say that there is something wrong with trading with the Soviet Union, because it is Communist controlled, that if they were conducting a grocery shop would they say to a man who came in to buy a tin of fish, " Are you a Communist ? ", and, if he said he was, would they turn him out of the shop and say, " We shall not serve you " ? Of course, they would not. Honorable members on the Government side were very happy to sell our wool to the Soviet Union when prices were skyrocketing because the Soviet Union brought an effective element of competition into the wool sales. They were willing to sell wool to any country that would take it. Therefore, I say to the Government, when it complains about the state of our balance of overseas funds, that it, should get out and do something effective about it. If the Treasurer complains about the shortage of loan money that is available at present interest rates, he should be prepared to resist increases of interest by seeking the co-operation of the States as has been proposed by the Labour party. This Government complains that it has not the power to control interest rates, but what does it do about the matter other than complain ? The Prime Minister makes speeches night after night, and apart from the honeyed words that seem to cascade from his lips when he makes speeches, he takes no action at all to remedy the evils that he complains of. If a Labour government had been in office at the present time, it would have already approached the State governments and asked them to give to the Commonwealth power to control interest rates. Until the problem of the distribution of power between the Commonwealth and States is tackled, and until the State Governments hand over to the Commonwealth the power to control interest rates at a reasonable level, there will be no effective control of interest rates in this country. But, until there is effective control of interest rates, no government, whether it be Labour or non-Labour, cam effectively keep down interest rates so that the man who needs to borrow to build a home, the man who needs to borrow to establish himself in primary industry and the man who has to borrow for other essential purposes, will be able to do so. Increased shipping charges weigh most heavily on primary producers. Recently, this Government agreed to give to the big overseas shipping combines an increase of *1* per cent, in the freight charged on cargo. The primary producers, whom the Australian Country party claims to represent, have to meet that out of their own pockets. If this Government is concerned about the interests of the primary producers who have to pay exorbitant shipping charges, why does it not now state openly and categorically that it does not intend to sell the Commonwealth shipping line, which was established by the Chifley Labour Government? Why does it not also state that if the overseas shipping combines, which have more money than they know what to do with, are not prepared to reduce freight rates on primary products the Government will expand the Commonwealth shipping line to compete with the overseas shipping cartel so that Australian ships can carry Australian products to the four corners of the world, and thus we shall not be burdened with excessive ship "ing charges as we are at the present time? This Government has to face up to the problem of hire purchase. The Labour party is in favour of the system of hire purchase, but it is not in favour of the excessively high interest rates which the hire-purchase firms are charging. We believe that hire purchase is really the poor man's overdraft but the rate of interest at about 1S£ per cent. - on the admission of the Prime Minister - is about double what it should he. That being so, the Government has no hope of borrowing the money that it needs for public works at 4£ per cent, while hirepurchase organizations are offering *1* per cent. Siu Eric Harbison. - Why does not the Labour party get the States to do something about it ? {: .speaker-2V4} ##### Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP -- That is exactly what the Labour party would do if it were in office. The Vice-President of the Executive Council **(Sir Eric Harrison)** is a member of the present Government, and I ask him why his Government has not done something to approach the States to get them to lower the interest rates on hire purchase; because until something is done on a Commonwealthwide basis, either by the Australian Government or by the six States acting together, there is no way of reducing the exorbitant interest rates being charged by hire-purchase organizations. The Minister for Trade **(Mr. McEwen)** has stated that the Government's economic proposals do not constitute a bad supplementary budget. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! The honorable member's time has expired. {: #subdebate-20-0-s16 .speaker-0095J} ##### Mr HOWSON:
Fawkner .- I was interested in listening to the honorable member for Hindmarsh **(Mr. Clyde Cameron)** talking about striking contrasts, because if anybody is more competent to talk on the subject of strikes than the honorable member for Hindmarsh, I do not know of him. We all know full well that the honorable member has spent the last fortnight in encouraging the Australian Workers Union to persist in its encouragement of the strike in the shearing industry. In doing so he has been doing everything possible to jeopardize our major export industry, and to contribute towards damaging the whole economy of Australia. However, the honorable member for Hindmarsh, and other members of the Opposition, have not made any constructive contribution to this debate. They have spoken about what they would have done if they had obtained office on the 10th December ; but they have made no constructive suggestions to substitute for the remedies proposed by the Government. Like the "honorable member for Hindmarsh, they "have merely talked about selling goods to overseas countries. They have given us also an example of the new-look Labour "foreign policy which is a complete sellout to Soviet diplomacy. I now turn to the very important issues that confront us at the moment. As I see them, we have three major problems before us with which we must come to grips. First, we have to achieve a balance between exports and imports. Secondly, we have to balance our budget, not only on the income and expenditure level, but also in the matter of capital issues. Thirdly, we have to combat tho present rise in the price level and ensure the curtailment of consumer spending. The Government has attempted to come to grips with all these problems on two occasions - on the 27th September last and on the present occasion. The sets of remedies that are being applied should be considered together. They are the new import restrictions which were imposed on the 27th September, the credit squeeze directed through the central bank to the trading banks, and the increases of indirect taxes which are proposed in the paper that is being discussed. I believe that those three measures, taken together, will deal with the three problems that 1 outlined earlier, but they are all shortterm measures designed to bring the economy into balance within the next few months. There is every indication, as honorable members heard to-night from the Treasurer **(Sir Arthur Fadden),** in his able speech, that those aims will be achieved. The Government has also indicated that there are longer-term problems which must be tackled and close attention should be focused on them. In brief, we must expect in the future to spend less on consumption, and so save more for capital production. On the level of Government spending, we have already- *Conversation on the Opposition front bench being audible,* {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! Larrikinism by the honorable member for East Sydney had better cease, or he will be put out of the chamber. I mean what I say. {: .speaker-KX7} ##### Mr Ward: -- What did I say? {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- The honorable member has been continually interjecting with larrikin remarks. {: .speaker-KX7} ##### Mr Ward: -- I was not talking. