House of Representatives
15 November 1960

23rd Parliament · 2nd Session

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

page 2815


Return to Writ


– I have received a return to the writ which I issued on 4th October for the election of a member to serve for the electoral division of Calare, in the State of New South Wales, to fill the vacancy caused by the resignation of John Brooke Howse, Esquire. By the endorsement on the writ it is certified that John Armstrong England has been elected.

page 2815




– 1 wish to ask the Prime Minister a. question. Will he consider a referendum, coincident with the next federal general election, to alter placitum (xxvi.) of section 51 of the Australian Constitution by deleting the words “ other than the aboriginal race “ in order to remove the prohibition on the Commonwealth’s legislating for this race? Further, in view of the fact that in world affairs, where race issues are sharpening, the Commonwealth is in fact held responsible for aboriginal welfare, will the right honorable gentleman assist States to take the steps necessary to lift the standards of aboriginal welfare generally at least to the standards of the Northern Territory, and will he consider altering the official objective from the abstract one of assimilation to that of the physical survival of aboriginal people as a distinctive people living in circumstances of full human dignity?

Prime Minister · KOOYONG, VICTORIA · LP

– The question is an interesting one. but it relates to a matter of policy on which I would not endeavour to make an offhand reply.

page 2815




– My question is addressed to the Minister representing the Minister for Civil Aviation. I ask the honorable gentleman whether both TransAustralia Airlines and Ansett-A.N.A. have been approached by British aircraft companies to purchase £35,000,000 worth of aircraft to replace Electras and Viscounts by 1965. Do the airlines agree that they should go ahead with these plans but are limited because the construction of the Tullamarine airport, at Melbourne, has been delayed owing to lack of funds and will not be completed until 1964?

Minister for Defence · DENISON, TASMANIA · LP

– I have no personal knowledge of the proposition mentioned by the honorable member. But I shall convey his question to my colleague in another place and see that the honorable member gets an answer.

page 2815



Mr Allan Fraser:

– I ask the Minister for Primary Industry: Will he take into account the acute anxiety and insecurity in dairying districts following the publication of the report of the committee of inquiry? Does he recognize that an immediate announcement rejecting the recommendations is necessary to remove grounds for believing that thousands of dairy-farmers will be bankrupted and an immense land monopoly established, with dairying districts deteriorating into sparsely populated areas controlled by big land companies?

Minister for Primary Industry · FISHER, QUEENSLAND · CP

– I point out to the honorable member that it is only fair that the dairying industry should have ample time to consider the committee’s report. The honorable member expresses concern for this industry; but I point out that the Government has, by its sympathetic treatment throughout the years, shown that it is capable of looking after this industry and other primary industries.

page 2815




– Has the PostmasterGeneral noticed reports that the Federal Government will not permit an Australian investor to invest in any of the companies recently granted a country television licence unless he is resident in the service area concerned? Will the honorable gentleman clarify the position? Will he bear in mind that any regulation intended to achieve this end, though framed with good intent, would be impossible to enforce and would certainly encourage practices intended to circumvent it?

Postmaster-General · DAWSON, QUEENSLAND · CP

-Over the week-end, I saw a considerable number of press statements concerning the Government’s decision on country television licences. Many of the criticisms have not been soundly based. However, I have not seen the statement to which the honorable member for Mitchell has referred, and I am glad that he has put his question so that I may clear up any misconception. In my statement to the House, I said that a qualification to the grant of a licence was that 50 per cent, of the shares must be offered to the public. That statement means what it says, Mr. Speaker. If there is any belief that it means that only those in a particular area may hold shares, I will take steps to correct the misconception. The position is that there must be a public issue of shares. This means an issue available to any resident of Australia and does not mean an issue confined to any particular area.

page 2816




– I desire to ask the Postmaster-General a question. Is it a fact that for the third year in succession veterans of World War I., and the people generally, have been denied the right on Remembrance Day of hearing a record of the beautiful chimes of the Sydney General Post Office clock and have been refused an explanation? Will the Minister say whether the clock and chimes will be restored by Remembrance Day 1961?


– I must applaud the persistence of the honorable member for West Sydney, and indeed of others interested in this clock. The position has not materially changed since I last referred to the matter in this House. As is well known now, I have arranged for extensive investigations to be made of the foundations of the General Post Office to ascertain whether the clock can be restored without excessive expense. The task of conducting these investigations has been referred to the Department of Works, and some time ago a contract was let for the necessary borings to be made. I have not yet had a report on these investigations. This matter is being very thoroughly examined, Mr. Speaker, because I want to be quite sure that the expense is justified before incurring it.

page 2816


M*. FOX.- I ask the Treasurer: Has he seen a report, attributed to Dr. Leonard H.

Ball of the Alcoholism Foundation of Victoria, to the effect that on the average one worker in 33 is either a problem drinker or an alcoholic? Is he aware that it has been reliably estimated that alcoholism costs the Australian community £100,000,000 a year, excluding the cost to industry? Will the right honorable gentleman give consideration to setting aside an amount of money, equivalent to 1 per cent, of the amount collected by way of excise duties on beer and spirits, as the foundation of a fund for research into the disease of alcoholism?


– I have not seen the report to which the honorable member has referred, but I am aware that alcohol can be a liability as well as the undoubted asset that it is in the view of many people in this country. It is suggested that additional finance should be provided to combat the problems of alcoholism. That is a matter of policy, which would not come directly to me in the first instance. The hypothecation of funds from a revenue source for a project which may, by someprocess of association, be related to that source has never commended itself to this Government, and I cannot give the honorable member any encouragement in that matter.

page 2816




– I preface a question to the Treasurer by directing the right honorable gentleman’s attention to the increase of 6d. in the £1 made in company taxation last year, bringing the maximum rate of company tax to 8s. in the £1. This has givengreat assistance to companies which raise money by the issue of debentures, in order to evade company tax, because, as the Treasurer knows, such companies pay interest on the debentures before payingcompany tax. Does the Government intend’ to take action against this type of capital raising?


– I am aware that companies which deduct interest payments as an expense item have an advantage of the kind mentioned by the honorable member. I hope to make a statement at 8 o’clock to-night on the Government’s general policy in relation to the economicsituation.

page 2817




– I ask the Minister tor Trade: Can he assure the House that adequate steps are being taken by the Department of Trade to find new markets for pearl shell, in view of the straits in which the pearling industry finds itself to-day through lack of markets?

Minister for Trade · MURRAY, VICTORIA · CP

– The Department ot Trade, with other departments, engaged in a trade promotion campaign in North America and Europe - some twelve or eighteen months ago, I think - with considerable success. It is believed that the benefits of that trade promotion drive are still flowing, particularly in regard to highgrade pearl shell, but I shall make inquiries and advise the honorable member of what is happening.

page 2817




– I address a question to the Treasurer. In order that the public may be better informed on likely trends in bank lending, or better prepared for them, will the right honorable gentleman commence the publication of periodic official statistics showing movements in unexercised borrowing limits approved by the trading banks, in the same way as such figures are already compiled and published in Canada and New Zealand?


– The Deputy Leader of the Opposition will be aware that the Reserve Bank does publish from time to time a great variety of statistics on various aspects of banking activity in this country. Whether the particular information sought could, in the circumstances of Australia, be readily obtained and published, and whether it would be desirable for that to be done, are matters which I cannot claim to have fully examined. However, now that the honorable gentleman has raised the question, I shall see what its implications and ramifications might be.

page 2817




– My question is directed to the Minister for Labour and National Service. Now that all Australia is being alerted to the seriousness of our continuing cost spiral, will he give consideration to the Government’s intervening in the three-weeks annual leave case which is now being heard? I ask this question because the granting of an extra week’s leave at present would directly involve the industries concerned in an additional cost of 2.2 per cent., and by the time it was passed on to the primary producer this cost would be almost doubled. Surely we are not going to be led to economic ruin by the example of the New South Wales Labour Government.

Minister for Labour and National Service · LOWE, NEW SOUTH WALES · LP

– The Commonwealth has already indicated its intention. It has intervened in the present leave case and has said to the Commonwealth Conciliation and Arbitration Commission that it will present to the commission any objective information which it might want. I should let the honorable member know that for the first time in their history, the graziers’ council and the woolgrowers’ council have amalgamated to present their own case. I can assure the honorable gentleman that if he cares to read the transcript he will find that this case is excellently presented. The argument is there upon which the commission can come to its conclusions and I believe that the graziers themselves are doing everything that can be expected of them.

page 2817




– I ask the PostmasterGeneral: Will he ensure that the new television stations which it is proposed to licence, will give satisfactory reception and high-quality programmes to people living in the fringe areas of reception at the present time? In view of the Government’s declared belief in free enterprise and the fact that companies are willing, ready and able to provide the service, I ask that a second licence be granted to each area, thus enabling viewers to have a choice of programmes. I ask, finally, that the Postmaster-General see to it that the new stations go into operation as speedily as possible.


– The honorable member for Macquarie asks me to ensure that the new television stations will present highquality programmes in what he terms the fringe areas. I think it is well known that there are certain limitations on toplevel production and presentation depending on the distance of the viewer from a station and also on the topography of the area concerned. It is therefore not possible to say that any particular area at some considerable distance from a television station will receive a top-quality programme. But I can assure the honorable member that, taking this fact into account, every effort is being made to site the transmitters of the new stations so as- to provide as wide a coverage as possible. This matter is still engaging the attention of the Postmaster-General’s Department and the Australian Broadcasting Control Board and it will, I expect, be the subject of a conference at the end of this week.

The honorable member then asks that I undertake to provide a second licence in each area, so that there may be a greater choice of programmes. I thought it was made quite plain by my statement, and also by replies to questions which the right honorable the Prime Minister has given in this chamber, that our policy is to enable the building up of as successful and efficient programmes in country areas as is possible. We know that the best way to do that, for the present, taking into account the availability or otherwise of advertising material, and the scope and coverage of a station, is to start off with one station, and, as the area steadily builds up in the development of television, to consider later the stage at which a second licence can be given. It was made quite plain that the provision of one licence now does not in any way constitute a monopoly service to the station granted the licence. We believe that by this arrangement, and by the provision that there shall be no exclusive arrangements with other stations, we shall be able to offer in country areas programmes of better quality than many of those that are provided at the present time in city areas. The experience of our station in Perth justifies our belief. Any suggestion that country viewers will not receive service comparable with that which city viewers receive is not based on experience or on fact.

page 2818




– My question to the Minister for Shipping and Transport is supplementary to that which was asked by the honorable member for Balaclava last Wednesday. Can the Minister say where the coastal vessel “ Troubridge “ is being built? What is the approximate launching date?

Minister for Shipping and Transport · CORIO, VICTORIA · LP

– I accept the implied reproach that in replying to a question which was asked of me last week by the honorable member for Balaclava I did not point out that Evans Deakin Limited is the company which is building the “Troubridge”. It speaks well for the capacity and ability of this old-established firm that it secured the contract to build that vessel. I understand the honorable member’s interest in this matter because I recollect that he was present with me when I visited the ship-building yard and I noted his knowledge of the yard and the personnel employed there. I understand that the “ Troubridge “ will be launched in about the middle of next year.

page 2818




– I direct my question to the Postmaster-General. Is it a fact that a radio session entitled “ Things I Hear “, which has been conducted for the past three years over station 2UE Sydney by commentator Frank Browne, has now been cancelled by the station? Is it a fact also that reports indicate that this session, which was conducted in an outspoken yet dignified manner, was very popular and successful? Further, is it a fact that the radio station claims that the session was terminated because pressure was brought to bear on the management? If these are facts, will the Minister state whether any complaints regarding this session were received. If so, from whom were they received? Did the PostmasterGeneral, at the instigation of a certain Minister, or Ministers, who resented the commentator’s criticism, indicate to the management of station 2UE that action would be taken against it and that its licence was in jeopardy unless the session was cancelled?


– The honorable member has asked a series of questions, the nature of which reminds me of a comment I made last week, I think, relating to the extravagant way in which he puts forward statements and questions. On this occasion he has asked several times “ Is it a fact? “ My reply is that I did not hear one statement in his questions which was. a, fact.

page 2819




– Can the Minister for Primary Industry say when the first payment will be made on this year’s wheat crop?


– The wheat year is recognized as ending, and normally ends, on 30th November each year. I hope to have arrangements finalized in time for payments to be made at the beginning of the next wheat vear.

page 2819




– Will the PostmasterGeneral order an immediate inquiry into the reasons why, in Newcastle, national station 2NC and commercial station 2NX interfere so badly with station 2KO that listeners to this station have to turn it off? Further, what are the reasons for station 2NX interfering with station 2HD at different times during the day? Is this interference due to the stations being grouped too closely together?


– I am not aware of the interference to which the honorable member has referred, but I am sure that I shall be able to obtain the information that he requires from the Australian Broadcasting Control Board, which watches constantly the level of programmes supplied to listeners and the amount of interference that occurs. I shall give the honorable member a considered reply to his question.

page 2819




– My question is directed to the Treasurer, and is supplementary to that asked by the honorable member for Henty concerning alcoholism and the establishment of a fund to finance an investigation into it. If the Treasurer considers this matter, or if any approach to it is made, will he also consider making another levy the proceeds of which would be devoted to research on behalf of moderate drinkers, for whom no one lobbies, so that the facilities available to that large section of the adult population may be improved and their interests protected?


– I think I indicated earlier, by implication if not explicitly, that I was not the Minister directly concerned with the sort of social problem which arises in relation to this fascinating topic. I am a considerable beneficiary, as the taxgatherer, from the excise paid by those who consume alcohol, whether moderately osinordinately; but I am sure that it is to thegreat body of moderate drinkers that I owemost of the revenue which comes my way from this source. Therefore, I am not: without sympathy or appreciation for thoseto whom the honorable gentleman’s refers.

page 2819




– Can the AttorneyGeneral inform the House when a permanent appointment will be made to the bench of the Supreme Court of the Northern Territory - a position that has remained vacant since the death of Judge Kriewaldt some six months ago? As the bench is now occupied on a temporary basis the present acting judge is reluctant to deal with cases that he may not be able to complete. The resulting delay is causing inconvenience and, in some instances, actual hardship.


– I have heard of those conditions, and I have been concerned about them and hope to make an appointment before the end of the judicial year. Meanwhile, I will take whatever steps I can to see that no backlag develops. It is a condition which has been under my attention.

page 2819




– Has the Minister for Social Services read the tenancy agreement which each tenant of a war widow’s home is required to sign before obtaining the tenancy? If so, does he not consider that it should be considerably amended before any further grant on a £2 for £1 basis is made by the taxpayers in respect of such homes?

Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

– I have no knowledge of any tenancy agreements entered into by those who find accommodation in homes for the aged built under the auspices of the Aged Persons Homes Act. The tenancy agreements and the contracts entered into are matters exclusive to the organizations responsible for the construction and continuous maintenance of such homes. The department’s only concern is that applications for assistance under the act shall comply with the letter and the spirit of the act.

page 2820



Dismissal of Teacher

Mr Clyde Cameron:

– My question is without notice, and is directed to the Minister for Territories. I should like to ask the Minister whether it is true that a person by the name of John Kaputin, a member of the Tolai clan in New Guinea, recently lost his job as a trainee teacher with the Port Moresby teachers’ college. If this is true, will the Minister give the reason for this occurrence?

Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– I have no knowledge of the case to which the honorable member refers. I know that there was a boy called John Kaputin. who went to a secondary school in Australia, but that is the extent of my knowledge of the case. I will make some inquiries.

page 2820




– Is it a fact that the Treasurer, in a recent statement in Adelaide, foreshadowed possible Commonwealth Government action which may have a marked influence on the economy of the Commonwealth? If such action is contemplated will the right honorable gentleman consider, as something that is becoming increasingly urgent, action regarding the adverse position of primary industry compared to that of secondary industry in this country?


– In Adelaide over the week-end, I did attempt to set out some of the salient facts of the economic situation as I saw them. I did not attempt to make any comment about policy or policy implications although perhaps some such inferences could have been drawn from some of my remarks. I have said earlier on behalf of the Government that I hope to make a statement later to-day. I can assure the honorable gentleman that in any consideration the Government gives to the economic situation, the importance of primary industries is clearly recognized, and our actions are directed to sustaining primary industries in a healthy and expanding condition.

page 2820




– Did the Postmaster-

General indicate in his announcement on the new television licences that when a company which was granted a licence had less than 50 per cent, of its shares held by the public, the company would be required to lift the public holding to 50 per cent.? Is there a time limit within which such companies will be required to reach a 50 per cent, public holding? What happens if a company fails to have 50 per cent, of its shares taken up by the public?


– No time limit has been fixed for the successful applicants to meet the requirement of a 50 per cent, public issue of their shares. The few companies that will have to adjust their shareholding have simply been notified of the requirement. Many of them will not have to adjust their shareholding. The position is that prior to the final issue of the licence, 1 will have to be satisfied that this requirement has been met. From discussions I have had with the Australian Broadcasting Control Board, I have no doubt that no difficulty will be experienced by any of the companies in meeting this requirement.

page 2820




– Will the Minister for Labour and National Service inform the House what steps are being taken to resolve the serious hold-up on the waterfront in Melbourne which is having a very damaging effect on the free flow of our exports?


– The strike that was pulled on in Melbourne in recent days was most unfortunate. The matter is now in the hands of the senior representative of the Australian Stevedoring Industry Authority in Melbourne. I understand that he has already had consultations with the leader of the Waterside Workers Federation in Melbourne and that he will continue his consultations with union delegates to-day. This is a most regrettable incident led by a section of the community that is held in contempt by many of us. I hope that on this occasion the waterside workers themselves will realize that the best interests of themselves and of the nation will be served if they go back to work.

page 2821




– 1 direct a question to the Minister for Trade. Recently, in reply to a question asked by me, the Minister said that the deterioration in our overseas balances would not in any way be a threat to the Australian economy while we were able to draw from the International Monetary Fund about £211,000,000. Does the Minister still hold that view?


– I think the honorable member is attributing an amount of detail to something I said which would not be confirmed by reference to any answer I gave. I assure him that the policies of this Government will be found to be such as will safeguard the solvency of Australia.

page 2821




– My question is addressed to the Minister for the Interior. When alterations to the Commonwealth Electoral Act were being considered, was consideration given to an increase in the deposit required from a candidate, which has remained the same for the last 59 years? Does the Minister realize that some people make a farce of elections by standing when they have no chance of election, and so clutter up ballot-papers unnecessarily? Does he realize that one candidate who lost his deposit at Balaclava and at La Trobe is threatening to lose his deposit at Higinbotham also? Does the Minister not feel that the system in the United Kingdom, where the deposit is seven and one-half times the Australian deposit, is better for the purpose of keeping out no-hopers?

Minister for the Interior · FORREST, WESTERN AUSTRALIA · LP

– Consideration has been given to this question. I do not think it is desirable to measure a candidate’s deposit by his expectation of success. We have to strike a figure which will deter frivolous and obstructive candidates. The honorable member has mentioned a case in which somebody seems very keen to get into Parliament. We should not deter people from offering themselves for election by fixing a prohibitive figure as a deposit. There is no great evidence in the hands of the Government that a large number of candidates stand for election, not for the purpose of getting into Parliament, but for the purpose of obstructing the procedure of an election. Until we have such evidence, I do not think that there is any case for increasing the deposit.

page 2821




– When did the Prime Minister first become aware that this country was facing extreme economic difficulty? Did the Prime Minister or his Government receive and ignore warnings from its expert economic advisers of the threatened dangers? If so, does the Prime Minister not consider that such gross bungling of national affairs warrants the resignation of his Government? If, on the other hand, the Government’s economic advisers failed correctly to assess developments and to keep the Government fully advised, does the Prime Minister propose to replace those who have proved so incompetent?


– I will, as always, pay the most tender attention to the suggestion that I should resign. I do not want to disappoint anybody, but I am not contemplating it this week. As to the rest of the honorable member’s question, there is nothing hidden that shall not be made known. My colleague, the Treasurer, will make an elaborate statement on this matter this evening.

page 2821




– Is the PostmasterGeneral aware that the people of the southeast of South Australia are most distressed that their developing and progressive area is once again to be denied the benefits of television? Will he give an assurance that he will approach with a sense of urgency the consideration of the next phase of television development, and that the claims of the south-east of South Australia will receive due consideration?


– I am quite sure that if I failed to impart a sense of urgency to the fourth phase of television the honorable member for Barker would very quickly bring me to account for that lapse. I have already stated that, immediately the final arrangements for the third stage of television are completed by the Australian Broadcasting Control Board - there are still a number of questions to be attended to - I shall ask the board to consider the nature and timing of a further extension of television. In that extension, of course, the claims of the areas represented by the honorable member for Barker and the claims of areas concerning which representations have been made to me by other honorable members will receive due consideration.

page 2822



Control of Adjacent Roads

Mr J R Fraser:

– My question is directed to you, Mr. Speaker. I ask you whether, in consultation with the President of the Senate, you will consider suggesting that the Government, by legislation or other action, should place the roadways on either side of this building under the direct control of the Parliament, so that proper provision may be made for the parking of the vehicles of senators and members, and also of those who are employed in this House or who come here on their lawful occasions.


– The matter raised by the honorable member is already receiving consideration. Some action has been taken, but any proposal involving matters outside the control of the presiding officers will have to be handled with care.

page 2822




– I address a question to the Minister for Primary Industry. Have the substantial exports of meat to the United States of America last year had any real effect on the Australian cattle population? What is the present estimated total number of beef cattle in Australia? Has there been a steady improvement in the quality of our cattle in recent years, particularly in north Queensland?


– Because of heavy exports of beef to the United States of America last year, as well as because of the drought conditions that prevailed, there was a decrease in the beef cattle population in 1958-59. I am pleased to say, however, that although sales to the United States in the last twelve months have been maintained at a fairly high level, the beef cattle population as at 31st March, 1960, showed an increase of about 220,000 head. I cannot recall, at the moment, the total population. The honorable member also asked about an improvement in the quality of the cattle. I think one of the benefits of selling so much of our beef to the United States has been that it has enabled the industry to cull the herds judiciously and go in for breeding better stock. This trend is evident throughout Australia, including north Queensland, where the quality of cattle has shown a marked improvement.

page 2822



– Is the Prime Minister aware that there is a widespread feeling in the community that the introduction of a multiplicity of amendments to the Crimes Bill indicates that the bill was a very illconsidered piece of legislation? Is he also aware that there is a feeling that too little time has been allowed in this Parliament for this most controversial legislation? If he is aware of these things, will he take steps to ensure that adequate time is allowed for consideration of the legislation in this Parliament, even if this involves holding it over until next year?


– Dealing with the last proposition first, it is not intended to hold the legislation over until next year. I know that there has been a considerable amount of discussion about it. This was, in fact, facilitated by the procedure adopted by the Attorney-General, who introduced the bill and then allowed a good deal of time for public consideration of it. Many of the views expressed on the legislation have been expressed, I regret to say, by people who have never troubled to read either the bill or the speech made by the Attorney-General. It is quite true that the Attorney-General has foreshadowed some amendments. It would be an error to assume that these are amendments which are, strictly speaking, of substance. They are, in fact, designed to make even clearer what was already clear to lawyers in the bill as it stood originally.

Mr Ward:

– You do not understand it yourself!


– I said it was designed to make clearer what was already clear to lawyers. I did not say it was clear to the honorable member for East Sydney. It is the intention of the Government that this bill, which has already been fully canvassed, should, if we obtain a majority in both Houses, be placed on the statute-book before the end of the year.

page 2823




– I address a question to the Minister for Primary Industry. 1 refer to the talks on the crayfish industry conducted by the Department of Primary Industry some weeks ago. Can the Minister tell us something of the general assessment of the potential of the industry on the western coast? Is the crayfish catch increasing or is it relatively stable? Are there any major problems to be solved?


– I have had a report from the officers who engaged in talks on the crayfish industry. I am not fully conversant with all the details, but I recall that it has been ascertained that there is a unique kind of crayfish in the northwest of Western Australia. These crayfish will not go into the traps, and the fishermen have to dive for them. There is a demand for this variety. Research into the crayfish industry is being undertaken, and I shall try to get further details of it for the honorable member.

page 2823



Report of the Public Accounts Committee.


– I present the following report of the Public Accounts Committee: -

Fifty-first Report - Expenditure from Advance to the Treasurer for the year 1959-60, together with Treasury Minutes on the Forty-first and Forty-sixth Reports and Summaries of those Reports. and move -

That the paper be printed.

May I say for the information of the House that this report is in three parts. Part III. records the Treasury minutes on the committee’s forty-first and forty-sixth reports and Part II. refers to a relatively minor amendment to the Table of Trust Fund Investments in the Finance Statement. The main section of this fifty-first report is Part I., which summarizes the results of the committee’s examination of the expenditure from Advance to the Treasurer for the financial year 1959-60.

Of the many items of interest commented on in the report, two are of particular significance. The first relates to the failure, in certain specific instances, to achieve satisfactory progress with projects admitted to the civil and defence works programmes. The failure was due to administrative deficiencies which we do not expect to be repeated in the future in view of the assurances given in the course of our investigations. The second is that in this report your committee has had to refer again to the present form of the Estimates and the Appropriation Acts. In a number of cases, we found that these had presented problems which the departments concerned had not dealt with as effectively as they could have done, with the result that obscurities and misleading information had been presented to the Parliament.

Question resolved in the affirmative.

page 2823


Assent reported.

page 2823



– I wish to make a personal explanation. When speaking on the Loan (Housing) Bill 1960, last Wednesday, I stated that at a conference in Adelaide the Ministers in charge of housing in five of the six States supported the extension of the present Commonwealth and State housing scheme. The honorable member for Wilmot, by interjection, asked me which Minister did not approve the extension of the present scheme, and I answered that it was the New South Wales Minister. I have since ascertained that no State specifically rejected the extension of the present scheme, although South Australia exhibited disinterest. I wish to correct my misstatement and to apologize to the New South Wales Minister for Housing for my mistake.

page 2823


Message recommending appropriation reported.

In committee (Consideration of GovernorGeneral’s message):

Motion (by Mr. Menzies) agreed to -

That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act relating to the Indus Basin Development Fund Agreement.

Resolution reported.

Standing Orders suspended; resolution adopted.

Ordered -

That Mr. Menzies and Mr. Harold Holt do prepare and bring in a bill to carry out the foregoing resolution.

Bill presented by Mr. Menzies, and read a first time.

Second Reading

Prime Minister and Minister for External Affairs · Kooyong · LP

– I move -

That the bill be now read a second time.

The purpose of this bill is to enable the Australian Government to appropriate funds for its contribution of £6,965,000 Australian under the Indus Basin Development Fund Agreement. This fund has been set up by the International Bank for Reconstruction and Development and by governments friendly to India and Pakistan to finance the construction of a system of works in the Indus River basin following agreement between the governments of India and Pakistan on the Indus Waters Treaty. Both the Indus Waters Treaty and the Indus Basin Development Fund Agreement were signed in Karachi on 19th September, 1960. The Indus Waters Treaty was signed by Mr. Nehru, on behalf of India, Field Marshal Ayub Khan on behalf of Pakistan, and Mr. W. A. Iliff, vicepresident of the International Bank. The Indus Basin Development Fund Agreement was signed by representatives of the governments of Australia, Canada, the Federal Republic of Germany, New Zealand, Pakistan, the United Kingdom and the United States of America and of the International Bank for Reconstruction and Development.

