Senate
1 December 1960

23^rd Parliament · 2^nd Session

ASSENT TO BILLS
QUESTION
- WYNDHAM AIRPORT
QUESTION
- DROUGHT RELIEF
QUESTION
- ARCHITECTURE
QUESTION
- SEARCH FOR OIL
QUESTION
- ORIENTAL LANGUAGES
QUESTION
- MELBOURNE GENERAL POST OFICE
QUESTION
- CANBERRA
QUESTION
- CANBERRA TO QUEANBEYAN RAILWAY
QUESTION
- PUBLIC WORKS PROGRAMME
QUESTION
- COMPANY MERGERS
QUESTION
- ORIENTAL LANGUAGES
QUESTION
- CAPTAIN COOK’S LOG BOOK
QUESTION
- STEEL
QUESTION
- OVERSEAS TRADE
QUESTION
- COMMUNISM
QUESTION
- ORIENTAL LANGUAGES
QUESTION
- URANIUM
QUESTION
- DUTCH NEW GUINEA
QUESTION
- ROYAL AUSTRALIAN AIR FORCE
QUESTION
- COMMONWEALTH AND STATE FINANCIAL RELATIONS
QUESTION
- WHALING
QUESTION
- SALES TAX
QUESTION
- DRIED FIGS
QUESTION
- TARIFF BOARD- PROTECTION FOR GRAMOPHONE EQUIPMENT INDUSTRY
QUESTION
- TRADE WITH NATIONALIST CHINA
QUESTION
- INTER-PARLIAMENTARY UNION
GOVERNMENT BUSINESS
- Precedence
SPECIAL ADJOURNMENT
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL (No. 2) 1960
- Second Reading
- Second Reading
ALUMINIUM INDUSTRY BILL 1960
DEFENCE FORCES SPECIAL RETIREMENT BENEFITS BILL 1960
- Second Reading
WOOL USE PROMOTION BILL 1960
- Second Reading
CATTLE AND BEEF RESEARCH BILL (No. 2) 1960
- Second Reading
MEAT EXPORT CONTROL BILL (No. 2) 1960
- Second Reading
WOOL RESEARCH BILL 1960
- Second Reading
WOOL TAX BILL (No. 1) 1960
- Second Reading
WOOL TAX BILL (No. 2) 1960
- Second Reading
NATIONALITY AND CITIZENSHIP BILL 1960
- Second Reading
CRIMES BILL 1960
- Second Reading
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL (No. 2) 1960
- Second Reading
ADJOURNMENT
INSURANCE BILL 1960
- Second Reading
APPLE AND PEAR ORGANIZATION BILL 1960
- Second Reading
APPLE AND PEAR EXPORT CHARGES BILL 1960
- Second Reading
NATIONAL CAPITAL DEVELOPMENT COMMISSION BILL 1960
- Second Reading
INDUS BASIN DEVELOPMENT FUND AGREEMENT BILL 1960
- Second Reading

The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 1 1 a.m., and read prayers.

page 1885

ASSENT TO BILLS

Assent to the following bills reported: -

Sugar Agreement Bill 1960.

Weights and Measures (National Standards) Bill 1960.

Sales Tax (Exemptions and Classifications) Bill 1960.

” PRINCESS OF TASMANIA

Senator MARRIOTT:
TASMANIA

– Has the Minister representing the Minister for Shipping and Transport read the press announcement that the popular Bass Strait ferry, “ Princess of Tasmania” - which he was largely instrumental in having constructed - is fully booked for the holiday season? As this announcement may deter people from seeking accommodation in the vessel early in December or after the middle of January, will the Minister suggest that the dates when accommodation is available be published? Many mainlanders are begin.ing io realize that any time is holiday time in I asmania.

Senator PALTRIDGE:
LP

– I shall refer the question to the Minister for Shipping and Transport and ask him to consider whether he can meet the request.

page 1886

CANBERRA TO QUEANBEYAN RAILWAY

Senator McMANUS:
VICTORIA

– My question is directed to the Minister representing the Minister for Shipping and Transport. Is a proposal under consideration for the transfer of ownership of the railway line between Canberra and Queanbeyan from the Commonwealth to the New South Wales Department of Railways? Would such a proposal, if put into effect, ensure a better rail service for Canberra? Is it a fact that at Christmas time Canberra will be deprived of the air-conditioned diesel train which normally links Canberra with Sydney, and will travellers from Canberra to Sydney be provided instead with an old-type steam train during the Christmas holiday period? If so, is this action in keeping with Canberra’s status as the National Capital?

Senator PALTRIDGE:
LP

– I am sure the honorable senator will appreciate the need to place that question on the notice-paper so that the Minister for Shipping and Transport may reply to it. It may be of interest to Senator McManus to know that, subsequent to his criticizing the Australian Capital Territory line during the debate on the Estimates, there has been an exchange of correspondence between the Commonwealth Railways Commissioner and the Commissioner for Railways in New South Wales, not in regard to ownership but in relation to a general smartening up of the service.

page 1887

QUESTION

PUBLIC WORKS PROGRAMME

Senator DRAKE-BROCKMAN:
WESTERN AUSTRALIA

– In view of the absolute necessity to increase the volume of our exports, will the Leader of the Government in the Senate suggest to the Prime Minister that a meeting of all State Premiers be convened as soon as possible to discuss State works of a national character with the object of drawing up a list of works priorities other than Australian Loan Council items so that the Commonwealth may decide with precision, and in harmony with the proper needs of all States and the nation as a whole, the works for which Commonwealth grants or special Commonwealth loan assistance should be made available?

Senator SPOONER:
LP

– The question is an interesting one. It contains the kind of proposal that seems to be attractive but which it is not as easy to put into practice as may be thought. The States are already committed to works programmes; they have called tenders and have entered upon contracts which they cannot easily change. The States are very jealous of their right to organize and carry out their own works programmes in their own way. A move such as that suggested by the honorable senator may well result in the States requiring the Commonwealth to find additional moneys, lt is never easy to meet such a request. The Commonwealth distributes all its resources once a year, and I am sure it would be unable to meet the additional demands that might eventuate.

Furthermore, it is not to be assumed that the States, knowing the national circumstances, are not already altering and amending their works programmes in order to make a contribution to the earning of greater export income. I conclude on this note: I should very much like to see the States consciously make an endeavour to give priority to public works that would yield greater export income. Having said that, I shall give further thought to the honorable senator’s suggestion.

page 1889

QUESTION

QUESTION

COMMONWEALTH AND STATE FINANCIAL RELATIONS

Senator VINCENT:

– My question, which is directed to the Minister representing the Treasurer, relates to the matter of Commonwealth funds being made available to the Western Australian Government from time to time for developmental projects in the north-west of Western Australia. Can the Minister tell the Senate whether the State Government has used all the funds that have been made available? If it has not, can he tell the Senate how much money has been spent and how much remains unspent? Can he enlighten the Senate on a very important aspect of these arrangements which I proceed to describe? When the first grant was made available the Commonwealth Government announced that the State Government should submit a list of works for approval by the Commonwealth in respect of the expenditure of the money made available. Has that been done? If it has not been done, will the Treasurer take the matter up with the State Government?

Senator PALTRIDGE:
LP

– The amount of money which the Commonwealth agreed to make available to Western Australia was £5,000,000. I am not in a position to say how much of that amount has actually been allocated to Western Australia at this point of time, but I will obtain that information and let the honorable senator -ave it quite soon.

The procedure is that from year to year the State Government confers with the Commonwealth Treasury on the State’s expected rate of spending. Discussions are held, and year by year the amount agreed upon is placed in the Estimates and appropriated by this Parliament. 1 shall find out the amount that has been appropriated up to this point of time.

Senator SPOONER:
LP

– The Minister for Trade has supplied the following answers: -

The question of assistance to the production in Australia of dried figs was referred to the Tariff Board for inquiry and report on 11th August, 1960. The growers also sought an embargo on imports of figs. Such a course was not considered warranted on the facts submitted.
It is understood that in some cases dried figs would represent as much as 25 per cent, of the total output of growers. However, it appears that, apart from one or two growers, the production of figs is ancillary to production of such crops as vine fruits or citrus. The figures quoted for unsold stocks compared with figures previously supplied to the Department of Trade show that there has been some decrease in stocks in recent months.
lt would 1 no! be unexpected that figs were Veins shipped from Turkey; imports have always supplied a large part of the Australian demand, for which the local production is inadequate.
In accordance with the procedures established in cases such as this, the industry has now formed a representative panel and discussions have taken place between this panel and the Department of Trade. From these discussions it appears that there is no justification at present for taking action to restrain imports apart from referring the matter to the Tariff Board. However, the matter is being kept under close review by the Department of Trade.

page 1892

QUESTION

TARIFF BOARD- PROTECTION FOR GRAMOPHONE EQUIPMENT INDUSTRY

Senator ARNOLD:
NEW SOUTH WALES

asked the Minister representing the Minister for Trade, upon notice -

Is it a fact, as alleged by Sir Arthur Warner, a director of Electronic Industries Limited, that the Government has decided not to adopt a recommendation by the Tariff Board for protection to the gramophone automatic changing equipment industry?
Is it also a fact that because of this decision Electronic Industries Limited has closed down its plant which was engaged in this industry?
If this is the real position, will the Government reconsider its decision regarding protection to the industry?

Senator SPOONER:
LP

– The Minister for Trade has supplied the following answers: -

Yes. It was announced in June, 1956, that the Government had decided not to adopt a recommendation of the Tariff Board for increased tariff protection for the production in Australia of record changing devices.
It is understood that Electronic Industries Limited has recently ceased production of record changing devices.
As recently as last May, I advised Sir Arthur Warner that if a case was submitted on an industry basis a further Tariff Board inquiry would be considered. No further approach has since been made.

page 1892

QUESTION

TRADE WITH NATIONALIST CHINA

Senator WARDLAW:
TASMANIA

asked the Minister representing the Minister for Trade, upon notice -

Will the Minister inform the Senate of the outcome of important talks held recently between senior officials of the Departments of Trade and Primary Industry and a trade mission from Formosa with the object of opening up promising new markets for Australian wool, wheat, beef and dairy cattle in nationalist China?

Senator SPOONER: The Minister for Trade has supplied the following answer: -

A party of eleven private businessmen from Taiwan - Formosa - recently visited Australia and held discussions with Australian traders, the marketing boards and government officials. The mission was arranged by the Ambassador for the Republic of China.

The mission had buying and selling interests. A number of members were interested in purchases of wool, wool tops, wheat, beef, dairy cattle and dairy products and as a direct result of the mission’s visit it is expected that exports of these products from Australia to Taiwan will increase.

page 1893

QUESTION

INTER-PARLIAMENTARY UNION

Senator COOKE:
Western Australia

– by leave - 1 lay on the table the following paper: -

Inter-Parliamentary Union - Report of Australian Delegation to the 49th Conference held at Tokyo, September-October, 1960, together with Report of Secretary-General to the Inter-Parliamentary Union. and move -

That the paper be printed.

If this motion is agreed to, the printing of the paper may proceed without delay.

Question resolved in the affirmative.

page 1893

GOVERNMENT BUSINESS

Precedence

Motion (by Senator Spooner) agreed to -

That Government business take precedence of general business after 8 p.m. this sitting.

page 1893

SPECIAL ADJOURNMENT

Motion (by Senator Spooner) agreed to -

That the Senate, at its rising, adjourn till tomorrow at 11 a.m.

page 1893

SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL (No. 2) 1960

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 Civil Aviation · Western Australia · LP

– I move -

That the bill be now read a second time.

This bill, together with the rates bills which will follow, is designed to give effect to the sales tax increases which were foreshadowed in the statement on economic measures recently made in this chamber. The rate of sales tax on passenger motor cars, including station wagons and similar vehicles, is to be increased from 30 per cent, to 40 per cent., and the rate of tax on motor cycles is to be raised from 16$ per cent, to 25 per cent

Honorable senators already have some knowledge of the reasons for this action. These sales tax increases form an essential part of the Government’s plans to deal with certain unsatisfactory features of the economy, lt is clear that, at the present time, there are some industries which must be regarded as giving rise to excessive demand upon the Commonwealth’s resources of labour and materials. The motor industry is one of these. The position is illustrated by the fact that registrations of new vehicles in October were 29,750, which is equivalent to an annual rate of 357,000. Registrations in the four months ended October were 26 per cent, greater than in the corresponding period last year and 49 per cent greater than in the corresponding period of 1958. In undertaking this rate of production, the motor industry sets up heavy demands upon many other industries, with the result that certain materials, such as steel, required for the purposes of other essentia] industries are in short supply, and those industries suffer accordingly.

The Government has a full appreciation of the great value of the motor industry to the Commonwealth but if we are to have a well balanced economy, we must realize that there are limits to the resources which the Commonwealth can afford to expend in this industry, having regard to the essential needs of other sections of the economy.

Evidence of the great call made by the motor industry on labour is the fact that between October, 1959 and October, 1960 employment in larger private factories producing transportation equipment, of which motor vehicle factories make up by far the greater part, increased by 9 per cent. In the same period employment in larger private factories as a whole in the five mainland States is estimated to have risen by only 4 per cent.

In addition to its very high rate of absorption of materials and labour, the motor industry creates a demand for greatly increased imports, not only of vehicles and parts, but also of petroleum products which are needed for the running of the enormous number of vehicles now in use. It has been found that, in the September quarter of this year, imports of petroleum products and other items clearly attributable to the motor industry and motor transportation were running at an annual rate of £200,000,000, compared with a rate of £152,000,000 in the corresponding period in 1959.

For the financing of the high sales of motor vehicles, a large volume of funds has been channelled, through the hire-purchase companies, from other uses, thereby making it more difficult, and more costly, for those seeking to obtain funds for more essential purposes to do so. More than £212,000,000 was channelled by hire-purchase companies into the financing of retail sales of motor vehicles in 1959-60, some £35,000,000 more than in the preceding year.

It is essential in the general interest that the level of activity in this field should be lowered, so that expenditure on imports may be kept within reasonable limits, and other essential industries may receive an adequate share of the Commonwealth’s resources. It is for those reasons, then, that the tax increases are proposed.

As previously announced, it is provided in the legislation that the increases shall operate in respect of taxable sales effected on and after 16th November.

The tax of 162/3 per cent. on commercial motor vehicles remains unchanged, and there will be no change in the tax applicable to parts and accessories for all classes of motor vehicles. Tyres and tubes remain taxable at 121/2 per cent. and other parts and accessories for motor vehicles continue to bear tax at162/3 per cent.

The proposed increases have been decided upon after very full consideration of the economic situation, and of the needs of all sectors of the community. In the view of the Government, it is essential that these increases be made as a part of its plans to restore balance to the economy.

I am well aware that the present rate of sales tax on cars and station wagons is regarded as relatively high. The Government would not now be proposing this increase were it not convinced that some lowering of activity in this field is neces sary in the general interest. As the Treasurer has already stated, the Government holds itself ready to review the sales tax rate when it feels the situation of the industry and the state of the economy looked at together appear to warrant some adjustment.

I commend the measures to honorable senators.

Debate (on motion by Senator McKenna) adjourned.

SALES TAX BILLS (Nos. 1 to 9) 1960.

Bills received from House of Representatives.

Motion (by Senator Paltridge) put -

That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Sales Tax Bills Nos. 1 to 9 being put in one motion, at each stage, and the consideration of all or several of such bills together in committee of the whole.

The PRESIDENT (Senator the Hon. Sir Alister McMullin). - There being an absolute majority of the whole number of senators present, and no dissentient voice, I declare the question resolved in the affirmative.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– I move -

That the bills be now read a second time.

These bills are merely machinery measures which are necessary to give effect to the Government proposal to increase the rate of tax on passenger motor cars from 30 per cent. to 40 per cent. The bills have no other effect, and are complementary to the Sales Tax (Exemptions and Classifications) Bill (No. 2) which has just been explained to honorable senators.

The general rate of tax remains unchanged at 121/2 per cent. and the rates of 8) per cent.. 162/3 per cent. and 25 per cent. continue in force, although, as indicated previously, motor cycles are being transferred from the 162/3 per cent. rate to the 25 per cent. rate.

Debate (on motion by Senator McKenna) adjourned.

page 1895

ALUMINIUM INDUSTRY BILL 1960

In committee: Consideration resumed from 30th November (vide page 1882).

The Schedule.

Senator McKENNA:
Leader of the Opposition · Tasmania

– In the spate of questions directed at the Minister for National Development (Senator Spooner) late last evening there was one that related to the Aluminium Company of Canada, which is the proprietor of a lease adjacent to Weipa in Queensland. I asked the Minister whether any approach had been made to that company or by that company in connexion with the activity at Bell Bay. I pointed out that as the company had a very large lease and would need production facilities, it might well have been interested in the Bell Bay project in some form or other. The Minister overlooked answering my question, which was: Was that company approached or did it make any approach to the Government? Were any discussions held with that company in relation to the sale of Bell Bay?

Next I would like to ask the Minister a question relating to the Swiss company, Aluminium Industries Aktien Gesellschaft. That company had established a branch in Australia and had successfully negotiated an agreement for employment by the Australian Aluminium Production Commission as consultants. I have no doubt that the Government was kept fully informed even if it did not actively participate in discussions with the Swiss firm. My advice is that this company was interested in acquiring an interest in Bell Bay. Is the Minister able to say whether this company’s wishes were ever communicated to the Government? If any discussions took place with the company about acquiring an interest in Bell Bay were they on the basis that the company would participate with Tasmania and the Commonwealth and would not seek a dominating interest in the project? It is obvious that discussions took place between the Australian Aluminium Production Commission on the one hand and Aluminium Industries Aktien Gesellschaft on the other, and I repeat that I have no doubt that the Government was involved in those discussions. Can the Minister say whether this firm exhibited any desire to acquire an interest in Bell Bay and if so, what kind of an interest?

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

– No approach was made by the Government to the Aluminium Company of Canada. With regard to Aluminium Industries Aktien Gesellschaft, its professional services only were retained. The company was clearly informed that it was being consulted only in respect of its professional services.

Senator McKenna:

– Will the Minister say whether the Aluminium Company of Canada made any approach to the Government?

Senator SPOONER:

– Not that I am aware of. I would like to place a general reservation on my answer in that from time to time suggestions were made by various people that other firms might be interested in this undertaking. 1 have no recollection of the Aluminium Company of Canada ever making any direct approach on this matter.

Senator WRIGHT:
Tasmania

– I would like the Minister to tell me what arrangements have been made for the supply of bauxite from Weipa to the Bell Bay undertaking. The agreement set out in the schedule to the bill is quite indefinite on this matter. It simply refers to certain contracts. Clause 14 (2.) of the agreement set out in the schedule states -

Without prejudice . . . the Company agrees with the Commission and with the Commonwealth -

to enter into a deed with the Commonwealth and the Commonwealth Aluminium Corporation Pty. Limited-

That is a company unknown to me - on terms that have been agreed in relation to the supply of bauxite and alumina from Weipa.

That is a provision of a most indefinite character to be found in a contractual agreement. I ask the Minister to explain fully what the provision refers to.

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

– The Commonwealth Aluminium Corporation is better known as Comalco. I do not know whether it is possible to give a short explanation of the matter referred to by Senator Wright. I will do my best to give it. I start on the general basis that it is reasonable to assume that as Consolidated Zinc is interested in Weipa and in the Commonwealth Aluminium Corporation it will normally draw its supplies from Weipa. Somewhere in the agreement is a proviso under which, in the computation of the profits of Bell Bay, the auditors have an obligation to see that supplies from Weipa to Bell Bay are sold at commercial prices. That is an obvious precaution to take having regard to the interlocking nature of the two companies. That, I think, answers the query in general terms. In the fullness of time, Bell Bay will normally get its supplies from Weipa.

The clause to which Senator Wright refers is really a minor refinement. When we granted a mining title, or whatever the correct term is, for the Government deposits, we placed a restriction upon it. We said, in effect: “ We do not know what might be the future of Bell Bay or of Gove. We want a contractual obligation so that Bell Bay will always be able to get bauxite from Gove.” We protected the Bell Bay plant in that way. At a subsequent stage Consolidated Zinc came into the picture. Consolidated Zinc holds Weipa. In the course of making other arrangements for Weipa we included the same provision in our deal with Consolidated Zinc. So the Bell Bay plant is now in the situation, in relation to the present owners and in relation to the succeeding owner if the venture is sold, that it has the right to draw from Gove 150,000 tons of bauxite a year, or alternatively 75,000 tons of alumina, on terms and conditions to be agreed upon. As I have indicated, a similar arrangement obtains in regard to Weipa. Seeing that the same parties are now interested in Weipa and Bell Bay, that may seem to be an unnecessary precaution; but we thought it was advisable to make the position absolutely sure so that Bell Bay could always look to Australian sources for its supplies.

Senator McKENNA:
Leader of the Opposition · Tasmania

– As the Minister knows, I, too, am interested in matters associated with these agreements. I made a request to the Minister for a copy of each of the two agreements, and I am obliged to him for having made them available. I believe the one relating to Weipa has been drafted but is still in the process of being signed. The other one has been signed for a considerable period. I do not regard a provision such as the one we have been discussing as being unnecessary. Indeed, I believe it is an essential safeguard to the interests of the Bell Bay plant that there should be agreements assuring Bell Bay of raw materials from the two great deposits in Australia. I think the Government would have been lacking in its duty if it had not made provision for some such assurance.

As the Minister has indicated, each of the organizations now at Gove and Weipa is able to supply 150,000 tons of bauxite per annum, or half that quantity of alumina. I believe that the provision to which we are referring is a very desirable one. It leaves the Bell Bay organization with an assurance that it will be able to produce some 75,000 tons of aluminium per annum from those two sources. I regard that as being a vastly important right in favour of the new company. When one sees the changes that take place in the ownership of these leases - from Comalco to Consolidated Zinc and then to a joint partnership of Consolidated Zinc and Kaiser, all within the space of a few months - one can see that not only should the immediate holder of the lease be bound but also that the agreement should be extended to bind his assigns so that the Tasmanian organization will be assured of adequate supplies.

I felt I had a duty to make sure that the position was safeguarded. I approve what has been done.

I should like now to refer to the Gove lease. From the relatively little knowledge I have of that lease, I understand that an obligation was cast upon the lessee to complete, between April, 1958, and the end of December, 1959, investigations of the area, to cost some £50,000. Then an obligation was cast upon the lessee to submit a plan of operations to the Commonwealth. In default of doing that or of getting the time extended with the approval of the Commonwealth, the lease was to be forfeited. Is the Minister in a position to say whether that plan of operations has been submitted? The lessee had three years as from the end of December, 1959, to do that. Of course, those three years have not yet run out. But I ask the Minister what the position is in regard to that plan of operations. What can he say about the firm and binding intent of the company to proceed to the development of the lease, either in the mining of bauxite or the production of alumina?

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

– I am afraid that .1 cannot say anything very definite because, as Senator McKenna will appreciate, pretty big commitments are involved. I only say that I am satisfied with the practical position. The company was bound to provide a plan of operations, or whatever the correct term is, and it did that. I am not certain about whether the Minister for Territories (Mr. Hasluck) has approved it. I have had discussions with the companies concerned within the last few days. They have stated - I believe with a good deal of reason that the various changes which have occurred have created different circumstances. Until the British Aluminium Company withdrew from the Comalco partnership, a considerable portion of its technical resources was devoted1 to the Weipa project. Now the present holders of the Gove lease are no longer interested in Weipa, and people have come out from England and have made some preliminary inquiries. They have told me that they intend to press ahead at a faster rate than was previously the case. I regard the position as being quite satisfactory.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I thank the Minister for that explanation. I should like to refer now to clause 8 of the agreement, which provides for payment to be extended over a very long period. Will the Minister indicate why a company of the financial stature of Consolidated Zinc and backed, as we now know, by the Kaiser organization, should want such exceedingly long terms? Will he indicate the special circumstances that induced the Government to spread the payments over such an extraordinarily long period? I can understand why only £2,500,000 is to be paid1 by way of deposit and why, for the next four years, only £250,000 per annum is payable. That will be a period of expansion. Then for eleven years the annual payment is to be £625,000, with a final payment after that of much the same sum. What influenced the Government to extend the period of payment over sixteen years?

I do not want to have the Minister rising continually. I shall glance at the matters I wish to raise with him and give him some forward notice about them. My next set of queries will be related to the third schedule to the agreement. Perhaps I should postpone reference to them to enable the Minister to answer the question I have just addressed to him.

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

– In order to give an adequate answer to the question asked by the Leader of the Opposition 1 start from the basis that there is a fundamental difference of opinion about the attractiveness of the purchase price. I hold the view, and the Government holds the view, that the price, and the conditions of the sale as a whole, are most advantageous to the Commonwealth Government and the State Government. I mentioned yesterday - and there is no harm in repeating it - that that was also the view of Reynolds Corporation, which at one stage was interested in the partnership.

So we start on the basis that we are getting a very good price for the asset. Senator McKenna asked why such a long time is allowed for payment of the purchase price. I do not think that the time allowed for payment can be looked at in isolation. We must remember that £20,000,000 will be involved in buying the Bell Bay plant and bringing production up to the level of 28,000 tons per annum. That is a large sum of money by any accepted standards. The company has to make the necessary financial arrangements. Even for a large company such as this, the finding of £20,000,000 additional subscribed capital would present difficulties and problems, particularly as the business is being bought in anticipation of what it will produce in the future, rather than on the basis of what has been done in the past. It would, I suggest, be impracticable to raise share capital of £20,000,000 for this venture, so the company is making other arrangements for finance.

Against that background, I see no reason why we should not accept terms for a portion of the purchase price, remembering that one of the reasons that we obtained a good purchase price was our acceptance of what 1 call a partnership atmosphere. I know that that is not a proper legal description of the position. What 1 mean is that the Government is taking a share of the risk and is relying on the profit-earning capacity of the company in the future.

To the £20,000,000 that is to be spent at Bell Bay - that in itself represents a big venture - we have to add what will be spent at Weipa, which is a part of the same organization. Then we must bear in mind what will be done in the smelting section of the industry and, at some future stage, on the fabricating side. This is a vast project. We do not have in Australia the kind of capital that is needed for such a project. It is not unreasonable for a portion of the money to be supplied from capital and a portion from loan moneys. The Government is satisfied with the price it is getting and it does not think it is unreasonable to accept terms for the balance of the payment along the lines set out in the contract.

