House of Representatives
5 May 1966

25th Parliament · 1st Session

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

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Mr. L. R. JOHNSON presented a petition from certain citizens of the Commonwealth praying that the Commonwealth Government repeal the Wards’ Employment Ordinance and legislate to provide at least the basic wage for all Aboriginal workers in the Northern Territory.

Petition received and read.

A similar petition was presented by Mr. Wentworth.

Petition received.

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– I ask the Minister for Civil Aviation a question. In view of the many recent DC3 engine failures, particularly the latest failure over Bass Strait, will the Minister say why his Department has not introduced regulations to compel these aircraft to carry life rafts when flying over Bass Strait? Was the recent failure due to lack of air frame de-icing equipment or the DC3’s known poor singleengine performance at all-up weight with a propeller feathered or windmilling? Has the Department failed to institute performance tests as requested by the Australian Federation of Air Pilots? If so, will these tests be carried out?

Minister for Civil Aviation · DARLING DOWNS, QUEENSLAND · LP

– I would not like it to be thought that Australia’s record of safety in aviation is not the best in the world, because the facts show that it is. However, from time to time problems do arise regarding engine failure. This occurs more particularly with older piston engine aircraft than with jet or turbo-prop aircraft. I am not aware of the incident to which the honorable member has referred but I will make some inquiries about it and obtain some information. The DC3 aircraft are being steadily phased out of operation in Australia and will be replaced with a more modern type. They are out of manufacture, but that does not mean that we do not still insist upon the very rigid and high standards for operation that apply here.

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– I direct my question to the Minister for External Affairs. Has he seen statements this week by the Indonesian Minister of Foreign Affairs, Dr. Malik, and His Excellency the Indonesian Ambassador to Australia that Indonesia will work for a peaceful settlement of confrontation? Would such a settlement mean that the 1,000 strong Australian force in Borneo at present facing 13,000 Indonesians along jungle frontiers would be released to return to Australia? If this is so, does the Minister see in this reported changing attitude of the Indonesian Government a chance for an early settlement of confrontation, and to what extent are we participating in negotiations towards this end?

Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– The Australian Government is, of course, watching wilh very close attention and interest all developments that have followed the change of Government in Indonesia and particularly such developments as may lead to a cessation of confrontation and the attempts to crush Malaysia. I do not think it would be helpful for me to enlarge on that aspect at this stage. Regarding the disposition of our forces, I would simply add this comment: Even assuming that confrontation were ended, the continuing problems of security ki the whole of the South East Asian region, including Malaysia, would still be present. Any decisions by the Government relating to the future disposition of forces would have to be taken from time to time in the light of the continuing need to guarantee the security of South East Asia.

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– I ask the Prime Minister a question. Is the Australian Government engaged in any current endeavour to bring about a cessation of hostilities and a negotiated settlement in Vietnam?

Prime Minister · HIGGINS, VICTORIA · LP

– As has been made clear by my colleague, the Minister for External Affairs, who has reported extensively to the Parliament on these matters, Australia has supported the conduct of negotiations throughout, but at the same time has held that the negotiations should be directed to a just and enduring settlement that would ensure the integrity and independence of the people of South Vietnam. We have given such support, diplomatically and otherwise, as we have been able to the efforts of the United States of America and other countries that have tried to bring hostilities to an end. Australia is not a belligerent country. Our goal is peace, and we welcome the efforts that are being made to this end. It is, I think, to be greatly deplored that every effort so far made has been scornfully rejected by the North Vietnamese and the Vietcong.

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– I address my question to the Minister for External Affairs. I refer to the South East Asia Collective Defence Treaty in which each party agrees to recognise that aggression in the treaty area will endanger peace and safety and to act to meet the common danger. The aggression referred to in paragraph 1 of Article IV is aggression against any of the parties or against any state or territory which the parties by unanimous agreement may designate. I refer the honorable gentleman also to the restriction imposed by paragraph 3 of Article IV, that, where a state or territory is designated by unanimous agreement, no action in that country will be taken without the invitation or consent of its government. I ask the right honorable gentleman whether the parties to S.E.A.T.O. did unanimously agree and did all sign a document to record their unanimous agreement to designate South Vietnam under Article IV. Did Australia receive an invitation from South Vietnam, in accordance with Article IV, before we sent troops to fight in that country?


– The honorable gentleman in his question has correctly set out the position of Australia. In the protocol to the Treaty which was done at Manila on 8th September 1954 the parties to the Treaty unanimously designated the free territory under the jurisdiction of the state of Vietnam as being an area to which the provisions of Article IV were applicable. I have read that statement from an answer to a question put on notice by the honorable member for Yarra. That information is already in the possession of the honorable member for Yarra and the House. I endorse the statement made in the ques tion that the honorable member for Parramatta has asked. The question has stated that this was a unanimous decision of the parties to the S.E.A.T.O. Treaty.

Mr Calwell:

– Pakistan and France?


– Yes, it was a unanimous decision by all the parties made on 8th September 1954. I also reaffirm what has been stated on many previous occasions, that a request was received by the Australian Government from the Government of South Vietnam in accordance with the terms of this protocol. It surprises me, Sir, that this information, which was given in answer to a question on notice, has apparently been ignored by certain honorable members opposite, because not only is the information available in that answer, but the Treaty series, which of course, is available to all members of the House and to the general public, publishes both the Treaty and the protocol in the same document, and anyone fairly reading those documents would know that a unanimous decision was made to designate South Vietnam as a state to whom the Treaty applied. They would also know from answers given to questions in this House that a request was received in accordance with that protocol from the state of South Vietnam. What leads to speculation is why so many members opposite should continue to try to obscure those plain facts.

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– My question is directed to the Minister for External Affairs. What is being done to explain our immigration laws to the Filipinos? Is it a fact that Australia does little in the Philippines to counter criticism of our immigration laws? Is the Australian Embassy there understaffed? Have we a Press attache there?


– It is the constant duty of our representatives in Manila to make sure that Australian policies on all matters are well understood by the Government and the peoples to whom they are accredited. Also on the visits - by no means infrequent -of Ministers and others to Manila similar opportunities are found for ensuring that the Philippines Government understands our policies and the reasons for them.

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– My question is directed to the Minister for Air. Has the Department of Air taken into consideration the ever increasing number of trained pilots resulting from the rapid development of aerial agricultural practices, the growth of the Commonwealth assisted aero club movement and the increase in the use of private aircraft in the pastoral and agricultural ‘industries? Is there any projected plan for the use of these pilots, particularly those over Royal Australian Air Force air crew age, a number of whom would certainly want to give some service in time of war or any other national emergency?

Minister Assisting the Treasurer · FAWKNER, VICTORIA · LP

– I know that the honorable member for Calare has on more than one occasion referred to this important matter. 1 think about a year and a half ago he raised the subject in a debate in the House. Since then the Department has had a look at this and the honorable member will remember that an Air Force emergency force has been created in order to make use of the services of pilots in these categories who have been suitably trained. However, in the categories of pilots that have been mentioned in this question the position is not quite so easy because they have rather specialised flying skills which are very different from the flying skills required in the Royal Australian Air Force and the retraining programme that would be required would be extensive. It would not be all that easy to fit them immediately into a force along the lines suggested by the honorable member. We shall look at this suggestion carefully as the result of this question and will give this programme further consideration. If there are ways in which this can be effected it will certainly be done.

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– I address a question to the Treasurer. Why does the Commonwealth Actuary take so much longer to conduct his quinquennial investigation of the Defence Forces Retirement Benefits Fund than he takes to conduct his quinquennial investigation of the Commonwealth Superannuation Fund? I point out that his last quinquennial investigation of the Superannuation Fund as at 30th June 1962 was reported on by him on 18 th December 1963, whereas his last investigation et the D.R.F.B. Fund, as at 30th June 1959, was not reported on until 13th November 1962, and his report on the D.F.R.B. Fund as at 30th June 1964 has apparently not yet been made. I ask the Treasurer whether in fairness to retired and serving members of the forces and as an encouragement to men to undertake or continue a service career he will urge the Commonwealth Actuary to speed up his investigation so that additional benefits can be provided out of any surplus in the Fund and, in particular, so that members prematurely retired on health grounds are at least as well treated as public servants so retired.


– I will look very carefully at the facts contained in the question just put to me by the honorable member. Naturally enough, if there are any difficulties for pensioners and other people involved I will immediately urge the Commonwealth Actuary to complete his report as soon as possible.

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– Will the Minister for External Affairs secure and lay on the table the Communist Chinese Foreign Ministry statement that last year Communist China transported a total of 43,000 tons of Soviet military supplies to the Ho Chi Minh regime in North Vietnam? Will the Minister send a copy of the statement to the honorable member for Yarra in the hope that the honorable member may cease asserting that the Vietnam war is an internal civil war?


– It would give me great pleasure to accede to the honorable gentleman’s request.

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– My question is directed to the Minister for Primary Industry. Has the Minister received any representations from professional fishermen’s associations concerning the large quantities of fish fillets being imported to the detriment of and causing depressed prices on sales by Australian fishermen, so much so that the Queensland Fish Marketing Board is reported to have a substantial supply of mullet fillets on hand and the Clarence River fishermen have been on a quota since Christmas? Can the Minister also confirm that permission has been given for the importation of up to 8,500 tons of Kaio hake from Japan for the current year?

Minister for Primary Industry · FISHER, QUEENSLAND · CP

– I cannot recall any representations made 10 me on that matter. Indeed, 1 am sure they have not been made. However, I will check and see whether they have been made and inform the honorable member.

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– Can the Treasurer obtain from the British Treasury authorities an assurance that, in the event of the devaluation of sterling, Australia’s holdings of foreign exchange in London will be protected? If he is unable to obtain such an assurance, will he inform the House of what measures can be taken to protect the real value of these balances? I point out that this question follows along the lines of one I asked his predecessor a couple of years ago.


– I think the honorable gentleman will recognise that some of the measures proposed by the Chancellor of the Exchequer in his Budget speech yesterday were designed to strengthen sterling and consequently to reduce considerably any prospect of the United Kingdom Government’s having to devalue sterling. Some time ago, representations were made to the British Government in order to satisfy ourselves that the treatment that is given to other countries in relation to the repayment of their overseas balances is also accorded to Australia. However, the honorable gentleman raises an interesting point, and I will again discuss with my department whether we should make any further request to the British Government to ensure that we are on a parity with the countries that are most favourably treated.

As to the second part of the honorable gentleman’s question, I think it would be imprudent if I were to canvass the various alternatives open to the Australian Government in the event of the British Government devaluing sterling. I hope, and I think most people in the British Government confidently expect, that sterling will not be devalued.

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– I preface a question addressed to the Prime Minister by saying that many thousands of home owners and home purchasing citizens in several local government areas in New South Wales will learn this morning, with great dismay, that rates imposed by the Metropolitan Water, Sewerage and Drainage Board are to be increased by up to 50 per cent. This follows immediately upon substantial increases of up to 40 per cent in municipal rates. Does the Government recognise what intolerable burdens these imposts place on many pensioners and low income families? Do these burdens arise predominantly from the grossly inequitable system of flat rate land tax used by local government authorities, the heavy burden of road construction and maintenance and the increasing volume of social service and welfare responsibilities being imposed upon local governments? Will the Government now take the initiative in convening a round-table conference of Commonwealth, State and local government representatives, as promised back in 1950, to work out a more equitable system of financing local government? Finally, will the Government give consideration to an immediate substantial increase in pensions to meet some of these distressing rale burdens now confronting pensioners?


– The honorable gentleman has asked a rather omnibus type of question.

Mr Calwell:

– Do not give us an omnibus reply.


– I do not intend to do that. I cannot give an answer directly to those points which involve matters of policy, but I shall study the question in its detail. I would not like the honorable gentleman to think that New South Wales citizens are the only sufferers from sharply increased domestic ratings by local authorities. I can assure him that Victoria has felt the impact of this process quite acutely also, and I have no doubt that the experience has been fairly general in other parts of Australia.

The honorable member refers to the desirability of having some three way discussion. The Commonwealth Government has made it clear that if the State Governments were so disposed we would be willing to join in that type of discussion, but I have heard the proposal quite summarily rejected by State Ministers for Local Government, and 1 am not aware of any change of heart that has occurred since. Generally speaking, the financial arrangements between the Commonwealth and the States have been set out in a formula which was unanimously arrived at after discussion some time ago. We shall be holding a meeting of Premiers and a Loan Council meeting in June and no doubt any immediate problems of the States will receive some airing at that point. Possibly the sort of problem the honorable member has mentioned will be part of the story we shall be hearing from the Premier of New South Wales.

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– Without any notice whatever I address a question to the Minister for National Development who will no doubt be aware of the advocacy in this House by the honorable member for Riverina for the setting up of a Murray Valley Commission, and he may even have heard of my efforts in this regard. As there is reasonably general support in the Murray Valley for the establishment of such an authority, which would incorporate the functions of the River Murray Commission with work to develop the whole valley, will the Minister make investigations with a view to ascertaining and reporting to this House whether such a move would be practical in promoting national development?

Minister for National Development · FARRER, NEW SOUTH WALES · LP

– 1 heard the speech by the honorable member for Riverina last night on this matter and I know the honorable member for Mallee has advocated the course he mentions, because I undertook a tour during last year of some of the areas involved. 1 point out to him that this is a constitutional responsibility of the States concerned and that if there is any desire for this sort of body to be set up the primary move must come from the States. I presume that the States would know the feeling of the people in those areas. We would not as a Commonwealth Government seek to intrude unless we were requested to do so by the State authorities. I will make some inquiries to see whether national development could proceed at a greater pace if we were to have an organization of this sort. Personally I cannot see that it would, be cause I think the States are quite capable, provided they get the money, of undertaking various projects in the area.

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– I ask the Minister for Shipping and Transport a question. Has he directed his attention to the current United States Senate inquiry on the built-in dangers to life and health and the lack of safety factors incorporated in the design of American automobiles? As Australian built vehicles seem to have minimal safety factors incorporated in their design will he arrange for a special committee of inquiry to be appointed from representatives of this Parliament, and assisted by technical staff, to investigate publicly and report on any dangers to human life and wellbeing which may be apparent in Australian ‘built vehicles and to recommend safety precautions that should be incorporated in the design of those vehicles in the interests of public safely?

Minister for Shipping and Transport · FORREST, WESTERN AUSTRALIA · LP

– I have seen some reports of the American Senate inquiry into the question of the safe design of motor vehicles, although I have not studied them fully. In Australia the right to register a vehicle is vested in the State Governments and it is their responsibility to see that vehicles are safe in both roadworthiness and design. There has been some cooperation between the State Governments, acting under the auspices of the Australian Road Safety Council, in looking at matters of design. The function of the Commonwealth Government is to co-ordinate and to ensure co-operation between the States in trying to achieve uniformity. I would hesitate to intrude on what is obviously a responsibility of the State Governments.

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– I ask the Treasurer: Will he give consideration to augmenting the staff of the Commonwealth Actuary by using the services of Commonwealth public servants? I mention those employed as statisticians and accountants who under expert supervision could give worthwhile assistance to the Actuary. I make this request in view of the excessive delay now apparent in bringing down the quinquennial report on the Defence Forces Retirement

Benefits Fund and the consequent postponement of action in respect of the surplus which the report can be expected to disclose.


– I have not had any representations through the Department to increase the staff of the Commonwealth Actuary. I do not know the cause of the delay in bringing down the report to which the honorable member refers. The delay may be for reasons not associated with a deficiency of staff. Nonetheless, as the suggestion made by the honorable gentleman is worthy of attention, I will take it up with the officials concerned. I will let the House know the result.

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– In view of the excessive number of volunteers for the Australian Army being rejected because of failure to pass the education tests, I ask the Minister for the Army whether he will review this matter wilh a view to lowering the standard as a means of obtaining the required number In the Australian Regular Army. I might add that I heard a story to the effect that one chap who failed the education tests for entrance to the Army joined the Australian Country Party and later became a member of Parliament.

Mr Malcolm Fraser:

- Mr. Speaker, I do not believe that the honorable member really thinks that the last part of his question is credible in any sense. I do not know whether the honorable member was in the House yesterday when I again pointed out the position regarding the educacation and intelligence tests in relation to people joining the Australian Regular Army or the Citizen Military Forces. These standards were established as a result of operational experience in the days of the last World War. It was decided then that if the standards were lower than the ones that were set, anyone brought in under those standards would be a danger to his colleagues and an administrative liability. The standard of the education test is approximately grade 4 or grade 5 in Victorian primary schools. The intelligence tests are such as would exclude, if applied over the whole community, only the bottom 3 per cent, of the community. I do not know how often honorable members opposite will continue to say that these standards should be lowered and how long they will continue to urge that we should damage the structure of the Army by introducing people into the Army who are totally unsuited to serve in it.

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Mr. TURNER__ My question is addressed to the Minister for Shipping and Transport. It follows upon his answer to the question directed to him by the honorable member for Oxley. I ask the Minister whether, from data available to him, he agrees with the estimate that road accidents in Australia are now costing the economy, directly and indirectly, approximately $400 million per annum? This is an amount equal to the annual cost of our defence until three or four years ago. Does the Minister agree that the design of passenger cars is a significant factor in these accidents? If so, has he given thought to the possibility, constitutionally and otherwise, of applying to the Treasurer for the imposition of a differential sales tax on passenger cars according to whether or not they comply with certain specific safety requirements?


– The annual cost to the Australian public of traffic accidents is admittedly tremendously high. I could not vouch for the exact figure given by the honorable gentleman. Nobody has yet analysed what proportion of that cost arises out of the actual design of vehicles. Nobody has yet determined whether this represents a larger proportion or a lesser proportion of that amount. In one sense, this factor does form a portion of the total cost, but I could not say whether this is a large or small section of that cost. As for the honorable member’s suggestion that the Commonwealth should decide vehicle standards and tax vehicles according to the way in which they comply with those standards, this is a matter that I will have examined.

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– I ask a question of the Prime Minister. I draw his attention to the purchase of 200 acres of land at Dandenong in Victoria by the estate of the Duke of Westminster, not for the establishment of a new industry but for speculative purposes. What benefits would accrue to Australia from this investment from an overseas source? Will it bring any new techniques, any new know-how or any new employment? If as 1 believe, it will not bring any of these things, are we reduced to a situation in which we must sell our land for speculative purposes to maintain our national solvency?


– To reply fully to the question asked by the honorable member would be to deliver an economic thesis. The introduction of foreign capital - perhaps I should say overseas capital rather than refer to British investment as foreign capital - brings certain advantages. It brings an addition to the Australian working stock of capital. Perhaps we gain the most advantage from investment in industries which involve new techniques and give us new production. But any addition to the assets of the banking system enables more credit to be made available for Australian entrepreneurs who then can take advantage of opportunities for capital development which would not be available to them if there was a smaller amount of capital at the disposal of the banking system. I do not think I should pursue this matter in great detail. Unfortunately United Kingdom investment in Australia, whether of the kind mentioned by the honorable member or for industrial purposes generally, is likely to be reduced, and perhaps some of the disadvantages that the honorable member sees in the influx of capital from overseas will be diminished accordingly.

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– I direct a question to the Treasurer. I preface it by reminding him that on 27th April, in answer to a question by the honorable member for Moreton, he gave details to the House for the first time of the Government’s decision to make available $1.75 million in interest bearing loans to Queensland sugar cane farmers and millers under the drought relief scheme. Is the Treasurer aware that the most serious problem facing the sugar industry in general is the disastrously low world price applying to more than 50 per cent, of the total production of sugar in Australia? Will he take immediate steps to see whether the sugar industry, which is so vital to Queensland, can be assisted generally by grant or loan to raise the aver age cane price paid to growers pending either successful negotiation of an international sugar agreement or a Commonwealth stabilisation scheme? When will he provide details of the application of the special loan just announced, so that interested members will not have to get their information from newspaper versions or from explanations of the broad application given in this House in answer to pre-arranged questions?


– What the Government has attempted to do is to enable the Queensland Government to give immediate help to farmer members of the co-operative sugar mills of Queensland. If the honorable gentleman objects to assistance being given to these sugar mills-

Mr Calwell:

– If the Minister suggests that, he is twisting and misrepresenting what the honorable member for Dawson said.


– He is misrepresenting what has been done and therefore he will be corrected as quickly as I can correct him. Because of the difficulties that have been encountered by the co-operative sugar mills, the Queensland Government has asked whether we will provide financial assistance to it for the making of concessional loans to assist the farmers concerned in meeting levies imposed on them by the sugar mills. I made that clear in answer to a question that was rightly asked by the honorable member for Moreton. If the honorable member for Dawson wants information suppressed until such time as I can make a formal statement to the House, the millers and the cane growers who want to know their position immediately will be deprived for as much as five to ten days of knowledge of the Government’s intentions. I regard the procedure that we have followed as sensible and wise in the interests of the growers and the millers. I certainly have no intention of adopting the course of action proposed by the honorable member.

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– In the absence of the Postmaster-General, I seek some assistance from the Treasurer. Having some sympathy with my colleagues who advocate improved telephone services in rural districts, I ask for an assurance that Australia is to the fore in the use of modern telephonic installations and that adequate funds will be provided annually by the Australian Government for the Post Office for research in the very important field of the development of modern telephonic communications. Will the Treasurer ask his colleague to inform the House later whether in the near future with the development of modern equipment, farmers may be relieved of the need to undertake the costly provision of miles of telephone lines?


– The whole question of research both in secondary industry and in other fields that I describe as tertiary is now under the closest scrutiny by Treasury officials. I hope to be able, during the Budget discussions with my colleagues, to give these matters the fullest possible consideration. Any decision that we make will be announced on the presentation of the Budget.

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– I direct a question to the Prime Minister. I ask: Is it a fact that the Government considers Communist China to be a major threat to the security of Australia and the world and to be a party to Vietcong activities in Vietnam? If so, will the right honorable gentleman state how his Government justifies trade with China, particularly when Australian boys are being conscripted to fight in Vietnam? Would it be correct to say that the Government knows that in view of its attitude to China it is morally wrong to trade but prefers to do so rather than risk loss of support by the Australian Country Party, which is the chief political beneficiary from sales of wheat and wool to the enemy?


– The Minister for Trade and Industry and I, as well as other members of the Government, have stated our position in this matter. The honorable gentleman should recall that we, in company with the United States of America, have indicated that we have clear but limited objectives in relation to the struggle in South Vietnam. We have made it clear that we do not seek to destroy North Vietnam as a national or economic entity. We have no state of war declared against Communist China. Where aggression has occurred we have sought to resist it and to check its growth. What we have done in these other matters is entirely consistent, with that position.

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– I ask the Minister for National Development a question. In view of the large resources of coal now available in Australia, what organised research is under way to use this coal and with what success? Is there any evidence to indicate that in Australia coal usage will diminish as other cheaper sources for the production of energy become available?


– Research into the use of coal has been carried out in Australia for a considerable time by State organisations and private industry. The honorable member will recall that recently the Commonwealth Government set up the National Coal Research Advisory Committee. The Commonwealth has made a grant to the Committee of, I think, £130,000, matching the amount coming from State and industry sources. A committee has recommended forms of research into the use of coal, and this research is being undertaken. One of the most interesting research programmes is being carried out by the Department of Supply, which is running a turbine on brown coal. This programme is of great interest but has not yet reached a stage of definite development, lt appears that although the usage of coal in some areas may decrease in coming years, particularly with the discoveries of gas and oil, the amount of coal that will be required for the generation of electricity will increase. In fact, our sales overseas are increasing. So there appears to be scope for considerable increase in the use of coal for a long time to come.

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.- I move -

That this House deplores the failure of the Government to make adequate provision for Australia’s defence supplies and the development of industries associated with these supplies.

Any worthwhile defence system in a country situated in Australia’s geographical position, blessed with good primary industries and ever-increasingly efficient secondary industries, must have as one of its foundations for defence a sound industrial base. Australia has a sound industrial base. We have the capacity to expand it. But unfortunately our sound industrial base is not linked closely enough to our defence system. What is required is that the Government give industry encouragement to embark on a planned programme of research and of production of the goods necessary for our defence system. The Department of Defence should purchase Australian manufactured goods when their quality is up to standard and their price competitive. I admit immediately that our small-arms factories, certain aircraft production plants, clothing industries and other industries are doing a worthwhile job, but more is required. My plea is for a plan to embrace industries such as the electronics industry, the heavy machinery industry and the light aircraft industry. There are, of course, many other industries one could name, but my remarks will be confined to the three I have mentioned.

Australia’s defence forces have substantially increased in recent years. No doubt in years to come they will be increased still further. This increase will not weaken our industrial development provided we gear our industrial sources to our defence needs. We must plan now for such development. At present there appears to be a complete lack of co-ordination between government departments responsible for defence purchases and people concerned with building up the industries allied directly and indirectly to our defence needs. A classic example of this is the fact that recently tenders were called by the Department of the Army for the supply of earth moving equipment. The machines required are readily available from Australian manufacturers. The price of the Australian made machines on the Australian market is lower than that of similar imported machines. Technically, Australian made earth moving equipment, like Australian made motor cars, is at least the equal of imported equipment. Some people may claim that the Australian product is better. But the Department of the Army did not accept the Australian manufacturers’ tender; it accepted the tender of an overseas competitor. As a result an order worth at least $j million has gone overseas to the detriment of Australian industry.

The Australian made earth moving equipment could have been supplied to the specifications required at a price lower than that of the imported machinery if the duty on the imported machinery were included in its price. I understand that Commonwealth purchasing officers are required to take into account the incidence of duty when comparing tender prices of Australian manufactured goods and those of overseas goods. But the Government does not pay duty on imported goods. So the purchasing officers deduct from the price of the imported goods the amount of duty - a duty which is approved by this Parliament as a protection to Australian industry. Tha effect of not paying duty on imported goods is that their cost is reduced. By this kind of magician’s trick the purchasing officers prove that the tender price of the imported article is the lowest received. By a stroke of the pen the duty imposed by this Parliament to protect and build up Australian industry is thrown aside by the Government. This surely is not the way to help build up sound Australian industries which would be so necessary to Australia’s defence in time of need.

The Australian company which was unable to win an order from the Department of the Army has been able to export its machinery overseas. It sells on the tough international heavy machinery market tha very machines rejected by the Government. This is proof that the quality and the price are right. How can Australian industries continue to develop their potential for our civilian and defence requirements if they are not given a reasonably fair chance of supplying the Government’s needs? Mr. Brooks, General Manager of the company which has sold its heavy earth moving machinery overseas, has been complimented by the Department of Trade and Industry for his ability and initiative in selling on the open market. He recently brought back from Egypt Australia’s biggest overseas order for heavy machinery. Here is a company that can compete overseas in the tough international market. It has proved that it can sell in this wide market, but it cannot sell to the Department of the Army - to the Government. Industry needs a better deal.

What applies to the heavy machinery industry applies with equal force to the electronics industry. Let me quote from an article in the “ Manufacturers’ Monthly “ of 15th April this year. The article is headed “ Stepping up campaign to win more defence orders” and reads -

A vigorous campaign to stir Government authorities into buying more defence items from Australian manufacturers instead of overseas has been initiated by more than a score of leading companies in the telecommunications field.

In a statement issued on their behalf, Mr. N. M. Dunn, Group Director of the Plessey Automation Group, said that approximately 80 per cent, of the electronics equipment ordered for Australia’s armed services last year was bought overseas.

He contended that local industry could have met 50 per cent, of the orders if given the opportunity.

As chairman of the body formed by these local companies - the Australian Telephone Development Association - Mr. Dunn is critical of the thinking of Australia’s armed services, which “ are convinced that only America or possibly Europe can supply the equipment needed “.

The article also states -

But the fact is that Australian industry has to suffer, because our supply officers are saying: “ We do not have to worry about supplying our troops-

He is speaking of Vietnam - the Americans are doing that for us.”

Mr Curtin:

– Who said that?


Mr. Dunn, who is the Group Director of the Plessey Automation Group, speaking on behalf of the Australian Telephone Development Association. In recent times, as Mr. Dunn said, Australia has purchased from overseas manufacturers aircraft and meteorological equipment which should have been designed and developed in Australia. The Commonwealth Government spends approximately $40 million a year on this equipment and equipment of similar type. In 1950, the Commonwealth Scientific and Industrial Research Organisation installed airport radar equipment in Sydney and Melbourne on an experimental basis with the intention of developing the processes of air traffic control. An amount of £50,000 per annum was set aside at that time to cover the cost of the project. But no encouragement was given to industry to proceed with the manufacture of the equipment. The Department of Civil Aviation recently had to purchase airport radar equipment from France, comprising airport radar control warning systems. Installation of these warning systems costs in the vicinity of $1,500,000 for each capital city. If Australia installs them at the six capital cities, the installation costs will be $9 million.

If Australia had continued with the C.S.I.R.O. development that had been commenced when this Government took office, we would now be able to produce and install the equipment that we are purchasing overseas. As Mr. Dunn said, 80 per cent, of the electronic equipment purchased by the defence forces last year was purchased overseas. The overseas suppliers carry out extensive research into electronics and plough back into research a proportion of their annual sales. For every $40 million Australia spends on imported electronic equipment, $2 million is invested in overseas research. By continuing to purchase goods overseas, Australia helps to ensure that its overseas competitors are able to keep abreast of developments and ahead of Australian industry. Undoubtedly, some of the equipment imported into Australia could not have been purchased here, but because it is not available in Australia docs not mean that it could not have been manufactured here. The Government and industry should co-operate in a research and development programme and should share the cost of the programme.

The Postmaster-General’s Department, in contrast to the Department of Defence, has been a staunch client of the local electronics industry. But for some reason the defence Services have not been so active. The Postal Department appears to recognise that the scale of operations possible in this country does not allow local manufacturers always to match the price of the imported article. But this is more than made up by the benefit of quick supply and the ability to develop reliable projects for special needs. The Department of Defence, should follow the lead set by the Postal Department. If our defence orders continue to flow overseas, Australia may well deal itself out of the chance of establishing a modern electronics industry. If Australia depends on other nations for the supply of electronic equipment needed by the defence Services, it risks being exposed and crippled if our supply lines are cut in time of war or defence emergency.

The industry received a severe blow some time ago when the Government purchased a 250 kilowatt transmitter for

Radio Australia from an overseas manufacturer. Action such as this gives little encouragement to the industry to engage in research work and to seek export markets. Overseas competitors say, with truth, that even the Australian Government will not purchase the Australian product. With earthmoving equipment, the local company could sell its product overseas but the Australian Government preferred to buy the imported equipment. This story is repeated with the electronics industry.

Whatever criticism is due to the Government regarding the heavy machinery and electronics industries, it must come under a much more severe attack for its action - or lack of action - in the field of light aircraft production. The Menzies and Holt Governments have, by their policy of allowing the purchase of light aircraft from overseas and of permitting the unrestricted entry of these aircraft into Australia, encouraged the slow strangulation of this important industry, which, with Government assistance, direct or indirect, could well become a keystone in Australia’s defence system. To understand how the Government’s policy has destroyed the light aircraft industry, it is necessary to place before the House facts concerning the Aviation Division of Victa Ltd. of Sydney. I do not make a plea on behalf of Victa Ltd., but this happens to be the only company engaged in the mass production of light aircraft in Australia. For that reason, I am compelled to refer to it.

Victa Ltd. has been producing a very fine and efficient aircraft, the two seater Airtourer, which was designed and almost entirely produced at the Victa plant. The propeller and engine are the only imported parts. The aircraft is priced within the range of similar aircraft imported into Australia. But by allowing the unrestricted import of aircraft produced by powerful overseas interests, the Government has brought local light aircraft production almost to a standstill, with, of course, the inevitable retrenchment of skilled staff. The story broke on 15th February 1966, when the “ Australian Financial Review “ published an article headed “ Shock end to light plane venture. Victa halts output of light aircraft “. The article stated -

Production of aircraft by the Victa Aviation Division ceased yesterday.

This dramatic and unexpected end to a pioneering Australian enterprise will be announced formally today by the chairman of Victa Ltd., Mr. G. B. Richardson.

But the “ Financial Review “ was told officially last night that work had stopped on the famous two seat Victa Airtourer

Over the past four years a total of 160 Airtourers have been built and sold, in Australia, New Zealand and the United Kingdom.

The article continued -

In September, 19S9, Victa founded their aviation division, however, and undertook to build a minimum of SO Millicer Airtourer light aircraft. The aircraft was redesigned as an all-metal machine and the new prototype first flew on December 12, 1961.

The first production aircraft flew on July 4, 1962, and type approval was given in July 1962.

The Victa announcement follows closely on an optimistic assessment of the light aircraft market in Australia by Mr. R. M. Ansett.

The A.T.I. Group-

That is Mr. Ansett’s group - last year obtained Australian distribution rights for the Piper range of aircraft. In the last quarter of 196S, 126 new Light aircraft were registered in Australia.

Mr. Richardson would not comment on whether the decision to stop Airtourer production was in any way connected with Victa’s unsuccessful attempt to get the Commonwealth to introduce protective measures for the local industry.

The article went on to say -

However, it seems most unlikely that the company, after its relatively successful beginning with the Airtourer ending so sadly, would contemplate again taking on the giants of the United States.

It added-

What is virtually certain is that Australia’s first real attempt to venture into the aircraft industry, from the design stage to production, has failed. Victa, however, deserve nothing but praise for their courage and enterprise.

The company certainly has not received any encouragement from the Government, lt is pertinent to ask: For what reason has the Government allowed Australia’s only mass produced light aircraft industry to cease production? Victa Ltd. invested $3 million in this industry, which is closely allied to the nation’s defence needs. Is the Government aware that in the brief period of its production, the Airtourer earned for Australia in foreign currency £300,000? The Airtourer received an excellent reception from Australian aero clubs and it also received an excellent reception overseas. Let me quote to the House short extracts from the journal “ Air Pictorial “. In the issue of

November 1965, having air tested the Airtourer, the journal reported -

Every now and again there appears an aeroplane which looks absolutely right and in the air proves us good as it looks; for example, the Spitfire, Tiger Moth, Hart and Mosquito. Such quality is rare, but all the signs are that the Victa Airtourer has it. Its arrival in England this year is especially welcome, for not only does it seem to be the long-awaited “ Tiger Moth replacement “ but it is a Commonwealth product. . .

In a later paragraph after tests are recorded the review states -

This article begins by paying tribute to the quality of this aircraft. In fact, it is not too much to say that in a number of years flying, which includes experience of other aircraft besides those which have been subjects of fifty-seven “Air Pictorial “ air tests, this pilot has not found a more attractive light trainer, nor one better suited to the tasks for which it is intended, lt fulfils all that was hoped for from the design which won the Royal Aero Club competition; and in its latest version, as the Victa Airtourer Model 115, is an aircraft of exceptional quality.

Why has the Government, or perhaps I should say the Tariff Board, refused the submission of the Victa organisation for quantitative restricton on imported aircraft as a temporary protection? Victa Ltd. suggested that the Government should restrict the number of imported aircraft into Australia to the same number as was allowed last year in addition to a 20 per cent, increase to allow for growth, which seems to be a reasonable proposition. I am sure nobody could argue against that - the same number of aircraft as were imported last year plus 20 per cent, to allow for growth.

In 1962 the Victa Aviation Division launched Australia’s first commercially produced light aircraft. Figures for the last three years show that the number of light aircraft imported into Australia has been comparatively stable. During this period Victa sales have increased and because of this success the company over the last two years has committed large amounts of money for designing and tooling a four seater aircraft. To finance such an expansion of its production it had to be assured that its two seater sales would continue. In 1964-65 the total number of United States two seater aircraft imported into Australia was 21. In 1965-66 it is proposed to import 170 such aircraft. This is not a normal increase. It results from action taken by overseas interests to flood the Australian market with two seater aircraft. The Government, by allowing such imports into Australia aids and abets these overseas companies in their attempt to destroy our established light aircraft industry. This blatant attempt by large overseas companies cannot be allowed to succeed.

I invite the Minister to say whether the Royal Australian Air Force proposes to follow the practice of the United States Air Force of giving initial primary training in light aircraft. If it intends to do so, does the Government intend to purchase imported light aircraft for this purpose? Of course, maybe it intends to purchase them from its friend Mr. Ansett, who has now got the right to import this type of aircraft. ls that the reason why it is now seeking to destroy this industry that has made such progress? The United States Air Force recently ordered 170 Cessnas for primary training purposes. The basic reason for this is that the cost of a jet machine is $400,000 compared with a cost of SI 6,000 for a piston type machine and training on piston type machines allows pilots to be weeded out. If the Australian Army pilots are to be trained on jets will the Minister say how he thinks they will be able to switch easily to piston type aircraft? It is very easy, so I am informed, for a piston trained pilot to go on to jets, but it is most difficult for a jet trained man to switch to piston type aircraft.

