House of Representatives
12 November 1964

25th Parliament · 1st Session

  1. House of Representatives
  2. 25th Parliament
  3. 1964

Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 10.30 a.m., and read prayers.

page 2865

MR. SPEAKER

Sir ROBERT MENZIES:
Prime Minister · KooyongPrime Minister · LP

– Mr. Speaker, before you proceed with the ordinary business of the day, 1 want to tell you that some keen investigator has discovered that this is an interesting day in the history of the Parliament because, today, you, Sir, equal the record term of office for a Speaker. You have held office for 8 years and 76 days. That was the period of office also of the previous record holder, Sir Frederick Holder, who served as Speaker from May 1901 to July J 909.

Mr Whitlam:

– The South Australians are durable.

Sir ROBERT MENZIES:

– They are very durable. All 1 want to say to you, Sir, is that you have been durable; we are very glad that you have been durable and we welcome the opportunity to thank you for the uniform good temper with which you have presided over us. We wish you, in a sense, many happy returns of the day.

Mr CALWELL:
Leader of the Opposition · Melbourne

– Sir, if you will suffer me also to offer my congratulations upon your long term of office I should like to say that there have been times when the Opposition was hopeful that your term would end - as the result of an election. Of course, had we won one more seat in 1961, we would have kept you on as Speaker. You know my opposition to the wearing of wigs; I would have waived that objection in order to keep you in office. We would have kept you in office in the same way as the distinguished Prime Minister of Great Britain has maintained in that Parliament the same Speaker who presided over the destinies of the country in the days of two Tory Prime Ministers. The Prime Minister (Sir Robert Menzies) and I share a love of history. Whilst it is true that Sir Frederick Holder and you have a most remarkable record for the occupancy Of the Speaker’s chair, I want to remind you that Sir Frederick Holder died while in office. We do not want that to happen to you. You have not always pleased us, but by and large you have been better than many I have known.

Mr ADERMANN:
Minister for Primary Industry · Fisher · CP

– Mr. Speaker, I endorse the very kindly references made to you and I offer you my congratulations personally and the congratulations of the Australian Country Party. I endured three years under your supervision as Chairman of Committees, and I can say with sincerity that in every approach to your task, which has not always been an easy one, you have been honorable and have wanted to do whatever was best. I commend you and congratulate you.

Dr FORBES:
Minister for the Army · Barker · LP

– Sir, your South Australian colleagues in this House would like to add to the felicitations that have been offered to you on this occasion. We are proud that South Australia produces not only Speakers - this applies to both sides of the House - but good Speakers. I also remind the House that the gentleman whose record you equal today was also a South Australian. I repeat, Sir, that we South Australians in this House are proud of the distinction you have brought to this Parliament and to your State.

Mr MACKINNON:
Corangamite

– As a self-appointed representative of the lowly back benchers I should like to extend to you, Mr. Speaker, our felicitations. Throughout your long term of office you have certainly conducted your duties in a manner that has carried on the old tradition of dispensing justice with mercy. I sometimes think that your equanimity must be severely strained through provocation at times. We extend to you our wishes for a long life in office, and our best personal wishes.

Mr FAILES:
Lawson

– In the absence of the Chairman of Committees I think I might be permitted to speak on behalf of the Temporary Chairmen who have worked with you and for you and to express out appreciation of the very many courtesies which you have extended to us and the help you have given us in trying to carry on the work of the Parliament.

Mr POLLARD:
Lalor

- Mr. Speaker, I am the only honorable member here who has enjoyed the experience of being suspended from the sittings by you. May I say how much I enjoyed it and how richly I deserved it?

Mr SPEAKER:

– First, I direct attention to the fact that there is nothing before the Chair. I should like to say how much I appreciate the kindly references to my services. I thank all honorable members for the tolerance and understanding which they have always shown towards me. As a matter of fact, it would not be the first time I had lost my rank if I were thrown out of office. I should also like to express my appreciation to my Parliamentary colleagues for their support, and also to the electors of Boothby for the confidence they have shown in me.

page 2866

QUESTION

FAMINE RELIEF

Mr CALWELL:

– Has the Prime Minister been advised that in many parts of India people are suffering from mass starvation due to famine and that demonstrations by starving people are taking place in such States as Kerala in southern India? If he has been informed of these unfortunate happenings will he say. whether the Government can make an early decision to send wheat and rice to India as famine relief and as a gift expressive of the concern of the Australian people for the unfortunate suffering of these people?

Sir ROBERT MENZIES:
LP

– This matter has given rise to some practical problems which I believe were the subject of a recent statement, but I will look into it and will advise the honorable member before the House rises.

page 2866

QUESTION

WAR SERVICE HOMES

Mr FOX:
HENTY, VICTORIA

– My question to the Minister for Housing relates to war service homes finance. Will the Minister consider the War Service Homes Division introducing, within the terms of the contract of sale, life assurance covers for its own mortgagors as is done by the Victorian Housing Commission and also, I believe, by the South Australian Housing Trust? At present, if a breadwinner dies his widow is obliged to continue the existing mortgage and to repay to the Division the full amount owing at the death of the ex-serviceman. In many cases this is a hardship.

Mr BURY:
Minister for Housing · WENTWORTH, NEW SOUTH WALES · LP

– Most of the people covered by the schemes of life assurance relating to the purchase of houses operated by the South Australian Housing Trust and the Victorian Housing Commission, are in the young age group; many are young married folk setting up house for the first time. In the case of war service homes, very few loans are made these days to people in the under 40 age group. We still make loans to persons who were discharged up to well over 40 years ago. Unlike most lending bodies, we do not inquire too closely into the health or age of the prospective purchaser. We rely on security and the purchaser’s capacity to repay. The difficulty of establishing an insurance scheme in these circumstances is that rates of premium to those covered would have to be so high that the scheme would hardly be practicable. Part of the success of the insurance scheme for fire cover and other risks on the house is that the scheme is compulsory. However, all the normal facilities of life assurance companies are available to people who wish to obtain the cover referred to by the honorable member.

I might say also that the widows’ scheme operated under the War Service Homes Division is extremely generous. In cases where widows are reduced to a very low income the charges in many cases are at a fairly nominal figure and are carried forward as an eventual charge on the property. So the position so far as widows are concerned is largely covered. This matter has been looked into on a number of occasions over the years. It is impracticable to give effect to the suggestion made by the honorable member, and as time goes by it becomes even more impracticable because the state of health of those concerned continues to deteriorate and they continue to grow older.

page 2866

QUESTION

H.M.A.S. “ MELBOURNE

Mr WHITLAM:

– I ask the Minister for the Navy a question. When will H.M.A.S. “Melbourne” be withdrawn to commence its modernisation? When will delivery commence of the 14 S2E Tracker aircraft? When will H.M.A.S. “ Melbourne “ and the Tracker aircraft be in service together?

Mr CHANEY:
Minister for the Navy · PERTH, WESTERN AUSTRALIA · LP

– The half life modernisation of H.M.A.S. “ Melbourne “, referred to in the Prime Minister’s defence statement, cannot commence until early in 1967 due to the need to place forward orders for certain equipment. The Tracker aircraft must be ordered immediately, however, because of production line requirements in the United States of America. It is hoped that these aircraft will be available before “ Melbourne “ goes in for her refit. While “ Melbourne “ is being refitted the squadrons which normally operate from the carrier will not be inoperative. They will be based at the naval air station, where training and exercises will be carried out. In a state of emergency those aircraft could be put at any spot around the coast to operate as land based aircraft. Of course, when it is time to put “ Melbourne “ in for the half life modernisation, due regard will be paid to the strategic situation at that time.

Mr Whitlam:

– When will “ Melbourne “ be back in service?

Mr CHANEY:

– About 18 months after the refit commences.

page 2867

QUESTION

TRACTOR TESTING

Dr GIBBS:
BOWMAN, QUEENSLAND

– My question to the Minister for Primary Industry relates to a very welcome statement attributed to the Minister in this morning’s Press. It is stated that tractor testing will be resumed at Werribee, with the support of the Government. Will the honorable gentleman give further details of this matter to the House? In particular will he advise the House whether the tractors to be tested are to be purchased in a random manner?

Mr. ADERMANN__ There was a likelihood that tractor testing would bc discontinued because of the inability of the University of Melbourne, which conducts the tests, to select tractors at random, but this problem has now been overcome. The Commonwealth and Victoria together were prepared to advance sufficient funds to enable tractors to be purchased at random. Since that decision was reached the Tractor Manufacturers Association has indicated to me that it is prepared to supply any tractors required so that the Commonwealth and Victoria may not be called upon to provide finance. So on all counts this matter has turned out very satisfactorily. Testing will be conducted on a trial basis for a period of two years. The matter will then be examined. I hope that a very satisfactory conclusion will be reached.

page 2867

QUESTION

WORKERS COMPENSATION

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES

– I ask the

Treasurer whether he has noticed the report this morning that the New South Wales Government proposes to amend its work men’s compensation law to make it superior in many ways to the legislation now before this Parliament. Has he noticed the report published in Melbourne yesterday in which it was stated that accident costs in Australia last year reached the enormous figure of £300 million, of which £170 million was due to accidents in industry? In the light of the severe impact of this expenditure upon the national economy, will the Treasurer take up with Cabinet the importance of regularising compensation and other accident coverage on a national level - in agreement with the States, of course - by establishing a national insurance fund?

Mr HAROLD HOLT:
Treasurer · HIGGINS, VICTORIA · LP

– I should like to give some study to the honorable member’s question. It does invite a comment which would embody an element of policy. I have not seen the report that the New South Wales Government is increasing its rates of compensation. We have just dealt with compensation legislation in this Parliament. That legislation seeks to give a scale of compensation which will not be out of line with what might be taken as the fair Australian average in these matters. New South Wales has tended to be ahead of the field but, on the other hand, the Commonwealth scales have usually been rather higher than those of any other State.

I conclude by merely saying that what the honorable member has put to me certainly merits study. The figures he has given with relation to the loss suffered through industrial accidents in Australia are certainly disturbing. In the past, this Government has attempted to give some lead in improving industrial safety standards, and I am certain the publication of the figures given by the honorable member will give it added stimulus to continue with that work.

page 2867

QUESTION

MILITARY INSTALLATIONS IN NEW GUINEA

Sir ROBERT MENZIES:
LP

– On a previous occasion, the honorable member for Batman put to me a question about military installations in New Guinea. Perhaps I could answer him now, as I promised I would, before the defence debate is resumed.

Article 4 of the Trusteeship Agreement for the Territory of New Guinea provides:

The Administering Authority will be responsible for the peace, order, good government and defence of the Territory . . .

Article 7 states -

The Administering Authority may take all measures in the Territory which it considers desirable to provide for the defence of the Territory and for the maintenance of international peace and security.

It follows from that, of course, that it is not necessary for us to secure approval from the United Nations before attending to these matters.

page 2868

QUESTION

WORK CAMP IN NEW GUINEA

Mr KING:
WIMMERA, VICTORIA

– I ask the Minister for Territories whether he has seen the leading article in the “South Pacific Post” of Friday, 6th November 1964, which states that applicants for enrolment at the work camp to be conducted in New Guinea by the National Union of Australian University Students next January have been asked to sign an application form stating -

The Department of Territories requires that the following declaration be completed by all applicants for the New Guinea Work Camp:

I…….. undertake not to indulge in any political comment or activity in the Territory of Papua-New Guinea for the purpose of the 196S Australian-Asian Students Work Camp.

Will he state whether the Department of Territories laid down any such requirement?

Mr BARNES:
Minister for Territories · MCPHERSON, QUEENSLAND · CP

– I would say that this matter has no connection with the Department of Territories. I do not know whether the student body mentioned has requested those of its members who are proceeding to this work camp to sign such a declaration. I say categorically that the Department of Territories has made no such request. This matter arises from an application from the student body to the previous Minister for Territories in 1963 when a work camp was under consideration. The student body then included a number of Asian and Indonesian students and the student body asked whether there would be any political difficulties if these students took part in the work camp. My predecessor said there would be no such difficulties provided the students did not enter into any political discussions. This remark was made having regard to the background of the local people. We did not want any incidents there. This work camp was eventually established with the assistance of the Administration and it was a very great success. There will be another camp next

January. I say again that we have not required these declarations to be made. I feel sure that we can rely on the good sense and good conduct of the people who take part, and I also feel sure that the forthcoming camp will prove to be another great success.

page 2868

QUESTION

BROADCASTING AND TELEVISION

Mr STEWART:
LANG, NEW SOUTH WALES

– My question is addressed to the Postmaster-General. Has he yet taken any action or made a decision regarding the purchase by John Fairfax Ltd. of all the shares of A.T.V. (Aust.) Pty. Ltd. for about £2,500,000? Is it a fact that the sale involves control of stations 2GB Sydney, 2CA Canberra, 2 WL Wollongong, 2LF Young, and 5DN Adelaide and also substantial shareholdings in 2LT Lithgow and 3AW Melbourne? Does the sale also involve substantial shareholdings in Amalgamated Television Services Pty. Ltd. Channel 7 Sydney, Queensland Television Ltd. Brisbane, Canberra Television Ltd., Riverina Television Ltd. and other country television companies? Will the Minister say whether every broadcasting licence issued by him contains this condition -

The control of the station shall not be varied in any manner whatsoever directly or indirectly without the permission of the Minister.

If licences do carry this condition, does the Postmaster-General consider that the action of the Fairfax interests in removing existing directors, appointing their own nominees and thus gaining control of a large number of broadcasting stations, is in breach of that condition?

Mr HULME:
Postmaster-General · PETRIE, QUEENSLAND · LP

– I have not yet been able to study the matters to which the honorable member refers.

page 2868

QUESTION

HEALTH AND MEDICAL SERVICES

Dr MACKAY:
EVANS, NEW SOUTH WALES

– I wish to ask a question of the Acting Minister for Health. I have received a letter from a constituent which reads as follows -

I have been having trouble with my teeth ever since they made them at the dental hospital. They made them three times and they did not make them right. They keep dropping down all the time and the lower ones want fixing too. He made the silly remark to get a carpenter if I had any more trouble with them.

Can the Minister advise me whether my friend should give the New South Wales Government instrumentality a fourth opportunity or whether the Minister will confer with the Minister for Labour and National Service with a view to providing my constituent with a palatable alternative?

Mr SWARTZ:
Minister for Repatriation · DARLING DOWNS, QUEENSLAND · LP

– The disabilities suffered by this unfortunate person certainly command sympathy. His plight could be worse only if he were a member of Parliament. I was thinking of the danger to the Prime Minister if one of his Ministers suffered a similar disability. However, I am sure that neither the Minister for Labour and National Service nor the Commonwealth Minister for Health can assist in this case, as the dental hospital in Sydney is controlled by the New South Wales Minister for Health, to whom I suggest this query should be directed.

page 2869

QUESTION

WORKERS COMPENSATION

Mr COURTNAY:
DAREBIN, VICTORIA

– I direct my question to the Treasurer. Is he aware that recently an apprentice was awarded £60 as compensation for an injury he suffered, that the Treasury appealed to the appropriate State court and that the appeal was disallowed? The Treasury then appealed to the High Court and again the appeal was disallowed. I ask: Can the Treasurer tell honorable members, to the nearest £1,000, how much this action to prevent a boy from receiving his entitlement of £60 cost the Government of this country? Will steps be taken to restrict such costly exercises?

Mr HAROLD HOLT:
LP

– I will ask the honorable member to give me details of this case. He will be aware, of course, that in matters of this kind the responsibility of the Treasury, acting on behalf of the Government - and, indeed, through the Government on behalf of the general body of taxpayers - is to ensure that what is done is reasonably and fairly done and it may be that a particular case not involving a great deal of money in itself can nevertheless require the determination of a question of principle or policy which could, if extended indefinitely, result in large amounts of money being called for from the Treasury. I am quite certain that the action taken in this case would be reasonable in the circumstances but I shall give the matter my personal attention now that it has been raised with me.

page 2869

QUESTION

MOHAIR

Mr ALLAN:
GWYDIR, NEW SOUTH WALES

– My question is directed to the Minister for Primary Industry. In view of the publicity being given to the use of mohair in Australia, I would like to know what quantities of this fibre are imported and where it is imported from. Is mohair replacing wool to a significant degree in the manufacture of carpets, clothing apparel and blankets? Is it grown here and, if it is not grown, what assistance, if any, oan be given to encourage its production?

Mr ADERMANN:
CP

– Most of the mohair imported comes from the United Kingdom. I think the quantity imported last financial year was about 418,000 lb. which was worth about £318,000. It is used in the manufacture of carpets - in its pure state it blends even with wool - and in furnishing fabrics and the like. There has not been much mohair produced in Australia and the quality is low compared to that produced in other countries. It is not easy to say that we can give much incentive or help the production of better quality mohair because of our present import embargo on ruminants. There has not been much desire on the part of anyone to breed them so it will not be easy to improve the quality unless we can import the better quality animal from overseas to improve the strain.

page 2869

QUESTION

DEFENCE

Mr CURTIN:
KINGSFORD-SMITH, NEW SOUTH WALES

– My question is directed to the right honorable the Prime Minister. In view of the Government’s decision to introduce conscription for overseas service which will mean the calling up of all Australian youths on their reaching the age of twenty years, and considering the huge cost of the extra service equipment which will mean a great strain on the national economy, will the Prime Minister give an assurance to honorable members, in view of the grave situation which he claims exists at the present time, that he will take steps to conscript the wealth of the community, or does he intend to allow all of our national sacrifices to be made by the conscripted youth of the nation?

Sir ROBERT MENZIES:
LP

– I do not fail to observe that this slogan is being exhumed. There may have been some truth in it many years ago. There is very little truth in the suggestion today that wealthy people do not pay a proper share of the needs of the country. The honorable member ought to consult the tax schedules and he will see that there has been a very great levy upon wealth in Australia; and there will continue to be a contribution in that way.

page 2870

QUESTION

PAPUA AND NEW GUINEA

Mr WHITTORN:
BALACLAVA, VICTORIA

– My question, which is directed to the Minister for Territories, refers to Commonwealth public servants who apply for positions in the Public Service of Papua and New Guinea. Does the Minister realise that a Commonwealth public servant has to resign from his position in Australia before he can be accepted into the Public Service of Papua and New Guinea and that that condition is not made clear in the advertisements in the “ Gazette “? Does a public servant, after serving in Papua and New Guinea, retain his entitlements when he comes back to Australia?

Mr BARNES:
CP

– I just cannot recall the type of advertisement that is used for positions in Papua and New Guinea, but I will consider the matter raised by the honorable member for Balaclava.

page 2870

QUESTION

CITIZEN MILITARY FORCES

Mr HARDING:
HERBERT, QUEENSLAND

– My question is directed to the Minister for the Army. When is it proposed to implement the reorganisation of the Citizen Military Forces and to split existing units to form new battalions?

Dr FORBES:
LP

– The broad answer to this question is: “ In the very near future “. The times will vary from unit to unit in order to fit in with what is happening in the particular command. The reorganisation in north Queensland in which the honorable member for Herbert is particularly interested will take place almost immediately.

page 2870

QUESTION

PETROL PRICES

Mr LUCHETTI:
MACQUARIE, NEW SOUTH WALES

– I ask the Prime Minister whether he has abandoned his election policy proposal to reduce the price of petrol to country users. If that important election pledge, which was made about 12 months ago, is not to be repudiated, will the Prime Minister say when the necessary legislation will be presented to the Parliament and when it will come into operation?

Sir ROBERT MENZIES:
LP

– The policy has by no means been abandoned. A great deal of work has been done on this matter. As the honorable member will understand, you do not just write out a bill on a matter of this kind. There are questions of power to be considered; we must have the cooperation of the States, and we must make working arrangements with the petrol companies.

Mr Luchetti:

– Did the Prime Minister foresee those things in making his promise?

Sir ROBERT MENZIES:

– Yes, of course I did. The honorable member docs not imagine that it all happened overnight, docs he? ls that the way they do things on his side of politics? Do they announce a policy, do everything by the next morning and then go home to bed? I do not believe it. The fact is that there have been long and close negotiations with the oil companies, which are the distributors, and without whose co-operation the proposal, cannot be implemented. Those discussions have practically reached finality. The result of them will be put to the State Governments, 1 expect, in the next few days. When we have had those discussions with the State Governments - we must have them because we will need co-operative legislation or co-operative arrangements with the States as the matter has to be handled by the States grants procedure - we will bring in the legislation. I am quite confident that the legislation will be before the Parliament in the autumn sessional period.

page 2870

QUESTION

UNNATURALISED IMMIGRANTS

Mr DALY:
GRAYNDLER, NEW SOUTH WALES

– I direct a question to the Minister for Immigration. Is it a fact that there are more than 200,000 unnaturalised persons in Australia? Is it also a fact that one of the attractions to be offered to prospective migrants in the future will be an invitation to settle in Australia without the need to apply for naturalisation and with the opportunity to enjoy our security and freedom without any obligation to serve overseas in the armed forces - such service being confined to conscripted Australian boys who will bc expected to fight and die for the freedom to be enjoyed by our unnaturalised persons?

Mr OPPERMAN:
Minister for Immigration · CORIO, VICTORIA · LP

– In reply to the part of the honorable member’s question which relates to our immigration programme, I say that no invitation will be extended to prospective immigrants in the way that he suggested. The matter of compulsory callup is in the hands of the Government, as a matter of policy. It does not come within the scope of the Department of Immigration. In the first part of his question the honorable member said that more than 200,000 newcomers have not been naturalised, but I point out that this figure includes children who have come to Australia. I remind the honorable member that more than 400,000 immigrants have been naturalised. The advantages of being naturalised in Australia are apparent to the newcomers. Six months before the newcomers are eligible for naturalisation the Department sends them an advice. It is not the policy of the Department to demand that immigrants be naturalised, but I am quite certain that the attractions in Australia and the concessions that they would get through naturalisation will encourage them in the future to become Australian citizens at the same rate as previously.

page 2871

QUESTION

PAPUA AND NEW GUINEA

Mr MACKINNON:

– I. address a question to the Minister for Territories. Prior to the winter recess I asked him whether the report prepared by the Committee of the International Bank for Reconstruction and Development sent to inquire into the economy of Papua and New Guinea was available to the Government and when he intended to make the report available to members of Parliament. I again ask him that question.

Mr BARNES:
CP

– The Government has received the report of the World Bank. When the report will be released is a matter of Government policy.

page 2871

QUESTION

TELEVISION

Mr COPE:
WATSON, NEW SOUTH WALES

– I wish to ask the PostmasterGeneral a question apropos a question asked by the honorable member for Lang last Monday in regard to the purchase by John Fairfax Ltd. of all shares in A.T.V. (Aus.) Pty. Ltd. Can the Minister now tell the the House whether this purchase results in the Fairfax interests owning and controlling three television stations in Australia in breach of the Broadcasting and Television Act which provides that only two stations may be owned or controlled by the one interest? What action does the Minister propose to uphold the law of the Commonwealth if in fact there is a breach of the Broadcasting and Television Act?

Mr HULME:
LP

– Notice of the proposed purchase was published in the “ Sydney Morning Herald “ and perhaps in other newspapers. The holdings of A.T.V. (Aus.) Pty. Ltd. in radio and television stations are set out in the annual report of the Australian Broadcasting Control Board so that honorable members and the public can be aware of what holdings are included in the proposed purchase. The implications associated with this purchase, having regard to the Broadcasting and Television Act, are being looked at by me at the present time.

page 2871

QUESTION

CITRUS INDUSTRY

Mr TURNBULL:
MALLEE, VICTORIA

– My question is addressed to the Minister for Primary Industry. I ask: Is the Minister aware that it has been calculated that as new acreages of citrus are coming into production at a rate too fast for the increasing consumption of fresh fruit it will be necessary during the next few years to divert as much as 40 per cent, of the industry’s production to processing? As this will bring a serious problem to the growers, will the Minister consider arranging for officers of his Department with special knowledge of the citrus industry to visit citrus growing areas with a view to meeting growers and discussing Ohe problem with them?

Mr ADERMANN:
CP

– I think that the short answer is: “ Yes “. The Department of Primary Industry is always available to discuss problems affecting primary industries and to help in any way it can. Representatives of the Department will certainly discuss the matter with representatives of the industry to ascertain the best approach. The honorable member must recognise, however, that difficulties arise in the exporting of citrus fruits as fruit because of the fruit fly problem. For instance, some countries will not accept fruit from Queensland and other States where fruit fly exists. This somewhat restricts the market and limits consumption, and it is the greatest problem in the selling of citrus fruits.

page 2872

QUESTION

COMMONWEALTH SCHOLARSHIPS

Mr REYNOLDS:
BARTON, NEW SOUTH WALES

– My question is directed to the Prime Minister. From time to time, the right honorable gentleman has stated that any further increase in Commonwealth scholarships tenable mainly at universities would have to await consideration of the report of the Committee on the Future of Tertiary Education. The whole of this report, apparently, is still not in the hands of the Government, despite the fact that it was expected a year ago. Does this mean that the greatly increased number of potential matriculants now sitting for examinations cannot look forward to any increase in the number of these scholarships in 1965? Does the Government intend to implement its year old promise to provide 2,500 technical scholarships? Finally, in view of the great interest in the report, can the Prime Minister intimate precisely when its contents will be made public? If there is to be some delay in making the report available, will he immediately provide a summary of the report’s recommendations?

Sir ROBERT MENZIES:
LP

– I am not in a position to say when the report of the Committee on the Future of Tertiary Education will be available. As I think I intimated the other day, I have seen - I cannot say that I have studied - two large volumes. I have been told that a third has yet to come. It is not our fault that the release of this report has been delayed. I have been anxious to obtain it. However, the Committee’s task has been very heavy and the result is that it has occupied a lot of time. The report will have to be considered by the Government. Obviously, we must have an opportunity to consider it before we either provide a summary of the contents or make a statement about what we intend to do. There will be no delay about that when the time comes, but I cannot promise it in a week or two. Quite a lot of difficulty has arisen concerning the 2,500 technical scholarships because almost every State has an education system different from that of each of the others.

Mr Reynolds:

– But we have been waiting a year.

Sir ROBERT MENZIES:

– I am well aware of the date. A phenomenal amount of work has been done in the course of the year. Senator Gorton, the Minister who assists mc in these matters, has had a series of discussions with representatives of the States relating to a number of aspects, including the technical scholarships. The difficulties have now been resolved, and these scholarships will be available in the New Year.

page 2872

QUESTION

DEFENCE

Mr JESS:
LA TROBE, VICTORIA

– I wish to ask the Minister for Immigration a question supplementary to that asked by the honorable member for Grayndler. Will the Minister see that any publicity abroad for the purpose of attracting migrants sets out that the Australian Labour Party’s policy on defence and national service training is not to be taken as representative of the views of the average Australian citizen but is the outworn dogma of a political party which refuses to put the danger to this country-

Mr SPEAKER:

– Order!

Mr Calwell:

– I rise to order, Mr. Speaker. The question invites comment and is completely out of order.

Mr SPEAKER:

– Order! The question is out of order.

page 2872

QUESTION

PETROL PRICES

Mr HANSEN:
WIDE BAY, QUEENSLAND

– My question is directed to the Prime Minister. I ask: When formulating arrangements for uniform petrol prices throughout Australia, will the Government consider the margins being received by operators of service stations who, today, are paying excessive rents and in most instances working long hours to obtain anything like an income that will provide a reasonable living?

Sir ROBERT MENZIES:
LP

– Without going into detail, I can say that this problem of the margins has been very much under discussion. I would expect that when decisions are made the question can then be answered. I do not know at the moment what decision will be made, but I do know that the question has been under very careful examination.

page 2872

QUESTION

ROYAL AUSTRALIAN NAVY

Mr BENSON:
BATMAN, VICTORIA

– My question is directed to the Minister for the Navy. Is it intended that members of the Citizen Naval Forces will be entitled to exemption from call up under the proposed national service scheme? At present, only personnel in the Citizen Military Forces have been said to be entitled to such exemption.

Mr CHANEY:
LP

– The answer to the honorable gentleman’s question is: Yes.

page 2873

QUESTION

APRENTICESHIPS

Mr McIVOR:
GELLIBRAND, VICTORIA

– I address my question to the Minister for Labour and National Service. Does he agree with the suggestion of Mr. Self, a representative of employers, that, as the youth of the country is to be called up for military service, the time of apprenticeships should be decreased from five years to three years?

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

– I thought the House would have known that over the last two years the Government has been continuously endeavouring to reduce the time of apprenticeships - and not without considerable success. In the metal, electrical and vehicle trades, Commonwealth awards have been varied to provide that the period of apprenticeship of a man with the necessary educational qualifications will be reduced to three years and in some cases to three and a half years. In other industries, particularly in the building trades, the period of apprenticeship can be about four years. So we are doing all the honorable gentleman says we should do. The great difficulty we have found is that some unions, particularly the Amalgamated Enginering Union, are resisting the Government’s policies on other forms of training. We do hope that a different approach will be adopted in the future.

page 2873

SPECIAL ADJOURNMENT

Motion (by Mr. Fairhall) agreed to -

That the House, at its rising, adjourn until Monday, 16th November, at 2.30 p.m.

page 2873

BILLS RETURNED FROM THE SENATE

The following Bills were returned from the Senate -

Without amendment -

Income Tax and Social Services Contribution Assessment Bill (No. 3) 1964.

Income Tax (International Agreements) Bill 1964.

Papua and New Guinea Bill 1964.

Export Payments Insurance Corporation Bill 1964.

Meat Inspection Arrangements Bill 1964.

Broadcasting and Television Stations Licence Fees Repeal Bill 1964.

Broadcasting and Television Bill (No. 2) 1964.

Without requests -

Income Tax and Social Services Contribution Bill (No. 2) 1964.

Broadcasting Stations Licence Fees Bill 1964.

page 2873

TELEVISION STATIONS LICENCE FEES BILL 1964

Bill returned from the Senate with a request.

page 2873

REFERENCE OF WORK TO PUBLIC WORKS COMMITTEE

Augmentation of Darwin Water Supply, Northern Territory

Mr FREETH:
Minister for Shipping and Transport · Forrest · LP

.- I move -

That, in accordance with the provisions of the Public Works Committee Act 1913-1960, the following proposed work be referred to the Parliametntary Standing Committee on Public Works for investigation and report: - Augmentation of Darwin Water Supply, Northern Territory.

The proposal involves the following work at an estimated cost of £1,460,000: -

  1. Provision of two additional bores and equipment at McMinns, together with storage and water softening facilities.
  2. Enlargement of the main pipe line from McMinns to Berrimah and laying a 24in. diameter pipe line from Berrimah to Casuarina.
  3. Provision of two service reservoirs at Casuarina.
  4. Provision of a pumping station near to the 31 mile.

I table plans of the proposed work.

Question resolved in the affirmative.

Permanent Barracks and Depot Accommodation at Broadmeadows for A.R.A. Units.

Mr FREETH:
Minister for Shipping and Transport · Forrest · LP

– I move -

That, in accordance with the provisions of the Public Works Committee Act 1913-1960, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report: - Construction of Permanent Barracks and Depot Accommodation at Broadmeadows for A.R.A. Units.

The proposal involves the erection at an estimated cost of £825,000 of officers’ mess and sleeping quarters, sergeants’ mess and sleeping quarters, other ranks’ sleeping quarters, depot workshops, telecommunications and instrument workshops and a high lift bay to No. 1 workshop, together with associated engineering services. Generally, the sleeping accommodation will be of brick construction, the workshops will be steel framed with brick infill panel walls and the high lift bay will be steel framed with metal wall cladding. I table plans of the proposed work.

Question resolved in the affirmative.

page 2874

HOUSING LOANS INSURANCE BILL 1964

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

Second Reading

Mr BURY:
Minister for Housing · Wentworth · LP

– I move -

That Iiic Bill be now read a second time.

Mr. Speaker, the purpose of this bill is to establish a Housing Loans Insurance Corporation to insure lenders against losses arising out of the making of loans for housing. The Bill, which will authorize the Corporation to put into effect the Government’s promised housing loans insurance scheme, will empower the Corporation to insure loans made for the erection of homes, the purchase of existing homes, additions to homes, the repair and improvement of homes, and the discharge and refinancing of existing mortgages on homes. The main purposes of this scheme is to assist people to obtain as a single loan and at a reasonable rate of interest, the money they need, and can afford to borrow, to buy or build a home. As the amount borrowed may, at times, be a high proportion of the value of a house and land, there is the risk that a lender may lose some of his capital or may not receive all the interest due to him. The offer by the Corporation to insure against the risk of loss due to failure to recover the amount outstanding of a loan, together with accrued interest, will enable lenders to protect themselves against such losses.

The scheme aims to assist people to borrow, by means of a single loan secured by a first mortgage, the difference between available personal savings and the cost of a home suited to their requirements. The amount of the loan would, of course, be related to the ability of the borrower to repay it over a reasonable period. It is our hope and intention that this scheme will progressively remove the present need for many creditworthy borrowers to obtain a second mortgage loan, frequently on oppressive terms and conditions.

Sir, the scheme aims to assist people to obtain low-deposit loans to acquire homes by the offer to insure the repayment of loans made up to a high proportion of the valuation of a home. Insured loans may be 80 to 90 per cent, of valuation, or even 95 per cent, in cases where a borrower’s capacity to repay appears to be unusually high. However, to be insurable loans must be made at reasonable rates of interest. A loan up to these percentages of valuation has in it far greater risks of loss than a conventional loan, of, say, 70 per cent, of value. Quite justifiably, up to the present, the major lenders, who are responsible for the safe investment of the moneys entrusted to them, have rarely been willing to lend where they see a possible risk of loss. Now that the risks will be removed when the loans are insured, I hope that the major institutions that lend for housing will be willing to make loans up to a high proportion of the value of a dwelling.

There are now close to 3,250,000 dwelling units in Australia. Over the past 30 years the number has doubled, and it is expected that it will double again within the next 25 to 30 years. The natural increase in our population must be adequately housed. In addition, dwelling accommodation must be found for the increasing number of newcomers to .our shores, whose skills are essential to enable us to maintain our high rate of growth. If we are to continue to grow at about the same high rate as in the recent past, and I have no doubt we shall, we must encourage an increased rate of flow of the nation’s savings, especially private savings, into our home building industry. We expect the home savings grant scheme to assist in stimulating additional saving for this purpose. As time goes on increasing funds must be available to those who lend for housing purposes.

The provision of more funds for housing would be greatly assisted by the establishment in Australia of a market for housing mortgages. We hope that our offer to insure the repayment in full of housing loans will stimulate private enterprise to establish such a market. Moreover, in offering to insure these loans, we hope to attract additional oversea capital into the Australian home building industry. Our offer to insure the repayment of housing loans, together with accrued interest, will, we trust, go a long way towards achieving these important aims. The time will doubtless come when some lending institutions will be in a position to say that all their loans are insured by the Corporation, which is guaranteed by the Commonwealth Government. What safer investment could anyone wish for?

During the past several months, we have made a close examination of other housing loans insurance schemes, the manner of their operation and the lessons to be learned from experience in administering them. We have also had the benefit of the valuable advice of an assistant director of the Central Mortgage and Housing Corporation of Canada, which has been operating a nationwide housing loans insurance scheme for more than 10 years. May I put on the record my thanks to the Canadian Government for making available to us the services of this very able and well informed officer?

As honorable members would expect, I have also sought and obtained the views of the major lenders for housing on the elements of our proposed scheme. We have had the benefit of discussions with, amongst others, the Australian Bankers’ Association, the Life Offices Association, the Australian Association of Permanent Building Societies and the Australian Council of Co-operative Housing Societies. We are indeed grateful to them for the views they have expressed. We have also explored the difficulties being experienced by many home seekers in arranging to borrow the money they need for their homes. We have spoken to builders and housing project developers who will, we hope, be encouraged to expand their private enterprise activities with the assistance of insured loans. I believe we have evolved a workable scheme which will operate within the authority of the Bill now before the House.

This Bill has been drafted to give the Corporation the widest permissible powers to insure loans made for purposes in connection with housing. It is designed to empower the Corporation to insure all manner of loans that may be made to add to, or improve, the stock of dwelling accommodation in Australia. The Bill has also been broadly drafted because housing loans insurance is a field in which the Commonwealth has not had any experience to provide a guide, and in which problems that have not been foreseen may well arise. In essence, the Bill provides for the establishment of the Housing Loans Insurance Corporation, authorizes it to carry on the business of insuring housing loans, sets out the general field in which the Corporation is to operate and indicates the nature of the limitations to which it is to be subject.

Loans acceptable for insurance will include those made, or being advanced, to the owner or lessee of land on which a dwelling is being, or has been, erected. These loans will not be confined to those made in respect of a single dwelling unit. The Bill defines a dwellinghouse to include not only a single dwelling and a home unit, but also a building comprising multiple dwelling units. Clause 4 defines insurable loans to include -

  1. loans made for the purpose of acquir ing land and constructing, or completing the construction of, a dwelling on the land. However, clause 22 makes it quite clear that the Corporation may not insure a loan made solely for the acquisition of land - we do not wish to encourage the land speculator;
  2. loans made to construct a dwelling or complete the construction of a dwelling on land owned or leased by the borrower;
  3. loans made to purchase an existing dwelling;
  4. loans made to alter, improve or ex tend a dwellinghouse. These would include loans for, amongst other things, the permanent provision of water supply, electricity and sewerage, and the conversion of an existing dwelling into two or more dwelling units;
  5. loans made to meet expenses on roads, kerbing or footpaths, in connection with land which the borrower owns; and
  6. loans made for the discharge of an existing mortgage over land on which a dwellinghouse has been, or is being, erected and which is owned or leased by the borrower.

The legislation provides that the Corporation shall charge a premium for insuring a loan, and that the premium rates shall be determined by the Corporation. In fixing these rates, the Corporation will be required to aim over the long term neither to make a profit nor to incur a loss. It is expected that the premium to be charged will be in the form of a once-and-for-all payment for insuring a loan up to its maturity date. It is proposed that the premium be collected from the lender and that in practice the lender would recover the amount from the borrower. In return for the payment of a relatively small premium, the borrower will receive the benefit of a larger loan at a reasonable rate of interest and for a reasonable period. We expect it to be the normal procedure for the lender to agree to lend the amount of the premium to the borrower. When the lender does this, the amount of the premium may be added to the loan and the Corporation will insure repayment of the whole. It is not proposed that the Corporation be permitted to insure housing loans made by the Commonwealth or a State, or by an authority of the Commonwealth or a State, other than a bank. It is the usual practice of governments themselves to carry their own risks of loss.

May I draw the attention of honorable members to clause 23 of the Bill. I believe this clause will be of very great significance in the future. It will authorise the Corporation to refuse to insure a loan if it is not satisfied that a dwellinghouse will be, or has been, built according to sound standards of construction. We all wish to see improvements in the standard of housing in Australia, and the maximum feasible adoption of uniform standards that will increase the efficiency of the industry and reduce its costs. The Corporation should be in a position to assist acceptance of minimum building standards by having the power to refuse to insure loans for dwellings that fall short of reasonable standards of construction.

Loans will be insurable only if the repayment of the loan is secured by an approved security over the interest of the borrower in the land. The Bill defines an approved security as meaning a first legal mortgage, but it will also permit an approved security to be a second mortgage or, indeed, any form of security over the borrower’s interest in the land that is declared by the regulations to be an approved security for a class of insurable loans.

It is the Government’s intention that a loan made for the purpose of buying or building a dwelling will be insurable only if it is secured by a first legal mortgage. This is in line with the objective of encouraging the major lenders to make high ratio insured loans, so that the need of many home seekers to obtain second mortgage loans may be removed. To insure a second mortgage made to acquire a home would be to insure lenders who lend mostly at interest rates higher than those at which first mortgage loans are customarily made, and for far shorter periods. Neither the American scheme, nor the Canadian scheme, authorises insurance of other than a first mortgage loan for the acquisition of a home. We also intend that an insurable loan for the discharge of an existing second mortgage must be a single loan, being either a renegotiated first mortgage or a loan to discharge the existing first and second mortgages, and that it would be secured by a first legal mortgage. We do not intend to authorise the Corporation to insure a renegotiated second mortgage loan secured by a new second mortgage.

The Corporation may insure a loan secured by a first mortgage made to a farmer for the erection of any type of dwelling on his property. As the Corporation will not bc empowered to insure the repayment of a loan made to acquire land for farming and commercial purposes, the amount of an insurable loan made for farm housing will be determined in relation to the appraised value of the dwelling or dwellings proposed to be erected.

A loan to buy or build a dwelling to which is attached, for example, a shop or surgery, may be insured up to a percentage of the appraised value of that portion of the building comprising the dwelling. To be insurable, such a loan would have to be secured by a first mortgage. There are many people who wish to borrow to extend or improve their homes, bat have already given a first mortgage over their properties. In these cases, it is not proposed to rule out the insurance of a home extension or a home improvement loan secured by a second mortgage, or some other type of security over the borrower’s interest in the land, but a first mortgage, including a renegotiated first mortgage, will be preferred.

The Bill defines the borrower’s interest in the land as an estate in fee simple, an interest as lessee under a lease in perpetuity from the Crown, or an interest under any other form of lease for a term of years. The Corporation would, however, have to bo satisfied that the lease will give reasonable security of tenure to the lessee for at least the period over which the loan is due to be repaid. The Bill also authorizes the Corporation to accept any other interest in land that may bc prescribed by the regulations. Subclause 20 (5) of the Bill would prohibit the Corporation from insuring a loan in excess of £2,000 where repayments of principal, or payments of principal and interest, are not to be made in equal, or approximately equal, amounts at regular intervals not exceeding twelve months. The Corporation may also refuse to insure smaller loans unless they are to be repaid in approximately equal amounts at regular intervals. This is in line with the prudent practice of all housing loans insurers.

