27th Parliament · 2nd Session
Mr SPEAKER (Hon. Sir William Aston) took the chair at 2 p.m., and read prayers.
Mr WHITLAM presented from certain citizens of New South Wales a petition showing that due to higher living costs persons on social service pensions are finding it extremely difficult to live in even the most frugal way. The petitioners call upon the Commonwealth Government to increase the base pension rate to 30% of average weekly male earnings, plus supplementary assistance in accordance with Australian Council of Trade Unions policy and by so doing give a reasonably moderate pension. The average weekly earnings for adult male unit wage and salary earner means the figures issued from time to time by the Commonwealth Statistician and published quarterly.
The petitioners pray that the House of Representatives will take immediate steps to bring about the wishes expressed in their petition so that citizens receiving the social service pensions may live their lives in dignity. .
Petition received and read.
– I direct a question to the Prime Minister. I ask: Does he agree that due to increases in prices since the last increase in pensions the purchasing power of pensions has been considerably reduced? I think he must agree with that. In view of the loss of value of the pension will he grant the request of the various pensioner leagues that urgent consideration be given to an increase in pensions before the normal Budget session in August next?
– The matter of increases in pensions of all kinds is always a matter that has to be discussed in the total Budget context and the total economic state of the nation.
– My question is directed to the Minister-in-Charge of Aboriginal Affairs.. With regard to the offer made by
Comalco Holdings, at present mining bauxite at Weipa, will the local Aboriginals in that district be allowed to participate?
– As I understand it - I have been in touch with the Queensland Government regarding this - Comalco has offered 40,000 shares for the benefit of Aboriginals and it is also offering a number of shares, I think 1 50, to each employee, including Aboriginal employees. I am not quite certain of the details, but T believe that that is the nature of the proposal. The shares taken up by the Queensland Government will, I think, be held for the benefit of Aboriginals in Queensland but their disposition will, of course, be a matter for the Queensland Government and not for this Government.
I am glad to tell the House that I was able to get Comalco to set aside a further 10.000 shares for the specific benefit of the Aboriginals in the Weipa area exclusively. These shares are to be taken up today by the capital fund in the Office of Aboriginal Affairs and they will be held in trust pending the establishment of some legal cooperative, to which they will be transferred, consisting of Aboriginals of the Weipa area itself. In this way the venture will not only be to. the advantage of Queensland Aboriginals as a whole but there will be a specific advantage for the Aboriginals of the Weipa area. As the House will know, quite a number of Aboriginals are living a little south of Weipa at Aurukun and I am hoping that, in co-operation with the Queensland Government, we will have a proposal for the capital development of that area which can itself provide a very good pastoral base for quite a major cattle industry.
– I address a question to the Minister representing the Acting Minister for Immigration, fs the Minister aware that in the first 3 months of this year 30,000-odd Americans, which represents an increase of over 30%, have made inquiries about the possibility of migrating to Australia? I ask the Minister: Through what Commonwealth agencies in the United States of America were these inquiries made? ls sufficient staff and information available to give a clear and accurate picture of conditions in Australia at present? If sufficient staff and data are not available will the Minister take steps to have them made available as a matter of urgency?
– The prospect for a migration flow from the United States of America is very real and very great. The policy which has been pursued has been that a considerable amount of counselling should be done with each individual applicant so that the applicant does really have a full knowledge of Australian conditions and does not come here expecting to find picturesque things, which tends to be the view of a great many people in the United States. It really is a counselling matter.
The number of officers was strengthened greatly last year. New vice-consulates and consulates have been opened in the United States so that officers can travel around that country, meet people, talk to them and answer their queries. The time that they assign for individual interviews is getting on towards an hour. There is also a considerable exchange of letters and information through the post. I have no doubt that in the future a great many settlers will come here from the United States, that as more come they will generate a chain reaction, and in future the United States is likely to become one of our major sources of migrants.
– I address a question to the Minister for Health. Is it a fact, as comments freely circulating would have people believe, that the Government’s attitude towards altering the common fee schedules had been affected because pamphlets detailing these schedules for distribution to the public had already been printed before final discussions took place? If these comments are erroneous, will the Minister clarify the matter?
– No pamphlets relating to the new health benefits plan have been printed for distribution to the public. This cannot be done until the legislation has been passed by this Parliament. In the interest of getting information to the public as quickly as possible precautions have been taken to set up the proposed information in type, but I emphasise that that is as far as the exercise has gone, lt is as far as it will go until the Bill has been passed by the Parliament.
– I ask a question of the Minister representing the Minister for Supply. Has his attention been drawn to a recent report in the ‘Australian’ stating that the Government has abandoned the joint British Aircraft Corporation and Commonwealth Aircraft Corporation project for the development and manufacture of a swing-wing supersonic attack trainer known as the AA107? Is the substance of the report in accordance with the facts? Has the Government decided to scrap this project? May I point out to the Minister that this project is the last hope for the Australian aircraft industry to undertake a major military development to save the industry from virtual collapse?
-The assumption in the last part of the honourable gentleman’s question is not quite correct. In answer to a question asked a short while ago I mentioned the sum which the Government is providing for the development of a twin engine light aircraft - project N - for which it is hoped there will be a considerable requirement not only for the Services but also in commercial sales in Australia and possibly overseas. But it will be up to the local aircraft industry to demonstrate that with the funds made available it can build prototypes. Funds have been provided for 2 prototypes to meet requirements for a good aircraft. It is true that the approach that has been adopted to support the aircraft industry in this sense is a modest one but when you arc starting a design from scratch it is reasonable to adopt this approach. When you come to the matter of a supersonic swing-wing advanced trainer and ground attack aircraft which had been under, I think, very preliminary design at Fishermen’s Bend, you enter a different area altogether. As this House is only too well aware, there have been considerable problems with swing-wing designed aircraft. I think it was ambitious to suggest that with the resources available to us Australia might be able to undertake a project of this kind and do it in a way that would meet Royal Australian Air Force requirements.
One of the things honourable members should bear in m nd when talking about top flight aircraft for the RAAF is that such aircraft must be the best of their kind if they are to provide the Air Force with the best possible capability for the role that is being filled. It is quite a different matter if you are providing trucks for the Army. You can get somebody else’s trucks. If your own are not the best available, they will probably do the job just as well. In the air it is much more important to have the best. Just because an aircraft happens to be designed in Australia or designed in part in Australia is not of itself an argument for the RAAF to purchase that aircraft if it will not fulfil the role as we would wish. I would like to mention one other point, and I do not want to be held to ransom over these figures-
– I rise to order. Might I suggest that the one other point be made by way of a statement after question time, because it is inappropriate to make it at question time.
-Order! There is no substance in the point raised by the honourable member.
– I do not want to be held to ransom over the figures I am about ro give. At present in the United States 2 advanced fighter aircraft are being built. They are the F14 and the FI 5 - one for the United States Air Force and one for the United States Navy. I think both aircraft will be swing-wing aircraft. They will be very sophisticated aircraft and, I am advised, vastly expensive - certainly starting prices will be in excess of $I0m or SI 2m. I understand, and this gets to the point of the question, that the developmental costs for one of these aircraft and the contracts relating to it are $US400m. So the development of sophisticated aircraft is an extraordinarily expensive business. The other point which has just come to my mind is that although some reports said that the United Kingdom was interested in this swing-wing advanced trainer cum ground attack aircraft which had in part been designed out here, and only in a very preliminary sense in part designed here, all the advice available to me is that the Royal Air Force would not be interested in such an aircraft. Despite assurances from the company there would be virtually no prospect of the Royal Air Force having any interest in or placing any order for the aircraft. This must make one doubt the viability of the sort of project the honourable member had in mind when he asked his question.
– I direct my question to the Postmaster-General. Owing to the high cost of trunk calls in country areas and its adverse effect on decentralisation of industry and on rural producers, especially as a result of the extended local service area zoning system, can the PostmasterGeneral give any indication as to the possibility of introducing a flat unit call charge for local and trunk calls within the States? What would the unit call charge be in such circumstances for trunk and local calls on a time basis?
– From time to time the Department has had a number of representations for the results sought by the honourable member to be achieved. It is necessary in making some statement about it to make certain prognostications which could be quite inaccurate. At the moment the ratio of local calls to trunk calls is approximately 14 to 1. It would be impossible for one to indicate to what degree the number of calls will continue in both areas on the basis which the honourable member has suggested. If one were to assume that the same number of local and trunk calls would be made, it is estimated that 10c would be the local call charge. But it is believed within the department, and I think with justification, that if a charge of that nature were applied there would be a considerable increase in the number of long distance calls which at the moment are trunk calls and a considerable reduction in the number of local calls made by subscribers. Therefore it would seem necessary to adjust the figure of 10c to which I have referred to take into account these variations.
There is another very important factor in relation to this. The telephone system in Australia has been developed on the basis of the variation of charges. To go to a single charge basis throughout Australis would mean a good deal of capital investment to improve the trunk switching facilities to enable those making trunk calls to have them as local calls. At the same time quite a substantial part of the equipment which is associated with the local call would become redundant because of an expected reduction in calls. Australia has a system which is similar to that used in, I believe, all the Western countries of the world. We have tried to rationalise as best we are able to meet the Australian circumstances. We have reduced the number of charging distances very considerably in comparison with, say, New Zealand which I think has 14, Canada which has 26 or 27 and the United States of America which has 46 or 47. Of course, to have these substantial increases in the number of calling distances means a great deal of extra work within the telephone system and this is a very expensive type of operation. I would believe that there is no prospect of the proposal made by the honourable member being acceded to in Australia because of some of the problems I have mentioned and many others which I have not indicated in answer to this question.
– I ask the Prime Minister: Has the Government decided to hold any further consultations or have further communications with the States before the resumption of the debate on the Territorial Sea and Continental Shelf Bill?
– Yes, Mr Speaker, there is a complementary Bill to the Bill at present before the House, as the Leader of the Opposition would know. This will be a Bill setting out the administrative arrangements, covering such things as royalties, fees, method of granting titles - all those matters of administration to be settled. It is hoped that this will be able to be also put in the form of an agreement - heads of agreement between the States and the Commonwealth on these matters. The proposed heads of agreement and the proposed Bill dealing with the administrative matters will be distributed to the States quite shortly and there will be discussion with the States on these matters in an endeavour to reach agreement. This will take place, I believe, early in June. I think 9th June is the date that has been settled. It will be not until after this discussion that we will proceed with the Territorial Sea and Continental Shelf Bill.
– My question is addressed to the Minister for the Navy. In view of the increasing activity of foreign owned vessels of various types operating in Australian waters and the possibility that the Navy will be called upon to pursue such vessels al short notice, is there legal provision for such pursuit outside Australian territorial waters?
– In short, yes, there is. The matter is regulated by the convention on the high seas and deals with the doctrine of hot pursuit. I have no wish to infringe the proper function of question time so I will excuse myself and answer as crisply as I can the question raised by the honourable member. The doctrine of hot pursuit governs a customary practice in international law which has now been codified in Article 23 of the convention on the high seas. The term ‘hot pursuit1 is a term of art and it is a doctrine of the utmost importance to Australia. If I may take the simple proposition of a foreign owned fishing vessel seen to be fishing in territorial waters, for example off the coast of Queenslands-say, 2 miles from the coast. Assume that this vessel then moves outside the territorial waters. The doctrine of hot pursuit would enable a warship, or a military aircraft or a ship specifically authorised by the Government to follow it, to follow that vessel. The doctrine of hot pursuit, I point out in view of the current interest in the territorial sea, is available only to a state which is a state in international law. The doctrine must be applied immediately; there can be no breaking off of the pursuit. An auditory or visual signal must bc given to the ship and there must be complete observance of all the code’s provisions which are contained in Article 23. Failure to observe any of those provisions could lead to damages against the coastal state, which in the case of Australia would be the Commonwealth and not the State of Queensland. It underlines, if I may say with respect, one of the least observed aspects of current controversy on the territorial sea.
– I preface my question, which is addressed to the Treasurer, by referring to the increase in the Commonwealth long term bond rate to 6% in February last. Are terminating building societies the main source of building loans for borrowers in the lower income groups? Are borrowers from such societies now being faced, as a result of that increase, with increases in their repayments of up to $5 per week? Will the Treasurer extend to such borrowers similar relief to that granted by his Government to primary producers? What further increase in repayments to such societies will result from the current bond rate increase, in May, to 7%? What relief does the honourable gentleman propose for this additional impost? To what extent will such increase of interest rates further inflate the consumer index of living costs?
– I noted that some of the terminating building societies had increased their rates, but these are hot directly equated lo the bond rate. The increase in the bond rate is a direct result of the Commonwealth’s being unable to raise long term funds at 6%. Consequently we have established a rate at which we may have much better prospects of raising money. The terminating building societies establish their rates quite separately. I would think that -as societies borrow substantially from banks this would be reflected in their lending rate. However, like other sectors of the market, building societies have to raise their funds in accordance wilh the rate at which lenders will provide money. I have no specific plans to deal with one particular context of interest rates: these rates will take their place with the rest. As I said, building societies will raise their funds according to the price that their lenders charge.
– I ask the Treasurer whether the Government will consider a suggestion from the Federated Taxpayers Associations of Australia that a permanent taxation law revision committee be established for the purpose of making an impartial survey and recommendation to the Treasury on matters relating to proposed taxation law amendments and on questions and requests emanating from the public?
– The Government naturally will consider any serious, well thought out views about taxation which are put to it. If this body, or any other body, would like to work hard on the problems involved and submit its ideas to me I certainly will examine them.
– 1 ask the PostmasterGeneral whether any consideration has been given to supplying television education programmes on tapes or by some other means to schools in remote areas where television is unlikely to extend for some considerable time. If so, is it likely that such programmes will be available in the near future? If not, why not? If there are legal difficulties, what are they and why can they not be removed? Finally, if the matter has not been considered, will the Postmaster-General give it his early attention with a view to giving children in those remote areas the opportunity to gain an improved education?
– A meeting attended by myself and the Minister for Education and Science on behalf of the Commonwealth, and by State Ministers for Education, was held late last year to discuss educational television. Technical experts indicated to that meeting that a great deal of development was taking place in this area of television. At that time Ministers believed it was desirable not to proceed, apart from the expenditure of a little more money, beyond the point which the Australian Broadcasting Commission had attained in relation to educational television. At the present time a system known as EVR, which I think stands for electronic video recorder, is being developed and might become available for use in various schools. Tapes for this system could be made available by some authority in Australia - perhaps the Australian Broadcasting Commission. Until we have further discussions and there appears to be unanimity between the State Ministers and the Commonwealth any further expansion in this area of educational television is not likely.
– My. question is directed to the Minister for Repatriation. When Budget consideration is being given to repatriation benefits, will the Minister for Repatriation stress strongly that repatriation hospital, medical and pharmaceutical benefits be extended to all ex-servicemen and women of the First World War and the Boer War irrespective of any connection between the disability and war service?
– The matter which the honourable member for Mallee raises has been the subject of a number of representations from various individuals and also from ex-servicemen’s organisations. I mention that a great number of the 1914-18 returned servicemen are already catered for within the repatriation system. They either have disabilities which are accepted as being due to war service or they are in receipt of a service pension, which indicates that they are somewhat needy people. They have available to them hospital and medical treatment through the system. However, having said that, I can assure the honourable member that, even though one of the basic reasons for the Repatriation Department’s existence is to assist people who have suffered disabilities because of war service, I will certainly be taking the matter he raises into account during the Budget discussions.
– I ask the Minister for Defence: What regulations apply to correspondents covering the Australian task force in Vietnam? Were these regulations revised and relaxed after complaints from journalists about excessive restriction of their activities in the field in Vietnam?
– Some considerable time ago an attempt was made to unify the regulations that apply to the 3 Services because they appeared in different places in a number of different regulations. A tentative draft of revised and unified regulations was promulgated last year or even the year before - it was before the last election - and a number of journalists indicated that they believed the revised and unified regulations would give them reduced access to servicemen compared to the situation that had previously existed. When this became evident my predecessor indicated that the rules that had been applied would continue to be applied; in other words, the tentative revised and unified draft was put aside for the time being. It was felt however that there was still a need to codify the regulations as they affected the 3 Services because of marked differences in the interpretation of the regulations and because if the regulations as they now exist were applied strictly to the letter as they appear to read they would virtually prevent anyone from talking to a serviceman and getting an answer of any kind. For quite some considerable time discussions were held within my Department and between my Department and the Service departments concerning a revised draft. The revised draft has been discussed in Press circles and has been sent out to the Services. I think that in Vietnam it has already been promulgated and is in use. lt has not reduced the access to servicemen in any sense at all. It should tend to increase it. I will immediately find out what stage the new draft has reached and what is its current status. It will not be a classified document. Copies will be available to honourable members and to members of the Press. It had been my intention to see that it was made available. I should have pursued this matter more vigorously before this, but 1 must confess that other more urgent matters looming in front of mc have got in the way of my doing that. I will try to bring it to a conclusion. The drafting has been completed. I hope that the public media w:11 believe that it is a reasonable attempt to bring unity to the approaches of the 3 Services in this area.
– I ask the Treasurer: With a view to allaying unnecessary concern and speculation on the state of the Australian economy will he say how long he expects the present relatively illiquid state of the economy to continue?
– The normal seasonal pattern for liquidity is that in the last quarter of the financial year when tax income to the Government greatly exceeds outpayments there is a loss of liquidity which lasts just for that quarter. The normal pattern thereafter is that as soon as tax refunds begin, just after the close of the financial year, over the following few months, up to $400m is pumped back into the economy. As the new financial year proceeds the former liquidity pattern gradually tends to re-establish itself. I would expect the normal seasonal factors to be at work this year.
– The Minister for External Affairs will recall that in the fortnight before President Nixon sent United Slates troops into Cambodia there was an outbreak of Khmer violence against Vietnamese who were residents of Cambodia, even to the point of genocide, with bodies thrown in the river and so on. Were any representations made by either the Djakarta conference powers or the Australian Government to the Government of Vietnam to desist from these actions? If so. what underlies the threat of the South Vietnamese Government to expel Cambodians if action by the Cambodian Government against Vietnamese continues?
– It was rather difficult to follow the confused statement made by the honourable gentleman. 1 should first of all point out to him as a matter of definition that the word ‘genocide’ does not apply in this case for 2 different reasons. The first is that he was dealing on the one hand with Vietnamese and on the other with some South Vietnamese residents of Cambodia. The second point is that there is no proof that the Cambodians did embark upon a process of getting rid of the South Vietnamese residents in their country. Accusations were made. They were never proved, and the accusations have since been dropped. I took the initiative myself, when I was in Saigon, to see whether we could get a goodwill mission to go to Cambodia to try to ensure that the Cambodians, and the South Vietnamese did not quarrel the one with the other.
Subsequent to that, and particularly through the influence of the Papal Nuncio, the Cambodian Government agreed to accept not a goodwill mission but an official mission in order to try to ensure the repatriation of South Vietnamese or Vietnamese residents from Cambodia. The mission was well received and, in fact, many, many people - I could put it at as many as 4,000 to my knowledge at the present moment - have been returned or are in the course of repatriation.
The Lon Nol Government of Cambodia knows that the possibilities of ill will between the 2 ethnic groups do exist. I am confident that this Government will do all in its power to reduce the tensions and to try to ensure that all concerned will fight the common enemy and not one with the other. What I do want to emphasise is this: While I know that deaths have occurred, the matter of who was responsible for the large scale massacres has not been proved. I can assure the honourable gentleman again that the Lon Nol Government in Cambodia is doing all that it can to reduce the possibilities of such bloodshed.
– Is the Minister for External Affairs aware that statements have been made by diplomatic representatives in Australia that if Cambodia and Laos could be effectively neutralised it would be highly possible that our troops could return home to Australia in a very few months? Was the Djakarta conference a move in this direction towards success in bringing neutrality to those countries? If it was a success as a conference, could the Minister indicate what moves have emerged from it? Have any follow-up moves been made as yet to implement the objectives of that conference?
– Up to the present moment the thinking of the Djakarta conference - and since I have returned - has been localised to Cambodia. I can assure the honourable gentleman that so important is the geostrategic position in Cambodia that if we were to achieve peace and neutrality free from interference by other countries there we would make an enormous contribution towards peace in the whole of South East Asia. SoI do hope that this can be recognised by all countries, and particularly by the Communists, and that they will accept this principle in the same way as we in the Government in Australia accept it.
As to the Djakarta conference itself, again I have to stress that this was localised to Cambodia. All our thoughts were designed to try to ensure that the neutrality of that country was respected and that, consequently, after a ceasefire all foreign troops would be withdrawn. As to the conference itself, as I pointed out to the House yesterday, 3 countries led by Indonesia - the other 2 were Japan and Malaysia - had been appointed as a goodwill mission to interview the 3 countries representing the International Control Commission on Cambodia in order to sec whether they would exert their best influences in order to achieve peace. Before the representatives at that conference - that is, the Foreign Ministers of the 3 countries concerned - left Djakarta, they had had a preliminary meeting. If Mr Aichi, the Japanese Foreign Minister, had left before this meeting was called his Ambassador would have taken his place. Representatives of these countries have discussed preliminary ways and means of approaching the members of the International Control Commission.
It has been pointed out in today’s cables that Tun Abdul Razak, the Foreign Minister for Malaysia, himself will approach the Canadian Prime Minister when the Canadian Prime Minister visits Malaysia this week. I am sure that he will put in the strongest terms the necessity for action forgetting all the protocol and difficulties that have to be overcome, in order to play a part to the best of our combined capacities to try in bring peace to this region which is so enormously important to the future of this country.
– I ask the Prime Min ster a question. The right honourable gentleman will have noted the decision by some State governments to reduce the voting age to 18 if they secure the co-operation of the Commonwealth Government which compiles the roll of voters for State parliaments as well as the Commonwealth Parliament. I ask whether the Government has come to a decision on this matter. If it has not, does the Prime Minister expect that it will come to a decision in time for a vote to be taken on the Bill I introduced in November 1968 and which is on the notice paper for me to introduce again in the week after next?
– I have noted what I believe must be the basis of the honourable member’s question, and that is that the New South Wales Government has announced a decision in principle to seek to reduce the voting age to 18. There have been discussions between the Commonwealth and the States on this general matter. I have no doubt there will be further dis.cuss ons, particularly in the light of the “New South Wales decision in principle. I think that is all I can say in reply to the honourable member.
– 1 address my question to the Treasurer, ls he aware of recent comments, particularly those of the honourable member for Reid, on the rising price of urban land? Does his understanding of economics permit him any surprise at this phenomenon, involving as it docs a finite quantity of land and a potentially infinite demand for it? If the Minister agrees with me that the only effective way to prevent rising land prices for urban development in a free enterprise system is for the Government to buy all the land, can he give a firm indication that no such Socialistic intrusion into our free economy is intended?
– It is of course elementary commonsense that the quantity of suitable urban land available is strictly fixed. On one hand-
– This is Australia we are talking about.
-Order! The Minister has been asked a question and he cannot reply to it in the midst of a number of interjections. I ask honourable members to be silent.
– 1 was not aware that the land area of Australia was increasing, although an honourable member opposite seems to take a different view. The real problem is the very limited area of land available, particularly around the big cities. On the other hand, the more money that is available to potential purchasers of land the more competition there will be, and this in turn will raise prices. I would certainly reassure the honourable member on this question, because the Commonwealth Government has no constitutional power to acquire land for this purpose, nor, to be practical, would we have the necessary funds. It is true that in the Australian Capital Territory the Government does already own all the land which is subject to leasehold, but I cannot imagine any such move by a federal government, not even a Labor government. If the Opposition came to office it would rapidly be acquainted with the facts of life which now it so constantly ignores.
Discussion of Matter of Public Importance Mr SPEAKER - 1 have received a letter from the honourable member for Oxley (Mr Hayden) proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The grave and deteriorating state of the nursing profession in Australia arising from extensive dissatisfaction with conditions of employment, remuneration, training, education and professional status.
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)
– I propose the matter of public importance which has been circulated in my name and read to the House. Only a fool would deny that a grave and deteriorating situation exists in the nursing services of our national public hospitals. Extreme disillusionment with remuneration, working conditions, education and training, and professional status have pushed nurses to the unparalleled position of threatening strike action. The nursing profession, more than any other group of employees in this nation, has been exploited financially and physically to prop up the nation’s hospital services. It is disgraceful that this exploitation has prevailed for so long. To suggest that it should continue any longer is intolerable. These women and girls should not be called upon to make great personal sacrifices to help keep our under-financed, overstrained public hospital services in operation. It should be the aim in providing and maintaining health services to strike a high standard of excellence in this essential public service. Adequate public health services of this standard should be available to all according to need. The cost of maintaining these services should be the duty of all according to their means and it is gutless of any government - and all governments in Australia are guilty of this offensive behaviour - to try to evade this moral responsibility by gracelessly thrusting a large part of the burden of this cost on to the nursing profession.
Conditions of a nurse’s employment involve certain undesirable indignities. For instance, nurses complain of having to mop floors, clean walls, wash dishes, wash linen, tidy kitchen cupboards, change bed side screen covers, perform central switchboard duties and messenger services, cook meals, undertake clerical duties outside those that are a nurse’s responsibility and stoke boilers. What a miscellany. It is quite unreasonable that any group of people who are normally regarded as professionals in the community should be treated in this undignified manner. Often they are bowed down by petty procedural details, tyrannised by dated traditions and restricted in their liberty as individuals. In reality we ask of them on the one hand to fulfil the role of the hewers of wood and carters of water in the medical services, and on the other hand expect them equally to rise to the occasion in response to demands of a complex, technical and quite advanced nature in their role as professionals in our medical services. But these 2 roles are in conflict and inevitably lead to disillusionment and dissatisfaction for many nurses.
A nurse trained to perform complex, skilled techniques such as giving intravenous solutions receives a jar to her sense of professionalism and to her pride in technical skill when she is relegated to dull, intellectually undemanding tasks of a monotonous, repetitive nature such as cleaning bedpans or sputum mugs. Is it the measure of professionalism that our public hospital authorities seek to preserve for nurses to maintain for them an unwanted and offensive reputation for the calling as the bedpan brigade? Can there be any genuine quibble on the need for handsomely improved remuneration for nurses? For instance, a first year sister, that is, after 3 years training involving lectures, study and fairly regimented working hours and constricted private life, receives $48.40 per week in Canberra. After 4 years as a sister, she reaches the lavish heights of $54 per week. A Public Service Board Third Division base clerk, Class 1, female at 21 years, with no training, commences at $51.52 per week and at the fourth year rises to $59.31 per week. The clerk enjoys a 35-hour week - an unheard of luxury for the nurse who, as like as not, is working unpaid overtime. On this basis alone one finds dramatic cause for the current grave failure of the nursing profession to attract and hold adequate numbers of young women.
The 1969 annual report of the Conference of the Institute of Hospital Administrators emphasises this failure, reporting that a number of Victorian metropolitan public hospitals have recently had to close beds because of shortages of nursing staff. The governments of Australia continue to ignore the inadequacy of nurses’ remuneration at the peril of our nation’s public hospital services. How many more beds must be closed down before they act? To adopt a blinkered view of the role of the nurse as equivalent to that of any ordinary tradeswoman is certainly and surely to aggravate at a rapidly increased rate the current run-down in nursing services.
On the score of education and training of nurses, only now is there some activity to upgrade their standard and quality. This belatedness is in site of the references of the Martin and Wark committees on higher education. In any event it comes grudgingly and gracelessly in deference to the explicit threats of members of the nursing profession to take direct industrial action out of sheer frustration - a frustration born of generations of public exploitation of a nurse’s sense of dedication and commitment to the sick. The Martin Committee urged, to use its own words, the provision of higher education for all who have the desire and capacity for it. That was several years ago but it is only in recent weeks that the Government has announced its interest in following this point up in relation to nurses.
The Wark Committee, as far back as 1966, urged positive action on higher education for nurses at colleges of advanced education. At page 50 of its report it stated:
The nursing profession in the community is directly influenced by the changes in outlook in the medical and para-medical fields. Entrance standards and training techniques and the possible employment of the resources of colleges of advanced education require further examination. The aim must be to have training suitable for all phases of nursing- to train some but not all nurses to a higher level than at present.
The Wark Committee was recommending a radical reappraisal of training for the nursing profession, lt is only in recent weeks that the Government has got around to announcing somewhat vaguely, but with some degree of concreteness, some proposals in respect of this important topic, it was the anger of the nurses which forced a grudging concession from the Government in this respect.
The 1967 report of the Institute of Hospital Matrons of New South Wales and the Australian Capital Territory entitled Report of the Committee to Consider all Aspects of Nursing’ stated bluntly:
The present system of training is now producing a nurse who is restricted in outlook, resistant to change and unable to cope confidently with the scientific and technical advances in medicine and the social problems of the patients.
I stress that the Institute’s report referred not to some recently innovated system but to one which, with modification, has been with us for a century or more. We should contrast the Australian situation with the situation in Canada where the responsible authorities are working towards university preparation of 25% of their professional nurses. This may not be the best answer, but at least Canada is acting positively and at a higher qualitative level than the responsible authorities in Australia are prepared to act. Quite obviously education for nurses needs radical recasting.
Not only must nurses be tenders of the sick and dying, giving their technical skill and even more importantly those invaluable ingredients, warm understanding and compassion; they must also be capable of administering staff and wards full of patients and meeting the requirements of those patients. A matron of a large public hospital has a very big and onerous administrative responsibility, although the extent of this is not reflected in her pay level. In spite of this there seems to be little preparation in the training of nurses essentially geared for this responsibility. Thus the Institute of Hospital Matrons, in a survey of 87 schools of graduate nursing, found 10% of graduate nurses employed in senior administrative positions but only 6.8% of this number possessed postgraduate qualifications.
In short, it is a cynical cruelty and a dishonourable deception for public authorities charged with conducting the nation’s public hospitals to foster the fond belief in young women that nursing is an exalted position and then, once they are in the profession, to underpay, overwork and inadequately train them. The offence is doubly compounded by the lack of regard which these authorities display towards the need to elevate the status of the nursing profession. Already the wastage of entrants is high - indeed higher than in the United States of America or the United Kingdom. In the United Kingdom the wastage rate for student nurses over a 3-year course is between 30% and 40%. In the United States the wastage rate is about 33% for nurses in the 3-year diploma course. Robert Gillam’s analysis ‘Student Nurse Wastage in NSW’ shows a rate of attrition for 87 training schools in New South Wales for the 3 intake years up to and including 1963 as ranging between 40% and 54%. Figures given to the Leader of the Opposition (Mr Whitlam) today by the Minister for Health (Dr Forbes) show an appalling wastage rate of 45% in the Australian Capital Territory and 64% in the Northern Territory for the 3-year training period ending in 1969. These 2 areas, clearly suffering the worst attrition rate in the Commonwealth, are the responsibility of the Federal Government. No public hospital in Australia has been able to restrain attrition to 10%, as has been done in some British hospitals. Additionally, the drain - a capital loss to the community because of the value a trained nurse represents - continues after graduation.
The Royal Australian Nursing Federation has published a study of the profession covering the years 1960 to 1967. This shows that 57% of trained nurses cease nursing within 4 years of graduation and 74% within 8 years of graduation. No doubt many retire because of marriage, but little is done to establish the best way of encouraging them back into the profession - for example, by the provision of re-training programmes at Government expense or child minding centres set up close to their employment. In any event, the Government seems’ cavalierly unmoved by this phenomenally high rate of attrition at a time of developing crisis in Australia’s nursing services. Gillam’s work, which I referred to earlier, shows that the greatest source of recruits- to. nursing is the lower socio-economic groups, presumably because of the upward social mobility seemingly offered by the profession.
The development and better distribution of affluence in our society clearly indicates in the medium term that as other opportunities for this upward mobility present themselves to girls in this group there will be greater difficulties in attracting recruits from this area - that is. given the present extensive deficiencies in the appeal of the profession, this will surely be so. Consequently the long term prognosis for the profession in its supplying a public service of high standard is not good. Inevitably further overburdening of already tautly stretched womanpower resources will lead to collapse. Again, appointing full time specialist staff at public hospitals and eliminating the means test on public ward treatment, which are recommendations of the Nimmo Committee, currently being negotiated between the Commonwealth and the States will lead to a marked increase in demand for public ward treatment. This in turn will cause further stress on the already overstretched public hospital nursing services. All of this betokens a grave state in the nursing profession today. Remuneration, conditions of employment, education, training and, most importantly, professional status drastically need attention.
Who is to provide the cash, because it will cost a lot of money to rectify these failings as they have developed, been compounded and allowed to worsen over a very long time? Yet action is urgent if we are to stave off the collapse of important parts of our public hospital system. Clearly the States cannot foot the bill adequately. State finances are in a parlous condition. Applied Gorton centralism accentuates this situation. Health services lean especially heavily on State Budgets. The all States average per capita expenditure on hospitals alone was $14.14 in 1966-67. It is exceeded only by their average per capita expenditure on primary education, which amounted to SI 7.03. Each year the cost of the State health services spirals wildly. In 1966 an amount of $6.2m was written off as bad debts by the nation’s public hospitals. Victoria alone writes off 30% of its public ward fees. Wages and salaries for our public hospitals assume the greatest proportion of total maintenance costs - between 65% and 70% of total cost. These facts indicate the magnitude of the challenge if we are to handle this problem.
Clearly the States need help, and especially do they need help for their nursing services. There is an SOS loud and distinct being sent out from all States, seeking Federal Government co-operation in funding and developing health services. If the appeal is ignored not only will the nursing profession experience a rapid movement into crisis but so, too, will our public hospital system, currently serving the nation. So far the Commonwealth has been cautiously restrained in its help of the State public hospital systems. Between 1964 and 1966 the Commonwealth increased its contributions to maintenance expenditure incurred by the nation’s public hospital system by 9%. For the same period the State increase was 20% . This is public irresponsibility on the part of the Commonwealth Government but I regret that we have come to expect a reaction of this kind from this Government.
– There is in Australia a mood of concern about the future of the nursing profession. The Government shares this mood but, unlike the Opposition, cannot agree that there are simplistic and immediate answers available. However, it does agree that answers must be found to the problems of recruiting nurses, preventing wastage within their ranks and, above all providing them with a job satisfaction they deserve. The Commonwealth Government is fully prepared to play its rightful part in improving the job satisfaction of nurses and maintaining their sense of vocation but I must point out that the Commonwealth is only one of the parties in this process. The Commonwealth Government is responsible for health services, and therefore for employing nursing staff, in the Australian Capital Territory and the Northern Territory. It has an interest and a concern about the provision of health services and therefore of nurses in the States but it is not constitutionally responsible for those services. The States are, of course, the largest employers of nurses in Australia and in its attempts to assist the. nursing and health services, the Commonwealth would be irresponsible to regard the Australian Capital Territory and Northern Territory as islands to be artificially insulated from the States. By that I do not mean that the training, the conditions and the wages of nurses in the Australian Capital Territory and the Northern Territory must be exactly the same as in the States. There is no need for uniformity for the sake of uniformity but at least what happens in the Commonwealth Territories must be recognised as having an interaction on the conditions of nurses in the States.
There are several aspects of the nursing question which need to be examined. The Opposition has consistently laid great stress on the matter of wages. This is, 1 acknowledge, a very important matter but it is not the complete answer, as, indeed, the honourable member for Oxley (Mr Hayden) acknowledged. As all honourable members know, the Commonwealth Conciliation and Arbitration Commission has reviewed the salaries of nurses in the Australian Capital Territory and has given judgment’. The Government believes that wage claims are best settled by the arbitration process. In the case of Australian Capital Territory nurses, their claim was considered by a Full Bench of the Arbitration Commission. The case covered the nursing, staff qf the Canberra Community Hospital and certain other nursing staff in the Australian Capital Territory. The Canberra Hospital Board and the Minister for Health were parties in the case as employers, as were the Canberra Mothercraft Society and the Commonwealth Public Service Board in respect of other groups affected by the claims. However, I would point out that the Commonwealth as such took no part in the case. The nurses were not satisfied with the judgment handed down by the Commission and have requested that the matter be referred back for reconsideration by another Full Bench of the Commission. In the light of this it would not be appropriate for me to comment on these wage claims at this time, lt is not appropriate at this stage for me to try to review the equity of a wages case which is still under consideration by the Commission other than to say that the Government believes that the ultimate judgment by the highest arbitration tribunal in the land is one which must be respected by all parties concerned.
But apart from the matter of wages there are other matters which should be examined. Amongst the major problems facing the nursing profession today one of the most important is education. Quite recently a report prepared for me by a special Australian Capital Territory committee on nursing education has been released for public discussion. The report stresses the need to adapt and improve the educational component of nursing training and recommends an early examination of the feasibility of establishing a central nursing school in the Australian Capital Territory. I am happy to have such an examination carried out. I have also, in line with recommendations in the report, asked my Department to look into the question of an Australian Capital Territory nursing education authority and to discuss with the appropriate authorities the possible establishment of a tertiary level basic course in general nursing and post-graduate courses. I understand that reports containing similar recommendations have been released in various States throughout Australia. 1 have no doubt that this subject of nursing education is one which can be usefully discussed between the States and the Commonwealth and 1 will do my best to see that such discussions take place. To assist in this objective 1 have also recently asked the Nursing Committee of the National Health and Medical Research Council to make any recommendations it feels may be appropriate. The National Health and Medical Research Council exists to advise both the Commonwealth and the States as appropriate. According to the report prepared for me by the Australian Capital Territory Committee on Nursing Education it seems there may have to be a change in emphasis away from hospital oriented nursing training towards a more generalised nursing and public health basic education. If this is so the implications for the recruitment and status of nurses may be quite profound. These are very big questions and I would hope to see them discussed fully between the States and Commonwealth so that at least general lines of approach and commitment can be agreed upon.
In the more immediate future the financial problems inherent in attracting and retaining nurses do, of course, loom large for the States. The problem of maintaining nursing staffs and of providing working environments which adequately reward nurses is one which is related to the whole question of hospital and health services, As I have already pointed out health services, as distinct from health benefit payments, are constitutionally the firm and primary responsibility of the States. But just as in the planning of the new medical benefits system this Government used as a basis the facts of medical life as they exist in this country, so do we intend to have regard to the facts as they affect hospital life. It is with this in mind that the Commonwealth has engaged in intensive discussions with the States in recent weeks on those aspects of the Nimmo Committee report which have a bearing on the provision of hospital services. Financial problems affecting the recruitment and maintenance of nursing staff will certainly be considered in the context of these CommonwealthState discussions.
In addition even to the factors of financial rewards for nurses and of education, there are other matters which impinge on nursing. For instance, the very much wider range of job opportunities available to women nowadays must mean that many young women who only a few years ago would have chosen nursing as a career now choose other work. This widening of employment opportunities is socially to be welcomed but it must be acknowledged as a factor in the recruitment and retention of nurses. There is also the somewhat intangible factor of the motivation of those who choose the challenging career of nursing. This motivation can to some degree be influenced by wages and conditions but these can never be the only elements in forming a sense of vocation. I am inclined to agree with those observers who note as one of the more encouraging traits of the young people of today a concern about the personal satisfactions of the work they choose as well as the material rewards they may gain from that work. Governments cannot create this kind of vocational idealism by monetary rewards or by waving any magic legislative wand. The best they can do <s to see that those who do have a sense of vocation are not exploited and to try to provide for such people rewards in terms of adequate pay, generous and understanding conditions reflecting the difficulties of the work and opportunities for training and advancement. Ultimately, however, the status and rewards given to a career such as nursing must depend on the interplay of attitudes throughout the whole community.
