23rd Parliament · 1st Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m.. and read prayers.
– I ask the Prime Minister whether he has seen the report of the American Atomic Energy Commission, released just after the report of the Australian Radiation Advisory Committee. Does he believe that the American report weakens the reasons for the enormous reassurance which he felt the Australian report justifies? I refer particularly to the apparent rejection by the American committee of the concept of “ the maximum permissible concentration “ of strontium- 90 in the human body. In view of this new doubt, has the Prime Minister’s attitude in the matter changed at all? Does he believe that some warning ought to be given to the Australian people against complacency in this matter?
– I have no reason to doubt the validity of the Australian committee’s report. Nothing that has appeared since appears to me to weaken it in respect of Australia at all.
– I preface my question to the Minister for Immigration by referring to the fact that a few weeks ago the honorable gentleman was good enough to answer a question of mine regarding Anton Simon Spanbroek, the promoter of a doubtful South Perth £1,000, 000 hotel project, who was smartly deported for the second time from Australia. Is the Minister aware that in Rome, last week, Spanbroek stated, “ I will smuggle myself back into Australia, give myself up and fight my case in the courts “. He said, also, “ There are lots of ways of getting into a big country without any one knowing “. Does the Minister still confidently claim that his department’s precautions are adequate to cope with this defiant deportee?
– I was not aware of the statement by Spanbroekto which the honorable member has referred. It is easy, of course for a man with such a record of a highly questionable nature as Mr. Spanbroek to indulge in bombastic language when he is in the comparatively happy sanctuary of Rome. But I can assure the honorable member that this man will find it far more difficult to get into Australia, if he tries the third time, than the way in which the department was able to arrange his exit from it. It was one of the neatest pieces of engineering that I have known for some years.
Dismissals of Employees
– I direct my question to the Minister representing the Treasurer. Is it a fact that by direction of the Treasury all Commonwealth departments have been ordered to dispense with as many employees as possible, without consideration being given to the needs of the particular departments? Is it a fact that as a result of this order 1,000 employees in various departments have been dismissed already, and that dismissals are continuing? Is the Minister aware that notice of termination of services has been issued this month to 100- odd employees in the Sydney metropolitan area alone? Is it a fact that orders have been issued to the effect that all possible construction work, and minor maintenance work in the various departments, must be done by contract? Is the Minister aware also that this interference with the administration of departmental heads is causing confusion, chaos and suspicion which has resulted in the destruction of the hitherto high morale of the remaining loyal members of the various government departments?
– The comprehensive reply to that question is, “ No “.
– Has the AttorneyGeneral read the annual report of the Association of Co-operative Building Societies of New South Wales in which it is stated that one home in five built in New South Wales last year was financed through cooperative building societies? Would it be possible to vary the percentage of money which is lent to the various States for housing so as to increase the proportion advanced to co-operative building societies?
Does the Attorney-General agree that Government finance for housing could be used further to stimulate building by private enterprise?
– I have not read the report to which the honorable member has referred, although a day or two ago I noticed a newspaper summary of it. I shall convey to the Minister in another place whom I represent the matters that have been raised by the honorable member. At this moment I simply content myself with saying that the reformation or remaking of the housing agreement when it falls due will enable the Minister whom I represent to consider what can be done along the lines suggested by the honorable member.
– I address my question to the Minister for Health. Is it a fact that some vital drugs have been dropped recently from the pensioners’ pharmaceutical benefits list, including drugs used for the relief of arthritis? If this is so, will the Minister review the position with a view to rectifying what appears to be an obvious injustice to elderly members of the community, who will suffer great hardship?
– The question of whether drugs are placed on or removed from the list of pharmaceutical benefits for pensioners or, indeed for the general population, is decided on the advice of a committee of experts. It is true that this committee recommended recently that one particular drug - I do not know anything about a series of drugs - should be replaced by two others. This has been done. I am sure that the honorable member will agree that this is a sensible procedure to adopt.
– I ask the Minister for Primary Industry a question without notice. In view of the recent rise in the price of sugar overseas, following a serious fall, is the Minister in a position to say what the prospects are for the future?
– The price of sugar did drop as low as 2.55 cents a pound.
It has recovered somewhat until to-day the price is about 3.14 cents. The International Sugar Agreement is based on a minimum price of 3.25 cents a pound and quotas are affected when the price falls below that figure.
– I ask the Prime Minister this question: In the light of reports that are in his possession, is there any reason to doubt the statement that a guided rocket has reached what might be called terra firm a on the moon-
– Luna nrma.
– Well, luna firma. Is there any reason to doubt the report and has the Prime Minister any further information on the matter other than what has appeared in the newspapers?
– I am not aware of any direct reports that have come in to us on this matter. Therefore, one relies on the cabled news. I have not the slightest reason to doubt that this remarkable technological achievement has taken place, and I must say for myself that I see no reason to withhold admiration for it. It is a very remarkable achievement. All I hope is that they do not knock the moon about too much because it has some advantages in life.
– My question is directed to the Minister for Supply. I understand that Sir Thomas Playford, Premier of South Australia, has not been invited to visit Woomera for about four years. In view of the very great co-operation and assistance given by the South Australian Government to the Commonwealth in the development of Woomera and the long-range weapons establishment at Salisbury, will the Minister consider issuing such an invitation in the near future?
– The answer to the honorable member’s question is, “Most certainly “.
– Has the Minister for Health given consideration to the possibility that the increase in the incidence of lung cancer is due to compulsory chest X-rays for the early detection of tuberculosis, rather than to cigarette smoking?
– A great deal of advice has been obtained about this matter and it is obvious that the mass use of X-rays is not contributing anything to the dangers of radiation in Australia.
– My question is directed to the Prime Minister. Is he aware that on 3rd May, 1957, a committee was set up in the United Kingdom to inquire into the working of the monetary and credit system in that country? Is he aware that the committee, known as the Radcliffe Committee, has recently produced its report? Is he aware that the committee has pointed to three monetary regulators deserving of serious attention, namely, the control of international capital movement, the control of the terms of hire-purchase credit, and, under certain circumstances, control over lending by financial institutions other than banks? In view of the obvious deficiencies in existing controls in Australia in these fields, will the right honorable gentleman consult with the Treasury and report to Parliament on any changes thought necessary to improve the monetary and credit system of Australia, particularly in the fields mentioned?
– I am aware of the investigation and of the report, the full text of which came into my possession recently. It is a very long and elaborate document, and I do not profess yet to have mastered it. I am aware that the three matters referred to by the honorable member are dealt with in it. It is a document which requires a great deal of study. We propose to have that study made, and I propose to do what I can to obtain a sufficient number of copies of the report to make them available to honorable members who are interested in this very important topic.
– My question is addressed to the Minister for Immigration. Many Australians are concerned regarding the small percentage of migrants applying for naturalization. Will the Minister consider introducing legislation providing, as a condition of entry into this country, that application for naturalization must be made within a given period, say three years?
– I think I can answer the honorable gentleman’s question at once and, if I may say so without impertinence, without further consideration. I personally - and I think this would be the view of the Government too - would be loath to depart from the present practice, which has obtained for many years during the litetime of this Government, of regarding an application for Australian citizenship as an entirely voluntary act. If you depart from that practice and introduce an element of compulsion with regard to our European settlers here, then I think you will be importing an idea which is foreign to our whole concept of democracy in Australia. So I say to my honorable friend, whom I have known, both in war and in peace, for many years, that I hope he will think again before pressing a suggestion which I feel would be quite injurious to the whole programme of immigration.
– My question is addressed to the Prime Minister. It concerns the proposed construction of a modern hotel in Sydney by Qantas Empire Airways Limited to cope with the influx of overseas travellers. Has the company been given permission to construct this hotel? If permission has not been granted, what is the reason for the delay?
– The question of the construction of this hotel was receiving some consideration when I was abroad. It is still under examination, and no final conclusion has yet been reached.
– My question is directed to the Minister for Primary Industry. I refer to recent announcements of the development in the United States of America of what is called antibody milk, which is used in the treatment of certain diseases. Will the Minister consider having an investigation made of this process, with a view to its adoption in Australia?
– I amaware that experiments are currently being carried out in the United States to assess the effectiveness of antibodymilk in thetreatment of certain ailments.I understandthat spectacular success has been achieved in certain cases. The researchcommitteeofthe Australian Dairy ProduceBoard is at present investigating theresultsof theseexperiments. Upon receiving the committee’s report, and if the process appears to be as good as has been suggested, Iwill discuss the matter with my colleague, the Minister for Health, and ascertain the possible effect upon the Australian dairying industry of the production here of this commodity.
– I ask the Prime Minister whetherhis attention hasbeen drawn to the fact that Mexicanmushrooms, which make people temporarily mad, but which could benefit the insane, have been cultivated in France. Is it a fact that experiments show that people using the drug extracted from these mushrooms suffer from vivid hallucinations, see scenes of grandeur, experience a feeling of peace and satisfaction, and think that everything is perfect? Is it also a fact that reports indicate that an overdose might swamp the mind with delusions ofsuch insufferable beauty that the patient would suicide? As it is apparent from the economic position of Australia and the actions of Ministers that they have access to supplies of this mushroom drug, will the Prime Minister take all necessary precautions to prevent an overdose and mass suicides in the Cabinet?
– I am greatly indebted to my friend from Grayndler for what I must concede to be the most brilliant account of the symptoms displayed by Opposition members that I have ever heard. Up till now, I was unaware of the simple explanation that they had been eating the wrong kind of mushrooms.
– My question is addressed to the Minister for Trade. Have the recent wool prices, which have been maintained at the wool sales, been in keeping with the Government’s assessment of the position? If so, will this assist the maintenance of the present level of imports for this year?
– The Government would notdare to make a precise estimate of the levelof wool values, but I can say that the Governmenthadcalculatedthat the run down of wool stocks in the textile manufacturing countries and the recent level of economic activity in Europe,North America and Japan would combine to produce a higher andafirmer levelof wool values for this year.I am glad to say that this broad assessment by the Government has, up to the present,beenborne out. On that basis, I have no doubtthat the Government will be ableto sustain the higher import ceiling- £50,000,000 higher thanlast year - which has been announced.
– I wish to ask the Minister for the Interior a question. Will he say whether a decision has been reached to sell all the war workers’ homes in my district and in adjacent districts in South Australia?If this is so, has it been decided that the purchasers must pay cash for the homes and that, although the occupants, who are mostly workers, will be given the first chance to buy, no provision has been made to enable them to purchase the homes on terms? If this is the position, will the Minister make it possible for thesehomes to be sold on terms to the people living in them instead of insisting on a strictly cash basis which could result in the homes being sold to people who would purchase them for letting purposes only?
– I cannot recall a decision having been made on the lines suggested by the honorable member. When sales are made to tenants, it is usual to give terms to them. I will consider the honorable member’s request.
– Can the Minister for Trade advise the House whether the United Kingdom will purchase the full quota of the 1958-59 wheat crop which that country agreed to acquire?
– As the United Kingdom Government does not purchase wheat these days, having, as a matter of policy, returned thetrade in wheat to private enterprise, there is not a firm contractual obligation on -the part of the ‘United Kingdom to buy wheat, ‘but part of the United Kingdom-Australia Trade Agreement provides that the United Kingdom Government will ‘use -its best endeavours to induce millers in that country to -purchase a minimum of -750,000 tons - equal ‘to about 28,000,000 bushels- of f.a.q. wheat each year. Last year, we had not the wheat to supply that amount. By the way, this is not an obligation on Australia to supply; it is a right of Australia to supply. This year, the United Kingdom millers have, I believe, purchased approximately 550,000 tons up to date, ‘there being some three months of the year still to run. The .United Kingdom Government assumed .some .provision of sanction, if I may use the term not improperly, within the general trade treaty if these purchases did not occur. In short, Australia could call, in the last resort, for a review of all the terms of the treaty - a quite substantial provision not lightly undertaken and not lightly to be availed of.
This year, the United Kingdom has a good crop of wheat of a very favorable moisture content which has been harvested in exceptionally .favorable circumstances. I understand that this permits a higher blending of United -Kingdom home-grown grain in the local grist than is by any means customary. This, 1 think, could lead to some difficulty in the full take-up of the quantity of wheat offered to “the United Kingdom market by Australia. Where special circumstances eventuate, we shall not be found to be completely inflexible in our reaction to those special circumstances, but I have no .doubt .that, in general terms, this arrangement will be .observed over the years, and I am sure .that it will be substantially, if mot fully, -brought to fruition during this year. The real objective of the Australian -Government in negotiating this arrangement was -not to ‘ensure that we can sell this wheat, :because we can always sell wheat if we follow *.the ;other fellow’s price down low enough to undercut him. The provision which I have mentioned was designed to ensure that we -would sell at least this quantity of wheat -at .commercial values, without the -need to secure sales by undercutting government-subsidized competitor wheat from (Other ^countries. This tis the purpose understood by both parties, and I have confidence that it will be achieved.
– My question is directed to the Prime Minister. I ask: Does the right honorable gentleman agree with the belated statement by the Minister for National Development, last week, that the coal industry faces a crisis owing to the trend towards the increasing use of oil as a fuel, and that, if the trend continues, coal will be relegated to a minor position as a source of fuel? Does the prime Minister agree, also, that the needs of the coal industry are urgent and that the Government could justifiably increase expenditure an coal research? -If it is a fact that the needs of the industry are urgent, and that this country is becoming increasingly dependent on imported oil, will the right honorable gentleman inform the Parliament what action the Government proposes to take to increase expenditure on research into the uses of coal, especially with respect to the production of liquid fuel from coal?
– I have not seen the statement referred to by the honorable member, and therefore I make no comment on it. I myself am no pessimist about the future of coal - rather the contrary.
Mr. -IAN ALLAN.- I desire to ask the Minister for Trade a question. Can the right honorable gentleman say whether it is a fact that Russia is a signatory to the world agreement on tin, and whether, if so, there is any indication that that country is willing to participate in other international agreements to regulate the production and sale of commodities?
– The world arrangement on tin - if I may use the term “ world “ in .this context - is embodied in the establishment of the International Tin Council. I think that Soviet Russia is not a member of the council. World prices of tin are sustained at a level agreed between those who are buyers and sellers of tin within the membership of the council. About a year ago, prices were being ‘seriously depressed ‘by the presentation of tin to the world market by Soviet Russia at lower prices. This became a matter of serious concern, and at about the time of the Montreal conference, when the Commonwealth countries were discussing the desirability of policies to achieve greater world stability in bulk commodity prices, the Russians, I am glad to say, changed their policy and ceased to undercut the world market, with the result that tin prices became stabilized again. There are certain other commodities in connexion with which some Communist countries have displayed a willingness to co-operate. Some Communist countries are signatories to the International Sugar Agreement, and we need not be without hope that some of them will co-operate in world policies to produce greater price stability.
– My question is directed to the Prime Minister, as Leader of the Government. I ask the right honorable gentleman whether his Government has been approached by the United Kingdom Government with a proposal for a merger of British Commonwealth airlines. Will he assure the House that no action will be taken by the Government to jeopardize the independence of Australia’s own international airline, Qantas?
– I have heard of no proposal that would affect the independent existence of Qantas, which I regard as one of the outstanding airlines in the world.
– Has the Minister for Primary Industry seen a report concerning the market prospects for chilled beef in the United Kingdom resulting from a possible decrease in exports to that country from the Argentine? Can the Minister suggest ways to encourage the export of chilled beef from Australia to the United Kingdom so that Australia may take advantage of the situation that has arisen?
– The Minister for Agriculture in the United Kingdom has indicated that there seems to be a reasonable prospect of a good market for chilled beef consequent on the over-slaughtering of cattle in the Argentine, making the
United Kingdom market, from that point of view, more secure for our deliveries. The difficulty in connexion with chilled beef was that we had not the transport to carry that type of beef to the United Kingdom until the Blue Star Line entered the trade. I think the House is aware, from a statement that I made here some days ago, that the last shipment it chilled beef to the United Kingdom was the best ever for quality and delivery. This is very encouraging, and anything I can do to assist in the development of that trade will certainly be undertaken.
– Is the PostmasterGeneral aware that in the Sydney metropolitan area there are over 70 free newspapers, with a circulation of 750,000 weekly, and that there is a substantial number of such newspapers in Melbourne, and some in Brisbane and Adelaide? Is it a fact that on such newspapers the full newspaper postage rate must be paid even when as many as 10,000 copies are posted at once? Will the Minister consider altering the regulations so that genuine free newspapers containing, say, 33 per cent. local news, will be carried by post at the same rates as apply to newspapers that are sold?
– It would appear that the question refers to the practice of granting bulk postage rates to certain newspapers which qualify under the provisions of the postal regulations. I do not know to which newspapers the honorable member is referring. He said that there were 73 newspapers in Sydney to which this bulk provision did not apply. The position is that any publication wholly set up and printed in Australia, which conforms to the requirements of the postal regulations, may attract the bulk postage rate. There are such requirements as that a newspaper shall be published for sale, and that 75 per cent. of the total circulation must be paid for by contributors. I can provide details of these and other requirements if the honorable member desires to have them.
– Can the Minister for Defence say whether it is correct that the United States Secretary for Defence, Mr. McElroy, intends to visit Australia? If so, can the Minister tell the House under what circumstances the visit will be made and when it will be made?
– Yes, it is true that Mr. McElroy, Secretary for Defence of the United States of America, is coming to Australia. He is due here about the end of this month or early in October. Details of his visit have not yet been settled.
– I wish to ask the PostmasterGeneral a question with reference to the free newspapers which circulate in Melbourne and Sydney. In Melbourne a large proportion of local newspapers are free, and in many areas they are the only local newspapers in circulation. In reply to the honorable member for Barton, the Postmaster-General refused to consider amending the postal regulations to give those papers the benefit of the bulk postage rate. I ask him, now, whether he will give special consideration to making bulk postage rates available to free local newspapers, of which there is a large number in Melbourne and Sydney. I am particularly interested in one newspaper called the “ Coburg Citizen “, which is a very powerful journal, circulating in my electorate.
– This sudden concern by members on the other side of the House for the application of the bulk postage rate to free newspapers rather surprises me. The regulations which allow certain newspapers to qualify for transmission at bulk postage rates have been in existence for very many years. They were in existence while the Labour Government was in power, and they were not then altered.
– My question is addressed to the Prime Minister. As there appears to be general agreement among Commonwealth and State Governments that the continued concentration of most of our population in a few cities on our seaboard is a national calamity, will the Prime Minister give consideration to convening a conference of our leaders, both Commonwealth and State, with a view to overcoming constitutional difficulties and giving practical application to the oft-heard cry for decentralization?
– Every year we have a conference with the Premiers of the States and any matters which are brought up are then considered. I would not think it necessary to have a special conference on this particular matter. There are many important questions and we do take regular opportunities of discussing them.
– Has the Prime Minister received a request from the Premier of Victoria for a Commonwealth grant towards the capital cost of the construction of the Monash University? If so, when did he receive that request? Has he yet answered it? Will the Commonwealth Government make available the funds sought in this request?
– I think it was about two weeks ago that I received from the Premier of Victoria a letter asking, in effect, for an acceleration of the programme for the building of Monash University. I say “ an acceleration “ because we had already made provision, within the terms of the Murray committee’s report, on the then assumed time-table. I replied to that letter and I have since had a discussion with the chairman of the Universities Commission, Sir Leslie Martin. That commission, which of course is a very proper body to express a view on such matters because this is one of the main objects of its creation, is meeting, I think perhaps this week, but certainly within a few days, to discuss the matter. When I have received advice from the commission I will then be in a position to take the matter to the Government and to make a reply to the Premier of Victoria.
– My question to the Minister for Trade relates to the visit to Australia of the Right Honorable John Hugh Hare, the United Kingdom Minister of Agriculture, Fisheries and Food. Has the Minister received assurances that there are good prospects of markets in the United Kingdom for Australian primary produce and that these will not only be maintained but also increased with the rising standard of the United Kingdom economy?
– I can; say that. in. discussions between. Mr. Hare. and. my colleague the Minister/ for Primary Industry, and myself, Mr. Hara himself volunteered the view that with the rising standard of living in the United Kingdom there should run a continuous, satisfactory opportunity for the sale of good quality Australian products - good quality of the kind which he concedes we do present upon that market. Mr. Hare also reminded us of something that we accept and are familiar with - that there is a need to promote vigorously the sale of our products in the United Kingdom market against the competitors we encounter there. I think that the broad answer to- the’ honorable member s question is, “ Yes “. lt is the view of both the Commonwealth Government and of our visitor from the United Kingdom that there is and will’ continue” to be a substantial and rising market for high quality Australian products of the kind that’ we are already selling.
– I ask. the Minister for Immigration whether he has yet convinced, the Public Service Board, of the valuable and specialized work performed,. ever since the war, by the social workers employed, in-, the Department of Immigration. Has he persuaded the board to abandon or modify its-, proposal to dispense, with their services?
– I think there may be some misapprehension in the honorable member’s mind and, if. I may add to that, in, the. minds of various other honorable members who have, from time to. time raised’ this, question. with me as to what is. intended. The honorable, member may. recall that some years, ago social, workers were appointed in order to deal; by and. large, with the specific problem of displaced persons coming to Australia. The great stream of people in that category amongst our migrants has now virtually stopped, and we all hope, that there, will be. no future convulsions in. Europe, which will cause such ;> great transmigration of people under such sad circumstances again. Therefore; the principal object for which these social workers were originally appointed has evaporated.
What is now proposed is not to abolish’ social workers: but, instead; to: reducer their. number somewhat, lt is- nor to1 cut them off, but to bring the number down- to a sizewhich both the Public Service Board and’ my department feel will be adequate for the problems of the present and the future. We intend to have a social worker appointed for each State, together with the Australian Capital Territory, and in addition, one welfare officer for each of the States, with the exception” of New South Wales and Victoria, for which, in accordance with their greater population, we propose to appoint two. So, Sir, in the upshot the result will be that instead of having 23 social- workers there will be fifteen,, in the rather dramatically changed circumstances inwhich, we find ourselves to-day-. If my friend finds himself a. little critical of this change, I would ask him to give these new arrangements at least a fair trial. I have: no doubt that if,, over the next year or so;, these numbers are found to be inadequate, the. Government will review- the whole matter.
In- Committee, of Supply: Considerationresumed from 3rd September (vide pagE 956),
Department of the Treasury.
.- I am pleased to have this opportunity of discussing, the Treasury estimates since the people of Australia have just struck, the first blow in the Lismore State by-election in expressing, their criticism of this horror Budget. Lismore has been a traditional Australian Country Party seat, but the people in that State electorate have, replied, to the Government’s action in using- the Post- Office as a revenue-raising instrumentality. They have voted against the: traditional Country Party; representation’ in the State Parliament..
Order! Just where do the remarks of the honorable member relate to these estimates?
-The people of Lismore have’ expressed their disapproval of this horror Budget brought down by the LiberalAustralian Country Party Government - or, -I should say, by its ultra-conservative Treasurer (Mr. (Harold Holt).
– Order! The honorable member must -confine his remarks to the estimates -under consideration.
– I wish to refer particularly to foreign investment in Australia and the loans which Australia has raised overseas. I wish to emphasize also the startling amount of profit which has been flowing out of Australia into the pockets of .foreign investors. -Some people have described this Government as ;a “ borrow or bust “ government. Since it has been in office it has borrowed 318,000,000 dollars from the International Bank for Reconstruction and Development, 153,000,000 dollars from the New York Stock Exchange, £stg.80,000,000 from London, 120,000,000 francs from Switzerland, 15,000,000 dollars from Canada and 30,000,000 dollars from the International Monetary Fund. It is particularly interesting to see the results of the capital outflow to repay overseas loans. Recently, I placed on the notice-paper a question to the Treasurer dealing with this matter. His reply indicated that in the period from 1950 to 1956 we have approached the International Bank on six occasions and have borrowed a total of 318,000,000 dollars, the equivalent of £142,000,000. The interest on those loans has amounted to £27,000,000. .
