House of Representatives
17 March 1959

23rd Parliament · 1st Session

  1. House of Representatives
  2. 23rd Parliament
  3. 1959

Mr. SPEAKER <Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.

page 643

PRIVILEGE

Charge against Member.

Mr PEARCE:
Capricornia

– I wish to raise a matter of privilege, Mr. Speaker, in regard to something that has occurred since the House last met, and I propose to conclude my remarks by submitting a motion to the House.

Sir, since this House met last, a man, John Somerville Smith, has caused to be circulated in the Commercial Travellers’ Club and has also, I am informed, posted to the editor of the “ Rockhampton Morning Bulletin “, a copy of a lettergram that was sent to the Leader of the House (Mr. Harold Holt) at 11.30 a.m. on 9th March, 1959. When the Leader of the House received this lettergram he referred the matter to me, and also to the Prime Minister (Mr. Menzies), and sought my comments in regard to it, and I gave to the Prime Minister a written statement containing my views.

Since that time - and before a roneoed copy was given to me to-day by a senator - the Leader of the House informs me, he replied to John Somerville Smith telling him that I had bluntly denied acting with any impropriety in my conduct as a member of this chamber.

At a much earlier time this John Somerville Smith issued threats against me, principally through the Government Whip, that I had better keep out of his way or he would take action to see that my reputation was ruined. I paid very little attention to this threat, because I had formed the opinion that this John Somerville Smith was rather eccentric and flamboyant in his manner, and that he could not possibly be serious about uttering threats, in view of the nature of the tasks that I had refused to undertake on his behalf by using my influence as a member of Parliament to obtain information.

As the roneoed copy of the lettergram has received circulation as far abroad as Melbourne, in the Commercial Travellers’ Club, and Rockhampton, I wish the matter to be considered by the Committee of Privileges of this House. I therefor? move -

That the matter ‘be referred to the Committee of Privileges.

Mr Calwell:

– But what is the matter concerned?

Mr PEARCE:

– It is suggested that I should give the House some idea of the contents of this lettergram. The lettergram, which was sent to the Leader of the House, alleges that I engage in professional lobby work for certain firms, that I have stolen from Mr. John Somerville Smith some of his customers - although my fees, it is said, are higher than his - and that I influenced the Government in order to obtain for the firm of Thiess Brothers a £9,000,000 Snowy Mountains scheme contract. That is, broadly, the nature of the contents of the lettergram. That Sir, is broadly the nature of the lettergram - that I had improperly used my influence or my position as a member of Parliament for certain firms. A roneoed copy of the lettergram is in my possession.

Mr HAROLD HOLT:
Treasurer · Higgins · LP

– Perhaps I shall be permitted to add a word or two on the facts and then have leave to continue my remarks at a later stage, in case it is necessary for me to put any further comments to the House. As the honorable member for Capricornia (Mr. Pearce) has pointed out to the House, I received this rather lengthy lettergram from Mr. Somerville Smith, I think on Tuesday of last week.

Mr J R FRASER:
ALP

– Was it sent “collect “?

Mr HAROLD HOLT:

– No, but it was marked “ urgent “, if my recollection is correct. The contents certainly were of a scandalous character, as the honorable gentleman has pointed out. The sender prefaced the lettergram by referring to some statements I made in this House when, as honorable gentlemen will recall, Mr. Somerville Smith had publicly advertised for members of the Parliament to join his organization as public relations assistants, or to engage in activities of that kind. In the course of speaking to this matter, which was raised in the debate on the motion for the adjournment of the House on one occasion, I did point out to honorable members what, it seemed to me, was involved in the proposal, and I also added a warning to people who might be thinking of securing the services of this gentleman, that the Public Service of this country dealt with matters which came before it on their merits, irrespective of whether they were advanced by members of Parliament or anybody else. Mr. Somerville Smith sent a lettergram drawing attention to what I had then said and requesting me to take action to have the honorable member for Capricornia disqualified from his membership of this place. I thought that my proper course in the circumstances was to place the contents of the lettergram before the head of the Government and the leader of Mr. Pearce’s party, who of course in this case was one and the same person. I also made the contents known to Mr. Pearce himself. The Prime Minister (Mr. Menzies) subsequently had a talk with Mr. Pearce and asked him-

Mr Ward:

– Who is this Mr. Pearce?

Mr HAROLD HOLT:

– The honorable member for Capricornia. I apologize to the honorable member for East Sydney for referring to the honorable member for Capricornia by name. The Prime Minister requested that the honorable member for Capricornia place his comments i’a writing, which he did, and he made a copy of that document available to me. On receipt of the honorable member’s comments, I sent a note to Mr. Smith, acknowledging receipt of the telegram and saying that the honorable member for Capricornia had given an emphatic denial that he had acted with any impropriety at any time in his capacity as a member of this House. So far as I was concerned, that was where the matter stood until, earlier to-day, the honorable member for Capricornia brought to my notice the fact that a roneoed copy of the lettergram sent to me had apparently been given circulation at such widely separated points as Melbourne and Rockhampton. Whether it has had an even wider circulation than that, perhaps the investigation referred to will elicit. I ask for leave to continue my remarks later.

Leave granted.

Dr Evatt:

– I have no objection to this course, but I suggest that as the debate is to be adjourned, any documents that the Leader of the House has in his possession be submitted to us in the meantime, leaving the question to be determined on the motion a little later.

Mr Harold Holt:

– Any documents would, of course, go to the Committee of Privileges, if the House decided that the matter be referred to that committee.

Dr Evatt:

– I follow that.

Mr Calwell:

– But the Opposition wants to know what is in them.

Mr Harold Holt:

– I have indicated the substance of it.

Dr Evatt:

– It is not unreasonable that a document of that kind be made available to the Leader of the Opposition before the matter is referred to the Committee of Privileges.

Mr Harold Holt:

– Yes. I am sure that the honorable member for Capricornia will agree to that course.

Debate adjourned.

page 644

QUESTION

NORTHERN TERRITORY

Conditions of Imprisonment

Dr EVATT:

– I desire to ask the Minister for Territories a question in relation to the proceedings against Albert Namatjira which have just been completed in the High Court of Australia. Some time ago, the Minister was good enough to inform the House that a decision had been taken that Mr. Namatjira would not be compelled to serve imprisonment and that arrangements would be made for him to spend the period of sentence, which, I think, was three months, with his tribal mates. That was a decision which I am not criticizing in any way. It certainly met with approval by all with whom I have discussed the matter, and I thought it was a very humane and proper decision. I ask the Minister: Does the Government adhere to that decision?

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

– At a time when this case was still before the courts, I gave assurance that if and when Albert Namatjira was sentenced to a term of imprisonment arrangements would be made so that that term would not be served inside a gaol. I should now like to re-affirm that and assure the House that arrangements are in fact being made so that he will not serve the sentence inside a gaol. I use the term “ gaol “ in the precise sense of an area enclosed by a high wall, or a fence, and buildings.

I think that the position has been misrepresented in some quarters, and I should like to take the opportunity, if I may, to make the matter clear. It has been represented that, by giving an assurance of this kind, I have attempted to interfere in the jurisdiction of the courts. But surely the position, as all honorable members will agree, is this: The courts have carried out their functions and brought them to conclusion, and have passed sentence of imprisonment. That being so, it now becomes the responsibility of the Administration of the Northern Territory to take the sentenced man into custody, and he having been taken into custody, it is within the powers of the Administration or its officers-

Dr Evatt:

– The Crown has the prerogative of mercy at all times.

Mr HASLUCK:

– It is not a question of the prerogative of mercy. The point is rather that it is within the power of the officers of the Northern Territory Administration to make arrangements regarding the way in which this sentence shall be served in custody. It is possible for a gaoler, under the laws in force in the Northern Territory, to make arrangements for the transfer of a prisoner from a gaol to some designated place to serve the remainder of his sentence. The procedure that will have to he followed is this: Albert Namatjira will be taken into custody. He will enter the gaol at Alice Springs and, having entered the gaol at Alice Springs, arrangements will be made for him to be transferred elsewhere, in order that during the period of his sentence-

Mr Ward:

– It sounds like “ Alice in Wonderland “!

Mr HASLUCK:

– It is extraordinary the way the honorable member for East Sydney can always make a joke out of the misfortunes of other people. The person in question is a man who deserves, and I think commands, the widespread pity and sympathy of most Australians but when we are trying to discuss his position seriously, the honorable member for East Sydney comes in with a flippant interjection which suggests that he, unlike his leader, has no regard whatsoever for the fate of this very great Australian.

Let me now continue. After Albert Namatjira has been taken into custody at the Alice Springs gaol, arrangements will bt made as early as possible to transfer him, so that he will serve the remainder of his sentence in the open, in conditions that will be most conducive to his rehabilitation. Unlike some of the other parts of Australia, the Northern Territory has not developed its prison system to the stage at which facilities are available for the rehabilitation of prisoners, and I am sure that every honorable member in this House will agree that the object of those who have the custody of Albert Namatjira during the next three months will be to see that during that time this great Australian has the best possible chance of rehabilitating himself, and that when he has completed his sentence he will not have been made worse by undergoing it, but will have had a chance of becoming better.

Dr EVATT:

– By way of a supplementary observation, I would like to suggest to the Minister that it may be desirable to have action taken by His Excellency the Governor-General to carry into effect the change that the Minister had indicated. I do not wish to elaborate the point now, but I suggest that this may be the more correct way of achieving the results that the Minister wishes. I agree that the purpose should be as outlined by the Minister, and I think all honorable members will also agree.

Mr SPEAKER:

– Has the Minister any further comment?

Mr HASLUCK:

– No.

page 645

QUESTION

GANNET AIRCRAFT

Mr HOWSE:
CALARE, NEW SOUTH WALES

– Is the Minister for Defence aware that serious doubts have been publicly expressed as to the airworthiness of the Gannet aircraft in service in the Royal Australian Navy? Has the R.A.N, thoroughly examined the Gannet and put it through exhaustive tests? If so, what have these tests revealed? Finally, in view of the natural concern of airmen and their relatives owing to the reported unreliability of the Gannet, can the Minister assure the House that it is not only suitable for service in the R.A.N., but also reliable?

Mr TOWNLEY:
Minister for Defence · DENISON, TASMANIA · LP

– Having noticed these comments regarding the Gannet aircraft, I asked ray colleague, the Minister for the Navy, to give me a short report on the aircraft. I did this only yesterday, and 1 have the report with me at present. The board of inquiry into the crash in Sydney found that it was caused by a misplaced circlip which allowed control of the rudder to be taken out of the pilot’s hands and the aircraft to yaw violently. All Gannets were grounded and’ the relevant parts examined, and such examination is now routine maintenance. A Sydney newspaper raised further doubts on this matter by publishing alarmist statements which the paper itself admitted to be based on rumour. The Minister for the Navy made a signal to “ Melbourne “ on the same day and personally spoke to the captain in charge of H.M.A.S. “ Albratross “, the R.A.N. Fleet Air Arm base at Nowra.

As a result the Minister informs me that no doubts as to the airworthiness of the Gannet have been expressed by pilots to any officer of the R.A.N. No pilots have approached the captain of “ Melbourne “ or any other senior officer on “ Melbourne “ to express concern. No written orders to fly Gannets have ever been asked for by pilots. No requests that X-ray tests should be held have ever been made.

The Navy is satisfied that the Gannets are safe, the performances of the Gannets have shown and are showing that they are safe, and there is no intention of grounding them.

page 646

QUESTION

AIRCRAFT PRODUCTION

Mr GALVIN:
KINGSTON, SOUTH AUSTRALIA

– My question, which is directed to the Minister for Supply, concerns the recent dismissals of skilled tradesmen from the Aircraft Production Branch in South Australia. I ask the Minister: What is the reason for such dismissals? Is it the intention eventually to close down completely the works at Parafield? Is it correct that work previously carried out by the department is in the future to be handed over to private enterprise?

Mr HULME:
Minister for Supply · PETRIE, QUEENSLAND · LP

– Taking the last question first, it is not the intention to hand over the work of the department to private enterprise. The dismissal of some men at Parafield is due to a reduction in the overhaul work of the Royal Australian Air Force there. We found that 25 men were surplus. We have been able to place quite a number of them. At the moment, sixteen are unplaced, but we are hopeful that four of these will be placed in positions which, although not comparable with the positions that they held, will provide them with a slightly lower wage. It is a matter for them to determine whether they will accept these positions. I would indicate to the House that there is no intention whatever to close the departmental factories at Parafield.

page 646

QUESTION

DIPLOMATIC RELATIONS WITH RUSSIA

Mr CASH:
STIRLING, WESTERN AUSTRALIA

– I preface my question to the Treasurer by saying that the maintenance of a diplomatic mission in Russia for the ten-year period from 1944 to 1954 involved Australia in an expenditure of over £500,000. Does the Treasurer agree with me, having regard to the rapidly increasing cost of living in Russia, that should diplomatic relations be resumed with the Soviet Union, the Treasury would need to spend for this purpose during the next ten years over £1,000,000?

Mr HAROLD HOLT:
LP

– The honorable member has based his question on a supposition. I think that he can be assured that in any matters of this kind the Treasury will exercise its normal vigilance to ensure that no greater financial provision is made than it is felt that the circumstances, and importance of the occasion, warrant.

page 646

QUESTION

TELEPHONE SERVICES

Mr STEWART:
LANG, NEW SOUTH WALES

– My question is directed to the Postmaster-General. In answer to a question asked last week by the honorable member for Barton regarding the basis on which telephone services are converted to duplex services, he said, in part -

The basis is that no duplex service is installed in a case where there is a calling rate which averages more than about two calls a day.

I ask the Minister whether “ about two calls a day “ is an elastic phrase which can be stretched to suit departmental inclinations or whether it means that any subscriber with more than two calls a day will not have an exclusive service converted to duplex. Does the department take into account the calling rate of all exclusive telephones within reasonable proximity o£ the new. service and convert to duplex, services the exclusive telephones with the lowest calling rate?

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

– The honorable member has quoted my reply of last week correctly. I said that a calling rate of about two a day was taken- as the yardstick for measuring the possibility of converting from- exclusive to duplex services. The honorable member wants to’ know whether a- person who had a- calling rate of more than- two calls was not likely to be changed over to a duplex system. I carefully said, “ about two calls- a day “; that is, round about that figure. If somebody had ten or fifteen calls a- day, that would not- be “ about two- calls- a day “, but two and a half calls probably woul’d be considered inthai) category I1 refuse to be tied up by the honorable member on that particular figure..

The honorable member also referred to the calling rate of exclusive services already existing which might be transferred to duplex. As to the Last part of his question, in such conditions other factors are taken into consideration such as the availability of cables, the closeness and the amount of work which would be entailed in transferring an already existing exclusive service to a duplex service and factors like that. Certainly, if there were a number of exclusive services reasonably adjacent to the service it was desired to provide, the exclusive service which had. the lowest calling rate would be the one chosen, but some other factors apply as well.

page 647

QUESTION

GANNET AIRCRAFT

Mr STOKES:
MARIBYRNONG, VICTORIA

– I: address: a question to the Minister for Air representing the Minister for Civil Aviation. It is supplementary to the question that was asked by the honorable member for Calare. I refer to the suggestion that X-rays should be used to test the tail assemblies of- the Gannet aircraft. Will the Minister inform the. House whether there has been an. increase in the safety factor in the commercial aviation field from the. use of X-ray,, particularly in checking the propellers of the Viscount series?

Mr TOWNLEY:
LP

– I think the question would! be better on the notice-paper- so’ that it could be referred- to- my colleague in’ another place. The question is quite technical and an answer would’ involve, considerable: talk, on my part.. It would be answered most properly by the Minister in? charge of the Department, of Civil Aviation.

page 647

QUESTION

LEGISLATIVE COUNCIL FOR THE. NORTHERN TERRITORY

Mr NELSON:
NORTHERN TERRITORY, NORTHERN TERRITORY

– Has the Minister for Territories given any thought to the shocked reaction of the residents of the Northern Territory when they learn that the Government’s proposals concerning the reform of the Legislative Council consist of creating a council of eight elected members, seven Governmentnominated official members, and three Government-nominated non-official members who- will owe their- position1 on the Council- to Government patronage?. Does the Minister seriously contend that a council of” eight elected members as against ten Government-nominated’ members represents an improvement over the present unsatisfactory position, and does- he think that in their present mood, the people of the north can be fobbed off by these paltry proposals when they have been led to believe that some worthwhile improvement would be made? Finally, is it a fact that the reaction of the Government parties was such that when the proposals were placed before them last week for approval, the Minister was forced to withdraw them pending further consideration?

Mr HASLUCK:
LP

– So far as I am aware, no legislation on this subject has been presented to the House up to the present moment.

page 647

QUESTION

AUSTRALIAN MILITARY FORCES

Mir:. BUCHANAN-.* - I wish to direct a. question’ to the Minister for. the Army. First, Mr. Speaker, may I ask your indulgence t® congratulate him - and the- Army - on the magnificent staging of “Operation Firepower “ which a few of us were privileged to enjoy at Puckapunyal last weekend?

Mr BUCHANAN:
MCMILLAN, VICTORIA

– The precision with which some 4,000 national service and Citizen Military Forces troops under a handful of regular officers-

Mr SPEAKER:

– Order! The honorable member should ask- his question.

Mr BUCHANAN:

– Will the Minister give approval to the Prince of Wales Light Horse Regiment, the tank corps which took part in the manoeuvres, having the honour to wear the emu plume which was so intimately identified with the Australian Light Horse in the First World War, and so preserve a tradition of which every true Australian is proud?

Mr CRAMER:
Minister for the Army · BENNELONG, NEW SOUTH WALES · LP

– Let me say first in reply to the honorable member that this is not a Dorothy Dix, and 1 thank him for his congratulations.

Mr Ward:

– Where is your feather?

Mr CRAMER:

– My only regret is that the honorable member for East Sydney did not attend the exercises. If he had he would have known something about the matter. I will give consideration to the suggestion that has been made by the honorable member for McMillan and give him an answer. I cannot go any further at this stage.

page 648

QUESTION

PARLIAMENT

Salaries of Members

Mr PETERS:
SCULLIN, VICTORIA

– Will the Prime Minister, in the interests of the community and in order to protect the reputations of honorable members from unjustifiable slurs, have published annually, in the Taxation Commissioner’s return, the incomes and the sources of income of all parliamentarians? Alternatively,, will the right honorable gentleman make the incomes and sources of income of all parliamentarians subject to audit and report by the Auditor-General?

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– Sir, the last thing that I would want to do would be to embarrass any honorable member in his no doubt frequent application to his bank manager for an increased overdraft. The answer to the question, therefore, is, “ No “.

page 648

QUESTION

DEPARTMENT OF DEFENCE

Mr FORBES:
BARKER, SOUTH AUSTRALIA

– My question is directed to the Minister for Defence. Can the Minister say how long the recently appointed Director-General of Inspection Services will take to complete his task of co-ordinating the inspection services of the three service departments and the Department of Supply? Is this co-ordination part of the general process of unifying the services provided by these four departments, as announced by the Government last year? Finally, can the Minister say what other progress has been made in this general direction?

Mr TOWNLEY:
LP

– The appointment of the Director-General of Inspection Services is a permanent one. In the departments of the Navy, Army and Air, and in the Department of Supply, quite a number of specialists were engaged on inspecting the great multiplicity of things that are bought for the services, such as ships, tanks, aircraft, clothing, furniture and many other things. Inspections had to be made at the time of purchase and sometimes during manufacture. The Government thought that a good deal of overlapping could be eliminated, and greater efficiency and saving in man-power achieved if the services were co-ordinated under one head. That change has taken place and is working very efficiently.

page 648

QUESTION

EDUCATION

Mr COPE:
WATSON, NEW SOUTH WALES

– Is the Prime Minister aware that election advertisements authorized by J. L. Carrick, of the Liberal party of Australia, outlining Mr. Morton’s policy speech, state that the Commonwealth will inquire into primary, secondary, and technical education? Is it a fact that the Prime Minister has already refused a request by Mr. Hawke, Premier of Western Australia, for such an inquiry?

Mr MENZIES:
LP

– A few days ago, I was asked a question about Mr. Hawke’s proposal and what I had said in relation to it. The statements that I have already made about that proposal still stand. I would desire not to be cross-examined about what appears in advertisements because, to tell the honorable member the complete truth, I very seldom read them.

page 648

QUESTION

PENSIONS

Mr WARD:

– 1 direct a question without notice to the Prime Minister. I should like to know whether it is a fact that in the course of an interview televised by all Australian television stations in November last, he stated that the Government hoped to go on with the good work of pensions when economic conditions improved. If so, in view of his claim during the last federal election campaign that Australia was at present enjoying unparalleled prosperity, will the Prime Minister state to what degree the position must further improve before it can be expected that pensions will be increased, and whether he expects to do anything along those lines in the next twelve months?

Mr MENZIES:
LP

– The honorable member is asking, in effect, for a preview of the next Budget. Since I have not had one myself, I can hardly give one to him.

page 649

QUESTION

NETHERLANDS

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES

– Does the Prime Minister know whether the attitude of the Netherlands Government towards West New Guinea will change as a result of the election in the Netherlands of which news was received during the week-end and which is likely to result in a change in the coalition government?

Mr MENZIES:
LP

– Frankly, I do not know; nor, I think, does anybody else know at this stage. I have seen the election figures but we are yet without any information as to whether the result will lead to a change in the policy of the Netherlands Government. Indeed, it is a process of some length to get a new government in the Netherlands. The process is not quite as swift as it is in our own country. If, at any time in the future, we ascertain anything on that matter I will be very glad, of course, to say something about it.

page 649

QUESTION

IMMIGRATION FROM AMERICA

Mr J R FRASER:
ALP

– Has the attention of the Minister for Immigration been drawn to a statement attributed to an American movie actress, Miss Anne Baxter, after her departure from Australia recently, that she expected a wave of immigration from the United States of America to this country? Can the Minister say whether this announcement was preceded by any close personal discussions or consultations with him or with any other member of the Cabinet? If some consultations took place, will the Minister announce the result of them to the House? If no consultations have been held, will the Minister seek, as early as possible, an opportunity to have close personal discussions with Miss Baxter on this important matter and ascertain what steps she would recommend to increase recruitment of American immigrants to this country?

Mr DOWNER:
Minister for Immigration · ANGAS, SOUTH AUSTRALIA · LP

– Ever since I have been a member of this House I have noticed that, quite understandably, honorable members have paid great attention to the points of view of actresses. The honorable member for the Australian Capital Territory, being a bachelor, probably is no exception.

Mr Calwell:

– He is in the last stages.

Mr DOWNER:

– So I understand. I thank my honorable friend for the suggestion that 1 have conversations, if no more, with Miss Baxter. I have seen the observation that she made about the possibilities of Australia, and all I can say is that if, between us, with the Government-

Mr Ward:

– Why are you wriggling?

Mr DOWNER:

– Let me put it this way, Sir, if it will satisfy my friend from East Sydney: If, by our joint efforts it is possible to attract a great degree of immigration from the United States, then certainly the Government would be able to claim that it is putting “ oomph “ into immigration.

page 649

QUESTION

HOBART WATERFRONT

Mr CAIRNS:
YARRA, VICTORIA

– Has the AttorneyGeneral had referred to him by the Prime Minister the question asked by the Deputy Leader of the Opposition last Wednesday concerning a statement by Mr. Justice Ashburner that two witnesses, Mr. and Mrs. Hursey, had sworn false evidence against a man named Gold? Is it a fact that Mr. and Mrs. Hursey did swear false evidence in this case? Were their interests being watched at that time by counsel? If so, who was the counsel? Has this counsel also appeared in another well-known case in Tasmania in which it has been alleged that perjury occurred? Finally, does the Government intend to examine the alleged false evidence given by the Hurseys with a view to prosecution, or is it the Government’s intention further to protect these two persons in view of their value to Liberal party propaganda?

Sir GARFIELD BARWICK:
Attorney-General · PARRAMATTA, NEW SOUTH WALES · LP

– Following the question asked by the Deputy Leader of the Opposition, I read the judgment of Mr. Justice Ashburner. The question before him was whether there was an assault by one Gold on Hursey on 4th December last. Gold denied this. He was disbelieved and His Honour said that he was a selfconfessed liar. His Honour found the assault proved. His Honour accepted the evidence of an independent witness who spoke :to what he saw .between 8 and 9 o’clock at night on a wharf or in a wharf shed. His Honour’s acceptance of this witness involved the acceptance of a description of the assault which placed -the assault outside the view of Mrs. Hursey. His “Honour then concluded, as a matter of reasoning, that as he believed the independent witness, it followed that Mrs. Hursey could not have seen the assault she described. His Honour reasoned from this that the evidence she and ‘her ‘husband ‘gave was false. This, o’f course, ‘His Honour was quite entitled -to do, though he did ‘not say he disbelieved these witnesses because of anything intrinsic to themselves or to their evidence.

I am quite sure, myself, that a prosecution of the -Hurseys for false swearing could not be launched, ought not to be -launched, and if launched would necessarily fail.

page 650

QUESTION

PARLIAMENT

Mr FOX:
HENTY, VICTORIA

– Has ‘the attention of the Prime Minister been directed to a report that the New Zealand Government intends to alter its parliamentary standing orders in such a manner as to declare unparliamentary certain words and expressions which are also frequently heard in this ‘Parliament? These words, though colourful, add nothing to the dignity -of this “Parliament. ‘If the right honorable gentleman has heard of these reports, will he give consideration to having the Standing Orders of this Parliament brought into line with the sentiments expressed by the New Zealand Government?

Mr MENZIES:
LP

– I have not heard of the index produced by the New Zealand Parliament, but I have been a little concerned about various aspects of debate in this House and about the constant need for preserving the dignity of Parliament. I have been particularly troubled by the most unwarrantable and scandalous attacks made on prominent citizens from the floor of this House, those .citizens having no opportunity to reply. I will give thought to this matter, and if I can begin to see any way of dealing with it which does not restrict the proper privilege of Parliament I will take the opportunity of suggesting a meeting of the Standing Orders -Committee.

page 650

QUESTION

TELEPHONE SERVICES

Mr GRIFFITHS:
SHORTLAND, NEW SOUTH WALES

– I ask the PostmasterGeneral whether anything is !being done to eliminate the almost constant daily delays of up to two hours that occur in the Newcastle trunk-line telephone exchange. Is it a fact that efficient service has been sacrificed for what is known as “ speed of answer “? If so, will the Minister have inquiries made to see that the people of Newcastle receive much better treatment when making trunk-line calls?

Mr DAVIDSON:
CP

– Quite recently the department has been taking action to improve certain aspects of the trunk-line services, particularly between Newcastle and Sydney and to one or two of the outlying exchanges from Newcastle. I think it was only within the last two or three days that I directed a letter to the honorable member - I will check on this and make sure of it - which indicated to him that, as a result of the action being taken by the department, there will be considerable improvement in trunk-line services from some parts of the Newcastle area to Sydney.

page 650

QUESTION

COMMONWEALTH-STATES FINANCIAL RELATIONS

Mr L R JOHNSON:
HUGHES, NEW SOUTH WALES

– Is it a fact that recently the Prime Minister claimed that existing ‘financial relations between the Commonwealth and States had proved a dismal failure? In view of the Prime Minister’s belated realization, of a fact which has been apparent to most people over a long period, will the right honorable gentleman indicate the manner in which it is intended to remedy the injustices being done to the States?

Mr MENZIES:
LP

– I must .ask the honorable member not to put these somewhat common-place phrases into my mouth - “ dismal failure “, and so on. My views on the problem of financial relations between the Commonwealth and the States have been expressed quite frequently and have, indeed, not varied very much. I called a special conference to discuss them only within the last fortnight and the discussion which occurred was, I think, felt by everybody present to be most valuable. There will be further discussions when once more we meet the Premiers in conference and in the Australian Loan -Council.

page 651

GOVERNOR-GENERAL’S SPEECH

Address-in-Reply: Presentation- to Governor-General’.