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! The honorable member for East Sydney will obey the Chair, or I will deal with him. {: .speaker-0095J} ##### Mr HOWSON: -- I now direct attention to capital expenditure by governments. The chief spenders of capital arc the State governments. The Treasure has emphasized that the Australian Government is giving a lead wherever possible. *Conversation on the Opposition front bench again being audible,* {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -Order! The honorable member for Herbert must maintain silence. {: .speaker-KDB} ##### Mr Edmonds: -- What have I done? {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! The honorable member has been interjecting and talking. **Mr. Edmonds.** - I was not interjecting. I was talking to the honorable member for East Sydney. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order I The honorable member for Herbert and the honorable member for East Sydney have been making stupid remarks all the evening, and I will not allow them to continue. {: .speaker-KDB} ##### Mr Edmonds: -- Order! Nothing! {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! The honorable member for Herbert will apologize to the Chair or I will name him. {: .speaker-KDB} ##### Mr Edmonds: -- For what? {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- For disobeying the Chair. The honorable member will sit down. {: .speaker-KDB} ##### Mr Edmonds: -- I will sit down, but only because you have told me to do so. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -Order! The honorable member will apologize to the Chair. {: .speaker-KDB} ##### Mr Edmonds: -- For what? {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- For disorderly conduct. Will you apologize? {: .speaker-KDB} ##### Mr Edmonds: -- I apologize because you have demanded it. {: .speaker-0095J} ##### Mr HOWSON: -- The Treasurer has stated that this Government should give a lead, wherever possible, in reducing its capital requirements, but it must be obvious to the State governments by now that unless radical changes take place in our economy, all our requirements of money are 'not likely to be forthcoming from the loan market, and so the rate of development by the State governments and by semi-governmental authorities will have to be slowed down. I believe that money will flow into Commonwealth loams only if the conditions offered are attractive to investors in comparison with other avenues of investment. At present, a great deal of money is going into private investment, especially to the hire-purchase companies, and since only the States have the power to control the hire-purchase companies and since, also, they would themselves be the chief beneficiaries of such control, it is surely in the States' own interests that they should consider the necessary legislation. Some criticism has been expressed in relation to private investment and the credit squeeze. I believe that the credit squeeze that was initiated last September is already having effect, and that the expansion of private investment will be slower in the coming months. On the other side of the picture, the Government aims to reduce consumption by private individuals. This is to be achieved, first, by increasing sales tax on non-essential items, and by endeavouring to control hire purchase. But if consumption is reduced, the simultaneous investment of savings must be encouraged. This, of course, involves interest rates, and that matter has attracted considerable attention during this debate. No honorable member has put the facts more clearly than has the honorable member for Mitchell **(Mr. Wheeler),** who emphasized that money, like many other commodities, is subject to the law of supply and demand. At a time when we are moving from a period of cheap money to what can be regarded as a more normal situation, we must expect interest rates to rise unless we are prepared for a copious issue of treasury-bills and the subsequent inflation to which that would give rise. When the Government needs loan money, it must be prepared to meet the demands of the market. At present, these include not only appropriate interest rates, but also provision for the needs of short-term investors. I realize that this might cause hardship to a number of thrifty small investors who put their money into low interest bearing bonds, such as those at per cent. So far as possible, those people should be protected from hardship. Two proposals that have been put forward are surely worthy of consideration. The first is that bonds from the estates of the original subscribers should be accepted at their face value for the payment of federal probate duties. The second is a proposal that short-term investors should be allowed an opportunity to subscribe to loans up to a total limit of £500 per person, the loans carrying a variable interest rate during their full term. T believe that those two measures would assist considerably towards a return of popular confidence in the loan market. There is also the need, however, tr» borrow from overseas, as well as on the home market. The record of the present Government in. obtaining loans from international funds is remarkably good, but every effort should be made during the coming year to increase overseas loans. Private investments from overseas also must be encouraged, and we can be proud of the economic environment created by this Government to attract overseas investment. *[Quorum formed.']* If private investment from overseas is to continue on an increasing scale, we must face the fact that overseas companies that invest funds in Australia must be allowed to take out of the country reasonable profits earned by their efforts. Further, I believe that we should consider the action taken by the Union of South Africa recently when it declared that there would be no limit on the repatriation of foreign funds invested in future in the Union. This has done more than any other measure to encourage overseas investment in South Africa. Having said all these things, I believe that two fundamental problems in our economy still remain. The first is the need to increase our exports to such a degree that import restrictions are no longer required. Already the Minister for Trade **(Mr. McEwen)** has foreshadowed a scheme for encouraging export industries and subsidizing individual exporters. I believe that such a scheme could encourage a rapid increasein our manufacturing industries; also, I am informed, it would especially assist in gold production in this country. There can be no more vital problem to any one in Australia than that we should all concentrate on this one need for an expansion of our exports. The second thing that is important is a task which is closely allied with the first one. That is that we must strive to become more efficient economically and reduce our costs of production. Again, I would disagree with the honorable member for Hindmarsh when he said that we can do nothing more about increasing our productivity. I believe that it is the one thing in which a tremendous lot can be done to improve the whole standard of our Australian economy. A recent article on this subject of productivity read in part - longstanding traditions of employers and of trade unionists alike have put a deadly impeding weight of restrictive practices on productivity and on progress. To get a free and frank examination ... of the whys, hows and wherefores of traditional yet inefficient methods will be an enormous forward step. I can instance the British textile industry in which remarkable increases in output per year accompanied by substantial rises in earnings per worker have been achieved. It has been done by such means as the reorganization of work; by work study, producing better, but not heavier work; by better methods; by more intensive use of machinery; and by the elimination of waste. Already the national Labour Advisory Council which was set up by the Minister has stated the ways in which productivity oan be increased in Australia. It is important that this work should be extended to management and to union leaders in specific industries. ' At present, the greatest need is that for training. There is a need to improve the standard of training for management. We must all welcome the recent announcement of the establishment of the Australian Staff College, and we must encourage the work of bodies such as the Australian Institute of Management. On the trade union side, it is interesting to note that the British Trade Union Council runs its own courses and training schemes in order to teach its best trade union leaders the principles of work study and other productivity techniques. Would not a similar development in Australia