The Indus and its five main tributaries, the Jhelum, the Chenab, the Ravi, the Beas and the Sutlej, constitute one of the great river systems of the world. The main river of this system, the Indus, flows for 1,800 miles from the Himilayas, in Tibet, through Kashmir and into Pakistan to its estuary south of Karachi on the Arabian Sea. The Jhelum and the Chenab also flow into Pakistan, but whereas the Jhelum rises in the Kashmir hills, the Chenab in its upper reaches flows for some 50 miles in India. These three rivers are known as the western rivers. The Ravi, Sutlej and Beas, which flow into Pakistan after traversing India for some distance, are known as the eastern rivers.

With the system of irrigation developed in the Indus basin over the last 100 years, these rivers support a population of 50,000,000 people in India and Pakistan. The area of irrigated land is about 30,000,000 acres - the largest irrigation system in the world. This irrigation system has been developed entirely from river flow, and without dams or other forms of water storage. It is subject to seasonal variations. The flow in the lower reaches is also dependent upon drawings higher up the rivers. Pakistan, as will be seen from the map which has been distributed, is the lower riparian power, and has been concerned to ensure an adequate flow of water. If the available water from the rivers had been sufficient at all times to irrigate all adjacent areas in India and Pakistan, there would of course have been no Indus waters problem. The present treaty permits equitable use in each country of available waters.

By providing funds for dams, headworks, link canals and power stations, the Indus Basin Development Fund Agreement will enable greater utilization of the tremendous potentialities of the Indus group of rivers.

Under British rule there were frequent disputes between the provinces and princely States of undivided India on the use of the Indus waters. However, on partition between India and Pakistan in 1947, the border between India and Pakistan was drawn right across the Indus system. The use of the waters of the Indus system became a major issue in the relations between Pakistan and India. What had formerly been a dispute between provinces in undivided India had become an international issue.

In 1951, the President of the International Bank, Mr. Eugene Black, suggested to the Governments of India and Pakistan that the bank lend its good offices to help them reach a settlement. The offer was accepted and after some years of complex negotiations, the general principles of a settlement were agreed upon and found final embodiment in the Indus Waters Treaty 1960. The main features of the settlement, as outlined in the treaty, are as follows: -

  1. All the waters of the eastern rivers - the Ravi, Sutlej, and Beas - will be available for the unrestricted use of India. However, during a transitional period of ten years, which may be extended to thirteen years under certain conditions, while Pakistan is constructing works for the replacement of waters from the eastern rivers by waters from the western rivers and other sources, India is to permit the release of water to Pakistan from the eastern rivers as specified in a schedule attached to the treaty.
  2. The waters of the western rivers - Indus, Jhelum and Chenab - will be for the unrestricted use of Pakistan except in certain specified cases in India and Kashmir where they may be used by India for irrigation, hydro-electric and other purposes specified in the treaty.
  3. India is to pay £62,500,000 sterling as a contribution to the cost of Pakistan’s construction during the transition period of the replaceworks already mentioned.
  4. Both countries are to co-operate to the fullest possible extent in the further development of the rivers.
  5. A permanent Indus Commission, consisting of one representative appointed by each government, will have a general responsibility for the carrying out of the provisions of the treaty and will seek to reconcile any points of disagreement.
  6. If the commissioners are unable to resolve a dispute, the matter will be submitted to a ‘“neutral expert”, a highly-qualified engineer, for a final judgment on technical questions, and for resort in certain circumstances to a court of arbitration.

It was recognized during the negotiations preceding the settlement that the cost could not be met by India and Pakistan, and the International Bank undertook to draw up a plan to provide the requisite funds. The outcome after a separate series of negotiations was the agreement that I have referred to.

Under the agreement, the Administrator of the Indus Basin Development Fund will be the International Bank for Reconstruction and Development. In addition to

India, whose contribution of £62,500,000 sterling for the construction of works in Pakistan during the transition period has already been mentioned, the governments of the following countries will make contributions of the amounts stated below in the form of grants freely convertible into other currencies: -

Country - Grant.

Australia- £A6,965,000.

Canada- Can$22, 100,000 (£A1 0, 1 57,024).

Germany - DM (Deutsche Mark) 126,000,000


New Zealand- £NZ 1,000,000 (£A1,244,125).

United Kingdom- £20,860,000 sterling (£A26,1 53,225).

United States- US$177,000,000 (£A78,903,674).

In addition, the United States will make a loan of 70,000,000 dollars, repayable in rupees, to Pakistan and will contribute to the fund as grants or loans to Pakistan an amount in Pakistan rupees equivalent to 235,000,000 dollars. The bank will also make up to 80,000,000 dollars available in a loan to Pakistan. Pakistan undertakes to make available to the fund £440,000 sterling and an amount in rupees equivalent to £9,850,000 sterling. All of these contributions are of course subject to such parliamentary or congressional approval as may be necessary in the case of each contributing government.

The agreement is to come into force immediately the Indus Waters Treaty has been ratified by India and Pakistan. The administrator of the fund is then to notify each contributor of the amount required from it to cover estimated disbursements during the half-year period commencing on 1st October, 1960. He will give notice at the beginning of each succeeding half-year period of the amount required to be contributed for that period. The Indus Basin Development Fund Agreement Bill will enable Australia to contribute to the fund.

On current bank proposals, the Australian contribution will be spread over a period of twelve years. Preliminary estimates suggest that our annual contribution will increase from about £180,000 in the first year to a maximum of over £1,000,000 in the fifth year and then decline over the following seven years.

This enterprise, which means so much for the common welfare of people in both India and Pakistan and represents one of the really great contemporary examples of international co-operation, can hardly fail to have beneficial effects on general relations between the two countries. The Indus waters settlement constitutes a stirring example, I believe, of how two great nations, India and Pakistan, can co-operate with each other and with other nations in the solution of a complex and difficult issue. I should like to pay a tribute to the wisdom of their leaders and also with marked emphasis to the skilful and patient diplomacy of the representatives of the International Bank.

Debate (on motion by Mr. Haylen) adjourned.

page 2826


Motion (by Sir Garfield Barwick) agreed to -

That, during the consideration in Committee of the Whole of the Crimes Bill 1960, so much of Standing Order No. 223 be suspended as would prevent proposed new clauses being considered in their numerical order with the clauses as printed in the bill.

page 2826


In Committee of Ways and Means:

Customs Tariff Amendment (No. 3)

Consideration resumed from 19th May (vide page 1967), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, .as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1958).

Customs Tariff Amendment (No. 4)

Consideration resumed from 19th May (vide page 1968), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1968).

Customs Tariff Amendment (No. 5)

Consideration resumed from 19th May (vide page 1970), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1969).

Customs Tariff Amendment (No. 6)

Consideration resumed from 19th May (vide page 1974), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1971).

Customs Tariff Amendment (No. 7)

Consideration resumed from 19th May (vide page 1976), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . .(vide page 1974).

Customs Tariff Amendment (No. 8.)

Consideration resumed from 19 th May (vide page 1976), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1976).

Customs Tariff Amendment (No. 9)

Consideration resumed from 19 th May (vide page 1977), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1977).

Customs Tariff Amendment (No. 10)

Consideration resumed from 19 th May (vide page 1977), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1977).

Customs Tariff Amendment (No. 11)

Consideration resumed from 19 th May (vide page 1978), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1978).

Customs Tariff Amendment (No. 12)

Consideration resumed from 19th May (vide page 1979), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1978).

Customs Tariff Amendment (No. 13.)

Consideration resumed from 19th May (vide page 1979), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1979).

Customs Tariff Amendment (No. 14)

Consideration resumed from 16th August (vide page 85), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1959, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the nineteenth day of May . . (vide page 84).

Customs Tariff Amendment (No. 15)

Consideration resumed from 8th September (vide page 991), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 990).

Customs Tariff Amendment (No. 16)

Consideration resumed from 8th September (vide page 992), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 992).

Customs Tariff Amendment (No. 17)

Consideration resumed from 8th September (vide page 994), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 993).

Customs Tariff Amendment (No. 18)

Consideration resumed from 8th September (vide page 995), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 995).

Customs Tariff Amendment (No. 19)

Consideration resumed from 8th September (vide page 996), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 995).

Customs Tariff Amendment (No. 20)

Consideration resumed from 20th October (vide page 2244), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 2241).

Customs Tariff Amendment (No. 21)

Consideration resumed from 20th October (vide page 2245), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 2244).

Customs Tariff Amendment (No. 22)

Consideration resumed from 20th October (vide page 2247), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff 1933- 1960, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals . . . (vide page 2245).

Customs Tariff (Canadian Preference) Amendment (No. 2)

Consideration resumed from 19th May (vide page 1980), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff (Canadian Preference) 1934-1959, as proposed to be amended by Customs Tariff (Canadian Preference) Proposals introduced into the House of Representatives on the twenty-eighth day of April . . . (vide page 1980).

Customs Tariff (Canadian Preference) Amendment (No. 3)

Consideration resumed from 19th May (vide page 1981), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff (Canadian Preference) 1934-1959, as proposed to be amended by Customs Tariff (Canadian Preference) Proposals introduced into the House of Representatives on the twenty-eighth day of April . . . (vide page 1981).

Customs Tariff (Canada Preference) Amendment (No 1)

Consideration resumed from 8th September (vide page 1000), on motion by Mr. Osborne -

That in these Proposals - . . (vide page 996).

Customs Tariff (New Zealand Preference) Amendment (No. 3)

Consideration resumed from 19th May (vide page 1982), on motion by Mr. Osborne -

That the Customs Tariff (New Zealand Preference) 1933-1959, as proposed to be amended by Customs Tariff (New Zealand Preference) Proposals introduced into the House of Representatives on the twenty-eighth day of April . . (vide page 1982).

Customs Tariff (New Zealand Preference) Amendment (No. 4)

Consideration resumed from 16th August (vide page 85), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff (New Zealand Preference) Proposals 1933-1960, as proposed to be amended by Customs Tariff (New Zealand Preference) Proposals introduced into the House of Representatives on the nineteenth d of May . . . (vide page 85).

Customs Tariff (New Zealand Preference) Amendment (No. 5)

Consideration resumed from 8th September (vide page 1001), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff (New Zealand Preference) 1933-1960, as proposed to be amended by Customs Tariff (New Zealand Preference) Proposals, be further amended as sei out in the Schedule to these Proposals . . . (vide page 1001).

Customs Tariff (Federation of Rhodesia and Nyasaland Preference) Amendment (No. 2)

Consideration resumed from 19th May (vide page 1982), on motion by Mr. Osborne -

That the Schedule to the Customs Tariff (Federation of Rhodesia and Nyasaland Preference) 1960 be amended as set out in the Schedule to these Proposals . . . (vide page 1982).

Excise Tariff Amendment (No. 2)

Consideration resumed from 16th August (vide page 86), on motion by Mr. Osborne -

That the Schedule to the Excise Tariff 1921-1960 be amended as set out in the Schedule to these Proposals . . . (vide page 86).

The committee is also asked to consider a proposal for new legislation involving the repeal of the Customs Tariff (Canadian Preference) 1931 and the Customs Tariff (Canadian Preference) 1934-1960 and its replacement by a Customs Tariff (Canada Preference) 1960.

Specifically, the matters under consideration relate to amendments which I moved in this committee on 19th May, 16th August, 8th September, and 20th October, 1960. The amendments proposed on 27th October, 1960, however, are not under consideration on this occasion.

Mr. Chairman, I suggest, with the concurrence of the committee, that the following tariff proposals in which there are some inter-related matters be taken together: -

Customs Tariff Proposals Nos. 3 to 22,

Customs Tariff (Canadian Preference) Proposals Nos. 2 and 3,

Customs Tariff (Canada Preference) Proposals No. 1,

Customs Tariff (New Zealand Preference) Proposals Nos. 3 to 5,

Customs Tariff (Federation of Rhodesia and Nyasaland Preference) Proposals No. 2, and

Excise Tariff Proposals No. 2

This should give honorable members greater freedom in debate.

Motions - by leave - taken together.

Minister for Air · Evans · LP

– With minor exceptions, which are exclusively of an administrative nature, the proposals give effect to decisions made by the Government following its consideration of a number of Tariff Board reports - some 22 in all - or else they relate to the Budget, or the Canada-Australia Trade Agreement. As honorable members are aware, the Budget proposals varied the import duty on certain radio valves and cinematograph film, and removed excise duty from Australian-made radio valves. The Canada preference proposals follow the conclusion of a new trade agreement with Canada earlier this year. When enacted, the provisions now proposed will replace those in the Customs Tariff (Canadian Preference) 1931 and the Customs Tariff (Canadian Preference) 1934-1960 proposals. I commend the proposals to honorable members.


.- I do not disagree with the proposals as submitted by the Minister. They have been before the committee since 19th May and people both inside and outside the Parliament have had ample opportunity to study the Tariff Board’s report. Honorable members are also well informed as to the Budget proposals.

The proposals cover a wide range of articles such as embroideries, transformers, reduction coils, and so on. I have had time to read only a limited number of the Tariff Board’s reports, but those which I have read have been quite satisfactory, and the recommendations given effect by the Government are amply warranted.

On this occasion, I can only repeat what I have said over a number of years - the Australian Labour Party is a protectionist party. We live in a world of realities, and only by continuing to protect our industries so long as people in other countries seek to protect theirs, can we continue to enjoy the standard of living that we have built up over generations. It is to be regretted that greater interest is not taken by honorable members in these tariff proposals. I take it that this lack of interest is due to the fact that Australian manufacturers are, in the main, satisfied with the decisions of the Tariff Board. On the other hand, I do not know that any great protest has come from those who represent the importing industries, some of which are adversely affected by the proposals. Fortunately, many of the great importing interests have come to realize over the years that, traditionally, the Parliament of Australia, and Labour members of the Parliament in particular, have insisted on tariffs to protect Australian industries, and the importing interests have therefore been induced to set up their own manufacturing concern within Australia. They have found Australian labour satisfactory. Indeed, many of them have found themselves in the happy position ultimately of being able to manufacture goods in Australia, where the standard of living is higher, at a cost equivalent to, and in some cases substantially less than, that at which similar goods can be produced in the countries from which they were previously imported.

I do not know that I need say any more. The Labour Party supports the proposals. We believe that, generally speaking, they are satisfactory to all sections of the Australian community.


.- I rise mainly to make a point that was not made by the honorable member for Lalor (Mr. Pollard). He said that the Labour Party favoured a policy of protection. So do we. He also said that not much interest was taken in the Tariff Board’s reports or in these proposals because all sections of the Australian community considered them to be satisfactory. I strongly disagree with that. There is one section of the Australian community which, taking it as a whole, does not look upon the system of tariff protection in this country as wholly satisfactory. I emphasize that, in making this statement, I do not wish it to be understood for a moment that the people to whom I refer are opposed to protection as such. But they are against the indiscriminate degree to which it has gone. It is a notable fact that the honorable member for Lalor (Mr. Pollard) in mentioning the groups which regard the present protective system as satisfactory referred to the manufacturers. It is obvious that they should regard the present system as adequate. The honorable member mentioned the importers, and on the whole the importers do not do too badly out of the present system.

The section of the community which the honorable member did not mention, either accidentally or by design, is the primary producers, the rural industries of this country.

If .the .honorable member had paid attention to the statements made by the leaders

Qf rural organizations in recent years, particularly in recent months, he would have found that that section of the Australian community most emphatically does not regard the present protective system as satisfactory. Indeed, those people regard it as most unsatisfactory. As I said, they are not against protection, but they feel that the present protective system has gone too far.

Mr Pollard:

– Do you think the honorable members in the corner will be voting against the bill?


– I am talking generally about this question and not about any of the specific items which are before the House, because the honorable member for Lalor spoke generally about it and said that all sections of the of the Australian community were satisfied. I can tell him, if he does not already know it, that the primary producers of Australia are not satisfied with the present protective system. One of the things which they have asked the Government to do, and which I and other honorable members on this side of the House, including my friends in the Country Party, have repeatedly asked the Government to do, is to set up a committee of inquiry into the economic effects of the Australian tariff. The last inquiry into the economic effect of the Australian tariffs was made in 1927. Since then the protective system has grown piecemeal, at a time when Australia’s manufacturing industries have developed completely out of recognition.

Despite the careful and objective job that the Tariff Board does, I, for one, feel convinced that the board itself does not quite realize where this system is taking us. I believe that the Tariff Board would welcome a fundamental inquiry into the effect of the Australian tariff. That is all I wish to say except to repeat, as I said earlier, that I believe the honorable member for Lalor is quite wrong in saying that he and his party believe that every section of the Australian community is completely happy with the present system of protection in Australia. The primary producers of Australia are quite definitely not satisfied with it, and I believe that they are right in that attitude.

Questions resolved in the affirmative.

Resolutions reported.

Standing Orders suspended; resolutions adopted.

Ordered -

That Mr. Osborne and Mr. Davidson do prepare and bring in bills to carry out the foregoing resolutions.

page 2830


Bill presented by Mr. Osborne, and read a first time.

Second Reading

Minister for Air · Evans · LP

– I move-

That the bill be now read a second time.

Mr. Speaker, the tariff changes proposed by this bill have already been debated by honorable members in the Committee of Ways and Means, and I do not propose to refer to them again. I merely wish to direct the attention of honorable members to the new form of the Customs Tariff (No. 3) Bill. It will be seen that there are four schedules to the bill covering the customs tariff proposals introduced on 19th May, 16th August, 8th September and 20th October. Previously, according to the procedures followed in this House, four separate bills would have been required, but with the co-operation of the Attorney-General (Sir Garfield Barwick), the officers of the House and the Opposition, this rather cumbersome procedure has been considerably reduced. The advantages arising from having three fewer bills than would previously have been required will be apparent as the bills are passed through the committee stage. So far as we can see at the present time, the number of bills - six - which I now have to introduce, is the minimum to which these procedures can be reduced, but it is much better to do it in six than to introduce nine bills to achieve the same purpose.


.- At this stage I will say a few words in reply to the honorable member for Barker (Mr. Forbes). He challenged my remark that overall the principle of protection for the Australian economy is generally accepted by all sections of the community. Generally, that is true, although in detail it might be slightly untrue. There are odd sectors of the primary producers - I do not mean odd in character, but odds and ends of primary producers’ organizations - which from time to time protest most vociferously against the imposition of tariffs. But in the Parliament we have the Minister for Trade (Mr. McEwen) from the Country Party, and we have a Country Party corner in this House. Tariff bills come down by the dozen, imposing protection on all manner of equipment and articles used either directly or indirectly in connexion with primary production, but divil a protest comes from any representative of a rural electorate in this Parliament. I think that on odd occasions the. honorable member for Wakefield (Mr. Kelly) has had a word or two to say about them; but the point is that if we had no protective tariff and did not adjust it from time to time, the primary producers of this country, who directly require equipment on their farms, instead of being exploited by a local manufacturer would be exploited whole-hoggedly by importing instrumentalities over which the Commonwealth Parliament has no control whatever.

Mr Mackinnon:

– Why not give us the facts?


– Perhaps I will quote the facts for the honorable member for Corangamite. My mind goes back to 1919 when I wanted a reaper and binder. Those machines were not then made in this country, and it did not matter what importing firm I sought the price from, a reaper and binder cost £105. But lo and behold, this Parliament saw fit to impose a tariff on reapers and binders and we then had H. V. McKay at Sunshine, in my electorate, manufacturing them and they were put on the market at £95. All that was happening under free trade was that the Australian primary producers, the people the, Country Party claims to represent, were being shockingly exploited by the firms that were importing reapers and binders. But as I say, when those machines were manufactured in this country the price came down from £105 to £95. That had the additional advantage that our kith and kin were employed and we were able to impose our own labour and social conditions and were able to impose taxation on the. manufacturers in this country if they exploited the community.

In World War II. we were in the happy position that we were so well organized in the manufacture of agricultural implements within the confines of this country that we exported agricultural implements to Great Britain and others of our allies in various parts of the world. This followed the implementation of a policy designed to protect industry in general, and young industries in particular. It did no disservice to the primary producers; it rendered a distinct service to the community as a whole. I do not think there is any argument about that.

I admit that when tariffs apply there should be some arm of the legislature which is able to police matters in a more effective way than is being done at present to ensure that the protection is not being exploited unduly. There is the protection of industries that I have mentioned, but there is no control over the importer.

The Minister for Trade (Mr. McEwen) informed the House recently that that Government had decided to remove import restrictions. He stated that this would be followed by such a flow of imports into this country that the prices of similar goods manufactured in Australia would fall. Lo and behold, when I asked the Minister for Trade several months after the Government’s decision to remove import restrictions whether there had been a reduction in the price of goods which previously had been subject to import licensing, or of the price of similar goods which were manufactured locally, he stated that the Government at that time had not had enough experience of unrestricted imports to give a firm reply to my question. Some weeks have passed since then and the Government now is able to tell the Parliament - the Treasurer (Mr. Harold Holt) will probably emphasize this aspect to-night - that the removal of import controls on commodities from overseas has not prevented inflation in any way and has not reduced the price either of imported goods or of the locally manufactured goods with which they are in competition.

Clearly, the honorable member for Barker and those who share his opinion that a free-trade policy results naturally in a flow of imported goods at bargain prices, are not aware of the true position. The experience of this country proves the contrary to be the case.

I did not mean to participate in the debate on these tariff bills, but when fallacious arguments are advanced some one should rebut them. Butter, cheese and other primary products are protected by tariffs. Primary products which are not protected by tariffs are protected by instrumentalities which set down local prices and so on. After all, the greatest market, except for our wool and wheat, is the home market and to make this market most effective the people should be enjoying the highest possible standard of wages, social services and general living conditions. I leave the matter at that.


.- I participate in this debate, which seems to have flared up in an unexpected way, to make some comments on the statements which have been made by the honorable member for Lalor (Mr. Pollard) and to support the honorable member for Barker (Mr. Forbes) who entered the lists and put the case for the primary producers very effectively. I join issue with the honorable member for Lalor on one point. Whilst I think that all of us who represent the rural sector of the electorate will be be quick to deny that we are opposed to protection as a principle, we all recognize - and I am sure the honorable member for Lalor recognizes also - that protection imposes a cost on primary producers, particularly those who are meeting world competition, such as wool producers.

I support the request of the honorable member for Barker for an inquiry into the effect of the tariff. Those of us who are primary producers have a shrewd suspicion that tariff bears fairly heavily on us. The last inquiry into this matter was held, I think, in 1929. That inquiry proved that the tariff did not impose an excessive burden on the economy, but many of us feel that the position now may be different from what it was then. This is not a matter on which an ordinary person can express an authoritative opinion. If the primary producing sector is being asked to shoulder the load of producing the exports that are necessary to keep Australia solvent, it should be assured that the Government’s tariff policy will bear on it to the extent that difficulty will be experienced in meeting world competition.

The second point I should like to make is that some of the infant industries that have been protected have borne out the protectionist ideal. The most important of these - the iron and steel industry - has met world competition very effectively. The 1919 reaper and binder that the honorable member for Lalor mentioned is pretty well worn out now, and the argument that he advanced does not now apply. If reapers and binders were being imported now probably they would be coming in cheaper than they could be manufactured here.

I suggest that the Tariff Board lay down as a principle that assistance to industries by subsidy or by tariff should be on a sliding scale. Industries that have received tariff assistance, usually as a result of a Tariff Board report being implemented, should be looked at again after a period of years to see whether they are taking undue advantage, as they do in some cases, of their protection. I for one, should like the caustic soda industry to be reviewed to see whether the tariff assistance on that commodity is not having an undue effect on other materials. Surely there should be a periodic review of these industries and, perhaps, a scaling down of duties.

I have participated in this debate because I did not want the honorable member for Lalor to think that the honorable member for Barker was completely unsupported by honorable members on this side of the House. The honorable member for Lalor should realize that many of us who represent rural constituencies are not opposed to protection as a general policy although we feel that particular aspects of the policy bear harshly upon the rural sector, the health of which is so essential at this time when the need to increase our exports is so vital.


.- I was very interested to hear the views of the honorable member for Wakefield (Mr. Kelly) on this subject. He suggested that we should have an inquiry into the tariff. I have been urging that course on the Government during the last few months. As the honorable member said, the last inquiry was held by the Brigden committee in 1929. Conditions have changed vastly since that time.

The costs associated with our tariff structure are a completely unknown quantity at present, and it would be a very interesting exercise for us to have an investigation of those costs. Even if it meant bringing about no substantial change in the tariff structure, the exercise itself would be enormously valuable. I know that when this subject was mentioned a year ago by the Associated Chambers of Commerce, the Graziers Federal Council and various other interested bodies, there was some opposition from the manufacturers in Australia, who said that it would be a waste of valuable time to have such an inquiry. I disagree. I think the inquiry would be extremely valuable and would throw a lot of light on the way we are heading in Australia. It would also probably enable us to put our economic house in order, at least so far as the tariff is concerned.

There is another aspect of the tariff. We trade with other countries, and in considering what should be done about our policy of protection we should also consider our relationships with the countries which buy our products and the countries from which we buy manufactured goods. Most of our best markets are in countries which are moving rapidly towards unification on the trade front. We deal quite extensively with the countries of Europe and with the United Kingdom. Europe is now divided into two big blocs of trade partners - the European Economic Community, which consists of the countries known as the Inner Six, and which has moved most quickly towards unification on the economic front, and the Outer Seven, which consists of Great Britain and some of the smaller European countries, which have combined to form the European Free Trade Area.

The first tariff cuts in all those countries were made last June, and it is intended to have reductions of tariffs between the countries in the groups at intervals over a period of years until there is virtually free trade between them. Both the European Free Trade Area countries and the European Economic Community countries will enjoy free trade. In that circumstance Australia might find itself in a very difficult position as a country which believes in protection, and yet is dependent for its overseas income on the export of commodities. I consider that it would be wise for us not only to review our tariff machinery at this juncture, but also to review our relationships with the stable and wealthy countries, such as those countries I have mentioned in Europe, and countries of the dollar area, particularly the United States of America and Canada.

The world can be divided in three ways. It can be divided into Communist and nonCommunist blocs of countries; it can be divided into developed and undeveloped countries; and it can be divided between those countries which are stable and which enjoy the result of policies of full employment, and those countries which have unsolved population problems and do not enjoy the privilege of full employment. If we set out to bring Australia into line with the countries which are fortunate enough to have stable populations and wealthy enough to afford full employment policies we shall be alining ourselves with strength. We shall thereby be benefiting not only ourselves and the countries with which we join as partners, but also the underdeveloped countries, because nothing can solve their problems more quickly than the growing wealth and strength of the stable countries, which will be the fount from which the under-developed countries will draw the trained people and the capital that they need for development.