The Bill will establish a Corporation to carry on the business of insuring housing loans. The Corporation will consist of a Chairman, a Deputy Chairman and three other members. The Bill will also provide that the Chairman and Deputy Chairman bc full-time members, and that the Chairman will also be Managing Director. The Managing Director will be the Corporation’s chief executive officer. This arrangement should provide for the efficient conduct of the Corporation’s business.

Clauses 17 and 18 of the Bill will give the Corporation power to carry on the business of insuring an approved lender who makes an insurable loan, against the whole, or against any part, of any loss in respect of the loan. The loss that the Corporation may insure includes -

  1. loss of moneys constituting the loan, which may include the amount of the insurance premium;
  2. loss of interest and other charges on or in relation to the loan; and
  3. any other loss arising from any default in relation to the loan.

The reference to other charges associated with interest is to the management fees payable by some borrowers at regular intervals and assessed on the amount of a loan. These fees, which are charged separately under many building society mortgages, are similar to the charges for administration incorporated by most other lenders in the interest charge. Such a management fee will be treated as part of the interest charge.

The expression, “ any other loss arising from any default in relation to the loan”, is intended to cover losses due to realisation expenses, including legal costs in acquiring vacant possession of the property, costs of essential repairs to the property up to an amount previously approved by the Corporation, costs of the sale, including advertising costs up to a limit approved by the Corporation, and any payments by the lender of municipal rates and fire insurance premiums outstanding on the property. Our thinking is that the internal costs ordinarily met by a lender in administering an insured loan in default should continue to be met by the lender out of the charge for administration included in the interest payment or out of the management fee.

There must obviously be a limit on the period during which interest may accrue on a loan in default and be admitted in the amount of a claim. This will be a matter for determination by the Corporation. When a loan is in default, interest might accrue at the mortgage interest rate on the outstanding balance for up to twelve months. Thereafter it might continue to accrue for a further period at a rate that might well be below the mortgage rate.

The legislation will provide that an insurable loan must be made by an approved lender. The classes of lenders eligible for approval will be specified by the Minister, but the Corporation will approve particular lenders. The Corporation will also have the power to withdraw its approval of a lender. Classes of approved lenders will include banks, life insurance companies and building societies. As time goes on, other classes of lenders will almost certainly be approved. Approved lenders will, as far as possible, be responsible for the administration of insured loans. As is the practice of lenders at the present time, they will examine the title to the relevant property, appraise its value and assess the capacity of the borrower to repay a given loan. In the event of the default of a borrower, any action to renegotiate a loan or to obtain vacant possession and sell the property will, in almost every case, be undertaken by the approved lender. Under the default procedure, we have in mind that the lender will advise the Corporation of the action he proposes to take. It is expected that the Corporation will, in most cases, endorse the action proposed by the lender. If the Corporation does not agree with the proposed action, it will endeavour to persuade the lender to adopt the course the Corporation thinks desirable under the circumstances. The general practice will be that a lender shall exercise his rights under a mortgage to sell the property before he may submit a claim.

There may be cases where a borrower defaults under an insured loan and the mortgagee wishes to exercise his rights under the mortgage to sell the property and submit a claim, but the Corporation believes that a sale at the time would unduly increase the loss in respect of the loan. In cases such as these, the Corporation will be permitted to determine the amount of loss in respect of the loan and to pay this amount, notwithstanding that the lender has not exercised any of the rights he has against the borrower. The approved security, and any collateral to that security would, of course, be assigned to the Corporation. To deal with cases such as these, the Corporation will have a limited power to acquire, hold and dispose of the securities for loans insured under the scheme. It is a power the Corporation will, on occasions, need to exercise, but it may be exercised only when an insured loan is in default.

Clause 24 will authorise the Corporation to pay a claim where the lender has exercised his right to sell the mortgaged property, but has not pursued any personal or other remedies he may be entitled to exercise against the borrower. It is rare for the major lenders to exercise the rights they have under a personal covenant where the property has been sold. This is also the usual practice of oversea authorities who make and insure housing loans. It will, however, be for the Corporation to decide whether or not to accept and pay a claim lt a lender has not exercised all the remedies he may pursue. Clause 19 will authorise the Corporation, where a security is transferred to it in consequence of its paying a claim, to dispose of its rights under the security by a further assignment of the mortgage or, if it is satisfied that in all the circumstances it is desirable to do so, to renegotiate the security and, if it thinks fit, subsequently to sell it.

If a market in insured mortgage loans ls to be developed in Australia, the insurance contracts must be assignable. Clause 42 provides that when an insured loan is sold or otherwise assigned, the contract of insurance may also be assigned to the person to whom the mortgage is transferred. How ever, it will be essential to the smooth working of the scheme that an insured loan should continue to be administered by an approved lender. Such a lender will be familiar with the conditions attaching to the contract of insurance, the reporting to the Corporation of a loan in default, what may come to be regarded by the Corporation as reasonable action in the event of a default, the extent to which costs may be included in a claim and other administrative matters. The Bill therefore provides that a contract of insurance may be cancelled if an insured loan ceases to be administered by an approved lender. Before the insurance cover may be assigned to a non-approved lender, he must have arranged for an approved lender to administer the loan under an agency contract. Such a contract, which must be in a form approved by the Corporation, would list the things to be done by the approved lender. An agency contract will not, of course, interfere with the right of the holder to sell or otherwise transfer his interest in any mortgage to which such a contract refers. However, if a loan is to continue to be insured, it must be administered by an approved lender.

The Bill provides that a number of specified matters of policy may be determined from time to time by the Minister, by the Corporation with the concurrence of the Minister, or by regulation in accordance with a recommendation made to the Minister by the Corporation. The more important of these matters are- referred to in clause 20 and sub-clause (2.) of clause 47. I shall have something to say about them shortly.

Clause 25 provides that, subject to the provisions of this Bill, the Corporation may adopt its own policies, but will be obliged to keep the Minister informed of any significant policy decision it may make. A matter of policy not otherwise provided for in the Bill may be declared by regulation to be a matter of policy in respect of which the Minister may issue a direction. The Bill, however, expressly forbids the Minister to instruct the Corporation to write, or not to write, a particular contract of insurance.

Sub-clause (1.) of clause 20 provides that classes of insurable loans may be prescribed by regulation. Sub-clause (2.) of clause 47 provides, however, that after the Corporation has commenced to carry on its business, regulations prescribing classes of insurable loans, or an amendment of any existing regulations in respect of classes of insurable loans, may not be made unless the regulations are in accordance with a recommendation made to the Minister by the Corporation. Sub-clause (2.) of clause 20 gives the Minister power to direct the Corporation not to insure particular classes of loan until he otherwise directs. This provision is included to give the Government a power to determine, if it so wishes, the scope of the business that the Corporation may insure from time to time. The Government may use this power in accordance with its assessment of the need to stimulate, or not, the levels of activity in sectors of the home building industry or to attempt to divert portion of the demand for homes towards a fuller utilisation of existing houses. In times such as the present when the physical resources in the home building industry are close to being fully employed and building costs are tending to edge up, we would not wish the activities of the Corporation to create any undesirable pressure. However, honorable members may be assured that the Corporation will be permitted to insure all classes of housing loans as soon as adequate finance and physical resources may be available for these purposes.

There will also be a limit on the amount of a loan that may be insured in respect of each class of insurable loan. These limits, which will be determined by the Corporation with the concurrence of the Minister, may be varied from time to time. The Corporation will also fix limits on the percentage, or percentages, of the appraised value of the land and dwelling that may be lent and insured.

In announcing the scheme we said we would introduce legislation- to permit the Corporation to insure housing loans up to a high percentage of valuation, ranging up to 95 per cent, in appropriate cases. We also referred to those who want a house which is, in size or quality, better than the average. At present the average value of a newly erected house and land is in the vicinity of £5,000. We do not intend to overlook those creditworthy borrowers who wish to borrow a high proportion of the valuation of a house and land costing more than the average. There are, however, sound commercial reasons why those who wish to acquire such homes should have a reasonable equity in the property.

Although the Corporation will determine the maximum amount, and the maximum percentage of the value of a house and land, that may be borrowed if the loan is to be insured, no lender will be under any compulsion to make an insurable loan to any particular borrower, or to make a loan up to the maximum amount or the maximum percentage of valuation that may be insured. At present many institutional lenders have not the finance freely available to permit them to make many larger loans. Although we do expect all these lenders to make some larger high-ratio loans, and to insure them, the needs of many borrowers will continue to be satisfied with loans up to conventional percentages of valuation which will not be insured.

Even if there were a large increase in the funds immediately available for housing, it is doubtful whether there would be an increase in the rate of home construction, as almost all the labour available for home building is now fully employed. Between March and June this year there was a most gratifying increase of 3,170 in the number of persons engaged in new dwelling construction. Whilst the Government is doing all it can to expand this labour supply, a further rapid increase must not be expected. It takes time to train craftsmen. Although a record number of building workers is migrating to Australia this year, there is a limit to the number we may attract. We will not, of course, relax our efforts to this end. We must not expect the major lending institutions to change quickly the home lending rules they have been working to for many years. Experience elsewhere has been that, when an offer to insure high-ratio low-deposit loans is first made, lenders hesitate to make larger loans. It takes time to change lending habits. A borrower seeking a higher-ratio insured loan will be expected to demonstrate his need for it, and his ability to repay it. Insurable loans made during the early operation of the scheme might be between 80 and 90 per cent, of valuation. This should help many who would otherwise seek both first and second mortgage loans. In the relatively few cases where a borrower’s capacity to repay appears unusually high, loans up to 95 per cent, of valuation may be made and insured.

Clause 20 of the Bill provides that a loan shall not be insurable if the interest rate payable exceeds the maximum permissible interest rate to be determined from time to time by the Corporation with the concurrence of the Minister. This rate will be notified in the “ Gazette “. It will be announced shortly before the Corporation commences to carry on its business, and should permit institutional lenders who make housing loans to insure some of their housing loans. It is the practice of some lenders to take power under the mortgage to vary the rate of interest charged after a loan has been in existence for a specified number of years, or at certain set intervals. We believe it is highly desirable that the rate of interest payable on an insured housing loan should be constant for the full duration of the loan, especially if a market in insured mortgage loans is to be developed. It is not proposed that the Corporation should, in its initial operations, be required to refuse to insure mortgage loans where the interest rate may be varied. However, it is intended that the terms and conditions of contracts of insurance will include a provision that they may be cancelled if a lender were to vary the rate of interest on an insured loan without the consent of the Corporation or if the interest rate on an insured loan were to be raised above the maximum permissible interest rate prevailing at that time.

The Bill provides for the Corporation to determine the maximum duration of the loans it will insure. The maximum duration of an insurable loan on an existing dwelling may be for a shorter period than for a loan for a newly erected dwelling. Home extension and home improvement loans will be for relatively short periods. When we announced this scheme, we said we would assist the obtaining of low deposit loans related to the income and reasonable creditworthiness of the borrower. The capacity of a borrower to repay a loan is a matter of importance. The Corporation may refuse to insure a loan if it thinks that the amount of principal and interest payable on the loan, and rates and any other payments in respect of the property, would exceed a certain proportion of the borrower’s established income. Assuming this proportion were 25 per cent, of income, a loan repayable by regular instalments at intervals not longer than twelve months over a period of 25 years at an interest rate of, say, 6 per cent, per annum, would be about three times the borrower’s established annual income.

Honorable members will note that the Bill contains the customary provisions in Commonwealth statutory authority legislation to authorise the Corporation to appoint staff. The Treasurer will make an initial advance of £100,000, and will be authorised to advance further sums to the Corporation on such terms and conditions as he determines. The Corporation will also have a general borrowing power to meet its possible future need for funds, but this power may be exercised only with the Treasurer’s approval. The Corporation’s avenues of investment will be limited to fixed deposits with an approved bank, Commonwealth securities and the official short term money market.

The Bill will exempt the Corporation from taxation under a law of a State or a Territory and also from the payment of income tax. The Corporation will, however, be empowered to pay for municipal services in respect of properties it may hold. Assuming that adequate funds are forthcoming, the passage of this Bill and the establishment of the Corporation should eventually confer widespread benefits on many people. The scheme is designed to assist many of those wishing to borrow, to buy or build their own homes, to obtain high-ratio insured loans at reasonable rates of interest. Those who wish to borrow to add to their ‘homes may benefit from insured loans. Those who lend for housing purposes also stand to benefit greatly. The risks of loss of capital and interest will be removed when their loans are insured.

Benefits should also flow to those who have the enterprise to borrow to build multiple dwelling units, or to sub-divide land and erect a number of individual homes. Indeed, the Scheme should benefit all who obtain their livelihood from the home building industry. In the past those who build our homes have suffered from fluctuations in the demand for their services. In their interest and in the national interest, it is most desirable that these fluctuations be reduced to the minimum. Although home building is a field in which the Commonwealth has only limited powers of determination, our policy is to do all we can to influence the determining factors, so that Australia will continue to have a high and rising rate of new home construction. The housing loans insurance scheme, to operate under the authority of this Bill, should help us (o achieve this most important aim. I commend the Bill to honorable members.

Mr Crean:

– I would like to ask the Minister whether he could give some indication of what the premium as a percentage of a loan is likely to be? Secondly, are we expected to debate this Bill on Monday?

Mr. Harold Holt__ No.

Mr BURY:
LP

– I did mention in my remarks that the premium will bc such -as is determined.

Mr Crean:

– Have you any idea of the percentage?

Mr BURY:

– 1 could not mention a figure without being involved in a complex situation. There are different factors involved.

Mr Crean:

– I will move that the debate be adjourned but I would like to ask the Leader of the House (Mr. Harold Holt) whether it is intended to debate this Bill before we conclude this session?

Mr BURY:

– We will debate it if you are ready.

Mr Crean:

– I am asking that question because I do not think we are ready and 1 do not think it is fair that we should proceed to debate the measure.

Mr Harold Holt:

– It is not our intention to debate it this sessional period.

Debate (on motion by Mr. Crean) adjourned.

page 2881

ADVANCE TO THE TREASURER 1963-64

Statement of Expenditure

In Committee

Statement - by leave - taken as a whole.

Mr CREAN:
Melbourne Ports

– I simply want to indicate to the Committee at this stage that we have had occasion to debate other financial matters and we do not propose to speak on this.

Statement agreed to.

Resolution reported; report adopted.

page 2881

LOAN (AIRLINES EQUIPMENT) BILL 1964

Second Reading

Debate resumed from 9lh November (vide page 2664), on motion of Mr. Harold Holt-

That the Bill be now read a second time.

Mr CREAN:
Melbourne Ports

– 1 move -

That all words after “ That “ be omitted with a view to inserting the following words in place thereof: - “ this House, whilst not declining to give the Bill a second reading, is of the opinion that the financing of the purchase of aircraft by the Australian National Airlines Commission and Qantas Empire Airways Limited should be met from revenue and not from a loan raised overseas “.

I will briefly indicate our reasons for moving that amendment later. The amendment is consonant with what the Opposition did when a similar measure was before us in, I think, May. We considered that in view of the level of Australia’s overseas reserves, which stand in the region of £850 million, it seemed absurd that a sum as small as £13.4 million should have to be borrowed on the sort of terms set out in the Bill. The Bill is intended to authorize a loan of $30 million dollars, or £13.4 million Australian. The actual amount will depend on whether or not Qantas Empire Airways Ltd. is to buy two or three aircraft and Trans-Australia Airlines one aircraft. Apparently, if Qantas buys only two aircraft instead of three, the sum borrowed will be $24 million dollars instead of $30 million dollars, the arrangement is flexible and we are not arguing about that.

What the Opposition objects to is the principle of borrowing when, in fact, we could pay cash. We say that the repayment side of the transaction could simply be entered into by the Government directly with the two airlines concerned instead of having this agreement with a bank overseas. I do not want to traverse all the arguments as fully as I might have but there are one or two aspects of the Opposition’s reasons for this amendment that I would like to refer to. We have had a similar debate, I think, on two previous occasions and the Opposition chose to adopt similar action on those occasions to that which we have adopted now. We indicated that we thought this a foolish way to finance this kind of proposition. Perhaps there would be some merit in the attitude of the Treasurer (Mr. Harold Holt) - although I would not agree with it necessarily- - if we were borrowing £100 million or some amount of that kind; but when it is a sum as small as this one it seems to us to be a reckless financial performance to pay interest in excess of 5 per cent, when we could avoid that payment. After all, if you pay interest at 5 per cent, over a period of eight or more years, as in this loan, you almost add’ another SO per cent, to the financial costs of your transaction. To the Opposition that does not seem to be a prudent way of doing things. On a previous occasion when this sort of argument was advanced from this side of the House, I think the Treasurer, replied, in effect: “Well, after all, Australia has a certain amount of overseas reserves, some of which are invested in securities overseas, and if we took so many millions of pounds out now and ran down our reserves we would lose a corresponding amount in interest from investments “.

I was not quite aware of the extent of this type of practice and I put a question on notice to the Treasurer some time ago for which he furnished an answer. His reply showed that at 30th June 1964 the total net gold and foreign exchange holdings in official and banking institutions amounted to £854.1 million. I have not looked at the figures for the September quarter but I do not think that they have been reduced substantially. There may have been some fall in that quarter. The gold component of that total of £854.1 million was £97.3 million. So about £757 million of that total was held in forms other than gold. I also asked the Treasurer what was the policy of the Government on investing the sums of money held overseas and in what kinds of investments those sums were invested. The Treasurer replied -

Many complex factors are involved in determining the location and type of investment suitable for Australia’s international reserves. Some of the important factors taken into consideration are Australia’s position as a member of the sterling area-

I can quite understand that -

  1. . the currencies in which the bulk of our external transactions are settled-

I think it is established that we do not hold, proportionately, a great amount of dollars or gold. Most of our reserves are held in the form of sterling. Australia is a member of the sterling area, and quite flexible and very useful machinery for balance of payments purposes has been built up for the whole of the Commonwealth of Nations. The Treasurer’s reply continued -

  1. . the convertibility of various currencies, the ease with which securities may be bought and sold in the markets concerned and the earnings offering thereon.

The great bulk of international reserves is held in British and to a lesser extent United States Government securities with a relatively short life to maturity, e.g. Treasury bills and short-dated stock and bonds. Yields are subject to very considerable changes over time and also may vary from day to day. The following figures indicate the measure of yields recently available -

Of course, we cannot hold very many of our reserves in longer term securities. If we do that we will have problems of conversion. The maximum rate of interest payable on United States securities is 4 per cent, on the securities with the longest term, and the rate payable on the securities with the shortest term - the 91 day treasury bills - is 3i per cent. The Treasurer’s answer went on to supply the total amount of interest that Australia earned by the investment of its reserves in various years. For the year ended 30th June 1962 the earnings were £28.1 million; for the year ended 30th June 1963 the figure was £22.3 million, and for the six months to 31st December 1963 the figure was £14.3 million. So there is some profit in investing portion of our reserves. I sought certain information and the Treasurer gave that rather comprehensive answer.

Even taking that answer into account, it is said that, in order to finance this transaction by paying cash now and running down our reserves, we might have to sell some of our investments. I am not too sure that we would have to do that. If we did that, we could offset the interest that we would pay on the borrowing against the interest that we would lose on our investments. Even without allowing for that, we would not receive as much on our investments as we would save if we did not borrow. That is the view that we members of the Opposition take. First, this borrowing is imprudent financially for a country as small as Australia is, when our reserves are as large as they are.

The other rather peculiar point about this matter is that not long ago - I think about six to eight months ago - the Treasurer said that he thought it would not be as easy to borrow overseas this year as it had been last year. My colleague, the Deputy Leader of the Opposition (Mr. Whitlam), put questions on this matter on the notice paper. The Treasurer has replied to those questions in the last day or two. The questions asked by the Deputy Leader of the Opposition were -

  1. Hus the Minister for Civil Aviation announced that Qantas is entering into a contract to purchase three more jet aircraft?
  2. Had the Treasurer already staled that it did not seem likely that we would be raising any new loans abroad this year?
  3. If so, has the Government now decided that purchases of this nature and extent are well within Australia’s own capacity to finance and do not justify or require foreign loans?

The Treasurer’s answers were -

  1. Yes.
  2. In my Budget Speech 1 said that, at that stage, it did not seem likely that we would be raising any new loans abroad this year for works and housing programmes.
  3. Before the present sittings conclude, I expect to introduce a bill covering an oversea borrowing for aircraft purposes. The Government’s reasons for arranging this borrowing will be explained at the time.

To do justice to the Treasurer, I admit that he did give some explanation in his second reading speech on this Bill. However, the explanation was not satisfactory. He stated -

Our export earnings also have been growing but we cannot expect every year from now on to be better for export earnings than the one before.

Mr Harold Holt:

– We have had very good seasons, but we cannot rely on always having good seasons.

Mr CREAN:

– That is so. The Treasurer continued -

Rather, whether because of seasonal conditions affecting export production or variations in the prices obtainable in overseas markets, we can expect some years to bc less favorable than others for export earnings.

This is a very difficult factor for Australia because of our great dependence on primary products, the prices of which we do not determine but which are determined on world markets. That point is quite significant. The Treasurer went on to say -

Especially when import demand is running high, we will in some years undoubtedly have to draw on our reserves; sometimes, perhaps, quite heavily

For that reason, it is no more than prudent to take advantage of whatever opportunities we have to strengthen our reserves.

It would seem that the Treasurer thinks that if he can borrow he ought to borrow. I do not think that is a very healthy point of view for the Government of a country such as Australia to have. But that is the Government’s point of view, and private enterprise has a similar point of view.

This matter is bound up with the inflow of what might be called foreign capital into Australia. In recent years that inflow has been quite significant. For instance, in 1959- 60 the net apparent capital inflow into Australia was £238 million. In 1960-61 the figure was £328 million. The year 1961-62 was a bad year from the Treasurer’s point of view. In that year we had a capital inflow of only £88 million. In 1962-63 the figure rose again to £300 million; and in 1963-64 the figure was £249 million.

Mr Uren:

– Those figures include undistributed profits.

Mr CREAN:

– That is right. Those figures represent the net apparent capital inflow, or the increase in Australia’s indebtedness to people outside Australia. Those figures represent a pretty significant percentage of our annual export trade that the Treasurer talks about. They point to. the very real position that our reserves are as high as they are only because of that very high capital inflow. Our reserves are not high because we have earned them; they are high because our economy has been put in pawn to people outside Australia. I suggest that it is time that questions of this type were looked at. To show that these ideas are not peculiar to members of the Labour Party and therefore cannot just be brushed off as wild, I draw to the attention of the House an article which appeared in the very informative journal, the “ Economist “. I know that the Treasurer reads this publication, when he has the time to do so.

In the very recent issue of 19th September 1964 there is an interesting article headed “ As a Borrower Sees It “. The journal states that the article was written by a distinguished Norwegian economist. The journal “ Economist “ has the habit, the reason for which is probably best known to itself and is possibly quite good, of not putting signatures to articles that appear in it. It is very rare that an article appearing in the “ Economist “ is shown as coming from, say Mr. Jones; it is always written by “a correspondent”. In this case it was written by “ a distinguished Norwegian “. In the article he speaks about a group of countries each of which has a net import of long term or medium term capital, and he says -

Norway, Finland, Canada, Australia and Japan belong to this group. To a varying degree these all feel themselves faced with certain basic problems:

He then states the problems that he feels these countries should be looking at. Remember, he includes Australia. He asks, as a first question -

Is it wise to continue capital imports in view of the increasing debt servicing obligations being incurred?

I should like to consider that question in a moment. He then asks -

Is it right, from an international point of view, for an advanced country -

He describes Australia as an advanced country - to rely upon other people’s savings and, possibly, to compete with the needs of the underdeveloped countries?

He continues -

What about the future availability of a capital supply from abroad?

It is to the first two questions in particular that I want to give some consideration, because I feel that the Treasurer has cast his net wide enough in his speech to enable these matters to be encompassed in the debate on this Bill. The Treasurer related the need for borrowing to the question of Australia’s overseas reserves. I deal first with the question -

Is it wise to continue capital imports in view of the increasing debt servicing obligations being incurred?

I should like to point to some rather interesting figures that appear every year in a United States publication “ Survey of Current Business “. In the August or September issue of each year the publication gives quite comprehensive details of United States investments in other countries. Sometimes one can obtain from that source more information about American investment in Australia than can bc got anywhere else. Certainly it is difficult to get the information in Australia.

The August 1964 issue contains information relating to this year, and additional information can be found in issues of previous years. The publication shows that at the end of 19S0 the total United States investment in Australia was 201 million dollars: At the end of 1963 the investment had increased to 1,277 million dollars. In a period of 13 years there had been an increase of about 1,100 million dollars in American investment in Australia. The earnings on that investment of 1,277 million dollars last year, after the payment of taxation, was 145 million dollars. If honorable members relate the 145 million to 1,277 million they will find that it represents a pretty good rate of return, to say the least. That is a return of about 1 1 per cent, on the total investment, after taxes have been paid. In other words, Australia is not a bad milking cow from the point of view of American investors. I doubt whether our own industry, as a whole, returns the same satisfactory figures. Perhaps, as some writers have suggested, this is a challenge to Australian industry to become more efficient. But it is also an indication that these concerns operating in Australia have apparently charged prices substantial enough to return these yields, so it is a question again of our internal economy being affected. That earning can come only from sales in Australia - out of the hides of the Australian public, if one cares to put it that way.

Apparently the rate of return on American investment is much higher than the rate prevailing on local investment as a whole, and I should think also that it is higher than the rate operating on British investment in Australia. I regret that I have not been able to get the same full information about British investment as I have been able to get from the American source. At any rate, that is one answer to the question -

Is it wise to continue capital imports in view of the increasing debt servicing obligations being incurred?

What I am trying to get the Treasurer to acknowledge now and then is that we should be looking at this other aspect of the borrowing problem; not only looking at the situation just for the moment as building up our reserves, but remembering that it is building up reserves today at the price of a pretty heavy drain on the reserves in years to come.

Mr Harold Holt:

– The honorable member would probably have to alter the whole basis.

Mr CREAN:

– That may be so. I am not suggesting that the Australian economy is altogether the worse for there having been foreign investment, but what I am suggesting is that sometimes we have perhaps had enough of it and that overseas investors may be doing too well from their investments in Australia. Surely they are points that are worthy of consideration. So much for that problem.

The second question, which again is one I think Australia must look at, is -

Is it right, from an international point of view, for an advanced country to rely upon other people’s savings and, possibly, to compete with the needs of the underdeveloped countries?

Again, I think it is high time that Australia adopted a little more responsible approach to the question of helping underdeveloped countries. It was interesting to get the other day from the Department of External Affairs a copy of Information Handbook No. 2, “Australia’s Aid to Developing Countries “. One cannot say that Australia has done nothing in this field, but I think one can say that Australia ought to be doing much more than it is doing. The suggestion is made these days that aid to underdeveloped countries by those who can afford it - I believe that Australia is in that second category - should be of the order of one per cent, of the donor’s gross national product, which in current terms would be about £90 million for Australia. Probably by the end of June 1965 one per cent, of our gross national product will be near enough to £100 million, because our gross national product by then will be in the region of £10,000 million. According to this publication, at the moment Australia is not providing anything like £90 million to £100 million for the desirable purpose of aiding underdeveloped countries.

Mr Harold Holt:

– Would the honorable member add that amount to the Budget?

Mr CREAN:

– If the Treasurer is prepared, as he was the other night, to add £404 million for defence over a three year period, he should ask what it is that we are defending ourselves against. Surely one of the reasons for aggression by some countries is that they are “have nots” while others are “ haves “. I believe that peaceful co-operation - peaceful penetration, if that expression is preferred - is just as significant a matter for a government to consider as is additional defence. If the Government can find for defence, as it claims to be able to do, another £400 million over and above what it is spending now, why can it not find another £40 million or £50 million to aid some of the poorer parts of the world? But, even setting that question aside, the Government could refuse to be so persistent a borrower of capital which, in the world perspective, is in short supply.

Mr Harold Holt:

– It is quite fallacious to assume that if Australia did not borrow the money some other country would.

Mr CREAN:

– It is not fallacious at all.

Mr Harold Holt:

– Of course it is. The proposition involves the assumption that all borrowers have the same appeal.

Mr CREAN:

– In this, as in a lot of other matters, we have, on the one hand, those who can afford to pay the highest rates of interest and, on the other hand, those whose needs are greatest. The Australian

Labour Party believes that social need is sometimes a superior consideration to private profit when instruments of development are at issue.

Mr Harold Holt:

– Security and return arc important.

Mr CREAN:

– They may well be important at times, but, as the right honorable gentleman knows, security is not always purchased by a high rate of interest. All I am suggesting is that it is time the Government considered these points and got away from the idea that it is always good to borrow. In some circumstances, it can be bad to borrow. First, the borrowing may in the future become a liability dangerous to the reserves that the Government thinks it is guarding at present. Secondly, we say it is time we exercised a little self denial, as it were, and refused to hawk our requests for borrowings on the world’s capital market. We should undertake capita] development out of our own resources. Any equipment that has to be purchased overseas for our development ought to be paid for out of our own current resources.

Having dealt with the first two points that I wish to mention, I should now like to direct the attention of the House to a third matter. We on this side of the chamber appreciate the splendid job that has been done for Australia by Qantas Empire Airways Ltd. The annual report of the airline for 1963-64 presents a brief financial statement at page 2. Referring to the company as an entity, it states -

We own assets amounting to £56,877,475.

Most of those assets have been built over a reasonably short time. In fact, most of the company’s expansion has been undertaken over the last ten years. I am sure that ali Australians are proud of the role that Qantas has played in international air transport. Australians are not proud, however, of the role that Australia has played in another form of international transport - shipping. I suggest that some of the effort devoted to building up an international airline could well be turned to the development of an international shipping line to serve Australia. I suppose that no country is as dependent on shipping as is Australia. In many respects, in terms of shipping services, we are the worst equipped of all the nations with a large volume of international trade. I think it is time we paid more attention to shipping. The present situation has a significant influence on our economy through its effect on our international reserves. One of the greatest drains every year on our overseas reserves is caused by the invisible items of trade.

Mr Peters:

– Especially freights.

Mr CREAN:

– One of the greatest contributors to the adverse pattern of invisible items of trade is shipping freights. I think the net drain from this one cause alone is more than £100 million Australian a year. If we look at the matter from the standpoint of priorities, we may come to the conclusion that it would have been more prudent to build up a shipping line before developing our international airline. I do not suggest that we should not have built up an international airline, but we certainly ought to have developed a shipping service. I notice that the Treasurer has now left the chamber. He has the habit, when any proposal is made from this side of the chamber, of saying: “ How will you pay for it? Where is the money to come from? “ Yet he does not consider that any questions should be asked about the sums required to pay for any proposals adopted by the Government. He seems to think that the Government proposals should be accepted without question.

Some people might suggest that,, if it cost about £57 million to build up our overseas airline over the years, the cost of developing an international shipping service might be, say, £100 million, and that we could not find £100 million at present. AH I suggest is that over the next few years - I envisage this as a relatively short period - Australia ought to be thinking in terms of expenditure of the order of £100 million at least, as a minimum, to embark on the establishment of its own international shipping line. We might need to have ships of special types built to meet our particular needs. Some might be able to buy off the hook. In any event, I suggest that we ought to be thinking in terms of expenditure of this magnitude over a relatively short period in the years ahead. After all, our gross national product is rising by something like £500 million a year. Some of the increment year by year is saved, and some proportion of what is saved could be devoted to the establishment of a shipping line just as properly as to the financing of an international airline.

Mr DEPUTY SPEAKER (Mr Brimblecombe:
MARANOA, QUEENSLAND

– Is the amendment seconded?

Mr PETERS:
Scullin

.- I second the amendment.

Sitting suspended from 12.44 to 2.15 p.m.

Mr PETERS:

– In introducing the Bill now before the House, which proposes to raise overseas a loan of 30 million dollars, the Treasurer (Mr. Harold Holt) said that the economy of this country was growing rapidly and that therefore the payment of the principal and interest that will accrue on the loan was well within the capacity of this nation. He also said that our overseas balances were in a particularly strong condition, but, despite this, they would not be used in the purchase of aircraft overseas. Instead, money would be borrowed in America for this purpose. How does the Treasurer know that the economy of this country is growing rapidly? On the day on which he made his pronouncement, the Government issued a document called “The Meaning and Measurement of Economic Growth “. In it, thousands of words covering many pages are used to show that the national economic growth of Australia cannot be measured by reference to the gross national product or by reference to the production per head of population. But the document does not give any means of measuring the growth of the economy. I would be interested to hear the Treasurer say how the growth of the economy is measured.

For many years, the Bureau of Census and Statistics has issued documents showing rural production, secondary production and mineral production. The production of these commodities for previous years and the gross national product have been shown. The Bureau has also shown the gross and net production for each individual in the community. The documents show that while gross national production has increased, production per head of population has diminished considerably. Rural production per head of population, according to the statistics presented by the Government, has decreased by £90 per head in terms of today’s currency. Secondary production has increased, of course, but the overall value of production - rural, secondary and mineral - since 1950 has decreased by £30 per head. Why were these documents issued by the Bureau? They were issued to enable the ordinary individual to estimate the growth of the economy. But according to the latest document they do not reveal the growth in the economy. What do they reveal? Why were they issued? This presents a peculiar puzzle. I believe that the documents do allow the growth or lack of growth of the economy to be estimated, and that they reveal that there has been a disastrous diminution of economic growth since 1950 in the essential commodities.

One facet of the economy, overseas balances, can be assessed perhaps more accurately than economic growth can. What has happened with our overseas balances? The Treasurer said that they are very strong but that the Government does not intend to use them to purchase aircraft overseas because our overseas reserves should be held for use in an emergency and should not be allowed to run down. The position of our overseas balances, which the Treasurer said are particularly strong, is revealed by the official documents. They show that in June 1959 our overseas balances were £516 million. In 1959-60 we had an adverse balance of payments of £230 million. In 1960-61, we had an adverse balance of payments of £368 million. In 1961-62, we had a favorable balance of £2 million. In 1962-63 we had an adverse balance of £221 million and in 1963-64 we had an adverse balance of £14 million. Over the period since we had a favorable balance of £516 million we have had adverse balances. We have not been able to meet our commitments to the extent of £831 million. Today we have £834 million in our overseas reserves. How has that position been brought about.

Mr Whittorn:

– By good government.

Mr PETERS:

– It is brought about by one obvious means. If we are not able to meet our overseas commitments out of our earnings, we borrow money. If we need money to pay for our groceries, or to pay shareholders if we are in business, what is done? Money is borrowed and dividends are paid out of capital when we cannot pay from earnings. This Government is doing what Reid Murray Holdings Ltd. and a number of other organisations in this country have done. However, ultimately the stage is reached when no capital remains and no dividends can be paid - the time for liquidation arrives.

Australia is big business, and as such should be standing on its own feet and meeting its commitments from year to year. We should be living within our income. We should learn from the example of the United Kingdom. The United Kingdom is not like Australia: It is not a debtor nation. The United Kingdom is a creditor nation. For a period of years the United Kingdom had a small adverse balance of payments but it has had a considerable adverse trade balance because it was receiving money by way of interest from all countries from oversea investment. It bad no transport charges - British ships were transporting goods into and out of the United Kingdom - and it had no insurance charges, because insurance money was invested in English companies. Later, England had considerably adverse trade balances. As soon as the Government of Britain saw that it was unable - and I paraphrase the words of the British Prime Minister - to stand on its own feet, that it was not living within its means, that it was living upon borrowed capital or upon the sale of British assets in order to meet current expenditure, then action was taken to increase the productivity of the country, to increase exports and to establish import replacement industries.

Australia is in a similar position, but what has this Government done? It has endeavoured to hide from the people the true position. Every year the Government presents, with the Budget Papers, a national income and expenditure statement which includes what is virtually a profit and loss statement of our dealings with other countries. However, instead of referring to “ profit or loss “ the statement up until 1956-57 referred to the “increased indebtedness to the rest of the world “, which was the amount by which Australia was unable to meet its obligations to other countries. It was the amount by which Australia was putting itself, its industries, and the capacity of the people to earn, into pawn for future generations. However, in 1956-57, apparently because this statement of increased indebtedness was appearing annually with monotonous regularity and was creating an unfavourable impression, the description of that item was changed to “ surplus or deficit on current account “. It was the same item under another name. Surpluses did not occur; they were always deficits. This year the description of this item has been changed again. It is now referred to as “overseas balance on current account”. So we have had overseas balances on current account of £230 million, £368 million, minus £2 million, and of £221 million and £14 million. What impression would this item give to people reading it? It would give the impression that we had favourable overseas balances except that when reference was made to minus £2 million wc apparently were down in one year. In reality we have been down £230 million, down £368 million, up £2 million, down £221 million and down £14 million.

I would not say that this was cooking government accounts. I do not know who is responsible for the terminology used in connection with these accounts. I do not know who has changed the method of presenting public accounts, whether it is the Treasurer (Mr. Harold Holt) in the interests of the politics of his party, or whether it is government officials, but if the Reid Murray organisation or anyone else conducting business started to change the terminology of its financial statements, as the Government has done, in order to befuddle shareholders into believing there was economic growth in the undertaking and that the business was showing a profit and not a loss, the organisation would be pilloried by public opinion for doing something which bordered on being most undesirable. This, of course, is what the Government has done with the accounts of this nation. This is why we say that the Government should not borrow 30 million dollars merely for the purpose of obtaining aircraft for this country. We want aircraft but we certainly do not want this country to be put in a position of greater and greater difficulty.

To use once again the expression used by the British Prime Minister, we should stand on our own feet. Australia should live within its means. The matters that I have referred to are not subtle matters that have to be worked out by gentlemen with great academic qualifications. They involve the ordinary simple principles of buying and selling. And they call for application of the philosophy of Wilkins Micawber. Honorable members opposite may have read “ David Copperfield “. I remind them that when his hair was grey and he had accumulated the wisdom that comes after experiencing the vicissitudes of a long life, Wilkins Micawber set out his philosophy thus: Income 20s., expenditure 19s. 6d., result happiness; but income 20s., expenditure 20s. 6d, result misery. That is the lesson this Government must learn. The Government must learn to live within its means. Instead of looking for pastures new where we can raise increasing loans under increasingly arduous conditions at increasing rates of interest we should bc endeavouring to channel the resources and the labours of this country into the production of more and more of those essentials with which we may buy goods overseas or which will obviate us having .to accumulate deficits every year overseas.

The matter of overseas loans is a matter of simple arithmetic. Time after time members of my Party have sought to impress upon the Treasurer that this is a matter of simple arithmetic, but he discards our submissions. After him the deluge. His attitude is: Borrow, spend, bust, as long as you are not here when the bust occurs. The Government seems to adopt that philosophy rather than the philosophy of the amiable old gentleman whom I have mentioned. The Treasurer is not in the chamber at the moment, but I hope that the Minister for the Navy (Mr. Chaney), who is at the table, will acquaint him with my remarks and ask him to tell me why he issued the statement titled, “The Meaning and Measurement of Economic Growth”, which does not tell how economic growth occurs, or the amount of economic growth that has taken place in the Australian community, but goes to some trouble to point out that all the means that have been adopted down through the years by the Government to acquaint the people of this country with the growth of its industries, secondary or primary, have been so much humbug and hogwash. That is in reality, what the document that he has now issued conveys to the people.

We must not merely look at the implications of this loan and the effect it will have on the economy. The honorable member for Melbourne Ports (Mr. Crean) made it clear that the Opposition does not oppose the buying overseas of this type of aircraft. We are aware that the use of this type of aircraft for the transportation of goods and people from one country to another will secure overseas capital for Australia and enable the loan to be redeemed, perhaps with a profit on the deal. What we say is that the entire policy of the Government as regards loans - the Government’s entire economic policy and its policy of dealing with other countries - is such as will inevitably lead to disasters greater than the disasters Britain faces today. The Government will have to apply remedies more stringent than the Government of Britain is applying today if we are to rectify our overseas trading position. The complaint from which our economy suffers is exactly the same as that from which Britain suffers at the present time. The only difference is that we are suffering more than Britain is.

In 1949 when the Labour Party ceased to govern Australia this country was not a debtor nation. It owed not any man, but today we are indebted to overseas countries to the extent of £2,000 million. We are indebted to America, Britain and Switzerland. We have borrowed 14 million guilders from Holland. We have borrowed money from every country from which money can be raised and we have borrowed at increasing rates of interest. In fact we have so importuned at the door of Shylock that Shylock himself has taken steps to prevent us from securing further advances. The nations that lend money to us - the capital exporting nations - are placing impositions on capital leaving their countries and we must pay those impositions in addition to the dividends and interest that we pay on overseas money used in this country. The whole subject of overseas loans and the economy, upon which depend our standard of living and the provision of hospital facilities, educational facilities and defence re,quirements, merits earnest consideration. We should take measures to prevent the drift to disaster before it is too late.

Mr UREN:
Reid

.- This Bill seeks the approval of the Parliament to the borrowing by the Commonwealth of up to 30 million dollars, or about £13.4 million, on behalf of Qantas Empire Airways Ltd. and the Australian National Airlines Commission, which operates Trans-Australia Airlines. The borrowing is being made by the Commonwealth in order to assist Qantas and T.A.A. to finance the purchase of additional Boeing jet aircraft and related equipment. Qantas will be assisted by the loan to acquire either two or three additional Boeing 707-338C aircraft, and T.A.A. one additional Boeing 727 aircraft, in each case with related equipment and spares. The Opposition has no objection to the purpose of these loans. In fact, we support the acquirement of these valuable aircraft to build up these two important people’s undertakings. Trans-Australia Airlines, the Australian interna] airline, is the people’s undertaking. Qantas Empire Airways Ltd. is the people’s undertaking which operates as an overseas airline. All Australians are proud of both. As the honorable member for Melbourne Ports (Mr. Crean) said earlier, it is a great pity that this Government did not make provision also for the establishment of an Australian owned overseas shipping line to reduce to a minimum the present heavy cost to the Australian taxpayers of the invisible charges which include freight costs. We are being bled white by the overseas monopoly shipping lines and if we had our own overseas shipping line to blend with the Qantas airline, the Opposition would be very pleased indeed.

