House of Representatives
22 April 1969

26th Parliament · 2nd Session

Mr SPEAKER (Hon. W. J. Aston) took the chair at 2.30 p.m., and read prayers.

page 1279


Export of Merino Sheep

Mr MUNRO presented from certain electors of the Division of Eden-Monaro a petition showing that the decision of the Government to lift the 40-year old ban on the export of merino rams will do irreparable harm to the present and future merino wool industry of Australia; that the initial quota of 300 rams will be sufficient to make any future protest worthless; and that the production of fine medium quality merino wool in cheap labour countries will put the Australian merino wool grower and all connected wilh this industry out of business.

The petitioners pray that the Government will cause to be held a referendum of wool growers to determine this issue.

Petition received.


Mr HAYDEN presented from certain citizens of Australia a petition showing that there is a crisis in education in Australia; that a transformation of the classroom situation is necessary, where children will have reasonable freedom to develop as selfreliant, independent individuals and where they can learn to function as members of a democratic community; that proper preparation for school and thorough guidance there by qualified teachers are crucial to a proper education for Australia’s children; that the present rate of teacher training is far below the requirement determined by the Martin Report which shows that 75% additional teachers in government schools alone will be required by 197S compared with those in service in 1963; that to obtain maximum benefit from the education system preschool facilities should be available to all children; that insufficient State or Federal assistance bas been made available to meet these requirements; that adequate finance to meet these requirements can only be provided by the Commonwealth Government; that there is an urgent need for a national inquiry into all aspects of Australian education.

The petitioners pray that the House of Representatives in Parliament assembled will give earnest consideration, during Human Rights Year, to this most vital matter.

Petition received and read.

page 1279




– My question is directed to the Prime Minister. I refer the right honourable gentleman to his statement in this House on 20th March during the debate on poverty. Does the right honourable gentleman recall describing the undertaking by the Australian Labor Party to abolish the means test as ‘inane’? Does he recall saying that the abolition of the means test would not assist to relieve poverty where the need really lies? Did the Minister for Social Services support him by describing the proposal as ‘fatuous’? Has the right honourable gentleman seen the heavy vote polled in the Curtin by-election by a candidate supporting the abolition of the means test? If so, does he still think that the abolition of the means test would be ‘inane* and fatuous’?

Prime Minister · HIGGINS, VICTORIA · LP

– I have noticed the vote referred to by the Deputy Leader of the Opposition but I think it must be accepted, even by him, that the abolition of the means test would not be directing governmental taxation assistance to the greatest areas of poverty, and this is what was stated at the time.

page 1279




– The Minister for Defence will recall that recently J asked him a question in connection with the proposal to release certain lands held by the defence departments in Sydney, particularly at South Head, for the purpose of public recreation. In view of the statement’ made by the New South Wales Minister for Lands that he intends to create a national park, which if it is to be effective must obviously include defence land on the Sydney headlands, will the Minister for Defence inform the House what definite decisions have been made about this matter?

Minister for Defence · PATERSON, NEW SOUTH WALES · LP

– I think that the House and the people of Australia generally will very much appreciate the fact that the New South Wales Government has decided to preserve what remains of the public heritage in relatively unencumbered land on the foreshores of Sydney Harbour. I have noted the proposal to set aside a 1,300-acre Sydney Harbour national park. I have noted also with a bit of interest that no less than 1,000 of those 1,300 acres are sought as a contribution by the Commonwealth. The Commonwealth Government has never been disinterested in either this proposal or any steps it might take to assist this grand design. Indeed, it has re-arranged the proposals for the land at South Head. We have decided to move the Department of the Army installation from that area, thus providing 33 acres there for use by the Stale. lt should be recalled that the balance of this harbourside land is really functional to the purposes of the Department of the Navy, at least for the time being. As the Minister for Lands knows very well, the Commonwealth Government has had the North Head area under study for some time to see what disposition of the land might be made to assist the State. More recently the Commonwealth Government has sold to the State six parcels of land at a valuation satisfactory to it.

The whole of the defence lands in New South Wales are under consideration at the present time. This indicates that the Commonwealth is co-operating as best it can with the State, but it must not be expected that these lands will be made available in the immediate future. I draw attention to the fact that such lands as the State itself held around the Sydney Harbour foreshores have been alienated and if it were not for the fact that the Department of Defence had held these other lands for so long there would be no chance whatsoever of the State Government establishing a national park in that area. The Commonwealth will cooperate to the best of its ability in bringing to fruition the grand design of the New South Wales Government.

page 1280




– I ask the Minister for the Army whether all Australian Army Service Corps men, including national servicemen, are liable to meet the cost of their own defence, including travelling and legal expenses, if involved in police traffic offences while on duty. If so, are servicemen made aware of this prior to taking up duty? Is it a fact that recently a New South Wales national serviceman who was sent to

Queensland to do his service was involved in a traffic accident in that State and, although exonerated from blame by the Army was refused financial assistance to return to Queensland to defend a police traffic prosecution arising from the accident? As the case is still before the court will the Minister review his earlier decision not to provide assistance to this soldier? Alternatively, will he tell the Parliament why it was not ensured that the case would be disposed of while the soldier was still serving in Queensland?

Minister for the Army · FLINDERS, VICTORIA · LP

– I could not quite hear the full question posed by the honourable gentleman, but 1 caught the major part of it. The circumstances to which he draws attention are largely true. The matter has been very fully considered and there is no intention on my part to- review the case. I point out to the honourable gentleman that, as a matter of general policy, any soldier involved in a case in a civil jurisdiction bears the cost of and takes the responsibility for arranging his own defence, except where a matter of litigious Commonwealth interest per se is involved. This is a question of policy.

page 1280




– 1 address my question to the Minister for National Development. I refer to recent announcements of major new mineral developments, particularly to reports that a contract is about to be signed for huge iron ore exports from the Robe River area of Western Australia. I also refer to the Treasurer’s reported statement that he expects the gross national product to rise by a record amount this year. Can the Minister indicate the extent to which mineral developments are contributing to the nation’s growth rate?

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

– So far no contract has been signed for the Robe River project, to which the honourable member refers, although [ understand from both the head of the company concerned and the Western Australian Minister for Industrial Development that they are hopeful that a contract will be signed in the very near future. If a contract is signed, I believe it will be one of the largest contracts ever signed for mineral exports; it will be of the order of SI, 200m.

However, I stress that not only has the contract not been signed but it has not been considered by the Commonwealth Government, which will have to decide whether to give authority to export after it reviews all the factors associated with the contract.

The honourable member asked what contribution minerals are making to the nation’s growth. Mineral developments have increased enormously in recent years. My Department regularly issues projections of mineral exports and in fact has produced one which I hope to issue very shortly. It shows that in the year 1970-71 Australia for the first time will have mineral exports in excess of $ 1,000m per annum. This is 3 years earlier than was shown by a previous projection which was made only 10 months before this projection was made. In addition, at (hat time there will be a quite considerable saving to national funds by replacement of oil imports, which will be running at about $130m per annum then. In fact, if we take the 6-year period from 1966-67 we believe that the increased contribution of minerals to export income, either by way of exports or of replacement of imports, will exceed S 1,000m per annum in that period.

page 1281




– My question is directed to the Prime Minister. Can he advise the House whether reports are correct that he agreed with President Nixon on his recent visit to the United States to repeal the National Service Act and so bring Australia into line with the policy of the United States Government recently announced by President Nixon, which is no conscription lor overseas service?


– If there are such reports, they are incorrect.

page 1281




– 1 ask the Prime Minister whether his attention has been drawn to an article attributed to Dr J. F. N. Murray, a former Chairman of the Federal Valuation Board, when speaking to the Pan Pacific Congress of Real Estate Valuers and Appraisers. Dr Murray stated that the major capital cities in Australia were suffering from a proliferation of government employees and that the advantages of removing departments to country towns would be very great. Can the Prime Minister advise the House whether the Government is considering this form of decentralisation with its attendant advantages to country towns and the nation generally?


– I think perhaps the first point 1 ought to make relating to the article is that it refers to government employees and is not to be taken as referring to Commonwealth Government employees but rather to Commonwealth, State and municipal employees. At least that is the way in which I would interpret it. The honourable member will also know that there has been a considerable programme of decentralisation - and that is all it can be called - in the transfer of Commonwealth Government employees from the main cities of Australia to Canberra, lt is often suggested that building houses for Commonwealth Government employees in Canberra is a waste whereas clearly if they were not built here they would need to be built, or occupied, in some other major city. In relation to other matters, the Post Office clearly does decentralise as far as it is possible for it to do so, and so do various other departments. As an instance of that, I would remind the honourable member of the construction of the Army camp at Townsville, which was in itself a measure of decentralisation in that the soldiers and all the administrative facilities connected with them were required to move to a country town. Clearly where it is possible with advantage for this to happen it is a good thing for it to happen.

page 1281




– My question is directed to the Minister for Health. In view of the chaotic confusion that exists in all States, and particularly in South Australia, in regard to the inadequate supplies of Hong Kong ‘flu vaccine will the Minister give consideration to importing sufficient supplies of the vaccine to alleviate this serious situation?

Minister for Health · BARKER, SOUTH AUSTRALIA · LP

– My department has made careful inquiries about the possibility of importing influenza vaccine. The only vaccine that is available to be imported has in fact been imported, and that was only 150,000 doses. The honourable gentleman talks critically about the situation in relation to ‘flu vaccine. 1 think I should just make the point to him and to the House that flu vacine is almost unique as a pharmaceutical product. Unlike other pharmaceutical products it cannot be stockpiled because the situation in relation to it can never be clear in Australia until January or February. Not only is it not clear how much will be required - whether or not there is likely to be an epidemic - but also it is not until that time of the year that sufficient information is available as to what the cocktail is to have in it. in other words, what strain of virus the vaccine will have to counter.

All 1 want to say is that in this situation inevitably there will be temporary shortages at some distribution points. Some chemists and some doctors will experience temporary shortages and there will be shortages at other points where drugs and medicaments of- this sort are normally available. Since the Commonwealth Serum Laboratories Commission has received a good deal of abuse in relation to this matter, let me say that never before - despite the fact that ‘flu vaccine has been on the market for many years - has the demand in Australia for ‘flu vaccine exceeded 500,000 doses. The Laboratories have produced, since the February dateline of which 1 have been speaking - they were unable to produce earlier to meet the situation in Australia - 2.5 million doses and they expect to have produced 4 million doses by the end of May. Under an Act of this Parliament the Commonwealth Serum Laboratories Commission has complete independence in this matter. I have requested the Laboratories to give priority to the production of single dose ampoules of vacc’.ne for distribution to chemists for the use of pensioners and for distribution direct to private doctors of multi dose packs for use by those categories of people who are not pensioners and who really need the vaccine. The Laboratories have agreed to do this. I am still informed, notwithstanding the honourable gentleman’s description of the situation, that before the end of May there should bc enough vaccine to vaccinate all the people in the high risk groups, [n addition there should be considerable supplies of the vaccine for others in the low risk group.

page 1282




– Has the Minister for Health called together the Commonwealth Health Insurance Council to examine and report on the implications of the Nimmo Committee’s report? If not, will he do so in order to have the advantage of the particular qualifications of the members of the Council in matters affecting the administration of the national health scheme?


– I have not yet done so but I intend to do so next month.

page 1282




– I ask the Minister for Primary Industry a question. Has a survey been made to ascertain whether any significant contribution is made to wheat production by people in business or professions who have farming interests only as a sideline or for purposes of income tax relief? If so, what did the survey reveal? If a decision is taken to restrict wheat deliveries will genuine farmers already established and genuine farmers presently developing a property be given preference or priority over the people to whom I have referred so as to ensure that the genuine farmer will receive a quota at the highest possible level1? Finally, if the allocation of quotas becomes a State responsibility will the Minister use his influence to ensure that preference is given to the genuine farmer?

Minister for Primary Industry · RICHMOND, NEW SOUTH WALES · CP

– The Government does not carry out surveys of part time or temporary farmers. When the Government conducts a survey of a rural industry it does so only of people who are bona fide farmers and who obtain the bulk of their income from their farming activities. The quota delivery plan for the wheat industry is at present being considered by representatives of the industry, the States and the Commonwealth. Progress to date makes me optimistic that the plan will be implemented this year. There are a few areas of difficulty with the Australian Wheat Growers Federation on the matter of restrictions on saleable wheat. The States are involved in the matter of legal amendments necessary to implement quotas. The Commonwealth is involved in fiscal arrangements for the first advance of $1.10. I believe that all of these problems wilt be resolved in the very near future. The matter of quotas for individual growers will have to be resolved at a State level, the industry being in close consultation with the State governments. I would think that whatever decision is arrived at on this level, it will be to see that there is no injustice done to bona fide farmers.

page 1283




– My question is directed to the Minister for Primary Industry. Is he aware that the painted ornamental fish decorations behind the supper table at last Thursday night’s parliamentary reception were made of margarine? Does the Minister consider the provision of imitation fish to be the most appropriate use yet discovered for imitation butter ©r does he think that these decorations were the first ominous signs of a new technological breakthrough enabling the production of an artificial fish taste and indicating the possibility of a further organised and deliberate campaign directed against another great Australian primary industry?


– I will agree with the honourable member that this is probably the most appropriate use that there is for margarine. But I think that the Australian fish industry, like the Australian dairy industry, is not going to be unduly concerned about it being used for this purpose.

page 1283




– I ask the Prime Minister a question. Has the right honourable gentleman received any reports from the Australian High Commissioner to the United Kingdom on the magnificent victory of Miss Bernadette Devlin, at the age of 21 years, in a recent election for a Northern Ireland seat in the House of Commons? Does the victory of Miss Devlin indicate that affairs in Northern Ireland are taking a turn for the better? Does our High Commissioner in London furnish regular background reports on the troubles and civil commotion in Northern Ireland? Has the right honourable gentleman given any instructions to the High Commissioner to use his best endeavours to have civil liberty and elementary democracy introduced into Northern Ireland? I point out that we hear a lot about North Korea but we hear nothing about Northern Ireland, which is-


-Order! The honourable member has asked his question.


– I am bound to say that I have not received any information as to the victory at an election to which the honourable member refers. 1 have not given any instructions to our High Commissioner accredited to the United Kingdom Government and I think that anyone who did would have great temerity to interfere in any way in the affairs of Ireland.

page 1283




– My question is addressed to the Minister for Social Services. I ask: Because of recent misleading public statements on poverty by the Leader of the Opposition and others, can the Minister confirm that the means test applies today only to single social service pensioners who receive the sum of $728 plus an additional $520 a year or its equivalent in property which is in addition to his own residence and personal property? Without in any way detracting from the case of the progressive liberalisation of the means test, in which I personally firmly believe, will the Minister take steps to dispel the widespread conception that somehow the abolition of the means test would advantage a large number of pensioners-


-Order! The honourable member will ask his question.


– Or alleviate real poverty?

Minister for Social Services · MACKELLAR, NEW SOUTH WALES · LP

– I am afraid that I am no way in control of misleading statements made by the Leader of the Opposition. I am not in a position-

Mr Cope:

– Thank heavens for that.


– The honourable member has much to be grateful for. The whole matter of the means test is one of policy on which 1 am unable to comment except to say that it is at the present moment receiving the active consideration of the Welfare Committee and indeed of the Government. The question of the operation of the means test is tolerably well known, and at this moment I do not propose to go into details about it. But I reiterate what 1 said last week, that we have prepared pamphlets in relation to this matter which I think will enlighten even the Leader of the Opposition. We hope that these pamphlets will be disseminated and that what they say will be appreciated by all members of the House and. of the public. Tt is true, of course, that the means test, under the merged means test arrangements made by this Government, does not operate until a notional income of $10 per week has been reached in the case of single persons, and SI 7 per week in the case of married persons.

page 1284




– The purpose of the Army Design Establishment is to design, develop and prove equipment to meet the needs of the Australian Army. As a result of a visit which I made to the Establishment some months ago, I am aware that a small number of trade vacancies exists in an establishment, as I recall, of about SOO trades and technical categories. However, the vacancies do not exist as a result of any wage inadequacy, because in accordance with Commonwealth policy my Department pays full award wages. The present vacancies are due, I am sure, to the general level of employment and the shortage of trades and technical personnel throughout the community. It is true that a small number of national servicemen has been posted against those vacancies. They are soldiers and they are paid as such. I am sure that their pay would include group pay allowances, where appropriate, and that would in fact approximate to civilian rates of pay without overtime.

So far as the general justification for using national servicemen in this fashion is concerned, I point out to the honourable gentleman who asked the question that the prime purpose of the National Service Act was in fact to provide manpower to enable the Australian Army to meet its defence obligations and commitments, lt is entirely consistent with this essential purpose that national servicemen should be utilised at the Design Establishment on the basis, not that they form some cheaper pool of labour, but that they are there to remedy a labour deficiency. I understand that at the Establishment there may be national servicemen who live out because there is no suitable living-in accommodation available.

page 1284




– Is the Minister for National Development aware that a recent meeting of the Southern Riverina Irrigators District Council has stressed a requirement of additional water from the River Murray and is asking the Federal and State governments concerned to look at projects which could make more water available to the district; in particular, the possible diversion of the Kiewa River water into Lake Hume? Can the Minister say whether this project has been investigated and, if so, what were the results of the investigation?


– The River Murray Commission, at my instigation, did look at this project. We desired to see what would be the cost of diverting the Kiewa River and what benefits would accrue from it. The Snowy Mountains Hydro-electric Authority assured us that it would be quite possible to undertake this work by the construction of a small diversion weir and channel of some 18 miles in length, which would divert water over a saddle into Lake Hume. This would cost about $4m. However, when we came to look at the benefits of this project we ran computer programmes and these showed that the benefits would be virtually nil. This is because during the irrigation season water from the Kiewa is made available. Being above Albury, it belongs to the River Murray Commission. It is supplemented by water released from Lake Hume to give each of the three States its entitlement. During the period when irrigation is not under way the River Murray Commission still has to retain a flow in the river and it does this with Kiewa water. The small amount that would ever have been available for diversion Into Lake Hume would usually have been diverted only in years when Lake Hume was full.

The Commission decided that there was virtually no benefit of any sort to be obtained by diverting the Kiewa River into Lake Hume. The only benefit would be the additional electricity which would be generated by passing the water through the turbines at the Hume Weir. However, the honourable member knows that the River Murray Commission, in its recent report, has recommended a new major storage at Dartmouth and if and when this storage is constructed it will make available a great additional amount of water in the River Murray. The River Murray Commission controls the water only while it is in the Murray. The moment it is diverted it is for the State government to see how that diverted water is allocated.



– I address a question to the Minister for Defence. Did the Government announce the placing of an order for the Fill aircraft in late 1963? Was the expected delivery date announced then as being between May and September 1967? Did the Minister, in June 1968, state that the first aircraft would be flown to Australia during October? Did he say, as the turnover ceremony for the first aircraft at Fort Worth ob 5th September 1968: ‘At the end of the month these fine aircraft will begin to fly westward’? Was this prediction then changed to July or August of this year? Can he give any indication whether this latest guess will prove to be correct?


– I am delighted to have the honourable gentleman so intimately concerned with the future of this magnificent aircraft project. The dates that he has given are substantially right. They may vary a month or two either way, but in the broad the honourable member has done his homework extraordinarily well. It is true that in October last it was expected that we would have early delivery of the aircraft. But the House knows very well - the Opposition has never allowed us to forget it - there was a failure of a test piece in the structure of the aircraft and this set the expected date of delivery back to August or thereabouts of this year, although that date was not confirmed. Our aircraft, therefore, were put back into re-work in the production line of the General Dynamics Corporation. But in the meantime there followed a further failure under static test which called for further modifications. These modifications are presently being done and the best anticipation that we have - it is only an anticipation - is that the aircraft should be available some time late in the year.

I hope that I will not be held to a precise date because already on a number of occasions we have stipulated to the United States, and indeed have given an undertaking to the House, that we will not accept delivery of these aircraft until we are completely certain that all the technical difficulties have been taken care of. For that reason I am completely unable and, indeed, unwilling to put down a definite date. We will do exactly what we have said: We will take delivery of the aircraft as early as possible when we have been assured to our own satisfaction that there are no further technical difficulties.

page 1285




– Did the Minister for Labour and National Service recently notice a leading article in a Sydney newspaper which gratuitously advised the Government to broaden the grounds of conscientious objection applicable to national service? Did the article suggest that grounds other than religious grounds should be included in the legislation? Is my memory astray, or have such grounds been included in the National Service Act for very many years?

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

– I did notice a leading article which I presume is the one to which the honourable member referred. It clearly contained an error of substance upon which the rest of the article was founded. I noticed, too, that in the footnote to a letter which appeared in the same paper today there was confirmation of the error. Those who read the National Service Act - I would have thought this would have been the elementary thing to do before writing leading articles on such a subject - would know that section 29a. (5.) makes quite clear that conscientious objection can be approved on grounds other than religious grounds. This in fact has been part of the present legislation and its predecessors for many years, lt is indeed sad that homework of a better standard could not be done so that accuracy can be preserved. I would hope that in the future people, whether members of Parliament or newspaper writers, know their facts before they write such exhortations.

page 1286




– I direct my question to the Prime Minister, ls his Government to sign the Nuclear Non-proliferation Treaty?


– 1 think it has been made quite clear in this House on a number of occasions that our Government welcomes an effective nuclear non-proliferation treaty, but there is a requirement for it to be effective, and there are a number of other requirements to which we wish to know the answers before I can give an answer to the question asked by the honourable member.

page 1286




– 1 ask the Minister for Civil Aviation: ls it correct that he is under pressure from more than one source to case the curfew on the schedule of jet aircraft operations in and out of most capital city airports between the hours of 1 1 p.m. and 6 a.m.? Bearing in mind that the probable objection to these operations is the incidence of aircraft noise; would the Minister give an assurance to the House that he would respect the status and position of this Parliament’s instrument of activity in this field, namely, the Select Committee on Aircraft Noise?

Minister for Civil Aviation · DARLING DOWNS, QUEENSLAND · LP

– I cannot recall any instance in which J. have been approached directly on this matter; I do not know the position in relation to the Department. Certain approaches may have been made directly to my Department, but I have certainly not been subjected to any pressure whatsoever and have not had any direct approach made to me. But 1 can assure the House that the importance of this matter is fully appreciated, and certainly this is one of the matters that would be taken into consideration by the Committee that has been set up by this House. I have given assurances in the past, and I do so again now, that we give very careful consideration to applications which are received from time to time for variation of this policy either for emergency purposes or for some other special reason. From time to time, by agreement, we have given permission for additional flights outside the normal hours for emergency purposes or because of pressure of requirements at Christmas time, the Easter period or some other period of that type when it is just not possible to handle the traffic on any other basis. I do give an assurance to the House again that until such time as some variation can be seen in the noise problem we will’ strictly adhere under normal conditions to the policy in relation to airports - particularly Sydney and other airports where we feel it is necessary to apply this policy in Australia.

page 1286




– Did the Prime Minister see the leading article which appeared in a prominent Australian- newspaper yesterday calling for the resignation of the Minister for External Territories? If he did see this statement and the points outlined in it as a basis for the Minister’s resignation, and if he has considered the points, what action does the Government propose to take?


Mr Speaker, I think the solicitude that members of the Opposition have as to who is or who is not serving in the Cabinet is becoming quite touching. All I can say in reply to the Deputy Leader of the Opposition is that 1 saw the article to which he referred and I read the article to which he referred and that is all that I propose to say to him.

page 1286




– I ask the Minister for Shipping and Transport: As at this time the Australian Government is requiring refiners to use Australian produced oil, will there be an increase in the volume of crude and product moved around the Australian coastline? If so, what steps is the Government taking to ensure that the level of coastal freight rates will not affect unduly the price of petroleum products to Australian consumers?

Minister Assisting the Minister for Trade and Industry · NEW ENGLAND, NEW SOUTH WALES · CP

– It is true that as a result of the considerable increase in Australian production of crude there will be an increase in the volume of the Australian product moved around the Australian coastline and there could be some additional movement of crude from one source of production to the refineries where it is to be utilised. It is true also that as of the present time the industry assessed rate for general purpose tankers, or ASCRA, is almost twice the level of the AFRA rate which is the rate set for the carriage of oil in overseas general purpose tankers. It is true further that Australian operating costs as a result of Australian manning industrial conditions and for other reasons are substantially higher than they are in other countries of the world.

In the result, the Government is concerned that, if there is to be an increase in the volume of shipping and in the movement of crude and product around the coastline, any high level or discrepancy in level between the ASCRA and AFRA rates might in some way affect the selling price of petroleum products in Australia. For this reason, the Government, for some time has had discussions with representatives of industry in an effort to try to establish what might be a reasonable rate below which the oil companies should be able to carry both product and crude profitably. tt is hoped that, as a result of these discussions, it might be possible to assess a maximum coastal freight rate and to require then all new tankers in future, whether they are to be built in Australia or imported to Australia, to be operated at or below this level. It. is felt that, by negotiations in this way, there should be a containment in any possible increase to consumers and that it should be possible to ensure that there is at the same time adequate profit for shipowners and ship operators.

page 1287



Mr Speaker, I wish to make a personal explanation.


-Does the honourable member for La Trobe claim to have been misrepresented?


– Yes, indeed 1 do, Sir. The News- Weekly’ of 26th March 1969 refers to a symposium in which I took a part. I had to comment on two papers. The passage to which I object in the publication is:

He said be agreed with Mr Samuel’s comments on inadequate pay rates in the Australian Army, and criticised the present structure of promotions within the armed services.

To gain promotion, he said, all one had to do was wait around. The quality of leadership in the army consequently suffered. 1 feel by that, Sir, the inference may be taken that 1 am criticising the standard of officers or Army leadership. I am not. Might l read from the transcript taken from the tape? According to the transcript, I said:

There is no doubt that the Army at this particular time as far as junior and middle Officers and NCOs is considerably under strength. The result of this shortage is you get a man as a second lieutenant one minute, a first lieutenant the next then he is a captain within months and you could well find him a major before very much longer. Now there is one thing to being a very good officer in the Army. 1 think you will agree most of it you learn by hard experience; most of it you learn by seeing how other people handle situations, and it is 1 think agreed by most that good officers are the first requirements for the safety of troops. This circumstance is brought about by the circumstances of having a shortage in middle commissioned ranks. This is not a criticism of the officers themselves.

page 1287


Ministerial Statement

Minister for Shipping and Transport · New England · CP

– by leave - Honourable members will recall the statement made by the Prime Minister (Mr Gorton) on 26th November 1968 that the Government had decided, subject to the satisfactory conclusion of negotiations, to enter overseas shipping by operating Australian crewed vessels in its own right in both the Australia-United KingdomContinent trade and the Australia-North America trade. I now inform the House that the Government has approved the formal agreement whereby the Australian National Line - thai is, the Australian Coastal Shipping Commission - will enter into a joint venture with the British shipping linos comprising Associated Container Transportation (Australia) Limited. The Chairman of the Australian Coastal Shipping Commission, Sir John Williams, will be authorised to sign the agreement and will sign it later today: Sir Basil Smallpiece, Chairman of the Cunard organisation, will sign on behalf of that company’s subsidiary. Port Une:

Mr Edmund Vestey will sign on behalf of Blue Star, and Mr Alastair Lloyd on behalf of the Ellerman organisation.