be just as important ? Most of the principles for increasing productivity are straightforward. We can achieve it by increasing the efficiency and the scope of machinery. We can achieve it by flogging the machines, not the men ; by utilizing machinery and horse-power to the full and so developing the scope of shift work in industry; by junking machinery when it is worn out and by replacing it with better and newer models ; by rewarding efficiency, skill and responsibility at all levels and doing away with restrictive practices on the managerial and union sides ; in short,, by organizing all work so that men can do the least and the machines the most in a week. In this aim, I believe that members on both sides of the House can be united. We are facing a situation in Australia in which our resources of man-power and capital are insufficient to maintain our standard of living and at the same time to develop for the future at the rate at which we would wish. The Government has taken steps to rectify the economic situation which confronts us. But in the breathing space that is afforded us by the enforced restrictions that have been necessarily imposed, I suggest that we must do everything possible to maintain our prosperity by increasing our exports and improving our degree of industrial productivity. {: #subdebate-20-0-s17 .speaker-K6X} ##### Mr COUTTS:
Griffith .- During the last two months in which we have been, passing through this crisis, we have heard two spokesmen announce what people -thought was the policy of the Government. The first was the Prime Minister **(Mr. Menzies),** and the second was the Treasurer and the Deputy Prime Minister **(Sir Arthur Fadden).** Each seemed to speak with a different voice. The Prime Minister, in September last, thought that we could meet our difficulties by restricting imports and reducing Commonwealth expenditure on public works. Then he drifted from that policy to an all-embracing attack on conditions, with the increased taxation that was announced in March. As the honorable member for Hindmarsh **(Mr. Clyde Cameron)** has pointed out, the Treasurer spoke, in Brisbane, yesterday, along altogether different lines from those that were followed by the Prime Minister when he made his announcement in this place. Perhaps the Prime Minister delivered this supplementary budget speech - obviously the duty of the Treasurer - in this place, in March last, because the Treasurer does not agree with the measures. Some of my colleagues have said that the Government has no mandate for what it is doing. I cannot altogether agree with that statement, because the Prime Minister, in the policy speech which he delivered at the Canterbury Memorial Hall, on the 15th November last, appealed to the electors " to judge how we will deal with future problems by remembering how we dealt with past ones". {: .speaker-JSU} ##### Mr Bryant: -- That was a threat. {: .speaker-K6X} ##### Mr COUTTS: -- As the honorable member for Wills **(Mr. Bryant)** has said, that was a threat. But, it was not taken as a threat by the electors during the recent election campaign. What is the Prime Minister doing on this occasion, in 1956? He is doing what was done in the horror budget, in 1951. He is increasing sales tax. His present policy is merely a repetition of what took place in 1951. So, the Prime Minister can look the people in the face and honestly say, " You gave me a mandate, because I am only dealing with this problem, on this occasion, as I dealt with the problem in 1951 ". The Prime Minister made a further threat in his policy speech last November, when he stated - >A victory for Labour in this election would, beyond the slightest doubt, land this country into an international and internal financial crisis. Such a crisis would set back the great and dynamic development -which it ha» been and is our principal ambition to' encourage. The Prime Minister suggested that those things would happen if the Labour party won. Of course, people could be pardoned for assuming that he intended toconvey the meaning that these thingswould not happen if he were returned at the polls. The people certainly elected: a Liberal party-Australian Country party government, and the things that the Prime Minister . threatened to do havebeen done. Of course, he is merely repeating what he did in 1951. I shall not weary the House by reiterating the points that have been made sofrequently in regard to the increases of taxation. I point out, however, that they are sectional and savage - sectional, because they hit only certain people in thecommunity. {: #subdebate-20-0-s18 .speaker-K8B} ##### Mr CURTIN:
KINGSFORD-SMITH, NEW SOUTH WALES -- They hit the worker. {: .speaker-K6X} ##### Mr COUTTS: -- They hit the working man in particular. For example, the consumer of beer is hit very heavily by the increased excise on that commodity, but the man who does not drink makes nocontribution towards the increased revenue from excise that is sought by the Government. Because he is paying increased taxation, a man who smokes becomes, in effect, a patriot. As a nonsmoker, I feel almost guilty of treason because I am not making such a contribution. However, I do not propose to remedy the situation. The increased cost of petrol will be a major factor contributing to the increase of costs. The increased tax on motor vehicles affects not only motor cars, but also commercial vehicles and spare parts. Because the internal combustion engine plays a major role in Australia's transport industry, the increased costs will be passed on to the consumer and will lead to a further spiralling of prices and charges. As the Premier of Queensland has pointed out, the increase of the petrol tax is a direct denial of the policy on which this Government was elected to office in 1949, and about which we were reminded by the Treasurer a few moments ago. The cry then was " Fill the bowsers ", and the Government was returned to office. The Premier of Queensland has stated that the increase of petrol tax constitutes, in effect, a re-introduction of the petrol rationing system, because the ordinary man, for economic reasons, will be forced to reduce his purchases of petrol. On the -other hand, the wealthy man will not be affected. It is a most unfair system of rationing, because it gives to the rich and takes from the poor. "What concerns me most is the savage attack that is being made on our internal economy by the Government's economic policy. I have already stated that the measures adopted by the Government can result only in increased internal costs. Only yesterday, in Brisbane, the Treasurer warned the people of Australia about the accelerating spiralling of costs. Although he is aware of the seriousness of the situation, the Prime Minister is guilty of committing the Government to an act that will further accelerate the spiralling of our internal costs. I feel sure that the people who, on the 10th December last, expressed such complete confidence in the Menzies-Fadden coalition were bewildered and astonished when the Prime Minister delivered his economic statement. They were bewildered when they discovered, so soon after the right honorable gentleman had said that our only problem was our prosperity, that it was necessary to introduce a supplementary budget and to impose such harsh increases of taxation, and they were astonished when they discovered how much money was involved and which section of the community was being hit. We have been told that the Government proposes to increase company tax by ls. in the £1, and that that increase will bring in £30,000,000 of the additional £115,000,000 that the Government proposes to raise. We know that the trading companies, because of the warning they have received, will pass on the increase in the form of increased charges for the goods they sell. Actually, they will be paying nothing from their profits into the Treasury. The increase will be paid by the consumer. The increased tax will apply also to the private trading banks, which are the darlings of this Government, and no doubt honorable members opposite, because they are unaware of the situation, will say that the trading banks will thus pay their contri bution towards Commonwealth revenue. In effect, that is so, but I propose to quote some figures that were published on the 22nd March by the *Courier-Mail,* which is the Liberal party's organ in Brisbane. The finance editor of that newspaper has taken pains to point out that, because of the increased overdraft rate, the banks will be completely reimbursed for the increased taxation that they will be required to pay. The article states - >On latest figures the average increase of -J per cent, on overdrafts and 1 per cent, on fixed deposits could add a net £1^ million to their yearly incomes. > >The new rates will apply to private trading bank advances of around £800 million and deposits of around £250 million. > >The Common weal til Bank Governor **(Dr. Coombs)** said last week: "The banks have agreed to confer with the Central bank concerning the effect of these changes on their earnings and to consider ways by which any increase in earnings arising from such chances may be offset". > >On the total profits of all the private trading banks this increase would only just pay the extra ls.