23rd Parliament · 2nd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
Mr. J. R. FRASER presented a petition from 51 electors of the Division of the Australian Capital Territory in the Naas, Naas Valley, Gudgenby and Orroral districts praying that, as the whole of their social and business contacts are with Tharwa, Queanbeyan and Canberra, action be taken to have the Rocky Crossing and Top Naas telephone exchanges included in the Tharwa zone under the Elsa arrangements.
Petition received and read.
Leadership of Australian Delegation
– I ask the Prime Minis ter whether the appointment of the Attorney-General to lead the Australian delegation to the United Nations-
– I accept that amendment. I ask whether the Attorney-General’s consequent absence from this country for some three months means that the Government has shelved its consideration of the report of the Constitutional Review Committee, and also that it has no intention of introducing legislation during the current sessional period to curb monopolies and restrictive practices, as was forecast in the Governor-General’s Speech last February.
– The honorable member’s question is based on a wrong assumption. It is not my intention or the AttorneyGeneral’s that in attending the General Assembly he will be absent for some months. On the contrary, he will be absent for a few weeks.
– Is the Minister for Immigration aware that the State subsidy to the Fairbridge Farm School in Western Australia may cease shortly? If that does happen, is there any way, over and above any help now given, in which the Minister’s department or the Government can further assist this worthy organization which helps under-privileged children from Great Britain to start a new life here in Australia?
-I understand that there is some possibility that the subsidy granted by the Western Australian Government to the Fairbridge Farm School near Pinjarra may cease but the matter is not yet determined. It is still the subject of negotiation between the Commonwealth and the Western Australian Government. I am very hopeful that, in view of the splendid attitude of the Western Australian Government hitherto and the great generosity that it has shown towards the whole course of child immigration, the State Government will find it possible to continue, at the very least, on the path on which it has been treading until now. Ever since 1946 the Commonwealth has been paying child endowment in respect of children migrating from the United Kingdom. We have also been paying an initial Commonwealth equipment allowance of £10. These payments, of course, will continue but, as I said earlier, I greatly hope that it will be possible for the Western Australian Government to continue its present practice.
– Is it a fact that the Prime Minister intends to give a farewell party to the honorable member for Mackellar before his departure overseas for the United Nations conference?
– I regard that as a valuable suggestion.
” MAGIC TAN.”
– Has the Minister for Health any information to give the House in relation to a product known as “ Magic Tan “ which is claimed by its makers to produce a golden tan overnight? If the Minister considers that a health risk might be involved in using this chemical to change the colour of the skin, will he have it investigated by the National Health and Medical Research Council? In particular, will he have the council look into the reaction, if any, that would follow if a person were exposed or over-exposed to the sun a day or two after using “ Magic Tan “? In any case, does the Minister not consider that the best and most enjoyable and relaxing way of gaining a sun-tan is to laze in the glorious sunshine of Queensland?
– 1 do not think it will be necessary to refer this question to the National Health and Medical Research Council. This substance, 1 understand, is designed to give an alluring though spurious sun-tan. I understand that it is pointed out by its makers that it offers no protection against sunburn. Those who employ it run all the ordinary risks of sunburn but, as far as I can see, no other risks. As far as the honorable gentleman’s question concerns the beaches of Queensland, of course, I can support him heartily.
– Why has the Minister for Territories refused an entry permit to New Guinea for an English professor of anthropology who is at present a visiting professor at the Australian National University and who had sought permission to inspect some of that university’s projects in New Guinea? In particular, will he explain why it took his department some four months to process the application? Is there any consultation between the university and the department concerning such applications, of which this is not the first to be rejected in the anthropological field?
– The Deputy Leader of the Opposition has raised a whole complex of questions and I think, in order to put the matter quite straight and perhaps correct one or two small misconceptions that are revealed in his question, I should traverse the whole matter from the beginning. The immigration laws of the Territory are administered by the Territory Administration. The permits are issued by the Administrator. The policy which he applies is that any one who would be eligible to enter the Commonwealth of Australia is eligible-
– What are you reading from?
– It should be satisfactory to the honorable member to know that I can read. The policy is that any one who would be eligible to enter the Commonwealth of Australia is eligible to enter the
Territory, subject to proof that the applicant has financial means or a guarantee of employment or accommodation in the Territory and is not disqualified on grounds of character or security-
– On a point of order, Mr. Speaker, I ask you whether any person outside this Parliament is permitted to answer a question by proxy. The question was asked of the Minister and it is quite obvious that he knows nothing about the subject and has had the answer prepared, and is reading it.
– Order! The Minister is in order.
– If there has been any preparation of this answer it is preparation done by myself. Seeing that there has been quite a deal in the newspapers about this subject, any Minister would have intelligently anticipated that a question would be asked on this subject, and I did not underrate the acuity of the Deputy Leader of the Opposition, even if I under-rated the acuity of the honorable member for East Sydney. I think this point must be made quite clear in order to understand the general situation. Permits are issued by the Administrator of the Territory, and the policy he applies is that any one who would be eligible to enter the Commonwealth of Australia is eligible to enter the Territory subject to proof of his financial means and proof that he has either employment or accommodation awaiting him in the Territory, and subject also to there being no disqualification on grounds of character or security.
That extra qualification required in the Territory is one that is recognized fairly generally and, I hope, would be recognized by all members of this House. It is certainly one that has been recognized by the Staff Association of the Australian National University which, in a letter to me on this subject - I trust the honorable member for East Sydney will not object to my quoting from a letter on so important a subject - stated as follows: -
We appreciate fully that the administration of Papua and New Guinea is a difficult task and that your department has a responsibility in excluding undesirables from the Territory and protecting the indigenous people from troublemakers.
In the present case the application for a permit was referred to the Administrator in the usual way. The Administrator took advice and on the advice received he refused to grant the permit. Before that decision was communicated to Professor Gluckman it was brought to my notice; and I was not prepared, on the information that was placed before me, to take any steps to ask the Administrator to reconsider his decision. I came to the opinion that the Administrator had acted thoughtfully and had taken advice and that he had been careful to discharge the responsibility that rested on him.
Another question has been raised in connexion with this matter - and it is also implicit in what the honorable the Deputy Leader of the Opposition said - and that is a suggestion that the Government has been doing this sort of thing frequently. I should like to say quite plainly on behalf of the Government that it encourages and values the co-operation of research workers in the Territory of Papua and New Guinea. This is borne out by the impressive number of research workers in many fields of learning who not only have been permitted to go to the Territory but also have ‘been assisted to go there during the post-war years and work among the people of the Territory. One could make quite an imposing list of medical scientists, psychologists, geographers, physical and social anthropologists, linguists, economists, historians, botanists, biologists, and other scientists in considerable number. These research workers come from many different countries and many different academic institutions. Many of them have also acknowledged the official help they received in doing their work in the Territory. So far as the records of my department show, only three persons out of the many scores of persons who applied for permitsto enter the Territory for the purposes of academic study were refused permits.
– Why were they refused permits?
– Order! The honorable member for East Sydney will remain silent.
– The refusal was based in every case on a disqualification that had nothing whatever to do with their academic standing and nothing whatever to do with the academic studies they proposed to undertake.
– What was it based on?
– Order! The honorable member for East Sydney is persisting in interjecting. He knows from his long experience here that in doing so he is completely out of order. 1 ask him to refrain from interjecting, and warn him that if he does not I shall have to deal with him, as with any other honorable member who treats facetiously an urgent question asked by the Deputy Leader of the Opposition.
– I rise to order. Would I be in order in asking the Minister for Territories to make a statement on this important matter instead of taking up the whole of question time?
– Order! There is no substance in the point raised by the honorable member. The Minister has the right to answer in his own way.
– I know that on this side of the House we do pay a question by the Deputy Leader of the Opposition that deference which apparently his own supporters do not pay to him.
– Cheap sarcasm!
– The last question asked by the Deputy Leader of the Opposition was whether we have treated persons of academic standing differently from the way in which we have treated other persons. My reply is that we have not done so. We have encouraged and assisted many persons engaged in academic studies to visit the Territories.I emphasize again that, while scores of permits have been issued, only three applicants have been refused permits in the post-war years.
The final point I wish to make is that the Government cannot accept the proposition that an academic applicant has the right to enter the Territory in circumstances in which any other applicant would be refused the right to enter. To put that the other way, no disqualification will be applied to an academic applicant that would not also be applied to any other applicant.
– I ask the Minister representing the Minister for Civil Aviation whether the Allison engine as installed in the Hercules aircraft is giving the same mechanical trouble as similar engines installed in the Lockheed Electras are giving.
– I think perhaps my colleague, the Minister for Air, could give a more accurate reply to that question than I can, but I can assure the honorable member that similar engines which are installed in the R.A.A.F. C130’s have not given the same amount of trouble. No doubt that is because they are not subjected to the same sort of loadings day after day as civil aircraft are subjected to.
– I ask the Minister for External Affairs whether he can tell us from what source the Administrator of Papua and New Guinea obtained his information in connexion with the Gluckman case. Did the Minister himself peruse the information which was conveyed to the Administrator from that particular source?
– The Administrator obtained his information from the usual sources.
– They tapped the professor’s telephone!
– Oddly enough, nobody’s telephone was tapped. The Administrator obtained his information from the usual sources. I have seen the information provided for him; I would certainly never dream of overruling his decision.
– I wish to ask the Minister for Trade a question. The Minister recently announced further limitations on the export of scrap iron and steel. Can he now state why such increased restrictions are necessary?
– Scrap iron and steel are extensively used in this country for essential purposes, and, in addition, certain new industries now being established will depend upon local scrap. For instance, an industry being established to make cast iron pipes will be serviced almost entirely from scrap steel. In these circumstances, the Department of Trade keeps a close watch on the amount of scrap that is economically available to local industry, identifies that scrap which because of its remoteness would not be economically available to Australian industry, makes scrap in certain geographical areas available for export, and makes appropriate arrangements for the remaining scrap “ arisings “ - as the trade jargon has it - to see that local industry is adequately supplied.
– My question is directed to the Prime Minister. Will he inform the House whether his Government favours the provision of financial assistance for denominational schools throughout the Commonwealth?
– The honorable member puts to me a question that is outside the jurisdiction of this Government.
– My question, which is directed to the Acting Minister for Supply, is based on a statement made in this House by the Minister for Supply some time ago regarding the Malkara anti-tank weapon. The Minister for Supply informed the House that the British Government had decided to equip the British Army with this weapon. I now ask the Minister whether the British Army is in fact being equipped with this weapon. If it is, is the weapon with which it is being equipped manufactured in the United Kingdom or in Australia? If the weapon is being manufactured in Australia, are we able to maintain supply at a rate satisfactory to the United Kingdom Government?
– The question of the honorable member for Lilley refers to a notable achievement of the Department of Supply and associated bodies in obtaining a contract for the sale of this wholly Australian-developed weapon to the British Army. The weapons being sold to the British Army are being entirely manufactured in Australia. They are being manufactured at the Government aircraft factory, which developed the weapon in conjunction with the Aeronautical Research
Laboratories and the Weapons Research Establishment. The honorable member asked me whether the Government aircraft factory was able to maintain the delivery schedule. I understand that it is, and that there is no difficulty at all in meeting requirements for the delivery of the weapons.
– Will the Treasurer ascertain whether he can apply the proposed alteration to the means test earlier than eight months hence as announced in his Budget speech? In view of the many doubts as to the cost of the proposal, will he check with the appropriate officers to find out whether the additional cost of £4,200,000 per annum is an accurate assessment?
– The time-table given in general terms in the Budget speech was supplied to me by my colleague, the Minister for Social Services, and represents on my understanding of the matter the best arrangement that his department can make. It is a complex administrative problem that awaits the Minister and his department. Certainly there is no intention to occasion avoidable delay in the matter. As to the estimates of cost - again, they have been compiled largely in the Department of Social Services, and I think it would be widely known that the present head of that department is a former very senior officer of the Treasury. I am quite confident - and I am sure that my colleague shares this view - that the estimates are as soundly based as calculations can contrive.
– My question is directed to the Minister representing the Minister for Civil Aviation. Has the Minister seen a report that all Electra aircraft will be recalled to the factory in the United States of America in order that a serious defect in the wings may be remedied? Can the Minister give an assurance that the Electra is safe?
– I shall refer this question to my colleague in another place, but I can inform the honorable member now that Electra aircraft are to be returned to the Lockheed factory in California for re positioning of the engine rather than for work on the wing. This will be done at the cost of the Lockheed company, and progressively these aircraft will be taken over to America to be modified. As to whether the Lockheed Electra is a safe aircraft, I can give the honorable gentleman an unqualified assurance in regard to that. This aircraft has been examined by surveyors, aircraft engineers and so on, in every country on earth where the Electra has been operating. These authorities have met in the United States, and Australian technical authorities were there with them. After the most exhaustive tests they decided that this aircraft could be flown with utter safety at a speed not exceeding 225 knots, and that is the practice now throughout the world. I might add that, as well, the Department of Civil Aviation in Australia watches the position constantly, and is quite satisfied with the operating safety of the aircraft. The people who have probably the most intimate interest in the safety of this aircraft are the airline pilots and air crews. As well as having a personal interest in the safety of the aircraft and being superb professionally, they have a very keen sense of their responsibilities to the travelling public - and they do not hesitate to accept this aircraft with its present limitation regarding speed.
– May I induce the Treasurer to come from behind your chair, Mr. Speaker, to answer a question without notice? As the right honorable gentleman is no doubt aware, Japan has exercised severe restrictions upon the induction into Japan, or the investment in Japan, of foreign capital, and, though these restrictions have been somewhat relaxed, Japan still controls the amount of foreign capital being invested there and determines the activities in which such investment shall take place. Will the right honorable gentleman tell this House what the restrictions were and are, and, if they were, and are, necessary to protect Japan from economic and political subservience to outside capitalists, will he state whether the Government will consider discriminatory restrictions on the induction into Australia, or the investment in Australia, of foreign capital?
– That adds up to quite a question. As to the arrangements operating in Japan, 1 shall see whether I can secure information from the Treasury which I can make available to the honorable gentleman. I think it would be quite misleading, however, to compare the economic circumstances of Japan with the economic circumstances of Australia or, for that matter, to try to relate our own problems directly to those of any other country. Each country has its own economic situation, and its elected government no doubt tries to ensure that the soundest and most satisfying policies are pursued.
I have no doubt that this country, passing as it is through a process of rapid population growth and desiring to continue that expansion - the reverse of the situation in Japan - does need the assistance of outside capital at this stage of its development. The Government is well aware of the implications of capital inflow. It watches the situation very carefully and is giving encouragement at this time to ensure that the capital which comes here works to the advantage of the Australian community.
I shall examine the honorable gentleman’s question further when I see it in written form to ascertain whether I can supplement the answer which I have just given.
– In addressing my question to the Minister for Labour and National Service, I refer to the Minister’s interest in the formation of productivity groups. How many such groups are working at present? Are they operating in all States? Is consideration being given to the formation of additional productivity groups? Do these groups co-operate with organizations such as the chamber of manufactures?
– The answer to the first part of the honorable gentleman’s question is that there are about twenty productivity groups operating in four States. As to the second part of the question, my department and I are most anxious to encourage the formation of further groups because we think that the idea could have a marked effect on productivity. I think you probably know, Mr. Speaker, that they are groups which meet together for the purpose of exchanging ideas between different establishments. If we can do anything to encourage the formation of additional groups, we will do it. Fairly recently we published a booklet which showed industry what it could do if it wanted to form new groups.
As to the last part of the honorable gentleman’s question, generally each group is established on a particular area basis by agreement between individual establishments.
– Is the Treasurer aware that sales tax is paid by consumers in Tasmania - and no doubt all over Australia - on telegrams and air freights because the cost of these is added to the price of an article before sales tax is calculated? A case was brought to my notice in which a mechanic in an electrical firm sent a telegram to Melbourne for a motor car spare part to be air-freighted to Launceston. Is not this method of calculating sales tax an unwarranted imposition and a vicious way by which to pass on costs to the Australian consumer?
– The subjectmatter of the honorable member’s question is, of course, not novel, although perhaps the particular circumstances he has mentioned may differ from the general run of representations which have been made in the past objecting to freight costs being included as a component when sales tax is calculated. There is a full explanation of why this is done in practice, and I shall be glad to supply it in written form to the honorable gentleman.
– My question is directed to the Minister for Shipping and Transport. Can he inform the House what progress has been made in the negotiations between the Commonwealth and South Australia with respect to the standardization of the railway line between Broken Hill and Port Pirie? Is it a fact that if a decision on this matter is not made quickly, the South Australian Government will be forced to spend about £500,000 on new rolling-stock which would become useless if standardization of the line were subsequently effected?
– I appreciate the interest of the honorable member in this matter as, indeed, I can appreciate the interest in it taken by all South Australian members. One has only to be in South Australia, as I have been during the past 24 hours, to understand that a very keen watch is being kept on this proposal. However, L should like to point out that quite an amount of detail has to be studied, including the requirements for rolling-stock and terminal facilities, and also the actual route of the standard-gauge line. It is impossible at present to say exactly what the project would cost; the total could be something like £30,000,000. In the light of these considerations, although it may appear on the surface that progress is slow, I can assure the honorable member that everything possible is being done. I hope shortly to have ready for the Cabinet a submission in which all these details will be clarified, and when that goes to the Cabinet, the matter will become one of policy. As to the problems of South Australia in relation to rolling-stock, it is difficult for me te say exactly what is the state of the existing rolling-stock there. All I am concerned with at present is the details of standardization and the possible date of its completion.
– I direct my question to the Prime Minister. Has any State government sought Commonwealth assistance for aid to private schools? If so. what is the Commonwealth Government’s attitude to this question?
– I am not aware of any such application having been made at any time.
– My question is directed to the Treasurer. The Leader of the Opposition, in his weekly column in the Sydney “ Daily Telegraph “, attacks the Commonwealth Government on the question of-
– On a point of order, Mr. Speaker: ls it not a fact that the Stand ing Orders provide that a question may not be based on a newspaper report?
– Provided the honorable member who asks the question is prepared to vouch for facts, he is in order.
– Does the honorable member for Hume vouch for the facts?
– My question is based on a weekly newspaper column which is signed by the Leader of the Opposition. Not only is the column signed by him but his photograph aggravates -
– Order! The honorable member may not make a speech.
– In this column, the Leader of the Opposition attacks the Commonwealth Government on the question of curbing hire purchase and land speculation. Are these matters within the jurisdiction of the Commonwealth? If not, is the honorable gentleman very confused about the powers and jurisdiction of State governments?
– The Leader of the Opposition, of course, is well aware of the limitations on the powers of the Commonwealth Government in these matters. Indeed, he has frequently advocated greater Commonwealth powers in order that we may take action of the kind which he recommends. In the absence of those powers, I suggested on an earlier occasion to the honorable gentleman that if it was felt that hire-purchase conditions and rates of interest were unreasonable it might be useful for some of the powerful and financially strong trade unions of this country to service their own members by conducting their own hire-purchase schemes. At the time, he attacked me for what he declared to be a facetious suggestion, only to find that, on the same afternoon, the Adelaide press had recorded a statement by a South Australian trade union official that his union had been conducting a hirepurchase organization for some considerable time with much satisfaction to its members. I think that while the Leader of the Opposition is waiting for the referendum on which he has set his heart, having now learned of the satisfactory experience of the trade union movement in South Australia, which, apparently had been unknown to him earlier, he might pursue that possibility further and see just how practicable it is to introduce a degree of competition which would provide lower interest rates and better service in Australian hirepurchase business.
– I preface my question, which is addressed to the Minister for Trade, by stating that as a result of the decision of the Government to exempt motor vehicles from the import licensing provisions as from 1st October of this year, a great deal of concern is being felt in the Australian motor vehicle industry with regard to the possible effect on the second-hand car trade. In view of this concern, will the Minister inform the House whether secondhand vehicles will be admitted on the same conditions as new vehicles? Any information the Minister can give will assist the people concerned in the industry, who undoubtedly regard this as a matter of great importance.
– Some communications addressed to the Government, through me, have arrived from people who consider that their interests may be adversely affected by a large volume of imports of second-hand motor vehicles, particularly from north America. A study has been made to assess the likelihood of serious damage to the Australian industry, and it appears at present that there are really no grounds for serious perturbation. Certain factors provide a large degree of protection under existing conditions. First, the importation of a motor vehicle fully built involves quite heavy freight charges. Secondly, a motor vehicle imported from the United States of America or Canada must undergo a very costly conversion from left-hand to right-hand drive. Thirdly, such an imported second-hand vehicle would attract the same rate of customs tariff duty as is prescribed for automobiles generally. Finally - and this is a point that I think has been overlooked - an imported second-hand motor vehicle, as well as attracting customs tariff duty, is subject to the prevailing rate of sales tax when sold in Australia. This tax does not apply to a vehicle which becomes second-hand in this country. Having in mir ‘ all these con siderations, it appears that at present there is no likelihood of any great volume of imports of second-hand vehicles, but the position will be watched.
– My question is directed to the Minister for Defence. Since it appears that some short-haul customers of airlines are worried about the reliability of Lockheed Electra aircraft, will the Minister ask his colleague, the Minister for Civil Aviation, to try to arrange for more Electra services on the east-west transcontinental routes, because long-haul customers using these services have every confidence in the operation of Electras and appreciate the advantages of these aircraft?
– I will be very pleased to convey the honorable member’s comments to my colleague in another place.
– My question is addressed to the Treasurer and is supplementary to the question asked by the honorable member for Hume. Accepting in part the Treasurer’s statement that the Commonwealth lacks the power to control hire purchase and interest rates within the States, will the right honorable gentleman take steps to control hire purchase and interest rates within the Territories of the Commonwealth, in which the Commonwealth Government has absolute power?
– I think the honorable member is aware, as are most honorable member is aware, as are most some time ago a conference was arranged by the State Premiers to consider hirepurchase activities. The State Premiers, of course, have full power in this field within their own territories. I should have thought that honorable members opposite, who are apparently concerned at the operations of hire-purchase companies, would have found it more profitable to put their views before their colleagues in the governments of some of the States than to address them to this Government. In any case, the Commonwealth Government sent observers to attend that conference, and according to my recollection - my colleague, the Attorney-General, can correct me if I am wrong on this point - the Commonwealth representatives fell into line with the decisions reached by the State governments on how they should handle these matters inside their own boundaries.
– I ask the Minister for Territories: Why will he not disclose the information on which he based his decision to bar Professor Gluckman from New Guinea? Is it because he fears that the information, which the Prime Minister says came from the usual sources, will not stand up to challenge and examination? Why will not the Minister submit his case for independent judgment, instead of, in effect, libelling Professor Gluckman with vague allegations based on undisclosed information? Does the Minister seriously contend that Professor Gluckman could do more harm in New Guinea in a three weeks visit, even if he is a security risk, than will be caused by the introduction of these star chamber methods?
– Perhaps the honorable member for Yarra has not been in this House long enough to know that it is an established rule, which was followed in the time of the previous Government and has been followed consistently during the term of office of this Government, that matters relating to security are not discussed in this House.
– I present the following report of the Public Accounts Committee: -
Forty-eighth Report - Treasury Regulation 52, Second Report.
In the committee’s first report on Treasury Regulation 52, the forty-second report presented in this House on 8th October, the committee proposed the formation of a departmental working party to examine certain aspects of procurement. The report now presented is the result of the committee’s consideration of the report of the working party and other information which has become available to the committee since the original inquiry.
In broad terms Treasury Regulation 52 enunciates the principle that all government contracts involving expenditure in excess of £200 should be let by public tender. Prior to the committee’s inquiry there had been proposals put to the government that this limit be increased to £2,000 or perhaps £5,000, but proposals which later were put to the committee were in terms of a limit of £1,000 or £2,000. However, not all departments supported those proposals. After examining all the evidence the committee has recommended that the present monetary limit in Treasury Regulation 52 be lifted to £500, provided that two additional safeguards are introduced by amendment of other Treasury regulations.
I conclude my remarks by saying that the recommendations of the committee have been made after considering the sustained conflicting opinions of various experienced! Public Service departments and authorities. There are disturbing features about the way the Public Service went about the various departmental investigations into Treasury Regulation 52, which the Public Service would do well to consider carefully.
Ordered to be printed.
– I move -
That, in accordance with the provisions of the Public Works Committee Act 1913-1960, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to this House: - Construction of a new international terminal building at Perth Airport, Western Australia.
The proposal provides for the erection at an estimated cost of £450,000 of a steel and reinforced concrete ground and first floor building. The building will provide accommodation for all airline operators, with ancillary accommodation for the Departments of Customs, Immigration and Health. It will also provide office and functional accommodation connected with airport management for the Department of Civil Aviation. The committee has reported favorably on the proposal, and upon the concurrence of this House in this resolution the detailed planning necessary for carrying out this work can proceed.
Debate (on motion by Mr. Calwell) adjourned.
– I move -
That, in accordance with the provisions of the Public Works Committee Act 1913-1960, it is expedient’ to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to this House: - Construction of a new nurses’ home and training school at the Canberra Community Hospital, Australian Capital Territory.
The plans provide for the construction of a new nurses’ home and training school as part of the proposed development to enlarge the present hospital to an ultimate capacity of approximately 600 beds. The new home will be a seven-story steel framed building connected by a covered way to a singlestory dining and recreation block. The building will accommodate 345 nurses and will be complete with all the normal requirements of a modern nurses’ home. The estimated cost of the proposal is £915,000.
Debate (on motion by Mr. Calwell) adjourned.
In Committee of Supply: Consideration resumed from 25th August (vide page 490), on motion by Mr. Harold Holt -
That the first item in the Estimates under Division No. 101 - The Senate - namely, “Salaries and allowances £33,650”, be agreed to.
Upon which Mr. Calwell had moved by way of amendment -
That the first item be reduced by £1.
.- This Budget is pleasing for several factors. The first is that the calamity howlers and prophets of doom and gloom most certainly took an unprecedented nose-dive in their public prestige as Budget forecasters. The second most pleasing factor of the Budget, to my way of thinking, is the development of the merged means test and the benefit that this will bring to many thousands of age pensioners. Indeed, the Prime Minister (Mr. Menzies) himself pointed out the other evening that it will enable about 120,000 more persons to be covered by the age pension scheme.
The third most pleasing factor of the Budget is related to the merged means test. I, along with my colleagues on this side of the House, take great personal pleasure in the satisfaction which must be felt by the honorable member for Sturt (Mr. Wilson) as a result of his work in trying to evolve a better means test. I know that we all share in his great satisfaction and give him full credit for the tremendous work that he has done.
As ever, in this Budget, we on this side of the chamber have been subjected by the Opposition to the usual quota of screams and groans and moans. We have been subjected to all the old charges that we are the minions of what are called the “capitalists”; that we are in the pay of the banks; that we care naught about age pensioners, invalids or widows; that we care less about workers, and that all we are concerned with is keeping office and grinding the mass of the population into mother earth. Of course, upon reflection, any sensible person will realize that these charges are so much nonsense. But they continue to be brought up in debate after debate.