Senator WRIGHT:
Tasmania

– I feel bound to refer to some figures T put before the committee last night as to the earning capacity of this undertaking and to the prospect of the Government being paid interest at any time. On a consideration of those figures it occurred to me that 1 was wrong in saying that before interest will be paid to the Government the company must earn, first of all, £650,000 - that is, 6i per cent, of £10,000,000. It occurred to me that the correct basis of the calculation would be 6i per cent, of the capital moneys that had been paid, which may vary from £2,000,000 to £10,000,000 over the sixteen years. I feel that I was wrong in taking the figure of £650,000 and then adding interest at the rate of 5 per cent, on the outstanding balance. There is a duplication there of something of the order, I should think, of £400,000.

I should not like my error to stand uncorrected. I would have been gratified if the Senate had thought the matter to be of sufficient importance as to require proper analysis and a confident statement that the profits that will be earned by the company will be sufficient to pay the specified dividend, not only on the capital moneys that have been paid from time to time in respect of the purchase of the plant, but also on moneys expended on the expansion of the plant that the company is bound to undertake. I should have been gratified if sufficient consideration had been given to my submission to detect the error, and a full analysis of the position had been before us.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I should be happy to hear the Minister reply to the point raised by Senator Wright. I do not wish to develop that at the moment. I make the suggestion that when the first mortgage over the real estate belonging to the new company, and the document setting out the floating charges to be made by the Government to the new company, are being drawn up, the Government should consider the matter about which I expressed some disquiet yesterday. I mentioned that there is no clear provision in the agreement requiring the company to remain in operation. I ask the Minister to consider, when drawing up the mortgage agreements, whether a clause could be included to ensure the carrying on of the plant whilst any moneys are still owing. I know that he could not go beyond that point.

There is an opportunity now to close what I suggest is a gap in the agreement. I am not dealing with probabilities. A draftsman does not do that when drawing up a document, but he should deal with possibilities. It seems to me, from the purely legal point of view, that there is a possibility that the company could close the works down and still take sixteen years to pay the purchase price. I think the Government should direct its mind to trying to close that gap when the mortgage documents are being drawn up.

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

– I can do no more than say that I will direct the attention of the law officers to the suggestion that has been made by Senator McKenna. I cannot give an undertaking that we will comply with it, because that would involve something in the nature of a new deal.

Senator McKenna:

– I will be happy if you do that.

Senator SPOONER:

– I do not think that even now Senator Wright has got the formula correctly. Interest will be payable to the Commonwealth by the company if it makes a profit of 6i per cent., not only after tax has been deducted, but also after it has paid the interest due on other borrowed moneys. In other words, the company has the right, before paying interest to the Commonwealth, to earn 61/2 per cent. on the funds employed in the business, whether they are capital funds or loan moneys.

As to the estimates, this is a very complicated matter. It involves guess work about the results the company will achieve in the future. I give the assurance that we made all sorts of computations before we reached the conclusion that I expressed in the debate yesterday, namely, that we do not think that the profit made by the company during the first four years of its operations, when the business is disorganized as a result of the building programme necessary to expand the output to 28,000 tons, will be sufficient to give rise to the obligation to pay interest on the debt to the Commonwealth. Our estimate is that four years hence, when the rebuilding is completed and the business is going ahead with an output of 28.000 tons, instead of the present output of 12,000 tons, the company will be able to pay a dividend of 641/2 per cent., plus interest to the Commonwealth, and to reduce its arrears of interest.

Senator WRIGHT:
Tasmania

– I am sorry to take further time. I think that the Minister was referring to the definition of “ gross operating surplus “ which is set out in the third schedule of the agreement. I understood him to say that “ gross operating surplus “ is the taxable income of the company, with the following qualifications, as stated under the definition: -

interest payable by the Company under this agreement will not be deducted;
interest payable on money borrowed by the Company for the conduct of the Company’s undertaking will not be deducted:

I did not quite understand the meaning of those qualifications until the Minister explained them. If I correctly understood him, he said that the company is, even if borrowing other funds at 5i per cent., at liberty to recover a dividend for itself at 6i per cent. on the capital before the Commonwealth is paid its interest or any part of it. I ask the Minister whether I am correct in that respect. That leads me to inquire about what borrowings the clause refers to, because quite obviously from the clause and the reference that was made in the Minister’s second-reading speech to the proposal announced on 15th November to tax interest on notes issued by a company, there is some transaction current about which we should be informed. Can we be informed of that transaction?

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

– My remarks were not related to the third schedule; they were related to the transaction as a whole. This provision regarding tax on interest is not related to any negotiations that are going on, of which I am aware. It is merely a precaution that the purchaser wanted to have inserted. We do not know what the purchaser’s arrangements are at this stage. On the general question, the bargain is that the shareholders will gain 6i per cent., but in the computation of the 6i per cent. return to the shareholders it is known that the company will have borrowed money, that the company is entitled to charge that interest at whatever rate it may pay but not exceeding61/2 per cent. if it borrows from its own associated companies but at the actual rate which it pays if it borrows from some outside concern.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I am interested in the third schedule, which has brought Senator Wright into the discussion. I have rarely read a more complicated document dealing with one phase of this agreement. It deals with the interest formula - the formula primarily for determining how you arrive at the point where funds or earnings of the new company are to be applied in reduction of any deficiency in payments of interest that has accumulated. It is a most complicated agreement. It is expressed in a highly technical way and it involved me, I confess, in intense study to try to understand it. Indeed, I did not reach the point of understanding until I had conferred with the Minister’s officers. I am obliged to him for making that facility available to me.

– Thank you. 1 would like the Minister to look now at the proviso that follows the qualifications to the definition of “ gross operating surplus ‘”. It reads - provided that, if in any financial year after the Company has undertaken works to expand the smelting capacity of the Company’s undertaking beyond a designed smelting capacity of 28,000’ long tons of aluminium per annum the production of the Company’s undertaking in the financial year exceeds 28,000 long tons of aluminium, the gross operating surplus means the amount that bears to the amount remaining as aforesaid the same proportion as 28,000 long tons bears to the installed designed smelting capacity of theCompany’s undertaking at the commencement of the financial year.

That is a very involved proviso. 1 would like the Minister to say whether my understanding of it is correct, that is, the effect is to disregard any gross operating surplus attributable to a year’s increase in production over 28,000 tons. As the expansion capital is disregarded under the definition of issued share capital, in calculating the 6i per cent, dividend and in determining gross operating surplus it is necessary to disregard earnings on that capital. Is that a correct interpretation?

Senator Spooner:

– Yes.

Senator McKENNA:

– 1 am also concerned with the matter of the operating surplus. Senator Wright has referred to the action taken by the company to protect itself against the effect of the threatened income tax arrangement to disallow interest incurred by companies above specified amounts. The company is rather fortunate that the announcement in that respect was made by the Government just before this agreement was concluded. The company was thus able to foresee what might lie ahead and to include reference to this subject in the agreement. That reference, I take it, is in sub-paragraph (b) of the definition of “ operating surplus “ in clause 1 of the third schedule to the agreement. The sub-paragraph reads - the amount (if any) obtained by applying to any outgoing, consisting of interest deductible under sub-paragraph (a) of this definition, incurred by the Company in the financial year which would not be an allowable deduction under the Act, the ratio which the rate of tax bears to one minus the rate of tax;

Again, 1 put to the Minister my understanding of that provision. I take it that the provision arises from the recent announcement by the Government of its intention to introduce certain economic measures, including the disallowance of interest for income tax purposes. I take it that this provision will allow the company to deduct for income tax purposes additional interest for which the company becomes liable, so that the company’s dividend of 61/2 per cent. will be preserved as a commencing point for the payment of interest.

Senator Spooner:

– Yes. There is the compensating feature, of course, that we shall eventually get more income tax.

Senator McKENNA:

– I follow that. This provision enables the company to protect itself and to ensure its 61/2 per cent. dividend?

Senator Spooner:

– Yes.

Senator Wright:

-It has been announced that the proposal of the Government regarding the deductibility of interest will not have any effect except as a prospective arrangement.

Senator McKENNA:

– Of course, we have not before us at the moment the actual proposals in detail.

Senator Wright:

– That point has been clarified.

Senator McKENNA:

– I should hope so, because if it had not, a company that had recently commenced operations would be limited to a deduction of £10,000 per annum. I should think there would have to be provision for new companies to be looked at on their merits. Otherwise, the position would be quite unjust. The establishment of industries might be prevented.

There is only one other matter to which I wish to refer. Although the agreement provides that if there is any deficiency of interest at the end of the sixteen year period, that deficiency is to be wiped out, there is a qualification which I see to that provision. It is to be found in clause 6 of the third schedule to the agreement. As I understand the matter, the deficiency of interest that may exist when all principal moneys have been paid will not be forgiven if, in any year, production has been disrupted to the extent of more than onefourteenth of normal production. The time for payment of interest represented by the deficiency in those circumstances will be extended by one year for each year in which there has been a disruption of production, due to expansion, exceeding one-fourteenth of normal production. Am I correct in putting the matter in that way?

Senator Spooner:

– Yes.

Schedule agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

Sitting suspended from 12.41 to 2.15 p.m.

page 1901

DEFENCE FORCES SPECIAL RETIREMENT BENEFITS BILL 1960

Second Reading

Debate resumed from 29th November (vide page 1805), on motion by Senator Paltridge -

That the bill be now read a second time.

Senator SANDFORD:
Victoria

.- Mr. President, this bill, according to its title, is a bill for an act to provide special retirement benefits for certain members of the Australian Regular Army. Although the bill specifies that it applies to members of the Australian Regular Army, I assume that it covers members of the three Services. The Minister for Civil Aviation (Senator Paltridge) who is in charge of the measure may be able to clear up that point. The Opposition does not intend to oppose this measure. It cannot very well do so because the bill gives at least some compensation to mer. who are compulsorily retired before completing the period for which they enlisted.

I understand that the retirement benefits provisions are the result of the findings of the Allison committee. This Government set up a committee, headed by Sir John Allison, to go into certain matters, particularly the position of men who have been serving in the various arms of the Services and who are retired because of Government policy. The abolition of national service training, incidentally, is quite in keeping with the Government’s form of off again, on again. As a matter of fact, on the Government’s form, 1 would not be surprised if it tried to sell the armed services to private enterprise.

I will be interested to know whether the Minister can give an indication of the total number of persons who will be affected and the numbers in the various groups. There are four groups of ex-servicemen to whom these benefits will be made available. I understand that most of the servicemen who are to be compulsorily retired were originally engaged as instructors in the various Services. They were engaged for a minimum period of six years, with the opportunity to be re-engaged for periods which would bring their length of service up to over twenty years. It is very perturbing to think that all those people who enlisted in the Services, particularly as instructors, embarked on that work as a career, lt will be very difficult for them, particularly those who are in the older age groups and those who have had a fair length of service and so are a good deal older now than they were when they undertook this work as a career, to fit into civilian occupations-

It is pleasing to see that the Government has recognized some obligation in respect of these men. I understand that only men are involved. 1 do not think anybody from the women’s services is covered by this bill, but the Minister may be able to inform the Senate about that when he is replying. As I have said, it would be interesting to know the total number of persons con.cerned and the number in each of the four categories. Although the Government has made some effort to compensate these people for being prematurely retired from the Services, the amounts provided under this bill are not at all excessive by any means. When the Minister is replying, he might also be able to inform the Senate whether any or all of these people will be entitled to any repatriation benefits, particularly those with a fair length of service.

As I understand the position, and as my reading of the bill and the Minister’s secondreading speech indicates, four categories of ex-servicemen are covered by the bill. The first category covers those retired with less than six years’ service. I believe that is the minimum period of enlistment. They receive a refund of the contributions they have made to the Defence Forces Retirement Benefits Fund, plus £20 a year for each year of service. The only additional benefit or gratuity, if you like to call it by that name, that a person with five years’ service would receive would be £100 in the aggregate. Of course, that will not be enough to pay the increase in sales tax on a car, if he wants to buy one, if and when that measure is passed by the Senate.

The second category covers men with more than six years’ service and less than fifteen years’ service. They receive a refund of their contributions to the fund, plus a gratuity which I am led to believe is two weeks’ pay for each year of service. As I said earlier, it is just some recognition and it will only help them to pay the increased sales tax on motor cars that the Government wishes to impose, if they are lucky enough to be able to buy cars when they retire.

The third category covers men who have completed fifteen years’ service but have not served for the requisite twenty years in order to become entitled to a pension in ordinary circumstances. I believe that the amount of the pension and the condition* that these people will have to fulfil in order to become entitled to the pension were decided upon by the Allison committee. These men will be entitled to the pension outlined in the bill, which was decided upon by the committee, provided they are prepared to pay the contributions that they would have had to pay had they completed their full period of twenty years’ service. It is quite obvious that a person with sixteen or seventeen years’ service, in order to become eligible for the pension, would have to pay, in a lump sum, the contributions that he would have made had he served for the full twenty years. It is quite understandable that a number of these people will find it very difficult to pay the amount of the extra contribution in order to become entitled to the pension. The additional amount that they will have to pay in order to qualify for the pension will be decided by the Commonwealth Actuary. Of course, we know from experience that actuaries are always very real in their computations and there will not be any chance of a lesser sum than is actually necessary being determined upon.

The fourth category covers men who have completed more than twenty years’ service and are entitled to the amount of pension decided upon by the Allison committee. Quite a number of those exservicemen will suffer distinct hardships because it is easy to understand that having embarked upon a military, naval or air force career, as the case may be, men with a fair length of service, who ace getting up a little in years, will find it extremely difficult to obtain in civilian life a position that will meet their requirements. After all, even the full pension, which I understand is less than £10 a week, would not be nearly sufficient to meet civilian requirements. 1 suggest that there is a need for the Government to make a special effort for the rehabilitation of these people and their absorption into civilian life. We have for this purpose an excellent organization - the Commonwealth Employment Service - which was set up by a Labour Government. It is composed of experts in various aspects of employment and re-employment. Certain sections of that service could be utilized by the Government in order to examine the whole matter.

Another thing that needs serious consideration is that many of these men are engaged in specialized activities often as instructors. They are key personnel. On their retirement, it may be possible for the Government to transfer them to some other branch of Commonwealth employment, particularly in the defence structure, where their specialized knowledge will not be lost to us. These men were induced to enter the Services as a career. Only a few years ago, when national service training was in full swing and there was no indication of its early termination, the country was flooded with advertisements in the press and on hoardings, appealing to men to make a career of the Services and offering them security. That applied to the ordinary rank and file, but it had an even greater application to men engaged as instructors. They were offered a specialized career and they were guaranteed security.

We must pay tribute to the work done by the Allison committee, but the Government cannot escape responsibility entirely. I suggest that it still has a responsibility to ensure that these men will be reabsorbed into civilian employment, and that the services of specialists will not be lost. In the terms of enlistment, there may be provision for compensation for compulsory retirement before the termination of the period of enlistment, but from a moral point of view compulsory retirement savours of breach of contract by the Government, which induced the men to enlist by offering them security and specialized careers.

I should like to mention another matter, which is possibly not pertinent to this legislation. I have raised it before in the form of a question. I understand that quite a number of the benefits recommended in the Allison report, and now available, do not apply to Service personnel who retired before the report was received. Although this matter may be a little outside the scope of the measure, I should appreciate some information from the Minister on that aspect.

The Government established a committee, which has recommended certain benefits for personnel whose service is terminated. As I have said, these men believed that they were entering the Services as a life career. They were induced to enlist by very wide publicity throughout the country. Now that their engagement has been or is to be terminated, the Government should make a special effort for their rehabilitation and absorption into civilian life.

Senator MARRIOTT:
Tasmania

– I, like Senator Sandford, support the motion for the second reading of the bill. I hope that the vote will not be long delayed, because we have recently had the experience of the Opposition saying one night that it would oppose a bill and then, after a meeting the following morning, deciding to vote for it. We do not want to provide an opportunity for a change of mind by Senator Sandford.

In these days of changing needs in defence and re-organization of the Services, any government is faced with problems. This Government is carrying out its responsibility to the Services in introducing this bill to provide additional benefits for those who are compulsorily discharged prior to what would be their normal time of retirement. That is all to the good, and1 that is why I support the measure. But a statement in the opening paragraph of the Minister’s second-reading speech is the reason for my rising to point out what is either a deficiency in this legislation or a need for another bill to do what is only just and fair. The speech began -

The purpose of this bill is to provide special retirement benefits to those “ other rank “ members of the Permanent Military Forces. . . .

In a study of the bill, 1 can find no reference to those who reach officer rank and are similarly compulsorily retired. Those officers have exactly the same problems and the same requirements as have other ranks. If the Government is looking after the other ranks first, all honour to it. I was an other rank myself. But I do not think that the officers should be left out in the cold when they are compulsorily retired.

An officer of any rank knows the age at which, in normal circumstances, he will be retired. So he plans his life, the education of his children, and his standard of living, in accordance with the salary he will receive and the conditions under which he will live until the date of retirement, on the assumption that he will remain efficient and be retained in the Services. In fairness to myself, I must say that while the re-organization was going on I warned1 the Government of its responsibility and 1 asked the Government to give consideration to this matter. Whether or not it has done so, I do not know, but officers who have had over 30 years’ service and who would normally have five or six more years to serve, have been compulsorily retired on reduced superannuation and required to pay part or all - I think part - of the superannuation contributions they would have paid had they completed their normal years of service. They had very short warning that their military careers were about to end and that their incomes were to be reduced by almost two-thirds. They were fairly busy officers in their postings and some of them did not have time to look round for jobs or to make plans for their future. Some of them had to move interstate following their retirement. They had to look for jobs.

I do not want to hear any honorable senator claim that all of the officers concerned have found good jobs and do not need assistance. That is not the attitude that we should adopt. The fact that they have found good jobs shows that they were worthy, efficient and capable men. But supposing one of these officers was not able to obtain a good job and was in financial difficulties. Should we help only that one officer and leave the other efficient officers to fend for themselves? Some of these officers may have financial problems that they will never be able to solve. I do not think that they are receiving just treatment for the years of brilliant service that they have given to Australia. The Government still has time to act. This matter may need further consideration because I admit that we are establishing a precedent. In these times of changing defence requirements it may be that other services or even the Army again may need to be reorganized. Let us hope that our armed services may one day be disbanded altogether. That must be our aim. Action taken now will set a precedent for the future. If the Government does not treat fairly the officers it is now compulsorily retiring, those officers who remain in the Army may become apprehensive that they may be retired without just reward when their term of service still has five or even ten years to run. We in this Parliament do not want to do anything to lower the morale of our permanent forces. We do not want officers who still have five or six years’ service ahead of them to be looking for jobs in case they should leave the Army. If we are not going to retire them we want to ensure that their morale stays high.

The Government was fortunate in being able to call on the Allison committee to go into this matter in respect of the other ranks. That committee’s findings have been accepted by the Government and everybody is happy about them. But I wonder whether the Allison committee was asked to consider what should happen to officers who are compulsorily retired. If so, I should like to know what recommendation the committee made to Cabinet. I support the bill.

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– in reply - One naturally feels a sense of satisfaction that both sides of the Senate support this measure, albeit that the support coming from the Opposition and from my colleague, Senator Marriott, is somewhat qualified. 1 do not think it is generally understood that the Defence

Regulations have for many years contained a provision which enables men to be retired by reason of a reduction in establishment or in corps. That provision would have enabled the Government to effect a reduction of the size of the Army without making any provision for men, retired other than that which existed in legislation then in force. But because of the particular and unusual nature of the Army reorganization the Government appointed the Allison committee to inquire into this matter and to make recommendations as to how the situation should be met, meting out justice to those men affected and at the same time having regard to the requirements of the Army. The report submitted by the Allison committee was adopted by the Government in all except the most minor detail. J think the committee’s report would give general satisfaction to all who are concerned about this matter.

Senator Sandford made some reference to action that might be taken by the Department of Labour and National Service in respect of these men. I can assure the honorable senator that the department has commenced an examination of the position with a view to placing these men in employment that will be most suitable to them. Senator Sandford wanted to know whether this arrangement extended to other Services. No, only Australian Regular Army personnel are affected. The same situation does not arise in the Navy or the Air Force. The number of men affected by these retrenchments is set at a maximum, of 1,650. No women are involved.

The First Schedule to the bill shows the amount of pension - life pension - that will be available to men with up to twenty years’ service. I stress that the pension is a life pension. Assuming that a man with twenty years’ service retires at age 45 or thereabouts, I do not think that Senator Sandford could reasonably claim that the pension is insubstantial.

Senator Marriott referred to officers who were retired for reasons other than those flowing from the general re-organization, of the Army. This is a matter in which Senator Marriott has shown particular interest - the matter of eight officers who were retired some little time before the reorganization took place. Those officers were retired to meet the needs of the

Service, which is a provision that has existed in the Defence Forces Retirement Benefits Act for a long time. Their retirement was not related in any sense at all to retrenchments that occurred as a result of the re-organization. Those officers were retired in accordance with the existing provision - a provision that had been used many times over the years. Although some of these cases, when viewed personally, may appear to contain an element of harshness, honorable senators must not overlook the fact that these men draw for life a pension commensurate with their length of service in the Army, despite the fact that they may not have served until normal retiring age.

I think I have covered most of the matters that were raised during the debate.

Question resolved in the affirmative.

Bill read a second time.

In committee:

The bill.

Senator SANDFORD:
Victoria

– I should like the Minister for Civil Aviation (Senator Paltridge) to amplify his statement that the Commonwealth Employment Service or the Department of Labour and National Service has already embarked upon a scheme of re-employment for those personnel whose services have been terminated.

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– The Department of Labour and National Service was represented on the Allison committee. The honorable senator will appreciate that the department’s representatives were familiar with the needs of the personnel who had to be looked after, and they assured the committee that they would have no difficulty in placing those men in suitable employment.

Bill agreed to.

Bill reported without amendment: report adopted.

Bill read a third time.

page 1905

WOOL USE PROMOTION BILL 1960

Second Reading

Debate resumed from 29th November (vide page 1806), on motion by Senator Gorton -

That the bill be now read a second time.

Senator CANT:
Western Australia

– Six cognate bills have been introduced to cover the situation that is dealt with in the measure that we are now discussing. If it is convenient to the Senate, I should like my remarks on the Wool Use Promotion Bill to be regarded as being applicable to the other five measures to which I have referred. Of course, other honorable senators will still have the right to discuss any of the provisions of those other bills.

One of the purposes of this bill is to provide for the substitution of the words “ Reserve Bank of Australia “ for the words “ Commonwealth Bank of Australia “. In addition, it is proposed that the Australian Wool Bureau shall be permitted to place money in any bank approved by the Treasurer. I believe that that provision is open to criticism. Surely it will not be suggested that in certain centres in which the bureau desires to operate there may not be a branch of the Reserve Bank and that consequently it would be more convenient for the bureau to bank with one of the private banks. I believe that, wherever an opportunity exists for the carrying on of banking business, the national bank of the Commonwealth should have a branch, and that the Australian Wool Bureau should deposit its funds in that branch. In round figures, the annual collections of wool tax amount to £1,000,000, and that sum is subsidized by the Commonwealth Government. But it is the taxpayers’ money, and the taxpayers’ money should be lodged with their own bank and not with a private bank. One is a little suspicious about what is in contemplation when the Treasurer (Mr. Harold Holt) displays a desire for the Australian Wool Bureau to use a private bank in preference to, or at least on equal terms with, the people’s bank.

The second amendment is merely a machinery amendment which makes provision for the substitution of the title “ Australian Woolgrowers’ and Graziers’ Council “ in lieu of the title “ Australian Woolgrowers’ Council “. That arises from an amalgamation of the Australian Woolgrowers Council and the Graziers Federal Council.

I suppose the promotion of wool is an activity that has to be carried on, but I do not regard it as being the most vital activity within the industry. 1 believe it is proper to say that if our efforts to promote the use of wool were relaxed, at some time or other we would have a surplus of that commodity. But at the present time we are able to sell all the wool that we can produce; there is never a surplus. Whether that is a result of the promotion of wool or simply the result of people wanting wool I am not in a position to say.

I believe that the real problem confronting the industry is our inability to sell wool at a price that is satisfactory to the producer. In this connexion, I should like to quote the following passage from a publication entitled “ Competition between Fibres “ which was prepared by Messrs. G. O. Gutman and M. Fead -

To a large extent advertising must aim at putting at the consumer’s disposal information which he did not previously possess and persuade him to alter his consumption habits, in the light of this new (or allegedly new) information. Wool has been known and used as a raw material for several thousand years. Most people are familiar with its properties and end uses and what new information can be retailed to them must inevitably be marginal.

That seems to discount the suggestion that extra emphasis should be placed on promoting the use of wool. Those gentlemen further said -

There may well be some force in the argument previously referred to that if prices of wool fluctuate heavily the long term market for wool may be eroded. But this erosion would be due not to any shortage of the long term supply of wool but rather to fluctuations in the short term price. Short term price fluctuations in wool in the past have been almost entirely caused by a fluctuating demand being met by inelastic supply. And if this problem is a serious one, as it may well be, the answer would seem to lie in making the supply less inelastic which would have to be done by withdrawing wool from the market in times of low demand and adding to the supply out of stocks when demand is rising.

That would seem to indicate that one of the main problems confronting the industry is the need for an organized marketing scheme which would allow the product to be stored and used when it is required.

Several weeks ago we had quite a lengthy debate about the need for an inquiry into the marketing of wool. I do not want to traverse that ground again, lt seemed to me that the Senate as a whole was in favour of some sort of marketing scheme and a reserve price. I would have thought that when the Government was setting out to amend this legislation it would have included a proposal for an inquiry into the industry, although I am not satisfied that such an inquiry would serve any useful purpose. I believe that all the information that could be obtained by a committee of inquiry is presently available to the Government.