I believe that Australia should be looking towards strengthening still more its links with, first, the leading Commonwealth countries. Then it should look to strengthening its links with European countries, and finally its links with the countries of the North American continent. The countries in those areas compose the stable section of the world, and we would be very foolish indeed to try to proceed, on our own here in Australia, as a small community, completely independently of those big blocs. In this modern world of massive power concentrations we could be crushed economically very easily indeed. So it would be wise for us to strain every nerve and use every effort that we can use to strengthen our links, first, with Great Britain and the principal Commonwealth countries like Canada and New Zealand. We have in the British Commonwealth a system of consultation on economic matters. The Commonwealth Finance Ministers meet annually or once every two years in a consultative body. The Treasurer (Mr. Harold Holt) has just returned from a meeting of that body. So far as I know, no communique was issued as a result of the meeting. No resolution was made, no action was taken following the meeting of the Finance Ministers of the Commonwealth. Of course, there is a very good reason for that. It is simply that membership of that consultative body is not confined to the wealthier sections of the British Commonwealth. It includes the under-developed countries and countries which have newly won their independence, as equals with the leading and the older Commonwealth countries like Australia, Canada and New Zealand. So we cannot hope for that body to be a very effective piece of machinery. It can be contrasted with the type of organization that has been set up by the European Free Trade Area which, although it is not so tight an organization as the European Economic Community, is still a pretty effective instrument.

Members of the European Free Trade Area, at a meeting held only last week in London, considered a proposal to establish a small committee consisting of the Finance Ministers of each of the countries concerned and the leaders of their central banks, to meet regularly and to consider constantly ways and means of ironing out the economic differences between their countries, so that uniformity of approach to trading problems could be achieved as early as possible.


– Order! The honorable member has gone a little wide of the bill, which relates only to the matter of the tariffs provided for in this schedule.


– Yes, Mr. Deputy Speaker. I will return to our peculiar national problem. I was drawing a parallel between what is being done in the rest of the world and what is being done in Australia. I support the suggestion that has been made in the course of this debate that there should be an inquiry into our tariff structure in Australia. I urge the Government most strongly to tie in such an inquiry with an investigation into our relations with the countries from which we buy and to which we sell.


.- Some comment has been made on the need for further investigation into the tariff structure of Australia. After all, this bill, like other tariff bills, applies a tariff that comes within the scope of trade agreements or is modified by them. For example, before the operation of the trade agreement with Japan which was arranged by the Minister for Trade (Mr. McEwen), a rather high tariff scale operated against goods from Japan. As a result of the trade agreement, because certain goods were exported from Australia to Japan, the tariff on goods coming to Australia from Japan was reduced or modified. I believe the time has arrived for an investigation into our tariff system and the methods by which tariffs are determined.

As everybody knows, our trade suffers constantly from severe disabilities. The object of a tariff originally was to protect Australian trade and it was regarded as an efficient and competent method of protection. That is not the case now. After we have imposed duties, we have to go outside the tariff to protect the national economy or industries by the imposition of import restrictions, modified or absolute. The tariff system cannot be said to be totally efficient so long as we have to bolster the tariff by import restrictions or by directions to banking organizations that they must impose a credit squeeze upon importers to protect our economy within the tariff system. How can the tariff system be said to be totally efficient in such circumstances?

To-day we are in such a position that, not for to-morrow or the day after but apparently for as far ahead as any one can see, it will be necessary to bolster the tariff system either by import restrictions, absolute or modified as I have said, and by a credit squeeze on importers so that our economy and our industries can be protected. Surely the time has arrived when we must take a careful look at our system of tariff protection that has been so satisfactory in the past. I have no doubt that ten, twenty or 50 years ago the bill before the House would have protected the industries concerned effectively, but it is totally inadequate to-day. Therefore, the Government should do some serious new thinking on the whole matter of Australia’s trade with other countries.


.- I was pleased to hear the honorable member for Scullin (Mr. Peters) say that he would like to see an investigation made into the Australian tariff system. I support the honorable members for Wakefield (Mr. Kelly), Barker (Mr. Forbes) and Gwydir (Mr. Ian Allan) who said they would like to seen an investigation made into the tariff system. As honorable members well know, it is almost 30 years since the tariff system was examined thoroughly, and I think the time has come when it should be revised and brought up to date. The Brigden report, in 1929, estimated that the tariff was imposing a penalty on rural industries of 10 per cent. That was offset by concessions to primary producers in the form of railway and various other concessions. I believe that the tariff policy to-day probably has placed a bigger loading than 10 per cent, on primary industries, but only a full investigation can determine what that loading is.

Australia is estimated to be the seventh largest trader in the world. Therefore, it is important that we should be continually moving towards freer trading areas. We see in Europe, in the European Common Market and the Outer Seven, moves to lower tariffs and encourage trade among the countries concerned. We in this part of the world cannot remain isolated. Therefore, I think our policy should be to lower tariffs if possible. When the tariff policy of Australia was first formulated, it was introduced to protect industries until they were firmly established, but apparently it has been carried on indefinitely as part of our policy. One of the things that we must decide upon definitely is our attitude to cheap labour countries which provide unfair competition. We also have to determine our attitude towards subsidized goods. Further, we must determine our attitude to goods from Communist countries, because it can be said that these, after all, are only goods subsidized by the various governments concerned. When the world is moving towards freer convertibility of currency and the lowering of trade barriers, Australia must have a forward approach to these matters. That should be done only if there is a complete inquiry into our tariff policy at a time when the internal cost structure is going up and every avenue is being investigated by the Government.


– Before any other honorable member speaks, I remind honorable members that this bill relates only to particular tariff schedules. I have allowed a degree of latitude in the debate so that honorable members could make a point which was mentioned earlier. However, some degree of divergence from the subject-matter of the bill has developed, and the debate has gone outside the scope of the measure before the House. I ask honorable members to relate their remarks to the bill.


.- Before I proceed, Mr. Deputy Speaker, I should like to have your ruling on the matters to which I am permitted to direct my remarks. Five or six speakers have spoken on a particular subject. Does your direction to honorable members mean that I cannot speak on that subject?


– Order ! It means that the honorable member must relate his remarks to the bill before the House.


– As you will not permit me the same liberty as has been accorded to other honorable members to deal with a matter that affects primary industries, I am unable to state my case and had better not proceed.


– The honorable member may not speak unless his remarks have relationship to this bill.


– The honorable member for Scullin (Mr. Peters) said certain things to which I wanted to reply. As the honorable member has been permitted to say these things, if I am not allowed to reply to him, I will be placed at a disadvantage.


– Order! The honorable member may speak only on matters relating to the bill. Other honorable members were called to order before and came back to the bill.


.- I am, I believe, in the same position as the honorable member for Mallee (Mr. Turnbull). My purpose is to answer some of the diversions-


– Order! I remind honorable members that the Chair is in control of the House. As I have said, a certain amount of latitude was allowed to members who used illustrations to make points in relation to the bill. In fairness, I think that latitude has been allowed to both sides of the chamber. I remind the honorable member for Mallee that it was a member of the Australian Country Party who at the beginning of this debate transgressed most.

Question resolved in the affirmative.

Bill read a second time.

Mr Turnbull:

– I rise to order.


– Order! The honorable member for Mallee will resume his seat.

Bill reported from committee without amendment or debate; report adopted.

Third Reading

Motion (by Mr. Osborne) proposed -

That the bill be now read a third time.


.- As this bill deals with machinery and many other things that are related to primary production, it was my intention to point out, in the terms of a question which I asked to-day in this House, that the Government should take every opportunity to use the tariff to equalize the economic positions of primary industry and secondary industry. I know that no country can hope always to sell and never to buy. Therefore, we have to watch our tariffs in order to permit countries to sell to us so that, by keeping their economies on an even keel, they may, in turn, buy from us. As has been stated in this debate, tariffs were first introduced in order to help secondary industry to get on its feet and become progressive and prosperous. If you look at the share market-


– Order! The share market has no relation to this bill.


– I believe that certain secondary industries are in such a prosperous condition that it is no longer necessary to protect them. The abolition or reduction of the protection which those industries receive would allow overseas goods to come into this country for use by the primary producer. This would tend to put him in a more favorable position in relation to secondary industry. Consequently, I ask the Minister for Air (Mr. Osborne) to use the tariff and every other measure available to assist primary production.

Mr. OSBORNE (Evans - Minister for through the House expeditiously, I deliberately did not reply to remarks made earlier by honorable members on this side in relation to the alleged need for an inquiry into the economic effects of the tariff. But I feel I must point out that they have implied that the Government simply follows every recommendation of the Tariff Board and that the board itself makes every inquiry on an ad hoc basis, without any examination of the overall effect of its work. Both these assumptions are wrong. The Tariff Board is a competent body of eminent and qualified people. It has its own qualified staff and every major examination that it makes is, in itself, an examination of the effect on the economy of the tariff then being considered. Then the Government itself examines meticulously the reports of the Tariff Board as they come forward. In that way, the Government is kept continuously in touch with the effects of the tariff on the economy.

There is a third process to which I should draw honorable members’ attention: I refer to the activity in which the Government has engaged very resolutely and effectively in recent years of negotiating trade agreements, every one of which involves an examination of the effect of the tariff on the whole community. I think that this sort of continuous examination of the economic effects of the tariff is much more effective and more likely to produce successful results than is any special body set up to make a general inquiry. The history of administration is full of the records of committees such as those suggested which have been set up especially to inquire into wide matters of administration but have achieved negligible results.

The only other matter to which I want to refer concerns the comments of the honorable member for Lalor (Mr. Pollard) about the removal of import controls. Import controls really have nothing to do with the debate at all but I might point out to the honorable member that they have never been adopted by the Government as other than a fiscal measure, whereas the tariff changes we are debating are designed for the protection of Australian industry.

Question resolved in the affirmative.

Bill read a third time.

page 2837


Bill presented by Mr. Osborne, and passed through all stages without amendment or debate.

page 2837


Bill presented by Mr. Osborne, and read a first time.

Second Reading

Motion (by Mr. Osborne) proposed -

That the bill be now read a second time.


.- There are a couple of matters that should be submited in connexion with this bill. Recently we have seen the effect of imports on certain industries - for instance, the furnishing textiles industry.

Mr Osborne:

– I raise a point of order, Mr. Deputy Speaker. Furnishing fabrics are not covered by this bill, and a discussion of them is not relevant to the legislation before us.


– Order! The honorable member for Yarra must confine his remarks to matters that are covered by the bill.


– I was referring to what has happened in recent weeks in relation to furnishing textiles merely as an example of what can happen, and what will happen if we are not most careful, in relation to the goods which are to be admitted from Canada, under this legislation, at concessional rates of duty. I do not know whether the House or the Tariff Board has considered the economic circumstances which produced the results to which I will refer. Industries in the United States of America and in Canada are usually conducted on a far larger scale than their counterparts in Australia. When the Tariff Board is making its determinations, upon which legislation of this kind, giving preference to goods from Canada, is based, one factor can easily be overlooked. When the output of the factories engaged in producing certain classes of goods in Canada has satisfied the usual markets, there is frequently a surplus, sometimes amounting to 10 per cent, or 20 per cent, of the total output. This surplus can be considerably greater than the total output of similar factories in Australia. As a result, we find that goods are landed in Australia which represent no more than the marginal output of an industry in North America, at considerably less than the price at which those goods sell on the retail market in North America.

Any examination of the position that the Tariff Board might make, based on comparative costs of production, in order to determine the rate of tariff, could well overlook this circumstance. The sending of goods to Australia in these circumstances, at a preferential rate of tariff, constitutes little better than a dumping of the surplus production of the industry involved overseas. I merely wish to direct the attention of the House to this aspect of the matter. As I said earlier, this has already happened with regard to furnishing textiles within the last couple of weeks, and I submit that local industries producing the goods covered by this bill could be affected in a similar way.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2837


Bill presented by Mr. Osborne, and passed through all stages without amendment or debate.

page 2837


Bill presented by Mr. Osborne, and passed through all stages without amendment or debate.

page 2837


Bill presented by Mr. Osborne, and passed through all stages without amendment or debate.

page 2837


In committee: Consideration resumed from 10th November (vide page 2806).

Clauses 1 to 4 agreed to.

Clause 5 (Operation of Act).

Attorney-General · Parramatta · LP

Mr. Chairman, I should like to say something about this clause, which will make a very significant change in the applicability of the Crimes Act. The act, when it was passed in 1914, was not made applicable to any acts or circumstances occurring outside the Commonwealth of Australia. The reason was that at that time it was thought that the Commonwealth did not have power to make its laws effective beyond the limits of Australia and its Territories. Since 1914, as I mentioned in my second-reading speech, many changes have taken place, perhaps the most notable of them being changes in the status of this country. In 1914, it was a member of the British Empire. To-day, it is an independent nation and it has been expressly given power to make its laws effective outside Australia. The Statute of Westminster has been adopted by this country, and there is now no impediment to its making its laws effective with respect to acts which take place outside Australia.

It is very important, I think, that I should point out that this means only that acts done outside Australia by people who have relationship to Australia, that is to say, Australians, are covered. It does not mean that an act done by a foreigner in some place beyond the Commonwealth or its Territories is caught up by our law. It means, for example, that if larceny takes place in an Australian embassy or larceny of Australian funds by an Australian abroad occurs, or if Australian secrets are communicated abroad by an Australian to a foreign country, offences will have been committed under the Crimes Act.

This clause has particular significance in relation to matters which the committee will no doubt discuss later on. The provisions of the 1914 act with respect to treason and so on did not apply to acts done outside Australia. Probably, the likeliest place for acts of that nature to be committed is outside Australia, and the Commonwealth has already had experience of endeavouring to prosecute a person for acts done outside Australia which the Commonwealth claimed to be in breach of section 24 of the Crimes Act. On that occasion, the Commonwealth was quite frustrated - I put this in a neutral way - because, although it was able to resort to the State law as a member of the public, as it were, as a common informer, and put in motion the State law, from the point of time at which the party accused was committed for trial the Commonwealth lost all control of the matter, which then passed Into the hands of the State AttorneyGeneral. We then had the spectacle of the national government, which desired to put a man on trial where his guilt or innocence could have been determined by a jury, being unable to do so because it could appeal only, as it were, as a suppliant to the State Attorney-General, who on that occasion refused to proceed further. It had no power of its own.

I suggest to this committee that that is not a tolerable situation for a national government. So one of the first things to be done in the general, routine overhaul of the principal act in which I have been engaged was to make the laws of the Commonwealth effective with respect to acts in relation to this country committed beyond Australia by Australians. This is not only a very large extension in the effectiveness of the Crimes Act, Mr. Chairman. It is also a very distinct mark of the maturity of this nation. It is a step that is very consonant with the increase in Australia’s international stature and its dignity as an independent nation such as we now are.


.- Mr. Chairman, as the Attorney-General (Sir Garfield Barwick) has reminded the committee, the purpose of the Statute of Westminster was to permit - and not only to permit but also to encourage - the development of the full association of the member nations of the British Commonwealth of Nations. This development could be achieved only by legislating for an extraterritorial effect where the interests of a particular dominion required it. With the adoption of the Statute of Westminster, we passed beyond that concept of relationship with Britain under which we relied on the Mother Country for certain legislation. We are now in a situation in which, because of the adoption of that Statute, we ought ourselves to legislate. This clause represents the fulfilment of the Statute of Westminster insofar as legislation of this type is concerned.

The Statute of Westminster was adopted by Australia some years ago. Indeed, if my memory serves me correctly, it was adopted by this country during World War II. The Statute was adopted for a specific purpose - to enable us to deal with a situation which challenged us in our role as a contributing member of the British Commonwealth. Quite apart from that situation which brought about the adoption of the Statute, Australia was confronted by a specific circumstance which was a great affront to the dignity of this nation. An Australian, who, of course, owed allegiance to Australia, chose to broadcast over Radio Tokyo during the war and to carry out activities which were akin to those carried out in Germany by William Joyce, or Lord Haw-Haw, as he was better known. The provisions of the United Kingdom law which brought the hangman’s rope to Joyce were not available in the law of this country to punish the man who offended against Australia. Australia ought to have the power to punish such offences in an extra-territorial sense. For these reasons I support the clause. We have to have it in fact; and in principle, because of the development of the concept of Australia as a contributing dominion in the partnership of the British Commonwealth, we ought to have it.


.- I think that several points in relation to this proposal of the Attorney-General (Sir Garfield Barwick) should be brought to the notice of the committee. He submits that this provision is a sign of the increased stature of the Commonwealth and that it now is able, or finds it necessary, to introduce a law which allows us to pursue Australians who offend against Commonwealth law, no matter where they may be when the offence is committed. This may very well be a necessary provision, but to see it as a mark of the increased stature of the Commonwealth is, to say the least, a rather peculiar view. The need to make laws to pursue offenders in other parts of the world is, to my way of thinking, something that we should hardly mention in relation to our increased stature. These provisions may be necessary, but at best they are a most unfortunate necessity. I find it difficult to understand the Attorney-General’s attitude that this circumstance indicates our growing prestige.

The second point that I want to submit for the consideration of the committee is this: The Attorney-General says that he has been involved in a review of the legislation. We know that he came to the Parliament with a great reputation. He seems to have been given the job of reviewing Australian law in quite a number of fields. Perhaps if he had not entered Parliament, this review would not have been undertaken. But if, as he says, the Government has found in the past that Commonwealth law has not reached some offenders, then it has taken a most unusual length of time for the Government to alter the law to bring these people within its reach. None of the cases that have even been hinted at by the Attorney-General have occurred within the last ten, twelve or fifteen years. Presumably they all occurred during the Second World War. This Government has been in office for almost twelve years since then, but it has seen no necessity to attempt to amend the Crimes Act during that time.

One wonders why it is that the year 1960 has been chosen for this great amendment of the Crimes Act. If it is not for the reason that the Attorney-General has entered Parliament as a result of a byelection, what other reason is there for this wholesale review of the Commonwealth crimes legislation? Had the Government not been fortunate enough to acquire this bright star of the law, would it have allowed our Crimes Act to have gone unamended for another twelve years? Is the AttorneyGeneral serious when he gives his explanation for these amendments? Has the Government some other motive for introducing this amending bill? And, of course, “ amending “ is the appropriate word Amendments have been circulated in respect of this bill which was introduced only a few weeks ago and which the honorable gentleman himself said would meet with the approval of every one except Communists and Communist sympathizers. Apparently, the bill does not meet with his approval, because he has now introduced six pages of amendments. Does that make him a Communist sympathizer? I suggest that the Attorney-General cannot expect the committee or the people to take him seriously.

The honorable gentleman suggests that the need to extend the provisions of the act to the whole of the Commonwealth and the Territories and beyond the Commonwealth and the Territories arose from something that happened during the Second World War. If that is so, the Government is guilty of dereliction of duty in not having repaired the deficiency in the past twelve years. In 1950, the Prime Minister (Mr. Menzies) told us that we had to prepare for war in three years. But there was no amendment of the Crimes Act. We have been spending £200,000,000 a year on war and defence. But there has been no amendment of the Crimes Act. However, in 1960, after all those years and all those circumstances, we have a spate of amendments which makes this place look like a snowstorm in winter. Mr. Chairman, I have difficulty in understanding the explanations of the honorable gentleman in the context in which he has given them.


.- I want, first, to point to the inaccuracy of the honorable member for Yarra (Mr. Cairns) in stating the length of time that this Government has been in office. He asked why, if we had done nothing to amend the Crimes Act during the last twelve years, we are doing something in 1960. He seems to see something sinister in the year 1960. I remind the committee that this Government has been in office for nearly eleven years, not twelve. The Labour Government which preceded it was in office for eight years, and several of those years were post-war years. I draw the attention of the committee to the fact that the honorable member is inaccurate at least in some of his statements.

He is also inaccurate when he refers to the basis of these amendments. He criticizes the Attorney-General (Sir Garfield Barwick) for having circulated certain amendments within the last few days. However, it may be usefully pointed out that these amendments are merely declaratory of the existing law in many instances and are intended to assist the layman to comprehend what the Attorney-General and the Government are aiming to put on the statute-book. It is not intended to put anything over or to blind any one with science. The Attorney-General has gone out of his way to explain the law and the proposed new law by means of these declaratory amendments, which are condemned by the honorable member for Yarra, so that every one will be fully seised of the importance of the amendments and will realize that they seek to defend the country against those who would undermine it and hand it over to some potential enemy.


.- Reference has been made to the term “ throughout the whole of the Commonwealth and the Territories “. I ask the AttorneyGeneral (Sir Garfield Barwick) whether this term includes the trusteeship Territories, and to give us his ruling as to how the law runs in relation to these Territories. Does any conflict with international law arise? I understand - the Attorney-General may correct me if I am wrong - that trial by jury is not necessarily provided in the Territories. I think some constitutional case some time ago decided that indictment and the jury system were not necessary in relation to offences committed within the Territories and that the Government could govern by decree. If that is so, the lowering of standards of justice for the people of our trust Territories could be considerable.

I ask the Attorney-General to inform me whether he is sure of his ground in relation to the Territories. I ask him further whether there is a lower standard of justice and a higher possibility of oppressive conduct by Administrators in relation to trust Territories.


.- The honorable member for Yarra (Mr. Cairns) has referred to proposed new section 3a, which is now before the committee, and which provides as follows: -

This Act applies throughout the whole of the Commonwealth and the Territories and also applies beyond the Commonwealth and the Territories.

Does the honorable member for Yarra present Labour’s view when he criticizes this amendment? Does he suggest that Labour believes that any person guilty of treason, treachery or sabotage against this country should escape the penalties of the law if he remains abroad? Is that the view of the Opposition? When speaking to the proposed amendment, he said that it was not necessary, thereby suggesting that anybody who was a traitor to this country should escape the penalties provided by this legislation if he happened to be outside the Commonwealth. For instance, does the honorable member suggest that, if Australian troops were sent overseas on a United Nations’ mission, the Opposition believes that any saboteur who endangered those troops or injured them in any way should escape the penalties provided by this legislation? That is what he said, and it is up to the Opposition to defend that view, or to deny it.

La Trobe

.- Listening to the honorable member for Yarra (Mr. Cairns) one could form the opinion that even if the Government decided to accept in toto the Opposition’s amendments the Opposition would still oppose the bill. The honorable member endeavoured to prove that, as nothing had been done up till now, nothing should be done. Surely the purpose of amending the Crimes Act now is to ensure that nothing detrimental or dangerous to our security will happen in the future. The purpose of this legislation is not to deal with what happened in the past; it is to guard against happenings in the future. I cannot see that the remarks of the honorable member for Yarra have any bearing at all on the proposed amendments. I agree with the honorable member for Hume (Mr. Anderson), who argues that the legislation must apply to the Territories, and I submit that it is only reasonable that the Government’s proposal should be accepted.


.- The honorable member for Hume (Mr. Anderson) and the honorable member for La Trobe (Mr. Jess) both missed the point. That is usual for the honorable member for Hume, but the honorable member for Jess might eventually learn better. For us, the operative words are, “ this Act “. The amendment proposed by the Attorney-General (Sir Garfield Barwick) offends not only members of the Opposition, but also the great mass of the Australian people, including large and significant organizations. We are not alone in our objection. This legislation is to apply throughout the whole of the Commonwealth and the Territories, as the clause says, and for that reason the Opposition will take every opportunity, in the comparatively few minutes available to it. to make clear to the people of Australia that we oppose the proposal not because the Labour Party has been or is associated with any of the dire crimes mentioned but, firstly, because we have some faith in the people of Australia; secondly, because we have little faith in the Attorney-General’s judgment in these matters, because of his known character in this place in the last year or so; and, thirdly, because we take a dim view of the suggestion by the honorable member for Hume, who knows better, that the Labour Party has anything other than the welfare of the people and the nation at heart. I emphasize that the nation’s welfare is conditioned, not only by the law, but also by the rights and freedoms of its people. There are large areas of this legislation which are offensive to the people of Australia.

I do not think that anybody on this side would have any objection to an appropriate act applying to the people in the Territories, but the people in the Territories of the Commonwealth do not enjoy the ordinary civil and legal freedoms that we in Australia do. They are governed by a completely different political system. The people in the external Territories have no rights in this Parliament, while the people who are represented here most capably by the honorable member for the Australian Capital Territory (Mr. J. R. Fraser) and the honorable member for the Northern Territory (Mr. Nelson) have no effective voice in this Parliament because both those honorable members are denied the right to vote on these matters. In those circumstances, we must not take lightly any attempt at extending a repressive and restrictive Commonwealth act to the people of the Territories. We want all these points cleared up. Let there be no doubt about the fact that the Opposition stands firm on this matter, and that a great and significant proportion of the Australian electorate is on our side, as rh<; Government will learn in the near future.

Mr. CLYDE CAMERON (Hindmarsh) T5.101. - T am very disturbed at the inclusion of the words, “ and the Territories “. This measure proposes to make it a crime for any person to levy war. I point out that if agreed to this legislation will apply to the natives in the trusteeship Territory of New Guinea who have no right to vote, and therefore cannot remedy their grievances by constitutional means. They have no right to remedy industrial grievances by appealing to an arbitration system. They have to remain in complete subjection, politically, socially and industrially until such time as this Government chooses, out of the goodness of its heart, to free them from the situation in which they now find themselves. I say now, and have always said, that there is absolutely no justification for overthrowing an established government by force provided the people of the country concerned have the right to remove a government constitutionally. But where the people of a country have not the constitutional right to remove a government, they have every justification for overthrowing that government by force, because there is no other way of removing it. No one could ever complain of, or with justification condemn, the Bolsheviks who, in 1917, overthrew the corrupt Czarist Government of Russia, because they had no other way of removing that government than by force. They did not have the right to vote their government out. They had only one way left to them. The New Guinea natives are in precisely the same position as are the people of all the totalitarian countries of the world where the right to a free vote is denied the common people. We have the right to vote a government out of office, but the people of New Guinea are not one whit better off than are the people living under the most totalitarian form of government in the world. Therefore, it is completely wrong and unjust for this Government to say: “ Look here, we will give you no right to vote the government out of office constitutionally. We will give you no right to determine by constitutional means whether you want self-government. We will give you no right to determine by constitutional means whether you want to become a complete entity as an island nation of your own. We refuse you the right to remove the government by constitutional means, and if we should catch you doing anything that resembles an attack upon the government or an attempt to remove the government by force, that will become an indictable offence for which you may be imprisoned for life.” In order to gain some idea of just how far this measure goes* one has only to look at that part of it which makes it an offence to levy war against the established government.

The CHAIRMAN (Mr Bowden:

Order! The committee is discussing clause 5 at the moment.

Mr Clyde Cameron:

– I am dealing with the application of the new law. Clause 5 provides that the act shall apply throughout the Commonwealth and the Territories. I am complaining about what the legislation sets out to do. I say it should not apply to the Territories. If the measure did not make it an offence to levy war against the established government, perhaps I would not see so much objection to its being applied to the Territories, because when we see just how wide the application of the words is to be, we begin to appreciate the great injustice that can follow from extending its application to people who have no right to rectify their grievances by constitutional means.

