Senate
22 May 1956

22nd Parliament · 1st Session

  1. Senate
  2. 22nd Parliament
  3. 1956

The President (Senator the Hon. A. M. McMullin) took the chair at 3 p.m., and read prayers.

page 841

CENTENARY OE RESPONSIBLE GOVERNMENT IN NEW SOUTH WALES

The PRESIDENT:

– I wish to remind honorable senators that the opening of the second session of the thirtyeighth State Parliament of New South Wales to-day marks the 100th anniversary of the first meeting of that Parliament and of the granting of responsible government to that State. I am. sure that all honorable senators will join with me in extending to the Parliament of New South Wales our congratulations and best wishes on this historic occasion, and in expressing the hope that the years that are to come will be marked by continued prosperity and progress which have been features of the period that has elapsed since responsible government was granted to that State

Senator O’SULLIVAN:
Minister for the Navy · QueenslandMinister for the Navy · LP

– This is one of those occasions on which, I am sure, however inadequately my sentiments are expressed, they will be endorsed and supported by all honorable senators. The attainment of the 100th anniversary of representative and responsible government is a circumstance in which not only the people of New South Wales, but also Australians generally, regardless of the States from which they come, should take great pride. All States should offer to the people of New South Wales most sincere congratulations on the phenomenal progress which has been made by their eldest sister. Indeed, this is a record which thrills every Australian. The remarkable progress in every phase of life - a fuller, freer and better life enjoyed through the efforts, the work and the sacrifice of those who have gone before us - is something in which we as Australians can take great pride and great encouragement. I am very happy, Mr. President, to associate not only myself and honorable senators on the Govern- ment side of the chamber, but also I am sure, honorable senators opposite, with the remarks which you have made.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I should like to associate myself with the remarks made by you, Mr. President, and the Leader of the Government in the Senate (Senator O’Sullivan) on the very happy occasion of the centenary of responsible government in New South Wales. Selfgovernment, I think, is very much like good reputation. One does not realize its priceless value until one has lost it. This occasion causes us to have some fundamental thoughts. First, one must be grateful to those who, for the first tinkin Australia, won the right to self-government for the State of New South Wales which at that time, I understand, included Queensland. One must also, looking at the vast development of New South Wales, and realizing that its beautiful capital city of Sydney is one of the great cities of the world, pay tribute to all the governments and all the people down the 100 years of selfgovernment who have achieved such extraordinary progress. It is hard to believe that the tangible assets, the public works and the activities of New South Wains have been developed in such a vow short time.

T think it is appropriate that, at thi* moment, we should have regard to the words of John Buchan, I think it was. “ the only way in w*hich we can pay our debt to the past is by putting the future in debt to ourselves”. That is a very proper thought to entertain at this moment, and we should realize that, in 100 years from now, we shall be judged upon the principles we have adopted now, and upon the practices that we institute in the period that lies immediately ahead. One hundred years ago, in New South Wales, there was merely a Legislative Council, of whose members, two-thirds were elected, and one-third were nominated by the Governor of the State. The Governor was in supreme command, but even he and the Legislative Council were subject to the veto of the British Government: so that the veto, about which we hear so much these days, was not, unknown more than 100 years ago. It bears out the old saying that there is nothing new under the sun. I take pleasure in associating myself very particularly with the remarks that have been made to the Senate, and we of the Opposition take particular pride that at this happy moment, when New South Wales is celebrating this centenary, there is a Labour Government under the leadership of Mr. J. Cahill, in office in that State to conduct the celebrations.

page 842

QUESTION

TELEPHONE SERVICES

Senator O’BYRNE:
TASMANIA

– By way of preface to a question that I direct to the Minister representing the PostmasterGeneral, I inform him that, in a letter that I recently received regarding the installation of telephones, my correspondent, who is a chartered engineer, stated that he was still receiving the same old answer that he got in 1946 when he applied for a telephone to be installed at his residence. As he very rightly pointed out, apparently a telephone is the only commodity, apart from battleships, which one cannot get on the commercial market. In view of the great difficulty that is being experienced by people throughout Australia in obtaining telephones, can the Minister explain the position that came to light as a result of a raid on an illegal bootmaking establishment in Melbourne during the week-end, when 40 telephones were found to be connected to one establishment for starting-price betting purposes? Does not this reveal great laxity on the part of the administration of the telephone branch? Can a check be made on other nests of telephones, which evidently deprive deserving people of a socially essential service?

Senator COOPER:
Minister for Repatriation · QUEENSLAND · CP

– As I have mentioned before in the Senate, the Government is quite aware of the shortage of telephones. One of the reasons for the shortage, in my opinion, which I have expressed before, is the prosperity of the nation. Telephones are not merely adjuncts to business premises. They are now installed in many residences. Many thousands of telephones have been installed since this Government came to office. The telephone branch is gradually overtaking the lee-way, but some time will elapse before a telephone can be supplied to every person who wants one. The Government is doing the best it possibly can to expedite the provision of telephones for all applicants. I shall bring to the notice of my colleague, the Postmaster-General, the honorable senator’s comments about the raid in Melbourne during the week-end.

page 842

QUESTION

GENERAL MOT ORS-HOLDEN’S LIMITED

Senator ARNOLD:
NEW SOUTH WALES

– I preface a question to the Minister representing the Minister for Customs and Excise by saying that the very substantial profit recently disclosed by General MotorsHolden’s Limited has caused some public comment. Will the Minister make available to the Senate a statement showing what protection is available to companies producing cars made wholly in Australia against those who incur the penalty of a tariff upon a wholly imported car ?

Senator O’SULLIVAN:
LP

– I shall be very happy to make that information available to the honorable senator, assuming that it is available; I have no doubt that it is.

page 842

QUESTION

AUSTRALIAN NATIONAL TRAVEL ASSOCIATION

Senator BUTTFIELD:
SOUTH AUSTRALIA

– My question is directed to the Minister representing the Minister for Trade. Is it a fact that extra money has been allotted to the Australian National Travel Association? If so, how much will it be and what proportion of it will be directed towards the promotion of tourism from hard currency areas ?

Senator SPOONER:
Minister for National Development · NEW SOUTH WALES · LP

– The Government recently increased the appropriation to the Australian National Travel Association to £50,000 per annum. As to what proportion is allocated to hard currency areas, I cannot say offhand. No such stipulation was laid down. The amount was made available to the association without any definition as to where it should be spent in order to attract tourists.

page 843

QUESTION

WHALING

Senator TANGNEY:
WESTERN AUSTRALIA

– I ask the Minister for National Development a question following upon the Minister’s statement to the Senate on the 10th May when, in reply to a question asked by the Leader of the Opposition, he stated that the Nor’ West Whaling Company, the recent purchasers of the Australian Whaling Commission’s assets at Carnarvon, would employ all those who had been formerly employed by the commission, particularly those whose homes were at Carnarvon, and that the Public Service Board would employ those members of the commission’s staff who had been displaced by the new company, and so on. Has the Minister’s attention been drawn to a statement appearing in both the Western Australian and South Australian press over the week-end that 130 men will lose their jobs as a result of this transaction, and that those men who had left good jobs in the Public Service to go into the service of the Australian Whaling Commission will be placed in jobs in which they will lose from £90 to £700 a year in salary and that the Nor’ West Whaling Company stated it is abiding by the terms of its agreement with the Government? What were the terms of the agreement with this company with regard to the employees of the Australian Whaling Commission? Out of the profits which the Government says it has made from the sale of the commission’s assets, will any bonus be paid to those employees whose faithful service over the six or seven years of their employment with the commission has made such a profitable transaction possible ?

Senator SPOONER:
LP

– I do not remember exactly the specific words of the speech I made to which the honorable senator has referred. Whatever assurance I gave to the Leader of the Opposition and the Senate was correct. I did not conjure the statement out of the air; I made it after obtaining advice from officers of the department. The honorable senator has said that I made a statement to the effect that all those who were previously employed by the Australian Whaling Commission would be found employment elsewhere. My recollection is that I made no such statement, but that I said that those who were previously employed at Carnarvon would be found employment elsewhere. If that statement is not correct I shall be very surprised. I shall make inquiries, and if what I said was not correct I shall say so to the Senate; but in this question and answer the presumption is that what I have said is entirely correct, and that what I have said will be carried out. As to the other details to which the honorable senator has referred, I am sorry to say that I have not seen the newspaper reports or quotations. I shall have those reports examined, and if they contain anything that is contrary to what I said previously, again I shall let the Senate know. It is all very well to make a song and dance about transactions like this–

Senator Critchley:

– It is the honorable senator himself who is making a song and dance.

Senator SPOONER:

– No, I put a factual statement to the Senate in contradistinction to a very biased and unfair statement made by the Opposition. It is all very well for an honorable senator to stand up and ask whether any arrange ment has been made to give the employees a share of the profits of the business. When a Labour government administered the Australian Whaling Commission, did it give a share of the profits to the employees? I shall be very much surprised indeed to learn that it did. These suggestions and proposals are aimed only at obtaining party political credit, and are not based on consideration for the employees concerned. Consequently, I have very little sympathy with such suggestions.

page 843

QUESTION

TASMANIAN SHIPPING SERVICES

Senator HENTY:
TASMANIA

– Is the Minister for Shipping and Transport aware that no potato ship is listed to leave the northwest ports of Tasmania for Sydney during the week ending the 2nd June? Will the Minister have this matter examined with a view to providing a ship to enable the regular trade in Tasmanian potatoes for Sydney to be maintained?

Senator PALTRIDGE:
Minister for Shipping and Transport · WESTERN AUSTRALIA · LP

– I understand tha i at the moment the position is as described by Senator Henty, that a ship has not as yet been allocated for the week that he mentioned. Currently the position is under examination by the Australian Shipping Board and the Tasmanian traffic committee, with a view to ascertaining whether any ship can be allocated during the period stated.

page 844

QUESTION

STERLING LOANS

Senator ROBERTSON:
WESTERN AUSTRALIA

– My question is directed to the Minister representing the Treasurer. Has the Treasurer had his attention drawn to a statement made by the executive officer of the Victorian Employers Federation, Economic Division, and published in the West Australian of the 21st May? That statement was to the effect that British investors had withdrawn more than £100,000,000 sterling from Australia since 1939. Will the Minister representing the Treasurer make a statement giving a true picture of British investment in, and withdrawal from, Australia at the present time?

Senator SPOONER:
LP

– I have read the statement to which the honorable senator has referred, but I have not discussed the matter with the Treasurer. T was very interested in the statement, and I wondered whether the reference was to a net balance of capital - whether withdrawals had exceeded additional investments. I know that there has been a substantial flow of British capital into Australia in recent years. In view of the public interest in such a matter, I suggest that the honorable senator put her question upon notice, and I shall obtain the relevant figures if they are available.

page 844

QUESTION

HOUSING

Senator ASHLEY:
NEW SOUTH WALES

– Will the Minister for National Development inform the Senate whether it is true that, in the last twelve months, in New South Wales, there has been a serious decline in the commencement of construction of new cottages, and that responsible leaders in the building industry in New South Wales have become alarmed at the effect of this trend? Is it a fact that a special meeting of the Master Builders Association of New South Wales was held recently to discuss the problem, which is caused solely by lack of finance, and thai the industry, on the statements of ils own leaders, is in a position to absorb more finance without creating inflationary tendencies or causing a shortage of materials or labour which would lead to a possible return of black-marketing? Is this trend a most serious one, not only because of the loss of new homes, but also because many competent building teams which were built up over a period, are being broken up or diverted to other work to the detriment of the home-build j ing programme? Is it a fact that there can be no solution of the home-build iiia problem until a more realistic approach is adopted by the Australian Government, the financial policy of which is solely responsible for the drop in the homebuilding rate? Is the Minister aware that, in New South Wales, it has been estimated that, during the first three months of 1956, the commencement rate of new dwellings was down 25 per cent., and that the building industry estimates that that estimate represents a drop of 1,000 houses in the period?

Senator SPOONER:
LP

– I congratulate the honorable senator upon his knowledge of the building industry. I suggest that he might have more appropriately moved the adjournment of the Senate, rather than ask a question which will occupy the best part of a column in Hansard. So that the honorable senator may add to his store of knowledge, I remind him that, last year, a record number of houses was built throughout Australia. I also wish to inform him that cottage building costs in Australia last year increased by 10 per cent. I remind the honorable senator, also, that the task is to employ our resources to the best possible advantage so that we can get the maximum number of homes with the minimum increase of building costs. With great respect to those who hold contrary views, I point out that that is exactly what happened during the year 1955. We have obtained a record number of homes in Australia - unfortunately, with a 10 per cent, increase in cost, but still the rate of construction was a record. Jeremiahs will always arise in every period of the building trade’s history to say that the Government is making too much money available or is not making available enough money. At present, the Jeremiahs are saying thai the Government is not making enough money available. It is not entirely a matter for the Government. The Government is only on the margin of the building industry. I forget the exact figures, but

Hie amount that has been spent on building, outside of home building, is very greatly in excess of that which has been -pent on home building. As honorable senators will see from a bill which will be before the Senate this afternoon, we have attacked this problem and an endeavour is being made to dampen down private investment so that the resources we have got will be distributed more evenly. I am sorry I have not the time to answer thu other fourteen points in the honorable senator’s question, but I shall be pleased to do so if he will move for the adjournment of the Senate.

page 845

QUESTION

ATOMIC WEAPONS

Senator WORDSWORTH:
TASMANIA

– I preface my question to the Minister representing the Minister for Defence by pointing out that the attention of the whole world is directed towards the recent atomic explosion by America and tho effects of this terrific explosion. It has been stated in the press already that the American Government is being forced to reconsider its attitude towards civil defence owing to the tremendous effects of this explosion. Will the Government reconsider its policy towards civil defence and inform the Senate whether in its opinion the money spent on civil defence is worth while, or whether it is just impossible to devise any effective defence against this terrible weapon?

Senator O’SULLIVAN:
LP

– The question raised by the honorable senator is one of tremendous importance. I will discuss the matter with my colleague, the Minister for Defence, and if, emerging from that discussion, there is something worth while to place before the Senate, I shall be happy to do so.

page 845

QUESTION

MONOPOLIES

Senator BROWN:
QUEENSLAND

– I ask the Leader of the Government whether the Government is in favour of competition. ]s the Government in favour of monopolies? ls the Government aware that there is a constant move among retail distributing traders towards the establishment of monopolies? Does the Government know that in the last few months southern distributors have taken over various stores in Brisbane? Is the Government aware that McWhirters Limited has been taken over by The Myer Emporium Limited, that Overells Limited of Brisbane has been taken over by Waltons Limited and that Finney Isles and Company Limited has been taken over by David Jones Limited? Is the Government in favour of monopolies in the distributing trade? If not, what steps are being taken to offset this trend?

Senator O’SULLIVAN:
LP

– The honorable senator should know from his very long experience that it is not proper l.o ask questions which involve matters of government policy. However, I have no hesitation in stating for his benefit, not fully, but briefly, our general attitude. Our political philosophy favours competition. Our political philosophy is to look with great severity upon any type of monopoly that is likely or calculated to be used to the detriment of the people. Our attitude generally, whether it be in connexion with competition or any trade at all, is to give first consideration to the interests and welfare of the Australian people.

page 845

QUESTION

MOOL BULLA FEEDING STATION

Senator SCOTT:
WESTERN AUSTRALIA

– I ask the Leader of the Government in the Senate whether it is a fact that, the Government feeding station in the Kimberleys, known as Moo Bulla, has recently been sold. Is it a fact that there were some 300-odd natives being fed and clothed on the station prior to the sale? Is it a fact that the purchaser of the station has dismissed all native personnel? Was it a. condition of sale that all natives on the station had to be adequately fed and clothed by the purchaser ?

Senator O’SULLIVAN:
LP

– I am not aware of the circumstances surrounding the sale, but I shall have inquiries made and give the honorable senator whatever information follows from them.

page 846

QUESTION

TELEVISION

Senator O’BYRNE:

– My question is directed to the Minister representing the Postmaster-General. I understand that the range of reception from the proposed television stations in capital cities, all situated on the coast of Australia, will be about 60 miles. Consequently, half the area within range will be ocean. Will the Minister say whether any consideration has been given to establishing television stations at a distance from the coast, particularly in New South Wales and Victoria, well away from the capital cities, so that the maximum number of people living in country areas may be served by these initial installations?

Senator COOPER:
CP

– I remind the honorable senator that before this Government did anything about television, it appointed a royal commission which investigated every aspect of it. The report of that commission is both voluminous and interesting, and I suggest that the honorable senator read it.

page 846

QUESTION

TELEPHONE SERVICES

Senator COOPER:
CP

– On the 10th May last, Senator Critchley asked the following question : -

I preface a question to the Minister representing the Postmaster-General by stating that, in South Australia and, I presume, in many other States, many thousands of people are still waiting for telephones to be installed at residences and places of business. Many of the applications have been lodged for more than twelve months. The usual excuse for the delay is a shortage of materials. Can the Minister inform the Senate whether that difficulty has been overcome and whether the number of applications for telephones in South Australia over the past twelve months has increased or decreased?

I have now received the following information in reply: -

As promised I have made inquiries concerning the provision of telephone services in South Australia and find that there are at present 0,080 applications deferred in that State because of plant shortage. At the same time last year 5,659 were deferred. Telephone connexions in South Australia for the twelve months ended the 30th April, 195G, totalled 10,122 as against 9,701 for the year ended the 30th April, 1955. As suggested in my earlier reply, the increase in the number of deferred applications was due to the greater demand for services generally. Thirteen thousand one hundred and twenty-two applications having been lodged in South Australia during the year ended the 30th April, 1956, compared with 11,54!) fur tin; similar period up to April, 1055. The honorable senator is assured that all steps possible are being taken to meet outstanding applications and cater for future development.

page 846

QUESTION

RETURNED ARMY NURSES

Senator TANGNEY:

– I ask the Minister for Repatriation whether many hundreds of Army nurses in Australia who returned from W World War I., are destitute, ill, and unable to obtain medical treatment in repatriation hospitals. As it is impossible for these women, at this remote date from their return from war service, to establish their entitlement to repatriation benefits, will the Minister consider the difficult and strenuous service conditions under which they worked, in all climates, during the years 1914-18, as sufficient evidence of the necessity for their age and invalid pensions to be supplemented by the Government? In cases where destitution and necessity are established, will the Minister consider having the nurses admitted to repatriation hospitals for treatment ?