Our objection to the Bill is simple. We believe that the aircraft for which the loans are being raised should be paid for out of our overseas reserves, which stand at a very high level indeed today. At the end of June last, these reserves totalled £854 million. So we could easily afford the £13.4 million required for these aircraft. The honorable member for Melbourne Ports has explained that a good part of our overseas reserves is invested in loans in New York and London. The maximum rate of interest which we are receiving on those loans is four per cent. We shall be required to pay five per cent, interest on the loans which it is proposed to raise under this Bill. It will be seen, therefore, that even with money lending we are losing on the deal. In both international trade and the game of international finance, Australia has paid very dearly for her development and for the equipment she has obtained. In his second reading speech, the Treasurer (Mr. Harold Holt) said -

Our balance of payments position is strong at present, but it is traditionally subject to wide fluctuations, often within short periods. Our economy is growing rapidly and with that growth there is a continuously increasing demand for imports - materials, capital equipment and other requirements that we must obtain abroad.

The Treasurer said that only last week. Let me quote now from what he said a few months ago in his Budget Speech because there seems to have been a quick change of front on his part with regard to the need for loans. In his Budget Speech, the Treasurer said -

At this stage it does not seem likely that we will be raising any new loans abroad this year for works and housing programmes on what we would regard as reasonable terms and conditions. We will make a further drawing estimated at £10,615.000 against the International Bank loan for the Snowy Mountains Scheme; but that is all.

For some reason, the Treasurer has made a quick change of front. I wonder if this has been made necessary by the Government’s lack of planning for the future? This might be the case. The Treasurer dealt at great length with the question of our balance of trade. He referred also to overseas reserves. For the first four months of this year, our exports totalled £424 million while our imports amounted to £470 million. Thus, we had a deficit of £46 million in that period. I emphasise, too, that this figure excludes invisibles. For the corresponding period last year, the value of our exports was £429 million while the value of imports was £378 million. So, for that period, we had a credit of £51 million. Therefore, our position at the end of the first four months this year is worse than it was at the corresponding date last year by some £97 million. Perhaps the reason for seeking to raise these loans is that the Treasurer is worried about the future of the economy. Perhaps he is so worried about it that he is prepared to beg, borrow or steal every penny he can from overseas to build up a fictitious total of overseas reserves. But that is only in accord with the very foolish policy that has been pursued by this Government for a number of years now. As the honorable member for Scullin (Mr. Peters) has said, this Government has been living above its means. It has not been planning ahead or controlling the economy at all.

Let me refer briefly to this Government’s overseas borrowing record as compared with that of the Labour Government. At 30th June 1941, the year when the Labour Administration took office, Australia’s sterling debts totalled £478 million. By 30th June 1950, the year in which the Labour Administration went out of office, that figure had been reduced by £108 million to £370 million. On 30th June 1941, Australia’s dollar indebtedness was 211 million dollars. By 30th June 1950 it had been reduced by 16 million dollars to 195 million dollars. The only debts Australia had when the Chifley Government went out of office were the sterling debt in Great Britain and the dollar debt in New York. I remind honorable members that during its term of office, the Labour Administration had to fight a war. It was in office during the time when this country was under great stress. Yet it was still able to reduce our sterling indebtedness by £108 million and our dollar debt by 16 million dollars.

When the Menzies Administration took office, Australia’s sterling debt was £370 million. Today it is £364 million. Although, during this Government’s term of office, our sterling debt has fallen by £6 million, our dollar debt has increased from 195 million dollars to 620 million dollars - an increase of 425 million dollars. During this Government’s term of office, Australia has also borrowed 30 million dollars from Canada, 240 million francs from Switzerland and 40 million guilders from Holland. The cost of borrowing has increased from £19 million in 1950 to £33 million this year. That is the sorry record of this Government - this borrowing Administration.

But that is’ not the worst of it. Our greatest problem arises from the indiscriminate inflow of private investment from overseas. One of the great crimes committed by this Government has been its action in permitting this inflow.

I want to deal briefly with the balance of payments situation, because the Treasurer dealt with this matter at some length in his second reading speech. When we consider the record of this Administration we find that in the period from 1st July 1950 to the end of June 1963 our deficit amounted to £1,902 million. The two countries with which we do most of our trading are the United Kingdom and the United States. Our deficit with the United Kingdom, over the same period, amounted to £1,812 million and our deficit with the U.S. was £1,362 million. With these two countries we had a combined deficit of about £3,175 million. Luckily we had a credit of £1,273 million with Japan, China, France, Belgium, the Soviet Union and with certain European countries. We were left with an overall deficit of £1,902 million. If we look at the figures for the trading year 1963-64, which was a good trading year for this Government, we find that we had a deficit of some £19 million after allowing for £269 million for invisibles. But for these costs we would have had a credit of over £250 million.

Last year we had a deficit with the United Kingdom, after invisibles, of £135 million, and our deficit with the United States after invisibles was £195 million. One can appreciate the growing concern about this deficit in our balance of payments. How is this deficit met? It has been met mainly by the inflow of indiscriminate private foreign investment.

I now turn to the figures giving the inflow of foreign capital. Taking the period from 1st July 1949 to 30th June 1963 - we have not any later figures - we find that investment in Australia by overseas investors amounted to £1,669 million; £1,125.6 million was direct new capital investment, while £543 million was reinvested out of profits made by overseas companies operating in Australia. Some £540 million, of course, was called undistributed profits. This represents a kind of indirect tax levied by the great overseas monopolies in Australia by increasing the price of the goods they manufacture. These extra amounts are taken from Australian consumers and help to build up the great monopolies in Australia that are owned by foreign investors.

During the period I have mentioned dividends, the equivalent of capital outflow from Australia, to overseas investors, amounted to £615.5 million. These figures should give rise to serious thought on the part of every person in Australia. We are selling more and more of our heritage. I will deal later - with the differences of opinion within the Government’s ranks concerning foreign investment. We know that the Treasurer has been a great advocate for private foreign investment in Australia. On the other hand, the Leader of the Country Party, the Deputy Prime Minister (Mr. McEwen), has a very different point of view.

What is the cost of all this private foreign investment? I have given the cost of public borrowing and I shall now turn to the cost of private foreign investment. In the first year of this Administration it amounted to about £14 million, but last year it was £58 million. Then we come to portfolio investment, which Mr. Chifley would not accept in any circumstances because he said it was hot money which could flow out of the country as easily as it flowed in. Portfolio investment operates in the purchase of shares in established Australian companies - it has no roots in this country. The cost of this has increased from £5 million in the first year of this Administration to £13 million last year. I have before me a document titled “Annual Bulletin of Oversea Investment - Australia” issued by the Commonwealth Bureau of Census and Statistics. It shows that portfolio investment over the last three years has amounted to about £120 million. This represents a serious problem confronting us. All this Government is concerned with is to get any kind of capital. It gives the same priority and the same deal to any kind of capital coming to Australia, whether it is for the purpose of developing essential Australian industries and bringing in technical knowhow or for the purpose of building a soft drink factory or a cosmetics factory, or whether it is simply speculators’ money. All investors enjoy the same concessions, and British and American capital is covered by particularly favourable taxation agreements.

I referred earlier to the difference of opinion within the Government’s ranks. The Prime Minister said on one occasion that every time a complaint was made about foreign investment it was made by some left wing member of the Labour Party, but because of economic pressures within Australia he has now stated that local investors must assume a larger share of the investment being made in this country. This does not represent a solution of the problem but at least it would be a step in the right direction. The Deputy Prime Minister had a few words to say on this subject on 2nd April 1963 at the annual conference of the Victorian Country Party. He said -

There has been an increasing tendency for capital to flow into Australia not to establish some new and highly complicated technical activity, but to come in to buy out an Australian flour mill or Australian bakery or an Australian dairy factory, sometimes a co-operative.

I make it quite clear that I can’t welcome the transference of ownership to overseas people of these simple food processing activities which have been actually established by Australians, and in many cases successfully operated by Australians for more than half a century.

We in this room are mostly established farmers. If we earn enough annual income we can live comfortably. If we don’t we could still live comfortably by selling a bit of the farm each year, and that is pretty much the Australian situation - we are not earning enough and we are selling a bit of our heritage each year.

What is the view of the other partner of the coalition, the Treasurer? At the conference of the International Monetary Fund in Washington on 1st October 1963 he said’ -

We in Australia have shown how private foreign capital can develop a country.

This was intended to show the new underdeveloped nations how private foreign capital can develop a country. Of course it can develop a country but, on the other hand, the Deputy Prime Minister has said that we are selling a bit of our heritage every year. The honorable member for Scullin (Mr. Peters) said that we are living above our means and, consequently, we have to beg, borrow and steal at any price from overseas. We know that there are great problems that exist in a developing economy and this nation, of course, needs developing. We have stated clearly that if we have not sufficient in our overseas reserves to pay for the necessary capital equipment or technical knowhow from our balance of payments then we will accept Government loans from overseas. Honorable members might say: “ Why are you not supporting this Bill? “ Well, we have made it clear that we believe that our overseas reserves of £854 million are sufficient to pay for this equipment. So why should the Government go further into debt? Why does Australia need to borrow money from America and pay 5 per cent, interest when we have this £854 million, part of which is invested in foreign countries for long terms on which we receive only 4 per cent, interest? It is not commonsense.

The Opposition states quite clearly that even though it is a good thing to get this important equipment we believe it should be paid for by using our own funds. The Labour Party does not say that we can turn against foreign investments or Government loans. We believe that each case has to be examined on its merits. We have to plan in this regard. We have to be sure that if we get private investment to come into this country it does so under certain conditions - and they should be stringent conditions. Perhaps we might have to have Australian capital partake and share in the venture. It might be that the Government itself should share in the venture with overseas private investors so that we can establish an essential industry, lt might be that certain sections of Australian industry need technical knowhow and equipment that we do not have here in this country and we might need to bring it in. lt might be that if foreign overseas interest came into Australia - and we should be very clear on this point - that we would have to make sure that no restrictive franchise is provided for. We have to bc sure that if these overseas countries create industry in Australia it is clear to them that they have to export their goods and help pay their own way because most of the foreign investment in this country comes here under restrictive franchise. It was found, even in the Deputy Prime Minister’s own Department, the Department of Trade and Industry, when a survey was made of some 1,100 companies, that 800 restrictive trade franchises had been brought here and the companies concerned could export possibly to New Zealand and a few of the Pacific islands but could not export anywhere else. Surely all Australians would realise that this Bill concerning even a small loan - some £13.4 million - can open up a discussion dealing with the question of private foreign borrowing and Government borrowing and what their priorities should be. Surely members of the Australian Country Party should rise in their places and support the utterances of the leader of the Country Party, the Deputy Prime Minister. Of course he is expressing an Australian point of view but up to date he has only used words. He has taken no action.

As the honorable member for Scullin pointed out, our position is drastic. It has become crucial. We know the great difficulty and problems that existed in Great Britain when the Labour Party, after a long period of time, took over the Treasury benches following 13 years of Conservative reign. A crisis existed and we know of the drastic action that had to be taken. The same action will have to be taken in Australia when the Labour Party is returned to power. But I hope, for the benefit of Australia, that the present administration will at least see the position from an Australian point of view. In the words of John McEwen: “ Do not let us sell a bit of our heritage every year “.

Reverting to the Bill again, I hope that it helps to make a contribution to the development of Trans-Australia Airlines - the finest airline in Australia. Personally, I always travel by T.A.A. because I am a shareholder and I hope all other Australians feel the same way - as they are also shareholders - and travel by that airline. Qantas Empire Airways Ltd., an international airline, has shown that Australia can compete in the international sphere efficiently and make a profit. All we need to do now is to continue developing, not only in air transport, but in shipping. Government action along lines similar to those relating to air lines is long overdue in regard to the establishment of an overseas shipping line. I have pleasure in supporting the amendment moved by the honorable member for Melbourne Ports.

Dr J F Cairns:
YARRA, VICTORIA · ALP

.- It i3 very pleasing to have an opportunity to discuss a Bill such as this which raises so many crucial and important points in international finances for the consideration of the House. I was very pleased to see that the Treasurer (Mr. Harold Holt), in introducing the Bill, made adequate reference to those wide issues. I think the House is justified in applying its mind to all those issues which the Treasurer himself introduced as being relevant to the discussion of this Bill.

First, what does this Bill do? The honorable member for Reid (Mr. Uren), who has just sat down, pointed out the essential things that the Bill does. It provides, first of all, funds for the purchase of aircraft for use on Australian airlines. lt is recognised by everybody that there is a necessity for the purchase of these aircraft and the Opposition agrees with the Government in respect of this matter. But I would like to make an additional point with regard to the purchase of these aircraft which I think has not been made in this debate. This Bill requires us to borrow money for the purchase of aircraft and to” borrow it overseas. This clearly indicates that we have not got the aircraft or the facilities to produce them, in Australia. We have to borrow money from overseas to get them because that is the only place where aircraft of this kind can be manufactured.

I think that this is a thorough going condemnation of the Australian Government, to begin with. Australia has a tradition now of some 25 or 26 years in the manufacture and assembly of aircraft, but after so long and after a period during which overseas aircraft industries have developed Australia is quite incapable of producing a transport or passenger aircraft of the kind required. I think this is a severe condemnation of the Government because in other parts of the world, in small countries like Sweden, where an aircraft industry exists that is capable of producing aircraft of this sort there is a close partnership between the Government and those concerned in the industry.

Mr Fairbairn:

– The honorable member is not suggesting that we ought to tool up for the production of the six Boeing 727 aircraft is he?

Dr J F Cairns:
YARRA, VICTORIA · ALP

– It is not a case of tooling up to make the Boeing 727 at this moment. If the Government had arranged the tooling up many years ago it would now have a capable industry. It is no good for Government supporters to sneer at this sort of thing. They have been sneering at this sort of thing for a long time in exactly the same way as they sneered at the possibility of establishing an iron and steel industry 30 or 40 years ago. If they can only appreciate a national point of view, if they can only get away from the narrowness and parochialness that exists in minds of this kind, then we would develop an aircraft industry which, if we had started in 1913, would be equal to the iron and steel industry. In every case where we have established a secondary industry in this country that attitude which Government supporters are now revealing was present. If all Australians had shared that attitude we would still be hewers of wood and drawers of water and we would have no secondary industry in this country. The aircraft industry is no different to the motor car industry or the iron and steel industry. If we had taken action in a proper way to plan and develop the industry that we need today we would now have an aircraft industry. We would not need to buy three or four different types of aircraft that the Government says it needs now for the defence services. These could all have been incorporated in the development of the same kind of industry. I do not pay any respect to the kind of assertion that the Minister for National Development (Mr. Fairbairn) has made. But that is an aside.

The first thing that is wrong at present is that we have to borrow money from overseas in order to purchase aircraft such as those to be purchased under this Bill. A good deal too much respect is exhibited by honorable gentlemen opposite for, as they think, these very important and significant people overseas. I would like to see a little more Australianism exhibited from the other side of the House. The second unfortunate point about this Bill is that it authorises borrowing and it does that because we have no other way of getting aircraft. The Labour Party agrees with the Government in that sense, although I will have something to say about that point in relation to another point in a few minutes.

The only question that divides the House at this stage is: From whom should we borrow? That is a simplification of the question that divides the House. The question is: Should we borrow from overseas banks or should we borrow from our own banks? This is precisely a matter of the economics of the situation. In a minute I will explain the full significance of this question. At this time the Labour Party comes down on the side of borrowing from our own Reserve Bank and not on the side of borrowing from the banks for which honorable gentlemen opposite have a subservience. Honorable gentlemen opposite have a lack of respect for our own Australian economic power and institutions. This is the issue that divides the Labour Party and the Government parties on this occasion. So the honorable member for Melbourne Ports (Mr. Crean), on behalf of the Opposition, has moved the following amendment -

That all words after “That” be omitted with a view to inserting the following words in place thereof: - “ this House, whilst not declining to give the Bill a second reading,-

We do not decline to give the Bill a second reading, because we want the aircraft and in the circumstances we have to accept the financial conditions under which they will be obtained - is of opinion that the financing of the purchase of aircraft by the Australian National Airlines Commission and Qantas Empire Airways Ltd. should be met from revenue and not from a loan raised overseas. 1 support that amendment. The reasons for the amendment are fairly simple. The first point I make is that wherever the question of foreign borrowing by Australia is involved at the present time, all Australians should think deeply about it. Yet members of the Government parties are unconcerned about this Bill. In this debate there have been three Opposition speakers one after the other - the honorable member for Scullin (Mr. Peters), the honorable member for Reid and now myself.

Mr Uren:

– There have been four.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– That is so, because the speech of the honorable member for Melbourne Ports, who opened the debate for the Opposition, was not followed by one from a member of the Government parties. The striking point about this debate is that no-one on the Government side of the House wants to contribute to it or feels that he should contribute to it.

The fact that important issues have been raised cannot be ignored. One issue that has been raised is the attitude adopted by the Minister for Trade and Industry (Mr. McEwen), who has spoken against foreign borrowing. Yet no member of the Country Party is ready to see the relevance of that attitude to this Bill or is capable of applying to this Bill the propositions propounded by the Minister for Trade and Industry. And, of course, no member of the Liberal Party is even remotely concerned about the Bill. In Australia at present there is a great need for very deep thought to be given to the question of foreign borrowing, whenever it arises.

The second thing that has emerged in this debate so far is the deep contrast between the attitude of the Labour Party and that of the Liberal Party to questions of economy and of living within our means. In almost every election campaign, when the Labour Party proposes to advance social welfare, people from the other side of the House and, very frequently, from other places allege that the Labour Party is ready to spend well in excess of its ability to provide, and we are always asked: “ Where will the money come from?” Yet our political opponents, when in office, spend without regard to the nation’s capacity to pay, in a manner which is in striking contrast to the record of the Labour Party. The honorable members for Scullin and Reid produced evidence to show the thoroughly sound and solid attitudes that have been adopted by the Labour Party on this question.

I think we are prepared to admit that in some respects the attitude of the Labour Party means possibly a slower rate of growth in the affluent part of the economy. I would be prepared to make that admission right from the start. But, if our political opponents intend to endeavour to lead Australia on a policy of providing the inessentials or the ingredients of affluence before they are ready to provide the necessaries to the same extent, I will not go along with them. This Bill raises, with complete relevance, a choice of that kind. It brings out in contrast the attitudes of the Labour Party and of our political opponents on this question. I believe that if the Australian citizen applies his mind carefully to this matter he will find, not only in what the Labour Party sets out to do but also in what it has done in the past when in government, that our policy is sounder and more in accord with economic facts and with having two sides to an account and balancing those two sides than the attitude of our political opponents ever is.

The next question that arises is that of borrowing overseas, or what is sometimes called investment. The first point that I make on this question is that Australia has been borrowing overseas at a fantastic and increasing rate and with a deficit every year. I do not believe that any person or any country can go on indefinitely incurring a deficit every year without paying the penalty for it some day. Australia has been doing that. The first thing that we have to say about borrowing overseas, or capital investment, is that we are not very sure of what it amounts to. Frequently we have given to us figures which purport to be the amount of money that has been invested in this country from overseas. But we can never be very sure of what those figures really mean.

Mr Peters:

– Or of what the value of the investment is now.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– That is right. Recently the Treasury issued a very imposing document on the measuring of economic growth. As the honorable member for Scullin said, from the point of view of a practical man. that document means that we cannot measure economic growth in this way and we cannot measure economic growth in that way; but nowhere in that document do the erudite men of the Treasury give us the faintest indication of how we can measure economic growth. An ordinary man can tell us of the difficulties of measuring economic growth and may be unaware of precisely how to do it. But I believe that we have the right to expect a little more than that from the men who are in positions of leadership in this field. 1 hope that it will not be very long before the Treasury directs its attention to issuing another document that will tell us how we can measure economic growth.

Of course, foreign investment is part of that economic growth which the Treasury considers is very difficult to measure. I hope that before long the Treasury will devote its collective mind to telling us a little more about foreign investment. First, there is the question of portfolio investment, which was referred to by the honorable member for Reid. This is money that can be taken out of Australia very quickly. It is property in limited and other companies which has been obtained by the purchase of the shares of those companies on the stock exchanges. Those shares can be sold on the stock exchanges just as quickly as they have been bought. That is not a secure or permanent investment in this country.

Secondly, there is the question of retained profits. Some of the greatest foreign investors in Australia are people who have brought to this country no overseas funds at all - or none to speak of - and who, with a very small amount of money, have acquired control of an Australian concern which has then developed because the economy has developed. Those investors have then acquired the power to charge prices that are very high in the circumstances, to make very large profits and to retain in the business very large volumes of funds with which they have bought greater volumes of assets in Australia. I suppose that General MotorsHolden’s Pty. Ltd. is the best example of such an investor. There could not have been any more than £1 million of foreign purchasing power ever brought to Australia by those who own G.M.H., but today the assets of G.M.H. are worth roughly £120 million. The other £119± million has been acquired in Australia for those people who pretend to have brought foreign investment to Australia. The £11 9i million of Australian assets which are in G.M.H. now, can now draw to the full extent from the Australian economy profits which in due course are taken back quite significantly to other countries. That raises the proportion of withdrawal to a fantastically high rate when compared with the amount of investment in the first place, and increasingly we will have to pay the cost of that in the future. Although this does not mean that we need specially discourage foreign investment or that we need not specially use it, we should not use it unnecessarily.

Australia, a well developed and affluent country, should not be so ready to draw on the world’s investment capacity because the underdeveloped and poorer countries need investment from outside far more than we do. Even if it were a profitable and desirable thing for Australia to do, we should have second thoughts about putting ourselves in the position of being the leading borrowers in the world, and I think that we are pretty close to being the leading borrower from the International Bank for Reconstruction and Development. Borrowing from this organisation should not be encouraged in an advanced economy like ours. We ought to think a little more of the needs of other countries.

The fourth point that I want to deal with is the question of overseas balances. The Labour Party says in relation to this transaction that if we need to borrow £13 million for the purchase of aircraft we should borrow it from our own Reserve Bank and not from banks overseas. This contention may appear to honorable members opposite and to some others to be unreal because they might say that we are not really borrowing the money from overseas banks at all, since Australia has £854 million of overseas funds - this is what the official document shows. They may say that our overseas funds are now almost as high as they have ever been, that although they were higher two or three quarters ago and have been falling since, they are still high. They may say, therefore, that Australia has all this money overseas and this transaction does not involve borrowing from foreign banks. I think it is necessary to make this point clear.

Australia does not have £854 million worth of gold or notes or property overseas. The £854 million is the difference between what we have received over the years for our exports and services in contrast with what we have spent overseas in that time for our imports and services. All the money that we have earned in the past has been distributed already to people who in fact earned it. It has all gone. It does not exist any more. Therefore, if we are to draw upon the £854 million we must go to a bank to get it, and we must go either to an Australian bank or to an overseas bank. That amount does not exist somewhere overseas in somebody’s vaults in the form of gold bullion, Australian notes, American dollars or British sterling; it exists only as an entry in a book. Therefore, if we are going to draw upon this amount we must use some kind of bank in order to do it.

The question is. which bank do we use? If we use the Australian Reserve Bank we are creating an Australian debt, but we are doing it at the lowest possible rate of interest. We would be getting our money cheaper than we could get it in any other way. We would be getting our money without increasing any of our overseas obligations, but we would get it just the same and it would be just as effective and just as real. What I cannot understand is how men who pretend to bc businessmen, as many of our political opponents pretend to be, prefer to borrow at a rate of interest which is about twice as high as an alternative that would be available to them. I cannot understand why many of our political opponents who pretend to be businessmen prefer to borrow overseas, incurring a debt, than to borrow in Australia incurring a debt. I might say also, in passing, that I cannot understand how the Treasury advisers, who are supposed to be just as astute in applying their minds to this, are able and prepared to give this kind of advice to the Government.

There is another thing in relation to our overseas balance: It is held not in Australian banks but in British banks. What we earn, like what Malaysia earns - this is the important significance of Malaysia to Great Britain at the present time - is not held by us as a nation but is held in the British banking system and it makes money available for Britain to use for her purposes. The amount we have earned - our surplus of £854 million - and Malaysia’s surplus, which is more than £500 million every year, is made available by the British banking system to Britain to purchase goods overseas or to pay for British troops overseas. It is able to draw upon this money. The charge that Mr. Harold Wilson carefully addressed to the British Tories when he came to the Despatch Box to make his first speech as Prime Minister of Great Britain was that they had deceived the people of Britain and that what they had been doing was drawing upon the money earned by other parts of the world to suit their own purposes, that they had not only drawn upon all the money that Britain had earned but had drawn upon a great deal of money that Australia had earned and Malaysia and other countries had earned. He said, in effect: “You have been living not upon our own earnings but upon the earnings of the Commonwealth countries.”

The situation has now been reached in which the volume of sterling reserves overseas available for Australian use is not what most people think it is. The British banking system and the British Treasury have found it necessary to impose pretty strict controls on the spending of sterling overseas. Those controls apply as much to Australia as they apply to England and, although our own Government in Australia is not prepared to apply these more economic measures and these controls in the Australian economy, we are as much subject to the controls that have been applied in Whitehall as we would be if they were applied here in Australia. We are in exactly the same boat as the British economy. We have not unlimited reserves upon which we can draw continuously, which makes it all the more necessary for any honorable member who is concerned with the economic stability of Australia to be concerned with this question and to say that if there is an alternative way for us to obtain £13 million for the purchase of aircraft without borrowing overseas then it is just as important for us to take these steps as it would be for the British Government to take these steps.

We have no greater capacity to draw upon overseas reserves than the British Government has. Our position is exactly the same. If Mr. Harold Wilson finds it necessary to apply these really realistic and commonsense provisions to the operations of the British economy, then likewise the Australian Government must find it necessary to do so. Australia’s position, however’ superficially better than, or different from, that of the United Kingdom, is basically the same; so is it not necessary for Australia to think seriously about the question of overseas borrowing? This subject has been referred to by the Minister for Trade and Industry (Mr. McEwen) who, above all things, is a man of commonsense, a man of reality, a man who, I feel, over the last 10 or 15 years has shown more commonsense and economic wisdom than all the rest of the Government Ministers and their advisers put together. Is it not important to realise that for five or six years the Minister for Trade and Industry has been saying exactly the same things as those of us on this side of the House who have been concerned with foreign borrowing have been saying? Is it not of some significance that the Prime Minister (Sir Robert Menzies), who is more an expert in propaganda than in economics, has at last begun to say that we must have a second look at this? It is of great significance. On the whole, I have a great deal of personal respect for the Treasurer, but so far, he has not shown himself to be a man of realism and commonsense in a good deal of his economic thinking. I am disappointed in the Treasury, of course.

The Government’s attitude to foreign investment is the same for all sorts of investment. I agree that foreign borrowing has its place in the economy and has to be resorted to. But, whatever be one’s attitude to foreign borrowing as a whole, all forms of foreign investment are not sufficiently alike for us to adopt the same attitude to them all. So far, the Government’s attitude to all forms has been the same. As long as borrowing is foreign borrowing, it is good in the eyes of the Government. The Treasurer appears to think that everything is all right as long as he can periodically take a trip to Washington or Whitehall and mix with the Rockefellers in Washington and the men in the City of London who play the role of financiers. These men in London are faceless. Indeed, the term “ faceless men “ originated there. It was not first applied to those who make up the Federal Conference of the Australian Labour Party. This expression was first used in a document issued by the British Labour Party to show that the financiers in the City of London were faceless men. I cannot think of the name of one of them. On the other hand, many of us can think of names of Rockefeller and others in the United States of America.

Mr Uren:

– And Morgan.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– And Morgan. All forms of foreign borrowing are not the same. Foreign borrowing that enables us to bring to Australia machinery or the real substance of production - something that we would not otherwise have had here - may be regarded more favorably than other forms of foreign investment, and there is a good case for so treating it. But there is no reason to encourage foreign investment that is used merely, as the Minister for Trade and Industry has said, to purchase some part of an existing Australian industry without adding anything to our economy. There is no reason to encourage portfolio foreign investment that merely buys shares for speculative purposes today and sells them tomorrow, boosting creeping inflation at the same time, as Mr. Chifley recognised many years . ago. This Government has positively refused to discourage or disallow this kind of investment. This is the context in which we must consider the loan that is the subject of the Bill.

This loan is unnecessary. Borrowing overseas for the purchase of aircraft is not only unnecessary but also unwise, uneconomical and more costly than the alternatives. So I would think that any thoughtful citizen and member of this Parliament, if he applied his mind for a few moments to the economic issues involved in a bill of this sort, would completely support the amendment proposed by the honorable member foi- Melbourne Ports. It is inconceivable to me that we can continue in the way we are going, lt is inconceivable to me that those whom we would expect to have the sound commonsense that training in business or economics would give them continually come down in favour of treating all forms of foreign investment as good. Those people seem to be psychologically attracted towards borrowing overseas, as if it gave them a feeling that they thereby improved their standing or became belter and stronger and able more freely to mix with better people than those with whom they would otherwise have been mixing.

Mr Pollard:

– They behave as if they are shickered

Dr J F Cairns:
YARRA, VICTORIA · ALP

– I would say, rather, that they appear to be intoxicated with the exuberance of their enthusiasm for foreign borrowing and for the opportunity of visiting Whitehall and Washington to mix with the people who have command over millions. This is a very attractive prospect, but I do not think it is a sound enough basis for decisions in this National Parliament. Therefore, I support to the full the amendment proposed on behalf of the Opposition.

We on this side of the chamber recognise the need to obtain aircraft for our airlines. But we suggest that they should be obtained in this country. We regret that the Government has neglected to encourage the development of the aircraft industry. Were it properly developed, aircraft could be obtained here without the borrowing of funds overseas. We acknowledge the need to borrow in existing circumstances. Where we differ from the Government is that we would borrow, not from overseas banks and financiers, but from the Reserve Bank of Australia. In conclusion, I emphasise that the real question at issue here is not a pro posal to draw on some vast volume of overseas funds as if we were drawing on a store of gold. What is involved, in any case, is borrowing. We have to borrow to get access to those funds. The question is: Do we borrow in Australia from the Reserve Bank or do we borrow from overseas banks and financiers? The Australian Labour Party comes down on the side of borrowing from the Reserve Bank.

Mr BURY:
Minister for Housing · Wentworth · LP

– Mr. Deputy Speaker, the honorable member for Yarra (Dr. J. F. Cairns) has just wrapped up in his general strictures on borrowing abroad some very curious propositions. I am amazed at what he said. As I understood him, he suggested that our sterling reserves in London somehow were not available. These reserves are being turned over all the time. Money is going into them and coming out in a virtually continuous stream. In a commonsense business operation, we invest in London funds that we ourselves are not necessarily using all the time. Anyone who listened to the honorable member, however, would think that these funds were just handed over to the British, who lived on them. The truth, of course, is that these funds earn us a very good rate of interest. This has been so particularly in recent times. All this adds to our overseas earnings.

Mr Uren:

– What is the rate of interest?

Mr DEPUTY SPEAKER (Hon W C Haworth:
ISAACS, VICTORIA

– Order! The honorable member is out of his own seat and should cease interjecting.

Mr BURY:

– This is the reverse of overseas investment in Australia, and, on the whole, we do very nicely out of it.

Mr Uren:

– Tell us the rate of interest.

Mr DEPUTY SPEAKER:

– Order! Interjections are out of order.

Mr BURY:

– Saying that our sterling balances in London are not available to us is tantamount to saying that the British would repudiate their obligations and that these sterling balances would be frozen.

Mr Peters:

– That is not so at all.

Mr BURY:

– Unless I misheard the honorable member for Yarra, he said that these sterling balances were not available for our use. In essence, this amounts to saying that the British Government would default in its obligations relating to sterling funds. I find this proposition almost fantastic, Sir.

I turn now to the question of whether we should borrow abroad. Members of the Australian Labour Party say that they would borrow from our own banking system and, presumably, run down our overseas funds for the purpose. At present, by a combination of good husbandry and good fortune, our overseas reserves are high. But surely we know by now from hard experience that our overseas balances are subject to extremely large and rapid fluctuations. With a quick change in the terms of trade, the major failure of a crop or a slump in wool and wheat prices, our now healthy overseas reserves could become quite small very soon. Foreign borrowing cushions these fluctuations and enables us to maintain a higher level of imports for both consumption and investment. Consumption, indirectly, makes other investment possible and keeps the flow of imports at a higher level than would otherwise be possible. Nothing is wholly good or wholly evil. When we encourage foreign investment in Australia, to some extent, as everyone must, we have to take the rough with the smooth. We have to look at the broad aspect of these things. The broad picture is that, without this large volume of foreign investment, Australia would not have anything like the resources it now has at its disposal and development could proceed only at a slower rate. True, it would be very nice to be able to set up a body of officials who would, after close scrutiny say: “ We like this dollar; we do not like that dollar. We like this £1; we do not like the other.” Action within limits in this field is, of course, quite reasonable.

On the whole, a favorable climate for foreign investment will attract foreign investment. One of the reasons why Australia has been able to borrow on the American market at a better rate than can any other country except Canada and receive such favorable treatment is that foreign investment here is not subject to bureaucratic controls. In conditions of freedom, these investments flourish. The imposition of a lot of controls would frighten away the foreign investor who is essentially a timid character. It is all very well to look at these matters from our viewpoint only, because we regard our economy as safe and sure. But the investor, who has alternative avenues of investment in his own back yard, looks very carefully at all the factors. Over a period of years, the Government has succeeded in inducing a climate that is highly favorable to foreign investment. This adds enormously to our resources. But this does not mean that in particular avenues such as natural resources the process does not need watching closely. The broad factor is that foreign investments add enormously to our resources. This specific borrowing for the purchase of aircraft is, of course, borrowing for an activity that will bring big currency earnings to Australia. I agree with one comment of the honorable member for Yarra. This has to be looked at more widely, because the total picture is that borrowing for this purpose makes available for other purposes the funds that could have been used to make the purchase.

I would suggest that this is a sound process to continue. Anyone who suggests, as an Opposition member did, that borrowing overseas is very easy has not had the experience of trying to do so. This measure is sound. It will make extra aircraft available and these will earn foreign currency. In addition, borrowing in this way will keep our overseas reserves at a higher level than they would otherwise be.

Mr HAROLD HOLT:
HigginsTreasurer · LP

– I am indebted to my colleague, the Minister for Housing (Mr. Bury), for having put so succinctly the views that the Government holds on this general question of overseas investment. Although I have not been physically present at all periods of the discussion, I have been present in the sense that what has been said here has reached me at my desk through the channel of communication I have with the chamber. I must say that I was titillated by the concluding remarks of the honorable member for Yarra (Dr. J. F. Cairns), who suggested that those of us who negotiate these overseas loans become intoxicated with the exuberance of foreign borrowing, I think that was the way in which he expressed it. But in the words of the old song, “I get no kick from champagne”. On the contrary, I share with my colleague, the Minister for Housing, a dissent from this description of the feeling that accompanies the rather arduous process of raising the cash. Of course, in practice, this task falls very largely on the Secretary to the Treasury. Anyone who has studied the personality of Sir Roland Wilson at all closely would hardly visualise him becoming too exuberant about a process of this sort. However, let us pass on from that as a little example of exuberance and colourful imagery on the part of the honorable member for Yarra.

In substance, this is a small Bill. It does not break any new ground, it is in line with the process we have gone through in a succession of borrowings for the purchase of aircraft. Quite clearly, this relatively minor Bill on a matter that was canvassed in the Parliament previously has been made the vehicle for the expression by the Opposition of its general attitude to overseas investment. I would not like the public to have an inaccurate residue of impression in their minds as to the attitude of the Australian Labour Party on this topic because the concentration of criticism that has been offered today might suggest that Labour sees very little virtue in overseas investment. I have before me the authority of the official “Speakers’ Notes “ used by the Australian Labour Party at the Federal election of 1961. It deals in some detail with this matter of overseas investment. At page 17, this interesting document lists the advantages in this way -

The Labour Party does not deny the advantages of foreign investment. They can be summarised: -

An immediate gain in foreign currency.

The introduction of new industrial tech niques. (hi) The introduction of new managerial techniques.

The introduction of new products.

The introduction of new marketing tech niques.

Access to overseas research.

Some import saving.

That states quite accurately and I think very reasonably some of the principal advantages we all see in this process of overseas investment. The document then goes on to look at the disadvantages.

Mr Uren:

– The Minister should read them out, too.

Mr HAROLD HOLT:

– I am just about to do so; do not be impatient. The first disadvantage recited is that the control of key Australian industries may fall out of the hands of Australian citizens. That, of course, is one of the possibilities that we must take into account in our overall policy on this matter. But does anybody really believe, even at this point of time when overseas investment has been going on in this country for a quite considerable period, that Australia has been penetrated to a degree that we find embarrassing, awkward or in some way disadvantageous to our national interest? I have made the statement before, and I repeat it, that we are fortunate that most of the overseas investment that reaches us comes from countries with which we have very close relations, not only in trade but also in our defence. The bulk of total investment has come to Australia in the postwar years from the United Kingdom. Of the balance, the bulk of the investment has come from the United States of America. These two countries between them have been responsible for a very large part of what has been a considerable investment, averaging something over £100 million a year since 1947. But here are two countries with which we have a good deal in common, not only speaking a common language and having a good deal of mutual trade, but also sharing the sort of international objectives and indeed the domestic and community ideals that we cherish in Australia. Not every country awaiting development which looks to overseas investment for that development can point to such a favorable circumstance. The countries of South America and of Africa will not be, and are not, in that favorable position. I do not want to occupy the time of the House unnecessarily, but it is an important consideration to bear in mind that the great bulk of the investment which comes into Australia is from sources which are friendly and helpful to us and well disposed towards us. That has been reflected, I believe, in our relationships. In my experience, American executives who come out here usually tend to become good ambassadors for Australia while here and after they return to their own country. I invite any member from the Opposition - and I would hold the invitation open to anybody - to point to any instance over the years in which the Commonwealth Government has had to come to issue with representatives of overseas organisations because the policies they were following were regarded as inimical in some way to Australia. We are all aware that some principal concerns which have established subsidiaries here and elsewhere, do at times, place a restriction upon the export capacity of a particular organisation. We have done what we can, through my colleague the Minister for Trade and Industry (Mr. McEwen), to have these restraints removed. However, the reasons for the restraints can be well understood, and if we were in a similar situation we might act similarly. But this is a relatively minor matter in the total picture. It is one which we hope to improve. It must be viewed against the enormous advantages which have enabled us to grow to an unprecedented degree and to absorb to an extent unparalleled in our national history the additional population of the postwar years. These are some of the dividends Australia has received from overseas investment, which has served us richly in the period in which it has been operating.

I just add these further comments which I think are of rather more immediate concern to us. Reference has been made to the strength of our overseas reserves at the present time. The argument drawn from that is that a borrowing of this minor dimension would appear to be quite unnecessary. The point I make about the overseas reserves is that experience has demonstrated to us - and it has been an uncomfortable experience on several occasions - that the situation in respect of reserves can change quite speedily. Bad seasons, a drop in overseas prices and some falling off in production or markets are factors which can quickly affect it. A high level of importing because of internal economic pressures also can have a direct effect. In Australia at present we are importing at a high rate. This is proving very useful to us to offset some of the pressures that an over full employment situation is creating for us, but the level is undoubtedly high and we need a high level of exporting in order to cover the bill. Fortunately, over the last two years we have enjoyed a record value for exports, and we hope that will continue, but it would be foolish to ignore the possibility that there may be reverses of one kind or another ahead of us.

The other factor which has come so recently into the picture is the extent to which we are enlarging our defence expen diture, much of it on equipment which will have to be supplied from overseas and paid for overseas. I cannot give a precise figure at the moment of the total cost, but it will be a very large total; it will run into not millions of pounds but perhaps hundreds of millions of pounds. That is a factor that we have to bear in mind. These are expenditures over the next three financial years and they will have a direct bearing upon the holding in our overseas reserves.

Mr Duthie:

– How is the expenditure to be split between the United Kingdom and the United States of America?

Mr HAROLD HOLT:

– Docs the honorable member mean in relation to aircraft and equipment?

Mr Duthie:

– Yes.

Mr HAROLD HOLT:

– I cannot answer that offhand. It is a matter which one of my Service colleagues could answer. Of the long list of items some would come from one country and some from the other, but as to the quantum of reserves it does not matter whether the items are from the United Kingdom or from the United States of America; the currencies of those two countries are freely interchangeable so far as we are concerned and we have to pay for the goods whether in dollars or in sterling. I hope that at some not distant date this Parliament will have an opportunity for a full dress debate on this question of overseas investment. It is a subject which the Vernon Committee has been examining.

The honorable member for Melbourne Ports (Mr. Crean) or one of the cither speakers opposite thought that the Treasury, which has been devoting much attention lately to publications of an informative nature, might turn its attention to this topic. Of course it has, for Cabinet purposes. I have brought before Cabinet material which has been the produce of work in the Treasury. What emerges is not merely the product of Treasury thinking, or of my own thinking assisted by the Treasury’s efforts, but is the product of the thinking inside Cabinet which has led to a decision, such as that concerning these particular items.

Question put -

That the words proposed to be omitted (Mr. Crcan’s amendment) stand part of the question.