In the Australian Capital Territory I believe the situation is that the pay and conditions available to nurses, while not strictly comparable because of different classifications and penalty loadings, are not significantly different from those in other States where they have recently been reviewed. The matters causing the dissatisfaction amongst Canberra nurses are not therefore merely local issues. No properly comparable figures of the ratio of nurses to hospital beds over the whole of Australia are available since several different methods of recording are in use in the various States. It is possible, however, to gain some idea of the nursing staff situation in the Australian Capital Territory and New South Wales by reference to figures for individual hospitals. The Australian and New Zealand Hospitals and Health Services Year Book 1969 shows that in the previous year the Canberra Community Hospital had a daily average of occupied beds of 409 and a nursing staff of S30. In the large provincial centres, Royal Newcastle Hospital had an adjusted daily average of 713 beds and 461 nurses. The Wollongong Hospital had a daily average of 327 occupied beds and 324 nurses. In Sydney the Prince Henry Hospital had a daily average of 549 occupied beds and 629 nurses. The Royal North Shore Hospital had 595 occupied beds and 688 nurses.
Since there is obviously a concern in the Australian community generally about the problems of nursing as a career the Government, while insisting that wages must remain a question for the proper tribunals, is ready to do whatever it can to ass:st in the areas where it has responsibility. But 1 want to emphasise that there are other authorities which have responsibilities, and nurses themselves and the community generally must also be prepared to examine their attitudes. The assertions made by the Opposition on this matter cannot be supported but inasmuch as this debate will help to focus the attention of the community on the current and future problems of our nurses then I believe it is worthwhile.
– We are debating today a matter of very great importance in Australia and that is the grave and deteriorating state of the nursing profession. It might be better described as the crisis in nursing throughout Australia. We are discussing this question in the context of the confrontation that is taking place throughout the length and breadth of Australia in all the hospitals and particularly in the public hospitals. The parties in this confrontation - or should I. say, the opponents - are, ranged on one side, the nurses who are in favour of reforms, who want to do something about the state of the nursing profession and who want therefore to do something about patient care in the hospitals throughout Australa and. on the other side, the forces of reaction, those who are opposed to having anything done; these are the members of the hospital departments, the hospital administrations and the entrenched establishment within the nursing profession. I submit that what any responsible government should do - this is what a Federal Labor Government or any Labor government in any State would do - is support the side which would do most to further the interests of patient care. That is the side that is presently being espoused by the nurses. We believe that we should intervene - that the government should intervene - on behalf of the nurses. This is not so much intervening in an industrial dispute but doing what happens to coincide with patient care. No government anywhere in Australia can afford to jeopardise patient care or take risks with people’s lives.
Let us have a look at what the governments throughout Australia are doing at present. I point out that all of these governments are of the same political complexion as the present Federal Government. This is the attitude of the Liberal Government in South Australia where a deputation from the Royal Australian Nursing Federation was recently received by the Minister for Health in that State. It put a number of forthright propositions before the Minister but the Minister would not concede there was any great problem. In fact, before he would even discuss anything with this deputation he insisted that the industrial officer of the Royal Australian Nursing Federation make an apology for a public statement that he had made that the Minister was not really concerned with the nursing crisis, in fact, the Minister in South Australia was more concerned with his own personal feelings. He had to have his own honour satisfied before anything would be discussed about nursing. Evidently that was more important than- the care of the patients with whose responsibility he, as Minister for Health, is charged.
We had the same attitude expressed recently by the Queensland Minister for Health on the ‘Four Corners’ television programme in which he virtually stated that the problem was being rather overstated by the nurses and that we really had to balance their claims up with the taxpayers’ interests. This is right, but we must have a really complete new look at the status of the nurse in Australia. We have the same situation in Victoria. I have an extract from the ‘Bendigo Advertiser’ of an item which the honourable member for Bendigo (Mr Kennedy) was good enough to point out to me. This publication is dated 19th May 1970 and states:
There were about 30 to 40 nurses present from the Bendigo Base Hospital–
This was at an election meeting at Bendigo - wielding banners carrying such slogans as ‘We are a profession, not cheap labour’. The Premier told the nurses that there was no problem that could not be solved with a few dollars to the people involved.
So here he is just shrugging the whole thing off. He barely acknowledges that there is a problem at all. I do not think he really is aware of the situation as it really is.
What has the Federal Government done? I point out that I had quite a bit to say, and my colleagues on this side had also quite a bit to say, during the second reading debate on the National Health Bill about the quality of medical care in Australian hospitals. But the Minister for Health passed it off as what he called a lot of soporific waffle. What was this which he described as soporific waffle? I quote from what I had to say on 6th May in my second reading speech. I said:
There is a great crisis in staffing in public hospitals throughout Australia. The situation is extremely serious in South Australia where numerous hospital beds and even an entire wing of the Royal Adelaide Hospital are out of operation because there is ‘not sufficient nursing stall to run them.
Later I said:
This is an extremely serious matter. I suggest it is something which the State governments cannot manage by themselves. The Commonwealth Government must take responsibility for this; it must take an initiative.
This is what the Minister described as soporific waffle - the shortage of nurses throughout all public hospitals in Australia. I. wonder: Can the Minister really in conscience justify his attitude? The attitude of the Australian Labor Party is that it is quite hypocritical for the Commonwealth Government to take the attitude that it is just a matter of State government responsibility. In this day and age we just cannot let the State governments manage by themselves with their own limited commitments. There must be consultation between the Commonwealth Government and the State governments. They have to get together. They have to say: ‘What are the problems of nursing in Australia’. As the Commonwealth Government and the Stale governments are charged with the responsibility for patient care throughout hospitals in Australia they have to say: ‘What are we going to do about it? Let its look at the problems and see what we can do in consultation; let us see what we can do about improving the standards of hospital care’. But at present the State governments are absolutely starved for funds.
There is no constitutional limitation on the Commonwealth in certain fields. For example, the Commonwealth has seen fit to intervene in the field of tertiary education, in certain fields of university education and in respect of providing colleges of advanced education. Well, is nursing training not education? Is it not tertiary education? Surely the Commonwealth Government could take some initiative in this field. Now I want to say a few things about what we believe ought to be done. In the first place I believe that the central issue is pay, because there is an increasing drift from nursing into other occupations.
We must do what we can to try to attract girls into this profession. In other words, we must provide sufficient pay, pay that will be comparable with that of the jobs which will be competing for these girls. So, in the first place, the salary level must be completely re-appraised. Secondly, we must do what we can to relieve the workload on nurses. This can be done by upgrading the work done by nursing aides in hospitals. Too much of the work at present undertaken by nurses could more properly be carried out by nursing aides. Obviously this means that more nursing aides are needed. The shortage of nurses could and should be partly relieved by nursing aides performing some of the tasks which have been traditionally regarded as the responsibility of nurses. This means, of course, that the pay, education and status of nursing aides must be upgraded. In this way the trainee nurse and the trained nurse can be freed to perform the more skilled and responsible duties proper to their profession.
On the matter of education we of the Opposition support the principle espoused by the Truskett Committee in New South Wales, that nursing training should no longer be the responsibility of the hospitals but that a special college should be set up charged with the training of all nurses and that that college in each State should have the status of a college of advance education. There are many other matters that we need to give our attention to. Many of these are matters that 1 believe the nursing profession itself should be looking at. J believe that there are nurses in the precincts of the House today. I would suggest that all the nursing bodies throughout Australia look at certain matters themselves. They should be seeking participation in the formation of policies within public hospitals by actually having nursing representatives on the boards of hospitals.
I want to conclude by saying that the nursing crisis in our hospitals will not be solved until our attitudes to all aspects of nursing are revised. It is not just a question of salaries, although that is important, but also of working conditions, education and professional status. We have to decide whether we want to continue to regard the nurse as a person who is regimented, working in an outdated, hierarchical system, overworked, underpaid and performing repetitive, uninteresting duties more properly those of the domestic staff, or whether we should regard her as a skilled, responsible professional, a trained specialist in supportive patient care. If we persist in the former attitude we cannot hope to attract anybody into the nursing profession. 1 cannot understand the attitude of the Commonwealth Government. As far as I can see it has completely failed in its responsi bility for qualitative patient care. I do not know why the Minister for Health even wants to be the Minister? I do not know why he has joined the Federal Ministry. He just does not seem to be interested in prosecuting a decent policy of health. I would have thought he would be absolutely bursting to make all the reforms that need to be made in hospitals throughout Australia - about medical manpower, about staffing hospitals, about qualitative nursing care. But all he seems to be interested in is preserving the status quo. I just cannot understand it. The Minister has absolutely failed and he ought to resign.
– I would like to comment on some of the things that were said by the honourable member for Kingston (Dr Gun). At one stage he said that he wondered why the Minister for Health (Dr Forbes) had accepted the portfolio of Health and why he really was holding on to it because he did not seem to be interested and did not even seem to be doing the job. I think this is answered, first of all, in the speech that the Minister made in this debate. The Minister answered the queries raised by the honourable member for Oxley (Mr Hayden) and also the queries that had been raised in other instances. Also, I think one should consider what the Minister for Health did during the preparation of the recent National Health Bill, the time that he spent in travelling around Australia and discussing the situation and matters relating to the Bill with those who were interested and ascertaining whether people agreed with the Bill. I am sure that even the people who oppose some of the provisions of that Bill accept the fact that the Minister for Health at least devoted a tremendous amount of time and effort to endeavouring to ascertain the conconsidered opinion of many of the people associated with health matters. I think that effort on the part of the Minister answers the criticism of the Minister for Health by the honourable member for Kingston.
The closing words of the Minister also provided an answer to the criticism from the Opposition. I cannot remember the exact words but the Minister expressed the view that, while he believed that this matter of public importance brought forward by the Opposition could not be supported in strength, nevertheless the discussion was of value because matters of concern and the complexities of health care could be discussed. Again this was an acceptance by the Minister of the problems and difficulties associated with nursing.
I particularly want to mention 2 points associated with this discussion on the nursing profession. I wonder whether there is any relationship between this discussion, as one of public importance, and another debate not so long ago on the Canberra Hospital, and the fact that a by-election campaign is now under way in this area. It is extremely easy for an Opposition at any stage to bring forward matters such as this and to say what it would do if it occupied the government benches. The Opposition can do this because it has absolutely no responsibility. Opposition members know that they can say things without having to worry about putting their words into effect.
I think it is accepted by everybody that there is a need to raise the general standard of nursing. Nobody would disagree with that proposition. But to do this requires a certain amount of time. The honourable member for Kingston commented on some of the nursing conditions .in hospitals’ in some States. I remind him that the Australian Labor Party was in office in my own state of New South Wales for some considerable time. The Liberal-Country Party coalition now in office in that State is finding it tremendously hard to rectify some of the mistakes and some of the bungling of a Labor Government.
The Minister for Health (Dr Forbes) answered the points put forward by the honourable member for Oxley (Mr Hayden) about other duties performed by nurses. These duties vary in different States as well as in different hospitals. Not all hospital authorities require nurses to perform exactly the same type of duty outside the direct sphere of nursing, lt is accepted that the problems of health are complex. The Commonwealth has taken steps to have discussions with the States about this matter in an endeavour not only to uplift the general standard of nursing but also to make a valuable contribution to hospital and health services throughout the country. Associated with nursing are home nursing, meals on wheels and all the other activities that are part and parcel of a nation’s health service.
It appears that running through this discussion is the suggestion that an increase in remuneration would solve the whole problem associated with nursing. Nobody expects people in the nursing profession to work without proper remuneration. During the demonstration by nurses outside Parliament House yesterday somebody said to one of the nurses: ‘I would not take on your job for $5,000 a week’, and the nurse replied: ‘Neither would I’. I think that remark underlines an important clement. Nursing is not a profession that people follow merely for the remuneration they receive, but this does not mean that this section of the community should bc exploited. The point I stress is that there should be no intervention by a particular parly or a particular government in relation to remuneration. We have always stood firmly by the idea that all such matters should be determined by arbitration. That was the reason for the appointment of the Conciliation and . Arbitration Commission. A dangerous precedent would be established if any government interfered with the Commission in respect of the fixing of rates of remuneration. Such action would have a tremendous effect on the economy as a whole. In addition, it would bring such matters into the field of politics. That would be most dangerous not only to a particular union or a particular section of the community but to the Government and our economy as a whole.
I want to make one comment on a point made by the honourable member for Kingston. The honourable member said that the Minister for Health was not interested in the conditions of work of nurses and other related matters. He said that the Minister was more interested in his own personal standing, because he had asked somebody to apologise for a statement made before being prepared to interview a certain group. If a Minister is told by somebody that he is not interested in certain conditions which apply to people, that statement is’ not ‘ a very good foundation for discussions between the Minister and the people concerned. If it is implied that Minister is not concerned with particular aspects of his portfolio but that he administers a portfolio only because he desires what one might call the honour and privileges attached to it, then I think that that Minister would be entitled to ask for an apology before entering into discussions.
I think there is justification for considering all the matters put forward by the nurses in their case but 1 oppose direct political intervention. The Government has established the Conciliation and Arbitration Commission and other groups and organisations and they are the channels through which these people should proceed in an effort to have their claims accepted.
– The Australian Labor Party believes that an absolute fundamental to the success of a national health scheme is the availability of an adequate supply of effectively trained and professionally contented nurses. Quite frankly, I was very disappointed in the statement made today by the Minister for Health (Dr Forbes). He chose at least 2 areas in which to shunt responsibility onto other people. Firstly he blamed the States for a lot of the crises in the nursing profession today. He said that nursing was the prime responsibility of the States except in the Australian Capital Territory and the Northern Territory. Secondly - and this train of thought was continued by the honourable member for Lyne (Mr Lucock) - he said that the matter of salaries in particular was one for the courts. I think I quote the Minister correctly when I say that he said that the wage claims of the nurses are best settled by the court. The honourable gentleman for Lyne elaborated on this point and said that this was not a matter over which there should be political action. Yet only a few days ago in this place, in a very political setting and in a very political sense, we finally determined to some extent the salaries of doctors throughout the community and the remuneration that they are likely to receive.
I do not think many people in the community would have blamed the Commonwealth Government if it had gone into the Conciliation and Arbitration Commission hearing of the nurses case and had pleaded the public cause. Never mind just the nurses cause. It should consider also the public interest about which we hear so much. The Commonwealth should have gone to the Commission and drawn attention to the fact that the Government’s great investment in the whole of our national health scheme could be seriously undermined because of the inadequate number of nurses in our community. I do not think I need quote statistics to illustrate the problem. The problem is well enough known. It has already been referred to. We hear of wards being closed in hospitals all over the place, not only in South Australia and Victoria, but also in my own State of New South Wales and in Queensland. Wherever one goes in the country or the city the situation is the same. This means that a whole lot of sick people are unable to gain admission to hospital. Nurses, on the other hand, already in short supply, are becoming physically exhausted because they are overworked. This in turn leads to further resignations. It all snowballs.
There has been no great increase in the intake of student nurses in the last 10 years. In Melbourne fewer nurses were entering the profession in 1969 than in 1967, 2 years earlier. Doctor J. S. Lawson, the Medical Superintendent of the Footscray and District Hospital, in an article in the ‘Medical Journal of Australia’ of 26th July 1969 entitled ‘Who will Nurse the Sick in the Seventies?’ made some very important points regarding the shortage of nurses in Australia. He indicated that the position was more likely to get worse than better, and he gave his reasons. First of all, the proportion of females in the population aged between 15 and 19, from which we are likely to recruit trainee nurses, is declining in relation to the number of males and females over 65 in the community - the people who will make the greatest demands on hospitalisation. He says in fact that, according to his projections, the ratio will deteriorate by 10% between 1969 and 1979. He went on to mention that the duties of the nurse are becoming more complex and more sophisticated. New techniques are being introduced and new technology is involved. He mentioned such things as spare parts surgery - we are just at the outset of this development and tremendous things could happen in the future - the whole range of coronary care, respiratory assistance units and the monitoring of unborn infants. These are all comparatively new fields, all making their demands on the nursing profession.
Thirdly, he mentioned the fact that national health schemes surely aspire to making it easier for more people to get the kind of medical and hospital care that they need. The introduction of means test, free public wards in hospitals must all add up to a greater number of people entering hospital, while at the same time the pool from which we can draw trainee nurses is reducing comparatively. Talking of wastage, not only of nurse trainees but also of those who have graduated as nurses, he makes the following remarks: Of the 1965- 66 intake of trainee nurses in Victoria, 34.4% were lost to the profession before they had graduated. In New South! Wales the figure was as high as 50% in certain places. The highest loss of ali is in the first year of traineeship.
This is the place above all where new educational techniques ought to be applied. 1 can only wonder where the tutors in nursing hospitals get their training. As one who has been involved in educational training, I can say that they certainly do not get it in our teachers colleges. I am not aware of them having any professional qualifications as educators. In fact this was one of the points made in a recent report by the nursing profession itself. I wonder how many of the new teaching techniques and teaching aids are available to the tutors. They do have some training in imparting their knowledge. But what of the training that is provided by the medical staff, the honorary doctors and honorary specialists? How much training have they had in the art of imparting their skill and knowledge. There seems to be implicit in this whole business the old concept that applies in technical education. If someone is well qualified and knowledgable in a particular field he is accepted as being qualified to impart his knowledge. This is a belief we have to get over, and 1 am heartened to hear that at least here in the national capital inquiries are being made and moves are afoot, to bring nursing training within the province of colleges of advanced education.
– lt is to happen at Bathurst in New South Wales.
– It is heartening that it will happen in the new college of advanced education at Bathurst. This will be a big step forward. When talking of nursing as a profession, the nurses themselves have to recognise that they will receive professional recognition, of which salaries are a part, only if they are qualified. Not only must they undertake certain responsibilities but they must have what are commonly regarded as professional qualifications. As members of a profession, they would be well advised to seek opportunities for better training not only for under-graduates but for those who have graduated. I think they ought to plug very hard for the setting up in every big hospital of a counselling service so that youngsters, when they are having difficulty in their training or in their operations within the hospitals, will have someone to turn to for help in the art of communicating with those in authority. It has been represented to me by senior nursing staff that one of the great problems in our hospitals today is this break down of communications, this sense of isolation, this sense of frustration, of not knowing where to turn. This is something that could be done quite readily along with relieving nurses of the non-professional duties that were enumerated by my colleague, the honourable member for Oxley.
In my former field of teaching these things have been happening for so long. Headmasters and teachers were filling in form’s, doing playground duties and a whole host of other clerical duties that could well have been performed by people who did not need the same professional qualifications. The number of nurses in the community is relatively scarce. This imposes even greater responsibility on us to make the best possible and the most economical use we can of those scarce and valuable nursing resources. Obviously what is needed is a greater knowledge of the facts of the situation. For that reason we ought to be conducting a national inquiry, and not a little piecemeal inquiry, as valuable as it might be, here in the Australian Capital Territory or may be in one or two States. What is needed is a thorough, systematic national inquiry into the state of nursing. Such an inquiry is coming far too late. It should have come years ago. If it had we would not have reached this crisis situation. But it is better late than never. Such an inquiry is already under way in Great Britain. I will quote the terms of reference.
Last year the British Government set up an inquiry:
To review the role of the nurse and the midwife in the hospital and the community and the education and training required for that role, so that the best use is made of available manpower to meet present needs and the needs of an integrated health service.
This sort of inquiry, to which public testimony of all kind can be made, could do nothing but a lot of good for our health services.
Mr DEPUTY SPEAKER (Mr Hallett)Order! The honourable member’s time has expired.
– We have listened this afternoon to tirades of criticism from a number of members of the Opposition, and I refer particularly to the last 2 Opposition members who have spoken. I remind honourable members that if the Australian Labor Party had considered this matter to be of such importance and had really been on the side of the nurses, as it has been claiming and stamping about this afternoon, it could have easily had this debate on a day when the Parliament was being broadcast. This in effect would have ensured that the nurses’ cause would have been promoted to a far greater extent than it has been today, but the Opposition did not do this. Yesterday afternoon I crossed the road in front of Parliament House and stood for a few minutes listening to the Leader of the Opposition (Mr Whitlam) when he was addressing a gathering of nurses. He ranted and raved in what was very much a political speech.
It is all very well for someone to stand up in this Parliament and say that nurses should be given more money, when he knows full well that this matter has been decided by the Full Court and is being raised again, and not tell the truth. The fact is that the Government is unable to interfere, even if it subscribed in every way to the claims of the nurses, because this is the whole process of our democratic system. It was so appropriate yesterday that the Leader of the Opposition, when finishing off his address, said:
Girls, there is one way you can do something about this. On 30th May-
We heard the girls say: ‘Here it comes.’. Then there was a message to vote for some Labor candidate who had recently been endorsed by that Party for the coming byelection. I might remind honourable members opposite that the previous member for the Australian Capital Territory was the late Mr Jim Fraser, a man whom we all held in great respect. If the Leader of the Opposition thinks that the nurses arc so naive as to accept his suggestion, no wonder the Australian Labor Party has lost 9 Federal elections in a row.
The honourable member for Oxley (Mr Hayden), the shadow Minister for Health, presented a fairly statistical type of address today, with figures and comparisons of our nursing system with those of other countries. The honourable member for Oxley often contributes to this House without a written note but today he had a prepared speech. I heard one of my colleagues ask: Who wrote that for you?’ but the honourable member seemed to ignore it. I am very sympathetic towards the nursing profession. When I was some years younger I spent just over 12 months in a Queensland hospital. I came to admire very much the work and dedication of the nurses. I frankly would not like the sort of life that they lead - with broken hours, commencing duty in the early hours of the morning with a first shift of 3 or 4 hours, then a few hours off in the middle of the day, and then coming back at 4 or 5 o’clock in the afternoon. Their day is broken up and they never have time to call their own. The nurses in Queensland had to return to the hospital by 12 o’clock at night. They were like Cinderellas. On a Saturday night the matron was especially generous and allowed them out until 12.15 a.m. That does not happen as frequently as it used to. I would not wish that sort of life on anybody. That is the type of conditions that nurses work under.
The honourable member for Oxley referred to the high percentage of losses of nurses to the profession once they graduate. This is quite a normal happening. After what I saw yesterday my opinion has not changed. Nurses are On the whole a bunch of very attractive women. The normal process is for girls such as these to get married. One honourable member suggested that more should be done to attract these nurses back into the profession later on in life. Perhaps more attention should be paid to bringing them back into the nursing profession once they have raised their families. The loss of nurses is a normal thing. 1 refer to the speech made by the honourable member for Kingston (Dr Gun) who suggested -that the Commonwealth Government should interfere in advancing the aims of nursing groups. The honourable member d:d not tell the House that it would be unconstitutional to interfere with State matters and rights. It is not a matter of just giving money to the States. The States get their money from the general revenue grant. State expenditure on hospital maintenance is moving in proportion to the moves in amounts of general revenue grants. Perhaps we might look at this a little closer. 1 suggest that in this area the States should be allocating an improving percentage of their resources to hospitalisation. We are fully aware that throughout Australia in recent years there has been an improvement in the area of nursing aides. If the honourable member for Kingston is honest - ] have no reason at this point of time to believe that he is not; he has been here only a little while, and as time passes we will find out - he will recognise that fact. Clerical assistance is being introduced slowly and helpers are employed to do the more menial tasks for the nurses. 1 support the improvement and trust that the process will continue at a much more rapid rate.
The honourable member for Barton (Mr Reynolds) has been the most inaccurate speaker here today. He made the claim at the beginning that this Parliament only some days ago set the salaries of the doctors by adopting the new health scheme, lt is a pity that the honourable member did not understand the Bil that was introduced. The doctors’ salaries are determined by the patients who choose to attend their surgeries. Furthermore, the Government has only agreed with the representatives of the profession as to what is the most common fee charged. Contrary to the claims of the honourable member for Barton, the Government has not set these figures. The honourable member said that the Minister for Health (Dr Forbes) passed the buck to the Slates, yet he did not say what the Commonwealth should be doing. At least the honourable member for Kingston had the audacity to say that the Government should act on an unconstitutional basis, but the honourable member for Barton made not one suggestion.
We on the Government side recognise that the standards of nursing need lifting. Looking back to recent years we recall that the basic training for a nurse took 4 years. Throughout Australia today it takes 3 years, except in some hospitals in South Australia where it can range up to 4 years. In Toronto recently I visited a couple of lasses who had left Australia as fully qualified nurses. In Canada their qualifications were not recognised. I subscribe fully to the need for improvement in this area. I do not believe that the wording suggested by the Opposition - of the grave and deteriorating state - is fully justified. Investigations have been carried out and reports made over the last 3 or 4 years which have been submitted to the various State governments. These underline some of the failings in our nursing system. I hope that the Minister for Health, while he cannot directly interfere as some of the Opposition members would suggest because it would be unconstitutional, will work in closely with the State Health Ministers to try to bring about an agreement on what is an acceptable standard of nursing training throughout Australia.
As I said, the Government is most definitely not opposed to the aspirations and hopes of the nurses. In a changing society where the standard of education is rising, it is only right that these young lasses should be assisted in every way possible to upgrade their standard so that they can take their place in the world in a very worthy profession.
Mr DEPUTY SPEAKER (Mr Hallett)Order! The honourable member’s time has expired.
– The grave and deteriorating state of the nursing profession in Australia, to which the honourable member for Oxley (Mr Hayden) has directed attention, is obviously a matter of great public importance. I strongly support his action in bringing it before the House, because the more this matter is debated and the better it is understood the greater prospect there is that the dissatisfactions which exist can be alleviated and removed. My particular concern is with the Canberra Hospital, of which 1 have been a board member for 23 years and chairman for a good part of that time - and am chairman now. The Canberra Hospital serves not only the people of Canberra but is a specialist base hospital for a considerable surrounding area of New South Wales.
Because I am concerned that girls in this area might be deterred from applying to become student nurses in our hospital, I want immediately to correct 1 statement at least which might have misled them very much. A girl joining, at age 17, the clerical service of the Commonwealth Public Service would have to be employed for 8 years as a clerk to reach the salary that a girl commencing nursing training in Canberra Hospital at age 17 would reach in 5 years.
I believe - and all of us who have been in hospital know - that nurses render most devoted and dedicated service to their patients. They deserve our thanks and admiration. But so, I believe, do clerks in the Public Service and so, I believe, do those who clean Commonwealth public offices. I mention those 2 categories because I think that it is sad indeed that some of the misguided advocates of the claims of nurses have chosen to make derogatory comparisons between the nursing profession and these other very useful and important occupations.
My second point is that, having heard this afternoon the woeful conditions that exist in public hospitals in the States, 1 must say that the Commonwealth, in relation to Canberra Hospital, is at least comparatively a very good employer, which may be only partly duc to the fact that I am Chairman of the Management Board of that Hospital. I direct attention to the fact that the nurses’ case which has been just dealt with and the decision which has aroused such protests and such rejection from the nursing staff of Canberra Hospital was decided by the Full Bench of the Commonwealth Conciliation and Arbitration Commission at the request of the nurses themselves. Ready agreement was given to this request by the Canberra Hospital Management Board. However much dissatisfaction there may be with the result of the adjudication, it was an adjudication chosen by the nurses. I know of no other way now in which their case can be re-examined or their wishes met except by the matter again coming before that Commission.
I particularly direct attention to some of the conditions which exist in Canberra Hospital and which, I hope, may serve as some sort of model for public hospitals in the States. The Minister for Health (Dr Forbes) may be encouraged to assist the States to reach these standards which have been reached in nurses’ conditions in Canberra Hospital. In the first place, I deal with annual leave. Those required to work on Sundays at Canberra Hospital receive 6 weeks annual leave. All other nurses receive 5 weeks annual leave. Nurses working in Canberra Hospital receive time and a half for all work on Saturday and double time for work on Sunday. This provision is additional to what has been provided in the States because, for example, in Victoria no provision is made for penalty rates for weekend work at all and in New South Wales the provision in this respect is on a much lesser scale. Surely what can be done in Canberra can be done throughout Australia.
In addition, nurses at Canberra Hospital receive a loading of 10% for evening duty and 25% for night duty, the latter being employment between 6 p.m. and 8 a.m. Full board is provided in the nurses’ home at Canberra Hospital for first and second year student nurses for $2.58 a week, for third year nurses for $3.87 a week and for other members of the nursing staff for $7.11 a week. These conditions also may well be taken as a model to which the public hospitals in the States could subscribe. Nearly all student nurses in Canberra live in. Many of the more senior staff live out.
There are several other matters in which Canberra Hospital is in advance of some other public hospitals in the conditions provided for nursing staff. I am not saying for a moment that the path to further improvements in conditions and salaries of nursing staff at Canberra Hospital is closed or ended. I wish to see further improvements made. But, as an example of what I mean, I point out that in Canberra Hospital nurses are relieved completely of the task of serving meals to patients. I have seen on recent public affairs programmes that this obligation still rests with nurses in the various States.
The honourable member for Kingston (Dr Gun) referred to the need for nursing aides. We employ 137 nursing aides in Canberra Hospital. The introduction of diet maids for the provision of meals was begun 14 years ago and has been extended progressively ever since, so that this obligation no longer rests on the nursing staff. Also. Canberra Hospital provides for student nurses the equivalent of 1 day of working time each week for study purposes. In our hospital nurses are not required to do their study after they have completed their working day.
– That is an important provision.
– Yes. We give them the equivalent of I working day a week purely for study purposes. When their examinations approach we give our nurses further periods completely off duty to enable them to prepare themselves for their examinations. 1 know of no other award anywhere in Australia that contains such a provision, [t is a very important and wise provision. I hope that this debate will lead to this and other improvements that exist already in Canberra being extended throughout the rest of Australia. The total nursing staff of Canberra Hospital, including nursing aides, is about 700. I think that today it is 697. The daily average of occupied beds is 560 at present. These figures show a high ratio of nurses to patients compared with the position elsewhere.
Finally, in the brief time that I have left to me, 1 wish to mention just one matter - broken shifts. These are the bane of nurses in very many hospitals. Broken shifts do not exist in Canberra in the sense that every nurse in Canberra Hospital, with the sole exception until last week of the intensive care ward, works a a straight shift of 8 hours. The only exception, as I have said, until last week, was the intensive care ward. I imagine that many nurses throughout Australia may envy this provision. The only other thing that I should say - and I say it in complete fairness - is that none of these improvements which have been made in Canberra Hospital through my own work as Chair man of the Management Board and through the work of my colleagues on the Canberra Hospital Management Board could have been put into effect without the approval of the Minister for Health, who is at the table, and f thank him for what he has done.
- Mr Deputy Speaker-
Motion (by Dr Forbes) agreed to:
That (he business of (he day be called on.
The following Bills were returned from the Senate:
Appropriation Bill (No. 3) 1969-70.
Supply Bill (No. 1) 1970-71.
Appropriation Bill (No. 4) 1969-70.
Supply Bill (No. 2) 1970-71.
Debate resumed from 19 May (vide page 2374), on motion by Mr McEwen:
That the Bill be now read a second time.
Mr WHITTORN (Balaclava) [4.8J- Mr Deputy Speaker, yesterday when we were debating the decision made by the Government recently to establish an Australian Industry Development Corporation I said - and 1 should reiterate perhaps a little - that the Minister for Trade and Industry (Mr McEwen) in his second reading speech mentioned that some 15 Australian companies each year were being taken over by overseas interests. The implication in that statement is that Australian companies may be taking over other Australian companies also. But this was not mentioned.
So, last Saturday, I made it my best endeavour to obtain the information from at least 5 stock exchanges throughout Australia. I mentioned that, during the part of my speech which I delivered yesterday. I proved to my own satisfaction that what the Minister has said was not correct. In other words, in the last 7 years 50 Australian companies have been taken over by overseas interest. That is an average of 7 companies a year. But in the same 7 years 217 Australian companies have either merged with or been taken over by Australian companies. In other words, I believe there has not been the research and economic analysis that this problem justifies. The decision is a complex one and the Parliament does not have the information to justify the decision.
In fact, the Prime Minister (Mr Gorton) yesterday when he was welcoming the Prime Minister of Canada made some very timely remarks, I thought, about the fact that Canada itself was giving consideration to setting up its own Canadian Development Corporation. How right the Prime Minister is. This is so true. But the fact remains that a decision was made in 1965 by the Canadian Government to set up what it calls a report of the task force on the structure of Canadian industry. This was headed in 1965 by a Mr Watkins, and the report is called the Watkins report. This report was presented to the Parliament in 1968. In other words it had taken 3 years for the Canadians to complete research and economic analysis. The report was then presented to the Canadian Parliament in 1968. Even in 1970 the information contained in the report indicates that the Canadian Parliament is unwilling to introduce a Canadian Industry Development Corporation. This is the type of research and analysis, as I mentioned yesterday, that the Australian Government should have carried out and that we in the Parliament should be able to read about. I can read the information formulated by the Canadians but I cannot read the information formulated by the Australians. So I repeat what I said yesterday, that I cannot see the justification at this stage for setting up this Corporation.
I believe my comments are supported by the remarks of the Minister for Trade and Industry in his second reading speech. In the first paragraph of his speech he said:
Australia has made dramatic progress in industrial development in the past decade.
This in itself would indicate to me that there was very little need for intrusion by a government into the affairs of private enterprise. There may be factors associated with the establishment of companies that the Government should have a look at. There may be factors that private enterprise should consider before the Government intrudes. These factors could easily be ascertained and established by the Government on the one hand and by private enterprise on the other, sitting around the table and making the points, so far as the Government is concerned. I said yesterday, and I repeat today, that this subject of the establishment of an Australian Industry Development Corporation apparently was discussed by Cabinet in 1967. In that year Cabinet rejected the need for a government controlled corporation of this type. In fact, the report sent to the Australian Resources Development Bank, which is a bank comprising a consortium of all banks in Australia, including the Government controlled Commonwealth Bank, was to the effect that Consolidated Revenue - that is the taxpayers funds - could not be used for the purpose of instituting private enterprise ventures. At that time - 3 years ago - it was the intention of the Government to keep out of this sort of venture. I believe it is unjust in saying that changes made since 1967 justify the intrusion by governments into these affairs.
The first paragraph of the Minister’s second reading speech augments what I am trying to say. We were told in his second reading speech that the loans negotiated by the Corporation will not be guaranteed by the Commonwealth. I ask honourable members to appreciate the fact that this Corporation will be established initially with funds of $25m, with the possibility of its funds being increased to $100m. This amount of $25m - or SI 00m, whichever you like - will come from taxpayers money, from Consolidated Revenue. I fail to see how a government can establish a corporation of this type unless the corporation is responsible to the Government and the Government indemnifies any losses made by it. In other words, I see no safeguards in the Bill. In his second reading speech the Minister mentioned no safeguards to ensure that losses made by this Corporation would not be offset from Consolidated Revenue, that is, from taxpayers money. The Bill provides that the Corporation shall report to the Minister and after a certain time the Minister shall table the report in the Parliament. I feel that the Corporation must be responsible to the Parliament by reason of these 2 facts: Firstly, that money comes from Consolidated Revenue, and, secondly, that the Corporation shall report to the Parliament as well as to the Minister.
There is not a private enterprise organisation in Australia today that would establish itself with SI 00m unless and until it had done a tremendous amount of research into and analysis of the market possibilities of its operations. But we find ourselves setting up a corporation with capital funds of SI 00m without this research and without this analysis. 1 believe that the Corporation, when it goes overseas to raise funds, will be asked: ‘What guarantee is there of indemnity against losses?’ The answer of the officers of the Corporation automatically will be: ‘This is a government instrumentality, set up by the Government, backed by the Government from Consolidated Revenue. The Corporation reports to the Parliament itself. Therefore obviously any losses will be guaranteed by the Australian Government.’ Any losses by the Corporation which were not guaranteed by the Australian Government would put Australia’s overseas financial standing in a ruinous situation. Therefore it is inevitable that the Corporation’s affairs must be guaranteed by the Commonwealth Government.
We were told originally that the internal borrowings of the Corporation would be kept to a minimum. However, the Bill does not establish the fact that internal borrowings - that is, Australian borrowings - will be kept to a minimum. It says in clause 7(4):
The words ‘shall seek’ and ‘principally’ make me suspicious of the real intentions of the Corporation in relation to borrowings.
– The Minister for Shipping and Transport (Mr Sinclair) says that the internal borrowings will be controlled by the Reserve Bank. This is true. It is spelt out in the Bill. But when interest rates are so high overseas, as they are today - 12% is the normal amount to be paid for Euro dollars - the Corporation will wither on the vine unless some special dispensation is given to it to borrow in Australia.
15361/70- R.- (901
We heard the honourable member for Cunningham (Mr Connor) say yesterday that Qantas Airways Ltd was in trouble when endeavouring to borrow overseas, because it would have to pay the current rate of interest, which is 12%. We have heard criticism of the private enterise consortium because it has not borrowed overseas to a very great extent since 1968 until recently. I say that it has been very prudent in its activities, because the interest rates overseas since 1968 have been so high. This Corporation will wither on the vine unless and until some change is made regarding its borrowing within Australia. The word ‘principally’, of course, means that at least 50.5% or 51% should be borrowed overseas. That means that 49% could be borrowed in Australia and thus it will be competitive with the Australian Resources Development Bank and other lending institutions and boost up the interest rates in Australia, and people in Australia may have to pay higher interest rates because of the activities of this Corporation. I said yesterday that I could not support the initiation of this facility and I repeat that today.
– The introduction of this Bill into the Parliament represents a major advance in the thinking of the Government. It is a great pity that the Government was not prepared to initiate this type of legislation a considerable number of years ago when it could have acted to enable far greater participation by Australians in the industrial development of this nation. At this late stage, as was pointed out by the honourable member for Balaclava (Mr Whittorn), there will be great difficulty in raising loans overseas at reasonable interest rates to promote the operations of this Corporation. But even at this late stage the Opposition welcomes the introduction of this legislation. As was pointed out by the Minister for Trade and Industry (Mr McEwen) and as has been pointed out on many occasions both within and outside this House, it is a great pity that the Government did not arrive many years ago at the necessary state of mind relative to its economic judgment to bring in this legislation so that some of the basic components of our national industries could have been saved from take-overs by overseas companies.
The prime example of Government neglect of the need to maintain Australian interests in industry is the Bell Bay aluminium undertaking which was set up as a joint venture by the Government of Tasmania and the Commonwealth of Australia at a time almost immediately prior to the great expansion in the Australian alumina industry. The Commonwealth chose to sell out its share of the venture to American companies with the claim that it was not able to provide the necessary capital for the expansion of this industry in order to allow it to develop to its fullest extent. This claim was completely hollow. The facts of the matter are that the Commonwealth Government did not wish to maintain its interest in that industry and was not prepared at that point of time to take the necessary steps to protect for Australia what is and what then was an important component of our national industries. It must be conceded to be a major victory for the Minister for Trade and Industry that he has been able to overcome the financial conservatism of many honourable members, especially of the Liberal Party, in order to bring this Bill before the Parliament. I think it is more a mark of recognition of his important bargaining power within the coalition than it is a mark of the Liberal Party’s acceptance of the principles involved.
This Bill, given the necessary support, will operate to the advantage - we hope, anyhow, - of Australian participation in Australia’s future development. As 1 said before, it is a pit)’ that such a corporation could not have been set up a long time ago. The honourable member for Balaclava indicated that he did not believe that basic statistical data and research material on which such a corporation could be set up were available. He did not believe that the Commonwealth had undertaken the degree of research which was required. When this Government came into office some 20 years ago there was a section of the Department of Labour and National Service which was responsible for inquiries into secondary industry- That section produced what is known as the GAP document. One of the first initiatives taken by the Government under the leadership of Sir Robert Menzies was to wind up that section because the Government did not want the embarrassment of statistical information being made available to the Australian people. We now find people of the same conservative economic point of view complaining that the information that this body and other bodies which then existed could have provided is no longer available. It would seem they are hoist with their own petard.