Senator COOPER:
CP

– It is all very well for the honorable senator to make a broad statement that there are many distressed nurses in the category she mentions. I should be very glad if, in the first place, the honorable senator would bring to my notice any information or request which she may have from nurses returned from World War I. The position of a nurse who served overseas is exactly the same as that of a serviceman who served overseas. They were both members of the forces, and the Repatriation Department looks after all ex-service personnel who suffer in any way from war-caused disabilities, that is, disabilities which can be traced to war service and accepted as attributable to such service.

Senator Critchley:

– That is, if they think it is a war-caused disability.

Senator COOPER:

– If they think it is a war-caused disability, they can bring their case before the department, which has all the necessary facilities for having such cases investigated. If the disability is accepted by the department as being war-caused, then the ex-service man or woman concerned is entitled to the full benefits of the Repatriation Act. This business of saying that the department is responsible for all the nurses of World War I.-

Senator TANGNEY:

– Not all of them - just some of them.

Senator COOPER:

– There are many nurses who have illnesses attributable- to war causes, and they are looked after by the Repatriation Department just as well as it cares for ex-servicemen. However, if nurses have disabilities that are due to age or their civil occupations, they ure not entitled to the benefits of the Repatriation Act. We can grant benefits only in accordance with the conditions of the act. The department and I have no power to say that one section of the community shall receive benefits from the Repatriation Department which other sections of the community, which served on a. comparable basis, may not receive. As I say, a nurse is in exactly the same position as an ordinary member of the forces. There are thousands of ordinary members who are sick and in need of hospital treatment, but because their sickness is not attributable to war service, they are not entitled to receive treatment through the Repatriation Department.

Senator Tangney:

– “What if their disabilities were aggravated by war service ?

Senator COOPER:

– If that were so, they would be entitled to benefit.

Senator Hendrickson:

– And the department would give them the benefit of the doubt-

Senator COOPER:

– As my friend, Senator Hendrickson, says, the department always gives them the benefit of the doubt.

page 847

QUESTION

MYXOMATOSIS

Senator SCOTT:

asked the Minister representing the Minister in charge of the Commonwealth Scientific and Industrial Research Organization, upon notice -

  1. Has the Minister any information regarding recent press statements to the effect that farmers in Australia should take advantage of every known method of destroying rabbits in the next few years?
  2. Is it a fact that the virus known as myxomatosis is losing its efficiency and that, at present, it is only 90 per cent, effective, as against AO per cent, when first introduced?
  3. Is the Commonwealth Scientific and Industrial Research Organization still experimenting with the virus in an endeavour to increase its strength to its original effectiveness of 09 per cent.?
Senator SPICER:
Attorney-General · VICTORIA · LP

– The Minister in charge of the Commonwealth Scientific and Industrial Research Organization has supplied the following answer : -

There is no doubt that all the available evidence points to the danger of a continuing decline in the efficiency of myxomatosis in future years. This, however, will be due less to changes in the virulence of the virus than to a progressive increase in the resistance of rabbits to the infection. Whether the decline in efficiency be slow or rapid will depend in large measure on the regularity and intensity of disease outbreaks in particular areas. At Lake Urana, in the northern Riverina, for instance, myxomatosis has been generally distributed each year since the summer of 1950-51; the change in the natural resistance of the local rabbit population has been assessed by Professor Fenner, of the Australian National University, in large-scale laboratory tests. Using a widely prevalent strain of the virus, the mortality has dropped from 90 per cent, to 50 per cent, in three successive seasons.

This change in the resistance of the rabbit has so far not been obvious in the field, where conditions are harder for sick animals and many die that would recover in the laboratory. In fact, the last season’s kill at Lake Urana had all the appearance of being very satisfactory, as it was generally over most of eastern Australia. It would be rank stupidity, however, to ignore the evidence of a change that is almost certain to occur widely, at greater or lesser speed, if we depend on myxomatosis alone. The rabbit, as a problem, cannot be considered to be finished for all time. Once again, land-owners should be urged to take every possible measure to exploit the gains accruing from myxomatosis and to destroy their remaining rabbit populations.

Investigations are, of course, still proceeding in the hope of modifying the virus so that new strains may be developed against which immunity to existing strains will not operate.

This isat best, a faint possibility, and it would he unwise to place reliance on the hope of success. In the light of the existing situation,another step which should be taken is the widest possible distribution of the original laboratory strain of the virus which has a higher virulence than the present wild strains and which may, temporarily, serve to deplete existing stocks of resistant rabbits. To sum up,then, we must accept that the virus now present in the field will become progressively less effective and, in the light of this, two measures for meeting the situation should be applied as vigorously as possible: First, the destruction of surviving populations by orthodox means, and,secondly, the general dissemination of the original laboratory strain of the virus of high-killing power.

page 848

QUESTION

CANBERRA ANNIVERSARY CELEBRATIONS

Senator MARRIOTT:
TASMANIA · LP

asked the Leader of the Government in the Senate,upon notice -

  1. Is the date of the passing of the Seat of Government Acceptance Act in December,1909, recognized as the official birthday of the national capital city of Canberra?
  2. If so, can the Leader of the Government assure the Senate that, in view of the importance of celebrating the fiftieth anniversary of the capital, the Government, in consultation with suitable organizations and associations in Canberra, will take an early opportunity to plan fitting and adequate celebrations of the anniversay?
  3. In addition, will world-wide publicity be given to the celebrations with a view to publicizing Canberra from the important tourist industry point of view?
Senator O’SULLIVAN:
LP

– The following answer is now supplied : -

  1. No. Although the Seat of Government Acceptance Act was passed in 1909, it was not until the 12th March, 1913, that the city was named at an official ceremonyat which foundation stones were laid in the commencement column. The Advisory Council of the Australian Capital Territory has suggested that this date should be accepted as the official birthday of Canberra. 2 and 3. As the fiftieth anniversary will not occur until 1963, no action is yet contemplated to celebrate the occasion.

page 848

QUESTION

ANTARCTICA

Senator HENDRICKSON:

asked the Leader of the Government in the Senate, upon notice -

With respect to the recent broadcast by Admiral Byrd from Washington when surveying the exploration work now being carried out in the Antarctic with the co-operation of 40 nations, has the Australian Govern ment any views in regard to the Admiral’s suggestion that the entire area should be placed under the control of the United Nations? If so, could a considered statement be made to the Senate?

Senator O’SULLIVAN:
LP

– I now answer the honorable senator’s question in the following terms: -

The Australian Government can see no reason for placing the Antarctic Continent, including the Australian Antarctic Territory in particular, under the control of the United Nations.

The extent of the Australian Antarctic Territory is defined in the Australian Antarctic Territory Acceptance Act of 1933. Under the legislation the Commonwealth accepted the Australian Antarctic Territory from the United Kingdom as a territory under its authority. In doing so, we inherited the benefits of British discovery and activity going back to the Antarctic voyage of Captain Cook. Prior to the Act, however, the Australian Government was itself actively engaged in Antarctic discovery and exploration. Australians played an important part in the Antarctic expeditions at the turn of the century - Scott 1901-4 and 1910-13 and Shackleton 1907-9. In 1911-13 Dr. (now Sir) Douglas Mawson led an Australian expedition to the Antarctic which carried out extensive exploratory and scientific work. In 1929-31 this distinguished Australian led the British, Australian, New Zealand Antarctic Research Expedition (B.A.N.Z.A.R.E.) which took formal possession on behalf of the Crown of many areas previously discovered by British explorers, together with the new discoveries by his expedition of Princess Elizabeth Land and MacRobertson Land.

Since the war Australian activity has been maintained and has, in fact, increased in range and vigour. Three years ago we set up a permanent scientific base at Mawson. In the coming year we intend establishing a second base at Vestfold Hills, some 500 miles to the east, as well as an advance field station in Kemp Land. New discoveries have been made, further areas have been charted and mapped and the scope of scientific investigation expanded.

Our sustained activity in our Antarctic territory is a measure of the importance which, in our national interest, we attach to the area. Our observations during our period of sovereignty have shown how meteorological changes in the Antarctic can have farreaching effects on the Australian weather; this work has received international recognition. We are also carrying out an elaborate programme of scientific research on such subjects as terrestrial magnetism, geology, glaciology, biology and seismic, ionspheric auroral phenomena.

The strategic importance of the Antarctic Continent is another factor to which we must pay full regard. The distance between our eastern and western coastlines is greater than that between Australia and the Antarctic. The Australian sector lies directly to the south of us, and is closer to us than any other continental land mass.

Apart from large deposits of coal already foundin the Antarctic, we know little of its mineral resources. Because of the very nature of its geological structure it is possible that there are other deposits in the Antarctic. It is also conceivable that the day may not be too far away when the Antarctic will be used as a short route for Sights from Australia to South Africa and South America.

Although we see no reason for placing our Antarctic territory under international control, this does not mean that we have not been prepared, for agreed and defined international purposes, to co-operate with other countries wishing to carry out scientific investigations in this region. Through our association with the International Geophysical Year we haveoffered facilities to any country wishing to set up scientific stations in the Australian Antarctic Territory for that period. Both the United States and Soviet Union are, withou r consent, establishing such stations.

page 849

QUESTION

TELEVISION

Senator ASHLEY:

asked the Minister representing the Postmaster-General, upon notice -

  1. Is it a fact that American tenders were less than half the quote submitted by Amalgamated Wireless (Australasia) Limited for the national television system in Australia?
  2. Will the Minister provide the Senate with a comparative statement of tender prices of English, Australian, American and continental countries, without disclosing names of firms?
  3. Is it a fact that an accepted tender for a transmitter was for an amount in excess of 800,000 dollars, while one American quote was 400,000 dollars for two?
  4. Admitting the dollar problem, what steps were taken to sue that the accepted tender was not excessive because it entailed the use of sterling goods?
  5. What percentage of the equipment is to be made in Australia, what length of time will be allowed for payment for equipment, and what is the estimated total cost of transmitters, studio equipment &c.?
Senator COOPER:
CP

– The PostmasterGeneral has supplied the following answers : -

  1. No. American tender prices were higher than those of Amalgamated Wireless (Australasia ) Limited.
  2. No tenderer offered an appreciable amount of equipment of Australian manufacture although most tenderers included some Australian items. Twenty-two tenders were received but of these only eleven offered a substantial proportion of the total equipment re quired. Seven offered all or most of the items required. Of these one offered United Kingdom equipment, two offered equipment of United States manufacture, one of continental manufacture and throe offered composite equipments made up from items of United Kingdom, Australian and cither United States or continental manufacture. Direct comparison between tenders on a price basis only is likely to be misleading because of differences in types and quality of the facilities offered. However, the following prices which include customs duty indicate the approximate costs of providing the basic items of equipment for two stations by the seven major tenderers: -

United Kingdom £1,350,000-

United States of America (a) £1,484,000.

United States of America (b) £1,352,000.

Continental £1,585,000.

Composite (a) £1,340,000. Composite (b) £1,848.000. Composite (c) £1,404,000.

The equipment being purchased includes items produced in the United Kingdom, United States of America, Continent and Australia.

  1. No. The prices in all cases were reasonably comparable.
  2. The prices and the special features of all traders were considered closely before contracts were placed. Equipment is being purchased from four of the tenderers and includes items manufactured in the United States, the Continent and Australia, as well as the United Kingdom.
  3. Approximately 4 per cent. of the equipment is being produced in Australia. Payment for the equipment will be distributed over the current and next two financial years. The estimated total cost of the transmitting studio and associated equipment for the Sydney and Melbourne national television stations is £1,600,000. This does not cover the expenditure onbu il dings.

page 849

QUESTION

COMMONWEALTH EMPLOYEES’ COMPENSATION

Senator RYAN:
SOUTH AUSTRALIA

asked the Minister representing the Treasurer, upon notice -

  1. How many Commonwealth employees’ compensation claims were made in 1953, 1954, 1955 and 1956 (to date) ?
  2. How many claims were approved, rejected or remain undetermined for each of the abovementioned years?
Senator SPOONER:
LP

– The Treasurer has supplied the following answer : -

The Commissioner for Employees’ Compensation is authorized by section 7 of the Commonwealth Employees’ Compensation Act 1930-1954 to delegate all or any of his powers or functions. There are delegates in 87 different offices of Commonwealth departments and authorities. Regulation 14 requires the Commissioner to make an annual return to the Treasurer of payments made under the act. The statistics, which he compiles from the returns made by delegates, show the number of haw claims for which compensation has been paid during the financial year. The Commissioner does not have a record in the form in which the question was asked. An answer to that question would involve an examination of the files in the offices of each delegate. Inquiries are being made to ascertain the extent to which that information, namely, the number of claims approved and the number which were rejected or remained undetermined, is readily available in the different offices from existing compilations. The number of new claims for which compensation has been paid in each of the years specified in the question -

page 850

QUESTION

TELEPHONE SERVICES

Senator MATTNER:
SOUTH AUSTRALIA

asked the Minister representing the Postmaster-General, upon notice -

How many applications for telephone installations had not been granted in South Australia as at the 31st March, 1956, in (a) the Adelaide metropolitan area; and (6) the rural areas?

Senator COOPER:
CP

– The PostmasterGeneral has supplied the following answer : -

At the 31st March, 1956, the number of deferred telephone applications on hand totalled 6,001 for the Adelaide metropolitan area and 665 for the rural areas of South Australia.

page 850

QUESTION

OLYMPIC GAMES

Senator MARRIOTT:
TASMANIA · LP

asked the Leader of the Government in the Senate, upon notice -

  1. In view of the Commonwealth Government’s big financial investment in the 1956 Melbourne Olympic Games and the likelihood that the games will be the greatest yet held, will the Government take adequate steps to ensure that a full-length colour film of the games is made?
  2. In an effort to publicize Australia and to recoup the Consolidated Revenue Fund for moneys spent on the games, will the film unit of the Australian News and Information Bureau be provided with sufficient funds to carry out this project and bo asked to make a full-length feature film suitable for worldwide distribution?
Senator O’SULLIVAN:
LP

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

  1. The Government does not propose to provide funds for making a full-length colour film of the Olympic Games.
  2. A film recording the events at the games could devote only a minimum of coverage to publicizing the country in which the games are held. Its publicity value to Australia would, therefore, be limited. On the financial side, the Government accepts the opinion of the News and Information Bureau, which accords with the view of the film industry that a full-length colour film of the events at the games would not earn sufficient revenue to recover its cost. The bureau’s film unit, however, has focused attention on Australia as the host country for the games by making a short colour film in cinemascope, to be released in 7,000 cinemas throughout the world, as well as several progress reports on games preparations for world television and cinema outlets. The day-to-day reporting of games events through newsreels and television, although desirable, is not a matter for the Government. Arrangements to this end fall within the functions of the Olympic Gaines Organizing Committee.

page 850

QUESTION

EXPORT OF APPLES AND PEARS

Senator HENTY:

asked the Minister representing the Minister for Primary Industry, upon notice -

  1. Has the Minister seen the report in the Singapore Tiger Standard to the effect that importers in Singapore were annoyed at the “scurvy treatment” received from the Australian Apple and Pear Board?
  2. Is the Minister aware of the type of treatment referred to ; if not, will he cause inquiries to .be made with a view to removing any irritations which can have an adverse effect upon our market for apples and pears in Singapore?
Senator PALTRIDGE:
LP

– The Minister for Primary Industry has supplied the following answer : -

There have been various reports in the Singapore press criticizing the Australian Apple and Pear Board’s marketing arrangements in Singapore. These, articles appear to have been inspired by a small minority of importers who wish to change the present method of distribution. The import of Australian apples and pears into Singapore is in the hands of the Australian Apple and Pear importers Committee, which was set up on the initiative of the Australian Apple and Pear Board in an endeavour to bring about orderly marketing arrangements for our apples ami pears in Singapore. The board has a majority nf apple and pear grower members. Prior tu the committee’s establishment, much wastage ji.il financial loss had occurred because of illtimed arrival nf shipments and the lack of orderly distribution methods for disposal nf the fruit. With the committee operating arrivals are no longer clustered but are arranged to meet market needs. The firms represented on the committee account for about 90 per cent, of the business with Australia. In the board’s opinion those excluded are smaller importers who have operated mainly on a casual basis and have played little part in building up the apple and pear trade with Australia. Membership of the committee was increased from eleven to thirteen following the investigations of an official delegation of the board which visited the area in October, 1955. The delegation discussed the position in detail with all sections of the trade and was satisfied that the committee had achieved its purpose in bringing about orderly marketing conditions in Singapore for Australian fruit. The marketing of fresh fruit through local committees restricted in membership is not unusual. Such panels are used by New Zealand and South African fresh fruits marketing boards and also by other Australian commodity boards in the United Kingdom. South African and New Zealand panels in Singapore are each composed of two firms only. The only method of removing the irritation in Singapore would be by adding to the committee all Singapore importers who have ever dealt in Australian applies and pears. In the opinion of the Apple and Pear Hoard this would not he in the best interests of the industry and would tend to defeat the purpose forwhich the committee was set up.

page 851

MINISTERIAL AND ADMINISTRATIVE ARRANGEMENTS

Senator O’SULLIVAN:
QueenslandMinister for the Navy · LP

– by leave - In accordance with the promise I gave on the motion for the adjournment of the Senate last Thursday, I wish to make an announcement of certain changes that have recently occurred in ministerial and administrative arrangements. These changes are -

  1. The administration of the war service land settlement legislation has been transferred from the Minister for the Interior to the Minister for Primary Industry;
  2. The administration of the war service homes legislation hasbeen transferred from the Minister for Social Services to the Minister for National Development, who in this capacity will be represented in the House of Representatives by the Minister for Social Services; and
  3. The administration of Division 2 of Part II. of the Re-establishment and Employment Act, which deals with preference in employment, has been transferred from the AttorneyGeneral to the Minister for Labour and National Service.

