Senate
10 November 1971

27th Parliament · 2nd Session

  1. Senate
  2. 27th Parliament
  3. 1971

The PRESIDENT (Senator the Honourable Sir Magnus Cormack) took the chair at 2.30 p.m., and read prayers.

page 1795

SENATOR SWORN

The PRESIDENT:

- Senator McManus was absent on 17th August when the certificates of election of honourable senators to serve in the Senate on 1st July 1971 were tabled in the Senate and senators were then sworn in. Senator McManus has now returned from overseas and is in attendance in the chamber.

Senator Francis Patrick McManus made and subscribed the Oath of Allegiance.

page 1795

QUESTION

CONNAIR PTY LTD

Senator McLAREN:
SOUTH AUSTRALIA

– My question is directed to the Minister for Civil Aviation. Has the Minister’s attention been drawn to the sub-editorial of the ‘Darwin News’ of Saturday 6th November referring to the government subsidy of $838,000 payable to Connair Airlines? In view of the claims being made in relation to this subsidy, will the Minister authorise the holding of an independent inquiry into the operations of Connair and the airlines subsidy as it applies in the Northern Territory?

Senator COTTON:
Minister for Civil Aviation · NEW SOUTH WALES · LP

– I had not seen the actual editorial although the contents were referred to me in rough detail. Connair Airlines has been subsidised for a long, long time by the Commonwealth because it is an essential rural service to a great part of the outback of the Northern Territory as well as north-western Western Australia and parts of Queensland. These are inaccessible areas to which it is not at all easy to communicate in any other way.

It has been regarded by the Commonwealth as an essential part of its activities in developing Australia and keeping communications up that Connair should be so supported, and it has been. I think what is happening up there is that other people who are in the airlines business would like to get into the act as well as Connair. But I do not think that there is room for more than one. 1 do not see any case at all for an independent inquiry.

page 1795

QUESTION

WOOL

Senator POKE:
TASMANIA

– My question is addressed to the Minister representing the Minister for Primary Industry, ls it a fact that the Chairman of the Australian Wool Commission, Mr W. J. Vines, announced in Melbourne on Sunday last that the Commission had negotiated a further loan of $30m at 6.5 per cent, repayable by 30th April next? To what amount will this new loan bring the total sum borrowed by or granted to the Commission for the purpose of adding to its enormous stockpile of wool which is exacerbating the crisis in the wool industry, particularly when 90 per cent of the locked up 700,000 bales of wool could be sold tomorrow at world parity prices and put to use?

Senator DRAKE-BROCKMAN:
Minister for Air · WESTERN AUSTRALIA · CP

– Yesterday the honourable senator asked me a question - in fact he has asked me a few questions - about the Australian Wool Commission. One part of his question yesterday dealt with the amount that the Commission has borrowed from banks and the interest rates charged. Yesterday I said that I would seek from the Minister for Primary Industry information about that matter. I have not the answer at this stage, but I make one point: The honourable senator spoke of the Commission having 700,000 bales of wool. I do not know from where he got that figure. Any figure other than that given by the Commission can be only an educated guess. The last figure given by the Commission, on 2nd August this year, was that 339,000 bales had been bought in by the Commission up to that time, and that it had on hand another 120,000 bales of price-averaging-plan wool which would be transferred into the No. 3 and No. 4 pools. Those are the official figures at present. Any other figures are pure supposition on the part of various people.

page 1795

QUESTION

TASMANIAN AIR SERVICES

Senator TOWNLEY:
TASMANIA

– My question is directed to the Minister for Civil Aviation. In view of the additional profit disclosed by Trans-Australia Airlines, has the Minister given thought to having the Australian National Airlines Commission investigate a lower fare rate to Tasmania to give some preferential treatment to that State because of its almost entire dependence upon air transport and in lieu of money spent in other States upon roadways?

Senator COTTON:
LP

– I think it is well known that while the capital for the Australian National Airlines Commission is provided by the Commonwealth of Australia, the Commission operates in its own right and makes its own managerial and operating decisions. I am very pleased that it has been able to do a better job of profit making this year than previously, but I would not want to be directing it as to what it should do about its fare structure. That is a matter for the Commission. If it feels that it can encourage business by doing something extra in Tasmania, where I believe there is a need for an extended service in certain parts, I would be looking at that matter with approbation.

page 1796

QUESTION

TRAINING OF CAMBODIAN FORCES

Senator WILLESEE:
WESTERN AUSTRALIA

– Can the Minister representing the Minister for Foreign Affairs explain how the Cambodian Government has accepted Australia’s offer to train Cambodian troops in Vietnam when both the Acting Prime Minister and the Minister for Defence say that no offer has been made and that the Cabinet had simply agreed in principle to discuss the training of Cambodians, subject to suitable arrangements?

Senator WRIGHT:
Minister for Works · TASMANIA · LP

– This matter has been the subject of agitation and speculation for a number of days now. My view is that the Parliament can be served best by my taking a little time to assemble with precision the sequence of facts and to afford them to the Senate. That 1 would propose to do as early as possible.

page 1796

QUESTION

RURAL PROPERTIES

Senator YOUNG:
SOUTH AUSTRALIA

– Can the Minister representing the Minister for Primary Industry say whether any farmers or graziers have walked off their properties because of their inability to meet financial commitments? If this is so, to what extent has this happened? Has the Government given serious thought to the purchasing of these properties with the aim of leasing them, with the right to purchase, to near neighbours, thus assisting the neighbours to have economic units and also preventing large companies and corporations purchasing cheap real estate?

Senator DRAKE-BROCKMAN:
CP

– I understand that the State authorities have suggested that some primary producers have walked off their properties, but no State authority has been able to supply official figures to show how many have in fact walked off their properties.. There is evidence that a number of farmers and graziers have taken up outside jobs with the intention of earning money so that when conditions in their industry improve they will be able to go back to their holdings and take up where they left off. In regard to the final part of the honourable senator’s question I remind him that the agreement with the States made under the States Grants (Rural Reconstruction) Act sets out the purpose of farm build-up as being:

To supplement, without discouraging, the normal processes under which properties which are too small to be economic are amalgamated wilh an adjoining holding or are subdivided anil the subdivided portions are added to adjoining holdings, or to assist a farmer wilh a property too small to bc economic to purchase additional land to build up his property to at least economic size.

That is the whole purpose of the rural reconstruction scheme which we have to keep in mind. However, as to the first part of the question, I know of no official figures which would give any indication of of how many people have walked off their properties.

page 1796

QUESTION

TRADE WITH CHINA

Senator PRIMMER:
VICTORIA

– My question is addressed to the Minister representing the Minister for Trade and Industry. In view of consistent reports of potential markets for Australian produce in China, what endeavours have been made or are contemplated by the Department of Trade and industry to assess such market potential, particularly for dairy produce and dried fruits, which are affected by the loss of British markets?

Senator COTTON:
LP

– I do not have the detailed information with me, but for a long time Australia has enjoyed a quite substantial trade with China in many commodities. In this case I think I will have to get for the honourable senator an updated set of figures. I had figures up to about 6 months ago which showed, on a basis of 5-year intervals, the pattern of trade between Australia and China. The figures showed that substantially the trade was through exports by us but that there were some imports, details of which would need to be given separately. The imports by us were not very great over a wide range of commodities. However, I shall get that information for the honourable senator.

page 1797

QUESTION

WINE

Senator LAUCKE:
SOUTH AUSTRALIA

– In addressing a question to the Minister representing the Minister for Primary Industry I refer to a completely erroneous impression being given in regard to the economic position of the grape growing and wine making industries generally, arising from the singular bouyancy of a few major old established wineries. Will the Government step up its inquiries into the position of the large co-operative wine making concerns, which provide an outlet for thousands of wine growers crops, with a view to determining what action the Government might take to ensure that growers are able to have their grapes processed at the next vintage? Is the Government aware of the deep concern of private growers, particularly in irrigated areas, with regard to the prospects of disposing of their next crop? Is the Government aware of the serious decline in wholesale wine sales and in the flagon trade, which has an especial impact on that section of the industry which is dependent on such trade?

Senator DRAKE-BROCKMAN:
CP

– There has been great concern in the wine industry over a number of factors. One matter which has been bandied about quite commonly is the Government’s policy with regard to excise on table wines. I think it would be fair to say that the Government realises that there has been an impact on the industry through the imposition of the excise, but an examination of the situation by the Government reveals a number of other factors which also should be taker into consideration. The position of the wine industry has been concerning the Australian Agricultural Council. At its last meeting, the Council set up a committee known as the Commonwealth Grape Advisory Committee. I understand that this Committee will be investigating mat ters when it meets in December and will present a report on the situation to the next Council meeting. The major topic to be discussed at the next Australian Agricultural Council meeting in relation to wine will be the 1972 crop. This is what concerns the honourable senator. I understand that the statistics for 1970-71 show that the level of sales of wholesale wines is not very much different from that of 1969- 70. There are no official figures available for sales of wine in the type of container to which the honourable senator referred. I can also tell the honourable senator that the Department of Customs and Excise has figures which show that the sales of wine for 1971-72 are picking up.

page 1797

QUESTION

HAWKER SIDDELEY ORGANISATION

Senator BISHOP:
SOUTH AUSTRALIA

– I ask the Minister representing the Minister for Defence whether he has been able to investigate the matter raised by me on 2nd November relating to the proposed transfer to Brookvale, New South Wales of the Hawker Siddeley Electronics Engineering plant, which is performing defence contract work at Salisbury at a location very close to the Weapons Research Establishment. It is likely that this transfer will result in 200 skilled workers being retrenched in South Australia before the end of March 1972. Is it a fact that this firm has stated that equipment covered by recent contracts which it had obtained would be manufactured in South Australia?’ Has he been able to initiate any action which would avoid these retrenchments?

Senator Sir KENNETH ANDERSON:

–

I think I owe the honourable senator an apology. He asked me late yesterday afternoon whether I was in a position to make a comment on this matter. I said that I believed 1 was. I am in the process of obtaining some information and some background to this matter. Regrettably, it is not available to me at this point of time but I hope to be able to make a comment tomorrow.

page 1797

QUESTION

CANNED TUNA

Senator GEORGES:
QUEENSLAND

– Is the Minister for Health aware of the reports that the mercury level in canned tuna sold in Australia is 10 times the permissible level? Is his Department aware of this position and what action is being recommended to the respective authorities? Will he resist any attempt to increase the permissible level of mercury to allow such contaminated products to escape the health regulations?

Senator Sir KENNETH ANDERSON:

–

If there are health regulations, it is axiomatic that there would be no attempt to allow any escaping from the regulations unless it was proven and established, not on any capricious judgment of a Minister for

Health or lay people-

Senator Georges:

– You will not allow an increase?

Senator Sir KENNETH ANDERSON:

Mr President, am I to be allowed to answer the question?

Senator Georges:

– Obviously, you did not hear the question.

The PRESIDENT:

– The Minister may answer the question if Senator Georges would be kind enough to allow him.

Senator Sir KENNETH ANDERSONI think the question had better be placed on the notice paper so that 1 can give it a considered answer.

page 1798

QUESTION

EDUCATIONAL ASSISTANCE IN OUTBACK AREAS

Senator NEGUS:
WESTERN AUSTRALIA

– J address a question to the Minister representing the Minister for Education and Science. It is asked in response to a request from a woman in Western Australia who says she is desperately in need of help. Has the Minister received appeals from the other States for additional financial help to enable them to increase in turn their educational assistance to outback areas? Will the Minister inquire into proposals submitted by the Isolated Children’s Parents Association with the object of granting immediate allowances and concessions to the parents of children in the isolated areas of Western Australia and other States who are at present struggling to teach their children by correspondence lessons and need financial assistance?

Senator WRIGHT:
LP

– 1 have no knowledge of the receipt of any application, but if the honourable senator is referring to an application by an association it is possibly the subject of correspondence between that association and the Minister. 1 heard with sympathetic understanding the honourable senator’s plea on behalf of outback children for increased educational facilities and in that spirit I will convey his concern to the Minister in case he has received such an application and is considering it.

page 1798

QUESTION

CAREER REFERENCE CENTRES

Senator PROWSE:
WESTERN AUSTRALIA

– I ask the Minister representing the Minister for Labour and National Service: Does the Commonwealth Employment Service, which recently opened a Career Reference Centre at 199 Flinders Lane, Melbourne, intend to widen the service provided? If so, will it give urgent consideration to establishing a similar centre in Perth because owing to the isolation of the western capital from the facilities offered in Melbourne, the usefulness of the centre in Melbourne to the residents of Western Australia would be severely limited?

Senator WRIGHT:
LP

– lt is a fact that since January last the Department of Labour and National Service has opened the Career Reference Centre in Melbourne referred to by the honourable senator, and a similar centre in Sydney. To that extent there has been consideration of the centres of greatest population. I am well aware of the intervening 2,000 miles between Melbourne and Perth and I shall refer the honourable senator’s inquiry to the Minister for consideration in case expansion of the service can be justified in the near future. The patronage that has been given to the 2 centres providing information about career opportunites for youths seeking advice about careers has been great. The numbers who are availing themselves of the service have been beyond the expectations of the Department.

page 1798

QUESTION

IMMIGRATION

Senator CAVANAGH:
SOUTH AUSTRALIA

– 1 ask the Minister representing the Minister for Immigration whether it is a fact that twice in the past 18 months the Minister has rejected an application for Australian citizenship from Mr Felipe Ysmael. If so, why were these applications rejected? Is a new application now before the Department?

Senator COTTON:
LP

– I am sure the honourable senator will understand that it will be necessary for me to make inquiries for him us 1 do not have the necessary detail available to me instantaneously in the Senate. I shall take note of the honourable senator’s question and obtain an answer for him.

page 1799

QUESTION

DESERTED WIVES

Senator MULVIHILL:
NEW SOUTH WALES

– I ask the

Attorney-General: What action is the honourable gentleman taking in conjunction with State government legal authorities to ensure that maintenance orders affecting deserted wives, particularly when the errant husbands skip across the border, operate promptly and continuously?

Senator GREENWOOD:
Attorney-General · VICTORIA · LP

– It is difficult to give an adequate answer to the honourable senator without knowing details of the particular cases he has in mind. Maintenance orders for the support of deserted wives and children may be made either under the maintenance acts of the States or under the Commonwealth matrimonial causes jurisdiction. If made under the maintenance acts of the States there is uniform legislation throughout Australia which enables an order made in one State to be enforced in another State. If it is made under the Matrimonial Causes Act it can be enforced by simply registering it in a court of summary jurisdiction. If the enforcement provisions are inadequate there are collectors of maintenance, I think, in each territory or State who can be appealed to for action.

Senator Murphy:

– There is also the Service and Execution of Process Act.

Senator GREENWOOD:

– I am indebted to Senator Murphy. If there are particular matters about which the honourable senator wants information and if he gives mc the details I will inquire for him.

page 1799

QUESTION

DIABETIC FOODS

Senator DEVITT:
TASMANIA

– My question is addressed to the Minister for Health but it could have Treasury implications as well. Is the Minister aware that presumably because of the need for defining processes and chemical treatment procedures involved in their manufacture, the price cf a wide range of diabetic foods is substantially higher than that of their non-diabetic counterparts? Is the cost factor accentuated by the addition of sales tax on these preparations? Because of the many difficulties suffered by diabetics would it not be reasonable to remove sales tax from these preparations, or at least reduce it so as to bring prices into line with those for similar non-diabetic foods? Finally, if this cannot be done, what other means could be adopted to remove the burdensome financial disability from this very deserving section of the public?

Senator Sir KENNETH ANDERSON:

I would not challenge the broad basis of the question posed by Senator Devitt, lt may well be that certain processes inherent in the preparation of these foods could cause them to be more expensive than are non-diabetic foods. Be that as it may. the honourable senator then went on to suggest that there could be some variation in prices as a result of some amelioration in sales tax. As Senator Devitt indicated, this is a Treasury matter and it would have to be referred to the Treasurer. I certainly will do that. I feel bound to say that a similar argument could be used, and has been used, no doubt in good faith having regard to the problems of the people concerned, in relation to other diseases. This would open up not only the question of diabetics but also that of retarded children who need certain types of medicine and of people suffering paralytic diseases. That is the generality of the problem. I will refer to the Treasurer the particularity of the matter dealt with in Senator Devitt’s question.

page 1799

QUESTION

WOOL

Senator JESSOP:
SOUTH AUSTRALIA

– I address my question to the Minister representing the Minister for Trade and Industry. 1 have received an inquiry from an export merchant who is currently interested in exporting raw wool. Can the Minister say whether this merchant would be able to purchase wool from the accumulating stockpile of the Australian Wool Commission? If so, how would a price be established? Would a minimum quantity purchase be required?

Senator COTTON:
LP

– I am sure that the Department of Trade and Industry is prepared to consider any particular request put to it. I suggest that the precise details of the proposition bc made available to mc by the honourable senator. I will see that they get to the Department of Trade and Industry and through it to the responsible wool authorities.

page 1800

QUESTION

UNIVERSITIES

Senator GIETZELT:
NEW SOUTH WALES

– ls the Minister representing the Minister for Education and Science aware that many thousands of secondary school students will be unable to enrol in universities in 1972 because of inadequate facilities in existing universities? Has the Government received any requests from the States for special grants to overcome the shortage of facilities in tertiary education? If not, will the Government initiate talks with the States with a view to providing Commonwealth funds to enable the provision of additional facilities and/or universities?

Senator WRIGHT:
LP

– A number of students fail to secure entrance to our universities for one reason and another. One of the reasons affecting some of the faculties in some universities is that their facilities already are overtaxed. Continuing consideration is given to the need for these facilities. We have had instances in recent weeks of special faculties which have come under consideration. But the primary responsibility for considering those matters lies with the Australian Universities Commission whose members visit the universities, engage in personal negotiation with the authorities administering them and then make their assessment within the limit of federal finance as to the amount that should be available from the federal source for universities and which the State governments will undertake to match in their recognised proportion. I know of no special application by any State for funds for universities as such. I would expect such an application to come from the Premier of the State concerned to the Prime Minister and not to the Minister for Education and Science.

page 1800

QUESTION

CRIMINAL LAW OF THE AUSTRALIAN CAPITAL TERRITORY

Senator MURPHY:

– I ask the AttorneyGeneral whether it is still his intention to introduce legislation next year to cover the criminal law in the Australian Capital Terri.ritory and whether that law will be affected by or based on in some respects the draft criminal code for the Australian Territories which was submitted to his predecessor in February 1969 and tabled here. Is it a fact that that draft criminal code contained many provisions which might be debatable even if not on a party political basis? Will the Attorney-General take up with the Government the possibility of having a joint select committee inquire into the draft code that was proposed, prior to the introduction of the legislation next year?

Senator GREENWOOD:
LP

– It is my present intention that next year there shall be introduced a criminal code for the Australian Capital Territory and for such other Territories as to which it will be applicable. Whether or not that code would have a wider application is a matter upon which at the present time I am not able to express .any opinion. But I am sure that the honourable senator is aware that the draft criminal code which was presented to Parliament, I think, in 1969 was the product of some 5 to 6 years work undertaken in a voluntary way by representatives of the legal profession throughout Australia, assisted by officers of the Attorney-General’s Department. It does represent an exhaustive study and it does represent, 1 think, the work of the best brains who were prepared to apply themselves to this subject, lt has also been the subject of further investigation within my Department by officers of the Department and others who have been brought in to assist. The measure which is to be presented to Parliament next year will be, I believe, a comprehensive measure able to be debated on its merits. In those circumstances, the submission of it to a further committee, before it is presented, does not appear to me to be a prudent step.

page 1800

QUESTION

TASMANIAN SHIPPING SUBSIDY

Senator RAE:
TASMANIA

– My question is directed to the Minister representing the Minister for Shipping and Transport. By way of brief preface I mention that last week the Minister for Shipping and Transport announced the reference of certain matters relating to transport in Tasmania to the Bureau of Transport Economics for investigation. Bearing this in mind, will the Minister endeavour to expedite a reply to the question asked recently by me seeking to have the subject of the reintroduction of a shipping subsidy to Tasmania investigated by that Bureau?

Senator COTTON:
LP

– Yes, I will. I imagine that one of the things that the

Bureau of Transport Economics will be looking at will be the overall problem of communications for Tasmania. I think that it is a most worthwhile question for it to investigate. I shall have to direct to the responsible Minister the specific question in regard to shipping subsidies. I have no information here which allows me to determine the terms of reference of the Bureau’s inquiry at the moment.

page 1801

QUESTION

THARUNKA

Senator KANE:
NEW SOUTH WALES

– I refer to my question to the Minister representing the Minister for Education and Science on 13th October 1971 which concerned the New South Wales University student journal Tharunka’ and associated publications such as the notorious ‘Sex Manual’. 1 ask whether the Minister has yet ascertained whether any University moneys helped to pay for these publications. Can the Minister inform the Senate on the matter?

Senator Wright:

– Did the honourable senator say that the subject matter of the question was on notice?

Senator KANE:

– No, it is not on notice.

Senator WRIGHT:
LP

– That information has not yet reached me. I shall give the Minister a reminder and see that the information is forwarded to the honourable senator at the earliest opportunity.

page 1801

QUESTION

HEALTH BENEFITS

Senator POYSER:
VICTORIA

– My question is directed to the Minister for Health. When will the Government implement the promises made by the former Prime Minister, Mr Gorton, which were contained in 2 successive election policy speeches, that aged persons who became chronically ill would be able to receive some benefits from health insurance organisations or medical benefit societies of which, in many cases, they had been members for most of their lives? Is the Government holding back on the implementation of this most urgent reform so that it can be used again as an election gimmick for the general election which is to be held in 1972?