There have been two developments of which this House should be informed. The first is that the ANL has joined as a member of the appropriate conferences with a 7£% share of the trade sufficient to ensure a sound basis for ANL entry into the trade between Australia and the United Kingdom and Europe. The second development is that the Government has now decided to buy the ships from the outset rather than charter them for 5 years with the obligation of purchase at the end of a 5-year period. Honourable members will appreciate that entry into a major operation of this kind involves consideration of a whole host of factors, among them being finance, terms of payment, British investment allowance, crewing, costs involved in operation, arrangements for effective management, and whether or not it should be operated under an Australian Sag. In making its decision on how best it could proceed the Government had to weigh against each other the effects of all these matters and decide on the best kind of operation from Australia’s overall point of view. Whilst I cannot divulge the estimates involved - they draw on the Associated Transportation Container lines’ assessments of revenue and thus concern the private affairs of companies - the negotiations involved intensive and detailed discussions between the partners, with government and with a great many groups of people in order to ensure that all relevant factors were given their proper weight. In the result it became clear that our earlier intention to charter should be modified and that on balance Australia’s interest will be best served by owning the ships from the outset.

The Government will buy the ship which the ACT lines had previously designated ACT 3. The Australian name of the ship will be announced shortly. The ship was launched in Germany last week. It is expected to be delivered by the builders at the end of July and will then be bought by the ANL from the ACT lines at the actual cost of the vessel. The ACT ships for the UK-Europe trade will cost around $8im each. However, ANL will be obtaining the vessel on terms which I shall explain in a moment.

There is no doubt that this is a very favourable price for a ship of this kind. Because of the time at which the orders were placed and because three ships were being bought at the one time, the ACT lines were able to obtain a most advantageous price from the builders. By coming in now, after these arrangements have been developed by the ACT lines during the last 2 years, the Australian Government will receive the full benefit of their forward planning. A like advantage will be obtained for the ship to be built for the trade between Australia and the east coast of North America. The cost of this ship is not precisely settled. It will be higher than the cost of the ship for the United Kingdom-Europe trade; but, here again, the ACT lines are buying a number of ships from the same yard and obtaining a benefit in the price from the volume of business involved. The Government is certain that, had Australia sought to buy a single ship on its own, for either of these trades, it could not have achieved a price comparable with those at which the ships are being bought. Consideration was given to building in Australian yards. This would have meant placing an order now, with delivery very much later. It would have been more costly, and would not have enabled Australia to enter the United Kingdom-Europe trade at the beginning of the container ship era. The ship for the United Kingdom-Europe trade will be bought on terms from Germany. It will be bought at 20% deposit with a loan repayable over 8 years at an interest rate of 5i% on the reducing balance. Honourable members will know that these terms for ships stand comparison with any terms available in the world.

The effect of the decision to buy the ships at this time is to increase the initial capital required for the venture. While these amounts are subject to final administrative details, the down payments on ships, working capital, containers and related setting up costs are likely to increase the initial amount needed to around $9m from the S6m and $7m indicated earlier on the charter basis. This modest increase for purchase at the outset on terms rather than charter and the obligation of subsequent purchase obviously influenced the Government’s decision to buy. I might add that in addition the Government has been able to obtain the benefit of exchange cover originally negotiated by the British shipping companies for their purchase arrangements with the German shipbuilding yards.

Containers for the three ACT ships for the United Kingdom-Europe trade have already been ordered and largely constructed. In fact, these containers are already in service between Australia and the United Kingdom-Europe with ‘ACT 1’ and shortly will be further employed with ACT 2’. The arrangement for the Australian ship for the United Kingdom-Europe trade will therefore be to draw on a basic stock of containers already provided for that ship. Containers for the ship for the Japan trade on the other hand are already being bought from Australian manufacturers. The Government, of course, is completely free to take its own decisions in relation to its future requirements of containers.

The Government had deliberately chosen to move into overseas conference operations at this time of major changes in the technology of shipping, when container ships, vehicle deck ships, and the whole range of new cargo handling techniques associated with these ships show every prospect of fully viable operation. The Government’s decision has been made to associate the ANL with a group of companies long experienced in international shipping, rather than to go it alone. These companies will bring their knowledge and skills into the joint venture, with ANL a full and responsible Australian flag operator alongside them.

On many occasions it has been said that Australia should go into overseas shipping at any price, as if these were not complex commercial undertakings. The Government has not acted lightly in this matter. It has weighed the extra costs of Australian crewing against the many other advantages which participation in the joint management of these operations will bring. Under the arrangement these extra costs will not be reflected in freight rates - they will stand to the account of the ANL alone. By participating in the joint management of the container ships of the ACT lines, alongside ANL, valuable insight will be gained into the operations of these ships and of the Conferences involved. We can ensure that the Australian exporters who pay the freight will receive the protection that this information will confer.

ANL is to acquire equities in the Australian land facilities serving these container ships also. This will add further to our knowledge. To all this will be added the experience from the operation of the Searoad service, jointly with Flinders Shipping Co. and Japanese interests in the AustraliaJapan trade. Together these moves will add greatly to the understanding which the Government brings to bear on its policy involvement in overseas shipping.

Taking these arrangements and ANLs entry into the Japanese trade the position is then that Australia is poised to enter international shipping in three major areas for Australia’s international trade: With the United Kingdom and Europe, with Japan and with North America. In all three trades we will be operating Australian ships, crewed by Australians, owned by Australia, sailing under the Australian Hag. I present the following paper:

Shipping - Ministerial statement, 22 April 1969.

Motion (by Mr Erwin) proposed:

That the House luke note of the paper.

Debate (on motion by Mr Charles Jones) adjourned.

page 1289


Report of Public Works Committee


– In accordance with the provisions of the Public Works Committee Aci J913-1966, I present the report relating to the following proposed works:

Commonwealth Hostel, Alice Springs, Northern Territory.

Ordered that the report be printed.

page 1289


Motion (by Mr Swartz) - by leave - agreed to:

That in accordance with the provisions of the Parliamentary Retiring Allowances Act 1948- 1968, the honourable member for Ballaarat (Mr Erwin) be discharged as a trustee serving on the Parliamentary Retiring Allowances Trust and that the honourable member for Henty (Mr Fox) be appointed as a trustee to serve in his place.

page 1290


Motion (by Mr Erwin) agreed to:

That the House, at its rising, adjourn until tomorrow at 10.30 a.m.

page 1290


Discussion of Matter of Public Importance


– I have received a letter from the honourable member for Dawson (Dr Patterson) proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The failure of the Government to take adequate action to alleviate the effects of the Queensland drought disaster.

I call upon those members who approve of the proposed discussion to rise in their places. (More than the number of members required by the Standing Orders having risen in their places)


– It is noticeable that not one member of the Australian Country Party rose to support the proposal of the Opposition to discuss a matter which today is being described in many areas of Queensland as without parallel in importance and potential devastation - that is, the Queensland drought. I also noticed that among those honourable members listed to speak in the debate today are the Minister for Civil Aviation (Mr Swartz) - with all respect I shall be interested to hear what contribution he can make, on behalf of. the Government, to this most important debate - and the honourable member for Lilley (Mr Kevin Cairns) whose knowledge of the drought in Queensland would be confined perhaps to the occasional droughts that occur in the city of Brisbane because of beer strikes.

The approach of the Federal Government to the drought in Queensland can only be described as disgraceful. It shows how out of touch this Government is with rural Queensland. It reveals the complacent attitude of the Government towards the misery and despair of the people who are suffering daily through the devastation caused by the drought and who desperately need help. Yet, as I have said, not one Country Party supporter has risen to support the Opposition in its proposal to discuss, as a matter of public importance, the drought in Queensland. The Government seems incapable of understanding that in widespread areas of Queensland this drought has all the earmarks of being one of the worst in history, and the approach of a dry winter and spring - normally the dry seasons of the year - spells disaster for many areas of Queensland.

In the last 2 weeks I have seen at first hand in my own electorate, in the electorate of Kennedy, the electorate of Maranoa and the electorate of Wide Bay large areas devastated by drought at a time when there should be at least some effective moisture in the soil. In large areas the protein content and nutritive value of native pastures is virtually zero. The underground and surface water supplies are drying up with such rapidity that here again we have the earmarks of an economic smash unless sufficient winter or autumn rain falls at least to replenish the surface water supplies and to promote some growth of native legume to give feed for starving breeders. The available records and the experiences of people in Queensland who are familiar with droughts all point to one thing, that this drought is further advanced at this time of the year than was any other drought in Queensland’s history. This conclusion is bolstered by the condition of native pastures, the degree of water salinity and the rapidity with which underground and surface waters dry up. The Government seems so preoccupied with the mining boom that it has forgotten the real grass roots foundation of the Australian economy, which still happens to be primary production.

The Government’s arrogance in its approach to the Queensland drought is summed up by its intention to review the drought position on 30th June, the end of the financial year. This is the approach of the Government, to wait until 30th June. What has the 30th June or the end of the financial year got to do with the review? Does the Government think that the devastation which is occurring in some areas of Queensland is going to be suspended until 30th June. The review should be conducted immediately. The damage which has already been done to native pastures and top feed, the complete collapse of the summer crops in widespread areas and the drying up of surface and underground water demand that some action be taken immediately. The action already taken by the Government smacks of such a degree of discrimination against the Queensland people that the Premier of Queensland on Friday openly rebuked this Government, the Prime Minister (Mr Gorton) and the Treasurer (Mr McMahon) for their attitude towards the Queensland people - and that rebuke can be read in chapter and verse in the telegram which the Premier sent to this Government. lt is absurd that in a drought with more savage initial intensity than any other drought in history the Government has decided to provide matching grants only. In other words, instead of providing the total cost as it has in previous droughts it has decided to provide only 50% of the total cost. Emergency carry-on finance is needed to save starving stock, to allow debts to be paid, to allow boring plants to be hired to drill for water which would give some of the starving stock a drink, and to purchase some fodder to keep the ewes, cows and heifers alive. All of these things are urgent, but we see the paradox of a government working on a programme to restrict the production of grain. Storages in some areas are being completely saturated with grain and yet the Commonwealth Government, according to the Queensland Government, has refused point blank to allow wheat to be diverted at concessional rales to feed starving stock.

The entire approach of the Government to droughts is based on the philosophy of wait and see what happens, and belatedly to make ad hoc decisions to hand out moneys to the States to be handed out in turn to producers, many of whom are down on their knees already. The other philosophy of the Government is, of course, thai it is the responsibility of the States. This is the negative and defeatist attitude which is always adopted when the Government wants to pass the buck - it is the responsibility of the States. The handing out of finance to producers who have been belted time and time again by droughts, by low world prices, by rising costs and by negative government policies is no solution to this perennial problem, a problem which we are going to get in the future in many areas of Queensland and in the rest of Australia as surely as night follows day. The Government consistently refuses to reveal how it determines water conservation priorities. Surely it does not need any further proof of the priority that should be given to the near coastal areas of Queensland, where the Burdekin, Fitzroy and Burnett basins are today being devastated by drought. The incredible situation is that in the last 20 years the Commonwealth has financed only one dam in Queensland. 1 refer to the Emerald Dam, which has not yet been constructed. lt is clear that in western Queensland it is not practicable to do much about large scale water conservation. However, encouragement could be given to make properly improvements with respect lo water points and the storing of fodder. This encouragement must be given through a constructive Government policy of tax concessions and long term loans. What has happened to the Government’s hollow promises of a scheme of drought bonds, announced at the time of the last Budget, to minimise the ravages of drought when if strikes in places like Queensland? This is a question which primary producers throughout western Queensland are asking. Where is the drought bonds scheme which was announced with a blare of trumpets at Budget time last August? I have no need to remind the Government that Queensland holds the premier position as an earner of surplus export income. The industries which are mainly responsible for the earning of surplus export income are the primary industries - the industries which in Queensland today are being devastated by drought. Their contribution to the national economy demands that they get a better deal from the Commonwealth in drought relief. Last week the Treasurer (Mr McMahon) said that S60m had already been made available to the States for drought relief but on a conservative estimate, direct and indirect losses through drought in Queensland in the postwar years have amounted to about $ 1.000m. Losses in the Burnett-Isis area alone amount to more than the $60m which the Government has made available.

The solution to the problem in the area is the construction of dams. But what do wc gel? What priority has the Government given to the Burnett-Isis scheme? It has no priority. Last Thursday in this Parliament the Government announced its of priorities. Queensland is to have the

Emerald Dam - the only dam which a Federal Government has financed in the last 20 years. In 3 or 4 years’ time, when the water conservation scheme has come to an end, it would seem that no further finance will be provided for Queensland for water conservation purposes. Water conservation is vital to the near coastal area of Queensland - the area embracing the Burdekin, Fitzroy, Burnett and Pioneer Rivers. There is a greater concentration of beef cattle in the area than in any other area in Australia. There are more cattle within 150 miles of Rockhampton than in the Northern Territory and the Kimberleys combined. The turn-off of cattle from the area is about four times the combined turn-off from the Northern Territory and the Kimberleys.

The creeping devastation in Queensland must be seen to be believed. All members of Parliament should see for themselves what happens to a weak weaner calf when a pack of dingoes conies out of the scrub at night to attack and tear it apart. Then they might appreciate the devastating effects of drought. Let them see for themselves dozens of what months ago were prime cows go to a water hole where there is no water or only a little muddy water in the middle, only to get bogged and not be able to get out. This is the scene unfolding as we enter winter and approach the recognised dry months. What will the situation be in October or November? In many of the central highlands areas which traditionally grow grain sorghum I doubt whether one acre will be harvested. From what [ have seen in the central highlands, from Emerald through to Clermont, no acres will be harvested. There is only devastation and misery. What is the Government doing about this situation? It is waiting until 30th June for a review. Is it any wonder that primary producers and other people in Queensland have just about had this Government for its approach to drought problems?

Is it any wonder that the Premier of Queensland, in order to save his skin on the eve of a State election, has been forced to send to Canberra a blistering telegram condemning the Government for its discriminatory treatment of Queensland in the matter of drought relief? We want to know what the Government intends to do. Let us hope that the Minister for Civil Aviation (Mr Swartz) will tell the Parliament what the Government intends to do not on 30th June but now, because, as I have said already, this drought has all the earmarks of being one of the worst economic smashes in Queensland’s history. The records show that no other drought has been more advanced at this time of the year. The evidence of the severity of the drought is everywhere to be seen - in the condition of native pastures and in the amount of surface water available. Had it not been for property investment in water conservation, fencing and tick control, coupled with the availability of wheeled transport, losses in Queensland, particularly of breeding stock, would have been calamitous. They will be calamitous if the Government does not act. The Government must do something about two things; - fodder and finance. Finance will not keep cattle or sheep alive but it will allow primary producers whose stock is starving to move their stock to areas where feed is available or to bring fodder to the stock.


-Order! The honourable member’s time has expired.

Minister for Civil Aviation and Minister Assisting the Treasurer · Darling Downs · LP

– 1 was disappointed by the speech of the honourable member for Dawson (Dr Patterson). In the past he has made some constructive contributions in this House but today, because of the State election campaign being conducted in Queensland, he has Icnt himself to what I consider to be blatant political propaganda. I make that statement for a number of reasons, perhaps the main one being the fact that on 11th March the Prime Minister (Mr Gorton) made a statement about drought relief for Queensland. The honourable member for Dawson is aware of this and also that on 13th March the Prime Minister made another statement on the same subject. The honourable member is aware also of the text of a question asked in the House last week by the honourable member for Kennedy (Mr Katter). In a Press statement on 11 th March last the Prime Minister referred to drought relief measures for Queensland. He said:

These measures will include: Rail and road subsidies on the transport of fodder and the movement of livestock to agistment’. Carry-on finance for drought affected farmers who are unable to obtain credit from normal commercial sources: Grants to local authorities in rural areas to relieve unemployment caused by drought.

Details of the arrangements will be determined in the course of Commonwealth-State discussions to be held later this week.

The proposal was for the Commonwealth to participate with the State on a SI for $1 basis. On 13th March the Prime Minister made another Press statement, of which the honourable member for Dawson is well aware, saying:

In Canberra today the Queensland Premier (Mr Bjelke-Petersen) and the Treasurer (Mr Chalk) asked the Commonwealth to consider giving assistance in the form of direct grants if the present seasonal conditions in Queensland continued after the end of this financial year.

I told the Premier and the Treasurer that the Commonwealth Government would be prepared to consider this matter in the light of the seasonal conditions at the time.

What the honourable member for Dawson has not told the House and what he knows is that this year an estimated $2. 2m will be allocated for drought relief in Queensland. This is something under way at present. If the honourable member is aware of this why did he not mention it? But if he did not know, and has asked the question, I tell htm so now. The question asked by the honourable member for Kennedy was also of interest because it referred to some concessions on wheat for feed purposes. The Treasurer at that time undertook to consider any proposals put forward by the Queensland Government. Consideration has been given in the past to proposals for concessions and long term loans for wheat purchases for feed purposes. Concessions of interest on these purchases are considered. This matter is under consideration by the Queensland Government at present. The Commonwealth Treasurer has made it quite clear that if and when submissions are received from the Queensland Government they will be given careful consideration.

The honourable member for Dawson also referred, in what 1 thought appeared to be disparaging terms, to the fact that I was to follow him in this debate. He referred to me as the Minister for Civil Aviation. That description, of course, is quite correct, but I also happen to be the Minister Assisting the Treasurer, and the Treasury has direct responsibility in this field. Also, I happen to represent one of the main agricultural areas in Queensland, as you, Mr Deputy Speaker, are aware, and I do not think the people of the Darling Downs would be very happy to have the rather slighting reference made to them.

The honourable member did not refer to the fact that a member of the Australian Country Party would be taking part in thi.«. debate. The honourable member referred to me and to the honourable member for Lilley (Mr Kevin Cairns), but he omitted to refer to the fact that a member of the Australian Country Party was listed to speak. The honourable member for Dawson well knew this but he avoided making reference to it and brought in some other implication. Again, as 1 say, this merely indicates that this matter has been introduced purely on the basis of party political propaganda. He also asked the question: Why wait till the end of the financial year for a review of the policy in relation to the drought situation? I have answered thai question by indicating that finance has already been made available under the present arrangements between the Commonwealth and the Slates. In addition to this, the very fact that discussions have been held with the Premier and Treasurer of Queensland on this matter indicates quite clearly and publicly that the matter is under very intense consideration at present. The Government of Queensland as well as the Federal Government has an appreciation of the tragedy that is taking place, particularly in certain parts of Queensland :H present.

In addition to the finance that is being provided directly I should also like to mention that consideration and some active assistance have been given in the past by way of special revenue grants to the State of Queensland. Since 1966-67 up to and including this financial year $6. 9m has been allocated. I think we should appreciate that traditionally the provision of direct financial assistance and relief for those affected by natural disasters, such as the drought, has been primarily a function of State governments. One of the main reasons for this position is that the State governments are in the best position to assess conditions in their respective areas and the needs of those affected by the disaster. However, the Commonwealth has recognised that the States have only limited financial resources on which they can readily draw to finance emergency expenditure such as is required when a natural disaster of this type has occurred. Thus, when disasters on a large scale requiring relatively large relief expenditure have occurred, the Commonwealth has assisted the States or the State concerned in financing such expenditure, usually by meeting half the cost. In such cases the basic approach of the Commonwealth is that governmental assistance should be concentrated primarily on those who are in real need and who are unable to obtain assistance elsewhere.

For the 3-year period ended 30th June 1968 Commonwealth reimbursements of expenditure on drought relief measures totalled almost $60m of which about $26m was made available by way of loans and over$33m by way of grants to all States. As I have said before, it is estimated that in 1968-69 assistance of $2.2m will be provided to Queensland. This, of course, would not concern any further approaches made by the State to the Commonwealth in this field. With the development of severe drought in New South Wales and Queensland back in 1965 the Commonwealth undertook to provide all the funds needed to finance certain drought relief measures which the Commonwealth and those Slates had agreed to be necessary.I merely mention that matter to indicate the extent to which the Commonwealth will go. Whilst it is normal policy that the Commonwealth will finance on a $ for$ basis, in special circumstances such as those that occurred in 1965, the Commonwealth has been prepared to make special full grants for this purpose.

I think that the arrangements for 1968-69 are fairly well known to the honourable member for Dawson as they are to most honourable members in this House. The Commonwealth is reimbursing the States of New South Wales, Queensland, Victoria and South Australia for their total drought relief expenditures in 1968-69 from, first of all. loans made during the whole of 1968-69 to drought affected farmers who established a need for carry-on loan assistance prior to the end of September 1968 or for loan assistance for restocking prior to the end of December. Secondly, the Commonwealth is reimbursing the States for freight concessions extended to drought affected farmers priorto the end of December 1968 on the transport of stock back from agistment or for restocking purposes. Thirdly, reimbursement is being made on expenditure actually incurred on other measures, including expenditure by local authorities, from grants, for the maintenance of employment in rural areas prior to the end of September 1968.

In announcing the measures at that time, the Prime Minister emphasised that it was not the Commonwealth’s intention that State expenditure on the various relief measures should necessarily cease on the dates on which the Commonwealth assistance to the States ceased. If a State felt it was necessary to continue a particular measure after the cut-off date for Commonwealth assistance, it was thought reasonable for the State itself to meet the limited expenditure likely to be involved. The Commonwealth indicated, however, that it would be prepared to consider any new arrangements for assisting the States, if drought conditions were to re-emerge on a large scale.

So we come to the present position in Queensland. In March 1968 the Prime Minister announced that in view of the recurrence of drought conditions over a large area of Queensland, the Commonwealth was preparedto participate with the Queensland Government on a $1 for $1 basis in the provision of funds for drought relief measures. Subsequently, the Queensland Premier and the Queensland Treasurer asked the Commonwealth to consider giving further assistance in the form of direct grants, if the present seasonal conditions in Queensland continued after the end of this financial year. The Prime Minister informed the Premier and Treasurer that the Commonwealth Government would be prepared to consider (his matter in the light of seasonal conditions at the time. At this point I must emphasise the close and constructive co-operation which exists between the Commonwealth and State governments in these matters.

In addition to the grants on a$1 for$1 basis, to which I have referred, there are other ways in which assistance to alleviate the effects of drought is provided by the Commonwealth. Firstly, the Commonwealth provides special revenue assistance for State budgets. As I have already said, the Commonwealth has provided$6.9m to Queensland from 1966-67 to up to and including this financial year. Secondly, the Commonwealth provides special banking arrangements. The Commonwealth provides, thirdly, for expenditure and research relating to drought mitigation and fourthly for special taxation measures.

I want to refer to drought mitigation because it was discussed at length by the honourable member for Dawson. The Commonwealth announced in 1967 that it would be prepared to make available $50m over the next 5 years to assist the States with suitable water conservation projects. Approval already has been given by the Commonwealth for three projects and other proposals submitted by the States are being examined. In addition to this scheme, the Commonwealth is continuing to provide to the States assistance of many kinds bearing on drought mitigation. In addition, the Commonwealth is co-operating with the States in the exploration for, and measurement of, Australia’s water resources, and in the construction of certain other water conservation and water supply works.

Assistance is also being provided to the States for agricultural research and extension services. Commonwealth agencies such as the Commonwealth Scientific and Industrial Research Organisation, the Bureau of Meteorology and the Bureau of Agricultural Economics have intensified their investigation into drought mitigation, and the question of the general role of the Commonwealth in this field is under examination. As announced in the 1968-69 Budget Speech, the Government has decided in principle to introduce a scheme of tax deductible drought bonds to assist pastoralists, mainly in arid areas, who are unable to conserve fodder and water, to make financial provision, within limits to be specified, against natural disasters. The bonds will be redeemable in time of disaster. There will also be provision for redemption or transfer of the bonds on the sale of the bond, holder’s property. Legislation to give effect to this scheme will bc introduced when the details have been settled.

The last point which I must mention is the question of water conservation, because while this debate primarily is directed at Government responsibility in relation to drought relief, it is only right that I should refer to the tremendous advances which are being made in an area which the Opposition, from time to time in debates of this type, has conveniently overlooked. My colleague, the Minister for National Development (Mr Fairbairn), was pleased to announce that all States had submitted advices and that further details were still awaited of some State proposals for consideration in regard to the grants which have been announced by the Commonwealth. He did, however, mention two schemes. One was the Ord scheme and the other was the Emerald irrigation scheme in Queensland. As honourable members know, both of these schemes have been approved. I conclude by again emphasising the announced intention of the Commonwealth Government to give sympathetic consideration to submissions by the Queensland Government on drought relief measures and to remind the House of the substantial and practical results which have been achieved over recent years by the helpful co-operation between our two Governments.

Wide Bay

– I join with my colleague the honourable member for Dawson (Dr Patterson) in supporting this proposal which 1 believe is of importance, if not to the whole of Australia, most certainly to the Stale of Queensland. If the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) accuses us of adopting blatant propaganda tactics, I think that he must use the same phrase (o describe the actions of his political colleagues in the Queensland State Government. 1 refer to the Queensland State Country Party Premier and the Queensland State Liberal Treasurer. The Queensland Treasurer, Mr Chalk, in a letter to the Mayor of Bundaberg indicated that funds available for the relief of unemployment were severely restricted owing to the Commonwealth Government’s refusal to make grants available on the conditions of previous years. If thai is not passing the buck, I wonder how one could describe it.

I am surprised that the Minister for Civil Aviation should have said - and he would be in a position to know whether this was right or not because he is also, as he said, the Minister Assisting the Treasurer - that the Queensland Premier and the Queensland Treasurer agreed that they could hold off until the end of the financial year. Their assessment of the position must be far different from my assessment, and I um sure that it is far different from that of the honourable member for Kennedy (Mr Katter) who has been visiting parts of my electorate and of the electorate of the honourable member for Dawson. He knows the position in these areas. I am surprised that he at least is not one member of the Country Party who is prepared to support us in this proposal, because from a statement which he made outside the House, he certainly is of the same opinion as we are about the situation.

The position is that 85% of the State of Queensland is affected by drought. I shall take the position at three rainfall recording stations, which are all in the south eastern part of Queensland and which have the lowest rainfall recordings in the State. Records have been kept in Brisbane for 118 years. The rainfall in Brisbane between 1st January and 31st March 1969 was 5.91 inches. There were 9 points of rain recorded in Brisbane between 1st April and 14th April, making a total of 6 inches for Brisbane for the period 1st March to 14th April, or 27% of the normal average rainfall for Brisbane. That was the driest 4-month period since 1846 and 1902. In the Bundaberg area, 5.45 inches of rain were recorded between 1st January and 14th April 1969, which was 22% of the normal rainfall. That was the driest 4-month period since 1932. In the Gayndah area, which was probably the worst hit of all by the drought, 2.74 inches were recorded between 1st January and 14th April 1969, or 20% of the normal rainfall. It was the driest 4-month period since recordings were taken. The previous driest 4-month period was in 1926, when 3.65 inches of rain were recorded. This is the position in Queensland today.

Feed is becoming scarce. In many areas grasses have already dried up. In some areas stock have been hand fed since Christmas. There will be almost a total failure of the sugar crop in areas which are not irrigated. Here 1 must pause to join with the honourable member for Dawson who said that there is a need for irrigation. While congratulating the people in the Emerald district on having obtained the water supply scheme, once again I voice my disapproval’ of the fact that the

Queensland Government, after having given some assurances, saw fit to give priority to the Emerald scheme, although the Burnett-Kolan scheme would have supported ten times as many farms as the Emerald scheme will support. Nevertheless, that is the position. There has been almost a complete failure of the peanut and maize crops. Peanuts are being baled for hay to be used as feed. They are not being processed. The citrus industry is also affected. Even in irrigated areas there has been a considerable falling-off of fruit. The fruit obtained certainly will be of a lower grade.