In 1965 the Australian Army interested itself in the Airtourer. For some reason, just as in the earth moving machinery field and in the electronics field, after an investigation it settled at that time for the Winjeel trainer at a cost of $120,000 a unit against a unit cost of $12,000 at that time for the Victa aircraft. If there was something wrong with the Victa aircraft that could have been improved why did not the Army suggest improvements to the company? Why did it not encourage this industry to serve the nation’s interest? Mr. Speaker, in the electronics field and in the aircraft industry trained personnel are being lost to Australia. They are going overseas because there is not enough research and developmental work going on in this country. Universities in New South Wales are turning out aeronautical engineers but because there is not sufficient work for them to undertake and not sufficient research for them to engage in in Australia, they are forced to go overseas. The same thing is happening in the electronics field. They not only go overseas, but many of them never return to Australia, so those trained personnel are lost. This nation cannot afford to allow its industries which are showing great initiative - such as Victa Ltd. and other companies - to go under. Unfortunately the Government is more interested in importing goods than in fostering the manufacture of Australian materials.

It does not serve the nation’s interest for the Commonwealth Government to continue to purchase imported products to the detriment of Austraiian industry. Such a practice imposes an unnecessary demand on Australia’s overseas exchange and certainly does not encourage the development of industries in Australia closely allied to our defence needs. There is no doubt that in a time of emergency the best source of supply is the closest source of supply, and in the event of a defence emergency the closest source of supply is the Australian source of supply. 1 hope I am not being uncharitable to the Government when 1 suggest that it is letting in unrestricted numbers of light aircraft to the detriment of Australian manufactured light aircraft because its friend, Mr. Ansett, recently obtained the right to import light aircraft. There is something completely wrong when overnight permission is given for the import of these aircraft in such numbers that they will completely swamp the Australian market. The Cessna people have already announced that they intend to undercut the Australian light aircraft price. This should not and cannot be allowed to succeed. Victa Ltd. failed in its application to the Tariff Board. I hope that the Government will give some consideration to giving the company some relief in other ways. I understand that the company has received advice that to obtain protection by bounty or some other means would take at least two years. The company cannot continue to compete with a flood of imports, particularly as the company bringing in these machines has announced that it intends to undersell the Australian machine.

Victa Ltd. has produced a fine aircraft approved by the aircraft industry, generally. It is Australian designed and Australian manufactured, and the company has been able to export these aircraft, lt has been able to sell them on the United Kingdom market. It is like the earth moving equipment which can be sold readily overseas. As 1 have said, Mr. Brooks has received plaudits from the Department of Trade and Industry for the sales of earth moving equipment that he has been able to make overseas. At the present time he is heading a mission overseas hoping to increase these sales further. It does not give much encouragement to Mr. Brooks, to Victa Ltd. or to other Australian manufacturers to tell them that they have produced a good product and that they are good salesmen. The encouragement they need is for the Government to purchase their products in Australia. If the price of these products is right, the quality is good and they are good enough to sell overseas the products ought to be good enough for this Government to buy. The Government should be willing to bring the companies that produce aircraft and various kinds of equipment with a defence potential into a closely knit plan allied to our defence system. Time is running out and so we need this close organisation. Industry can play its part, but the GovernIndustry can play its part, but the Government, so far, has failed to play its part. I hope the Government will take action soon to implement such a policy and will decide that it is not good enough to say to the Australian people that they should buy Australian made goods. The Government should set an example, particularly in the field of industry which is so closely linked with the needs of our defence system.

Mr Gray:

– I second the motion and reserve my right to speak.

Minister for Defence and Acting Minister for Supply · Paterson · LP

– When I saw this item on the notice paper I wondered what had prompted the honorable gentleman to bring it forward, because during the three years that I was Minister for Supply I cannot recall any occasion on which there were officially arranged visits to any of the defence plants in this country by the Opposition.

Mr Luchetti:

– I have visited defence plants. I have done so repeatedly.


– The honorable member for Macquarie has inspected the very efficient industry which operates in the middle of his electorate. I am talking about a broad interest by the Opposition in what is being done in defence production in Australia. This is the first instance of an interest in it in three years.

Mr Bryant:

– The Minister should be delighted.


– We are delighted. Also during that period there was no debate on the Estimates for the Department of Supply and no debate on the Defence Estimates dealing with this matter. We are entitled to assume either that the Australian Labour Party for three years has been completely satisfied with what has been going on in defence production in Australia or is only now beginning to take an interest in it.

Mr Whitlam:

– I spoke on the Estimates last year on the electronics aspect of it.


– If that is so I withdraw the remark, but the honorable member would be the only one who has done so.

Mr Whitlam:

– The honorable gentleman may remember also that I accompanied him to Maribyrnong and Lithgow.


– I had not recalled that. This was an individual interest by the Deputy Leader and it was very creditable, but he did not have a very big party. In opening an opportunity to discuss one or two precise matters, which I hope to deal with in an equally precise way, the honorable member for Kingston (Mr. Galvin) has attacked the Government’s failure to promote defence in industrial production in Australia. The Department of Supply, which has the job of co-ordinating and supervising defence production in this country, is also responsible for the preparation of Australian industry at large to supply Australia’s defence needs. The Department operates 15 factories. These are nucleus factories. They are not designed to take over the entire load of Australia’s requirements in the event of war, but they are there as the repository for the development of techniques, for the establishment of standards and to provide this country’s peace time requirements at a time when a very wide swath of Australian industry is not particularly interested in producing Australia’s defence equipment.

If the honorable gentleman likes to go back to three articles which were published in the “ Financial Review “ - he has been good enough to quote them briefly in another context - he will read some quite interesting stories of defence production in Australia. I content myself with quoting only one paragraph from these articles in which the “ Financial Review “ has said -

Even the most critical examination of its operational efficiency suggests that Supply-

That is the Department of Supply - pursues its aim of supporting the Armed Services with dedicated enthusiasm and a level of technical and managerial skill rarely found elsewhere in Australia.

What is the function of the Department of Supply in respect of defence production? It is to make sure that in time of need Australian industry can undertake the production of the whole of our defence requirements. The question of the whole of our defence requirements must be modified in a minor way. There are some things which this country will never be able to produce and, therefore, these must be arranged for by other logistic processes.

The Defence Standards Laboratories in Australia operate the finest industrial research organisation in this country. The honorable gentleman talked about the Commonwealth Scientific and Industrial Research Organisation, which is another magnificent research organisation under Government control. But the industrial side of the Government’s research effort is conducted through the Department of Supply and, primarily, by the Defence Standards Laboratories. This is an organisation which is up with every modern technique, which has complete access, as I have every reason to know from personal observation and visit, to research plants of every kind overseas, both government and private. It is there to assist with their technical problems every Australian manufacturer engaged on defence production. It is available to help Australian industry generally on the payment of necessary research fees. Sir, we are backed by the Australian Aeronautical Research Laboratories, a research establishment which is recognised throughout the world as being one of the finest of its kind.

This is the body which underwrites the safety and progress not only of military aviation but also of civil aviation in Australia. The honorable gentleman will be quite pleased to know, I hope, that the Victa Company, to which he referred, had considerable help from the Aeronautical Research Laboratories in the development of the Victa aircraft. This is the body which solved the problem of fuel contamination, a problem which was concerning the aeronautical industry throughout the world. It was solved by the competence and dedication of the people who work in the Government’s Aeronautical Research Laboratories.

In South Australia we have the Weapons Research Establishment which employs a most competent body of scientific technicians in every branch of science and in every branch of defence production. The importance of this is, of course, that in time of national need the experience and the ability of these research organisations would be brought into play and would underwrite the defence production capacity which we have in Australia. The honorable member for Kingston has said that we have a quite sound industrial base but that it is not linked sufficiently closely to defence requirements. What the honorable gentleman overlooks is that the same kind of industry which produces our normal civilian requirements, using the same kind of techniques, materials and plants as to 95 per cent, of them, produces our defence requirements. Such industries would be aided and abetted in a specialised application of these techniques and materials by the research organisations to which I have referred.

If we are going to look at our productive capacity for the war needs of this country, let me refer to Lithgow. In the Small Arms Factory at Lithgow we have, I believe, the finest production engineering plant in Australia. Indeed, its competence is such and its record is so good that it is regarded as a model by production engineers everywhere in this country. I am happy to say that there are more visitors from Australian industry to the factory at Lithgow than there are from the Opposition. This is a factory which is quite capable of producing all our light armaments and it is doing so magnificently in terms of quality, adequacy in quantity and at a price which is highly competitive. Here is an industry which has taken out a licence for the manufacture of a piece of overseas equipment and is today capable of competing in world markets with the originator of its design. This speaks of industrial competence and it speaks of industrial management. These things reside within the Department of Supply, within the Government’s own defence organisation.

If we are going to talk about aircraft, we are assembling today in Australia the Mirage aircraft. We are manufacturing, as to 80 per cent, of it, the Atar engine, which is one of the most advanced military jet engines in the world, and we could manufacture in Australia the remaining 20 per cent, if we were under compulsion to do so. But in a country of this kind with not unlimited resources economics must come into the matter. If the honorable gentleman is worried about our not being able to produce what we need in military aircraft he might go back to the last war and look at the figures. We produced some thousands of aircraft in Australia, all very creditably done and all giving a magnificent range of service to this country’s defence. We have designed and engineered a target aircraft in Australia which is being bought by the United States of America in competition with the best they have in that country. This does not say that the Government cannot provide its own defence requirements. For example, we have the Government Aircraft Factory and we have the Commonwealth Aircraft Corporation, a privately owned organisation which has had vast experience in the production of aircraft to its own design, including crop dusting aircraft. These organisations are capable of producing all the engines that we need. In New South Wales we have the great Hawker De Havilland organisation which is backed by some of the best technical resources in the world. It has behind it a successful programme of production of the Vampire aircraft and is now ready to move into the production in this country of the Macchi trainer aircraft.

If one walks into the Government Aircraft Factory one can see on the floor there today the Ikara, the new antisubmarine weapon system which will be fitted to our new ships and eventually to the whole of the Australian Navy. Here is a concept which began in the minds of the technical people available to this Government. The designs were worked out by these people, and the equipment is being built in the Government Aircraft Factory, in the Commonwealth Aircraft Corporation’s factory and in 200 other factories throughout the country which have contracted to make parts for this equipment.

While on the subject of contracts to manufacture parts, I must refer to the National Instrument Company Pty. Ltd. which, if the honorable member for Kingston really wants to get back to Mr. Ansett with all the dirty words he can think of, is an Ansett offshoot. The company possesses some of the most advanced technical equipment in this country. It was the first major industry to instal a clean room for the proper servicing of instruments in Australia. It has been through all the developmental stages and is now making the gyroscopes for the Ikara anti-submarine weapon system. I repeat that these are all developments in this industry and that it is absolute humbug for the honorable member for Kingston to tell us that Australian industry is not doing enough research. Industry in this country is doing all the research it needs for its own civilian development. It is being assisted in its research for defence by the Government’s own organisations or, alternatively, the Government’s organisations are doing the research work and holding the information so gained in readiness against the time when we may be called upon to produce.

The honorable member referred to two or three other matters with which, I am sorry, time will not permit me to deal, but I do want to revert to the question of earth moving equipment because the honorable member made a great song and dance about this. He does not know any of the facts. He has listened to half of the story. If he had cared to come round to my office I would have given him the other half, chapter and verse, and he could then have avoided the embarrassment he has caused to all concerned by bringing this matter into the House today. I am particularly sorry that in explanation of this matter I shall have to bring to light certain facts which are not very creditable to the manufacturer concerned. It is true that last year the Department of the Army wanted 25 earth moving scrapers for use at home and, in particular, overseas. If the Army wants some equipment, it has a complete right and entitlement to lay down the specifications of equipment which will do the job that needs to be done. In this case the Department of the Army wrote the specifications and called for quotations. The fact that this type of equipment is available in the earth moving field is indicated by the fact that overseas tenderers did meet, within an acceptable margin, the specifications written by the Department of the Army.

The tenders submitted by the Australian manufacturer failed in two vital ways to meet the Army’s specifications. One of these was the work capacity of the equipment. Good heavens, if one wants a piece of equipment, one surely is entitled to say how much work one expects out of it. The depth of spread required by the Army was approximately 22 inches. The equipment offered by the Australian manufacturer had a depth of spread of only 11 inches whilst that offered by the overseas tenderer had a depth of spread of 20 inches. The second and quite vital point related to the angle of approach, or, in other words, the angle of incline between the base of the wheel at the front of the tractor and the front of the equipment itself. This has to do with the angle of climb that can be got from a piece of equipment. This equipment is required to fit into a Hercules aircraft for transport. In order to be able to fit into a Hercules aircraft, a minimum angle of clearance of 30 degrees is required. This requirement was contained in the specifications. The equipment offered by the Australian manufacturer had an angle of clearance of only 134 degrees. In other words, the Australian manufacturer offered a piece of equipment which could not be fitted into the aircraft, and the basis of the Army’s needs is that it shall be capable of being fitted into the aircraft. It is nonsense for the honorable member to come here and say that the Army deliberately turned its back on the Australian product. There is no complaint whatever about the quality of the Australian product. I readily admit that the equipment turned out by the company concerned is in the forefront of Australian engineering capacity, but what was offered just did not meet the specifications.

The company made some complaint that it was not invited to amend the specifications. What are we supposed to do? Are we supposed to go and beg Australian manufacturers to provide equipment to meet our specifications? ls there any point in writing specifications if a manufacturer does not propose to meet them? The way was open for this manufacturer to come and negotiate with the Department of Supply, which 1 was administering at that time, or with the Department of the Army. He singularly failed to make any such approach. It is impossible to look at a matter of this kind without believing that here was a manufacturer who relied on the fact that he was an Australian manufacturer to sell equipment to the Australian Government, regardless of what the Army wanted. If the Army of this country is going to put troops into a foreign field it will give those troops the right kind of equipment to do the job it wants done. The opportunity is there for the Australian manufacturer to meet the specifications if he wants to. If he fails to meet those specifications, or if he does not negotiate for some concessions, then that is his business. I would hope that in future this manufacturer will try to meet the specifications.

In the short few minutes that remain to me, there is another matter with which I wish to deal. The Australian Government has provided for every manufacturer the full protection of the Australian tariff. We do this by comparing when we must the price of overseas equipment against the price of Australian equipment. We add to the price of the overseas equipment the cost of freight and the duty which would be payable on that equipment if it were imported commercially. The prices are then compared. It is quite clear that under this system every manufacturer is entitled to the full protection awarded by the Australian tariff. The way is always open for manufacturers to go back to the Tariff Board. I have urged them to do this myself. Indeed, they should not take any sort of urging. If they want to put to this Government a proposal that there ought to be a differential in favour of Australian manufacturers, then it is up to them to make the submission and I have urged them to do this. How far do we have to go in urging Australians to do everything possible to allow their own Government to use their equipment?

I have not time to deal with the aircraft electronics industry, but I do want to tell the honorable member, who should be delighted to know this, that within the last couple of days, through the Department of Supply, the Royal Australian Air Force has placed an order for roughly $1 million worth of Bendix automatic navigation equipment for the Macchi trainer. Here is a new departure in Australia. lt has been deliberately worked on and fostered by us. I had a good deal to do with it personally over the years when the contract was in its formative stages. In the last few days, I have had the pleasure of writing a contract for Amalgamated Wireless (A/asia) Ltd. to do a considerable amount of tooling for the production of the new manpack communication sets for the Australian Army.

These things are going on all the time. But when we come to the black boxes involved in the equipment of the FI IIA aircraft, the Mirage aircraft, and so on, we need only very small quantities. It would be completely nonsensical to ask Australian industry to tool up for the production of 20, 30, 50 or even 100 pieces of some of the world’s most intricate electronic automatic equipment. If the honorable member for Kingston knew a little more about production techniques in Australia or in any other country he would know that this is one of the things a government does not do. Because our job is seeing that this country’s defence is adequately catered for in the field of equipment and of engineering we satisfy ourselves by providing logistic supplies that are guaranteed and which are co-ordinated with the United States of America in many cases because we need uniformity in this kind of equipment with the United States. These things underwrite our supplies. At the same time I direct the honorable member’s attention to the various brochures turned out by the Department of Supply and by the Department of Defence and I give him a free invitation to come with me if he likes to any industrial plant in this country and we will examine its capability. If he can show me where it cannot meet Australian requirements in defence production I will buy the plant.


.- The Minister for Defence (Mr. Fairhall) in his opening remarks expressed some surprise that this motion should be moved and he wondered why. The reason is that the Opposition, in company with about 90 per cent, of Australia’s population, is somewhat concerned at the lack of support the Government gives to those Australian industries that could and would supply defence equipment if they had the opportunity to do so. It is all very easy to say that industry generally is not concerned with this, but what of those industries that are concerned and are able to do the work? The Minister says: “ In time of need we can expand our production to adequate proportions “. Will there ever be a greater time of need than now? With the lesson we have had of the Pearl Harbour type of military action, now is the time of need. If we wait until events happen on our doorstep there will be no possibility of organising Australian industry adequately to meet a crisis. It must be organised beforehand, and any government sufficiently concerned with the problem would arrange for this to be done.

The Minister mentioned the Lithgow Small Arms Factory. I agree with him, as does the Opposition, that the persons concerned in that factory have the appropriate technical knowledge. This is one of the finest factories of its type not only in Australia but probably in the world; but when we are faced with a shortage of small arms, why does that factory work one shift when two or three shifts could be worked?

Mr Fairhall:

– There is no shortage.


– There is a suspicion in the minds of the public that the limitation of the national service call-up and the limitation on the numbers in the Army are due not to a lack of recruits or a lack of capable staff to train them but to a lack of equipment. This could be rectified by turning out more items from an already existing factory. Not only has the Government neglected Australian industry in the matter of defence supplies, but it has totally ignored Australian items even when the price has been lower than the overseas price and when there has been no evidence that the Australian equipment has been inferior in any way. In considering the matter of price it is quite obvious that the Govern ment frequently does not know what price it is going to pay for foreign equipment. This was made plain by an answer given by Sir Robert Menzies, when he was Prime Minister, to a question asked by the Leader of the Opposition (Mr. Calwell) concerning the cost of the Tartar guided missile system being installed on the three Charles F. Adams class destroyers being built for us in the United States of America. On page 2509 of “Hansard” of 9th November 1965 Sir Robert Menzies said -

I am informed that the cost of fitting the

Tartar guided missile system, including a full outfit of missiles, to each of the three Royal Australian Navy destroyers, is £4 million. This is less than half the cost of the ship without its Tartar system, and other equipment.

He went on to say that the United States Navy was responsible for the oversight of all contractual arrangements. In other words, public money - our taxpayers’ money - is being spent by a foreign agency that is beyond the control of the Australian Government and which is not being supervised in relation to the expenditure. On the other hand, the publication “ Jane’s Fighting Ships “ for 1966 at page 12 gives the total cost of these ships as £20 million or $40 million, of which sum the Tartar missile system and its associated equipment accounts for no less than £13 million, which is 325 per cent, more than the former Prime Minister said it was. What sort of information has this Government at hand when it misquotes the cost of equipment to this extent and admits that the purchase and installation of this equipment is beyond its own control? The Government simply pays the bill and asks no questions. It would appear that the former Prime Minister had been grossly misinformed. This is the best possible interpretation we can put on his statement. Reliable experts in this country have estimated the cost of installing an Australian designed guided missile system as being something less than the amount stated by Sir Robert Menzies. We have paid an outlandish price, but according to Vice-Admiral Sir Henry Burrell, former Chief of the Australian Naval Staff, the Tartar system is anything but efficient.

The cost in the United States is, of course, somewhat suspect because of the recent court action by the United States Government to recover overcharges by electronic supply firms amounting to many millions of dollars. According to reports there was a $15 million overcharge by the General Electric Company, by Westinghouse Electric International Company and by 27 other equipment manufacturers. Although 2,000 charges were laid details of only two have been reported in Australia. On being questioned on this matter all that the Australian Government could say was that neither the General Electric Company nor the Westinghouse company was involved in installing equipment on the Australian destroyers; but what of the other 27 companies involved in those charges? Was the General Dynamics company involved? Would it be correct to assume, as the Government has done, that these firms are prepared to swindle their own Government but would hesitate to swindle our Government? Is it a good proposition to establish arrangements for the purchase of equipment from firms over which we have no supervision and to simply pay the bill, particularly when the United States Government has admitted, by taking a court action, that it thinks it has been swindled?

The position regarding local aircraft is even worse, apart altogether from the question of the manufacture of supersonic fighters and bombers, which the Government claims we cannot manufacture in Australia because of our small population. The Government ignores the fact that Sweden designs and manufactures its own aircraft for its air force and relies to no extent on exports to support the industry. Are we to assume that we cannot manufacture aircraft for ourselves when our population is one third greater than the population of Sweden? The necessity to provide the Army with a suitable ground support and attack aircraft is not denied. Experience in Vietnam and elsewhere has demonstrated the unsuitability of supersonic or even fast subsonic planes for this purpose. We need an aircraft that can fly at about 280 to 320 miles an hour. There has been designed in this country a military aircraft that is ideally suited to this requirement under Australian conditions. The existing Canberra aircraft is not suitable for this role, apart from the fact that it is not armed. Its safe operating height when travelling at 500 to 600 miles an hour is about 1,000 feet, which exposes it to detection by radar at about 35 to 40 miles distance. This gives the enemy four to five minutes warning and presents him with a target of 1,500 sq. ft. moving at a maximum angular velocity of 45 degrees per second.

The locally designed plane could contour fly at some 20 ft. above treetop level, and would not be detected in time to give more than a maximum warning to ground defence of 40 seconds. Even then, there would be a target of only 180 sq. ft. moving at an angular velocity of almost 1,000 degrees per second. In other words, the locally manufactured plane is the superior one. Such an aircraft would be capable of operating within the blank area of enemy radar and would have a minimum turning radius less than that of any modern antiaircraft guided missile which it could easily avoid. In fact, this aircraft would be capable of a 180 degree turn in less than five seconds. It could take off fully loaded from a 600 ft. strip of graded earth in a temperature of 120 degrees Fahrenheit and land with the same load on the same strip. It could carry 1,000 lb. weight of armaments. This means that it could be armed with two 20 mm. cannons, built in, with 200 rounds each and also carry six 100 lb. bombs or any other similar combination of weapons.

The structural strength would be about 12 times the force of gravity, with or without ordnance. The pilot would be protected by aluminium armour against weapons up to a 20 mm. cannon. The aircraft would be powered by a 700 h.p. turbo-prop engine using kerosene fuel. It would operate as readily from an aircraft carrier as from land. The cost, without armaments and navigational aids, would not he more than S80,000.

Mr Fairhall:

– What aeroplane is this?


– It is the Victa. Australia could obviously afford to secure a large number of these aircraft - say 2,000 of them. One third of these could be manned by members of the Regular Army and the remainder could be manned by reservists. Plenty of persons are available to fly these aircraft, as any qualified light aircraft pilot could handle the plane after a six hour conversion course. There are more than 11,000 such pilots on the register in Australia now. Additional training would be required for military purposes, but the cost of the plane, the armaments, the instruments and the pilot training would be little more than half the present cost of training a pilot for a modern fighter. The cost of training a pilot to fly a Mirage fighter is approximately £60,000 to £80,000. The Government could obtain a plane, equipment and the trained pilot almost for the cost of training the pilot under the present system. The specifications for this plane exist. The factory to produce them is now building light aircraft in Sydney. All the preliminary work has been done by Victa Ltd. in its aviation division. This company, which is entirely Australian, struggles to produce a first class plane without any Government support whatever. If some sort of assistance is not forthcoming, the aircraft division will probably not be able to continue beyond the end of this year.

The Minister said that this company is free to make its approaches and that it will get an answer within two years. But within two years there will not be a factory there. The skilled staff will be dispersed. The opportunity will be lost. The defence of this country will be placed in jeopardy. It is quite idle for the Government to claim that local industry is not interested in supplying these needs. Here is a company that is interested. Never mind what any other company might do or what attitude it might adopt. Let the Government demonstrate the fact that it is interested in these activities by thoroughly investigating this proposition and by taking action that will prevent the disbanding of this organisation for this purpose. Let the Government establish something of its own. It is not true that this country has not the population to sustain a 100 per cent, aircraft industry aimed at the defence of Australia’s shores. As 1 have pointed out, Sweden has its own aircraft industry. This industry produces the Saab fighter which the Swedes claim is superior to the aircraft which we have purchased from France. The Swedes have manufactured in their own country 600 aircraft of this type to equip their own air force. In addition, Sweden is providing its own bombers. It has realised the vital necessity of relying on its own industry and not foreign industries in times of emergency.

Australia is doing nothing in this direction. The Government says that if we can buy our requirements cheaper abroad, let us go shopping for them there. What would happen if, in the event of war, the countries from which we buy these requirements are no longer willing or able to supply them to us? What do we do then? Do we get in touch with our enemy and ask him to hold off until such time as we can organise our industries to produce our requirements? We have the industries capable of doing the job. We throw the onus onto them. We throw the blame onto them. In other words, the responsibility is on the Government to see that these companies do the job correctly. In the matter of heavy earth moving equipment, if a company is not producing something of the correct specifications, then surely it is the duty of the Government in the interests of defence and in the interests of national safety to see that the company does do this correctly. Surely a little money spent on research and design and an additional amount spent to secure this equipment would be a very good investment. It would be very good insurance also.

As I said at the beginning of my address, the Opposition together with the Australian public is concerned at what the Government is not doing. The Opposition is concerned at the lack of support for companies and industrial undertakings in this country that are prepared to do something in this field. If we ignore altogether those companies which are not prepared to do anything in this field, we still have ample undertakings which will do the job providing the Government gives them the support they require. To refer these matters to the Tariff Board and to other instrumentalities that will take years to reach a decision is not only begging the question but also taking an unnecessary risk with the security and the freedom of this country.

The Government should take steps to see that this state of affairs is reversed and that local industry is developed to the full, not only to turn these items out but also to provide employment locally to boost and bolster the Australian economy. Here is the opportunity for the Government to accomplish both of these desired ends by a single act of support to local industry. The Government by so doing will provide employment. It will provide industrial expansion. It will provide a much better setting for the defence of this country against any possible enemy.


.- Both the honorable member for Kingston (Mr. Galvin) and the honorable member for

Capricornia (Mr. Gray) have demonstrated quite clearly that although they have a genuine interest in the question of defence - they are few among the many in their Party in this respect - they are determined at all costs not to be confused by the facts. So far as my friend from Kingston is concerned, the Minister for Defence (Mr. Fairhall) demonstrated this fact quite adequately when he corrected the misimpression that the honorable member for Kingston had concerning earth moving equipment. Another point on which the honorable member for Kingston displayed his woeful ignorance of the facts was in relation to the question of the comparative merits of the Winjeel aircraft as against the Victa aircraft. What the honorable member overlooked in his argument is that the Winjeel aircraft is an Australian manufactured aircraft also. When two Australian manufacturers are in competition in producing aircraft, some of the ground for the argument that Australian industry is not prepared to meet the demands that are made upon it for defence is taken away.

I wish to deal with the question of the Tartar missile that was raised by the honorable member for Capricornia. The suggestion is that Australia should have developed its own system rather than buy the Tartar system, and that we were in some way in danger of being taken down by American manufacturers. Such suggestions are nothing short of preposterous, as the fact’s will show. First of all, as is known, the cost of the Tartar system for each of the DDG destroyers is £4 million, which gives a total of £12 million for the three.

Mr Gray:

– It is £20 million.


– That is the total cost of each destroyer. The missile system for each destroyer costs £4 million. Does the honorable member really suggest that we could have obtained a comparable system as cheaply if we had done the job for ourselves or tried to do it for ourselves? In this matter of defence supply, and planning for future defence supply, one has to take into account, if one is realistic, economies of scale and the necessity to make the best use of resources which are inevitably limited. It is a flight of fancy to suggest that we, by ourselves, could have obtained a comparable system for anything like the price we are paying to the United States for the Tartar system. Let the honorable member for Capricornia (Mr. Gray) remember that this missile system is required for only three ships. It is not as though we had a requirement for a number of ships which might justify our undertaking production on the basis that there would be a demand for a long production line.

The other point that should be made about the Tartar system is this: there is every practical safeguard and precaution against over-costing because we are buying this missile system in a package deal, and we have the benefit and advantage of the United States Navy’s own supervisory systems for checking costs. The honorable member for Capricornia suggested that there had been some prosecutions under the United States Sherman Act against manufacturers connected with this aspect of the American defence industry. As the former Prime Minister pointed out in the answer he gave on 9th November 1965 vo a question upon notice - my friend from Capricornia referred to this - the presecutions under the Sherman Act did not relate to the supply of equipment for ships of the Charles F. Adams class, the DDG destroyers. The honorable member for Capricornia is raising hares that will just not run.

Let me go back for a moment to the remarks of the honorable member for Kingston (Mr. Galvin) who suggested in all seriousness that we were doing the wrong thing in buying the Macchi jet trainer.

Mr Galvin:

– No, I did not.


– He said that we should buy a lot of piston engined aircraft.

Mr Galvin:

– I said we would need to have piston engined types as well.


– As well, yes. Well, it seems to me that this is another example of the way in which the Labour Party lives in a former age when it comes to questions of defence planning. What we need is a jet trainer. My friend from Kingston, who I know has a genuine interest in these questions but will not attend to the facts, suggests that we should prefer a piston engined trainer to a jet trainer. This does not fit in with the realities of the situation. He overlooked mentioning that the Macchi trainer is manufactured - or assembled - in Australia.

Mr Galvin:

– There is a big difference.


– I agree with the honorable member. But he overlooked that point; he just did not refer to it. What the honorable members for Kingston and Capricornia are doing, or attempting to do, by this motion is to create the impression that the Opposition as a whole - I emphasise “ as a whole “ - has an interest in defence problems. Of course to endeavour to create such an impression is nothing short of a hollow pretence, as I shall show. I repeat that the honorable members for Kingston and Capricornia have an interest in these matters. I wish that the general body of the Opposition had a similar interest.


– Order! As it is now two hours after the time fixed for the meeting of the House, the debate on the motion is interrupted.

Motion (by Mr. Fairhall) agreed to -

That the time for discussion of notices be extended to 12.45 p.m.


– I am indebted to the House for its indulgence. I was saying that I wish the general body of the Opposition had an interest - a genuine interest - in matters of defence, but of course this is not the case. Let me illustrate the point in this way. When, not long ago, the Government announced that it was approaching the American authorities to ascertain whether there might be opportunities for selling Australian made defence equipment and supplies to the United States forces for use in Vietnam and in the South East Asian area generally, the Opposition criticised this move in trenchant terms and suggested that it was entirely wrong and unjustified. I remember listening to a speech in this House by the honorable member for Hindmarsh (Mr. Clyde Cameron) in which the honorable member imputed to the Government base and sordid motives for making the very sensible inquiry that it did make.

This is an indication that the mainstream of Opposition thinking does not really get down to the problem of defence and defence supplies. Those who criticise the Government for seeking to sell defence supplies to the Americans fail to realise that it is in the interest of the development of Australian defence industries to achieve economies of scale and to bring about a situation in which we can have longer production runs than would be the case if we were supplying only our own forces. This is one indication of the unrealistic attitude of the Opposition in its failure to face up to the question of defence supplies.

The point can, of course, be illustrated in various ways. The honorable member for Capricornia has said today that there are dangers ahead, and I quite agree, lt is comforting to know that there is somebody in the Opposition who thinks we are in a situation of danger. The Leader of the Opposition (Mr. Calwell), however, as reported in the Melbourne “ Age “ of 7th March 1966, made statements in which he pooh-poohed the idea that China had any aggressive intentions. He said -

Communist China would have to be represented at any pence conference over Vietnam. Other parties that should be represented are North Vietnam, the Vietcong and the South Vietnam Government. . . . Australia did not face any threat of invasion from Asia in the immediate future. . . China had no navy or merchant marine capable of attacking Australia. If China had any aggressive intentions it would take the traditional land route into Europe and it was the Russians who had most to fear.

Again we see a basic division in the ranks of the Opposition. The Leader of the Opposition said what I have just quoted, but the honorable member for Capricornia says now that the enemy is at the door. I wish more people thought as the honorable member does, because they would then display a more realistic attitude to the situation.

If the Opposition had any genuine concern about the actions of the Government in the field of defence supply one would have thought the matter would have been thoroughly agitated during the debate on the estimates for the Department of Supply in the last Budget session. The Deputy Leader of the Opposition (Mr. Whitlam) spoke to us today about the electronics industry and I accept what he said, but the point is that in the last Budget the estimates for the Department of Supply were £3 million more than the actual expenditure for the previous year. The estimated expenditure on capital facilities for defence production in the current financial year is £1.165 million higher than actual expenditure last financial year. We heard no complaint from the honorable member for Capricornia, when the Estimates were before the Parliament, that the Government was not doing enough. Yet today he went so far as to suggest, without quoting any confusing facts to prove his point - he did not want to be confused by the facts - that the reason why there is a limitation on the numbers in the Army is that there is a lack of equipment.

If this is his case, and if there is any grain of truth in it, surely this situation is not just something that has grown up overnight. The honorable member should have raised the matter during the consideration of the Defence estimates last year and pressed for greater expenditure not only by the Department of Supply but also by the Department of Defence and the Services generally. One treats with something little short of contempt - this is not said in any personal sense to my honorable friend - a suggestion that the limitation on the numbers in the Army is in some way related to supply problems. This kind of suggestion has not been backed by any evidence. We know that the efficient and highly organised Commonwealth Small Arms Factory at Lithgow is making enough small arms to supply our own forces not only as they now exist but as they are projected in the near future. The Factory is also able to sell small arms abroad, thus increasing our foreign exchange reserves. So the criticisms made by the honorable member are shown to be little short of fantasy.

The Opposition knows that it is in a dilemma in relation to defence generally. It knows that in the eyes of the Australian people, because of statements made by its leaders in the last few weeks, it stands convicted of a policy that is essentially a policy of repudiation of our defence commitments. We have heard the Leader of the Opposition say that if a Labour government is elected Australian conscripts will be withdrawn from South Vietnam immediately.

Mr Irwin:

– And from other places.


– And from other parts of South East Asia where we have stationed forces in pursuance of our international obligations. Opposition members, and particularly the honorable member for Kingston, who is out of the main stream of thinking in his party, know that the public regard them as repudiationists. Hence this little exercise today. This has been a rather sorry attempt, because it has not been backed by facts or any accurate statement of facts, to create the impression that honorable members opposite as a whole are interested in some aspects of defence. Why, if they agree with what their Leader said, as reported in the “ Age “ the other day, they should logically take the view that there is very little need for an Australian defence effort. If China has no aggressive intentions, as their Leader suggested, why worry? So we have seen this little exercise today. 1 submit to the House that honorable members opposite have not succeeded in bringing to light any substantial fact that demonstrates that the Government is not making the best possible effort in the defence field, lt is easy to say that we should buy everything Australian - that we should make all the sophisticated black boxes here. Economies of scale and the allocation of resources in the most useful way, having regard to the overall picture, must be taken into consideration.

Mr Irwin:

– And also the need for co-ordination.


– And also the need for the co-ordination of effort as between various industries. Does the honorable member for Kingston know - he has shown no sign of being aware of it - that this Government, which he has criticised for not co-ordinating the efforts of itself and industry, has established no fewer than, I believe, 16 industrial advisory committees composed of 80 prominent industrialists whose task, which is undertaken in their spare time and without cost to the nation, is to advise the Government on matters of defence co-ordination in relation to the placing of orders and effort generally in the field of defence supply? This is a tremendously useful means of obtaining advice from qualified experts in industry. Does the honorable member know that there is an institution such as the Defence Business Board, which is designed to advise the respective defence departments on their business contracts, the manner in which they should place their orders and the quarters in which they should place them? This Board is headed by Sir John Allison as Chairman, and there is also a Deputy

Chairman. Each of the Services is represented on it not by a serviceman but by a skilled businessman whose particular task it is to advise the department with which he is associated, whether it be the Department of the Army, the Department of the Navy, the Department of Air or another department, on matters of procurement and defence contracts. Therefore, the present situation is not one in which, on an objective investigation of the facts - and the Opposition has failed to investigate them objectively - it can be said that the Government is falling down on its job.


.- Mr. Deputy Speaker, the honorable member for Parkes (Mr. Hughes) has demonstrated the confusion in the ranks of the foe. He says that the Chinese are knocking at our gates. The Minister for External Affairs (Mr. Hasluck) says that they are not. However, that is not the subject of the debate today. We are now concerned with the question of whether the present Commonwealth Government has developed national self sufficiency in the field of defence supply. The Minister for Defence (Mr. Fairhall) and the honorable member for Parkes demonstrated the wide difference between the premises on which honorable members on opposite sides of the House base their arguments. The honorable member for Parkes outlined very well his concern with the cost factor and with the profit that may be made by Australian manufacturers of armaments if they sell to our allies. He is concerned only with costs as such - with the economics of the operation. The Australian Labour Party is concerned with national self sufficiency. We believe that when the element of cost is placed side by side with the element of national self sufficiency, it must be realised that no matter what the cost the development of our own resources, technical, intellectual and material, represents the most important contribution that we can make both to the welfare of the nation itself and to our defence capacity. This element of national self sufficiency is the matter under discussion today.