Certain problems associated with the exact delineation of the functions of the Department of Trade and the Department of Primary Industry remain unsettled. A great number of matters have had to be examined, and the allocation of administrative functions is not easy. An announcement on the matter will be made as soon as possible.

I also wish to announce to the Senate that, during the absence abroad of the Prime Minister and the Minister for Trade, the Treasurer will act as Prime Minister, and the Minister for Primary Industry will act as Minister for Trade, and the Minister for Customs and Excise will represent the Attorney-General in the other chamber.

page 851

REGULATIONS AND ORDINANCES COMMITTEE

Senator ARNOLD:

– I present the tenth report of the Regulations and Ordinances Committee.

Report read.

Motion (by SenatorArnold) proposed -

That the report be printed.

Debate (on motion by Senator McKenna) adjourned.

page 851

SUPPLEMENTARY ESTIMATES, ETC

Report of Public Accounts Committee

Senator BENN:
QUEENSLAND

– On behalf of the Public Accounts Committee, I lay on the table the following report: -

Twenty-fifth Report - Supplementary Estimates and variations under Section 37 of the Audit Act 1901-1955 (Commonwealth Consolidated Revenue Fund, for the year 1954-55).

Ordered to be printed.

page 851

ORDER OF BUSINESS

Senator LAUGHT:
South Australia

.- In the absence of Senator Wood and at his request, I move -

That the business of the Senate, Notice of Motion No. 1 standing in the name of Senator Wood, be postponed until Tuesday, the 29th May.

La explanation of this motion I desire briefly to say that the Minister for Air (Mr. Townley) notified the Regulations and Ordinances Committee of the Senate this morning, that an Executive Council minute had been signed recommending to His Excellency the Governor-General that the regulation be repealed.

Question resolved in the affirmative.

page 852

COMMONWEALTH AID ROADS BILL 1956

Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Paltridge) read a first time.

Second Reading

Senator PALTRIDGE:
Minister for Shipping and Transport · Western Australia · LP

– I move -

That thu bill bo now naui a second time.

Under the present Commonwealth aid roads legislation, which was introduced in 1954, an amount of 7d. a gallon is allocated for roads purposes from the proceeds of customs and excise duties on petrol. The purpose of the present bill is to increase those allocations to 8d. a gallon. This increase will operate as from the 1st April, 1956. At the current rate of petrol consumption, the increase will add approximately £1,000,000 to the Commonwealth aid roads grants in the remainder of the current year, and about £4.000,000 in a full year. These additional grants will be paid to the States on the same conditions as the payments already being made under the existing legislation.

As honorable senators are aware, the Government recently introduced measures to increase taxation on certain commodities on which there has been a particularly high rate of expenditure and which involve a large amount of imports. Petrol was one of those commodities, the rate of customs and excise duties on petrol being increased by 3d. a gallon. At the same time, the Government felt that the roads problem deserved special consideration, and that some portion of the additional tax on petrol should be used for roads purposes. In effect, therefore, this bill provides that of the recent increase of 3d. a gallon in the petrol tax, Id. a gallon should be set aside for roads.

It has been contended in some quarters that the Government should make available to the States, for roads purposes, the full amount of this increase of 3d. a gallon in the petrol tax - or, indeed, that the whole of the petrol tax proceeds should be set aside for roads. I do not think any one can fairly say that this Government has not given full recognition to the importance of the roads problem in Australia, or that it has not been liberal in the provision of finance for roads. By a series of legislative measures - of which this is the third since it took office - it has made progressively more generous the basis on which grants are available for roads purposes. This year, the Commonwealth aid roads payments will be £27,500,000. Next year, the payments will be more like £32,000,000. If these figures are compared with what was done previously - with the grants being made, for example, in the year before we took office, which amounted to no more than £7,700,000 - it will be seen how we have substantiated our interest in the basic developmental problem which roads represent. Indeed, the annual provision which we are now making for roads is three or four times as great as the amount being provided when we first took office.

However, the roads problem - which, incidentally, is primarily a State responsibility - is but one of the many important developmental problems which face us to-day. If every branch of activity were to receive all the finance it claims to require, we would have a total works programme in Australia nearer £1,000,000,000 a year than the £400,000,000 a year now provided.

The difficulties being encountered in financing the States’ works programmes at their present level are well known. Indeed, the additional taxation imposed recently - including the additional tax on petrol - was required primarily to enable us to assist the States’ works and housing programmes without calling on treasury bill finance.

If, therefore, we were to adopt the suggestion that the whole of the increase of 3d. in the petro) tax be devoted to roads, we would have to raise this money from some other source. In other words, we would have to impose some further taxation either on incomes or on commodities other than petrol. I feel sure that any such move would find little support.

There is, of course, the alternative that the commitments for which we have been seeking additional finance should be reduced - in other words, that we should reduce correspondingly the assistance which we are giving the States in other directions. Such an alternative does not merit serious consideration. In passing, however, I might mention that, as most of the States rely to some extent on their general revenues and on loan moneys to finance road expenditures, their ability to do so is assisted by Commonwealth general revenue grants and by the special loan assistance which the Commonwealth has made available in recent years. This fact is ignored completely by those who imagine that the only portion of the petrol tax proceeds which goes to assist roads is the portion which is set aside specifically for grants under the Commonwealth aid roads scheme.

Even if the matter were to be considered solely in terms of the proportion of the petrol tax set aside specifically for roads, the present Government has an impressive record. In 1938-39, the Commonwealth aid roads grants represented only 43 per cent, of the petrol tax collections. By 1949 - the last year of the Chifley Labour Government - the proportion had risen to only 47 per cent. In the current financial year, no less than 73 per cent, of the total customs and excise duties on petrol is being set aside specifically for roads.

It is sometimes argued that the petrol :ax was introduced for roads purposes and that, as it is ostensibly a tax on motorists, it is only right and proper that it should be used specifically for roads.

Such an argument completely ignores the facts. Petrol tax was first imposed in 1902. It was not until 1923 that the first roads grants were made to the

States and not until 1926 that roads grants were first associated with petrol tax collections. In every year since 1902 at least some portion of the petrol tax lias been used for general revenue purposes. In 194.0, for example, the rate of petrol tax was increased by 3d. a gallon and in 1946 the tax was reduced by Id. a gallon ; in each case without any change being made in the proportion of the tax set aside for roads purposes.

Finally, it is a fallacy to say that anything like the whole amount of the petrol tax is paid by motorists. Quite recently the president of the Long Distance Road Transport Association of Australia declared that “ whatever tax is paid by the commercial carrier, it must be passed on to the public in the cost of goods and services “. The fact is that between 65 per cent, and 70 per cent, of the total petrol consumption is used in commercial vehicles, and so the cost is passed on to the community at large. It is, therefore, only fair that some part of the tax should go to Consolidated Revenue and be used for the general services and obligations of the community.

Under the Constitution, responsibility for roads rests with the States. We regard it as proper, therefore, that the States should be free to decide the particular roads on which the Commonwealth aid roads moneys should be expended. We have, however, laid down one major condition which was introduced by our predecessors in office; namely, that part of the total grant must be expended on rural roads other than main roads. We have progressively increased this provision for rural roads, and the 1954 legislation provides that at least 40 per cent, of the Commonwealth aid roads moneys must be spent on such roads. As a result, the proportion of the total grant which must be spent on rural roads in the current financial year will amount to about £11,000,000 and this amount, with the increased petrol tax allocation proposed in this present bill, will increase to nearly £13,000,000 next year. In the year before we took office, 1948-49, the amount set aside for such roads was only £2,000,000. This provision is, of course, designed to promote development in rural areas, and is of particular benefit to primary producers and to the local authorities who are largely responsible for roads in these areas. 1 commend the bill to honorable senators.

Debate (on motion by Senator McKenna) adjourned.

page 854

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION (COMPANIES) BILL 1956

Second Reading

Debate resumed from the 17th May (vide page 836), on motion by Senator Spooner -

That the bill be now read a second time.

Senator O’FLAHERTY:
South Australia

– The purpose of this bill is to declare rates payable under the Income Tax Assessment Act, and it deals specifically with the imposition of a flat rate of tax on companies. The Opposition will not support the bill. There are several reasons why we oppose it, but I shall give three in particular. The first is that the bill ignores altogether the principle of taxation in accordance with ability to pay. Secondly, the Government proposes, through this bill, to impose further taxation after a tacit promise that no more taxation would be necessary in this financial year. That statement was made by the Treasurer (Sir Arthur Fadden) when he introduced the budget in August last. The Treasurer said then that there would be no need to increase taxation because the proposals contained in the budget would carry the Government through the difficulties that faced it in this financial year. This bill has been presented a little more than six months after the Treasurer made that statement. The fact is that the bill will not come into operation until the 1st July next, but companies which have a taxable income in this financial year will have to pay the increased impost under this measure in the next financial year. They will pay on the operations of this financial year, and that is contrary to the Treasurer’s tacit promise.

The Opposition will oppose the bill, also, because it does not provide for graduated taxation on the expressed tax able income of companies. The Australian Labour party has been twitted at various times about its taxation proposals. Soon after the Treasurer made his budget statement, a general election was held. During the election campaign, the Labour party made certain proposals about taxation. Some of them were along the lines proposed by the present Prime Minister (Mr. Menzies) in the election campaign in 1949 when the parties he now leads defeated the Labour Government. I refer, in particular, to a tax on excessive profits. During the last election campaign, the Labour party was accused of being arbitrary because it suggested £25,000 as a starting point for the taxation of excess profits. Our opponents said that we paid no regard to paid-up capital. That criticism was made by the Prime Minister, the Treasurer and other supporters of the Government. Their statements were merely political propaganda against the proposals of the Labour party. They were unfair and inaccurate statements, and left an impression that the Government would take paid-up capital into consideration when taxes of a similar nature were considered later.

Now we find that the Government has disregarded that principle. It has also taken no notice of the number of shareholders in a company. The Government proposes to impose a flat rate of tax. It does not take into consideration paid-up capital or accumulated capital, and it disregards the number of shareholders. It does not matter whether there are five or six; 5,000 or 6,000. When we proposed an excess profits tax, we were accused of not taking these things into consideration. Yet, in this bill, the Government has neglected to consider the very things that it said we had not considered. For instance, it has paid no regard whatsoever to the amount of paid-up capital, or the question of whether a company has made profits in excess of the usual or recognized fair percentage. It simply imposes a flat rate of ls. in the £1 on all companies, the extra ls. being based on assessed taxable income irrespective of whether these companies make any profit for themselves. I do not know whether all honorable senators appreciate it, but it is a fact that a company may have a taxable income without earning any net profit whatsoever. The Government has not considered that point. Any companies that are unfortunate enough not to show any net profit will still have to pay the extra ls., based on taxable income.

I repeat that this tax is being levied irrespective of the paid-up capital or even the accumulated capital of a company. No consideration is given to the number of shareholders in a company. This special tax is based on assessable income. It ignores altogether the capital employed, and I remind honorable senators that this is being done by a government which made a definite promise, in 1949, that it would impose a tax on excessive profits. No attempt is being made to do that on this occasion, and that is one of the main reasons why we on this side oppose the measure. Tha Government, however, is retaining the formula introduced by the Labour government dealing with differential rates payable by companies. Public companies with a taxable income not exceeding £5,000, will pay ls. in the £1 less than public companies with a taxable income in excess of that figure. All companies will receive a benefit up to a taxable income of £5,000, but those whose taxable income does not exceed £5,000 will pay ls. in the £1 less tax than those whose taxable income exceeds £5,000. The bill provides, also, that private companies will pay an additional tax of up to 10s. in the £1 on all assessable undistributed profits. This undistributed profits tax does not apply to public companies. Although I admit that there is a special reason for imposing this undistributed profits tax, I submit that that same reason is equally applicable to the undistributed profits of public companies, and I suggest that a searching inquiry should be made with a view to doing something about taxing the undistributed profits of public companies as well as those of private companies. A little later, I shall refer to the position of some public companies.

I revert to the question of excessive profits. Labour’s proposal at least had the merit of exempting the greater number of companies from paying this tax because they in fact did not make excessive profits, but, at the same time, it would have resulted in greater revenue than will be received under this bill. That greater revenue would have been paid by a lesser number of companies. The tax would have been paid according to ability to pay ; in other words, it was a tax on excess profits. From time to time, this Government appears to he imbued with the idea that it must give preference and concessions to big business interests, to the people who are really their political friends. Prior to 1953, an extra tax of 2s. in the £1 was imposed on companies having a taxable income in excess of £5,000. In that year, these companies paid the ordinary company taxation plus 2s. in the £1. In 1953. this extra taxation was removed. There was also a reduction of ls. in ‘the rate of other company taxation. On the 9th September, 1953, the then. Treasurer, referring to this reduction said -

As it is not proposed to r«-enact the additional levy of 2s. in the £1 in the years 1.051-52 and 1952-53, -

That is, the reduction - the proposed rates represent, in the generality of eases, a reduction in tax of ls. in the £1 on the first £5,000 of taxable income and 2s: in the £1 on the balance of the taxable income.

Thus, quite clearly, there is a greater reduction for big business, that reduction being 2s. in the £1 as against only ls. ir the £1 for smaller companies. The company which earned £5,000 would get a reduction of ls. in the £1 whereas the company whose taxable income exceeded £5,000 would have the benefit of the reduction of 2s. in the £1. In other words, according to the Treasurer, the big business received the same reduction as the small business, that is, ls. in the £1 on taxable income up to £5,000, and a further reduction of 2s. on all taxable income over £5,000.

During election campaigns since then, and in this chamber, we have endeavoured to point out that that system was wrong in principle in that it reduced the taxation of those companies which were in a position to pay while it gave only a slight reduction to those people who were struggling to make even an assessable income. There was such a hullabaloo about it at that time that we could not get a word in edgeways. All we could get from the Government and its supporters was the repeated claim, “ We have reduced taxation “. I concede that there was a reduction in taxation, but, as I have pointed out, the bigger companies enjoyed a greater reduction than did the smaller companies. Exactly the same principle is being put into operation under this bill. After promising that there would be no increase in taxation, the Treasurer now imposes an extra levy on a flat rate of ls. in the £1. This means that the reduction of ls. in the £1 that was enjoyed by the smaller companies with an assessable income not exceeding £5,000 a year is to be re-imposed. The same flat rate is being imposed on the larger companies, but in 1953 there was a reduction of 2s. in the £1. Government supporters loudly proclaimed throughout the country at the time that the Government was reducing the amount of tax payable by companies. Now, instead of reimposing that 2s., only ls. has been reimposed; consequently, the smaller companies have had their taxation rate restored in full to what it was in 1951-52, whereas the larger companies are still ls. in the £1 to the good. That is a specific reason why the Opposition does not SUPpOrt the bill. Some observers say that the Government believes in making concessions in order to help its friends, and it appears that its friends in this case are big business interests.

It is necessary to examine the figures relating to company taxation, and authentic statistics are contained in the latest annual report of the Commissioner of Taxation. It shows that of a total of 22,S73 private and public companies, only 1,392 bad taxable incomes of more than £50,000. On a percentage basis that means that 6.1 per cent, of all companies in Australia earned 67 per cent., of the assessable income. The report discloses also that the total taxable income of all companies disclosed was £405.200,000, and that 6.1 per cent, of the companies had a total income assessed for taxation purposes at £273,900,000. The companies to which preference is being given in the reimposition of com pany tax, and which, consequently, will reap the benefit are 6.1 per cent, of the total of those earning more than £50,000.

The others, almost 94 per cent., will pay the same rate as they paid in 1952. The larger companies will not be affected, but the smaller ones will have to make a sacrifice. These facts and figures emphasize the justice of Labour’s policy that taxation of excessive profits is much more equitable than the proposals contained in this bill.

The report discloses, further, a concentration of profits in the hands of public companies. No more, than 995 public companies, or 4.4 per cent, of the total, earned a total taxable income of £230,600,000 out of the total income of £405,200,000 earned by all companies. Those 995 companies earned 57 per cent, of the total disclosed assessable income of all companies. That is surely a further justification of Labour’s idea of taxation in accordance with ability to pay. It is more equitable than the flat rate system. The report shows that 397 of the total number of private companies - that is 1.8 per cent - earned an assessable income of £43,300,000. That is nearly 10 per cent of all company profits - or all company assessable income - on which income tax was levied.

Another feature is that from the £230,600,000 taxable income of the 995 public companies, dividends amounting to £68,800,000 were paid. That sum was available after all charges had been deducted from assessable incomes, and it should be compared with the total of £S7,900,000 paid in dividends to shareholders of all other companies. That is an extraordinary position. Public companies claim that they are ploughing back into their businesses a large proportion of their profits. That activity should be examined by the Taxation Department with the object of ascertaining whether they should not, disgorge some of that money to be used for the development of the Australian economy and the benefit of the people instead of being devoted to the particular interests of the companies. Their profits and dividends are enormous, and are not commensurate with the amounts which they claim are being ploughed back into their businesses.

Some startling disclosures are made in respect of public companies in the highest taxable income group, earning profits of £500,001 and upwards. Eighty-five companies, or 1.65 per cent, of the total number of public companies, had a total taxable income of £106,900,000, after allowing £9,200,000 for depreciation. Honorable senators should not forget that that amount of taxable income was made after all the costs of running the industries, and of bookkeeping and other administrative matters, had been taken out. They were still able to allow £9,200,000 for depreciation of their property. I suggest that that might be called disclosed depreciation.