The shortage of Australian investment capital is not as great as we would be led to believe. The facts are that certain research organisations have indicated that about 90% of all capital investment in Australia comes from Australian sources. The other 10%, unfortunately for Australia, has managed to take over most of the growth industries within our economy, and therefore has a position in our economy far in advance of the actual investments which have been made. This is a situation which could not be allowed to continue without some action being taken. In his second reading speech the Minister for Trade and Industry said that one of the prime purposes for the setting up of this Corporation is that with the growth of our gross national product the demand for consumer goods is such that our import requirements and the requirements to service overseas investment capital are growing but the burden of our export income is becoming so great that we will not be able to guarantee to meet these growth requirements in the future. I would like to deal briefly with one area in which our export income has been suddenly cut off largely because, I believe, of inaction by the Commonwealth Government in a field in which it has power to act. 1 speak of the ban recently placed on mutton exports from Australia to the United States of America and the continuing pressure against our other meat exports. This is an area in which considerable export income is available to Australia and it is income which has been jeopardised largely because of the inadequacy of the inspection facilities provided by the Commonwealth in our meat works. Meat inspectors are Commonwealth employees and as such are employed under conditions laid down by the Public Service Arbitrator and it is therefore within the power of the Commonwealth to act.
There has been much criticism of this Bill because it will enable the Government to act in a limited field to encourage new industries. The point I want to make is that it will not be sufficient to pass a Bill of this nature unless we are also prepared to act to protect those export markets which we already have by providing adequate facilities to ensure that- the quality of our exports is up to the standards demanded by the receiving countries. The people who are of vital importance in the industry which I have just mentioned are the meat inspectors. There are not enough of them. The Minister indicated in this House the other day that he was aware of this problem. I wonder whether he is aware, and if he is aware why he does not act to correct the situation whereby after 12 months training a meat inspector receives $65 a week and after 7 years experience his salary is $82 a week. He is unable to obtain annual leave because there are not enough meat inspectors available for him to be replaced while on leave. He is not paid overtime under the same conditions as other people in the industry; He is not given time to clean up after his work as are others, and in addition he is given no time for a meal break. These are only basic things, but they are things which the Commonwealth Government, as the employer of these people, should be able to understand and correct. Apparently it is not prepared to correct them. Because of this there is a threat to an industry which is earning considerable export income for Australia.
To some degree over a period of time, the Bill will relieve some of the problems which the Minister set out in his second reading speech - problems which are being created by the need for Australia to earn export income in order to service capital investment which has occurred in Australia over a number of years. This is a small measure, but it represents an important step forward in our economic thinking. There are a number of reasons why Australia needs not only a corporation of this nature but also a government with an imaginative approach to our economic problems. I think we should compare what is proposed in this organisation with what the Italian Government has done in promoting and assisting industrial development in Italy. The IRA is a major corporation which was set up by the Italian Government to promote secondary industries and to service industries in Italy. It is one of the most important organisations in the world industrially, lt operates in almost all fields of commerce and ensures that Italy has active participation in its own industries, lt acts also to ensure that employment is provided in areas where people are seeking work. At present the organisation operates in the fields of television and radio, motorways, airlines, shipping lines, telephone services, docks, engineering, manufacturing and steel works. It is one of the biggest corporations in the world. It was sufficiently large for the Italian Government to utilise its services to purchase the reserves of natural gas that were discovered in Italy and to ensure that those reserves were utilised for the benefit ot the nation. There is no indication in the Bill, or in anything that the Minister has said, that the Australian Government at this point of time is prepared to recognise the need for this type of Australian participation.
I have considerable doubts whether the philosophy of the major party on the Government side has changed at all in relation to this type of legislation. I believe that the existing political situation has enabled this Bill to be brought into the House. I trust that the Board of Directors of the Corporation will be sufficiently independent of mind to avoid the political restrictions and constrictions which the conservative Treasury will endeavour to apply in order to prevent the Corporation from having any major influence within the economy. The Bill has the support of the Opposition because the Opposition believes that a corporation of this nature is absolutely necessary in our economic conditions as they exist now and as they have existed for many years. We are only sorry that no real effort has been made in other areas to examine exactly how else and to what extent we can participate in capital investment in Australian industry and in the furtherance of Australian industrial growth.
We tend, as a Parliament, to ignore the problems which are being created by some of the social costs associated with the operations of our national economy. It has been stated by Professor Wheelwright in a paper - and I think others have said the same - that each migrant to Australia has a social cost of about $4,000. This may or may not be true but it is one of the things that this Parliament should consider. It would not be wrong, and it would not indicate any lack of support for our immigration problem, if a committee of the standing of the Vernon Committee were set up to inquire into the economic value and the economic cost of immigration to Australia and to make recommendations on any alterations that are necessary, for economic reasons, to our immigration policy. If, as has been claimed by the professor, we are spending about $4,000 on each migrant in social costs - not actual dollars - then it would not be a bad idea if we had statistical and economic data provided to show us the absolute value of immigration. I believe we need migrants at the rate we are getting them, and at the rate we can get them, but it may well be that in accepting the need for migrants we are overlooking some real economic facts. It would not do any harm for this Parliament to try to find out the true situation.
The final matter to which I refer is the effect that overseas take-overs of major Australian industries has on our work force. It is true to say - I do not think that even the boards of overseas companies would deny it - that it is more difficult to get harmonious industrial relations in an organisation which is totally owned outside Australia and where, in the main, before even minor industrial negotiations can take place the Australian officers of that company have to contact an overseas board to get approval to negotiate. The overseas board, incidentally, may have little or no knowledge of prevailing conditions in Australia. lt may have little or no real understanding of the on the spot problems that confront employers and employees. These overseas boards are making decisions and are trying to engage in industrial negotiations which just cannot be done by remote control. Across the table is still the best way to negotiate matters between employers and employees. 1 believe that Australian participation in industry, with Australian directorates having the responsibility and power to negotiate with their employees, is one of the major aims which any government should be seeking, lt is an aim which would have real effect on improving industrial relations.
I support the Bill. 1 hope that the Government appoints to the Board of Directors of the Corporation people who are prepared to undertake the aims which were set out by the Minister for Trade and Industry and which the Opposition hopes will be fulfilled. I sincerely trust that the conservative elements on the Government side who would seek to destroy this Bill by restrictions are not able to have their way.
– Clause 6 of the Australian Industry Development Bill, which we are now considering, states: (1.) The functions of the Corporation are lo assist in ;he provision of financial resources required by Australian companies engaging or proposing to engage in industries in Australia concerned with the manufacture, processing or treatment of goods, or with the recover)’ of minerals, for the purpose of facilitating and encouraging the establishment, development and advancement of those industries.
It is said that there are other avenues for obtaining this type of finance but, despite the fact that those avenues may be available and despite the credit that has been given to them, it is quite obvious that more must be done to retain Australian equity in Australian companies. The other avenues are still there. Notwithstanding endeavours to discount the arguments advanced in his second reading speech by the Minister for Trade and Industry (Mr McEwen) lo prove the need for the Australian Industry Development Corporation, there can be no doubt that there is a need for it if we are to retain such equity in Australian industries as is desirable and in the best interests of this country.
Australia’s development in the last decade has been marked by rapid industrial growth. The annual value of production has doubled over the last decade and the value of exports of manufactured goods has increased from 11% to 17% of the total in the same period. Vast mineral deposits have been discovered. We have reserves of iron ore sufficient to supply the world’s needs for perhaps centuries to come. We have giant bauxite reserves and vast reserves of coal, phosphate and nickel. The discovery of these reserves is the work of men of vision. It is a remarkable record of achievement by private enterprise both in Australia and overseas. Al] this has been helped by the initiative of the Government in devising effective policies and providing facilities for development: encouraging confidence in the development of Australia. Not enough credit is given to the Government in this regard. An entirely new era in Australian industrial development is dawning, founded on a sound industrial base that has been already achieved. The opportunity is now with us to develop industries to world stature and competitiveness by achieving higher levels of processing of Australian raw materials by associated industries and the full development of Australian inventiveness.
Manufacturing industries can be developed, which are geared from the outset to the export trade. This will overcome the disadvantages of the small home market. Operating at the lower cost because of low cost Australian raw materials, a larger scale of production is possible, making exports possible. This is what we are looking for. We want companies which are large enough to compete with their exports on overseas markets, at the same time supplying the Australian market. We want to see these companies selling to the world Australian invented, Australian designed and Australian manufactured products. All this is possible and will be achieved in the not too distant future. The implications of development are wide ranging and of great importance. The general level of costs in industry will be lower as a result of this type of operation. The new giants will in themselves be important new outlets for Australian manufactures and service industries. They will provide a new impetus for Australia’s urban development and, naturally, new wealth always means that a higher standard of living can be provided in this country.
Large scale industrial development needs large scale finance. This is elementary. The development of mineral resources in this country has already cost hundreds of millions of dollars. The Hamersley group, for example, has spent more than $300m in exploring for minerals and will spend perhaps a further $150m. The Mount Newman group has already spent about $200m and will spend a further $70m. Finance has had to be found by private enterprise on a scale which hitherto in this country has been the preserve of governments. The further development of resources for processing, refining and manufacture will require far greater injections of capital than we have witnessed to date. It has been clearly demonstrated that if we are to exploit to the full these new opportunities capital must be forthcoming and effective Australian ownership and control must be achieved. But there is a problem here because capital is very scarce in Australia, despite the remarks of the honourable member for Corio (Mr Scholes). Although the Australian capital market is growing steadily, there is not enough capital in this country for the type of development we envisage. Also, industrial development could not be permitted to absorb all of the capital available in this country because if this happened other vital sectors would suffer.
Few Australian industries are large enough to obtain the vast capital resources necessary for expansion to a world scale of production. This must be conceded generally in examining this aspect. This is particularly so when a new or enlarged project will not be income generating for some years, as is often the case with large scale projects. Inevitably an Australian company wishing to develop must look for an overseas partner. This has been the practice in the past. Such a partner will almost always be a large international company. If that international company or any other company is able to provide finance for the Australian company it can be provided only at the expense of lowering Australian equity in the Australian company. Yet all too frequently these overseas companies providing this finance are themselves borrowing on the international capital market. They are well known to the international investor. They can borrow on their general credit reputation. They can use a variety of capital raising techniques to enhance the attractiveness of their borrowings. This is because of their large scale efforts in this direction.
For an Australian company expansion too often means a loss of independence; a loss of Australian control. The Australian company has the very undesirable choice of accepting this or deciding not to expand. This is a situation which we should not allow if it is possible to avoid it. It is in this direction that the AIDC can play a very worthwhile role because when a project is soundly based and when existing financial institutions have got together all the finance they can provide for it, the Corporation will bring to bear its fund raising activity to help the project on its way. The Corporation will seek the needed resources on overseas markets. It has been claimed that overseas funds would not be available to the Corporation or, if they were available, they would be at rates which would be too costly for Australian ventures. But capital is available overseas. Much of Australia’s mineral development is being financed by these very borrowings on the international capital market.
I have already emphasised the extent of such financing by giving one or two instances. To show the extent of overseas capital available let me say that total borrowing on the Euro bond market alone in 1969 amounted to no less than 52,435m. To put the matter in perspective, that sum would be enough to finance 3 Snowy Mountains schemes - schemes which by recent Australian standards were gigantic. It is true that Euro bond rales have been higher than rates in Australia, but as the honourable member for Lilley (Mr Kevin Cairns) himself pointed out, the gap has narrowed significantly. There is no arbitrary upper limit to the interest costs which sound industrial ventures can bear, lt is true that borrowings would be more attractive if interest rates were lower, but it has been proved that sound industrial ventures can carry high interest rates and still be successful; still promote the development of Australia as we want to see it promoted. The multi-national corporations borrowing substantial long term funds at these higher rates show that there is a potential for the profitable employment of higher cost funds raised by the AIDC on behalf of Australian owned ventures even if they have to bear the higher interest rates.
In addition the B il provides that the Australian Industry Development Corporation will assist only when it is requested to do so by the company to be assisted and I think this is a point that should be noted. So there are no fears that the Corporation will interfere where it is not wanted. There is ample scope for the Corporation to contribute in a positive and non-restrictive way to the sound and full development, of Australian-owned industry. In the course of this debate there has been some question about the extent of takeover of Australian companies by overseas companies. 1 would like to quote one or two factors that will support this argument, although I do not think that the arguments put up by the Minister in that respect have even been shaken by the arguments used against it.
I will not weary the House with a long quotation but I will quote the first paragraph from a relevant article headed: S 1 00m Goes Overseas’. It appeared in the Melbourne ‘Age’ on 7th December 1968. The article says:
Overseas takeovers of Australian business are running at an unprecedented level. Since January, foreign controlled corporations have brought more than $wOrn worth of listed local companies under their control.
While 1 will not go on to quote the rest of the article, I would like to draw attention to the fact that on that same page there is an article headed ‘Biggest Foreign Takeovers’ which lists some 19 companies that were taken over in 1968. In fairness, some of those companies have been mentioned in this debate and have been queried to some extent. There is a list of 19 companies which I could quote but I do not think I need do so in order to support my argument. The list is there for anyone to see. I wish now to refer to an article published in the same newspaper on 14th March 1969. The article is headed ‘Uniroyal takes S.A. Rubber’. It says:
The giant Uniroyal rubber group of the US has bought a controlling interest in the South Australian-based tyre and rubber goods maker, SA Rubber Holdings Ltd.
Further on the article says:
The acquisition makes South Australia Rubber a subsidiary of Uniroyal and gives American manufacturers a stronger grip than ever over the Australian tyre and rubber industry. Only two of the major manufacturers are now controlled by Australian interests.
These are 2 examples and if honourable members want more there are plenty available. There is no doubt about the need for some action to be taken to maintain Australian equity in Australian companies. This Bill bringing the Australian Industry Development Corporation into being is certainly a very effective way in which to do it.
I want to turn to one other aspect of this Bill which has arisen during the course of debate. It has been said that the Australian Industry Development Corporation has possibilities for use as an instrument of Socialism. 1 want to point out that if there was a change of government and the new government wanted to use some measure as an instrument of Socialism it would not be necessary for it to be on the statute book; the new government would introduce it. It might be a better one if the new government tried to twist it a little bit rather than establish one of its own. I have no doubt that it would go the whole hog and introduce Socialism over the whole field. The existence of this Bill would not make any difference if there was a change of government. However, there are adequate safeguards in the Bill to prevent it from being used as an instrument of Socialism. Although the Corporation may acquire equity in a company, under clause 8 (3) (c) of the Bill the Corporation is directed to ‘endeavour, so far as practicable, to avoid becoming or remaining in a position where it is able to control or manage the affairs of a company to which it provides assistance’. That section specifically directs the Corporation to do that. Under clause 8 (4.) the Corporation is directed to dispose of its equity in a company where the retention of the shares is not necessary for the proper performance of its functions. The Corporation is able only to assist the company to carry on and to ensure that Australian equity is retained. Clause 9 of the Bill states:
In the exercise of its powers the Corporation is not subject to direction by or on behalf of the Commonwealth.
So I think we can fairly claim that this Bill is not a Socialist Bill and that avenues by which socialistic methods might be used in its implementation have been covered by provisions of the Bill. Let me repeat that, although this legislation could be changed, just as easily a new Socialist measure could be introduced.
– What do you call socialistic measures?
– I would not try to explain it to you because I have not time today. I conclude by saying that the potential for industrial development on a world scale obviously exists.
Mr DEPUTY SPEAKER (Mr Jarman)The honourable member for Sturt will restrain himself.
– He is being very provocative.
– He is the ever open mouthpiece of the new look Australian Labor Party. There is potential for industrial development on world scale in Australia. There is a need to supplement the scarce Australian capital and that need will continue. The capital markets of the world have shown their willingness to provide funds for Australian development. The strongest assurances have been forthcoming in Australia and overseas from eminent and informed financial and industrial leaders that a corporation structured along the lines proposed in this Bill, working as no other Australian institution is geared to do, would be an acceptable partner with private enterprise for Australian industrial development with Australian ownership. Mr Deputy Speaker, I support the Bill.
– It is a little saddening and rather pathetic to hear honourable members of the Australian Country Party, like the honourable member for Maranoa (Mr Corbett) who has just resumed his seat, support everything that the Leader of the Country Party (Mr McEwen) says. This is a Socialist measure. I wonder if their hearts are in it when they support this Bill as my heart is certainly in it. It is extraordinary that they are always rather blindly supporting the Leader of the Country Party. 1 sometimes wonder whether some of the economic policies of the Country Party are really in the best interests of the people whom the Party claims to represent. But that is a matter for their consciences and is not my concern. It is the intention of the Opposition to support this Bill. In doing so I would like to ask a few questions, some of them of a rather fundamental nature. We are discussing the Australian Industry Development Corporation Bill. I think the first thing we should ask is: Are we in favour of industrial development? This is probably a silly question to a lot of people but I think it is fundamental. I think, having answered that, that we should ask ourselves if it is a desirable thing that we have industrial development in Australia; is it necessary to import foreign capital in order to do so; and if it is necessary to import foreign capital does this Bill meet the requirements?
The first question is: ls industrial development a good thing? Of course, it is assumed by most politicians in Australia that industrial development is the be all and end all of our political life. State elections are fought, won and lost we think, on who can get the greatest industrial development for their State. All sides argue that the bigger our cities become, the more factories we can get, the more bridges built, the more the suburbs invade the countryside, the better it is for everybody. We get more goods produced, more goods consumed, and what could be better than that? The apostles of industrial development unlimited argue that industrial development accommodates a rising population, both migrant and Australian born. They say it brings economies of scale so that our industries can expand into the export market. They say it stimulates the building industry and supports service industries so that we get a rise in the gross national product and if we get a rise in the gross national product that is al) we need. I think that all these assertions are only partly true. It is necessary that we should also look at the other side of the ledger.
I make no apologies for mentioning these matters in reference to a Bill dealing with industrial development. In the first place, a matter which has received a great deal of attention in recent times is the effect that industrial development is having on the environment. A tremendous amount of publicity and attention has been directed towards how industrial development causes pollution of air, water and soil. I hope in this case that Government opinion will not lag very far behind public opinion and that when matters of industrial development are considered concurrent attention will be given to the effects it will have on the environment. I believe a pressure group in the United States of America called Zero Economic Growth Incorporated has been formed and that this group does not want anything done to increase industrial development because it fears that the effects on the environment might completely outweigh any economic advantages that might accrue. I am not saying that we should go that far but I think we should take a balanced approach. I am in favour of economic growth, but let us keep our perspectives in this.
Look at the bauxite development at Weipa in northern Queensland. I think that both the Queensland Government and the Australian Government would regard this as a great development in the field of extractive industries. However, I wonder whether the Aboriginals living at Weipa on Cape York Peninsula would agree with this. What has happened is that the Aboriginals had 91% of the land of their native reserve excised and handed over to the mining company. What was paid in return for this land was a lump sum of $300,000 plus a royalty of 5c per ton of bauxite. This is going not to the Aboriginals in the area but into Queensland’s consolidated revenue. There are other adverse affects from industrial development. Not the least of these is the social effect. Many commentators have referred to what is going on nowadays as the second industrial revolution. Anyone wilh any knowledge of history will know about the horrors of the first industrial revolution and how human beings were depersonalised into what were called ‘factors of production’. It was the degradation of humanity as a result of the first industrial revolution under early capitalism that gave rise to the flowering of Socialist thinking throughout Western Europe and caused the rise of the great Socialist movements in Western Europe in the 19th century.
I think it is no accident that in this second industrial revolution there is an increasing advocacy of greater participation in management and control of industry by the workers and by the community. I believe this is no accident because this is really a second great step forward in industrialisation. In the 19th century it was mechanisation - machines took the place of men’s hands. Now we are getting automation where machines are taking the place of men’s minds. So let us have as much industrial development as we can, but let us qualify that by saying: Just have that amount of industrial development that is consonant with minimal over exploitation of the environment by man, exploitation of man by man or exploitation of man by machine. On this side of the House we believe that these aims of industrial development, hand in hand with desirable social changes and the preservation of the environment, can be achieved only by democratic socialism.
The second question 1 would like to pose is whether it is necessary to have foreign capital imported into Australia for the industrial development that we will have. I believe it is necessary, to some extent, to have foreign capital. I believe that we have to have some sort of foreign capital, but we should try to keep it at a minimum, and we should keep it a minimum by mobilising the capital resources that we have in Australia as much as we can. The Minister for Trade and Industry (Mr McEwen) made a reference to this in his second reading speech when he said:
Inhere are many demands on our limited capital resources. Scarce Australian investment funds do not easily flow to new projects which may take many years to reach the earning stage.
I agree with this reference to scarce resources, but let us try to mobilise that capital that we have. I think that at the moment there is far too much frittering away of public funds on so-called development works that are not really development works at all. They are just carried out for political purposes. Also, I think it is a bit hypocritical for the Government to say that there are scarce resources of capital on the one hand and on the other hand dole out public money to some wealthy private schools in the community. This seems to me to be somewhat of a two-faced approach to this matter. If we are to mobilise our resources of capital to the optimum we have to have a great degree of economic planning. We have to have a good look at our policies on such matters as land prices, because a lot of the money that is invested by lending institutions is going into housing but too much of that is being taken up by inflated prices of land.
We have to have an overall look at the policy on tariffs. Too much of our tariff policy is made on an ad hoc basis at the moment. We should be looking towards investing as much as we can on education, because this is a very great way of increasing our national prosperity. Also, I believe we would have to consider, as referred to earlier by the honourable member for Corio (Mr Scholes), the proposition that we would have to look at some of our immigration quotas and decide what is the immigration target we need most of all in order to integrate migrant intake with the other aspects of our economic planning.
It is rather ironic that it is the Minister for Trade and Industry who is saying that resources are scarce. In a lot of cases it is of his doing. It is because of his policies that Australia has been groping along from day to day making ad hoc decisions, lt is extraordinary that so many honourable members on the Government side of the chamber have chosen to do nothing about this. For some reason they all seem to have cowered before the Minister for Trade and Industry.
There is an urgent need for us to plan the development of our resources so that we can achieve an optimum gain in our national prosperity. Earlier this year I put a question on notice to the Treasurer (Mr Bury) in which I asked what was the rise in the gross national product, at constant prices, per head of population in Australia over the last 10 years and how it compared with the same parameter for Japan, the United States of America, the United Kingdom and other countries in western Europe. The answer I received was rather surprising in view of the fact that the Government says that there has been a tremendous rise in prosperity in Australia.
The rise in gross national product in Australia at constant prices and constant population during that 10-year period, was 2.8%. In Japan it was. 10.1%; in Italy it was 5.3%; and in West Germany it was 4.7%. In fact Australia was second last of the countries mentioned. This shows that we have a long way to go in the field of economic planning.
– Which year was that?
– The figures covered the last 10 years up to 1968-69. It is necessary for us to mobilise our resources for 2 reasons: Firstly, so that we can achieve a maximum degree of Australian equity in our own industries and resources and, secondly, because it is necessary that we maximise our growth in national product so that we can catch up with the countries mentioned in the table to which I have referred. If we do not own our industries we lose all round. What often happens is that foreign companies operating in Australia sell their products, their ores or whatever it is, overseas at cost or a little above so that the taxable income in Australia is kept at a minimum. All we get are the royalties, and they are very low anyhow.
The third question is whether this Corporation is what we want. Does this Bill fit Australia’s requirements? The Bill is a desirable thing as it stands at the moment. To some extent it is necessary that we have some degree of foreign capital entering Australia. If it must come in then I think it is a good idea to have it come in as debenture issues rather than as equity. The Minister for Trade and Industry referred in his second reading speech to some of the disadvantages of having equity capital owned overseas. He said:
There are export franchise limitations, arrangements that limit competition with a foreign parent, processing of raw materials here, and sale at cost, as inputs for industry overseas, and fabricating industries finding themselves at the mercy of foreign-owned firms who control the prices of their raw materials. These are some of the” consequences that can flow from excessive foreign ownership of industry and resources.
It is extraordinary that the Minister for Trade and Industry seems just to have discovered these drawbacks of foreign control. The Australian Labor Party has been talking about them for years.
Another advantage of this particular Corporation will be that it will enable economic planning to be implemented. I refer particularly .to the control of capital issues. By the time all the issued capital from the Government to this Corporation is fully paid up it will be $10Om. This will enable it to borrow up to S500m. If we add the extra capital of the Corporation arising from any profit that it may make after taxation, and also any profit that may be realised from the investment of the issued capital of SI 00m in the first place, as time goes on the amount of capital that the Corporation will be able to direct into desirable places will be pretty substantial. My principal objection to the Bill is that it does not go far enough.
In his second reading speech the Minister for Trade and Industry referred to the problem of the multi-national corporation. He said, 1 think, that the problems of the multi-national giant often are not the problems of Australia. The Australian Industry Development Corporation appears to be a corporation which will use funds in Australia for companies which lack the prestige or backing to raise capital overseas on their own initiative. In that respect the Bill appears to do nothing really to break the stranglehold that the multi-national corporations already have on the Australian economy. However, as far as the Bill goes it is a good thing. As I said, it is better to have industries sustained as far as possible by Australian capital. Where industries have to be sustained by foreign capital then it is better to achieve this by means of shares rather than debentures. However, we have to remember that debentures themselves are not wholly unmixed blessings, particularly at the moment when the Euro bond rate is so high. Also there are other disadvantages. We have to remember that one does not declare dividends on debentures but they still have to be serviced and sooner or later they have to be redeemed.
I would like to deal now with some of the specific measures in the Bill and some of the objections of the apostles of laissez faire economics, of whom the honourable member for Lilley (Mr Kevin Cairns) seems to be the chief apostle at the moment. I do not know whether the honourable member for Lilley actually seeks the mantle of being the apologist for the big financiers in Australia. That certainly is not a mantle I would seek. Being a little chap myself, rather would I be seen to represent the interests of the little people. The honourable member for Lilley tried, rather dishonestly, I thought, to evoke reaction from the Australian Labor Party against this Corporation because it is to operate as a fringe banking organisation. He said that the Australian Industry Development Corporation would be a fringe banking organisation and that, as the Labor Party always has opposed hire purchase companies and the exorbitant interest they charge, we ought to oppose this measure. The implication was that we of the Labor Party had better look out because the Corporation would charge exorbitant interest rates. But when we look further at his speech we find that he is not talking about that at all. What, the honourable member for Lilley is worried about is that the Corporation will charge a low rate of interest and that this will be to the detriment not of the consumer but of the private financial interests in Australia.
Another objection put forward to this Bill is that it is a Socialist measure because of the amount of government equity that will be acquired. I would rather that it be a more Socialist measure, and that its workings should conform more to the policies of a democratically elected government. I think the Corporation will be a little too independent of Parliament as the Bill stands. No doubt when the Labor Party comes to office in 1972, or perhaps sooner - since J prepared this speech it appears that this will happen sooner - one of the first things it will do will be to modify the provisions of this Bill so that the activities of the Corporation can be carried out in conformity with Socialist government policy.
Another of the objections levelled against the Bill concerns clause 8(6.). Under this clause the Corporation is not obliged to divest itself of equity in any enterprise and it need not refrain from acquiring a majority shareholding in any industry. I cannot understand why some people object to this proposal. It seems to me to be superstitious for anybody to object to a public corporation - that is public in the sense that it is a government or semi-government undertaking - participating in industry in this day and age. Some people, such as the honourable member for Lilley and other representatives of financial interests, are worried that the Corporation is going to lend at low interest rates and make no profit and that therefore it will constitute unfair competition with private financial interests. This is a good thing. This is the basic and fundamental advantage of Socialist enterprise. With private enterprise one has to worry about some of the income going to the wage earning sector and some going to the profit earning sector. The advantage of a government enterprise is that one does not have to be concerned about how much goes to the profit earning sector. The benefit can be passed on to the consumer by means of low prices. In the case of this particular government enterprise the profits can be passed on by means of low interest rates. Alternatively, if it does choose to make some degree of profit, that profit is ploughed back into the Government so it can be used for proper purposes.
I think it is extraordinary to see the people who are complaining about unfair competition from Socialist enterprise because these are the same people who usually say that Socialism is inefficient and never works. We seem to have 2 standards here. If Socialism really did not work properly, its opponents would not be worrying about competition from Socialist enterprise. So if Socialism is really inefficient, the profiteers in this country should not have anything to fear. If Socialism is efficient, as I believe it is, the beneficiaries are the people. So in my opinion clause 8 (6.) will enable the AIDC to operate as a public enterprise. This is a good thing. It would be quite disastrous if this sub-clause were not in the Act. What it would mean is that the members of the board would have to look at an enterprise and say. ‘We are getting over 50% control of this’ or ‘We do not need to have equity in this corporation any more’ and sell the equity. Therefore, what that really means is that they will have to sell for purely ideological reasons. What sort of sellers’ market will it be then? What sort of price would the shares realise? I would like to know, if that happened, the identity of the people to whom it sold the shares and the market value of the shares when it sold them.
I want to come to another matter that has received a lot of attention, and that is the claim that this Corporation will support so-called lame duck industries. The Minister for Trade and Industry said in his second reading speech that this Corporation will not be a supporter of lost or doubtful causes. This raises the very large and very important question of what is meant by lost or doubtful causes, because in the modern capitalist state there is such widespread propping up of private enterprise by Government intervention already that it is difficult to define what is a doubtful cause. It is a very interesting matter for the advocates of capitalism to ponder on how efficient private enterprise would be without Government support, and I am not in this case thinking only of selected primary industries. There is a plethora of examples in manufacturing industry and other secondary industries.
For instance, let us look at the venture in Whyalla in South Australia where the Broken Hill Pty Co. Ltd wants to ship its steel across Australia from Whyalla to the eastern seaboard. 1 wonder whether that would be a lost or doubtful cause. I wonder how profitable that would be if the Government were not to build the railway for BHP - and I emphasise that the Government is building it for BHP. When I was a general practitioner in Whyalla in 1963 the then Minister for Shipping and Transport hinted at building a railway from Whyalla to Port Augusta for the convenience of people commuting to Adelaide, but that idea was quickly passed over. However, as soon as BHP wanted to ship its steel by rail, that project assumed top priority over night. I hope I will have a chance to mention that when speaking to the Bill that the Minister for Shipping and Transport (Mr Sinclair) has introduced.
– The company has been shipping it for years by sea.
– I am talking about shipment by rail.
– That is the point. It has been shipping it by sea. It is now to ship it by rail.
– We will get on to that later when we are dealing with the Bill introduced by the Minister. What about the ports and bridges that are built for various mining companies by the Government? What about the tariff protection that is given to selected secondary industries? What about the trifling royalties that the mining companies pay for extracting ores from Australian soil? I believe that the dangers of political patronage are inherent in this Australian Industry Development Corporation. But let us face it: This is an inherent danger in any phase of the activity of a government of any complexion. Any government can prop up private interests as the present Government props up the interests of those who are contributors to McEwen House. The answer does not lie in rejecting legislation of this sort but rather it lies in an open examination of the national economic policy objective based on an open, rational public debate. It lies in lifting the veil of secrecy surrounding the workings of government, and it lies in community participation in decision making - what we call participatory democracy.
Some opponents of this Bill, decrying it as Socialism, imply that Socialism is merely nationalising a few key industries. Socialism is much more than that. It involves full participation by the people in making decisions which affect their lives. The honourable member for Angas (Mr Giles), who I see is in the chamber, the other night stated his view that under a Labor government this Corporation would be under Government control, under what he likes to call the dead hand of a Socialist empire. Socialism does not mean dictation by a faceless government; it means control by the people.
I think I have time to refer to one other matter mentioned by the honourable member for Lilley. He questioned whether the Australian Industry Development Corporation had a place in view of the existence of the Austraiian Resources Development Bank, and he pointed to something that was referred to earlier this year by the Prime Minister (Mr Gorton). The Prime Minister evidently implied that the ARDB was not doing its job because it was borrowing locally and we needed a new body that would borrow overseas. I think that the honourable member for Lilley made a very good point. The Australian Resources Development Bank did right in borrowing locally when it could, firstly, because it is as well to keep borrowing in Australia and, secondly, it is even more important to do so when there is such an enormous disparity between interest rates in Australia and those overseas. I hope that when this Corporation is brought into existence it will not be hampered by anybody’s interpretation of the second reading speech or the Act, but it will maximise the amount of borrowing it does in Australia. I cannot see any reason why it should not. It will be subject to the economic guidelines laid down last year. There should not be any strictures on the AIDC borrowing funds in Australia and I hope it will do that as much as possible.
In conclusion, I would like to reiterate that the AIDC does not solve all the problems. lt does not really get anywhere near solving all the problems the multi-national corporation brings to Australia; but it is a good start for a future democratic Socialist government. I wish the venture well. I hope that it will not become a source of political patronage for selected interests, and I have much pleasure in supporting the Bill.
Mr TURNER (Bradfield) “5.22J- The honourable member for Kingston (Dr Gun), of course, is a good Socialist. I believe that he is entirely sincere. Indeed, ideologies have caused great suffering to mankind through the ages. So be it. 1 propose to deal with this Bill entirely as a practical matter. 1 hope that we will not hear much more of the rhetoric that suggests that all who are good Australians must support this Bill in all its details or in its main principles. I think it was Dr Johnson who remarked that the appeal to patriotism is the last refuge of a scoundrel. I hope there are not too many scoundrels here.
The differences that exist in this chamber today are not differences which are related to the arrangement of the chamber. Normally those on this side of the gangway stand for certain things and those on the other side of the gangway stand for other things and opposite things. But this is not the division in the House on this quiet Wednesday when we are not on the air. It is rather between some Liberals on the one hand and the Australian Labor Party, the Australian Country Party and a number of apathetic Liberals on the other hand. This is the real division in the chamber today, not that which divides the seats between left and right of the Speaker’s chair. We are concerned with differences’ in regard to means perhaps rather than ends.
I imagine that most of us - probably all of us - agree that if we have more Australian capital in enterprises in this country the better it will be for all of us. We may well agree about this, but whether the Corporation is the best means of achieving that objective may well be the matter in dispute. This is the nub of the matter, I think. We need more investment by Australians in enterprises exploiting the resources of this country. It is sometimes said that that was not so in the United States of America when it first developed, that capital was obtained from Europe and subsequently that capital was repatriated, that the Americans paid back their borrowings to Europe and so became free and the owners of their own capital resources. This is not entirely true. The United States succeeded in ridding itself of this load of debt largely through 2 world wars, not entirely by paying back under ordinary peaceable conditions. When one bears this in mind one may be the more concerned that we do not involve ourselves too deeply in debt overseas.
We need capital inflow if this country is to be developed and we need it on the best terms that we can get. If we can borrow fixed capital at fixed interest rates for fixed terms and pay it back, these are the best terms on which we can get it. We may not be able to get all that we need by this means and we may have to accept, however unwillingly, capital inflow of the kind that we have seen in recent years. But we must have it on the best terms that we can get it. There is no great disagreement about these things. Some of my colleagues like the honourable member for Lilley (Mr Kevin Cairns) and the honourable member for Balaclava (Mr Whittorn) have pointed out that the way proposed in the Bill is not the best way to achieve the objective that we all have. I associate myself with the arguments that they have advanced. The honourable member for Lilley is much better qualified as an economist, as a man who has studied finance profoundly, to express opinions on the matters that he has put forward. I adopt his arguments. I believe that he is right.
I want to make a few remarks about the matter of the presentation of this legislation. There was no reference to it in the policy speech of the Prime Minister (Mr Gorton). Therefore, theoretically at least, honourable members on this side of the House are not bound by it. We never went out on the platform and promised that this would be done. I would not say that everything that is lumped into a policy speech therefore has to be adopted by free members of a parliament. Maybe bond members or slave members have to, but not free members. Nevertheless it is persuasive that if a thing is not embodied in a policy speech one is not bound by it. How has it emerged? By casual references, rumours, newspaper reports, or a speech that the Minister for Shipping and Transport (Mr Sinclair), made some years ago somewhere to somebody, whoever it may have been? The attitude as far as I and my colleagues are concerned has been this: Yours is not to reason why’.
There has been the usual secretiveness that characterises the conduct of public affairs in our hick republic. There has been the usual inarticulateness on the part of Ministers who seem usually to be tongue tied and incapable of expressing what their policies are or the reasons for them when going out seeking to convince people that they are right. The attitude has been: ‘Take it. That is it. Rubber stamp it in the Parliament. It is law.’ That is not necessarily accepted, and that is why governments go out of office. This is all in the best traditions of our colonial past, our rather simple form of government. It is the sort of government that goes with people concerned with roads and bridges but who have only in recent times had to face some large issues. It is parochial, it is slipshod. This is the way we conduct our public business. I do not agree with it.
The Minister for Trade and Industry (Mr McEwen) has come forward with the support of friends. First of all he comes up with the support of the Australian Industries Development Association. He has been very busy getting around seeking the support of these people, not explaining what he proposes in small print or any print or in detail to members on this side of the House. But he has been very busy with AIDA and the Associated Chambers of Manufacturers of Australia and so forth. Let us look at the support he has. Dr Barraclough, the spokesman for AIDA, said:
The claim that an IDC would compete with existing financial institutions would not hold if it be a firm condition that the IDC be a lender of last resort.
There is no such provision in the Bill. Maybe the draftsmen could not cope with it. But they managed to cope with it in regard to the legislation relating to the Australian Resources Development Bank. However, that was not incorporated in this Bill. Provided it be a lender of last resort its charter should preclude it from looking for business in any way whatever. Therefore under this Bill1 it is not to look for business. It is to wait until business comes to it. That is a nice distinction. Sometimes it has been suggested to me that if I made some application or other it might be looked upon favourably. I was not approached, of course. Dr Barraclough continued:
On the contrary it should be prepared to act only when approached and then only if it could be shown that other avenues have been exhausted.
That applies if this institution is to be a lender of last resort. It is nowhere expressed in the Bill. He continued:
Furthermore, an IDC’s loan raising should be exclusively in external markets, bringing additional capital into Australian hands.
This surely is what we all want. But does the Bill say so? No. It uses the word principally’. It says that it shall borrow principally abroad. What does ‘principally’ mean? It is nowhere defined. I suggest that it means very little indeed. The AIDA spokesman went on:
It should be a requirement of acceptability also that an IDC be subject to taxation no less and no more than other commercial institutions.
It is not required to make any profit. If you do not make a profit you do not have to pay taxes. There is nothing about profit and so there is nothing about its being subject to taxation like other institutions. This is what the great friend of the Leader of the Country Party said.
Let us look at the support that he has from ACMA. 1 have the official handout from Mr R. W. C. Anderson whom we all know. He said:
It was not possible to give any final views on the IDC proposals until legislation was introduced and details became clear.
They had not even seen the legislation. They knew nothing about it except what the Leader of the Country Party had told them. That was probably as much as he told back benchers on this side of the Mouse. Mr Anderson said:
But it had been possible, from statements and comments … to piece together a picture of what appeared to be the Government’s intentions.
I mentioned the phrase ‘hick republic1. This is how we do business. We piece together a picture from statements and comments. He went on:
At a recent conference of Presidents of National Manufacturers’ Associations … the IDC proposals were considered in some detail-
On statements that had been pieced together. 1 da not know how these gentlemen conduct business if they come to an opinion on the basis of statements and things pieced together. Mr Anderson said:
On the basis of the information available on IOC the meeting passed a unanimous recommendation . . . that ACMA should welcome and support the establishment of the Industry Development Corporation.
Well, they are very easily pleased.
Finally, the most damning support that the right honourable gentleman has had came from the Australian Farmers Federation, ft joins the IDC supporters. 1 will quote only one little bit from the spokesman’s statement:
Mr Forrester referred to companies concerned with food processing which, it was understood, bad become overseas owned in recent years.
He went on to say:
Australian rural industries consider it mast undesirable that the local management teams forming price policies and establishing commercial practices should be responsible to overseas controllers who are not subject to the influence of local public opinion, our own national loyalties, nor necessarily sensitive nor accessible to consultation by other sectors of Australian industry nor dependent upon them.
That is what Mr Forrester said. In other words, we must have companies that are amenable to Government influence - and to Country Party influence and to rural influences if they are processing food - so that rural industries may force them into better bargains for the producers - and to hell with the consumers. So, those are the great supporters of this legislation.