Before leaving this point I must explain that one of ‘the serious objections we have to applying to the Territories the provision relating to “ levying war “ is that as far back as 1781, which was 400 years after the statutes on treason to which the Attorney-General referred when trying to justify certain aspects of this bill, Lord Chief Justice Mansfield held that the assembly of a multitude for the purpose of achieving reforms by means of demonstration constituted “ levying war “. Supposing that a multitude of natives assembled before the District Commissioner and some little thing went wrong - it only needs a little thing to go wrong because they are a highly excitable people - or if some little thing was said which excited them to flare up, their tempers would rise and before you knew where you were you would find yourself in the middle of what might be described as a revolution. A situation could develop which, in the words of Lord Mansfield, would be levying war against the Commonwealth. I believe it is outrageous that we should impose this legislation upon the New Guinea natives, who have no right to vote. They have not given this Government a mandate to impose these shackles upon them, because they have no vote. When a situation such as that prevails, I believe this Government has no right at all to impose any of its laws upon people who cannot remove the Government for imposing laws which they consider to be unjust. The only people who should be affected by laws passed by this Parliament are those who have the constitutional right to elect a new Parliament if they consider the laws passed to be unjust.

Minister for Air · Evans · LP

– There is no substance whatever in the argument of the honorable member for Hindmarsh (Mr. Clyde Cameron), and it is a patent absurdity. He suggests that a government which has imposed upon it the obligation to pass laws and administer the affairs of a dependent people has no right to pass laws to prevent those people from levying war against it. It is a manifest absurdity. Taken to its logical conclusion, it would undermine the whole basis of the trusteeship system of the United Nations. If a country which is responsible for the government and administration and making of laws for a dependent people is unable to legislate against the levying of war against it, there can be no sanction for that government. The honorable member is suggesting, if his argument is taken to its logical conclusion, that any dependent people has an absolute and inherent right to take up arms against the government which governs it. That is an absolute and patent absurdity.

Mr Clyde Cameron:

– If they have not the right to vote.


– That applies to many native peoples under the trusteeship of the United Nations. The argument put forward by the honorable member is too absurd to be taken further. While on my feet I want to take up a few remarks made by the honorable member for Yarra (Mr. Cairns). He gave a completely twisted interpretation of the views of the Attorney-General (Sir Garfield Barwick) and of the honorable member for Bruce (Mr. Snedden), to the effect that we take pride in the passage of a penal statute as a mark of our nationhood. The obligation to pass this legislation is a mark of our nationhood, and we take pride in the fact that we are now a completely independent people, no longer required to rely, in our extra-territoria relations, on the laws- of somebody else:

This is an obligation which arises from that fact. I also disagree with the implication by the honorable member for Yarra that there is something shameful in having to pass a law of this sort When did it become shameful to have to provide the machinery for the defence of this Government and its statutory authority? When did it become shameful for a people to pass laws to provide that its citizens shall not commit treason inside or outside the boundaries of their own country? As I have said, the honorable member for Yarra expressed a completely twisted viewpoint.

Wide Bay

.- As I understand the argument advanced by the honorable member for Hindmarsh (Mr. Clyde Cameron), it would make Lord Justice Mansfield turn in his grave. The honorable member said that the effect of Lord Mansfield’s decision was that if some natives assembled peacefully to demonstrate in Papua-New Guinea and somebody stirred them up and they then did something wrong, action could be taken against them. Lord Mansfield’s decision did not say any such thing. It said, in effect, that if those natives assembled with intent by force and violence to change the state of affairs relating to the Government they would be liable - if they assembled with intent. The honor* able member for Hindmarsh said they would be liable if they assembled peacefully to demonstrate. Lord Mansfield said they would be liable if they assembled with intent by force and violence to overthrow the Government. Here we have another example of how the words of a judge can be twisted in an attempt to give them a meaning they do not have.

The second part of the speech of the honorable member for Hindmarsh inclined me to the view that what he meant to imply was that the natives in New Guinea should be able to commit treasonable acts without being charged. What a ridiculous state of affairs it would be if natives in Papua or any other place could commit treasonable acts and still not be subject to the law. There is only one issue involved in this question. It is whether this provision is right or wrong. Is it right that Australia should be given the same powers as the United Kingdom already possesses when its citizens commit crimes either within or outside its jurisdiction? The United Kingdom has had that power for a long time. Because Australia has achieved nationhood it is now desired to give her similar powers, and therefore the provision is good.


.- I think that a couple of points that have been raised in the course of this debate require further attention. The first is the submission of the honorable member for Ryan (Mr. Drury) that my criticism of the spate of amendments introduced by the AttorneyGeneral (Sir Garfield Barwick) is not a valid criticism. His reason was that the seven pages of amendments that have been introduced by the Attorney-General have only been introduced to explain to people who do not know the law what the original bill really means. I call to the honorable gentleman’s attention the fact that there have been widespread criticisms of this bill by such leading lawyers as Mr. Kerr and Mr. Wootten and Sir John Latham, who was once an Attorney-General of the Commonwealth and who introduced legislation not dissimilar to this, as well as Mr. G. H. Cohen, of Melbourne, Professor Sawer, and Professor Stone, of Sydney. The debate that has gone on between these lawyers in the public press shows not only that the lawyers are worried about this bill but also that on some points the AttorneyGeneral was not correct in the assertions that he put forward. The amendments are not only for the purpose of explaining the bill to laymen who do not know the law but also to meet the effective criticisms made by those lawyers whose names I have mentioned.

The second point which I think requires further attention is that made by the honorable member for Hume (Mr. Anderson), who submitted that in criticizing clause 5 I implied that it was wrong to have a Commonwealth law applicable in Commonwealth Territories and beyond those Territories to an Australian who commits an offence. That, of course, is a completely wrong interpretation. We object to the application of a bad law here, in the Territories or anywhere else. We say that this is a bad bill and ‘that even with the seven pages of amendments that have been proposed by the amending Attorney-General the bill will remain a bad bill. As the honorable member for Wills (Mr. Bryant) pointed out, we are against the application of a bad bill to Sydney, Melbourne, Canberra or any part of the Commonwealth, to the Territories of the Commonwealth or to the rest of the world. We are opposed to this bill because it is a bad bill.

The other aspect which requires further attention is the one which was mentioned by the honorable member for Hindmarsh (Mr. Clyde Cameron). He stated that it is wrong to apply a law to a territory in which people live who have no constitutional means of changing that law. He claimed that in applying this law the Government will apply, among many other things which are bad, the provision in relation to levying war. I want to make two comments about this aspect. The first is that I believe that this provision is not contained in any legislation in any State, in Great Britain or anywhere else. In addition to what is contained in the laws of other States or countries, this bill provides that an act preparatory to levying war is an offence. Not merely is it an offence to levy war, but it is an offence to do an act preparatory to levying war. As far as I am aware - it will be open to the Attorney-General to indicate whether I am incorrect - there is no similar provision in any law in any part of the British Commonwealth.

The Minister for Air (Mr. Osborne), who flew in a few minutes ago, stated that levying war implies the taking up of arms against the Commonwealth, as though the people of New Guinea might take up arms and march on the Commonwealth. Levying war does not mean that at all. The massive definition of levying war which was given by Lord Mansfield in 1781 - it will be open also to the Attorney-General to say whether any substantial change has been made in this definition since 1781 - states that levying war does not mean organizing war against a country. It is something much different from that. Lord Mansfield’s definition is in these terms -

Insurrection by force and violence to raise the price of wages, to open all prisons, to destroy meeting houses, nay to destroy all brothels, to resist the execution of militia law, to throw down all enclosures, to alter the established law, or change the religion, or to redress grievances real or pretended, have all been levying war.

Is that the fact? If it is, the natives in the Territories or the people in Australia can be held to be guilty of levying war without taking up arms against the Commonwealth. They can be held to be guilty of levying war if they are responsible for insurrections by force and violence to raise the price of wages. Where is the relevance to levying war in Australia? Is the Government concerned that the people might throw down all enclosures, change the religion or destroy all brothels? If it is not, what is left of Lord Mansfield’s definition? The critical thing that remains is insurrection by force and violence to raise the price of wages. In other words, legitimate industrial disputes can come within the ambit of the definition of levying war. We shall have a closer look at this aspect when we deal with the relevant amendment, but who can be satisfied that the Attorney-General will draw the line indicating where an ordinary industrial dispute becomes something else? How many policemen have to be pushed over? How many people have to be hit on the head before an industrial dispute becomes something other than a legitimate industrial dispute? Who knows the answer to those questions? The whole concept is vague and indefinite.

I submit that the point that was made by the honorable member for Hindmarsh still stands. When a law of this kind is applied to the people of the Territories who have no constitutional right to change it, an incident like that which occurred at Navuneram could blow up into something which would come within the meaning of “levying war” because the people of the Territories have no rights and no opportunity to change the law in any way.


.- This discussion concerns clause 5 of the bill which seeks to apply the Crimes Act to the Commonwealth and the Territories and beyond the Commonwealth and the Territories. The major part of the Opposition’s argument seems to have centred on the question of whether it ought to apply to the Territories. Let us put the matter in its proper perspective. This clause seeks to apply the whole act to the Territories, and the whole act is not just section 24a or 24ab. The Government’s proposal relates to a whole series of offences, to the release of offenders on licence, to people who are found on trial to be sane, to bribery of

Commonwealth officers and things of that nature.

Does the Opposition seriously put to the committee that the bill should exempt the Territories? What a stupid suggestion! If the Territories were exempted, people would have only to resort to the Territories to do with impunity those things which are necessary to overthrow by violence the Constitution or the Government of Australia. Going a step further, the Opposition states that if the Government cannot exempt the Territories from the application of the bill because people will resort there to carry out their evil designs, it should exempt the indigenous natives. This is another stupid suggestion. Of course, the Government cannot exempt the indigenous natives! To do so would be to create an atmosphere in which people with evil desires could go to the Territories and there seek to whip up among the indigenous natives an intention which could be converted into violence directed against the Constitution or the Government of Australia. If the Opposition’s proposal were accepted, it would mean that such people would be immune from punishment.

Obviously honorable members opposite are not prepared to argue these clauses in a sensible manner. As the debate progresses we shall find probably that they are incapable of arguing any clause in a sensible manner.

Mr Clyde Cameron:

– The honorable member for Bruce (Mr. Snedden) went to great pains to point out that this clause will apply the Crimes Act in its entirety to, for instance, the Territory of Papua and New Guinea. That is my complaint. If the clause exempted certain parts of the bill from application to the Territory I should have an altogether different attitude to it. But I am completely opposed to the whole of the act being applied to the Territory because among other provisions which will apply are those contained in clause 56, which will impose upon the people of the Territory the obligation to allow jurisdiction under the act to be exercised by a district officer or an assistant district officer of the Territory. So you have the situation that an assistant district officer of New Guinea, a man who has had no legal training and who knows very little about the law - the rights conferred on a citizen1 by the common law and the law of evidence - an inexperienced person whose knowledge of the habits of the natives may be profound and whose knowledge of pidgin English may be good, will have the power under this act to impose the death sentence upon a native. Against such a sentence, the uneducated primitive native would have no practical means of appeal. The only practical means available to a native of New Guinea to change the law of New Guinea is to do exactly what the bill seeks to prevent, that is, to resort to violence, insurrection and demonstration. The Government proposes in this bill to take away from the natives the only means that they have of changing the law.

Let us never forget that we are there, not at the invitation of the native people of New Guinea, but because we have imposed ourselves on the native people of New Guinea. We were never invited there. We just went there. And, having gone there, having denied those people the right to vote and so to have a say in the making of the laws that govern them, we now propose - that is, under this present Government - to impose this new, vicious law on them, under which they can suffer penalties such as the death penalty, imprisonment for life and so on, when they exercise the only means they have of changing the law.

We give our own people in this country the right to change the laws by constitutional means. Having given our own people the right to change laws by constitutional means we have every right to introduce a law that will prevent them from adopting unconstitutional means of changing the law. But we have no right to impose the death penalty on people who have no means of changing the law constitutionally for trying to alter the law by some other means.

Let us also never forget that the great American nation was brought into being as a result of armed insurrection against established government. That is perhaps the reason why, in the American constitution, there is no prohibition against people altering the government by armed revolution or by force. What the Americans hold is that the people have the right to alter the government, that if the government is bad the people have the right to alter it. There is nothing in the American constitution which specifically refers to armed revolution or the use of force. I notice that the Attorney-General has made a note, and I will be interested to hear whether I am correct in this regard. It is quite possible that 1 am not exactly correct in this particular matter, but that does not get away from the fact that the New Guinea natives are people to whom we deliberately refused to give the vote.

Only a few weeks ago we were discussing legislation which would have enabled the Government to give those people the vote had it wished to do so. Indeed, the Opposition actually moved an amendment to the bill to that effect. You will recall, Mr. Chairman, that the Opposition moved an amendment specifically calling on the Government to establish a common electoral roll in the Territory and to give every native the right to vote, and thus the right to change the law by constitutional means. This Government rejected that amendment and, having by a specific and deliberate act on its part refused to give these people the right to vote, it now seeks to impose on them this savage law, knowing very well that the poor devils have no way of altering the law by constitutional means.

Attorney-General · Parramatta · LP

– One honorable member asked what legal warrant we have for providing that this act, in whole, shall apply in the Territories, including the Territory of New Guinea, which is a trust territory. This question has quite recently been litigated, as honorable members will know, in a case in which I appeared for the Commonwealth as its Attorney-General. One of the points which was raised in that case was the extent to which the Commonwealth could make its laws applicable in the Territory of New Guinea. The challenge which was made to the Commonwealth was that it was unable to provide for one legislative council for the two TerritoriesPapua and New Guinea - because it was limited in some way by the trusteeship deed. The High Court held, quite unambiguously and emphatically, that the Commonwealth was quite entitled to apply such laws of the Commonwealth as it thought fit to the Territories, and it expressly answered, also, the honorable member’s question as to whether the extension of such laws constitutes in any way an infringement of the international obligations assumed under the trusteeship deed. So my answer to the honorable member is that t there is ample legal warrant for extending the laws to the Territory of New Guinea, and that there is no inconsistency between extending those laws to the Territory of New Guinea and the trust instrument.

Then the honorable member for Hindmarsh (Mr. Clyde Cameron), with a degree of emotion which perhaps warped his judgment and prevented him from reading carefully what was in front of him, developed the proposition that the clauses of this bill, particularly clause 56, will work in some miraculous way to allow a district officer or an assistant district officer of the Territory to try people in the Territory for breaches of the act and, amongst other things, to impose the death penalty. That, I may say to honorable members, is a complete misconception. All that clause 56 seeks to do is to invest the several courts which it mentions with the jurisdiction which the act purports to confer on these courts. Clause 56 proposes to insert a new section 85e. Sub-section (3.) of that new section reads -

The jurisdiction invested in, or conferred on, a court of summary jurisdiction by this section shall not be judicially exercised except by a Judge, a Magistrate, or a District Officer or Assistant District Officer of the Territory.

Now, honorable members will have noticed that many of the various offences which are dealt with in the bill are referred to as indictable offences. The purpose of that is to secure the constitutional provision that trial on indictment for an offence against the law of the Commonwealth shall be a trial before a jury.. Honorable members will have noticed the first of the amendments which I have circulated.: There is an amendment by the Opposition which does more than I propose, but which would also do what I propose. My amendment would make it certain that, notwithstanding another provision in the act, those offences stated by the bill to be indictable will, in fact, be tried on indictment.

Mr Whitlam:

– Your amendment would not catch an attempt to commit such an offence.


– That may be right. What honorable members need to appreciate is that it was decided - and I think one honorable member referred to this - by the High Court that although an offence was described as being indictable, if there was machinery by which you could try that offence summarily so that you did not have in fact to use an indictment, as the document by which you charged the accused, then you need not try the case before a jury but could try it summarily. Section 12a of the act provides that proceedings in respect of offences against the act, although declared indictable may, with consent, be heard and determined summarily. It also provides that if an offence relates to property the value of which does not exceed £50 the case may be determined summarily at the instance of the prosecutor, and it need not be by consent. The amendment proposed - with which I will deal more fully later - is designed to secure that these provisions regarding an offence involving property worth £50 or less, and offences triable summarily by consent, are not applicable to the major offences which are referred to in the bill. If that amendment is accepted it will mean that in extending this law to New Guinea a person who breaches the law in respect of matters dealt with in the bill, and referred to in my first amendment, would have to be tried on indictment and before a jury. Clause 56 does not give jurisdiction to a district officer to try anything on indictment. It gives only summary jurisdiction. So assuming my first amendment proves acceptable to the committee, the extension of this measure to the Territory will mean that any one who commits the particular offences to which reference has been made, will have to be tried on indictment whether he be a native-born Australian from the mainland, a planter or an indigene. There is no discrimination in treatment between the people who may commit the offences.

The honorable member for Hindmarsh has overlooked that these offences are perhaps as likely to be committed by persons who become planters, by settlers or visitors as by the indigenous peoples; so it is very necessary that the law should apply and apply equally throughout the Territory of New Guinea. Therefore, the rather harrowing picture that the honorable member for

Hindmarsh drew of a district officer passing sentence of death on somebody is quite inaccurate and not a possibility under this bill.

I should like to refer now to another matter that was raised by the honorable member; and I must say with great respect to him that I was greatly surprised when he referred to it. I do not know that the honorable member has really plumbed the depths of his own suggestion. It is all very well for him to say that we were not invited into New Guinea by the natives. That may be true enough, but this nation has accepted a solemn undertaking internationally - and that undertaking has been accepted internationally - to bring these people to a point of self-determination. Probably there is nothing so foolish as to talk about holding an election now in New Guinea throughout the length and breadth of the Territory. That just is not good sense or practical politics. We all know that these pepole have to be brought along to maturity. This nation is most honorably discharging its obligation to do so and is doing it with as much speed as is thought appropriate in all the circumstances, bearing in mind the state of development of the people themselves.

As I think the Prime Minister (Mr. Menzies) said in the House not long ago, these people are not a coherent nation. They are a. group to tribes and people living in villages without any true sense of community as yet. Through this period of tutelage, they must be treated with humanity and as much wisdom as in us lies. To say that we ought immediately to give them the opportunity to determine a form of government they do not understand and have no means of exercising sensibly is folly. Indeed, it is more than that; it is dangerous folly. When it is coupled with the proposition of the honorable member that it is perfectly right for these natives to make war on the Administration in order to achieve what this group or that group of natives wants, it is incredible. If the honorable member takes the analysis of his proposition a step further, he will realize that natives in such circumstances might not all want the same thing. He must then go a step further and say, “Two or three groups of them can make war on one another and one or all of them on the

Administration; he must say that that is all right”. That is a terrible thing to say; in fact, for anybody who has the good of the natives at heart to say it, is rather shameful. That will not help the natives at all. Even saying it is not a good thing. These people are in a tutelage state. It is not harsh to say to them and those who might incite them, “ You are not going to cast this Territory into a state of civil war “ - because that is what levying war means, in substance.

I should think that honorable members - and the honorable member for Hindmarsh, when he pauses a little to consider what he has been saying - will agree that as we carry out this obligation honorably and under international supervision through the Trusteeship Council, these natives will be brought to a stage of self-determination. Until then, neither they nor those who would incite them are entitled to make war on the Administration. There is nothing harsh, nothing improper and nothing unreal in saying that this law will apply throughout the length and breadth of New Guinea. The honorable member for Hindmarsh must know that there are in this world those who would not mind an unrestrained opportunity to instigate civil war among the natives of New Guinea and against the Administration. That is not a foolish statement. For the honorable member to come into this House and say that not merely should we enable these people to do this but that it would be laudable if they did, is dangerous talk.

Mr Cairns:

– The honorable member did not say that.


– Yes, he did.

Mr Haylen:

– You have taken his words too far.


– I have not pushed them an inch beyond what he honorable member said. I am not going to discuss at this point what levying war means, because I will come to it in the discussion on another portion of the bill to which it is relevant. I say only this at present: There is no substance in the statement by the honorable member for Yarra (Mr. Cairns) about an insurrection to raise the rate of wages will be bringing wages under this bill, because honorable members will know that I have already proposed an amendment which will ensure that any act done in good faith in pursuance of an industrial dispute or an industrial matter will not be forbidden or made unlawful by any of the provisions of the bill. If the whole of the legislation is made applicable, the safeguarding provisions I have mentioned will also be applicable.

Finally, the honorable member for Hindmarsh has suggested that the United State of America has no provision to prevent civil war against itself. I would have him know that he is not right.


.- The Attorney-General (Sir Garfield Barwick) has failed to reassure the Opposition on three aspects. Firstly, he equates levying war with waging civil war. I believe he is not correct, and I cite for my authority the 1958 edition of Kenny’s “ Outlines of Criminal Law “ in which this statement is found at page 365 -

It is not essential that the offenders should be in military array or be armed with military weapons. It is quite sufficient if there be assembled a large body of men who intend to debar the Government from the free exercise of its lawful powers and are ready to resist with violence any opposition.

Sir Garfield Barwick:

– What else is that but civil war?


– It is civil war without war. The footnote to the quotation I have read states -

Nor need the body be large; three men with dynamite have been held sufficient.

The examples quoted by the honorable member for Hindmarsh (Mr. Clyde Cameron) might regrettably prove apt. It would be possible for indigenous inhabitants of New Guinea to be charged with levying war in the sense that we have inherited that term or, still more easily, for them to be charged with the new aspect of treason which appears in no statute - British, American or Australian - of doing any act preparatory to levying war. There is no definition of that phrase.

Secondly, the Attorney-General has yielded to the Opposition’s persistence that there should be a trial by jury for treason in all its forms. He has not yielded to the Opposition’s assertion that there should be a jury trial for any crime or any offence which under the Crimes Act or this bill are said to be indictable offences. Section 7 of the Crimes Act which is to be amended by clause 8 of the bill states -

Any person who attempts to commit any offence against any law of the Commonwealth- and the bill adds the words “ or of a Territory “- whether passed before or after the commencement of this Act, shall be guilty of an offence and shall be punishable as if the attempted offence had been committed.

The consequence of that is that one does not have to have levied war or to have done any act preparatory to levying war. One need only have attempted to levy war or attempted to do an act preparatory to levying war. In those circumstances - the circumstances of attempt - there is no guarantee of a jury trial at all if the property involved is worth £50 or less. That is, if the stick of dynamite or the shillelagh are worth less than £50, one can be tried summarily.

Then one comes to the other proposed section, which the honorable member for Hindmarsh quoted. Under this section a summary trial for any of these offences can be before a judge, a magistrate, a district officer or an assistant district officer of a Territory. Let us assume that the trial is to be before a jury. Then, under proposed new section 85e (4), the trial on indictment, of an offence not being an offence committed within a State, may be held in any State or Territory. That is to say an indigenous inhabitant of New Guinea who is charged with one of these offences, if it is on indictment, need not be tried in that Territory. He can be tried in any other Territory or in any State. I submit that the Attorney-General has failed to allay the fears which the honorable member for Hindmarsh and others have very properly raised as to the position which could arise in the Territory of Papua and New Guinea.

Progress reported.

Sitting suspended from 5.58 to 8 p.m.

page 2849



HigginsTreasurer · LP

– by leave - According to i’s practice, the Government has recently made a further review of the Australian economy in its various aspects. Our economy is never static. It has become very diversified. It is affected by seasonal swings, fluctuations in export prices and the level of external demand. Our population is small compared with that of other great trading nations, but we rank amongst the first ten in the world in volume and value of goods marketed overseas and imported. Our external trade is a larger proportion of our total trade than is the case in most other countries. Our policy objectives of national expansion, immigration and full employment, while consistently maintained, subject the economy to varying strains. It should not be surprising that from time to time changes in methods become desirable. But in any such changes of tactics made necessary by changing circumstances, we have steadily held to these broad goals.

From our latest study of the overall situation we have decided upon certain corrective measures. Amongst these are some on which decisions, in principle, were taken at the time of our Budget discussions, but on which it was then felt that further study was needed before they could be applied.

Most of the measures which I shall now announce will be given immediate, or almost immediate, effect. Some will involve legislation; others will not. But they all belong to a general plan of action and are closely related to one another. I therefore propose to explain them together.

In February of this year, it will be recalled, we announced four measures directed to check excessive buoyancy already evident at that time. We intervened in the basic wage case to counsel the commission in the public interest against granting a further general wage increase at that juncture. We removed the great majority of restrictions on imports. We decided to work towards a balanced Budget in 1960-61, and we stated our support for the policy of the Reserve Bank in trying to reduce excessive monetary liquidity in our economic system.

Then, when we came to the Budget after the middle of the year, we followed through on the third of these objectives by providing in our Budget for a cash surplus in 1960-61. To make this possible, we kept additional expenditure down well below the level of 1959-60, and we made substantial increases in taxation.

The main facts of our present situation are, of course, well known; the more difficult task is to assess how trends will unfold during the remainder of 1960-61 and beyond. Considering our external position, imports are still high, exports are somewhat lower than last year, and capital inflow appears to continue at much the same rate as for some time past. In recent months our overseas reserves have been falling quite rapidly and although, on the ordinary pattern of events the greater part of the fall will occur in the current six months, it will probably continue through the rest of the financial year, even if at a slower rate. As I have explained elsewhere, we are well placed to stand such a fall as seems likely in 1960-61, because we still hold more than £400,000,000 in gold and foreign exchange of our own and have, behind this, drawing rights with the International Monetary Fund totalling more than £200,000,000.

Nevertheless, we have to conserve these overseas reserves, which are so vital to the functioning of our economy, because we cannot be sure what external conditions will’ be in times ahead. Placed as we are, we can never afford to be extravagant with imports. The Government removed import controls because it held that our economy would benefit from being able to obtain supplies abroad from the widest and best sources. It has always been our view that tariff action, carefully framed to foster only sound industries, is far preferable to the arbitrary protection which import licensing gives. Moreover, import restrictions had always been resented by the community and we had undertaken to get rid of them as soon as we possibly could. Having got rid of them, the Government firmly intends, as I said in my Budget speech, to keep out of them; and we believe that, given reasonable success in trading abroad and in attracting overseas investment, we should be able to do so.

We expected that there would be some rise in imports, if only because people would promptly buy overseas goods they had not been able to buy in the years of restriction. But we believed also that some restraint would be needed to prevent the exuberance that normally follows the removal of restrictions from leading us into unnecessary difficulties. We sought this through what we hoped would be a careful regulation of bank credit, and later through a balanced budget and other measures. Even with such measures at work we expected * that there would be an early phase of fairly heavy importing, but that soon thereafter the rate of inflow would begin to fall. So far, it has continued at a fairly high level, and there is one principal reason for this. It is, that we have in progress a very strong boom in spending- - spending on consumer goods, on motor vehicles, for example, where record sales have been taking place, on building in its various forms, and on other branches of investment. Meanwhile, there has been a great increase in supplies of goods produced locally - and I welcome it. But this has not been enough to meet all demands, and, of course, the effort to produce locally has increased the call on overseas supplies of materials, components and equipment. It has done more than this. It has led to quantities of steel, and probably of other materials, which would normally have been exported, being diverted to local use. It is thus working against our external position in two ways. It is increasing the import bill and it is also reducing our potential earnings from exports.