Mr SPEAKER:

– I inform the. House that the Address-in-Reply will be presented to His. Excellency the Governor-General at Government House at 5.15 p.m. to-morrow. 1 shall be glad, if the mover and seconder of it, together with as many other honorable members as. can conveniently do so, will accompany me to present it.

page 651

QUESTION

AUSTRALIAN CAPITAL TERRITORY COMMITTEE

Mr SPEAKER:

– I wish to inform the House of the following appointments of senators and members to be members of the- Joint’ Committee on the Australian Capital Territory: -

Senators. McCallum, Vincent and Wood have been appointed by the Leader of the Government in the Senate, and Senators Armstrong and Tangney have been appointed by the Leader of the Opposition in that House.

Mr. Anderson and Mr. Howse have been appointed, by the Prime: Minister and Mr. Beazley and Mr. J. R. Fraser by the Leader of the Opposition: in. this: House.

page 651

LEAVE OF ABSENCE

Motion, (by Dr. Evatt) agreed to -

That leave of absence for one month be given to the honorable member for Cunningham (Mr. Kearney) on the ground of ill health.

page 651

WOOL

Mr SPEAKER (Hon John McLeay:
BOOTHBY, SOUTH AUSTRALIA
  1. have received a. letter from’, the honorable member for Lalor- (Mr. Pollard) proposing that1 a definite matter of urgent public importance be. submitted, to the House for discussion; namely -

The serious economic position of the Australian wool growing industry and- the urgent need for the application of a more efficient wool marketing system.

T call upon those members who approve of the proposed discussion to rise in their places. (More than the. number of members required by the Standing Orders having risen, in their, places) -

Suspension: of Standing. Orders

Motion (by Mr. Harold Holt) agreed to with’ the concurrence of- an- absolute majority of the members- of the House -

That so much of the Standing. Orders be suspended’ as would prevent the discussion being continued until- 6 p:m.

Mr POLLARD:
Lalor

– I have submitted this proposal to. the. House, for discussion because the wool-growers of Australia are passing through one of the most serious times, economically, that they have experienced’ over the past five or six years. In addition, I have submitted it because at the very point at which the- woolgrowers of this Commonwealth meet economic difficulties the whole nation likewise meets economic difficulties. In order to find out the seriousness of the position one need only call on any country storekeeper and’ ask him how he is faring. He will: say that things are not too good, that his book debts are increasing and that the volume of his business is decreasing..

J*ust as night follows day, the decrease- in the country storekeeper’s volume of business is reflected” right through the manufacturing’ industries in the- cities - the industries that manufacture chemicals, agricultural machinery and other commodities that supply- the wants of the wool-growers. These difficulties extend right into every phase of Australia’s economic life. They finally affect the Commonwealth Government itself, and the Treasurer and’ the Government find themselves in serious economic difficulties.

Now, Sir,, let. us look at the situation that confronts us as a nation. In his recent Budget the honorable Treasurer, Sir Arthur Fadden-, had: to budget for a deficit of £1’1’0,000,000- a figure almost exactly equalled by the estimated fall’ in Australia’s export income from wool in the last twelve months. That is to say, had’ it not been for the fall in the price of wool in the last twelve months the Treasurer could have balanced the1 Budget. Instead, he- has to have1 recourse to national credit, and there is circulating in the community now, in this financial” year, an amount of not less’ than £1-10, 000; 000: of printed money which’,, in days gone by, would’ have been referred’ to as- a fiduciary note issue. Of- course, according’ to’ supporters of the present’ Government, when they were in opposition, that is a most serious and most dangerous state of affairs.

In addition, our overseas trade balances are seriously threatened. They are depleted by some hundreds of millions of pounds compared to a few years ago, and the Government has had recourse to import licensing as an economic measure designed to keep our trade balances as sound and secure as possible.

It can be truly said that most of these difficulties flow from the very serious fall in the income of Australia’s wool-growers. The position will be highlighted, of course, when the wool-growers’ tax assessments go out during the next financial year. The difficulty is accentuated by the fact that, whilst it is true that both the Commonwealth Government and the State governments are proud that there have been huge overseas investments in Australia - which, overall, I suppose, are of some economic benefit - some of the return from those investments will have to be repatriated to the country of origin of each investment. At the moment, taking America alone. America had invested, as at 1957, no less a sum than 600,000,000 dollars - in round figures £300,000,000 - in Australia, an investment which last year earned for the American investors £84,000,000, which was the equivalent of 14 per cent, on their investment. True, some of that return will be ploughed hack to promote further economic development in Australia, but ever and always, Mr. Speaker, eventually the profits of the American investor, the British investor, the German investor, or any other investor in Australia, must be repatriated to the source of the investment.

That brings us to the point where we have to ask ourselves, as members of the Labour party do, whether that very important source of our national income, the income from our annual wool clip, is what it ought to be. If it is not what it ought to be, why is it not? All the evidence tends to prove that the Australian wool-grower to-day is the victim not only of buying rings within Australia, but also of internationally organized buying rings.

He would be a foolish person who would suggest that in regard to the sale of its primary products this country could insulate itself entirely from world trends in prices, either upward or downward. But the plain fact remains that from time to time organizations of buyers are operating in this country and in the international sphere. Buyers organize themselves into tightly-knit groups to depress the prices of the products upon which Australia relies for her funds to buy goods from overseas. Although this trend has operated for from two to three years, the Government is negligent, apathetic, and almost unconscious of the fact that anything of this sort has happened. I propose to prove that in a few minutes, but before I do so, let me cite the figures that show where we are in the wool market. The National Council of Wool Selling Brokers of Australia states in its brochure that the average price of wool in 1956-57 was 78d. per lb.; in 1957-58, 67d.- a fall of lid.; and in 1958-59, 46d.- a further fall of 2 Id. These figures are all for periods of seven months. The total fall between 1956-57 and 1958-59 was 32d. per lb. When the figures are all finalized, it is estimated, moderately, that the national income will have been reduced this year, as a result of falling wool prices, by £110,000,000, if not £120,000,000 or as much as £132,000,000.

Let us have a look at what this will mean to the economy. In 1956-57, wool exports accounted for 44 per cent, of our national export income; in 1957-58, 45 per cent.; and in 1958-59, 37 per cent. Thus, there is a continuing reduction of the proportion that income from wool bears to national income. I know that the Government will say that there has been an increased sale of steel, and that metal exports of all sorts have increased. The Government will endeavour to hide the fact that the falling proportion that sales of wool bear to the national income is not the result of any increase in the exports of secondary products or of better prices for exports generally, but is the result of the manipulations, operations, and nefarious influences - I use the term in the organizational and not the personal sense - of those people who are commercially in a position to combine against the 90,000 wool growers of this country and so to depress their prices. In 1948-49 the average price of wool was about 44d. per lb. The cost of production then was only about half of the cost of production to-day, because in the last ten years inflation has resulted in the doubling of the cost of production of everything in Australia. So the wool-grower, in order to receive a return commensurate with the return he received from a reasonable price in 1948-49, would need to receive at least 88d. per lb., instead of 46d.

Let us have a look at the statistical position. Some people ask how Australian wool growers, supported by the Government, could ever hope to determine what price they shall obtain for their wool. I submit that they could play a very prominent part in determining what the outside world is to pay for their wool. South Africa, New Zealand, Australia, and the United Kingdom account for 1,800,000,000 lb. of the world’s wool production. The United States of America, the Argentine and Uruguay account for only 900,000,000 lb., so it is obvious that a combination of South Africa, New Zealand, the United Kingdom and Australia could determine very largely what they were to receive for their wool if they were efficiently and thoroughly organized. It may be said that the world does not want wool. That argument is completely discounted, notwithstanding endeavours to obscure the fact that in every year in the last 20 years Australia’s wool clip, with the exception of perhaps a handful of wool, has been absorbed into the markets of the world.

I am informed that I have only four minutes remaining in which to deal with one of the most important problems that has ever faced this Parliament. Now let us consider the Government’s attitude. The Government is completely indolent. As far back as 1955, this Labour Opposition was alert to the position. The honorable member for Grey (Mr. Russell) asked the Treasurer of the day, Sir Arthur Fadden, the reason for the fall in wool prices. The Treasurer facetiously said, “ The reason for the fall in the price of wool is obvious. Bidders are not bidding high enough.” Later, the honorable member for Darling (Mr. Clark) said-

Purchasing of Australian wool is getting into the hands of a small minority of four or five buying interests who are buying for various parts of the world. They are able to for-e down the prices of this product. So it is very important that the Government should do something.

The honorable member for Hume (Mr. Anderson) said, however -

The honorable member for Darling talked about selling wool. He said that under this Government the purchases of wool were falling into the hands of fewer buyers and that prices were being forced down. Thai is nonsense. Does the honorable member not know brokers are paid commission on value of sales? Does tva think they would try to bring prices down and so get a lower commission? This illustrates the foggy Labour thinking thai goes on the whole time. The wool sales are conducted by free auction and any possibility of lot splitting is very carefully watched by brokers and producers. The price of woo] is not affected.

Because of shortage of time I shall have to eliminate a lot of what I proposed to say but let us have a look at the facts. Combining to force down the price of wool is an age-old practice. The Government has said that there are no buying rings, no cartels and no lot splittings. It may interest the Minister for Primary Industry (Mr. Adermann) to know that as far back as 1948 a conference was held between the wool buyers of Australia, including Sir James McGregor, then Mr. McGregor - a member of the executive of the Australian Council of Wool Buyers and one of the foremost wool buyers - and myself as Minister for Commerce and Agriculture. Mr. McGregor, illustrating the inconvenience of country selling centres said, “ Recently I had occasion to go to Goulburn and I bought 150 bales of wool. I split it afterwards into eight lots to go to eight different countries.” The evidence before the New South Wales commission of inquiry into monopolies, lot splitting, and pies or buying rings, indicates quite clearly that it is a common practice in Australia for wool buyers to split lots and to combine together to prevent competition. The conservative section of the wool growers says, “We do not want any interference.”

Mr SPEAKER:

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

Mr MENZIES:
Prime Minister · Kooyong · LP

– As my friend, the honorable member for Lalor (Mr. Pollard), has realized - and I sympathize with him - fifteen minutes is a rather small time in which to deal with a matter of such great moment. Just as he had fifteen minutes, so have I, and I want to take up my time by stating as briefly as possible the view of the Government on the general problem. It cannot be done with elaboration.

I would have rather enjoyed having ten minutes in which to take up some of the debating points that my honorable friend : presented me with. I yield to the temptation -to mention one. I understood, at the time of the Budget debate, that the Opposition’s policy was that it did not matter a scrap whether you had ;a fall in export income, that what you needed to do was to use central bank credit, and that a deficit of £110,000;000 was open to criticism only because it was not a deficit of £220,000,000. But I am very glad to hear from my friend, who takes a more sensible view of this matter, that ‘he realizes, as we do, that it is the true export earnings of the country which afford the true foundation of our economy. And if the matter is so regarded, we .are on a great .deal of common ground,

The honorable .member points out - and I agree with him - -that the economic position of wool is vital to the .overall economy of Australia. J could not agree more than I do with that. Our -market for wool has a profound effect on our economy - for reasons that I need -not take up the time of honorable members in discussing. Similarly, of course, as -my friend agrees, the economic -position .of the world has a profound ‘effect on the market for wool. The 40 nf trouble that we- get into occasionally is in thinking that certain difficulties are perpetual, .whereas our experience indicates that they .are not. ‘5Ve have, for .example, seen a .very sharp fall in the price df ‘wool, and that gives nobody any pleasure. ;Tt continues to give the ‘Government a great deal of anxiety, and -I am able to say that more ti.ne is given to thought of that problem than is given perhaps to any other single problem that we have. One of the reasons for it, of course, is that there has been a recession in the United .States of America, there has been some pause in Europe, including Great Britain, and there nas been some pause in Japan. Though it is worth while reminding honorable members that, because of the trade treaty with Japan, that country has been in the wool market far more, under the arrangements then made, than she would otherwise have been. But for that treaty, the demand for wool would have been lower and the price would have fallen. It is just as well to remember that thing. But, just as an American recession, or a pause in Europe or in the Japanese economy, can have, and will have, .an effect .on the price of wool, so .recovery in those countries will have its effect on the price of wool.

I see no reason myself why we should be pessimistic about this matter in the long run, because the world’s population is increasing, standards of living are rising, the demand for wool - taking it over a period of five years - must increase, and we ourselves in Australia, as a result of a variety of measures, have stimulated production in terms of ‘both the quantity and the quality of wool. We are, whatever the fluctuations may be. the strongest wool-growing country in ‘the world. Therefore, Sir, lI say that while we face up to the -problems we must not over-exaggerate temporary events or events that -may turn out to be ‘temporary.

Mr Pollard:

– That is not of much solace to the man who is selling now.

Mr MENZIES:

– No, but we now have two particular .problems in this matter. One of .them is to increase the production of wool. As I say, I know about the competition of man-made fibres - :of artificial .fibres - and we have heard about that,a:great deal. The longer J -live, the more satisfied I am that if wool can meet the .market and be up in its production and, if possible, down in its costs, and if it .can be up with research and therefore able to offer a product of quality to the community, wool will beat these artificial fibres any time of day. All our experience has been ‘in that direction, and therefore the Government has, in effect, concentrated its mind on -three things. I will state them very hastily. First of all, let us increase the quantity of production of wool. In order to do that, you must improve farm economics. We have set out to do that by a variety of taxation measures, and in particular by the special depreciation allowances which have so dramatically encouraged farm housing, the improvement of plant, the improvement of fencing and water supplies, and the like. In the result, Mr. Speaker, the production of wool in Australia has, over a term, been increasing quite remarkably, and so has the sheep population. I will not take up time by quoting statistics, because honorable members who are interested in these .matters are very familiar with them.

In the second place, wool must be encouraged to meet the competition of other fibres, and that means research. It is perhaps very well worth while mentioning that the research fund which was established in 1957, and which is financed by a contribution of 2s. a bale by the growers and 4s. a bale by the Government, is already finding this year, and in years to come will find, no less than £1,600,000 as a research fund, which is being spent through such brilliant agencies as Commonwealth Scientific and Industrial Research Organization, the various State departments, and the various research bureaux - I need not elaborate them. What has been done is already quite remarkable. This is a practical way of dealing with the wool problem. We have seen the tackling of the problem of moth in wool, and the tackling of this problem of developing some method of making wool permanently creasing - a problem at which some people smiled at one stage, and which has been overcome by the Si-Ro-Set invention. I could mention a dozen of these things. They all have made a powerful contribution to the selling of wool and the establishing of wool in the world’s markets, and to the opening up of new markets for wool’s new products.

At the present time, of course, we have the International Wool Secretariat, which is financed, as to 62 per cent, of its funds, by the Australian Wool Bureau, which is a growers’ organization, and which, though not directly engaged in the selling of wool, is vastly concerned in promoting the idea of wool, knowledge of wool, and an understanding of how significant wool is in the world’s economy.

AH those things - and a dozen others that I could mention if I were not, like the honorable member for Lalor, under the eagle eye of Mr. Speaker, limited to fifteen minutes - represent a constructive and an active approach to improving wool production, and improving the capacity of wool not only to enter and retain the world’s markets but also to meet competitors on any ground. After all, if those things can be done, the demand for wool will itself, under the historic system in Australia, have its effect on the price of wool.

The only other matter that my friend opposite had just bare time to mention was the marketing of wool. We are very well aware, Sir, of the fact that, even at present, discussions are occurring and various views are being expressed about the desirability of departing from the traditional auction system - whether it should be varied or added to by some floor-price structure, and whether perhaps, as some people have suggested, it ought to give way to a system of mass purchase and appraisement. We are very well aware of all these proposals that have been made, but we also have a memory of some of these things.

In 1951, a proposal was made - and was powerfully advanced - for some floor-price scheme. It was advanced in circumstances in which Australia, South Africa and New Zealand, with the active co-operation of the United Kingdom, all were prepared to participate if, following our steady practice, the growers of the wool - who, after all, owned the wool - indicated that they wanted their wool handled in this way. At that time one of the organizations concerned was in favour of the scheme. The Graziers Federal Council of Australia was against it. I. think I am right in saying that the Graziers Association of New South Wales was against it. But a great campaign was carried on and the proposal was defeated by the wool-growers themselves, by four to one. This was at a time when Joint Organization proceeds were available and when there was a handsome prospective financial basis for such a scheme. All those financial circumstances are different, but we still maintain our attitude.

I do not want it to be thought that any government, including my own, would regard itself as bound to do something because somebody wants it done. But we do say this, and we put it with great precision: We are not prepared, as a government, to give definitive consideration to a proposal for marketing of wool which would vary the present system, unless we are satisfied that it receives the general support of the wool-growers themselves. If a change to such a scheme is in accordance with the general will of the wool-growers, then we will consider it. Honorable members will understand me when I say that even then it does not follow that we must accept it, because there may be other broad financial considerations’. The whole point is that we do not think the Government owns the products of the wool-growers.

We look with great pride on the history of the wool industry. The wool-growers of

Australia have, over generations, taken up the attitude that they do not want to be pushed around by governments. They like to handle their own affairs, and, in the result, wool has had such a history that it is now beyond all question the most vital industry in Australia, the most vital to the whole of our economic safety. We will not lightly discard the methods or the point of view that have produced these results. I am not, for one, prepared to say to the wool-growers who have produced this vast amount of wealth for Australia, “ You have grown the wool but I am now going to tell you how you should dispose of it “. That, of all matters, is a matter on which their voice is entitled to be heard.

The last thing I want to say is that one of the major organizations in the wool industry has just indicated to me that it feels that this problem cannot be fully examined in Australia, where we consume 10 per cent, of our wool. It believes that it must see what the position is in the other parts of the world, which buy 90 per cent, of our wool. This organization is, therefore, sending its president and secretary abroad to examine all aspects of the matter in the light of world trends and world developments. Until this delegation returns and makes its report, and we know what the organization’s views are, it would, in my opinion, be an act of impertinence on the part of the Government, except in the face of some overwhelming and sudden crisis such as a war, to say, “ We do not care what your views are; we know better than you do “.

In time of war, as has been demonstrated in the past, acquisitions and appraisements may be quite inevitable, and vast international bargains may be made, as I well know from my own experience. Our policy is that except in such circumstances this problem is one to be considered calmly, with a balanced view, and with the fullest consideration being given to the deliberately stated views and opinions of those who are producing this wonderful commodity. That, Sir, is our policy.

Mr SPEAKER:

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

Mr CLARK:
Darling

.- The issue before the House is the plight of the Australian wool industry and the urgent need for the adoption of a more efficient marketing system. That this plight is serious is shown, I think, by the remarks that have been made by the Prime Minister (Mr. Menzies) in this debate. The right honorable gentleman has given no indication that the Government intends to do anything to overcome the position in which the industry finds itself. He spoke of the historical background of the wool industry, and his speech was delivered in a rather interesting fashion, but he avoided the main point, which is the necessity for a more efficient marketing scheme. Last financial year the income from primary industries in this country slumped by about one-third, or by £180,000,000. Of this amount the drop in wool income represented about £150,000,000. This demonstrates the very great importance of the industry, and I believe that the Government could have done more towards maintaining a price for wool and stabilizing the wool industry. As a matter of fact I make the charge that the Government’s actions actually contributed to the fall in wool prices.

Honorable members will recall that some time ago in this Parliament I brought up the matter of interest charges on money used for the purchase of wool. I refer to wool for shipment overseas and wool bought on consignment. Interest rates were increased in the United Kingdom, and instead of adopting a policy of its own, the Australian Government followed the lead of the Bank of England and increased interest rates here from 5i per cent, to 8 per cent. This had the immediate effect of depressing the price of wool because it forced many small buyers out of the market and increased the cost of purchasing and holding wool. This made it undesirable for many people to hold stocks. The tendency then was to buy from hand to mouth rather than to buy and hold stocks of wool. This was brought about by increased interest rates.

I brought the matter up in the House and asked two questions of the Prime Minister, one in each of two successive weeks. He said he knew nothing about the matter. Finally we had a reply from the then Treasurer, Sir Arthur Fadden, to the effect that the action had been taken in keeping with the increase in interest rates overseas. Professor Copland, in a televised interview in Sydney, in the “ Meet the Press “ programme, stressed the point that Australia should not have increased interest rates on money used for the purchase of wool, but should, if anything, have reduced these interest rates, because it was in the interests of Australia to sell as much wool as possible, and to encourage people to continue to buy wool. This Government followed its old policy, as a result of which interest rates are increased here following any increase that occurs in England. I do not think that we should be influenced in this way. We are a primary producing country and we should do everything possible to encourage buyers to acquire money in this country for the purchase of wool. As a matter of fact, if we can increase our revenue by making money available by way of short-term loans, for the purchase of wool and other products, then we should make that money available. We should not be losing the invisible income represented by the interest to be paid for such short-term finance. There are other invisible incomes which we should also be receiving, such as the income from shipping freights. We should have our own shipping services and banking services, all bringing in extra revenue.

There is another way in which I think the Government has contributed to the fall in the price of wool, and certainly to the losses on sales of carbonized and scoured wool. The Minister for Labour and National Service (Mr. McMahon), who is now at the table, will remember that I made representations to him on behalf of certain Japanese who had approached me some considerable time ago with reference to the purchase of carbonised and scoured wool, tops and noyles in Australia. These men pointed out to me that the wool was treated better in Australia than in any other country, and they were anxious to buy Australian scoured wool, but that they found great difficulty in obtaining finance in Japan for the purchase of such wool, because about 30 per cent, for added charges was tacked on to the price of the wool. They could find money for the purchase of raw wool for treatment in their country, but it was more difficult to find money for the purchase of semi-treated wool.

They proposed that, if a small quota were made available to their establishment for the export to this country of goods of a type to be nominated by the Ministers - anything acceptable to this country, they said - they would buy ten times the value of wool and continue to buy carbonized wool in Australia. They further pointed out that if they could not obtain some reciprocal trade arrangement, they would have to cease buying carbonized wool and would become a competitor by treating wool for other countries. The Minister knows that that is a fact, because I put the case to him. He said he would approach the Department of Trade and endeavour to obtain an assurance that that department would meet their requirements. However, after a considerable time, the proposal was turned down and we have lost the sale of that carbonized wool. Many industries were working three shifts a day producing the wool, but now some of them have gone out of existence and others are working only one shift instead of three. Because of the lack of interest shown by the Minister we have lost a considerable business in carbonized wool and a good deal of it has gone to Japan.

I believe that the wool crisis is very important to Australia. “ Rydge’s Journal “, of February, 1959, pointed out that there has been no stability or confidence in the wool market since the rate of discount was raised by the Bank of England, and said1 that this, together with the tight credit policy adopted generally, heralded the commencement of the drastic drop in wool values. That confirms the point that I made about interest rates. The wool producers have to pay the prices set by the manufacturers of the products that they import. However, their own product is sold at auction and is knocked down to the highest bidder, and we know that many of these auctions are faked.

The honorable member for Lalor (Mr. Pollard) pointed out in the earlier part of his speech that the honorable member for Hume (Mr. Anderson) had said that J was putting a lot of hooey before the House in relation to the manipulation of wool sales in Sydney. However, evidence given before a commission on this subject has shown that what I said is correct. It is a very sorry state of affairs indeed that the wool industry is suffering as it is. Much of the wool offered to-day is subject to lotsplitting and forward selling. I believe that the wool-sellers are offering wool in lots that are too large. Many of the small buyers are not able to operate to-day because wool is offered in such large lots and they cannot find the finance to enable them to deal with it. Consequently, many of the small buyers have disappeared from the market.

There is another important factor in relation to this problem. A Mr. Stephen Kennedy, who attended the Australian military clothing conference, pointed out that wool was fast losing the market to synthetics in America. We know that the propaganda campaign being conducted in America by the synthetic interests is having a bad effect on wool. In addition to organizing a selling campaign- or a- marketing proposal, there must be some campaign organized-

Mr DEPUTY SPEAKER (Mr Bowden:
GIPPSLAND, VICTORIA

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

Mr MCMAHON:
Minister for Labour and National Service · Lowe · LP

– The Prime Minister (Mr. Menzies) has very clearly stated the principles that guide the Government when- it is considering the problems of the primary industries. Those principles apply as much to the wool industry as to the wheat, dried vine fruits and butter industries or any other primary industry that may require consideration. The Prime Minister has stated quite clearly that we do not wilfully interfere with the marketing of Australian primary products - I- am paraphrasing his words - we would not be prepared to give definitive consideration to a proposal for marketing wool unless we are sure that it is in the nation’s interests to do so, and that a majority of growers- - the wool-growers in this instance - are in favour of the Government considering a plan put to it. If the Government decided to negotiate or to co-operate with the growers, it would do so without any prior commitment as. to the fina! decision. In this case, we see clearly that the principles of the Government are based upon non-interference and upon letting the industry run its own affairs unless there is an overriding national interest and there is a request for us to negotiate or to- cooperate with the industry on the initiative of the industry. That is a clear position pod has- been the guiding principle of the Government sin«*e it has been in office.

I, like the Prime: Minister, regret that the time foi these urgency debates is short. Consequently, 1 must confine my statement to three problems. The first is the pervasive effect of a fall in the international price of wool. I say no more than that we- think wool is our greatest export industry and, therefore, whenever its price falls or,, perhaps, the quantity soldi falls, this Government must give the most careful consideration to what the implications or the pervasive effects may be. Despite the fact that there has- been a fall in our income from wool of something like £508,000,000 to £280,000,000 in three years, the economy is healthy and should remain so. The Government has, by its actions, been able to minimize the impact on the Australian economy. The only other matters that I can deal with quickly are these: First, is there evidence that an international buyers’ ring is able to combine to determine, very largely, the price of Australian wool?

Mr Pollard:

– Is the Minister dealing with the- local combine?

Mr McMAHON:

– The honorable member referred to an international combine.

Mr Pollard:

– I said local and international combines.

Mr McMAHON:

– Let me take, first, the international combines. I have not very much time. I leave aside the question of pies, because that relates to local combines and is now being dealt with by a commission sitting in Sydney, and I would not consider prejudging the issue. As to whether there is an international combine, I put it quite clearly that this depends on the definition. If a ring or an international combine is defined as a combine of large buyers, then, on the evidence given to the inquiry into the trade in wool being held by the New South Wales Industrial Commission, such a combine has not been found to exist in the northern selling centres. As I have said’, the existence of pies - that is, local buyer organizations - is being looked at by the commission-, but so far no international ring has been found to exist.

Mr Pollard:

– Would you say that-

Mr McMAHON:

– I am- terribly sorry, but 1 cannot debate this, matter across the table. You had your fifteen minutes; let me have my ten minutes.

The next question is why has the price ot wool fallen? This, I think, is where the examination by the Opposition should have begun. It should not have begun with the question of the auction system and whether it should be replaced or modified. The question should have been: What was the real reason for the fall in the price of wool? Many reasons are given. The first and the dominant reason is that the international consumption of wool has fallen. A worldwide fall in the demand for all commodities has taken place, and wool unfortunately fell a little further than other commodities did. So, Sir, instead of looking for defects in the system, we should have been looking at the real cause, and the real cause was that the consumers were not buying as much wool, or as much of other commodities, as they had been in previous years. If the honorable gentleman wanted to find a solution to the problem of price, he should not look at the selling system alone because, to be perfectly frank, it does not matter how perfect the system is; unless the demand of the consumers is high, you cannot expect prices to be high.

The real causes of the fall in the price of wool are: First, there has been a fall in demand and, secondly, there has been a battle with the consumers’ dollars as between synthetics and wool and woollen fabrics. I mention that because I am sure the honorable member for Lalor was looking at a mechanism rather than the cause of the present problem. Wool consumption has in fact fallen by about 14 per cent, in the first nine months of this financial year as compared with last year.

The next point to which I wish to address myself, because I think it is most important, is: What of the future of wool? Should we look at wool as though - and J believe its difficulties are temporary - its prospects are glum? Immediately, I make this statement: Wool is still the most magnificent of all the fibres and there are reasonable grounds for thinking that it will be able to compete with other fibres in the future provided there is not unfair competition, lt should be able to compete with artificial, fibres, and wool should be able to bring a better price in the next few years than it is doing at present.