I give the honorable member for Parkes some marks for the line that he followed in his argument. If this is a question of economics, his point was well taken. But if this is a question of effective defence and the welfare of the nation, his argument was wholly on the wrong side. What we are trying to get across to the Australian people is that confusion has arisen over motives. What are our motives on this side of the House? We have demonstrated a knowledge and understanding of defence production, because most defence production in Australia is carried on in electorates represented by Labour members. So I shall not concern myself with that point. In the minute thatI have left,I want briefly to make a few points. So far as I can determine, the present Government has not asked the Australian automotive industry to produce anything satisfactory in the form of an armoured fighting vehicle. My inquirieslead me to believe that the Government has not placed this problem before the Australian automobile industry, though we have one of the largest automotive engineering industries in the world. In the field of shipbuilding, the Government has completely ignored the Australian industry and all its capacity. I believe that this was an error not in relation to costs but in relation to national development. In a sense, it represents an insult to the Australian industry and its capacity for achievement. In the field of aircraft manufacture, this Government has ignored the capacity of the Australian industry to undertake research and development of its own materials and equipment in the way that the Swedish industry has done. For this reason, I believe that the House ought to reject the Government’s policies.


– Order! The time allotted for precedence of general business has expired. The honorable membe for Wills will have leave to continue his speech when the debate is resumed. The resumption of the debate will be made an order of the day under general business for the next sitting.

Sitting suspended from 12.45 to 2.15 p.m.

page 1524


Bill - by leave - presented by Mr. McMahon, andread a first time.

Second Reading

Treasurer · Lowe · LP

.- I move-

That the Bill be now read a second time.

The purpose of this Bill is to authorise the payment in the current financial year of up to $26 million to the States of New South Wales and Queensland for expenditure on drought measures. Honorable members will recall that some time ago the Commonwealth gave an undertaking to assist the States in this way. In particular, we agreed, in effect, to underwrite State expenditure on all drought measures they found necessary, including loans provided by them for restocking purposes. To ensure that the States would not be impeded in undertaking such measures by any shortage or cash, we have made finance available to them on an interim basis pending the passage of this legislation.

At this stage, we cannot know precisely how much we will need to pay to the two States in this financial year to cover their outlays on drought measures. The State Governments themselves, however, have estimated that their expenditures this financial year will amount to approximately $25 million, made up of $16.5 million for New South Wales and $8.5 million for Queensland. To provide for the possibility that these estimates may be exceeded, the Bill before the House provides for payment of up to $17 million to New South Wales and up to $9 million to Queensland. The precise amounts to be paid to the two States will, of course, depend on the trend of their actual expenditures and on their actual requirements.

The fact that the Bill specifies certain amounts for payment in 1965-66 does not mean that the Government has placed any limit on the assistance to be made available to the two States for drought relief purposes. We have made it clear that we will continue to assist the States to finance their drought measures as far as necessary and for as long as necessary. Accordingly, the Bill provides for the payment of such further amounts of assistance as Parliament shall, from time to time, appropriate. Clearly, further assistance will be needed next year, although at this stage we cannot predict how much will be required. We will, I expect, be making provision for payment of further assistance in the annual Appropriation Bill.

The Bill does not set out the precise terms and conditions for the Commonwealth assistance, but leaves them to be determined by the Commonwealth Treasurer. This will provide flexibility to deal with any circumstances that might arise. As regards the measures currently being undertaken by the States, however, the terms of assistance have been agreed between the Commonwealth and the Premiers of the two States concerned. In general, the Commonwealth assistance will cover expenditure by the States on drought relief measures and also on certain drought rehabilitation measures. The assistance falls into the following five categories -

The assistance provided by the Commonwealth to the States of New South Wales and Queensland will take the form of outright grants except in cases where the funds are used by the States for making repayable loans. In terms of the States’ estimates of their requirements in 1965-66, nearly $10 million will take the form of outright grants and just over $15 million will take the form of repayable advances. The Commonwealth will make these advances available on an interest-free basis, repayable over a period of 10 years but without any repayments in the first two years. The States will be charging interest at concessional rates on their loans but they will be meeting the administrative costs and, within reasonable limits, any losses which may arise. If, however, such losses prove to be beyond the financial resources of the States at the time, the Commonwealth has undertaken again to come to their aid.

I believe that the scheme of Commonwealth assistance which has been agreed with the States is enabling the States to relieve the immediate effects of the drought to the extent that this is practicable. This assistance is certainly the most generous ever provided by a Commonwealth Government in this sort of situation.It has, of course, been complemented by what is being done through the monetary system. In that area, of course, the trading banks, strongly supported by the Reserve Bank, have been doing an excellent job in providing farmers with assistance. As to restocking, which will largely be a matter for the trading banks, the new arrangements for the Farm Development Loan Fund can be expected to make a valuable contribution.

Unfortunately, in north-west New South Wales and to some extent in south-west Queensland, the drought still persists. In other areas, some relief rains have fallen in recent months but, unless further rains fall soon, the position could again become serious. For our part, we will continue to do all we can to alleviate the effects of the drought to the greatest extent possible. From the outset, we have viewed the drought as a national problem; we will continue to view it as such. I commend the Bill to honorable members.

Debate (on motion by Mr. Crean) adjourned.

page 1526


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

Second Reading

Treasurer · Lowe · LP

– I move -

That the Bill be now read a second time.

As honorable members are aware, the Government has already announced that it intends to continue to participate in the financing of beef road development in the States when the current schemes for the provision of Commonwealth financial assistance come to an end. The report of the Northern Division of the Department of National Development on a possible future programme of beef cattle roads is under examination at present, and when that is completed we expect to hold discussions with the States concerned about various aspects of the future programme.

Meanwhile, it is important that work on beef roads should proceed pending the outcome of the Government’s study and discussions with the States concerning a future programme. In the case of Queensland, of the total funds of$1 6.6 million authorised for payment to the State under the Queensland Beef Cattle Roads Agreement Act 1962, only about $600,000 will remain undrawn at the end of the current financial year. The Government proposes, as an interim measure pending a decision about the future programme, to provide further financial assistance to the State for the construction of beef cattle roads during the financial year 1966-67. The scale of the interim programme of assistance is intended to be of broadly the same order as has obtained in recent years under the current scheme.

The purpose of the Bill before the House is to provide this further assistance. The Bill will approve an agreement, which has been signed on behalf of the Commonwealth and the State, to amend the existing agreement so as to increase the limit of financial assistance available for beef roads in Queensland from $16.6 million to $20.5 million. This increase, together with the balance of funds available under the present agreement at the end of the current financial year, will permit the provision of Commonwealth assistance of $4.5 million for beef roads in Queensland in 1966-67. The increased assistance will be extended to the State on the same terms as have applied in the recent years of the current scheme. This means that half the assistance will be in the form of a grant and half in the form of a loan. The loan portion will be repayable over 15 years commencing on 15th December 1967.

The roadworks for which the financial assistance will be available have been agreed in discussions between Queensland and Commonwealth authorities. However, provision is made for variation of the proposed programme if this should prove to be desirable. The works on which expenditure in 1966-67 is proposed comprise the completion or continuation of work on roads in the existing programme, as well as the commencement of work on certain new roads. The work on roads in the existing programme comprises the completion of current contracts on the Julia CreekNormanton and the Georgetown-Mount Surprise roads, the construction to sealed standard of the Mount Isa-Dajarra road, the construction of several bridges on the GeorgetownMount Surprise road and some works on the Winton-Boulia road.

New works will consist of the following -

Between Dingo and Mount Flora, it is proposed to construct and seal a length of road north from Dingo, as well as to bridge the Isaacs River. On the road between the Battery and Townsville it is proposed to form and gravel the connection to the Ross River road. Between Mareeba and Laura, bridge construction is proposed as well as improvement of certain sections, while on the road from the Lynd to Charters Towers some road improvement work adjacent to the Lynd is planned, together with a bridge over the Basalt Creek. The Government is confident that the road works outlined above will constitute a valuable addition to what has already been achieved under the beef roads scheme, which is making such a significant contribution to the development of the beef cattle industry in the north and to northern development generally. I commend the Bill to the House.

Debate (on motion by Mr. Luchetti) adjourned.

page 1527


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

Second Reading

Minister for Air · Fawkner · LP

.- I move-

That the Bill be now read a second time.

The object of this Bill is to ratify an Agreement between the Commonwealth and the States amending the Financial Agreement to permit it to operate in decimal currency. The Agreement was signed by the Prime Minister and each State Premier before the changeover to decimal currency and came into effect on 14th February 1966. The Financial Agreement of 1927 was ratified by the Financial Agreement Act 1928 which also contained certain appropriations and provisions relating to expenditure of loan proceeds to enable the Commonwealth to carry out its obligations under the Agreement. This Bill amends the Financial Agreement Act 1928 to ensure that these clauses will apply to the Agreement as amended.

The amending Agreement itself is in a form which will permit reprinting of the Financial Agreement so that it can be easily read in terms of decimal currency even though some of the money references in it apply only to the period prior to the introduction of decimal currency. The Agreement itself relates solely to the changeover to decimal currency and is of a routine character. I commend the Bill to honorable members.

Debate (on motion by Mr. Crean) adjourned.

page 1527


In Committee.

Consideration resumed from 4th May (vide page 1487).

Clauses1 to 6 - by leave - taken together.


.- The Opposition, which agrees with the Bill, has no desire to hold up its passage. However, as I mentioned during the second reading debate, this is a difficult Bill to understand, particularly as it is drafted. The Minister for Health (Dr. Forbes) said that he was pleased with the harmony with which the

Bill had been accepted by the Opposition. I would say to him that had he not explained certain provisions of the Bill in his second reading speech, the Bill would not have had such an harmonious passage through the second reading stage. The clauses of the Bill particularly clauses 1 to 6, are almost impossible to understand without some written explanation. As an example, let me read the following definition from clause 5(1.)- “goods for therapeutic use “ means goods that -

  1. are (whether by writing or otherwise) represented to be, or are (whether by reason of the way in which the goods are put up or for any other reason) likely to be taken to be-

    1. for therapeutic use;
    2. for use asan ingredient or component in the preparation or manufacture of a substance or article for thera peutic use; or
    3. for use as a container or as part of a container of a substance or article for therapeutic use or use of a kind referred to in the last preceding subparagraph; or
  2. are included in a class of goods the sole or principal use of which is, or ordinarily is, a therapeutic use or use of a kind referred to in subparagraph (ii) or (iii) of the last preceding paragraph,

Does anyone follow that definition?

Mr L R Johnson:

– What does it mean?


– That is precisely what I was wondering. It is an extremely difficult and intricate provision, especially the last portion, which I shall read again -

  1. are included in a class of goods the sole or principal use of which is, or ordinarily is, a therapeutic use or use of a kind referred to in subparagraph (ii) or (iii) of the last preceding paragraph,
Mr Irwin:

– If the honorable member reads it again, he will be therapeutic.


– The definition continues - but does not include -

  1. goods in respect of which a cer tificate has been issued under section 8 of this Act; or
  2. goods consisting of a vaccine prepared from microscopic or ganisms from the body of a person or animal for use only in the treatment of that person or animal;

Honorable members will agree that it was necessary for the Minister to explain that provision to us. I do not know whether the honorable member for Mitchell (Mr. Irwin), who seems very convivial, comes under the animal, mineral or vegetable provisions of the Bill. I will not read the remainder of clause 5. However, towards the end of the clause, honorable members will find this provision - (2.) For the purposes of this Act, goods for therapeutic use shall be deemed to be represented to consist, either in whole or in part, of a particular substance or a particular article if -

  1. the goods bear a name or description -

    1. that is, or is likely to be taken for, a name or description of the substance or article; or
    2. that is likely to cause the goods to be taken to consist, in whole or in part, of that substance or article;
  2. The Minister or another person is informed, in pursuance of a notice under section 9 of this Act, that the goods consist, in whole or in part, of that substance or article; or
  3. the goods are otherwise represented by writing or otherwise, or otherwise purport, to consist, in whole or in part, of that substance or article.

I will be quite honest and say that I cannot quite get to the foot of that, and I sincerely trust that what the Minister said in his second reading speech about that clause is factual.I think it will be agreed that for a layman to know what that clause means is exceedingly difficult.

Without belabouring the point, I say again that this is an exceedingly difficult bill to understand, and I ask the Minister to explain, in a way we can understand, what the first clause means and also the part of clause 5 which is somewhat complicated. I think we are entitled to an explanation of these matters.


Like my colleague the honorable member for Grayndler (Mr. Daly) I do not want to delay the passage of this Bill, but I agree with him that the clauses that he read out a short time ago appear to be ambiguous. They may be intended to be ultra-specific, but they are certainly difficult for most people to comprehend. Some kind of a synopsis, some explanation or some account of them from the Minister for Health (Dr. Forbes) would be beneficial. In the first place T have some concern about clause 1 which reads -

This Act may be cited as the “ Therapeutic Goods Act 1966 “.

The side note defines this title as the short title. I have a feeling that there will be many people in Australia who will be misled by that title, because this Bill certainly does not have the kind of general application to therapeutic goods in Australia which the title implies. There is no need for me to make any contention on this. I need only repeat the admissions of the Minister who not only indicated the category of therapeutic goods and the type of packaging which are covered but went on to indicate the very vast category of therapeutic goods which are not covered. Somewhere, either in the short title or in the interpretation clause, some endeavour should be made to specify that although therapeutic goods are covered this Bill applies only to therapeutic goods that are imported or exported, or made the subject of interstate trade or are supplied by the Commonwealth as pharmaceutical benefits. In other words the short title could have the effect of lulling the Australian community into a false sense of security. People could get the idea that because this Parliament in May 1966 passed a Therapeutic Goods Bill they are afforded reasonable protection.

I have no doubt that the public is afforded some degree of protection, but only in respect of the goods in the categories I have outlined. Outside of those categories there is an enormous number of goods readily available to people. The Minister said that there are 20,000 to 30,000 different therapeutic substances in Australia. We know that the instrumentalities which examine the therapeutic qualities of goods have dealt with only a comparatively small number up to date. I mentioned the figure last night during the second reading stage of the debate. I think the number examined is only 1,323. There has been no effort by the Minister to indicate the kind of progress that is going to be made in examining therapeutic goods in the future. We have examined somewhere near one twentieth, probably, of the therapeutic goods that are in circulation in Australia. The Minister made it clear that family remedies are not going to be covered at all and that neither are those goods which are produced in a State for distribution within the State. 1 make this point because I think it is an important one to make at this stage.

I am also disappointed that it is not possible for me as an ordinary member of this Parliament to have a clear understanding of the terms “ British Pharmacopoeia “, “ British Veterinary Codex “ and “ British Pharmaceutical Codex “. I am anxious to get some understanding of these terms, because they are basic to this legislation. The goods to be covered by the legislation are defined by monographs and the like in these various publications. The Parliamentary Library’s only copy of the British Pharmacopoeia is on loan.

Mr Haworth:

– I have it.


– It is on loan to the honorable member for Isaacs. How can we be expected to debate the principles and other matters in this Bill when the one copy of that publication in the Library is on loan? There is no copy of the British Veterinary Codex in the Library at all, although that publication is an important basis of this bill. The same applies to the British Pharmaceutical Codex. There is no copy of it available in the Parliamentary Library. So it is very difficult for honorable members to make an intelligent study of these matters. The Minister has the benefit of this material in his Department and probably in the office he occupies in Parliament House. T hope that as a parliamentarian he is not as disadvantaged as the rest of us are. T am anxious to ascertain the definition of these titles, “ British Pharmacopoeia “, “ British Veterinary Codex “ and “ British Pharmaceutical Codex “. They cover certain things which give people a great deal of concern.

For example, there are many honorable members here who would be anxious to be assured that the various hair restorers available are up to a certain standard. To be perfectly frank, I have some slight personal interest in this subject. The Treasurer (Mr. McMahon) undoubtedly would be anxious to know something about it. I am unable to have this knowledge, the material is not available to me. In the United States this kind of legislation covers cosmetics. I am not able to know whether lipstick, rouge, facial creams and the like are required under this legislation to comply with a specified standard. I know that such things would not be included in the British Veterinary Codex but they could be included in the British Pharmacopoeia and the British Pharmaceutical Codex. I ask the Minister to clarify that point for mc. There has also been a lot of controversy, consternation and anxiety about hair sprays. Not only has the substance of hair sprays been questioned from time to time, but indeed the containers have exploded and have been the subject of great publicity in this country. For these reasons 1 ask the Minister to make some comment.

More importantly still, I want to emphasise the point I started with. There is a great need to clarify the legislation because a substantial number of the therapeutic substances in this country are not covered. We of the Opposition contend that they are not covered because after 17 years in office this Government still, has not succeeded in obtaining any constitutional powers to deal effectively with the position. That is a reflection on the Government. If the Government does not want the constitutional power here it should ensure that there is adequate liaison with the States, that co-ordination has been effected and an account of that co-ordinating process should be provided in the legislation, indicating that the States are doing something to provide adequate protection in regard to all the things which are not covered by the provisions of this Bill at present. These are important matters. I have gained the impression that pharmacists and others who specialise in this field have felt that a degree of protection is going to be afforded to the Australian public and that it is long overdue. Such is not the case. The degree of protection which they have hoped for is not implied in this legislation and will not result from it. I feel, therefore, that clause 1 is misleading and that some clarity or closer definition is necessary.


.- This debate illustrates two fatal weaknesses in the Committee system of the House. Both the honorable member for Grayndler (Mr. Daly) and the honorable member for Hughes (Mr. L. R. Johnson) have claimed that they are unable to understand clearly.

They have read out some clauses which they say are complicated. I would agree that the language is not what one would call folksy. It has its difficulty. But if this were a select committee of the House dealing with this technical matter it would be possible to get explanations readily understandable by laymen, I would hope, from officers of the Department. But because we sit as a Committee of the Whole no such explanations are forthcoming. The Minister for Health (Dr. Forbes) himself is not a technical man. Nevertheless, so far as the British Pharmacopoeia is concerned, 1 find it difficult to understand how anybody who has gone to the slightest trouble to find out what the Bill is about would not know what the British Pharmacopoeia is and the place it takes in regard to pharmaceutical matters. This does not really present any great problem to people who have taken even a very little bit of trouble. There is lack of understanding in the Committee of the Whole because of the way in which the Committee functions without the aid of officers to provide explanations.

But the second illustration, and this is quite perfect, is the way an attempt has been made to play politics in regard to a simple technical measure of this kind. The honorable member for Hughes, in particular, said that people may suppose that this Bill protects them completely against impure therapeutic substances but they would be wrong if they thought this. Why? Because it applies only to some substances - those that may be used for the purpose of pharmaceutical benefits under the relevant legislation passed through this Parliament, pharmaceutical substances going into interstate trade and all pharmaceutical substances that may be imported. I credit the honorable member for Hughes with knowing why the goods that are dealt with in this Bill are limited to those categories. He knows just as well as I do, and just as well as every honorable member, that the reason why these categories of goods are covered by this Bill is that they are the only ones over which the Commonwealth Parliament has jurisdiction That is the reason why intrastate therapeutical goods, or goods which do not fall within these categories, are not covered. He knows it very well, but he seeks to make political capital out of this and is trying to put it to the people.

Mr Curtin:

– No.


– Yes, he is. He is trying to put it to the people that the reason why other pharmaceutical goods are not covered is not because there is no constitutional power to do so. This is the real reason, as he knows. I know, and everybody here knows, that the honorable member is trying to suggest that it is due to the dereliction of the Government, because the Government did not set out to cover these other things which it might have covered. This is trying to make very poor, petty, political capital over this measure and I must protest against it. But this is the fatal defect of the Committee of the Whole: First, people do not know what the measure is about because there is nobody to tell them, and secondly, even on a little matter of this kind they must play their poor, miserable politics.


.- I want to reply briefly to some of the statements made by the honorable member for Bradfield (Mr. Turner). I agree with him that the honorable member for Hughes (Mr. L. R. Johnson) does know the reason why certain pharmaceutical goods are not covered in this Bill, but the intention that he attributed to the honorable member was completely wrong. The honorable member for Hughes levelled his criticism at the fact that the goods are not covered in the Bill because the Government had failed, after 17 years in office, to seek the constitutional power necessary to give effect to this legislation. For 17 years the Government has sat there with no control over health matters. This is a situation which we know places limitations on the Bill, lt restricts the right of the Minister to act unless there are imports or exports of these products or unless one or two other factors are associated with them. In effect, unless State Governments legislate, any kind of product can be sold and distributed in the States and the Commonwealth Minister has no power whatever to take effective action under this Act against its sale or distribution. That is the important point that the honorable member for Hughes was making.

He knows the limitations of the Bill and he blames no-one but the Government. He does not blame the departmental officers because they can only draft legislation in accordance with what is constitutionally possible. No matter how the Minister for Health (Dr. Forbes) may explain or the honorable member for Bradfield may apologise, they cannot escape the fact that the Government has failed to seek constitutional power on this question. The Joint Committee on Consttiutional Review in 1959 - six years ago - referred to the matter that we are now discussing. At paragraph 578 on page 80 of the report under the heading “ Public Health and Safety “ the Committee said -

In the Committee’s view, it would be much better from the public viewpoint if there were a single set of laws and regulations applied by one authority covering the whole question of the protection of public health. One set of technical experts could combine to have a knowledge and strength which several separate authorities could scarcely be expected to attain. Single legal control would ensure that uniform standards of safety were observed and also facilitate the task of amending legislation to take account of changing knowledge of the use and handling of radioactive substances.

Even that Committee representing all parties unanimously decided in favour of what the honorable member for Hughes has criticised the Government for failing to do. The failure to obtain constitutional power is one of the fundamental weaknesses in what is, so far as it goes, very good legislation. I could not allow the remarks of the honorable member for Bradfield to pass unchallenged because he misinterpreted - for political purposes, I suggest - the remarks made by the honorable member for Hughes.

Mr. TURNER (Bradfield) [2.52J. - I think the record should be put straight. As 1 understood the honorable member for Hughes (Mr. L. R. Johnson) he did not say one word about a referendum to obtain the necessary constitutional powers. 1 think the perfectly plain implication of what he had to say was that the Government might have covered all these other substances in this Bill but had not done so. He did not, so far as I can recall, say one word about a referendum. If honorable members opposite would wish the Government to seek power by referendum, that is another matter. The public knows how easy or difficult it is to pass a referendum and can form its own judgment as to whether the Government has failed or not failed on that matter. But the honorable member for

Hughes left it perfectly clear by implication that the Government might have covered these other substances in the Bill but had not done so.


– The last thing I wanted to do was to leave any confusion in honorable members’ minds about my views on this matter. It is a very serious misrepresentation to contend that the members of this Committee do not know anything about the British Pharmacopoeia, for example, or the British Pharmaceutical Codex or the British Veterinary Codex. We were not complaining about that at all; we were complaining that they were not available and, since they were not available, it was difficult for us to know precisely what was covered. It was for that reason that I went on to ask about such things as hair sprays, cosmetics and substances of that kind. My clear intention was to indicate that the short title of the Bill conveyed a false understanding of the position. If the honorable member for Bradfield takes the trouble to look at it he will see that it says -

This Act may be cited as the Therapeutic Goods Act 1966.

I was simply making the point that since there is a substantial number of goods which will not be covered by the Act, there should be some qualification to that effect. Otherwise, it could be assumed that all goods were covered. I thought 1 had succeeded in making my point very clear. If I did not do so, then it was probably the fault of the Minister because I was stating, in the main, what the Minister had said. He indicated beyond any doubt at all that the Commonwealth could not deal with goods which are produced in a State and which are disposed of within that State. He also said that the Commonwealth had no intention of dealing with them, or with proprietary lines, including, to use his own words, the bulk of proprietary lines.

I submit, therefore, that the term “ Short title “ gives the wrong impression. It gives the impression that this legislation covers a far more comprehensive field than it does. The honorable member certainly misrepresented me when he said that I had not said anything about the failure of the Government to look at the constitutional position. I ask the honorable member for Bradfield to tell me, by way of interjection if neces sary, whether he was in the House and heard my second reading speech last night. Is he prepared to deny that I devoted a considerable part of my speech to the constitutional position? I unquestionably did that, and we take up the debate from there today. This is a very reasonable thing to do, and we do not deserve this criticism.

The honorable member for Grayndler and I are acting very responsibly in this matter. We feel that the Commonwealth Government could have taken greater pains to overcome the constitutional difficulties confronting it, and that if this were not possible, it could have set up similar liaison and co-ordination to that accomplished under other laws relating to public health. A classic example of which the honorable member is well aware is to be found in connection with the laws relating to the control of tuberculosis. Without making any change to the Constitution, the Commonwealth was able to assume full responsibility and completely underwrite the States in their attempts to arrest the spread of that dread disease. That is the substance of our complaint. We suggest that with a little co-operation the short title could have been so framed as to make this a far more effective piece of legislation which would afford a great deal more protection to the Australian people.

Minister for Health · Barker · LP

– It is quite true that I indicated in my second reading speech, and in my reply to the second reading debate last night, that, because of the limitations placed on Commonwealth powers, this legislation does not cover all therapeutic substances or all therapeutic goods. For example, those that are the subject of intrastate trade are not covered. But we cannot judge this legislation on that fact alone. Whether the points made by the honorable member for Grayndler (Mr. Daly) and the honorable member for Hughes (Mr. L. R. Johnson) with relation to the Commonwealth’s seeking constitutional powers are valid depends upon whether our lack of power has any practical effect. As I clearly indicated last night, from the point of view of protection of the public, which is, after all, the purpose of the legislation, this lack of power on the part of the Commonwealth has little significant effect.

This is so for two reasons. The first is that although there are many therapeutic substances which are produced in a State and sold in that State and which, therefore, do not come within the terms of this legislation, there would be very few manufacturers who produce substances which are sold solely within one State. It goes beyond the bounds of reason to believe that a manufacturer would produce an inferior quality batch of his product for selling within a State and a different quality batch for selling in another State. The fact that he is required to produce a product of a particular standard for sale interstate ensures that he maintains that standard throughout the whole of his production.

The other reason why this point is of no significance is that the States have full control of matters over which the Commonwealth has no constitutional power of control. As I said last night, we have been acquainted for many years with the State legislation on these matters. The Commonwealth Department of Health has contact with the State administrations which act under Sate laws, and we are quite confident that in those cases where we lack constitutional power to control any particular substance the States will exercise very effective control.

Therefore I make the point that both the honorable member for Grayndler and the honorable member for Hughes are just beating thin air in reiterating their arguments. They are only doing it because they are not prepared to accept the fact that a State Government can behave responsibly. They do not believe in federalism. That is all right but it ignores the facts of the situation. This country has got on very well for very many years with the Commonwealth exercising certain powers and the States exercising others, both in a responsible manner.

The honorable member for Grayndler asked me to explain to him the meaning of sub-clauses (I.) and (2.) of clause 5. As he rightly surmises, these two sub-clauses are the heart of the legislation. Everything done under this Bill depends on what are classified as therapeutic goods for the purposes of the Bill. There is nothing particularly mysterious about sub-clause (1.) of clause 5. The definition laid down there is more or less the same as that laid down in the existing legislation except that it also includes equipment and so on which is not covered by the present legislation. I am sure that if honorable members study it carefully its meaning will become clear to them. The object of the clause is to ensure that we have power to examine all things which either are or purport to be therapeutic substances.

Sub-clause (2.) of clause 5 enables the Department of Health to recognise goods that are for therapeutic use. It is one thing to define these goods and another to recognise them. The Department must rely to a large extent for recognition upon the way in which the goods are put up, what the importer claims them to be, and so on. This sub-clause sets out various ways by which therapeutic goods may be recognised. To give one example, reference is made to the labelling of goods for therapeutic use.

The honorable member for Hughes raised the question of the availability of the British Pharmacopoeia, the British Veterinary Codex and the British Pharmaceutical Codex. I am sorry that he was not able to find them in the Parliamentary Library. All I can say t’o him is that what is placed in the Parliamentary Library does not come under my control. If the honorable member has any difficulty in getting these volumes from the Parliamentary Library, I shall be only too happy to make copies available to him on loan at any time he should desire to study them. In relation to his specific question about whether I have a copy available t’o me the answer is “ Yes “, but I hope that it never becomes necessary for me in the fulfilment of my duties to have to read it.

The honorable member referred to cosmetics and hair sprays. I suppose some people would describe both these commodities as being for therapeutic use, but I think it would be stretching the word “ therapeutic “ to so describe them. In fact, 1 am advised that neither of these commodities would come under the terms of this legislation, but this does not mean that they are not controlled. I reiterate again and again that there exist State acts to attend to these matters. I am quite sure that if it is necessary to control the standards of cosmetics or hair sprays it can be done under State legislation.

Clauses agreed to.

Clauses 7 to 9 - by leave - taken together.


.- I want to address a few remarks to clause 9, which relates to the furnishing of information with respect to the composition of goods. Subclause (1.) states - (1.) The Minister may, by notice in writing served on a person who -

  1. has imported goods for therapeutic use into Australia;
  2. has caused goods for therapeutic use to become the subject of trade or commerce among the States;
  3. has, under a law of the Commonwealth relating to the provision of pharmaceutical benefits, supplied goods for therapeutic use as a pharmaceutical benefit; or
  4. has supplied goods for therapeutic use to the Commonwealth or to an authority of the Commonwealth or a Territory of the Commonwealth, direct the person to furnish, in writing, to the Minister or another person specified in the notice, within such period as is so specified, such information with respect to the composition of the goods as is required by the notice.

This deals with the provision of goods that are exclusively under Commonwealth control. We come back again to what was raised in our discussion of the previous clauses, namely, the limitations placed on the Minister regarding drugs that are not up to standard or are dangerous and which can be in circulation and in use in a State without the Commonwealth Minister or his Department having any control over them. To illustrate this point I refer to an article that appeared in the Sydney “ Sun “ of Tuesday, 3rd May 1966 under the heading “ Some Cleaner! Poison at 30 Cents a Bottle” and which stated -

A pungent chemical, which can be fatal if inhaled, is being freely sold in Sydney.

The chemical is carbon tetrachloride, used by many housewives as a cleaning agent.

In the U.S. it is classed as a deadly poison and labelled with a skull and crossbones.

But in Sydney today a “ Sun “ reporter bought a small bottle for 30 cents from a Sydney chemist.

The typedlabel stated only, “ Not To Be Taken - Carbon Tetrachloride.”

There was no warning that the fumes could be fatal.

The labelling gave no hint of the fluid’s toxic effects, as illustrated by cases listed in the widely read American magazine, the “ Family Safety Magazine.”

One of the cases involved a New York mother who used half a cup (less than 30 cents’ worth on the Sydney market) to sponge the upholstery of two chairs.

Her daughter, who sat on the chairs to watch television, became violently ill.

It took a 10-man medical team to save the child’s life.

I repeat that this drug is on sale in Sydney at present for 30 cents a bottle. The article continued -

Other cases listed by the “ Family Safety Magazine” were:

After a few drinks, a young man in New Jersey cleaned his shoes with carbon tetrachloride while standing in a closet. He died three days later.

It was found that as a result of the carbon tetrachloride his liver and lungs were badly damaged, and his kidneys had stopped functioning.

A Coast Guard officer died 11 days after his wife had sponged food stains from his uniform while he lay on a couch several feet away.

She had used only a quarter of a cup of carbon tetrachloride.

Her husband had drunk several cocktails the night before.

Death was due to a combination of carbon tetrachloride and the alcohol still in his system.

Another man sloshed a bucketful of carbon tetrachloride on curtains to clean them.

To avoid the fumes, he had taken the curtains into the backyard . . . but he died next day.

The American magazine quotes authorities as saying that some people including heavy drinkers, those who are overweight, and those suffering from lung, heart, kidney, or liver ailments should never go near carbon tetrachloride - even in the outdoors.

Doctors in Sydney said they had no way of telling whether a patient was suffering from carbon tetrachloride poisoning unless the patient was himself aware he had been exposed to the poison.

The main chemical companies in America no longer sell carbon tetrachloride for home use.

This must be one of the most dangerous drugs that is freely available in Sydney. I do not know whether it is an imported item. There is no reason to doubt the facts that have been stated. The reporter was able to buy this article. In a case like this, how will the Minister overcome the limitations which are placed on him constitutionally unless he has some form of agreement with the State authorities concerned. I know of other instances, which I will not quote, of drugs not as potent as carbon tetrachloride being available. Surely there is a great weakness in the protection of public health if a poison can be available for 30 cents and the Commonwealth Government has to stand by and say: “ There is nothing we can do constitutionally; we lack the power “. What action is available to the Minister under this legislation? How would a poison like carbon tetrachloride get on to the market if the State authorities are policing the situation as has been said?

I have never subscribed to the view that the Commonwealth Government should not be interested in all matters of national importance. I see no reason why constitutionally this Parliament should not have power over health services throughout the Commonwealth. Why should people in New South Wales be disadvantaged simply because they are unfortunate enough temporarily to have a Liberal Government? Why should poison be sold over the counter in New South Wales at 30 cents a bottle just because the people in that State are not intelligent enough at this stage to elect a Labour Government? If it subscribes to the view that State Governments can control health matters, does the Government adopt the attitude that it is all right for some people in New South Wales to get poisoned while the people in Tasmania, where there is a Labour Government, are safe? This Government ought to be thinking big and acting big. This legislation places limitations on the Minister for Health, and people are endangered because of the shortcomings of the legislation, particularly as it gives the Minister power only in respect of imports and exports and a few other matters.

Good as this Bill seems to be as a progressive move the legislation can never achieve what should be the perfect system until such time as the Commonwealth has control to enable it to protect the health of all the people in all the States without the people being dependent entirely on the whims or shortcomings of governments that are elected from time to time. Perhaps the Minister can tell me how a happening like the one I cited - namely, the sale of carbon tetrachloride - can be avoided and what action he can take now that the matter has been brought to his notice and to the notice of the Commonwealth health authorities?


.- My colleague the honorable member for Grayndler (Mr. Daly) is to be congratulated for drawing the Committee’s attention to important omissions from the legislation. Clause 9 causes me some concern. It states, inter alia - (1.) The Minister may, by notice in writing served on a person who -

  1. has imported goods for therapeutic use into Australia;
  2. has caused goods for therapeutic use to become the subject of trade or commerce among the States;
  3. has, under a law of the Commonwealth relating to the provision of pharmaceutical benefits, supplied goods for therapeutic use as a pharmaceutical benefit; or
  4. has supplied goods for therapeutic use to the Commonwealth or to an authority of the Commonwealth or a Territory of the Commonwealth,

I am interested in the aspect that the Minister can serve notice on specified people. I wonder what will cause the Minister to think of serving notice on anyone in the categories mentioned in the clause. It seems to me to be fairly clearly indicated that the purpose of the legislation is not to throw a blanket over every therapeutic substance as is being done in the United States of America. Here, the onus is on the Government to detect and become susceptible to some danger point in regard to the supply of therapeutics.

What prompts the Government to serve a notice? Why pick one particular company or one particular drug out of the 30,000 therapeutical substances that are to be found in Australia? The Minister has said that testing these things is quite expensive. He speaks about the valuable work of the National Biological Standards Laboratory. The Laboratory is doing good work. It is unquestionable that testing is expensive. It costs a lot of money to set up such an establishment. What I want to know is why the Minister, by serving notice, is to require information to be provided, so that the Commonwealth can engage in the testing and examination of the therapeutic substances. I do not think there is any quarrel as to whether testing should be carried out. But why is the Commonwealth Government required to accept the onus for testing these substances? Why is not the company, the supplier, the importer or the exporter, as they are referred to in the Bill, required to make out a case as to the therapeutic bona fides of their particular commodity before it comes onto the market? I believe that this is the process that operates in some other parts of the world.

Last night, I made reference to a newspaper cutting about the position in the United States of America where the authority concerned, the Food and Drug Administration, said to drug manufacturers: “ Make them safe and effective or they will be taken off the market.” I went on to mention that the regulations which were adopted despite strong objections from drug makers were to apply to all drugs used that were cleared for sale from the time the 1938 Food, Drug and Cosmetic Act was passed. In other words, there was a retrospective coverage. I understand the position to be that these regulations call for drug makers to submit evidence to support medical claims concerning drugs which were cleared before the 1962 procedures were adopted. I commend a course of action of this kind. It seems to me that in our case we are working back to front. In other words, we are chasing the horse after it has bolted. We allow drugs to come onto our market. From the point that they come onto the market, they can be the subject of imports or exports and they can even go on to the pharmaceutical list. After these drugs have been on the market for some time, for reasons best known to the Minister and such authorities as the National Biological Standards Laboratory, suspicion may arise concerning them. My point is that a commodity should not come on to the market until it is cleared as being safe. A case should be made out by the promoter, the person who is endeavouring to market the commodity, as to the bona fides of his commodity.