The effects of the drought are not only being felt in the rural section of the community. They are also being felt in the cities. Last week the Council of the city of Maryborough estimated that there is only a 90 days’ supply of water for the city. The council needs money to explore for new supplies of water. Recently Bundaberg was successful in obtaining another bor. but how long it will last is a matter of speculation. In the Gayndah and Kilkivan districts the water is not fit for human consumption. Its colour is like that of stout. If flavour could be introduced into it, probably it would be very acceptable. Permanent creeks are becoming water holes. Fish, such as mullet and fresh water jewfish, are dying. The Mary and Burnett river basins are unique in that they are the only areas in which the Ceratodus or lung fish exists. If the drought continues this fish will face extinction. I do not suggest that the Federal Government can do anything to put water into these streams at the present time, but 1 point out the position so that honourable members who come from the other States may realise the position in Queensland during what should be the heaviest rainfall period of the year. Winter is usually the driest priod of the year. If rain fell1 some planting could take place, but there would still be doubt concerning the permanent water supplies.

On 2nd February 1969 the Queensland Government declared as drought areas the Burnett and Wide Bay districts in southern Queensland. A letter was written to the Prime Minister (Mr Gorton) in about the middle of February. On 24th February, when he was in Brisbane, the Prime Minister said that he bad no knowledge of a request for Federal Government assistance from the Queensland Premier. The Minister for Civil Aviation and Minister Assisting the Treasurer stated that on 11 tb May the Commonwealth announced that it would match State drought relief expenditure on a $1 for $1 basis. It was left to the State to make a decision. On the Tuesday following Easter the State member for Isis was approached by a number of farmers who asked whether they could obtain drought relief assistance. He contacted the Agricultural Bank, which is the usual source of assistance outside the co-operative dairy companies. He was told that forms were not available. Following discussions that he had with a branch of the bank in Brisbane the forms were made available the following day. I understand that forms were made available to the dairy companies on 15th April, 10 weeks after the area was declared to be a drought area.

Dairy companies are in the position of being asked to guarantee or underwrite any loans that they make available to farmers. I agree that one of the best ways of making fodder available is for the cooperatives to purchase the fodder and provide it to their own suppliers, but they are in the unenviable position of having to assess whether a person is in a position to repay a loan. From discussions that I have had with representatives of two dairy companies I understand that some farmers are paying for fodder that they purchased in 1967.

Not enough is being done. The States say that the Commonwealth Government is not assisting by way of loans. I am surprised that the Premier and Treasurer of Queensland, both of whom are members of a party that claims to be interested in and knows a lot about rural matters, consider that the people who are in this situation can wait until the end of the financial year. The longer these people stay out of production with their earning capacity stopped the more the Government loses. The Government loses sales tax on implement replacements, excise on fuels and tax on income. I emphasise that there is an urgent need for the Government to act immediately to alleviate the effects of the drought. I do not absolve the Queensland Government for its slothful approach to this problem, particularly as its members belong to a party which claims to have a special interest in rural matters.

Mr KEVIN CAIRNS (Lilley) [4.12J- It was to be expected, of course, that at the time of a drought in Queensland some front bench members of the Opposition would take the opportunity to raise the subject in this House. One might be expected to examine their motives in raising it and in referring to the very sad and tragic effects of drought, lt is also to be remembered, merely in passing, that the previous very serious drought in Queensland occurred in 1965-66 and that at that time a present front bench member of the Opposition was elected to this Parliament at a by-election. He was able to take advantage of the distress of that drought to gain votes, and of course he would hope that the circumstances of February 1966 would be repeated now. We can understand, of course, his cri de coeur. We can understand that he should weep tears of whatever type he could conjure up at the moment, but we are distressed that once again he should take advantage of a distressing situation to build up political advantage not for himself but for those people in the Opposition in Queensland with whom he has a certain amount of soul affinity.

Perhaps one ought to review the attitudes of the Commonwealth Government in relation to drought. The previous great drought in Queensland and in New South Wales saw the institution of the best and most generous measures to assist in the alleviation of drought that the Commonwealth has ever undertaken, lt is appropriate to review a few of the attitudes and a few of the results of Commonwealth action in relation to drought within the past 3 years. It is by having a look at the immediate past that one can see whether the attitudes in the present situation in Queensland are fair and appropriate. It is certainly not appreciated by members opposite that over the past 3 years the Commonwealth has paid $80m by way of drought assistance, including grants, to the States that have been afflicted by droughts. This was never contemplated by any previous government. It was never even contemplated by an Australian Labor Party government. Those people who felt the effects most directly appreciate that they had never before had the consideration that they obtained in those years, and they appreciate that they will have the consideration which is appropriate in the present drought.

The Minister for Civil Aviation (Mr Swartz) - perhaps it is worth interpolating that he is also the honourable member for Darling Downs - made it clear that the honourable member for Dawson (Dr Patterson), who led for the Opposition, did not quite appreciate what he was speaking about. Submissions were made about the attitude of the Prime Minister (Mr Gorton). It is worth recalling what the Prime Minister has said in relation to this drought. On Mm March he announced that in view of the recurrence of drought conditions over a large area of Queensland the Government was prepared to provide further finance to the Queensland Government on a $1 for $1 basis - the usual basis of assistance in times of natural disasters - but that the $1 for $1 basis could be departed from according to whether the drought was as severe as or less severe than in the past. In 1965 the provision of assistance on a $1 for $1 basis was departed from, and in view of the present expectations in Queensland it would not be going too far to say that the $1 for $1 basis could be departed from on this occasion. However one can make a judgment of this nature only on the evidence that is available at the time. One cannot look into the future.

There was correspondence between the Prime Minister and the Premier of Queensland and the Prime Minister announced on 13th March that the Commonwealth Government would be prepared to consider the drought in the light of seasonal conditions at the time, that is, in the period subsequent to March and in the period subsequent to April - in fact, in the period in which we find ourselves now. Perhaps it is worth recalling also that apart from reimbursing Queensland for drought relief expenditure the Commonwealth has provided the following special revenue assistance to overcome the indirect effects of drought: In 1966-67, $2*m; in 1967-68, $2.3m; and in 1968-69, nearly $2m. We can recite too many figures and perhaps we are lost in them from time to time, but it would be appropriate to bear in mind that there has been a continuing sensitivity with respect to this drought and its effects.

Few minutes remain available to me but one should say that the attitude of the Commonwealth Government in relation to this drought has to be part of the Government’s strategy. What does this strategy involve? It involves taxation measures, which have been instituted. It involves certain measures which have been instituted in relation to the Rural Credits Department of the Reserve Bank. It involves measures in relation to some of the very tragic effects of drought, including grants to local authorities to relieve unemployment due to drought. The Government is expected to have a strategy in relation to drought but we ask ourselves: Has the Opposition demonstrated the same sense of strategy? Has it demonstrated the same sense of strategy in relation to its own policies? Permit me just for a moment to mention one matter which I know honourable members opposite will not welcome having brought home to them once again.

Mr Irwin:

– Do not be too hard on them.

Mr Kevin Cairns:

– I do not want to be. 0%’er previous years the Commonwealth Government to assist in the relief of unemployment due to drought, gave Queensland nearly $2m in 1965-66, nearly $2m in the subsequent year and Sim in 1967-68. We have a responsibility to relieve unemployment in the areas contiguous to drought areas. Having that in mind, we now ask the Opposition this question: Why does it continue to oppose that kind of investment which will at present and in the immediate future assist to relieve unemployment in areas contiguous to Gladstone and Mackay? Why in its foolish - I hesitate to use the word ‘insane’ so I retract it before saying it - attitude on foreign investment, which relieves one of the great accompaniments of drought in the provincial cities, does it propose and support a policy adopted by its State colleagues which would prevent the investment occurring which is designed to assist employment in the areas in which it makes ‘its traditional cris de coeur? This is part of a strategy. The Opposition is not to know what its right hand or left hand is doing, lt might not understand what a drought strategy is concerned with. A drought strategy is concerned with overall economic strategy, and we cannot have the various parts of the economic system opposing one another. So our policies in respect of drought are part of a strategy. They are part of a fiscal strategy, but I would certainly say that they show the way in dealing with a drought - a path which has never been trodden by the Opposition and which, in terras of social and fiscal strategy, the Opposition would never know how to tread.


– Governments exist to govern and in a democracy they do this in the interests of the governed. That is, the Government exists to prevent unfair actions to the detriment of the people. The people of Australia, however, have shown at elections and referendums that they demand of governments more than restrictions on unfair behaviour. They demand, as the Australian Labor Party demands, that the major onslaughts of natural calamities on the community, on groups and on individuals should be increasingly the concern of governments and should be counteracted by governments. Not the least of these calamities in this driest of the continents is drought. It creates cruel suffering among stock and natural fauna, and even some of the most affluent absentee farmers and the most distant city dwellers are inclined to be touched when they see evidence of this on a newsreel at the local cinema or on their television screens.

Fortunately, no government in this country would dare to allow such suffering amongst its citizens, although the increasing hunger in the world at large seems to have made little enough impact on this administration of an affluent age in this lotus land. However, next to starvation, the cruellest blow of a natural calamity on a living family is bankruptcy, the loss of a home, the loss of a livelihood and the loss of the land to which, in many cases, the family has a stronger bond than most of us have with anything inanimate. In some cases the land is identified with the family which first claimed and cleared it. Of course, there are a few cases where families have been so affluent that drought cannot hurt them or where they have been so incompetent that drought is just the last straw which would sooner or later have come, whether in that form or some other form, to prove that incompetence. In the great majority of cases, however, the farmers of this country are not a well off group and a high percentage of them are living in poverty. When drought come*, it usually means disaster for some of them. It is easy to be detached at this point if we have no personal contact with the family that suffers, but how can a man with a family to feed and educate, a farm and a home to pay off, be expected to take the philosophical view: ‘Oh, well, that’s life; I gambled and lost’? ls that the way we reward industry and initiative in the sector of our economy which built the selfreliance, the prosperity, the balance of overseas payments and credit of this continent? Do we just stand by, remarking: I am all right, Jack’? Or do we start to face up to this question with a minimum of that foresight that we expect of any responsible management, of any ethical insurance corporation, of the farmer himself who takes this appalling risk? It is a tradition in this country to help the drought stricken with public funds, but unfortunately this seems to help very few of those worst hit by drought, because they are bankrupt or exhausted before drought aid is made available.

The Prime Minister (Mr Gorton) has promised carry-on finance to those unable to obtain it from ordinary commercial sources. The struggling farmer is not very impressed by the fact that the Government is prepared to help the man who is rejected by his bank manager, because in many cases this means that he must bc desperate, approaching bankruptcy, or someone that the bank considers too poor or a bad risk - a man who has become totally committed to a bank for the rest of his days not knowing whether he will ever get rid of his mortgage because of the quite unfair rates of interest charged on rural investment by the regular finance market. The small farmer is lucky to get 2% or 3% on his investment very often, yet he pays the bank at the same interest rate as is paid by the rich land speculator who makes capital gains from community improvements paid for by ratepayers in the district over many years. lt is time that an Australia-wide plan was adopted by all governments to beat drought, lt can be beaten by far-sighted water conservation schemes. It should not have to depend on State initiative to put up a drought mitigation scheme, as the Minister for Civil Aviation (Mr Swartz) has suggested. It should be a total push project by governments, rural producers’ organisations, departmental experts in the field, farmers and graziers and their bankers. But that, of course, is socialist planning, and planning for private enterprise by governments - so the Queensland Government and the Commonwealth Government tell us - should be restricted to advice, requests, economic incentives, tax and freight concessions - what the honourable member for Lilley (Mr Kevin Cairns) calls strategy - not after a general survey but just when the Government is forced to act by a general outcry. What sort of drought policy is this supposed to be from a government calling itself a LiberalCountry Party Government? It is an apology for not having a policy.

The patience of the farmer who has loyally supported the Country Party is wearing thin. The resounding vote for the honourable member for Dawson (Dr Patterson), who has moved this motion today, in a so called blue ribbon Country Party seat in part of this drought affected area, and the resounding vote for the State member for Isis at the most recent State by-election in this drought affected area in another former Country Party seat are signs of this disillusionment. The Premier of Queensland sent a telegram to the Federal Treasurer (Mr McMahon) which read as follows:

The Slate Government applies for further drought relief measures to be effective immediately. We seek 100% recoupment of the cost of items which the Commonwealth met at 100% in the previous drought. This will allow the State to apply funds saved to other relief measures.

The Premier said that he was deeply disturbed by reports which left the impression that the State Government was remiss in failing to seek Commonwealth approval for extended drought relief measures. The mayor in one of the cities affected by this drought received a letter from the State Treasurer, Mr Chalk, stating that funds available for relief of unemployment were severely restricted owing to the Commonwealth Government’s refusal to make grants available on the same conditions as previous grants.

The honourable member for Lilley unfortunately in his speech sought to examine our motives in raising this matter for de bate. Of course, we are used to this from the honourable member for Lilley. We saw how his white-washing tactics - and he uses other colours besides white - backfired in my own electorate if the by-election result in which 1 gained an increased majority as a result of the misfiring of some of the tactics that he used is any indication. We know that the main argument of the honourable member for Lilley against the honourable member for Dawson is: ‘You would not know anything about it’. We know that he is a Queen Street farmer and that he would know quite a lot more than the honourable member for Dawson who has spent most of his life studying at first hand and in the academic field rural problems and is still doing so! I submit, Mr Deputy Speaker, that the Government is remiss, offhand and callous in its proposal to defer further aid on previous bases that it has found applicable to droughts on earlier occasions. The Government has deferred this aid until the end of the financial year for no good reason when the evidence is there to show that the aid is required now. A stitch in time saves nine. One head of cattle could be saved a lot more cheaply now than by waiting until 30th June.


- Mr Deputy Speaker, when the discussion of this matter of public importance began in the Mouse today, I rather imagined that the real field work that had been done over the last 3, 4, 5 or 6 weeks by my colleagues and myself would be supported in a manner which set aside all political considerations. I thought that, just once, there would be cohesion in this House and that the Opposition would get behind us in supporting what we have said about the critical situation which exists in Queensland today. Why am I saying that this expected cohesion did not eventuate? I am saying that it did not eventuate because there was no recognition whatsoever of any action that the Federal Government or the State Government has taken to meet this disaster. When we hear a completely one-sided, slanted point of view we must conclude immediately that here is a politically slanted argument. I regret to say that this is so. As I heard the various speakers from the Opposition, it became quite obvious to me that they had not even bothered to find out what had been done.

Let me make it prefectly clear that 1 am now repeating only what I have said in this House at least three times in the last 3 or 4 weeks. This is the most critical situation that has existed in Queensland. Let us look briefly at what has been done and what is being done, which is even more important. 1 have a long list here. The Minister referred to some of the actions that are being taken. I will go through them very briefly because I do not want to take up my time in reiterating what the Minister most ably said. First of all, grants have been made to local authorities. There is a difference in respect of these grants this time. The grants to tocal authorities during the 1965-66 drought were applied, I am afraid, not precisely to assist those most severely affected although as a local council man I must say that there are two sides to this argument about drought assistance. There are those people who are affected directly - the land owner himself - and there are those people who are associated directly with the produce from the soil. But there are a number of innocent bystanders as well. There are the men employed by shire councils, shearers and railway workers. Railway workers lose their jobs because the rail loadings drop off to nothing. 1 could go on and mention other people who are involved. These people include windmill experts, fencers, contractors, truck owner-drivers and transport workers.

We do find that certain important things have been done with these grants this time. I quote the case of the Peak Downs Shire which is one council that has done this work most effectively. Share farmers are now included in the orbit of work. This shows honourable members how critical this drought is. Share farmers are being engaged as council employees. I might mention - 1 am sure that the honourable member for Wide Bay (Mr Hansen) will appreciate this comment - that there are two share farmers in the Mundubbera area who earned less than $400 over a period of 6 months to 8 months. One of those share farmers had nine children. These men are being employed as the result of the contribution made to local governments by way of grants. Then we have rail rebate provisions on fodder and stock. I will not go into the details of those provisions because I want to employ my time to much greater advantage. Other action taken concerns road permit fees on stock and material for stock food as well as a scheme for carry on finance for farmers and graziers. Why did not honourable members opposite mention all these matters? Do they not think that they would have received far more sympathy if they had been reasonable in their approach in this debate and not made it a debate for political flag flying? I will not go into the details of the scheme for carry on finance for farmers and graziers either.

I have gone briefly through the various schemes for drought relief. Let us pause for a moment to consider this fact: When I said that we were out doing the rugged field work while other people were theorising, I meant that we had formed a group of people who are working particularly hard on this matter of the drought in Queensland. In fact, 5 people are involved, 4 of whom are affected critically themselves. I refer to the honourable member for Maranoa (Mr Corbett), Senator Lawrie - I do not know whether he has any cattle left at all - Senator Ron Maunsell, whose stocks have been reduced to nil, and the right honourable member for Fisher (Mr Adermann). 1 do not need to tell the House about the peanut crop that does not exist in the area of the right honourable member for Fisher. By the way, talking about crops that do not exist any more, I should say that in the Peak Downs Shire the entire crop has failed. There is not a stalk of anything left.

But honourable members would imagine if they listened to the three speakers on the Opposition benches that nothing was being done and that we were standing by and watching all this happen. They could believe that no-one was concerned and that even the Premier of Queensland, a man who is himself affected by the drought, was not concerned. Let me tell the House this: We took the trouble of conferring with the Co-ordinator-General in Queensland. We wanted to know precisely what the Queensland Government had submitted to the Federal Government. Honourable members have heard this in detail.

We know that a considerable amount is being done. But 1 am one who claims that we have a disastrous situation which has to be met with additional methods. The traditional policy of a $1 for Si contribution is not enough on this occasion. Do honourable members know what I have suggested? I have drawn attention to the varying characteristics of the drought areas. For instance, take the central west or the far west of Queensland. Maybe stock could be fed there. But the people who know about these things do not think that this is very practical. Hence, the logical approach to this problem is to make available to those people in the far western and north western areas of Queensland immediate assistance for the transport of their stock not to agistment areas in Queensland, because areas for agistment do not exist in Queensland, but down to the areas in this part of Australia where there are vast acreages of fodder such as 1 have never seen before and not too much stock. This would be the immediate solution to this problem. This proposal is being attended to. Of course it is being nutted out. The authorities are trying to find the answer to it.

In addition, the problem of fodder arises. 1 am appalled by the fact that there are large storages of wheat in the Biloela area or in Biloela itself and on its outskirts, but much more so in an area of my own electorate at Capella where tons and tons of wheat are lying. I do hope that within a very short space of time - within the next 24 hours, if honourable members like - a decision will be reached in relation to the granting of a subsidy in order to make this wheat available to the people who are so seriously affected. I do think that once a drought reaches the critical proportions that this drought in Queensland has reached something like the Life Line organisation should be established. It could be ‘Life Line in Primary Industry’, where the people who are affected critically, who have just about exhausted all their financial resources and who are going to drop out of the industry altogether are granted assistance. A bit of danger arises here too. In the old days, if a farmer went broke, someone wiped away a few tears, the farmer moved out into something else and another farmer stepped into his place. But there is a danger these days that individual farms vacated b small farmers will go into the orbit of the large land holder. I have never made any secret of the fact that I consider this a great danger to the Australian economy and to Australianism generally.

The small producers must survive. If a fellow goes by the board he is not replaced by another farmer; he comes into the orbit of a large landholder. This could lead to very serious consequences in a drought situation. If a fellow has reached a critical situation he should be able to approach a centralised committee which will assist him to survive. As I have said, we have a group of people in the Parliament who are keeping in close touch with what is happening in respect of drought relief and with what is being done by the Queensland Government. Honourable members know that the situation does not end there. The $1 for $1 relief has to be expanded. Because of the varying characteristics of the various drought areas in Queensland it is not a simple matter to find a solution to drought problems. For this reason there should be not committees that go out to the drought affected areas but a lifeline organisation. I repeat that it should be a centralised committee which can be approached for assistance by those people who are critically affected.

This is one occasion on which honourable members should cohere to find a solution to the problems of drought which not only is a disaster to Queensland but which in the future will prove to be a national disaster.


– Order! This discussion has now concluded.

page 1302


Bill - by leave - presented by Mr Malcolm Fraser, and read a first time.

Second Reading

Mr Malcolm Fraser:

– I move:

This Bill seeks authority for the Government to give guarantees on behalf of the Commonwealth in respect of certain loans made to independent schools in the Australian Capital Territory and the Northern Territory in connection with the scheme of Commonwealth assistance in meeting the capital and partial interest costs of constructing independent primary and secondary schools. Commonwealth aid to independent schools in the Australian Capital Territory was developed in response to various proposals from school authorities for assistance with loans and for direct grants. In July 1956 the Commonwealth Government issued a statement recognising the special problems for schooling associated with the accelerated growth rate of Canberra. It introduceda scheme of partial reimbursement of interest on loans raised by the school authorities to meet capital expenditure on secondary schools. It is generally referred to as the interest subsidy scheme. On 5th September 1961 the Government extended the scheme to primary school projects. The total cost of projects approved under these arrangements was $3,988,656. With the concurrence of honourable members I incorporate in Hansard a list of the schools which received assistance for projects approved under the interest reimbursement arrangements which applied during the period 1956 to 1965.

However, by 1965 this form of assistance had proved inadequate to meet the increased needs of the independent schools that were unable to raise the capital necessary for the construction of urgently required school facilities. In November of -that year the Government introduced a scheme of assistance whereby independent school authorities received from the Commonwealth repayments of the amount of loans for approved projects, by equal annual instalments up to 20 years. This scheme was extendedto the Northern Territory as well as to the Australian Capital Territory. The

Commonwealth also makes to the school authorities an annual interest payment at a rate not exceeding the long term bond rate current when the loan for the project is approved. The interest is paid on the balance of the loan remaining after each annual reduction of capital has been made. The total cost of projects approved under the November 1965 arrangements is $9,890,924. Again with the concurrence of honourable members, I incorporate in Hansard a list of the schools for which projects have been approved under the capital repayment and interest subsidy arrangements which have applied since November 1965.

As a result of this scheme of assistance independent school authorities in the two Territories have been able to go a long way in providing new schools and extensions of existing schools to meet the rapid growth of the school-age population in the Australian Capital Territory and the

Northern Territory. Were it not for this scheme of assistance the Government would be involved in the building and staffing of more government schools to accommodate those pupils who would otherwise have attended independent schools.

Recently the independent school authorities in the Australian Capital Territory have experienced delays and disappointments in obtaining loans for approved buildings at reasonable rates of interest. Their financial obligations under the interest subsidy scheme arrangements have also affected their ability to proceed with further school buildings.

School projects approved in principle to the value of approximately $3,181,000 have been held up because the ACT Catholic Education Office and the Canberra Girls Grammar School were unable to arrange suitable loans, lt is probable that additional sources of loans for the independent schools, such as superannuation funds, could become available if the Commonwealth were able to give guarantees to prospective lenders. In order to ensure that the independent schools in the two Territories will be able to provide for the reasonable future needs of school facilities the Government decided in December 1968 to extend the conditions of the 1 965 capital aid scheme to projects previously approved under the interest subsidy scheme, and this Bill has been introduced to give the Government adequate authority to offer formal guarantees under the capital aid arrangements in the two Territories. The guarantee will not cover the cost of ineligible items such as residential or church facilities and will be limited to the reasonable cost of each project as determined by the Minister. Preliminary expenditure has already been incurred on some approved projects for which loans have not yet been obtained and the Bill provides for the guarantees to apply to expenditure already incurred on approved projects.

I emphasise that this legislation is expected to assist the independent school authorities to obtain additional loan funds and that the Government is not seeking to expand its financial commitments under the capital aid scheme. The Bill provides for a statement to be laid before Parliament each year containing particulars of the guarantees that have been issued during the previous year and of any repayments made during that year under any guarantees made in accordance with this Bill. I commend the Bill to the House.

Debate (on motion by Dr Patterson) adjourned.

page 1304


Second Reading

Debate resumed from 17 April (vide page 1247), on motion by Mr Swartz:

That the Bill be now read a second time.

Melbourne Ports

– This Bill, which does three things, is a rather curious assembly of measures. I should have thought that the three matters contained in it ought to have been presented to the House separately. This Bill enacts, firstly, a double taxation agreement between Australia and Japan; secondly, it enacts a double taxation agreement between Australia and Singapore; and thirdly, provision is made to deal with the taxing of the earnings of international airways as between France and Australia. If these measures had been presented separately to the House, as has occurred on other occasions, it would have been easier for honourable members to indicate their attitude to them one by one. For reasons that I hope to develop in the course of my speech it is the intention of the Opposition to oppose the double taxation arrangement between Australia and Japan. We see some merit in the one between Australia and Singapore. Regulating the taxing of airways is a formal enough procedure. Each country taxes the profits of its own undertaking and at least there is some equality of return on both sides. I move the following amendment:

That all words after ‘That’ be omitted with a view to inserting the following words in place thereof: as it can be shown that the agreement with Japan for the avoidance of double taxation will operate to the disadvantage of Australia, this House is of opinion that action should not be taken to give the force of law to this agreement’.

The question of double taxing is a perplexing one. I said this on the previous occasion when this subject was debated in the House in April of last year. On that occasion we were dealing with a double taxation agreement between Australia and the United Kingdom and I quoted the observations of a committee of the Organisation for Economic Co-operation and Development. In paragraph 3 at page 9 of its report, the Committee said:

The phenomenon of international double taxation, which can be generally defined as the imposition of comparable taxes in two (or more) States on the same taxpayer in respect of the same subject matter and for identical periods, and its harmful effects on the exchange of goods and services and movements of capital and persons, are so well known that it is superfluous to stress the urgency of the need to remove the obstacles that double taxation presents to the development of economic relations between the member countries of the OECD.

I said then that this is a relevant enough doctrine when it is applied, say, to trade between France and Germany, between Germany and Italy or between Italy and France or some other members of the European Common Market or even within Europe, because there is a reasonable enough equality of transactions between the countries. Germany may well invest in a motor car industry in France; France on the other hand may have investments in some other heavy industry in Germany, so that what is gained in one way is lost in another and can be made up with the residue from the industry domiciled in a country. But it is not necessarily a relevant doctrine to apply to Australia and some other parts of the world. Nor is it necessarily a doctrine that is applicable wherea relatively developed country such as Australia is perhaps giving assistance to a less well developed country or a country less well equipped with capital, such as some of the developing parts of Asia or Africa. Let me give an illustration of the latter situation. If the Government of a country - in this instance Singapore - sees some virtue in inducing capital from somewhere else, often from anywhere else, it gives favourable tax concessions at its end because it believes that the tax concessions will be more than repaid by the development in its industrial structure.