When the Curtin Government came to office in 1941, our borrowings totalled £43,300,000 from New York and £478,300,000 from London. When Labour was defeated in 1949, those amounts had been reduced to £40,000,000 and £386,500,000 respectively. I remind honorable members .that we had fought a war and had embarked on a major programme of post-war development in that period, but we had suceeded in reducing our loans from New York by over £3,000,000 and from London by £92,000,000. What has this Government done since it has been in office? In 1951, although our borrowings from sterling areas had dropped slightly, our borrowings from dollar countries had increased to 202,400,000 dollars. The position has deteriorated still further, and we now have outstanding in overseas loans £stg.33 1,9.00,000 from London, 505,100,000 -dollars from New York, 120;000,060 francs from Switzerland :and 13»800;000 dollars from -Canada. What .interest are ‘we called upon :to pay on .those Joans? “Bach year we pay j£1 2,-iOOjOOO *on -the London Joans, over £4,’600,000 on the New York .loans, £474,000 -on <the Swiss Moan, -and £133,000 -.on the Canadian “loan, ‘representing a ‘further -capital outflow of £17,300,000 each year.
The Labour Party has always .believed that we should not borrow overseas -if we can obtain money within Australia. How different is the ‘approach of this ‘Government, which ‘has borrowed tremendous amounts of ‘money -from the International Bank on which we pay £27,000,000 Interest The ‘late Mr. ‘Chifley stated that we should be a member of ‘the International Bank so that we might assist backward nations. But what have we done? With the exception of India, which has a population df some 400,000,000, we have become the greatest borrower from the International Bank. This Government - -this ‘borroworbust Government- :mus[ take stock -.of itself, and use every .endeavour to ,get the Australian people out of pawn to overseas investors.
Finance may be obtained from -overseas in two ways, ‘first, by foreign investment in Australia, and secondly, by foreign loans. Of the two evils, I prefer foreign loans. But we must examine our .position before we start indiscriminate borrowing overseas. Honorable members will recall the recent begging mission that went overseas in an endeavour to obtain 44,000,000 dollars to recondition the Mount Isa to Townsville railway line. During the week in .which Parliament was in .recess I noticed in the press that the honorable .member for Wide Bay (Mr. Bandidt) apologized for the begging mission by saying that finance to meet the cost of reconditioning the railway line could not be obtained in Australia.
During the recent debate on the banking legislation, some particularly interesting figures dealing with reserves in the Commonwealth Bank and the private banks were mentioned. The latest figures that are available show that in December, 1958, the Commonwealth Bank held cash and Government securities to the value of 32.77 per cent, of deposits. Honorable members will recall that the figure of 25 per cent. was stipulated in the Chifley banking legislation in 1945. Under pressure, particularly from the honorable member tor Melbourne Ports (Mr. Crean) and the honorable member for Yarra (Mr. Cairns), the Government crumbled. Those two honorable gentlemen kept hammering this figure of 25 per cent, of liquid assets that was supposed to be maintained. A leading Government suppporter said in the banking bill debate recently that the figure had been reduced to 14 per cent., no doubt at the behest of the private banks.
Let us now consider what the Commonwealth Bank with its assets could do for Australia. If the Commonwealth Bank could reduce the proportion of its liquid assets from 32 per cent, of deposits to 14 per cent., it could advance another £124,000,000 for the development of this country. The Mount Isa to Townsville railway line is an example of a project that could be financed by the Commonwealth Bank. We have some 100,000 persons unemployed; we have the materials, and the Commonwealth Bank has the finance. In those circumstances, why should we go cap in hand overseas to borrow money? The Commonwealth Bank could advance the money without issuing additional treasurybills. But even if it were necessary to issue additional treasury-bills, I would have no objection to the Commonwealth Bank doing so. I could name some companies that commenced operations with the aid of an overdraft from the Commonwealth Bank, and they are not doing too badly at present.
I should like to deal now with the capital outflow to foreign investors. Overseas investors have made huge profits on their investments in Australia. All honorable members know that under the 1953 and 1958 Income Tax (International Agreements) Acts a certain amount of foreign capital leaves Australia with a minimum deduction for tax purposes. Last year, a profit of £77,000,000 was made by foreign investors in Australia. Of that amount £43,000,000 went overseas and £34,000,000 was retained in Australia. Some of it, as one honorable member pointed out, is “hot” money, whilst some has been re-invested here. With the concurrence of honorable members I shall have the following table compiled from figures appearing at page 20 of the White Paper on National Income and Expenditure, incorporated in Hansard.
The total profits from foreign investment in this country between 1949 and 1959 amount to £582,000,000. Of that sum £301,000,000 was sent out of the country and £281,000,000 retained here, either lying idle or re-invested. It is particularly interesting to note the White Paper figures of capital outflow since the 1953 tax agreement. Unfortunately we cannot discern what is British capital and what is American capital. In 1952-53 the sum of £24,000,000 was sent out of Australia in dividends, and £17,000,000 was retained here. In other words, in that year a profit of £41,000,000 was made from foreign investments. But in 1953-54 the profit had risen to £60,000,000, of which £32,000,000 left the country and £28,000,000 was retained here. That was a direct outcome of the international tax agreement.
Let me refer to the position of General Motors-Holden’s Limited. In the financial year 1957-58 General Motors-Holden’s Limited made a profit of £11,500,000. Of that amount £6,000,000 was re-invested in Australia and £5,500,000 was sent out of the country. In the last financial year the company made a profit of £15,500,000, of which £7,500,000 was sent out of the country and £8,000,000 was re-invested here. That means that in the last two years this company has sent £13,000,000 away from this country. What the people do not know is that General Motors-Holden’s Limited has re-invested its money-
– Order! The honorable member’s time has expired.
.- I wish to address my remarks to taxation. I remind the committee that at the opening of this Parliament His Excellency the Governor-General indicated an intention to implement a wide review of taxation legislation. He said -
My Government will set up a competent and independent public investigation of Commonwealth taxation laws.
I suggest to the committee that a reasonable interpretation of those words permits the hope that the investigation, when it comes, will cover all aspects of taxation as we know it in this country. Of course, a tremendous amount hinges on the interpretation placed on the word “ taxation “. I have turned to the Estimates for my definition and to see whether I would be unreasonable in expressing the thoughts that 1 have with regard to this taxation review. I find that the Estimates set out the various categories of taxation under certain headings. Sales tax is listed, of course, as an indirect tax, and is estimated to produce in this financial year £150,000,000. Pay-roll tax is estimated to produce £53,200,000. Estate duty is calculated to provide £13,300,000, whilst gift duty is estimated to produce £2,000,000. The balance of the estimated revenue from taxation is included under the heading of income tax, both individual and company, and is estimated to produce £664,000,000.
Those are the headings of taxation. When one talks of an investigation or a review, of Commonwealth taxation, I submit to this committee that the intention would appear to be to review the whole field of taxation. I should like to comment in passing on each of the taxes that [ have mentioned. First let us deal with sales tax. Here most of us are in agreement that many anomalies cry out for overhaul. It is apparent that governments over a number of years have not been able to eliminate all the anomalies to which attention has been directed by the professional men whose task it is to see that correct returns are made by taxpayers in this field. We should recognize that sales tax is damaging to certain small and struggling industries in the country to-day. It is, of course, a burden to the family because of the inflation of costs. Sales tax is an impost which in my opinion - and I submit this opinion most keenly and earnestly to the committee - to-day calls for a complete review to ensure that anomalies are corrected and that the tax is placed fairly upon the community.
There is hardly a need for me to stress the importance of reviewing the pay-roll tax. Honorable members are well aware of the nation-wide criticism of this tax. Some people say that it is entirely iniquitous. Others refer to it as being harsh and unscientific. We must face the fact that it is levied irrespective of ability to pay. It takes no account of losses being incurred in business. It falls just as heavily upon the business that is struggling, because it is a direct levy upon the pay-roll, provided that the pay-roll is large enough to be taxable. While speaking of pay-roll tax, I, together with other honorable members, would raise my voice in support of local government authorities who, with the all too limited finance available to them for their development plans, find that they too must pay this tax upon their pay-rolls.
In the fields of estate duty and gift duty anomalies are easy to find. One of the best ways to deal with these anomalies, even though they may be in this relatively small field, is to have an expert committee review them in conjunction with income tax and make official recommendations to Parliament.
The field of income tax law bristles with problems and a comprehensive review is long overdue. I submit that all these facets of taxation call for detailed investigation. At this moment, we as a Parliament wait to learn the terms of reference of the commission or committee of inquiry to which I have referred, and which was promised in the Governor-General’s Speech. We wait also for the announcement of the. names of the men who will comprise thisinvestigating group. I am reminded of the fact that recent answers to questions asked in the House of the Treasurer (Mr. Harold Holt) do not re-assure us that we are to be given this all-embracing review or inquiry that I am advocating. So I make a plea to the Minister for Supply (Mr. Hulme), who is at the table, and to the committee, that the widest possible terms of reference be approved by. the Govern-‘ ment. We- need. in. this, country; an uptodate study of the impact of. taxation legislation and the fairness of the demand being made on the various sections of the community. T submit that only by granting wide terms of reference will we get the answers, to the points that I have emphasized.
My second plea is that it should be a representative committee or commission that is appointed. I suggest that the committee or commission should include not only business men and professional leaders in the taxation field, but also a representative of this’ Parliament. I am not so sure that the Government with which I am proud” to be associated is going to agree to this recommendation. Perhaps it will say that there is hardly a precedent for such a- body. However, if is rather’ appropriate that the Minister sitting in the committee at the present time is none other than the Minister for- Supply, my friend and colleague, the. Honorable A. S. Hulme. I want to remind, the committee that he” was appointed chairman of the. all-important committee on depreciation allowances a few years ago which brought down a report which has been of inestimable value. A very gratifying measure- of praise has been accorded to the Minister for the contribution that he made in that field. I think that sets a precedent for the request I make to the committee to-day, a request which I trust the committee will convey to the Government.
In this connexion: it is my pleasure to refer to the Royal: Commission on. the Taxation of Profits, and: Income; 1951-55,. in the United. Kingdom”. I. refer to the terms- of reference of that commission; feeling that, my” colleagues; in* the committee will appreciate the wording- to which I” direct attention. The- terms of reference include the- following: -
We have deemed it expedient that’ a- commission should’ forthwith issue to. inquire- into the present system of taxation of profits and income, including; its incidence and’ effects, with, particular reference to the taxation of business profits and the taxation of, salaries and wages; to- consider whether, for the- purposes of the; national, income, the presentsystem is the best’ way- of raising the required revenue from the taxation of profits and income, due- regard being- paid to the points of view of fee. taxpayer and of the Exchequer; to consider the. present: system of; personal allowances; reliefs and. rates of tax, as a. means of distributing, the tax burden fairly among the. individual members of the community; and to make recommendations consistent with maintaining the same total yield of the existing duties’ in* relation to the national income:
Mr. Chairman, I think it is necessary for me to say that admittedly these terms of reference are not as- wide as we need, and not as wide as- those which- 11 have advocated this afternoon. But let me say that this particular report was a monumental piece of work in the taxation field. I- envisage a similar report, on an even wider basis: It is interesting to note that in the case of- the United Kingdom inquiry revenue policy was not to be affected. The recommendations were, as I said, to be consistent with maintaining the same total yield as the existing duties in relation to the national income.
Having dealt with this important subject, i turn to various matters for which current legislation- in this country seems to make inadequate or no provision. I would advocate that, attention, be given, at the earliest possible time to the removal of. sales tax from. foodstuffs-. This- 1- do ianthe interests particularly of the, family man. Many a voice has been raised in this Parliament about the application, of sales tax to cakesand pastry. If. this tax were removed the cost admittedly would.be. about £4,800,000, and the. sales- tax on ice cream, canned fish and other foods accounts for about, another £3,000,000. Apart from foodstuffs, however, we find’ other anomalies. The family man has” to carry the burden of educating” HiS children, and he finds that exercise books, drawing and painting- books, which he must’ buy for” them, are” subject’ to sales tax. Here” is an- anomaly; the- adjustment of which would cost’ the revenue only £110,000.
While, on the subject) of sales: tax, I want to make a plea which I hope will be conveyed, to. the Treasurer. L suggest the exemption from- sales tax of motor buses used in- the - conduct! of regular passenger services, excluding, those- of less than three tons- unladen” weight- and- those- with a- seat ing capacity of less- than twelve- passengers. Not only should the” operators of theseservices be: relieved of sales tax on the vehicles themselves, but also,. Jj suggest, on. the spare’ parts,, tyres and- other components- used in connexion with, these vehicles. 1 make this recommendation, well knowing that a deputation was received by the Treasurer and that he was- quite- impressed with the justness of the claims presented by it. Notwithstanding that, however, no allowance has Been made in the recent Budget in respect of these sales tax items. An adjustment of this anomaly would cost the revenue only £500,000, and would make, li suggest, a. very helpful contribution to people who, in the field of private enterprise, have made, and continue to make- to-day under extremely difficult conditions, a very valuable contribution to our community life.
My time being- limited, I will satisfy myself by referring, in the income tax field, to the need for further implementation of recommendations contained in the report cf the Hulme depreciation committee, to which I have referred. There is in that report a recommendation- regarding’ depreciation on- quarries, which has not yet been implemented. In this connexion I’ would also remind the committee that the companies and persons engaged’ in timber cutting, bringing, in from the- forests the timber which, is- being, used in so many of- our building, projects, have a similar problem, because; their buildings-,- their timber mil ‘ and the accommodation for housing their workers, are subject to wastage- over arelatively short- time as> forests* are: cut out. Here again V suggest*, to- the Minister’ that there’ should be an- early implementation of the recommendation; contained in thareport of- the depreciation- committee;
I trust tHat we shall’ see, within the next few weeks’, a review of, the taxation, legislation along, the lines. I have recommended, with embracive terms of reference covering, all fields, of taxation, and. that, we shall also have a representative committee which- carr give to> us a. report which, will be- of. value;, and upon- which the Government, and the Parliament may base- taxation measures to operate, for quite a’ number of- years to, come
.- I refer to Division No. 193. - Taxation Branch, and to Division No. 197. - Bureau of Census and Statistics. I- propose to deal with, the last-mentioned division first. The Bureau of Census and Statistics is one of- the most important branches of Commonwealth activity, and 1 want to pay tribute to those engaged in its. work, and to say that they are. playing a most important part in gathering! together essential information for all sections of the community. Their valuable work is known and appreciated by all honorable members. From time to time we call upon them to provide us with information necessary for our debates in this place. Likewise business firms find themselves obliged to the bureau for most important information dealing with the affairs of the nation.
The Bureau of Census and Statistics i» important not only on the national plane but. also- in- the international field, and I believe there is need to extend its operations, to bring it up to date, and to make it possible for this important organization to give answers to questions of great moment. 1 acknowledge the work of those engaged in the service of the bureau. I regard them as courteous officers, only too anxious to please on every possible occasion. But despite the fact that the bureau and its officers are most eager and Willing to please, and are ever ready to assist honorable members and others,, nevertheless there are great gaps in the amount of service that it can render’ the community, either because of the restriction of the work of the bureau, the lack of finance or for some other reason. Quite recently, I sought7 to obtain information from the Bureau of Census and Statistics relating to the age of children leaving school. I Was eventually informed, after considerable research, that’ no up-to-date information on this subject was available.
One would” think, with- the- opportunities available to. the– State Departments of Education”’ to note’ the’ age of children- ceasing to attend’ school” and; the’ wide facilities of the Bureau of Census and Statistics, coupled with the (Commonwealth Office of Education; that’ this- information would be readily available to Honorable members. Some two or three years- ago, after considerable difficulty, a- member of the bureau furnished me with certain, information. I appreciated his problem on that occasion. On this occasion, the information was not available. Eventually the Office of Education provided me with certain figures, but, although they were valuable because they told a story, they were incomplete because they were not up to date. The latest figures available on the number of students commencing their fifth year studies related to 1953 or 1954. This is 1959, and I feel that the 1958 figures should be available. We should have that picture now so that we can look to the future, watch the trends and determine policies on known facts. However, the information was not available. I do not know who is responsible for this state of affairs, but I feel that the State Departments of Education, the Bureau of Census and Statistics and the Commonwealth Office of Education between them should be able to provide this important information when it is required by honorable members or by people who interest themselves in the educational needs of our children.
Another important matter dealing with education was referred to the Minister for Labour and National Service (Mr. McMahon). In April of this year, I placed the following question on the noticepaper: -
What was the number of - (a) tradesmen and (b) apprentices employed as (i) carpenters, (ii) bricklayers, (iii) plumbers, (iv) painters and (v) electricians in each State at the 31st December, 1958?
Some considerable time later, I received this reply -
How hopelessly inadequate those figures are! In 1959, we are told that we must depend on information obtained in 1947. The reply continued -
The “Quarterly Bulletin of Building Statistics” of the Commonwealth Bureau of Census and Statistics gives the number of tradesmen engaged on jobs carried out by builders of new buildings and the figures include contractor and subcontractors principals, but exclude persons working on owner-built houses.
Such statistics as are published are very limited and incomplete and not by any means up to date. The Australian Apprenticeship Advisory Committee has been devoting much attention to the improvement of apprenticeship statistics and it is hoped that useful comparable statistics on an Australia-wide basis will be available later this year for the financial year 1957-58.
That calls for a correction. I am not complaining about the position of the bureau. I do not know in what fashion it is handicapped. If it is a matter of the law, the law ought to be amended. If it is a matter of shortage of funds, funds ought to be made available. If some other difficulty is creating this situation, that difficulty ought to be ferreted out and the problem faced so that these important questions affecting the lives of a vast number of people can be considered in the light of the latest information.
Having said that, I add that I feel that the bureau has done and is doing a good job, and is giving valuable service in many other directions. I want to refer to another aspect of its activities. This is the compilation of the figures for the C series index, on which the basic wage is fixed. I make a plea to the committee that we adopt a new and enlightened approach to the question of the basic wage. The C series regimen ot other days is not good enough for this period. We hear time and time again about the growing prosperity of our country; yet we maintain an index that takes account of the price of potatoes and onions, but not of green vegetables or other essential items that should be an accepted part of the life of every family in our community. As in other days, people are compelled to depend upon the irreducible minimum when the basic wage is being computed.
I feel that there is a very great need for a complete review of the C series index. It should take into account developments in recent times and include such matters as the provision of educational aids and additional clothing for school children. It should reflect a policy that will give positive help to families, for I believe that those suffering the greatest hardship to-day are those people who are sending their children to school. They find that they lack the essentials to give their children an opportunity to take a full part in our nation’s development. I believe that the C series index should be reviewed and that the trade unions should be taken into the confidence of the Government. The collation of these figures should be an open book so that we will all know the price of a given article at a given time in a given town and so that this information can be checked and cross-checked. I know that some excellent people are engaged in gathering this information. They are experts in this field and they are honorable, trustworthy people, deserving of the highest respect. But I feel that the collection of this sort of information should be done openly; there should be no back-door methods about it. If that were done, the C series index of prices would be viewed with greater confidence.
Another matter to which I wish to refer in the limited minutes at my disposal is the harsh, thieving methods of indirect taxation. This Government was elected to office in 1949 an a promise that it would, amongst other things, deal with the question of taxation and, in particular, remedy the grab of indirect taxation which is taking money out of the pockets of the people in a variety of ways. According to the figures that we have before us, in this year £472,200,000 will be taken from the people by indirect taxation, whilst direct taxation will account for £732,425,000. This shows how indirect taxation has grown and how it is bearing harshly on some sections of the community. We have all received circulars from various organizations dealing with the injustices of this form of taxation. It takes from the poorest person in the community - whether he be an age pensioner, an invalid pensioner, an unemployed worker, or a person responsible for the upkeep of a large family - precisely the same amount of money as it takes from the richest person. It is an inequitable and unjust tax and it should be corrected. Sales tax is imposed on ice cream, on school books, on foodstuffs, and on toilet preparations.
I have not time to go through the full list of the circulars sent out by manufacturers of household items which show the growth of these industries in the country to-day, and the effect of sales tax, but I do want to mention specially a matter that affects a number of people in my electorate as well as many people and organizations in areas along the coast and adjacent to the big rivers in this country. I refer to the unjust impost of sales tax on the equipment needed by rowing clubs, which are organizations of people engaged in amateur sport. We know that, under another division of the Estimates, the Government makes money available to the Commonwealth Council for National Fitness. Rowing clubs, without any cost to the people generally, provide one of the most wholesome and healthy sports available. Yet the Commonwealth Government levies sales tax at the rate of 12i per cent, on all the equipment required by those clubs, whether it be an oar or a rowing shell.
I have received from the Nepean Rowing Club a letter in which it is stated that the club has to pay £78 in sales tax on a new boat that it has just purchased. Rowing clubs receive no financial assistance, and they depend entirely on the goodwill of the people interested in the sport. They have no other means of finance. In this letter, the secretary of the club states -
Please accept my Club’s thanks and appreciation for your efforts on our behalf and rowing clubs throughout Australia in connection witta Sales Tax on Rowing equipment.
He adds that perhaps one day we may have a Treasurer with sufficient understanding of the tremendous struggle that rowing clubs have to raise finance, and that he will take appropriate action.
– Order! The honorable member’s time has expired.
.- Mr. Chairman, I should like to direct my remarks to the subject of pay-roll tax. 1 was very disappointed indeed, when the Budget was brought down, to see that that tax was not either abolished or reduced. We are living in a competitive world to-day, and Australia is one of the main trading nations. So much of our employment depends on the earning of overseas funds that the removal of any tax on costs must be of first importance to the Government. The pay-roll tax is a direct tax on costs. In 1956, the Tariff Board estimated that for every £1 that the Commonwealth collected in pay-roll tax, the community finally had another £2 added to its costs. About £50,000,000 is collected annually in payroll tax. This means that the tax adds more than £100,000,000 every year to our costs.
It serves no purpose just to criticize a tax and say that it should be removed, but it is constructive to indicate how it is possible to remove it. Is it possible to remove this tax? I shall indicate that it is. State governments and local authorities pay approximately £12,000,000 of the £50,000,000 collected annually in pay-roll tax. This amount could be offset against the tax reimbursements to the States, and these payments could be reduced by £12,000,000 if the tax were no longer paid. It is proposed, in this Budget, to reduce direct taxes by 5 per cent., and it is estimated that this will cost between £21,000,000 and £22,000,000 a year. If this reduction were not made, between £21,000,000 and £22,000,000 could be deducted from the net loss to revenue as a result of the removal of payroll tax, leavingonly about . £17,000,000 still to be madeup. So itbeginsto come withinthe boundsof possibility.
At present, many manufacturers pass the pay-roll tax on to the public, but many organizations cannot do that - for example, the banks. The private banks pay heavily in pay-roll tax andtheycannotpass it on. How could they pass it on? If they did not pay this tax their profits would increase. As a consequence, they would pay more incompany tax. Dividends in the hands of individual shareholders would increase, also, and they would pay more in incometax. Soa good dealof the£17,000,000 would be made up by higherrevenue fromboth company tax and income tax on individuals. A similar effect would be seen in respect of other businesses. Firms ofpublic accountants, and other professional firms, employ highly paid executives and staff, who would pay more in income tax. So the outstanding amount would be reduced from £17,000,000 to something within reasonablebounds
In addition, farmers would be affected. At present, pay-roll tax is a very heavy burden on them in every way. Farmers are considerable users of manufactured goods, and especially of machinery and plant, which they require annually in large volume. Pay-roll tax is paid on all of it. This tax also increases the freight and other transport charges paid by farmers. The effect on the cost of superphosphate alone is very considerable. From the time that the original raw material leaves its source - Nauru Island or some other place - payroll tax begins to add to the cost. This tax is paid by shipping companies, stevedoring companies and the companies which convert it into fertilizer. At every stage, this tax is paid. I remind honorable members that the agricultural and pastoral industries earn most of our overseas funds. They cannot pass pay-roll tax on to the public, although it is a great burden to them. Manufacturers of goods for export cannot pass the pay-roll tax on to the buyers as do manufacturers of goods for local consumption, and big retail stores.
It is indicated in the Budget that the Commonwealth will pay, in the current financial year, about £140,000,000 out of revenue for public works. What pro portion of that expenditure of £140,000,000 is represented by the additional costs due to the pay-roll tax which is added tothe cost ofthe large volume of materials, plant and machinery needed for those public works? If all these things were taken into account, it would be possible, as honorable members can see, to reduce the outstanding amount of £17,000,000 lost to revenueby the removal ofthe pay-roll tax to a verysmall figure indeed.
Is the pay-roll tax a goodtax? I have never been able to see any justification for it. It is in the same category as is the land tax leviedby the New South Wales Government under Mr. Cahill. Itis virtuallya tax on capital. Onecannot justifyit on any ethical ground, and I find it extremely hard to understand why it has beenretained for so long. The benefit gained by the removal of this tax would be spread throughout thecommunity. The family man, in particular, would benefitby reducedcosts. Indeed, we in this country must reduce our costs. Housing would benefit greatly by reduced material and reduced labour costs. Transport costs are one of the most important elements inourcost structure. Transport costs in this country are always higher than those in any other country which competes withus in the world’s markets. Primary production is of great importanceto all our industries, and transport costs are especiallyimportant in primary production.
