House of Representatives
24 August 1977

30th Parliament · 2nd Session

Mr SPEAKER (Rt Hon. B. M. Snedden, Q.C.) took the chair at 2.15 p.m., and read prayers.

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The Clerk:

– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:

Broadcasting and Television

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That because television and radio

  1. a ) affect our social and moral environment,
  2. are family media watched and heard by many children at all times, and
  3. present too much explicit violence and sex, they therefore need stronger control than other media and the existing standards need stricter enforcement in both national ABC, and commercial sectors.

Your petitioners therefore humbly pray:

That the Australian Government will amend the Broadcasting and Television Act, in relation to both national and commercial broadcasters, to legislate

  1. for adequate and comprehensive programs in the best interests of the general public,
  2. for a ‘Dual System of Regulation’ enforced by the Australian Broadcasting Tribunal by internal regulaton and external control.
  3. for an independent consumer body to represent the best interests of the general public, and
  4. for immediate and effective penalties to be imposed for breaches of program and advertising standards.

And your petitioners as in duty bound will ever pray. by Mr Sinclair, Mr Lionel Bowen, Mr Hurford, Mr McLeay, Mr Neil, Dr Richardson, Mr Eric Robinson and Mr Ruddock.

Petition received.

Australian Association for Better Hearing

To the Honourable the Speaker and Members of the House of Representatives in Parliament Assembled.

The humble Petition of certain members of the Australian Association for Better Hearing, and other citizens of Australia, respectfully showeth that a financial burden is imposed on hearing impaired members of the public in that the special telephone equipment, which is essential for such hearing impaired citizens to make telephonic communication, is subject to installation costs and rental charges.

Your petitioners therefore humbly pray that the Federal Government give every consideration to waiving the installation costs and rental charges of the special telephone equipment required by hearing impaired members of the public.

And your petitioners as in duty bound will ever pray. by Mr Dobie, Mr Charles Jones, Mr Martin, Mr Neil, Mr Newman and Mr Ruddock.

Petitions received.


To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned students, parents, teachers and citizens of Australia respectfully showeth:

That the decision of the Government to withdraw all forms of financial assistance to students of non-State tertiary institutions in the main, business colleges, is in total conflict with stated Government education policy.

The decision will result in a shortage of places for training secretarial and clerical students and an inordinate demand upon the State Government technical education systems.

At a time of severe economic disruption, this action must lead to an unnecessary worsening of the current employment situation for school leavers.

Your petitioners, therefore, humbly pray that the Commonwealth Government will act immediately to reverse its decision.

And your petitioners as in duty bound will ever pray. by Mr Baume, Dr Edwards, Mr Graham, Mr Neil and Dr Jenkins.

Petitions received.

Private Nursing Homes Subsidies

To the Honourable the Speaker and Members of the House of Representatives assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That many pensioners who are holders of the Pensioners Health Benefit Card, have suffered undue hardship as inmates of private nursing homes, because the Federal Government subsidy was insufficient to meet the charges as laid down.

Many pensioners whose spouse was an inmate of the private nursing homes suffered poverty in an endeavour to sustain their partner while in the nursing home.

Only in rare cases was the statutory minimum patient contribution as laid down adhered to.

That the telephone was a matter of life and death to many pensioners, but because of the cost of installation of the telephone many are unable to afford the installation.

That those pensioners who have only their pensions and very little else to live on and are forced to pay high rents, are in many cases living in extreme poverty.

The foregoing facts impel your petitioners to ask the Australian Government as a matter of urgency to:

  1. Make sure that subsidies paid to private nursing homes are such that each pensioner holding a Pensioners Health Benefit Card will pay the private nursing home no more than the statutory minimum patient contribution, which will allow six dollars per week to be retained by the pensioner patient for their personal use.
  2. That a pensioner holding a Pensioner Health Benefit Card shall have a telephone installed free of charge, or at a very nominal charge.
  3. That those pensioners who have only their pensions and very little else to live on, shall receive a subsidy to assist them. The subsidy to be governed by a means test.

And your petitioners as in duty bound will ever pray. by Mr Lionel Bowen, Mr Dobie, Mr Neil, Mr Ian Robinson and Mr Sainsbury.

Petitions received.


To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That the delays between the announcement of each quarterly movement in the Consumer Price Index and their application as a percentage increase in age and invalid pensions is excessive, unnecessary, discriminatory and a cause of economic distress.

That proposals to amend the Consumer Price Index by eliminating particular items from the index could adversely affect the value of future increases in aged and invalid pensioners and thus be a cause of additional economic hardship to pensioners.

The foregoing facts impel your petitioners to ask the Australian Government as a matter of urgency to:

  1. Require each quarterly percentage increase in the Consumer Price Index to be applied to age and invalid and similar pensions as from the pension pay day nearest following the date of announcement of the CPI movement.
  2. Give an open assurance to all aged and invalid pensioners that any revision of the items comprising the Consumer Price Index will in no way result in reductions in the value of any future entitlements to pensioners.

And your petitioners as in duty bound will ever pray. by Mr Aldred, Mr Groom and Dr Klugman.

Petitions received.


To the Honourable Speaker and Members of the House of Representatives assembled. The humble petition of the undersigned citizens of Australia respectfully show us:

That due to the new information on whale communication, behaviour and intelligence, and to the depleted state of most of the great whale stocks and the uncertainty associated with whale population estimates, that commercial whaling is no longer acceptable to the vast majority of Australians. It is urged that immediate steps be taken to end this activity.

And your petitioners as in duty bound will ever pray. by Mr Sinclair.

Petition received.


To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth:

That we support the aims of Project Jonah.

Your petitioners therefore humbly pray that steps be taken to end commercial whaling.

And your petitioners, as in duty bound, will ever pray. by Mr Yates.

Petition received.


To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned electors of the Division of Casey respectfully showeth:

That the future of the whale is threatened by unnecessary slaughtering for purposes such as pet food, perfumes and so on.

That existing regulations set down by the International Whaling Commission are totally inadequate to prevent the demise of the whale species.

Your petitioners therefore humbly pray that steps be taken to end commercial whaling.

And your petitioners, as in duty bound, will ever pray. by Mr Falconer.

Petition received.

Estate Duty

To the Right Honourable the Speaker and Members of the House of Representatives of the Commonwealth in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That where whole or pan of a deceased estate passes to the surviving spouse it should be free from Federal estate duty.

And your petitioners as in duty bound will ever pray. by Mr Connolly and Mr Ian Robinson.

Petitions received.

Rudolf Hess

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We the undersigned members of the Order of the White Cross, a humanitarian Knighthood for the Defence and Protection of Life and residents of the Commonwealth of Australia by this our humble petition respectfully showeth:

That the undersigned petitioners are deeply concerned with the cruel continuation of the imprisonment in isolation of the former Minister of the Third Reich, Rudolf Hess in Spandau Prison, Germany, being a violation of Human Rights and an affront to the ethics of Humanity and Justice and that the grim fate of the S3 years old prisoner must be also the concern of the Australian Government since it took part, directly or indirectly in the Military Tribunal of Nuremberg.

It is a fact that:

  1. Rudolf Hess was not found guilty of war crimes nor of any atrocities, but he had indeed risked his life in a PeaceMission by flying singlehanded and unarmed to Scotland in order to end a war which has brought death to many millions of people and endless misery to our world. Even taking into account that his Mission was bound to fail without the approval of Hitler, he must be granted the merit of a very noble deed, particularly since he had made this attempt at the height of German victories.
  2. Rudolf Hess has suffered 36 years uninterrupted imprisonment while all other former executives of the regime which they have served up to the end of the war, were released from Spandau Prison, leaving Hess the only one since about ten years in a large jail to endure the torture of isolation, an additional punishment, not meant nor expressed by the Judges of the Nuremberg trial.
  3. The prisoner is now 83 years old and very ill. His fate is causing despair to his family and compassion of millions of people around the world, an example of inhuman revenge due to the Veto of the Soviet Union.
  4. The Lord of Knights and Leader of the Order of the White Cross International, Dr Paul Robert Neuman already submitted a petition to the Honourable the Chairman and the Council of Ministers of the USSR, pleading for the release of Rudolf Hess on humanitarian grounds.

Your petitioners therefore humbly pray that:

The Australian Government is not in agreement with the further imprisonment of Rudolf Hess, being an affront to the humanitarian principle of Australia and that the Government officially protests to the Soviet Union, demanding the release of the prisoner and allow him to spend the very short and last part of his life in the surrounding of his family.


To appeal to the Government of the Soviet Union to forego their Veto in favour of a release on humanitarian grounds.

And your petitioners as in duty bound will ever pray. by Mr Anthony.

Petition received.


Petition to the Honourable the Speaker, and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of the Commonwealth humbly showeth that the undersigned are deeply concerned: that abortion is the destruction of innocent human life, that on 10 May 1973, the House of Representatives overwhelmingly rejected the Medical Practices Clarification Bill, which sought to legalise abortion on demand in the Territories controlled by the Federal Government, that the Legislative Assembly in Canberra should consult Parliament again before discussing and debating the opening and operations of Population Services International and Preterm Foundation in Canberra, that the situation regarding abortions in the Australian Capital Territory is the same as that in New South Wales where the statute prohibits abortion but allows a defence, that the situation in the Australian Capital Territory has a great impact on situations in the states.

Your petitioners therefore humbly pray: that the Federal Government will act immediately to prevent the establishment and/or operation of Population Services International and Preterm Foundation, and other private clinics, in the Australian Capital Territory, that taxpayers’ money may not be used, through Medibank, to finance abortions.

And your petitioners as in duty bound will ever pray. by Mr Braithwaite.

Petition received.


To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:

That whale killing should be stopped in 1977. And that Albany whaling station should be turned into a research station.

And your petitioners as in duty bound will ever pray. by Mr Brown.

Petition received.

Defence Housing

To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth:

  1. The objection to recent savage increase in Defence Forces married quarters rental.
  2. The objection to the unjust reclassification of Defence Forces married quarters without due regard to condition and standard of the quarters.
  3. The objection to the proposed ‘phasing out’ of service provided married quarters, a proposal which is sure to force private rentals within the vicinity of Defence establishments to astronomical levels.

The continuing erosion of ‘conditions of service’ does nothing for the current low level of morale within the Defence Forces.

Your petitioners therefore humbly pray that rent increases for Defence Forces married quarters be reversed, that reclassifications of married quarters be amended, and proposals to phase out service provided married quarters be rejected.

And your petitioners as in duty bound will ever pray. by Dr J. F. Cairns.

Petition received.

Australian Roads

To the Right Honourable the Speaker and members of the House of Representatives in Parliament assembled. The humble petition of the undersigned concerned citizens respectfully showeth:

  1. Australia’s extensive road system is a national asset wasting because of inadequate Federal and State funding.
  2. Commonwealth Government funding of roads has fallen over the last six years from 2.9 per cent of all Commonwealth outlays to 2.3 per cent.

Your petitioners therefore humbly pray that the House of Representatives in Parliament assembled, should ensure:

That the Commonwealth Government’s long-term policy should be to provide SO per cent of all funding for Australia ‘s roads.

That at a minimum the Commonwealth Government adopts the recommendations by the Australian Council of Local Government Associations for the allocation of $5, 903m of Commonwealth, State and Local Government funds to roads over the five years ending 1980-81, of which the Commonwealth share would be 41 per cent as recommended by the Bureau of Roads.

And your petitioners as in duty bound will ever pray. by Mr Chapman.

Petition received.

National Archives Building

To the Right Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned members of the Australian Society of Archivists and citizens of Australia respectfully showeth:

That, contrary to the accepted principle that the primary duty of an archival institution is to look to the physical and moral defence of archives in its care, the Australian Government has so neglected to care for its archives in the Australian Capital Territory that they are in considerable physical danger;

And that it is a matter for national concern that unique records documenting the history of Australia and Australians are, in their present accommodation in the Australian Capital Territory, under constant threat of destruction.

Your petitioners therefore humbly pray:

  1. That construction of a proper archives repository at Mitchell in the Australian Capital Territory be commenced without further delay, to prevent, as far as possible, further deterioration of archives at present housed in sub-standard accommodation; and
  2. That funds be made available and planning commence immediately for the construction of a prestige National Archives Building within the National Area.

And your petitioners as in duty bound will ever pray. by Mr Fry.

Petition received.

Children’s Libraries

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of the Australian Capital Territory respectfully showeth:

  1. Children’s libraries are needed to assist with the stimulation of a child ‘s intellectual development.
  2. Reduction of public expenditure should not be at the expense of the educational development of children.
  3. Closing of any established library is a retrograde step and contrary to the findings of the Committee of Inquiry into Public Libraries.
  4. That the purported decline in use of existing children’s libraries at O’Connor, Lyneham, Narrabundah and Red Hill can be directly related to:

    1. the reduction in hours of service;
    2. the unsuitability of such hours for school children and working parents; and
    3. the adoption of policies which discourage or fail to stimulate increased usage.

Your petitioners therefore humbly pray that the House of Representatives ensure that:

  1. The existing Children’s Libraries at O’Connor, Lyneham, Narrabundah and Red Hill remain open.
  2. That existing Children’s Library facilities be at least maintained, preferably extended by more reasonable hours, more sensibly related to use.
  3. That rather than depriving the public of existing children ‘s libraries, similar libraries be built in all suburban shopping areas.
  4. That reduced expenditure and staff cuts by the National Library Service should not be at the expense of educational facilities for our children.

And your petitioners as in duty bound will ever pray. by Mr Haslem.

Petition received.

Television Services in Isolated Areas

To the Right Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This humble petition of the undersigned concerned citizens of Mansfield, Victoria, respectfully showeth that the television reception in the Shire of Mansfield, is extremely poor, regardless of existing antennae provided.

Your petitioners humbly pray that the House of Representatives in Parliament, assembled, should ensure that the situation be improved.

And your petitioners as in duty bound will ever pray. by Mr Holten.

Petition received.

New Australian Constitution

To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled; the humble petition of the undersigned citizens of Australia respectfully showeth that we believe that Australia’s constitution is undemocratic and should be replaced by a democratic constitution. This new constitution should be drafted at a representative, directly elected people’s convention, following extensive public debate, and then put to a referendum of the people. The petitioners therefore humbly pray that the Parliament, as a matter of urgency, will help to promote such public debate and will arrange for the holding of such a people’s convention and referendum.

And your petitioners as in duty bound will ever pray. by Mr Les Johnson.

Petition received.

Income Tax

To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. We, the undersigned citizens of the Commonwealth do humbly pray that the Commonwealth Government;

  1. Recognise that the practice of disallowing taxation claims for sullage removal is discriminatory as taxpayers owning property in sewered areas are entitled to a concessional allowance of up to $300 for sewerage services rendered.
  2. Take steps to remove the provisions of the Income Tax Law which prevents approval being given for taxation claims for sullage removal unless the charges are annually assessed.

And your petitioners as in duty bound will ever pray. by Mr Les Johnson.

Petition received.

Royal Commission on Petroleum

The Petition of certain members of the Service Station Association of NSW Ltd, and certain members of the motoring public of NSW respectfully sheweth:

That the Federal Government give every consideration to inplementing the findings of the Royal Commission on Petroleum.

Your petitioners therefore humbly pray that your Honourable House will take action to ensure that the needs of the motoring public and the retail petroleum industry are given every consideration.

And your petitioners as in duty bound will ever pray. by Dr Klugman.

Petition received.

Access Radio 3ZZ

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth that by the closure of Access Radio 3ZZ:

  1. 1 ) the only avenue for broadcasting free speech by all citizens of Australia, will be closed,
  2. ) the ABC is being dictated to by the Government, and
  3. the content of broadcasting by ethnic and minority groups including English speaking groups, will be severely reduced and restricted.

Your petitioners therefore humbly pray that Government funding of Access Radio 3ZZ be continued.

And your petitioners as in duty bound will ever pray. by Mr Eric Robinson.

Petition received.


To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned electors of the Division of Sturt respectfully showeth:

That they are greatly concerned about the fact that so many people, including such a large number of young people, are receiving Unemployment Benefits without any condition except that they are not able to find suitable employment.

Your petitioners therefore pray that Parliament give consideration to the suggestion that, to enable individuals to maintain their self-respect and dignity as human beings, and for the good of the community at large, the provision of Unemployment Benefits carry the requirement that the recipient of such benefit be available for service to the community for a time equal to that which would produce a similar return at minimum wage rate.

And your petitioners as in duty bound will ever pray. by Mr Wilson.

Petition received.

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Notice of Motion


-I give notice that at the next sitting I shall move:

That this House notes with concern the practice of the boundary commissioners in allowing the national Press access to their confidential recommendations relating to Federal boundary revisions before they are presented to this House and to honourable members and requests that such arrangements shall be terminated forthwith.

The motion is seconded by the honourable member for Braddon.

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– My question is directed to the Treasurer. Is it a fact that by next July taxpayers with taxable incomes of $4,500 to $7,500 per annum- in other words, about 40 per cent of all taxpayers- will pay more tax under the Government’s new tax system than they would have paid if the existing scales had been fully indexed, whether or not they have dependants? Is it also a fact that with family allowances, which took the place of rebates for children, heartlessly not being indexed, taxpayers with one child, on about $12,000 per annum or less, with two children, on about $13,000 per annum or less, and with three children, on about $ 14,500 per annum or less will be worse off than before by next July? How can the Treasurer honestly justify saying that the Budget charts a course to lower taxation?


– I can be extremely positive about this Budget charting a course for lower taxation. The simple fact of life is that during the course of this year, as a consequence of indexation and the new standard rate, the cost to the federal revenue of the reforms which the Government is bringing down will be $1.3 billion and the estimate for the following year is $1.8 billion. In other words, there will be an effective cut in taxation next year, with the new rate scale half indexed, of $973m. In other words this year’s Budget gives an additional $973m in tax relief for next year. I remind the honourable gentleman that his party was the party which imposed, directly as a consequence of Budget decision after Budget decision, an intolerable burden of taxation upon the taxpayers in this country.

This Budget provides a very clear and decisive series of initiatives which are designed to provide tax reform. The great majority of taxpayerssome 90 per cent, or all those with incomes up to $16,000 a year- will pay tax at no more than the standard marginal rate of 32 per cent. This will add very significantly to incentive. Thus, during the course of this year a worker earning $10,000 a year will be able to earn up to an additional $6,000 a year without any increase in his marginal rate of tax. That will make it much more worthwhile to work overtime or to become qualified for a more skilled job. I repeat the figures which have been provided to the honourable gentleman. Tax reforms this year will cost $ 1 . 3 billion, and that can be compared with the so-called tax reforms of the Hayden Budget which had a full year cost of $204m. This year’s Budget is six times more generous than the Hayden fraud of that year. The estimates for the following year, which depend on certain assumptions, represent a cost to the federal revenue of $l,899m and that is approximately $ 1,000m more than taxpayers during that year would have received if they had received only the benefits of indexation.

Mr Innes:

– You are an absolute phoney.


-Order! The honourable member for Melbourne will withdraw the remark.

Mr Innes:

– I withdraw.


– I call the honourable member for Bradfield.


-I direct my question to the Minister for Aboriginal Affairs -

Mr Scholes:

– I rise to order. You asked the honourable member for Melbourne to withdraw his statement that the Treasurer is a phoney but you allowed the Treasurer to accuse the honourable member for Oxley of being a fraud without any interruption at all.


– I listened carefully to what the Treasurer said. He described the taxation provisions in the Budget as a fraud. Had he directed the remark to the honourable member for Oxley, I would have required it to be withdrawn.

Mr E G Whitlam:

- Mr Speaker, the objectionable words used by the Treasurer were ‘the Hayden fraud’. The surname and the word ‘fraud ‘ were immediately juxtaposed.


– I will check Hansard and if my recollection is wrong I will at a later time call upon the Treasurer to withdraw the remark.

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– My question is directed to the Prime Minister. I refer to the recently announced joint economic statement put forward by the Leader of the Opposition and the honourable member for Oxley. What are the main differences between that proposal and the Budget brought down by the Treasurer last Tuesday night?

Prime Minister · WANNON, VICTORIA · LP

-There were very substantial differences between the suggestions made by the Leader of the Opposition and one of his economic advisers a few days before the Budget was introduced and the Budget. The House should take note of the fact that their proposals were put forward with a certain degree of modesty. They emphasised that it was not an alternative Budget and was not meant to be an alternative Budget. We could therefore draw the conclusion that some other spending proposals would have been involved if they had been introducing a budget. They suggested spending $800m to provide no more than 50,000 jobs. The Regional Employment Development scheme which they knocked out because it was extravagant, wasteful and not working properly had involved expenditure at the rate of” $250m for 33,000 to 35,000 jobs. So in Opposition they have learned to provide an additional 20,000 jobs for a very greatly expanded cost- $800m for 50,000 jobs. They suggested that that would cure the ills in the economy but I believe that, coupled with the other things that were implicit in the Leader of the Opposition’s statement in relation to the Budget, it would obviously have meant very much greater Government spending because in every area the Leader of the Opposition was criticising inadequate Government spending. Implied in that surely is the suggestion that he would spend much more.

One of his economic advisers, the honourable member for Oxley, indicated that the deficit should be about $3, 500m. That is about 50 per cent more than the deficit in the Budget introduced by the Treasurer. The honourable member for Oxley suggested that we could have a deficit of that kind and at the same time reduce interest rates. If he were operating on the moon he might be able to do that but, operating in the real world, he knows that he would not be able to do it and he is doing a great disservice as an exTreasurer in deceiving the people of Australia in such a way. It is not possible to increase Government spending greatly and at the same time promise to reduce interest rates in the way that he did.

Not only much greater government spending but a deficit 50 per cent greater and increased interest charges would have been the hallmarks of whatever Labor might have done. There is a very great deal of difference between that and what the Treasurer introduced. Quite clearly there would have been no tax cuts.

It is interesting trying to see honourable gentlemen prove on the one hand that the tax reforms of this Government- over a period of approaching two years our tax reforms add up to a series of historic and far reaching reforms never before seen by any government in the Commonwealth of Australia- are minimal and not worth having while on the other hand they sometimes try to suggest that those tax cuts are too large and are outrageous. The criticisms that they make seem to be in direct conflict with one another. Of course, that is nothing new because there was a rather delightful Press conference last week at which the three blind mice were leading the Press gallery of Australia on these matters and they conducted an interesting dialogue amongst themselves. 1 am sure that these things must help the Leader of the Opposition.

Earlier this year there were many people in every corner of Australia including the President of the Australian Labor Party, Mr Wran, probably Mr Dunstan, and certainly Mr Hamer and Mr Bjelke-Petersen, calling for tax cuts. If the people of Australia want tax cuts and if those tax cuts are to be paid for realistically and responsibly, not by printing dollars as our predecessors might have done, there has to be restraint on government spending. We have shown we are capable of exercising that restraint and of leading in tax reform in a meaningful way. The honourable gentleman’s speech a short while ago indicated quite emphatically that he is not prepared or able to exercise restraint in government spending and that he would do the same again.

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– I refer the Minister for Transport to a report that a businessman by the name of Mr Peter Lloyd has suggested that the New South Wales Government should approach the Federal Government to allow the aerodrome at HMAS Nirimba at Schofields to be used as a general purpose airport- in other words, for light aircraft. Will the Minister give an assurance that he will not permit the aerodrome at HMAS Nirimba in the western suburbs of Sydney to be used for this purpose?

Minister for Transport · GIPPSLAND, VICTORIA · LP

– Some time ago the New South Wales Government joined with the Commonwealth Government in setting up a select committee to inquire into the airport needs of Sydney. As a result there is on public display in the heart of Sydney the Major Airport Needs Study. I thought I had invited all Federal members of Parliament to see that display. If the honourable member has missed out on an invitation I will make sure he gets one. I am sure it would be to his edification if he went along to see MANS and looked at what is proposed in terms of total needs for Sydney airports in the future. Referring to the specific matter that the honourable member raised, I would advise him to take his question along to that display and to ask the State and Commonwealth officers present at that display for information about what is happening in regard to it.

Mr Armitage:

– That is for the national need.


– That is so, but related to the national need of Sydney Airport is the need for secondary airports and the use that will be made of them. All this can be seen in a study of the general question. I would advise the honourable member to go along to the MANS display and see what he can learn.

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-I ask the Minister for Aboriginal Affairs whether it is a fact that his Department has refused to finance a project to give special nutrition to malnourished Aboriginal children in the inner Sydney area?

Minister for Aboriginal Affairs · STIRLING, WESTERN AUSTRALIA · LP

– It is not correct to say that the Department has refused to finance this program. The fact of the matter is that my colleague the

Minister for Health has received a report prepared by one of his officers after consultation with the Aboriginal Medical Service in Redfern, that my colleague has sent a copy of that report to me and that it is under consideration by both of us at the present time. Some confusion may have been caused by the fact that this is a new request, that is, it is in addition to programs which have been proposed for this financial year. Therefore if it is to be approved it must be supported with funds additional to those already programmed for the Service.

I take this opportunity to indicate the level of funds that will be provided for this Service this financial year and, as well as that, the total funds expected to be available to it. The Service will receive $260,000 from my Department for operational expenses. In addition, it will receive $100,000 for renovations to premises, making a total of $360,000, against the sum of $302,000 which it received in full last year. In addition, it has available to it refunds from Medibank for medical services provided. They are expected to be of the order of $75,000 this year. Furthermore, for some years the Service has been seeking public donations. I am not sure just what amount it does receive by way of public donations, but I know that it is expected to be of the order of $45,000. 1 believe also that the Freedom from Hunger Campaign has agreed to provide $ 1 12,000 to it over two years and something like $45,000 this year. All told the Service is expected to receive half a million dollars this year, which is a quite tidy sum.

I might say also that my colleague and I are very conscious of the problem of malnutrition amongst Aboriginal children, particularly those in the inner city suburbs of Sydney. What is being looked at is a planned and controlled nutrition intervention program. I think the House would recognise that before any program of that kind is introduced it needs to be properly considered and assessed by experts from the Department of Health, which in this case will be the technical consultants to my Department.

Mr Uren:

– I raise a point of order, Mr Speaker. I draw your attention to the two questions that have been answered this afternoon by the Prime Minister and the Minister for Aboriginal Affairs. The replies have been lengthy. They were both in response to questions without notice. I wish to make two points. Firstly, the Ministers are not adhering to the Standing Orders. Secondly, they are refusing to comply with a request that you have made on many occasions that Ministers keep their replies brief.


-That is not a point of order in fact, although the points made by the Deputy Leader of the Opposition in raising the matter are valid. I call upon Ministers to make their replies brief. Has the Minister for Aboriginal Affairs concluded his answer?


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– I ask the Treasurer a question in relation to the changes to the taxation system. I ask him how he can justify such a blatantly unfair, unjust and regressive system -


-Order! The honourable gentleman is not entitled to make argument. He is entitled to seek information but not to make argument. I ask him to ask his question as a question seeking information.


– Could I ask him to inform me how he justifies such a blatantly unfair, unjust and regressive system?


-No. The honourable gentleman will ask his question or I will rule him out of order.


– I ask the Treasurer how he can justify the system which will result in himself receiving an increase in income of $37 a week as against the average income earner receiving only $2.80 a week, that is, a system whereby although the Treasurer receives only three times what an average income earner receives in income he will receive 13 times the benefit received by such a person. Finally, I ask him how he can countenance the selfishness and inequity of the system, whereby the Prime Minister will receive an extra $67 a week but a man in receipt of unemployment benefit will receive much less than $50 a week.


– One never quite knows who speaks for the Opposition on matters of economic affairs and economic policy. I am reminded of the Prime Minister’s comment earlier today about the three blind mice.

The honourable gentleman who is trying to interject is the shadow Minister on the Opposition benches who has been mooting higher tax for those on incomes of $15,000 and beyond, a matter which has not been denied by the Opposition. This is a contradiction to other statements which have been emanating from the Opposition in relation to matters of taxation. The words ‘blatant’, ‘unjust’, ‘unfair’ and ‘inequitable’ are, of course, the perfect description of the Hayden socalled tax fraud of 1975-76. 1 set that matter to one side but I welcome questions on the Opposition’s record of tax reform.


-Order! The honourable gentleman will withdraw the words ‘Hayden tax fraud’. Previously I permitted him to use terms which I understood to relate to the Budget. This term is directed specifically to the honourable member for Oxley. I ask the honourable gentleman to withdraw it.


– I withdraw the statement. The phrase I had very clearly in mind was the Hayden Budget tax fraud. I do not qualify that for one moment because of the comments made by myself and the Prime Minister earlier today. The honourable gentleman seeks justification. Let me provide it.

A most important benefit of this quite unprecedented and decisive tax initiative is that there are tax reductions at all levels of taxable income. What are the details of the particular benefits? The take-home pay of all wage and salary earners will rise from 1 February 1978 when the reformed scale will be fully reflected in the payasyouearn instalment deductions. The biggest proportional gainers- I emphasise that- are those on lower incomes at the bottom of the tax scale. In addition, the incomes of about 225,000 taxpayers, including many thousands of pensioners with small private incomes, will be made non-taxable. Thus the new system is a very significant social reform. It improves the position of lower income groups in the Australian community. The first $3,750 of everyone’s income will be free from tax.

I mentioned a few moments ago- I repeat itthat some 90 per cent of taxpayers, all those with incomes up to $16,000 a year, will pay tax at no more than the standard marginal rate of 32 per cent. This will add significantly to incentive. The honourable gentleman who posed this question does not know about incentive. His series of budget measures did more to desert the course of incentive in this country than any budget that has been brought down in recent years. These reforms are genuine. They are far-reaching. They are certainly consistent with equity and they will provide incentive for taxpayers at all levels of the tax scale.

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-Has the Minister for Defence been advised of criticism related to expenditure on defence equipment for the three Services and the present budgetary proposals? Can he clarify this criticism for the House? Even better, will he consider making a detailed and precise statement that one should hope would lead to a debate on defence in the House?

Minister for Defence · MORETON, QUEENSLAND · LP

– I would be happy to consult the Leader of the House and seek to facilitate a general debate on defence. I excuse myself from seeking to explain some of the criticism that has been launched against the figure given by the Treasurer in his Budget Speech concerning the defence vote. One would need to summon in aid one of the most accomplished witch doctors of Africa to explain that criticism. I shall give the facts as I understand them. Defence expenditure in 1976-77 was $2, 182m. That figure is expressed in December 1976 prices. Expressed in May 1977 prices that figure is $2,320m. The Budget now aims to spend for 1977-78 $2,343m. That is a difference of $23m, which is the equivalent of one per cent real growth. That is precisely what the Treasurer had to say.