Why do I come to that conclusion? First, there is a growing world population and we have to assume improvement in the standard of living in other countries of the world. Secondly, we think that with adequate research and promotion wool should be able to hold its place in competition with artificial fibres. The Prime Minister has mentioned what has been done in scientific research and sales promotion. The Australian Wool Bureau is handling the latter problem and I think that during the course of the last few months it has shown a degree of energy and enterprise that should be welcomed not only by this Parliament but also by the whole of the Australian people. Scientific research is taking up £1,600,000, and for the time being that is about as much as can be effectively spent on research activities.

But I have one other factor to mention about the prospects of wool. We think that production will increase in the future by something like 2 per cent, to 3 per cent, per annum. Sales of apparels are expected to increase by something like 4 per cent. So far from coming here and creating the impression that pies are spoiling the prospects of wool or that the prospects are bleak, we should be advertising the fact that wool has characteristics that cannot be duplicated by any single artificial fibre. You can get one artificial fibre to compete with wool in certain qualities, but you cannot get one artificial fibre that can compete in every way with wool.

I conclude by stating that there is no real evidence of an international wool ring. Secondly, if you want to effectively argue this problem, it is wise to look at it in terms of causes before you look to an alternative selling system. If the honorable member for Lalor had put forward an alternative system and said, “ Let us look at this alternative scheme “, it might have been different, but when you examine the alternative systems - whether it is a floor price scheme or acquisition appraisement - they all have faults. I conclude: In my opinion, the real remedy lies in correcting any faults that are found in the present auction system, such as a lot of splitting, rather than some radical move to destroy the system that has been so eminently successful in. as the honorable gentleman has said, selling every bale of wool that has ever been produced in Australia.

Mr. LUCHETTI (Macquarie) [4.91- - This is a most important matter because it affects not only the growers but the national economy. It is a matter which reaches deep into every home in Australia. The fall in the price of wool not only affects the man on the land but is a serious matter for every person in the community. It affects seriously those who are going on the land. It affects the ex-serviceman who wants to become established as a land settler. It affects the farmer who wants to improve his property with better fencing, better pastures, a water supply or new buildings. It is important to the man on marginal land and to the new settler who has been compelled to borrow. The price of wool is important also because of its effect on rural employment. That must be a matter of concern to every honorable member. It is also important when one contemplates the action of a past government and remembers the wool realization ramp of money taken from the country which was never returned to the country.

But apart from the broad issues of national income, the responsibility is on the Government to see that the growers are not robbed by restrictive practices. Surely, it is the responsibility of the Australian Government to see that the national income is returned to the nation unimpaired. Admissions of restrictive practices are being made at present. Conditions of the industry will not be judged by the words of the Minister for Labour and National Service (Mr. McMahon) to whose past statements I shall refer in a few moments. The position will be judged on the wool cheque that is received by the growers and on the national income. The Minister for Labour and National Service has made a few sweeping assertions. He remains as complacent to-day as he was when he was Minister for Primary Industry. He has read an opinion concerning an inquiry which is being held in New South Wales in relation to monopolies in the wool trade. The Minister has declared that there are no buyers’ pies. He has tried to convince the Parliament and the nation that the cause of the present trouble in the wool industry is that we are unable to sell our wool. The Minister should know that the wool that is being produced to-day is being sold and that there is no carry-over. There is greater produc tion of wool and it is all being sold, but are we getting the right price for our wool?

Let us examine some of the opinions that were expressed by the Minister for Labour and National Service when he was Minister for Primary Industry. These are reported in volume J 8 of “ Hansard “ of 1 1th March, 1958 at pages 135 and 136. In reply to the honorable member for Lalor (Mr. Pollard) who asked a question about buyers’ pies or cartels, the present Minister for Labour and National Service said -

I feel sure that this is a figment of the honorable gentleman’s imagination.

In view of what is taking place in New South Wales, and the sweeping statements that have been made at the inquiry there by witnesses on oath, the Minister should have a second thought on this matter. In any case, the Minister is singularly illinformed, or else he is doing his best to cover up the buyers who are exploiting the Australian wool-growers and, therefore, this nation. In replying to the questions asked by the honorable member for Lalor last year, the Minister was at great pains to excuse those concerned and to let them out of their responsibilities. He stated -

I feel sure that this is a figment of the honorable gentleman’s imagination. I have no evidence, and I have never heard it suggested, that buyers’ rings of any kind are operating in the Australian wool market. I feel reasonably confident that if they had been operating, that fact would have been brought to the attention of the Government, the department or myself.

The Minister added that nevertheless, knowing the honorable member’s great interest in this matter, he would ask the department to gather whatever facts it could, and that he would then be only too happy to discuss the matter with the honorable member for Lalor. In reply to the honorable member for Maranoa (Mr. Brimblecombe), on 26th March, 1958, the Minister said - 1 was not aware that overseas interests had made a statement that it was intended to operate a buyers’ ring in Australia during the current wool selling season; but, subsequent to a question being asked by the member for Lalor two weeks ago, I had comprehensive inquiries made by the Department of Primary Industry about the matter, and I am informed that there is no evidence to support the conclusion that a buyers’ cartel is operating in this country.

That answer was given by the present Minister for Labour and National Service, who at the time was Minister for Primary Industry. I exonerate the officers of the Department of Primary Industry, because invariably they bring forward reports sought by the Minister, and it is not surprising that such a report would be made known to the Minister.

The honorable member for Gwydir (Mr. Ian Allan) asked a question along similar lines regarding the sale of merinos to South Africa. There was evidence that our merinos were being sent out of this country, but the Minister for Primary Industry and the Government showed no great concern.

I should like to direct the attention of honorable members to some of the evidence given by Sir James McGregor before the inquiry into the Goulburn wool sales. Sir James said that prior to the inquiry he had never heard the term pies, but he commented that he was surprised to learn that five firms with which his firm had pie arrangements had bought 21.72 per cent, of the wool clip in 1957-58. Sir James was then shown a pamphlet issued by the buyers’ association, which stated that the purchase of only a few hundred bales of cheap wool could undermine the market. Of course, the Minister has said that there is no evidence of pies operating.

Another witness before the inquiry was Mr. Robert Radcliff Lewis, vice-chairman of the New South Wales and Queensland Woolbuyers Association. He admitted the existence of pies, and he also admitted that to some extent they restricted maximum buying competition. He said that pies

Would tend to restrict the price of wool offered in the market.

The instances that I have mentioned are only some of many that are available to the Minister. The Minister knows this. He knows that buyers from almost every buying house in the country have given evidence that restrictive trading practices are in operation, yet he comes into this House and, in a dishonorable manner, denies the existence of pies.

Mr McMahon:

– Mr Deputy Speaker, I take exception to the honorable member’s remark.

Mr LUCHETTI:
MACQUARIE, NEW SOUTH WALES

– I withdraw the remark.

Mr McMahon:

– I ask for a more emphatic withdrawal than one given with one’s foot on the desk. That is not satisfactory to me.

Mr DEPUTY SPEAKER:

– The honorable member will withdraw and apologize.

Mr LUCHETTI:

– I withdraw the remark and apologize. Mr. Lewis is on record as saying that pies exist, and that they depress the market.

Mr DEPUTY SPEAKER:

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

Mr DRUMMOND:
New England

– The House is discussing what is alleged to be the serious economic position of the woolgrowing industry and the need for a more efficient wool marketing system. I represent one of the greatest woolgrowing areas of Australia, situated on the northern tablelands. This area produces the greatest proportion of Australia’s highgrade merino wool, and I am sure that nobody in my position would deny for one moment that serious difficulties do confront the woolgrowing industry. But it is altogether an over-simplification of the problem to suggest, as honorable members opposite have, that the fault is entirely due, or largely due, to lack of efficiency in the wool marketing system.

Before I proceed to elaborate, I point out that certain aspects of this matter need clarifying. In the first place, the Graziers’ Association of New South Wales, which is a body that represents a large proportion of the wool growers in Australia, and particularly merino wool growers, has taken certain steps. On 19th November, 1958, the general council of the association resolved that the Australian Woolgrowers’ Council be requested to obtain an expert report on the auction system of wool marketing and on the factors affecting wool price trends, and to investigate and report on all proposals for altering the present wool marketing arrangements in Australia. On 24th November last, the Australian Woolgrowers’ Council wrote to the Federal Council of the Graziers’ Association, stating that consideration of proposals with regard to wool marketing was a function of the Australian Woolgrowers’ Council and that the resurgence of the demand for wool marketing arrangements was such that considerable priority should be given to the federal staff to work on that subject. The result was that Mr. Chislett, secretary of the Woolgrowers’ Council - a very knowledgable man - produced an extraordinarily fine, analytical and objective report. The Graziers’ Association and the Woolgrowers’ Council decided that Mr. Chislett and Mr. Wetherly, chairman of the Woolgrowers’ Council, should proceed abroad to investigate certain aspects of the matter with a view to ascertaining the causes operating against the successful marketing of wool in this country.

I wish to point out to honorable members that during the 1957-58 season, 3,117,036 bales of merino wool were sold, representing 73.2 per cent, of all types of wool sold. There were 1,109,589 bales of crossbred and British fleeces sold, representing 26 per cent, of the total sold. Rough fleeces accounted for 32,689 bales. Turning to the size of flocks, one finds that there are 44,806 holdings in Australia with flocks ranging from one sheep to 499 sheep. There are 28,776 holdings running between 500 and 999 sheep. This means that there are 73,582 holdings running less than 1,000 sheep. There are, therefore, 37,407 holdings running the bulk of the sheep in Australia, which last year amounted to about 139,000,000.

It any scheme of marketing is to be considered - and this matter is being investigated by the growers’ organizations at present - the factors that I have mentioned would have to be taken into consideration. The people with small flocks, which are mainly coarse wool sheep, and the people with the flocks that fetch high prices, are facing different problems to-day. Therefore, I say that there is a grave oversimplification in the wording of the proposal although I think that the honorable gentleman has done a service in opening up this question.

Here are a few of the factors which 7 think have entered into the present position: One factor, which I think is almost ignored! is that wool is, in the broad sense, practically an indestructible fibre. It is the only fibre I know that can be remanufactured many times, until, perhaps, only a little dust is left. So-called “ shoddy “ is mixed with virgin wool. Consequently, given a few years of peace, wool begins to kill its own market in that way. I do not think that there has been enough research into the impact of that factor because the figures with which we are supplied are always in terms of virgin wool.

Let me give the House, briefly, a few of the thoughts that occur to me: I think that the gross return from the sale of wool is not so important as the amount that is left after the producer has paid the production expenses. The community has been passing through easy street and it has ignored the impact that rail freights have had on the transport of wool and sheep. Other important transport costs are those in respect of fertilizer, building materials for use on properties, salt concentrates, general supplies and machinery. Wages generally, particularly those of shearers have risen. I am not suggesting that shearers and other workers are being paid too much, but I am suggesting that their wages are factors in the cost of wool. Other costs that have risen include those of sheep dips, licks, drenching chemicals, fertiliser, and spare parts. Local government rates have risen and in New South Wales the State has plastered the man on the land with the land tax which the Commonwealth Government dropped. Those are all factors in the cost of wool. Their merit or demerit does not matter at the present time.

Let us consider the position of the producers who have to sell because they are faced with financial responsibilities. As the honorable member for Lalor mentioned, twenty or more years ago the wheat-grower had to throw his wheat on the market. If he was a small man he had to break the market for the wealthier man, or undermine it, and the speculator and the operator benefited. We have overcome that difficulty. I am not suggesting that that is the matter that has to be taken up now, but I do suggest that in a period of declining prices it is necessary to examine financial arrangements to see whether those arrangements are forcing men to sell their wool on terms which undermine the major market. What is the best system of marketing? The auction system has served this country extraordinarily well. It is a remarkable system under which an enormous amount of good is done by co-operation.

Mr DEPUTY SPEAKER:

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

Mr CLAREY:
Bendigo

.- I think that the honorable member for Lalor (Mr. Pollard) has done a very wise thing in bringing forward for discussion this very important question of wool income and the general problem of wool sales at the present moment. Like other honorable members, I stress that wool plays a very important part in Australian economic life. The fact that, in the last eighteen months, the fall in the value of wool has been nearly £200,000,000 gives some indication of how the instability of wool prices can very seriously affect the economic life of Australia. On an occasion such as this, it is possible for us briefly to analyse the position of the wool industry and to see whether it is possible to find some way of remedying or improving the position.

The first thing that one finds in looking at the history of the wool trade is that this commodity is subject to very sharp price fluctuations. During the last eight or nine years, on one occasion the price of wool rose to the fantastic average of 144d. per lb. Now, on sales up to 28th February last, the average price of wool is 46d. In a complicated and complex manufacturing and technical world such as we have at the present moment, any commodity that is subject to sharp fluctuations of that description will cause difficulties for the manufacturers who use it; it will cause difficulties for the people who grow it, because of the uncertainty of income; and it will cause difficulties for the community as a whole because of its effect upon economic life. Therefore, we have to try to see the position as it is to-day and find the causes for the fluctuations in world demand.

The Minister for Labour and National Service (Mr. McMahon) has suggested, in this debate, that the increasing world population, together with a prospect of improvement in living standards, indicate a more rosy future for the wool industry. But I point out that living standards have been tending to increase in all countries for some years, and that in some countries they have increased substantially. In addition, the world population has been increasing in a most pronounced manner during the last ten to fifteen years. In those circumstances, one would expect the price of a fibre such as wool which, as has rightly been pointed out, has a quality unequalled by any other fibre whether naturally grown or man-made, to rise. Yet the price of wool has not risen! At the present time, it is falling.

It has already been pointed out that under our system of auction, in the main, we dispose of our clip each year. In the countries in which the system of auction has been adopted, generally speaking, at the end of each year the total wool produced tends to be sold. Stocks are not unduly high at the end of the season. In Australia, perhaps a few thousand bales may not be sold. The stocks carried by manufacturers, generally, are sufficient to carry over for two or three months. In those circumstances, one would think that, as wool came on to the market, its price would not fall but might well increase.

I point out to the House that other factors are operating to which due consideration must be given. The two principal fibres used in textile production 30 years ago or even less were cotton and wool, but during the intervening years there has been a tendency for man-made fibres to be widely manufactured. Their variety is very great, and they are used for many purposes. Do not let us run away with the idea that the progress that has been made in the creation of man-made fibres is now at an end. The firms which are engaged in the production of these fibres are spending millions of dollars in experimentation, either to improve their fibres or to produce new fibres. From now onwards we have to face the position that, in addition to competition from the natural fibre cotton, there will be an evergrowing tendency for man-made fibres to be produced which, in many cases, will take the place of wool. Whether it will be effective is another matter, but it will take the place of wool and will, in addition, be used for some things such as parachutes and articles of that description for which wool is not used.

The very great danger to the wool industry in Australia is the variability and fluctuation of price which make wool, from the manufacturer’s stand-point, a very difficult commodity to handle profitably. When we investigate the prices being paid for manmade fibres we find that the price is regular. Statistics show a very small variation in the price of rayon, nylon and the various derivatives from nylon. Mr. R. J. Webster, the chairman of the well-known firm of

Felt & Textiles of Australia Limited, said to be the biggest buyer of Australian wool, warned that because of fluctuating wool prices no woollen manufacturer would buy wool if another fibre could be substituted.

So we come to this question: If manufacturers are beginning to become hesitant and somewhat apprehensive over the varying prices of wool, how can we overcome that difficulty? One suggestion is an investigation of the whole position. Another is to see whether the auction system under presentday conditions gives the wool producer the same valuable service which it gave 30, 40, 50 or 60 years ago. We should try to ascertain whether under our modern system of auctioning practices do creep in which enable buyers to combine in order to buy cheaply.

A wool promotion scheme is not the answer in itself because the promotion of wider uses of wool will be subject to the same difficulties to manufactures as are now caused by variations in the price of wool. We have to consider two or three different things. In addition to a floor price system in New Zealand and South Africa we should look at the system of guaranteed prices in operation in the United States and the United Kingdom. If prices continue to fall we might have to do the same as was done by the late William Morris Hughes in 1921 and determine that wool shall not leave Australia unless a certain minimum price has been paid for it. These are the things we have to do to protect the producers and the economy of Australia.

I hope that, as a consequence of this debate, the whole question will be looked at, not from the stand-point of the prejudices we have in favour of a system or of any bias we have to this thing or that, but in the light of conditions operating in this modern world so that we might find some system or method that will give stability of wool prices and, consequently, a stability to those who are interested in wool use.

Mr DEPUTY SPEAKER:

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

Mr FAIRBAIRN:
Farrer

.- One thing which both sides seem to have in common in this debate is that they realize the serious effect the fall in wool prices has had on the economy. As speakers on this side of the chamber have already pointed out, this effect has been really remarkable in that it has been much less severe than might have been expected. A similar fall in prices in the 1929-30 era was responsible for a very considerable amount of unemployment and completely upset the economy of Australia. Recently, although there has been a sharp decline in prices the economy still seems to be very buoyant.

This is due partly, no doubt, to the way in which the Government has handled the special accounts and also to the fact that we now have a great number of secondary industries. As a result there has been a lot of cushioning in the economy. But the outlook of the Australian Labour party appears to be that the whole of this fall in wool prices is a plot or, to use a favorite expression of the Leader of the Opposition (Dr. Evatt), a conspiracy against the woolgrowers, and that it is not related in any way to supply and demand. Honorable members opposite suggest that all that is necessary is to find a new method of marketing and the price of wool will be bumped up. Although they have not mentioned a figure no doubt they would suggest an increase of 50 per cent, would be achieved.

Arguments like that are fallacious. Many members of the Opposition such as the honorable members for Bendigo (Mr. Clarey), Macquarie (Mr. Luchetti) and Lalor (Mr. Pollard) have all said that all the wool is being sold at auction. That is not so, because considerable stocks are carried over, and that is one of the major reasons for the fall in price. The stocks carried throughout the world to-day are 50 per cent, greater than they were twelve months ago. Argentina and Uruguay have 145,000,000 lb. of clean wool on hand. In New Zealand and South Africa where they have a floor price scheme, 18,000,000 lb. of clean wool is in stock. Between this year and last the normal carry-over of wool in Australia, New Zealand and South Africa increased by 36,000,000 lb. In Europe there is a large stock of tops amounting to something like 171,000,000 lb. These stocks of wool have prevented the operation of the natural supply and demand in the market. I understand that they are gradually being reduced, particularly of tops in Europe, and as a result the price is improving and the demand is increasing. I believe that the Japanese have recently been given a very large buying order which will allow the purchase of about 500,000 bales of Australian wool before 30th June. This must improve the demand and raise prices.

The reason for this drop in the price of wool is not the system of marketing. In the first place it is attributable to the large stocks on hand. Secondly, the demand for wool, generally, has slackened by 14 per cent, in the last twelve months. Thirdly, there has been a general recession throughout the world. But wool is not the only commodity the price of which has dropped, although the fall in wool price has been more than the average fall in the prices of other commodities. In the case of copper, however, the price has dropped more than has the price of wool. This is in keeping with a world-wide fluctuation in prices. Lastly, we must not forget that there has been an increase in the use of man-made fibres, particularly in the United States of America. I have previously pointed out to honorable members that in this year alone at least five new types of man-made fibres will be in strong competition with wool, in addition to the number already competing.

Further, the Commonwealth Government has no marketing authority. It does not own the wool and unless the grower asks the Government to introduce a marketing scheme it has no authority to introduce one. Honorable members opposite are inclined to forget that fact. They say the Government should introduce a marketing scheme to restore the economy. But the wool is the property of the growers. The wool industry is most efficient and unless the growers approach the Government and ask for a scheme the Government has no right or authority to introduce one. One of the great difficulties is to decide whether the growers want a scheme. One of the growers’ organizations has approached the Government and asked for the introduction of a floor price scheme. Another organization, which claims to represent the majority of the wool produced in Australia, has said that at present it does not feel that major alterations in wool marketing in Australia are necessary. It was agreeable to some minor alterations, but not major ones. Another organization, the Australian Primary Producers’ Union, has not, so far as I know, come to any decision on an Australia-wide basis. I understand that, in fact, its regional conference in New South Wales decided that its members did not want any alteration at the present moment.

As the Prime Minister pointed out, on the last occasion when such a scheme as we are now discussing was submitted, it was defeated by 63,000 to 16,000 votes. Has there been any change since that time? The only change has been in the price of wool, which has dropped. Possibly people think that since the growers are getting less to-day for their commodity they might be more inclined to agree to the scheme than they were before. On a previous occasion, we had funds with which to start the scheme; to-day, we would have to obtain funds from somewhere and the only source would be a levy on wool. On a previous occasion, a li per cent, levy on wool would have brought in £50,000,000 in one year. I think that to-day we would have to impose a 7i per cent, levy over three years in order to obtain sufficient capital funds for the introduction of a floor price scheme.

In my opinion there are five ways in which the return to the wool-grower can be increased. The first is, more efficiency on the farm. The second is, research into improving the demand for wool. In this field the Commonwealth Scientific and Industrial Research Organization has done, and is doing, a magnificent job. Only last week, it was announced that the organization was showing for the first time drip-dry material made of wool. The third way in which the return to the grower can be improved lies in publicity and promotion. The fourth way lies in the conclusion of trade agreements, and the fifth in marketing alterations. I am convinced that of all these, the one that would be least effective in improving the wool-grower’s income is alteration in the marketing system.

There are all sorts of marketing possibilities in the open auction system at present operating. They include open auction; open auction combined with futures trading; open auction with a floor price scheme, which might give an increased return to the grower when the price is low, but with a tendency for returns to level off in the long run; and appraisement and acquisition by the Government, as during the war. Unfortunately, there is no time in this debate to go into the details of all these;, but I want to say that the Government is seised of the importance of studying, the wool industry. We have a Government members’ committee which has been studying the problem. Only last week,, the committee was addressed by the chairman of the Australian Wool Bureau, Mr. Gunn, who made the recommendation I have mentioned. We have also had with us Mr. McKay of the Division of Agricultural. Economics, Mr. Weatherly, chairman of the Australian Woolgrowers’ Council and Mr. Waterman, a government member on the Australian Wool Bureau. We are seised of the necessity to do everything, we can to improve wool use. Our committee intends to make certain recommendations. I had hoped to mention some of them, but there is no time in which to do so. I hope that the Opposition will realize the necessity of doing first things first.

Mr DEPUTY SPEAKER:

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

Mr CLAY:
St. George

.- My desire to say something upon the subject of Australia’s greatest export commodity arises from my personal knowledge of the working people in the textile industry and of those who’ own, or manage, the various mills which process the wool from the time it arrives at the scouring plant until it appears in knitted, matted or woven form in the households of the Australian people, or is worn by them. I have a deep personal concern with the welfare or otherwise of the woollen industry. There are too many lives connected with its welfare, directly and indirectly, for this subject to be treated Otherwise than with the utmost seriousness.

I desire to deal, first, with those whose livelihood depends directly upon the prosperity that derives from the need for this natural fibre which, despite any claims to the contrary, is still superior to any manmade fibre. In regard to this point, I should like to issue a warning to Australians who might buy, and wear, suits made of a mixture of wool and terylene. A person wearing such a suit and seated, perhaps in a public conveyance, next to a smoker, may have cause for regret, because a spark falling on the suit would immediately make a hole in it. Even if the hole were no bigger than a matchhead the wearer would have to pay about £2 10s. to have it mended..

I said that wool is still superior to any man-made fibre; but I would not be so bold as to- declare that science will never produce a fibre better than, or equal to, wool’. At the moment, however, and for the faresseeable future, there is no comparable substitute in sight. Here we have a situation, of which we should be taking the utmost advantage, not only in the interests of the Australian manufacturers, and their scores of thousands of employees, but also in the interests of the woolgrowers themselves..

I may say, Mr. Deputy Speaker, that I have played no small part in the negotiation of industrial agreements whereby the labour cost of textiles was: fixed for periods of three years or more in advance, and I ana very pleased to be able to say that these agreements were honored faithfully by both sides. It must have been a. great consolation to the entrepreneurs of the textile industry to know with certainty that here was a known factor which they could take into their calculations with’ the utmost confidence when budgeting for each year’s expenditure. The executives responsible for the budgeting were prepared to pit their skill and experience against the uncertainty of public fancy in. the fashion world. They were prepared,, likewise, to attempt to estimate the quantity of public demand. Unless you. have lived and breathed in- the atmosphere, of the textile industry you can never sufficiently appreciate the enormous effort that goes into the production of a single garment. But of all the factors involved, the most critical is the price of wool.

T meet and converse with many of our manufacturers, both large and small, in the woollen trade, and inevitably the price of wool becomes the centrepiece of the conversation. Quality is never mentioned, because here there is no room for complaint. The methods used in the handling and processing of wool are such as to merit the highest praise, and compare more than favorably with the handling and processing of wool anywhere in the world. It is only the price of the raw wool which keeps the woollen trade in an almost perpetual state of apprehension, and is forcing manufacturers, against their will, to turn to the less satisfactory substitutes provided by the industrial chemists, the prices of which are stable.

When the price of wool rose spectacularly in 1949, the rise was immediately followed by a sharp increase in the prices of woollen goods. This presented a situation which caused no great fear in the minds of manufacturers, however, because they could still buy in advance without the fear that they were taking any risks. Today, on the other hand, there is not one solitary manufacturer who will buy wool it he can possibly avoid doing so. One and all, they express the desire to use wool, for at least two reasons. One is that it is the best fibre, and the other is that this country’s prosperity is still pegged to wool.

I believe that the time has come when the Government must intervene, no matter whom it pleases or displeases. It cannot be denied, and it certainly cannot be concealed, that there is at work a conspiracy on the part of the major wool buyers to force down the price, from a purely mercenary motive. When one comes to think of it, it is a wonder that the plot was not hatched years before. I do not know whether this coalition government can make up its mind on what steps should be taken, but it is crystal clear that the time is rotten ripe for action.

Mr Forbes:

– What action?

Mr CLAY:

– I shall come to that. The world still wants our wool, but we cannot continue to supply it at its present price and keep Australia prosperous. If we are not to yield a victory to the conspiracy of the major buyers, the Government must enter the auction ring itself as a bidder for our own wool or, as an alternative, set about some method of price fixation. The hours are slipping by and the situation continues to deteriorate. There is less likelihood now of a major war than there has been for many years. A major war would, of course, as we know, send the price of wool soaring again, but I thank God that there is no likelihood of that in the immediate or foreseeable future. I have suggested two forms of action, and I hope that ‘there are others, but for heaven’s sake let us start doing something. Let us abandon our Micawberlike attitude of waiting for something to turn up, or finessing with purely speculative and feeble palliatives.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– In this matter the honorable member for St. George (Mr. Clay), unlike some of his colleagues, has at least been bold enough to suggest two courses of action which he thinks should be taken. One of these is that the Government should itself enter the market under the free auction system and start bidding for wool. The honorable member said that if this action did not have sufficient effect, the Government should impose a fixed price for wool. If honorable members opposite seriously support action of that kind, I can assure them that such proposals will keep them in the Opposition benches in perpetuity, because one of the things that is worrying the wool-growing industry at the present time is the difficulty of putting forward some proposal which will lead to stability in the world price of wool, while at the same time making it impossible for any government to interfere with the wool industry and with the functions of the wool market. That presents one of the fundamental problems of this industry and one which, I am sure, is giving many people in it a great deal of concern at the present time.

The honorable member for Bendigo (Mr. Clarey) made the point that unstable prices for wool lead to great economic difficulty. That is quite obviously true. It leads to difficulty for governments and for individuals, but it should be remembered that the overseas reserves that we now have in the United Kingdom and which have been built up by careful husbandry on the part of this Government have been earned very largely by the wool industry. So if there are times when the wool industry brings great difficulty on the Australian economy because of low prices, it must also be admitted that the overseas reserves which are earned by the industry do give the people of Australia and the Australian Government some latitude and freedom of action within the limits of those reserves. No other industry has contributed to our overseas reserves to anything like the same extent.

The honorable member for Lalor (Mr. Pollard) implied - I think that I am paraphrasing him correctly - that since all of the Australian clip, except for the normal end-of-year carry-over, has been absorbed during the year, there is an adequate demand for wool and therefore we can jack up the price of wool to some level which he did not mention. I point out that in countries where the free auction system does not operate, for instance, in New Zealand, South Africa, Uruguay and the Argentine, and where there has been considerable government interference of one kind of another in the sale of wool, there are, because of present circumstances, very large unsold stocks of producers’ wool. The presence of those stocks in those four countries is one of the factors that has caused the depressed market, especially over the last few months.