Plainly enough, to safeguard our overseas funds position, we must reduce the excessive internal demands which are the main reason why imports continue to run high. That is the external aspect of the matter.

But to reduce excess spending is something we would have to do in any case. It is now creating serious shortages of labour, especially in New South Wales and Victoria. At the end of October there were registered 22,737 unfilled vacancies in New South Wales and 16,820 in Victoria. In each State this was about twice the number of persons registered for placement: 11,637 in New South Wales and 7,534 in Victoria. We did not have merely full employment; we clearly had over-full employment. These shortages are both hampering production and helping to force costs and prices up. Excess spending is also destroying any possibility of building resistance to the cost and price movement, and it is providing scope for much speculative activity in land and building and, until quite recently, in stocks and shares.

Spending has, of course, been strongly on the rise for a considerable time past, and the Government has, at successive stages, taken action to restrain it. I recalled these measures earlier and they have been explained from time to time to the House. That they have had some effect of the desired kind is undoubted; probably they have had a very considerable effect. We may ask, for example, how much worse our supply position would now be had we not obtained more imports. Moreover there have been, in addition to our own measures, developments like the fall in wool prices which, within certain areas of the economy, are having some deflationary consequences. But there are various measures and forces which we have applied and which have not so far been fully effective or - perhaps more accurately - they have not been effective enough in all the necessary directions.

Some say that the Government should have taken more drastic action than it has done. I find it a little odd to hear an Australian Government blamed for not being tough enough in its economic measures. After all, we have to do more than try to balance overall supply and demand in the economy; we have also to ensure, if we can, that growth keeps on at a sufficient rate. It is only little more than a year ago that many people were expressing anxiety about the problem of absorbing new labour from migration and from young people leaving school. So far as this year has gone, that has proved not to be a serious problem at all. Indeed, the number in employment has increased by more than 100,000 in the year. Yet, under other circumstances, the problem could be serious; and if growth is to proceed the problem will continue to be there. Our general preference has been for taking action by stages - firm action but not violent action - with the aim, as we said earlier in the year, of bringing steady but increasing pressure on the situation until it is brought into balance and the cost and price movement is stopped. Then, at the appropriate time, the restraints can be slackened off.

At the present time it can be said that demand is much too high; but that is true only in an aggregate sense. It is not true of all sectors of the economy or of all people. Undoubtedly, some people are spending much more than usual but others are not. Similarly, the demands that industry is making on resources are not universally too great. Some industries are running along quite normally or, if they have expanded, it has not been more than commensurate with the general rate of growth. The excess demand for resources is most evident, and over-expansion has been most pronounced, in certain sectors. Building is an obvious case. Preliminary statistics just released show that, in the September quarter, houses and flats were being started at a rate above 100,000 a year. This is 16 per cent, higher than a year earlier. Building of offices, hotels, shops, factories, hospitals and the like has risen by an even greater percentage and, on all indications, the rise goes on. Much of this building is no doubt essential to the normal expansion of industry and trade, but there is also an element which is speculative, and apparently proceeds from a view that boom conditions will continue indefinitely. A recent official survey of a large sample of businesses indicates that they were expecting to increase their spending on new buildings and structures in the six months to December, 1960, by 38 per cent, compared with actual expenditure in the previous six months.

The motor industry is another conspicuous example. Registrations of new vehicles have lately reached a rate of 330,000 a year, which is far above the highest point achieved in the 1954-55 boom. There are other industries which have expanded fast, but building and the motor industry stand out. I do not question the vital place which both industries have in our affairs. But we must take account not only of intrinsic worth but also of questions of degree in our current circumstances. Taken together these two industries represent a big volume of activity in themselves and, because they set up demands on many other industries, the boom in them has spread its effects far and wide.

The measures now in force - the Budget in particular - will no doubt continue to exert a restraint on demand, perhaps an increasing restraint. There is, however, no reason to expect that they will have any greater effect on the booming industries than on any others. We have come to think, therefore, that the current measures ought to be reinforced in certain ways. First, we consider that the overall liquidity of the whole economy, which has been very high for a long time and is still high, must be reduced. Not only has money been very plentiful but it has been turning over more, rapidly than in former times, and both tendencies must be checked. However, in doing this we must try to concentrate what is done on the activities we want to restrain and to safeguard those others, especially export production, which must be encouraged to expand. Secondly, we think we should try to diminish the excessive flow of funds, generally through the so-called fringe institutions, to hire purchase and other sorts of consumer credit, to land and real estate activity and to speculative activity generally. Thirdly, we propose to use such direct measures as we have at hand to steady down activity in the building and motor vehicle industries.

From the beginning of this year we have sought, by one means and another, to reduce the liquidity of the monetary system. We had that in mind when we lifted import controls; it was also one object of our Budget, in which we provided for a cash surplus and imposed additional taxation. But whatever effect those steps have had so far has been largely offset by the great increase in bank lending which has since occurred. Frankly, we did not reckon on this. We were given to understand last February that there would be. at the most, only a moderate increase in bank advances during the months ahead, and that was in fact the aim of Reserve Bank policy. Its failure to be translated into effective action is now - and has been for some time past - a matter of great concern. What really is the position? For months past the Government and the Reserve Bank have desired to see the growth of bank advances slowed down to more acceptable levels. The Reserve Bank has issued requests to this effect, and through the statutory reserve deposit mechanism has kept a tight hold on the liquid reserves of the trading banks. But the techniques used have failed to bring about the desired result. In the event bank advances outstanding have increased by no less than £150,000,000, or 15 per cent., during the current calendar year alone. It was not until August last that the trading banks made any substantial reduction in the very high rate at which they had been granting new overdraft limits or adding to existing limits. This had gone on at a time when their holdings of liquid assets were falling and notwithstanding the requests of the Reserve Bank to moderate the pace of new lending.

It is appreciated that some new commitments must be entered into in the ordinary course of conducting the country’s business. Equally, some advances are being currently repaid. There is a turnover in bank advances which is not only inevitable but positively helpful in assisting the economy to adapt itself to the ever-changing pattern of industry and commerce, lt is only when the rate of new lending commitments unduly exceeds the reductions normally occurring that the growth in outstanding advances becomes a matter for concern.

I find it rather strange to contrast these figures with the rising chorus of voices that proclaim a credit squeeze - not only a credit squeeze, but a drastic one. I know that some people, indeed, have been refused bank accommodation which they thought would be easily forthcoming. Some, no doubt, have in fact been squeezed. But some people got not only the £150,000,000 by which the aggregate of advances increased; they got in addition the further amount by which other people were reduced. They have been soaking up credit as a dry sponge soaks up water. The immediate aim is to secure a quick cessation of the growth in advances actually outstanding.

Our prime object, plainly, must be to halt the rise in new bank advances and to bring down the total outstanding in the coming months. With this purpose in view, the Reserve Bank has followed its earlier requests for a reduction in the rate of new lending approvals with a request to the trading banks for a substantial reduction in the total of outstanding advances between now and the end of next March. In the June quarter, it is usual for a tightening of monetary conditions to occur, mainly because this is the period in which large tax payments are made and also for reasons associated with the seasonal swing in the balance of payments. This year the tightening is likely to be considerably sharper than usual, partly because tax payments will be larger but also because it is probable that overseas reserves will still be falling to some extent. If the banks are to support their customers during that period, it is all the more important that they should in the meantime have redressed their own positions to the greatest possible extent.

There are those who tell us that this outpouring of bank credit cannot be stopped; at the very least, that dire consequences will befall us if it is. Well, the simple answer is that it can be stopped, and that serious consequences will follow if it is not stopped. So it must be stopped.

I now address myself to the means by which it will be stopped. It will, of course, be the Reserve Bank through whose agency the process will be directed. But the Government in this matter will be standing behind the Reserve Bank and lending it support and encouragement.

The Government will stand squarely behind the existing initiative of the Reserve Bank in maintaining pressure on the liquidity of the trading banks until the desired results are secured. By this I do not mean that the statutory reserve deposit ratio or the Reserve Bank’s credit policy will be directed by the Government or that it will not be changed from time to time, upwards or downwards. But the Reserve Bank will manage it, as heretofore, with the carefully calculated object of ensuring that the right pressures are maintained at the right times to secure the right results. Similarly, the Reserve Bank will continue to give guidance and, if necessary, direction on the quantity of bank credit that should be made available from time to time.

Importantly, too, it will give much more specific guidance on the classes of borrowers whose needs are to be judged less important, and the classes of borrowers, especially certain classes of export producers, whose activities may reasonably call for extra accommodation. In other words, the object will be to see that bank credit is not excessive in total, and that it is not diverted from those who can make good use of it to others whose activities in current circumstances are making undue demands on the country’s resources.

There would be no sense at all in reducing bank support for the primary industries producing for export because we want to see them, if anything, expand their output. On the other hand, there are the best of reasons for reducing the bank finance available for the building-up and holding of stocks of imported goods and, indeed, of stocks of any kind of goods.

Equally, there are the strongest reasons for curtailing bank finance for land and share speculation, for consumer credit in any form and for purely financial dealings. The aim must be, in other words, to concentrate the heaviest weight of restriction on those less essential activities which have been adding to the spending boom. At the same time, we wish to protect and give a proper degree of support to essential production, and especially to rural production for export. A selective policy will, therefore, be required, and will be maintained until the objectives of policy have been met.

These are the main lines of the policy it is intended to follow on bank credit during the coming months. Within a few days, the Reserve Bank will, in pursuance of its powers under the Banking Act, issue more detailed instructions to the trading banks. 1 propose also to approve certain recommendations put to me by the Reserve Bank Board on the subject of bank rates of interest. First, as to the rates paid by the trading banks on fixed deposits and certain classes of current accounts: Neither the Reserve Bank nor the Government has any wish to compel the banks to pay specified rates on their deposits, but it is known that they have themselves wished to raise the rates currently offered to depositors as an inducement to them to leave their funds with the banks rather than to succumb to the enticement of putting their free resources into one of the many forms of investment outside or on the fringe of the banking system proper. This, we believe, would be a very helpful move in current circumstances.

I have spoken earlier about the rate of turnover of money and the relation of this to the operations of the so-called fringe institutions or financial intermediaries. These can be taken to include, broadly, all the organizations, new and old, which are engaged in the business of raising money from the public to finance consumer credit, share and land dealing, promotion and construction of more or less speculative kinds. There is a great problem of how to regulate the activities of these bodies and it is not made any the easier for us by the limi tations upon our constitutional powers in this field. I should perhaps observe that in the United Kingdom, the United States of America and other countries in which a similar problem exists, but which possess wider constitutional powers, it does not appear that any satisfactory system of control has yet been worked out either.

What concerns us more particularly here, however, is the connexion that exists between the growth and activities of these bodies and the supply of money in the conventional sense of trading and savings bank deposits and notes and coins. There can be little doubt that an over-abundant supply of money favours them because, when people have more money at their disposal, they are likely to draw upon their bank deposits and invest in the notes, debentures or deposits of the organizations which offer relatively high rates of interest. When the money is spent by these institutions the people who receive it deposit it again in be banking system.

If the flow of funds to these bodies is to be reduced, it appears necessary that the rates of interest offered by the banks on deposits should be increased. We recognize that any increase in deposit rates must be substantial if it is to have a worthwhile effect. I am accordingly giving my approval to a new set of arrangements about maximum rates of interest on fixed deposits which the Reserve Bank will propose to the trading banks. In the first place, the Reserve Bank will request the trading banks not to accept fixed deposits for a longer term than twelve months, but they will be authorized to pay up to 4± per cent, for that term. Deposits lodged for three to six months may in future be accepted at rates not exceeding 4 per cent.

The trading banks will also be authorized to increase their maximum overdraft rates on most classes of loans, but not on all and not by the same amount in all cases. No bank loan may be made at present at a higher rate than 6 per cent. In future the maximum rate to be charged will be 7 per cent. Over all its loans any bank at present may not charge rates which will average out at more than 5± per cent. This permitted average will now rise to 6 per cent. Again, however, it is necessary to ensure that the permitted rise in interest rates is applied selectively, so that its impact will fall mainly on those activities we want to abate. The Reserve Bank will therefore request that, as a general rule, the banks should continue to provide preferential rates below the average for export producers in the rural and mining industries. It will also suggest to the trading banks that they should charge the higher rates permitted to them on finance for such things as imported stocks or speculative or financial dealings.

So far as possible, it is the aim of the Reserve Bank, and indeed of the Government, that there should be as little interference as possible in the traditional relation between banker and client. We have no detailed information about the affairs of individual bank customers, nor do we want it - and we want no judgments by the Reserve Bank on the credit-worthiness of particular individuals. Some people, no doubt, will fail to get an advance, or will be asked by their banker to reduce an existing advance, for reasons which have no relation to national credit policy. But we see no ground, based on national credit policy, for an overall attack on current loans to primary industry, loans which have been made for housing, and the many smaller overdrafts which have not been unduly or unreasonably increased in the last year or so. This would be attacking the problem at the wrong end. But there are those who have heavily increased their borrowing limits, or who have called heavily on notional limits established in the past, and who in the process have contributed to those developments we are now seeking to check. These are the avenues where we will expect the main attention to be given.

In these new circumstances it is obvious that there will need to be some rise in the rates payable on savings bank deposits. This matter will be taken up at once by the Reserve Bank with the private savings banks, the State savings banks and the Commonwealth Banking Corporation.

There are, however, two sides to the business of competing for money. It can, no doubt, be a useful step to offer higher bank deposit rates as a means of persuading people to leave their money on deposit rather than to invest it with the fringe institutions. But the effect of this could obviously be nullified if the fringe institutions were to raise their borrowing rates by an equal or a greater amount. Up till now they appear to have found it relatively easy to do this, and one fact which has assisted them is their ability to deduct the full amount of interest they pay as a business cost in arriving at their taxable income. The value of this to such borrowers is very substantial indeed. With the general rate of company tax at 8s. in the £1, the net cost to a company of a 5 per cent, loan is only 3 per cent., and an 8 per cent, loan only 4.8 per cent.

The position so created has been a mattei of concern to the Government for a good while past. It figured prominently in our Budget discussions in July, in Cabinet, when we concluded that something should be done about it, and much time and effort has since been expended in examining the matter in all its aspects. There can be no doubt that the competition of some of these borrowers offering relatively high rates has reduced the amount of subscriptions to Commonwealth and semi-governmental loans raised to provide money for basic development and community facilities. The Government thus loses in two ways. Because of the tax concession, it loses tax revenue on the interest paid by competing borrowers and it loses loan money which might otherwise have come to it. Ultimately, the burden falls on the general taxpayer. But competition with Commonwealth loans is not the only, nor, perhaps, even the most important aspect that concerns us. Industry suffers as well, because the unbridled competition of some borrowers taking advantage of the taxation privilege, and being able to charge the public inordinately high rates when they lend the money again, has tended to drive up interest rates generally.

It is, of course, a long-established taxation practice to allow deduction of interest as a business expense in determining taxable income. But while this may be sound in principle, it has now been carried to such extreme lengths, and has led to such burdens on public authorities and on the general taxpayer, that it cannot be allowed to persist longer without some modification.

Regulation of this matter is, of course, somewhat difficult, because the needs and circumstances of borrowers differ so widely. Although a great deal of thought has been given to it, we would not claim that we have yet been able to evolve a fully satisfactory scheme. We do, however, feel that action of some kind ought not to be further delayed and we therefore intend to bring down, by way of an interim measure which will hold the position, certain proposals for the immediate amendment of the Income Tax Assessment Act. Full details will be given in my second-reading speech on the bill I shall introduce.

The principal features will, however, be theses -

  1. The new provisions will apply only to interest on borrowings by companies. Interest on borrowings by individuals and organizations other than companies will continue to be fully deductible as at present.
  2. Interest will also be fully deductible on borrowings by and from banks, approved pastoral finance companies, approved short-term market dealers and building societies. Interest on loans from governments or guaranteed by governments will also be fully deductible. These provisions take account of the fact that the classes of interest concerned are now subject to regulation.
  3. Apart from these exceptions, the amount of interest for which deduction will be permitted in 1960-61 and until the permanent scheme has been instituted will not exceed, in the case of most companies, the amount of interest actually deductible in the income year 1959-60, or the sum of f 10,000, whichever is the greater. The allowance of full deductibility for amounts up to £10,000 is intended to cover the position of small companies or companies coming on the market, perhaps for the first time, for moderate amounts of loan money.
  4. To meet the case of newly established companies and companies which had relatively small or no interest payments to deduct in 1959-60, but which have since borrowed, such companies may exercise the option of substituting in the formula the annual liability on their borrowings as of to-day for the interest deducted in 1959-60.

I wish most strongly to emphasize that we regard this scheme, as I have said, as a holding operation, to remain in force only until such time as a more comprehensive and detailed scheme is fully developed in the light of experience and wider information. I ought perhaps to say, however, that in evolving a permanent scheme our aim will be to reduce as far as possible the advantage which deductibility of interest provides for companies which seek to borrow excessive amounts of money at excessive rates of interest. It should most definitely not be concluded that the permanent scheme will bear any close similarity to the interim scheme I have just announced. At least, the interim scheme will allow companies which find themselves involved to make any adjustments they believe to be necessary in their circumstances.

Along with the general problem of deductibility of interest, we have also given attention to the current practice of issuing interest-bearing notes which become convertible after a period into shares of the company concerned. While it is claimed, probably with some truth, that this method of finance is particularly suitable for some companies at an early stage of their development, it is quite plain that the practice is now widely regarded as a means of obtaining the advantage of interest deductibility on the return for what is in essence share capital for the companies involved.

The Government has therefore decided to amend the income tax law to provide that interest on convertible notes issued in the future shall not be deductible for income tax purposes by companies which may issue such notes in future. It will thus, in most respects, be treated on the same basis as dividends. I should make it clear, however, that the legislation will not affect companies in respect of notes already issued. I shall give further details in my secondreading speech on the amending legislation.

The several forms of action I have outlined - the tightening of bank credit on a much more selective basis, the raising of interest rates on bank deposits and the associated raising of the maximum limits on bank lending rates, partial non-deductibility of interest on borrowings by companies, and disallowance of interest on convertible notes as a deductible item - are, as a group, aimed at bringing about a reduction in the excessive liquidity of the economy, and at reducing the flow of finance, largely through the fringe institutions, to the areas of activity which have done most to foster the boom and keep it going. If these measures lead to some reduction in consumer credit in speculative building and real estate operations and in the building up of excessive stocks - in itself a speculative type of operation - they will be generally helpful.

Besides these, we have decided to increase the rate of sales tax on motor cars and station wagons from 30 per cent, to 40 per cent. The existing 163- per cent, rate of sales tax on motor cycles, motor scooters and similar vehicles will be increased to 25 per cent. We are doing this, firstly, to cut back the rate of buying of these vehicles, which has become higher than the current condition of our economy can reasonably be expected to support. Industrially, the performance of the motor industry in Australia has been impressive and the Government fully recognizes the great contribution it has made to our development. But we have also to recognize that there are limits to the resources we can afford for the production of items such as motor cars as against other requirements of our growing economy. Apart from its great call on local resources of labour and of materials such as steel, the industry is responsible for a very large total of imports; and with the steep rise in motor vehicle output, imports for the motor industry, as well as of petroleum products, have also risen steeply. Taking petroleum products and other items clearly attributable to the motor industry and motor transportation, imports in the September quarter this year were running at an annual rate of £200,000,000 compared with a rate of £152,000,000 in the September quarter of 1959. I am, of course, well aware that the present rate of sales tax on cars and station wagons is regarded as relatively high. The Government would not now be proposing this increase were it not convinced that some lowering of activity in this field is necessary in the general interest. It holds itself ready to review the sales tax rate when it feels the situation of the industry and the state of the economy looked at together appear to warrant some adjustment.

These then are the measures we propose for immediate application. Another matter we had under consideration at the time of our Budget discussion, and on which study has continued, has a rather longer-term significance. It concerns the tendency, evident over a number of years now, for life insurance companies and superannuation and provident funds to depart from their traditional practice of investing a large proportion of their funds in the securities of public authorities, and to apply an increasing and now very large proportion of such funds to commercial and industrial investments. Let me quote some relevant figures.

Whereas life companies held 50 per cent, of their assets in Commonwealth and semigovernment securities in 1939, and 68 per cent, in 1949, the proportion had fallen to 37 per cent, in 1959. Putting the matter another way, the life companies increased their assets by £562,000,000 in the ten years between 1949 and 1959. They applied £481,000,000 of this increase to investments other than public authority securities, £77,000,000 to semi-governmental securities, and only £4,000,000 to Commonwealth securities. The trend has become more pronounced in the more recent years. The life companies increased their assets by about £90,000,000 in 1959, but only £8,000,000 of this was applied to Commonwealth and semi-governmental securities. We only have details for some months of 1960, but trends similar to 1959 are already apparent. The life companies, as a group, have not so far added to their net holdings of Commonwealth securities at all this year.

The Government cannot ignore the fact that life companies derive a great part of their funds from the savings of the community at large. It seems quite reasonable that, as with savings banks - and this Parliament and the country have supported this policy - a reasonable proportion of the funds so collected should be channelled back through public authorities to finance the provision of community services. To the extent that public authorities do not share in such community savings, they are forced to keep taxation on the community higher than it would otherwise need to be. The Government has also to consider that the life companies, as custodians of a large part of community savings, and as providers of personal insurance in various forms, have acquired a certain institutional status which is recognized, for example, in the various taxation concessions they enjoy. Moreover, the amount of funds coming to the life companies has undoubtedly been increased very considerably by the increased tax concessions the Commonwealth has allowed to taxpayers generally for life insurance premiums, contributions to superannuation and provident funds and the like. This concession is, in fact, costing the. Commonwealth approximately £35,000,000 each year under present arrangements.

Unlike the savings banks, life companies are, for all practical purposes, at present free to allocate their investible funds as they wish. Though the Government would have preferred to keep the life companies free of any greater degree of control, it can no longer do so in the public interest in the light of the policies which some of the companies have followed, and are still following. In fairness to the general taxpayer the Government finds itself compelled to take action to check the drift. We are not unmindful that many of the life companies have been and still are large holders of Commonwealth and other public authority securities. We are also well aware of the valuable support they give to housing and to social institutions such as churches, hospitals and schools. We have no doubt either that, so far as these companies have invested in other fields, their investments are sound from a financial standpoint. We cannot, however, shut our eyes to the trends that have been going on and we cannot, unfortunately, see any sign that these trends would, if left to themselves, come to an end. We have, therefore, reached the conclusion that a point must be set beyond which the process cannot be taken further, and that is the object of the action we now firmly intend to propose to Parliament.

The Government has accordingly decided to introduce measures to establish a minimum level of 30 per cent, for the ratio of public authority securities to the overall investments of life companies. In deciding the minimum figure to be established, the Government has taken into account that the average proportion was 37 per cent, in 1959, and, although it will be somewhat less in 1960, the companies conducting by far the greater part of present life insurance business are still above the level of 30 per cent. At the same time, we realize that the establishment of a minimum ratio could impose difficulties on companies which have undertaken forward commitments of one kind or another for lending to their clients. Accordingly, we propose that the date by which the minimum rates shall be reached will be placed some time ahead, so as to give companies an interval in which to make necessary re-arrangements of their business.

Legislation will be introduced early next year which will in effect require life insurance companies to hold not less than 30 per cent, of their assets in Commonwealth and semi-governmental securities by a specified date. The legislation will also provide that, of this amount of 30 per cent., not less than two-thirds is to be invested in Commonwealth securities. Broadly, that is the proportion which exists in our government and semi-governmental loan programme at present.

Most of the major companies had ratios of more than 30 per cent, in 1959, and should have little difficulty in complying with these provisions by making appropriate adjustments to their current and future investment programmes.

Several companies, however, have ratios considerably less than 30 per cent. Some of these companies could encounter difficulties in re-arranging their assets by the specified date, and we will therefore propose arrangements for such companies to consult with the Insurance Commissioner with a view to reaching suitable arrangements for my approval. There are many details of the new arrangements yet to be completed, such as questions revolving about definitions and valuations of assets; but the Government expects that the life companies will immediately take steps to re-arrange their investment programmes to reduce as far as possible the problems which some of them may have to face when the proposed legislation becomes law.

The Government has also had under examination the rapid growth of superannuation and provident funds over recent years. As with the life companies, these funds also benefit greatly from the tax concessions allowed to contributors and, in addition, the income of the funds themselves is non-taxable under section 23 (ja) of the Income Tax Assessment Act. Some superannuation and provident funds hold sizeable amounts of public authority securities and their support for Commonwealth loans has been of considerable assistance to the Government. But many of them either hold no public authority securities at all or very much less than the ratio we will be laying down for life insurance companies. We therefore propose to introduce legislation early next year which will require these funds to hold a minimum of 30 per cent, of their assets in the form of public authority securities, including at least 20 per cent, in Commonwealth securities. There will again be cases where difficulties could be involved in complying with this provision by the date which we propose to specify, and there will be scope for trustees of funds with low ratios of public authority securities to negotiate for a somewhat longer period during which they will be required to bring their ratio up to the minimum 30 per cent.

This, then, is the substance of our proposals. Although in some respects they break new ground, we do not regard them as being in any sense a departure from previous policy. It is no lip-service we pay to the aim of stable growth. If we believed that expansion could be assured and reasonable stability achieved with measures less than these, we should be happy to do less. If we thought that more was required we should be proposing more. As it is, on our present knowledge, we judge these to be no less and no more than necessary to make stability real in terms of costs and prices, and to achieve internal balance between demand and supply and external balance between overseas receipts and expenditures. As is always true of Australia, and of the Australian economy, the test will lie with events - events which, as we fully recognize, will be strongly influenced by forces beyond our control, like overseas markets, by the actions of other authorities and, perhaps more than anything else, by the reactions of the Austalian community. But we acknowledge our responsibility to give a lead and do whatever should be done and can be done in our own province. If, later on, other situations arise, requiring other forms of action, we will take them just as soon as the need is clear.

Meanwhile there is much that we and others can do towards strengthening our basic situation. I would put first and foremost the reduction of costs, especially of costs which impinge on export industry. There is a multitude of directions in which this can be sought. I would rate high, too, the techniques of design and merchandising by which both old and. new lines of exports could be brought to command attention abroad. I am willing to believe that there are not a few major projects to be found which, with skill and enterprise, could provide access to new sources of large-scale exports. We have some such projects under active examination at the present time. We have had our problems - problems of national growth, and problems of a country small in population yet one of the great international trading countries of the world. But we have weathered these difficulties in the past, and this sustains my confidence that our external problem, formidable though it often seems, will yield to the same sort of imaginative efforts as those which produced the great growth in our export potential during the post-war years and the great expansion of Australia which has transformed this nation and brought prosperity and strength to its people.