That seems to be a fair enough argument to apply as between Singapore and Australia, but it does not seem to be a reasonable argument to apply as between Australia and Japan. There seems up to date to be no difficulty in certain capital investments being made by Japan in Australia, even in the absence of the double taxation agreement. Of course, one knows that generally there has been a remarkable increase in the volume of trade on ordinary account between Australia and Japan. I shall quote a recent effusion on this subject by the present Treasurer (Mr McMahon) when he was delivering an address on 10th March 1969 - only a month or so ago - at the International Seminar organised by the Australian Finance Conference. The title of the Treasurer’s address was ‘The Economic Prospect’ and in the course of it he said:

During the 1960s, there has been a marked change in the destination of Australian exports. Japan has emerged as Australia’s largest customer. In 1958-59, 30% of Australian exports went to Britain and 13% to Japan. By 1967-68, exports to Japan were 21% of total exports, while Britain’s share had fallen to 14%. There has been a marked increase in Australia’s sales to most other Asian markets. In the 1970’s, Australia’s trade can be expected to be increasing with Asia. A high proportion of mineral exports will go to Japan, and rising living standards there and in other Asian countries should provide growing markets for our primary produce and manufactured goods.

At the same conference an address was delivered by Mr Shogoro Ariga, who is Chairman and Managing Director of Mitsui and Co. (Aust.) Ltd. The theme of the conference was ‘Australia 1980’, looking ahead, as we all ought to be looking ahead, for a period of 10 or 12 years rather than, as this Government seems to do, for a period of 10 or 1 2 months. Mr Ariga made this comment:

It will be seen, therefore, that despite the long odds against it which are being quoted in some quarters, we of Mitsui are backing the Pacific Basin Community (a potential market of 600 million people) and Australia’s integration with it, as the success story of world economics in the 1980s - and our record in Australia and elsewhere shows we are not reckless punters.

Both of those observations seem to me to indicate that Australia and Japan arc not doing too badly in their trade relations even in the absence of a double taxation agreement. We on our side find no warrant whatever to enact this arrangement. Apparently Japan is satisfied enough with the conditions that apply at the moment, although being prudent people and very skilful business people they would no doubt like to have the pitch made a little clearer for them. It seems to me that this is what is being done and it is being done to the detriment of revenue collections in Australia. On the previous occasion I quoted from the final report of the Royal Commission on the Taxation of Profits and Income, which was presented to the House of Commons in June 1955. I was rather interested to see that one of the points that 1 made by way of quotation from that report seems to have been acknowledged. During his remarks on the introduction of this Bill the Minister assisting the Treasurer (Mr Swartz) said:

Double taxation agreements have two principal functions. One is the elimination of double taxation and the other is the apportionment of the relevant taxation revenue between the contracting countries, lt is this second function that causes most of the difficulties in negotiating a comprehensive agreement-

I would ask honourable members to observe this qualification - particularly when there is not an equal flow of income between the two contracting countries. In such circumstances, a double taxation agreement can involve a greater surrender of tax revenue by one country than the other. Any apparent loss of tax revenue must, however, be weighed against the advantages that accrue from an agreement

I submit at this stage that it certainly has not been proven that there is going to be anything like an equality of flow of capital between Australia and Japan, and the opinion of most people on this side of the House is that most of the flow will be from Japan to Australia. In other words, there will not be an equal flow and in such circumstances the Australian revenue will surrender more than it will gain from transactions with the Japanese.

I would have thought that the Government would try, at least, to indicate why it felt that this arrangement was necessary. I think sometimes there is a kind of prestige element about these double taxation agreements. I f a country does not have a double taxation agreement with another it is regarded as an ‘out’ country, while those countries which have such an agreement are ‘in’. I repeat that the ones we have currently in existence are with the United Kingdom, the United States of America, Canada and New Zealand, and with the possible exception of New Zealand - certainly with the other three - the flow of capital runs in such a way that the advantage does not lie with Australia. The preponderance of capital flow is from the United Kingdom, from the United States of America and from Canada, and sometimes in the case of Canada it is hard to know whether what flows in the name of Canada is really Canadian or American. Nevertheless, preponderantly the flow is from the other countries to Australia, and therefore all those countries fall within the category outlined by the Treasurer, in other words the advantages to them and to Australia are not equal. The advantage is to the country from which the capital flows and the disadvantage is suffered by the Australian revenue. We are the losers in the arrangement.

The Treasurer has not indicated in the case of Japan - he does not have to do it at this stage in regard to the United Kingdom or the United States because the agreements with them are not under review in this measure - whether the apparent loss of revenue is sufficiently outweighed by the advantages that accrue from the agreement to make it worth while. What are the advantages that are supposed to accrue to Australia by giving the Japanese investor an advantage, which he did not have prior to the agreement, to the extent of 15% on the taxation of his dividends? What are the advantages that we are supposed to get from the agreement which made it worth while to negotiate the agreement? As honourable members know, the effect of double taxing is that by reason of the conventions and assumptions that have developed around the concept of the agreement the country in which the source of the income lies has the first bite at the cherry, as it were, rather than the country from which the capital may have come. If a Japanese firm invests in Australia by establishing an enterprise here and it makes a profit, then at the first level Australia can tax that profit as though it were entirely an Australian operation.

Perhaps it is not quite as simple as that, because sometimes some of the transactions that take place in the bookkeeping include such things as service fees, payments for royalties and management and so on which, in essence, go straight to the company at home but which appear as a deduction in computing the profit as far as the Australian transactions are concerned. I have no evidence that this is so with Japanese operations because I do not think that as yet they are quite as extensive as, say, the operations of the United Kingdom and the United States of America. But Mr Brash, in his book entitled ‘American Investment in Australian Industry’ suggested that with some large American companies the payments by way of management fees, royalties and engineering services and so on were actually larger than were the remittances of profits and, of course, because they were regarded as items of expenditure they reduced the amount of profit that was taxable in Australia. He suggested that there ought to be more rigorous policing of this by the taxation authorities in Australia. I do not think they do not effectively police the provisions; f think they require amendments to the Act which would enable this socalled expenditure to be brought within the net of taxation. At least one small improvement was made recently with the provision for the taxing of royalties. These were not previously taxed, but even now the rate of taxation is only a maximum of 10% on the amount of royalty, which again is very much less than the ruling company tax rate of 45% or the rate that could be collected if it were an individual actually receiving the sum of money by way of income.

As I have suggested, arguments seem to have been developed by the Government to justify this double taxation agreement with Japan. It seems that it is regarded as an unfriendly attitude if we do not have a double taxation agreement with Japan, one with Canada or with New Zealand. I submit that this is a very shallow sort of way of looking at the Situation. What ought to be borne in mind is where the greatest advantage is going to fall, and it seems to me without any doubt whatever, that the greatest advantage in this instance will fall on the side of Japan. The two quotations I gave, from the Treasurer of the Commonwealth of Australia and from the representative in Australia of the very large international concern, Mitsui, seem to indicate that trade and other relationships with Japan are moving quite satisfactorily already. Another thing seems to me to be overlooked, and to illustrate it I would like to quote again from a short paper. I must commend the Australian Finance Conference for the calibre of the contributors it had recently at its seminar on Australia in the 1980s. This paper, entitled ‘Industrial Horizons’, was presented by Sir Ian

McLennan, the well known Managing Director of the Broken Hill Pty Co. Ltd. Sir Ian said this:

Japan, along with other nations to which Australia acts as a major supplier of raw materials, must recognise that if industrial development is te make progress here, it is essential that a reasonable and growing amount of secondary processing should be undertaken in this country. Furthermore, there should be ample opportunity for Japan to supply needed goods to this country without interfering unduly with our own industries.

I am sure my colleague the honourable member for Scullin (Mr Peters) would agree with that sentiment. Sir Ian continued:

Some healthy competition is doubtless desirable.

During the next decade, let us hope that Australia’s business relations with Japan develop beyond that of a mutually convenient trading association. Compared with other countries of South and South East Asia, Japan and Australia are relatively capital-rich, high wage countries. By participating together in Asian industrial development, both countries will do much for the nations which are our neighbours, and al the same time develop healthy trade flows which will be mutually advantageous.

Nowhere in any of these utterances is there any suggestion that relations that are now healthy, that are thought to be desirable for the future and that everybody thinks will expand in the future will be hindered in any way by the non-acceptance of this double tax agreement. I think Sir lan’s real suggestion is that if Japan has any surplus capital to invest it would be doing a greater service to the development of the Pacific area, parts of Asia and possibly Africa also if that capital were invested in some of the poorer fields which require economic expansion rather than in the lush fields in Australia. I will make the point in more detail in a moment.

Mr Uren:

– What you have suggested may not be such a good proposition.


– That may be so from Japan’s point of view but if investment in Australia is a good proposition from Japan’s point of view, being fleeced in this way must be a bad proposition from Australia’s point of view. These are matters that should be pondered by honourable gentlemen opposite who presumably will applaud the Government’s vision in entering into this agreement. If honourable members opposite support the agreement I must ask why it is necessary. Why is it necessary to rebate the amount of tax payable by Japanese interests on profits remitted from Australia to Japan? Why should those interests be in a favoured position compared with that of the shareholder in Australia deriving a dividend from an economic endeavour transacted in Australia?

Another matter that should concern Australians is the destination of Japanese investment in this country. Much of it will go into what some people would describe as the development of Australia’s mineral resources but which other people might regard as unfair exploitation of our natural resources. The pattern of investment in recent years has been in fields of this kind. The United States is a good example. I draw the attention of honourable members to an interesting article in the August 1968 issue of the ‘National Provincial Bank Review’. The issue contains a valuable survey’ by John H. Dunning, Professor of Economics at the University of Reading. He is well versed in these matters. Mr Dunning’s article is entitled ‘U.K. and U.S. Investment Abroad: A Comparative Study’. 1 will nol quote extensively from the article. One of Mr Dunning’s conclusions is:

The geographical and industrial structure of the direct investment of the two countries is basically similar, but the U.S. has a higher proportion of its capital invested in (a) mineral and material exploitation and (b) the technologically advanced industries. U.S. capital in manufacturing industry also appears to be more concentrated in the fastergrowing industrial countries.

I submit that the undue concentration in mineral and material exploitation which we have witnessed taking place by the United States of America in countries like Australia is what will happen with Japanese investment in this country. As Sir Ian McLennan suggested, it is time we began to go a little further in the refining processes ourselves, using our own capital and technological skills, rather than relying upon somebody else.

Recently in Australia Professor Whitmore, Professor of Geology in the University of Queensland, presented a paper on the minerals situation in Australia. As published in the issue for 15th January 1969 of ‘Australian Mining’, a journal which is sent to most honourable members, Professor Whitmore’s paper read:

The present desire of foreign capital to invest in our minerals industry strongly suggests that we could, and should, raise our terms for co operative development, although the scope for raising our terms might not be as great as some people seem to imagine.

I suggest that all that the double tax agreement does is lower the terms rather than raise them. It lowers them to Australia’s disadvantage; it raises them to the advantage of the Japanese. Professor Whitmore continued:

I do not believe that the role of government should simply be restricted to blanket inducements in the form of subsidies, tax allowances, and concessional rates on items such as freight and electric power, valuable though these may be.

Professor Whitmore’s next observation should be studied carefully by Government supporters:

We require an overall policy for the proper development of our mineral resources, grounded on a determination to preserve a controlling Australian interest in the long run, but there is still only a glimmer of appreciation of the vital need for formulating one.

I submit that the very sanctioning of this agreement shows that there is still no glimmer that the Australian Government, in its desire to get capita] at any price and from any quarter, is mindful of the fundamental need for planned conservation and use of our natural resources. This is one reason why this proposal for a double tax agreement should at least be called into question.

I pass from our opposition Vo the agreement with Japan and turn to the arrangements with Singapore. I regard Singapore as being in a different category of economic development from either Australia or Japan. In his second reading speech the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) said:

I should mention that, in the case of Singapore, two special provisions have been made in the general area of credits. Singapore, as a developing country, has enacted economic incentive legislation, a feature of which is the remission of tax on income arising from foreign investment in, or the supply of industrial know-how to, Singapore enterprise*.

This is a conscious decision taken by the Government of Singapore to bring about an increase in its economic development and ultimately in its economic growth and therefore an ability to raise the standards of its people - standards which at the moment might be regarded as deplorable compared with Australian or Japanese standards. The Minister continued:

As to direct investment by an Australian company in a Singapore undertaking, Singapore accepts that this would best be done by the Australian company establishing a subsidiary company in Singapore. The Singapore profits of such a company would not be subject to Australian tax under our general law, but Singapore was concerned that, when the profits were remitted to the Australian parent company by way of dividends, they might then be subject to Australian tax, so nullifying any remission of Singapore tax that had been made.

I would indicate again that this kind of observation was made in general terms in the British report on the Taxation of Profits and Income. Paragraph 671 of this report states:

As we showed in our First Report, a number of circumstances may have led the country in which the profits have arisen not to tax what it might have taxed.

This is what Singapore proposes to do with regard to Australian investment in Singapore. The report continues:

There may be pioneer reliefs: There may be special exemptions for special activities: There may be special allowances or rules of measurement which have the result of discharging tax that would otherwise be due. Therefore some extension of the formula would be required which aimed to secure that the United Kingdom tax claim did not revive to take the place of the tax deliberately foregone by the other country. lt seems that this admirable sort of proposition has been recognised by this legislation. The Government of Singapore, in its own wisdom, believes it right to encourage foreign investments. It is prepared to give such investments favourable tax concessions. Singapore has asked quite reasonably that Australia should not tax what Singapore has left over.

It seems to me that this is a fair enough proposition, taking the relative levels of the two countries. It is something that I would like to see extended perhaps to countries such as Indonesia or some parts of Africa, provided that the governments of those countries wanted this kind of private development. I know that some people tend to regard this as sowing the seeds of neo-colonialism, but these agreements are for a limited period of time and can be revoked by either side. I have seen the industrial complex in Singapore. This area has been set aside to encourage industry from anywhere and the Singapore Government offers such concessions as ‘tax holidays’.

Finally, it seems to me that, where there are so many places in the world that are capital hungry and short of capital for essential development, whether it be at government level or at the level of private endeavour, there is some obligation on those who are not so short of capital, l say this, bearing in mind that it is hard to find any country in the world that ultimately, in a strict economic sense, could not be regarded as capital hungry or short of capital. In fact, I think it is probably a sound enough proposition to say that Sim invested in Australia would be a belter economic proposition than $lm invested in Singapore.

Mr Peters:

– Singapore’s need is greater.


– The need of Singapore to be raised up, as with some other countries, is greater than ours. That is why I would applaud the suggestion made in the remarks of Sir Ian McLennan, which I have just quoted, that we should think more of our neighbours who are in unfortunate circumstances and that perhaps there should be a joint venture by Australia and Japan in this and other areas. Rather than Australia sanctioning a double tax agreement with Japan which may bring capital to Australia that perhaps could more worthily in a human sense go to Singapore, we ought to forego the advantage in favour of the situation in Singapore or somewhere else. I think this is the sort of thinking we should adopt. A week or two ago we had a gathering in this country of people from Asia who talked about the problem of economic development in Asia. I am one who believes that a large part of the economic development that has to take place in areas in Asia should take place at the government level. This should be achieved by that rather curious word of recent years called ‘infrastructure’ which provides for better health services, better public transport, better public utilities, better education and so on. These activities have no direct return that one could call immediate profit at all. Loans need to be given on what are called ‘soft’ terms. These are loans at either subsidised interest rates or loans with no interest rates at all.

One of the purposes of the Asian Development Bank when it was established was to lend part of its funds in this way. lt seems in many respects that at best all the double tax agreements that we applaud do, if they do very much, is to smooth the path of those who are already more affluent than the majority of people in the world.

Mr Peters:

– What is the honourable member’s attitude towards the French arrangement?


– Just in passing, I regard the French proposition as a reasonable sort of one. Here, at least, we have equality. lt seems silly to me to have an arrangement to file returns in Australia and in France and then share the income afterwards. We should decide that any ticket that is sold in France should be regarded as French earnings and that any ticket sold in Australia should be regarded as Australian earnings. As I understand it, most people when they leave one country or the other want to return to it. So the position tends to even out. I think that the administrative advantages outweigh any problems. The same thing, to a greater extent, ought to apply to shipping. Australia has had enough sense to develop an international airline system but it has been very belated in developing an international shipping line. Nevertheless, we welcome the suggestion that we are beginning to do so. At the moment a shipping arangement would be rather one-way traffic. Such an arrangement would favour the P. & O. organisation. There is no equivalent as far as shipping is concerned. In airways Qantas Airways Ltd is just as good a performer as is Air France - UTA. I have every confidence that we will derive from our airline operation as much as or probably more than, will the French equivalent. But this will be a comparatively minor matter in total. I urge the House to support my amendment.


-Is the amendment seconded?

Mr Connor:

– I second the amendment and reserve my right to participate at a later stage in the debate.


– As the honourable member for Melbourne Ports (Mr Crean) has said, this is an occa sion when we once again formalise income lax international agreements, commonly called double taxation agreements, between Australia and various countries. This form of debate was adopted last year, 1 think on 30th April, when we formalised an agreement between the United Kingdom and Australia. On that occasion the Opposition gave the impression that it was not very interested in investment from overseas, even from the United Kingdom, and again today the Opposition has indicated that it is not too keen on investment in Australia, either from Japan or from any other country which has money to help Australia grow.

I find it difficult to understand the attitude of the Australian Labor Party because it was Mr Chifley who, as Leader of the Labor Government in 1946, first formalised double taxation agreements between Australia and the United Kingdom. It is coincidental that in the same year he also took steps, which were successful, to encourage the mighty General Motors Corporation of America not only to invest in Australia but also to build up in Australia a motor manufacturing industry which is second to none. As all honourable members know, the motor manufacturing industry is the second largest industry in Australia. It provides jobs for Australians. It ensures that the families of the people engaged in the industry have an excellent future ahead of them. lt also provides the people engaged in it with good over award wages and superannuation, and it enables their children to go to good schools, lt seems to me that the Labor Party of 1946 is quite different from the Labor Party of 1969.

As I have said, the original agreement was formalised in 1946 by Mr Chifley, who was then leader of the Labor Government, but now we lind that the Opposition has moved an amendment which refers particularly to the proposed double taxation agreement with Japan. Of course, we will negative that amendment as soon as possible. I think it is important from the point of view of a capital hungry country that we should make this form of agreement with the United Kingdom, as we have done, with the United States of America, with New Zealand which is a good trading area for Australia, and with Canada. I congratulate the Treasury officials and the Treasurer (Mr McMahon) in taking this form of agreement a step further, by negotiating and signing agreements with Singapore and Japan. 1 am told that the Singapore agreement was signed on 11th February J 969. and that when ratified by this Parliament it will become effective from 1st July this year. The Japanese agreement was signed on 20th March 1969, but it will become effective from 1st January of this year; in other words, it will be made retrospective by about 6 weeks. 1 am sure I speak on behalf of the Government when I say that we believe that this form of agreement is a good thing.

It is interesting in this case that there are two different types of countries concerned with the agreement. Singapore is a very small yet progressive country, and the other country, Japan, is a much larger country which trades heavily throughout the world. The honourable member for Melbourne Ports conceded that Japan now takes the greatest proportion of our exports, namely 21%, whilst the United Kingdom has reduced its imports from Australia, from 32% in 1958-59 to 14% today. In other words, I believe that the relationship built up between Australia and Japan is a formidable and useful one which should be formalised by a double taxation agreement so that this trade can continue. The Japanese are astute with their trading, as the honourable member for Melbourne Ports mentioned. The Japanese gentleman to whom he referred could well have said that a month ago. If there is no continuity of the type of trade which the Japanese want with Australia, they could easily look elsewhere for the produce which they are now obtaining from Australia. This is one of the purposes of the double taxation agreement.

I feel sure that the honourable member for Melbourne Ports has read the draft economic conditions which were established by the Organisation for Economic Cooperation and Development, commonly known as the OECD. It put the purposes of double taxation agreements in simple language. It stated that one of the purposes is to ensure a continuity of trade between two countries on a bilateral arrangement, or between more than two countries, if possible, on a multilateral arrangement. The Organisation’s draft report which was issued in 1963 contains three main clauses. I think that for the purposes of the record it is worthwhile stating them. One clause stated that the purpose of double taxation agreements is to achieve a sustainable economic growth arid employment and a rising standard of living in member countries while maintaining financial stability, thus contributing to the development of world economy. What better purpose can Australia have than the international development of trade and the better development of international economies throughout the world? This form of agreement sustains trade between two countries in particular and between more than two countries generally.

The second clause of the. OECD draft report stated that double taxation agreements contribute to sound economic expansion in member as well as non-member countries, in the process of economic development. In other words, when one country invests in another country, economic development is sustained as between the source of revenue and the source of finance and causes some stimulation of business in the country which produces the revenue. The third clause of the report stated that double taxation agreements contribute to the expansion of world trade on a multilateral non-discriminatory basis in accordance with international obligations. Those are the three points on which OECD based its draft report, and I believe that we in Australia would do well to note these points, not only in financial matters but also in other matters.

As a result of the double taxation agreement with Japan there could well be additional capital inflow from Japan to Australia. What does this mean? What it means to me is quite different from what ;.t means to honourable members opposite. To me it means that because of the double taxation agreement the Japanese will say that Australians are bent on selling their goods and services, if possible, to the Japanese. When I speak of goods, of course, I refer to the iron ore and bauxite which the Japanese are buying from us, to the coking coal which they were buying from us in ever-increasing quantities, and to the liquefied gas from Bass Strait which they will shortly be buying from us. This additional trade will mean that railways and deeper ports, which otherwise we would never have, will be constructed, lt is hardly necessary for me to mention that if it were not for this additional trade we would not have the port of Dampier which will accommodate iron ore carrying ships of 120,000 tons, on 2, 3 or 6 occasions a week. It is hardly necessary for me to say that Port Hedland in the north west part of Western Australia would never have been developed to its present state if it had not been for overseas investment in Australian enterprises. What has happened at Weipa in the northern part of Australia due to the efforts of Conzinc Riotinto of Australia Ltd and other companies? These areas have been built up by overseas investment in Australia, and they will be consolidated. These efforts are being made because we are establishing double taxation agreements with certain countries.

I find it difficult to realise that the Opposition could oppose a double taxation agreement with Japan because the agreement will encourage the Japanese to reinvest their earnings in Australia. All of the statistics issued by the Commonwealth Bureau of Census and Statistics indicate that at least 50% of the money invested in Australia by overseas companies and of the profits earned from those moneys is reinvested in Australia in railways, services und other things which are good for Australia and for Australians. Furthermore, this investment builds up the technical skills, the technical know-how and the efficiency of Australians because they use new equipment and new techniques.

The OECD carried out its investigations between 1956 and 1963. The European countries wanted to know what they should do about the reinvestment of profits made in their countries by other countries. They established this Organisation of Economic Co-operation and Development. The United States of America is a member of OECD and it supported and encouraged the activities of the Organisation. The main purpose of the draft report of the OECD is related to the development of international trade. It said, as I have already stated, that this is best done by bilateral agreements between two countries or multilateral agreements between more than two countries, lt suggested that these should take the form of double taxation agreements. It is easy to see why bilateral agree ments are easier to negotiate, because the taxing arrangements of individual countries do have an effect on the form of the agreement. That is why the agreements with Singapore, Japan and the United Kingdom vary one from the other, but the structure established by the OECD has been used as the basis in each case and I think the Treasury will give official recognition to this assertion.

The reports prove conclusively that when taxation is imposed by two countries the investor could easily be led to the stage where 50% of his profit was taken by the country of source and 50% was taken in his own country. In other words he would get no return at all from his profits. The honourable member for Melbourne Ports mentioned royalties and. other matters, but I do not think that they are related to this legislation. If. we need to strengthen the control of royalties going to other countries from companies manufacturing and producing in Australia, let us have a look at the situation; but I do not think it has much relevance to this type of legislation.

As F have said, the entrepreneur from Japan, Singapore or the United Kingdom who invests in Australia must see that he can get some return. He must be sure that the two governments concerned look with some sympathy at his prospects of receiving a dividend. I do not believe that those countries that have invested in Australia have a tremendous future in respect of their investment and we need only to look back on the records to appreciate this. For instance, in 1911 the mighty Broken Hill Pty Company Ltd was classified as an overseas company because 74% of its capital was held by overseas interests, the balance being held in Australia. Of course, the position is quite different today, 84% of the company being owned by Australians and only 16% by overseas countries. This is a classic case of overseas investment assisting Australia. It has generated sufficient capital among employees and others to enable them to buy into this magnificent company and reverse the situation. Admittedly it has taken nearly 60 years.

Let us take another company as an example. The Australian ownership in North Broken Hill Ltd increased from 34% in 1913 to 84% today - again a tremendous reverse. Initially this company was practically owned by overseas interests, but now it is practically owned by Australians. The Western Mining Corporation, a company which is often in the news in Australia, was once owned totally by overseas interests, but now 90% of the capital is Australianowned. This is the type of company that overseas investors are interested in, but it is the type of company that has a diminishing asset. With mining and oil exploration the asset diminishes immediately the first barrel of oil is taken or the first ton of ore is mined. Overseas companies find that they have to keep up exploratory work in mining or in oil exploration to make sure that their investment pays off. Before they sell their first ton of ore they have to build tremendous railroads, as has been done between Mount Tom Price and Dampier and between Mount Newman and Port Hedland. We read in the Press yesterday of a new venture, lt appears that an overseas company, with a 25% Australian interest, will be selling S 1,250m worth of iron ore to a certain Japanese firm, but it will have to build another railway and another port in the north west part of Western Australia.

What does this do to Australians? It gives them better jobs, better education and better schools. We have men in Australia today whom ‘ we did not have 5 years ago - men who can run an. oil rig and do all the things that’ we used to read about in the newspapers and see in the newsreels being clone by Americans. This work is now being done by Australians. We are more or less self-contained in respect of oil drilling, oil exploration and oil production.

I often wonder why members opposite worry about Esso-BHP and the fact that, some 6 months ago. it called up $30m of Australian debenture capital. The criticism in the Press and by the Opposition was quite fantastic. What, has the company done with that money? lt has expended S20m in Australia on capital works. If it ever moves out of Australia it cannot possibly take those capital works away’. Conzinc Riotinto of Australia Ltd cannot take its railroads out of Australia. Any company which invests; in Australia and provides ports is building up a workforce of highly qualified Australians on high wages, with good superannuation and a continuity of employment. I believe that the Treasurer feels that the capital upsurge in Australia - Australian capital and overseas capital as well - has initiated a regeneration of capital in Australia. He feels - I agree with him - that some of this capital will have to be reinvested, or should be reinvested, overseas because we want to look after our markets overseas the same as the Japanese, the British and the Americans want to look after their markets.