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– My question is addressed to the Treasurer also. Is it a fact that Budget Statement No. 4 estimates the cost to revenue this financial year of the new tax scales to be $399m- this is not the figure he has mentionedwhereas the subsequent cost to revenue correction sheet given to the Press Gallery but not to me indicated an amount of $406m? What is the cause of the difference? Assuming the amount to be about $400m, accepting temporarily all the other assumptions contained in the Budget and noting that the Treasurer did not answer the claims by the honourable member for Oxley and myself, did the Government consider using the $400m in job creation programs? Would this not have been a better option from the point of view of getting our economy going again, to say nothing of not having the unfairness of this tax system?


– I reject the use of the last term. This system is not unfair; it is equitable and provides incentive. Because it provides incentive it will provide a stimulus in the second half of this year towards the working of the Australian economy and will build on the progress made during the course of last year. As for the figures, the reform of the tax scale announced in the 1977-78 Budget will mean that $406m less will be collected in personal income tax in 1977-78 and another $965m in revenue will be given up due to tax indexation. This means a total of $ 1,371m by which the Government’s measures will reduce personal income tax in 1 977-78.

If I look beyond that, to put the matter in full perspective, in 1978-79 the reform of the tax scale will mean that $ 1,390m less will be collected in personal income tax. Apart from the cost of reforming the tax rate scale, there will also be a 1978-79 revenue loss of some $467m from the remaining half indexation of the rate scale and the full indexation of dependant rebates. When that amount is added to the $ 1,390m it will be seen that the Government’s tax indexation and tax scale reforms together will reduce the 1978-79 revenue by $ 1,857m. That amount is $973m more than the estimated cost of full indexation. In other words, the figure of $973 m measures the net impact of the Budget changes on 1978-79 revenue compared with the pre-Budget situation.

What the honourable gentleman was saying in his question by way of inference was that he would not have brought forward any tax reform in a Budget at this time had he been in government and had he been the Treasurer of the day- I think that is a matter of some speculation. I believe the case for tax reform is overwhelming at the present time. We have moved to correct that injustice and anomaly. As mentioned, the measures contained in the Budget are decisive and unprecedented. They put Australia into the category of one of the most advanced countries in tax reform in the world.

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– I ask the Minister for Overseas Trade: What is the latest situation in the dispute between Colonial Sugar Refining Co. Ltd, as agent for the Queensland Government, and the Japanese refiners on the future of the 600,000 tonne per annum long term sugar contract? What action is the Commonwealth Government taking towards resolving these issues which are most critical for the Queensland sugar industry?

Deputy Prime Minister · RICHMOND, NEW SOUTH WALES · NCP/NP

-I agree with the honourable member that this is an extremely critical matter for the Queensland sugar industry, which invested some $400m in expanding the industry in Queensland to meet the long term contracts with Japan. We believe that these contracts are bankable documents which should be honoured. The present situation, apart from causing immense concern to the Queensland industry, I should think would be extremely embarrassing to the Japanese Government and to Japan because the Japanese refineries are refusing to receive sugar which has been delivered to Japan under those contracts. In other words, the contracts are not being honoured. The contracts were written in 1974 at about half of what the world price was at that stage. We believed that was a good deal; all parties believed it was a good deal. The world price has now dropped considerably below the contract price so the Japanese refiners are refusing to take the sugar.

If the price had gone the other way Australia certainly would have honoured its obligation to supply the sugar. At the moment seven boats carrying more than 100,000 tonnes of sugar are being held up in Japan waiting to be unloaded. Therefore a resolution to this question needs to be found.

The Prime Minister when he visited Kuala Lumpur spoke with Prime Minister Fukuda and told him that the Australian Government strongly supports the Colonial Sugar Refining Co. Ltd in its general handling of this question and that it supports the validity of the contract. We hope that there will be no compromise to the contract. If there is any compromise it will be a matter for the parties directly involved with the contract. I am quite sure that all parties would like to see this matter amicably resolved without going to the court. I hope that now Prime Minister Fukuda is back in Japan he will find an early resolution of this matter. If a country like Japan, which is very deficient in raw materials, wants to have assured reliable suppliers- there is no better way of doing so than by writing long term contracts. If this long term contract were to fall down I believe it would be a very sad day for Japan in looking to other countries for the supply of raw material. We need to remember that immense investment is required in order to supply raw material in bulk, as has happened with the sugar industry in Queensland.

I hope that there is an early resolution of this matter. The Queensland Government has agreed to an extension of the negotiations to 3 1 August. I hope that the matter will be resolved by then. I think that it will be a tragedy if the matter goes to the courts for finality. I am sure that is not the wish of the Japanese Government.

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– My question, which I direct to the Treasurer, relates to the changes to the taxation system. I ask: Is it not a fact that the proposals are most generous to the highest income earners such as he and the Prime Minister and much less generous to middle and modest income earners? Is it not also a well established fact that the propensity to save from increases to income for higher income earners is much greater than is the case for middle and modest income earners and that middle and modest income earners have a much greater propensity to consume from such additions to income? Would it therefore be a fact that if the Treasurer genuinely wanted to give some demand lead to an economic recovery in the course of this financial year, the more effective way, apart from the -


-Order! The honourable gentleman is now arguing the issue instead of seeking information.


-Would it be a fact that a more effective way of giving a demand lead to economic recovery in the course of this year would have been to provide more generous benefits for middle and lower income earners? More importantly, would it not have been even more effective in terms of stimulating demand in the economy to have used some at least of the total of $973m cost in a full year of this proposal in support of private business and job creation programs so that more jobs could be created, more demand generated in the economy and recovery got underway?


-This appears to be the day for Bib and Bub on the Opposition benches. I might say that they for their particular destructive reasons are seeking, of course, to muddy the waters in relation to the advantages of the new personal income tax system. I might say, as the Prime Minister has also pointed out, that the two economic spokesmen, along with that great economic genius, the Leader of the Opposition, recently held a Press conference which was described by one leading newspaper as a Laurel and Hardy show. I would not want to qualify that for one moment. But far from -


-Order! I suggest that the right honourable gentleman should make his answer relevant to the question.


– I thank you, Mr Speaker. As to the benefits of this system, what the honourable gentleman cannot get in his own mind is that everyone gains. Those at the low end of the scale gain considerably, as I sought to point out to the honourable gentleman a few moments ago, because the first $3,750 of everyone’s income will be tax free. That is of considerable benefit to many thousands of pensioners. Some 225,000 taxpayers, including many of those pensionersthis is government by a party of social reformwill be made non-taxable. That measure- we do not qualify it- will be of very significant benefit to those people and their spending habits. The honourable gentleman conveniently seeks to overlook that situation. Because I have not mentioned this point before I point out that almost all full-time workers will have lower marginal tax rates. There will be a large reduction from 45 per cent to 32 per cent and a marginal tax rate will apply to taxpayers with incomes between $12,532 and $16,000. I assume that that is the tax bracket to which the honourable gentleman is referring.

The average rate of tax will be lower for all taxpayers, including the minority whose marginal rate will be higher. Let me come back to the sorts of categories about which the honourable gentleman seeks to pose questions. A taxpayer with a wholly dependent spouse will be able to earn up to $5,484 without paying tax because the present dependent spouse rebate- that is $555- is maintained under the new system. The sole parent and other dependent rebates are also maintained under the new system. No taxpayer with an income of up to $16,000 will, I am informed, pay more than 25 per cent of his income in tax.

Mr Hunt:

– Twenty-five per cent?


-Yes, 25 per cent. This is a program of equity. It is a program of incentive. It puts Australia into one of the most advanced systems of tax reform in the world. Of that there can be no doubt. All the questions put by the Opposition in the Parliament today are designed only to talk down the benefit of that system and, by inference, make it clear that had the Opposition been in Government it would have imposed higher taxes and not reformed the tax system.

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-I ask the Minister for Health a question about the drug tagamet. By way of explanation I point out that it has been shown dramatically to cure stomach ulcers without the need to resort to major surgery. Can the Minister say when a decision will be made regarding the addition of this effective but expensive drug to the pharmaceutical benefits schedule?


– I think the honourable gentleman is referring to a drug which, in some circles, is regarded as a wonder drug in this area of treatment. If that is the drug, it is currently undergoing review by the Pharmaceutical Benefits Advisory Committee which is presently investigating the quality of the drug, its safety and its efficacy. The Committee is also examining clinical trials which have been performed to ascertain whether the drug has equal qualities for both short-term and long-term treatment. I expect a recommendation from the Pharmaceutical Benefits Advisory Committee, probably before the end of this year. If the Committee recommends the inclusion of the drug tagamet on the pharmaceutical benefits list I will have no hesitation in having it included on that list.

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Mr E G Whitlam:

-The Minister for Immigration will remember that at the first question time of this Parliament he encouraged all illegal immigrants who were covered by his amnesty offer to come forward. He commented that he did not know of a single case where amnesty had been refused when people had come forward. I ask: Has the Minister received the Ombudsman’s report on his Department’s handling of the application of Mr Ignazio Salemi who is one person who came forward but was not granted an amnest If so, will he make the Ombudsman’s repo vailable to the public, as are the judgments d le High Court justices before whom the case ime last August, October and February? I also ask the Minister when he expects to make a decision in the light of the Ombudsman’s report.

Minister for Immigration and Ethnic Affairs · WARRINGAH, NEW SOUTH WALES · LP

– Firstly, the premise on which the Leader of the Opposition has based his question is incorrect. I did not offer amnesty to all illegal migrants in Australia; I offered it to all visitors who had overstayed in Australia as at 3 1 December 1975. Secondly, I have received the Ombudsman’s report and I am presently considering it. Thirdly, I believe that the report has already been made available to the public through the people who took action on Mr Salemi ‘s behalf.

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– My question is also addressed to the Minister for Immigration and refers to a statement in the Budget Speech last week which said:

The Government has decided not to set a specific immigration program for 1977-78 but to determine in-take on the basis of numbers of eligible applicants.

I ask the Minister whether he will comment on that apparently more flexible scale of numbers of immigrants.


-The honourable gentleman is not entitled to ask for comments. He can ask for information.


-I ask: Can the Minister indicate whether the number of eligible applicants is likely to increase over last year’s target of 70,000 migrants?


– There has been a change in the attitude of the Government in relation to an immigration program. Previously we had set a program target for each individual year. This year, as the honourable member has correctly stated, there is no specific program outline. The main components of the intake will remain family reunion- the family reunion criteria will not be altered; they apply to mothers and fathers, husbands and wives, and dependent childrenrefugees, and those people who fit the occupational criteria. The occupational criteria apply in cases where people have qualifications which are both recognised and needed in Australia in the long term.

The occupational criteria are continuously being reviewed and are totally reviewed every three months. In fact the intake will be altered chiefly by the numbers of occupations which are in short supply in Australia. Of course, again that will depend upon the level of economic activity in Australia, and I hope, as all honourable members would hope, that the level of economic activity in Australia will continue to develop in the coming years. I cannot put a specific figure on where this activity may take place or what numbers will be involved, but I anticipate that the program will be in the same vicinity as last year.

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Mr E G Whitlam:

– I ask the Minister representing the Minister for Social Security a question concerning the payment of unemployment benefits to school leavers. Will the new Director-General of Social Services now review the claim by last year’s school leaver, Karen Green -

Mr Hodgman:

– She is at work now. She does not want to go on with it.


-Order! The honourable member for Denison will remain silent.

Mr E G Whitlam:

-She sought work and could not get it for three months and was denied unemployment benefits during that period. I ask the Minister whether the new Director-General of Social Services will now review the claim by last year’s school leaver, Karen Green, in the light of the High Court judgment she obtained against the former Director-General or will the Minister direct the new Director-General to review her claim. I also ask whether, as the Budget calculations seem to indicate, the Government expects that those who leave school at the end of this year will not receive unemployment benefits until school resumes next year, despite the recommendation by Dr Myers and the interpretation by the High Court.


– Naturally on an issue such as this I cannot answer on behalf of the new DirectorGeneral of Social Services or indeed the Minister for Social Security. I certainly do not think that the Minister for Social Security would be taking any action which would differ from actions she has taken in the past on this issue. However, I will refer the question to the Minister for Social Security and make sure that the honourable member gets an answer as soon as possible.

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– My question is directed to the Minister for National Resources who will be aware of the significant cost increases which the new fuel excise and crude oil prices will create for country business people and farmers. Does the Minister consider it is unjust for country people so to suffer no matter how logical and necessary the new policy is? Does the Minister believe that the new pricing arrangement provides scope for a fuel price equalisation scheme? Can he assure country people that such a scheme is being considered?


– I do not think that anybody likes to see fuel prices go up but the reality of the situation is that the world oil price is increasing and in order to avoid distortion in the use of resources Australia needs to keep pace with the world price. Adjusting the price also encourages greater exploration and development of Australia’s known fields and more research into alternative forms of energy such as solar energy or coal conversion. I am conscious of the increased cost to the community and particularly of the increased cost to the farming community and to those in outlying areas. We did have a price equalisation scheme which guaranteed no greater price for people in remote areas than 3.3c above what was paid in city areas but this scheme was abolished by the Whitlam Administration because it was considered unnecessary. That was tragic because the scheme enabled Australians no matter where they lived to have access to energy at reasonably comparable prices.

I would like to see this sort of scheme brought back. The Government has looked at proposals to do this, but because of the very stringent Budget circumstances in which we are the Government has had to reject the proposal as it has had to reject many other proposals. However, it is not a matter which the Government will put aside indefinitely and, when circumstances are appropriate, we certainly will look at it again. There is need for Australians no matter where they live to have access to energy at reasonable prices. As energy becomes more expensive, I believe that a national energy policy becomes more important. Members of the Opposition who try to bully the Government into action should look at what they did to rural people when they abolished a scheme that was of great national significance.

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Minister for Primary Industry · New England · NCP/NP

– Pursuant to section 26 of the Tobacco Marketing Act 1965, I present the annual report of the Australian Tobacco Board for the year ended 31 December 1976 together with financial statements and the report of the Auditor-General on those statements.

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Minister for Primary Industry · New England · NCP/NP

– Pursuant to section 29 of the Dairy Produce Act 1924, I present the annual report of the Australian Dairy Corporation for the year ended June 1 976.

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Minister for Special Trade Negotiations · Bennelong · LP

-On behalf of the Minister for Business and Consumer Affairs (Mr Fife), I present a report entitled ‘Packing and Labelling Laws in Australia’ prepared by the Trade Practices Commission. The report is currently being studied by the Government and will make a considerable contribution to the formulation of policy in this area.

page 559


Minister for Aboriginal Affairs · Stirling · LP

– For the information of honourable members, I present the report of the activities of the Australian National Commission for UNESCO during 1975-76.

page 559


Minister for the Northern Territory · Fisher · NCP/NP

– For the information of honourable members, I present the text of a statement by the Minister for Science (Senator Webster) on Australian Landsat Facilities.

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Minister for Environment, Housing and Community Development · Bass · LP

Pursuant to section 11 of the States Grants (Nature Conservation) Act 1974 I present an agreement in relation to the provision of financial assistance to Victoria for land acquisition for nature conservation purposes (Yellingbo) 1976-1977.

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-Mr Speaker, I wish to make a personal explanation.


-Does the honourable gentleman claim to have been misrepresented?


– Yes. I say this more in sorrow than in anger. In the Sydney Morning Herald of Saturday, 20 August, it is reported in ‘Sayings of the Week’:

It is a shame that the Government could not persuade Geoff Boycott to become an Australian citizen.

The newspaper then attributes that remark to Mr Giles. I would point out that at page 37 of Hansard these words are recorded:


– Yes. A Minister may table a paper at any time. The discussion is now concluded. May I comment that it is a pity that the parties were not able to persuade Geoff Boycott to become an Australian citizen.

In spite of the fact that we have not done so very well in Sheffield Shield cricket recently, New South Wales is still the premier State in cricket and it was the Waverley Club that brought Boycott to Australia in the first place.

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– In accordance with the provisions of the Public Works Committee Act 1969,I present the reports relating to the following proposed works:

  1. 1 ) Military Area at Randwick, New South Wales;
  2. RAAF Base Edinburgh, South Australia;
  3. Animal Quarantine Station at Wallgrove, New South Wales.

Ordered that the reports be printed.

page 559


The following Bills were returned from the Senate without amendment:

Commonwealth Employees (Employment Provisions) Bill 1977.

International Development Association (Further Payment) Bill 1977.

page 559


Assent reported.

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Discussion of Matter of Public Importance


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

The Arbitration Commission’s decisive rejection of the Fraser Government’s arguments for a wage freeze.

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–


-Mr Speaker, two days ago an event of enormous economic and, I suppose, political significance occurred in this country and that was the decision of the Conciliation and Arbitration Commission, as part of the pattern of wage indexation decisions, to award a 2 per cent increase in the national wage case. The effect of that was not just in the form of the 2 per cent increase but what was said by the Commission in delivering that judgment. In the course of delivering that judgment the Commission not only increased wages by 2 per cent; it found itself in absolute conflict with the economic policies of this Government. This is an event of extraordinary significance because the Commission has never been regarded as the workers’ tribunal. It has never been regarded as being pro union, pro worker or pro the Labor Party. It is an impartial tribunal. As one who was associated with it for many years in an advocacy sense and in appearing before it I think I am in a position to say that it certainly is a basically impartial tribunal although I think it perhaps has a tendency to lean, if anything, against the interests of the unions. In this case the Commission tackled the Government’s economic policy head on in that it decided that a number of fundamental facts and argument put forward by the Commonwealth Government were wrong and those things are central to the economic policy pursued by this Government.

I come now to some of these items. The first was that real wages had increased. This is something which the Commonwealth had said in submissions before the Conciliation and Arbitration Commission. It was said also by the Treasurer (Mr Lynch) in his recent Budget Speech. At page 5 of his Budget Speech he said:

There can be no doubt that, had the wage determination processes permitted real wages to decline in 1976-77, recovery would have been stronger and unemployment less.

Instead, so far from having declined, as has been repeatedly asserted by our political opponents, real wages were actually higher at June 1 977 than a year earlier.

That just simply is not true, as the Conciliation and Arbitration Commission pointed out. It referred in its judgment to the fact that there had been a significant reduction in the real level of wages over the course of the last year. It set out the figures on page 9 of its judgment. The Commission said that the increase in the consumer price index in the last 12 months was 13.4 per cent, compared with a 10.8 per cent increase in average weekly earnings, a 10.9 per cent increase in adult male minimum weekly wage rates and an 11.8 per cent increase in-adult female minimum weekly wage rates, hose figures flatly deny what was asserted by the Treasurer (Mr Lynch) in his Budget Speech and also by the Fraser Government in its submissions to the Arbitration Commission in the national wage case.

Of course, in saying that real wages have increased the Government has looked at other indices. It has used the consumer price index figures minus that part of the CPI which deals with health and medical costs. It has also looked at the implicit deflator for the gross domestic product or parts of the gross domestic product. In the course of the recent national wage case the Commonwealth Government used four or five indices, depending on which one was favourable in respect of the argument that it was putting. But the one which is most appropriate to arbitration decisions is the consumer price index. It is the one which is relevant to the living standards of workers. If one uses that index to see how the prices of the goods and services purchased by wage and salary earners in this country have moved, one finds that there has been in fact a much higher increase in prices than in wages and that real wages have declined. So the arguments used by the Commonwealth before the Commission and in the Budget Speech have been shown to be totally wrong.

Secondly, we found in this case that the Government was arguing that devaluation had added more to the consumer price index in the June quarter than the 0.4 per cent attributed to it by the Commonwealth Statistician. The Commonwealth Government said that it was 0.7 per cent. We on this side of the House find it extraordinarily interesting that the Government should be trying to convince the Arbitration Commission that the contribution that it has made to inflation through devaluation is rather higher than the Commonwealth Statistician attributed to it. We will be interested to note just how it continues to argue in this regard in the future. The Government has already made the point that in future causes there will be further increases attributable to devaluation. It will be interesting to see how much the Government will accept as being responsible for devaluation in future inflation rates. The fact of the matter is, of course, that the Commission did not accept the

Commonwealth Government’s 0.7 figure. It said that it was much more convinced by the 0.4 figure given by the Commonwealth Statistician, particularly as the 0.7 figure claimed by the Government was based, as the Commission said in its decision, merely on a judgment. It was just a pure judgment. No calculations were put before the Commission. If the Government wants to convince us now that it is in fact adding to inflation by much more than what the Commonwealth Statistician has said we will be interested to listen to its argument.

A further and very fundamental point which was tackled by the Commission in its decision was that the recovery of the profits share of income to normal levels is basic to economic recovery. That, of course, is a very fundamental argument which is continually put forward by economic spokesmen for the Government. They say that the gross operating surplus of companies as a proportion of the non-farm gross domestic product at factor costs has as its long term average 1 7.5 per cent and they take the 5 years up to, I think, 1972-73 to get that. They say that now that the profit share is well below 17.5 per cent when measured in that way there is therefore a lack of incentive for business to invest and there is therefore a lack of economic recovery, job creation and so on. In fact, if one looks at what has happened one will see that there has been a quite substantial recovery in the profit share. From the Budget one can see that, using the same basis of measurement as the Government has used in the past, the profit share in 1976-77 was 14.4 per cent. So it has edged back considerably from the 12 per cent that it reached in 1974. It is much closer to the long term trend. If one looks at what the Commission said in respect of this on page 6 of its judgment when noting that increase in profitability one will see that it said:

Although profits have not quite returned to ‘normal’ levels, we are impressed that they have recovered progressively and significantly since the Commission introduced the indexation principles. But the recovery in profits has been accompanied by increasing rather than reduced unemployment and we are unable to conclude that it is lack of profitablity which is preventing a recovery from taking place.

So the Commission is saying there that profitability is up and that unemployment also is up. So it does not seem to fit in with the Commonwealth’s analysis. If one goes further than the Commission in fact went one can make the point even more strongly. Profitability is higher than appears on the surface because it is the after tax profitability which is really important to companies. Let us look at the matter in after tax terms. They must be much better off than appears in gross terms because of the investment allowance and the stock valuation adjustment. These very substantial tax benefits which this Government has handed out to companies has meant that in after tax terms their position is much more comfortable than appears when looking at the gross figures.

There is also in this whole area a fundamental illogicality in the Government’s argument because the fact of the matter is that in a recession the profits share always declines. That is because there are certain fixed costs which have to be allocated against production. If there is a smaller output of production the same amount of fixed costs have to be allocated over a smaller production and therefore the unit costs of the output are up. If one looks back at all the trade cycles one will find that it is always the case that the profits share declines in a recession and increases in a boom. The wages share does the reverse. The Melbourne Institute of Applied Economic and Social Research showed in its publication Australian Economic Review earlier this year that profits now are above their normal level for this stage of the trade cycle. It measured the extent of the trade cycle by looking at such factors as the degree of unemployment, the amount of excess capacity in industry and so on. It is the Institute’s judgment, looking at the matter in as analytical a way as possible, that the profits share is above its normal level for this stage in the trading cycle. So in this whole area of profitability the Government’s argument has been put into considerable doubt, to put it at its mildest, by the decision of the Commission. Indeed, there are other arguments which can be used to support what has been said by the Commission.

Another extremely important point, which is tied in with the profits factor, is the reduction in real wages being necessary to promote economic recovery. That is also an extremely basic element of the Government’s economic policy. The Commonwealth put forward various arguments in the national wage case to support this argument. It said that real wages were in fact now above the trend rate of growth. It calculated the trend rate from 1961 to 1973 and from 1961 to 1976 and it projected through to 1977 to see what the trend rate should be and said that the actual rate of wages was above their trend level. That was true only in respect of award rates. Let us look at the earnings. They are the really important factor. They are what the employers have to pay- not just the award rates. According to the figures for the latest quarter available they were in fact below the trend rate. So the Government’s figures have confounded its argument in that respect.

The Government also produced evidence in regard to what it delightfully described as the real wage overhang. It purported to show that real wages had increased faster than productivity; so there was an overhang which would have to be eradicated before economic recovery could proceed. But the evidence went only to 1 975-76, not to any period past the middle of last year. The Australian Council of Trade Unions updated that material to 1976-77 and showed that the gap would disappear in 1977-78 even with full wage indexation being applied. I was about to say even with full wage indexation continuing to apply but it has not been applied in five out of the last six cases. But if it were applied as from now this so-called real wage overhang, as measured by the Commonwealth Government, would disappear in 1977-78. The ACTU put forward a table to demonstrate that. I do not have time to refer to the figures, but let me say briefly that the Commonwealth had a chance to refute those figures if it so wished but it did not refute them. It said nothing about them. Therefore one can only assume that the Government felt that it had lost that argument- at least in respect of the figures.

We have also noted that the real wage overhang is the reverse of the profits share drop in a recession. The wages share goes up, the profits share comes down and the productivity growth declines; so there is a real wage overhang. The eradication of the real wage overhang would occur with economic recovery. Once one has economic recovery- one has an economic boom- and is going back towards full employment, the profits share goes up and the wages share comes down. Wages increase at a slower rate than productivity. This so-called real wage overhang disappears. The Government wants that to happen right now in the middle of a recession, not by generating economic recovery but by cutting the living standards of wage and salary earners in this country. That is an argument which again has been substantially rejected by the Arbitration Commission.

There are other reasons to support the view adopted by the Commission in rejecting the basic argument of the Commonwealth Government. The 1976 Budget expectation for wages and prices was, in fact, better than expected. Last year’s Budget Papers anticipated that prices would rise by 12 per cent and that average weekly earnings would also rise by 12 per cent so that there would be no reduction in real wage levels but unemployment would fall. In fact, there was a fall in real wages but unemployment went up by sixty thousand or more. Another one per cent of the work force became unemployed despite the fact that real wages fell. The Government, in its Budget Papers, did not anticipate that happening. It is no wonder that the Commission expressed in its judgment its scepticism as to whether smaller wage increases would have led to reduced unemployment.

If increased wages are the cause of unemployment why has female employment increased whilst male employment has decreased? In the last year or so there has been practically no increase in employment levels. What increases there have been have occurred in the female area, not the male area. Yet female wages have increased much more than male wages. Another exhibit in the case put by the Australian Council of Trade Unions showed that the ratio of female earnings to male earnings had moved from 58 per cent in September 1973 to 66 per cent in June 1977. At the same time the female unemployment rate had declined from 1.9 times the male rate to 1.5 times the male rate. That totally refutes the argument put forward by the Fraser Government in this chamber time after time and in the Arbitration Commission.

If the Fraser Government really believes its argument about the real wage overhang why does it persist with the investment allowance? It is totally contradictory. The investment allowance subsidises capital. If the Government thinks that wage costs are causing the replacement of labour by capital, why is it subsidising capital, making it cheaper compared to labour and so creating more unemployment? It seems that the Government wants to create more unemployment by continuing a subsidy which reduces the price of capital compared to labour. It is no wonder that the Commission rejected the Commonwealth’s submissions on this basic issue of real wage levels and the profit share.

Minister for Special Trade Negotiations · Bennelong · LP

– This matter of public importance raised by the Opposition arises from the decision taken in the most recent national wage case by the Conciliation and Arbitration Commission to grant what amounted to the equivalent of 80 per cent of the cost of full indexation in respect of the June quarter increase in the consumer price index. This decision will add some $800m to the annual national wages bill in this country. At the time the Government expressed its disappointment with the decision of the Conciliation and Arbitration Commission. In responding to the honourable member for Gellibrand (Mr Willis) I echo the disappointment expressed by the Treasurer (Mr Lynch) and the Minister for Employment and Industrial Relations (Mr Street) on that occasion.

The Commonwealth stands by the submission that was put on its behalf to the Conciliation and Arbitration Commission. I remind the House and, in particular, the honourable member for Gellibrand that economic spokesmen on this side of the House were not the first as members of a government to identify the direct link between wage increases and unemployment. In what has now become a famous phrase the honourable member for Melbourne Ports (Mr Crean), who I notice is to follow the honourable member for Gellibrand for the Opposition in this debate, drew the attention of the country in the last few days in which he was Treasurer of the Commonwealth to the link between wage increases and unemployment. The former Prime Minister, now the Leader of the Opposition (Mr E. G. Whitlam), when addressing a conference of Young Labor in 1 975, said:

Inflation today is undoubtedly and almost solely due to wage claims and increases.

In 1975 the honourable member for Oxley (Mr Hayden) made this omnibus statement in his Budget Speech when he was Treasurer. He said:

It does employees generally no good to get higher and higher money incomes if the results are just higher prices, a severe squeeze on profits, a slump in new investment and a contraction of job opportunities.

They were not the words of Treasurer Lynch. They were not the words of an economic spokesman of this Government. They were the words of the honourable member for Oxley when he was the Treasurer of the last Labor Government and exercised in his economic statements a greater degree of responsibility than he has exercised in his economic statements over the past 12 months.

I make it clear at the outset that the Government stands by its proposition that there is a link between wage increases and unemployment. Wages are a cost to employers. The capacity to pay higher wages does not come out of thin air. If it cannot be met by higher unit productivity it must be found by raising prices, taking lower profits, squeezing investment funds or balancing the total wages bill by reducing employment. It is the last factor which is the cause of concern to the Government. It has been the basis of so much argument put by the Government to the Arbitration Commission and generally in economic debate.

The honourable member for Gellibrand dealt with the increase which had occurred in the profit share of gross domestic product as did the Arbitration Commission. He pointed- I accept his figure- to the frequent use of the long term trend of 17.5 per cent. The truth is that there has been an increase in the profit share, largely brought about through the policies of the present Government, from 12 per cent which is an extremely low base in historic terms to approximately 14 per cent. Whilst that represents a considerable improvement, I do not accept that it represents the massive improvement which was put to us a moment ago by the honourable member for Gellibrand, nor does it represent a situation in which there can be any complacency in thinking that a proper balance in profit sharing has now been achieved in the Australian economy.

The basis of the attack made by the honourable member for Gellibrand centred on the argument addressed before the Commission- it has been repeated outside the Commissionconcerning whether there has been a reduction in real wages. The honourable member referred to page 4 of the judgment of the Full Bench. Dealing with the period from the June quarter 1 976 to the June quarter 1977 the Commission used the increase in the consumer price index of 13.4 per cent The Commission argued- the honourable member for Gellibrand accepted the proposition and would have the House accept it- that because the consumer price index had increased by 13.4 per cent against respective increases of 10.8 per cent, 10.9 per cent and 1 1.8 per cent in average weekly earnings for adult male minimum wage earners and adult female minimum wage earners, there had in fact been a real reduction in wages.