Most of the wool produced in Western Australia is produced by the small growers. It has been the custom to regard the State as being divided into two parts, the pastoral industry occupying the portion above the twenty-sixth parallel and the small producers occupying the portion below the twentysixth parallel. More than two-thirds of the wool produced in Western Australia comes from below the twenty-sixth parallel. I have a letter from the Farmers’ Union of Western Australia, which represents the small growers. A motion agreed to at a meeting of the union directing attention to the necessity for a changed selling scheme reads as follows: -

The Wool Section of the Farmers’ Union advises that its policy with regard to wool marketing is that a change in the present auction selling system is necessary and that such change be effected by incorporating a reserve price scheme in the auction system. 1 think the Government should act along those lines and not engage in promotion schemes any more than is necessary. It has been said, although I do not believe it, that wool promotion means, in effect, trips overseas for certain people to attend champagne parties in Paris. If that is the only result of the spending of the tax moneys gathered from wool growers, and the subsidy paid by the taxpayers of Australia, I think we could easily do without wool promotion.

The Opposition does not oppose the six measures, so I shall say no more at the second-reading stage.

Senator McKELLAR:
NEW SOUTH WALES · CP

– In view of the Opposition’s attitude to these bills, there is no necessity to discuss this matter at any length. I rise merely to reply to one or two statements made by Senator Cant. His assessment of the value of wool promotion is not the same as that of the general body of wool-growers. The promotion campaign that has gone on under the auspices of the Australian Wool Bureau is just commencing to show results. Obviously it takes some time for results to be obtained under any scheme, and we are now beginning to get results from the wool promotion scheme. The growers themselves are of the opinion that it is to their advantage to make a contribution towards this scheme. They have been happy to do that, and it was only recently that their contribution was increased. I do not think that Senator Cant really meant what he said when he deprecated the efforts in regard to wool promotion. It is not fair to say that the only activity is visits overseas by some people, who indulge in the way to which he referred. That is not so.

One thing that militates against the consumption of Australian wool is that, under the agreement made with the International Wool Secretariat in the early days, Australian wool cannot be advertised and sold as such. From the point of view of the agreement, wool is wool, no matter from where it comes. That has operated to the detriment of Australian wool-growers. I know that efforts are being made to have that part of the agreement changed, but, so far as I know, no success has been achieved.

The legislation is of a machinery nature, providing for a change of the names of the organizations concerned and for a change of the banking arrangements. I am very glad to see these measures coming forward, and I am also pleased that the Opposition is not opposing them.

Senator O’BYRNE:
Tasmania

.- The scope of the debate is very limited and I rise to make only a few comments. Wool promotion, in my view, is very important to the wool industry. First, it enables Australian wool to be advertised, and secondly, it means that there are people working to show the advantages of wool at a time when synthetics are offering a tremendous challenge to it. We have to look to the future. We must make certain that people will appreciate the advantages of fabrics made from pure wool, because the manufacturers of synthetics are spending vast amounts of money to explore every nook and cranny of potential markets for their products. I believe that the wool promotion plan is capable of meeting the challenge of the synthetics manufacturers. lt has been said that we can dispose of our annual wool clip at the present time and that the carry-over from one year to another is only sufficient to meet the needs of sales in the new year. The number of bales sold at any one centre is about the same as the number of bales carried over from one year to another. Our wool, therefore, is being sold on a receptive market throughout the world, but we have reached the stage when we must not only engage in wool promotion, but also must organize the industry along sound, planned lines.

Many people hold the view that the auction system is the best for the wool industry, but another view is gaining momentum. The latter view is that a stabilized price system should be introduced, ensuring a steady return to producers of wool above their costs of production and thus enabling them to plan improvement of their pastures and flocks and embark on other programmes that must be spread over a period of years. From what I might call the spear-head - which is worldwide wool promotion - down to the distribution of wool there are many aspects of the industry that can be smartened up and made more efficient. Economies must be effected if the wool industry is to be properly organized. I am very pleased to see two organizations that have been spokesmen for the industry in the past now joining forces. There will now be one organization where previously there were two.

Another of the measures that are now before us deals with cattle and beef research, although it is only of a machinery nature. I believe that there is tremendous scope for scientific research in the cattle and beef industry. The Animal Health and Production Division of the Commonwealth Scientific and Industrial Research Organization is a very efficient unit. It appears that there has been a tradition of laxity in the beef industry because there has been no incentive to breed first-class stock. The graziers have been content to breed only poor quality stock and, as a result, world opinion of Australia’s beef has been lowered. It has been said that vested interests supported the sale of Argentine beef on the British market and that the poor quality beef that was sent to that market from the Northern Territory of Australia was badly presented to the British consumer. Doubtless, we will over come that situation in time. I think that there will eventually have to be established for the purpose of publicizing and properly presenting Australia beef an organization similar to that which now functions in relation to the wool industry. 1 believe that the C.S.I.R.O. can provide valuable advice to the graziers to enable them to increase the production of beef. Experiments are being widely conducted into pasture improvement. I do not think any one could deny the truth of the assertion that cattle which are well controlled and properly husbanded produce beef of a much higher quality than do cattle that are allowed to run on range country. I believe that pasture improvement will enable a quick build-up of young beef, baby beef, in the future. To-day, a wide variety of food is available to the people, including poultry, pork, lamb, mutton and beef and other meat. They want good quality meat, and I think the answer lies in increasing the production of young, sappy - baby - beef. However, good pastures must be available for the fattening, not only of young beasts - the calves - but also for the vealers and the mothers.

Another important aspect of this matter is the question of the fertility of our beef cattle. It is a well-known fact that far too low a percentage of calves is born in the bigger herds. It is in this direction that research into the beef industry should be extended so that on every property on which cattle are run the maximum number of calves - the maximum return - will be sought by all methods known to our scientists and research workers. By this means, we will hold down costs and so get greater returns from our breeding herds. Furthermore, when cattle are properly husbanded and kept under strict control there is less bruising - less deterioration - in the ultimate product.

In debating the bills before the Senate concerning wool promotion and beef research and related matters, we are dealing with the most important sectors of our economy. If we are to balance our overseas trade, it is in these sectors that our gold lies. In many respects, the natural resources of this country have not been fully tapped. In addition to improving pastures, we should pay attention to the further development of country in our higher rainfall areas and encourage water conservation and irrigation wherever possible. Not only must we promote the sale of beef; we must convince the graziers of the desirability of their running only the best quality stock. They should be encouraged in every way possible to improve the quality of their herds. Opportunities exist to-day to introduce the very best strains into herds that have never previously been improved by the use of good sires.

I have made these observations with a view to the improvement of our primary industries so that they may compete successfully overseas. We must develop every aspect of our economy, including our secondary industries and our mineral resources. It is vitally important that we get the maximum efficiency from our sheep flocks and our cattle herds. Encouragement should be given to the C.S.I.R.O. to expand its research in relation to beef. Officers who have technical knowledge of this subject should be available to advise the graziers and the wool-growers. There should be direct contact between the men in the back room, as it were, who work out these things in theory, and the practical men on the farms. By this means, our basic primary industries will be stabilized and our sheep flocks and cattle herds will be improved. I support the bill.

Senator McMANUS:
Victoria

.- I do not propose to detain the Senate for very long, but since one of the measures that we are discussing provides for the appointment of representatives of combined primary industry organizations, I am emboldened to suggest that the representatives should strike a blow on behalf of the Australian housewives. When one discusses these matters with housewives nowadays, one is told that there is a shortage of beef in the butchers’ shops and also that prices have risen alarmingly. It has been said that beef prices have increased because there is a shortage of cattle. The fact that there is a shortage has been denied by the answer to a question which I directed to the Department of Primary Industry recently. The reply states that there has been no decrease in the number of cattle in Australia; that the number is much the same as it always has been.

I referred that reply to a company with large interests in -the meat exporting and wholesale and retail butchering trades. I asked whether it was true that there was no shortage of beef and of other particular kinds of meat. In connexion with the statement that there has been no decrease in the number of beef cattle, the company stated -

We have noted the livestock population as at 31st March and from other sources all seem to point that there are still as many cattle in the country as previously. The big question of course is how accurate were those statistics of by-gone years. We are trading only in Victoria and I detail hereunder the numbers of stock yarded at Newmarket, which is the principal saleyards in Victoria, since the 31st March with the comparable figures for the corresponding period in the previous year: -

From these figures it will quite easily be seen that the number of livestock yarded has dropped considerably and is insufficient for our increasing population.

Those figures, of course, are subject to criticism by those who contend that our herds are as numerous now as they have ever been. There may be a good reason for the decline in numbers, but to me, it is alarming. We have an increasing population and need to stimulate our export trade if we are to improve our overseas balances. In the light of those facts, the figures that I have given ought to be looked at.

The whole situation of the cattle industry does not appear to be as satisfactory as the Department of Primary Industry would have us believe. My contention in this respect is supported by the report of the Victorian Inland Meat Authority, which has recently been published. The report states that factors which are having a detrimental effect on slaughtering in Victoria are, first, the acute shortage of cattle throughout the Commonwealth, and secondly, consumer resistance to high prices for all classes of meat. It appears, therefore, that the position is not satisfactory. From the point of view of our export trade, things do not seem to be going as well as they might be. The Victorian Inland Meat Authority has stated in its report -

Livestock prices and continually increasing costs of production have made successful operations in overseas markets difficult, and have resulted in virtual cessation of export of manufacturing type beef and mutton to the United States. . . . The anticipated market in Japan for manufacturing mutton has not been realized, again owing to the cost factor. 1 leave the matter there, Mr. President. 1 am not an expert on this subject. In fact, 1 know very little about it, but I do know that there is a strong body of opinion amongst people in the trade, and also amongst housewives, that there is a shortage of beef. There is also a feeling that everything is by no means well in the cattle industry. Because that industry is so important to Australia, I think we should all be concerned to improve the position. I hope that the authorities that are to be appointed will try to improve the lot of this industry which means so much to Australia.

Senator GORTON:
Minister for the Navy · Victoria · LP

– in reply - As Senator Cant and Senator McKellar have said, the bills that are before the Senate are purely machinery measures. They deal not with matters of substance relating to the industries we are discussing, but merely with arrangements whereby two organizations, which have now amalgamated, will be given the legal right to appoint the same number of representatives from the amalgamated organization as previously was appointed from the two separate organizations. Consequently, the bills do not in fact deal with many of the matters that have been discussed during the debate.

Senator Cant stated that, concurrent with the introduction of these bills, perhaps the Government should have instituted an inquiry into the wool industry. I direct his attention to a recent statement by the Prime Minister (Mr. Menzies) to the effect that the terms of reference of the committee of inquiry that is appointed to consider the wool industry will need careful study, and that the Government will require time to appoint competent persons whose services will be available. The Prime Minister has stated that the composition of the committee and its terms of reference will be announced as soon as possible. So, although that matter has nothing to do with the bills we are discussing, it can be said that it is under consideration.

Senator Cant also raised the question whether accounts covering the taxpayers’ money that is used by the Australian Wool Bureau should not be confined, by statute, to the Commonwealth Banking Corporation or the Reserve Bank of Australia. I do not believe that there is any of the taxpayers’ money in the money that is used by the Australian Wool Bureau for wool promotion. The money that the bureau uses for that purpose is raised by levies on wool-growers. There is no subsidy from the Commonwealth to augment that fund.

Senator Cant:

– There are two wool tax acts.

Senator GORTON:

– Yes, but the bureau raises all its money by means of levies. The reason for the introduction of this legislation in its present form is that, at the moment, the Australian Wool Bureau runs an account with the Commonwealth Trading Bank of Australia, as distinct from the Reserve Bank of Australia. The Treasurer (Mr. Harold Holt) has no objection to its banking with the Commonwealth Trading Bank, and the purpose of the legislation is to bring this statutory authority into line with other statutory authorities which have the right to use the facilities of which ever bank they prefer.

Senator Cant stated that we are able to sell all the wool that we produce. It is true that we have been able to do that so far, but the point is that we need to sell the wool that we produce at a price that is profitable to growers. Wool use promotion, by opening up new avenues for the use of wool, will help us to achieve profitable returns from wool. I agree with Senator McKellar that promotion methods are already beginning to bring benefits to the wool industry.

I do not think, Sir, that there is much more I can say in reply to Senator Cant’s remarks. I agree with Senator O’Byrne’s statements regarding the value of research into the beef industry, and into pasture and stock improvement, and so on, but as 1 have said, the bills that we are discussing do not specifically deal with those matters. I shall take note of the remarks made by Senator McManus regarding the views of the Victorian Inland Meat Authority. 1 remember that, at times, I have replied to questions asked by the honorable senator in this place and have indicated that our herds have not been seriously depleted. I have given figures supplied by the Department of Primary Industry. I think those figures are correct, but we will check them against the figures cited by Senator McManus and at a later date I will speak to him about this matter which, again, is not a matter which is specifically dealt with by these bills.

Question resolved in the affirmative.

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

page 1911

CATTLE AND BEEF RESEARCH BILL (No. 2) 1960

Second Reading

Debate resumed from 29th November (vide page 1806), on motion by Senator Gorton -

That the bill be now read a second time.

Senator CANT:
Western Australia

– The Opposition does not oppose this bill.

Question resolved in the affirmative.

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

page 1911

MEAT EXPORT CONTROL BILL (No. 2) 1960

Second Reading

Debate resumed from 29th November (vide page 1806), on motion by Senator Gorton -

That the bill be now read a second time.

Senator CANT:
Western Australia

That the bill be now read a second time.

Question resolved in the affirmative.

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

page 1911

NATIONALITY AND CITIZENSHIP BILL 1960

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator HENTY:
Minister for Customs and Excise · Tasmania · LP

– I move -

That the bill be now read a second time.

This is a very short bill to amend the Nationality and Citizenship Act and its purpose is to simplify the procedure which a migrant must follow when applying for Australian citizenship. Section 36 (2.) (a) of the principal act requires an applicant for Australian citizenship to furnish, by way of statutory declaration, certain personal particulars set out in that section and information concerning a number of other matters prescribed in the Citizenship Regulations.

Experience has shown conclusively that the complicated form of application necessitated by this requirement is quite beyond the capacity of some migrants, although they may have achieved a reasonable knowledge of English, and is deterring many eligible applicants from seeking citizenship. Some new settlers who are unable to complete the forms themselves are reluctant to ask an Australian neighbour or friend to help them. In some cases, it would mean divulging confidential personal particulars to the person assisting them. Also, many new settlers are not personally known to a Justice of the Peace or a Commissioner for Declarations and are too diffident to seek out and approach one who is unknown to them. lt is still necessary that the department should obtain this information. But in order to assist migrants by reducing the form of application from its present formidable proportions, it is proposed that instead of having them complete a statutory declaration incorporated in the form, giving all the required particulars, the departmental officers who interview them will obtain the information verbally and note it down in a form which the applicants will sign. Applicants will not have to cope with the forms themselves, but will be able to go to the office of the Department of Immigration in each capital city and in a warm and friendly atmosphere, discuss the matter and give their personal particulars to a departmental officer. In country areas, application forms will be available from Good Neighbour councils and other voluntary organizations willing to assist. Commonwealth Employment Service officers in the country or, in some States, the local police, will conduct interviews and assist migrants in the same way as the Department of Immigration officers will do in the capitals. The reports of these interviews will then bc sent to the Department of Immigration. Thus it will not be necessary for migrants in the country to go outside their own local areas to complete the formalities necessary to naturalization. The elimination of the statutory declaration will not make the act less effective for dealing with persons who might give false information.

Section 50 of the principal act provides that any person who knowingly makes or permits to be made a statement or representation which is false in a material particular, may be prosecuted, and provides a penalty of £100 or imprisonment for three months. And section 21 provides that any person convicted of such an offence may have his naturalization revoked. The bill merely simplifies the method of applying for citizenship and the act will be just as effective for punishing persons making false statements and depriving them of citizenship so obtained, as it was before the amendment.

Section 36 (2) (b) of the principal act requires an applicant to provide also three certificates of character from Australian citizens, two of whom are Australian citizens and one of whom is a justice of the peace, postmaster, school teacher, police officer, or a person included in a class of persons approved by the Minister. This requirement has proved of little practical value and is another major deterrent to many migrants well qualified for citizenship.

Some migrants who wish to become Australian citizens are too shy to ask Australian citizens to certify that they are persons of good repute, as they are required to do, knowing full well that in many instances the Australian citizens are not really in a position to vouch for them. And some are anxious not to impair their good relations with their Australian acquaintances, sometimes achieved only after careful cultivation, by a request which might embarrass their friends. More often than not such fears are groundless but they may be very real to the migrant nevertheless. The Australian citizen may be equally reluctant to certify the migrant to be a person of good repute and therefore worthy of citizenship, not because of any lack of good neighbourliness but simply because he feels it is asking too much of him. A would-be new citizen who is rebuffed, perhaps unkindly, cannot be expected to approach other Australians for the certificates.

It has been shown that the certificates have little real value and cannot be accepted as evidence of a person’s good character. They might be obtained from persons who are quite ignorant of the applicant’s true character. In fact, the necessity to furnish the certificates has proved a serious obstacle to many new settlers worthy of Australian citizenship and no obstacle to any who might wish to conceal unfavorable information. The Department of Immigration does not rely on the certificates but makes an independent check of an applicant’s character. It is proposed, therefore, to abolish the requirements of a statutory declaration and three certificates of character and that is the main purpose of the bill.

The amending bill also contains a clause, sub-section (2) of section 36, providing than an applicant shall be required to provide only such information as is known to him or can reasonably be ascertained. This provision is considered necessary because some young persons, particularly refugees, who may have been born in refugee camps, or even concentration camps, might have only a limited knowledge of their family antecedents.

It will be evident that the bill does not interfere with the qualifications required of new citizens or the safeguards of citizenship but is designed merely to give greater assistance to those wishing to adopt our citizenship. I therefore commend the bill to honorable senators.

Debate (on motion by Senator O’Flaherty) adjourned.

page 1913

CRIMES BILL 1960

Second Reading

Debate resumed from 29th November (vide page 1830), on motion by Senator Gorton -

That the bill be now read a second time.

Senator McKENNA:
Leader of the Opposition · Tasmania

.- The Senate now has before it a bill that undertakes a very comprehensive review of most provisions of the Crimes Act of the Commonwealth, although it does not review all parts and all sections. I propose to take a moment or two to refer to the history of the bill in this Parliament, because the bill that the Senate now has before it is a very different one from that which was introduced in another place and taken to the second reading on 8th September last. The debate was not resumed for a period of seven weeks and then, on 27th October there was a day’s debate. The delay, which was not unfortunate in the circumstances, was caused by the absence abroad of the Attorney-General (Sir Garfield Barwick), who was attending a very important meeting of the United Nations. The secondreading debate was continued on 8th November and on 10th November, when it was gagged by the Government after only nineteen Opposition members had spoken, 26 others being denied an opportunity to speak. It is worthy of note that the Attorney-General made no reply to the second-reading debate.

That was a bad enough start, but worse was to come. The Opposition circulated 44 amendments at the committee stage and the Attorney-General circulated 22, making a total of 66 amendments for consideration by the committee. The debate in committee was confined to a little over one hour on 15th November, to the whole of the sittings on 17th November and 22nd November, and to two hours on 23rd November, making a total period of two days and three hours for the consideration of 66 amendments of a vastly important nature. The guillotine was so severely and unjustly applied that even many Government amendments were never discussed, but were put without discussion at all. Many Opposition amendments were never allowed to be put, discussed or voted upon. I think some fifteen of the Opposition’s 44 amendments fell into that category.

I make the comment that that was most unparliamentary, and a most undemocratic procedure. Denying speech to the Opposition in that ruthless way was really denying a hearing of the views of half of the electors of Australia. It shows how necessary it is- that there should be most complete and adequate safeguards in this bill, which touches upon the civil freedoms of people and the right to freedom of speech. When we have a government, in the Parliament and in public, limiting speech in this way on a matter of vast interest and great public controversy, we fear - I say quite frankly - what could be the result of vesting in an Attorney-General the power to initiate prosecutions and to administer this legislation. Under the original bill, he could have taken, in the privacy of his office, all kinds of steps to limit freedom of speech in this country.

It alarms us to see the Government treating in such a ruthless way a bill dealing with matters which are very serious to the Commonwealth and to individuals and itself limiting freedom of speech. It is no wonder that the Opposition is very concerned to ensure that when this legislation is administered in comparative privacy by a government there should be the fullest safeguards for freedom of speech and, in proper cases, freedom of action. I express the hope - I do not know whether it will be realized - that we shall not have in this place a repetition of the procedure in the other place.

During the period when the AttorneyGeneral was abroad, the bill became the subject of the most acute political controversy in Australia. It was attacked in very important aspects by the whole of the trade union movement, eminent jurists, some church bodies, the Australian Journalists Association, and nearly every newspaper in Australia. When the Attorney-General returned to this country he rebuked the critical members of his profession with the charge that they had not read their books. He implied that the law they were postulating was not a correct presentation of the law. He defended the provisions of his bill and towards the end of October he made two statements. One of those statements dealt with the provisions of the bill relating to treason and treachery. The other statement dealt with sabotage, espionage and breaches of official secrecy. He indicated that he would have officers of his department look at one or two of the provisions in the bill. But by and large he defended the bill as presented and rebuked his critics in the terms I have mentioned. It is interesting to note that in the House of Representatives the original bill was supported in its entirety by Ministers of the Crown and other Government supporters.

To complete the history of the matter, on Tuesday, 8th November, the Opposition made available to the press the terms of 44 amendments that it proposed to move. Those amendments were confirmed, with very slight alteration, by the party on the following day and were circulated in the Parliament. On the next day the Government, certainly to the surprise of the Opposition and, I think, of many other people also, in view of the public statements that had been made on behalf of the Government, circulated some 21 amendments, yielding in many important respects to the views of the critics of the original bill and yielding in very important aspects to amendments that the Opposition had proposed.

Senator Kendall:

– That was pretty good, was it not?

Senator McKENNA:

– That was an excellent end result from many points of view. I remind the honorable senator that at this stage I am merely tracing the history of the bill through the Parliament. I think it is proper to place these facts on record. 1 can imagine the discomfiture of many of Senator Kendall’s colleagues when they found that having supported the original bill in its entirety, the Government proposed to move 21 amendments of a vastly important nature. That rather betrays the fact that proper consideration had not been given to the bill in the first place. I would say that that lack of proper consideration stems from the fact that the Attorney-General briefed himself - or was briefed by the Government - to protect the state and what faults appeared in the original bill would come from a too-keen devotion to that one cause of protecting the state. Protection of the state is a very desirable objective. I am not complaining about that approach, but when one focuses one’s attention upon that single aspect in the situation, one is liable to overlook, as the original bill did, that there are social, industrial, philosophical, legal and humanitarian considerations affecting the civil liberties of people that must be considered. The point that the Opposition makes is that those matters were in fact overlooked and I need say no more than that the Attorney-General produced 21 amendments dealing extensively with five major matters of high principle. It is clear, even from the Government’s point of view now, that in the first place the bill should have been presented in very different form.

As I see it, the Government’s amendments improved the bill in five important respects. I will refer to them briefly. They assured trial by jury for the political offences of treason, treachery, sabotage, espionage and breach of official secrecy, Trial by jury for those offences was not guaranteed in the bill presented originally to the Parliament. It is of vast importance that trial by jury is now assured. The second important feature of the amendments was that they introduced badly needed provisions into serious offences by requiring the Government to specify enemy countries which, or persons whom, it would be an offence for any Australian to assist. The original bill left our citizens at their peril to guess at what countries might noi be assisted. The criticism levelled at the bill in the first instance was rejected by the Attorney-General, but the bill as it now comes to the Senate, following amendments proposed by the Opposition and accepted by the Government, concedes the important point that enemy countries must be specified. The third aspect of the amendments is that they provide a most important guarantee of freedom to criticize in good faith the actions not only of the government of this country but also of governments of any country. The original bill contained a provision of that type - in more restricted form than now appears in the bill - with application to the offence of sedition. It is now beyond doubt that this provision is to apply to all these major crimes affecting the state, and that is a matter of the highest importance in the re-shaping of the bill.

The fourth great improvement in the bill was the guarantee of freedom to act in good faith in connexion with an industrial dispute or matter. As the original bill stood there was some doubt about this and the trade union movement of Australia felt great concern about it. When the bill was originally introduced the Attorney-General argued that the bill would not impinge on bona fide industrial action, but it is obvious that he has now seen the need for some provision such as now appears in the bill by reason of the fact that he has accepted in exact terms the amendment that the Opposition had proposed.

The fifth important aspect of the amendments adopted by the Government is that, in respect of very serious political crimes, intent to injure the safety or defence of Australia is now an absolutely essential ingredient of the crime whereas the bill, as originally presented to the Parliament, provided that if an act in effect did prejudice security it could constitute a crime. To leave out the ingredient of guilty intent on the part of the person accused was most obnoxious.

Although the five matters to which 1 have referred do not meet, in full, the wishes of the Opposition, as I will indicate in a moment, they are vast improvements to the bill. We welcome them, although we still think that the bill can be further improved.

In the committee stage we will seek to improve some of the provisions not only in the bill but also in the principal act. We hope to submit in this place certain amendments - some fifteen of them - that were not allowed to be moved, discussed or voted upon in another place. The Senate may well address itself to a consideration of the matters that we will raise. Many of them are matters of great moment.

– I make that quite clear. 1 said that the Attorney-General had not met the Opposition in permitting disloyal intent to be proved. I was referring to disloyal intent, not to the original act. The very discussion we are having now is an indication of my belief that this bill is essentially one for committee debate. I shall be moving 41 amendments on behalf of the Opposition. It is impossible even to attempt to discuss them adequately now. In the time allotted to me I could not devote even a minute and a half to each of them. So I do not propose to go into a lot of detail at the moment I am merely foreshadowing at this stage where the main objections of the Opposition will lie. Even in this matter, which has been the subject of much public controversy, the Attorney-General went some distance in modifying the provision. I merely indicate that the changes he has effected to it - it applies to three crimes - are still quite unacceptable to the Opposition.