The other day, the Prime Minister (Mr. Menzies) made a very good speech indeed. I think that he was addressing the Chamber of Manufactures, in Sydney. He spoke about the dangers of inflation. Recently, the Commonwealth Conciliation and Arbitration Commission increased the basic wage by 15s. a week, and that increase must have a noticeable effect within the next two or three months. The C series index of retail prices will indicate the effect of this wage increase on maintenance and other costs. The removal of the payroll taxinthis Budget would have offset the effects of this wage increase and would have done much to prevent further inflation. This is something that the Government must look to. It must see what can be doneto remove any tax on costs, particularly when the effect of it is to prevent us from competing effectively in overseas markets. Any SUCh tax should be reviewed.
To my mind, there is no logic in imposing a tax on costs, and I ask the Government to consider again in the future the removal of this tax. If it were removed, the benefit would be spread over the whole community.
Mr. HAYLEN (Parkes) (4.10].- In discussing the estimates now before the committee, I want to deal with some of the comments -made by the honorable member for ‘Hume (Mr. Anderson). He attributed rising taxes and even the present level of taxes, as well as the increasing pressure of inflation, to the payment of increased wages to the workers, but I take an entirely different view. I direct his attention, and that of .the Minister for Social Services (Mr. Roberton), who is now at the table, to the enormous convulsions in capitalist industry in Australia -to-day as evidenced by takeovers, capital gains and the way in which /banking has deserted its normal function of discharging what is officially understood as banking business and has become a sort of hand-maiden -to hire-purchase. All those things are causing, not a recessive inflation, but they have assisted in producing a builtin inflation in the -country. So to-day we have an inflation which is part of our way of life, part of our living, because we -have accepted those .things.
One of the things to which I referred in speech on the Budget, and which I now hope to elaborate on, is the existence of rackets, associated with taxation. One such racket is the capital gains racket, in which the whole of industry to-day is participating. Big companies everywhere in Australia are hoping to get an investment which will give them capital gains of either big or little proportion. They are even creating investment .organizations, as the honorable member for Melbourne Ports (Mr. Crean), who is an expert on those things, would confirm, through which they seek to create for themselves a sort of free market for getting more capital and more money without having to pay the requisite tax on it. I .am not suggesting that taxation .of capital gains .is not imposed in some cases. It is. But in many cases it is not.
The worker is taxed at the source of his income. As soon as he gets his meagre basic wage, or his basic wage with the loading on it appropriate to his job, he is taxed. He pays that tax before he leaves the factory or office with bis pay. But by various manoeuvres companies can make capital gains, in the aggregate to an enormous proportion, on which .no tax is paid. The honorable member for Hume will surely agree that that is inflationary to a highly dangerous degree.
Let us look at the landscape being dug up, as it were, by the various tycoons of industry fighting one another on take-overs. Capitalism, which is coming under the microscope to-day because of its many failures - and which is put under the microscope more by the Labour Party than by the Government - is not cutting a very effective figure in regard to take-overs. What is the position of ‘the ordinary person who is a shareholder in a reputable real estate firm like Richardson and Wrench, and who suddenly found himself, during the last week, confronted by a take-over bid from exterior forces? His only concern is how much more dividend and prestige they can give him. He invested, in the first place, in an old-established company. He may not like the personnel, he may not like the tactics, and he may not care for the steamrolling attitude, of those people who are coming in to take over. It is the case of the tyrannous, wealthy and more astute company taking over from the level-headed company which was prepared to get a fair :thing-out of industry, and not to mulct it of every penny that could be got.
Take-overs are going on all over the country. .Surely there is a bribe inherent in it, a built-in threat to the old company inherent in it, and also an inherent prospect of big profits to the new shareholders or those who take over. And from where do those profits come? The money comes to the trading companies only from the sale of their products, and it is obvious where the Australian people are when this take-over war is finished. It is obvious that if you have sixteen big retail trading firms, and take-overs reduce the number to six, and 100 real estate firms, and take-overs reduce the number to ten, competition is reduced drastically, and there will be a monopolistic trend. In fact, a monopolistic trend is not only inevitable, it is intended. So, when more profits are made, they are made out of the Australian people. There is a tighter grip on industry and, if the Government only knew it, it is making easier the eventual take-over of those organizations, which could be subversive to the economy and to the people, by some future Labour government. So the question of take-overs ought to be looked at very closely. I have not seen any member on the Government side taking any concern in that at all.
We have seen the degradation of banking until it has become the camp follower of the hire-purchase tycoons, and we have seen the way in which capital has been battered about in this take-over battle, the brontosaurus of big business fighting on every street corner, as it were, to take over a weaker neighbour. That does not give any encouragement to the average investor or to the average Australian. The average worker wonders what is in it for him, and why those things are going on without any effort to check them or any chiding word from the Prime Minister or the Treasurer. The attitude of the Government seems to be: “ Well, let it rip. It is capitalism having a holiday.” It is a very serious business, and one we should consider in this chamber.
The second point with which I wish to deal is that raised by the honorable member for Macquarie (Mr. Luchetti) concerning the regimen on which the basic wage is assessed. Here is futility of the most absurd kind. The C series index was first compiled in 1921, and the object was to find out the needs of people who earn the basic wage. It was a regimen of their needs, and in those piping days, apparently, people on the basic wage did not need anything but potatoes. There are no green vegetables in the regimen, there is no fruit, there is none of the amenities of to-day. But to-day, when even the moon has a visitor, when a rocket has been lodged on the moon, surely 1921 is a bit unrecent in relation to fixing the regimen to provide which the worker’s wages are paid every week, very reluctantly, by industry. Some of the items in the regimen are so outmoded and old-fashioned that I must support the application and the urgent plea of the honorable member for Macquarie that we do something to modernize the regimen. Here is a way to modernize it: If the statistical branch is starved of money - and I believe it is - if its resources are meagre but its personnel is excellent, then let us help it. Any good journalist, any journalist in the press gallery of this Parliament, anybody with a flair for research, could go out and discover what the average working man needs to-day, in order to live in accordance with the standards appropriate to this country, and what wages he should enjoy in accordance with the standards of 1959. But those facts will not reside in a regimen created in 1921, which is an insult to the intelligence of the Australian people, and a racket when it is applied to the worker’s salary. So why can we not have a conference where Government bodies could sit in, where the statisticians could sit in, where unionists and representatives of the workers could sit in, to deal with the regimen? We could include in that conference a few housewives, who have to make the family income spin out, and a few people who fully understand the implications of this thing. Thus we might produce a regimen which at least would be sincere. The old battle would be joined as to how much industry can afford to give the worker. But surely you cannot begin to get understanding or a sympathetic approach between the two units - capital and labour - when you have in operation something so outmoded, so foolish and so contemptuous of public opinion as the regimen in use to-day.
The basic wage has, of course, been frozen on occasions; but the plan upon which a young man and his wife and children may live and work is based, honorable members will hear with amazement, on this outmoded regimen which was operative and reasonable in 1921. Since then there have been attempts to adjust it, but we have not succeeded. In this television age, in which people have a better all-round appreciation of vitamins and nourishment and so on, none of the modern requirements appears in the regimen, and none of them will appear in the regimen unless something is done to create an entirely new atmosphere in the fixing of the amounts of expenditure needed by a man, his wife and family. For the benefit of honorable members I should like to read an extract from a statistical publication, which concerns the initiation of the C series index. It reads -
The “ C “ Series Index (covering food and groceries, rent of 4 and 5 roomed house, clothing, household drapery, household utensils, fuel, lighting, fares, smoking and some other miscellaneous items) was first compiled in 1921. It was used by the Commonwealth Court of Conciliation and Arbitration for purposes of quarterly wage adjustments from May, 1934, to August, 1953.
Some State tribunals have rejected it. It has more or less fallen into discredit because it is so woefully out of date. If this type of statistical information is to be prepared by our Bureau of Census and Statistics, which is a highly efficient organization, we should give the officers of the bureau an opportunity to ascertain the facts. We should not give them some fuddle-duddle which belongs to 1921 and say that it is good enough, only to find that when it gets into the courts the various advocates kick it about.
If there is any validity in wage fixing and if there is any validity in attempting to give the worker a fair wage for his work, it is surely not implied in a regimen which was created in 1921 and which assumes that the most delightful dinner for the worker is a feed of watery spuds. There is nothing in the regimen about green vegetables and nothing about the delectable fruits of this country. It provides only for the horrible kind of meal that one would expect in some poor house in the days of Charles Dickens.
On another occasion, I spoke about the fustian procedures observed in this Parliament. What I said then applies equally to our fustian wage-fixing and industrial legislation. Where else in the world would a wage be fixed in accordance with a list of goods that had application in 1921 but not in 1959? The Australian worker is a tolerant man. He is tolerant because he does not know how many factors are operating against him. He does not know that before he even gets to the Arbitration Court the wheel has turned almost a full circle against him because of high costs and inflation.
If the committee to which I have referred is to be brought together, its representation should be made as wide as possible. It should include the down-to-earth housewife who knows what it costs to feed a husband and kids. She knows what a battle it is to pay the rent and buy clothes for her family. The problem should not be left to a lot of professors who may be all right on theory but who, when they come to deal with hard facts, would get lost in Woolworths and would not be able to find the way out.
In justice to the people we should have a look first at where inflation is causing grave dangers to this country and that is in capitalism run mad. The worker no longer should be considered as the element hostile to peace in industry. The trouble is caused by what big industry is doing to itself. It is heaving here and there to get rid of its excess profits. Two shops are being built to sell the goods that could easily be sold by one; but the worker is not given two sets of wages to meet the resulting increased cost of goods. Because of enormous profits in industry, which are as high as 16 or 20 per cent., the cost of operating the additional shops is merely a flea-bite or a bagatelle. Endeavours on the part of companies to get rid of their profits have resulted in great building progress outside the cities, in the suburbs.
There will come a day when we will have to realize that these things are not entirely necessary and that some of them are the result of a too heavy profit-taking and will contribute heavily to inflation in the future. Having looked at the situation and found that inflation has become built in as part of our lives we have to ascertain what mechanism can be used to eliminate it. This mechanism will have to provide that when the economy is inflated the worker will have his wages increased to a similar degree. To-day, when we make an effort to adjust the position, we run into the regimen with the items that I have cited. The cost of all these items has been increasing consistently - sugar, eggs, beef, canned pears and peaches, gas, lighting kerosene, firewood, air fares and freights, interstate shipping fares and freights, cigarettes, and, of course, margarine, which has begun to appear on the breakfast table more frequently than butter. The regimen merely records the increases and does nothing about the matter. If we were to get the brains of the country to settle down and determine a minimum standard of living for Australians, we would be astonished at the result. And having obtained that result a move could then be made through the Arbitration Court to establish that standard. Otherwise, it is merely a question of the stronger force repressing the lesser. There is no- justice’ in this.
– Order! The honorable member’s time has expired.
.- I must apologize to honorable members for speaking for a second time on the Treasury estimates. I will be brief and will not detain the House for very long. I want to draw the attention of the Treasurer (Mr. Harold Holt) and the Government to the establishment of a wool futures market in Australia. I believe that this has. been unduly delayed by the Treasury and the Government. It has been known by the users of wool for some considerable time that probably the greatest drawback to. wool is the violent fluctuations which occur in prices.
The users of synthetic yarns* know that they can buy as; much as they want at a certain price at any time during the year. They know that the price probably will not vary during the year although it may go up a little every couple of years. However, the price of wool fluctuates violently from week to week and from month to month. This makes it particularly difficult for users to know what price they will’ have to pay for it and what price they will have to put’ on their finished item.
In addition, for almost three months of the year - the winter months - very little wool comes on to the market. So, the wool user, must buy a large stock and hold it for his requirements. Three-months later, when the wool selling season opens, he may find that. the price of wool has dropped. As a result, he has to mark down the value of his stock and perhaps show a. trading loss. All that he wants is to be able to use wool and make a profit out of what- he does to it. He does- not want to lose money because the value of. his stocks drops.
Various alternatives have been put forward to obtain a more stable price’ for wool and to encourage more people to use it or, at least, to avoid discouraging them from using it. The floor price plan has been put forward by some organizations. Although this has been introduced in New Zealand and South Africa there has been no sign in those countries that the violent fluctuations which occur in the price of wool have been ironed out to- any degree. In fact, over the years in which these schemes have operated; prices have fluctuated just as violently in those countries as in Australia.
Then there has been the suggestion by some people that there: should, be an appraisement system. In peace-time; of - course, no government has any authority to acquire and appraise wool at a givenvalue as it did during the war. Even if ithad that right,- 1 am sure that this Government would; hesitate to exercise it. Anappraisement that pushed the price too high would tend to make people buy. synthetics instead of. using: wool. Synthetics become cheaper to use when: the price of wool is too high. If the price of wool is too low the Australian grower and the community lose-
There have been suggestions- that sales should be- spread more- evenly throughout the year: At present, large quantities of wool come in’ at certain- periods. In ona period of four days last year 250,000 bales of wooli were sold, whereas, in other periodsthere were no’- sales: for some months. If it were possible; for example, in South Australia to suspend sales earlier and start them in, say, May so that wool would besold there while in other parts of Australia’ there- were no sales the users of wool would not be- required to carry such great stocks.
In’ addition to these proposals, there has been a proposal to establish in’ Australia” a greasy wool futures market. This is, in’ effect, a system of insuring against a rise or fait in the price of wool. It” can be used by growers, buyers or users of the wool. Prices are quoted up to an eighteen months period and” if any person is satisfied-foi example1, if a producer is: satisfied that the price of wool- quoted in: twelve months’ time would suit him - he will say, “ All right, i will sell futures to-day and in twelve months’ time, if my clip is ready to sell I will buy back these futures “. If the price of wool drops: in the meantime, he will get the price which he agreed to: get on the wool- futures- market. If the price goes up, he will miss out and will, not get that extra. But he does insure himself and he can tell,, months or years ahead, what the price of that wool will be.
This; system has operated! very successfully in- countries, abroad and has been inoperation; in the cotton market, for- a considerable period:. I think every one- realizes that it- has worked very well in- cotton-. It has been in use in- wheat in Canada where it is possible- to get- quotations1 on- futures for wheat. There are- markets now in NewYork, London, Rouxbaix and Antwerp. The market in- New York is for- greasy wool and’ tops but in the- other three- cities it is in tops only: In other words they are partly made up. The difficulty from the Australian point of view is that the New York market cannot be used” by the Australian grower or even by an Australian user of wool for the reason that the exchange and dollar control is, particularly difficult. The. other markets are at the other side of the world and they are not in greasy wool. The position reminds me of a story which, was, told in Australia during; the war. An. American serviceman in this country wrote back home about, the beautiful girls- in Australia. One of his girl friends in America wrote back, and asked, “What have these Australian girls got that, we haven’t got?” He wrote back and said,, “ Nothing,, but they have got it. here “. There are wool, futures markets- in other parts of the world, but we have nonein Australia. The ordinary grower cannot operate on them. He cannot give; delivery in tops. There: could be & case- where he might, be forced, to- give delivery;, but obviously he could- not work: out the, various: costs involved in giving- delivery in London. If we had a- wool futures greasy market operating in Australia. I am sure that it would’ be used- very much more- by growers and users of wool’ in this country, to their great advantage.
This, proposal has been sponsored by a, number, ok woolgrowers’ organizations! It is supported also’ by Chislett and’ Weatherly who recently took a trip around the world! They say that wool’ futures’ markets should1’ be used more and’ that such markets would’ be - of great advantage to Australia as they would help to iron out the great price fluctuations in wool’. Chislett and Weatherly were rather inclined to- say that7 Australia should have greater access- to the London market. I do not think that is the case at all. I think we want to establish our own market here where, after all, we produce 65 per cent, of the world’s merino wool. This is where the great sales of wool are held and this is where the greasy wool futures market should be established. Prices at auction sales and. the prices of the futures market go hand in hand. If the price at auction goes down,, the price of wool futures over a long, period goes, down also.
The proposal for a- wool futures market has- been supported also by Mr. Gunn, chairman of the Australian Wool-growers Council. Within the last week he has come out in support of the establishment in Australia of such a- market. The only people I can find in the wool-growing industry who are opposed: to the- establishment of this market, are the Australian Wool and Meat Producers Federation. I think they are opposed to it probably because, they do not understand, its- full implications. I think they feel that, it might, under-cut the proposals which they put. forward for a floor price plan, but nothing could be further from the truth. We could operate a floor price plan and have a greasy wool futures market as well.
The point I wish to emphasize to-day is that proposals have been put: forward and have been with- the Treasury for quite a long time - I understand- some six months or so-. Nine firms have agreed to start such- a- market in Sydney and the only thing they require of the Government is to allow exchange- to- operate to enable people from abroad to buy and’ sell on- a wool futures market, in’ Australia. Surely that should not be a very difficult proposition to examine-. The- only question, is whether there is. any liability to Australia? I am sure that there is no liability. Obviously a person from one- country might make a good deal and gain some- dollars whereas a person from another country might make a poor deal and lose some pesos. Every time there is a buyer on the market there is a- futures seller, and there would not be any great liability to- this country. On the contrary it would result in- bringing quite a large sum. of money into- this country in commission on sales.. At the present time, every time a sale takes* place on the futures market in London,, £10 sterling goes out of Australia’ to pay- for it.
Here is an instance where proposals have been put to the Government by reliable firms who have had considerable experience in the operation of futures markets; but the Government has delayed for months and months and no decision has been made about exchange control. In this case the people who are the initial floor members are the only ones who stand to lose anything. The Government has not been asked to put one penny into it and the growers have not been asked to put one penny into it. The Government should not interfere in any way. It should either say, “ Exchange control is clear and we can allow this “; or “ We will not allow it “. But once having agreed to the proposition, surely the Government should say: “ This is a major step forward in wool marketing. We welcome it and we will allow these initial firms to go ahead immediately and develop a greasy wool futures market in Australia. “ I hope that something will be done very quickly in this matter by the’ Treasury.
.- Two matters have been raised in the debate on the Treasury estimates this afternoon. The first to which I wish to refer is that of wool futures markets, mentioned by the honorable member for Farrer (Mr. Fairbairn). He said that he did not think there would be much opposition to this proposal and that the Government should adopt it. I want to say quite clearly that there is a lot of opposition to this proposal and I hope that the Government will not accept it. I think that a reasonable, objective examination of futures markets in whatever part of the world they have operated shows that they first raise the average cost of production of the commodity - if you can call it the cost of production - by fitting in perhaps 1,000 or 2,000 highly paid people who take their own share of the price of the product and therefore raise its ultimate cost. This is what would happen if wool futures markets were introduced into Australia. This is an artificial arrangement and will not iron out the difficulties caused by fluctuations. The fluctuations in price show a smaller percentage of variation than was the case previously, but the operation of futures markets has been responsible over a period for a rise in the cost of the commodity handled. I think that has been the conclusion reached by a number of people who have objectively examined the operation of futures markets in various commodities.
The second point to which I wish to refer is the almost complete agreement on both sides of the chamber that something should be done about taxation. There has been agreement that indirect taxes, such as pay-roll tax and sales tax, should be reduced, and there has been agreement also that some inquiry should be made into the tax structure. However, any inquiry along the lines of the Hulme investigation of a couple of years ago would be almost useless. That inquiry had very limited terms of reference, which implied a concern with what might benefit a particular kind of taxpayer rather than what might benefit the community as a whole or contribute to the public interest. The time has long since come and gone when there should he the widest possible investigation into the tax structure by some body of no less significance than a royal commission with important powers and authority. Any holeincorner inquiry of the kind that was conducted a few years ago would not be the solution to the present problem.
I wish to refer now to the matter of foreign borrowing that was raised by the honorable member for Reid (Mr. Uren). We are led to believe that all forms of foreign borrowing by the Government are good because they are a contribution to the development of Australia. This generalization, this over-simplification of the position, is completely misleading. Overseas borrowing may contribute to the development of Australia, but it may not. This matter may be looked at in two ways. The first is the way in which a great Australian company, Australian Paper Manufacturers Limited, looked at it in its annual report for this year. This company has a capital of about £30,000,000. The annual report is in these terms -
Your Directors, while acknowledging the work done by various Governments in attracting new capital to Australia, believe that there is a tendency to over-emphasize the importance of foreign cam.panies in the country’s development.
To my mind, that is a gross understatement of the position. There is certainly a tendency to over-emphasize the importance of foreign companies in Australia’s development. The report continues -
They wonder whether the Federal Government, in the overall picture, and the State Governments, in their anxiety to attract foreign capital to their own States, overlook what has been and can be done by Australian industry. Competition on the basis of equal opportunity is the essence of free enterprise, but there should be no special concessions or assistance by Governments to overseas companies to the detriment of local industry’s ability to compete and expand.
Very shortly this will become a political issue - Australian industry versus foreign industry. If this Government wishes to stand on the side of foreign industry, let it do so, but the Opposition will stand on the side of Australian industry. The report goes on -
Overseas control of any section of industry could be contrary to the interests of the Australian shareholders especially in the long term and is likely to be to the detriment of the employees and customers of that industry and of the Australian public generally.
I remind honorable members that I am quoting from the report of an Australian company with a capital of about £30,000,000. The report continues -
Your Directors are submititng to stockholders at an Extraordinary General Meeting to be held on 28th September amendments to the Articles of Association aimed at preventing control of the Company from falling into nonAustralian hands.
Here is a £30,000,000 Australian company which finds it necessary to hold an extraordinary general meeting of shareholders on 28th September for the sole purpose of introducing into its articles of association provisions aimed at preventing the company from falling into nonAustralian hands. That is the state of affairs that we have reached in this country. It is an understatement to say that this Government is over-emphasizing the importance of foreign companies in Australia’s development.
This matter may be looked at also from the economic aspect. Does this investment contribute to our development? The answer to that question depends, first, upon whether the investment is public or private. When the Government borrows overseas the funds obtained replace in its expenditure funds which might be obtained in some other way by taxation or by borrowing in Australia. The chances are that such funds will be spent directly in some developmental work and, therefore, the borrowing is more likely to contribute to our development than is private borrowing, because it is by no means certain that private borrowing will go directly into the development of Australia. As the annual report of Australian Paper Manufacturers Limited indicates, one of the purposes of overseas investment in Australia is to obtain control of our industries, not to assist in the expansion of our developmental facilities. Having obtained control of the situation, the foreign capital then turns to the Australian loan market to obtain further capital, if possible by debentures which give no control to the investors, or by preference shares which give practically no control to the investors. As I have said, the main purpose of foreign investment is to obtain control of an industry and then use Australian capital to build it up.
Our public banks, such as the Commonwealth Bank, have in turn contributed very greatly to the building up of Australian companies. I need refer only to General Motors-Holden’s Limited. It is wrong to assume that expenditure on developmental works corresponds to the amount of private investment in Australia. That does not follow at all. We do not know what proportion of the funds borrowed overseas is expended on developmental works, but we do know that it is not 100 per cent.
The second point to which I wish to refer is that when we borrow a given amount of money from overseas it does not mean that that money will be spent on imported capital. There is confusion here. The funds are sometimes called capital, but the machinery and materials which are used to produce other goods, are also called capital. When we obtain money from overseas it does not mean that we get capital in that second sense. All the money that is borrowed by government or private borrowers in Australia goes into a pool of overseas funds. That pool is available for the purchase of any commodity. It can be used to buy machinery; it can be used to buy consumer goods which are not of any developmental value, and it can be used to pay dividends upon the money borrowed. There is no certainty what proportion of the total net addition to overseas funds that come from overseas borrowing will be spent on the import of machinery or other developmental equipment. What happens will be influenced, if not determined, by tariffs and import licences. If in any one period there is an addition of, say, £100j000(000 or (100,000,000 -dollars to overseas funds -as a result .of borrowing, the decision as to whether that money will be spent -on -capital will be .influenced by the nature of Australian tariffs, .and particularly by ‘the ,gran of ‘import licences.