Senator Henty:

– Was that depreciation on property alone, or on property and plant?

Senator O’FLAHERTY:

– Depreciation on property and plant. I suggest that that is only the disclosed amount of depreciation. On top of that they made £106,900,000. From that sum, they paid £27,800,000 in dividends, or 31.7 per cent, of the total dividends of all companies. Honorable senators opposite should not try to tell me that those are not excessive profits. Yet, the companies concerned are to pay on those profits only an additional ls. in the £1, because the Government took off 2s. in the £1 in 1953. They are being let off lightly. I contend that this rate of tax will make no difference at all to these companies.

The book value of their plant and machinery - and this is a matter about which Senator Henty may know something, if he does not know anything about the actual value of those things - represented 39.7 per cent, of the total plant and machinery of all public companies. Does not that point to the fact that undistributed profits are being ploughed back unnecessarily for the benefit of people who are concerned not with the progress and development of this country, hut only with their own interests? Since the publication of those figures, the Treasurer (Sir Arthur Fadden) has made one or two statements in connexion with the budget of last year. Having regard to the figures given by him, I think it will be found that there is now a greater aggregation of capital in fewer companies, and that probably bigger profits are being made. The Treasurer himself stated, in connexion with this bill, that. he expected to obtain additional revenue, from the increase in the rates of company tax, of £30,000,000 in a complete assessment year. If we multiply £30,000,000 by twenty, we get £600,000,000. Yet, in August last year, the Treasurer used the figure of £505,000,000 in referring to the taxable incomes from companies. For the seven months from August of last year until the Treasurer introduced this bill, the increase of assessed taxable income of companies has amounted to £95,000,000. Yet those companies are to be mulcted of only an additional ls. in the £1.

From the- figures referred to by the Treasurer in August last, and those given by him in his second-reading speech on this bill, it is plain that there are companies that are making excessive profits. Those figures indicate, also, that the incidence of taxation is very unjust and has no relation at all to the principle of taxation in accordance with ability to pay. As I have pointed out, although those companies have made an additional £95,000,000 at least, they are to be fined, as it were, only ls. extra in the £1. That brings me back to the point that I made a little while ago, that the ramifications of these companies should be considered closely with the object of taxing their unexpended balances. This bill does not provide for equitable taxation.

Dealing with the matter of excessive profits, since the Government made its promise in this respect in 1949, and repeated it in 1951. it has successfully dodged the subject. Statements have been made to the effect that an excess profits tax is impossible to apply because the technicalities are so great and the problems so complex. I know that experts have advised Labour governments, in times gone by, along exactly the same lines. An examination of this legislation indicates that the principle of taxing excess profits has been applied, even by this Government. Honorable senators opposite cannot dodge the issue and say that it is impossible to impose such a tax, because it has been imposed.

Senator Henty:

– Where’

Senator O’FLAHERTY:

– T am not permitted, in the course of debating the hill with which we a”? now dealing, to go into the ramifications of that matter, but on another occasion I shall refer the honorable senator to the circumstances that I have in mind. But, in another measure that is now before this chamber, a flat rate of payment for certain licences is prescribed, and it is provided that, in addition, a percentage of the profits shall be paid to the Government by the licensee. If the principle I advocate can be applied in that instance, why should it not be applied to companies? Despite the fact that technical experts have stated that that principle cannot be applied, it is being applied in the measure to which I have just referred. All that is necessary is the imposition of higher rates of taxation as profits rise. For instance, an excess profits tax of 1 per cent, could be imposed on profits of £25,000, 2 per cent, on the next £10,000, 3 per cent, on the following £10,000, and so on. There is no reason in the wide world why that cannot be done. I admit that I have been just as bamboozled in other days by the technical advisors as are supporters of the Government to-day. I realize that there would probably be a difference of opinion between the Government and the Opposition about what constitutes a fair rate of profit. If, for instance, a compromise rate were agreed upon, we should then take into consideration the paid-up capital of companies.

Senator Hannaford:

– What about the profit that is ploughed back into a company ?

Senator O’FLAHERTY:

– It could still be ploughed back. When the capital of a company consists of both preference shares and ordinary shares, a fixed percentage dividend is payable to the preference shareholders, but the dividend to the ordinary shareholders varies.

I understand that copies of the balancesheet of General Motors-Holden’s Limited have been sent to all honorable senators. That document sets out clearly that a dividend of 280 per cent, has been declared on ordinary capital of, I think, £1,750,000.

Senator Buttfield:

– But what happens when there is no profit available for distribution to the ordinary shareholders ?

Senator O’FLAHERTY:

– The ordinary shareholders receive dividends according to the amount of capital they have subscribed. I contend that the difficulty of applying an excess profits tax to companies in all their ramifications could be easily overcome.

Senator Hendrickson:

– The Prime Minister (Mr. Menzies) said that he would introduce an excess profits tax. He is not fair-dinkum.

Senator O’FLAHERTY:

– Of course, I do not want, to pick on General MotorsHolden’s Limited.

Senator Buttfield:

– But the honorable senator did so.

Senator O’FLAHERTY:

– The Sydney Morning Herald stated that the profits of that organization were fantastic. I could describe them in different terms! According to the Financial Review, information contained in which is sometimes reprinted by the daily press, Humes Limited has a paid-up capital of £2.000,000, on which, in 1955, it earned a net profit of £705,000, which is equivalent to 35 per cent, of the paid-up capital.

Senator Kendall:

– What was the gross profit ?

Senator O’FLAHERTY:

– That firm actually paid a dividend of 17£ per cent. What I am pointing out is that this company made a net profit equivalent to 35 per cent, of the subscribed capital, and paid a dividend of 17£ per cent. If the company, after paying all expenses, gave to each of its workers a dividend of Hi per cent., based on the profit earned from- the goods he produced, there would be nothing to quarrel about. Honorable senators opposite know that the profit was excessive in relation to the subscribed capital. Waugh and Josephson Limited, which has a paid-up capital of £500,000, earned a net profit of £207.000 in 1955.

Senator Kendall:

– What were its sales figures?

Senator O’FLAHERTY:

– That company made 40 per cent, on its capital. Do honorable senators opposite believe that that was fair? Reverting to the working man, if, at the end of the year, the company, after meeting all expenses, paid him a bonus of 40 per cent, of the profit earned from the goods he produced, he would be quite satisfied. But the workers know as well as supporters of the Government, that that rate of profit is excessive. This company paid a reasonable dividend. Although it earned profit of 40 per cent, on its paid-up capital, it paid a dividend of only 12-2- per cent. If the Government considered that that was fair, then obviously the excess profits above 12£ per cent, should have been taxed accordingly

Senator Hannaford:

– The honorable senator should not forget that companies already pay tax on undistributed profits.

Senator O’FLAHERTY:

– Some honorable senators opposite, like a lot of other people, believe that they should go out and take everything they can possibly get. I remind them that the preference shareholders receive relatively low dividends.

I come now to the published financial information in relation to McPherson’s Limited, a firm from which some honorable senators have probably purchased plant and machinery. That company has a paid-up capital of £3,000,000, on which, in 1955, it made a net profit of 22 per cent. Again, if honorable senators opposite believe that that is a reasonable profit, then obviously they should agree that any profit earned in excess of that rate should bear tax at progressively higher rates. The Electrolytic Zinc Company of Australasia Limited has a paid-up capital of £3,000,000, on which, in 1954 - the figures for 1955 are not available - it earned a net profit of £2,400,000.

Senator Kendall:

– That was good work.

Senator O’FLAHERTY:

– In other words, it earned 80 per cent, om the paid-up capital. Does any honorable senator opposite contend that that was reasonable? Of course, it is a good concern! It paid a dividend of only 55 per cent. ! If honorable senators opposite believe that the dividend rate of 22 per cent, that was paid by McPherson’s Limited was reasonable, then they must agree that this company should have been taxed at an additional rate on its profits in excess of 22 per cent. I did not want to deal with General Motors-Holden’s Limited, but I am forced to do so as that company has been mentioned. I have in my hand the brochure published by that company. I will say for this company that it discloses everything it possibly can to the general public whereas a number of companies disclose very little to the public. On the first page we find details of net sales, net income, dividends paid, net income retained and the total funds employed in the industry. Details are also shown of dividends paid on preferential shares. Some preferential shareholders got only 6 per cent. They may get a bonus, but that is not disclosed here. The amount they get is much smaller than that paid to ordinary shareholders.

The company has a paid-up capital of £2,311,000.” The ordinary shareholders’ capital amounts to £1,7S0,000. The net profit for the year is £9,757,S35, of which £4,908,305 is being placed in reserve. To the ordinary shareholders who have subscribed only £1,750,000, that profit amounts to 280 per cent. The preference shareholders get £60,000.

Senator Hannaford:

– For a good many years the shareholders went without a dividend.

Senator O’FLAHERTY:

– The Sydney Morning Herald said it was a fantastic profit.

Senator Hannaford:

– The honorable senator does not believe all that the Sydney Morning Herald says.

Senator O’FLAHERTY:

– It is net profit after making provision for the payment of accrued liabilities, including income tax. As a result of this bill the company will pay only an extra ls. in the £1 although it has made provision for £8,800,000 in addition to the £4,908,305 it is ploughing back into the business. The shareholders have subscribed only £2,311,000. “Where has the rest of the money come from - from the same source hh it comes from with al] companies.

They make profits and plough them back mtn the business.

Let us consider the total amount, that has been ploughed back by General Motors-Holden’s Limited. On the first page of its report, the company discloses that for 1954, £40,921,007 was the overall capital invested in the company, although the shareholders paid up only £2,301,000. This year the total funds employed in i lie business will be £46,957,024. The net dividend paid to the ordinary shareholder on the total funds employed represents 24.3 per cent. Honorable senators opposite cannot tell me that that is a lair thing; it is an excessive profit. If the firm I mentioned previously, which declared a modest dividend of 12^ per cent., is taken as a standard under normal conditions during an inflationary period, then the Government should take h tremendous amount of money from General Motors-Holden’s Limited by way of an excess profits tax. “Rut there is no suggestion of that in this bill. In 1953 the Government granted large companies a concession of 2s. in the £1, thus relieving them of a tax imposed by the Labour government over and above ordinary company taxation. Companies with an assessable income under £5,000 were granted a concession of ls. in the £1. To-day, the Government is reimposing that ls. in the £1 on the small companies and is reimposing only 50 per cent, of the tax previously paid by the bigger companies. These bigger companies show hy their balance-sheets that they are making exorbitant and extraordinary profits. The Sydney Morning Herald calls them fantastic, and so they are. No attempt has been made in this bill to deal equitably with company taxation.

If we compare the amount of tax that is paid by the ordinary worker in industry with the amount paid by these companies we find that the companies are getting off very lightly. In 1949, when the present Government took office, the ordinary employee on the basic wage was paying considerably less in taxation than he is paying to-day. I know that honorable senators opposite will reply that the worker receives additional social ser vices benefit, but that does not compensate him for the greater amount of income tax he is paying. I do not intend to cite figures relating to a. family man because the further one considers a man with a wife and dependants the worse the position gets. In 1949, when the present Government took office, the basic wage earner paid £16 in income tax. on a basic wage of £330. Following the 1952 budget, income tax rates were increased by a bill very similar to the one now before the Senate. In 1952 the man on the basic wage was paying £50 2s. in tax. In 1954.-55 the same man was paying £41 Ils. We must remember that the basic wage has been pegged for nearly three years and the position of the basic wage earner has remained the same. The Government has made no attempt to give any taxation concession to the smaller man; under this measure, concessions will he made only to the big taxpayers and especially the big companies who are the friends of the Government. I am well aware that it has been stated previously that there is no harm in helping one’s friends at times; nevertheless, it is outrageous for the Government to allow its wealthy friends to continue to make the exorbitant and fantastic profits that they are making at the present time. I repeat that no attempt of any kind has been made in this measure to make those who can afford to do so, pay their fair share of the taxes.

In August, 1955, the Treasurer (Sir Arthur Fadden) said that there would be no need to levy additional taxes on the people except in one or two minor cases, and that the then taxing measures would carry us through our difficulties. Later, the Prime Minister (Mr. Menzies) said that he would take some fiscal action to remedy the economic position. The fiscal action taken by the Government has been explained in this chamber, but I am sure that nobody other than those immediately concerned with the matter fully understand it, or, indeed, knows anything at all about it. Early this year the Government stated that it was necessary to obtain more revenue. For what reason? First, we were told that we must obtain additional revenue in order to check inflation: immediately afterwards, a Government statement was made to the effect that it was necessary to impose additional taxes in order to meet commitments that will arise next year and which previously were unprovided tor. I suggest that this bill will neither assist to check inflation nor enable us to obtain, in anything like the required amount, revenue to meet next year’s commitments.

I understand that about £260,000,000 will be required next year. I suggest that there is something wrong somewhere when Government spokesmen told us in the past that all we needed to do was to impose additional taxes on a few minor items, but now state that we must make companies pay additional taxes because we have certain commitments to meet next year. I suggest that all the statements that I have detailed cannot be right, and that they all cannot be applied to the measure at present before the Senate.

The PRESIDENT:

– Order] The honorable senator’s time has expired.

Senator LAUGHT:
South Australia

– I rise to support the bill. I was most interested to listen for a full hour to the speech made by Senator O’Flaherty. As far as I was able to understand what he said, we are now well aware of where he stands on this matter. He opposes the bill; that is, he opposes the increase of ls. in the £1 in the rate of company tax. Of course, not one of us knows why he has taken the stand that I have indicated - perhaps not even the honorable senator himself knows that. He occupied the time of the Senate in putting forward a most amazing argument concerning excess profits taxes and numerous other aspects of taxation.

I suggest that we should clear up once and for all what the great former leader of the Labour party had to say about excess profits taxes. No doubt Senator O’Flaherty will subscribe to this statement of the late Mr. Chifley which I shall read, because no doubt he, like all other supporters of the Labour party, agrees that Mr. Chifley was a great Treasurer. In 1947, in another place, Mr. Chifley moved the second reading of the War-time (Company) Tax Assessment Bill. I believe that some of the remarks made by him on that occasion are worthy of consideration by the Senate. He said -

This short amendment to the War- t Im ( (Company) Tax Assessment Act has the effect of discontinuing the war-time company tax as from the close of the financial year at the 30th June last. The last year of company profits which will be subject to the tax is. therefore, the financial year ended the 30th June, 1046, or the accounting period substituted for that year.

Then he explained the mechanics of the matter, and continued -

As part of its general review of taxation, the Government has carefully examined the incidence of this tax, and has found that it contains many aspects which make it inappropriate that it should continue in the period of post-war reconstruction. The tax was necessary as a war-time measure. Where companies became liable to substantial war-time company tax, because of high profits in relationship to capital employed, such profits were generally made possible by business expansion under extraordinary war-time conditions. Apart from the revenue needs of the country, there was every justification for reclaiming a substantial portion of the profits which arose from war-time conditions.

Now, I ask honorable senators to pay particular attention to this part of the late Mr. Chifley’s speech, because it may be applied particularly to the present circumstances. He said -

In the post-war period the circumstances which pave rise to these profits will cease. With the return of industry to peace-time production, competition in most fields of production is rapidly being restored. In ordinary peace-time circumstances this ta.x operates inequitably, lt penalises new industries by preventing the building up of reserves and, consequently, favours old-established industries which have had the opportunity of building reserves in the past. Its abolition should provide a stimulus for new industries. The discontinuance of this tax follows the trend in other countries in regard to similar forms of tax. The United Kingdom repealed its excess profits tax as from December, 194fi. Canada, South Africa and New Zealand have also announced the repeal nf their excels profits taxes.

I suggest that no other reply to Senator O’Flaherty’s speech could bc more eloquent or more to the point. This Government, after attaining office, appointed a very important committee known as the Commonwealth Committee on Taxation. The committee was appointed in 1950, and it had as its chairman a very distinguished gentleman, the late Mr. Eric Spooner, of Sydney, who, besides having had parliamentary experience, had a great deal of practical experience in the accounting and business world. As was the practice in those days, the then Treasurer referred to this committee certain important matters relating to taxation, particularly the matter of a change in taxation policy. The question referred to the committee in reference No. 49 related to excess profits tax. The report of the committee is available. It was printed by order on the 10th October, 1951. Paragraph 4 of the report states -

Research has been made by all means available to the Committee into the various taxes in this and other countries over the past 35 years that have aimed at the taxation of excess profits during wartimes or under peace conditions.

I stress that this committee set itself the task of going back over the experience of other countries for 35 years to investigate the working of excess profits taxation. As a result of the work of such a wise committee with a distinguished chairman, a most important report was obtained. Paragraph 12 of the report stated -

The Committee’s view is that the application of an excess profits tax to incomes that are already subjected directly or indirectly to the present rates of tax on individuals is dangerous in that it may lead in a number of cases to unsound financing arrangements on the one hand, or to the disturbance of the industrial structure on the other hand.

The culminating feature of the committee’s report is in paragraph 20, and I ask honorable senators to pay particular attention to this section of the report because it answers, once and for all, the statements that have been made by Senator O’Flaherty. The paragraph states -

It is the view of the Committee that, despite the opinion expressed in paragraph 13 that public companies are the only available field for this class of taxation, the application of any form of Excess Profits Tax to the incomes of public companies is impracticable for the following reasons: -

It would re-introduce a form of taxation that has been found in all past experience to be complicated and charged to the full with anomalies that cannot be avoided.

It could not fail to operate harshly upon the small and new companies which have not the advantages of reserves created in earlier years. These reserves usually provide substantial immunity against this class of taxation for the larger and older companies.

It could apply with severity to companies, particularly the small and young companies, that depend upon undistributed profits to finance the replacement costs of assets at the higher price levels that are current to-day. To the extent that the effect of the tax m,-y necessitate the raising of additional capital, such concerns may be faced with the need to meet increased dividend commitments in years of lesser prosperity.