I think it is time that, once again, we paused for a moment in the debate on the Budget to evaluate the background of some of these charges. We are continually being told, both in this place and outside, that the Menzies Government seeks to destroy the workers and that we are aiming to create great pools of unemployment. Indeed, we have the assurance of that poet and author, the honorable member for Parkes (Mr. Haylen), on this subject. I take it that, being a member of the Opposition’s shadow cabinet, we can accept the honorable member’s views as being representative of those of the Opposition when he stated, as reported at page 1697 of volume 182 of “Hansard” of 15th May, 1945-
I realize that there cannot be total employment but if we can get down to 5 per cent, of unemployment, for all practical purposes that can be regarded as total employment.
– Who said that?
– The honorable member for Parkes, the poet and author.
– I suggest that, from the point of view of the Labour Party, 5 per cent, unemployment is total employment. Against the wild charge that we on this side of the chamber are forever trying to create unemployment, let us present the unarguable fact that since the Menzies Government attained office in 1949 the proportion of unemployment in Australia has not been over 2 per cent. I think that that nails the furphy once again. But of course, this will not stop the Opposition from continually trying to revive the charge.
Recently, the Leader of the Opposition (Mr. Calwell) stated that the fifteen Queensland members on this side of the Chamber could not care less about our State. He asked what we were doing to help Queensland. I am rather interested to test the validity of the sudden interest by the Leader of the Opposition and the Deputy Leader of the Opposition (Mr. Whitlam) in Queensland and their desire to help Queensland. On the front bench of the Opposition, which contains its shadow cabinet which, if the Opposition unfortunately were to come into office, would constitute its cabinet, there sits not one solitary Queenslander, although on that side of the chamber are three Queenslanders, two of whom held Cabinet rank in former _ Labour ministries. Again, Sir, evaluating the genuineness of the attack made upon us, the next thing I want to deal with is the continuous scream that members of the Australian Labour Party in this place are the only people who are fighting the arch-enemies of civilization, the Leninists - that we on this side of the chamber are only mouthing our fight against Leninism or communism and that members of the Labour Party, on behalf of the workers, are the only ones who are really doing something about it.
The facts, Mr. Chairman, are patently obvious and patently unarguable. If mem bers of the Opposition were doing something serious in connexion with the red development, there would certainly be no division in their own ranks and there certainly would never have been the breakaways from their party that have occurred. I have in my hand a volume entitled “ The Garden Path “, which consists of over 500 pages of carefully documented analysis of the inroads and influence of communism, or Leninism, into the great Australian Labour movement. All honorable members opposite have read it, but they have never been able to disprove one solitary statement made in it. The next thing which should be said to members of the Opposition is that not only are they not fighting communism but that, on the contrary, the Communist Party of Australia itself regards the Australian Labour Party, as presently constituted, as its right wing.
– Where did the Communist candidates’ preferences go in the last election?
– In most cases they went to A.L.P. candidates. I come now to the report of the eighteenth congress df the Communist Party of Australia in 1958. It was written by Sharkey, the general secretary of the party. Let me read a few extracts from it and contrast them. First of all we have the statement of the federal chairman of the Australian Labour Party, made in March, 1957, at the A.L.P. conference in Brisbane, that any departure from the principles of democratic socialism and the policies developed at the Hobart conference would be a negation of Australian Labour Party policies and principles. As against that we have testimony of none other than Sharkey. At page 60 of his report appears the following statement -
The A.L.P., having rejected Group policy, returned to a stand more in keeping with its traditions. Its Federal Conference decisions at Hobart and Brisbane with their emphasis, for example, on Peace, recognition of the People’s Republic of China, for a measure of nationalisation, against repressive legislation and the discussion initiated on socialism, reflects great world changes and the profound changes in the A.L.P.
Thus the Labor Party’s stand for peace, in favor of banning nuclear weapons, for recognition of People’s China is an extremely important development and opens wide scope for united working class action.
The Communist Party played a decisive part in the Labor movement by calling for and working for unity, by warning the workers of the dangers of Industrial Group policy and calling on them to struggle against it.
At page 59 of the report, we read -
World events have brought about profound changes in the Labor Party and in the working class movement generally. These changes have led to a far more progressive policy of the A.L.P. and a great movement of its members to socialism and progressive policies.
Communists declare that they will allow nothing to stand in the way of united action with the Labor Party and non-party workers in the struggle for all the aims of the labor movement.
At page 31 of the same report, we read -
The policy of the Labor Party, agreed upon at its Hobart and Brisbane conferences would, if implemented, represent a progressive change in governmental policy in both foreign and home affairs.
Consequently our eighteenth congress will no doubt agree to the proposition that our party, the Communist Party, should support once more the return of the Labour Party to office.
I come now to my final quotation from this great volume of the Communist Party. The bulk of Labour Party supporters are not conscious of this Communist claim, but the breakaway section of the Labour Party in the southern States and Queensland is very conscious of it. Sharkey states -
Therefore, a major aim of our Party, in the course of the struggle to remove the Menzies Government from the Treasury benches, will be to still further strengthen trends towards united action between the Labor and Communist Parties.
Then we have “The Light Grows Brighter “, a booklet by John Burton, with a foreword by Mr. Chamberlain, the Federal President of the Australian Labour Party, and an introduction by the former leader of the Australian Labour Party, Dr. Evatt. At page 15 of that booklet, Burton, who has been acknowledged as an exponent of Labour’s policies, states -
Labor must make it clear that, the fact that violence was used in special circumstances is no criticism of these objectives which socialists and communists may have in common, stressing always that socialists aim to bring about their objectives within the democratic framework of the parliamentary system. . . .
In this changing situation, Labor should welcome any common ground which can honestly be found between communists and socialists, and which can make co-existence practical and cooperation possible.
We also have the statement, in the “ Sydney Morning Herald “, of 16th June, 1953, by the present Leader of the Opposition (Mr. Calwell) of a further principle put forward by the Communist Party, when he stated -
We might even live to see the day when we evolve a one-party state in Australia.
The honorable member for East Sydney (Mr. Ward) was reported in the “ Sydney Morning Herald “ of 6th November, 1944, as stating -
Australia should begin to think along the Soviet lines in post-war planning.
A former Minister of the Labour Government in this place, Mr. Holloway, is reported in Volume 193 of “ Hansard “, on 10th October, 1947, as saying -
If I were to permit myself to be drawn into a philosophical discussion, I could show that every aim of the Communist movement throughout the world is based on the teachings of Christ.
Then we have the booklet, “ Communism is Treason “, in which Mr. J. T. Lang makes the definite charge that during the Chifley Government’s regime leading members of the Communist Party were able to move into key positions in the Labour Party. In this booklet, he proves that charge clearly and conclusively. He mentions also that while the wives of the men who were serving their country in the forces could not obtain telephones, the Communists could get all they wanted. 1 come now to the “ Tribune “ of Tuesday, 15th November, 1955, in which the Communists say -
Following the A.L.P. Hobart Conference and the A.C.T.U. Congress, the whole Labour movement has common ground on many vital issues - such as peaceful co-existence between nations, banning of atomic weapons, better living standards.
Again, the Leader of the Opposition (Mr. Calwell) and his colleagues have stated openly, time and time again, in this place that they strongly support the nationalization of banking.
– Hear, hear!
– The honorable member for East Sydney says, “ Hear, hear!” yet, in the Brisbane “ Courier-Mail “ of 7th November, 1958, the then Deputy Leader of the Opposition is reported as having said -
One of the silly stories being circulated by the Government - and there were plenty - was that if Labour won the banks would be nationalized. Nothing is further from the truth. As the prospective Deputy Prime Minister in the next Labour Government I deny emphatically that the Labour
Party proposes to nationalize the banks or anything else in the lifetime of the 23rd Parliament. . . . We have no intention whatever of nationalizing the other banks. l put these matters forward to give some idea of the weight that can be given to the charge that this Government is not interested in the workers. We are also charged with intervening in the margins case, yet honorable members opposite are strangely quiet when it comes to the charge laid by Mr. J. T. Lang in this House on 7th November, 1946, when he said that when he came here he could not find the Labour Party, but he did find a party suffering acutely from Communist infiltration and a party committed to the pegging of wages. He said that the Labour Party had refused to abolish the pegging of wages which it had imposed in 1942. Yet we are accused of pegging wages! He also said that the Labour Party was too busy worrying about developing inflation. Now, we are charged with being responsible for inflation! Mr. J. T. Lang also said that the Labour Party had intervened in the courts and done everything possible to destroy the workers. Mr. Lang had been a great Labour leader for 33 years, and at one time was an intimate friend of the honorable member for East Sydney (Mr. Ward).
– He ratted on the Labour Party in the finish.
– That depends on one’s opinion in connexion with communism. For instance, if you agree with the Communist policies adopted by the Labour Party, you are not a rat; if you do noi agree with them, you are a rat. It is a strange situation!
We are accused of not caring about the workers. Contrast that accusation with statements made by the then Minister for Post-war Reconstruction (Mr. Dedman) in the Labour Government as reported in “Hansard” of 2nd October, 1945, at page 6265-
If there is any criticism which may be directed against the policies of past governments supported by the present Opposition- the then Opposition being the present Government - it is this: Too much of their legislative programmes was deliberately designed to place the workers in a position in which they would have a vested interest in the continuance of capitalism. That is a policy which will not have my support, at any rate.
In other words, the Labour Government of the day did not want the workers to become individualists, to own their own homes or to develop those things which would eventually make them capitalists. They wanted the workers to be subservient to, and dependent upon, political patronage at all times. That has always been the policy of those who support the general aims of the Communist International. I think I have said enough-
– Hear, hear!
– I know the honorable member for East Sydney would prefer me not to continue with my speech. If I had the time, I could put an irrefutable case against the charges made by the Labour Party. But I think I have said sufficient to prove that little credence can be given to these repeated, senseless charges by the Opposition that the Government is not interested in the workers and the aged, or in the development of the country. Suffice it to say that at no time has a Liberal government reduced age and invalid pensions or other social service benefits. On the other hand, a Labour government did do that, and on that occasion six of its supporters were so disgusted that they walked across the floor of the chamber and voted against the proposal. The other day, the honorable member for Cunningham (Mr. Kearney) said that 90 per cent, of the people in Australia were workers. That being so, it can be argued that over 50 per cent, of the workers of Australia support the Menzies Government, realizing that we are fighting for the workers of this country. They realize that although we do not call ourselves a Labour Party the fact is that the Menzies Government is the best Labour government the Australian workers have ever had.
– You ought to be careful or you will lose your endorsement.
– Not at all. We on this side can speak our minds. Now let me direct attention to an article in the Sydney “ Daily Telegraph “, of 25th August, 1960, under the heading, “ Two views of our awful prosperity “. That article points out that the Leader of the Opposition predicts a dire future. He sees nothing but galloping inflation, a decline in living standards. a depression in industry and other dire happenings, whereas Mr. Heffron, the Labour Premier of New South Wales, sees the reverse. This disparity of views indicates just what little credence we can give to the assertions of the Opposition in the Federal Parliament. Honorable members opposite persist in making wild charges. They remind me of the little boy who is lost in the dark. He feels that he must keep on shouting in order to keep from becoming afraid. It would seem that honorable members opposite have to keep on shouting to convince themselves that they are still alive. 1 want now to refer to a matter which would aid the development of this country and to which, I think, more and more attention must be given by governments and by leaders of industry and commerce. This is the development overseas of various types of transport. Last year, I mentioned the Hovercraft. When 1 asked a question about this development, I was told that the Hovercraft was at too early a stage of development to be considered. However, it has now reached such a stage of development that four companies in Great Britain are working on it. It is expected that by the middle of next year a Hovercraft weighing 25 tons and carrying 68 passengers will be operating commercially, and others will follow quickly. There is no shadow of doubt that by 1970 Hovercraft, or variations of the Hovercraft, weighing 400 tons or more will be operating on the waterways and on land in various countries. The development of this craft means that we should give very serious thought to that part of the Commonwealth and State financial arrangements related to roads. We should also consider the effect it will have on coastal shipping and on industry generally.
We know that, in addition to the Hovercraft, a flying truck is on the drawing boards. This means that it will be fully developed within the next five years. This flying truck will be able to travel along a road, suddenly take off, climb to 15,000 feet and cruise at over 200 knots. All these developments must have an effect somewhere on our economy. We must give very serious consideration to the impact that they will make. I should like to see a joint committee established to study these developments and advise on the probable impact and economic effects that these new types of transport, using roads, sea and air, will have within the next six to eight years.
.- The honorable member for Griffith (Mr. Chresby) raised a matter that he could well have raised during an adjournment debate, and I believe that it is my duty as a member of the Opposition to say a few words about his remarks. The honorable member represents a swinging seat and must use redbaiting tactics to encourage th° Australian Democratic Labour Party to give him its preferences. Let us look at the attitude of this Government towards communism. Not one Government supporter has complained about Senator McCallum being elected on Communist preferences in 1955, when he received 73 per cent., or 112,000, of Jim Healy’s preferences. Nothing was said last year when the Liberal Youth Conference of New South Wales advocated recognition of red China by the Liberal Party. No protest has come from the Government side about the Deputy Prime Minister, Leader of the Australian Country Party and Minister for Trade (Mr. McEwen) advocating the recognition of red China. Nothing is ever said by honorable members opposite, particularly by the honorable members for Moreton (Mr. Killen) and Mackellar (Mr. Wentworth), about the restoration of diplomatic relations with Russia. Incidentally, the Government arranged for these relations to be restored at a convenient time just after the election. It was not done prior to the election because the Government was afraid of losing the preferences of the Australian Democratic Labour Party, lt is interesting to note that not only did the Government restore diplomatic relations with Russia, but the Treasurer (Mr. Harold Holt) also restored drinking relations with the Russian Embassy. He was there as a representative of the Government drinking vodka with the Russian officials.
This professed anti-Communist Government objects to Communists coming into Australia and to Communists in Australia going overseas to receive instructions. Who is responsible for granting permission to these Communists to come into Australia and to Communists in Australia to go overseas for instructions? No one but this Government! The honorable member for Griffith referred to what some one had said about the Leader of the Opposition (Mr. Calwell). Let me read what a Liberal supporter said about the Prime Minister (Mr. Menzies). The honorable member for Mackellar said -
Mr. Menzies can neither call nor command as a Leader. Under his leadership, the party broke up. Yet he refuses to co-operate under the leadership of any one else. In these circumstances, the greatest national service he can render the party in Australia would be to quit politics.
– Who said that?
– The honorable member for Mackellar. Honorable members opposite refer to comments made about the Leader of the Opposition. Some of their arguments are quite ridiculous! 1 should like to refer to the Budget, but before doing so I want to congratulate the Leader of the Opposition on the magnificent contribution he made to this debate. No one can deny his undoubted ability and sincerity in putting the case for the Opposition. I also congratulate the honorable member for Hunter (Mr. James) on his maiden speech. There is no doubt that the people of the Hunter electorate will be just as well represented by him as they were by his father, Mr. Rowley James.
This Budget reflects the callous disregard of this Government for the real needs of age and invalid pensioners. Once again, many honorable members opposite have referred to the percentage of the basic wage paid as a pension during the regime of the Labour government and the percentage paid now by this Government. In my opinion, this argument is completely irrelevant and serves no useful purpose. The solution to the problem is bound up with the answers to two questions: First, is £5 a week enough to sustain any person in reasonable security and in keeping with our standards of living? Secondly, can the economy afford to pay more? Let us examine the first question. I contend that a Treasurer in budgeting for a surplus of £15,500,000 is showing a disregard for the real needs of the pensioners. The age pension could have been increased by another 7s. 6d. a week, making the total increase 12s. 6d. a week, at a further cost of less than £14,000,000. This would still have left a Budget surplus of £1,500,000. It is true that the Government pays a supplementary allowance of 10s. a week to single pensioners who pay board, rent or lodging but whose income does not exceed 10s. a week and whose assets do not exceed £209. However, single pensioners who own their homes are debarred from receiving this allowance despite the fact that they may have no money other than their pensions and no assets except their homes. In many instances such people are paying out more in rates and taxes than other pensioners who receive the allowance are paying in rent - yet they are denied this supplementary allowance.
I think it is reasonable, Mr. Temporary Chairman, that we concern ourselves not with the 15 per cent, or 20 per cent, of pensioners who receive income apart from their pensions, such as superannuation or supplementary earnings, or with the 8 per cent, who receive the supplementary rent allowance, but with the vast majority of pensioners whose only means of subsistence is the pension. From time to time, we hear honorable members on the Government side boast of how much it is possible for pensioners to receive in pensions, supplementary earnings, superannuation, and so on. However, as I have said, I believe that we should concern ourselves with the great bulk of the pensioners whose only income is the pension.
We must not forget that the age pensioners of to-day had to raise their families the hard way - without help from the Government. Until 1941, New South Wales was the only State in Australia that paid child endowment, so it is safe to say that more than 60 per cent, of the present age pensioners had to raise their families without one penny piece of child endowment to h~Ip them. Naturally, the lack of this assistance nullified their prospects of acquiring a little nest-egg for their years in retirement.
There is another matter apropos the age and invalid pensioners which requires urgent attention. I refer to the funeral benefit. In 1943, the Curtin Labour Government instituted the payment of £10 towards the funeral costs of pensioners. Despite the great diminution in the value of the £1 that has occurred since 1943 the funeral benefit remains static at £10, although £10 to-day has a value equal to only £3 10s. 6d. in 1943. The Estimates provide for an expenditure of £371,000 on funeral benefit this year. I submit, Mr. Temporary Chairman, that the funeral benefit should be increased to £25 as a commencing rate, at a further cost to the revenue of £556,000, which would bring the total estimated outlay this year to £927,000. 1 believe that the need to increase this benefit has been overlooked by the Government, despite many protests from the Opposition benches over the last two years. Let us hope that this defect will be remedied in the very near future.
Now I turn to another important branch of social services - child endowment. The allowance for the first child is 5s. a week, and no adjustment has been made to this rate since it was introduced in 1950. Endowment for the second child has remained at 10s. a week since 1948. On the ground of the loss of purchasing power alone since these rates were last set, they should be increased this year. The purchasing power of money has fallen to half what it was ten or twelve years ago, and the Government should have given some assistance to the recipients of child endowment even had it increased the rates by only a small amount. I believe that such assistance is essential in the interests of Australia’s future development.
Occasionally we hear many good speeches about our immigration programme, which was introduced by the present Leader of the Opposition, when he was Minister for Immigration, in 1947 or 1948. It is a programme of which we are all justly proud, and it has been carried on by this Government since it took office. We are told in many a speech that we must populate or perish. We must also realize that we should encourage Australians to raise bigger families, because every baby bom in Australia, whether of old Australian or new Australian parents, is just as welcome and just as important as a person brought from overseas. The need to raise larger families in this country is something of which we are losing sight. When child endowment was introduced in New South Wales by the Lang Labour Government, in the mid-1920’s, it was introduced in order to assist needy families in the lowincome group to raise their children in some degree of comfort and to give them a decent education. It was also intended to encourage the birth-rate. However, as the Leader of the Opposition (Mr. Calwell) said in his speech on the Budget last week, this Government has treated child endowment as a dead letter.
My daughter became a proud mother a few weeks ago. I made inquiries from her and she told me that she now takes the baby to a baby health centre which prescribes special foods and other essentials which cost her between 35s. and £2 a week to provide. Yet from this Government she gets only 5s. a week in child endowment. Naturally, people in other circumstances, with more children, are in a worse position in that respect. If people are to have the incentive to raise large families the Government must give them some financial help. There are many thousands of mothers and fathers in Australia to-day who are eager and willing to raise large families, but are unable to do so because of their economic circumstances. Yet the Government does absolutely nothing about increasing assistance to Australian mothers.
A matter of deep concern in connexion with our secondary industries is the alarming shortage of skilled tradesmen. The seriousness of this shortage is evidenced by statements emanating from government leaders, chambers of manufactures, and employers’ organizations. One such statement reported in the press was made by Mr. P. J. Self, the secretary of the New South Wales Employers Federation. According to the report Mr. Self said the shortage of skilled tradesmen was “ acute and rapidly growing worse. “
The report further stated -
The situation called for prompt co-ordinated action by the Commonwealth and N.S.W. Governments. “ Since the war we have drawn fairly heavily on overseas sources for skilled tradesmen, Mr. Self said. “ The proportion of skilled tradesmen in the male work force has been 50 per cent, higher among migrants than among the Australian population. “Now it is becoming increasingly difficult to attract these people to Australia because of improved conditions overseas. “ That is one reason why the shortage is rapidly growing worse. “ Another reason is the falling off in the number of apprentices entering skilled trades. “Some positive steps must be taken to arrest these trends and to ensure an adequate supply of skilled workers for the State “.
There is a similar statement from a representative of the Chamber of Manufactures, which I have not time to read. The indications are that this is a very serious position. There are only two ways of obtaining more skilled tradesmen. The first is to bring them from overseas - and apparently that is out, because we cannot get them in any appreciable numbers because of the improved conditions abroad and because of housing shortages and so on in Australia. The second is to obtain them through the recruitment of more apprentices.
Let us look at the reason why there is a lack of apprentices in Australia to-day. The margins for skill in Australia are ridiculously low, as I shall endeavour to show. The fitter is used as the yardstick by which all margins for skill are measured, so I shall use the fitter’s wage to illustrate my point. In 1947 when the basic wage was £5 9s. he received a margin of £2 12s. 6d. a week. The margin was 48 per cent, above the basic wage. Let me now contrast that position with the present-day set-up. The fitter’s margin for skill now stands at £4 16s. a week with the average basic wage at £13 16s. The margin is now only 34 per cent, above the basic wage. In other words, the skilled worker’s margin has deteriorated by 13.3 per cent, in thirteen years. If the margin which obtained in 1947 applied to-day it would be £6 12s. 6d. a week or £1 16s. 6d. a week greater than it is.
Let me now deal with the shortage of apprentices. Is it any wonder that parents do not encourage their youngsters to learn a trade when they leave school, now that the margin for skill is so low? A few weeks ago Sydney newspapers carried an advertisement which had been inserted by the Sydney County Council seeking labourers at £17 15s. a week. I am not suggesting for one moment that that wage is excessive for labourers, but when one remembers that in New South Wales the federal basic wage is £14 3s. and the fitter’s margin is £4 16s., making a total wage of £18 19s. which is only £1 4s. above the labourer’s rate, is it any wonder that there is a shortage of apprentices? What mother and father would want their boy to learn a trade, knowing that when he finished his time - after having accepted low wages, after having spent a lot of his leisure time in study, and after having endured a good deal of worry at examination times - he would be only £1 4s. a week better off than a labourer? Why should parents be concerned about putting their youngsters to a trade while this state of affairs exists? Why should a skilled worker receive only a few shillings more than does a labourer?
Let me mention now a few of the privileges to which a fitter and turner, working under the federal metal trades award, is entitled. He receives three months’ long service leave after twenty years’ service, a week’s sick leave every twelve months - this can be accumulated for only two years and then is lost unless it is used - and a fortnight’s annual leave. Let me contrast those privileges with the privileges of a labourer who works for the Sydney County Council. He receives three months’ long service leave after ten years’ service with an additional 1.3 weeks for each subsequent year, double the sick leave which a fitter receives, and three weeks’ annual leave. When those privileges are considered and valued, there is very little difference between the pay of a labourer employed by the Sydney County Council and that of a fitter and turner. If the Government, the chambers of manufacturers and the employers’ organizations are serious in their statements calling for more recruits for apprenticeships, they should do something to encourage young men to take up trades by giving them, when they finish their time, a much more satisfactory margin than a tradesman now receives.
Let me refer now to overseas shipping freights. I am at a loss to understand exactly where the Country Party stands on this matter. In the five years in which I have been in this House, there have been three increases in overseas shipping freights - a 7) per cent, increase in 1955, a 14 per cent, increase in 1957 and a recent 6 per cent, increase. But not once in that time have I heard one member of the Country Party express dissatisfaction or concern about the burden which overseas shipping freights places upon the primary producers. Why do County Party members not try to represent the country people? They complain about the high cost of production but, in the main, they claim that this is due to workers’ wages or the slow turnround of ships. None of them ever speaks one word about the tight grip which overseas shipping monopolies have on the Australian economy in general, and the primary producers in particular.
If we are to expand, develop and become the great nation which we hope to become, it is imperative that we re-establish a Commonwealthowned shipping line. The Australian economy is based on exports and imports but we do not own one ship which travels overseas. We depend on overseas shipping companies for our very existence. What are we expected to do? Are we expected to continue like this for ten, twenty or even 50 years? Surely a start must be made somewhere. One honorable member interjected a moment ago and mentioned the cost of providing a Commonwealth-owned shipping line. Admittedly the line may lose money for a time, but what difference will that make if the line will save the primary producers, protect our economy and lower shipping freights? Are those advantages not worth a temporary loss in operating costs? At present we spend £200,000,000 on defence. I do not quibble about that expenditure, but it is a dead loss.
Our economy, which is dependent on overseas shipping companies, is just as important to Australia as is our defence system because, if an overseas combine decides not to send its ships to Australia, what can we do? We do not have a shipping line of our own, but much smaller nations than Australia with much smaller populations and much weaker economies have their own overseas shipping line. I refer to Finland, Sweden, Greece, Iceland, Panama and others. 1 have been told on good authority that even the Republic of Eire now has its own shipping line. Those countries have realized that their existence depends on overseas shipping, and so they have provided their own ships. But what has this Government done? We have the Australian Overseas Transport Association which negotiates with overseas shipping combines on freights. When the overseas combines seek an increase in freights the association meets them in conference. The best that it can hope to do is to beat down the proposed increase. In 1955 the combines sought a 10 per cent. increase in freights and the Government proudly beat its breast because the proposed increase was reduced to Ti per cent. But we knew before the negotiations started that the combines had asked for a greater increase than they expected to receive. That is the best that we can hope for - to beat them down. This is a very unsatisfactory state of affairs particularly when we remember that we have to send our products 12,000 or 14,000 miles away and bring our vital imports the same distance back to Australia. As 1 have said, if the overseas shipping combines said that they were unable to carry our produce, we would be out on a limb. What would happen if we were faced with a war or a state of emergency? What would happen if we were cut off from the United Kingdom in those circumstances? How would we transport our exports and imports which are so vital to our economy? The answer to that question is that we could not move them because we would not have the means to do so.
.- Mr. Temporary Chairman, again we have heard from an Opposition member the usual Labour tactics of speaking in shibboleths - promising everything but not explaining exactly how the things promised will be done. The honorable member for Watson (Mr. Cope) has said that we should have our own shipping line because the foreign shipping lines are too expensive. Australian seamen work much shorter hours than do overseas seamen, and the turn-round of ships in Australian ports is hampered by unlawful strikes by both waterside workers and seamen; so how could we possibly compete with overseas shipping? Any attempt to do so would mean only that Australia’s primary producers would have to pay ever so much more than they already pay for the freighting of their products overseas.
The honorable member also went on to talk the usual Labour jargon which is so often used in attempts to buy votes by promising more social services such as a better funeral benefit and a higher maternity allowance, or baby bonus as it is often called. These things are promised by Labour wherever we turn, but its spokesmen certainly do not explain how the necessary funds will be found. We in this place are used to this sort of talk from the
Australian Labour Party, of course, and so, I think, are the Australian people. Repeatedly at elections, we have seen Labour promising the whole world, only to suffer a worse defeat than ever before.