The Tariff Board more ,or .less has considered -all .matters .associated with .Australian development. It has raised tariffs on certain goods which .would .interfere with our development to prevent .them ‘entering Australia. We ,can assume that .the Tariff (Board, ,by its tariffs, -would -be responsible for -some of the £-1.00,000,000 to which I have referred being spent upon capital, but the Tariff Board’s influence is very vague and indefinite. When we consider import licensing, we should remember that a permit is issued to allow the import of certain goods, but where there has been an addition of say, £100,000,000 to overseas funds .no consideration is given to the question of whether or not licences should be issued for capital, that is ,to say, machinery, &c. In fact, import licensing is .administered only from the point of view of safeguarding the overall total of overseas funds. If those funds increase by £100,000,000, import licensing will be freer and such items as American perfumery, furs and other similar consumer goods will be in greater supply. It does not necessarily follow that a higher proportion of the borrowing will be spent on capital.
If the Government were interested in spending the borrowed funds on capital, the system of import licensing would need to be administered in such a way that most, if not all, of the addition to overseas funds would be spent upon machinery and developmental equipment instead of import licences being issued more or less indiscriminately.
– We are not indiscriminate.
– You are pretty nearly indiscriminate. The honorable member cannot tell me that there are any controls that really amount to controls in the issue of import licences. There is unlimited transfer of licences between the various categories. The honorable member must know that if he knows the right people and can pay a few pounds, he can get a transfer easily between one category and another. .Any belief .that you are really controlling this situation is a fantasy.
This Government has been found wanting -in the .conduct .of ,its overseas borrowing programme for .developmental purposes. Overseas borrowing is /merely io solve the Governments external .debt situation, It is .satisfied .only to add to funds; at does mot care how those funds , are spent. ;It will -not .take the necessary steps to see that they are in fact used .for developmental purposes. Not only is this an unsatisfactory use of -the resources that are obtained in -this way - if they :must he so obtained - but it is also, -as was mentioned “in the report of Australian Paper Manufacturers Limited, endangering Australia’s development. Despite what may have been achieved by encouraging foreign capital development, the evidence is that, at the same time Australian capital development has been delayed, obstructed or held back in certain fields. What is the alternative? The alternative is to try to get money to a greater extent from other places. We must turn to Australian capital and, if we are concerned with this problem, we must devise a tax structure which will ensure that a greater proportion of Australian capital is actually invested by levying a lower rate of tax on invested resources. This matter has not been looked at for a long time. There is no certainty that depreciation allowances are invested at all. The lower rate of tax should be on the money actually invested in development, not on the money that is held back and not distributed, because that is what your depreciation allowance does. The Government should turn more to the Commonwealth Bank for its requirements. If the Government wants to build the Mount Isa railway it should not need to borrow £20,000,000 or £30,000,000 from overseas. It could borrow that money from the Commonwealth Bank.
– Order! The honorable member’s time has expired.
.- We have listened for a good while to many potential Treasurers in this committee. The honorable member if or Reid (Mr. Uren) is interjecting: Having listened to his- contriqbution to trie debate I- feel’ sure that he would make a very good Treasurer.
What strikes, me. particularly, is that honorable, members who have been dealing with this matter have overlooked one important thing, and that is how much we are prepared to allow our deficit to extend if indeed we are in favour of a deficit budget on a cash balance basis at all. I’ would” have expected that the honorable members who have made all sorts of suggestions to the Treasurer (Mr. Harold Holt) would have been prepared to indicate where the money would come- from. We have heard, for example, that it could come from the Commonwealth Bank. We. have also heard, that it could come- from heavier taxes. Now the honorable member for Yarra (Mr. Cairns) has suggested lower taxation- on investment. I wonder whether the honorable member for Melbourne Ports (Mr… Crean) will agree- with, the honorable member for Yarra in. that regard, in view of the fact that the honorable member for Melbourne- Ports is in favour, of heavier taxation!
Honorable members opposite are very worried because money is being borrowed, from overseas. I can recall reading that about. 100’ years ago: the United States of America was very worried because its national debt, had crept up to. the colossal figure of 200,000,000 dollars. The United. States was very worried because it. had to pay about 10;000,000 dollars a year in interest, just as. some honorable members in this- chamber to-day are worried about the interest that we are paying. The United States was worried. L00 years ago about, a total national debt of 200,000,000. dollars. Last year the deficit in the United States - for one year alone - was 12,500,000,000: dollars, or as the Americans would say, twelve and one half billion dollars.
Let us look at- our finances first and get our own figures into perspective. If we look at the Treasury Information’ Bulletin for July, 1959’, we find that of the total of £326,400,000 worth of securities maturing in Australia during 1958-59, £259iT0O;000 worth were- converted; £65J500”,000 worth were redeemed’ by the National- Debt Sinking Fund by 30th June and the remaining £l’,800j000’ worth were outstanding- at that’ date. That means in effect that our finances have been- so managed that- we have been able to- reduce our national debt in that year by £65,500;000. through the. National Debt! Sinking Fund. That is. not a bad effort so far as the National Debt Sinking Fund is concerned. But do not let us take just one aspect of Treasury figures. Let: us. consider the.- grants to the States. In 1958r59 the total grant to Queensland - I am particularly interested in Queensland, because that is the up and coming State - amountedto £31,894,000. That- figure was made up of the formula, grant and supplementary grants. But in 1959-60 the figure is no longer £31,894,000; it has increased to. £36,375,000. If Queensland is to get that, amount - and I know she deserves more - it is obvious that Australia must find something like another £5,000,000 for this purpose:
The Treasury Information Bulletin to which I have, already referred shows that Queensland1 - the sunshine State - received £24,560,000 from the allocations to the States for works and housing in 1958-59, but for 1959-60 the. sum. of £26,230,000 has been approved for this purpose. That is an. increase over the previous year, and if this money is to be paid - and we have no doubt that it will be - it must come from somewhere.
If we look at the deposits with the major trading banks we find, that- at June, 1959; they amounted to £1,612,400,000, which was an increase of- £54;100j000 over June,. 1958, but during the preceding twelve months deposits, increased by only £2,300j000. There was- an improvement in, the. last twelve months as compared with the’ previous twelve months-. Interestbearing deposits during the preceding twelve months increased, by £47,300,000 and. other deposits decreased by £45,000,000; But between. June, 1958, and June, 1959, interest-bearing deposits with the. major trading, banks increased by £27,800,000,. and deposits not bearing interest increased by. £26,300,000, which was. a. great increase last year, compared with the previous year.
There: is: another significant fact concerning our economy which: I. hate u> mention to’- the Opposition because; it has been telling us- how terribly this- Government: has been- managing’ the: country and how badly off we are. The banks’ special account balances with the Commonwealth Bank were unchanged during the June quarter of 1959. The Commonwealth Bank did not have to inject any money into our economy, but twelve months before that it had to release £50,000,000 to help our economy. So we see how well things have been going during the past twelve months. In June, 1959, savings bank deposits amounted to £1,391,000,000, an increase of £42,000,000 from the end of March, 1959. The increase in Savings Bank deposits from 1958 to 1959 as a whole was £94,500,000, compared with an increase of £69,400,000 from 1957 to 1958. These figures indicate, I submit, why this Government can propose a deficit balance of £61,000,000.
I would go further and say that if the Government were prepared to relax sales tax somewhat, the projected deficit could be a little more than £61,000,000, because I have no doubt that history will repeat itself this year. In the previous year the Government budgeted for a deficit of £110,000,000, and in the actual result the deficit was only £29,500,000. In the same way I believe that although the Government has budgeted for a deficit of £61,000,000, having regard to the way things are going overseas with our prices the final deficit will be much less. Only recently sugar prices overseas have increased from 2i cents, to 3 cents, approximately, per lb. Butter has gone up to nearly 400s. per cwt., whereas about twelve months ago it was 205s. Meat has increased in price very greatly. In short, no matter how conservative the Government is, the figure that it sets down as the Budget deficit must be improved upon, because things are going well.
For these reasons I suggest that the Government could budget for a deficit somewhat greater than £61,000,000. I do not mean that deficit budgeting should be carried to any unnecessary lengths, but I do make certain suggestions which, I suggest, should be considered by the proposed taxation committee. We should contemplate a reduction in sales tax. I would say, for instance, that half of the sales tax on cakes and pastry should be removed. At present this tax realizes about £5,000,000, and I believe that £2,500,000 of that could be relinquished. Sales tax on ice-cream, which realizes about £1,400,000, could be abolished. The removal of that tax would help both the dairy farmer and the consumer. More icecream, and therefore milk products, would be consumed. Similar arguments apply in the case of canned fish. If the sales tax were removed from this item it would cost the revenue £800,000. On other foodstuffs sales tax realizes about £1,300,000. I suggest that sales tax could be either reduced or abolished completely on these foodstuffs, and this would mean, in effect, a reduction of about £6,000,000 in revenue.
I agree with the honorable member for Swan (Mr. Cleaver) that it would be a good idea to remove the sales tax on school exercise books. This would involve only about £100,000, but it is a big item so far as the people are concerned who have to purchase exercise books for their student children. I consider also that the taxation committee would do well to examine the possibility of further increases in the allowable deductions for a spouse, parents, &c. If the allowance were increased by £13 to £156, there would be an estimated reduction in tax revenue of £3,500,000. This suggestion involves the important question of whether it is desirable that the family man should be given all possible benefits. If allowable deductions for dependants, spouse, parents and children were increased, then the family man would get the benefit at a time when, I submit, the economy could stand it. An increase in the allowable deduction, for the first child under sixteen years of age, of £13, bringing it to £104, would cost us about £2,300,000. A similar increase in the allowable deduction for other children would cost an estimated £2,300,000.
In considering the question of an inquiry into taxation I am entirely in accord with what has been said by the honorable member for Swan, that the inquiry must cover the whole field. How can you get a true picture of taxation if you do not consider all forms of taxation? I entirely support, therefore, the argument of the honorable member, that the proposed inquiry should cover all fields, not merely income tax alone, but also all other forms of taxation, such as sales tax, pay-roll tax and so on. Time will not permit me to deal with the various forms of taxation, but I do say that the proposed committee should certainly include a member of this Parliament.
.- The honorable member for Wide Bay (Mr. Bandidt) has considered the Government’s financial methods and found them very satisfactory. He appears to adopt a policy of putting on blinkers so that he may not see the inflationary nature of the Government’s financial policies. He said, for instance, that the Government last year contemplated deficit budgeting to the extent of £110,000,000. That is to sayif he would put it in the crude form which would show the truth - it proposed inflation to the extent of £110,000,000 last year, but it did not have to inflate £110,000,000, the honorable member says, but had to inflate only £29,700,000. I am afraid the honorable member has not studied all the Government’s inflationary devices, because this Government has a habit of showing its revenue from loans as revenue, when a good deal of its revenue from loans is straight inflation. The reason why the revenue of this Government from loans is straight inflation, while that of the previous Labour Government was not, is that the Labour Government followed a policy of excluding banks from loan subscription; therefore, existing money in circulation was drawn in as subscription to loans. But the present Government has repeatedly allowed banks to subscribe new cheque money to loans. There was one loan, to the extent of £100,000,000, which was straight inflation. There was another of £130,000,000 which was straight inflation in the loan funds. In the present Budget there are more straight inflation devices in the Government’s loan programme, because it will allow private banks to subscribe.
I believe the Ministry has persistently shown gross discourtesy throughout the Budget debate and in this present debate, in that not one of its members has explained why the Government has chosen the method of borrowing from the private banks new money, inflation money, at 5 per cent., instead of using treasury-bills from the Commonwealth Bank at 1 per -cent. The only possible explanation that comes to my mind is that as the private banks are supporters of this Government a reciprocal courtesy is extended, and the Government pays interest to their unnecessarily which it could pay to its own Commonwealth Bank, and which would be paid back to it by the Commonwealth Bank, as that bank is obliged to subscribe its profits to the Treasury. I do not believe that the Treasury officers who were advisers to the late Prime Minister. Mr. Chifley, ever advised a financial policy so foolish.
I invite the honorable member for Wide Bay to note that not only was there £29,700,000 of inflation in treasury-bills last year, and also the £50,000,000 of inflation which he mentioned in connexion with the release of special funds, but that there is also consistent inflation caused by the present Government’s method of raising its loans. It is that which has transformed this country from being one of the countries in which the purchasing power of the unit currency was held best, to one in which it is held worst. This, when all is said and done, is from a government which criticized its predecessors and promised that the value of the 1949 £1, which, we were told, was inadequate because Mr. Chifley’s financial policy was inflationary, would be restored. It has not been, and constantly we have this doctrinaire policy, favouring private enterprise and conferring upon the private banks the right to inflate the currency when they are permitted to subscribe to loans. Admittedly, if usury fields of investment are made attractive to investors, as has been done with the hire-purchase field, nobody can be expected to subscribe to loans, and so resort must be had to inflationary measures to encourage subscriptions to the loans. But that does not justify permitting inflation through the private banks instead of through the Commonwealth Bank.
– Does the honorable member claim that the Commonwealth has control over the hire-purchase field?
– I think the Commonwealth Government could very easily control hire purchase by competition through the Commonwealth Bank. Granted that it has not a direct constitutional power, it still has an economic power, but it has deliberately, by legislation, deprived itself of the capacity to use this power.
– It has a constitutional power over the banks, which are now all tied to companies which control two-thirds of the hire-purchase business.
– I accept the honorable member as being able to give that reply, because he is qualified in law and I am not.
If the Government is to have an inquiry into taxation, it would be very good if it were to seek to discover the extent to which taxes are merely competitive. We have before us figures which show that £472,000,000 was collected in indirect taxes, some £150,000,000 of this being in sales tax. Has anybody ever determined the extent to which sales tax reduces the proceeds from income tax? Suppose that a person buys a commodity at an increased price because of the sales tax component in the price. If he does not pay that sales tax but uses the money to make another purchase, the amount then becomes the income of another person who in turn purchases something else with it. So it goes through the economy, producing increased incomes instead of being cut at the point of an immediate increase in price. If thai £1-50,000,000 of sales tax did not exist, but had gone through the economy as the income of individuals, by how much would income tax collections be increased? That is a question worth asking. I do not think that a scientific analysis has ever been made of the extent to which taxes are merely competitive with one another. The same comment applies to pay-roll tax and a good many of the other indirect taxes.
The question of foreign borrowing was, I think, very uncritically discussed by the honorable member for Wide Bay, and the House is indebted to the honorable member for Yarra (Mr. Cairns) for bringing us back to the real concept of an intelligent borrowing policy, and that is whether we are borrowing .capital. I do not say that there are no circumstances in which we should borrow from abroad, but the element which determines whether we should is physical. We borrowed, I understand, ‘£42,000,000 -to buy six Boeing airliners. If we must have -six ‘Boeing airliners, it is -quite clear that we in Australia cannot establish a -Boeing industry, or an industry to make the ‘equivalent not a Boeing airliner, merely to supply six aircraft. Clearly, there is not within Australia a big enough market for these aeroplanes. We want only a few of them; to set up an industry to make them would be completely foolish. If Australia has not immediately available the dollars needed to import that capital - ‘the physical items consisting of the aircraft, their components and spares and so forth - then there is a case for borrowing. I think that there may have been a case for borrowing abroad for some of the earth-moving equipment and other technical equipment required for the Snowy Mountains scheme. But to borrow money abroad for the kind of capital that can already be manufactured in Australia is plain folly.
A Labour government had the experience of following an Australian Country Party Treasurer who pursued a tremendous programme of borrowing abroad. I refer to the right honorable member for Cowper (Sir Earle Page). He borrowed from 1924 to 1928 on a grand scale, when the price of our agricultural produce sold abroad was very high, just as this Government has borrowed when wool has brought record prices. His unfortunate successor, the late Mr. Scullin, had to try to pay back in the depression years when prices crashed. A policy of borrowing abroad may be justified if it is developmental; it is one way of carrying out developments. But the honorable member for Farrer (Mr. Fairbairn) reminds me that at least some forms of capital that we have acquired from abroad in the dollar area may have been acquired in the sterling area, perhaps without the necessity to borrow if our own sterling earnings were sufficient. I doubt whether it was necessary to allow the import of Electra aircraft when an exactly equivalent aeroplane, the Vickers Vanguard, could have been purchased in the United Kingdom. This is a kind of bigger sister to the Viscount. I do not want to deal now with the aircraft industry, but I say that the Government must .adjust its foreign borrowing policy in accordance with the physical capital that it has imported. If, as I suspect, some of this -foreign borrowing has been used in the importation of consumer goods, then it is a completely irresponsible policy.
It is time that the Government had a look ‘at industries that are protected by tariffs. Honorable < members opposite are fond of saying that they are :the apostles of free enterprise. The Australian Country Party and the Liberal Party believe respectively in the socialization of the losses of the farmer and the socialization of the losses of the businessman. Stabilization schemes often represent socialized losses, and tariffs always do. A business which exists by virtue of tariff protection is, by Government action, having its losses socialized; they are transferred to the community ,as a whole. The Chifley ‘Government was very largely responsible for the establishment of General Motors-Holden’s Limited. It was Mr. Chifley’s proud aim to get :£his Australian car manufactured. But, under tariff protection, the profits of this company have now risen to £10,000,000 or £12,000,000 a year.
– Where did you get the money from to start the industry?
– The tariff was necessary for them. It was a socialized loss, they got their money from abroad. I know that an American company supplied the capital. I am not ta’king any defensive action on that. Mr. Chifley believed that that was the quickest way to get their knowhow and so on into this country. I am making a different point now.
By tariffs, the -company was enabled to survive and now by tariffs it is .enabled to make inordinate profits. This is doing .two things, first, it is raising our cost structure. I do -not think that it is necessary for this company to make a -profit :of £12,000)000. By reducing the tariff, we could cut the profit down to £2,000,000 or £3,-000,-000, and .that would be an adequate return on the capital invested in .the company. Not -only are -we -raising the cost structure. <but by so greatly increasing the company’s profits, we are (destroying the earning power of its own exports. Foreign investors .on whose investments we pay interest are .able .to .make a claim on our production without having .to reciprocate by providing physical goods in exchange. If, by tariffs, we inflate the profits of General Motors-Holden’s Limited to £12,000,000 and that amount goes abroad to foreign investors, .£12,000,000 of Australian production is taken away from this country .and it does -not have to be .covered by imports. So we ought to ‘take a critical look at -the -tariffs that protect -com panies which have invested behind our tariff wall, and see that those tariffs give us a reasonable return. At present, the indiscriminate encouragement of foreign investment is very largely destroying the earning power of our own exports.
.- Mr. Temporary Chairman, if the committee will have patience with me, I should like to elaborate a little on the matter with which I was dealing earlier when my time expired. I was explaining the way in which tax is evaded by foreign capital ‘under -the present international .tax agreements, and I gave as an example, the earnings of General Motors-Holden:s Limited. I took that company as an example only because the figures with respect to it are so readily available. It is difficult to get figures from the Government in respect of other organizations, because so many things are hidden, particularly in regard to profits and the outward flow from this ‘Country of profits on capital investment. As I explained earlier, -foreign capital has made more than £500,000,000 in this country since 1949, and over £300,000,000 -of that has represented a capital outflow from Australia. In the last two years, General Motors-Holden’s -Limited has been -responsible for a capital outflow of £13,000,000.
Of course, people will say, “We need foreign investment in this country”. Earlier, I dealt with foreign loans and foreign investment and said that, even though we do not like foreign loans, they are less evil than is foreign investment. The investment in General Motors-Holden’s Limited was made prior to the 1953 tax -agreement with the United States of America. Under the Chifley tax scale, the company .would have paid to the Australian people in taxes £4,500,000 of that £13,000,000 which has gone out of this country, but under the new reciprocal agreement between Australia and the United States a maximum of 15 per cent., 3s. in £1, or approximately £1,800,000, is paid. This means that, !in the last two years, the international tax agreement entered into by this -Government has, in effect, defrauded the Australian people of £2,700,’000 in respect of one ‘company alone.
The point is that ‘this is just -one example that shows up. Recently, I put :on the notice-paper a question to the Treasurer (Mr. Harold Holt) in these terms -
Of the net dividends and profits of £43,000,000 remitted overseas in 1958-59, what amount was remitted to (a) Britain, Cb) the United States of America, (c) Canada and (d) other countries,
In the answer, which I received only this afternoon, the Treasurer informed me that the figures are not available. I agree that it was a Labour government that negotiated the tax agreement with the United Kingdom, but I think that, had the Labour Government continued in office, it would probably have reviewed the position. At present, the dividends on British capital invested in Australia go out of this country tax free. American capital pays a maximum of 15 per cent, on dividends, as does Canadian capital. This represents 3s. in the £1. The honorable member for Yarra (Mr. Cairns) said, earlier this afternoon, that it is a matter of where the Australian Labour Party stands. The Labour Party believes that we can develop this country with our own resources. It believes that we can develop it with Australian capital, by means of the Commonwealth Bank, our own industrial effort and our own man-power. There may be times when we shall need te borrow abroad. Then we must decide what foreign capital we need, and avoid the speculators. However, I cited figures earlier to demonstrate that, during the term of the Chifley Government, even though we had just come through a war, we reduced our overseas borrowings. We reduced our debt in Britain by £92,000,000 and in the United States by £3,000,000.
The fact is that, to-day, British capital invested in Australia does not pay the Australian people anything by way of income tax. and United States and Canadian capital pays only 3s. in the £1. Other foreign capital pays approximately 7s. in the £1. But Australian capital paid, prior to this Budget, 13s. 4d. in the £1. As a result of the hand-out in this Budget, it will now pay 12s. 8d. in the £1. I believe that we must make a complete revision of these tax agreements. What sort of reciprocity is there in what is supposed to be a reciprocal tax agreement entered into by this country? “We find that, under that agreement, benefit is received by only one major firm which lias invested in the United States. I believe that it is the Kiwi shoe polish company, and that it has invested something like £100,000 in that country. The tax-free dividends that it receives are only peanuts compared to those that are taken out of this country. As I have already indicated, one company alone has gained for itself, in two years, £2,700,000.
The Minister for Trade (Mr. McEwen) proudly publishes information about the investment of British and United States capital in this country which indicates that something like 1,000 firms in those countries have invested money in Australia. I do not think that one needs much imagination to see that Australia is a land of milk and honey for foreign capital, which is taking very large profits abroad and bleeding us of our resources. One has only to read the “ Australian Financial Review “, which is published in Sydney, in order to see this, and I ask members of the Government and their supporters to read and absorb a recent article in that journal by an economist named Herbert. It is particularly interesting. There must be fresh thinking on this problem. We are seeing colonialism all over again. We have a wonderful country with a great future, and we on this side of the chamber have faith in its future. But we believe that we must develop Australia with our own resources. We do not need to beg, borrow and steal from overseas, and put ourselves in pawn in the process, because we shall pay dearly in the long run for everything that we get from overseas. The honorable member for Yarra pointed out very effectively earlier that some of this capital which is borrowed from overseas is used for the import of goods which are not needed for the expansion of the Australian nation. We must face up to the situation, particularly in relation to import licensing, and ensure that only essential commodities are brought into this country by the expenditure of capital raised overseas.
I notice that the honorable member for Richmond (Mr. Anthony) has just walked into the chamber. I wonder whether he is happy to know that the result of the by-election in the Lismore State electorate in New South Wales, which was held last Saturday, represents a great Labour victory. We can now say that it is a great Labour victory, because the poll has been declared and a new Labour member has been elected to represent in the New South Wales Legislative Assembly part of the area represented in this chamber by the honorable member for Richmond. The result of the Lismore by-election is the outcome of the foolish policy adopted by the Government in the preparation of this Budget, which is the work of a conservative Treasurer. Probably, it will not be long before a Labour member represents Richmond in this place. I am sure that, at the next federal general election, this Government will be in trouble.
– Mr. Temporary Chairman, I support the arguments advanced from this side of the committee in relation to overseas borrowing and taxation policy, with particular reference to indirect taxes, which were mentioned by the honorable member for Fremantle (Mr. Beazley). We are at present considering the proposed vote of £11,539,000 for the Department of the Treasury. However, if the Treasury is responsible for the ruinous financial policies that are being adopted by this Government, there is every reason to object to the continued existence of this department. We look at the tax figures as estimated in the Budget. Customs duties are expected to produce £75,700,000, excise duties £246,500,000, sales tax £150,000,000, income tax on individuals £431,000,000 and on companies £232,000,000, pay-roll tax £53,000,000, estate duty £13,000,000 and gift duty £2,000,000. But land tax is to produce nil. The Labour Party believes in taxation according to ability to pay. There can be only one measure of an individual’s ability to foot his share of the running costs of the community, and that is income earned or capital owned. Payroll tax and, particularly, sales tax, offend against every principle of taxation, and especially against the principle of taxation according to ability to pay. The community has to find some method of abolishing both pay-roll tax and sales tax. In this case a total of £200,000,000 is to be taken from the community by means of what I suppose the Treasurer would call painless extraction. The community is not to be trusted to meet its fair share of taxes. It is just nonsense to suggest that there would be a revolution if you were suddenly to announce that income tax was to go up to about £630,000,000. I believe that the average Australian is willing to foot the bill according to his ability to pay, particularly if he knows he is getting value for his money.