Senator Sir KENNETH ANDERSON:

I do not suggest for one moment that the Party to which I belong deals in election gimmicks.

Senator Poke:

– It is a good thing that we do not lose our sense of humour.

Senator Sir KENNETH ANDERSON:

–

As someone has said, one has to keep one’s sense of humour. I shall not make any prognostication as to the part of the year in which the election will be held. Having muddied the waters sufficiently with that statement I shall give consideration to the matter of substance in the question and respond to it at the appropriate time.

page 1801

QUESTION

SALES OF CANNED TUNA

Senator YOUNG:

– I do not know whether I should direct my question to the Minister for Health or to the Minister representing the Minister for Primary Industry. I ask this question following the question asked by Senator Georges in which he stated that there is a 10 per cent mercury level in canned tuna.

Senator Georges:

– I did not say that; I said 10 times the acceptable level.

Senator YOUNG:

– Will the responsible Minister make inquiries to see whether this position applies to all tuna caught in Australian waters, or does this level vary? What are these variations in relation to the different fishing areas around the Australian coastline?

Senator Sir KENNETH ANDERSONI would like to respond to that question. I was in the process of sending a note to Senator Georges to say that had he watched his blood pressure I was going to give him an answer which suggested that I would have his question examined without delay. Therefore this situation applies also to the question asked by Senator Young. I am sure that I can be relied on to provide the honourable senators as quickly as possible with an answer covering both questions.

page 1801

PRIVILEGE

Senator GEORGES:

– I thank the Leader of the Government in the Senate for that accommodation, which I do not really deserve. Will the Attorney-General consider postponing the action taken by him against a person who gave evidence before a select committee of this Parliament and in so doing incriminated himself? Will the Attorney-General first allow to be concluded the investigation by this Parliament into the rights, privileges and protection of witnesses who come before our committees? Will he accept that had these rights been properly defined, and protection and advice properly given to this witness, the witness would not now be in a serious predicament?

Senator GREENWOOD:
LP

– In answer to the honourable senator’s question I give the comprehensive answer, no.

page 1802

QUESTION

QANTAS AIRWAYS LTD

Senator KEEFFE:
QUEENSLAND

– My question is directed to the Minister representing the Prime Minister. Is it a fact that to date the Prime Minister has refused to travel with Qantas Airways Ltd for most of his overseas tour? I ask the Minister whether the Prime Minister’s reluctance to travel with Australia’s international airline was brought about by the recent dispute over the carriage of passengers between this country and the United States of America, or was there some other reason? If the latter, what was the reason?

Senator Sir KENNETH ANDERSON:

– To my knowledge the Prime Minister on part of his travels has been a passenger with Qantas Airways Ltd. Senator Keeffe sees sinister implications in that very human decision by the Prime Minister. When you are travelling by air you take the aircraft, 1 presume, which is most accommodating for your programme. As to the sinister implications that Senator Keeffe wants to put into it, I think he has been reading fairy tales again.

page 1802

QUESTION

TELEPHONE RENTAL CHARGES

Senator TOWNLEY:

– 1 ask a question of the Minister representing the PostmasterGeneral. In about the middle of October I asked the Postmaster-General question No. 1S31 on the notice paper concerning reduction of telephone rental charges in Hobart in view of the few services easily available to subscribers in that area. I now ask: Is the Minister able to advise when a reply may be expected?

Senator GREENWOOD:
LP

– I am unable to say when a reply will be received, but in view of the fact that the honourable senator has asked me a question inquiring about it I shall take steps to bring it to the attention of the Postmaster-General in the hope that an early reply can be given.

page 1802

QUESTION

GOVERNMENT LEADERSHIP

Senator MILLINER:
QUEENSLAND

– I ask the Leader of the Government in the Senate whether he has learned of the following statement of the Acting Prime Minister, Mr i. D. Anthony, made at a public meeting at Southport last weekend:

The Federal Government would not have survived the Gorton-McMahon leadership crisis had it not been for the steadying influence of the Country. Party.

Was the Government in such difficulties that it was close to falling in the days to which the Acting Prime Minister referred, or was he giving himself praise to which he was not entitled?

The PRESIDENT:

– I think that question comes under the heading of a rhetorical question, but if the Leader of the Government in the Senate wishes to reply in rhetorical terms he may do so.

Senator Sir KENNETH ANDERSON:

– Sir, I did not see the statement.

page 1802

QUESTION

DENTAL HEALTH

Senator Douglas McClelland:
NEW SOUTH WALES · ALP

– I refer the Minister for Health to his answer to a question yesterday on the cost of the Australian Labor Party’s proposals on health. I refer particularly to that section of his answer relating to dental care. When the Minister stated that Dr Gun’s estimates were unreliable, did the Minister mean that research within his department had indicated that Dr Gun had in fact over-estimated or under-estimated the cost of this facet of Labor’s policy? Is the Minister aware that at least Si 00m per annum is spent by Australians on dental care and that because of the high cost the services necessarily reach only a very small section of the Australian population? Will the Minister agree that in contrast to the positive proposals of the Australian Labor movement his government, despite 22 years in office, has not yet developed a comprehensive health scheme which embraces the dental health of all members of the Australian community, particularly the younger generation?

Senator Sir KENNETH ANDERSON:

–

When 1 referred to the figures that were quoted by Dr Gun as possibly being unreliable, 1 think from memory I also made some reference to other associated costs. In any event dental care, in our own conscious knowledge, is a most dicey field in which to make estimates. We all know, particularly in terms of health insurance, that whether you are very healthy or very unhealthy certain things happen to your teeth at certain times of your life, and this is a fact of life. Certain dental situations emerge in all persons, even when they are babies. They cut their teeth, they lose their first teeth, then they get their second teeth, then they may be subject to orthodontics, and at a certain age they may tend to lose their eye teeth and so on. The whole question of dental care is one of the most difficult things in the medical field or the paramedical field in relation to cost evaluation. I said that my view is that the costing could be unreliable, and I repeat that it could be unreliable. I do not suppose we could find anybody in the professional world who could tell us with any precision what the implications of dental care are. They are in the nature of the person as God makes him.

page 1803

QUESTION

NUCLEAR POWER

Senator LAUCKE:

– I address a question to the Minister who represents the Minister for National Development in this place. On 6th October I asked the Minister whether he would make representations to the Minister for National Development concerning the possibility of providing a nuclear power station in South Australia, so located as to enable that State to have a major sea water desalination plant and a further source of power. I ask: Has a reply yet been received from the Minister?

Senator COTTON:
LP

– I have some information which bears on the general subject and which, I think, may be useful to the honourable senator, pending an official reply coming forward from the responsible Minister. At present there are no nuclear desalination plants operating and indeed I am not aware of any under construction. The proposal to build such a plant was announced by the then President of the United States of America in 1967 but work on this project was subsequently suspended. At this stage there is no evidence that a nuclear desalination plant would provide water at a cost delivered to the householder comparable to the figures applying in the case of Australian cities at present and in the near future.

With regard to the use of a nuclear power station in South Australia, the main problem is that at present nuclear power plants are economical only in quite large unit sizes. It is a generally accepted practice that any new unit of electricity system should not exceed something like 10 per cent of the generating capacity of the whole system. Therefore there are some basic difficulties associated with the introduction of nuclear power generating in South Australia, at least in the near future.

page 1803

QUESTION

EDUCATION IN THE AUSTRALIAN CAPITAL TERRITORY

Senator NEGUS:

– I address my question to the Minister representing the Minister for Education and Science. Is it a fact that the last 3 Ministers for Education and Science have stated that a local education authority is inevitable in the Australian Capital Territory? Docs the present Minister intend to establish such an authority? If so - and before doing so - will the Minister consider holding an immediate open and independent public inquiry to ensure that such an education authority is in accordance with the wishes of the residents of the Australian Capital Territory?

Senator WRIGHT:
LP

– I am bound to say that I am a bit apprehensive in answering impromptu a question that is designed to bring together the statements of at least 3 Ministers for Education and Science. When I recall that the area referred to by the honourable senator is under the principal jurisdiction of the Minister for the Interior, I think I would like the honourable senator to put his question on the notice paper so that it will have co-ordinated and careful attention.

page 1803

QUESTION

HEALTH

Senator DONALD CAMERON:
SOUTH AUSTRALIA

– My question is directed to the Minister for Health. Has there been any noticeable increase in applications for health insurance from families on low incomes and eligible migrants since the investigations by the

Department of Health on publicity proposals were initiated some 3 months ago? Will the Minister give an assurance that the simplified revised procedures for applications, operative from 1st November 1971, will be distributed to all agencies including Darwin and that trade union organisations are supplied with details for publication in their journals to encourage low income families to avail themselves of the benefits of the scheme?

Senator Sir KENNETH ANDERSON:

– Yes, I will take up the point immediately I am free to do so today. I will see that the revised procedures are made available, if they have not already been made available, not only in Darwin but in other areas in the Northern Territory. As to whether there has been any significant variation in the number of applications for health insurance, I do not know. I will seek information on that matter as well and have it made available to the honourable senator without delay.

page 1804

QUESTION

SOUTH AFRICA

Senator WRIEDT:
TASMANIA

– I ask the Leader of the Government in the Senate the following question: Will the Australian Government lodge a strong protest with the South African Government over the 5-year gaol sentence imposed on the Anglican Dean of Johannesburg? Is it not true that this political trial and conviction have shocked world opinion? Will the Government prove the sincerity of its stated opposition to apartheid by condemning this tyranny against a churchman for his opposition to what the United Nations and world opinion in general regard as a crime against humanity?

Senator Sir KENNETH ANDERSON:

– The honourable senator made some fairly categorical statements as a consequence of what he has been reading in the Press. I would be more cautious about that if I were he. Nevertheless the question is a fair one for me to refer to the Department of Foreign Affairs.

page 1804

QUESTION

HEARING AIDS

Senator MULVIHILL:

– I direct the attention of the Minister for Health to a statement made this morning in Sydney by Mr W. Parr, lecturer in charge of courses for teachers of the deaf at the Sydney Technical College, in which he contrasted the overall subsidy planned for hearing aids provided in Scandinavia, Holland and the United Kingdom with the comparatively little or nothing that is provided in Australia. In view of this very constructive survey, does the Minister have any plan to redress the imbalance to Australians suffering from deafness?

Senator Sir KENNETH ANDERSON:

– Within the framework of my Department there is the Commonwealth Acoustics Laboratories. Within the framework of that section of the Department a very significant contribution is made in relation to hearing aids, in terms of cost value. Pensioners can hire hearing aids at a nominal fee of $10. It is a once and for all fee. Subsequent repairs and maintenance are done by the Department. I must admit that, as Minister for Health, I am very proud of what the Acoustics Laboratories does in the health field. I would like to provide the honourable senator with an extended answer which would give more particulars of the wide range in which the Department does operate. The Department also provides a service, on a concessional basis, tothe Department of Repatriation in relation to the acoustics side. I will get a more comprehensive reply to the honourable senator’s interesting question.

page 1804

QUESTION

AIRCRAFT INDUSTRY

Senator BROWN:
VICTORIA

– Will the Minister representing the Minister for Supply assure the Senate that in the event of an agreement being reached, arising out of the current negotiations between the Government Aircraft Factories and the Commonwealth Aircraft Corporation, the terms and conditions of such agreement shall be subject to ratification by the Commonwealth Parliament?

Senator DRAKE-BROCKMAN:
WESTERN AUSTRALIA · CP; NCP from May 1975

-BROCKM AN -I think that towards the end of October last Senator Little asked me a similar question, among a series of questions that he put to me. I asked him to put the question on notice. I have not obtained a reply from the Minister for Supply. As soon as I do, 1 will let Senator Brown have a copy of it.

page 1805

QUESTION

RURAL PROPERTIES

Senator WILKINSON:
WESTERN AUSTRALIA

– My question, which is directed to the Minister representing the Treasurer, follows the question asked earlier by Senator Young about the sale of properties that farmers have been forced to leave. Will the Leader of the Government in the Senate request the Treasurer to give consideration to lowering the age of eligibility for the age pension to 60 years for farmers who have to leave their farms at that age due to economic circumstances?

Senator Sir KENNETH ANDERSONI will refer that question to the Treasurer, as I must.

page 1805

QUESTION

AUSTRALIAN COUNTRY PARTY

Senator POKE:

– My question is addressed to the Minister representing the Minister for Primary Industry. Why has the Australian Country Party’s national secretariat sent a questionnaire to more than 50,000 members asking their opinions on topics ranging from abortion, militant unionism and migration to the health of the coalition? ls this a sign of the Country Party’s anxiety about its rural chickens coming home to roost, or is the Country Party endeavouring to update its image-

The PRESIDENT:

– Order! I do not know what this question has to do with the Minister. Senator Poke, you cannot direct a question about party affairs in the guise of a question without notice to a Minister whom you select at random.

Senator POKE:

– 1 do not query your ruling, Mr President, but 1 would like to express an opinion. My question bears a close relationship to the question asked by Senator Jessop yesterday, which you allowed. 1 think that if you allowed a question of that nature on that occasion you should now allow my question.

The PRESIDENT:

– Does the Minister feel competent to answer that question?

Senator DRAKEBROCKMANWhether I feel competent or not I would like to say to the honourable senator first of all that he has his figures mixed up. The questionnaire to which he has referred was sent out to branches by the Australian Country Party secretariat. From what the honourable senator said it would seem that the

Country Party has 50,000 branches throughout Australia. That probably is more than the Australian Labor Party has. My information is that the questionnaires have created much interest at Party meetings and that there has been some very good debate as a result of the questionnaires. I inform the honourable senator that it has always been the policy of the Country Party to speak with one voice, which is more than the honourable senator’s Party can do. 1 read about the Launceston conference of the Australian Labor Party at which delegates who had no farming background made statements as expressions of the policy of the Party while primary industry spokesmen for the Party stayed outside the meeting and said later that those inside forming the policy knew nothing about farming. We do not want that sort of situation in the Country Party <o we make sure that we keep in touch with our branch members.

page 1805

QUESTION

MR FELIPE YSMAEL

Senator CAVANAGH:

– I address a question to the Minister representing the Prime Minister. Were representations made to the Prime Minister by Mr Bill Waterhouse, a Sydney bookmaker who has been struck off the roll of bookmakers who operate in Sydney, on behalf of Mr Felipe Ysmael, a Filipino who has been warned off racecourses for life by the ViC.torian Racing Club? Were the representations for permission for Mr Ysmael to come to Australia as a diplomat made at a time when he had been indicted to stand trial on charges relating to a $16m land swindle in Manila?

Senator Sir KENNETH ANDERSON:

– I would not have a clue as to what representations were made to the Prime Minister. If representations made to me are any criterion of those that are made to the Prime Minister, he would not know either, because one of the responsibilities of Prime Ministership or of a Minister or even the Leader of the Opposition is to receive representations made in all manner of ways and on all manner of subjects. If the honourable senator has some serious need of an answer to his question, about which I have some reservations, I suggest that he put the question on notice.

page 1806

ANSWERS TO QUESTIONS ON NOTICE

page 1806

AIRLINE MERGER IN WESTERN AUSTRALIA

page 1806

MEDICAL INSURANCE

Senator Sir KENNETH ANDERSON:
LP

–

Yesterday I gave an assurance to the honourable senator that I would have this matter looked at. I have been informed by my Department that the rules of medical and hospital benefit funds previously varied considerably and in some cases the funds covered dependants up to 16 or 17 years of age only. However, in conjunction with the recent reconstruction of hospital and medical benefit schemes and the reregistration of funds, their rules were revised to provide coverage for dependants up to 24 years of age, provided the dependant is (a) unmarried and (b) a full time university, college or school student. Commonwealth benefits are payable on the same basis as fund benefits insofar as dependancy is concerned. So dependants are really covered up to the age of 24 years, which is very close to the age mentioned in the honourable senator’s question. There may be some qualifications but the suggestion made by Senator McClelland is substantially in force. However, I also mention that this question will receive further consideration by the Commonwealth Health Insurance Council next week. When this is done and when I have further information I will readily make it available to the honourable senator.

page 1806

LIPECTOMY OPERATION

Senator Sir KENNETH ANDERSON:
LP

– Medical benefits are payable to members of registered organisations for expenses incurred for all professional medical services listed in the schedules to the National Health Act. One of the services, as described by Senator Laucke, is lipectomy for abdominal apron or similar condition. This could cover the type of case referred to by the honourable senator. 1 point out that as with other services in this category it would be virtually impossible to say that they were performed for cosmetic reasons only.

The question contains implications of the operation being conducted for cosmetic reasons or for the removal of what the honourable senator described as beer pots and flaccid bellies. There could be, apart from other considerations, a variable psychological component in these cases. To implement a system of refusing to pay benefits for operations because they were purely for cosmetic purposes is therefore not considered a practical proposition.

page 1807

OMEGA NAVIGATION STATION

page 1807

PRIVILEGE

page 1807

PORT AUGUSTA TO WHYALLA RAILWAY

page 1808

GOVERNOR OF SOUTH AUSTRALIA

Senator Sir KENNETH ANDERSON:
LP

– 1 believe that there is a protocol in relation to congratulatory signals. The honourable senator has my assurance that the protocol laid down in these matters will very properly be observed by the Government.

page 1808

PALM ISLAND

page 1808

PENSIONER TRAVEL CONCESSIONS

page 1808

IMMIGRATION

page 1809

WOOL

Senator Poke:

– On behalf of the Australian Wool Commission.

page 1809

TOWNSVILLE AIRPORT

page 1809

IMMIGRATION

page 1809

CAMBODIA

page 1810

ELECTORAL

page 1810

DECENTRALISATION

Senator Sir Kenneth Anderson:
LP

– Mr President, having regard to the interests of the Senate and all honourable senators, I ask that question time be brought to a conclusion.

page 1810

SECURITY

(Question No. 1365)

Senator CAVANAGH:

asked the AttorneyGeneral, upon notice:

  1. Did Commonwealth Police, some four or five years ago, recover a quantity of classified documents on the Black Knight project from a Mr Usher of Whyalla, South Australia, and did they instruct Mr Usher not to mention that he had had the documents in his possession.
  2. Were the documents purchased by -Mr Usher for $30 at a Commonwealth disposal sale; if so, are they not the property of Mr Usher, and what authority did the Commonwealth Police have to remove them.

Senator GREENWOOD- The answer to the honourable senator’s question is as follows:

  1. and (2) On 31st July 1964 Mr Usher informed an officer of the Commonwealth Police Force by telephone that he had found some official documents in a drawer in one of three steel filing cabinets purchased by him from the Commonwealth for $30. He arranged for (he officer to visit him and collect the documents. The officer visited Mr Usher later on the same day and collected the documents. Some of the documents were classified. The officer did not instruct Mr Usher not to mention that he had had the documents inhis possession.

page 1810

TELEVISION

(Question No. 1484)

Senator Douglas McClelland:
NEW SOUTH WALES · ALP

asked the Minister representing the PostmasterGeneral, upon notice:

  1. Has the Postmaster-General seen a statement attributed to Mr R. C. Packer, the Joint Managing Director of TCN Channel 9, that the Melbourne Herald and Weekly Times group controls four television stations in four capital cities, which is directly contrary to the provisions of the Broadcasting and Television Act and Regulations made under the Act.
  2. Does the Postmaster-General agree that the allegation is very serious, and is made not only against the Melbourne Herald and Weekly Times group, but also against the Australian Broadcasting Control Board for the way in. which the Board is administering the Act and Regulations.
  3. Does the Melbourne Herald and Weekly Times group in fact control four television stations in four capital cities; if not, what is the actual situation; if so, will the Postmaster-General take action immediately to break up this monopoly of the Australian mass media.

Senator GREENWOOD - The PostmasterGeneral has provided the following answer to the honourable senator’s question: (1), (2) and (3)I cannot say that I have seen the particular statement referred to by the honourable senator. If the statement attributable to Mr Packer was in fact made, it is clear that the relevant provisions of the Broadcasting and Television Act, which are admittedly complicated, are not understood. With regard to the interests of the Herald and Weekly Times Ltd in licences for commercial television stations, I should point out to the honourable senator that details of such interests are contained in Appendix ‘J’ of the Twenty-third Annual Report of the Australian Broadcasting Control Board which was recently tabled in Parliament. Appendix ‘J’ of that report sets out, as far as it has been practicable for the Board to ascertain, details of the multiple shareholding interests of newspapers and othersin broadcasting and television stations.

It is a fact that the Herald and Weekly Times Ltd does control within the meaning of the Broadcasting and Television Act (which is broadly the ability to control, directly or indirectly, more than15 per cent of the shares or votes in a company) the companies which bold the licences for stations HSV Melbourne, BTQ Brisbane and ADS Adelaide, with interests of 85 per cent, 30.6 per cent and 40.6 per cent respectively. The Herald and Weekly Times Ltd also has a ‘prescribed interest’, as distinct from a controlling interest, in the licence for TVT Hobart. For the honourable senator’s benefit, a ‘prescribed interest’ is, broadly, a voting, shareholding or financial interest in excess of 5 per cent, held directly or indirectly in a licensee company. The holding ofthe abovementioned interests by the Herald and Weekly Times Ltd in HSV, BTQ, ADS and TVT do not contravene the provisions of the Act in any way. Whilst the present legislation does not permit any one person (or company) to hold more than two prescribed interestsin television licences, the Act affords protection to those persons who at the time the present legislation became effective, i.e. 17th December 1964, held interests in excess of those now permitted, but which interests were within the bounds of the previous provisions of the law. As the Herald’s interests in the abovementioned four stations were held prior to the date in question., they are permitted to be retained, but cannot be increased in any manner. The honourable senator may be assured that the Australian Broadcasting Control Board maintains a constant review of the ownership and control details relating to commercial licensees and related companies, in order to ensure, as far as practicable, that the restrictive provisions of the Act are observed.

page 1811

TAIWAN

(Question No. 1565)

Senator POKE:

asked the Minister representing the Minister for Foreign Affairs, upon notice:

Has the Australian Government stated the view that Taiwan should not be expelled from the

United Nations Organisation because it was a foundation member and has always acted in a responsible manner and discharged its membership obligations.