The House divided. (Mr. Deputy Speaker - Hon. W. C. Haworth.)

AYES: 54

NOES: 38

Majority .. ..16

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Original question resolved in the affirmative.

Bill read a second time.

Message from Governor-General recommending appropriation announced.

Third Reading

Leave granted for third reading to be moved forthwith.

Motion (by Mr. Harold Holt) proposed -

That the Bill be now read a third time.

Mr POLLARD:
Lalor

.-I have enjoyed the debate this afternoon on this financial measure, but everything about the debate seems to revolve around the question of whether the Government, in what it would be pleased to call a reasonably affluent climate, can afford to pay cash from the resources of the Australian people for these aircraft which are to be imported from the United States of America. The aircraft will cost £13.4 million. We have been told that we have an overseas credit balance of about £800 million, which I realise is not quite what it might seem. But surely, in all the circumstances, we can afford to pay cash for these aircraft. We should begin to pay cash for what are, after all, having regard to our overall annual income, relatively small amounts.

The Opposition has raised this matter in previous debates on bills seeking to borrow money with which to purchase aircraft for Trans-Australia Airlines, but always with the same result. This afternoon the Minister for Housing (Mr. Bury) referred to our overseas balances as a cushion. A cushion is a very comfortable and useful article. But there is a vast significance in this respect in the size of the cushion. If you had a cushion 4 feet high on this chair alongside which I stand it would be an uncomfortably full cushion. On the other hand, a cushion about 2 inches high would be very comfortable. What we need in the financial sense is a comfortable cushion in relation to our overseas balances. I suggest it is always desirable to have substantial reserves; but having regard to the present state of our overseas reserves, £13.4 million is a mere fraction. We should adopt a policy of paying our debts as we go.

Not many years ago the Government sought a loan overseas of £30 million for the purpose of building a railway from

Townsville to Mount Isa. The loan was sought from either the International Monetary Fund or the International Bank.

Mr Harold Holt:

– The International Bank.

Mr POLLARD:

– All right, the International Bank. Ninety per cent, of the amount of that loan was expended on the employment of Australian labour and materials.

Mr Uren:

– More like 99 per cent.

Mr POLLARD:

– About 90 per cent, will do me. I do not want to make the case against the Government any worse than it is. I will accept the figure of 90 per cent. The balance was probably expended on imported plant. The Government approached the International Bank for a loan of about £30 million, but the Government was promptly sent packing. The end result was that the finance to build the railway from Townsville to Mount Isa was found somehow from our own resources. Is that not correct? That had to be done. The International Bank refused to make such a loan available because of its responsibility to the countries which make up its membership.

Mr Harold Holt:

– That had nothing to do with it.

Mr POLLARD:

– I know I am touching the Treasurer (Mr. Harold Holt) on the raw. What is the position in respect of the loan which is the subject of this Bill? This loan is to be raised from the Chase Manhattan Bank, which is a private enterprise outfit that has no responsibility and a damned sight less morals. If it can keep the Australian Government on the hook and suck money out of the Australian taxpayers at the behest of, and with the cooperation of the present Government, it will readily do so because it believes that is good business. It is good business from the bank’s point of view, but it is mighty bad business for the Australian people. It is suggested that the finding of this £13 million from our own resources would make things a little difficult in Australia. Let us look at some of the difficulties. Before very long, the members of this Parliament will be looking around the emporiums in Sydney and Melbourne for their Christmas cards.

Mr DEPUTY SPEAKER (Hon W C Haworth:

– Order! The honorable member should remember that when speaking to the third reading of a bill he must confine his remarks to the contents of the measure. He must not refer to other matters.

Mr POLLARD:

– Very good. But I think I should show why I think it should not be necessary to borrow this money. I am saying that if action were taken to prevent the spending of so much of our foreign credit by making dollars available to our importing houses to enable them to import Christmas cards - and this is only a minor example-

Mr DEPUTY SPEAKER:

– Order! I have already told the honorable member that he must not refer to matters not related to the Bill.

Mr POLLARD:

– I am getting back to the Bill. If the things that are running in my mind-

Mr. DEPUTY SPEAKER__ Order! I wish they were not.

Mr POLLARD:

– If the things that I have in my mind were done, the people of this country would not have to recoup the present terrific drain by paying higher taxes in the near future. The Government always has an excuse. Today the Treasurer holds out the excuse that we shall be required to find more foreign currency to meet the increase in our defence spending. No matter what the occasion may be, if the Government wants to kow-tow to people overseas by plunging Australia into near insolvency eventually, it will find an excuse. If the excuse were not increased defence expenditure, some other reason would be offered for obtaining an increased accretion of international currency to fatten the Government’s friends who are engaged in the lucrative business of importing unnecessary luxuries into Australia.

Mr HAROLD HOLT:
HigginsTreasurer · LP

– Mr. Deputy Speaker-

Mr Beaton:

– Holt clean bowled by Pollard.

Mr HAROLD HOLT:

– We shall see before we are through. The honorable member for Lalor (Mr. Pollard) has given us another demonstration that governments cannot win. I have heard honorable members opposite attacking this Government, saying that we are making this generation of Australians carry burdens which posterity should be asked to share.

Mr Pollard:

- Mr. Deputy Speaker, I rise to order.

Mr HAROLD HOLT:

– I am not saying that the honorable member for Lalor has said that.

Mr Pollard:

– My point of order is that the Treasurer is straying from the issue before the House.

Mr DEPUTY SPEAKER:

– Order!

There is no substance in the point raised by the honorable member.

Mr HAROLD HOLT:

– What I am say ing is directly relevant because what the honorable member for Lalor has just been putting to us is that instead of borrowing for this purpose - putting aside for the moment the question whether it is borrowing inside Australia or outside Australia - we should be carrying this expenditure on the Budget.

Mr Pollard:

– That does not matter, cither.

Mr HAROLD HOLT:

– The honorable member says it does not matter. Let us extend that argument over the whole field of our borrowings. We cannot isolate just this £13 million, for that is only part of the total expenditure of the Government in a particular period of time. The Government is raising as much money as it can inside Australia. In a series of loans throughout the year we take every £1 of loan money that is offering to us. In most years that is barely sufficient to cover the housing and works programmes of the States as agreed upon at Loan Council meetings. In some years what we raise falls short of that total and we have to find the difference out of Commonwealth revenue. In one or two years there has been a surplus of loan funds over State requirements, and that has gone to augment Commonwealth resources.

In effect, what we are doing here is raising by way of loan, money which otherwise would have to be included in the Budget. I merely repeat the point that what we are doing is trying, within the resources available to us, to spread the load as evenly as we can to ensure that that portion of the burden which should fall upon the present generation is borne by it, and that portion which can be carried not only by ourselves but by those who will enjoy the benefit of this expenditure in the years ahead, is shared by them. That is why loans are raised.

There are two other points which I might have mentioned a little earlier. One is that much of what is invested here from overseas is building our export income and so helping us to expand our overseas reserves. This is particularly true in the mineral field, and even in the field of motor car manufacturing. For instance, General MotorsHolden’s Pty. Ltd., with its 60 export points, is today realising in overseas sales almost the equivalent of what it remits outside Australia in the form of profits. The dividend for Australia from the profits earned by this organisation goes to swell the expenditures that governments are able to undertake for the benefit of the community as a whole.

As a final illustration, I point out that the overseas investment that is today going into oil research - expenditure which Australia would not readily shoulder because of its speculative nature - will, we hope, some day have the effect of reducing very considerably the call we would otherwise have to make on overseas funds for our oil requirements. Those are just a few examples to round off the story.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– It is a sad story.

Mr HAROLD HOLT:

– It is not a sad story for Australia because Australia can point to an absorption of population and a development of industry unparalleled in our history. As I said earlier, we are all the stronger, all the more prosperous and all the more comfortably placed because this has been happening in our time.

Question resolved in the affirmative.

Bill read a third time.

page 2905

BILLS RETURNED FROM THE SENATE

The following Bills were returned from the Senate without amendment -

Commonwealth Employees’ Compensation Bill 1964.

Seamen’s Compensation Bill 1964.

page 2906

TARIFF PROPOSALS 1964

Customs Tariff Proposals (No. 27); Customs Tariff Proposals (No. 28); Customs Tariff Proposals (No. 29)

Mr BURY:
Minister for Housing · Wentworth · LP

.- I move- [Customs Tariff Proposals (No. 27).]

  1. That the Schedule to the Customs Tariff 1933-1964, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals and that, on and after the thirteenth day of November, One thousand nine hundred and sixty-four, Duties of Customs be collected accordingly.
  2. That in these Proposals, “ Customs Tariff Proposals “ mean the Customs Tariff Proposals introduced into the House of Representatives on the following dates: - 11th August, 1964; 16th September, 1964; 1st October, 1964; 29th October, 1964; and 9th November, 1964.

[Customs Tariff Proposals (No. 28).]

  1. That the Schedule to the Customs Tariff 1933-1964, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals and that, on and after the thirteenth day of November, One thousand nine hundred and sixty-four, Duties of Customs be collected accordingly.
  2. That in these Proposals, “ Customs Tariff Proposals “ mean the Customs Tariff Proposals introduced into the House of Representatives on the following dates: - 11th August, 1964; 16th September, 1964; 1st October, 1964; 29th October, 1964; and 9th November, 1964.

[Customs Tariff Proposals (No. 29).]

  1. That the Schedule to the Customs Tariff 1933-1964, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals and that, on and after the thirteenth day of November, One thousand nine hundred and sixty-four, Duties of Customs be collected accordingly.
  2. That in these Proposals, “ Customs Tariff Proposals “ mean the Customs Tariff Proposals introduced into the House of Representatives on the following dates: - 11th August, 1964; 16th September, 1964; 1st October, 1964; 29th October, 1964; and 9th November. 1964..

Customs Tariff Proposals Nos. 27, 28 and 29 which I have just tabled relate to proposed amendments of the Customs Tariff 1933-1964 and, in the main, give effect to the Government’s decisions in respect of the following Tariff Board reports -

Butadiene and styrene butadiene synthetic rubber; emery stones, oilstones and whetstones; and processed continuous filament man-made fibre yarns.

At a later stage I shall table the relevant reports. The Tariff Board report on synthetic rubber concerns products made by local manufacturers forming part of the Altona petrochemical complex. Butadiene is a chemical made from petroleum and is the principal raw material used to make styrene-butadiene synthetic rubber. This synthetic rubber, which is the only type produced in Australia, is also known as polybutadiene-styrene and is described under this name in the tariff schedule. No change is proposed in the non-protective duties on butadiene and increased duties of 6d. per lb. are being provided on forms and types of synthetic rubber which compete directly with Australian production of polybutadiene-styrene.

On emery stones, oilstones and whetstones, other than those of the type used directly in the hand, it is proposed to replace the present combined ordinary and primage duties with new protective duties of 10 per cent. British preferential tariff and 22½ per cent. most favoured nation.

In practice, the only change in incidence will be an increase of 5 per cent. ad valorem in the British preferential rate.

On the recommendation of the Tariff Board, it is proposed to remove the present temporary duties from processed nylon and terylene yarns. These are yarns which have been subjected to special twisting, plying or texturising processes such as in the case of stretch nylon yarns. In the opinion of the Tariff Board, the Australian industry has recovered from the difficulties recently experienced and is at present able to cope with import competition without protective duties.

The Proposals also incorporate a change which is not associated with a Tariff Board report. This relates to calcium carbide and follows the completion of international negotiations. Its purpose is to ensure the maintenance of an agreed margin of preference in favour of Canada and does not affect the current protective rates of duty. I commend the proposals to honorable members.

Debate (on motion by Dr. 3. F. Cairns) adjourned.

page 2908

TARIFF BOARD

Reports on Items.

Mr BURY:
Minister for Housing · Wentworth · LP

– I present reports by the Tariff Board on the following subjects -

Butadiene and styrene butadiene synthetic rubber.

Emery stones, oilstones and whetstones.

Honing machines.

Phenol (Dumping and Subsidies Act).

Processed continuous. filament man-made fibre yarns.

Terpolymer of butyl acrylate vinyl acetate and acrylic acid (Dumping and Subsidies Act).

Ordered to be printed. .

page 2908

CUSTOMS TARIFF VALIDATION BILL 1964

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

Second Reading

Mr BURY:
Minister, for Housing · Wentworth · LP

– I move-

That the Bill be now read a second time.

This Bill provides for the validation until 30th June 1965 of the collection of customs duties under the following Tariff Pro posals - Customs Tariff Proposals Nos. 25 and 26 and Customs Tariff (New Zealand Preference) Proposals No. 8 which I tabled on 9th November 1964; and Customs Tariff Proposals Nos. 27 to 29 which I tabled earlier this afternoon. Honorable members will appreciate that time will not permit these proposed tariff changes to be debated before the close of the sitting. However, an opportunity to debate them will be made available to honorable members early in the new year. I commend the Bill to honorable members.

Debate (on motion by Dr. 3. F. Cairns) adjourned.

page 2908

CUSTOMS TARIFF BILL (No. 4) 1964. CUSTOMS TARIFF (NEW ZEALAND PREFERENCE) BILL (No. 4) 1964. EXCISE TARIFF BILL 1964

Second Readings

Debate resumed from11th November (vide page 2860), on motion by Mr. Bury -

That the Bills be now read a second time.

Mr KELLY:
Wakefield

.- It is unfortunate in a way that the Tariff Proposals and the Customs Tariff Validation Bill that have just been presented by the Minister for Housing (Mr. Bury) should come before the House so soon after our discussion last night of the Bills which are now before us and which we will now proceed to discuss again. The procedure must be completely confusing to anybody who does not follow this rather morbid subject with a great deal of care. I must frankly admit that I am just beginning to pick up the threads of the new procedures that we adopted in this Parliament a year or so ago. However, 1 appreciate that the new procedures allow us to do something which I think we should continue to do. As I see the position, they give us an opportunity to discuss at the second reading stage the general principles on which our tariff schedules operate, the methods by which the Government forms its decisions and the general principles controlling our tariff system and our fiscal system generally. We can then discuss in Committee the various items that are. dealt with. I shall have something to say about the principles that I suggest we should follow in deciding the general level of the tariff, rather than the tariff to be imposed on a particular item.

I am sorry that the honorable member for Yarra (Dr. J. F. Cairns), who led for the Opposition, and who discussed various items, did not take the opportunity that was afforded him to discuss general principles. I know that he would be quite capable of discussing general principles, and in fact he touched on them towards the end of his speech. I shall endeavour to discuss the general principles that guide the Government in bringing in a Bill of this kind.

We have to admit immediately that on this subject the platform of the three parties, the Labour Party, the Country Party and the Liberal Party, show striking similarities. The three parties agree, although they use different forms of words, that the industries that are economic and efficient should be protected. There is no argument about what should be the policy of the Government, or, indeed, the Parliament, but there is a good dca) of argument, not about the policy itself but about the carrying out of the policy.

Some honorable members know that I have taken rather a morbid interest in the way in which the system works, and I shall again evince such an interest during this speech. The responsibility for advising the Government on these matters rests on either the Tariff Board or the Special Advisory Authority, but the final decision is ours. The final responsibility is that of the Government, the Minister who initiates the action and the Parliament that confirms it. Because we have this responsibility, after receiving reports and studying them, it is important that we as a Parliament should examine continually the principles on which the system operates. I have to admit that it is not easy to arrive at these decisions; it is not as easy as I used to think it was. What I have learned to realise as I have been here longer is that sometimes wc have to take unpopular action. We have to stand up and be counted about certain things. We have to take action that does not please particular people or groups of people. My concern is to show that if this system is to work well, every now and again - in fact continuously - there is a need for courage to resist the electoral pressures that sometimes mount up against us.

To illustrate this point I am going to use a particular industry as an example of where and why courage is sometimes needed to resist the temptation to make oneself electorally popular. I have chosen the olive oil industry and I do so for several reasons. First, because the Tariff Board or the Special Advisory Authority in September published a report on olive oil. The report did not lead to a change of duties but it was one of the group of Tariff Board reports brought in at that time. Secondly, I chose olive oil because it is a primary industry and I have always been aware that uneconomic primary industries, if unwisely protected, are more disadvantageous - even more dangerous - than an uneconomic secondary industry. We should not have any illusions about there being a special place in heaven for primary industry - particularly the uneconomic primary industries. The third reason I choose olive oil is that I can speak about this industry with some knowledge. I have to admit that I myself have grown a certain amount of olives. I planted olive trees in. order to cash in on what I thought was an opportunity to fill a market. It has now become obvious that Australian producers can supply the market only with olive oil produced at tremendous cost. There is only one reason for this: It is not that we cannot grow olives well but that we are unable to pick them cheaply whereas countries overseas can do so. They are the reasons why I have chosen the olive oil industry as one in which it is necessary sometimes to take unpopular action.

Let us look briefly at the history of the industry. A Tariff Board report was prepared in 1960 and it recommended a duty of 2s. a gallon and a bounty of ls. 6d. a gallon. The Government did not follow this up for reasons which I could never understand but it imposed a duty of 3s. 6d. a gallon on imported oil. In May 1962 the Special Advisory Authority made another report on the industry and left the duty of 3s. 6d. but allowed the importation of four gallons of oil duty free for every gallon of local oil used in Australia. Then the matter went back to the Tariff Board and again it recommended abandoning the Special Advisory Authority’s formula and recommended a duty of 2s. a gallon and a bounty of 2s. a gallon. The Government would not accept this recommendation again for reasons I just cannot follow, but ordered a duty of 4s. a gallon. This is the way things were until September 1964 when this current report was made with the group that we are now discussing. It altered the position again. It kept the 4s. a gallon duty - and that is why it does not appear in the schedule - but the Special Advisory Authority recommended the importation of three gallons of oil duty free for every gallon of Australian oil used. The matter is now back again with the Tariff Board.

This is a set of circumstances about which I have often complained. Why should I take this trouble to go over this kind of rather uninteresting arithmetic? What does it all mean? I have prepared a series of calculations, a copy of which I have given to the Opposition, which set out what the arithmetic - dull and uninteresting as it may be - really means. With the concurrence of honorable members I incorporate the document in “ Hansard “.

page 2910

QUESTION

OLIVE OIL FIGURES

These are based on figures taken from the report on Olive Oil by the Special Advisory Authority in September 1964. Local production is assumed to be 40,000 gallons and imports 1,090,000 gallons.

In 1962 the Tariff Board recommended an M.F.N, duty of 2s. and a bounty of 2s. a gallon. Using the 1963-64 figures, the cost of the industry would have been as follows - 40,000 gallons of locally produced oil would have increased in price by 2s. a gallon (duty) - £4,000. 40,000 gallons on 2s. a gallon bounty- £4,000.

Imports would be 1,090,000 gallons. These would increase in price by 2s. a gallon, so the consumer would pay an extra £109,000, but this would be paid into Customs Revenue and so would balance out. The net result is £8,000 aid to the industry.

The Government did not accept the recommendation but instead imposed a 4s. a gallon duty. The result to the growers was the same, they still would receive £8,000, with £218,000 extra being paid by the consumer (and so reducing the demand) and the same £218,000 going into Customs Revenue.

Then in 1964 the Special Advisory Authority recommends that the duty remain at 4s. but that three gallons of Olive Oil could be imported duty free for every gallon of Australian Olive Oil used.

The balance sheet would then read as follows - The 40,000 gallons of locally produced oil would still cost the consumer 4s. a gallon extra so producers would still receive £8,000 as before. But he would be able to import three times 40,000, i.e. 120,000 gallons, which would pay no duty but would increase in price as if it had (because the price would be set by the duty paid cost of the balance of the imports). So the consumer would pay an extra 120,000 by 4s., or £24,000 extra which the producer would receive. This, with the earlier £8,000 would make £32,000 extra received by the olive grower, or four times as much as the Tariff Board recommended.

In addition, 930,000 gallons would still come in and pay duty of 4s. so the consumer of olive oil would pay an extra £186,000 and Customs Revenue would benefit by the same amount.

The 1962-63 figures on olive production show 2,577 acres of olive trees in bearing. The £32,000 subsidy works out at about £12 8s. per acre annually.

Summarising the results, if the Tariff Board report had been followed and if production figures for 1963-64 were used the producers of olive oil would have received a subsidy of £8,000 a year. They would have received the same amount of subsidy if the recommendation for a duty of 4s. a gallon had been adopted. The Government adopted that recommendation but as a result of the report of the Special Advisory Authority - the one which I have been discussing - the subsidy was increased from £8,000 to £32,000 a year. That works out at an annual subsidy of £12 8s. for every acre of bearing olives as at June 1963.

There are a lot of people - generous minded people - who will say that it is fair to pay a subsidy of £12 8s. an acre. I am not criticising their attitude to life. I am criticising their attitude to the economic standards which should be used to develop this country. Surely there are other uses to which we could put this land which would be more profitable for the grower and more economic for the country than to grow olives which we are now subsidising at the rate of £12 8s. an acre. Perhaps this price would be worth paying if there were any hope that in the future we would be able to get off the ground in this industry and produce olives cheaply. The unfortunate fact, as I know to my sorrow, is that olives are expensive to pick by hand and that this places us at an economic disadvantage with the countries with whom we compete, the chief one of which is Spain. Honorable members are going to say that we should use mechanical pickers. If you shake the trees you run a grave risk of damaging them.

Mr KELLY:

– No. They use children, which is very much cheaper. The point I want to make is that we sell to Spain £5.3 million worth of goods a year and we buy from them goods worth £2.2 million. Honorable members have to realise that if we are not careful there is a danger of affecting our export trade in other ways. There is a danger of doing this. I do not say it is a terribly serious danger. I am not one of those who expect a bilateral balancing of trade between one country and another. But I do say that if this kind of action is taken, particularly as it appears that there is little chance of our having an economic olive oil industry, then we do jeopardise our wool trade and our wheat trade. Our wool and wheat trade are not necessarily at risk although they may be to a certain extent.

It may be true that the Government has an obligation to those people already in the industry. I am not saying that it has not, and I am not saying that we just have to be hard-hearted and that everybody has to be taken out of the industry. But I do say that if I am right in my figures - and I am not always right in them - it is important that, we, as a Parliament, realise that there are occasions when we have to ease the growers or other producers in an industry out of production. It may not be necessary for us to force them out of production, but we may have to ease them out of production. We, as members, of the Parliament, realise that it is easy for us to make ourselves popular by helping everybody; but occasionally, indeed often, we have to stand up and be counted when unpopular action is required.

I know what will happen after I have finished this speech. The honorable member for Mallee (Mr. Turnbull) has been most assiduous in his support of this industry. I have nothing but admiration for the single-mindedness that he exhibits. The honorable member for McMillan (Mr. Buchanan), with great eloquence and determination, has supported the cause of the industry. When I sit down I will be criticised as a person who does not believe in the development of Australia. Perhaps the honorable member for Mallee may not say that but I think honorable members on both sides of the House will agree that when someone stands up and says that sometimes we have to make our judgments a bit more clear-eyed, that presents an opportunity for others to pick on him.

I must admit that some of the remarks that have been made about me have hurt rather more than honorable members thought they would. So I was interested to read a statement made by Adam Smith in “ Wealth of Nations “ almost 200 years ago, which is apropos of the present position. He said -

The Member of Parliament who supports every proposal for strengthening this system-

He was referring particularly to the system of protection - is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more, if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services, can protect him from the most infamous abuse and detraction arising from the insolent outrage of furious and disappointed monopolies.

Those words give me some comfort. I realise that Adam Smith must have been subjected to some of the criticisms to which, no doubt, I will be subjected shortly. However, I continue my plea for a more careful consideration of the principles on which our tariff system works. Some people, including some honorable members in this House, would say that if an industry - for example, the wool industry - gets into trouble we should subsidise it back into profitability. In my opinion, that is fundamentally foolish. We cannot subsidise everybody without having a completely Socialistic state and the inefficiences that go with such a system. Other people would say that we should produce everything here in Australia. I suppose it is true that we could produce almost everything in Australia. Those people might use olive oil as an example. There is a great market for olive oil in Australia, but not much is made here. We can grow olives and we can make olive oil. We could also make all the Boeing aircraft that we want, but no one would be able to afford to ride in them because they would be too dear.

We have to draw the line somewhere. It is a matter of some importance that the final decisions on these matters are ours. We who sit here in this chamber have to make up our minds, with the advice of the Tariff Board, on which industries will be protected. It is not as easy to do that as I used to think is would be.

Mr Holten:

– Why does not the honorable member provide a list of industries which he considers should be protected and those which should not be protected?

Mr KELLY:

– That is the question that I want to consider. Obviously, we cannot protect all industries. I am thinking of the principles that should guide us in deciding which industries we should protect. The first matter that we have to consider - we have to watch this for the sake of the economy - : is the amount of imports. That was discussed in this chamber a little while ago. We also have to watch the amount of exports. What gives us hope for the future is the fact that we may be able to increase our exports and so pay for the imports that an industrial economy demands.

Another point about which we have to be careful is that we do not use the catchcry that high tariffs naturally help development. We have to realise that many industries feel the burden of protection. The exporting industries, in particular, feel the burden of protection because they cannot pass on their cost increases. They are the industries whose development has been hindered to some extent. We have to realise that if we protect everything we will hinder the development of our exporting industries.

Let me give a specific example of that. Everybody is keen on development. There is not one honorable member who does not beat his breast and talk about how important it is that Australia be developed and how the outlying areas of Australia should be developed. Development is a good thing. I have said that before and I go along with it every inch of the way. But what happens if a duty has to be imposed on motor cars, making them more expensive? How much does that kind of action hinder development. We know that utility trucks can be brought into Darwin from Japan with very great advantage under present arrangements, because the freight from Melbourne to Darwin is probably greater than the freight from Japan to Darwin. So, it is obviously of great disadvantage to producers in the Northern Territory to increase the tariff on such trucks. I am not saying that the tariff on such trucks should not be increased; but I am saying that it is important that we do not take action which hinders development. Tt is quite clear that in many instances we do that or tend to do that.

Another argument that we always hear is that only secondary industries oan employ our people. I am afraid that I will have to repeat some figures that I have given to the House time and time again, but this is the only way to get them into people’s memories. I think this will be the fourth time I have cited these figures in this chamber. About 12 per cent, of the Australian work force is employed in primary industries. About 27 or 28 per cent. - the exact figure depends on what is meant by secondary industries - is employed in secondary industries. As in all developing countries, the great majority of the work force is employed in tertiary or service industries.

It is also worth remembering that a greater proportion of the work force is employed in secondary industries in Australia than in the United States of America. Let me give a specific example. In Australia there are 60,000 people making motor cars and 140,000 people servicing them. So we cannot just take the easy way out and say that we have to protect an industry because it provides employment. We have to realise that over the long term the main problem that Australia has faced, is facing and will face is not how to find employment for our people but is how to find people to do the job of development which Australia so badly needs to have done.

I am glad to say that the main change in Australian thinking - I am glad to see that the Labour Party is recognising its responsibilities in this regard and 1 was interested in the remarks made by the honorable member for Melbourne Ports (Mr. Crean) recently - is in our thinking on our responsibilities in international affairs and our relations with other countries. Surely after hearing the defence statement on Tuesday night it has come home to all of us that we have a responsibility to trade with, and aid, in particular those people in Asia who are so close to us. We are all beginning to feel uneasy about the economic isolation, as well as the political isolation, in which we live. I believe that even the Labour Party - I use that term with some respect, ‘because by tradition that party has been the high protectionist party of the Commonwealth - is beginning to feel a little uneasy as to where its policy is leading. Again I use India as an illustration. Everybody urges that it is more important to trade with India than to provide aid, but when we start to bring in textiles that India can produce cheaply people turn away and say. “ That is not for us; other people can deal with them, but not us”.

Another thing about which we must be careful is decentralisation. Many people say that we must produce certain goods in certain areas so that we can achieve decentralisation. I certainly do not intend to criticise people who support the decentralisation of industry, but 1 do want to add one word of warning. We must remember that our general tariff policy inevitably leads to an increasing congregation of people in capital cities. If we really want to tackle the problem of industry going out into healthy country areas we must be careful of the way in which the tariff instrument is used.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– Tariff alone is not enough.

Mr KELLY:

– I agree that other things must be used. I ask honorable members to bear in mind that the inevitable result of a policy of high tariffs is to have large numbers of people congregating in cities. I shall not argue about the merits of living in a city, but we must all recognise quite clearly what we are doing.

I believe that the House needs to be told, and that Australia needs to be told, that we must have a feeling of confidence. We must have pride in our past performance and hope and confidence that in the future we will be able to expand our primary industries very much more, if only we have the opportunity to do so. We must put more money into research and we must carefully watch our cost structure. I have been continually amazed at the avenues that are opening up for our agricultural and pastoral industries through which we can assist our trading position. I do not want to spend too much time on this, but I should like honorable members to realise the hopelessness of the attitude taken by so many people that it is only secondary industry that can sufficiently employ our people or can give us the kind of leadership and sound economic future that I feel we can have if we are prepared to work together.

I have raised these matters knowing that when I have sat down I will probably be criticised for having wasted the time of the House on things which have no immediate application to the Bill, but I have done it in the realisation that we have a responsibility as a House to do something about them. It is not good enough for us to sit here and pass the responsibility on to the Tariff Board. As a House we must make up our mind to take an intelligent interest in these affairs. We should not give way to the abuse that I feel is so often aimed at me because I have battled in the past, as I will battle in the future, for the House to take an intelligent interest in great principles which I believe are much more important than is generally recognised.

Mr BUCHANAN:
McMillan

.- I would not like to disappoint the honorable member for Wakefield (Mr. Kelly) by not saying anything and I should like to contribute a few words on behalf of people in the olive oil industry. The honorable member for Mallee (Mr. Turnbull), in whose electorate many olives are grown, will agree with me that the industry is a pretty valuable addition to the economy of his part of the world. There are one or two points on which I should like to put a different view from that expressed by the honorable member for Wakefield. He made the point, as he said today, for the fourth time, that it is not only secondary industry that provides employment and that secondary industry has not a very important part in providing employment. I remind the honorable member that if you took to a conclusion the argument that he adopts in some of his assessments of the financial value of the things he criticises there would not be people working in secondary industry. We would import motor cars instead of making them. The 60,000 people working in the motor car factories would just not be employed and they would not be able to buy his wool, his wheat and his olives.

It is essential, with Australia’s growing industrial force, that we have people working in industry in Australia and not just import the goods and rely on the tertiary section to distribute them. The figures for the tertiary section cited by the honorable member were grossly inflated because, naturally, they included all those in the professions and everybody else, quite apart from those engaged in distribution. The distribution of motor cars could probably be done by the same number of agents if all cars were imported, but it would make a tremendous difference if there were not the people working in the factories to assemble the cars and put them on the market.

One of the main reasons why I thought I must say something in the debate is that in his final remarks the honorable member said that he hopes we can expand primary industries. He said he was amazed at the avenues opening up for primary industries and that we should seize the opportunities and take advantage of research. On this basis he implied that in this particular sector we would be able to take care of our expanding population. But at the beginning of his remarks he said that the olive oil industry is one of the primary industries that we could well do without. The only basis that I can accept for his saying that is that he cannot grow olives profitably. The honorable member for Henty (Mr. Fox) and the honorable member for Macarthur (Mr. Jeff Bate) have looked at this industry on the spot at the invitation of people in the olive oil industry who were concerned that there was a feeling that it was only a minor industry that was not worth helping. Those in the industry felt that some members of this House should have some knowledge of the industry. The honorable member for Wakefield has had incorporated in “ Hansard “ figures showing the cost of production of olive oil and subsidies paid to the industry. From a quick glance at the figures I found them no more convincing than the figures that he cited when assessing the cost to Australia of any other commodity. Honorable members will recall that he multiplied so much by so much and arrived at a figure, which is such a narrow way of calculating a figure that it does not get one anywhere.

During the war, the olive oil industry was very restricted. The Australian Government did everything it could to encourage the industry to expand. Special permission had to be obtained to buy olive oil at one stage, and for a while it was sold only in 5 oz. bottles. It was in very short supply. A study of olive oil imports shows that, from 100,000 or 200,000 gallons a year, they increased suddenly when import restrictions were lifted. They have now reached 1.5 million gallons a year. This represents a colossal increase. There is a big market for olive oil in Australia, and the industry is one in which Australians ought to be able to participate. When imports increased so greatly, it was said that this was just because people were catching up on the backlag that they had not been allowed to import before. However, the high level of imports has continued.

People who saw opportunities in the growing of olives began to put in groves. Unfortunately, olives, like any fruit-bearing trees, take a long time to come to full bearing, At least 10 years are needed to get anything much in the way of a harvest from olive trees, and possibly 15 years pass before full production is reached. At Robinvale, a big acreage was put under olive trees. Olives have to be pressed near where they are harvested. So a factory was established at Robinvale. All this development was undertaken in conjunction with war service land settlement. Irrigation is available from the Murray River. So there is a link with the Snowy Mountains Hydro-electric Scheme. All these associated factors came into the establishment at Robinvale of a worthwhile Australian industry that has built up its potential from 20,000 or 30,000 gallons a year to a level at which it could supply the annual demand of more than 1.5 million gallons.

The growers have tried the method of beating the olives off the trees with long sticks and gathering them on strips of hessian, but this is rather slow. As the honorable member for Wakefield has said, it is also rather expensive, because we in Australia have to pay high wages for our labour. However, the growers are confident that, given an opportunity, they can develop mechanical pickers that will avoid the breaking of limbs o»- the trees which occurs when the beating method of harvesting is used. But harvesting machines can be developed only if the growers can really get into business. The industry applied to the Tariff Board for a protective duty of about 9s. or 10s. a gallon. This is rather high, and the people who use the 1.5 million gallons of olive oil now imported would have to pay a lot more for the product. I agree with the honorable member for Wakefield, who made the point that the cost would be loaded on to the consumer. We want to avoid this as much as possible. The Tariff Board has the responsibility for looking at the matter, not from the narrow standpoint of whether the cost of protecting the already established industry would be the equivalent of £12 8s. an acre, but from the broader considerations of the future of the industry. The Board considered the degree to which the industry was worth protecting and encouraging.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– What effect has the migration programme had on the industry through the influx of Italians and Greeks?

Mr BUCHANAN:

– It has increased the consumption of olive oil most decidedly. That effect will be with us permanently. The Tariff Board decided to recommend protection partly by bounty and partly by duty. But the Government did not consider that it ought to adopt this method, and it decided to extend protection wholly by duty. The industry found that this method did not work satisfactorily. So it approached the Special Advisory Authority. He came up with a very much better proposal, which I fully support and which I favour, not only for this industry, but also for dozens of others. This proposal envisaged the regulation of imports by a sophisticated method designed to protect the industry without adding to costs. The proposal was that for every gallon of local oil purchased the buyer could import three gallons duty free. This scheme worked like magic. AH the importers placed orders for the Australian product. In effect, they said: “ This suits us. We are very happy to co-operate on this basis.” The producers believed that they were at last firmly in business, and they began to plant more trees, to extend irrigation works and to adopt a system of overhead watering that was more effective than the previous method of ground watering. All this was due to the encouragement given by the thought that the industry had at last turned the corner.

The position of the industry was again referred to the Tariff Board. Like the honorable member for Wakefield, I cannot understand why the Board recommended against the regulation of imports by the method that I have just described and proposed the introduction of a duty. The Government decided to impose duty at the rate of 4s. a gallon. The immediate effect was that the importers lost interest in the Australian product. Unfortunately, at the same time, the price of Spanish olive oil landed in Australia was reduced. Australian production costs ranged from 32s. 6d. to about 36s. a gallon, and the price of imported Spanish oil fell as low as 32s. and 28s. a gallon, and even, at one recent stage, down to about 23s. a gallon. As a conse quence, the orders to which the Australian industry bad confidently been looking forward did not eventuate. So the industry again approached the Special Advisory Authority. Australian trees were producing olives, but the cost of production in Australia, which was higher than the low price of imported Spanish oil, prevented the growers from selling their olives. The processing factories could offer the Australian producers only £30 a ton. This would not pay wages. So the olives were not worth picking and the growers were better off to let them fall from the trees. Rather than see this happen, they appealed to the Special Advisory Authority, who has recommended a return to the method of regulating imports by allowing three gallons of olive oil to be imported duty free for every one gallon of the Australian product bought. As a consequence, the processors have been able to increase their price to the growers to £40 a ton and the producers are again in business.

I am just as confused as is the honorable member for Wakefield about the policy considerations behind the decisions that have been made. I say most emphatically that the Australian olive oil industry has a good market that it is capable of supplying, given a fair opportunity. The trees at present established have not yet reached their maximum production. In the years to come, they will produce even more oil and even more readily satisfy the Australian demand. The Tariff Board considers that the industry is worth helping but just draws back and refuses to recommend that it be protected by the regulation of imports. As I have said, I favour the adoption of this method for many other industries. Imports could be regulated by the imposition of duty on a sliding scale, thereby preventing overseas producers from dropping their price below a figure at which the Australian producer could sell profitably, by the imposition of quantitative restrictions or by allowing a specified quantity to be imported duty free for every gallon of the local product bought. When the Department of Customs and Excise was asked about the practicability of a system of import quotas, it said that there would be no difficulty in the administration of such a system.

I think I should make those few remarks in fairness to the olive oil industry. As the honorable member for Wakefield has taken the attitude today of sticking to principles, I too would like to suggest that it is high time we had a proper inquiry into the basis on which the Tariff Board makes its recommendations and the way it approaches these problems. Honorable members would then have clearly in their minds, as the honorable member for Wakefield suggests, the reasons why certain things are done or not done.

Mr TURNBULL:
Mallee

.- I feel I must say a few words at this stage, even if only to thank the honorable member for Wakefield (Mr. Kelly) for the very nice remarks he made about my advocacy in support of this and other industries. I appreciate his action very much and reciprocate by saying that he doggedly keeps on trying to get something done about tariffs, and I do not think I have seen any other member of this House be so persistent. We may not agree with all that he says, but his tenacity is undoubted and I wish him every success.

I say very kindly to the honorable member for McMillan (Mr. Buchanan) that practically everything he said has been said by me, perhaps in a different way, on a number of occasions in this House. As he pointed out, I had some visitors to the Mallee electorate. He was one and the honorable member for Macarthur (Mr. Jeff Bate) was another. Of course, if they can do anything for the olive oil industry, I would very much appreciate their interest. In Mallee are the Oliveholme Ltd. groves. They are near Robinvale on the Murray River and they are worth seeing. The olive trees grow in profusion and their olive bearing capacity is excellent. But looking at them is not enough; something must be done to help the industry. In Australia we produce 3 per cent, of the olive oil that we consume. I know that not many honorable members take much notice of speeches made by others and I do not think that very many honorable members read “ Hansard “. But someone may recall that during this Budget sessional period I advocated the encouragement of primary industries for which we have an assured market. I instanced the olive oil industry and the cotton industry. I said that we produce only 3 per cent, of olive oil that we consume, and that, therefore, we have a wonderful market in our own country if we can increase production. I said that we produce about 11 per cent, of cotton that we consume and that here again we have the best market of all, the home market, for increased production of cotton.

How can we expand the markets for these products? First, there is a bounty on cotton. It has been established that cotton can be produced successfully and on an economically sound basis in Australia, and the cotton industry is being expanded. But this does not apply to the olive oil industry, which supplies only 3 per cent, of the local market. The Special Advisory Authority, as a temporary measure, has permitted the import of three gallons of olive oil for every gallon of local production that is bought. But it does not take a mathematical genius to calculate that on this basis local production would not go very far and, if three gallons are imported for every one gallon produced, we would not reach the stage of supplying the 25 per cent, of the olive oil consumed in Australia which is the aim of this formula. Therefore, some other way must be found to encourage the olive oil industry in Australia.

The manager at Oliveholme, Mr. Henry, with whom I have been in contact, has said that if we could get over the initial period it takes for the trees to come into production - I would say that is about eight years with production increasing over the next two or three years - we could extend our olive groves and produce much more oil for the Australian market. Of course, this is quite true. But it does not seem that we can assist the industry over this initial period by using the tariff structure only. If we impose a high tariff so that local producers can obtain a reasonable return and sell their product at an economic price, the price of the oil becomes high not merely for the three per cent, of consumers using the Australian product but for the remaining 97 per cent, as well. That is not a sound proposition.

The honorable member for McMillan said that at one time the suggestion was made that a bounty should be paid. I favour this procedure. I believe that we must foster the industries for which we have the home market. A large part of our production of wheat, wool and other products of the soil is exported to countries with lower living standards than we have and the people of these countries, therefore, are not able to pay as much as can be paid in Australia, which has a high price structure. It would be a sound, economic move for us to foster industries that supply products for which we have a ready market here in Australia. I ask the Government to give this proposition some realistic thought and to keep in mind that the healthy future of these industries means much to Australia.

I do not think we should allow the local production of olive oil to remain as low as 3 per cent, of our consumption. I believe that we can increase production only by the payment of a Government bounty. The Government should set out specially to foster the industry. It should encourage the industry to increase its production to such an extent that it will be able to meet most of our requirements. This is an economic proposition. If we were able to supply, say, 80 per cent, of the Australian consumption, or even 100 per cent., the oil could be sold at a price that was satisfactory to the Australian consumers. The details of this proposal would have to be worked out, of course. I believe that the Department of Primary Industry should send its experts into the groves where the olive oil is produced and to the head offices of the people concerned in this great productive effort. The production of olive oil should be intently studied and some scheme devised that will encourage production. In a question I asked today relating to the citrus industry, I said that officers of the Department of Primary Industry with special knowledge of citrus trees should go to the citrus areas and discuss the problems of the industry with the growers, because at the moment production is outrunning the increasing demand for the supply of fresh fruit and a large quantity of fruit will have to be processed into fruit juices. The problem is a big one and I was very happy to hear the Minister for Primary Industry (Mr. Adermann), in answer to my question, say: “Yes, we are prepared to send experts to these areas and to do everything we possibly can to foster the citrus industry.” This should be done foi the olive oil industry and for the cotton industry. Honorable members will find that I will continue my advocacy for industries for which a home market is assured.