In this debate it is not appropriate, perhaps, to discuss whether we are getting value for our money, but I think that it is appropriate to discuss the attitude of the Treasurer and the Treasury towards the social conscience of the people. Both sales tax and pay-roll tax are almost an inheritance from the old hearth tax, window tax and chimney tax. They are an attempt to avoid facing the issue. Look at the various dodges that Treasury officials and Treasurers, both Federal and State, have got up to. They impose a tax of 3d. or 2d. on receipts and on cheques, according to the State in which a person resides, whereas the only logical way in which money should be collected is from income tax levied according to ability to pay, and therefore based on the earnings of the taxpayers and any capital increments they may gain. I believe that there are huge sums of money that have been acquired by people who pay no tax on it.
Let us consider the question of land tax. One of the features of community life in the last ten or fifteen years has been the increase in the value of land. Nearly all of this increase has come directly as a result of investment by the community as a whole. There was an interesting example in an area at Watsonia, in Victoria, only two years ago. This area consisted of vacant land, cut into blocks but still with comparatively few houses on it. About two years ago, the Government announced that it proposed to proceed with the building of a large barracks, which would involve the expenditure of a great deal of money. The very next day blocks whichhad been on the market for £400 went up to £800. This is indicative of the way inwhich expenditure on behalf of the community at large returns to individuals profits which are usually tax free.
So I believe that the Treasurer and Government have to find some method of ensuring that people who receive capital1 increments, as a result of increases in landvalues or share values, pay their fair share of the overhead involved in running the community. These increasing values apply to land particularly. They apply especially in Melbourne’s inner suburbs, where blocks of land have multiplied in value tenfold in the last ten or twelve years. Here is an increment enjoyed by some individuals, although some of them are not necessarily rich. However, they get £700’ or £800 or £1,000 extra on which they pay no income tax. This is one field at which the Treasurer must take a very careful look.
What happens in regard to land values is only indicative of what happens in regard to many other values which continually rise - for instance, the value of shares. There is a continual increase in the value of shares in both industrial enterprises and commercial enterprises. This can come about as a result of additions to share capital, bonus issues and so on. Here is another case in which the lucky owner does not contribute his fair share to the community’s overhead. This is another section of the economy which needs close and careful scrutiny.
Another field which ought to be considered is the lottery field. Annually some £25,000,000’ is paid out in lottery winnings, but the winners pay no income tax on their winnings. A person who wrote a book and, by- some freak of publishing, succeeded in making £5,000 from it, would have to pay income- tax on that amount. So I believe we- ought to be turning our attention to, the method’ by which income tax is computed, and the methods by- which the various forms of taxation are- raised!
It has been- pointed out that’ we are now using income tax concessions in order to encourage people overseas to lend- us money. We have a zone- allowance to encourage people to> live in the tropical or most inhospitable parts of the country-. We have a. tax- rebate to encourage investment in gold-mining- shares and other things. Of course,, the greater your- income the greater the value of the concession, and: that alsooffends against the general principle of ability to pay. If your income goes up; in effect your municipal rates go down, because the increase in your taxable income means an increase in the amount per £1’ that’ you- are paying-, so- your deductions increase in value accordingly. I believethat the principles that’ the Treasurer has managed to bring into the whole taxation system must be closely scrutinized and radically altered.
One of the really offensive features of our taxation system is the pay-roll tax. Honorable members on both sides have continually raised this question. Pay-roll tax. falls heavily on every State instrumentality and every municipality; and that is absolutely indefensible.
I turn- now to the estimates for the Department of the Treasury, which involve a proposal to expand the accommodationoccupied by the Government Printer. I believe that the Government Printing Office holds part of the answer to the. presentdomination of the- printing field by a few commercial interests, particularly in’ the newspaper industry. I- believe that theGovernment has every opportunity, throughthe expansion, of the Government Printer’s activities- in this field of enterprise, to compete with, the people who own and control our. newspapers. I believe that in. the same way as we can. own and. control the Australian. Broadcasting Commission, with its news services and. all its- other services, we ought, to own. and control a governmentprinting, or publishing, commission. We ought, to take some, steps, even if it is constitutionally difficult to do so,, in that direction. I do not see why a government’ newspaper with head-quarters in. Canberra could not be expanded’ to become a national newspaper in the same way as we have a national Broadcasting system. This’ could be done with the co-operation of State or municipal authorities. We could- probably make finance available for the Government to enter into the printing field’ in opposition to the present monopolies which control” it. I believe that this is one of the difficulties the- community faces - a monopoly or limited’ control over our means- of communication.
The British Stationery Office and the United States Stationery Office both perform very important functions in spreading information. They are publishers in a big way.. This Government has failed to expand our publishing. 1 do not know what the figures are, but hundreds of thousands of pounds worth of Government publicationsare” printed every year under contract by private printers and publishers. This- is indefensible. The Estimates do not show in detail what this cost amounts to, but they show that every department produces publications which have been printed outside, under private contract. Therefore, I believe that honorable members should give very close attention to the possibility of expanding the activities of the Government Printing Office.
Proposed vote agreed to.
– I have a matter which comes within the activities of the Attorney-General’s Department. The Attorney-General (Sir Garfield Barwick) himself has some knowledge of this matter which I regard as a most serious and important one for the Australian community. I do not present myself as a legal luminary. As a layman, it has always been my impression that one of the functions of the Commonwealth Attorney-General’s Department is to see that the law is upheld and, wherever public interest is involved, to give assistance to the community and to protect its interests against the activities of any elements which work against the public good.
I think that all honorable members will agree that from time to time we hear of instances of what is regarded as restriction of trade or restrictive trade practices. I have in my possession correspondence which proves beyond doubt that not only are restrictive trade practices being carried on by cartels and monopolies in this country, but that those practices are being allowed to continue without any interference from the Commonwealth AttorneyGeneral’s Department.
It is quite true that the Attorney-General has given me an opinion in this case which seems to indicate that, from his point of view, there is no action which the Commonwealth can take. I have already said that I am only a layman, but it appears to me to be rather extraordinary that, in this case, if the opinion of the AttorneyGeneral is correct, that the Commonwealth has no power under which it can take corrective action. This matter concerns the firm of Charles F. Hawkins Proprietary Limited, warehousemen and manufacturers and distributors, of 134-136 Flinders-lane, Melbourne. This company manufactures woollen goods and has been in business for approximately 30 years. One of the items that it has been manufacturing is Doctor flannel undershirts. There are five other Melbourne firms in the same line of business. Those five firms formed an association. Charles F. Hawkins Proprietary Limited, for some reason best known to itself, did not join the association.
In August or September of 1957 the association decided to raise prices by 10 per cent. Charles F. Hawkins Proprietary Limited refused to raise its prices on the ground that at that time the price of wool had fallen. This seemed to be a pretty substantial reason for not acting in collusion with the other members of the trade. But immediately this firm refused to raise its prices, it got into difficulty with the association. The association then threatened the manufacturers of the flannel, Kelsall and Kemp (Tasmania) Limited that its members would no longer handle the product if the manufacturers continued to supply Charles F. Hawkins Proprietary Limited. Supplies to that firm were then discontinued.
I have a copy of a letter to Charles F. Hawkins Proprietary Limited from Kelsall and Kemp (Tasmania) Limited. Amongst other things, it says this -
As you know from our agents, several of our other shirt flannel customers have indicated their intention of closing their accounts if we supplied your firm with this flannel and we have no alternative but to accept the position. This position is not of our seeking but we feel sure that there is nothing we can do in the matter.
Because Charles F. Hawkins Proprietary Limited would not raise its prices, the association to which I have referred exercised pressure on the manufacturers to deny that firm supplies of flannel. This association, the Wholesale Softgoods Association, comprises Sargood Gardiner Limited, D. and W. Murray Limited, Robert Reid and Company Limited, Paterson, Laing and Bruce Limited and Richard Allen and Sons Proprietary Limited.
In view of the combination of those forces, one can imagine what a hopeless task the firm of Charles F. Hawkins Proprietary Limited would have in getting any corrective action by this Government even though the firm has been established and operating for over 30 years. Too much wealth and influence is exercised against the firm by this continuation of its trade competitors. Charles F. Hawkins Proprietary Limited wrote to me on a number of occasions, telling me some rather interesting things. In the first communication, sent to me in December of 1958, the company said -
From time to time the public are informed of cartels, monopolies, etc., set up to control markets and regulate prices for various commodities. This company has recently had experience of action of this type being taken in respect to woollen products and we enclose a statement setting out the facts. This statement clearly indicates that if a small operator wishes to sell goods at competitive prices against the high cost organised groups, pressure tactics are used to have supplies refused to enable the organised groups to operate the market to the disadvantage of the consumer.
I brought the details of this matter to the notice of the Attorney-General. In his first reply, dated 14th July, 1959, he said -
I did not assume that the whole of the business activities of Chas. F. Hawkins Pty. Ltd. were limited to the State of Victoria. I did assume that when it purchased its supplies of flannel it did so in Victoria. I also assumed that any arrangement which may have been made between the company’s competitors was made in Victoria with a view to affecting the purchase of flannel by the company in Victoria. In relation to your inquiry these seem to me the significant facts. The Australian Industries Preservation Act covers arrangements made in relation to interstate trade. I concluded that the Victorian purchase of flannel by the company would not be part of interstate trade and that it would not become part of it merely because at a later stage the company’s products made from that flannel would be sold into other States.
It is quite true that the action taken by the association was taken in Victoria. But Charles F. Hawkins Proprietary Limited supplied customers throughout Australia. The fact that supplies were discontinued by the action of this association in Victoria seemed to me to imply that there was some infringement of section 92 of the Constitution which guarantees, so it is said, freedom of trade between the States.
If a transport operator takes a load over a State border, the Commonwealth and the State both say that they have no authority in the matter because there is a power vacuum and neither the Commonwealth nor the State has power to deal with the situation. But here is a clear illustration of an attempt to prevent people in what was believed to be a competitive industry from keeping prices down against the wishes of the great monopolies and cartels that have been allowed to flourish in this country. The Attorney-General still insists that he has no power to deal with this situation. I do not know whether he believes that this Parliament lacks constitutional power. In my opinion, the situation ought to be examined.
I am not aware whether Charles F. Hawkins Proprietary Limited has been able, since, to get supplies of this material. But why does this Government remain silent and inactive in such matters? When a trade union decides to take direct action to improve the conditions of its members there is never any lack of constitutional authority or legal power available to antiLabour governments to deal with such action which on occasions has been represented as a restraint of trade. If the trade union movement of the Labour Party in this country attempted to boycott a hostile newspaper because of its activities, it would, according to legal advice, expose itself to severe penalties, because such action would be regarded as a restraint of trade. If the law can be applied in one respect in regard to restraint of trade, then in my opinion there is something wrong with the law or with the administration of it when no action can be, or is, taken in these particular cases.
– It is one-eyed.
– That is true; it is a onesided law. How can the Australian community be expected to observe the law in its entirety when it has so many illustrations of how the law operates adversely against workers or their organizations or the community generally and, on the other hand, fails to act against another section which is exploiting the community and which evidently has great influence with particular types of government? I should be interested to hear the Attorney-General explain in some detail how the happenings to which I have directed attention cannot be regarded as a restraint of trade. As I have already pointed out, it would appear to the layman that if a distributor or wholesaler is prevented from getting supplies from the manufacturer and is, as a result, unable to supply interstate customers, that appears to me to be a distinct interference with interstate trade. At least this matter might have been taken a little further and tested.
I merely rose in my place on this occasion to let the facts be known to the Australian community. I am not suggesting that this is an isolated case. These people, because of their likely past political associations, no doubt hesitate to seek the aid of the Labour Party and I should imagine that it would be only as a last resort that they would put into the hands of a Labour member evidence to show exactly what was happening. But evidently this firm feels that its position is so desperate it had to take this course in order to have the matter ventilated in an effort to get some action on the part of the authorities. It is able to look after itself if it wants to take legal action to test the law, but I believe there is a greater duty devolving upon the Attorney-General’s Department to protect the Australian people who are the consumers of goods. If a firm is artificially forced to increase the price of a commodity beyond what it should be when proper, free competition is prevailing, then in my opinion it is a matter in which the Commonwealth Government and the AttorneyGeneral’s Department should interest themselves and take some action.
If the law is lacking, let us have an amendment of the law. If constitutional power is lacking then let the Government say so in order that this matter might be taken into consideration when the people are next asked to extend the constitutional authority of this Parliament.
Order! The honorable member’s time has expired.
– As no other honorable member has risen, I shall take my second period of fifteen minutes. I do not know whether the Government wants to get the Estimates through Parliament quickly and with little criticism, but I consider that when a member raises a matter which he regards as important, and is supported in his opinion by other honorable members, and when there is evidence that there are monopolies and cartels functioning in such a way as to keep up prices, surely he is entitled to some reply. I have received written replies from the Attorney-General, but at this moment he does not deign to make any comment or reply to my criticism.
– You were fully answered by letter.
– The Attorney-General says that I was fully answered. That is a matter for the judgment of the committee. If the Attorney-General thinks I was fully answered, he can rest assured that I was not satisfied with his reply, and I am sure that there are many other people in Australia who are not satisfied with the situation revealed in this particular case.
I should like to know why the Government has not taken some action to protect the Australian community. If there is some obstruction in the way of its doing so, why has not the Government taken some steps to remove that obstruction? As I have said, there is plenty of evidence available concerning the operations of monopolies and cartels, but this is the first time in many years that I have actually had the details submitted to me by one of the parties affected by this type of activity. When a matter like this is raised by a member of the Opposition, the Government has a tendency to brush it aside and suggest that he is distorting the facts or quoting them out of their proper sequence. In this instance I have stated the facts supplied by a firm which has been penalized, undoubtedly, by a very powerful cartel of interests who are co-operating to compel the Hawkins company to comply with their demands in regard to raising prices or they will force it out of business by applying pressure on the manufacturer compelling him to deny supplies to this firm. This matter is so serious that I should hope that even if the AttorneyGeneral does not agree with the arguments I have advanced, he at least must realize that there is something to answer and explain. I hope that before this debate concludes the Attorney-General will give such an explanation.
Sitting suspended from 5.57 to 8 p.m.
Debate resumed from 1st September (vide page 767), on motion by Mr. Davidson -
That the bill be now read a second time.
.- Mr. Speaker, the measure now before us may be regarded in many ways as the triumph of the Treasury over the Treasurer (Mr”. Harold Holt) and the Australian Country Party; as the triumph of Treasury doctrine over common sense, as I hope to prove in a moment. The PostmasterGeneral (Mr. Davidson) in his secondreading speech on this measure on 1st September, occupied nearly an hour in an attempt to justify the proposed increases in postal charges, but he very cleverly skated over or camouflaged the really significant feature of the proposal, which is that £11,000,000 of the additional estimated revenue of £16,000,000 will be paid direct into Consolidated Revenue under a new concept, apparently, that after 59 years’ existence the Post Office, which was regarded previously as a great public utility, should be regarded in the future as a private enterprise business undertaking which should earn a profit on the capital sums that have been invested in it. As I have said, this measure is the triumph of Treasury doctrine over common sense. Apparently, the idea so to regard the Post Office has been in the minds of some Treasury officials for a long time, and I shall indicate that fact shortly in a documented way. Those officials have had the idea that this great undertaking, which has been in existence for nearly 60 years, should be put now on a new financial basis.
The major portion of the proposed increases are not legitimate charges to cover increased wages to the loyal band of some 80,000 Postal Department employees. If honorable members refer to the Estimates and Budget papers they will see that for this financial year the ordinary expenditure of the Post Office in all its phases is estimated at £109,000,000, whilst the revenue expected as a result of the proposed new charges for letters, telegrams, telephone calls and other Postal Department facilities will amount to £119,800,000 - a surplus, in round figures, of £11,000,000. In his Budget speech the Treasurer stated -
The earnings of the Post Office should also be increased, not merely to meet the cost of its daytoday services but to provide something by way of return on the additional capital.
I propose shortly to indicate the sources from which that capital has been drawn in the main but, to begin with, the House should observe that the major portion of the contemplated increases is not intended to cover the day-to-day activities of the Post Office, but to meet this new mythical charge that the Treasury officials believe should be made against capital investment in the Post Office. Honorable members should mark clearly that important departure, which accounts for the major portion of the proposed increases.
Because of the nature of our geography and various other aspects of our life, it has been a traditional feature in Australia that in many respects the Post Office has been a developmental agency rather than primarily a business undertaking. It has been the usual practice not to consider revenue from telephones and letters as distinct from the revenue received by the undertaking as a whole. So long as the undertaking as a whole covered its costs on what was regarded as a commercial basis, previous governments were satisfied. I shall refer to this matter later because the cash position as revealed in the Estimates and Budget papers is not significant as a means of testing the efficiency and payability of the Post Office but, rather, tariffs and everything else rest on what are known as the commercial accounts of the undertaking.
The Government must concede that the proposed increases have caused a great deal of outraged feeling in all sections of the community. I shall detail only a few of the pieces of correspondence that I have received to indicate the diversity of the objections to these proposals. I have received letters from the Religious Press of Australia, the Library Association of Australia, the Association of British Book Publishers and, for the benefit of our Queensland friends, a publication known as “ Queensland Country Life “. Those bodies have written to me expressing their objections to the proposed increases, and their comments are worthy of attention because they indicate the high degree of resentment that exists in all sections of the community. As I have said, it has been traditional in Australia to regard the Post Office as a great public utility. In fact, in his Budget speech the Treasurer said, “ The Post Office is, of course, a great public utility “.
Some four or five years ago, the Post Office was subjected to a very comprehensive examination by the Public Accounts Committee of this Parliament, and quite a number of matters that were noted by that committee in its twelfth report are worthy of recollection at this stage.
– Was the honorable member on that committee?
– I was on the committee at that time. In paragraph 36 of its very comprehensive report the committee stated -
Like most public utilities, the Post Office supplies services for which it charges. If its departmental “ status “ should result in customers being charged too much, or too little, there may be cause for complaint. In that event public and parliamentary pressure may be exerted to alter government policy.
Well, extra-parliamentary pressure has already been exerted to alter some of the things that the Government had intended when it brought down this measure.
The committee continued -
Without going so far as to say that the Post Office should pay its way, the Committee considers that the fullest attention should be paid to the relationship between the income and the expenditure of the Post Office in fixing charges.
Some extracts from the findings of the Royal Commission on Postal Services of 1908-10 were appended at the end of the Public Accounts Committee’s report. That royal commission must have been a very extensive inquiry, because it occupied nearly two years. The Public Accounts Committee cited some of the findings of the royal commission because the committee thought that what had been decided by the royal commission was still relevant in our own day and age. The committee quoted the following passage from the findings of the royal commission -
As to the second proposition that the service should be continued on a profit-making basis, the Department being treated as a commercial proposition, your Commissioners desire to dispose at once of the propriety of making the services profit making, since the Department, as well as performing functions of a postal character, pro vides facilities which tend to develop the country. In many instances continuous settlement depends upon constant and regular mail services. This is notably the case in outlying parts of Western Australia and Queensland.
That was in 1908; it may still hold true in 1959. The royal commission went on to say, regarding another proposition that the department should be self-supporting as a Commonwealth concern - . . the balance of evidence is in favour of the services being made self-supporting as far as possible. Your Commissioners recommend that the Department should be self-supporting as a whole, and consider this is practicable without the lessening of facilities. The service should be viewed as a Commonwealth concern and the term “ self-supporting “ should be applied to the functions of the Department as a whole, irrespective of any particular State, and also to each main branch of the services, viz., postal, telegraphic and telephonic.
In paragraph 178 of its report the Public Accounts Committee summarized the evidence of officers of the department in this way -
It has never been the practice to regard the tariff structure as being a medium designed to ensure that each branch - Postal, Telephone and Telegraph - is operated in watertight compartments and successive governments have rather adopted the principle of treating the Post Office results as a whole, and in some cases higher or lower charges have been adopted in the services of the individual branches irrespective of their financial position, so long as the objective of a satisfactory overall result was obtained.
The committee listed several instances where it had been the practice of the Post Office not to endeavour to cover all costs in fixing tariffs for particular services. In paragraph 181, dealing with telephone charges, the committee cited the department as stating - . . in accordance with government policy, concession rates are applied to telephone services in country districts in the interests of decentralization, the maintenance of people on the land and the development of primary production. To supply services in rural areas on the basis of the charges corresponding with the costs would give rise to widespread dissatisfaction and could impose real hardship on a section of the community, almost wholly devoted to primary production.
With regard to the gentlemen of the press the committee said -
The charges to the Press for trunk-line calls are less than those for the ordinary user of the trunk-line telephone services. The Press is charged the cheaper night rate and is allowed a period of five minutes instead of the usual three minutes.
That is another example apparently of the transmission of news being regarded as a public service and being charged a lower rate than other services. The committee noted also in its report that because of different geographical and climatic circumstances Tasmania, for example, could not be treated in the same way as the metropolitan area of Sydney.
The telegraph service is the section that has traditionally shown the greatest loss, but it renders significant services to people in outback areas. Again dealing with the press, I point out that concession rates for press telegrams at present involve a remission of up to £250,000 a year. Finally - and this is significant also - the Public Accounts Committee obtained estimates from officers of the Post Office of how the various activities of the Post Office worked out when charges were measured against revenue. It was shown that letters and post cards showed a profit of £3,000,000. Commercial papers in letter form showed a profit of £650,000. Commercial papers in package form showed a loss of £100,000. Printed papers in letter form showed a profit of £300,000, but in package form they showed a loss of £230,000. Bulk newspapers and periodicals - this is a significant item - showed in 1954 a loss of £2,400,000. Samples of merchandise showed a loss of £25,000. Third class mail - books, &c. - showed a loss of £75,000. Registered articles showed a loss of £900,000. Parcels showed an estimated loss of £670,000. So the profit on letters in one form or another roughly balanced the losses on the other activities.
The committee reported that broadly the letter rate of 3id. an ounce, as it then was - subsequently raised to 4d.; now to be raised to 5d. - subsidized the bulk carriage of newspapers and periodicals. The speech of the Postmaster-General indicates that broadly that is still the position - that the ordinary letter rate, even at 4d., earns a profit which subsidizes losses in other directions.
In paragraph 383 of its report the committee said -
The history of bulk newspaper rates was one of low rates to facilitate the dissemination of information, particularly over long distances; the charges would not even cover rail and oher conveyance costs, quite apart from the Department’s handling costs. In reply to further questions by the Committee, the Department stated that, in its opinion, an increase in the newspaper rates would not affect the distribution of the large bulk of magazines and newspapers. Some of the smaller papers might be affected.
The committee went on to indicate that the loss on registered articles was due to high handling costs.
I have quoted from the committee’s report to show that up till quite recently the Post Office had been satisfied if it more or less broke even. That meant that certain of its activities subsidized other activities. There is nothing new about that, although in his speech the Postmaster-General tried to discount that practice by saying that in 1959 it was no longer necessary to have the kind of dissemination of information that we apparently had in 1919 or thereabouts. But the main principle was that the results of the undertaking were considered as a whole and taken over a period of years, and for the last three or four years in particular, on a commercial basis about which I will say more in a moment, there has been no great significant profit or loss by the Post Office as a whole, and certainly nothing to justify increases in charges of the order of £16,000,000 which we are now contemplating. It is a new and abhorrent doctrine altogether that is responsible for the major part of these increases, and I think the House would be well advised to note it.
Why, it might be asked, these increases of £16,000,000 in the commercial tariffs, and what, after all, are the commercial tariffs? Again, the Director-General of Posts and Telegraphs went on record to indicate that it was the commercial basis on which the Post Office ought properly to be considered. The Twelfth Report of the Public Accounts Committee says, at paragraph 43 -
The Director-General informed the Committee that in the past governments had been interested mainly in the overall results of the finances of the Post Office. They had not fixed charges for services so that each branch would be self-supporting.