I invite the attention of honorable senators to that section of the report. As I have stated, the former Labour Prime Minister, Mr. Chifley, was totally against an excess profits tax as a peacetime measure. A few years later, the Spooner committee expressed itself against the tax, and emphasized, particularly, the damage that it would do to small and new companies without reserves. Yet Senator O’Flaherty has pleaded for the imposition of an excess profits tax. Has the honorable senator given consideration to such an important report as the one I have just cited? What arguments would Senator O’Flaherty adduce against the arguments of the Spooner committee? Unfortunately, the honorable senator is not in the chamber, and he has not the right of reply in this debate, but it would be interesting to have an answer to those uncontradicted statements which appear in the report of the Commonwealth Committee on Taxation.

I shall pass on now to a number of features of the bill to which I believe the Senate should give consideration. Naturally, members of Parliament can support, only reluctantly, bills that increase taxes because tax increases, such as that proposed in this bill, place a burden on those who are engaged in commercial enterprises. Australia, as a quickly developing nation, wants to do everything possible to attract the investment of overseas capital. The more overseas capital we attract, and the more development there is through the private sector, the less responsibility there will be upon governments - Federal, State or municipal - to obtain money by taxes and rates for developmental projects. Therefore, we should invite new capital into Australia, but any bill that increases taxes, especially on companies, could have a tendency to frighten off overseas capital. Let us examine the present position in connexion with the company tax. First there is the rate of company tax foreshadowed in this bill. Then, there is a tax on undistributed profits of private companies, and upon the dividends of the companies when they reach the hands of the recipients. The Prime Minister (Mr. Menzies) in his economic statement, presented in the House of Representatives a few weeks ago, made this statement in connexion with company tax -

The taxable income of public and private companies has risen very considerably since 195 1-52, rates of dividends have frequently increased and there have been substantially greater allocations to reserves. The weight of company taxation is undoubtedly much lower in Australia than in overseas countries like the United Kingdom, Canada and the United States of America.

I pause there. “While T. accept the statement of the Prime Minister that the weight of company taxation is “undoubtedly much lower in Australia than in overseas countries “, when one adds the tax that the recipient pays upon dividends at the rate applicable to his income, there are many cases in which the impact upon the subject who gets his reward through the work of companies, is possibly higher in Australia than it is in other countries. Although I accept the statement that the impact of company tax is lower, I add the comment that, when raising the rate of company tax, we should not lose sight of some other aspects of taxation that, as it were, precede the company tax. This Government has a splendid record in connexion with mention. Tt abolished the federal land t.°, much to the annoyance of the Opposition, ft lowered pay-roll tax, but T should like to see that tax lowered still further because it hits at almost every company. It does so because almost every company has so many employees that it does not qualify for exemption. By means of the pay-roll tax, the initial company tax, the undistributed profits tax and finally through the tax paid by shareholders on dividends, companies and their members pay pretty solidly in this country, although over the hist few years the Government has extended a certain measure of justice to the recipients of dividends. Shareholders no longer pay the penal rate that they once did on dividends. They now pay the same rate as is applicable to income from personal exertion. It will be seen from this that the Government is progressively arriving at an understanding of the problems confronting company shareholders.

Recently, I read an interesting article in the Taxpayers’ Bulletin for October, 1954. That article referred to a statement by the chairman of the National Reliance Investment Company Limited in Melbourne, Mr. Staniforth Ricketson. Speaking about eighteen months ago, that gentleman said -

Numerous suggestions of ways and means of cutting taxes will be suggested, but in this connexion a plea is submitted for the removal of an injustice being done to the holders of ordinary shares in companies. This section of the community, unfortunately not an organized voting force or pressure group, is the only group of individuals whose incomes are doubly taxed, once in the form of the tax on profits earned by the companies and again in the tax at full rates on the income paid from those tax-paid profits and received by the owners of the businesses, the ordinary shareholders. This is so unfair and so inequitable that there is no justification for it or for the wrong to be kept going any longer.

Then he quotes -

If ten or twenty people worked a business as a firm, a partnership, they would pay only one tax on their incomes or profits, but let them form the business into a public company, and double taxation is immediately levied. lt is the same business and the same partnership and the same people, so why should there be this differentiation? Of course, there should not be this differentiation, but the evil was introduced, it was an easy source of taxable income, and so inertia and a lack of moral responsibility on the part of legislators have kept it going.

While agreeing that there is an emergency at the present time and while agreeing with the Prime Minister’s action in recommending these financial changes to the Parliament, I invite the attention of the Minister for National Development (Senator Spooner) to that observation by Mr. Ricketson, who is a man of high standing in Melbourne. If company taxation is to be increased we should give some consideration to lessening the impact of the tax on recipients of dividends. I feel that it is unjust to impose double taxation and for that reason I make that suggestion.

I wish now to refer to the recent taxpayers’ conference that was held in Hobart. That conference was attended by leading accountants and men of finance from all parts of Australia, and it dealt with this question of increased company taxation. When I asked a question about that conference a few weeks ago, Senator Benn interjected, “ They are just a lot of tories “. I am sorry Senator Benn is not here to hear nae, but I say to him that these men are the practising accountants and businessmen of the country who are in daily contact with these subjects and the taxpayers, and I suggest that the remarks they make at such a conference are most appropriate. At this conference, a paper was read by Mr. F. L. Harcus, of Adelaide. He api,reciated that the Government is concerned with the rise in interest rates, and he asked why the Government increases the rate of company taxation when it is so worried about increased interest rates. He said that when the rate of company tax is increased, we increase the inducement to a company to borrow at. higher rates of interest instead of under the old fixed long-term share capital method. He said that companies should be encouraged to put cash into land, plant and those other things which make for the general development of Australia. He suggested that by encouraging companies to do that we would tend to keep down interest rates and hold down the pressure for higher interest rates which results from the imposition of a tax penalty on companies.

Mr. Harcus gave it as his considered opinion that the time had come for an investigation into the extent to which the present taxation laws are causing increases in interest rates. The Government should give serious consideration to the question of whether this additional company taxation of ls. in the £1 will help to bring about an increase in interest rates. For instance, one reads with concern in the press that a semigovernmental organization in Queensland, the Southern Electric Authority of Queensland, is offering a rate of interest 2 per cent, higher than the effective bond rate. I understand that one of the large rubber companies is offering, for short-term capital, an effective rate of almost 9 per cent. I direct the attention of the Senate to these facts in the hope that the Government will consider whether the proposed increase in company tax will have the effect of lifting interest rates. That factor must be given serious consideration. In a very interesting and human reply given to me recently in the Senate on another taxation bill, the Minister for National Development said that he was going to tilt the lance with, me in connexion with my suggestion that a royal commission on taxation should be set up. I repeat now that the time is ripe for such action to be taken.

Silling suspended from o..’,5 In 8 p.m.

Senator LAUGHT:

– Before the dinner recess, I was refering to some kindly remarks made a. week ago, in the course of a. debate on taxation, by the Minister for National Development (Senator Spooner) who represents the Treasurer (Sir Arthur Fadden) in this place. Senator Spooner said, in answer to my request for a royal commission on taxation, that already the Government had appointed the Spooner committee, but that committee did not perform the same function as would a royal commission. Many specific matters were referred to the committee by the Treasurer, and its duty was to sit in camera and subsequently furnish a report on the subject considered. It had no right or licence to hear evidence in public and it was, in a sense, like a civil service committee, but consisting of men in private practice. Its members were the servants of the Treasurer, with the duty of inquiring specifically into a certain point of taxation law or procedure. Possibly a hundred references were so made and it wrote forty-three reports, which were released, as and when the Treasurer saw fit. Such a committee would not be adequate for the purpose of a full-scale inquiry into taxation law and practice, despite the fact that it did excellent work.

The Spooner committee has been out cf existence for several years. The last of its reports - which was somewhat limited - released about eighteen months, ago, dealt with depreciation. At about the same time the Hume report on depreciation allowances was released, and honorable senators will recall that it was a most comprehensive document. It is not enough that the Government should answer taxation inquiries by referring to the Spooner committee. When the Minister for National Development was speaking last week he said that the Government did not intend to embark on a comprehensive review of taxation law because uniform taxation was still a live question. I understand that a challenge to the whole system of uniform taxation has been, made at the instigation of the Victorian Government, and because the matter is sub judice I will make no more than a passing reference to it. But company taxation will obviously be retained by the Commonwealth should the States resume the right to levy income tax. Consequently, requests for an inquiry into company taxation cannot be parried by suggesting that it would be best to await the outcome of the challenge to uniform taxation. Whatever happens in that issue, one can say with a fair amount of certainty that the Commonwealth will continue to control company taxation.

I support the bill, rather reluctantly, because it provides for an increase of taxation, but I cannot in any way subscribe to the arguments advanced by Senator O’Flaherty in opposition to the measure. The honorable senator’s main argument appeared to be that he opposed the bill because the Government had failed to impose a tax on excess profits. [ refer again to the momentous speech by the late Right Honorable J. B. Chifley, in 1947, when dealing with the War-time (Company) Tax Assessment Bill. He said -

With the return of industry to peace-time production, competition in most fields of production is rapidly being restored. In ordinary peace-time circumstances this tax operates inequitably.

He was referring there to excess profits tax. The Senate should pass this bill, and should pay no heed to the arguments of Senator O’Flaherty, on behalf of the Opposition.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without requests or debate.

page 865

EXPORT PAYMENTS INSURANCE CORPORATION BILL 1956

Second Reading

Debate resumed from the 17 th May (vide page S39), on motion by Senator Spooner -

That the bill be now read a second time.

Senator KENNELLY (Victoria) [8.9 1 . - The purpose of this bill is to promote export trade per medium of an export payments insurance corporation. That corporation will cover insurance against risks in connexion with exports that are not covered by ordinary insurance companies. I gather from the debate on this measure in the House of Representatives that such risks would arise in the case of a purchaser becoming insolvent, or where there was an alteration of the exchange rate of the country in which the purchaser was resident, or, perhaps, if the country in which the purchaser was resident became involved in a war. There might be other circumstances, too, in which this corporation would help an exporter to obtain a reasonable price for his goods.

The Government believes that the establishment of this corporation will help to improve our balance of payments position which, of course, is causing grave concern at this time. It is interesting to note that, by 1950, we had established a credit overseas of approximately £800,000,000. By December. 1955, that credit had fallen 10 £350,000,000 or £370,000,000, clearly indicating a very great drift. It is also interesting to attempt to visualize the circumstances which brought this about. When this Government came to office at the end of 1949, the overseas balances of the nation were in a very buoyant state.

Senator KENNELLY:
VICTORIA

– They were approximately £800,000,000. If the honorable senator refers to the statistics for the period 1949-50, he will see that that is so.

Senator GORTON:
VICTORIA

– The figure was £740,000,000.

Senator KENNELLY:

– If the honorable senator wishes to debate the matter, let me say in reply that figures that I obtained from a publication of the Commonwealth Bank indicate that, by 1955, the balances had fallen to approximately £370,000,000. When this Government came to office it had handed to it economic measures which had kept the country on an even keel. The facts are as I have stated them. Why, then, are we in our present economic position, and why is it necessary for legislation of this kind, with which the Labour party has no quarrel, to be introduced for the purpose, according to the Government, of helping to improve our balance of payments? I remind honorable senators opposite that the Government parties wanted to give away all economic controls. They said, “ Let private investment and private enterprise carry on in the normal way “. They have fought more than one election since that time, and whilst it is true that there have been side issues at those elections, it is also true that the Government parties have continued in their advocacy of the abolition of all controls.

If this bill and our present economic condition are the outcome of the abolition of controls, I suggest that one is entitled to say that it is about time that some economic controls were reintroduced. I wonder just where we are heading. The cost structure of the nation has become unstable. I suppose that the costs of all commodities have risen more, between 1949-50 and the present time, than they have during any other period in our history. I think that everyone must admit that rising prices have been an impediment to the sale of our commodities overseas.

In the House of Representatives, the Minister for Trade (Mr. McEwen) emphasized the necessity to export our secondary products. No one disagrees with that statement, but how are we to accomplish that purpose? Without being actually certain of the correct figure, 1 suppose it is true to say that Japan can manufacture articles at least 20 per cent., or 25 per cent., cheaper than we can manufacture them in Australia. To my mind, that must have a great bearing on the drive to export the products of our secondary industries. I understand that the price of Australian steel does not affect its successful export, and I suppose that if it were not for the restriction that is placed on the export of steel, more steel would be exported than is the case at present. Steel, however, is a very necessary commodity in Australia. It means a great deal to the development of our towns and cities, so that it is wise to restrict its export.

In the main, the Australian Labour party finds very little, in principle, to oppose in this bill, although we should like to know more about certain of its details. I am pleased to see that the Minister will have full control over the operations of this corporation. Although he will not in any way interfere in relation to the granting of insurance cover to particular companies, so far as the policy of the body is concerned he will, at the cutset, be the guide. In my opinion, that is proper, because if an honorable senator or a member of the House of Representatives wishes to question the actions of the administrator of this legislation, he will he able to obtain first hand information from the Minister. In the main, the commissioner will be only applying the policy that has been laid down. The bill also provides for the appointment of a consultative council consisting of not more than ten members. I hope that the Minister will be good enough to inform us of the industries that they will represent, and I hope, also, that they will represent some of the primary industries whose products are now stored in the silos, products that I should be very pleased to see on the water on their way to another country.

The bill provides that the corporation shall assist persons who wish to export goods, but who are sceptical about the probability of receiving payment for them, by insuring the goods up to 85 per cent, of their cost according to the exporter. I should have preferred a lower percentage to be prescribed. I do not consider that the individual should be required to bear only 15 per cent, of the risk. It is only right that the corporation should protect itself, and I would not expect it to write insurance beyond the amount of money available to it.

I look at this matter from this point of view : Where do we propose to sell these goods? Bisks associated with sending our goods to recognized markets where there is very little chance of loss being incurred by the exporters, are already covered by the ordinary insurance companies. Whilst I know that legislation similar to the measure now before us is in operation in other countries of the world, I am a little bit sceptical about the matter, because private enterprise has refrained from covering the risks to which the bill relates. Therefore, one is entitled to consider whether this kind of business is as good as it looks. I know that the time factor is important. It has a bearing on the period that an exporter can afford to wait for his money, hut I am not so optimistic as were some speakers in another place about the bill assisting to rectify our adverse balance of payments overseas.

As I read the measure, the proposed corporation will he precluded from writing insurance on normal risks associated with the export of goods, such as loss by pillage or by disasters at sea. This corporation will be started with an appropriation of £500,000.

Senator WRIGHT:
TASMANIA · LP; IND from June 1978

– How much?

Senator KENNELLY:

– Clause 23 provides - (1.) The Treasurer may pay to the Corporation, out of the Consolidated Revenue Fund, which is appropriated accordingly, sums not exceeding in all Five hundred thousand pounds.

Another clause provides that the corporation may write insurance worth £25,000,000 at the one time. It seems to me that the Government has adopted a small and petty approach to this matter. It says to the proposed corporation, in effect, “ You will take all the risks in the world. You may or may not be able to pull through. It is up to you. But you will be deprived of some certain income, which we are handing to private enterprise.” The Labour party believes that, at least, sub-clause (3.) of clause 13 should be omitted. At the committee stage, an amendment to that effect will be moved. As I stated earlier, clause 16 lays down -

That the corporation shall specify a percentage as the percentage of the amount of the loss, as defined in the contract.

All the exporter will be responsible for is 15 per cent., but he shall be insured up to at least S5 per cent.

I should now like to deal with the matter of staff. Specialists will he needed who know the insurance world, but I am surprised to find that the corporation does not need to obtain its ordinary staff through the Public Service Board. I believe that where staff is needed for a Federal Government department - call it a corporation if you like - it should be obtained through the normal channels of the Public Service Board. There is no chance then of favoritism. Persons with the necessary qualifications can be selected and there need be no heartburnings. I have vivid recollections of the time when applicants for positions on the Commonwealth Bank staff were made to pass the ordinary examinations. At all times the Parliament, when dealing with a. government department, or a corporation of this sort, should make provision for the qualifications for a position to be laid down so that any citizen who thinks he possesses the qualifications can make application for the position. It would appear that, with the exception of the commissioner and acting commissioner, members of the staff of this corporation will receive remuneration comparable with that received by members of the Public Service. For that reason, the staff should be chosen by the Public Service Board. Why should the commissioner of this corporation be given the right to choose his own staff? I am not so much concerned with what staff will be chosen, but I think the Government, should give very serious consideration to this matter in order to dispel any fear that there may be favoritism as far as appointments to a Commonwealth department are concerned. For that reason, the Government should be careful to ensure that appointments to the staff of the corporation shall come within the purview of the Public Service Board.

The finances of the corporation are, of course, to be guaranteed by the Commonwealth. I reiterate that the amount of capital of the corporation, if I may use that term, will be £500,000. Another matter connected with the finances of the corporation which I find hard to understand is the provision as to banking. The corporation, as T said, is to start off with working capital amounting to £500,000 and it can insure goods of a value up to £25,000,000. The bill provides -

That the moneys of the corporation not immediately required for the purposes of the corporation may he invested on fixed deposits with the Commonwealth Bank of Australia or with any bank approved by the Treasurer.

This is a type of insurance that the Government will not lose to private insurance companies. It was because they would not handle this type of insurance that the Government has brought down this bill.

Senator Kendall:

Senator Kendall interjecting,

Senator KENNELLY:

– What I have said is true. If private insurance companies would have carried out the functions which the Government hopes this corporation will carry out, it would not have given a moment’s thought to bringing down a bill of this kind. I think that is the least one can say.

Senator KENDALL:

– I did not contradict the honorable senator.

Senator KENNELLY:

– I thought Senator Kendall said that he disagreed with what I was saying. T am pleased to know that one member on the Government side admits that this business would be too risky for private enterprise.