The Government, of course, rejects the proposition that the correct index to use for such a comparison is 13.4 per cent. It will be of no surprise to the honourable member for Gellibrand for me to say that for a considerable period of time the Government has been arguing very strongly that if one is to get a proper picture of the underlying inflation rate in this country, a discounting of the figure of 1 3.4 per cent ought to be made to take into account the effects of the health insurance adjustments made in the December quarter of last year. If one uses the adjusted index after having made allowances for those health charges which came in on a onceonly basis in the December quarter last year the index will be lower than the three figures of 10.8 per cent, 10.9 per cent and 1 1.8 per cent to which I have referred.

I know that the honourable member for Gellibrand does not accept that proposition, but I put it to him and to the House that it is proper to argue that because of the nature of the adjustments that were made to health insurance in the

December quarter of last year and because of the circumstances that surrounded those adjustments, using the proper basis of comparison, namely, that lower index, there in fact has not been a reduction in the real level of wages. I say this leaving aside for the moment- I shall come to it shortly- changes to the level of household disposable income brought about by such matters as family allowances. The Commonwealth does not yield at all from the proposition that there is a direct link between the level of wages and the price of labour. I should be surprised if any correct analysis of the economic circumstances of Australia over the past 5 years could lead any impartial economic assessment to another conclusion.

The fact of the matter is that we are still suffering very heavily from the wages explosion that we had in 1973 and 1974. The honourable member for Gellibrand knows very well that that wages explosion was the principal cause of the chain of events which led to the devaluation of the dollar in November 1976. He knows as well as I do that the uncompetitiveness of Australian industry which was brought about and so very significantly added to by that wages explosion in 1973-74 remains one of the principal employment and economic problems that we have at present. Until such time as it is possible for Australian industry to become more competitive and until it is possible for the produce of Australian manufacturing industry in particular to be more competitively priced on domestic markets we are continually going to see the erosion of market shares to imports and the decline of employment opportunities for Australians in Australia.

The Government believes that it is a matter of simple economic logic that wages and the price of labour are a direct and continuing factor so far as employment levels are concerned. I repeat the disappointment which has been expressed already at the decision made by the Conciliation and Arbitration Commission. After one makes allowances for the discount factor of 0.4 per cent for devaluation, the figure decided upon by the Commission represents something of the order of 80 per cent of full wage indexation. The Government has not departed, from the time it took office in December 1975, from the view it holds very strongly that this country simply cannot afford full wage indexation. Whilst it is always possible to accuse governments of any persuasions of having changed their position on certain matters, the fact remains that there are central bases to the economic policy of this Government which have not changed since we came into office. They have not changed because we believe them to be correct. We believe the experience of the 3 years prior to our coming into office proved them to be correct. One of those propositions is the very strong belief that we cannot in current economic circumstances afford full wage indexation. For that reason we express again our disappointment that 80 per cent of full wage indexation was granted.

We reject the proposition put forward by the honourable member for Gellibrand and others that in fact there has been a reduction in the real level of wages. We reject the proposition of the honourable member for Gellibrand that there is no significant link between the level of wages and the level of unemployment. This link has been acknowledged in times of greater responsibility on the part of the Opposition by colleagues of the honourable member for Gellibrand who now sit with him on the Opposition benches. We believe that this link exists particularly in the small business area. Ask any person who is trying to operate a small business in Australia what a contribution a wage increase will make to his capacity to avoid retrenchments and to re-employ people when added to that wage increase are the imposts of State payroll tax and workers’ compensation insurance. Ask any small manufacturing enterprise around Australia the realities of continued wage increases so far as employment is concerned. I think that if we were to ask those questions we would get a resounding and overwhelming answer to the effect that the continued escalation in the cost of labour is a direct cause of retrenchments and of the inability of Australian industry, particularly in the manufacturing area- be it large or small- to re-employ people.

For that reason the Government does not for one moment yield from its previously stated proposition, a proposition put to the Conciliation and Arbitration Commission, a proposition repeated last week by the Treasurer, with whose remarks I totally agree, that is, that there is a direct link between the cost of labour and the level of unemployment in this country. In the circumstances that I have described and bearing in mind the very strongly argued and held view of the Government that the correct index to use is that which discounts the one only health insurance costs incurred in the December quarter last year, I repeat that it is the view of the Government that, contrary to the view argued by the honourable member for Gellibrand, the real level of wages in this country has not fallen. That remains the view of the Government.

Melbourne Ports

-I repeat the terms of the matter submitted for discussion:

The Arbitration Commission’s decisive rejection of the Fraser Government’s arguments for a wage freeze.

After what the Minister for Special Trade Negotiations (Mr Howard) has said, there does not seem to be much doubt that the Conciliation and Arbitration Commission has rejected the Fraser Government’s arguments. I think we have heard from the other side of the House a kind of defence of the thought that somehow the Conciliation and Arbitration Commission is wrong and the Government is right. There seem to be three grounds on which the Conciliation and Arbitration Commission came to its decision. I shall headline these briefly. The statement by the President of the Commission on the national wage case stated:

First, using the CPI as the measure of changes in the purchasing power of money, on the most recent statistics published by the Statistician the following figures show that there has been some decline in real wages since May and June of last year.

I do not want to repeat the figures, but that statement illustrates that there is a difference of opinion between the Commission, which is supposed to be independent in making its decisions, and the Government as to what the decision ought to have been based on. The statement continued:

Second, on all the evidence and argument before the Commission, it remains highly contentious whether employment recovery would have been greater or less merely if the Commission had awarded smaller wage increases during 1976-1977.

If I may say so, that is a pretty powerful affirmation of a contrary view. The statement continued:

Third, we believe there is a tendency to overstate the power of the Commission to control actual wage movements.

I repeat that that is germane to the situation. The Government is expecting the Conciliation and Arbitration Commission to be a scapegoat for the failures of policy in other areas. The question of whether failures can wholly be attributed to government is something about which I talked last night. I repeat part of what the Treasurer said in his Budget Speech:

The grave imbalance between real wages and productivity resulting from the 1974 wage explosion still remains Australia ‘s major economic problem.

That problem can only be solved by winding down real wages relative to productivity; while it persists, it makes all talk of quickly reducing unemployment merely hollow rhetoric.

The philosophy of the Government is further spelt out in Statement No. 2 in the Budget Papers. I quote only these words:

So long as the price of labour, and particularly certain categories of labour, remains excessive relative to its product, there will continue to be both a tendency for contraction in the overall scale of production and, for any particular level of activity, a heightened tendency to substitute capital for labour. The latter process is now seemingly occurring at an advanced rate.

I ask categorically: Does the Government seriously believe that unemployment in Australia is at its present level because at the moment horsepower is preferred to manpower? The question can be put as bluntly as that. I believe that any government in a Western country in 1977 which holds that principle as a basis of belief is not facing up to what the realities of employment, as we know them in Western communities, are. Are people out of work in Australia today because machines are preferred to men? Surely we have reached a situation in Australia at the moment where capacity is not fully utilised. We have more machines and more horsepower now than are being utilised. At the same time the level of unemployment is larger than this country has ever known.

I think that the Arbitration Commission has done a service. It has suggested that it is not our job to do what the Government through its Treasurer and other members claim. I think that the Commission used a very good phrase when it said that the best thing we can get is something it called consensus between employer and employee groups in respect of what is being done in the wage process. I also want to quote- I do not think it has been quoted previously- what the representative of the Commonwealth said when he addressed the court in answer to a question from the Bench in connection with an argument that was put forward by Mr Hartnett for the Australian Council for Salaried and Professional Associations on the causes of unemployment. No doubt it can be said that the Commonwealth’s counsel was the Government’s paid official and that what he said was not the Government’s view. However, the Commonwealth counsel said:

In essence, Mr Hartnett seems to have been arguing that most of the current unemployment stems from structural imbalances in the labour market. The fact is that a number of factors have contributed to the present unemployment situation. Certainly there are structural imbalances. The main feature is, in our submission, the slackness in economic activity which in turn is linked in limited measure to excessive real wage costs, and we have stressed this in this and previous national wage cases.

I underline the phrases ‘slackness in economic activity’, ‘structural imbalances’ and ‘linked in limited measure to excessive real wage costs’. At the moment the only thing that the Government seems to want to suggest is wrong is that the wage costs, which are only, as it is said, a limited part of the problem, are in fact the dominant factor. That again has been rejected by the court, which rightly says: ‘Does anyone believe that if we had not given 2 per cent it would have made any substantial difference to the vast number of unemployed?’ Does anyone want to go back to the Luddite days when it was considered better to use physical manpower than machine horsepower? To say so would be to fly in the face of historic economic development. Surely what has not been acknowledged here is that the changes are structural and that they are not being grappled with as far as this community is concerned.

The Minister for Special Trade Negotiations said that wages are a cost to employers. Of course wages are a cost to employers, but they are not the only cost to employers. They vary between groups of employers in respect of their relative significance. But surely what has to be underlined is that wages are also the principal source of consumer demand in the community. In essence the President of the Commission seemed to me to be saying that wages had had the effect at higher levels of lowering real take home pay. What is this Government doing by its tax concessions to endeavour to remedy that situation? What is wrong with the court trying to remedy the situation within the terms of its role? As my colleague the honourable member for Gellibrand pointed out, is there not a contradiction in what the Government is saying? I do not accept that the problem is one of capital being utilised instead of manpower. But if that is a thesis, why did the Government introduce the investment allowance to encourage the use of more machines? It seems to me that the Government’s economic policy as far as restoring full employment is concerned is bankrupt and threadbare. The recent decision of the court only underlines and unfortunately highlights this point.


-We have just seen an exercise in academic rhetoric from the honourable member for Melbourne Ports (Mr Crean) and the honourable member for Gellibrand (Mr Willis). They have used all sorts of academic terms to tell us why the Conciliation and Arbitration Commission has adopted the point of view it has or why there has been an increase in the level of unemployment or why there has not been the economic recovery for which the people of Australia have been hoping. I suggest to honourable gentlemen opposite that these things are happening perhaps not because of the rhetoric that they can read in text books but because of factors that are far more practically based. They need to look at the practicalities of a situation that is causing the inherent problems we have in Australia.

We realise that 75 per cent of employment in Australia is in the private field. Private employers can stay in business only while they make money. They can employ people only while they make money. If we take away profits from private employers they will neither stay in business nor employ employees. That is a basic principle. I think that the honourable member for Gellibrand might have difficulty in reading that sort of thinking in some of his text books. Perhaps he should go out into the work place. He should come with me into the factories and talk with employers. He should talk with people at the work face. If he does so he will be convinced about what I am saying. I think the Commission recognised some of these factors but perhaps it was not in a position to spell them out as clearly as we can do in this Parliament. The Commission in its national wage case judgment stated:

The Commission has tried to operate a set of wage principles in a difficult industrial and economic climate, and from the chaos of 1973-74, to bring order and restraint to wage fixing as an essential ingredient for economic recovery.

The honourable member for Gellibrand and the honourable member for Melbourne Ports both failed to get to the nitty gritty part of that judgment. The Commission links wage policy and industrial climate with economic recovery. I think we cannot lose sight of that fact. What else did the Commission say in its judgment, if we follow its trend of thinking? Speaking about the indexation guidelines it said: . . . there has been substantial compliance.

We have heard this from honourable gentlemen opposite. The Commission also stated:

This conclusion has been made the more difficult by certain unions openly stating that they are seeking to destroy the package and taking action in an attempt to bring this about.

Here is the critical factor affecting our economic recovery, not action which is being taken by this Government which is dedicated in its intention to bring about economic recovery and full employment in this country. I am sure that all honourable members on this side and the other side of the House will agree that if we are to achieve these things we must have more than just one side of the industrial arena working towards this situation, that we must have all people in Australia working towards this end. I am convinced in my own mind that there are people in Australia who are purposely subverting economic recovery. They do not want to see a full recovery with full employment because that would not suit their political purposes. The Commission has been trying to bring about a climate of sanity in its wage fixing policy. It is the same climate as the Government has been trying to bring about in economic recovery.

I think in this context we cannot forget the relationship which productivity has to the ability of employers to pay wages and the economic climate which surrounds productivity. To me it is common sense- perhaps I do not read the same text books as do honourable gentlemen oppositethat if employers are to pay higher wages there must be an increase in productivity. If more is being taken out of the cake by increased wages then something has to suffer and that is either the ability of the employer to be able to invest in new projects and thereby create new employment or his ability to pay the number of employees he has already. The Minister for Special Trade Negotiations (Mr Howard) quoted the words of the honourable member for Melbourne Ports. I recall the Leader of the Opposition (Mr E. G. Whitlam), during his time as Prime Minister, saying that one man’s increase in pay meant another man’s job. What has happened to those principles since the Opposition lost the 1 975 election? Have honourable members opposite forgotten those statements? They are still relevant today. What happened to productivity? One of the stalwarts of the Australian Labor Party for a lifetime, one who saw the writing on the wallsome of the younger members opposite have not seen it yet- is Sir John Egerton who recently in an article in the Bulletin had this to say in relation to unions:

They can assist by agreeing to a program of greater productivity. This does not necessarily mean a substantially greater personal effort but improved continuity of work and a realisation that protection of new employment avenues is the most telling contribution unions can make.

Here is a critical factor in economic recovery in this country today. Unions are dedicated for their own political reasons. I stress that I am not referring to all unions but to those militant unions which are led by a minority, by communists. These are people like Mr Carmichael, Mr Halfpenny, Mr Gallagher, Mr Clancy, Mr Elliott and a few others of their ilk who are in critical positions and are dedicated to destroying the economic and social system of this country. They are dedicated to bringing that about by tearing down the economy and replacing the system, which we have known and enjoyed in Australia, with their communist or socialist system. Sir John Egerton in the same article stated: . . . the economy is seriously threatened by disputes which do not show up in the statistics and which in many cases involve no lost time for their originators, though the disputes put other workers out of employment.

This is a fact with which honourable gentlemen on the opposite side cannot disagree. We have had a situation which has threatened employment such as that relating to the Utah Development Co. project in Queensland which could offer employment for at least 2,000 people. That project was threatened by a minority of communist led unionists subverting that program and eliminating job opportunities. Another instance is in Tasmania were eight members of the Transport Workers Union were in dispute with other unionists. Because of that the ports of Burnie, Devonport and Bell Bay have been tied up. At least 3,000 workers will be put out of work if those eight unionists do not go back to work. That is what is causing the economic downturn in this country. Honourable members opposite come in here and piously say that because they have read a text book on economics they can interpret the problems of this country and get the economy going. Good God, honourable members should get out in the factories and the work places where it is all taking place. That is where they will learn what Australia is all about.

Mr Willis:

– Tell us about the railways workers in Hobart.


– The railways workers in Hobart are back at work, my friend. They have learnt common sense. Perhaps the honourable member should go and join them. Let us look at employment. The honourable member for Gellibrand suggested the factor of female employment. Unfortunately, in the debate on employment, this factor has not been brought to light. The honourable member for Gellibrand touched on it but I think he should have gone further and pointed out that in the 10 years from 1966 to 1976 the percentage of married females in total employment has increased from 14 per cent to 21.2 per cent. At present there are 1,287,000 married females in the total work force. That is an increase of 435,000 married women in the work force. Surely these two-income earners in the one family are reducing the employment opportunities for other Australians. I submit to the House that the Commission is doing its darn.dest in a most difficult economic climate which we are facing in Australia. It is combining with the Government in recognising that wages are an inherent part of the economy and that they play a substantial part in economic recovery, but both the Commission and the Government are being subverted in their joint efforts by a minority of militant trade unionists.

Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired. The discussion is now concluded.

page 568



Motion (by Mr Howard) agreed to:

That unless otherwise ordered, Government Business take precedence of General Business on each day of sitting until the Appropriation Bill (No. 1) 1977-78 and the Appropriation Bill (No. 2) 1977-78 have passed all stages in the House.

page 568


Second Reading

Debate resumed from 18 August, on motion by Mr Nixon:

That the Bill be now read a second time.


-The purpose of the Air Navigation Amendment Bill 1977 is to provide parliamentary approval to the ratification of the protocol adopted at the twenty-first session of the assembly of the International Civil Aviation Organisation. The session was held in Montreal, the headquarters of ICAO, and the effect of the protocol was to amend Article 50A so as to increase the membership of the ICAO Council, which is its governing body, from 30 to 33. The basis of the decision was that the membership of ICAO had increased to 140 states and hence an increase of three in the size of the Council was appropriate.

The Opposition does not oppose the Bill nor does it wish to delay the passage of the Bill. ICAO is a substantial and important body in international aviation and operates as a specialised agency of the United Nations. Australia has been a member of ICAO since its inception in 1947 and has played an important role in its deliberations and activities. We were represented on the first management committee of the Council by Mr R. W. Gross and at the world conference in

Montreal in April of this year our delegation was ably led by Mr J. Rowland. Given that there are 140 members of ICAO, it is to Australia’s credit and a recognition of the vital nature of aviation in our transport systems that member states have seen fit repeatedly to re-elect Australia’s representatives to the Council. I do not think that any country has as great a dependence on efficient, safe and reliable air services, both domestic and international, as Australia. The development of those services has enabled our nation to develop as an international trader much more quickly than would have been the case in the absence of aviation services. While the Bill before us is not a controversial one nor is it in dispute, I am disappointed that it has taken three years to get here. In his second reading speech the Minister for Transport (Mr Nixon) noted that at 1 July 1977 only 52 member states of ICAO Had ratified the protocol and that 86 member states needed to ratify it before it would come into force.

I do not wish in the course of the debate to give a long explanation of the purposes and functions of ICAO, but I think it is relevant to mention something of its objectives and the magnitude of its activities. At 31 December 1973, and these are the latest figures I have been able to obtain, ICAO employed 657 persons in the secretariat in Montreal, 132 persons in its regional offices, and 180 in professional categories in the field on UNDP projects, a total work force of over 1,000 persons of 57 different nationalities. Its 1973 budget- and its budget is based on the calendar year rather than on our fiscal year- showed total appropriations of $US 13.0 10m. Contributions from member states totalled $US 10.092m, with the major share of that amount coming from the United States, Soviet Russia, the United Kingdom, France and West Germany. Australia’s share, as appropriated in last year’s Budget, was $240,000 but the actual payment was only $2 15,135. 1 do not know why there is a discrepancy in those amounts, and perhaps the Minister will enlighten us later in the debate. Without impinging on the Budget debate now before the Parliament, I note also that $260,000 has been provided in the current Budget for our contribution this year.

The aims and objectives of ICAO are to develop the principles and techniques of international air transport so as to ensure the safe and orderly growth of international civil aviation throughout the world; to encourage the arts of aircraft design and operation for peaceful purposes; to encourage the development of airways, airports and air navigation facilities for international civil aviation; to meet the needs of the peoples of the world for safe, regular, efficient and economic air transport; to prevent economic waste caused by unreasonable competition; to ensure that the rights of contracting states are fully respected and that every contracting state has a fair opportunity to operate international airlines; to avoid discrimination between contracting states; to promote safety of flight in international air navigation; and to promote generally the development of all aspects of civil aeronautics.

I mentioned a few moments ago that membership of the Council is the subject of this Bill, the Council being the governing body of the organisation. The world conference of ICAO, which as I mentioned was held in April this year, was the first full world conference of the organisation held for 30 years. It is worth noting that the major issues discussed were those of capacity of international airlines, the development of nonscheduled air services and, in particular, charter air services. I bring that matter before the Parliament because it is the subject of much debate in the Australian community at the moment. Whilst recently I welcomed the decision of the Minister to conduct a review of Australian domestic air transport services, I did express my disappointment that that review was not being carried out publicly.

It seems to me that in Australia the aviation industry is in many ways a private club. It is a club of industry and government, but the industry depends upon traffic and upon the carriage of persons and the carriage of freight. When it is recalled that in the financial year just ended 1,023,000 Australians travelled overseas, most of them by air, it is clear that there ought to be a vehicle through which they can express their views on the types of transport services provided, the frequency of air schedules, the fares, and the quality of services provided. Until such time as government and the aviation industry in this country open up these sacred chambers of discussion to the community, the community is not going to be best served.

We hear many complaints from individuals who use the airline services. We hear complaints from organisations and from businesses on the cost of air fares. As a Parliament we do not provide any means by which the community can express those views or justify the views that they put. That is why I mentioned a few weeks ago, when the Minister set up the review of Australian air transport services, that it would be inadequate unless the inquiry was public and unless there was a clear opportunity for people to go along and listen to the submissions and be able publicly to put their own submissions about the kind of services they wanted, the quality of the services, what they were prepared to pay, and what people in the industry thought would be the best type of service to meet Australia’s needs, both domestically and internationally. I think it would be to the advantage of Australia if the scope of the inquiry was widened to include international air services. The time is long past when the average Australian thought of air services simply as services within Australia. All of the major international airlines which operate out of Australia seek to increase their traffic by advertising and by promotion campaigns. Sections of the tourist industry seek to encourage Australians to travel abroad, but nobody bothers to ask people what kind of services they want, what kind of holiday package they would like to have. All of that is heightened by the recent visit to Australia of Mr Laker and his proposal to the Government and to the Select Committee on Tourism to introduce charter fares. I will return to that a little later. Also involved in that same scene is the recent decision by President Carter to authorise Continental Airlines to operate a Pacific service to Australia when it is claimed that such an act would provide a significant overcapacity on that route. It will also be recalled that it is not so long ago that Qantas withdrew from certain routes in the Pacific because of overcapacity and that a little earlier American Airlines had withdrawn from the same service because of over-capacity.

Let me return to the people who are really important, the consumers of air services, the people who want to travel overseas. Mr Laker’s proposals, on the face of them, must appear very attractive to those Australians who would like to go abroad. They must appear more attractive to those three million Australians who were not born in Australia, those who have very strong and continuing links with their families overseas or whose families overseas would like to visit relatives here. I think that this matter is one of great importance to Australians and should not be dealt with just by industry and by government. The Opposition would like to see a vehicle created whereby the people, the consumers themselves, would have an input into aviation industry decisions, particularly on capacity and on fare structures. I said earlier in a statement on behalf of the Australian Labor Party that one of our objectives in aviation would be to establish consumer councils so that such a mechanism could be created and government would be aware of who wanted to travel and how much they could afford to pay. Those desires could then be taken into account when trying to assess the capacity of our own international flag carrier, Qantas, and when trying to fit a low cost-type air travel into scheduled air services. Mr Laker’s proposals have been very well promoted by the Press and I must congratulate him and his organisation on their capacity and on the quality of their presentation. I do not know of any other airline operating into Australia-

Mr Nixon:

– Hear, hear!


-The Minister says ‘hear, hear! ‘ and I agree with him on that point. Credit should be given where credit is due. Mr Laker and his organisation have presented a better case over a longer period than any other international airline wishing to fly in and out of Australia. I must confess that the Opposition is a little intrigued about how Mr Laker can give an assurance that he can bring in and take out full aeroplanes. The suggestion is that he would not intrude on traffic out of Australia but would bring additional traffic into Australia. We would all like to see that happen, and particularly so the Australian tourist industry and the other airlines operating out of Australia because, if that were the situation, travellers being what they are, from time to time there would be a flow-over from those charter flights to some of the scheduled services or other flights for the return journey when the travellers who have arrived in Australia wish for one reason or another to change their schedules.

I come back to the central point. What do the people of Australia want, what are they prepared to pay and are they prepared to travel, as Sir Lenox Hewitt puts it, with six toilets instead of 14, with three 9 hour travelling stints, pay a lower price and land at an airport 3 hours journey away from London on the trip to the United Kingdom or would they prefer to pay a higher price and have a service more readily available when they want it so that they can pick and choose when they want to go. These are some of the factors that need to be taken into consideration. However, there is another side to it. I find here a conflict which is difficult to resolve in the attitude of sectors of the Australian tourist industry. On the one hand there is a sector of the tourist industry which put to the previous Government and is putting to this Government the suggestion that because of what it calls the depressed state of internal tourism in Australiathat is, Australians travelling within Australiathe Government, which means the taxpayer, should in some way subsidise capital investment and renovation programs of the tourist industry and the establishment of facilities in other areas to cater for tourists. That is one side of the equation.

On the other side of the equation is another sector of the tourist industry which supports Mr Laker’s proposals for low price air fares to and from Australia through charter or non-scheduled services. On the information available to me at this stage- and I would be interested to hear the Minister’s comments because I think this is important to the Australian community-I do not believe that, if we are to drop air fares substantially the incoming traffic that Mr Laker assures us there will be will more than offset an increase in outgoing traffic. It could well be that the Australian tourist industry as a whole in terms of both its internal and its external operations, could be the loser. So although the tourist industry is saying that it needs Government assistance to improve its facilities, part of the industry is saying that we ought to make fares cheaper so that more people can travel overseas. Over the last 2 years there has been continual criticism from sectors of the Australian tourist industry that its main competition has come from overseas package tours, particularly those to Asia. I suggest not by way of criticism but in a sincere way to the tourist industry that it ought to determine its priorities before it approaches the Parliament, so that parliamentarians will have a clear understanding of what the tourist industry wants.

In recent weeks Mr Laker appeared before the House of Representatives Select Committee on Tourism and some members of the Committee were very impressed with the proposals he put forward. But I must come back to his original claim that he can give an assurance to bring full aeroplanes to Australia and take full aeroplanes out of Australia. In other words, he will not be decreasing traffic presently available out of Australia but will increase the tourist potential within Australia by bringing in more persons from overseas. Before Parliament makes a decision on this matter much more information needs to be brought out into the open not by way of claim but in the form of solid evidence.

That brings me back to my earlier comment in respect of the 3 million Australians who were not born here and who have very strong ties overseas. As a nation we have a responsibility to those people to facilitate travel to their relatives. In many cases these people left Europe for Australia 15 to 25 years ago and their parents and grandparents in Europe have now reached a considerable age. It is a matter of great emotional significance to them that they be able to travel to Europe to see those relatives in their declining years. For that reason, I hope that the Minister can develop some way to include in the present review of domestic air transport services a review of international air transport services, so that we can look at the whole picture. We all understand the on-carriage which occurs in Australia as a result of airlines coming into the country. People who come into Australia do not necessarily wish to stay at the point at which they arrive. They might arrive at Brisbane, Melbourne or Sydney but the odds are that they will want to travel on to some other point within Australia. So in that sense they can add to the potential of domestic air traffic. We have a responsibility to those people to try to do something to broaden the discussion and to base the discussion on facts rather than on the claims of those who wish to market the services.

I do not want to labour the Parliament by reading into Hansard the agenda items or recommendations that were adopted by the International Civil Aviation Organisation conference but I simply advert to the conference in this way. Unfair trade practices or, to use a better term, malpractices in ticket selling and the under the counter deals with some airlines that the Minister has referred to in this Parliament were raised. I mention that aspect to show that it is not simply a domestic matter in Australia; it is a matter concerning civil aviation throughout the world. If people simply wish to take the short term advantage of getting a cut price rate for travel to some place, that is all very well, but everyone expects whether they are travelling overseas or within Australia that there will be an efficient, safe and reliable air service which will operate with reasonable frequency to take them wherever they want to go. Cut prices or bargain basement rates at certain times are not compatible with a reliable quality air service. Somewhere there has to be a reconciliation of those two objectives. I hope that the Minister will be able to add something to my comments. The Opposition does not wish to delay the Bill. We do not oppose it.


-The honourable member for Shortland (Mr Morris) was right when he said that this was not a contentious Bill. I wish to spend a few moments discussing some of the implications of this Bill. It is interesting that this is the first time this matter has come before the Parliament. Usually it has been handled by way of regulation but now it is being written into our legislation. I thoroughly agree with the honourable member for Shortland that many of the implications of the decision of the International Civil Aviation Organisation are vitally important to Australia. Australia has been recognised as one of the leaders in world civil aviation organisations for more than 30 years. It is a great tribute to us that, except for 3 years, we have played a very vital part in ICAO’s planning in the area of safety, aircraft design, airport development and airport features.

I was interested to hear the comments about the movement of the International Civil Aviation Organisation into the field of economic planning for international civil aviation and some of the points brought up by the honourable member for Shortland. I agree with many of the points that he raised. I think that we in Australia are sitting on a bubble in the area of international aviation which is about to burst. I refer to situations that are developing at the moment such as the collapse of organisations like AUS student travel and the Four Seasons Travel organisation. I understand that there is a possibility that other organisations could be in financial difficulties at the moment. Perhaps it is time we started looking at the full ramifications of some of the practices that are going on in international civil aviation organisations.

I am sure that ICAO would be looking at one particular practice. I think that many of the scheduled International Air Transport Association’s airlines have fixed percentage rates of commissions for agents but unfortunately quite a number of undercover dealings are going on with certain travel groups. We hear some fairly frightening stories of some of the activities that are happening in Australia at the moment. Some organisations are going to international airlines and virtually blackmailing them into commissions of 15 per cent, 20 per cent and 25 per cent. These overriding commissions have to be discounted through packages back to their clients. Many of the travel organisations to which I speak from time to time are desperately worried about what is going on in this regard. Certain travel organisations are attached to credit unions and trade unions and, quite admirably, they are providing overseas travel at a much cheaper rate. But it gets a little frightening when you find that some of these tour packages are sold at a cheaper rate through these organisations than through the original organisers.

A number of such cases were cited to me in Brisbane the other day. Someone had gone into a particular travel agency and ordered a booking on a tour. Some hours later there was a ring from another travel agency saying that it would like to book this person on that particular tour. The original agency said that it believed that that person already had been booked. The person wishing to make the tour had come in and checked on the details of the tour then had gone to the discounting organisation and found that it would be cheaper to buy the tour through it than through the original agency. The commission was picked up at the discounting organisation. The 10 per cent commission involved for the original booking agency was lost to another party which was getting an overriding commission from the international airline concerned.

I have written to the Minister for Transport (Mr Nixon) on this matter on a couple of occasions and I understand that investigations are going on at the moment. I am sure the situation will be resolved. That is the type of thing which is developing in Australia now and it is the kind of thing that we have seen happening in Britain and a number of other European countries in years past. It is something that I hope will be cleaned out soon for the future of Australia’s travel industry.