Senator WRIGHT - The Minister for Foreign Affairs has furnished the following reply:

Yes. To give just one example of this, the Foreign Minister in his statement in the General Assembly of the United Nations on 4th October said: . . one of the realities is that the Republic of China is and has since the beginning of the organisation been a loyal and responsible member. In our view there should be no question of expelling it.’

Senator BROWN:

asked the Attorney-

General, upon notice:

  1. How many Commonwealth cars were used to maintan surveillance of the premises of the Radical Action Movement’ at Palmerston Street, Carlton, Victoria during the period 25th to 27th September 1971, and for how long were these car used for this purpose.
  2. How many Commonwealth Police were used for the surveillance, and for how long.
  3. What was the cost of maintaining the surveillance.

Senator GREENWOOD- The answer to the honourable senator’s question is as follows:

  1. Two Commonwealth cars were used for a period of 43 hours.
  2. Four Commonwealth policemen were used for the surveillance for a period of 43 hours.
  3. $469.16.

page 1811

COMMONWEALTH CARS

(Question No. 1422)

page 1811

AID FOR SOUTH VIETNAM

(Question No. 1546)

Senator GAIR:
QUEENSLAND

asked the Minister representing the Minister for Foreign Affairs, upon notice:

  1. Is the Minister aware that a typhoon recently struck the northern part of South Vietnam, causing the deaths of more than 100 people and leaving hundreds of thousands homeless, and that the South Vietnam Government has made an international appeal for food, clothing and medical aid for typhoon and flood victims in the area.
  2. What amount of aid does the Australian Government propose to give in response to this appeal, and will the Government give sympathetic consideration to the appeal as it did the case of the appeal for aid for refugees from Pakistan.

Senator WRIGHT- The answer to the honourable senator’s question is as follows:

  1. The Government is aware that the northern part of South Vietnam was recently struck by a typhoon which caused considerable loss of life and damage to dwellings and crops in a number of northern provinces.
  2. The Government of the Republic of Vietnam has not made a call for international assitance but we offered to supply galvanized roofing sheets to a value of $22,000 to help to provide shelter for people rendered homeless. The authorities in Vietnam in expressing thanks for the Australian gift have described it as ‘prompt, spontaneous and highly appreciated’. The consignment of roofing iron was despatched from Brisbane on the “Harima Maru’ which sailed on November 4.
The PRESIDENT:

– I have received the following letter from Senator Byrne:

Dear Mr President,

In accordance wilh Standing Order 64, 1 intend to move on Wednesday, 10 November - That the Senate, at its rising, adjourn until tomorrow at 10.29 a.m. - for the purpose of debating a matter of urgency, namely:

The growing concern in Australia regarding the alienation of the beneficial ownership of Australian resources lo non-Australian interests.

The level of beneficial ownership and control by non-Australian interests in public companies and corporations.

The best method of reconciling the attraction of overseas capital for Australian development with the retention of Australian ownership and control.

The best method of mobilising available Australian private capital resources and attracting its commitment to national development whether by operation of income lax, company tax or otherwise.

Yours sincerely, C. B. BYRNE ls the motion supported? (More than the number of senators required by the Standing Orders having risen in their places)

Senator Gair:

– Mr Acting Deputy President, before the honourable senator gets under way with his address on this urgency matter I draw attention to the state of the House.

The ACTING DEPUTY PRESIDENT (Senator Davidson) - I am advised that a quorum is present. Senator Byrne may proceed.

Senator BYRNE:

– I am sure that honourable senators will realise the important substance of the motion which, in its technical form, is now before the Senate for discussion. Honourable senators will also note the substance of the matter for debate and the terms in which it is couched. This matter does not purport to sheet the blame to anybody for a situation. It is not a matter which, in its terms, alleges any sort of conspiracy to allow overseas interests to take control of Australian enterprises. It is completely divorced from anything of that character. Its aim and its purpose are as expressed in its contents and in its terms, to draw the attention of the Parliament to the need for some positive action to be taken to oversee and examine in depth the developing situation in Australia in relation to overseas capital investment, particularly in Australian resources and Australian enterprises generally.

Every honourable senator will realise - I use the term in the matter of urgency - the growing concern in Australia. There has been articulated in the Press by individuals and organisations a growing concern for the extent to which the beneficial ownership of Australian resources is passing into non-Australian hands and the extent to which the beneficial ownership in public companies and corporations is, by one means or another, passing out of Australian control.

Senator BYRNE:

– Beneficial as against, say, trust ownership or control - rather equivalent to a title in fee simple in relation to real property.

Senator BYRNE:

– That is a very technical question. In half an hour I do not have time to go into the technical details. 1 think everybody knows what is understood by beneficial ownership in general terms and the intent and purport of this motion. The object of the motion is to reflect in this formal manner the concern which is being expressed nationally in so many quarters and to take positive action in this place to do something about it. What is proposed by the Australian Democratic Labor Party on whose behalf I speak today is this: We propose this urgency motion and we wish it to be put to a vote. We wish the Senate to record its sense of the urgency of the situation. That having been done we will tomorrow propose a motion in this place for the appointment of a select committee of the Senate to investigate the whole matter of public investment in Australia flowing from overseas hands. As the motion might be delayed for a long time in debate and in implementation we then propose to move that it be raised to a level of priority. This will enable its early debate and immediate determination so that such a select committee, if created and given appropriate terms of reference, can begin to operate, particularly with the administrative examination, during the long parliamentary recess which is coming up. That is the approximate manner of approach of the Democratic Labor Party to this situation. 1 know - that is why I have couched the motion in moderate terms - that we are dealing with a very sensitive situation. We are dealing with the flow and interflow of capital resources. I do not wish this matter to be debated in any atmosphere of hysteria - in other words by its being said that this country is being taken over - or with any exaggeration. That can only have the effect of deterring the legitimate flow of capital which, properly controlled and disciplined, is absolutely and vitally necessary for the development of Australian resources. But we do feel that this is a matter which must attract early examination in depth and in breadth. It is a matter at which the Australian people are looking and with which they are vitally concerned. We need quite a calm appreciation of the whole situation. I trust that the Senate, giving its mind to this position, will find it appropriate to support the creation of an appropriate select committee of the Senate to examine the whole matter so that we will know just where we are going.

This motion has 2 connotations. In my concept, a motion of this kind, to attract, must be important and it must be urgent. I think that nobody could deny the intrinsic importance of the matter which is now before the Senate. On the figures that I shall present I trust that nobody will deny the urgency of the need for consideration of the consequences of the position which is now becoming manifest. I have had a document prepared by the Research Department of the Parliamentary Library in relation to overseas investment. If it is not alarming to read it has very serious implications concerning the extent to which foreign ownership of Australian resources has developed over the years. Because my time is limited I shall refer briefly to certain sections of this document.

Senator BYRNE:

– Yes, I can incorporate the whole document. I thank Senator Murphy for the suggestion. In 1966-67 overseas controlled companies contributed 26.3 per cent of the total value of production of manufacturing industries in Australia. In 1968 they contributed 58 per cent of the total value of production of mining industries in Australia compared with 39 per cent in 1964. In the table to which I shall now refer selected manufacturing industries arc characterised by a high degree of foreign control, and these are listed. This table shows the degree of overseas control of selected Australian manufacturing industries as at 1966-67. Apparently these are the latest figures available.

Senator BYRNE:

– 1 will indicate that later on. Tlhc degree of overseas control in relation to motor vehicle construction and assembly was 87.8 per cent; non-ferrous metals, rolling and extrusion, 83.6 per cent; soap and candles; 82 per cent; mineral oils, refining, 81.6 per cent; industrial and heavy chemicals and acids, 78 per cent; pharmaceutical and toilet preparations, 76.3 per cent. These percentages show the degree of foreign control in the various products. Those figures come from the Commonwealth Bureau of Census and Statistics.

The degree of overseas control in the Australian mining industry measured in terms of value of production in 1964 comparatively with 1968 is as follows: Overseas control in the metaliferous mining industry in 1964 was 53 per cent and in 1968 it was 69 per cent. In the fuel sector of the mining industry overseas control in 1964 was 18 per cent and in 1968 it was 40 per cent. In other areas of mining, overseas control amounted to 20 per cent in 1964 and to 29 per cent in 1968. There we see this tremendous rise in the degree of foreign control of Australia, particularly in the important segments of the Australian economy on which Australia is relying more and more today and will rely more and more in the future.

In answer to Senator Webster’s query as to what I meant by overseas controlled companies, the definitions which apparently are accepted by the Bureau for the purposes of its computations are as follows: Firstly, branches of companies incorporated overseas and registered in Australia as foreign companies; secondly, Australian companies in which at least 50 per cent of the ordinary shares, or voting stock, is held by individual persons or companies resident in one overseas country, or where 25 per cent or more of the ordinary shares, or voting stock, is held by one company or a group of associated companies; thirdly, wholly or partly owned subsidiaries of companies included in the first 2 definitions. Therefore I think that is a fair definition of what is an overseas controlled company. Those percentages can then be assessed, and the degree to which there has been this movement of the ownership of Australian assets into non-Australian hands is becoming unfortunately only too manifest.

I wish to refer to the second reading speech made in the House of Representatives on Tuesday, 5th May 1970 on the

Bill to set up the Australian Industry Development Corporation. The speech was delivered by Mr McEwen, as he then was. It stated in part:

It is, nevertheless, a matter of national concern that overseas capital is usually obtained on terms which have resulted in predominantly foreign ownership of many of our greatest industrial enterprises, and fastest growing industries.

In 1969 alone, at least IS Australian owned companies, with assets worth $mom disappeared from the lists of the two largest stock exchanges because of takeover by overseas interests. There are also, of course, many other companies which have continued in existence but with the overseas ownership growing and becoming dominant.

But too frequently in the pattern of such arrangements, when the Australian partner cannot meet his share of the capital requirements - whether equity or loan- he will at best become the minor partner in the new enterprise that results.

The Minister went on to say:

Looking deeper into the statistics, we see a vastly different picture. If we look at the situation in factories with over 20 employees, we find for example, that the motor vehicle industry is nearly 90 per cent foreign controlled. The industrial and heavy chemicals industry, and the pharmaceuticals industry, over SO per cent foreign controlled. In the electrical and electronic industries, including in the total many small enterprises, overseas ownership is around 50 per cent. Production of alumina and aluminium is about 75 per cent owned overseas.

Foreign domination is not confined to the largest industries. The production in Australia of such day-to-day items as roller bearings, electrical hand tools, abrasives, and glazed ceramic tiles, to mention a few of the smaller and more specialised industries, is carried out predominantly by foreignowned companies.

That is a speech made by the Minister in the House of Representatives in the course of introducing the Bill to create the new Australian Industry Development Corporation, the intended purpose of which was to attempt to relieve the situation. We must therefore assess this situation against the general background of the present Australian position. First of all, it must be assessed against the decline in the area of rural production where there is a vast translation of the very nature of the basic Australian economy, a process which will continue, which will accelerate and which will expand in that sense. We will become perhaps more and more a secondary industrial country. We will become a country depending more and more upon the exploration for and the exploitation and development of primary resources other than the agricultural resources and those things that generally come from the land. That is the pattern today which is evident in the development of our mineral resources. Therefore now is the critical time to act. If we are to do anything about this situation it must be done now, because we stand on the threshold of a completely new economic era in Australia and the whole economic pattern of Australia will be vastly altered.

We discuss this matter against the general background of the rather fluid international monetary situation, where capital movements across the world, due to the realignment of currencies, is very fluid. With nations and individuals in those nations now seeking sources of exploration and the commitment of capital, Australia, because of ils political stability, because of its natural resources, because of other attractive elements in the Australian investment scene, will attract this money which is now becoming available to Australia. Again it is a time when we must move, if ever we are to move. We have the advent of the European Economic Community, the full consequences of which may not be known or apparent to Australia, but obviously that also will affect the flow of capital with the emergence of the new European economic unit and again the movement of capital across the world.

We have the changing structure of Australian society, and in particular we have the extraordinary consequences of the newly discovered Australian affluence and the effect of the now burst mining bubble of the mining boom, which crashed within the last 2 or 3 years. Up to that time the newly developed Australian affluent society produced savings in the hands of people which they committed to speculative enterprises, the result of which was a big inflow, from individual private sources, of capital investment into developmental and speculative enterprises. So many people in a rather unsophisticated market had their fingers burnt that many of them have withdrawn from the market, with the consequences we know. But in the affluent society there are still large amounts of free money which they are committing to ordinary deposits in savings and trading banks. In other words, there is building up in

Australia a tremendous bank of available capital for commitment in the hands of the Australian people.

This is indicated by the figures which I now take the liberty of presenting to the Senate. These figures from all the trading banks show the liability of the trading banks, excluding shareholders funds. Again they have been provided by the Legislative Research Service of the Library. In 1960- 61 the total fixed deposits in Australia were S842m: today they are S3, 188m, an increase of more than SI 00m since last year. The figures standing at current account have doubled since 1960-61 and have increased by S339m since last year to a total of $7,339m. Therefore the total available money is $8,078m in bank deposits and $3.1 88m in fixed deposits. There is in the hands of Australian citizens a vast sum of capital resources available for commitment if we can do two things. The first is: Reassure the Australian people that there are worthwhile investments in Australia which arc completely above reproach, these investments being subject to the ordinary commercial risks which anyone speculating must be prepared to accept. The second is: Reassure people that these investments will be protected and that where they commit their money they will have the protection of public authorities which will ensure that they are not the victims of depredations, bogus prospectuses or matters of that kind.

In addition to those monies which are in the trading banks, S7,634m, in round figures, is in the savings banks. There is this tremendous bank of capital monies available for investment and it is in Australian hands. This is a situation where the accumulation of these monies is a potential embarrassment to a government trying to control the economy because if those monies flow out into consumer goods the effect could greatly precipitate the inflationary process. But the people with money in the banks are reluctant, in view of their rather recent experiences, to commit these monies to mining or enterprise ventures. We must do something to see how this money can, firstly, be mobilised and, secondly, be attracted to the national investment and development market. That, as honourable senators will see, is one of the heads of reference of the subject which is now before the Senate, namely:

The best method of mobilising available Australian private capital resources and attracting its commitment to national development whether by tire operations of income tax, company tax or otherwise.

But, very obviously, a situation has developed of which great advantage can be taken. There is an alternative. We realise that in a young country such as this a capital inflow in some dimensions is, of course, of vital importance. We can never do without it in the conceivable future; we should never attempt to do without it. It is only a question of finding that balance between the inflow of capital and the surrender of the control of our own natural resources or our own national corporation activities. But we have this money as an alternative and why it should not by some means or other be made available i«td why inducements should not be held out to have it available in lieu of the need to go overseas for capital I do not know. When we have this vast bank of uncommitted capital monies it should not be necessary for us to seek the overseas markets as we do.

That is the general background against which we present this proposition. But there are particular situations against which we present it also. I refer - and I do this without the slightest criticism to the very distinguished Australian concern - to the proposed flotation or the resort to the market of Gunn Resources and Exploration Incorporated, a company which Sir William Gunn has incorporated in the United States for the development of rural properties in Western Australia and the Northern Territory. There was a case where Sir William Gunn no doubt found it necessary to approach the American capital market in the absence of money being available in the Australian market. That I do not criticise. But it is a matter for us to discover whether there are alternatives in respect of which that type of money can be discovered in Australia so that the ownership of these resources shall remain in Australian hands. I understand that no approach to the market has been made yet by that incorporated United States company. Whether it is going ahead or not I do not know; but that is one straw in the wind that has persuaded the Australian Democratic Labor Party to raise this matter at this stage.

There was a suggestion or a rumour that there might be a very big Japanese investment in the salt industry in Western Australia. That also has not gone ahead. But it would be a matter of immense consequence if that had taken place because of the trade Japan/ Australia within the jail area, the effect that would have had on the price of salt in Australia, and also the overseas price of our exports of salt. Those matters would have been of very great concern.

Then we have the further incidence of the Burmah-Woodside oil consortium in the north-west of Western Australia. As honourable senators know, the Woodside company and Mid-Eastern Oil have discovered a major gas field and also at this stage a significant free flow oilfield which may expand into something of major proportions. I confess here that I have been a very minor shareholder in Woodside over many years. Of all the millions of shares, I think 1 own 200 or 250. Also, rather recently I think I purchased 200 shares in Mid-Eastern. I consider that I should just mention that fact. It has now been proposed that a consortium will be formed of Woodside Oil NL, Mid-Eastern Oilmaybe Santos, but I am not sure - and the Burmah Oil Co., which, of course, is a non-Australian company. This is the position in relation to this takeover. A consortium of exploration companies including Woodside Oil NL, Mid-Eastern Oil and the British oil group have discovered a major field of natural gas. The field includes the Rankin North and the Scott’s Reef structures; the former is estimated to hold reservoirs of 4 trillion cubic feet of natural gas.

On 12th August the chairman of Woodside, Mr J. G. Donaldson, announced that Woodside, Mid-Eastern and Burmah would merge to form a holding company entitled Woodside-Burmah Oil NL in which Burmah would hold 50.3 per cent of the equity. With Woodside-Burmah as the dominant group within the consortium, this merger implies that effective control of the development of this discovery passes to the overseas Burmah group. It is possible that the development of this field could provide the necessary resources of power for the broad-based industrial development of the Pilbara region. One of the reasons - and this is very legitimate - for the merger mentioned by the chairman of Woodside was the likely difficulties of mobilising sufficient capital if the local companies - Woodside and Mid-Eastern - attempted to develop the discovery alone. In this regard, this project represents a possible case where the Australian Industry Development Corporation could come to the party.

In the document to the shareholders of Woodside the chairman, Mr Donaldson, said:

The proposed merger would result in a consolidation of our joint interests into one entity, Australian based and managed albeit with slightly over 50 per cent owned in London.

The real significance of a thing like this becomes apparent. This is a developing area of Austrafia with immense resources of natural gas and probably potentially immense resources of natural and free flowing oil. It is a power field that would support some immense technical recovery complex in that part of Western Australia with steel mills and activities of that kind. In other words, there is so much tied up in this area. This power field would also be contiguous to the great Pilbara iron ore region which is being developed by many people. Yet, the control of the power resource in this area on this takeover would necessarily pass - and this is acknowledged - out of Australian hands.

We have the example of the recent development by Mr Lang Hancock in relation to the Pilbara region. As this matter may be one of litigation - I am not sure of the area of it - it would not be appropriate for me to discuss it on this occasion.

Senator BYRNE:

– 1 think I could mention a fact which would be a public fact. 1 refer to a speech which was made by Mr Hancock on only 4th November this year. I speak in the context of the leases that he, and I think his partners, had discovered. These were the Angelas leases to which a permanent title was not given but was hived off and has been given to a consortium. 1 do not go into the merits or demerits of that hive off. I merely look at the consequences. Mr Hancock said:

The rights of occupancy on the Angelas were held in abeyance until, for some extraordinary and inexplicable reason, the Minister for Mines issued a statement that he had confiscated these discoveries from Hancock and Wright and allocated them to Armco Resources Pty Ltd - not the Armco Steel Corporation - but Armco Resources, a Sydney registered American company with a paid up capital of $2 and a nominal capital of $10,000; completely managed by Americans.

There is a case, of course, where again a significant portion of Australian assets is passed to an American based company. I am not saying that this is a matter of antiAmericanism, or anything of that kind.

Senator BYRNE:

– I am quoting from a report of a speech by Mr Hancock which was made at the Inaugural VicePresidential Dinner of the Contact Club in Sydney on 4th November 1971, only a few days ago. I do not go into the matter because there is litigation covering it but there is an instance in respect of which, on the facts, the assets have passed out of substantial Australian control. I am not alleging that these matters have come under no government scrutiny - that would be unfair - but over. the years guidelines as to the participation by foreign interests in Australian corporations and in Australian companies have been laid down. In 1965 investment guidelines were laid down by the then Prime Minister and the then Treasurer. They were restated by Mr Gorton, the then Prime Minister, in 1969. Wilh some amendments they have been followed through since then.

Those investment guidelines went only to the control of debt commitment, not to the control of equity commitment. There has never been a guideline laid down as to the control of equity investment in public corporations in Australia by overseas interests. It would bc a matter of interesting analysts to see the extent to which the guidelines have operated successfully or unsuccessfully. Good and all as the guidelines may be, they go only a small part of the way in this more important subject of control of equity investment. Participation in the beneficial ownership of Australian industries has never been the subject of discipline at the instigation of the Government.

I know that in 2 cases the Government did intervene. It intervened when there were rumours of the attempted take-over of the MLC Assurance Co. Ltd and in the attempted movements in relation to Queensland Mines Ltd”s great uranium discovery. The Government could intervene in those cases because of one reason - both companies, fortuitously, were registered in the Australian Capital Territory. Therefore, action being within Commonwealth power the action was able to be taken. In each case Mr Gorton moved in and stopped what would have been the complete take-over of major Australian enterprises - one in the field of assurance and the other in the field of the control and exploration of natural resources. He moved in to prevent that happening. That process has not been available in other company cases because of the limitations of constitutional power. With the re-interpretation of the corporation power, as given by the High Court in the concrete pipes case decision, there is now possibly a vast constitutional field available to the Commonwealth Government which has not been explored. What was not possible before or what was possible only in the cases where the companies were registered in the Australian Capital Territory may now be possible.