There are several causes of unsatisfactory wool prices. Some of them are important. Some of them are not so important and are of doubtful effect. But the most important, I believe, is the general recession overseas, especially in the United States of America and in certain countries of Europe. A very important aspect is that of promotion, which has been poorly carried out in the past, but 1 believe that we shall see great changes in the promotional field and that this matter will be well looked after in the future. Synthetics and tariffs must have some effect. Marketing may have an effect, but I am not prepared to admit that it has a considerable effect, having regard to the fact that in South Africa and New Zealand, where floor price schemes have operated, the percentage fall in the price of wool in the last six months has been markedly greater than the percentage fall in Australia, where there is a free market system. The American tariff of 25 cents per lb. on wool imported to the Unted States cannot but have an adverse effect on the wool industry as a whole. Indeed, I am told that it is killing the wool and sheep industry in the United States of America. That is not something which is under the control of this Government.

The Prime Minister (Mr. Menzies) traversed the history of this matter. He said that the Government had been prepared to accept a scheme, and had gone so far as to put forward fairly detailed proposals and argue before 28 countries that the scheme would be a fair one for the world buyers of our wool. Then, somewhere along the line, some woolgrowers got the idea that they did not want the scheme or any scheme, and 80 per cent, of those who voted voted against the scheme. The Government’s policy, quite clearly, is that if the growers want a scheme, it is prepared to examine the scheme and see whether it is practicable. But surely, in the light of past events, the Government would want very considerable evidence that the growers were not going to change their minds again and, after appearing in largemeasure to support the scheme, to throw it out by a four to one majority. For instance, how many growers have asked* themselves whether they are prepared, in present circumstances, to pay 5 per cent, or Ti per cent, annually for two, three, or four years, or for whatever period is necessary for the building up of a revolving fund to finance some sort of floor price scheme? That would be a levy, on present prices, of £4 or £5 a bale. Have many growers asked themselves whether they are prepared to make that payment? I should think that the Government would want some evidence along those lines.

However, it is quite clear that the wool industry is giving a great deal of attention to this matter of marketing and wool problems in general. The Australian Wool and Meat Producers Federation has put forward a plan. The Australian Woof Growers Council has already brought out one very able report, and two of its representatives are going abroad to examine, first, the effect of the futures market and the possible benefits that may come to the industry from its operation, and secondly, the effect of fluctuating prices on the textile industry and overseas manufacturers. There is a great deal of evidence about the effect of these things inside Australia. We are not quite so sure what kind of effect they have in the markets overseas. Furthermore, within a month or two, there will be a report on the Goulburn activities. This, again, will have to be examined when it is available. Presumably, when all this information is .available, the industry will come to some decision on it, and I have no doubt that if it wants action by the Government it will put up its own proposals, which the Government will be able to examine for itself. I hope, further, that the industry “will not ignore possible improvements that could, and I believe should, be made in the present auction system - improvements that I believe would go a long way towards solving the present troubles in the marketing of wool.

The most serious of these troubles is that, for three months of the year, people cannot buy wool, because wool sales close down. This means that merchants and firms in general have to carry much larger stocks than they should have to carry. As a result, they are liable to greater loss, owing to changed market conditions at the opening of the next sales. This cessation of sales for three months is really a carry-over from the horse-and-buggy days, before the advent of air transport, when communication with Europe was difficult and buyers had to return there to consult with their principals. To-day, that lapse of sales for three months is completely out of date.

There is another specific feature of these auction sales which I think should be done ;away with, and that is re-offering. Wool auctions are the only ones that I know of anywhere in the world in respect of which the buyer is allowed to come along within a prescribed time and say, in effect, “ I am sorry, Mr. Auctioneer. I made a mistake. That lot has to go up for auction again.” Buyers of stock and buyers of land cannot do this, but a buyer of wool can do it. It is something that should be altered.

Mr CAIRNS:
Yarra

.- The debate so far has revealed pretty clearly that the Government’s attitude, as has been indicated by the Prime Minister (Mr. Menzies) and the Minister for Labour and National Service (Mr. McMahon), is that wool-selling shall be left alone unless there is some overriding interest which requires the contrary. The Government, of course, says now that there is no such overriding interest. But the Government is not objective, academic or detached in arriving at this view. It believes in leaving things to private profitmaking enterprise, because such enterprise makes much more that way, whatever may be the effects on the rest of the community. It is the philosophy of the Government - if one can call it that - to leave things alone for this reason. So the Government is not quite detached and not quite academic when it states the proposition as lt has done. The position that the Opposition takes up, on the other hand, is that, in reaching a decision on this matter, the interests of the community as a whole, and not just the interests of the wool industry or the wool buyers, should be considered. The Opposition says, as it was put by the honorable member for Lalor (Mr. Pollard), that there is an overriding interest at the present time requiring that action be taken in this matter.

The reasons that we have put before the House for taking this view are, first of all, that price pies or combines are operating in the wool market. When this matter was first raised by the Opposition last year, the present Minister for Labour and National Service, who was then Minister for Primary Industry, and other Government speakers, said that there was nothing in it and there was no evidence that any price combines or pies were operating in the wool market. However, when the New South Wales Government instituted an inquiry into this matter, it was quickly revealed that there was plenty of evidence of the existence of such combines.

I want to make one point about the inquiry in New South Wales. It has been undertaken by the Industrial Commission of New South Wales, which is confined to evidence of activities in that State alone. Most of these combines in the market are interstate, and some are international, in their ramifications, and the Industrial Commission of New South Wales is not capable of following them through. Therefore, we say that there is reason for the Commonwealth to act in the matter in order to see what is the position of these combines.

The second reason that the Opposition puts forward to indicate the overriding interest of the community which requires action in this matter is that wool prices are the main cause of economic instability in Australia - instability of both rising prices and falling prices. But the growers are all right in all circumstances. Most woolgrowers are pretty well off, even when prices are low. Perhaps they have to go down to the Chevrolet level from the Cadillac level, but they are still pretty well off, even when prices are low, and they are quite satisfied to be left alone in this way. However, that is not the position of the rest of the community. As evidence of that,

I shall quote the words of Sir Arthur Fadden, the former Treasurer, who was at the time plain Mr. Fadden. He anticipated the possible evil and damage that instability in wool prices would cause, and, in his Budget speech in 1950, he said -

This rise in wool prices will add to our international reserves . . .

He went on to say that, to that extent, it would be a good thing. Then he said -

The internal consequences, however, could be very disruptive unless firmly controlled. To make a further great addition to the volume of purchasing power, not matched by an equivalent quantity of additional goods, would increase competition for available supplies and divert resources still further from developmental activities into less essential uses. This would tend to disperse and weaken the national effort at a time when it should be more and more concentrated. Moreover, there would be direct effects on the cost of living because of higher prices for clothing and meat and this in turn would lead to higher wage costs throughout the whole economy.

Sir Arthur Fadden correctly saw there that this wool boom would be behind the whole inflationary pressure in Australia. He correctly saw that it was not wage increases that would cause inflation, but that it was this primary increase in wool prices, and that, following upon its effect on the prices of food and clothing, there would be a secondary round of wage increases. So instability, Mr. Deputy Speaker, does not affect only the wool-growers, and this matter must not be considered only from the stand-point of the wool-growers. The wool-growers are important, for they contribute to our international reserves. But they do not manufacture goods, build houses or educate people in Australia. Of course, they have their importance, but they are not in a supreme position, and when we are considering whether anything should be done in this matter we must go further. We must realize that, in effect, the wool industry and its instabilities and fluctuations are behind the possible instability of the Australian economy as a whole.

These fluctuations in wool prices have been most dramatic indeed. In 1949-50, the index stood at 480. Tn the next year, it rose to 999 - an increase of 1 08 per cent, in one year. Then it fell to 564 - a fall of more than 40 per cent. Tn the next year, it was 616 - a rise of 9 per cent. In 1953-54, it was stable at 615. and that is the only time that it has been stable in the years since World War II. In 1954-55, it was 538 - a decline of 12 per cent. Then it increased by 14 per cent, in the following year, and in the year after that by 26 per cent. This instability is behind the whole instability of the Australian economy.

What can be done about this? The first thing that becomes apparent is that this kind of instability cannot be dealt with by banking policy alone. The Prime Minister, earlier in the debate, as is his habit, created an argument which he said was the argument of the Australian Labour party. Being expert at creating arguments in order to facilitate his own destruction of them, he excelled himself in this instance. The Labour party has not put forward, in this debate or at any other time, the suggestionthat it is completely unconcerned about the level of exports. We say that the level of exports must be stabilized as much as it can be stabilized, and that then central bank policy must be used in order to deal with the situation. But we know that central bank policy cannot deal with the situation unless there is some stability in the export situation itself. Dr. Coombs, in his R. C. Mills Memorial Lecture, has shown pretty clearly that the existing banking machinery is quite helpless in the present situation. Mr. Deputy Speaker, thequestion that then arises is: What can be done in this situation? The answer given by the Minister for Labour and National Service was that fluctuations in exports occur, and that nothing can be done about them. Of course fluctuations occur, and the Opposition recognizes this. But we say we must take steps to ensure that these fluctuations are modified as much as possible.

We contend that the sellers of wool in Australia must be placed on a similar basis of combination and monopoly as are those who are forming combinations and monopolies in the buying of wool. The position must be equalized in this respect. We suggest also that before we can say what should be done there must be some comprehensive inquiry by this Government to discover what the situation in regard towool marketing really is. On two occasions in our history marketing schemes haveoperated and strengthened and stabilized the national economy. They have saved this country on those occasions from some considerable measure of disaster. The first of those schemes was referred to by the chairman of the British Australian Wool Realization Association, Sir John Higgins, in this way -

The matter of wool stabilization has been mentioned, and it was treated by a section of the shareholders present in rather a humorous way.

It was treated in the same way by speakers on the Government side of this chamber this afternoon. Sir John Higgins went on -

I am going to spoil, probably, a reputation by becoming a prognosticator. I say wool can be stabilized. I say it most unhesitatingly. I do not wish to take up any more wool schemes, but when one realized the debacle which has occurred of late and the importance of the wool industry to Australia, one must sink personal convenience and do what one is able to do for his country.

On another occasion Sir John Higgins said -

When, it became known to the world wool trade that wool stocks were firmly held and were not to be sacrificed the market steadily improved.

Wool marketing proposals have been put to the growers a couple of times. On the first occasion, 74 per cent, voted in favour of such a scheme, only 1 per cent, less than what was needed for its implementation. On the second occasion when the matter was put before the growers the Government had imposed1 a 20 per cent, wool sales deduction tax, and some of the leading woolgrowers conducted a . campaign, saying that if the proposed scheme was accepted the tax would become permanent.

Mr DEPUTY SPEAKER (Mr Lucock:
LYNE, NEW SOUTH WALES

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

Mr TURNBULL:
Mallee

.- At the outset let me read to honorable members the terms of the matter of urgent public importance proposed for discussion by the honorable member for Lalor (Mr. Pollard). They are as follows: -

The serious economic position of the Australian wool growing industry and the urgent need for the application of a more efficient wool marketing system.

Those are very plain terms. The first part refers to the serious economic position of the Australian wool growing industry. Everybody agrees that the wool industry is in a fairly serious economic position, owing to the drop in the price of wool and the high level of prices generally obtaining in Australia. The next matter, referred to by the honorable member was “the urgent need for the application of a more efficient woolmarketing system”. I think we all agree that we should have the best possible marketing system that can be introduced. We can continue to improve our marketing methods year after year and so achieve the most efficient system.

The honorable member for Lalor was. fairly modest in his remarks and comments. He did not make any suggestions. He said that the wool growing industry is in a. serious economic position, but I listened very carefully to his speech, and he did not tell us what he thought would be the best method of improving the wool-marketing, system-. Some of his colleagues did make certain suggestions, and I want to refer to them.

The next speaker on the Opposition side was the honorable member for Darling (Mr. Clark). He said that not very long ago he had suggested that if we accepted a quota of Japanese goods, the Japanese would buy a certain amount of our wool. Fancy the honorable member for Darling saying that, when the Opposition had, fairly recently, proposed for discussion, as a matter of urgent public importance, the Japanese trade agreement, and had condemned it roundly. Every honorable member on theOpposition side condemned that agreement except the honorable member for Lalor, who was overseas. Of course honorable members know the story that I have been telling - and it is quite true - that when the honorable member came back to Australia he said to his colleagues, “Keep off thisJapanese trade agreement”. They have kept off it. They have not said a word about it since. But the views expressed by the honorable member for Darling this afternoon were quite contrary to those he expressed at that earlier time.

Then we come to the honorable member for Macquarie (Mr. Luchetti). He said the woolgrowers remember the money grab by the Government. This was referred to also by the honorable member for Yarra (Mr. Cairns), who, however, did. not go quite as far as the honorable member for Macquarie. They were both referring, of course, to the Wool Sales Deduction Act. The honorable member for Macquarie said that the money was never repaid to the: wool-growers.

Mr Luchetti:

– I said “ the people in the country “. Keep to my words.

Mr TURNBULL:

– All right, I will. The honorable member said the money was never repaid to the people in the country. That means the wool-growers, because they are the people in the country from whom, according to the honorable member, the money was withheld. It amounts to the same thing, and it is only a technical point that the honorable member has raised. The wool-growers are the people in the country, and he said that the money was never repaid to them. He was hoping to get some paltry political advantage out of this debate on a matter which is so serious that we should treat it on its merits. Every one knows that the woolgrower got back the total amount of the money that was held. The honorable member for Lalor can continue to interject, but he knows that what I am saying is perfectly true.

The honorable member for Macquarie then made some remark about the dishonesty of the present Minister for Labour and National Service (Mr. McMahon) at the time when he was Minister for Primary Industry. When the honorable member was called upon by Mr. Deputy Speaker to apologize, he did so straight away. I could not help thinking of the story of World War I. concerning the Kaiser and the scrap of paper. The Kaiser said, “ One can always apologize.” The honorable member took advantage of the opportunity, just as the Kaiser did.

The honorable member for Lalor referred in his speech to certain matters not encompassed by his motion. He spoke of the £300,000,000 of American investment in Australia. After all, this investment is creating a great deal of employment here. At the end of last week Dandenong, in Victoria, was proclaimed a city, and it is in the Dandenong district that a good deal of this American investment is centered. These matters are of vital importance to Australia. However, in the short time at our disposal in this debate we must try to decide what should be done with regard to the matter before us. The honorable member for St. George (Mr. Clay) has suggested that the Government must intervene. He said the Government must enter the wool auction rooms and bid for wool. Any one who knows anything about auctions would know that the way to spoil an auction is to go in and bid for and buy in the commodities being auctioned. The moment you start to buy goods in you spoil the auction.

The Prime Minister (Mr. Menzies) made the position very clear. He said that the fundamental principle is that the goods produced by primary producers, whether those goods be wool, dried fruits, wheat, barley or anything else, belong to the people who produced them. When we consider stabilization schemes we find that the wheat stabilization scheme was not implemented until it was agreed to by the wheat-growers. At the present time I must say that the wool-growers are not agreed on anything in this respect. I have some newspaper statements which I could read to the House. One of them, which appeared in the “ Victorian Wheat and Wool-grower “ of 6th March, 1959, is to this effect -

The recent Australian Wool-growers’ Council decision to delay consideration of the need for a Floor Price in the wool auction system should not be regarded as the last word.

Certain wool-growers’ organizations have suggested that we should continue with the auction system; others say that we should abolish it and introduce an appraisement system. The important point is, as was pointed out by the Prime Minister, that if the wool-growers decide that they want some special scheme introduced for the sale of wool, and submit the proposal to the Government, then the Government, knowing all the ramifications of this great industry and their effect upon Australia’s economy, will give the proposal careful consideration. The Prime Minister added that there may be some other relevant factors that will prevent the adoption of the proposed system, but that it would, nevertheless, be given full consideration because of the vital importance of the matter.

The honorable member for Lalor said that certain people are forming groups or cartels for the purpose of buying wool and then dividing it up between themselves. Other honorable members have made similar remarks. If wool buyers are doing that, they must be dividing it overseas. No one has said how it can be stopped. In

Victoria, a law prevents the splitting of lots at auction sales of stock. If I bought 1,000 sheep in the market, I could not give three people 250 sheep each and take 250 for myself. But nothing in the wide world can prevent me from taking those sheep out of the stockyard, 300 or 400 yards down the road and giving three people 250 sheep each and keeping 250 for myself. The law can only prevent lots being split inside the market and booked accordingly; it cannot prevent them from being split outside.

The important thing that we must do to-day is to see whether we can get a more buoyant demand for wool. I was pleased to see that in last Saturday’s Melbourne “Sun”, the Australian Wool Bureau had five pages of advertisements for wool products. I was not very pleased with the way some fashions were depicted, but nevertheless it is apparent that the Wool Bureau realizes that we must have more advertising. During the Address-in-Reply debate, I pointed out that, for every £100 income from synthetics, £3 6s. is spent on publicity and promotion, but the amount spent on wool is only 6s. 4d. for every £100 of wool income. So, the manufacturers of synthetics are spending ten times as much on publicity as the producers of wool and the Government are spending. I make one suggestion to-day, not only to the Government but also to the wool-growers: It is that the growers contribute 10s. a bale and ask the Government to match it with another 10s., so that £1 a bale would be available for world-wide publicity.

Mr DEPUTY SPEAKER:

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

Mr THOMPSON:
Port Adelaide

– I am sure that this debate has been worth while. I point out, however, that the honorable member for Lalor (Mr. Pollard) did not suggest that we should do something specific. He merely raised for discussion the serious economic position of the Australian woolgrowing industry and the urgent need for the application of a more efficient wool marketing system. The honorable member for Mallee (Mr. Turnbull) stated that the honorable member for Lalor had not made any concrete proposal, and drew the inference that there was no need to have a discussion and that there was no need for a more efficient wool marketing system. Yet he showed newspaper advertisements which are intended to increase the sale of wool and the use of wool!

Mr Turnbull:

– I did not say that.

Mr THOMPSON:

– Well, the honorable member contended that we had not suggested what should be done; but I tell him that we sought to do no more than bring this matter forward for discussion. The honorable member revealed clearly in his remarks that he is not altogether happy with the present marketing system. He is not altogether sure that the wool-growers are getting the best price for their wool. That is the subject that we are discussing this afternoon. We want to make it clear that something more than has been done should be done to promote the use of wool and to obtain a better price for it.

We on this side of the House contend that the Australian market is being increasingly dominated by overseas interests. I think that is in the mind of the honorable member for Lalor. We want the best price for our wool, but the contention is that we are not getting the true value of the wool. Overseas buyers put their heads together, as it were, and decide that the price of wool will not go above a certain figure. Newspaper reports of wool sales show very clearly that the buyers do put their heads together and decide what will be paid for wool. On the same day, wool may be sold in Adelaide and in Brisbane, and the reports show that the prices vary by the same amount in both places. The buyer in Brisbane knows what will be paid for wool sold in Adelaide. If he does not, the price will not vary by the same amount in both places. We contend that something more than has been done should be done.

The remarks of the Prime Minister (Mr. Menzies) support our attitude in raising this matter to-day. He said that a woolgrowers’ organization has sent two of its officials overseas to inquire into the marketing system. We have heard comments on the suggestion of some wool-growers that there should be a floor price for wool. This system has been tried in South Africa. We are told by some that it is satisfactory and by others that we must wait for some time to see whether it will be a success. Evidently the views of wool-growers in South

Africa and those marketing the wool there must be very much in accord with the arguments of the honorable member for Lalor that the present system in Australia, which previously obtained in South Africa, does not give the best results. It may prove in the end that the South African is not a success, but we do not know. However, the bulk of the wool-growers there decided to try the floor price system.

Years ago, when we spoke about a wheat board controlling the selling price of wheat, there were objections even in this House. I remember the Minister for Social Services (Mr. Roberton), before he was a Minister, objecting very strongly to any one saying how these commodities should be sold. He said that the produce belonged to the grower and the grower had a perfect right to do as he wished with it. However, we know that in the interests of the growers and of the community as a whole, certain procedures must be laid down and the producer cannot do as he likes with his produce to the detriment of others in the same industry. That is the suggestion that we make to-day in relation to the wool industry. I do not say that the system of a floor price should be adopted here. I do not know that that would be correct, but I do say that the matter should be fully investigated and a decision arrived at. I hope that when we receive a report from the men who have gone overseas for the woolgrowers’ organization, we will get a little more enlightenment than we have had.

I have stated before that I am afraid that this country will suffer very severely because of the influence of overseas interests who have invested money here. I do not mind these people lending us money which can be paid back, but I say that when they invest money here, take away large earnings and still have to be repaid, our wool cheque will not be as useful as it should be. These matters are all bound up with the price of wool. Honorable members on the Government side continually tell us that we depend on wool for our prosperity, and we know that to a considerable extent that is so.

However, the big mistake in the wool industry was that, when the price of wool rose, no provision was made to control the price of land. The present cost of production of wool is based largely on the high prices that were paid several years ago for land. Because wool was bringing high prices seven or eight years ago, land values rose and that is an important factor in the present economy of the woolgrowing industry. That situation will remain unchanged so long as supporters of the Government, who are opposed to the Australian Labour party’s policy, stick to their freedom to allow prices to range where they will whether it be for produce or land. In effect, they say, “ Let prices rise! Posterity can carry the burden “.

When supporters of the Government say that wool is being sold at 56d. per lb. and costs 58d. to produce, what is the basis of that cost of production? A lot of it resulted from the high valuation of land when the price of wool was up. The honorable member for Lalor has said that we want stability. We do not want the price of wool to rise and cause inflation in the prices of everything else and then to fall by 50 per cent, or more as has happened in the past. We want a stable system.

Mr DEPUTY SPEAKER:

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

Mr MACKINNON:
Corangamite

– I do not think any honorable member will argue against the premises on which the honorable member for Lalor (Mr. Pollard) introduced this matter into the House; that is, the great importance of the wool industry to .Australia and the economy of our country, and the effect on every feature of our national life if the industry suffers any setbacks. But all honorable members on the Government side of the House feel that the medicine that has been suggested by the honorable member for Port Adelaide (Mr. Thompson) is not very palatable. He hinted that the existing world-tested auction system should be scrapped. Honorable members on this side of the House feel that that is an experiment we should not rush into without very serious consideration. In the first place, I feel myself -that the arguments that have been submitted by the honorable member for Lalor are based on suspicion. They are based on an atmosphere suggesting that the growers are being taken down. That suspicion requires examination, but I would suggest that any argument or proposition which draws its force from a feeling of suspicion is one which we should treat with the utmost care before we reach a decision.

There is no doubt in my mind that lot splitting exists, but it is difficult to determine to what extent it affects the actual overall price of Australian wool. It is obvious that if restricted, it cannot have any serious effect. The poorest example that could be cited by the honorable member for Lalor was that of McGregor buying at Goulburn 150 bales of wool which were dispatched to eight clients overseas. To my mind, that does not come within the true meaning of lot splitting. I regard that as a normal function of buying where a man has many overseas clients and fulfils orders for them. If the honorable member cannot get a better example we should think carefully before we reach a decision on lot splitting. I suggest to him that he and I might go to a sheep sale and see a suitable line of wethers or ewes. As the honorable member for Mallee (Mr. Turnbull) has said, in such a case the honorable member for Lalor might know that I want some of that Stock, and he wants some as well. We would be very tempted to get our heads together before the sale, although I do not say that we would do so. That is a human idea.

Several honorable members have referred to the Goulburn inquiry. Again, I would suggest that we should adopt care and have considerable reservations in considering the findings of that inquiry because the whole concept of the inquiry was based on a feeling of hostility over the actions of the buyers in boycotting the Goulburn wool sales. Against that background, one would be tempted to consider the findings with reservations. The subject that is before the House is much wider and relates to an organization of buyers, so extensive as to defeat the system of a true auction. Reference has been made particularly to the buyers. When buyers are working for principals overseas, they are buying on reserves which are given them by telephone or cable. It is no advantage to them to have a falling price because mostly they are buying on commission. They would like to see the prices rise because that means more commission for them. Again, psychologically, no buyer gets many marks if he has bought wool early and then finds the market falling so that he could buy more cheaply in a month’s time. Unless some extraordinary circumstances arise, the buyer himself has a vested interest in seeing that prices rise or at least stay stable. Again, the woolbroker is vitally concerned because his main income is derived from commission. The woolbrokers are vitally interested in seeing that the price of wool goes up or at least remains steady. Any reduction in prices naturally affects their returns immediately.

However, I do believe that in an industry of such importance as the wool industry, there is always a period when we should examine existing conditions. I do not think anybody could possibly deny that such a time arrives when the wool-growers in a falling market believe that they should be getting more money. Therefore, the Government has been wise in encouraging the various growers’ organizations to examine the position. The Australian Woolgrowers Council, the senior organization concerned with the price of wool, is despatching senior personnel overseas to examine certain features of wool selling operations and the wool market generally. Certain other woolgrowers’ organizations have made other suggestions. I think it would be completely wrong for the Government to adopt the attitude that it will make recommendations which it will submit to the growers’ organizations. At the same time, it is obviously the responsibility of the Government to make available to the growers’ organizations the very wide fund of knowledge which is obtainable through various departments in the Public Service and which would assist the organization concerned to reach finality.

The points that have occurred to me and which I would like to summarize briefly are these: First, the instability of prices is obviously having a vast effect on the confidence of manufacturers, retailers and the public generally in their attitude to products of the wool industry. That is probably one of the most important matters that requires examination. How can we overcome this instability of prices? Secondly, mention has been made of an examination of an extension of the wool futures market so that prices can be geared! throughout the selling season to the year’s operations. Thirdly, reference has been made to the desirability of a continuous selling season. I think that has tremendous advantages. I think that could prevent the violent fluctuations that take place between the closing of the May-June period and the opening of the August sales. Under present conditions there is no need for overseas buyers to require months to return to their principals. Air transport is so fast these days that the old reason for the hiatus in wool selling no longer exists. The Government should examine this matter very closely to see whether the wool selling season could be continuous.

My other point concerns the individual grower and his unavoidable costs of production. Many of these costs are beyond his control. Provided that he is normally efficient and knows what he is doing - is using the best sheep under good conditions - he can do something towards lowering his costs of production, but certain unavoidable costs are largely in the hands of governments. The honorable member for New England (Mr. Drummond) mentioned the incidence of certain government impositions on the industry. In the past, the wool industry has generally been regarded in the same light as the goose that laid the golden egg. Shire rates, land taxes, death duties and other taxes all impose a burden on the wool industry, and governments must take heed of this. If they do not, one of the most productive industries in Australia will be stifled.

Mr Pollard:

– What about the cost of petrol, oil, and fertilisers?

Mr MACKINNON:

– They have an effect on the wool-grower, and freights also, which are controlled by governments. Superphosphate is one of the few things that have come down in price.

The average price of wool to-day, low as it is compared with previous years, is still four times higher than the price received before the war, but rising costs of production have made woolgrowing less profitable.

Mr DALY:
Grayndler

.- The Parliament is indebted to-day to the honorable member for Lalor (Mr. Pollard) for having brought to its attention the very serious position existing in the wool industry. Supporters of the Government parties have to-day defended a system that is destroying not only our economy, but the wool industry also. The honorable member for Lalor pointed out - and this has been accepted by honorable members on both sides of the House - that buying rings exist in Australia to-day. Some of those rings are organized internally and others on an international basis. It is a disgraceful state of affairs that a negligent and complacent government should have allowed buying rings to exist for a number of years. It was left to the New South Wales Labour Government to institute a judicial inquiry, which has brought to light certain practices that many honorable members would not have believed existed. The honorable member for Mallee (Mr. Turnbull) is one who has seen the light.