-in-the-£l company tax so that the net effect could be the same as with any company which regarded company tax as a cost of production and raised its prices to cover any increase. It will be observed that the interests of the private trading banks have been absolutely safeguarded by the Prime Minister. That the banking section of the community, which has been so favoured by this Government, should be permitted to escape its obligation to make a contribution towards Commonwealth revenue at this time of crisis is indeed shameful. The *Sydney Morning Herald* has published the following report : - >The Prime Minister, **Mr. Menzies,** said in the House of Representatives . . . that the increase in the overdraft rate of interest was not intended to provide extra profits for the trading banks. But the right honorable gentleman has not told us in this place that the increase of the overdraft interest rate will cover the increased taxes that the private trading banks will have to pay. In effect, the Prime Minister's statement is incorrect. I am sure that the Minister for Trade **(Mr. McEwen),** who is Deputy Leader of the Australian Country party, must be alarmed at the Prime Minister's economic statement. I sincerely believe that the Minister for Trade has been trying to the best of his ability to market Australia's products. I am informed by a journal entitled *Muster* that, notwithstanding certain outbursts that have been made by supporters of the Government, a trade commissioner has been sent to red China to sound out the possibilities of trading with that country. An article in this well-known organ of the Australian Country party expresses great alarm at the fact that since diplomatic relations between Russia and Australia have been broken off, Australia has lost wool sales to the value of at least £25,000,000. The article goes on to say that Ministers of this Government admit unofficially that the wool market will not regain its former levels until or unless Russia resumes buying. Because of this, the Australian Trade Commissioner in Hong Kong, **Mr. Harry** Menzies, has been sent te Peking to investigate the possibilities of trading with red China. I am sure that should this Government enter into trade arrangements with red China there will be many red faces on members of the Liberal party a.nd the Australian Country party in this House. The ultimate effect of this supplementary budget must be an increase in our internal cost structure, which must have a disastrous effect upon our export income. We have been told by the Governor of the Commonwealth Bank that the increase in the overdraft rate will have an almost negligible effect upon our export industries, but if the increase in the overdraft rate is to be borne by the industries manufacturing for internal consumption, then it must have an effect on the cost of production of goods used in Australia, for instance by the railways and other transport systems, thus adding to the cost of goods produced for export. In the few minutes remaining at my disposal I wish to refer to the increase in the bank interest rate. We were told by the Treasurer **(Sir Arthur Fadden)** a few weeks ago that no increase in the bank rate was contemplated, and I remember that prominent members of the Australian Country party spoke in this House and ridiculed such a suggestion. They were most outspoken in rebutting the suggestion that there would be an increase in the bank rate. The honorable member for Fisher **(Mr. Adermann)** only recently visited the town of Nambour in his constituency in Queensland, where the English, Scottish and Australian Bank Limited has been reducing overdrafts to primary producers, who are growing pineapples and bananas in that area. The honorable member was most alarmed, and I understand that he said then that he did not agree with the proposition that primary producers should be denied these overdrafts while the money was being spent in the cities. Nevertheless, the English, Scottish and Australian Bank Limited is being permitted to transfer its funds to its subsidiary, a hire-purchase undertaking known as Esanda Limited, while the primary producers are denied overdrafts. What stand will the Australian Country party take in this matter? The amendment moved by the honorable member for Melbourne Ports **(Mr. Crean),** which we are at present debating, constitutes a criticism of the proposal to increase interest rates. The members of the Australian Country party go on to the hustings and proclaim to the farmers who support them that they are ready to do or die in the interests of the primary producers. They have in this debate a grand opportunity to demonstrate that they are sincere in their claim to stand for the man on the land. Let us have a test of sincerity in this matter on the part of members of the Australian Country party. Do they stand for the man on the land, or do they worship the same god as do the members of the Liberal party, the god of money and of the private trading banks that dominate the Liberal party in this country to-day? I hope that the members of the Australian Country party will live up to the title that we are compelled to bestow upon them in this place, that of " honorable member ", and that they will support the amendment moved by the honorable member for Melbourne Ports, when he attacked this proposal to increase interest rates being charged to the primary producers and industrialists of Australia. {: #subdebate-20-0-s19 .speaker-JWI} ##### Mr FOX:
Henty .- In rising to support the economic measures introduced by the Prime Minister **(Mr. Menzies),** I do so in the hope that what I have to say will be constructive. I believe that the Prime Minister's economic statement was an honest endeavour to correct a financial position in this country which members on both sides of the House know very well to be dangerous. The difference of opinion between the Government and the Opposition appears to be as to the appropriateness or otherwise of the suggested measures. First of all, let me say that the policy laid down by the Prime Minister was the result not of any hasty or unconsidered decision, but of a great deal of thought, by both the Prime Minister and his financial advisers. It is also consistent with the advice given by Australia's eight leading economists. With these facts in mind, I firmly believe that until something better is suggested we should be prepared to accept these measures as the best that can be introduced. I have read very carefully the speech of the Leader of the Opposition **(Dr. Evatt),** not with the object of deriding his opinions and scoffing at his criticism of our economic policy simply because he sits on the opposite side of the House, but in order to analyse his criticisms and see whether they are, in fact, fair and constructive, and whether the Opposition has any reasonable alternative to offer. The Leader of the Opposition said - >So far from being counter-inflationary, I think that every one of the proposals is distinctly inflationary in trend. . . . These taxes, whether they are customs, excise or sales tax, are indirect taxes. Their very intent is that the burden should be borne by consumers other than those who pay the tax. Their objective is that the price to the consumer shall be increased and, of course, that does not stop with the consumers. I contend that this statement is not in accordance with the facts. The new taxes have increased the price of beer, spirits, tobacco and cigarettes. How can these taxes be paid by any persons other than consumers? They must be met by the consumers. Similarly, sales tax on private motor cars, on