The honorable member for Griffith (Mr. Chresby) made a devastating attack on the Australian Labour Party and its association with the Communist Party of Australia. Immediately afterwards, the honorable member for Watson tried to make all the excuses in the world for Labour. I should just like to remind him of a certain French proverb -
Qui s’excuse s’accuse.
It means -
He who excuses himself accuses himself.
The honorable member for Watson also congratulated the Leader of the Opposition (Mr. Calwell) on what he described as an excellent speech on the Budget. My comment on the Leader of the Opposition’s speech is that it was absolutely bankrupt of anything constructive. He certainly did not constructively criticize one proposal contained in this Budget. He constantly attacked the Government with proposals that would increase costs throughout the country. What was his answer - his one and only answer - to our problems? It was the holding of a referendum in order to permit more socialistic controls over capital issues and hire purchase. The honorable gentleman was in favour of an additional control wherever it could be introduced. In fact, he was supporting, I think, 21 recommendations that have been made in favour of a referendum proposal being presented to the Australian people.
I should just like to make the point that since federation referendums have been held on fourteen occasions, and 26 questions have been submitted to the people in this way. Only four of the 26 proposals have been accepted. The Australian Labour Party makes an issue of monopolies in this country, and while I am on the subject of referendums, I should like to point out that nine questions relating to monopolies have been submitted to the people of this country at referendums. On this occasion we are hearing from Labour the same old jargon that we have heard for years and years. Every time a proposal on monopolies has been submitted at a referendum the Australian people have defeated it. So we see again the Labour shibboleth which is used in an endeavour to engender class hatred - hatred between various groups in our society.
If there are monopolies, what we want is more competition. When this Government eased import licences in order to create more competition so that industries producing for the home market would have to compete with overseas products, what did we get from the Australian Labour Party? All we got was a scream that we would put certain people out of work. A few people may be affected, but they are the manufacturers who started while import licensing existed. They were on a bonanza and made extremely high profits. They will now have have to come back into line, if they are to compete.
We all know that Labour is very fond of prices control. But it promises the whole world in this field also. It promises us that it can turn this country into a Utopia if only we have all the necessary controls. In the years after the Second World War, until 1949, Labour imposed capital issues control, rationing and a number of other controls. What happened? Inflation was rampant. All the controls did nothing whatever to prevent black-marketeering and shortages, and they failed to give people the necessary incentive to produce more. At that time, our economy was in a strait jacket, and only when the present Government took office and lifted Labour’s controls was there any boost for production in Australia. Most countries that had bureaucratic controls have reverted to free enterprise. Germany had national socialism. Italy had fascism, which was just another form of socialism. Russia still has socialism of a kind. But what happened in England where there was socialism after the war? The English people tossed out the British Labour Party and installed a Conservative Government which is now stronger that any other Conservative government in this century has been. Free enterprise is the only system under which we get maximum efficiency, because the law of supply and demand automatically diverts production into those fields where it is most needed.
The Australian Labour Party has criticized this Government severely for allowing costs in Australia to increase in recent years. I suggest that members of that party look to their own house first and consider some of the real reasons why costs have risen. Let them look at the practices of some of the unions, for instance. Australia is a highly unionized country and the powerful union interests here are bringing about many conditions which tend to increase costs. I refer to the unions’ unreasonable demands for shorter working hours, for one thing. They expect us to work only 35 hours a week without incurring any increase in costs. How can we work less and produce less and still expect to get things at the same prices as before if the same wages as before are being paid for less work?
Furthermore, the unions are demanding many penalties on industry, such as three weeks’ annual leave, equal pay for the sexes and long service leave. I know that these are worthy objects, but we are a developing nation and we have to produce as much as we can as quickly as we can. Every time one of these penalties against industry is imposed, the cost of production increases. In addition, many unions are militant. They say to governments, “ If you do not do this, we shall strike, whether or not we are going against a decision made in opposition to the arbitration system “. Rolling strikes - continual strikes - cause a lag in production and they further increase costs.
I turn now to matters directly associated with this Budget. I should like to say, without being pedantic, that last year I criticized the Government for being a little too liberal in its spending. I considered that last year’s deficit Budget, with its reduced taxes and increased communication charges, would tend to promote inflation, and I think that in some respects I was correct. This year, however, the Government has taken heed of the problems ahead. It has presented what may seem to be an uninteresting Budget. Nevertheless, this is a very courageous and1 bold Budget. Its object is to curb the continuing increase in costs.
This Government receives much criticism from the State governments, and is subjected to pressure from pressure groups within its own ranks, on the ground that it is giving the States insufficient funds for education, roads, hospitals and all sorts of services and facilities provided by the States. I point out that, although we have been very prudent in this Budget, we are giving the States an additional £29,192,000 in this financial year. We are also giving them permission to spend an additional £10,000,000 of loan funds, and at the same time we are reducing our own expenditure on capital works and services by £2,139,000. We are trying to give a lead to the Australian people by cutting government expenditure as much as possible. We would like to see the States, in turn, show a little prudence in their spending.
The Government has looked after those people who need help. Expenditure from the National Welfare Fund has been increased by £31,000,000. We appreciate that costs have increased, and we hope that the extra 5s. a week will give a little help to those receiving age, invalid and widows’ pensions. We hope, too, that the increases in repatriation benefits will be of assistance to those in receipt of those benefits.
I would like to make a few comments on the major step forward that has been taken by bringing together the income and property means tests that have been applied in respect of pensions. I believe this is an important step towards the eventual abolition of means tests. The abolition of these tests will encourage thrift, and the encouragement of thrift is the backbone of free enterprise. Thrift is the basis of the monetary system in a democratic society. Thrifty persons have a constant incentive to produce as much as they can.
Some criticism of the Budget has been voiced by the primary-producing section of the community. It has been suggested that the primary producers should have been given more liberal treatment. I do not quite know what further assistance the primary producers expect, because over the years this Government has gone out of its way to try to benefit primary industries. It has given those industries tax concessions which are the envy of secondary industries. Tt has granted depreciation allowances at the rate of 20 per cent, over five years in respect of many items of capital equipment, including houses built for share-farmers or employees. The Budget now before us provides for an increase to £3,250 of the amount of expenditure on such residential accommodation to which the depreciation allowance of 20 per cent, shall apply. Provision has also been made for the complete writing-off of certain items of expenditure, including that on soil reclamation, water conservation and fencing for pest control.
In addition to these concessions, the Government has always ensured that customs duties on equipment used in primary production remained as low as possible. Sales tax payable on such equipment is negligible. Taxation allowances have been granted to people residing in Australia’s arid zones. In order to assist primary producers further, the Government abolished land tax in 1951-52, but unfortunately other land taxes were then imposed by many of the States.
The Government has also provided bounties for the dairying, flax and cotton industries. Although I know that many people would like to have more subsidies provided, I suggest that you cannot provide more subsidies in the field of primary production unless you have control over production. Otherwise you will find subsidies continuing indefinitely and the country reaching a chaotic financial position. The United States of America has got itself into trouble in this way and now has huge surpluses of agricultural products. I certainly hope we do not find ourselves in a similar position in this country.
The Government has also contributed vast amounts of money to various primarypro.ducing organizations for purposes of research. It contributes on a £1 for £1 basis for research in the wool, dairying, beef, wheat and tobacco industries. It has made a special grant of £250,000 a year to the dairying industry, to help it to discover ways of improving efficiency, and has extended another £250,000 to other primary industries for similar purposes.
I have mentioned some of the ways in which this Government has tried to help primary producers over the years. It has developed a very efficient Department of Trade, which has negotiated agreements and trade arrangements for the disposal of our primary products with many other countries. It has instituted the Export Payments Corporation in order to ensure the sale of our primary and secondary products in what might be considered rather doubtful trading centres from our point of view. It has tried in every possible way to look after the primary producer, and I just do not know what we could do to give further assistance.
I do concede, however, that the primary producers are in a difficult position and are losing ground in the national economy. In 1949-50, primary production was responsible for 14.4 per cent, of our national income. Ten years later, in 1959-60, this proportion had dropped to 8.5 per cent. This is a clear indication that some sort of distortion has developed in our national economy. It is bulging in the wrong direction. It should show improvement in those industries that produce goods for export, thus helping to build up our overseas reserves.
In this connexion 1 would like to cite some figures which appear in the White Paper on National Income and Expenditure for the year 1959-60. The figures have been given for the period of the last ten years, and I have worked out average figures for the periods 1949-55 and 1956-60 in order to compare the earlier and later periods. During the second period wages increased by 42.3 per cent., as compared with the first period, company income increased by 41.6 per cent., while farm incomes fell by 17.7 per cent. The incomes of unincorporated businesses and professions increased by 30 per cent. The figures for net rent and interest increased on dwellings by 87 per cent., and in other activities, which would include finance and hire-purchase companies, by 67 per cent.
These figures show clearly that our national development has become distorted. It is difficult to know how to solve the problem, but I do suggest that there is not the incentive for primary production that there used to be, because costs are catching up with gross income. The figures given in this White Paper show that farmers’ costs have increased over the year by £32,000,000. Last year I pointed out that these costs had been increasing each year by £30,000,000 to £35,000,000, and we now find that they have again increased by £32,000,000. We are gradually reaching the position at which there will be no profit at all for primary producers, and this country will then be in real difficulties.
– We have reached that stage already.
– We will not be in serious difficulty until our overseas reserves are diminished. While we have sufficient reserves to enable us to import the materials to keep our secondary industries going, we will be able to maintain a high level of employment, but should our overseas reserves drop in the next five years we will be in very grave trouble.
In the White Paper on National Income and Expenditure in previous years there have appeared useful graphs showing the movements of farm incomes in comparison with total national income. This year the graph does not appear. I do not know whether it was decided not to include it because it was showing too clearly the way in which the primary industries were losing ground. I hope this was not the reason why the graph was left out.
The Australian Country Party has published a very good booklet entitled “ The Crisis in Farm Costs and Income “. In table E in that booklet we find that since 1954-55, farmers have tried to better themselves by increasing the volume of production by 20 per cent. But the prices received by farmers during this period have fallen by 5 per cent, and costs have gone up by 1 1 per cent., with the result that the net income of farmers has fallen by 7 per cent. This clearly shows that something is wrong in our economy. Yet nobody is able to say what we should do about it. I, too, am a little hazy on how to overcome this problem. The Government is striving to curb costs this year and this is the most important thing that it could do for the farmers. No minor gimmick will satisfy the farmer. The way to help him most is to curb costs.
This year, the Government has bravely produced a four-point plan to curb inflation. First, the Government said in January that it would balance the Budget. It has lived up to its word. This was no easy job. The Government had either to increase taxation or reduce expenditure. It has tried to strike the happy medium by cutting expenditure and mildly increasing taxation. The second point in the Government’s plan to curb inflation was the easing of import licensing. This will bring about greater competition with our own industries. They will have to lower their prices in order to compete with imports. The greater inflow of goods into this country will decrease liquidity and therefore the demand for goods will decrease.
The third point of the Government’s plan was to send counsel before the Conciliation and Arbitration Commission to oppose any increase of the basic wage. I am nol in favour of the Government constantly being represented before the commission but I feel that one reason why it was represented this year was that primary industries were not aware of their obligations. Primary industries should give evidence before the commission on how increased charges will affect” them. We have seen, year after year, that the only primary-producing organization that has been prepared to give evidence in court is the graziers’ association. All our primary industry organizations should unite and have a permanent secretariat to brief and finance counsel to go to the commission and show how primary production will be affected if wages are increased. It does not matter whether it is a straight-out wage case or a margins case; the primary producers should know that the metal workers margins case establishes a basis for margins all over Australia. The increase of wages in secondary industry directly affects the cost of materials that primary producers have to use.
The fourth point that the Government adopted was the tightening of credit. That involved calling extra money into the statutory reserves of the central bank. I am afraid that I have a somewhat different opinion on this to the Government. I feel that this tightening-up of credit has a directional effect. It affects those organizations which are dependent upon the banking system for finance. The people who are hit the hardest are the primary producers because they have no stock exchange on which to borrow money as the secondary industries have. They depend almost entirely on the banking system or on the pastoral finance companies which, in turn, get their money from the banks.
I consider it to be abhorrent that the central bank should be taking money from the trading banks, whether private or Commonwealth-owned, and paying them an* interest rate of 15s. per £100 when those organizations have to pay up to 3 per cent for money. That is an injustice. The more money that is called up by the central bank, the bigger the loss that is suffered by the trading banks. This system is discouraging banking organizations from seeking money on fixed deposit. Why encourage fixed deposits when you know that the central bank will call the money up and you will lose on it? Before the war, there were advertisements in all types of magazines encouraging people to put their money in fixed deposits, but to-day no such advertisements appear. If you put your money into a fixed deposit account, people say, in effect, “ The bigger sucker you “. If you have money to bank’ now you are invited to put it into the hire-purchase section or into unit trusts because more money can be made out of it. The use of statutory reserves in the way to which I have referred is weakening our whole financial structure.
It is about time that we woke up to the fact that the best way to ease demand is by a flexible interest rate. Why is Australia the only country in the Western World that has stuck to a rigid interest rate? I am not in favour of higher interest rates permanently, but I can see that there are times when they should exist to curb inflation. An increase in interest rates might mean that farmers would have to pay an extra 2 per cent, which might result in a total additional interest payment of £8,000,000. But this increase is slight compared with the consent increase of approximately £32,000,000 that has taken place every year for the last six or seven years. If you increased interest rates and made money more valuable instead of tightening bank credit you would slow down demand for money and thus reduce the amount going into hire-purchase organizations and organizations which are able to raise funds through unsecured notes, debentures or shares. The Radcliffe report on the monetary workings of England emphasizes very strongly that the crucial matter regulating demand is not the value of money in the community but the value of money. In recent years, Britain has been using its interest rate as a mechanism for controlling and easing demand. Sub-paragraph (g) of paragraph 397 of the Radcliffe report says -
The authorities thus have to regard the structure of interest rates rather than the supply of money as the centre-piece of the monetary mechanism. This does not mean that the supply of money is unimportant, but that its control is incidental to interest rate policy.
I think it is time that we had a royal commission into the monetary workings of this country. The Vilgron inquiry was held in South Africa, the Rueff inquiry was held in France, the Radcliffe inquiry in Britain and the Gordon inquiry in Canada. Those countries have not suffered monetary depreciation to the extent that we have suffered it in Australia, yet they found such inquiries necessary and very rewarding.
– Order! The honorable member’s time has expired.
.- 1 have listened with a great deal of interest to the speech of the honorable member for Richmond (Mr. Anthony) and I propose to reply, during the course of my remarks, to some of the statements he made; but I have risen for the purpose of supporting the amendment moved by the Leader of the Opposition (Mr. Calwell). During the course of this debate Government supporters have told us that this Budget has for its purpose the control of inflation. It is true that the control of inflation is a matter of paramount concern in all sections of the community to-day; and we have been told that this Budget will control inflation as it will result in the withdrawal of £40,000,000 from the expenditure field. The Prime Minister (Mr. Menzies), in the course of his remarks the other evening, explained how his Government has increased expenditure. In other words, all that this Government now proposes to do is to withdraw money from the private expenditure field and spend it in the public expenditure field.
So, it is patently obvious that this Budget will do nothing to control inflation. For ten long weary years the people of Australia have been told how this Government has dealt with this problem, but during that period inflation has increased to such an extent that the cost of living has risen by 98 per cent. That fact gives some indication of the measure of control which the Government has exercised during that period. Nothing in this Budget indicates how the Government proposes to halt the speculative activities which are rampant in the community to-day. In spite of all the Government says, when we examine the Budget and read the speeches delivered by the Government’s apologists we look in vain for real measures to control inflation. As far back as 1949 the Menzies Government promised that it would increase the purchasing power of the Chifley £1, but since its advent to office prices of commodities have risen by 98 per cent. Just prior to the announcement of the C series index figures for the June quarter the prices of some of the commodities in the index rose steeply.
The Government says it believes in free enterprise. The honorable member for Richmond referred to free competition. There is no free competition in this country to-day, but free enterprise goes merrily on its way in the form of monopoly capitalism. That fact is amply demonstrated by takeover bids. Only the other day Coles and Woolworths clashed in a take-over bid involving millions of pounds. We see more and more capital getting into fewer and fewer hands. Yet the Government talks about State-controlled capitalism. Judging by the Government’s way of dealing with the growth of monopoly capitalism, it is in favour of a small minority ultimately controlling the economy of this country. The adverse effects of the activities of the monopoly capitalists are felt not only by a great majority of the workers but also by the 600,000 pensioners who will get a rise of 5s. under this Budget. I repeat that the Budget will do nothing to interfere with the vicious control of the monopoly capitalist. Under this Government the rich become richer and the poor become poorer. The owners of land and capital are becoming wealthier at the cost of the great masses of people, and the incomes of small farmers have continued to fall.
The honorable member for Richmond referred to the fall in income of the farmers. The Minister for Trade (Mr. McEwen), who is the leader of the Country Party, stated at the Country Party conference in New South Wales a few weeks ago that although primary production had increased by 11 per cent, the income of farmers had fallen by 1 1 per cent, during the past four years. In the course of his remarks in this debate the Leader of the Opposition stated that the average income of the farmer under the Chifley Government, in 1949, was £489- Chifley £l’s - but this year his income is only £408 - Menzies £l’s. In other words, despite the depreciation in the purchasing, power of the £1, his income has dropped. So the farmer can draw very little solace from this Budget. The honorable member for Richmond stated that this Government has given a concession in respect of the building of housing accommodation for farmers’ employees, but we find that the amount involved is only £10,000 and that the concession will not be applicable during the current financial year.
It has been said that this is a “ stay as you are “ Budget which will suit the wealthy supporters of the Government who have been drawing the cream off the milk ever since the Government assumed office. But it is not a “ stay as you are “ Budget for the consumers, because every quarter the cost of living rises. Then we have criticism, such as that offered by the honorable member for Richmond, about the trade unions applying to the court for wage increases; and it is said that the current inflation is a prices inflation. All that the unions seek is a restoration of the value of wages in order to maintain at least the living standards of their members. In Queensland, in nearly every case when there has been a basic wage hearing the court has granted an increase on the basis of the Statistician’s figures. The honorable member for Richmond also referred to the 35-hour week. In these days of advanced technology and the application of inventions, surely on the eve of automation all sections of the community should be enabled to derive some benefit from these advances instead of the whole of the benefit going to those who own the machines. In other words, the unions are simply seeking for their members some benefit from the general prosperity, if there is any prosperity condition.
I was very interested in what the honorable member for Richmond (Mr. Anthony) had to say about interest rates. There is much to be said for his suggestion that interest rates should be controlled. The Labour Party has been advocating the control of interest rates for years. The Labour
Party also believes in capital issues control. It believes more to-day than ever it did before in the control of interest rates charged not only in the banking field, but also in the field of hire purchase. It believes that this control is necessary to prevent exploitation. At the present time, the amount owing by the public to hire purchase organizations is £416,000,000, and there is *io control over the rates of interest that may be charged by the hire-purchase organizations for the money advanced.
Hire purchase has been looked upon as the poor man’s overdraft, the means by “which he can obtain commodities and articles without security. Without hire purchase, he would not be able to buy these things, and the fact that he is able to buy them through hire purchase has given a great stimulus to Australian secondary industries. But because there is a certain -section of people who seek to charge exorbitant rates of interest, we believe that interest rates should be controlled.
Looked at from every angle, there can be no doubt that this Budget offers not the slightest ray of hope to the workers or the small businessman. On the contrary, because of the intensification of takeover moves and the development of monopolies, the small businessman is on the way out. Again, as honorable members on both sides have indicated, the primary producer can hope for very little from this Budget. As for controlling inflation, it falls flat as a pancake.
If the Commonwealth has not the constitutional power to control interest rates or to take the steps necessary to deal with the pressures which are causing this inflationary trend, then the Labour Party will support it if it goes to the people with a referendum seeking additional power. This Government might well follow the example set by the Lyons Government which sought power through a referendum to control marketing and aviation. When the people refused to grant the additional powers, the Lyons Government asked the Premiers of the States to cede them. The State Premiers did cede the additional powers required, with the result that to-day the Commonwealth Government can control marketing and aviation. As a result of the ceding of those powers by the State governments, the Commonwealth Department of Civil Aviation was established. Because of the adverse inflationary drift, because of the exorbitant prices structure, this Government should give serious consideration to seeking from the people the requisite power to control these matters.
The honorable member for Richmond criticized prices control. I take it that he does not oppose the subsidizing of dairy farmers and the fixing of the price of butter. Surely, as a representative of a sugar-producing area, he does not oppose a fixed price for sugar. It has also been reported that the banana growers in his area are anxiously looking for a measure of control over the price of bananas to lift that industry out of its present deplorable state. Surely, having regard to the wishes of the three main industries in his electorate, he would not oppose some system of controlling prices.
Then we have the worker’s position. His savings are disappearing. The man who had £600 in the bank in 1939 now finds that it is worth only about £200. The man who took out an insurance policy for £600 in 1939 finds that to-day it is worth little compared to what he hoped to receive. Not only is the present wave of inflation scaling down the living standards of the worker, but lit is also scaling down the living standards of the primary producer, as was pointed out by both the Leader of the Opposition and the Leader of the Australian Country Party. Again, the price of building allotments has skyrocketed, and the cost of home construction is spiralling continually. How can the young married couple hope to own their own home in those circumstances? Is it any wonder that wives are being forced to seek employment to help their husbands save the deposit necessary to buy or build a home?
When we look at the Budget after paying due regard to the matters to which I have referred, we find that the Government expects to receive £263,000,000 by way of excise duty and £180,000,000 by way of sales tax. Incidentally, these are all indirect taxes which are passed on to the consumer in the form of higher prices. The revenue that the Government hopes to receive from other forms of indirect taxation is about £98,000,000. So the Government hopes to collect £601,000,000 by way of indirect taxation, all of which will be passed on to the consumer in the form of higher prices. lt expects to collect £112,000,000 in excise on beer, £14,000,000 on tobacco and £66,000,000 on cigars and cigarettes, a total of £192,000,000. All of this is passed on, in higher prices, to those who enjoy these articles, and as a section of the community they pay indirect taxes of £192,000,000. Incidentally, most of those who consume these goods are workers. Because they regard them as necessities and not as luxuries, as the Government does, they pay £192,000,000 to the Government. The present drift can result only in the imposition of restrictions which will ultimately lead to deflation. The Government will be stampeded into taking some drastic action which will swing the economy from an inflationary trend into deflation, with all its inherent vices, its unemployment and misery. We had experience of a policy of deflation in the period from 1929 to 1932.
The Government has lifted import restrictions. It said that this will remedy the position because it will allow free competition. However, I cannot discern any marked difference between the price of commodities made overseas and the price of commodities made in Australia. This policy has not produced the benefits that the Government hoped it would. But the lifting of import restrictions will result in our overseas balances being reduced. If we want to maintain our overseas balances at the present level, we must increase our exports to meet the cost of the additional imports. It has been said that wool production will fall by about 5 per cent, because of drought and other conditions. In face of this, I do not know where we will find the additional exports. Imports for the past three months were valued at £60,000,000, and this means that imports for the year would amount to £240,000,000. Experts have expressed the opinion that our overseas balances will fall by £200,000,000.
In an effort to meet the cost of imports, the Government has raised loans abroad. The Australian Labour Party since its formation has opposed overseas borrowing. During the depression years, it was said that the country had been placed in pawn to overseas moneylenders, and that is what the Government is doing now. It is all very well to talk about overseas investors investing capital in this country, but they expect dividends on their capital to be paid overseas. These dividends can come only from our overseas funds and to meet the increasing demand for payments overseas, we must increase our exports. But this Budget does not offer any inducement to the primary producer, for instance, to increase his production. The price of wool prior to the Brisbane sale fell by 7i per cent., and it is estimated that a fall of 1 per cent, means a loss of £6,250,000. It is evident, therefore, that we free a very serious problem for the future. The Budget has done nothing to improve either the internal or the external position. The Opposition has suggested remedies to meet the situation, but the Government permits monopoly capitalism to go merrily on its way.
I should like to support the plea of the honorable member for Maranoa (Mr. Brimblecombe) for a review of the zone allowances granted under the income tax legislation to outback areas. The zones were fixed to offer some inducement to people who live in areas which suffer from adverse climatic conditions, high costs and lack of amenities. In the past ten years, I have drawn the attention of the Treasurer (Mr. Harold Holt) to anomalies that have arisen. I shall give one illustration, without being parochial. The residents of the shire of Jericho, 300 miles west of Rockhampton, do not enjoy either a zone “ A “ or zone “ B “ allowance, but the residents of Mackay, on the coast with a daily air service, receive a zone “ B “ allowance. The people 300 miles inland must pay rail freight on foodstuffs, clothes and other items, but they do not receive any taxation allowance. That is just one of many illustrations that could be given. I agree with the honorable member for Maranoa that zone “A” and zone “B” should be extended.
I also support the honorable member for Maranoa on the question of road communications. A bill was discussed in the last sessional period intended to foster research into the production of beef. I do not want to repeat what I said in that debate, but I pointed out then that communications are vital to this industry. Perhaps they are more vital now than they have ever been. Road transport has come to stay, but if the road trains are to continue in operation, they must have decent roads. These road trains are capable of bringing cattle from the cattle-producing areas in better condition and at a younger age. I ask the Government to complete the scheme that the Chifley Labour Government inaugurated to promote the production of beef. The basis of the scheme was the construction of roads in large shire areas which had small populations. The provision of decent roads would enable these people to get their products out of the area and to bring the commodities they need into the area.
As I said at the outset, I support the amendment of the Leader of the Opposition because this Budget does nothing to apply a brake to the present inflationary trend’s.
.- At the outset, let me compliment the Treasurer (Mr. Harold Holt) on what I consider to be, in prevailing conditions, a very good Budget. I do not suggest for one moment that it solves all our problems or that it could not be improved; but it is still a good Budget, and undeserving of the harsh criticism levelled at it by the Opposition. I congratulate the Treasurer on the work he put into it, and I hope that in the years ahead he will continue to guide the financial affairs of this nation and beat the record term of office of his illustrious predecessor.
Now let us examine some of the criticisms offered by the Opposition. The Opposition Whip, the honorable member for Wilmot (Mr. Duthie) said -
To the wage-earners, who comprise the vast majority in the nation, this is a cynical, cruel and crippling Budget. The Government has even withdrawn the 5 per rent, rebate cf income tax which it gave last year.
Now let us see what the Opposition said about this rebate when it was granted last year. It will be interesting to quote the remarks of the honorable member for Yarra (Mr. Cairns), who at least, among members of the Opposition, is regarded as an authority on financial matters. He said -
It will give £20,000,000 in a reduction in direct income tax in this way: To the 57 people in the community who have an income of £50,000 or more, it will give £1,555 a year. To the 568 who have incomes between £20,000 and £50,000, it will give £1,055 a year. To the 756 people who have between £15,000 and £20,000, it will give £451.
And listen to this -
But to the 1,208,000 whose incomes are between £105 and £600, it will give less than £2 a year; to the 303,000 whose incomes are between £600 and £700, it will give less than ls. a week, and the 1,115,000 who earn the average income of between £700 and £1,000, it will give about 2s. a week.
– Hear, hear!
– Right. The honorable member for Yarra went on to say -
That is the kind of social injustice that comes from this Government.