At this stage I think I should clear up the popular conception amongst growers of what is a wool buyer. The popular conception of a wool buyer is a man who comes from Bradford, Boston, or Tokyo and personally attends the sales, wildly gesticulating and bidding competitively against other persons desirous of buying our wool. Sir James McGregor and other people have stated frankly that this practice no longer exists in Australia to any extent. Generally, wool buyers hold commissions to buy within specific limits. Possibly they also buy on their own account, and sell advantageously when the opportunity presents itself. The heavy fall in wool prices in the last few years has created the suspicion that the operations of wool buyers are a substantial factor affecting the price of wool. Overseas merchants fix the price at which they will buy, and that price is substantially below the cost of production.

Woolgrowers should be aware that in Australia to-day there are fewer than 200 wool buyers, skilled in every device to buy cheaply. They operate under the pie system and in buyers’ rings. They go in for lotsplitting, and they operate internationally. The result is that, except in exceptional circumstances, buyers are winning all along the line. These buyers are skilled in propaganda and the use of the press. They have, in addition, the support of people like honorable members opposite, who continually seek to reduce the wages of the workers while at the same time seeking to protect the people responsible for this state of affairs.

The judicial inquiry set up in New South Wales heard evidence from Mr. H. Paterson, chairman of the New South Wales and Queensland Wool Buyers Association. He said, as reported in “ Muster “, “ that by not competing for wool and getting it through pies, buyers could obtain their requirements for less than if there were a free auction system “. In addition, Sir James McGregor, one of the big monopoly wool buyers in this country, has admitted that he operates through the pie system. The other buyers will not move against him because they fear that they will be expelled from the ring, and will not be able to enter into competition for wool.

These things are happening. It has been established, according to the honorable member for Lalor, that Australia’s loss of export income last year amounts to £110,000,000. The average loss on wool in the last year, because of the operation of the rings, is 32d. per lb. The Labour party has put forward proposals to correct this situation.

I am interested in the attitude of the honorable member for Mallee. Not long ago in this House, when Opposition members suggested that the price of wool might fall, the honorable member said -

But if the Government puts into effect, as Labour would do, a floor price for wool without consent of growers, that would be an act of socialism of the worst order.

Yet the Government that he supports has, without the consent of importers, imposed a severe form of import restrictions. Has not the Government which the honorable member supports by indulging in the most extravagant imposition of import controls indulged in socialism? On these matters the Government is begging the question. What does it intend to do? Wool has fallen in price, but the community has not benefited from that fall. Suits and woollen clothing are just as highly priced to-day as they were at the height of the wool boom. The buying rings that exist in the wool industry to-day are having a tremendous effect not only on individuals in the industry, but also on the economy.

Quite a few things could be done about this matter. Many constructive suggestions have been put forward from this side of the House. Very few constructive suggestions have emanated from the Government side of the House, because honorable members opposite are too concerned with protecting the wool buyers - Sir James McGregor and his kind - who operate the woolbuying combines. Government supporters would rather protect these people than take an interest in the people who need their protection, namely, the woolgrowers, particularly the smaller ones who urgently need assistance.

In anticipation of a favorable growers’ market, the Government should consider conferring with the governments of South Africa, New Zealand and the United Kingdom, with a view to introducing a scheme similar to the one that was introduced in 1950, and which everybody agrees was a very successful scheme. I refer to the joint organization scheme. It made a huge profit and protected the growers and the economy. What would be wrong with such a move in this hour of crisis? Why does not the Government consider a proposal such as that to give some protection to the wool industry? The Government might also consider taking some action along the lines taken by the late W. M. Hughes in 1921. He put into operation a customs regulation preventing the export of wool at below the cost of production. Immediately, the buyers “ came to the party “ and prices improved.

I have before me a copy of a report on the wool industry which was presented to this Parliament in 1921. This contains a copy of resolutions adopted by members of a conference representative of the whole wool industry in Australia, held on 17th March, 1921. I should like to have these resolutions incorporated in “ Hansard “.

Mr DEPUTY SPEAKER:

-Is leave granted?

Government supporters. - No.

Mr DEPUTY SPEAKER:

– Leave is not granted.

Mr DALY:

– It is interesting to note that the honorable member for Mallee (Mr. Turnbull), an Australian Country party member, presumably representing the woolgrowers of this country, and by occupation an auctioneer who, on his own admission, split lots at sales, has refused to agree to the incorporation of these resolutions in “ Hansard “. These resolutions were endorsed by the late Right Honorable W. M. Hughes, as Prime Minister of Australia and as a member of a party similar to that which the honorable member for Mallee supports. This information is vital to the solving of this great problem and for refusing to agree to its incorporation in “ Hansard “, the honorable member for Mallee deserves to be condemned. I hope that the woolgrowers will appreciate that he does not realize the solution to this problem because he is here to protect the best interests of the woolbuyers such as Sir James McGregor.

I have not time to read this document but the resolutions were endorsed by every pastoralists’, graziers’, farmers’ and settlers’, and co-operative association throughout the Commonwealth; also by the Convention of Australian Farmers Federal Organization held in Sydney on 22nd March, 1921; and by the Convention of Graziers Federal Council of Australia, held in Brisbane on 6th April, 1921, and the following days. Those organizations all combined in order to introduce that scheme. There are a couple of constructive suggestions in respect of these matters.

Mr DEPUTY SPEAKER:

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

Mr FORBES:
Barker

.- In the few minutes available to me before this debate is closed, there is little I can say about the speech of the honorable member for Grayndler (Mr. Daly). He is the only person in this debate on the Opposition side who has put forward one single alternative to the present system. He put forward as an ‘alternative the scheme put forward by Mr. Hughes in, I think he said, 1921 - a time, when, so far as I know, there were no competitors to wool. In those days we could hold the world up to ransom by imposing an embargo on wool being exported at a price no lower than the cost of production. Now we have synthetics.

This afternoon honorable members opposite have suggested that the Government is culpable because it has not imposed some new system of selling on the Australian wool grower. They have claimed, as a justification for this imposition, that the price of wool, at present, does not provide an economic return to the grower and, in fact and by implication, they have alleged that faulty marketing is the sole reason for the recent fall in prices. We. on this side of the House, have suggested that there are other reasons for the fall, not the least important being the serious economic depression in the major industrial countries overseas which buy our wool. We do not discount the effect of marketing. Far from it. But to suggest that it is the only reason is a gross distortion and contrary to the information available both to the Government and to the major woolgrowers’ organizations.

We believe that an alteration in marketing is too important a matter to Australia and to the woolgrowers to be undertaken without being absolutely certain that it will not be disastrous. Above all, we put forward the view that wool belongs to the growers, not to the Parliament or to the Government. It is for them to propose an alternative. The Opposition has suggested that they are not capable of proposing an alternative. They are examining the matter at the present moment. Speakers on this side in this debate have mentioned a report put forward by the Australian Woolgrowers Council. They have suggested that the investigation is not yet finished. When it is finished the growers themselves will be in a position to decide what they desire to do in this matter. The Government has promised that if the growers put up a scheme it will do everything in its power to assist them.

Mr DEPUTY SPEAKER:

– Order! As it is now 6 p.m., the time allotted for this debate has expired and the discussion is terminated.

Sitting suspended from 6 to 8 p.m.

page 678

RESERVE BANK BILL 1959

Second Reading

Debate resumed from 12th March (vide page 640), on motion by Mr. Harold Holt -

That the bill be now read a second time.

Mr McCOLM:
Bowman

.- It was with some trepidation that I first thought of entering this debate because a subject of this nature is one which would normally be considered to be reserved for people with a large degree of technical knowledge. However, it has been amply proven in the course of the debate that no great technical knowledge is required. Over the last few years it has been very amply demonstrated also, in many ways, that this subject has been chewed over by quite a number of economists and experts, and I am heartened when I think that one can find an economist ta fit into almost any theory. Lam reminded; of the definition’ of aw “ expert “ which I once heard’ given by His Excellency the Governor-General. He defined the word as. “ ex “ representing the- unknown quantity and! “ spert “ being a drip under pressure! With these thoughts in mind I have little hesitation! now in entering the debate.

F am supporting these bills for three main reasons. In the first place I believe that they represent a genuine attempt on the part of the Government to streamline our present Commonwealth banking structure. I repeat that they represent a genuine attempt to streamline it. Although, possibly, the attempt may be misguided’ and quite unnecessary, nevertheless it is genuine. I believe that the idea of the Development Bank as put forward is a good one. I am convinced also that it is not the Government’s intention in these bills to destroy the structure or functions of the Commonwealth Bank. It cam be argued that the existing system could well be allowed to- continue, and, personally, I have always been inclined towards that theory.

We should consider the events and the pressures which led up to the presentation by the Government of these bills on a number of previous occasions as well as on this, occasion. The first event was the attempt by the Australian Labour party to nationalize the Australian private banks. This attempt quite naturally frightened not only the. proprietors of those banks but also their employees. It also brought to- the minds of many Australians the real danger that could come, from- a nationalized banking system by the tremendous control- that could be exerted through that- system over the country’s economy. Quite naturally the proprietors of the trading banks reacted very strongly and set up their own organization to- fight the Labour party policy. It was quite natural also that the private bank employees should react very strongly; and they, too, set. up their own organization to fight this attempt to nationalize the private banks. These: things are now history, but nevertheless, they are matters we should consider in dealing- with these bills.

Considerable criticism has been expressed by honorable members opposite concerning the suggestion that some of the private trading banks or, may be, one of their- organizations gave financial assistance to the Liberal and the Australian Country parties in their fight against Labour’s bank nationalization policy. I do not know whether they did that; I can only say that I support their right to do it. Surely, honorable members opposite could not deny the private trading hawks such- a right which the Labour party gave to the brewers to- support the party of their choice.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– It would be very nice if we could establish the fact that this legislation is the direct result of donations from the banks to the Government parties.

Mr McCOLM:

– I did not say there was a donation. I said it was suggested that one was made. If there was, I support their- right to make it. The trading, banks had every right to form their organization to play the important part it did in the 1949 elections. I know I received considerable assistance from them in my electorate. I was thankful and happy to have it and I believe they had the right to give it, just as any trade unionist has the right to fight for his principles and1 for his job. In 1949, the Prime Minister (Mr. Menzies) when he was Leader of the Opposition had something to say about banking in his policy speech and I propose to quote his exact words. They are important because they have been ignored and misquoted frequently ever since. This is what he said on banking policy -

As we have already said, the Australian Banking System is vitally involved iii this election.

It returned to office, we will repeal the BankNationalization Act.

Further, we propose to introduce a Bill to amend the Constitution by making it impossible, for such Socialist legislation to be passed in future without your approval given at a Referendum.

Those are the main things he said and the only specific promises that were made concerning what the future Government’s action would be. At that time, it will be remembered, the bank case was before the Privy Council. The decision had been made and’ the Chifley legislation was thrown out. But the full judgment had not been given. When it was given it became quite clear that the private trading banks of Australia could not be nationalized by direct legislation. Therefore, the statement which the present Prime Minister made in his policy speech in 1949 that he proposed - to introduce a Bil) to amend the Constitution by making it impossible for such Socialist legislation to be passed in future without your approval given at a Referendum. became quite unnecessary. Consequently, the Government did not proceed with that quite unnecessary measure. I mention this because these particular matters have been consistently misquoted over the years, but they are part and parcel of the pressure that has built up since 1949 on this question of banking.

Quite rightly the proprietors and employees of the private trading banks had a fear, and they still have a fear, that a Labour government would nationalize the banks. They hold that fear quite logically in view of the expressed opinion of honorable members opposite that this is still part of the policy of the Australian Labour party which would be implemented at the first opportunity. They seem to have forgotten at times that the banks cannot be nationalized directly by legislation, consequently pressures have begun to build up. There is no question about that whatever. These pressures came from the private trading banks in one way and another - from the private trading banks officers association, from the Institute of Public Affairs, from parliamentarians in both the Liberal and Australian Country parties - and they persisted over a period of years.

I shall read a telegram which I received in 1957. I think that all members on the Government side received a copy of it. It was sent by the general secretary of the United Bank Officers Association and read -

Bank officers and their families throughout Australia watching keenly outcome of banking legislation discussions and expect all Government members to adhere to Liberal-Country parties 1949 pre-election promises to legislate to ensure full preservation of Australia’s free enterprise banking system.

The point there is that they tend to forget that the Government had done what it promised in 1949. In fact, it had done more than it promised in 1949.

Letters in similar strain came from other organizations and, as a result of them and of the real fear that grew in the minds of some people that the Labour party would use every means in its power to nationalize the banks, pressure was put on the Government. I do not think that there is the slightest doubt about that. I think it would be tantamount to burying one’s head in the sand to deny that that happened. Whether or not this pressure will have the desired effect is very problematical. It has, to a large extent, resulted in these present measures before the House; but it is my firm opinion that these measures, far from destroying the power of the Commonwealth Bank, will build up the power of the Commonwealth Bank, and I think that, as a result, the various people who exerted the pressure will, in the long run, rather regret that they did so.

Sometimes some of the pressures applied made one wonder whether the real motive was the protection, pure and simple, of the private trading banking system, or whether the aim was to protect that system by destroying the Commonwealth Bank. I believe that some of the pressures were aimed at destroying the Commonwealth Bank; but I do not believe that the purpose of those who applied them is being implemented in this legislation. If I did, I would not be supporting the legislation.

Together with those unfortunate pressures - and I think that they were unfortunate - a number of quite unscrupulous things were done by the private trading banks. I am going to mention these, because I think they should be mentioned. I know of fourteen different cases of customers, when they approached their banks and asked for an increase of overdraft for one reason or another, being given the answer, “ No, under the Government’s banking policy we are not allowed to give you that increase.” When these statements were traced to their sources it was found that they were made as a result of the internal policies of the banks concerned, and the refusal was not a result of Government policy. Some of the trading banks were trying to push on to the Government blame that did not rightly belong to it. I think that these matters should be made public, because some of the methods used by the private savings banks since they came into existence have also been unscrupulous. I doubt whether they would accord with what I would call normal business practice.

I make no bones about the fact that I was bitterly opposed to bank nationalization in 1949, and still am opposed to it; but I believe that a lot of the history behind the present measures should be made known. What will the legislation give us? It will give us a Reserve Bank which may streamline the structure of our banking system. Whether or not it will succeed is at present problematical. Time alone will tell.

We are also to get from the legislation a Commonwealth Banking Corporation which will consist of the Commonwealth Savings Bank and the Commonwealth Trading Bank, in more or less their existing forms, but slightly differing in their managerial structure. We are also to get the Development Bank which, I believe, will fill a long-existing gap in our banking structure. I think that it will be a really useful institution which will give backing to some of Australia’s greatest assets - to courage, foresight, and initiative - and give it from a source from which it cannot be obtained at present. In the Development Bank I see something that will be worth while in assisting the nation’s economy.

Mr Calwell:

– You are having a bob every way.

Mr McCOLM:

– If honorable gentlemen on the other side of the House were fair, they would admit the correctness of what I am saying. Charges have been made from time to time that it is dangerous to have a trading bank associated with the central bank, because information received by one section in the course of its normal transactions could be used by the other advantageously against the private trading banks. It is argued that the establishment of the Reserve Bank will provide greater safeguards for the private trading banks. All I can say about that is that in the hands of a hostile government such information, if it were required, would be obtained and passed on anyway. Any government of this country must be in ultimate charge of the banking structure, so I cannot see any particular safeguard, in the direction mentioned, in the establishment of the Reserve Bank.

A system of statutory deposits is to replace the existing special account system. Well, I still cannot for the life of me see how the private trading banks will thereby be put in a safer position, when there will be the possibility of a call-up, on certain notice, of 100 per cent, of their deposits. They will be no safer than they are at the present time when the maximum that can be called up is 75 per cent, of their new deposits. I just cannot see any fresh safety factor for the private trading banks in the proposed new system.

At present we have a sound Commonwealth banking structure which, over the years, has proved itself to be efficient and effective. It is also a unique structure, and for that reason alone it has received some criticism. I can see no valid reason why, if the Commonwealth banking structure is working effectively and efficiently, it should be changed; but that again is a matter of opinion. I also cannot see any reason why the Development Bank cannot be added to the existing structure; but that, too, is a matter of opinion.

I think we must ask ourselves a number of questions before leaving this subject altogether. The first question I would ask is: Will the proposals before the House provide any improvement, and will they increase the efficiency of the Commonwealth banking structure? I think the answer to that question would be that they may, but only time will tell. Nobody can say for certain what will happen. The second question I would put is: Will the present proposals provide any real safeguard against an attack on the banking system by a hostile government? And thi answer to that question is, categorically “ No “. There can be no legislation passed into law under this Government which cannot be undone in the future by a Parliament controlled by a government hostile to the private banks.

So there is no real safeguard whatever in this legislation for the private trading banks. I think that we should also ask ourselves what the cost of these proposals is going to be. It is an inescapable fact that the cost will run into many millions of pounds. So we ask ourselves again: Will this cost be worth the result produced? We can say in answer to that only that we do not know, because we do not know what effective result is going to be produced.

I think there is one point on which there must be no doubt in any person’s mind - that is, that for the effective control of the country’s economy we must have, and must .maintain, a strong Commonwealth banking structure built up to the level of the strongest of .the private banks or at least on .equal terms “with them, if the strength of the private banks grows through amalgamation or combination. In the last few years -we nave been shown that this increase of strength .of .the private banks could’ be a real possibility, because if any two of the -four major private banks in Australia were to amalgamate they would form a very formidable banking structure in themselves. If any three of them were to amalgamate, they would form by far the most powerful banking structure in Australia. I believe it is essential that any government that is elected to power by the people of Australia must have the final say over the economy of the country. It can only do that if it can effectively control its banking system in one way or another. It can only do it if the Commonwealth banking structure is allowed to expand on equal terms with the private trading banks because if the private trading banks, or a number of them, decide to amalgamate, they will .present a formidable financial structure. To my mind, that is the only way in which we can ensure that our internal -economy -is directed, as it must be, from within Australia. I am sure that no person with our country’s interest -at heart will query this proposition.

In conclusion, there are three things I wish to say. First, I wish the new banking structures well, and I hope that the members of the present staffs will be able to find employment in the -section of their choice. I (know that they will continue to give the sterling service that they have given in the past. Secondly, I hope that the people of Australia will realize and remember that there is only one sure way of preventing the nationalization of the private banks in Australia, and that is by keeping out of power the party whose fundamental aim it is to carry out the nationalization of those banks - the Australian Labour party. Lastly, I should like to use in a slightly different context the thought that was expressed by His Excellency the Governor-General at the opening of the Ecafe conference at Broadbeach: Many clever men have given much thought to the basic proposals contained in these bills. I hope that they have also been wise men.

Mr SEXTON:
Adelaide

.- First and foremost, Mr. Speaker, let me express my thanks to the electors of the Adelaide division for their decision to send me as their representative ‘to this National Parliament. I pay tribute to my predecessor, the Honorable Cyril Chambers, who, in this Parliament, served the nation well. Australia owes a debt of gratitude to its wartime Labour Government, of which Mr. Chambers was a valuable member. Future historians will acclaim this with a much keener -appreciation than do present generations.

Secondly, I should like to congratulate you, Mr. Speaker, on your election to the high office which you -hold in this Parliament. I recall with pleasure that my first acquaintance with you was when you occupied the high office of Lord Mayor of the City of Adelaide. I am pleased to renew my acquaintance with you under your guidance in this chamber. The fact that you were elected unopposed to your office is eloquent testimony to the respect in which you are held by all sections of the House. I congratulate also the Chairman of Committees, the honorable member for Gippsland (Mr. Bowden). I must say that he has greatly impressed me, a new member, -by the manner in which he discharges his duties. I also record my thanks to the officers of the House and honorable members generally for the assistance that they have rendered to me.

I now turn to the banking legislation under debate. It consists of four major bills and ten minor ones. We on this side of the House were rather startled, when listening to the honorable member for Bowman ‘(Mr. McColm), who immediately preceded me, to find that he sounded, to a great degree, the many warnings that have issued from the Opposition side. Perhaps we can hope that he will have a change of heart and will cross the floor of the House when the vote is taken. When new legislation is proposed, it is usual for the Government to indicate the reasons for the changes involved. Either the existing law has led to injustice of some kind, or some one has recommended a change in order to make the law work more efficiently. But that has not been done on this occasion. The Government cannot show that the proposed changes of the banking laws have been- sought by the public. They have not been, recommended by the Commonwealth Bank itself. On: the contrary, it is known that the top executives of the bank oppose the. Government’s plan. Nor is there any evidence to show that the changes were recommended by’ the Treasury. Indeed, to be fair to the Government, it can be said’ that the: Government has at no- time even suggested that the legislation arises from failure of existing legislation, from public demand, from Commonwealth Bank requests, or from a recommendation of the Treasury.

Therefore, one has to- ask whence came the demand for this legislation. The answer is- obvious. It came from the private banking combine of Australia. The former Treasurer, Sir Arthur Fadden-, said that there had been no discrimination by the central bank in favour of the Commonwealth Trading Bank. If one studies the liquidity ratio of the private banks and measures it against that which the central bank has imposed on the Commonwealth Trading Bank, one sees evidence of central bank discrimination against, and not in favour of the- Commonwealth Trading Bank. If the liquidity ratio of the Commonwealth Trading Bank were reduced to that of some of the private banks, that bank would be able to release immediately another £100,000,000 for lending purposes for the general public. This would not only satisfy the demand’ for home building finance but would also result in an enormous increase in the bank’s profits.

Further,, the Commonwealth Trading Bank suffers from existing. Government policy in the field of. hire purchase activity. Private banks have rapidly expanded their interest in hire purchase finance, with its exorbitant rates and charges amounting to usury, while in the same period the Commonwealth Bank has been forced to reduce its; activity in this lucrative field. The reduction is stated in official reports as being due to bank policy. This means that the Commonwealth Bank’s hire purchase department has been stifled and frustrated by the Commonwealth Bank Board, members of which are directors of many private companies which are interlocked, through their shareholdings, with private banks.

Another example of central bank discrimination against the Commonwealth Bank is seen in its policy on. overdraft interest rates, for while the Commonwealth Trading Bank has been forced to adhere strictly to the limits set,, the- private banks have escaped their’ obligations by the simple process of channelling their investments, into their, own: hire purchase companies and thus circumventing their national obligations to prevent inflation in this fieldi..

Now let us examine the question of public demand. There has not been any! The fact is that the popularity of the Common^ wealth’ Bank has increased during the past, few years, much to the dismay of the private banks and, I suspect,, to the disappointment of the Government and its members. We have not heard one responsible section of the public during the past ten years offer the slightest criticism of the Commonwealth Bank. Even the Government does not claim that there is a public demand for this legislation.. It is true that, some speakers- claimed that the Government had a. mandate for its action, so let us examine this claim more closely. The Deputy Leader of the Opposition (Mr. Calwell) cited voting figures which I believe warrant repetition. The Senate figures show that the Government parties received a total of 45 per cent, of the votes cast, which meant that 55 per cent, of the Australian electors did not vote for the Government. The Labour vote of 43 per cent., plus the D’.L.P. vote of 8 per cent., meant that a total of 51 per cent, of the electors voted against this banking legislation. The D.L.P. made clear to- its supporters that if it were elected” it would oppose the Government’s banking proposals. This was a prominent plank in the D.L.P. platform. We must remember that it was the opposition of D.L.P. and Q’.L.P. senators; together with that of Labour senators, which defeated this legislation when it was brought’ before Parliament last year. Summed1 up-, therefore, it will be seen that, far from having a mandate for its legislation,, the Government has used its- 45: per cent, of public support to. reject the wishes of the. 51 per cent, of the. people who are opposed, to its proposals;

Nbw I deal with the attitude of the Commonwealth Bank itself: It is well known that there is no- demand by officers’ of the bank for the changes proposed. The bank’s officers already are fed up with the uncertainty which results from constant changes in the bank’s structure - changes which affect such things as experience, efficiency, promotion and salary range. At the managerial level, officers find themselves working at a great disadvantage, compared with their counterparts in the private banks. To take one example, whereas the manager of a private trading bank has control over that bank’s savings bank activities, no such control lies with the State managers of the Commonwealth Trading Bank. At a higher level again, if it is right to allow the general manager of any one of the private banks to control its savings bank policy and funds, it should be equally right that Mr. Armstrong, the General Manager of the Commonwealth Trading Bank, should control the policy and funds of the Commonwealth Savings Bank. To-day, Mr. Armstrong is one of Australia’s greatest bankers, but I have grave doubts whether his ability will be recognized in this new set-up. The very fact that the Commonwealth Bank has succeeded in the face of unfair handicaps is in itself eloquent testimony to his genius.

In 1950, the Commonwealth Bank transacted about one-seventh of the total of the trading bank business in Australia, whereas, to-day, it has reached fourth place. In fact, only three of the private trading banks hold more depositors’ funds than does the Commonwealth Trading Bank. There is little doubt that within the next five years, but for the intervention of this legislation, the Commonwealth Trading Bank would have reached top position. This remarkable achievement by a public undertaking, together with the achievements of other public bodies such as Trans-Australia Airlines and the Australian National Line of ships, is the answer to the advocates of so-called free enterprise, who consistently claim that there can never be any virtue at all in public ownership and control of basic industries and services.

There is also the question of Treasury requirements in respect of existing legislation. I said earlier that there is no evidence that the Department of the Treasury has requested the action which the Government is now taking. I go further, and say that this legislation was introduced in the face of Treasury advice, for it is well known that Sir Arthur Fadden, the previous Treasurer, no doubt acting on the advice of his departmental officers, strenuously opposed these banking proposals when they first came before the Cabinet. This fact was published in every leading newspaper of the Commonwealth, and was never denied by Sir Arthur Fadden. It is clear, therefore, that, to find the real reason for this legislation, we have to look in other directions.

Let us examine the reason given by the majority of Government supporters - that the legislation is necessary in order to protect the private banks from future socialist governments. Such an argument can be quickly disposed of by reminding the Parliament that this so-called protective legislation will operate only during the life of anti-Labour governments, because, immediately a Labour government is elected, it will repeal this legislation and, on the basis of the 1945 Chifley banking legislation, will restore to the Commonwealth Bank the opportunity to engage in the active competition with private banks which, on odd occasions, Government supporters pretend to favour. A Labour government would need strong reasons to abandon the principles enunciated in the Chifley legislation of 1945. In fact, it could go further and incorporate in its policy the recommendation of the Royal Commission on Monetary and Banking Systems to place the control of the funds and policy of the Commonwealth Savings Bank under the direction of the general manager of the Commonwealth Trading Bank, in the same way that the general managers of the private banks control the savings bank activities of those banks.

So we see clearly that the argument that this legislation is necessary in order to protect the private banks against a future Labour government has no validity when it is remembered that what the Parliament of to-day can do the Parliament of tomorrow can undo. We are entitled to ask: Is it the Government’s real intention to liquidate the Commonwealth Bank altogether, and perhaps even to sell it to the private banks if it fails to destroy it by other means, on the principle that once an egg is scrambled it cannot be unscrambled?

One other reason for this legislation was advanced by Government supporters with varying degrees of enthusiasm - namely, that the proposed Commonwealth Development Bank would greatly assist primary producers. The only Government speaker who impressed me on this point was the honorable member for Wannon (Mr. Malcolm Fraser), who said, among other things, that he believed that the advance publicity claiming that the Development Bank was the answer to the primary producers’ prayers was a false conception of the actual way in which this bank would operate. He very properly pointed out the restrictive nature of clause 73 of the Commonwealth Banks Bill 1959. This clause charges the Development Bank with the responsibility of deciding whether an applicant primary producer is likely to be successful or not, without necessarily basing the opinion on security.

By what yardstick the Development Bank will make its decisions is beyond me, having in mind the present trend of the falling prices of primary products and the absence of any evidence that indicates a recovery of these prices. All the opinions that I have seen expressed are that we cannot hope for any rise in the prices of primary products in the near future and that, in fact, we shall be fighting to hold what we have, if we take into consideration trends in overseas prices. Primary producers are claiming to-day that much of their output is produced at a loss. Moreover, many of our traditional overseas markets are drying up, because the nations to which we sell are now reaching a stage of internal development which allows them to cut down on imports from Australia. Therefore, we reach a situation in which Government speakers are whistling to keep up their courage when they wax eloquent about more profitable production with the assistance of the Development Bank. The plain facts are that this bank will be severely restricted in its operations if it is to work by orthodox banking procedure - and my understanding of the Commonwealth Banks Bil! is that the bill demands that the bank shall conduct its business strictly in accordance with orthodox banking procedure.