I was interested in what the honourable member for Shortland said about the provision of non-scheduled services into this country and the fact that ICAO had looked at charter organisations around the world. His comments about the Laker organisation were interesting. I am a member of the House of Representatives Select Committee on Tourism and it was an interesting experience to say the least when Mr Laker appeared before that Committee. His background is interesting. He has been in that type of charter operation for about 30 years. He is one of the few people who have been in that type of operation and have survived. He has opened up a number of new markets overseas. If honourable members read the transcript of his evidence they will see that he admitted that initially, in the first 12 months of his operation, probably it would be found that he would be taking more Australians overseas than he would be bringing visitors here. He said that this had happened in the other countries in which he operated. He cited as an example the situation that operates now between England and the United States. He now carries more American passengers from America into the United Kingdom than he does the other way round. I think that to a very great degree that was the point he was pushing when he appeared before the Committee. This would develop ultimately and perhaps we would see a new market created, especially in the visiting friends and relatives area which the honourable member for Shortland mentioned. This is a most important thing. We have some very large ethnic groups in our community and naturally they want to visit their homelands. But most importantly we want them to come back here and we want them to bring visitors here as well, people who will spend their money in our country in order to further develop that side of the tourist industry.

Mr Crean:

– Australia is still one of the dearest places to come to unfortunately.


– Australia is one of the dearest places to come to but through organisations such as that operated by Mr Laker perhaps it can be opened up a little bit. When a tourist arrives here it certainly is terribly expensive for him to get around. Australia’s domestic air fares are terribly high. We do not have any pro-ration system of our air fares between the domestic carriers and the international carriers. We should be doing some fairly serious study in this area to see whether we can resolve that situation.

When speaking to the Minister earlier today I was very pleased to learn that there has been some genuine interest in bringing the one-stop charter operators back into Australia. I understand that there are some American carriers who are interested in coming into Australia and increasing the tourist flow in that way. If the Australian tourist industry is to grow up it has a very real obligation to look at this aspect. The only way in which we are going to make any appreciable growth in the tourist industry is through bulk traffic. We are not looking at having one or two visitors coming here. We have to have them here in their hundreds. It is apparent from looking at trends overseas now that the Germans are travelling in bulk, if I could put it that way. Three or four jumbo-jet loads a week are going into ports such as Bangkok. I understand that soon they will be going to Noumea. We see the Japanese, in their hundreds, going around the world in these special groups. Australia is missing out on this market and it is one that we should be encouraging if we are to get any real growth in the tourist industry.

The International Civil Aviation Organisation has undergone some very real stresses and problems in years past. ICAO has recognised this and has worked towards bringing some sort of stabilisation and rationalisation into international air traffic. This is most important. It is very important that Australia makes its contribution even though it may only amount to $260,000 because I believe that we can get great benefit from the work being done, especially in the field of charter traffic and non-scheduled traffic into this country. If we are to look towards this type of market we have to do some homework here. I was interested to hear the honourable member for Shortland mention that some tourists who come here might wish to stop over in places like Brisbane before moving off overseas.

Mr Morris:

– Why not?


– That raises some particularly depressing problems for honourable members from Queensland. An organisation such as the Laker organisation clearly could not operate into the Brisbane Airport with the present limitations on the runways there. It is not for me to bring up in this House once again the situation at the Brisbane Airport and the very real problems that we face there, nor to stress the implementation of the QC plan. But if we are to bring bulk tourism into Queensland- obviously the Laker organisation must be interested in going into a port like that- some decision has to be made soon about Brisbane Airport.

ICAO is a part of the United Nations organisation and Australia has been very deeply involved with it for 30 years. Australia is playing a very important role in contributing to the future of civil aviation. It is an organisation that Australia, because of its very nature, must support wholeheartedly, and therefore I support this Bill.

Wide Bay

-I shall be quite brief in my remarks in support of this Bill to amend the Air Navigation Act. It is simple in essence and I shall not exploit the latitude extended to the House for a free ranging debate on matters that are properly the concern of the Government and within the purview of the International Civil Aviation Organisation. Quite simply this Bill calls for the ratification by the Australian Government of the protocol of ICAO to increase the council membership from 30 to 33. This is not at all unreasonable as the assembly of the International Civil Aviation Organisation decided in 1974 that because ICAO had grown from 84 states in 1961 to 140 states, a proportionate increase was reasonable within the parameters of the functions of that Assembly.

It is proper that Australia has brought its expertise to ICAO and that it maintains a continuing interest in such a prestigious organisation. It is an instrumentality of the United Nations Organisation. Any organisation which has a responsibility to contracting states which carry in excess of 600 million passengers per annum must be of consequence. There is an awful lot of responsibility attaching to that organisation to ensure that international travellers can move about with a reasonable assurance as to their security, well being and comfort. Incidents such as the tragic collision of Jumbo aircraft on the ground at Tenerife must command the attention of ICAO. It must ensure that as far as is humanly possible incidents of that nature are avoided. 1ACO, of course, has wide-ranging responsibilities in relation to international travel. Specifically it covers technical problems, supersonic operations, all-weather operations, aircraft accident prevention, as I have just mentioned, the application of space techniques relating to aviation, visual aids, the air-worthiness of aircraft, automated data interchange systems, aircraft infrastructure compatibility, the impact of civil aviation development on the human environment and aviation security. That is certainly an expansive field. It requires the best talents that Australia and the other member nations can bring to ICAO. As the honourable member for Shortland (Mr Morris) and subsequent speakers pointed out, this is a non-contentious Bill. To facilitate its passage through the House I terminate my remarks by recommending that the Bill be supported.

Minister for Transport · Gippsland · LP

– in reply- I thank those honourable members who have contributed to the debate. There are one or two points arising out of the debate that I want to comment on. I refer firstly to the position concerning Laker Airways. I cannot help but agree with those who have mentioned that Mr Freddie Laker certainly has a great way of advertising Laker Airways. I cannot recall anybody receiving as much publicity before his arrival in Australia and then after his arrival as Freddie Laker received. An exception might be -

Mr James:

– Elvis Presley.


– Elvis Presley has not been here. I was thinking of those fellows who had long hair. I cannot think of their names.

Mr Morris:

– The Beatles.


-Yes, the Beatles. I think the amount of publicity Freddie Laker received rivalled the amount of publicity given to the Beatles. The fact remains that Freddie Laker still does not have an application before the Department of Transport for his airline to come to Australia. That is not to say that he will not be putting in an application. He has certainly had some in-depth discussions with the Department and with me on the matter but at this point in time he has not yet put in an application. One would assume from the publicity he received prior to and after his arrival that he was certainly testing the water insofar as potential Australian traffic to the United Kingdom is concerned. I am not averse to looking closely at such a proposition if and when it comes forward. Indeed, for the sake of air travel in this country, I hope that he does put forward a proposition. Let us then see how it measures up.

I should point out to the House that there are other means of travel that are not much different in price from what Mr Laker might be offering. It is true to say that instead of flying for 26 hours in an aircraft that has six toilets people can fly for the same period for a little more money in an aircraft that has 14 toilets. The comfort that might be enjoyed by having that number of toilets might be more important to them than the $100 that they can save on an air fare. But all those things are hypothetical and are still speculativeexcept the number of toilets. We will have to wait and see what comes out of the proposition.

The honourable member for Shortland (Mr Morris) raised the subject of nights to Australia by Continental Airlines. It is a fact that Continental has been granted by President Carter the right to fly to Australia. That is completely proper under the bilateral arrangements that exist between Australia and the United States of America. When the original bilateral arrangements were signed it was agreed that Qantas Airways would be the Australian carrier. In order to secure the right to fly to San Francisco and across America on its way to Europe and thus have the ever-loving round the world trip that everyone was seeking Qantas gave a second carrier the opportunity to fly from America to Australia.

At this point in time there is nothing before me in respect of Continental’s application other than the knowledge that it is going to come to Australia. I had the opportunity to meet the President of Continental, Mr Robert Six, when I was at the Paris Air Show. We had a very enjoyable conversation. He is an aggressive salesman. Should he and his airline come to Australia I am sure that they would put up a great battle for their share of the market. This matter does raise in my mind the very serious question of overcapacity on the route. Pan American World Airways, Air New Zealand, Canadian Pacific Airlines and Qantas are already operating on that route. In my view the introduction of another airline is not going to add much to the profitability of all concerned. We do have a right under the bilateral arrangements to raise the question of total capacity on the route. We will be talking to the American authorities about that before any final decisions are taken on the number of flights that Continental may make into this country.

The subject of overriding commissions for travel agents was raised. It is the practice of some travel clubs and associations to subsidise travel from funds that they have raised for their membership by other means. That situation does apply and it is not in breach of the air navigation regulations. This subject has arisen for discussion again as a result of the crash by AUS Travel. I am not alleging that the payment of overriding commission was the cause of that crash which at present is the subject of an inquiry. Therefore it would be improper of me to speculate on what caused the crash. Because the overriding commissions have a part to play in the difficulties into which travel agencies have been getting, after discussions with the Crown Law officers my Department will be writing to travel clubs and associations seeking to find out the basis on which they might pay to travellers out of their funds a subsidy above and beyond the normal commission. We will be doing this simply as a means of protecting the public. I think it is proper that that should be on record.

Finally, I visited the International Civil Aviation Organisation in June on my way back from Europe and I was most impressed with the very efficient way in which it carries out its technical responsibilities. The honourable member for Wide Bay (Mr Millar) read out a list of its responsibilities. It operates in a highly technical area and a highly responsible area. The existence of ICAO certainly leads to there being safer and better aviation throughout the world.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

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

page 574


Ministerial Statement

Minister for National Resources and Minister for Overseas Trade · Richmond · NCP/NP

– by leave- The Commonwealth Government has now completed its consideration of the proposals submitted by the North West Shelf Joint Venture companies last year in which they outlined the plans for development of the large gas reserves they earlier discovered in the Rankin Trend area on the North West Shelf. It is also understood that the Western Australian Government has now reached agreement in principle with the Joint Venture in regard to the supply of gas to the Western Australian market both in respect of quantity and price. The agreement in this respect is now awaiting ratification by the Joint Venture companies. The parties in the Joint Venture are: Woodside Oil Ltd, Woodside Petroleum Development Pty Ltd, MidEastern Oil Ltd, BP Petroleum Development (Australia) Pty Ltd, and California Asiatic Oil Company. BHP and Shell Development Australia Ltd each hold a 50 per cent interest in North West Shelf Development Pty Ltd which has a controlling interest in the Joint Venture through its holdings in Woodside Petroleum Ltd. The companies have already expended about $175m on petroleum exploration in the North West Shelf area and in this context the Rankin discoveries were made in 1972. It will be remembered that the companies were keen to proceed with development in 1974 but were prevented from doing so by the policies of the previous Government.

Since returning to office our Government has co-operated closely with the Joint Venture and the Western Australian Government and we are now at the stage where the Joint Venture should soon be able to decide to move on to the next and very important stage of project definition. This will involve further collection of data, including appraisal drilling, seabed analysis, soil and site surveys and firming-up design, costing, revenue and timing forecasts. At the same time, negotiations would be set in train in respect of the long term contracts for the sale of liquefied natural gas, LNG, to overseas markets. During this stage all the environmental aspects of the proposed development will be taken fully into account through the environment protection administrative procedures to ensure that the Commonwealth environmental legislation is complied with. An environmental impact statement will be required in time to enable it to be adequately examined prior to the granting of any production licence.

When the project definition study has been completed consideration will then be given by the Joint Venture to moving to the final substantive development stage. It will involve the construction of at least two offshore platforms, 120 kilometres of pipeline to the shore, processing and LNG plants and a number of specialised LNG tankers. On current estimates the costs involved are expected to be in the vicinity of $2,500 million at current prices and it is anticipated that the gas will come on stream in 1 984. Against this background it is not surprising that with the long lead time involved the Joint Venture sought the clearest possible assurances from the Commonwealth and State governments as to the conditions that will apply to the project and its end products. These were aspects that the Joint Venture considered had a significant bearing on the viability of the proposed project.

As indicated on numerous occasions previously, the Commonwealth Government attaches the highest priority to this project. It will be the most costly project ever undertaken in Australia. As well as supplying much needed gas for energy starved Western Australia, obviously great economic benefits will flow to Western Australia and to Australia as a whole. Most importantly, it would be invaluable in providing further incentive and encouragement to the petroleum exploration industry. Unless it is apparent to exploration companies that any gas discoveries can be developed within a reasonable time, exploration, especially for much needed oil, could be seriously retarded. But in addition, I believe a decision by the Joint Venture to press ahead with the project definition study and then, we all hope, to full scale development, will be a demonstration of confidence that will give a lead to the nation as a whole.

The principal areas of Commonwealth responsibility involved in the consideration of the project to date have been related primarily to the export of LNG and to a number of taxation aspects. It is quite apparent that without a reasonable level of exports the development of the project would not be viable as the companies would not be able to generate an early cash flow to cover the investment involved. The gas would then remain in the ground, Western Australia would be denied the much needed energy source, significant export earnings would be lost and much needed off-shore exploration discouraged. It is for these reasons that the Government has agreed that approval should be given for the export of 53 per cent of the currently estimated reserves in the three fields, North Rankin, Goodwyn and Angel, over a 20-year period. The remaining reserves are expected to be adequate to meet the requirements of Western Australia through at least until the end of the century. Exports of condensate will also be permitted subject to satisfactory evidence that every reasonable effort has been made to market the product in Australia.

The views of the National Energy Advisory Committee will be of interest to honourable members in this regard. As will be remembered, this high level Committee was set up earlier this year to provide advice to the Government on energy matters. The Committee recently considered the various options that may be open in regard to the development of the North West Shelf gas resources and the Chairman has now advised me by letter that on balance it would be appropriate for the Government to approve the present proposals for the development of the North West Shelf gas which call for export of gas from the shelf area. The Committee expressed the view that to assist, the export of reasonable quantities of gas should be permitted. At the same time the Committee sees the need to keep under review the extent to which Australia’s domestic requirements may be met from known reserves or from discoveries yet to be made.

In regard to taxation matters the Government has decided to introduce legislation during the current sittings of Parliament to amend the income tax law in three important respects. By arrangement with the Treasurer (Mr Lynch) I now outline the details of these proposals. First, it is proposed to extend by 2 years the period within which capital expenditure on the acquisition of certain plant and equipment will be able to qualify for an investment allowance deduction of 20 per cent. Where plant ordered before 30 June 1978 is first used or installed after 30 June 1979, or where plant is ordered, et cetera, after 30 June 1 978 and no later than 30 June 1 983, the investment allowance is available under the present law at the rate of 20 per cent of the capital cost of acquisition, provided the plant is used or installed ready for use and held in reserve by 30 June 1984. Under the proposal, eligible plant or equipment ordered by 30 June 1985, or which the taxpayer concerned commences to construct by that date, will be able to qualify for an investment allowance of 20 per cent of the capital cost, provided that the plant is brought into use or installed ready for use no later than 30 June 1986.

In deciding to extend the period of the concession by 2 years, the Government wishes to ensure that, in the long range forward planning of large development projects, business enterprises will be influenced by the availability of the incentive provided by the special income tax deduction. The very heavy capital expenditures to be made by the enterprises involved in developing the North West Shelf gas fields, in particular, can now be undertaken on the basis that, for plant and equipment to be acquired under contracts let by 30 June 1 985 and brought on stream no later than 30 June 1986, an investment allowance of 20 per cent will be available in addition to the ordinary deductions which are available under the rapid write-off provisions applicable to petroleum mining companies or over the estimated effective life of the plant.

The second proposal is to amend the petroleum mining provisions of the income tax law to include within the range of allowable capital expenditures of a petroleum mining company the cost of a liquefaction plant for use in processing natural gas. As a result of this decision, the cost of such plant will qualify for accelerated deductions over the life of the relevant field or on a diminishing value basis at the rate of 20 per cent per annum, whichever basis gives the greater deduction. The decision will mean also that the cost of a liquefaction plant will come within the scope of the third proposal that I will now mention.

Finally, it is proposed to introduce a new income tax concession to encourage exploration for, and development of, off-shore petroleum deposits. The new concession will be available in respect of moneys subscribed after today as paid-up capital to companies holding valid licences or permits under the Petroleum (Submerged Lands) Act, or registered interests in licences of permits under the Act. These companies will be able to lodge declarations with the Commissioner of Taxation foregoing the right to deductions to which they would become entitled under Division 10AA of the income tax law for capital expenditure incurred after today on offshore exploration for petroleum or on the development of petroleum fields.

Capital expenditure on on-shore facilities that are directly related to off-shore exploration and development operations, to the extent that it qualifies under division 10AA, will also be within the scope of the declarations. However, the cost of acquiring petroleum mining or exploration rights or information will not qualify under the scheme. By lodging a declaration, a company will be able to confer an income tax rebate on both corporate and non-corporate shareholders in respect of their share capital subscribed that is spent on eligible outgoings. The tax rebate will be allowable in the subscriber’s income tax assessment for the year of income in which the moneys are subscribed and will be an amount of 30 cents for each dollar subscribed. Consistently with the normal taxation treatment of rebates, the new rebate is not to give rise to a refund of tax or to any form of carry-forward credit.

The concession will be available where moneys are subscribed directly to a petroleum exploration or mining company or to a company interposed between the shareholder and the operating company provided there is an appropriate connection between the interposed company and the operating company. There will be a number of safeguards to protect the new concession from abuse. Broadly, the law will provide that declared moneys must be spent on eligible outgoings within the two income years following the year in which the moneys are subscribed. Subscriptions not spent immediately on receipt must be held by the operating companies on readily realisable deposits such as with a bank or in the short term money market.

Declarations will be permitted only in respect of all, or a specified proportion, of a particular capital subscription. Where declared moneys are spent on ineligible outgoings or are not spent within the two years following the year of subscription, the tax rebate to the subscriber will be withdrawn. Other safeguards along the lines of earlier safeguards associated with the former scheme of shareholder deductions will also apply.

A number of other decisions have also been taken by the Government which have specific or general implications for the North West Shelf development. In regard to foreign investment the Government has indicated to the Joint Venture that it has no objections on foreign investment policy grounds to their proposals for the development of the Rankin Trend area. In regard to overseas borrowing controls the Government has decided that it is prepared to provide, in respect of major projects, longer term assurances of freedom from future adverse changes to the controls on overseas borrowings which might prejudice forward plans for funding subject to the following conditions: The assurances would apply only to projects involving estimated capital expenditure of $500m or more; applicants would be required to demonstrate that there is a very high probability of the project being commenced within three years; and no assurances would be given in respect of overseas borrowings with a repayment term of less than four years.

Assurances provided by the Government would be on condition that the applicant reached satisfactory arrangements with the Reserve Bank in respect of the timing of the drawdowns of the overseas borrowings. Once these conditions had been met, the Government would provide an assurance for the North West Shelf Joint Venture and others that met the conditions. The Joint Venture has had preliminary discussions with Australian Customs in regard to the more specific details of the development details. The Joint Venture has been informed that the existing by-law procedures will apply in regard to any imports for the project. The announcement in the Budget Speech last week that the crude oil levy will not apply to condensate marketed separately from the crude oil stream will also be relevant to the North West Shelf project.

Mr Jacobi:

– What does that mean?


– Yes, it applies to Redcliffas well.

Mr Jacobi:

– I just asked what it meant.


– I thought you were referring to South Australia.

Mr Jacobi:

– Oh, no.


– While keen to assist the North West Shelf project in getting off the ground, the Government has nonetheless been very mindful of the possible shortfall of gas supplies in the eastern States and South Australia by the end of the century. This shortfall has been estimated at between three and four trillion cubic feet. There have been suggestions that the North West Shelf gas should be held in reserve for this eventuality; or alternatively a transcontinental pipeline should be constructed with the LNG plant located on the east coast rather than in the north-west. Neither of these proposals is acceptable to the Joint Venture or the Commonwealth and State governments for a number of reasons, some of which have been explained above. In addition, the economics of a transcontinental pipeline are open to some questioning and a detailed examination of such a proposal at this late stage would almost certainly lead to a further serious delay over the above the two years that was lost because of the policy of the previous Commonwealth Government. The end result could well be that the project may not proceed at all.

It is almost certain that the further gas resources required by the eastern States and South Australia will be discovered or proved up. There is optimism in respect of the Cooper and other Basins in South Australia and central Australia especially as exploration becomes more economically attractive. Further gas discoveries are also anticipated offshore, especially on the North West Shelf. In considering proposals for the development of other gas fields in the future the Commonwealth Government will continue to give proper weight to domestic requirements. The Government has decided that it will continue its policy of allowing exports of reasonable quantities of gas but exports will be permitted only after the Government is satisfied that domestic requirements of gas and gas liquids, including petrochemical feedstocks, have been considered. Any proposals to meet domestic requirements would, of course, have to be realistic and economically justified.

The whole question of the future domestic requirements of gas in Australia has, and will continue to be examined in such important fora as the Australian Minerals and Energy Council and the National Energy Advisory Committee. It is the intention of the Commonwealth to continue to co-operate with the States to ensure that the necessary action is taken to meet the future domestic requirements, especially in the eastern States and South Australia. The Commonwealth believes that within the context of its responsibilities it has provided a satisfactory climate for the Joint Venture to now review its position. I confidently expect it will make an early decision to proceed to the next stage and look forward to the significant impact this will have in so many ways throughout Australia. I present the following paper:

Development of the North West Shelf Gas FieldsMinisterial Statement, 24 August 1977.

Motion (by Mr Staley) proposed:

That the House take note of the paper.


-This statement is long overdue. It is the first official indication from the Government that it supports the concept of large scale natural gas exports. The statement outlines commitments which would cover investments in the North West Shelf extending nearly until the end of the century. Because of this factor the attitude of the Opposition as an alternative government is critical to the future of the investment. The statement details a number of important aspects relating to the project, the prime one being that the Government would permit the export of 53 per cent of the currently estimated reserves of gas in the three fields, North Rankin, Goodwyn and Angel, over a 20-year period. The attitude of the Opposition, as stated in its latest national platform, is that it supports the development of the North West Shelf gas field. It does so in these terms:

Labor will allow exports of natural gas from the North West Shelf sufficient to justify development expenditure but not more than should be allowed in the national interest, having regard to Australia’s domestic demand for hydrocarbons.

The Opposition is of the view that the development of this field now is important for Australia in a number of respects. Firstly, the infrastructure established by an export market can supplement Western Australia’s vital energy needs with natural gas in the coming decades. Secondly, the project will demonstrate that Australia is capable of developing a field of this size. This should serve to stimulate further confidence and investment in serious off-shore exploration and development of hydrocarbons.

Turning to the specific proposals announced by the Minister for National Resources and Minister for Overseas Trade (Mr Anthony), the Opposition finds there are a number of areas that need to be clarified and amplified. While the Opposition agrees with the export of natural gas it is vitally concerned to see that adequate reserves are maintained for Australia’s future domestic requirements. It firmly believes that natural gas will provide an energy foundation block for Australia’s industrial development between now and the end of the century. The Minister indicated in his statement that the estimated shortfall of gas supplies for the eastern States and South Australia by the end of the century is of the order of 3 to 4 trillion cubic feet, but what he has failed to tell the Parliament is precisely how the Government arrived at an export figure of 53 per cent of current estimated reserves which, of course, is about 6V2 trillion feet. It is not sufficient for the Minister to declare that 53 per cent of reserves is the minimum export level needed to justify the investment when in fact it could be less. The Minister must provide the Parliament with adequate documentation to back up the Government’s assessment. It is of only marginal value to refer to the opinion of the National Energy Advisory Committee without providing the correspondence from the Chairman and the Committee’s calculations. Bald statements are not enough. Because this statement by the Government is only the beginning of a long feasibility study by the Joint Venturers there is adequate time available to satisfy the Parliament that the Government’s permissible export level is correct.

The Minister indicated in his speech that exports of condensate will also be permitted subject to satisfactory evidence that every reasonable effort has been made to market the product in Australia. Before the Government blithely puts this resource in the hands of the consortium for export it must determine what role condensate should play in Australia’s total energy picture. Certainly a Labor government would. Condensate should not be exploited by the North West Shelf producers in the same way that liquid petroleum gas has been exploited by the Bass Strait producers- a gift that is being sold at world market prices without the Government requiring that a market for domestic consumption be developed, especially in respect of transport. The Opposition notes that the project will be subject to an environmental impact statement, but it needs to be reassured that such an environmental inquiry is conducted by the Commonwealth perhaps with State participationbut certainly not left solely to the State of Western Australia.

I turn now to taxation. It has always been implied by the Joint Venturers and the Government that this project would be only marginally profitable and would need all the assistance it could get to become viable. While the Opposition accepts this assumption prima facie it is in no position now to establish that this is so. If in the future the performance of the investment exceeds expectations and is such that returns exceed reasonable profit levels, the investment may breach the threshhold levels fixed under a secondary profits related resource tax that a future Labor government would introduce. The consortium should ponder this possibility. It is notable that the Minister makes no reference to the Government’s proposed resource tax on crude oil having any application to the North West Shelf project.

On the specific taxation measures outlined by the Government, the Opposition accepts that the petroleum mining provisions of the income tax laws should be amended to permit a range of allowable capital expenditures such as the cost of a liquefaction plant to be written off at petroleum mining depreciation rates. Whilst there can be a technical argument about whether the liquefaction plant is fundamentally a manufacturing plant or part of the mining process, it is clear that accelerated depreciation allowance on this item of equipment at mining rates will facilitate a more substantial cash flow to meet debt servicing requirements.

The Minister also indicated in his speech that the Government proposes to extend by two years the period within which capital expenditure on the acquisition of certain plant and equipment will be able to qualify for an investment allowance deduction of 20 per cent. He then went on to say that in deciding to extend the period of this concession the Government wished to ensure that in the future large development projects will be influenced by the availability of the incentive provided by the special income tax deduction. This statement is ambiguous. The Opposition is not certain whether the Government intends that the investment allowance should be extended by two years for this project only or whether it means that the provision will be permanently available for large investments at Cabinet discretion. The Minister should explain to the House whether this provision is an across the board measure or is limited to this project. Until this point is clarified the Opposition can give no indication of its attitude to this measure.

In his statement the Minister also outlined a completely new income tax concession to encourage exploration and development of off-shore petroleum deposits. While this may be associated and applicable to the North West Shelf venture, obviously the measure is intended for wider application, and should properly have been the subject of a separate statement. Certainly there is a need to step up off-shore exploration and the Government is long overdue in coming to terms with the inadequacy of Australia’s off-shore exploration effort. In this sense the Opposition is sympathetic to proposals which encourage new exploration activity.

The new concession outlined by the Minister will operate in much the same way as the former section 77C and 77D concession operated before it was repealed by the Labor Government. It was repealed because of the abuses which took place under the guise of subscriptions for exploration. This new provision apparently recognises the problem of abuse for the Minister has indicated that moneys will need to be spent on eligible outgoings within the two income years following the year in which the moneys are subscribed. When the legislation is introduced it must have a provision which requires proof of expenditure being established before deductions are permitted for subscriptions. The statement is a little unclear, however, as to whether subscriptions will be limited to companies holding licences under the Petroleum (Submerged Lands) Act only or whether it will be extended to on-shore explorers. In the second paragraph on page 7 of the statement the Minister refers only to a petroleum exploration or mining company. The general tenor of this proposed legislation meets with the Opposition’s approval. However, it does reserve the right to scrutinise and finally determine its attitude when the amending legislation is presented by the Treasurer ( Mr Lynch ).

Finally, the Minister has been remiss in not referring to the foreign investment aspects of this project. He dismisses this in one paragraph. He gives no indication of what the level of foreign participation is in the venture, and on what basis the Government has approved of the percentages. The Opposition believes that the level of foreign equity is about 52 per cent of the total project. Whilst this is near the targets established by the foreign investment guidelines of both major parties, it still technically breaches the guidelines of the Government. Obviously one or more of the foreign partners will need to shed a small percentage of their equity to Australian interests so that the project can comply with the letter and spirit of the foreign investment policy. This would certainly be required by a Labor government.

In conclusion, the Opposition accepts the proposed policy of the Government wherein the Minister states in respect of major projects involving estimated capital expenditure of $500m or more that longer term assurances of freedom from future adverse changes to the controls on overseas borrowings will be guaranteed. Of course, these provisions announced by the Government are but the beginning of this massive undertaking. Because of its importance to the national economy the Opposition would like to see the project proceed and succeed. However, as the foregoing indicates, the Opposition will require far more information on the development and it will closely monitor all Government initiatives with regard to the project.

Debate (on motion by Mr Donald Cameron) adjourned.

page 580


Second Reading

Debate resumed from 18 August, on motion by Mr Sinclair:

That the Bill be now read a second time.


-The Opposition does not oppose this Bill which proposes to authorise the payment of moneys for the ensuing 12 months for the promotion and research programs of the wool industry. The Bill also introduces provisions which will give the Australian Wool Corporation total control over the movements of wool outside Australia. However, I wish to raise a number of matters relative to this legislation and consequential upon its operation. Under this legislation power is given to the Australian Wool Corporation to negotiate freight rates. It appears that some consideration has been given to the general freight rate negotiations which take place for primary industries and which normally are based on the negotiations relating to the price of wool. Under the legislation the Minister will exercise his authority in relation to the negotiations after the Wool Corporation has undertaken the negotiations and reported to the Minister. At present negotiations take place after consultation with the Minister. Because of the overlapping consequences I suggest that the Minister for Primary Industry (Mr Sinclair) might indicate to the House at a later stage exactly how negotiations for freight rates for other primary industries will be undertaken. Will they be tied to the negotiations of the Wool Corporation? In some ways this would be unfair to wool growers. The consequences of change could well disadvantage a variety of other primary producers whose freight rates are substantially dependent on these negotiations.

The Wool Corporation will be able to negotiate outside the normal conference lines. This could alter the quantities of primary products being shipped. There are some dangers in this area and I am sure the Wool Corporation is aware of them. In other industries such negotiations have ended up, at least on occasions, in people getting their fingers burnt. I draw attention to this matter because the Bill provides that the Minister’s authority will be exercised after the negotiations rather than before the negotiations as has been the case up to the present. Another matter in the Minister’s second reading speech relates to the discontinuance of the practice of funding on a triennial basis and, instead, annual allocations of funds being made. This may or may not be in the best interests of the industry. On the question of research, it is certainly important that promotional projects be planned on a basis longer than 12 months. The second reading speech states that the Minister will indicate the level of funds which he anticipates will be available for each of the ensuing two years. That is a doubtful proposition. I use no stronger term.