Mr Turner:

– At what point is it to be cleared if it is moving interstate? If a product comes from outside Australia, this might apply. But suppose it is moving from New South Wales to Victoria?


– This is precisely the point that I was raising for consideration in relation to the last clause of the Bill. That is what we were talking about extensively during the second reading stage of the Bill. What the honorable member for Bradfield (Mr. Turner) has intimated is that there is a deficiency in the Commonwealth practice. The Commonwealth is inept in this.

Mr Turner:

– No.


– That is unquestionably the case whether the honorable gentleman contends the point or not. Constitutionally, this does bring up real difficulties. There is the very real necessity to ask the States, possibly, to cede powers to the Commonwealth so that the best interests of the people can be served in this regard. There is no point in the honorable member for Bradfield saying that there is a difficulty but because of the situation we are not interested in doing anything about it. Whether a commodity is being produced in one State and being sent to another State, or whether it is distributed in the State in which it is manufactured, it is obvious that the Australian people have the right to know whether it is a good commodity and whether it will do them harm. Not only are they entitled to know that it will not do them harm, and that there is no possible deleterious effect from taking that drug, but also they are entitled to know that the commodity measures up to what is said about it and that it can do what it is said to be able to do. Otherwise, as I said last night, people are being sold short and taken for a ride.

We cannot allow the people to expend their money in this way when the results which are advertised cannot possibly be accomplished. So, if there is a constitutional difficulty, I put it to the honorable member for Bradfield that it is our job to overcome it. But I do not want to get involved in a discussion on that point. Even in regard to the matters in respect of which we have constitutional power, why should we put the onus on the Commonwealth Government to pinpoint some danger or some potential flushpoint in regard to these commodities?

Mr Buchanan:

– On whom would the honorable member put the onus?


– I am making it clear that we should do what is done in the United States of America. The onus in the United States of America has been put on the manufacturer or the producer. If he is proposing to offer to the community a certain commodity, he has to demonstrate to the satisfaction of the authorities that that commodity is therapeutically sound. The Minister has said that the process of establishing whether a commodity is therapeutically sound is costly. It is indeed. Surely it should be part of the research carried out on the commodity by the producer. After all, the producer of the commodity is engaged in research. He should have looked at the therapeutic aspects of his commodity. Not only should he establish the therapeutic aspects, but also he should be obliged to demonstrate that the commodities he manufactures are produced in proper circumstances - in hygienic surroundings and facilities. I believe that there is an obligation on manufacturers to demonstrate to the Commonwealth Government that their package is right, that the advertising is a fair representation of the facts, and that the labelling is a fair representation also. The onus should not be on the Commonwealth to detect potential flashpoints in relation to these commodities. I ask the Minister for Health why this is not done in Australia.

I referred last night to the legislation in the United States, the Food, Drug and Cosmetic Act, which was enacted by Congress in 1962. The passage of the amendments to this Act was the culmination of a controversial two year investigation of drug industry prices by the Senate Judiciary Antitrust and Monopoly Subcommittee directed by its chairman, Estes Kefauver. I referred to this matter last night but not in the great detail to which 1 wish to refer to it now. I wish to refer specifically to some of the things that were done and accomplished by that inquiry. These were included in the Bill that was introduced.

The provisions of the Bill introduced in 1962 were designed to increase supervision by the Government of drug industry facilities and production, and to ensure the safety and, for the first time, the effectiveness of drug products. The Bill applied to both prescription and proprietary drugs. I ask the Minister: Does this legislation apply to prescriptions other than to those prescriptions which are provided under the national health service? As I understand it, it does not. By international standards which are established to provide protection in these matters, the Government is dragging the chain. The legislation introduced in the United States of America required drug manufacturers to register with the Government, operate under quality manufacturing controls and to submit to regular factory inspections. These conditions have not been plucked out of the air. They are applied in other parts of the world. The protection given to the people of the United States is the kind of protection that the Opposition demands for the people of Australia. We are going to make a nuisance of ourselves during the Committee debate until we get some assurance that this kind of protection is to be provided. I see my time has expired. However, I wish to take advantage of my second period to speak on this matter.

Dr Forbes:

– I rise to give the honorable member for Hughes the opportunity to take his second period of 15 minutes.


.- I thank the Minister for Health (Dr. Forbes) for his courtesy. I will continue to give some account of the coverage provided by the United States of America legislation. The drug manufacturers in the U.S.A. are required to provide substantial evidence of a drug’s effectiveness and the Health, Education and Welfare Secretary is permitted immediately to remove a drug from the market if it presents “ an imminent hazard to the public health”. The legislation also increased the time allowed to the Government to approve or reject manufacturers’ applications to market a new drug. Many other requirements are listed. The legislation requires drug labels to bear the common name as well as the trade name of the drug and its active ingredients. It requires increased information on a drug’s side effects, possible dangerous properties and the effectiveness of the drug to appear in drug advertisements. Many of these things are not required here. The boot is on the wrong foot. The onus is on the Commonwealth. I would like to see this section of the Bill provide that every therapeutic substance must be approved by the Commonwealth authority before going on the Australian market. This is not to say that the Commonwealth authority would have to engage in thorough and expensive testing of every commodity, but a case would have to be made out by the producer - the drug manufacturer - and I should imagine that in terms of the British Pharmacopoeia, the British Veterinary Codex and the British Pharmaceutical Codex many of these things could come to be categorised and the clearing process carried out quite effectively.

I had not intended to hold up the Committee, so 1 will spend no more time on that aspect. However, there are certain other matters that should be mentioned. I refer first to the serving of a notice. When a manufacturer is served with a notice the likelihood is that someone at the governmental level has the idea that there is a danger in the particular commodity. It would not be the intention that notices be served on everybody, but only on those responsible for substances which are suspect. What amount of time will be allowed after the serving of a notice for the person concerned to come up with an answer and provide prima facie evidence that there is no dubious therapeutic quality in the substance concerned? Are the goods to be frozen at every level once the notice is served? The very fact that a notice is served would seem to indicate that some suspicion is entertained about the substance in question. Where are the goods at that time? They might be in the drug company’s warehouse or they might have been sold. The horse might have bolted. The legislation does not indicate that the provision will be applied before the goods go into circulation. If they are in the hands of various wholesalers or various chemists, are they to be recalled? May they be sold or otherwise distributed after the notice is served? May advertising by radio, television or the Press continue after the serving of the notice?

Those are the points I wanted to make. I do believe that there are some problems concerning people outside the categories mentioned, the categories of people who import goods and who supply goods for Commonwealth purposes and the like, and I want to know whether the things that the Commonwealth is providing for with regard to a considerable range of therapeutics are in fact being covered by the States where it is appropriate for them to do so. This is quite important if the Australian people are to rest assured that they are buying commodities which can have no deleterious affect upon them and indeed are capable of having a good effect upon them.

I was interested in the newspaper article quoted by the honorable member for

Grayndler (Mr. Daly). The fact is that almost every day of the week one can read one of these horror stories. I think the honorable member quoted from yesterday’s Sydney “ Sun “.

Mr Daly:

– That is right.


– I have before me an article which appeared in the Sydney “Daily Mirror” last night. It is headed “ Disease from Vaccine “, and it tells of two people who suffered a withered arm and a withered leg respectively through taking Sabin oral vaccine. One was awarded compensation of $140,000 and the other 860,000. As I understand it, Sabin vaccine has been on the market for a long time. I. am not sure whether it is readily available in Australia, but we would like to feel that when Sabin vaccine has been produced here and is about to be marketed it will automatically be subjected to examination. It is poor consolation for these gentlemen, one with a withered arm and the other wilh a withered leg, to know that after the weaknesses of this vaccine have been demonstrated in such a terrible way it is now to be subjected to close investigation. So I put this to the Minister: Is there any prospect of reversing the process and putting the onus on the companies concerned so that protection can be more readily available for the Australian people?

Minister for Health · Barker · LP

.- I do not want to detain the Committee long, but there are one or two points that I should refer to. The honorable member for Grayndler (Mr. Daly) spoke about carbon tetrachloride. This is not a therapeutic substance. It is not a substance which will be covered by this Bill, nor is it intended that it should be covered by this Bill. Evidently it has poisonous properties. Control of poisonous substances is the responsibility of the States. I do not think that it is necessary for me to say anything further on this matter.

The honorable member and his colleagues opposite will go on taking the point of view that they have demonstrated in this debate because, as I indicated earlier, they believe, from their particular doctrinal approach to government in Australia, that the State Governments are inherently incapable of acting in a responsible matter in any field whatsoever. If one believes that, one will continue to urge the kind of viewpoint put forward by these honorable gentlemen. I do not believe that and therefore I do not regard this as a point worth canvassing in the debate on this Bill.

The honorable member for Hughes (Mr. L. R. Johnson) had a lot to say about clause 9 which gives the Minister the right to serve a notice in writing requiring a company marketing a therapeutic substance to furnish the Minister with information concerning its contents. Obviously this power is one that is required. We cannot determine a standard, or determine whether a therapeutic substance conforms to a standard, unless we know what is in it. However, the honorable gentleman attempted to sketch a rather horrific picture of the situation. He implied that the vast majority of drug manufacturers would be unwilling to provide this information and he gave us a picture of a Minister constantly having to exercise this power under threat of the penalty laid down in the Act. This, of course, is not a realistic picture. This provision is placed in the legislation so that the Minister will have the power in the very few cases in which it will be necessary to exercise it. As to the vast majority of companies and the vast majority of goods coming on to the market it will simply be a question of the Department saying to the company concerned: “ We want to test this drug for standard “, and the company will provide the drug and indicate its composition. My point is that this is only a residual power.

The honorable member raised the matter of extending our legislation to make it as wide as that which exists in the United States of America under the Food and Drug Administration. In that country an obligation is placed on the manufacturer of a new product. The honorable member was inclined to muddy the picture because he suggested this sort of power might be necessary in relation to testing batches of a product which had been on the market for some time. In the United States, this power relates to new products coming on to the market. There is placed on the manufacturer an obligation to provide certain details and to prove to the Food and Drug Administration that a substance is up to the required standard and that it is safe. We are considering carefully whether it would be desirable to introduce a similar system to deal with the very small number of cases that we have in Australia.

Many new drugs emanate from the United States or are imported into that country at a very early stage after they go on the market, and it is precisely because the Food and Drug Administration there adopts the measures that I have outlined and makes its reports available to us in Australia speedily that it has not been considered necessary for more urgent action to be taken here. In most instances, we are aware of the results of American tests on a new drug before that drug is marketed in Australia. However, all this does not mean that we. do not want to test the new drug for ourselves, though it reduces to a very small margin the possibility of difficulty with a new drug in this country. As honorable gentlemen will be aware, this procedure has avoided problems in many instances. I reiterate, however, that we are considering introducing a procedure similar to the American practice so far as it may be considered necessary in Australia.

I should perhaps make one other point concerning tests made under the requirements of customs legislation. In this instance, provisions similar to those of the United States legislation apply. Manufacturers and distributors are required to satisfy us that the substances are safe and of the required standard. Until this is done, imported products cannot be marketed in Australia. The last point made by the honorable member for Hughes related, I think, to Sabin poliomyelitis vaccine. I have seen the Press report to which he referred. The United States Food and Drug Administration has watched very carefully the situation in relation to this vaccine. As far as I know, in Australia it has been used in the poliomyelitis immunisation campaign only in Tasmania, and it has proved perfectly satisfactory there. I am informed that tests in the United States have disclosed that the chances of a person contracting crippling poliomyelitis from this vaccine are only one in one million or one in li million. All the attempts of the Food and Drug Administration, based on the strict provisions and standard mentioned by the honorable member for Hughes, have so far been unable to eliminate that one chance in one million or in li million of a person who has taken Sabin oral vaccine contracting crippling poliomyelitis as a result.


.- Mr. Chairman, we on this side of the chamber regret that the harmony of the debate on a matter so important as this is to the nation has been destroyed by the Minister’s political approach. He has seen fit to inject party politics into the consideration of this measure. I thought that the contributions to the debate made by honorable members on this side, particularly the honorable member for Hughes (Mr. L. R. Johnson), were thoughtful and well developed. They should not go unnoticed. The Minister suggested that we on this side believe that the State Governments can do no good. That is not what we believe. We consider that they are efficient and are able to discharge the responsibilities of the tasks entrusted to them. But we consider that health in particular is a national responsibility and that the Commonwealth, in the general interest, if it has the constitutional power, can more effectively enact legislation to regulate these matters. I was particularly careful to put the Minister right on the subject of the Commonwealth’s constitutional power in this field. It is not that we believe that the State Governments can do no right. It is just that what we consider is best for the people in the field of health can best be done under Commonwealth control, as is the case with social services and various other aspects of the Commonwealth’s administrative responsibilities.

The honorable member for Hughes made an important point when he dealt with the question of putting the onus on the manufacturer to prove the quality of his products and to relieve the Government of the onus of establishing quality. The Minister, in reply to that suggestion, fell back on the excuse that because the United States authorities require drug manufacturers and distributors in that country to establish the quality of the products that they handle, we can dodge the issue here and impose no responsibilities or obligations on the manufacturers and distributors. That is amazing reasoning, coming from the Minister. It amounts to side stepping the issue. As the honorable member for Hughes stated, there is no reason why requirements similar to those adopted in the United States should not be laid down in Australia.

I was interested to hear that tetrachloride is not a therapeutic substance. I am aware that the Minister, like me, lacks what may be described as skilled or professional knowledge on this subject. So I presume that his advisers have told him this. However, I believe that, as the Bill is worded, one could place nearly anything in the category of a therapeutic substance. I suggest that tetrachloride comes within this category, if one takes into account the following definition in clause 5 (I.) - “ therapeutic use “ means use in or in connexion with-

  1. the preventing, diagnosing, curing or alleviating of a disease, ailment, defect or injury in persons or animals;
  2. the influencing, inhibiting or modifying of a physiological process in persons or animals; or
  3. the testing of the susceptibility of persons or animals to a disease or ailment.

The Minister cannot convince me that tetrachloride could not be regarded as a substance having therapeutic use within the meaning of paragraph (c) of that definition when used for the purpose that I mentioned earlier. Apparently the Minister, on the basis of the professional advice that he has received, chooses to shelve his responsibility, just as he attempts to do in relation to proprietary lines of drugs, saying that these can be controlled by the States. He maintains that the Commonwealth has no power to control these. I cannot accept his explanation with respect to tetrachloride. I believe that its use comes within the definition of “ therapeutic use “ that 1 have read.

Minister for Health · Barker · LP

.- Mr. Chairman, when I was answering the remarks about Sabin oral vaccine made by the honorable member for Hughes (Mr. L. R. Johnson), I forgot to add that this did not represent a really good illustration on which to base the case that he was attempting to make. This vaccine cannot be sold in Australia by pharmaceutical companies. The only Sabin vaccine that is permitted into this country is imported by the Commonwealth Government. Its potency and standards are tested in our laboratories after it is imported. Furthermore, it is administered only to people who have already been given Salk vaccine. Therefore, the chances of any occurrence in Australia similar to that described in the report read by the honorable member are very slight indeed.

Clauses agreed to.

Clause 10 (Labelling and packing requirements in British Pharmacopoeia, etc.).


.- Mr. Chairman, this very important clause deals with the labelling and packing requirements in the British Pharmacopoeia. I suppose that in all forms of business and industry today labelling and packaging are amongst the most important factors that have to be considered. The realisation that something must be done about the packaging of drugs is apparent from the wording of clause 10 and other clauses dealing with this matter.

I want to deal briefly with the packaging of drugs. I propose to quote from the summary of the report of Mr. W. J. Cuthill, S.M.. on his inquiry into Standardisation and Marking of Packaged Goods in Terms of Weight or Measure, tabled in the Victorian Parliament on 28th April 1964. The inquiry was sponsored by the Victorian Chamber of Manufactures. Mr. Cuthill subsequently produced a 2,322 page report, in six volumes. I will not read the report at length. The summary of the report refers particularly to the packaging of drugs, lt reads -

Doubts arc expressed as to the powers of the Commonwealth to legislate on matters relating to standardisation and marking. It is suggested that the Federal Government should make the laws, but the States administer them.

The summary reads further - lt is pointed out that there is dual control of marking off foodstuffs and drugs in most States, and a great deal of confusion was brought to the Board’s notice.

Se we get back to the point of dual control, which was raised at the commencement of the debate today. In a section headed “ Marking-English Language “ the report reads -

The Board’s attention is drawn to the almost total absence of legislation prescribing marking shall be in the English language.

This requirement is found only in the Food and Drug Regulations under the Health Acta in some Stales. Such a requirement would exclude the use of all foreign symbols which exist on packages from Tokio to Athens.

The Board considers that it wilt be necessary alao to provide that the name of the product be expressed in English.

As far as labelling and packaging are concerned, the Government might give some consideration to Mr. Cuthill’s report. I am influenced in my attitude towards labelling by a report which appeared in the “Daily Mirror “ on 26th July 1962. It read -

The senior medical officer of the National Health and Medical Research Council, Dr. A. Johnson, who prepared the report, made these points -

The report there referred to was one in which health authorities blasted vitamin pills as a waste of money. The report of the health authorities stated -

No extra vitamins were necessary for a healthy person on a balanced diet. Vitamins A and D could be harmful if the intake is1 too high. The chief good done by most vitamin preparations was psychological.

The newspaper report continued -

Dr. Johnson said some preparations contained at least a dozen minerals and a dozen vitamins. “ Such a combination in one capsule, tablet or liquid is a sales gimmick without scientific justification “, he said. Dr. Johnson said there were few physicians who have not prescribed vitamins for tired, nervous or depressed patients. “ Vitaminhappy tendencies in the medical profession can be attributed, in part, to pharmaceutical promotion “, he said.

In other words, labelling and packaging of a particular kind is helping to sell gimmicks. I hope that this legislation will to some extent put an end to this practice, because no matter what ails people, nobody should be able, through labelling or packaging, to sell products which are just gimmicks, in some cases harmful, and in many respects of no use. That is why we support this clause but we sincerely hope that the Government will give consideration to what came out of the Victorian inquiry. The Government should make every effort to stop firms from selling, because of the nature of the package alone, goods that are of no use to the purchasers.


.- The requirements of labelling and packaging, as dealt with in clause 10, are important. Everybody realises that not only are the potency and effectiveness of drugs important but also the safety and suitability of containers. A great deal depends also on the truthfulness of labelling and advertising. I rise mainly to indicate the manner in which this problem has been approached in the United States under the Federal Food Drug and Cosmetic Act, which was amended in 1962. The principles of safety to which I have already referred at length apply not only to drugs but also to packaging and labelling. The onus should be on the manufacturer to show that his packaging is safe and satisfactory.

A great deal depends on the way the legislation is policed. Under the United States legislation a registration procedure was set up. Every drug manufacturer and packager had to register annually his name and place of business. He was assigned a number. This enabled registrations to be publicly inspected. The legislation required that every registered establishment permit inspection of its premises at least once every two years. The legislation provided for the registration of foreign drug establishments. This enabled drugs produced outside the United States to be examined to see whether they complied with the specifications, both as regards quality and packaging, set down in the legislation. The legislation provided that upon inspection of drug establishments drugs could be examined to ascertain whether they were wrongly branded, adulterated or otherwise prohibited under the legislation. Honorable members will see that this matter has been treated more seriously in the United States than it has in Australia.

Earlier, I referred in a cursory manner to the drug clearance procedure which applies nol only to the therapeutic quality of the drug but also to packaging and labelling. The United States legislation prescribed that the labelling of any drug should include the established name of the drug and the established name and quantity of each active ingredient in the drug. These details must appear prominently on the label and in type at least one half as large as that used for the trade or brand name. The legislation defined the word “ establishment “ as the official name listed in the recognised compendium. This is similar to what is being done here.

I mention these matters to show the thoroughness of the United States legislation. The Minister adopted a poor attitude in claiming that because the United States was going about this matter so thoroughly, there was less need for Australia to deal thoroughly with it. His attitude is that many drugs that are in common usage in the United States and in Australia are satisfactory because they have been approved by the United States authorities.

Dr Forbes:

– It is simply a fact of life that the drugs happened to come on to the market in the United States before they came on to the market here.


– The Minister’s attitude is clear but he has completely misunderstood the effect of what happens. If the situation is as he asserts, it means that the residue of drugs and packages coming into Australia and requiring examination is not of great proportions. So the task that we must undertake in this legislation is not formidable or insuperable. That is why I am so concerned about the Government’s slavish approach to this legislation. Since so much is done by the United States, for Heaven’s sake why can we not look thoroughly at the remainder? So many drugs which have a wide application remain to be tested. We should test drugs that have a peculiar application to Australia or to our tropical conditions, for instance. We should determine whether the packaging meets the pecularities of conditions in Australia. Why can we not transfer the thoroughness of the United States to the much smaller job we have in Australia and require everyone to register? Why can we not say that all factories must register and ask every State to require them to register, if we cannot do so ourselves, in conformity with standards that we suggest are desirable to safeguard the welfare of the community? It is possible to consume in one State a drug that has been manufactured in another. We should call for registration and for the inspection of factories. We should call for evidence to be provided about any new drug that comes on the market. Having shown our capacity to do this, we should go back for some years. We should act in relation to household items, which have been abandoned completely and recklessly by the Minister. He said that the Government would not look at them at all.

Dr Forbes:

– I did not say that.


– The Minister did say that. He intimated that these commodities are not covered by the legislation.

Dr Forbes:

– I did not say “ none at all “.


– I cannot place my hands on the precise wording at the moment, but, never fear, I will find the passage in the very near future. Does the

Minister deny that this legislation excludes ordinary household proprietary lines?

Dr Forbes:

– The power is in the legislation.


– In his second reading speech, the Minister made specific reference to the fact that these items are not being covered. They should be covered. We should first deal with drugs coming on the market and then we should go back for a number of years and review the drugs that came on the market in that period, having regard not only to the therapeutic aspect but also to the labelling and packaging, for the reasons that the Minister has given. I refuse to accept what the Minister has said. This is slavish. It is a poor piece of legislation in the sense that the Minister has not set out to do the job that obviously needs to be done.

Minister for Health · Barker · LP

– The honorable member for Hughes (Mr. L. R. Johnson) has referred to remarks I made. My remarks are clearly set out in the second reading speech. I shall stand on them rather than on the honorable member’s interpretation of, and the gloss he has put on, my remarks.

Clause agreed to.

Clauses 11 to 18 - by leave - taken together.


.- I want to make a few observations about Part II, which deals with the determination of standards. My remarks are in no way a criticism of the Government and its desire to control the standards of drugs. This is a most desirable objective, but I think I would be doing less than my duty if I did not point to a danger spot in the control of therapeutic substances. This Part gives the Minister the right to determine standards by ministerial order. Previously this was done by regulation. I think that this is the principal change that distinguishes this Bill from the 1953 Act. I would not like the opportunity to pass without again registering my disapproval of this procedure. A principle is involved, but I do not propose to refer to it now. All I want to do is to refer to some of the comments made by the Minister for Health (Dr. Forbes) when he explained why he considered it was necessary to have ministerial control. I do this with very great respect to the Minister. I do not think the reasons he gave are valid, but he may think they are. I would like to take each one of the five reasons he gave last night and show how they do not measure up to the seriousness of introducing a system of ministerial orders.

The first reason the Minister gave was that ministerial orders are speedier than regulations. I have no doubt at all that they are speedier and I am quite sure that the Department would much prefer to have this type of administration than the previous type of administration. The procedure with a ministerial order is that the departmental head makes a decision and asks the Minister to sign the order. After all, the Minister must naturally take notice of his departmental officers on technical matters such as this. He cannot be expected to know everything about them. So the departmental head decides that this is the more expedient way of enforcing a decision. The Minister supports this procedure by a further argument that dozens of foolscap pages would be required to print the monographs setting the standards. I do not agree. Details of only a comparatively few drugs would need to be printed, because most drugs are registered in the British Pharmacopoeia or the British Pharmaceutical Codex. Only reasonable variations from these standards would need to be published. But if the printing of regulations did occupy as much space as the Minister said, so what? Hie manuals that describe the drugs contain literally thousands of monographs that do not take up anything like the amount of space that has been suggested by the Minister. His third point was that the number of orders will reach considerable proportions. I do not believe that that is so. As I have just mentioned, only variations would be published. Details of new drugs that come on the market after the manuals have been printed would need to be published, but they do not take very much space.

The Minister’s fourth reason was that it would be very difficult for the Parliamentary Draftsman to give details of expert scientific matters. I do not take very much notice of this argument. I do not think it is valid.

Probably the most important argument advanced by the Minister was his fifth argument, which was -

Fifthly, a precedent for this has been accepted by the House in the National Health Act in respect of pharmaceutical benefits.

I would have no objection, if this applied only to pharmaceutical benefits. But it does not apply only to pharmaceutical benefits, lt goes outside that list and includes a large range of drugs that are not pharmaceutical benefits. A ministerial order affects not only pharmaceutical substances but also containers, labels and other aspects of packaging. A manufacturer may be exporting his drugs. They may be going to Asia and they may be sold in Australia in the same kind of container or package with the sams kind of label that is used for the drugs when they are exported. A departmental officer may say: “ 1 do not think that is necessary “, or “ I think such and such ought to be changed.” By ministerial decision this change can be made. Now, it sometimes requires a good deal of representation and a good deal of expense before a change can be made. When a change is made by Government regulation there can be a holding up process, if 1 can express it that way. A Minister dealing with a regulation to be authorised by the GovernorGeneralinCouncil would no doubt have a careful look at the matter. He would be a little more careful in signing his name to such a decision. He would want to make sure that the regulation was satisfactory to the manufacturer and to the industry generally. 1 am not happy about the fact that these changes in future will be made by ministerial order instead of by regulation. My reason for saying this is that some member of a department may make a recommendation to the Minister and the Minister, not being a technical man, may agree with the officer. Such a system could have dangerous effects. I do not think decisions should be made in that way when we are dealing with drugs; I think it is a backward move. There are democratic reasons that could be given, as to why ministerial orders should not be introduced into the lawmaking process, but my main objection is that the procedure in this instance could be dangerous. If the Department of Customs and Excise can introduce GovernorGeneralinCouncil regulations that involve many pages, and even volumes, I think the Department of Health could easily do the same. 1 think that the type of administration proposed is wrong, and that laws should not be made by ministerial order. If they have to be made they should be made by regulation and the Department of Health should be no different from any other department in the Commonwealth in this respect.


.- I address myself specifically to the question that the honorable member for Isaacs (Mr. Haworth) has raised, namely that of substituting minis terial orders for regulations. In my second reading speech 1 slated the Opposition’s attitude on this matter. It is supported by the honorable member for Isaacs whose sentiments, 1 think, are generally accepted as seeking to safeguard the rights of the Parliament. Parliament has the right to disallow regulations, and should have the right to prevent the rushing through of orders that may not be in the public interest. In his second reading speech the Minister for Health (Dr. Forbes) outlined clearly the reasons which prompted him to substitute orders in writing for regulations. His remarks applied to several clauses and I address my remarks to each of those clauses. The Minister stated that the other system had become unworkable. I think he mentioned at one stage that some regulations could run into several pages and would be extremely complicated and technical. In view of that I was wondering what form his order in writing will take. Will he just mention the technical name of the drug or will he be called upon to give the same details in writing as would be given in a regulation? Will anything be saved by substituting an order in writing for a regulation?

We on this side of the chamber are not happy about orders in writing replacing regulations, for the reason that the adoption of this system will remove safeguards, in that it will take away the Parliament’s right to disallow. However, we have accepted the Minister’s explanation about urgency and the need for speed. He told us that a departure from normal procedure is necessary because this matter is concerned with drugs which can kill or maim people and affect their genera] health if not taken properly. We hope, however, that the substitution of orders in writing for regulations will not become part of the general pattern of health legislation. At the same time we on this side of the chamber accept the explanation given by the Minister, no doubt prepared for him by his officials, that there is a need for speed. However, we do not accept the principle of substituting ministerial orders in writing for regulations. The honorable member for Isaacs supports us in this. This is quite a change if 1 may say so with due humility. It is pleasing to see that on this one occasion at least the honorable member for Isaacs is supporting us on such an important matter. It shows that if we are patient we will have the least likely people supporting us. 1 conclude by repeating that although the Opposition is not happy about substituting orders in writing for regulations we understand the reasons that have prompted the change on this occasion.


– Normally 1 would have some very grave doubts about the proposed method of maintaining standards. I do not think it is right as a general principle that ministerial orders should replace regulations. I will not go into that matter in the Committee stages, because of the limitation of time. This industry is in an entirely different position from other industries. It is a highly technical industry in which some allowance has to be made for the fact that the ordinary type of regulations cannot be made to deal with it. We are all agreed on the necessity to provide standards. 1 applaud the Bill as covering a much wider field than the legislation which it replaces. We are going to have much higher standards in some cases, and those standards are not going to be restricted to those provided for in the British Pharmacopoeia. In this new legislation the standards will be entirely different. They will be quite new and will be determined by new testing methods.

The pharmaceutical industry is one in which new products come forward as the result of the work of some individual firm in the industry. It is not common for government organisations, universities or that type of institution to bring out new drugs. New drugs generally result from research work done by one of the great pharamceutical firms which have done so much to alleviate the sufferings of the world. Thousands and thousands of new drugs have come on to the market in recent years because of research work that somebody has done. The honorable member for Hughes (Mr. L. R. Johnson) is wrong in thinking that the Government should require such firms to maintain a standard. The position is that it is these firms that set the standard. The Government could not lay down a standard for one of the modern drugs because it is only the firm that has discovered the drug that can tell the Government what the standard should be. No drug can get on to the list of pharmaceutical benefits until it has been approved by the Government, and even if the firm wants to sell it over the counter, without it being on the pharmaceutical benefits list, approval must be obtained before it can do so. The point I am making is that the industry itself has to determine the therapeutic and toxic effects of new drugs. Over the years, as a result of testing, it has to try to arrive at a drug which is the purest that can be made. The firm does this and it says, in effect, what the standard is.

The Minister made quite a lot in his speech of the fact that there is going to be consultation with the drug firms. He set out rather fully, and I thought rather well, the processes that go on. First, and this is right in the early stage, before the product goes on the market at all there is research and reference to all recognised scientific and official publications. That has to be made by the departmental officers. In many cases this information will be available purely and simply only from the manufacturer who discovers it. Next, representatives of the pharmaceutical industry, particularly those concerned with the special class of product, are consulted and their problems are discussed. Then someone gets down and prepares a written standard which is circulated for comment throughout the pharmaceutical industry. Obviously the circulation of this is going to be fairly limited. It cannot be circulated to the whole industry or be made a public paper. Then having taken due regard to comment, the proposed standard is referred to one or more advisory committees.

I am not so much concerned about the actual method of the Minister making an order. But I do not think it is sufficient for him to say in his second reading speech that the industry will be consulted in the way he has mentioned. A second reading speech is not binding. It would be much preferable to have this necessity to consult stated somewhere in black and white to assure the industry that it has some protection in respect of the standards of something that it has discovered - not that the Government has discovered, but something that some member of the industry has discovered and wants to make available to the public. All he requires is the Government’s co-operation in order to put it on the market. The Government, naturally, has to protect the public and standards are required to be laid down, but in very many cases it will bc essential that a particular manufacturer be consulted. I cannot see much reason why that provision should not be written in somewhere, preferably in the Act. If it cannot go into the Act, it could go into the regulations.

Do not let us forget that there will be rather voluminous regulations about this industry. Somewhere wc ought to be able to provide that before the Minister actually sets standards, whether in the form of a letter or a regulation which, as the honorable member for Grayndler (Mr. Daly) has said, will not be any different - the wording would have to be similar and would run into the same number of pages whether it bs an order or a regulation - the Minister should consult as to the need for and the terms of the order with the manufacturer or. as perhaps might be necessary, some delegate of the industry. All I want to indicate is that the Minister should consult with the manufacturer or all those manufacturers who, he thinks, would be affected by an order. For instance, if it were proposed to set a standard for aspirin - we have many examples of very low quality aspirin being sold and it is highly desirable that a firm standard should not only be set but also maintained by testing - the Minister, knowing that there are not very many manufacturers of the basic ingredient of aspirin in Australia, would consult with that group before finalising the writing of the order or regulation. The consultation having been completed and a decision made on the need for a standard and its terms, the matter would then go to some advisory committee.

Wc are told that under the regulations there will be an advisory committee, but the indication is that this committee will be given, a very long time afer the decisions have been made, some opportunity to look at them. Perhaps some six months after the event the committee will be able to object to the Minister that it does no approve of the standard. But the worst feature of this is that there is no guarantee that the representative on the advisory committee would really have the inside knowledge on the drug that was at stake. For this reason I urge that we try to provide in the legislation, or the regulations, for a specific consultation with the manufacturer concerned.

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


.- I shall take only a minute to deal with the question of enforcement. The Minister may issue an order in writing to require certain things. Clause 12 states - (I.) The Minister may, by order in writing, determine that a monograph in the British Pharmacopoeia, the British Pharmaceutical Codex or the British Veterinary Codex shall, for the purposes of this Act, be deemed to be modified in such manner as is specified in the order.

Then clause 13 provides - (1.) The Minister may. by order in writing, determine that, with respect to a matter that is a prescribed matter, the standard for a substance or article to which the order applies is, for the purposes of this Act, the standard specified in the order. (4.) In this section, “ prescribed matter “ means composition, strength, potency, stability, sterility, quantity, quality, method of preparation or any other matter prescribed by the regulations.

What I should like to know from the Minister is this: If an order facilitated by clauses II, 12 and 13 is issued under the regulations, in what way and by what manner does the Commonwealth satisfy itself that, say. the method of preparation and the hygienic conditions under which the drugs are being produced are satisfactory and comply? Everyone knows that backyard factories are operating in many parts of Australia. I would not find it difficult to make a list of a dozen backyard factories where the standards are well below those desired and where, perhaps, because commodities such as sugar of milk which is fed to young children are being packaged, it is not only a matter of the quality of the product that goes into the package but also a matter of the hygienic nature of the environment, the containers and things of this kind. Have we inspectors in the employment of the Commonwealth who will be going around to visit these establishments? What personnel have we? What skill have they? We have talked at some length about the new kind of container, the plastic device and things of that sort, lt would be very difficult for any unskilled person to be able to detect whether one of these plastic injection appliances is good or bad. What kind of personnel will be involved? The genera] question of application is one that comes to my mind and 1 would be grateful if the Minister could throw some light on the subject.


.- Being very well disposed towards the Minister and believing that his Bill is a good one. it is with some hesitation that 1 am critical about one aspect of it. What I am concerned about is that the device of an order in writing by the Minister is being used instead of the more usual device of a regulation for the kind of purpose contemplated in clause 11. I listened to the Minister last night to hear the reasons for this departure from usual procedure and, so far, I must confess that I am not convinced. The honorable member for McMillan (Mr. Buchanan) has just given us an account of how a new drug can come on the market. It is a rather lengthy process. It does not happen overnight. The Minister will correct me if 1 am wrong, but 1 understand that under the existing legislation it has been possible to do this by regulation. What has happened in recent times that leads the Minister to the conclusion that the use of regulations is not expeditious enough? One gets the impression that unless he can rush to his office in the middle of the night to sign a paper and so prevent some particular substance from being used, people will be killed or poisoned, ls this a true representation of the situation?

The Minister has given us no examples to show why there should be a departure from the method employed under the existing Act - that of denning by regulation what is a substance. He gave a variety of reasons, such as expedition, for requiring the method proposed in this Bill. Regulations are issued once a week, or more often than that, and they become effective immediately they are published in the “ Gazette “. They remain in force until Parliament meets - this may be six months later - and disallows them, if it so chooses. That is a fairly expeditious method, and before I can be convinced that there should be a departure from it I should like to hear from the Minister some examples which show that greater speed than is possible by the use of regulations is necessary. As I have said, regulations can operate with very great speed.

The reason why Parliament has preferred regulations to orders in writing is that the regulation method gives an opportunity to interested parties to make representations whereas, under the system now proposed, the only opportunity for making representations exists through consultative bodies which I think the Minister told us last night will meet perhaps only once a year. That is not giving interested parties a fair opportunity to make such representations as they may think fit. So I would need a great deal of convincing that the need for speed is so important that there should be a departure from the usual procedure.

It may be that the Minister is relying rather on the other reasons that he gave, although, to me, they seemed of far less importance. He spoke about the prescription of these substances as being highly technical. Many regulations are highly technical and can be understood only by people who are interested in the particular field to which they apply. Apparently some people read the British Pharmacopoea before going to sleep, but those who prefer to read the Government “ Gazette “ would find that they would not understand much of some regulations because they were too technical. So that argument has very little weight.

It is also suggested that regulations would take up a great deal of space. But exactly the same space will be taken up whether the method adopted is regulations or orders under the Minister’s hand. In either event, the decisions must obviously be printed and circulated to a large number of people. So this does not seem to be an argument of very great substance.