Dr. Coombs, the present Governor of the Commonwealth Bank, has already said that the proposed Development Bank will be very difficult to administer. We are also reminded by the Treasurer (Mr. Harold Holt) himself that the financial assistance from this bank must be only supplementary to other finance received from the usual lending houses. I take this to mean that the trading banks, insurance companies, investment companies and the recognized lending institutions will have first pick, with first mortgages as securities. Then the Development Bank is to come in behind these mortgagees to render its supplementary financial assistance. We are not told how such advances will be secured. At the best, they appear to be second mortgage risks, with the added risks of droughts, falling prices and the absence of markets. In common with some other honorable members, I have grave doubts as to the scope of this financial assistance. I believe that it is reasonable to suspect that many of the bank’s would-be clients will finish up in the hands of a hire-purchase company that will be waiting for them - at the far end of a private bank counter. Alternatively, if the Development Bank is to undertake a large volume of business on a supplementary basis, the risks will be bad and many failures to balance assets and liabilities will occur.

One of the most pronounced disabilities of primary producers to-day is that they are the victims of inflation - of an internal high cost structure while being required to sell their produce at world competitive prices. Upon assuming office, this Government stood idly by and allowed inflation to run wild on the altar of a free enterprise economy. To-day, the producers suffer, with all sorts of advice heaped upon them. I believe that export subsidies, among other measures, will have to be considered to help producers out of their dilemma. However, we will discuss these matters at a more appropriate time, when Parliament gets down to the business of really grappling with the problems of primary producers.

The Development Bank has been featured as a bright star by some Government speakers, while others say that the Government has not restricted it enough. My own opinion is that the bill does not present much hope for our producers, and a considerable stretching of the rules laid down will be needed in order to assist producers to any great extent. The success orfailure of thebank will depend largely on the elasticity with which its regulations are administered.

To add to the difficulties of this bank, we find that the private banks will get their cut as agents for the Development Bank. This can only weaken the bank’s effectiveness. We mustalso clearly remember ‘that the Development Bank has swallowed up the hire-purchase department of the Commonwealth Bank, and this department can no longer serve the public. This is the department that could have been a tremendous success if allowed -to function in the financing of the purchase of consumergoods as well as the production of goods. By a policy direction of the bankboard, obviously with the approval ofthe Government,this department was not allowed to serve the public. Have we any evidence that a similar direction will not be given to any one of the units of the Commonwealth Banking Corporation in the future?

The attitude of Government members in this debate clearly discloses their abhorrence of government enterprise. This has also been demonstrated by their past actions in selling the Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited and the successful Commonwealth whaling station, and by their hawking for saleof the Commonwealth shipping line. These are all pointers to the fact that the Government would be prepared to get rid of our publicly-owned banking structure if it could manoeuvre into a position in which it felt it could get away with that.

A summary of the case for this legislation can. be set out as follows: -

  1. A hypothetical fear by private banks that the central bank may in the future discriminate against them.
  2. A need to separate all units under the Commonwealth Bank and place them in different compartments.
  3. The establishment of a new Development Bank which will allegedly greatly assist primary producers and businessmen.

I believe that the weaknesses pointed out by honorable members on this side of the House, including the dangerous drift in our banking structure in Australia,are com pelling arguments why this legislation should be rejected. We have already pointed out thatthereis no justification forthefear of future discrimination entertained by the private banks. No discrimination has taken place, and,consequently, this fear should never be a basis for such far-reaching legislation. On the contrary., the central bank has gone along way to show its fairness to private banks, by giving them latitude that it would not allow its own Commonwealth Bank.

There is certainlyno need to separate the units of the Commonwealth Bank as it now stands. It is a thriving, efficient, co-ordinated banking institution,expertly managed and serving the nation as a great publicly-owned institution. To divide it is to weaken it. The proposal to separate the units of the bank probably sprang from the old principle of divide and conquer.

The third point, concerning the establishment of the Development Bank, is one that I have already fully discussed, with all its attendant dangers and probabilities.

The Leader of the Opposition (Dr. Evatt) gave a timely warning of the insidious way in which a secondary banking force is developing in this country, with its attendant ill-effects on our national economy. He also made a penetrating analysis of the weakness of the Government in this matter and the natural greed that has been shown by the manipulators of high finance in this country. Following speakers pointed out the various facets of our banking structure and its profound effect on our economy. They have shown the mounting influence that the banks and financiers are wielding in the affairs of the nation, and the way in which the Government has failed to assume its proper responsibility in these matters. The finance manipulators are interested only in the profit motive, and have scant regard for the national well-being. The control of banking and finance, therefore, should always remain with the national Government.

The Deputy Leader of the Opposition (Mr. Calwell) sounded a dramatic note in this debate when he accepted a challenge of the honorable member for Mallee (Mr. Turnbull) to produce evidence of the private banks’ participation in political skulduggery. He gave details of a secret account that was opened in the Bank of New South Wales. This is what he said -

In the head office of the Bank of New South Wales in Sydney there was from 1948 to 1956 an account known as the B.D.C. account. It was known officially in the bank as the “ Bank’s Defence Committee “ account but it was always referred to in the bank as the “ Bank’s Defeating Chifley” account. Seventy-two deposits made up a total contribution of £176,000 to this account between 1948 and 1956. Over the same period of eight years to 1956, there were 32 withdrawals. Honorable members opposite will see that I am well informed on this matter. I used to be the Minister for Information. On Tuesday, 18th November, 1956, the account was closed, when the balance of £34,000 was drawn out.

This information brought a stony silence from Government supporters and paralysed the vocal chords of the honorable member for Mallee. The late Mr. J. B. Chifley confirmed the existence of this skulduggery shortly before his death, when he said -

It is idle for honorable members opposite to deny that huge funds were made available to them, because I can produce evidence to show the source of the funds, the amount subscribed and the purpose of the subscriptions.

The House should remember that it is the same private banks, with their constant hunger for profits, that to-day are sponsoring the legislation before this House. Can we, and should we, hope for them to assist in furthering our national well-being? Another quotation worthy of repetition is as follows: -

It is patent that in our days not only is wealth accumulated but immense power and despotic domination are concentrated in the hands of a few . . . This power becomes particularly irresistible when exercised by those who, because they hold and control money are able to govern credit and determine its allotment, for that reason, so to speak, the lifeblood of the entire economic body, and grasping, as it were, in their hands the very soul of production so that no one dare breathe against their will. Economic domination must be kept within just and definite limits, and must be brought under effective control of public authority.

The Commonwealth Bank of Australia will, with the passage of this legislation, lose its name, its character and its united strength. We remember its great achievements in financing two world wars, in financing exports of primary products and simultaneously giving a grand service to the Australian public. In this way the Commonwealth Bank has become an integral part of our national aspirations and security. Let us keep it that way so that our present generation and generations yet unborn will live to know and respect it as a living symbol, embracing the Unity and strength of our people, and of Australia, our nation

Mr OSBORNE:
Minister for Air · Evans · LP

– I would like to congratulate the honorable member for Adelaide (Mr. Sexton) on his maiden speech, which was delivered with clarity and lucidity. I wish that I could agree with what he has said, but I am afraid I cannot do that. I do, however, congratulate him on having successfully surmounted the first and principal hurdle in his parliamentary life.

Mr. Speaker, for a long time many people interested in banking reform in this country - that is to say, non-socialists interested in banking reform - have discussed three things. The first is the need for an independent central bank, freed from the distractions of the activities of trading banking or responsibility for trading banking. The second is that the Commonwealth Trading Bank, with certain advantages of a governmentowned and operated bank, should be subject to the same controls and restraints by the central bank as are all other trading banks. The third is that the system of statutory reserve deposits, under which our trading banks operate, and which is a principal means by which the central bank can restrict tendencies to inflation when they occur or can expand credit when it is needed, should be put on a precise, clear and simple basis, and should be made applicable equally to all trading banks. All three of those things will be effected by the legislation that we are now debating. In 1957, when Sir Arthur Fadden introduced bills of a similar nature, he said -

There cannot be full harmony within the Australian banking system, nor that close cooperation which ought to subsist between the central bank and the trading banks unless and until this separation is effected.

He w.as referring to the separation of the central bank from the Commonwealth Trading Bank, which is the prime purpose of the Reserve Bank Bill. The overwhelming majority of those interested in the principles of a government’s relationship to banking accept that dictum. In other parts of the world, almost without exception, central banks have only central banking functions to perform and are not distracted by other responsibilities, nor are they burdened with the lack of confidence and the suspicion of those whom it is their duty to control, which inevitably arises from their being in competition with the private banks, as is the present situation in Australia.

Mr Bryant:

– You do not care whether the watersiders have a feeling of harmony and co-operation with the people who control them.

Mr OSBORNE:

– You have chosen an unhappy example from our industrial life. I hope the banking situation in this country, no matter how political it becomes, will never get into the parlous state of industrial relations on the waterfront, from which this country has suffered for so many years - but they are improving, too.

When these bills become law, our central bank will have no activities to perform other than central banking, because the rural credits system which it will control is universally recognized as being properly a function of central banking. In the new Commonwealth Banking Corporation, which will be established by the Commonwealth Banks Bill, there will in fact be three separate banks. The first is the Trading Bank, which will carry on very much as it does at present, except for two important factors. It will in future be subject to the control of the Reserve Bank In exactly the same way as are the other trading banks, and, also, it will pay tax on its profits. So, the private banking system will no longer have any reason to complain that a Commonwealth Bank, in competition with it in trading hanking functions, enjoys special advantages.

The second of the banks will be the Savings Bank which will operate in the same way as it does at present. It will not pay tax on its profits, as private savings banks do, but there are good reasons for that. They are: The Savings Bank has an obligation to pay to the governments of three States half of the profits it earns in those States. That is a relic of the arrangements and agreements made with the Commonwealth by those three States when the Commonwealth Bank took over their State savings banks. Further, the Commonwealth Savings Bank has an obligation to pay to the Commonwealth Government half of the remainder of its profits. Those two burdens are heavier than the burden of taxation. The third of the banks, as the House knows, will be the Development

Bank - a completely separate organization whose purpose is to take over the Mortgage Bank Department and the Industrial Finance Department of the present Commonwealth banking structure.

I believe that this new system constitutes a very considerable advance and a great improvement in the banking law of this country. 1 believe that it will work well and that it will persist for many years. In such a complex arrangement criticism is inescapable. There is room for divergence of views, and it is inevitable that some aspects should receive criticism in this House. The Opposition, of course, long ago committed itself to complete and wholesale rejection of the plan. But the Opposition has a mystique about nationalization of banking. This is part of its socialist principles which have been so decisively rejected by the electorate in every election for nine years, but which the Labour party persistently clings to, probably because it cannot find any substitute acceptable to all of its members, or to any large number of them. So, they cling to this worn out, discredited theory for want of another.

With that background, the Leader of the Opposition (Dr. Evatt) dismissed these bills contemptuously as a surrender to the private banks. He characterized the scheme as a meek submission by the Government to the Liberal party’s alleged masters. But the repeated verdicts of the electorate do not bear that out, and I do not believe that the Australian people could be deceived for a moment about this - nor have they been! There is not much value in criticism of this charter for the banking system of Australia, worked out in such detail as this has been, based merely on the contemptuous suggestion that this is a surrender to the private banks. I do not think, really, that the Leader of the Opposition believes this himself, nor do any of his thoughtful colleagues.

Then the Leader of the Opposition turned away from that criticism and raised what is undoubtedly a red herring, and that is the phenomenon of the growth of hirepurchase finance in the Australian economy in recent years. He knows very well that this Government cannot control hirepurchase finance. The theory, which has been developed by the Opposition at such length and which has had one or two echoes from this side of the House, that the development of hire-purchase finance has created something outside the banking system that will swallow it up, has had two very interesting commentaries to the contrary in the last few days. If hire-purchase finance is choking the banking system, it is interesting to note that the principal and largest subscribers to the last Commonwealth loan, which was oversubscribed, were the private banks. More particularly, only to-day the Commonwealth Statistician released the monthly banking figures. Tt appears that the deposits of the trading banks have risen by £22,100,000 in the last month and that the liquidity of the trading banking system is at a higher point to-day than it has been for a very long time.

These facts do not exactly bear out the interesting theory that the banking system is being utterly changed by the growth of hire-purchase finance outside it. The banking system is, and will remain, the dominant factor in the regulation of the Australian economy. I have not the slightest doubt that it will remain so. I have said that this long discussion on hire-purchase finance to which the Opposition has devoted itself is a red herring dragged across the trail and it should be regarded as such.

In these circumstances, with the Opposition in the state it is over the nationalization of banking and avoiding any worth-while discussion of these issues by bringing in the side issue of hire-purchase finance, it is not surprising that the most thoughtful and interesting discussion of these bills has come from this side of the House. One or two honorable members expressed the fear that the Development Bank, in the hands of a hostile socialist Treasurer, could develop into an octopus which would strangle all private banking in Australia. I am quite confident myself that these fears are groundless. My friend, the honorable member for Mitchell (Mr. Wheeler), in speaking of the Development Bank, suggested that the idea of putting the Development Bank into this structure arose from a desire to offer a sop to the Democratic Labour party, which was then in a controlling position in the Senate. I do not think that is right. The real reason for the Development Bank was this: It is only by creating a new structure entirely that a proper place can be found for the two functions of the Mortgage Bank Department and the Industrial Finance Department, which are at present carried on by the Commonwealth Bank. They are not central banking functions.

If the Mortgage Bank Department and the Industrial Finance Department had been handed to the central bank, then the first principle of our legislation - that the new Reserve Bank of Australia should be entirely free of any functions which are not central banking functions - would have gone; so they could not be handed over to the Reserve Bank. Should they go to the Commonwealth Trading Bank? They are not ordinary trading bank functions, and it would be impossible to give them to the trading bank and still carry out the intention that the Commonwealth Trading Bank should be placed on all fours, so far as control is concerned, as the other private banks. The Mortgage Bank Department and the Industrial Finance Department are clearly not functions for the Commonwealth Savings Bank, so the solution was to create a new body - the Development Bank.

It is easy to become very enthusiastic about the Development Bank, as some people have done, but it is really a continuation of the two functions I have mentioned with small added capital. The capital is not as great as at first may appear, because it will take over the £15,000,000 which is the aggregate of the capital of the Mortgage Bank Department and the Industrial Finance Department, together with an additional £5,000,000 which will be found from the reserves of the present Commonwealth Bank. The powers to borrow from the central bank, which will be given to the new Development Bank, are limited to £2,000,000 except with the expressed approval of the Treasurer. Its powers to borrow, to accept deposits and to pay interest on deposits have raised criticism in some quarters, but unless a bank has a power to accept deposits and pay interest on them, it can hardly be said to be a bank at all, and we must bear in mind the constitutional- limits of this Parliament. There are, I believe, good reasons to reject the fear that a hostile socialist Treasurer could use the new Development Bank, as set out in this legislation, to stifle all independent banking. I shall quote first from the charter of the Development Bank itself. Clause 72 of the Commonwealth Banks Bill states -

The functions of the Development Bank are -

to provide finance for persons -

for the purposes of primary production; or

for the establishment or development of industrial undertakings, particularly small undertakings, in cases where, in the opinion of the Development Bank, the provision of the finance is desirable and the finance would not otherwise be available on reasonable and suitable terms and conditions.

That is a statutory limitation on the Development Bank.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– We could alter that.

Mr OSBORNE:

– The honorable member for Hindmarsh has said that his party could alter that, but it must first get the approval of the electorate. Honorable members opposite must get into office before they can do it and by that time, this structure will have been in operation so long that even the socialist Labour party will have seen some virtue in it. Certainly this legislation could be changed by a Labour government. That could be done to clause 72, which I have just quoted, but so it could to any other part of these bills. There is no defence against such change except to keep socialist governments out of office.

The next safeguard against the Development Bank being abused is the capacity of the Parliament itself to keep an eye on the operation of the structure. The new central bank will have authority to regulate interest rates. I have heard the fear expressed that it could discriminate in favour of the Development Bank to the disadvantage of other banks, but the regulation of interest rates by the central bank would be done by regulations which will come before the Parliament. They will be open to the scrutiny of this Parliament and the change will certainly not be possible by stealth.

Finally, there is the fact that in future we will have a true Reserve Bank, a true central bank, the board of which will have a considerable degree of independence. The Reserve Bank will be jealous of its reputation and its status as a true Reserve Bank. One of its obvious duties is to deal fairly and impartially with the banking system as a whole. A socialist Treasurer who tried to use the Development Bank improperly to the disadvantage of other banks would have to deal with the powers of the central bank itself, and I believe that they would be found to be considerable. I have no doubt that the three banks to be administered by the Commonwealth Banking Corporation - the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Development Bank - will undoubtedly make up a group of very great strength and power in our economy. It has never been part of this Government’s policy to destroy or curtail the power and authority of the Commonwealth banking structure as a whole. On the other hand, the private banks will have the assurance, which they have long sought and of which they have long felt the need, of three things - an independent central bank, a fair, precise and uniform statutory reserve deposits system and a Government trading bank subject to the same controls as they are themselves.

The Australian economy is expanding fast. In the ten years from January, 1949 to January, 1959, deposits in the Australian banking system have nearly doubled from £883,000,000 to £1,687,000,000. In the same period, advances by all banks have risen from £436,000,000 to £1,007,000,000. This position is not static. All of us believe, even members of the Opposition, that in the expanding future that lies ahead of our country, this progress will continue. Provided that fair competition is assured - and it will be by this legislation - the private banks will have ample opportunity, side by side with a powerful government banking structure, to expand their activities and to increase their resources. I welcome this legislation and I believe that it is a great step forward in the banking legislation of this country.

Mr WARD:
East Sydney

.- Mr. Speaker, if it were necessary to make any reply to the remarks of the Minister for Air (Mr. Osborne) I think the most effective way to do so would be to quote some of the remarks made by the honorable member for Bowman (Mr. McColm) earlier this evening. His speech was most extraordinary. In my opinion he made probably the most effective and strongest speech in favour of nationalization that we have heard during this debate; but then he announced that he would vote in favour of the legislation because he was opposed to nationalization.

Let me deal with some of the points made by the honorable member for Bowman. First of all, he said that the legislative protection to be given to the private banks by this legislation was valueless and would cost millions of pounds. He said that we should leave well alone, because the Commonwealth banking structure was working very efficiently at present.- He defended the right of the private banks to provide funds to the Government parties. I assume from his remarks that he admitted that the statements made by the Deputy Leader of the Opposition (Mr. Calwell) were accurate and that such funds were actually provided. The honorable member admitted that pressure had been applied for destruction of the Commonwealth Bank. By whom was that pressure applied if it was not by representatives of the private banks? The honorable member related instances where the private banks had engaged in unscrupulous practices. Can any honorable member imagine a stronger case from a member of the anti-Labour parties for the nationalization of the private banks?

The [struggle over the Commonwealth Bank has ensued for many years. The history of the struggle is well known, and I do not need to waste my limited time in relating the many incidents in the struggle. Ever since the Commonwealth Bank was established by a Labour government there has been opposition to it from the reactionary elements in this country and in particular from the private banks. Their policy was one of opposition to the establishment in the first instance, and then their policy became one of obstruction after the bank was established, and they still hope for its eventual destruction. In various ways the private banks and their political representatives have attempted to destroy the effectiveness of the Commonwealth Bank.

I do not want to repeat unduly the arguments that have been advanced by my colleagues, but I remind honorable members that in 1938 the Minister for External Affairs (Mr. Casey), who was then Treasurer, introduced a bill into this Parliament designed effectively to destroy the Commonwealth Bank as the people’s bank. That legislation proposed to introduce for the first time into the capital structure of the bank private capital to the extent of £34,000,000. There was such a public outcry against the proposal that the government of the day - an anti-Labour government - did not proceed with the legislation, but abandoned it without putting it to a vote in Parliament.

The honorable member for Richmond (Mr. Anthony) made an extraordinary speech in this debate. I will admit that perhaps, being young he may be a little naive, but he was obviously very frank also. He said that it was the objective of the party that he supports to destroy the Commonwealth Bank. When he later made a personal explanation in an effort to correct the statement, which he knew to be very damaging, I made a note of exactly what he said and he merely confirmed what we on this side of the House had understood him to say in his speech. I ask honorable members to listen carefully and decide whether this is a correction of the honorable member’s earlier statement. In his personal explanation he said -

What I said was that the Opposition made out that that was our policy-

That was, to destroy the Commonwealth Bank.

I said that if it had been our policy we had made a very poor job of it and I proved conclusively that we had.

That is the honorable member’s own statement, that he had proved that his party made a very bad job of its efforts to destroy the Commonwealth Bank. No member of the Opposition would contest that.

Let us look at the Government’s attitude to the Commonwealth Bank. The Government calls itself a free enterprise government. It believes that it should not engage in any form of business whatever. Why does it make an exception in the case of the Commonwealth Bank? A few years ago when the House was debating the sale of the whaling station in Western Australia the Minister for Trade (Mr. McEwen) said that his Government was a free enterprise government. He said that the Government did not believe in entering into trade of any description. He said that the purpose of the Government was merely to explore the situation, to see whether the avenue was one in which capital could be profitably invested, and if that was the case, to withdraw. If the Government thought that it could get away with the outright sale of the Commonwealth Bank or its destruction, it would not hesitate. But the Government knows the political consequences of action such as that.

Let us examine the Government’s statement that it has a mandate for this legislation. Figures have been quoted in this House, but I want to look at those figures from a different angle. In his speech the Treasurer (Mr. Harold Holt) said -

In the course of the recent federal election campaign, iiic Govermnent affirmed its determination to proceed with these banking proposals if returned to office. The fact that we were so returned with majorities in both Houses, and indeed with a record majority in this House of Representatives, must be accepted as a broad endorsement by the Australian people of the banking reforms we had proposed.

Everybody knows that that is a dishonest statement in the first place, because the measures now before the House are not identical with the ones that were presented in the last Parliament. But in any case, the Government has not got a mandate from the people. The honorable member for Adelaide (Mr. Sexton) quoted figures showing the percentage of valid votes recorded for the various parties at the last federal elections. Those figures showed that the Liberal-Australian Country party coalition received 45.19 per cent, of votes, which means that approximately 55 per cent, of the people were opposed to the Government’s proposals. But I think that a more accurate way of assessing the approval or otherwise of the people of the Government’s proposals is to take the number of electors enrolled. If you want to say that you have the approval of the people you must have the vote of the majority of those entitled to vote. Of the number of electors enrolled, only 38.6 per cent, voted in favour of the Government parties. That shows conclusively that more than 61 per cent, of the people had not approved the Government’s proposals.

Some honorable members opposite seem to think that this legislation is doing some thing to protect the private banks in the event of a Labour government regaining office in this country. The honorable member for Ryan (Mr. Drury) and the honorable member for Macarthur (Mr. Jeff Bate) said that Labour could not nationalize the private banks because of section 92 of the Constitution. But what they failed to point out was that the High Court only declared by a majority of four to two that section 92 prevented the nationalization of the private banks. It is quite true that each of the six judges of the court found some reason to declare the legislation of the Labour government to be invalid, but only four of them regarded section 92 as an obstruction in the way of nationalization. Four of the judges declared banking to be trade,’ but two of them declared that banking is not trade but an instrument thereof. Those two judges were the then Chief Justice, Sir John Latham, and Sir Edward McTiernan, whom 1 regard as the most learned of the six judges who comprised the court. So it is apparent that the judges were not unanimous that section 92 was a complete obstruction. Probably future judges, possessing a more progressive approach and outlook to these matters, will take an entirely different view to that taken by the majority on this occasion.

Let us examine this case because it is rather interesting. Amongst the four judges who heard this case and before whom the Leader of the Opposition (Dr. Evatt) appeared were two whose right to sit on the case was challenged by the Leader of the Opposition. They were Mr. Justice Starke and Mr. Justice Williams. In my opinion, which I think is shared, not merely by members of the Labour Opposition in this Parliament but by a great majority of Australians, there were at least two judges on that case who had no right to sit on it.

When those judges were challenged with having a direct interest in private banks in this country, what was their reply? Mr. Justice Starke said that he had no shares in private banks but that his wife had. Mr. Justice Williams said that he held shares in private banks for his sister. I think that honorable members will agree that even if those judges were completely free of any suspicion in regard to their past activities, because of the effect on the Australian community they should have retired from this case.

In order to show that Mr. Justice Starke had rather a peculiar attitude to the issues involved in this case, let me quote what he said later. One of the matters dealt with by the court was the question of just compensation. Honorable members opposite have accused the Labour party of wanting to destroy the private banks without the payment of any compensation. Under the legislation that Government supporters have mentioned the Labour Government of the day proposed to acquire the private bank shares at their market value which, in my opinion, represented a reasonable and fair approach to this proposition. But Mr. Justice Starke said - t do not think it is true to say that share holders will receive the fullest value for their shares. The Parliament intends to give shareholders the market value which is not the highest value.

The highest value would not necessarily have been a just price, lt could have been an excessive price. In my opinion, a fair and just price would have been the market value of the shares at the time.

Let me turn to the question of the nationalization of the private banks. I believe, as a member of the Labour party, that if a Labour government of the future is to make real progress in this country by implementing its policy of improving the living standards of the community, it must have a banking monopoly. Let us see what the Treasurer (Mr. Harold Holt) has said on this subject. There are many quotations that I could make from the speeches of honorable members opposite which would show conclusively that if they were to examine the matter fairly they would have to admit that this was the proper thing for any progressive government to do. The Treasurer said -

The operation of the banking system goes to the very root of the national well-being and it is vitally important that the system should at all times work with maximum efficiency and harmony.

Who could argue that the present system, comprising the private banks and the Commonwealth Bank, works with maximum efficiency and harmony? Do the private banks always co-operate in carrying out the national policy? Let me give a couple of illustrations. I shall quote, not what Labour members have said, but what a member of a political party similar to the present Government parties said. The late Mr. F. G. Pratten, formerly member ‘for Parramatta, said in addressing the manufacturers’ annual dinner in Sydney on 27th October, 1924 -

From the London money collected by banks for Australian exports it had been the practice to pay the overseas interest bills and the Government repaid the banks at this end. But the banks repudiated that policy, used their overseas money to finance a flood of imports, and governments were compelled to borrow in London to meet their overseas interest. Thus the banks impelled a change in the policies of governments and by the financing of extra imports frustrated the doctrine of national protection.

I readily admit that the private banks could not do that to-day, even if they wanted to do it, because there are controls which would prevent it. But I think that it demonstrates that when the private banks have the opportunity to take such action national policies are very low down in their consideration and profits are right at their top.

In the same year, 1924, the Associated Banks made a demand on the Bruce-Page Government for the right to draw Commonwealth notes to any extent they wished on the basis of an interest-bearing loan. The Government, initially, refused. Then the banks proceeded to call in overdrafts, refuse new credits and refuse to finance wool sales. The Sydney “Sun” of 9th October, 1924, reported that bank credits were unprocurable, no matter what the security offered. On 11th October, 1924, a secret conference was held between the Government and the representatives of the private banks, and on 14th October the newspapers reported that the Government had given way on all points.

Let me come a little nearer the present. Dr. Coombs, the present Governor of the Commonwealth Bank had a consultation with the private banks in 1952. There is the same sorry history of the operations of the private banks right throughout the years. It was decided, at that conference, that the liquid assets to deposits ratio would be 25 per cent, and this was to be achieved by June, 1953. From 1954 to 1955 advances by the private banks increased by £140,000,000. From 1953 to 1955 they increased by £250,000,000. Let us hear what Dr. Coombs, the Governor of the Commonwealth Bank had to say about the activities of the private banks. He said -

There can be no doubt that the rise in advances was excessive and contributed significantly to the rapid emergence of inflationary conditions. . . . It took place despite strong central bank pressure to restrain it.

Mr Wight:

– What about the Commonwealth Bank?