Mr WENTWORTH:
Mackellar

– So far as I am aware

Mr DEPUTY SPEAKER (Mr Mackinnon:
CORANGAMITE, VICTORIA

– Order! I think I should point out that there is no mention of olive oil in this series of tariff proposals.

Mr WENTWORTH:

– In that case, Mr. Deputy Speaker, may I confine myself to the remarks of the honorable member for Wakefield (Mr. Kelly). I trust that 1 shall receive the same indulgence as he received. So far as I know no olives are grown in my electorate and I can therefore speak with an entire lack of bias. I thought the honorable member for Wakefield was a little too despairing of the prospects of the olive oil industry in Australia. This seems to me to be a natural industry for Australia. Apparently we have the right climates and right soils, and the tree grows well and fruits well here. Therefore there is no natural reason why we should not be able to develop this industry efficiently in Australia. As the honorable member for Mallee (Mr. Turnbull) has rightly pointed out, we have a market in Australia we should be growing for our home market. I entirely agree with the principle he enunciated. In these circumstances I feel that the honorable member for Wakefield, unless he can produce figures which he has not so far produced, is unnecessarily despairing when he says that our olive industry has no future. It must have. Maybe we are going about it the wrong way; I do not know. Maybe we should be organising it differently; I do not know.

Mr DEPUTY SPEAKER:

– Order! I have pointed out that this is not a general discussion on the olive industry. We are considering Bills which do not mention olive oil. It was mentioned in explanation by the honorable member for Wakefield, but I am afraid that the debate has been allowed to develop. I suggest that the honorable member for Mackellar does not press the point.

Mr WENTWORTH:

– I shall leave olives, Mr. Deputy Speaker, except for saying that I believe that this subject should be examined and the olive industry given sympathetic protection. I think two or three things should be said regarding the general matter of principle enunciated by the honorable member for Wakefield. He took his stand on principle, and so do I; not on any question of expediency at all but on higher economic principles - first principles. I hope that they will be first principles properly enunciated and relevant to the circumstances in which we now find ourselves.

First, he said he thought that Australia’s population could be increased by primary industry as well as by secondary industry. This ought to be so, and I do not deny it. It may well be. I have no bias against either primary industry or secondary industry. I think both should be fostered, but I point out to the honorable member that all over the world the trend is for the production per man employed in primary industry to increase rapidly. This is the way in which, in Australia, we can reduce our primary industry costs. Therefore, while I agree with the honorable member that we should be increasing vastly our export of primary products I do not think it follows that the number of people employed in this form of industry will increase in proportion. Indeed, Che increase in primary out-turn correlated with increasing mechanisation may well mean that the increased population should be absorbed in the secondary and service industries which serve the needs of the primary producers. I do not think that we can look to primary industry to absorb a big increase in population, although we can look for a big increase in out-turn. I think the increase in out-turn of primary industry will call for increased populations in the industries which serve the mechanisation of primary industry. This is the first principle the honorable member enunciated.

Secondly, and I shall say this briefly, he seemed to think that every removal of a barrier to international trade was a good thing. I do not feel this at all. I feel that an economy is healthiest when the proportion of local trade to international trade is fairly high, and this accords with the principle enunciated by the honorable member for Mallee a few moments ago when he referred to production for the home market. In the present condition of our economy full employment can be maintained only by some government or concerted action, perhaps in the control of credits, perhaps in the control of wages and perhaps in other ways. If we are to have full employment the boundaries of economic political authority must be brought more and more together. This does not mean, of course, that we should do without international trade. What I mean is that international trade should be confined mainly to those products where one country has a tremendous natural advantage over another. For example, it may be that with our wool we enjoy natural advantages in Australia that are not possessed by other countries. It is therefore entirely right and proper that our wool trade - and our wheat trade and other trades of this character - should be exporting trades. In many instances our minerals should be export trades. In general, we should try to apply the principle very properly enunciated by the honorable member for Mallee of marrying our production to our home market. This is the second point on which I find myself at difference with the honorable member for Wakefield.

Lastly, the honorable member said that an increase in international trade was necessary in order to cure Australia’s political isolation. I remind him that we have a very large ratio of international trade to gross national product. We are not an isolated country by any means. Unfortunately, if we want to help the underprivileged countries of Asia we will have to do it in some way or other by gift, or by the extension of the Colombo Plan, and not by trade, because trade can lead only to an unhealthy degree of international investment in these countries, and this must arouse not political friendship but, in the long run, political resentment.

I have taken my stand on matters of complete principle, not on matters of expediency, but I feel that the more refined principles should be enunciated as against the - and I say this with all due respect to the honorable member for Wakefield - crude principles on which he seeks to found his philosophy.

Mr HOLTEN:
Indi

.- The honorable member for Wakefield (Mr. Kelly), who is well known for his lengthy discussions of the tariff proposals which come before the House from time to time, during the course of his speech said that we should be more definite about the industries that we want to protect and those that we do not want to protect. By interjection I suggested that he should make a list of the industries which he considers should be protected and a list of those which he considers should not be protected. Following that interjection a couple of Government supporters looked at me and said: “ Bruck Mills”. I was not quite certain from the inflection in their voices whether they thought that this firm received favorable treatment because of the wonderful tariff protection it receives. Perhaps they mentioned this firm because of my constant advocacy on its behalf. I do not claim any credit for this, and I am not always bringing the name of Bruck Mills (Aust.) Ltd. before the House, but I am proud to represent the city of Wangaratta which contains this industry, which is one of the largest employers of labour in Australia.

I have no hesitation in rising to my feet whenever Bruck Mills is referred to. If the honorable members who mentioned that firm were seeking to imply that it has received favorable tariff protection, they were far from the truth. Bruck Mills has had its share of ups and downs in the last few years. In 1960 emergency tariff protection was removed following a report by the Tariff Board. As a result of this action employees of Bruck Mills worked a four day week for seven months of the year. A temporary duty of 25 per cent, was recommended by the Special Advisory Authority on. imported products that competed with those of Bruck Mills in 1961, but this was removed following a further report by the Tariff Board in 1962.

Mr Cope:

– How many employees are there at Bruck Mills?

Mr HOLTEN:

– There are about 750. That has been the number over the years.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– What have these Tariff Proposals to do with Bruck Mills?

Mr HOLTEN:

– Well, synthetic fibres are mentioned. I cannot say for sure that any of the products referred to in the Proposals are produced by Bruck Mills, but the honorable member for Wakefield was given licence to roam all over the place in this debate and during the debate the name of Bruck Mills was specifically mentioned by way of interjection by two Government supporters. Whenever necessary I am prepared to say a few words about Bruck Mills, for the benefit of those who may be prepared to listen intelligently, so that they may know the part played by this firm in Australia’s industrial complex. 1 have already said that Bruck Mills has not received any special tariff protection in the last few years. If it were to be suggested that the textile industry in Australia should not have tariff protection, it would be the only textile industry in the world without tariff protection. Japan is recognised as one of the greatest textile producing countries. In Japan very high tariff barriers are raised against textiles imported from other countries. The same situation exists in the United States of America, Britain and Italy. I understand the honorable member for Wakefield. He is a theorist, but he cannot escape the hard facts of life. Wool, silk and man-made fibre industries all over the world are protected by tariffs. The honorable member for Wakefield was fairly mild and vague this afternoon - more so than usual. He said that he had been abused. I have never heard him abused in this House. I have heard honorable members differ from him. Anyway, I do not think he minds being abused. After all, it is all publicity for him and this is one of his main objectives.

Let me give a few facts about Bruck Mills.

Mr DEPUTY SPEAKER:

– I suggest the honorable member make them brief.

Mr HOLTEN:

– I will. In the last few years Bruck Mills has produced more than 70 million square yards of fabric - more than enough to drape around the world. The fabrics produced by Bruck Mills have many important uses - ‘protective industrial clothing, parachutes for men and supplies, specialised fabrics for medical use, fillers for porcelain electricity insulators, fabrics for the Australian armed forces and for members of Antarctic expeditions, and modern fabrics for the clothing needs of the people of Australia. There is no doubt about the contribution made by this firm to the welfare of Australia.

If people in the wool industry think that synthetic fibre industries only pose danger to them, I would refer them to the remarks of Mr. Norman, Vice-President of Burlington Industries Research and Development Department. Burlington Industries is an American firm and is the biggest textile manufacturer in the world. In the United States of America it is the biggest buyer of Australian wool. Mr. Norman states that his firm buys Australian wool mainly because it is the world’s best wool. Mr. Norman states that the blending . of synthetics with wool is becoming commonplace all over the world. The tendency is to make a fabric that will be equally suitable for summer or winter wear. People in the wool industry must learn the facts of life. These industries are really interdependent. Blending of synthetics with wool is becoming more and more the trend throughout the world. Surely these people realise that wool is useless until it is converted into a fabric. It must be treated and turned into a fabric. If wool is to remain the backbone of our income earning exports, we must have the skills to weave it into clothing.

Mr BURY:
Minister for Housing · Wentworth · LP

– in reply - Unfortunately in this debate only the honorable member for Yarra (Dr. J. F. Cairns) has dealt with the subject before the House. The honorable member for Wakefield (Mr. Kelly) professes to be and no doubt is a tariff expert, but all he did was lead the House up the garden path into an olive grove. He did say that he referred to olive growing only to illustrate his point, but unfortunately he did not stop there. In giving his illustration I think the honorable member overlooked one or two principles. As I understood the honorable member, he agrees that we can grow olives in this country as well as any other country. I do not know whether this is so, but I will accept the honorable member’s assurance that it is. Although we can grow olives in Australia as well as any other country, the point made by the honorable member was that olives grown in Australia were more expensive than imported olives because of the labour costs involved in picking and harvesting the crop. The honorable member said that our wage levels were so much higher than those of Spain that olive growing in this country was not an economic proposition. We have also to think about the future. If the honorable member for Wakefield studies the situation closely he will see a very rapid bridging of the gap between the wages paid in Mediterranean countries and those paid in Australia. So the differential could well largely disappear in the course of a few years.

As the honorable member said, it takes some years to establish olive groves. I suggest to him also that there is the possibility that if this industry develops sufficiently better methods of harvesting will be devised.

The present method of harvesting is rather crude; but there is a prospect of improvement. There is some logic in that; but I repeat that olives are not mentioned anywhere in these Bills and we should not spend too much time referring to them. I understand that the Opposition is not opposed to any of the measures before the House. Nor is any member on the Government side.

Question resolved in the affirmative.

Bills together read a second time.

Third Readings.

Leave granted for third readings to be moved forthwith.

Bills (on motion by Mr. Bury) together read a third time.

page 2920

BILLS RETURNED FROM THE SENATE

The following Bills were returned from the Senate without amendment -

Repatriation Bill (No. 2) 1964.

Interim Forces Benefits Bill 1964.

Repatriation (Far East Strategic Reserve) Bill 1964.

Repatriation (Special Overseas Service) Bill 1964.

Seamen’s War Pensions and Allowances Bill (No. 2) 1964.

Sitting suspended from 5.47 to 8 p.m.

page 2920

QUESTION

DEFENCE REVIEW

Ministerial Statement

Debate resumed from 10th November (vide page 2724), on motion by Sir Robert Menzies -

That the House take note of the following paper - Defence Review - Ministerial Statement, 10th November 1964.

Motion (by Mr. Fairhall) - 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.

Mr CALWELL:
Leader of the Opposition · Melbourne

– I move -

That the following words be added to the motion: - “ and opposes the Government’s proposals to conscript Australian youth for service overseas, regrets its failure to stimulate recruitment for the regular Army and condemns its delay in securing Naval and Air Forces to safeguard Australia and its territories and communications”.

The statement before the House comprises one of the most devastating criticisms of the

Government’s defence policies that could possibly be produced. Seldom has a government placed itself in such a humiliating position, and never before has the leader of a government produced such a detailed indictment of himself. Let there be no mistake about what this statement means. From beginning to end it is a confession of failure and an admission of incompetence. It is not a review of Australia’s defences; it is a statement that reveals in the starkest reality our national defencelessness.

This statement sets the final, ultimate seal on the story of fourteen years of failure, on fourteen years of deception, on fourteen years of waste through confusion, and on fourteen years of lack of leadership. But it is ~ something more than that, it is something worse than that. It is a political document which trifles in a cynical way with the fundamental questions of peace and war and of life and death. It has been produced at this time and in this way for the most transparent reasons of political expediency. Nor, as I will show, does it deal effectively with the pressing problem of making adequate provision for the present and future defence of Australia. A study of the paper shows, beyond doubt, that the same critical gaps now existing in our defence system will remain unfilled, and that the confusion of the past will persist into the future. Therefore we condemn, and we must condemn, the Government on the following three grounds: its past failures, its present opportunism and its future incapacity to provide Australia with the defences it needs, and that it must have to survive.

This review cannot be taken in isolation. Its worth cannot be properly assessed without reference to the past actions of this Government, any more than the Government’s motives can be judged without reminding ourselves of how it has acted in similar situations in the past. After all, this is not a question of electing a new government. This Government has been in power for nearly fifteen years. This is not its first defence review; it is its seventeenth. Indeed, it is the fifth such document that has been produced in the last two years.

How extraordinary, how fascinating this study becomes. In judging the Government’s motives and intentions, the Parliament and the people are entitled to examine its words and its actions; and from such an examination, two things emerge with frightening clarity. The first is that whenever the political fortunes of this Government have been at stake, the Prime Minister (Sir Robert Menzies) and his colleagues have discovered the existence of an emergency. And the second is this: As soon as the purposes of political expediency have been served, the emergency is forgotten, the Government lapses into its normal torpor and smugness, and the defences of Australia continue to be neglected. The overwhelming, indisputable proof that this is so is provided by the very document now before the House, the document which itself shows the neglect into which our defences have fallen.

In his policy speech in April 1951, the Prime Minister said -

We solemnly believe that the state of the world is such that we cannot give ourselves more than three years in which to get ready to defend ourselves. Indeed, three years is a liberal estimate.

The point that I want to make is not that the Prime Minister was wrong - and thank God he was wrong - but the important question is: What would Australia’s position have been under his Government had he been right? It would have been desperate indeed. Had war broken out in 1953 the Regular Army could not have sent two battalions overseas. The Citizen Military Forces would not have been able to put a man overseas. The wasteful system of national service then operating was so inadequate and inefficient that it would have been murder to put the trainees into the field. The Air Force was practically obsolete, much of our Navy was in mothballs, and all this was happening at the end of the three years during which this Government told us to expect a devastating war.

In 1954, which happened to be an election year, the Prime Minister demanded, in thunderous tones, support for the South East Asia Treaty Organisation, a support which he said was to be given “ with arms, with men, with ships, with supplies, with all the instruments of war”. In 1955, another election year, the Prime Minister announced “ a complete consideration of our defence training and provision “. But in August 1956, Sir Frederick Shedden, who was Secretary for Defence under the war-time Governments, known to us as the

Menzies, Fadden and Curtin war-time Governments, admitted to the Parliamentary Public Accounts Committee that Australia was nothing like ready for mobilisation. Sir Frederick further revealed that Australia was certainly not ready in the Prime Minister’s crisis year of 1953.

Two months after this, the Prime Minister stated that Australia had never been in better shape in peace time. Exactly one day later, and that was on 4th October 1956, the Prime Minister announced that the Government had decided on a “complete revision from top to bottom of all items of the defence programme in the light of circumstances now existing in the world “. In December of that same year, the Prime Minister said that “ the world situation was the gravest since the Second World War “. This was years ago.

Thus we can see from experience, banked on experience, that the Prime Minister’s past conduct has been a dangerous mixture of gravity towards the international situation, and levity towards the actual provision of defences for Australia. None knows better than he how and when to create an atmosphere of crisis. None knows better than we how far his deeds fall short of his words.

In 1963 the Government knew that it dare not enter the election campaign without being able to promise a replacement for the obsolete Canberra bomber. For eight years, the Royal Australian Air Force had been telling the Government that its most urgent need was for such a replacement. Nothing was done until the very eve of that critical election.

The decision to buy the American TFX bomber was made in a matter of days, even hours. The then Minister for Defence, the late Mr. Townley, left for the United States under instructions not to go to America to investigate and study the desirability of buying the TFX but to sign the agreement for the purchase of this bomber immediately. Once that was done, the Prime Minister told the people of Australia two things, both of which have been disproved by events. He said that the TFX would go into operation in 1967, and he said that B47 bombers would be made available to provide a temporary replacement for the Canberra. B47’s were flown to Australia and around the capitals and towns of the Commonwealth to show the people what a wonderful plane they were getting. Once the election was won, the bombers flew back to the United States. Where is the temporary replacement now? The American Air Force is grinding them into scrap, and Australia is to have no temporary replacement.

The TFX will not be delivered now by 1968, if by then, and the bomber force will not be operational until 1970, if then. The most important point of this story, a disgraceful and scandalous episode, is that the Government’s lack of foresight and its indecision has left the Air Force weak in a most vital aspect of ils capacity. But it also shows, in a quite frightening way, the lengths to which the Government will go to deceive and mislead the Australian people on defence matters. It is against this background that the review now under consideration must be viewed.

The Prime Minister, in precisely the same language of 1949, of 1953, of 1954, of 1956, of 1958 and of 1963, spoke of the dangers confronting Australia. And now again, against the background of failure after failure in the field of defence, he speaks grandiloquently of things all of which are to be done in the future. Let me make this point, which I will repeat again and again until it is fixed indelibly in the minds of the Australian people: If the Prime Minister’s words mean anything, they mean that he believes that a crisis exists now, not that it will exist in the future. But the defences which the Prime Minister promises - promises made after more than fourteen years of failure - will not be provided until some time in the distant future.

The events which he describes, the events which are supposed to have injected a new sense of urgency into the Government, are the events of the past six to eighteen months. The new defence proposals, if they are ever implemented, will become effective only from 1966 onwards. Few of them will produce even remotely significant results before 1968, and in the case of the Navy and the Air Force they will remain largely ineffective until 1970. It is in this light that the Government’s new found sense of urgency must be judged. And it is against this background that the review, and the Government that made it, must be judged.

The more dangerous Australia’s situation is supposed to be, the greater the culpability of the Government which has left us naked in the face of the danger which it now claims threatens us. The point which the Prime Minister should remember, and which the people will not forget, is that it is a great deal easier to produce a document which takes an hour to read than to produce adequate and efficient fighting forces. It took the Cabinet three days to reach agreement on these proposals. It will take three years or more before most of them can begin to be effective.

The Prime Minister is obliged to sustain the crisis atmosphere he tried to manufacture on Tuesday night last for another three weeks - the three weeks to 5th December. But the defence proposals which he claims to justify, by stating that a crisis exists now, will not take physical shape for another three years. I cannot emphasise that point too often. The Government’s sole excuse, and then it would be only a partial excuse, would be that the country was now faced with a totally new, unforeseen, unexpected situation - a situation which was not anticipated and which could not have been anticipated. But this is not the case.

The Prime Minister’s statement about the current situation in South East Asia is couched in the broadest terms. On the facts which he has produced, he says nothing that could not have been said six months ago. It is not the situation which has changed; it is the Government’s attitude to the situation which has changed. I suggest, and I firmly believe, that the change of attitude, or seeming change of attitude, is the result, not of a re-appraisal of events abroad, but of the realisation that its Senate majority is now endangered.

Thus it is necessary to distinguish between the verbiage that is designed for political ends and the substance of the proposals contained in the review. When considering these on their merits, we must ask three questions: Are our present defences now in a position to meet the situation which the Prime Minister says now exists? Do the new proposals achieve their avowed objective - that of providing Australia with adequate defences to meet possible dangers likely to arise soon and in the next few years? And thirdly, do they provide the best and most effective ways of achieving that objective? The answer to each of those questions is: “ No “.

As to the first question, we are emphatically not in a position to meet any serious emergency. We are not in a position to meet any serious threat to our nation. We are not in a position to honour any of our international obligations.

Mr McMahon:

– That is not true.

Mr CALWELL:

– The Minister for Labour and National Service may answer in due course. Honorable members opposite are the guilty men tonight. They are on trial, not the Australian Labour Party. Let me list a few of the failures and deficiencies which have resulted from the confused policies of the past 15 years. The Government has failed to- recruit sufficient of our youth to the services. It has failed to define an effective role for the Citizen Military Forces. It has failed to replace the outdated and immobile Centurion tanks. It has failed to provide a temporary replacement for the Canberra bomber. It has failed to make any decision on the future of the Fleet Air Arm, and as a result it has now given the Fleet Air Arm its death warrant. It has failed to make a decision on the purchase of a modern aircraft carrier. It has failed to provide an adequate radar system. It has failed to develop the service industries. On the contrary, these industries have been allowed to become run down to a dangerous level. It has failed utterly to provide defences for our 12,000 miles of coastline, either by way of adequate surface combat ships, or naval, military or air bases.

Each of those failures is a critical failure. Yet none of them is redeemed in this new review, not one. That fact alone would be sufficient condemnation of the review. Sir, it is incredible that these deficiencies should exist. It is a shocking thing that they should be allowed to continue to exist indefinitely. And yet, for all that this review will achieve, that is precisely what will happen.

Let me underline this point: These shortcomings are not in the category of those items in the review which might be dealt with in 1966, 1968 or 1970. They are not to be tackled at all. It is only when the review is examined in detail that it becomes clear how irrelevant it is to the situation which the Prime Minister claims to now exist.

First, let us look at the Navy proposals. The “ Melbourne “ is to undergo a refit that will cost £10 million. The “Hobart” underwent a refit that cost £3 million and a few months later it was sold to the Japanese for scrap. The “ Melbourne “ will bc out of service for two years at least, during which the Navy will have no carrier. No mention is made of when the new Tracker anti-submarine aircraft will replace the obsolete aircraft which have been relegated to the “ Melbourne “ for so long. But is it not a fact that they will not be obtained until 1967? And as I have said, the valuable defence provided by the Fleet Air Arm is to be lost to the nation for ever - or at least while this Government lasts. Proudly, the Prime Minister announces that a fleet replenishment ship is to be acquired, in 1970. Additional mine-sweepers are to be obtained, in 1968. All this is to meet an emergency which the Prime Minister says exists now. He said the other day that Australia never faced a greater risk than it faced today. So he will have everything prepared by 1970.

Mr Daly:

– That is going well.

Mr CALWELL:

– That means that he is in a hurry. As I have already pointed out, the Air Force will have no strikereconnaissance capacity until 1970. One has only to look at these facts to realise that there is just no connection between the first four pages of the Prime Minister’s statement - his essay on the South East Asian situation - and the rest of the statement which deals with what the Government actually proposes to do.

Not the least of the Government’s failures has occurred with the Army, and not the least blameworthy part of this review is the steps which the Government proposes to take to cover its failure. The Government’s answer to its own inadequacies is to conscript the youth of Australia for overseas service. The Prime Munster states that the voluntary system has failed. It has not failed. The Government has failed. The youth of Australia has not failed to respond; the Government of Australia has failed to provide the leadership to which youth could bc expected to respond. The Prime Minister gives one reason, and one reason only, for the alleged failure of the recruiting system. He blames full employment. Yet three years ago, when the credit squeeze was at its worst, and when the heaviest burden of un employment fell upon youths of military age, the increase in recruitment was marginal. This proves that the failure of the recruiting system goes far deeper than the temporary state of the economy.

The proposition that the Government asks us to accept is that it is impossible to recruit another five to seven thousand men annually by improving methods of recruiting, raising the status and morale of the forces, providing amenities and opportunities that will make the Army an attractive career, and removing those features which are causing dissatisfaction among both officers and men. I for one do not believe it. The Labour Party does not accept it. Four months ago, the Minister for Defence (Senator Paltridge) himself did not accept it. Sixteen days ago, the Minister for the Army (Dr. Forbes) did not accept it, and if his statements are to be believed, the Chiefs of Staff and all the Government’s military advisers rejected it. In Perth on August 9th, Senator Paltridge told the Western Australian Liberal Party conference that it was generally agreed that a scheme of selective training for 12,000 youths would not be effective. Yet now we are told that a scheme for training half that number will not only be effective, but is absolutely essential.

The Minister for the Army expressed his views on the same subject in Hobart on 26th October - and that is not so long ago. His was not a slip of the tongue. In a prepared statement to the Returned Servicemen’s League National Congress, the Minister said -

This is the problem to which I have given more attention than any other since I became Minister for the Army.

He then said -

Even a scheme which provides for a two year period of service does not provide the people we most need, that is, experienced officers and N.C.O.’s. Those are the people we are short of now. The deficiency would be even greater if conscription were introduced.

The Minister for the Army added - and I hope the Press reported him correctly -

It is wasteful in the sense that you only get about eighteen months of service out of each person you train, compared with five and a half years for most regulars.

Of course, that was a whole fortnight ago, and everything seems to have changed. On Tuesday, the Prime Minister put the effective service life of the new conscripts at only one year. The Minister for the Army added these dulcet words in his Hobart speech -

I hasten to emphasise that all this means that an Army composed entirely of long term volunteers is a better one than one based on a mixture of volunteers and conscripts.

Yet the Minister for the Army now has the task of organising for the first time in peace-time, an Army composed of volunteers and conscripts, and one, which for the first time in history, will comprise volunteers and conscripts in the same units. But the Minister, with that engaging impetuosity which inspired him to call the former Chief of the Naval Staff an “ old hasbeen “, let the cat out of the bag completely, though he did not know it at the time. He said -

We have not introduced conscription up to this point in time because our military advisers have indicated in the clearest and most unmistakable terms that it is not the most effective way of creating the army we need to meet the situation we face. I stress that this is military advice. The reasons for rejecting conscription have nothing whatsoever to do with the political consequences of its introduction or its cost.

I hope the honorable gentleman will do me the honour of saying that I have quoted him correctly.

Does the Minister now say the military situation has changed dramatically in the past fortnight? Does anything in the Prime Minister’s statement indicate a deterioration of any radical nature in foreign affairs over the past fortnight? The one factor that has changed in the past fortnight is that 5th December is now 14 days nearer. It is all so transparent. Sixteen days ago, the military advisers were unanimous that conscription was not effective. Now we are asked to believe that in those 16 days something has happened that makes the provision of 4,000 conscripts not today, but by January 1966, a vital necessity. It will be January 1966, six months after the first call-up, and nine months from now, before a single conscript becomes remotely ready for service.

In his Hobart speech, the Minister for the Army tried to suggest methods of making the recruiting campaign more effective. In his view, in those dim, distant days around 24th October last, one of the main problems of recruitment was that it operated in an “ environment which assumed that soldiering was not a career, in the normal sense of the word, but something undertaken by civilians in uniform “. The Minister said that the most urgent task was to break down and change that psychological attitude. And yet is it not crystal clear that the Government’s conscription proposal will have exactly the opposite effect? That is, it will reduce the status and the sense of career among the volunteers.

Has the Government given any consideration to the effect its scheme will have on voluntary recruitment itself, the system upon which we still must necessarily rely for the vast majority of our servicemen? I refer to recruits for the Australian Regular Army and the Citizen Military Forces. Of course it has not because, as in the case of all its defence projects, the Government has thought nothing through and has acted in haste, confusion and utter inconsistency.

At a time when the great task facing the army and its leaders is to build up the morale and status of the Service, the Government, with unerring aim, has hit upon the very thing that will weaken and harm both the status and morale of the volunteers. Therefore, this proposal will make the Army less, not more effective. The Prime Minister maintains that voluntary enlistment has failed. And yet last year alone, 23,000 men volunteered. Only 6,300 were accepted. It is very proper that the forces should maintain standards of the highest order, but does anybody suggest that a reject ratio of nearly four to one would apply in war time? Of those rejected last year, 4,400 were rejected on educational grounds alone. Let it be noted that these volunteers were rejected for lack of education, not lack of intelligence, because those fall into another category included in the total of 23,000. I ignore here the fact that these figures represent a shocking indictment of our educational system. But would it not be an obvious solution for the Army to provide education facilities of some sort to help bring these potential recruits up to standard? Did not the Curtin Government do that in World War II, and was it not beneficial?

A year’s education would create a soldier with at least five years service ahead of him, and a more valuable citizen for the rest of his life. This simple and obvious reform alone would have provided at minimum cost 4,400 full-time regular soldiers last year - the same number which the Government proposes to obtain, for two years only, under a costly, inefficient and grossly unfair system of conscription. How, in view of these facts, has the Prime Minister the audacity to claim that the voluntary system has failed? It is on the basis of this claim, a claim for which the Prime Minister has not produced a shred of proof, and which is completely disproved upon examination, that the Government has decided to introduce a completely new principle into the defence policy of the nation.

Let me say unequivocally that the Labour Party opposes utterly and absolutely, conscription for the youth of this country for service overseas in peace time. But when it is proposed, as the Government does now, to conscript one in thirty of the boys eligible each year, rank injustice will be piled upon utter folly. These boys, with not only their careers, but possibly their lives at stake, are to be selected by some form of lottery, or Russian roulette. Someone has called the lottery a lucky dip. Should it be called an unlucky one? One will go and 29 will stay. Is this equal treatment before the law? Such a system will open the door for the exercise of every kind of privilege and pressure, and in the end it will mean that those selected, even if the euphemism used is “ not exempted “, will be the young fellows whose families lack influence and friends. Nor has it been explained why young immigrants and the children of unnaturalised immigrants are to be exempt, while the Australian born and those who have done their duty to become naturalised are to be impressed into service. Yet we are told today that the recruitment of young European migrants is to be stepped up to fill the gap in industry that will be left by the conscription of the Australian born of the naturalised Australians.

Why then has the Government decided to introduce a conscription plan of this sort. It cannot be because of an immediate emergency, because the plan will not begin to operate for nine months, and will show no results for two or three years. It cannot be that the Government wants a more effective Army, because as I have shown on the evidence of its own military advisers, it will actually weaken the effectiveness of the Army. It cannot be that voluntary recruitment has failed, because voluntary recruitment has not failed. It has not failed for the Air Force or the Navy, and it would not be classed as a failure for the Army if reasonable steps had been taken to give the people who were rejected - not on medical or security grounds or on any grounds other than educational - an opportunity to secure the basic education which the Minister himself said they lacked. He said the standard was that of a 14 year old child, or something equivalent to that. The reason for this plan is clear. Without the inclusion of this proposal, the Government’s defence review is a weak and ineffective document.

The Navy and the Air Force are still left hopelessly ill equipped, and the new equipment promised in this review will not come into service until 1967, 1968 and 1970. Therefore, the Government realises that these defence proposals are not sufficient by themselves to create the desired impression of urgency and emergency. But it also knows that its electoral strategy requires that such an impression be created, and that the Senate elections be conducted in an atmosphere of immediate emergency and urgency. And it believes that this conscription proposal fits the bill.

This then is a proposal ineffective in its operation, unjust in its application and immoral in its motivation. The Government has not made out and is unable to make out any case for its introduction. The Labour Party has no other course but to oppose it. We oppose it because it is unnecessary, because it is impractical, because it will weaken the Army, because it is unjust, because it is dangerous and because it lacks a moral basis. Our duty to the fighting forces of Australia, our duty to our national traditions and our principles, our duty to the youth of Australia, our duty to the nation and its security, require and demand that we oppose this proposal of conscription for overseas service, and that we condemn the Government which is willing to place the welfare and safety of Australia in jeopardy for what it believes, and misguidedly believes, to be its own political advantage. This review proves, if proof were ever needed, that the Labour Party alone can be entrusted with the defences of this nation. I see the honorable member for Evans (Dr. Mackay) laughing. He can afford to laugh because this will not worry him. But let me tell him, and the other people who do not take any serious interest in these matters, that SO years ago the Fisher Labour Government established the Royal Australian Navy. Let the honorable member laugh that one off, if he can.

Mr Falkinder:

– A Navy of tin cans.

Mr CALWELL:

– It was a very good Navy. It was a bigger Navy than the Navy that exists today. There were more ships in it and it had more officers and more men-

Mr Harold Holt:

– There was a very different Labour Party then.

Mr CALWELL:

– Of course it was a different Navy, but then the Fisher Labour Government was a different government from the Menzies Liberal Government. Now the Treasurer trots out the hoary old story that there was a different Labour Party then. Let me tell him how different it was. When William Morris Hughes deserted us and formed a Nationalist government, he invited Andrew Fisher, on his return to Australia after he had resigned his office as Australian High Commissioner in London, to join the Nationalist Party, and Andrew Fisher said: “ I would not give my dead body to the Nationalist Party “; and I would not give my dead body to the Liberal Party.

The Menzies Government has celebrated the fiftieth anniversary of the establishment of the Royal Australian Navy by condemning the Fleet Air Arm to death, by destroying hopes for a modern aircraft carrier and by declaring that the flagship of the fleet ultimately will become a coffin ship, like the Wirraway aeroplanes of World War II. In that war the Curtin Labour Government marshalled the full material, financial and physical resources of this nation so that the nation might survive. More than one million men and women of Australia were mobilised in that terrible conflict. That mobilisation, considered on a proportionate basis, surpassed that of any other nation engaged in the war.

I pay my tribute to everybody who served in that war, including honorable members on the Government benches and on the Opposition benches. The work had to be done, the task had to be fulfilled, if this nation was to survive. There can never be any question about where the Labour Party stands once this nation is attacked or is in real danger. We will do our duty in the future as we have done it in the past. Because Labour provided leadership, we never felt obliged to cast a slur, as this Government has done, on the patriotism and courage of the manhood of Australia.

The defence policy of the Labour Party at the last election was derided by the Government; but many of its provisions have been adopted already, at least in principle, by this Government. I suggested that there should be one Army unit in northern New South Wales. The Prime Minister said that that was just nonsense.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– And vote catching.

Mr CALWELL:

– Yes. That was the terrible charge that was levelled against me. Now an Army unit is to be placed not at Grafton but at Townsville. I do not accuse the Government of vote catching. I think that this is the right thing to do. It should have been done last year. The Prime Minister said that the Army must preserve its mobility and therefore units cannot be dispersed throughout the Commonwealth. Now the Government proposes to disperse units in accordance with the Labour Party’s plan of 1963.

But many important features of the defence policy of the Labour Party at the last election, such as a decision on the purchase of a modern aircraft carrier - which we advocated - have not been implemented. That policy would have made a beginning in carrying out the task of repairing the neglect of recent years and of providing Australia with adequate defences. s in the past and always while there has been a Labour Party, we are determined that Australia shall be capable of defending itself properly. After nearly 15 years of confusion under this Government - I am being comparatively charitable when I merely put the neglect down to confusion - Australia is not now in a position to defend itself properly.

As in the past, we are willing to ask the people of Australia to make whatever sacrifices are necessary to provide proper defences; and we know that they will respond as they have responded in the past. But the people will not respond sincerely, and cannot be expected to respond gladly, to a government which refuses to take them into its confidence, which misleads them with inflated claims as to its defence achievements, which tries to hide the true state of our defencelessness and which regards the lives and careers of Australia’s sons as a proper subject for political opportunism.

The Prime Minister has thrown down the gauntlet and I accept it gladly. In the forthcoming campaign, my colleagues and I will go from city to city, from town to town, throughout the length and breadth of this continent, with one aim. We will expose the deceit and duplicity of this Government not only on defence but over the whole range of policy. We will tell the people the true state of the defences of this nation. We will tell them how the Government is trifling with the lives of their sons in an attempt to cover up its own deficiencies. What the Prime Minister has done can be stated simply and understood readily. He has served notice on the world that if war comes in the near future Australia might be able to participate in if in perhaps five years’ time. That is what this review boils down to. It is a confession of failure, and as such deserves the condemnation of this Parliament. But, more importantly still, it deserves, as it undoubtedly will receive, the condemnation of the people of Australia, whose security and welfare will continue to be endangered until another Labour government takes office to guide the destinies of this great nation.

Mr SPEAKER (Hon Sir John McLeay:
BOOTHBY, SOUTH AUSTRALIA

– Is the amendment seconded?

Mr Whitlam:

– I second the amendment and reserve my right to speak to it.

Mr HAROLD HOLT:
HigginsTreasurer · LP

.- The Leader of the Opposition (Mr. Calwell) announced his speech as an attack on the Government’s defence policy, but it quickly became exposed as an indictment of the Australian Labour Party and of the present leadership of that party. Members of the public who have listened to the two speeches that have been made in connection with this motion have heard, first, a statement by the Prime Minister (Sir Robert Menzies), in calm but sombre terms, of the extensive additions to Australia’s defensive capacity and, tonight, a ranting harangue, a political attack from the word go, a rejection of the opportunity held out to the Opposition to adopt a policy for Australia which would narrow the differences between the Government parties and the Labour Party and which would give some unity of leadership to our people in the burdens that they will have to carry and the sacrifices they will have to make. There was the opportunity for the Opposition.

If one studies the items set out in the 1963 policy speech of the Leader of the Opposition, one sees that not so many items are in dispute between us. Indeed, with one quite significant exception to which I will come in a moment, every item set out in the official speakers’ notes of the Labour Party for the 1963 election campaign is substantially covered by the programme that the Prime Minister has announced to the country. In those circumstances, there was an opportunity, as I say, for a narrowing of the differences between us. It may well be that there would have been outstanding this issue of compulsory selective service. Let us argue that point out, if need be. This was the attitude which the Opposition has exposed tonight. From the moment he began his speech the Leader of the Opposition could not restrain himself from launching a shoddy political attack which will have brought disgrace to his Party and disgrace upon his own leadership. The language was reckless. It was defamatory of a splendid body of servicemen in the three fighting services of this country.

We were told that the nation is defenceless. Yet Australia has honoured every commitment which it has under its treaty obligations with its allies in this area. Yet this is the story going out from the Labour Party to the Australian people at this time. The Leader of the Opposition makes the allegation that had war broken out in 1953 the Regular Army could not have sent two battalions overseas. What effrontery to hear from the other side of the House, for those of us who were in. this Parliament during the 1 950’s, when we listened, Budget debate after Budget debate, to attacks from honorable members opposite directed against the size of our defence vote.

Mr Stokes:

– “ Cut it in half “. they said.

Mr HAROLD HOLT:

– Yes, they said that we should cut it in half. In 1955 the then leader of the Labour Party, in the course of his election campaign, announced that he was going to save £40 million out of the defence vote at that time. This is the party that is attacking us for leaving the country in a defenceless position. At other times honorable members opposite have been critical of what they say is the inadequate proportion of the gross national product being devoted to defence. I took the trouble to make some comparison of the situation at the present time with that in the last financial year when Labour was in office, 1949-50. The Budget for that year provided for an expenditure of £54 million on defence. That was 8.3 per cent. of the total expenditure in the Budget, and it was 2 per cent. of the gross national product in that year. In 1963-64 - and I am quoting this figure rather than the figure for the current year because we have not yet obtained the gross national product figure for this year - our expenditure was £260 million as against the expenditure of £54 million in 1949-50 by the Labour Party. That figure of £260 million was 11.9 per cent. of the total expenditure in the Budget as against 8.3 per cent. in the Labour Party’s last Budget, and it was 3 per cent. of the gross national product as against the 2 per cent. under Labour in 1949-50. So, this Government has added one-third, in effect, to the total expenditure of that time in financing the programmes which lie ahead of us.

Mr Mortimer:

– Not very convincing.

Mr HAROLD HOLT:

– It would not be to the honorable member, because he refuses to absorb the figures. Year after year we were subjected to the attack by members opposite on the ground that the vote for defence was excessive. Now, if you take the official “Speakers’ Notes” of the Australian Labour Party for 1961 - and we are getting closer to the present time -you will find 24 subject matters set out which Labour speakers were expected to talk about in the course of that year’s election campaign. Defence did not find a place among the 24 items which were the subject matters of the “ Speakers’ Notes “ of that year. Defence did not find a place anywhere in that document. The only reference to defence which will be found in this publication is under the heading “ Foreign Policy “, on page 44 of the document. The policy statement which emerged from the twenty-sixth Commonwealth Conference of the Australian Labour Party on 14th April 1961 is recited there. What is clear from this document is that Labour was relying in some naive fashion, as it had on earlier occasions, upon the United Nations. The only really positive passage in the whole of this Labour foreign policy statement is that in relation to the South East Asia Treaty Organisation. I will give honorable members the highlights from that. It reads -

We declare that S.E.A.T.O. must be replanned on a cultural, education, medical and technical assistance basis and not a military basis, and should include all the peoples of South East Asia.

In accordance with the policy of the Party, we urge the withdrawal of Australian troops from Malaya.

We advocatetotal world disarmament, for world peace and international amity and understanding.

We believe that the Australian Armed Forces should be re-organised for defence and specifically as a peace unit of the United Nations and not as an aggressive force.

That was the policy of the Australian Labour Party, stated as recently as December 1961.

I come to the defence policy of the Australian Labour Party of 1963. Set out very briefly here under the heading “ Labour’s Defence Policy” is the complete list of defence moves that the Labour Party apparently regards as necessary. It commences -

Air Force.

  1. Ensure that the R.A.A.F. has the best pos sible replacement for the obsolete Canberra bomber.

Does the Labour Party challenge the fact that the TFX is the best bomber replacement for the Canberra bomber? -

  1. Re-establish Australia’s aircraft industry.

The Australian aircraft industry is engaged on a programme now with the Mirage and other aircraft which is keeping the aircraft industry absorbed and, indeed, the aircraft industry is short of the labour necessary for expansion at this time -

Army.

With the addition of at least 14,000 men, complete the re-organisation of three new Army battle groupings - one armoured, two mechanised.