Now, 1 wish to say a -word about the timetable of this Bill. I come back to the way in which we conduct our great affairs in this hick republic. Notice was given of a meeting of the relevant Government committee on this side of the House to take place on 4th May. I received that notice on 30th April. Now, 4lh May was a nonsitting day when members would not normally have been here. On the following day, Tuesday, 5th May, the Australian Industry Corporation Bill was introduced into the Party room. Because there was a fog it was not introduced until 12.25 p.m. and the debate went on-
– There is still a fog.
– Yes, there was plenty of fog involved. No small print, but plenty of fog and plenty of generalities. The great debate went on. The Bill was explained at 12.25 p.m.. A question was asked by an honourable member from this side of the House. That took 2 minutes. Then, the honourable member for Lilley had the opportunity to say something for 10 minutes, speaking after 1 o’clock when most members were feeling rather hungry.
Now, that was the full debate in the Government Party room. Now everyone knows how we introduce legislation into this House. A special Party meeting was held after the Bill had been introduced. We had been promised we would see the small print. We saw no print, large or small. But there was then a special Party meeting - yes, indeed - on Wednesday, 13th May, after the whole thing was a fait accompli and the Bill had been introduced into the House. Debate ensued on Thursday, 14th May. That is the history of a great piece of legislation. It is perhaps the most important piece of legislation to be introduced this session. That is how it came lo the Party and to the Parliament.
Then we had the second reading speech. May I say a word about the way these things are done in slightly more mature communities. I refer to the Parliament of Westminster upon which we falsely claim that wc base ourselves. There, it is usual of course to introduce important changes in policy first of all by way of a report by some kind of an expert committee that sorts out the facts and the principles involved, analyses the situation and perhaps reaches some conclusions which the Government may or may not adopt, giving its reasons in a White Paper which is laid on the table and published long before any debate takes place in the House. Then, at last there is debate in the House and that debate is informed. I have mentioned already how informed this side of the House was on this Bill. The Opposition, of course, had no information at ali until it received the second reading speech. 1 wish to say a word about the second reading speech before I finish.
I have taken out some facts by way of illustration of the work carried out by committees of the British Parliament in the last 2 years or 3 years. The Fulton Committee reported on the reorganisation - basically and fundamentally - of the English Civil Service. The Pilkington Committee reported on broadcasting and television, their structure and what ought to be done about them and how far the Government ought to go with them. The Plowden Committee and the Duncan Committee reported on the reorganisation of the British Foreign Office. The Radcliffe-Maud Committee reported towards last year on the radical restructuring of local government in England. Local government there is pretty much what the State government is here. These are just some examples of the activities of British committees over the last 2 or 3 years. This is not what happens in the Australian Parliament before a Bill is introduced.
We had the second reading speech delivered by the Minister for Trade and Industry. I want to speak about the second reading speech because it is our sole source of information, apart from what we may piece together if we are as assiduous as ACMA was. The prime object of this Bill is alleged to be to ensure adequate Australian participation in the exploitation of Australia’s natural resources. Yet there was no analysis of foreign investment - none whatever. A few figures were given indicating that this is the way the wind is blowing, perhaps, if we accept those figures. The honourable member for Lalor (Dr J. F. Cairns), who led for the Opposition, produced some figures of his own, or rather some figures that had authenticity, but he had to quote them. They were not given by the Minister. The honourable member for
Lilley quoted other figures. They are in Hansard. The honourable member for Balaclava quoted other figures. But why should these honourable members be giving figures? Surely it is the duty of the Minister and the Government introducing an important piece of legislation into the House, having the possession of these matters as none of us have them, having in the files of their departments these figures, to produce this information. Surely that is the duty of any government and its Ministers in anything but a hick republic. But did they? Not at all! AH we had was the second reading speech by the right honourable gentleman in which he gave a few spot figures showing the way the wind was blowing.
No review was given of prospect of Australian participation. We have heard about these great enterprises that are to be capable of competing on a world scale throughout the world. We have 2 such enterprises, perhaps, in this country - Broken Hill Pty Co. Ltd and the Colonial Sugar Refining Co. Ltd. I think that they perhaps are the only ones. What are these other great enterprises that are to be built up to compete on a world scale? What are the prospects of Australian participation? I suggest that mainly the Australian equity participation will place Australia in the position of a very junior partner. Was there any appraisal of what were the prospects of Australian capital in these vast enterprises that are to operate throughout the world? At least we should have had some appraisal of our prospects. But we had nothing. We have no analysis of methods used by other countries in meeting this problem of overseas investment. We have not asked them: ‘What do you do about it?’ No. We have just a flat statement that the AIDC is the answer. Yours is not to reason why. We have no analysis of what anybody else does. This is it. Ipse dixit! The Minister said it himself. That is it! No, the second reading speech which gives us this full knowledge and information which elsewhere might be given in a White Paper.
No information is given regarding the success or failure of the guidelines policy laid down by the Prime Minister some little time ago. This policy was supposed to induce foreign investors in this country to allow Australia to participate in equity capital. Has it succeded? Has it failed? To what extent has it succeeded or failed? Do we hear anything from the right honourable gentleman? Not a word! Then there was said to be a gap - you know, we do not have any institution that is capable of providing Australian capital on the scale required for the purposes involved. There is a gap in our financial institutions? We have no institution capable of doing this sort of thing.
Where is the gap? Has it ever been identified? Not a word about it. The gap in the Australian investment scene, as the right honourable gentleman put it, is not identified. Does this mean that there is a gap and that it is a gap that relates to, say, the riskier business - those things that cannot get finance in the ordinary way or through the Australian Resources Development Bank? The Minister does not say whether it is risky business or what it is. When the Australian Resources Development Bank was established we were told all about the investment gap. But there is nothing here about what the gap is that has to be filled. All we are told is that there is a gap and that it must be filled - by this means. That is all. The right honourable gentleman said:
It will assist where the development would not otherwise take place.
What is that? The risky business? Or what is it? I do not know. He does not tell us.
No reasoned case is presented as to how the Australian Industry Development Corporation can get fixed term capital overseas that the Australian Resources Development Bank cannot get. There is what the honourable member for Lilley referred to, that is, a confluence of objectives. We are all seeking to do the same thing - and both the AIDC and the ARDB are trying to do precisely this. That is, to get fixed term capital overseas on a large scale for investment in Australia. There is a confluence of objectives. Why is it that the Australian Resources Development Bank cannot successfully do the job that is required? Why is the Australian Industry Development Corporation the only institution that can do it? Where is this gap? Both institutions, of course, are backed by the Government. Do not let us have any nonsense about this. The AIDC, of course, is backed by the Government.
An honourable member earlier in the debate this afternoon made this point and there is no need for me to elaborate on it any further. Of course, if the institution was not able to pay its debts or if it failed the Australian Government would have to back it up, otherwise Australia’s credit standing would be finished. Consequently both these institutions have backing from the Government. What did the right honourable gentleman mean when he said:
It must seek to enable Australian industry to conserve our foreign exchange by competing with imports without recourse to high tariff barriers.
What does this mean? It is rather enigmatic. Does it mean that this Corporation will assist Australian industries so that they can be better organised to meet overseas competition? This has nothing to do with exports. What is intended here? Is this intended to be a kind of rationalisation of Australian industry? Unless that is what the words mean I cannot understand them. It is said that money is to be made available by this Corporation to Australian industries to enable them to compete better with foreign imports. What else does it mean? Again the right honourable gentleman said that this Corporation will ‘promote trade and commerce between the States’. What does he mean by ‘between the States’? Does this mean perhaps that there is some raw material in one State and it is proposed to process it in another State in order to develop some fancy plan of decentralisation in that other State? Will it be justified on that ground? I do not know.
We have not been told what is meant by the words ‘promote trade and commerce between the States’. What is the meaning of this odd phrase? It is like the earl’ier phrase that I mentioned. The right honourable gentleman also said that the Corporation may further the development of Australian resources necessary for the defence of the Commonwealth. Let all patriots spring to attention. Does this mean, for example, that we should promote cotton growing on the Ord so that it can be used to make canvas for tents for soldiers? What does it mean? Can this be a cloak for heaven knows what kind of operation? Maybe that is a foolish example, but I am just wondering what wilt be brought in under the cloak of a defence industry. There is scarcely a reference to the. ARDB. There has been no attempt to distinguish it or to show why it cannot do the job. No details have been given of cases where applicants to that bank have failed to get loans or where it has not been able to command sufficient resources. I think from memory it has loaned something like $260m, which is a fairly tidy sum.
We have not had a single word from the Treasury about this. It is said that this Corporation is not a bank. 1 should have thought that this was a matter in which the Treasury would have some interest. Are we not entitled to be told what the Treasury thinks about it? We have not had a word from that quarter. Then there is the vagueness of the Bill. There have been nothing but exhortations. We have seen nothing that is really laid down in black and white and nothing that is really enforceable. All we have had are vague exhortations. I have already mentioned that this Corporation is to get its funds principally from abroad, whatever ‘principally’ may mean, lt must aci in accordance with sound business principles. What does this mean? A sound business, presumably, aims at a profit. But there is no suggestion in the Bil1] that the Corporation is to aim at making a profit. Is this a sound business principle? There is no mention of the amount of the profit.
What about the other competing instrumentalities, such as the airlines and so forth, which have to make profits that arc laid down as an objective. The right honourable gentleman also said that the Corporation is to be subject to taxation. Taxation on what? If it does not make profits there will be no taxation. What about the income that it derives from its $)00m capital? It does not have to pay any dividends. It does not have to pay anything to the Government. So presumably, it will get interest on the investment of its capital. What does it do with this? Perhaps it starts a defence industry. Who knows? Perhaps it will promote trade between the States. Who knows? The Minister for Trade and Industry also said that it must divest itself of equities. How much equity and when? Once a year it is to have a kind of stock take, and if it thinks fit it has then to divest itself of equities.
The Corporation is subject to the Reserve Bank regarding domestic borrowings in any one year. There is nothing said about the interest rates that are laid down by the Reserve Bank for other institutions. Supposing that the Corporation happened to borrow overseas at a particular time an amount of $100m or $200m and that this suddenly arrived in Australia and the expenditure of that money made demands upon resources in this country at a time when those resources were already overstrained, so that an inflationary situation developed. This is the grandest of all marginal institutions. We have heard a lot about marginal banking institutions, but what about this colossus which is not under the surveillance of the Reserve Bank? The Minister also said that there are safeguards. I mentioned that the bank shall nol provide assistance except at the request of an applicant. I have already made reference to this and I need not say more.
Then there is the matter of the appointment of directors. The remuneration is to be fixed by the Governor-General; in other words, by the Government. This is very odd. Maybe you can or you cannot get somebody at a given figure. Is the GovernorGeneral to fix a different remuneration for the succeeding director, having already fixed it for the first one? Judges receive fixed remuneration to protect them from bias. But in relation to the directors of this Corporation the remuneration is to be fixed by the Governor-General. The amount paid to a director who is appointed at this stage may vary from the amount paid to a director appointed in 3 years time. There is to be a tenure of something between 3 years and 6 years. Who says that the Government will have no influence on the directors? Of course they will all bc splendid fellows but as time passes less splendid fellows may be appointed. Who knows?
We hear that this Corporation is to be free from Government interference. This is set out splendidly in the plainest terms. There is a body called the Tariff Board. Attempts have been made by the right honourable gentleman who introduced this Bill to intimidate it again and again. Wc all know that this is a fact. The Tariff Board, of course, is free from Government interference - if you cannot intimidate it. The Reserve Bank board is free from Government interference too. Do not we remember a little while ago when the Prime Minister and the right honourable gentleman went to the Bank Board and told it that it must reduce the rate of interest on overdrafts for rural producers? So what is the value of a guarantee that a Board shall be free from Government interference? These are 2 cases within recent memory. As- may have been inferred, I am against the Bill.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired.
Sitting suspended from 6 to 8 p.m.
– The people of Australia have now become accustomed to the delay in implementing reforms which is caused by internal divisions in the 2 Government parties. Examples such as the reform of our archaic system of health insurance and a satisfactory resolution of the issue of Commonwealth, State and civic financial relations spring readily to mind. The measure which we are now debating, the Australian Industry Development Corporation Bill, is yet another example of this process. The Corporation was first proposed to Cabinet in July 1966. It has been delayed for 4 years because of the differences between the Minister for Trade and Industry (Mr McEwen) and the previous Treasurer. The Australian Labor Party welcomes this Bill’s belated appearance, despite the limitations which the previous differences of opinion have forced the Minister of Trade and Industry to include within it. It is clear that the suggestions embodied in the Bill are already a compromise with the forces of 19th century economics in the Liberal Party. I am most disturbed by the suggestions that the Minister will be willing further to dilute this measure in yet another attempt to compromise with such forces.
The limitations which have already been placed on the new Corporation are severe but they are not a barrier to amendments in due course. Some of the accusations that have been made over the 4 years since the Minister first suggested this Corporation show quaint signs of Liberal nostalgia for a lost innocence. Certain words such as private enterprise’ or ‘sound business principles’ and other slogans have to be beaten occasionally like voodoo drums to conjure up the lost spirit of 1949. The same basic problems are indicated in the now farcical promise by the Prime Minister (Mr Gorton) to call a philosophy conference for the Liberal Party. This farce which has been continuing for almost 2 years has highlighted a problem of which the Liberals were apparently unaware. They never really had a philosophy. The belated acceptance of this fact has led to an outburst of internal controversy which is threatening to delay further major social and economic reforms. We have already waited for 4 years for this Bill. It must be clear after the events of last week that the Government benches are not the appropriate place to resolve internal divisions. It is clearly time for this bedraggled lot to be cast into the political wilderness in search of their lost innocence.
As is well known, the Australian Labor Party has supported an institution of this nature for some time. I promised it in my policy speech at the elections for this House last October. The Prime Minister did not. During the long recess it is clear that the Prime Minister searched around through the Government pigeon-holes to bring forward a flurry of legislation and create the image of energetic government. He was not unaware of the proposals by the Minister for Trade and Industry, for as long ago as 13th March 1968, in answer to a question of mine, the Minister for Trade and Industry stated that he had already had a discussion with the Prime Minister about this very matter. There was no action over the intervening 2 years. There was no thought given to the proposal before the policy statements at the last election. Suddenly it has been sprung upon us, belated but welcome, even though it bears the stamp of hasty compromise on its very face. There are many severe limitations on the Corporation throughout this Bill, so much so that there is a real danger that, to adjust the words of the Minister in 1967, this Corporation has been taken out of the state of suspended animation to be put into a state of animated suspension. Legislation, however, can be amended and it is important that this institution be created, that it gather its staff and establish its sources of information and finance so that it can readily be given a more creative role by the Labor Government in 1972, or, it seems, even earlier.
The purposes of this measure and some of the arguments in favour have already been canvassed in this debate, and I do not intend to repeat them. Issues associated with the problems of foreign investment such as balance of payments considerations have already been covered. We on this side of the House welcome the basic change in emphasis with respect to foreign investment on the part of the Government which is shown by this Bill. The new attitudes are more appropriate and the suggested remedy, though limited, is clearly a step in the right direction. I wish to concentrate on the basic issue of the availability of development finance in Australia. I trust that this Corporation will fill an important gap in the Australian capital market. There is no doubt that the Australian capital market has developed in its sophistication over recent years, although in many cases slowly and spasmodically. Creation of the Australian Resources Development Bank was an important development. Over the last 2 years the number of merchant bankers, most of them controlled by overseas interests, has more than doubled. Our major financial institutions have shown somewhat greater willingness to organise consortia and to become involved in major development projects. Nevertheless, certain basic gaps remain. The first is the necessity of major concentrations of entrepreneurial capital; the second is the availability of development finance for small businesses.
In the initial controversies between the McEwen and McMahon banks, certain amendments were made to the previous Treasurer’s proposals which served as a compromise at the time. Indicative of this process was the change of name from the Bankers’ Development Refinance Corporation to the Australian Resources Development Bank. This Bank as it finally emerged was to do more than simply refinance trading bank loans; it was given authority to make loans directly. It was also given power to purchase equity, although it has not yet done so. Greater emphasis has been placed on the possibility of raising finance overseas. I remind the former Treasurer of what he said on 4th April 1967. With reference to the then proposed Refinance Corporation he stated: ‘We do not expect a great deal of overseas borrowing.’ It is clear that originally the Refinance Corporation was to be dominated by a lender philosophy whereas the proposed Development Corporation was to be a source of entrepreneurial capital. In the process of com promise at that time the former institution acquired certain of the characteristics of the latter.
In the present compromise, the Development Corporation has had engrafted upon it certain of the features of the lender philosophy. It is clear that in these 2 processes there is a very real danger that the 2 institutions will serve similar functions with some possible differences in emphasis. This is not good enough. There are different functions to be performed. Both institutions could exist if only the Government were not so bedevilled by its internal divisions which have forced the Minister to compromise his own initial ideas. I must admit that it is somewhat amusing for supporters of private enterprise to complain about duplication. I thought that is precisely what competition was all about. It is very difficult to have competition except in terms of at least 2 competitors. Members of the Government who are opposing this Bill are quite clearly dominated by outmoded prejudices against government enterprise. They assume that for some reason or another government bureaucracies are less efficient than the private bureaucracies which dominate the large corporations. Tell that to Ansett Transport Industries Ltd. Tell it to the international airlines which compete against Qantas Airways Ltd. Tell it to the banks which compete against the Commonwealth Bank of Australia. It is clear that there is a role for government initiatives in our economy and this cannot be hamstrung by the pitiful remnants of social Darwinism.
Let me explain further what I mean by entrepreneurial capital. This is. capital which is allied directly with entrepreneurial skills and takes an active and creative part in the development of the enterprises in which it invests. If we are to compete with the large multi-national corporations, then we do need some large concentrations of entrepreneurial equity capital. The opportunities which wc are facing today require institutions which are able to combine managerial skills and capital to exploit those opportunities. We are not so well endowed with entrepreneurial talent that we can afford to spread it thinly across many corporations, including the subsidiaries of many foreign corporations. Our managerial gap may be solved by cencentration of these scarce resources to some extent. Our shortage of entrepreneurial skills is a major obstacle to our economic development, and it is both a cause and a consequence of excessive reliance on foreign direct investment. Although there have been certain promising developments amongst our insurance companies and private funds which indicate a movement in this direction, it has been slow and spasmodic. There has been suspicion until recently of investment in mining. Even today there continues to be suspicion of investment in exploration. Many of our institutions delay their intervention until the companies art almost at the stage where they can pay dividends. There are major areas of conservative management in our major institutions. They have missed opportunities in the past and they have been most reluctant to take the sorts of risks which foreign corporations have been willing to assume and regard as utterly normal. Some have sought to entrench their position by swapping shares with another conservative board of directors to prevent take-over bids. It is clear that despite some promising developments there is a role for a single major concentration of entrepreneurial capital which can direct the flow of funds to the growth points in the economy.
I do not have to emphasise again the desirability of attracting capital from overseas in the form of fixed interest loans rather than equity investment. The balance of payments effect of this alternative has already been debated. I am, however, amazed at the suggestion that, because interest rates are high overseas, it may be difficult to raise such capital. It is said that this is why the Australian Resources Development Bank did not borrow overseas until recently. But in the time since that bank was created thousands of millions of dollars have flowed into this country from overseas. Presumably the people who supplied this capital were not interested in the higher rates of interest overseas, for the rates of return on direct investment were even higher. The suggestion that these interest rates should in any way limit the operations of the proposed corporation raises directly the distinction between an institution dominated by the lender philosophy and a concentration of entrepreneurial capital. The reason why the ARDB was unwilling to borrow overseas whilst thousands of millions of dollars flowed into this continent was precisely because that bank served a particular and necessary function. It sought its capital to re-lend and not to re-invest. If the proposed Development Corporation is to regard its primary role as re-lending at fixed interest, then it will duplicate the functions of the ARDB. It will not fill the gap in the Australian capital market which I have outlined. The difficulties of the ARDB have not been due simply to the high interest rates overseas but have also been caused by the uncertainties of international exchange rates in recent years. In the period before the bank was able to build up its reserves it sought to insure itself against the risk of exchange variations. The Reserve Bank explained that its forward exchange facilities were available only for current transactions. Simply because something has never been done before is not an argument for never doing it. This was a special case, and of great importance to Australian development, and I trust that the new Development Corporation will be able to acquire foreign exchange cover for capital items.
The role of the Corporation in ensuring that some of the key growth points in the economy remain in Australian hands is crucial. Much of the debate about foreign investment has been concerned with foreign ownership rather than foreign control; such as the debate about the balance of payments effects of foreign investment. But foreign control has quite distinct ramifications over and above those of foreign ownership. For example, the importation of management skills tends to reduce incentives to improve such skills at home. Reliance on overseas technology tends to limit domestic innovation. The prices for the exports and imports of foreign owned companies may indicate a shift of the companies’ international profits to some tax haven. There are also the restrictive export franchises which have already been discussed. All of these effects are functions of control rather than ownership. There is some argument for us to place less emphasis on using our scarce capital for buying minority interests in foreign companies and more emphasis on the development of Australian controlled enterprises. This should be a major role of the proposed corporation. This Corporation must not be simply another financial institution, another passive investor. It must be willing to take firm steps in the development of our resources to ensure that they are controlled by Australians. To a certain extent the compromises apparent in this Bill limit this role, I trust there will be no further compromises.
The second gap in the Australian capital market to which I have referred is the development finance available for small businesses. The assumption that large corporations are always more efficient is not true. There are many areas of investment in which small organisations are more appropriate. One of the key advantages of large corporations is in fact the ability to raise capital cheaply. There is a good deal of evidence that what economists have called the McMillan gap exists in Australia. For example, the minimum size at which it is worth floating shares is fairly large, and even above that size small corporations have problems in raising fixed interest capital. In his second reading speech the Minister for Trade and Industry stated:
In the electrical and electronic industries, including in the total many small enterprises, overseas ownership is around 50%. . . . Foreign domination is not confined to the largest industries. The production in Australia of such day-to-day items as roller bearings, electrical hand tools, abrasives and glazed ceramic tiles, to mention a few of the smaller and more specialised industries, is carried out predominantly by foreign-owned companies.
In these words the Minister may have been suggesting that the Industry Development Corporation is designed to fill this gap. The processes of making its facilities available to small enterprises require a complex organisation. It may very well be that this particular gap is best filled not by this Corporation but by an expansion of the activities of the Commonwealth Development Bank. I note that the Commonwealth has not provided any further contributions to the Commonwealth Development Bank since the 1963-64 Budget.
A disturbing aspect of the Government’s approach in introducing this measure has been highlighted in the speeches from the outspoken members opposite. It is clear that after 20 years in government excessive secrecy has become commonplace in governmental decision-making. Information is too often regarded as the Minister’s private property. This has become disturbingly evident in the lack of information provided by the Minister. On several occasions in recent years I have inquired about the report prepared by Mr L. J. Dooling on this proposed corporation. As recently as last Wednesday I asked the Minister once again whether he would release Mr Dooling’s report. He refused. From the Press reports we learn that his Department has in fact compiled extensive information on business projects which did not get adequate financial support and in which the Australian equity was too low. The Minister has no more perceptive critic that the honourable member for Bradfield (Mr Turner) who, in his typically tart tones, revealed those sources and items of information which are the reserve of the Cabinet alone. Why has this information not yet been available to the Parliament? One of the basic rights in a democracy is the people’s right to know. This requires the Government to provide full information to the Parliament on any major new measure.
The bask purpose of the Corporation must be to direct entrepreneurial capital for the development of Australian resources. Over recent years it has become clear that the major Australian financial institutions have found it difficult to adjust to the new scale of the opportunities we face. Although there are some companies which have taken up the challenge there remain areas in which excessive caution, conservatism, delay and timidity have continued to the detriment of the development of Australian resources by Australians - the denial of opportunities in their own country to Australian scientists and managers. Many of these institutions remain passive investors even after they have seen the benefits to be gained from supporting development projects. It is to be hoped that the new Corporation will not become simply another passive investor because of the restrictive provisions which the Minister felt compelled to insert in this initial Bill.
In an exhaustive survey of capital financing for the Australian mineral industry Mr P. J. Rose, of the Institute of Applied Economic Research within the University of Melbourne, pointed out that Australian financial institutions had been unnecessarily conservative in supporting mineral development and that the managerial initiative in raising international capital had come from financiers outside Australia. He also pointed out that the Australian Resources Development Bank ‘must be judged a highly conservative lender’. His basic conclusion indicates the problem which we hope the new Corporation will solve. He stated:
The size of capital issue associated with the establishment or expansion of a mining company is sometimes so large by normal Australian standards that there are difficulties in marshalling the required funds.
The new Corporation can play a crucial role in overcoming this deficiency as long as it is not hamstrung at birth by a lender philosophy.
In my policy speech for the House of Representatives elections last October I outlined a 3-point plan for overcoming the problem of foreign control. Firstly, a Labor government would invest directly in development projects alongside local and foreign private companies. Secondly, we would amend the taxation laws to enable and encourage Australian insurance companies to invest in approved basic industries and development projects, as they have already been enabled and encouraged to invest in government securities. Thirdly, I promised that we would establish an Australian industry development corporation on the lines of Italy’s IRI. As many honourable gentlemen now know, not only the Istituto per la Ricostruzione Industrial but also the Ente Nazionale Idrocarburi have done wonders in mobilising and concentrating Italy’s economic, intellectual and managerial resources.
We have at last seen the acceptance of the last of these projects. A major new institution will now be established that could serve to introduce a new dynamism into the Australian capital market. I trust that the Government will not stop here - that it will at last take steps to enable and encourage our other large financial institutions to participate in the same broad objectives of this’ Australian Industry Development Corporation.
– We have been listening to a collection of suave asides sliding all over a quaint speech by the Leader of the Opposition (Mr Whitlam) but what could scarcely be called an authoritative speech on economics and one which scarcely reflects the policies or platforms of the Australian Labor Party. I am pleased to see that the honourable member for Melbourne Ports (Mr Crean) is now at the table. One can only wish that he might have had the opportunity to speak. I am quite surprised that the honourable member for Oxley (Mr Hayden) and the honourable member for Adelaide (Mr Hurford), with their economic backgrounds, have not as yet been given an opportunity to speak in this debate.
The potential value of the Corporation proposed in this Bill should be assessed in relation to what implcations are seen in the very large inflow of foreign capital into this country in recent years. There are few subjects more complex than this one, and it is one in which it is easier to get opinions than facts. It is not always possible to separate emotional response from economic judgment in thinking about the issues raised by overseas investment, but it is very important that we do think about it and base whatever we do about it on a proper concern for the future development of this country. There can be no doubt that the huge sums invested here from abroad in recent years have been of crucial significance to the rapid industrial development we have seen taking place. Without this inflow of foreign capital we could not have developed all the new industries we have seen established; we could not have embarked on the immense new mining projects; we could not have developed our cities as they have developed or sustained our migrant intake. In fact, it is generally agreed that much of Australia’s progress would have been delayed for who knows how long before Australians, acting alone, could have amassed the vast capital requirements needed or gained the technical and managerial know-how to undertake large scale projects without outside help.
I do not believe there can be any real argument with the proposition that this foreign investment has brought great benefit to Australia at this vital stage of our development. However, I do not believe that it would be wise to arrive at that comfortable conclusion and let the matter rest. I think it right that we should occasionally look at the balance sheet and see what minuses, if any, there may ba developing. It is not so long ago that this country faced a series of crises in our balance of payments position. Honourable members will remember that there was a continuous battle to make ends meet in our international transactions. Terms of trade were and are working against Australia, as indeed with all major rural exporting countries. Manufactured exports were beginning to play an ever more significant part for us. But it was the dramatic development in the mineral industry in the past decade, backed by Government encouragement and guidance and largely financed from overseas sources, which came to the rescue of Australia’s international trading situation and appears to have largely removed the threat to stability with which we had learned to live so precariously from year to year.
Of course, there can be no disputing that the inflow of foreign capital itself has played a crucial task in balancing our accounts in some recent years. Other honourable members have pointed out some facts about the extent of foreign ownership in certain key areas of our economy. Others have referred to the growing bill which must be paid now, or in the future, for overseas funds which have been invested here. I would like to consider very briefly what these factors mean for our balance of payments. Simply put, a growing industrial structure means growing demands for capital equipment and the essential materials to sustain industrial growth. A growing population with full employment and rising living standards means growth in consumer spending. In turn, these growth factors generate imports which have increased from an annual bill of approximately $ 1,800m at the start of the 1960s to something of the order of $3,500m this financial year, representing an annual increase at the rate of 8% over the past decade.
In addition to paying for imports we also need growing amounts of foreign exchange to meet deficits on invisibles such as freight, overseas travel, dividends and interest payable overseas. This need has been growing also. In 1959-60 the deficit in this area of our balance of payments was about $500m. Now this deficit is more than $l,000m a year and is growing. The burden of these items such as dividends, royalties and interest payments remitted abroad is also growing. In 10 years these remittances have more than doubled to about $340m today - a figure, I remind honourable members, which includes royalties. Irrespective of the precise base used or the particular factors considered, it will be agreed that the bill for these items is increasing and doing so significantly.
Whether one agrees with the figures put forward by the Minister for Trade and Industry (Mr McEwen) on whether one agrees with those which have been mentioned in this debate by my colleague, the honourable member for Lilley (Mr Kevin Cairns), is somewhat immaterial. Honourable members will recall that the Minister claimed that income remitted overseas had risen from 8.3% of our export earnings 5 years ago to 10.5% a year ago. The honourable member for Lilley, on the other hand, by removing certain data, claims that the figures should be from 6.6% to 8.6%. I have not had time to investigate thoroughly the figures of the honourable member for Lilley. However, I support them and his contention that royalties should not be considered in this context. Nevertheless, the reality is that both sets of figures show that, despite a substantial increase in the volume and value of our exports in the past 5 years, the cost of servicing foreign debt and foreign investment in Australia is steadily growing and, I venture to say, will continue to do so. Some time over the weekend I was able to do some figures too and I would suggest that perhaps the most significant figure to look at in this context when we consider that exports in 1964-65 amounted to $2,574m and in 1968-69 $3,220m, is the income earned after tax. This income payable on direct private overseas investment excluding royalties moved from $250m in 1964-65, which represented 9.7% of exports, to nearly double that figure in 1 968- 69 of $493m or 15.3% of that export figure. The danger is there and is one which we have to be careful about.
In the last 5 years the annual rate of foreign capital inflow has doubled. In the last 2 years it has been at the level of some $ 1,200m. Coupled with the plough-back of profits by foreign owned companies in Australia, which itself has doubled in the last 5 years, the commitments we are now building up for future overseas payments in profits, royalties, interest and repayment of loans must be, as I think is generally admitted, rising at a considerable rate. It is to be regretted that nowhere near enough work has been done in (his field of inquiry and I would hope that the interest that was being shown at some of the universities - certainly at the University of Melbourne’s commerce faculty - 10 years ago could be re-activated. There can be no questioning the great need for definitive research into forecasting trends for payments of income remitted abroad and 1 would commend it to any students who are contemplating a subject for their master’s thesis. But back to the Australian Industry Development Corporation. One of the main purposes I read into the proposal for an Australian Industry Development Corporation is to encourage, not to force, but to encourage, a gradual build up in the Australian-owned share of the development now going on in order to moderate the rate of build up in our future commitments overseas for profits, royalties and interest payments. I believe this is common sense.
As honourable members realise, capital inflow can come in a number of forms. It can come in as borrowing with a finite requirement to repay at fixed rates or as equity capital with a continuing and growing need for capital service payments. Overseas capital can come in to industries restricted by franchise imposed by parent companies overseas which prevent them exporting or to industries which develop exports and contribute to our export earnings. It can come in a way which leaves a large degree of Australian ownership and control or excludes Australian participation. In each of these alternatives, admittedly starkly posed for this speech, there is a choice between one way and another, with one choice being better for Australia’s future. As 1 see it, the job for the Development Corporation will be to use its influence where it can in the projects for which its assistance is sought to see that the choice made between the available alternatives is that choice which is in the best interests of Australia. Perhaps its crucial role will be its ability to influence the proportions of overseas capital coming in in the form of fixed interest loan money as opposed to equity capital. As structured by this Bill I believe this Australian Industry Development Corporation can play this useful role certainly to the extent that its operations should result in a larger proportion of overseas capital coming into
Australia in the form of loan moneys. These moneys will eventually be repaid, thus ending the commitment to send funds overseas to service them. Equity capital gains a right to participate in profits and there is no predictable end to the commitment. As the enterprise prospers and grows the overseas payments grow with it.
As we are aware, the greater the share of profits of enterprises financed with capital from overseas which goes to Australians through equity holdings in our enterprises, the greater will be our capacity to finance our own further development and the stronger will bc our long term balance of payments position. These are simple facts and they have been simply put - oversimplified perhaps, but none the less important to this debate as it has developed. Of course, there remain big tasks to be undertaken in developing Australian industry and natural resources. This is not in dispute. Nor is it disputed that huge amounts of capital, both loan and equity, will need to be forthcoming for Australian development. It is in our long-term interests to encourage such measures as the Australian Industry Development Corporation, designed to assist the efforts of Australian companies to get overseas capital in the form best suited to what T believe are our best long term needs.
Here in Australia we have developed many kinds of financial institutions each filling an important and specialised need. These institutions cover a wide range and reflect the rapid sophistication of the Australian money markers in the past decade or so. We have the large private trading banks and their savings banks, State government savings banks, the Export Payments Insurance Corporation established by the Federal Government, the private Australian Bankers Export Re-Finance Corporation, the Commonwealth Development Bank - wrongly incorporated, I still firmly believe, in the Government-owned Commonwealth Banking Corporation - the private Australian Resources Development Bank, the hire purchase finance companies, short term money market dealers who have evolved from major share broking firms, life insurance offices, overseas discount houses, the new and rapidly expanding credit unions, and so on. Furthermore there has been a great expansion of the Australian merchant banking system, increasingly in recent years in partnership with the internationally renowned merchant banks of Britain, Europe and, to a lesser extent, the commercial banks of the United States of America.
All these institutions have largely grown up to meet a specialised need although there is inevitably some overlap between their interests and, contrary to what the Leader of the Opposition (Mr Whitlam) suggested,, certainly a welcome element of competition between them. Some of these institutions perform banking functions for industry insofar as they provide short and medium term finance, deposit and overdraft facilities, and so on, although all of them, I would remind the House, do not operate as banks within the banking system. Some of them - the brokers, the short term money market dealers, the life offices and the merchant banks - provide the broad range of financing facilities, the underwriting and placement of share issues and the putting together from a variety of sources of the financial package needed to get a project off the ground and enable a company to expand. I feel there may be some confusion in the minds of the public and indeed in the minds of some honourable members simply because they have not realised that the proposed Corporation is not intended to act as a bank at all. It will not be performing banking functions any more than, say, the Australian United Corporation or the Development Finance Corporation perform such functions.
A Corporation such as the Australian Industry Development Corporation will be a financial institution certainly; but it is not a bank. It wilt not, for example, have the privileges of a bank in accepting deposits. The Reserve Bank will not stand behind it lending support to its activities. So I do not see that the Corporation could be fairly looked upon as competing with the traditional role of the banks. At the same time, we must never underestimate the fundamental role that has been played by the Australian trading banks throughout Australia’s history. The expertise that has developed from ISO years of diversified financial experience cannot and must not be understated. While the value of extending this expertise into certain other financial activities should be clearly understood and encouraged, I believe the Go vernment and the Reserve Bank have seen to this and I doubt whether there would be much credible objection from thinking Australian bankers on this matter. The trading banks have diversified not only in the way they have invested their capital funds into such activities as hire purchase, where, I might add, there has been great stabilisation following the extension of banking managerial expertise into this formerly volatile area of finance, but into the new areas of fund management and trust accounting, for example.
At the same time we know that the banks have been forced into changing their philosophies, partly because of competition from newly developing financial organisations and partly because of policies of restriction put forward by the Reserve Bank. The Australian money market of 1970 bears no resemblance to the Australian money market of 1950 - if, in fact, it deserved such a title 20 years ago. No, Mr Speaker, the role of the trading banks has changed over the past 2 decades and it is to the credit of private bank management in this country that the banking system has moved with the times so well. It has not always been a voluntary transition. Reserve Bank policy has not always been easy to follow and its directions have not always been to the advantage of the customers of the trading banks. Restrictions on lending policy, restrictive control of the trading banks’ capacity to earn profit commensurate with capital involved and skills employed have not only challenged the trading banks to greater working efficiencies but they have forced bank management into new activities not, as is so often alleged by members of the Australian Labor Party, to protect their own ends, whatever these may be, but to ensure that bank customers are given the financial servicing and credit facilities their customers require.
I do not intend this speech to be an apologia for the trading banks. I merely wish to put into some perspective what they have done, what they can do and what they believe themselves capable of achieving. I am not convinced that they have the facilities or the managerial experience to move into the activities that are planned for the AIDC. The merchant banks, for their part, do not normally, as will the AIDC, act as risk investors in their own right, with their own funds - lend to projects or participate significantly in the equity of a venture. Nor, perhaps, more importantly, have the merchant banks the capacity to raise a loan overseas for a venture which does not itself have a credit standing on the international money markets. So 1 can see no cause for concern here for the merchant banks. Rather. I believe, the AIDC should be seen as becoming a client, or an associate of the merchant banks and other related financial institutions. Indeed. I can envisage that there could be a substantial increase in business for them, as the Corporation’s activities develop, both in acting in partnership with the Corporation in financing ventures and because of the growing number of projects in which Australian firms have an interest and will look to the existing financial institutions to provide their specialised services.
As for the Australian Resources Development Bank, its role and importance for Australian development is unquestioned. lt will, I am certain, continue to receive unqualified support for its operations. But its activities are limited to the extractive industries and 1 am led to believe it does not participate in all stages, from mining to manufacture, of a new venture. For example, it would not be its purpose lo assist in the future development of an essentially mining venture into a fully fledged and integrated processing and manufacturing operation. Principally refinancing loans by its member banks, the Australian Resources Development Bank is essentially an extension of the traditional banking facilities for industry. Quite apart from all this, perhaps the main reason why an Australian Industry Development Corporation will not be in competition with existing financial institutions is that it is obviously intended to tap sources of funds not available to them; and it will be using these funds for a purpose which is not central to that of any of the exist:ng institutions, namely a charter responsibility to act - this is the important feature - to maximise Australian participation in industrial ventures.
I see the AIDC as providing a new facility tailored especially to promote and encourage Australian participation in our industrial development in partnership and not in conflict with existing institutions.
I imagine it will operate in a variety of ways, as determined by the particular needs of a venture it is engaged in, in providing finance solely for Australian partners in Australian ventures. I can understand that the AIDC can be and will be something of a catalyst in the putting together of attractive financial arrangements which would meet the needs of the partners in the project - the Australian companies involved, the overseas companies’ involved and the other financial institutions involved - while at the same time achieving for all Australians the important policy objective of greater Australian ownership and control of Australian industrial development.
The Bill gives the AIDC the flexibility not only to be a fixed interest borrower and lender but to provide through convertible notes, option warrants and .the like the equity sweetener that can attract to ventures funds which would not otherwise be available. On occasion, it may need to be an investment participant itself to secure its objectives of preserving Australian ownership for the future. Perhaps it is in this field that we may need some of these conditions to be considered. I know of no financial institution in Australia able to perform this task. An interesting new feature of the Corporation will be a systematic programme of borrowing overseas funds for development by Australian private industry of Australian resources and skills. I do not believe that the Corporation will always find it easy to borrow money on the international markets - whether in the recognised markets in Europe and the United States of America or from the less organised, but still significant, sources to be found elsewhere in the world. In fact, I believe the activities of the AIDC will be curtailed in the establishing period by the availability or non-availability of such funds overseas. Furthermore, I believe that the rate of interest that will have to be charged to clients of the Corporation, certainly at the present time, will prove to be a further dampener.