The ACTING DEPUTY PRESIDENT (Senator Davidson) - Order! The honourable senator’s time has expired.

Senator COTTON:
LP

– I think the table is of interest to honourable senators who are interested in the subject, asI think most of us are. The accumulation of liquidity which flows out of the interest that people have in this country as a place of investment gives us a great security in our reserves position when one has regard to our trading complications. We are a very large trading country against our total economic base. A great deal of our production passes into world trade. Many other countries have a much different situation. The percentage of their production passing into world trade is quite small. Our problems of maintaining a reserve, therefore, are important in maintaing stability in our situation of trading. The latest figures that I have demonstrate that our international liquidity reserves would cover our imports for something like 7 months. That is a remarkably strong situation for a country such as this to be in. The accumulation of Australian savings and the amount of over seas investment in this country, about which I am talking, provides the total amount of resources available to Australians, to governments, to the community, to semi-governmental authorities and to private industry for the development of Australia. It is this total pool of resources that provides the growth of this country, its living standards and its securities. I think that the Senate would agree totally that Australia cannot do without a volume of overseas capital inflow. As I listened to Senator Byrne, I gathered the impression that that is what he would feel. We do not have enough savings of our own to grow at the rate at which we want to grow, to give us the security that we need or to give us the total pool of resources that we need.

What is proposed by Senator Byrne in due course, as a progression of events leading out of this debate, is the establishment of a select committee to inquire into all aspects of overseas investment. I do not want to speak at length on this subject, but

I am becoming extremely concerned, as a senator in the first place and as a Minister in the second place, at the work load that the Senate is placing on itself and on senators by the accumulation of committees and committee references. I am very concerned that whenever the Senate does a committee job it should be of the same high quality that we have had in the past. I think the work of Senate committees has had a lot of attention drawn to it throughout Australia. I am a little reluctant to engage in any more Senate select committees until we see further progress in the select committees and the other committees that we now have. I think we have a fairly full plate to digest.

When we talk about the problems that are being canvassed here we should remember some things about our country. Except in one area - that is, mining speculation - throughout time Australia has been noted as a very conservative investing country. Many people known to honourable senators and to me have tried to begin projects here. They have sought Australian finance for those projects and they have not succeeded. One of the notable examples of this is the great Mount Isa complex in Queensland which could not get Australian capital support to do what it sought to do. That project was developed with overseas money simply because Australian money was not forthcoming at the time.

Senator COTTON:
LP

– In the spirit of what the honourable senator is now saying I make the comment that money is always available. What is not always available is a consensus of priority. Relating my remarks again to the previous argument, 88 per cent of the total Australian investment comes from Australian savings and about 12 per cent from the movement of overseas capital into this country. Out of their 88 per cent the Australian people can support whichever industry they like, but they cannot support all industries, because they do not provide all the money that is needed. This would be true of the days when Mount Isa was developed. At the time it would have been a conscious decision of priorities for people to say that they did not like mining and that they would put their money into something else.

Unfortunately this is a fact of life. Anybody who has been involved in seeking investment money in Australia for various corporations will usually have found this to be the pattern.

Australians like to be involved in successful businesses but are not keen on entering into buinesses that are not likely to be successful, or which will take a great number of years to come to profitable fruition, as many projects do. There are quite a few cases when we do not have the resources - I put it that way - the patience, forbearance or experience to live out the years to turn losses into profits. I know that when some of the great corporations of the world begin new projects they acknowledge that part of their capital requirement is needed to sustain the losses of the early years and to get the business operating. Suppose one went to the Australian stock exchange and said: ‘We want some money to build up a company to do something for Australia, but there will be no dividends for at least 5 years and probably for 10 years; the first 5 years will be loss years and you will have to face that fact.’ How much capital would one get? It would not be a lot. One might well say, without wishing to be unkind, that if the Australian people are concerned about the level of overseas investment and about all these other things, perhaps they could put their money where their mouths are. 1 have much information on this subject, but I do not think I have any prospect of dealing with all of it. I hope that my colleagues in the Senate will be able to present the additional material which needs to be used in this general discussion. When we talk about the capital inflow into Australia we must bear in mind that most of it has been directed to the corporate sector. Private overseas investment in companies in Australia totalled $10,238,000 between July 1947 and June 1971, and of this total 76 per cent was direct investment and 24 per cent was what might be called portfolio or institutional investment. So when people say that all this overseas money comes into Australia but it all flows out again tomorrow, this seems to be very unlikely. It is apparent from the figures that so much of the money is direct investment money which really must remain here. Investment from the United Kindom and from North America accounted for 84 per cent: They are probably the 2 greatest partners or allies that we have had in the old scene, that we have in the new scene and that we will have in the world to come. They provide 84 per cent of the total investment coming into this country.

When a country has not enough money, what is wrong with its getting from its friends the extra resources to help it. This is much like one’s own private life and one’s own affairs. The limit of what we can do with our own resources sometimes is reached and we are faced with a decision of being much smaller or of not doing the things in our affairs which ought to be done for the sake of achieving what we had set out to do. In this situation we need to get capital from someone else. When we need to do that, what we like to do is get it from people who will back us through time and who might be regarded as our friends and allies. This is just as true of Australia as a country as it is of an individual. Any one of us who goes to a bank to borrow money to help build up an enterprise does so because he has not the capital in his hands at the time.

European investment has been increasing a little in recent years. There is very little Japanese investment. Direct private overseas investment has been directed mainly to manufacturing and tertiary industries, but during the latter part of the 1960s a great part of this money went into the mining sector. I have had some experience in the mining industry - not directly, but in association with it - and my knowledge of the mining industry in the years that 1 have known it since about 1935 has shown me that it has been fully occupied with what it could generate from its own earnings and cash flows and what it could acquire from the stock exchange. It has been fully occupied in doing the things that were before it to be done. It could not acquire any greater access to funds, but suddenly in the mid-1960s there was in this country what might be called a mining resource explosion. We then had a choice of holding the growth possibilities of this great mining resource down to the level for which we could supply resources or to admit overseas resources to do it. We have done the latter. I believe that in the net balance Australia was wise so to do, because in many of these operations we were linking the development of our mining resource to an overseas market and using overseas capital more or less to make it a completely good and tight package. In many ways this is what the mining industry capital has succeeded in doing.

Income payable on overseas investment in Australia has increased steadily during the post-war period and in 1970-71 it amounted to S652m. This was equivalent to 2.4 per cent of the net national product, which is much the same proportion as occurred a decade ago. So what is really being said is that although we have much more money coming into Australia - and we have used much of this money - we are still relatively in the same position in our cost of payment for it as we were 10 years ago; but in the process we have acquired a huge internal growth, a huge internal fixed investment, a huge expansion of our resources and a much greater and bigger Australia. In recent years about half the money, which might be referred to as profit money, has been remitted and the other half has been ploughed back into industry. That is the immense importance to Australia because it is the fixed investment, the product of capital in the first stage and cash flow ploughed back that produces the growth of this country. We have to be factual about this. Once these great developments are here we cannot move them away; they remain here forever for the benefit of the Australian people, so long as the Australian people themselves are forthcoming as time goes on.

I think it is true to say that manufacturing and mining have had a concentration of overseas investment. There are reasons for this. The first reason is that the Austraiian investor, save an institution, prefers to invest infrastructural^. This is traditional, historically. Equally, some of the big manufacturing and mining complexes take such huge amounts of capital in great lumps that Australia is not able really to provide it. Equally, often they have special techniques, expertise and know-how to give and very often it is wise to take their capital so as to get their know-how and expertise.

I refer next to the general economic effects of overseas investment. It provides access to additional physical resources from abroad and permits a more rapid growth in the domestic economy than could occur without it. I think it is reasonable to say that. In addition it brings technological and managerial know-how. It can be fairly said that, on balance, Australia has a net advantage from overseas investment and not a net disadvantage. All sorts of other factors can be added. For example, there is the contribution that this investment makes to our export situation. I ask honourable senators to consider the scene in Australia from about the mid- 1960s and what we would now be thinking about if we had not generated this huge investment programme to build a great mining programme which in turn has enabled us to build a big export programme. I ask honourable senators to look at our balance of payments position and to consider the difficulties that we have had in our rural industries. In this situation investment has been an immense boon to Australia and has enabled it to achieve a state of international stability. Our balance of payments situation might not have been anything like as good as it now is if we had been relying, as we have in the past, purely on the rural sector.

Countries change and develop and they find new things to do. When they do that, they must have the resources, but in addition they must have other things also - the know-how, the skills, the capital and the outlets. In the kind of programmes that have been talked about today, so many of these things have been tied together. Government policy on overseas investment has been set down in statements to the Parliament. I think all honourable senators have had reference to those documents, and they are available for those who wish to do further work on them. In general, the Government welcomes overseas investments. But it wants to see that Australians have opportunities, within the limits of their resources and capacities for saving, to participate. It has reserved the right to do all that it possibly can to prevent takeovers when, in the circumstances of the case, it considers this necessary in the national interest. On several occasions referred to earlier, and as perhaps will be referred to later by me if I have time - which I begin to doubt - the Government has acted to prevent such takeovers. Over the years, we have taken steps to foster domestic ownership of Australian industries and resources.

These include the Australian Resources Development Bank, the consortiums of banks to back projects, the consortiums of Australian companies and the Australian Industrial Development Corporation. All these represent arrangements which this Government has made to provide devices by which the Australian people can, more and more, become investors in their own country.

The Government has sought to establish conditions in which overseas enterprises can operate securely and effectively on even terms, and. as far as is practicable, in collaboration with Australian enterprises. The Government welcomes joint ventures. It encourages them. It does everything it can possibly do to try to increase Australian participation in joint ventures. There have been some occasions when it has not been able to do so, and other occasions when it has succeeded in doing so. But in some cases the participation has become watered down because as capital needs rose and the time before dividend payment lengthened, the Australian investor showed increasing reluctance to become involved. Laws that are enacted by Australian Parliaments and enforced by the Australian courts regulate the contractural arrangements for the supplies and customers and the standards they are obliged to set and their wages and conditions.

Overseas people who come here with their capital to build enterprises do a great deal for this country. But they operate under the broad scrutiny and the legislation of this country’s Parliaments and this country’s government so they are not outside the national control and .parliamentary control. They are not in any way isolated from the problems that a country such as Australia has. They will suffer as we will suffer if things go wrong. They have a lot of money tied up here. They have a big stake in this country and a big interest in seeing that it goes on and does well.

Access to overseas capital is the mark of a developing country. It is the mark of a country in which people have confidence. Most of the countries of the Western world that have become countries of consequential industrial size have had to have access to overseas capital and overseas resources in their earlier years of their development to develop themselves to the point of what might be called a take-off. The history of the United States of America is a case which is quite remarkable. The United States had a tremendous pool of resources and very little capital. The people of that country had a great wish to build their country into a great industrial country. It is history, and I think it is true, that they grabbed ali the money and as many people as they could lay their hands on. They were very substantially in debt to overseas lenders. But having that resource and raw material those people then went flat out to build up a huge industrial economy. They did so; they paid off their debts and have become an extremely powerful country.

Senator COTTON:
LP

– I think it is fair to say that there is some truth in what Senator Murphy says, but I think it is a heavily exaggerated item in the growth of the American industrial economy. We will not have time to develop this argument today. I suggest that we might both look up the factual situation. We will discover that in the net position the American contribution to overseas defence and wars was substantial enough to outweigh any gain that country might have received by being a powerful industrial economy in times of war.

Senator COTTON:
LP

– They did pay off their debts. The honourable senator will find if he refers to the history of this that they paid off their debts very substantially out of their industrial growth.

Senator COTTON:
LP

– No, I am not doing anything of a kind. The honourable senator is trying to misrepresent what I am saying. 1 said that the Americans had developed a powerful economy and they had paid off a great part of their debts. This is what they did. Senator Murphy intruded and I fairly tried to put the position in balance with him. I do not think that what Senator Cant is saying is correct. I am a believer in the idea that if a country is to be built into something greater than it is the people have to be prepared to acquire resources and put them to work. If they succeed in doing that, they will overcome the problems, through time, of equity and debt. The problems will not be overcome if the people will not do it for themselves.

The histories of countries is like the histories of people. How many honourable senators know of people who started off in life with nothing, who borrowed money and who worked very hard and paid it back. That is what countries are all about. This is what will happen in this country. I am prepared to predict that if we continue in the way in which we are proceeding at the moment the day will come when we will find increasing ownership by Australians in the equity of the country and less reliance on borrowed money. That will flow from the energetic application of the people of Australia to their own managerial and resource development problems, the use of overseas capital, and the use of overseas skills which, once they are acquired by this country, remain here. They are not taken away, although Senator Byrne way think they are.

Of course, this is the philosophical difference between us. 1 do not agree with the honourable senator’s viewpoint. I think that I am correct. I am prepared to. have my view contested. All my experience and that of people with whom I have associated has proved that what I am saying is correct. The way to develop things is to have a go. If we have not the capital ourselves, we should obtain it, make it work, and then set to to pay it back. To me, access to overseas capital and resources is a matter of great importance in the growth and stability and the success of this country. Therefore, I do not want to see placed in the way of that availability of capital what might be called warnings signs to overseas investors that Australians do not want their capital, that they are not welcome and that in due course they will be told to leave, f know this is not what Senator Byrne intends. But it is the way some people may wish to construe what is being said here. If that were to be the case, I would regret it.

I think that the continuation of a high level of capita] inflow in the years ahead is essential to this country. I do not beg that question with anybody. I do not see how growth rates and living standards can be maintained at their present levels without access to overseas capital. I do not think that the Australian people can be asked to do a great deal more. As I have said, their rate of saving is very high. The Australian Government has taken a number of steps to try to make it possible, through time, for the Australian community, when it is satisfied that it is prepared to do so, to have a go itself to a greater extent. 1 will now deal with convertible notes. As a step towards attaining its goal of increasing Australian equity participation in Australian development the Government acted in 1969 to divert fixed interest borrowings into borrowings with a chance of equity participation. That was a very important step which has not been referred to very widely in this debate. The Government amended the legislation to restore under particular conditions the deductibility for income tax purposes of interest on convertible securities. This change was intended to allow companies in the early development stages to raise fixed interest borrowings while, at the same time, providing Australian investors with the opportunity subsequently to take up an equity holding on fixed terms and conditions. That is one of the ways I prefer to see the situation handled. I prefer to see money borrowed under some kind of note arrangement so that at a certain point in time the note can be converted into equity. That is one way in which an attempt is being made to handle this matter. It is quite a sensible suggestion and device.

Turning to the subject of institutional developments, during the past few years the Government has legislated to establish 2 new institutions designed to provide finance for projects of national importance. In 1967 the Australian Resources Development Bank was given bank status under Commonwealth legislation. The main objective of the ARDB is to assist Australian enterprises to participate more fully in the development of Australia’s natural resources. It provides finance and can provide finance for major development projects by contrast loans, by equity invest ment, by a mixture of both or by refinancing trading bank loans. By lune 1971, only a short time after commencing operations, the bank had outstanding loans of S26!m. That was a device to marshal the availability of credit within (he trading bank system in order to handle a large project which an individual trading bank itself could not handle. It has had remarkable success. I think I am correct in saying that it has participated in some of the mining developments in this country over latter years.

In 1970 legislation was passed by the Commonwealth lo provide for’ the establishment of the Australian Industry Development Corporation with’ the aim of mobilising additional financial resources, principally from overseas. Depending on the needs funds are to be applied to projects by loan investment or by acquiring an equity interest. That was a device to acquire resources overseas from countries that wanted to lend, but not to governments. They wanted to lend to operations and projects as such and would be induced to do so because they had an opportunity to gain some equity in a project as well as to invest money in it. I am afraid that this is a fact of life. You cannot do anything else if you want to acquire resources needed by this country. It is necessary (o tap the world capital markets. One section of the world’s capital markets will lend money on a loan basis for projects that have an extremely high security rating, but when projects have a risk element it is necessary to approach another area of the capital money markets. Often it is necessary for risk capital to pay a higher rate of interest and to approach a different grouping of people. Sometimes it is necessary also to offer equity in order to attract resources.

My overall argument is that Australia has to have a large flow of overseas resources to do the things that this country needs to have done. In my view they cannot be done without overseas resources. While an examination might profitably be conducted of how those resources should be managed, this country should do it in the light of its own posture and at its own point in time. Australia is very early in the development of its total resource scene and we will need to acquire money for quite a while yet. The convertible no:es situation allows us through time to participate and to take greater equity. We have institutions which are now devoting themselves more to the risk capital area where the risk to individuals can be minimised. This is more a function of institutions.

We have an interest withholding tax. Earlier this year the Income Tax Assessment Act was amended to accept the payment of interest withholding tax on bearer securities issued overseas. This is a further inducement to our situation of local investment and local ability to have a greater influence over the money that in the end is invested in this country. Looking at the matter broadly it is clear that we cannot really do without the money. The governing influence is whether the Australian people demonstrate through time their own willingness to continue a high savings rate in the community and to put those high savings into the development of their own country by investing in Australian Resources Development Bank securities or by taking shares in some of those companies to which I have referred to a greater extent than they now do.

The ACTING DEPUTY PRESIDENT (Senator Lawrie) - Order! The Minister’s time has expired.

Senator Little:
VICTORIA

– He has joined a new party since then and gets better advice.

Senator MURPHY:

– Senator Byrne was then a member of the Democratic Labor Party.

Senator MURPHY:

– You may make those fine distinctions but to us you are all - I do not say this disrespectfully - tarred with the same brush. My proposal on that occasion could not be proceeded with because at that time the Government and the Democratic Labor Party, in discussing the formation of other select committees, said that there were not enough staff, resources or facilities to set up those committees. It was said that however desirable the proposition was that a committee should be established to investigate and organise relief after natural disasters, we really could not support such bodies. So the proposition on overseas control of Australia was not proceeded with and remained on the notice paper until the elections.

It is pleasing to see the conversion because the Opposition agrees that this matter is urgent. In fact, the question of overseas ownership and control of Australia is becoming paramount in the minds of most Australians. It is not a matter of the government’s putting up the question of who runs the country and engaging in spurious political tactics. The real question facing us is: Who owns the country? It is a question of major national importance which will affect the lives of our people for many decades to come. Already we have a satellite economy. Our natural resources, industries and our land itself are coming more and more under foreign control and domination.

Our subservience to overseas interests is so great that we must do more than debate the questions raised by Senator Byrne. We must act instead of talking. As I have suggested, a committee should be set up to inquire into the overseas takeover of our national heritage.- All these questions are still vitally relevant today, as they were when 1 raised them in 1969 and when they were earlier raised in the Senate and the other chamber during the 1960s. Now that foreign takeover has been proceeding apace, the question goes beyond the extent of foreign ownership and control to what plans the Government has made to regain substantial Australian control of our resources, including large tracts of land. What plans and programmes have been drawn up to restore Australian equity where it is now subservient to foreign control? How many Australians today would not wonder about that point? Who is going to own and control this country when our children grow up? Who will be deciding their destinies? In 1970, in a book entitled The International Corporation’, Donald T. Brash, using figures derived from the United States Department of Commerce, said this about Australia:

To judge by the number of guests, Australia’s reputation as host to the international corporation stands high indeed. Over the 2 decades 1947-48 to 1967-68 total foreign capital invested in Australian companies amounted to $6,579m. Of this, $3, 134m came from the United Kingdom (47.6 per cent), $2,573m (39.1 per cent) from the United Slates and Canada, and $87 1m from all other sources combined.

For United Slates corporations the attractions that Australia offered were clear from the fact that by the end of 1967 there were only 4 countries in the world - Canada, the United Kingdom, West Germany and Venezuela - where the book value of United States investments exceeded the amount invested in Australia. In per capita terms, only Canada and Venezuela surpassed Australia as a field for direct investment from- the United States. United Stales direct investment in Australia expanded by 1,071 per cent between 1950 and 1967 compared with an expansion in total American direct investment abroad of only 403 per cent during the same period. The level of United States corporate investment in Australia more than doubled between 1962 and 1967 alone. Figures published by the United Kingdom Board of Trade indicate that British direct investments in Australia increased by 65 per cent between 1.960 and 1965. The United Kingdom corporate stake in Australia in 1965 was substantially the largest single foreign commitment of British industry. Brash commented:

At present international corporate guests occupy some of the most important rooms in the Australian economy; certainly, to push the metaphor still further, most of the main public rooms.

If I may be allowed to extend the metaphor: Our foreign guests now not only occupy the rooms but run the hotel.

Senator MURPHY:

- Senator Sim says rubbish’. Will Senator Sim deny that if they are not running the hotel they are managing it? They are certainly in a position to dictate what occurs in this country. Certainly he will not deny - I think he did not deny it on an earlier occasion - that his Party was financed by the great corporations which were foreign owned, and when that was put directly in this chamber Liberal Party leaders who were here would not deny ‘it because they knew it was the truth. Where corporations are in a position to be able to interfere directly in the affairs of the country and are able to manipulate governments, it is not too much to say that they are running the place. That is what is happening. It is as idle to say that they are not running the place as it would be to say that they are not running the banana republics.

The Australian Government has had no explicit or definite policy on foreign investment. That was the viewpoint of Brash, the great student on these matters. Brash said that Australia was ‘an almost completely open house; the only areas out of bounds are broadcasting and banking.’ Of course, he is wrong in regard to banking as it is publicly known that 86 foreign trading and investment banks are represented in Australia, over 50 of them having been established here since 1969. One of the 5 largest trading banks is British owned. Apart from the recent mushroom growth of merchant and investment banks, there is this substantial degree of control as is set out in the many articles by Professor Wheelwright.