We propose, under the arrangements announced, to increase the number of men in the Army from 22,750 to 37,500 by the end of 1966.

  1. Raise the strength of the Pacific Islands Regi ment from 700 to an eventual 6,000.

We are planning for a quite speedy build-up to some 3,000 odd persons in this regiment, and no doubt when this build-up has been completed we will find it necessary to go higher.

The document goes on -

Navy

  1. Subject to the advice of the Defence experts, purchase or lease a modern aircraft carrier.

I will come to that matter, which was stressed by the Leader of the Opposition, in a moment -

  1. Revive the Australian shipbuilding industry to supply Naval needs.

Surely our shipbuilding industry is flat out at the present time building both civilian and Service ships -

Servicemen

  1. Review all Service pay rates and pension entitlements.

That was done.

  1. Introduce a Service housing scheme.

That has been done. In short, with the exception of the aircraft carrier and with the difference in approach to securing of the necessary personnel under a compulsory selective service scheme, what is proposed in the 1963 programme of the Australian Labour Party is substantially covered by the programme that has been announced by the Prime Minister. I said something about an aircraft carrier. This point reveals how the Opposition can loosely embark upon a particular proposal with no idea of its practical problems, its costs, or availability, or any of the detailed aspects which are discussed in our regular defence reviews. Surely it should not be a matter of sneering and jeering that we do have these reviews; but it seemed to be so, judging from the speech of the Leader of the Opposition.

It will interest honorable members to have some idea of the complexity and the order of costs that would be involved in the acquistion of a new attack carrier, with its associated complement of fighter-strike and anti-submarine aircraft. The construction in Australia of such a vessel would be quite impracticable. The hull could possibly be built here, but the design work would have to be undertaken overseas, and most of the specialised equipment and machinery would have to be obtained overseas and assembled in the hull. This, of course, would add considerably to the cost and time factors.

It has been estimated that it would take something like 12 years to build the hull and fit it out under these conditions, and that the cost would be at least 40 per cent, greater than overseas costs.

Construction overseas of a carrier in the vicinity of 50,000 tons would cost from £72 million to £100 million for the ship only - this is apart from the aircraft necessary to operate from it - depending on where it was built, and it would take at least five years. The purchase and modernisation of an existing overseas carrier would cost more than £58 million. The total cost of such a project, including fighter/ strike and antisubmarine aircraft, and essential training and support facilities, would be of the order of £150 million - for a carrier, the hull of which by the time it was acquired would be over 20 years old. Sir, the weight of professional military advice to the Government on this proposition was that the project could not be supported from the point of view of strategic justification and priority in relation to other Naval requirements and the requirements of the other Services on an inter-Service basis.

The Leader of the Opposition saw fit to have some amusement at the expense of my colleague, the Minister for the Army (Dr. Forbes). He said that a couple of weeks ago we were saying that we did not need a selective service scheme and that now we apparently do. He asked: “What has changed?” What has changed is this: The Government has gone through a thorough review of the strategic bases for the Australian defence programme with its advisers from the three Services. The Leader of the Opposition told us that nothing has changed. Sir, our military advisers do not tell us that; they tell us that there has been a serious deterioration of Australia’s strategic position. Are we told that nothing has changed in South Vietnam, When we had the warning not only of the military but the civilian situation there? Are we told that nothing has been changed when we have seen the confrontation policy of Indonesia, bringing not only a landing of troops on the mainland of Malaysia but also bringing Australian troops for the first time into combat with Indonesian troops? Are we told that nothing has changed when China has set off a nuclear bomb? Our advisers think that there has been a serious deterioration.

It was after the Government had analysed this situation with its military advisers that it came quickly to the conclusion that the kind of programme we needed gave to the Minister for the Army a very proper and valid claim to say it would not be worth the diversion of effort, the cost and the interruption to our own regular forces to produce a selective scheme for the smaller numbers spread out over a much longer period of time which was in contemplation when he made that statement. From the time he made that statement there was a major change in the programme regarding the total number of men required and the speed with which they had to be available to us inside our regular forces. So I hope that we will not hear any more of that particular kind of nonsense.

My time runs on. I do not have the 45 minutes that was available to the Leader of the Opposition, but within my 20 minutes I leave myself comment on two matters. The Leader of the Opposition has at last stated quite emphatically and clearly where the Labour Party stands on this question of a compulsory selective service proposal.

Mr HAROLD HOLT:
LP

– At least we know where we are. Someone said “ conscription “. I remind the honorable member who interjected that his Party thought that conscription was necessary in 1943. The then Labour Prime Minister thought that Australia’s security situation was such that a degree of conscription of our young manhood was required at that time. The Leader of the Opposition is at least running true to form; he opposed his own Prime Minister at that time and he is now running true to the same policy that he espoused at that time. At least we know where we are. That is the Labour Party of the present day. It is when we know that that we recognise why the public could not accept the claim by the Leader of the Opposition that Labour can be entrusted with Australia’s defence. What Labour Party? Which wing of the Labour Party?

I have been reading with some interest a very interesting article by a former candidate of the Labour Party. He was one of its white hopes in the last election campaign.

I refer to Barry Jones, a candidate for the electorate of Bruce, which was regarded as one of the critical contests of that campaign. In the spring issue of “ Dissent “ he published an article “The Two ALP’s”. In the course of that article be stated -

I submit that there are three main reasons for Labor’s persistent failure (a) lack of public confidence in evasive or contradictory policies; (b) a feeling that the party lacks sufficient competence to govern and (c) the narrowing basis of party support.

Attitude to the US, SEATO and the Western Alliance: While Mr. Calwell and most parliamentarians are strongly pro-American and support in broad terms the defensive alliance created by Western powers, strong elements in the ALP follow a neutralist line and oppose US policy in South-East Asia. It was hard to convince voters at the 1963 Federal election that Labor backed Malaysia, although the Leader’s speech was clear enough. The Peace Movement with which Labor find’s itself aligned is generally hostile to US policies. Who does represent Labor policy accurately?

Then dealing with relations with the Communist Party he stated -

At election time, party leaders repeatedly attack the Communists and we invariably place them last on “ How to Vote “ cards. But between election times, rightly or wrongly, there is close collaboration wilh Communist elements (whether of the Moscow or Peking variety) in trade unions, peace fronts, fund raising, and some propaganda organs. For some years we followed a policy of persistently denying that “ so-called “ unity tickets existed. It is better to openly avow CP links than to be exposed to the public as untruthful.

That article was not something written by a spokesman for this party; it was an analysis by one of their own candidates. I commend to anybody who wants to get a clearer picture of the Labour Party of today a study of what the honorable member for Yarra (Dr. J. F. Cairns) said when he talked about the Labour Party being next in the spectrum to Communism. This is set out in the same issue of “ Dissent “. I do not want to put the honorable member at a disadvantage by quoting just one section of the article, but I remind honorable members that in a spectrum there is not a sharp line between colours; there is a gradual fading of one colour into another. That is where the Labour Party of today stands in relation to this country and that is why the Labour Party of today cannot be entrusted with the defence of this nation.

Mr WHITLAM:
Werriwa

.- Mr. Speaker, the Treasurer (Mr. Harold Holt) has shown more interest in the defence policy of the Labour Party than he has ever shown in the defence policy of the Liberal Party. For six years he has presided over the administration of two Acts - the Defence Forces Retirement Benefits Act and the Commonwealth Employees’ Compensation Act - in such a way as to discourage an alarming number of servicemen from re-enlisting, thereby bringing about a most disturbing situation in our service numbers. Furthermore, he is the man who is responsible for the department whose pettifogging procedures and whose hazy hierarchy, to quote Professor Beddie. has been responsible for delaying a good many of the Government’s defence proposals and has been responsible for seeing that none has ever been completed.

It is true, as the Treasurer said in quoting from the policy speech delivered by my leader (Mr. Calwell) a year ago, that a very great number of the material features of the defence proposals stated by the Prime Minister (Sir Robert Menzies) two nights ago were ones that we had already suggested. The big difference is apparently in the costing. The Treasurer has just said - I do not know ‘whether this was on the advice of defence or Treasury experts - that to carry out our proposal of getting a secondhand carrier and modernising it would cost £58 million. The Prime Minister said that our existing aircraft carrier - secondhand, by any standard - would take £10 million to modernise. Perhaps the Treasurer is no more expert on the financial aspect of defence matters than he is on strictly civilian Treasury matters.

Mr Harold Holt:

– This is official information from the Service departments. Let there be no mistake about that.

Mr WHITLAM:

– Was this Service advice given since the Minister for the Army (Dr. Forbes) made his last quotation from defence advice? Was this advice given in the last 16 months, in the last 16 days, or in the last 1 6 hours since the Prime Minister made his speech? The reason why this drastic change of policy has been made is that there is a Senate election in the offing. The Government has decided to make it a khaki election.

Conscription is designed to mask the position that will obtain for another four years. Not one of the material proposals that the Prime Minister made two nights ago will come into operation for another four years. In many cases, they will not come into operation for another five or six years. The only exception is manpower. There was no mention of docking facilities, no mention of aircraft maintenance or construction and no mention of ship building. There was no mention at all of these industrial activities which have to be dovetailed with a defence policy.

Let us recall what happened just before the last general election. There was a similar defence stunt. The B47 came and made its tour of our aerodromes but we found that there was only one aerodrome in Australia that could accommodate it. When it landed at every other aerodrome it had to use parachute brakes. This was the plane that we were proposing to have as an interim bomber-strike reconnaissance aircraft because it would have a bigger load capacity and a bigger range than the Canberra which was declared to be obsolete nine years ago by the then Minister for Defence. A few months ago the B47 proposal was abandoned.

I doubt very much whether the troops conscripted under the present plan will be sent to Malaysia but it is stated that it is necessary that they should go there - that they will be needed in two years or two and a half years from now, when their training will be complete. Let us be quite clear about this. No S.E.A.T.O. power and no A.N.Z.U.S. power has conscripts in South East Asia. Is Australia to be the only country to have them there? What chance would they have in view of the material position which would still obtain? There will be no naval or air forces to protect our lines of communication with them for another four or five years.

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– What about American conscripts?

Mr WHITLAM:

– There are no American conscripts in South East Asia, either in the Philippines or in South Vietnam.

The Prime Minister spoke in the most baleful and portentous terms two nights ago. In the first quarter of an hour of his address he used the word “ Communism “ more often than President Sukarno used the word “ neo-colonialism “ in an address on Independence Day extending over some hours and intended to inculcate hysteria. The Prime Minister spoke thus for the same purpose as President Sukarno conjures up witch names - to drum up internal support. The Prime Minister probably has in mind the fact that a year ago the Prime Minister of Malaysia won a great electoral victory by having the same concepts paraded for internal consumption there. But this does nothing to convince the countries around the Indian Ocean of the sanity and morality of our objectives compared with those of Indonesia. How will we convince other countries in our region that we are more sane and moral than the Indonesians if we resort to the same tactics as they do, and for the same purpose?

Mr Jess:

– Do you want to” convince China?

Mr WHITLAM:

– One of the best bulwarks against China would be Indonesia, but the result of what the Prime Minister is doing is to accelerate the move by Indonesia towards China and like-minded powers. It was the Prime Minister’s shillyshallying during the 1950’s that drove Indonesia to seek arms from the Communist bloc. It was this Prime Minister and the Ministers for External Affairs whom he appointed who grossly miscalculated world opinion on West New Guinea and did not evolve a coherent Australian policy. Their presentation was unconvincing. All that they succeeded in doing was just to deprive Indonesia of the two-thirds vote necessary to bring the question of West New Guinea before the General Assembly of the United Nations. After four attempts which we frustrated, to get the international body to deal with West New Guinea, Indonesia sought arms from the Communist bloc. The arms race was on. Hysteria was promoted and strong arm tactics were shown to prevail. The Prime Minister is now promoting this aspect of hysteria for internal propaganda and political purposes. Will this convince the peoples around the Indian Ocean or in South East Asia - the peoples in our region - that we are any more sane or sensible now than we were in the 1950’s on the question of West ‘New Guinea? Of course it will not.

Was this great change to conscription for overseas service in peacetime made on military advice or not? Senator Paltridge, speaking in Perth last July, said -

The Government regards defence and recruitment as extremely important but it does not propose to go ahead with any national service training scheme on the advice of its Chiefs of Staff, supported by similar overseas experts. The Federal Government believes the correct way is to develop mobile, hard-hitting, well-equipped and well-trained forces.

On the 26th of last month the Minister for Army quoted the “ unmistakable “ advice of his military advisers. When I asked him about the matter the other day, he said that he regretted that I did not quote the whole of his remarks. I will quote two passages - twice as many as I did then. This is what the Minister said -

We have not introduced conscription up to this point in time, because our military advisers have indicated in the clearest and most unmistakable terms that it is not the most effective way of creating the Army we need to meet the situation we face. I stress that this is military advice.

Again, he said -

Even the scheme which provides for a two-year period of service does not provide the people we most need, that is, experienced officers, N.C.O.’s and specialists . . . The deficiency would be even greater if conscription were introduced.

The Minister purported to rely on the advice of the military advisers. What has happened in the meantime? When I put a question to Mm yesterday be said that the defence review had been going on for a long time. Obviously he intended the Returned Servicemen’s League to believe that the advice about which he was telling them was not only the latest advice that the Government had got but was current advice - advice that it was still receiving. Why then the change?

It is the political internal situation which has changed, not so much the external situation. The Prime Minister said that we needed to introduce conscription because in a period of unsurpassed prosperity and more than full employment people would not enlist. This is not so. In June 1961, when there were 111,700 registered unemployed, the permanent forces had a membership of 46,800. Last June, when the number of registered unemployed had dropped to 48,500, the permanent forces had a membership of 52,600. There are more people in the armed forces now than there were when registered unemployment was two or three times as great. In June 1961, there were 1,000 fewer men in the forces than there were the year before, but there were 64,500 more people in the unemployment pool. The figures do not bear out what the Prime Minister has said.

Let me demonstrate where our forces might come from in a successful voluntary system. It is anticipated that by June 1968 the Navy will have gained 30 per cent, more members with a voluntary enlistment system and the Air Force 26 per cent, more. The Army needs 65 per cent. more. If the Army were to get the same percentage of additional volunteers as the Navy or the Air Force, somewhere between 26 and 30 per cent-, it could obtain another 7,000 recruits in that period, or 45 per cent, of what it needs.

Secondly, there has been an excessive rejection of volunteers. Last year, the Army accepted only 2,839 out of 11,079 applicants. More than 8,000 were rejected on various grounds. Let me interpose here and ask: Were those who were rejected by the Air Force or the Navy referred to the Army? The rate of Army rejection is unreasonably high. Were we so selective when we were choosing the First or the Second Australian Imperial Force? Shall we be so selective in culling out the new conscripts? We have tried to form a corps d’elite. We shall have nothing but N.C.O.’s and officers in this corps. If we were to reduce the rate of rejection by one third, we would, from this source alone, obtain another 10,000 men for the Army by June 1968. Thus, if we had the same percentage of voluntary enlistments for the Army as for the other two Services, and if we were to reduce the rate of rejection by one third, we would have many more men available than the Government expects to get by conscription.

Thirdly, the Government has made no attempt to test the two proposals which it made in its previous defence review the week before last. What is it now doing about the Regular Army Emergency Reserve, which will give us 3,600 more men - all trained, all former professional soldiers? What is it now doing about the Citizen Military Forces members who can be called up on the declaration of an emergency? We are not waiting to see whether that system will succeed.

Above all, this Government has never tried to attract men to the Army to curb the Army wastage of 200 a month and to stimulate voluntary recruitment. Australians, I am certain, will now recognise that turbulence in the area of the Indian and South Pacific Oceans will compel us to maintain larger peacetime forces than hitherto. Young men who give a sizeable portion of their careers to such essential public service should reasonably expect to receive an enduring advantage from it. A, career soldier must change his occupation at an age when he has dependent children, some in their teens, and when, if he were a civilian, he might well be entering into an executive or managerial position. Australians must ensure that the soldier and his family are, and will remain, on a par with civilians of the same age when he re-enters civilian life.

Mr Hughes:

– The Australian Labour Party has not done much about that.

Mr WHITLAM:

– I shall state some of the proposals which we could adopt. But the present Government will never try these. We are no longer in the situation which we were in between the two wars and immediately after the last war. We are now in an area of continuing turbulence. In all probability, there will be no wars in this area. If there are, they will not resolve any situation. They may merely settle Australia’s future in a generation or so. We must try to live in this area and help other people to live together with us. In the meantime, we must have a larger standing Army than hitherto, and we ought to make some of it available for standby units to serve the United Nations as Canada, New Zealand and the Scandinavian countries have done.

Here are some proposals which are within the Government’s present powers to adopt. The Defence Forces Retirement Benefits Fund should no longer be conducted like the Public Service Superannuation Fund, since the two Funds have to cater for men in greatly different careers. The Repatriation Department should provide health services for servicemen, and their families, during and after their service in the forces. Yet, yesterday, the voice of every Government supporter in this chamber was raised against this proposition when we presented an amendment designed to give effect to it. The War Service Homes

Division should be made available for servicemen and their families. More intensive and generous rehabilitation and retraining programmes should be provided for servicemen at the end of their service. Scholarships should be given to their children, whose education is so often disrupted, as they have to move from State to State. All these are proposals to which the Commonwealth can give effect with its existing machinery. They have already been adopted in other countries in order to establish adequate peacetime armies on just terms. Men are not re-enlisting in the Australian Army at the end of their first term of service. They say: “ When we at last get out, we shall be well behind in the quest for security and a career, in the quest for housing and in the quest for education for our children “.

What urgency is the Government showing in other defence matters? Let me briefly discuss the equipment of the forces. I shall deal first with the Air Force. There will be no replacement for the Canberra bombers until 1968. The “ Sydney Morning Herald “, whose operations room is very vocal on these issues, has stated that the replacement will not be in squadron service till 1969. The Mirage fighters will not be in service in a fully operational form till 1968. These are the replacement for the Sabre, which the Government said it would replace in 1955. The Mirages are being acquired in preference to the FI 04, which the Prime Minister once announced we would get in 1957. The Orion maritime reconnaissance machines will go into service at Richmond in 1968. So there will be no capacity for protection, for retaliation or for reconnaissance with any modern aircraft until 1968.

Let me now pass to the Navy. At a cost of £10 million, the “ Melbourne “ is to be modernised. It is to stagger on in its present condition until early in 1967. By that time, its present aircraft will be obsolete. They will have come to the end of their tether. Honorable members will recall that even then their service life will have been extended by four years. When the Tracker aircraft arrive to go into service on the “ Melbourne “, the vessel will go into dock for a modernisation refit which will take 18 months to complete. So, by the end of 1968, the Trackers can begin practising in operational conditions on the modernised, second hand “ Melbourne “. There is no telling when the Daring class destroyers will complete their modernisation programme. The “ Perth “ will be commissioned in May next year, the “ Hobart “ in November next year and the “ Brisbane” in 1967. These are the ships which the old has-been, Admiral Burrell, said could fire only two guided missiles during an attack by modern aircraft. The keels of the two additional Type 12 frigates have not yet been laid. The first of the “ Oberon “ class submarines will be completed in December 1966 and the fourth three years later. The escort maintenance ship will not be completed until 1967 and the fleet replenishment vessel until 1970. Two minesweepers will be completed in 1968. We have no date for the Hercules aircraft. No order has yet been placed for any helicopters.

What is the urgency? If we send these conscripts to Malaysia, they will be the only conscripts there. They will be unable to receive support in the air above, on the land or on the seas. The Government’s whole defence programme as announced in this review is just a stunt designed to mask the real situation for another four years until we have contemporary or competitive combat forces on the sea, in the air or under the sea.

Mr DEPUTY SPEAKER (Mr Failes:
LAWSON, NEW SOUTH WALES

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

Mr BARNES:
Minister for Territories · Mcpherson · CP

– Mr. Deputy Speaker, anyone who has listened to the Leader of the Opposition (Mr. Calwell) and the Deputy Leader of the Opposition (Mr. Whitlam) may well ask: What sort of defence policy has the Australian Labour Party? We have not heard anything about it. Indeed, we have heard nothing constructive from honorable members opposite in this debate. They have attempted merely to null the Government down and to inject a lot of emotion into the consideration of this vital matter of defence. Since honorable members opposite have not given us an inkling of their attitude to defence needs, we shall have to look into their history. Some of this may be ancient, certainly, but it has a very important bearing on the security of Australia. Let us look first to the Labour Party’s actions in relation to the United States base at Manus Island. Labour wiped it off. Then there is the Naval communication station at North West Cape. I suggest that the communication base there would not exist if the Labour Party were in office. We heard from the Opposition at one stage proposals for a nuclear free zone in the southern hemisphere. This would have played right into the hands of atheist materialism, which is the driving force of hundreds of millions of people who are against democracy. A nuclear deterrent, on the other hand, would be a safeguard for us. The Leader of the Opposition also objected to sending troops to Malaya. The Deputy Leader of the Opposition said that our bulwark against China is Malaysia. Where is their reasoning in this matter?

Mr Kevin Cairns:
LILLEY, QUEENSLAND · LP

– They would not be there if they had any.

Mr BARNES:

– They would be on this side of the House if they had any reasoning. There is another factor which is most interesting. They have alleged that we are really making this imposing effort on defence because of a political motive. What do they suggest by that? They say that we are introducing this defence programme just before the Senate election, and that it is going to be a popular proposal. Do they object to the fact that the people want this sort of thing? This is the sort of defence programme that the people approve of but that honorable members opposite object to. I believe that the Peace Conference has really taken over the Australian Labour Party. The left wingers have won the battle already. The honorable member for Yarra (Dr. J. F. Cairns), the honorable member for Hushes (Mr. L. R. Johnson) and the honorable member for Reid (Mr. Uren) are playing right into the hands of the Peace Conference. This is how it has worked.

Mr Daly:

– The Minister is a conscriptor

Mr BARNES:

– The honorable member for Grayndler (Mr, Daly) seems to be obsessed by what he calls conscription. This is another emotional factor that has been introduced. The proper term is compulsory selective training. It is to provide a very small section of our defence force. The selective system will be the fairest way in which to select the men. They will be chosen from a cross section of the com munity of Australia. I am certain of one thing: The majority of the young men of Australia will be in favour of this scheme because they still possess the spirit of the men who fought in the two world wars.

From what I could gather, the Deputy Leader of the Opposition suggested that if we improve the superannuation scheme, if we improve the repatriation benefits, and if we improve the health services we will get the Army that we require. That is his suggestion. Under a voluntary system of recruiting, the average young man volunteers only when he is satisfied that his country is in danger. It is not for me to say and it is not for the Deputy Leader of the Opposition to say when that might be. It is for the young man himself to make up his own mind in that direction. When they consider that the country is in danger they will voluntarily enlist in their thousands.

The situation today has changed. Of course, the Labour Party is thinking back to old wars. They are always thinking back >n this sort of thing. In previous wars we had a year or two in which to train the volunteers. We will have to be ready if another war starts. We will not have the time to train the men. If we do have another war - and I do not believe that we will - we will have to be prepared. The best way to keep peace is to be prepared for war. Men require two years’ training before they become an effective defence force.

I would like to refer now to another factor. We in Australia are in an altogether different position from the situation we were in when we entered the two previous wars. We entered the two previous wars as a very minor country with massive support from the United Kingdom. The position has changed because we depend today on the massive support of the United States of America, as well as many friends in the southern hemisphere and in Europe. We have certain obligations to meet. We are signatories to the South East Asia Treaty Organisation, together with the United Kingdom, France, the United States of America, Pakistan, Thailand, the Philippines and New Zealand. This is a group of nations which President

Macapagal of the Philippines recently described as - symbolising the readiness of the sovereign nations of the Eastern and Western Hemispheres to come to terms with each other for the purpose of mutual wellbeing.

The members of S.E.A.T.O. are diverse in many respects. Their historical and political backgrounds are widely different. They include both developed and undeveloped countries. Moreover, the principles on which S.E.A.T.O. is based are those of interdependence and of collective security. As to the effectiveness of the organisation, not one of the signatories of the Treaty, which was signed in Manila 10 years ago, has been the object of Communist aggression. This shows the effectiveness in the organisation of our friends. The United States of America, the most powerful nation on earth, has pledged to come to the aid of all other signatories of S.E.A.T.O. in the event of a military attack. I might add that the United States of America has conscription, as the honorable member for Grayndler calls it. Do we suggest that America should send its troops, to the other end of the world to defend us when we are not prepared to introduce a degree of compulsory selective training? That is all we are asking. We are also a signatory of the A.N.Z.U.S. Treaty, together with New Zealand and the United States of America. It is purely a military agreement of a more local character. I think all this indicates that we have partners with common aims to preserve our independence. At the same time they will come to each other’s aid when the situation arises.

Our ultimate danger lies in athiestic materialism. The methods used by Communism are extremely subtle. The Communist in Asia, by subversion and terror, and, if need be, by armed intervention; seeks to promote instability and political chaos. Having done that, he condemns the regime which he is seeking to undermine for itsfailure to provide for its wellbeing and the progress of its people. This is the Communist in Asia and not the peaceful coexistence in which Communism seeks to demonstrate its superiority inevitably through economic competitiveness. I am speaking about the Communist who believes that power grows out of a gun barrel, well aware of the inevitable slowness of the tempo of economic development and growth amongst the under developed. These Communists are forcibly denying the opportunity for steady progress and they hope to cause people to despair of the hope for any amelioration of their conditions.

A current example of the Communist technique is South Vietnam. There the Communists held their hands for five years from 1954 onwards, not expecting the Government to cope with its great internal residual problems. Recently, acute conflicts have developed over the creation of Malaysia, which Australia strongly supports. Although it remains true that, because of nuclear deterrent, global or full scale war may be unlikely as a deliberate act of national policy, limited wars or hostilities of various kinds are already occurring, or could break out in a number of areas in South East Asia.

I shall refer now to the measures which the Government is taking to safeguard the defence of Australia. They include selective national service, expansion of the Citizen Military Forces, expansion in North Queensland, expansion in Papua and New Guinea, expansion of school cadet units, and additional equipment. We are to spend millions of pounds on the equipment mentioned in the recent defence statement. I would like to add this comment to the criticism made by the Deputy Leader of the Opposition about the modernisation of the H.M.A.S. “ Melbourne “. Under present plans “ Melbourne “ is scheduled to begin her modernisation in mid- 1967, and this will take between 18 months and two years. “ Melbourne “ will have a continuing operational life of ten years following modernisation. The time scale for the work is based on the existing one shift work schedule, but round the clock work in an emergency would considerably reduce this timetable. The actual start of modernisation will, of course, depend on the international situation existing at the time.

We have been told that the modernisation, which will cost nearly £10 million, is very extensive. In addition to a major overhaul of main and auxiliary machinery and the replacement and updating of various equipment and facilities, the modernisation is designed to enable “ Melbourne “ - this is important - to operate anti-submarine aircraft by day and night in all weathers, to operate as the flagship and perform the duties of a major air defence ship with long range detection and height finding radar facilities, to provide close range air defence by the installation of Seacat missile systems and to improve habitability standards.

Mr Devine:

– This will be done by 1970.

Mr BARNES:

– The honorable member should think about 1943. Delivery of the 14 Tracker S2E fixed-wing anti-submarine aircraft authorised in the new programme at a total cost of £16.5 million will commence in 1967. This is most important. The date for the commencement of the modernisation of “ Melbourne “ is dictated by the availability of materials, and the ordering and delivery of the Tracker aircraft is timed to take advantage of United States production schedules at the most economic level. The modernisation period will provide a valuable opportunity for conversion training of personnel for the new Tracker aircraft. During the period that “ Melbourne “ is undergoing modernisation, the Fleet Air Arm squadrons will be based at the Naval Air Station at Nowra, and will, of course, be available for deployment as necessary. This is one of the points of criticism. “ Melbourne “ is valuable in our defence system and it is a bulwark of our security.

The defence programme has regard to our Territories. The Government realises its obligations to the areas in the north. The tremendous expansion of defences in Papua and New Guinea will be welcomed by the people who live in the Territory. Of all Australians, they live closest to the area of hostility. The honorable member for Hughes would not appreciate this, but I remind him of the remarks of the Prime Minister (Sir Robert Menzies) on 6th September 1963, when he said -

Nothing … is more damaging to the growth of independent institutions than armed attack or invasion. These Territories-

That is, Papua and New Guinea - have had bitter and devastating experience of that . . . We will defend these Territories as if they were part of our mainland; there must be no mistaken ideas about that.

Darwin and the north have been very much in the Government’s mind in framing this defence programme. As well as planning by the Services, the Administrator is reviewing local liaison arrangements. Civil defence organisations are active. This is all part of the programme in the north. The Pacific Islands Regiment will be increased from its present strength of about 1,000 to 3,500 by June 1968. A coast security force will be formed in Papua and New Guinea and will have five patrol craft which will be locally manned and maintained. The Army works programme in Papua and New Guinea includes additional barracks, workshops, engineering services and housing for native married members of the Forces.

Mr Devine:

– What is the rate of pay?

Mar. BARNES. - I should have thought that Opposition members would applaud these arrangements, but they do not. Work will be done on airfields in the Territory. This will include the construction of Boram airfield, the rehabilitation of Nadzab airfield, extensions to Daru airfield, improvements to smaller strips between Boram and Daru and the improvement of the airfield at Cocos Island. The programme also includes the rehabilitation of Manus Island oil fuel installations. The implications of the programme are tremendous. We are fulfilling the Prime Minister’s pledge to defend Papua and New Guinea and our other Territories, including the Northern Territory and Cocos Island. It covers a wide range. This is a broad defence programme designed to ensure the security of Australia. Honorable members opposite say that we have introduced this programme for political reasons. This is not so; we have devised this programme because the people of Australia want it this way.

Mr GRAY:
Capricornia

.- We can agree with the Minister for Territories (Mr. Barnes) that the first duty of any government is the security of its country and its people. This goes without argument. But we are critical not only of the steps taken by this Government to provide security but also of the manner in which it is done and the degree to which it may be accomplished. Admittedly, we are a country of only 11 million people. But other countries with fewer people have accomplished more. Sweden, for instance, with a population of 8 million, has a selfcontained defence industry. It is able to produce aeroplanes equal to, if not better than, the Mirage. At this moment, it has a programme which will provide the country with 600 of these aeroplanes.

Mr Hughes:

– It also has conscription.

Mr GRAY:

– So have we now. We are told that conscription has been introduced because we cannot secure recruits. But we had the recruits. It is not a matter of the men not offering themselves; it is a matter of the Government not accepting the men. The figures given by the Ministers who represent the Services show that only one recruit in four or five is accepted. This is a fact.

My son was one of 12 men who offered for enlistment, but he was the only one accepted; the other 11 were rejected. The Government now proposes to accept under its compulsory system the men it has rejected previously under the voluntary system. If the Government had accepted the volunteers, it would not have found it necessary to conscript anybody. Australians have never hesitated to offer themselves voluntarily to defend this country. The numbers sought by the Government are not very great. As many as 20,000 volunteers offered themselves in one year, but the Government accepted only 3,000, 4,000 or 5,000 of them. Recruits will now be accepted mainly on a medical examination. This is the procedure that exists in wartime. I had soldiers in my unit who were totally illiterate, but they were as good as anybody else for the job they had to do. Men are not unintelligent because they are not educated. We are not sending these men to lecture the enemy on the differential calculus. We are sending them out to fight and men with little education can learn to fight just as easily as can educated men. The compulsory part of this programme was completely unnecessary. It was introduced merely to meet a crisis that is not a military crisis. How is it that over the last three weeks we have discovered that a state of crisis exists?

On 26th October last our mutual friend, the Minister for the Army (Dr. Forbes) in all good faith addressed the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia. There is no doubt about this: He did not go there to tell the League something in which he did not believe. But today, of course, it is different. He said -

I could perhaps say that we have not introduced conscription up to this point in time, because our military advisers have indicated in the clearest and most unmistakable terms that it is not the most effective way of creating the army we need to meet the situation we face.

Do we, three weeks later, face any different situation - except, as the Leader of the Opposition has pointed out, the crisis of 5th December next, when there is to be a Senate election? It may be unfair to quote the Minister out of context. In case it should be considered so, I ask leave to incorporate in “ Hansard “ the speech which he gave to the R.S.L.

Mr DEPUTY SPEAKER (Mr Failes:

– Is leave granted?

Mr Barnes:

– No.

Mr DEPUTY SPEAKER:

– Leave is not granted.

Mr GRAY:

– Then the House must not blame me for reading only portions of the speech; I am not prepared to read it all. The Minister said -

Even a scheme which provides for a two year period of service . . .

As the Government now proposes - does not provide the people we most need, that is, experienced officers and N.C.O.’s and specialists. These are the people we are short of now. The deficiency would be even greater if conscription were introduced.

So we may expect, now that conscription is to be introduced - the word “conscription “ is the Minister’s, not mine - that the Army will be less efficient. We are told that the Service chiefs have changed their minds. Perhaps they might be subject to a tendency to change their minds when the policy of the Government changes, but even experts sometimes are a little unreliable. Let me cite to the House an expert, no less a person than Field Marshal Earl Haig, who commanded the British Armies in France in the Great War. In 1925, seven years after that war had ceased - a war which, if it proved anything, proved that cavalry was finished forever - said in an official report -

Some enthusiasts today talk about the probability of the horse becoming extinct and prophesy that the aeroplane, the tank and the motor vehicle will supersede the horse in future wars. I believe that the value of the horse and the opportunity for the horse in future are likely to be as great as ever. I am all for using aeroplanes and tanks, but they are only accessories to the man on the horse, and I feel sure that as time goes on you will find just as much use for the horse - well-bred horses - as you have ever done in the past.

Mr Hughes:

– That is about as up to date as your defence policy.

Mr GRAY:

– It is about as up to date as the Government’s intentions for defence in the future. This statement was made by a man who was accepted as one of the greatest experts, seven years after he commanded armies in a war which, as I have already stated, proved - if it proved anything - that the cavalry was gone forever.

Mr Robinson:

– That is your own argument of 25 years ago.

Mr GRAY:

– This Government will have in another 20 years the items needed to get its defence forces up to date. We want to have located in this country the industries to back up our defences. The defence equipment that is proposed to be used by Australia is to be imported. It is quite idle for the Minister to say that we have an aircraft industry. We have no such industry. Unless our aircraft industry is 100 per cent., it is nothing. In reply to a question, I was informed that 85 per cent, of the Mirage aircraft was to ‘be built in Australia. How does one fly 85 per cent, of a Mirage? If we are to depend on an outside supply source for vital parts of our defence equipment and a real crisis ever arises, no-one will give us anything.

We (have been told that this country is not capable of producing some of the modern devices that go into these items of equipment. That is not true. I am convinced, everybody on this side of the House is convinced, and I am sure that honorable members opposite in their own minds are convinced, that Australian scientists can do as much and as well as scientists in any Other part of the world. We were told that the electronic devices on the three destroyers being purchased in the United States could not be produced here. Yet the country has not been told - although this is true - that some of the electronic timing devices being used at Cape Kennedy in the United States to assist to track satellites were designed and manufactured in Salisbury, South Australia. This Government gave them to , me United States. Not only could these destroyers be built and equipped in Australia but also they could be built and equipped here more cheaply. We would then not only have had the destroyers but also we would have provided employment for the men who built them and the scientists who designed them. We would have had, too, the very great advantage that when the destroyers were actually in use we would have been able to keep them in use because we could have supplied all the necessary refitment equipment that they would require in service. This argument applies to every other single item that this Government proposes to purchase.

While we are on the subject of the Navy, let us not forget that the Navy that this Government has and the Navy that it proposes to get are not combat forces at all. The largest gun that goes to sea in our Navy is a 4.5 inch gun. This naval force is entirely designed for anti-submarine and escort work. It is intended only as an appendage of the United States Navy. It is not intended to fight, it is not equipped to fight, and it is not trained to fight. As I pointed out in the House only a few weeks ago, the training ship on which future combat sailors, if any, are trained has its main armament guns plugged with wood and unusable. There are no gunnery instructors on board. It is not a combat navy. It may be said that the Oberon class submarines are combat vessels. They are obsolescent before we even get them. The United Kingdom proposes to build no more for itself but we are getting the United Kingdom to build four for us. We could have built these submarines, too, in Australia and, having built them, we could have serviced them.

We have been told by our mutual friend the Minister for Territories (Mr. Barnes) that we depend on the United States. This is correct as far as this Government is concerned. We depend on the United States, we depend on the A.N.Z.U.S. Treaty and we depend on the South East Asia Treaty Organisation, but can anybody guarantee not only that the United States will come to our ass:stance in a real crisis but also that it could?

Dr Mackay:

– What is the alternative?

Mr GRAY:

– The alternative is to put ourselves in a position in which we can defend this country if we have to do so.

Dr Mackay:

– Do not be silly.

Mr GRAY:

– It may seem silly to honorable members opposite even to contemplate that we could defend the country. This attitude has been obvious over the past IS years while they have controlled the defence services of Australia. It is rather surprising that tonight when we are debating defence the Government has not put up one Service Minister to defend its defence policy. We will give the Government a chance. We have given it a chance for IS years and what has it produced? It has produced a crisis on defence. If this means anything, it means that over the past 15 years our defence has been inadequate. If it is not inadequate why do we have all the hubbub at the moment and why is defence expenditure up to £400 million a year? If the crisis is not as urgent as the Government says, it must have a department of soothsayers, because the crisis must be in the future, when the Government proposes to reach the apex of its defence effort. It is in the future, and it must be a long way in the future. The flagship of our Navy is to be modernised. It is to go into dry dock for this purpose in about 12 months time, and it will remain there for about two years. It is planned to spend about £10 million on it, and that amount will not be spent under two years, so the crisis must be more than three years away. Some of the equipment the Government intends to get will not arrive here and be available for Service use until 1970, more than five years away. How can any honorable member - seriously - not only say that a crisis is approaching but also claim to be able to nominate the time at which it will arrive?

In the past it has been the duty of the Government to keep the defences of this country in some sort of shape so that they would be useful if actually called upon. It is obvious that the proposals announced by the Prime Minister (Sir Robert Menzies) will lead to more taxation. Most of the proposed expenditure is not immediate, but there is not the slightest shadow of doubt that when the Senate election is safely over, win, lose or draw the Government will have to raise additional taxation to meet the proposed additional expenditure. No-one is denying that, but no-one has stated it.

Dr Mackay:

– What did the Prime Minister say?

Mr GRAY:

– The Prime Minister did not mention taxation.

Mr Robinson:

– Why did the honorable member advocate a cut in the defence vote?

Mr GRAY:

– I have never advocated a cut in the defence vote, and never in its history has the Australian Labour Party attempted to cut the defence vote.

Mr Robinson:

– What a short memory.

Mr GRAY:

– We have been the Party to lead Australia in two wars. It has been pointed out tonight that the Royal Australian Navy was established by a Labour government. A Labour government was in power during the First World War and during the Second World War. We have provided the necessary political leadership in this country during the two wars in which we have been engaged. We have not hesitated to spend money or to take the steps that have been necessary to do the job. We do not propose to hesitate now. We are critical of these proposals, which we regard as being aimed not necessarily at the defence of this country but which are merely a political policy aimed at the electors on 5th December next. We object to the whole idea that our defence should be entirely dependent on another country, whether it be the United States of America or any other.

Mr Turnbull:

– You called upon America quickly in the last war.

Mr GRAY:

– The honorable member for Mallee is old enough to remember that so far as the United States of America is concerned it has gone to nobody’s aid in any circumstances.

Dr Mackay:

– That is a disgusting statement. What about Korea?

Mr GRAY:

– The United States entered the First War because it was attacked, and it entered the Second World War after Pearl Harbour was attacked. Members opposite will be greatly extended in trying to prove to anybody that had we been attacked instead of Pearl Harbour America would have come to our aid. The only country we could have depended upon to come to our aid was Great Britain and she had gone to the aid of other countries. I am not saying that the United States would not have come to our aid had we been attacked; I said that members opposite could not prove that she would have come to our aid. It has been said that United States troops came to Australia to help us. The United States troops who came here were refugees. I was at the port at which they were landed. They had been half way between Pearl Harbour and Manila when the Japanese attacked both places, and so the troops were sent here.

Mr King:

– In other words the honorable member has no faith in the Americans.

Mr GRAY:

– I have no faith in anybody going to anybody’s aid. The first principle of defence is that a country must be prepared to defend itself. I would point out that one of the provisions in the S.E.A.T.O. Pact is that these countries agree to come to each other’s aid in accordance with their constitutional processes. That provision has never been explained satisfactorily in this House. When Sir Garfield Barwick was the Minister for External Affairs he tried to explain it but the Americans disagreed with his interpretation.

Mr Robinson:

– The honorable member is too dumb to understand it.

Mr GRAY:

– Maybe I am, but I am not as dumb as those who profess to believe this and are still unable to explain it to anyone. Perhaps I would not be so dumb if the honorable member could tell me what it means; but he cannot.

It is most important that we should be able to defend Australia, and that we give more attention to continental defence and perhaps a little less to military adventures in Asia, where they are bound to fail. The main thing is that we defend Australia. The Labour Party is prepared to do that 100 per cent.

Mr SPEAKER:

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

Mr Malcolm Fraser:
WANNON, VICTORIA · LP

– The honorable member for Capricornia (Mr. Gray) has been as inaccurate as other members of the Opposition who have participated in this debate this evening. I would have thought that even his memory would have gone back a few short weeks to the return from America of the Deputy Leader of the Opposition (Mr. Whitlam), who said that people in the United States, in the State Department and elsewhere, had told him that the interpretation of the provisions of the A.N.Z.U.S. Treaty by Sir Garfield Barwick was correct This statement received some publicity and, I understand, some controversial debate in the Labour Party caucus the next morning. We cannot hold ourselves responsible for the honorable member’s lack of memory in this regard.