In another place the Opposition moved a general amendment to the motion for the second reading of the original bill. I shall read it to the Senate and will then suggest what the Opposition proposes to do in this place. I wish to point to the differences between the Opposition’s amendment to the motion for the second reading in another place and the amendment I shall move in this place. On 27th October the Opposition in another place moved an amendment in the following terms: -

That all words after “That” be omitted with a view to inserting the following words in place thereof: - “the bill be withdrawn and redrafted because it fails to repeal objectionable features of the Crimes Act, including political and industrial offences and the death penalty, and because it introduces new offences infringing freedom of speech, writing and action by individuals and organizations innocent of disloyal intent, and because, in particular, it fails -

to preserve the rule of law and the principles of natural justice in trials for these offences;

to establish the principle of trial by jury for all these offences;

to achieve certainty and precision in the definition of these offences;

to ensure the application of long established rules excluding evidence of the character of an accused person on trial for these offences;

to provide means of specifying enemy countries which or enemy persons whom it will be an offence to assist; and

to guarantee liberty bona fide to express criticisms and to seek alteration of the policy of the Australian or any other Government “.

In the light of the changes that the Government has accepted, the Opposition in this place now finds it necessary to omit the following words which were included in the amendment moved in another place: - and because it introduces new offences infringing freedom of speech, writing and action by individuals and organizations innocent of disloyal intent,

Our point in relation to that matter has been met completely, with one exception. We desire to have excepted from the application and the definition of these crimes action in good faith of a substantially religious or humanitarian character. The Opposition’s viewpoint in that regard has not been met by the Government. The amendment that I shall move will refer to that matter. We also propose that the following words which were included in the amendment moved elsewhere be omitted: -

to establish the principle of trial by jury for all these offences;

Provision has been made for that. We also propose to omit these words -

to provide means of specifying enemy countries which or enemy persons whom it will be an offence to assist;

That has been made quite precise. We also propose to omit the following passage from the original amendment: -

to guarantee liberty bona fide to express criticisms and to seek alteration of the policy of the Australian or any other Government.

Accordingly, I now move the following amendment to the motion for the second reading of the bill -

Leave out all words after “ That “, insert “ the bill be withdrawn and redrafted because it fails to repeal objectionable features of the Crimes Act, including political and industrial offences and the death penalty, and because it fails -

to preserve the rule of law and the principles of natural justice in trials for serious offences;

to achieve certainty and precision in the definition of these offences;

to ensure the application of long established rules excluding evidence of the character of an accused person on trial for these offences; and

to guarantee freedom to do anythingin good faith of a substantially religious or humanitarian character “.

I have arranged for the circulation of the Opposition’s amendments, which number 41 altogether. They are with the Government Printer at the moment, and I am hoping that they will be circulated with the notice-paper in the morning so that honorable senators may have an opportunity to consider them over the week-end.

The Opposition has no quarrel with the great bulk of the provisions of the bill. Most of them modernize and humanize procedures under the Crimes Act; they are quite beneficial. The law relating to such matters as coinage and unlawful soundings needed revision. But the bill does not make a proper survey of other objectionable features of the act. I refer, first, to sections 30.i to 30r, which have been the subject of great offence to the trade union movement of Australia and the Australian Labour Party for a very long period. They were introduced in 1926, but they have been very rarely used. 1 summarize them by saying that they provide that, if the Governor-General proclaims a serious industrial disturbance, it is an offence triable summarily or on indictment for any person to take part in that industrial action, to incite it or to encourage it in any way. The penalty upon conviction is one year’s imprisonment and, in the case of a person not born in Australia, liability to deportation at the instance of the Attorney-General acting alone without a right of appeal of any kind. I pause here - we will discuss this in committee at some length - to indicate that a person liable to deportation could be an Australian in every sense of the word, not a person who has been naturalized or given citizenship in this country.

Senator Wright:

– Is there authority to to deport other than under the Immigration Act?

Senator McKENNA:

– All I am saying is that this bill takes that power. It provides that the Attorney-General may deport any member of an organization declared under the act to be unlawful, if he were not born in Australia, and also any person convicted of the offence of participating in a strike proclaimed by the Attorney-General.

Senator McManus:

– Whether born in Australia or not?

Senator McKENNA:

– No. I have made that clear all along. The section applies to persons not born in Australia. One has only to think of one of our ambassadors abroad who comes back to Australia. A son may be born to him whilst he is abroad in the service of the country, and he may have another son born to him within the confines of Australia. Suppose they both take part in a strike of this type that has been prescribed by the GovernorGeneral. One is liable to deportation and the other is not. That could happen.

– Is not the intent the very essence of the offence?

Senator McKENNA:

– It is only one of the ingredients of the offence. It is an essential ingredient of the offence, but so, too, is the act. In relation to prohibited places the act is prescribed as approaching or being in the vicinity of such places. I undertake to give some really surprising examples, if I am permitted to do so, at the committee stage, showing how easy it is for a person to be placed in jeopardy of being charged with a serious crime only by reason of his proximity to a prohibited place, the nature of which he cannot determine. It may be a concealed prohibited place. What the Opposition wants to do is to have prohibited places brought out into the light, in appropriate cases, by being proclaimed by the Governor-General as being important for the safety and defence of the Commonwealth, so that any person in the vicinity may be able to see clear notices, at each point of entry, that they are prohibited places.

The fourth matter concerns search warrants. In relation to offences under Part VII., covering espionage and breach of official secrecy, a search warrant may be issued by a justice of the peace. The Opposition will propose an amendment to provide that warrants in relation to these serious matters should be issued only by a magistrate or a judge.

The next matter that concerns us largely is sub-section (5.) of proposed section 84, which contains a denial of the right of a person who has been wrongfully arrested by a Commonwealth officer to bring an action for damages. His normal common law right of action for wrongful arrest is completely denied by that sub-section and the question of compensation is reposed entirely in the discretion of the AttorneyGeneral.

Senator Wright:

– What section is that?

Senator McKENNA:

– Proposed section 84, sub-section (5.). It is in the original act and I think it is brought over almost without alteration. I cannot find it in the act at the moment, but I think if honorable senators look at proposed section 84 they will find that the wording is the same as that in the act. A matter that gravely disturbs the Opposition is that there should be a denial of a civil right of the utmost importance and that the question of compensation should rest entirely in the discretion of the Attorney-General, who can recommend the payment of something or nothing.

– As to malicious words, let me reserve my thoughts for the committee stage. You fire a question like that at me when I have not got the section before me. I appreciate the point you make, and I do not deny that there may be something to it. I should like to have a look at it in committee. I have not the terms of the particular section before me at the moment. 1 repeat that this is essentially a bill for consideration by a committee. I am very sorry that the Senate has not seen fit to appoint a select committee to consider the bill. I cannot imagine a more fruitful matter than this bill for a Senate committee to consider. It is not a matter for party political argument in the Parliament. I think that many of the difficulties that the Opposition sees could be ironed out, and that either our viewpoint or the bill could be straightened out by calm deliberation in committee.

There cannot be any hurry for the passage of this measure. I remind the Senate that in 1949 when the present Prime Minister (Mr. Menzies) was wooing the people - and wooing them very successfully - he made a promise that if he were returned to power the laws against sedition and subversion would be reviewed and strengthened. Eleven years have since elapsed and we have only now got the bill before us. So the Government cannot plead haste or claim that there is an urgent situation that has to be met. Even at this late stage, in the interests of preparing a good bill to govern this country in vital particulars, I think that the Government would be well advised to consider referring the measure to the tender mercies of a select committee. That would be a very healthy exercise and I think that between us we could make the bill a very much better measure. I am not moving in that direction: I merely commend that thought to the Minister.

We of the Opposition concede most readily that there have to be laws against treason, treachery, sabotage, espionage and the rest, and that offences of that nature must be visited with drastic penalties. That has to be done. But although these crimes are serious and although they are rare, we are not prepared to concede any variation of the principles of natural justice or the rule of law in relation to them. I am prepared to say, further, that we are not the least bit embarrassed or concerned over the fact that in 1914 a Labour government adopted the Official Secrets Act of 1911 of Great Britain containing provisions that we find to be obnoxious, some of which the Government adopts, some of which the Attorney-General has pointed to as having been in the law for a long time. He has made that approach to antiquity time and time again throughout his handling of this bill, and I find that approach embodied in the second-reading speech of the Minister in this place. Because something was put in an act 40 or 50 years ago, it is to be embraced.

– I say, first of all, that adequate thought was not given to them in 1914. Here was a country just emerging into independence, embarking upon its first war of a world nature, and finding there was nothing on its statute book to deal with offences against the State. What did the government of that day do? Without thought, it lifted the 1911 statute out of the English statute book and adopted it, with the thought that it would be looked at and considered later. The government of the day had to do something in the light of the circumstances and the situation with which it was faced.

Let me now deal with something that Senator Vincent picked me up on a little while ago. 1 refer to section 78 (2.) dealing with the known character of an accused, which has never been used in this country. We can find no reported case of its having been used, either, in Great Britain. I would hope that Great Britain would be as ashamed of the provision as we of the Opposition are to-day - quite as ashamed. So I hope that no argument will be directed at the Opposition that because a Labour administration did certain things in 1914 they should be repeated to-day. The Attorney-General makes that approach when it suits him; but when he wants to make an approach to the complete and utter protection of the State he ought to do it on its merits regardless of precedent altogether. He cannot have it both ways.

Senator Mattner:

– Would not the approach of the Labour government that was in office from 1941 to 1949 come into your argument?

Senator McKENNA:

– I can assure the honorable senator that both the Curtin Government and the Chifley Government which were in office between 1941 and 1945 were sufficiently preoccupied with the war effort to be worried about straightening out legal tangles. Let me say that at that stage there was almost totalitarian control in this country - there had to be - in order to marshal our reserves.

Senator Mattner:

– I was merely asking.

Senator McKENNA:

– You have opened Up a proposition, Senator, and I propose to deal with it in my own way. First, there was the war and then the post-war period, when we were very fortunate that We needed to have only very little recourse to the Crimes Act. I can say this: There was a decision by the Chifley Labour Government during the post-war period to repeal sections 30J to 30R and that at some time it would get round to looking at the rest of the Crimes Act. There was a decision of Cabinet to that effect. The reason why that decision was not implemented was the preoccupation of the Chifley Government with more urgent measures in the post-war period and the fact that the parties which now comprise the Government were responsible for letting it go on with the good work. It was a dead letter so far as the then government was concerned

I can talk very much more briefly on this bill in the light of the changed circumstances in which it is presented, than if 1 were facing the original bill. I concern myself only to review what has happened and the many points at which the Government has already met the Opposition’s viewpoint, and to give a broad indication of the troubles we still see in the bill. We are not prepared to condone any departure from traditional British principles and the rule of law. It is for that reason that we have worded our amendment to the motion for the second reading of the bill in the way in which it is expressed. We shall press for the adoption of the amendment, and if it is not carried we shall certainly oppose the motion for the second reading.

Senator VINCENT:
Western Australia

– I agree with the comment of the Leader of the Opposition (Senator McKenna), made in the course of his eloquent speech, that this is a committee bill. It is a most difficult measure to canvass during a second-reading debate, because so many of its facets are, to a very large degree, unconnected. However, Sir, I join issue with most of the other remarks of the honorable senator. He began by criticizing the Attorney-General (Sir Garfield Barwick) for amending this legislation. I thought that that was a strange criticism to come from the honorable senator who, at the same time, was forced to admit that the amendments were, first, in line with Labour thinking, and secondly, of profound importance. I think that that was the expression he used.

I dispute those observations immediately because the amendments that have been introduced by the Attorney-General in another place do not go to the fundamental principles of the bill. They are not of the essence of the measure at all. They are of an administrative and technical nature. They seek, in the face of criticism, some of which is bona fide and some certainly not bona fide, to amplify and explain the provisions. They certainly do not propose any substantial modification of the principles involved. It is most important to remember that, in amending the provisions, the Government has not departed from their substance and the principles with which they deal.

My friend, Senator McKenna, gave five examples of amendments which, he said, he regarded as substantial deviations from the original provisions. I wish to comment briefly on at least one of those examples, lt will be remembered that the honorable senator referred to the matter of trial by jury. The only amendment of that provision has been made for the purpose of enabling trial by jury in cases of espionage and sabotage relating to property of a value of more than £50. It may be said that the original provision perhaps did not give an inherent right to trial by jury, whereas the amendment will, of course, provide that right. Does the Leader of the Opposition suggest that that is an amendment of substance? Does he think that there would be any possibility of a charge of espionage arising in relation to property with a value of less than £50? The argument that that amendment is one of substance obviously does not carry much weight.

I submit, Sir, that the same comment may be made of the rest of the honorable senator’s allegations. He suggested, for instance, that the Government had introduced a badly needed provision in regard to specifying countries that are at war. As I have said, this is one of the amendments made by the Attorney-General to explain, not to alter in substance, the purpose of the legislation. Whether or not a country is at war is a question of fact which can be proved, and which must be established before a jury, in any event. The provision for the prescription of a country deemed to be at war is in fact merely a form of clarification of one of the technicalities involved in these provisions and does not alter the substance of the measure.

In regard to the third objection of the honorable senator, concerning the freedom to criticize, as a lawyer he should know that that right has existed as a general proposition in law at all times so far as certain offences are concerned. I do not think there is any substance in his criticism in that respect. I come to the matter of character. Again, I agree with Senator McKenna that this is a subject that can be dealt with adequately only at the committee stage. However, I propose to refer briefly to the provision relating to character. I assume that the honorable senator objects strongly to the re-insertion of this provision in the legislation. The bill does not alter very materially the existing law relating to the admissibility of evidence as to character, nor does it alter very materially the present law relating to evidence of similar acts. As Senator McKenna well knows, the law has always made provision for such evidence to be given in certain circumstances; for example, when an accused person attacks the character of a witness for the prosecution, or when the accused himself gives evidence of his own good character. In those circumstances, and in others, it is well known that relevant evidence in relation to character is admissible. I do not propose to canvass this matter at length, but it is also well known that evidence of previous similar acts by the accused1 may be given in certain circumstances.

The bill before the Senate does not propose to alter the law in regard to those matters, but it proposes to add to them a provision in relation to character and aspects of proof which are in fact not new. They have formed part of our Crimes Act since 1914. If Senator McKenna now takes violent objection in principle to such provisions, I remind him that not only were the provisions introduced by a Labour government, as he has said, but also that three subsequent Labour governments - the Scullin Government, the Curtin Government and the Chifley Government - could have had the provisions repealed had they wished to do so. Tt is rather unusual that at this stage there should be a violent change of attitude by the Australian Labour Party to a legal principle which must be deemed to have been accepted by its originator in 1914 and also by three subsequent Labour governments.

I agree with Senator McKenna, of course, that that fact cannot be stated as a reason why the provisions should continue, but it is a very good prima facie reason why they should1 do so. The onus is on Senator McKenna to explain this change of attitude on the part of the Australian Labour Party, not on the Government to justify the provisions. I shall again refer to this matter later in my speech. I mention it now merely in passing because I do not think that we should have to justify the principles to which I have referred. It has been a part of our established law and also that of the British law. I point out that a similar provision has been included in the British Official Secrets Act since 1911. The principle has been embodied in Canadian law since 1939. So, for quite a period of time, between 1911 and 1939, jurists in both those great democracies - Great Britain and Canada - thought alike. New Zealand followed with its act in 1951. In 1911, the British thought it expedient and proper to introduce this principle and place the act on its statute-book; in 1914 the Australian Labour Party thought it prudent to insert this principle in an act and place it on the statute-book; in 1939 Canada followed suit; and in 1951 New Zealand also followed1 suit. That is a long period of time, I suggest, for eminent jurists to accept this principle in acts on the statute-books of democracies of no mean calibre.

I pass from that matter to Senator McKenna’s criticism of two other sections of the Crimes Act which have been in the act since 1926. I refer to sections 30J and 30R. Those two sections refer to industrial disturbances and the power for a proclamation to be made in respect of industrial disturbances in the transport industry and the Public Service. They make it an offence for persons to continue in strikes or lockouts after such a proclamation has been made. That piece of legislation has lain on the statute book since 1926. I am surprised that at this time the Labour movement should suddenly discover that it does not like that legislation. If the Labour movement does not like it now, why was it not disliked during the reign of the Scullin Government and removed, and why did not Mr. Curtin or Mr. Chifley remove it? I believe that there is a very good reason why it was not removed. Those three leaders of Labour governments and their governments believed, although it may not have been a very popular party belief, that those two provisions were good law, and that is why they were not removed.

The onus is on the Opposition to come along now and show why those sections should be removed. We should not have to justify them at this stage; but if we have to do so, there is ample justification for them. Those two sections relate only to the key industries of this country - transport and the Public Service. If disruptive elements got into those two services, they could ruin Australia overnight. There is good reason why those two sections are in the Crimes Act and there is good reason why they have never been abused. They are used only in cases of emergency in which disruptive efforts by subversive elements in our industrial life attempt to ruin the national economy.

I prefer to deal with Senator McKenna’s other objections very briefly in committee. Before 1 refer to the bill, I shall discuss the amendment moved by Senator McKenna. It is in very general terms. I want to say a few words about the four propositions contained in the amendment. First, Senator McKenna suggests that the bill be withdrawn and re-drafted because it fails to repeal objectionable features of the Crimes Act, including political and industrial offences - I think I have dealt with those matters - and the death penalty. I could speak for a full hour on the death penalty, but I do not intend to delay the Senate now by giving a dissertation on Liberal principles concerning the death penalty. I simply say that we feel that the highest penalty should be paid by an offender who commits the most dangerous and most serious crime on the statute books. I believe that treason is the most evil of all crimes; it is a far more serious offence than ordinary murder or wilful murder for which, under most of our criminal laws, the death penalty is the punishment. I believe I am justified in saying - and I am supported by parliaments over many hundreds of years - that treason is the most foul and evil of all crimes. A man who sells his own country deserves no sympathy in respect of punishment. 1 understand that the Labour movement does not believe in the death penalty. To my mind, it is a proper penalty for such a terrible offence as treason.

Senator McKenna’s amendment proceeds to outline four propositions. First, the amendment says that the bill fails to preserve the rule of law and the principles of natural justice in trials for serious offences. I suggest to Senator McKenna that that is a very vague observation. He should tell the Senate where the rule of law has been infringed in this bill. I suggest that it has not been infringed. I join issue with him on that point, and perhaps we can have it out in committee. As a lawyer, I do not understand the meaning of the expression “ natural justice “. I think I know what Senator McKenna means by “ natural justice “. To many people, it probably means a sort of rough justice, but it has no significance in law. The honorable senator will have to explain the expression before we can really be ad idem, as it were, on where we differ on this proposition in his amendment. To my mind, it is a very woolly proposition.

The second proposition in the amendment refers to the definition of these offences. With the greatest respect to Senator McKenna, I do not think the crime of treason and the offences flowing from treason, which are many and which to my mind are probably more important, have ever been better defined than in this bill. They are most elaborately denned. In fact, I suggest that in the bill they have been rather overdefined, merely to placate or please the wellmeaning people who have found something sinister in the proposed amendments. I defy anybody to show me where these offences have been better denned in an act on the statute-book of any other State or country.

Of course, one can always criticize the definition of a crime, but one must always have regard to this problem in the drafting of statutes: The English language is a most difficult language in which to be precise at certain times. The wording which has been used is in all cases wording which has stood the test of time over many generations and tests in courts of appeal. Departure from those principles would not be justified and would be very foolish. In my opinion, the amendment moved by the Leader of the Opposition carries little weight because the proposed amendments define these crimes much better than any other statute does, and with a precision which T think is exemplary.

T have dealt with the third proposition in the amendment. It refers to evidence of the character of an accused person. I will reserve my other remarks on that matter until the committee stage. 1 want to make just one remark about the fourth proposition in the amendment which suggests that the bill fails to guarantee freedom to do in good faith anything of a substantially religious or humanitarian character. I do not know why this was included. It was possibly because the Presbyterian Church in Victoria does not like the bill. Here is rather a vain effort on the part of the honorable senator to curry a little favour with that famous body. This bill has nothing to do with religion and very little to do with humanitarian principles. It is a bill devoted to crimes of treason. All the freedoms of which we are justifiably so proud are adequately protected. Not only religious freedoms and humanitarian freedoms, but all our other individual and social freedoms, are well protected.

There is no great change of substance in these provisions. We shall still have trial by jury. We shall still have the onus of proof resting on the Crown. We shall still have an offence which has, in many respects, not been altered by one comma’s dot from the form in which it has stood in the statute-books for 100 years. There is no great deviation in principle. Certainly all our principles of law and the rule of law have been preserved. There is no innovation at all. To talk about the preservation of religious and humanitarian freedoms is a little silly, because these freedoms are there. They are well preserved. Neither the Church of Scotland in Victoria nor any other church need worry about the freedoms that are so well preserved in this measure.

So far I have been discussing Senator McKenna’s remarks. I want to say something now about the merits of this legislation and about treason as a crime. The provision that is most in issue between the two sides of the Parliament relates basically to the main crime of treason and the subordinate treasonable crimes - offences analogous to treason. I do not think it in any coincidence that for hundreds of years - in fact since the 14th century - in Britain and in other democracies where criminal codes were established, the crime of treason has always been placed first in order of priority so far as gravity of offences is concerned. It is no coincidence that in Great Britain, America, Canada, the Australian Commonwealth and all of the Australian States, from the time codes relating to criminal law originated, the crime of treason has been placed first amongst crimes . in order of gravity.

There is a good and very important reason for that, I suggest. A man who accepts the benefits, freedoms and protection that a democracy gives him and then, as a spy, tries to sell out his own nation, deserves very little sympathy. 1 suggest that condemnation of the crime of treason is based on a very important sentiment so far as Anglo-Saxons are concerned - and we are mainly Anglo-Saxons. It is the sentiment of loyalty. A boy is trained to be loyal to his family, his team, his community

Senator Paltridge:

– His political party.

Senator VINCENT:

– At times, even to his political party. When he wears a uniform, he realizes the significance of loyalty. Those who have been fortunate enough to wear one will know what I mean by that. To my mind, a man who has these blessings and then, wilfully and deliberately, sells out to an outside country - or to an outside ideology, which is the modern way of selling out one’s country - deserves very little sympathy. I am not unique in believing that the crime of treason is of all crimes the most villainous and deserving of the extreme penalty. Similar considerations apply to lesser offences which have in them treasonable elements. Loyalty to one’s country and to all that should be held dear is of the very essence of the way of life of our democracy. It is astonishing to me that Australia is one of the few countries that has not an adequate law relating to treason. I should think that it is probably the only democratic country that has not an adequate law with respect to treason and offences of which treason or treasonable associations are an element.

Senator Laught:

– The Petrov commission showed that.

Senator VINCENT:

– I thank Senator Laught for reminding me of the Petrov commission, because I might have forgotten to mention it. We had a very big inquiry into such matters by three learned, independent judges. A lot of evidence was taken, some of which, I thought, was of a terrible character. Evidence was given of some scandalous matters, and then the most surprising thing happened. The three judges said, in effect, “After all the investigations that we have made, we now cannot come out with a recommendation that any of these traitors “ - because traitors they were - “ be punished, because we have not in Australia a law relating to treason under which they can be punished “. That was a terrible thing to have to say, 58 years after we became a nation.

People have complained about the introduction of this measure. Some have even suggested that we should not bother about a law relating to treason because we have not had one for such a long time. That is no reason why we should not have one now. The Petrov commission, comprising three independent, honest men, learned in the law, said that we could not prosecute traitors because we had not any law under which they could be prosecuted. I want to read some of the remarks made by the learned judges, because we all must accept some responsibility for the absence of such laws. We, as members of Parliament, are the responsible people involved. We must accept the odium of those remarks. That it was almost 60 years before an Australian Government thought fit to introduce an adequate, law relating to treason is a most remarkable circumstance. I know that there were some reasons why a law of this type was not introduced in 1901. I suggest the main reason was that Australians as a nation are particularly careless when it comes to these things. We are isolated, not only geographically but also sentimentally. However, I do not think that we get any marks as a Parliament or as a nation for the absence of proper laws with respect to these important offences.

I wish to refer to some of the findings of the Petrov commission that are relevant to this bill. Although the report of the Petrov commission dealt with espionage in association with Russia, the bill now before the Senate deals with espionage in association with any foreign country that may have subversive interests in Australia. I emphasize the word “ subversive “.

Some people have said that this bill has been introduced merely to attack the Communists. Of course it has been introduced to attack the Communists because the Communist Party of Australia is a subversive organization. But the bill will not apply only to the Communists. Tt will apply to all subversive groups in this country, whether they be in sympathy with Russia, China or any other country. At paragraph 1073 of its findings the Petrov commission reported -

Apart from the difficulties arising from the law of evidence-

That is one criticism that has not yet been rectified - it seems that the law of Australia is inadequate to combat espionage, particularly in time of peace.

That is the blunt truth of the matter. That situation has prevailed for 60 years. The report continues -

It is beyond our power and duty under the Letters Patent to make recommendations regarding alteration of the law, but it is our duty to consider the law in order to report whether there has been any unlawful communication of information or documents to Soviet agents. That is the only head of illegality with which we are concerned under the Letters Patent.

At paragraph 1078 the commission reported -

Espionage by that name is not an offence known to the law. Under the common law, if a person obtained a secret document from an official he could be charged only with larceny of the paper.

That is, he could be charged only with stealing the paper. That is the common law. because espionage is a modern form of treasonable activity. It is a modern form of crime. Nevertheless, we knew that it was a treasonable action and the members of the Petrov commission have handed down an indictment of the inadequacy of our laws whereby people may be charged, it at all, not with spying or treason - not with an offence associated with treason - but merely with larceny of a piece of paper. At paragraph 1079 the learned judges of the commission reported -

Tn the United Kingdom, the Official Secrets Act was passed in 1911. That Act operated in Australia until the Commonwealth Parliament enacted, in the Crimes Act of 1914, the provisions of the Act of the United Kingdom. In 1920 the Parliament of the United Kingdom amended the Act of 1911. making, inter alia, drastic changes-

I emphasize this section - as to the onus of proof in respect of offences under the principal Act. None of the amendments made in the United Kingdom Act of 1920 have been adopted in Australia.