Senator MURPHY:

– Yes. Although he is not always correct in that he understated in that particular respect. The position is extremely serious for this country, particularly when one reads the article by Mclnnes, the Paris correspondent of the Wall Street Journal’. I seek leave to incorporate that article in Hansard.

The ACTING DEPUTY PRESIDENT (Senator Lawrie) - Is leave granted?

Senator MURPHY:

– This article shows how serious the position is. We want the destiny of this country to remain in our own hands. Surely it is time an inquiry was conducted into this matter, for the sake of everyone. Australia needs technology; it needs management skills; it has needed capital. One would think that in view of the enormous resources that have been discovered here we would no longer have to import capital. I refer to the enormous mineral resources, the benefit of which is flowing overseas. Those developments have not enabled Australia to become free of the necessity to import capital. If we have been exploiting these resources in our own interests Australia would not be in the position of having to import capital. We ought to have been free of this need already. We ought to be the same as other countries with enormous resources which have used those resources for the benefit of their own people. Instead, the benefits are flowing out because the ownership and control of these great resources is more and more in overseas hands. This Government has been deprived of the revenues it would need to provide social services, education and health benefits, if it were so minded. That is why the position of our people has deteriorated and will continue to deteriorate.

The wealth of this country is not the wealth of Australians. Its wealth has come under the control and ownership of others. It is time a halt was called. Not only must this continue no further; we also must seek out ways and means of bringing our industries, commerce and land under our own control.

The ACTING DEPUTY PRESIDENT (Senator Lawrie) - Order! The honourable senator’s time has expired.

Senator Withers:
WESTERN AUSTRALIA

– That is why a Minister is in America at the moment.

Senator SIM:

– That is right. As Senator Withers reminds us, a Western Australian Minister is in America at the moment seeking further American investment for Western Australia.

Senator Byrne quoted the example of the Angela deposits. I do not pass any comments on the rights or wrongs of what happened regarding those deposits, but the fact is that the Government of Western Australia provided an opportunity for an American-owned company to develop those deposits. I do not comment on the correctness or otherwise of its judgment. It is no use the Labor Party engaging in hysterical comments and attacks on the Commonwealth Government when Labor State governments follow a policy of encouraging foreign investment.

The truth is that it is extremely difficult to find out all the facts with regard to foreign investment. Dr Brash, who was quoted by Senator Murphy, has written a book in which he has analysed American investment in Australian industry. It is rather interesting that Dr Brash started with a bias against American investment and that, after most detailed examination and analysis, he reached the strong conclusion that American investment has been of great benefit and advantage to Australia. Professor Arndt, who is a well known economist, is on record as having said that one of the great problems is to get all the facts. Professor Arndt stated:

I think it is quite possible that the benefits, direct and indirect, of overseas investment during the past decade have greatly outweighed the costs, direct and indirect, and will continue to do so. My point is that I do not know and I cannot see how anyone can find out.

From those comments we can see that Professor Arndt admits that this matter involves a great number of intangibles. Nevertheless, that is a statement from a well known economist who, in the past, was not unknown to the Australian Labor Party.

In trying to examine foreign investment in Australia, we should look at the reasons why overseas interests invest in Australia. Dr Brash did this. This point is rather interesting because sometimes people are inclined to say that overseas interests invest in Australia only because they seek to obtain profits, to exploit our resources and then to get out. The truth is much the other way. Certainly overseas interests invest here because they believe that we have a stable political and economic climate. Enterprises in Australia are profitable. But these are not the only reasons. A survey of 100 American companies operating in Australia carried out by Dr Brash in an endeavour to try to establish the motives for their investment in Australia, showed that the greatest proportion invested in Australia because of obstacles to trade. They were frightened that, because of high tariff barriers and import restrictions, they would be cut out of the Australian market.

The next reason for investment in Australia was to take advantage of the expected growth of the Australian market. The third reason was to gain access to Asian markets. The next reason was to avoid unfavourable conditions for expansion in the United States of America. Only a small proportion of these investors said that they invested here because of Australia’s stable economic and political climate. No investor said that increased profits was the purpose of investment in Australia. In other words, the majority of investors came to Australia to avoid obstacles to trade.

Let us look very briefly at some of the advantages of foreign investment in Australia. 1 mention the tremendous technical skills and know-how which we have been able to import from the United States and from other countries to assist our industries and to provide greater technical knowledge and greater managerial skills here. These gains cannot be measured in dollars and cents. Australian workmen have been provided with new skills, the benefits of which they would never have enjoyed had it not been for the introduction to Australia of American investment in particular.

As my time has nearly expired, . and I have dealt very little with what Dr Brash has said, may I say in the minutes left to me that Dr Brash in his analysis discovered that many American companies prefer an Australian equity in their operations. Indeed when overseas interests invested in Australian firms to the extent of 25 or 30 per cent of the equity they found in time that the Australian sharebolder wanted to sell out. He was not prepared to accept a small return. He wanted a quick return on his money. Company after company came under United States control because of the attitude of Australian shareholders. Even when American interests tried to retain Australian shareholdings, the Australian shareholders preferred to sell out. Dr Brash deals with this fact. As Dr Brash has been accepted as an authority, I point out that he has come out strongly in favour of foreign investment in Australia. He believes that the benefits of this investment greatly outweigh any disadvantages. 1 have in me a streak of Australian nationalism. I. want to see greater Australian participation. I believe we have to continue - as Mr Tonkin is continuing - to encourage foreign investment in Australian industries. I do not believe that we have the capital resources to develop them. I believe that such measures as were outlined by the former Prime Minister should be taken. The Minister for Civil Aviation has quoted a number of these measures to encourage greater Australian equity and to put into the hands of Australians the means to obtain that equity. Many interests such as Hamersley Holdings Ltd are now throwing their companies open to Australian shareholding. Australians are taking up that shareholding. Mount Isa Mines Ltd was given as an example. It was an ailing company and it was taken over by an American company. In time Mount Isa Mines Ltd has returned largely to Australian ownership.

Senator SIM:

– It might be more than that, but it is at least 48 per cent Australian equity. Without the risk capital which came from the United States in the 1930s Mount Isa would have closed down and 1,000 men would have lost their jobs. If we go back to the food processing industry we will find that United States capital has rescued ailing Australian companies which are closing down. Not only have these companies been restored but they have been expanded, thus providing more employment opportunities, greater skills for Australian workers and gains to the Australian economy. We have to keep a balance in this situation. Certainly we all wish to encourage greater Australian equity. To talk about Australia being taken over by foreign companies or foreign control is so much humbug. I think the Minister for Civil Aviation quoted figures in relation to investment in Australia which showed that, by far, Australians are the greatest investors in our industry. While foreign companies overall play a major part in developing Australian industries they certainly do not play a dominating part.

Senator Sim:

– Get on to Mount Newman and Gove.

Senator CANT:

– The honourable senator took up the question of the Hamersley group. What happened with the Hamersley group was that the iron ore reservations were granted to a man by the name of Lang Hancock who handed them to Conzinc Riotinto of Australia Ltd. Conzinc Riotinto joined with the Kaiser Steel Corporation of California. The company was CRA 60 per cent and Kaiser Steel Corporation 40 per cent. Senator Sim went on to say that shareholding in the Hamersley group was now available to the Australian public. I venture to suggest to him that it is not available to the Australian public. When the company went into production it was persuaded to give the Australian people a 10 per cent interest. It did so and it sold the shares at a premium of $2.50 a share - they were 50c shares. The Australian people paid $25m for a 10 per cent interest in the Hamersley group. Kaiser Steel and CRA retained a 90 per cent interest for an investment of $25m. The only risk capital which was put into the Hamersley group was $2. 5m to conduct a survey of the deposit and a feasibility study for the railway line and the port. The Australian people were never invited to invest in that company until after it proved a goer. They were then sold shares at a premium of $2.50.

Subsequently Kaiser Steel Corporation sold another block of its shares at $5.17 a share and it now has 33 per cent of the

Hamersley group going for nil. Is this the sort of investment that honourable senators opposite want. This is the sort of thing that they want to talk about. Great play is being made about a gentleman in Western Australia called Lang Hancock. As I. said earlier, he was granted the Hamersley deposits. He was also granted the reservation at Paraburdoo which he let out on royalties to t’he Hamersley group. He was also granted the reservations at Koodiaderie which he has also let out to Hamersley on royalties. He was granted the Rhodes Ridge deposits which he is negotiating to Texas Gulf Sulphur. This man is taking practically the whole of the Pilbara iron province. It is probably the biggest iron province in the world. He has not put one penny into it. Every reservation which he obtains he sells to someone else. I know that at the present time there is some litigation going on in relation to the Angelas deposits. I am a little sad about the Angelas deposits, because no sooner did the Western Australian Government have those deposits returned to it through court action than it granted them to an American company, Armco Resources Pty Ltd. Again the big reservations of iron ore go into overseas hands. One reservation which one can look at with some little pride is Mount Newman. It is two-thirds Australian owned. It is owned 33i per cent by Broken Hill Pty Co. Ltd and 33i per cent by Colonial Sugar Refining Co. Ltd. The other 33J per cent is owned by Amax Mining Inc. of America. That is the only company with a substantial Australian equity in that great province. The rest of it is owned overseas. If any honourable senator wants to know what Australia gets out of this, I remind him that the latest figures I have been able to get were the 1968 figures in relation to Hamersley Iron Pty Ltd. That company produced 10 million tons of iron ore, made a profit of $20m and employed 357 men. It paid no tax on that profit because of the capital investment. The only return to the Australian people was the income tax imposed on the salaries of the workers plus, of course, the tax paid on the royalties that Hancock received.

Senator Sim also talked about Mr Tonkin sending Mr Graham and Mr May to Japan to negotiate overseas investment in Australia. I think that Mr: Graham and Mr

May went to Japan to write contracts, not so much for investment. But whatever was the situation, there does not exist now, nor has there existed in the past 10 or IS years, a State Premier who has not gone overseas or sent his Ministers overseas in order to sell Australia. Every one of them has done it. Mr Tonkin is not the only one. Mr Askin and Sir Henry Bolte also have been overseas for the purpose of selling Australia. Let me remind the Senate that the Australian Labor Party is not opposed to overseas investment but it is opposed to uncontrolled overseas investment. There are avenues open to the Australian Government to retain an equity for the Australian people.

We can learn a lesson from what happened in relation to the Bougainville copper. Conzinc Riotinto of Australia Ltd wanted to develop the Bougainville copper. It was told that it could develop it on condition that it made available 20 per cent of its holding to the Administration of Papua New Guinea at par. In last year’s Budget we loaned the Administration of Papua New Guinea the money to take up that 20 per cent interest. Why cannot the Government force upon overseas investors some joint venture operations in order that Australia will be able to maintain an interest in its raw resources. It need not necessarily be a 20 per cent interest; it might even be a 40 per cent interest; it will differ from industry to industry. What is wrong with the Government endeavouring to persuade overseas investors in the raw resources of Australia to do some processing of those raw resources in Australia. I have referred to the number of people employed by Hamersley Iron. We are running into a pool of unemployment but we could increase opportunities for employment in Australia by insisting that certain processing be carried out in this country.

Senator Byrne spoke about the Burmah Oil Australia Ltd-Woodside Oil NL takeover or merger, and I wish to refer to it also. I seek leave to incorporate in Hansard a document which was sent to me by Mr Hughes-Jones entitled ‘Who is to Control this Key Australian Asset’, which refers to natural gas.

The ACTING DEPUTY PRESIDENT (Senator Lawrie) - Is leave granted? There being no objection, leave is granted. (The document read as follows) -

WHO IS TO CONTROL THIS KEY AUSTRALIAN ASSET?

TO ALL CONCERNED IN THE FUTURE OF OUR NATION:

In May of this year a decision was taken by the Boards of Woodside Oil N.L. (of which I am a member) and its affiliated company, Mid-Eastern Oil, te farm-out portion of their equity in 140,000 square miles of tenements extending from a little north of Barrow Island to Northern Territory waters. The locality may be termed, for the purposes of brevity, the North-West Shelf.

Briefly, the history of the leases involved is that they were taken up initially by Woodside and Mid-Eastern. Some were granted by the Government of the Commonwealth and some by the Government of Western Australia.

As the art of deep water drilling developed, interest in these tenements mounted and there was no shortage of overseas aspirants for a stake in them when a decision was reached by Woodside and Mid-Eastern that they alone could not foot the huge bill that seismic and drilling programmes would involve.

This necessitated approval of the Commonwealth and Western Australian Governments and this was forthcoming to a three-way split which gave Shell a 33i per cent interest, Burmah Oil 33i, and Woodside and Mid-Eastern combined 33i per cent. There were other lesser considerations to the agreement involving a period in which the Australian interests were carried and a cash payment that would accrue to them in the event of production of oil or gas.

Shell, however, was party to an agreement with Caltex in which, it seems, they were to share equally in any prospecting interest either might acquire in Western Australia. This resulted in a split of Shell’s interest. Something of a similar kind obtained between Burmah and BP. The result is that today the owners of the leases are Shell 16i, Caltex 16*, Burmah 163, BP 16), Woodside 25, and Mid-Eastern 8i per cent. Burmah was made operator for the consortium.

Burmah is. in addition, a 31 per cent shareholder in Woodside.

A very flattering response was received to the recent farm-out proposal. One candidate, for instance, offered a very substantial sum in cash and a big interest-free loan, which placed the total value of the lease at well into the minefigure bracket, even before the present finds of gas and condensate.

Nevertheless, Burmah, by virtue of an agreement under which it subscribed for its 31 per cent shareholding in Woodside, exercised its right to veto the farm-out, at the same time acknowledging that this action imposed a responsibility on it to assist Woodside.

Woodside, at this stage, had as cash in hand, as calling power and as unpaid premium for Burmah’s shares, sufficient funds to carry through its share of the exploration programme for about two years. Mid-Eastern was in a similar position.

Woodside’s shares, at that time, were at a discount on the Stock Exchanges of Australia and the position looked grim, lt seemed most unlikely that the market would support new issues of capital.

But, within a matter of days, an important change came over the scene. Drilling of both the Rankin North No. 1 and Scott’s Reef No. 1 wells was yielding strong evidence of hydrocarbons. Testing could not take place until termination of the holes, but it has since proved the existence of huge reserves of gas and of condensate. Condensate, of course, can bring higher prices than crude oil.

The Honourable the Minister for National Development, Mr Swartz, and the Honourable the Minister for Mines in Western Australia, considered these results of sufficient importance to justify pronouncements on their part, and. because any facts we have been given are second hand, I choose to quote statements by Burmah representatives at a Press Conference in Perth.

The Melbourne Sun News-Pictorial, reporting the Conference, said:

The well intersected a gas reservoir 1,857 feet thick (in Rankin North No. 1) in which there were 10 pay zones containing gas and condensate. Total thickness of these zones was 1,020 feet.

Exploration manager of BOC of Australia Ltd, Mr D. R. McDonald, yesterday, described it as a superb reservoir”.

The group is looking to proving up reserves in the field, which covers 50 square miles, of a minimum of 4,000,000,000,000 (4 trillion) cubic feet of gas. “However, the group is known lo be confident of having much bigger reserves than this.

The reservoir intersected by the North Rankin well is thicker than any one of the Bass Strait finds and almost half as thick again as the huge natural gas field discovered in the North Sea.

Mr McDonald said yesterday that the public generally was not aware of the value of a natural gas find.

But the group sees the potential of the North Rankin well as similar in value lo a 30,000 barrels a day oil flow.’

Further on, the report reads: “BOC’s operations manager in Western Australia. Mr Lindsay Franklin, said yesterday that the North Rankin well had so far indicated that a deposit big enough to support a commercial venture h;ul been found.

He said there would be more than enough for the Stale’s industrial requirements.

It could be a cheap form of power for iron ore and bauxite plants and it could also be shipped to Japan or the West Coast of the United States’, he stated.

Mr Franklin said the Japanese were aggressive seekers of natural gas as an energy source. “The group is looking for a daily production rate of 500 million cubic feet of gas from the field.

This would mean the simultaneous production of more than 10,000 barrels of condensate a day,.

Condensate is an almost colourless liquid rich in petrol and by-products. It is in demand as a fuel and sells for about the same price as crude oil.

An offshore platform on the structure could cost $15 to $20m. The platform at the site would have to be as high as a 50-storey building.

A pipeline 84 miles to the nearest land could cost $40-$50m and plant to liquify the gas another $150m.’

The costs could total $220m and Woodside’s share on this basis could be $55m. But let us take a longer term view and put Woodside s requirements at $80m.

Fortunately Scott’s Reef, for which production estimates are not yet available but could be great, has a neighbourhood island on which it is thought a liquifying plant for the Japanese and other overseas markets could be established. This would obviate the need for a liquifying plant on the mainland at this stage, but the possibilities in this regard not only be finally determined by feasibility programmes and the drilling of step-our wells.

Importantly, meanwhile, there are a number of other and bigger structures which are believed to bc on the same trends and drilling has started on Rankin No. 1 and Bedout No. 1. The Bedout structure alone has been said to extend over 750 square miles. This would be huge in anybody’s language.

Besides gas and condensate there is, of course, always the possibility of obtaining crude oil from one or more of the structures. We proved a flow of 1,014 barrels a day from an earlier well. Legendre No. 1, but this was not considered to be commercial.

To determine just how far Burmah was willing to go in fulfilment of the responsibility it had incurred through use of the veto on a farm-out, our Chairman, Mr 3. G. Donaldson, went to London for conferences with the Burmah Board.

As a result of this he brought back a proposal for the formation of a joint company in which Burmah would hold 50.3 per cent of the issued shares.

This gives Burmah control of the company and, in spite of the very convenient facade of an Australian Chairman and an Australian Board, it will undoubtedly call the shots as it has done already as evidenced by ils use of (he veto.

Woodside, Mid-Eastern and Burmah will each put their respective interests into the new company, Woodside-Burmah. and these total 50 per cent of the holdings of the six partners.

In other words. Burmah will have command of 50 per cent of the leases in the North-West and to this should probably be added the influence it probably has in BP in which it is a very major shareholder.

Not only, then, would Australia lose all control of what could prove its richest asset, but effective control is being vested in one overseas company. This fact, while it may not attain its full significance until more is known of the actual gas, condensate and oil content of the North-West areas, could well prove in the years ahead to bc a calamity of lbc first order. It could in fact be little short of a national disaster.

Woodside and Mid-Eastern Directors were called together on Tuesday of last week and told of the proposal. We were required to finalise the matter on the Thursday morning with virtually little opportunity to come up with alternative methods of financing our needs.

I, alone, objected to the scheme and felt it necessary to tell my fellow members of the Woodside Board that I would fight it in other places and in every way at my command. 1 was asked if 1 proposed to resign but said that ‘No. I could fight it much more effectively from within.’

Perhaps the most fruitful course open to me is to obtain the ear of the Commonwealth and Western Australian Governments which have, presumably, to approve the transfer of the shares if it is wished to take them out of the names of the present owners and put them into the new company.

However, the companies may avoid this by leaving them in the names of Woodside, MidEastern and Burmah, and taking these over as subsidiaries.

If this be done, all that may remain for the Governments to do is to give the parties concerned a clear statement of their attitudes to the proposals. Such a statement could weigh heavily with them.

Other courses open to me are to. marshal public opinion on the matter but this is not easy for an individual, nor is it within the realm of possibility for an individual to circularise the 30 or 40,000 shareholders of Woodside and Mid-Eastern.

Additionally, it would be an uphill fight with the numbers heavily stacked against mc from the outset. As stated, Burmah already holds 31 per cent of the capital of Woodside and the interests of the Chairman and associates could mean that the proponents of the scheme have a 40 per cent holding from the start.

Mid-Eastern might hold better prospects in this regard, but. here again, the proponents of the scheme are in a strong position and it has been said thai the Mid-Eastern situation ‘has been taken care of. This could, although it is only conjecture, explain how it is that Woodside shareholders are lo receive 1 share in the new company for one now held in Woodside, whereas Mid-Eastern shareholders are to receive 4 for 5. Their entitlement is clearly only 4 for 6. 1 summarise, now, the reasons for my opposition to the proposal.

As an Australian i think it is imperative that a halt be called to overseas domination of a key Australian industry. The industry needs a measure of overseas help but not to the extent of complete control. Particularly is this the case with the NorthWest Shelf which could prove to be Australia’s greatest bonanza. In this regard, there is a tendency hi the moment lo say it is too early to make such predictions. Al this stage, therefore. I have confined any figures herein lo Burmah’s own predictions.

Burmah s interests may not coincide with Australia’s interests. Burmah could be styled an industrial giant. It has interests in many parts of the world. It is not an unfair exercise ot the mind to picture a situation in which, say, the world ruling price for natural gas in liquified form is of the order of 20c a thousand cubic feet. The cost of production by Australia could be, say, 10c. whereas the cost of production elsewhere in the Burmah stable could be 7c. To which source would an overseas company such as Burmah be likely to turn for supplies? We could hardly expect it to be Australia. (The figures used are not intended to relate to possible costs and profits. They are purely hypothetical. Nevertheless, 10c a thousand cubic feet may be a reasonable profit margin and would put total potential profit from North Rankin structure alone at $400mM

Burmah’s interests may not coincide with those of other shareholders. Not only could Australia’s interests suffer, but for the same reasons shareholders could suffer badly. Election bv Burmah to allow its NorthWest interests to remain fallow at am stage could disappoint shareholders and cause their shares to come on the market, where, if it. be so minded. Burmah could buy them, thus increasing its control.