But he said that it was the commercial accounts and not the cash accounts which ought to be the proper criterion in assessing whether or not the Post Office as a whole was successful. And why? For the reason that there are certain services which, if provided by the Post Office for other departments are not charged for in the Treasury accounts, but which are charged for in the commercial accounts. There are certain other items, quite substantial, which are charged for in the commercial accounts but which do not appear in the Treasury accounts. Therefore, you cannot get the true position of the Post Office without looking at the figures published annually by the Postmaster-General in his report. I would direct attention to page 42 of the last report that is available, the one for the year ended June, 1958, which indicates some of the reasons why the stark Treasury figures are not the true answer to the problem. The report says -
Treasury expenditure included payments of £979,229 towards amortization of Capital Loan Funds and charges of £4,042,009 for the replacement, renewal and expenses of demolition of assets. In the Commercial Accounts £8,556,170 was credited to the Provision for Equalization.
Treasury expenditure included actual payments made for Superannuation amounting to £2,009,593 but in the Commercial Accounts £4,506,682 was recorded as accrued liability in respect of staff contributions.
Similarly, the meteorological services are estimated to be worth somewhere in the region of £1,000,000. They do not appear in the Treasury accounts but are charged into the commercial accounts to give the true position of the Post Office as a whole.
That is not the whole of the difference, but at least it indicates that you cannot get the position as a whole from the simple figures as they appear either in the Estimates or in the Budget papers. You have to go further and look into the commercial structure of the accounts, because there are amounts, in some cases of the order of several millions of pounds, that do not appear in the Treasury accounts but are legitimate revenue items for the department There are some things such as depreciation and interest appearing in the accounts which do not appear on the Treasury side of the matter.
But it is this new doctrine of interest about which I wish to have something to say. Again, the Public Accounts Committee, in its deliberations, came to this matter. I hope I will be pardoned for quoting the report of this committee at some length, but I repeat that it is a recent report. The committee made an exhaustive ex amination, and the circumstances have not changed very much in the few years that have elapsed since. The committee said, at paragraph 117 -
As far as the Postmaster-General’s Department is concerned -
Not only will it be necessary to determine the capital of the Department, but also whether, in that determination, the Department should be permitted to offset against its capital accumulated surpluses and reserves in order to arrive at the net figure on which any interest should be calculated;
The issue will then be whether interest should be charged on funds invested from revenue as well as from loans . . .
What rate of interest is to be charged? . . .
Now, no decision has been made on these matters until the last few weeks, because when the State Premiers met at Canberra in March of 1959, about six months ago, there was considerable discussion about these matters. The Premiers felt that they had a grievance because moneys which the Commonwealth raised out of revenue in the Australian community, and which were diverted to State public works, were subject to interest payments which the States had to make. The Premiers took objection to this. I think certain comments made at that time are worthy of note, as coming from a very conservative Premier, the Premier of South Australia, Sir Thomas Playford. He said, at page 47 of the report of that Premiers’ Conference -
Let us suppose that I spend some of this money on the provision of a generator for electricity. Having paid for the capital asset of the generator, the taxpayer-
And I suggest that this argument applies with equal relevance to the Post Office, the Commonwealth activity - then has to proceed to pay, by way of increased rates for his electricity, an interest charge which is being provided by the money that he has already produced himself. In a world which is highly competitive, and which will be even more competitive for many of our exports, that system is resulting in a very heavy increase in the cost of public services which I believe to be entirely unwarranted.
The argument continued for some hours, and I ask honorable members on the Government side to note this rather interesting sally on the part of the Prime Minister (Mr. Menzies) and the Treasurer (Mr.
Harold Holt) in replying to the arguments put forward by Sir Thomas Playford and some of the other Premiers -
– Really, the idea of us paying ourselves interest on the money that we lay out for public works is a bit humorous, is it not?
Mr. BOLTE. ; You Jo it in the case of the Snowy Mountains scheme, because there the States or the consumers will pay it.
Mr. BOLTE. ; But in relation to nonproductive works, you do not charge yourselves interest. It does not come into your Budget. You do not have in your Budget an item of interest on the capital revenue moneys that you have raised. We have an item of interest.
– I wonder what the effect would be if we had.
Mr. HILEY.; The Postmaster General’s Department would show a loss if you did that, and so would the Commonwealth Railways.
Mr. BOLTE. ; That would be the practical effect. The Commonwealth Railways and the Postmaster-General’s Department would show a substantial loss. Now the States are forced into the position that, if they are using these moneys for some of their services, as Sir Thomas Playford has said, the services start to show a loss, and the States are forced to put up the charges. So it does not work out as well for us as it does for the Commonwealth.
– I understand that argument, but I do not understand the argument about what the Commonwealth ought to do. The proposition is that we charge ourselves interest, we throw into deficit a couple of great undertakings that have been referred to, and we then raise the wind in order to meet that deficit - because it all comes back on to us. Therefore-
And I ask honorable members to note this - charging ourselves interest is merely a complicated piece of bookkeeping that does not produce one pennyworth of financial results.
The Treasurer, who is now absent, put his position in these words -
But if we are to incur losses on our Postal Department and on the Commonwealth Railways, as is apparently recommended here, then just as the States have met such a position by increasing their rates for various services, we would also, presumably, be required to increase our rates for these services. This, incidentally, would affect the revenues of the States. Certainly an increase in Postal Department charges would affect them. If we did not do that, then we would evidently have to increase general taxation to cover the deficits.
Why the change of view between March, 1959, and August, 1959? Why this new concept of charging interest for these undertakings which both the Prime Minister and the Treasurer conceded then would do what it is doing now, and that is to put up the charges on all the postal activities in the Commonwealth? The majority of people agree with the opinion of Mr. Cahill, who, on page 51, added -
I would like to say further that the point of view expressed round this table is the point of view that is held by nearly every person in New South Wales no matter what his political opinion may be. That is, that the raising of money by taxation free of interest and its lending back to the same people from whom it was raised, with an interest charge added to it, is quite wrong.
Is that not common sense? We believe that there has been a systematic and sensible policy to pay for as much of the public works programme as possible out of revenue. But why then go through the camouflage of saying, “ If we had not raised it through taxation, we would have had to raise it through loans and charge an extra 4i per cent, or 5 per cent.”? What sort of crazy bookkeeping is that? That is what Mr. Bolte chose to call it, and I maintain that it is crazy bookkeeping. In the last ten years, almost ?400,000,000 has been raised out of revenue to provide for this great developmental undertaking, but now in 1959 a few bright boys in the Treasury say that this is not fair competition. With whom does the Post Office compete? The Post Office is a monopoly undertaking providing services that are not provided by any one else, lt provides services that ought to be provided at the lowest possible rate consonant with the older concept of endeavouring roughly to equate expenditure with income. But now notional interest will be loaded into the amounts that have been raised out of revenue in the past. We say that it is crazy bookkeeping and that this crazy bookkeeping is imposing injustices on all sections of the community. People who now pay 4d. for a letter, to cover its cost in a commonsense way, will pay 5d. They are sopped off with the comment that in the future instead of sending letters only across the suburbs they will be able to send letters from Melbourne to Sydney by air mail without any added cost. Who receives the benefit of this? It is making a distinction between the customers of the Post Office which in our view is an invidious distinction. The ordinary letter has traditionally paid its way up till now, but because the Australian Country Party PostmasterGeneral could not put up the same fight, apparently, as his Liberal colleague put up for the Commonwealth Railways, the postal charges will be increased. Why single out the Post Office as the one undertaking that will bear these interest charges?
– What about civil aviation?
– Civil aviation is not quite in the same category. I am considering more these undertakings. I ask honorable members to look at the Commonwealth Railways. The tariffs of the Commonwealth Railways will not be increased, but the Commonwealth Railways pays interest only on the money raised for it from loan funds, and not from public revenue. Similarly with the Australian Aluminium Production Commission, money has been put in by the Government and it is not returning any profits. Have a look at the rather strange financial doctrine that is being followed with the Export Payments Insurance Corporation where £500,000 was advanced to start it. The undertaking invested this amount in government bonds and the interest derived from these government bonds appears as income in the accounts of the undertaking.
Why should that kind of subsidy be given to people who use that service when no similar subsidy is given to the ordinary people who have no appeal except to express their resentment, as they have in the past few weeks? Why the inconsistency in doctrine? I should have thought that the Post Office would have been the last undertaking to have been chosen for this impost. There may have been some logic in it if an undertaking such as the Snowy Mountains Hydro-electric Authority had been chosen. After all, this undertaking produces electricity competitively with that produced by other means and a case could, perhaps, be made for charging some notional amount of interest there purely to make its price competitive with that charged by other similar organizations. But this argument does not apply to the Post Office, which does not compete with any one. If it is right that the State railways should be charged interest on their loan moneys, why is not this doctrine applied to the Commonwealth Railways? Is it because the Minister from the Liberal Party was stronger in his resistance to the Treasury doctrine than was the Country Party
Postmaster-General? 1 submit, Mr. Speaker, that all these matters require to be answered.
If 1 may, I shall sum up in the few minutes that remain to me. We on this side of the House believe that the majority of these increases are unnecessary. We would have no objection to granting increases if they resulted in wage justice being given to the employees of the Post Office, but we have every objection to paying notional usury for money that has already been raised by the taxpayers. We regard this new Treasury doctrine as an abhorrent doctrine that ought to be opposed. We say, finally, that the Post Office should in the future continue to be what it has been in the past - a great public utility rendering services of a daily kind, and services of a developmental kind, in bringing communications to people in far places. It should not become a travesty or the plaything of certain gentlemen in the Treasury. As I said at the beginning, this is a triumph of the Treasury over the Treasurer, and once the Treasury is triumphant over the Treasurer, we do not enjoy self-government in Australia.
– lt is obvious that the honorable gentleman from Melbourne Ports (Mr. Crean) has a very good technical knowledge of the workings of the Postmaster-General’s Department and particularly of the way in which the commercial accounts of the PostmasterGeneral’s Department are constructed. But 1 think that it is correct to say that he has not drawn a distinction between the PostmasterGeneral’s Department and a normal business enterprise on the one hand and a department of state and a business enterprise on the other hand. I think it is wise at the beginning for me to say that the Postmaster-General’s Department can be regarded as ambivalent - efficiently ambivalent if you like to use that expression - because it is at once a great department of state and also a commercial or business enterprise run by the Government, lt is a great department of state, and consequently, under the Australian Constitution, it has to pay all its surplus funds into the Consolidated Revenue Fund. I do not intend to go to any lengths in explaining the constitutional necessity of this, but
I do say - and this was explained by the honorable member for Melbourne (Mr. Calwell) in his second-reading speech on the Post and Telegraph Rates Bill 1949, on behalf of the Labour Government - that, because this is a department of state and because it is part of the executive of government, its surplus funds have to be paid into Consolidated Revenue and cannot be accumulated in trust funds.
Secondly, Sir, the department is a great commercial and business enterprise, and, as such, it is the wish and the intention of the department itself that it should carry out its activities in accordance with what can be regarded as normal commercial practices, and that it should use the methods of normal commercial accounting to decide what it should charge for the services that it gives. So, Sir, you find that the Postmaster-General’s Department has this double function - this double character. The Director-General of Posts and Telegraphs dealt with what he thought was the department’s attitude in his report in 1954, and he tried to make it clear that, so far as it was practicable, the charges made were related to the total cost of the Department. He said -
Unless there are clear explanations I think it is bad for such organizations as ours to be operating regularly with deficits. That has a bad. effect on staff morale and almost everything else.
So, Sir, I point out to you that there is this double function. You have the department operating, as far as it practically can, as a commercial enterprise. If the government of the day, in its wisdom, wants to 2ive some overall policy directive to the department involving the use of a service at less than the cost, the Government can do so, and, to this extent the PostmasterGeneral’s Department operates as a department of State, and any deficiency in the section of the accounts related to that function has to be carried by other sections of the department.
I do not know how many people on the Other side of the House have bothered to read the speech made by the honorable gentleman from Melbourne on the second reading of the Post and Telegraph Rates Bill 1949, which I have already mentioned. What is obvious is that the honorable member for Melbourne Ports has not read it. If he had, he would have noticed certain para graphs relevant to this debate. Before I read it, Sir, I want to emphasize what was said by the honorable gentleman from Melbourne Ports. He said that there is a new financial basis altogether, and that we are treating the Postmaster-General’s Department, not as a great public utility, but as a private enterprise show. He remarked that this is a triumph of Treasury doctrine over common sense. Did the Australian Labour Party say that in 1949? On the contrary, Sir, the honorable member for Melbourne, in his second-reading speech on the Post and Telegraph Rates Bill 1949, said -
This bill deals with the amendment of the Post and Telegraph Rates Act 1902-1941 to adjust certain postal and telegraph charges in order to give an equitable return for the services provided under present costs and conditions.
I do not say that my colleague, the PostmasterGeneral (Mr. Davidson), read what had been said by the honorable member for Melbourne in 1949, but it is significant that he put the reason for the changes in words very similar to those that were used by the honorable gentleman from Melbourne in 1949.
The honorable member for Melbourne went further, Sir. I think it is important that I should now state exactly what he said. He stated what were the possibilities, and then said, in effect, “ We can reduce the services that are provided; we can make the taxpayer pay; or we can increase the charges. “ How did he conclude? His exact words were -
The operation of the department at a heavy financial loss would place an added burden on taxpayers generally, “ whereas an increase of charges for the services rendered means that the users of the services will make the necessary increased contribution.
That was the Australian Labour Party’s justification of the action that it took, and it is a perfect explanation of what has been done in this instance. The honorable member for Melbourne, who then represented in this House the PostmasterGeneral of the day, concluded his reference to that matter in this way. He said -
Equity demands that the last course be followed.
What horrible nonsense and humbug it is, Sir, for any one to claim now that we are adopting a new financial basis altogether, and that it represents a triumph of Treasury doctrine over common sense. The simple fact is that, in terms of principles themselves, as well as in terms of their application, exactly the same thing has been done on this occasion as was done in 1949.
Now, Sir, I turn to the third argument of the honorable member for Melbourne Ports. I think it is regrettable that, on this occasion, he has not only completely misunderstood the Prime Minister (Mr. Menzies) but also failed to read what the Treasurer (Mr. Harold Holt) said in his Budget Speech. The honorable member for Melbourne Ports referred to what he called this new doctrine of interest, and he went on to deal with the four matters that he said the Postmaster-General’s Department should take into consideration when deciding interest charges. I do not think that any one in his right senses would deny that those were the four considerations that had to be taken into consideration. The honorable member then went on to say that, in imposing these extra charges, we were providing for the interest burden on capital invested. If the honorable member had read what had been said by my colleague, the Treasurer, he would have found that the Treasurer said that the increase is to provide some contribution towards the capital of the PostmasterGeneral’s Department for development. In other words, this is not an extra provision for an increased interest burden over and above the provision now being made. I hope to touch on this matter further a little later. This is an attempt to provide some contribution towards the capital for development.
I want you to know, Mr. Speaker, that, as yet, a decision as to the payment of interest additional to that already charged has not been made. This is something that will be decided by the committee that has been referred to by the Postmaster-General and the Treasurer. Sir, I express my regret that the Prime Minister’s statement at the Premiers’ Conference has been misunderstood and quoted in this House in opposition to the measures now proposed. What 1 also want to mention to the honorable member for Melbourne Ports is that we should not get too complicated in our explanation of this problem. After all, somebody has to pay. If I may use the words used by the honorable member for Melbourne in 1949, if it does not come in terms of increased charges, it has to come from the taxpayer. The simple answer in regard to this problem is that, this financial year, after the additional charges have been met, there will be a cash surplus of £11,000,000 in the Postmaster-General’s accounts. Consolidated Revenue will have to provide £39,400,000 for the department, leaving the taxpayers to provide, this financial year, £28,400,000. If it had not been for the fact that additional charges of £16,200,000 are being levied, the taxpayers would have had to find £44,600,000. I venture to suggest, Sir, that that would not be fair to the general taxpayer. I think it is proper that at least £16,200,000 of the additional funds or revenue should be paid by the persons who use the facilities provided by the department.
I accept the sincerity of the honorable gentleman from Melbourne Ports and the fact that he was so emotional about this because he was putting a personal point of view, but I want to say that, in one case, he misrepresented the Prime Minister’s statement and, in another case, he misunderstood the structure and all the normal commercial workings of the PostmasterGeneral’s Department.
There is only one other point of the honorable gentleman’s argument I want to discuss, and I shall come back to it later. In the meantime, if I may, I want to put my case for the department itself. I believe that any one who has the good fortune to come in contact with its personnel, and to talk to them, will go away with an increased respect for their integrity and ability. So far as I know, after ten years on the Government side, except in respect of the lag in the provision of telephones, there has been little but praise for the activities of this efficient business enterprise and Commonwealth department.
Sir, what are the main features or policies the Minister dealt with in his second-reading speech? I think that we can divide the purposes of the bill into four. The first purpose is to get increased efficiency in the services provided; the second is to produce better administration; the third is to increase charges in order to meet additional costs; and the fourth is to obtain an additional amount of capital to permit development work to be carried on within the department. Those are the four objectives that will be financed by the additional charges. I express the opinion, Mr. Speaker, that unless we impose the additional charges the purposes that I have mentioned could not be achieved to the extent to which we hope they will be.
Now may I come to what the department is doing, and the level of efficiency at which it is working. I hope - in fact, I believe - that honorable members with country constituencies will agree that the work of the Post Office is a job well done. If I may add just a little to what the PostmasterGeneral had to say, I should like to explain that if we believe in efficient, quick and cheap delivery of postal matter to all parts of Australia we should do what we can to reduce charges and to send mail by the quickest possible means. So, the first proposal made is to remove the airmail surcharge on letters and letter-type mail, so that the maximum of such mail will be sent by air. This is the quickest means of delivering it. This will lead to a reduction in charge and a considerable increase in the speed of delivery to all parts of the country. This is a real example of efficiency. I put it to you that the PostmasterGeneral, himself a country man, lives up to the motto of Cobb and Co. - “ The mail must go through and get there as quickly as possible “. I compliment the honorable gentleman on his action.
The bill proposes two other changes which I think will meet with a great deal of commendation in business circles. The first is the proposal for a unified charge for the first weight unit of each class of mail. This means that instead of charges being based on a variety of tariffs there will be one charge of 5d. for the first weight unit. The despatch clerk in the office will now be relieved of the drudgery of having to decide to what class of mail an article belongs, and the value of the stamp that he has to put on it.
– Why don’t you wake up to yourself?
– You may not like the example of the despatch boy in the office, so let us say the despatch girl in the office will not have to decide to exactly what class of mail an article belongs. Despatch clerks will no longer have to go through the drudgery of deciding to what class of mail an article belongs. Secondly, the change in regard to amalgamation of commercial and printed items of mail will be a great benefit to those who are relieved of the necessity of differentiating between these two classes as for example whether a bill that is being sent out in typed form or a printed document belongs to one class of mail or to another. Such an article that is a typed commercial document will now be subject to the same charge as printed matter. This will not only be a considerable administrative improvement, but will be a great help to business men and commercial interests generally.
Now I come to two changes regarding telephone services. I should like to refer first to the system that the PostmasterGeneral called “ Elsa “. I think it means “ extended local service areas “. The change will mean that a person in a country district will be able to put through a call to a neighbouring country district on a nontime basis. The service provided by the telephone branch to country areas will be extended considerably, and as there will be a charge on a no time basis for calls within a zone the subscribers will get an improved service at a cheaper rate. This is a great improvement, but I must say, Sir, that I have not heard any compliments being paid to the Postmaster-General on this improvement. I think that I am the first to compliment him on the change.
Lastly, the Postmaster-General proposes to reduce the number of trunk line areas from, I think, 22 to eight. This is another administrative change which will simplify the work of the department and give it an opportunity to reduce its costs.
The other point that 1 wish to mention is the attempt to include in postal charges an amount to permit the accumulation of funds which can be subsequently allocated for future developmental work by the Postmaster-General’s Department. This is a practice which is already followed by the Victorian Electricity Commission. It is a normal commercial practice; I should like to touch on it again later in my speech.
Before I touch on the question of charges I should like to point out, as the PostmasterGeneral and the Treasurer have already done, that since 19S1 the cost of materials and equipment used by the PostmasterGeneral’s Department has increased by 50 per cent., and that wage rates have also increased by more than 50 per cent. I should like the honorable member for Melbourne Ports to know that during that period basic wage increases have added £22,000.000 to the earnings of postal employees. I am glad that this occurred. All members on this side approve of the wage earner getting an improvement in his pay associated with an increase in productivity and efficiency. They welcome those pay increases received by postal employees. However, I would have expected my friend from Melbourne Ports at least to have recognized the fact that the workers in the Postal Department are getting increased wages and are benefiting from increased efficiency.
In many instances the department’s charges have not been altered since 1956. In fact, since 1951 the only changes made have been in relation to charges for parcels and one or two other things. Generally speaking, there have been few changes since 1951. The department has to a large extent been able to absorb increased costs by increasing its efficiency and, to some extent, by obtaining funds from the general revenue pool.
Costs have been increased. If postal charges were not increased this year the department would probably show a deficit of about £4,000,000. I cannot say whether in a full year the increase in charges will cover this £4,000,000, because that is still in doubt, but I hope that it will. The main criticism of the increase in postal charges relates to bulk postage rates. The point I want to argue here is whether there is any real justification for the criticism. I do not think there is. I point out that although since federation the trading accounts of the Postal Department have shown an aggregate surplus of about £26,000,000, the loss on bulk postage alone has been of the order of £57,000,000. That means that the ordinary taxpayer is being called upon to pay a subsidy to the people who use the bulk postage facilities. Secondly, on this occasion an increase of 33i per cent, in the charges is proposed. The honorable member for Melbourne Ports (Mr. Crean) has conveniently forgotten that in 1949 when dealing with the increase in bulk postage rates by the then
Labour Government, the honorable member for Melbourne (Mr. Calwell) considered them to be fully justified although they were not, as on this occasion, an increase of 33 J per cent, but an increase of 108 per cent.! In other words, the rate was increased on that occasion by Hd. for each 16 ounces. I can understand public criticism, of course. But as the Labour Party was able to praise itself for increasing rates by only 108 per cent., how can it criticize this Government for introducing, ten years later, an increase of 33i per cent.?
Lastly, in dealing with this problem, may I state that the bulk rate charges in Australia are cheap when compared with those of other countries? I make only this one comparison: In the United Kingdom, no singly addressed publication is conveyed for less than 2d. sterling. A United Kingdom publisher distributing 1,000 separately addressed papers would pay postage equivalent to £10 8s. 4d. Australian. In Australia, under the new rate, the publisher will pay £1 14s. 9d. I suggest that much of the criticism about the bulk rates has been misplaced. I think it is fair to say that, as it is on the proposed charges, the taxpayer is making a sufficient contribution to bulk postage costs in this country.
I come now to the telephone services. We admit that in recent years there have been profits in the operating account of the Telephone Branch. But we have to remember what has been said by the honorable member for Melbourne Ports regarding interest charges, and also what has been said by my colleague, the Treasurer (Mr. Harold Holt), about the necessity to obtain capital for future development.
Mr. Speaker, during the last five years, Post Office capital expenditure has totalled nearly £200,000,000. As the Treasurer said, these funds have been provided from consolidated revenue and the Government has decided that it would be fair for the telephone charges to recoup all operating and maintenance costs and to ensure a return on capital.
We have to look at this problem of capital expenditure against the background of a determination by the Government to ensure twenty years of national development. The big problem of development. as most members know, is how do we provide the capital for this development. I have heard it said recently by manufacturers that over the next five years we have to increase our financial allocation for private capital development from £103 per head to £150 per head if the objective of the Government of 20,000,000 prosperous Australians in the time of some people now living is to be met. Much the same applies to public investment. We have this immense problem of finding capital for development. We have to explore every avenue to ascertain what ways and means are open to us to get the funds.
I have stated that the Victorian Electricity Commission had to increase its charges to obtain funds for development. Similarly this year the Commonwealth has to find between £39,000,000 and £40,000,000 for capital development by the PostmasterGeneral’s Department. If part of the money was not found from increased charges the taxpayer would have to pay. Frankly, he is heavily enough taxed now. As an alternative activity in the PostmasterGeneral’s Department would have to be reduced.
Those who remember the quotation that i made from the speech the honorable member for Melbourne in 1949 will know that if the Labour Party had been on this side of the House now and had stuck to the principles of 1949, it would have adopted an exactly similar method to that being followed by this Government and would have found the money in the same way.