Then the Minister said that this kind of prescription would be better given by the experts in his Department, in the form of an order for him to sign, than by the Draftsman. The Draftsman, of course, is a good lawyer and 1 imagine he has had to put many technical matters into regulations and into legislation. He seems to have been able to accomplish that difficult task with considerable skill, lt seems to me, therefore, that the Minister has given no really convincing reason why there should be a departure from the usual practice which docs give this Parliament an opportunity to have a second look at these matters and which also gives an opportunity to other interested parties to make their representations. 1 have not been convinced by what the Minister has said so far. lt may be that he can say something now that will convince me. I should like to know in particular why much greater speed is required than is possible under regulations which, as I have said, can be put into effect within a matter of days.


.- I should like to make one other point. There does not seem to be any provision in this legislation for some sort of an appeal. It may be that it is not necessary. Certainly it would not be necessary if there were consultation and agreement were arrived at between the industry and the Commonwealth on standards. Please remember that we are talking only about standards. We are not talking about the sale of these goods or the restriction of their circulation.

Let us forget for the moment the more common drugs which are fairly well known. We have arrived at suitable standards for them. For instance, one aspirin is very much the same as another. But when we come to the new life saving drugs we come to an area in which only the manufacturer has the knowledge to be able to say: “This is the form it should take.” The manufacturer has developed these things after having spent years of research on them. If some person in the Department, even some highly qualified pharmacologist is to be able to say: “ There is too much moisture in this; it would be better if it were of such and such a standard of dryness “, or that in his opinion the product is slightly too acid, when the manufacturer knows from his experience that the chemical state in which the drug is produced is necessary to economic production, all sorts of difficulties could arise.

For example, if the Department were to decide on a standard other than that prescribed by the British Pharmacopoeia - there is no requirement to keep to the standards that have been recognised all along as being quite high enough for commercial manufacturing purposes - the manufacturer would have to accept that although he was quite conscious of the fact that the requirement would be deleterious to the marketing of his product. He would have no right of appeal. 1 mention this as one of the things that should be looked at.

I come now to the reasons for speed given by the Minister last night. He said that it was not appropriate to do these things by regulation. The fifth reason he gave for saying that was that the listing of the pharmaceutical benefits under the National Health Act is fixed by exactly the same means as is proposed in relation to the determination of standards under this legislation. If that were so, it would probably go a long way towards overcoming a number of the difficulties that the industry envisages. The point I make here is that before a product goes on the list of pharmaceutical benefits, there is consultation, and agreement is arrived at between the authorised representatives of the industry and the Government. If the same procedure could be followed with respect to the standards which are being laid down as is followed with relation to the acceptance of the product as being suitable for sale as a pharmaceutical benefit, it would go a long way towards solving this problem.

Dr Forbes:

– Agreement as to what?


– As to whether the product is suitable to be accepted as a pharmaceutical benefit.

Dr Forbes:

– Not to go on the list?


– No; agreement between the Department and the industry only as to the actual formulation of the drug. I do not think we should publish anybody’s formula, but we should publish the names of new pharmaceutical benefits. An agreement is arrived at regarding the formulation of a product and it is then referred to the Minister who has the final say regarding pharmaceutical benefits. I think the Minister would retain that right in any circumstances.

Minister for Health · Barker · LP

– I have listened with great interest to the remarks on this particular aspect of the legislation. In reply to the honorable member for McMillan (Mr. Buchanan) I remind him that when I was speaking last night I referred to the provision in the National Health Act that provides for the Minister to fix details of pharmaceutical benefits by determination. I referred to that not because the procedure of arriving at what is or what is not a pharmaceutical benefit is the same but because it is an example of a situation in which the Parliament has thought fit to use this method to detract from its powers, if 1 can put it that way. In other words, the Parliament has accepted that there are cases where regulations are not a suitable method of achieving a desired situation. That is the only reason I mentioned it. However, some honorable members have questioned the necessity for the change. I would say categorically that I and the Government believe that it is desirable for determinations to be made in this way. Anything that detracts from the oversight that the Parliament has over these matters is not . good, so the Government, in deciding to include this provision in this legislation, took that as its starting point.

Looking at the situation, and particularly having regard to the practical experience that we have had in 13 years’ operation of the Act, and taking into account the fact that there would be a much larger volume of determinations and standards under this legislation - and they would have a wider scope - the Government could think of no other way of achieving the objectives of the legislation than the way laid down in the legislation. The honorable member for Bradfield (Mr. Turner) said - and I can understand why he should say this - “We could make regulations under the previous Act, why cannot we do it under this one? “ As I said in my second reading speech, this method of fixing determinations by regulation was found under the previous legislation to be impracticable, so much so that not one single regulation to fix a standard was passed in the whole 13 years of the currency of the Act. A lot of standards were fixed and complied with by the industry, but if they had not been complied with by the industry there would have been no legal power to enforce them. We, of course, would have hurried in a regulation in a particular case where it was necessary. Because of the combination of the various factors I mentioned and the explanations I gave last night it has not been found practicable in 13 years to produce a regulation regarding the fixing of standards. The honorable member for Isaacs (Mr. Haworth) said that a number of statements I made were untrue.

Mr Haworth:

– I did not mean it that way.


– I said that there would be a large volume of determinations and the honorable member said that there would not be. Is that not saying that what I said was incorrect? Let me given an example of the volume of determinations that there probably will be. At present the number of standards laid down by the Food and Drugs Administration in the United States of America for antibiotics alone - and this is but one section of the drug industry as the honorable member for Isaacs, being an expert, clearly knows - would fill a volume larger than the whole of the British Pharmacopoeia and the British Pharmaceutical Codex put together. The British Pharmacopoeia will probably, by the time we have got properly under way with this, provide standards for perhaps 20 per cent, of the products for which we have standards in Australia, lt will catch up with them in due course, but as the honorable member knows, there are long delays in putting new drugs into the Pharmacopoeia and they are not always in an appropriate form for Australia. Minor variations are made and all these matters have to be the subject of a determination and if it is required that the determinations will be by regulation then all will have to be the subject of a regulation.

The honorable member for Isaacs said that these standards were unlikely to be complex or of great length. I have some examples that I will be glad to table or to show the honorable member, but they occupy pages. I have one relating to the proposed minimum requirements for inactivated poliomyelitis vaccine and it occupies eight foolscap pages of closely typed formulas and so forth. I am told that many of these determinations will be similar, although we will find cases in the British Pharmacopoeia that are much simpler. If they were all simple and if that were the only consideration, regulations would be appropriate. We propose producing a looseleaf booklet for the convenience of people who have to be guided by these standards and who have to comply with them. The only difference from the British Pharmacopoeia will be that ours will be loose-leaf instead o; bound and will probably not be as thick.

I insist again that whatever my honorable friend from Isaacs may say, ministerial orders, from our experience, will be quicker. 1 insist again that the standards are of a highly technical nature, that the number of orders will reach considerable proportions and that the content of the orders, being technical, will be better drawn up by scientific experts than by parliamentary draftsmen. In the last resort I fall back on the point that we have found by actual experience in administering the existing Act - an Act that is not nearly so demanding as the new Act is going to be - that regulations have not been an appropriate method of achieving the objectives for which the legislation exists.

Sir, something has been said by the honorable member for Isaacs and the honorable member for McMillan about consultation with the industry. I think I answered this point last night. It is asked: Why is the right of the industry to be consulted not written into this Bill, and why is it being written into the regulations? It is said that this would give the industry a guarantee, which does not exist, that it would be consulted always before a determination in relation to the standards for its products are fixed. The reason why it is not customary and the reason why it has not been done in this Bill is that to provide that before something can be done the Minister will have to consult with somebody is meaningless. This is something that cannot, in any meaningful sense of the word “ consultation “ be applied. This is something on which a legal obligation on either side cannot be placed effectively. The word “consultation “ relates to an attitude of mind. It is not susceptible, in any meaningful sense, to being put in a legal form. Whatever may be written into the proposed Act about consultations, if I like to avoid consultations or the other parties like to avoid consultations, there is nothing that can be done that will stand up in law.

Another point that I made last night was that I gave an undertaking in my second reading speech that, as under the present Act, we will, in the regulations which permit this, set up a consultative committee which will comprise members of the pharmaceutical industry. The Government regards this undertaking as binding on it. It will be covered by regulation and not by ministerial order. Therefore, it will be subject to oversight by this House. For example, if a subsequent government tried to do away with this undertaking, the House could consider it. I have given the undertaking, as I said last night, that I will give careful consideration to any recommendation the industry may make as to the form of the regulations concerning consultation with the industry. I have given a specific undertaking - this is in answer to the point made by the honorable member for McMillan - that, unlike the present committee, members of this committee will have the right, not only to call meetings of the committee, but also to nominate the subjects that will be discussed. So, it should not be necessary for the industry to wait for six months after a determination has been made for this committee to meet.

Mr Buchanan:

– But the Minister will not take six months?


– I am not a member of the Committee. The majority of the members of the Committee are not official members. Provided the industry can get the non-official members of the Committee on side, it should be possible to get the Committee together fairly quickly. The final safeguard in relation to consultations with the industry is this: It is a fact of life, for reasons mentioned both by the honorable member for Isaacs and by the honorable member for McMillan, that it would be virtually impossible to lay down a standard for most of these products without consulting with the industry. That, I believe, is the best and most specific guarantee that the industry could have that it would be consulted.

The honorable gentleman also raised the question of an appeal. I would suggest that tie process by which standards are arrived at is the best argument against the necessity for an appeal. We must remember, first, that departmental officers examined the world-wide literature on certain drugs, substances or goods. They consult with the industry about these things. After that consultation, the departmental officers write a standard. They get the comments of the industry when they have written that standard. Then, if there is any difference of opinion or any doubts in the mind of the department officers, they refer the matter to one of the three expert committees. They refer it to one of these committees that is not representative of the interests of the industry. This committee, as it were, is an arbiter in this process, lt seems to me that there we have the sort of arbiter that we would have in a court. If there were an appeal to a court or other body, how would such a technical matter be decided? The only way it could be decided would be to send it to such experts as we have on these commutes to be arbiters in the matter. That is the reason why we do not provide for an appeal. This matter has been put up to the representatives of the pharmaceutical industry. They agree with our feeling.

I wish to mention the point made by the honorable member for Hughes as to how we carry out our powers in relation to inspections and so on. If the honorable member looks at clause 24 of the Bill he will find that there is power to make regulations in relation to a long list of things. This is the means by which these powers are carried out. If the honorable member looks at the regulations under the existing Act he will find that there are powers to enter premises and examine processes to see that they are safe, clean, hygienic and satisfactory. There are Commonwealth servants who are trained and available to do this sort of work. This is the way we catch up with the backyard manufacturer.

Mr. TURNER (Bradfield) 14.531. - I do not wish to occupy an undue part of the time of the Committee. But I am more confused than ever since the Minister for Health (Dr. Forbes) spoke. He said that the Act which is being amended had been in existence for 13 years and that no regulations had been prescribed under it because this was impracticable except, presumably, in relation to the matters that we are now discussing. Yet, he said in answer to the honorable member for Isaacs (Mr. Haworth) that the volume of the determinations would be so great that it would amount to two volumes the size of the British Pharmacopoeia which I am holding now in my hand. Now, if these determinations have been made but no regulations have ever been gazetted, how do these determinations become effective? I just cannot understand this.

Mr Buchanan:

– Through the goodwill.


– My friend from McMillan says it is through the goodwill of the industry. We have an explanation. Then the Minister spoke about a looseleaf system. This suggests that determinations are going to roll in day after day, week after week. Presumably, these will not start as volumes twice the size of this volume. There will be, from time to time, new determinations within reasonable compass which might indeed be the subject of regulations. Furthermore, though this looseleaf system may be adopted, it does not follow that, as far as the convenience of the users is concerned, it could not run along parallel with the issue of regulations. The great feature of regulations, of course, is that they do give time and opportunity to interested parties to make their representations. The Minister has, of course, been replying to the honorable member for Isaacs and the honorable member for McMillan (Mr. Buchanan) as the Minister who is concerned with getting along with an industry. I am not concerned with this aspect of the matter at all. I am concerned with the precedent that is being set in this legislation and . which may be invoked in respect of other legislation in the future. The point I make once again is that a Committee of the Whole is a perfectly hopeless kind of mechanism to enable members to understand a technical measure such as this. Without the attendance of officers who can give evidence and be questioned in a totally different atmosphere from that which prevails here, members of this Parliament are not in a position to know what it is all about. As I say, the Minister has spoken again and he left me more confused than ever until an interjection clarified a matter that had seemed entirely inexplicable.

It may be that it does not matter whether members sitting in a Committee like this understand what is going on, but if this is so one can go further and say that this Parliament does not matter either. The fact is that we are here and that we should be able to understand matters upon which theoretically we express an opinion by a vote. If we do not, we might as well all go home. Once again I emphasise the futility of expecting this kind of Committee to deal with technical matters such as those raised in this measure.


.- I am sorry if I conveyed the wrong impression to the House. Obviously the Minister was misled when I said that there were not many drugs whose monograph would need to be listed. I possibly conveyed a wrong impression. I thought I said “ comparatively speaking “ when I made that remark. I want to remind him and the Committee that although he has a very large list - which he showed to the House - of new drugs which do not appear in the British Pharmacopoeia, the reason that they do not so appear is that this British Pharmacopoeia is for 1963. I have here an addendum for 1964 and within a few months another British Pharmacopoeia will be issued which will cover everything in the previous one together with everything in the addendum plus many new drugs. All that would be required in these circumstances that I have previously mentioned would be for the Governor-General to make regulations and to refer to the particular drug in the B.P. 1966 or 1967 or whatever it might be. So although I may have said there would not be a comparatively great number, I know that there will still be quite a lot of new substances that will not be covered by these volumes, but do not forget that the British Pharmacopoeia and the British Pharmaceutical Codex are being re-issued very frequently these days because of the great numbers of new drugs.


.- I wish to take the opportunity of applauding the express provision in clause 18 that orders all be notified in the Gazette. This will avoid the mischief which arose under the Tuberculosis Act, under which it is possible for orders or determinations to be made in secrecy. It is impossible for honorable members or members of the public to ascertain some of the determinations which can be made under the Tuberculosis Act. In fact there is no procedure for the public or for members to be informed that orders have been made. Determinations and orders under the National Health Act regularly appear in the Gazette. They will so appear under the Therapeutic Goods Act.

The particular matter which concerned me under the Tuberculosis Act was the fact that determinations can be made by the Director-General, subject to the direction of the Minister concerning persons who may receive allowances under that Act. One determination was made which had the effect of excluding practically all Aborigines from receiving allowances. As we know, there are more sufferers from tuberculosis amongst the Aboriginal section of the Australian population than amongst all other Australians combined. A determination was made on 14th June 1950. I did not know of it until a newspaper article appeared in January last year. I telegraphed the Minister and later put a question on the notice paper for him. Between sending the telegram of 11th January and receiving my answer from the Minister the determination was amended.

It would be idle to suppose that all members of Parliament read every order that is published in the Gazette, but there are some persons in the community directly affected by certain legislation who could be expected to look for such orders. At least we have the opportunity of knowing what determinations have been made by the Minister under the National Health Act and under the Therapeutic Goods Act. We do not have this opportunity under the Tuberculosis Act, and consequently, for the space of some 15 years, thousands of Aborigines were deprived of the allowances which other tuberculosis sufferers in Australia had been receiving. I therefore applaud the express provision in this Bill for publication in the Gazette of orders made by the Minister.

Clauses agreed to.

Clauses 19 to 22 - by leave - taken together.


.- These clauses appear in Part III of the Bill which is headed “ Goods to Conform to Standards “. Clause 19 refers to imports and provides that goods become prohibited imports if specific standards regarding therapeutic labelling and packaging are not met. The import heading is an important one, and there are two other headings. Together these three headings throw into sharp relief the extent of the coverage of therapeutics under this Bill. After the section covering imports we come to clause 20 which deals with interstate trade as it affects therapeutic goods. This clause makes it an offence to suffer or permit goods not conforming to specific standards to become the subject of interstate trade. I wonder whether this has any retrospective effect. The Minister for Health (Dr. Forbes) might be good enough to have a look at that question since there are already many substances in circulation which could well be given a close examination such as is envisaged in this legislation.

Clause 21 deals with pharmaceutical benefits. It is an offence if persons supply therapeutic goods as pharmaceutical benefits unless those goods conform to the standards laid down. Clause 22 concerns the supply to the Commonwealth or to an authority of the Commonwealth or of a Territory of goods set out in three categories. So we can see thrown into sharp relief the classes of substances with which the Bill deals. These are substances that are imported, substances that are the subject of interstate trade, substances that are pharmaceutical benefits and substances that are supplied to the Commonwealth or an authority of the Commonwealth or of a Territory. These provisions throw into sharp relief not only what the Bill covers but also what it does not cover.

I wish to take this opportuntiy to clarify a point that was raised only a short time ago. The Minister himself admitted in his second reading speech that this measure is subject to limitations, and his observations have an important bearing on the clauses that we are now considering. He said -

Legislation concerned with the local manufacture, intrastate supply and consumption of these items is the responsibility of State governments.

Similarly, the Commonwealth will not enter into the general control of family remedies, including the bulk of proprietary lines.

These admissions have caused the Opposition a great deal of concern. I still hope that the Minister will be good enough to take up the matters on which he has re ceived representations this afternoon. I turn now to the question of penalties. The penalty of a fine not exceeding $200 or imprisonment for a term not exceeding six months provided for in clause 25 seems to be infinitesimal compared to the seriousness of potential offences. I suppose a fine would be the more likely punishment in most instances. A fine of $200 imposed on a great manufacturing concern which breaches the requirements of this measure and which as a result of the breach could import therapeutic substances of doubtful or dubious quality seems inappropriate.

Clause 19 provides that goods that do not comply with certain standards are prohibited imports for the purposes of the Customs Act 1901-1966. I understand that, in effect, the Collector of Customs in the relevant State becomes responsible for the implementation of the provisions of this Bill relating to imports. I am unable at the moment to pinpoint the provision that provides for this, but it is unquestionable that the Collector of Customs takes over. What I want to ascertain from the Minister is precisely how the Collector comes to be involved when goods from another country arrive at the port of entry into Australia. Will the Commonwealth Department of Health have been advised of the intention of a manufacturer or distributor to bring the goods into Australia? The Collector of Customs will be required to prohibit their entry if they have not complied with the specific standards laid down with respect to therapeutic content, quality, packaging or labelling. It is unlikely that he will be equipped with the necessary knowhow to determine these matters and I would like to know how he can give effect to the very important provisions of the measure in respect of them.

Clauses agreed to.

Clause 23 agreed to.

Remainder of Bill - by leave - taken as a whole.


Mr. Deputy Chairman, clause 30 provides power to make regulations -

  1. for making provision for or in relation to -
  2. the establishment of committees to advise the Minister on matters relating to the importation into Australia of therapeutic substances and on such other matters as are prescribed, and the functions and powers of those committees; and

    1. the payment of remuneration and allowances to members of committees established un der the regulations; and
    2. for prescribing penalties not exceeding a fine of Two hundred dollars or imprisonment for six months for offences against the regulations.

The operation of this measure will be watched with great interest not only by the Parliament but also by members of the pharmaceutical industry and many members of the community at large who have been concerned about the weaknesses of the existing legislation. As all honorable members appreciate, we receive annually from the Director-General of Health an impressive report. The Government now proposes the appointment of new advisory committees, the members of which will be remunerated at an unknown rate and will receive allowances at rates not yet revealed to us. I suggest that the annual report of the Director-General give an account of the activities of such committees. Among other things, too, we would like to know how many orders are issued by the Minister each year in each area of operations. The provision of this information either in the normal annual report or in a separate report would help us considerably in achieving our aim of contributing intelligently to future debates on the important subject of the therapeutic quality of medicines, drugs and other substances that affect the health and wellbeing of the people of Australia. I ask the Minister to be good enough to consider this proposal with respect to the annual report.


.- Mr. Deputy Chairman, I wish to ask the Minister: To what extent have the States passed or are they expected to pass legislation complementary to this Bill? Since the Therapeutic Substances Act of 1959 became law, I have not pursued the inquiries which I used to make on this subject by questions placed on the notice paper. I note, however, that up to that stage the need for complementary State legislation if the control of therapeutic substances for the benefit of all Australians was to be effective had been acknowledged for some years. The National Health and Medical Research Council, at its thirty-seventh session in May 1954, noted -

All States will require amendment of their respective Acts to provide powers for the licensing of manufacture of therapeutic substances as advocated by the Commonwealth. All members stated that their respective governments had agreed in principle to giving effect to the recommendations of the Commonwealth.

On 27th August 1958, the then Minister for Health answered a question by me on this subject in these terms -

To supplement Commonwealth powers under the Therapeutic Substances Act, amendment of the Food and Drug Acts in some States may be necessary to provide certain powers for the licensing of manufacture of therapeutic substances. The Commonwealth has been informed that the governments of the States concerned agreed in principle to providing these amendments where necessary.

You will notice, Sir, that the then Minister, in answer to my question, made practically the same statement as the National Health and Medical Research Council had made more than four years previously. As I have said, I have not pursued the subject since that time. One gets the impression that honorable members who ask questions on health matters are regarded as hypochondriacs. So, after a lapse of nearly eight years since the Minister made the statement I have quoted and a lapse of 12 years since the National Health and Medical Research Council made its recommendations,I would ask whether the States have passed laws within their powers to complement the Therapeutic Substances Act which this Bill is repealing. I hope that in asking the question I shall not be regarded as importunate or impatient. If the States have passed such laws, which States have passed them and when did they pass them? Further, does any State legislation complement the legislation which we are passing today? If so, in which States? Further, is it expected, and if so, when is it expected, that the remaining States will pass legislation complementary to this Bill?


.- I think clause 30, which refers to the establishment of committees, is simply a repetition of the provision in the existing Act. Under the Therapeutic Substance Regulations there is provision for the appointment of committees, so I assume that we will have merely a reprint of those Regulations to bring them into line with the new legislation. One of the committees referred to is the Therapeutic Substances Advisory Committee which, I take it, is the body which the Minister has said he will set up under this legislation and which will meet irregularly and have referred to it at some late date, after all the committees have been set up, various orders that have been made. Referring to this Committee the Regulations state -

The Committee shall inquire into and advise the Minister on any matter relating to the Act or these Regulations referred to the Committee by the Minister.

So it is not a very valuable committee when you come to think of it. Another committee is the Therapeutic Substances Standards Committee. This is an important Committee which sets standards. It consists of the Director-General of Health, the Director of the National Biological Standards Laboratory and the Commonwealth Analyst. So far, so good. They are the Government’s representatives. But also on the Committee are two persons each of whom is an expert in pharmacology, a legally qualified medical practitioner, and a person approved as a pharmaceutical chemist. I ask whether it would be desirable to include on the Committee one or two persons nominated by the National Council of Chemical and Pharmaceutical Industries. Perhaps the names of those representatives could be drawn from a panel supplied to the Minister. I submit that suggestion as one worthy of investigation.

The third committee is the Biological Products Standards Committee. Its functions are to inquire into and advise the Minister on the standards and matters relating to the standards of antibiotics and other things mentioned in the Regulations. The Committee consists of the DirectorGeneral of Health, the Director of the National Biological Standards Laboratory - so far, perfectly understandable - a person who is an expert in virology, one who is an expert in medical bacteriology, one who is an expert in veterinary bacteriology, one who is an expert in endocrinology and one who is an expert in epidemiology. That covers a wide field. I wonder, in view of the arguments that have been advanced in the debate, whether the Minister will consider including on one or more of the Committees one or two representatives of the

National Council of Chemical and Pharmaceutical Industries.

Minister for Health · Barker · LP

.- The Deputy Leader of the Opposition (Mr. Whitlam) asked about complementary State legislation. My advice is that as regards those substances which there is no power to control under the Act - that is, those substances which are the subject of intrastate trade - existing State legislation is regarded as satisfactory in practice. The Deputy Leader of the Opposition asked a lot of specific detailed questions. I will look at them in “Hansard” and provide him with detailed answers.

The honorable member for McMillan (Mr. Buchanan) referred to committees. Referring to the Therapeutic Substances Advisory Committee he surmised that the Therapeutic Substances Regulations would simply be re-enacted. This is not so. I have asked the industry to suggest to me for consideration means by which the Committee may be made more effective. I have specifically undertaken, for instance, that not only will matters referred to the Committee by the Minister be considered but also matters referred to it by people and groups represented on the Committee. Thehonorable member asked whether the industry could be represented on other committees. I answered that question in winding up the debate last night on the second reading. On a highly technical committee of the nature of these Committees nobody can be a representative of all sections of the industry because-

Mr Calwell:

– The Minister has his back to this side of the chamber. We cannot hear him over here.


– At least I am standing side on to both sides of the chamber. Quite often the Leader of the Opposition stands facing his colleagues as if wondering whether he will be stabbed in the back. My impression is that he feels he is less likely to be stabbed in the back from this side than from his own side. I was saying that it had been found that no one individual can give expert advice on all aspects of the industry, but above all it was found that the work of the Committees is such that they would be rendered ineffective by the presence of industry representatives because in order that they may do their work, it is necessary that the Committees have available to them the formulae and trade secrets of companies which might be competitors. What happened in practice was that those Committees whose membership included industry representatives did not meet at all. So it is felt impracticable and undesirable to have direct representatives of any body on these expert Committees.

Remainder of Bill agreed to.

Bill reported without amendment; report adopted.

Third Reading

Bill (on motion by Dr. Forbes) - by leave - read a third time.

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Security of Members’ Offices


– by leaveI left the House around midnight last night. When I went to my room on my return this morning at approximately 9.15 a.m., I at once noticed a number of newspapers attached to the Venetian blinds and windows. I asked members of the cleaning staff for an explanation. They told me that they had found my room locked this morning and upon entering it had seen letters and documents scattered around the room. The contents of the room had obviously been interfered with. I subsequently found that at least three files containing personal documents had been removed from the drawer of my desk. These files are important to me and to many of my constituents. Among material missing are submissions and papers belonging to people in my electorate. I immediately notified Mr. Speaker, who is taking appropriate action. It must be clear to all honorable members that this is a most serious matter. I appeal to the person or persons who removed these documents without my authority to return them to me. I also urge all honorable members to take heed of Mr. Speaker’s offer of 3rd May to obtain keys for their rooms and to keep them locked for as much time as is possible.

Leader of the Opposition · Melbourne

– by leave - This is a very serious allegation. The honorable member for Dawson (Dr. Patterson) has been subjected to improper treatment. I would like you, Mr. Speaker, to intervene in this matter. This has happened twice now in a fortnight to Opposition members. It has not happened to any honorable members on the Government side of the chamber, but it could happen to them. It has happened in the past. When I was a member of a Labour Government, the Minister for Post-war Reconstruction, the Hon. John Dedman, found that his files were missing. That is a very sad story. There are people around this place who seemingly are determined to raid members’ rooms for their own purposes, and I do not know how we can stop them. I do not know what you can do, Sir. It is of no use appealing to the better instincts of these people, because they obviously have nefarious intent in stealing the personal property of honorable members. They have done this to the honorable member for Dawson. He has told me what is missing from his files. I know what happened to the honorable member for Macquarie (Mr. Luchetti). It is all right to ask that some action be taken, but the action will have to be more drastic in the future than it has been to date. I hope the security police or other people will find some way of stopping this activity. We do not know who is doing it. We may have suspicions, but I do not think anyone on this side of the House would think that any employee of the Parliament or any responsible officer of the Parliament would do anything of this nature. So I appeal to you, Sir, to do what you can to help us on the Opposition side.

Mr SPEAKER (Hon Sir John McLeay:

– Inquiries have already been set in train and when we are able to arrive at a decision we will report it to the House. As far as I am concerned, I view this matter most seriously, because it implicates many innocent people.

page 1556


Bill returned from the Senate with amendments.

page 1556


Debate resumed from 28th April (vide page 1314), on motion by Mr. Howson -

That the Bill be now read a second time.

Melbourne Ports

– As the Minister for Air (Mr. Howson) said when he introduced the Bill, it really does not amend the Income Tax (International Agreements) Act in substance; it is a piece of legislation consequent upon the change to decimal currency. All it does is to insert “ dollars “ where “ pounds “ appears now. This is a machinery measure only and therefore we do not intend to debate it. If the Bill had amended the agreements, we would have debated it at greater length, but because of its limited scope and particular purpose we offer no objection to it.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr. Howson) read a third time.

page 1557


Second Reading

Debate resumed from 28th April (vide page 1314), on motion by Mr. Howson - That the Bill be now read a second time.

Melbourne Ports

.- The Bill makes fairly minor amendments to the operations of sales tax provisions. The memorandum circulated by the Minister for Air (Mr. Howson), who assists the Treasurer (Mr. McMahon), sets out the purposes of the Bill. The first purpose is to give effect to Australia’s obligations under the New Zealand-Australia Free Trade Agreement. Goods that enter Australia under the Agreement will not be prejudiced when they arrive here by the imposition of sales tax at a rate different from that applying to similar goods produced in Australia. It seems logical to make this provision.

The Bill also grants to United Kingdom servicemen stationed in Australia the concessions relating to the purchase of Australian-made motor vehicles which are already allowed to United States servicemen in pursuance of the Status of Forces Agreement. Again, this seems to be a consistent enough course to follow. Certain concessions have been available to United States servicemen, and it seems equitable and logical to grant the same concessions to United Kingdom servicemen.

The third matter arises from certain new technical arrangements that are taking place in the development of what was formerly known as town gas in the United Kingdom and coal gas in Australia. The amendment ensures that domestic gas supplied by public utilities will remain free of sales tax notwithstanding technological changes that have taken place in recent years. It seems to be that in essence anything that is sold is subject to sales tax unless it is specifically exempted. Previously coal was the essential raw material from which domestic gas was made and gas made from coal has always been exempted. The description of the exemption is regarded as being too narrow to encompass certain new forms of gas that may be developed in the near future. Already, I think, much of the coal gas used is blended with oil gas and we have, of course, the great new possibilities in natural gas. It might be fascinating to go into the implications of this, but it is scarcely in my province to do so in debating this Bill.

The fourth matter which the Bill proposes is to remove doubts regarding the scope of two minor amendments to the Act effected in 1965 and make a number of drafting adjustments which are needed in consequence of other matters which are referred to in the Act. This also seems to be of a technical nature and the Opposition does not intend to oppose it. We welcome the fact that exemptions from sales tax are to be extended by the measure. I should like, however, to take the opportunity to make one or two observations about the operation of sales tax in Australia and to try to urge upon the Government that it is about time that the whole impact of sales tax was reconsidered. I know that this is a matter for a Government policy decision, but I want to point out what the Opposition regards as a number of inequities in the structure of sales tax in Australia.

In the 44th report of the Commissioner of Taxation, the section dealing with taxation statistics contains a certain amount of material on the collection of sales tax in Australia. The latest figures given in that document relate to the 12 months ended 30th June 1964. They show that in that year the Commissioner of Taxation collected in the form of sales tax £162.553,000, or about $325 million. I think the Budget estimate is that the amount to be derived from sales tax this year will be £397 million. So honorable members will see that this tax is one of some significance. The interesting thing, when you look at these statistics, is that sales tax operates on a relatively small amount of the aggregate of transactions in the community. At page 148 of his report the Commissioner of Taxation gives some details of the sales values of taxable and exempt goods included in returns. These returns are lodged monthly. They show that for the 12 months ended 30th June 1964 £4,128,415,000 worth of goods were sold but that the taxable sales amounted to only £1,202,838,000. So sales tax has an impact on only approximately one quarter of the sales that are made by the community. Quite a large body of goods are exempted. Most clothing, and now most foodstuffs, are exempted, and these represent considerable items in consumption expenditure. 1 wish now to look at the various categories of goods on which sales tax operates. It operates as a percentage of the sales value of the goods. There is one category of goods bearing tax at 2i per cent. The total value of sales in that category amounted to £233,653,000. A tax of 2i per cent., or one fortieth of the sales value, would have yielded approximately £6 million for the year ended June 1964. The next category bears tax at 12± per cent., or one eighth of the value of sales. The value of sales in that category amounted to £617,549,000, so that the tax collected on that body of sales would have been about £77 million. It includes such items as detergents and cleansers, which I want to say something about in a moment or two. Then we have the category which bears tax at the rate of 22i per cent. This includes such items as motor cars. The sales value of goods in that’ category amounted to £244,595,000 in the year ended June 1964. The amount of tax that would have been collected in that category would have been in the region of £55 million. There is a further category of goods which attracted tax at the rate of 25 per cent. That in the main is the maximum tax that operates. The turnover of goods in that category was £106,294,000 so that the amount of tax collected would have been approximately £27 million. That makes a total collected in the period of about £165 million or $330 million.

The Labour Party holds the view that sales tax is an inequitable form of taxation and that it ought progressively to be eliminated. It may be a bit difficult to encompass that sort of revolution in a short span of time. As I have indicated, according to the current Budget it is aimed to collect an amount near enough to $400 million or £200 million in sales tax this year. It would present some difficulty to the taxation structure of Australia if the same agregate of taxes had to be collected and the Government were to abolish sales tax accounting lor $400 million. The Government would face the problem of how to impose the additional taxes to compensate for the loss of sales tax. I do not want to go too deeply into this at the moment. I merely want to indicate what the view of the Opposition is on this matter and suggest that it is about time that the Government stated its view on sales tax as a permanent feature of our tax structure.

I have no doubt that it can be contended that certain items are luxuries and ought to be subject to taxation. Sales tax is an easy way in which to raise taxes. All I would suggest is that that is scarcely the fact, so far as the operation of sales tax in Australia is concerned, that all the items taxed are luxuries. I doubt whether anybody would seriously suggest that a motor car or truck, or a motor vehicle of any sort, can be regarded as a luxury in Australia. We have one of the highest incidences of motor vehicle ownership of any country with the possible exceptions of the United States of America and Canada. The motor car is almost an essential to every family in Australia and it seems ironical - in fact it seems unjust, rather than ironical - that a tax should be imposed upon it at all. This is no doubt an easy method of raising money. The motor car is in the 22i per cent, category and, as I have already indicated, two years ago £55 million, or $110 million, was collected in taxes imposed on motor vehicles. Whether that is regarded as a sensible way of raising such a sum of revenue is, in my view, at least arguable.

But there are some items where it does seem rather absurd that tax should be imposed at all. The examples I could cite at least indicate some of the inequities. The inequity in a sales tax is that one pays the same amount of tax irrespective of one’s income. The amount of tax is determined by one’s use or consumption of a particular article rather than by the total level of one’s expenditure or total income. It is regarded as equitable that those who have higher incomes have a better capacity to pay tax than those with lower incomes, but the sales tax runs contrary to that principle because the tax is levied as the articles are consumed.

All honorable members were circulated recently with a pamphlet bearing the rather intriguing title “ Why tax cleanliness? “. This document sets out the case of a group known as the Australian Soap and Allied Products Manufacturers for the abolition of sales tax on soaps and tooth paste. They say -

The average household in Australia spends about $1.60 a week on soaps, dentrifices-

I would be inclined to call it tooth paste, but apparently dentifrice is the term - and detergents. The sales tax on these, which is 12i per cent, represents about 20c weekly, or about $10.40 a year.

I ask the honorable members to bear that in mind. This is a tax which falls on the average family in Australia at the rate of 20c or 2s. a week, aggregating SI 0.40 a year. In one sense it almost takes away 40 per cent, of the benefit which child endowment gives in respect of the first child in a family. We have the principle of child endowment operating one way and the principle of sales tax operating with the reverse sort of equity. The Government gives with one hand but takes away with the other. It seems to me that there is not really a very satisfactory case for having a sales tax on a product such as this. It may well be that there are certain luxury types of soap used by some people in some circumstances, but by and large the bathroom cake of soap or the tube of toothpaste is essentially an item used by any family. The unfair part of the sales tax is that the average income family with two or three children pays an inequitable amount in terms of its overall economic circumstance while this method of tax is used to make up the revenue. No doubt other examples can be brought to bear. One or two of my colleagues will this even- ing cite examples which they regard as anomalies in the operation of the sales tax.

We suggest that it is time that the whole structure of taxation in Australia was reviewed because, over a long period of time, inequities and anomalies have crept into the structure. It is about time that many of them were corrected. I admit that that is a question of policy for governments and that different governments have different policies. The document which was circulated to honorable members goes on to point to the rather odd thing that although toothpaste is taxed, there is no tax on the toothbrush with which the toothpaste is applied. If a person prefers to use a mouthwash instead of toothpaste he pays no tax. They point out that clothing is tax free but that the soap to wash the clothing is taxable. Brooms, mops, dusters and buckets attract only 2i per cent, sales tax - 10 per cent, less than is paid on the soap and detergent that is put in the bucket. Sales tax on steel wool pads is only 2i per cent. Again they are used for cleaning, but the cleaning agent with which they are used is subject to the higher rate of tax. There is no sales tax on dog soap yet soap for human usage is taxed. Whether that is a perversion of humanitarianism I do not know. We do not tax soap for the dog, man’s friend, but we tax man for the soap that he uses. One can derive a certain amount of humour from these examples, and the organisation must be commended for the way in which it has presented its case in this matter.