While I personally believe this mav not be the policy of the present generation of Burmah directors and Australian representatives, it, like everything else, is subject to change. We have seen the danger of top representation in Australia being changed, already. It has happened twice in our experience.

Even conceding the goodwill of the present generation of Burmah personnel, every Australian must already be concerned to see the control of 2 out of 4 of Australia’s gas fields steadily, but surely, falling into Burmah’s hands. On top of the threatened final erosion of Australian control in the North-West it is a matter of concern that the South Australian fields, which are now supplying Adelaide and will be supplying Sydney, are steadily falling under Burmah’s dominance. Not only does the proposed company directly extend Burmah’s influence in South Australia, and not only has Burmah by virtue of its interest in Santos got a sizable holding in the South Australian field, but recently it has made a successful bid for a controlling interest in Reef Oil which, in turn, has an interest in the field, and already controls Basin Oil.

On completion of the present exercise involving Woodside and Mid-Eastern, Burmah’s interest in the South Australian fields would be something like (his:

BURMAH OF LONDON

100 per cent of 50.3 per cent of

Burmah Oil Australia Burmah-Woodside

Ltd 53 per cent of Vamgas. 27 per cent of Santos up to 65 per cent of Reef 50 per cent of Basin plus Reef’s 30 per cent of Basin. (The two holdings in Basin give Burmah an effective 50 per cent of Basin.)

Santos, Reef, Basin, and Woodside and Mid-Eastern all have holdings in the South Australian field. It would be interesting to determine the full extent of Burmah’s control in respect of this field, but obviously it is intent on dominance. I have not had time to work out the full significance of this web of interests, but I suggest that these facts, in themselves, indicate a trend that could become a source of deep concern to Australian Governments in the years ahead, and could have an important bearing on the lives of all of us.

  1. It is argued that Woodside would not be able to raise the sums of money needed to develop the huge gas deposits of the Northwest Shelf. When I challenged at our Board meeting that this had not been properly researched I was told that Poseidon and a number of others had not been able to raise locally the funds they need. Why, it was asked, should we expect to be able to do what others have been unable to do. Over the years, in my negotiations at Government level on behalf of clients, I have always found the impossible a worthwhile challenge and perhaps I am too prone to say that nothing is impossible. To reinforce my belief that the Australian money market could be prepared to help in the development of this key Australian industry, I have discussed the position with some influential people, and although they naturally could not give a firm answer I was left in no doubt that they would be pleased to look very sympathetically at any proposal we might submit. Accordingly, I asked our Board for deferment of consideration of the matter for one month and for the appointment of a committee of which, I suggested, 1 might be convenor. There was no seconder for this motion and I felt constrained to ask why members of the Board should be so hell-bent in their desire to surrender control of this Australian asset to overseas interests. We had money to tide us over for quite a few months and urgency could not be pleaded as an ingredient of the position.
  2. It was argued, too, that the potential of the North-West Shelf was becoming ‘too big for us’ to handle and that we would be out of our depth in it. It was said that we needed the assistance of someone like Burmah to handle it. I must agree that this is correct in certain respects, but I cannot help wondering what a Board of some of Australia’s greats of the past and of the present would do in similar circumstances. I think of what men of the calibre of the late W. S. Robinson, the late Sir Essington Lewis, and some men of the present generation, would have done. Our companies patently need the help of the best brains Australia can produce. I am an Australian to the core and believe that even the ability and determination of the right Board the integrity of Woodside and Mid-Eastern could be maintained and at least a worthwhile measure of Australian control of the North-West Shelf could be assured. As hateful and offensive as such an idea would be to my political beliefs, I am firmly of opinion that failing all else it would be better far to nationalise our industry than to drop it so lightly into overseas hands.

There are many more things I could say, but the foregoing will more than satisfy readers that it is a matter of the gravest concern and demands remedial action immediately. As the matter stands there are inherent in it a number of the gravest dangers.

Thanking you for your patience.

  1. N. Hughes-Jones.
Senator CANT:

– I wish to quote briefly from the document because at one point it sets out that Burmah Oil had a 33 per cent interest in the 140,000 square miles of exploratory permits in the north of Australia, which includes the Northern Territory. The Shell Co. of Australia Ltd had a 33 per cent interest and Woodside Oil and Mid-Eastern had a 33 per cent interest. Subsequently it was broken up so that the Shell Co., Caltex, Busman Oil and British Petroleum had a 16 per cent interest, Woodside Oil had a 25 per cent interest and Mid-Eastern Oil had an8 per cent interest. In addition to this Burmah had a 31 per cent shareholding in Woodside. The overall result of the takeover by Burmah of Woodside and Mid-Eastern was that Burmah received a 50.3 per cent interest in the gas. The gas in Bass Strait is owned 50 per cent by Esso Standard Oil (Aust.) Ltd and 50 per cent by BHP.

If honourable senators look at the diagram contained in this document they will find that Burmah of London owned 100 per cent of Burmah Oil Australia Ltd, 27 per cent of Santos, up to 65 per cent of Reef Oil, 50 per cent of Basin Oil, plus Reef Oil’s 30 per cent holding in Basin Oil. It is one of the largest companies operating in the Cooper Basin in South Australia. So not only the gas found on the north shelf of Australia, including the Northern Territory, is overseas owned, but also 50 per cent of the Bass Strait gas is owned overseas. Also Burmah is moving in with a monopoly of the South Australian gas. Yet this Government sits back and does nothing about it. It allows this valuable asset that belongs to the Australian people - not to the Government, to the Liberal Party or the Country Party but to the people of Australia - to be taken away by overseas investors as they like. Do honourable senators think that the companies will be influenced by what happens in Australia? lt will be influenced by the decisions that are made in the board of directors rooms in New York and London.

Senator Bonner:
QUEENSLAND

– Are they improving that land?

Senator MAUNSELL:

– Today, the overseas people are improving the land. Let me refer to Cape York Peninsula which was certainly undeveloped and in which the only communication was by way of pedal radio and a few bush tracks. Americans, most of whom are individuals and not companies, have gone there and invested large sums of money. Pasture improvement has been carried out. But they are still on leasehold land of which, under the conditions of the Queensland land laws, half can revert to the Crown after 15 years and the whole can revert to the Crown after 30 years. Individuals can retain a priority right over a living area, which may be 10 per cent of the area held.

Leaseholders are compensated not for the land but only for structural and visible improvements on it. Naturally it does not pay anyone to take the improvements away and in most cases the improvements are sold to incoming tenants for a lot less than they are worth. These are things that have to be stated. It is interesting to note that in most cases Australians just have not bothered to invest or are not prepared to invest in the northern part of Australia. This is country which a lot of northern Australians regard as having a climate made up of 6 months of summer and 6 months of hell. That is their description of this country and they would not think of living there. If overseas people such as Americans are prepared to go there, good luck to them.

There are 2 Australians besides Sir William Gunn who have been enterprising, and who have been trying to develop the northern part of Australia. One of them is Mr Bryce Killen, who has been trying to get Australian capital. It is interesting to read an article which appears in tonight’s issue of the Sydney ‘Sun’ newspaper which carries the headline: ‘Pastoral Float a Flop’. The article states that the public share issue offered by Northern Agricultural Development Corporation Ltd closed last night 50 per cent under-subscribed. Mr Killen was trying to raise this money in Australia. He is the man with the Katherine meatworks and other enterprises in the north. However, he was able to obtain less than 50 per cent of the amount required.

Senator MAUNSELL:

– Maybe we have. Prior to Senator Byrne coming into the chamber I was mentioning that most of the American and overseas investors in northern Queensland and the Northern Territory arc individuals and not companies, and they are prepared to live there.

Senator KEEFFE- What about Sir William Gunn’s companies?

Senator MAUNSELL:

– The honourable senator talks about Sir William Gunn’s companies and says that he has gone overseas to sell Australian interests. But they are not Australian interests; they are American interests. Sir William Gunn has not been able to float money here. The Americans hold the controlling interest in those companies. Sir William went over there to raise more money to develop properties because he could not get that money here.

Another man who comes from northern Queensland and whom I know pretty well is Clive Foyster. He has been earnestly trying to develop the northern areas of Australia. He is doing a job in the north at Lakeland Downs and has spent a fortune there. But he needs a lot more money to develop his port so as to dispose of trie thousands of tons of sorghum that he is growing in that tropical area. But did he get his money in Australia? He could not raise it anywhere in Australia and he had to go and get Japanese money.

Senator MAUNSELL:

– Well. Senator Keeffe, may I once again impress on you that it is all leasehold land. All these people are selling are the leases of land owned by the Crown. In case the honourable senator does not know the land laws in Queensland or the land laws of the Northern Territory, that is a fact. Surely anyone who has any understanding of the pastoral industry knows that if one is to spend big money in developing undeveloped areas it is a long time before one gets any return on capital. If droughts or other unforeseen events occur it could be 30 or 40 years before one gets a reasonable return on capital. This is the reason why in the Northern Territory the terms of leases were altered from 30 years to 50 years. This was done in order to encourage people to spend large sums of money and therefore develop these areas. Let us face it. if we look at a world map we find that the distance between Darwin and Sydney, Melbourne or Canberra is some 1,700 nautical miles direct while it is only 820 miles or 120 miles more to Singapore. The distance is only 350 miles from Darwin to Timor and less than 150 miles from the Cape York Peninsula to the mainland of New Guinea. Unless we do something about developing the northern areas of Australia, bearing in mind the teeming populations to the north of us who are living on small areas of land, we might not hold it in the long run. I say that while there are people with risk capital who are prepared to come out here and to develop leasehold land in the north, good luck to them. 1 have not heard too many cries from the Opposition or elsewhere about the last Northern Territory float which Sir William Gunn offered in America - I refer to the Humpty Doo business in which American investors lost millions of dollars.

Senator MAUNSELL:

– Yes, but at least Australia money was not going in there. I have not heard anyone here suggest that Australian capital should have been diving into Humpty Doo. All that is said is: ‘Ah, it is a good thing we were out of that’. Who is to say that the new enterprise of Sir William Gunn, which is a risk again, will not suffer the same fate if there were a slump in the beef industry of Australia? lt would be a different story if Australian capital were invested. The Opposition would say: ‘No, let us be out of that’. I remember that on one occasion Senator Milliner asked a question in which he wanted “to know whether people in the primary production areas who were suffering the effects of the rural recession were hostile towards Americans coming out here or about Sir William Gunn selling parts of Australia to America. Out in my country and in a lot of the other depressed areas property owners would be happy if Sir William Gunn brought investors to those areas. Unfortunately a lot of these people are in the position that they cannot sell and they cannot carry on. The depressed prices are such that they would welcome anyone who had the money and who was prepared to develop the area so that they could sell.

Senator MAUNSELL:

– Yes. This kind of rubbishing of the people who are trying to attract development to northern Australia is typical of the Opposition. It will rubbish anybody who tries to do something constructive. Apparently to make a profit is a great crime. The Opposition does not want to have anything to do with schemes that fail, but if a scheme is a success, if something is discovered and if it is a going concern, the Opposition wants to be in on it.

Senator MAUNSELL:

– The employment that is being created in Australia as a result of the inflow of overseas capital is terrific. Australia is a growing country. It is not possible for us, with our resources, to develop the country and the employment producing industries to the extent necessary. We could not possibly do that without overseas investment. We have absorbed into our population the migrants that we have been bringing into the country. We have the lowest unemployment rate in the world and we have been able to maintain it while carrying on this development. Certain people have made profits. Some overseas investors have been fortunate. In the main, however, little mention is made of those investors who have thrown money down the drain. A lot have invested in oil and mineral search in Australia. They have spent a fortune here.

The ACTING DEPUTY PRESIDENT (Senator Laucke) - Order! The honourable senator’s time has expired.

Sitting suspended from S.S7 to 8 p.m.

The PRESIDENT:

– Order! The honourable senators time has expired.

Senator Mulvihill:

– But you give them bargain rates on royalties.

Senator JESSOP:

– In spite of what the Opposition says I believe it is essential for the development of this country to encourage capital inflow. I am sure that our progress would be retarded without such stimulation. Of course, some problems arise in respect of the foreign exchange required to service overseas investments, the possible loss of local ownership and the control of our industries and resources.

Senator JESSOP:

– The Government recognises these problems and keeps a constant watch to minimise costs. As Senator Mulvihill has suggested, when Mr Gorton was Prime Minister he recognised that such problems arise. In fact, he took action to protect the interests of various industries.

Senator JESSOP:

- Senator Gair has referred to another area in which the Government took action to see that a takeover bid was nullified. Let us have a look at the record. The Minister for Civil Aviation referred to measures that have been taken and I am glad to see that the Opposition has recognised that some action has been taken in these matters. I would like now to deal with some points raised by Senator Cant in his speech. If I remember correctly, he implied that no tax was paid by the Hamersley group. He must have had amnesia at that stage. Obviously he has forgotten that the group in 1970 paid to the Western Australian Government royalties totalling $7.6m. Progressively to that stage the Western Australian Government had received from Hamersley $22m.

The interjections coming from honourable senators opposite indicate that they are a little sensitive about this matter. Otherwise they would not be reacting so violently, lt is all very well to accuse overseas companies in this regard but it is another matter when the Opposition is reminded of the tremendous benefits that accrue from enterprises in various parts of Australia.

Senator JESSOP:

– I was about to refer to what Senator Cant had said. Senator Webster is quite right. Senator Cant referred specifically to Armco and the Angela mining leases in Western Australia but he did not mention the help given by the Tonkin Government at that time.

Senator JESSOP:

– That is quite right. The Western Australian Labor Government encouraged the Armco people to take over that area so that honourable senators opposite are skating on thin ice in directing criticism at overseas investment in Australia. Senator Murphy said that overseas interests would take over the hotel. It is quite ironical that the Labor Premier of South Australia has made 2 or 3 overseas trips with the object of attracting industries to South Australia. I encourage his efforts in that regard because, as Senator Bishop said earlier, certain companies are moving out of South Australia. I therefore think it is fair to commend the South Australian Premier for seeking to attract overseas companies to that State. I doubt that they will come, because they realise the disadvantages of working under a Labor administration.

The Labor Premier of South Australia has suggested that he would welcome Asian capital in order to build an international hotel in Victoria Square, Adelaide. He has gone further and offered the particular site, which is worth about Sim, and has dangled an additional carrot by suggesting that State land tax would be waived in respect of the enterprise. It is almost incredible and one can appreciate the agitation of other hoteliers in South Australia who have been denied that particular incentive. It seems 10 me to point very strongly towards the insincerity and the double standards of members of the Opposition, particularly in their attitude to this debate. I commend the Democratic Labor Party for bringing this matter forward.

The PRESIDENT:

– Order! The honourable senators time has expired.

Senator Murphy:

– ls there anything novel about that?

Senator GREENWOOD:

– I suggest that there is a great deal novel about that. Certainly there is a great deal about it which runs counter to what should be regarded as the current stream in the area of recompense for wrongs suffered as a result of acts which have been done. It is true that in the Australian Industries Preservation Act there was a provision which stated that if a person suffered an injury he could recover treble damages. But I remind the Senate that the Australian Industries Preservation Act was initially enacted in, T think, 1906. In those days there were many other provisions which gave expression to what I might call the private right to obtain punitive damages. In those days there was a prevalence of what might be called the informer actions. If an individual took action against a person because of a wrong which contravened the criminal law he could recover the penalty and pocket it himself. The whole development of our criminal law has been to move away from that concept of an individual benefiting from another individual’s wrong doing. I think that is a desirable trend in society.

Equally one might say that what Senator Murphy is proposing is designed to give to an individual a recompense far and away beyond any amount which he may have actually suffered and give him what is in the nature of exemplary damages. The expression ‘exemplary damages’ is well known to lawyers. An element of punishment is involved in exemplary damages. From talking to some lawyers in the chamber I know that there is a distinction between the House of Lords in England and the High Court in Australia as to what should be regarded as the criteria upon which exemplary damages are awarded. But whatever be those differences the tendency in law - both in England and Australia - over the last few decades has been to move away from the award of exemplary damages. A person who sues for loss or damage which he has suffered should be entitled to reover, and to recover in full, the loss or damage which he has suffered. He should not be entitled to recover additional amounts which, it may be claimed, are capable of being awarded to him because of the punitive example it is desired to impose upon the wrongdoer. If there is an element of wrongdoing on the part of the person who is being sued should it be a matter for the criminal law? In the circumstances in which Senator Murphy has moved this amendment I think he ignores the fact that clauses 96 and 97 refer to penalties which a person may have imposed upon him for a breach of any of those provisions. These are two of the very few clauses in this Bill where a penalty is imposed on a person who is guilty of the offence. The penalty is a fine not exceeding $10,000.

On top of that Senator Murphy says that a person might be able to sue for the wrong and recover treble damages. I think that that is heaping vindictiveness upon punishment. I do not think that is the correct policy on which this Parliament should set its seal. For those reasons I hope that the Opposition will think twice about this provision. If a person feels that a wrong has been committed he can sue and recover the loss which he has suffered. If he is not satisfied with that sort of remedy he can say that the person concerned should be punished by law. He can charge him with an offence. That offence carries with it a maximum penalty of $10,000. I think that is a fair indication of the way in which the community should regard this offence. But to say that he can be punished by a penalty of $10,000 and an award of treble damages is, I think, taking the matter too far. After ail, there are many other agreements in this community which are not so accommodating in terms of recompense to an individual who wants to take action. It would be an anomalous position to arrive at the result which Senator Murphy is contending for.

Senator Wright:
LP

– Is the idea that this is a power of dispensation yours alone or do you base that upon any text to which you can refer?

Senator MURPHY:

– I suggest that if the honourable senator reads what the constitutional historians such as Lecky, Hallam and others say he will find many references to this dispensation with the law being one of the burning issues of the 17th century.

Senator MURPHY:

– If you will listen, 1 am saying that to my mind this is equivalent to the dispensation which occurred in the 17th century when the British Government was claiming the power to be able to apply the law to some and to dispense with the law in respect of others. When provisions that no prosecution can be commenced without the consent of the AttorneyGeneral or only by the AttorneyGeneral are constantly being inserted in the law, this Government is returning to the same state of affairs. This is true not only of the English system but also of many other systems of law in countries which have had the same kind of struggle. The endeavour has been to put a law in the hands of some person to decide whether the law will be invoked against certain persons. I think that is an undesirable practice. The endeavour should be to make a law which applies to everyone. The strength of the system which we have inherited is that the law should apply to all. It is only in the rarest cases that there should be a provision such as this. Yet it seems to be becoming more and more common in legislation coming before this Parliament. I suggest, with great respect, that this practice should be looked at to see whether it should be continued.

I move on to clause 168. I wish to insert a new clause after clause 168 but I think the convenient course would be to wait until these clauses have been dealt with before proposing the new clause.

Senator Murphy:

– Would not that situation be met by orders for costs or proceedings against persons who were doing it constantly to have them declared vexatious litigants?

Senator GREENWOOD:

– The point which Senator Murphy makes, is not without merit. Notwithstanding what he says, the prospect of costs being awarded against a person is not always a deterrent. I think he knows that on occasions people have been declared vexatious litigants when, after a long time in which the penalty of costs has not deterred them, the AttorneyGeneral of a State or of the Commonwealth has felt impelled to go to the courts to have those persons declared vexatious litigants. The point I make is that there are prosecutions. Throughout our criminal law the same concept is accepted and applied, that there are some offences for which the consent of the Attorney-General or of an officer appointed by the Attorney-General is required. That is to ensure that the prosecutions which are instituted have the authority of government behind them. I do not think that the community, or the administration of justice suffers. In a sense, that is basic to the approach which Senator Murphy has adopted.

In this day and age we have what in the 17th century, to which Senator Murphy alluded, was not apparent. In this day and age we have a parliament which exercises a constant scrutiny and in which the decisions, the actions and the inactions of Ministers of the Crown are open to question and certainly are open to criticism. I think that if in a particular case a prosecution is not launched, reasons will be required to be offered in the open forum of the Parliament as to why the prosecution is not launched. That is a safeguard which I know all honourable senators would accept, and a safeguard against what would otherwise be regarded as an unfair dispensation of the law. Senator Murphy compared this provision with the situation that existed in the days when the monarchy reigned supreme, when the monarch decided whom he would prosecute and whom he would not prosecute, when he would dispense justice and when he would not dispense justice. That argument has its attractions, but it is far removed from the relevance of this day and age.

In the administration of justice it is prudent from time to time that some prosecutions should be launched only with the authority of the Attorney-General, the Crown Solicitor or some person who represents government so as to prevent a constant avalanche of private prosecutions being instituted by people who feel that they have some crusade in which they must engage but which is designed purely to harass people in a way in which they should not be harassed. But having said that, and having indicated the Government’s opposition to any proposal that this provision should be altered, I indicate that I take note of the points which have been made by Senator Murphy. It may be that the Attorney-General is not the appropriate person to determine whether prosecutions should be instituted. It may be that some other person representing government should make the decision, but I do not concede that that is the case. All I say is that it is a matter which will be taken into account in our consideration of the new legislation.

Clauses agreed to.

Proposed new clause 168a.

Senator Greenwood:
LP

– Why is it proposed to leave out proposed sub-clause (2.) from the amendment as circulated?

Senator MURPHY:

– It has been indicated to me that the substance of that sub-clause was included in clause 168.