If the Australian Industry Development Corporation, established by government* with large capital backing for all to see, cannot borrow overseas at reasonable rates of interest for investment in projects with investment appeal I have doubts that any Australian privately owned business would be able to do so. If such private businesses cannot do so then the scarcity of funds on the Austraiian loan market will mean minimal Australian ownership and control of the ventures. Internationally controlled companies do not suffer from either restriction and may still draw from captive overseas funds which they control. To sum up, with the safeguards written into its charter I believe no existing financial institution need fear the AIDC as a competitor. Indeed, existing institutions should look upon it not as a bank nor just as another financial intermediary but as a potential partner from whose activities they can gain business. As a new institution, with a specialised function of assisting Australian industrial development into private Australian ownership, it should help bring new funds into Australia. I have doubts about some details of this Bill and have agreed with many of the criticisms brought forward by honourable members on this side pf the House, particularly as to whether this Corporation will find the money it seeks overseas. But I believe we cannot know this until we try it.
Let me add a final word about the threat of nationalising the AIDC whenever, and if, the Labor Party assumes office in Australia. I have listened to the words of nationalisation from the honourable members for Lalor (Dr J. F. Cairns) and Cunningham (Mr Connor). The latter member, honourable members will’ recall, went so far as to say that his Party will put the AIDC to other and better uses when the Australian Labor Party assumes power. But not a word came from the Opposition Leader (Mr Whitlam) regarding nationalisation. So what? These and similar comments by the Leader of the Opposition are based on one premise and one premise alone. The ALP still intends to nationalise, and I quote from page 10 of that Party’s Platform Constitution and Rules’, as approved in 1969, for ‘nationalisation of banking, credit and insurance*. Later, in the same document, on the same page, the ALP plans ‘Regulation of hire purchase and fringe institutions in conformity with regulations of the trading banks’. Or will it be ‘Nationalisation by rationalisation of the trading banks’? Yet again on page 11 of the platform and policy the ALP declares for all to see that it plans ‘to nationalise any industry or part thereof. The Australian Labor Party has never varied from its plans to nationalise, not just control, anything and everything it wants to. Now we will hear them say that the Constitution places limitations on them; that they, the Labor Party, will be restricted only insofar as they can get round the Constitution. If honourable members and the public think that that is merely a smart legalistic play on words by the legalistic Leader of the Australian Labor Party, then let them not be fooled. Let Mr Jackson and Mr Scambler of the banking world not be fooled. It is no argument to say that the AIDC should not come into operation because, at some future stage, that glorious party of the left-
– Oh, cut it out.
– I know the honourable member for Sydney is not part of the left. I repeat that it is no argument to say that the AIDC should not come into operation because at some future stage the glorious party of the left might nationalise it. That glorious party of the left is going to nationalise everything. Even if it is intending to change its policy on State aid yet again - a policy, I might add, which the late Jim Fraser never repudiated for a moment, even when his political leaders did and even less when his opponents in the Australian Capital Territory ranks of the Labor Party campaigned against him on his support for State aid - let us recall that the Australian Labor Party is dedicated to nationalisation of credit whenever and wherever it can.
I remind the House that the Reserve Bank still holds the power to cripple trading banks and their subsidiaries in Australia. The danger of nationalisation through restricted rationalisation of the Australian banks is present now, and the banking leaders of this country should recall this fact whenever they want to make public statements. Of course, the AIDC can be nationalised but where does the ALP think that it would get the funds from overseas to help it operate? From my own experience overseas there would be an immediate and lasting disenchantment with a socialised Australian Federal government. I venture to say that when the ALP does gain office the
AIDC will cease to have the required overseas support and any resultant nationalisation of it will be of far less significance than the mammoth disruption that will shake our economy when the ALP nationalises the trading banks and their subsidiaries - and any other source of credit for that matter. 1 do not disagree with many of the criticisms made by honourable members on my side of the House. I do agree with many of them. Perhaps the case for the scheme before the House has been overstated. I believe there are areas for reconsideration. However, on balance, 1 believe the principles behind the scheme are sound and that they certainly deserve a trial. I support the Bill.
– I will not follow my friend the honourable member for Hughes (Mr Dobie) down the fascinating path ha lo how a state-owned institution can be nationalised, lt seems to me that the proposed Australian Industry Development Corporation will be a Stateowned institution. The Opposition supports this Bill setting up this Corporation because its purpose is to increase the Australian content of industry in Australia and because it also proposes to promote industrial development. The main difficulty ] see about it - 1 am rather astonished at the nature of the criticism from honourable members on the Government side - is that it is a pigmy in its initial conception. I shall illustrate this by pointing out the magnitude of its proposed capitalisation when compared to the annual supply of capital in Australia at the moment. If honourable members read the Bill they will discover that it is proposed to capitalise the Corporation initially by a grant of $25m. This sum may be augmented in the first period of operation to 4 times that amount, if the Government is able to raise the funds. It is hoped that they will be raised principally from overseas.
I would like to clear one little difficulty that seems to have intruded into this debate, that is, whether this organisation is a bank or something else. If I may I want to repeat a story I have told in this House before. It is attributed to the late Lord Keynes. Someone asked him to explain the difference between the International Bank for Recon struction and Development and the International Monetary Fund. The late Lord Keynes is supposed to have said that you best understand the Bank if you think of it as a fund and you best understand the Fund if you think of it as a bank. I suggest, with all respect, that this Corporation will be a fund rather than a bank.
If one turns to the White Paper on national income one finds that for the 12 months ended in June 1969 what is described as gross fixed capital expenditure in Australia amounted to $8,083m, or in round terms S8.000m. About two-thirds of that sum was expended in private investment and approximately one-third in public investment. The principal thing that ought to concern honourable members is the item described as ‘All other private investment’. This is what is left when we take out of the private field the money spent on construction of new dwellings and other new buildings. The sum left is what goes into the expansion or development of industry in our private enterprise system, or that part of industry still in that field, and in that period it amounted to $2,375m. That is why I say it is a pigmy conception to think that somehow the injection of $25m into the Australian Industry Development Corporation, leading up to possibly S lOOm, will disrupt the whole fabric of private enterprise.
The other interesting and significant figure that ought to be noted is that those capital funds amounting to approximately S8,000m were found in the main within Australia, with the exception of a sum of SI, 149m - not an insignificant item - which is described in the White Paper as the net apparent capital inflow. Of course, the significant and strategic thing so far as the Australian economy is concerned is the tendency for the majority of that net capital inflow to go into what is called all other private capital expenditure.
It is this which has led up to the sort of situation referred to by the Minister for Trade and Industry (Mr McEwen) as the preponderance of foreign ownership in certain of our industries. After all, he only quoted the figures, which are freely available, relating to overseas participation in Australian manufacturing industry in the period from 1962-63 to 1966-67. They
The degree of overseas participation in the Australian mining industry in recent years is a stark indication of what has happened. I gather from a lot of the speeches made in the course of this debate that most honourable members have high hopes that the sort of capital expansion envisaged with the institution of this Corporation will be in the mineral field. I shall quote some figures shortly which indicate that in some fields it is already too late because control at the moment is largely non-Australian. The table at page 13 of the document entitled ‘Overseas Participation in Australian Mining Industry’ shows that from 1963 to 1967 - a period of 4 years - overseas ownership in the mining field increased from 27.3% to 40.9%. Of course, the degree of Australian ownership on the other side declined from 72.7% to 59.1%. In other words, we have reached the stage where two-fifths of the minerals industry is under foreign ownership. Primarily what is being exploited are Australian natural resources. The exploitation is taking place on the basis of two-fifths foreign ownership and three-fifths internal participation.
Some mention has been made in this debate of another organisation, the Australian Resources Development Bank Ltd. The honourable member for Bradfield (Mr Turner) had a great half an hour out here just before dinner indicating how little information the Minister for Trade and Industry (Mr McEwen) had given about this Bill setting up the AIDC: I simply say to the honourable gentleman: How little information was given to this House when the Australian Resources Development Bank Ltd was set up. No legislation relating to it was passed by this House. All that was necessary was the consent of the Treasurer to its calling itself a bank. Apart from the fact that one can go down to the Victorian Companies Office, search the registrations and find the articles and memorandum of association or its annual report, it is subject to no scrutiny whatsoever.
The type of criticism that has come is rather astonishing. Even though the ARDB has been in operation for not much more than 2 years, in the time that it has been in operation it has extended credits amounting to about $250m, the main part of which has been in the field of minerals. The annual report of the ARDB shows that the biggest advances that have been promised are: Something like $65m for bauxite and alumina, something in the region of S40m for nickel, something in the region of $40m for iron ore, $40m for oil and natural gas, $20m for zinc, SI 5m for coal, $10m for pyrites and some $15m for other fields. I repeat that this organisation operates as a bank and not as a fund. With an initial capital of some SI Om it has been able to erect a structure of advances that will in a short period be in the region of S250m.
But I want to draw attention at this stage to some rather interesting features of the situation in the base metals industry in Australia, because this is the one to which, it seems to me, people look with such high hopes for contribution to exports in the future. I use as my main source of information a publication entitled ‘The Contribution of the Base Metals Industry to Australian Economic Growth’ by S. Tsung which is published by the Committee for Economic Development of Australia. It is from the Committee’s M series, No. 26. It says some rather striking things. This is why it seems to me that these apostles of free enterprise in the Liberal Party, as they were described here this afternoon, do not seem to realise the sort of situation that Australia has to face in exports, say, in the 1970s.
The learned writer points out that according to projections for 1971 Australian contracts for the supply of some 40 million tons of iron ore to Japan have already been signed, but Japan’s total needs in that year will be 88 million tons. He says that Japan is reluctant to have a dependence rate upon any country greater than 45%. For a strategic material, this 45% seems to be extraordinarily high. It is the writer’s opinion that Australia is not likely to get more than 5 million tons of this extra 17 million tons in the years ahead. He goes on further to note that one solution which has been recommended to the Japanese Government by a special sub-committee on the basic problems of the iron and steel industry is the formation of an Iron and Steel Council within the Ministry of International Trade and Industry, which is known very briefly as MITI. This Council would work to co-ordinate industry planning more closely with government projections. It would bring even greater centralisation to the steel industry and a tougher approach to negotiating raw material contracts.
I submit that what this shows is that the Ministry of International Trade and Industry in Japan has a much tougher approach and a much more systematic approach to looking after Japanese interests than the Australian Government has to looking after Australian interests. Some people in the wool industry are concerned at the moment. I do not want to go into that argument tonight except to indicate that it seems that Japan as a buyer is much better organised than is Australia as a seller. The writer goes on further to talk about projections for iron ord exports from Australia during the period from 1966-67 to 1974-75 and lists the likely demands from such companies as Hamersley Iron Pty Ltd, Mount Newman Iron Ore Co. Ltd, Mount Goldsworthy Mining Associates, Cliffs Western Australian Mining Co. Pty Ltd, Western Mining Corporation Ltd, Sentinel Mining Co., the company operating the Savage River project, Morgan Mining and Industrial Co. Pty Ltd, Frances Creek Iron Mining Pty Ltd, Broken Hill Pty Co. Ltd, and the companies operating the Northam and Hanwright projects. He expects that by 1974-75 exports will be of a value of S446m.
But then the other thing that the learned writer goes on to note is the capital structures of these various concerns that are operating in this field at the moment. I have time to quote only one. I quote the rather dominant one. Hamersley Iron Pty Ltd. I think the honourable member for Maranoa (Mr Corbett) quoted some examples of cost this afternoon. At the end of 1967 the cost of the Hamersley project was $179m. This figure includes the first primary crushing unit and concentrating facilities, the railway and rolling stock and the loading and port facilities at Dampier. It also includes the bulk of the cost of a pellet plant that was completed in March 1968. With a planned second crushing unit to lift the capacity to 24 million tons and the balance of the cost of the pellet plant the cost will be in excess of $200m. Mr Tsung pointed out that vast sums are involved in developing Aus*tralia’s natural resources. He then comments:
Hamersley ‘s capital at the date of writing is $A50m. The shares are owned as to 54# by TRA. 36% by Kaiser Steel Corporation of the US. and 10% by the Australian public. Eighty-five per cent of CRA is in turn owned by overseas interest, therefore in effect I8.t%-
Less than one-fifth - of Hamersley’s capital is owned by Australians.
This is why I submit that in many respects these measures are too little and too late. lt was astonishing to hear the Minister far Trade and Industry say that he knew of no important country other than Australia where the government exhibits a complete indifference as to whether its natural resources or production opportunities .ire owned in whole or in part by overseas interests. What an astonishing statement to come from the Deputy Prims Minister crf a Government that has governed Australia for 20 years, for the whole of which the inflow of foreign capital has been significant. He says that at a stage when the capital inflow from overseas is hundreds of millions of dollars and when Australian participation is as low as one-fifth. The Government comes along with a paltry measure that will start a capital fund of $25m which is likely to yield at the end of 12 months or so $100m and it claims that the majority of the money will come from overseas. At the moment the ruling interest rate overseas is from 10% to 12%. When inflation is the most pressing economic problem do members of the Government believe that inflation will be halted if they finance investment in Australia at a rate of 12% on money borrowed overseas? Surely the whole concept and approach is absurd.
What is required in Australia is something of the magnitude of the Japan Development Bank: I quote from its financial statements of 31st March 1968, which are the latest available to me. They show that the assets of that concern, and in turn the liabilities - expressed in American dollars, which are one-tenth less than the value at Australian dollars - are $3,617m. That is the way in which our principal customer looks after the problem of industrial development. It is done on a government basis. Australia is faced with a situation in which virtually the whole of our wool is sold outside Australia, more than half of our wheat is sold outside Australia and the same is true of dairy produce and sugar. That is also the situation we are going to face with minerals. Our principal buyer in the years ahead will be Japan whose trade, through its trade department and buttressed by economic assistance from the Japanese Treasury and other sources, is much better organised to do a good deal for Japan than Australia’s system is organised to do a good deal for us.
I have said before in this House that Australia is being robbed at the moment of nearly $200m a year in current wool prices. I do not think we know how much we are being robbed of in the prices that have been negotiated for the sale of iron ore. We have abundant resources of iron ore available in Australia. Surely they ought to be regarded as the national heritage of all Australians. Why does it require somebody from overseas to own the preponderant amount of the equity that is required to take that ore out of the soil and sell it to our customer, Japan, 2,000 miles away? Why must the industry be riddled by the dominance of foreign ownership? This is why at last we applaud the measure that is now before us, small as it is. Honourable members should look at the figures for the industrial development corporation in South Africa, whose economy is at a much lower level than ours in terms of the gross national product. The advances through those organisations in Japan and South Africa are for different purposes, according to the nature of the economy concerned. Australia must build this sort of institution that can give this country some strength as a seller of commodities, both primary and mineral, and ultimately of manufacture, that other parts of the world will require. But we cannot do it if we go into the organisation as a curious assembly of individual sellers against organised buyers.
Somebody mentioned earlier today the lack of co-ordination of resources. This is the kind of thing that can happen if we allow foreign concerns to be the dominant determinant of where development takes place. I quote again from the study on the metal industry:
The problem that is causing concern within the Australian iron ore industry is that of resource allocation.
That was mentioned this afternoon by my colleague, the honourable member for Kingston (Dr Gun). The article continues:
The problem has arisen because of the failure of the Government to provide for infrastructures and community services in those remote mining areas. The Government has turned these responsibilities to private industry. As a result railway lines, port facilities, power supply are privately owned. A company’s interest is unfortunately not always the same as the national interest -
The Minister for Trade and Industry said something of that kind in the course of his speech, that what was good for General Motors-Holden’s Pty Ltd was not necessarily good for Australia - and reconciling the two is an important role ot government in the modern free enterprise economy. In this respect both the Western Australian and the Commonwealth governments have failed to do in the iron ore development in north Western Australia. A disturbing example of this is the failure to co-ordinate the railway lines. Hamersley Iron built a 180 mile railway line from Mount Tom Price to Dampier at King Bay. Mount Newman is about 100 miles to the east of Mount Tora Price. Early in 1967 when plans for Mount Newman were still on the drawing board the Mount Newman consortium approached Hamersley Iron in respect to a proposal to use Hamersley’s line for the shipping of Mount Newman ore. The terms demanded by Hamersley were: a capital payment of $A 50m for the use of Dampier and the railway line for which Mount Newman will receive no equity in the assets plus SOc a ton toll plus operating costs. The terms are so tough that Mount Newman has no alternative but to build another 260 mile railway line almost parallel to the Hamersley line and to construct port facilities at Port Hedland. The marginal cost for Hamersley in sharing its railway line with Mount Newman is nowhere near the amount demanded. For the economy as a whole this is a distinct case of misallocation of resources.
He goes on to suggest the prospect of the 2 rival concerns building 2 ports instead of coming to an agreement about building 1 port only. If this sort of thing is done by the use of foreign capital I think it is time that the Government stepped in and regulated what some of these irresponsible multi-national giants are doing as far as planned development in Australia is concerned.
Surely the resources of a body like the Australian Industry Development Corporation could be used to act as a neutral factor between contending companies. The Corporation could say: ‘We are not going to allow you to build 2 railway lines when the second company can be served by a spur from the railway line built by the first company.’ I submit that to do that is only to be sensible as far as the national development of Australia is concerned. Puny and all as this measure is, at least it is a beginning. 1 hope at any rate that this organisation will grow to great heights in a short space of time.
– In answer to the last comment made by the honourable member for Melbourne Ports (Mr Crean) I ask him whether he has considered that the line built by the Hamersley organisation will be committed fully when the company finishes its development of its new mine and that it could not spare any of its rolling stock or any of its facilities for anybody else because of the enormous size of its operations. May I say that such operations by companies are possible only under a free enterprise government. I will develop this idea in a moment.
If the Party for which the honourable member speaks were in power no development would take place in Australia at all because of the fear of nationalisation of the means of production, distribution and exchange. It is no good for the Opposition to try to laugh these remarks off. These are the facts of life. The Australian Labor Party went out of office in 1949 because it began to nationalise the banks. Now, when this tremendous expansion and boom is occurring in Australia, the Labor Party wants to monkey around with those developments. The fact is that these things have taken place only because we have a free enterprise system.
In 1953, the then Prime Minister, Mr Menzies as he then was, said, as reported at page 121 of Hansard of 19th February 1953:
We are deeply committed, as a government, to the principle of fair competition in the banking system.
He also said:
We stand for fair competition. . . . 1 wish to address the whole of my remarks to ‘fair competition’. Mr Menzies continued: . . between it . . .
He was referring to the Commonwealth Bank: . . and the other trading banks in the country. The light way to achieve that competition is, first, to give it a separate legal existence-
That is, the central banking part of the Commonwealth Bank: . . and, secondly, to make it subject to precisely the same rules as are those institutions which are competing with it for business.
He said further that his Government believed in:
Mr Menzies said that he believed in the administration of central banking policy with true, genuine competition between the banks. His words were: ‘true, genuine competition between the banks’. This is the philosophy and the kind of system that brought the Liberal Party into power in 1949.
Again, when introducing the Banking Bill in 1953, which followed the Commonwealth Bank Bill 1953, Mr Menzies said:
As I have said in relation to the earlier Bill, the Government is pledged to preserve competition on a fair and equitable basis as an essential ingredient of the banking system in Australia.
In that same speech he said:
We believe that a strong competitive banking system is one of the pillars of the economic freedom of the individual, and we are resolved to remove any potential threat to that system which is at present inherent in the banking law. At the same time, we recognise the tremendously important part played by the central bank and the need of that bank of adequate powers to perform its task.
Now, the same thing was followed right through to 1957. The then Leader of the Country Party, Sir Arthur Fadden, when he was Treasurer, when speaking on the Reserve Bank Bill 1957 said:
The chief purpose of this Bill is to establish the central bank for the Australian monetary and banking system as an institution which will not be directly associated with the conduct of banking business in competition with the private banks.
He said further:
But we also believe that the private trading banks have a vital part to play in the Australian banking system and the Australian economy; and there can be no doubt either that the great majority of Australian people believe this too.
That system, which this Government introduced in 1953 and then confirmed with the Reserve Bank Bill and the establishment of the Reserve Bank in 1957, has been a kind of economic freedom which has meant that Australia would prosper. We have seen tremendous prosperity in the last decade based on this system of free enterprise banking under the control of the Reserve Bank which is responsible for the flow of money in Australia. I believe that the Australian Industry Development Corporation is not meant to work with the Reserve Bank. It is meant to work outside the Reserve Bank. Although I find it difficult to believe that it is not a bank, if it is not a bank what will it do with these funds which it receives through this legislation? lt will have to bank those funds in some private bank. Immediately that happens it should become subject to the control of the Reserve Bank. 1 feel moved to speak in this way in opposition to this Bill. I cannot support this Bill. Some honourable members here may remember that in 1956 I was moved to rise in this place and ask for leave to bring in a Bill for an Act to amend the Commonwealth Banking Act 1945-1953 so as to provide for separate administration of the separate banking functions of the Commonwealth Bank of Australia. At that time, the Government parties held a Party meeting. The then Prime Minister, Mr Menzies, agreed following that move, which was made on 10th May 1956, to have a 3- day meeting on the question of the Reserve Bank in February 1957. Following this Party meeting, the Government introduced the Reserve Bank Bill. We now have the Reserve Bank of Australia operating in every State of Australia.
The Reserve Bank has been able to avoid severe inflation and severe recessions because it had a system of skimming off what were held to be funds which were too available at certain times, it skimmed those funds off and put them into statutory reserve deposits. The Bank of New South Wales, during the Second World War, when it believed that there was too much money and too much danger of inflation, voluntarily deposited its surplus funds with the Commonwealth Bank. This led to the system of statutory reserve deposits which 14 years later became enshrined in the conduct of the business of the Reserve Bank of Australia. This was done to prevent too much money being in circulation, to prevent over-employment and to prevent prices rising and affecting people not able to cope with high prices.
The Reserve Bank has been able to do this, lt has been able to achieve it by getting trust between the private trading banks and the Reserve Bank and by having the principle of fair competition enshrined in its charter. This principle was stated over and over again in the speeches I have quoted and is in our philosophy on banking. So, under this economic freedom and our free enterprise banking system, we have seen develop the Hamersley and Comalco undertakings and all of these other big mineral concerns. They have added to Australia’s prosperity and to our export income. We have seen in operation this system of which I have given some of the philosophy and some of the kinds of principles which were stated by Mr Menzies, as he then was, and by the former Leader of the Country Party, Sir Arthur Fadden, when he was Treasurer. These have been successful. Certainly we are in a time of change. Certain attitudes of people are changing. We heard the Canadian Prime Minister yesterday giving effect to this kind of thinking. But there are certain principles which cannot be changed. One principle which cannot be changed is that you cannot allow too large an amount of money to come in which will raise prices against our export returns, raise prices against pensioners, and raise prices against people who are on fixed incomes. This cannot be allowed because it means economic torture, and hardship for people who ought not to have to put up with it.
So I believe that these principles which 1 have announced, and which 1 have repeated here tonight, cannot be changed. I believe that the moment we set up a corporation like this, which is held to be not subject to the ukase, to the orders, to the counsel of the Reserve Bank and which can go on its own, we interfere with the free enterprise banking system which has been so successful. I believe we cannot interfere with it without great danger. In what way is this Corporation different from the banks which have been operating and which have been successful? Incidentally, it is quite interesting to note that 20 years ago some of the Labor speakers - and I know of one who is not far away from here - said we should run a steam roller over the private banks and we should make them disgorge their money for the good of the people. That was the kind of demagogic talk we heard from certain people. The honourable member for Eden-Monaro (Mr Allan Fraser) may remember some of those to whom I refer. That kind of criticism, which of course is nonsense, has ceased. There is not the same criticism of the free enterprise banks because they have done a job for Australian development. The Labor Party spokesmen have not been attacking the free enterprise banks because I believe that the honourable member for Melbourne Ports (Mr Crean) and other honourable members have been able to understand the operations of this system. They have come to applaud the operations of the system. It is a good one and cannot be lightly changed without severe damage to the whole of the economy.
First of all, let us look at the capital of the Australian Resources Development Bank. Let us take it as a kind of comparison with this new Corporation which is said to bc not a bank. 1 do not quite understand why it is not a bank. I think there has been some confusion about this. When it gets funds from overseas where does it put them? Does it get a load of bullion and put it into its own coffers, or does it get a cheque from overseas and put it into a private bank? In that case it would immediately become subject to the operations of the Reserve Bank which has to control the flow of credit. The authorised capital of the Australia Resources Development Bank is $ 1 Om, . comprising 10,000 shares of $1,000 each. Paid up capital is
S3m. comprising 3,000 shares fully paid. The Bank has power to borrow or raise money. The Corporation has a capital of Si 00m which is taken from the taxpayers. The taxpayers will pay this whether they like it or not. They will pay $25m a year for 5 years. This money does not come from investors. It does not come from people who are interested in mining or commerce in Australia. It comes from the taxpayers. So immediately that happens there is unfair competition for capital because the taxpayers of Australia, if this becomes law - and I will not support it - will put in $25m.
– How will you vote on it?
– One of the important reasons why I would not support it is that the honourable member is Supporting it. He signed the pledge for the socialisation of the means of production, distribution and exchange. Honourable members opposite can see that by getting this part of the legislation into operation it is a start in carrying out their pledge. Some honourable members opposite feel a little guilty about not being able to carry out their pledge of socialisation of the means of production, distribution and exchange. But through this Bill - I heard honourable members on the other side say this today - and with a few little changes to it they can socialise banking. They can socialise banking with the taxpayers money and by plundering all of the people who tried to develop Australia and have risked their capital. There have been some very big risks taken and there are still some very big risks being taken. Does the Labor Party think by voting for this Bill it is carrying out part of its pledge to socialise the means of production, distribution and exchange? Socialisation of the means of exchange is one of three ways of socialising a country. Of course, this will please all kinds of friends. There is no need to nominate who they are. The honourable member who has interjected tells me he is a left winger, so he will be able to please the left wingers. No left wing country has been able to produce as Australia has under a free enterprise system.
– What about Sweden?
– I am very glad to get a laugh from one of our new young members. No other country, Russia and China included, has been able to reach our standards of living. If honourable members have read the last Soviet statement which was made on 18th May they will have seen the terror that is occurring in the Kremlin because of the economic failure in Russia. There is no spur or competition to try because everybody has a job. The honourable member has the kind of laugh which we usually get from the chaps with the red ties in the Domain. When we say something about free enterprise we get this kind of approach. But could this man produce anything? Could he run a business? Could he work in a bank? Could he do anything that shows initiative or the strength of the new methods adopted in running concerns such as Hamersley and Comalco? We get the chap who says: ‘Let us have the dictatorship of the proletariat’. We are reminded of the people who went to the big Russian show where there were 3 or 4 cars. They sa:d: ‘Who do these belong to?’ The reply was: ‘They belong to the directors’. When they came to the Australian show there were 1.000 cars. They asked again: ‘Who do they belong to?’ The answer came: ‘They belong to the workers’. So the workers run the cars here; the directors run the cars in Russia. That is the kind of thinking and the approach of the honourable gentleman opposite who has the tolerant laugh. It is typical of a certain class of people in relation to the running of the Labor Party.
So we gel the situation where this Australian Industry Development Corporalion is to make big industrial concerns in Australia go ahead. I do not know why anybody should think that we are not doing well in Australia. I think that the operations of the Hamersley company, of Mount Newman and of Mount Goldsworthy and the people who got on to the rich iron ore - Robe River is nol so rich - and the people who got the best deal they could with the Western Australian Government and the Commonwealth Government, have made a great contribution to Australia’s prosperity and have saved us from what would have been a failure of our balance of payments. There is no doubt that these concerns have saved us from this situation. They have done so under a Liberal free enterprise government. They have done it under the free enterprise banking system with the spur of strong competition. But in the future where will the competition come from with this $100m in 5 years of taxpayers money? As far as I know interest will not be paid on this amount. The rules were that Qantas Airways Limited, Trans-Australia Airlines and other organisations had to make allowance for taxation. As far as I know this Corporation does not have to do so. it is able to lend 5 times the amount of its capital. That means it can lend S500m. 1 do not know from whom it gets the other $400m. Perhaps it puts $25m into a private trading bank and says: ‘Give us $125m now’. If that is correct, what about the other people who want funds from the private trading bank? They will be closed off because the Reserve Bank will say: ‘You can lend only so much’. The private trading banks have agreed to abide by what the Reserve Bank says.
So in that case this extra money will shut off borrowing by, say, the Hamersley company which may want to extend its operations, lt will not be able, to do so unless it can get the funds from overseas. Somebody has said: ‘We will get money from the oil rich sheiks.’ But these oil rich sheiks will not put money into Australia unless they have a guarantee of immediate expropriation. This Corporation would be a great thing to have their money in. If it started to lend it out to start some great business it would have to pay it back tomorrow. I do not see what it would get from them. We are told in some of these statements that the 12% interest overseas is lessened. I do not know what it comes down to. But if 12% were paid for overseas money which until recently prevented the Australian Development Resources Bank from borrowing, how would the Corporation start a show in Australia making a profit out of borrowing at 12%? lt would have to charge 15% because it would have to pay the bank clerks and the people in the Corporation. 1 do not see how that one would work. Perhaps honourable members who have been here a few weeks will turn out to be much more expert than I am on these matters.
There was on 20th May, or the day before, a meeting of the Victorian Employers Federation, the’ Australian Bankers Association, the Victorian Chamber of Manufactures, the Council of Fire and Accident Underwriters of Australia, the
Metal Trades Industry Association, Victorian Branch, and the Melbourne Chamber of Commerce. I must say that after the last couple of years I am much more friendly to Victorians than I used to be and I respect Victorians. That meeting was held to discuss the Australian Industry Development Corporation Bill. Mr Allen, the President of the Melbourne Chamber of Commerce, said: . . it was the unanimous opinion of these groups that in its present form the Bill be immediately deferred to allow time for further detailed study of certain sections which required amendment.
We have just heard that the off-shore mineral rights legislation has been deferred for a while. Sweet reasonableness has prevailed. The people who are involved in this ought to have the chance to have another look at it. I think that the honourable member for Moore (Mr Maisey) is aware of this. I can see by the way he is nodding his head that he is fully in favour of deferring that legislation. I think that the proposal now before the House should be deferred until we know a little more about it. This is an incredibly confused and technical piece of interference with Australian free enterprise banks. Mr Allen said, according to a Press release:
That is, the deferral - the role of private enterprise in Australia would be seriously weakened and he called upon the Government to recognise the responsible and earnest request of these private enterprise bodies.
Do they know nothing about these affairs? Are these earnest men who have suddenly awakened to the dangers in this proposal? The answer would be over on the other side of this chamber, because they are the men who have sworn to socialise the means of exchange and their enthusiastic reception of this legislation is almost the kiss of death, not only to this matter but to the future, to competitive strength and to the kind of energy that is generated by competition, business and the enormous thrust of the great mining companies. All that will begin to wither on the vine. I have not the slightest doubt that that is what is in the wind. None of this great boom that has taken place in Australia would have occurred if that alternative government were sitting on this side of the House because anybody who had any prospects of iron ore and the rest of it would know that that government would steal it from them by nationalisation of the means of distribution, production and exchange. Then we have the Associated Chambers of Commerce. Do these men know nothing about it? Mr Lambert, Deputy President of that organisation, in a Press release said:
Nothing that has been said by the proponents of the Australian Industry Development Corporation Bill has changed ACCA’s view that the Corporation will duplicate existing facilities.
Let me say that the Minister who presented this Bill to the House has always earned my greatest respect and admiration. He is a very great Australian with a very great image but the minute that he or anybody else cuts across what 1 think is an immutable principle of the operation of free enterprise in any of its forms, I must claim the right to oppose it.
– As long as it will not defeat the Government.
– Well, of course, by some kind of a trick the Opposition might vote for something that it does not believe in just to get some kind of an upheaval on the Government side but it immediately dishonours the vote. I have seen this happen here plenty of times. The Opposition has voted for something in which it did not believe in order to get some low-down political advantage and-
– As long as you do not defeat the Government you are a rebel.
– You can laugh it off.
– You are a rebel if you do not defeat the Government.
– But you do not get away with that stuff when there are questions of principle involved, and your principles are to socialise the means of production, distribution and exchange, unless you are a liar, and I do not think you are. I think you mean to keep that pledge and you have said that you will vote for this and that means it is helping you to carry out your pledge, and therefore you are honest about it. Although the Minister for Trade and Industry (Mr McEwen), in his second reading speech, indicated that the Corporation must not seek a controlling interest in enterprise with which it becomes involved, the Bill states in clause 8 (3.) (c):
The Corporation shall endeavour, so far as practicable, to avoid becoming or remaining in a position where it is able to control or nv.mage the affairs of a company to which it provides assistance.
I can imagine the Labor Parly loving that bit, because this is the provision that Russia has. It sends out to country areas thousands of miles away directors to run some concern and they make a mess of it.
– I rise to a point of order. Mr Deputy Speaker, 1 draw your attention to the fact that the honourable member is inferring that this is dreadful Socialist legislation. I point out that it has been introduced by a Liberal Government.
Mr DEPUTY SPEAKER (Mr Maisey)Order! There is no point of order.
– Similarly, it is stated in the second reading speech that the Corporation must dispose of its equity holdings which are no longer necessary to its policy objectives. The Bill, on the other hand, in clause 8 (4) only says: the corporation shall endeavour to dispose of those shares.
I wonder how it will’ feel if it has some beauties which are earning a lot of money and it can relieve the taxpayer of his $ 10Om lt might keep those shares but it ‘shall endeavour to dispose of those shares’. It could offer them at $100, receive an offer of only $89 and then say: ‘Well, we will not sell.’ But it shall endeavour to dispose of them. The Associated Chambers of Commerce has stated:
ACCA considers that it should be mandatory that the Corporation dispose of shares at the earliest possible opportunity.
Clause 8 (6.) of the Bill is a magnificent provision. I am glad that the AttorneyGeneral (Mr Hughes) is present tonight because he ought to have a go at this one. I am quite sure that the Minister for Trade and Industry and the Attorney-General would not be a party to this. I wonder who wrote this one. Clause 8 sub-clause 6 states:
The exercise of any powers by the Corporation is not invalid, and shall not be called in question, by reason of any failure of the Corporation to comply with any of its obligations under this section.
– David Fairbairn.
– That is a beauty. In other words, what it says to the layman - and I am sure it does not say this to the Attorney-General, as we must get him out ot this - is that-
– Do not worry. I do not feel as if I want it to look that way.
– I do not think you do and for that reason I wish you knew. That sub-clause means that the Corporation can do anything it likes and it cannot be called into question by reason of any failure to comply with any of its obligations under this section. This Bill introduces so many new principles and cuts across so many immutable and unchangeable ones that this is the kind of thing which, after being brought in, should be examined in the same way as we dealt with the proposal on the 3-mi)e limit. There is too much haste about this matter. We have had some kind of leak from a Cabinet meeting which was held some months ago and suddenly the Bill appeared. Anything which I have said about the Bill does not apply to the Minister for Trade and Industry. I still have the greatest admiration and respect for him. as most other people have. He is a very great Australian. He has been driven to do this by some lack of the Australian component. Perhaps it was the Robe River one which took so many years to get going because the Australian component was not available and because this area was not quite as rich as the Hamersley and Hamersley Range areas which are almost incredibly rich.
There is no need for Australia to sell all its metal or ore to one country. Other countries want Australian ore. There is a tremendous demand for it and we can sell it, but the people who started are now in the box seat and it will be much more difficult for others, and it will be difficult for this Corporation to work. I do not support the Bill.
– There is always a certain mystical quality about the speeches of the honourable member for Macarthur (Mr Jeff Bate). One is never quite sure what he means by it all. He is opposed to this Bill. He is not opposed to it to the point where, if it came to the crunch and it meant the defeat of the Government, he would vote against it. His principles would not carry him that far; that is obvious. But there are a few things to which he is dedicated. He is dedicated to the principle of private enterprise and freedom, lt is a pity he does not extend that to the 20-year-olds who are being called up under the National Service Act. It is a pity he does not extend that principle to the Conciliation and Arbitration Act which nationalises for his benefit, and the benefit of people like him, the industrial workers of Australia. Apparently the only things he is prepared to nationalise are 20-year-olds and industrial workers. Of course he did say - I suppose this is to his credit - that honourable members opposite are cabin’s, cribb’d and confin’d inside the party room. As the honourable member for Bradfield (Mr Turner) said today, they are not allowed to discuss anything.
The honourable member for Macarthur seems to labour under a few misconceptions. He mentioned left wing governments. Presumably he was referred to governments that have a faintly democratic Socialist flavour - what we might call Labor governments. They all appear to be running backwards as far as he is concerned. Has he ever been to Sweden? Is not Sweden a model of what a progressive rational Socialist government can achieve over a period of 30 or 40 years? Its standard of living is rising rapidly, far beyond the reach of this country. Our standards are subsiding.
Has he ever given thought to Israel, beleaguered as it is in the Middle East, with its very small population and with a Labour government holding off all its enemies and developing the country as well? Has he thought of West Germany which, I suppose, is enshrined in his mind as a booming country? It now has a Socialist leader. Has he thought of Norway and Denmark which, over the last few years, have progressed under Labour governments. Has he looked at Singapore, where the Peoples Action Party is a Socialist party - a Labour party? Has he had a look at what is happening in Britain where a Labour government has managed, over the last 5 or 6 years, to drag that country out of the doldrums into which a political party to which he would adhere had dumped it in previous years? Of course, this is part of the theory of those members opposite whe rise and talk about these subjects and express a lot of airy fairy nonsense, as indeed the honourable member for Macarthur did. He said that there would bc no development at all if people such as wc on this side of the House were handling the affairs of this nation. Where was his Party when the Snowy Mountains scheme was inaugurated in 1949? Members of his Party boycotted it.
– I was there.
– I understand that the honourable member for Mallee (Mr Turnbull) was present, as was the honourable member for Chisholm who was then, 1 think, the Deputy Premier or the Minister for Transport in Victoria. He was probably taking somebody for a ride during the course of it. But members of that magnificent institution, the Liberal Party as it is called, and members of its Country Party satellite all stayed away. But now, of course, the Snowy Mountains scheme is a wonderful scheme and they are deeply proud of it. 1 mention also the trans-continental railway. We can run through the whole gamut of Australian achievement and find that many of them have been Government initiated, most of them initiated by Labor governments. So much nonsense is uttered by members opposite. My colleague, the honourable member for Melbourne Ports (Mr Crean), I think satisfactorily demolished the economic arguments advanced by honourable members opposite.
Before 1 examine what the Minister for Trade and Industry (Mr McEwen) had to say, I feel I ought to answer some of the remarks of the honourable member for Cook (Mr Dobie). I think he regards himself as some sort of economic mastermind. He called upon my colleagues, the honourable members for Oxley (Mr Hayden) and Kingston (Dr Gun) to participate in this debate. They are quite happy to participate in the debate but, by agreement, we have agreed to end the debate soon. However, the honourable member for Cook denounced the Leader of the Opposition (Mr Whitlam) for having made what might be called a fairly shallow, uninformed kind of speech. Then he launched into what might be called very deep philosophical considerations of the situation by making such earth shattering comments as: ‘Rising employment and higher wages means growth in consumer spending’. What a devastating discovery! How many economic degrees does one need to realise that? How many long years does a person have to work in a private banking system to be able to discover that when people have more money and spend more of it they actually purchase more goods with it? Then he made another discovery. I understood that it was floating around; in fact, the Minister for Trade and Industry seems to sleep with it under his pillow, not that he does anything about it. Even dogs are barking it. He discovered that the cost of servicing foreign investment is steadily growing. What a remarkable achievement by him! He had the brass to stand and criticise the Leader of the Labor Party for having made what might be described as a non-professional speech. If his contribution was professionalism, it is time the economic faculties of our Australian universities had a good look at their teaching.