furs, jewellery, radio and television sets, and other luxury items can be borne only by the consumer. Only in respect of petrol purchased for commercial vehicles can the tax be passed on. Petrol purchased by the private motorist must be paid for by him. As to the claim that these measures are not counter-inflationary, I submit that if the average working man, about whom the Opposition claims to be worrying, has only a certain amount to spend on beer, tobacco and petrol, and finds that, as a result of the increased taxes, he can drink less beer, smoke fewer cigarettes and buy a little less petrol, surely that must result in less money being paid for the import of these items, and must result in helping us to balance our overseas payments, while at the same time reducing the amount of money being spent on these commodities. Surely this is counterinflationary. The Leader of the Opposition went on to say - >We know perfectly well on whom the main burden of these new taxes will fall. It Will fa.ll on the ordinary consumer - the salaryearner and others on fixed incomes. It will be a heavy burden. Some assess it at 10s. or more a week, others estimate a higher figure. I think that even 10s. is a greatly exaggerated estimate. Assuming that the average worker consumes, say, four glasses of beer a day during a six-day week, he will spend about 24s. a week on beer, and will pay about 4s. in extra tax. If he also smokes one large packet of cigarettes a day he will spend more than £1 a week on cigarettes and pay additional tax of approximately ls. 9d. If he owns a motor car and buys four gallons of petrol a week, he will spend 15s. a week on petrol and pay an additional ls. a week tax. This working man, to whom we are referring, is spending an additional £2 15s. a week on beer, cigarettes and petrol, and paying additional tax of 6s. 9d. a week. I am ignoring sales tax. because that does not affect such items as food, clothing, building materials, furniture and electrical items for the home, such as refrigerators and washing machines, on which' the sales tax remains the same. In order to pay an additional 10s. a week in taxes as a result of these measures, the worker and his wife - if he is married - would have to spend more than £4 a week on those commodities, and I maintain that no working man, or at least no married man on worker's wages, could afford to spend that sum without going short of essentials. If, of course, he has only *£3 10s.* a week *to* spend in any case and cannot afford to spend any more, then surely the measures that have been adopted are counter-inflationary. To do his share in helping the nation to counter inflation, he is making sacrifices to the extent of a few glasses of beer a week and a few cigarettes a day. Having regard to the incidence of lung cancer, perhaps he is doing himself a good turn, anyway. The man who can still afford to pay the high cost of motor cars, jewellery, furs and other luxury items is, therefore, contributing a much greater amount, and rightly so, than is the worker. Now we return to the speech of the Leader of the Opposition. The right honorable gentleman stated, referring to the additional ls. in the £1 company tax - It will not stop profiteering by those corporations, in this country which during the last two years, have been making profits without precedent in the history of Australia and which have largely contributed to the increase in prices from which stem the main inflationary pressure. That statement ignores altogether the relation of profits to turn-over and to invested capital. When speaking of banks, the right' honorable gentleman said - In some records, one finds profits stated in relation to shareholders' funds. That is most misleading although it is now becoming the customary way of stating the profits of a corporation. Shareholders' funds include, very often, millions of pounds of reserves. On the basis of shareholders' funds a profit may be stated to be 5, G or 7 per cent., and the average reader will say, " Well that seems to be reasonable". But it is not the profit on the capital investment at all, and to get at the truth one has to make elaborate calculations which show an enormously greater proportion of profit. I cannot bring myself to believe that the Leader of the Opposition really believes that that is so. That statement is contrary to all accepted laws of accountancy and, indeed, to common sense. How else can profits be stated except in relation to shareholders' funds? If these reserves originally had been paid out as dividends and then returned for investment in the corporations, or if they had been distributed as bonus shares, they would have formed part of the invested capital. So, how is it possible to regard reserves any differently? In any event, why cannot the worker buy some of the shares in these huge profit-making cor porations and so share in the profits? If he cannot afford to buy shares, then I maintain that he cannot be paying ait additional 10s. a week tax on luxuries. As to whether excess profits are beingmade by some corporations, one has only to read the financial pages of the daily newspapers, where it is possible to see the* yields in relation to the market value of shares. In any case, what are excess profits? How can they be defined? Let us take, for example, two companieshandling a similar type of goods, in exactly the same line of business and1 with the same amount of invested1 capital. Let us assume that one companygoes in for a very high mark-up of prices,, and that its management is inefficient,, whilst the other company, with efficient management, decides on a lower mark-up and, as a result, its sales greatly exceed those of its competitor. Indeed, they may be three or four times greater than the sales of the other company, as a result of the lower mark-up. I ask the House: Which are. the excess profits - the comparatively low profits of the concern with the indifferent management which is exploiting the public by a high mark-up of prices, or those of the other company which marks its prices at a much lower level and which, as a result of efficient management, is able to make double the profit of the other company, with exactly the same capital ? I suggest that extreme difficulty would be experienced in defining just what are excess profits. One of the greatest points of difference raised by the Leader of the Oppositions was in relation to the increase of interest rates. Whilst on this subject of interest rates, I should like to dispel one of the fallacies raised by the right honorable gentleman. It is a fallacy which a great many people do not see. He stated, in speaking of hire-purchase companies paying a higher rate of interest to the trading; banks- In any case, the interest they pay to the private banks is deductible as a business, expense in that type of business. He entirely overlooked the fact that no business pays a tax of 20s. in the £1. It is like a businessman breaking his neck to pay for a dinner for certain business associates at an hotel because the cost of the meal is deductible as a business expense. The businessman pays, say, £5 for the meal, and the tax he would have paid would have been perhaps less than half that amount. To return to the private banks, the Leader of the Opposition stated - £1,250,000 per annum will go to the private banks directly as a result of the Government's proposals. This attempt to reduce the policy of raising interest rates to simple static arithmetic can lead only to a complete distortion of the facts. Assuming that advances and fixed deposits average, in 1955-56, the same as they averaged in 1954-55, the gain from an additional per cent, on overdrafts would be £3,8S0,000 in a full year, which would be offset by £2,630,000, representing the additional cost of fixed deposits, leaving an apparent gain of £1,250,000, as referred to by the Leader of the Opposition. But, again, lie ignored certain facts. First, this policy of raising interest rates is part of the national policy to ease pressure on resources, to encourage saving and to discourage spending. It is designed to reduce the amount of money lent by the banks. There is already ample evidence of advances declining, and if these continue to fall they must directly affect the revenue of the banks. At the same time, it is likely that bank deposits will rise, and so, too, will the banks' expenses, such as the cost of managing accounts, interest and so on. That may well