Members of the Opposition should blush with shame at the humbug in which they have indulged in this debate. They know quite well that what they have said has had very little regard for accuracy or fact. They have said - I challenge them to repeat it if they will - that these measures have been introduced for political purposes. Is the honorable member for Grayndler (Mr. Daly) or the honorable member for Eden-Monaro (Mr. Allan Fraser) prepared to stand again and say that these measures have been introduced for political purposes?

Mr Daly:

– Yes.

Mr Malcolm Fraser:
WANNON, VICTORIA · LP

– This is surprising, but perhaps it at least reveals some consistency in the Opposition, because that is precisely the charge that the present Leader of the Opposition (Mr. Calwell) laid against the then Labour Prime Minister, John Curtin, in 1943. The present Leader of the Opposition, criticising his own Prime Minister, John Curtin, during the debate on the Defence (Citizen Military Forces) Bill 1943, said -

The introduction of this Bill has been dictated by political reasons.

It is strange that the present Leader of the Opposition is leading the same attack against these measures as he led at that time against his own Prime Minister. He criticised and attacked John Curtin, not only in the Parliament, where his remarks were recorded and were available for all to read in “Hansard”, but also in the Labour Party caucus, if the reports that came from that meeting are correct, and certainly at the Labour Party Conference, the record of the proceedings of which is available in the Parliamentary Library. In addition, he criticised his Prime Minister at the meeting of the Victorian Executive which, at that time, most vigorously opposed the measure advanced by the Prime Minister to provide for the Australian militia to fight outside

Australia. When introducing the measure the then Prime Minister said -

The defence of Australia is not confined to its territorial limits. Provided adequate forces are available, it can best be secured by denying to the enemy the outer screen of islands from which attacks can be launched on the mainland.

That statement was made by the then Prime Minister. No member of his party at this time should be ashamed of it. In the same debate the present Leader of the Opposition made the statement that I have already repeated -

The introduction of this Bill has been dictated by political reasons.

He also appealed, during his speech in this debate, to the Labour Party Conference of 36 men to upset the decisions of the Parliament, to change its own decisions and to force the cancellation of the legislation. He went on to say -

I hope that this Bill will be defeated, and as I have already said, if it does become law I hope that it will be a dead letter. If it does not become a dead letter, I hope that in a few months the Labour Party in Australia in conference assembled-

He appealed to the outside conference of faceless men - will revert to the attitude which it formerly adopted in regard to conscription. When that occurs I believe that honorable members of the Labour Party in this Parliament-

I interpolate - “will obey the conference and “- will do their utmost to maintain the traditional policy of the party, which is not only a good policy for Labour . . .

The Leader of the Opposition has been consistent but he had no regard for the strategic situation that Australia faced in 1943 and he has no regard for the situation that we face at the present time. It is most unfortunate that be has been able to persuade the Labour Party to adopt that attitude and to change the principles and standards set by its former leaders.

Every person in the House will regret the necessity for these measures, which will inevitably involve a diversion of resources from developmental works and which will inevitably involve some sacrifice on the part of each Australian; but because of that sacrifice, it is plain that we must examine, as the Prime Minister did, the reasons for these measures. Those reasons include the continued and increasing instability in South East Asia and Indonesia’s policies, which pose a continual problem for us and for our friend’s in Malaysia and the United Kingdom. As the Prime Minister said, we should have much in common with Indonesia - the stability of the area, the development of our two countries, security, and opposition to the spread of Mainland China. The argument over Malaysia is the one point of difference which is, in a large measure, making what we are doing necessary, and which could lead to war between our two countries if Indonesia persists in its blatant, avowed and admitted aggression against Malaysia. If it does lead to war, it is pertinent to ask what the nature of the war could be in that area or in South East Asia.

On the mainland it is plain that the United States would be the main allied partner. If the United States was involved in something that spread from South Vietnam this could plainly lead, at the worst, to a general war with China. But in the Indonesian-Malaysian theatre a conflict is more likely to be a limited one, not necessarily on one front. It could be on two fronts. In this regard the measures we are taking in Papua-New Guinea in relation to the Pacific Islands Regiment and other establishments in that Territory should be borne well in mind. We cannot at the same time ignore the possibility of increased Russian help for Indonesia because it may not be widely known but is nevertheless true that there are already, and have been for a long time, Russian technicians in Indonesia assisting with the maintenance and use of their sophisticated surface to air missiles and other missile weapons of various kinds.

We in this Parliament, including the Opposition, and particularly the Leader of the Opposition, who continually attacked Prime Minister John Curtin during the last war and who, no doubt, added greatly to that Prime Minister’s troubles and difficulties during the war, should all be able to accept that the threat to Australia has been growing and is greater now than it has been for some considerable time. If we accept Chat, it is appropriate to ask what our response should be. In asking this, we need to take into account four elements in our community that contribute to our defence capability. They are the quality of our people, which is unequalled; the arms and forces available to our country; our industrial capacity; and the nature of our friends and our alliances. A balance must be maintained between these. For example, if our arms and our men under arms are too great in relation to our industry, not only will our growth be stifled but also at the same time our ability to support arms in the field will be reduced. This situation to some extent may have hindered operations in the last war. On the other hand, if there are too few men under arms in relation to the efforts of our allies, our allies might come to ask whether their fullest effort would be justified in our aid. Any conclusions that might come to us concerning the preservation of the balance between these four matters must be judged against the threat presented to our country, which all of us should be able to agree is greater now than it once was.

The programme that has been announced for the Services is a comprehensive one. In the next few years additional ships; - at least one a year and, on occasions, two or more a year - will be coming into service in the Navy. These will be additional to the ships at present in service. There is no plan to put any of the present ships out of operation and into reserve. The new ships will include some of the best and most capable fighting ships in the world today. The most notable of these are the D.D.G.’s which I saw being built in the United States. These are magnificent fighting vehicles and will be of great advantage to the Australian Navy. Contrary to what the honorable member for Capricornia has said, the Oberon submarines, which will also be coming into commission, are the best non-nuclear submarines available in the world today. The new equipment that is to be ordered and that which has been ordered for the Air Force is well known. Of the Mirage fighters, we shall now be getting a total of 110 with 10 extra training aircraft. As to jets, the FI IIA aircraft will be delivered later in this decade. I was told only in the last two or three weeks that these aircraft will be flying, on time, before Christmas. That is a magnificent effort. The Prime Minister (Sir Robert Menzies) has announced that the additional 12 Hercules aircraft will increase the heavy lift transport capability of the Air Force by over 100 per cent. Then, of course, we know about the Caribous, the Iroquois and the training aircraft that either have been ordered or are going to be ordered.

The controversial matters involved in this programme relate to what should be done with the Army. The Government says - and we on this side of the Parliament believe that it is right - that the voluntary system has failed - that it is not possible to get the numbers that our present strategic situation requires by voluntary means. Some criticism has been levelled by the Leader of the Opposition, and by the honorable member for Capricornia, at the standards maintained for recruitment. They say: “ People apply, but you will not accept them. Why will you not accept them? If you accepted them all, you would not need compulsion “. It may seem strange, but the standards followed by the Army at the present time and which have been followed consistently for over 20 years are those which were laid down by the Curtin Government in 1943 under operational conditions. Those standards have not been altered. They are the standards that were found to be necessary as a result of campaign conditions during the last war.

The Leader of the Opposition has said that the rate of re-engagement is not high enough. Our rate of re-engagement is 70 per cent., and that is very good. The Leader of the Opposition also said that the wastage is too great. This is lower than 10 per cent. Indeed, I do not think that any industry would have a better record than that. The Leader of the Opposition said at some time, perhaps at Rockhampton, that more should be done by way of salaries or other financial inducements. I remind him that the Government made a very marked step forward in these matters in June but at the moment it is not possible to notice any real beneficial effect on the recruiting level as a result. That is quite different from the position that applied when the recommendations contained in the former report, the Allison report were adopted. The adoption of these recommendations had an immediate effect upon recruitment. Therefore, it may well be a reasonable assumption, judging from more recent experience, that financial inducements alone will not bring people into the armed forces under present circumstances. However, if the target of 28,000 by 1967 had been maintained, it might have been tenable to argue, as the Leader of the Opposition tries to do, that voluntary means could still be tried. The Government has said that 33,000 effective bodies in the Australian Regular Army by 1966 are essential. This represents the achievement of a larger target within a shorter period of time, and it is clear that we would have no possibility of reaching these levels by the voluntary means.

He has said that war service homes and the provision of health benefits for all servicemen would have some effect, but most people going into the Australian Regular Army volunteer between the ages of 17 and 19 years. I suggest that those people generally are not very concerned about establishing a home, going to a doctor, or seeking health benefits of one kind or another. I do not think these things would appeal to them.

There is another argument. It is that the voluntary system would not make available to Australia the great numbers of reserves that this new system will provide. By 1968, 18,000 fully trained people will be in Reserves, and thereafter, the number will be 21,000. If we have to have national service training, then it is appropriate to ask which kind’ of national service training it should be. It must be related to the threats that confront Australia. We need forces that are quickly available, and we need reserves that can follow up the initial forces within a reasonable period of time. Further, all forces must be available to be used outside Australia. For the Army, therefore, it is plain that national service of the 1950 type would have little relevance to the present situation because under that system, the large numbers involved were not readily available and the system to some extent weakened the regular forces because of the large numbers of Regular Army personnel that had to be used for training the national service men.

If we look at the Government’s proposals, we find that they are ideally tailored to our present requirements. We will have selective national service training of slightly fewer than 7,000 men a year. There will be a considerable expansion of the Citizen Military Forces, which will be stimulated by the provision that an agreement to serve for six years in the C.M.F. will obviate the necessity to serve two years as a national service man. There will be quite a marked expansion of the Pacific Islands Regiment. Equipment purchases for the Army will be increased from £10 million a short while ago to £30 million at the end of the proposed programme.

Let me now deal with the manpower problem of the Army in a little more detail. We will have 6,900 people in training for two years, with three years on the Reserve. By 1968 the Reserve will number 18,000 and by 1969 it will be 21,000. It will remain at that level thereafter. By 1966 the Regular Army will number 37,500, with 33,000 effective as against 22,000 at the present time. There will be 3,600 on the Emergency Reserve and 35,000 available in the C.M.F. This will give a total of more than 71,000 people readily available. By 1969 we can add the 21,000 that will be on the Regular Reserve and available like the C.M.F. in any defence emergency. Australia will then have a total of over 90,000 troops fairly readily available. This will be a very considerable force for a country of our size.

I would like to interpolate one comment at this point. I believe that the Government and this Parliament should give a guarantee that no one will be penalised as a result of being called up for national service. We have an individual and collective responsibility to see that persons called up are not penalised. This is a matter that I believe is of the greatest importance, and I am pleased to see that the Minister for Labour and National Service (Mr. McMahon) has said that the Government is looking into it.

The Government plans will provide forces commensurate with our immediate ability to supply them, with the threat that confronts us, and with the effort that is being put forward by our allies. In the United States I found an understanding of the position concerning our defence forces. It was accepted that we were in the middle of an expansion programme. It is clear that our allies will be delighted at our efforts, and Australia can hold her head high in respect of the contribution she is making towards the security of this part of the world.

The Government during the last 15 years has been praised for many things, and justly so. It has been praised for the development of our country, for the improvement in social justice in Australia and for the international stature that our Prime Minister has achieved for us. The Government has, especially since May 1963, made a graduated response to a deteriorating international and strategic situation. It is not always realised and remembered that the effect of the defence statement of May 1963 was to add £40 million a year to our defence expenditure; that between May 1963 and the present time the Government authorised an additional amount of £118 million for new or more modern equipment, and that in addition, the Government has spent large amounts of money in increasing the pay and improving the conditions of the members of the Services.

The Government has made a graduated effort to meet a steadily deteriorating situation. The measures now before us do not represent something which has been decided on quickly. What the Prime Minister recently announced represented the culmination of a programme that was really begun in May 1963 with the defence statement presented at that time by the Prime Minister. It should be looked at in that light. With the fulfilment of this programme we will have forces to meet the needs of Australia and the threats that are likely to confront Australia. We will be able to meet our commitments in the South East Asian area and elsewhere.

An essential feature of the Government’s programme is that the arrangements for selective national service training for the Army will make very rapid expansion possible once the scheme has been properly introduced. This would be a great advantage for Australia if we were ever confronted with a situation in which full mobilisation was necessary. The Government has provided a lead for which, I am sure, all Australians will be thoroughly thankful. It is a lead that was necessary. The Government has answered Australia’s need, and its action has the unanimous support of members of the Government parties and the great majority of the Australian people.

Mr L R JOHNSON:
Hughes

– On Tuesday last the Parliament and the people of Australia saw the Prime Minister (Sir Robert Menzies) cast in a characteristic pre-election role. He was simmering with synthetic passion and superficiality. He was warning the nation about the grave dangers which are confronting Australia and which I am sure he hopes, in desperation, will manifest themselves in time for the Government to derive benefit from them in the forthcoming Senate election. I very much doubt whether most of the proposals set out in the defence review will ever be implemented. If that is so, the treatment will be no different from that accorded to other defence proposals that have been made during the 15 years for which this Government has been in office.

It is necessary for the Government to pull yet another rabbit out of the hat on the occasion of the Senate election campaign. Things have been happening in Australia. First, there was the “ Voyager “ disaster, which provided clear and undeniable evidence that there is something seriously wrong with the Royal Australian Navy. Not only have we problems on the sea. Problems are manifesting themselves in the air. We have with us the Ansett- A.N.A. problem. Whenever things are bad and an election is looming it is necessary, in keeping with the Prime Minister’s method of running an election campaign, to invoke some kind of diversion. Another one has been invoked on the eve of the forthcoming Senate election.

If the Prime Minister’s case for a dramatic overhaul of our defences is honest, it must be the result of one or both of two factors. The first is the neglect and indifference over the period for which this Government has been in office which have left our defence resources in a most inadequate state. That is probably the factor which has motivated the Government to advance its latest proposals. The other factor is the failure of the Government’s foreign policy. It is undeniable that one of the most important responsibilities that any government has is to pursue a foreign policy which serves the best interests of the people of the country concerned. There has been a deterioration in foreign affairs. Unfortunately, we have not been successful in cultivating good relations with our nearest neighbour with the result that, according to the Government, there prevails a state of affairs in which a good deal of our economic, manpower and other resources must be devoted to the cause of war and to preparation for war rather than for the benefit of the people.

Sir, when we speak of the deficiencies of this Government in relation to defence, I am reminded of a statement that was made only a few days ago by Captain John Robertson, former commander of the “ Melbourne “, who, as most honorable members would readily concede - I am sure the honorable member for La Trobe (Mr. Jess) would concede this - is probably the most authoritative journalist on defence affairs in Australia today. In the “ Australian “, which is one of the most responsible newspapers on defence matters, Captain Robertson stated

We arc engaged in a rush to correct the omissions of 10 years of prevarication - 10 years during which the defence vote declined, 10 years during which the status of our defence forces was depressed, 10 years of talk, 10 years of inaction, 10 years of gambling on the indulgence of our allies - 10 wasted years.

I repeat that that is the comment of Captain Robertson, who has been eulogised by the honorable member for La Trobe and many other honorable members during recent debates.

We have heard the Prime Minister referred to in eulogistic terms during this debate, even by the honorable member for Wannon (Mr. Malcolm Fraser). Let me say that there is a great deal of consternation in this country at the present time about the proposal of the Prime Minister to introduce conscription and the right honorable gentleman has been asked questions about his own attitude in time of war. All honorable members had the opportunity to observe the extent to which he was embarrassed about them. Now, I am not saying that the Prime Minister had to go to war but I want to refer honorable members to some comments which were made by a close associate of the right honorable gentleman. I am referring to a former Prime Minister, Sir Earle Page. On the 20th April 1939, Sir Earle made a speech in this Parliament and the effect of the speech was that the government of the day was tendering its resignation. He gave three particular reasons why he considered Robert Gordon Menzies to be unsuitable as a Prime Minister of Australia. Let me quote in part what Sir Earle said -

I come now to the third incident: Some 24 years ago the right honorable member for Kooyong was a member of the Australian Military Forces and held the King’s Commission. In 1915, after having been in the military forces for some years, he resigned his commission and did not go overseas.

Sir Earle went on to say

I am not calling into question the reason for the right honorable gentleman’s action, nor would I question the reason of any other individual in similar circumstances. Ail I say is that the right honorable gentleman has not explained, to the satisfaction of the very great body of people who did participate in the war, his reasons, and because of this I am afraid that he will not be able to get that maximum effort from the people of Australia to which I have referred.

I am not making these remarks; I am but quoting the comments of a former Prime Minister of this country. As I have said, it is not for me to quibble as to whether or not the Prime Minister chooses to go to war but what I have the right to quibble about is that he at least had the choice and made his decision. It seems to me to be a pretty unsatisfactory state of affairs that he will not concede this right to the young men of our community even in times of peace. What the right honorable gentleman has had himself in the way of a prerogative, which he exercised, he has now decided to deny to the 20-year-old men of this country.

We have heard about national service training. The clear fact of the matter is that tonight we are discussing in this defence review the question of conscription. That is what it is called. It is conscription. The Opposition considers that it is unnecessary because insufficient effort has been made to encourage voluntary recruitment. Recruiting is falling at a very drastic rate even at the present time and the incentives offered to members of the Citizen Military Forces are obviously inadequate. The Deputy Leader of the Opposition (Mr. Whitlam) tonight advocated that the war service homes provisions should be extended to those who serve in the C.M.F. What is wrong with giving these young men an opportunity to get a housing reward for the service they give? What is wrong with giving them repatriation benefits, which are no different from the national health schemes which operate in most parts of the world in this year of grace 1964? The people of Great Britain, New Zealand, and Scandinavian countries, including Sweden, have all these benefits whether they went to war or not. This is the concept we should have in considering such matters. We have in prospect this unfortunate state of affairs - conscription for the young men of Australia. Although only about 7,000 young men are to be selected every year there will be many hundreds of thousands over whom will hang this cloud of uncertainty. What is going to happen to them about their employment opportunities? They are training for careers. It is a matter of drawing names from a barrel. It is an unfortunate fact that these men will not be selected to defend Australia. They will be selected by this Government to fight on foreign soil, in some distant land, even in times when Australia has not made a declaration of war. Is not this the situation? Should we have had conscripts fighting in the Korean war, for example? The honorable member for Parkes (Mr. Hughes) is attempting to interject. He is referred to in this place as “ Packer’s Pea for Parkes “ and apparently he conforms to the “ Daily Telegraph “ line. lt seems that he would advocate the conscription of young men to fight in wars such as the discredited Korean war. He would have them fighting for such corrupt regimes as that of Syngman Rhee, which has been discredited in the eyes of the world. The Korean people themselves ultimately got rid of the bone of contention by rejecting Syngman Rhee. This is the kind of situation in which the Government would invoke the conscription of young Australian men. The Syngman Rhee Government reeked with corruption and collusion.

There are many contemporary situations closely related to the one I have mentioned. What dictator does the Government want in power in Vietnam? Which of the five dictators who have prevailed in Vietnam in as many years would Government supporters send our conscripted 20 year olds to fight for? Should they risk their lives for dictators who take over by military coups every few weeks? Should these young men be conscripted to risk their lives around the murky, mosquito-infested waters of the Mekong River in times of peace or when no declaration of war has been made by the Government? The honorable member for Parkes is lighthearted about this matter, but our history shows that conscription has so aroused the Australian people that they have swept governments out of office on the issue. If the honorable member will not treat it seriously, there are mothers, fathers, brothers, and sisters of our young men who regard it as a matter of the utmost importance.

Under the scheme announced by the Government there are to be practically no exemptions - only deferments - except in cases of extreme physical or mental incapacity. Any young man who is able to stand on his two feet and carry a rifle is eligible to be called up. Young men who are now 20 will have this threat over their heads for a decade. They will be subjected to great uncertainty by having the evil day postponed. Already there is speculation as to who will obtain deferments. Indentured apprentices will be entitled to put off their training until they have served their time in their trades. This is also true of university students, especially those who are studying for their first degree. There are many other young men who are training for careers but are not indentured as apprentices. What about all the young men who are training to be accountants or journalists or are serving in our Public Service or in the field of commerce? They are looking forward to a career. They are in the process of training for a career, but they will not obtain deferments unless perhaps they know a member of the Liberal Party or a Cabinet Minister. Already we have undeniable evidence that the Country Party is making representations on behalf of the sons of wealthy squatters. The Country Party wants a block exemption for them, but the ordinary working fellow who has no influence or contact with the members of the Liberal Party will have to carry the burden. lt is necessary to consider the attitude of the Australian people. I know that already people are saying: “lt is good to have this conscription. We will gather up all the bodgies, all the people with long hair-dos and all the people who hang around the milk bars, and we will put them in the Services “. Let me tell the people of Australia, or those who are listening to me, that those young men - the so-called bodgies, the so-called larrikins and the young fellows who are bringing discredit on the Australian community - are not the ones who will be conscripted; they are the ones who will be exempted, just as many young men have been exempted in the past because they have had insufficient academic qualifications. The young mcn who hang around the milk bars will not be admitted to the Australian Army. They will not measure up to educational standards. They will not be considered fit enough and decent enough for the Australian Army. So conscription will not achieve that purpose at all. It will be the decent, wholesome young Australian who has a future ahead of him who will be conscripted. So there will be a great deal of disillusionment among the Australian people.

As one of my colleagues who preceded me in this debate said, new Australians or migrants will be exempted, too. In fact, as we are taking 7,000 men out of the community and sending them off to some distant country for two years, simultaneously we will be increasing the migrant intake. We will be saying: “ Good bye, chaps. Farewell. Don’t you worry. All your jobs, your businesses and possibly your houses will be taken over by people whom the Government will be bringing from other countries. Away you go. We will bring other young men to Australia.” I do not blame the new Australians. They arc under no obligation, because they have been exempted from any obligation. I am not prejudiced against new Australians. I know many of them who have taken out Australian citizenship and have accepted their responsbilities as well as any Australian born citizen has. But we have a potential problem in the fact that from now on exemption from military service will be an aid to migration.

One unfortunate fact about this whole matter is that a great number of services will be slashed savagely because the Government has now decided to cover up its past defence misdemeanours. We will spend a great deal of money on the defence programme and I have already established that expenditure on certain civilian undertakings will be curtailed. We were to build a university in Papua and New Guinea, but the dogs are barking that the Government cannot now afford to build that university. We were also to get on with the establishment of a university in Newcastle, but that is being curtailed for the same reason - the cost of conscription. Contribution under the national health scheme are to be increased because the Government has decided on this course of action. I have ascertained that the activities of the Commonwealth Scientific and Industrial Research Organisation are being curtailed so that the Budget can bc balanced and so that these conscripts, who are to receive £1 6-odd a week, can be paid.

We all know the anomalies which exist in the pensioner medical service and which affect more than 100,000 pensioners. There is now to be no relief in that service, again because of the Government’s decision to introduce conscription. Although the Government previously was contemplating increases in the rates of child endowment, which have remained static for so many years, this, too, will now be deferred. One of the worst effects of which I have heard - this comes as a great surprise to me - is that some members of the Australian Regular Army are starting to talk in the old derogatory way about the members of this new conscripted force. We remember the prejudice in the old days, the talk of chocos and things of that kind. What a shocking thing it would be to have a resurrection of that type of prejudice and the establishment of a second class Army here in Australia. Those are the matters that give concern.

My electorate bears the name of William Morris Hughes. I do not need to remind honorable members opposite but I do give this Government the sombre warning that it was William Morris Hughes who, in 1916, sought a mandate for conscription. The referendum for which he sought support was rejected by the people of Australia. It was thrown to the four winds. He was forced to relinquish the Government. He was forced to leave the Australian Labour Party. After that, when he started the Nationalist Party, he came again to the people with a similar referendum, which was also rejected.

The ACTING DEPUTY SPEAKER (Mr. Mackinnon). - Order! The honorable member’s time has expired.

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– I hope that no more electorates will be named after great Australian statesmen because I feel that, after the miserably muck-raking performance on the part of the honorable member for Hughes (Mr. L. R. Johnson), the late Billy Hughes will be turning in his grave to think that the honorable member’s electorate bears his name. The honorable member for Hughes spoke about the 10 years that the locusts have eaten. He did not talk about the 10 termites of the

Opposition who are destroying or attempting to destroy the fabric of Australia’s freedom. He went back pitchforking through the midden heaps of the past to find ammunition to throw at the Prime Minister (Sir Robert Menzies). He went on to discuss rehabilitation benefits. He said that there were going to be no rehabilitation benefits. Who has said that there are going to be no rehabilitation benefits? If young men of this country are going to be asked to do two years service and spend three years in the Reserve they are entitled to and will be given reasonable rehabilitation benefits for the service that they have given as compared with those who are not called upon to give it or those in the Australian Labour Party who would not give it anyway.

The honorable member then went on to ask whether the Government is going to request any Australian to serve in a discredited war such as the Korean war and to support somebody like Syngman Rhee, who was thrown out of office. Syngman Rhee is not the only war leader who was thrown out of office after the armistice was declared in Korea. We know of other countries to which this applies and which have, as honorable members know, democracy. I wish the honorable member for Hughes had been with me in Korea less than a fortnight ago and had come with n.e to stand on the boundary of the Communist and the Free World at a place called Panmonjan. I see that the honorable member for Hughes is leaving the chamber. He had better get out. I wish honorable members could have stood with me on that boundary and seen there one of the world’s greatest comedies as a memorial to one of the world’s greatest tragedies. Normally, the idea that you can solve international problems by splitting a nation in two such as happened in Germany, Korea and Vietnam which now are all troublesome spots, if not running sores in the international world today, creates only more problems than you think you are going to solve. Those things, at the moment, are in the past.

I wish the honorable member for Hughes could have been with me to Tokyo at the time of the Olympic Games and seen the tragedy there of the division of Korea. There was a father in Tokyo who had not seen his daughter since the Communists over-ran Korea. He came to Tokyo at his own expense to try to meet his daughter who was a member of the North Korean Olympic team. Eventually, he was allowed to see her for five minutes before she departed on a boat with a guard on each side of her. That is the sort of problem that these people are facing. The honorable member for Hughes does not realise that the two rocks of the anti-Communist world, the Republic of Korea armed forces and the Republic of China armed forces which are some 600,000 or 700,000 strong have been playing a big part in the defence of this country of which I hope he is as proud as the rest of us are. I say that because these people have been forcing the Communists to maintain armed services opposite them which otherwise would have been diverted south and which probably would have overrun South East Asia before now. I hope that many more members of this House will be able to visit Korea. I was astounded to find that I was the first back bencher for some five years to visit that country. I was interested to see the advances that had been made and some of the difficulties that had been overcome since 1955 when I was last there and when the country had been completely devastated by the war of Communist aggression. Members of the Parliament have started visiting countries in South East Asia. I hope that some honorable members will be able to go to Korea and make personal contacts and get personal understanding of the problems that are being faced in Korea, so that we in Australia will be able to do more in the future than we have done in the past to help countries of that nature.

The honorable member for Hughes asked: Who advocates that Australian troops should fight against the Communists in South Vietnam? I shall tell him. The honorable member for Herbert (Mr. Harding), one of his own party, when he came back from a visit to the area, submitted a report to the Stuart Branch of the Australian Labour Party in which he warned that should South Vietnam be lost or become neutralist, Laos and Cambodia would follow and Thailand also would be lost. The honorable member went on to describe two of the Vietcong prisoners of war he had met, both of whom had come from North Vietnam. He described the ammunition and the captured arms that he saw, some of which had come from

Czechoslovakia and some from China. He said finally that if national service training were brought in it should be for two years and that a good look should be taken at the Citizen Military Forces and the school cadets.

Mr Stokes:

– Who said that?

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– The honorable member for Herbert in his report to the Stuart Branch of the A.L.P. I take my hat off to him for saying what he felt after visiting the country that has been maligned and for being able to understand the position in such a short space of time.

Mr Duthie:

– Who maligned whom?

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– If the honorable member wants to know, it was the honorable member for Hughes when be was speaking about Vietnam. If the honorable member for Wilmot says that the honorable member for Hughes did not malign Vietnam, then I am sorry for his ability to understand.

The attitude of the Labour Party at the present time in regard to the defence and security of Australia, and to co-operation in the defence and security of our neighbours and allies in South East Asia, seems to mc inexplicable, incomprehensible and unintelligible. Over the past 10 years honorable members opposite have on some occasions criticised the Government for expending too much on defence, and on other occasions it has been suggested that there has been wasteful expenditure. Now they say, temporarily, that we should have a better defence force, but they have not said how we should go about achieving it. Because there is an election coming up, I suppose they will be advocating stronger defence measures. Anybody’s guess is as good as mine as to what the actual policy of the Labour Party is.

To me, the decisions of the Labour Party are like the synthetic deliberations of the mad hatter’s tea party, in a room where there are nice red balloons around the ceiling. Probably the members of the party think that the balloons were bought in Hong Kong, but actually they were made in Peking. I am reminded of one of our Australian scientists who recently visited Peking and became so excited and enthusiastic at the reception he received that in the banquet hall in Peking he said, as reported on Peking Radio on 8th October-

It was pretty to see these festoons of light reflected like necklaces round the shoulders of the beer bottles.

Knowing the abstemiousness and personal patriotism of the Leader of the Opposition, I can only suggest that the myopic vision of which he gave evidence tonight was due to the political optical prescription which was given to him by the medicine men on the federal executive, or perhaps he viewed the landscape in that way because the honorable member for Yarra (Dr. J. F. Cairns) or the honorable member for Reid (Mr. Uren) had touched it up with a little Peking paint. Perhaps they were colour blind or could not read the label on the pot of paint.

Mr Duthie:

– The honorable member’s trip to Japan has not improved him.

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– It might improve the honorable member if he visited these countries rather more often. However, it is in keeping with a document I received not so long ago from New Zealand headed “Some Facts About the War in Vietnam “. This shows the extent and pertinacity of the Communist propaganda. The document is similar to one I picked up in New York earlier this year headed “ Stop McNamara’s War in Vietnam “. The back page of the second document is almost word for word in many ways with the Peking propaganda, and is evidently propaganda straight from Peking. This sort of stuff has been circulated all over the place.

Look at the recent events - the change of government in Moscow; the still armed armistice in Korea; the Independence Day speech of President Sukarno, when be definitely came out and sided with the Communists; President Sukarno’s recent exchange of ambassadors with North Vietnam and North Korea; and the recent speeches of Prince Norodom Sihanouk in Cambodia. Anyone on the other side of the House who says that the situation has not deteriorated simply has not taken the trouble even to find out the elementary facts.

I have criticised the Government freely, if not harshly, for not moving fast enough. Maybe, like many people in this free world, the Government has erred in bending over backwards in order to try to maintain the peace which we all want. Maybe some others have bent over backwards so far that they cannot even see the dangers that are approaching from the front. However, the fact remains that the statement on defence expenditure, and the programme outlined by the Prime Minister (Sir Robert Menzies) earlier this week in this House, have been widely acclaimed in Australia, America and Britain as a realistic approach to an unfortunate and dangerous situation. I warmly congratulate the Government on having both the courage and the determination to tell the Australian people - it could have painted the picture in much stronger colours - of the dangers which unfortunately we have to face. There is not one honorable member on either side of this House who would not be sorry that these measures are necessary, and there are not many in the House, on either side, who would say that they are not necessary.

I appeal to honorable members not to treat this debate, and this defence review, as a political football. I believe that the Australian people - I have said this before in the House - have been ahead of us for a long time in their thinking on what was necessary. Evidently when the Prime Minister was in Washington he gave a pledge to President Johnson. It was reported in the “Age” of 25th June that President Johnson said -

We work for the same kind of free world.

I don’t know when a news announcement has given our country more comfort and been received with greater satisfaction than the announcement made last week that the people of Australia were ready and anxious to make their contribution of men, materials and equipment alongside of ou/ men who are fighting for freedom in South Vietnam.

Everything that matters for us and everything that matters for you is at a common risk in this strange world and must therefore be explained and defended in common.

The Prime Minister has honoured the promise that he gave to the United States President at that time. I am perfectly certain that Australians of the present, as of the past, once they are told what the position is, and realise the facts, will heed the warning, even though they may not warmly applaud, and will support the measures that have been suggested.

Furthermore, the fact that we are taking these defence measures will give us much more right to have our voice heard in the councils of the world in the determination of what is to happen in this region. It will not only promote our own security, which depends on other people, but also, I believe, enable us to accept our share of responsibility for helping our friends and allies in South East Asia. I trust that we shall be able to get all our friends and allies, with us, to treat South East Asia as one strategic concept, instead of piecemeal as we have treated it in the past, and that we shall be able to stop Communist aggression. The No. 1 priority is security for ourselves and our friends and allies in this region.

Having taken appropriate measures to attain that objective, let us remind ourselves that this is not the end of the road. It is just the beginning of a new era which will demand more sacrifices by us, more friendly co-operation and more assistance, because, hand in hand with security, must go economic aid and the provision of technical knowhow so that the other countries of the region may assist us to preserve the security of Australia and we may assist them to raise their standards of living and achieve economic progress. If we recognise this, we shall promote our own prosperity in the future as well.

The Government, with a lead from the Prime Minister, has very definitely lifted the eyes of Australians to what one may call either the new frontiers of old freedom or the old frontiers of new freedom. Whether old or new, they depend on principles in which all of us have believed for a very long time. This new and expanded defence policy will help to cancel out any doubts that may have existed in the minds of certain people in the countries of South East Asia about Australia’s attitudes. I know that there were some doubts. I have been to South East Asia twice this year, and I know that some people there have held the view that Australia was strong on words and weak on action. The Prime Minister’s statement will certainly cancel out those doubts and help to build up the morale of those who felt that they were having to go it alone and to fight against aggression without sufficient help. The statement will also inform both the United States of America and Great Britain that they have not to go it alone in this part of the world. I should like to read part of a letter which I received the other day from a United States congressman, and which bears on this point.

He was one who had been advocating de Gaulle’s neutralist policy, and I had written him a letter on the subject in fairly strong terms. One paragraph in his reply read as follows -

My objection to our involvement in South Viet Nam is that I doubt whether this war can be won by military means. If we are right in pursuing this war by the military means that we are now employing, why are not our SEATO allies - Australia, France, New Zealand, Pakistan, the Philippines, Thailand, the United Kingdom - on the front with us?

I think he was a little astray as regards the United Kingdom, which is practically going it alone in assisting Malaysia. The letter continued -

In any event, it is a very bad situation but I feel very strongly that if we are in there at all, we should not be in there unilaterally. 1 think we all agree with that sentiment, and I am glad that we are now taking steps to increase our efforts to help other nations in South East Asia to the full measure of our capacity in the discharge of our responsibilities. So 1 say: Let us not forget that this is the beginning of a new road on which we must be prepared to make greater sacrifices for our collective security against would-be aggressors and to assist in maintaining the peace and improving the prosperity of our friends and allies in this region of the world.

Mr BENSON:
Batman

.- The Prime Minister (Sir Robert Menzies) having made his statement on the defence review, he has been followed by other speakers on the Government side, but they have yet to prove to Australia that the measures that have been proposed must be adopted for the safety and the security of this country. In order to get about 4,000 men into the armed forces by about the middle of next year, to bc followed by an annual enlistment of 6,000, the Government has had to resort to conscription. Conscription, in the view of honorable members on this side of the House, is not necessary. I hope to show during the course of my speech why it is not necessary.

Mr Jess:

– The honorable member docs not think it is?

Mr BENSON:

– If the honorable member for La Trobe listens he may learn something. On 21st May 1964, the Minister for

Defence (Senator Paltridge) was asked a question about the number of boys of 17 and 18 years who had applied to join the Army and had been rejected. I want to show the wastage that is occurring by giving the numbers of good men who have applied to join the forces but have been rejected. I want the Government to tell the nation what is going to happen when these boys of 17 and 18 years, having applied to join the Army and having been rejected, reach the age of 20 years and are liable for conscription. Will they be conscripted then, in spite of the fact that when they were aged 17 or 18 they were found to be unfit educationally? Will the Government conscript those boys in order to complete its annual call-up? We were not told about that. This is the question which was asked of the Minister for Defence -

  1. How many persons made application to join (a) the Royal Australian Navy, (b) the Australian Military Forces, and (c) the Royal Australian Air Force, in the period 1st January to 31st December 1963?
  2. How many were accepted as recruits in each Service?
  3. How many were rejected (a) for medical reasons, (b) because of lack of a suitable educational standard, or (c) for any other reason?

Of the 24,932 who offered for enlistment during 1963, 19,454 were rejected and 5,478 were accepted. Yet we are told that we have to use this outdated and outmoded system in order to get 4,000 men into the armed forces. I am a great admirer of Lord Nelson, who said that one volunteer is worth two pressed men. That was the philosophy of the Minister for the Army (Dr. Forbes) as late as last Monday. Last Friday the Minister took it upon himself to circulate to every member of this Parliament copies of the address which he made to the National Congress of the Returned Servicemen’s League at Hobart.

Even at that time the Minister did not know what the first 11 in Cabinet were doing. He is a member of the second 1 1. He had copies of his address placed in the box of every honorable member. He stated in his address that he disagreed with conscription, and he gave three reasons why he disagreed with it. 1 did not want to read what be said because I have other matters to talk about. However, I shall do so now. This is what he said -

I am not here this afternoon to argue the point about conscription.

I could perhaps say, however, that we have not introduced conscription up to this point in time because our military advisers have indicated in the clearest and most unmistakable terms that it is not the most effective way of creating the Army we need to meet the situation we face.

This copy of his address was put in my box last Monday. He then went on to explain the purely military disadvantages of conscription and said -

First, even a scheme which provides for a two-year period of service does not provide the people we most need, that is experienced officers and NCO’s and specialists. These are the people we are short of now. The deficiency would be even greater if conscription were introduced.

Secondly, it is wasteful in the sense that you only get about 18 months’ service out of each person you train compared with the 5i years’ service for most Regulars.

He then went on to say -

I hasten to emphasise that all this means is that an Army composed entirely of long-term volunteers is a better one than one based on a mixture of volunteers and conscripts.

Dr Forbes:

– Read on.

Mr BENSON:

– I have only 20 minutes in which to speak. No Service Minister has yet spoken in this debate.

Dr Forbes:

– The honorable member finished on the sentence that suited him.

Mr BENSON:

– -The Minister can have unlimited time to speak, if he wants it; we will give him an extension of time. I hope he will read the whole of his statement. When he had finished speaking, the R.S.L. was disappointed.

Mr Jess:

– Does the honorable member think the League would be happier with himself?

Mr BENSON:

– I think it would be. It wrote to all members of this Parliament asking them to vote for its proposals in this Parliament. Honorable members on the Government side voted against the League’s proposals. We proposed the amendments sought by the League, but we did not get anywhere with them. .

Mr Jess:

– Is this defence?.

Mr BENSON:

– Of course it is defence. If men had not been killed in defence of their country, we would not have the R.S.L.

Mr Jess:

– What statement has the honorable member made about defence?

Mr BENSON:

– The honorable member for La Trobe (Mr. Jess) should read “ Hansard “. He must have been here when we moved four amendments that had been requested by the R.S.L.

Mr Jess:

– On defence?

Mr BENSON:

– On repatriation, which is a branch of defence. What is more, after midnight we were gagged.

Mr Whitlam:

– On every one of the amendments.

Mr BENSON:

– We were gagged on every one of them. I want to get back to the major point and try to show why there is so much confusion in the Services at present. It is the confusion in the Services amongst officers of all ranks that makes people think twice about joining the Services. One matter that creates confusion is the Defence Forces Retirement Benefits Fund. What has happened about this? Nothing. I have been working as hard as I can for this, but I have been told: “ Do not raise it now. It is all right. It will be fixed up.” In the “Bulletin “ of 22nd February of this year, a group captain had the audacity to write a seven page essay on what he thought of the retirement benefits. He was about to be court martialed for it, but then the authorities said: “ We had ‘better not court martial this fellow. We will have an inquiry into it.” Then it was thought dangerous to have an inquiry and the matter was shelved. In the end the Prime Minister had to see the GovernorGeneral.

Mr Jess:

– What has this to do with defence?

Mr BENSON:

– I am telling the House of the situation in the Services at present and of the Government’s actions in regard to retirement benefits. The honorable member knows how the Government filched money from Captain Robertson. Here was a man who had given many years of service, but when he applied for a pension, to the disgrace of the Government he did not get it. Honorable members who are interjecting cannot take it. They do not like to see a man get justice. What did the honorable member for Gippsland (Mr. Nixon) say in this House yesterday about conscription? He said: “I hope that men in employment on the land will be exempted”. That is the view of the Australian Country Party: Send every Tom, Dick and Harry, but for God’s sake don’t send me. In this House I have said on several occasions that defence must be built, not bought. Today in the Library I came across the first volume of the official history of the Second A.I.F., which was written by Gavin Long. At page 88, with reference to the period of June 1940, he wrote -

From the beginning of the war a multitude of problems had proceeded from the fact that Australia was unable to equip her armies from her own factories. The size of her expeditionary force, the organisation of that force and the militia, the A.I.F.’s destination, and many of the problems its commander was to face in the Middle East derived from a fundamental flaw in Australian policy, namely failure to recognise that effective defence depended on a nation’s ability to manufacture arms.

We were told this by Gavin Long after World War II and we were told this by Bean in his official history of the First A.I.F., written after World War I. We have not taken the advice that was given. I do not like saying this, but at the moment we are not in a position to mobilise anyone. Let anyone try to call up 4,000 men.