About 12 or 18 months ago a similar case was presented on behalf of the bakers and biscuit makers who were successful in prevailing on the Government to remove most of the tax which had applied to their products. The Government is now at the time of considering its Budget for the financial year 1966-67. I hope that in the discussions that are now taking place the operation of sales tax and its incidence on particular items will be considered and that the Government will walk along the path that a Labour government would choose so that this tax can be progressively done away with all together. There are certain obvious items where the Government could begin. I hope that the Minister will be able to convince his colleagues of the inequity of the tax in this direction and that he may have some sway in the Cabinet in removing it from items such as those to which I have referred. Some of my colleagues have other points that they wish to raise. The Bill is so drawn with the title Sales Tax (Exemptions and Classifications) Bill that they will be able to tread fairly widely in the debate in this instance. Many of them have examples that have come to their personal knowledge. I trust that the Minister will take note of the representations they make.


.- I do not intend to canvass the many different items contained in the provisions of the Bill relating to sales tax exemptions and classifications. The measure deals with some commodities which come under the New Zealand-Australia Free Trade Agreement, including fruit juices, lt deals also with gas, which is not necessarily a coal derivative, used for normal reticulation. As we all know, these days coal gas for normal reticulation is either propane or butane which has been re-formed to the same molecular structure as the old coal gas. However, that is by the way. Other parts of the Bill relate to motor cars which may be of significance to some people. For my part, in speaking to this Bill, I wish once again to bring to the notice of the House and the Government, as many honorable members have done in the past since I have been here and did before I came here, the discriminating effects of sales tax on people living in places away from the place of production or the port of entry in the case of manufactured or imported goods.

I, like the honorable member for Melbourne Ports (Mr. Crean), have never regarded sales tax as a fair method of taxation. I do not think many people do, because it applies with equal force on everyone in the country, irrespective of income. The truth of this is so clear that I do not think it needs elaboration. If anyone does not admit this, he would be very hard to convince by any argument. The different rates of tax charged on different articles are also open to many types of manipulation by retailers and manufacturers. For instance, if an article of cut crystal is described in the invoice in such a way that it can be deemed ro be an article for use on a dining table or on a kitchen table, it will attract the minimum rate of 2i per cent.; but, if this same article is sold under a name which indicates that it is to be used for decorative purposes, it attracts the maximum rate of sales tax, which, I think, is now 16* per cent. There are many other examples which could be mentioned in connection with most other phases of retail trading where this anomaly can and does arise daily. I mention these points merely to show that sales tax is not the most desirable form of taxation. The sooner it is abolished and the revenue derived from it gathered in a direct and fairer manner, such as by way of income tax, the better it will be.

I wish also to raise a matter which has been mentioned by the honorable member for Leichhardt (Mr. Fulton), the late honorable member for Dawson, Mr Shaw, and myself in this House during the last few months. It is the charging of one rate of sales tax on heaters, which are used mainly in the southern States, and the imposition of a much higher rate on air conditioning appliances, which are to tropical Australia the equivalent of what heaters are to the south. To me, living as I do for part of the year in the south and part of the year in the north, it seems incomprehensible that any government can legitimately argue that an appliance which will keep one cool should attract more sales tax than one which keeps one warm. This differential in rate of tax only serves to typify the remote, disinterested attitude of departmental officials stationed far from the scene of action, as it were, and it is this laissez faire approach and indifference which finally sets people not against the officials concerned with formulating the one-sided regulations, but against this Government.

Air conditioning units are still regarded as luxuries in North Queensland mainly because of their high cost. An average air conditioning unit costs between $400 and $500, and it will cool only one room. I think that about 12i per cent, of this cost is represented by sales tax. There is a tremendous unused capacity in the factories which manufacture this sort of equipment. I think we are all aware of the heavy stocks of refrigerators, washing machines and so on which are now being held by retail stores - stocks which have built up because the market has become saturated. Indeed, the production side of the industry is on the verge of a crisis because of the saturated state of the market. To me, it is nothing short of amazing that these appliances are still being sold. Of course, if the manufacturers ceased or curtailed production, this would be detrimental to the employees in this industry as well as in the steel, paint and other allied industries. My point is that if air conditioners were exempt from sales tax this would go a long way towards increasing the demand for them, and there is certainly a huge unsatisfied market in thehot areas of Australia for these appliances.

I ask for leave to continue my remarks at a later hour.

Leave granted; debate adjourned.

Sitting suspended from 5.59 to 8 p.m.

page 1561


Ministerial Statement

Prime Minister · Higgins · LP

. -by leave - Southern Asia today demands and receives world wide attention and concern. In this ancient complex, densely-populated region the habits and practices of centuries are bending, breaking or yielding under the impact of twentieth century technology and new concepts are challenging the old. The revolution takes many forms, most of them unsettling, some of them violent and dangerous. Conflicting ideologies compete there for the hearts and minds of hundreds of millions of human beings and these millions may have doubled by the end of this century. The Communist power seekers in Asia are trying to make this revolution the vehicle of disruption and instability enabling them to overturn established authority and shackle whole communities to their philosophy. They exploit grievances, aggravate divisive factors, undermine stability in order to bring about political and administrative chaos. Behind the Communists in South East Asia, wherever their structures are to be found, is the driving force of China.

China, with a population upwards of 700 million, is governed by a Communist regime implacably committed to its goal of a Communist-dominated world. The Chinese

Communists scornfully reject the concept of peaceful co-existence which has brought some respite in the cold war and an easing of tensions in Europe. Subversion and guerrilla warfare, as spelled out in the writings of Mao Tse-tung, have been directed with planned thoroughness to the villages and paddy fields of South East Asia. These tactics have been eagerly adopted and ruthlessly waged in South Vietnam by General Giap, the leading military theoretician of North Vietnam, and by the Vietcong, the self-styled Liberation Front, who have learned their lessons well from him.

South East Asia has become a critical battleground for free peoples everywhere. South Vietnam has become a testing point of the determination to prevent Communist aggression and check its cancerous spread.

Australia is standing today with the people of South Vietnam, our close ally the United States of America, and the forces of other friendly countries in resisting the Communist threat. We see more than the need merely to preserve the independence and integrity of South Vietnam, important though that task may be of itself. To us, the threat is, as I have said, to free peoples everywhere. If South East Asia is to fall under Communist control we face a future in which the security of Australia is in jeopardy.

While at this time South Vietnam is the most heavily embattled, other countries of the area are alert to the threat also. It is noteworthy that Korea, which so recently was itself a battleground of Communist aggression, has supplied more military forces, in proportion to its population, to aid South Vietnam than any other country. Three successive Presidents of the United States have clearly recognised the threat, leading to the provision by that country of a massive and decisive contribution of forces and material. Australia, in company with the free countries of South East Asia, has cause for gratitude for this contribution made to security in South East Asia by American firmness and military strength. We have admired the resolution and strength of purpose that President Johnson has brought to this issue.

The Communists have deliberately chosen to carry out aggression by covert means on the basis of long and careful underground preparation extending over more than a decade, in the training for guerrilla warfare, the establishment of secret bases and stockpiles for a protracted campaign, the securing of routes of infiltration, the introduction of specially trained cadres, the application of methods of indoctrination and terrorism against defenceless village people. These are all elements in the infra-structure. This is the pattern of Communist aggression in the conditions of South East Asia. By these means, the aggressor seeks to escape the full censure of the free world which would flow from an open declaration of war in the sense that we have known it in the past. The enemy does not openly deploy his forces in the manner of conventional warfare where their aggressive actions are readily identifiable internationally. Even today, when North Vietnam has at least nine regular regiments of the P.A.V.N. operating in South Vietnam, they will make no admission of this. Nor, of course, do they admit the earlier build up of Vietcong guerrilla forces and infiltration to which I have just referred. This is a war largely of attrition, in which there are no front lines and hostile activity is planned to occur, and does occur, in many widely separated places simultaneously.

I have said that Australia stands militarily with South Vietnam, the United States and her allies, but it is also an important part or our thinking that we are able to play a useful part in the building of a better world order in South East Asia. Wherever we have been involved in a military role in this area over the post-war years, our servicemen, acting along the lines their Government has approved, have made a positive contribution to the wellbeing of the people of the country in which they found themselves. I was glad to find that programmes of military civic action - as they aTe called - and rural rehabilitation and development are now accepted as an important part of the tasks of the military forces of all the allied participants. There is, in addition, an extensive programme of civilian cadre training for service in the villages, which I shall refer to again later. Through the Colombo Plan, and in other ways, Australia has made a useful contribution by civilians also.

It is against all this background that my recent visit to several of the countries of South East Asia should be viewed. In each of these countries Australia has serving men and women joining with others in holding in check the Communist threat. The existence of that threat is common to all of these countries. It has varied in degree and as to point of time. We played a part lor many years, with Britain and New Zealand, in stamping out Communist terrorist activity in what was then Malaya. We sent military forces to resist Communist aggression in Korea. We have helped in Singapore and Borneo. We have given assistance in various forms to Thailand, and now we are to increase earlier military aid in South Vietnam by providing a task force.

On taking office, I decided to seize the first opportunity I could take to pay a visit to our Australian troops at their various stations. I felt it desirable to have direct personal knowledge of the conditions of their service, and have them feel from my presence with them that they occupy a high place in the regard of their Government. I wanted also to have in my mind that awareness which only personal contact can provide of the nature of our various establishments, their environment and setting. I wanted to make the dots on the map come alive as known places with known people.

A strong team of advisers, who were also to gain much benefit and information as observers, came with me. These advisers included the Chief of the General Staff, Sir John Wilton; the Deputy Secretary of the Prime Minister’s Department, Mr. Lawler; a specialist on South East Asian affairs in the Department of External Affairs, Mr. Gordon Jockel; and Mr. Clugston, of the Department of Defence. AH those gentlemen, together with the other gentlemen who were with us, were of great assistance. I acknowledge with appreciation the help that they gave me. Facilities were provided, at the expense of their employers, for members of the Press who desired to accompany the party, and about 20 newsmen, photographers and television cameramen, most of them of senior status in their organisations, accompanied us. I express my appreciation to them for what appeared to me to be a consistently high standard of reporting.

In the course of the tour I visited Vietnam, Thailand, Malaysia, including both West Malaysia and Sarawak, and Singapore. I shall say something about each of these countries.

There were advantages in being able to travel at short intervals between the four countries visited and inspect, over the space of 10 days, activities in more than 20 localities. A head of government, in addition to receiving the courtesies and hospitality considered appropriate to his office, is given means of speedy transport and communication. He is supplied with the most frankly expressed and authoritative information. It is possible in this way to gain in a short time a quick insight into the manner in which each country is tackling its national issues, and, at the same time, have a more vivid awareness of the proximity and significance that one country in the region bears to the other. A valuable gain from my journey has been the development of a more intimate relationship with leaders and senior Ministers in all the countries visited. This facilitates future contact and discussion on matters of mutual interest.

Vietnam, of course, in current circumstances, was the country of most immediate interest to us. It was of great value to confer with the Chief of State, General Thieu, the Prime Minister, Air Vice-Marshal Ky, the Foreign Minister, Dr. Do, and other members of the Government of the Republic of Vietnam. Theirs is commonly thought of as a military Government, and in a situation of such intensive military activity, under constant threat of Communist attack, one would expect the Government to possess, as it does, a strongly military flavour and influence. There is, however, a greater civilian composition in the senior levels of government than is generally known. The Directory comprises the military leaders and corps commanders, but associated with this is a Ministry of twenty members of whom five are doctors, five are lawyers, four are military officers, using “ military “ to embrace the three services - the Prime Minister, of course being a senior air force officer - three are engineers, two are economists and one is a trade union official. Some of them have been actively in the fight for national freedom throughout their adult life. Our talks with them were frank and comprehensive. They are determined to see the struggle through until freedom and independence have been secured.

The day to day reporting of events as they occur in various parts of Vietnam can obscure the extent to which economic and community life there have adapted themselves to military operations persisting over many years. Take the situation in Saigon. It is true that terrorist incidents happen there with disturbing frequency. Several incidents occurred during the period of my visit. Sometimes there is loss of life, injury and damage from Vietcong sneak raids. But it must be realised that Saigon is a large city of about two million people. Life goes on with most people unaware at the time that another hostile incident has occurred. The shops are busy; there is plenty of traffic about; people go about their occasions seemingly undeterred.

The scale of United States assistance pouring into Vietnam is enormous. It has to be seen to be believed. Saigon, I was told, has become the busiest airport in the world. The helicopters in service are to be numbered in thousands. They have proved of immense value for rapid mobility of troops into action, and the speed with which they rescue and transport disabled soldiers for medical treatment has cut in half the fatality rate from injuries as compared with that of Korea and the Second World War. The choppers, as they are familiarly called, are just about the most popular pieces of equipment in the country.

My talks in Saigon and at Bien Hoa included detailed briefings from military and diplomatic representatives of the Government of Vietnam, of the United States including the Ambassador, Mr. Cabot Lodge, and General Westmoreland and, of course, our own Australian advisers. As a result of the information gained from them, supplemented by what one could see of the immensity of the scale of provision of military equipment and logistic requirements, I am confident that the Vietcong cannot win. The military position in South Vietnam has now been secured. The Vietcong have suffered heavy losses and their casualties have been increasing.

Sneak raids by small parties, such as that made recently on Saigon Airport, can still be carried out from time to time by the Vietcong. These raids are part of the military and political tactics of guerrilla warfare. They make dramatic news, but they do not weaken the hold of the South Vietnamese Government on the areas under its control. On the other hand, mobile forces are now available to conduct operations against enemy forces when they are located, and to penetrate into territory previously considered Vietcong strongholds.

There has been a noticeable weakening in the morale of many of the Vietcong. The sustained bombing attacks on supplies and Vietcong held positions and the speed and mobility of helicopter borne troops are having punishing effect. The Vietcong are suffering from lack of medical supplies and treatment. The number of defectors has increased substantially and significantly in recent months, both as a result of military and psychological operations. The Vietcong are now drawing on much less experienced troops, and the regular North Vietnamese regiments have proved themselves less adapted to the guerrilla type of warfare in what is for them unfamiliar terrain. They prefer to fight in formed units. This makes them more liable to detection and air attack. The heavier equipment to which they are accustomed creates a transportation problem for them. More intelligence information is flowing in, while detection methods have improved. Allied forces have been able to strike in critical areas before the enemy was able to move. In a country of such difficult terrain, and with the tactics and strategy employed by the enemy it may be a long time before the Communist threat can be subdued. But, increasingly, areas will be cleared of Vietcong and a more peaceful pattern of life restored. It must be remembered that while the Vietcong control large tracts of country, they hold none of the major centres - they do not command any one of the 43 provincial capitals.

The protection, rehabilitation, and development of additional areas brought under control is a formidable task and will take a long time. It involves the re-establishment of civil administration, police, civil protection units, and a variety of civil projects to provide medical aid, education, communications and other public utilties. Here again the United States is providing massive support. Military civic action by combat troops will, however, be the initial step towards this ultimate objective.

The Government of Vietnam maintains establishments for the intensive training of cadres, each 59 in number, to be located in the villages, specially trained to help in defence against Vietcong attack and to assist the villagers to build a better life for themselves. Those to be trained are nominated by the village chiefs and become equipped to carry out tasks of medical service, education, construction of homes and school buildings; they learn improved agricultural methods and other activities of benefit to the village dweller. Since March 1964 some 20,000 trainees have already been equipped for service along these lines.

The Australian troops in Vietnam and elsewhere, as I discovered, also regard what they aptly refer to as “ hearts and minds “ as a necessary part of their activities. They have become well and affectionately known in the villages and the areas they serve. They have helped in this way to improve morale and build friendship for Australia. The warmth of welcome and cordial hospitality shown to us by members of the Government were evidence of the appreciation which they obviously very sincerely feel for Australia’s military participation and material help. A bright prospect in the Vietnam situation is the application by all the allied participants to constructive programmes for improvements of standards in the towns and villages.

All those I met in Vietnam were concerned about the political situation and discussed it frankly. In the middle of the pressures and strains of the war, the country is seeking to establish a new system of government. This is a difficult enough process at any time as Australians know from their own history. Constitutionmaking in any circumstances brings to the forefront the competition among the various political and regional interests. In Vietnam, the process is made more complex by two particular circumstances. In the first place, the country has not been kindly dealt with by history for easy political evolution. Over the centuries, religious, regional and cultural influences have produced a variety of groups and sects and local loyalties. The years of French colonialism and Japanese occupation were followed by a systematic Communist programme to destroy the growth of institutions and the structure of government. In the second place, the wartime situation requires a strong executive government.

Rapid and effective action is needed for the conduct of the fighting, for pacification and for vigorous programmes of civic action. Finding the right constitutional expression of the relationship between the military and civilian elements is a complex matter not easily to be resolved. But an awareness of the difficulties should enable us to maintain a steady view, seeing events as they occur in a realistic perspective. As they are checked in the military sphere in Vietnam - and they are being checked - the Communists are likely to intensify their efforts in the political sphere, not only in seeking to promote distractions in Vietnam but in wider political offensives through their agents of influence in the other free countries of the region.

The people of Vietnam have great toughness, vitality and pride. They are neither apathetic nor dispirited. There is a general will to resist Communist aggression, and to prevent Communist domination. The recent political disturbances appear to have had only minor adverse effect on the military situation. The judgment is that the Vietnamese armed forces with the United States and other allies can resist the aggression and ensure security while South Vietnam develops the basis of an enduring stability. 1 have spoken at some length about the situation in Vietnam because of its importance. But 1 wish to refer also to the general discussions which I had in the other countries I visited, which touched upon regional matters of common concern. Thailand is a country of considerable experience and influence in the South East Asian region. It well exemplifies the rapid economic and social progress which can be made with well directed aid from friendly countries. It is able to play now, and I believe increasingly in the future, a significant part in promoting the security and stability of the region. The fact that I was able to return, so soon after the event, the visit made to Australia by the Prime Minister, Thanom Kittikachorn, enabled us to establish an even warmer and closer relationship which will, I believe, be of enduring benefit to our two countries. I was taken by helicopter on an hour’s journey from Bangkok over an interesting stretch of the Thai countryside to an audience with King Bhumiphon at his summer palace at Hua Hin. The King recalled with appreciation the visit of himself and the Queen to Australia. He asked me to convey his greetings to the Australian people.

In Kuala Lumpur, I was able to review with the Deputy Prime Minister, Tun Razak, and some of his colleagues, the latest thinking of the Malaysian Government on the confrontation issue, the expansion of the Malaysian defence effort and problems arising for both those countries from the withdrawal by Singapore from Malaysia.

In Singapore, in addition to having useful talks with the Deputy Prime Minister, Dr. Toh, and other senior Ministers, I paid a visit to the Singapore naval base and had a briefing there from senior officers and visited those Australian Navy units then at the base. Arrangements were made for me to view the whole area by helicopter, and this was certainly a very practical descriptive way of studying this vast establishment. Australia has long held the view that the continued maintenance of the base by British forces is an important contribution to the security and stability of the whole region of southern Asia. My discussions with representatives of the Malaysian and Singapore Governments confirmed that they too share this view. The base has the additional value of representing a considerable factor in the economy of Singapore. It directly employs more than 30,000 people and, through its requirements, gives indirect employment to many tens of thousands of Singapore citizens. Although I have not previously referred to it specifically in this statement, we fully and gratefully acknowledge the major support which the United Kingdom provides by means of its forces which are spread through the Singapore-Malaysian area - including Borneo - and which collaborate with other Commonwealth forces.

Each of the Governments we met took me frankly into their thinking on their basic problems and national issues. They gave me accounts, in particular, of their plans for economic development and social progress, and of the thinking underlying these plans. I came away with the impression of realistic, modern-minded governments and developing administrative structures.

Purposeful efforts are being made to put national resources into rural development.

All are agreed that the benefits of modern life must be progressively spread into the villages and remote rural areas. The central Governments are aware that the resources and facilities at their disposal must be used to break down the traditional feeling of the small landholders that governments bring them no benefit. 1 have spoken of the prominence given to civic action programmes in Vietnam. In Thailand, mobile teams are being sent into the remote provinces to survey the problems and provide civic action there; national development programmes give a major place to agriculture and inland transportation. In Malaysia, the experiences of the emergency have been studied and incorporated into national planning. The new villages established during the resettlement programme of the emergency have become permanent communities. We were briefed on these matters in the National Operations Room, which is personally supervised by the Deputy Prime Minister. This centre aims at co-ordination and drive in carrying out the rural development programme. In Sarawak, the twin problems of providing security and development in rural areas are major priority tasks.

The Government of Singapore is energetically grappling with the problems of industrialisation and international trade in order to provide employment for its growing work force.

Australia is playing a part in assisting with these schemes of welfare and development. 1 was impressed by the work which the surgical team from the Alfred Hospital, Melbourne, is doing in the district hospital at Bien Hoa village. I also met members of the surgical team from St. Vincent’s Hospital, Melbourne, which is doing similar valuable work at Long Xuyen. In discussions with Government leaders, I was told of the value they attach to the contributions which our experts are making in various civil fields such as road and bridge building projects in provincial areas, and in attachments to institutions. During my visit to Kuching, the Sarawak association of former Colombo Plan students met me to express their appreciation of Australia’s help. They represented a numerous group of young men trained in various professions in Australian universities and other educational institutions.

The major intention prompting this tour, however, was to visit our forces serving in various parts of South East Asia. I have now seen at first hand the splendid job they are doing. I have had opportunities to meet informally with officers and men in their service positions and at their billets. In discussions with Government and military leaders in the various theatres, I have heard unstinted praise for the quality of our forces both as fighting men and as representatives of Australia in their contacts with local populations and in projects of civic action. This has been a heart warming experience. Australia can be very proud of the men and women of our armed forces throughout South East Asia. The great tradition of Australia’s fighting men is safe in their hands - with the Navy on patrol duties in Malaysian waters, with the Army in its border posts in Borneo, playing its part in the crucial fight against aggression in South Vietnam, or building airfields in Thailand and roads under the most difficult conditions of terrain and climate in Sabah and with the Air Force on the alert for air defence at Butterworth and Ubon, or providing vital air transport in South Vietnam. The Army cloth cap, battered and faded in service, is to be found worn in every conceivable variety of shaping, but with a jaunty and cheerful pride. These forces may not be large in numbers relative to the total forces engaged in these areas, but they are of the highest quality and they make a significant contribution to the allied effort. They have an effect and influence out of proportion to their actual numbers. I would like to include in this tribute the armed forces of New Zealand serving in the area. I visited the New Zealand battery alongside our battalion in its encampment at Bien Hoa, and this unit joined together with us on the morning of Anzac Day in the most moving commemoration of that anniversary that I have ever attended.

Our troops have shown themselves able to win the confidence and friendship of village peoples in the areas of operations; good relations have been developed with the local authorities and residents in base areas; and the Governments have made clear to us the value they place on the presence of our forces. Their initial stationing in these countries involved a degree of co-operation and mutuality of interest between us and the Governments concerned. Once established, the continuing presence of our forces has contributed appreciably to the further strengthening of the relationship. They have earned a high reputation for their conduct, their military capacity and their military civic action work. It was clear from what I was told in private discussion, and from what each Government said publicly, that there was much satisfaction in the presence of Australian troops as a direct commitment by Australia to South East Asian security.

I have spoken at some length about a number of aspects of my journey and its background. I have mentioned the Communist inspired instability and disruption in southern Asia, that South East Asia has become a critical battleground for free peoples everywhere, and that the prime manifestation of the struggle now finds itself in Vietnam. I have said something about the reasons for Australia’s participation with America and other allies in support of South Vietnamese forces in their defence of their national integrity. Because of their very considerable importance,I have referred also to various matters bearing on the social and economic development of Vietnam and other countries in the region. I have referred also to discussions with Government leaders in each of the countries, and I have spoken in the highest terms, as is their due, of our own forces in the area, of their quality, of their standing, of the work of military and civil significance which they do, and, I now add of their understanding of the role which they perform, and the powerful reasons for it.

I now conclude by saying again that the visit was for me, and I would hope for the Australian nation, a most valuable exercise. It has produced a sharpening of our consciousness of military and political situations which are constantly under our examination.I retain a vivid visual picture of many locations and establishments of continuing importance to us. The review has provided a new and rewarding occasion for an up to the minute exchange of views with other Governments. Naturally I cannot reveal the substance of the intimate discussions which took place with these Governments, but the results will be beneficial to our own future internal counsels. The journey brought closer personal relationships.I am glad to report that my visit was very much welcomed in each of the countries concerned. They, I believe, as well as we, felt that each derived value from it. Australia is known among the countries of the area as a good ally, and a reliable friend. We clearly have a not insignificant part to play in the future of a region undergoing a revolution of change - a revolution surely representing one of the historic movements in the story or mankind. I return with a firmly based confidence in the allied capacity to defeat aggression and establish conditions for peace and security. We must keep a clear and calm vision of what we are trying to achieve and a resolute will to do it. My Cabinet colleagues and I have long held the view that Asian countries are prepared to work closely with others in preserving security in the region and in establishing a structure of defence and effective power to deter future aggression. I return strengthened in that conviction. The principles of collective security that we have been following are soundly based. Our defence policies are the right policies for Australia at this time.

I present the following paper -

Prime Minister’s Visit to South East Asia - Ministerial Statement, 5th May 1966- and move -

That the House take note of the paper.

Debate (on motion by Mr. Calwell) adjourned.

page 1567


Second Reading

Debate resumed (vide page 1561).


.- Mr. Speaker, the principal Act that this Bill will amend is very unpopular with the the majority of Australians because of the rates of sales tax that it imposes. Anyone who becomes in any way excited at the idea that the amendments proposed in this measure will mean any real relief from sales tax will be very sadly disappointed, I am afraid. This Bill is not intended to provide any relief by alteration of the present rates of sales tax imposed on the Australian public, nor will it do so. Articles already subject to sales tax will remain subject to the same rates of tax when this measure has become law. It will not remove from the Second or the Third Schedules to the principal Act or from the general rate category any of the items at present included, which are taxed at the rate of 25 per cent., 2½ per cent. and 12½ per cent., respectively. These are the items with which most Australians are directly concerned, because they represent ordinary purchases. The explanatory memorandum circulated to honorable members with the Bill states that it is designed to -

  1. give effect to Australia’s obligations under the New Zealand-Australia Free Trade Agreement;
  2. grant to United Kingdom servicemen stationed in Australia the concessions relating to purchase of Australian-made motor vehicles which are already allowed to United States personnel in pursuance of the Status of Forces Agreement;
  3. ensure that gas supplied by public utilities will remain free of sales tax, notwithstanding technological changes that have taken place in recent years; and
  4. remove doubts regarding the scope of two minor amendments to the Act which were effected in 1965 and make a number of drafting adjustments which are needed in consequence of changes in other laws which are referred to in the Act.

The explanation makes it clear that the amendments to the legislation will bring no relief from the burden of existing taxes. But even so, we must support the Bill because it honours our agreements and undertakings with other countries. Notwithstanding whether we support or oppose those agreements and undertakings, once they are made we must honour them. Also, the Bill ensures that sales tax will not be applied to articles imported from New Zealand under the New Zealand-Australia Free Trade Agreement if similar articles produced in Australia are not subject to sales tax. While I sincerely hope that Australians will always buy Australian made goods whenever possible, I would never agree to an extension of sales tax to encourage the purchase of Australian made goods. Of course, we also agree that drafting adjustments should be made to the Bill to remove any doubts in relation to the Act.

But while we support the Bill for what it contains and does we nevertheless are very critical of it for what it does not contain and does not do. We regret that the Government has failed to seize the golden opportunity offered by this measure to remove or reduce substantially the sales tax on many of the items now listed in the First and Second Schedules to the Act and which, as I said earlier, are now widely used in everyday life. In answer to questions on taxation matters, we are invariably told by the Treasurer (Mr. McMahon) that they are receiving consideration or are under investigation and will be dealt with at the appropriate time. Unfortunately, the appropriate time never seems to arrive. Here the Government did have an opportunity to make a move, but apparently it was not prepared to do so. The Government’s inaction must be taken to mean that as far as it is concerned the reduction or removal of sales tax is of no great consequence.

Early in 1956, as honorable members will recall, the Government, for the alleged purpose of reducing consumption and increasing savings, introducedlegislation to increase substantially the sales tax on a number of items which it claimed were in the luxury class. The Government said at the time that the increases were of a temporary nature, designed to meet the special needs of certain peculiar circumstances of the country’s current economic position and would not be retained any longer than was absolutely necessary. Among the items which the Government said were in the luxury class, and the Consumption of which had to be reduced, were lipstick, face powder, baby powder, razor blades, shaving cream and many other necessary toilet items, such as soap and toothpaste. Unfortunately the temporary measure of 1956 has, by 1966, as far as this Government is concerned, become a permanent measure and the increased tax still applies to those so-called luxury items which in fact must be classed, if common sense is used, as items of absolute necessity in these modern times.

The imposition of a high rate of sales tax in 1956 was designed supposedly to reduce the consumption of particular articles. The tax would have that effect only among classes of people other than the wealthy. Today in our changing world I would not think that this tax does anything to reduce the consumption of these articles. Rather, it simply adds an unwarranted burden to the people who should not be obliged to carry such a burden. As I said earlier, most of the articles to which 1 have referred are not in the luxury class. I ask honorable members opposite whether they seriously suggest that ordinary everyday toilet requisites, particularly those used by women, should continue to be classed as unnecessary luxuries. Would anybody suggest that it is treating a baby in an extravagant and luxurious manner to dust its body with powder? Yet this item is subject to sales tax at the rate of 25 per cent. Would any honorable member opposite be courageous enough to deny his wife the use of lipstick and powder or the other things that are so dear to a womans’ heart?

Mr Cope:

– Some of them would.

Mr. COLLARD__ I do not think so. I do not think they would have the courage. But I do not think many honorable members opposite need courage in this matter because they can well afford to pay for these items, notwithstanding the sales tax on them. Today we encourage rather than discourage the use of these items which the Government in 1956 described as being in the luxury class. Today nobody attempts to restrict the sale of these items in order to increase savings. It would be a sorry day for us if our womenfolk were denied the use of cosmetics or were even restricted in their use, because these things are part of their normal lives. I do not suggest for a moment that our womenfolk have need of these things: they are beautiful in any event, but they are part of their normal lives.

I appreciate, as I am sure every honorable member does, that it is necessary to gather sufficient finance by way of taxation in order to run the country efficiently. It is also appreciated that our avenues for the gathering of taxes are to some extent restricted. But, like thousands of other Australians, I take strong exception to the methods of tax gathering used so extensively by this Government. I refer to indirect taxes. The raising of revenue by indirect taxation forces people on low incomes, who cannot afford these charges, to subscribe the same amount to the needs of the country as do people who enjoy higher incomes and who are better able to pay the taxes. I cannot see why the wife of a man earning £20 per week should not use the same amount of powder on her baby as the woman whose husband earns £100 a week. Yet the family on the lower income pays as much in sales tax on this article as does the family on the higher income. Such a method of tax gathering should be used only when absolutely necessary - perhaps in time of war or immediately after a war. It certainly should not be used now, when the Government is continually telling us how healthy the economy is and what a state of full employment we have. If these conditions exist, surely greater amounts of revenue should be collected by other taxation. Indirect taxes, such as sales tax, are an unnecessary burden on our young people, particularly young married couples. Additionally, they are a heavy burden on elderly people, such as pensioners, who can ill afford to pay such taxes out of the miserly pension they are granted by this Government. There can be no valid reason for imposing sales tax on powder used on the more tender parts of a baby’s anatomy in order to prevent heat rash and other conditions. Similarly, sales tax should not be applied to soap and toothpaste, which everybody should use for the sake of cleanliness and health.

Mr Coutts:

– This affects those of us who have our own teeth.


– I have mine. Why should sales tax be imposed on razor blades, shaving brushes and shaving cream and soap? I am sure that the honorable member for Griffith will agree with my argument here. Surely all of those things are not classed as luxury items. I submit that the imposition of such a high rate of sales tax on items in everyday use by the young and the old is a pretty low way of collecting revenue.

I notice also that, under the Third Schedule, sales tax at the rate of 2-£ per cent, is applied to washing machines, vacuum cleaners and radiators. Surely in the light of today’s modern way of living these articles cannot be regarded as luxuries to be enjoyed only for the wealthy. Surely the housewives of the basic wage earners and the pensioners today are entitled to own these conveniences. Of course they are. But even if it can be claimed logically that they are luxuries, I am sure that this argument could not be used to justify the imposition of sales tax on some other items which also attract the rate of 2i per cent. I refer to refrigerators, ice chests and other appliances used for the cooling and freezing of food. These appliances are absolutely necessary, at least in many parts of the Commonwealth. It is not simply a matter of cooling the food just to have it cold at the time of consumption and therefore more agreeable to the palate; there is also the very important factor of preserving food such as milk, meat, vegetables and butter in places that are not only extremely hot but where food items cannot be purchased or delivered every day. If people in those areas did not have refrigerators or some other satisfactory cooling device, they would be at a very considerable disadvantage and would also have to bear the cost of a considerable amount of waste. But the Government continues to allow the sales tax to remain on these items that can be regarded only as necessities.

By retaining sales tax on these items, it would seem that the Government firmly believes that people in the lower income groups should still be satisfied with the old type hessian and water cooler - the Coolgardie type cooler that was popular in the gold rush days. The Government seems to believe that the housewife should still be prepared to stand over a hot fire at the washing copper, to scrub the clothes by hand and to iron them with a flat iron. Earlier today, the honorable member for Herbert (Mr. Harding) asked the Government to reduce the rate of sales tax on cooling systems, which are very important in the hotter parts of Australia. But, of course, the tax should be removed not only from air coolers but also from refrigerators, washing machines and similar appliances. In many country areas and in the cities, more particularly in the north, residents must have electrical or gas equipment. The cost of all the equipment that is needed is quite substantial, even without the addition of sales tax.

Admittedly, during the last 10 years, the rate of sales tax has been reduced on some items; but there have also been increases. For instance, items in the Third Schedule which carried sales tax at the rate of 10 per cent, in 1956 today carry the rate of 2i per cent. However, in the Second Schedule, items that carried 16 J per cent, in 1956 now carry 25 per cent. Items under the general rate which carried I2i per cent, in 1956 still carry the same rate. Surely the time must be well past when the tax should be removed altogether from most of the items in the Third Schedule, which, as I said, carry 2i per cent. With regard to the Second Schedule, the Government’s argument that toilet preparations and equipment are in the luxury class will not bear examination today. 1 suggest that the overwhelming majority of the people - practically the whole of the community - sees these items only as part of everyday living. This being so, the rate of sales tax on them should be reduced substantially.

I notice that sales tax at the rate of 25 per cent, is imposed on items such as hot water jugs, kettles and toasters, and on appliances whether operated by electricity, gas, kerosene or other fuel, for use as room heaters or for culinary purposes. It is a wicked shame to impose such a burden on people today when, in many places, they have no choice but to use electricity, gas or kerosene. In many places, it is impossible to buy wood for a wood stove or for an open fireplace, and the only fuels that people can buy are those referred to in the Schedule. It is obvious that these items are not luxuries; they are absolute necessities. The people using them have no choice; they cannot buy any substitutes. But the Government continues to impose the burden of sales tax on people, irrespective of whether they are wealthy or poor. Pensioners and basic wage earners will pay the same amount of tax as the Treasurer will.

Even such items as brooms, mops, dusters and garbage cans carry sales tax at the rate of 2i per cent. This rate applies also to floor coverings, mattresses, pillows and other bedding and the appliances and fittings used for or in connection with electric, gas or other lighting. The fact is that people just cannot avoid using many of these items. There is no suggestion that they are luxuries. Then we have the items that come under the general rate and carry sales tax at the rate of 12i per cent. Items in this category include soaps, dentifrices and detergents. The honorable member for Melbourne Ports (Mr. Crean) mentioned this matter earlier in the debate. The soap manufacturers point out that these items are used purely for health purposes and their proper use can be the means by which many diseases are avoided. Yet they carry this high rate of sales tax, and there is no justification for it.

Another matter that I wish to mention is closely related to sales tax but concerns the injustices to consumers and purchasers in the country and outback areas of Australia, who frequently are obliged to pay a higher amount of sales tax on the articles they purchase than do the people who reside or purchase them in areas close to the place of manufacture or importation. My inquiries reveal that sales tax is applied to the wholesale price of the article and that, with the addition of railway freights, shipping freights or other transport costs, the wholesale price of the article in one place can be much higher than it is in another place. It naturally follows that the amount of sales tax h also higher. So, the consumer in the country and outback areas pays a higher amount of sales tax than does the person in the city who buys exactly the same article. An article manufactured in Melbourne, or delivered and sold in Melbourne as a distributing point, will sell at a much lower wholesale price in Melbourne than it will in the north of Australia. In Melbourne, the wholesale price of an article on which sales tax is charged at the rate of 25 per cent., 12i per cent, or 2i per cent, may be £10, but, by the time the same article reaches the north of Australia, the. wholesale price on which sales tax is charged has become £12. Of course, on the toilet preparations to which I referred earlier, the difference in the amount of sales tax would not be as high as it would be on such articles as washing machines and refrigerators, but the principle is the same. The people in the north of Australia are paying a greater amount of sales tax than the people in the cities are.