Do I sense amongst all the people opposite a feeling of disquiet at the increasing control of Australian industry by overseas investors? For years it has been part of the mystique; for years it has been the legend; for years the honourable member for Lilley (Mr Kevin Cairns) has been saying how wonderful it is to have all this money pouring in. Even in the cloud of words which he used as a speech, we could determine that somewhere there was some disquiet and that Australians should look at the situation.
Let us examine the speech of the Minister for Trade and Industry - his rather rhapsodic exercise. He said that the Corporation will be the most wonderful thing that has happened to Australian industry; that the Corporation will operate expressly to assist Australian industry to expand its capacity and scope and to increase its efficiency and competitiveness. I wonder whether we can expect that. He said that it is going to assist in marshalling financial resources, particularly from overseas. By waving some magic wand the money that comes from overseas instead of filching away the national ownership of Australia is going to confer upon us some intimate blessing. I am blessed if I can see how it is going to do it. It is going to help where the ordinary banking system and other financial systems cannot meet the financial needs of Australian interests and Australian industry, so the Minister says. Why is this? Of course, the Government has allowed the Australian banking system to pour its money into all sorts of ventures. The banks are now developers of land in the cities of Australia. They are now one of the greatest investors in hire purchase. This Government has allowed the Australian banking system to abdicate its real responsibility to the people of Australia and become money lenders pure and simple. Then the Minister said that we are to have capital in a non-equity form. I wonder what advantage this will confer upon the lucky borrowers. Are there not any lessons to be learned from Australian history in this regard? Nearly all those things that have been built with borrowed capital - the railway systems of Australia are the principal victims - will have to carry a load of debt down to the end of time. They can never stagger out of it.
The honourable member for Macarthur - I do not regard him as the deepest political thinker in this nation - did mention interest rates. The Minister for Trade and Industry gave his blessing to higher interest rates. Now in Australia they have risen to the point where I claim that they are not interest rates any longer but straight out usury. We have interest rates of 8% and 8£% in the banking system and 9% and 10% outside. On some sorts of mortgages the interest rate is 12%. If we borrow money at 9% and 10% and have to pay the servicing charges, as the honourable member for Macarthur pointed out, how are wc to pay dividends? If this is the kind of company we are to help, why is it so short of chips that we have to supply money out of taxpayers’ funds? Of course I must say that I am not a great believer in the institution that is being established. It may lay the foundations for a future Labor government to do something about it, but I am quite certain that we will do it much belter than the Government, lt will lend to projects and take an equity in them. As has been pointed out, its capital will be paid up to $25m initially, lt can get S25m each year for 4 or 5 years provided it gives a year’s notice. What a staggering sum for the ninth or tenth wealthiest country in the world. About 2.5 Fills every year to be invested in Australian industry and it will shake the foundations of private enterprise if we get hold of it, according to the honourable member for Cook and other honourable members opposite. It will straighten up the whole staggering system of capitalism in Australia, according to its advocates on the other side of the House. I do not believe it. In his second reading speech the Minister for Trade and Industry said:
We will set up a Corporation of significant stature and image as a borrower. lt will be able to borrow up to 5 times its limit. How far does that get us with some of the significant industries in Australia? How far would it get us in developing the deposits of bauxite at Gove, which should not be developed by foreign investors and in fact, in the interests of the Aboriginal people there, should not at this stage be developed al all in my opinion. Listening to the right honourable gentleman deliver his speech we heard one of the new examples of jargon. I had not run across this one before but I noticed that the honourable member for Cook employed it tonight also. He said: We will have the equity sweetener’. 1 wonder what that is? He even gave his blessing to higher interest rates. But he said, and this is the rub: ‘lt will become entirely a part of the private enterprise scene’. How can something that is publicly owned, and publicly controlled, with the directors appointed by a public authority - in this case the Government - be anything but a public institution? Just what kind of nonesense are we coming at? ls it not a fact that it will be a government institution using public funds for private purposes? ls it not a fact that that is part of the way in which over the centuries the ordinary members of the public have been exploited for the advantage of private enterprise and private profits? I believe that this is an aspect to which we should turn the deepest possible attention. The Corporalion’s role will differ from the customary role of a statutory corporation or even from a government owned company or business concern. 1 do -not know how much of this is just words. I do not know how much of it is wool pulled over the eyes of honourable members opposite so that the Minister for Trade and Industry may get his operation launched. He said that it will not become the dominant element in the ownership of an industry. It is supposed to disposses itself once the enterprise becomes profitable. This is the way in which honourable members opposite use the Australian governmental system as an instrument of private enterprise - as a way in which they can bolster private enterprise. Then the simple shareholder who happens to be the citizen of Australia opts out. 1 believe that this is a quite conscienceless abuse of public power. If we go into it we should own it. I see nothing wrong with the Australian Government putting money into a concern and owning part of it. Why should we not go into partnership? It has been successful in Sweden and in some parts of Australian industry. I understand that the British Government owns a fair slice of the shares in British Petroleum. The Minister said that the Corporation will play a passing role. On one occasion when discussing the political philosophies of honourable members opposite the honourable member for Fremantle (Mr Beazley) said - at least the remark has been attributed to him - that what they want to do is capitalise their gains and socialise their losses. This Corporation guarantees them against losses and it will be used to gel their hands on the gains. I do noi think this is such a miraculous piece of legislation. The Corporation may be the McEwen Bank. I think it is more likely to be the McEwen mirage.
Let us examine some of the previous shadow sparring we have indulged in. As an historical exercise I thought it was worth while turning back the pages to see what we have done in the past. 1 have here a number of pieces of earlier legislation. Some of them were fought out with great vigour in this place since I came here. Let me refer first of all to the Australian Industries Preservation Act of 1906. lt would restrain monopolies, so we were told. Section 7 of the. Act reads: (1.) Any person who monopolises or attempts to monopolise, or combines or conspires wilh any other person to monopolise, any pan of the trade or commerce with other countries or among t lie States, is guilty of an indictable offence.
That section was hardly ever used. The Act was hardly looked at from 1911 to 1963 or 1964. Then we had the Interstate Commission of happy memory. It was to be a remarkable achievement. Introducing the Interstate Commission Bill in 1912 the Right Honourable William Morris Hughes, as he later became, said:
It has to be noted that the Interstate Commission will not be merely a Commission of inquiry. It will possess, as I have already pointed out, powers of administration and adjudication.
He had a lot to say about what this remarkable instrument would achieve. He said:
We have, therefore, given the Commission power to investigate, on its own initiation, a wide range of subjects. . . .
The Commission may, for instance, investigate matters affecting the production of and trade in commodities, the encouragement, improvement and extension of Australian industries and manufacture, bounties paid by foreign companies to encourage foreign snipping, and so on - page after page, but nothing ever happened. Then we come to one of the brighter creations of our former colleague, the Right Honourable Sir Robert Gordon Menzies. This was the Motor Vehicles Agreement Bill of 1940. Introducing the Bill - this is interesting in view of later philosophies which he developed - the right honourable gentleman said:
If we establish a motor car manufacturing industry in Australia we shall reduce the demand that this country has for dollars . . .
As I recall, in 196S when we launched our unhappy commitment in Vietnam it was to try to get dollars. The right honourable gentleman also said in 1940:
If we are to produce in Australia from our own resources tanks, armoured cars and motor transport to carry our armies over large distances, - that point has a great significance for us in Australia - we must set about the business of making internal combustion engines.
Well, not one motor car was produced under that legislation. Then there is another distinguished piece of legislation - the International Labour Organisation Act. It has been on the statute book since 1947. We send delegations of great tonnage overseas at great expense and they consider at some length matters before the International Labour Organisation. It is a very useful exercise for honourable members to turn up the pages of Hansard. As recently as 7th May this year the honourable member for Hindmarsh (Mr Clyde Cameron) asked what we had done about International Labour Organisation Conventions Nos 2, 23, 32, 52, 58, 62, 81, 84, 92, 98, JOI, 202, 109, 112, 118, 123 and 128. The answer from this fine procrastinating set opposite is: Nothing. So I am not one of those who places great store in the fact that something placed on the statute book might have enshrined in its deep Socialist principles.
Then there is that wonderful creation of the Minister for Labour and National Service (Mr Snedden) - the Trade Practices Act. This legislation was fought out vigorously throughout the land. From one end of the continent to the other people were shivering in their shoes. We were bombarded with letters and telegrams telling us what this legislation would do to us. Introducing the legislation the Minister, who was then Attorney-General, said:
The purpose of this Bill is to preserve competition in Australian trade and commerce to the extent required by the public interest. Competition is an essential ingredient of any free enterprise economy.
That is, unless the competition happens to be developed by the Commonwealth Bank or Trans-Australia Airlines. We do not want that sort of competition. Those were fine words by the Minister. What has happened under this legislation? I understand that we have a Commissioner. I understand that one of the breweries has been told that it should not do what it has been doing, but it has not taken much notice. After 5 years we have got just about nowhere with that legislation. The political party opposite has a tine record of bringing down legislation, having a great deal to say about it, causing a great furore and then producing nothing. Having listened to the debate so far I am moved to ask: Why do so many people opposite, who claim to be Liberals and Australians, demonstrate such a terror of public ownership? What is so terrible about 12 million shareholders owning something? What is so terrible about the operations of a concern being the responsibility of this Parliament?
I believe that those people who continually attack public enterprise are recording a vote of no confidence in themselves. It is a vote of no confidence in their Party, in their Parliament and in the people, for do they never look at the record? Is not
Qantas, Australia’s own airline, a totally publicly owned company? Is it not one of the world’s great airlines? Has it not established one of the finest records for safety, service and economy? Is it not one of the few airlines in the world which operate without government subsidy? I have only one grudge with Qantas. At the present moment it does not seem to have the nerve to land in Israel although it lands in Arab countries. But that is a side issue here. What about Trans-Australia Airlines? Honourable members opposite believe in competition. How long would Sir Reginald Ansett and his fleet last if Trans-Australia Airlines was really turned loose? How long would they have lasted without the protection of Government Acts and Government sponsored departments? What is wrong with the State Dockyard at Newcastle? I understand it is one of the most efficient dockyards to be found anywhere. What is wrong with the State Electricity Commission or the State Savings Bank in Victoria which is about the largest bank in Victoria, but is shackled because the Government does not want it competing? There is the Commonwealth Bank itself. When is the Government going to allow it to compete?
These are some of the issues that are before us today. We seem to be suffering from a national inferiority complex. We seem to be begging around the world for somebody to come in and own various of our assets. Why is it that Switzerland, with about one-third of our population and 12,000 miles away, has the funds, the expertise and the know-how to come here and develop some of our bauxite deposits. We in this place allow people to say ‘We have not the funds to do it’. Why is it that Sweden is in such a dominating position in the world in so many specialised fields of industry? How is it that Britain, a tiny dot of land, for 3 centuries has been able to overcome these difficulties? I want to know where our national spirit is.
As I see it, the real principle that we are being asked to espouse here today - we on this side of the House give it what might bc called a qualified blessing - is the use of governmental power for private profiteering. This is the negation of the private enterprise principles that are continually espoused by honourable members opposite.
Why is it that they come in to protect the private banks against the free flowing exercise of the power of competition by the Commonwealth Bank? Why is it that the private airlines have to be protected against the public enterprise airlines? Why is it that we have to give subsidies to the petroleum companies? Why is it that we have to give subsidies to the shipping companies? Why is it that when we give a subsidy of one-third of the cost to a shipping company that spends $5m or $6m on a ship we do not own one-third of it? Why is it that we have to subsidise some of the tycoons of the world? Why is it that if honourable members opposite are so confident that private enterprise and free competition are so good that we constantly have to dicker with the system and have tariffs to protect industries from private enterprise in other parts of the world? We happen to be a protection Party but the facts are that there is no such thing as private enterprise; there is no such thing as free enterprise of this sort: and there is no such thing as a free moving enterprise system in which governments do not intervene on behalf of some industries.
Most of the large industries of Australia are protected in one way or another. The industries producing superphosphate, motor cars, or anything else are protected by Government action and, therefore, it is a false doctrine that is being espoused by honourable members opposite. The people of Australia should wake up to it. 1 hope that the House will start to examine the possibilities of really developing this Corporation in the way in which the Italians have developed theirs and in the way in which 1 understand the Swedes have been able to develop large areas of Swedish enterprise. I hope before very long the people of Australia will realise that we cannot have a national spirit and that we cannot be anything else but a colony if we permit decisions about the destiny of large areas of the economy of the country to be made in the board rooms of Detroit, London, West Germany and Zurich. Therefore if this Bill is a demonstration that there is a slowly growing national spirit on the other side of the House I welcome it. But I do not regard it as any great movement towards a solution of these problems. It is just what one might term another McEwen mirage.
– in reply - I find it a little hard to know where, out of the Socialistic blandishments of the honourable member for Wills (Mr Bryant), he finished up in terms of this Bill. I wish to go over some of the arguments that have been presented before this House and to look at them in relation to what I see as a very necessary adjunct to the financial structure of this country. When the honourable member for Cook (Mr Dobie) was speaking a while ago he mentioned that in his opinion in 1950 we could hardly be said to have had a financial structure of any substance. It one looks at the change in the structure of our economy in 1970 and sees the changing demands both in terms of future investment and the areas from which investment can be generated, I think one will appreciate the purpose for which this Australian Industry Development Commission has been constituted.
It has been suggested during the debate that the division in this House on this issue is between members of the Government rather than between the Government and the Opposition. I think the last few honourable members who have spoken on behalf of the Opposition have fairly effectively demonstrated that this is not so. In fact from the very commencement of the debate the Opposition has suggested several areas where they see this measure falling far short of what they would regard as being the necessary measure of control evolving from such a Corporation. A moment ago the honourable member for Wills gave quite a burst on the extent to which he felt this instrument could be used to further the aims of Socialism by the introduction of Government funds as direct investments in sectors of the economy through following the considered policies of a government. The Government has included in the Bill restraints which are specifically intended to ensure that the Corporation may not be so used. I think that therein lies the first division between the attitude . of the Government and the attitude of the Opposition to this Bill.
The objectives nonetheless have been substantially agreed on amongst all those who have spoken. A philosophy has been mentioned by even my colleague, the honourable member for Lilley (Mr Kevin Cairns), which suggests that it is worthwhile to endeavour to encourage an increase in the measure of Australian equity. That of course is the basic purpose behind the establishment of the Australian Industry Development Corporation. Clause 8(1.) of the Bill sets this as being the principal policy objective of the Corporation. To the extent to which there is a need for it, however, there are honourable members of the Government parties who feel that adequate provision is already available within the existing financial structure of the Community. I frankly disagree with that contention for several reasons. First of all, I believe this Corporation will not in any way operate in the field of a bank. I feel that the Australian Resources Development Bank is operating in a field and in a manner that is quite distinct from that intended for the Australian Industry Development Corporation. The Development Corporation is specifically intended to invest funds borrowed for a particular project. In other words, it will not act in the normal way that banks in Australia do in advancing loans for particular purposes and generating income from the funds so advanced. Rather it is intended to be an investment corporation which will utilise funds raised for specific projects.
During the course of the debate the honourable member for Balaclava (Mr Whittorn) and the honourable member for Lilley both said that they felt the Australian Resources Development Bank was in its way quite adequately able to perform a role which they saw as utilising and maximising Australian equity. I do not believe the Australian Industry Development Corporation as it is presently constituted will compete in the field in which the Australian Resources Development Bank operates. The Australian Industry Development Corporation, which will borrow funds from overseas to invest in projects, is not going to use the capital which is its structure. By contrast the ARDB, the resources bank, operates through its capital. The capital itself of the ARDB is the principal case for re-investment supplemented predominantly by domestic borrowing. The AIDC is to be specifically restrained from using its capital other than as security to raise finance principally overseas. Clause 24 sets out specifically the structure of the capital of the Corporation. We can see that the capital of the AIDC is intended only to provide the security for the raising of sufficient funds for the particular projects in which it desires to invest. Indeed, under sub-clause (8.) of clause 24 there is a restraint which ensures that the actual funds subscribed from the Parliament are to be there.
Principally as an inducement to persons to make loans to the Corporation for use by it in the performance of its functions and will not ordinarily be applied by the Corporation in the performance of its functions, and the Board shall have regard to that intention in making requests under this section for payments of instalments of capital.
By contrast the ARDB operates specifically through the funds that are its capital. Beyond that, of course, there are restraints in terms of the total amount of borrowings of capital of the AIDC. The honourable member for Melbourne Ports (Mr Crean) has suggested that perhaps the finance might be far larger than it is to be. But I believe that this Corporation acting, as it will tlo, specifically in 2 fields - in the fields of mining and manufacturing - will find initially it is adequate to have a smaller rather than a larger capital. As its investments spread it will be able to grow with investments which have proved remunerative and also will bc able to grow as may be necessary to achieve the maximised Australian equity for which it was originally constituted.
When this measure was introduced the Minister for Trade and Industry referred to the general trends in our economic climate which he saw as the basis behind the establishment of the Corporation. There is no doubt that at a time when rural exports are growing al less than 2% and import needs are growing at 8% there is a need for Australia to turn to other sources to generate sufficient income in order to be able to finance these expanded imports, indeed, one of the things that is happening in our industrial sector is that we are progressively moving from small scale into larger scale industry. This does not exclude the possibility, which indeed I see as being essential, of this Corporation investing in small industry. This is one of the few areas in which I. find myself in agreement with the Leader of the Opposition (Mr Whitlam), because 1 believe that there are many small industries in Australia which could profit ably benefit from having an injection of capital such as that which should be available through the operation of the AIDC.
There are many other industries in this category which because of shortage of capital find themselves in a position where they are unable either to compete satisfactorily in export markets or to compete within Australia against the multi-national corporations which are increasingly operating within our country. Of course, it is for that reason and towards that purpose that clause 6 of the Bill sets down the provision which the honourable member for Bradfield (Mr Turner) felt was so vague and ambivalent. Clause 6 (2.) sets out that the Corporation shall perform its functions in such a manner as to promote trade and commerce between Australia and places outs:de Australia; to promote trade and commerce among the States: to promote economic development of the Territories, and so on. To my mind it is essential that there be some body in Australia, some corporation which is able to generate from overseas, by virtue of the very high standing that a corporation of this nature will have, money which can be invested in ventures which are virtually at (he launching pad in terms of growth. As 1 see it, this is the phase in which much of Australian secondary industry is in today. Australian industries at that stage today too often find that they are unable to raise sufficient funds locally and consequently are subject to overseas takeover bids.
Yet there is no doubt that overseas investment has made a tremendous contribution to Australia. Overseas capital is something which should be encouraged rather than hindered, and will be, I believe, by a measure of this sort. Yet it is essential that we do, however, have some mechanism which will enable Australia, wherever possible, to raise capital overseas perhaps partly by equity sweeteners so as to retain the maximum percentage possible of Australian equity rather than having equity participation going straight to overseas hands. I believe that there is at this stage a very real opportunity for Australia to achieve world scale in many of its secondary industries through the operation of a corporation of this nature.
There is no doubt that if Australian manufacturers are to compete on world markets, if they are to face world competition at home with minimum tariff protection, we must build up vastly greater scales of production and we must attract massive capital investment. There is no doubt that a corporation of this nature is the ideal instrument by which this can be achieved. It is not an instrument which will in any way conflict with private enterprise. Indeed, it is these constraints which the members of the Opposition principally object to within the clauses of the Bill.
The Bill itself has been so designed that in every phase - and the Leader of the Opposition has described as rather quaint the objectives - there is a sound basis on which one can lay down firm guidelines for the Board of Directors of this Corporation. I refer in particular to clause 8(2.) which provides that in the performance of its functions the Corporation shall act in accordance with sound business principles. This I see as a way in which one can require the Corporation to follow what must surely be objectives which relate to investing only where the ultimate return from the investment is going to fulfil the functions and the policy objectives for which the Corporation is constituted.
During the debate a number of areas which have been canvassed, principally in terms of the suggestion that the Australian Resources Development Bank, that is the resources or refinancing bank, is in fact operating in such a way that there is no necessity for the AIDC. There are a couple of aspects to which I would like to refer. I have mentioned that 1 do not believe that the Australian Industry Development Corporation will be a bank. I do not believe that it should be a bank. The honourable member for Macarthur (Mr Jeff Bate) has suggested that he believes it would be far better were it subjected to the same restraints and to the same general terms of operation as the trading banks are and if that were to be so then it could surely function through the ARDB. But I think to suggest this indicates a failure to recognise that at the moment there is a great deal of overseas capital which is coming into Australia and which is not so subjected to the restraints which he seeks to impose. Virtually what the AIDC will seek to do is to introduce into Australia, with a greater measure of
Australian equity surely than is now possible, similar capital to that which today comes in without any such control.
The honourable member for Balaclava suggested that in his opinion there was no need for any institution. He referred in particular to the reference in the second reading speech of the Minister for Trade and Industry to Australian firms taken over by overseas interests. The honourable member stated that he had made an assessment through the stock exchange gazettes and, if I recall his figure correctly, he said that takeovers amounted to 7 a year. But if he looks at the figures for the last few years - again these figures are taken from stock exchange gazettes - he will find that there were no fewer than 15 ‘overseas’ company take-overs. They were the 15 in 1969 to which the Minister for Trade and Industry referred. Substantially they were companies which, at least in the initial stages, were either overseas owned or under overseas control.
I will give honourable members an indication of companies which have been taken over since the incorporation of the Australian Resources Development Bank. The ARBD was not constituted - as is AIDC - in such a way as to enable it to prevent companies from falling into the hands of companies subject to overseas control or where there is such a measure of overseas investment as to prevent attainment of an objective desired by every honourable member in this House, as I understand it. and that is the maximisation of Australian equity. For example, in the field of automotive parts, forging and engineering, TRW of the United States of America took over Duly Hansford and British Leyland took over Pressed Metal Corporation. In other light engineering fields, Borg-Warner of the United States took over Thompson Scougall, and John Lysaght took over Brownbuilt. The honourable member for Balaclava mentioned that subsequently John Lysaght was taken over by the Broken Hill Pty Co. Ltd. Nonetheless, that second take-over was still in prospect at the time of the first take-over. American Machine and Foundry took over Pioneer Welding. In chemicals, Croda took over Federal Chemicals, Dow chemicals took over CSRC, and Dow and Slater Walker took over Drug Houses of Australia. In textiles and footwear, Courtaulds took over the Hilton Corporation,
Slater Walker took over Easywear and Kinney World Trading took over Williams Shoes.
The Australian Industry Development Corporation is directed not only at takeovers. This Corporation, being specifically directed towards mining and secondary industry, will also have an interest in maximising Australian equity in the ownership of the great new extractive industries now developing to a large extent in this continent. For instance, new ventures are being announced by overseas interests in which there is only a very small or negligible Australian equity, if any. Consumer Glass Co. Ltd of Canada is setting up a S6m plant, Australian Fibre Glass Pty Ltd of the United States is setting up a $4m plant, Dow Chemicals is setting up a $70m plant and the Guest, Keen and Nettlefold group of the United Kingdom is entering into partnership in a new steel works worth $92m at Westernport Bay.
There are many other areas of activity in which there is some measure of Australian equity but far less than I believe to be desirable or supportable in the general climate of Australia’s growth. Australia at this stage is launching forth into a scale of operation in secondary industries which involves far more financial investment, far more automation, than has been the case previously. Therefore the order of our capital demands will increase, ft is because of that increase and because of the figures referred to by the Minister for Trade and Industry in his speech that the increase in remittances overseas becomes significant. This is also true when we consider the figures referred to by the honourable member for Lalor (Dr J. F. Cairns). He quoted from Sir John Crawford’s paper and referred to the net apparent capital inflow in 1967-68 and 1968-69. The honourable member for Lilley (Mr Kevin Cairns) to some extent disagreed with the figures mentioned by the Minister for Trade and Industry in relation to the increase in overseas remittances in the last 5 years. The Minister said that the increase was from 8.396 to 10.5% of our export earnings. It is true that the figures presented by the Minister for Trade and Industry were calculated on a slightly different basis. We have had some discussions in order to resolve the differences.
However, there has been a demonstrable increase in overseas remittances and there certainly has been a very substantial recent increase in the amount of overseas investment in Australia. This has occurred not merely because our mining industries are at a particular stage of development, but is due in part at least to the fact that Australia’s secondary industries are also at a very critical stage of development. They have reached a phase of development where it is becoming increasingly necessary to inject larger sums of finance if they are to be truly competitive and if the interests of the consumers - basically this is the Government’s concern - are to be protected. It is in this area that I contend that the Australian Industry Development Corporation will play a particular role.
Quite a number of specific matters have been raised in this debate. I do not intend to cover all of them in the few minutes available. I believe certain protective mechanisms have been specifically written into this Bill which have not been adequately understood by honourable members on this side of the House who have criticised the measure. Clause 9 specifically provides that in the exercise of its powers the Corporation will not be subject to direction by or on behalf of the Commonwealth Government. This is a specific requirement of the Bill. That must be considered against the criticism of the honourable member for Macarthur about this body being a Socialist enterprise. The fact that there is a specific requirement in clause 8 (4.) that each year the Corporation shall specifically review the shares it holds is again an area of protection for the private enterprise sector of the Australian community. Specifically the aim of this clause is to ensure that the Corporation takes stock of the reserves it must necessarily accumulate, if given this fairly limited amount of capital, in order to achieve the objectives laid down.
I should add that it is for that very reason that it would be difficult for the Corporation to pay a dividend on the same basis as similar government enterprises, such as the Australian Coastal Shipping Commission, Trans-Australia Airlines or Qantas Airways Ltd. Some honourable members have suggested that the Corporation should be required to do this. If the Corporation were to do this it would find itself subordinate to the normal budgetary allocations of the Commonwealth. We must remember that the capital of this Corporation will not be for direct investment but for its day to day functions. The capital will be there as a security on which to borrow funds. The Corporation is to generate funds from overseas for reinvestment in Australia. If it were subject to budgetary allocations, it would not be able to grow progressively. The provisions of this Bill, such as the Reserve Bank restraints on domestic borrowings, the requirement for the Corporation to dispose of shares and to invest only in accordance with sound business principles are specifically included to protect the private investment sector adequately.
There is 1 other area that needs to be mentioned. I think clause 24 answers some of the problems raised by honourable members on this side of the chamber about the structure of the capital of the Corporation. It needs to be recognised that the initial capital will not be $100m but $50m. which will be paid in 2 instalments, with the restraint that there shall not in any 1 year be more than a $25m instalment paid. Under sub-clause 5 of clause 24 the initial capital is to be $50m until such time as certain conditions - and they are pretty stringent requirements- are met. These rerequirements are that on that capital of $50m the borrowing ratio of 4 to 1 should have been achieved. When we think of the order of overseas investment in Australia and think of the $ 1,000m approximately that has been coming into Australia each year in recent years, we can see that what has been constituted is a corporation not of a gigantic size but one of a nature which I believe and which the Government believes will be able specifically to complement those other facilities that are available within the money mechanisms of this country. The protection under sub-clause 8 of clause 24 also needs to be considered, and that is that the capital itself is there to be used only as an inducement to make loans to the Corporation. So what we have is a body with an initial capital structure of $25m. In the following year it may get another $25m.
– From whom?
– It will be a subvention from the Treasury. That $50m is not for the purpose of direct investment in the projects for which it is intended. The distinction between this body and the ARDB is such that I believe the AIDC will not specifically in any way compete with but will rather complement what the ARB itself is able to do. I believe that each of these bodies will have a specific role within the financial system of this country, 1 believe however that the Australian Industry Development Corporation will be far more inclined than the other body to generate funds from overseas and yet retain Australian equity and Australian control. Of course, it is with that purpose and that object in mind that the body is being constituted. Accordingly I commend the Bill to the House.
That the Bill be read a second time.
The House divided. (Mr Speaker - Hon. Sir William Aston)
Majority . . . . 98
Question so resolved in the affirmative.
Bill read a second time.
– Order! It being past 11 p.m., in accordance with the order of the House of 1 6th April, I propose the question:
That the House do now adjourn.
– I require that the question be put forthwith.
– The question is: ‘That the House do now adjourn’. Those of that opinion say ‘Aye’, to the contrary ‘No’.
– I think the ‘Noes’ have it. Is a division required?
– Ring the bells! (The bells being rung) -
– If I may have your indulgence for a moment, Mr Speaker, I remind the House that in accordance with the resolution passed by the House some 2 or 3 weeks ago, at the hour of 11 o’clock, or after the counting of a division that might be then in progress, you put the question that the House do now adjourn. In accordance with the resolution I required that the question be put forthwith and, in terms of the resolution, you put the question. 1 then called ‘no’ to negative the adjournment so that the House might continue for the purpose of carrying on through the Committee stage of this Bill. I think there might have been some misunderstanding on the other side of the House as to the consequences of what I proposed.
– Does the Opposition wish to call off the division?
– I direct the Clerk to cease ringing the bells as there is no division.
Message from the Governor-General recommending appropriation announced.
Clauses1 to 5 - by leave - taken together and agreed to.
Clause 6. (1.) The functions of the Corporation are to assist in the provision offinancial resources required by Australia companies engaging or proposing to engage in industries in Australia concerned with the manufacture, processing or treatment of goods, or with the recovery of minerals, for the purpose of facilitating and encouraging the establishment, development and advancement of those industries.
– I move:
I move this amendment for a number of reasons, the first being to relate the activities of the Corporation to the activities which were set out in the speech of the Minister for Trade and Industry (Mr McEwen). The burden of the Minister’s second reading speech at page 1600 of Hansard is very clear; it is that the principal functions of the Corporation are to be related to external trading activities.In other words, in those cases where a judgment is required as to the industry which is going to receive assistance from the Corporation, those industries whose activities will be conducive to an improvement in Australia’s external trading plans will receive an advantage. At that page the Minister said of the Corporation:
It will have as a clear objective to facilitate this industrial development in ways which will promote trade both internationally and between the States. It must aim especially at expanding exports on a world-competitive basis, and enhancing our long term balance of payments position. It must seek to enable Australian industry to conserve our foreign exchange by competing with imports without recourse to high tariff barriers.
In other words, the principal industries which will receive assistance from the Corporation will clearly be those industries which are operating in some kind of export parity position. They are not industries which are receiving a great deal of protection. They are not industries which would be uneconomic were they to operate other than behind a high tariff barrier or a high protective barrier of some kind or another. They are industries which are conducive to improving the trading position of this country. I would say that insofar as one looks at sub-clauses (1.) and (2.) of clause 6. of the Bill, the emphasis on the functions to which the Corporation is devoted is not clear. Sub-clause (2.) indicates that the Corporation shall perform its functions in 4 different ways. These of course are related to the nature of the Constitution. But the manner in which the Corporation is to operate and the nature of the industries to which it may give assistance differ from those stated by the Minister for Trade and Industry in his second reading speech. It is in order that this requirement to improve the balance of trade be a pre-eminent condition so far as the activities of the Corporation are concerned that J have moved this amendment. We know clearly enough that the balance of trade and, in another sense, the balance of payments have been the most difficult and most ephemera] parts of Australia’s economic relations for very many years. For many years this country operated under almost a siege economy. It operated in a cyclical sense merely because of the problems concerned with our balance of trade. It is in order to give the activities of the Corporation that emphasis which is not presently apparent in the Bill that I move this amendment. I will not say any more, as it is getting late and as divisions obviously will take a great deal of time to count. I therefore move that the proposed new sub-clause be inserted.
– Insofar as this amendment is in accordance with the expressed objectives of the Corporation, it would be the Government’s wish to comply with the amendment. In fact, it was originally set out both in the specifications contained in clause 6 (2.) and in the Minister’s second reading speech that part of the functions of the Corporation should be just that which is now being set out more expressly. Accordingly, the Government is happy to accept the amendment.
– I support this amendment and I am very glad that the Government has seen fit to accept it. I hope that the other amendments that have been circulated by the honourable member for Lilley (Mr Kevin Cairns) will receive similar treatment. At this stage 1 would like to speak to a certain extent generally on some of the clauses and to indicate that at a later stage I shall be supporting some of the amendments that have been circulated recently. In speaking generally to this Bill I think that we should ask ourselves 4 questions. We should ask ourselves first of all: Is this Corporation really needed? ls there a firm demand established by the Government for this Corporation and for the tasks that it is expected to perform? So far in the debate I do not believe that a full and sufficient case has been made out for this Corporation.
The motion for the second reading having been agreed to, there are 3 other questions to which 1 think we should address ourselves. Firstly: Will the Corporation fit in generally with the Government’s economic policy? Can it be restrained in time of inflation from adding to inflationary tendencies? One of the amendments that is to be moved to clause 8 will aim to make it clearer and more certain that the Corporation will be restrained accordingly. I feel we should then ask ourselves: Will this Corporation compete fairly with private enterprise and especially with those organisations, such as the Australian Resources Development Bank, that have already been set up by this Government for very similar purposes?
I think that 2 questions should be asked. They are: Is the Corporation to be required to make profits similar to the profits that are being earned by its competitors? If not, will it be truly a lender of last resort? Two amendments that have been circulated by the honourable member for Lilley have that in mind. Either the third proposed amendment will set out that the Corporation is to be a lender of last resort, or the fifth proposed amendment will set out that it should be required to earn a profit. Obviously the Corporation cannot be expected to do both. It cannot be expected to be a true earner of profit and at the same time to be a lender of last resort. I believe that the Government should set out clearly which of those aims it expects the Corporation to fulfil, and therefore should accept one or other of those proposed amendments.
I also wish to ask whether we can be certain that the creation of the Corporation will not lead to government control of companies and therefore to greater socialisation of industry. This is one of the fears expressed earlier, so clearly and ably, by the honourable member for Macarthur (Mr Jeff Bate).
The fourth proposed amendment that has been circulated is aimed at bringing out that situation more clearly so that there can be spelt out in detail the certainty that if the proposed amendment is carried it will be very difficult for the Corporation to acquire complete or governing control by having a large share of equity. I am particularly worried by clause 8 (6), which I shall be dealing with later. I am very pleased that the honourable member for Bradfield (Mr Turner) proposes to move an amendment to that provision. The honourable member has circulated copies of his proposed amendment. I shall give it my full support.
– Are we not discussing clause 6?
– That is true, but I feci at the moment it is wise that the Committee should realise the general aim of all the proposed amendments being circulated so that they can be considered in the whole context rather than individually. Later I shall ask the Minister whether, if the Corporation is subject to taxation generally, it is to be specifically subject to withholding tax. I had hoped that the Minister for Shipping and Transport (Mr Sinclair), who is in charge of the Bill, would be able to take notice of the questions I plan to ask later in the Committee stage. I have given an indication of them now so that he may be ready to answer those questions later. However, it seems that he is occupied at the moment.
I would like to know to what extent the Corporation will be subject to exchange control. I will also ask that question al the appropriate stage. I have given some general indication of the questions I shall ask as we proceed through the Committee stage. I want now specifically to congratulate the Government for accepting the important amendment moved by the honourable member for Lilley. I think it quite clearly sets out what should be the main aim of the Corporation; that is, specifically to secure an improvement in the balance of Australia’s external trading operations. If the directors of this Corporation will see to it that the main task is to improve our export earnings then I believe that we can be fairly happy with what takes place. If, however, the functions are wider at the present time then I will have some of the fears that I expressed earlier in these remarks.
-! support clause 6 because it is one of the important clauses outlining the functions of the Corporation. Under the Bill the provision of finance is primarily to fill a gap which exists in the broad spectrum of financial resources available to enable an Australian owned industry to expand its operations principally for the export market and so assist in our balance of payments situation in the future. The motives have been clearly outlined by the Minister for Trade and Industry (Mr McEwen) - to help structure existing viable industries on a world competitive basis and to maximise Australian equity. These objectives are to be achieved in a private enterprise environment and the terms of the Bill ensure that it will operate within the principles of the free enterprise system. This is not a Socialist measure to create a new bank. It is not a new bank. The Corporation will not have the privileges and purposes of a bank and will not function as a bank, as some antagonists have suggested. The limitations that apply in the field of banking do not apply to this Corporation. It will not compete with the banking system and certainly will not supplant the Australian Resources Development Bank, but I submit that it will1 tend to supplement or complement the role of the Australian Resources Development Bank.
The broad functions of the Corporation under clause 6 will be to encourage the development and expansion of Australian industry, especially those industries processing our own plentiful resources, such as minerals - and I hope products of rural origin. I am thinking in terms of wool processing in the future - and to facilitate industrial development on a scale large enough to expand exports of an industrial nature on a world wide industrial competitive basis; to help earn foreign exchange and so assist our balance of payments situation which will need watching, according to the figures that have already been given to us projecting future requirements of foreign exchange into the 1970’s. It will’ help Australian owned and part-owned and Australian controlled industries to increase their scale of production, thereby reducing the need in some cases for heavy tariff protection. This should, of course, help to stabilise costs generally in our economy. If Australian industry can increase its scale of production by exploiting the world market opportunities then we should see more efficient industry needing less tariff protection and a consequent lowering of costs in our rural export industries, particularly our wool industry which of course is our biggest export industry and certainly one of our most unprotected industries.
Australia, in ils present stage of dramatic development, is requiring a continuing and growing demand for capital. We are a capital hungry country. We have seen over $L000m per annum worth of capital inflow lo this country in the last 2 years, and of course this has brought with it considerable foreign ownership of Australian industry and a need to service dividend commitments and repayments into the future. But Australia is going to need a continuing flow of capital into this country. There has been a need for a long time to ensure that wc do retain in some way Australian equity in our industrial sector. In order to give some idea of the capital requirement of Australian industries, I quote the following figures: In 1949, $ 1. 090m was invested in-
– Mr Chairman, I rise to order. I understand that some kind of arrangement has been made among members of the Government parties. But, after all, we are in the Committee stage and we arc dealing with a particular clause which is very narrow in its manner and substance. I submit that the remarks being made at present by the honourable member for Gwydir are very wide of that clause. We are now sitting well after 11 o’clock, the time at which we decided we should adjourn. I submit that the debate should be kept more confined to the clause before the Committee.
– I suggest that the clause and the amendment give a little wider scope than might be given by just the clause itself. Provided that the honourable member for Gwydir keeps within the framework of the clause and the amendment, he will be in order.
– It is not my intention to take up the time of the Committee unnecessarily. I assure the honourable member for Lalor (Dr J. F. Cairns), who is leading for the Opposition, that I am not endeavouring to put him to sleep. We listened to him for some considerable time when he was making out his case. I want to quote these figures in order to demonstrate that there is a need for an inflow of foreign capital into our industrial structure.
We have seen the dramatic development of our secondary industries. The net value of our manufactures rose from $1,1 38m in 1949 to nearly $8,000m in 1969. We have seen products from secondary industries finding growing markets overseas. In I960 secondary industries exported $198m worth of goods, representing 11% of our total exports. In 1968-69 the figure rose to $562m, representing 17% of our total exports. I understand that this year $700m will come into this country from manufactures. So we are finding new markets. We will have to continue to find new markets. I believe that the provisions of this clause will help us to maintain the degree of growth in our secondary industries that will enable them to exploit the export markets.
We will need a growing availability of financial resources for our secondary industries. I know that sources are available already for our secondary industries. There are ways and means by which they can raise the necessary capital. But this Bill provides a new facility and a new access for our secondary industries which they will need in playing a far greater role in earning foreign exchange in the future and retaining Australian equity. So I support the clause and also the amendment which I believe does, to some extent, broaden the intent of the clause.
– The debate on this clause gives me the opportunity to speak, which I did not have in the second reading debate. I want to state now that the functions of this Corporation are not desirable and that, if ever a redundant, unnecessary and unwarranted Bill was brought before this chamber, this is that Bill. We have heard a lot of fairy floss spoken in regard to this matter. Dealing with the matter broadly and with the functions of borrower and lender, let me say that this Corporation, if it was functioning-
– Mr Chairman, I take a point of order. In the Committee stage the debate should be kept strictly to the clause under discussion. An honourable member should not be permitted to complain that he was unable to speak during the second reading stage and then proceed to make a second reading speech now.