I remind the House that 12 months ago it was indicated that education funds would have a growth of 2 per cent per annum and we know what the situation is in that area. If the plan for research and promotion is based on that principle there could be disastrous effects for a program already under way. There is no guarantee that the same sort of result will not occur. The Government is transferring certain basic research costs from the levy funds to Consolidated Revenue. This is something of a gain, provided the Department of the Treasury does not find out. I think it has been the experience of most people in the House that it is far more difficult to maintain funding for such projects over a long period where they are direct deductions from Consolidated Revenue. It is much easier with funds which are committed by way of an arrangement such as the grower contribution levies and government grants. I draw attention to one other matter relating to funding in the industry and that is the apparent lack of any support or consideration for the present situation. In this year’s Budget the wool industry is a net contributor to the income side of the Budget by around $73m. Wool growers will contribute more to revenue than they will receive in return. The Wool Corporation has substantial trading stocks. I think it is reasonable to suggest that this stock will continue to grow for some time, despite optimistic projections.

During the last few weeks I have been in Japan. I think honourable members will be aware that the textile industry in that country which is the most substantial buyer of wool from Australia is, to say the least, in decline. Its industry is operating at about 70 per cent capacity and is looking at a long term stabilisation at that level. I think it can be anticipated that at least in some areas the Corporation will be placed in a position where its stocks will increase. It is also evident that the Government is withdrawing its funding through government loans to that organisation and is requiring the Wool Corporation to seek funds to finance its holdings on the open financial market through the trading banks or wherever the Corporation can find funds. This will be an added cost to the grower and to the Corporation, especially if the market for fine wools continues to be as tardy as it is now. It appears that that is the likely future.

I am concerned also at the methods and operations of wool promotion. I note that in the last few days there has been promotional activity in Australia. High fashion garments were shown in the hope that Australian garment manufacturers- if there are any left- would pick up those designs and manufacture them for the Australian market. It was about two or three weeks ago that a major designer in fine wool cloths in Australia went out of business because Australian fine wool cloths were not available for her to use in the garments which she designed and imported articles were too expensive for such use. I am not exactly sure what conclusions can be drawn from that. It seems that an Australian based designer who has been very successful in the past and who seeks to use Australian fine wool materials is unable to obtain those materials in Australia and because of cost she is unable to import such wools. So the promotion of the types of garments designed by foreign designers which that company had previously designed and marketed might well be an unprofitable operation.

The Opposition does not oppose this legislation because it is important that promotion and research in these areas continue. It welcomes the provision for basic research to be transferred to funding from Consolidated Revenue. We hope that those who control Consolidated Revenue will remember the importance of that research and of the work of the Commonwealth Scientific and Industrial Research Organisation, especially in this field, in the past in maintaining wool in a competitive position with artificial fibres. The market for fine wool is currently under some pressure, as I have said. If promotion can partially solve that problem a major future problem for the whole industry could disappear. Unfortunately, I have some short term doubts about that happening. Some time in the very near future the problem of stockpiles of fine wools and the price levels of those fine wools in the market will have to be tackled by both the Wool Corporation and, I think, the Government.


– I support this Bill, which amends the Wool Industry Act in two major ways. The first change gives the Australian Wool Corporation additional powers in relation to setting conditions for the carriage and handling of wool for export by sea. The powers are designed to improve the Corporation’s negotiating ability on freight rates and to enable economies to be made in the movement of Australian wool exports. I believe it is necessary that the matter of freight rates and the effect of freight costs on Australian exports be examined. This Bill provides for the incorporation into the Wool Industry Act of exactly the same principles and arrangements for freight rate negotiations as were included in section 14 of the Australian Meat and Livestock Corporation Act, which was recently passed by this House. These amendments are designed to ensure that marine freight rates and services for all commodities are determined to the advantage of the wool industry. Of course, the Australian Wool Corporation, and the Wool Board before it, has taken a very keen interest in many aspects of freight negotiations. It has also encouraged innovation in the handling and freighting of wool, areas which are both very important. In retrospect, it is very likely that the introduction of containerisation for wool may not have provided the benefit to the industry which was forecast at the time it was introduced. It is very clear, as I said earlier, that a consideration of all aspects of freight rates is vital. I welcome the amendments contained in this Bill, as I welcomed the moves made by the Government when it formed the Meat and Livestock Corporation.

The second part of the Bill concerns the future financing by the Government of wool promotion and research. Up until the last financial year an amount for a 3-year period was included in the Wool Industry Act to cover the Government’s contribution to research and promotion. That arrangement has expired and this new arrangement follows on the investigation by the Industries Assistance Commission of research and promotion in the wool industry. In effect, what will now happen is that triennial funding will be discontinued and annual appropriations will be made from Consolidated Revenue for the Government’s contribution to research and promotion. Some concern might be expressed about the discontinuation of triennial funding, but in his second reading speech the Minister for Primary Industry (Mr Sinclair) indicated that there would be forward planning in respect of research and promotion expenditures, instead of a decision being made each year relating solely to that year. In his speech the Minister said:

Future government financing of wool promotion will be reviewed annually. The review will decide on the level of support for the following financial year and, to assist in the forward planning of promotional programs, will provide an indicative level of support for the following two years.

I think that overcomes any criticism which might be made about the abolition of the triennial funding arrangement. Indications will be given of allocations for both research and promotion in future years. At the moment the wool industry is doing a lot to help itself. The 8 per cent levy currently being paid by the wool growers is a very substantial burden on them. Admittedly, the Government has supported the wool industry by giving an assurance of a reserve price of 280c per kilo clean on a whole clip average basis, and that was a welcome decision. It followed some of the decisions, both favourable and unfavourable, made by the Labor Government in respect of the reserve price for the Australian wool clip. But there is still a huge burden on the wool industry in the requirement that it pay 8 per cent of its gross proceeds by way of levy. Of course, 5 per cent of the levy is for market support activities and the remainder is for research and promotion activities and the operating expenses of the Australian Wool Corporation. The 8 per cent wool tax is expected to raise some $95m this year, and that $95m will be taken from the pockets of the wool growers in a period of rapidly rising costs.

An analysis of that $95 m shows that it is expected that some $59.5m will go into the market support fund and $32. lm will be used for research and promotion. Additionally, in the Budget the Government allocated $3 1.4m for research and promotion, of which $ 19.9m is earmarked for promotion and $1 1.5m for research. The research money is distributed in various ways. Some of it represents a direct allocation to the Commonwealth Scientific and Industrial

Research Organisation, following a recommendation by the Industries Assistance Commission. Of the $ 1 1.5m which will be allocated from Consolidated Revenue for research, it is expected that $6.9m will go to the Wool Research Trust Fund for allocation in the same way as such amounts are currently allocated. An amount of $4.4m is included in the allocation for CSIRO, as well as about $200,000 for the Bureau of Agricultural Economics. In effect, the total promotion and research budget this year, including the amount allocated to the CSIRO, is something like $66. 6m, which is indeed a significant figure. As far as the Government’s contribution is concerned, in his second reading speech the Minister said: . . . the Budget provides $3 1.4m as the Government’s contribution for the current fiscal year for wool research and promotion. This is an increase-of some $ 10m over 1976-77.

The honourable member for Corio (Mr Scholes) criticised the Government in some measure when he said that the Budget allocation represented a credit for the Government in relation to the wool industry, and that is so. Even though the Government will spend a considerable amount of money on the wool industry, a sum of $ 100m is still outstanding on loans made previously to the Australian Wool Corporation for stockholding activities and so on and that has to be repaid. At the beginning of last year it was expected that some $240m would be repaid to the Federal Government, but only $145m was repaid, and it is expected that the additional $100m will be repaid this year. That does not represent taxation of $70m on wool growers. It is a return by the Australian Wool Corporation of money loaned to it by the Government. I do not think that it in any way gives an indication of the future financing of any stockpiling by the Corporation. The Corporation’s stockpiles have always been financed by grower contributions, by loans from the private banking sector, and by government assistance by way of loans. I anticipate that if the need does arise in this financial year, and let us hope that it does not, similar sources of financing will be available. The wool industry has been quite adamant in its expressions over a long period of time that it is determined to finance its own market and stockholding operations if at all possible. To a large extent, I reject the criticism made by the honourable member for Corio.

The reports of the Industries Assistance Commission in respect of research set out a number of recommendations on the wool research program. They recommend that approximately 60 per cent of the wool research currently undertaken by

CSIRO and the Bureau of Agricultural Economics and financed by the Wool Research Trust Fund should be funded by the Government through direct appropriations. That is exactly what this Bill is attempting to do. The reports further recommend that the Commonwealth Government provide a grant on a dollar for dollar basis to match expenditure on research from growers’ levies and interest. Again, the Government has virtually accepted that recommendation in its Budget proposals for this year. It was further recommended that changes be made in the administration of the wool research funds and the method by which recommendations are made. I do not think that this recommendation has been adopted at this stage. However, the two basic recommendations of the Industries Assistance Commission in relation to wool research funds have been adopted in the Bill before us.

The Minister for Primary Industry clearly indicated in his second reading speech that the arrangements still permit the Australian Wool Corporation to negotiate with the Australian Wool Industry Conference and the International Wool Secretariat on areas of importance and areas of preference for wool research although, as indicated previously, some of the money will be paid directly to the CSIRO for basic and continuing wool research. We all realise that the International Wool Secretariat research, linked with its promotion to help manufacturers, has played an important part in maintaining wool’s share of the total textile market. I noted in the Industries Assistance Commission report the comment of the Corporation when reporting on the level of available funds for wool research. The Corporation commented, as reported on page 54 of the IAC report:

It is the opinion of the Corporation that the existing level of available resources for, and expenditure on, wool research is adequate to meet present needs.

The additional report of the Industries Assistance Commission entitled ‘Financing Promotion of Rural Products’ clearly shows the importance of promotion to the future of wool and the very great efforts that have been made over a number of years by the International Wool Secretariat to encourage and maintain wool usage throughout the world. In looking at the level of expenditure on promotion, especially by the International Wool Secretariat, that report at page 59 stated:

Nevertheless, the Commission would judge, on the basis of the evidence submitted by the IWS and on its own analysis, that it seems probable that the optimal level of wool promotion is greater than the current level of expenditure and that it probably would be as large as or larger than the IWS budget of 1973-74, expressed in terms of real purchasing power.

There is of course a limit to what either the Government or growers can contribute to wool research and promotion and I think that a fairly reasonable balance has been achieved by the additional Government contribution this year. Looking at the history of the financing of wool research and promotion, I note that in the financial years 1970-71 to 1972-73 an average of $2 7m was allocated by the Government for research and promotion. However, the amount allocated during the period the Labor Government was in office fell fairly significantly and in 1973-74 the amount allocated for research and promotion was only $22m. The same amount was provided in 1974-75, while in 1975-76 it fell to $20m with a change in the method of allocation and division of the money. Under the 1975 proposals introduced by the previous Government three-quarters of the research program and one-quarter of promotion costs were to be funded by the Government. That decision has now been reversed and the present Government is getting back to the dollar for dollar basis of financing in both areas. This is vital.

Although the level of financing of research and promotion is useful and although much effort has been spent on both research and promotion, we would be very foolish to think that additional Government money at this stage is sufficient. A number of other problems in the wool industry are crying out for solution. I refer in particular to the recommendations of the Australian Wool Corporation on marketing which was made a number of years ago. These recommendations were forgotten by the previous Government and unfortunately I feel they are being forgotten by this Government. There is so much worth in those recommendations which can adequately change the shape and future of the wool industry that they bear careful consideration and, in my opinion, should be implemented. To a large extent we are hiding our heads in the sand if we take it for granted that improving the research and promotion vote alone is going to help the industry when we are not able to market wool as a commodity in a competitive textile world. Frankly, the wool industry cannot afford the luxury of continuing with the antiquated marketing system it has at this stage. It is significant that the whole wool industry accepts that change is necessary in the marketing of the Australian wool clip and agreement in the wool industry is something which is unique.

I know that the Government would like to claim that the limited offer to purchase scheme which it has approved for introduction this year is a significant improvement but, looking at it honestly, it is on a very small scale. It is attempting to test areas of wool marketing and wool handling which really are well outside the marketing recommendations of the Australian Wool Corporation. This is a petty manoeuvre to try to avoid introducing the recommendations. I support the Bill.

Debate interrupted.

page 584


Notice of Presentation

The First Clerk Assistant- I have received notice from the Minister assisting the Treasurer (Mr Eric Robinson) of his intention to present at the next sitting a Local Government (Personal Income Tax Sharing) Amendment Bill.

page 584


Notice of Presentation

The First Clerk Assistant- I have received notice from the Minister Assisting the Treasurer (Mr Eric Robinson) of his intention to present at the next sitting a States Grants (Capital Assistance) Bill.

page 584


Notice of Presentation

The First Clerk Assistant- I have received notice from the Minister for Health (Mr Hunt) indicating his intention at the next sitting to introduce a National Health Acts Amendment Bill

page 584


Second Reading

Debate resumed.


-I wish to make a personal explanation.

Mr DEPUTY SPEAKER (Mr Drummond)Does the honourable member claim to have been misrepresented?


– Yes. The honourable member for Canning said that the $73m which will be contributed was not a tax as I had indicated. I did not indicate that it was a tax. I said that wool growers will be net contributors to the expenditure side of the Budget- that is, there are other forms of expenditure.

Mr FitzPATRICK (Darling) (5.43)- It would have been nice to follow the speech by the honourable member for Canning (Mr Bungey) had the speech not been a bit too comprehensive and had the honourable member not taken most of my time. However, I am grateful for the opportunity to speak in the debate because there are many large and important wool growers in my electorate, many of whom are in serious difficulties. The provisions of the Wool Industry Amendment Bill (No. 2) will no doubt be important and will assist in bringing about a more viable wool industry. The Minister for Primary Industry (Mr Sinclair) in his second reading speech told us that the Bill has a twofold effect. One of its purposes is to amend the Wool Industry Act 1972 to give effect to the Government’s decision to continue to contribute in conjunction with the wool industry to programs of wool research and promotion but it does appear from some remarks by the honourable member for Canning- and I do not want to go over themthat the wool industry is paying more than its share of the cost of promotion. That is regrettable.

The Bill also contains provisions designed to enable the Australian Wool Corporation to act more effectively in negotiation of freight rates. This is important because the people in my electorate continually complain to me about high freight rates. Of course, these are not only overseas freight rates about which they are concerned but also internal freight rates. The figures produced by the honourable member for Canning were startling. I know he is correct in saying that $95m for this scheme has come out of the pockets of the woolgrowers. I am very concerned about that because most of the woolgrowers in my electorate cannot afford to make this kind of a contribution towards research and promotion. I believe that the Government should be making a greater contribution in these fields.

There is no doubt about the importance of the wool industry to the Australian economy. There is an urgent need for the Commonwealth to immediately tackle the serious economic problems of the industry and formulate constructive action to enable it to regain and maintain its former viable economic position. The comparative economic advantages enjoyed by the Australian wool producers over other wool producing countries has come about through the efficiency of the Australian woolgrowers and the fact that the great majority of them are hard workers. Most of them whom 1 visit in my electorate are all kinds of tradesmen. They can pull down a shed, they can put up a house and they can repair machinery. I have no doubt that that is why they have such an economic advantage over other countries. It is unfortunate that this advantage has been eroded at an alarming rate because of insidious increases in production and marketing costs. One would hope that with the right to negotiate freight rates some of these costs will be reduced.

There is no doubt that unsatisfactory wool prices are wrecking the financial position of many woolgrowers, particularly those in marginal areas as is the case with many of them in my electorate. The Industries Assistance Commission inquired into the funding of wool research and wool promotion and, according to the second reading speech of the Minister for Primary Industry, its report has been taken fully into account. I hope that is so because wool research and wool promotion are very important. It is of great satisfaction to woolgrowers to know that when they put submissions before the IAC someone takes a bit of notice of them and they are acted upon. Many growers in my electorate have pointed out these things to me and according to what I am told it is a matter of urgency for the Government to recognise that radical changes in the systems of marketing and distributing wool must be implemented. We should have greater standardisation and an improvement in the quality of presentation.

Despite the prediction that the gross value of mineral exports will overtake the value of wool exports, it should be remembered that most of our major mineral production is in foreign hands and that means that a good bit of the pro/it goes overseas. Let no one think that I am entirely against it because a large proportion of my electorate also depends upon the mining industry. There is no doubt that there should be some balance between these two industries.

The Government has said that it has accepted the recommendation of the IAC that some 60 per cent of the programs of continuing wool research now supported in the Commonwealth Scientific and Industrial Research Organisation and the Bureau of Agricultural Economics by expenditure from the Wool Research Trust Fund should be funded in the future from consolidated revenue. At least we can say that we are taking a step forward but many other measures need to be taken. I hope that at some time in the future when I am given a little more time I will be able to put these things before the House.


– I also support this Wool Industry Amendment Bill (No. 2 ) because I believe it is very necessary. The purpose of the Bill is to strengthen the position of the Australian Wool Corporation in freight negotiations and to assist it in co-ordinating economics in transport operations. There can be no doubt that one of the great problems confronting any industry is that of continually increasing costs. This Government should do anything it can to enable a corporation such as the Australian Wool Corporation to promote better transport arrangements. Great efforts should be made in this area and credit should be given to this Government for doing what it can to assist the Corporation in its desire to try to cut costs wherever possible.

I believe that the honourable member for Corio (Mr Scholes) expressed some misunderstandings when he made his remarks about this Bill. I believe that the Minister for Primary Industry (Mr Sinclair) will consult with the Minister for Transport (Mr Nixon) and that they will give the Corporation policy guidelines in advance of any negotiations that are to be held. There will be co-operation and consultation on the part of those two Ministers and that is what we would expect. That is the way a government should work. When two ministries are involved in an operation there should be the closest cooperation between them. I believe that this Bill is an example of that co-operation.

This Bill will enable the Government to continue its support for wool research and promotion. Appropriations for this support will be made annually instead of on a triennial basis. This matter has been raised in this debate. Comments have been made about the advantages and disadvantages of having these funds made available on an annual or triennial basis. There are points for and against. The fact that funds are made available annually does not necessarily mean that it is detrimental to the continuation of research. This Government has put control of the inflationary trend foremost in its operations and the future of the industry should be looked at carefully. If funds were provided on a triennial basis we would not have the flexibility that is available when funding is on an annual basis. The people concerned would be committed for the two years following the year in which the allocation had been made. I admit, however, that indications would be given as to what funds would be available in those succeeding years. This Government wants to continue, beyond any shadow of a doubt, the research program and this alteration in funding will provide it with flexibility. This will give it an advantage in enabling the programs mentioned by the honourable member for Corio to be continued with even greater security than would have been the case if those programs had received a fixed amount triennially.

This amending Bill will also give the Australian Wool Corporation the authority to set conditions for the carriage and handling of wool for export. That is a point with which I want to deal. These measures will give strength and power to the Corporation in negotiating for the industry which has suffered many setbacks in the past. The wool industry, in common with many other primary industries, has gone through some very serious difficulties. It has always had to face up to a world market price. In this country, as in many other countries, costs have risen substantially and there has not been much that the Government has had to do for the industry. Certainly at times some funds have been provided. I well recall what happened when the reserve price plan was being brought in and some $60m was provided for it. Even supporters of the Government to whom I spoke expressed very great concern about the full amount of money having to be provided to support the reserve price plan for wool. In fact, in the course of time that was not the case. But it was of great advantage to every Australian to have this industry kept on the more stable footing that the reserve price plan was able to give to it.

The wool industry can take very great credit for the way in which it has been able to handle its own affairs. If it were left to handle its own affairs and did not have to worry about the interference that unfortunately sometimes occurs it would be able to do even better. One has only to consider the way in which the exports of live sheep have been restricted because of the dictates of people who have no right to dictate to appreciate what this has meant. These exports have been of very great benefit and are a well deserved benefit to many people in the sheep industry. Unfortunately they have been kept in line and have had to conform to the conditions laid down in relation to exports. These people need the benefits that are being obtained as a result of the export of live sheep, but the obtaining of that benefit has been restricted. I believe that it has been restricted to an unnecessary degree. When one has an industry that is prospering one has an industry that is able to provide employment, which is to the benefit of the working man. Sometimes a very short-sighted policy is adopted in relation to the operations of our primary industries.

The honourable member for Darling (Mr FitzPatrick) mentioned the rise in costs. I agree with him that is one of our great troubles. I can only hope that we will be able to get the sort of co-operation from the Opposition benches that is needed to enable us to control inflation. Instead of harping continually on what the Government is trying to do and instead of continually criticising the efforts that are being made to help to reduce the constantly rising costs, if the Opposition were to co-operate with the Government insofar as rising costs are concerned it would be of very great benefit to the people whom the honourable member for Darling and I represent.

Let me return to the Bill. In his second reading speech the Minister for Primary Industry said:

The Government is determined to achieve close coordination over a range of cargoes in the negotiation of freight rates so that Australia may maintain the best possible bargaining position.

That is of vital importance. He went on to say:

To this end, and in consultation with the Minister for Transport -

This refers to the point that I made -

I will be informing the Australian Wool Corporation of the principles and policies which the Government regards as appropriate to be applied and followed in any freight negotiations the Corporation undertakes. These will be designed to ensure that marine freight rates and services for all commodities are determined to the best advantage of rural industries.

That is something that I think has to be carefully looked at. I believe that when we are looking at the freight rates with regard to the goods produced by the industries of this country we have to see that we have a continuity of transport. We do not want to have hold-ups. One of the problems that we have in our shipping and transport industry is the fact that there have been far too many hold-ups, which are to the disadvantage of primary industry and to the disadvantage of the reputation of Australia as a supplier of any commodity.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

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

Sitting suspended from 5.59 to 8 p.m.

page 587


Ministerial Statement

Debate resumed from 17 August, on the following paper presented by Mr Malcolm Fraser:

Post-ASEAN Conference Talks- Ministerial Statement, 17 August 1977 - and on motion by Mr Howard:

That the House take note of the papers.

Mr E G Whitlam:
Leader of the Opposition · WERRIWA, NEW SOUTH WALES · ALP

– At a time when the present Prime Minister (Mr Malcolm Fraser) who made this statement was preoccupied with the countries which comprise the Association of South East Asian Nations solely as a means of containing China, at a time when he was clumsy and inept enough to give high State Department officials the impression that he supported the bombing of the dykes on the Red River to quell the population of North Vietnam, I said in August 1968:

Real prosperity for Indonesia, Malaysia and Singapore is dependent in the final analysis upon the development of effective arrangements for regional co-operation. All three of these nations are members of the Association of South-East Asian Nations (ASEAN), which includes in addition Thailand and the Philippines. ASEAN is the most natural and wholesome of all the regional arrangements in this area. It comprises neighbours. There are no gaps in its membership. There are no outsiders, and everyone shares common interests.

I contrasted the Asian and Pacific Council which the Australian Government supported but which omitted Indonesia and Singapore and concluded:

New Zealand and Japan are Australia’s natural associates in promoting the development of the ASEAN nations.

The Kuala Lumpur summit conference coincided with the tenth anniversary of ASEAN. The Prime Ministers of Japan, New Zealand and Australia were invited to Kuala Lumpur to confer with the ASEAN leaders. It was a realisation of the hopes I expressed and the development I urged 9 years ago. ASPAC has disappeared. SEATO has, in the words of the member for Lilley (Mr Kevin Cairns), ‘been laid to rest’. The Five Power Arrangements have succumbed as a post-colonial anachronism. ASEAN survives and thrives. In their joint statement of 7 August the ASEAN heads of Government and the Prime Minister of Australia stated: they recalled that Australia had been the first country to establish a formal relationship with ASEAN in 1974.

In January 1974, senior Australian officials held lengthy talks in Bangkok with ASEAN officials on Australia’s assistance to regional ASEAN projects. In January and February 1974 I made official visits to all the ASEAN countries except Indonesia which I had visited separately within 3 months of forming a Government. In March 1974 the Foreign Minister, Senator Willesee, visited ASEAN countries and invited the ASEAN Secretaries-General to visit Australia to discuss proposals for Australian co-operation with ASEAN in economic development. I set out my Government’s approach to Australia’s relations with ASEAN in a speech I made in Singapore on 8 February 1974. 1 said:

The confluence of our history and geography- our origins as Europeans, our location on the edge of South East Asiagive us a unique opportunity to demonstrate to the international community that countries with very different cultural, religious and ethnic backgrounds can evolve intimate and lasting relationships.

To this end we shall spare no effort to ensure that in the years ahead, Australia is accepted as a co-operative and helpful member of the Asian and Pacific region, and a neighbour of the nations of South East Asia.

The signs of this new approach are around us in this region. In ASEAN, Singapore, Indonesia, Malaysia, Thailand and the Philippines have and have sustained an organisation which is workable and relevant, and which reflects the common needs of the countries of South East Asia. Australia applauds the achievements of ASEAN, and the hope which it offers for the economic and social progress of the people of the region. But we have no desire to intrude; I have said many times before that Australia does not seek membership of ASEAN. What we do hope is that we can cooperate with ASEAN imaginatively and constructively as a neighbour and as a friend. We think we have certain skills to offer if these skills are needed; we know that we have much, in turn, to learn from you and your ASEAN partners.

I emphasised in that speech that Australia did not seek to intrude. Our involvement with ASEAN must be neighbourly and co-operative, never intrusive. Most important of all, ASEAN exists to advance the interests of its member nations, not of its neighbours. This is the message the present Prime Minister must take to heart. It is offensive to ASEAN and counter-productive for Australia if the Australian Government seeks to use ASEAN as a stalking horse in its trade and economic relations with our other trading partners, the European Economic Community, Japan or the United States. There are disturbing signs in the Prime Minister’s statement that this is still his perception of the role of our Asian neighbours- as Australia’s stalking horse. The emphasis he gave in a statement, ostensibly about the ASEAN summit conference, to our trade relations with the EEC and with Japan betrays his real intent.

I well recall the first time the present Prime Minister floated his idea of using ASEAN to advance Australia’s arguments with the EEC. It was at our parliamentary luncheon for the late Tun Razak, Prime Minister of Malaysia on 16

October 1975, one of the two days that year which will live in infamy. The Tun would not have a bar of such a proposal because he saw its essential hypocrisy; nor would any of the other ASEAN leaders. At the time of Tun Razak’s untimely death, by which time the member for Wannon was Prime Minister, he sought further to intrude. He lobbied clumsily and offensively in Kuala Lumpur in February last year for an invitation to the ASEAN summit conference to be held in Bali. He embarrassed his Malaysian hosts, in mourning for their Prime Minister, he embarrassed his Australian officials, he embarrassed Australia. Perhaps this was the first instalment of the Government’s so-called economy program. The present Prime Minister sought to consummate a relationship with ASEAN at the same time as he was attending a funeral:

Thrift, Thrift, Horatio! The funeral bak ‘d meats Did coldly furnish forth the marriage tables.

Of course, his clumsy, ill-timed intrusive overtures were rejected.

The present Prime Minister further offended our ASEAN neighbours by his gratuitous allegations of instability in Malaysia and Indonesia when he visited Peking in June last year. In a written answer to me on the 1 8th of this month he admitted that the Department of Foreign Affairs gave him a report on how the press was able to obtain the record of his conversations in Peking but refused to table the Department’s report because, as he said, he does not see that it would serve any useful purpose to table it. When by inadvertence and incompetence his private indiscretions became public property Indonesia demanded an official explanation or retraction. Against the background of clumsiness, offensiveness and intrusiveness Die present Prime Minister went to Kuala Lumpur. He says blandly enough now:

The ASEAN heads of Government raised the question of our trade and they expressed the strong wish to increase their share of trade with Australia.

On his statement, in public statements before his visit and in Kuala Lumpur the Prime Minister used trade figures which purport to show that the balance of trade in ASEAN countries has moved in ASEAN ‘s favour since 1971 from the ratio of 3.4 to 1 to 2 to 1. But for the ASEAN countries the share of trade is as important as the balance of trade. And ASEAN, our five nearest neighbours, together share only 3.8 per cent of our total imports. Japan by contrast has almost 20 per cent of our imports.

The Prime Minister repeatedly makes comparisons between the growth of trade with

ASEAN countries on one hand and our industrialised trade partners in Europe, North America and Japan. It is an irrelevant and counter-productive comparison. It demonstrates the complete failure of the Prime Minister to understand the real nature of our relations with the ASEAN countries and their view of their relations with Australia. Simply, they are our neighbours. They expect to be treated as such. They expect our trade relations as much as our other relations to reflect that inescapable fact of geography. At present our trade with ASEAN clearly does not reflect our true situation as the nearest neighbours, the most industrialised neighbours of these large and rapidly developing nations.

Perhaps the most revealing and most offensive part of the Prime Minister’s statement was his reference to the European Economic Community. He said:

I also emphasised that ASEAN trade opportunities in the Australian market were heavily dependent on Australia’s access to other markets particularly the EEC for Australia’s agricultural products.

What, one may ask, is the connection between Australia’s canned fruits and Filipino plumbing? But the essential point is that it is not the conduct of a good neighbour to relate and restrict the trade opportunities to be offered to its principal neighbours to our own prospects in the North Atlantic countries 20,000 kilometres away. It is precisely this attitude, of which the present Prime Minister is the outstanding exponent, which casts doubt on Australia’s willingness to act as a genuine co-operative neighbour.

Australia’s agricultural difficulties with the EEC stem directly from the policies pursued by the Country Party under Sir John McEwen with the acquiescence of Sir Robert Menzies and the active support of the crypto-Country Party members of the coalition of which the member for Wannon (Mr Malcolm Fraser) has been a prime example. They encouraged and financed farmers to produce for export products for which there was a market in Britain alone. They staked everything on being able to prevent Britain under the Conservative, Labor and, again, Conservative governments from entering Europe. Now, in Brussels, the Prime Minister has been thrown off balance by the display of European unity.

At 8 o’clock last Wednesday night the Prime Minister announced that it had been arranged in Kuala Lumpur that there should be consultative machinery with ASEAN members on trade matters, particularly, presumably, quotas and tariffs. Twenty minutes later the Minister for Business and Consumer Affairs (Mr Fife) announced that the Government would soon announce lower quotas for footwear, textiles and clothing- the very three areas identified in the Prime Minister’s ASEAN statement as having been discussed in Kuala Lumpur. One can only marvel at the exquisite sense of timing of this Government.