This year, when this rebate which the Opposition described last year as being miserable and worth virtually nothing, is withdrawn, its withdrawal is called “ a cruel and crippling burden “. Now, apart from the action on this rebate, the only other increase in taxes in the Budget which can possibly affect the working man is the increase in the rate of sales tax on electric razors from 2i per cent, to 25 per cent. This sales tax has been increased in order to remedy an anomaly which has existed for some time, because for a number of years safety razors have borne the 25 per cent, rate of sales tax. The honorable member for Wilmot started to interject, but has apparently changed his mind. I am glad that he did so, because I was about to say that I have read in the newspapers that at least one company - the Remington Rand company - has announced that it will absorb the increased sales tax and leave the retail price of its electric razors unchanged. 1 compliment this company on that, and 1 hope that other manufacturers of electric razors will follow its example. I want to tell the Opposition now that I have no shares in Remington Rand. In fact, I have no shares in any company despite the fact that the Opposition continues to refer to us over here as being the spokesmen for big business.
Now I turn again to what the honorable member for Wilmot had to say about the Budget. He said -
Spiralling profits and prices causing an everwidening gap between income and expenditure have led to the breakdown, not the stabilization, of our economy.
He described the Budget as - a vicious weapon which is being used against the ordinary man in the street whose wife has been forced to seek employment in order to make ends meet.
– Who said that?
– The honorable member for Wilmot. Now listen to what the Leader of the Opposition (Mr. Calwell) had to say about the Budget. He said that in the ten years this Government has been in power prices have risen by 98 per cent. I want to remind honorable members opposite that when the Chifley Government went out of office in 1949 the basic wage average for the six capital cities was 129s. To-day it is 276s. My authority for those figures, in case they are challenged, is the Commonwealth Year Book and issue No. 62 of “ Australia in Facts and Figures “ published by the News and Information Bureau. So, on the admissions of the Leader of the Opposition, prices have risen by 98 per cent, but the figures I have given show that wages in the same period have increased by 114 per cent. So this everwidening gap between income and expenditure to which the honorable member for Wilmot referred appears to be widening in reverse.
I do not want to deal harshly with the honorable member for Wilmot, but he made great play on the fact that company profits have risen considerably, and he named certain companies. I did not have time to check all of them, but I checked three under the mistaken impression that all of them had their head offices in Melbourne. I will deal with them in the order in which the honorable member for Wilmot mentioned them. The first company he mentioned is Meggitt Limited which, he said, had paid a 12i per cent, dividend, having earned a record profit of £88,481 for the year ended 31st May. He mentioned Motor Credits Limited, saying that it was a hire-purchase associate of the Automobile Chamber of Commerce and had lifted its profit by 36 per cent. from £105,465 to a record of £143,986 for the last financial year. He then said -
The profit of Gordon Edgell and Sons Limited increased by 36 per cent, in the year ended 30th June.
He went on -
These arc fantastic figures when one considers that the Government has had nothing to say about profit inflation. Throughout Australia, this is the sort of thing that is going on. Prices are moving upwards week by week and the poor old consumer is being slugged. Profits are rising all the time and companies are making no effort whatever to steady costs.
The inference from that is that the companies are increasing their rates of profit. I do not think that anybody would argue against the contention that, with rising population and with improved methods of marketing, any progressive company will increase its turnover. I shall set out to prove that increased turnover is responsible for the increased profits. The first company I shall take is Meggitt Limited. I contacted this company and it sent me its balance-sheets for the last two years which, unfortunately, did not show the turnover. My informant told me that this year’s profit, which was a record, was 15.7 per cent, on actual invested capital. On shareholders’ funds the profit was equivalent to 6.8 per cent. In spite of the fact that this company was formed in 1911, it was only last year that it made its first issue of bonus shares. My informant also pointed out that the higher profit this year was due to increased turnover. As reported in the current balance-sheet, the company purchased approximately 50 per cent, of the year’s record harvest of 26,500 tons of linseed and paid to the farmers £1,200,000 for raw linseed. I think that members of the Australian Country Party will agree that linseed meal is essential in order to increase primary production.
So much for Meggitt Limited. The next company I contacted was Motor Credits Limited. This company stated that its turnover last year had risen toy approximately 100 per cent. Turnover for 1959 was £578,000 and for 1959-60 was £1,144,000. In other words, although the profit was up 36 per cent, the turnover was up 100 per cent. The company pointed out that the increased turnover was due not only to the normal increase in business, but also to the fact that during the year the company had floated a subsidiary company and had opened a number of new branches.
I am sorry that the honorable member for Wilmot is not here at the moment, but I wish to say that when one of the two companies whose profit rose by 36 per cent. - and I am not saying which one - was told of the honorable gentleman’s statement about the increase of 36 per cent., with his inference that the company’s rate of profit had increased by that percentage, I was told, “ You can tell the honorable member for Wilmot from us that if he can show us. any way to increase our rate of profit by 36 per cent, he will be perfectly safe in resigning his seat, because we will give him a job for life at a higher rate of pay than he is ever likely to receive as a member of Parliament “.
Gordon Edgell and Sons Limited admitted that its profit rose by 36 per cent., but pointed out that its turnover almost doubled. This was due to several things. One was that the company had purchased the Birdseye interests and entered into the manufacture of baby foods for the first time. This was also its first full year in the manufacture of frozen foods. The company also pointed out that it was an all-Australian company and the capital invested in it was all Australian. The company also says that it is highly regarded as an employer among the trade unions. I was interested to learn that it provides a good deal of employment in Tasmania, the State in which the honorable member for Wilmot’s electorate lies.
It is only natural that increased population and improved marketing methods result in increased turnover and increased profits, and I maintain that it is not entirely honest to present increased profits as an argument, without relating them to turnover. Let us take the case of two firms - two shops, if you wish - which operate next door to one another. They have exactly the same overhead and sell exactly the same line of goods. One firm is content to accept a mark-up of 25 per cent, on the cost of its goods, but its neighbour wants a mark-up of 40 per cent. I do not think any one would argue that the company with the lower mark-up would sell the most goods. We all know the law of diminishing returns. Generally speaking, the more you increase the price of goods, the more you reduce demand, but the more attractive you make prices, the more goods you will sell. If a company such as the one I have mentioned reduces its mark-up from 40 per cent, to 25 per cent., and so doubles its turnover, it makes larger profits. If it trebles its turnover it could make almost double the profits of its competitor. Does the Opposition applaud the company which works on a lower markup and increases its profit? No! It merely states that this company last year increased its profit by 100 per cent., and then it proceeds to talk about profit inflation.
On the question of who is honest and who is dishonest, let me turn now to the speech of the honorable member for East Sydney (Mr. Ward). He said -
In its presentation of statistics, the Government is dishonest.
Later he stated -
In the year 1958-59 the Government, because it is a big businessman’s Government, released to the private banks large sums of money from what were known as the “ special accounts “ but which are now called the “ reserve deposits “ under our existing banking legislation. The Government said that it wanted to increase the liquidity of the private banks, but the money was not used for the purpose of home construction or development. Immediately these millions of pounds were released by an anti-Labour government from the reserve deposits in which they had been earning interest at the rate of t per cent., the private banks invested the money in Government loans at 5 per cent. That was a completely dishonest act on the part of the Government.
But the honorable member for East Sydney did not tell us that these funds which were earning # per cent, interest actually belonged to the private banks themselves.
– That is very much a matter of opinion.
– Well, they received from the Reserve Bank i per cent, interest on their own funds, but when they borrowed back their own money to invest in Commonwealth bonds they had to pay 5 per cent, interest. And the honorable member for East Sydney accuses the Government of dishonestly favouring the private banks!
In his speech the Leader of the Opposition (Mr. Calwell) said -
We say that the money-grabbing, moneygrubbing controllers of big business have built-in star chambers which inflict severe penalties on those who refuse to abide by, or break, the agreements which they determine among themselves.
This can mean, and sometimes does mean, the loss of livelihood for many small shopkeepers, retailers, growers and producers of all sorts who have no court of appeal against arbitrary and unjust penalties imposed by the monopolies.
I assure the Leader of the Opposition that I do not agree with those tactics, but I remind him that people who live in glass houses should not throw stones. It is not so very long ago that two people named Hursey refused to pay a levy imposed upon them by a union because they considered it to be an unjust levy. Yet they were prevented from earning a living by the members of the union! To me, this case is not a great deal different from the star chamber methods to which the Leader of the Opposition referred.
I want to turn now to the subject of inflation about which so much has been said and written. In one breath the Opposition tells us that it is impossible for the worker to save anything, and in another breath it tells us that inflation is eating away the worker’s savings. I realize that inflation is an evil which must be defeated and, as the Institute of Public Affairs has stated, it is everybody’s business to fight inflation. It can seriously undermine our export market, and it penalizes the thrifty. It penalizes, in the main, those persons who have invested in endowment and life assurance policies; those who have paid superannuation at a rate which they thought would return enough to keep them in their old age; those who were patriotic enough to invest in Commonwealth bonds and those who banked their savings. I am glad that the Government has done something to alleviate the distress of a section of these people by greatly liberalizing the means test in relation to pensions. I shall have more to say about this subject when the proposed social services legislation is being discussed in a few weeks. In the meantime, I should like to remind pensioners of a few facts which the Opposition will never bring to their notice.
When the Menzies Government came to office in 1949 the permissible income for a pensioner was 30s. a week. To-day it is 70s. In 1949, the value of property which a pensioner was allowed to own before losing his right to any pension was £750. This Government increased that figure to £2,250, and the Budget provides that a pensioner without any income other than the pension may have property worth £4,620 before losing completely his or her entitlement. A married pensioner couple who have no income other than the pension may own £4,040 worth of property, cash, bonds, shares or assets other than their own home and motor car and still receive the full pension of £5 a week each. They do not lose their entitlement completely until their joint additional property is worth £9,240. For the purposes of this legislation, any income that they may receive from property is disregarded entirely. I remind pensioners further that of the proposed pension rate of £5 a week, Liberal governments will have provided approximately £4.
When the Chifley Government went out of office in 1949 the pension rate was 42s. 6d. a week. This Budget raises it to 100s. a week, an increase of 135 per cent. For pensioners who are eligible for the supplementary rent allowance of 10s. a week, which was also introduced by the Menzies Government, the increase is nearly 160 per cent. The Leader of the Opposition has stated that in the ten years since this Government assumed office prices have risen by 98 per cent.
Let me further relate the pension to the basic wage. In November, 1949, the basic wage was 129s. a week. To-day it is 276s. a week, an increase of 114 per cent. As .1 have said, the pension has increased by 135 per cent. Let mc po further. The Opposition has said that if this Government had not intervened in the hearing before the Arbitration Commission, the basic wage would have been increased. I do not believe that even the most enthusiastic member of the Opposition would have expected an increase of 20s. a week in view of the fact that over the past eight years the largest increase has been 15s. But let us assume that the commission had granted an increase of 20s. a week, bringing the average for the six capital cities to 296s. a week. The percentage increase on the November, 1949, figure would have been only 130 per cent., and yet the pension as announced in the Budget is already up 135 per cent., and 160 per cent, for those who receive the supplementary allowance. I say without fear of contradiction that this Government has done more for the pensioners than Labour ever did. I say this without being smugly satisfied that what we are doing is enough. I have every confidence that the Menzies Government will continue to ease the means test and increase the pension rate as it has done regularly during its term of office.
But Jet me return to the question of inflation. I know that inflation harms many people and that it must be defeated, but the people whom it hurts least of all are the workers. I hope to prove that statement. I have stated already that, on the authority of the Leader of the Opposition, prices have increased by 98 per cent, while wages have risen by 114 per cent. That takes care of current purchases. But let us take the case of a worker who, in 1949, entered into a contract to purchase his home. Statistics show that more than 70 per cent, of Australians either own or are purchasing their homes, in 1949 a home could have been purchased from £2,000 to £2,500 for a deposit of from £250, with the repayments ranging from £6 to £8 a month over from fifteen to 30 years. In the intervening ten or eleven years wages have doubled and the value of the worker’s home has doubled. But the purchase price is still the same, the interest rate is still the same and the repayments are still the same. In other words, the worker is able to repay his loan with £1 notes which are worth only 10s., or, to use the figures which have been quoted often by the Leader of the Opposition, with a £1 note which is worth 6s. 8d. It is strange to notice that when the Opposition refers to the Menzies £1 in relation to the worker it is worth only 6s. 8d., but when it comes to company profits, the Menzies £1 is worth 20s.
To a lesser degree, even the worker who has purchased goods on a hire-purchase contract for three years benefits to the extent of the inflation that has occurred over that term of three years. The person who has invested his money in stocks and shares loses nothing, because the market value of stocks and shares moves in accordance with the change in the value of money. Those persons that I mentioned earlier who have invested their savings in bank accounts, insurance policies and superannuation are the chief sufferers.
Having dealt with the features of the Budget that I like, I should now like to dis cuss those features of which I do not approve. For one thing, I do not like the pay-roll tax, and I make no secret of the fact. In saying that, I give my own views, and I am not an agent or spokesman for any one or any organization with a vested interest in the subject. The pay-roll tax is an inflationary tax. I have heard it said by some of my colleagues in this chamber that all taxes are inflationary, and even Mr. R. C. Taylor, secretary of the Victorian Branch of the Australian Railways Union, who was quoted by the honorable member for Wilmot, evidently believes this to be true, for he said - . . the Budget itself is inflationary with increased income tax, pay-roll tax, &c, which will inevitably increase prices.
However, the basic difference between the pay-roll tax and company tax is that the pay-roll tax is paid by companies with a specified number of employees, or more, whether or not a profit is made, and company tax is not paid unless a profit is made. The pay-roll tax therefore forms part of the cost structure, on which the prices of all commodities depend, and to that extent it is inflationary. I am fully aware that in order to finance child endowment, the Government must raise revenue from some source, but there is no doubt which way companies would decide if, through the chambers of commerce, the chambers of manufactures or other organizations, they were given the option of continuing to pay the pay-roll tax or paying an equivalent amount by way of increased company tax.
– Which way would they vote?
– They would vote for higher company tax. Apart altogether from being inflationary, the pay-roll tax is a nuisance to the employers, who have to employ additional staff in order to keep the necessary records and supply the required returns to the Government. I think it is equally silly that this tax is levied on State government departments and local government authorities, because the Commonwealth Government has to reimburse those bodies for the pay-roll tax it has taken from them, and it has to employ additional staff to handle the returns.
Another thing about which I am not happy - and I have said so before - is the unhealthy trend towards loan and debenture capital. I have a graph published by the National Bank of Australasia Ltd. in its annual report for 1959, which shows that funds raised by debentures, registered notes and deposits in recent years have risen out of all proportion to funds raised by share capital. I know that hire-purchase companies are offering up to 6 per cent, for money at call and up to 10 per cent, on deposits for extended periods. I have also two brochures - respectively termed a schedule and a memorandum - issued by two prominent stock-and-share-broking firms in Melbourne which give rates of interest for money on call and on fixed deposit. These show that there is plenty of demand for money at call at 4 per cent., and for fixed deposits at 6 per cent, for nine months, 7 per cent, for twelve months, 8 per cent, for three years and even at 10 per cent, for longer periods. The banks, however, are permitted to offer their depositors interest at the rate of only 3 per cent.
To my way of thinking, this has three bad effects. First, it is inflationary, because if companies have to pay a high rate of interest on money that they borrow, they must charge a higher rate when they lend it again, if they are in the moneylending or hire-purchase business, and if they are manufacturers, the high rate of interest adds considerably to the cost of production of their goods and allowance for this is made in the sale price. Secondly, the high rates of interest that I have mentioned divert money from Commonwealth bonds, and from the banks, which cannot compete with such interest rates. As banks, in the main, are the chief supporters of Commonwealth bonds and government loans, this again operates against the bond market. The third bad effect is that, because the banks are permitted to lend only about 30 per cent, of their deposits, less money is available for housing than should be the case. I say this in spite of the fact that the deposits of the savings banks have risen considerably, particularly since the trading banks established savings bank departments.
I believe that there is too wide a margin between the rates which the banks are permitted to offer to depositors and those which are freely being offered by hirepurchase companies and others. I do not for one moment suggest that the rates should be similar, because where there is an element of risk in lending, as is the case in hire-purchase contracts, a higher rate of interest must be charged to the borrower than the banks can charge on overdrafts. Therefore, it is not unreasonable for hire-purchase companies to offer higher rates than are paid by the banks. But is it any wonder that the people prefer to lend at the higher rates when they can get double the rates that the banks offer? This, unfortunately, diverts money away from the banks, which could make it available for housing finance. I am aware that hire-purchase companies will finance home purchase on first mortgage, but the rate of interest that they charge is much higher than that charged by other lending institutions, and their loans are for much shorter terms.
There is only a limited amount of money available, and in my opinion the Government should do what it can to direct it into proper channels. I believe that companies should be compelled to raise a greater proportion of their funds by way of share capital than they are raising in that way at the present time. I do not like controls, and neither does the Government, but it has not hesitated to impose them when it thought they were necessary, as it did in respect of import licensing. However, T think that some form of control is necessary in this instance, because loan finance is inflationary, since the interest paid on the borrowed money has to be met whether or not a company makes a profit, and to that extent it forms part of the cost structure. But dividends are paid only out of profits and do not affect prices. I have read that bank credit has been restricted again recently. In my opinion, this only reduces the supply of cheap money. It causes no shortage of dear money.
Like the honorable member for Bowman (Mr. McColm), I think that the trading banks should be encouraged to enter into the hire-purchase field, but I prefer to work from the opposite end of the scale. Instead of permitting them to charge a higher rate of interest, I would restrict the rate of interest that the hire-purchase companies are permitted to offer to prospective lenders, and thus reduce the rates that these companies charge to borrowers. I am sure that if this were done, more money would be directed into Commonwealth loans, and this would be a help in controlling inflation. If public companies are compelled to raise a greater proportion of their new funds by way of share capital rather than loans, prices would be reduced, 1 am sure.
While on the subject of bank credit, I just want to say that I do not think it is logical to assist importers on the one hand by removing import restrictions - a policy of which I thoroughly approve - and hamper them on the other hand by making it difficult for them to pay for the goods that they import.
I wanted to discuss housing, but my time is running out. Let me just say that I realize that in matters of financial policy there can be many opinions as to what is the best policy at a particular time, and history can show them all to be wrong. With this in mind, despite the criticism I have offered in respect of this Budget, I again compliment the Government and the Treasurer on presenting what is, in the prevailing conditions, such a very good Budget.
.- Mr. Temporary Chairman, the honorable member for Henty (Mr. Fox) has adopted the usual Liberal technique, which is based on the maxim, “ If you cannot convince, confuse “. This afternoon, he began with a vicious attack on the honorable member for Wilmot (Mr. Duthie) and then proceeded, with the air of a magician, to produce figures from here and figures from there. They were most difficult to follow, but he just went on racing through them and trying to show that this Government was doing something worth while for the country and that there was an air of prosperity about. Finally, he stated that the workers were the people who benefited from inflation. He seemed to suggest that inflation enabled the wage-earners to live in luxury, as it were, and that they had no difficulties.
Alleged facts and figures do not worry me very much when it comes to assessing the ability of the workers of this country to cope with the ^ever-increasing costs and prices, because those of us who sit on this side of the chamber are constantly in touch with the wage-earners. My electorate is largely a newly developed area in which most of the breadwinners are young wageearners, and I can assure the honorable member for Henty that they are having a desperate struggle to keep up wi!h the rising prices which have been the order of the day since the Menzies Government came to office almost eleven years ago. Of course, one would expect honorable members on the Government side to attack the wage-earner, and to say he is enjoying all kinds of good things.
The honorable member for Henty mentioned somebody who said that it was everybody’s business to fight inflation. It is great to hear that kind of talk, but the fact is that this Government says that the wage and salary earners are the people who should bear the whole burden of fighting inflation. It says nothing about increased prices or increased profits. It says nothing about the exploitation of the miseries of the people of this country. It says that wage and salary earners shall carry the burden, while prices and profits continue to rise unchecked. The Government makes no attempt to deal with prices and profits, but when the workers make an application to the Arbitration Commission for a fair adjustment to restore their purchasing power, so that they may cope with increased commodity prices brought about by the actions of this Government, it goes to the commission, not to produce facts on the state of the economy, but to say that the wage-earners should not receive an increase.
– The Chifley Government did the same in 1946.
– I am not concerned with the Chifley Government or with what happened in the past. The trouble with many of you on the other side of the House is that you want to live in the past. What about bringing yourselves up to date? If you think the wage-earner is enjoying such great prosperity, you should try to live on the basic wage for a short time, try to purchase a home or to raise a family on the wages that the workers are receiving to-day. You will find it is a much more difficult job on those wages than it is on the salary that you receive as a member of this House.
I think the time is long overdue when the Government should revise its policy that wage and salary earners should bear the whole burden of the fight against inflation. If it is everybody’s business, then the Government should see that everybody takes a fair share of the burden. We have been waiting for a long time for this Government to declare itself prepared to do something worthwhile to counter inflation, but instead it continues to feed the inflationary fires that are causing the constant increases in prices, and this Budget reflects no change in the Government’s policy.
I support the amendment moved by the Leader of the Opposition (Mr. Calwell), because I believe this Government deserves the most severe condemnation for introducing a Budget of this kind. This is a Budget that should be condemned, first, because it seeks to increase taxation. Whether you say that income tax is increased by 5 per cent, or that the 5 per cent, remission granted last year is now to be reimposed, the fact remains that the people this year will have to pay more in income tax than they paid last year.
We have heard many laudatory comments from Government supporters about the provisions for easing the means test. Does not the Government think it is about time it did something to ease the means test? Have honorable members opposite forgotten the famous 1949 and 1951 policy speeches of the Prime Minister (Mr. Menzies) when he said that if a Liberal Government was returned to power a plan would be prepared for abolishing the means test, not merely to give some small relief as is proposed in this Budget? Have honorable members opposite also forgotten that when the Minister for Defence (Mr. Townley) was Minister for Social Services, in about 1953, he said, “ Within twelve months we will produce a plan that will result in the abolition of the means test “? I do not know what happened to that plan, or whether the present Minister for Social Services (Mr. Roberton) has been looking for it and has been unable to find it. In any event, he seems suddenly to have found the right page, because we are now told, ten years after it was first announced that the Government would do something about the means test, that we are going at least a part of the way.
But this is only scratching the surface of the social services problem. The honorable member for Henty did not tell us anything of the plight of the wife of an invalid pensioner who receives the princely sum of £1 15s. a week to look after her invalid husband. The husband, as an invalid pensioner, will now receive £5 a week, so that the total amount coming into the home of that pensioner will be £6 15s. a week. This is all that will be available to buy what is necessary to keep two people going. Some people will say, “ The wife can go to work “, but if a man is an invalid he needs a good deal of care, and the most the wife can do is to take a part-time job to bring in a few extra shillings. It is no use saying that the pensioner can earn up to £3 10s. a week over and above his pension, because an invalid pensioner cannot go to work and earn anything. In my own electorate an employer who owned a baker’s establishment, out of the goodness of his heart gave a job to an invalid pensioner. He was required to clean harness, and he could sit down at the job. The Department of Social Services told him that if he accepted the job he could not continue to receive his invalid pension, because he would have shown that he was not physically incapable of working.
This Government boasts of what it has done to ease the means test, but it deserves no praise for requiring an invalid pensioner and his wife to live on £6 15s. a week.
– Did you do any better when you were in office?
– I was not here when the Labour government was in office. I am merely pointing out to you, and, I hope, to the Government, that you have some responsibility. You have to do more than merely ask, “What would the Opposition do if it were in power? “ It is the responsibility of the Government of this nation to do something about caring for the -people who need care. Government members can talk about Australia Unlimited, but it is not much consolation for the invalid pensioner and his wife to hear them talk of Australia Unlimited and its great prosperity when they allow them only £6 15s. a week to live on.
The honorable member for Henty spoke about the pay-roll tax and about child endowment. I thought honorable members opposite would all be too ashamed to mention child endowment, because they have done nothing about it since 1951. The Government to-day is continuing to penalize the mothers of this country. It has practically wiped out child endowment. If Government supporters had the courage to do so they would stand up in this Parliament and say, “ We do not intend to care for the kiddies of Australia. We do not believe in child endowment.” They have not the courage to do this, so they leave the child endowment at the same rate as it was years ago.
We are prepared to spend thousands and thousands of pounds on immigration. I am not complaining about that expenditure, but I do think, however, that if we can spend £1,000 or so to bring an immigrant to Australia, we should be prepared to give some assistance to our young people, whether native-born Australians or newcomers, to rear their Australian children. But child endowment has been forgotten, as have many other social services such as those mentioned by the honorable member for Watson (Mr. Cope). Consider, for instance, the funeral benefit applicable in the case of pensioners. The Government has done nothing about this benefit, which is still fixed at £10, as it was when first introduced by the Chifley Government.
The community is faced with rising prices, but this Budget shows that the Government has no plan or policy to cope with the problem. Prosperity is here, but prosperity for whom? Prosperity for the monopolies.
Sitting suspended from 6 to 8 p.m.
– I have pointed out that this Budget contains very little that is worthwhile. I have said that two major factors in it are the increased taxation on the one hand, and some easing of the means test on the other. I have pointed out that it is ten years since the Menzies Government came to power. When the present Prime Minister (Mr. Menzies) was Leader of the Opposition he had promised that if his party were elected to office it would implement a plan to abolish the means test. About 1953, the present Minister for Defence (Mr. Townley), who was then Minister for Social Services, stated that he had a plan to abolish the means test, but it was not introduced. Now, more than ten years after the proposal was first mentioned we have a kind of piecemeal thing which eases the means test in one direction, but does very little that is worthwhile in the general field of social services. I have pointed out that an invalid pensioner will receive £5 a week under the Government’s Budget proposals, but that his wife will still receive an allowance of only £1 15s. per week. Apparently this Government expects an invalid pensioner and his wife to live on £6 15s. a week! lt is no credit to this Government that it has not provided a wife’s allowance at least equal to the pension rate payable to an invalid husband.
The Budget indicates that the rise in prices and profits will continue unchecked. The green light has been given to the profiteers, the racketeers and the monopolists. The Government will carry on the same policy as it has in the past and expect the wage-earners of this country to bear the main burden of inflation. The Government’s attitude to wage-earners has been indicated by the fact that it sent counsel to oppose the application of the trade union movement in the basic wage case to restore to the workers of Australia a just wage by giving them an increase to compensate for rises in prices. The Government endeavours to keep wages down so that workers and their families shall not receive a decent share of what is called “ prosperity “ in this country. The Government is prepared to allow the racketeers, the monopolists, and the take-over merchants to exploit the people. As the honorable member for Wilmot (Mr. Duthie) points out by way of interjection, this is the first Government that has ever gone into court with the definite objective of opposing wage increases. It is a low-wage Government. Of course, there is some prosperity. But it is prosperity for whom? If prosperitiy means that £6 15s. is all that we can afford to give to an invalid pensioner and his wife, I shudder to think what would happen if the Government decided that we were in a state of depression. If the Government thinks that the £6 15s. represents social justice in the time of prosperity, I think that the Government should find out what prosperity means. Does prosperity mean that we are unable to provide adequate educational facilities? Does it mean that the Government is unable to co-operate with the States on a decent educational plan? In a state of so-called prosperity, is the Government prepared to see overcrowded schoolrooms and inadequate hospital accommodation? Is it unable to provide adequate care for the aged and sick? ls that prosperity? Whether we call the present state of affairs inflation or not, I believe that we are just approaching the true gradient of rising prices. Many people in the community have been able to ride this inflation. They have been able to sell their homes on a rising market, make a few pounds and go to live in a more distant area. To-day the position is different.