The CHAIRMAN (Mr Lucock)Order! I point out to the honourable member for Hindmarsh that clause 6, which we are now discussing, relates to the functions of the Corporation. This affords a fairly wide sphere of discussion. The amendment also enables a discussion in fairly general terms. As long as an honourable member keeps within the limits of the clause and the amendment he will be in order.
– I am dealing with the function of the proposed Corporation. Had I been able to speak during the second reading I would have discussed this matter more fully. The aims of the Corporation are most estimable, but I question its functions. Anyone with meagre experience would know that the organisations proposed to be assisted would never have the opportunity of being assisted by any recognised lending authority. For this reason it is probable that the Corporation will lose much money. The expense involved in enabling the Corporation to fulfil its functions will be tremendous. There is nothing in the functions of the Corporation that the Australian Resources Development Bank could not do, and do much better, because of the vast experience and training of the people associated with it. It seems to me that by establishing the proposed organisation we will have another redundant Public Service organisation which will cost many hundreds of thousands of dollars a year to finance. Anyone who thinks that the Corporation will be able to borrow money for its stated purposes and functions is indulging in wishful thinking and has had no knowledge of the handling and borrowing of money.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 7 agreed to.
In providing assistance in relation to a particular company, or in relation to companies engaged or proposing to engage in a particular industry, the Corporation shall pursue a policy directed to securing, to the greatest extent that is practicable, participation by Australian residents in the ownership of the capital, and in the control, of that company or of the companies engaged or proposing to engage in that industry. (2.) In the performance of its functions the Corporation shall act in accordance with sound business principles and the Corporation shall not provide assistance in relation to a particular company unless it is satisfied that the company will operate in an efficient manner and on a profitable basis. (3.) The Corporation -
– I move:
The amendment is a very qualified one and I should hope that the last 3 or 4 lines of the amendment do not qualify out of existence provision for the Corporation to have regard to the current monetary policies of the Commonwealth. We are all aware, within recent years, of the increasing difficulties that exist in any system where monetary policy is to have a real effect, where money is to retain its value and where interest rates are to be at appropriate levels, of having too great a proportion of activities lying outside those fields for which there is some responsibility. This has been given significant point in the last report of the Australian Finance Conference. On page 2 of its report is a table which only confirms the existence of what we have known to have been the trend for a great number of years. There it is made perfectly clear that of the total estimated demand in Australia for what are known in this table as receivables, or for what are often judged to be factors operating on the credit market, the areas in which there is some responsibility for interest rates have decreased. For example, in the year from June 1968 to June 1969, the trading banks’ responsibility for the credit market declined from 33.8% to 22.8%, but the responsibilities of the finance companies - the finance institutions, the fringe banking institutions - have shown a rise consistent with the rise they have shown over a great number of years. 1 am concerned that as this Corporation is clearly not to operate within the banking system, and as it will not be subject in its operations to banking control, it should at least have some due regard to monetary policy. Monetary policy, for the purpose of this amendment, is defined not in the narrow sense of current physical monetary obligations or output of the Commonwealth, but in the totality of quantitative monetary policies operating within the Commonwealth. I refer to such matters as total quantitative aspects of monetary movement, the total volume of money available, the variations in that movement, the rate of circulation of that money and so on. J would hope that the Corporation in its activities would not find itself in conflict with the current trend in monetary policies defined in that way. I would disagree with the Minister for Trade and Industry (Mr McEwen) on this point. There is an institution which has somewhat parallel activities to the Corporation, and that is the Australian Resources Development Bank. That bank in its operations is required not to operate contrary to or in conflict with current monetary policy of the Reserve Bank of Australia. If the Corporation were to operate in clear conflict with current monetary policy, if it were to operate out of phase with that policy, the matter of keeping interest rates on an acceptable level would be made unduly difficult.
If I may give an example: At the present time it is perfectly clear that there is a very tight monetary policy in this country, and that tight policy is being worked through the banking system. This policy has operated for some time, lt operated to a certain extent last year, and it is operating in a far tighter and more stringent way at the present time, and has done over the last 6 or 7 weeks. The present operations of that policy are having a real and clearly different effect in a quantitative manner on the total loans, advances and so on being made available in the community than would have been the case had such a policy not been operating. For example, if one consults the weekly statement on central banking business which is published by the Reserve Bank of Australia, and examines from the beginning of April to the present time the movements in the types of loans, advances and other assets for which banks are responsible, one would find that the movements have declined, not a great deal, but significantly. If in that situation a body such as this corporation were to lend in the market, as it will be able to do in a very significant manner, it could run counter to the current practice of monetary policy. In order to neutralise that effect monetary policy would have to be tougher, interest rates would have to be higher, or the quantitative withdrawing of money in the community might have to be more stringent. We know this. So it is in order to ensure that the operations of this Corporation will not be contrary to monetary policy that I have moved this amendment. I hope that the amendment will be accepted.
I am actually surprised in some ways that the Opposition did not seek to move an amendment of the kind I have proposed, as it is in conformity with an economic doctrine which it has practised for a number of years. We do not take it to the extremes to which the Opposition has taken its doctrine, but I would hope that, as I have taken that doctrine as far as it ought to be taken on this occasion, in a sensible manner, the Opposition will support the amendment. I hope, of course, that the Government will support it. I think it has value and I think it should be supported. But there is one other matter in relation to it which I would like to mention. This concerns the requirement for the Corporation to have an annual report. If the operations of Commonwealth monetary policy are to have any significant effect upon the phasing of operations of this Corporation details of its activities will have to be provided more often than once a year. We know very well that monetary policy can change radically over a period of 12 months, monetary policy being defined in the way in which 1 have defined it. So if we are to see that its operations are not out of phase with the current practice in the rest of the community, I think the Minister will agree there has to be some kind of check, some kind of data and statistics on what the Corporation is doing, provided if possible quarterly, certainly half yearly, but not yearly if we are to make this Corporation work. Having made that definition of monetary policy I hope the Government will accept the amendment.
– As to the amendment, which the Government will accept, there are a couple of aspects that need to be mentioned. The honourable member for Lilley (Mr Kevin Cairns) has suggested that the Corporation might well move out of phase with normal Government monetary policy.
– No, wider than Government monetary policy.
– 1 appreciate that. The honourable member is concerned with what the word ‘Commonwealth’ inserted here might mean. I referred to Government policy. In terms of the word ‘Commonwealth’ he has intended to embrace as wide a field as possible of Government monetary policy. The interpretation I am prepared to put upon the word in the amendment is that it would not bc limited in the context of monetary policies only to those expressed in the Government’s Budget transactions but that it would include total monetary policies directed to the wellbeing of the whole Australian economy. The honourable member for Lilley pointed out during the course of his speech a moment ago that he feels it would be possible for the Corporation to move out of phase. I can understand that. He feels that if it did so this might place it in a position where the intention of the Government and the whole monetary policy in the form of words which I have just used might create difficulties. To that extent the Government is prepared to accept the amendment.
Let me add 2 qualifications. First of all, there are restrictions within the legislation which require the Reserve Bank to give approval for internal borrowings. The Corporation, of course, is not intended to have nor could it be subjected to Reserve Bank controls in matters where other competitive financial institutions, in particular the merchant banks which are operating in a similar field, are free of them. Consequently while the amendments covers the whole field of monetary policy it would not be intended, nor would it be possible, for the Corporation to act, it not being a bank, within the control of the Reserve Bank other than where specifically designated in the legislation. 1 think it is within this area that the basic distinction between the Corporation as an investing body and the other institution, the refinance bank, can best be drawn because the other bank, being specifically a bank, must necessarily operate within the restraints which apply equally to all banks. This Corporation on the other hand is intended specifically to operate with no greater restraints than are applied to overseas capital which is invested in Australia and to marshall capital and apply it to those purposes for which the Corporation is constituted. There is one other matter the honourable member for Lilley mentioned and that is the quarterly statement. I would not like to give an undertaking as to the practicability or possibility of issuing quarterly statements. However, I will undertake to examine the matter and advise the honourable member whether such a course is convenient. With those qualifications the Government is prepared to accept the amendment.
– The Opposition does not propose to vote against this amendment. It does not seem to me that there is any harm in inserting the provision that in the performance of its function the Corporation shall have regard to the current monetary policies of the Commonwealth. It seems to me that it would bc inconceivable that a corporation of this kind could operate without having regard to those policies. If the honourable member for Lilley (Mr Kevin Cairns) sees any possibility of that, he sees a possibility of division, perhaps, between the Department of Trade and Industry and the Treasury. He would be much more aware of that than I would be, and perhaps from his point of view it is necessary to provide a safeguard of that kind. If that is his reason for the amendment I can understand it. lt seems to be, however, that clause 7 (5.) provides adequately for the Reserve Bank generally to control the amount of money borrowed by the Corporation and, therefore, to control the amount of money that the Corporation can lend. I think that subclause 5 is meant for that purpose. I think also that it would be inconceivable that the board of the Corporation could look at sub-clause 5 and not carry into operation a policy which was in accord with the monetary policies of the Reserve Bank. Any view that the honourable member for Lilley might have that the board might operate in a contrary way seems to be a very strange view from a man who is as conservative as he is. I can see no reason for it other than his obvious desire to ensure that the Corporation, being the creation of the Department of Trade and Industry, will not operate contrary to the policies of the Treasury and the Reserve Bank. Of course, if he thinks it necessary to make that clear by an amendment we will not vote against it.
– I disagree with the honourable member for Lalor (Dr J. F. Cairns). I believe that the honourable member for Lilley (Mr Kevin Cairns) has been wise to seek acceptance of this amendment. He has put forward his reasons very succinctly. I welcome the remarks of the Minister for Shipping and Transport (Mr Sinclair) but I should like confirmation of some of the provisos he mentioned a few minutes ago when referring to the
Reserve Bank. As I understand it, they were designed to ensure that not only must the Corporation conform generally with Reserve Bank policy as well as with Commonwealth monetary policy, but more than that, it must be seen to set an example to competitors in the same field.
Even if it has to compete with merchant banks one must realise that the Corporation, although meant to be divorced from the Government, will be seen to be an agency of the Government, or at least of the Commonwealth. To that extent not only must it generally carry out its functions, but also it must be seen to give a lead. If restraint is being imposed on the economy at any time I think it should be clear that the Corporation will give a lead in its restraints. I hope that the Minister will confirm that that generally is what we have in mind and what he has in mind in accepting the amendment that is now before us.
– I do not want to labour this point but the honourable member for Lilley (Mr Kevin Cairns) in his speech during the second reading debate on this Bill highlighted the fact that there was no control by the Reserve Bank over the Corporation. I do not know how any person with a commonsense understanding of clause 7 (5.) of the Bill could come to that conclusion. I followed the honourable member in the second reading debate. I pointed out this aspect and ( will read it to him again. 1 think the Minister for Shipping and Transport (Mr Sinclair), who is in charge of the Bill made it perfectly clear in reply that the Reserve Bank had complete control over this organisation. Clause 7 (5.) states:
The Corporation may supplement its borrowings outside Australia by borrowing moneys within Australia but the total amount that may be borrowed by the Corporation within Australia in any period of twelve months ending on the thirtieth day of June shall not exceed such amount (if any) as is determined by the Reserve Bank of Australia in respect of that period.
If the honourable member is not clear on the matter he has only to read clause 6 which will further clarify this aspect of the Reserve Bank’s authority over this Corporation.
The honourable member for Lilley is simply over emphasising the question of restraint. It is remarkable that this honourable gentleman, who is a member of the
Liberal Party which is supposed to stand for liberal terms, should be so concerned about restraints and controls, lt is almost laughable that the honourable member should emphasise and re-emphasise the importance of the restraint that must be placed on this organisation. As I said in my speech on the second reading, I have great respect for the draftsmen of this legislation. I believe that the legislation will be as a grain of sand in the desert in dealing with the real problems that face Australia. But it is at least a grain of sand. 1 commend the Government for taking even that step. I think that the restraints that are being called for by the honourable member for Lilley are not necessary. That is why we on this side of the chamber are not going to become terribly upset about it and why we shall accept the amendment.
– I want to say a word or two in very friendly defence. I think there is a difference of opinion concerning the proposed amendment which is not covered by clause 7(5.). That clause relates to the activities of the Corporation in respect of borrowing, especially within Australia. Basically the clause says that the total amount of borrowing on the Australian market in any period of 12 months shall be determined by the Reserve Bank. But it is also clear from the clause and from statements of the Minister in respect of other clauses that this is to be a minority of the support for the Corporation. Therefore, if there is to be a Reserve Bunk interest in the activities of the Corporation it is to be an interest in a part of the Corporation that is a very small proportion of its support. Because it is a small proportion it will not have the kind of effect I envisage in the proposed sub-clause. After all, if the Corporation is to do all the things that have been projected for it to do, if it is to enable equity to be retained al a far higher level in so many industries than is attainable at the moment, it is going to be pretty big cheese - it is going to be a pretty big show. If it is to be as large as this we want to have some kind of interest in the range of its activities. lt is for these reasons, and because clause 7(5.) does not cover the kind of position I have indicated, that this amendment is put forward.
Amendment agreed to.
– ls the honourable member for Lilley prepared to seek leave to move his remaining 2 amendments to clause 8 together?
– Yes, Mr Chairman, I seek leave to move the remaining 2 amendments together. I feel that they will suffer the same fate as my earlier amendments.
– Is there any objection? There being no objection, leave is granted.
– The fate which the 2 amendments which I propose will suffer may not be as pleasant as the fate other amendments have suffered up to the moment. Firstly. I move:
In other words, I hope to insert in the Bill - 1 feel that I will be unsuccessful - a provision whereby the Corporation shall be in the nature of a lender of last resort. In this respect I have in mind provisions which have been inserted in other financial measures which have been introduced in this chamber. I refer specifically to the Commonwealth Development Bank of Australia. There are a number of reasons why the provisions which relate to the Development Bank cannot be duplicated here. If it is argued, for example, that one ought not to require that an appropriate borrower has shopped around in all kinds of institutions one could change the plural to the singular and thereby substitute the word ‘institution’. The legislation could be changed to provide that the attempt to secure assistance should bc an attempt to secure assistance from institutions within Australia. After all, the bodies which will be approaching this Corporation will be, from their very nature, bodies which will be unable to operate on the world market. That is almost provided by definition - and, almost by definition, it covers all of Australian industry. So it would be quite simple to ensure that such a provision shall apply.
I also suggest that another amendment should be moved. 1 will speak to it in very strong terms. Sub-clause (3.) (c) of clause 8 provides that the Corporation shall endeavour to avoid becoming or remaining in a position where it is able to control or manage the affairs of a company to which it provides assistance. Sub-clause (3.) (d), which 1 propose in my amendment, merely intends to make it perfectly clear. 1 move:
Al the end of sub-clause (3.) add the following paragraph:
for the purpose of the preceding paragraph the Corporation shall be deemed to be in a position where it is able to control the affairs of a company if it holds more than fifteen per cent of the issued capital of the company except where the equity acquired by the Corporation is in the nature of bridging finance.’.
I think that this is a very important provision which cannot be ignored, lt is important for this reason: We have made it mandatory in a number of fields - for example, in radio and television stations - that an equity holder ought not to hold more than 15% of the equity in such activities. As the Minister for Social Services (Mr Wentworth) has reminded me, this requirement came about years ago when a London newspaper was suspected of trying to buy into a large Australian radio network. Provision was written into the Broadcasting and Television Act at the time that there shall be no greater than 15% equity in such a body. In other words, it was judged that a 15% equity would give a degree of control which would be real and substantial. Th s has been perpetuated in other fields. I suggest that if sub-clause (3.) (c) of clause 8 is to have any meaning the proposed sub-clause (3.) (d) ought to be added. A meaning ought to be given to the maximum amount of equity which the Corporation shall acquire in any body. In other words, if the Corporation is able to acquire any amount of equity, irrespective of whether it supplies bridging finance or otherwise, one has to doubt, and doubt very sincerely, whether clause 8 (3.) (c) has any meaning. The clause means that the Corporation ‘shall endeavour1 not to assume or to have a controlling interest in any company. I doubt that the clause has any meaning.
This point lies at the heart of the case. We chose 15%. One could have chosen 10%. A statement has been made by the Treasurer (Mr Bury) in relation to the Brisbane Permanent Banking Co., now the Queensland Bank, to the effect that one shareholder is not to acquire more than 10% interest. It has been foreshadowed that the Banking Act will be amended so that one shareholder cannot acquire more than 10% of the equity in such a body. A figure of 10% was chosen because it is considered that that is a critical level, which would break down the traditional banking structure in an important credit and financial institution. In this amendment we are seeking a higher percentage. We chose 15%. We could go higher if the Corporation is to require for short periods a 20% or 25% equity when providing short term finance. Once that short period of time has elapsed, once the emergency requiring such a large amount of equity to be held has elapsed, then it should be understood that the equity would be brought down to a level such as that required in other important institutions operating in Australia. Those are the reasons why I moved the amendments and I hope that they will be accepted.
I want to revert to the lender of last resort clause. If this body is to operate on equal terms with bodies operated by private enterprise, one of two requirements is appropriate, cither that it be a lender of last resort, or, that it be required to pay a return on its capital such as occurs in the case of Trans-Australia Airlines and the Australian National Shipping Line or that it should operate on exactly the same levels of activity required, for example, of the Commonwealth Banking Corporation in relation to the other banks. Either it is to be a lender of last resort or there should be a return on capital. Both propositions cannot be excluded.
I return again to the suggested amendment requiring a maximum equity of 15%. This figure is appropriate. It is higher than that currently foreshadowed by the Treasury in relation to banks. Tt is a figure which allows a degree of control which is very substantial. The honourable member for Hindmarsh (Mr Clyde Cameron) would know that Wheelwright, in writing his work in the late 1950s, selected the figure of 15% as being quite significant in relation to ability to control a corporation or company. That provision has been accepted in other fields. Therefore I think this amendment is reasonable. It allows sufficient flexibility for the Corporation to go to a higher figure in those areas where such action is required. If this proposed amendment is supported by the Government then it would give clause 8 (3.) (c) meaning which is not presently apparent. That paragraph states that the Corporation: shall endeavour so far as practicable, to avoid becoming or remaining in a position where it is able to control or manage the affairs of a company to which it provides assistance.
At present those words merely represent a pious aspiration. The amendment should be supported if clause 8 (3.) (c) is not to be nullified or neutralised. The amendment would give it meaning. Above all it emulates and supports a principle which has been acted upon on so many other occasions in Australia and has been adopted by this Parliament.
Thursday, 21 May 1970
– If the amendment to clause 8 (2.) were not so serious it would be humorous. The Australian Industry Development Corporation, if it sticks strictly to clause 8 (2.) of the Bill, will not provide assistance in relation to a particular company unless it is satisfied that that company will operate in an efficient manner and on a profitable basis. I challenge any lender of money who wishes to lend money to a company not formed to lend money within the provisions of that clause. 1 defy any lender of money to do that, because there are many unknowns such as death and sickness that can operate. No lender of money could honestly lend money under that clause. This highlights one of the faults in the scheme that has been brought before the Parliament. As I said previously, the clause is unnecessary and redundant. The only company that the Corporation would bc able to assist would be a company in existence. Because of the limitation of funds available, the Corporation is not likely to be of any great value to any company or firm in Australia.
– The Government does not propose to accept either amendment, but I wish to speak briefly on them. The honourable member for Mitchell (Mr Irwin) suggested that his understanding of the application of clause 8 as it now exists is that in no instance could the Australian Industry Development Corporation lend money on sound business principles. I assure the honourable gentleman that that is one of the distinctions between this Corporation and any other operating in the financial sector as a bank. This will not be a bank. The Corporation will not lend money. It will reinvest money that it borrows specifically for particular projects. As the honourable gentleman mentioned recently, the extent to which the Corporation is dependent upon borrowing moneys, principally overseas, will ensure that if the rale of interest moves as it has in the last few years, no doubt for many propositions there will be more attractive interest rates available. Consequently, in the normal run of business judgment a company would not turn to the Corporation first for any required funds unless it sought to fulfil certain objects.
The first amendment moved by the honourable member for Lilley (Mr Kevin Cairns) referred to an addition to the end of clause 8 (2.), which is intended to ensure specifically that investments made by the Corporation were last in the queue. The reason why the Government does not accept the amendment is that possibly sufficient restraint is placed on the Corporation by the application of clause 8 (3.) (a) which ensures that the Corporation shall nol provide assistance to a company except at the request, or with the consent, of that company. In other words, the Corporation is not intended to canvass business, lt is required specifically to comply with the constraints that are written in the measure. Because the Corporation will be raising its money in these fairly difficult overseas money markets - as I explained a moment ago in reply to the honourable member for Mitchell - more often than not it will be the last resort. For that reason I do not believe the amendment to be desirable or necessary. If the fulfilment of its objects were to be included, it may well preclude a desirable investment which is fully within the objects of clause 8 sub-clauses (1.) and (2.). For that reason I do not believe it to be desirable and the Government does not propose to accept it.
The honourable member for Lilley suggested but did not propose an alternative - that the Corporation pay a dividend. I do not believe that a dividend is appropriate to this Corporation for 2 reasons. Firstly,
I believe it is necessary that the Corporation be kept completely at arm’s length from the Government. The whole object of the constraint of this Corporation is such that by keeping it at arms length we will be able to ensure that it operates within the ambit of what we would regard as private enterprise. Consequently, it is being kept at arms length by not being required to pay a dividend.
The second point is that I think it is also very necessary that the Corporation have the capacity to augment its capital. It will augment its capital and its borrowing capacity not only in accordance with its subscribed capital but also in accordance with its reserves. One way by which it can increase its reserves is by investment which will progressively, one would hope, increase in value. There is no doubt however that in the early years many of these investments will not necessarily increase at a reasonable rate. Consequently, it would be very difficult to determine just what sort of period would be necessary before they in fact became profitable. It is for that very reason that we have the restraining provision that investments be made in accordance with sound business principle and in accordance with the general objectives which are directed towards maximising Australian equity.
The third point 1 make about the Corporation paying a dividend is that it is essential that it be kept divorced from the normal budgetary allocations that might well follow if it is necessary for the Corporation to pay a dividend and to remit funds regularly back into the Treasury so that it can then be said that it needs to turn to the Treasury whenever it needs to increase its capital. The pattern of operation of the Corporation is such that it is intended to be kept completely at arms length so that the capital which is subscribed cannot be used for the general investment propositions for which the Corporation is constituted. Only the borrowed funds will be used for this purpose.
The Government does not propose to accept the second amendment. I understand that one honourable member has expressed concern that the Corporation might hold a greater percentage of equity shareholding than the spirit intends. The object of this amendment is to alleviate that concern. I do not believe there is any justification for this concern. The Bill is so framed that the Corporation is not in a position ever to seek a controlling interest. The Bill instructs the Corporation at least once a year to review its portfolio of holdings and to divest itself of such holdings as are no longer necessary to be held to secure the objectives of the Corporation. That instruction is contained in one of the succeeding sub-clauses. Therefore, under the Bill as drafted, the Corporation will be required once a year to make a judgment as to whether there are grounds to continue to hold equity shareholdings. These instructions go to the Board of Directors, the majority of whose members will be part-time directors appointed because of their experience in private enterprise. The Government would not wish to circumscribe the judgment of the Board of Directors by stipulating the percentage of equity capital which the Corporation may take in any venture.
It is not desirable that the amendment be accepted. The request and consent provisions that are inserted in clause 8 (3.) (a), I believe, provide some protection. I think that such a restraint as this amendment would involve could deny a company assistance in circumstances where something more than a 10% or 15% equity held by the Corporation is eminently desirable from the point of view of that company and, indeed, would in that way preclude an investment in a corporation - not this Corporation but a corporation in which the AIDC is investing - which has specifically made a request. The restraints requiring that equity be noncontrolling, transitory and tapering will ensure that the Corporation will not maintain a permanent equity. For that reason I do not see that this amendment would contribute towards the efficacy of the Corporation. Therefore the Government does not propose to accept it.
The Australian Labor Party opposes the 2 amendments moved by the honourable member for Lilley (Mr Kevin Cairns). The second proposed amendment to clause 8 asks for the addition of the following words at the end of sub-clause (2): and that the company has made every reasonable attempt to secure assistance at appropriate rates from banking or financial institutions usually engaged in such type of arrangements and without success.
The Opposition would hope that this Corporation would not always be a lender of last resort. It hopes that in some cases it will even be a lender of first resort. But knowing that the Corporation is going to be borrowing money overseas and elsewhere at high rates of interest it is very unlikely that it is going to be a lender of first resort. The Opposition thinks there are enough restrictions on the Corporation already without providing any more. 1 think the second amendment could come only from a person who, whether he knows it or not, is a spokesman for the existing lending institutions. The Australian Labor Party is the spokesman for people who need to borrow money, people who do not have money. The honourable gentleman who moved this amendment can only be a spokesman for those who arc lending money. He wants to restrict competition. He is not an advocate of competion. He is trying to restrict competition and in effect he is saying: ‘Look, here is a corporation which could compete with some of the banks. 1 think that is a bad thing.’ Well, 1 think it would be a good thing to have most of the banks more effectively competed with than they are at present. If this Corporation could give the banks a bit of competition at least in the fields defined it would be an excellent thing in the public interest. I have no time for the spokesmen for the private financial institutions who have found their way into this House.
The second point raised by the honourable gentleman was the matter of control. He says he wants control denned at 15% of the shareholding. Control can be exercised and is exercised in the case of many so-called private corporations with much less than 15% of the shareholding. In some cases the controllers of big private corporations may have only 1% or 2% of the shareholdings. They are able to hold control because the rest of the shareholding is distributed among tens of thousands of people who have no way of competing against these professional managers whose control is based on a very small percentage of the shares. I agree with the Minister at the table, the Minister for Shipping and Transport (Mr Sinclair) that the powers of the Corporation are already seriously limited - limited too much - by clause 8 (3.) (a) which says: (3.) The Corporation -
Clause (3.) (b) is a similar kind of clause. I would like to see the Corporation able to go out and search for business and not be restricted, as those clauses restricted it, to assisting companies which come to it for assistance. Why should it not go out and give the other lending institutions a bit of competition? Are not honourable members on the other side of the House advocates of competition? Does not the honourable member for Wakefield (Mr Kelly) consider himself an advocate of competition? Does not the honourable member for Lilley consider himself an advocate of free enterprise and competition? Yet honourable members opposite have spoken tonight in terms of restriction. They fear that this Corporation will provide competition for some of their friends - though I am sure they are not really their friends, because I am certain that very few of the honourable members on that side of the House are in any way friends of the people who control the big financial interests. They may identify themselves with them, and they may think it is very nice to identify themselves with them, but I am quite sure they are not in any way friends. These people are in a much higher firmament than the honourable members opposite who have spoken. 1 think clause 8 (3.) (c) should be read in conjunction with clause 8 (4.) (b). I hope it will be the intention of the Corporation to read these provisions together. Clause 8 says: (3.) The Corporation-
As though it would be a terrible thing for the Corporation - a large public body set up by the Government which is supposed to represent in some way the will of the people - to exercise any control over a company which does not in any way express the will of the people. It must be read in conjunction with sub-clause 4 (b) which states:
The Board is satisfied, as to any of those shares, that retention of the shares is not necessary for the proper performance of the functions of the Corporation.
I would expect the Corporation to take that into account. From time to time it will be inclined to say that it is necessary for the Corporation to retain its shares so as to ensure the proper performance of the functions of the Corporation. I am sure that under a government drawn from this side of the House which is seeking to express the public interest through the will of the people, we would want the Corporation to retain shares in some companies to ensure the proper performance of the functions of the Corporation as set out in sub-clause 4 (b). I do not assume that the Corporation is getting powers now. The Minister interjected when I was speaking to say that he did not intend the Corporation to come in quickly and sell out quickly. I hope that this is not the intention of the Minister or the function of the Corporation. I submit to the Committee that it would be necessary from time to time for the Corporation to hold its interest for a considerable length of time to ensure its proper functioning.
I have been goaded into speaking by the speech of the honourable member for Lalor (Dr J. F. Cairns). I would like to ask the Minister for Shipping and Transport (Mr Sinclair) 1 question. If I understood him correctly, he said that keeping the Corporation at arms length from the Government was important. Then he said that for that reason it was important that the Corporation should not be a set dividend target. I cannot understand the connection between one statement and the other. Could the Minister explain it for me?
– I did say that, but I realise that there is another amendment related to this which will shortly be moved. Perhaps I can leave my explanation until then.
I rise simply to indicate my support for the 2 amendments that have been moved by my friend, the honourable member for Lilley (Mr Kevin Cairns), which are now before the Chair. I have observed the same amity and access between the Government and the Opposition on this occasion as existed a little earlier. The Government is not prepared to accept the amendments and is firmly supported by the honourable member for Lalor (Dr J. F. Cairns). A little earlier, in the course of this debate, some of us were able to observe that amity by seeing both sides sitting cheek by jowl in the one enterprise. We do not want to delay the House, especially at this hour, by forcing another division. That is why it is necessary for me now to express my support for what the honourable member for Lilley has sought to do.I must say this because I cannot indicate it by my action in a division.
We have 2 amendments before us. The first deals with the question of whether it should be made explicit in the legislation that the Corporation should be a lender of last resort. There is no difficulty in drafting a provision of this kind. Indeed such a provision is contained in section 72 of the Commonwealth Banks Act 1959-1961 where it is provided that the functions of the Development Bank are to provide finance for persons in cases where finance is desirable and the finance would not otherwise be available. There is no difficulty therefore in drafting such an amendment. Indeed, we have been told by the Minister for Shipping and Transport (Mr Sinclair) at some length and by his distinguished predecessor in this debate that there is no overlap in the institutions, that is to say, the Australian Resources Development Bank and the Corporation, at all. The Minister said earlier in the discussion of this clause, I think, that he would not accept that the corporation would be other than a lender of last resort. We would simply like to make this explicit. HereI may say with reference to the honourable member for Lalor who is leading for the Opposition that he need not import any fanciful reasons why we support these amendments. We are not, as he says, in the same firmament - I think that was his phrase - as those distinguished gentlemen who control our great financial institutions and therefore it could hardly, he said himself, be on the grounds of any personal friendship with them that we would seek to move amendments of this kind. He need not look for any abtruse reasons. What we fear of course, is that this institution, shall we say improved by the Opposition in due course by amendment, could become en engine whereby a government could control a large segment of industry in this country. We believe that when a government controls industry it uses industry for its own political purposes and we fear the political purposes of Socialism. The honourable member need not enter into any high flown notions as to why we support these amendments - whether through personal friendship or because we are the spokesmen of vested interests. God knows how long we could talk if we talked about vested interests. But we will not. We will not delay because the hour is late.
The other amendment is one which 1 think has been fully supported by my friend the honourable member for Lilley. The Bill itself in clause 8 (3.) (c) states that the Corporation: shall endeavour, so far as practicable, to avoid becoming or remaining in a position where it is able to control or manage the affairs of a company to which it provides assistance.
Now, this is a purpose of the very Bill, lt is stated in the plainest terms and all the honourable member for Lilley seeks to do is to make it explicit that control would amount to the possession of 15% of the equity in such a company, lt merely makes explicit what is stated in plain terms in the Bill itself. He has supported the figure of 15%, 1 think, beyond any doubt or question. He has pointed out that this is the very figure that has been chosen in the case of radio stations and in other Government legislation. Indeed, the honourable member leading for the Opposition has said that people have succeeded with 10% less than 15% - in gaining control of a company. Once again we fear control of companies exercised by a corporation which itself may well be amenable to government - not necessarily this Government but any government in the future, a government drawn from the other side of the House, for example. We believe that (his is bad and wrong and contrary to principles that we support. So I support the 2 amendments that have been moved by the honourable member for Lilley that are now before the House. I only regret that the Government is not able to accept the amendments and I understand that the Opposition is in full agreement with the Government.
– I am urged to support the amendments mainly by the remarks of the honourable member for Lalor (Dr J. F. Cairns) for the same reasons put forward by the honourable member for Bradfield (Mr Turner). 1 would like to stress what the honourable member for Lalor said. He said, I think in all sincerity, that he hoped that the 15% equity would be retained, if necessary, for a long period. He stated that the Deputy Prime Min:ster (Mr McEwen) had given him this assurance and that it was not intended to get in and out. He went further and said that when the Opposition formed the government they would retain the equity so that they could see that the companies went along in a certain line as desired. Is this anything but nationalisation of industry? If it cannot be seen what could happen surely the remarks of the honourable member for Lalor have indicated what could happen.
I accept the comments of the Deputy Prime Minister (Mr McEwen) that this is not intended by this Government. I accept the assurance of this Government. But I think that the greatest concern must be felt by anybody in regard to this clause, and leaving aside for a moment the amendment moved by the honourable member for Lilley. Are we unleashing a vehicle which honourable members on the other side of the Committee could use and manipulate? We have fought-
– What a load of rubbish. Who said that the honourable members opposite were the most trustworthy people in the Commonwealth?
– When my distinguished friend who, I believe, gained most of his experience on the waterfront, feels himself fitted to-
– It is a pity you did not go there. You might become educated.
– I would not like to enter into a discussion on that point. Let me proceed on the line of argument that I was adopting. I presume that nobody will deny the truth of the proposition I have put. The honourable member for Lalor (Dr J. F. Cairns) has not denied it. He made the statement, and I think he sticks by it with sincerity-
– Why should he deny it? Of course he made it.
– Well, your friend, the honourable member for Sturt, seems to be protesting a bit. It seems to me, at this stage, that this is a Bill of great expectations. The honourable member for Lalor said: We expect that’. The Minister for Trade and Industry said: ‘We expect that. The Minister for Shipping and Transport (Mr Sinclair), who is at the table, said: ‘We expect that’. It is reasonable, I think, for those of us who may be more cautious beings to expect that certain things could happen. This is all that I am prepared to say. If it were not for what the honourable member for Lalor said in respect of this clause I would not have risen and supported the amendment. I would have accepted the assurance given by the Deputy Prime Minister. The weakness of this clause and the strength of the amendment moved by the honourable member for Lilley became apparent as the glee and great anticipation with which honourable members on the Opposition side greeted this measure became clearer and clearer. I will support the amendment. If there were a division on it, quite frankly I would vote for the amendment.
– I rise to say just a few words in respect of the remarks made by the honourable member for Lilley (Mr Kevin Cairns) and by those few who have supported him. Sir, it is quite clear from the remarks of all of them that they arc concerned with preserving the special position which the lending institutions now enjoy in this country and with preserving the special position enjoyed by the interests which show little regard for Australia’s welfare. They have no regard at all for the need for Australia to own and control its industries. Where these honourable members must choose between these 2 conflicting interests they are prepared to reject the interests of Australia and to take the side of those who have no regard for Australia except to use it as a quarry and as a place in which to obtain quick returns for little outlay.
Clause 8 of the Bill makes clear what the purpose of the Corporation shall be. It states in part: the Corporation shall pursue a policy directed to securing to the greatest extent that is practicable participation by Australian residents in the ownership of the capital, and in the control, of that company or of the companies engaged or proposing to engage in that industry.
No Government could render a greater service to this country than to try to achieve the objectives there stated.
Here we see these honourable members who are opposed to this legislation having the hide to put the point of view of private investors above the interests of their own country. They ought to be ashamed of themselves for doing so. They ought to be perfectly ashamed of themselves for coming into this place and so blatantly putting the view of people who have waxed fat and battened on this country over the years. These honourable members are putting the interests of these people before the interests of their own country. They are supposed to represent their country. They were sent here to pass laws that will benefit the country to the maximum extent possible. Occasionally, we find that the Government flukes being right. That happens as often, perhaps, as the Opposition flukes being wrong. On this occasion both the Opposition and the Government happen to be right.
Now we have the odd occasion when the Deputy Prime Minister and Leader of the Country Party (Mr McEwen) has done something that is really in the interests of this country. Although he was a long time thinking about it and made a lot of noise about people gradually getting control of Australian industry, at long last, after he was able to get this measure before the House by prevailing on those in the Liberal Party ranks who opposed him and who represented the private lending institutions, we still find those who opposed it fighting a rearguard action against it. I do not know what satisfaction they get from this. Are they completely ignorant of what they are doing, in which case we could perhaps forgive them, or are they willingly or guiltily going along as the direct personal representatives in this place of those lending institutions, even though they know that what they are doing is against the best interests of this country, which is their country as much as it is our country? I am thoroughly ashamed of them and I hope that they will feel just as thoroughly ashamed when they see their recorded remarks in Hansard.
– I wish to make a few observations. The Minister for Shipping and Transport (Mr Sinclair) seemed to be confused about my remarks referring to the Corporation and the borrowing company. The honourable member for Lalor (Dr J. F. Cairns) missed the point that it is most desirable that the equity in a company be not held for a long period. If a company is well established and is able to carry on, the equity in it can be sold. Surely the aim of the Corporation should be to assist as many companies or firms as possible. By retaining equity in a company and not capitalising it, the Corporation is defeating the revolving attitude to funds at which it should be aiming. The observations of the honourable member for Lalor fall down on this point because by retaining equity in a company the Corporation would be prevented from assisting other companies.
– I should like to make a couple of brief remarks in support of what was said by the honourable member for Hindmarsh (Mr Clyde Cameron). What seems to have been overlooked by previous speakers is one word in the first amendment to clause 8 proposed by the honourable member for Lilley (Mr Kevin Cairns). I refer to the word ‘appropriate*. The amendment reads: . . that the company has made every reasonable attempt to secure assistance at appropriate rates from banking or financial institutions
What exactly is meant by ‘appropriate’ rates of interest? I suppose that the first thing one does when trying to borrow money is to negotiate the loan at the lowest possible rate of interest. Therefore an interpretation of this expression could be that one would try to obtain assistance at the lowest possible rate of interest. If the honourable member means the lowest rate of interest, why does he not say so? These words would suggest that what is actually meant is that if a company wants to borrow it goes first to a private institution where it might have to pay 10%, but then finds that it can get the money at 8% from the Corporation. To suit the particularly perverse ideology of the honourable member for Lilley the company would have to borrow at the higher rate of interest from the private lending institution. It does not seem to be to be particularly beneficial for Australia that an amendment of that sort should be carried. I think the honourable member for Lilley has done himself credit in moving this amendment.
The honourable member suggested as an alternative that the Corporation should declare a dividend, or something like that. This would mean that the Corporation would be required to tie one hand behind its back when competing with private financing institutions. It seems to me that if we are going to put this handicap on the Corporation we achieve a direct contradiction of the first part of the Clause which says that the Corporation shall act in accordance with sound business principles. If one is going to fight one does not tie one hand behind one’s back. 1 am very surprised, Mr Chairman, that you did not rule the honourable member’s amendment out of order because it is a complete negation of the original motton. As J said this afternoon, it is a funny thing that the same people who say that Socialist enterprises never work are the ones who are squealing about suffering unfair competition from a Socialist enterprise. If Socialist enterprise is really inefficient they should not have anything to fear. If it is efficient the people of Australia will benefit by it.
– I am sad that the Government has not seen fit to accept either of these 2 amendments. The first one deals with the general question of the lender of last resort. The Australian Industry Development Association, which came out in support of this measure generally, stressed in one of its Press notices that above all this Australian Industry Development Corporation should be a lender of last resort. The Minister went out of his way to compliment the AIDA for what it said because he was so pleased with the support he was getting from that Association for this Corporation. The Association stated very strongly that it should be a firm condition that the Corporation be a lender of last resort and that its charter should preclude it from looking for business in any way whatever. Here we are endeavouring to set out in quite simple language what in fact so many people who have been generally supporting this Corporation from outside the Parliament have been insisting on.