Senator Kendall:

– I did not say that either.

Senator KENNELLY:

– Therefore, the Government has had to come in, as it always does, to support private enterprise. The corporation will have £500,000 with which to commence its venture. If that money is not needed immediately why cannot it be banked in the bank that at least returns more to the people of this nation than does any private bank? Whoever drew this bill certainly had. no intention of giving anything back to the people of Australia. He first of all made sure that money would not be made out of the venture and then ensured that the money the corporation does not immediately need may be deposited with banks other than the Commonwealth Bank. I know that in an earlier clause the right is given to insurers to use the facilities of other banks. In that case, it is quite all right because exporters may be in a place where no branch of the Commonwealth Bank exists. However, I do think that the Minister should ensure that the money which the corporation does not need for the time being should be placed in the Commonwealth Bank. I am sure that wherever there is an office or a branch office of this corporation there will be a branch of the Commonwealth Bank. Therefore, it is the intention of the Opposition to move an amendment to the effect that if the people’s money is not used, it should be placed in the people’s bank. That would seem to be an ordinary, sensible arrangement, and I believe that if this measure were a bill dealing with money that belonged to any of the private banks, then by ordinary common business practice any sum of money not used would be banked with those private banks.

Senator Sheehan:

– They do not mind socialism among their friends.

Senator KENNELLY:

– I do not know whether I am being helped or hindered at the moment by interjections, but I shall continue in my own way because I cannot listen to the left with one ear and to the right with the other. According to the bill, the maximum liability of the corporation will be not more than £25,000,000. I should like the Minister for National Development (Senator Spooner), if he replies to the debate, to say whether the bill will give any exporter in this country carte blanche to make arrangements to trade with any country in the world. If that is the purpose of the bill, I shall be delighted to show that at least we are getting a little saner. If we have goods to sell, and any other nation needs them, we should use our common sense and sell to that nation so long as it does not interfere with our defence arrangements. That is necessary if Australia is to prosper.

Senator Spooner:

– We shall sell wherever we can.

Senator KENNELLY:

– I am delighted to hear that, and delighted to know that there has been a change of government policy recently.

Senator Spooner:

– As long as it does not interfere with our defence.

Senator KENNELLY:

– I am also delighted to hear that. There are other clauses of the hill, but they are more or less usual in a bill of this nature, and all I can say in conclusion is that I hope the measure will do what is expected of it. I regret that it is needed, and I believe that if the Government had governed this country as it should have a bill of this nature would not be needed, having regard to the healthy state of the economy which was handed over to it. However, we are now in trouble, due in no small measure to maladministration, and for the sake of our country I believe that if this measure can accomplish what the Government expects of it, it will serve a good purpose. In that event the Opposition will be as pleased as the Government.

Senator ANDERSON:
New South Wales

– I rise to support this bill, and at this stage of the debate I believe that it would be useful for me to traverse some of its main features. The measure can be summed up by saying that it i3 a bill to promote Australian export trade. It is designed to enable Australian exporters to insure against certain risks in the export trade which cannot normally be insured against with commercial insurance concerns.

We have to consider the bill in relation to the background of the problems connected with our overseas trade and overseas balances. During the current sittings of the Parliament, there has been a debate on a Government economic statement, and during the last budget session we had a similar debate. During both those debates, the problem of our over seas balances was debated very vigorously by honorable senators and by representatives in another place. In those debates emphasis was constantly put on import restrictions as a short-tel m solution of our problem. However, practically every speaker in the debates has referred to the only practicable long-term solution, which is to increase our exports.

This bill is an attempt to encourage our export industry by providing insurance of a kind that would not otherwise be available to the exporter. It is now proposed to provide insurance for the exporter against risks of non-payment from causes such as insolvency of the huyer, failure to pay within a certain period, blockage of foreign exchange by overseas governments, sudden imposition of new import controls in markets abroad, and revolutions or rebellions. The insurance, generally, is intended to apply from the date of shipment, although I understand that there is provision that in certain circumstances insurance may apply from the date of placing the order. I understand that that envisages circumstances where an order placed in this country for some manufactured article necessitates the setting up of engineering and other technical works involving heavy expenditure.

To take a hypothetical case, an Australian firm might receive an order for a large number of engines of a certain type. The filling of such an order would pose technical problems, and the contracting firm might have to spend a hugeamount of money in preparing to make the engines. Then, perhaps, the country that placed the order might suffer from a revolution, or might impose import controls, which would nullify the order and cause ruin to the people who had taken the contract. In circumstances such as those, I understand that there is provision for insurance from the date of placing the order.

The Government’s aim is to make this scheme financially self-supporting. Senator Kennelly and the Minister for National Development have both indicated that the insurance cover will be up to 85 per cent, of the cost involved, which will require the insured to carry lft per cent, himself. The ultimate liability of the corporation will be about £25,000,000. Honorable senators can gather from the speech of Senator Kennelly that the Opposition does not oppose this bill in the sense that it has opposed other bills, lt is, of course, true that it is the Government’s duty to introduce legislation, and the duty of the Opposition to oppose it in order to bring out the best in the Government’s proposals. In this case the Opposition has followed the usual pattern, although it has done so very mildly. The Opposition has indicated its intention to move two amendments with the idea of widening the scheme so as to include transactions usually covered by ordinary commercial insurance companies. Of course, that simply means the establishment of a new governmental insurance scheme. If the insurance provisions suggested by Senator Kennelly were brought into the scheme, an enormous government monopoly in insurance would be created. That is in line with the Opposition’s political thinking, but the Government and its supporters do not seek to encourage such monopolies.

The Opposition has indicated its intentions quite clearly in the second of the two foreshadowed amendments in which it suggests that we should exclude the right of investment of any funds of the corporation in any organization except the Commonwealth Bank. That, also, follows the traditional line of the Australian Labour party. The Government and its supporters take the wider view in connexion with banking arrangements. Quite clearly, all the transactions involved in this proposal will not be confined to one banking system. This scheme envisages a capital expenditure up to £25,000,000 in all sorts of avenues of secondary and primary production, and in almost every nation of the world. Quite clearly and properly, that expenditure will not be limited to transactions within one bank. It will involve all the major banking institutions in the free world. For that reason alone, it is a short-sighted approach to suggest that the investment of funds should be confined to the Commonwealth Bank. We shall need the services of every banking system in the world and of every banking com pany in Australia. Obviously, all manufacturers in Australia will not be associated in business with the Commonwealth Bank alone. They will use all the banks, and the suggestion that investment should be circumscribed, as the Opposition has suggested, indicates a narrow outlook.

This scheme is not something new. A similar scheme is in operation in the United Kingdom, where it was established many years ago. It was introduced before World War I., but it did not operate extensively until after World War II. when it had about 300 policyholders. I believe that to-day there are about 3,000 policy-holders, and their insurance cover amounts to about £525,000,000. Their scheme is selfsupporting as ours is to be. In fact, the United Kingdom scheme has always been self-supporting, apart from the period of World War TI., and again in 1952-53 when it met some difficulties. The experiences in that year show clearly how the scheme operates. Brazil blocked the payment of overseas commercial debts and, in six months, the United Kingdom Exports Credit Guarantee department paid to its insurers-exporters £32,000,000. Exporters who had not insured had a long wait until Brazil lifted its currency restrictions. It would be well to reflect upon what the effect would have been on the Australian economy had Australia been a heavy exporter of wool to Brazil in that year. The effect upon the Australian economy would have been disastrous. There is a lesson for us in that experience of the United Kingdom exporters. Obviously, we should do our utmost to encourage this scheme, so as to enable it to be a complete success.

Similar schemes are in operation in France, Italy, Germany, Sweden and Canada. I wish to refer, in particular, to the Canadian scheme, because a. statement made by Senator Kennelly was relevant to it. The Canadian scheme was introduced in 1944, and was patterned on the United Kingdom scheme, as is ours. It was intended to be selfsupporting, and was reasonably successful until it was caught up in the Brazilian currency trouble in 1952. In the House of Representatives, an honorable member said that the Canadian scheme included ordinary insurance business, and Senator Kennelly has suggested that the Australian scheme should include ordinary insurance also. I want to make it clear that ordinary insurance business is not embraced by the Canadian scheme, and I direct the attention of honorable senators to an extract from an address given in January, 1954, by Mr. B. Duchesne, of the Canadian Exports Insurance Corporation, to an international trade congress sponsored by the international trade section of the Montreal Board of Trade. He stated -

The purpose of Export Credits Insurance i» to provide Canadian exporters with protection against credit and political risks involved in foreign trade. This development of a government sponsored and financed insurance plan does not represent any intrusion of government into the business field. The risks covered by this type of insurance do not include any risks which can be and normally are insured by commercial insurers. Export Credits Insurance therefore differs entirely from marine insurance and covers a completely separate subject. Marine insurance covers the goods against physical damage. Export Credits Insurance, on the other hand, covers the foreign accounts receivable against non-payment by the buyer or the buyer’s country.

Export Credits Insurance represents the provision by the Government of a service which cannot be provided by private enterprise and is a recognition of the fact that particularly in the case of difficulties in the transfer of the proceeds of export sales there is no other means by which an exporter can cover his risks or indeed assess the risk from information which is available to him.

Obviously, the Canadian scheme sets itself against any intrusion into the ordinary field of insurance. I was delighted that Senator Kennelly should refer to the question of markets, and I was pleased, also, when the Minister stated, by way of interjection, that the Government intended to seek markets wherever they could be found if that did not cut across our democratic principles or impair the safety of Australia. The development of new markets always involves a risk. It involves the making of previously untried credit arrangements, and contacts with traders in unknown fields. If the insurer can insure up to 85 per cent, of this risk, as the bill provides, he will be prepared to seek out and obtain this business and, as a result, the Australian export trade will be enlarged and our national economy improved. It must be obvious to us all, however, that he is not going to seek out markets in places where he cannot cover himself against these risks and where, of his own knowledge, the risks might be considerable and certainly far beyond what might reasonably be anticipated by anybody looking for business. The very fact that he can cover himself for up to 85 per cent, of the capital cost is of itself an incentive for him to go after those markets. That is a rebuttal, to some extent, of what Senator Kennelly said when he suggested that we should insure him for only 75 per cent. It must be obvious to everybody that the more we reduce the amount of cover, the less incentive there will be for him to take the risk. If he can insure for only up to 50 per cent, of his risk, there is, obviously, not the incentive for him to take the risk. That is fairly elementary. If he has to go into a country where there are rumours of a rebellion or of internal strife, and he can obtain cover up to only 50 per cent., 65 per cent., or even 75 per cent., he will not be inclined to do it. The nearer we can get him to the amount where he can protect himself wholly, the more he is likely to take the risk and go after the market. For that, reason, 85 per cent, seems a reasonable cover to me.

Another point I make is that this scheme is being introduced at the request of representatives of Australian exporters and manufacturers who say that such a scheme is essential to compete in world markets. Before bringing down the bill, the Government conferred on the main points of the measure with representatives of exporters, manufacturers, primary producers, marketing boards and bank and insurance interests, and all sides, just as the Opposition has done to-night, gave support to the general principle involved in the scheme. My final point relates to premiums. The striking of a premium rate is one of the most difficult tasks involved in the scheme. I suppose that, in the early stages of the corporation’s life, even though the United Kingdom Government’s representatives support it, the question of assessing premiums will be the most, difficult problem of all. I suppose it will be true to say that probably for every risk that is undertaken there will have to be almost individual assessments. In almost every risk that is taken somebody will have to strike an individual rate. I have no doubt that before striking a premium rate for the various risks involved, information will be sought in the country where the goods are to be sold as to the credit of the firms concerned. T have no doubt that where we have Australian trade representatives overseas, they will be called upon heavily to supply the corporation with information as to the credibility of the people concerned. After all, that will be simply following the normal factors of obtaining a trade report, a practice which is quite a common feature of insurance writing in the ordinary course of events. If a company gets a risk, it seeks a trade report and bases its judgment on that report.

In this instance we have trade representatives overseas in many places and no doubt we shall be calling for trade reports from them. “Where we have not got Australian representatives is where the problem really begins and where it really becomes increasingly difficult. I have no doubt that in the early stages the striking of the rate will be a “shot in the dark” in some cases and therefore, of necessity, it will have to be reasonably high. Because I say it may be reasonably high in the early stages and because I believe that in certain circumstances it will be a “shot in the dark”, I suggest, realizing as I do that the intention is to make it financially self-supporting, that in the early stages some provision should be made for premium rebates. If no such provision is made, it seems to me that in the early years of the corporation’s life, insurers who have the advantage of its cover will be required to pay heavily for it. There is nothing original or new in the suggestion that there should be some premium rebate. After all, in the motorcar insurance business there is a no-claim rebate. Again, in personal accident and sickness insurance the insurer is given a free year after contributing for so long without claims, and certain things are given to those who take out life assurance.

It is a cause of regret to me that there is not written into the bill something which will enable the corporation, in its initial stages, and subject to its getting a reasonable run of success, to introduce some form of rebates to certain of its insurers. If there is no such provision, it seems to me that the premium rates may be very heavy and may tend to slow down the incentive for every exporter to come into the scheme. As against that, I realize that there is a likelihood that it will develop to the stage where, if the exporter goes to his banker for finance, it will be something similar to borrowing money on the security of a house. The banker, the solicitor, or any other lending authority will probably say, “ Yes, I will lend it to you provided you have insurance cover “. It may well be that although this scheme is voluntary, in practice it will almost become a compulsory scheme because there will hardly be a lending authority in the Commonwealth who will not say to the exporter, “ If we are going to finance you, the first requisite is that you should take insurance cover from the export corporation “. That is just one more reason why we should tell the Opposition that we will not have anything to do with that part of the amendment which suggests that the corporation should be allowed to engage in all fields of insurance. If my prediction proves to be true, then, if the amendment foreshadowed by the Opposition is carried we shall, in effect, create an insurance monopoly; and that would not be in the best interests of the Australian economy.

I conclude by saying that I give my support to the scheme. I agree with Senator Kennelly “when he says that we all hope that it will have the desired effect nf encouraging our export trade and of finding for the Australian economy markets which we have not hitherto been able to procure. If it does that, it will be doing that which the Government and, indeed, the Opposition and the whole of the Australian community want it to do.

Senator SHEEHAN (Victoria) [9.10’. - There is no doubt that this is a very important piece of legislation. It is one that might have been introduced into the Parliament much earlier. Apart from some of its details, it will not be opposed by members of the Labour party. I was forcibly struck by one of the paragraphs in the Minister’s second-reading speech, in which he said -

The Government has not lightly decided to interest itself in a new field of Government activity, lt has done so at the request of the commercial community and in the knowledge that, for this, type of risk, and for this magnitude of risk, the special form of insurance contemplated is not normally obtained from commercial insurers.

If ever a government blew hot and cold over particular activities in this country, it is this Government. A day or two ago, the Senate was debating a measure which had for its objective the disposal of an institution under the control of the Government - the Australian Whaling Commission’s station at Carnarvon, in Western Australia. A Government senator intimated that now that this commission had justified itself by pioneering a particular industry, the time had arrived to hand it over to private enterprise. He said, “ We believe in private enterprise. We will have none of this socialism or the socialistic ideas of the Labour party.”

The bill now before the Senate is a very important piece of legislation. It has for its objective the extension of Australia’s overseas trade in various conntries. The Government realizes that there are some potential customers who may not be blessed with sufficient of this world’s goods to pay cash for the goods which they will purchase from Australia. Or, it may be. that in their present state of development they are not able to offer to Australia goods manufactured in their countries in exchange for the goods which they are receiving from Australia. Consequently, the Government has devised this means of setting up an insurance company.

Commercial interests are not concerned about the development of the Australian export trade. This private enterprise, of which the Government speaks so frequently, and which is extolled as being the great developer, is not interested in whether Australian overseas trade is extended into other countries, and unless the Government comes to its assistance and administers a good dose of socialism, this venture may not succeed. The Govern-

S.- raff] ment must bear the responsibility. The insurance companies will take no risk a,t all, but the Government - this great supporter of private enterprise - ‘has to engage in a socialist enterprise.

The Government has been careful to insert a provision in the bill that if this new business undertaking becomes successful, it must not go too far and encroach upon the preserves of the ordinary insurance concerns, which are able to make big profits from their activities in life and marine insurance and in all those other fields into which they venture. Those are the fields in which insurance companies make the huge profits that enable them to erect palatial buildings. If this corporation, which is being set up by the Government for the purpose of stabilizing and developing Australia’s primary production and secondary industries, becomes a success, that is the only field in which it may operate, and it may not go further ahead. Such a provision shows how far ideas of overseas trade have advanced. I must congratulate the Government upon seeing the virtue of a little bit of socialist enterprise and co-operation. In bygone days private individuals took a certain risk. They bought wheat from the growers.

Senator GEORGE RANKIN:
VICTORIA · CP

– The Labour Government sold wheat to New Zealand at 5s. 9d. a bushel.

Senator SHEEHAN:

– That was not a had price compared with the ls. or ls. 3d. a bushel that private enterprise gave to the wheat-growers before the establishment of the Australian Wheat Board. Senator George Rankin has shrewdly anticipated the point I was about to make. In those days, private enterprise would pay to the grower or to the manufacturer a price sufficient to allow for competitive exporting, and then rake off a profit. Fortunately, Australia has advanced from that position to the present basis of trade control. The Government is now prepared to step in and relieve private enterprise of any risks that might be incurred in seeking new markets.

Senator Hannaford:

– Good old Government.

Senator SHEEHAN:

– I agree with the honorable senator, “ Good old Government “. It suits the Government to do so. Commercial interests have asked the Government for assistance, and although I have no objection to the Government helping them, I wish that the Government would be consistent. If it is consistent in anything it is consistent in its inconsistency. One day it condemns State enterprise and next day supports it - if any advantage is to be gained.