The honorable member for Henty (Mr. Fox) spoke of what he called the great prosperity that the workers are enjoying. He said that inflation had helped them. I would like to bring to the mind of the honorable member the problem which is facing the wage-earners, particularly those who are attempting to purchase a home in which to rear their families. In South Australia, up to a month or so ago, it was impossible for a person even to have an application for housing finance accepted by the State Bank of South Australia or the Savings Bank of South Australia - two banks which, until recent years, made finance readily available for home purchase. The Commonwealth Bank was still accepting applications but only on a restricted basis. A person could lodge an application only if he had had an account with the bank for a certain period and had a certain amount in it. Young married couples with as much as £1,000 have been unable to obtain finance to purchase a home. I suppose that that position has obtained throughout Australia. After all, it is not a bad effort for a young married couple to have saved £1,000. Are we really prosperous when such people are unable to obtain finance to purchase a home? There is plenty of money for hirepurchase. It is a ridiculous state of affairs that, although there is unlimited hirepurchase finance to provide the things that go into a home such as furniture, refrigerators, radio and television, as well as for motor cars and even garages, when it comes to finance to complete a home we are so prosperous that we cannot afford it. Before this Government came into power a block of land in my electorate could be bought for £100 or £200 and there was a chance for even the wage-earner to buy a block, build a home, and still have a few pounds left to buy furniture. But in prosperous Australia - Australia unlimited - under this Government we say to young married couples, “ You have done well to have saved £1,000. There is plenty of finance to buy furniture but there is no finance to buy a home.” This is reacting badly on the flow of immigrants from the United Kingdom. I spoke to a man the other day who came to this country about seven years ago as a British immigrant and who bought a block of land for £200. Both he and his wife worked long hours of overtime and, finally, obtained a home. But he said to me, “ I could not honestly recommend any one in the United Kingdom to come to this country to-day because it is almost impossible to obtain a home. It would be asking too much of a family with kiddies.” Blocks of land that cost £100 ten years ago cost as much as £1,300 to-day; and that is prosperity - prosperity for the monopolies and for the L. J. Hooker people and such like, but little prosperity for the people who count in this community. We could rightly have expected that this Government, when introducing its Budget, would have done something about the position, but there was not a word about it - not a sign that the Government is even aware that prices are continuing to rise or is aware of the great obstacle that that is placing in the way of many people in the community.
A few moments ago I spoke of the position in South Australia when the banks would not even receive applications for assistance in home building; but all of a sudden the State Bank of South Australia found that the South Australian Government was able to hand it £4,000,000 to be made available for home purchases. Then we had the spectacle of people queueing up all night, of families coming for miles to stand in the cold, in the middle of winter, in the hope that they would be able to lodge an application for home finance and ultimately receive it. There was no guarantee that they would ever get the assistance, but they were prepared to stand out in the cold all night in the hope that they might get it. That is prosperity under this Government. It can be said that these people did not have to stand out in the cold, that they could have come back the following week or the following day; but desperate people have to take desperate action. And that is the position of some aged people who have to live under rotten conditions in my electorate to-day; they have no hope of buying homes. And -many people who have kiddies are trying to bring them up under conditions which are not good for them. The people who queued up were in that position and they were prepared to wait all night, in their desperate need. I suppose all of them must have had at least £1,000 in hand, and many of them may have had quite a lot more. But Government supporters talk about prosperous Australia, Australia Unlimited under Menzies. Yet people have to queue up in the hope of obtaining finance to build a home.
– It is really a wonder to me that you stay here.
– The reason for the present position is that members of the Government parties are out of touch with reality; they are never in touch with the people who need assistance. If it were not for the Labour members in this Parliament the voice of the little people would never be heard. The honorable member for Swan (Mr. Cleaver) came to this House after I came here, but he will be gone when this Government of this country goes the way it surely will go.
This Government boasts of prosperity and of all the things that are happening at present, but it does nothing in the field of education. It is true that it has done something to assist the universities, but it has done nothing in the fields of primary and secondary education. So Government supporters must take the blame in that respect. It is useless for them to ask, “What would the Labour Party do?” It is the Government’s job and responsibility to attend to these matters. If members of the Government are unable to do the job, they should be men enough to say so. If they do not believe in child endowment they should tell the people of Australia that they have no intention of doing anything in that respect. I hear one honorable member opposite mumbling in his beard, and I would like to know his views on the plight of invalid pensioners. Is he quite happy with the Government’s policy on repatriation?
During the Budget debate last year, I came up on an old hobby-horse of mine, the psychiatric ward at the Dawes-road General Repatriation Hospital, in South
Australia. I pointed out that for six years the Minister for Repatriation (Senator Sir Walter Cooper) had said that he recognized that this old, temporary and outmoded structure needed rebuilding; and each year he promised that something would be done about it. In a letter to me, after the ‘Budget debate last year, he said - You have my assurance that on the conclusion of the present programme this work will be commenced.
Since then another Budget has been brought down, but once again ex-servicemen in South Australia who need psychiatric treatment have been forgotten. The Minister’s promise ranks with the famous promise of the Prime Minister (Mr. Menzies) that he would put value back into the £1. These are the famous promises of the people on the other side of the chamber, who claim that they understand what is needed. These psychiatric patients are forced to walk, at 5.30 a.m., in the cold and rain, with only a shawl over their heads, on their way to the showers. Prosperous Australia! Great prosperity in the nation! Yet that is the best we can do for these ex-servicemen. God help this country if we ever get what this Government would call a depression.
– If there is need for further commendation of the Budget it is provided in the fact that honorable members opposite - in particular the honorable member for Kingston (Mr. Galvin) - have no real objection to it whatsoever. The only argument the honorable member advanced was that the Commonwealth Government did not carry out functions which pertain to the State governments, such as education, and the control of prices, which have nothing at all to do with this Government. Otherwise his speech was entirely devoid of argument. He had much to say about poverty. In that respect let us look at Brian Fitzpatrick’s “ Labour Newsletter “ and a Gallup poll which he took in the Darebin electorate. When the question was asked as to whether we are better off under this Government, an average of 46 per cent., mostly Labour voters, said that we are, 37 per cent, said we are just as well off, and only 17 per cent, said we are worse off. And Darebin is in a Labour stronghold. So I say to the honorable member that we do live in a prosperous country.
Australia is still enjoying the fruits of prosperity; and it is evident from the Budget, which I heartily commend, that the Government is determined to hold the ramparts of prosperity. But in a country which calls for expansion and development, the peopling of this continent, social justice and employment for all so that we may continue to enjoy the benefits now available to us, it is inevitable there must be an accounting as to whether we can allow costs to climb as they have in the past or whether there should be a balancing out without subtracting from our present benefits. Undoubtedly development and expansion, as well as the effect of our immigration policy, create an inflationary effect. We cannot engage in either development or any generous migration scheme without an inflationary effect, because the money so invested is not immediately productive. We reap the harvest eventually, but the policy impinges on the costs structure meanwhile; and that is why the Prime Minister’s statement that the Budget has been fashioned to slow down inflation is descriptive indeed of what the Government has really set out to achieve. Action has been taken by this Government to bring that about. We have removed import restrictions, which will affect costs in the whole of the community. This is of particular importance to those producers who export products overseas. We intervened in the basic wage proceedings before the Commonwealth Conciliation and Arbitration Commission. I do not know whether honorable members opposite suggest that only one side of the case should ever be placed before the commission. Surely cognizance must be taken of the fact that we have in Australia a section of the community known as the primary producers whose gross income last year was £1,304,000,000, whose production increased in volume by 11 per cent, in the last four years, and whose net income during that same period fell by 11 per cent. During that same period, the weekly earnings of male employees increased by 20 per cent, while company incomes rose by 31 per cent., so that action taken by the Government to steady inflation must primarily be in the interests of the primary producers of Australia.
We have placed restraint on excessive bank liquidity while at the same time ensuring that credit facilities for primary pro ducers are not restricted unduly for it is vital that finance should be available for the production of export commodities, indeed for commodities in general. Certainly that is essential if we are to maintain, let alone increase, our exports and maintain our overseas credits.
The fourth action the Government has taken is the attempt in this Budget to avoid deficit financing. We depend upon our exporters because they are the basis of our economy in that through them we build up overseas credits. It is in their interests that we seek to avoid inflation. Exporters cannot pass on higher costs when they have to face competition on the world’s markets to-day. If they do try to pass on costs, some one else takes their markets. As the primary producers provide over 80 per cent, of our exports, it is essential that they avoid inflation for statistics have shown that they cannot pass on costs. In our efforts to slow down inflation, we must protect the primary producers by putting a brake upon their costs. In the financial year ended June, 1960, the gross value of rural production increased by £40,000,000, yet the net income of those producers rose by only £3,000,000. I think it will be agreed by all that primary industries must be kept in a healthy state because they are vital to the Australian economy. Primary industries have made a tremendous contribution to our economic expansion, and they certainly will be expected to provide a large part of the additional income we are told we shall need in the next few years for the development of our economy. I cannot visualize their producing the whole of the extra funds which the experts suggest we shall need, but certainly they will provide a large part of them.
The primary producer does not benefit only on those occasions when special provision is made for him. Actually, he benefits most when the whole economy is kept in balance, and this Budget is aimed at keeping the economy in balance. Like every other section of the community, the primary producer benefits most when domestic markets are assured, when he is not costed out of exports, when he is not faced with run-away increases in transport costs and when there are no excessive rises in the prices of the goods he needs for production. Further, that is the time when primary production makes the most effective contribution to the economy.
Apparently the Leader of the Opposition wants to have it both ways. He attacks the Government for intervening in the basic wage hearing, and he appears equally horrified at the thought of a decline in farm incomes or a rise in the price of butter as though no primary producer should enjoy the right to pass on in the price of his product the extra cost of the wages he is required to pay. After all, the primary producer adds to the price of his product only the additional cost that has occurred in the period since the previous investigation was made. Let me tell the Leader of the Opposition that these increased costs are responsible for both the lesser income and the increase in prices.
No one can suggest that the primary producers of Australia have been the cause of the present inflation. An examination of the statistics will disclose that there has been no steep rise in the price of primary products commensurate with the increases in costs elsewhere.
– How about the price of wool?
– You have such a woolly head that you cannot even see properly. Nor can the primary producers be charged with inefficiency, especially when we realize that whereas by 1952 the volume of primary production had increased by only 3 per cent, over the prewar figure, it has increased by 50 per cent, since then. That is one side of the picture, and I base my argument on published statistics.
But I do not desire to leave the picture unfinished. Whilst primary producers are making this contribution to the Australian economy, a contribution which we recognize as essential, I do believe that this contribution alone cannot give us the expansion, development and increase in population that we desire. It is noteworthy that the growth of secondary industries has been nothing less than phenomenal. This has been due in no small measure to the assistance given by this Government, the confidence engendered in trade and business by the Government’s policy, and the trade promotion campaign in which the Commonwealth Government has been a partner. We say that interdependence between primary and secondary industries must be recognized. 1 notice that when one financial writer was referring to the Government’s policy towards primary producers he described the assistance we have given them as hand-outs. My reply to that is that no section merits these returns more than do the primary producers nor, in comparision. do they receive the same percentage results as other sections of the community. I suggest that this writer ought to get some practical experience amongst the producers so that he may know what he is talking about. The greatest handout, if it can be called that, is the £740,000,000 which primary producers contribute to our overseas credits to be used by the business world for its requirements. The newspapers and their so-called financial experts contribute very little to the building up of these credits which are so vital, and which they themselves use so extensively. I do not call them handouts. I do not even call the dairy subsidy a handout, unless it be a handout to the consumer to enable him to buy butter at from 6d. to 7d. per lb. cheaper than he would otherwise be able to buy it. The beneficial effect upon the dairying industry, however, is the more attractive market at the lower price. It enables the farmer to sell more of his produce on the domestic market. I repeat that I do not call these items handouts; I regard them as part of the orderly system employed by this Government as a policy to keep a balance in our needed production and in marketing.
I turn again to the Leader of the Opposition, who I notice has no complaints about our full employment, who is quite happy about our prosperous condition, whose party has no answer to the Government’s Budget which is fashioned to slow down inflation, and who argues two ways on primary production. He weakly says that the Government has done nothing for the primary producer. As I am honoured with that responsibility at the moment, I must point out that we have taken many steps to assist the primary producer. I might summarize our actions by referring to the orderly marketing systems and the stabilization schemes that we have applied throughout most of the primary industries, and also to research and to promotion. I shall elaborate those matters.
Primary producers have shown a practical appreciation of our economic position by participating in orderly marketing schemes. It would not be disputed, even by the Opposition, that these schemes have already proved their worth. The Opposition may be surprised to know that to-day only about 8i per cent, of the foodstuffs we export are outside orderly marketing schemes of one kind or another. To-d’ay, the industries concerned are very much alive to marketing problems. They realize that we cannot afford to expand at any price but that there should be satisfactory realizations, for that is essential if they are to continue. They also know that a tighter cost-price squeeze will severely limit their opportunities on overseas markets, where we compete with commodities from cheap labour countries or countries that subsidize their farming. The recent small rises in domestic sugar and in dairy prices reveal the problems of the primary producers. The rises in sugar and dairy prices have been much smaller than price rises in other sections of the economy, but we should certainly take them as a warning. They show the efficiency in the industries, more particularly in the sugar industry, where costs increased by 20 per cent. By its efficient methods, the industry was able to absorb 10 per cent, and the increase passed on to the consumer was only 10 per cent. The industry is to be commended for its action.
I understand that the honorable member for Kennedy (Mr. Riordan) said this afternoon that the Government ought to do something about marketing. I have outlined’ the steps that we have taken in implementing marketing schemes to cover all except 8i per cent, of our foodstuffs. I do not wish to do the honorable member an injustice, but I understood him to say that the State Premiers in 1937, when the Lyons Government was in office, passed over marketing powers to the Commonwealth Government. He knows that is far from the truth and that no power was conceded by the States to the Commonwealth. He should have another look at statements he intends to make before he tries to mislead honorable members. In 1937, the people turned down the referendum. I know this, because I. was organizing in the hope that the proposal would be carried. And it would have been carried if Labour had not turned turtle on the issue after it had first given its support. I remember that the Queensland Labour Premier supported the proposal at first and then, at the behest of the Labour executive, opposed it. That is the tragedy that occurred then. If the referendum had been carried, we would have the necessary powers now.
The rise of promotion schemes in many sections of primary industry shows how seriously the man on the land and his representatives view marketing problems. They realize that to-day marketing is not merely distributing, but outright hard selling. They are prepared to contribute substantial sums for promotion. But whether they can continue to sell their produce depends on the margins over costs that they have to enable them to take advantage of opportunities on world markets. In this selling drive, it is important that our export foodstuffs be of the highest quality. Export inspection work has become particularly significant because of the emergence of a buyers’ market. Export inspection standards have had to be maintained and intensified to ensure that our products can compete favorably with the products of other countries. More than two-thirds of the administrative expenditure of my department is incurred in maintaining these essential inspection services.
I referred to research as one of the major activities undertaken by the Government on behalf of primary producers. In a few short years, we have reached the stage at which practically every major primary industry has a research scheme to deal with its particular problems. These schemes are partnerships between the members of the industry concerned and the Commonwealth Government, and are financed jointly. The schemes were initiated by the primary industries themselves, and producers are willing to pay a levy to provide funds. The effect of these research schemes must be to improve rural efficiency and possibly find new outlets for primary products. In this way, farmers are showing that they are one of the most enlightened sections of the community. They are anxious to get the best out of their propertics and are making their own efforts to hold the line on costs. Already beneficial results are evident.
The funds for research, provided jointly by the various sections of primary industry and the Commonwealth Government, are substantial indeed in this financial year. The wool research programme allocations total £2,268,000, of which the Commonwealth contribution, at 4s. a bale, will be £1,000,000. Wheat research allocations, made by the Wheat Industry Research Council and the State research committees, and approved by me, total £447,000. The Commonwealth contribution will be £170,000. 1 ‘have approved a dairy research programme estimated to cost £220,000, of which the Commonwealth contribution is £100,000. The tobacco research programme is estimated to cost £218,000, of which the Commonwealth Wi provide over £25,000, the balance being contributed by growers, manufacturers and the governments of the tobacco-growing States. The beef research programme has not yet been formulated, but revenue from the cattle slaughter levy in a normal year is estimated at £320,000. When expenditures are made from the fund, they will be matched by Commonwealth contributions. The sums I have mentioned total more than £3.500,000 for jointly financed research schemes in 1960-61. There are also a number of Commonwealth bounties and grants to primary industries, with which I shall deal later.
Backing this drive for high-quality exports are increasing Commonwealth grants for overseas trade publicity. The Commonwealth contribution to Australian trade publicity in the United Kingdom will be £456,000 in this financial year, compared with £396,000 last year. Contributions by the statutory marketing boards and by other organizations handling Australian products in the United Kingdom will raise the total spent directly on publicity for Australian products in the United Kingdom to about £1,500.000. In addition to that, the Commonwealth contribution to the cost of trade publicity overseas in countries other than the United Kingdom will be £301,000 in this financial year, compared with less than £210.000 in the previous year.
– That shows the Country Party’s pressure on the Treasurer.
– The facte answer effectively statements made ,Dy people like the honorable member, who claim that the Government is doing nothing for the primary producers. We are right on the ball all the time. We are doing everything possible in orderly marketing, stabilization, research and promotion. .Honorable members opposite are interjecting, Mr. Temporary Chairman. They do not like to hear the ‘truth about those things. They do not like the facts to be brought home to them.
In addition to that, I want to say that while the general tightening of credit will affect all sections of the community, I am confident that the primary producers will not be relatively worse off if recognition is given by the banking system to their peculiar and vital needs. Rural advances to-day stand at a very considerable sum. We have also in operation, inaugurated by this Government, the Development Bank which is making advances to primary producers. I hope it will make an even more effective contribution in the future. The primary producer also has the advantage of Commonwealth Government guarantees of advances made under the orderly marketing schemes to which I referred. For example, the first payment on wheat - made to producers long before the crop is sold - requires about £100,000,000, which is made available by the Commonwealth Bank under guarantee from the Government. The guarantee for dairy products is over £40,000,000 a year, and enables dairymen to be paid long before their produce is sold overseas.
In the Treasurer’s Budget speech there is reference to a payment of £7,200,000 having to be met this year from the Wheat Prices Stabilization Fund. I think that this deserves a word of explanation. As at 30th June, 1960, the Wheat Prices Stabilization Fund was in credit by more than £11,000,000. This is the greatest amount this fund has held since the then balance in the fund was repaid to growers as their contributions on all pools up to that for the 1952-53 season. The stabilization plans have been in operation since 1948, to the satisfaction of growers and at no cost to the Commonwealth. Interest earned on growers’ contributions has more than paid for all withdrawals to date. The sum of £11,000,000 now in the fund consists of contributions by the industry from earlier wheat pools, and interest earnings. When the final sales of the 1958-59 crop are made in the next few months it will be necessary to draw from the fund almost £7,000,000 to complete payments on that crop. Sales from the 1959-60 crop are not expected to be completed until some time in the 1961-62 financial year, when it is expected that the balance of about £4,000,000 remaining in the fund will need to be supplemented by the Government to complete guaranteed payments against the 1959-60 crop. The remainder of the stabilization period also will require guaranteed payments.
I referred earlier to bounties and subsidies that have been paid to primary industry. In the Budget papers there is mention of a number of bounties and grants to various sections of primary industry, which are worthy of comment. I have a list of them. If any honorable member would like to take a copy to his electorate and broadcast the details to show the generous attitude of the Government to primary industry, I would be glad to give him one. The biggest subsidy is the dairy subsidy of £13,500,000, which is continued this year. This, I submit, is a consumer subsidy. In addition, there is the cotton bounty, which will be paid this year, and is estimated to cost £480,000 compared with the amount of £214,000 required last year to meet the Government’s guarantee. This bounty guarantees Australian cotton-growers a price of 14d. per lb. seed cotton, and this year’s cotton crop is expected to be about 12,000 bales compared with 7,500 bales produced last year.
Then there are the Dairy Industry Extension Grant of £250,000 and the Commonwealth Extension Services Grant of £300,000, of which £264,000 will, it is expected, be distributed to the States this year. These grants have been of great use in enabling the spread of new farming ideas and techniques among the rural community.
An indirect aid to the producer is the £46,000,000 which will be spent on Commonwealth aid in respect of roads this year. This sum includes £4,000,000 in matching assistance to the States. We have also the system of allowing tariff concessions on imported tobacco to manufacturers who blend specified percentages of Australian tobacco leaf in their products. This has proved a powerful stimulant to Australian tobacco-growing. All this adds up to generous government assistance to the primary industries of Australia.
– Order! The Minister’s time has expired.
.- The Minister for Primary Industry (Mr. Adermann) is the first Australian Country Party Minister to participate in this Budget debate. He is also the first Minister to have referred to the problem of rural products and rural incomes. I regret that he seemed to take satisfaction in the fact that the Government has brought about a freeze in the basic wage and has limited margins. He thought that this action would reduce the cost of the machinery and other materials which farmers use. He does not seem to realize that the wage-earners and salary-earners are the people on whom the farmers principally depend for their incomes. The other people on whom the farmers depend for their incomes are the people to whom we export our rural products. Because there is no disputing the gravity of the situation in recent years, the Minister for Primary Industry very naturally quoted his leader, who told the New South Wales Country Party conference two months ago that despite the increase of 11 per cent, in the volume of rural production in the last four years compared with the preceding four years, net farm income fell by 11 per cent, over the same period.
– That has been quoted four times in this debate already.
– You did not produce any solution of the problem, nor did the Minister for Primary Industry. We are in the same boat, because Australia depends-
Order! The honorable member for Wannon will cease interjecting.
– Everybody in this country, whether he is an investor, a wageearner, a salary-earner or a farmer, depends on our export income. We are one of the ten or twelve largest trading countries in the world. We are, for our numbers, a highly industrialized country. We are not the only highly industrialized country which depends on imports to keep its industries going. The United Kingdom and West Germany are other examples of countries which import most of the things which their industries process, but we are alone, among the highly industrialized countries, in depending still on our primary products for most of our income. West Germany and the United Kingdom, and those countries like the United States which are balanced as regards primary and industrial products, depend for their income mainly on the export of manufactured goods. We have never yet got to that position. We still depend for the bulk of our income on our primary products. The Minister for Primary Industry made no suggestion as to commodity agreements or how best to increase the overseas price for our primary products.
The Minister for Trade (Mr. McEwen), if I may quote him again, has said that Australia will have to increase its export income by £250,000,000 in the next five years if we are to meet our mounting import bill. In other words, we will have to do as well in the next five years as we have done in the last eight or ten years. In 1950-51 and in 1956-57 our income exceeded the income that we received last year. Lombard, the financial writer in the London “ Financial Times “, pointed out earlier this month that since the beginning of the ‘fifties the rise in Australia’s sales abroad has been about one-half as much as the world average yet its imports have expanded at» nearly the same rate as the imports of other nations. That is the problem. We are receding on the balance of payments plane while we still are not exporting any greater proportion of our manufactured goods and the price we are receiving overseas for our primary products is declining.
What does the Minister for Primary Industry do about it? What does the Minister for Trade do about it? Many of our postwar manufactures have been, set up by overseas investors and a very large proportion of those are subject to agreements which preclude them from exporting our products to markets overseas. We are more dependent than is any other industrialized country on overseas investors for our markets abroad.
The Minister for Primary Industry who, as well as the Minister for Trade, should be interested in concluding commodity agreements with or alongside our neighbours, never refers to that problem. All the emerging countries of Asia and Africa have the same problem that we have - that industrialized countries which depend on manufactured exports for their incomes can always put it over the countries which depend on the export of primary products. Since the war, prices of primary products have fluctuated much more than have prices of manufactured goods. The obvious advantage for Australia lies in teaming up With other countries which depend for their incomes on primary exports. But we have not done so.
The other aspect in relation to our exports is that our invisibles are rising constantly. Between 1949-50 and 1958-59 freight costs on our imports rose by 75 per cent, but thi value of our imports rose by only 48 per cent. Our insurance and freight bill is rising much faster than is the amount which we have to pay for the imports. There again, it is plain that we should participate in the shipping and the insurance business. The Government is a prey to its principal backers and its own doctrines. It is clear that, like any other trading country, we ought to have an international shipping line. We are the only trading country of any consequence in the world which does not own, either governmentally or through corporations, a single ship which trades overseas. We are, therefore, completely in the hands of shipping companies which are owned by countries which want to keep our exports cheap in their markets and which exploit us for all that the traffic can bear
The Government has been told aH about this. It had the Basten report nine years ago, and it has had the Tait report relating to our wharfs and stevedoring industry for the last five years. It knows the position of the shipping and the shipbuilding industries; it knows the position about fluctuations in our exports of primary goods, but it does nothing. This aspect was not even mentioned in the Budget speech.
Let me deal now with the Budget position in general. The Treasurer estimates that revenue for the Consolidated Revenue Fund will rise by £180,000,000. Expenditure ordinarily charged to that fund is estimated to be £81,000,000 greater than it was last year. The net result is that revenue will rise by about £100,000,000 more than will expenditure. If it were not for the fact that we have to use taxation for loans, we would have a surplus this year of £126,000,000- £11,500,000 more than the surplus which was budgeted for in the horror budget. In 1958-59 the estimated deficit was £110,000,000 but the actual deficit was £29,500,000. In 1959-60 the estimated deficit was £61,000,000 but the actual deficit was just under £29,000,000. If it had not been for a few unexpected and nonrecurring items, such as contributions to the World Bank, the deficit last year would have been only about £16,000,000. This year, because of increased taxation, it is estimated that there will be a surplus of £15,500,000. If the results are as good as they have been in the last two years - that is, if the Treasurer (Mr. Harold Holt) and Treasury officials have been as pessimistic this year as they were in the previous two years - our actual surplus this year will be at least £60,000,000.
– Would you object to that?
– It depends on how the Government spends that surplus. As an excuse for this position the Government states that we have to make up for the deficiency in loans. Two years ago cash loan raisings amounted to £147,000,000. Last year they were £120,000,000. This year it has been suggested that we will be able to raise only £90,000,000. The Government has- good reason for concern at our inability to attract investment in government bonds. If it were not for the fact that we have to use taxation for public works, we would this year have a larger surplus than ever before. But we have- to accept the position that it will be necessary to maintain public works by taxation. However, the Government never takes any steps to increase the attractiveness of government bonds’ or to make investment in private spheres more selective or more’ publicspirited in its nature. The simple fact is that private investors can invest- in high interest securities which are virtually guaranteed by the banks, and therefore by the Government; instead of investing in government bonds.