offset any gain which might result from higher overdraft rates. As has been stated by the Prime Minister **(Mr. Menzies),** the average increase of interest rates is not to exceed per cent., and obviously the banks are going to have difficulty in allocating their advances in order to average the interest rate at 5£ per cent, over their hundreds of thousands of advances. The tendency will be to maintain competition, so that the banks may preserve their connexions, and the managers will tend towards the lower end of the interest scale. If, as a result of this, the average rate falls only 4s. per cent, short of the target of £5 10s. per cent., the banks will find their profits are lower instead of higher as a result of the change in the interest rate. There is no scope for discretion in paying the additional 1 per cent, on their term deposits. Incidentally, the banks will be involved in a great deal of additional expense in seeing that their numerous branches all operate on the same rates of interest for the various types of loans. The Prime Minister has stated that steps will be taken to confer with the private banks on means of offsetting any additional profit resulting from the changes. Such means are now being considered. The private banks want to cooperate with the central bank and keep within the 5$ per cent, average. Naturally, they do not want to leave themselves open to the criticism of making higher profits from necessary measures of economy. As the Treasurer **(Sir Arthur Fadden)** said this evening, they have already undertaken to supply the central bank with regular statements of the amounts advanced at the various rates between 5 per cent, and 6 per cent. Differential rates of overdraft interest are the recognized method of encouraging or discouraging certain types of borrowing. During the past ten or eleven years, the banks have been deprived of this instrument, but it has now been partially restored in the national interest. In the case of people who borrow money from the banks at 5 per cent, and invest it in hire purchase and other financial institutions at 7 per cent, and 8 per cent., or on second mortgage at 10 per cent., it should be possible to charge them an even higher rate than the maximum permitted rate of 6 per cent. The essential point is that desirable forms of borrowing will attract favorable rates of interest. To the extent that the policy is successful in discouraging less desirable forms of borrowing, the tendency will be for increases to keep below the permitted average rise of per cent. In conclusion, I offer my opinion on what I consider to be one of the chief factors making for the increasing failure of Commonwealth loans. The Prime Minister **(Mr. Menzies)** has stated that the reason for the increased taxation is to raise for the States an amount of £67,000,000 for what they declare to be urgent works. For the year ended the 30th June, 1955, more than £28,000,000 was invested in State lotteries, and this- figure is increasing each year. Only this week we learned that Tasmanian lotteries are launching the biggest lottery in the world- 100,000 tickets at £25 each. That means that £2,500,000 is going into one lottery. Out of these lotteries the States receive approximately 30 per cent, of the amounts contributed - in some States the proportion is higher and in others it is lower - and the balance is swallowed up in prizes and administration costs. The States are crying out for money for their urgent public works, but yet they are aiding and abetting the public in sabotaging the loan market by drawing off sums of money which would normally be available for loans. It is time that they realized that they cannot have it both ways. For the reasons I have given, I support the measures introduced by the Prime Minister. {: #subdebate-20-0-s20 .speaker-KJQ} ##### Mr JAMES:
Hunter .- I did not intend to speak to the motion, but as the debate has progressed I felt that -something should be said, particularly about the amendment moved by the honorable member for Melbourne Ports **(Mr. Crean).** He moved - >That all the 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 agree entirely with that amendment. I never knew what an overdraft was until I came into this Parliament. Now I have to operate on one and pay interest on it, -and it seems that that interest rate will be increased. I do not want to make 10 per cent, profit, as the honorable member for Henty **(Mr. Fox)** suggests. I am using my overdraft to pay my debts, and I will be slugged for more interest. I know that many other people who have invested in small mines, and have had to borrow money to produce coal will suffer in the same way. That sort, of investment, is not profit-making as it was once. A great injustice has resulted from these economic measures, and when all the facts are considered it is obvious that they have been sprung upon the people since the general election of the 10th December last. Had the people been aware that these measures would be brought down they would have shown their hostility, as they have done in various States, particularly in the recent election in Western Australia, when the Labour Government was returned to power with an increased majority. I am confident that a similar result will be recorded in the forthcoming Queensland elections. The honorable member for Henty, speaking of the increased prices of cigarettes and beer, said that a smoker could easily economize by doing without a couple of cigarettes a day, and that a drinker could do without a pint of beer a day and save the price of it. The honorable member had nothing to say about the man who drinks whisky. The worker does not drink whisky because he cannot afford to do so, but he is the person who is obliged to pay 2d. more for a middy of beer - that is a 10-oz. glass. In some hotels where the law is not being policed publicans are charging 2£d. more on a 10-oz. glass of beer, and so are making a greater profit. That is a halfpenny more than the Government has specified. {: .speaker-JLU} ##### Mr Anderson: -- The State governments control prices. {: .speaker-KJQ} ##### Mr JAMES: -- The. State governments have had nothing to do with the increased price of beer. Why has the Australian Government allowed " slush " oil to come into this country to be used as fuel in competition with coal, which has always been recognized as one of the greatest powerraising agencies? For many years in this Parliament, I have advocated that the governments of the day should try to extract oil from coal instead of importing crude oil from overseas. The question has been asked, " Why did not the Labour Government do it ? " When the last. Federal Labour Government was in office the war was at its height, and every effort had to be concentrated on winning it. The government of the day could not spend money on the extraction of oil from coal. I first entered this Parliament in 1928, and I can recall that in 1929 the miners were locked out of the mines for fifteen months, and were forced to accept a reduction of 12£ per cent, in their wages. That was agreed at an arbitration hearing presided over by **Mr. Charles** Hibble. They are adopting the mme tactics now at Bellbird colliery, where they have locked out 560 miners. They have locked out 200 miners at Stockrington and another 300 to 400 in the western district. The honorable member for Macquarie **(Mr. Luchetti)** has mentioned that. In those circumstances, it is time something was done to prevent a recurrence of events in 1928-29 when the Bruce-Page Government allowed the colliery proprietors to lock the men out for fifteen solid months and force upon them a 12-J per cent, reduction in their earnings. The honorable member for Wentworth at that time was **Mr. Walter** Marks. Although he was a supporter of the Bruce-Page Government, he sided with the Opposition on that issue and for doing so was defeated at. the following election by the present right honorable member for Wentworth **(Sir Eric Harrison).