Our region comprises economies at four levels: There are the industrialised and developed nations, Japan and Australia; the rapidly developing semi-industrial economies in Korea and on Taiwan; the developing countries which the ASEAN nations are, predominantly; and the least developed nations- Burma, Kampuchea, Laos. The ASEAN nations- our neighbours- are now poised to enter the second level, to become rapidly developing semi-industrial nations.

The plain fact is that unless we develop sound and co-operative trade structures with ASEAN now we shall find within 10 years the terms of trade reversed against us. It will then be a question not of the level of protection but of meeting competition for markets for goods which our neighbours will be able to produce more efficiently than we can. The negative approach which the Prime Minister set out in his statement a week ago and which he pursued in Kuala Lumpur makes it clear that under his Government there will be no effort to build those structures and no real effort to develop trade relations with ASEAN appropriate to our role as a strong industrial nation or appropriate to our role as a neighbour.

There is a lesson we should draw from the United States and her relations with her neighbours- Latin America. The Latin American countries are much more sensitive to the treatment they receive from the United States across the Rio Grande than they are about the treatment they receive from Europe across the Atlantic. Propinquity brings obligations as well as opportunities. It can provide as easily a focus for resentments as a bridge for understanding. The countries of ASEAN do not have as high expectations from the European countries of the EEC, 20,000 kilometres away as they do of this nation of European origins, their nearest and most developed neighbour. It contributes nothing to better relations with our neighbours to tell them, as the Prime Minister does, that they can expect no better treatment from us than we, the representative of European culture and technology in this region, or they, can obtain from Europe; or to tell them, as the Prime Minister has done, that until Europe improves its trade treatment of us, we shall not be able to improve our trade treatment of them- our neighbours. These are the reasons why the Prime Minister’s visit to Kuala Lumpur and his statement have failed to promote better relations with ASEAN, and why they contain the seeds for serious misunderstanding in the future.


-The member countries of the Association of South East Asian Nations- Singapore, Malaysia, Indonesia, Thailand and the Philippines- have characteristics in common. Because they are our near neighbours- they are not our nearest neighbours; Papua New Guinea is that- we should do our level best to understand those characteristics and to shape our relations with them accordingly. The five ASEAN nations are all in some degree undeveloped. They have all in recent times experienced a considerable explosion in their work forces- a labour force explosion that was experienced in other countries in Asiamostly those countries north of the ASEAN countries- some years before.

The ASEAN countries have little prospect but to use that labour force in the business of light manufacture and in industries that will inevitably compete with Australia. The people who have been dispossessed of their land in Thailand in particular are tending to concentrate around the major city of Bangkok. There is now little prospect of land reform. If these people are not to find employment the situation will be politically and socially explosive and, one way or another, we are likely to feel the repercussions in Australia.

The labour forces of Hong Kong, Taiwan and South Korea grew earlier. They grew through the 1950s, 1960s and into the 1970s, but will slow down in the 1980s and 1990s. We are able to predict the growth of the labour force quite certainly because those people who will enter the labour force have already been born. We can predict with considerable accuracy what the labour force will be in years to come if we do not try to look too far ahead.

The labour force growth rates in the ASEAN countries jumped after 1965. Growth rates are likely to remain at high levels- at as high as 2!£ per cent to 3V4 per cent per year- into the 1980s and 1990s and even into the next century. At this growth rate the labour force in South East Asia will virtually double between 1975 and the year 2000. For instance, Indonesia’s labour force will jump from 45 million to 80 million, the Philippines labour force from 14 million to 28 million, Malaysia’s labour force from 4 million to 7 million and Thailand’s labour force from 20 million to 35 million. By contrast, Australia’s labour force is expected to rise from 4 million to 5 million in that time.

Malaysia’s development plan and the development plan of most countries in the area must inevitably involve export manufactures. The development plans of Japan just after the war and later of Korea, Taiwan and Hong Kong involved export manufactures. As the standard of living and the price of labour in Japan rose the labour intensive industries moved off-shore from Japan first of all into Korea and then into Taiwan and Hong Kong. Those countries became wealthy or wealthier, and gradually their high cost manufacturing is moving into the ASEAN countries. We can expect the ASEAN countries not only to be dependent on this manufacturing but also to provide goods that are by world standards cheap if they are produced in labour intensive industries.

The Prime Minister said in the statement that we are debating that we have a significant interest in helping to ensure that ASEAN succeeds in its efforts to generate the economic and political stability for which it is striving. Indeed we have a considerable interest in ensuring just that. We are interested that our near neighbours should be secure non-totalitarian states that are well disposed towards Australia. We are interested that they do not develop a frustration that will inevitably make them unfriendly towards us and therefore less helpful to us in both a political and economic sense. We are interested in trading with them because it can be to our mutual benefit. Surely there is no one who will deny that ultimately trade must balance; that a country cannot go on selling more than it buys and that if we wish to sell Australian goods we must inevitably buy goods from overseas. Those propositions are axiomatic.

Australia has enormous opportunities to sell to its near north. However, in recent times the trade balance has tended to move against the ASEAN countries. In 1966-67 the trade gap- the difference between what we sold to the ASEAN countries and what we bought from them- was $83.9m. By 1975-76 that gap had grown to $342.4m. I seek leave to incorporate in Hansard a short table relating to trade.


-Is leave granted? There being no objection, leave is granted.

The table read as follows-

Column A is the trade balance for Mainland China, Japan. Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia and Philippines. Column B is all of these without China. Column C is all of these without China and Japan. Column D is the ASEAN countries which are the last five mentioned in A.

All columns show a general widening of the trade gap between our Asian neighbours and ourselves.

Table B


– Our neighbours to our near north are not particularly happy about the situation. The leading article which appeared in the Straits Times of 20 August 1977- a few days ago- refers to Australia’s attitude to the import of textile products from the ASEAN bloc as follows:

From January the quota levels in all these sectors -

That is the textile groupswill be considerably scaled down, extending further the Great Barrier Reef around an already inhospitable coastline for exporters.

Unfortunately our attitude to the ASEAN countries is already causing them some disquiet and some unhappiness. Yet we have enormous opportunities to trade in this area. It is an area in which there are very few vested interests. It is an area where we can enter markets to sell our wool, beef, iron, wheat, coarse grains, dairy products and rolled steel- our capital intensive manufacturers. Markets would open for all these commodities as they opened for us once before- in Japan, Korea, Taiwan and Hong Kong. In 1951-52 we sold a mere $105. 3m worth of goods to Japan, Korea, Taiwan and Hong Kong. By 1975-76 our sales to those countries had grown to nearly 700m worth of goods. That same opportunity would be available to us in the ASEAN countries. We would be able to establish an Australian interest there. We would be able to sell to these people if we bought from them. We can buy from these people to our own advantage. We can purchase goods that they produce more cheaply and more competitively than we can produce them. So long as their labour rates are substantially cheaper than ours these people will continue to produce more cheaper than we can. If we buy more labour-intensive products from them and sell to them products that require greater intensity of capital for their production we will both be in front. If, on the other hand, we try to defy market forces and be like a man trying to stand in front of a grass fire with a bag to beat it out, we will find ourselves in a small island with grass but with everything else burnt around us and still the imports will come in. If we block imports and continue to sell our exports our balance of payments will be driven up, we will be forced to revalue and the competition from those who would sell within Australia will become greater. Either we will have to raise our barriers against imports still higher or we will have to revalue again. The result is inevitable. I predict that like it or not we will have to face the problem of goods coming into our country to competition with goods produced by our less competitive labour-intensive industries. If we do not accept this equilibrium will still eventually be reached because as the ASEAN nations become wealthier their labour rates and their cost of production will rise. As we become poorer our relative labour rates and the cost of production of our labour-intensive goods will fall. Therefore equilibrim will be reached, but in a manner that will suit nobody.

No one would suggest on the one hand that Australia should accept a very rapid rate of change. That clearly would be too disruptive. But on the other hand, if we turn our face against change and do not accept the inevitable fact that to remain a wealthy people and to remain with friendly neighbours to our near north, we must shift as quickly as we can without disruption towards capital intensity, towards those things that we do best and accept the goods of other countries, we will be as Canute was before the waves- we will get horribly wet. There are middle courses. We can do things to assist the restructuring of Australian industry where that is necessary. We can couple a policy of devaluation with a policy which assists those import competing industries to shift to more capital intensive import competition and to exports. If we do not do these things we will be poorer than we need be, we will not increase our employment one jot, and we will have some very unfriendly neighbours.


-I am in sympathy with much of what has been said by the honourable member for Moore (Mr Hyde). On the other hand, I am among the many who are far from happy with the statement which we are debating tonight and which was made by the Prime Minister (Mr Malcolm Fraser) on 17 August in this House about his meeting with the Heads of Government of the Association of South East Asian Nations in Kuala Lumpur on 6 and 7 August. I am even less happy with the outcome of that meeting. The statement seems to me to be an unconvincing apology for a confrontation situation which he perpetrated and which generated, regrettably, a bad Press in Australia and, what is more important, a bad Press overseas.

Before embarking on detailed comments on the statement I want to put an important meeting such as this one between the Prime Minister and the leaders of our closest neighbours into some sort of perspective, in fact, into a satisfactory framework. This I do in the following way: Not only does the Fraser Government not have a long term strategy for domestic recovery and structural change in Australia but also it does not have a long term strategy for improving economic relations with our trading partners. The Prime Minister has appointed a special minister to deal with the European Economic Community, a distant market with which we are basically competitive and a market of secondary importance to our major trading partner, Japan. Almost at the same time the Prime Minister set up a vague consultative arrangement for officials from ASEAN with which our future, as was said tonight by the Leader of the Opposition (Mr E. G. Whitlam) and the honourable member for Moore, must be increasingly intertwined.

On finding the problems of Australian manufacturing industry difficult, the Government produces a White Paper which is essentially a justification for doing nothing. It is time that Australian trade policy was rethought as part of a comprehensive plan for the economic development of Australia. Such a plan would begin by recognising that trade is mutually beneficial. Trade allows countries to specialise in the productive activities in which they are more efficient. Government policies should be concentrated on encouraging those industries in which Australia has a comparative advantage, the areas in which Australian skills and resources can be most effectively combined. Such economic policies will enhance the well-being of both Australians and our trading partners. Such an approach is particularly obvious in the case of ASEAN because, to a considerable extent, our economies are complementary. The policy of increasing protection, which it seems to us the Fraser Government seems to be adopting, will simply contribute to entrenching a high rate of inflation and increasing the cost of production in Australia, with the result that economic recovery will be slower. An alternative commitment to specialisation, growth of industries in which Australia has comparative advantage and commitment to a gradual winding down of industries where Australia can no longer compete effectively, will lead to lower costs and faster growth.

Much of this argument is clearcut and is widely accepted by a number of people, but there are two necessary conditions to such a policy. I hope that the honourable members for Moore and Wakefield (Mr Kelly) and others who understand these things will use their influence in the Government in relation to these two necessary qualifications. Firstly, the policy should be introduced in a planned way which ensures that while some industries are being wound down others are expanded. Secondly, generous and comprehensive adjustment assistance should be made available to the employees and to the firms in industries which are affected. We have a Budget before us with no mention of structural adjustment assistance for those industries in which, as the honourable member for Moore has just wisely pointed out to us and which I point out to the House, they are so basically needed. At present industries are declining haphazardly and the whole cost is being borne by employees and firms directly affected. This is quite unjust. It is in marked contrast to the policy of the Australian Labor Party. I shall read from a document entitled ‘Labor’s Proposal to get Australia Working Again’ because I believe it is important. It was issued a couple of weeks ago and I read part of it into the record. It states:

A Labor Government will co-operate with industry, labour and other bodies affected by this type of change to develop programs, providing for the re-training, reestablishment and compensation of those concerned.

Important sections of Australian industry cannot succeed without some level of protection. This however cannot be used as a justification for any level of protection sought nor should it be used as a rationalisation to prevent critical scrutiny of protection levels. The major defect of the present system of review is that it is based on over-simplified notions of a free market economy and proceeds in isolation from a comprehensive economic strategy. Dramatic reductions in tariffs allow the marketing of cheaper imported goods, raising the consumption standards of those remaining in the workforce. But without government intervention and in the absence of greater real economic growth than we have seen in recent years this improvement is achieved at the expense of increased unemployment.

A Labor government will take steps to integrate the development and application of a protection policy with overall indicative economic planning to ensure that, where change is desirable, it proceeds with the least disruption and the minimum of cost to those affected. In addition to job retraining, relocation and compensation for displaced members of the workforce, job opportunities must be developed in new areas in response to community needs.

I am glad to have that in the record as a policy document from the Labor Party. Now in contrast to this planned, interventionist approach, so much part of Labor’s philosophy, the Fraser Government is culpable because of its failure to introduce adequate adjustment assistance programs. Change will occur no matter what the Government does. The Government’s responsibility should be to ensure that change happens in a planned way, and to ensure that anyone who is affected is generously compensated and has the opportunity for re-training to prepare to take alternative employment where this is necessary. The Prime Minister’s exchange with ASEAN leaders is yet another symptom of the Government’s lack of direction for the Australian economy. Our relationship with ASEAN countries could be characterised by collaboration. Instead the Government is, I believe, arrogantly intensifying division and hostility. This, I believe, is the framework in which we must view this particular meeting, the statement about which is the subject of this debate. Now let me say something in greater detail about the Prime Minister’s statement and about his meeting.

I believe the Prime Minister’s meeting with ASEAN Heads of Government has increased conflict between Australia and our closest neighbours. The Government’s rigidity and insensitivity have worsened Australia’s foreign relations. The negativism and economic primitivism which have characterised domestic economic policy are apparently to characterise our international economic relations. The cost will be felt not only in the cooling of relations and even hostility of ASEAN countries towards Australia but also in the continuing delay in the regaining of normal rates of economic growth within Australia. I had hoped that the recent meeting with the Commonwealth Heads of Government had increased the Prime Minister’s understanding of the developing countries. He said in his address to the nation after returning from that meeting:

However important aid might be, fairer and more equitable international trade is likely in the longer term to be much more helpful . . . If we cannot achieve better trading arrangements and more stable prices at reasonable levels for the developing countries, there is going to be a great deal of disillusion.

However, it was clearly a vain hope. There was little evidence of compromise and break-through arising from this meeting. There was plenty of evidence to the contrary. Despite recognising that trade is more important than aid, the Prime Minister offered more aid. Though even this was done in a misleading way, for the period within which it is to be given was not stated. Despite clear fore-knowledge of the wishes of the ASEAN governments, he could only offer more talks- the normal delaying tactic of someone unwilling to make a decision.

I charge that the Prime Minister is also inconsistent. In his speech to the nation after returning from Europe he was able, unblushingly and correctly, to criticise the EEC for increasing agricultural and manufacturing protection. Yet he has claimed that Australian protection vis-a-vis Asia is justified because we have a small population. Life was not meant to be that easy. The Prime Minister neglected to mention that Australia has an average income 20 times higher than the average income of ASEAN countries, and that is a factor we must take into consideration in our planned approach to this problem. He also said that more of the aid would be given in untied form, but he did not say how much more. ASEAN countries, used to trickery with aid figures, will believe that when they see it.

It is the two-facedness of this approach which I deplore. To justify this position the Prime Minister misleadingly quoted statistics which show how fast Australian imports from ASEAN countries have grown- at least that is what they purported to show. He chose as his base year the 1970-71 financial year when imports from ASEAN were at their lowest point. If growth over the last 10 years rather than over the last five years is calculated, the figure becomes a growth rate of 12.5 per cent rather than the 30 per cent the Prime Minister has used in many speeches. In no speech has he mentioned that Australian exports to ASEAN are more than twice as high, at $692m, as our imports valued at $3 18m in 1975-76. The fact is that Australian exports to ASEAN countries have grown faster during the last 10 years than our imports from those countries. Over the past 10 years Australia’s trade imbalance with ASEAN has increased. It has grown from $84m in 1966-67 to $342m in 1975-76. It is no wonder that the statement issued after the meeting said:

The ASEAN Heads of Government, while appreciating the domestic economic problems faced by Australia at the moment, expressed the strong wish to increase their share of trade with Australia.

Once again, it is the lack of candour and honesty in the statement which I find appalling. It is extraordinary that the Prime Minister would sign a statement which said:

The ASEAN Heads of Government and the Prime Minister of Australia viewed with concern the spread of protectionist tendencies in many developed countries.

Incidentally, I have just been on a world tour and I should point out that most, if not all, of the enlightened leaders that I met around the world shared that same great concern about the protectionist tendencies of many countries at this time. It is extraordinary that the Prime Minister signed that statement while at the same time, as a matter of policy, continuing with the unsatisfactory conservative approach of past Liberal and National Country Party administrations rather than the long term planning, interventionist, assistance for structural change approach of the Labor Party which I outlined earlier. Michael Richardson was only one of a number of Australian journalists to report that ‘ASEAN senior officials, especially trade officers, are known to be bitterly disappointed at what they consider to be Australia’s unreasonably defensive stand at the Summit and marathon behind-the-scenes negotiations on the wording of the trade section in the joint statement’. A little more candour, a little more honesty, some hope for a changed planned approach towards tackling problems together with ASEAN countries would have avoided these strains to our relationships with our closest neighbours.

The tragedy of this incident is that it suggests a future of increasing division between Australia and ASEAN countries. AH the fine words about aid, consultation, technical and scientific cooperation and cultural exchange are secondary to the concern of the South East Asian countries to create the conditions in which economic development is possible. For the foreseeable future economic issues will be the most important element in our relations with these countries. Even strategic factors are of less importance. The Government is creating hostility by the inconsistency of its words and its actions. Australian selfrespect depends entirely on helping to create the position in which economic development is possible. We must contribute to creating the conditions for elimination of poverty. We are in the happy position that such an approach will at the same time result in helping ourselves.

The most disturbing feature of all this is that at no point has the Prime Minister given any indication that he understands the potential which exists for an interdependent pattern of complementary economic development and trade between Australia and ASEAN nations. This potential has been recognised by the EEC and is embodied in the Lome Convention, which was mentioned by the Leader of the Opposition (Mr E. G. Whitlam) and which sets up concessional trading conditions between the European community and African, Caribbean and Pacific countries, and by the United States, which has special trading relations with the Latin American countries. The trade concessions which Australia has given to developing countries are small and peripheral compared with the arrangements which have been negotiated by the European and North American countries with their developing country partners. We are suffering a Prime Minister and a Government which are still harking back frustratedly to past European connections instead of properly understanding Asia.


-I am delighted to be able to speak in this debate. I can speak of the countries with which this debate deals with some understanding, a certain amount of experience and knowledge, and a good deal of affection. I have spent many years of my life living and working and travelling in the area. I have lived in and travelled over much of Indonesia. I know Malaysia very well indeed, having spent a couple of years there. I have lived in Singapore and Sarawak and I have travelled widely in Sabah, from which country we have some distinguished visitors in the House tonight. I know Thailand well. The only one of these countries I do not know well is the Philippines, and I have been there on two or three occasions. It is 33 years since my first visit to the area and in the last three years I have been back to one or two of the countries, so I do have a good deal of understanding of them all.

What is the aim of the Association of South East Asian Nations? It is to accelerate the region’s economic growth, its development and progress, its cultural development, and to promote regional peace and stability. The ASEAN countries are our friends and neighbours and the more we can do to understand them the better. I do not agree with some of the comments of the honourable member for Adelaide (Mr Hurford), who was very critical of some of ASEAN ‘s actions. I know from personal experience that these nations think a great deal of Australia. They are our great friends, they understand us, and I hope that more and more Australians will understand them. A great many of the leaders and the people running these countries have been educated in Australia. They understand us and I think they too have a great deal of affection for us. This year ASEAN is ten years old, and its greatest credit is that it has survived for that time and is going on from strength to strength. Prior to this year many tensions existed and there was a lack of common interest throughout the area. Many regrettable disputes occurred prior to the formation of ASEAN, and it is only 1 1 years since 1 was very actively involved in one of those disputes. I am delighted that there are now no disputes between those countries and that two of them, Malaysia and Thailand, are co-operating very actively on their common border against a very difficult insurgency situation. In his statement the Prime Minister (Mr Malcolm Fraser) said:

ASEAN leaders recognise that only through interdependence and self-reliance will they secure peace and stability in the region. And they have concerted their energies to establish the region as a force for stability and concord.

I should like to stress the last few words of that statement: . . . a force for stability and concord.

The Prime Minister went on to say:

The ASEAN countries have firmly held that ASEAN is not, and should not be, a security organisation or a military pact. Increasingly their concern has been with the problems of economic development.

I believe that it would be unwise for those countries to become involved in a military pact. They are much more likely to achieve success and stability in the region by economic strength. It is of vital importance to Australia that we have to our north a stable non-communist group of friendly countries with a reasonable standard of living. From my personal experience, I know that nothing breeds communism faster than empty bellies. So anything we can do to increase the standard of living and to help these people we should do. I am interested in the area not only because I know it well but also because my electorate is very close to it. Irian Jaya, West Irian, is only a few kilometres from the north-western corner of my electorate. It is much closer to my electorate than is the city of Brisbane.

Before I came into the chamber, I looked at the map and noticed that we have two arcs of security to our north. The first of those arcs includes Papua New Guinea which is not a member of ASEAN. I hope that one day it will be. It could be useful for Papua New Guinea and certainly Indonesia would welcome its membership. The first arc also includes Indonesia. A secure neighbourhood with Indonesia and Papua New Guinea gives us our first line of security. The second arc or second line of security comprises the Philippines, the other Indonesian islands, Singapore, Malaysia and Thailand. It is of vital interest that we keep these nations as stable noncommunist countries.

Japan has been mentioned by a number of previous speakers and, whilst it is not a member of ASEAN it is obviously the biggest noncommunist power and participated in the postASEAN summit meeting at which our Prime Minister represented Australia. No discussion of ASEAN and Australia’s role in the area can be complete without considering the already great and rapidly increasing influence of Japan in the area in both trade and aid. Japan is another country which I know well. I spent over four years of my life living in Japan. Those years of living in the area have given me a broad view of many of the problems. All the ASEAN countries need a bigger share of trade for their long term stability, as other speakers have said. They need it very badly indeed. They expressed to the Prime Minister their strong wish to increase their share of trade with Australia. I believe that we are obliged for our own security and stability in the future to give them a fair share of trade. ~

Mr Kelly:

-Dead right.


-We do have short term economic difficulties. I am glad that the honourable member for Wakefield (Mr Kelly) agrees with my previous remark because he has been a great influence on my thinking on this subject.

Mr Jacobi:

– That would be a disaster.


-It was for the good. Of course, it is difficult when we have a high rate of unemployment to allow freer access to some of those areas of trade to which the honourable member for Wakefield referred- that is, clothing, textiles and footwear which are produced much more cheaply and much more efficiently by those countries.

Mr Carige:

– That would be the case, too.


-It is the case, regrettably. Certainly they do it more cheaply and perhaps more efficiently.. I heard the honourable member for Wakefield the other day say that it is costing the consumer in Australia $600m a year for protection of our clothing, - textile and footwear industries. I know that we have very high tariff barriers but these tariff barriers and our protection are paid for by the exporter, by the primary producer and the miner. I do not have too much manufacturing industry in my electorate but I have a great many primary industries and have great and burgeoning mining industries. They are paying for the protection of people in the big cities.

Australia’s long term interests will be best served by carefully restructuring our heavily protected industries. It will have to be done carefully. The 25 per cent across the board tariff cut by the Labor Government was a disaster for these industries. The idea was right but the timing and method were wrong. It is a great pity that we did not do something about these tariff barriers when we had full employment; because we did not look at this problem and understand it then, we are having problems today. I would like to see the ASEAN countries increasing their share of the Australian market. In this regard some ideas have been mentioned. They include an annual ASEAN trade fair sponsored by Australia and the procedures which have been set up for consultation. My knowledge of the area makes me aware of the great importance which these countries place on consultation and consensus. They reach decisions by consensus and this is something which we must learn to do. It is not easy for Australians, who tend to be much more direct and sometimes brutal, to take part in discussions with the very polite people of these countries who aim for consensus rather than conflict.

Mr Braithwaite:

– One hundred thousand tonnes of sweetener helps.


– I presume that the honourable member for Dawson is talking about sugar. We are doing other things such as helping to set up five industrial projects in the region. This must be good. We have completed an important road in Thailand and there is another under construction. I have seen part of one of those roads. All these efforts to help will, I hope, secure our long term economic relationship with the ASEAN countries giving them much better access to our markets. Of course, we need access to their markets to sell the goods which we produce more efficiently and more cheaply than they do.

Because it was decided that more trade was not possible at the moment it was decided instead to increase aid. I do not believe that aid is any long term substitute for trade. We should try to scale down our aid and to increase our trade as quickly as possible. It is very hard for people in my electorate where some industries are on their knees- the beef industry is in great trouble- to understand when they see that we are giving $90m extra to ASEAN countries in our Budget but nothing more to the beef industry. They ask questions which I find hard to answer. I know these countries well. I believe that they need our help, support and aid. I suppose it is because I am so aware of their problems that I say that we must increase our trade. Aid is no substitute for it. It is tragic that more was not done recently to help in this way. I support very strongly the efforts of the ASEAN countries to promote their own prosperity and stability and these efforts should have the support of every Australian. I said earlier that a stable, prosperous and secure ASEAN provides an important guarantee for Australia’s future security. Therefore, I strongly support Australia’s initiatives and commend them to the House and to Australia.


-There are two things which I wish to say at the commencement of my remarks. Firstly, I welcome to this House members of the Sabah House of Assembly. Secondly, this debate is far more important than it is rated in this House. I understand that it is to be chopped off very shortly and that further debate on the conference of the Association of South East Asian Nations and its implications is not to take place in this House. It is all very well for the Prime Minister (Mr Malcolm Fraser) to make the sort of statement he made in this House the other night, but this whole question is more deeply implanted in the problems of the Australian economy and in the problems of other economies than the superficial statement made by the Prime Minister would indicate. Unfortunately the honourable member for Leichhardt (Mr Thomson) who preceded me in the debate seems to believe, as does the Prime Minister, that the problems which the textile, footwear and many other industries in Australia are currently facing appeared some time in 1974. That is not correct. The present problems of those industries commenced basically during and were growing throughout the 1960s. The levels of investment and the levels of modernisation in some of these industries have been extremely low. It is fair to say that whilst it is the habit in this Parliament for people to make repeated statements about labour costs in Australia there is at least some evidence that improvements in management techniques would have gone a long way towards modernising many of our basic industries and making them more competitive.

The more unfortunate occurrence in the present situation is Australia’s lack of preparedness to enter into agreements such as those operating under the General Agreement on Tariffs and Trade. The United States of America, which promoted the free trade euphoria of the Kennedy Round, made good and sure that it had secured very, very high levels of protection for itself before it agreed to the cuts which were initiated at the time of GATT. It is significant for people who keep talking about access to Australia’s markets and who listen to the statements of the United States without question to note that 90 per cent of the United States textile market is reserved exclusively for United States manufacturers. Australia at the moment reserves about 60 per cent of her market for Australian manufacturers.

Mr Hyde:

– Because it pays us.


-The United States does not do real bad in world trade. Japan has almost a total embargo on any form of entry into the

Japanese market which is in competition with its own industries. Far back I can remember hearing Sir John McEwan complain about the difficulties of getting anything on to the Japanese market. Japan and the United States represent the two greatest potential markets in this part of the world. Both of them are substantially closed off whilst the Australian market is extremely vulnerable. I consider that the blundering statements and the handling of some of our protection measures by the present Government have caused some of the problems which face us. Earlier tonight the Leader of the Opposition (Mr E. G. Whitlam) mentioned a statement made in this House within an hour of the statement by the Prime Minister in which it was indicated that we would be seeking to change our trading relations and that we would be seeking to bring about certain re-allocations of sources of imports. The Minister for Business and Consumer Affairs (Mr Fife) stood up in this House shortly afterwards and announced reductions in quotas in most of those sensitive areas about which the countries making up the Association of South East Asian Nations were making complaints.

I have never been stupid enough to suggesst that Australia can afford to denude itself of its basic manufacturing industries. Those who have done so have always referred to more efficient areas of production in which the labour force can be placed but none of them have ever been able to stand up here and reveal those more efficient areas of production. The honourable member for Wakefield (Mr Kelly) cannot do so either. The honourable member for Paterson (Mr O’Keefe) has stood up in this House on numerous occasions and made statements about the textile industry. I want to make some rational comments on that industry and other industries in Australia. Talk of restructuring industries in Australia to date has been substantially pie in the sky. Talk of additional investment in order to modernise productive methods and therefore make Australian industries more competitive also is pie in the sky. The simple reason for saying that is that no long term guidelines and no policies have been laid down. No structures have been provided whereby those alterations to the internal structure of Australian industry can take place. The White Paper which was brought down in this House did not offer any way out for those industries which will disappear gradually in the next 10 years. I would agree with the honourable member for Moore (Mr Hyde) in that respect. Despite any levels of protection, substantial portions of our industries will just fade away and die, largely because of obsolescence and complete incapacity to manufacture at anything like acceptable cost levels. That will create vacuums which cannot be met in the employment area.

A lot of nonsense is also talked about increasing employment opportunities in Australia. Unless manufacturing industries maintain something like their levels of employment and tertiary employment is increased- current government policy is to reduce it- there are no other areas in which opportunities can be created. At an earlier time in this Parliament the Prime Minister made a statement to the effect that he did not think that the Government should be encouraging investment in industries which would bring about modernisation of production methods to the extent that this would cut down the labour content in those industries. Unfortunately you either have that investment or you have no industry at all.

The ASEAN countries, as with other Pacific countries, represent very substantial markets for a lot of our goods, not only in the primary areas but also in the mineral and manufacturing areas. Because of lack of thought about our approach in many of these areas we have created demands which I doubt very much that the Australian Government can meet. The Prime Minister’s statement would indicate that the Government has no intention of meeting them for access to Australia’s markets. We are the only market which appears available and the only market in which we appear to be currently continuing to alter our protective mechanisms. We have very few long term protective mechanisms.