That is rubbing salt into the wound of our failure to make adequate laws. The report of the commission then deals with the difficulty of trying to prefer a charge under the existing laws of Australia against men like O’sullivan, Lockwood and Chiplin, who are, of course, traitors who should have been punished as such. In any other democracy they would have been tried for treachery or treason. Unfortunately, in Australia we had no suitable law on the statute-book. The bill now before the Senate attempts to rectify several technical defects in our law, but in this respect it has been very trenchantly criticized by the Opposition.

At paragraph 1092 the commission reported

In the light of the heading of Part VH. of the Crimes Act - “ Breach of Official Secrets “ - and of the context in which the words “ document or information “ appear, the documents and information which the legislature had primarily in mind would seem to be official documents and official information.

That means that our existing law can relate only to a document that is classified as an official document. If I were a Russian spy in this country and read an official document I could go to the Soviet Embassy and type my recollections of that official document. I could then hand what I had typed to the Soviet authorities. There would be nothing official about the document that I had typed and 1 would not have committed an offence. But the bill now before us alters all that. If my friends opposite will look at the definition of documents and information they will see that it now covers documents other than official documents and information other than official information. That definition has greatly annoyed the Communists in this country. I have received several letters from the officials of Communist-controlled unions objecting very forcibly to their rights being taken away under this provision. That is something over which my heart rejoices no end.

The Petrov commission, at paragraph 1094, reported -

Moreover, the type of document which the Section seems to contemplate is one which had an existence before it was obtained or communicated. The effect of Section 78, as extended by Section 77, is to prohibit the communication of such an existing document or “ the substance, effect, or description thereof “;-

We now come to the important part of this paragraph - the Section seems not to include a writing which is made by the communicator and not compiled from a previously existing document.

That is a further weakness in our law which 1 am glad to say the present measure rectifies. That rectification, too, is very strenuously opposed by Her Majesty’s Opposition. At paragraph 1097 the commission reported -

Because of the uncertainty of the meaning-

It is terrible to think that the three learned judges of the commission had to make that observation about our laws in respect of treason, treachery or espionage. I repeat paragraph 1097 -

Because of the uncertainty of the meaning of Section 78 we prefer not to say whether any communication was made in breach of that Section. Our reluctance is fortified by the fact that even if breaches of Section 78 did occur there is no evidence legally admissible in a court of law which would be sufficient to warrant a prosecution in respect thereof.

In paragraph 1101 the commission reported -

We are satisfied that, apart from any element of illegality-

This is the most damning part of all in this report - much material was communicated to Soviet agents to the prejudice or possible prejudice of the security or defence of Australia and that in some cases the communicator knew that the recipient was a Soviet agent. We have dealt with the circumstances of these communications elsewhere in our Report.

Paragraph 1102 contains a further damning statement in these words -

Some of these communications were (because of the nature of the information communicated) directly prejudicial to the security or defence of Australia, and many were indirectly prejudicial.

Surely those quotations from a very important report lead us to but one conclusion. Whether or not we are concerned with what the Communists feel and think, surely that comment by the learned judges of the commission is adequate justification for placing on the statute-book a proper set of laws relating to treason, treachery, sabotage and espionage.

Sir, there are other reasons to which I shall refer in passing. In a few years’ time the situation in New Guinea could become, shall I say, highly dynamic. It probably will be fraught with great difficulties and dangers, and possibly trouble. At the moment we have no laws to prevent the infiltration of subversive elements into New Guinea. We have no law to prevent a Communist agent, or for that matter an agent of any foreign power that has designs on the established order of government in New Guinea, from going there and so very simply influencing and affecting the lives and minds of the simple-minded people who live in the Territory. What is happening in the Congo affords an illustration of the point that I am making. All was reasonably ordered and peaceful until twelve months ago, when the Communists moved in. Who has suffered as a result? Only the unfortunate indigenous inhabitants have suffered, and they are suffering in their thousands. Quite apart from the obligation we have to mainland Australia, surely there is an obligation upon us to protect the 2,500,000 coloured people in New Guinea who at the moment cannot protect themselves. I suggest that that is the second reason why we must have laws relating to this matter. It is so easy, as I have said, for a saboteur to go in and disrupt the way of life of these natives.

I can postulate a third reason for regarding this bill as a rather urgent measure. Not very long ago the Soviet Embassy in Australia was re-established. I am one of those people who are suspicious of the Soviet Union. I am quite prepared to believe that in the Soviet Embassy building in Canberra an espionage section is operating as hard as it can and that, unless we are very careful, history will repeat itself. I believe there is another Petrov in the Soviet Embassy. I do not think any one can deny it. Why are Soviet representatives there in such numbers if that is not so? If we want a repetition of what happened before Petrov defected we have only to ignore the obligation to pass proper laws with respect to treason and treachery. If we are prepared to combat the subversive elements that are at work in the Soviet Embassy, let ais have these laws.

When all is said and done, it was the Australian Labour Party which established the security service in Australia. Why was it established? It was established to ensure our security. Although it is sometimes criticized by the Opposition in moderation, and sometimes immoderately, perhaps, it has done a wonderful job for this country. I believe it is a first-class service. But it lacks the teeth to bite with. What on earth rs the good of having a security service if there are no laws whereby it can carry out its work and bring malefactors to justice? What is the purpose of the security service without the complementary law whereby it can bring to justice those who are traitors to our nation?

I advance those four reasons for regarding these laws as essential. One reads in the press certain remarks by ill-informed critics who would have us believe that we have got on pretty well for 60 years without laws relating to treason and treachery, and who ask why we should bother about them now. 1 wish to make one other observation about the bill. Some critics on the Opposition benches say that it goes too far, but 1 suggest that it does not go far enough. Time will not permit me to go into detail, but I propose to mention some illustrations in support of my suggestion. I believe that the Crimes Act should include all our law relating to what are called public offences. As I have indicated, I wish to mention some illustrations of the way in which I believe the law, particularly that relating to treason and treachery, could be improved. In the first place, proposed new section 24, which relates to treason, does not include an offence such as offering a gratuitous insult to the Sovereign. I do not suggest that such an offence should be made treasonable and be punishable by death; but it is of a treasonable nature. The proposed law does go to the extent of dealing with bodily harm tending to the death or destruction of the Sovereign, but it does not contain any reference to a minor assault. I do not suppose a reigning sovereign would very often be insulted, spat upon or assaulted in a minor way. But I mention such offences, because the proposed amendments of the existing law do not cover that kind of offence.

Senator Gorton:

– They are not covered in the English law either, are they?

Senator VINCENT:

– Yes. They are covered by another statute.

Senator Gorton:

– But not as treason.

Senator VINCENT:

– We have not any law to cover that situation. Let me refer to an even more important offence. Honorable senators know that proposed new section 24aa provides that it shall be an offence for a person to do any act or thing with intent to overthrow the Constitution of the Commonwealth by revolution or sabotage. But the proposed new section does not make it an offence to overthrow or to attempt to overthrow the Constitution by means not amounting to revolution or sabotage. There are plenty of ways other than revolution or sabotage in which one can attempt unlawfully - I emphasize the word “ unlawfully “ - to overthrow our Constitution. Perhaps that is something which should receive the consideration of the Attorney-General at a future date. I am not suggesting that the act should be amended at this stage to cover that situation. When all is said and done, modern revolution or modern sabotage is a pretty obvious way in which to overthrow the Constitution. But there are many ways that are not so obvious and which can be employed right under our noses, but which are unlawful and should be punished. I mention such acts, because I feel they are in the nature of treachery just as much as sabotage is.

I refer now to offences against executive members of the Government, the judiciary and the legislature. At the moment, we have inadequate laws with respect to offences against the Executive and legislative authority. I refer briefly to the Western Australian Criminal Code which, together with many other State laws, comprehensively covers offences against the Executive, the legislature and the judiciary. Similar provisions are not in the Crimes Act. I think it is time we did have them because these are offences which contain a treasonable element. I refer honorable senators to the Western Australian Criminal Code, sections 54 to 60. They are very important sections. Section 54 reads -

Any person who advisedly -

Does any act calculated to interfere with the free exercise by a member of the Executive Council of the duties or authority of his office as a member of the Executive Council or as a Minister of State; is guilty of a misdemeanour, and is liable to imprisonment for three years.

I think that is a very important law. In all humility, I suggest to the Attorney-General that it be incorporated in our Crimes Act. The Western Australian Criminal Code proceeds to deal with offences against the legislature and with unlawful interference with members of the legislature. Such interference is an offence in any democracy, and I think we should have a similar provision on our statute-book. One of these days the honorable senator who is interjecting may possibly be interfered with. If he votes against this bill there is a distinct possibility that he will be interfered with.

I pass on to something which is just as important, namely, giving false evidence before parliamentary committees. Some honorable senators were present with me when refusal to give evidence before a Senate committee was a very important issue. I think Senator Wade will remember the occasion when a famous Communist in Sydney refused to give evidence before a Senate select committee. The committee had no proper and adequate power to enforce its authority. I refer to these matters briefly because my time is running out. None of these provisions is to be found in Commonwealth law.

Bribing a member of Parliament is another offence not provided for in Commonwealth law. I think it is about time that we had on our statute-book a law dealing with members of Parliament receiving bribes. These are things that will require the attention of the Attorney-General in due course.

Senator McManus:

– At whom are you looking?

Senator VINCENT:

– I notice a yearning look come over the faces of some honorable senators. The offences to which I have been referring are all offences which have an element of treason in them. They are not offences of high treason, as it is commonly called, but they have an element of treason. Possibly they are more important than the crime of high treason because v/e have never had occasion to invoke the law relating to that crime. Encompassing the death of the Sovereign is a pretty rare offence in these modern times, but sabotaging the mind of a member of Parliament by bribery is a more possible offence.

Senator Robertson:

– It is more insidious.

Senator VINCENT:

– It is more modern, too. I make one other reference to the absence of adequate legislation from our statute book. I refer to piracy. Honorable senators may smile, because they think that the days of the pirates have gone. It is quite possible that piracy will be regenerated in certain parts. We have no adequate law on our statute-book to deal with pirates.

There is another very important omission from the Crimes Act, namely, the offence of interference with our armed Services, it may be held that the present legislation covers this position to an extent, but 1 suggest, with great respect, that there is nothing to prevent interference with members of the armed Services in this country. There is no such offence with which a person can be charged. I shall give an illustration. A man may sneak into the mess of an Air Force squadron and insert an insidious drug into the food of the pilots, thereby preventing them from being able to fly the aircraft of the squadron. That offence, of course, could be punished under a State law, but we have no Commonwealth law to prevent interference with our defence forces. 1 think that these things are important.

I admit that what the Government is doing in this bill is important, but I think that the things I have mentioned are also important, and to the extent that they are not provided for in the present legislation, the legislation is inadequate. I suggest to the Attorney-General that some consideration be given to drawing up a proper criminal code of Commonwealth law. Each State has its own code, and there is no reason why the Commonwealth should not have one too, with all the public offences, as I shall call them, properly codified and set out. One must not overlook the fact that there is a doubt whether an offence of violence committed in an aircraft flying outside the three-mile limit can be punished at all at the present time. That is something about which we should be concerned because such a thing nearly happened the other day, and one of our colleagues was involved.

I have referred in passing to the objections to this measure by certain, interests in Australia. I think all honorable senators have had letters from the Building Workers’ Industrial Union of Australia, and probably they have had letters in similar vein from the Presbyterian Church of Victoria. I want to say one or two things about the objections raised by the Building Workers’ Industrial Union. The letter I have mentioned was signed by F. Purse, the federal secretary, who is a Communist. It is well known that this is a Communist union. The Victorian State secretary, Mr. Chandler, is also a well-known Communist. He took a leading part in certain industrial strife which culminated in the clean-ballot legislation and other legislation against victimization which was introduced by the Chifley Government. In the name of liberty, peace and freedom this person now comes out to attack this bill. He is supported very strongly by two other well-known Communists, Messrs. Clancy and Dawson, the New South Wales and Queensland State secretaries respectively of the Building Workers’ Industrial Union. In the name of liberty and freedom these Communists criticized this measure. I want to make some reference to this because I think it is important. Amongst other things the letter states -

We-

That is the union - consider these amendments to the political and industrial sections of the Act to be an attempt to steal away the people’s democratic rights.

Coming from a Communist, that makes me weep! But, Sir, it is remarkably like the criticism that is coming from the Opposition. Senator McKenna’s motion states that the bill fails “ to preserve the rule of law and the principles of natural justice for serious offences “.

The PRESIDENT:

-(Senator the Hon. Sir AlisterMcMullin). - Order! The honorable senator’s time has expired.

Motion (by Senator Hannan) put -

That Senator Vincent be granted an extension of time for thirty minutes.

The Senate divided. (The President - Senator the Hon. Sir Alister McMuIlin.)

AYES: 33

NOES: 25

Majority . . . . 8

AYES

NOES

Question so resolved in the affirmative.

Senator VINCENT:

– Mr. President, in view of the statement by the Leader of the Opposition this afternoon that the Government had attempted to gag debate on this measure, I am somewhat appreciative of the Opposition doing likewise to me. It is a long while since an honorable senator has been stopped from speakingin this chamber and I shall not forget the action of the Opposition this afternoon in voting against my being granted an extension of time. It is significant, I think, that just when I was warming up, asit were, the Opposition suddenly found that it did not want to hear what I had to say. I shall proceed to warm up again.

I shall quote some observations that were made by that great democratic institution, the Building Workers Industrial Unionof Australia, which is so ably administered by the federal secretary, Mr. Purse, a Communist, and the Victorian State secretary, Mr. Chandler, a notorious Communist. They made some observations on this very important bill. When I am reading them, I would like honorable senators of the Opposition to note the similarity between the observations of this Communist union and those of the Opposition in relation to this bill. I think that the similarity is most marked. It may be only coincidental, of course, but it is remarkable how the ideas of the Building Workers Industrial Union of Australia and those of the Australian Labour Party seem to coincide on this important legislation.

Senator Ormonde:

– And those of the Presbyterian Church.

Senator VINCENT:

– Yes, and the views of the Presbyterian Church. Perhaps I should say the Victorian wing of the Presbyterian Church, which has been influenced. unfortunately, by, I think, certain subversive elements, and which I do not think at the moment is properly representative of honest Presbyterians in Victoria. However, getting back to the Building Workers Industrial Union I find this is what it said in dealing with the matter of treason -

An important consideration to be kept in mind when examining the amendments is that any action taken under them places the onus of proof on the person charged.

That, of course, is a deliberate falsehood; it is a lie. Turning to Senator McKenna’s amendment, we see that, in an indirect way, he makes the same suggestion. His amendment reads -

. insert “The bill be withdrawn . . . because it fails -
1. to preserve the rule of law and the principles of natural justice in trials for serious offences; . . .

Sir, there is nothing in this bill which is against natural justice or any other form of British justice or the rule of law. As far as the Communist union is concerned, that is a deliberate falsehood. The comments in the booklet published by the Building Workers Industrial Union continue -

Previously treason could only be committed at a time of war.

Again, that is completely untrue. On the next page, in dealing with the crime of treachery, the union printed this comment concerning the provision of the bill -

It is so loosely drafted that as it stands it could be used to suppress public discussion of the Government’s foreign policy.

That comment is in almost identical terms to criticism by members of the Australian Labour Party in another place. It is not true. It is completely false. The statements in this document to which I am referring are Communist propaganda.

Senator O’Flaherty:

– Where did you get it?

Senator VINCENT:

– I got it from the Building Workers Industrial Union of Australia, under a covering letter signed by Mr. Purse.

Senator Paltridge:

– Is that Purse, the Communist?

Senator VINCENT:

– Yes. On page 8 of the brochure the following reference is made to the provision relating to treachery: -

So that an ordinary expression contrary to the policy of the United States Government could cause a person to be charged under this section.

That, again, is a deliberate and wilful misstatement of the law. Mr. Deputy President, you cannot charge a person for a bona fide statement of opinion on any subject. There has to be a treacherous intention, and that treacherous intention is particularly defined in the statute. Without such an intention there is no offence. The perpetrator of this document knows that that is so, and I suggest that those members of the Australian Labour Party in another place who have criticized the bill also know that it is so.

Let me go on to page 9 of the brochure, where reference is made to the crime of sabotage and to prohibited places, to which I think Senator McKenna also referred to-day. The document states -

So that building workers, seamen, waterside workers, railway workers, transport workers, and all groups of workers associated with any of the wide range of industries named could be affected.

In other words, Sir, the argument there is that an innocent worker who stumbled across a railway yard, which might be a prohibited place, could be charged with an offence under this bill. That is the most terrible rubbish. The suggestion is both unfair and incorrect. As we know, there must first be an element of treachery in his action. He must go to the prohibited place for a purpose prejudicial to the security of Australia, and that purpose has to be proved. The prosecution has to prove the purpose that was in that man’s mind; it has to prove that he intended to do something prejudicial to the security of this country in going to that prohibited place.

It is a terrible indictment to make of a trade union, but I say that this trade union has maliciously and deliberately falsified the purposes of this bill. I am afraid that members of the Opposition in this Parliament have been doing the same thing and have been trying to make people fearful of the consequences of the bill. Many innocent people, in a bona fide way, have been visibly affected by the criticism that has been hurled at the measure by malicious people who have axes to grind. As I have said, Sir, such criticism is not fair. Although 1 think that this is a bill that is eminently suited to objective debate, I object to the attitude of the Australian Labour Party to the measure. I object to criticisms which follow the Communist patter, criticisms which have no basis in fact. There is plenty of food for argument of an objective nature in the bill, but to mis-state its objectives maliciously and deliberately is neither reasonable nor fair. Of course, that is a Communist trick, but the Australian Labour Party should not adopt it in discussing the bill.

Senator Ormonde:

– What makes you think that we have done so?

Senator VINCENT:

– I have read the “ Hansard “ reports of speeches of men such as the honorable member for Yarra (Mr. Cairns), who have been repeating parrot fashion statements similar to those made in the brochure to which I have referred, both inside and outside the Parliament. I have seen press reports of statements by Labour leaders that have been in almost exactly the same terms as those used in the brochure. The statements that have been made do not happen to be true, and they were not true even before the bill was amended, because the principles upon which the amendments are founded have not been changed.

In relation to sabotage, the brochure states -

The section states that on a prosecution under this section it is not necessary to show that the accused person was guilty of a particular act. Even if an act is not proved against him, he may be convicted if “from the circumstances of the case, from his conduct, or from his known character as proved, it appears that his purpose was a purpose prejudicial “, etc.

Again, that is a deliberate misrepresentation of the position. It will be remembered that Senator McKenna corrected himself this afternoon when I pointed out his mistake on this point, but on many occasions in the other place the statement was made that the offence of sabotage could be proved by evidence of character. That is not true. The act of sabotage has to be proved factually. That is the most important prerequisite to proving the offence of sabotage. It is evidence of intention that is related to the matter of admissibility of evidence in respect of character. Those are two entirely different elements of proof.

In the other place, time after time members of the Opposition criticized this measure in the terms in which it is criticized in the trade union brochure. I point out that the principles have not been changed in this respect, either. An addition has been made to the section for the purpose of elaborating the technicalities involved, but there has been no change in the principles.

Senator Ormonde:

– That is important for laymen, is it not? Laymen do not understand these matters as lawyers do.

Senator VINCENT:

– That is so, but I suggest that if malicious people wilfully make deceitful and incorrect statements about the bill, it will be even more difficult for laymen to understand it. There is a great deal of opposition to this measure by people who genuinely think that there is something wrong with it, their thinking in that respect having been instigated entirely by the Communist Party of Australia and by certain members of the Australian Labour Party who have not spoken the truth about it.

The brochure also states -

The present Act relates only to the passage of information that may be useful to an enemy.

This is interesting -

The new amendments remove this important limitation and extend it to a “ foreign power “. So that the mere exchange of opinions or ordinary books and printed materials can be made an offence with a seven year jail sentence.

That statement, of course, refers to the weakness discovered by the learned judges in the Petrov royal commission. They found, to everybody’s surprise, that there was no offence in supplying information to a country unless it was an enemy. The Union of Soviet Socialist Republics is not an enemy of Australia. Legally speaking, we are not at war with Russia. So, there is no offence in supplying information to that country. The bill seeks to make the all-important amendment that the word “ enemy “ shall be crossed out and the words “ foreign power “ inserted in its place, so that if a person, with a treacherous or treasonable intent - and that is important - supplies information to a foreign power he will be guilty of an offence. The Communists, being very sensitive about what happened to comrade Lockwood, are most indignant that we should introduce such a provision. They are very annoyed about it, and so, too, are a number of people in the other place.

The brochure continues -

Again the section saying that in any prosecution nothing has to be proved against a person, he may be convicted on the basis of his conduct, or from his known character as proved, is also included.

That is another mis-statement of the law. I think I have given sufficient excerpts from the booklet to show the nature of the propaganda that has been insidiously pumped into the Australian public by the Communist Party of Australia. I am afraid that many members of the Opposition have followed the same line.

Senator O’Flaherty:

– You have been saying that for months. You know it is not true.

Senator VINCENT:

– I invite the honorable senator to read the “ Hansard “ reports of speeches by Mr. Cairns and other honorable members who share his way of thinking, and compare them with the statements in the brochure from which I have read. If they do that, they will see just how closely connected the two sets of statements are.

Senator O’Flaherty:

– That does not prove anything, except to your biased mind.

Senator VINCENT:

– It proves to my biased mind, as the honorable senator calls it, that Mr. Cairns, whom I am singling out because his name comes first to my mind, although there are others, and comrade Purse speak alike in regard to this bill. That is all I am saying. I am emphasizing that Purse and Mr. Cairns have made statements which are not true.

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

Leave granted; debate adjourned.

Sitting suspended from 5.45 to 8 p.m.

page 1932

SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL (No. 2) 1960

Second Reading

Debate resumed (vide page 1894).

Senator McKENNA:
Leader of the Opposition · Tasmania

– The bill before the Senate deals with a relatively insignificant portion of the Government’s sales tax proposals. Actually, it deals with the sales tax upon motor cycles and motor scooters only. I suggest to the Minister that it may meet the convenience of honorable senators if we debate together this bill and the nine sales tax bills, which deal with the major matter of the impost of sales tax upon motor vehicles. That procedure will be convenient and will also save time. Does the Minister agree?

Senator Paltridge:

– I agree that that is a convenient way to debate these matters.

The PRESIDENT (Senator the Hon. Sir Alister McMullin). - As there is no objection to the suggestion made by the Leader of the Opposition, the course he suggests will be followed.

Senator McKENNA:

– The two substantive measures that are under consideration deal with sales tax on motor cycles and motor vehicles of a non-commercial type. I should like to begin by referring to the Sales Tax Bills (Nos. 1 to 9) 1960, which increase the rate of tax applicable to items in the fifth schedule of the Sales Tax (Exemptions and Classifications) Act from 30 per cent. to 40 per cent. That is an addition of 10 per cent. to the existing tax of 30 per cent. However, I submit that the proposal is put in its proper perspective when we regard that addition of 10 per cent. as an increase of 33) per cent. in the existing rate of tax, because in fact that is what it is.

When I look at the fifth schedule I find that it includes only two categories of articles, namely, motor vehicles designed primarily and principally for the transport of persons, and motor vehicles capable of being readily converted into sedans, station wagons and estate cars. The bill that is immediately before the Senate merely transfers one item, motor cycles and motor scooters, from the fourth schedule of the Sales Tax (Exemptions and Classifications) Act and places it as item 62a in the second schedule. The effect of that is to increase the tax on those articles, motor cycles and motor scooters, from 16) per cent. to 25 per cent. That is the picture that is presented in the two substantive bills before the Senate.

At the outset, I should like to review the incidence of sales tax on motor vehicles over the last eleven years. In 1949 the rate was only 8) per cent. In October, 1930, the present Government increased it to 10 per cent. The Government doubled it in September, 1951, making it 20 per cent. In September, 1953, the rate was reduced slightly to 161 per cent. In March, 1956, in the little Budget, the Government made it the very high impost of 30 per cent. Now, in November of this year, the rate is to be increased by 331 per cent, to 40 per cent. When one looks at the sales tax categories, one finds that there are five of them.

Senator Scott:

– The rate is to be increased from 30 per cent, to 40 per cent. You said from 331 per cent, to 40 per cent.

Senator McKENNA:

– No. The honorable senator did not hear me accurately. 1 said that the rate is to be increased from 30 per cent, to 40 per cent., which is a 331 per cent, increase in the present rate. That is the position, and I continue to repeat that I am not talking about a 10 per cent, addition, which would be strictly accurate; I am talking about what is in fact a 331 per cent, increase in the present rate of 30 per cent.

At the moment there are five categories of sales tax with rates of 81 per cent., 121 per cent., 161 per cent., 25 per cent, and 30 per cent, for motor vehicles, which is the rate that is now being increased. The increase from 30 per cent, to 40 per cent, is the one change in the five categories. We find that in the whole field of sales tax, the highest rate is reserved for passengercarrying motor vehicles. On the face of it, of course, that tax is punitive in relation to the motor industry and the individuals who use passenger-carrying motor vehicles. It is highly discriminatory as against all other articles on which sales tax is imposed.

It is rather staggering to realize that under this Government the sales tax on this type of motor vehicle has been increased almost five-fold. It has been increased by 480 per cent, in the eleven years during which this Government has been in office - from 81 per cent, in 1949 to 40 per cent, under the proposal in this bill. It is rather pertinent to comment that the present Government gained office in 1949 on, among other things, a solemn pledge that the rates of taxation could and would be reduced. In the sales tax field the rates have soared constantly, apart from one reduction from 20 per cent, to 161 per cent, which took place in September, 1953.

– For a moment, I thought the honorable senator was talking to me. I will change the theme and pass to my next point.

Sales tax was reviewed by the Government as recently as August last. It was not changed in August when the members of the Government had before their minds all the factors that are present in the economy to-day. It is quite extraordinary that the Government addressed itself particularly to the question of sales tax in its Budget in August last and not only made no increases but actually granted certain concessions. I certainly applaud the concessions the Government gave in favour of disabled civilians who, because of leg troubles, were unable to use public transport. That was a very fine concession indeed. Three months ago the Government actually gave concessions in sales tax with no thought, either for revenue purposes or for general economic purposes, of increasing it. Now, three months later, it proposes this enormous increase of 33i per cent, in the rate of sales tax on motor vehicles.