Senator MURPHY:

– I thank the AttorneyGeneral. The indications which were given to me about a possible duplication were incorrect and I shall proceed with the amendment as circulated. The purpose of the proposed amendment is to require a report by the Commissioner every 3 months. It is thought by us that in view of the great national importance of the matter it is desirable that attention be paid not only by the Commissioner but also by the Parliament to what is happening in a field which requires action and in a field where the Commissioner has said that very little progress has been made. This seems to us to be even more imperative now than it was in 1965 when we suggested that there should be regular reports, more frequently than annual reports, in order to show what was really happening in that field, lt is true that this requirement would impose a further task upon the Commissioner, but it may be that the Commissioner might want the opportunity to bring before the Parliament facts about what is happening. Certainly we are indebted to him for what he has said annually as to the lack of progress and the inability to achieve any real progress under the Act as it stood.

Perhaps it would be salutary if in the progress of what we hope will be a temporary Act the Commissioner is given the opportunity - in fact, the duty - of furnishing to the Attorney-General for presentation to the Parliament a report on how the temporary Act is operating. One could think of no better way in which to stir up everybody than if the Commissioner were able to say what was happening and the AttorneyGeneral presented to the Parliament a report of what he said. For example, the Commissioner might report that another 3 months has passed without our getting further ahead. In any event the AttorneyGeneral would be required to report to Parliament at the end of the year.

Reports to Parliament are extremely important. A report on this subject is perhaps of greater importance than a report in any other field. We know that the economy is sick. I heard someone say the other day - I think it is perhaps true - that whilst enormous attention is paid to that 30 per cent or so of the economy which is concerned with wages and the manufacturing industry as it affects wages, the real areas of softness where the economy is sick are apart from that and are those areas in which restrictive practices are operating to make the economy sick. I think it would be extremely helpful to the Parliament if we were reminded of what is happening to the economy more often than annually - quarterly - during this time when we have no effective trade practices law.

The reality is that with this measure about to go through the Parliament, we will be no better off than we have been during the last 3 or 4 years after the Act was proclaimed because, as the AttorneyGeneral has told us - and it is correct - apart from the amendments which were made in this place the Bill is virtually a repeat of the useless Act that was passed in 1965. In this event, why should we not be told each 3 months of what is happening and what is not happening? That will help to stir everybody into action in order to remedy the position. I commend the amendment.

Senator Greenwood:
LP

– All I suggest is that for this quarter the Commissioner could only report that the High Court declared the Act invalid and that the processes of having the legislation passed through the Senate occupied the balance of the quarter.

Senator MURPHY:

– It boils down to this: If we do not have provision for a quarterly report we will not receive any report at all, unless the Attorney-General has in mind not introducing these laws at all until some time after 30th June next year. However, I am pleased to have struck some chord of sympathy in the AttorneyGeneral. He says that he finds some merit in what has been said and that he will take it into account. He said that the Commissioner will no doubt find some other way of doing this. That being said, I am happy with the position. Although I would like the matter to be put to a vote, I do not propose that the Senate be divided on it.

Proposed new clause negatived.

The CHAIRMAN:

– Is leave granted for Senator Murphy to move in the direction he has indicated? There being no objection, leave is granted.

Motion (by Senator Murphy) proposed:

Thai clause 3 be amended by inserting after Pan III the following new Part:

Pan IIIa. - Predatory Pricing and Monopolisation.

Senator Sir Kenneth Anderson:
LP

– May I intercede to suggest that the 2 taxation Bills be taken together in a cognate second reading stage debate. I understand that an amendment is to be moved to one of the Bills. We could deal with that separately by vote.

The PRESIDENT- ls the Opposition agreeable? There being no objection, that course will be followed.

Senator Prowse:

– Would it not accentuate the very thing you are complaining about if the Government did what you propose?

Senator WILKINSON:

– I have not done anything about it. I am saying what the Government is doing. I have not altered anything at all. I am stating the situation as it exists under the Act. Let us now look at the other end of the scale - a very important one - and see how it affects the person who is in the high income bracket and is availing himself of the benefit of insurance. A very large amount can be deducted from taxable income for insurance payments. I think the figure is $1,500. Referring to the $16,000 income bracket, if we multiply the relevant amount by 62.4c we see that this is of great benefit to the person in the high income bracket. That is why I, on behalf of the Opposition move the following amendment:

Leave out all words after ‘That’, insert - the Bill be withdrawn and re-drafted because it (a) does not comprehensively restructure the rate schedule and (b) increases the tax payable by certain individuals on aflat percentage basis’.

The effect of the flat percentage basis has been revealed in the illustrations I gave relating to the deductions for spouses of persons on varying incomes, and for insurance deductions. We can apply it also to the amount allowable for medical expenses, payments to hospital benefits funds, education and so on. All these things have been included.

A number of suggestions have been put forward as to how the tax schedule could be varied and how we could have different types of income tax. There are a lot of authorities in the world for such a proposal. I think you have heard me mention negative income tax before, Mr President, or reverse income tax. Since I mentioned this subject last year I have done further reading on it.I have been very intrigued by the merits of a suggestion, that came to me through the usual service provided by the Parliamentary Library, in an article entitled ‘Guaranteed minimum income’ written in Canada by James L. Clare. He proposes a system called ‘Canada Income’. I do not want to go right through this article; 1 merely mention it as being one of the very good systems which aims to eliminate poverty. That is particuarly relevant at this time because of the situation facing our primary producers and particularly age pensioners and people receiving social service benefits.

Under this ‘Canada Income’ scheme, social services as we know them would be abolished and replaced with a much more realistic living allowance. I am only suggesting this idea so that it can be looked at by the Treasurer and his Department. The characteristics of this ‘Canada Income’ scheme are that it eliminates poverty; it provides an incentive for the poor to work: it breaks the poverty cycle and removes the need for public housing and other subsidies to the poor, it is readily and fully understandable to the poor; it is visible and open for comprehension by non-poor; it takes care of sporadic and seasonal employment most readily; it eliminates testing; it eliminates snooping; it minimises administrative overheads. This article, which contains some tremendously important suggestions, warrants investigation to see whether the system could be incorporated into or adopted by our tax law. It applies not only to taxation. As I have said, it also provides for a more reasonable approach to social services as we know them, which is the most important part of the operation.

Those are the main reasons why we of the Opposition believe that this Bill should be withdrawn and redrafted. It is not pertinent to the subject for me to go through the Bill because we do not agree with it. I have endeavoured to show that we believe that commonsense indicates that we should apply some other principles, in the changing conditions that we find in the world at present, in order to make our income tax law more realistic and a more operative way of raising our finance. This also would be helping those in need in the community.

The PRESIDENT - Is the amendment seconded?

Senator Sir KENNETH ANDERSON:
LP

-(New South Wales - Minister for Health) (10.18) - I thank the Senate for its general approach to the cognate debate on the Income Tax Bill 1971 and the Income Tax Assessment Bill (No. 3) 1971. I feel bound to remind the Senate that the Opposition has moved an amendment to the Income Tax Bill 1971. If this amendment were carried, it would defeat the Bill. It would be lost. It would not proceed to the Committee stage. The amendment reads:

Leave out all words after ‘That’, insert - the Bill be withdrawn and redrafted because it (a) does not comprehensively restructure the rate schedule and (b) increases the tax payable by certain individuals on a flat percentage basis’.

In fairness to Senator Wilkinson who led for the Opposition I should say that he said that because of its very nature the amendment inferentially means that the Opposition is moving to defeat the Bill, and therefore that the amendment should be faced up to, considered and voted upon on that basis. I thank Senator Wilkinson, Senator Guilfoyle and Senator Little for their brevity in the expressing of their views. They did not lose anything by their brevity. They made the points. I thank Senator Guilfoyle particularly for bringing out some of the substantive matters which are in the Bill. This means that I, as the respondent to the debate, have no necessity to enlarge upon the points which she raised. I shall advert to 2 matters in the atmosphere in which this debate is being conducted. It is the purpose and desire of the Opposition to defeat the Bill because of a flat increase in additional levy. I shall make some reference to the increase in company tax rates. I shall deal with the last item first.

I think there is an implication that in relation to company tax something has been overlooked which is significant. It is true that the increase in company tax rates are confined to the rates on the first $10,000 of taxable income. Consequently the additional revenue is modest, being only $26m in a full year. But $26m is part of the budgetary considerations and this is a Budget Bill But the change is much more important than the revenue yield would indicate. I do not wish to disparage $26m in a revenue sense but a far more important matter is involved in this besides the revenue. Opportunities for a form of tax avoidance by means of company splitting will be avoided. That is the purpose of this provision. I ask honourable senators to understand that this is not an illegal avoidance. Within the Act there were legal opportunities for tax avoidance. It is calculated that those opportunities for tax avoidance will be taken away by this Bill. Because of the lower rate of tax on the first $10,000 many companies have adopted the practice of splitting into a number of separate but smaller companies purely so as to have the aggregate income taxed at the lower rate. This new provision is inserted in the Bill to stop that practice.

This was never the intention of the tax on the lower rate but, as it happens, that is the way the previous Bill was drafted. The practice involves plain abuse of the taxation system in that sense. What we are doing now is making certain that that avenue is not open for what I have chosen to call - perhaps not in as hard a sense as it sounds - tax avoidance. By reducing opportunities for this form of action - the reduction of the differential between rates on the first $10,000 and the rest of the taxable income - we are taken towards a more sound and equitable system in relation to company tax. That is the point that I wanted to bring out.

The other point which I wish to bring out is the method taken by the Opposition to defeat the Bill. The Opposition’s criticism is that the increase in the flat rale on the additional levy is contrary to the theory of progression. I think this point needs to be examined very carefully. In any event it is rather inconsistent with the argument used’ by the Opposition on previous occasions. I am not going to go to the barricades in an aggressive sense, but I merely remind the Opposition of this. I think that the claim about progression would be true if the additional levy were a flat percentage of taxable income. But of course that is not the case. The additional levy, as a flat percentage of the tax, calculated at the general rate, reflects the progression of the general rate with the result that the tax payable, including the additional levy, is neither more nor less progressive than the tax calculated at the general rate.

Senator Sir KENNETH ANDERSON:
LP

–

The honourable senator can read this a couple of times in Hansard tomorrow and he will appreciate the point. We all have difficulties with taxation. We understand the generalities of taxation. We certainly understand taxation when we obtain our tax assessment. But when we get into the refinements it is sometimes a little awkward for us all to understand. I am no exception. But I say to honourable senators opposite that in 1959 when we had a debate on this matter of the incidence of the reduction, the argument put by the Opposition - I do not need to spell it out; I have it written in a very tight form here - was rather opposite to the approach it is now taking. I will not bother to have the amendment moved by the Opposition on that occasion incorporated in Hansard; 1 would not like to hurt anybody’s feelings.

The fact of the matter is that an amendment has been moved and I think this is the critical thing in it. We are dealing with 2 Budget Bills. We are having a cognate debate. An amendment has been circulated in relation to the Income Tax Bill. The effect of the amendment, if it were carried, would be to defeat the Bill and lose us the revenue. The Bill would go, the revenue would go. But the matter would not remain there because it would become a major matter in the constitutional situation. It would become a question of crisis. While it is natural, proper and appropriate to criticise a Budget measure because it may fall short in certain fields and might need to be enlarged in other fields, nevertheless the decision taken by the Opposition in this case to move a motion which would defeat a Budget Bill is something which I suggest is not appropriate. Clearly the purpose of the Bill is not only to make some provisions in company law to raise revenue, but equally to close certain avenues of tax avoidance. For those reasons I commend the Bill to honourable senators and ask for a speedy passage. I ask that we take the motion for the second reading, with the amendment, of the first Bill.

Question put:

That the words proposed to be left out (Senator Wilkinson’s amendment) be left out.

Senator Milliner:

– We are not opposing the Bill.

Senator WEBSTER:

– I realise that the Opposition is not opposing it, Senator, but there are one or two points I would like to make because 1 have been very close to a number of manufacturers who have found competition by overseas suppliers so extreme that it has been necessary for them to prompt the Government in this matter. I refer the Senate to the annual report of the Export Payments Insurance Corporation and particularly to the item on page 9 of that report which relates to capital goods. That sums up how our exporters feel at present. The words are these:

In no other area of international trade is the competition keener than for capital goods contracts. Here, the advanced nations vie for business with a whole range of sophisticated techniques and inducements. Buyers are courted with long term loans at favourable rates of interest and sometimes a grace period of several years before repayments commence, lt is all the more creditable, therefore, that in this climate Australian exporters achieved the success that accompanied their efforts in the past year.

The tenor of the Bill is indicative of the fact that Australian manufacturers, in attempting to gain exports, have found enormous overseas competition based mainly today on the availability of finance for the buyers whom they hope will purchase the goods. Capital goods are going from Australia to Hong Kong, Indonesia, Malaysia, New Caledonia, New Zealand,

Taiwan and Thailand. All have had some benefit of cover by the Corporation’s business.

There is quite a deal to be said about the move in relation to buyers credit, the level of the contracts which may be entered into, the fact that 20 per cent of the initial contract is required as a deposit so that the Corporation can be confident that a genuine contract is being entered into - which means that only 80 per cent of the contract volume may be insured by the Corporation - and the fact that there shall be at least 65 per cent Australian content in the contract to be entered into. These are important matters and matters to which the Minister for Civil Aviation (Senator Cotton) referred in his second reading speech. In the context of the general points raised by the Opposition and as are expressed clearly in the Minister’s second reading speech I have great pleasure in supporting the Bill.

Senator Wilkinson:

– I was not saying that.

Senator COTTON:

– 1 know that you were not. 1 am taking up a bit of time, late at night, to give you some extra information. The Bill is really an amendment to extend the capacity, power and usefulness of an extremely useful body. When we note that in ils first year it insured S22m worth of exports under 14 policies and that at 30th June 1971 there were 915 policies in force with a face value of $51 1m I do not think anyone needs to elaborate any further. The Corporation is a first class Australian institution. It was devised to serve an Australian purpose, lt has flexibility. It is being extended to have extra capacity. It covers the trade needs of this country in a very difficult and emerging time. 1 think we should congratulate the Government for introducing the Bill, and at the same time thank honourable senators for their help in getting it through.

Question resolved in the affirmative.

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

The PRESIDENT:

– 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 affirmative.

page 1812

OVERSEAS INVESTMENT IN AUSTRALIA: OWNERSHIP OF AUSTRALIAN RESOURCES AND COMPANIES

Formal Motion for Adjournment

Senator BYRNE:
Queensland

– I move:

I do so for the purpose of enabling a debate on a matter of urgency, namely:

  1. The growing concern in Australia regarding the alienation of the beneficial ownership of Australian resources to non-Australian interests.
  2. The level of beneficial ownership and control by non-Australian interests in public companies and corporations.
  3. The best method of reconciling the attraction of overseas capital for Australian development with the retention of Australian ownership and control.
  4. The best method of mobilising available Australian private capital resources and attracting its commitment to national development whether by operation of income tax, company tax or otherwise.
Senator Webster:
VICTORIA

– What does the honourable senator mean by beneficial ownership?

Senator Webster:

– What does beneficial ownership mean when there is a lease?

Senator Murphy:

– The honourable senator can incorporate it.

Senator Webster:

– What does ‘controlled’ mean?

Senator Sim:
WESTERN AUSTRALIA

– Litigation.

Senator Sim:

– What time was that statement made?

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– I welcome Senator Byrne’s suggestion that we should conduct this debate in a fairly detached and high-minded spirit. I think that would be the way in which all honourable senators would seek to conduct the debate. I sympathise with him because I could see that he had a great deal more material to present than time would permit. It may well be that other honourable senators will suffer the same fate, f make a few broad comments to begin with. Australia as a country is characterised by a very high level of savings. I think that in the Western world it has one of the highest levels of saving. I believe that the level of saving in Japan is ahead of our level, but not by very much. After Japan, Australia is the next country demonstrating a high capacity to save and, therefore, out of this to invest in our development and in our resources. It is true that the savings have not provided enough money to do all the things that we wanted to do. An illustration of the ratio of Australian and overseas investment over the last decade would be something like this: Of the total investment in Australia, about 88 per cent would come from Australian savings and accumulations and about 12 per cent would come from overseas investments. Characteristically Australia chooses to invest in certain areas. We have a lot of things to do with the money that has been accumulated. Many of these things are what are called infrastructure developments.

Senator Byrne commented on the savings banks accumulation of deposits, but it should not be forgotten that the savings banks savings are substantially an accumulation of money by Australians that the banks devote to providing housing finance and equally to supporting the Australian requirement for borrowing within Australia for Australian purposes. Therefore the money is not available to be invested again. In the main it is hypothecated for those purposes. Savings banks finance comes also from a highly proper level of retained savings. They offer a low interest rate to depositors, and they have a very high degree of security. Therefore they are not very keen, as savings banks, to lend their money in anything which could in any way be called speculative. We all remember the problems that faced the savings banks during the depression. In one notable case a savings bank defaulted. Traditionally in this country savings banks are most conservative in their programmes of investment. I do not think anyone would want them to depart from that programme. I certainly would not.

In the process of becoming a country that has become attractive to other countries for capital supply, Australia has become noted. I have a table which sets out the state of the Australian overseas reserves or the Australian international liquidity, lt goes from 1967-68 to 1971-72 and contains the latest figures as at the end of September 1971. The table shows that our total international liquidity has practically doubled in that short period of a little less than 3 years. This is a significant illustration of the confidence that people around the world have in Australia as a place to which to send their money. I seek leave to incorporate in Hansard the table to whichI referred.

The ACTING DEPUTY PRESIDENT (Senator Davidson) - Is leave granted? There being no objection, leave is granted. (The document read as follows) -

Senator Byrne:

– Perhaps the money was not available then. It has been available only in more recent years.

Senator Murphy:

– Did not 2 World Wars enable them to do that? When their creditors became involved in the European war the Americans rose to great prominence by paying off the debts?

Senator Cant:
WESTERN AUSTRALIA

– That is not what you are saying. You are saying they paid off their debts.

Senator Cant:

– You are misrepresenting the position.

Senator MURPHY:
New South WalesLeader of the Opposition

– We of the Opposition welcome the proposition brought forward by Senator Byrne to discuss overseas ownership and control of our resources and industries. I would include even our land. This has become a burning issue in Australia. After the elevation of the present Prime Minister (Mr McMahon) I predicted that the issue of foreign investment which had been fairly quiet during the Primeministership of John Gorton would revive fairly quickly in Australia, because there is a deep feeling throughout Australia that whereas the former Prime Minister in his own inimitable way was endeavouring to maintain Australian control over our resources, it is not true of the present Prime Minister. He has been identified throughout his career as being less partial to the interests of Australia and to the desirability of maintaining Australian control over our own destinies than most Australians would like.

As I predicted, so it has come to pass not only in the Senate but all over the country where people are again starting to discuss the issue of overseas ownership of our resources, industries and land. People who were relatively quiet when John Gorton held office as Prime Minister now feel that there is an open go. This is why ventures like that of Sir William Gunn are begun overseas. People who have felt restricted during the last 2 or 3 years now feel that they have an open go and can do what they like because a government is in office that will not present any difficulties for them. There will be no dramatic moves to try to prevent takeovers of Australia’s land or resources. That is the present climate and it has produced some converts.

This is not a new issue on the Senate. Shortly after I entered the Senate I, along with many others, asked many questions about increasing overseas ownership and control of our resources. On 15th April 1969 I moved that a Senate standing committee be established to be called the Standing Committee ou Overseas Control of Australian Resources, Commerce and Industry. An interesting debate ensued. I am sorry that Senator Byrne is not in the chamber because I mentioned to him that I would refer to the fact that in that debate he interrupted me when I said that foreign control of Canada’s economy is greater than it is of Australia’s, but Australia is second only to Canada and that in that country an inquiry was conducted. Senator Byrne interrupted and asked:

How is the conclusion that Australia stands second to Canada arrived at? Apparently the extent of control in Australia is known. If that is so, what is the necessity for further inquiry?

Senator Little:

– No, the Queensland Labor Party.

Senator Sim:

– Rubbish.

Senator Sim:

– Do you accept Brash as an authority?

Senator Cotton:
LP

– Yes.

The ACTING DEPUTY PRESIDENT - There being no objection, leave is granted. (The document read as follows) -

Combine those two notions, the internationalisation of production and the prominence in it of very big companies, and you get the vision of an integrated World economy dominated by a handful of giant corporations. That vision, or nightmare, has hardened into a prophecy. … By the end of the century, 300 firms will control three-quarters of the assets of the non-communist world. The apparent precision of those forecasts is quite bogus they could prove to be wide of the mark. Yet the difference might still not be visible to the naked eye: tomorrow’s economy, whether dominated by 60 firms or 600, will look highly concentrated and very international.

This prospect scares many people. It scares those who dislike bigness, who detest the industrial system or the consumer society or Americans or just foreigners; it frightens those who fear their social fabric, or ancient culture or antiquated business methods could not withstand exposure to the international firm. On none of these scores need it frighten Australians … we are on the winning side - admittedly as a junior partner, asa satellite economy. … It would be as well if we relished being on the winning side - because we can’t get off. . . . Scores of international companies already are solidly entrenched here, they are growing faster than the economy as a whole and they could continue to do so, in all likelihood, even if they got no further capital from abroad, as long as they went on getting technical help from home. … We might be in the cheap seats, but we’re padlocked in. We can grow inside the system being fashioned by international companies, but not outside it, and certainly not against it.

Does this mean that we must simply accept the rules of the game, as dictated by the big companies? Well, I’m afraid it does in the end come down to something like that. [Emphasis added] (Neil Mclnnes, an Australian who is Paris correspondent of the Wall Street Journal, in ‘The Challenge to Australia of the Multi-National Corporation’, paper presented to the Australian Institute of Political Science Summer School, Canberra, January, 1970.)