The Government has mustered sufficient courage to bring down this bill. I am pleased to know that, as a result of its investigations and its consultation with other authorities, it is now prepared to launch this enterprise, which will be a help to the people interested. The proposed corporation will fulfil an important function. It is true that some nations not far from our shores would like to obtain foodstuffs and materials which are produced or manufactured in this country. There is no doubt that our people are anxious to trade with them, and under this arrangement it will be possible for them to do so. I think that it is wise to establish such a corporation, because it will result in Australians going nut and looking for trade with greater confidence.

I hope that as a result of experience of this corporation we shall venture into much wider fields than those covered by the bill. We can afford to take greater risks to expand our export trade. I say, at this stage, that I intend to support the amendment when it comes before us in committee, because I believe that it embodies a wise provision. The Opposition is asking the Government to conduct the financial transactions involved in the operations of this corporation through the nation’s bank, the Commonwealth Bank. There is no doubt that the corporation will depend largely, in its initial stages, for financial support on the Government. The Opposition wishes to have the nation’s bank recognized as the medium through which all the financial transactions will take place. We on this side think that that is a natural corollary. The private financial institutions are not prepared to take risks in all directions, whereas the Commonwealth. Bank is prepared to undertake risks in order to develop the nation.

Senator GEORGE RANKIN:
VICTORIA · CP

– It is not taking risks if the Government is backing it.

Senator SHEEHAN:

– In ordinary circumstances, our private banking institutions are not prepared to accept responsibility unless there is an assurance of success. The Commonwealth Bank should be recognized as the institution to which the Government can look for support, and the Government should, in turn, give the bank all the support that it can possibly give to it because of its importance to the national economy. Of course, honorable senators opposite, being favorably disposed to private enterprise, want to hand this little sop to the private banking institutions.

As I see it, with one or two amendments, this legislation could be very valuable. It represents a complete change of front by the Government and is a reversal of the philosophy that the Government parties have enunciated from time to time. They are prepared to condemn any government enterprise unless it suits their book to do otherwise. This bill has been introduced in the interests of the people who support the Government parties. I do not mind if they support and encourage private enterprise, so long as they are consistent and do not blow hot and cold. I hope that the supporters of the Government will stiffen the attitude of the Government to State owned and controlled institutions, so that it will encourage those institutions instead of destroying them.

Senator WRIGHT (Tasmania) [9.25 J. - In dealing with a bill such as this, 1 cannot but express regret that we should have been treated to the usual galloping of Senator Sheehan’s hobbyhorse for the last fifteen minutes. The bill will be recognized, on reflection by the few honorable senators who are interested in it, as one of the forward-looking measures that have emanated from the Government. It is particularly opportune, at the present time, that we should engage ourselves with positive proposals for the expansion of trade, because there are those of us who are altogether depressed by the emphasis that has been placed on such restrictive measures as import restrictions for the purpose of bringing about a trade balance.

This measure goes to the extent of creating a government corporation for the purpose of making available insurance to people - not exporters only - who participate in trade and commerce with countries outside Australia. In that respect, of course, it is designed to afford to the trader some indemnity against risk. Of course, that is one of the things that endanger trade, so that if there is an insurance company to take care of that risk there is an assurance that the trader will get bis price for the goods he has to sell. But I feel that it would be a mistake to place too much reliance on the benefits that this bill will confer. Those who wax so eloquent about the theoretical virtues of socialism would do well to remember that this bill accentuates the vital fact that it is only by competitive external trade that the community within this Commonwealth can grow prosperous. The market within the Commonwealth for the consumption of our products is not nearly sufficient to enable us to support our population at the standard of living to which we aspire. The thing that I think should indelibly be borne in upon the conviction of the Opposition by this bill is that if this community is going to maintain its standard of living it must do so by means of a vigorous and expansive export trade. We should afford much greater assistance to the maintenance of that policy if we maintained our internal economy on such a basis that our costs would enable us to be competitive traders outside Australia. However, I intend to take the opportunity, when the Senate is dealing with Supply, to speak more fully on that vital subject, because it concerns a matter which in the next few years may become a crucial problem for this country.

I was interested to hear the remarks of Senator Anderson and his reference to various other countries that have enacted legislation of this kind. He has relieved me of the necessity to refer to that matter. For myself, I do not derive very much satisfaction from seeing what France, Holland, Belgium, Sweden and other countries of entirely different characteristics and economic circumstances have done by way of legislative action, but it is always useful to have a look at the parent legislation of Great Britain. It may be the fact that the United Kingdom legislation of this character originated before World War I., but the first reference I have found to it is in 1921. It does not seem to have achieved any importance in relation to external trade until after World War II.

It is of interest, in passing, to note that, according to some accounts and balance-sheets that I have looked at concerning the Export Credits Guarantee Department of Great Britain, the maximum liability of all guarantees outstanding on the 31st March, 1953, aggregated £315,000,000. Allowing for the difference between Great Britain’s external trade and ours, that sum is to be compared with the £25,000,000 that we place as the limit of all contingent liabilities to be contracted by the corporation under this bill.

Senator Hannaford:

– That would be in somewhat the same ratio, would it not?

Senator WRIGHT:
TASMANIA

– When we consider that our external trade is between £600,000,000 and £1,000,000,000 a year, it is a little depressing to think of the contribution that will be made by a corporation guaranteeing insurance, when it is required to limit its maximum contingent liability, at any one time, to £25,000,000.

Senator Anderson:

– It is proportionate to turnover.

Senator WRIGHT:

– It is what the Parliament is providing. It does not say anything about being in proportion to the risks covered. Clause 28 limits the contingent liability of the corporation under contracts of insurance to £25,000,000.

Senator Hannaford:

– We have got along very well without it up till now.

Senator WRIGHT:

– This measure limits the contingent liability to £25,000,000. It far transcends any business experience to which my judgment has been treated on any occasion, but I put the matter to the Senate for its judgment as to whether or not it is proceeding with due appreciation of the magnitude of the figures that are necessary to make anything like a worth-while contribution to the business.

I was to some extent comforted to see that a sole commissioner might have to his aid the advice of a consultative council. I, myself, think there are men of. great judgment whose experience would be infinitely valuable in the arrangement of our overseas share, but clause 12, provides for the appointment of a consultative council consisting of not more than ten members. And then, if you please, under sub-clause (3.) of that clause, it is the privilege of the commissioner, at his discretion, to consult them; although it is provided that, if the Minister so directs, there shall be consultation. In the English legislation, with that lack of veneer that characterizes the British statutes as compared with the particular mould of the Canberran productions, section 1. of the Export Guarantees Act 1949 just says this - and he who runs should read it -

For the purpose of encouraging trade with places outside the United Kingdom, the Board of Trade after consultation with the Advisory Council may with the consent of the Treasury make arrangements for giving guarantees. . . .

I stress the phrase, “ After consultation with the Advisory Council”. As that section was perused by the penmen of this statute, I would be intensely interested to know why it is necessary to insert a whole clause - clause 12 - in order to establish an advisory council and to authorize the evasion of it.

I have heard in this debate references to the fact that insurance may be effected at shipment, and I. think Senator Anderson suggested that a contract might be made to cover the manufacturer in Australia who suffered loss because an order did not fructify by reason of some change of currency or exchange. I want to invite the Senate to interpret clause 3, which is the substantive clause of the bill, and read with it clause 34 which, but for my growing scepticism would have escaped my attention because it is hidden away under what is usually an uninteresting caption - Miscellaneous. But it is, of course, a most potent corollary of clause 13. and I just want to know what is the intention.. The English statute refers to guarantees to, or for the benefit of, persons carrying on business in the United Kingdom, being guarantees in connexion with the export, manufacture, or distribution of goods, the rendering of services, or any other matter which appears to the Board of Trade conducive to the said purpose. And then it goes on to provide in sub-section (2.) -

In this section the expression 11 trade with places outside the United Kingdom “ includes any transaction involving a consideration in money or moneys worth accruing from * person carrying on business or other activities outside the United Kingdom to a person carrying on business in the United Kingdom.

So that there they make no bones about it. It accrues in respect of the manufacture or distribution of goods, so long as those goods are intended for external trade. Our clause 13 (2.) provides -

The contracts of insurance which the Corporation may enter into under this section are contracts of insurance with, or for the benefit of, persons carrying on business in Australia being contracts of insurance against risk of monetary loss, or other monetary detriment-

I should like to know the origin of those two phrases - attributable to circumstances outside the control of the person suffering the loss or detriment and resulting from failure to receive payment in connexion with, or otherwise arising out of, acts or transactions in the course of, or for the purpose of, trade with countriesoutside Australia,

Well now, that seems to me to enable insurance to be given to any person carrying on business in Australia, or for his benefit, in respect of financial loss arising out of any act or transaction in thccourse of, or for the purpose of, trade outside Australia. Let us take the abattoirs in South Australia as an instance. That abattoirs is buying beef and killing it for the purpose of trade outside Australia. I know that there is a question under appeal to the Privy Council at the present time as to the extent to which this is interstate trade in terms of section 92 of the Constitution, hut undoubtedly the basis of that is, if I remember aright - it is just an idea I express on my feet - that there is a conflict with the export control of the Commonwealth, which can only be based, upon foreign trade. So that it seems to me that this proposed corporation is authorized not merely to guarantee contracts in relation to exported goods; it will be available to give contracts of insurance to cover losses that might arise out of failure to receive payment in connexion with transactions which are undertaken for the purpose of trade with other countries. So, it seems to me, it comes within our confines and operates before the goods are exported. I simply make the submission in the hope of obtaining the comment of the Minister, if he will be so good, either in reply, or at the committee stage. I, for one, have not been instructed on the matter from what £ have read of the House of Representatives debate or from what I have listened to in the Senate.

Senator SPOONER:
LP

– I thought it was said in the second-reading speech that the goods being manufactured for export would be covered.

Senator WRIGHT:

– I mention these matters so that, perhaps by repetition of the statement, they will sink into my understanding. To me, the clause seems fairly wide.

Senator Kennelly has foreshadowed an amendment to sub-clause (3.) of clause 13. Sub-clause (3.) is the only provision for exemption from what I have just read. Ft reads -

The Corporation shall not enter into contracts of insurance under this section against risks that are normally insured with commercial insurers.

It seems to me there was an opportunity for the ingenuity of those whose ambition it is to be legislators to express that sub-clause with a little more precision. What does it mean when it says, “Tho Corporation shall not enter into contracts against risks that are normally insured with commercial insurers”? How would one ascertain that? Who is going to say whether a risk is a risk that is normally insured with commercial insurers? I would be most interested to know where that phrase came from, what it means and what its true ambit is. Of course, it will readily occur to those who understand the legislation that if that subclause stood alone it would effectively circumscribe the authority of the corporation to grant effective and valid contracts of insurance.

When one turns to clause 34 in Part III. - Miscellaneous - one finds that although some of us would have been invited to place great faith and confidence in the limitation provided by subclause (3.) of clause 13, from the point of view of legislative effect, clause 34 does not mean a razoo.

Senator Cameron:

– What is that?

Senator WRIGHT:

– Surely, Senator Cameron does not ask, “What is that”? Clause 34 reads -

Without prejudice to the duty of the Corporation to comply with the provisions of this Act and to observe the limits of its powers under this Act, a contract insurance entered into by the Corporation is not invalidated by reason of a provision of this Act not having been complied with by the Corporation in relation to the contract or by reason of its not being within those limits.

Senator McKenna:

– That is an escape clause.

Senator WRIGHT:

– That is what I call putting up a gate made of eggshells. There is no limitation at all placed upon the risks that this corporation may take, and this corporation may ignore the provisions of sub-clause (3.) of clause 13. That clause is not an effective piece of legislation. It is subject to what, in my experience, is a unique exemption penned in clause 34. I should like to know where the parent of clause 34 can be found, alive or dead.

Then, I find in the second-reading speech in the House of Representatives of the Minister for Trade (Mr. McEwen), for whom I have the greatest regard, that he says with all simplicity and straightforwardness - it will insure only certain kinds of risks, as provided under the bill, lt will insure against insolvency of the overseas buyer, for example, or against the overseas buyer’s inability to obtain foreign exchange to remit payments owed to an Australian exporter. But it will not insure against fire or pilferage or damage to goods, or against marine or other risks that are normally insured with commercial insurance houses. 1 have dealt with sub-clause (3.) of clause 13 on that. The only provision I find in the bill that limits the classes of insurance to which the corporation can enter into contracts, is sub-clause (2.) of clause 11. There, it will be noted that the determination of this matter is entrusted by Parliament to the Minister, and to the Minister only. There is no definition in the bill delineating the character of insurance for which thi3 corporation can contract. So, it seems to me that we may take a little comfort from the fact that the Government has brought in a measure designed to benefit our export trade, but I think it is fairly apparent that the degree to which the corporation to be erected for that purpose is subject to any parliamentary restriction is fairly indefinite. Notwithstanding that, I have no doubt that if this corporation is managed, as I have no doubt it will be, with the skill, enterprise and adventure of those who settled in Australia 150 years ago without any such aids, it will do something to expand the trade of Australia. Although, of course, when one realizes the difficulties such a corporation in Great Britain had to face in its initial stages, and when one realizes the external cost barriers which confront Australian trade in almost any market at the present time, this corporation will need not only our goodwill but also all our enterprise and assistance to enable it to strike a significant blow in favour of the expansion of Australian trade.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

. The Opposition is supporting this measure in principle and offering some proposals for amendment. In the first place, I should like to draw some conclusions from the introduction of this bill, the first being that it is an inescapable reflection on certain things in our community and in our type of community, and on certain things which should have been avoidable had those, whose responsibility it was in recent years to control this nation, taken the necessary steps. When Senator Wright says that it is a reflection of that type of economic circumstance which arises where you have a high standard of living and a small local indigenous population and therefore a small home consumption market and the necessity to export on a world market which has a cost and price level below our own, he is dealing with an inescapable fact.

It is the failure of the Government to attempt to alleviate that matter in any way that has to some extent precipitated the introduction of this legislation, and therefore it is in a sense a criticism of that very failure. That failure goes back to 1949, at least, in political expression and propaganda, when a serious political promise was made that the cost and price structure of this country would be controlled. After many years we find that we have not yet controlled it. Indeed, we have hardly handled it, and now, with an artificial support programme, we have to acknowledge the extent of our own failure. Those one or two conclusions immediately emerge from this legislation.

Another point is that if Senator Wright seeks to cast a reflection on the political philosophy of the Labour Opposition, I remind him that although we do acknowledge that private enterprise in the export market is vital to Australia, this bill itself contemplates support for that export marketing from the public purse, and at the public risk, which is a direct intervention of the State in pursuance of a philosophy which we espouse and which the Government consistently and vehemently denies. Therefore, in itself, this measure is an acknowledgement that the Government is seeing eye to eye with the Opposition in its idea of the responsibility of the State to intervene and support industry in certain circumstances.

Senator Scott:

– It is the Opposition that sees eye to eye with the Government.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– Not at all, but this emerges from our political philosophy, which the Government appears to have adopted in part. I suggest that that is very much different from the Opposition agreeing with the Government. This type of export marketing support is, in a sense, historic, in the same way as the advent of the limited liability joint stock company.

In the days of British trade expansion when marketing and expansion risks were encountered, a grave detriment to the investment of money in and the pioneering of new markets was the fact that the whole of the investor’s capital, as well as his private assets, were committed in the only available systems of legal cooperation which existed. If three or four people joined together in a partnership, then, according to the law, the whole of the assets of the partnership as well as the assets of the individuals composing the partnership became available to the creditors in the event of the partnership failing. Naturally, people were reluctant to commit the whole of their assets to a venture because in the event of failure or even bankruptcy they would suffer complete personal destitution. This system restricted foreign trade investment.

It has been said that the advent of the limited liability company provided a formula by which a number of people, or indeed, a great number of people, could venture small sums of money knowing that their liability would be limited to the money that they had actually invested. That enabled the mobilization of capital for risky enterprises because, if those enterprises failed, only the amounts invested by individuals would be lost to those individuals. The limited liability company was a great incentive to overseas investment during the period of British trade expansion and development.

In a parallel sense this type of legislation now before the Senate may have the same effect, because, although it does not limit the liability of the person to the capital invested, it protects him and indemnifies him for his capital to the extent that he has insured. Therefore, we can only hope that this measure will have an effect corresponding to that of the advent of the limited liability company. The advent of the latter type of legal corporation, and its operation in international marketing and trade investment generally, was accompanied by some very grave scandals. Capital collected from private individuals fell into bad hands. It was invested in completely indefensible propositions and many people lost their life’s savings. That sort of thing subsequently became subject to legal control which largely prevented it from happening, but some malpractices still occurred. Indeed, they go on to-day.

I point that out as a note of caution in this debate because, as people could be involved in investment scandals and could lose money in limited liability companies, a similar type of scrutiny to that eventually exercised over the operations of companies must be exercised by those administering the corporation to ensure that although risks may be taken in investment, those risks must be at least justifiable from the viewpoint of the trader or the Australian economy. There is no reason why the Treasury should be ultimately called upon to assume the financial burden of a very bad export commitment or investment, any more than private individuals are ultimately expected to risk the possibility of the loss of their properly invested money in a joint stock company or limited liability corporation. While there is a parallel here to the organizations I have mentioned, there may be tremendous opportunities in this scheme for expansion of trade similar ‘to the expansion that took place in Britain in the eighteenth and nineteenth centuries. Nevertheless, there is a responsibility on the corporation to ensure that the funds of the Commonwealth are carefully preserved and conserved.

This bill will write into our legislation another public corporation, and this again is a type of government instrumentality which has a certain autonomy and a certain independence from the Parliament. While I welcome the creation of this type of government instrumentality which has independence of action but is subject to some degree of close scrutiny, I have been disturbed, and I think Senator Gorton has also been disturbed, over the last two years, by the inability of senators sometimes to obtain in this chamber answers to questions in regard to the operation of public corporations. It is a very difficult subject, and a very new political and legal field. The question is to what extent a public corporation in its operation should be completely autonomous and therefore completely divorced from scrutiny by the Parliament, and to what extent, being the creation of the Parliament, it should be subject, through the responsible Minister, to questioning by private senators or representatives in another place.