I lay on the table the following paper: -

Economic Measures - Ministerial Statement - and move -

That the paper be printed.

Suspension of Standing Orders

Motion (by Mr. Downer) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent the Leader of the Opposition (Mr. Calwell) making his speech without limitation of time.

Leader of the Opposition · Melbourne

Mr. Speaker, in the twenty years that I have been in this Parliament I have always regarded it as customary, when a Minister intended seeking leave to make a statement on an important matter of Government policy, for the Leader of the Opposition to be supplied beforehand with a copy of the statement. When the Treasurer (Mr. Harold Holt) told me last week that he was likely to make a statement, I asked him to let me have a copy of it in advance, but I am at a disadvantage in that 1 am following him to-night in the debate without having been given a copy of his statement. That is typical of the growing discourtesy with which the Government treats the Opposition. When I asked the Treasurer for a copy of the statement he told me that he would let me have it after the stock exchanges closed to-day. I waited until he spoke to-night, but I have not yet received a copy of the statement. I certainly did not intend to demean myself by asking for it a second time. Therefore, I am in the position of having to deal with the long rigmarole that he has delivered without having the opportunity to study some of the detailed proposals, particularly those which concern the motor industry and other sections of the community which will be adversely affected.

The Treasurer’s statement consisted of the usual mass of platitudes for which he and his colleagues are so deservedly notorious. It contained the usual scarcely concealed deceit and the downright distortion of facts with which we are so familiar. This is particularly true of his statements in relation to our overseas balances, which is the kernel of the Government’s current problem. He tried to hide the fact that the Government is not concerned with the external position, but the real problem which confronts the Government is how to provide the necessary funds by increased exports to pay for the imports of essential capital and consumer goods.

This is the third time in this year of grace that the Menzies Government has brought down a new economic plan. In February there was the four-point plan - freeze the basic wage, instruct the banks to impose stricter credit controls, release imports and balance the Budget. Then in August the Government introduced the various fiscal measures, telling us at that time that the proposals put into effect in February were working very satisfactorily and that there was nothing further to worry about. Now we have a new economic plan, completely different in certain respects from the plan that was introduced previously.

Sir, if ever there was a useless, washed-out Government, it is this peculiar collection of ministerial misfits that controls the departments of state of the Commonwealth of Australia to-day.

If these facts are as clear to the Treasurer at this moment as he says they are, why did he not know all about them in August? Why did he not tell us about them when he brought down his Budget only a couple of months ago? Apparently he did not know about them. He told us in his Budget speech that everything was proceeding satisfactorily, but apparently it was not so satisfactory. So there is only one course left for the Opposition to take, and that is to test the feeling of the House on this matter. Therefore I move -

That all words after “That” be omitted with a view to inserting the following words in place thereof: - “ this House declares that it has no confidence in the Government’s capacity to guide the Australian conomy efficiently and that the economic policies pursued by the Government over the past eleven years and in particular the measures announced to-night are an admission that the policy which the Government put into force in February last has proved a failure “.

We can divide Australia’s economic history over the last ten years into four phases. These phases are as follows: - The wool boom of 1950-51 and the slump of 1951- 52; the two and a half years of rising employment from December, 1952, to June, 1955; the three and a half years of rising unemployment from June, 1955, to December, 1958; and, lastly, the two years of rising employment from December, 1958, to the present time. I think of the last three phases as the 1952-1955 expansion, the 1955-1958 stagnation and the current expansion.

The current expansion differs from the 1952-1955 expansion mainly in being characterized by a stock exchange boom and, later, by a land boom. These features were both minor features of the 1959 scene. When the present expansion had been in progress for about a year the trends implicit in that expansion prompted Government action. This action, at the beginning of this year, consisted, as I have said, of the final lifting of import licensing and the announcement of the intention to seek the pegging of wages - which the Commonwealth Arbitration Commission readily and almost abjectly and submissively, conceded to the Government - the balancing of the Budget and a tightening of credit.

The upswing of economic activity has continued unabated in spite of these supposed restrictions. Employment has expanded to take up the slack of previous three years, and the Minister for Labour and National Service (Mr. McMahon) has boasted of the fact. He boasted about it in a statement that was issued only yesterday or the day before. Industrial production has risen, and demand has spilled over onto imports and exportables.

It would appear that the rise in imports is nearly as much in commodities which have been virtually free of licensing over the years as it is in commodities newly delicensed. That is a fact of which the public apparently does not know too much. There has been an importation of cotton goods, which were never subject to licensing and of other goods as well. So, when it comes to the question of imports, we are dealing not only with goods that were subject to control but also with a lot of goods that were never subject to control. We are faced with a very adverse external position, in that we are likely to lose £200,000,000 in overseas reserves by next June.

I interrupt myself to say that my speech to-night is dependent in part on what the Prime Minister (Mr. Menzies) told the Liberal Party conference yesterday, insofar as he has been accurately reported - and I hope he will not say he has been misreported. It is also, in part, based on the reports of the Treasurer’s carefully prepared speech - prepared for him, too, by Treasury experts - which he delivered to the Chamber of Manufactures in South Australia on Saturday night; and in part also on the statements he made on television, when he did not have the Treasury experts at his elbow and had to say things in answer to questions which turned out to be partly contradictory of the things he had said the previous night.

There has been a fall in the price of wool over the last four months. According to to-day’s press, the average price of wool over the last four months has been 48d., as against 60d. in the corresponding period of last year- a drop of 12d. We lost £19,000,000 because of the fall in the price of wool in the first four months of this year. The loss may be £77,000,000 or £80,000,000 over the whole year. The Government has said that it did not expect such a drop in the price of wool. Yet, if you read the speeches of members of the Government delivered in earlier days, you will see that they calculated that there would be a drop in the price of wool. There is an international wool pie as well as a local wool pie operating. Prices are rigged by continental and Asian buyers just as they are by domestic buyers. When Japanese and other Asian buyers are operating, the British and American companies stand out, and the Australian wool-grower suffers as a result.

The next questions, on the internal side, are whether the present activity is too great in this country, whether there is over-full employment and whether inflationary pressures are building up. It might also be asked whether the distribution of resources between consumption and investment is in the best long-term interests of the economy. The Government is belatedly taking some action to force the insurance companies to contribute to government loans. It is forcing the insurance companies and other people to finance the public sector of the economy, without which, of course, the private sector of the economy could not function properly. Left to themselves, the directors of the insurance companies and the mutual life companies - who are also the directors of a lot of other big companies - would put their money into those concerns out of which they can make more profit. They, of course, will resent the pressures that are being put on them at the present time. I do not know how the insurance companies will react, but I should imagine they will not react too favorably.

It would appear that internal demand is rising. It may be rising too rapidly from the Government’s point of view at present, and the situation, as in 1955, may be one of both incipient and growing inflation. But the internal situation is dominated, as I say, by the external situation. Unless the Government can balance our overseas funds - unless we can export enough to pay for our imports - we may be able to get by this year and for a little longer, but after that the crash will come. We have got to find the money with which to pay for the goods we import. It is the external position that is worrying the Government, but the Treasurer has not been honest enough to face up to the fact to-night. The current rate of balance of payments deficits can possibly be supported for the period I have mentioned, but for no longer. The problem facing the Government is how to achieve a balance in our overseas accounts without cutting down the internal demand to the point where a serious decline in economic activity is initiated. That is the Government’s problem. How far can it go by cutting down the internal demand without initiating a run-down in employment and everything else? The measures already take are probably enough to deal with the internal situation to-day; but it has become increasingly apparent that the external situation will require something stronger.

The Government engaged in an activity a few months ago from which much was expected. The Department of Trade financed a big export convention. I went with the Minister for Trade (Mr. McEwen) to speak to the assembled representatives. We had people from all branches of industry. The trade union movement was invited to give its aid. I noticed the general secretly of the Waterside Workers Federation, a leading Communist, who was an honoured guest at the convention. Everybody who was anybody was invited to help the project the Government had in mind. That was the project of increasing our export income by £250,000,000 a year over the next five years. It was said that unless we could do that, we would be in grave difficulties.

Of course, the truth is that we will be in great difficulty. At one moment, the Government speaks about the great prosperity of this country - and it is prosperous; o-ir complaint is that the prosperity is not being properly or fairly shared. But this country is not nearly as prosperous as are other countries. It is not growing at the rate at which other countries are growing. This country’s production is not growing at the same rate, or anywhere near the same rate, as production is increasing in Japan, West Germany, Great Britain and Canada. When you consider the rate of progress that has been made in Japan and West Germany in comparison with our own. you must remember that those two countries were blasted almost out of existence in the last terrible war; and yet they seemingly have arisen phoenix-like from the ashes. If 1 might change the metaphor, they started off well behind scratch in comparison with Australia, but they have gone far ahead of us. Whatever progress we have made is nothing comparable with that in either country and it is not anywhere near what it should be.

Time is against us. We just cannot afford the present rate of progress. It must be much more dramatic and our economy must be much more dynamic than it has been up to the present. Australia is facing a dilemma of choosing between external and internal balances, and there is a strong possibility that the measures deemed necessary for external balances may result in an internal recession. This recession might even be accompanied by something of a liquidity crisis because of the unco-ordinated manner in which new types of financial activity have been allowed to develop. The Treasurer himself talked about the problem of liquidity. It is on his mind. He sleeps with it every night. He knows very well that unless he can solve this problem of liquidity, his Government will not survive the next election.

The virtual collapse of the stock market in Australia indicates the unstable foundations on which much of our capital markets have been built in the last year or two. Does any honorable member deny that there has been a collapse in the stock markets? Tn six weeks, all the gains which have been built up in Australia over eight months were lost. The stock markets in Australia are at a price level as low as that of September last year, and they are continuing to fall. It will not be so very long either before the bottom falls out of the land boom. What does the Government propose to do about those things? It says. “ We will increase the sales tax on scooters. We will increase the sales tax on motor cycles.” To repeat the jargon of the Government’s economic advisers, now sitting in the corner, and said in a previous period, “We will skim off the surplus spending power of the public and will pay it into the Treasury “. The Treasury will proceed to spend every penny of it. It will not be put away in the old oak chest. It will not be sterilized. It will be expended and its expenditure will help inflation, too.

The supplementary measures that have been proposed by the Treasurer to-night - though he does not admit it - are directed at the external situation, and must be judged first by the needs of that situation. He is trying to dampen down expenditure in Australia so that there will not be money with which to buy imported goods, and the less money there is to pay for imports, the more money there will be left in London with which to maintain the balance in our account. Why does not he say it in such simple language? Why does he not say, “What we are doing is to prevent you - the Australian people - from spending your money so that there will be more money left overseas to finance the importation of essential goods “?

But the Treasurer has not said that all the imports will be essential He has said there will be some form of discriminatory treatment of imports. We heard that in 1951-52, when the Government wasted all the balances that the Chifley Labour Government had built up. This Government spent all that money with the idea that the flooding of this country with imports would force down the cost of living. But it did not force down, the cost of living; prices rose and inflation increased. The country was filled with beautiful sweets and chocolates made in England. They came on to the Austraiian market, and the Australian people thought they were so beautiful that they bought them up and sent them back to their English relatives as Christmas presents. If you look round the stores of David Jones Limited in Sydney, the Myer Emporium or any other big store in Melbourne or elsewhere - and I defy supporters of the Government to do it - you will find that since this Government lifted import controls - if you are a gourmet, a glutton or an epicure - you can buy frogs’ legs in aspic. That is what Australian funds are being used for - to import goods of that kind into Australia.

We believe that essential capital and consumer goods must have preference over non-essential goods and luxury goods. If the Government would discriminate as between the essential and the non essential, nobody in Australia would object; but the Department of Trade people and the Treasury people all say, “ We must never again have import restrictions “. We will reach the stage very soon, if our overseas bal- ances are not strong enough, where we will have to have protective tariffs so that Australians employed in factories producing electrical goods, clothing, boots and shoes and other goods can continue to remain in employment. Or is it that the Government wants unemployment? . Does the Government want a pool of unemployed? Does it want 4 or 5 per cent, of the work force out of employment? Is the Government concerned about unemployment? One of the reasons why Nixon lost in the United States presidential election lay in the fact that there were 5 or 6 per cent, unemployed in the U.S.A. The Republicans believe in a certain percentage of unemployment, and the Democrats believe that there should be full employment. I remember the present Prime Minister saying in 1948 that if he were an American, he would be a Republican. Of course he would. The significance of his admission follows on. He is not so much concerned about unemployment if it will help to protect the present position. Between February and October of this year there was a rise in bank advances of £162,000,000. That is a record sum. But why was that trend not discovered earlier? Why was it not discovered by Treasury officials or by Ministers - for instance, by the Minister for Labour and National Service (Mr. McMahon), who is at the table.

Mr Peters:

– He could not discover anything.


– Of course he could. Not only did he do a course in economics, but he repeated it. The reason, Sir, that this vast increase was not detected was that the Prime Minister and the Treasurer both had to have their annual winter cruises in Europe and the United States of America. Both had to enjoy the northern hemisphere summer and recuperate after their strenuous Australian labours. They had to engage in matters which they considered important and each had to take the top brass of his department with him. So, there was nobody left in Australia to detect what was happening. It was only when the travellers came back, after the Prime Minister had had his little altercation with Mr. Nehru and certain other things had happened, that this dreadful situation with which we are now confronted was ascertained. So, to-night, we are asked to treat certain legislation as urgent and rush it through the Parliament. 1 sympathized with the Prime Minister while the Treasurer was overseas. The Treasurer made an unannounced visit to Tokyo before he went to Lausanne; then he turned up, eventually, in New York, unannounced, at the time when the Prime Minister and the Attorney-General (Sir Garfield Barwick) were there. The Minister for Trade was then the Acting Prime Minister, the Minister for Trade, and also the acting Acting Treasurer. The Prime Minister has been portfolio-ridden while the Treasurer was away. This, of course, was due to the fact that he had nobody around him whom he could trust with certain portfolios, while the rest of his supporters, his back-benchers, are all incompetent.

Even before the Prime Minister went overseas, he had to take time off to do certain things. He had to go down to the olympic pool in Melbourne to talk about the menace of communism. I assure him that unless he does something about the internal situation in Australia he will have an internal menace of communism to deal with before very long. The Opposition wants to maintain full employment. We want a stable economy: we want a balanced economy. I could quote things that the Prime Minister has said from time to time about hire purchase and inflation. I could speak of the things that the Treasurer has said on these subjects. But they have, to-night, boxed the compass. They have turned back on the things they once denounced. They now propose something which the Opposition advocated for a considerable period - obliging insurance companies to subscribe to government loans. If you follow that argument to its logical conclusion, there is no reason why other concerns such as newspapers, television stations and radio stations should not have to contribute, for instance, to electricity loans and other public loans in order that the community may function satisfactorily.

We should make sure that our loans are filled. The Treasurer, in particular, has been very eloquent on this subject, but he failed to mention that about £120,000,000 worth of Commonwealth works are this year being paid for out of revenue while £80,000,000 worth of State works are being paid for, not out of loan moneys which might properly have been provided for this purpose, but out of revenue also. So, there is being raised by taxation the sum of £200,000,000 which ordinarily, under the capital system, would have come out of loan raisings. The Government is now belatedly attempting to ensure that loan moneys will be available.

Now I want to say a few words about the higher bank interest rate which the Government has announced. This is a victory for the private banks and for nobody else. The private banks have ignored the Government’s directive in regard to advances policy. They were the ones which pushed up advances to £162,000,000, despite the directive of the Reserve Bank of Australia that they should not do that. Now that the nation in floundering, the Government surrenders to the banks as it always does, and the little people will be subject to an even greater degree of extortion. We of the Australian Labour Party believe in cheap money, not in dear money. It was a policy of dear money that brought about the depression of the 1930’s. The Government’s decision represents a complete sellout to the trading banks. The Treasurer has implied that much in his speech. The banks were instructed by the Government, through the Reserve Bank, more or less, to reduce their balances. But in fact, they increased them. The Treasurer is now offering the banks a bribe to carry out the instructions that they are bound by law to carry out.

I do not think that a dear money policy will solve any problems. It will make it more difficult for the person who is buying a home. It will make it more difficult for the person who is buying property. It will make it more difficult for the person who is buying furniture. Instead of taking this action, the Government should have sought power from the people, as recommended by the Constitutional Review Committee, so that this national Parliament could control interest rates other than bank interest rates. The national Parliament would then work effectively in the interests of the whole nation because it could properly protect the public interest.

The present trouble began, in part, a few years ago when the Government reduced the private banks’ special deposits with the

Commonwealth Bank from 75 per cent, to 25 per cent, of their total deposits, and when the Banking Act was amended to permit the private banks to divert their funds into hire-purchase companies so that they could get higher interest rates and earn money in a way in which they would have never otherwise been able to earn it. The Opposition and the Australian people believe that the Government will not resign, despite all the mistakes that it makes. It will hang on to office like barnacles clinging to a ship’s hull. If there were a scintilla of decency or an atom of respectability left in the Government it would resign.

We invite the House, particularly honorable members in the Australian Country Party corner, to vote for the proposition which I submit because among the people who are being ruined by the present policy of the Government are the primary producers of Australia. All the people are suffering - the pensioners, the mothers, all wage and salary earners, as well as the primary producers. This Government has been in office for eleven years. It has failed for eleven years. It ought to remain no longer.

Mr Whitlam:

– I second the amendment, Mr. Deputy Speaker, and reserve my right to speak on it.

Minister for Labour and National Service · Lowe · LP

– The substance of the amendment moved by the Leader of the Opposition (Mr. Calwell) is that the policies adopted by the Government in February of this year have not been successful. The first point I want to make is that the honorable member completely fails to understand the difference beteween the objectives of policy and the means adopted by the Government to ensure that those objectives are attained. As my colleague, the Treasurer (Mr. Harold Holt), has said, we have four objectives of policy. The first is the continued development of our resources; the second is full and profitable employment of our people and our resources; the third is stability of our overseas reserves and relative stability of our currency, and the fourth is justice for wage-earners and to beneficiaries of social services. What I want to point out is that these are the objectives of policy. What we did in February, what we did by means of the Budget provisions and what we propose to do now are the means by which those policy objectives are to be achieved. I venture to suggest that if one analyses each of the measures adopted by the Government in February, and in the Budget provisions, and the measures that are now proposed, one would see that they have all been aimed at the achievement of these objectives. The Leader of the Opposition failed completely to understand the distinction between policies and the measures it proposes to achieve those policies.

The honorable member raised another matter. He said that no copy of the statement which the Treasurer made to-night had been made available to him. The simple answer is that the statement was in the nature of a Budget statement, and the Treasurer could not, in propriety, have made that statement available to the Leader of the Opposition. In any case, it is quite obvious that the Leader of the Opposition need not have replied to-night. He could have waited until Thursday or until next Tuesday. But no, he was a little too intemperate, a little too quick off the mark. He wanted to get to work to-night and get his statement off his chest. One of the fantastic aspects of this complaint is that although the Leader of the Opposition complained about the Treasurer not making a copy of his statement available, the honorable member has come here to-night with a written reply to the Treasurer’s statement. Apart from the little humorous interludes, which we have all heard so often, his speech was already written before he heard what the Treasurer had to say. In one of his sallies, the honorable member referred to my having repeated a course in economics, a fact which I would have been only too happy to acknowledge if it were correct. I would prefer that to the repetition of the same old nauseous, idiotic jokes that we have heard so frequently from him in an effort to raise a laugh and divert attention from his failure to present a case to this House. I repeat he came here with a written reply. It obviously could not have been a reply to the Treasurer’s statement, and it was prepared only in the hope of causing some discontent in the community and of bringing a few discontented voters over to his side. If you look at the matter against that background, Mr. Deputy Speaker, I am fairly certain that you will take little or no notice of what the honorable gentleman has said.

Let me now attempt to put this debate in perspective. It is quite true, as the Treasurer has said, that we live in a rapidly developing community, in which there is continuous change. In a community of that kind I think it is reasonable to expect that the economic measures taken by the Government must be varied from time to time in order to meet changing circumstances. In these conditions we should accept the changes now suggested by the Treasurer as matters of course. We should be prepared to take them in our stride. It should not be thought that the present economic position is very strained or that we have problems that could be thought of as insoluble. On the contrary, we should be able to accept these measures as a matter of course, realizing that the problems are not very great and are certainly not insurmountable.

A second point, and one which I think I should make particularly for the benefit of honorable members on my own side of the House, is that there is no reason in the world why any one should be hurt as the result of these measures. If people are wise they can avoid suffering any hurt from them. But the alternative to the introduction of these measures should also be considered. If we were not to resort to the remedies that are now suggested, then the possibility - not a probability, but a real possibility - is that many people would be hurt between June and September of next year. It was for this reason that it was deemed necessary to take precautionary action.

In his Budget speech the Treasurer made it clear that we faced two difficulties. One was connected with the problem concerning our overseas balances. The other related to continued increases in costs and prices. To those we now add three other difficulties which, although not of a major kind, nevertheless must be dealt with. The first difficulty arose from the slackening of investment in Commonwealth bonds, while the other two sprang from excess activity in the building industry and the motor vehicle industry. Each of these problems has been faced and I repeat that if you look at the remedies recommended by the Treasurer you will find that an attempt has been made to solve them. As well you will find they make a major contribution to the solution of the real difficulties that we face, those concerning our overseas balances and export income, and rising internal costs. All these problems interlock, and it is just not possible to solve the balance of payments problem unless you can, first, solve the problem of rising internal costs and increasing internal activity. If you solve the last problem, men the first can be solved by Government action.

Since the Budget was introduced three other changes have occurred which have made it necessary to take additional action. The first was a fall in the price of wool of about lOd. per lb., which meant a loss of about £60,000,000 in our overseas earnings. Secondly, the private trading banks lent something like £160,000,000 during the course of this calendar year, when it was contemplated that advances by these banks would be of the order of £30,000,000 or £40,000,000. Finally, there was a very substantial falling off in contributions to Commonwealth loans made by insurance companies. None of these developments could have been foreseen. The genius has not yet been born who could have forecasted the changes that were to take place and the consequent action that should have become necessary.

In the Budget discussions, the Treasurer considered each of the measures that have been proposed to the House to-night with one exception, which was the least important of all. That relates to the non-allowance as a tax deduction of interest charged on notes that could be converted into shares. Each of the other proposals made to the House to-night was discussed at the time of the Budget. At that time it was not certain that action of the kind now recommended would be necessary, because we did not expect the fall in wool prices or the great increase in bank advances, and as the Treasurer and the Government thought that the remedial measures adopted in the Budget would be sufficient and would achieve our purposes by the end of the year, the Government decided to postpone other action until the suggestions were further considered and we knew exactly which way the economy was trending.

I want to make this point clear, Sir: Not only have we seen there three additional factors emerge. In addition, we have seen the demand for goods continually expanding. Only to-day, I was able to get certain additional figures relating to the number of job vacancies in the building industry and in the vehicle industry. Each of these sets of figures indicated beyond any shadow of doubt that far from the pace of development slowing up, it was expanding at a faster rate than we had previously anticipated. On the facts, some sort of temporary but remedial action became necessary to prevent the development of conditions which, by June, might have brought the economy to a state into which the Government would not have wished it to get.

I sum up, Mr. Deputy Speaker, by saying this: There was a real probability, if we had not taken action now, that by June of next year the condition of the economy would have become much more acute and the remedial measures needed then would have been much more severe than the Government would wish to take. So I complete this first part of my contribution to the debate to-night by crystallizing my thoughts in this way: In the first place, our policy has remained consistent, but the means that we have employed in order to achieve the objectives that the Treasurer has so frequently mentioned have varied from time to time. I believe that the measures now proposed are an essential step in achieving those objectives.

I think too, Sir, that it is desirable for me to mention another matter. The Leader of the Opposition, in criticizing the Government, has mentioned only one measure that he thinks should be taken. He believes that there should be large-scale constitutional reform. I do not agree with that. I personally have long held the opinion that, with the possible exception of the coordination of industrial relations and of wage and salary determinations by industrial tribunals, if you could exploit the existing powers of the Commonwealth with regard to interest rates you would have sufficient financial power to keep the economy under control. I believe that the measures now proposed by the Treasurer with regard to interest rates both of a banking and non- banking kind and contributions to Commonwealth loans by assurance companies are of an epoch-making kind and considerably increase the economic power of the Commonwealth. This increase of power will be of inestimable value in the future and will help us to keep the economy on an even keel and moving forward in a more consistent fashion than hitherto.

I have mentioned that although we have an external problem the first problem that we must solve is the internal problem of rising costs and rising prices. We face to-day the classic problem of boom conditions in which there is too much money to spend - an economy in which the demand is too great for the available supply of goods and services. In short, too much money is chasing too few goods. In addition to that, Mr. Deputy Speaker, we have conditions in which people have to be given greater inducements to save. And thirdly, the investment in government securities has to be increased.

If you look at the remedies taken by the Treasurer, Sir, you will find that an attempt is being made to solve each one of these problems. The central problem is being approached in this way: First, the Treasurer has made it clear that if there is too much money chasing too few goods we should keep a tighter hold on the supply of money through the banking system. When you realize that the private trading banks increased their advances in this calendar year by £150,000,000, you understand the need for action to be taken to restrict credit. Secondly, in order to induce people to save more, the Reserve Bank has taken action to increase the interest rates paid by the private trading banks on deposits, and similar action will be taken with respect to the savings banks. In other words, incentives are being held out to save money rather than spend it - to invest money rather than permit it to chase the available supply of consumer and investment goods. Finally, in order to ensure that this policy cannot be defeated by what the Treasurer calls the fringe financial institutions, interest rates outside the banking system will be controlled.

In the first place, we hope that we shall be able to devise a means which will ensure that the taxation mechanism cannot be used in order to permit interest rates to be raised by the fringe financial institutions to an uneconomic level. I illustrate that by saying that under the present system of tax deductions, which permits companies to deduct the interest on loans before arriving at their assessable income, the effective rate of interest on money borrowed by such companies at 8 per cent, really costs the company about 4i per cent. This means not only that the Treasury loses revenue but also that interest rates become distorted and subscriptions to Commonwealth bonds fall. So the Government has decided that a mechanism will be developed to control the interest rates that are offered by these fringe financial institutions. I believe that this is one of the essential means that has to be adopted by the Government if the economy is to be kept healthy.

The Treasurer is to be congratulated on the series of measures he is now taking. I believe that they will help to achieve the four objectives of the Government that I have mentioned. I repeat them - national development; stability of the exchange rates and of the relative value of money; full employment; and social justice for the wageearner and for those who depend on social services, and provision for national health. I finish on this note. I believe that the measures being taken are wise and that they will be successful. When the Treasurer made his Budget speech on 16th August, he realized that we might have a temporary problem, but he did not expect the three changes in the economy which unfortunately have occurred. We think that in the changed circumstances the remedies adopted will be adequate, and we expect the economy to continue to prosper.