I sum up in these terms: The increased charges which are to be made amount, in a full year, to about £17,400,000. Against that, as the surcharge on domestic airmail is to be abolished, there will be a loss of revenue, in a full year, of £1,100,000. So, in a full vear, there will be an increase of £16.200.000 in the revenue of the PostmasterGeneral’s Department. I do not want to go into the figures too deeply, but I ask honorable members to keep that figure of £16.200.000 in mind. There will be a cash surplus of £1 1,000,000 in the commercial accounts, and the taxpayer will provide, in accordance with normal procedure, £39,400,000 for buildings and for postal and telegraph services- This means that the taxpayer, this year, will provide £28,400,000 to permit the Postmaster-General’s Depart ment to go ahead with its development plans. If the new rates had not been introduced, the taxpayer would have had to provide £44.400,000. Even with the increases and taking into account changes in purchasing power and changes in costs, the proposed charges for postal and telegraph services are relatively lower than they were before the war. This is an important fact. That, in itself, indicates that the PostmasterGeneral’s Department is operating efficiently.
I conclude on this note: The Government thinks that the charges are reasonable. We feel that the user of the PostmasterGeneral’s services should make some provision for the increased capital amount required by the Department. Personally, I believe that, if we are to achieve that wonderful goal of continuing development and progress, this measure is necessary.
As to the public, I have tried to test the opinion, not of those who may be engaged in the business of selling or distributing papers and books, but of literally hundreds of members of the community, such as the taxi driver and the fellow in the lift. In reply to my question they have said that, as wages go up, perhaps some increase in postal charges is to be expected.
– Order! The honorable member’s time has expired.
– I desire to make a personal explanation to clear up what the Minister for Labour and National Service (Mr. McMahon) has called a “ misrepresentation “.
– The honorable member has the right to make a personal explanation.
– The Minister said that I had misquoted and misrepresented both the Prime Minister and the Treasurer.
– I did not say “misrepresented “. I said “ misunderstood “.
– I quoted from the exact words of the Prime Minister in a public document. I shall read only four lines from the Treasurer’s own speech and leave it to honorable members to judge the precise meaning of his words. He said -
Tn the meantime, however, it is clear beyond doubt that, since capital expenditure on the Post
Office must continue to increase, the earnings of the Post Office should also be increased, not merely to meet the cost of its day-to-day services but to provide something by way of return on the additional capital.
– The Minister for Labour and National Service (Mr. McMahon), who has just concluded his speech, has indicated quite clearly the Liberal Party point of view concerning the additional Postal Department charges which will take effect from 1st October and 1st November next. The fact that he came to the rescue of his party so early in this debate and suggested that the increased postal charges will make the task of the office boy easier when putting stamps on envelopes clearly demonstrates the weakness of the Government’s case. The Minister said that the department hopes to raise an additional fi 6,000,000 a year and that an additional £28,000,000 had to be found to meet the operating costs of the Post Office.
Why does not the Government follow a similar policy with regard to civil aviation? Is it because Reg Ansett does not get a cut from the Postal Department? In the last ten years this Government has spent £111,000,000 on civil aviation services for which it has received a return of less than £5,000,000 a year. The Minister referred to people in the outback and said that as a result of the reduction of the surcharge on airmail they would get their letters quicker. The Government professes great concern for the people in the outback. If it is prepared to help them with airmail concessions, why does it not consider them further and help these people with improved aviation services? The PostmasterGeneral’s Department is a great organization which provides a service from one end of this country to the other which could never be done by private enterprise. I do not think that any John Taxpayer would object to a little extra taxation to expand this great organization.
The Minister said that he wanted to add something to what the Postmaster-General had put to the House. But let us first examine some of the arguments which the Postmaster-General (Mr. Davidson) used in trying to explain away the new postal charges. On this, the first occasion that a Liberal Party Treasurer has presented the Budget, a Treasury point of view of public finance has been stated, certainly at the level of the Postal Department. Ever since this Government has been in office it has stressed the need for tapering off inflationary trends in this country. 1 wonder why it should be the first, in this particular session of Parliament, to do something to twist the tail of inflation in Australia? Of course, everybody knows that the increased postal charges will be passed on to the general public by way of additional costs. The Government is talking with its tongue in its cheek about limiting inflation. This bill will stimulate inflation and because of that fact members on this side of the House are entitled to tell the Government that its approach to this problem is unrealistic.
When I read the statement in the Postmaster-General’s speech that the basic wage increase was one of the reasons for these additional postal charges I could not help recalling that in the 1958 report of the Postmaster-General’s Department it was stated that a profit of £4,000,000 had been made during that financial year. The figures of the Postal Department for every year since 1951 had taken into account all increases in the basic wage except the most recent one. To suggest that these additional charges had been made necessary because of the most recent basic wage increase is completely unrealistic. Does not the Government understand that in a great organization such as the Postal Department all the capital invested in it over the last half-century has represented profit-bearing material? For example, the telephone installed in my home 22 years ago has been serviced only three times. It has never been repaired, but every half-year the Postal Department has received not less than £15 in service payments. But the Government now suggests that additional charges will come into operation on 1st October next to meet the cost of new equipment which the department has to use. lt is unbecoming of a government which is supposed to have financial stability and background to suggest that the increase in the basic wage has been responsible for the additional charges.
One of the statements in the speech of the Postmaster-General which attracted me, but which I think is a disgrace, was that if the present postal rates on publications were allowed to continue they would virtually subsidize the publishing and printing industry, ls it not a fact that the printing and publishing industry prints and publishes only those things which the public require or demand? This Government says that it will now shackle the provision of public requirements by curtailing the amount of material which publishers will produce. Thus it will place a real restraint on private enterprise.
A comprehensive search of our records has disclosed that a registered letter No. 276 was delivered to Customs Credits of 126 Phillip-street, Sydney, but the disposal of registered article No. 255 cannot be traced.
In point of fact, Customs Credit has no address at all at 126 Phillip-street, Sydney. It is obvious that the nearest the department could get to tracing this lost article was that two articles were accepted at the Auburn Post Office on 26th May whereas the sender had posted her letter on 29th May. The letter goes on -
I am unable to ascertain if registered article No. 276 was forwarded by Mrs. Young as Customs Credits do not keep a record of the receipt of registered mail.
Mrs. Young was the lady in question. Customs Credit keep a record of all mail received, but it had no record of having received Mrs. Young’s letter. Since the department cannot trace it, this woman is the loser by £20. If the name of the sender had been recorded when the letter was registered all this trouble would have been avoided. If the department increases the rate for registered post some guarantee should be given that the person registering the article will know that it will reach its destination safely. I am not suggesting for a moment that there is any weakness on the part of the employees, because they carry out their duties as directed. I am suggesting that there is a weakness in the system and that it should be corrected before any additional impost is added to registration charges.
In presenting his case, the Minister made the point that there is now no need for the distribution of the material provided by these publishers and printers, because, according to him, illiteracy has virtually disappeared in Australia. Does the Government not admit that the grand system of distribution that has been built up in this country by the publishers and printers, through the Postmaster-General’s Department, has played a tremendous part in the elimination of illiteracy in Australia? Does the Minister want to destroy the very system that has made it possible for us to say that illiteracy has virtually disappeared in Australia? Why take away something that has assisted the people of this country to achieve such a standard of education and understanding that the Minister can claim that illiteracy has virtually disappeared here? If we have reached that stage, let us not interfere with any section of the structure on which the Minister has based his claim. If for no other reason, the Government stands indicted for the attack it has launched, in the form of the legislation now before us, upon the publishers and printers.
The Minister for Labour and National Service went to great pains - I think he referred to this matter on three occasions - to tell us what happened in 1949. I am astounded that a responsible Minister should, in 1959, make reference to something that happened in 1949, and use it as an excuse - not as a reason - for an impost such as that which the Government now proposes. Surely the Minister and the Government realize that in 1959 we are faced with a set of circumstances different altogether from those which operated in 1949. In that year, we were emerging from great difficulties and from a period when everything had stagnated as a result of the war. The position in 1959 is very different.
In his second-reading speech, the PostmasterGeneral stated -
If Post Office plans for automatizing the telephone service are not progressively implemented, avoidable operating costs of between £35,000,000 and £40,000,000 will almost certainly be incurred over the next ten years… in an organization such as the Post Office, great changes are inevitable. The machine is taking the place of man. When the Minister talks about avoidable operating costs of between £35,000,000 and £40,000.000 being incurred if plans for automatizing the telephone services are not implemented, surely he must understand that, in the main, that amount will be saved in the wages bill, because fewer employees will be required. Let us consider this capital outlay about which so much screaming is going on at present. Every £1 invested now in modern equipment and machinery - unlike in 1949 - displaces man-power. The equipment automatically becomes a reaper of great profit for the department. It is generally accepted by business firms that machines pay for themselves in periods ranging from eighteen months to five years, because out of the cost structure disappears what is known now in the capitalist society as the costly content - the man-power that is necessary to meet the requirements of business undertakings.
The Minister has prophesied that in the next ten years his department would be faced with avoidable operating costs of between £35,000,000 and £40,000,000 if the capital investment that has been proposed were not made. But is it not a fact that the capital that the Government wants to collect from the additional revenue will be a money-spinner for the department? The capital that will be raised by the proposed increased charges will, in itself, on the Minister’s own say-so, save between £35,000,000 and £40,000,000 in the next decade. Why talk at this stage about £16,000,000, as the Minister for Labour and National Service did so vehemently a moment ago, when in point of fact the Postmaster-General has predicted that in the next decade the Post Office will save between £35,000,000 and £40,000,000 as a result of the capital outlay now proposed?
Let me now analyse this organization which proposes to levy increased charges. Let us have a look at the Annual Report of the Postmaster-General for the year ended 30th June, 1958, and let us consider the business transactions of the Post Office for that year. Unfortunately, whether by accident or design, the report for the year ended 30th June, 1959, is not in our hands. Before proceeding, I remind honorable members that, except as to the last increase, the basic wage increases involving £22,000,000 that have been mentioned are reflected in the figures that I shall quote. The report states -
New records were established in many of my Department’s activities-
This is the Postmaster-General speaking - a free Minister, not a Minister controlled by a Liberal Treasurer and a Liberal Government. He went on to say - some of the highlights being: - 1,895 million postal articles handled - an all time record and an increase of 112 million.
I ask honorable members to keep that figure in mind, because I propose to say something shortly about staff arrangements. The Postmaster-General continued - 88,492 telephone services added after allowing for cancellations - a rise of 10,020 from the 1956/57 rate to the best net connection figure ever; 1,295 million telephone calls - a record and a rise of 62 million;
This was achieved, in the main, with the equipment that was installed long before any basic wage rises occurred. He continued - 112.6 million trunk line calls - a rise of 6.6 million and another record -
With comparatively less staff, as I shall show in a moment - 1,540 trunk line channels added - the previous best was 1,117 in 1954-55; a financial turnover of £928 million - a record and £41 million more than in 1956-57.
The Minister for Labour and National Service said that the Post Office should be regarded as a great commercial enterprise. What did the Postmaster-General say in his annual report for the year ended 30th June, 1958, on this aspect? He said -
A commercial profit and loss surplus of £4,010,180- an improvement of £893,134 on the previous year.
Yet the Government talks now about increasing postal charges.
Let me turn now to the staffing of the Post Office, but before dealing with this matter I remind honorable members of my remarks about automation and its impact on the growth of profits, not only in the Post Office but also in any other organization in which it has been introduced. On page 28 of his report the PostmasterGeneral said -
Full-time staff increased during the year by 1,811 to a total of 84,602.
For an all-time record rise of 112,000,000 in the number of parcels handled; for the best figure ever in telephone services connected; for a rise of 6,600,000 in trunk-line calls, and for a record rise of 62,000,000 in telephone calls, there was the modest increase in permanent staff of 1,811. To earn a profit of £4,010,180 the permanent staff was increased by 1,811. Let me take the matter a stage further, because automation is already on the move. In the case of semi-official postmasters there was a reduction of 157. The increase in the main operating staff of the department was 316. Improved traffic handling procedures in the telephone and telegraph fields led to a significant reduction in the rate of increase of staff in the telecommunications division. Envisage the millions of telephone calls that are made each year, and then note that the rate of increase in telephone staff was only 0.6 per cent, in 1957-58, compared with an increase of 2.7 per cent, in 1956-57 and 4.2 per cent, in 1955-56. As a result of the installation of new equipment from year to year fewer employees will be required in the department, although the department will be providing additional services and thereby earning additional income. What is important is that the costly man-power factor is diminishing. Despite that, the Government wants the people to pay more for postal and telephone services!
If the Postmaster-General’s Department was a department running its own affairs and was showing a loss it might have some reason for doing the things that this Government is proposing in this measure. But what are the facts? I asked a question on notice recently seeking information about the other services provided by the Post Office. In his answer, the PostmasterGeneral said that the Post Office paid age and invalid pensions, war pensions, widows’ pensions, child endowment and naval, military and air force allotments. It collected war service homes and repatriation payments, and customs duty on postal articles. It sold Commonwealth taxation stamps, beer duty stamps and State duty stamps. It also conducted Commonwealth Savings Bank business. In my question I asked how many man hours were required to provide those services. In his reply the Postmaster-General said that it was not easy to determine the exact hours involved, but he said that on a rough calculation it would appear that in each week the number of hours involved were -
The honorable gentleman said that the Postmaster-General’s Department received commission from each other department concerned, based in some instances on the number of transactions and in others on the total values handled. For the year 1957-58 - and that is the year I am dealing with - the total value of these transactions was £253,000,000 and the commission earned amounted to £1,150,107. I do not know the basis of calculation of that commission, but I submit that before postal or telephone charges were increased, those other departments should have been called upon to pay a fairer amount to the Postmaster-General’s Department for the services that they receive.
Transactions amounting to £253,000,000 are a considerable item. Imagine the capital cost involved just in the housing of the 1,100 or more men necessary to perform that work. If you disregard the cost of housing, sick pay, long service leave, holiday pay and all other relevant charges attached to employees these days and take the average wage as shown in the calculator, you get a figure of £1,216,544 which the other departments would have paid in the ordinary course to have that sum of £253,000,000 collected. It is ridiculous to impose additional charges on the community at a time when so much work is being done by the Post Office for other departments in Australia for practically nothing. The commission being charged would not pay for the man-hours involved, much less any other costs involved in the collection of those amounts. In view of the great public service that this organization is rendering, when one sees printers and publishers attacked by the Liberal Party through an Australian Country Party Minister, and when one finds that the Government is prepared, through legislation such as this to destroy the very things that will help to eliminate illiteracy one wonders what force is at work. I never believed I would live to see the day when I would stand in this House and quote a former honorable member - Mr. J. T. Lang - but last week he said -
The 1939 Budget should go down as the Great Post Office Swindle.
Last year the telephone branch earned just on £60 million while the Budget papers disclose that the cost of telephone exchange services was £23,800,000 and trunk-line services £6,429,000.
So the Post Office showed a clear profit of almost £30 million above the cost of providing the services.
Any business that can operate on a 100 per cent, margin above its overhead is surely exploiting its customers and that is precisely what the Post Office has been doing to its telephone customers.
The 1959 Budget was Treasurer Holt’s maiden attempt at national budgeting. He made the elementary mistake of turning his problems over to the Canberra Treasury officials.
Here we have the view of a man who for many years had Treasury responsibilities. He put his finger on the spot when he said that the Treasury had demanded these increases. What is the Post Office swindle? Mr. Lang added -
That was where the Post Office swindle started. They decided that the Post Office as a business must be charged with the servicing of its own capital costs.
That is an endorsement of what the honorable member for Melbourne Ports (Mr. Crean) said to-night in his attack on this measure. This bill will go down in history as one of the bills that have been forced upon this country at a time when the necessity for them does not exist and at a time when the Government has changed its policy completely. Let us put the position at its worst, as the Minister for Labour and National Service (Mr. McMahon) did when he said that if we did not raise this extra £16,000,000 the taxpayer would be forced to find an extra £44,000,000 this year. In his Budget speech the Treasurer (Mr. Harold Holt) said that income tax would be reduced by 5 per cent, this year - a saving to the taxpayers of approximately £50,000,000. Now, when grandmother wants to send a Christmas card to her grand-daughter or grand-son she has to make it easy for the office boy and provide a 5d. stamp. The Government claims to be handing back £50,000,000 to the taxpayers through its reduction of 5 per cent, in income tax, but to most working people, from the basic wage earner upwards, this will mean nothing. If the ordinary working man has a telephone in his home the additional £2 a year rental will more than offset the 5 per cent, reduction in his income tax.
Once again the Liberal Party has imposed on an Australian Country Party Minister the responsibility of bringing down a measure typically Liberal - spelt with a capital “ L “. The Government has paid no regard to the long-range consequences of the measure. It has paid no regard to the twist that the measure will again give to the tail of inflation at a time when the Government is pleading with private enterprise to absorb the basic wage increases and everything else that tends to increase costs in Australia. Over the last ten years the Government has been calling the same tune, and now we have a measure designed to do just the reverse. Why? We are entitled to a more vivid explanation than has yet come from the Postmaster-General or the Minister for Labour and National Service, representing Liberalism spelt with a capital “ L “. This measure should never have been introduced when the Post Office, as is shown in the report from which I have quoted, had a surplus in 1958 of more than £4,000,000 and when it was providing a service for other organizations at a considerable loss.
When this measure reaches another place surely Government supporters will join with the Opposition to force its withdrawal and do what is right and proper in this country. We should allow this great expanding organization to go on in the way that it has been going on, and to provide the services that are necessary to our community. If, in fact, the department suffers a small loss, it would be far better to meet that loss, even to the extent of £3,000,000 or £4,000,000, out of consolidated revenue, as has been done in the past, than to cause another upsurge in inflation, which is apparently the policy of this Government.
– Order! The honorable member’s time has expired.
– The main issue in this debate could not have been better stated than in the way it was put by the honorable member for Melbourne (Mr. Calwell), when he was a member of the previous Labour Government and posed a question as to who should pay for postal services, the user or the general taxpayer. If services are provided below their proper cost, the taxpayer has to make good the difference. Furthermore, the fact that they are provided below cost means that the demand for them is stimulated, and total expenditure, which the general taxpayer has to meet, is stimulated still further. Until the end of World War II it was the general principle, accepted by all parties, that Post Office charges should be fixed at a level which covered administrative costs and all ordinary operation and maintenance charges, together with all debt charges and sufficient to amortize the capital invested in the facilities. It is worth reporting at this stage that in some years when a Labour government was in office the charges levied by the Postmaster-General’s Department were sufficient to cover all charges, including interest, and more than enough also to cover the full cost of new capital expenditure. In fact, from the viewpoint of prudent national housekeeping, the Labour Party could point to a good record. But instead of boasting of their own record in this matter and chiding us for the declension in Post Office accounts which has set in in the last decade, Opposition members have, of course, chosen to indulge in the normal luxury of Opposition and exploit what must inevitably be a very unpopular measure, however necessary.
This declension has set in in our time. In the last year for which accounts are available, the one ended 30th June, 1958, a loss was shown of nearly £2,000,000 on ordinary postal services, and of £330,000 on telegraph services. This was merely on the cost of daily operation, without any capital considerations being brought into the picture at all, and the loss was made good only by a nominal profit on telephone operation. But when we examine the accounts and find that on a capital investment of over £400,000,000 interest of only £878,000 was charged - which should have been at least £20,000,000 for ordinary prudent bookkeeping purposes - it is readily apparent that the amounts which have been shown in the books of the Post Office as profits for the past few years have, in essence, been of a phony character.
One most desirable aspect of the measures proposed by the Government is the establishment of a body to examine fully the accounting system of the Post Office. This system is at present extremely difficult to follow. For instance, one item which might properly have been charged against the apparent daily operating profits is that of superannuation and pensions for Post Office staff, which amounted, apparently, to about £2,000,000. This would have reduced the nominal profit shown even further.
The fact is that for some years past, with a combination of inflation and the rapid development that has been taking place, we have ceased to charge the Post Office a proper rate for capital. Indeed, when the honorable member for Melbourne Ports (Mr. Crean) was working himself up on this subject, he travelled far from the proper canons of his old profession of accountancy. No doubt the prevailing atmosphere on the opposite side of the House is highly deleterious to any such sound notions as he may once have had.
Just to illustrate the difficulties that have arisen in conducting the Post Office on a proper basis, it might be worth while to go back to 1945, which was the last year in which proper financial provisions were made. Since 1945 the wage rates for postal and telephone employees have risen by proportions ranging from 175 per cent, to 250 per cent. Let us now compare this increase with the increases in postal and telephone charges. In that time the firstclass letter rate has been increased by 60 per cent., and the rate for commercial papers 133 per cent.; telephone rentals have increased, for metropolitan businesses 110 per cent., for residents 140 per cent., and in the country by 35 per cent, to 60 per cent. The charge for local telephone calls in the metropolitan area has been increased by 100 per cent, and in the country by 140 per cent. Charges for trunk calls have increased 110 per cent, to 140 per cent.
Keep these figures in mind and measure them against the increase in wage rates for postal workers - which may have increased proportionately more than other items. Average weekly wage-earnings in the March quarter of 1959 were 190 per cent, higher than in June, 1945. From whatever viewpoint the matter is looked at, the fact is that the Government has failed to keep pace with increasing costs. If any charge can be levelled properly against the Government, it is that it has been too dilatory in the matter, that it has waited too long, with the result that charges have been increased too much in one hit.
Consider the period since July, 1951. In that time there have been two increases in charges. In 1956 charges amounting to £7,250,000 were added, and in 1955 a mere £475,000. Since 1951 the Post Office bill for wages and materials has increased by £30,000,000. It is only because of the increased efficiency that the Post Office has been able to achieve that the losses currently being suffered are not much greater. For instance, in the last three years, when the traffic handled by Post Office staff has increased by 20 per cent., the staff has increased by only 8 per cent.
Every movement in the community in an upward direction affects the costs of the Post Office. For instance, every one shilling increase in the basic wage adds £60,000 a year to the cost of the postal section of the Post Office. Without these increases, the loss in the postal section for 1957-58 was £1,900,000. If the charges were not increased, particularly having regard to the new air mail rates, the loss this year would have been £4,000,000. Leaving aside the question of interest and capital accounting, there would without these increases have been a cold loss on the postal section of £4,000,000.
In this section of postal charges, it is true, as the Postmaster-General pointed out, that the users of postal facilities for ordinary first-class letters do in fact carry a large number of other charges. If on this occasion bulk charges are increased somewhat, this is only some measure towards redressing what is and has become a somewhat artificial situation. The loss in 1958-59 on bulk postage at current rates was £3,000,000. Even with the increases, small though they now are, the loss on bulk postage is still likely to be of the nature of £2,500,000. The postal structure maintains a low rate for publications posted at bulk rates. Even with these increases, it will retain rates for registered mail, parcels, money orders and postal notes which are well below the cost of handling. It prescribes rates for packet-form articles, including commercial papers, printed matter, patterns and samples of merchandise which are only slightly below handling costs. But it provides rates for letter-form articles sufficiently in excess of handling costs to offset losses incurred in other classes of postal traffic.
This subsidy for bulk postage is in fact a subsidy for the printing and publishing trade, and in the past there has been very good reason for this. It helped to disseminate information effectively and quickly, and educated large numbers of people at a time when communication was very limited. However, the fact remains that at present it costs the Post Office 6d. to handle every newspaper and periodical for which it recoups itself from revenue to the extent of Hd. Whatever complaint there may be, those who now use the new bulk postal rates should bear in mind that on every single item they post there is a subsidy from other users and from the taxpayer of 4id. As has already been pointed out, since federation there has been a steady move to lessen the differentiation between bulk postage rates and other rates. The current increase is, of course, very much smaller than the increase imposed in July, 1949 and in 1951. It is in fact smaller than the increase imposed by the Labour Government, and Opposition members may well say that they were prepared to do in the interests of good financial housekeeping more than this Government is prepared to do.
The United States of America and Canada adopt this bulk postage system. In England, the cost of posting 1,000 individuallyaddressed newspapers is the equivalent of £10 8s. 4d. in Australian currency. In Australia, to post the same number of newspapers will now cost £1 14s. 9d. In New Zealand, it will cost the equivalent of £6 in Australian currency. In England, it costs about 6id. to post an individual publication such as the “ Reader’s Digest “. The new rate in Australia will be 2id. Small church papers, about twenty to the pound, cost 2id. in England, and will cost one-third of a penny in Australia.