I have not heard from the Treasurer (Mr. Harold Holt) or from the secondreading speech of the Minister for Civil Aviation (Senator Paltridge), who represents him in this place, what will be the financial impact of this new impost on the Budget. I refuse to believe that the Treasurer and the Government have not some idea of what the result of this additional tax will be. In my time in the Ministry, I had an exceedingly close association with the Taxation Branch. I know its statistical section and the officers of that section particularly well, and if there is one branch of the Public Service for which I have the highest respect, it is that branch. It constantly amazes me that, with uncanny accuracy, those officers get close to the ultimate results achieved, although they may be twelve months ahead in preparing estimates. They do an extraordinarily fine job. They are highly experienced. For the purposes of this tax, they have the perfect example of the “ Little Budget “, when the sales tax on motor cars was lifted from 6i per cent, to 30 per cent. They can see over the last four years the effect that that type of increase in the sales tax on motor vehicles has upon the industry and upon the Government’s revenue.

The Treasurer was pressed in another place to indicate what the results would be. He said at first that he could only say that it was expected that revenue would not be affected ultimately. Under some pressure he said that he had an estimate from the department, that estimate being that there would be an increase of revenue by about £7,000,000 for the balance of this year, if the volume of sales continued at its present level. It is not expected, according to the Treasurer, that that result will be realized, and probably the Budget will be neither up nor down.

It is completely irresponsible for the Treasurer of this country to come to the

Parliament with a taxation proposal of this type and not make the clearest statement of the expected yield from that tax, but, instead, to avoid questioning upon it. It really amazed me that in the second-reading speech to-day we were not given some idea of the expected yield. The position is quite clear. Either the Government is concealing its knowledge of the position, or it does not know. If I had to make a choice between those two situations, I would say that the Government does not know. But it ought to know. I am certain that the yield could be gauged, with a high degree of accuracy, by the specialists of the Taxation Branch, in the light of the experience that they have had. 1, on behalf of the Opposition, ask the Minister to make a complete statement to the Parliament, if he wants to put this taxation measure through, as to the expected results of the imposition of the additional tax. Leave out the economic factors and the objectives in the economy at which the Government is aiming by the imposition of this tax, and tell us the expected impact upon: the finances of the country. It is a serious default on the part of the Government that it asks for the Parliament’s approval of a tax and is not prepared to tell the Parliament quite frankly what the impact upon our finances will be.

After all is said and done, the Government is not looking for additional revenue this year. It budgeted three months ago for a surplus of £15,000,000, so it is completely clear that it does not need an additional yield of revenue this year. It will achieve that surplus of £15,000,000 after using £140,000,000 of revenue to carry out capital works of the Commonwealth and after applying £80,000,000 of revenue for the support of State works programmes. So it is not a matter of the Commonwealth needing additional revenue to carry on the affairs of the country for the year. Therefore, it is quite obvious - it is stated quite frankly in the secondreading speech - that the Government is using this tax for other purposes than the raising of revenue. I would say that it is a most inexpert instrument to use at this particular stage for conditioning other elements and factors in the economy of the nation. 1 shall refer later on in my address to the aim of the Government and the targets at which it is shooting. I want to refer at this stage to the “ little Budget “ of 1956, when something similar happened. We ought to be able to learn some lessons from that. That measure was introduced on 14th March, 1956. It was a gross piece of deceit upon the electors of Australia because only three months previously, in December, 1 955, the Government had gone to the country, asked for a blank cheque, and given not the slightest hint of the need of the economy for disciplinary measures. The moment it came to the Parliament after the election was over, it imposed upon the nation an extra taxation burden of £115,500,000. This included the revenue obtained by lifting the sales tax on noncommercial motor vehicles from 161 per cent, to what was, at that time, the shockingly high impost of 30 per cent. I would ask the Senate to note the objectives of the increased tax. The Prime Minister (Mr. Menzies), on 14th March, 1956, said -

Not only do motor vehicles and their components constitute a substantial item in our imports, but they also represent the bulk in value of hire-purchase transactions and they have, in fact, generated a vast capital demand inside Australia.

Presently, I shall indicate where, in the statement made on 15th November last, we find that repeated almost word for word. Certainly the same ideas were incorporated: too heavy a drain on our imports, too big a demand for labour and materials, and too much activity promoted in the hire-purchase field. All those things were repeated in the statement of 15th November and they were repeated in the second-reading speech which the Minister for Civil Aviation delivered in this place to-day.

Senator Paltridge:

– A good speech.

Senator McKENNA:

– So says the Minister. All I can say is that the Government has been working on the same theme for the last four years. The methods it applied in March, 1956, quite Obviously, did not have the desired effect. The imposts have to be stepped up again now, at the end of four years. It might have been a good speech in that it opened out and elaborated very little. I should have thought that the Government would have learned from experience that this is a futile approach to the problem of inflation and imports. If it rs not futile, it certainly is completely inexpert. I think the Minister has just put his finger on what is wrong with this Government. All its members think about are good speeches - words, words! A spate of words, without action, is all that comes from them. They are quite happy when they make a good speech. The difficulty is that they make what they call a good speech about a problem and the moment after they have made it they pick up the speech and the problem and put them away in a pigeonhole. They bring them out three or four years later, make the speech again and still call it a good speech. The Minister has put his finger on what is wrong with this Government - too many words and not enough action. The Minister invited that remark. Nevertheless, it is quite true. The Government parks the good speeches and the same old problem in the same pigeonhole until the problem bursts out again. A Minister then makes the same old speech and the Government puts the speech and the problem back in the pigeon-hole. I wish that members of the Government would stop making flowery speeches and get down to some real work. We warn action from the Government, not good speeches. We want a little more deep thinking, a little more real thinking about the problems confronting this country. YOU cannot solve problems with speeches, no matter how good they are. I am sorry that the Minister diverted me to that theme, but I think he earned that little diatribe.

I was about to deal with a speech of the Prime Minister which indicated the objectives at which the Government was aiming - objectives which at that time were carefully concealed from the electors and were brought into the open only after the Government was once again ensconced on the treasury bench. On 14th March, 1956. the Prime Minister said -

We are well aware of the benefits which will ultimately flow from this great industry . . .

– That is only one aspect of it. Let us stick to those aspects that are immediately relevant to the matter under consideration. I think every one in this chamber acknowledges that a heavy impost has been placed on the people in the form of sales tax. A total of £180,000,000 is to be collected this year. Of that sum, £77,000,000 will come directly from the motor trade. The whole of that revenue is inflationary. It is unfair. It is a charge on rich and poor alike. Whether a motor car is a necessity or a luxury, the same tax is paid; there is no discrimination. Accordingly, it is one of the most unfair forms of taxation. That is the blunt instrument, the unfair instrument, which the Government directs at one industry which makes an impact upon every home in the country.

I say to Senator Spooner without any hesitation that activity, instead of being lowered, ought to be increased. This industry should be given every opportunity to expand so that it may get its costs down and so that it may become easier for the people of Australia to own motor cars which, I repeat, are no longer luxuries. If we have prosperity in this country, this is the one avenue of approach to life which should be made easy for the people. It can only be made easy if it is made cheap, but it cannot be made cheap if activity in the industry is lowered.

The Government has adopted a negative approach to the problem. We of the Opposition believe that the Government, instead of being frightened of activity, ought to encourage it in areas where an increase of activity is needed. The Government has had eleven years in which to overcome the shortage of steel, but we are now worse off than we were eleven years ago. The fact that we have a shortage in this field is a condemnation of the Government. The Minister, in the course of his second-reading speech, complained that the motor industry imposes a heavy strain on our balance of payments situation. The Government says that petrol is the most significant item in this respect. I again say that the Government must accept a high degree of blame for that situation. Let me repeat what I have said on many occasions over the years in this place. I note that the “ Daily Mirror “, in its leading article last night, repeated the theme exactly as I have presented it for many years. Instead of complaining about imports of petrol imposing a heavy strain on the economy, let us try to find oil in this country in a decent, wise and broad way. According to the Budget figures, this year the Government will collect revenue at the rate of £134 18s. lOd. for every man, woman and child in the country. If I throw in what we spend on the oil section of the Bureau of Mineral Resources, if I throw in the subsidy of about £2,500,000 and if I concede the £2,000,000 concession in taxation, we see that the Government of this country, in the search for oil. spends 8s. per head of population out of the £134 18s. lOd. per head that it collects. I have complained again and again of the lack of leadership in attacking this problem in a broad way.

The Government has not given leadership. It has just followed lamely in the wake of unco-ordinated private enterprise in this field.

What a dramatic change would take place if we found oil! The Minister for National Development has expressed his confidence that oil will be found in Australia. If he has that confidence, the people of Australia would support him if he spent on the search for oil more than 8s. of the £134 18s. lOd. per head of population which the Government takes from the people each year in taxation. I repeat: What a dramatic change there would be if we could find oil! We would save on imports and eventually reach the stage where we could export oil. The finding of oil would revolutionize the balance of international payments position of this country. I am not complaining about this for the first time now. For many years this has been a theme which I have pressed and urged. I have been told from time to time, of course, that we have not got the know-how. The Minister supplied the answer to that objection himself when recently he bought brains from overseas. You can always buy brains in any field. The Minister himself, only a few months ago, engaged the Petroleum Institute of France to examine Australia’s oil prospects. We are awaiting with very great interest the report that the institute has made regarding the most likely areas for the discovery of oil.

The Government’s approach to the problems of the economy has been a negative one. Its attitude has been to stop people because they are doing too well; to tell the people of Australia that it is going to make it more difficult for them to own their motor cars; and to cut down demand to conform with the available supply of materials. After all, the Government itself added to our economic problems by lifting import controls on motor cars. Why do we want to bring motor cars from overseas when we can manufacture all the motor cars we require and are in a position to export them? Why do we want luxury imports.

I should like to see a more daring approach to this problem, not a running away from it. I do not want to see anything done that will retard the rate of development in this country. I am certain that if the Government took its courage in its hands and pushed the development of the steel industry, pushed the development of the motor industry, and speeded up the search for oil - spending whatever is required in order to determine whether we have oil or not - nobody would begrudge such expenditure.

J have nothing to say, relatively speaking, about motor-cycles. From the figures supplied by the Commonwealth Statistician for August, I note that about 8,500 motorcycles are sold annually. That -is a relatively insignificant factor, and it will not affect the economy to any extent, no matter what the Government might do. It is not a major item in the sales tax proposals of the Government. On 30th June last the Treasurer spoke in Sydney to the Society of Security Analysts - whatever that may be - and he was reported in the Sydney “ Daily Telegraph “ as saying that General Motors-Holden’s Limited expected to earn £6,000,000 in overseas exchange this year from ‘the sale of Holden cars outside Australia. He cheered and welcomed the prospect. The report continued -

The hope was that General Motors-Holden’s future earnings from export income would substantially exceed the amount its directors considered desirable to remit to .the United States in dividends.

In 1959 the company earned £1,958;000 :in overseas exchange for Australia.

In June last the Treasurer remarked on the expectation of £6,000,000 in overseas earnings and cheered the company on, but in November he is saying that the activity of the company must be lowered. It is little wonder that one finds men like Sir Douglas Copland - highly respected by everybody and particularly favoured by this Government for his advice - being critical of the Government. The press of 22nd November, after the Government’s economic policy was announced, reported him as follows: - . . that in the 43 years he had been in Australia he had never known such a state of confusion about fundamental economic policy as now existed . . . you don’t want to take action that is going to slow down the whole economy, imposing difficulties on people who are in no way responsible for what is happening. On the contrary, the right thing would be to go into reverse gear, namely, impose import restrictions.

The concern should be not with dampening down the rate of progress, but with organizing it to the maximum effort to meet the nation’s demands.

He could not understand what sort of confusion had led to recent enactments in Parliament designed to check progress. They were bound to lead to some sort of disorder and trouble in all sectors.

The present difficulties could have .been overcome by placing mild restrictions on the import of unnecessary luxury items.

I know that everybody on the Government side will respect an opinion coming from that source. I know they will respect the criticisms they have had from supporters of their own party in the business community. It is quite obvious that the Government is embarking upon a course that is not only unpopular, but that also will not produce good economic results for this country. It will not slow down inflation and will not in any substantial way provide more goods. On the contrary, as Sir Douglas says, it will cut down progress, and that certainly is not what Australia wants.

I feel I need say very little more on this subject. A storm of protest has come from the motor manufacturing industry itself, which feels it has been betrayed after being encouraged into an enormous capital development activity in the last few years. The trade unions concerned in the industry are very indignant about what has been done. Motorists’ associations throughout Australia have been very vocal in their protests. One thinks of the great effort that has been made by the Australian motor manufacturing industry during the past eight years.

With import restrictions in operation, we would have been short of transport but for the great effort the motor manufacturing industry made to supply the needs of the country. When import licensing was really on, if the motor industry had not had the enterprise and courage to expand its plants and produce cars in Australia, we would have faced a great failure in the transport affairs of the nation. Yet this is the industry that is singled out above all others for the imposition of a most vicious sales tax. The intention, to use the words of the second-reading speech, is “to bring about the forced lowering of its activities “. We of the Opposition think that the bill shows a complete lack of understanding on the part of the Government of economic problems, a complete lack of wisdom in selecting the .instrument to toe applied to the problems of -the day, and without hesitation we announce our emphatic opposition to the measure.

Senator ANDERSON:
New South Wales

– I rise to support the motion for the passage of this bill and I support the related measures. I think we are ail accustomed to hearing fall from the lips of the Leader of the. Opposition (Senator McKenna) in major debates something that both stimulates us and demands consideration. But quite frankly, in his criticism of these measures to-night, Senator McKenna made some extraordinary statements. He criticized the Government for what he called its reliance on the use of words rather than the performance of deeds. He treated the Senate to a dissertation on the steel industry, delivered a travelogue in regard to the finding of oil in Australia, and made some extraordinary statements concerning employment.

When Senator McKenna was referring to the steel industry, I could not help but recall that Mr. Heffron, the Labour Premier of New South Wales, made a brilliant speech last week when performing the opening ceremony of the new inner harbour at Port Kembla and said that the steel industry in Australia has a marvellous record. No doubt many supporters of the Labour Party who were present cheered that pronouncement. Amongst other things, Mr. Heffron said that our steel compares more than favorably with that in any other country of the world, having regard to our population and our economic strength. But the Leader of the Opposition in this chamber, in order to develop an argument, implied that both the Parliament and the nation had fallen down on the job.

Then, he suggested that the motor car industry should be allowed to run free. The socialists are asking us to let business run free! Back in 1949, when they formed the government of this country, one had to beg on his knees and, figuratively speaking, put himself on the hook in order to get ration tickets so that he could buy petrol to enable him to use his motor car. Altogether, Senator McKenna’s argument did not ring true. His speech to-night was typical of the speeches we hear from him when the Estimates and Budget papers are being considered by this chamber; they never get to the core of a situation.

We have been told a story about General Motors-Holden’s Limited being in the doldrums. Goodness me, it was not long ago that we heard honorable senators on the opposite side blackguarding the Government for the mighty octopus-like growth of that organization. They grab at any straw in order to make out a case, but those of us who have been here for some time and have heard all this before have some difficulty in accepting the Opposition’s submission.

The Leader of the Opposition implied that the Government is out to create unemployment in the motor car industry. In this respect, however, he was not up to his usual standard because the plain fact is that that is not intended at all. What is intended is that the motor car industry shall be steadied down. It was unfair of Senator McKenna to imply that the Government is out to bring about wholesale unemployment in the industry. Indeed, if anything was likely to cause unemployment, it was that statement, which did not become him.

Let us look at the record. In New South Wales, General Motors-Holden’s Limited have said that no retrenchments are contemplated. The British Motor Car Corporation in New South Wales has announced that no retrenchments are contemplated. In Victoria, again, General Motors-Holden’s Limited has announced that no retrenchments are contemplated. The Ford Motor Company of Australia Proprietary Limited, in Victoria, has announced that no retrenchments are contemplated. The manufacturers of the Volkswagen have announced that no retrenchments are contemplated. One could go right through the industry and would find that panic has been created for political purposes, that it is not justified. In the long run, such statements do not make any contribution to the economic security of the great working community which the Opposition purports to represent.

The purpose of the measures we are considering is to implement the proposals to increase sales tax that were contained in the recent economic statement of the Treasurer (Mr. Harold Holt). The rate of sales tax on passenger motor cars, including station wagons and similar vehicles, is to be increased from 30 per cent, to 40 pel cent., and the rate of tax on motor cycles is to be raised from 16$ per cent, to 25 per cent. As has been previously announced, it is provided in the legislation that the increases shall be operative as from 16th November last. The tax of 16$ per cent, on commercial motor vehicles will remain unchanged, and there will be no change in the tax applicable to parts and accessories for all classes of motor vehicles. Tyres and tubes will remain taxable at 12$ per cent., and other parts and accessories for motor vehicles will continue to bear tax at 16$ per cent.

I suggest that it would be folly to argue the merits or demerits of these proposals in isolation. In trying to get to the hub of this issue, that is what the Leader of the Opposition did. I think that he made a grave mistake. These proposals are designed to preserve and to safeguard the economy. It is axiomatic that the Australian economy is subject to constant adjustment. References have been made in other places from time to time to the necessity for this. Honorable senators need only consider the geography of Australia, the vastness of this continent and the variations of climatic conditions to realize that it is necessary for a government, from time to time, to make adjustments in our economy. We have only to observe the effect that fluctuations of world prices have on our primary industries to realize that, in order to protect those industries, such adjustments must be made. These fluctuations of overseas prices are completely beyond the control of any government in Australia. It will be readily seen that we do not live in isolation, and we have to trim our sails and make adjustments in the Australian economy in accordance with changing circumstances over which we have no control. It is inevitable that our overseas balances experience ebbs and flows, as a result of droughts or full seasons, and changing world prices. If our overseas reserves fall - if they are not kept in check - as a nation we prejudice our ability to obtain the goods that are essential for development, particularly the development of our secondary industries. If our overseas reserves fall dangerously, in fact, full employment in this country is prejudiced; our economic security is prejudiced. In his economic statement, the Treasurer referred to this aspect of the matter in these words -

Plainly enough, to safeguard our overseas funds position, we must reduce the excessive internal demands which are the main reason why imports continue to run high. That is the external aspect of the matter.

The internal demand referred to by the Treasurer has created in Australia an employment position which has brought certain difficulties in its wake, particularly in the motor industry, as I shall point out in a moment.

Let us consider the employment position in Australia, particularly in the more populous States of New South Wales and Victoria. For the purpose, let us refer to figures supplied by the Department of Labour and National Service in relation to the position at the end of October last. At that time, unfilled jobs in New South Wales numbered 22,737, while the number of registered unemployed was 11,637. That is to say, Mr. Deputy President, that the number of unfilled jobs was almost double the number of persons seeking jobs. Much the same state of affairs was to be seen in Victoria. At 31st October, there were 16,820 unfilled jobs in that State, and there were 7,534 registered unemployed. I suggest that those figures are indicative of the problem that is being created by excessive demand which has forced up the cost of labour and materials and also prices. We find, Sir, that the effects of the problem are particularly noticeable in two industries - the building industry and the motor industry. I do not intend to deal with the building industry because it is not germane to this debate. We have already dealt with the general position of the economy when we debated the economic measures recently announced by the Treasurer. The bills that we have before us to-night relate to sales tax. If I were speaking in another context, no doubt I would be permitted to say that in recent times we have seen a most extraordinary boom in the building industry, which has resulted in a rat race for the services of the people engaged in that industry. The services of building industry tradesmen have been so much in demand that the cost of building and building materials has been forced up. Putting those considerations to one side, Mr. Deputy President, and coming back to the motor industry, the plain fact is that the industry is out of balance. Because of that, it is doing harm to the economy. That is the reason why it is necessary to take action to correct the position.

If we were to allow the motor industry to run free, I suggest that that would prejudice our prosperity and our ability to bring to this country the goods which are so necessary for the development of secondary industry generally. In fact, if we were to allow the motor industry to run free, as Senator McKenna has suggested we should, we might prejudice full employment in this country. The demands of the motor industry on our overseas credits is greatly in excess of the demands of other industries. When we appreciate that, of a total import figure of about £1,000,000,000, no less than £200,000,000 has been expended on imports for the motor industry some idea of the imbalance to which I have referred may be gained.

Let us consider the development that has occurred in the motor industry. I have in front of me some figures which I want to give because I think they are most interesting. In 1959-60, the value of retail sales of new and used motor vehicles, parts and petrol amounted to £858,000,000, or more than 15 per cent, greater than the 1958-59 value. Registrations of new passenger vehicles for the four months which ended in October 1960 were 26 per cent, higher than they were for the same period in 1959 and 49 per cent, higher than for the same period in 1958. Registrations of new motor vehicles, including commercial vehicles, reached an annual rate of 338,000 in the first four months of 1960-61. More than £212,000,000 was channelled by hirepurchase companies into the financing of retail sales of motor vehicles in 1959-60, or some £35,000,000 more than in the previous year. The motor vehicle industry and associated industries have been among the most strenuous competitors for labour and materials. Employment in these industries has risen very steeply, but even so, a large number of jobs has remained unfilled.

Expansion in the motor industry has been an important factor in the building boom. Imports of petroleum products and other items clearly attributable to the motor industry were running at an annual rate of £200,000,000 in the recent September quarter, compared with a rate of £152,000,000 in the September quarter of 1959. It is interesting to note that imports of motor vehicles and finished components have increased in value from £16,900,000 in the September quarter of 1959 to £25,000,000 in the September quarter of 1960, or an increase of almost 50 per cent. Total petroleum imports increased in the same period from £20,900,000 to £24,500,000, or by more than 17 per cent.

Australia is one of the four countries of the world in which there is now a motor vehicle for fewer than every four persons of the population. I do not want to go very far beyond the points I have already made, but I contend that it is essential, in the general interest, that the level of activity in this field should be lowered, so that expenditure on imports may be kept within reasonable limits and so that other essential industries may receive an adequate share of the Commonwealth’s resources. It is for those reasons that the increase of sales tax has been proposed. If we want to maintain full employment and the state of prosperity that we enjoy in Australia, and if we want to ensure that our living conditions remain the equal of those to be found anywhere else in the world, quite clearly we have to see to it that our overseas credits do not run down. Time and again we have heard in this place the plea that we should try to build up our secondary industries and encourage diversification of industrial activity so that we shall not continue to be so greatly dependent on primary industry. If we are to develop our secondary industries, we shall need commodities that are essential for that purpose. If we have no overseas funds with which to purchase those commodities, the development of our secondary industries will suffer. We have to maintain a balance between the various requirements. We cannot allow expenditure on imports to run only in the one direction.

The motor industry is one of the most important industries in the Commonwealth. That being so, we cannot allow it to get out of balance, nor can we allow the demands of that industry to prejudice the requirements of other industries. I should think that that is a simple matter of economics and that there would be ready acceptance of it in any school of economic thought. The statistics plainly indicate that the motor industry is out of balance. That being so, I should think that the Opposition, far from opposing the proposed increase of sales tax, ought to say, “ We recognize that there must be balance in the industry. Because we believe that we represent the working men and women, we want to ensure that they remain in employment. For that reason we do not want to prejudice the steel industry and other secondary industries because they provide a great volume of employment for working people.” If one does not want to take this action, quite clearly one should realize that the motor car industry is running slightly away from, and is out in front of, other Australian secondary industries. It is not going along consistently with them. For that reason, we say that it needs to be steadied. That does not mean that we advocate unemployment in the motor car industry; we do not. We say that the industry needs to be given a steadying influence.

I am quite convinced that the great mass of the Australian people see in these proposals the action of a government which is prepared to come out against the tide of great press publicity and stimulated opposition and do what is necessary to preserve our great prosperity, our future, and indeed in the ultimate the employment of the ordinary men and women in Australia. I support the bill. .1 am quite convinced that time will be on our side in this matter, as it was when we took economic measures in the past. Time will prove that when the people have security, they will recognize that this Government has the courage to do what has to be done.

Senator COLE:
Leader of the Australian Democratic Labour Party · Tasmania

– Mr. Deputy President, I wish to bring before the Senate the objections that the Australian Democratic Labour Party has to this sales tax measure. First of all, part of the policy of this party is the abolition of these secondary taxes because they increase the costs of the ordinary family man. But despite that policy, if we thought that it had been shown that this measure could help the Australian economy, we could have deviated a little from that policy in order to support this measure. However, when we look at the secondreading speech of the Minister for Civil

Aviation (Senator Paltridge), we can find no arguments that change the view that we hold at the present time.

I should like to read certain extracts from that speech. Too much was left to luck and not enough information was given about how the various proposals he was bringing forward will affect the economy. He said -

. certain materials such as steel required for the purposes of other essential industries are in short supply, and those industries suffer accordingly.

As he has made that statement, I ask him what industries are being affected by the shortage in the supply of motor car steel. I think that information should have been put in his second-reading speech.

Senator Henty:

– Bins cost Dewerisp Products Limited of Scottsdale twice as much money because they had to use imported steel. You asked a question and I have told you the answer.

Senator COLE:

– That is a very important matter and I am sure it will have a great effect on the Australian economy! It must have cost that firm at least £500. The Minister also said -

The Government has a full appreciation of the great value of the motor industry to the Commonwealth, but if we are to have a well-balanced economy we must realise that there are limits to the resources which the Commonwealth can afford to expend in this industry, having regard to the essential needs of other sections of the economy.

That is still airy-fairy. The Government has not given any illustrations to the Senate of what it is trying to do. We should know such things if we are to make a balanced judgment of the Government’s taxation proposals.

The Minister also said in his secondreading speech -

. the motor industry creates a demand for greatly increased imports, not only of vehicles and parts, but also of petroleum products which are needed for the running of the enormous number of vehicles now in use.