We notice in clause 11, to which Senator Wright has referred in another context, that there is a particular responsibility imposed on the Minister in relation to a determination of policy by the corporation, and that no policy can be laid down in certain matters nor can any new policy be determined except with the consent of the Minister. Therefore, we have to find a line between a genuine inquiry directed to the Minister administering this legislation in relation to the actual activities of the corporation, and a question which concerns the determination of policy. I can visualize a case involving trade with red China, which is an undetermined field. Suppose an exporter has a projected contract with red China, and approaches the corporation to obtain support in relation to it. At that stage, the corporation will have to determine whether the exporter will get that support. In addition, the Government will have to determine what is to be its policy on trade with red China.

Senator ANDERSON:

– That will have nothing to do with the corporation.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– That is correct, but it will be the concern of this chamber. Therefore, if I should ask a question of the Minister relating to such a contract, am I to receive a reply? The contract would be related to an individual trader, ,v.id would involve tho relationship between a client and the insurer. Therefore. I would not be entitled to reseive a reply, but I am entitled to ask about general trade policy, which is the concern of the Parliament. This field of the public corporation is a new and undeveloped field of legislation and judicial inquiry, but some text-books on the subject are being written, notably one by Mr. Herbert Morrison of the British Labour party, in which he finds some difficulty in determining the extent to which the Minister can be asked in the House questions relating to the operations of the organization concerned.

There are several specific matters upon which I desire to speak briefly. Senator Kennelly asked the Minister for National Development (Senator Spooner) whether this bill would open the trade door to all countries and whether, in fact, the corporation would have carte blanche in connexion with trade “with other countries. I believe that the Minister replied in the affirmative, but I would not be sure. I suppose that trade policy will still be settled by the Minister concerned, and: unless there is a settled trade policy, the corporation will not be free to act in an individual transaction in a general way. The matter will have to go before the Minister. I do not know whether a decision will then emerge as an administrative act of the Government, or whether it will come under a regulation, but T should be interested to hear from the Minister what will be the approach of the Government in such circumstances.

Clause 13 has come under well-deserved scrutiny from Senator Wright, but the amendment that is to be moved from this side of the chamber for the omission of certain words from sub-clause (3.) of clause 13 appears to me to be designed to impart a certain strength and vitality to the corporation that it might lack otherwise. We accept the fact that those who are engaged in the field of commercial insurance are in it for profit. They undertake insurance risks for which premiums are paid, and it is a profitable commercial venture. They have no statutory or other obligation, except a commercial obligation to themselves and their shareholders and those who make contracts with them. They will accept only that type of risk, and insure that branch of business, which will return them a profit, or give their shareholders a dividend.

Senator Henty:

– They hope.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– Yes, at least they hope so. In the terms of sub-clause (3.) of clause 13 of the bill, the proposed corporation will be in a position where it must accent business which has previously been doubtful or undesirable and, perhaps, uninsurable with any commercial insurance company.

Senator Henty:

– At what premium?

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– If the business were accepted by commercial companies, a high premium would have to be determined in proportion to the attendant risk. This corporation, by statutory obligation, will have to accept only that type of business. There will be no opportunity to offset the risks of the business by undertaking any ordinary insurance where there would be a fair possibility of a reasonable return. The effect will be this: The premium will always be high because of the nature of the only business that the corporation can accept. 1 agree that that is providing that sub-clause (3.) of clause 13 is observed in actuality, and not more in the breach than in the observance, as Senator Wright has suggested in examining another clause. Would it not be fairer and more reasonable to give the corporation the opportunity to enter into the general insurance field so that, by spreading its risks over other types of business, it would be able to offer a low premium rate to those who most deserve it - the people who are taking the commercial risks? That would provide insurance at a reasonable premium for those whom this bill is designed primarily to assist. There is not even a possibility of ever being able to reduce the premium on the ordinary trading of the corporation as set out in the bill. Therefore, when the amendment is considered at the committee stage, I hope that it will receive the enthusiastic approbation of honorable senators who should try to ensure that this corporation will do the job that we all hope it will do.

Senator Anderson:

– Fundamentally, you argue that the corporation would still have to assess the premium according to the risk.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– Of course, the corporation might do that. I suppose that is bow it will be done, but any other contingency which would have the effect of reducing the premium in accordance with a particular risk will be denied to the corporation in the terms of sub-clause 3 of clause 13.

We support this measure because it is a positive approach to the problem of Australian exports. That matter has been discussed in this chamber on many occasions. 1 remember the Minister for Shipping and Transport (“Senator Paltridge) discussing the possibility of Australian secondary industries finding adequate export markets. It is a tremendous problem which, ultimately, can be solved only by the rapid implementation of the immigration programme at the highest level in order to establish, as speedily as possible, that sort of economy in which the nation produces a large proportion of what it consumes and consumes a large proportion of what it produces, as is the case in the United States of America. Until that position arises, the State must accept the responsibility - as it is doing through this measure - of supporting private industry in finding and establishing new markets. A great opportunity exists for the establishment of new markets, but there must bc a stimulation of private enterprise, endeavour, initiative and courage.

Although this corporation will not be what I shall call a joint public corporation, in which shares will be held jointly by a government and by private individuals, it will be a joint corporation in its conception, because it, contemplatest]i e Government working in conjunction with private individuals and privatecapital. It is an attempt to achieve something which is becoming more and more vital and important to Australia every day. I join with other honorable senators on this side of the chamber in supporting, in principle, the measure that is before us.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I enter the debate very briefly to join with Senator Kennelly and my other colleagues in wishing the project sponsored by this measure every success. I do not anticipate that that success will be as spectacular as may be thought by some. I am tempted into the debate, too, by the thoughtful contributions that have been made from both sides of the chamber. I find it an unusual role for me to be in the position of supporting with real cordiality a measure introduced by the Government. I find that the bill before the, Senate is in complete line with the policy announced by labour in December last when we proposed that there should be set up a ministry of exports to stimulate exports in a vital, way. and when we proposed that there should be a system of export credits and guarantees. We did not refer to insurance because we thought that approach was a more direct approach than the mere system of insurance in which 1 see a number of weaknesses, some of which have been touched upon by honorable senators to-night.

The point has been well made that the risks to be covered are quite extraordinary. They are very great risks from an insurance viewpoint. The type of risk has been quite adequately detailed by the Minister for National Development (Senator Spooner) in the course of his second-reading speech. Seeing the particularity with which they are set out, I find that I join quite cordially with Senator Wright in asking why they should not have been set out in the same detail in clause 13 of this bill. It seems to me that the risks to be covered fall into a relatively small category and might have been detailed with just the particularity that the Minister himself used in outlining the purposes of the bill in the course of his second-reading speech. I put it to the Minister again that if the principles he enunciated regarding the disposal of public undertakings were to be applied generally by the Government, then, assuming this corporation succeeds and, on the case that he put to the Senate recently, private enterprise is prepared to fill the whole field and is eager to take over, what assurance have we that in those circumstances the Government will not repeat its performance in connexion with the whaling industry? I recognize that this is pre-eminently a field for government action, that the Minister might say that the Government should well give a lead. .But if, when this plum, if it turns out to be such, is ripe, can we have an assurance that if a sale is to take place public tenders will be called and that long terms, if granted, will be not lower than the anticipated profits, or the level of profits being earned by the organization before such sale?

I agree again with Senator Wright regarding the rather extraordinary way in which clause 13 i3 expressed. There seems to be a string of almost plenary powers to cover transactions in all their phases between traders here and elsewhere, although, on that point, I notice that . the clause referred to transactions between persons “carrying on business in Australia . . with countries outside Australia “. With respect to the drafting, I suggest that this might be better expressed as “ with persons in countries outside Australia,”; because, in actual fact, even if a transaction is with a foreign government, it is not with the country but with somebody, some person, as we understand that term under our Acts Interpretation Act, in that country. Then, that great power, as has been well pointed out, is immediately cut down by sub-clause (3.) of clause 13. I think that was the particular sub-clause as to whose parentage Senator Wright made an inquiry. I have no knowledge, nor am I guilty, but I suggest that perhaps that is a clause that arose out of the discussions between the Minister on the one hand and all the commercial interests on the other. I should imagine that the parent of that clause was the insurance interest, or interests, that took part in the consultations which preceded the drafting of this bill. I should imagine that the insurance underwriters would say, “ We do not mind your engaging in this so long as you do not touch anything that we are handling “. I suspect that the parent of this is the Association, of Insurance Underwriters of Australia, who were carefully out to protect their own interests. They sought to do that in terms that they believe are completely clear and unambiguous. It may well be that they are unambiguous, because I think that sub-clause (3.) is capable of rather clear definition. It reads -

The Corporation shall not enter into eontracts of insurance under this section against risks that are normally insured with commercial insurers.

The underwriters association would be able to supply an exact definition of what risks are normally undertaken by that body

Senator Wright:

– Yes, but it does not say “ classes of risks that are normally undertaken by commercial insurers “.

Senator McKENNA:

– Not classes.

Senator Wright:

– It refers to risks.

Senator McKENNA:

– “ “Risks “ is the word. It mentions the risks that are normally undertaken. I suggest that those risks would be capable of fairly clear definition by reference to the records of the various underwriting associations in Australia. I would suggest that the insurance companies felt completely confident of their own position when they were able to secure the writing in of that particular sub-clause. I feel that the Minister for Trade (Mr. McEwen) enunciated a principle in the bill that might well have been applied to this point when he said -

If any exporter does choose to insure, he must offer . “ ‘r spread or risk and cannot choose only hi worst risks for insurance. He will not be ex, expected to offer to insure where cash is received before shipment- there is nothing to insure against, of course - or in respect of sales against irrevocable letters of credit. where there would be no need for insurance. If that is a principle, then why does it not apply in this class of insurance that is to be undertaken? Is this corporation to be able to say to an exporter who wants to insure, for example, against exporting to some minor, insignificant, uncertain country that is politically unstable, “ We are not prepared to cover your exports to that country unless you take from us as well cover against a similar type of risk on your exports tq the United Kingdom “ ? Is that what the Minister means? In other words, does he mean that if a man is exporting he must put the whole range of his exports in for insurance cover at varying rates according to the class of risk? I should imagine that would be governed by the financial status of the particular country. If that is a principle that it is good enough for the Government to affirm, why does it not say to this body, “ If your clients want you to take all these great risks that we all acknowledge, why should not the commission be free to turn round and say, ‘ Why don’t you give us your motor car insurance? Why don’t you give us your workers’ compensation insurance? What about making it fair? You are bringing us only all your risky business.’ “ ? Surely, if the principle is good in one case it holds good in the other. In my limited experience of insurance activities, that is the type of thing that is done with great regularity. It is a common thing for an assured to put various classes of insurance in the hands of the one insurer, pressure being exerted upon him for that purpose.

Senator Byrne effectively made the point that the rates must be high for these great risks. If the commission, were able to engage in more lucrative work those rates could be reduced. They will play a vastly important part in the costs of the exporter, because they will form part of the costs of the goods on export. They will make the exporter’s position in a competitive world market more difficult, because the higher the premiums, the higher will be his cost3 and the more difficult it will be for him to compete.

I do not expect any spectacular success to follow this measure. The insurance cover it provides is of far too limited a scope. The amount of £25,000,000 made available is far too small. I direct the attention of the Senate to the fact that an obligation is cast upon the commismon not to exceed £25,000,000, but if it does, it is provided in another clause that the liability of the Commonwealth is unlimited. That liability relates to all commitments and liabilities of the commission. Consequently, if the commission disobeys its instructions and exceeds the £25,000,000, the Commonwealth will still remain responsible.

In view of the costs to the exporters, 1 make the further point that, according to the Minister’s second-reading speech, the insurance cover is intended to cover payments within twelve months. This is a long time for an exporter to wait, but it is suggested that an exporter will say to a financier, “I have cover up to 85 per cent, on this sale; will you please finance me?”. If that is to be the process, the costs to the exporter will be increased further by the amount of interest that he has to pay. With higher premiums and interest rates over what may be a twelvemonths’ period, costs to the exporter will be multiplied and will make bis position more difficult. I say again that for those reasons I do not expect any spectacular improvement, nor do I think that the operations of the commission will make a vast impact upon Australia’s balance of payments position.

I point to the fact that last year, of all our exports, only 5 per cent, could really be called manufactured goods. Obviously, we cannot look to secondary industry, unless there is an extraordinary increase in the export of manufactured articles, to play any major part in turning the balance of payments position more in favour of Australia. High premiums, and the need to wait for a year for money and pay interest on overdrafts in respect of it in the meantime, will not stimulate the interest of manufacturers in this measure. They have very easy markets in Australia. There is no difficulty in disposing of their goods here. Their fundamental difficulty is that stated by Senator Byrne when he instanced the fact that the cost structure in Australia is the real problem troubling exporters to foreign markets.

Although this bill is helpful and may be useful to some manufacturers, it will play a relatively small part in the whole scheme of things. A more direct approach might have secured a better result. The provision of depreciation allowances would have been a better method, and would have encouraged our manufacturers to import more efficient and uptodate machinery. Of course, they are in trouble about importing capital goods into Australia. In the present emergency relating the the balance of payments, I suggest that the Government should give serious consideration to some easing of taxation on profits made from the sale of Australian-produced goods overseas. That may sound revolutionary, hut if the Government wants to put heart into the export drive, particularly as it affects the manufacturing industries of Australia, then it must consider extending the depreciation allowances and easing the restrictions on the importation of machinery into Australia. Good results may accrue if steps are taken in these directions.

I conclude with a ‘brief comment on the consultative council to which Senator Wright conferred. No information is given in the bill or in the second-reading speech of the Minister as to the personnel to be appointed to that council. I should be grateful if the Minister, in his reply, could give the Senate some indication of who they will be. I join with my colleagues and other senators who have spoken in cordially supporting the bill, and hope that its objectives will b»’ attained.

Senator SPOONER:
Minister for National Development · New South Wales · LP

– in reply - Honorable senators will agree that the second-reading debate on this bill has been one of the most interesting that have taken place in this chamber. I face a difficulty which is common to every Minister in winding up a debate of this kind, that he may not be able to understand the notes that he has made, or that they may not refresh hia memory in the way that he desires. However, a glance at the clock assures me that my difficulties in that direction will be eased considerably in about three minutes from now.

Taking the speeches in turn and dealing only with the discussion of the bill itself and not of the economic conditions which have necessitated its introduction, the first point which needs to be made, and reiterated at every opportunity, is that we must look at the risks that are to be covered. The preamble to the bill sums up the situation very well. It sets forth that the purpose of the bill is to provide insurance against certain risks arising out of that trade not normally insured with commercial insurers. This is a special enactment to provide a service which cannot be otherwise obtained. The risks to be covered will not be taken by the trader, and no insurance companywill insure against them. The bill is based on world-wide experience, and is to provide protection against insolvency, failure to pay within a specific period, blockage of foreign exchange and sudden imposition of import control.

Senator WRIGHT:
TASMANIA · LP; IND from June 1978

– What is the honorable senator reading from?

Senator SPOONER:

– From my notes.

Senator WRIGHT:
TASMANIA · LP; IND from June 1978

– I was hoping that those items might be contained in the bill.

Senator SPOONER:

– I forthwith admit the soft impeachment that my notes are either incorrect or, maybe, completely correct, and that I may not now be able to read them. However, I have stated the foundation to which we must return again and again - that the bill provides a means of insuring against risks for which no cover can be obtained elsewhere.

Debate interrupted.

page 885

ADJOURNMENT

Broadcast of Questions

The PRESIDENT (Senator the Hon. A. M. McMullin). - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question -

That the Senate do now adjourn.

Senator MARRIOTT:
TASMANIA · LP

– I hope that. I shall be able to retain the interest of the. Senate for only a few minutes to discuss a matter which I do not think conies under your jurisdiction, Mr. President, nor do I think that the Government or the Opposition is culpable in regard to it. However, I think that the Senate, owing to the power of the microphone, has fallen into a custom which we should alter. It was very well illustrated during question time to-day, when we came to answers to questions upon notice. After some of those questions had been answered - that is, when certain honorable senators had risen and read out questions, and Ministers bad replied - the lights on the wall went out, indicating that the proceedings were not then being recorded for possible broadcasting at a later hour to-day. Then, when Senator Ashley, I think it was, was called upon to ask a question and he commenced to read it out, there were cries from both sides of the chamber of “You are not being broadcast”. Thereupon, Senator Ashley and all the honorable senators who followed with questions, simply said, “ I desire to ask question number such-and-such standing in my name”, the reason for the change in procedure being that up to that moment we were kow-towing to a problematical broadcast audience, or an audience that might be able to have the opportunity to listen to a re-broadcast of question time if that re-broadcast were fitted into the period between 7.20 p.m. and 8 p.m.

In the Senate chamber, at the time to which I have referred, there were approximately 70 members of the public, including a large number of school children who, we hope, had come here for educational purposes. We completely ignored them. We simply asked Ministers to get up and answer questions that were on the notice-paper. I say, quite seriously, that if we are going to extend to the public, who may or may not be listening and paying attention to the broadcast, the courtesy of knowing what questions are being asked, we should at least extend the same courtesy to members of the public who come here to watch and listen to the proceedings of the Senate. I hope that, in the future, we shall treat those people courteously and not just acknowledge an audience that may or may not be listening in at a particular time.

Question resolved in the affirmative.

Senate adjourned at 10.33 p.m.

Cite as: Australia, Senate, Debates, 22 May 1956, viewed 22 October 2017, <http://historichansard.net/senate/1956/19560522_senate_22_s8/>.

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