I conclude: There is no need for any one to be hurt by the measures that have been taken by the Government. In fact, I believe that were it not for these measures many people would be injured, and those who would be injured are those least able to look after themselves. I add two thoughts: First, we have found a new economic weapon to add to the small number of controls that can be exercised by the Commonwealth; and secondly, we are confident that this country will Keep steadily moving forward on the prosperous way that it embarked upon when the

Menzies Government first came into office eleven years ago.

Melbourne Ports

.- What the Treasurer (Mr. Harold Holt) has done to-night amounts to a re-writing of the Budget. Nothing has been said or done to-night that could not have been said or done on 16th August when the Treasurer introduced the Budget. This is a further sample of the belated action taken by this Government which fears to do what ought to be done because it thinks that to do so would harm the section of the community to which its political adherence is mainly given. The need for this action to-night arises out of the complacency of the Government towards trends which have been obvious in the economy for a considerable time. After all, no catastrophic change has occurred, despite what the Minister for Labour and National Service (Mr. McMahon) has said. He said that three things had happened out of the blue. They have not happened out of the blue at all; they have merely been the continuation of trends which any one in a responsible position ought to have seen. All that has happened with wool is that its price has fallen still further. The rise in bank advances has been more rapid since February because the Government removed import controls altogether. The fall of subscriptions by insurance companies to Commonwealth loans is merely the continuation of a trend that has been evident for at least five or six years.

In May, 1960, when the circumstances were not significantly different from those obtaining in November, 1960, an official Government publication, “The Australian Economy, 1960”, said in the foreword -

Although inflation has not been exercised, here or anywhere else, it does seem that, considering the rate of growth we and others have kept up, there has been a fair degree of success in moderating it.

So, the opinion of the Government in May, 1960, six months ago, was that it had achieved a fair degree of success in moderating inflation. I should like to quote further from this document because the passage I shall read seems to me to highlight the context in which the Government should have been looking at these matters before and in which it now looks at them to-night. At page 27, dealing with inflation, this statement appears -

The first thing to have accepted is that inflation serves no generally useful purpose.

Nobody would deny that. The statement continues -

The second thing to get established is that any degree of inflation-

Australia has had more inflation than has any other part of the Western world - is harmful to the broad interests of the economy, to large sectors of industry and to very many people, and is therefore to be avoided.

Then I come to what might be said to be the ability of the Government - and something could have been done about this. The statement went on -

The third great fact is that there are limits to the power of governments to prevent or control inflation.

I should like to put this matter in perspective, to use the word of the Minister for Labour and National Service. However, I suggest that my perspective is a little different from his. To show that it is not wild speculation, I propose to support the whole of my idea of proper perspective with a government document, “Treasury Information Bulletin, No. 20- October, 1960”. At page 5 - I suggest that this is the point towards which our view should be orientated - this statement appears -

Civilian employment in August, 1960, excluding wage-earners in rural industries and female private domestic servants, is estimated at 3,048,800 persons, an increase of 104,700 persons since August, 1959.

The total expansion of employment in this boom period that the Government says we are enjoying was 104,000. I put that alongside another government document entitled “Australian Manufacturing Industry in the Next Decade “, which was prepared by a committee of business men set up by the Government. This committee said that it would be necessary to increase our work force at a rate of about 2i per cent. The committee put our work force at about 4,000,000 people. It believed, therefore, that our work force should be increased by over 100,000 people. Yet we are told that in this year of boom, which is to be dampened down now, we must reduce our rate of expansion. I suggest that some people will be hurt in this process because the Government has moved too late and even now is moving in the wrong direction. To illustrate the problem, I point out that of the total increase in employment mentioned in the “Treasury Information Bulletin “, almost half, or 51,000 persons, was in the manufacturing field, and 76 per cent., or 80,000 of the 104,700, was in the highly industrialized States of New South Wales and Victoria.

That is the first point of perspective that ought to be noted. The second point is contained in the following statement which appears at page 17 of the bulletin: -

The Consumer Price Index for the six capital cities in the recent September quarter was 4.4 per cent, higher than in the September quarter of 1959.

In other words, inflation has gone on at the rate of 4.4 per cent, in the last twelve months. This means that something like 9d. of every £1 was lost in this way in the course of the year and the so-called average wage of £21 was worth 15s. less in purchasing power at the end of September, 1960, than it was at the end of September, 1959. The third point of perspective should be of some significance to members of the Australian Country Party. At page 18 of the bulletin, we find this statement -

The Export Price Index … for August, 1960, was 7.1 per cent, lower than that for May.

Yet the Minister for Labour and National Service told us to-night that this is a new factor in the situation! In August, 1960, when the Budget was introduced - the statistics would have been available - the Government had knowledge that the export price index was 7 per cent, lower than it was three months earlier. This reduction means a loss of £70,000,000 or £80,000,000 in Australia’s export earnings. Then we have this statement -

The balance of trade for the first quarter of 1960-61 showed a deficit of £88 million, compared with a deficit of £5 million in the first quarter of 1959-60.

I want to show now why this has occurred. It is shown by the dissection of imports that is given at page 20 of the document. I shall give the increase in imports first by goods and then by countries. The value of yarns and manufactured fibres increased by £2,000,000. And in this country our own textile industry is languishing as a result of competition from imported textiles. In the three-month period from July to September, the value of the imports of textile piece goods increased, from £15,000,000 to £20,000,000. The value of the imports of petroleum products and oils increased during the same period from £23,000,000 to £27,000,000, while the value of vehicles and parts of vehicles imported increased from £18,000,000 to £26,000,000 and that of imported tractors and parts from £5,000,000 to £18,000,000. The value of other machinery imported in the same three months increased from £24,000,000 to £32,000,000 and the value of timber imports increased from £4,000,000 to £8,000,000. The value of imports of drugs, fertilizers and chemicals during that period) increased from £11,000,000 to £14,000,000. Many of those things could have been produced in this country, and all the increases 1 have mentioned flow directly from the relaxation of import restrictions.

The greatest factor responsible for the deterioration in our trade is the drop in our balance, not with the sterling area, but with the United States of America and Canada. In the period between January and August, 1959, our deficit with the United States and Canada was £22,000,000, but between January and August, 1960 - the period during which import control’s were relaxed - the deficit increased from £22,000,000 to £96,000,000. As soon as import restrictions were relaxed, importers bought anything from anywhere. As an illustration of the type of things they imported, I mention that to-night my wife told me that she went to Myer’s store in Melbourne and that, in the food section, she could have bought imported ants - for consumption by humans, not by animals - imported caterpillars and imported shark fins. They may be only comparatively minor items, but they do give some indication of the kind of things which this Government has allowed to be imported into this country, to the detriment of Australian industries and the stability of Australian currency.

Looking for the villain of the piece, as it were, we come to the blessed term “ liquidity in the economy “. I have heard the word “ liquidity “ creep into debates in this Parliament during the last four or five years, but I doubt whether many people know precisely what it means. Bank lending is a significant factor. According to statistics given on page 22 of the document to which I have referred, outstanding loans or overdrafts by the major trading banks, other than loans to authorized dealers in the short-term money market - that new mysterious creation - amounted to £1,077,500,000 in September, 1960. This represents an increase of £147,900,000 since September, 1959. On page 23 of this document we find the categories in which the major increases took place. I suggest that mainly the money obtained was used to finance the importation of goods, and this Government was responsible for making that possible by removing import restrictions. At June, 1959, advances to manufacturing industries amounted to £180,600,000, but by June, 1960, those advances had increased by £32,700,000 to £213,300,000. Advances to the retail trade rose from £92,600,000 in June, 1959, to £109,000,000 in June, 1960- an increase of £16,400,000 - while advances to the wholesale trade showwed an increase of £12,600,000 in the same period, rising from £89,900,000 to £102,500,000. The increase in the advances in those three categories alone totalled £61,700,000, or about one-half of the total increase in bank advances, despite the fact that in normal circumstances loans to undertakings in these categories represent only about one-third of bank advances. Those figures indicate precisely where the main increase has taken place, and that huge increase flows directly from the action taken by this Government in February, 1960, the effects of which were evident when the Budget was framed in August of this year.

We say that in these circumstances what the Government is doing to-night represents a fraud upon the people and upon the parliamentary system, because the trend was evident and should have been recognized by the Government in August, 1960. So contemptuous, or perhaps so ignorant, was the Treasurer of these things that he was not even present in the House when the Budget was being debated. During those debates we had a part-time Treasurer and a parttime Prime Minister, who merely passed through Australia from time to time. During all this time, the economy of the country has been deteriorating. The people who will be hurt will not be those who have already imported as much as they need.

They were shrewd enough to see, as any intelligent person could, just what would happen. Ever since import controls were lifted, we of the Opposition have said that it would be only a matter of time before they had to be reimposed. But the Government is tied to a policy of not reimposing the controls directly and tries to reimpose them indirectly. The effect of that will not be felt only by the importers; it will be transmitted to other sections of the community. Those who will be hurt in the process will be the innocent people whom inflation has robbed systematically during the whole of the period that this Government has been in office.

That is why we have moved this censure proposal to-night. We have not waited. This country has waited too long, and the longer it has waited the more it has been devastated. We have chosen to-night the only manner in which we can launch an attack. We have moved an amendment stating that this Government no longer possesses the confidence of the House. It has been in office too long, and it has done too little too late. All the disadvantages which are now apparent should have been evident to the Treasurer in August, 1960. I have not time to read the whole of the Treasurer’s Budget speech, but I shall quote the following passage from the statement he made on 16th August last -

As the Government sees it, then, the situation clearly requires a steadying-down in the rates of increase in expenditure.

How did he seek to steady it down? Merely by adding 6d. in the fi to the company tax and making minor adjustments to sales tax rates. In that same speech he also said -

The Budget is not the only instrument of policy - monetary policy and trade policy have highly important roles to play - and there must be consistency between all three.

One thing we can say is that there has been no consistency in this Government’s policies at all. The Prime Minister took offence the other day when somebody said, “ On again, off again “ in connexion with import controls. What else can we say about this Government’s policy after what has been presented to us to-night? Although the Government has not had the decency to call, it a supplementary budget, this is in effect such a budget. It does go some way towards removing deficiencies that ought to have been seen on 16th August - deficiencies which flowed as the inevitable consequence of steps taken in February, 1960, when import controls were removed. The Government is deserving of censure. I hope that some of the independentlyminded members who normally support the Government will- consider the position to-night from the point of view of the national interest rather than from the point of view of petty parochial interests and will support our censure motion.


.- The honorable member for Melbourne Ports (Mr. Crean) has once again shown the attitude of the Labour Party, particularly since it has been in opposition in this Parliament, in the matter of import restrictions. When import restrictions were introduced there was no body of opinion so bitterly against their introduction as the Opposition, but now, in 1960, the Opposition has turned around and is just as vehement in its protests at import restrictions having been lifted. The part of the honorable gentlemen’s speech to which I take exception is that in which he said, shortly before concluding, that the introduction of this measure to-night was a fraud upon the people and an insult to this Parliament. We are about half way through the month of November, and on 25th August last, only two and a half months ago,, as reported at page 468 of “ Hansard “, the honorable member for Melbourne Ports said -

We of the Labour Party believe that some people profit by inflation because, if they did not, inflation would not be continued. But because of inflation the vast masses of the population suffer from great injustices and it is the task of the Government, where it can intervene in economic policy, to attempt to redress those injustices.

The honorable member for Melbourne Ports admitted that there was an inflationary problem, as the Leader of the Opposition (Mr. Calwell) did before him. He went further and said that a lot of people were suffering injustices. And the honorable member for Melbourne Ports rightly said that when we see those things happening it is the task of the Government to intervene in the economic policy to alleviate the position. To-night we are endeavouring to carry into effect what the Labour Party said should have been done long ago.

The Leader of the Opposition said to-night that there should be some responsibility placed on the insurance companies to invest in government securities; and that is what we are doing. I admit that this action might be of a temporary nature only, but nevertheless we are taking it. So far as we have heard from members of the Labour Party on this . question, they have never had a policy in respect of it. Let us go further and refer to two speeches by members of the Labour Party. The honorable member for Fremantle (Mr. Beazley) can rant as long as he likes, but the Leader of the Opposition has asked the House to agree to an amendment which he moved in the following terms: -

That all words after “ That “ be omitted with a view to inserting the following words in place thereof: - “this House declares that it has no confidence in the Government’s capacity to guide the Australian economy efficiently and that the economic policies pursued by the Government over the past eleven years and in particular the measures announced to-night are an admission that the policy which the Government put into force in February last has proved a failure”.

After reading that out the honorable gentleman appealed to this little corner of the House and said that he hoped members of the Country Party would vote for his proposition. Fortunately for the Country Party, we have memories. What sort of policy are we going to vote for in respect of anything that the Labour Party might put up? My mind goes back to 1948. Not one member of the Labour Party has yet denied the statement made by the then Minister for Commerce and Agriculture, the honorable member for Lalor (Mr. Pollard), on 24th April, 1948, when he said -

We will go on and on until eventually, in Australia, you will have a great co-operative Commonwealth. Its wealth–

Now we get the “ Hear, hears! “ - will be owned by the people and will be operated in a socialistic manner for our people as a whole.

That is Labour Party policy, and it has never been denied or refuted by any member of the Opposition. Yet we have the honorable member for Wills (Mr. Bryant) saying “Hear, hear! “ when I quote this comment made by a member of his party, the honorable member for Lalor. That is what the whole of the Labour Party would like to do. Instead of having an economy which is flexible and can cater for the fluctuations that occur, the Opposition wants an economy which places one in a strait jacket and keeps one inside the iron railings for ever and anon.

The Leader of the Opposition referred to the policy of this Government over the last eleven years. Let us look at some of the things which might have been done. We recall that at another period in our history, when the inflationary boom was at its highest and when wool prices, as a result of the Korean war, went up through the roof and wool was 300d. per lb., something was done. The present Government introduced what was known then as the wool sales deduction legislation, to last only long enough to cater for the existing conditions. The Labour Party opposed that legislation tooth and nail and said we were going to be completely annihilated. But what were we offered in exchange? The gentleman who let the cat out of the bag was the then Premier of Queensland, Mr. Hanlon, who on 10th April, 1951, was reported in the Brisbane “ Courier-Mail “ as having said -

Only a Federal Labour Government would fix a home consumption price for wool. If it’s good enough for the sugar grower, the wheat grower and the humbler types of farmers it is good enough for the wool grower.

I thought I would have heard some “ Hear, hears! “ from members of the Opposition. I remind them that that was a wrong comparison - if they want to be reminded - because the wheat-grower through the home consumption price has been making a contribution to the economy of this country and the welfare of its people for many years. This side of the House, and this particular corner of the House, is well aware of the fact of Labour’s policy. If the Leader of the Opposition thinks that any honorable member in this particular corner of the House is prepared to support the amendment he has moved, he has another think coming.

The same honorable gentleman talked about having an economy which is dynamic. He went on to refer to what is happening in Japan and Germany and pointed out how those countries have an advancing economy, how their production is increasing, and so on. I ask him whether the workers of Japan and Germany subscribe to the policy enunciated by the Leader of the Opposition some few years ago when he said, in this very place, that he would incite the workers of Australia to protest, to go slow and everything else, in order to defeat this Government. That was said quite some years ago. It is strange that to-night we have the Leader of the Opposition opposing the Government’s proposals to counter the inflationary pressures and to protect the economy of the country; and suggesting that we should adopt measures which are used in Japan and Germany. It was only a few short months ago that the same honorable gentleman led the whole of his team in this Parliament to oppose trenchantly and for many a long day the idea of this country entering into a trade agreement with Japan - a trade agreement under which Japan to-day is the largest buyer of our wool and under which, since it was signed, she has taken greater and greater quantities of our wheat, barley and so on. That agreement between Australia and Japan has been of benefit not only to the primary producers in this country, but also to every Australian.

Mr Daly:

– And it is putting Australians out of work.


– I am glad that the honorable member for Grayndler has come into the trap, because I have another quotation from the honorable member for Melbourne Ports. At page 469 of “ Hansard “ of 25th August last, he is reported as saying -

We do not deny that prosperity exists and probably exists, in the aggregate, to a greater extent in Australia in 1960 than ever before. And why should it not? Australia is a nation well endowed . . with natural resources. Its population is growing by reason of natural increase and also by immigration by 2 or 3 per cent, per annum.

He went on to say that by the end of June there had been an increase of 3.4 per cent, in the wage-earning force of this country. The honorable member for Grayndler has said that we put men out of work because we entered into an agreement with Japan. Another honorable gentleman, by interjection, supports the honorable member for Grayndler. I want to remind the House that the honorable member interjecting stated in this Parliament that the only way for this country to prosper was to have very sound and prosperous secondary industries despite what primary industries might think about it.

The honorable member for Melbourne Ports stated on 25th August, 1960, that it is necessary for any government to do what it can to protect the economy by whatever means it thinks proper, because if we do not project our economy not only one sector but the whole community will be affected. We experienced a depression not more than 30 years ago and we do not want to see those days return. The country will be better for any move that the Government takes temporarily to keep the economy flexible and cater for the conditions that arise, without introducing unnecessary controls and strait jackets.

That was proved only four short years ago when this Government introduced the little budget despite protests from the Opposition. What did the little budget do? It catered for our expanding economy and, to remind honorable members of the statement of a member of the Opposition which I read a few moments ago, I point out that the little budget also catered for our growing population and the employment of our people. What is the position to-day? Because of our monetary arrangements, one sector of the community seems to be able to obtain just what it wants. I remind members of the Opposition that very recently they criticized things that have been going on. In the two major States of Victoria and New South Wales’ wages far in excess of the award rates are being paid merely to obtain staff. What are those States doing? They are creating a demand not only for skilled workers but also for the unskilled.

Mr Daly:

– Why not?


– I do not object to that, but I do object to the Labour Party complaining when things do not go the way it wants them to go. Recently members of the Opposition were complaining about certain hotel building that is going on. If my memory serves correctly, the newspapers have carried reports to the effect that unskilled men can earn £30 a week and more working on these hotels. But that is only part of the picture. Such a demand has been made on the steel industry for steel to be used, not only in the construction of these hotels and luxury flats but also in the motor car industry that to-day we are importing steel from overseas. Let honorable members ask primary producers whether they can obtain fence posts, bore casing and the other things that they need.

Mr Barnes:

– And fencing wire.


– Yes, fencing wire, too. While these conditions obtain we must ask ourselves, if we have any sense, how we can expect the primary-producing sector to increase its productivity and supply exports to provide the funds that are necessary to keep our secondary industries and our labour force fully occupied. When these circumstances arise I cannot understand people who will not make a move to correct them and thus protect our exporting industries which are so vital to our economy. But strangely enough, when these things come home to us, the section of the community which starts to complain first is the section which is loudest in its condemnation of any action that is taken to assist the economy to remain on an even keel. That brings <me back to what the honorable member for Melbourne Ports said, namely that when these conditions are found to exist it is up to any government to intervene to correct them.

What does the Government intend to do? In the first place, it intends to alter the existing interest rates. Some honorable members who do not stop to think have said that the banks are making terrific profits. To-night the Leader of the Opposition said that they are putting their money into hire purchase.

Mr Anderson:

– That is not true.


– It is true to a degree, but one would think that a gentleman who occupies the important position of Leader of the Opposition would be a little more careful in choosing his words. The banks are not putting other people’s money into hire purchase; they are puting their shareholders’ funds into hire purchase for the simple reason that with the low rate of interest on deposits the banks are not receiving the deposits that normally would come into their hands.

Mr Griffiths:

– They must have a lot of millionaire shareholders.


– They have a few, but do not forget that all this began some time ago and that the banks entered the field of hire purchase to earn dividends for their shareholders. You cannot blame them for that. Any corrective action must come from government sources. The banks need deposits before they can lend money to other people, and if they cannot get deposits because of the ruling interest rates offered by fringe banking institutions, as they are called, it is right that we should increase the interest rate on deposits for twelve months in the hope, as the Treasurer mentioned to-night, of encouraging deposits that may be used, in the main, to assist the exporting industries in their endeavour to increase productivity. Further, as the Treasurer rightly pointed out, the money that is going into fringe banking is being obtained very cheaply. Should we not correct this anomalous position? If we can believe what Opposition members have been saying for the past few months about certain companies, which I shall not name, obtaining money at the rate mentioned by the Treasurer, is it not right and proper that the Government should intervene and try to channel money into other quarters?

Mr Beazley:

– But the Government is not doing that.


– Then why does it propose to increase the interest rate on deposits? The Government proposes also to increase the interest rate on overdrafts to 7 per cent, and, if I heard the Treasurer’s statement correctly, the rate will be between 5 per cent, and 7 per cent, with an average of 6 per cent, over the whole field. We only hope that the primary producing sector or, for that matter, any of the exporting industries which are earning funds overseas, will get its fair share of the money that may be available at the lower rate of interest.

We come now to the motor industry. If honorable members study the bulletin which was referred to by the honorable member for Melbourne Ports or the White Papers that are issued from time to time by the Government, or if they study the year-book or the quarterly statements which are published by the automotive industry, they will be amazed at the activities that are going on in the motor world.


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


.- In the philosophy of the honorable member for Canning (Mr. Hamilton), it is quite in order for banks to lend money at 30 per cent, for hire purchase, and it is quite in order for wool prices to boom, but it is a crime when some wage earner working on the building of a hotel gets £30 a week. Apparently the law of supply and demand is to operate in everything except wages. Of course, that was the philosophy of the Government when it intervened before the Commonwealth Arbitration Commission to hold down wages while it was boasting that in the rest of the economy its policy was laisser-faire.

The honorable member for Canning is not expected to agree with the Labour Party. I think that when the Leader of the Opposition (Mr. Calwell) spoke about the Country Party he was merely indulging in hyperbole. But, however much the honorable member for Canning may disagree with everything that the Labour Government did between 1941 and 1949, there is one very simple fact to which I invite his attention. On the day that the Labour Government fell it left this Government £989,000,000 of sterling balances in London.

Mr Hamilton:

– Why?


– Never mind why. It is no part of my argument to say that that was the result of clever policy. For the purposes of this debate, I accept the explanation of the honorable member that it was the accident of war that produced that fund. Can we start off from that? We had £989,000,000 in London on the day the Labour Government fell. To-night the Treasurer (Mr. Harold Holt) says that our London funds stand at £400,000,000. According to the “Treasury Information Bulletin “, Australia’s reserves stood at £547,000,000 at the end of December, 1959. So they have fallen by £147,000,000 in this year. That means, to begin with, that the policy of removing import controls was a mistaken policy. The Government is using credit restriction as an alternative means of import control. It does not, as it did before, say, “ You can import machinery, which is important, but you cannot import so much crockery, which is not important “. The Government is asking the banks not to advance money to importers, but we cannot, with that blunt instrument, discriminate between importers who are importing vital machinery and those who are importing dolls from Japan. The

Government has fallen from using a scientific and selective instrument to using a blundering and non-selective instrument, but its policy is to reduce imports.

It is useless to say that this is a new. development which the Treasurer could not reasonably anticipate. That was the excuse made by the Minister for Labour-, and National Service (Mr. McMahon) to-night. I invite the members of the Country Party to look at the latest publication on national income and expenditure. At page 8 of that document, they will see a statement on the balance of international payments in the last three years. This is the Government’s own information, from which they will see that the deficit on current account for 1957,58 was £174,000,000, that the deficit for 1958-59 was £207,000,000; and that the deficit for 1959-60 was £243,000,000. That shows a constantly rising deficit on current account. Are we expected to believe the Government when, one month after the conclusion of the debate on the Estimates which accompanied the Budget, it comes in here and says, “ Oh, surprise! The trade tendency is against us “? Are we expected to take that seriously when the Government has been reporting on this tendency over the last three years? Note the vital point in the Treasurer’s statement - that he clings to his fallacies and states them in a new way.

The Government has been financing the trade deficit for years. When we had an agricultural boom, we still had a trade deficit. The Government has been financing it by borrowing and by hot money. The Treasurer has now switched from talking about his £400,000,000 sterling balance in London as his international currency reserve and says, “We have another £200,000,000 because we have the right to borrow from the International Monetary Fund “. So what he has in the back of his mind is more borrowing to cover the trade deficit.

The policies of West Germany and Switzerland have been mentioned. One thing that West Germany and Switzerland did recently was to raise the bank interest rate to, I think, precisely the same figure as the Treasurer mentioned to-night - 7 per cent. The immediate effect was a rush of hot money to those countries, and the governments of Switzerland and

West Germany became alarmed, because money that can rush in can equally quickly rush out. If the Government were honest it would say, “ We cannot tell, in these capital imports that we are always quoting, how much is solid investment and how much is hot money. We have no means of knowing that.” But the Government goes on talking as if this were solid British investment of the nineteenth century kind in colonial areas, to build railways, to build wharfs, to build harbours, and all that kind of thinking that was the investment thinking of the nineteenth century, whereas half the time the present form of investment is not that kind of investment at all, but is money that can retreat quickly. In the Treasurer’s reports on national income and expenditure we read that the value of goods imported was £946,000,000 in 1959-60 but that what Australia had to pay was £1,369,000,000. The invisibles now total £423,000,000, and every time we cover the trade gap with this borrowing we are committed to increased invisibles in the payment of interest.

To-night on the news there was a statement that the surviving great British motor company is to be taken over by the Ford interests at a price of £130,000,000. Well, are we all going to cheer and say, “Wonderful! Britain is getting £130,000,000 of new investment.”? Of course not! The whole of the plant that the British motor firm has built up is there just the same. It is not added to. Nothing is added except that the shareholders who, if they sold on the British market would have received £4 12s. each for their shares, will now get £7 10s. from the United States. Temporarily there is an addendum to the British dollar supply, but it will go and then the British motor industry will start to swing from being an earner of foreign capital to being a liability, as the purchase price becomes capital invested in Britain on which the British will have to pay interest. Yet this Government is totally uncritical as to whether investment in this country is the investment of hot money, whether it is merely the taking over of some existing asset, or whether it is something new that is being brought into the economy.

Almost everything that the Treasurer said to-night, except his statement about his decision to increase sales tax, was said before. If we turn to the Budget speech, which is scarcely two months old, we find the following statement: -

Thirdly, the Government expressed its approval of the action being taken by the Reserve Bank of Australia to prevent any increase in the liquidity of the banking system over the vear . . .

Later in the speech appears the following statement -

A second danger would be a rise in imports to levels higher than we can afford. I shall say more presently on the balance of payments and our attitude towards it.

The Treasurer might have said a lot of things on our attitude towards the balance of payments position, which is worsening. To-night he talks as though the crisis were new, but in August he said -

Prices and costs rose sharply over last year and, so far, the rate of increase does not seem to be slackening. Shortages of key materials and of some classes of labour have appeared - clear signs that, once again, our efforts to expand are, in some directions, over-reaching our resources. The recent rate of imports also suggests that, notably though local supplies have increased, they are failing to match the rise in demand and this, in consequence, is spilling over into demand for imports. Speculation in shares and other securities and in land is disturbingly active and prevalent.