Companies now secure most of their finances in debentures and notes instead of by shares. Five years ago listed companies secured only 32 per cent, of their new money in the form of debentures, mortgages, deposits and so on. For the nine months ended in March last - the last figures which have been published by the Statistician - the figure had risen to 82 per cent. More than four-fifths of the money which companies now raise comes in the form of debentures, mortgages, deposits and so on. Companies can afford to pay 7 or 8 per cent. on that money, and the public finds that that form of investment is just as secure as are government bonds. It is more attractive to the investor arid it costs the company no more’ because a company can pay off all those fixed-interest commitments before tax is assessed.
The Government’s first step in making government bonds competitive with private debentures and mortgages is to treat these fixed income securities in the same way as shares are treated. If all companies had to take into account their commitments in this regard in the same way as they have to take into account their commitments on shares, the people would have confidence once again in government bonds and would- find them attractive. The Government knows the solution, but it refuses to adopt it.
Capital gains have become another gap in our tax laws. A complete new technique is being’ developed to enable investors to obtain a very large amount of money to spend without being subject to tax on that money or without being subject to tax at’ as high a rate as they would pay if they were earning the money by their own efforts or as wages and salaries. This new form of peculation or speculation can be overcome by bringing capital gains under the income tax laws. That is done in the United States of America and in all the countries of western Europe.
– It is not.
– No. The Deputy Leader of the Opposition should stick to the facts.
-It is done in the United’ States arid in every country of western Europe.
Order! I ask the honorable member for Richmond and the honorable member for Hume to cease interjecting.
– The other reason that the Government has for increasing taxation - the reason besides the attempt to make up for the failure of the loan market - is to reduce the pressure of spending power and thereby deal with inflation. It is true enough that something ought to be done about inflation. The figures in this regard are constantly bandied about. I shall give honorable members the figures as they appear in the United Nations “ Statistical Yearbook” for 1959. Australia holds pride of place for having had the largest increase in the cost of living during the ten years to 1958. The increase in the United Kingdom and New Zealand was 55 per cent. The increase was 20 per cent, in the United States, 24 per cent, in Canada and 105 per cent, in Australia. The excuse which is always given is that Australia is expanding. Does anybody believe that Canada has not expanded as much as Australia has done or that West Germany has not been under as great economic stress as Australia has been under? Yet in West Germany the cost of living increased by 18 per cent., compared to 105 per cent, in Australia.
– What was the source from which those figures were obtained?
– The United Nations “ Statistical Yearbook “ for 1959.
– Then they are official.
– Indeed they are.
The Budget principally deals with alterations in the methods of taxing. The real challenges in taxation in this country are, first, the gaps which have occurred - capital gains are not taxable, to take one example - and secondly, the fact that the incidence of taxation has altered so much. In 1950-51, the first financial year for which this Government was wholly responsible, Australia’s indirect taxes comprised 39 per cent, of all taxes raised. Last financial year our indirect taxes comprised 52 per cent, of all the taxes raised. The Menzies Government frequently poses as a government which believes in reducing taxation. In actual fact, the percentage of the gross national product which goes to the Commonwealth in taxation is now as high as it was in the first year in which this Government was in office. The only difference is that whereas direct taxes have increased by 50 per cent., indirect taxes have gone up by 150 per cent.
I have already indicated that capital gains, also, should be taxable in this country, Sir. The capital gains technique is a form of tax evasion for consumer spending. We know that the Treasury officials have worked everything out and that the Treasurer (Mr. Harold Holt) will not put their ideas into operation. Before the presentation of a budget, the Government backers call off those who would put these ideas into operation.
There are other forms of evasion or speculation which have become much more grave in the last few years. One of these is the use of the expense account. People can now eat, drink, travel and make merry at the expense of the Commissioner of Taxation, because the amounts spent in this way are deducted when assessing taxable income so long as the spenders assert that the expenditure has been made in the process of earning income. Indeed, holidays can be taken tax free, and conventions, conferences, spring seminars, winter forums and summer schools all can be attended with the blessing of the Commissioner of Taxation. The proper word to use for these gatherings, in derivation and in practice, is probably “ symposium “.
I have already mentioned this vast increase in the raising of company capital by fixed-interest methods, under which the interest cost is deducted in arriving at the taxable income. It is quite plain that in all these matters the taxation laws are due for review. The Treasurer told me last session that if debentures, mortgages and so on were treated as shares are treated, the Commonwealth’s income would increase by £8,000,000 a year. If capital gains were made taxable, the increase would be much greater than that.
The Government properly regards inflation as our greatest internal economic problem, Sir. Our greatest external economic problem is the declining balance of payments. If overseas investors were not fully repatriating their dividends, we should not be paying our way. That is our greatest external problem. I have dealt with our greatest internal problem - inflation. The Government has sought to counter it by freeing imports and by balancing the Budget. Other measures adopted were the freezing of the basic wage and the restraining of bank liquidity. The difficulty about the freezing of the basic wage is that a lot of other things that should have accompanied it have not been done. We were told that speculation in land and shares would be restrained. We were told that the Government would introduce legislation to deal with monopolies and restrictive practices, which force prices up. But nothing has been done about those things. The Government will not persuade wage and salary earners to acquiesce in the freezing of the basic wage and the limiting of margins for skill unless justice is done to all sections of the community. More than justice - licence, in fact - is being extended to that section of the community which lives on investment, as distinct from the majority of our fellow citizens, who live on wages and salaries.
Most Australians are wage and salary earners. The Commonwealth Conciliation and Arbitration Commission fixes the emoluments of people who earn as much as £3,000 or £4,000 a year. Most white-collar workers, all scientists and journalists, a great number of lawyers, all research doctors and most engineers are on wages and salaries. Very highly qualified persons have been affected by this Government’s attitude in the Commonwealth Arbitration Commission. The Government appears before that body in two capacities. First it appears as the respondent, or defendant, in arbitration proceedings. Then it has a second voice when the Attorney-General intervenes in the public interest. It has two voices against the one voice of the employees.
– The Bendigo by-election did not show that the people believe that.
– Of course, the decisions were conveniently delayed until after that election. We shall see what effect they have in the by-election for the State seat of Temora, in New South Wales.
The next method of countering inflation that the Treasurer has approved and reiterated is endorsing the Reserve Bank’s request that the trading banks should restrain liquidity. On 1st December last the Governor of the Reserve Bank asked the banks to see that their lending policies were consistent with not more than a moderate expansion of bank credit in 1959-60. In actual fact the trading banks during that year increased their advances by more than the amount by which they had increased them in any of the last five years. In other words, the Government has not backed up the Reserve Bank’s request.
This may be an opportune time to refer to the matter of constitutional reform, because a very clear disparity exists in the credit field between bank credit and other forms of credit. In the last seven years we have seen the emergence of the hirepurchase system, the alternative banking system, which the banks feed with their investment, with some of their advances, with their staff and with their buildings. The Government has, during that period, abandoned the control of bank investments and has exempted hire-purchase companies from the provisions of the banking legislation. In those seven years the banks have increased their advances by £354,000,000, and the hire-purchase companies by £329,000,000, almost as much. But bank advances in that period have shown only a 54 per cent, increase on what they were seven years ago, while hire-purchase advances have increased by 369 per cent. In other words, the proportionate increase in the alternative banking system is seven times what it was in the recognized banking system.
We are frequently told that the State governments have power to legislate with respect to hire purchase. Of course, if we were to cease passing laws on banking, the States would have power to pass laws on banking also. We know perfectly well that the mere fact that the Commonwealth Parliament has power, under the Constitution, to pass laws on certain subjects does not mean that the States cannot also pass laws on those subjects. They can do so, so long as those laws are not inconsistent with the Commonwealth’s laws. But unless the Commonwealth has express power under the Constitution to pass a law on a certain subject, it is precluded from passing such a law.
Eleven out of the twelve members of the Constitutional Review Committee recommended that this Parliament should have power to pass laws concerning hire purchase. Would anybody in this chamber assert that the State governments should pass laws concerning banking? The States never did so before the war, when we had not passed laws on the subject, and we know that they would never agree to pass laws on banking now. Can anybody think the States would sufficiently agree now as to pass laws concerning the alternative banking system?
Banking and hire purchase are six of one and half a dozen of the other. If it is fair for a government to pass laws concerning banking - and every Commonwealth Government does - then it is just as fair for it to pass laws concerning hire purchase. It is quite obvious that if the Commonwealth Parliament had the power to do so it would pass laws concerning hire purchase, no matter which party was in power - laws of the same kind as it now passes with respect to banking. Banks advance credit for purposes much more basic to our development than those for which the hire-purchase companies make advances, but hire-purchase investment is completely uncontrolled, whereas bank advances can be controlled, if governments see fit to do so from time to time. If the members of this Parliament were allowed a free vote on the matter, there is no doubt that they would decide that the laws which apply to banking should also apply to the alternative banking system, hire purchase. Honorable members opposite, therefore, are merely using the alibi technique when they say that the States should pass these laws. The States have never passed laws on economic subjects and they never will, because they can never agree on such matters.
Similarly, we have been promised legislation concerning monopolies and restrictive trade practices - the sort of legislation which has been in force in the federation of the United States of America since the 1880’s in the case of the Sherman Act, and since the First World War in the case of the Clayton Act. All members of the Constitutional Review Committee, Liberal,
Country Party and Labour, were unanimously of the opinion that the Commonwealth Parliament should have power to pass laws concerning restrictive trade practices. We were promised such legislation in the Governor-General’s Speech last February. We have been promised it, with receding enthusiasm, ever since. The Attorney-General (Sir Garfield Barwick) said in an offhand manner last week that in due course, no doubt, there will be some legislation on this matter. The Prime Minister (Mr. Menzies) told us in the last sessional period that he was devoting loving care to the Constitutional Review Committee’s report on this subject. Last week he said, “ I regret to say that I can give no further information on this subject. I will do so as soon as I am in a position to do so “. The Attorney-General is now proposing to go abroad and to pay a visit to the United Nations. It is quite plain that the Parliament will not have an opportunity to consider this matter this year, and the Australian people will not have an opportunity to vote on it. All that we have ever suggested is that the Australian people should have the opportunity to modernize their Constitution, which was drawn up. by State politicians in the 1890’s on the model of the American Constitution, which was drawn up in the 1780’s. Australia is the only important industrial or trading country in the world which labours under such an archaic and lopsided governmental arrangement.
.- The Deputy Leader of the Opposition (Mr. Whitlam) will, of course, have an opportunity - and I am sure he will use it - if not before, then certainly in December of next year, to propose such constitutional changes as he thinks are desirable for the furtherance of his socialistic purposes. Most of us on this side of the Parliament feel that there is no need whatsoever for any hurry in this matter. The honorable member mentioned legislation concerning restrictive trade practices which has been in existence in the United States of America since 1890 or thereabouts, and he deplored, by- implication, the absence of legislation on this subject in Australia. Of course various Labour governments have been in power for periods of many years since Federation, and one is forced to conclude, therefore, that they have sadly neglected their opportunities to introduce this kind of legislation. The honorable member made the curious statement that the States are inactive in respect of hire-purchase legislation. If he has time to study what goes on in New South Wales, he will find that there is a considerable body of legislation on hire purchase on the statute-book of that State. He will also find that strenuous efforts have been made by the States to achieve some degree of uniformity of treatment of hire-purchase problems.
The honorable member has shown, as honorable members opposite frequently do, a desire to control everything, but such control is by no means essential for the basic purpose of combating inflation, although the Opposition continues to argue that these strict controls are necessary for this purpose. What was necessary a few years ago, and still may well be necessary, for the socialization of the economic processes of Australia, is certainly not an essential element in the process of controlling inflation. Of course it is fashionable now for the Opposition to trundle out these arguments in favour of controls, advocating them not for the express purpose of achieving socialization by having control of the whole economy but as a necessary means of curing inflation.
There is a curious difference between Mie Leader of the Opposition (Mr. Calwell) and his deputy in their approach to the matter of inflation. The Leader of the Opposition is one of the founding fathers of Australian inflation, if such movements can be attributed to individuals, or responsibility for them placed on individuals. Two basic themes which run through the thinking of many persons in this country certainly gained a fillip when the honorable gentleman’s party was in power. “ Populate or perish “ was his motto, but when he began the huge immigration scheme that has added so many to the numbers of Australians, he introduced something which made at least some considerable degree of inflation in Australia completely inevitable. His Government was in power when the White Paper on this subject was published, although that Government did not necessarily contribute much to the paper in the way of ideas. But it was the sponsor.
If any one is responsible for initiating the two main causes of inflation in Australia, members of the last Labour Cabinet must bear a very heavy part of that responsibility. It is true that the Ministers of that Cabinet, who are still members of this House, are only the rag-tag and bob-tail remnant but, they too, were responsible. Undoubtedly, the major cause of inflation has been the huge immigration programme. For that programme, the Leader of the Opposition rightly claims credit, but he must also assume full responsibility for its economic effect.
Apart from those two issues with which the Leader of the Opposition was closely associated, every time he opens his mouth he gives support to the kind of things which make more intense the degree of inflation. He tries to conjure up virtually non-existent unemployment and urges still further monetary expansion to cope with the imaginary situation. Every lime the talks about the Colombo Plan, the Territories, the development of the Northern Territory, or about social services he, in effect, advocates the use of more millions of pounds. Yet noticeably absent from his statements are the ways and means by which the resources of this country, the strain on which is the basic cause of. inflation, can be increased. Far from helping to increase the resources available to carry out these huge pipgrammes, he would reduce even those resources by curtailing overseas investment in Australia.
The speciality of the Deputy Leader of the Opposition (Mr. Whitlam), expressed in many places, is to complain bitterly about some of the inevitable results of the policies of immigration and hyper-full employment, which his leader played such a part in initiating. He complains of a lack of resources for providing schools, roads, public utilities, and all the other things that governments provide. But there is already a virtually impossible burden on the capital resources of the country, which can be carried now only with a considerable degree of inflation. If the Deputy Leader of the Opposition were to spend more time in considering the origin of existing policies he might come to wiser conclusions on how to make ends and means meet.
He made much of the very serious problem of the marketing of primary products. Of course, Australia depends essentially on its primary products. But he asked what the Government had done to increase the price of primary products. As far as intergovernmental negotiations and trade missions are concerned, there is virtually no stone that the Government has left unturned. The Deputy Leader of the Opposition did not explain how, if the balance of world supply and demand of primary products is tilted against the primary-producing countries, this situation can be remedied. He seems to imagine that some kind of ganging-up by the primary-producing countries could alter this very unpleasant and hard fact of life.
He referred again, as he has so often, to the Commonwealth’s establishment of a shipping line. It is one of my personal regrets that we find it impossible, for cost reasons, to run a shipping line. One would think that a great island situated as Australia is would be a natural place from which to run a shipping line. But the economic facts are against us. The lowest charter rates that the Australian National Line can offer for overseas trade are about 50 per cent, higher than ruling world charges. The cost of running a ship under Australian manning rules is quite impossibly high.
According to the Tariff Board, which presumably went into the matter very carefully, the rate of turn-round of our ships is only back to two-thirds of the rate which existed before the war. The present rate may be almost twice as good as the rate immediately after the war, but despite the huge outlay on handling machinery and the general improvement in conditions on our wharfs, we can still achieve only twothirds of the rate that obtained before the war. This is no foundation for the establishment of an Australian shipping line.
If we established such a line, the Australian taxpayer would be called upon to pay a most fantastic subsidy. We now have world shipping competing for our trade. Most trades are subject to charter and international rates if we so desire. It so happens that it suits most of our primary producers to have an arrangement with the conference lines to have ships running at certain times. They make their bargains with overseas shipowners. Of course, we should do everything that we can -to keep shipping rates down, but to suggest that the solution is to pour tens of millions of pounds of the taxpayers’ money into a shipping line, just to satisfy some peculiar quirk of pride, is fantastic.
The honorable member for Werriwa referred to the unattractiveness of government bonds, but every time it is suggested that interest on government bonds should be raised he and his supporters are the first to protest. The Government has made an effort with its special bonds, but I believe that, ultimately, the only way to solve this problem is to cure inflation, in which case confidence in owning government paper would be restored once more, or to raise the rate of interest. The Labour Party has given no indication whatever of supporting any policy which would in hard fact meet the problem of inflation. Indeed, the reverse is the case.
The honorable member deplored the fact that so many of our companies were raising such a large portion of their resources in the form of loans rather than in the form of shares and equity. Any thinking person must share this sentiment. Of course, our taxation system is overdue for revision, because if companies obtain money in the form of share issues that greatly increases the incidence of taxation. If you tax profits in the hands of companies and then, when they are transferred to a shareholder, you take a full further exaction, the result is these horrible quirks. In order to borrow, these companies have to pay interest rates. If. by some means, compulsory or otherwise, you are going to funnel these funds which are now going into private hands towards government loans, you are going to cut down the rate of expansion throughout private industry. You cannot have it both ways. Australian resources are very limited. The Government is already spending a very high proportion of the national income, and unless you can cut down by some means the continual demands that are involved in a huge immigration programme, you are bound to get these pressure points.
If, in fact, as no doubt many members of the Labour Party would like, you cut off and divert the rewards which have gone to private enterprise and try to expand the public expenditure sector at its expense, you would in fact slow down the whole working of .the system. This Budget certainly goes some distance at least towards breaking down the inflationary process. Anybody who looks around at what other things might be done, particularly those who have read the Radcliffe report - and one would hope that the Government and other authorities concerned would have digested that report by now - may have one or two thoughts on the subject of interest rates, because the socialist inhibitions which have affected our own authorities in the matter of interest rates have been a severe bar in controlling the private enterprise economy. We have a position now where people who are fortunate - a favored few - enjoy bank overdrafts, which are a kind of credit rationed to the relatively few and available at 5i per cent, interest. The banks are not able to exert discipline on the banking system by means of interest rates; it all has to be done in the form of who does or does not get a bank overdraft at interest which must not exceed 6 per cent.
In the current position when capital is short and the pressure on the sources is so strong in a private enterprise system, one way of properly imposing restrictions is to use the weapon of interest rates, and if the authorities forego forever using bank interest rates as a means for disciplining the system they will forego one of the most useful instruments. This is recognized in many circles but unfortunately, as in so many cases, when politics and political inhibitions rather than economic hard sense enter the picture, we pay the penalty. No doubt the Opposition will talk about the wickedness of the banks and the fact that increased interest rates might bring them some benefit; but that is incidental. The level of profits enjoyed by the banks are readily controllable by the central bank, and if we are to continue to keep these old inhibitions about interest rates we will find it increasingly difficult to have any control whatever over this growing money market; and of course this money market outside the banks grows. It has been pushed outside the banks by the restrictions over the years; and the inflationary conditions imposed on the banks have meant that other enterprising people have come along and have taken the existing credit and channelled it into other directions where there’ is a quick return. Thus the velocity of the circulation of money - the rate at which we use available funds - has greatly in creased. But it still remains from the point of view of basic control that the origin of credit is through the banking system in expanding and contracting advances and in the fluctuations caused by movements in overseas funds. However one may look at the hire-purchase and outside money market, it is only a fringe factor compared with the importance of proper controls over the banking system.
If we look elsewhere at what might be done to control the situation, it is obvious that one of the pace-makers in the Australian economy has become the Conciliation and Arbitration Commission. Each year we solemnly debate £20,000,000 one way or the other, an increase of taxation, or cutting off a few fringe benefits; but the Conciliation and Arbitration Commission, sways the whole economy of the country. Even in the space of a single year it can itself inject directly another £200,000,000 of purchasing power into the economy. It is an extraordinary position we are in when the Government virtually aspires to control in rough terms the working of the economy, but washes its hands of the whole wage system. It has been the fashion until very recently to say “ Keep politics out of this and let the Conciliation and Arbitration. Commission do it “. The commission is hedged in and talked to by all sorts of pressure groups, and it has to make its decisions on the fiction that there is a sort of industrial dispute spreading beyond the borders of one State. What in fact it is doing is to determine the whole trend of the economy throughout Australia. This problem is bedevilled because naturally every government intervenes in the wage mechanism, as was in fact charged against this Government for its intervention in the court on the last occasion. But if it had not intervened we should have been on a course perhaps not of disaster but certainly of far more intensive inflation.
There can be no real change in the position obviously unless the support of the trade unions themselves can be enlisted; and it behoves some of the more thinking members of the trade union movement to think just where this process is going. It is true, if we take the last twelve months or so, that in the March quarter average weekly wage earnings were 9 per cent, above those of the previous quarter, whereas prices had increased by only 6 per cent. But if we look at the trend of real wages over the last three years we find that they have not risen very much. Certainly the real value of the basic wage has not risen very much, and we continue in the position whereby we fix a wage which goes into the next range of prices, and costs are put up. There are of course a number of companies which automatically increase their prices whether it h necessary or not to do so, when their wage bill increases; but they are only a small part of the economy. At least three-quarters of the economy has no prospect whatever of passing on heavy increases in its wage bill, except by increasing prices. And so this horrible process goes on.
If, in fact, the criterion by which the Conciliation and Arbitration Commission measures wages is capacity to pay, there is no real discipline in the system, because if as the result of wage increases the economy generally gets slack, losses are made, and because of the full employment policy the Government is virtually forced to pump more money into the system to keep the process going. If there is a threat from overseas, either the Tariff Board or the import control mechanism restricts foreign competition, and so it is looked after in that way. The faster wages rise the more inflation occurs and still higher profits are made. If, in fact, by the beginning of next year the Conciliation and Arbitration Commission is going to say again that industry can afford to pay, it may be true that industry in one sense can afford to pay; but it can only do so because the Government relies upon the second turn of the wheel to pump more money into circulation. So, there is no real discipline in this process except finally our overseas position. That position is affected in two ways - directly because of the demand for imports, and also and more seriously on this occasion because it puts up to disastrous levels the costs of our primary producers. Unless various divergent elements in the country get together and say “ We have had enough of this inflation so we will keep it within limits bearing in mind our migration programme “, we are in for more and more inflation until such time as we are disciplined by a fall in overseas funds, the tightness of our overseas position and the fact that our primary industries will not be able to carry on. Every one concerned, particularly the serious trade unionists, should look at what happens when the process of inflation goes a bit further. Take a look at Latin America, for instance. You can keep on shoving up wages, you can keep on trying to apply various controls; but, in an inflationary world, it is not the wage-earner who ultimately gains. The people who go to the top are not the people who are the constructive elements. They are those who put a considerable premium on the mere manipulation of money.
If this is to be stopped, if we are to shrink back from this process of perpetual inflation, we shall need a very much greater degree of co-operation on the part of all sections of the community than is evident now. At the moment there is no real solid political basis for an attack on inflation in Australia. Every one is against inflation in general, but no side will take measures which will hurt that side. It is true that we shall be fully employed and that we may enjoy an illusory prosperity if the process goes on, but, in the long run. our investment will be far less effective, we shall not use our resources to the full, we shall not enjoy anything like the high standard of living that we would enjoy otherwise, and a considerable number of elements within the community will suffer more and more. I urge honorable members on both sides of the House, if they are serious about our inflationary problems, if they are not merely treating the matter as a political football, to strive to establish a greater degree of co-operation on all sides than there has been in the past.
– The speech delivered by the honorable member for Wentworth (Mr. Bury), to which we have just listened, was an analysis of a budget brought down by a government that he supports. He said that we were in for more and more inflation until the process was stopped by a fall in our overseas funds. He saw nothing in the Budget, or in what the Government had done apart from the Budget, to convince him that we were not in for more and more inflation. Very rightly, he pointed to some of the consequences of inflation, and he referred to some of the South American countries as examples, but he saw nothing in the Budget, nor did he see anything in the policy of the Government outside the Budget, to save us from that fate. He predicted that we ware in for more and more inflation unless or until it was stopped by the discipline of a fall in overseas funds. He was not satisfied with what the Government had done, and he put forward a proposal of his own.
The honorable member’s proposal is that we should rely upon variations of bank interest rates to save us from inflation. He says that bank interest rates should be used to discipline the system. He says that the money market has been pushed outside the banking system by the controls that have been imposed upon the trading banks. I think that it would be of advantage if we thought about his proposal for a moment or two, because it is a serious proposal which emanates from the private financial institutions of the country. It is a proposal to give effect to a conservative financial doctrine which would have some kind of effect upon the situation.
What it amounts to is that money should be made more expensive to borrow, for then there would be less of a tendency to borrow. The system would be disciplined by the fact that money was more expensive to borrow. It seems fairly clear that one of the characteristics of the last few years in Australia has been that money has become more expensive to borrow. Has not the honorable member for Wentworth looked at the pages of the daily newspapers and seen how money has been advertised for at 7 per cent., 8 per cent., 9 per cent., 10 per cent., 12 per cent., 15 per cent., and even 18 per cent.? Would he want money to be more expensive than that? Is he reasonable in suggesting that the banks did not want to set up hirepurchase companies, that they did not want to lend money at 15 per cent., and that they would prefer to lend it at 5i per cent., 6 per cent, or 7 per cent.? Is he suggesting that the banks would have denied themselves the opportunity of setting up hire-purchase companies if there had been no control of the trading banks by the central bank? That proposition only has to be stated to be seen to be absolutely naive and theoretical.
In a system of this kind, those who have money to lend, lend it at the highest rate they can get for it. There is virtually nothing in the system to-day to stop them from getting the highest return they can. There is nothing to prevent interest rates from disciplining the system, making money more expensive to borrow, if those who have money to lend want to lend it under those circumstances.
The honorable member had something to say about the proposal by the Deputy Leader of the Opposition (Mr. Whitlam) that we should have an Australian shipping line operating overseas. He said that the economic facts were all against Australia running a shipping line. We ran one once, and it made a very considerable profit for five or six years. In those days, business was not as easy to obtain as it is now. The line made such an extensive profit during those five or six years that a government of a political colour similar to that of the Government now in office had to sell it to private enterprise because it was too competitive, and too great an economic annoyance to the private shipping companies. The honorable member for Wentworth said that the world shipping lines compete for the Australian trade. We know that the world shipping lines are in combination for the Australian trade and that competition in this field is fiction. The honorable member also said that Australia might have to subsidize a shipping line, if we had one. Would not that be a terrible thing! Do we not subsidize almost every other industry we have? Do we not subsidize almost every section of secondary industry by the imposition of tariffs which result in higher prices for the goods produced? But that is a national policy which is in the interests of the Australian economy. If we had to subsidize some ships in order to bring competition to the international shipping field, might that not be of great advantage?
Then the honorable member for Wentworth criticized the Deputy Leader of the Opposition for saying that the States cannot be expected to undertake the regulation of the hire-purchase field. The Deputy Leader of the Opposition did not say the States were impotent there; he said they could not be expected to legislate in the hirepurchase field because uniformity of legislation is needed. The same could be said to-day of the Commonwealth Government. Why does it not legislate to control hire purchase in the Australian Capital Territory? Exactly the same thing could be said, too, of the Labour Government of New South Wales. No government of a small area, even one of the larger States, can legislate properly in connexion with these things. No State government has ever legislated in connexion with banking, as the Deputy Leader of the Opposition has pointed out. This is a field for Commonwealth action and for Commonwealth legislation. If the present Commonwealth Government were prepared to do something, instead of continually talking about these things, hire purchase could be regulated.
– You know it has not the constitutional power to do that.