By signing this agreement with Singapore, we have an opportunity of encouraging Australian businessmen, commercial enterprises and entrepreneurs to invest in Singapore. As the honourable member for Melbourne Ports said, the Government of Singapore has requested that overseas countries invest in its country. What does Prime Minister Lee Kuan Yew say? He says what I say - that because of the control of Hong Kong by Communist China in the years gone by and the effect of that control in the years ahead, Hong Kong will lose its power as the international port of South East Asia and will be replaced by Singapore. I believe he is right. He is encouraging overseas investment and I do not think, to use Sir Henry Bolte’s words, he is very choosy about where the investment comes from. Those who invest in h>s country will, of course, obtain a tax holiday during the first 5 years of their investment. In other words, he wants them to re-invest their profits in Singapore to ensure that the people of Singapore continue to have an increasing rate of production and an improving standard of living. This is what Mr Lee Kuan Yew has in mind, and I believe he is right. We should encourage him in this. We should have another international port in the South East Asian area. The amount of goods and services that will be processed through Singapore in 20 years’ time or 30 years’ time will be tenfold what it is today. Goods coming from overseas countries like Australia and America are transshipped there and sent into the South East Asian area. The Treasurer rightly said that we in Australia provide only 3% of imports being acquired by South East Asian countries. Here is an opportunity for Australians to invest in Singapore and elsewhere if they like in South East Asia to build up manufacturing procedures and processes, because there is no doubt in my mind that when a biscuit company or any other company sets up in Singapore the Singaporean Government will establish trade or tariff barriers to ensure that that company, wherever it comes from, will be protected in Singapore. This is the process as I see it, and this is what Australian businessmen and the Australian Government should encourage and help along the way.-

The honourable member for Melbourne Ports gave me the impression that he considered there was no future for Australia in the agreement with Japan, that all the advantages could be credited to Japan. I say first that the profits Japanese companies make in this country will be reinvested, because the records have shown that overseas investors will reinvest 50% of their profits. The second point is that the Japanese, like any other country that imports goods and services from Australia, want a continuity of these goods and services. If they find that Australia is not sympathetic to their needs so far as continuity is concerned they will look elsewhere for iron ore, bauxite and oil. There is no doubt in my mind that this is the reason why we are signing a double taxation agreement with Japan. The Japanese will obviously find that Australia is a country that can be dealt with on a long term basis. It is a strange thing that Japan has not increased its military prospects in South East Asia in the way it did before World War II. It has not increased its efforts in foreign affairs but it has built up in the area - throughout the world, in fact - a tremendous image as an industrialised country and a country that has the ability to trade. After the war the image of Japan in Australia was the lowest of any country in the world. Let us face this fact. It is because of the Japanese tenacity and the procedures they have adopted with exports and imports to and from various countries that they have built up an image of trustworthiness.

Thousands of Australians go to Japan and visit Tokyo, Osaka and other areas and they find it a useful procedure to take their wives and families to see how the Japanese live. By the same token, the people of Japan come to Australia - not to the same extent and not to the extent 1 would like to see them come but they are coming here in increasing numbers - and they are beginning to understand Australians a good deal better than they did before. In this matter of international relations mentioned by the OECD it is important that we should formalise an agreement with Japan of all countries, firstly, because of the tremendous amount of trade we are doing with it and, secondly, to ensure that the personal relationships that have been built up in recent years are continued and made to grow. This is very important from Australia’s point of view, and it is certainly important from the Japanese point of view. They, of course, are a little over-suspicious of Western type people but they have learned to trade with us on Western lines. We encourage them to think the way we do in business, and they realise that we have financial controls on our economy which are useful to us and handy to them in many, many instances.

I find the Opposition’s reason for opposing this double taxation agreement with Japan contrary to good reasoning, because it must be in the long term beneficial to Australia, and of course it will be beneficial to Japan. The honourable member for Melbourne Ports said that it will benefit Japan because the investors from Japan will not be paying the same amount of tax us they would normally pay. This is true, but it is the short-sighted view that he gives to the people of Australia when he points this aspect out. The Treasurer and members on this side try to take a longer range point of view to ensure that the” trading we now do with Japan is continuous and is a growing trade and that the people of Australia will have an ever-increasing standard of living because of the investment by Japan, Britain or America, and there will be goods and services available to Australians in the future as they have never been available before. We know that the level of unemployment in Australia is lower than it has ever been. In Victoria only 0.9% of the work force is out of work. Most Australians, whether they work for private companies or in government departments, own their own cars, and wherever we go we can see the goods and services that they enjoy because of overseas investment in Australia. lt is interesting, too, that the honourable member for Melbourne Ports said that we can do these things ourselves with our own capital. The first point I would like to make is that we are one of the highest taxed industrialised countries in the world. In other words, 1 do not believe that we can tax the people of Australia any more. I believe thai real consideration should be given and must be given to reducing income tax in Australia. We cannot take any more from the people of Australia for this additional development. Australians, on the other hand, are among the best investors in the world in capital equipment in Australia. We have the reputation that we do invest in goods and services to a greater extent than people in other countries. I will concede that some of it is forced because the Government takes it in the form of tax and builds roads, dams, bridges and the like, but it is a capital investment for the good of future Australians. Therefore, we cannot expect the investors in Australia to spend any more money on investment to build up these goods and services, particularly the mining ventures that we have in Australia.

As I see it, the Australian Labor Party would leave the iron ore in the ground until we had time to do something about it. I say as a technical man - as an engineer - that already technological processes have shown that there is a plastic as strong and as pliable as steel. I suggest that in 20 or 30 or 50 years’ time steel will be replaced as a commodity. I do not suggest that honourable members opposite sell their shares in BHP today, but I am suggesting that technical processes are such that there will be replacement of steel in the future. We all know that the developments of atomic energy are such that oil is being replaced as a fuel. It will not happen in Australia in 20 years’ time or even in 50 years’ time, but we all know that at least five atomic energy plants have been built in Japan to generate the electricity that it needs for its tremendous factories. This will be a multiplying process in all countries throughout the world. In other words, coal and gas in 50 years’ time will be quite useless as generators of electricity. So I would suggest that the sooner we get our oil out of the bottom of Bass Strait, Moonie or wherever it is in Australia, the better for Australians. The sooner we use our bauxite, the sooner we use the copper from Mount Isa and elsewhere, the sooner we use the iron ore from Mount Tom Price and

Mount Newman and other places, the better for Australians. We oppose this amendment proposed by the honourable member for Melbourne Ports and support the Bill.

Sitting suspended from 5.59 to 8 p.m.


- Mr Speaker, supporters of the Government claim that Australia offers the best opportunities for overseas investment of any country in the world. They say that it has stable government, vast natural resources which are almost unexploited, a skilled labour force and a rapidly growing population. The Committee of Economic Inquiry, known as the Vernon Committee, probably was led astray by these claims as, in 1965, it said:

In our view there is no longer justification on the basis of the experience of recent years for general promotion of overseas investment either by the Commonwealth or State governments.

Yet, the Government has extended vastly by its double taxation agreement with Japan the promotion of overseas investment. Why?

I have endeavoured to find out the financial effects of existing double taxation agreements. I have asked the Government: What is the proportion of the Australian industrial assets owned overseas? The reply is: No idea. I have asked: What is the taxation paid on dividends overseas since double taxation agreements have operated? What would the taxation have been if none had operated? The answer is: No idea. I have asked: What is the taxation paid by Australians overseas since the operation of double taxation agreements? What would it be if none were operating? Again the reply has been: No idea. Yet, without this knowledge, this Parliament is asked to ratify double taxation agreements with Japan and other countries. Without the knowledge which I have requested which should be in the hands of the Government if the Government is acting intelligently in connection with the imposition of double taxation agreements against the declared recommendation of its own Committee of Economic Inquiry, the application of the double taxation agreement with Japan will reduce the effects of protective tariffs and the effects of any other device used by Australia to prevent successful competition on the Australian market by overseas products with Australian goods, lt will promote the flow of Japanese goods to Australia. : The Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) in introducing the legislation to ratify the double taxation agreement with Japan said:

In the case of a capital importing country a double taxation agreement removes some of the impediments to foreign investment, and thus tends to increase the volume of capital inflow.

He also said:

The agreement will foster trade between the two countries.

This is true. The Japanese agreement will increase the flow of goods from Japan to Australia to a much greater extent than the flow of goods from Australia to Japan will be increased.

Japan now buys from Australian primary producers wool, iron ore, leather, etc., that are processed in its factories and add to its development. Japan purchases from Australia foodstuffs necessary to feed its workers. It gets these things that are essential to the expansion of its industry and to the livelihood of its people under better conditions from Australia than from anywhere else. This is why Japan buys these primary products that are essential to the employment of its people. These products must be processed in Japan’s .factories. If Japan cannot get them, it cannot employ its people. Therefore, it must obtain them. Only for these reasons does Japan purchase them.

In return, Australia has been accepting goods, many of which do not promote Australian development but do absolutely the reverse. These goods endanger the employment of Australian workers. The Japanese have made it perfectly clear why Japan wants a double taxation agreement with Australia. I have some quotations from the Australian Press which, together with what I will outline now. will tell the story of the demands by Japan for preferential treatment regarding the goods that it sells on the Australian market and on other markets.

In 1957, I was at the United Nations. The Japanese had before the Economic Committee of that body a proposition for the creation, under the control of and subject to the United Nations, an organisation somewhat similar to GATT - the General

Agreement on Tariffs and Trade - for the purpose of increasing freer trade amongst the nations of the world. That, of course, was the alleged objective. The Australian Government was supporting the proposition from Japan. I was a delegate ‘there. I went to the representatives of Australia - our body used to meet on Fridays - and 1 said to them: ‘Well, gentlemen, I certainly am not going to put up this proposition and support the Japanese. 1 agree that the Government is entitled to do what it likes in connection with the issue, but I am not going to be its mouthpiece. Choose somebody else.’ So, Dr Thompson put up the case.

Fortunately, however, the nations of South America which were not highly developed and many of which did not have conditions where labour was cheap or working conditions were deplorable - those were the conditions in some of the Japanese factories - opposed the proposition. They said: ‘We want to develop our industries. We are emerging from the state of primary producing nations to the state of nations that desire population. We can support those populations only wish industry. Therefore, we are going to protect and develop our industries’. The result was that, in spite of Australia’s support, the proposition from Japan was defeated. Since then, the story of the action of the Japanese has been told in the Australian Press.

I have no objection to Japan as a nation endeavouring to secure to the limit of its capacity what it can in the interests of its people. However, I object to our country and our Government being a willing tool of Japanese industrial interests. The Australian* of 21st February 1968 published a story with the headline: ‘Stick to Farming, Japan Tells Us’, The article begins:

A Japanese businessman yesterday advised Australia to concentrate on : its- rural exports and keep out of manufacturing.

He went on to say: ‘We can manufacture goods at one-third of the labour cost in Australia. Therefore, you provide us with the primary and the rural products and we will do the manufacturing*.

Mr Maisey:

– That is a great tribute to our farming community, though.


– Yes, it is a great tribute. But if such a policy were put into operation it would mean the extinction of this country as a growing nation. The next item to which I refer comes from the ‘Australian* of 8th May 1968 which is headed: ‘Japanese warn we must play ball with them’. The article reads:

Australian sales of minerals and agricultural products to Japan could be jeopardised unless Australia played ball, Japanese businessmen warned yesterday.

They said that unless Australia widened its doors to Japanese industrial products, Japan’s purchases of primary products could slow down.

The following was reported in the ‘Australian’ on Thursday, 9th May 1968, under the heading ‘Your tariffs are too high, says Japanese businessman’:

High Australian tariffs were the main obstacle to joint ventures between Australian and Japanese companies, the head of Japan’s largest-selling chemical combine said yesterday.

And he insisted that Australia must lower its tariffs. In the ‘Sun’ of 8th May 1968 under the heading ‘Japan’s tariff cut demands opposed’ the following report appeared:

Leading Australian businessmen yesterday disagreed with Japanese demands lor a cut in Australian tariffs.

They (old Japanese industrialists that Australia’s secondary industries’ must be protected.

These industries were vital to the sound development of the nation’s economy, they said.

Then the big guns of Japan were put into operation. In the ‘Age’ of 11th October 1967 under the heading ‘Japan’s PM here for tax talks’ the following report appeared:

The Japanese Prime Minister (Mr Sato) will arrive in Australia today as Australian businessmen arc pressing for an early double-taxation agreement with Japan.

The double-taxation agreement will be one of the topics for tomorrow’s negotiations between Mr Sato and senior Australian Ministers.

That is the story of why Japan wants a double taxation agreement with Australia. It wants an agreement to promote not the welfare of Australia but the development of Japan. If I were a Japanese I would not object to that attitude. But I am not a Japanese; I am an Australian, and I object to the Government being a willing tool of those Japanese who desire to exploit the people of this country to a greater extent than they have in the past by the imposition of a double taxation agreement which, after all, as the Japanese themselves point out, is desired by them because it will enable exports from Japan to Australia to be increased.

There could be exports from Japan to Australia which would be desirable, but what are the exports that we have obtained in the past from Japan? Those exports include textiles, light machinery, footwear and things of that description. Year by year the quantity of these goods is increasing. In the last 3 or 4 years the value of manufactured clothing imported into Australia has increased from $19m to $25m. Of course that did not all come from Japan, but the fact is that if we increase Japan’s opportunity to exploit the Australian market, if we enable Japan by the operation of a double taxation agreement to reduce or nullify the effects of the protective tariffs or other devices which we have for the protection of our industries, then more of these goods will come into this country.

When these goods come into Australia how do we pay for them? Australia does not pay for them with the goods of Australia because sufficient goods do not go out from Australia. Japan does not want to promote an increase of exports from Australia to Japan equivalent to the increase she desires to promote in imports from Japan to Australia. What Japan desires to do is to reduce her adverse balance of trade with Australia. If she does this Australia’s adverse balance of payments with the rest of the world will be increased. As Australia cannot now pay with her goods for the services and the goods she receives from other countries, she will be much less able to meet her obligations when a Japanese double taxation agreement is in operation. The goods which Japan wants to put on our market must be paid for, and they will be paid for by the factories, the farms and the industries of this nation. The Vernon Committee of Economic Inquiry said in 1965 that if the flow of overseas capital into Australia is $3 00m per year then by 1975 46% of all the industrial assets of Australia would be overseas owned. The inflow per year since 1965 has not been $300m; it has been more than twice that amount. Last year the inflow of foreign capital into Australia was $ 1,000m. This year it will be more than $ 1,000m. If the double taxation agreement with Japan is ratified the inflow of foreign capital will multiply again and instead of $ 1,000m coming into this country each year to purchase the assets of Australia and to place the Australian people in jeopardy under burden of debt to other countries the amount will be $2, 000m or $3,000m.

Mr Buchanan:

– Be careful now.


-Order! The honourable member for McMillan is to follow the honourable member for Scullin in this debate and he will have an opportunity to reply then.


– The disagreement of the honourable member for McMillan is the highest tribute that could be paid to the remarks which I am making. Undoubtedly the assets of this country are being sold to overseas countries, and I earnestly believe that this is the greatest betrayal of the people of Australia that has occurred in the history of this nation. The fifth columnists within our Government are enabling the other nations of the world not only to take over the economic control of Australia but through that to dictate the political and social conditions of the Australian people. For those reasons I say unhesitatingly that we should reject the double taxation agreement with Japan. Honourable members opposite, particularly those who sit on the back benches, are average good Australians but they do not know sufficient about the effects of the inflow of capital into Australia. One honourable member after another on the other side has risen and spoken about an inflow of capital as though we could have an inflow of capital without an inflow of goods. If no goods come from Japan as a result of this double taxation agreement and if there is not a reduction of Japan’s adverse trade balance with Australia as a result of it, it has done nothing for Japan. Japan wants to have the agreement because it realises that it sends to this country what is called capital and that capital is goods, textiles, footwear and all kinds of articles that could be manufactured by Australians in Australian workshops. But the Government does not encourage their manufacture in Australia.

I have dealt with the general question. Now I want to deal with some particular matters in the double taxation agreements.

We have a double taxation agreement with the United States of America and it contains Article DC (2), which reads:

An individual who is a United States resident shall be exempt from Australian tax on remuneration or other income received, in respect of personal (including professional) services performed in Australia . . . if -

during the year of income in which the services are performed he is present in Australia for a period or periods not exceeding in the aggregate 183 days;

What does that mean? A similar provision is contained in the Japanese agreement. It means that the American or Japanese authorities can bring their artisans and experts to Australia, their experts can stay here for 183 days, can be paid whatever the Japanese or Americans want to pay them, and they can return home without paying a penny of tax to the Australian people. But it is worse than that. The provision in the agreement with the United States of America makes clear that it applies to all the people who come from America to work in Australia, provided they are not here for more than 183 days. I ask the Treasurer (Mr McMahon) to say, if wrestlers come here or if Johnny Ray comes here–

Mr Cope:

– He is here now.


– Our friend says that he is here now. These artists, actors, wrestlers or entertainers who come from America may get $100,000 or $200,000, but if they are not here for more than 183 days Australia does not get a penny in taxation from them. I want to know how much they would have had to pay in taxes if they had been called on to pay at exactly the same rate as applies to Australian taxpayers. I would like to know what exemptions America gives to Australians and what those exemptions are worth.

We also have a double taxation agreement with the United Kingdom.It was drawn up by a Labor Government and its object was to develop a specific industry. lt was intended to encourage that specific industry to become established in Australia after the end of the war in order to help Australia and the United Kingdom. But that double taxation agreement does not contain a provision to the effect that entertainers of all descriptions shall be free of taxation.

It has specifically written into it a proviso which states:

The provisions of this Article shall not apply to the profits, remuneration or other income of public entertainers such as stage, motion picture or radio artists, musicians and athletes.

In one agreement we grant exemption; in another we do not. It should be in all agreements or in none, and I say it should be in none. The double taxation agreement with Japan, which we are now discussing, does not exclude from Australian taxation artists and other entertainers but it does exclude from Australian taxation technicians, experts and similar people who are here for not more than 183 days. The Japanese can pay these people what they like for the time that they are here and then they can go home, stay home for a period and come back again. None of them would be so simple or so guileless as to stay here for more than 183 days.

These agreements are of vital importance to the people of Australia. If Australia is to continue to be governed by Australians, we should not increase the opportunities for other countries to take over Australia. We have Australian men fighting on the battlefields of Vietnam. When they come back their opportunities to secure a financial interest in any of our industries or to purchase any of the assets of Australia will be considerably reduced. If the Vernon Committee of Economic Inquiry was at all correct, the whole of the industrial assets of Australia are in danger of being owned overseas within a very short period. Inducements are being offered to overseas countries to take over the industries of this country.

I have said before and I say again the ownership of our assets by foreign nations is ultimately as disastrous to the freedom and liberty of our people to develop their institutions and their manner of life in the way they wish as an invasion by a military force would be. In the Second World War Japan poured vast amounts of treasure into its effort to capture the resources of this country so that it could use them to promote the ideas and the ideals of its people. She would have done so if she had been victorious. It cost her untold millions in equipment, manpower and other resources to fight ineffectively to secure control of this country. But what the embattled might of the Japanese army, air force and navy was unable to accomplish, this Government is helping Japanese businessmen with cheque books to accomplish in a very short period.


– The impassioned speech of my good friend from Scullin (Mr Peters) would create the idea that the Opposition believes that Australia is being ‘done’ by the agreement with Japan that we have negotiated very carefully over many months. I might add that agreements with Singapore and France are also covered by this Bill, along similar lines to the agreements that we have previously negotiated with the United States, New Zealand, Canada and the United Kingdom. It seems to me from what the honourable member for Scullin has said that the Opposition has not examined the basis of double taxation agreements. We have heard a tirade against any Japanese investment in this country. We are getting back to the old story of the differences between the Opposition and the Government on the general question of overseas investment in Australia. But let us not forget that this Bill is concerned with the two separate taxation bills that could face a person in another country who invests money in Australia, or an Australian company which expanded its business by investing in another country.

Surely this kind of activity can do nothing but good. Surely it is not reasonable to suggest that one country is going to gain an unwarranted advantage because a few miserable dollars are paid into its taxation system rather than that of the country in which the income is earned. Surely we should look on these agreements as a reasonable means of progressively improving trade relations in this part of the world. I am speaking particularly at the moment about this part of the world because we are concerned in this Bill with agreements with Singapore and Japan rather than with the agreements that we have previously made with other countries. Australia is situated on the edge of the Pacific area and is one of the leading trading nations in this area. This Bill will encourage relations between Australia and Japan and between Australia and Singapore, and it will do so on two different bases. First, I remind the House of an answer to a question on notice by the honourable member for Scullin given by the Treasurer (Mr McMahan). I was surprised that the honourable member did not use this in his speech because he would have tried to turn it in a different direction from that which I will indicate. The Treasurer said that the tax payable by permanent residents of Japan to Australia was $1,400,000 while the tax payable by permanent residents of Australia to Japan was $200,000. The honourable member based his attack on the miserable amount represented by the difference between those two sums of money, and using that as his base he claimed that Japan was getting an advantage.

How ridiculous this is. Both countries will gain an advantage from the improvement of trade in the Pacific area, particularly trade in the Australian context, in the decades that- are ahead of us. Australia will gain its advantage from the improvement in sales of the raw materials that it is producing today, which it is offering to the world and for which the best market is in Japan. We have negotiated very many agreements for sales of these materials, some of which were admirably listed by the honourable member for Balaclava (Mr Whittorn) this afternoon. Japan is buying a good deal of iron ore. from us and a good deal of coal. She is not so much interested in bauxite hut is going to take some of our natural gas in the form of liquid petroleum.

This double taxation agreement has been negotiated on the basis that each country is helping the other, and on the basis that each will gain something from it. The agreement does not mean that somebody will be able to avoid taxation. The Opposition seems to have forgotten or deliberately overlooked the basis on which the double taxation agreement operates. If an Australian investor wanted to open a factory in Japan - or in Singapore - he would go ahead. Perhaps an Australian company would start a subsidiary in Japan or Singapore. There are very many such subsidiaries operating at the moment, as is evident from the figures I have just given. The Australian company would naturally expect to earn profits from that subsidiary. Nobody goes into business in another country without expecting to make a profit in that country. If a Japanese company invests money in Australia we charge 45% income tax on the profits of that company, and that money remains in Australia. Conversely, of course, any Australian firm investing money in Japan will have to pay tax in that country at the rate laid down by the Japanese Government. What we are then concerned with are the dividends transmitted from the country in which the profit is earned to the country in which the investor resides.

Here we come up against a very important problem in that each country has its own taxation system. Each country believes that it should impose taxation at certain rates, and it tries to make those rates as equitable as possible. The rate of taxation on dividends arriving in the hands of an Australian investor is set down by the Aus-, tralian Government, while the rate applying in Japan is set down by the Japanese Government. We could arrive at a situation in which an Australia who had invested his money in Japan could be required to pay tax to the Japanese Government at the rate of 25% or 30% - I think it is a bit lower than our rate - and that would take care of a certain amount of his dividend. Then when he got the remainder back in Australia he would have to pay perhaps 40% or 50%, depending on his total income, and this would take up another large portion of the income ft om his investment, lt could be that he would consider his investment hardly worth while.

For this reason the various countries of the world have sought to work out systems by which they can play fair with their investors while ensuring that they get a reasonable amount of taxation revenue and that the country in which the investment is made is also assured of a reasonable amount of taxation. The whole matter is so complicated that I believe the Opposition has not grasped the point that nobody receives any reduction in taxation under the double taxation agreement. Tha total tax paid is about the same as that which was paid previously. It is simply a question whether, in this case, the Australian Government and the Japanese Government - or the Singapore Government - get half each of the profit and the investor gets nothing, or whether the Japanese Government and the Australian Government take a reasonable amount each by way of tax. leaving the investor with enough residual profit to think his investment worth while.

Having made those points I now deal with what happens to the country in which the investment is made. Over the last few years we have been glad to have a very high rate of overseas investment in Australia. 1 shudder to think what would have happened, having regard to our mania for buying overseas goods and the large quantity of imported goods sold in this country per head of population, if we had not had this overseas investment to offset our adverse trading balance. About 90% or more of the money invested by overseas countries in Australia has been used to develop Australia. This is. one thing which the Opposition seems not to want. It has some peculiar idea that we can delay development until, we have saved enough money to exploit this country ourselves. The philosophy of honourable members opposite is: Let us leave it there and not do anything about it.

Mr Whittorn:

– Put it in the savings bank.


– Yes, arid let it accumulate. Under Labor our raw materials from which we derive benefit would not be made available for the world to enjoy. Japan is at present buying raw materials in various countries. Australia has to sell its iron ore and bauxite in competition with exports from other countries. Japan has become one of the greatest manufacturing countries. It leads the world in steel making, shipbuilding and the production of fine optical instruments and some chemicals. In this atmosphere Japan, in conjunction with Australian companies, has made investments in Australia to exploit our raw materials. But Japan has shown a desire to advance a stage further. It has often expressed the view it would like not only to buy our raw materials and to participate in setting up towns, harbours and railways, which the honourable member for Balaclava (Mr Whittorn) so aptly described this afternoon

Mr Whittorn:

– Thank you.


– 1 will not repeat what the honourable member said because he made his comments so well. Australia will benefit from what Japan has done. We are well aware that Japan will make a pro fit from the processing of our raw materials. Japan will also show a profit from the companies that have been formed to put these projects into operation. But the profits that will go out of Australia, are so fractional compared with the benefits that will accrue to Australia from the ‘ establishment of industries here that we can simply disregard them.

The Japanese investor who is investing his money in Australia wants some assurance that ne will get a reasonable return on his investment. In this respect he is no different from investors anywhere in the world; he is no different from an Australian investing in an Australian company. In the first 10 years of operation the Japanese investor will get nothing back from most of these big undertakings, in Australia but eventually he hopes to earn 10% or 15% on his investment.

Mr James:

– Or 25 % .


– A member of the Opposition suggests that the return will be more like 25%. This would not worry me because if the earnings are taxed in Japan at the full rate and in Australia at the full rate, the net return to the investor will be very small. The purpose of the tax agreement that we are discussing -is not to help Japan or Australia. The agreement is not designed to help the economies of the two countries, lt is not designed to assist the revenue of either country. The agreement is designed to help the man who puts up his hard cash so that Australia may take part in a development which we all want but which would not be open to us if the investor was not assured of a return on his investment.

I have been inspired to participate in this debate because in the electorate of McMillan we have an example of a decentralised industry financed . jointly by Japanese and Australian investment. For some time there were two such industries, but only one remains. Japan has supplied the machinery while Australia has supplied the capital, the factory premises and the management. The staff is 100% Australian. In a situation such as this the advantage is all Australia’s. Japanese to whom I have spoken at functions iri the factory have pointed out that difficulties arise in the field of taxation. The Japanese will be extremely pleased to find that we have now decided to relieve them of the burden of double taxation. This is all that the Bill does. The Bill does not change anybody’s rate of tax. It does not give anybody extra money. We are not channelling money into somebody’s pocket. We are simply making it possible for somebody to invest his money in another country to his advantage but always, I would think, to the advantage of the country in which the money is invested.

Over the last few years we have been interested to know what might happen in several areas of Australia. One area that I have in mind is the Ord River. I am 100% in favour of development of the Ord. River project. I do not support the argument that we must grow cotton there or nothing. For years nobody lived in the area. Now we have the opportunity to open an area of Australia which should be opened. There are unlimited possibilities here, not only for cotton. Cotton has the foothold but this is an area as big as Victoria. Its population is sparse. We now have an opportunity to develop it. I submit that one of the things that has popped up in conversation about this so often has been that the Japanese are very interested in investment in that area because they need the cotton. There again is the need for the raw material. They would be quite prepared to negotiate agreements with the Australian people who also had faith in this area to put in mills or perhaps do the actual spinning of the cotton in that part of the world. I believe the Japanese would agree to this if they had the availability of the raw material for their weaving industry.

The same sort of feeler has been put out in several other areas. Japan might be interested in areas such as the Murrumbid gee area and several places where grains might be grown. I can see the possibility of Japanese co-operation with Australian entrepreneurs in the foreseeable future in developing things that we have not thought of as yet. First of all, the Japanese are interested in developing our raw materials. Secondly, they are interested in some form of processing.

From this thought I move on to another matter I have in mind and which I hope and believe will come true. Only by having some form of agreement with Japan, such as the one we have before us tonight, can we get to the stage where some of the present iron ore mining enterprises will begin the processing operation. If this is to be achieved we will need to establish factories, ports and so on. Instead of exporting the raw material we will have the opportunity to export the partly finished product.