Sales tax collections in 1964-65 amounted to a little more than £181,250,000 and represented 12.6 per cent, of the total revenue collected from taxation. This is not a great deal really, but much of it is collected on the little pinpricking items 1 have mentioned. There can be no doubt that sales tax is an unfair way to raise revenue. It is unfair that all sections of the community should be called upon to pay this tax, irrespective of their means. The whole matter needs serious and urgent attention. Sales tax should be removed altogether or the anomalies should be ironed out. The tax should be removed from the so-called luxury items which in fact are necessities. Whilst we support the Bill, we on this side of the House are completely dissatisfied with the whole system of sales tax. The Government should have taken this opportunity to overhaul the Act in its entirety and give relief to the large number of people who can ill alford to pay sales tax on the items that they must have.


.- My colleague the honorable member for Kalgoorlie (Mr. Collard) has given a very good resume of the operation of the Sales Tax (Exemptions and Classifications) Act, and after having heard him I think I would be guilty of repetition, but not tedious repetition, if I also were to indulge in a resume of the operation of the Act. Suffice it for me to make some small comments, lt is in my opinion unjust of the Government, while reducing sales tax in some minor respects over the period it has been in office since 1949, to have increased it greatly in other respects, lt is guilty of imposing a very heavy burden on the Australian people.

A tax has been imposed on cosmetics, a commodity which is used largely by the female section of the population. 1 regard this as a very unjust tax. I believe that cosmetics are unnecessary for Australian women, because they are already charming and beautiful. I have only to look round the Speaker’s gallery and the public gallery, which are crowded with beautiful Australian women, to make the point that cosmetics are unnecessary for Australian women. I agree that the female section of the population should be given free rein to do whatever it wishes about using cosmetics, but there should be no sales tax on cosmetics.

The Government does not impose sales tax on bookmakers’ bags into which the male section of the population in particular frequently pours a considerable portion of its hard-won earnings. Whilst the Government does not impose sales tax on bookmakers’ bags it does impose a tax on soap and toothpaste. All of us were taught by our mothers to lead a clean life and use plenty of soap and toothpaste, but the Government is trying to hinder the people of Australia from doing this by making it difficult for them to buy these necessaries.

Some of the items in the Bill arise from the New Zealand-Australia Free Trade Agreement. Clause 4 deals in part with fruit juices which are to be exempted. Because of the conditions of the Agreement fruit juices which are prepared in New Zealand are to be subject to the same degree of sales tax as fruit juices produced in Australia. One of the categories to which the Agreement applies consists of fruit juices, including grape must, and vegetable juices, whether or not containing added sugar but unfermented and not containing spirit. The explanatory memorandum distributed to honorable members names quite a number of fruit juices.

The Bill also exempts works of art produced by New Zealanders. These are now to be admitted to Australia and sold free of sales tax within this country. I am sure that the vast majority of members of this House who, as far as their financial position will permit, are patrons of the arts, will endorse the proposal of the Treasurer in the Bill relating to New Zealand works of art, particularly those which are produced by the aboriginal inhabitants of that country.

I should like some clarification on subclause (2.) of clause 4. This clause is designed to ensure that gas supplied to the public by public utilities will not be subject to sales tax if instead of the traditional coal gas some other gas is provided either alone or in combination with coal gas. I might have a wrong interpretation of the definition of public utility, so I ask the Minister to give me some clarification of this. 1 hope 1 am wrong, but as there is some doubt in my mind 1 shall ask a question. We are told that authorities providing gas or electricity have never been required to pay sales tax in respect of their products, but doubts have arisen as to whether the present item which exempts gas commercially known as coal gas is expressed in broad enough terms to cover those authorities which supply a gas made wholly or partly from liquefied petroleum gas. To place the matter beyond doubt subclause (2.) will replace the existing subitem (2.) of item 50 by a new sub-item which expressly covers not only coal gas but also any other gas which is supplied to the public by a reticulation system and used for a purpose similar to that of coal gas. We are passing into the gas age, 1 think I might say. That is, we are on the threshhold of the complete use of natural gas. In my own State of Queensland fields containing immense reserves of natural gas have been found. I understand that there have been finds to some extent in Gippsland in Victoria and that South Australia is just bursting with this gas. It would appear that in due course long pipelines will be constructed to convey the gas from the fields to the vast centres of population.

In the city of Melbourne, I understand, gas is at present supplied to the public by a public authority called the Gas and Fuel Corporation of Victoria. In my city of Brisbane gas is supplied to the citizens of north and south Brisbane by two privately owned companies. The phrase “ public utilities “ appearing in this Bill suggests, to my socialistic mind, a utility owned by the public - that is by a State or by a municipality. 1 am worried as to whether the privately owned companies which supply gas to the citizens of Brisbane come under this clause. I understand that soon the Brisbane Gas Company and the South Brisbane Gas Company - when pipelines are made available - will supply the citizens of Brisbane with gas from the Roma field. 1 hope that the Minister will acquaint me with the exact interpretation of the phrase “ public utility “ so as to set my mind at rest.

The last matter to which 1 wish to make reference is found in sub-clause (4.) of clause 4 which omits item 66a, sub-item (3.) of the principal Act and inserts a new sub-item which exempts honour boards or honour rolls which record the names of persons who have served in the armed forces of the British Commonwealth. Under the present law the scope of this exemption is defined in reference to item 81 (a). The sub-item is now to be expressed so as to eliminate the reference to item 81 (a) but its effect will remain unchanged. I think the phrase “ British Commonwealth “ went out many years ago. Last year, in company with the Minister for Air, who is in charge of the Bill, I attended a meeting of the Commonwealth Parliamentary Association at which members of the Commonwealth of Nations were in attendance in great numbers. Having seen the delegates there we can no longer claim that it is a British Commonwealth; rather it is truly a Commonwealth of Nations. I felt from some of the discussions that took place that many of the representatives resented the words “ British Commonwealth “ being applied to them.

I feel that the phrase “ British Commonwealth “ in the Bill should be changed to “ Commonwealth of Nations “ because in view of the situation which exists today, if we insist on the use of the phase “British Commonwealth” those soldiers who are now giving their lives in Vietnam, Borneo and other places and whose names appear on honour boards will not have the exemption applied to them. I hope that I am wrong in my understanding of this provision. I feel that the Minister should clarify the situation and, if necessary, move to change the expression to “ Commonwealth of Nations “. I do not propose to say more on the matter because, at heart, I support the measure.

Minister for Air · Fawkner · LP

– in reply - It is a pity that the honorable member for Griffiths (Mr. Coutts) has not read the Bill as well as the explanatory statement which has been circulated.

Mr Coutts:

– 1 accepted the statement.


– If the honorable member reads the Bill he will see in clause 4 (4.) that the inscription on the honour boards will detail the names of persons who have served in the defence force or in any other armed forces of Her Majesty. Therefore, if the honorable member deals wilh the Bill rather than with the explanatory memorandum he will have things cleared up to his satisfaction. The honorable member mentioned also the question of gas reticulation. So long as gas of any sort is reticulated through a pipe it will be free of sales tax. So those two items can be quickly cleared up.

The honorable member for Melbourne Ports (Mr. Crean) has raised rather wider matters than arc actually the subject of this rather narrowly defined Bill. I do not intend to take up the time of the House to answer him in detail because I feel that the points he raised are matters that are usually dealt with at the time of the Budget. However, I should mention that the honorable member said that in his opinion - 1 presume it is the opinion of his Party - the Opposition generally thought that sales tax was an inequitable form of taxation. 1 presume that if honorable members opposite composed the Government of this country they would seek to eliminate sales tax, if not immediately then in due course, and replace it with a vastly increased scale of income taxation, which is the measure they usually advocate in this House. If honorable members opposite are opposed to sales tax, would they similarly be against excise? There is not much difference between excise and sales tax. I presume, therefore, that they would take the tax off wines, spirits and beer and put it on to income.

Mr Crean:

– There is none on local wines, is there?


– There is on brandy and other spirits. I presume that as a result we would have a measure of vastly increased consumption of those beverages and a much higher scale of income taxation in Australia. It is interesting to see that the Opposition is against sales tax. I thought that one of the major proponents of sales tax or turnover tax was Mr. Kaldor, an eminent economist now advising the Labour Government in Great Britain.

Mr Crean:

– That is a different sort of tax.


– I do not know that a turnover tax is different from a sales tax. The important thing is that all these taxes on purchasing are designed to restrict purchases and to increase savings. I should have thought that there would be a great deal to commend that in the eyes of the Labour Party. I am surprised that honorable members opposite have been so vehement against the proposal. In our view this tax has much to commend it, although I agree that a number of anomalies have been raised in the debate tonight. I can only say in regard to the special matters that have been raised by the honorable member for Melbourne Ports, the honorable member for Herbert (Mr. Harding) and the honorable member for Kalgoorlie (Mr. Collard) that I shall see that the attention of the Government is drawn to them and, at the time that the Budget is being considered this year, these matters are again taken into consideration, even though they were not the actual matters under discussion in the present Bill.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr. Howson) read a third time.

page 1574


Second Reading

Debate resumed from 4th May (vide page 1436), on motion by Mr. McMahon -

Thai the Bill be now read a second time.

Melbourne Ports

.- 1 should like to enter a certain degree of protest about having to proceed with this measure which was introduced into the House only yesterday afternoon. With all respect, I think we should be entitled to somewhat longer consideration of these matters than we have been given in this case. It is true that the Parliament is in the second last week of this session. Nevertheless, I think that each measure that comes before us is worthy of a little more consideration by parties than has been the case here. I make this protest at this stage. The Minister introduced this Bill yesterday afternoon after the time of our Party meeting. Because we seem to have exhausted the items on the notice paper we are asked to debate the measure now at 9.20 p.m.

The measure which is before us is the Loan Bill. Whilst its title seems simple enough, implicit in it are quite a number of matters that are worthy of consideration. To some extent the Bill is a recognition that the calculations which were made at the time of the Budget brought down in August 1965 have proved to be in error. The Treasurer (Mr. McMahon) was not the Treasurer who drew up the Budget, but he is the gentleman who has inherited that office. He said in his second reading speech -

When my predecessor introduced the Budget for 1965-66 he estimated that the excess of expenditures over revenues would amount to about SI ti million-

Of course, the document at the time was expressed in pounds and the figure was £55.5 million - and that net loan proceeds would be more than adequate to cover this amount. It now seems unlikely that this will be the case. Accordingly, the main purpose of this Bill is to obtain authority for such borrowings as might be necessary to meet the resultant deficiency.

Apparently, when the Budget was framed, the Government had in mind that on ordinary revenue account there would be what is sometimes called a deficit. That is to say, the Government aimed at spending $111 million more than it would collect in taxes and the difference would be made good either by the issue of Treasury bills directly from the Reserve Bank or by recourse to borrowing from the public.

On this occasion the Treasurer apparently gives two sets of explanations as to why the Budget has gone awry. One is that it’ has gone awry because there is more expenditure than was budgeted for. He lists the unusual amounts that could not have been anticipated at the time. For instance, he refers to $26 million paid by way of drought relief to the States of New South Wales and Queensland, and to the payment of $19.8 million to meet International Monetary Fund drawings on behalf of India and New Zealand. In addition, he says that the Government is providing emergency food aid to India which is to cost $8 million, and that the Government’ has also agreed to an increase of $15 million in advances for State housing this year. These items represent an additional expenditure of $68.8 million. Of that sum, $27.8 million is on external account - the International Monetary Fund drawings, and the aid to India - and of the remaining $41 million, the sum of $26 million is to be paid to New South Wales and Queensland by way of drought relief and $15 million represents increases in advances to the States for housing. That is one side of the account. 1 turn now to the other side of the picture. The Government realises now that Commonwealth revenues will probably be less than it had anticipated. It is about this suggestion that 1 want to say something. I refer the House to a document that was tabled in the Parliament in August 1964. It was issued by the Commonwealth Treasury as a special supplement to the “ Treasury Information Bulletin “’ and has the rather elaborate title: “ National Accounting Estimates of Public Authority Receipts and Expenditure “. I propose to quote from page 16 of that document and to ask the House to consider what sort of conclusions the reverse circumstances would imply. This document relates to the circumstances of the financial year 1963-64 as against those of the financial year 1962-63. On page 16, reference is made to “ net indebtedness “. This is a technical term that means the difference beween all the outgoings of the

Government on both annual and capital accounts and all the incomings from taxation., loans and so on. The net result - plus or minus - is described as the net increase in indebtedness. The document states -

The net increase in indebtedness of £247 million in 1963-64 was almost unchanged from its level of £253 million in 1962-63. lt was. however, some £63 million below the level estimated at the time of the 1963-64 Budget, lt is noteworthy that virtually the whole of the change in the indebtedness item from the level originally estimated arose from variations occurring on the receipts side of the estimates. Total outlay was almost absolutely unchanged.

The point to be noted here is that the final outcome of the Budget changed because in that year receipts were greater than had been anticipated. This year, the reverse is the case; revenues will probably be less t’han was anticipated. This is the conclusion that the official document to which I refer went on to draw -

This increase in receipts above the estimates was, however, largely a measure of the speed wilh which the level of activity in the economy rose during the course of the year and the way in which this was reflected in greater yields from indirect taxes and from income taxes on persons than had been est mated at the time of the 1963-64 Budget.

In other words, it was claimed then that, because revenues were greater than had been anticipated, this was evidence that the level of activity in the economy as a whole was good. All I am suggesting is that, if this is to be the barometer, then the fact that revenues will probably be less this year than was anticipated is an indication that the level of activity in the economy is not as satisfactory as it ought to be. 1 would agree with that; but that is not the sort of interpretation that the Government seems to want to place on the present state of affairs. The Government is suggesting that things are not too bad. We on this side have said in this House, both at the time when the Budget was presented and since, that as events have transpired the policies outlined in the Budget were wrong. Of course, the main proposals in the Budget which were different were those which related to increases in both direct and indirect taxation. These have had the effect of reducing consumer expenditure in the community.

The Minister for Air (Mr. Howson) asked us a moment ago whether we considered excise to be a preferable form of revenue raising to sales tax. In the Budget, which this Bill alters to a great extent, the Government resorted mainly to indirect taxation as a means of increasing revenue. I think the total increase provided for was approximately £80 million. Of this sum, £60 million was to be raised by way of indirect taxes, such as taxes on cigarettes, beer, petrol and so on, and the remaining £20 million was to be raised by way of an increase of 2£ per cent, in income tax. The effect of those measures was to dampen down the expenditure of individuals.

The consumption of tobacco, petrol, beer and spirits has not changed very much. In fact, I think it is still much the same, lt may be even greater than it was prior to the introduction of the Budget, but, because all these items now cost more to buy, there is less money left over for the purchase of other needs of the family. This is being reflected now in a lack of spontaneity, if we like to call it that. There is a certain dullness of confidence in the community about the future. I suggest that these signs are implicit enough, but the Government points to certain things to suggest that the position is not quite as bad as it would seem to be. In reply to that, 1 refer the Government to its own gospel. When taxation revenues rose to a greater amount than had been anticipated, the Government took this as an indication that the state of the economy was better than had been anticipated. 1 suggest that the converse conclusion may now be drawn with equal validity. I suggest that when revenues are not up to anticipation we can validly claim that the economy is not ticking over as well as it ought to be. To show that I am not quite alone in this sort of thing I quote from a very useful document that I have used in the House before - a publication that is issued monthly by the Australia and New Zealand Bank Ltd., entitled “ Business Indicators “. I am quoting from the March 1966 issue which is the latest to come into my hands. It states -

While the rate of growth in Australia still faits to show any conclusive sign of recovery, the encouraging measures applied by the Government in recent weeks may yet have a greater effect through public psychology in helping stabilise the economy than their monetary value suggests.

At least the feeling of the Bank is one of caution rather than exuberance for the future. The article continues -

Total civilian employment was 3.5 per cent, higher in December than in the previous December.

At first blush that looks to be all right until we compare it and discover that it was a lower rate of increase than in the previous 12 months when employment increased by 4.3 per cent, as against 3.5 per cent. The article stated -

This was largely assisted by increased female participation in the work force. Female employment rose 5 per cent, in the December quarter alone, when the increase in male employment was only 2.8 per cent.

Of course the average of 3.5 per cent, is an amalgam of the two. The article continues -

Employment in the larger private factories - an indicator which is normally very sensitive to economic conditions - declined slightly over the year to December. This decline occurred in all major industry groups, with the exception of basic metals and chemicals and allied industry.

A further indicator of easing demand for labour is the reduced amount of overtime being recorded. The Department of Labour and National Service reported about the same proportion of factories working overtime in January 1966 as in 1965, but the proportion of employees working overtime and the average hours worked per employee were considerably less than a year earlier.

So much for the employment situation. The indicators on average are dull rather than bright. In respect of investment the article states -

The investment boom, which has helped to sustain the private sector while the consumption trends have been relatively weak, now appears to be waning. A slowing in the rate of growth of capital expenditure en buildings and structures and on capital equipment was evident in the December quarter statistics.

The Government seems to be taking a lot of credit for the fact that the estimated expenditures for the next quarter seem to be better, but experience is that estimates always exceed the ultimate result, and the Bank’s warning is that investment is also on the wane just as much as the other signs of economic activity are on the wane. The article refers to the factory production index. It refers to the relative stability of the total index but, after all, in a country where the population is increasing we should not just have stability in our level of factory output; we should have an increasing output. The article states -

The relative stability of the total index since December has not been reflected in the Durables Section which is continuing its downward trend, with an estimated decline of 2 per cent, from December 1965 to February.

The article goes further and states that in the durables section all groups are showing evidence of slow decline, with transport equipment as the main weakness. In a country that is supposed to be lacking basic development why should transport equipment be showing weaknesses in activity? The article continues -

Having declined by 4 per cent, to 5 per cent, each month from July to November, that Group’s slight recovery in December proved transient.

We thought the situation was improving, but it seems there was only a little spurt before the situation went downhill again, and from estimated figures it seems that the decline from December to February may be as much as 9 per cent. The article states -

This is accounted for by the continuing downward trend in motor vehicle production and, in particular, motor car bodies.

The article refers to goods that people put in their houses - furniture and states -

Having slumped 15 per cent, between July and December, furniture and household goods then remained stable through to February.

In other words, we now have a level 15 per cent, below what it was 6 or 7 months ago. lt would seem that, soberly enough recorded, these are not factors that point to anything to be crowing about in relation to the state of the economy. It seems to me that this is borne out by the measure now before the House - a measure that to some extent would not have been necessary if the Government’s revenues had come up to anticipation.

I repeat the lesson that surely is supposed to be learned from the other document, namely, that if revenues are going down more than was anticipated it is only a reflection as it were of the reality that economic activity as a whole is less than it ought to be. I suggest that these are matters of serious concern. The Government now proposes to raise $75 million on the loan market which it is going to allocate to the defence services. Of course this is done merely to get round the provisions of the financial agreement between the States and the Commonwealth under which the Commonwealth Government can borrow for defence purposes without consultation with the States whereas if it borrows for other purposes the loan comes from the Loan Council pool. The only reason that this technically is tied to defence is to get round that difficulty. In the August 1964 special bulletin issued by the Treasury we are told that we should look at the ultimate result - the overall position of whether we need to have recourse to loans rather than to something else. At page 10 of that document the following appears -

In other words, although loan raisings, particularly from the public, can be a matter of prime importance for reasons mentioned later, the economic problem from the budgetary standpoint is essentially one, not of substituting loan raisings for revenue as the source of finance for public authority expenditure, but of achieving, by financial means, a balance between total demand for, and supply of, resources in conditions of full employment in a growing economy.

I commend this document to the re-study of honorable members. It was issued in August 1964, almost two years ago, and it showed quite clearly that it is the overall position that is significant. The Government is responsible in a modern economy for the maintenance of full employment and, therefore, for the preservation of overall demand in the economy. Our suggestion is that at the moment there is reason to believe that overall demand is flagging somewhat, and that the only hope that the Government is putting any trust in now is that the Commonwealth Conciliation and Arbitration Commission in its current deliberations will grant an increase in wages. Such an increase is an immediate stimulus to the economy, because the additional fi a week, or whatever the increase is, will begin to flow immediately. I suggest that the Government at this stage of the year could have put another stimulus into the economy by increasing the weekly amount of the age pension now instead of waiting until August or September. It would be very pleasant for people who are in receipt of a pension and nothing more to have an additional 5s. to 10s. a week given to them as a form of interim payment now. Similar sorts of things could have been done with regard to child endowment. Equally, the Government might have done something to remove some of the taxation that it imposed in the last Budget. All the Government seems to be doing is hoping that things will turn out for the best, when it seems that many of the apparent signs are that circumstances are far from being good.

There is one other matter that 1 might have mentioned here but I think 1 will reserve the remarks I was going to make until we come to the Supply Bills which, 1 hope, do not come on this evening. It would be most unfair if that were the case. 1 was going to say something about another mutter that the Government ought to see as a sign of the times, lt is this: The British Government in its most recent budget has taken, and the United States Government some year or so ago took, certain measures to protect their balance of payments situation. I think it is time that Australia gave serious consideration to its future in the field of international balance of payments. I wish to refer to two items in relation to some of the increased expenditure in which Australia is involved at the present time. The first is assistance to India. I applaud the assistance that has been given to India. The amount of $8 million in assistance to India is little enough in the circumstances. I think all honorable members received today, as I did, a letter from a group in Melbourne dealing with the problem of famine and shortage of food in India. The Government is to be applauded for doing so much, but $8 million, while it sounds a lot, in terms of the amount of wheat that it will buy and in terms of the need which has to be fulfilled to supply a population of over 400 million people, is really fairly inadequate.

I am not suggesting that Australia can do everything to solve the problems of that great country. Nevertheless, I think it is time, as we said the other evening in the debate on the Asian Development Bank Bill, that we paid much more serious consideration to economic co-operation between ourselves and some of those other countries that are more nearly our neighbours in modern circumstances. That is the second matter. I leave it at that. I protest again about the haste in which this Bill is thrust before this House this evening. I would ask that the Government should endeavour to read the signs of the times. As 1 see it, and as many other people see it, the signs of the times are gloom rather than gleam, as far as the current situation is concerned.

Minister for Air · Fawkner · LP

– I apologise to the honorable member for Melbourne Ports (Mr. Crean) for the discourtesy that he feels because this Bill has been brought on so soon. I think the honorable member knows the problems which have been facing the management of the House in the last day or two. I can only thank the honorable member for his courtesy in responding to the needs of the House. Regarding his final remarks, 1 think, as the Treasurer (Mr. McMahon) said in his speech, this is a precautionary measure. We do not think that the full needs envisaged in this Bill will be required. Nor do I feel, as the Treasurer has stated recently, that the gloom that is foreshadowed by the honorable member for Melbourne Ports will come to pass. All I can say is that we shall know at the time of the presentation of the Budget.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr. Howson) read a third time.

page 1578


Second Reading

Debate resumed from 4th May (vide page 1436), on motion by Mr. McMahon -

That the Bill be now read a second time.


– There being no objection, that course will be followed.

Melbourne Ports

.- Mr. Deputy Speaker, apparently my words have fallen on very deaf ears. I must say that this will now be the third speech that I have had to make this evening. It is a little bit heavy when honorable members take into account the sort of fields that one is expected to cover. The measures that are before us, as has been explained, are the Appropriation Bill (No. 3) 1965-66, the Appropriation Bill (No. 4) 1965-66, the Supply Bill (No. 1) 1966-67, and the Supply BUI (No. 2) 1966-67. These four Bills deal with two sets of measures. The Appropriation Bills deal with additional expenditure that will be incurred before the end of this financial year. These expenditures were not anticipated at the time of the presentation of the Budget for 1965-66. It is certainly inevitable that at the level at which governments have to operate, some things that the Government thinks it might have to do at the beginning of the financial year do not have to be done, and some things that the the Government did not anticipate have to be carried out. Of course, there is not the convenient rule in government accounting that private accounting might have. If the Government saves £5, or £500 or £5 million on one account, it is not able to transfer that amount to another account. The Government has to obtain a separate parliamentary appropriation for a new project. The Appropriation Bills deal with that sort of item.

On the other hand, the Supply Bills which are before us also are a recognition that occasionally Parliament does have a holiday or a break. We will be finishing this present sitting next week. Parliament will not resume until August. So, after the 30th June, when the current Budget runs out, no expenditure will be sanctioned unless we pass the Supply Bills. The two Supply Bills give supply to enable the Government to carry on for a period of five months from 1st July to the end of November. The Treasurer (Mr. McMahon) said yesterday that the Supply Bills, by and large, are based on approximately five-twelfths of the Budget for the previous year. But there have been one or two additional items where the five-twelfths rule does not quite apply. The Treasurer said in this respect -

In general these amounts represent approximately five-twelfths of the 1965-66 appropriations and make no provision for new services. However the amount of $376,069,000 for Defence Services makes provision for the continuation of the current defence programme and large contractural payments due in the first five months of the financial year.

In other words defence expenditure this year is to be somewhat higher than for the previous year.

There is not a great deal in the Supply Bill that I wish to refer to because, as I have said, this is mainly an arbitrary arrangement arising out of the necessities of procedure. We must have supply from July onwards, and until the Budget is framed this can be arranged only by a kind of hand-to-mouth, rule-of-thumb procedure. However, the Supply Bill and the cognate bills do present an opportunity to raise matters that we might not otherwise have the opportunity to raise. I want to use the occasion to refer to the statement the Treasurer (Mr. McMahon) delivered in the House yesterday afternoon dealing with the budget of the United Kingdom. As we all know, the United Kingdom Government took certain action in its budget which was delivered about 36 hours ago. lt adopted certain measures to control the United Kingdom’s balance of payments situation. I. for one can understand the difficulty that faces the Government of the United Kingdom and I appreciate that that Government is entitled to take what measures it can to deal with its own situation. The measures that it took are viewed with dismay by some people in Australia who say that they could have dire consequences for this country. These dire consequences would apparently affect our own balance of payments situation.

It seems to me that what the United Kingdom has done and what the United States did some 18 months ago represented legitimate enough tactics on the part of those countries, and 1 think that these events should bring home to the Australian Government the need for this country to take stock of its balance of payments situation or its position on international account. I do not want to go into the details of the British situation because I think they have been made known well enough by the Press and other means of communication. There is a very succinct and quite recent statement of the situation in the United Kingdom in “The Economist” for 19th March 1966. On page 1143 under the heading “ Britain’s Payments Choices “ the following appears -

Britain’s payments predicament is supposed to be a central issue in the election campaign. But for all the shouting, both Labour and Conservatives are doing their best to make sure that the public hears about the real payments choices after and not before March 31st.

March 31st, of course, was the date of the United Kingdom election which, as we all know, was handsomely won by the Labour Party. Neither Party wanted to make the balance of payments situation a political issue because it was realised that it is not the fault of the present Government. It is the result of an historical process although recent events have certainly aggravated it.

The article continues -

Mr. Heath’s concentration on government mismanagement misses the central point. Britain’s £900 million-

That is £900 million sterling, which is £A1,125 million or $A2,500 million- overdraft has been needed to finance the I9b4-6S real deficit: the money that fled Labour is largely back again. Nor, as Labour is implying, can one expect the deficit to be transformed into the necessary surplus simply on existing policies, even if stiffened by marginal and not “ severe “ increases in taxes.

Realistically, Britain will soon have to make its choice from among more fundamental remedies. These are, briefly, export subsidies or devaluation; import quotas; stiffer curbs on overseas investment; and a tightening of the tax-cum-credit squeeze.

In other words “ The Economist “ on 1 9th March, a fortnight before the election, suggested that measures would soon have to be taken by Britain to grapple with this problem, and one of the measures that has been chosen is that of stiffer curbs on overseas investment. This means that it will not be as easy as formerly for capital to flow from Britain to places like Australia.

We all know about the problems of foreign investment and we have discussed them in this House. For a number of years now Australia has survived on international account only because we have been able to import goods that we have not had to pay for immediately because they have been covered by what is technically described as capital inflow. At the same time we have accumulated quite considerable balances in the sterling area. Sometimes people are disposed to look at one side of the situation only rather than at the two sides of it as they should. It is easy enough to think that we have a bank credit in the form of our sterling reserves when in fact these are only the end result of transactions over a considerable period of time, taking into account our trade position or our position with respect to invisibles and our position with respect to capital inflow. I think it is estimated that over a period of 10 to 15 years there has been a capital inflow into this country of something like £2,000 million or $4,000 million. If that capital inflow had not come here we would probably have had, instead of credits in the sterling area of near enough to $2,000 million, a deficiency of the same order. This would have been most unfortunate and would have forced us, perhaps, to do certain things sooner rather than later.

We of the Labour Party believe that we cannot continue to defer doing something about this very serious situation. One cannot be a borrower all the time; there comes the day of reckoning when one must cease to be a borrower and become a repayer. But it seems that the policy of this Government is for Australia to continue to be a borrower as long as it possibly can and put off the unpleasant day until tomorrow. We suggest that this is a fool’s paradise kind of philosophy and one that is not suitable for Australia in the present circumstances.

Our deficiency on trade account each year has been of the order of $400 million, which has been met by this inflow of capital. Next week my colleague, the honorable member for Scullin (Mr. Peters) will give some more details on this subject, and I do not want this evening to traverse the ground that he will cover. We do feel that the time has come when some systematic approach has to be made to the situation by the Government of Australia and the people of Australia. We must face the realities of the situation. All that has happened so far is that we have heard squawks of protest because Britain has taken the action that it has taken. It is said that this is bad for Australia. Indeed, some Australian interests appear almost to be threatening to pay Britain back by transferring their sterling holdings into gold or into dollars or some other currency. This seems to me to amount to looking out of only one lens of one’s spectacles and not asking why we have credits in Britain. The existence of these credits is due not to our prudent housekeeping or our good trading. It is largely due to the fact that we have had a substantial flow of capital from both the sterling and the dollar areas. That is the only reason why we have the balances that we at present possess.

I understand that there were going about Sydney a day or two ago rumours that the present Government in the United Kingdom intended to devalue sterling. I do not think that anyone who has read the more recent signs of the times would believe that devaluation was quite so imminent as that. It cannot, of course, be ruled out permanently, because Britain is in a very difficult situation. As well as being a trading nation, it has acted as banker for a large portion of the world for the best part of 60 or 70 years. It is still the place where the majority of the countries of the Commonwealth of Nations prefer to leave what are called their reserves of international currency. If devaluation does take place, of course, any country’s holdings of sterling will purchase less in terms of gold or of dollars or some other currency than previously. The present Prime Minister (Mr. Harold Holt), who was formerly Treasurer, suggested, 1 think, that Australia is the largest holder of sterling in the system at present. All I suggest is that when he said that he talked as though this was a credit that somehow was ours without there being -my liability to be reckoned against it.

The main reason why we have held our balances in sterling rather than in gold or in dollars has been that largely it has suited is to do so. Most of our transactions on international account are still either with Britain or with European countries that use sterling rather than dollars or gold. Also, we have been able to invest our surplus in the short term money market in Britain. Several years ago, I asked the former Treasurer a question about the policy that was pursued with respect to the holding of Australia’s reserves. I asked what was done with the sums, that were not needed on a day to day basis. The answer supplied was to the effect that investments of surplus sterling in the short term money market yielded as much as

SA30 million to $A40 million a year in interest. So, again, it has been not so much convenience as a certain measure of prudence that has led us to hold our reserves in sterling. Nevertheless, this arrangement does not grapple with the problem that is before us.

Basically, Australia could meet its international situation only in two ways. First, it could import less. The honorable member for Mackellar (Mr. Wentworth), in a speech last night on the motion for the adjournment of the House, seemed to suggest that we could retaliate against the latest United Kingdom Budget by cutting down our imports from Britain. It may be that Australia will have to reduce its imports, not from Britain in particular, but from the world as a whole, because we may not be able to go on as we are going at present. There are limits to what a country can do, just the same as there are limits to what an individual can do. There are limits to the degree to which we can import. I believe that there is a certain amount of truth in the suggestion that in terms of total imports Australia has been taking too much. It has been importing goods that could be supplied locally. I direct the attention of the House to the April 1966 issue of the bulletin of the Australian Industries Development Association. In an article under the heading “ State of the Economy “, it reviews current economic trends and observes -

In this regard we restate our view that imports arc at an excessive and unnecessary level, imports of many goods (for example, textiles, clothing, motor vehicles) include a significant proportion of goods which could be supplied on commercial terms from unused local capacity. There is more than a suspicion that imports of these and other goods are being landed in Australia at prices much below those in the countries of origin.

In other words, it suggests that there is systematic dumping of certain goods on the Australian market. The article goes on -

Again, very heavy import is developing of equipment for defence purposes. Had there been more preparation and co-ordination with local manufacturers much of this import would be unnecessary and, more important, local industry would be better prepared to meet our defence needs.

That is the sort of basis that prompted the motion that was launched in this House this morning by the Australian Labour Party. All that the Minister for Defence (Mr.

Fairhall) could offer then was an invitation to take one or two Opposition members through defence factories to look at machines working. That attitude does not seem to conform with that taken by the Australian Industries Development Association, which, I think, would know at least as much about past and present performances of Australian industry as the Minister does, i repeat that the Association, in its bulletin, stated -

Had there been more preparation and coordination with local manufacturers much of this import would be unnecessary and, more important, local industry would be better prepared to meet our defence needs.

The article goes on in that strain. All that J suggest is that we in Australia should at least be considering seriously whether some categories of imports should be regulated. I do not suggest a wholesale reimposition of imports control. However, I believe that the import licensing system was wrongly and too hastily dismantled at a time when it was enabling us to begin to get on top of many of the problems that faced us. 1. know that there will be difficulties. When a local industry says it can supply a product, sometimes there is a delay of several months between promise and fulfilment. Nevertheless, it seems to be certain that Australian industry has unused capacity to produce goods that at present are being imported.

That is one side of the picture: We could improve our trade position by importing less. But, above all, we could improve it by exporting more. Again, the Government seems to have been lacking in vision because it has failed to encourage the development of markets among countries that are our near neighbours. More than half the world’s population lives in countries not far from is. Unfortunately, in their present state of economic development, those nations are not very good customers, because the masses of their people have not sufficient purchasing power to buy goods of the sort that we could perhaps supply to them. We have made only certain halfhearted attempts to deal with the problem. Recently, the Minister for Trade and Industry (Mr. McEwen) took action to assist what are described as less developed countries by allowing, up to specified limits, manufactured goods into this country on preferential tariff terms. Our trade with these newly developing areas must be a two way process. But basically the limiting factor has been the matter that was mentioned here the other evening in the debate on the Asian Development Bank Bill 1966 - the problem of liquidity.

The present Prime Minister, when he was Treasurer, on several occasions in this House briefly mentioned certain deliberations that are taking place at the international level with the object of introducing reforms in international monetary management. 1 suggest that there ought to be much more discussion about these projected measures than they have received in this Parliament so far. A great variety of schemes and plans has been proposed. We have heard of the Stamp Plan, the Triffin Plan, the Horowitz Plan and goodness knows how many others, as Well as the Committee of Ten and other groups of individuals or countries that are propounding various schemes for international monetary reforms. I suggest that the Treasury should issue summaries of these various proposals, just as it issues quite useful information in the special supplements to the “Treasury Information Bulletin “. 1 would hope that the Treasury would put together, as it were, a conspectus of what all these various schemes of monetary reform amount to. Some seem to me to be only jiggering around with existing mechanisms, but some are quite realistic and perhaps contain fundamental changes which would be to the benefit of the poorer areas, economically speaking, in the world.

I cast out that suggestion for consideration because unless something of this kind is done to improve the international reserves of those countries which have many millions of people but scarcely any international reserves Australia will not get very far from being more dependent than it should be on what takes place in the developed part of the world rather than in the undeveloped part. I think we have allowed the strategic sections of our industry to become almost dominated by foreign ownership, which affects our mobility to plan future development. There must be a stocktaking in this field. To suggest that there will not be differences of opinion between members of the Government on this matter would be idle. Government supporters Uke great delight, of course, in suggesting that differences of opinion exist on this side of the House. I, for one, believe that any political party, including the Liberal Party and the Country Party, that does not have differences of opinion among its members is a dead political party. Political parties and politics generally thrive because of differences of opinion on what in many instances are quite technical matters. What is wrong with the Minister for Trade and Industry as Leader of the Country Party differing with the Treasurer on certain matters? Why do they not debate their differences in the House occasionally? We on this side might be prepared to support one of them. That would be an interesting proposition. All I suggest is that some of the matters we must face up to are matters that will invite different solutions and different approaches. If you are a democratic community you should not fear a certain amount of controversy. Not every controversy pulls the house down.. Perhaps if we do not do something the house will be pulled down despite us.