None of these things is really remedied tonight. The increase in sales tax is a choice for further inflation. Inflation is a condition of sharply rising prices, and sales tax aggravates inflation. If the Government is disturbed at the amount of money going into the motor industry, why does it not take some of the steps that would force down the price of cars?

Mr Turnbull:

– Tell us how.


– Members of the Country Party know. They are against the tariff, or, at least, the Country Party used to be.

Mr Turnbull:

– Give us some of the details of cutting down the price of motor cars.


– I am strongly in favour of reducing the protection that is afforded a company that makes £15,000,000 a year profit. That suggestion is not new. I said the same thing in my speech on the Budget. The Government thinks by raising the bank interest rate to check inflation. Long ago, John Maynard Keynes pointed out that raising the bank interest rate did not check inflation. All that it did was to discourage the sound borrower and the sound investment that will not get a great rate of return, and leave the field open for the speculative investor.

I congratulate the Treasurer upon his use to-night of a new term, “ fringe institutions “. The gallery looked blank when he used it. The honorable member for Canning gave a meaning to it which was quite different from that which the Treasurer sent me in a note, so the honorable member for Canning clearly did not know what the Treasurer meant. The fringe institutions are the speculators outside the banking system. To-day in Canberra there are builders who borrow money at 15 per cent, in order to build. They pass that cost on to their clients. What is more, they can claim such interest payments as income tax deductions. If the Treasurer had said to-night that those people could claim only the overdraft rate for income tax deduction purposes, he would have struck a blow at that kind of speculative finance. If those people paid 15 per cent, interest and could claim only 7 per cent, as an income tax deduction, a mortal blow would have been struck at that kind of speculative finance. But that is not done. What the Government is doing is exactly what John Maynard Keynes said was always done by the device of raising the bank interest rate. The Government is going to freeze out the more responsible borrower and leave the field open for the speculator.

The Treasurer said that the interest on deposits in the savings banks will be raised to 4 per cent. During my speech on the Budget - the Treasurer was not here at the time - I directed attention to the fact that as I walked into the Commonwealth Savings Bank at Claremont, Western Australia, I saw big posters inviting investments with L. J. Hooker at 8 per cent, and with somebody else at 7i per cent. That was apparently the Commonwealth Government’s idea of encouraging deposits with the Commonwealth Savings Bank, or it may have been the new business approach that the Government has ordered. I do not see how an inducement of 4 per cent, interest is sufficient when we read these advertisements offering 8 per cent.

It seems to me that nothing is being done in these measures to reduce what the Trea surer said were three diseases of the economy - share speculation, consumer credit, and purely financial speculation. He said that the building up of the motor vehicle industry had played an excessive part in our present crisis. He did not relate that to our external funds. I understand, however, from the papers that he submitted in August that the increases in imports which alarmed him then were largely going in that direction. In the White Paper on National Income and Expenditure 1959-60, the following appeared -

During 1959-60 import licensing controls were progressively relaxed and in February, 1960, were abandoned except for a small group of items. Recorded imports, which in the first quarter of the year were arriving at an annual rate of some £820,000,000, were in the last two months of the year arriving at an annual rate of about £1,080,000,000.

Months ago, the Government was telling us that the rate had increased by £260,000,000 a year. The statement continued -

During the year total imports (as adjusted for balance of payments purposes) amounted to £946,000,000, an increase of 19 per cent, over 1958-59. The largest increases were in imports of aircraft, motor vehicles, machinery and rubber.

Quite clearly, the importation of machinery was a thing to be welcomed. The importation of aircraft was deliberate government policy. I take it that that referred to the Boeing aircraft. So we can leave those two matters out as points of criticism. What do we come to? We come to motor vehicles. All that the Government proposes to do in regard to an importation that is prejudicing our funds in London is to raise the sales tax - in other words, to make motor cars dearer within Australia and to add to inflation in Australia, when the scientific way would be to reduce imports of motor cars. If the Government reduced imports of cars, if it cut down on the amount of money available for that purpose, there would be no necessary rise in the price in Australia, which will result from this great increase in sales tax; but there would be a conservation of overseas funds. At every step, the Government chooses the blunt instrument and not the selective instrument. It reduces credit to finance imports instead of selecting the imports we want. It has the same vague policy in regard to fringe speculators instead of removing the taxation deduction for excessive rates of interest paid to them, which would strike a blow at the whole of their work. The Government increases sales tax on motor vehicles because, it says, we are importing too many cars. It does that instead of introducing a form of import licensing that would reduce that number of cars.

The Treasurer gave us nothing new in what he said to-night. No new crisis has arisen. The only way we can account for the similarity of the Treasurer’s statements last year, and his statement in the Budget speech about too much liquidity and imports running haywire - he said that three times - is that in doing nothing about them, in fact by aggravating the import position by lifting import controls, the Government was hoping for a continuation of its tremendous luck. The honorable member for Canning said, quite untruthfully, that the Australian Labour Party criticized import controls. Its criticism was that £989,000,000 was dissipated in a slather of imports that made the controls necessary. When, in the 1951 boom of imports our sterling reserves had been run down by £600,000,000, the Government had to have controls. Had a Labour government come into office with those sterling reserves gone, it also would have had to institute controls. We objected not to the controls but to the policy that made them necessary, and that is what we object to to-night. But the Government was born under a lucky star. It had the boom in wool prices. The honorable member told us how the Labour Government had accumulated international reserves by a stroke of luck. Will he say that this Government contrived the record price of wool early in its career? Of course, it did not. As a result of that boom, the Government got a very large increase in its sterling reserves abroad, and that offset some of the effects of the folly of its policy. The Treasurer told us months ago, as I said early in this speech, that imports were becoming dangerous, but he did nothing about them. He lifted import controls. Now when no turn of luck has come to the Government, when in fact, for the first time, there is a turn of misfortune in the fall in the price of wool-

Mr SPEAKER (Hon John McLeay:

Order! The honorable gentleman’s time has expired.

Mr Harold Holt:

– I wish to make a personal explanation.


– Does the right honorable gentleman claim to have been misrepresented?

Mr Harold Holt:

– Yes. When the Leader of the Opposition (Mr. Calwell) began his speech to-night on the statement for the printing of which I had moved, he made the charge that as a result of a discourtesy on my part he had not received beforehand a copy of the statement. I think it proper to put the facts on record. The Leader of the Opposition made his statement when many more people would have been listening to the proceedings in this place and the damage, such as it might be, is perhaps not recoverable, but at least let the record be straight.

I discussed with the Leader of the Opposition the procedure which should be followed in relation to this statement. I told him that I expected he would wish to have some period of adjournment before he spoke himself. He replied that he wished to proceed immediately I had spoken. Then he asked whether I would be able to make a copy of my speech available to him. I pointed out that there were some problems associated with that; certainly it could not be made available before the closing of the stock exchanges this afternoon. I said that subject to that provision and on the understanding that the speech was for his own confidential perusal so that he could speak immediately after me as he had wished, I would make a copy of the speech available.

On the point of discourtesy, I might interpose here that when it became known to me, as it was in the course of the afternoon, that the Leader of the Opposition wished to speak at length, I immediately arranged that he should have unlimited time to speak. At a later stage, he asked if I would defer the business which normally would have been introduced by me after I had concluded my statement, and which now is ahead of us. I told him that I would do so in order that he would not be inconvenienced by having to wait for the legislation to be introduced.

As to the availability of a copy of my speech, the Leader of the Opposition could have had a copy. Actually, I brought in two additional copies - one for the Leader of the Opposition and one for the Deputy Leader. Despite all the gibes of honorable gentlemen opposite, I was, in fact, working on the text of the speech in my office up to 4 o’clock this afternoon. The typed copies were not available in my office for me or anybody else until 7.30 p.m. Had the Leader of the Opposition taken the trouble to have his private secretary ask for a copy at that time, the honorable gentleman would have had no cause for his subsequent complaint. I would certainly have supplied a copy to him if I had had the opportunity to do so. I was addressing a party meeting in the party room when the copies of the speech arrived, and I brought them to the House as soon as possible.

All I would add is that the honorable gentleman, apparently in order to cover up the fact that he was so indifferent to what the Government was going to propose tonight, came along with a typed motion before he had even heard what we had to say. To cover up his indifference to these measures, he has accused me of discourtesy.

Mr Calwell:

– I wish to make a personal explanation. I would be the last to accuse anybody of discourtesy unless I felt strongly about the subject; but the Treasurer (Mr. Harold Holt) did make his promise to me and I thought that at least he would have done what the Prime Minister (Mr. Menzies) always did for the former Leader of the Opposition, the present Chief Justice of New South Wales, Dr. Evatt, and for the late Mr. Chifley, and that he would send round copies of his speech to me. I was waiting, for such a copy. I accept the Treasurer’s explanation that he did not finish preparing his speech until 7.30 p.m. I quite agree that the Treasurer was late in finishing it because it bore all the evidence of that. I think I am not obliged to him for enabling me to follow him. He’ could not prevent it once he moved that the paper be printed. I was entitled to put the Opposition’s point of view immediately he had finished.

Mr Harold Holt:

– I am not complaining about that.

Mr Calwell:

– The Minister showed me no courtesy in facilitating, arrangements for me to speak immediately he had con- eluded. The Opposition wishes to consider the Government’s measures and we also want an opportunity for a full and fair debate on this question. We hope that in future we will have a full opportunity, before a Minister or anybody else speaks by leave, to see what he proposes to say, so that the Opposition can put its point of view immediately and not have to wait for a day or two, or a week or two.

Mr McMahon:

– Would you expect a copy of financial statements?

Mr Calwell:

– Yes.

Mr McMahon:

– You will not get it.

Mr Calwell:

– I take no notice of this twice-educated economist. The Treasurer always gives me a copy of his Budget speech as he delivers it. I expected that courtesy to-night; but if the right honorable gentleman wants to close the incident I, too, am prepared to do that. I leave it at that.

Debate (on motion by Mr. Cash) adjourned.

page 2879


Bill returned from the Senate without amendment.

page 2879


Motion (by Mr. Harold Holt)- by leave - agreed to -

That leave be given to bring in a bill for an act to amend the Sales Tax (Exemptions and Classifications) Act 1935-1959, as amended by the Sales Tax (Exemptions and Classifications) Act 1960.

Bill presented, and read a first time.

Second Reading

Treasurer · Higgins · LP

– by leave - I move -

That the bill be now read a second time.

The object of this bill, together with the resolution and rates bills which will follow, is to give effect to the sales tax proposals outlined in the statement which I have just made. The rate of sales tax on passenger motor cars, including station wagons and similar vehicles, is to be increased from 30 per cent, to 40 per cent., and the rate of tax on motor cycles is to be raised from 1 6i per cent, to 25 per cent.

There is to be no increase in the tax on commercial motor vehicles which bear tax at the rate of 161 per cent., nor will there be any change in the tax applicable to parts and accessories for all classes of motor vehicles. Tyres and tubes will remain taxable at 12½ per cent, and other parts and accessories for motor vehicles will continue to bear tax at 16 per cent. The increases take effect on and from to-morrow, 16th November. The reasons for the sales tax increases have already been fully explained. I commend them to honorable members.

Debate (on motion by Mr. Crean) adjourned.

SALES TAX BILLS (Nos. 1 to 9) 1960.

In Committee of Ways and Means:

HigginsTreasurer · LP

– I move -

  1. That, on and after the sixteenth day of November, One thousand nine hundred and sixty, the rate of sales tax in respect of goods covered by the Fifth Schedule to the Sales TaxExemptions and Classifications) Act be 40 per centum.
  2. That, for the purposes of this resolution, “ the Sales Tax (Exemptions and Classifications) Act “ meanthe Sales Tax (Exemptions and Classifications) Act 1935-1959, as proposed to be amended by the Sales Tax (Exemptions and Classifications) Bill 1960 and by the Sales Tax (Exemptions and Classifications) Bill (No. 2) 1960.

This resolution, and the bills which are to follow, are merely machinery measures which are necessary to give effect to the Government’s proposal to increase the rate of tax on passenger motor cars from 30 per cent, to 40 per cent. The measures have no other effect and are complementary to the Sales Tax (Exemptions and Classifications) Bill which has just been explained to honorable members.

The general rate of tax remains unchanged at 12½ per cent, and the rates of 8 per cent., 16 per cent, and 25 per cent, continue in force, although, as indicated previously, motor cycles are being transferred from the 16per cent, rate to the 25 per cent. rate.

Progress reported.

House adjourned at 11.2 p.m.

page 2880


The following answers to questions were circulated: -

Crimes Act

Mr Whitlam:

m asked the AttorneyGeneral, upon notice -

On what dates have proclamations been made and revoked under section 30j of the Crimes Act?

Sir Garfield Barwick:

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

Proclamations were made and revoked as follows: -

Native Members of the Forces Act

Mr Whitlam:

m asked the Minister representing the Minister for Repatriation, upon notice -

Why has no date yet been proclaimed for the Native Members of the Forces Act 1957 to come into operation?

Dr Donald Cameron:

– The Minister for Repatriation has supplied the following information: -

The Native Forces Benefits Act 1957 provides that the rates of pension to be paid will be such as are prescribed by Regulation and the proclamation of the Act had been dependent upon the making of regulations.

As the rates of pension to be prescribed for New Guinea natives have necessarily to be related to the rates of native wages the amounts could not be finally determined until appropriate wage rates which were under review had been determined.

Rates of war pension have now been settled and the regulations are in the final stages of preparation by the Parliamentary Draftsman.


Mr Ward:

d asked the Prime Minister, upon notice -

  1. Have officers of the Australian Security Intelligence Organization or its agents attended trade union meetings?
  2. If so, what was the purpose of these attendances?
Mr Menzies:

– The answers to the honorable member’s questions are as follows: - 1 and 2. I have told the honorable member on many occasions and in respect of many different allegations that I am not prepared to discuss the method of operation of the security service and I do not propose to change my attitude.

Papua and New Guinea

Mr Clyde Cameron:

n asked the Minister for Territories, upon notice -

  1. What were the hours of a standard working week for Europeans in the Territory of Papua and New Guinea in 1945 when the standard week for native workers was fixed at 44 hours?
  2. What is the present standard working week for (a) European and (b) native workers?
Mr Hasluck:

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

  1. The standard working week for public servants was 34 hours. While there was no Territory employment code for other European workers it is known that shop assistants and clerical workers worked up to 40 hours a week while artisans worked in excess of 50 hours, including overtime.
  2. It is difficult to generalize about working hours in the Territory and to differentiate between European and native workers. The standard working week for public servants, which include native members of the Auxiliary Division and the Third Division, is now 36) hours. Most other European workers are initially employed from Australia under agreements which are patterned on the appropriate Australian award conditions. Although the maximum working week without penalty rates for natives employed under the Native Employment Ordinance 1958 is 44 hours the natives almost universally work the same hours as the Europeans, especially in the building trades and in the stores, while in the planting industry the European employees work the same hours as or more hours than the native employees.
Mr Whitlam:

m asked the Minister for Trade, upon notice -

For what products and on what occasions has protection been (a) sought from and (b) recommended by the Tariff Board against products of the Territory of Papua and New Guinea?

Mr McEwen:

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

  1. During the post-war period, protection against imports from Papua and New Guinea has been requested at the following Tariff Board inquiries: -

Plywood.- In 1954, 1956 and 1957.

Veneers.- In 1957.

Passionfruit Juice and Passionfruit Pulp. - In 1957 and 1960.

Peanuts and Peanut Oil.- In 1960.

  1. Following these requests, the Tariff Board recommended as follows: -

Plywood. - In each case the Board recommended no increase in the existing protective duties (mainly 32½ per cent, ad valorem) on imports from British Preferential Tariff sources, including Papua and New Guinea. However, it also recommended that quantities from the Territory, up to a certain limit, should be admitted duty-free, under customs by-law, on a continuing basis. The limit recommended as a result of the 1954 inquiry was 12,000,000 square feet per annum, without restriction as to type. In 1957, the recommended limit was 16,000,000 square feet per annum, restricted to the highly moisture resistant type.

Veneers. - The Board recommended no change in the existing duty-free admission of imports from Papua and New Guinea.

Passionfruit Juice and Passionfruit Pulp -

  1. in 1957, the Board recommended an increase in protective duties. The British preferential tariff rates, which apply to Papua and New Guinea, were increased from a maximum of 2s. 3d. a gallon to 8s. 3d. a gallon (for bulk supplies). The board also recommended, however, that provision be made under customs by-law for duty-free admission from the Territory of 25,000 gallons per annum for five years.

    1. The board’s 1960 recommendations have not yet been released.

Peanuts and Peanut Oil. - The 1960 request for protection was made during the public hearings on a comprehensive reference covering vegetable and animal oils and certain materials used in their production. The Board has not yet completed its report.


Mr Whitlam:

m asked the Minister representing the Minister for Customs and Excise, upon notice -

  1. On what dates in 1959-60 did importers produce to a Collector of Customs the permission of the Minister for Shipping and Transport to import ships?
  2. On what date had the Minister given his permission?
  3. Of what type and tonnage were the ships, and from what country were they imported?
Mr Osborne:

– The Minister for Customs and Excise has furnished the following answer to the honorable member’s questions: - 1, 2 and 3-

Royal Australian Navy

Mr Beazley:

y asked the Acting Minister for the Navy, upon notice -

  1. Upon what scientific criteria was the figure of 30 cubic feet of air per minute or 1,800 cubic feet of air per hour determined as the standard of habitability in sleeping quarters in the Royal Australian Navy warships?
  2. When and by whom were the investigations carried out?
  3. Why is the naval standard so much at variance with the standards laid down for the Australian Mercantile Marine in Navigation (Crew Accommodation) Regulations made by Statutory Rules 1954, No. 38, under the Navigation Act, especially regulation 31 and regulations 15 and 37 which provide for 5,400 cubic feet of air per hour in rooms with a floor area of less than 100 square feet and 7,200 cubic feet of air per hour in rooms over 100 square feet?
  4. Do naval standards differentiate in changes of air per hour required in sleeping quarters of small dimensions and sleeping quarters of large dimensions?
  5. If naval standards are not based on any scientific investigation but on ad hoc criteria, will the Minister ensure that such an investigation is made, especially for service likely in tropica! conditions?
Mr Opperman:

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

  1. The figure of 30 cubic feet of air per man per minute is based upon the need to provide the oxygen and to restrict the carbon dioxide in the air breathed. A sleeping man requires not more than 1 cubic foot of oxygen per hour but produces about 1 cubic foot of carbon dioxide per hour. It has been found that if 30 cubic feet of air per man per minute is supplied the alteration in the optimum oxygen and carbon dioxide contents of the air in the compartment will be very small.
  2. The investigations were carried out by the Ventilation Committee at Admiralty on whose recommendations the “ Instruction for the design and installation of ventilation arrangements in H.M. Ships “ is based. The instructions in use at present followed a careful review of the problem under war-time conditions in tropical waters after the Second World War. The ventilation standards are constantly under review and amendments made as the result of investigations. The Ventilation Committee is associated with the Royal Naval Personnel Research Committee of the Medical Research Council.
  3. The difference between naval standards and standards for the mercantile marine arises because naval standards are based on the requirements of air per man, while the mercantile marine standards are based on twelve air changes per hour per compartment irrespective of the number of occupants. Naval standards give fourteen air changes per hour.
  4. As the naval standards are based upon 30 cubic feet of air per man per minute and the larger compartment will accommodate more men and will therefore be supplied with a correspondingly larger quantity of air, there is no differentiation: the changes of air per hour will be fourteen for all sleeping compartments irrespective of size.
  5. Naval standards are based on scientific criteria - see answer to question 1.

Humpty Doo Rice Project

Mr Nelson:

n asked the Minister for Territories, upon notice -

What amounts are owing by Territory Rice Limited to the Commonwealth Government for the following services and hire charges in connexion with the Humpty Doo rice project: -

  1. electricity power lines, (b) electricity supply, (c) Royal Australian Air Force, Department of Works and Administration earth-moving plant, (d) road and earth work, (e) buildings, (f) farm machinery, and (g) other stores and material?
Mr Hasluck:

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

The only amount owing by Territory Rice Limited to the Commonwealth Government is £7,534 5s. 6d. for electricity supplied during the year ended 8th March, 1960.

Public Service

Mr Daly:

y asked the Prime Minister, upon notice -

  1. How many persons have been refused appointment to the Commonwealth Public Service since December, 1949, because of adverse reports of the Australian Security Intelligence Organization?
  2. How many public servants have been (a) dismissed, or (b) refused promotion as a result of reports of this organization in the same period?
Mr Menzies:

– The answer to the honorable member’s questions is as follows: - 1 and 2. Since December, 1949, the Public Service Board and departments have continued the practice instituted under the previous Government of obtaining security reports before appointments are made in certain employment categories in the Public Service. The number of persons rejected for appointment, refused promotion and dismissed on security grounds is very small.


Mr Ward:

d asked the Prime Minister, upon notice -

What has been the expenditure on the Australian Security Intelligence Organization in each year since its establishment?

Mr Menzies:

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

This information is provided in the Estimates for each year under the heading of Miscellaneous Services - Prime Minister’s Department.

National Health (Pharmaceutical Benefits) Regulations

Mr Whitlam:

m asked the Attorney-General, upon notice -

  1. On what date did the Parliamentary Draftsman receive instructions to prepare amendments of the National Health (Pharmaceutical Benefits) Regulations which were notified in the Commonwealth Gazette on 28th October, 1960?
  2. On what date did the Draftsman despatch the amendments?
Sir Garfield Barwick:

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

  1. The first instructions were received on 1st August, 1960; further amending instructions were received on 2nd September, 1960.
  2. 30th September, 1960.

Trade Delegations

Mr Daly:

y asked the Minister for Trade, upon notice -

  1. How many trade delegations have been sent abroad since the last federal elections?
  2. Who were the members of each delegation, and which industries did they represent?
  3. What countries were visited by each delegation, and what did each delegation cost?
  4. On what basis, and by what methods, were the delegations selected?
  5. Will he supply particulars of any improvement in the volume of trade since visits by the delegations?
Mr McEwen:

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

  1. There have been five trade missions.
  2. Members of these trade missions have represented a very wide range of primary and secondary industries. The total number of businessmen who travelled on these missions numbered 82. It is therefore not practicable to list their interests in detail. The Government does not bear the costs of travel and accommodation of the businessmen.
  3. The countries visited by the missions, together with costs to the Government, were -

The costs incurred by businessmen on these missions are not known.

  1. Firms which are in a position to export are invited to join trade missions.
  2. It is not possible to provide precise details of changes in the volume of trade with the countries concerned resulting from visits by trade missions. Sales made by members are, understandably, not made public. However, exports to the countries to which trade missions have travelled are set out hereunder: -

Diplomatic Representation in Ireland

Mr Whitlam:

m asked the Minister for External Affairs, upon notice -

  1. What members of the Commonwealth of Nations have: (a) Ambassadors; or (b) Ministers, in Dublin?
  2. By what style do their letters of credence describe the Irish Head of State?
  3. By what style, and on what occasions, has Australia sought to address letters of credence to him?
Mr Menzies:

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

  1. United Kingdom, India and Canada have Ambassadors in Dublin.
  2. Publication of this information is a matter for the governments concerned.
  3. The negotiations with the Republic of Ireland on this subject have been conducted on a confidential basis.

Export of Motor Vehicles

Mr Whitlam:

m asked the Minister for Trade, upon notice -

  1. What manufacturers exported motor vehicles in each of the last three financial years?
  2. What were the number, destination and export earnings of their vehicles?
Mr McEwen:

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

  1. General Motors-Holden’s Limited, International Harvester Company of Australia Proprietary Limited, Chrysler Australia Limited, and Ford Motor Company of Australia Proprietary Limited; during the last two years Volkswagen (Australasia) Proprietary Limited have also undertaken exports.
  2. Exports of motor vehicles of Australian production during each of the last three financial years are as follows: -

Motor vehicles are being sold to more than 25 destinations, the main ones being New Zealand, Singapore, Hong Kong, South Africa, Malaya, Thailand, Kenya, Southern Rhodesia and island areas in the South-West Pacific. In addition, exports of Australian-made motor vehicle parts during the same three years were valued at:

Trade Agreement with the United Kingdom

Mr Clyde Cameron:

n asked the Minister for Trade, upon notice -

  1. Was it an understanding, when the present Trade Agreement with the United Kingdom was made, that the Government of the United Kingdom would seek to procure the purchase from Australia of a specified minimum quantity of wheat annually; if so, what was this quantity?
  2. How much wheat has been taken by the United Kingdom from Australia in pursuance of this agreement in each of the years since it came into operation?
Mr McEwen:

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

  1. Yes, the 1957 agreement with the United Kingdom included an understanding in regard to purchases of wheat from Australia. The agreement records “ the desire and expectation “ of the two governments that sales of Australian f.a.q. wheat and flour in the United Kingdom will be not less than 750,000 tons (28,000,000 bushels) per annum, including the wheat equivalent of flour.
  2. The history of the United Kingdom import performance under the agreement has been as follows: - 1957- 27,000,000 bushels. 1958 - A year of crop failure in Australia - 11,000,000 bushels. 1959- 21,000,000 bushels.
  3. The Government was concerned about the low level of sales in 1959 - a year in which we had abundant supplies - and I therefore took the matter up with the United Kingdom Government and sought in particular to ensure that there was no repetition of this shortfall in 1960.
  4. Sales in the current wheat season have been quite satisfactory. Between 1st December, 1959, and mid-October, 1960, 28,400,000 bushels were sold. Of this, all but 3,400,000 bushels has already been shipped. Shipping has been arranged for the remainder and the Wheat Board anticipates that United Kingdom imports in 1960 will reach the agreed figure with perhaps a small margin to spare.

Road Transport: Commonwealth Assistance to the States.

Mr Swartz:

z asked the Minister for Shipping and Transport, upon notice -

  1. Has Commonwealth assistance to the States for roads been increased regularly over recent years?
  2. What will be the total figure allocated for the five-year period ending on 30th June, 1964?
  3. What other Commonwealth grants are made to assist Australian road transport?
Mr Opperman:

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

  1. Yes. In 1949-50 the Commonwealth provided £9,000,000 to the States for roads. This amount has risen in each succeeding year, reaching £42,000,000 for 1959-60. It will reach £58,000,000 by 1963-64.
  2. £250,000,000, which will include £30,000,000 paid on a £1 for £1 matching basis.
  3. With the administration of road transport and the construction and maintenance of roads primarily State functions, the Commonwealth’s financial assistance for roads comprises its principal grant to assist road transport. However, some minor items of expenditure totalling not more than £250,000 annually are also made by the Commonwealth on State roads. This expenditure includes the provision and maintenance of roads of access to Commonwealth properties, and maintenance expenditure on the Barkly Highway in Queensland, the Eyre Highway and the GeraldtonLeamonthroad

Cite as: Australia, House of Representatives, Debates, 15 November 1960, viewed 22 October 2017, <>.