– It will not by any means ask for power; will it? The position is that hire purchase was presumed to be a banking activity. When the hire-purchase companies came to this Government to seek exemption from the 1945-53 banking legislation, that established- the presumption that they were engaged in banking. This Government did not refuse them; it gave them- the exemption’ without any trouble or difficulty. Why did not the Government then say to them, “ You are really bankers and you have to register under the act “, letting them take the Government to the High Court of Australia if they wanted’ to? But the honorable member for Sturt (Mr. Wilson), cannot say that this Government wants to regulate banking, hire purchase or any private-enterprise activity. Is it not obvious that the Government wants to leave these” concerns unregulated so that they may make as much profit as they like? Is that the free enterprise in which honorable members opposite believe? It is very obvious that the Government does not want to regulate hire purchase.
In introducing this Budget, the Treasurer (Mr. Harold Holt) said that a Commonwealth budget can be great and pervasive in its influence and can guide the broad trend of the economy. This Budget is not great and pervasive and it does not guide the economy. It is not pervasive; it is evasive. It evades the real causes of inflation, the needs of pensioners and family wage- earner; and the needs of education, health, public transport and essential services. It evades the odium of the increases of taxation which would be necessary to meet these needs. The Budget does not guide the economy; it allows the economy to guide it and: indeed, to dominate it. The economy is inflated. Not only does the Budget do little to- interfere with inflation, but it is also inflationary itself. The economy is distorted in favour- of those who have most and away from, those who have least, and the Budget does nothing to correct the distortion. Income distribution moves steadily in favour of those who are well off and comfortable. The use of labour and resources moves steadily towards the high profit end of the scale. The Budget does not offset any of these trends. It accepts and accentuates them. The Government is still in the position that it has been in for ten or eleven years. Faced with what it considers is the risk of losing votes or inflation, the Government has once more accepted inflation.
The Budget is supposed to have a surplus and, therefore, to be anti-inflationary. But it has no surplus. Estimated expenditure is £1,796,000,000 and estimated receipts £1,609,000,000. The excess of expenditure over receipts is a deficit of £187,000,000. How is this deficit to be made good? It is to be made good by borrowing £202,500,000. Would any one consider this is a surplus when the Government has to borrow to meet current expenditure? Is there a surplus when expenditure exceeds income by £187,000,000? Not only is there a deficit of £187,000,000 in this Budget, but it is a deficit that will be made up by the kind of borrowing that is especially inflationary in its effect. This borrowing is divided into two parts. First, the Government is to borrow £150,000,000 from what is called the public. But who is the public? Perhaps not more than 10 per cent, of the amount will come from individuals who lend out of their wages, salaries or profits. But 90 per cent, of the £150,000,000 that is being borrowed here will come from what are called the institutional lenders - the banks, the money market, the share and stock dealers and the insurance companies. All these are part of the institutional financial structure that is based upon the power of the trading banks to create credit. How much of the £150,000,000 is completely new money, completely created credit, no one can say exactly. But we can be sure that a considerable part of it will be new money created for the private financial system.
As I say, if it is taxes or votes, inflationary finance or the risk of unpopularity, this Government chooses inflationary finance rather than taxation so that its craving for votes can have full scope. But the Government does not turn only to the private credit-creating financial system for a good deal of the money needed to plug this deficit; it turns also to the public creditcreating system for another £52,500,000. That amount is to come from the euphemistically termed sinking fund available for loan redemptions. What a wonderful term - sinking fund available for loan redemptions! But who supposes that this fund has £52,500,000 of notes or coins or gold locked up somewhere. Of course, it has not! It is an account in the books of the Treasury, which shows that in the past £52,500,000 has been transferred to it because in the past £52,500,000 more was collected in some sector of the public accounts than was paid out. There is no way to use this amount unless treasury-bills are issued to allow money to be drawn in cheques, notes or coins from the banks. The £52,500,000 is merely a book balance from last year’s transactions, and new money must be created this year if it is to be used.
– That is not right.
– Well, you explain what is right when you have the opportunity. The Budget is inflationary because it provides for a deficit of £187,000,000, which is the amount by which expenditure provided in the Budget exceeds the amount to be collected. To make good this deficit, the Government will borrow from two sources. It will borrow from the private institutional lenders, who will create a good deal of the amount, and from the public financial system by the issue of treasury-bills for the balance.
– That is not right, either.
– Well, you will have an opportunity to explain it. Have you spoken in this debate?
– I will.
– I invite you, when you speak, to give an explanation of this sinking fund.
If this is the sort of Budget we would expect to deal with inflation, then we are in for a disappointment. Inflation is in the economy. The Budget does not guide the economy away from inflation; it guides it along the way of inflation. Bank credit restrictions and removal of import controls may reduce inflation, to some extent, but this Budget will not. In referring to bank credit restrictions, we should realize that they restrict the lending of money to the people who need it most. Hospitals and local government bodies will not be able to get money from the banks, because of these restrictions; but the private concerns which have a close association by joint membership of boards of directors with the trading banks will not be affected by the restrictions.
The Government does not expect any reduction of inflation. The basic assumption of the Budget is that inflation will continue to mount at least as rapidly as it did last year. The Government must obtain £1,609,000,000 in revenue. It can reach this level only if it obtains all the tax proceeds that it expects, and it expects that at existing rates its tax revenues will increase by £140.000,000. In other words, it expects that taxable incomes and values will rise sufficiently to allow £140,000,000 more to be collected at existing tax rates. This is the basic inflationary assumption of the Budget. If taxable incomes and values are to increase sufficiently to allow tax proceeds at existing rates to return £140,000,000 more, then these incomes and values will need to increase by about 10 per cent, or 11 per cent, during the course of the next twelve months. Some of that increase of course, will come from the incomes of additional people. Perhaps 80,000 or 90,000 more people will be at work during this year than there were last year. Some of it will come, perhaps, from an increase in the volume of imports and such things. But it is clear that when allowance has been made for these factors, at least 5 per cent, to 7 per cent, of the expansion in taxable incomes and values would have to be purely inflationary.
How can it be said that a budget that assumes an increase of from 5 per cent, to 7 per cent, in the money values of incomes and other values on which taxation is levied in the coming year is in any way disinflationary? The basic assumption of the Budget is inflation, and if that degree of inflation does not occur in incomes during the year, the Government will not be able to meet its commitments. Neither the Budget nor this Government has dealt with inflation. The Government has never done so, in fact. This is because it has never recognized what inflation is and, partly as a consequence of that, has never been willing or even able to apply the measures necessary to regulate it.
If that is true, I think we ought to ask the question, “ What is inflation? “ The Government has always said that inflation is excessive spending. You can no doubt hear the Prime Minister saying it now. The Government treats inflation as though every kind of spending is excessive - as though the spending of pensioners, the spending of family wage-earners, the spending of small farmers and the spending of white collar workers - who have been refused a 28 per cent, marginal increase - and the spending of the railway workers - who have been refused service grants - are excessive; as though spending on education, hospitals, health and public transport by State governments and municipalities is excessive. One has only to ask the question, “ Is this kind of spending excessive? “ The answer is obviously “ No “. The Government looks at the problem as though spending on speculation in land, spending by the well-to-do on luxury imported motor cars, spending by the large financial and industrial monopolies on office buildings and plant, were no more excessive than the spending of pensioners and family wage-earners, no more excessive than spending on education, health and other essential services.
I say that the essential feature of inflation is not that all kinds of spending are excessive, but that some kinds of spending are excessive. The essential feature of inflation is, in fact, lack of balance or economic distortion - not that every kind of spending is excessive. I think that common sense establishes that view. At a time when we are witnessing the battle of Coles and Woolworths for chain store supremacy, the Myer Emporium Limited, in Victoria, is erecting what has been called a “ mass shopping centre “, a “ mushroom growth “ and a “ gamble “, at Chadstone, just outside the City of Melbourne. I quote from the “ Financial Standard “, which states that here, in this one building, the following will happen -
Total road and parking area would make a 25 ft. wide roadway 5 miles long.
The amount of soil moved was 2i times the volume of the I.C.I. building.
Approximately 45 miles of wiring has gone into the Centre.
Enough steel to construct 82 miles of double railway track has gone into the building.
The materials used would build a 50-ft. x 50-ft. skyscraper 70 stories high. 13,200 ft. of underground drains . . . 40,500 sq. yds. of ceiling . . . 37,800 sq. yds. of plaster went into the construction.
Floors cover 400,000 sq. ft.
There will be 83 tenant shops plus services (to be staffed by about 1,700 people) and parking space for 2,500 cars.
This is described by a financial journal as a “ gamble “, as a “ mushroom growth “. Expenditure on it is to be £6,000,000. The municipalities in the vicinity will spend about £200,000 on water supply, roads, sewerage, footpaths and so on. In other words, on that one building, which is a gamble and a mushroom growth, thirty times as much money will be spent as will be spent by the municipalities in that district. That is the kind of distortion that we on this side of the chamber suggest is inflation.
Inflation, we suggest, can be dealt with only by restoring balance, by reducing that form of expenditure which is excessive and by increasing that form of expenditure which is deficient. This kind of policy will bring inflation under control because those parts of the economy in which expenditure is excessive are those parts in which expenditure, in fact, causes inflation. To reduce expenditure in those parts of the economy will regulate inflation. This is even recognized by critics of this point of view. They say that this will interfere with incentive. I suggest that it is necessary to interfere with the incentive of the speculators and the profiteers. The honorable member for Wentworth has said that we cannot have it both ways. We do not want to have it both ways. We want to get more money for education, essential services, social services, and for the family wageearner, and we want less money for the speculators and excess profiteers. We do not want it both ways. We want to establish balance.
The fundamental lack of balance in the Australian economy can be seen in the way different sections of the gross national product have changed over recent years. In 1952-53 wages and salaries were 50.2 per cent, of the gross national product. Since then they have fallen steadily until, in 1958-59, wages and salaries were only 48. 8 per cent, of the gross national product. That is what has happened to wages and salaries. They have not increased relatively. They have fallen by an amount which would aggregate nearly £100,000,000 if they were back at the 1952-53 level. That is why the hire-purchase debt has risen b.y about £70,000,000 this year. Wage and salary-earners have lost relatively about £100,000,000 in wages and salaries, so that they have to borrow from property owners and pay high rates of interest in order to make up the deficiency.
The Minister for Primary Industry spoke some time ago and said that the economy should be kept in balance. We repeat that. The economy should be kept in balance. We ask people to consider the facts ‘ in order to see just how much the economy is out of balance. Farm income was 13i per cent, of the gross national product in 1952-53 and has fallen until in 1958-59 it is only 6.8 per cent, of the gross national product. This represents a relative loss of £455,000,000. There has been a continuous fall in export demand, which has meant two things. One is that farmers - and the smaller the farmer the worse he has been hit by it - are now receiving a share of the gross national product which is about 6 per cent, lower than their share was five or six years ago. The Minister for Primary Industry has assisted in presiding over an economy which has seen the share of the farmers fall by 6 per cent. - and he talks about balance in the economy!
The second thing that has occurred is that the demand overseas, and the prices, for Australia’s exports have -fallen. Internal prices have risen, so that where, before this Government came to office, export prices in £ll significant cases were considerably higher than internal prices, now internal prices in some cases are double export prices. So it is the internal market which is maintaining what degree of stability there is in agricultural industry. Those two trends, taken together, cannot long continue. The incomes of farmers have changed so much that they are mainly dependent on the home market and home prices, but if wage and salary income continues to decline as a percentage of the gross national product, that market for farmers will fall away.
The basic economic facts show that the interests of the farmers and the workers are the same. But the interests of the large graziers such as the honorable member for Wannon (Mr. Malcolm Fraser) are not the same as those of the small farmer. His interests are as different from those of the small farmer as they are from those of the worker. But the Country Party in this chamber lines up with the big business interests that are represented by the Government.
– How do you know that?
– You are in it up to your ears. The basic distortion of the economy is shown by the fact that the decline in the wages, salaries and farm sector is associated with rises in the rent, interest and business income sector. Rent and interest at 3.9 per cent, of the gross national product in 1952-53 has become 5.4 per cent, to-day, a relative rise of about £170,000,000. And the honorable member for Wentworth wants to increase it still further. Business concerns have, it seems, carefully managed their accounts so that distributed income has not risen significantly more than have other incomes, but undistributed accumulations have risen more rapidly than have any other type of income or accumulation. An illustration of this is the depreciation allowance, which was 3.9 per cent, of the gross national product in 1952-53 and is now 7.6 per cent., a relative increase of about £220,000,000. Therefore, the accumulated earnings of business were held back and capital appreciation has gone on, thus providing the bait for take-over bids. This has led to the wretched process of bidding up the values and capital assets of organizations, which is the basic cause of inflation. Nothing that this Government has done and nothing that this Budget proposes even touch the problem.
The Government, by refusing to increase direct, taxation, which is the most difficult tax to transfer into prices, has allowed indirect taxation which goes directly into prices to rise from 9.8 per cent, of the gross national product, to 11.5 per cent. In other words, the Government has put this increase, in indirect taxation, which is valued at about £180,000,000, directly into prices, thus making another contribution to inflation.
The Labour Party claims that the economy is distorted and is out of balance. Our policy is to restore that balance; to reduce spending where spending is excessive by direct taxation upon incomes, and by reducing the amount which is retained in the business sector by a complete reconstruction of the tax system so that some equality can be obtained between the two sectors. With the proceeds of that taxation, increased spending can take place upon education, essential public works and social services which every one recognizes are most necessary. There is no other way to restore this balance to the economy; there is no other way to deal with the most important problems that confront us to-day. Rather than face the possibility of losing votes as a result of an increase in direct taxation, the Government follows an inflationary financial policy because it is much more concerned with holding votes and with keeping seats than it is with establishing balance in the Australian economy and with the basic requirements of Australian national development. That is the issue which separates our political parties.
– Order! The honorable gentleman’s time has expired.
– Listening to the honorable member for Yarra (Mr. Cairns) I have been somewhat fascinated in working out a little arithmetical problem. The honorable member is opposed to indirect taxes. At present, indirect taxes bring in about £500,000,000 a year. Presumably he would throw a large portion of that amount overboard. When dealing with the Government’s proposed borrowing, programme; he expressed the view that the £150,000,000 which the Government proposes to borrow will come mainly from institutions, and that a very large proportion, of this amount - perhaps most of it - is really created credit, so he would not resort, to this means of obtaining revenue. Therefore, he will lose a very large part of another £150,000,000 which, according to the Government’s plans, is now available to it. Further, he believes that the £50,000,000 in the sinking fund is really inflationary, and presumably he would not use that either, so he will throw overboard another £50,000,000. To summarize, he will lose £500,000,000, or a large part of it; something like £200,000,000 in loans which the Government proposes to raise largely from institutions, and £50,000,000 in the sinking fund.
Not content with giving up this revenue and money from borrowing, the honorable member wishes to spend more money on social services, education, hospitals, transport and the like. If honorable members care to add that £500,000,000, plus the £200,000,000, plus whatever figure you like to take for the honorable member’s proposals regarding an increase in social services and the other forms of expenditure which he has mentioned, they may well ask themselves how revenue will be obtained from other sources to make up for these losses and proposed increases in spending. At present, the yield from income tax imposed on individuals is about £500,000,000 and from companies about £270,000,000. It would seem then that the honorable member proposes at least to double direct taxation. If he believes that the workers will escape any increase in taxation if his proposal to double direct taxes is accepted, I cannot follow his reasoning.
I do not propose to take any further part in the political battle which has flowed from one side of the chamber to the other in the course of this debate so far, and no doubt will continue to flow during the remainder of it. But I propose to be as constructive as I can and to break some new ground. 1 do not propose to weary the committee with detailed facts and figures in support of my argument, not because these are not available but simply because I do not wish to be tedious. I believe that the trends which are evidenced in the various papers will be sufficiently supported by reference to them.
I propose to try to answer three questions: First, does inflation matter? Secondly, will it be sufficiently checked by the Budget and the associated policies which have been announced by the Government? Thirdly, if not, what more can and should be done to check inflation?
Let me deal now with the first question - does inflation matter? I believe - this may be a startling statement but it is true - that it is accepted by the Government and the Opposition, by business leaders and by the community generally that creeping inflation is not a bad thing. Economists are divided on the question of creeping inflation. Some believe that it does not do much harm and others believe, as I do, that it can be quite disastrous. As to those who suffer from it, either they seek to escalate themselves out of their difficulties - let this interest or that interest look after itself and let the rest go hang; here I refer to wageearners and pensioners. As to others, either they are impotent, or they are unconscious of what is happening or why it is happening, or they are inarticulate. They are numerically weak and have been disregarded. In my opinion, creeping inflation is utterly evil and a real effort should be made to reduce the creep below the 3 per cent, which has been the average for the past ten years.
What are the effects of inflation? Let us consider first the effect on loan raisings. Last year the Government raised £190,000,000 by way of loans. This year it anticipates that it will be able to raise £150,000,000. But the Australian Loan Council’s programme involves an increase in expenditure from £220,000,000 last year to £230,000,000 this year. This means that the difference will have to be raised by increased taxes, and that this process will continue, not only this year and next year but while inflation continues at this rate. The implication is that there will be increased taxes to meet the failure to raise money by way of loans.
What is the effect of inflation on primary industries? As we know, rural incomes have declined relative to the incomes of the remainder of the community. Costs have risen while prices overseas have remained fairly stable. So primary producers are caught in the nutcrackers between rising costs and the level of prices which does not rise.
What is the position in relation to other countries? I find - figures of this kind have been quoted in the House previously - that purchasing power to-day in various countries as a percentage of pre-war purchasing power is as follows, the Swiss franc, 55 per cent.; the German mark, 52 per cent.; the United States dollar, 49 per cent.; the New Zealand £1, 42 per cent.; the British £1, 37 per cent., and the Australian £1 is at the bottom of the list with 33i per cent. We have witnessed growing protection in one way or another of primary industries, for example, through the device of a home consumption price and the dumping of surplus stocks overseas at less than the cost of production. I refer to butter, eggs, sugar, dried fruits and so on. We have now reached the nadir when proposals are being made for the shoring up of our wool. This is the reductio ad absurdum of this process. I believe that the ultimate result can only be devaluation of the currency, and we shall move then to a still lower level in the value of our money. F om Hermon to Gallilee and from Gallilee to the Dead Sea we shall flow down from one level to the other in a further big decline if we have to face devaluation of the currency.
What is the effect on the fixed income groups? I refer, first, to superannuitants. In the case of public servants, governments have kept pace fairly well by making good the decline in the value of superannuation benefits. This has not been the case in respect of private firms. There have been two surveys in the past, and I have asked the Treasurer (Mr. Harold Holt) to have another in order to fix attention on the failure of some private companies to do justice to their retired servants. Again - speaking still about fixed-income groups - you have widows living on the income from trusts that have been created by wills or intervivos, widows who are living on the proceeds of what are called trustee securities - that is, government securities, mortgages and the like. These are erosion-prone securities. Such people have suffered.
Bondholders whether they be individuals - and people must be eccentric, I think, to invest in bonds - or institutions, both life assurance and other institutions, have of course been switching over more and more from government securities to buildings, as one can readily see if one walks about the streets of the cities, and into equities or whatever else they can get into. But they have such vast sums to invest that in large measure they are captive investors in government loans. So far as these fixedincome groups are concerned, the result is, in two words, continued impoverishment.
What is the position of wage-earners? These people continue to seek cost of living adjustments. They are always engaged in a rat race. As the wheel turns round, they run faster and faster but remain precisely where they were. Or you might say that they are in a position similar to that of that mythological figure, Tantalus, who was punished in the underworld by being placed up to the chin in a pool of water that flowed away whenever he bent to drink.
I should now like to quote some words which were used by Dr. H. C. Coombs, in his address to the Australian and New Zealand Association for the Advancement of Science, in August, 1959. He said - . . when allowance is made for higher aggregate earnings due to freedom from unemployment, larger family incomes as a result of more overtime, more readily available casual work, higher relative earnings for young people, for the effects of increased social services, and for the benefits of durable consumers’ goods financed by savings stimulated by hire purchase facilities, there will be surprisingly little left to be attributed to higher real wage rates.
Labour representatives, of course, prefer to propagate the money illusion - the illusion that as long as the worker has more notes in his pocket he is better off - rather than to seek other ways of increasing the worker’s real income.
What is the effect of inflation on the economy generally, Sir? First of all, it distorts the whole pattern of investment. Interest rates inevitably become high, because you have to deduct 3 per cent, straight away for the erosion of your capital. If people put their money into a savings bank and the rate of interest is 3 per cent., they receive, in real terms, no interest whatsoever. They are merely being preserved against the loss of their capital. So you always have to add to the interest rate that is charged 3 per cent, for the erosion of capital. This is one of the worst features of inflation. Another result, of course, is that government bonds, as we have heard, are priced out of the field, and you get, as the honorable member for Yarra has said, starvation of government works in connexion with transport facilities, such as railways and roads, schools, hospitals and so forth, because government bonds are priced out of the market.
Then again, people try to hedge against inflation. Hence the stock exchange boom, the land boom, hire-purchase booms for durables, and the creation of unit trusts and of land trusts, with ultimately, of course, the danger of a break in the boom and the loss of money by a lot of small people who have put their savings into these things. You get, also, the smart alecs, if I may call them such, who profit under these conditions and create social tensions. It is simply another of “ the spurns that patient merit of the unworthy take”.
Then you get a decline in the traditional institutional framework of canalizing savings. Banks cannot attract fixed deposits. Insurance societies are not attracting as much money as they should. People do not find it worth while to insure against, say, death duties. The savings banks are still attracting money, but they probably will not do so for very much longer, because people have a way of waking up in time and you cannot fool all of the people all of the time. The result of all this is that a lot of people put their savings into investments such as unsafe notes and direct deposits with various enterprises. The result is a loss of savings because the old channels are of less utility than before. I believe in these traditional channels of investment. Investments made directly are less likely to be wise than are those made through the traditional institutions, which have their means of assessing the value of investments.
Again, Sir, what is the effect of inflation on the cost push of wages and administered prices? I should like now to quote from an article entitled “ Creeping Inflation “, which was published in the June, 1959, issue of the “ Monthly Review “ of the Federal Reserve Bank of New York. Tt stated -
If a slow but steady rate of general inflation were to be tolerated as a form of surrender to the inevitability of prices increases in the “ administered “ price and “ organized labour “ industries the end result would be the transfer of purchasing power to the workers and management in these industries at the expense of those whose savings are being depreciated or who are unable to increase income in pace with price increases.
If .creeping inflation were accepted as public policy the result would be either social injustice or, if escalation were successful, galloping inflation.
I have not time to go into the effect of inflation on the stability of employment and economic growth, but if honorable members are interested in that they will find it dealt with in the article from which I have just quoted.
Before I go on to my second question, let me summarize what I have said. 1 have tried to drive home the point that inflation, whether it is galloping inflation or creeping inflation, is an unmitigated evil. Until all sections of the people wake up to this fact, nothing will be done to check it. That is why I have gone over what may appear to be old ground. I have done so for the positive purpose - not a purely negative one - of trying to bring people to the realization that all, including industrialists, workers and governments, have an interest in stopping this thing from going on.
Now I come to my second question: How effective is the Budget in dealing with this matter? I believe that it tackles only one aspect of the problem - demand inflation, which is caused by too much money chasing too few goods. The Government has budgeted for a surplus of approximately £15,000,000. I am disregarding the argument of the honorable member for Yarra in taking that figure. If the surplus budgeted for were double or treble that amount, how great a diminution would that make in the total purchasing power available to the community? We must look at the Budget surplus against a national income of £5,500,000,000. So a budget surplus even double or treble that budgeted for in the current financial year would not involve any very substantial decrease in the supply of money.
I believe that the credit squeeze is good so far as it goes, and that the removal of import restrictions have been salutary. I have no fault to find with the measures that the Government has taken here, but I cannot find in them a serious attempt to tackle this problem of creeping inflation. I believe that the Government, like the Opposition and all sections of the community, expects creeping inflation to go on and does not have its heart in the task of stopping it.
The Government .is jio more .to blame for it than is the Opposition or any other section of the community.
Now I come to my third question. I have hastened over the second, because much has been said about the Budget. My third question is: What else can be done if this Budget does not do the job? As I indicated earlier, the task requires leadership. The leadership should come, of course, from the Government, and nobody is better qualified to lead this nation than the Prime Minister (Mr. Menzies) himself. Leadership should also be shown by industrialists, by the captains of industry. I am continually disgusted by statements issued by spokesmen for various interests. It is time, I believe, that the captains of industry themselves took a hand by making meaningful statements. In Roman days when a funeral was being conducted it was the custom to employ a number of professional mourners. They evidently used some early form of tear gas, and their tears were preserved in vases and buried in the mausoleums of the deceased. It was this practice which prompted the words of Tennyson -
Break, thou deep vase of chilling tears That time hath shaken into frost.
It is about time, in my view, that these ersatz tears that are wept by the paid spokesmen of industrialists were also consigned to oblivion, and that we heard sensible and meaningful statements from the captains of industry themselves, lt is time, indeed, that they took on the job of leadership.
Leadership should also be displayed by the trade unions themselves, or the more thinking members of them. How do they profit from inflation? I have tried to point out that they do not, and I believe, as does the honorable member for Wentworth (Mr. Bury), who spoke earlier, that the responsible members of the trade union movement should give thought to this matter. I do not think it is too much to expect newspaper editors also to play a responsible part.
I now come to what I may call costpush inflation, whch I believe is the nub of the whole matter. The wages-price spiral must be braked somehow, and there are two shoes in the brake. One is the prices shoe and the other is the wages shoe. If you rely on one shoe only the whole machinery will simply burn out. This matter will come to an issue at the next basic wage hearing, which Will occur, I believe, in February of next year. In what context will the Commonwealth Arbitration Commission be called upon to decide the issue? I believe that it is from this angle that the Government must consider the matter, and that it must approach the commission with a determination to try to control prices. I am now speaking of the prices side of the brake drum. Something serious must be done in the matter of prices. A good deal has been said on this subject, but I shall refer once again to the reference in the Governor-General’s Speech at the opening of this session of the Parliament, when His Excellency said -
The development of tendencies to monopoly and restrictive practices in commerce and industry has engaged the attention of the Government which will give consideration to legislation to protect and strengthen free enterprise against such a development.
Later, the Prime Minister intervened in a debate and re-asserted the determination of the Government in this regard. It is my belief that this is one of the things that can be done which would give some assurance to the Arbitration Commission and to the workers that the Government is in earnest in its professed intention to prevent increases in prices. Without control of prices we cannot hop2 to control wages, and it is important - and I emphasize this - ;h?.t the Government should show its earnestness in this matter before the basic wage hearing comes on next year.
I come now to another point, the need for a review of tariffs. I am speaking not of reviews of particular items of the tariff, but a review of the aims and methods of our whole tariff policy. I refer to a review such as that conducted by Copland, Brigden, Dyason, Giblin and Wickens in 1928-29. That review was concerned not with particular items, but with the question of where we were going with our tariff policy. I believe the time is right to conduct another such review, because fresh problems have emerged in recent times which should be the subject of consideration by such a com mittee. Let me mention some of these problems. There is the emergence of monopoly and restrictive practices in our economy in recent times. How does this fit in with our tariff-making policy, and what principles should be applied, having regard to this factor? Secondly, there is the matter of import replacements. Overseas funds have become particularly valuable, and it may be that some local industries should be protected merely because they preserve our overseas funds. But upon what principles should such a policy be applied? Thirdly, there is the legacy of local industries built up in the period of import restrictions. Are we to be saddled with these forever, or what are we to do about them? Finally, there is the need to integrate the determinations of the Tariff Board with the findings of an authority that I would hope the Government would set up to deal with the question of restrictive practices.