Mr Freeth:

– What is your defence policy?

Mr BENSON:

– I shall tell the Minister. My defence policy is to build as much as we can in this country and not be a Mr. Newrich, as this Government is, shopping all over the world. If we were in government, the basic materials that go into a defence effort would not now be in the hands of foreign enterprise. I refer to the resources at Gove Peninsula and Weipa, the iron ore deposits, and the Mount Isa deposits, which are 64 per cent, foreign owned. These would be controlled by Australian interests.

Mr Freeth:

– What size Army would you have?

Mr SPEAKER (Hon Sir John McLeay:

– Order! The Minister will have an opportunity to speak later.

Mr BENSON:

– The Minister does not believe in this policy, but as far as we on this side of the House are concerned, these vital materials of war would be in Australian hands, not in the hands of overseas interests. Now, let us get back to what Gavin Long wrote, and let us find out what is necessary. He stated -

It needed this crisis to bring home the fact that, until this foundation had been laid, Australia’s ability to defend herself must steadily diminish in relation to the military power of an enemy which did possess adequate factories.

We should have adequate factories. What happened to the Australian aircraft industry when the war finished in 1945 was a disgrace. A Labour Government established that industry. I know about the aircraft that were being turned out at the end of the war. Honorable members opposite may shrug their shoulders and say that these aircraft were not much good, and I will agree with them. We did get to build an aircraft known as the Boomerang, which was not a very good fighter. That was in 1945. Sweden was in the same position but today, with her 8 million people, she builds the finest, or one of the finest fighter aircraft in the world. What will happen in Australia if we again become involved in a war?

Mr Hughes:

– Sweden has conscription, has she not?

Mr BENSON:

– I do not care what she has. Sweden, with her 8 million people, has an aircraft that can fly. We have not got it. Until a government realises that it is just as important to build its defences as it is to supply fighting men a country will never do the job that is expected of it. We have let these factories go. I think it is a disgrace. The Government has done nothing whatever to see that the factories are built up. Had it not been for the Australian Labour Party the shipbuilding industry of this country would be in the doldrums. It was only after pressure from this side of the House that the Government gave in and agreed to build tankers in this country. I am glad that we are to build tankers here. Had we not been pressurising the Government, tankers would never be built here.

Mr Jess:

– The honorable member will be expelled in a minute.

Mr BENSON:

– I will not be expelled. I wish now to refer to figures published in the defence report of 1964 by the Minister for Defence (Senator Paltridge) . They relate to the number of men in our militia forces and they show that the young men of Australia have expressed a vote of no confidence in the Government. Although the Government is spending about £700,000 a year cajoling people to join the Australian Regular Army or the Citizen Military Forces, the number of men in the C.M.F. has decreased. The Government should conduct a wide investigation to determine what is wrong with the young men of this country when so much money has been spent, and is being spent, in trying to get them to join the forces.

Mr Duthie:

– They do not trust the Government.

Mr BENSON:

– It is obvious that they do not trust the Government. The defence report contains figures relating to the C.M.F. from 1950 to 1964. In round figures, in 1950 there were 18,000 men in the C.M.F.; in 1951, 20,000; in 1952, 42,000; in 1953, 69,000; in 1954, 82,000, and by 1956 there were 87,000 From that time the number began to decrease, and over the years it declined to 77,000, then to 57,000, to 54,000, to 37,000, to 30,000 and, in 1964, to 27,000. We have now reached the position when the Government says that in order to satisfy the needs of the Army, against the wishes of the Minister for the Army (Dr. Forbes) and against the advice of his advisers, a miserly 4,000 men are required. I point out that there is to be no conscription whatever for the Navy and no conscription whatever for the Air Force but just for those who must serve in the Army.

I have pleaded in this House with the Minister for Air (Mr. Howson) to boost the Air Force Reserve and to let men who join the Air Force Reserve train to become pilots, but whenever I have asked him to do this he has replied that with modern electronic aircraft we cannot afford the time to teach these men to be pilots. Are all our aircraft, including air transports, to be as complex as the Minister tries to tell mc? Are we going to have no simple planes at all? Why cannot we train people to a certain stage so that they can take over should the need arise? Why cannot we expand our Naval Reserve? Why cannot we make the training a little more attractive? The answer lies in the fact that the Govern- ‘ ment lacks imagination and that an election is pending. The Government is fearful of losing the election so it promotes fear. It tells the people of Australia that the situation is so grim-

Mr SPEAKER:

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

Debate (on motion by Mr. Ian Allan) adjourned.

page 2956

BILLS RETURNED FROM THE SENATE

The following bills were returned from the Senate -

Without amendment -

Cellulose Acetate Flake Bounty Bill (No. 2) 1964.

Australian Capital Territory Supreme Court Bill 1964.

Salaries (Statutory Offices) Adjustment Bill (No. 2) 1964.

Without requests -

Appropriation Bill (Mo. 2) 1964-6S.

page 2956

ADJOURNMENT

Migrant Hostels

Motion (by Mr. Fairhall) proposed -

That the House do now adjourn.

Mr CONNOR:
Cunningham

.- I rise to direct the attention of the House to a matter of extreme urgency which has arisen within my constituency and which seriously concerns a group of British migrants who are accommodated at the Berkeley hostel which is located close to the Port Kembla steel works. The hostel is under the control of Commonwealth Hostels Ltd. which comes within the administration of the Minister for Labour and National Service (Mr. McMahon), who is now in the chamber.

Some three weeks ago I was approached by a deputation of about 30 men and women and their children who asked me to raise with the appropriate Government departments the plight in which they find themselves as residents of the Berkeley hostel and matters concerning the employment which had been offered to them by Australian Iron and Steel Ltd. and its associated company Broken Hill Pty. Co.

Ltd., which between them control the various sections of the steel industry in Fort Kembla.

I noted the names of all the people concerned who came to see me and will give full details to the Minister, but at this stage I should like particularly to mention certain cases. These people were recruited in England, where the Australian steel industry has launched a campaign with the objective of bringing some 2,400 skilled and unskilled workers to the Port Kembla district. They were contracted in Britain by various means - by newspaper advertisements, by officers of the Department of Immigration and by labour exchanges in Great Britain. They were induced to come to Port Kembla by offers of employment there.

The people concerned fall into two distinct groups, skilled and unskilled. 1 am particularly concerned with the unskilled people. To cite a typical case I shall read a letter dated 5th June 1964 which was addressed to a Mr. R. Kenworthy, 42 Selby Road, Uckfield, Sussex, by the United Kingdom representatives of Broken Hill Pty. Co. Ltd. The letter is in these terms -

We have learned from Migration officers at Australia House that you have made application to migrate to Australia.

From your past work experience we believe that you would be suitable for employment at either of our steelworks, i.e., at Australian Iron and Steel Pty. Ltd. at Port Kembla, or the Broken Hill Pty. Co. Ltd. at Newcastle.

The letter goes on to describe the residential advantages of the respective areas and then comes to the aspect about which I am most concerned. 1 am glad that the Minister for Immigration (Mr. Opperman) is in the chamber to hear this. The letter continues -

We are pleased to offer you employment as a production operator at either Port Kembla or Newcastle. We feel sure that you would not experience any difficulty with the work involved and you would have opportunities for promotion to higher classifications. The average wage would approximate £A22 per week, including bonus, shift allowance and weekend allowances.

Provided you are able to fulfil the requirements, . . acceptance of our offer of employment will enable you to travel to Australia.

A certain form was attached for completion by Mr. Kenworthy. The company then promised that Mr. Kenworthy would be given work on arrival in Australia. This paragraph is to be particularly noted -

You will be provided with Commonwealth hostel accommodation on arrival for yourself and your family.

This gentleman had no great resources when he came to this country with his wife and four children. He had two or three weeks’ living expenses in his pocket. His is a typical case. He was employed in England at £18 sterling a week, which is equivalent to £A.22 10s. His wife was earning £10 sterling a week in England, which is equivalent to £A.12 10s. On arrival in Australia that man was offered employment at £A.18 a week. He was offered accommodation. He is now accommodated in Berkeley Hostel. He is charged approximately £14 a week at the hostel for himself and his family. He is £17 a week worse off by having come to Australia.

Another case concerns a man named Henry Tomlinson. He was earning £20 sterling a week in Britain, which is equivalent to £A.25. His wife was earning £10 a week in England. In all these cases the people have been told by the recruiting officers that ample work for women was available in the Wollongong district. In the Wollongong district 5,660 women are seeking work. In the area in which these hostels are located the incidence of unemployment among women is 40 per cent. About 80 per cent, of the women who are looking for work are married. They must supplement the wages paid to their husbands who work in the steel industry.

These people were told when they sought to migrate to Australia that they would get homes here and be able to save. The truth is that they have no more than £4 a week on which to live. From that amount they must pay medical expenses and contributions to medical and hospital funds. They must buy clothing and provide for entertainment. In addition they must somehow save to buy furniture and put a deposit on a home. It is virtually impossible to do these things. Being sturdy British workers the men naturally sought other employment. They were offered employment in Sydney and Melbourne but they have difficulty in obtaining housing accommodation. When they raised the matter with me and sought my assistance to obtain transfers to vacancies in hostels in Sydney and Melbourne I did not trouble the Minister for Labour and

National Service and went through the usual channels, but these men were refused transfers. Tonight we have listened to a grand debate about military conscription. We are confronted here in the matter I have raised with a situation which, if not corrected, can be construed only as a covert form of industrial conscription, because these people have neither kith nor kin in this country. They have no financial means other than the few weeks’ money they brought with them from Britain. It is most difficult on their wages to pay the excessive rents that will be asked in the metropolitan areas of Melbourne and Sydney. Traditionally in all cases British migrants have been given two years accommodation at any of these hostels.

I want to see this country populated. I want to see men recruited to the steel industry in a proper way. I want to see them told frankly and fairly where they stand. The present practice must stop. This is a matter that concerns both the Minister for Immigration (Mr. Opperman) and the Minister for Labour and National Service. These people should be told the truth. If they still want to come to this country, we still want them. In particular we want tradesmen, but we do not want a situation in which people are literally marooned in a hostel and deliberately refused a transfer to another hostel in an area where they can get suitable work for themselves and their families. This is a rotten state of affairs. It is shocking. I know that the Ministers, having had the matter brought to their notice in the proper way, will take proper remedial action.

Mr Benson:

– I wish to make a personal explanation. In the course of my speech a few moments ago I stated that the honorable member for Gippsland (Mr. Nixon) had requested that people employed in the country be exempted from the call-up. I owe him an apology. I find that he did not make that request. He asked that their call-up be deferred. If I have caused him any embarrassment, I regret it.

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

– Mr. Speaker-

Mr Jones:

– I rise to order. The Minister might like to reply to both the honorable member for Cunningham (Mr. Connor) and myself at the one time. I am going to speak on the same matter.

Mr McMAHON:

– I should prefer to reply to one at a time. I have not had the matter raised by the honorable member for Cunningham put to me before. The honorable member will know that throughout the length and breadth of this country we have a problem of over-full employment. However, there are some parts of the country where there are more women that there are jobs available for them. The honorable member for Cunningham has localised such a problem to his area. I think he has pinpointed it accurately. A point that has to be mentioned is that in the area which he represents there has been greater industrial development than in any other part of the Commonwealth. We cannot expect that kind of industrial development - and mineral development for that matter - to occur without creating some problems.

As I understood him, the honorable member isolated - I think properly - three problems. The first is the problem of the employment of women, particularly married women, in the Illawarra area. I have been concerned with this problem for some time. It is a problem that demands investigation, and I give the honorable member my assurance that I shall make certain that my Department investigates it. The second problem is that of housing in the Illawarra area. In view of the dramatic industrial development in the area, there is a shortfall in housing for the migrants who have gone there, particularly continental migrants, and who want to get into homes as quickly as they can. Again I assure the honorable member that, having listened to him tonight, I shall ensure that my Department looks into this problem quickly. I am sure that my colleague, the Minister for Immigration (Mr. Opperman), will agree with that.

The third problem relates to mobility - the right of people to move from one area to another when they feel that they and their wives cannot get employment of the kind that they received when they were in the United Kingdom. I had not heard of that problem before. The honorable member for Cunningham used a word tonight that I have not heard used before.

Mr Connor:

– I said they would not have come here if they had not been given an assurance. There has been a gross breach of faith.

Mr McMAHON:

– I will not go into that question. I am trying to be helpful rather than political. 1 will ask my colleague, the Minister for Immigration, to help me to find out what can be done for people who wish to move with their wives and families from, say, the Port Kembla area to some other area where they can be gainfully employed. I assure the honorable member that we will look into the matter.

I know, as does my honorable friend from Geelong, the Minister for Immigration, that there are problems associated with Illawarra. The honorable member for Cunningham has isolated three of them. We have been aware of two of them before. I give the honorable member my assurance that I shall make certain that they are carefully examined in the near future. I had not heard of the third problem - that of mobility - before, but I give the honorable member my assurance that this problem will be looked into also.

Mr JONES:
Newcastle

.- I had not intended to raise this matter tonight, but as my friend the honorable member for Cunningham (Mr. Connor) has seen fit to do so, I propose to say something about it. Having listened to the Minister for Labour and National Service (Mr. McMahon) I am very pleased that he did not accept my invHalton to take the opportunity of replying to the honorable member for Cunningham and myself at the one time. I have learned something from the tactical move that has been made tonight.

On previous occasions I have raised with the Minister this matter of accommodation in Commonwealth hostels. On one previous occasion he was most helpful and cooperative towards a lady in distress. What I want to mention tonight has relation to what the honorable member for Cunningham has referred to. He mentioned British migrants who come to Australia as prospective employees of the Broken Hill Pty. Co. Ltd., with promises of employment in all sorts of fields. I have two cases in mind that were referred to the Minister initially on 23rd September 1964. Before that, in the Minister’s absence, I discussed these matters by telephone with his secretary. I made a simple request on behalf of these people who had been refused permis sion to transfer from the Commonwealth hostel at Mayfield West, Newcastle, to the Bunnerong Hostel in Sydney, notwithstanding the fact that there was accommodation available at Bunnerong.

As the honorable member for Cunningham said, with the co-operation of Commonwealth Hostels Ltd. these people are being tied down by B.H.P. as if they were slave labour. One family concerned was that of Mr. and Mrs. Gay, who have three children, and the other was that of Mr. and Mrs. Walduck, who have two children. The children are all young and of school age. They came to Australia with employment guaranteed by B.H.P. at Newcastle. Mr. Gay and Mr. Walduck were promised employment as plant operators. When they arrived in Newcastle they were given employment in the sinter plant. In my book the sinter plant is one of the worst places in the world to work. It is dirty and dusty, and there must be something the matter with anybody who is prepared to work there. These men were plant operators. As I say, the working conditions in the sinter plant are objectionable and I certainly would not like to work there. The two men worked there for one day and then packed up and said: “ That will do us “.

I raised this matter with the Minister in correspondence. He wrote to me and said that the men had walked out of the B.H.P. works and had not conferred with anyone, and that the Commonwealth Employment Service had found them other employment. I showed the Minister’s letter to these people and they gave me a letter in reply which I have given to the Minister. They said that they had conferred with the B.H.P. employment officer and five other B.H.P. officers. They said they asked for other employment and that the company told them the only employment they could get was labouring work, and that they could not be employed as plant operators.

As the honorable member for Cunningham has said, these people are given glowing promises of big money and good jobs, but the two men I refer to could get only labouring jobs. I am not asking for preference for British migrants or any other migrants over people who are already in Australia. But if we invite people to come here and say, “This is the kind of employment that will be provided” and then do not keep our side of the bargain, it is a poor show. These two men found other employment in Sydney.

Mr McMahon:

– We found it for them.

Mr JONES:

– No, they found it for themselves at Imperial Chemical Industries. The Commonwealth Employment Service placed one of them as a labourer at the Henry Lane Pty Ltd. establishment at Hamilton. The wages he received at that job were not enough to pay the rent at the hostel-but I am not complaining about the rent in any way. The work did not provide them with an income comparable with what they were accustomed to receiving in the United Kingdom. Both men went to Sydney and sought and obtained employment with LCI. at £26 a week. They have their families at Mayfield West. I know that there are vacancies at the Bunnerong Hostel butthe Department will not allow them to transfer. What are we coming to, Mr. Speaker? In my book, it should not take six, seven or eight weeks to investigate the matter and arrive at a decision.

If a company which sponsors people to come to Australia cannot maintain its promise to provide employment in a particular category, no one should stand in the way of those people transferring from, say, Newcastle, Wollongong or any other centre to another place where they can obtain better employment, receive more money, and live in a Commonwealth hostel. When we bring migrants to this country on the understanding that they will be provided with employment and hostel accommodation, we must realise that it takes time to settle down. A person should not have to stay at the first place selected for the rest of his life or until such time as he can provide his own accommodation. We all know that accommodation is at a premium and that it is difficult to obtain unless a person is prepared to pay an astronomical sum for rent or for accommodation for himself and his family.

These people should be given one or two choices as to where they want to live. If they go to Newcastle and do not like it and if accommodation is available at a hostel in Wollongong, why should they not have the opportunity to transfer? If they go to Sydney and then want to move to Melbourne, why should they not be allowed to transfer? I do not mean that this should go on for years and years. After a maximum period of 12 or 18 months, or two years, these people should be tied down and asked to look for accommodation. In New South Wales, after two years they should be eligible for a State Housing Commission home. We should be a little more tolerant with these people. I know the Minister will say that Commonwealth Hostels Ltd. is not his responsibility.

Mr McMahon:

– It is.

Mr JONES:

– That is very good. I was under the impression that the hostels came under some outside organisation and that the Department had some arrangement with that organisation. I come back to the point I made a moment ago, that is, that these people should not be compelled to settle in one centre and remain in the employment of a sponsoring company which cannot carry out the promises that were given to them when they came to the country. I had not intended to speak on this matter, but when the honorable member for Cunningham spoke to me about it earlier and indicated his position I thought I would add a little weight to what he had to say. The matter is in the hands of the Minister, and I should be pleased to hear from him.

Mr McMahon:

– Mr. Speaker–

Mr SPEAKER:

– Order! The Minister has already spoken. If he wants to speak again, he will have to obtain leave.

Mr McMahon:

– I am not closing the debate.

Mr SPEAKER:

– Order!

Mr Jones:

– Leave is granted.

Mr SPEAKER:

– Order! Is the Minister asking for leave?

Mr McMahon:

– I am not applying for leave. I think I have a right of reply.

Mr SPEAKER:

-I hope the Minister is not reflecting on the Chair.

Mr McMahon:

– No, Sir, I am not.

Mr SPEAKER:

– The Minister would be wise if he did not do so.

Question resolved in the affirmative.

House adjourned at 11.48 p.m.

page 2961

ANSWERS TO QUESTIONS UPON NOTICE

The following answers to questions were circulated -

Repatriation. (Question No. 602.)

Mr Cross:
BRISBANE. QLD

s asked the Minister for Repatriation, upon notice -

  1. Are Aborigines and Torres Strait Islanders, other than those leading a tribalised or nomadic life, entitled to repatriation pensions and benefits on the same basis as other Australians?
  2. If not, will he indicate what differences exist and in what circumstances these differences apply?
Mr Swartz:
LP

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

  1. Australian Aboriginals who served with the Australian Forces are eligible for benefits under the Repatriation Act on the same basis as other Australians provided their service qualifies them as “ members of the Forces “ under that Act.

Special legislation, namely the Native Members of the Forces Benefits Act, provides the statutory basis for an appropriate range of repatriation benefits to native members who served during the 1939-45 War at rates of pay other than the rates prescribed for male members of the Australian Military Forces. It is under this legislation that native ex-servicemen of the Torres Strait Islands receive pensions and other benefits.

  1. For some time the nature and amount of the principal benefits - for example, war and service pensions - available to Torres Strait Islanders and other Australian ex-servicemen has been the same. However, further consideration is being given to the provision for the Torres Strait Islanders of certain other benefits provided under the Repatriation Act and an appropriate announcement will be made shortly.

Uniform Laws. (Question No. 611.)

Mr.Whitlam asked the Attorney-General, upon notice -

What stage has been reached in the attempt to secure uniform laws on the matters which had been considered by the Standing Committee of Commonwealth and State Attorneys-General at the time of his predecessor’s reply to me on 5th April 1962 (“Hansard”, page 1468)?

What other matters have been considered by the Standing Committee since that date in the attempt to secure uniform laws?

Mr Snedden:
Attorney-General · BRUCE, VICTORIA · LP

n. - The answers to the honorable member’s questions are as follows -

  1. The matters set out in the first column were referred to in my predecessor’s reply on 5th April 1962. The second column sets out the present position.
  1. Of the matters considered, public reference Business Names Act, use of State parole and prohas been made to the following - off-shore oil, bation services by the Commonwealth, reciprocal registration of certain trades and professions, legislation covering parole and probation services, amendments of Wrongs Acts, aerial agriculture, authorised trustee investments, crimes committed formal validity of wills, jury service by public on aircraft, inter state sales of firearms, stock servants, limiting ship-owners’ liability, regulating transfer procedures, microfilming of documents, trainers of guide dogs, bonding of contractors, Uniform Evidence Act, reseals of probates and amendments of Uniform Companies Act and letters of administration, visiting forces, dangerous dmes, escaping mental patients crossing State or Territory boundaries, definition of Queen’s dominions, married infants’ wills, registration of air funnels on titles, fugitive offenders, sale of human blood, Statute of Frauds and Sale of Goods Act, licensing of television technicians, protection under Workers Compensation legislation of workmen employed interstate, dealings in land by infants, compensation for victims of crimes of violence.

Law Council of Australia. (Question No. 612.)

Mr Whitlam:

m asked the AttorneyGeneral, upon notice -

On what matters has his predecessor or he himself or the Standing Committee of Commonwealth and State Attorneys-General (a) received representations from the Law Council of Australia or (b) sought the views of the Council?

Mr Snedden:
LP

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

In respect of matters coming before the Standing Committee of Commonwealth and State Attorneys-General, to which I take it the honorable member’s question is directed, my predecessor or I have been in correspondence with the Law Council of Australia on the following matters, namely, uniform companies law, uniform business names law, resealing of grants of probate and letters of administration, share transfer procedure, statute of frauds and sale of goods, validity of wills of married infants, uniform evidence law, registration of air funnels on titles, uniform maintenance laws.

New Guinea Flying Scholarships. (Question No. 614.)

Mr Whitlam:

m asked the Minister representing the Minister for Civil Aviation, upon notice -

  1. How many New Guineans have received Australian flying scholarships since his predecessor and I corresponded on the subject in March and April 1963?
  2. Why has Trans-Australia Airlines not (a) made, or (b) announced the same plans as Ansett Transport Industries Ltd for the training of New Guineans as pilots?
Mr Fairbairn:
LP

– The Minister for Civil Aviation has supplied the following information -

  1. None. In March two scholarships were made available for the Territory but on the advice of the Administration that the number of matriculant indigenes was then not sufficient to meet general needs in professional occupations, it was decided to defer scholarships until early 1965.
  2. Trans-Australia Airlines employs a number of trainee pilots each year, and applications are invited by newspaper advertisements throughout the Commonwealth and the Territory of Papua and New Guinea. To date, no applications have been received from New Guineans either with or without die minimum qualifications specified.

The airline, however, has embarked on a full scale programme of employment and training for New Guineans desirous of entering the service of T.A.A. These personnel will, when trained and competent, take over positions now occupied by Europeans, and will eventually be eligible to assume the responsibilities of supervisory positions. As part of this programme, any New Guineans having the qualifications, aptitude and desire to make flying a career, would be given every assistance to achieve this goal.

Tin. 1 (Question No. 663)

Mr Collard:
KALGOORLIE, WESTERN AUSTRALIA

d asked the Minister for National Development, upon notice -

  1. What quantity of raw tin was produced in each State of the Commonwealth during each of the past five years?
  2. How much tin was exported in each of these years?
  3. Which companies participated in these exports, and what amount did each company export?
  4. What amount of tin was imported during each of those years?
  5. Did any of the exporting companies receive a rebate of pay-roll tax; if so, which companies, when, and what amount of rebate did each company receive?
Mr Fairbairn:
LP

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

  1. Production of tin in concentrates (tons) in the various Stales during each of the past five years was:
  2. Of the above exports the only exports in any quantity by any one company were 180 tons of concentrates (tin content 125 tons) in 1961. Other exports have been of small tonnages by minor producers. I am unable to furnish details of exports by individual companies as this information is made available to the Government on a confidential basis.
  3. Imports of tin metal (tons) during the years in question were:
  4. I am unable to supply the information sought concerning pay-roll tax rebates because of the restrictions imposed by the secrecy provisions of the law.

Training of Australian Personnel in Indonesia. (Question No. 679.)

Mr Devine:

e asked the Minister representing the Minister for Defence, upon notice -

  1. Are any members of the Australian Services being trained in Indonesia?
  2. If so, how many are being trained, and in what type of training are they participating?
Mr Fairhall:
Minister for Supply · PATERSON, NEW SOUTH WALES · LP

– The Minister for Defence has furnished the following reply -

As previously stated on 3rd September 1964 in reply to a question by the honorable member for Chisholm (Sir Wilfrid Kent Hughes), under reciprocal arrangements concluded some time ago an Australian Army officer is attending the current course at the Indonesian Command and General Staff College at Bandung.

Taxation. (Question No. 696.)

Mr J F Cairns:
YARRA, VICTORIA · ALP

rns asked the Treasurer, upon notice -

  1. What is the value to a taxpayer arising from concessional deductions from taxable income of (a) a spouse, &c, (b) a child and (c) each £10 of educational and medical expenses where the taxpayer’s income per annum comes within the following grades- £400-£500, £700-£800, £900- £1,000, £1,200-£1,400, £1,600-£1,800, £2,800- £3,200, £4,400-£5,000, £IO,000-£16,000, £16,000 and over?
  2. What would be the value to a taxpayer arising from concessional deductions granted for travelling expenses for each £10 of these expenses where the taxpayer’s income per annum comes within the same grades?
Mr Harold Holt:
LP

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

  1. The value to a taxpayer of concessional deductions for (a) a spouse, &c, (b) a child and (c) each £10 of education and medical expenses varies according to the level of income before allowance of these deductions. Therefore, no single amount can be assigned to the value of these concessional deductions for any of the grades of income in question.

The following table shows the value at current tax rates of the specified concessional deductions where the income of the taxpayer is, before the allowance of any of these deductions, equal to an amount shown in column 1. The amounts shown in column 1 are the lower and upper limits of the grades of income specified in the honorable member’s question.

  1. If concessional deductions were granted in respect of travelling expenses the value to a taxpayer of each £10 of such expenses would vary according to the level of income and the number of dependants maintained. The following table shows for various classes of taxpayers with specified amounts of income, the value at current tax rates of a concessional deduction of £10 for travelling expenses. The value of each subsequent £10 of travelling expenses would be approximately equal to or less than the amount shown in the table.

Civil Aviation. (Question No. 703.)

Mr L ft Johnson:
HUGHES, NEW SOUTH WALES

son asked the Minister representing the Minister for Civil Aviation, upon notice -

  1. Is it a fact that Ansett-A.N.A. Road Transports convey freight consigned as air freight, from Sydney to Brisbane each day?
  2. In what way are consignees made aware that parcels and other air freight are to be transported by road and not by air?
  3. Are charges for this service based on air freight costs rather than road freight costs?
  4. Has it been necessary for the company to obtain approval for this service?
Mr Fairbairn:
LP

– The Minister for Civil Aviation has supplied the following information -

I am assured that all cargo consigned as airfreight with Ansett-A.N.A. is carried by air.

Repatriation: Payment to Doctors. (Question No. 676)

Mr Whitlam:

m asked the Minister for Repatriation, upon notice -

What was the average payment by bis Department in 1963-64 to doctors (a) who held appointments under the Visiting Specialists Scheme and (b) who provided service as local medical officers?

Mr Swartz:
LP

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

  1. The average payment by the Repatriation Department during 1963-64 to doctors holding an appointment under the Visiting Specialists Scheme was £1,102 each.
  2. The average payment by the Repatriation Department during 1963-64 to doctors who provided service as Local Medical Officers was £382 each.

Electoral. (Question No. 692)

Mr Daly:

y asked the Minister for the Interior, upon notice -

  1. How many persons (a) of all ages and (b) over the age of 21 years live within the boundaries of each Commonwealth electoral division?
  2. If accurate figures are not available will he supply an estimate of the number?
Mr Anthony:
Minister for the Interior · RICHMOND, NEW SOUTH WALES · CP

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

The total number of inhabitants and (heir ancs are recorded only at a Census of Population: the last Census being on 30th June 1961. Census data for age are not tabulated for Commonwealth electoral divisions and no estimates are available. The total number of persons of all ages at 30lh June 1961, although not available by electoral divisions is available for Census divisions - see table below. These divisions closely approximate electoral divisions and are designated with the same names.

Electoral. (Question No. 693.)

Mr Daly:

y asked the Minister for the Interior, upon notice -

  1. What is the density of population in each Commonwealth electoral division?
  2. If figures are not available for individual electoral divisions, will he supply the figures for the areas of (a) city and (b) country electoral divisions in each State?
Mr Anthony:
CP

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

Because the actual population of Commonwealth electoral divisions is not available the actual density of population is similarly not available. However the table set out below gives an approximate average density of population per square mile at 30th June 1961, using the population of Census divisions and the approximate area of their equivalent Commonwealth electoral divisions.

Resettlement of Nauruans. (Question No. 704.)

Mr L R Johnson:

son asked the Minister for Territories, upon notice -

  1. What reasons were advanced by the Nauruan delegation for rejecting the proposal that resettlement be undertaken on Curtis Island?
  2. Is consideration of the Curb’s Island proposal now concluded?
  3. What other locations for resettlement are being considered?
  4. Did the Colonial Committee of the United Nations make an determination about this issue; if so, what were the terms of its decision?
  5. Did the Nauruan delegates ask for the transfer of the phosphate industry to the Nauruan people on the ground that it was their only natural resource; if so, why was the request refused?
  6. Does the White Australia policy represent any barrier to the offering of Austraiian citizenship to the Nauruan people?
  7. Has Australian citizenship been offered to them?
Mr Barnes:
CP

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

  1. The basic reason was the refusal by Australia to give the Nauruans the measure of sovereignly over Curtis Island which they asked for.
  2. No.
  3. No other area is being considered at the present time.
  4. A sub-committee of the United Nations Special Committee on the situation with regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples, has prepared a draft report on Australia’s dependent territories which it is expected will be considered by the full committee shortly.

The draft includes a recommendation requesting the Administering Power (Australia - on behalf of Australia, New Zealand and the United Kingdom) to assist fully in the future resettlement of the Nauruans according to their wishes.

  1. Please refer to the second last paragraph of the official statement issued on 20lh August last about the discussions with the Nauruans.
  2. Part of the offer made to the Nauruan people for resettlement at Curtis Island was that they should bc granted Australian citizenship.
  3. Australian citizenship was offered as part of the proposed resettlement scheme which the Nauruan representatives rejected.

Search for Oil. (Question No. 743.)

Mr Hayden:
OXLEY, QUEENSLAND

n asked the Minister for National Development, upon notice -

  1. What sum has been provided by the Commonwealth Government during each year since Federation for oil search in Australia?
  2. Can he also say what sums have been provided for this purpose during the same years by (a) the Slate Governments and (b) private enterprise?
Mr Fairbairn:
LP

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

  1. Early figures on expenditure are not completely certain. However, the following figures are offered, based on available records of expenditure incurred in the periods indicated.

The expenditure from 1950 onwards has been incurred by my Department.

In addition to this sum the following payments have been made to exploration companies under the Petroleum Search Subsidy Acts: -

2 (a) Precise details of expenditure on oil exploration by the State Governments are not available. They have emphasised that the following figures which they have supplied are, at best, only rough estimates.

  1. Expenditure by private enterprise has been as follows -

Civil Aviation: Subsidies. (Question No. 746.)

Mr Costa:
BANKS, NEW SOUTH WALES

a asked the Minister representing the Minister for Civil Aviation, upon notice -

What subsidy is granted to (a) Airlines of New South Wales Pty. Ltd.; (b) other airlines operating in New South Wales?

Mr Fairbairn:
LP

– The Minister for Civil Aviation has supplied the following information -

The following subsidies were paid to the airlines in 1963-64 for the operation of services in New South Wales-

Repatriation. (Question No. 748.)

Mr Uren:

n asked the Minister for Repatriation, upon notice -

What was the cost of Repatriation benefits paid to veterans of the Korean war each year from 1st July 1951 to 30th June 1964?

Mr Swartz:
LP

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

Available statistics include Repatriation benefits paid to those who participated in the Malayan operations between 29th June 1950 and 31st August 1957, as well as Korean veterans. The available information is as follows -

In addition to the above benefits, there are a number of other benefits, for example, medical sustenance during illness, to which these veterans are entitled. However, separate satisfies are not available.

Telephone Services. (Question No. 756.)

Mr Ian Allan:
GWYDIR, NEW SOUTH WALES

n asked the Postmaster.General, upon notice -

  1. What rule ‘ is applied to determine the economically justifiable radius of local call access under the E.L.S.A. scheme?
  2. Is it a fact that this radius is sometimes shorter in sparsely settled areas than it is in districts with a higher population density?
  3. Will he give consideration to making public the formula used by his Department in drawing up the E.L.S.A. boundaries?
Mr Hulme:
LP

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

  1. There is no set radius governing the extent of local service areas under the E.L.S.A. scheme. The grouping of exchanges to form zones is determined basically by community of interest factors taking into consideration the disposition of exchanges and the economic aspects of the interconnecting circuits and switching equipment. In general, it is economically feasible to provide local call access up to about 20 miles where there exists a substantial community of interest.
  2. No. On the contrary, in recognition of the particular needs of people living in the more sparsely settled areas, less emphasis is placed on the economic aspects. In these cases, depending upon the nature of the district, local call access to a main centre may be provided over somewhat greater distances than 20 miles.
  3. Because of the considerable number of variables applying to any particular situation, there is no set formula. The general principles of the local call charging system and the zoning of exchanges have already been made public and are referred to in the information pages of the telephone directory.

Australian Port Authorities Association. (Question No. 800.)

Mr Whitlam:

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

  1. When and where has the Australian Port Authorities Association had meetings in the last four years?
  2. What requests or recommendations were made at these meetings for legislative and administrative measures to be taken by (a) the Commonwealth, (b) any Territory and (c) any State?
  3. What action has been taken on these requests or recommendations?
Mr Freeth:
LP

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

  1. I have been informed that the Australian Fort Authorities Association has, in the last four years, had meetings in the last week of September 1962 at Fremantle and in the first week of November 1964 at Melbourne.
  2. and 3. The Australian Port Authorities Association is a body consisting mainly of representatives of State Government and local authorities responsible for the operation and control of ports and harbours within the States. Its activities and the proceedings at its meetings are not in any way the responsibility of my Department. Therefore I am not aware of what requests or recommendations are made at its meetings, nor am I aware of what action the Association has taken in relation to any such requests or recommendations.

Nursing. (Question No. 569.)

Mr Whitlam:

m asked the Acting Minister for Health, upon notice -

  1. How many nurses were registered in each of the last fifteen years?
  2. How many persons qualified as nurses in each of the last fifteen years?
Mr Swartz:
LP

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

The honorable member is no doubt aware that, under the Commonwealth Constitution, the control of nursing is the responsibility of the Stale Governments. The State legislation controlling the training and registration of nurses is administered by Nurses’ Registration Boards in all States except Victoria, where a Nursing Council operates. As independent statutory bodies, the Nurses’ Boards and the Victorian Nursing Council are responsible to the Ministers for Health in the respective States. In the Australian Capital Territory and the Northern Territory the registration of nurses is the responsibility of the Commonwealth Minister for Health, and Nurses’ Registration Boards, similar to the corresponding State Boards, have been established under statutory authority.

The New South Wales Nurses’ Registration Board has advised that statistical information is not available in relation to the number of nurses who registered in that State in each of the last fifteen years. The Queensland and Western Australian authorities are only able to supply such information from 1959 and 1961 respectively. The New South Wales Board is also unable to provide statistical information in relation to the number of nurses who qualified in each of the last fifteen years.

It is regretted that a complete answer to the honorable member’s question cannot therefore be given. However, such information as is available is tabulated hereunder. It should be noted that there is a certain amount of overlapping between tables 1A, IB and 1C, as many general nurses would also be registered as midwifery nurses and a few would be registered in each of the three categories as general, midwifery and psychiatric nurses,

Repatriation Department - Psychiatry. (Question No. 712.)

Dr Gibbs:

s asked the Minister for Repatriation, upon notice -

  1. What steps are being taken by his Department to keep abreast of modern developments in the field of psychiatry?
  2. What is being done to rehabilitate psychiatric patients as active useful members of the community?
Mr Swartz:
LP

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

  1. The Repatriation Department has recently appointed an Assistant Chief Director of Medical Services, who is also Consultant Psychiatrist to the Department, to be responsible for the overall technical direction and supervision of the Department’s psychiatric services. After studying psychiatric and rehabilitation developments and trends in the United States of America and Canada he carried out a comprehensive and critical survey of the Department’s psychiatric services in all States of the Commonwealth in association with a senior administrative officer.

Arising out of this survey a long range plan has been adopted for the re-organisation and development of the Department’s psychiatric services. This is based on close integration of the various psychiatric units, both in-patient and outpatient, to provide a uniform and effective approach to treatment, and emphasises the need for intensive treatment in the earlier stages with a view to the early return of the patient to the community. It aims at treating patients at the out-patient level as far as possible; at providing an active and coordinated therapeutic programme at all institutions, with due emphasis on physical medicine and rehabilitation; and at introducing Restoration Centres as focal points for re-entry of patients into the community.

The Plan is being progressively implemented as trained staff, which is in short supply, and other resources become available.

A successful example of the rehabilitation aspect of the Department’s psychiatric service is the halfway house operated in conjunction with the Red Cross Society in Victoria for the exclusive use of Repatriation patients. This centre, which was the first of its type in Australia, emphasises that rehabilitation is a team effort including active psychologist and social worker participation in association with para-medical activities covering physiotherapy, occupational and manual arts, as well as education and recreational therapies.

  1. See answer to question 1 above.

Nervous Diseases in Former Prisoners of War. (Question No. 765.)

Mr Uren:

n asked the Minister for Repatriation, upon notice -

  1. Has there been an alarming increase in nervous disease among former prisoners of war of the Japanese?
  2. Is it the intention of his Department to recall all Australian ex-prisoners of war of the Japanese for a further medical examination?
Mr Swartz:
LP

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

  1. There is no evidence of any undue increase in the incidence of nervous disease in this category of patient. 2, No. On the recommendation of a special Advisory Committee of medical consultants, most of whom were prisoners of war themselves, a complete medical survey of surviving prisoners of war of the Japanese who wished to participate was conducted by the Department during 1949- 1952. Ninety per cent, of these ex-servicemen have Repatriation entitlements for a war caused incapacity for which they are receiving medical care through the Department.

The results of the survey were again reviewed and current and future needs were considered by the Advisory Committee at the end of 1959. The Committee advised that a further general survey was not necessary and the Commission’s own medical advisers share this view.

Drugs. (Question No. 777.)

Mr Reynolds:

s asked the Acting Minister for Health, upon notice -

  1. Is he able to indicate the countries, which do not recognise patent rights, from which Australia imports drugs?
  2. If so, what has been the value of these imports from each of these countries during each of the last five years?
Mr Swartz:
LP

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

  1. Australia has imported drugs and medicinal preparations from the following countries which do not recognise patent rights on product or process or both -

People’s Republic of China (mainland China).

Czechoslovakia.

Eastern Germany.

Hungary.

Italy.

Poland.

Republic of South Africa.

  1. The only source from which information on the value of imported drugs and medicinal preparations is in any way readily available is the Overseas Trade Bulletin, published by the Commonwealth Statistician. In the Bulletin, however, imported drugs and medicinal preparations are grouped with imported chemicals, essential oils and fertilisers. As only certain classes of drugs and medicinal preparations are specified in the relevant section of the Bulletin, and as the country of origin is not always cited, it is not possible to give exact statistics for the total value of drugs or medicinal preparations imported from the countries in question. The f.o.b. values given in the table hereunder relate to those importations of drugs and medicinal preparations which can be identified and definitely attributed to a particular country. The actual total values of all drugs and medicinal preparations imported from the countries concerned would no doubt be somewhat higher. It will be noted that, as the figures for 1963-64 are not yet available, the information provided hereunder relates to the previous five years.

As a basis for comparison, the corresponding value of importations from the United Kingdom was -

Pharmaceutical Benefits. (Question No. 790)

Mr Collard:

d asked the Acting Minister for Health, upon notice -

  1. Are pensioners obliged to pay the full price for supplies of the influenza preventative polyvalent vaccine?
  2. If so, as many age and invalid pensioners are undoubtedly subject to colds, will the Minister give sympathetic consideration to having the vaccine placed on the free list?
Mr Swartz:
LP

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

  1. The influenza polyvalent vaccine is not a pharmaceutical benefit under the National Health Act.
  2. No drug may be added to the list of pharmaceutical benefits unless it has been recommended for inclusion in that list by the Pharmaceutical Benefits Advisory Committee. Requests for the addition of influenza vaccine to the list of benefits have been considered from time to time but have not been approved.

I would point out that the influenza virus and the common cold virus are quite distinct. Whereas influenza vaccine may give protection against influenza, it gives no protection against the common cold.

Cite as: Australia, House of Representatives, Debates, 12 November 1964, viewed 22 October 2017, <http://historichansard.net/hofreps/1964/19641112_reps_25_hor44/>.

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