One is told almost daily that all of the problems of Australian industry started some time in 1974 with the 25 per cent tariff cuts. As I pointed out earlier in this speech, most of the industries which got into trouble at that time were in trouble immediately before the 1973 boom. Most likely those areas of problem were staved off by that boom. The delicacy of the ASEAN position relates to the fact that we have something like a four to one favourable trade balance with the Philippines. In 1974 exports of textiles from the Philippines to Australia were almost non-existent. Within 12 months, because of the investment of foreign capital in that country, those exports had risen to something like one million pieces a month. The Australian market was not geared to absorb that in addition to the imports which came from Taiwan and the imports which are now coming from China and South Korea. A substantial section of Australian industry was hit a sledge hammer blow in the period after the world shortage of goods in late 1974.

I believe that a far more serious approach has to be taken. I have never hesitated saying in this House that I do not believe that we can allow open competition in Australia. I believe that is correct. When one talks about more efficient production one also has to look at the living standards and wages in Australia and those in other countries. Those things are not the only consideration. We also have to look at financial incentives. In some Asian countries which are exporting large amounts to Australia there are tremendous financial incentives for a manufacturer to establish. Manufacturers are given practically tax-free, cost-free accommodation to encourage them to establish themselves in some countries. That is a condition which Australia cannot match. I do not think Australia should be seeking to match it. But it creates a lack of competitiveness within our industries.

The Prime Minister also mentioned in his statement the talks he had with the Japanese Prime Minister, Mr Fukuda, and especially those relating to sugar. I would like briefly to mention those talks, which are critical to our long term trading arrangements with a number of countries and not just Japan. I have already mentioned the protective mechanism that exists in Japan and the almost total impossibility of obtaining access to the Japanese markets. I think it is reasonable to say in this House that although the present price of sugar under the long term contract with Japan is high by world standards it was originally negotiated at a price that was considerably below the world price because the Australian negotiators were prepared to sell at lower than the normal price in exchange for long term contracts. The fixed price of the contract was at the insistence of the Japanese Government- not the Australian negotiators.

The present problems within the Japanese sugar industry have been caused substantially by an over-capacity of about 20 per cent and a malapportionment of the Australian sugar by Japanese companies at the time because they thought the sugar was cheap and that therefore a commercial advantage would go to their affiliates by giving them a greater share of the Australian sugar than the non-affiliates of the trading companies which were undertaking the imports. I think it is fair to say that the Japanese industry is in very serious strife. It is most likely in as much strife as the Australian textile industry or footwear industries. But the problems are internal to Japan and have little relevance to the price of Australian sugar, which is in fact lower than the domestic price of Japanese sugar which goes through the same refineries. The malapportionment and the excess capacity, which even now is being exacerbated, are the real problems. I do not think Australia can afford to be in the position where, having negotiated a long term contract and the world price drops, it then has to sacrifice its capital investment in what is an efficient industry but where, when the price rises, it does not gain the benefit. That is in fact what we are being asked to accept. Whilst the sugar contract is being challenged we have price cutting taking place on a grand scale in the iron ore field at the moment. I would suggest that one of the things that Australia has to do as a trading nation is accept the single seller proposition, especially in relation to negotiations in Japan, on all commodities.


-Firstly, I would like to pay a tribute to the honourable member for Leichhardt (Mr Thomson) and to say how much I appreciate the tribute that he paid to the way in which my continual representation of a lower tariff structure has influenced his thinking. I might say that I have. always had a hunger and a longing for the day when someone who represents the National Country Party of Australia woke up to the significance of the burden that the exporters have had placed on them. We on the Liberal Party of Australia side of politics have a need for the support of the thinking National Country Party members- and there are plenty of them. I hope that many others will follow the example of the honourable member for Leichhardt and recognise so clearly that it is to the benefit not only of the other nations but also Australia to trade with one another. I appreciate the tribute that he paid and I welcome very sincerely his contribution to the debate.

The honourable member for Corio (Mr Scholes) challenged me to say how people would find employment if the tariff structure were reduced. That is the kind of comment that I get passed at me very frequently. Let me say just one thing about that. It is interesting that the honourable member for Newcastle (Mr Charles Jones) is sitting alongside the honourable member for Corio at the moment. The things which we are good at and the things with which we have a natural advantage are things like iron and steel. We could be much more competitive in the exporting of iron and steel if the iron and steel cost structure were not influenced by the same cost structure as the exports of primary and secondary industry. There is no such thing as a free feed, and everybody knows it now. If only we could get our cost structure tuned to the world situation so that we could compete. We have a natural advantage in respect of iron and steel. We should employ our people on things that we are good at instead of persisting in employing them on things that we are not good at.

That brings me to my main concern about this ministerial statement. I am most concerned about the highly protective attitude of the Government. There is a kind of pathetic belief that we ought to trade with other .countries for the sake of those other countries. I think it is a good idea, but the main thing that we ought to do is trade with them for our sake. If one looks back over the history of our trade with Asia one will see that before the war everybody said that Japan was an unfair competitor. The Japanese concentrated on the things they were good at and took advantage of their lower rate of wages and gradually Japan became a significant trading nation and the largest market for our primary products. Exactly the same thing has happened all over the world. The world is indeed like a bucket of worms. The world’s economy is changing all the time. The textile industry in Japan had the natural advantage of lower rates of wages. The textile industry shifted off shore. It went to Taiwan and Korea. Those countries developed a textile industry and, in the same way as Japan, became very significant markets for our products. Things happened in a natural manner.

The process is continuing. If one looks at the figures one will see that because the rates of wages in the countries forming the Association of South East Asian Nations are lower than in Korea and Taiwan the textile industry is shifting to the ASEAN countries. We poor, pathetic people are trying to stop the inevitable march of progress. Honourable members should look at the figures. The honourable member for Moore (Mr Hyde) spelt them out in his usual logical manner. The labour force in South East Asia will virtually double between 1975 and 2000. Indonesia’s labour force will jump from 45 million to 80 million; the Philippines’ labour force will jump from 14 million to 28 million; Malaysia’s labour force will jump from 4 million to 7 million; and Thailand’s labour force will jump from 20 million to 35 million. By contrast, ours will rise from 4 million to 5 million. By sitting here like King Canute and saying that we are going to keep things the same we are trying to withstand the inevitability of change- change that will be to the benefit of not only the ASEAN countries but also Australia.

One of the things that we have to realise is that every barrier to imports is an automatic barrier to exports. Every time we sit on the shore like

King Canute and say ‘Do not let these textiles come in’, we automatically, because we have a flexible exchange rate that moves in relation to the trade balance, make it more difficult for exports to go out. Yet we sit here in the pathetic belief that we are creating employment. This is the tragedy of Australia’s situation. With so many opportunities opening up before us we sit here like King Canute. I am probably doing him an injustice. He was trying to hammer home to his courtiers that it was the wrong way to behave but we still sit here while the opportunities wash around us.

We have appointed a Minister for Special Trade Negotiations to tackle the problems in the European Economic Community. I have been unable to obtain the balance of trade figures between Australia and the EEC. I do not know whether we have a problem. I am certain that no one has a clear opinion of it. The opportunities that are opening up before us in the ASEAN countries are startling. Honourable members may be surprised to hear me pay this tribute but people in the EEC countries are splendid farmers. Mr Deputy Speaker, you would be the most knowledgeable in this area. You know how good they are. I heard you say so the other day. The things we want to sell them are the things that we are good at growing such as wheat, flour and beef. Those are the products that they are also good at growing. They have a natural hesitation to trade with us. They put up barriers against imports in the same way as we do.

The opportunities are boundless for us to sell to the ASEAN countries the things that they do not grow which we have a natural advantage in producing well. They need wheat, flour, beef, iron and steel and dairy products. We are messing around with the EEC and thinking that this is where our opportunities lie when those of us who know our farming realise that farmers in the EEC countries are very good at growing those things themselves. Mr Deputy Speaker, I repeat that you would know more about this matter than anybody. Yet we are pretending that we will solve the problems relating to the EEC when the opportunities in the ASEAN countries are boundless. I am pleased to see that the Minister for Special Trade Negotiations (Mr Howard) has entered the chamber. I hope he will listen to my plea and realise that the opportunities do not loom in the EEC. I have no doubt that if they did he would squeeze every drop of juice out of that lemon but the real opportunities lie to our north. We have an advantage in that the ASEAN countries need the kind of things we produce naturally. Yet here we sit like King Canute saying that we must stop imports from these countries whatever we do.

I want honourable members to remember that we cannot stop the inevitability of change. It is inevitable that we need to increase the tariff burden to keep out textile, clothing and footwear imports. We say that we are going to stop them and that whatever happens we will save employment in these industries. We are dedicated to the people serving in these industries and we will protect their employment. If we protect all these industries it will pay, even now, to go to Singapore to buy clothes. I have a friend. He dresses a lot better than I do. I suppose you would call him a flashy dresser. He had to buy three suits. I have never bought three suits at one time in my life. You may frequently do that, Mr Deputy Speaker, because you are always the picture of sartorial splendour. This chap is also very well dressed. He wanted three suits and he was staggered to find they were going to cost him $900. Mr Deputy Speaker, do you know what he did? He bought a package ticket to Singapore. He bought the three suits he wanted and came back with $ 1 0 in his pocket.

Even at the present rate of protection it is inevitable that we cannot stop the tide coming in as King Canute knew and demonstrated to his courtiers. We sit here pretending that we can stop the inevitability of trade. It is no good saying that we are going to stop imports at whatever cost. Perhaps we will then have to stop people going overseas. We will live in a citadel Australia. Yet we have always kidded ourselves that we live by exports. One of the things we ought to realisehonourable members on this side of the House and the Government are always most eloquent in saying this- is that inflation is the real problem. I often wonder whether they recognise that inflation is a long-winded name for rising prices. The category of goods which rose the fastest in the last cost of living figures was clothing. I knowthe Minister knows- that inflation is our problem. Yet we are pathetically trying to stop the inevitability of change and not recognising that we increase inflation by increasing the cost of clothing.

Wherever one goes one finds the most eloquent criticisms of the people who have the nerve to place quotas in the way of beef and try to stop sugar coming in. Yet we have a range of quotas which has hardly ever been matched in the world. Perhaps that is not a fair criticism. There are other countries which are even worse but we are demonstrating that we can catch up with most. We criticise people who put barriers in the way of our trade while we demonstrate with frightening efficiency that we are determined to stop trade with other countries at almost any price. The tragedy of the ministerial statement is that we are denying ourselves not only the opportunity to help the ASEAN countries but also, above all, the opportunity to help ourselves.

Question resolved in the affirmative.

page 600


Second Reading (Budget Debate)

Debate resumed from 23 August, on motion by Mr Lynch:

That the Bill be now read a second time.


– It gives me great pleasure to rise in this debate to join with those economists, political commentators and others who have praised this Budget. Who would have thought when the Government came to office 20 months ago that the tax formula could have been restructured as it has been in this Budget? When the Whitlam Labor Government was elected in December 1972 unemployment was approximately 1 . 4 per cent of the work force. Inflation was running at about 4.5 per cent. When the Whitlam Government was dismissed from office by the people 3 years later, unemployment had escalated to 5 per cent and inflation to 16 per cent. The Fraser Government inherited a very sick economy from its predecessors.

During the past 20 months the Government has made a reduction in inflation its number one target. It is a remarkable achievement that inflation has now been reduced to less than 1 1 per cent. However, strong inflationary pressures are still at work. This Budget is designed to continue to contain inflation. The cut in personal income tax is one measure which the Government has employed in its fight against inflation. Its impact will be to bring about a redistribution of income from the Government to the people, with the greatest proportional gain going to the lower and middle income earners. This is in line with the Government’s commitment to reduce the burden of income tax and thus to restore the incentive for personal effort. Every taxpayer will benefit to some extent from the restructuring in the Budget of the tax system.

Unlike salary rises, tax cuts are noninflationary. They should, however, provide a further stimulus to demand, which should lead to expanded output. They will give a considerable boost to the economy. Since industry is operating well below capacity at the present time a lift in output would cut unit costs of production and increase productivity. Such an expansionary policy would prove more effective in winding down inflation than a policy based purely on contraction.

Further measures taken by the Government in its fight against inflation have been to budget for a deficit of $2,270m this financial year-a reduction of $523m on the past financial year- and also to reduce the ever growing Commonwealth Public Service by one per cent. However, despite these cuts, the Government has honoured its promise to pensioners and pensions will rise in November by $2.20 to $49.30 a week for single pensioners and by $3.70 to $82.20 a week for married pensioners. Despite the squeals from Labor supporters in the left wing teachers’ unions, spending on education will increase by 9.8 percent. The massive sum of $2,371m will be allocated by the Commonwealth Government to education this financial year. Higher student allowances will be paid from the beginning of 1978. Assistance to the handicapped will be increased by 33 per cent to $93m a year.

Unemployment is a continuing problem that should be of concern to all Australians. When the present Leader of the Opposition (Mr E. G. Whitlam) was Prime Minister, he used to tell us that unemployment was not the fault of his Government; it was a world wide problem. Now that he is in opposition, of course, he tries to tell our Government that unemployment, which we inherited from his Government, is all our fault and due to our policies. Nothing is to be achieved by trying to gain cheap political points in this way. Unemployment is too great a problem and it should concern us all. It is not only an economic but also a social problem. How wrong it is that in a country such as ours, rich in natural resources and in need of so much development, we are paying people because we cannot provide them with work.

I believe that unemployment is one of the greatest challenges facing this Government and the people of this country today. We face this problem in common with many other Western industrialised countries. It is a problem which we must tackle with all our energy. Australia has a lower unemployment rate than the average rate for the 24 member countries of the Organisation for Economic Co-operation and Development. However, the proportion of the unemployed who are aged under 25 years is higher in Australia than it is in most other OECD countries. In Australia about 55 per cent of the unemployed are aged between 15 years and 24 years. If these young people spend many years at school and perhaps at tertiary institutions, as our society requires of them, merely to find there is no work for them within that society, they will question the worth of the training and of the society itself.

Another group which deserves attention comprises those who have worked for 20 or 30 years and suddenly find they are amongst the unemployed. These people have a great deal to contribute by way of expertise and skills, and employers should look closely at preconceived ideas regarding age limits for job applicants. There are many people who want to work and to contribute to society. It is morally wrong to label all those who receive unemployment benefits ‘dole bludgers’, as some people do. It should be pointed out, however, that in our society today there are some people who unfortunately do not want to give; they want only to take. These are the people who abuse the benefits system. They cannot and should not be tolerated in our society. In the Australian of 16 April 1977 it was reported that the results of a survey by the Bureau of Statistics indicated that only 49.8 per cent of those who were unemployed were genuinely looking for work. Among the rest of the jobless 15.5 per cent gave false addresses and 1.2 per cent gave non-existent addresses.

Total unemployment benefits have gone up over the past 10 years from $1 lm to $567m. The number of young people under 2 1 years of age who were unemployed rose by approximately 80,000 to 152,000 during the time of the Whitlam Labor Government. I quote an admission made by the Leader of the Opposition in an address he gave to the National Press Club in Canberra on 20 July 1 977: … the Labor Government was too slow to perceive the dangers of sudden and excessive growth of wages in 1974.

He went on to state:

With hindsight, we ought to have done more to urge caution on the Arbitration Commission and other tribunals.

That was a masterpiece of understatement by the Leader of the Opposition. The largest increases in real wages in 1974 flowed to young people by way of increased wages to adult rates and to women through the introduction of equal pay. Whilst agreeing with the principle of equal pay for equal work, we cannot turn our backs upon its economic consequences. It cannot be disputed that the largest areas of unemployment at the present time are with youth and with women. About 55 per cent of our unemployed, as I have said, are aged between 15 years and 24 years. This percentage is one of the highest percentages of the OECD countries for that age group, yet we are below average in terms of the total percentage of unemployed.

Since 1965-66 real minimum wages and other labour costs of employing males have increased by 44 per cent. The cost of employing a female in a similar job has risen by 86 per cent. The largest yearly real wage and labour cost increase occurred in 1973-74. It is my belief, and many economists will agree with me, that the rapid increase in real wages is the major cause of our large number of unemployed today. In mid- 1974 unemployment started to escalate dramatically, aided by the encouragement of higher wages by the then Labor Government.

Unemployment among females can be shown by comparing employment figures of February 1974 with those of” February 1977. In manufacturing industry employment of males fell by 8.6 per cent, yet the employment of females during the same period fell by 1 9.5 per cent, more than double that of males. It is clear that the Government has a responsibility to aid these problem areas specifically. The Government has clearly recognised the need to tackle these problems. I commend the Government for this approach. The basis of the Government’s policy is to redress the structural imbalance noticeable in recent years, firstly by encouraging wage restraint and, secondly, by introducing specific schemes that directly reduce labour costs.

I refer specifically to the Government’s Special Youth Employment Training Program and the Commonwealth Rebate for Apprenticeship Fulltime Training scheme. Under the Government’s Special Youth Employment Training Program employers are paid a subsidy of $63 a week to provide on-the-job training for young people who have been unemployed for at least 6 months. The most pleasing aspect of this scheme is that an estimated 70 per cent of young people given employment under the scheme have found permanent jobs on the completion of their six months’ training period. This high percentage clearly shows the success of the scheme and proves that this scheme is far more than a temporary band-aid measure. One should stress also that this scheme need not even be expensive. It has been estimated that up to 80 per cent of outlays on such a scheme will be recouped by savings on unemployment benefits and increased income tax receipts. Experience in other countries where similar schemes have operated has proved this correct- such as in Britain where similar schemes are more than 80 per cent selffinancing.

In the Budget, the Treasurer stated that, all told, $i03m- 33 per cent more than last yearwould be spent on employment training schemes. The Government has earmarked $ 1 8m for the special youth training program this year and the Treasurer has stated that if more funds are required they will be found. Whilst I commend the Government for introducing the youth training scheme and for the $I8m which the Government has earmarked for this scheme this year, a little arithmetic shows that $ 1 8m will subsidise not many more than 12,000 jobs.

As 55 per cent or approximately 250,000 of our unemployed fall within the age group covered by this scheme- that is the ages between 15 and 25 years- as this scheme is 80 per cent self-financing, and as approximately 70 per cent of these young people find permanent employment at the conclusion of the subsidy period, I urge the Government to allocate more funds to this program as soon as practicable. Thousands of young people under 25 years of age are expected to apply immediately for governmentsponsored training under this scheme and I would like to see it utilised to the capacity of industry to cope. This scheme has helped about 15,000 teenagers in its first 10 months of operation and I would not like to see anyone turned away because of shortage of funds. Lack of work experience is often the problem met by young people in trying to find a permanent place in the work force. This program has been designed not only to give young people the chance to learn specific skills but also to give them work experience in the area of those skills.

The National Employment and Training scheme has been allocated $54.3m for 1977-78, an increase of $22. 7m over the previous year. NEAT provides full or part time training allowances, living away from home, book and equipment allowances, and assistance with payment of fees and fares for trainees. The increased allocation in these programs is a positive step forward by the Government in the fight against unemployment.

One of the paradoxes of the unemployment situation is that in some areas there is a shortage of workers, particularly in skilled trades. The major reason for this has been the increased cost of taking on apprentices. This has, in the past, made it unprofitable for employers to train the number of apprentices which they had done in previous years. The Government has once again recognised the cause of the problem and sought to alleviate it. It has done this by the introduction of the Commonwealth Rebate for Apprentice Full-time Training scheme, known as the CRAFT scheme. This scheme provides rebates to employers in respect of all apprentices released to attend technical colleges for compulsory full time basic trade training. Rebates are also payable in respect of apprentices undertaking approved full time on-the-job training and these rebates are free of Commonwealth taxation.

Unemployment is a problem which is not confined to Australia. However, there is no doubt that the policies and mismanagement of the previous Whitlam Labor Government contributed considerably to Australia’s present unemployment problems. Increases in wages, which the Whitlam Government encouraged, have meant that employers have been reluctant to take on additional staff or to replace staff. In a survey by the Australian Chamber of Commerce and the National Bank a significant proportion- 32 per cent of companies- said that wage increases had caused a moderate reduction, and a small group- of 6 per cent- said that they had resulted in a substantial reduction in the number of people employed by their companies.

The mismanagement of the economy by the Labor Government which allowed inflation to rise from 4.5 per cent to 1 6 per cent and the rapid expansion of the public sector of the economy at the expense of the private sector set the scene for the present level of unemployment. This Government believes that in order to bring inflation and unemployment under control, sound responsible management of the economy is necessary. There are signs that the Government’s economic policies are taking effect. The 2.4 per cent rise in the consumer price index for the June quarter and the increase in industrial production are encouraging signs. The Government has continually urged wage restraint as important if the unemployment figure is to be brought down.

As the Leader of the Opposition said when he was in government, unemployment is a problem not confined to Australia. No one would deny that the need to combat unemployment is urgent, not only because of the short term effects, but also because of the long term effects on the individual and on society. The Government is tackling both inflation and unemployment in this Budget. The two are intertwined. If we can improve Australia’s economic outlook and continue to reduce inflation there is no doubt unemployment will decrease. I believe the Government’s policies are sound and given time to prove themselves will return Australia to the prosperous nation which it was under previous Liberal National Country Party governments.


-I intervene in the general Budget debate because I will be absent from this Parliament on parliamentary business for some time and hence I will not have the opportunity to discuss during the Estimates debate some of those areas of government expenditure which have been so slashed. One of the things that concern me in looking at the Budget is the confusion that the wording of the Budget Speech can cause in the mind of the ordinary member of the community. I believe that one reform we could make- it is not a partisan reform- could be to pay some attention to the way in which the Budget is presented so that its true meaning can be clearly seen and appreciated by the ordinary individual. I was interested to read and hear the comment of so much of the media because it varied for the first few days after the Budget was presented. Even those people who are trained to try to analyse budgets were obviously confused about its true meaning.

The confusion is understandable when one looks at the dreadful sort of . :—– -.- , that is creeping into everyday usuage. I suppose the word ‘jargonese’ is one such term itself and I accept that that may be the case. When one looks at page 6 of the Budget Speech one sees the words:

This will permit an expansion in the broadly defined money supply to take place in 1 977-78 at a rate a notch or so lower than in the previous year.

A little later the following paragraphs appear:

We have been mindful, however, of the short-term dislocations that might have followed any appreciable reduction in real outlays at this time.

It is a measure of the painstaking preparation undertaken this year that we have been able to shape the Budget firmly within the parameters of our economic strategy, while accommodating the cost of both last year’s and this year’s major tax reductions..

Sir, what nonsense when one tries to reduce it to ordinary plain language.

Mr Baillieu:

– Can you not understand it?


– I cannot understand it because none of those terms are clearly defined in precise understandable language. They are general terms of the worst sort of nonsensical nature. I make a plea that as a parliament we should give some consideration as to how we treat those people we represent in presenting clearly what is being carried on in this place.

This is not a Lynch Budget- it is clearly a Fraser Budget. It is clearly a Budget which has as its basis a return to a class society and a return to privileges for certain groups. It is something that serves as a basis to fit in with the sort of industrial confrontation that was presaged in legislation before the end of last session of Parliament and as recently as last week. I do not think anyone is fooled about the true source of this Budget. I think one of the clearest expositions and analyses of the Budget was given last night by the Leader of the Opposition (Mr E. G. Whitlam). Even though he was somewhat husky voiced he was able to define those points at which we should look. The Treasurer (Mr Lynch) has followed his Budget by attacks on the conciliation and arbitration system which Australia has had for so many years and which is used to try to prevent industrial disputes and to determine what the level of wages should be. One remembers that on other occasions when the industrial movement complained of decisions it was told: ‘You should obey the umpire’.

There is obviously an attack on indexation by Mr Lynch and the Government. One wonders how much further the Government wants to see the Commission wind down its attitude to this matter. How would it preserve its credibility if it made such decisions under such obvious pressure? From time to time the Commission refers to the fact that in wage decisions it has to consider that part of its operations which instruct it to prevent industrial disputes. Unless it pays due regard to these sorts of matters it will only worsen those disputes.

One turns to the so-called tax benefits in this Budget. There have been so many versions of this matter at variance with the benefits which the Treasurer alleged were in the Budget that one starts to smell a rat. It appears that the apparent benefit is nowhere near as large as the Treasurer stated. I understand that the figures which he gave compare the tax savings on the 1976-77 rate of taxation when a more accurate measure of the change would have been to compare it with the index rate for the 1 977-78 year. I appreciate that under this scheme the figures go something like this: On a salary of $8,000 the saving per week at the 1976-77 rate is $4.30. To use the more honest comparison of the 1977-78 rate index, the saving per week is 70c. On a salary of $ 10,000 the relevant figures are $4.79 and, on the 1977-78 rate, $1.18. It is only when one gets into the higher brackets such as $30,000 that one sees the difference between $39.83 and $24.98. A substantial change is taking place.

Let us take that against the flow-on of price increases which have occurred because of” the changed attitude to fuel oil. There will be price changes not only in the use of the fuel but also changes will flow through to all industries which the oil price affects. Any tax advantage is very small indeed. Another matter concerns how we see Australia’s recovery from this situation. A very gloomy picture was still painted about the rate of inflation and unemployment. The present Government, when in Opposition and speaking of Australia’s inflation and unemployment, was never prepared to accept that there was an international element to the degree of inflation and unemployment. However, probably the one hope of the Government is that the low recovery being shown in the United States of America will be reflected through the other major countries and so assist Australia.

If one looks at the situation in other countries it is rather interesting to see what is occurring. Certainly, in the United States, the inflation rate is flattening out, if anything, somewhere over 5 per cent. The unemployment rate is falling towards 5 per cent after having peaked at almot 9 per cent in 1975. Canada shows a much more favourable position and so do many of the other developed countries. Australia shows an inflation rate which dropped to just over 10 per cent and which is now predicted to rise to the 1 1 per cent to 12 per cent range. Its unemployment rate is still on the rise after having hit almost 6 per cent. I always accepted that there was this major international factor in Australia’s problems. Perhaps the Government is wishing that it had paid some notice to that situation.

We were told in 1975 by the Prime Minister (Mr Malcolm Fraser) that he needed three full years to get the economy back into gear. One cannot help but feel that these controversial tax changes which give so little real benefit to the ordinary people in the community will further dampen any possibility of economic recovery and are possibly there with an eye to an early election. The nature of the Budget seems to be one way of making the poor worse off and the rich better off. This is quite a change from what normally occurs in Australia. There has been a tendency towards the development of a less class conscious society. This Budget is once more placing an emphasis on the class division. This is exacerbated by a target being made of various industrial organisations through legislation in this House. One wonders why the Public Service should come under pressure. One wonders at the complete absurdity of some of the legislation when it is applied to skilled persons. If skilled persons who are in short supply withdraw their labour, no amount of compulsion can produce other people skilled in carrying out that duty. The oft quoted example has been the air traffic controllers. It has been said that in the United States the air traffic controllers are not allowed to strike. Of course they are not allowed to strike, but their conditions are twice as good as those enjoyed by the air traffic controllers in Australia. At least they have rest periods for meals. At least they have a surplus of controllers to take over during gaps or to make up for deficiencies caused by illness and so on. Certainly they are much better paid.

In an electorate like mine, which is a fairly average working class electorate, this Budget will give no tax relief. It will do nothing to improve the high rate of unemployment in the area, even though local bodies such as our city council would prefer to see the citizens employed in something like the Regional Employment Development scheme. So much productive and useful work could be done in that area in the public sector rather than having people paid out in social welfare benefits. Of course, there is also a social cost to all that. There is the deadly effect of the individual, particularly the school leaver, not being able to get employment. The school leaver is hit with an atmosphere of hopelessness at home, at school, and when he leaves school and tries to find employment. A lot was said in this Budget about the youth programs. I have not seen much benefit for the young people in my community from these programs, although we have co-operated in trying to set them up. The fact is that the programs do not properly train the young people nor do they do anything about supplying job opportunities.

Coming to the field of education, there is no doubt that, considering the rate of inflation, there has been a cut in real terms- that seems to be the fashionable jargon phrase to use- in the amount allocated for education. Unfortunately, this has happened at a time when, due to the lack of programs and the lack of stimulus for employment opportunities, many more children will be staying longer at school or going on to tertiary institutions. There has been a real cut in the amount of money that will be made available, and it is no wonder that those persons concerned with education are complaining strenuously. A further factor has been the redistribution in recurrent expenditure as between the nongovernment schools and the government schools at a time when some real progress was being made and problems caused by lack of social opportunity and the difficulties of migrant children in relation to languages were being corrected. Because of the expenditure cuts, programs which have allowed under-privileged schools to develop systems appropriate to their needs can no longer be carried out.

In the field of welfare housing, in Victoria there are waiting lists of 1 8,000 people who have to wait four or five years for such housing. What is the social cost of that situation? What hope is there in the Budget for any change? The Budget is said to have redistributed money, to have put more money into people’s pockets in order to stimulate the recovery of the economy. But when it is analysed, this Budget has done nothing real in that regard. It has redistributed the money from those in the lower income group to those in the higher income group. We have a conservative Government with a massive majority. It has said that the hallmark of the genuine conservative government is the stability of the country. I have no doubt that this conservative Government is most cynically using this Budget and other measures further to divide the Australian community, leading to a great many more problems in the end. That is not conservatism, it is a radical philosophy of the worst type.

Monaro · Eden

– The honourable member for Scullin (Dr Jenkins) is worth following because he does command a great deal of respect in this House. However, he strayed slightly when he spoke in such emotional terms in his speech just now about class conscious societies. That is one of the things that this Government is trying to get away from, but still the honourable member tried to brand us as the sort of people who would create divisions and class conscious societies. I was poignantly reminded during the honourable member’s speech of a discussion I had during the dinner adjournment with a panel beater in Queanbeyan, which is a good average Australian city. The panel beater drew my attention to the fact that the Whitlam Government, more than any other Government for many years, created a class conscious society in this country. The Whitlam Government put great emphasis on Johnny being a doctor as distinct from Johnny being a panel beater.

Dr Jenkins:

– Are you getting personal?


– About the Whitlam Government?

Dr Jenkins:

– No, about the doctor.


-I suppose I should not have said that. I realise that the honourable member for Scullin is a doctor and he would be aware of the great esteem in which his profession is held by the mothers and fathers who want Johnny ‘to do better’. The class conscious society was created to a great extent in recent years by the Whitlam Government. It believed that people were better if they earned more money or if they had a better formal education. I believe that the present Government is getting away from that and moving towards the day when Australians will be measured on their merits, on the merits of how much they produce and how much they try to help other people in society.