** Poor old Walter Marks ! {: .speaker-KNX} ##### Sir ERIC HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944 -- What did he know about coal? {: .speaker-KJQ} ##### Mr JAMES: -- I know all about coal, and I know all about the rotten thing that the right honorable gentleman did to him. The Bruce-Page Government was defeated on the floor of the House when some of its own members voted against it, and was swept from office at the following election. Labour then governed, under **Mr. Scullin,** for quite a while. The Curtin Government appointed me Commonwealth Coal Liaison Officer during World War II. {: .speaker-K8B} ##### Mr Curtin: -- And the honorable member did a good job. {: .speaker-KJQ} ##### Mr JAMES: -- I did a good job, but E had to contend with this difficulty. Miners said to me, " Put coal at grass, Rowley? We did that in World War I. What happened? The fact that we had coal at grass was used against us as an excuse for locking us out for fifteen solid months in order to force upon us a 12-J per cent, reduction in our wages ". The miners produced more and more coal, not at my request alone, but at the request of all governments. The miners produced more coal than could be marketed. I pleaded with the Government to try to find markets for it, but nothing was done. All the Government would say was, " It is not economic to work Bellbird ". The owners are allowed to claim that it is noc economic to work the colliery. Nothing is done to them. What would happen if the worker were to say, " It is not economic for me to continue going down that mine slaving my guts out and risking death from explosions, so I will stop work " ? He would be gaoled. Did the Bruce-Page Government gaol the coalowners ? No ! The coal-owners locked the men out for fifteen months, and the Government threatened to prosecute John Brown. The threat was withdrawn and the result is that the miners have lost faith in the arbitration system. I know that all parties in this Parliament support arbitration. I support it, but at the same time it is very hard to convince the miners that they should adhere to the principles of arbitration when there is the danger of a recurrence of the events in J92S-29. The men have been locked out at several mines already, and the government of the day has made no attempt to enforce the law. If the workers dared to take their courage in their hands and refuse to go down a mine, they would quickly be prosecuted and gaoled, just as were the miners to whom I have referred. They would be prosecuted and gaoled as the timber workers were, and as poor old Jack Holloway was. {: .speaker-K8B} ##### Mr Curtin: -- What happened to Jack Holloway ? {: .speaker-KJQ} ##### Mr JAMES: -- He defeated, for the first time in the history of Australia, a Prime Minister - Stanley Melbourne Bruce. **Mr. Holloway** was returned in 1929 as the honorable member for Flinders. That event may be taken us a warning. I hope that the right honorable member for Wentworth takes note of it. He has a blue-ribbon Liberal seat, but I remind him that a former Prime Minister was defeated in Flinders, which was considered to be a blue-ribbon Liberal seat. The present Prime Minister **(Mr. Menzies)** also holds one, and I warn him that one Prime Minister has gone by the board, and history may repeat itself in that direction, just as it is doing in connexion with the lockouts. The Treasurer **(Sir Arthur Fadden),** in the course of his speech, mentioned beer. He said that the consumption of beer had increased since 1938-39. I point out that he also mentioned that our population had been increased by approximately 1,000,000 immigrants. He paid -a tribute to the honorable member for Melbourne **(Mr. Calwell)** for inaugurating the immigration scheme. It is a fact that the population in 1938-39 was not nearly so great as it is now. A further point to be remembered is that for a period after 1938-39, many of our soldiers were overseas. Some stayed in Japan in the post-war period. Now they are back, and the population has been increased with their return. In those circumstances, it is no wonder that the consumption of beer has increased. Lt cannot be said that the miners are responsible for the increase. Approximately 600,000 men who were in the services in World War II. have returned to civilian employment and many of them drink beer, but the glass of beer that an individual consumes is as nothing compared with what the right honorable member for Wentworth and his colleagues will consume in whisky. And they are charged only an extra Id. a nip, despite the fact that the alcoholic content of a nip of whisky is twice as great a 3 that of a glass of beer. Why, I could drink a glass of beer, but if I had two whiskies, I would be " over " ! I come now to the subject of petrol. On previous occasions, I have appealed to the Government to grant mine workers the right to claim as a deduction for taxation purposes the cost of their transport by motor bus to their work. All miners do not live right at the mines in which they work, and those who have to travel are given no tax concession for the cost of their transport. The Taxation Branch is entirely wrong in refusing this concession, because thi3 expenditure is incurred in the course of production and should be a legitimate deduction for income tax purposes. What is happening now? The increased price of petrol has caused bus fares to be raised. I have told the House how the price of beer has been increased by a halfpenny more than the increase of the sales tax, because some people are exploiting the workers. The Government can do nothing about it because it has no control over prices. The increased price of petrol will have tragic effects upon every one, especially the poor working man who perhaps can afford to take his family out for a run in a motor car only on Sundays. Cigarette prices also have been increased. The workers cannot afford to smoke cigars as do the VicePresident of the Executive Council **(Sir Eric Harrison)** and other Government supporters, but the sales tax on cigars has not been increased by as much as the sales tax on cigarettes. It seems that about ten or eleven years after every war, an attempt has to be made to bring costs back to normal. Costs increase during a war, admittedly. They increase after a war also and ultimately some government is faced with the task of bringing them back to normal. During the 1929-30 lockout in the coal mines, the miners experienced the first of the wage reductions forced upon them by the coal-owners, while the government of the day encouraged the coal-owners to lock the men out. Now, eleven years after the end of World War II.. we find that, at the Pelaw Main colliery, where I once worked, the owners have endeavoured to force upon the men new conditions that were fixed by arbitration. If working conditions are broken down, the workers, in effect, suffer a reduction of the purchasing power of their wages. I have previously mentioned the big Hetton Bellbird colliery. I remind honorable members that the Bruce-Page Administration initiated a prosecution against John Brown and, in fact, issued a summons against him. The late W. M. Hughes and the predecessor of the VicePresident of the Executive Council as member for Wentworth could tell honorable members all about that incident. They voted with the Australian Labour party against the withdrawal of the prosecution of John Brown. J. and A. Brown and Abermain Seaham Collieries Limited has now locked out the men at Stockrington No. 2 colliery. That company, I might say, has nothing to do with the Hetton Bellbird colliery. The northern district of New South Wales is the greatest coal-producing area in Australia, and approximately 80 per cent, of Australia's coal is produced in my electorate. The miners at times become hostile to arbitration when they have experiences such as those I have described. In conclusion, I say that the increased sales taxes upon petrol and other commodities are not necessary and the Government should not have imposed them. {: .speaker-10000} ##### Mr DEPUTY SPEAKER: -- Order ! The honorable member's time has expired. Debate (on motion by Mr.Failes) adjourned. House adjournedat 10.25 p.m. {: .page-start } page 1245 {:#debate-21} ### ANSWERS TO QUESTIONS *The following answers to questions were circulated : -* {:#subdebate-21-0} #### Bank Overdraft Rates {: #subdebate-21-0-s0 .speaker-1V4} ##### Mr Cairns:
YARRA, VICTORIA s asked the Prime Minister, *upon notice -* >Has any agreement been reached with the trading hanks that any particular or average interest rates on overdrafts shallbe charged in relation to (a) primary producers, (b) borrowers for the purpose of building or buying war service and other homes, and (c) other borrowers, so as to achieve the aims of the. Government that the lower overdraft rates will be employed in aid of important production and import saving, and that the higher overdraft rates willbe employed to restrain inflation? {: #subdebate-21-0-s1 .speaker-N76} ##### Mr Menzies:
LP -- The answer to the honorable member's question is as follows : - >Agreement has been reached between the major trading banks and the central bank on the principles to be adopted in adjusting trading bank overdraft interest rates in accordance with the recent policy decision on the matter. In determining rates tobe applied to individual overdraft accounts, the trading hanks will be guided by the need to restrain inflation and to avoid placing undue burdens on industries and enterprises which can contribute to the solution of the balance of payments problem. A rigid scale of rates has not been laid down because it is undesirable to limit competition and also because it is proper that banks take into account the circumstances of each individual case. Each bank will therefore be free to fix the rate For individual loans within the maximum of6 per cent, provided that its average interest on advances does not exceed 51/2 per cent., but taking into account the following principles: - > >1 ) Interest rates below the average of 51/2 per cent, will normally be applied to important export industries and to new enterprises or extensions of existing enterprises to make possible a significant net contribution to the balance of payments; > >In cases where for reasons of social policy it has been the practice to grant concessional rates (e.g., to building societies) rates below the average of51/2 per cent, will be applied; and > >Rates above the average of51/2 per cent, and up to6 per cent, will be applied in cases where they will best restrain inflation, for example, for loans to firms engaged predominantly in financing consumption expenditure and to enterprises undertaking expenditure more appropriately financed outside the banking system. > >The arrangements described above apply as from the 1st April, 1956. British Parliamentary Delegation. {: #subdebate-21-0-s2 .speaker-N76} ##### Mr Menzies:
LP s. - On the 14th March, the honorable member for Reid **(Mr. Morgan)** . asked the following question : - >Is the Prime Minister aware that a British parliamentary delegation is now in Singapore, looking over things there? In view of the fact that the right honorable gentleman does not consider that an Australian parliamentary delegation should go to Singapore, despite the invitation which I understand has been officially extended to this country by the Chief Minister, will he consider inviting the members, or the leaders, of the British delegation to come on to Australia and give us the benefit of their impressions? Because of the full itinerary and existing commitments of the British Parliamentary Mission it was not possible to invite the members of the mission to visit Australia. The leader, Mr.Geoffrey Lloyd, arranged to visit Indonesia from the 29th March, and the deputy leader, **Mr. Herbert** Morrison, left Singapore for Tokyo on the 2nd April. Most of the other members of the mission left Singapore on the 1st April to visit Ceylon. The honorable member may rest assured that the Government will ensure, through its Australian overseas representatives, that it is informed of any significant views expressed by the mission during its tour or in its report which is expected to be submitted in London before the Singapore constitutional talks open there on the 23rd April. Superannuation . {: #subdebate-21-0-s3 .speaker-N76} ##### Mr Menzies:
LP s. - On the 22nd March, the honorable member for Port Adelaide **(Mr. Thompson)** asked the following question : - >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? This matter was considered by the Government in conjunction with the last budget and it was decided that there was no justification for a further variation in the value of the unit of pension. In response to more recent inquiries from the High Council of Commonwealth Public Service Organizations, my colleague, the Treasurer, has stated that there has not been any more recent change in conditions to warrant a variation of that decision. {:#subdebate-21-1} #### Aboriginal Film Actor, Tudawall {: #subdebate-21-1-s0 .speaker-KGX} ##### Mr Haylen:
PARKES, NEW SOUTH WALES n asked the Minister for Territories, *upon notice -* {: type="1" start="1"} 0. In view of his own knowledge and the background of his sympathetic writings on the aborigine problem in the past, will he consider a revision of the statement on the Tudawali case which he made in the House on the 20th March, in reply to a question without notice? 1. Did the statement emphasize the white man's superiority? 3.Is Tudawali's inability to handle hie household finance a disability which isnot peculiar to the Australian aboriginal? 2. Why was an internationally known movie star, who happens to be an Australian native, paid less than the basic wage for two years' work on a smash-hit film? 3. Did Tudawali pay taxation on the amount of £800 which he received ; if so. did this make him eligible for social services and entitle him to a vote? 4. Did the Minister and the Native Affairs Department confer with Actors Equity to fix a proper salary for Tudawali's film work? 5. Was there any arbitration on this matter or was he exploited as a film star because of his colour? 6. Was any sympathetic consideration given to the problem of Tudawali in his sudden rise to fame followed by his return to the position of his former life in Darwin? 7. Does this case and, to even a greater degree, that of artist, Albert Namatjira, bring up entirely new problems of conscience in regard to our general attitude to the aboriginal ? 8. Will he seek an opportunity for Parliament to discuss this matter at an early date? {: #subdebate-21-1-s1 .speaker-ZL6} ##### Mr Hasluck:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP -- The answers to the honorable member's questions are as follows : - {: type="1" start="1"} 0. The statement was a correct recital of certain facts. 1. No. 2. Yes. 3. The film was an experiment in the use of aborigines as the principal figures. Tudawali was not an actor when engaged and it was certainly not known whether he would be a success. 4. The secrecy provisions of the income tax laws would prevent a categorical reply to this question. Eligibility to vote or to receive social services is determined by citizenship status and not by payment of taxes. Any coloured citizen is entitled to vote and to receive all social services benefits. Persons of aboriginal blood who have not yet obtained citizenship are cared for by special measures on their behalf. 5. The agreement for his employment in the Territory was negotiated between the producer of the film, **Mr. Chauvel,** the then Acting Director of Native Affairs and the Crown Law Officer. When Tudawali was to leave the Territory a separate agreement was drawn up by the Crown Law Officer between the Acting Director of Native Affairs and **Mr. Chauvel.** According to this agreement. Tudawali was to be paid an appropriate wage as agreed between Actors Equity and **Mr. Chauvel.** This document was signed by the Acting Director of Native Affairs on behalf of Tudawali when Tudawali left the Northern Territory. 6. The only arbitration in the matter was between the Acting Director of Native Affairs. **Mr. Chauvel** and the Crown Law Officer when the agreement was being drawn up. 7. My statement of the 20th March shows that full sympathetic consideration was given in this case. 8. On the6th October, 1955, in a speech during the Estimates debate in the House of Representatives, I dealt at length with what I feel to be one of the great social problems in Australia, i.e., the problem of aboriginal welfare. The cases of Tudawali and Albert Namatjira are good examples of the difficulties facing the Government in its welfare policy which, it should be clearly understood, has shifted emphasis from the mere protection of aborigines to a positive welfare and social advancement programme which retains also essential protective aspects. The cases which emphasized the difficulties in the implementation of such a policy do not call for its revision but they do call for patient, sympathetic and individual attention by welfare officers of the Northern Territory Administration. This attention is being given. {: type="1" start="1"} 0. A debate will not be initiated by the Government.

Cite as: Australia, House of Representatives, Debates, 11 April 1956, viewed 22 October 2017, <>.