There are many ways in which Australia and Japan could co-operate in the automobile industry. There is no reason at all why we should not be able to come to arrangements wilh the Japanese industrialists to have a reasonable Japanese and Australian content in automobile manufacture in Australia. There is no reason why we should not apply such arrangements to textiles. I believe that only by making forward moves, as we have done in the Bill before the House tonight, will we meet the difficulties of the investor. The Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) has explained in his second reading speech that the elimination of double taxation for the private individual is one of the objects of the Bill but that the apportionment of the relevant taxation revenue between the contracting countries is another. The Minister has also pointed out that one of the difficulties here was that one country might have to surrender more tax revenue than the other. In these circumstances an agreement will be satisfactory only if there is mutual understanding of what we are trying to develop in Australia. At present - and the amendment put forward by the Opposition is based purely on figures, taken as of today - there is a slight disadvantage to Australia if we think of mere dollars or the revenue that goes into the treasuries of the two countries. Australia will be making a little more remission than Japan. But give this agreement 10 years to operate and give the Japanese investor the opportunity to come to Australia and develop the industries that are here and crying out to be developed and it will be a different story. This applies not only to the mining industries on which major emphasis has been put in the past but also to our primary industries and our food industries to which the Japanese must look for more supplies in the future. Given the opportunity for this to happen, I am quite confident that the balance in favour of Australia in the future will be so strongly on our side that no-one could possibly agree to the terms of the amendment that has been put forward by the Opposition. On the mere fact of momentary advantage to Japan the Opposition objects to the forward looking policy which is envisaged in this Bill.

In the last couple of minutes that I have left I would like to point out the difference between the double taxation agreement with Japan and what is being done with Singapore. We have an entirely different basis of agreement with Singapore. I would have preferred each agreement to be incorporated in a separate Bill rather than be made part of a general double taxation agreement measure. This arrangement is rather hard to follow if we have to refer to a similar Bill which was based on the United Kingdom double taxation agreement last year. In the case of Singapore we have an entirely different situation. There are many companies in Australia that will, 1 hope, be investing in Singapore in the near future. Australia has reached the stage where it has the basic knowledge in manufacturing industries. We have the industries for many of the basic materials that are required by the world. I am speaking in particular of paper, chemicals and some of the metals. Australia has already established cement works in Singapore. We have the ability to produce a variety of goods. By investment in Singapore Australia can make a very great contribution to that country. The basis of the double taxation agreement with Singapore is different from that with Japan and the advantage will be in favour of Australia. However, all that 1 have said about the benefits that will come to Australia from Japanese investment in this country applies to Singapore, because it will benefit from Australian investment in its area. This will improve the economy of Singapore. Although the Japanese agreement and the Singapore agreement are made on different bases, the fact remains that Australia will be playing a very important part in the development of trading in the whole Pacific area in the near future.


– I was about to suggest that the speech of the honourable member for McMillan San carries its own answer. To put this debate in its proper perspective, naturally I support the terms of the amendment moved by the honourable member for Melbourne Ports (Mr Crean) which, in part, stated: as . . . the agreement with Japan for the avoidance of double taxation will operate to the disadvantage of Australia, this House is of opinion that action should not be taken to give the force of law to thi;, agreement.

In his introductory remarks the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz), who is at present at the table, stated that double taxation agreements have two principal functions, the first of which is to eliminate double taxation and to secure an apportionment of the relevant taxation revenue between the contracting countries. The second function is to remove any possibility of tax evasion. He went on to say:

  1. . in the case of a capital-importing country, a double taxation agreement removes some of the impediments to foreign investment, and thus tends to increase the volume of capital inflow.

I have yet to bear anything from the Minister or from any honourable member opposite suggesting that in any way this measure could conceivably be presented to the Australian people as being in their favour. No evidence has been given to date to indicate the prospects for Australian investment in Japan. Shortly I will come to that question.

I commence my speech by saying that we in Australia today are sitting on the greatest repository of mineral wealth in the world. That wealth is distributed around the Pre-Cambrian shield which covers a very considerable portion of Western Australia and northern Australia. The question that we must ask today is: Who in fact owns Australia in the light of the shortcomings of the present Government; its failure to evolve a policy for foreign investment, to control foreign investment, to quantify foreign investment, to evolve a coherent policy for national development and to control the worst features and abuses of some very astute international investors? We have heard much about the imbalance in trade between Australia and Japan. In point of fact, today there is a well known Pacific triangle of trade. We have a balance of trade with Japan which is considerably in our favour. Japan in turn has a very considerable favourable balance of trade with the United States, and the United States in turn has a favourable balance of trade with Australia. Arguments suggesting that this imbalance should be corrected in the fashion suggested in the Bill are entirely specious. There is a Pacific triangle, and it is a very real factor in the present situation. ls it to be suggested - and no honourable member opposite has done so - that there would be a capital inflow from Japan, in terms of specie, such as there has been from the United States of America or from the United Kingdom? As the honourable member for Scullin (Mr Peters) stated, Japanese investment is largely in kind, in goods. In the case of the mineral industry to which my remarks, will mainly be directed, it is, of course, in such commodities as rails, railway wagons, locomotives and heavy industry, ali of which could well be made in Australia, but nevertheless, having established an equity and having invested money in mining companies which are registered and are operating in Australia, dividends can be extracted in due course. What Japan could not achieve by war, bv physical aggression, she is now achieving by economic penetration. She has learnt the lesson that could have been taught to her by some of the older and mature countries under this financial and social system. What benefit will flow to Australia? What are our prospects for investment in Japan? In that regard I quote from a publication under the auspices of the Committee for the Economic Development of Australia, which is commonly known as CEDA. A comment is made by Mr Victor Gibson, a well known Australian industrialist, of Gibson Kelite Industries Ltd. Referring to the foreign ownership of Australian businesses, particularly by Japan, he said:

Japan over the past two decades provides what is probably the most outstanding record in world history of economic growth and advanced industrialisation. It also provides a perfect example of how to obtain foreign capital and techniques on terms to suit the recipient country although her need for this capital is at least as great as Australia’s.

He went on to quote the words of the Japanese Commercial Consul, as published in the Melbourne ‘Herald” of 30th November 1964. I interpose at this stage that Japan gave herself a flying start in 1948 by heavily devaluing the yen. Mr Gibson referred to the Japanese Commercial Consul, who said: . . isolated by the war from the world’s developments in science and technology, Japan certainly got off to a bad start in 1945. However, soon after the outbreak of the Korean war 5 years later, her industrialists had begun to import technology on a very high scale. On the other hand, the inflow of foreign capital for direct investment was kept on a highly selective basis and so on a small scale. Behind this was the thought that a too substantial induction of overseas capital into them would mean increasing overseas control of modern industries which has happened in Canada and to a lesser extent in Australia.

This, of course, is 5 years ago, and probably it is applicable to Australia with greater emphasis today. The Japanese Commercial Consul continued:

Separating them from capital, with its risk of control at the source of supply, we managed where necessary lo buy patents and technical know-how from overseas and to digest them in our own operations.

This is the keynote of Mr Gibson’s comment:-

Japan welcomes overseas loans, and, to a lesser extent, minority equity holdings. Companies wilh a majority of overseas equity are refused guarantees for remittances of profits and capital, and are also refused guarantees of compensation in the event of expropriation. Despite these official discouragements there is ample evidence that many overseas companies are still eager lo invest their capital there.

Japan today is literally a closed shop to foreign investment within its boundaries. I refer honourable members to the very real strain in economic relations which exists between the United States and Japan because of Japan’s reluctance to allow the American motor industry to penetrate its shores. One of the major factors contributing to this situation in recent months has been a list of 1 20 minor industries in which investment would be permitted, which has been compiled after very great pressure by the United States on the Japanese Government. The list was rejected contemptuously because there was not a major industry amongst those listed. That is the position in Japan today. How much capital from Australia does the Government seriously suggest will be admitted to Japan? In point of fact, is there any real need for us to put it there?

Mr James:

– It is a one-way traffic.


– Precisely. Even India, which was one of the major emerging nations after World War II and which was desperately in need of overseas capital, insists on a 51% local holding.

Mr Curtin:

– That is very sensible.


– Yes. Australia, which is sitting on vast mineral wealth, is prepared to open its doors in a free-for-all. The rape of Australian mineral wealth is continuing and it is to the eternal disgrace of this Government. The double taxation agreement in its present form can mean only one thing. If taxation is to be reduced from 30% to 15% on profits and dividends which are to be remitted to Japan, there will be a correspondingly greater increase in the taxation levied on the Australian wage and salary earner. It will give the Government a suitable pretext for curtailing the moneys it would make available for social services, housing, education and all the other matters that are so urgently required in this country.

The Vernon Committee, in its report which was promptly swept under the table by the Government, pointed out that in 1974 we would come to the point of no return where the inflow of investment capital to Australia would be exceeded by the remittance of dividends, interest and the various other forms in which profits of overseas investors are extracted from Australia. The Government has profited in no way by its mistakes. No attempt is made to screen the capital that is coming into Australia. The Government has no knowledge of the inflow. At present it needs an inflow of at least $ 1,000m a year to balance its trading on current account, and it is prepared to allow Australia to be sold piece by piece to achieve that balance. The Government has no coherent plan for development. It has no register in respect of the restrictive franchises which are a major feature of foreign industrial activity in Australia. It was the Vernon Committee which pointed out that there were not less than 1,100 of those franchise agreements. Almost every other major industrial country has a register and at least knows the text and the terms of restrictive franchises which prevent the export, in competition with the parent country, of products made under licence or under patent in Australia or other particular countries.

A good deal of what is coming into Australia today is hot money, lt is money which in a disturbed period of the world’s financial imbalance is scuttling around from country to country and is liable to go wherever the best return is available. The Government has failed to take into account the impact of the record high rate of interest - it is 8%- which is being charged in the United States of America today to its prime borrowers. This rate is designed to curb inflation in its own country and to attract back from overseas Euro-dollars in particular and also hot money which managed to escape through the net which curtails the exodus of American funds into overseas investment.

Australia has a good record of internal savings. Twenty-five per cent or 26% of our gross national product goes into internal investment. But the point that is not made by the Government, and which it does not want to face up to, is that Australia’s internal savings - savings generated within our own shores - meet 90% of our developmental requirements and that for the 10% of inflow that comes into the country a wholly disproportionate return is being given to very astute overseas investors. If this Government really got to work and correctly mobilised Australia’s savings in Australian resources we could come very much closer to financing what we need in terms of pure cash. It is true that certain overseas techniques heed to be brought into this country and we in the Opposition are the first to acknowledge this and to welcome them - but at a price and not as a means of selling Australia’s birthright.

Today the Government is pursuing a rake’s progress. It would need the brush of a Hogarth to depict what is actually happening here. The right honourable member for Melbourne (Mr Calwell) described it very graphically on one occasion when he said that we were literally selling the family home to pay the grocery bill. It is a remarkable feature of Australia, as the last of the continents to be developed, that it lacks the natural predators to keep a balance between the various species. For that reason when rabbits were introduced here there was no predator which kept them under control. In much the same way when foreign capital comes here we lack the economic knowledge, the economic know-how, or the ability to mobilise our own resources to curb the worst excesses. How much technology is required in mineral quarrying today? That, precisely, is what is happening around most of northern Australia. I listened with great interest this afternoon to a question addressed by the honourable member for North Sydney (Mr Graham) to the Minister for National Development (Mr Fairbairn) relating to the Robe River iron ore deposits and the consortium that was being organised to exploit them. The Minister laid great stress on the fact that % 1, 000m a year would be coming into Australia in the very near future from its exports of minerals, but he did not qualify his statement by saying how much of that money would remain in Australia or even would be available for the Commissioner of Taxation after the tax minimisers got to work in the respective companies.

In the case of the Robe River scheme the person who will entrench himself will be a rather astute gentleman named Ludwig. I am not questioning his commercial repute, but in a world of ninnies naturally he operates to the best advantage. If his present proposals are fully consummated he will be controlling one-third of Australia’s coal exports and one-sixth of its exports of iron ore. Does any honourable member in the Government suggest that Australian technology in coal mining is not capable of ranking with that in any other part of the world? Yet through Clutha Development Pty Ltd, the Sentinel Mining Company and his various other organisations, Mr Ludwig has literally entrenched himself in the pick of Australia’s coal coking fields. What answer has the Government? It has no answer other than its sheer, downright, stark incompetence. Let us take the Robe River proposal where the Ludwig interests will put up 50% of the cash and none of the technology.

Mr Irwin:

– I rise to order, Mr Deputy Speaker. I think that the House has been very tolerant. We have heard nothing about double taxation for 10 minutes. We do not mind a little tolerance but I do not think that there has been 5 minutes discussion of double taxation during the honourable member’s remarks.


Order! There is no substance in the point of order.


– Thank you, Mr Deputy Speaker, in the case pf the Robe River undertaking 50% will be subscribed by the Ludwig interests, 25% by the Cleveland Cliffs organisation .and some other groups and, I understand, 10% by Garrick Agnew Ltd. Only 25% will be raised from Australian subscribers generally on the open market. Only 28% of the total capital invested in that proposal - the largest mineral sales contract ever negotiated in the world - will be held by. Australians. I want to refer to the. activities of these various mining companies in tax minimising. The Minister, in his second reading speech, laid some emphasis on tax evasion. Today overseas’ mining companies are playing in reverse the same techniques that were used by the petrol companies in bringing crude oil into Australia. The petrol companies chose, through dummy companies overseas, to sell crude oil to Australia at excessively high prices. The reverse play is on today. Companies which are not at arm’s length with the companies operating in Australia arc in many cases buying ores at give away prices and blandly, when it comes to a question of company tax returns, the Commissioner of Taxation is being told that no profit or a minimal profit is being made. If they want something a little more scientific and a little less blatant, there is the question of remittance of fees under licence for the particular techniques that the overseas principal claims are available to the Australian subsidiary.

Today we could hot be in a worse position. I suppose one of the major tragedies in Australia today is the literal give away of 50% of Australia’s birthright in the Bass Strait oilfields. In addition to the other concessions which are given to overseas investors under the terms of double taxation agreements, we have the celebrated section 77a of the Income Tax Assessment Act; and we have Division 10 of the same Act. We have foreign ships built in foreign shipyards and insured overseas coming here and taking away ore that ought to be carried in Australian ships and sold at proper prices. The Leader of the Opposition (Mr Whitlam) today spoke the truth when he said that in future no company should be coming into

Australia to operate unless there is a majority holding by the Commonwealth Government or some other appropriate governmental authority. If we do not ensure that, we will be in the plight that was referred to by Professor Whitmore in his address to the Australian and New Zealand Association for the Advancement of Science at Armidale in August of last year. He said:

The need to employ foreign investment in order to expand the minerals industry inevitably brings with it a number of potential dangers, some more obvious than others. Foreign mining companies are not investing in the Australian mineral industry just to do us a good turn. They are concerned primarily m establishing profitable enterprises and secondly, in some cases, in obtaining ores or concentrates for further processing in their own countries. Thus the main potential dangers in foreign investment are:

The attainment of comprehensive processing and fabrication in Australia may be hampered by the desire of the company or its home Government to obtain minerals cheaply a’nd in the form of raw material.

In times of financial stringency in its home country and in times of over supply, the foreign company may act in its own interest or that of its country of domicile.

Foreign government policies may, through the operating countries, exert an undesirable influence on Australia’s policies, particularly in relation to overseas trade. A recent report by eight eminent Canadian university economists pointed out that Canada might be losing its grip on its own sovereignty and economic destiny by the intrusion of US law and policy through the medium of Canadian subsidiaries. . . . Friction is unlikely to occur so long as there is close alignment between the overseas policies of the country providing the investment and the recipient but difficulties are almost certain to appear when the policies diverge.

. . . association with foreign mining companies is not necessary to ensure access to modern technology and there are grave dangers in not generating indigenous expertise. lt has already been pointed out that mining operations are only carried out in Australia because they are profitable. The discovery of deposits elsewhere which were capable of cheaper development would lead to a transference of activity to them and a corresponding disruption of our economy. It is in Australia’s interests not to live on overseas technology but to develop her own, based on the special characteristics of aer raw materials. She must aim to position herself like Sweden who exports ore, techniques and sophisticated mining machinery. In no area is this more important than in the processing and extraction of the types of ores and metals which are being mined here. It is in these operations that Australia particularly needs to strengthen its teaching and deepen its research services.

In conclusion, I say that this legislation conferring double taxation rights on Japan is a standing disgrace. In the case of Singapore, assistance is needed, and I am sure that we can give it. In the case of the French agreement, it is just a matter of reciprocity. But we will live to rue the day when this Government used its numbers to force through the House the terms of this agreement with Japan.


– We have just heard from the honourable member for Cunningham (Mr. Connor) a perambulation through all fields of mineral production, and very little about double taxation. We heard all the waffle and. piffle that we could ever wish to hear about the inflow of foreign capital. What would we have done without the inflow of foreign capital? Honourable members opposite will not understand or do not have the intelligence to understand that once capital arrives in Australia it is Australian currency. They forget about that. These people overseas know that when investing in Australia there are no strings whatsoever applied to it at the present time, but. they know full well that if our economic position came to a point where we wanted the dividends and the profits from these capital investments to remain in Australia, our monetary regulations allow for this.

Why the honourable member for Cunningham could not- ‘give a discourse on double taxation, I do not know, because he had the Bill and- the Minister’s second reading speech in front of him. There was no reason why he should depart from the subject and wander, as I said previously, over many fields instead of keeping to the Bill we are discussing here tonight. He went on about India and about Japan, and one had to think quickly to know just where he was from time to time. India insists on 51 % Indian equity in companies established by overseas interests. Of course, we could do the same, but that is why India at the present time is so desperately short of capital. If we were foolish enough to take cognisance of the honourable member for Cunningham, exactly the same position would occur here. We could go along as if we were still in the- horse and buggy days and gradually develop Australia with the resourses that we have, but we would not be bringing about the standard of living that we so desire in this country. It is because of this inflow of money to Australia that we are able to develop and make Australia a much better and a grander country. We achieve this by the use of overseas capital.. This, is why the development of India is so restrained at the present time. It insists that it must have a 51% equity in the various industrial and commercial undertakings developed there.

The honourable member for Cunningham became all tangled up when he dealt with the difficulty of Australian investment in Japan. He considered that we should use all our surplus money, including the money in our savings banks, for the development of our resources. Then, in a flight of imagination, the honourable member said that perhaps Australian capital will be exported to Japan. There would be no likelihood of any Australian wanting to export capital to or to invest capital in Japan. Japan is a country with a very progressive and sound economy. It is in. South East Asia that we would like to invest any moneys that we had accrued for the development of the countries in that region and to bring them as near as possible as quickly as possible to our own standard.

Let us suppose that Australians did invest in Japan. We would get the worse end of the stick. The Japanese would remit to Australia those moneys that Australian investment in Japan had accrued less the deductions that Japan was entitled to take out of those earnings. Looking at it in this light, we see that the capital importing country has the best of it. This is the position of Australia in relation to Japan. This is how we would expect to benefit from the double taxation agreement here.

The agreement between France and Australia is limited to profits derived from international airline operations. It is a reciprocal agreement. Not very much comment is called for regarding that agreement. This Bill gives the force of law to the agreements that have been signed already. The agreement with Singapore, for instance, came into effect for Singapore on 1st January 1969 and, for Australia, will take effect from 1st July 1969. With these double taxation agreements, there are two principal functions that we must keep in mind the whole time. One is the elimination of double taxation and the other is the apportionment of the relevant taxation revenue between the contracting countries. It is this second function which causes most of the difficulties in negotiating a comprehensive agreement particularly when there is no equal flow of income between the contracting countries.

In his second reading speech, the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) said:

Any apparent loss of tax revenue must, however, be weighed against the advantages that accrue from an agreement. For example, in the case of a Capital importing country a double taxation agreement removes some of the impediments to foreign investment, and thus tends to increase the volume of capital inflow. This, in turn, has advantages not only in terms of fostering economic growth but also in terms of the tax revenues derived in due course from the expansion of the economy.

We can see that as a result of this inflow of Capital from Japan we. have been enabled to develop our mineral deposits to a greater extent than we would have been able to develop them had we relied upon our own resources.

It is a peculiar thing, but those people who . have not been associated with economic, business and commercial life - I refer especially to those who are associated with law - cannot seem to understand the simple facts of economic, business and commercial life. They are looking always somewhere in the woodpile for a hidden monster that does not exist. Some of the statements that they make from time to time are almost unbelievable. The honourable member for Cunningham spoke about what the Leader of the Opposition said today to the effect that we are selling our birthright, that the inflow of capital will catch up with us and that there will be a point of no return. How stupid can anyone become regarding simple everyday matters over which we have full control no matter where the money comes from?

I have told the House from time to time of the development of Texas. After all, 140 years is not a long period in the life of a nation. The whole of Texas was developed by Scottish capital and most of the people who settled Texas were Scottish migrants. During the period between the First World War and the Second World War, the whole indebtedness of Texas to Scotland was paid off by the Texans. The Texans now own Texas. As the Scottish people with their money and knowhow went to Texas between 120 years ago and 140 years ago, so the Texans are coming to the north of Australia today. We have seen already the great advantages resulting from the introduction of Texas knowhow. The Texans have brought in their strains of cattle that can stand up to the drought conditions of our great north lands. Beef roads have been built. Settlers are coming here. Some of those settlers will return to America but the majority of them will not. They will remain in Australia. Yet, we hear all this yahooing about foreign capital coming into Australia.

This capital, on the day that it arrives in Australia, is Australian currency and subject to all the controls that we impose. It is not subject to restrictions - we do not want to have any restrictions on that capital - but it is subject to all the rules and regulations that this House has imposed upon overseas capita) from time to time. One thing is certain about this capital: If by any chance - it is only a million to one chance - the present Opposition ever occupied the treasury benches, there need be no worries about capital inflow because when the Opposition took office capital inflow would be non est. It is only because of the soundness and stability of this Government that Australia, of all the nations of the world, is attracting overseas capital. This is why we are in the great development period that we are enjoying at the “present time. Within the last 10 days representatives of foreign countries were in Australia to discuss Asian development. It is only right, just and proper that Australia should consider exporting capital to South East Asian countries to enable development to take place in those areas. Australia has entered into these two agreements wilh Japan and Singapore with its eyes open and remembering that the importing of capital into Australia from Japan is to our advantage. I quote what the Minister for Civil Aviation and the Minister Assisting the- Treasurer said in his second reading speech:

The agreements with Singapore and Japan are in substance much the same as our new agreement wilh the United Kingdom which Parliament approved last year. . . . Under both agreements, Australia is to reduce its tax on dividends flowing to the other country from 30% to 15% of the amount of the dividends. However, where the dividends form pan of the proceeds of a business being carried on here by a Japanese or Singapore enterprise, ordinary rates of tax will apply. In converse circumstances Japan is also to reduce its rate, which is currently 20%, to 15%. Singapore does not effectively impose a separate tax on dividends and the agreement provides that Australian residents are to continue, to be free from Singapore tax on dividends, while that country’s law remains in its present state. If Singapore does introduce a separate tax on dividends, it will be obliged to restrict the tax to no more than 15% of dividends flowing to Australian residents.

It is easy to see that the agreements will benefit both Japan and Singapore and equally will be to the advantage of Australia. The Minister continued:

Both agreements also limit each country’s tax on iterest flowing to residents of the other country to 10% of the interest, except where the interest constitutes business profits of a branch or other permanent establishment in the country, of source. There will therefore be no reduction in the Australian withholding tax rate of 10%.

It will be seen that Cabinet has given this matter very careful thought and that this is not a one sided decision, as the honourable members believe. The Minister continued:

Both agreements follow the customary arrangement that the business profits of an enterprise of one country may be taxed in the other if they are derived there through what is the broad equivalent of a branch - or, as it is invariably described in double taxation agreements, a ‘permanent establishment’. The two agreements contain provisions which wilt ensure that, where both countries tax the same income, the country in which the taxpayer resides is to give credit against its lax for the tax of the country of source.

Mr Uren:

– Has the honourable member lost his place?


– I did not have to resort to the bad taste resorted to by the honourable member for Cunningham when he stated that what Japan could not do by aggression it would do by the methods that it is now adopting in assisting Australia to develop. One would have thought that with his experience the honourable member would have refrained from making such a wretched and horrible statement.

Mr Kevin Cairns:

– You do not expect it, do you?


– One does expect that, when coming in contact with decent people, the honourable member would restrain himself.


-Order! I ask the honourable member to address the Chair.


– The honourable member for Cunningham stated that money from our savings banks and insurance companies should be used for the purpose of development. If this were done I wonder what the traditional borrowers from these sources would do. If the savings banks and insurance companies ploughed all their funds into the development of our various resources the natural consequence would be that the traditional borrowers from these sources would have to borrow from overseas. The speeches made by Opposition members today have been removed from reality. I oppose the amendment moved by the honourable member for Melbourne Ports and I congratulate the Government on making these agreements. I know that the agreements will be to the benefit of Australia as a whole and that the people of Australia may look forward to times of prosperity and the co-operation, understanding and goodwill of our Japanese trading partners. I look forward to the development of Singapore and other South East Asian countries through the money, know-how and manufactured materials that Australia will bc able to export.


– The Bill before the House seeks to amend the Income Tax (International Agreements) Act 1953-68. It seeks to give the force of law to double taxation agreements with Japan and Singapore, and also a limited agreement with France in relation to international airline operations. What do the agreements mean’? They provide that dividends remitted overseas which attract a tax of 30%, or 30c in the $1, will be taxed at the rate of 15% or 15c in the Si. Later on in my speech I will deal with double taxation agreements which have not worked in the interests of Australia but have worked against the interests of Australia.

I do not want to be discourteous to the honourable member for Mitchell (Mr Irwin) by not spending too much of my time in answering his criticisms of my colleagues on this side of the House. The honourable member spoke about the development of Texas and said that Scottish capital was used in that development. He also argued that foreign investment would assist the development of Australia. Unfortunately foreign investment has been developing this country. We make no excuse for saying that. On many occasions one could question whether the use of foreign investment to obtain the present rate of growth is in the best interests of Australia. Priorities have not been established in the way they should have been. There has been no planning and no controlling of foreign investment.

This Government has had a deficit of some S7,269m in the period from 1st July 1950 to 30th June 1968. It has run into debt to the extent of more than $7,000m. Even in this year its deficit on the balance of current account about $J,l00m. So by the end of this financial year the Government will have run into debt to the extent of some $8,500m. Foreign investors who invest their money in this country are not charitable institutions. They receive a pretty good return. Even the ‘Sydney Morning Herald’ has pointed out that some foreign companies are . receiving a return of up to 600% on original investment. The Leader of the Australian Country Party (Mr McEwen), who was Deputy Prime Minister under the Menzies Administration and the Holt Administration and is Deputy Prime Minister under the Gorton Administration, said in April 1963 that this country is selling a bit of the farm every year, that it is selling a little bit of its heritage.

No legislative action or other action had been taken by the Government to control foreign investment, until our new shining knight, the Prime Minister (Mr Gorton), rode into the Australia Club in London on his white charger on 17th January 1969 and said:

Up until very recently it has seemed to mc that the posture of Australia, in seeking overseas capital has been the posture of a puppy lying on iti. hack with all legs in the air and its stomach exposed, and saying: ‘Please, please, please, give us capital. Tickle my tummy - on any conditions’.