It is surely late enough in the night for the House to adjourn. I hope that none of my colleagues will be called upon at this late hour to participate in the debate. I protest again at the haste in which measures are considered. It is not possible for one to give the serious attention to these matters that one would like to give when called upon :°o make three speeches in almost as many hours. If any inadequacies are apparent in my remarks this evening I hope I will be excused on the ground of having had to make them hastily.


.- I would first like to thank the honorable member for Melbourne Ports (Mr. Crean) for his co-operation. As one of the workers in the organisation, I appreciate what it must have meant to make a speech of such quality at such short notice. I assure him again that his efforts are appreciated, lt is my intention this evening to discuss the recently published Tariff Board report on motor cars. Before May 1964 there was a tariff of 35 per cent, for most favoured nations on cars that were imported into Australia already assembled. There was also a duty of 35 per cent, for most favoured nations on most of the components that went into a car. However, a standing by-law allowed many of these parts to come in at low rates of duty, although the number of parts coming in in this way had been reduced from time to time over the years. The ability to import some of these components at low rates of duty was necessary early in the car industry’s existence as the volume of cars produced was not large enough to enable high volume, and so, cheap production of car components. To protect the assembly of cars in Australia and to enable the assemblers to buy the higher priced Australian components, the duty of 35 per cent, was placed on built up cars.

In May 1964 the Government announced plans to encourage the incorporation of more Australian components in Australian cars. The Government was influenced in this decision by the large volume of car components that was being imported, and so using up foreign exchange. For instance, in 1964-65 imports of components under by-law amounted to $152 million. The Government was also being pushed by the makers of the components. Although operating very profitably, they were concerned that they were not expanding as quickly as the assembly side of the industry was and they felt that there was a danger of the industry becoming an assembling industry rather than a manufacturing one. The Government announced its plans in May 1964. There were three plans - plan “A”, plan “ B1 “ and plan “B2”. Plan “ A “ provided that an assembler of a car who planned to use 95 per cent’, of Australian components in his car in five years time could, in the meantime, continue to import a decreasing quantity of his components under by-law. For the smaller manufacturer whose volume of production was too small for him to be able to buy cheaply the Australian components, plans .. D, “ and “B2” were announced. I will not go into these latter plans in detail as they have been superseded.

At the same time as this announcement was made, the Minister for Trade and Industry (Mr. McEwen) referred the matter to the Tariff Board, but with terms of reference that were quite different from those usually used, making it quite clear that it was the Government’s policy - I quote from the terms of reference - “ to ensure sustained development of our economic and efficient automotive industry with maximum Australian content “. At the same time, the Minister also made it clear that although plans “ B1 “ and “ B2 “ may be altered following the Board’s report, those manufacturers who entered cars under plan “ A “ were guaranteed that they would not be disadvantaged even if the Board recommended less favourable treatment.

Sir, here we have a radical departure from the recognised principle that tariff protection should be granted only after a Tariff Board report. In this case, the Department of Trade and Industry evolved plan “ A “ and has stuck to it even though the Tariff Board obviously does not agree with its operation. It is true that the Department consulted the car manufacturers and it is true also that many of them came to the party. But there is no doubt that they did so reluctantly. This was made clear in a Press statement in February 1965 by Mr. W. Daunt of the Federal Chamber of Automotive Industries. In his statement he said -

It was reported in the Press after the last series of consultations between the industry and the Departments that the industry had “ agreed “ to the Departmental proposals. This is quite inaccurate, however, as the vehicle production section of the industry would naturally like nothing better than for the present status quo to be maintained. Experience has shown that under the existing arrangements the industry has been progressing along sound economic lines.

So, obviously, the car manufacturing sector did not agree with the departmental plan.

The plain truth is that the manufacturers just had to come to the party, as the Government held the whip hand with its power to withhold by-Jaw entry. But I submit that it is a dangerous procedure for Government officials to be given the power to say what form protection should take. They are not experts in making cars. Nor, for that matter, is the Tariff Board but at least the Tariff Board does take sworn evidence in public, allows the matter to see the light of day and to be ventilated and discussed. What goes on behind the doors of the Department of Trade and Industry no-one knows. Certainly I, as a member of the Parliament, do not know. I repeat that it is a dangerous departure from past principles to have Government officials awarding protection, and I am surprised that the practice has been accepted so tamely. We have had many recent references to the Tariff Board which have had the policy written into the reference - the chemical inquiry, the aluminium inquiry and so on. But not only was the policy written into the reference in this case but the method of protection was arranged by the Department before the reference was made. This is wrong indeed.

On the component side of this industry, the Government asked the Board whether the standing by-law, under which the imported components were coming in free of duty or at low rates of duty, should be continued and, if it was to be continued, the Board was asked to say under what conditions by-law entry should be granted. Unfortunately, the Board was not asked whether the rates of duty on the components should be altered. In its report, the Board recommended continuation of the by-law and drew up a table in which the allowable bylaw imports would vary and decrease with the volume of production. The table of variation is given at page 16 of the Board’s report. With the concurrence of honorable members, I will incorporate the table in “ Hansard “.

It is difficult to see at first glance the difference between this general recommendation of the Board and the original plan introduced by the Government. I will try to point out the significant difference later. For the present, I ask the House to accept my assurance that the protection recommended by the Board was lower than the action taken by the Government following the Board’s report. The reasons given by the Board for not following the Government’s original plans were these: First, the Board felt that the Government’s plans placed too much emphasis on the time programme rather than on a volume programme. The Board was told that a manufacturer would need to make at least 30,000 cars of one model before he had enough volume to expect economical quotes from component manufacturers of many parts, particularly engines. Judging from the report, the Board thought that this figure was conservative. It thought it would be better for all concerned to make the measure one of volume of production rather than the time a car had to be entered into, say, programme “A”. At page 16 of its report, the Board said -

The Board considers that the sustained development of an economic and efficient automotive industry consistent with maximum Australian content is most likely to proceed from manufacturing programmes that are based on volume of production rather than a period of time.

After all, it is the volume of cars made that is important. A model may be entered under plan “ A “ and not reach its planned output perhaps because the model proves unpopular. Under a plan “ A “ programme, it would have to take the consequences. Under a volume programme, its ability to get by-law concession would vary with volume, as indeed it should.

The second reason why the Board did not follow the Government’s plan was that it was doubtful whether the component manufacturers could make all the parts anyway. The component industry was running at full bore - it still is - was short of men and had been expanding very fast indeed without extra protection. In fact, the production had doubled in six years. The component manufacturers had been making very high profits. For instance, easily the biggest manufacturer, Repco Ltd., showed a profit in the year ending 1965 of 25.12 per cent, on paid capital or 12.2 per cent, net profit on shareholders’ funds.

The third reason why the Board did not follow the Government’s plans was that it was concerned with the overwhelming predominance of overseas ownership of the car manufacturing industry. It pointed out that of the $460 million invested in car manufacturing in Australia, only $20 million or 4.35 per cent, was Australian owned. The Board thought that the only chance for an Australian, or joint Australian-Japanese company, for instance, to get a start in the Australian manufacturing scene was ability to get access to a reasonable proportion of imported components under by-law. If this were denied, then the Australian industry must inevitably be left to the big five - General Motors, Ford, Chrysler, the

British Motor Corporation and Volkswagen, which are totally overseas owned.

Mr. Murray, one of the members of the Board, signed a minority report. He argued for the abolition of the by-law. This would mean that all imported components that could not be made in Australia and which came into Australia, would have to pay the 35 per cent. duty. He thought that not to abolish the by-law would be unfair to those manufacturers who had already embarked on plan “ A “ with the encouragement of the Government. He was quite clear that the inevitable result of the by-law cancellation would be that the market would be left to the big five to carve up between themselves is best they could.

Perhaps we should have a look at the technical reasons for this, lt is important to realise that the component manufacturer must be making a lot of parts before they can be made cheaply. If parts cannot be made in large volume, it is generally cheaper to import them and to pay the 35 per cent. duty. So the volume of production is the secret. The general consensus of expert opinion is that a manufacturer must be making about 30,000 cars of one basic model before he has enough volume io be able to get cheaper quotes from the component manufacturers, particularly for engine parts. The Australian market for cars in 1964 was about 400,000 passenger’ -vehicles. Table 7 of the Tariff Board’s report shows that 154,000 Holdens, 40,100 Falcons and 28,700 Valiants were produced in 1965. This left 172,200 cars to be divided between the other seven models entered in plan “ A “ or an average of about 24,500 each. Some of the seven models would do better than others, and it is quite certain that the manufacturer whose model did not take on for some reason and whose volume consequently fell would be placed in a very awkward position.

The smaller volume producer would, under Mr. Murray’s recommendations, either have to pay a higher price for many of his Australian components because of the small volume or pay 35 per cent, duty on them. So it is clear that the end result would be that the market would inevitably bc shared by the big five with about ten models. I can see the logic in this argument. What Mr. Murray is saying, in effect, is that ten models are all that the Aus tralian market is big enough to take and that it is better to have five big companies producing ten models, each composed of about 95 per cent. Australian parts, than to have a large number of less efficient small car manufacturers and car assemblers using a great amount of imported components. Indeed, if I were a dictator and not worried about the complete overseas control of the industry, it may be that I would do as Mr. Murray advises. But it is a pretty hard line for a democratic government to take, particularly if it believes in free enterprise.

So far we have discussed the Government’s original plan and the Tariff Board’s report, including the minority report. What action did the Government take as the result of the Board’s report? On 18th February, the Board announced its decision in a Press statement which was notable for its lack of detail and explanation. The next week the motor trade met with officials in Canberra to hear what it really meant, and I am sure that this was really necessary. But no-one seemed to think it was worth while to inform members of the Parliament of the significance of the Government’s action. On components the Government did not accept the Board’s recommendations. It adhered to its own plan A for those models which had been entered in plan A. It had already said that it would do this no matter what the Board said. But the Government’s action on the medium volume producers was different from the Board’s recommendations. The Government followed the early part of the table on page 16 - which has been incorporated in “ Hansard “. Models with a volume up to 2,500 will still be able to have 55 per cent, of their components imported under by-law. The next group with a volume up to 5,000 will have 50 per cent, import, but the next step is different. For those with a volume between 5,000 and 7.500 - not 10,000 as the Board recommended - the import can be 40 per cent, under by-law. But from 7,500 upwards, irrespective of variations in volume, there will be in the future no by-law importations, except the 5 per cent, allowed. This means that all models with a volume over 7,500 will be all treated the same as far as by-law entry is concerned.

Well, what is the significance of this? It means that the really small assembler of cars will be encouraged so long as he remains small, but the medium assembler will be placed in a very difficult position. It will be very difficult for a small assembler to become a big manufacturer because as soon as his volume gets over 7,500 he has to buy 95 per cent. of his parts locally with all the problems of high cost caused by the comparatively low volume, or he has to import them and pay the 35 per cent. duty. In effect, the Government’s action has removed the vital rungs of the ladder up which the small manufacturer could hope to climb to become a big manufacturer. These rungs have been there in the past and the Tariff Board recommended that they stay there. But they are not there now. So this will mean that the Government is pretty well guaranteeing the position of the big five, which are all overseas owned. At least it is guaranteeing the position of the big three - General Motors-Holden’s Pty. Ltd., the Ford Motor Co. of Aust. Ltd. and Chrysler Australia Ltd. How the British Motor Corporation (Australia) Pty. Ltd., and the Volkswagen organisation will manage I am not certain. There is logic in this, of course, as our limited market will not carry the overhead of many models and many small manufacturing plants. But the decision introduces a degree of government planning into industry which should delight honorable members opposite, but which sticks a bit in the gullet of a supporter of free enterprise. I am not close enough to the industry to be an expert on it, but I am critical of the Government’s failure to tell the House what it is letting us in for.

The other danger in the Government’s action is that the industry, or sections of it, will have the Government under an obligation to see them through if they fall on troubled times. Say a model does not take on - and all of them do not - or say the volume drops off and parts become dearer, then a manufacturer would be completely justified in saying to the Government: “ You urged us to enter our model under plan A. Now we cannot sell in sufficient volume. If we had followed the Tariff Board our ability to import under by-law would have increased as our volume dropped. But under the Government’s plan we will really suffer. What are you going to do about it? “ This is a plea that the Government would have difficulty in resisting. I consider this is a dangerous situation for any government to get itself into.

The Government followed exactly the Board’s recommendations regarding the tariff on built up cars. That is, the tariff was to remain at 35 per cent. most favoured nation but was to rise to 45 per cent., and stay there, if the proportion of built up cars exceeded the average of 7½ per cent. of the registrations during a period of two years. The Government also followed the Board’s recommendation that a period of grace be allowed for the importers to steady down the flow of cars. Indeed, the period of grace was the same as the Board said, that is, it was to extend to 30th June this year. But the Board’s report was signed on 24th September last year, so the period of grace to 1st July was nine months - which is the recognised gestation period,I understand. However, the Government did not make the report public and take action until 4½ months later, leaving only 4½ months as the period of grace instead of nine as recommended by the Board. The importers say that this 4 months is too short for them to steady down the flow of imports with the inevitable result that the proportion will almost certainly exceed 7½ per cent. So the duty will rise from 35 per cent. to 45 per cent. and stay there even if imports drop off again. I am certain that this is what the Government desired.

I think that this is a very great pity. The object of the exercise was to restrict the proportion of imported cars to less than 7½ per cent. If this could have been done voluntarily it would have obviated the risk of unnecessarily offending the Japanese, who buy most of our wool. We ought to remember the mess we got into in the 1930’s when we wantonly offended the Japanese in this way with disastrous results to our primary industries. An increase in the duty of built up cars will mean that people, say at Darwin, Townsville and other outlying areas, will lose the advantage which they have had, which they need and which they appreciate. If they buy Australian cars they have to pay freight to the outlying area whereas the Japanese land the cars in Darwin and Townsville at the same price as they land them in Sydney. We are always very vocal about our determination to help in the development of the north, but to make the essential tools of trade dearer than is necessary is not putting our eloquence into practice, in my opinion.

It will necessarily mean also that our choice of models will be limited. The main market for cars is in the city and I have no doubt that the present models are satisfactory for city purposes. But many country people like to buy a cheaper four cylinder car with lower petrol consumption and cheaper maintenance. It is true that they may not have the quick acceleration when the lights turn green, but there are not many traffic lights at Katherine.

In conclusion I want to say that it is a pity that the Government did not ask the Board for its opinion as to whether the rate of duties on components should not come down, lt is obvious that the component manufacturers were doing very well before the market was both assured and increased in this way. That they are generally efficient I do not deny, but that they are a pretty ruthless band of brothers is common knowledge. If honorable members want confirmation of this I suggest that they read the Tariff Board report on replacement parts. Protection has always been justified by saying that the price of the protected article will fall as volume increases. Well, the volume is certainly going to increase now, so prices should fall. Internal competition is supposed to see to this, but looking at the performance of the component manufacturers in enforcing a price structure that gives, in extreme circumstances, a profit margin of 600 per cent, on a part, I cannot help feeling sceptical about the ruggedness of this internal competition. For that reason I would have thought that a tariff of 25 per cent., which after all is about the general level recommended by the Vernon Committee, would serve to keep the manufacturers of components even more honest than they are.

Sir, I have taken the opportunity to discuss this difficult technical report during the debate on the Appropriation Bill. I believe that the report is a very important document. I am concerned that there was not some other way in which we could have an opportunity to discuss this report. I would hope that the House and the country will think about the kind of thing we are doing. I am most concerned. 1 do not think the House generally - and certainly not the country - really knows the significance of the step that has been taken by the Government. A good deal of the action taken has been in opposition to the recommendations of the Tariff Board. I thought it was my duty to put the facts to the House in the manner that I have.


.- I compliment my friend, the honorable member for Wakefield (Mr. Kelly), on his tenacity in dealing wilh tariff matters and the forthright way in which he goes about his speeches on them. I wish to bring before the House tonight the subject of beef roads in South Australia. We feel that recognition should have been given by the Commonwealth long before this to applications from South Australia for assistance by beef road grants. 1 think that all honorable members have realised the growing importance of beef roads to Australia and the high priority that should be given to the construction of roads to develop a particular industry. 1 feel that the need for such roads cannot be over emphasised, nor can the fact that once these roads are established, they attract other industries, such as mining and tourism, and give a greater incentive for expansion in the region which they serve.

The history of beef roads grants shows that in the early 1940s representations were made by some States for grants or finance to build roads in the less populated but nonetheless vitally important rural areas. The States had found then, as they still find, that it was utterly impossible for them to raise additional funds to build the roads necessary for a general expansion within the State boundaries. In 1949 the Commonwealth came to the assistance of the States and, over a .15 year term, has provided by way of grants some £1 million to the States of Queensland and Western Australia to improve certain stock routes. The importance of efficient transport facilities and the necessity to provide reasonable roads for the transportation of stock was at least recognised by the Commonwealth. Recognition was given also to the importance of the beef industry to the export trade, particularly with the United Kingdom. That this initial grant aided in the development and expansion of the industry in those two States there can be no doubt, but to obtain an overall picture of the quantities of this product needed for human consumption and the number of cattle provided by States for that purpose I refer to the Year Book of the Commonwealth of Australia which for 1948-49 showed that based on a three year average in Queensland the cattle slaughtered amounted to 1,119,000. In that year, still based on a three year average, there were 5,971,000 cattle in Queensland. At 31st March 1965 it was estimated that the Queensland cattle number had increased to 7,393,000. The 1963-64 figures show the number of Queensland cattle slaughtered to have been 1,857,000, an increase of slaughtered cattle from 1949 of 738,000 head and an increase in the cattle numbers of 1,422,000.

In Western Australia in the year of the first beef roads grant, 146,000 head of cattle were slaughtered and the cattle numbers at that time were assessed at 830,000. The 1963-64 figures show Western Australia as having slaughtered 373,000 cattle and that its cattle numbers had increased by 31st March 1965 to 1,258,000 head. This shows that in Western Australia from 1949 there had been an increase in the number of cattle slaughtered of 227,000 and an increase in stock numbers of 428,000 head. Surely the figures I have cited are indicative of the great expansion and development taking place in this industry in those two States which were recipients of the grant and show also the need for an overall plan to provide a complete network of communications for beef producing areas. Indeed, all areas, where such roads are necessary should be given proper consideration.

In the period to 1961 the Northern Territory and South Australia joined with the States of Queensland and Western Australia in making representations to the Commonwealth Government for assistance to build necessary and vital beef roads in their areas. The Commonwealth gave recognition to the Territory but refused to recognise, as it still refuses to recognise, that South Australia had a claim. It merely informed the Playford Government in 1961 that consideration was being given to its claim. A number of further inquiries or applications by the South Australian Government have met with the same result. The State has been told that consideration will be given to beef roads in South Australia at some later date. Last Friday the Minister for National Development (Mr. Fairbairn) was in Adelaide. He was asked what consideration was being given by the Federal Government to financing beef roads in South Australia. His reply is reported in the Adelaide “ Advertiser “ of last Friday in these terms -

The Minister said the Government was studying a major beef road programme which would come up for discussion fairly soon. “ Naturally the emphasis in beef road development is in areas where there are large numbers of cattle, and this means basically Queensland, the Northern Territory and Western Australia “, he said. “ We have assessed the cattle numbers in South Australia and certainly we will look at this when the overall report is being considered.”

We stm have no knowledge of whether the Minister will only look at the cattle numbers in South Australia or whether, when an overall assessment is being made, he will give recognition to the great need of a particular and specified area in that State where large numbers of cattle run. I refer to the Birdsville Track area and the road that runs north-west from it. The Birdsville Track runs straight up into the Channel country of Queensland.

We are aware of the necessity to develop beef roads as quickly as possible. We are in complete agreement that the grant which will be under discussion in respect of Queensland and Western Australia should be made. We agree that a continuing grant should be made to the Northern Territory. We know that there are still great isolated areas of good cattle country in those States which will only be brought under full and profitable production when access roads are provided. All we ask is that South Australia’s problem be recognised. The need for beef roads in a particular area must, of course, be the first consideration. Cattle numbers in the entire State do not always indicate a State’s real need for additional roads and neither do the cattle numbers processed at meat works. The Northern Territory continues to run about twice as many cattle as South Australia, yet South Australia processes twice the number of cattle. What we do wish to impress on the Government is the need for main and trunk route beef roads to be established in isolated areas, such as the Birdsville Track and the north-west road. We feel that so far as practicable an overall network of beef roads should be established as quickly as possible and that the isolated regions, such as that between Marree in South Australia and the Channel country in Queensland, should also be included in the area warranting Commonwealth assistance.

South Australia’s demand was not great initially. I understand that it was in the vicinity of £500,000, or Si million in present currency. It was not intended to give a road service to the whole of the State but to provide a service to an isolated pocket of the industry which badly needed a better communications road to make possible the speedy delivery of stock, to avoid weight loss and to make possible the delivery of stock throughout the whole of the year. I feel that we should bear in mind the amount of South Australia’s demand, the isolation of the area that it wishes to service and its cattle numbers, which are now smaller than those of the States which are already recipients of beef road grants from the Commonwealth. I will not bore the House by reading the total amounts that have already been granted to Queensland, Western Australia and the Northern Territory, but they are considerable. I think that a comparison of the demands made by South Australia with the grants already made to the other States, together with the needs of South Australia in a specific area, would show that South Australia’s application for a grant should be given further consideration. lt is now proposed that Western Australia and Queensland should receive further grants, and wc agree with this. A rough survey of the planned or established routes seems to indicate that Australia should, in the next few years, establish beef roads, main highways or railways which would connect Broome and Wyndham in the north of Western Australia with Katherine, Dunmarra and Darwin in the Northern Territory. The Finke, Western Alice Springs and Alice Springs regions should be connected to Darwin and Adelaide. The Tennant Creek area should be connected to Darwin and to Mount lsa in Queensland, and Mount lsa to various Queensland or eastern seaboard meatworks. To have a network of roads sufficient to meet the needs of the cattle industry in our northern areas we still require many more miles of main and trunk route beef roads to be constructed. A plan ought to be established for beef roads, main highways or railways forming a sparse network of communication between the producer and the meatworks, and this network should extend from the north of Western Australia to the eastern seaboard.

I again draw the attention of the House to an area which, with something less than 500 miles of beef roads, would connect up producers in the area with what seems to be the overall beef road plan and would permit producers to transport their beef on a very much shorter and less costly route. I refer to that region which would be serviced by a beef road established between Marree in South Australia and Boulia and which would run between a railway and a stock route. Birdsville lies somewhere about half way between Marree and Boulia, lt is something under 500 miles from Port Augusta and is about 260 miles from the rail head at Marree. It is close to 850 miles from any meatworks on the Queensland coast, and I must admit that it is 700 miles from Adelaide, where the meatworks to which the cattle would go are located. Great numbers of cattle from Birdsville and the Channel country are transported to the Queensland meatworks when the Birdsville and other tracks become impassable or impossible. Something under half of the 500 miles to which I have referred lies in the South Australian territory, but should a beef road and the necessary trunk routes be established they would provide a natural outlet for cattle brought up to good condition in the Channel country and places closer to the Adelaide market. Producers and property owners look for the quickest, cheapest and best method of marketing their stock and would welcome beef roads in this area.

If a proper all weather beef road were built between Marree and Boulia, it is thought it would have a stabilising influence on the South Australian market. Beef road grants to the States were introduced with the expressed intention of giving a stimulus to the beef producing industry. I believe that where such roads are established, not only will cattle numbers increase but also that the previous wastage will fall. The Birdsville track, the north west road and the feeder roads would be an outstanding example of what a proper outlet for production could attain. I take heart from the Minister’s statement regarding the Commonwealth Government’s expressed intention to continue in this important developmental work and from his statement that the comprehensive report received from the Northern Division of the Department of National Development on the future programme of beef roads h under continued examination. We trust that that examination is nearing completion and that when it is completed discussions, foreshadowed by the Minister, will take place between the States concerned about aspects of a future programme. I trust that South Australia’s problem is ventilated in the Department of National Development’s report and that South Australia will not only be invited to take part in the discussions but will also have its just demands recognised, so that, in actual participation, it can more readily join in the Minister’s expressed pleasure at the success of the Commonwealth’s beef roads scheme.

Debate (on motion by Mr. Killen) adjourned.

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Bill received from the Senate, and read a first time.

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Bill returned from the Senate, without amendment.

House adjourned at 10.58 p.m.

page 1591


The following answers to questions upon notice were circulated -

Northern Development. (Question No. 1508.)

Dr J F Cairns:

rns asked the Minister for National Development, upon notice -

  1. What mineral resources in the Northern Territory have been developed over the past five years, or are proposed to be developed?
  2. By whom has the development been carried out?
  3. What is the proportion of overseas and Australian participation in the development?
  4. What is the present slate of the beef roads programme?
  5. What roads have been approved and what allocations have been made?
  6. What are the proportions of Commonwealth and State allocations?
  7. What mileage of private railway is envisaged in Western Australia?
  8. Is this railway of standard gauge and by whom is it financed?
  9. Has the Government investigated or considered the construction of a northern transcontinental railway linking Darwin and Townsville; if so, what was the result of its investigations?
  10. What cattle lands are leased in the Northern Territory?
  11. Which properties are held by (a) overseas and (b) Australian interests?
Mr Fairbairn:

– The answers to the honorable member’s questions are as follows - 1. (a) Bauxite at Gove.

  1. Iron ore at Frances Creek.
  2. Iron ore at Mount Bundey.
  3. Manganese at Groote Eylandt.
  4. Copper and gold at Orlando and Ivanhoe.
  5. Silver, lead and zinc at MountEvelyn.
  6. Tin at Mount Harris.

The McArthur River lead and zinc deposit should also be mentioned in this context, although it has been known for many years, and no definite statement as to development has been made by MountIsa Mines, which holds the deposit. 2. (a) Nabalco Pty. Ltd.

  1. Frances Creek Iron Mining Corporation Pty. Ltd.
  2. Morgan Mining and Industrial Co. Pty. Ltd.
  3. Groote Eylandt Mining Co. Pty. Ltd.
  4. Peko Wallsend Investments Ltd.
  5. United Uranium N.L.
  6. Syndicate of Mr. Harris and Mr. Jessop. 3. (a) One half Australian owned.
  7. Australian owned.
  8. Australian owned.
  9. Australian owned.
  10. Australian owned.
  11. Australian owned.
  12. Australian owned.

    1. The beef road programme in Western Australia was due to expire on 30th June 1966, but approval has been given for it to continue for another year at the current level of expenditure of $3 million.

In Queensland approval has been given to the provision of additional funds to maintain the beef roads programme at the current rate of annual expenditure, namely $4.5 million.

Since the inception of the beef roads scheme in the Northern Territory in 1961-62 an expenditure of $12.6 million has been authorised. The amount authorised for 1965-66 was $2.3 million, of which $1.1 million had been spent by 31st December 1965.

  1. and 6. The roads approved and financial allocations made by the States and Commonwealth are shown in the following table -
  1. The precise mileage is not available as the routing of a considerable distance of track for the transport of iron ore in the North-west has not been finally decided. The State Department of Industrial Development has indicated that approximately 500 to 600 miles of line are expected to be completed by 1969. This will be additional to the existing private mileage in the State of about 130 miles.
  2. The new lines in the North-west will be standard gauge (4 ft. 8i in.), and the remainder 3 ft. 6 in. gauge. The standard gauge lines will bc financed by the following companies: -
  1. The possibility of a railway linking Darwin and Townsville was considered by the Government, which in 1953 appointed an interdepartmental committee to investigate and report upon the costs of construction and operation, and on the development which could be expected to result from the railway.
  2. Al 30th June 1965 there were 224 pastoral and pastoral homestead leases in the Northern

Territory. The total area of these leases was 281,753 square miles, representing 54 per cent, of the total area of the Territory.

  1. Twenty-six properties in the Northern Territory are held either entirely or in part by overseas interests. Twelve of these properties, totalling 28,495 square miles, have overseas British interests. The other .14 properties totalling 27,573 square miles are held by American or Asian interests.

The names of the properties are -

  1. Having overseas British interests -

Anthony’s Lagoon, Austral Downs, Auvergne, Avon Downs, Burramurra, Helen Springs, Manbulloo, Mistake Creek, Nutwood Downs, Rockhampton Downs, Waterloo, Wave Hill.

  1. Having American or Asian interests -

Brunette Downs, Bullo River, Coolibah, Delamere, Elsey, Fitzroy, Georgina Downs, Goodparla, Hodgson Downs, Jindare, Lake Nash, Meneling, Stapleton, Tipperary.

As far as is known, all the remaining 198 pastoral properties leased in the Northern Territory are held entirely by Australian interests.

Maintenance Orders - Treaties. (Question No. 1584.)

Mr Whitlam:

m asked the Minister for External Affairs, upon notice -

  1. With what countries has each (a) Slate and (b) Territory made arrangements under Maintenance Orders (Facilities for Enforcement) Acts?
  2. What steps have been taken since his predecessor’s answer to me on 25th October 1962 (“ Hansard “, page 2034) to accede to the 1956 United Nations Convention on the Recovery Abroad of Maintenance?
Mr Hasluck:

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

  1. In a reply given on 25th October 1962 (“ Hansard “, page 2034) to a similar question, my predecessor set out a list of the countries with which arrangements for the reciprocal enforcement of maintenance orders had been made up to that time. Since then no similar arrangements have been made with additional countries.
  2. As has been indicated in previous replies to questions on this subject, the States take the view that bi-lateral arrangements in this field are more suitable to their needs than arrangements made under a multilateral convention. Since my predecessor’s reply of 25th October 1962, all but one of the States have enacted new maintenance legislation containing provisions that will enable reciprocal arrangements for the enforcement of maintenance orders to be made with any country having similar legislation. In the circumstances Australia does not at present contemplate becoming a party of the Convention on the Recovery Abroad of Maintenance.

Mangalore Aerodrome. (Question No. 1717.)

Mr Beaton:

n asked the Minister for Civil Aviation, upon notice -

  1. Have the field tests on the pavements at Mangalore aerodrome which were completed in late 1965 yet been analysed?
  2. If so, did the tests indicate the need for additional works or equipment at Mangalore?
  3. If additional works or equipment are needed, when will these works be carried out or the equipment be installed?
  4. What types of aircraft in commercial use are able to use the aerodrome?
  5. Will aircraft now on order for the commercial airlines be able to use it?
Mr Swartz:

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

  1. The assessment of the field and laboratory results are being finalised at present by the Department of Works and it is expected that the results will be available early in May. 1 might say that the Department of Works has been under considerable pressure to complete investigations of pavements at many other places throughout Australia and a number of these have had to be given priority over Mangalore. 2 and 3. The answer to these questions must await the result of the investigations.
  2. At present, Viscount F.27 and DC.4 aircraft are able to use Mangalore without restriction. DC.6B and Electra aircraft are able to use the aerodrome on an alternate basis and also for some training. Boeing 727’s are able to use it on an alternate basis.
  3. The pavements as they exist at Mangalore today would be suitable for use by Douglas DC.9 aircraft on an alternate basis.

Automation. (Question No. 1702.)

Mr Webb:

b asked the Minister for Labour and National Service, upon notice -

  1. Has the Australian Council of Trade Unions, in order to protect workers, asked his Department to create a special section within the Department to prepare industry for the introduction of automation?
  2. if so, why has this action to meet the impact of automation not been taken?
Mr Bury:
Minister for Labour and National Service · WENTWORTH, NEW SOUTH WALES · LP

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

The A.C.T.U., represented by the President, the two Vice Presidents and Secretary, saw me on Monday last on this very question. 1 then told the A.C.T.U. representatives that a decision had been taken to constitute a separate Technological Change Section in the Department. Later on Monday f issued a Press statement explaining in some detail what the Section would do and what my Department, as a whole, had already been doing and planned in the technological change field. A copy of the Press statement is being sent to the honorable member.

Irrigation. (Question No. 1724.)

Dr Patterson:

n asked the Minister for Primary Industry, upon notice -

  1. In the economic evaluation of irrigation projects undertaken by the Bureau of Agricultural Economics, what is the Bureau’s attitude from a national viewpoint towards indirect benefits in tho benefit cost calculus when (a) comparing an irrigation project wilh other alternatives for investment (both like and unlike projects) and (b) evaluating an irrigation project in isolation?
  2. Does the Bureau in fact exclude completely all indirect benefits from all evaluations of development projects?
Mr Adermann:

– The answers to the honorable member’s question is as follows - 1. (a) The Bureau of Agricultural Economics has not been asked to compare one project with another.

  1. The Government recognises that there are indirect benefits and indirect costs in any project. The indirect benefits are intangible and may vary in significance from one region to another. It is for the Government to decide what weight they should be given. On looking back over a number of B.A.E. reports I find that they have drawn attention to particular indirect benefits, not only from a national viewpoint but also from a regional viewpoint.

    1. See answer to 1 (b) above.

Evaluation of Development Projects. (Question No. 1725.)

Dr Patterson:

n asked the Minister for Primary Industry, upon notice -

Does the Bureau of Agricultural Economics consider, under its present system of evaluation, that when a development project has been finally selected and constructed, indirect benefits flowing from the project have no real economic value in the benefit-cost analysis from the national viewpoint?

Mr Adermann:

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


Australian Army Journal. (Question No. 1698.)

Mr L R Johnson:

son asked the Minister for the Army, upon notice -

  1. Did the previous Minister for the Army take action in December1965 to ban the press and public from reading the then current issue of the periodical Australian Army Journal?
  2. Was public circulation of this periodical prevented by the Commonwealth taking out a Crown copyright?
  3. Is it a fact that this drastic action was taken to suppress circulation of an authoritative article by a military weapons expert, Major D. K. Atkinson, who exposed the unsuitability of an Australian Army weapon?
  4. What was the particular weapon criticised in the article?
  5. Was the criticism of the weapon well founded and are the lives and well-being of Australian servicemen threatened by the continued use of the weapon?
Mr Malcolm Fraser:

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

  1. Yes. The journal is intended as a forum for free expression and exchange of views by Army personnel on military matters. Up to 1961 the journal carried a restriction in the following terms: “ The information given in this Journal is not to be communicated either directly or indirectly to the Press or to any person not authorised to receive it “.

This provision was then removed but, as a consequence, it was found that occasionally reference to articles appearing in the Journal was made in the Press with the implication that the article was an expression of official views, notwithstanding the statement in each copy of the Journal that the views were the author’s own and did not necessarily represent General Staff opinion or policy.

This inhibited the free expression of views by Army officers and thus defeated the purpose of the Journal. The decision to re-impose the restriction on and Crown copyright the Journal was taken for this reason.

  1. No. The Crown copyright merely precludes reproduction of articles in the Journal.
  2. The action is not considered drastic, but in any case it was not taken to suppress the article referred to.
  3. The only criticism in the article was directed to the exaggerated claims which had been made on the casualty inflicting capabilities of the 5.56 mm. round, particularly in association with the Armalite rifle. Generally the article discussed 5.56 mm. weapons and weapon systems.
  4. Not applicable.

Perth to Kalgoorlie Railway. (Question No. 1693.)

Mr Collard:

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

  1. When was an estimate last made of the cost of constructing the standard gauge railway between Perth and Kalgoorlie and what was the estimate?
  2. Do the terms in relation to Commonwealth provision of finance for the project remain the same under the most recent estimate of costs as they were under the Railway Agreement (Western Australia) Act 1961 and do the same terms also apply with regard to repayments by Western Australia?
  3. If so, what are the amounts which Western Australia will be required to pay (a) as initial costs, (b) as repayments to the Commonwealth, (c) as interest on finance provided by the Commonwealth and (d) in total?
Mr Freeth:

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

  1. Tho Western Australian Government Railways re-estimated the cost of the project in February 1965. The estimated total cost was approximately $110 million. This estimate was based on costs current at the time, and did not include the cost of certain work for which at that stage designs had not been completed. For these reasons it was considered desirable to have a complete estimate prepared by consulting engineers with a report on all work to be undertaken. This report and revised estimate, covering the railway standardisation and associated railway works, has been received and is currently being examined by State and Commonwealth officers.

    1. Yes.
    2. The Railway Agreement (Western Australia) of 1961 provides that the State will pay -
    1. Fifteen per cent, of project expenditure as it is incurred;
    2. A further fifty per cent, of project expendi ture, by instalments, comprising:
    1. fifteen per cent, over 50 years, and
    2. thirty-five per cent, over 20 years;

    3. Interest on the outstanding balances at the long term bond rate as provided in the Agreement. (The rate currently in use is Si per cent.);
    4. It is not possible at this stage to advise the total amount which will be payable by the Western Australian Government.

Cite as: Australia, House of Representatives, Debates, 5 May 1966, viewed 22 October 2017, <>.