Mr WARD:

– Only three banks cooperated to implement the agreement arrived at between the banks and the Government, and one of the three was the Commonwealth Trading Bank. How can we get the conditions which the Treasurer has laid down as being necessary to ensure the future well-being of the people of this country when Dr. Coombs has stated that the private banks, after entering into a solemn agreement with the central bank to carry out this decision of maintaining a 25 per cent, liquidity in the banking structure did not honour their undertaking? The only way to get what the Treasurer said was essential in the interests of Australia is by means of a nationalized banking system - a government monopoly of banking.

Let us turn to what the Treasurer said in regard to this matter in his speech. Dealing with the necessity for the central bank to control and direct the various elements in the banking structure, he said -

The trading banks have agreed to continue to observe the liquidity convention which is now in operation … or such other liquidity convention as may be agreed in the future.

Agreed to continue! They have not observed the convention between themselves and the Commonwealth banking authorities. The Commonwealth Bank has a monopoly over the issuance of the small change of the nation - the bank notes and the coinage. There was a time in this country when the private banks exercised that right and it was a right which they defended when the government of the day decided that control ought to be transferred to a governmental authority. If the Commonwealth Parliament has control over the small change of the nation - and this is regarded to-day by every one as being essential - why has it not sole control over cheque currency?

Is it not readily recognized that the value of money is determined by the volume of money in circulation? What is the use of the Parliament having the right to regulate the small change of the community when it cannot control the cheque currency of the country?

Let me turn to the question of unfair competition. We have heard quite a deal about it. There is unfair competition; but the unfair competition is against the Commonwealth Bank. When this Government decided to reconstitute the Commonwealth Bank Board whom did it appoint? It appointed the representatives of big business in this country. It is perfectly true that the Government laid down that any of the members of the bank board who were appointed from outside the Public Service were not to be directly associated with a private bank. From outward appearances at least they have no direct association., but everybody knows that with the interlocking of directors to-day in big business, whether it be private banks, private insurance companies or great manufacturing concerns, it is the same group of individuals in control. Therefore, it is not necessary to have directors of private banks on the bank board in order that such interests can control the activities of the Commonwealth Bank. The representatives of big business are there. In my opinion, if the Government wanted to display some impartiality in this matter it would have insisted that anybody appointed as a member of the Commonwealth Bank Board should not only have had no direct connexion with private banking in this country, but also should not have any connexion with big business at all.

I shall read what the honorable member for Balaclava (Mr. Joske) said on the question of unfair competition. He agrees with me that unfair competition has operated against the Commonwealth Bank. This is what he said -

The private banks under the present system have not that trust and confidence in the central bank which is essential to the proper working of the banking system.

The central bank is aware of that position and in consequence it has leaned over rather too much in favour of the private banks in order to try to make conditions fair . . . The consequence is that tb» community has suffered.

That is a very great weakness which has affected the Government Trading Bank and it should be cured.

The only difference of opinion I have with the honorable member for Balaclava is that he thinks the bank board acted as he describes in order to display impartiality. On the other hand, 1 believe the bank board so acted because it represents the private banks and was acting in the interests of those organizations. According to the honorable member for Balaclava the Labour party opposes the present legislation because of its desire to strangle the private banks without payment of compensation. When the Labour government acted to nationalize the private banks it provided in the legislation for the payment of compensation.

To-day the private banks are in a favoured position in this community. They are much more favoured than those engaged in other types of trading activity because they are guaranteed against failure. Anyone who reads the legislation will see that if a private bank is inefficiently managed and gets into difficulties, it cannot fail because it is guaranteed by the Government. The Government intervenes, puts the affairs of that bank on a solid basis once again and bands it back to its former controllers without cost. Therefore, the private banks are in the position of having a guarantee which Ls not given to any other section of business in this country.

Now let me turn briefly to the question of separation of the Commonwealth Bank functions. Why has the Prime Minister suddenly changed his attitude in regard to separation? Tt is rather significant that the Prime Minister has not taken part in the debate on this, probably the most important legislation this Parliament will have to deal with. As a matter of fact, he has hardly been in this House while it has been discussed; he feels embarrassed and uncomfortable. The Prime Minister has been forced by his financial backers to reverse his attitude on the question of the separation of the functions of the bank. In 1953. in replying to a criticism by Mr. Gannon, general manager of the Bank of New South Wales, the Prime Minister said -

We believe that the Commonwealth Bank’s general trading activities have great merit because they act as a source of information to the central bank. They enable the central bank to have an instrument by which it may give leadership in banking policy.

That was his attitude in 1953, but we have heard not a word from him in this debate. Dr. Coombs, the Governor of the Commonwealth Bank, in a lecture which he gave to the English, Scottish and Australian Bank, in 1954, when, no doubt, he believed that the Prime Minister would not reverse his attitude, said this -

There can be little doubt that this link gives to the Commonwealth Bank a source of strength which can be of particular value in times when the economy is threatened with declining activity and employment.

Is not that what is happening now? At the end of January last there were 82,000 officially registered unemployed- But that is not the exact figure of the unemployed in this country. I have had conversations with officials of the Department of Labour and National Service, who informed me that in order to get an accurate figure at least another 25 per cent, should be added to the figure released by the Government. Prior to the last federal elections the Government denied that unemployment was increasing, but as soon as the elections were out of the way out came the official figures which disclosed the largest number of unemployed for the last ten years. I saw a confidential report a week or two ago which has been presented to the Government by its own officers. I was amazed to read that those officers predict that in the winter months, which are not very far ahead, they expect the official registered number of unemployed will be doubled. That means that the present number will increase to .160,000. To obtain the true figure, having regard to the method by which these estimates are made, by adding 25 per cent., the total number unemployed in the coming winter is likely to be between 200,000 and 250,000. To demonstrate again the filthy game played in this country by the private banks through their stooges in this Parliament, whose praises are always being sung by the newspapers, let me say that no mention was made in the press of the fact that Lustre Hosiery Limited, employing 70 men, has been compelled to close down and the last of its employees will be dismissed next May. Not a word of that has appeared in the press because the Government does not want the people to know the true situation.

Everybody knows that the banking structure in this country is rapidly changing because this Government has afforded the opportunity for private banks - which are now resenting governmental controls - to move into other fields of activity. Dr. Coombs said -

People are entrusting more of their financial reserves to business firms and proportionately less to banks and savings banks than previously.

In this they are encouraged by the greater reward in interest earned and the fact that in recent years they have not experienced any losses.

Everybody knows full well that when the Labour Government’s legislation was passed in 1945, it provided power for this Parliament and the Government of the day to control not only the advances policy of the banks, but also their powers of investment. They could not invest in public loans, or Government securities or in shares listed on the stock exchange. That legislation restricted them in these directions. But in 1953, those restrictions were removed by the present Government and now we find the private banks moving into the field of hire purchase. Why are they doing that? According to speakers on the Government side they are imbued only with a desire to do everything for the wellbeing of the Australian community. If the banks had surplus money to invest, and they were putting the national interest first, they ought to have been investing it in homes for the people, and in hospitals and schools which are so urgently required. They have not been prepared to deal on the basis of an overdraft, making advances for these particular purposes, but prefer to move into the more remunerative field of hire purchase.

The honorable member for Mitchell (Mr. Wheeler) alleges that banking has not been profitable. He said -

By the harsh application of the squeeze methods brought in by the Chifley Government and the subsequent restrictions placed on private banks by this Government, banking in its true form has not been profitable.

Consequently, private banks have moved into these other fields. I wish to make further reference to the Government’s conception of fair competition. It proposes to establish a Development Bank which will take over the functions of the Mort.gage Bank Department and the Industrial

Finance Department of the Commonwealth. Bank. It can engage in hire purchase business but only in what the Government calls “ fair competition “ with the private banks. The Commonwealth Bank cannot freely participate in hire purchase, the most lucrative form of hire purchase, lt may not make advances to the community for the purpose of buying motor cars, refrigerators, television sets and so on. That lucrative field1 is reserved for the private banks. And that is what they call fair competition!

Now I want to conclude - because I have just one minute to go - by saying to the House that there is no doubt in my mind, or in the mind of any reasonable person in this country, that this Government has been bought by the private banks. The allegations made by the Deputy Leader of the oppsition have not been questioned. Why did not the members opposite ask for this matter to be sent to the Committee of Privileges? Why did they not ask for that?

Mr DEPUTY SPEAKER (Mr Lucock:

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

Mr WARD:

– The Government wants no investigation, because it knows full well that if the books of the private banks are produced they will prove conclusively that every word that the Deputy Leader of the Opposition said is correct.

Mr DEPUTY SPEAKER:

– One point I would make is that in future when order is called for from the Chair, and an honorable member refuses to take notice of the Chair, such an honorable member will be named.

Mr Ward:

– I could not hear you, Mr. Deputy Speaker.

Mr DUTHIE:
Wilmot

.- Mr. Deputy Speaker-

Motion (by Mr. Osborne) put -

That the question be now put.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 53

NOES: 39

Majority . . 14

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 53

NOES: 0

Majority . . 13

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 697

COMMONWEALTH BANKS BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 382), on motion by Mr. Harold Holt)-

That the bill be now read a second time.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 52

NOES: 40

Majority . . . . 12

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 698

BANKING BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 384), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 51

NOES: 40

Majority . . . . 11

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee (Consideration of GovernorGeneral’s message):

Motion (by Mr. Harold Holt) agreed to -

That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to regulate banking, to make provision for the protection of the currency and of the public credit of the Commonwealth, and for other purposes.

Resolution reported and adopted.

page 699

BANKING (TRANSITIONAL PROVISIONS) BILL 1959

Second Reading

Consideration resumed from 26th Febxuary (vide page 385), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 52

NOES: 40

Majority . . . . 12

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee (Consideration of GovernorGeneral’s message):

Motion (by Mr. Harold Holt) agreed to -

That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to enact certain transitional provisions consequential upon the enactment of the Reserve Bank Act 1959, the Commonwealth Banks Ac: 1959 and the Banking Act 1959.

Resolution reported and adopted.

page 699

AUDIT BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 386), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 699

CHRISTMAS ISLAND BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 386), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 699

COMMONWEALTH EMPLOYEES FURLOUGH BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 387), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

CRIMES BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 387), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 388), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

NATIONAL DEBT SINKING FUND BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 388), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

NORTHERN TERRITORY (LESSEES’ LOANS GUARANTEE) BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 389), on motion by Mr. Harold Holt-

That the bill te now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

OFFICERS’ RIGHTS DECLARATION BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 389), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

RE-ESTABLISHMENT AND EMPLOYMENT BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 390), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL 1959

Second Reading

Consideration resumed from 26th February (vide page 390), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

page 700

EXPORT PAYMENTS INSURANCE CORPORATION BILL 1959

Second Reading

Debate resumed from 12th March (vide page 568), on motion by Mr. McEwen -

That the bill be now read a second time.

Mr CREAN:
Melbourne Ports

– In introducing the bill on Wednesday of last week, the Minister for Trade (Mr. McEwen) said that two important features were involved. The first was a proposal to double the liability that could be assumed by the Government in certain contingencies. The present statutory limit of £25,000,000 is to be raised to £50,000,000. The second proposal is to double what is called the working capital of the organization. It is to be raised from £500,000 to £1,000,000.

The original act was passed in May, 1956. It was then said to be a measure of vital importance to the future export trade of Australia and was passed with a certain amount of urgency. However, no policy under the new legislation was issued until September, 1957. The figures I am quoting are taken from -the annual report and financial statement of the Export Payments Insurance Corporation for the year ended 30th June, 1958. This report shows that the first policy was not written until September, 1957. When the legislation was discussed almost three years ago, it was stated that the existence of such an insurance scheme as this could possibly lead to additional orders for Australian exporters of about £25,000,000. It was felt on this side of the House at the time that that was a rather optimistic figure and that progress would be much slower, although if this thing grows to the proportion of similar schemes in Great Britain and Canada, in years to come it could well be a significant factor in our export trade. It is estimated, for instance, that something like one-seventh of the total volume of the export trade of the United Kingdom is covered by the Export Guarantee Corporation Department as it exists there.

Already, in the remainder of the financial year from September, 1957, to 30th June, 1958, guarantees to the value of over £11,000,000 had been issued by the Australian Export Payments Insurance Corporation. The annual report of the corporation sets out briefly the risks that are covered by this form of insurance. It states at page A -

These risks may be divided into two broad classes: -

those where non-payment of overseas accounts arises from the insolvency or protracted default on the part of the buyer, and

the political and economic factors which can give rise to a wide range of difficulties for the exporter. The most important of these are exchange transfer blockage or delay, import licensing restrictions, and war, civil war or similar disturbances.

The insurance risk covered by this form of policy is that which is not assumed by private insurance organizations. When the original bill was before the House in 1956, the Opposition suggested - and we still say there is value in the proposition - that the organization ought also to carry some other forms of export insurance. It should not only assume the liabilities that no private company will assume, but should also be given some of the cream of the business. A further suggestion that was made from this side of the House during the debate two years ago was that some attempt should be made by the Government to fill a very important gap in Australia’s trade position. Certain of Australia’s competitors, if we look at this matter on an international plane, are able, by some form of government agency or another, to offer long-term contracts to exporters. For example, there might be a sale of heavy earth-moving equipment to the value of some millions of pounds. Most Australian exporters are not in a position to wait three or four years or even longer to receive payment. If firms had to work on that basis in Australia, most of them would go broke. They cannot carry credit for that length of time. In the United States of America, the Export-Import Bank, which will make advances to exporters in anticipation of ultimate payment, will give an advance to the total value of the contract.

Similarly, there was some reference this morning at the conference of the Economic Commission for Asia and the Far East to the fact that Russian firms were filling longterm contracts for the sale of heavy equipment to other parts of the world. I suggest that that is a field into which the Australian Government should inquire. Such contracts would involve quite large sums of money, and customers overseas would buy from us if they had long enough terms of credit. Australian exporters, for the most part, are not in a position to give such extended credit terms and in consequence, much of the business is lost, not because Australia’s prices are not competitive but because the Australian exporters cannot provide credit on a long-term basis. We suggested two or three years ago that that sort of problem should be examined. The need is just as great for such assistance in 1959, even if the provision of long-term credit meant setting up a special fund of some millions of pounds. The money would be paid when the order was actually delivered and the ultimate payment would be collected by the agency from the Government or from the importer in the country concerned.

On the occasion of the previous debate, we referred to the cold war. Unfortunately, it still continues and one of the main weapons is not a military weapon but economic strategy of which this sort of transaction could well be a part. Australia and the countries of the British Commonwealth of Nations as a whole should be setting up some such organization. A move was made through the International Bank for Reconstruction and Development which set up a special fund, but surely the Australian Government is in a position to set up such a fund in Australia whether it be for the sale of machinery or even for the sale of certain primary products on a long-term basis. One of our difficulties, to which I think reference was made by one of the newly elected honorable members representing the Australian Country party, is that there are potential markets in the Eastern countries for many of Australia’s primary products but the people of those countries are deficient in purchasing power. It might be possible for trade deals to be negotiated, perhaps on a governmenttogovernment basis. It would be the responsibility of the government in the other country to see that the wheat, wool or pineapples were satisfactorily distributed to the people who needed the products.

One point calls for some explanation from the Government concerning one of the proposals which is contained in the measure before the House. The Government has made out a case for doubling the guaranteed liability because already the flow of business is round about £24,000,000 to £25,000,000. That is the potential liability which we hope will never have to be met but which must be met in certain events. The existing liability of £25,000,000 is not adequate for the potential trade and the proposal is to raise it to £50,000,000. The Opposition concurs with that proposal. A good case appears to have been made out in the annual report of the corporation itself and also in the second-reading speech of the Minister for Trade (Mr. McEwen), but I cannot reconcile with that proposal the request of the Government for a further £500,000 of working capital for the corporation. I direct the attention of the House to the statement of assets and liabilities of the Export Payments Insurance Corporation which are contained in appendix A of the annual report from which I have quoted. It indicates that the original capital of £500,000 which was provided in the legislation passed in May, 1956, is still intact, and has been invested in Commonwealth securities. What I want to know is this:

If the original £500,000 is in Commonwealth securities, why is the Government seeking a further £500,000 of working capital for the corporation? Has the Government in mind the purchase of a building or something of that kind? If so, I think it should have provided some information on the matter. It seems to me that the corporation could well realize the £500,000 worth of securities which it already has rather than seek a further appropriation of £500,000. It is not as though the £500,000 has to be held as a reserve against liabilities, because the corporation is covered by a separate provision that in the event of certain happenings the Government will assume liability, at the present time up to £25,000,000, and in future up to £50,000,000.

The question of working capital is somewhat of a mystery, at any rate from a first glance at the statement of liabilities and assets for the year ended 30th June, 1958. The statement of income and expenditure for the same year shows interest of £18,120 derived from investments, which, of course, is simply a return of somewhere between 3 per cent, and 4 per cent, from the £500,000 worth of Commonwealth securities. That investment income, together with the premiums received on the risk cover, is needed to make the undertaking show a profit for the year, despite the fact that according to the charter - the words are spelled out again in the annual report - the corporation is required to operate on a commercial basis. That means that it must endeavour to pay its way out of its earnings. If we subtract the sum of £18,120 - the interest on the original capital invested’ - from the receipts for the year, the corporation, will not show a profit on its business for those twelve months.

I do not know what form of bookkeeping is involved here or what sort of accounting concept is behind this, but I am sure that when this £500,000 was appropriated as the working capital of this organization, it was not intended that that money should be salted away in Commonwealth bonds to yield an income of round about £18,000 a year to cover half of the expenses in the first year. The Government may have in mind the setting up of agencies in other parts of the world, or perhaps the acquiring of a central headquarters building in one of the capital cities, involving expenditure of the order of several hundreds of thousands of pounds, but that has not been mentioned in. the Minister’s speech. Perhaps the Minister for Labour and Natonal Service (Mr. McMahon), who is at the table, will be able to elucidate this matter. Until some elucidation is given the House ought not to be asked to vote a further £500,000.

Mr McMahon:

– I think you will’ see the explanation in the Minister’s speech.

Mr CREAN:

– I read the. Minister ‘sspeech with some care, but 1 could not find any explanation of why an extra. £500,000 is needed when the corporation has £500,000 invested in Commonwealth, bonds at present. Perhaps the Minister might direct myattention to the passage: in the speech that he has in mind.

Mr McMahon:

– The passage is -

Normally, an organization of this type can expect to have considerable sums of money tied up pending rceovery from overseas.

Mr CREAN:

– This £500,000 is not tied up. It is invested in Commonwealth Government securities in this country.

Mr McMahon:

– The corporation has to hare reserves. The Minister for Trade explained that the corporation is charged to conduct its affairs on a commercial basis. The sensible assumption is that it will requre £1,000,000 for all these purposes, or at least a reserve of £1,000,000 for these purposes.

Mr CREAN:

– I do not regard that as a satisfactory explanation. The income that is earned by this undertaking arises from premiums. According to the words I have already read out, the corporation is required to operate on a commercial basis, which means that it must endeavour to pay its way out of its earnings. If the corporation had not received £18,000 interest as the result of working capital being invested in Commonwealth securities - which does not seem to me to be relevant to the undertaking at all - it would have had to cover in another way the cost of the services rendered. The premiums charged ought to have been double what they were.

This is an important matter, which has not been explained. What kinds of recoveries from overseas are involved? As I see it, if something goes wrong and an exporter is not paid by his customer, the payment is made out of the liability for which the Government has provided. It is not paid out of working capital at all. This measure, I might mention, was introduced on a Wednesday evening and originally the members of the Opposition were expected to debate it on the following Thursday morning. We refused to do so, on the ground that we had not had an opportunity at that stage to consider it. Since then we have read the only document that is available to us, namely, the annual report. It seems very odd to me, even in the face of the Minister’s words,, that although the original £500,000 is still’ tied up in Commonwealth securities in Australia we are asked to provide a further £500,000. Surely a wider explanation should be given to us of the kind of recoveries from overseas that are expected. This is not my idea of working capital at all.

The report says that the corporation has had to establish agencies in other parts of the world in order to secure the sort of information that is required. In a company the payments for that kind of thing would be regarded as capital expenditure, you would call those payments “preliminary expenses “ in a company, and that would be legitimate enough, but expenses of that kind do not seem to have been absorbedin the £500,000. All those expenses have been incurred, and the £500,000 is still intact. Yet we are now being asked to make available a further £500,000. If an explanation is not provided in adequate form, this measure ought to be delayed a bit longer until we can find out more about it.

Mr BURY:
Wentworth

.- The honorable member for Melbourne Ports (Mr. Crean) raised the question of the capital provided in relation to what inevitably it must be related to - that is, contingent liabilities. I would have thought that a part of this capital must be set aside to cover thefirst losses made by the corporation. So far, this corporation has been most successful in the insurance ithas effected, but, as is pointed out in this report, no judgment can be made because the number of guarantees are spread over a considerable period of time. It would not seem appropriate that in the first case, if a loss is made it shouldcome straight down on to the contingent liability, to be met by the Treasury in that way. It would also seem a reasonable assumption that this corporation is likely to expand into other cities. So far it is established only in Sydney and Melbourne, but provision must be made for establishing it in other capital cities, where at the moment it is represented only by officers of the Department of Trade.

The honorable member raised another rather wider matter - credit for exports. This corporation was not set up to provide credit. Its whole object is insurance. When you consider the prospect of Australia providing credit for exports on a large scale you enter a realm in which we, by the nature of our balance of payments problem, are singularly ill-equipped to go ahead. We will have difficulty over the next year or so in providing sufficient funds for our own use without considering exporting on long-term credit.

As far as the cold war is concerned, supplying under-developed countries is a kind of rat race in which Australia could not hope to reap dividends. We are already spending large sums of money under the Colombo plan and other forms of assistance to the countries of South and South-East Asia, but we are in no financial position to contemplate the provision of large scale long-term credits.

We should not pass over the fact that this corporation has made a very successful beginning. Up to the end of the last financial year - June, 1958 - contingent liabilities which it had undertaken in the course of its business amounted to no more than £5,700,000. Now, it is quite clear that if all business that the corporation has recently been discussing comes to fruition, the £25,000,000 contingent guarantee by the Treasury under the present act will not be sufficient. The House should take note that this venture has been most successful so far. It has made an excellent start. It has insured, according to the report, exports from Australia to 64 markets.

The corporation is likely to become of increasing importance to Australia’s export trade, not only to insure exports to markets where there is a large measure of risk, but also as a provider of information and guidance to exporters, stretching far beyond the normal needs of insurance. The corporation has established in a very short time a very effective network of information both as regards individual firms and the conditions prevailing in different countries. All this is most important information to guide our exporters and other potential manufacturers. People with an interest in those markets can now ascertain from the corporation much information for their operations which was quite unavailable two years ago. That information is very costly to collect. It is gathered from a number of sources, apart from the usual commercial services. It comes particularly, of course, from the contacts of the acting commissioner himself, Mr. Freeman. We should pay some tribute to the United Kingdom for having made available a man of this calibre at a time when the United Kingdom is expanding its own organization and can ill spare experienced hands. Mr. Freeman, of course, has brought direct information of his own about conditions in different countries. He also collects information from such sources as the International Monetary Fund and the International Bank, where a great deal of information is compiled on the commercial, financial, and economic conditions prevailing in most of the countries of the Western world.

The big danger in a corporation of this character is that it will be urged to move too far too quickly and will, as a consequence, undertake risks that are not really justified. Fortunately, the act provides that the corporation will not insure for more than 85 per cent, of the value of the goods shipped. It is basic to proper insurance of this kind that the individual exporter should have a direct financial interest in the outcome, and thus will take due care to ensure that his contract is met in every way and that he deals only with reliable people. As time goes on there is bound to be irresponsible clamour for greater coverage at less cost. That clamour is apt to come, as so much clamour comes with shortage of credit, from people to whom no prudent man would ever lend money in any case.

Another feature to guard against is the tendency for exporters to complain that they have lost orders because of unfair competition financed by other countries by long-term credits and other favorable conditions which, when you go into them in detail, prove to be quite different from the original allegations. This is one of the advantages of the union of international credit insurers operating in this field. They can exchange information and prevent a kind of international rat race in the insurance field, which would end in extending credit to people who are not credit-worthy and so getting them into trouble and, generally, having a bad effect on international trade and finance.

I am sorry that the Minister for Trade (Mr. McEwen) is not in the House while this bill is being discussed, because there is one important danger associated with this corporation. That, unfortunately, is that the acting commissioner’s term of office is about to expire. Section 10 (2.) of the act - a very rigid provision - states that the acting commissioner shall not serve for more than two years. On the other hand, the commissioner is appointed for seven years. Two years is not long enough to get a complex organization of this character, requiring a great deal of knowledge and experience, into being. It is not really prudent to hand over such a responsibility to a newcomer or somebody who has only been in the field for a limited time. I hope that the Minister will, by some means or other, be able to keep the acting commissioner here a little longer, even if the United Kingdom itself wants him back. The United Kingdom has been most generous -in the past and I am sure that it could be pushed a little further. The danger is that this corporation, having got off to a firstrate start, will, unless it continues to be managed by a man of Mr. Freeman’s qualities and experience, cease to operate successfully. I hope that the Minister for Labour and National Service (Mr. McMahon), who is at the table, will convey to the Minister for Trade my hope - and I think I am supported by most honorable members - that all reasonable measures will be taken to retain the services of Mr. Freeman.

Mr POLLARD:
Lalor

.- I wish to add my remarks to those of the honorable member for Melbourne Ports (Mr. Crean) regarding the short time allowed to members of this Parliament to look closely at this proposed alteration to the principal act. The Minister for Trade (Mr. McEwen) delivered his second-reading speech last Wednesday, and even at that early stage the Opposition was asked to consent to the bill being read a second time. We have had only two or three days to consider this measure and other matters. The bill is of profound importance to our export industries which, in existing circumstances, need nurturing. When assistance is given to these industries or semi-government organizations are established to help them, it is only right and proper that the Parliament should have adequate time to consider the proposals submitted.

The principal legislation received the support of the Opposition when it was introduced in 1956. We pointed out then, as we point out now, that there was no direct profit to be derived by the taxpayers from the corporation. The Australian Labour party does not necessarily stand for instrumentalities that seek direct profit; it stands essentially for instrumentalities that give a necessary service to the community. The Opposition saw no objection to supporting the original measure, but it did point out that when profitable kinds of insurance business such as marine insurance are to be transacted no opportunities are afforded to the taxpayers and the people generally to participate; they are landed with only the risky business.

The Export Payments Insurance Corporation has been functioning for a little more than 18 months. Although that is not very long, it is long enough for the corporation to find its way about and to get a real understanding of the difficulties already confronting it and those that are likely to confront it in the future. The commissioner’s annual report is a commendably short document. Unfortunately, it does not supply as much information as I think members of the Parliament are entitled to have. The Minister for Trade, too, in his second-reading speech did not supply as much information as we are entitled to have, particularly in view of the fact that the measure now before us asks the Parliament to increase the liability to be assumed by the Government from £25,000,000 to £50,000,000, and to increase the capital of the corporation from £500,000 to £1,000,000. Those increases may be quite justified, but we are entitled to have more facts.

We have been told that the corporation has covered business affecting 46 different countries, some of which have been named and others of which have not been named. A wide range of primary products and secondary industry exports have been set out; but, we have not been told in either the Minister’s second-reading speech or in the commissioner’s report whether wheat exported by the Australian Wheat Board is covered or whether the board assumes liability.

Mr McMahon:

– Exports of wheat by the board are not covered.

Mr POLLARD:

– The Australian Wheat Board, an instrumentality which protects the interests of wheatgrowers, apparently has no cover under this legislation.

Mr McMahon:

– The board does not want it.

Mr POLLARD:

– I am glad to hear that remark, but does the Minister tell me that this year there are not markets freely available to the board which it could exploit if cover of the kind provided by this legislation was available to it? Is the Minister telling me that?

Mr McMahon:

– I am not telling you anything.

Mr POLLARD:

– All I intend to say about that is that the board has had ample supplies of wheat for which it has not had any markets. From time to time we have read statements by the chairman of the board to the effect that there are markets for wheat in certain parts of the world but that the people concerned have not had sufficient currency of a kind acceptable to us and that the financial risks have been so great that the board has not been able to accept them. Has the board been offered the facilities that this corporation can provide, or is the corporation confining its business entirely to private companies and individual firms?