Those strong words were used by the Prime Minister. He gave the impression that we want foreign investment but we want it at our price. Of course, when he returned to Australia there was a stir in his own ranks and after a Cabinet meeting he came into the House and, in answer to points made by the Australian Labor Party during a debate on a matter of public importance, he toed the line and said: ‘Business is as usual. Our policy is the same as it has always been; foreign investment at any price.’ The Bill now before the House shows that the Government’s policy is still foreign investment at any price.

Let us examine the double taxation agreements. The Chifley Administration first entered into a double taxation agreement. It was then an administrative taxation matter between the Australian Government under Mr Chifley and the British Labor Government of that time under Mr Attlee. They entered into a double taxation agreement to encourage British investment in Australia by granting certain taxation concessions. After the Second World War, Australia lacked industrial capacity and knowhow. Mr Chifley and the Australian Labor Party believed that it was necessary to build up our secondary industries and to encourage know-how to come to this country. He gave the United Kingdom Government very handsome taxation concessions. But I believe had Labor continued in office this agreement would have been renewed long ago. At that time company tax was 7s in the JE1. For certain types of companies it was reduced to nothing and for other companies it was reduced to 3s in the fi or 15%. Individual investors at that time paid half the Australian rate of tax.

In 1953 we entered into a double taxation agreement with the United States of America. Again the rate of tax was reduced from 7s in the £1 to 3s in the £1 on dividends. In 1958 a double taxation agreement was entered into with Canada and another with New Zealand in 1961. Now we have double taxation agreements with Japan and Singapore. Later in my speech I will deal with the various aspects of the agreements with Singapore and Japan.

These are double taxation agreements. This means that Singapore or Japanese investors receive the same concessions as British investors do. But let us examine the figures over the years and compart the benefits to Australian investors with those obtained by investors from Britain, the United States and other countries. J have figures for the investment income payable overseas by companies in Australia. They show that in dividends alone in the period from 1948-49 to 1967-68 we have repatriated out of this country to the United Kingdom $907m. The amount we have received in return is $29m. We have paid $793m to the United States of America and have received back the astronomical sum of $3. 8m.

Mr Peters:

– That is reciprocity.


– The honourable member for Scullin uses those wise words: ‘That is reciprocity’. This has been a drain on our Treasury. The United States has saved 15c on every dollar of the $793m. I wish 1 could get that kind of discount. Let us look at what will happen with Japan. Here we have a country that we fought in war. It wants our raw materials. But it says: We will invest in Australia. We want to get our raw materials from Australia but we will not buy them from the Australian mining industries. We want an interest ourselves. We want to invest in that country ourselves and if we invest in that country we want taxation concessions as well.’ Consequently these great taxation concessions are being given to Japan. I do not single out Japan as the one country with which I oppose double taxation agreements; since I entered this Parliament 1 have consistently opposed all double taxation agreements with ali countries because in my opinion they are not in the best interests of this country. In his second reading speech the Minister Assisting the Treasurer (Mr Swartz) said:

I mention that profits out of which dividends are distributed by Australian public companies to foreign shareholders bear the company tax rate of 45%, so that, with withholding tax at the rate of 15%, the total Australian tax on each $100 of profit is S53.25.

That seems reasonable. One would say at first glance that it is reasonable that out of every S100 profit we should get $53.25 in tax. But here we see the dishonesty of this Government. In fact, this country is controlled by monopolies to a greater extent than any other country in the world. I have before me a publication of the Commissioner of Taxation titled ‘Taxation Statistics 1966-67’. lt gives at page 130 information concerning profits made by public companies. Last year public companies, foreign and local together, made $3,578m profit. I may also tell the House that 98.88% of ail those public companies earned 44.92% of the total profits. The other 1.12% shared 55.08% of the profits. Let us look at the structure of these monopolies, or oligopolies as they really are. Three or four companies within an industry get together and decide on the price that will be charged for the products of that industry. The price contains a component to cover the 45% company tax that is imposed by this Government, so that eventually it is the Australian consumer who pays the tax through an increase in the price of the product. At this stage, wilh the concurrence of the House, I would like to incorporate in Hansard page 130 of ‘Taxation Statistics 1966-67’.

That document clearly shows the extent ot monopoly control in this country. To say, as the Minister has said in his second reading speech, that this Government gets $53.25 out of every $100 profit is utter hypocrisy because the effect of oligopoly control is to pass the extra taxation cost on to the Australian consumer. More and more, day after day, monopolies are taking control of Australian industry.

So far I have disclosed only the profits that have been made by foreign companies on dividend outflow. We must also consider the undistributed income of overseas companies operating in Australia, in the period from 1948-49 to 1967-68 the total of undistributed and other income of United Kingdom companies was $l,193m. For United States companies it was $71 7m. The total of undistributed and other income for all foreign companies operating in Australia over the period was $2,175m. This undistributed income is retained iri Australia by foreign monopolies to develop their interests. Most of these foreign companies work in Australia under what is called a restrictive franchise. They do not export their goods. They sell on the Australian market. In assessing the price of their products they include the estimated amount of company tax they will pay and also the undistributed income which will be used for their future development in this country. lt is obvious how monopoly control is taking over in Australia. Yet the Minister says blandly and really quite loosely - he even appears to believe that honourable members accept his statement - that out of every $100 profit made by foreign companies we get $53.25 in tax.

We have fared badly in our double taxation agreements with the United Kingdom, the United States and Canada, and we will fare badly in our agreement with Japan. In the case of the agreement with New Zealand we have come out on the better side during the period I have been speaking of. We have received a total of $172m whereas New Zealand has received only $153m. As to Singapore, I believe that in the past we have been exploited, but because of the agreement with Singapore we will become the exploiters. If one looks at the development of colonial power and the exploitation of the under-developed nations, one can forecast that we will move our capital into Singapore and into South East Asia as a whole. We will invest our money there and in our turn will become the neocolonial power. This is why I say that we cannot divorce foreign investment from defence and foreign policy. This is why the Australian Government has been forced by interests within Australia to continue to commit Australian troops to Malaysia and Singapore. This is why the Government has decided to retain its Air Force squadrons in that area and also certain naval personnel. One cannot divorce foreign investment from foreign policy and defence. What we are doing is wrong, lt is wrong to invest in South East Asia as a means of exploiting the area. We should be encouraging development by means of long term loans through such organisations as the International Development Association at low rates of interest. We should encourage development with loans from the Asian Development Bank. We should try to provide the knowhow so that the Asians may retain their birthright. We should be able to learn from the experiences of such countries as Cuba and Canada, which have suffered from overseas investment. We are not learning from our own experiences.

This Government has turned its sights on South East Asia. The Government says that because Australia is more advanced industrially and from the point of view of education and know-how, instead of assisting these countries to develop we will exploit them. It seems to me that the double tax agreement has a similar purpose. 1 know that the Prime Minister of Singapore is said to have welcomed the agreement. He is so much in favour of it that we will not have to pay even the 15% withholding tax. At present all foreign investors get a tax holiday in Singapore but at some time in the future the 15% withholding tax will be applied. I do not think that it is in Australia’s long term interests for the private investor to exploit Asia. Anybody who says that foreign investors come to Australia in order to help us in only kidding himself. From 1948-49 to 1967-68 foreign companies with investments in Australia earned undistributed profits amounting to $3, 990m. Yet we still have people like the honourable member for Mitchell, egged on by the honourable member for Lilley (Mr Kevin Cairns), supporting unplanned and uncon- trolled overseas investment in Australia. We know from Press reports that in the party room the honourable member for Lilley even challenged the Prime Minister on his attitude to foreign investment. We know that the Prime Minister and the Deputy Prime Minister have reservations about uncontrolled and unplanned foreign investment. For years the Opposition has been drawing the Government’s attention to the danger of uncontrolled and unplanned foreign investment. In my maiden speech in February 1959 I accused the Government of allowing unplanned and uncontrolled foreign investment to take charge of our heritage. I urged the Government in 1959 to exercise some control over double taxation agreements.

The Labor Party has two allies in the persons of the Prime Minister and the Deputy Prime Minister, who have expressed verbally the views that are held by the Labor Party. But it is the establishment that runs the Government. We know that the Government is controlled by the wealthy monopolies, which represent 1.12% of Australian public companies but which account for more than 55% of company earnings. It is this sector of the community which wags the dog. The Government represents the establishment - Collins House and major foreign monopolies in this country. Those monopolies have the power, through the establishment, to bring into line the Prime Minister and the Deputy Prime Minister. The monopolies say: ‘You might have your policy on foreign investment but we are dictating our policy. You will conform or you will be removed.’ We know that when he is speaking on behalf of the Country Party the Deputy Prime Minister uses brave sounding words but I ask any member on the Government side of the House: What guidelines, what legislation has the Government established to control unplanned and uncontrolled foreign investment in this country? What has the Government done? What has the Government done to give Australia an image other than that described by the Prime Minister of a puppy lying on its back, saying: ‘Please give us capital; tickle my tummy on any conditions.’ I ask any member of the Country Party or the Liberal Party: What are you doing to control foreign investment and to protect our heritage? You know that you are not game and do not have the power to protect

Australia’s heritage. You know that the real power lies with the establishment - the monopoly companies which represent less than li% of Australian public companies. This Government has always been a sectional government. This legislation, which provides for a double taxation agreement with Japan, is .a further example of the Government’s assisting monopolies, and is not in the interests of this country, lt links the Japanese monopolies with monopoly interests in this country.

Mr JAMES (Hunter) [10.191-1 do not intend to speak at any great length. My contribution may be the shortest so far in this debate. I have been inspired to participate in the debate by the remarks of the honourable member for Reid (Mr Uren). I wish to record my criticism of this legislation. Since I entered the Parliament I, like most, honourable members, have tried to expand my knowledge of various subjects. I have subscribed to a number of magazines, controversial and otherwise. On the question of foreign investment, I was somewhat perturbed at the April issue of the Catholic Worker’, a magazine that is more forthright than other magazines or writings that come from that church. But 1 think that a man in Parliament should not shut his mind off from the writings of any organisation or any country whether it is East or West. I fear that foreign investment of the kind dealt with in the legislation before the Parliament can have very detrimental effect not in the immediate future but in the distant future. If the detrimental effect is not on us in this Parliament today, it will be on the ones who succeed us - on our children and grandchildren.

As a backbencher of this Parliament and member of the Opposition I visited Latin America which was referred to by my colleague the honourable member for Reid a few moments ago. After careful and discreet inquiry in Latin America I learned that Brazil, which is the major country there in terms of square miles, has 75% illiteracy. This is a country which, on the subject matter before you, Mr Deputy Speaker, has suffered the rigours and deprivations of uncontrolled foreign investment.

In the April issue of the ‘Catholic Worker’ - and I am keeping in mind that I do not intend to delay this Parliament for very long - it is pointed out that from 1950 to 1965 our friend and ally, the great and powerful north America, invested S3. 8 billion in Latin America and drew out SI 13 billion in profits.

Mr Curtin:

– Was that billion or million?


– Billion. This article points out that S3. 8 billion was invested and $11.3 billion was drawn out in profits. That must concern you, Mr Deputy Speaker, as a religious man. It must concern every decent man who must wonder whether this is likely to happen to Australia and whether this country is likely to become a banana republic. I believe in keeping myself in life close to mother earth. Only last weekend I went around a few of the rural parts of my electorate. I know that we cannot get milk out of a cow unless we feed it from the other end. If we keep milking a cow and do not put a bit into the other end, we will find that the cow will run dry. lt will die from malnutrition. I believe that the very thing this Government is permitting in this country could well bring about a situation in the long term that is happening to the people of Latin America today who have been virtually milked dry by investors of north America which is the greatest capitalist country in the world. This investing country has spread its tentacles throughout the Scandinavian countries and, as the honourable member for Reid said, has caused great concern to the people of Canada in the British Commonwealth. It probably brought about the dismissal of the Prime Minister of Canada, Mr Lester Pearson, who we were honoured to have in this Parliament only a few days ago. This man protested about uncontrolled foreign investment which was taking over his country economically. Yet honourable members wonder why I should rise to raise my voice in support of the Labor Party’s principles on this very important issue tonight.

Mr Deputy Speaker, I know that you are drawing my attention to the clock. Sir, I quickly caught your attitude. But when one is speaking I know there are two things that one must take cognisance of. There is the man who looks at the clock and the one who puts it to his ear. When he looks at it it is time to wind off and when he puts it to his ear it is time to stop. So, Sir, I will keep your attitude in mind. I would like to quote further from the ‘Catholic Worker’ in regard to the position of uncontrolled foreign investment. The April edition of the ‘Catholic Worker’, which is printed once a month, in the concluding section of the article, says:

By 1963, total US assets and investments in South America amounted to over $18 billion.

Mr Daly:

– What paper is that taken from?


– The ‘Catholic Worker’. The honourable member for Grayndler asked me the name of the magazine and he respects the authenticity of it. I believe that in the long term Australia is going to become another banana republic, another Latin America, another Honduras. I believe that Australia will become another Cuba. Fidel Castro found after his revolution that his country was virtually under the control of United States investors. Every law that had to be put through in Cuba prior to the revolution had to have the approval of the Ambassador of the United States in Havana.

Mr Deputy Speaker, if you will permit me to digress for one moment let me say that this Parliament frowned on me when I made my last speech and rose to protect the Australian Prime Minister (Mr Gorton) from the United States Central Intelligence Agency. 1 fear that the same might happen to our Prime Minister that has happened-


-Order! I suggest to the honourable member for Hunter that he is getting very wide of the subject matter under consideration by the House.


– It is all related to double taxation, Mr Deputy Speaker, with respect to you. But I will abide by your ruling. I know that honourable members on the Government side of the House will go down in history for what they are saying in this Parliament in connection with this double taxation agreement. Their views are in opposition to the Labor Party’s principles. What they say is going down in the records of this Parliament, and their children and their grandchildren wil’l despise them in the years to come. They are virtually selling out this country to foreign investors. This is something that is repulsive and objectionable to every decent nationalist Australian, as it is to rae. I hope that honourable members on the Government side will give heed to what has been said tonight by members on this side of the House in connection with this legislation which, in the long term, is not in the interests of the Australian people and is virtually a sellout of the Australian economy to foreign interests.

Minister for Civil Aviation and Minister assisting the Treasurer · Darling Downs · LP

110.28)- As I have already given my second reading speech when introducing this Bill, 1 do not intend to keep the House for long. But there are one or two points which t think should be replied to in relation to the amendment proposed by the honourable member for Melbourne Ports (Mr Crean). I believe that today the Opposition has made two mistakes. One is that, due to lack of research, a debate on a matter of urgency this afternoon has rebounded against it. Secondly, and I believe this to be the bigger mistake, the Australian Labor Party perpetuated its opposition to the Japanese Trade Agreement when this measure was introduced into the House. We know for a fact that Japan is now our best customer. This outdated opposition to this trade will not be accepted kindly in any State. In particular, the Opposition’s policy in relation to this matter will be especially resented in Queensland and Western Australia where Japanese investment and Japanese trade are so important. The objection of the Opposition to the development of Japanese trade should be noted by the great producers of raw materials in Australia.

The question of what benefits can be expected to accrue from having a double taxation agreement with another country is not one that can be answered simply by looking at the implications for taxation revenue of particular provisions in the agreement. Such an agreement is an important element in the whole of the financial, commercial, economic and political relations between the two countries concerned. The chief aim of double taxation agreements is to facilitate trading, commercial and financial arrangements between countries by providing a firm and reasonable basis for the imposition of taxation on transactions between the countries concerned.

An extract from the 1963 report of the Fiscal Committee of the Organisation for Economic Co-operation and Development titled ‘Draft Double Taxation Convention on Income and Capital’ was quoted by the honourable member for Melbourne Ports. I entirely agree with the quotation, but I disagree with the assumptions drawn by the honourable member. Both countries joining in a double taxation agreement stand to gain from the beneficial effects that such an agreement can have on trading, commercial and financial activities between thiem, not only by the removal of impediments to such activities, but by setting a firm taxation framework for the future. This is the basic reason for the rapid spread of double taxation agreements throughout the world. Such agreements can also be of considerable importance in political relations, in much the same way as are most-favoured-nations trade agreements.

Of the countries seeking agreements with us, Japan has been high on the list for negotiations. The main reason for this has been its importance as one of Australia’s main trading partners. For a number of years the Japanese have been pressing for negotiations with us. Apart from these general considerations, the Japanese have felt that we were discriminating against them because we have already had double taxation agreements with the United Kingdom, the United States of America, Canada and New Zealand. They raised the matter several times at Prime Ministerial level, and during Mr Sato’s visit to Australia in October 1967 agreement was reached that negotiations should commence shortly afterwards. To achieve avoidance of double taxation, both parties have to agree about the imposition of taxation on particular income flows between them. If both are to continue to impose tax on a particular income flow, it may be agreed that one should have a prior right to tax this, perhaps subject to prescribed limits, and that the other should allow a credit for this tax. Alternatively, the right to tax a particular income flow might be reserved exclusively to either country.

This normally means that both parties have to forgo some taxation revenue, and it is inevitable in practice that the country from which the larger income flows emanate will have to forgo a greater amount of revenue than the other. This has been the case, as has been mentioned in this debate, in our agreements with the United Kingdom, the United States and Canada. The fact that one country forgoes more revenue that the other does not mean that overall one gains and the other loses. For each the question would be whether the benefits for the country from the facilitation of trading, commercial and other activities, in terms of political relations with the other country, would outweigh the relatively small amount of revenue forgone.

There is one aspect that deserves particular mention. Internationa] investors are especially conscious of the problems that can confront them in the absence of a double taxation agreement. There are plenty of indications that investors are wary of investment in countries with which their government has no double taxation agreement simply because, in the absence of an agreement, they cannot be certain that there will not be unrelieved double taxation. If we wish to encourage overseas investment in Australia, or not actually to discourage it the writing of a double taxation agreement with countries which are potential sources of such investment and, in particular, the inclusion in such agreements of adequate credit provisions, facilitate such investment and enables us to impose a reasonable amount of taxation on the profits made from them without discouraging further investment.

The Japanese, in the agreement now before Parliament for approval, have gone substantially beyond the provisions of their own law and those of all their other agreements, by agreeing to allow Japanese residents receiving dividends from Australian credit for Australian tax on the company profits out of which the dividends are paid, in all cases where the Japanese investor holds 10% or more of an Australian company. Without this the benefit of the reduced rate of tax on dividends from Australia would accrue largely to the Japanese Treasury and not to the investing companies. Moreover, the provision reduces the incentive there might otherwise be for Japanese companies to seek major interests in Australian companies. The Japanese have also agreed to accept a definition of permanent establishment - this is central to the taxing of business profits in the country of source - which corresponds in all important respects with Australia’s views and which increases the range of Japanese business organisations here on which we may levy tax. They have also made substantial concessions on other matters.

There is involved therefore not only the matter of the benefits which Australia would gain from concluding a double taxation agreement with Japan; there is also the question of the consequences of not doing so. If we refused to conclude with the Japanese an agreement which was reasonably consistent with the agreements we have reached with other countries, the Japanese could regard that only as a discriminatory and unfriendly act on our part, and one that could not fail to have wider effects on relations between our two countries. The Government rejects the outdated policy which is inherent in the amendment proposed by the Opposition.

Question put:

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

The House divided. (Mr Deputy Speaker - Mr P. E. Lucock)


NOES: 35

Majority . . . . 25



Question so resolved in the affirmative.

Original question resolved in the affirmative.

Bill read a second time.

In Committee

The Bill.

Melbourne Ports

– I should like to say a few words about the performance of the Minister for Civil Aviation and Minister assisting the Treasurer (Mr Swartz). I resent the fact that what was given as a reply was really a hand written statement by the Treasury and ought to have been advanced when the debate was launched. I still regard the Parliament as a serious forum for the expression of opinion. I do not want to be read childish lessons at this stage by people who ought to know better and who ought to know more, with all respect. After all, transactions between Australia and Japan can be negotiated without a double taxation agreement, just as they can be negotiated with one. All that a double tax agreement does is to formalise what can very well take place without it. The dispute is about the conditions under which the double tax agreement is negotiated, and no answer has been given from the Government side to rebut the argument put from this side that Australia is the loser under the proposed agreement. We have had plenty of statements outside the House, and inside it, as to the growth of trade between Australia and Japan and as to the degree of investment by Japan in Australia, all of which has taken place despite the existence of a double tax agreement. There is no doubt whatever - it certainly has not been shown to be otherwise by anyone on the Government side - that the double tax agreement under discussion gives Japan more favourable consideration than it gets at the moment, and that more favourable treatment means loss of revenue so far as Australia is concerned from the profitable transactions of Japanese in Australia. I would have hoped that a serious attempt would be made to answer that argument instead of giving the silly schoolboy type of reply that was given. If matters are to be handled in this way then they should be handled by the Treasurer himself.

Bill agreed to.

Bill reported without amendment; report adopted.

Third Reading

Bill (on motion by Mr Swartz) - by leave - read a third time.

page 1338


Assent to the following Bills reported

Customs Tariff Bill 1969.

International Sugar Agreement Bill 1969.

page 1338


Devaluation of Sterling - Influenza Vaccine - Port Kembla Development - Rural Automatic Exchanges

Motion (by Mr Erwin) proposed:

That the House do now adjourn.


– I wish to raise the matter of devaluation compensation payments to exporters of solid pack apples from Tasmania to the United Kingdom. The chairman of the Tasmanian Fruit Processors Association, Mr I. V. Chapman, made quite an important statement on this matter in Tasmania yesterday. The crisis in this section of our export industry is due to the fact that as no decision has yet been made by the Commonwealth Government’s devaluation committee this section of the industry cannot forward sell its products because of doubts about compensation payments due to it following the devaluation of sterling. Here I wish to commend the Government’s devaluation committee upon the investigations it makes into each case brought before it. This committee visited Tasmania about 16 weeks ago. It returned to Tasmania only 6 weeks ago to make a further check on some of the facts relating to compensation to apple exporters for any loss incurred as a result of devaluation. The Commonwealth Government has promised that it will continue making these payments at least for the coming season. We hope that they will continue to be made until there is some change in the British Government’s attitude towards devolution, lt affects all our exports to the United Kingdom when we have the British devaluing as they did. Mr Chapman says that the Jones and Co. canning factory :tt Beauty Point in the north of the island, which is in my electorate, could close down by the end of May unless an early decision is made in respect of these payments of compensation. Even the guarantee of these payments would be of assistance to them. lt is the processing side rather than the growing side that is affected. The growers will be automatically assisted by compensation, but the processors have to go through a little more investigation. Mr Chapman feels that they are entitled to a yes or no decision from the Government as soon as possible so that they will know exactly where they stand. This Beauty Point factory is a vital one in the apple industry in the northern part of the State. We usually hear only about the Huon apple growing district of Tasmania, but a third of our apple production and a third of our growers are in the north, in the Tamar Valley, part of which is in the electorate of the honourable member for Bass (Mr Barnard) and part of which is in my electorate. Mr Chapman said that closure would cause considerable financial loss to growers and their employees in the orchards, and the factory employees as well, and a substantial loss in the solid pack export market, which would be difficult to recover because of competition from other parts of the world in solid pack apple exports to the United Kingdom. The Beauty Point factory was processing apples for the Australian market as well, and the loss of the export market could force it to close down this season earlier than it usually does.

One estimate puts the loss suffered by exporters of the pie pack to the United Kingdom as high as $1.45 on each carton of 6i lb cans. That is the loss at the moment without taking into account compensa tion payments for devaluation. The processors cannot possibly go on exporting at such a considerable loss as would be suffered at $1.45 on each carton of 6) lb cans. About only one-third of the crop this year will be processed. In other words, 22,000 cartons instead of 60,000 cartons will be produced. This of course will mean that a great amount of fruit will rot. If it cannot be processed in this way, it cannot be used and it will have to be destroyed. This is a great pity for any export market and for any exporter. The growers are therefore alarmed that once the quota of fruit has been met the balance of the crop that has been sent to the factories for processing purposes such as the production of fruit juice or pie pack will have to rot and be destroyed.

I mentioned this matter to the Minister for Primary Industry (Mr Anthony) this morning. I intended to ask a question on it at question time, but I was not able to do that, so 1 warned him about this fear that the processors have in Tasmania. He kindly said that he was prepared to have a look at it. He is in the chamber tonight, for which I am grateful. I am prepared to leave it in his hands now to tell us when we might expect an answer from the Government on devaluation payments for the processors.

Minister for Primary Industry · Richmond · CP

– I thank the honourable member for Wilmot (Mr Duthie) for notifying me that he was going to bring this matter up in the debate on the motion for the adjournment tonight as a result of his not being able to put a question to me at question time today. He brought up his concern that no Government decision had been announced iri relation to devaluation compensation on canned solid pack apples. This is a matter that has been brought to my attention on a number of occasions during the past 3 or 4 months. Indeed, when I was down in Tasmania for the Australian Agricultural Council meeting, I did take the opportunity of visiting, with the honourable member for Franklin (Mr Pearsall), one of these canned solid pack factories. Representatives at the factory were able to give me on the spot information as to the difficulties they were experiencing because of lower prices due to sterling devaluation.

I want to reiterate that the position is that the group of people affected submitted a claim for compensaion on 16th December last. It probably was one of the last claims we received. Since that time the submission has been examined closely. 1 think I am right in saying that some of their figures have been adjusted or that their case has been re-submitted. Officers of my Department have been in Tasmania to check the facts and the matter now is in the hands of the Devaluation- Reporting Committee which is to make a recommendation for the Government’s decision.

I do not think there is anything unusual in the delay because it takes time to obtain all the facts and information: We have had many claims to look at apart from the claim of the apple producers. When you look at the number of industries that have received some sort of compensation you realise that the record is considerable. To date we have paid out approximately $46m lo Australian rural industries and have committed ourselves to pay out about $88m. The following organisations have received compensation for their industries: The Australian Wheat Board, the Australian Dairy Produce Board, the Australian Apple and Peas Board, the Australian Canned Fruits Board, the Australian Egg Board, the Queensland Sugar Board, the Grain Pool of Western Australia, the Papua-New Guinea Copra Marketing Board, the Honey Pool of Western Australia, the Australian Honey Board, the Queensland Butter Marketing Board, the Australian Dried Fruits Control Board and arrangements for payments to exporters of condensory products are currently being finalised. We still have to make a decision in respect of four other industries. They are the solid pack apple industry, which was mentioned by the honourable member for Wilmot, the citrus fruit industry, the grape industry and the rabbit carcass industry. Those four industries are being examined by the Devaluation Reporting Committee. 1 hope it will not be long before I have a report to submit to the Government. 1 am very conscious of the need for an early decision on solid pack apples. The crop is being harvested now. Apart from using some of the low grade apples per solid pack, the only other outlet is to use them for juice and that outlet is being well supplied as it is.

I quietly passed a note back to the Devaluation Reporting Committee after the honourable member for Wilmot saw me today. 1 did likewise a few weeks ago following representations from the honourable member for Franklin. I said I would like to get this information as soon as possible so that the manufacturers concerned might have knowledge as to what price they could pay and how much they could manufacture. I hope the information will be gained as soon as possible.

Dr PATTERSON (Dawson) [10.59 - I rise tonight to ascertain whether some ordered system of priorities can be formulated for the distribution in Australia of Asian influenza vaccine. I want to inform the House of what J consider, and a very enraged section of the people of central Queensland considers, to be an incredible or scandalous situation which arose last week with respect to the distribution of this vaccine in the town of Monto and the surrounding district. Monto may not be known to many honourable members. It is in the Burnett district about 100 miles west of Bundaberg. Today this area is ravaged by drought. Mounting misery is to be found there.