At this point I would like to quote very briefly from the report of the Copland committee. This is what it said, at page 116-
The time has gone by when business units with great economic powers can be considered as “private” enterprise, with exclusive rights to their own information. Experience has shown that it is virtually impossible to regulate “ monopolies “ by legislative enactments directed at mere forms, or by legal interpretation of what is “ in the public interest “. The best safeguard of the public interest is publicity, and with protected industries subsidized by the public the case for publicity is overwhelming.
I believe, too, that some thought should be given to the reinstatement of the child endowment payment as a meaningful part of the wage structure. In this connexion, too, by the way, the Government could very well review the pay-roll tax, and consider whether it should not be abolished, the amount now being obtained by this method to be made up by increases in company tax. But the reinstatement of child endowment as an element in the consideration of wages is important from the point of view of the problems I have been discussing up to date, as well as for other social reasons.
Finally, the Government should show its determination to hold down prices by enunciating its determination not to increase its own charges. I refer to postal charges, and railway and airline fares and freights. If the States can be persuaded to co-operate, they might also agree not to increase their charges for railway services or electricity supplies.
I have not time to go into the longerterm methods that the Government could adopt, and I come now to a few comments on the Commonwealth Arbitration Commission. I believe, in common with the honorable member for Wentworth, that it is quite unrealistic for the Government not to have a policy in regard to wages. It must have such a policy, because wages concern many more persons than the employers and employees directly involved. Having perused the last basic wage decision, 1 believe that the court’s understanding with regard to productivity is quite defective. 1 suggest that in considering increased productivity you must give some reward to industrialists themselves, otherwise they will have no incentive to improve their technical processes.
I believe, too, that wage increases should be granted only according to the increases that have been achieved in productivity. A Swedish economist who visited this country within the last few years expressed astonishment at the fact that we did not do what is done in Sweden and consider the granting of wage increases in relationship to increased productivity. I know that there is great difficulty in drawing up a productivity index. In America recently much work has been done on this subject, particularly by Davis and Kentrick and by the National Bureau of Economic Research. This much can be said: However inaccurate the index may be, nevertheless the Arbitration Commission is bound to come to some conclusion as to what has been the movement in productivity, and the information on which it bases that conclusion should be the best that can be obtained, and not merely some evidence trotted out by an economist at the commission’s hearing, and not fully understood by the members of the commission. A better approximation of the extent of the increase in productivity must, therefore, be put before the commission by the Government.
Basically 1 believe that if we are to hold inflation down it must be by the efforts of the controllers of prices and the representatives of wage-earners, and that in encouraging these efforts the Government has a leading and vital role to play.
.- Mr. Temporary Chairman, the Government has presented another Budget to the country and the first thing to ask about it is whether its estimated result is likely to be any more accurate than budget estimates have been in the past few years. In 1953-54, Sir Arthur Fadden presented us with a Budget in which he estimated that the Government would have a surplus of £215,000 - an insignificant surplus which would have meant almost a balancing of the Budget. But he finished the financial year with a surplus of £56,200,000, so that the estimate prepared by the then Treasurer and his officials was £56,000,000 wrong. In 1954-55 he estimated a surplus of £251,000 - again a mere balancing of the Budget - but he ended the financial year with a surplus of £70,200,000. The estimate was, therefore, £70,000,000 in error. Over the period of four years from 1953-54 to 1956-57, surpluses aggregated £300,000,000.
It is important to look at these surpluses in the light of the fact that the Government has disclaimed the capacity to effect certain changes in social services. In 1957-58 Sir Arthur concealed a surplus by transferring £104,300,000 into a reserve account. He said that his surplus was £10,300,000, but the real surplus was £114,000,000. The present Treasurer (Mr. Harold Holt) in his last Budget, estimated a deficit of £61,000,000, but the deficit was £29,000,000 -a £32,000,000 miscalculation. While he has now calculated in this Budget that he will have a surplus of £15,000,000, certain of the conservative financial reviews of this country say that the surplus will, in fact, be £111,000,000.
I do not know why this phenomenon of strange budgeting came into existence. A possible explanation is that if a government is doing nothing to hold the value of the currency, it will find it difficult to calculate the surpluses that it will have in its constantly inflating money. The honorable member for Bradfield (Mr. Turner) spoke about creeping inflation. When the Government took office the average basic wage for the six capital cities was 129s. It is now 273s. - an increase of 112 per cent, during the eleven years in which the Government has been in office. I suggest that that is more than creeping inflation, lt is a pretty fast walk.
The honorable member for Bradfield said that the Government considered that inflation was undesirable. If that is so, what it has achieved over the last four years is, from its own point of view, undesirable. Inflation is a condition of sharply rising prices. The honorable member proved that inflation has very serious consequences. They are, after all, serious consequences which proceed from dishonesty. It is to be feared that governments can reach the point at which they value inflation as a means of paying off their debts. I do not want to reiterate what I have said, but there has not been apparent any sharp awareness of the sheer dishonesty of a system whereby the governments of this country, which in 1945, borrowed £100 from a person, thus borrowing 25 weeks of the basic wage, are paying back that amount with only seven weeks of the present basic wage.
The honorable member spoke about interest rates maintaining the capital value of Commonwealth loans, but the fact is that interest rates on Commonwealth bonds over the years have not compensated for the destruction of purchasing power. The honorable member, in effect, protested in the name of what some would call “ conservative finance “ or “ honest finance “ that the same purchasing power should be paid back that has been borrowed, and he tried to prove, to his own satisfaction, that the Government was concerned about this position.
The Prime Minister (Mr. Menzies) began his long career in that office by attacking inflation. He attacked the Chifley Government in. relation to social services and made his celebrated statement about restoring value to the £1. He said that pension rates would at least be maintained but that their purchasing power would be increased because value would be put back into the £1. I do not want to make the usual taunts about that statement. Nobody can contend that that promise has been kept. There is no sense in labouring the point. I am trying to establish only that the Prime Minister, at the beginning of his term of office, said that inflation was undesirable. I am trying to pin his philosophy and then test his performance.
When inflation continued after he had become Prime Minister, he called an unofficial conference of churchmen, economists, and all sorts of people, some of whom might be said to have had some responsibility for the situation, and some whose responsibility was very difficult to perceive. This conference was to consider what should be done about inflation - again indicating that in the Prime Minister’s view inflation was undesirable.
Despite all the pompous criticism that was directed at the Labour Government during its term of office, I do not suppose that any treasurer in the world was more successful in holding the purchasing power of money than was the late Mr. Chifley. The present Prime Minister, in his attacks on Mr. Chifley, always discussed inflation as peculiarly affecting the wage-earning members of the community. He said that they could not pass it on. Inflationary policies were a disguised form of taxation which particularly hurt the wage-earner. Therefore, by all the obiter dicta of the Prime Minister, during his eleven years of office, he has continued an undesirable trend in the economy. No Prime Minister has had an inflationary record equal to that of the present Prime Minister.
The honorable member for Bradfield spoke about the attitude of the Australian community towards inflation. The truth is that that attitude is confused because, except for a very brief period during Mr. Chifley’s time as Treasurer, the people have never seen the purchasing power of money kept stable by fair means. In 1926 the arbitration court in Western Australia, for the first time, declared a basic wage and it fixed the figure at £4 5s. In 1940, fourteen years later, the State basic wage was £4 5s. 4d., although it had gone down in the meantime during the depression. Those were fourteen years of the most extraordinary currency stability. That state of affairs was achieved by having in Australia 200,000 or 300,000 unemployed who had no competitive purchasing power whatever. So there was no inflation then. But there was no development then.
– There was a Labour Government.
– That is an extremely stupid statement. The period of which I am speaking was from 1926 to 1940.
There was a Labour Government from 1929 to 1931 - two years out of the fourteen. Do not waste my time by irrelevant interjections. In fourteen years the purchasing power of the currency was maintained by an army of unemployed who, in 1940, still numbered 200,000 and who still had no competitive purchasing power. Those who had purchasing power did not face the competition. My answer to the honorable member for Bradfield (Mr. Turner) is that in the one long period of time when there was no inflation in this community, the purchasing power of the currency was maintained by means that led to very great suffering in the community, and if in the Australian community to-day there is not a sufficiently serious attitude on the subject of inflation, it is because people would rather have full employment and inflation than a steady currency and continuing mass unemployment. That was the point I was endeavouring to make when I was ignorantly interrupted.
The continuance of inflation in the period of this Government has been because of the Government’s methods of finance. The honorable member for Bradfield attacked the honorable member for Yarra (Mr. Cairns) because of his comment on indirect taxation. You can take a reductio ad absurdum argument from the honorable member for Yarra and say, “ He advocates in one budget, knock out all indirect taxation “. Of course no sensible person advocates that, nor did the honorable member for Yarra. What is happening in the economy by the Government’s deliberate choice is a constant raising of the level of indirect taxation while it is depreciating the level of direct taxation. It began with a sales tax of £58,000,000 and the value of its income tax reductions over the years far exceeds £58,000,000. The Government could have totally abolished sales tax in the beginning of its career, and made no adjustment in income tax at all and could have maintained the level of income tax. The question arises as to whether that would have been a desirable choice and it comes back exactly to the point made by the honorable member for Yarra on many occasions that the Government’s indirect taxes strike those who are least capable of paying. Income tax graduated according to ability to pay, as a device for redistributing income, was the implication of what the honorable member for Yarra was arguing. The £184,000,000 which the Government is budgeting for sales tax is partly because it anticipates an increased volume of sales, and the figure is also rising every year because prices rise. If the Government has a tax which is calculated as a fixed percentage of the price, then the higher prices rise the more revenue the Government will get from that tax. Sales tax is a snowballing tax. If inflation is a condition of sharply rising prices, sales tax operates to raise them further.
The continuation of inflation is affecting the wage-earner. The other factor in government finance which is inflationary is its whole approach to the subject of loans. Why is it that no single member of the Government - including every member of the Cabinet itself - has never, in eleven years in this Parliament, spoken openly of the change in the character of loans to the Commonwealth? Why is it that no member of the Government has never directed attention to the fact that its predecessor, whose financial methods it has frequently derided, never permitted banks to subscribe to Commonwealth loans, and that the Government has made a revolutionary change in the loans by permitting banks to subscribe to them? Why is it that the Government will never bring itself to admit that Mr. Chifley could get his loans subscribed and over-subscribed from the purchasing power in circulation in the community, whereas the Government by permitting in some years as much as £300,000,000 to go into the finance of the Commonwealth through new cheque money has turned the loan from a device by which the Government induces people to destroy their own purchasing power for the time being by surrendering it to the Government so that the Government could make a claim on services and goods, without competitive buying and inflation? To-day, so far as the Government’s loans consist of new bank credit, the existing purchasing power stays with the community and the Government gets new purchasing power and the two sets compete for the labour and services in the community and we get more inflation. The whole of the Government’s loan policy, so far as it has allowed new credit to be injected into it, instead of being a counterinflationary device as it was under Mr. Chifley, has become inflationary.
One of the most urgent things for the Government to do is to restore the attractiveness of Commonwealth loans to the ordinary subscriber. If one goes into the Commonwealth Bank to-day one sees Hooker’s advertisements offering 8 per cent. What is the idea of 1 that? Is the Government trying to induce people not to leave savings with the Commonwealth Bank? The honorable member for Bradfield says that before long people will not be investing in savings bank accounts. What a tribute to the Government that statement is, while we have private entrepreneurs offering rates of interest three or four times as great as those offered by the Commonwealth. And if they are offering rates of interest much greater than Commonwealth loans and can pay those rates of interest because the Government permits an open slather to hire purchase, how can it restore the attractiveness of Commonwealth loans? And so we get the distortion of economy of which the honorable member for Yarra complains.
After all, we are still raising Commonwealth loans, and what does that mean in your philosophy? It means that you recognize that there is a sector of the economy where the Government has to decide to create new basic public works. It is fine to have lots of hire-purchase on television sets but there has to be some point at which you decide to generate the electric power to run them and that is why the Government has envisaged going into such things as the Snowy Mountains scheme. Its loans are to establish that kind of basic works for the whole community, and if it is going to make them dearer and dearer by having to raise interest rates because it is allowing an undisciplined rise in interest rates and prices in the rest of the economy, it will reach a stage of inflation damaging to the basic development of the country. I think that is what is taking place to-day. We will have a new currency, presumably, in the near future and it is about time that the Government changed the name of the unit, because if things go on as they are much longer, value put back in the pound will need to be concealed by something pretty drastic and if the unit is called “ an austral “ or something such as that, perhaps we will begin at a new point of time and forget the inflation which has gone before.
The position of the farmers to-day has been commented on by a number of speakers, and it is extraordinarily fascinating to hear the facade that is put up by Government speakers, and to read, in conjunction with that, the statements of the Government’s own financial experts. We find the farm incomes of the country not advancing but actually deteriorating, when they are still the export income upon which the community depends. Then there is the completely astonishing page 28 of the Treasury Information Bulletin. Honorable members opposite do not comment on it. According to the Government’s own statement, last year we exported £936,000,000 worth of goods and we imported £946,000,000 worth - that is commodities - but invisibles accounted for another £233,000,000, so that the trade deficit for last year was £243,000,000- and that is supposed to be a healthy state in the economy of which the Government can well be proud. It is concealed, of course, by borrowing and by capital imports.
Some aspects of this capital import business are highly dangerous. We cannot get a clear answer to the question of how much of this movement of money into the country is to take over existing assets. If that is taking place, you are in fact selling capital enterprises in Australia to finance a trade deficit. There is plenty of hot money in the world. There is plenty of money for importation into Australia. Money will not be sent very willingly to South America or Africa. The investing people in Europe and North America would find, and in fact are finding, in the social stability of this country an attractive field for investment. But you must go on year after year financing a trade deficit in that way, because, after all, in all capital imports there is an increasing need for invisibles. The more that is invested the more favorable must be our trade balance to finance the return of that capital. But there is no sign of that requirement, being met. On the contrary, there is an increasingly disturbing movement of the balance of the trade in commodities against ourselves.
The honorable member for Bradfield has spoken about the need to propose remedies for inflation. I do not know why he stood in his place pointing an accusing finger at the Labour Party in relation to that matter.
We did have one proposal - anyway, it was one of the devices that Chifley used against inflation - and that was prices control. The Australian community rejected it. I have no complaint about that, but it is a fact that the people rejected prices control. It is also a fact that this device was a rather effective means of holding the value of the currency from 1941 to 1949. There was also in Chifley’s thinking a deliberate preference for direct taxation and not for indirect taxation. Finally, there was a predisposition on his part to finance as much of the public works programme as he could out of current revenue.
– There was control of banking, too.
– Yes. I believe those measures would be effective in reducing inflationary pressures in Australia to-day. Another measure that could be adopted would be not to make further reductions of direct taxes, but to reduce indirect taxation. If necessary, for the period before that measure had its effect on prices, income tax could be increased. I repeat what I have said in previous years - that is, if the Government abolished sales tax, which will amount to approximately £180,000,000 this year, it would probably find that it would get a great deal of that money back in increased income tax.
The next proposal I advance is that there should be a device for scrutinizing tariffs. Why do we impose tariffs and then forget about them? General Motors-Holden’s Limited had a case for a tariff in 1946 and if behind the tariff wall that organization is making a tremendous profit, will there never be a point of time when the Government will consider a reduction of that tariff? Or does the Government adopt the attitude that the device is a jolly good revenue-maker, that these people are making a magnificent profit, and that it will remain silent and let the whole matter have its inflationary consequences? The General Motors-Holden organization can make an annual profit of £12,000,000; it should be content with a profit of £3,000,000 or £4,000,000. There should be some mechanism to review tariffs which are not necessary.
Another proposal I advance is that the Commonwealth Bank should be used as a weapon to counter inflation. The Commonwealth Bank could be used to puncture the whole crazy structure of interest rates that has developed around hire-purchase finance. The bank, by its competition, could so force down interest rates that the attractiveness of Commonwealth loans would be restored. That, in itself, would be an anti-inflationary device. Another device would be the use of more revenue to finance public works. I believe all those things would be an effective check on inflation.
I agree with the honorable member for Bradfield when he says it is becoming doubtful whether inflation is not acceptable to the Government. Inflation is not having any political consequences against the Government. The trade position which is developing as a result of inflation is concealed at the moment by foreign borrowing. There is nothing for the Government to worry about politically in that respect. And it is probable that the Government is not at all concerned about arresting this constant erosion of the purchasing power of Australian currency. The honorable member for Bradfield weighed up the pros and cons of the situation and left himself in some doubt. If he believes that the Government believes that inflation is undesirable, it certainly has allowed that undesirable state of affairs to continue for a long time. But if the Government believes a la Copland that inflation is just a part of expansion, why does it not come out and say quite frankly, “We are an inflationary Government because we think that inflation is the way by which the economy will expand “?
Motion (by Mr. Freeth) proposed -
That the House do now adjourn.
.- Mr. Speaker-
Motion (by Mr. Freeth) put -
That the question be now put.
The House divided. (Mr. Speaker - Hon. John McLeay.)
Majority . . . . 23
Question so resolved in the affirmative.
Original question resolved in the affirmative.
House adjourned at 11.13 p.m.
The following answers to questions were circulated: -
d asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows: - 1 and 2.
Figures for earlier years have not been dissected for the respective establishments, and except for major items of expenditure it would now be difficult to do so with any certainty. Up to and including 1958-59 expenditure on repairs and maintenance of these establishments was not recorded against the individual projects. Substantial expenditure during recent years in respect of Beauchamp House and Kingston Guest House covered extensive repairs and replacement of obsolete and worn-out services and fittings due to age of the premises - over 30 years in each case.
d asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows: - 1. (a) There have been no governmentsponsored or organized tours, but two Ministers and the Parliamentary Secretary to the Minister for Territories visited the Territory during the period. (b) Accounts for travel to the Territory of the following members have been received: - Honorable A. A. Calwell, Senators F. C. S. Dittmer and J. A. McCallum, Messrs. L. H. Barnard, C. R. Cameron, R. Cleaver, F. J. Davis, P. Howson, C. K. Jones, R. S. King, P. E. Lucock, E. D. Mackinnon, R. C. Wheeler, E. G. Whitlam and K. C. Wilson. As members issue their own warrants it is possible that others have travelled and the accounts have not yet been received by my department.
d asked the Minister for Territories, upon notice -
– The answers to the honorable member’s questions are as follows: -
Burns Philp and Company Limited.
China Navigation Company Limited (New Guinea Australia Line).
Austasia Line Limited.
Karlander (New Guinea) Line.
Companies operating air services between Aus tralia and the Territory are -
Ansett-A.N.A. Proprietary Limited.
Australian National Airlines Commission -
Trans-Australia Airlines (not a registered’ company).
Burns Philp (New Guinea) Limited.
Steamships Trading Company Limited.
Bougainville Company Limited.
G. and M. Shipping Services.
Colyer Watson (New Guinea) Limited.
New Guinea Company Limited.
Island Shipping Service Limited.
Madang Slipways Limited.
Northwest Trading Company.
Native Marketing and Supply Limited.
Batuna Shipping Service.
New Ireland Enterprises Limited.
Toma Shipping Company.
Pacific Distributing (New Guinea) Limited.
South Sea Shipping Company.
Gona Shipping Company.
E. R. Snook Proprietary Limited.
Companies operating internal air services are -
Qantas Empire Airways Limited.
Mandated Airlines Limited.
Papuan Air Transport Company.
Madang Air Services Limited.
Territory Airlines Limited.
World Wide Air Service Limited.
Government or on charter. The service was progressively transferred to private ownership as shown below: -
d asked the Minister for Territories, upon notice -
– The answers to the honorable member’s questions are as follows: -
n asked the Minister for Territories, upon notice -
– The answers to the honorable member’s questions are as follows: -
h asked the Postmaster-General, upon notice -
– The answers to the honorable member’s questions are as follows: -
m asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
m asked the Minister representing the Minister for Customs and Excise, upon notice -
– The Minister for Customs and Excise has furnished the following answers to the honorable member’s questions: -
y asked the Postmaster-General, upon notice -
How much has been expended during the past three years on repairs, maintenance and improvements to post offices and telephone exchanges in the following Sydney suburbs: - Newtown, Petersham, Lewisham, Marrickville, Summer Hill, Erskineville, Enmore?
– The answer to the honorable member’s question is as follows: -
m asked the Minister for Social Services, upon notice -
When and by what amount was each social service benefit last increased?
– The answer to the honorable member’s question is as follows: -
Age and invalid pensions - 1959, by7s. 6d. a week.
Widows’ pensions - 1959, by 7s. 6d. a week.
Wives allowances - 1952, by 5s. a week.
Children’s allowances - 1951,by 2s. 6d. a week.
Additional pension for each child after the first - 1956, introduced at 10s. a week.
Funeral benefit- 1943, introduced at £10.
Maternity allowances -
Where no other children- 1943, by £10 10s.
Where one or two previous children - 1943, by £11.
Where three or more previous children - 1943, by £10.
Child endowment -
Each child after the first- 1948, by 2s. 6d. a week.
First child- 1950, introduced at 5s. a week.
Unemployment and sickness benefits -
Adults-1957, by 15s. a week.
Unmarried minors -
Under 18-1957, by 5s. a week. 18-20 years - 1957, by 7s. 6d. a week..
Additional benefit for spouse - 1957, by 7s. 6d. a week.
Additional benefit for one child - 1957, by 5s. a week.
Rehabilitation allowances - 1959, by 7s. 6d. a week.
Training allowances - 1955, by 5s. a week.
Living-away-from-home allowances - 1955, by 10s. a week.
m asked the Minister for Health, upon notice -
Does his department propose to create, as recommended by the National Health and Medical Research Council in May, 1955, a permanent organization to maintain constant liaison between interested Commonwealth departments and State departments of health and of native administration for the study of problems affecting the health and social advancement of the aboriginal population and for planning and co-ordinating remedial measures to be applied as joint enterprises by Commonwealth and States in co-operation?
– The answer to the honorable member’s question is: -
d asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Health, upon notice -
Why are contributors to the Hospital Benefit Scheme who are paying extra contributions for extra coverage before the prescribed date of 15th June, 1960, eligible for higher benefits if treated in a government hospital than if treated in a private hospital?
– The answer to the honorable member’s question is as follows: -
In Western Australian public hospitals, the State Government recently increased public ward fees from 36s. to 56s. per day. Where a contributor to a registered hospital benefit organization wished to increase his benefit cover to meet the new charges, the rules of most organizations provide for a waiting period of two months before benefit becomes payable at the new rate. To meet this situation, the State authorities allowed a concessional reduction in the new fees, for members who increased their benefit cover before 15th June, 1960. This concession, which expired on 15th August, 1960, had the effect of deferring the increased charges, so that if a member’s benefit cover had previously been sufficient to meet the old public ward charges, it should remain sufficient to meet public ward charges incurred during the two months’ waiting period for eligibility to receive benefit at the higher rate. Under this arrangement, there is no question of a higher rate of benefit being paid in a government hospital than in a private hospital. In either case, the contributor should receive the rate for which he is insured, subject to the rules of the particular organization.
m asked the Minister for Health, upon notice: -
– The answers to the honorable member’s questions are as follows: -
m asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
The principal reasons for rejecting fund benefit were:
asked the Minister for Health, upon notice -
n. - The answers to the honorable member’s questions are as follows: -
The principal reasons for refusal of fund benefit in 1959 were -
Commonwealth hospital benefit was paid in all the above cases.
d asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
m asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
The dates on which these committees met in 1959 and 1960 are given below: -
New South Wales - 9th February, 1959; 28th April, 1959; 2nd-3rd February, 1960; 7th March, 1960; 30th May, 1960; 27th June, 1960.
Victoria- 23rd February, 1959; 10th August, 1959; 22nd February, 1960.
Queensland - 4th February, 1960.
South Australia- Did not meet during 1959, or 1960 to date.
Western Australia- 30th July, 1959; 10th February, 1960.
Tasmania - Did not meet during 1959, or 1960 to date.
Did not meet during 1959, or 1960 to date.
New South Wales- 13th January, 1959; 11th February, 1959; 10th March, 1959; 8th April, 1959; 5th May, 1959; 14th July, 1959; 8th September, 1959; 14th October, 1959; 27th January, 1960.
Victoria- 27th January, 1959; 26th May, 1959; 23rd June, 1959; 28th July, 1959; 25th August, 1959; 1st October, 1959; 17th November, 1959; 1st December, 1959; 22nd March, 1960; 28th June, 1960; 26th July, 1960.
Queensland- 29th April, 1959; 16th December, 1959; 3rd February, 1960; 2nd March, 1960; 23rd March, 1960; 20th April, 1960.
South Australia - 13th February, 1959; 7th August, 1959; 29th July, 1960.
Western Australia- 18th May, 1959; 22nd June, 1959; 8th July, 1959; 29th July, 1959; 11th July, 1960.
Tasmania - Did not meet during 1959, or 1960 to date.
New South Wales - Did not meet during 1959, or 1960 to date.
Victoria - 21st January, 1959; 6th February, 1959; 19th March, 1959; 21st April, 1959; 26th May, 1959; 9th July, 1959; 13th August, 1959; 11th September, 1959; 16th October, 1959; 18th November, 1959; 4th December, 1959; 23rd December, 1959; 3rd February, 1960; 10th March, 1960; 12th April, 1960; 11th May, 1960; 10th June, 1960; 26th July, 1960.
Queensland - Did not meet during 1959, or 1960 to date.
South Australia - 4th February, 1959; 26th March, 1959; 1st May, 1959; 12th June, 1959; 3rd July, 1959; 17th September, 1959; 3rd November, 1959; 9th December, 1959; 22nd December, 1959; 24th February, 1960; 14th April, 1960; 2nd June, 1960; 4th August, 1960.
Western Australia- 18th May, 1959; 22nd June, 1959; 8th July, 1959; 29th July, 1959; 11th July, 1960.
Tasmania - 24th February, 1959; 22nd April, 1959; 4th June, 1959; 17th June, 1959: 26th June , 1959; 12th August, 1959; 3rd November, 1959; 10th December, 1959; 29th December, 1959; 12th February, 1960; 31st March, 1960; 12th May, 1960; 14th June, 1960; 12th July, 1960; 18th August, 1960. (h) Commonwealth Health Insurance Council: 27th/28th April, 1959.
m asked the Minister for Health, upon notice -
Or. Donald Cameron. - The answers to the honorable member’s questions are as follows: -
m asked the Minister for Health, upon notice -
How many new beds were provided in each State during the last financial year under the States Grants (Mental Institutions) Act 19ss?
– The answer to the honorable member’s question is as follows: -
In addition, Victoria opened facilities for treating as out-patients 60 mentally ill persons each day. Queensland has opened 180 new beds since 1st July, 1960, and South Australia expects to open 260 new beds before the end of October, 1960. In Western Australia construction of a large new mental institution is about to commence.
Cite as: Australia, House of Representatives, Debates, 30 August 1960, viewed 22 October 2017, <http://historichansard.net/hofreps/1960/19600830_reps_23_hor28/>.