Will the Government’s action reduce petrol sales? I say that it will not, for the simple reason that if the Government stops people buying new cars, they will go to the secondhand car dealers to obtain means of transportation. So, there will be more cars on the road, using petrol, than there would have been if the Government had not reduced sales of new cars. People will still have their vehicles, and all the Government’s action will do is prevent people from buying new cars and force them to buy cars from second-hand dealers. There will not be any diminution in the amount of petrol used in Australia.

Senator Ridley:

– Nor in the amount of rubber used.

Senator COLE:

– That is automatic. The use of those sort of things will be enlarged. The Minister also made this point -

For the financing of the high sales of motor vehicles, a large volume of funds has been channelled through the hire-purchase companies . . .

That statement rather amuses me, after what the Government has done during this session of Parliament. It is afraid of the volume of hire-purchase transactions, but it has granted licences to fifteen country television stations in Australia.

Senator Mckellar:

– Do you not want television?

Senator COLE:

– I do not care whether we want it or not. If the economy of this country is in such a state that the Government has to take these measures, it had no right at all to grant licences for fifteen television stations, as it has done in the last few months, because the granting of those licences will lead to the importation of machinery to set up the stations and a tremendous number of hire-purchase transactions in the buying of television sets. The additional advances made by hirepurchase companies will run into millions and millions of pounds. We know that the introduction of television gave hire purchase the biggest boost that it was ever given in this country. I am not saying that I am against the country people having television.

Senator Marriott:

– You want two bob each way.

Senator COLE:

– No, I will have one and sixpence each way. I am not against the country people having television, but the Government says that the Australian economy is in such straits that it has to take these measures and it has chosen to place this increased tax on the product of a very efficient and flourishing industry.

Senator McManus:

– A necessary industry, too; not like television.

Senator COLE:

– A very necessary industry. The television stations and the hire- purchase companies which provide the money for the purchase of television sets have not reached the degree of efficiency attained by the motor industry, which produces goods for internal use, whereas; material must be imported for television* sets and to establish the television stations,.

– And the farmer.

Senator COLE:

– And the farmer, of course. He is not receiving the treatment he should be receiving, as was mentioned in another place to-day. As a result of the lifting of import restrictions, we have coming into this country millions of paperback publications, including comics. The Australian publishing industry is being destroyed because of the action that the Government took, without thought for the future of the economy.

I believe that the bill is vicious. It will affect the Australian wage-earner in more ways than one. Instead of restricting the production of motor cars, the Government should follow the example of West Germany, which is encouraging every family to own a motor car. We can see how West Germany is increasing the exports of Volkswagens and other cars. The Government should be encouraging exports instead of trying to destroy a very efficient industry. In estimating the annual registrations the figures for October were taken. Those figures were affected by the introduction of the new Ford Falcon, which probably resulted in a substantial increase in sales in that month. However, that was the month that the Government selected as the basis for its calculations of annual registrations. We believe that this imposition is against the interests of the people, that it will hurt the wage-earner and produce unemployment. Senator Anderson mentioned quite a number of firms which had declared that they would not put off workers. He did not mention the firms which are reducing staff.

Senator Marriott:

– Which are they?

Senator COLE:

– The Chrysler organization, the Standard organization and so on.

Senator Marriott:

– Who is “ so on “? Do you know of any one?

Senator COLE:

– I have just mentioned the Chrysler and Standard companies. Does the honorable senator understand? Unemployment is being caused. It might be said that there are hundreds more jobs than there are people available to fill jobs, but when a person is put out of a job in the motor industry he is unemployed. There may be economic reasons why he cannot move away to take another job. The Government is causing hardship to these people, just because it did not take the right action at the right time.

Senator Henty:

– Should we not have lifted import restrictions?

Senator COLE:

– The Government should have lifted them by degrees, instead of making a good fellow of itself by lifting them all at once. The Australian Democratic Labour Party will oppose this measure despite the fact that the Government claims that it is essential. We cannot concede that this measure is the only way to correct Australia’s economy, which would not be in such a mess but for the Government’s past actions.

Senator WRIGHT:
Tasmania

.- The Senate to-night is considering a number of bills that are being taken as a group for a technical purpose. Those bills are designed to achieve one simple object - to increase the rate of sales tax on motor cars and station wagons from 30 per cent, to 40 per cent. The increase has been brought about by the economic circumstances confronting the country. Higher taxation of the form proposed by the legislation now before the Senate is the remedy that is advanced to correct the present situation.

The trend in the economy indicating inflationary tendencies - rising prices of goods and services - has been evident for all of this year and stems from something that took place last year. Activity on the stock exchange and land speculation was adverted to in the Budget speech delivered by the Treasurer (Mr. Harold Holt) in August last. The trend was evident to the casual observer.

We live in a country where it is necessary to analyse the reason for this continuing inflation before one passes judgment on the remedies to be applied. Each of us has a responsibility in this respect. When 1 see the differences of opinion among the experts I am daunted to enter upon the field, but, holding a position in this Parliament, I do not think one is justified in disclaiming the responsibility of making one’s judgment on the appropriateness of this proposal.

Our economy depends to a great degree on our export trade to finance the importation of raw materials, which are the sinews of our development. The Government has limited constitutional powers and it is a notorious fact that the federal form of Government shows essential signs of weakness. The States have responsibilities but they do not seem to take any concerted action at present about the national economy. That has ‘been evident for a number of years. That has been the situation despite the fact that the States have become dependent on the Commonwealth to supplement allocations by the Australian Loan Council so that they may finance their public works. Such supplementary grants are made to the States without any restraint or qualification as to the way in which the States should integrate their activities with the economy of the country.

We in this country have a unique institution the significance of which seems continually to be ignored. I refer to our wagefixing authority. The Labour Party bears the chief responsibility for the promotion of irresponsibility in regard to this institution. Every Labour government and every

Labour opposition exerts the utmost pressure in an irresponsible degree to raise wage factors in our economy beyond the true value of what should be assessed as the wage unit. Our Conciliation and Arbitration Commission, particularly when it was paying regard to quarterly adjustments to the cost of living index, permitted rapid inflation for the first three or four years of this Government’s reign of office. After a temporary lull, in 1953, when the economy was stable, the commission issued decrees for wage advancements which were unrelated to economic values. The appalling tragedy of all that is that the prosperity of the primary producing section of the community, which is still responsible for 80 per cent, of our exports, has been reduced significantly while the artificial inflation in the wage section of the community has increased. That leads one to the statement that the internal contrariness of the economy is having an effect upon our exports. Although the volume of our exports has expanded, they inevitably bring prices which, in the increasing competitiveness of external markets, are reducing. When one sees the extent by which prices exceed internal costs of production and transportation one becomes aware that the prosperity of our export industries is reaching a dangerous level. That is chiefly caused by the ravenous demand made on the export industries by internal costs in Australia. That level of costs is not solely but chiefly the product of irresponsible wage-fixing tribunals, aggravated by the urgings of State Labour governments as against federal decisions. So you have every effort directed towards promoting artificial inflation with the money that is poured into the economy following these wage-fixing decisions. Such decisions increase costs and create a demand that threatens our export industries. The application of those wage fixations to the Public Service last year - this is a field in which the Commonwealth Government has complete power - imposed an additional burden on the budget of between £16,000,000 and £18,000,000. I find no recognition of the fact that internal costs are promoting a grave danger to the prosperity of our exporting industries. Of course, it is their prosperity, related to the degree to which we require imports, which governs the level of our external reserves.

The only other point I want to make by “Way of preliminary explanation of the view 1 am compelled to take is this: We are mow considering this matter in 1960. We have just passed through the decade of the fifties which, from the viewpoint of negotiating our way through our external trading, and having regard to increasing costs, has been easy. But every year during which the current state of affairs continues will intensify the competition that we shall meet abroad. In my view, the easy assumptions thai have been entertained in relation to the ‘fifties would be misleading if applied to the development of our economy in the ‘sixties. I believe that that places a special responsibility upon one. I am prepared to accept my responsibility as an individual member of the Parliament. That responsibility bears a relationship to the fact that the Senate has authority constitutionally in respect of bills such as the one we are now debating. The Senate has the authority, and therefore the duty, to review proposals of the kind we are now considering and, if necessary, to reject them..

In what way is it suggested that this proposal to increase the sales tax on cars and station wagons will correct our external reserves position or stem the inflation of costs within Australia? Let me refer to a matter that was the subject of contention between Senator McKenna and Senator Spooner, Senator McKenna referred to the fact that the Australian motor industry was making an increasing contribution to the volume of our exports. Senator Spooner asked Senator McKenna whether he would recommend an increase in the production of cars for the purpose of expanding our exports. Since then Senator Cole has spoken, and there has been an exchange of views about the possible effect of these proposals on the volume of our export of cars. I found that exchange of views interesting, because I have often rallied to the call which has gone forth on my side of politics and which has suggested thai the only way in which to extricate yourself from an inflationary condition is to produce your way out of it.

I do not say that this increase in sales tax will be imposed on export cars: it will not. But I have not read a word in the second-reading speech of the Minister for

Civil Aviation, or in the second-reading speech delivered by the Treasurer in another place, to the effect that this increase in sales tax is being imposed to restrict internal sales and that it will have the effect of expanding the surplus for export. If such a statement were to be found in the Minister’s second-reading speech, and if there were reasons to support the view that that would be the result, I should think it would have a positive appeal. When I spoke about the Government’s economic proposals generally, I referred to the comfort that one got from the fact that the Minister for Trade (Mr. McEwen) had emphasized the need to expand markets and to promote exports in a positive manner. He demonstrated how the Department of Trade had made a noble contribution to the Government’s management of the economy over the last five years by exercising all its skill and effort to promote markets. That was a theme which appealed to me.

I remind the Senate that the Minister for Civil Aviation, in his second-reading speech, referred to the very high rate of absorption of materials and labour by the motor industry, with a consequent increase in imports and an increased demand for steel. These proposals have been put forward for the purpose of dampening down that activity and of reducing demand. If honorable senators look at the “ Treasury Information Bulletin “ of October last they will see that the value of our recorded exports of vehicles and parts in 1959-60 was £9,000,000 f.o.b. For the July to September quarter of 1959, the value of those exports is shown as £1,000,000, and for the corresponding quarter in this year it is shown as £4,000,000. There may be errors in my translation of the figures, but if those figures are correct and if they can be multiplied by four without inaccuracy, it will be seen that the value of the motor industry’s exports in the current year will be £16,000,000. If the proposals now before us were directed to producing a restriction internally and also an expansion of our exports, I should think that they had a reasonable relation to the correcting of the imbalance in our overseas reserves.

If honorable senators look at the degree to which imports for the motor vehicle trade have expanded since we became aware of this inflationary trend - since 15s. was added to the basic wage in about April or May of 1959 and 28 per cent, was added to margins in about November last, making a load on the economy of not less than £200,000,000– they will see that the value of our imports of petroleum products and oils in 1959-60 was £100,000,000 and that the value of our imports of vehicles, parts and accessories, excluding aircraft, was £88,000,000. It will also be seen that for the July to September quarter of 1959 the relevant figures were £23,000,000 and £18,000,000, and that for the corresponding period in 1960 they were £27,000,000 and £26,000,000. There was certainly a relatively high increase in the July to September quarter of 1960 as against the corresponding period in 1959. But there was a relatively high increase in the value of our total imports between those two periods. The value of our total imports in the July to September quarter of 1959 was £205,000,000 and in the corresponding period in 1960 it was £281,000,000. So 1 remain unconvinced, Mr. President, that the proposal to increase sales tax on cars and other vehicles sold in Australia will have a substantial effect upon our external reserves position. I remain completely unconvinced by the argument that an increase in the sales tax on this essential commodity - used, as we have been reminded, by every family in Australia - will have any effect in reducing inflation in this country. It may have the effect of dampening down activity within the industry and depressing sales for a limited period. But, Mr. President, one speaks here now, as on most occasions, not by virtue of one’s own judgment but in the light of experience yet unexplained.

In May, 1956, we were confronted with an upsurge of the prices of materials and services. We had a proposal put before us then to lay a temporary restraint upon the motor industry, and the sales tax on cars and sedan wagons was increased from 16?, per cent, to 30 per cent. What was the effect? Let me quote the registration figures. In 1955 new car registrations amounted to 168,914. In 1956 they dropped to 143,111. Tn 1957, the figure was 148,915; in 1958, 154,873; and in 1959. 163,174. lt is the increase shown by those figures that this high rate of sales tax is directed to correct.

Mr. President, the impost of 1956 was not temporary. It has continued, lt is not being reduced in order to reduce prices, lt is being increased. The figures that I have show that the list price of a Holden sedan in 1955 was £870, and the tax payable was £123 5s. In 1959 the list price had increased by only £15 to £885 but the tax had gone up to £221 13s. lOd. At the present time the list price is £885 and the present proposal is to increase the tax to £295 lis. lOd. I have taken as an example another unit in the motor car industry. Id 1955 the list price of a Morris Oxford car was £940 and the sales tax was £127. In 1959 the list price had increased by only £4 to £944 and the tax had increased to £222. At the present time the list price has gone up by another £2 to £946 and under this proposal the tax will be £296.

If Broken Hill Proprietary Company Limited increases the price of steel, is not that increase felt right throughout the economy in necessarily increased costs? In relation to the motor car industry, if the Government increases an essential element of the cost of a car from £123 to £295, to quote approximate figures, is it not aggravating instead of reducing inflation? I cannot answer that question otherwise than by saying “ Yes “. I remind the Senate that the total yield of the sales tax on motor cars and station wagons in 1955-56 was estimated by the Treasury to be £23,500,000. The estimate of the Treasury is that in 1959-60 the yield will be £48,000,000. The motor industry tells us - and the statement is still uncontroverted - that repeated requests have been made for a reduction of the impost, but the reply of the Government has been that if that revenue were lost it would have to be found from other sources. The impost is being continued as a revenue impost although it was initially imposed to bring about economic adjustment.

Therefore the suggestion that this will be a temporary tax is one that does not justify confidence, in my view. If, with a fair degree of confidence - which is all that one requires in a political assessment of this sort - we could regard this as a temporary tax. imposed for, say, six or nine months, then I, for my part, would not oppose it. I am not moved by the references that have been made to impending unemployment. I regret that these adjustments will create dislocation in employment in some places, but my assessment is that they will noi cause wholesale unemployment. I regret that these adjustments will necessitate the revision of production programmes, the revision of which is always costly. A smooth flow of production is the only basis upon which business management costs can be kept down. lt may be said that this is a temporary impost, inasmuch as it will deter retail sales to some degree for a period of six months. But does not the experience of the Australian economy show that if an impost is kept on cars as a revenue item, the surge within the country and the money power to produce the cars that the people demand will overcome all resistance and that as a result inflation will be aggravated? The impost on the motor car industry in 1955 yielded £23,000,000. To-day the impost yields £48,000,000, and if this extra impost goes on the yield will be £60,000,000. It would be, in my opinion, just as vicious a factor aggravating inflation as would another increase in the basic wage. I would regard an increase in the basic wage as completely irresponsible and not in the interests of the recipients of the basic wage, who are deceived by artificial increases and who should have guarantees of genuine increases when they can be backed by real value. There is the further thought, Mr. President, as the article in the “ Bulletin “ last week showed, that undoubtedly all this manipulation of the economy by Treasury and fiscal measures increases the power of the Treasury, so much so that there are those who disparage a mere parliamentarian for intruding his duty into such an expert and complicated field. Well, we must bear that criticism, but the Treasury gains ground in respect of the control of the economy of this country every time a proposal of this sort is put forward. If we are to become so desperate that we are going to abandon what we claim to be a free-enterprise economy to an economy controlled by fiscal measures, that is a situation which I, in every election year, be it long or short, will be bound to oppose.

It is my view that increases of taxation, not only in the sales tax field, but also in the tariff field, the income tax field, and especially in the company tax field, introduce into the economic sandwich, if I may use a metaphor, a new layer of increased costs, which makes the fodder that the ordinary working man gets less palatable. So, Mr. President, I regret that I cannot convince myself that this proposal is at all appropriate either to stem inflation internally or to correct the situation regarding the external balances, and I oppose the measure.

Senator RIDLEY:
South Australia

. Mr. President, I oppose the proposal to increase sales tax on motor cars from the present rate of 30 per cent, to 40 per cent. I find it impossible to believe that any person who has any knowledge of the vehicle industry in Australia, and has given any thought to this matter, could do other than oppose the bill. I believe that if many members of the Government parties had been afforded an opportunity to consider this matter before the bill was introduced into this Parliament, they, too, would have found it impossible to support the proposal. I find support for this opinion in the many statements concerning sales tax that have been made by them when other measures have been before this chamber for consideration. I sympathize with those members of the Government who feel that, out of loyalty, they will have to vote for this measure, but who would have opposed the proposal if it had been placed before them prior to the introduction of the bill. I realize the position in which they find themselves to-night.

I adopted as the subject of my maiden speech in this chamber, on 27th August last year, the use of sales tax as a medium of economic control or the bringing about of unemployment. In view of the pertinence of the remarks that I made on that occasion to the subject now under consideration, I should like to repeat them to-night. At page 362 of “Hansard”, volume S.15, 1 am reported as having said -

To my mind, the lack of any indication whatsoever that there will be any remission of the sales tax which has been added throughout the years to various consumer commodities, is one of the most serious omissions. Honorable senators on this side have devoted a great deal of time to criticism of sales tax as a worthwhile, honest medium of raising revenue. J think the fact that it is not an honest medium is generally recognized and conceded. To my mind, it is equally repugnant to use that form of taxation as a method of either curbing expansion or of creating unemployment in any industry.

I propose to devote my contribution to the debate to my experience of the effect of increased sales tax on motor vehicles in the motor-body building industry. When sales tax was increased to its present level, both the Prime Minister (Mr. Menzies) and Mr. Holt, who was then Minister for Labour and National Service, said that the purpose was to reduce imports of petrol, thus saving dollar expenditure. It was stated also that any unemployment resulting would not be in the nature of real unemployment, but would only be disemployment. I understand that as a result of representations by both the trade union movement and certain companies engaged in the industry, the Prime Minister was satisfied that the increase in sales tax had achieved the purposes for which it was designed. I can only assume, from the lack of any mention of it in the present Budget proposals, that that satisfaction is shared by members of the Government as a whole.

I quarrel with the Government on that issue for a number of reasons. To my mind, it is clear that the expectations of the Government when it increased sales tax on motor cars were not fulfilled, and continuance of increased sales tax is not good government for these reasons -

It created unemployment in the motor vehicle industry;
There was a disparity in its effect as between States;
There was a disparity in its effect as between company and company;
It was a handicap to Australian manufacturers in competition with overseas companies;
It treated the motor car industry as a luxury industry;
It was a visible or invisible tax on every section of the community; and
It caused a depression of the living standards of the Australian people, with only an infinitesimal, if any, saving in the consumption of petrol.

I can only say that from the time this proposal was first mentioned in the newspapers and brought forth some comments from various employer organizations and organizations representing the manufacturing side of industry, almost all of the points I enumerated in my speech have been restated by spokesmen for the manufacturers. I desire now to quote a report that appeared in the “Sydney Morning Herald “ of Wednesday, 16th November this year, under the heading “ Car Price Increase May Range From £46 to About £198”. It was as follows: -

In Canberra last night the secretary of the Federal Chamber of Automotive Industries, Mr. W. W. D. Daunt, said the 40 per cent. sales tax increase on passenger vehicles would have a very harmful effect on the motor industry, Australia’s most important secondary industry.

These vehicles, for the most part, were used for getting people to and from work and for countless other essential tasks.

What the Government had failed to consider was that increases in sales tax levels on essential goods such as motor vehicles were inflationary in tendency, Mr. Daunt said.

An important result would be the disruption of production schedules, resulting in unemployment and waste of effort.

Production was planned months, and even years, ahead and stability of market conditions was a prerequisite to orderly and economic production.

The motorist and the motor industry in its widest sense bore the brunt of the emergency economic measures brought in in the “ little Budget “ of March, 1956. That they were to be subjected to further discriminatory measures was almost unbelievable. He said the cost of living had increased considerably since March, 1956, but the average price of cars, taking the more popular makes as a sample, showed that there had been, in most cases substantial reductions. Governments of other countries tried to encourage the orderly growth of efficient industries which were trying to develop export markets for their goods, but the Australian Government apparently singled them out for discriminatory fiscal treatment.

Leaders of industry and commerce in Sydney condemned the new measures announced by Mr. Holt to stabilize the economy.

That report not only supports many of the points I have made, but it also supports the argument advanced by Senator Wright. 1 wish to discuss a matter that was touched on by Senator Wright and also by Mr. Daunt in the statements that I have mentioned. I refer to the question whether the slowing down of the motor industry in Australia will prejudice its ability to compete with the motor industries of other countries. I should think that any one with a knowledge of the mass production of motor cars would agree that, if there is one thing that is essential for the economic production of vehicles, it is a high volume of production. If the Australian industry had a low volume of production, it would be quite impossible for it to compete with the industries of other countries which had a high volume of production. If the number of cars coming off the production line is reduced from 100 per day to 50 per day, the tooling costs for the cars coming off are doubled.

I think it was Senator Anderson who suggested that the proposed increase of sales tax would not cause unemployment in the motor industry. I think that that suggestion has been countered by the comment of Senator McKenna that the Treasurer (Mr. Harold Holt) did not deny that that would be so when he announced the economic measures recently. I say that the increase of sales tax will most certainly result in unemployment in the industry. As Senator McKenna has said, the secondreading speech of the Treasurer on the bill embodying the proposal to increase sales tax on motor cars in 1956 was in almost identical terms to that made on the present occasion. One of the few differences is that in 1956, instead of the word “ unemployment “, the term used was “ disemployment “. There is no doubt that the 1956 increase resulted in loss of employment in the industry, as I stated when I spoke in this chamber in August of last year. Chrysler Australia Limited has reduced its staff by 1,000 persons, and if that is not retrenchment, I should like to know what is.

I assure honorable senators opposite that it is almost as bad to be retrenched with the knowledge that there is another job to which you may go, as it is to be out of work for some time. Every employee is entitled to feel secure in his job. If he fails to make good, perhaps he should expect to be retrenched, but if he makes good at his job, surely it is bad business if his employer is forced to retrench him because of measures that the Government has introduced. On the previous occasion that sales tax on motor vehicles was increased, employees who had given a lifetime of service to the motor industry were thrown out of work. I contend, therefore, that the question of loss of employment because of the increase of sales tax cannot be dismissed simply by saying that the employees who are retrenched will be able to find jobs elsewhere.

The pith of this matter, Mr. Acting Deputy President, is not that it was necessary to restrain the motor industry, which is a debatable point, but whether an increase of sales tax is the proper method to attempt to do that. I have no doubt whatever that if the Government had consulted people who know something about the industry, other suggestions would have been made for the purpose of controlling the situation that the Government alleges to have arisen. I suggest, for instance, that the Government could have endeavoured to stop the importation of the luxury cars that have been coming here in increasing numbers since the removal of import restrictions. Per haps it would have been possible to impose a higher rate of duty on vehicle panels which are imported and need only to be fabricated and manufactured into motor bodies. I am positive that there are many methods that the Government could have adopted, instead of increasing sales tax. The Government may deny that the purpose of the measure is to augment its revenues, but I am sure that that is the real motive.

An aspect of this matter which I think is of particular importance, to honorable senators from South Australia is that the increase of sales tax on motor vehicles will have a greater effect on employment in that State than in other States. I mentioned this matter when I spoke about the previous increase of tax, and the matter has also been referred to recently by Mr. Ferguson who, if I remember correctly, has been appointed federal president of the Associated Chambers of Manufactures. Let me read the following newspaper report of comments made by him: -

In South Australia, which had more than 11 per cent, of factory workers in the automobile industry, the impact of increased sales tax on motor vehicles would be more serious than in other States where industrial employment was spread over a wider industrial range and with less emphasis upon the importance of the motor industry.

According to the newspaper report, he added -

It seems difficult for South Australia, therefore, to accept without some protest the singling out of a particular industry for special treatment.

It does not require much thought to appreciate the force of that argument. Not only is 11 per cent, of total factory employment in South Australia directly related to the motor industry, but in addition, many other persons are employed in the industries associated with the motor industry. This means that a much greater percentage of factory employment in South Australia will be affected by the increase of sales tax than will be the case in other States.

A representative of one of the manufacturing companies associated with the motor industry has informed me - I am now speaking from memory - that for every person employed directly in the motor industry, there are four more who are employed indirectly, not necessarily in Australia. Therefore, for every employee in the motor industry there are four other employees who are more or less dependent on him. A reduction of, say, 25 per cent, in the labour force in this industry would mean that four times, as many people employed in other industries would also be put off. work. Anybody with any knowledge at all of the position in South Australia knows that unemployment in the motor car industry creates an added problem. If employees lose their jobs at General Motors-Holden’s Limited or Chrysler Australia Limited, invariably there is a reduction in employment in other industries. There just are not sufficient employment opportunities for those people to be able to obtain other jobs.

The statistics on an Australia-wide basis do not portray correctly the position in South Australia, because, once the South Australian motor industry slackens, all other industries slacken wilh it, and employment opportunities disappear. That has been the position in South Australia for years. If a man cannot get a job at General MotorsHolden’s Limited, it is practically impossible for him to obtain a worth-while job anywhere outside that company. On that score alone, I am positive ‘that South Australian’ senators on the opposite, side of the chamber, if they had been given an opportunity to discuss this proposal before its introduction,, would not have supported such a measure,, the effects of which will undoubtedly fall- more heavily on South Australia than on the. other States-.

Earlier in the debate, Senator Anderson cited some figures from which he seemed to gain some satisfaction1. He may not have given the source of them1, but I think he said that the Minister for Labour and National Service (Mr. McMahon) had stated that about 1,000 panel beaters and 500 mechanics were required. I should like to quote from a copy of a letter which, was sent from the Vehicle Builders Employees Federation, of Australia to the Prime Minister (Mr. Menzies),. Mr. Calwell and Senator McKenna. The letter reads -

If am directed by the Vehicle Builders’ Employees. Federation of Australia to enter an emphatic protest against the new increase in sales tax on motor cars. In addition- the West Australian Vehicle Builders Industrial Union- of Workers requests to be associated with this protest.

We share the fears of the employers in. the industry that this new tax will bring about dismissals of labor.