Following a lot of publicity - whether it was true of not true is beside the point - about the possibility of Hong Kong or Asian flu striking areas of Australia, many people decided to take advantage of the offer to get the appropriate vaccination. The local authority in Monto, a most efficient body, organised approximately 1,500 people to be vaccinated at a local clinic. On the advice of the Commonwealth Serum Laboratories in Brisbane, the date arranged for the vaccinations was last Friday, J 8th April. The people were notified accordingly. Those notified included not only people living in the town of Monto but also people in the district of Monto.

On Wednesday, 9th April, the Health Inspector in Monto, Mr Kennedy, checked with the Commonwealth Serum Laboratories in Brisbane to make certain that the vaccine would be at Monto on time. He was advised that it was almost certain that the vaccine would be available at the clinic on the Friday and that he should proceed with the plan. The Health Inspector was told to ring Brisbane on the following Monday, that is, the Monday of the week in which the vaccinations were to take place, so that the exact number of doses could be ordered. So, the stage was reached where a precise number of doses was referred to.

On Monday, 14th April, Mr Kennedy rang the Commonwealth Serum Laboratories in Brisbane but could not locate anyone who would give him a definite answer or decision on the matter. As time was drawing on, Mr Kennedy rang on the Tuesday and finally received an answer from somebody in charge who informed him of certain changes. The following report appeared in the ‘Monto Herald’: -

The Council was told that the Federal Health Minister, Dr Forbes, had changed the priorities for vaccine, and public clinics conducted by Shire Councils were now at the bottom of the list.

That is what it was allegedly told.

It is a very serious matter. This happened on the ‘ Tuesday afternoon. People were making arrangements to come in on the following Thursday to be vaccinated on the Friday. Accommodation in hotels was booked. The town was geared for the vaccinations. The Chairman of the Shire Council, Councillor Hartwig, who is a strong Country Party man. made no bones about what he thought of Dr Forbes. He described the decision by the Minister for Health in the following terms:

  1. . complete disregard for the responsibilities of local government by a senior member of the Federal Parliament.
Mr Curtin:

– Is he a member of the Country Party?


– Yes. The Press report continues:

He said that employees of big firms in the cities had been vaccinated, but vaccine could not be made available to country people who had no other access to the serum, except through local authority clinics or the local doctors.

Councillor Hartwig immediately got in touch with the Queensland Minister for Health, Mr Tooth, as well as other people who were concerned. Councillor Hartwig finished up by saying:

I consider the Federal Minister for Health owes an apology to many thousands of Queenslanders for his failure to inform local authorities that they would be the last to receive the vaccine.

One can imagine the chaos that was caused in this area which is stricken by drought with people, including women, children, old people and sick people, coming into town to receive this vaccine. The Council had to act fast. It acted through the schools by putting out leaflets announcing that the clinic had been cancelled, by making radio broadcasts -and, in some cases, through limited television broadcasts. But still a lot of people came in on the Friday and had to be told that no vaccinations were available. One could be excused, I suppose, for thinking that the Federal Government has treated this town as if it were some type of hick town in which a lot of hillbillies lived. But it is quite the contrary. It is a highly respected town.

I assure’ the Minister that the people in Monto and the Monto district are extremely enraged at the treatment they have received. Up to the time J was notified of this matter, which was over the weekend - 1 have been in constant contact with the area - there had still been no official notification of the fact that vaccine was not available. The only advice that one could say was official was some verbal advice from the Commonwealth Serum Laboratories in Brisbane. According to that, in no uncertain manner - the person concerned made no bones about it - the villain of the piece was the Federal Minister, who was said to have made a trip to Melbourne to change the priorities. To what degree these allegations are correct, I do not know. In fact, I am only conveying to this Parliament what has been said and what is printed in the district’s only newspaper, the ‘Monto Herald’.

It must be obvious that some explanation of this matter is warranted and that, if necessary, some apology to the local authority in Monto - the Monto Shire Council - or certainly to the people of Monto is warranted. As I said, many sick and aged people made a special trip into the area to receive vaccination. One hears a lot of reports. I heard on the news tonight of an agency or chemist shop in Sydney where there is supposed to be a backlog of about 16,000 doses in meeting the demand for vaccination. That is what was said on television tonight. Washington H. Soul Pattinson was the chemist agency that was named.

The question that people are asking all the time is: What are the priorities? They are asking this question because many people who are young and healthy have been vaccinated. Plenty of people in business firms in the cities apparently have had some priority with respect to vaccination. But the question 1 am asking the Minister for Health is: ls it true that local authorities have now been relegated to the bottom of the list, as has been claimed by someone from the Commonwealth Serum Laboratories in Brisbane? If that is true, why did the Government take this action? II: it is not true, what is the Government’s policy with respect to providing vaccine or serum to local authorities, particularly those in the more remote areas of Australia where there are few doctors, where the clinics for administering the vaccine are few and far between and where concentrated arrangements have to be made, such as those which were entered into by the Monto people for last Friday for something that did not eventuate?

Minister for Health · Barker · LP

– Firstly, may I ask the honourable member for Dawson (Dr Patterson) where Monto is?

Dr Patterson:

– lt is about 100 miles west of Bundaberg.


– 1 have listened with interest to the honourable gentleman. I think the most useful thing I can say is that I will be glad to see that the remarks he has made are conveyed to the Commonwealth Serum Laboratories, because it is the body to which they should be made. Let me repeat what I said at question time today in answer to a question asked by the honourable member for Bonython (Mr Nicholls), I think it was. By an Act of this Parliament the Commonwealth Serum Laboratories, in respect of this commercial aspect of its activities is completely - I stress completely’ - independent of anything done by me or any other Minister or the Government. Therefore the decision in the case mentioned by the honourable member was a matter for the Commonwealth Serum Laboratories distribution organisation. 1 listened with interest to what the honourable member had to say about the allegations made against me in this respect. I repeat what I said today at question time. I exercised the only right available to me in respect of the Laboratories when it was clear to me that the demand for this vaccine had become completely out of proportion to any demand that there had been in the past. Indeed it is completely out of proportion to any reasoned assessment of the seriousness of any epidemic that might come to this country. Hysteria has been created by Press misreporting of the seriousness of overseas epidemics of this disease. Whether or not the demands will be met depends very much on the timing of any epidemic, should one come. If an epidemic is very late then the Laboratories will be able to produce enough vaccine to satisfy all demands and all requirements. However, if an epidemic is relatively early the Laboratories will not be able to do this. It was possible to gain this picture only when the orders started coming in.

As I say, I exercised the only right available to me in respect of the Commonwealth Serum Laboratories. I asked for a special meeting of the Commonwealth Serum Laboratories Commission and I put to the Commission my view that in the circumstances that had arisen the Laboratories should give priorities in distribution to single dose ampoules through chemists for pensioners - the only way pensioners can legally receive the vaccine as a pharmaceutical benefit - and to the distribution through private medical practitioners and hospitals of multi-dose ampoules for use by the other members of the community at risk. I refer to the people in the categories laid down by the Epidemiology Committee of the National Health and Medical Research Council. This is all I asked the Laboratories to do and I repeat that it was only a request on my part. The Commission agreed to the request. Nothing was said by me about local governing bodies, but I accepted, on the advice of the Commission, that if the Laboratories did give priority to the people in the categories to which I thought priority should be given, there would be some delay, particularly for large industrial users. It may well be true that the situation in Monto came about as a result of this particular decision. But it certainly was not done as a result of my throwing out local government bodies. I think any honourable gentleman who considers this matter fairly would find it very hard to disagree that first priority should be given to people in the category 1 have mentioned. If first priority is given to people in that category, other people must wait.

I would like the honourable member for Dawson to convey to the local governing body at Monto my apologies insofar as I am responsible for the fact that the campaign which it had envisaged may well be delayed, and for any inconvenience that is caused. I was not aware that the campaign was proposed, and it could well be that the Commonwealth Serum Laboratories were similarly unaware. Having said that, I make no apology whatsoever for the action I took in laying down priorities for the distribution of the vaccine. However, I conclude by saying that as the matter has been brought to my attention, and I have explained to the honourable member the particular relationship and the authority I have in this matter. I will be only too glad to bring his comments to the attention of the Laboratories.


– 1 wish to draw the attention of honourable members to a matter of considerable importance and urgency in relation to my constituency. About a week ago the Australian Iron and Steel Pty Ltd and Broken Hill Pty Co. Ltd steel group announced that it proposed to expend not less than $!50m over the next 3 years on the establishment of a major No. 5 blast furnace and an oxygen steel plant, rolling mills and other general development. Naturally, this announcement was a source of gratification in my home city. On the other hand, problems will immediately arise for the New South Wales Government which, frankly, is utterly incapable of meeting them from its present inadequate loan finances. 1 had considerable experience over a number of years as a State parliamentarian. ] was closely associated with the impact of development in the Wollongong and Port Kembla districts from 1950 to 1963. Despite the expenditure of nearly $200m by the New South Wales Government in that area, it is still lacking in its essential needs. One of the major concerns is the development of Port Kembla harbour. I was associated with the planning and construction of that harbour at a time when the Suez Canal was functioning. It was then considered that a harbour depth of 36 feet provided a very safe margin for shipping. Today, because of the closure of the Suez Canal and the revolution in world shipping in turning to bulk carriers, the major maritime countries are suggesting standardisation of vessels of between 100,000 tons and 125,000 tons dead weight. At Port Kembla on Sunday last the ‘Encounter Bay’, a vessel of 65,000 tons capacity, was not able to enter the port until the tide was favourable. Wilh a rise in tide it was possible for it to enter the port. The steel industry has asked that the inner harbour at Port Kembla be deepened to at least 47 feet to cope with the vessels that it proposes to use, and will be forced to use. On the north-west coast of Australia various iron ore ports are now being used by vessels with a standard draught requiring that depth of water. Those vessels must come to ports on the east coast of Australia.

Certain matters are obviously a national responsibility. The development of the new furnace at Port Kembla will result in an increase of employment and will provide employment for about 3,000 men. There are 19,000 employees at the steel works today. Major requirements will include the provision of housing, hospitals, schools and, above all, transport and sewerage, lt is essential for men in the steel industry who operate on a three-shift basis to live in reasonable proximity to the steel works. The State Government’s planning for the development of the Port Kembla inner harbour, as announced some 2 years ago, was for a programme spread over 6 years at a cost of some $13m. The steel industry will have completed its programme in 3 years and the State Government will not be able to match it. It is a matter of the Commonwealth Government accepting its responsibilities and making extra moneys available, under the powers that it has. to meet the urgent needs of my constituents and the city in general.

Today we are entering a new era. Already there is in existence what the town planners call a conurbation, with the emergence of a major city along the coastal area from Newcastle through Sydney and down to Wollongong-Port Kembla. At present there are nearly 3,500,000 people there. By the end of this century it is believed there will be 6 million people in the area. The limits are closely associated with the coal deposits of the Hunter Valley and of the Illawarra mountain range, lt will be necessary for that conurbation to have three fully operative harbours. Today the port of Newcastle has serious limitations in the depth of its entrance: equally serious limitations are found at Port Kembla, and the port of Sydney has a maximum depth of SO feet. This is a matter of national importance. These three cities merging into one will be the major centre of industry not only in Australia but also in the southern hemisphere. They will be the heart and the core of national development.

We live in an age of steel. 1 represent a city of steel and so does my colleague, the honourable member for Newcastle (Mr Charles Jones). Our problems are his problems. Newcastle has perhaps had the advantage of seme earlier maturity and some extra development. But the State Government is incapable at present of meeting our requirements. That is due in turn to the fact that the Federal Government has literally short-changed it. We always get the parrot cry in answer to criticism: ‘A certain amount of money has been made available to the State Government and it can apply it as it thinks fit.’ But the State Government, irrespective of its merits and demerits in planning, faces the situation that in 3 years it must accomplish what it hoped to do in 6 years. At the same time we have further problems in our area. We have the need for development as a general cargo port on the same basis as our sister city of Newcastle.

The Commonwealth Government might well have a look at the position in the major ports of eastern Australia. With the exception of Sydney on the mainland and Hobart in Tasmania, there is no port with a depth at its entrance at low tide of more than SO feet. If Australia is to achieve its destiny as a maritime nation, the national Government must be prepared to correct the situation. If it does not, only minor vessels will be able to come into the major steel ports and there will be a serious curtailment of maximum operating efficiency. It is on the basis of a cost benefit analysis that loan moneys are allocated today, but we have an unanswerable case.

Traditionally access to the City of Greater Wollongong and the former district of Illawarra, as it was known, has been difficult. The Wollongong area is cut off from the rest of New South Wales by the Illawarra range. Originally, access to this area was by sea. Even as late as last week with the usual April rainfall of over 10 inches we had the spectacle of the major mountain passes in the area - Macquarie

Pass, Keira Pass, Bulli Pass and Bald Hillbeing out of operation. The one exception was Mount Ousley Pass. There is only a single rail link between Wollongong and Sydney. It is via the Scarborough tunnel, which was condemned years ago. Tha cracks which are in it and which are due to the defects in the strata on which it is built are being watched every day. The Wollongong area has a tortuous access to the Hume Highway - up Macquarie Pass. It is one of the most treacherous an, hazardous passes in New South Wales. As a whole, the Government must face up to its national responsibility. Wollongong is a city of national importance. 1 state these demands clearly and with vigour and I ask that Wollongong be given, through the State Government, the assistance to which, as the potential major steel city of Australia, it is entitled.


– I wish briefly to raise a matter that I raised a considerable time ago in this Parliament. It relates to the connection to automatic exchanges of the telephones of persons living in rural areas. Approximately 12 months ago I raised in this House the problems of certain farmers in the Shelford district, which is in my electorate. I understand that the Postmaster-General’s Department has now decided to proceed with an automatic exchange in the Shelford area and that the nine persons concerned have been informed that they will have to pay the full cost of renewing the service lines which connect their properties to the Department’s lines.

I wish to ask the Postmaster-General (Mr Hulme) whether, even at this late stage, he will reconsider the position the Government has taken on this matter. It appears that these nine farmers have the choice of raising $15,000 between them or of losing their telephones. They have gone through one of the worst droughts in Victoria’s history and are hardly in a financial position to meet this kind of commitment, but as they live a considerable distance away from settlements a telephone is very important to them both personally and in the pursuit of their occupation of farming. I am told that some of the farmers have indicated that they are not prepared to pay what appear to be extremely exorbitant rates in order that the Department can introduce a new telephone exchange system.

I realise, and I think the House realises, the benefits of the introduction of automatic exchanges throughout Australia, but it seems hardly proper that a small number of persons should pay in excess of $1,000 each to have a telephone connected when the majority of telephone subscribers obtain this service free. I ask the PostmasterGeneral to review the matter. I also ask him to state at an appropriate time what the position of these telephone subscribers will be if they are unable to afford the sum which is being put forward by his Department as a necessary payment before they can have their telephone services reconnected after the automatic exchanges are brought into operation.

Question resolved in the affirmative.

House adjourned at 11.30 p.m.

page 1346


Answers to the following questions upon notice were circulated:

Cigarette Advertising (Question No. 1126)

Mr Webb:

asked the Minister for Health, upon notice:

Will he consider legislation to (a) ban all cigarette advertising, (b) enforce manufacturers to put health warnings on cigarette packets and (c) set a maximum level of tar and nicotine content?

Dr Forbes:

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

At the 1968 Conference of Commonwealth and State Health . Ministers, recommendations were received from the National Health and Medical Research Council regarding a warning label on cigarette packages including reference to the tar content.

The Ministers agreed to give the labelling proposals detailed consideration with a view to proposing a uniform approach at their next meeting. Before then it is expected that a final report on a survey of smoking attitudes will be received from the Council which meets in May 1969. The Ministers considered that it would be unwise to take any action on the labelling of cigarettes until this report became available. They agreed that it was important that there should be a uniform approach in each State since the responsibility for labelling is a State matter, and also agreed to work towards such a position.

Concerning the- advertising of cigarettes, the 1968 Conference of Health Ministers agreed to await the detailed final report on smoking attitudes to indicate what would be the most valuable means of dissuading people from smoking and convincing young people that they should not commence. Pending receipt of this report, the Government feels that publicity regarding smoking hazards, directed particularly towards young people, is to be preferred to the imposition of a ban over the advertising of tobacco and cigarettes.

Commonwealth Post-graduate Awards Scheme (Question No. 1195)

Mr Whitlam:

asked the Minister for Education and Science, upon notice:

  1. Is it because of differences in the standards of the degrees conferred by various departments in the universities that since the inception of the Commonwealth Post-graduate Awards Scheme, 335 awards have been made to chemistry graduates, 282 to engineering graduates and 269 to physics graduates, but only 74 to graduates in psychology, 50 to graduates in philosophy and 37 to graduates in economics?
  2. If not. what formula does the selection committee employ in comparing the degrees of graduates from the various faculties of Australian universities and from universities overseas?
Mr Malcolm Fraser:

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

  1. The reason for more Commonwealth Postgraduate Awards being given to students in the natural, applied, and medical sciences than to students in the humanities, is that there are more candidates in the sciences who seek to proceed to higher degree studies. The figures quoted in the question refer to the year 1966. Of higher degrees conferred by all universities in Australia in that year, 270 went to students in humanities and social sciences while 678 were awarded to students in the natural, applied, and medical sciences.
  2. Selection for these awards is made by the universities themselves. Each university sets up a selection committee composed of academic staff familiar with courses in universities in Australia and overseas, and each university arranges for awards up to the number of Commonwealth Postgraduate Awards allocated to it to be offered to the most highly qualified candidates. The number of these awards to be allocated to the universities is determined by the Commonwealth Scholarships Board in conjunction with the Australian Vice-Chancellors’ Committee. To be considered, an applicant must hold at least a second class honours (upper division) bachelor degree or equivalent. About 70% of those who have received an award in recent years have graduated with 1st class honours.

Influenza Vaccine (Question No. 1271)

Mr Donald Cameron:

asked the Minister for Health, upon notice:

  1. ls it a fact that in Queensland there are many persons on the so-called priority list who are unable to secure injections against Hong Kong influenza because of a shortage of vaccine?
  2. Have many hundreds of young healthy persons already been vaccinated?
  3. Can he intervene and issue instructions that doctors who have been involved in mass youth injections should use their allocations for those on the priority list?
Dr Forbes:

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

  1. The Commonwealth Serum Laboratories Commission leads the world in the development of influenza vaccines and has made an enormous effort to meet the unprecedented demand for influenza vaccine this year. Already this year the Laboratories have distributed in Australia approximately four times the average total annual issue of influenza vaccine over the past 10 years and are continuing to manufacture at the rate of 250,000 doses per week. Because of the unpredictable demand from many Quarters it was inevitable that in some instances temporary delays would occur in satisfying the demand. However, since 1st April the supply position has eased. Medical authorities have stressed that persons who are vaccinated against influenza during the autumn have the highest immunity during the winter months. Consequently, (he minor supply and distribution problems that have occurred should not have prejudiced the chances of persons to acquire maximum protection at the time it could most be needed.
  2. It is not possible to supply the honourable member with details of groups of persons who already may have received doses of vaccine because there is no obligation on the medical profession to notify the use of such products.
  3. Immediately after the meeting of the Epidemiology Committee of the National Health and Medical Research Council in February, 1 issued a statement in the Press drawing the attention of the medical profession to the priority listing recommended by the Committee. The statement has also been given publicity in the medical Press. I made a further statement recently urging medical practitioners to write prescriptions for single-dose ampoules of the vaccine only for their pensioner patients. In addition, my Department has circularised all doctors drawing attention to these matters. Special restrictions upon the sale of vaccines through normal commercial channels do not appear to be warranted at this stage, in view of information I have received that sufficient vaccine will have been available by mid-May to vaccinate the persons in the priority groups.

Pig Prices (Question No. 1284)

Mr Hansen:

asked the Minister for Primary Industry, upon notice:

  1. Has his attention been drawn to the poor returns currently being received for pigs?
  2. Have these prices in some instances been less than 50% of prices received 12 months previously?
  3. Is there any explanation for these poor returns?
  4. Can he say why there has been no similar reduction in the retail prices for pork and bacon?
Mr Anthony:

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

  1. Yes, I am well aware of the recent fall in pig prices in Australia.
  2. Seventy-five per cent of pigmeat is produced in New South Wales, Victotria and Queensland. During January and February this year auction prices at the capital city markets in these three States for baconer and porker pigs were on average about 14%-20% below those of last year. This fall is considerably less than 50%.
  3. Pigmeat production has risen significantly since 1964-65. This rise has been matched by increased consumption in Australia resulting in trie maintenance of remunerative prices over the period. However, a large increase in production of 8.8% during the 6 months ended December 1968 over the 1967 period appears to have outstripped the growth in demand, resulting in a fall in prices. This price setback must be looked at in relation to an increase of almost 40% in pork consumption between 1963-64 and 1967-68, and a general rise in pig prices over this period. While currently auction prices are below the levels ruling between 1964-65 and 1967-68 they are on a par with or above those prevailing prior to the upsurge in production which commenced in 1964-65.
  4. The fall in prices received by the producer has also been evident at the retail level. Prices, as measured by the Commonwealth Statistician in the major cities, have fallen considerably. For example, the price for u pound of pork chops in Sydney averaged 61 cents during the September quarter of 1968, or 7.6% below the 1967 level, but the price fell further in the December quarter to avera’ge 58 cents, or 14% below the corresponding 1967 price. For bacon rashers (pre-packed) the price in Sydney during October 1968 was 93.8c per lb- 0.8% below October 1967. In December 1968 they had fallen to 9,1.8c per lb- 3.6% down on December 1967. The price fall was, however, more pronounced in Melbourne and Brisbane, with prices in December 1968 being 7.8% and 6.4% respectively below 1967.

Influenza Vaccine (Question No. 1313)

Mr Calwell:

asked the Minister for Health, upon notice:

As the Postmaster-General’s Department proposes to offer facilities for vaccination against Hong Kong influenza free to postal employees, will all aged, invalid and widowed pensioners and their children be given the same facilities without cost?

Dr Forbes:

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

Vaccination against Hong Kong influenza was ma’de available free of cost to pensioners and their dependants as from 1st April 1969 under the National Health Scheme.

Investigation of Company (Question No. 1347)

Dr J F Cairns:

s asked the AttorneyGeneral, upon notice:

  1. Did he recently inform me that, after receiving a letter from the Victorian Shareholders Association, he had arranged for an inquiry into a company concerned with ores?
  2. In view of his action is it in the interests of all those concerned with the company that the results of the inquiry be made known without delay?
  3. If results of the inquiry have not been published, will he see that this is done as soon as possible?
Mr Bowen:

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

As a result of the investigation referred to in my letter of 30th December 1968 in reply to the honourable member, certain prosecution proceedings have been instituted in the Court of Petty Sessions, Canberra, against directors of the company concerned. The date for the hearing of these proceedings is 1st May 1969.

Medical Teams in Vietnam (Question No. 1365)

Mr Whitlam:

asked the Minister for

External Affairs, upon notice:

  1. Did the Acting Director-General of Health send Mr L. W. B. Engledow of his Department on 4th February a copy of a letter in which he told a member of a medical team in Vietnam that the Government had been aware for some time past of a great many basic problems regarding the organisation of the teams?
  2. For how long had his Department been aware of these problems?
  3. When was it decided to send a senior medical officer of the Department of Health and the Dean of the Faculty of Medicine in the University of Melbourne to Vietnam to assess the present role of and arrangements for Australian medical assistance and to investigate the feasibility of greater Australian involvement in leaching?
  4. When did the medical officer and (he dean return?
  5. When will their report be published?
Mr Fairhall:

– The answerto the honourable member’s question is as follows:

  1. No. But the Department has been aware of the substance of the letter, and has had a copy of it in its files.
  2. Since the first team went to Vietnam in October 1964, the Department of External Affairs has been aware of the continually changing problems, and kept in liaison with the Department of Health, and has as occasion required been adjusting arrangementsto meet and resolve difficulties and to meet new opportunities.
  3. Arrangements for the visit by the senior medical officer of the Department of Health, one of a series of planned annual visits, were begun in 1968to coincide with his other engagements overseas. The decision to send the Dean of the Faculty of Medicine of the University of Melbourne was taken on 20th February 1969.
  4. The Senior Health Officer and the Dean of the Faculty left Vietnam on 7th March. The Dean returned to Australia and the Health Officer kept other appointments overseas before returning.
  5. Their reports are confidential documents for the guidance of the Department of External Affairs in its administrative arrangements.

Australia’s Overseas Loan Indebtedness (Question No. 1321)

Mr Calwell:

asked the Treasurer, upon notice:

  1. What was Australia’s overseas loan indebtedness to (a) the United Kingdom and (b) the United

States of America at (i) the end of 1939, (ii) the end of 1949 and (iii) 30th June 1968?

  1. What was the interest rate existing on the indebtedness to each country at each date?
Mr McMahon:

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

  1. Debt of the Commonwealth and of the Slates denominated in Sterling and United States dollars, as evidenced by securities on issue, was as follows:

Road Accidents (Question No. 1207)

Mr Daly:

asked the Minister for Shipping and Transport, upon notice:

  1. How many road accidents have occurred in each State in each of the last 5 years?
  2. How many persons were (a) killed, and (b) injured in each State in each of those years?
  3. What is the total number of road deaths in Australia in that period?
  4. Has any assessment been made of the reasons for the accidents? If so, what are the details?
Mr Sinclair:

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

  1. As reporting of accidents not involving casualties is not compulsory in all States, figures can only be supplied of accidents involving casualties. The number of accidents involving casualties in each State, and in Australia as a whole, are set out below for the years 1963 to 1967 and the half year to June 1968. Such accidents are defined as those which resulted in the death of any person within 30 days of the accident or in bodily injury to any person to an extent requiring surgical or medical treatment. In the case of South Australia, the definition of an accident involving casualties was brought into line with the definition given above as from 1st October 1967; previously all accidents where persons were injured to any degree were included.

page 1349


2 and 3. The number of persons killed and injured in each State, and in Australia as a whole, are set out in the tables below for the years 1963 to 1967 and for the half year to June 1968; persons injured in South Australia up to 1st October 1967 included persons injured to any degree.

page 1349


page 1349


States, such bodies as the Department of Motor Transport in New South Wales and the Traffic Commission, Victoria, devote considerable attention to work which may lead to the prevention of accidents. A number of State government.-; have conducted public inquiries into road safety and the New South Wales Government has announced the setting up of a specialist Accident Research Centre. To enumerate even the research into the causes of accidents and their prevention which has been conducted in Australia would be impracticable within the scope of this answer. It must be said, too, that the putting into effect of the results of such research depends upon action by the State governments. Nevertheless, the Commonwealth is playing a leading role in the introduction of improved vehicle safety practices and uniform traffic legislation through the work of the Australian Transport Advisory Council and its associated Committees. Furthermore, this Government proposes setting aside up to $18m under the forthcoming Commonwealth Aid Roads Act for planning and research as approved by the Commonwealth. Whilst this sum is not intended to be directed specifically to road safety, it is, of course, with road safety in mind that much of the work will be done.

Cite as: Australia, House of Representatives, Debates, 22 April 1969, viewed 22 October 2017, <>.