So far I am really not impressed with the argument that the Minister has been putting forward, if 1 had had any doubts whatsoever when I rose earlier to speak, they have been dispelled by the remarks of honourable members opposite who have made it quite clear that of course . they would not like these amendments because they are so contrary to their doctrine. On the other hand, in relation to the limitation on the funds that should be held in any one company, this is a provision which has been lifted roughly from legislation on other Government instrumentalities, lt is to be found in the Broadcasting and Television Act. If we have seen fit in the past to put in this clause in order to deal with this very matter, I cannot see why the Minister is not willing to accept it. Here it is hedged around with every proviso. It can hold up to 15%, whereas 10% would probably have been a more reasonable amount. Even so, there is a proviso dealing with bridging finance. As honourable members on this side of the chamber have seen fit to bring in amendments of this sort in the past and have them inserted in Acts, 1 would have thought that here was another occasion on which such an amendment should be accepted.
Coming back to this question of lender of last resort, here we are using taxpayers’ money and not asking the Corporation to earn any profit, lt is one thing to compete but to use a large amount - S25m this year - of taxpayers’ funds, and not ask the Corporation to do anything - is a different matter. It can lend these funds out at any rate of interest. There is no provision for making a profit and no provision that it is to be a lender of last resort. I am really not impressed by the remarks of the Minister so far. if that is the best he can do he had better do a little more homework and come up with a more reasonable excuse than the ones he has put forward, because these are 2 reasonable amendments. So far anything we have heard from the Minister has, I think, really been a fair amount of nonsense.
One must listen with some interest to amendments moved by the honourable member for Lilley (Mr Kevin Cairns), because when all is said and done he is a man in principle. He said that he would not serve under the Prime Minister (Mr
Gorton) in the lowly position of Deputy Whip. However, he found out last week that supporting his principles had consequences. So he adopted a very simple theory; he gave away the principles.
– Order! I think the honourable member for Grayndler is getting very wide of the subject matter under discussion.
– I do not contest your ruling, Mr Chairman. I am dealing with the proposed amendment to clause 8, which provides that the Corporation should be a lender of last resort. The Opposition thinks it should be the first resort. In subscribing to that theory we do not see why the sordid machinations of the Liberal Party should be brought to light in this Parliament. We resent the attacks made on the Leader of the Country Party and Deputy Prime Minister (Mr McEwen) for introducing such a Socialist measure in the Parliament. We appreciate that for the sake of unity in the ranks of Government supporters he cannot defend himself tonight against the shadow sparrers. the sham fighters who will cross the floor to vote when there is no danger and by doing so will get their names in the newspapers. In that way they can show their hatred of the Prime Minister. But when the chips are down they will not cross the floor to vole. I am sorry that I must say the same thing about my. distinguished friend, the honourable member for Casey (Mr Howson). It is now 12.45 a.m. and we are debating in this Parliament not the provisions of this legislation but the machinations and hatreds in the once great Liberal Party and the feeling against the Prime Min:ster.
– Order! The honourable member for Grayndler knows enough about debating procedure at the Committee stage to realise that the remarks he is making have no relevance whatsoever to the Bill before the Committee.
– I naturally accede to your approach to this matter, Mr Chairman, but I think I might make passing reference to what has prompted the moving of these amendments tonight. We are discussing at present clause 8 of the Bill. The honourable member for Lilley has moved an amendment which expresses his concern about the provision in respect of a 15% equity. He is concerned firstly to ensure that foreign interests will be able to take over Australian companies, if need be, irrespective of the effects on the Australian economy. He also is trying to make sure in moving his amendments that the Bill will be made unworkable. The third reason why he has moved his amendments is, as I mentioned in passing, to bring to the light of day the hatred of himself and his colleagues for the Prime Minister and the failure to attend to these matters.
– Order! The honourable member will pass right along if he continues on that line.
– Thank you, Mr Chairman. I now wish to deal with the proposal that the Australian organisation should get out when there is a 15% equity. Let the honourable member for Lilley say whether he believes at this stage that foreign interests should take over Australian industry. Is that what the honourable member means by his amendment? Does he mean that when a 15% equity is reached the Australian organisation should get out and foreign interests should take over? Is that the type of amendment he is seeking and asking honourable members on this side of the chamber to support? Is that the Provision for which he is condemning the Deputy Prime Minister on the ground that this is Socialist legislation? If so, let him say so. We of the Opposition are completely opposed to the take-over of Australian industries by foreign interests.
In the amendment relating to the Corporation as a lender of last resort the honourable member refers to a company making every reasonable attempt to secure assistance at appropriate rates from banks or financial institutions. What does he term a reasonable attempt? Does he mean one, several or a dozen attempts? Let him say what ‘reasonable’ means in that context. Let him define it. And what are appropriate rates for banking and financial institutions? Is he referring to 15%, 20% or 30%? I think you will agree, Mr Chairman, that there are reasons behind the moving of these amendments that have not been put forward by the honourable member. His real aim is to vent his spleen and to adopt the role of hero.
– Order! The honourable member cannot proceed on that line.
– I will obey your ruling, Mr Chairman, but I am surprised at your taking exception because I am protecting your Party against attacks by your coalition partners in the Government. At the same time I am mentioning that behind these amendments is more than appears in their contents. The honourable member has not defined ‘appropriate’ or ‘reasonable’, and there must be an ulterior motive behind the moving of the amendments. No-one can properly deny that. If that is not the case, let the honourable member say why the Corporation should not be a lender of first resort. What is reasonable? What is appropriate? The amendment to clause 8 continues:
This stupid kind of resolution has been brought forward and there must be other motives behind it. I will not trespass on your generosity or disobey your ruling, Mr Chairman, but most people in this Parliament know the reasons behind these amendments, and in particular this one. 1 repeat the other amendment, lt states:
For the purpose of the preceding paragraph the Corporation shall be deemed to be in a position where it is able to control the affairs of a company if it holds more than fifteen per cent of the issued capital of the company except where the equity acquired by the Corporation is in the nature of bridging finance.
If one follows what is meant by these amendments one will see that they are designed to destroy completely the structure of the organisation that will be set up. Let the honourable member say if that is what he means; or is there an ulterior motive? I say that there is. I finish my remarks on this note: I regret that these honourable members who are so militant and so rebellious have adopted this means to vent their spleen against the Prime Minister in this Parliament. Having said so much, let us hope that there will be an end to it now and when the opportunity comes to defeat this discredited government they will do it the right way instead of trying to limelight their activities in this Parliament.
– Mr Chairman-
– Order! The honourable member for Lilley has spoken twice on the clause under discussion.
– No, I have not. I have spoken once.
– Order! The honourable member for Lilley has spoken three times on this clause and has used all his speaking time both on the clause and the amendments. I call the honourable member for Cunningham.
– These amendments should be rejected with contempt because they are aimed at the very heart of the Bill. They are in fact quite deliberately and craftily designed to vitiate it by ensuring that the maximum controlling interest that this Corporation shall be capable of holding in any overseas company operating in Australia shall not exceed 15%. I can conceive of nothing more unpatriotic. This Bill literally bristles with over-rigid precautions inserted obviously as a result of agitation within the Party room of the Government to pacify and satisfy even the most unreasonable objectors to it. These 2 amendments represent conditions that even the Government has to baulk at.
Let us take the first amendment. The Corporation is enjoined to exercise its main borrowing powers outside Australia and not within Australia. The whole of the argument advanced by those who support these amendments has been directed towards borrowing within Australia. Not only is the Corporation enjoined to borrow outside Australia but there are very definite limitations on its borrowing powers within Australia. They are limited firstly by the dictate of the Reserve Bank of Australia. Further, in deciding the amount that it shall be permitted to borrow within Australia, the Corporation is limited to the guidelines that Huw operate in respect of borrowings by overseas companies which are operating in Australia. It is sent into the fight with its hands tied behind its back. The first amendment goes further than that because it says: . . and that the company has made every reasonable attempt to secure assistance at appropriate rates from banking or financial institutions usually engaged in such type of arrangements . . .
That is capable of 2 applications. Firstly, the applicant company must itself apply. The Corporation cannot solicit business.
The initiative must come from the borrowing company. As it stands and as it reads it could, if applied ruthlessly, go further than that and the applicant company would be asked to state what steps it had taken to borrow overseas to range the world at large and to borrow from some of the institutions referred to here.
Let us take the situation in regard to the control of a company by way of a 15% shareholding. In many cases a 15% shareholding gives quite sufficient leverage to control a company. Need I remind honourable members of the other provisions of clause 8 which say, in effect, that every year the Corporation shall literally examine its economic conscience, see how many shares it holds, see what is a fair and reasonable holding and take the necessary action to divert itself of the surplus, with only 2 reservations? The first is that it can continue to hold a very limited number of shares which might give a sufficient yield by investment to provide it with its working expenses. The other reservation is an obvious one. I repeat that the amendments ought to be rejected with contempt because the second one in particular means this: This is the new charter for the emancipation of Australian industry from overseas control, and it is to he done with a limit of 15% on Australian shareholdings.
Mr KEVIN CAIRNS (Lilley) (1 2.56 a.m.] - Mr Chairman, may I speak to the amendments?
– Firstly, let me reply to the Minister for Shipping and Transport (Mr Sinclair) and to the very friendly comments made by the honourable member for Grayndler (Mr Daly). When I first came to this place I was told by some acquaintances of the honourable member for Grayndler to beware of him on the occasions on which he pats people on the back and tells them that they are good fellows. I feel that I have been subject to that kind of pat on the back this evening. I was also intrigued by his concern with the word ‘reasonable’. He said that it needed some definition. I suggest that ‘reasonable’ is a kind of word that is defined in the negative rather than in the positive and that the definition of it is to be found very readily and very easily in the honourable member for Graydler
Now let me comment on one or two words from the Minister. I believe that these comments are appropriate. He mentioned that clause 8 (3.) (a) contained sufficient support for the proposition that the Corporation would be passive in its operation. He then said that clause 8 (3.) (c) made it perfectly clear that the Corporation did not desire to retain a controlling interest in any company to which it had given substantial assistance. I suggest that clause 8 (3.) (a) represents a nice aspiration but that there are no guidelines according to which that aspiration is to be judged or according to which it is to be applied. Clause 8 (3.) (c) indicates that the Corporation shall endeavour to avoid becoming or remaining in a position of having a controlling interest. We merely desire to make it clear, with a great deal of flexibility, where a controlling interest would end. I thought that in the amendment a maximum of flexibility was allowed. After all, the amendment would do 2 things. It would propose a fairly high proportion which was appropriate, namely, 15% - a proportion that is higher than that which is to be proposed by the Treasurer (Mr Bury) in a later Bill to prevent Australian banks from being taken over by a shareholder with a large interest.
Secondly, we looked at the occasions on which the Corporation would be required to obtain and retain a much higher proportion of equity than 15%. This can involve matters of seasonal finance, matters’ of rollover finance for an organisation and cases in which short term support is needed. There are examples of this type of support in every Australian banking and financial institution. We utilised all of these examples to say that 15% was to be aimed at but that, if for those reasons- the provision of bridging finance of various types - that figure was to be exceeded, the Corporation should not thereby be debarred from engaging in its actviities and the. functions that are part of those activities.
I believe very sincerely that the Minister has never answered that proposition. I suggest that he has rather ignored it. To answer it by saying: ‘We do not want to do this. We do not want to make the Corporation a lender of last resort We do not want to require a return on its capital, which is the alternative, because we want to keep it at arm’s length’ is to use a nice choice of words, but I suggest that it is a choice of words without much meaning. It is a choice of words without meaning, such as the earlier choice of words when he said that the Corporation, in its capital, shall have 3 characteristics - the investment shall be noncontrolled, it shall be transitory and it shall be tapering. But these are 3 adjectives without a great deal of significance. They just remain said, and they do not appear in the Bill. They are not enshrined in any clause or any sub-clause and they can be ignored for reasons which themselves may be fairly transitory. If one says then that the Corporation is to be retained at arms length by not requiring it to be a lender of last resort or to secure a return on its capital and it is to be kept separate from government, I hope one reflects how the Corporation is to be appointed and its directors appointed. However, I do not want to enter into that part of the argument. Rather than the Corporation being at arms length, if these kinds of provisions are not written into the Act it can be rather succoured and coddled in its operations. That is the effect I fear on the Australian community.
The honourable members for Hindmarsh (Mr Clyde Cameron), Grayndler and Lalor (Dr J. F. Cairns) had some words to say. They suggested that they had become the battlers for competition and that we are the people who do not like competition. I found this a delightfully entrancing kind of proposition. They now want competition. If we look at their own structure and the way in which their decisions are made, they know that they have done everything over the years to preclude competition, especially with respect to their own positions. They would not know what competition is. All we say is that this Bill is to operate in a competitive system with neither advantage nor disadvantage. I would suggest at the moment that it will operate with a great deal of advantage compared to those institutions with which it is in competition, and it will be to their detriment. However, I return to the question of the 15%, which can be substantially upwards. The provisions in the amendment are much more generous than those that apply to other institutions which are concerned with broadcasting and television and to other organisations which will be concerned with amendments introduced in relation to the Queensland Bank.
– What will they be?
– For the Government in both of those interests, 15%, and it is going to be 10% and no more in relation to the latter. This has been made clear by the Treasurer. If those provisions are applied in respect of those institutions I would expect that 15%, with a substantial amount above it, to be held in equity as part of bridging finance. This ought to be acceptable to the Government. I am a little surprised and a little disappointed that the Government does not accept the proposition, but I assure the Minister for Shipping and Transport (Mr Sinclair) and the Deputy Prime Minister (Mr McEwen) that although I am surprised I thank them for having accepted other amendments. Amendments negatived.
– 1 move:
Omit sub-clause (6.), insert the following subclause: (fi.) Without prejudice lo the duty of the Cor-, poration lo comply with the provisions of this »ec:tion. a contract entered into, or other thing done, by the Corporation is not invalidated by reason of a provision of this section not having been complied with by the Corporation.’
This provision sets out the policy that the Corporation shall pursue. The draftsman, J think, has in mind simply that persons entering into contracts or other such transactions with the Corporation shall not find that these are invalidated because the Corporation has exceeded or departed from the policy laid down in the provision. However, the way it has been drafted would suggest, to a layman at least, that if the Corporation does not follow the policy laid down for it this does not matter at all. This of course is not the intention. Indeed, later on under clause 37 it is stated that:
Where- the Minister is satisfied that, during the year to which the report rehires, the Corporation has failed to comply with its obligations under section 8 of this Act-
That is, the policies laid down in section 8 - the Minister may, by notice in writing to the Executive Chairman, request the Executive Chairman to convene a meeting of the Board.
Then there is to be a confrontation as to whether the policy of the Corporation has been complied with or not. Quite plainly, the draftsman in clause 8 sub-clause (6.) does not intend to imply that these matters shall not be called in question as in claus 37. 1 do not think that there is any great difficulty about this matter. i think it is right that even a layman should understand what is meant. If this does no violence to the legal requirements or the requirements of the draftsman, then I would suggest it is right that even a layman should understand what is really intended. The words – other thing’ here are to be read ejusdem generis, that is to say, as matters of the same kind as contracts.
– I agree with the honourable member for Bradfield (Mr Turner). I feel sure that very many people outside the House have been extremely concerned with the broad terms of interpretation that could have been read into the clause as it is presently drafted. I think it is useful that the purpose of this sub-clause has now been set out so clearly by the honourable member for Bradfield. There is a similar clause, I believe, in the provisions relating to the Export Payments Insurance Corporation, and there should be now no doubt as to what is the true interpretation of and reason for this sub-clause. I hope that the Government will agree to the amendment.
– This will be one of the shortest speeches I have made in the House during my time here. The Government is quite prepared to accept the proposed amendment. The honourable member for Bradfield (Mr Turner) has correctly perceived the object of the sub-clause in its original form. We take the view that the proposed amendment will achieve precisely the same purpose. It is only a matter of words. We are quite happy to accept the change.
– I will make one of the shortest speeches I have ever made in this chamber. I agree with the Attorney-General (Mr Hughes). The amendment has precisely the same wording as the other clause. Therefore, I do not see why it should be accepted. Still, if the Attorney-General wants to do that it is all right with us.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 9 to 25 - by leave - taken together.
– I want to speak when we get onto clause 25.
– We are really dealing with clause 25 now.
– I suggest that if any length of time is to be taken on this amendment to clause 25, this would be an appropriate time to report progress. It is now 10 past 1. This matter could be dealt with in a few minutes tomorrow.
Clauses agreed to.
Proposed new clause 25a.
– I move:
That the following new clause be inserted in the Bill: 25a. - (1.) The Minister, with the concurrence of the Treasurer and after consultation with the Corporation -
shall, not later than one month before the commencement of each financial year, determine the percentage of the capital of the Corporation that would represent a reasonable return to the Commonwealth fromthe operations of the Corporation in that financial year, and give notice in writing to the Corporation of the percentage so determined; and
may, at any time during a financial year, by reason of a change in circumstances, by notice in writing to the Corporation, amend a determination under the last preceding paragraph. (2.) In performing their functions under the last preceding sub-section, the Minister and the Treasurer shall take into account, in addition to other relevant matters, the profits, in relation to capital employed, that have been and are expected to be, made by comparable financial institutions.’.
My intention is merely to move the amendment. I do not intend to take it to the vote. I think that the argument which is appropriate to this amendment has been submitted previously. There are substantial and good reasons why it should be supported. I refer to the Australian National Airlines Bill of some years ago in which the former Prime Minister and the then Treasurer indicated that a return on the capital employed would be appropriate. In that respect I refer to Hansard of 1961. I do not want to amplify this reference. I had thought that the terms relating to a lender of last resort or a return on the capital were the alternatives. If one was to be rejected the other would be supported. If the Corporation was concerned with the nature of the economic society in which we operate I would have expected that both were not to be rejected. I fear they will be rejected but I propose the amendment for the consideration of the Committee.
– I do not care what the hour is or what progress has been made. I am concerned about this matter and would like some further information from the Minister.
– You should fight in the Party room.
– I thought the Parliament was the place to debate these matters. A point was brought to my attention by the honourable member for Macarthur (Mr Jeff Bate). I cannot understand why the Labor Party is not concerned with this point. Perhaps it can be put out of the way by a simple explanation by the Minister. As I understand it,$100m is to be made available. Whether it be $25m or $50m in 1 year I know not. But the Minister did say by way of interjection earlier in the night when the honourable member for Bradfield (Mr Turner) asked where this money would come from, that it would come from the Treasury. That means it comes from the taxpayer and that we are committing on behalf of the taxpayer$100m. Honourable members opposite should not try to divert me by referring to F111 aircraft. Let us settle this matter tonight.
We are not asking this Corporation to show any profit or to pay any dividend. The explanation given is that to keep it at arm’s length we are not to ask it to pay a dividend or show any profit. The amendment merely says that the Minister each year should set a figure. It does not matter whether for the first year it is a nil return because we know it may not be possible to show a profit. With the other legislation we have said that in the first year no profit shall be expected. It seems to me we are giving away$100m. We are not setting any standard. We are not saying that the recipients have to be efficient or capable. We are not saying they have to invest wisely and well and that it will have to be proven and they will have to meet a standard. Again I come back to the fact that concerns me. What will the Opposition be able to do with an Act like this? The Corporation does not have to be efficient and can lend to any ratbag institution it chooses. I can well imagine we will have Uren urea, Cairns’ left wing bookshop, Daly’s dime stores, Foster’s freight store. Nobody will have to report to the Parliament whatsoever as to the efficiency of these investments. 1 am not denying the Minister’s good intent and the Government’s good intent but it does seem to me that we are committing the taxpayers money but we are not putting any standard on performance whatsoever.
– 1 point out to the honourable member for La Trobe that at the moment we are dealing only with clause 25 (a), the new clause proposed by the honourable member for Lilley. I think that the honourable member is enlarging a little on the subject, matter of the amendment^
– I am sorry Mr Chairman, but 1 am referring to clause 25 (a) which states that the Minister, with the concurrence of the Treasurer and after consultation with the Corporation, shall not later than I month before the commencement of each financial year determine the percentage of capital of the Corporation that would represent a reasonable return to the Commonwealth. I am saying that if this is not done there is no check on what investments are made; there is no control over the Corporation’s efficiency; there is no standard set as to how capable or efficient it has to be. I am noi arguing whether it is Socialist or whether it is helping-
– Order! The honourable member’s argument is developing into the point that if this is not done then this, this and this could follow. This could be taken into almost any sphere that any member of the Committee would wish to take it. The particular matter before the Committee is in relation to the return to the Government through the Minister. The honourable member should keep strictly to the point of the return and not go to what could happen in certain circumstances.
– I am delighted with your interpretation. Mr Chairman, and am most appreciative, but can I ask this question: If this amendment is not carried and if no dividend has to be paid or a profit shown, what happened if the Corporation’s investments are made most inefficiently and there is considerable loss?
– A point of order, Mr Chairman. I direct your attention to another clause in the Bill which covers adequately the kind of question that the honourable member is asking. It is clause 8. If he was not here and did not notice that, that is his fault. What he is saying now is relevant to clause 8(1.) and (2.) and should have been said then, not now.
– I think it is relevant to clause 25 also. Surely I can choose which clause I wish to speak to. Is the Labor Party running the House now?
– As 1 have pointed out, the honourable member in speaking to the amendment moved by the honourable member for Lilley must not go outside the matter covered by the amendment. The subject matter covered by the amendment is the financial policy of the Corporation reporting to the Minister with the Treasurer.
– I raise a point of order, Mr Chairman. The honourable member asked: Is the Labor Party running the House now?’ That is a reflection on the Chair and I ask that the honourable member withdraw those remarks.
– If it is considered to be a reflection on the Chair I withdraw it. I intended it as a reflection on certain people. I will conclude by saying that if the investment of $ 100m of the taxpayers money is nol considered to be sufficiently important that some control or restriction should be placed upon it, I agree with the amendment and I think we may well regret the day.
Mr SINCLAIR (New England- Minister for Shipping and Transport) (.I.IK a.m.] - Without going into clause 8 and the earlier provisions of the Bill (et me assure the honourable member for La Trobe (Mr Jess) that in terms of this proposition the SI 00m will not be invested until such time as the provisions of clause 24, setting out when and under what circumstances the second $50m will be available, are met. In any event there is a specific requirement that only that part of the Corporation’s borrowings which are attracted in terms of the security as a result of this ultimate SI 00m will be used for the purposes of the Corporation. Accordingly the funds which it is intended the amendment should refer to are substantially not those which are directed to the Treasury but those which are directed as a result of the borrowings.
– What if there is a loss?
– In those circumstances certainly there would be recourse to the capital of the company. Let me say, firstly, that the Government does not accept this amendment. Let me say, secondly, that the reason the Government does not accept this amendment is that its purpose is to increase substantially the extent to which the Corporation will find itself in a position of having to return continually to the Government in order to increase its capital. As it exists at present the Corporation is so devised that, by virtue of the continued increase in its reserves, it will be able to increase its borrowing limits and so expand. During the course of the debate earlier we considered the full extent of overseas money coming into Australia. In the last few years we saw it as being of the order of $ 1,000m. As it is designed at the moment the Corporation can have at the maximum a 5 to 1 borrowing ratio on a capital of $100m, which would give it $600m when it is ultimately of that size. Unless the Corporation has a capacity to grow it will continue to be in a supplicatory position to the Government and to the financial allocations of each Budget. If it can grow it can be kept at arm’s length from Government control. Accordingly, I do not believe that this chamber should support the amendment.
Proposed new clause negatived.
Remainder of Bill - by leave - taken as a whole.
– I wish to ask the Minister whether the Corporation is subject to a withholding tax as well as other taxes? Is it also subject to exchange control!? I gave notice earlier that I would ask these questions.
– In terms of the Corporation being subject to taxation, as I understand the withholding tax process it is not in fact levied against the Corporation; but it would be levied against the receipts of funds remitted. Withholding tax would be applied in the same way to funds returned and remitted overseas in the instance of this Corporation as with any other borrower, lt would be in general subject to a withholding tax. The honourable member for Casey (Mr Howson) also referred to exchange control. The Corporation would, of course, be subject to the same measure of exchange control’ as any other organisation in a similar position.
Remainder of Bill agreed to.
Bill, as amended, agreed to.
Bill reported with amendments; report - by leave - adopted.
Bill (on motion by Mr Sinclair) - by leave - read a third time.
House adjourned at .1.24 a.m. (Thursday)
The following answers to questions upon notice were circulated:
asked the Minister for Primary Industry, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for the the Interior, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for the Interior, upon notice:
– The answer to the honourable member’s question is as follows:
(a) In May 1965 a Conference on Electoral Law (referred to as a ‘Speaker’s Conference’) was established under the chairmanship of the Speaker of the United Kingdom House of Commons. The Conference submitted its report in February 1968.
(a) The method of voting in United Kingdom Parliamentary elections is ‘first-past-the-post and the Speaker’s Conference decided that there should be no change in the existing law in relation to the method of election. A new Register of Electors is compiled each year by Registration Officers sending notices to all householders requiring them to give a return of every person over 21 years of age resident in the household on a specified date. The Speaker’s Conference agreed that there should continue to be one annual Register of Electors as at present. Voting is not compulsory in United Kingdom Parliamentary elections and the Speaker’s Conference decided not to recommend any change in the existing law in this respect
It is not proposed to amend the Commonwealth Electoral Act to bring it into line with the United Kingdom or New Zealand legislation.
Northern Territory: Housing Finance (Question No. 735)
asked the Minister for the
Interior, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Shipping and Transport, upon notice:
– The answer to the honourable member’s question is as follows:
The final list of those who travelled is not an accurate reflection of those who were invited. Unfortunately a high proportion of those invited were unable to attend.
Neither a list of those who travelled nor those invited can be released without the express agreement of the State Governments concerned.
asked the Minister for the Interior, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Shipping and Transport, upon notice:
– The answer to the honourable member’s question is as follows:
The Commonwealth’s contribution towards the dinner in Sydney was $4,516.49 and towards the buffet tea in Perth was $1,123.62.
The costs incurred by the State is a matter for the States concerned i’n the running of the inaugural trains. I am therefore unable to make these figures available.
asked the Minister for Education and Science, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Education and Science, upon notice:
– The answer to the right honourable member’s question is as follows:
asked the Prime Minister, upon notice: (!) ls it anticipated that the Australian population will increase by about one million every three years from now on.
– The answer to the right honourable member’s question is as follows:
asked the Prime Minister, upon notice:
On what occasions, in what form and with what result have consultations taken place between Britain and Australia on the political future of the British Solomon Islands Protectorate.
– The answer to the honourable Member’s question is as follows:
Exchanges of views take place from time to time between Britain and Australia about developments in the South Pacific generally. The British authorities keep us informed about constitutional developments in respect of their South Pacific territories, including the British Solomon Islands Protectorate. Australia likewise keeps the British authorities informed in respect of the territories for which it is responsible. The question of the political future of dependent territories is essentially one for the peoples of the territories concerned and for the countries which administer them. The British Government’s policy with respect to its territories has been stated on various occasions. For example, the communique issued at the 1966 Prime Ministers’ Conference in London included the following: ‘The British Government stands ready to give independence to territories that want it and can sustain it. For the others Britain is willing to work out arrangements appropriate to each territory that will enable them, if they wish, to continue some form of association with Britain’.
asked the Prime Minister, upon notice:
– The answer to the honourable member’s question is as follows:
The Commonwealth Employees’ Furlough Act 1943-1968 provides for pro rata payment on cessation in the following circumstances:
The ‘domestic or other pressing necessity’ provision was introduced by Act No. 114 of 1967 and this Act also reduced from 8 to 4 years the qualifying periods in respect of cessation on account of death and permanent ill health.
A similar reduction in respect of cessation on account of age retirement or retrenchment was made by Act No. 58 of 1968.
These amendments were made after a review of similar provisions of other long service leave systems. The Public Service Board has advised me that although other systems vary widely, in the broad, the present pro rata provisions of the Commonwealth Employees’ Furlough Act compare favourably willi those of other long service leave systems.
asked the Prime Minister, upon notice:
– The answer to the honourable member’s question is as follows:
The Minister for Labour and National Service receives -
an allowance of $3,350 a year in respect of the expenses of discharging his duties as the member for the electorate of Bruce. A similar electoral allowance is payable to all members of the House of Representatives who are members of an Electoral Division not specified in the Second Schedule to the Act. Under the Parliamentary Allowances Bill of 1970 which is now before the Parliament, it is proposed that the allowance payable in respect of the electorate of Bruce will become $2,750.
The then Minister for Labour and National Service received in 1960 -
an allowance in respect of the expenses of discharging his duties - $1,700 a year.
an allowance of $3,000 a year in addition to salary.
travelling allowance of $24 a day when away from his home in connection with official business but excluding whole days spent in Canberra.
asked the Prime Minister, upon notice:
In view of the recent agreement between the Commonwealth and registered unions and associations under which Commonwealth Departments will make wage and salary deductions on behalf of members of such bodies who authorise deductions for union or association fees, will he request all Commonwealth instrumentalities to extend similar facilities to organisations whose members are employed by such instrumentalities.
– The answer to the honourable member’s question is as follows:
As stated by my colleague, the Treasurer, in reply to Question No. 452 (Hansard, pages 769-770), the deduction of union subscriptions by Commonwealth instrumentalities is a matter for consideration by the instrumentalities concerned.
asked the Prime Minister, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Prime Minister, upon notice:
Board to inform Mr Santamaria that his allegations are untrue and request that he publicly correct his false charge against officers who, by virtue of their office are unable to enter into public controversy.
– The answer to the honourable member’s question is as follows:
Public Service: Female Data Processing Operators (Question No. 882)
asked the Prime
Minister, upon notice:
Do women employed by the Commonwealth as punch operators in electronic data processing receive the full male rate of pay for this work.
– The answer to the honourable member’s question is as follows:
The Public Service Board has informed me that the staff who perform punching operations associated with the preparation of data for processing by computers are designated Data Processing Operators. This group is almost exclusively staffed by females. These female staff are not eligible for equal pay within the terms of the decision of 19th June 1969 of the Conciliation and Arbitration Commission in the Equal Pay Case.
I have also been informed that Data Processing Operators received substantial salary increases effective on and from 9th October 1969, resulting from an agreement with the relevant staff associations. The new rates were determined on the basis of appropriate rates for the job, irrespective of the sex of the Operator. However, the few males employed as Operators on 9th October 1969 were permitted, as a special concession, to retain on a personal basis an amount of $428 per annum above the new rates for the job.
asked the Minister for Education and Science, upon notice:
– The answer to the honourable member’s question is as follows:
In the above table the numbers of resignations relate to the twelve months period shown in the second column. Varying census dates for the numbers of teachers (see footnote (a) above) affects the comparability of percentages between States. In addition the regulations of different States regarding employment of teachers differ sufficiently to affect comparisons between States. For example in the years shown above the figures for Queensland and Western Australia include permanent female teachers who were required to resign on marriage and who were in many cases re-employed on a temporary basis without a break in service, (ii) During 1967, extended leave was granted to 304 teachers in New South Wales. Information for other States is not available.
These figures have been taken from reports of the State education departments. Owing to differences in methods of compilation they are not precisely comparable from State to State. Casual and parttime teachers are not included. In Victoria teachers at the secondary level in technical schools and al tertiary level in technical colleges cannot be separated; they numbered 4,108 (3,245 men, 863 women) in 1.968 and have been included here as secondary. Due to different sources of information the above statistics differ slightly from those published by the Commonwealth Statistician which do not show separate details of primary and secondary teachers.
asked the Minister for Education and Science, upon notice:
– The answer to the honourable member’s question is as follows:
Primary schools -
Northern Territory - $1,140.
Secondary schools -
Northern Territory- $1,920.
These costs all relate to schools constructed within the last two years and occupied during 1969 end 1970 as completed schools.
asked the Minister for Education and Science, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Education and Science, upon notice:
On what occasions and to what extent has his Department consulted with the Universities Commission and the radio and television stations concerning the establishment of an open university like that proposed by the Venables Committee in Britain in November 1968.
– The answer to the honourable member’s question is as follows:
My Department has not consulted with the Australian Universities Commission or with the radio and television stations concerning the establishment of an open university.
However, I have personally given some consideration to the possibility of such a development, among other possible developments, and have consulted the Australian Universities Commission. But my consideration of the matter has not reached a point at which I can make any statement to the honourable member.
asked the Minister for Education and Science, upon notice:
What reduction in staff and salaries would each university achieve if fees were abolished.
– The answer to the honourable member’s question is as follows:
I have sought the advice of all universities on the reductions in staff and salaries they would achieve if fees were abolished. The replies of the universities indicate that this is difficult to calculate. Staff members responsible for collecting fees do not spend the whole of their working time collecting fees and some universities have explicitly stated that they would not envisage dismissing members of staff if fees were abolished. They would nevertheless expect to achieve some eventual saving by deferring the filling of posts which might become vacant through resignations or retirements. In any event, the collection of fees is fairly highly mechanised and that consideration would reduce possible savings in salaries.
If, when you speak of fees you have in mind tuition fees only, and not fees payable for residential accommodation, for student union membership and so on, I think that there will be some saving, but not necessarily from the commencement of the abolition of tuition fees, but eventually.
On balance, it seems that savings which would accrue to universities from reduction in staff and salaries payable would not be significant.
asked the Minister representing the Minister for Housing, upon notice:
When the 1970-71 Budget is being framed will the Minister give specific consideration to extending to widowers the relief from the payment of instalments now available to widows under the War Service Homes Act.
– The Minister for Housing has provided the following answer to the honourable member’s question:
This question which is directly related to Questions No 527 and 781 asked by the honourable member on 9lh April 1970 and 16th April 1970 respectively, involves a question of future Government policy, and as indicated in the replies given on those occasions, it is impracticable to provide an answer to a question of this nature.
irns asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
The importation of susceptible species from countries where the disease exists is prohibited.
The importation of many animal products such as uncanned meat, milk, animal casings, fertilisers and slock feed of animal origin, is prohibited from foot and mouth disease countries. Other animal products from such countries are either accompanied by valid certificates of disinfection or are disinfected under quarantine control when they arrive.
Vaccines, cultures and the like are subject to special permission for importation and if any risk exists of foot and mouth disease or other unwanted virus being present permission is not granted.
Empty cattle vessels arriving in Australian ports, if not scrupulously clean, are cleaned and disinfected on arrival and before loading Australian animals.
Migrants corning from foot and mouth disease countries are carefully screened and if they are rural’ people (i.e. have had contact with farm animals or animal products) they are usually obliged to travel by sea vessel. This is to reduce the risk of any chance virus contamination surviving and to facilitate inspection of heavy baggage on arrival. In some cases these ‘rural’ migrants are allowed to travel by air (e.g. if sea transport is impracticable) in which cases their baggage is inspected for prohibited items such as meat and salami, and any clothing which has not been freshly laundered or dry cleaned. If found these articles are removed. At the same lime any risk footwear is disinfected. All this is done under the supervision of Australian Medical Officers and in addition their baggage is subjected to 100% inspection on arrival in Australia.
With the co-operation of the Department of Customs and Excise an examination of passengers baggage is made for quarantine prohibited items and the passenger is obliged to declare whether he or any of his family accompanying him have had contact with farm animals or animal products in the last 3 months. If so. and if the contact was in a foot and mouth disease country, footwear is disinfected and any unlaundered working clothes are removed for laundering. The passenger is also obliged to declare any quarantine items as a preliminary to examination of his baggage.
To prevent entry of disease by overseas ships garbage, this item is strictly controlled at all Australian ports. To facilitate safe disposal the Commonwealth has offered to grant to each State the necessary finance for the installation of incinerators at ports where overseas vessels call. Many incinerators are either operating or under construction and others are in the planning stage.
More recently a problem was posed by the advent of oil exploration at remote areas around the Australian coast. To eliminate risk of infective material coming ashore, each oil rig is stripped of overseas meat and other prohibited items on arrival thus being obliged to restock their larders with Australian foodstuffs.
I would add that the efforts of the Animal Quarantine Service are especially directed to preventing the introduction of foot and mouth disease into Australia in the realisation that precautions taken against the entry of this disease will cover many of the other exotic diseases of ruminant animals and pigs.
These plans have been finalised and have been adopted by the Australian Agricultural Council.
In the event of an outbreak the Commonwealth has agreed to meet 50% of the expenses of eradication and the States, collectively, the other 50%, regardless of where an outbreak may occur.
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
Subsequently, action was taken to increase the pay rates of certain auxiliary staff, including nursing aides, at the Canberra Hospital with effect from the first pay period commencing on or after 19th December 1969. These increases were approved following the decision of the Public Service Board to increase the pay rates for what are generally known as ‘physical grades* staff.
The pay increases for qualified nursing staff on the one hand and auxiliary staff (including nursing aides) on the other hand derived from separate pay reviews.
It was decided that male nursing aides employed at the time of the pay increases applying on and from the first pay period commencing on or after 19th December 1969 should, on a purely personal basis, receive the same pay increases on that occasion as provided for females. It was also decided that such male nursing aides would receive no further pay increases until their then current personal rates are exceeded by the ‘rate for the job’.
Dentists (Question No. 107)
asked the Minister for
Health, upon notice:
– The answer to the honourable member’s question is as follows: (l)
Dentists are registered under the following Acts and Ordinances:
Permanent Arrivals -
Settlers - Persons who on arrival in Australia state their intention of settling permanently.
Permanent Departures -
Former Settlers - Persons who, on departure from Australia, state that they had come to Australia intending to settle, had stayed for at least 12 months and are now departing permanently.
Other Residents - Australian residents, other than former settlers, departing with the stated intention to reside abroad permanently.
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
Chemists: Dispensing Fees (Question No. 630)
asked the Minister for
Health, upon notice:
– The answer to the honourable member’s question is as follows:
(a) The Government and the Guild jointly had a survey carried out by an independent firm of consultants on the costs of dispensing National Health prescriptions and in mid-1969 the Government decided, after examining the survey report, that National Health dispensing fees would remain unaltered. When conveying this decision to the Pharmacy Guild the Government invited the Guild to participate in a new survey so that a further review of chemists’ remuneration could be carried out, but the Guild has not yet signified whether it will accept the offer of a new survey. I recently received a new submission, dated 5 March 1970, from the Pharmacy Guild requesting an increase in dispensing fees and 1 referred the submission to the Joint Committee on Pharmaceutical Benefits Pricing Arrangements for examination and advice, as this is the normal procedure. I received the Joint Committee’s report on this submission on 20 April 1970 and I am at present considering this report. As soon as possible I will write to the Federal President of the Pharmacy Guild on this matter.
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice:
– The answer to the honour able member’s question is as follows:
asked the Minister for Education and Science, upon notice:
Will he arrange for the appropriate officers of the Commonwealth Scientific and Industrial Research Organisation to study the current mice plague in New South Wales, including the role of marsupial mice, with a view to delineating factors which led to the plague, and to elucidating practical means of prevention or control.
– The answer to the honourable member’s question is as follows:
The CSIRO Division of Wildlife Research has a continuing small-scale study on die house mouse, Mus musculus, which is responsible for the present plagues in the agricultural area of south-eastern Australia. The aim of the study is to understand the occurrence of mouse plagues and possibly to predict them. The results of the work to date suggest that a combination of three circumstances is necessary for mice to build up to plague numbers - a relatively high winter rainfall that thoroughly wets the subsoil and provides the mice in. the following summer with moist, cool and protected shelter in cracks in the ground; a good spring growing season pet milting much seed to set and providing ample food for the mice; and unseasonal rains in the summer enabling the mice to burrow into the cracked ground and breed prolitically
It appears that in most years normal weather conditions in south-eastern Australia keep mice numbers low by limiting suitable breeding conditions and food supply. However, it seems that a combination of these three conditions has occurred widely during the past season over widespread areas in South Australia, north-western Victoria and New South Wales.
Cite as: Australia, House of Representatives, Debates, 20 May 1970, viewed 22 October 2017, <http://historichansard.net/hofreps/1970/19700520_reps_27_hor67/>.