Mr Bury:

– Its facilities are open to the board.

Mr POLLARD:

– But I should like to know whether the board has sought cover from the Export Payments Insurance Corporation.

We learn from the corporation’s statement of income and expenditure that the premiums on risks insured so far total the modest sum of £18,703. The balance of the income of the corporation over the period it has been operating involves another £18,120 by way of interest on the working capital of £500,000, and miscellaneous income amounts to £165, making a total income of £36,988. Expenditure amounted to £32,141. We are told in the report of the commissioner that up to 30th June last the maximum liability, both actual and potential, was of the order of £10,000,000 and that additional business of the value of some £5,000,000 was under consideration.

Mr McMahon:

– The Minister’s speech contains later information. The Minister said -

In arriving at this figure, the Government has considered carefully the latest trading position of the corporation.

Mr POLLARD:

– That is right, and he said that the corporation has a contingent liability of £24,000,000. Yet on the fairly substantial volume of business already transacted, the premiums do not amount to more than £18,000. It seems to me that £18,000 is a mighty modest premium to charge on that liability, or assumed liability. One wonders where the corporation would have found itself financially if it had not been for the £18,000 interest on the £500,000 capital which the Parliament granted when the corporation was established but which apparently it has not yet spent, but has on deposit with the banks or somewhere else. Despite the lack of utilization of that £500,000, and the fact that the corporation is drawing no revenue from it, we are now asked to provide a further £500,000. We need rather sound reasons to justify that kind of business. We are not objecting to the provision of a further £500,000 in capital if a satisfactory explanation is forthcoming, nor are we objecting to a further liability obligation on the part of the corporation if it has business offering to justify that increase. We want a better explanation than that which has been tendered.

The Minister, in his second-reading speech, said -

Normally anorganization ofthistypecan expect to have considerable sums ofmoney tied uppendingrecovery from overseas. As the corporation is charged to conduct its affairs on a commercial basis, it is appropriate that it should have sufficient capital to meet its anticipated normal requirements. It is also a fact that as the corporation expands to take advantage of the new scope offered it, money will have to be expended on staffing and promotional activities . . .

Everybody knows that as business expands increased starling becomes inevitable, but I want to know something about these proposed promotional activities. Before we find one penny more in capital for this organization surely we are entitled to be told by the Minister what these activities will be! Will a gigantic advertising campaign be embarked upon? Will a great television programme be embarked upon? Are photographers, pressmen, or other people of that type with essential skills to be engaged? Are films to be provided? Is a large amount of money to be spent on promotional activities? If so, exactly what is the nature of these promotional activities?

The corporation may have the idea that there is a need to bring to the notice of the potential exporter the fact that these financial facilities are available to him under certain conditions. I suggest that as the number of exporting firms in Australia is exceedingly small, there is no call for extensive newspaper, magazine, film, television or any other form of promotional activity. The situation could be met by a continuation of the very wise practice already adopted, if my memory serves me rightly, by the Department of Trade of giving publicity in its excellent trade journal to the fact that these facilities are available to exporters. I take it that if firms are potential exporters of their goods, they receive, either gratis or on order, a copy of the journal. What additional promotional activity is required except perhaps that the insurance commissioner, in his wisdom, might see fit to send out in a circular letter official information that might be useful to an exporter? Honorable members are entitled to know something about this matter.

Mr McMahon:

– You have the explanation that it is capital required against a contingent liability.

Mr POLLARD:

– Are staffing and promotional activities contingent liabilities?

Mr McMahon:

– The corporation may be called upon to meet an insurance claim at short notice, and it has to have some money for that purpose.

Mr POLLARD:

– The honorable gentleman and I are at cross purposes. I am asking for an explanation of the proposed promotional activity. I have accepted the staffing explanation. That ought to be watched too. But what are these proposed promotional activities?

Mr McMahon:

– You accept the explanation of contingent liabilities?

Mr POLLARD:

– Yes.

Mr McMahon:

– The honorable member for Melbourne Ports does not.

Mr POLLARD:

– The Minister for Trade (Mr. McEwen), in his secondreading speech, did not mention promotional activities without meaning something. What is their justification and what is their nature? There is something else that I want to say about this business.

Mr Bowden:

– Why not leave it until next year?

Mr POLLARD:

– Nobody should be more interested in this matter than the Australian Country party to which the honorable member for Gipppsland (Mr. Bowden) belongs. Yet he wants to go home to bed ,and so do the rest of his party.

Mr Bowden:

– Your supporters are in bed.

Mr POLLARD:

– We have a pretty good mustering on the Opposition benches.

Mr Turnbull:

– If you sat in this House as often as we do you would have something to talk about.

Mr POLLARD:

– We will not go into that. The honorable member for Gippsland wants to go home to bed. By all means let him go home. He is no good here, anyhow. To come back to the bill, Mr. Speaker - and I suppose you want to go home to bed too - I suggest that, in view of the fact that there is quite a lot of room for discussion on this measure, the Minister should agree to adjourn the debate until to-morrow so that more mature consideration may be given to it. Is the Minister going to tell me that he intends to gag this important measure?

Mr McMahon:

– We are going to put it through to-night.

Mr POLLARD:

– How many members of this Parliament will be able to speak on it?

Mr McMahon:

– You know as much about it as any one knows. It is quite obvious that you do not need much more information. You have shown by your discussion of this bill and the original one that you are very fully informed. I am trying to give you information to the best of my ability.

Mr POLLARD:

– We would like to hear the explanation. If it is not adequate, we would like to continue the debate.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee: (Consideration of GovernorGeneral’s message):

Motion (by Mr. McMahon) agreed to -

That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to amend the Export Payments Insurance Corporation Act 1956.

Resolution reported and adopted.

In committee: Consideration resumed.

Clauses 1 to 3 - by leave - taken together, and agreed to.

Clause 4 (Capital of Corporation).

Mr McMAHON:
Minister for Labour and National Service · Lowe · LP

– The honorable member for Melbourne Ports (Mr. Crean) asked for the reasons why it had been decided to increase the working capital from £500,000 to £1,000,000. The reasons, if I can express them very shortly are these: The first reason is to increase the running expenses of the corporation.

Mr Pollard:

– Does “ running expenses “ mean the same as “ working expenses “?

Mr McMAHON:

– Yes. It is only a very small reserve fund, and as yet it has not been able to make sufficient profits to pay these expenses. Staff will be increased and so, too, will advertising. In short, I think that what I am now saying is set out in the Minister’s second-reading speech.

Secondly, the corporation has large contingent liabilities. It may be called upon to make payments at short notice and must therefore have some funds out of which payments can be made immediately without calling upon the Treasurer to provide the necessary funds. So, as the maximum liability is being increased from £25,000,000 to £50,000,000, it is thought desirable to increase the working capital from £500,000 to £1,000,000. I mention, too, as also appears in the Minister’s second-reading speech, that in increasing the maximum liability and the working capital, the Government had before it a unanimous recommendation that it had received from the consultative council of the corporation and the Export Development Council.

I think that it will be of interest to the honorable gentleman who raised this question, Mr. Chairman, to learn that the Canadian corporation has a ratio of maximum contingent liability to capital of ten to one. As you can see, Sir, the ratio of the corporation now being discussed by the committee is 50 to 1, so that we are, therefore, doubling the basis of what is needed for it, first of all in terms of working or running capital, and secondly, in terms of funds to meet any contingent liability that might have to be met immediately without recourse to the Government. As I have mentioned, Sir, this has been recommended to the Government by the consultative council.

Mr CREAN:
Melbourne Ports

– I thank the Minister for his explanation, but I still do not find it satisfactory. If he had indicated that since the balance-sheet was presented to the Parliament on 30th June, 1958, some, or a large part, of that £500,000 had in fact been expended on some of the contingencies to which he has referred, I should be satisfied, but I shall not be satisfied if the corporation has not so far used any of its £500,000. I can appreciate the need to increase the guaranteed liability from £25,000,000 to £50,000,000, that being the liability which the Government may have to meet in the event of default on the part of any of the buyers of goods in foreign countries. That is apart from the running expenses of the organization. I can understand that, in the event of a default of payment of the order of £500,000 or more, in order to pay the exporter immediately, before other money was obtained from the Treasury, the corporation might need more funds, but so far that has not occurred.

Is the Minister in a position to indicate whether the first £500,000 is still intact?

Mr McMahon:

– It is intact, but there are some contingent liabilities.

Mr CREAN:

– But those contingent liabilities have not, in the whole of the almost three years of the existence of the corporation, so far crystallized. If those things have not eventuated to date, why now seek a further £500,000? I do not think that the Minister has made his case out at all.

Mr McMahon:

– We are also doubling the liability. Surely, you must have some funds available in case a contingent liability in fact becomes a real one.

Mr CREAN:

– But the sum that you have available is to meet certain contingencies which have not occurred. You have not needed a penny of your £500,000 to date, even though your business has grown from nothing to £24,000,000, according to the Minister. You have not as yet touched a single penny of your £500,000; yet you are asking us to give you another £500,000. The case is not proven and I, for one, will not support it.

Mr LUCHETTI:
Macquarie

.- The Minister has spoken of contingent liabilities. It seems to me that he is not prepared to come into the open and make plain to the committee and the nation the objectives of the Government. If substantially increased sums are required, I believe that the taxpayers of Australia should be told just why they are required and what is to be gained from voting them. Over and over again the Minister has referred to “ contingent liabilities “. He mumbles across the table to the leaders of the Labour party with regard to this matter. He talks about running expenses. Surely this is not the old1 story of building up a department starting with an office and a chair and then gradually building around them a new and magnificent organization! It is clear to all concerned that we need to expand our export trade, and that there are lucrative fields in which Australia might become engaged.

At present, at Broadbeach in Queensland, there are in conference representatives of countries of the Far East, or our near north, discussing the urgent problems of eating, living and surviving. If we want to come to grips with those problems, the Government might well say, “ We propose to make certain foodstuffs available to Asian countries. We are going to make wheat available on long-term credit “, or, “ We are going to finance a venture in respect of which we are not likely to get out of the financial mire for a considerable time to come, but it is necessary for us to take a gamble, and this money is required to cover us over that period, for the sake of Australia and her reputation, our national security, and the goodwill of our northern friends “. If something like that were to be said, we could understand the need for the money. But the Minister has spoken of running expenses and contingent liabilities. That does not make sense to this committee.

We ought to know what is being done. Is this just a question of pouring the taxpayers’ money down the sink without any guarantee of what is to be received in return? I think that the Minister owes it to the committee to tell us what is to happen. Until such time as he makes a clear and unequivocal statement in that regard, I think that the Parliament should1 oppose the proposition.

Mr POLLARD:
Lalor

.- The Minister has said in his explanation that promotional activities involve advertising. I do not intend to repeat what I said previously, but, as I see it, adequate advertising probably is provided by the cover of the excellent monthly publication of the Department of Trade. If anything additional is to be indulged in, we ought to know the nature of it. Furthermore, I suggest, Mr. Chairman, that advertising in connexion with an instrumentality of this kind should hardly be necessary, because this is one of those rare instrumentalities to which people may go and have the Government of the country carry the burdens and the risks involved in their commercial transactions. In those circumstances, I suggest that advertising should be purely nominal. It is true that instrumentalities such as the Commonwealth Bank necessarily indulge in very extensive advertising, because they are in active and vigorous competition - or they should be - with competitors, such as the private trading banks; but this instrumentality has no competitors whatever. All that is required is that business people should know it exists. Promotional activities of an extravagant or expensive character are not needed.

Coming back to the capital provision, the corporation now has £500,000 of the taxpayers’ money available to it from which, in its last year of operation it reaped an investment income of £18,000. Now the Minister asks that that amount be increased to £1,000,000 from which the corporation, if it does not use its capital, will have a total investment income of £36,000. Even if there is a call on the capital funds of the corporation because of some loss by a business organization, the taxpayer carries the loss. He meets that loss out of the interest earning activities of this capital of £1,000,000.

I suggest that the corporation, which gives a cover such as no other insurance concern in the country will give, in its initial couple of years of activity should see that its premiums are sufficient to cover normal reasonable risks. Nobody else will give that cover at all. In these circumstances it does appear, unless we are told something to the contrary, that so far the premiums charged are insufficient to cover what ought to be a normal provision. We want to hear from the Minister what actually are the charges for cover on specific types of goods. What would be the cover on goods exported to Red China in contrast with that on goods exported to conservative Viet Nam or Laos or some other country? We want to know how the income of the corporation is being reaped. Is it heavy enough in respect of iron curtain countries or is it too heavy in respect of other countries which are a safer risk. We want to know how the mechanism of this organization works, and we are entitled to to that information before the Parliament grants any more funds to it.

This is a reasonable request. The Minister is a decent sort of a fellow as a rule and he should adjourn this debate, obtain the information and give it to the committee to-morrow. Otherwise, the Government is asking the taxpayers to find another £500,000 for a Government instrumentality to provide interest which will be added to an already heavy working capital in order to justify the corporation not charging premiums which ought to be charged. Most insurance businesses today are reaping very handsome profits and we want to know a little more about the activities of this corporation.

Mr McMAHON:
Minister for Labour and National Service · Lowe · LP

– Only two new matters have been raised by my good friend the honorable member for Lalor (Mr. Pollard). One is that I should give an additional definition of the expression “ promotional activities “. lt has been pointed out that this class of insurance is very complicated and requires a staff of expert field officers. There are several thousand exporters to visit and a potential of several thousand more who must be visited and have explained to them the problems of insurance, the premiums to be paid and the way in which this insurance can help them. For the information of the honorable member, the United Kingdom organization has, for this purpose, an outdoor staff of more than 100 persons.

Mr Crean:

– But that organization handles one-seventh of the export trade of Great Britain.

Mr McMAHON:

– In the eighteen months in which this corporation has been in operation it has done a magnificent job. I have not heard honorable members opposite expressing regret that it has been set up. They agree that this is a wonderful scheme and that this corporation has done a great job for Australia. It has been of immense benefit to the exporter. But now they want to haggle over a few minor details which, frankly, I thought would not have taken the time of the committee for more than a few moments.

The second point is whether the premiums should be built up in order to obviate the need for increasing capital. If this happened, Australian exporters would have to pay a higher premium than is paid by exporters from other countries. In other words this corporation would be placed at a competitive disadvantage.

I have listened to the honeyed phrases of my friend from Lalor. I always respect everything he says and I try, as far as possible, to agree with his requests, but cannot on this occasion. Therefore I move -

That the question be now put.

Question put. The committee divided. (The Chairman - Mr. G. J. Bowden.)

AYES: 43

NOES: 28

Majority . . 15

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 5 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Third Reading

Motion (by Mr. McMahon) - by leave - proposed -

That the bill be now read a third time.

Mr CREAN:
Melbourne Ports

– On behalf of the Opposition, 1 want to express my extreme dissatisfaction at the manner in which this bill has been dealt with here this evening. A Minister who is in charge of a bill dealing with such important matters as this should be well briefed in the salient features of the legislation. I trust that when this measure goes before another place, a more adequate explanation will be offered of the need for the additional £500,000 than has been given in this House. There ought to be appended to the measure for the information of the members of the other place a statement showing the disposition of the original amount of £500,000 as at the latest available date. In other words, a statement of income and expenditure should be furnished up to 31st December, 1958, or, if possible, at a date nearer to the middle of March, 1959.

I still believe that no case has been proven by the Government for the doubling of the working capital of this organization and I suggest that on this occasion the Minister for Labour and National Service (Mr. McMahon), acting on behalf of his colleague, the Minister for Trade (Mr. McEwen), has done his homework extremely badly.

Mr McMahon:

– I want to have my say on that. I have treated the Opposition with the greatest courtesy.

Mr. SPEAKER (Hon. John McLeay).Order! If the Minister replies at this stage, he will thereby close the debate.

Mr POLLARD:
Lalor

.- The Minister for Labour and National Service (Mr. McMahon) has not treated the Opposition with the greatest courtesy. I say that courtesy has not existed in the matter. Although this bill has been on the notice paper for three or four days, there have been only three speakers on it from this side of the House out of the substantial membership of our party. Other speakers have been gagged. Yet the Minister talks about courtesy!

A little while ago, having carried out some probing about the proposed promotional activities, I asked the Minister what would be the nature of them. Eventually, he made some inquiries from his officers, and he then informed the Parliament that the staff is to be added to by personnel who will visit the exporters of this country and explain this facility to them. Does he think that the exporting firms of this country and individual exporters are so dumb and so stupid that they do not already know that this facility is available to them. Yet the Minister states that a team of officers will be appointed to visit them and talk the matter over with them! This is one of the proposed promotional activities. In justification, the Minister stated that that is done in Britain, or in Canada, or in somewhere else. Does it follow that because something has been found necessary in connection with this type of business in Britain r>r elsewhere it is essential to do the same here This indicates that the Minister has been stampeded into coming along and asking this House to provide another £500,000 of the taxpayers’ money for this instrumentality which has not yet spent a penny piece of the first £500,000 that was granted to it. Indeed, it has invested this money and received from it a handsome return of £18,000 in interest.

I suggest that it has already been admitted that there will be a staff of visiting officers on good salaries - they ought to be granted good salaries - and expenditure will be incurred for travelling expenses, motor cars, etc. That is only one facet of the promotional activities. The Minister has neither denied nor admitted that there will be films, television shows and what-not to advertise the instrumentality which gives to the exporters of this country an insurance cover, and the people will have to shoulder the whole of the expense. If this were an insurance concern out to make profits, one could understand these promotional activities. As I said a little while ago, one can understand the promotional activities of the State savings banks and so on, because they are competing with other instrumentalities for business. But there is nothing of that kind in the matter under consideration. If the Minister thinks that the exporters of Australia are so dumb that they do not know what facilities are available to them, or how to get information about them, he is making a serious reflection on the exporters. The whole situation is most unsatisfactory, and I conclude by repeating my protest about the manner in which the Government has treated the Opposition with respect to this bill.

Mr McMAHON:
Minister for Labour and National Service · Lowe · LP

– in reply - I can add no more to what I have already said. I have answered to the best of my ability the two questions that were posed by the honorable member for Melbourne Ports (Mr. Crean), and the honorable member for Lalor (Mr. Pollard). They have admitted that this is a magnificent measure and that it gives coverage to a great number of industries. They raised only two questions of substance, and now complain that insufficient time has been allowed in which to debate those two matters. Sir, that cannot be true. No other members of the Opposition have been interested in the matter.

Mr Pollard:

– What about the honorable member for Macquarie?

Mr McMAHON:

– Yes. when you got him onto his feet.

Mr Pollard:

– That is a lie.

Mr McMAHON:

– You raised your hand.

Mr SPEAKER:

– Order! I ask the Minister to resume his seat. The honorable member for Lalor will withdraw that remark.

Mr Pollard:

– I withdraw it, but I want to say that I had no idea that my colleague was going to speak. I did not know that he intended to speak. When he called your attention to the fact that he was on his feet, I said, “ Good on you “.

Mr SPEAKER:

– Order! The honorable member will resume his seat. I ask the House to keep order. The Minister may proceed.

Mr McMAHON:

– I conclude by saying that it became perfectly obvious that what the Opposition was putting to the House was repetitious and for that reason I had no hesitation in moving the closure of the debate. This is a good measure. It doubles the operating capital of the corporation, and consequently the maximum liability that may be incurred, and it seems, therefore, that the action that has been taken by the Government is appropriate and should, in fact, have been taken.

Question resolved in the affirmative.

Bill read a third time.

House adjourned at 11.50 p.m.

page 713

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Papua and New Guinea

Mr Ian Allan:
GWYDIR, NEW SOUTH WALES

n asked the Minister for Territories, upon notice -

  1. Has any forecast been made of (a) future population growth and (b) public and private capital needs in the Territories of Papua and New Guinea?
  2. Has any estimate been made of the capacity of these territories to produce the foodstuffs required by their inhabitants now and in the future?
  3. Is there any discernible likelihood of the territories gaining a favorable balance of trade?
Mr Hasluck:
LP

– The answers to the honorable member’s questions are as follows: - 1. (a) Various forecasts, which might more accurately be described as guesses, have been made ranging up to 10,000,000 in the next half century. No precise calculation can be made, however, mainly because of lack of basic data and the shortness of the period and the limited area in which population trends have been observed.

  1. Private capital needs will vary according to many unpredictable events (for example the discovery of oil or a decision to use the water resources of Papuan rivers for power). Public capital needs (for hospitals, schools, housing, roads, bridges, &c.) are planned in the short term in periods of three to five years. Current public works expenditure is at the rate of over £4,000,000 a year.

    1. Subject to the qualification that no accurate estimate of population can be made it is understood from investigations already carried out and from progress in current investigations that the Territory of Papua and New Guinea has the capacity to produce a large part of the foodstuffs required by its inhabitants now and in the future. For instance -

  2. The 1957-58 imports of meat and fish were as follows: -

It is considered that the natural resourcesof the Territory are sufficient to supply all the present and future local demand for these products, when the animal and fishing industries are well established.

  1. The 1957-58 imports of rice were 17,000 tons valued at £1.022.733. This quantity could be produced in Papua and New Guinea under upland natural rainfall conditions from an area of something less than 60.000 acres, or about 40,000 acres or less under a controlled system of irrigation. There is suitable land of the total area required but actual use would depend on the economic prospects for rice as against other possible crops.

  2. The 1957-58 imports of vegetables and fresh fruit amounted to 1.584 tons. A large percentage of these items could not be satisfactorily grown in the Territory because of the unsuitable production environment. It is policy to encourage the local production of suitable fruit and vegetables to offset imports as much as possible and a considerable quantity of locally produced fruit and vegetables is already available for the community.

    1. Imports (£20.238,770) exceeded exports (£12,404,100) in 1957-58 by £7,834,670, i.e., by more than 50 per cent. of the value of exports. The main reasons for this large gap in external trade are -
  3. the heavy demand for imports of materials and capital equipment arising out of the heavy expenditure in Papua and New Guinea each year by or on behalf of the Commonwealth;
  4. the increasing imports by private enterprise arising out of its present accelerated capital development and oil exploration;
  5. the normal demands by the rapidly increasing Administration work force, their families and those persons in private enterprise servicing them, for European-type consumer goods; and
  6. the ever developing demands for these types of goods by the indigenous inhabitants themselves as they are gradually advanced through the efforts of the Administration and the missions.

It appears that for many years to come this largely undeveloped Territory will be dependent on external sources for goods, especially of the manufactured and capital type, to aid development and this will militate against any substantial reduction in imports. Many consumer import needs will tend to continue to increase as the indigenes become more advanced economically. On the other hand the efforts towards greater self-sufficiency in foodstuffs (especially in animal products, rice, fruit and vegetables), building materials and other minor manufactures should keep this rate of growth of imports within reasonable limits. The chances of improving the trade balance by increasing exports are dependent largely on world market conditions. Coconut products are the major export, providing 50 per cent. of the total value in 1957-58, but they are unlikely to increase significantly in volume. Gold, a major component of exports in the past is expected to decline in production unless new finds are made. Some increase can be expected in rubber production but timber products and cocoa and coffee should provide the biggest increases. At 1957-58 prices these foreseeable trends covering, say, the next seven years, could not fill the present gap between imports and exports.

World War I. Enlistments

Mr Duthie:

e asked the Minister repre senting the Minister for Repatriation, upon notice -

  1. How many Australian men enlisted in World War I.?
  2. How many of these men are alive to-day?
Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP

– I am advised by the Minister for Repatriation as follows: -

  1. Four hundred and sixteen thousand eight hundred and nine (Vol. XI. “ Official History of War “, Appendix No 5).
  2. It is not known how many Australian exservicemen of World War I. are alive to-day. There were 54,702. members in receipt of war pensions as at 31st January, 1959, but there is also an unknown number of survivors who are not in receipt of war pension.

Coal

Mr Griffiths:

s asked the Minister representing the Minister for National Development, upon notice: -

  1. What is the (a) quantity and (b) value of coal stockpiled in New South Wales by the Commonwealth Government?
  2. At what centres is it located?
  3. How much stockpiled coal was disposed of during each of the years 1956, 1957 and 1958 and from 1st January, 1959, up to the present date?
  4. To whom was it sold and what was the price received per ton?
Sir Garfield Barwick:
LP

– The Minister for National Development has furnished the following replies: -

  1. Nine hundred and eighty-five thousand five hundred and eighty-one tons of coal with a book value of £2,213,392 have been stockpiled in New South Wales by the Commonwealth Government.
  2. –

3 and 4. Details of the sales of coal are illustrated in the following table: -

Other stock movements on and off dumps during 1956 and 1957 were at book value, and represented normal operations of the New South Wales Mining Company Proprietary Limited, in its capacity as agent for the Joint Coal Board.

War Service Homes

Mr Griffiths:

s asked the Minister representing the Minister for National Development, upon notice -

  1. What is the number of ex-servicemen of both world wars, who are eligible to receive assistance from the War Service Homes Division?
  2. How many applicants are waiting for assistance to (a) erect new dwellings and (b) purchase existing homes?
  3. What is the waiting period usual in respect of each of these categories?
  4. If the period is not the same in each case, why not?
Mr Roberton:
Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

– The Minister for

National Development has supplied the following answers to the honorable member’s questions: -

  1. Approximately 1,100,000 e.-servicemen of both world wars and the Korean and Malayan campaigns, qualified by service for war service homes assistance. However, an ex-serviceman with the requisite service is not eligible unless he is married, or is about to marry, or has dependants for whom it is necessary to provide a home. He is not eligible for assistance while he owns another home, and there are other requirements in the act with which he must comply before he can be certified as eligible. In view of these requirements, it is not possible to make a reliable estimate of how many are eligible for war service homes assistance. The present view is that it will be necessary to provide a further 80,000 applicants with homes.
  2. The number of applicants awaiting assistance to erect a new dwelling house is 6,748. This total comprises 4,642 who desire to build under the act and 2,106 who desire to build privately, with temporary finance, after receiving the division’s approval. The number awaiting assistance to purchase existing homes is 12,237. In both types of cases, many applicants withdraw their applications when their turn is reached.

  3. The waiting period for an applicant who desires to build a home is as follows: -

    1. If he desires to build under the act - three months before any preliminary action is commenced. It then usually takes approximately six to seven months forthe applicant to decide finally as to the type of home required and for a satisfactory tender to be obtained. These periods and the time of building the home usually total about sixteen to seventeen months before the applicant obtains possession of his home and the final payment is made to the builder.
    2. If the applicant desires to build privately with temporary finance, after receiving the division’s approval, he has to wait twelve months from the date of satisfactory completion of the home before the division’s loan is made available. This class of applicant usually obtains occupancy of the home in approximately six or seven months and the Division’s loan is paid in eighteen or nineteen months.

The waiting period for assistance to purchase an existing home is approximately eighteen months from the date of receipt of the application. Subject to the property being a satisfactory security, the applicant is permitted to raise temporary finance for the waiting period, and so obtains occupancy of the home within a few weeks of date of lodging his application.

  1. While Government policy is to encourage the building of new homes, as will be seen from the answers to 3. the current waiting period before the full loan is made available are for all practical purposes broadly the same. The procedure adopted also assists the applicant to obtain occupany of his home with the least possible delay.

Railway Finance

Mr Bryant:

t asked the Minister representing the Minister for Shipping and Transport, upon notice -

What is the meaning of the terms (a) total funds and (b) net capital referred to in answer to a question concerning railway finances asked by me on the 24th February?

Mr Hulme:
LP

– The Minister for Shipping and Transport has replied as follows: -

The term “ total funds “ means the aggregate of loan funds expenditure, Consolidated Revenue expenditure and miscellaneous revenue expenditure on capital requirements of railways. The term “ net capita] “ is total funds lessloan repayments, loan funds transferred from railway authorities to governments, sinking fund payments, capital amounts written off, payments from depreciation fund in reduction of loan liability and miscellaneous repayments. The total funds are intended to show the gross amount which has been spent by governments on the capital requirements of the railway systems whilst the net capital is intended to show the present debits on the books of railway authorities in respect of this item.

Cite as: Australia, House of Representatives, Debates, 17 March 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19590317_reps_23_hor22/>.

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