That is the way this Government acts. This Budget as with the previous Budget, has been a very difficult one for the Government. It has tried to straighten out some of the worst faults in the direction taken by the previous Government. That statement is often made at question time, and in the view of some members of the public it is said too often. I do not believe that it is said too often.

One of the things that can be said with great pride is that this Government since the end of 1975, when it was required by the nation to straighten out the management of this country, has proved to be a government of good management. People have so often said that one of the reasons a Liberal-National Country Party government is elected is that it is a good management government. That fact is well known. I wonder whether some of the people on my side remember often enough the achievements of this Government during 20 months in office. The Budget for the year 1976-77 predicted certain things which were laughed at by the other side. It predicted that inflation would come down in that period by 4 per cent or 5 per cent per annum. In his speech last night the Leader of the Opposition (Mr E. G. Whitlam), and I do not like to use this word, was mendacious when he said that inflation had risen during that period. We know it has not. The housewives of Australia who buy their groceries know that it has not. They know that it has come down. The managers know that it has come down. The people in the street to whom the Leader of the Opposition does not relate also know it. The increase in the volume of money as predicted in the 1976-77 Budget is between 1 0 per cent and 1 2 per cent.

Dr Klugman:

– Like the number of unemployed.


– Another doctor interjects. The increase in the volume of money was set at about 10& per cent, as predicted. Productivity per man or woman was predicted to rise in this period by 4 per cent. This was completely different from the results achieved by the previous Government, which managed through its conniving and tampering with the Australian economy to achieve negative productivity for the first time for many years, if not probably for the first time ever in Australia. Productivity was predicted to go up by 4 per cent and according to the Budget Papers it rose by Vh per cent. However, this is provisional and the figure may well be adjusted upwards. The statistics on inflation, money supply and productivity show that the predictions for each was very close to spot on. So this is a government of good management which is exactly the basis on which the people elected us.

I turn now to the rates of inflation under the previous government. I know that this is a little unkind of me but in 1974 under the previous government the quarterly changes in the consumer price index were 2.4 per cent, 4. 1 per cent, 5.1 per cent and 3.8 per cent. In 1975 they included 3.6 per cent, 3.5 per cent and 3.5 per cent. All these figures were above what we used to attain in a single year before then. In the last quarter of 1975 the increase in the consumer price index was 5.6 per cent. Then suddenly be-‘ cause we had to bite the bullet, as everybody says, things started to turn around. And it was sudden. In 1976 the figure fell to 3 per cent in the first quarter, 2.5 per cent in the second quarter 2.2 per cent in the third quarter and 2.8 per cent in the fourth quarter. The increases in the CPI in the first two quarters of this year were 2.3 per cent and 2.4 per cent. We have suffered because the people wonder why they cannot have things on a plate as easily as they used to under Labor. It is not easy for this Government to stand up to the people without the extravagant schemes of the previous government, but we were elected because we were good managers. We know that what comes in has to go out and vice versa.

Not all of the things that at this time last year we wanted to achieve have happened. Unemployment has not come down as we had hoped. When we compare the earnest attempt by this Government in recent weeks before the Conciliation and Arbitration Commission with the earnest attempt by the Opposition to promote wage rises as being somehow desirable, it is obvious that this Government wants to get unemployment down. I can appreciate why the Opposition does not want to get unemployment down. It can see electoral advantage in having agitation by the people against this Government. In every forum the Opposition says, in as many words: ‘We do not want unemployment to come down; we do not want good management; we do not want inflation to come down further; we do not want productivity to keep rising’. It realises that good management means that it will stay on the Opposition benches. What the Opposition really wants is to be in government and not for Australia to be well managed.

In relative terms Australia is prospering. At the moment the country is not running as well as we all would like. But in an electorate such as mine the people are realising that basically they are prospering. The people know that there has been an increase in disposable income in the last 12 months for the average person. I am talking here in terms of real purchasing power as distinct from some rather obscure statistics that the captain of the Australian Labor Party keeps producing on television. The statistics show an increase in disposable income. They show that there has been an increase in company profits- not spectacular but nevertheless an increase. In percentage terms it is spectacular but of course after the Labor disaster we started from a very low base. The statistics show that in relative terms pensioners, the disadvantaged, the handicapped and the sick have benefited since Labor went out of office.Theyare the people about whom Labor so mendaciously says it cares for but really does not. We have achieved at great cost but to our electoral advantage great increases in all these economic indicators within the framework of producing greater social justice. This Budget records that fact.

The fight is on against inflation. It is a tremendously difficult fight. Of itself, inflation does not matter; it is the problems that inflation brings in the economy that matter. It is a very big fight. Again we have the captain of the Australian Labor Party, who is determined not to get inflation down, speaking in the Press about increases in wages. We who have some practical experience in the field know what happens when wages go up more quickly than productivity. We are fighting against inflation. This is difficult without the necessary powers. I will quote now what was said by one of the Laurel and Hardy team referred to in question time this morning when he introduced the Budget in 1975. He said:

We are no longer operating in that simple Keynesian world in which some reduction in unemployment could, apparently, always be purchased at the cost of some more inflation. Today, it is inflation itself which is the central policy problem. More inflation simply leads to more unemployment.

I am not quite sure what has happened to his brain since, but certainly when he said that he was spot on. Again, referring to inflation, I have another quotation but I do not quote accurately this time because I do not know what the Bishop of Lisieux said in the 14th century. However, it was something to the effect that bad money forces people to save good money. It is probably difficult for those honourable members opposite to understand but that is what has been happening today.

The Labor socialist strategy- and I must give the Labor Party credit not for its policies but for being openly socialist these days- is that the Government should spend a lot more money. The Labor Party always says that. It argues therefore that we should raise more taxes. The other member of the Laurel and Hardy team said quite recently in a statement that he would increase taxes if he were the Treasurer. This is the Labor socialist strategy. They do not seem to have ever had to manage money. Most of them have never been in the situation of having to cope with money. That is what the Budget is all about.

One of the things about which I would like to speak just briefly, in case some of the economists in the Parliament do not mention it, is high interest rates. One of the things that flows on from inflation and the typical Labor policies of high deficits is the problem of high interest rates. We are still grappling with that problem. If honourable members look at the accounts set out in the Budget Papers they will see that last year the Government had to raise a great deal of money to cover the Budget deficit. The money which the Government had to raise affected the alternate uses to which that money could have been put. Under the heading of ‘Other Financial Transactions’ it had to raise $132m. That included money used from Government trust accounts et cetera and it could have been used in the open market for other reasons. The net gain to the Government from savings bonds was $366m, minus $87m the other way in treasury notes, and $ 1,494m from other loans- and that refers mainly to Commonwealth inscribed stock and treasury bonds. A total of about $ 1,905m had to be taken out of circulation so that the Government could finance all those programs which people had been taught to want. Do not forget that the Government also has facing it a large amount, a record amount, of maturing loans this year, $l,710m for Commonwealth inscribed stock and treasury bonds, and a large amount on top of that, probably around $100m, for special bonds and other maturing stock. That amount of $ 1,905m will be reduced this year because of stringencies in the Budget to reduce the deficit.

We should always remember that the raising of large sums of money by the Government from the public has a tremendous effect on interest rates. It is not the only thing that has an effect on interest rates but in the present context it is one of the most important factors keeping up interest rates. One of the things that happens when interest rates are high- I know this because I was in this situation- is that young couples in Australia find that they cannot afford to buy a house. They might be able to raise the deposit but when they look at the repayments which include the interest rates, the cost of interest, they cannot afford them. One of the big factors that has been pulling back the housing industry in recent times is the high cost of money. High interest rates are a great cost also to business investment. In normal times if a person can make 15 per cent on his money he is prepared to go ahead with a business investment and is therefore able to employ more people. If he has to pay 14 per cent or 15 per cent for money it is a great discouragement. Interest rates depend upon a number of things. The deficit is only one thing but in present times it is probably the most important factor. The very solid achievement of the Government in bringing back the deficit in this Budget will go a long way towards lowering interest rates.

I would like to speak about this subject for a long time because I think that the interest rate at present is one of the most important things which the Government should attack within the parameters within which it can work. Of course, the Government cannot unilaterally pull down interest rates. I am running out of time in which to speak so I just reiterate that because of previous Budgets, the Budgets of the Whitlam Government as compared with the last two Budgets, we can see that the Opposition really does not seem to have ever had to manage. I have said that before in this speech. The Opposition does not appreciate what creates unemployment. It does not appreciate what people mean when they say to me that they have cut down the staff at their motel from ten to six and they are still managing somehow. They will never put those people back on again. The Opposition does not appreciate what a person in the construction industry in my electorate said the other day. He told me that he had cut his crew from 25 to eight and is still managing. The Opposition does not appreciate any of these things. All it appreciates is the denigration of genuine tax reform. All it appreciates is playing around with the Australian people for political ends. It cannot appreciate what the working people of Australia are all about.

Debate (on motion by Mr Jacobi) adjourned.

page 607


University of Western Australia -Sydney Airport- Army Cadets- Report of the Bureau of Roads- Hydro-electric Charges in Tasmania

Motion (by Mr Howard) proposed:

That the House do now adjourn.


– I speak tonight on behalf of five students from the University of Western Australia who were recently charged and found guilty of certain offences under the University’s Discipline Statute. I am interested in their case because I have in the past shown support for students oppressed by leftwing university authorities. Basically the students claim that the University is indulging in intimidation of conservative students by selectively enforcing the University Discipline Statute against students known to be conservative. Four of the five students in question are members of the University Liberal Club. They were picked from a crowd of some 40 to SO persons having a peaceful demonstration and reported to the University by some cranky feminists. The University, acting on nothing but the testimony of these feminists, several of whom admitted at the hearing to be biased against the accused students, laid charges of misconduct. The students were charged with multiple offences ranging from assault to wilful damage. They were cleared of all specific offences alleged but were still found guilty of the general offence of misconduct of which the University refused to give details. That was a wonderful judgment, a wonderful judgment indeed. They were convicted on the basis of a frame of mind- shades of my old friend Joe Chamberlain. He convicted some people on the basis of a frame of mind some 22 years ago and I think I might have been one of them.

The facts of this matter are as follows: No inquiry was held by the University and the charges were laid by a handful of sworn political adversaries. This was considered to be sufficient evidence. After the Murdoch University incident of a week ago when the Premier of Western Australia, Sir Charles Court, was almost pushed through a plate glass window, an inquiry was held to determine objectively whether anything warranting a charge had taken place at that university. The students to whom I am referring were given the benefit of no such independent inquiry and I think this is a particularly dangerous precedent. Previous demonstrations at the Western Australian campus have never been the subject of disciplinary charges even though many of them have been of a particularly violent nature. This particular demonstration, probably the first on campus by conservative students, was very mild and many witnesses, including many women, testified to this at the hearing.

One demonstration last year directed at the University Liberal Club was violent in the extreme yet no charges were laid against the leftists involved. Members of the Club were locked in a room with the guest speaker, a Federal Minister, Mr Viner, the Minister for Aboriginal Affairs. Abuse and obscenities were rife and when the Minister was finally extricated a bodyguard was required to see him to his car. Members of the conservative University Liberal Club were kicked and punched and crockery was thrown at Mr Viner but no charges were laid.

The recent hearing was told of much damage done to University and Guild property by the women. For example, a large section of stonework in the adjacent car park had to be repaired and resurfaced after a huge women’s slogan had been painted there that night. No charges or inquiry emanated from this act. The toilets, male and female, were extensively defaced with slogans on feminism. The cost to repair them was substantial. The men’s toilet was the worst. Several large anti-male slogans were gouged into the plaster. This sounds very much like the gang that defaced this place a few years ago. No charges were laid and no inquiry was held into this damage, albeit extensive, to which the women admitted.

It seems strange that the persons charged were those who were playing a very minor role in the whole proceedings- virtually just looking on. Perhaps this is more readily explained in terms of the New Libido incident earlier this year, which I have spoken about before in this place. Three of those charged wrote articles for the magazine to which both the women and the University authorities took exception. Why is it that left wing trendies are allowed, even encouraged, to hold violent demonstrations; yet any sign of opposition or publicity of a more conservative opinion on campus is fraught with serious repercussions. It is getting to the stage where members of the Liberal Club cannot take a public stand on any issue without the fear of serious reprisals from either the Guild or the University. The question that occurs to me is: If the University is not being pressured by left wing trendies into selective enforcement of its rules, who is pressuring it? It seems to me also that this offence might be something else that could be laid at the feet of the Australian Union of Students, which could not conduct a duck raffle in a pub without welshing.

Mr Les Johnson:

-The matter I want to raise tonight concerns the anxiety that many people have about the extension of the airport facilities at Sydney (Kingsford -Smith) Airport. I think it would be recalled by honourable members that this matter has been the subject of consideration and controversy over a very long period of time. A ducks and drakes game is being played in respect of this matter. As elections approach we find all kinds of camouflaged confusion invoked to deter people from understanding the real situation.

Many suburbs in the Sydney region are adversely affected by the present activities at Sydney (Kingsford-Smith) Airport and there is very great consternation that extension of the runway facilities could seriously aggravate the living conditions experienced by many thousands of people.

I refer to the fact that the Government of New South Wales, through the Premier, Mr Wran, has indicated in a most unequivocal way that it will not support or countenance the idea of the development of a second parallel runway into the Kyeemagh area. Indeed, on the 1 8th of this month in the State parliament the Premier was asked a question about this matter by the honourable member for Rockdale, Mr Bannan The Premier said in part in a fairly long answer:

It is true that one of the options is what is known as the Kyeemagh proposal. Without wishing to prejudice the considerations of that Committee - he was referring to the MANS Committee-

I should like to let the honourable member for Rockdale know that I have made it clear, in a letter I wrote to the Rockdale Municipal Council on 2 1 July, that I can ‘envisage no circumstances under which my Government would support any proposal for additional runways at Sydney airport ‘.

He went on to say:

I made it clear that we will not support further development of Sydney Airport that would in any way aggravate the existing impact of the airport on surrounding suburbs. Evidence gathered by the Government indicates overwhelmingly that it is not feasible to construct a parallel runway system at Sydney airport without enormous financial, environmental and social costs.

I think that puts beyond doubt the attitude of the New South Wales Government. What is in doubt at the present time is the attitude of the Australian Government. I believe that the Minister for Transport (Mr Nixon) should make a statement on this matter in the near future.

I draw attention to the fact that in Budget Paper No. 5, which concerns the civil works program for 1977-78, provision is made for site investigations for a parallel runway system at Sydney (Kingsford-Smith) Airport. It seems to me that this Government has to make up its mind on this matter. I ask the Minister for Special Trade Negotiations (Mr Howard), who is at the table, to refer this matter to the Minister for Transport. Since it is a fact that Budget Paper No. S makes provision in Division 83 1 for the expenditure of $51,079 for site investigation of a parallel runway at Sydney (Kingsford-Smith) Airport, I want to know whether that implies Government support for a dual runway system. If the answer is in the negative, I go on to ask why this expenditure has been provided for in the Budget.

There is one way to put this whole question beyond doubt and that is for the Minister for Transport to indicate that the provision should be withdrawn from the Estimates. This matter concerns people in my electorate, the electorate of St George and the electorate of Barton. I believe that it is one that should be settled with the least possible delay. It is having an effect on property values and some people are feeling extremely insecure. I challenge the Minister to indicate clearly whether this Government is going to take positive action along the lines I have suggested.


– I would like to draw the attention of the House to the new spirit that is developing in the Army cadet force, which was sneered at and disbanded by the Australian Labor Party. In particular, I want to draw attention to the good relations that are now developing with the Regular Army and the Army Reserve. With the help of the Minister for Defence (Mr Killen) and the Department of Defence- in particular Colonel De Lehunty- I visited the 3rd Cadet Brigade at annual camp in the state forests at Puckapunyal on Friday, 19 August. Having worked on the defence and foreign affairs committee of my party and in both the Regular Army and the Reserve Army in the United Kingdom, I was able to assess some of the valuable work being done at that camp. It was perfect weather. In fact, the whole camp had been conducted in perfect weather.

I was met by the commander of the BrigadeColonel Whitehead. I then went straight to see what was being done. The camp, which is being held between 29 July and 28 August, is comprised of 2,000 cadets from Victoria. May I add that they are not all from wealthy schools. Some are from Warragul Technical School, Northcote High School, Collingwood Technical School and Melbourne High School. So let us get away from the idea that the cadets come only from the wealthy schools. They come from many stratas in society. They are interested in the defence of this country. There was also an arrangement whereby the schools which happened to have bands had a band camp so that they were able to practice and learn music at Puckapunyal.

The object of the cadets scheme, as I understand it, is to be certain that at no time shall this nation ever be short of those who are able to lead and command. The object of the camp is a reasonable one. It is one to which nobody, with the exception of honourable members opposite, excluding the honourable member for Wills (Mr Bryant), would take exception. It is that every person in the Army as a cadet should be able to maintain himself in the field, handle weapons, read a map, navigate by day and by night, fire on the ranges and at least see some of Australia’s new defence weapons, in particular the tanks, in action. It is now of great credit to the Regular Army and the Army Reserve that there was sufficient equipment at the camp to enable all the units taking part in it to have the correct Army equipment. I am referring to wireless sets and all the other things that are necessary to make for a successful camp. I would like the House to know that every cadet has fired 35 rounds on an open range and has used a modern rifle. Every cadet has been able to observe, take part in and understand proper instructions from Regular Army officers. I think the House should also know that I looked with care into the medical arrangements and the safety arrangements for all cadets. They were well planned. I was absolutely satisfied that everything was there in case of emergency.

During my visit to the units in the field I had an opportunity to talk to the training officers and in particular to the PSI’s and the cadet officers. In addition, it was a real pleasure to talk to so many of the cadets themselves concerning the camp. I asked them only one question, namely, whether they had learned anything of real value. All of them gave the simple answer that this camp has enabled them to put into practice all that they have learned in theory. There is no doubt therefore that considerable credit must be given to the Army cadet officers, to the under cadet officers, to the boys themselves and to all those responsible for encouraging and training cadet units and their programs. But, of course, each cadet and each unit receive valuable training and assistance from the regular Army. As a result I felt that there was now serious co-operation between the cadets, the regular Army and the reserve Army. This speaks well for the future. I cannot see how cadet units can operate without the support of the reserve forces of the Crown.

If I were invited to make three suggestions I would make them in this order: Firstly, I think that the Army brigade headquarters should have three more PSI instructors next year. Secondly, I think it is offensive that the cadet officers have to pay tax when they are at camp. Thirdly, I suggest that the vote be changed so that the vote for the cadets is not confined just to camp and so that every cadet is allowed to have the full Army vote for the whole year. It seems to me that above everything else the training of young cadet officers with the regular and reserve Army is something of which this Party, the Minister for Defence and all those connected with the defence of this nation can be exceptionally proud.


– I hope the Minister for Defence (Mr Killen) takes note of what the honourable member for Holt had to say. His complaint is one that should be levelled completely at his own party. For 23 years when it was in government it did nothing. It has been in government for the last 20 months and likewise it has done nothing. The honourable member for Holt should direct his complaints to his own party. Tonight I shall speak on the report of the Australian Bureau of Roads on the general location in the vicinity of Newcastle of the national highway linking Sydney and Brisbane. In 1974 when the Labor Government declared national highways it left a blank rectangle from Swansea to Hexham. In the report which was prepared prior to that declaration there were suggestions not only on that area but also on a number of other points on the national highway around Australia- that there should be a detailed study to determine the exact location of the national highway.

As I said, the Bureau of Roads was asked to prepare this report in 1974. It did so and presented it to the present Minister for Transport (Mr Nixon) on 1 1 March 1976. It recommended that the national highway should go west of Lake Macquarie. That may mean nothing to honourable members but people in the Newcastle district understand completely what I mean by east and west of Lake Macquarie. The present Pacific Highway goes east of Lake Macquarie through the heavily built up suburbs of Newcastle causing a considerable amount of traffic congestion and creating ecology problems in the Blackbutt Reserve. A select committee of this Parliament made a unanimous recommendationa joint party recommendation- that the national highway should not go through Blackbutt Reserve. All these facts clearly establish that there should be no national highway east of Lake Macquarie.

None of the people or organisations who made submissions to the Bureau of Roads supported the location east of Lake Macquarie. They all supported the location west of Lake Macquarie. Anyone interested in roads today knows that throughout the world the trend is not to put highways through cities but to put bypasses around cities. That is what this report is all about. What concerns me at the moment is the fact that the New South Wales Department of Main Roads has put proposals to the Federal Minister for Transport to spend very large sums on upgrading the temporarily declared section of national highway between Doyalson and Swansea. I hope the Minister for Transport does not accept the programs being submitted to him by the New South Wales Government. The amount of money involved is $10.5m this year. As the cost is based on 197S figures that $10.5m in reality will be approximately $15m. That amount would provide enough finance to build approximately one-third of the road west of Lake Macquarie.

It is up to this Government to ignore the recommendations of the New South Wales Government and get on with the job of constructing the highway west of Lake Macquarie. This will provide a highway of national standard which will relieve the city of Newcastle and Lake Macquarie of a considerable amount of traffic congestion. This way it will be doing the job. Some people are advocating that the money should be spent on the Doyalson-Swansea area. If need be the Minister should de-declare- I think that is the term- the section of national highway between Doyalson and Swansea and let it revert to what it was prior to the declaration in 1974, namely, rural arterial. It should let the State Government use its own funds on upgrading that section of the Pacific Highway as a rural arterial road and get on with the job of constructing the national highway west of Lake Macquarie. That is the site on which the people of Newcastle require the national highway to be located.


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

St George

-The honourable member for Hughes (Mr Les Johnson) referred to the Sydney airport. The present MANS Committee Inquiry is considering a number of options, one of which is a runway through the suburb of Kyeemagh. That suburb is partly within St George electorate and partly within Barton electorate. When the Committee first announced its consideration some months ago that particular option was not displayed in its published material. It was not known to the public at large so that people could comment on it in the public participation program. Because of this when the proposal came to light I took the view it was intrinsically an unsound proposal but also that it had been raised too late by that Committee, that there had not been proper opportunity for members of the public to comment upon it and that therefore the Minister for Transport (Mr Nixon) should take steps to have the proposal brought to a halt. I also took the view that it was quite clearly outside the terms of reference of the Committee, although that is perhaps a legalistic point.

The Minister has taken the view that the Committee may continue to look at the proposal but he has stated that that proposal ought to be dealt with at an early time to alleviate the concern of residents in the area, particularly those whose properties may be affected by an unexpected announcement. I would have thought that the honourable member for Hughes would have consulted the Minister on those matters which are public knowledge. Letters have been forwarded to me and other honourable members and to the various other bodies interested in the matter.

Budget Paper No. 5 concerns an entirely different matter from the Kyeemagh runway. For the record I state once again that I am completely opposed to the Kyeemagh proposal. I think honourable members would understand that to rip up 1,200 homes and put down a runway in the midst of the city completely outside and divorced from the present boundaries of the airport does not mean expansion of the airport. The cost to the community would be so great that the whole strategy would fail. There must be a much better way of solving these environmental and transport problems. Although the honourable member for Hughes raised the matter, I am pleased to see that he did so to seek information. He did not make the same criticisms of the Government as the New South Wales Premier, Mr Wran, chose to make in the New South Wales Parliament a few days ago. Mr Wran tried to draw for political capital conclusions which were totally invalid. He has tried to scare the people of the area. In my view he has misled two local State members into making statements similar to his which could only scare people. They are saying that because this item appears in Budget Paper No. 5 there is an implication that the Federal Government intends to go ahead with some development of the runway in that area. I just want to let the House know that in 1971 or thereabouts, as I have been informed by the Minister’s Department, the proposal which appears in Budget Paper No. S for an engineering survey was first mooted. That engineering survey was commenced under the Whitlam Government in 1973. It has appeared in the Budget Papers every year for the past five or six years. The matter has been well known to all parties concerned. It ought to be known to Mr Wran, as should the information that was used by the former committee that the Whitlam Government set up, which resulted in the abortive Galston recommendation. What has happened since is that the new committee has used the data that has been collected and the new MANS committee is appropriating that data to itself. So the impression given by Mr Wran that this Government has initiated something and intends to go ahead with a new runway is totally misleading, quite fraudulent and obviously designed to put fear in the populace. It should be completely condemned.


-Today appears to have been ‘airport day’ and tonight continues to appear to be so. Everyone seems to be speaking on this issue. The honourable member for Hughes (Mr Les Johnson) and the honourable member for St George (Mr Neil) quite understandably are concerned that there might be extensions to Mascot. I have received pretty firm undertakings from the NSW Government in response to letters I have written to the Premier and to the State Minister for the Environment that there will not be a second international airport or a light aircraft airport in the Western Suburbs of Sydney. However, I am concerned that as an alternative to extensions to Mascot -

Dr Klugman:

– It will not go on the North Shore.


– The honourable member for Prospect has said that it will not go on the North Shore. Of course, there is some argument for putting it there. After all, the vast majority of the people who use light aircraft come from the North Shore. Some 45 per cent of the people who use international airports come from the North Shore also. Yet they do not want the airport, or rubbish dumps, on their home ground. They are trying to put the airport in the Western Suburbs of Sydney- that plain running from Parramatta to the Blue Mountains.

For this reason I asked the Minister for Transport (Mr Nixon) at question time this morning a question relating to a businessman, Mr Peter Lloyd, who has suggested that the NSW Government should approach and try to influence the Federal Government to allow the aerodrome at HMAS Nirimba, a naval depot at Schofields, to be used as a general purpose airport, in other words, for light aircraft. I asked the Minister whether he would give an assurance that he would not permit this depot to be used as a general purpose airport. The Minister waffled around, as usual, and did not give any firm undertaking. He referred to the Major Airport Needs Study. As I pointed out by way of interjection, everybody knows that that study relates to a second international airport for the Sydney region.

Mr Bungey:

– You have not even looked at it.


– The Minister probably has not even looked at it but he suggested that I had not looked at it. I have looked at it. I went along to the place in Goulburn Street and looked at the Major Airport Needs Study. I questioned the Department of Transport officials there. I found there were no State Government officials there whom I could question, only Federal officials. Each one of them set about telling me the sites that were being considered for a second international airport for Sydney if Mascot is not expanded. The honourable member for St George might be interested to hear and the honourable member for Hughes will be interested to hear that their first preference was for the expansion of Mascot, for the establishment of a parallel runway there. Officials of the Federal Department of Transport put that proposition when I visited the MANS display.

I then asked them what other sites were being considered. Of course, nearly all of them are on the western plain of Sydney, including Marsden Park, bordering Riverstone and in the Mitchell electorate; Badgerys Creek; the Kemps Creek area; Galston, also in the Mitchell electorate; the Rouse Hill area, also in the Mitchell electorate and on the western plain west of Sydney; Prospect; Hols worthy and Richmond. Everyone of these sites which they mentioned is on the western plain running from Parramatta out to the Blue Mountains. Every one of them is in an area which uses international airports very little indeed. This is my concern. In other words, airports are like garbage dumps- nobody wants them, particularly the people on the North Shore of Sydney. They want to dump an airport in the Western Suburbs of Sydney in the working class areas. What areas would they affect- Badgerys Creek, of course, the Camden area, around St Marys and all the other areas right around the Western Suburbs, which are the housing commission areas of Sydney.


– It absolutely appals me that in the very month when this Government in its Budget reduced taxes for all Australians and decided to forgo $1.9 billion in taxation the State Labor Government of Tasmania -

Dr Klugman:

– It has gone up again. Inflation must be affecting it.


-This State Government which is formed by the party to which the honourable member for Prospect (Dr Klugman) belongs, decided in an unprecedented move to make a savage attack upon the people of Tasmania and the industries of Tasmania by increasing hydro-electricity charges by 25 per cent. Honourable members look stunned. They may well look stunned because an increase of 25 per cent in power charges is absolutely unprecedented in the Commonwealth of Australia. We had the very first generation of electric power in Australia. In fact, it took place in Launceston, Tasmania. We used to be the State which had the cheapest electricity in the Commonwealth. It was used as a great incentive to draw industries to our State. But now we find the State Labor Government declaring war not only on industry but also on the consumers of Tasmania by a mammoth, monstrous, savage 25 per cent increase. The people of Tasmania can see very clearly that the Federal Government in Canberra cuts taxes and the State Labor Government in Hobart raises them by 25 percent.

It is a most serious matter. Of course, it is not news to the people of Tasmania that the Labor Party comprises the greatest tax bandits in this country. The ghost of Ned Kelly stalks this chamber every time the honourable member for Oxley (Mr Hayden) rises to his feet. Heckle and Jeckle- the honourable member for Oxley and the honourable member for Adelaide (Mr Hurford) are two of the greatest tax bushrangers in the history of this country. The serious implications of this power increase come to the matter of unemployment. I want to draw attention to the fact that when the Whitlam Government was in power Tasmania had the worst unemployment of any State in Australia. Since the Fraser Government came to power Tasmania has now dropped to the third worst. It has been passed by

New South Wales, under the careful guidance of Mr Neville Wran, who has done a wonderful job in achieving the highest unemployment record in New South Wales since the Depression. It will go higher under his careful guidance. The unemployment level in the Northern Territory, too, is worse than Tasmania’s. I am very concerned for the major employers in my State, such as the Electrolytic Zinc Company of Australasia Ltd in Hobart, and the Mount Lyell Minning and Railway Company Ltd, which this Government has bailed out once again, thanks to the efforts of the honourable member for Braddon (Mr Groom). Over one-third of this company’s running costs are in- curred in hydro-electricity charges. I am concerned also for the operations of Comalco Ltd at Bell Bay all these enterprises are endangered. The employment prospects of Tasmanians, which had started to improve as a result of the initiatives taken by our Government in Canberra, have been dealt a very savage blow by the disgraceful action of the socialist Government in Hobart. The Liberal spokesman on employment in the Tasmanian House of Assembly, Mr Roger Groom, M.H.A., who is the member for Braddon, has conservatively estimated that 2,000 jobs could be at stake as a result of this savage impost. I should like to go on in detail but time is running against me. I just want to ask: Are the householders and pensioners of Tasmania to switch off their hydro power- their radiators- for 25 per cent of next year?


-Order! We will have to wait for the answer. It being 1 1 p.m. the debate is interrupted. The House stands adjourned till 10.30 a.m. tomorrow.

House adjourned at 11 p.m.

Cite as: Australia, House of Representatives, Debates, 24 August 1977, viewed 22 October 2017, <>.