This bill also provides for evening out some of the anomalies between letters and packets. Packets are very expensive to handle relative to letters, and a very large proportion of them are, of course, of a business character. Therefore, there seems no proper reason why they should not bear a business charge. However difficult the sudden onset may be to those who use such services in a big way, in the long run this cannot be anything but a reasonable charge.
To summarize my views, I think that the new tariff schedule will rightly equate postal costs to postal revenue. I repeat that these postal costs now much exceed the revenue collected. A much better balance than hitherto will be achieved between the different types of postal articles. Whilst maintaining a considerable concession for publications printed in Australia, it raises postal revenue a little closer to the handling and distribution costs. It brings revenue from packets and parcels fairly close to costs, and gives the public a tariff schedule and postal information simple to follow and apply which will aid persons concerned with commercial mailing.
If I may, I shall turn now to telephone charges which involve an increase of £7,000,000 for this year and £12,400,000 for a full year. The telephone section has been active and has overcome very grave difficulties in the last few years, for which the public has not always been willing to give it adequate credit. It is easy to pick faults with the service provided by the Post Office in many individual cases, but over the whole field it has done a remarkable job and has good plans for the future. These are set out very clearly in a publication, just released by the PostmasterGeneral, called “The Australian Post Office - Progress - Policy - Plans “. The increase in telephone rentals of £4 for businesses and £2 for residences ought to be considered in the light of one serious fact which often escapes attention, and that is that the average cost of installing a telephone is about £290. This average cost takes into account the higher cost of installation in country areas and the lower cost in cities. However, the high cost of all country installations is considered in striking an average.
– Country people sometimes pay an extra £300 or £400, and that is not included.
– That is so. Charges vary in different places, but taking the country as a whole and averaging the cost over towns and cities, the cost to the department is £290. That, Sir, is a very heavy capital! cost, and it brings to the forefront of our minds the question of whether some interest charge on capital installations of this, size and character should be made. The taxpayer now has to find £290 for the installation of a telephone. It seems, reasonable, overall, to expect the user of equipment installed at such a cost to pay part of the interest and amortization charges involved in the necessary capital expenditure.
There are many views about the way in which capital should be costed, and I assume, from what we have heard in this debate, that the view of the Australian Labour Party is that capital should not be costed. We do, in fact, charge the Snowy Mountains Hydro-electric Authority for capital, and we insist, in our relations with the States, that when they use capital for their business undertakings the accounts should provide for interest to be paid.
– That still does not make it right.
– The honorable member no doubt would abolish interest altogether. Doubtless, instead of having the ordinary rationing in the market, and ordinary financial controls, he would impose direct administrative controls by government and pay officials to do the work which money does under a free system. That is a recognized difference between honorable members opposite and us. We believe in ruling indirectly through the medium of money, and they believe in ruling directly through an army of officials. That is one of the great contrasts between the two competing systems in the world to-day.
There is no doubt that not costing capital when it is used to provide facilities encourages the use of those facilities to an artificially inflated extent. It has been pointed out that the United States Post
Office levies certain charges which are much lower than ours. The United States Post Office, Sir, provides a very valuable lesson for us. To begin with, the telephone and telegraph systems in the United States of America are entirely separate from the Post Office. Costs, including capital costs, are charged out, and the rates are fixed by a public tribunal which determines the rates that the private company concerned may charge. But the mail service, which is provided by the United States Post Office, is very badly run down, and most inefficient compared with other United States undertakings. The reason for this is that, whenever a proposal to increase charges is before Congress, it usually objects to raising the charges, and once these charges become a political football, increases are not levied. The result is that, over a period of years, the United States Post Office has been starved of funds and has been unable to increase its charges. It receives some subsidy, but it always has to compete for it with other things. Over the years, it runs steadily further down hil] relative to other undertakings.
In view of the attitude that we have taken up to date, Sir. it is only right and proper that we should apply this same discipline of costing the use of capital to Commonwealth undertakings when we expect the States to apply it. It has been said by Opposition members that we are in fact groping about with this measure and that it will by no means provide enough to cover interest and amortization charges on the capital invested in the Post Office. It will not go so far, but it is a move in the right direction. One may well ask why this principle should not be extended and why the taxpayer should not indirectly subsidize every airline passenger. Unless capital is costed, facilities are in fact provided below their true cost, the demand is inflated, and. in the end, the cost falls back on the general taxpayer. If we do not charge properly for the facilities provided by the Post Office, and if we do not endeavour, directly or indirectly, to provide capital for its future development, it will run down hill, like the United States Post Office. That, Sir, is the last thing that we should contemplate. The Post Office provides a most important and essential public service. Also, it is the biggest business in the country, and it well behoves the Government to put the biggest business in the country on a business footing.
.- Mr. Deputy Speaker, the peculiarly bloodless speech that was made by the honorable member for Wentworth (Mr. Bury), who referred to the alleged intention of the Government to bring a new business wisdom to the conduct of the Post Office, ignored the fact that the measure now before us is not the measure in which the Cabinet really believes. The Cabinet had other proposals in mind, but it abandoned them in the face of a storm of public protest. If what the Cabinet originally proposed was right, what we have before us now is wrong. If what the Cabinet originally proposed was wrong, it was illconsidered. Whatever was right or wrong about the policy of the Australian Labour Party, Mr. Chifley, in the preparation of a Budget, did not make up his mind in haste, and did not retreat from what he proposed when he came to the conviction that what he proposed was right. It took him some time to make up his mind, but when he made up his mind on a financial measure, he stuck to it.
The measure that we have before us this evening is just one more boost to the inflationary spiral that is a result of the Government’s inflationary policy. The Minister for Labour and National Service (Mr. McMahon) spoke about the generosity of the Government in providing £22,000,000 for increased wages for Post Office employees as a result of basic wage adjustments. That, of course, is a measure of the advance of inflation in the Australian community under the administration of the present Government. The men who receive *th** extra £22.000.000 in basic wage adjustments do not get any improvement in their standard of living.
The Postmaster-General (Mr. Davidson), in his second-reading speech, said that materials have risen in cost by 50 per cent Government supporters have said that unless postal charges are greatly increased the taxpayers will have to pay in the form of direct taxes. They omit to say, of course, that there will be further inflation as a result of the increase in the charges for the services provided by the Post Office, because the businesses and others who will be most affected will pass the increases on to the community by way of increased costs. So we are once more heading upwards on the spiral of inflation, and it is at least arguable that if the taxpayer paid directly in the form of a subsidy, that would help to arrest inflation.
The honorable member for Wentworth was probably wise in just taking the inflation that the Government has allowed to occur in the community and using the Government’s inflationary policy to justify the proposals to increase these charges. But the Postmater-General was more garrulous. He did r.ot take his stand on a financial concept at all, but expressed all sorts of loose opinions about the state of literacy h the community and the way in which literacy was related to the concessions that were originally allowed on Australian mails. He said -
Progress in the fields of science and technology in modem countries like Australia has overcome the barriers of distance and time.
That is one of those platitudes like “The baby is the best immigrant “. The Minister continued -
With social and economic development and the introduction of compulsory schooling to fourteen years of age, or later, illiteracy has virtually disappeared in Australia. This, in conjunction with the availability of extensive library services, local and overseas newspapers, magazines and books, broadcasting and television, has afforded to all Australians ready access to news and information. It would seem therefore, that the original social reason for assisting … the distribution of newspapers, magazines and the like has lost its significance . . .
Does anyone honestly believe that, in 1901, literacy was established in this country by subsidizing the distribution of newspapers? It is an astonishing proposition to advance, because one needed to be literate to read them. What has happened in Australia, in point of fact, is that, with a literate community, there has been a vast increase in the volume of educational material going through the mails. These proposals strike a a blow at that educational work. The Government’s original proposals were impossible. It has now reduced them from the impossible to the outrageous, and it believes that, in the gasp of relief at its retreat, the community will find the present proposals more acceptable.
The honorable member for Wentworth said that adjustments should have been made. That is a wonderful piece of
Treasury reasoning. It may be that over the last ten years there ought to have been twelve increases in mail charges. But what do you do to businesses, to education, to churches and to trade journals if you take all this and do it in one hit? You absolutely wreck the ordinary expectation of their businesses. We have had letters from people running magazines, trade union journals and professional journals which gave figures of the order of £68 as their mail cost in a normal year. Under this proposal, the cost will become £540.
We speak about delinquency and about education. The Congregational, Presbyterian and Methodist Churches run a joint Sunday school publication. Under the impossible proposal, the increase in their mail costs would have been £6,000. The Government has retreated and the increase now will be £2,000. but it is an increase out of all proportion to what they were originally paying, and that at a period of time when we are concerned about the spread of delinquency in the community. This is an example of educational material going through the mails. There is a clear case, 1 think, for all educational material going through the mails to be subsidized.
One of the most pathetic illusions in Australia, to which we seem to adhere all the time - it underlies our Commonwealth” Literary Fund, it underlies our tariff on books, it underlies the differential rates on books - is that you can produce writers behind the tariff wall. It happens that the great bulk of educational books of an advanced technical nature come from overseas. It must be so. There have been all sorts of efforts to produce educational books in Australia - quite important efforts, and in some fields very effective. In the higher brackets of all sorts of studies there is a smaller customer market which, if you take it over the whole British Commonwealth of Nations, is significant enough to sustain books of a high technical standard, but inevitably most of those books are not produced in Australia, but are produced nearer to the sources of major research.
Under the proposals of the Government as originally brought down, let us look at what was happening to book posts, because it shows how ill-considered the proposals were. Postage on a parcel of Australian books weighing 1 lb. was to be increased from 6d. to lOd. and in the case of overseas books from 9id. to 2s. 2d. For a 3 lb. parcel of Australian books the increase was to be from ls. 4id. to 2s. 6d. and for overseas books from 2s. lid. to 6s. 2d. Postage on a 6i lb. parcel of Australian books, which was 3s. 0-Jd., was to increase to 5s. 5d., and the increase in the case of overseas books was to be from 4s. 5id. to 13s. 2d.
It happens that I have been associated with the mailing of books, both in the adult education movement in Australia and as a tutor in the University of Western Australia. I have been sending out many books through the mails. The increases in postage on educational books, the great majority of those coming from universities, having been published overseas, constitute a very heavy blow at education. I think the proposed increases that the Government has brought down are not of assistance to education.
If the Government had said, “ We are going to make the Post Office pay and we stand on a simple financial proposition “, we would have had to fight on that issue. But to say that illiteracy has vanished in the community and therefore it is no longer important to give concessional postage rates for books for educational purposes simply ignores the fact that once you have a literate community you have a much greater demand for educational material. If you want an advanced technical civilization - and you are getting it - you have got to help the fellow who is studying technical subjects to get his books cheaply. When you bring forward proposals which will mean that parcels of books will be greatly increased in price, you are not assisting the development of education in this community.
– You surprise me. You know quite well that the figures you are quoting are not the figures of the present proposals, but you are quoting them as if they were.
– I tried to make that clear, in fairness to you. I have said that you retreated from the impossible to the outrageous.
– You are trying to create the impression that the figures you are quoting are the figures of the present proposals.
– I am not trying to create any impression except that a thoroughly slovenly consideration was given to this matter by the Cabinet, and that you have retreated from the original proposal in the face of outraged public opinion. If that is the way you draft your departmental budget, you should have resigned as PostmasterGeneral.
– If that is the way you present the present statement you should have resigned your membership.
– I am not presenting your present statement. I am just speaking about how ill-considered your proposals are.
– You are attempting to give a wrong impression of the present situation.
– A point about your proposals also is that they are presented with a fair amount of deceit. I cannot understand why we have had the Post Office analysed into its different sections. I believe that if the Post Office should pay for itself, there is not any particular vice in a situation whereby first-class mail subsidizes book post and subsidizes bulk post. Somehow or other it has been presented as a grievance for the community that the first-class mail user posting a letter has been heavily penalized by the rates for bulk postage. Of course, the people who benefit by the bulk postage rates are also people who post letters by first-class mail. We are all receivers of magazines and all sorts of material through the mail. It is a question of using the Post Office as an instrument of social purposes. The Minister for Labour and National Service has tried to make out a case for saying that the social purposes to-day are less than they were in 1901. That was not established by the Minister at all.
The airmail proposals of the Government have been presented as a great concession. It was astonishing to hear the Minister for Labour and National Service. He almost convinced me that this was a measure to reduce postage rates. Alternatively, we were told that it was a measure to increase them and reduce the component paid by the taxpayer. It is a measure to increase postage rates, and, to sugar the pill, we are told that airmail will now cost 5d. instead of 7d. Perhaps the incidence of the airmail charge was previously felt most by Western Australians because we are substantial users of airmail. I am quite certain that, when there was a stamp allowance in this Parliament, Western Australian members used it much more quickly than did other members because almost every letter that we sent to the west was airmailed, whereas other members used ordinary mail.
By the same token, it seems that there will be very little advantage to the great bulk of mail movement in Australia in going airmail at the increased rate of5d. instead of going by ordinary mail at 4d. While there is a clear advantage in speed in getting a letter to Perth from Melbourne by airmail, it does not make much difference whether a letter goes overnight by train from Melbourne to Sydney or by aeroplane in the afternoon. In either case, it will be delivered in Sydney next day. So, to convert the mail service between Melbourne, Sydney and Brisbane to airmail does not represent a vast speeding up. I agree that for the one-fifteenth of the Australian community which is in Western Australia, the fact that the airmail service will be available for5d. will mean a speeding up by perhaps three or four days, compared with surface mail, but in respect of the great bulk of postage in Australia, the Government’s proposal will mean, not faster delivery, but that the sender of firstclass mail will be deprived of the option of determining whether his letter shall go by airmail or not. I do not think that that is the most just approach or necessarily the best approach to the problem of the postal services of Australia.
The measure that is before us will represent a heavy increase in the cost of many professional, trade and technical journals and many books. It is a further step in the spiral of inflation. It is an admission by the Government of how costs of services of all kinds and of materials have increased under it. The Government is forced to make another turn in the inflationary spiral. Having regard to the inflationary position in the country, I suppose this is inevitable, but it is another example of the way in which the Government chooses indirect, instead of direct, taxation as its means of raising revenue. Every time it has that choice it chooses inflation and evades the principle of placing the burden on that section of the community which is best able to bear it.
Debate (on motion by Mr. Barnes), adjourned.
House adjourned at 10.25 p.m.
The following answers to questions were circulated: -
d asked the acting Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows: -
2, 3 and 4-
n asked the acting Treasurer, upon notice -
Of the net dividends and profits of £43,000,000 remitted overseas in 1958-59, what amount was remitted to (a) Britain, (b) the United States of America, (c) Canada, and (d) other countries?
– The answer to the honorable member’s question is as follows: -
The regional details sought by the honorable member in relation to the net figures of dividends and profits remitted abroad in 19S8-S9 are not available. However, the total amount of income (including dividends, profits, interest, &c.) payable overseas in 1958-59 on portfolio and direct investment has been estimated at £52,900,000 and of this total an estimated £14,500,000 was payable to investors in the “ dollar area “, the balance being payable to residents of the United Kingdom and other “ non-dollar “ countries. In addition there were estimated debits of £38,000,000 for “ undistributed income “, of which £18,000,000 was attributed to investment by North American companies.
z asked the acting Minister for External Affairs, upon notice -
– The answers to the honorable member’s questions are as follows: -
Consultative Committee which meets annually at the Ministerial level reviews the progress of economic development in countries of South and South-East Asia and the problems that have arisen in the course of operation of the plan. Its deliberations not only help in focussing attention on the lines on which further development might proceed but also enable individual countries to gain from the experience of others engaged on similar tasks. The Colombo Plan Council for Technical Co-operation comprising representatives of member governments, reviews the operation of the technical co-operation scheme, including the dissemination of information, and makes recommendations as to how the matters may best be dealt with. It meets as often as its business requires - usually about once every two months. It is located at Colombo and is assisted by a small Colombo Plan Bureau which is responsible for the recording and publicity of technical aid programmes.
t asked the Minister for Territories, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Labour and National Service, upon notice -
Will he prepare a statement showing, in respect of the operation of the Australian Stevedoring industry in each of the last five years, (a) the number employed, (b) the number of industrial accidents which occurred, (c) the number of workers killed, (d) the number seriously injured,
– The answers to the honorable member’s questions are as follows: -
It is not possible to answer this question categorically. Workers compensation insurance rates for various occupations differ among insurers in the different States. All that can be said with any certainty is that workers compensation insurance rates far waterside workers are relatively high but much below those for some other occupations. 2. (a) The number of registered waterside workers in the stevedoring industry as at 30th June each year, for the past five years is as follows:- 1955, 26,612; 1956, 26,426; 1957, 25,622; 1958, 24,188; 1959, 23,040. (b), (c), (d), (e) and
State. These show the number of accidents resulting in compensable injuries (excluding cases of less than three days’ incapacity, for which figures are lacking) and the number of fatalities to be as follows: -
Statistics for 1958 are not yet available. These figures include accidents occurring on the way to or from work. They also include accidents to foremen, supervisors and tally clerks.
m asked the Minister for Labour and National Service, upon notice -
– The answers to the honorable member’s questions are as follows: -
Workmen’s Compensation (Occupational Diseases) Convention, 1925 (No. 18).
Equality of Treatment (Accidents Compensation) Convention, 1925 (No. 19).
Workmen’s Compensation (Occupational Diseases) Convention, 1934 (No. 42).
Safety Provisions (Building) Convention, 1937 (No. 62).
Labour Inspection Convention, 1947 (No. 81). 1959-
Safety Provisions (Building) Convention, 1537 (No. 62).
Labour Inspection Convention, 1947 (No. 81).
Protection against Accidents (Dockers) Convention (Revised), 1932 (No. 32).
Abolition of Forced Labour Convention, 1957 (No. 105).
The practice of giving consideration to particular conventions at meetings of the Departments of Labour Advisory Committee was initiated in 1958.
y asked the Minister for Labour and National Service, upon notice -
– The answers to the honorable member’s questions are as. follows: -
These were persons who claimed when registering with the Commonwealth Employment Service that they were not employed and who were recorded as unplaced at that date. They include persons referred to employment but whose placement was not then confirmed, those who may have secured employment without notifying the Commonwealth Employment Service, and those receiving unemployment benefit.
y asked the Minister for Labour and National Service, upon notice -
– The answers to the honorable member’s questions are as follows: -
These were persons who claimed when registering with the Commonwealth Employment Service that they were not employed and who were recorded as unplaced at that date. They include persons referred to employment but whose placement was not then confirmed, those who may have secured employment without notifying the Commonwealth Employment Service, and those receiving unemployment benefit.
d asked the Minister for Immigration, upon notice -
Is any means test applied in determining eligibility of applicants for assisted passages to Australia under the respective immigration agreements; if so, what are the details?
– In reply to the honorable member, I wish to inform him that no specific limitation in regard to capital is applied by the Australian Government in determining the eligibility of applicants for assisted passages to Australia under the respective migration agreements. Nevertheless, the matter is watched and in addition in some countries in which we are selecting migrants the overseas governments themselves determine certain conditions of eligibility which relate to the financial circumstances of the applicant.
e asked the Minister for Immigration, upon notice -
What number of migrants possessing the necessary qualifications have not applied for naturalization?
r. - The answers to the honorable member’s questions are as follows: -
t asked the Minister for Primary Industry, upon notice -
– The answers to the honorable member’s questions are as follows: -
m asked the Prime Minister, upon notice -
– The answer to the honorable member’s questions is as follows: - 1, 2 and 3. The following list of publications has been compiled from returns received from Commonwealth departments and instrumentalities, in response to the honorable gentleman’s question. The list indicates first whether or not a. publication is produced by the Government Printer, and second, whether or not it is available to the general public. The list does not include reports required by statute. This aspect was covered in my answer to a question by thehonorable member and which appeared in “Hansard” of 11th and 12th August, 1959.
Reports under Statute.
m asked the Prime Minister, upon notice -
When does the Government expect to table the outstanding reports required under statute?
– I have asked for information about particular reports outstanding, and will inform the honorable member of the position when this information is available. At the same time I have again impressed upon those responsible the desirability of having these reports available to honorable members when the Estimates are being considered.
m asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows: -
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows: - 1 and 2. The Australian Government’s view of recent events along India’s northern frontiers was stated by the acting Minister for External Affairs (Sir Garfield Barwick) in this House on 2nd September. (See “ Hansard “, pages 803 and 804.)
n asked the Prime Minister, upon notice -
Of the sum of £111,000,000 expended on education in 1958-59, can he state what amount was spent (a) by each State government, (b) by way of grants from the Commonwealth to the universities, (c) on Commonwealth scholarships and (d) on the construction of State schools by State Public Works Departments?
– The answer to the honorable member’s question is as follows: -
The £111,000,000 quoted by the honorable member includes only expenditures of a current nature and grants to universities. In addition total
Commonwealth and State expenditure of a capital nature on school buildings, &c, is estimated at £29,000,000, Commonwealth scholarships accounted for a further £1,654,000 and other scholarships £1,000,000. Total expenditure is therefore estimated at £142,000,000.
The distribution of this amount between States is shown in the table below. Figures in brackets are the amounts paid to each State as Commonwealth grants for universities and included in the total expenditure shown for the State.
The Statistician points out that State accounts are not yet available and all figures except those for the Commonwealth are estimates only.
d asked the Minister for Defence, upon notice -
– The answer to the honorable member’s questions is as follows: -
It has always been the practice of the Royal Australian Air Force continuously to study and evaluate all of the latest developments in fighter and other aircraft which may meet its operational needs. When these studies show that the current equipment is failing to meet the service requirement and a suitable replacement is available, a recommendation is made by my colleague, the Minister for Air, to the Government about the introduction of a new type. No recommendation has been made by the Minister for Air about a replacement for the Avon-Sabre aircraft. Last year the Government decided to increase greatly the lethality of the Avon-Sabre by adding to its armament the Sidewinder air-to-air missile, the first installation of which was made recently. When current studies indicate that a replacement is required for the Avon-Sabre and a suitable replacement is available the Minister for Air will put the question to the Government for its consideration.
n asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows: -
(Above rentals are inclusive of rates, taxes and cleaning and therefore vary from time to time as these charges alter.)
son asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
The following general bases are observed in determining the need for postal delivery services and public telephone facilities: -
Postal delivery service: (i) Consideration is given to the number of householders in the area to be served, their location in relation to the post office, the volume of mail for delivery, the condition of roads and footpaths, and the costs involved in providing the service, (ii) Where arrangements can be made at reasonable cost, establishment of a letter delivery service is usually dependent on there being at least150 residences and business premises within a radius of three-quarters of a mile of the post office and a daily average of at least 225 letters for delivery. Any special circumstances are also taken into consideration,
Public telephone facilities: (i) Where there is already a public telephone within 880 yards of the proposed facility it is usual to require a minimum annual revenue of £37 10s. in metropolitan areas and £22 10s. in country districts, (ii) Where there are not any public telephone services within 880 yards, a minimum annual revenue of £22 10s. in metropolitan areas and £12 in country districts is normally expected.
e asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
t asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
Strathfield Exchanges. There are no outstanding telephone applications in the sub-divisions of the electorate served by the Campsie, Kingsgrove and South Strathfield exchanges. In the sub-divisions served by the Bankstown, Lakemba and Peakhurst exchanges 60, 414 and 60 applications respectively are outstanding.
t asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Postmaster-General, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows: -
In addition, certain other measures have been introduced by the present Government which have resulted in increased pension payments in many cases. In 1956 widows and invalids with two or more dependent children were granted additional pension of 10s. a week for each child after the first and in 1958 supplementary assistance of 10s. a week was granted to age, invalid and widow pensioners (other than those pensioners whose spouse is in receipt of a pension or allowance) who pay rent and have little or no means apart from the pension.
y asked the Minister for Social Services, upon notice -
What number of - (a) male, and (b) female persons received sickness benefit in (i) each State; and (ii) Australia during the past twelve months?
– The answer to the honorable member’s question is as follows: -
The following grants of sickness benefit were made to males and females in each State and the Commonwealth during the twelve months ending 30th June, 1959:-
The actual number of persons who received sickness benefit during the period would be less than the above grants because some would have been granted benefit more than once in the year. The extent of this duplication is unknown.
y asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows: -
Cite as: Australia, House of Representatives, Debates, 15 September 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19590915_reps_23_hor24/>.