Already developments are taking place which clearly indicate that it is the Government who will benefit by increased revenue and that manufacturers will lose sales and’ consequently workers will- lose their jobs-.

The statement. by the Minister for Labor M*. McMahon thai l’,000 panel beaters and SOO mechanics are required for the industry is misleading. These tradesmen are not required for the manufacture of motor cars. They are required for the- repair section. It is the manufacturing, of motor cars that will, be affected by the new measures, and: as the workers in this section are mainly semi-skilled they cannot hope to find employment in repairs.

That sentence alone, Mr. President, indicates the Government’s complete lack of knowledge of the industry,, because itwould be as clear as crystal to anybody in the industry that in- this day and age neither panel beaters nor mechanics are employed, in the mass production of motor cars. So, 1 suggest that the statement that 1,000 panel beaters and 500 mechanics are required, as an indication that there is a shortage of workers in the industry which should be made up, only displays ignorance of the industry. The letter continues -

The Federation places no reliance on the Government’s assurance that this new increase will be removed at a later date, simply because the Government did not honor its promise in 1956 when a similar increase in sales tax was imposed.

Our members feel that the Government’s action will jeopardise their opportunity to accrue long service and so deprive them of. the benefits of. long service leave.

It is further believed that had it been necessary for the Government to introduce measures to curtail spending on luxury items, then imported luxury cars’ should have been the- starting point together with many other luxury items. These types of motor cars provide very little employment and satisfy the needs of a very few.

Australia to-day as one of the highest motorised’ nations in the world’ is dependent so much on road transport, due1 mainly to our poor public transport, and our geographical status.. To cater for the important aspect of our development manufacturers in 1952 heeded the Government’s pleas to manufacture more of the component’ parts of cars in Australia.

With this tremendous development has come, continuity of employment out of which has grown good industrial relations. These features have brought benefits to all.

Last but by no means least; has it been forgotten the vital part the- motor industry played during the war years? It appears by the severe measures meted out that this industry is to pay dearly for being efficient, and the public are also to pay for having sufficient faith to support and buy Australian made products.

Workers in the motor industry are incensed at the Government’s action and request that the measures be withdrawn or the legislation defeated with the subsequent consequences.

If that letter indicates nothing else, it indicates that the representatives of the manufacturers and the representatives of the workers in the industry are at one in their opposition to this measure. It may be appropriate, Mr. President, to say that this is not the first occasion on which there has been an indication of solidarity between the workers and employers in this industry. In point of fact, one of the most outstanding features of the growth of this industry, from its commencement as a motor body building industry to the present time, has been the ability of the representatives of the union, on the one hand, and the representatives of the employers, on the other hand, to co-operate with each other and reach agreement on matters without industrial strife. It can truly he said that the Vehicle Builders Employees Federation has played as great a part in the development of the motor car industry in Australia as any company has.

In the days following the 1914-18 war, when there was a shortage of ships to bring cars to Australia, a need for the mass production of motor car bodies was created. Two companies began production in South Australia - T. J. Richards and E. W. Holden and Sons. The Holden family started that firm. The two firms began the mass production of motor car bodies and, with tariff protection, reached the stage where they were quite capably fulfilling the needs of the market at that time. Then, in about the middle 1920’s, when it was possible to import cars, agitation came from the side of the industry other than the manufacturing side for the lifting of the tariff embargo to enable cars to be brought into Australia. What has been described as a wedding of convenience started at that time. It was most certainly a getting together of the trade union movement and the manufacturers - the two firms I have mentioned, together with members of the Labour Party - in order to defeat that move.

I believe it is true to say that the Australian motor car industry has been given no cause to proffer thanks to any government other than a Labour government, from the commencement of the industry in Australia. Mr. President, I ask for leave to continue my remarks at a later stage.

Leave granted; debate adjourned.

page 1954

ADJOURNMENT

The PRESIDENT (Senator the Hon. Sir Alister McMuIlin). - 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.

Question resolved in the negative.

page 1954

INSURANCE BILL 1960

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 Civil Aviation · Western Australia · LP

– I move -

That bill be now read a second time.

In 1932 the Commonwealth took over from the States the legislation relating to life and general insurance. In 1945, separate legislation was passed relating to life insurance. This bill provides for amendments to the Insurance Act 1932-37 which applies to all forms of general insurance business carried on in Australia. The general basis of the legislation is a requirement that insurers maintain deposits with the Treasurer which will be available to satisfy any final judgment obtained by a policy owner in respect of a claim made under his policy.

The principal purpose of this bill is to increase the deposits required from insurers consistently with increased premium incomes and increased property .values and increased property values. Those who propose in the future to commence insurance business in Australia will be required to lodge a minimum deposit of £10,000 in place of the present minimum of £5,000. After the commencement of business the deposit is reviewed annually and varied so that it represents £1,000 for each £5,000 of premium income up to a maximum deposit which is now being increased from £40,000 to £80,000. An exception is made of foreign companies, the deposit from which will be a fixed sum of £100,000.

Apart from these amendments, which are designed to maintain the protection of policy holders provided by the 1932 legislation, the bill provides for other changes of an administrative character. Definitions have been modified; the procedures to be followed in the event of an insurer ceasing business or winding up his business are provided in more detail, and the various references to life insurance, which is now governed by the Life Insurance Act 1945- 1959, have been eliminated. The purpose of these clauses can be explained in detail during the committee stages of the debate.

I commend the bill to honorable senators.

Debate (on motion by Senator McKenna) adjourned.

page 1955

APPLE AND PEAR ORGANIZATION BILL 1960

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 Civil Aviation · Western Australia · LP

– I move -

That bill be now read a second time.

The main purpose of this bill is to amend the Apple and Pear Organization Act 1938-1953 to increase the number of representatives of Tasmanian apple and pear growers on the Australian Apple and Pear Board from two to three persons.

The bill also provides that the representatives of Tasmanian fruit-growers shall be appointed to office on the nomination of the State Fruit Board of Tasmania, a statutory authority set up under the Fruit Board Act of that State, and that there shall be two members to represent the growers of southern Tasmania and one member to represent the growers of northern Tasmania.

These proposals give effect to the request of the fruit-growing industry in Tasmania, with the strong support of the Government of that State, that appropriate recognition be given to the dominating position in the export field of the Tasmanian apple industry, which is responsible for over 60 per cent, of the total apple and pear exports from Australia.

The board, as originally constituted in 1938, included four representatives of Tasmanian growers, but this number was reduced to two when the size of the board was altered from sixteen to twelve in 1947. The proposed alteration to the constitution of the board will give Tasmania four votes out of thirteen on the board - grower representatives three votes, exporter representative one - as against three out of twelve, as at present. As it happens, the employees’ representative on the board is also a Tasmanian, but Tasmania has no actual rights in that regard.

The provision for the appointment of the three Tasmanian grower representatives to the Commonwealth board on the nomination of the State board is, in the opinion of the Government, a logical procedure, since the State authority is comprised wholly of grower representatives elected by compulsory polls of all growers in Tasmania. In addition, the new arrangement gives northern Tasmanian growers, representing approximately 30 per cent, of the industry in the State, a direct voice in the conduct of Apple and Pear Board affairs, which does not occur under the existing voluntary election arrangements adopted for this authority.

Under the revised constitution of the board, the remaining five States will continue to have one elected representative each of apple and pear growers. The representation of fruit-exporters will remain at three members. The Government nominee is chairman of the board, and the employees engaged in the apple and pear industry will continue to have one representative on the board.

The opportunity has been taken to repeal redundant provisions of sections 9 and 16 of the act, which have ceased to have effect. There are also several minor amendments of no real consequence, including a revision of section 25 (2.) of the act relating to the presentation of annual reports of the board.

Clauses 6 and 7 of the bill amend the present provisions relating to the banking arrangements of the board in two ways. One of the proposed changes is the purely formal substitution of the words “ Reserve Bank of Australia “ for the words “ Commonwealth Bank of Australia “. This merely reflects the change in name of the central bank, and does not effect any substantive change in the law, as any reference to the Commonwealth Bank of Australia in the present act has already to be read as a reference to the Reserve Bank of Australia, in accordance with section 7 of the Reserve Bank Act 1959.

The other change proposed in this connexion is to permit the board to maintain its account and to place money on fixed deposit with the Reserve Bank and any bank approved by the Treasurer instead of, as at present, with the Reserve Bank or any prescribed bank. This proposed change will bring the banking provisions for the Apple and Pear Board into line with corresponding provisions in other statutory authority legislation.

In addition, there are transitional provisions in clause 9 of the bill which provide that the amended constitution of the board will take effect as from 1st January, 1961, in time for the next apple and pear export season, and that, after 1st July, 1961, all the members of the board will complete their terms of board membership on a common date.

I commend the bill to honorable senators.

Debate (on motion by Senator Poke) adjourned.

page 1956

APPLE AND PEAR EXPORT CHARGES BILL 1960

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator GORTON:
Minister for the Navy · Victoria · LP

.- I move-

That the bill be now react a second time.

The purpose of this bill is to amend the Apple and Pear Export Charges Act 1938- 1957 to increase the maximum rate of levy which may be imposed on exports of apples and pears from 2d. a case, as at present, to 6d. a case.

The proposal gives effect to a recommendation of the Australian Apple and Pear Board which is the statutory authority responsible for the orderly marketing overseas of apples and pears from Australia. The proceeds of the levies collected under the provisions of the Apple and Pear Export Charges Act form the sole income of the board and are used to finance the working operations of the board, as well as for trade publicity and research purposes.

The board has made its request with a substantial measure of support from fruitgrowing organizations in the various States, with a view to placing the board in the financial position necessary to implement plans for a concentrated trade promotion drive in the important United Kingdom and continent of Europe markets for apples and pears.

In the United Kingdom, in particular, which absorbs an average of 66 per cent, of total apple and pear exports from Australia, the fruit consumption level is lagging well behind that in some western European countries. The greatly increased fruit supplies becoming available from most countries for export to the United Kingdom are posing difficult marketing problems for the Australian apple and pear industry.

As I have mentioned, the bill seeks to raise the maximum rate of export levy to 6d. a case. The act already provides that any lower rate of levy may be determined by regulations prescribed from time to time, after report to the Minister by the board.

The present rate of levy as prescribed by regulations is lid. a case, the maximum rate being 2d. a case. This rate yields about £40,000 per annum in a normal export season and this has enabled the board to engage in relatively modest campaigns of promotion in the United Kingdom, West Germany, Sweden and Norway after meeting the regular expenses of board administration. At the present time the board’s income is barely sufficient to meet its financial commitments.

The board, with the approval of the fruit-growing industry generally, is anxious to have its proposal endorsed by legislation during the present sitting of the Parliament so as to place the board in a position to recommend that regulations be prescribed providing for a substantial increase in the rate of levy to be applied on the 1961 season’s apple and pear exports commencing in February next.

The board is also considering the possibilities of developing a plan of central research into the problems connected with pest and disease control in apple and pear production. This is, however, more of a long-term project and concrete proposals have not yet been formulated, but the board is aiming to be financially responsible for the establishment and co-ordination of a programme of scientific research into fruit production. This is a further factor behind the board’s decision to seek an increase in the maximum rate of levy to 6d. a case.

The board’s recommendation represents yet another practical example of how our primary industries are prepared to provide funds for self-help purposes. The Government commends the board and the fruit industry for their positive approach to a direct attack on the marketing problems and is pleased to give effect to their wishes. I commend the bill for the approval of the Senate.

Debate (on motion by Senator Poke) adjourned.

page 1957

NATIONAL CAPITAL DEVELOPMENT COMMISSION BILL 1960

Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Sir Walter Cooper) read a first time.

Second Reading

Senator Sir WALTER COOPER:
Minister for Repatriation · Queensland · CP

[10.45]. - I move -

That the bill be now read a second time.

This bill proposes two small amendments to the National Capital Development Commission Act. When the commission was set up in 1957 it was intended that it should plan, develop and construct the National Capital in an active way. Although in this sense it had rather a wider scope than a mere town-planning authority as we know such authorities, it was desired to keep the commission as free as possible from the normal administrative duties associated with a government department.

Since the commission has been carrying out its functions it has been found desirable that it should exercise some supervision over buildings that are being privately erected. Normally this is carried out under the Australian Capital Territory Building and Services Ordinance which, like similar legislation operating elsewhere in Australia, authorizes the making of regulations dealing with a host of detailed requirements relating to building. It has been thought proper that in at least one aspect the commission should exercise authority, although the remaining matters should be left to be administered as they are at present. This aspect is the design and siting of buildings privately constructed. There may be others in course of time. The existing act does not enable the commission to exercise this authority under the Building and Services Ordinance or any regulation made under it, and the first amendment simply empowers the commission to exercise such authority strictly within the limits of its functions of planning, development and construction.

The second amendment authorizes the commission to carry out work on land which is the subject of a lease when the lessee requests it and the Minister approves. The existing act expressly forbids the carrying out of construction on land owned or held1 under lease by a person other than the Commonwealth. This prohibition could cause difficulty. The first instance that comes to mind is in the case of the Australian National University, which is a body which might find it desirable to have the guidance of the commission in the designing and planning of its buildings and in such cases the Government feels it is desirable that the commission should bc free to give guidance and1 advice and, if necessary, to carry out construction as part of the development of Canberra.

Other semi-government instrumentalities could also be involved, such as the Australian Broadcasting Commission and the Commonwealth Bank. In some cases it could be found desirable for the commission to assist associations and organizations contributing to the amenities or culture of the community, such as youth clubs, orchestral societies, repertory theatres, sporting bodies and the like. I commend the bill to honorable senators.

Debate (on motion by Senator Armstrong) adjourned’.

page 1958

INDUS BASIN DEVELOPMENT FUND AGREEMENT BILL 1960

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator GORTON:
Minister for the Navy · Victoria · LP

– I move -

That the bill be now read a second time.

The purpose of this bill is to enable the Australian Government to appropriate funds for its contribution of £A.6,965,000 under the Indus Basin Development Fund Agreement. This fund has been set up by the International Bank for Reconstruction and Development and by governments friendly to India and Pakistan to finance the construction of a system of works in the Indus River basin following agreement between the Governments of India and Pakistan on the Indus Waters Treaty. Both the Indus Waters Treaty and the Indus Basin Development Fund Agreement were signed in Karachi on 19th September, 1960. The Indus Waters Treaty was signed by Mr. Nehru on behalf of India, Field Marshal Ayub Khan on behalf of Pakistan, and Mr. W. A. Iliff, Vice-President of the International Bank for Reconstruction and Development. The Indus Basin Development Fund Agreement was signed by representatives of the Governments of Australia, Canada, the Federal Republic of Germany, New Zealand, Pakistan, the United Kingdom and the United States, and of the International Bank for Reconstruction and Development.

The Indus and its five main tributaries, the Jhelum, the Chenab, the Ravi, the Beas and the Sutlej, constitute one of the great river systems of the world. The main river of this system, the Indus, flows for 1,800 miles from the Himalayas in Tibet, through Kashmir and into Pakistan to its estuary south of Karachi on the Arabian Sea. The Jhelum and the Chenab also flow into Pakistan, but whereas the Jhelum rises in the Kashmir hills, the Chenab in its upper reaches flows for some 50 miles in India.

These three rivers, the Indus, the Jhelum and the Chenab, are known as the western rivers. The Ravi, Sutlej and the Beas, which flow into Pakistan after traversing India for some distance, are known as the eastern rivers.

With the system of irrigation developed in the Indus Basin over the last 100 years, these rivers support a population of 50,000,000 people in India and Pakistan. The area of irrigated land is about 30,000,000 acres - the largest irrigation system in the world. This irrigation system has been developed entirely from river flow, and without dams or other forms of water storage. It is subject to seasonal variations. The flow in the lower reaches is also dependent upon drawings higher up the rivers. Pakistan, as will be seen from the map which will be distributed, is the lower riparian power, and had been concerned to ensure an adequate flow of water. If the available water from the rivers had been sufficient at all times to irrigate all adjacent areas in India and Pakistan, there would of course have been no Indus waters problem. The present treaty permits equitable use in each country of available waters.

By providing funds for dams, headworks, link canals and power stations, the Indus Basin Development Fund Agreement will enable greater utilization of the tremendous potentialities of the Indus group of rivers.

Under British rule there were frequent disputes between the provinces and princely States of undivided India on the use of the Indus waters. However, on partition between India and Pakistan in 1947, the border between India and Pakistan was drawn right across the Indus system. The use of the waters of the Indus system became a major issue in the relations between Pakistan and India. What had formerly been a dispute between provinces in undivided India had become an international issue.

In 1951, the President of the International Bank, Mr. Eugene Black, suggested to the Governments of India and Pakistan that the bank lend its good offices to help them reach a settlement. The offer was accepted and after some years of complex negotiations, the general principles of a settlement were agreed upon and found final embodiment in the Indus Waters

Treaty 1960. The main features of the settlement, as outlined in the treaty, are as follows: -

All the waters of the eastern rivers - the Ravi, Sutlej, and Beas - will be available for the unrestricted use of India. However, during a transitional period of ten years, which may be extended to thirteen years, while Pakistan is constructing works for the replacement of waters from the eastern rivers by waters from the western rivers and other sources, India is to permit the release of water to Pakistan from the eastern rivers as specified in a schedule attached to the treaty.
The waters of the western rivers - Indus,Jhelum and Chenab - will be for the unrestricted use of Pakistan except in certain specified cases in India and Kashmir where they may be used by India for irrigation, hydro-electric and other purposes specified in the treaty.
India is to pay £62,500,000 sterling as a contribution to the cost of Pakistan’s construction during the transition period of the replacement works already mentioned.
Both countries are to co-operate to the fullest possible extent in the further development of the rivers.
A permanent Indus Commission, consisting of one representative appointed by each government, will have a general responsibility for the carrying out of the provisions of the treaty and will seek to reconcile any points of disagreement.
If the commissioners are unable to resolve a dispute, the matter will be submitted to a “ neutral expert”, a highly-qualified engineer, for a final judgment on technical questions, and for resort, in certain circumstances, to a court of arbitration.

It was recognized during the negotiations preceding the settlement that the cost could not be met by India and Pakistan, and the International Bank undertook to draw up a plan to provide the requisite funds. The outcome after a separate series of negotiations was the Indus Basin Development Fund Agreement.

Under the agreement, the Administrator of the Indus Basin Development Fund will be the International Bank for Reconstruction and Development. In addition to India, whose contribution of £62,500,000 sterling for the construction of works in Pakistan during the transition period has already been mentioned, the governments of the following countries will make contributions of the following amounts in, the form of grants freely convertible into other currencies: -

Country - Grant.

Australia- £A6,965,000.

Canada- 22,100,000 Can. dollars (£A10,157,024).

Germany- DM126,000,000 (Deutsche Mark) (£A13,490,364).

New Zealand- £NZ1,000,000 (£A1,244,125).

United Kingdom - £20,860,000 sterling

(£A26, 153,225).

United States - 177,000,000 U.S. dollars (£A78,903,674).

In addition, the United States will make a loan of 70,000,000 dollars, repayable in rupees, to Pakistan and will contribute to the fund as grants or loans to Pakistan an amount in Pakistan rupees equivalent to 235,000,000 dollars. The bank will also make up to 80,000,000 dollars available in a loan to Pakistan. Pakistan undertakes to make available to the fund £440,000 sterling and an amount in rupees equivalent to £9,850,000 sterling. All of these contributions are of course subject to such parliamentary or congressional approval as may be necessary in the case of each contributing government.

The agreement is to come into force immediately the Indus Waters Treaty has been ratified by India and Pakistan. The administrator of the fund is then to notify each contributor of the amount required from it to cover estimated disbursements during the half-year period commencing 1st October, 1960. He will give notice at the beginning of each succeeding half-year period of the amount required to be contributed for that period.

The Indus Basin Development Fund Agreement Bill will enable Australia to contribute to the fund. On current bank proposals, the Australian contribution will be spread over a period of twelve years. Preliminary estimates suggest that our annual contribution would increase from about £180,000 in the first year to a maximum of over £1,000,000 in the fifth year and then decline over the following seven years.

This enterprise, which means so much for the common welfare of people in both India and Pakistan and represents one of the really great contemporary examples of international co-operation, can hardly fail to have beneficial effects on general relations between the two countries. The

Indus water settlement constitutes a stirring example of how two great nations, India and Pakistan, can co-operate in the solution of a complex and difficult issue. I should like to pay a tribute to the wisdom of their leaders and also to the skilful and patient diplomacy of the representatives of the International Bank.

Debate (on motion by Senator McKenna) adjourned.

Senate adjourned at 11 p.m.

Cite as: Australia, Senate, Debates, 1 December 1960, viewed 22 October 2017, <http://historichansard.net/senate/1960/19601201_senate_23_s18/>.

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Senate 1 December 1960

ASSENT TO BILLS

QUESTION

WYNDHAM AIRPORT

Senator CANT:WESTERN AUSTRALIA

Senator PALTRIDGE:Minister for Civil Aviation · WESTERN AUSTRALIA · LP

QUESTION

DROUGHT RELIEF

Senator McKELLAR:NEW SOUTH WALES

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

QUESTION

ARCHITECTURE

Senator DITTMER:QUEENSLAND

Senator Sir WALTER COOPER:

Senator MARRIOTT:TASMANIA

Senator PALTRIDGE:LP

QUESTION

SEARCH FOR OIL

Senator O’FLAHERTY:SOUTH AUSTRALIA

Senator SPOONER:LP

QUESTION

ORIENTAL LANGUAGES

Senator LAUGHT:SOUTH AUSTRALIA

Senator GORTON:Minister for the Navy · VICTORIA · LP

QUESTION

MELBOURNE GENERAL POST OFICE

Senator SANDFORD:VICTORIA

Senator SPOONER:LP

QUESTION

CANBERRA

Senator VINCENT:WESTERN AUSTRALIA

Senator Sir WALTER COOPER:

QUESTION

CANBERRA TO QUEANBEYAN RAILWAY

Senator McMANUS:VICTORIA

Senator PALTRIDGE:LP

QUESTION

PUBLIC WORKS PROGRAMME

Senator DRAKE-BROCKMAN:WESTERN AUSTRALIA

Senator SPOONER:LP

QUESTION

COMPANY MERGERS

Senator BROWN:QUEENSLAND

Senator SPOONER:LP

QUESTION

ORIENTAL LANGUAGES

Senator BUTTFIELD:SOUTH AUSTRALIA

Senator GORTON:LP

QUESTION

CAPTAIN COOK’S LOG BOOK

Senator TANGNEY:WESTERN AUSTRALIA

Senator SPOONER:LP

QUESTION

STEEL

Senator LILLICO:TASMANIA

Senator SPOONER:LP

QUESTION

OVERSEAS TRADE

Senator HENDRICKSON:VICTORIA

Senator SPOONER:LP

QUESTION

COMMUNISM

Senator HANNAN:VICTORIA

Senator GORTON:LP

QUESTION

ORIENTAL LANGUAGES

Senator O’BYRNE:TASMANIA

Senator GORTON:LP

QUESTION

URANIUM

Senator SCOTT:WESTERN AUSTRALIA

Senator SPOONER:LP

QUESTION

DUTCH NEW GUINEA

Senator HANNAFORD:SOUTH AUSTRALIA

Senator GORTON:LP

QUESTION

ROYAL AUSTRALIAN AIR FORCE

Senator MCCALLUM:NEW SOUTH WALES

Senator PALTRIDGE:LP

Senate
1 December 1960

Senator CANT:
WESTERN AUSTRALIA

Senator PALTRIDGE:
Minister for Civil Aviation · WESTERN AUSTRALIA · LP

Senator McKELLAR:
NEW SOUTH WALES

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

Senator DITTMER:
QUEENSLAND

Senator MARRIOTT:
TASMANIA

Senator PALTRIDGE:
LP

Senator O’FLAHERTY:
SOUTH AUSTRALIA

Senator SPOONER:
LP

Senator LAUGHT:
SOUTH AUSTRALIA

Senator GORTON:
Minister for the Navy · VICTORIA · LP

Senator SANDFORD:
VICTORIA

Senator SPOONER:
LP

Senator VINCENT:
WESTERN AUSTRALIA

Senator McMANUS:
VICTORIA

Senator PALTRIDGE:
LP

Senator DRAKE-BROCKMAN:
WESTERN AUSTRALIA

Senator SPOONER:
LP

Senator BROWN:
QUEENSLAND

Senator SPOONER:
LP

Senator BUTTFIELD:
SOUTH AUSTRALIA

Senator GORTON:
LP

Senator TANGNEY:
WESTERN AUSTRALIA

Senator SPOONER:
LP

Senator LILLICO:
TASMANIA

Senator SPOONER:
LP

Senator HENDRICKSON:
VICTORIA

Senator SPOONER:
LP

Senator HANNAN:
VICTORIA

Senator GORTON:
LP

Senator O’BYRNE:
TASMANIA

Senator GORTON:
LP

Senator SCOTT:
WESTERN AUSTRALIA

Senator SPOONER:
LP

Senator HANNAFORD:
SOUTH AUSTRALIA

Senator GORTON:
LP

Senator MCCALLUM:
NEW SOUTH WALES

Senator PALTRIDGE:
LP

Senator PALTRIDGE:
LP

Senator WEDGWOOD:
VICTORIA

Senator SPOONER:
LP

Senator AYLETT:
TASMANIA

Senator PALTRIDGE:
LP

Senator TOOHEY:
SOUTH AUSTRALIA

Senator SPOONER:
LP

Senator ARNOLD:
NEW SOUTH WALES

Senator SPOONER:
LP

Senator WARDLAW:
TASMANIA

Senator COOKE:
Western Australia

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

Senator McKENNA:
Leader of the Opposition · Tasmania

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

Senator WRIGHT:
Tasmania

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

Senator McKENNA:
Leader of the Opposition · Tasmania

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

Senator McKENNA:
Leader of the Opposition · Tasmania

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

Senator WRIGHT:
Tasmania

Senator McKENNA:
Leader of the Opposition · Tasmania

Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP

Senator WRIGHT:
Tasmania

Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP

Senator McKENNA:
Leader of the Opposition · Tasmania