Senator SIM:
Western Australia

– The Leader of the Opposition (Senator Murphy) is a master of the question ‘Have you stopped beating your wife?’ He repeated the allegation he made years ago that the Government was financed by all sorts of odd corporations, which he failed to name, and that they were manipulating the Government. When we ask him to prove it, he asks us to deny it. I suggest to Senator Murphy that if he wants to be taken seriously and not to be regarded as

Speaking a lot of gibberish, it is his responsibility to prove his allegations. It is not the responsibility of somebody else to deny them. Turning now to this debate, Senator Murphy accepted and then qualified that Dr Brash was an authority. 1 believe his qualification was the result of second thoughts. Perhaps Senator Murphy has read Dr Donald Brash’s book ‘American Investment in Australian Industry’ from which I will quote a little in a short while.

It is rather interesting that Dr Brash started off by referring to the fact that the Australian Labor Party has been hostile to foreign investment. He went on to say that its criticism, like that of politicians in some other parties, was more emotive than scientific. I would almost substitute the word ‘hysterical’ for ‘scientific’ because from time to time a note of hysteria comes into the voices of some members of the Labor Party - not all - when we are discussing foreign investment. I do not deny - indeed, I believe it is true - that there is a growing concern in Australia over foreign investment, a concern which is justified in some areas, although in some it is probably more emotive than scientific. I recognise this. I feel some concern with respect to foreign investment in some areas. I welcomed, as I noted Senator Murphy welcomed, the statement made by the former Prime Minister, the right honourable member for Higgins (Mr Gorton), in which he laid down guidelines for foreign investment. I still support those guidelines and the measures that he announced. I believe that they were correct and that they should be followed.

On the subject of the encouragement of foreign investment in Australia I take issue with Senator Murphy when he says that Australia has gained no real benefit or any great benefit as the result of our mineral development because the outflow from capital earnings has been so large. As it is not my wish to misquote the honourable senator, if what I have said is not correct, I would invite him to contradict me. I think that his view of this great mineral development is pretty naive because, whatever Senator Murphy may say. I do not believe that this development would have been possible without foreign investment which, in the case of our mining industry, came from the United States. This was risk capital of a very high order. Large sums of money were involved. The truth is that not only was money of this nature not available in Australia but also that Australians were unwilling to indulge in this type of risk investment.

This fact is proved by the problems that were experienced in obtaining Australian equity in the Mt Newman undertaking and the problems that have arisen recently at AMAX, which is a large development in the Kimberleys area of Western Australia, in obtaining Australian equity. The Gove bauxite project ran into problems when a 50 per cent Australian equity was sought. Frankly, this is the sort of equity which I would like to see in this type of development. Indeed, I would not mind if the equity were higher. I could quote plenty of examples of the problems associated with endeavours to obtain Australian equity in mining development either because the money is not available or, more probably, because Australians are not willing to invest in this type of enterprise. Plenty of evidence to prove this point is available.

I note with some interest and applaud - I do not make these remarks critically - the statement made recently by the Labor Premier of Western Australia who, since taking office, has sent 2 of his ministers, the Minister for Mines and Minister for the North West, and the Minister for Industrial Development and Decentralisation, to Japan to seek Japanese capital to ensure the continued development of the mineral resources of Western Australia. I mention this because it seems to me that the Labor Party has 2 standards. In a publication that I have here, the Premier of Western Australia, Mr Tonkin, is quoted as having said:

We won’t put any restriction on any company seeking to invest in Western Australia’s mineral resources.

Obviously, Mr Tonkin sent his Ministers overseas to obtain investments without restrictions.

Senator Jessop:

– It has about 48 per cent Australian equity.

Senator CANT:
Western Australia

– Not very long ago cries were going through this chamber and the other place, when there was some industrial strife, in this country about who governs Australia. People were referring to Mr Bob Hawke. I put it straight to the Government: Who owns Australia? I think this is the question that people have to ask themselves. It is all very well for the Minister for Civil Aviation (Senator Cotton) to say that 88 per cent of the investment in Australia is generated within Australia and that 12 per cent is generated outside Australia. This belittles the question. It is not so much the volume of investment that one should be looking at; it is the area of the investment. Senator Cotton said that other countries have developed on overseas investment. He gave the example of the great United States and the way in which it developed on overseas investment. He went on to say that the United States paid off its investment. As Senator Cotton should know, what happened was that the Americans regained ownership of their industries as a result of Great Britain’s involvement in the First World War.

Senator Cotton said that even though we have foreign investment in Australia today the industries will return to Australian ownership at a later stage. I think that Senator Cotton is still thinking pre-World War I. The Minister fails to acknowledge the development of the multi-national company, which has little regard for boundaries or anything else. It will move from one country to another as it feels disposed. If there are better profits to be made somewhere else the industries will not come to Australia. The story of Broken Hill Pty Co. Ltd is unlikely to be repeated in Australia. Senator Sim talked about risk capital. I shall give him the highlights of risk capital, if he wants that. He talked about the Hamersley group. Australians were never invited to put any risk capital into the Hamersley group.

Senator MAUNSELL:
Queensland

– In dealing with a matter such as foreign investment, naturally we are dealing with a very sensitive and a quite vast area. Because of the limited time available in this debate, I will simply express the general point of view that foreign investment in this country has done a remarkable job in conjunction with our rural export industries in assisting the development of the nation, in providing job opportunities and employment for Australians, including the old Australians as well as the millions of migrants who have been brought to this country since the war. Of course, there is a need for us to be vigilant at all times to see that our resources are not taken over and that we have control of them. 1 believe that Government supporters - not only the former Prime Minister but also the former Deputy Prime Minister - have made statements at different times on what they considered to be the trend in this country.

Every now and again a great deal of hysteria is whipped up not only by honourable senators opposite for obvious election purposes, but also by the Press. A typical example of this, of course, has been seen in relation to the sale of cattle properties in northern Australia to overseas interests. A lot of false propaganda has been put out in this regard. In the time that I have available to me I intend to canvass this matter thoroughly. When people talk about the sale of cattle properties in the Northern Territory (o overseas interests, it is never mentioned that they are sold on a leasehold basis. In the Northern Territory there are pastoral leases, as there are in Queensland. These people are taking over pastoral leases, and in the case of the Northern Territory they are 50-year leases subject to certain conditions which have to be carried out. Also it is not mentioned that the lessees pay rent to the Government. In the case of the Northern Territory these rents are paid to the Federal Government. Rental determinations are made on a 10-year basis. If the Opposition happens to win the day and unfortunately, gets control of the treasury bench and decides that it should do something about these people in the Northern Territory, it will have the right to re-assess the rentals every 10 5’ears. Let us face it, if the Opposition had control of the machinery to assess the rent it could tax these people off the country. Therefore it is so much eyewash to talk about . giving away the country’s birthright, selling the top end of the nation for all time and putting out this sort of propaganda.

It is interesting to note that Australians have always had an opportunity to invest in the cattle properties of northern Queensland and the Northern Territory. Let me go back to the days when land administration was controlled by the Labor Party in Queensland for 40 years. During that period many foreign companies had control of pastoral properties where a 30- year lease arrangement operated. Those leases were always renewed and in fact some of the companies have been in control of properties for anything up to 100 years. The one difference was that in those days the lessees did not have to comply with the developmental conditions that we have today. The result was - and many of our Queensland colleagues know this - that the companies exploited the land, put nothing back and left it more or less a dust bowl. As I have said, this was done while a Labor government was in office in Queensland for some 40 years. So this is not something new as far as the development of land resources are concerned.

But the fact still remains that this land is held as leasehold and can be resumed in time to come.

Senator Byrne:

– We may have to provide investment incentives?

Senator Keeffe:

– But he did not sell Australia.

Senator McLaren:

– That was bad management.

Senator Milliner:

– In western Queensland?

Senator Jessop:

– What about the employment that is created?

Senator Douglas McClelland:
NEW SOUTH WALES · ALP

– The subject of overseas investment is- one of the most vital that the Australian Parliament could discuss, because while the present Government relies so heavily on uncontrolled investment from abroad to overcome ils financial difficulty, if the position deteriorates further it will be very difficult for any future government which has the welfare of Australia and Australians really at heart to take positive and effective action to ensure that Australians recapture control of their own destiny and to ensure also that they remain the rightful owners of their own soil and their own country. The more one studies the overall picture, the more one can see how frightening is our complete lack of control over our future. I think it fair to say that in existing circumstances there is no legislation preventing any foreign company or corporation from coming into Australia and purchasing a large Australian enterprise such as the Broken Hill Proprietary Co. Ltd.

I want to make it clear, as my colleagues who have spoken before me have made it clear, that we of the Australian Labor Party do noi oppose overseas investment in Australia but that we are violently opposed to unregulated, unrestricted and uncontrolled investment coming into this country in the way in which it has been coming in under this Government. We want something to be done by the Government to preserve Australia for Australians. There was a time when it was said that Australia rode on the sheep’s back. It is quite obvious today that under this Government we rely practically completely on overseas investment for our development. From recollection it was last year that the value of the Australian wool cheque was about $486m. When we compare that figure with S722m, which was reported in the ‘Sydney Morning Herald’ of 14th June last as being the total amount paid overseas last financial year as income on investments in Australia, we can see the extent to which the Government has placed its eggs in the one basket of overseas investment.

It is interesting to note in a statistical analysis which was published last February by the Commonwealth Bureau of Census and Statistics that during 1969-70 the inflow of private overseas investment to Australia continued at the high levels of the previous 2 years. The inflow of $979m in 1969-70 was the second highest annual inflow recorded and was only $24m lower than the record inflow recorded in 1968- 69. The total inflow recorded for the 3 years 1967-68 to 1969-70 was S2,930m compared with 51,780m for the previous 3 years. Although the total inflow has been maintained al. a steady level over the last 3 years, the components of this total inflow have shown some marked fluctuations from year to year. The Bureau went on to say that direct private overseas investment in Australian companies during 1969-70 was a record S706m, $105m higher than the previous highest inflow recorded in 1968- 69. As undistributed income . rose by only Sim. the increase was due almost entirely to an increase of SI 04m in other direct investment. The main reason for the increase was that other direct investment from the United States of America in 1969-70 was S72m higher than in 1968-69. Analysis by industry shows that the most notable increases in direct investment from overseas occurred in the banking, other finance and property, and commerce industries.

Not only are overseas investors virtually controlling what we will mine, when we will mine it and the source of our markets, but also they are rapidly eating into and taking over property developments in Australia. Much of the north coast of New South Wales - indeed, some of the beaches on the north coast of New South Wales - are now owned by foreigners and foreign companies. As was said earlier in the debate, overseas companies are now able to swallow up at very cheap prices some of the land that has been vacated by Australian farmers because of the hopeless rural policies which are being pursued by the Government. Senator Cant has spoken about the mining and developmental industries, but what about the takeovers that have occurred of businesses and industries? I mention as an example the pharmaceutical industry, which is almost completely foreign owned. The Government allows these foreign people to rip large profits out of the pharmaceutical benefits scheme while it starves of the necessary wherewithal or restricts its own instrumentality, the Commonwealth Serum Laboratories.

The latest information available to me from the research service of the Parliamentary Library shows that there are 141 companies listed to supply the pharmaceutical benefits scheme. Of these 53 are Australian, 33 are American - including 2 which are Australian and United States joint owned - 27 are British, 9 are German, 6 are Swiss and 13 are from various countries. The material supplied by the Library goes on to point out that although there are so many Australian companies, these are mostly small ones and Australia captures 7.3 per cent only of the prescription market. As against that, the United States captures 53 per cent of the market, the United Kingdom 10.2 per cent, Germany 6.2 per cent. Switzerland 9.9 per cent and others 0.8 per cent. Whilst in Australia we have that situation in respect of which the Government can act, last week the Parliament had tendered to it the annual report of the Commonwealth Serum Laboratories Commission - one of the Government’s own instrumentalities - which states at page 9:

The area of commercial activity, and the freedom of the Commission to act in that area, are severely limited by the restriction to biologicals and the dependence upon revenue from products whose prices are fixed under the National Health Scheme. For some years the Commission has foreshadowed that the restrictions and limitations placed upon ils activities would in time make it impossible lo secure sufficient revenue to cover the costs of its operations, particularly those functions undertaken in the national interest. That situation has now been reached.

It is the view of the Commission that there should be a re-appraisal of ils objectives and responsibilities, lt is necessary to give the Commission freedom and positive assistance to operate in a wider area of activity if it is expected to continue to be largely financially self-sufficient.

That is an area which is within the direct responsibility of the Government, where a Commonwealth Government instrumentality is competing with foreign owned companies to supply requirements under the pharmaceutical benefits scheme. Yet in that area a mere 7 per cent of pharmaceuticals prescribed under the pharmaceutical benefits scheme are supplied by Australian companies. Yet there is this encouragement of foreign investment in the pharmaceutical industry. Then, of course, there is one of the service industries, namely the advertising industry. 1 understand that this industry is almost completely controlled by foreign owned companies. Indeed, on 4th May 1971 the Managing Director of the Channel 7 television network, Mr Bruce Gyngell, who is a very prominent Australian in the television sphere, expressed concern at the increasing overseas domination of Australian advertising agencies. In a report of the Australian ‘Financial Review’ of that date, Mr Gyngell said that while he was no expert, on the subject there was one significant thing happening in the media. He said:

It is that practically every Australian advertising agency - of which there were some 102 when I first joined this business in 1954 - have gradually disappeared. They are all being taken over by the American giants.

The article continued:

He said one of the last to hold out had been Jackson Wain in Sydney, but it had also recently succumbed. ‘I think it is rather significant that something as powerful as advertising is now almost completely in the control of the United States. Something like 70 per cent of the products marketed and merchandised throughout Australiaare orienting towards marketing philosophies and policies dominated from New York, Chicago and Cincinnati’.

My understanding of the situation is that the figure of 70 per cent cited by Mr Gyngell in that statement is very low and that it could well be as high as 90 per cent. Only this week in the Australian ‘Financial Review’ I read that all the members of the Australian Advertising Council, which advises the Commonwealth Government on advertising placement, with the exception of one, have been re-elected. The overwhelming bulk of the people on that council represent or come from foreignowned companies. Very unfortunately indeed, Australians or Australian-owned companies just do not come into (he scene at all. One could go on to cite a number of other industries. There is the food industry. We find that the food manufacturing industry is practically completely owned and controlled by overseas investors. As the former Prime Minister, Mr Gorton, said on 17th January 1969:

The posture of Australia in seeking overseas capital has been the posture of a puppy lying on its back wilh all legs in the air and its stomach exposed. It is saying: ‘Please, please give us capital. Tickle my tummy on any conditions’.

Whilst this situation continues - and it seems to have accelerated under the McMahon Government - one must ask: What is the future of Australia while there is this unrestricted, uncontrolled investment in this country?’ It is about time that the Government put into effect the words of the Acting Prime Minister (Mr Anthony) who, upon his return to Australia after his talks on the European Economic Community earlier this year went on record as saying that we must think and act as Australians more than ever before. About this time last year a group of Australianowned and operated companies engaged in the fields of marketing, advertising and public relations felt so anxious about this subject that they went to the extent of inserting an advertisement in an Australian publication. They headed it ‘The Australian Peasant’, lt was in these terms:

Who’s your boss now, mate? You’re good at humping someone else’s wool and beef and minerals onto someone else’s ships.

Pioneers - your ancestors were!

Now you don’t even own the land you’ve got your flat feet on.

Come on, mate: who owns the bank that owns you?

Peasants - never!

Aussies before have wiped the dust off their faces and shed their white collars and fought back. All we need is someone to push us just a little more - and it’s on.

Leaders - that’s what we need.

Politicians who are sincere enough to risk their seats trying to free the country again.

Leaders who’ll wrestle back our land and print our own flamin’ money.

Senator JESSOP:
South Australia

– The debate on the matter of urgency raised by Senator Byrne is of great interest to many people in Australia. It is a subject that is very dear to the hearts of the people who have found employment in Australia as a result of overseas investment being made in this country. I think that the way the motion has been phrased gives us very little time to do real justice to the important matter before the House. In any event, I would like to refer to one or two advantages of investment capital coming to Australia and re-emphasise some of the actions that the Government has taken in the encouragement of Australian equity in public companies that are. in fact, sponsored by nonAustralian interests.

The degree of overseas ownership of Australian companies varies. We must pay regard to whether the overseas share is measured in terms of profits, production assets or in some other way, so that when we are discussing this matter we must do so in broad terms. Perhaps the easiest way to illustrate this is to look at the proportion of total company profits, after tax, payable to overseas investors. For this purpose I would like to refer to the dividends and profits payable overseas during the period from1960 to 1970.

In 1960-61, the total company income, after tax, was$835m. Of this amount, $233m was payable overseas, representing 27.9 per cent. This percentage fluctuated during the period I am referring to, the lowest figure being 22.5 per cent in 1964- 65, or $271m out of a total income of $ 1,205m. In 1969-70,$548m was paid to overseas interests, the total company income in that year being$ 1,669m which, expressed in a percentage form, is 32.8 per cent. This represented an increase of 4.9 per cent in 10 years. The trend in 1970-71 would appear to be at the same level. These figures relate to the Australian corporate section. Senator Cotton mentioned this in his speech earlier. Therefore, due to the predominance of Australian ownership in sole traders and partnerships, the proportion of overseas ownership in Australian business as a whole would be substantially lower.

The main area of concern seems to be the mining industry. In the mining industry, overseas ownership and control are greatest in the metal mining sector, but the increase has been most rapid in the fuel mining section. Nevertheless, the great majority of mining enterprises whether operated by Australian companies, overseas companies with Australian equity participation or joint ventures between Australia and overseas companies are, in fact, managed by Australians. The fact that overseas companies have concentrated their interests in specific areas such as the Northern Territory, Western Australia and Queensland - again, this applies particularly to the mining industry - has attracted much more attention than if those interests were spread evenly throughout the country. But we cannot deny that without this capital many of these enterprises would never have got off the ground.

I can think of a classic example that occurred in the Gove area. I visited there in late 1967 when a bauxite industry was being developed. It was then in its formative stages. I made a point of asking company representatives there what the Australian equity would be in the enterprise. They told me that they were hoping to attract 50 per cent Australian equity in the project. I returned there in July this year and was surprised to see a bauxite mine in almost full operation and an alumina plant commencing production. I asked the same question about Australian equity and company representatives told me that the enterprise had not attracted 50 per cent Australian equity. The Government in its wisdom said: ‘Righto. If you cannot get 50 per cent Australian equity in the project, we will allow you to attract capital from elsewhere’. The result was that the company had to attract an additional 20 per cent capital from overseas. A very healthy alumina industry is developing there, providing employment opportunities for hundreds of people. 1 also asked company representatives about the effect on the Aborigines. I was interested to learn that the company is paying several hundred thousand dollars into an Aboriginal trust fund in the area. I think it is important to re-emphasise that although overseas capital has provided only 12 per cent of the total investment funds in the past decade, that money has helped us immensely. I think the Minister for Civil Aviation (Senator Cotton) referred to that aspect in his speech, and also the effect it has had in causing our domestic savings to rise to a high level. Senator Sim mentioned the important point that overseas investment in Australia gives us access to technological and managerial expertise that would not otherwise be available.

Senator Mulvihill:

– That is why Mr Gorton stepped in.

Senator Gair:

– The MLC directors should have been put in Pentridge.

Senator Webster:

– Has not the Labor Government of Western Australia rushed representatives to Japan to attract investment to that State?

Senator Young:

– It is a Labor Government, is it not?

Senator LITTLE:
Victoria

– 1 think this is an opportune time in the debate to remind honourable senators of what we are actually discussing and to compliment them on their approach to this question. It was brought up, as Senator Jessop said, by the Australian Democratic Labor Party. We are debating this subject as Australians interested in Australian affairs and Australia’s future, not as members of any political party. The matter of urgency that we are discussing relates to the following:

  1. The growing concern in Australia regarding the alienation of the beneficial ownership of Australian resources to non-Australian interests.
  2. The level of beneficial ownership and control by non-Australian interests in public companies and corporations.
  3. The best method of reconciling the attraction of overseas capital for Australian development with the retention of Australian ownership and control.
  4. The best method of mobilising available Australian private capital resources and attracting its commitment to national development whether by operation of Income Tax, Company Tax or otherwise.

Clearly this is a matter which we should discuss constructively in the interests of Australia, Let me remind honourable senators, particularly those whose history in the Labor Party is not as long as they would like it to be, that so far as overseas investment in Australia is concerned the Labor Party is the Party that gave the greatest initiative to attract overseas capital to this country. There is no harm in that and there is nothing wrong with that unless, as is suggested in the matters we are discussing, it gets out of hand and becomes excessive. I well remember the late Ben Chifley opening the first project of Genera] Motors-Holden’s Pty Ltd in this country. The Labor Party, under the late John Curtin and the late Ben Chifley, went to great pains to attract overseas capital for that project. Until that time Australians had said that it was impossible to establish such a project in the type of economy that Australia then had.

Do not let us throw darts at one another. Do not let us suggest that the idea of overseas capital in itself is evil or wrong, or that the idea is the exclusive property of one side of the chamber or the other because that is not factual in Australia’s history. There is nothing in the subject we are discussing to suggest that overseas capital in itself is wrong or that it should not be encouraged up to a point. What is suggested, in the interests of Australia, is that there are signs in our economy, on our share markets and in general economic activity, that over-investment of overseas capital in specific industries is reaching a point dangerous to the solidarity and the future wellbeing of Australia. That is all that we are discussing. If we discuss this subject on that basis I think we can do something very constructive for our country.

I agree with the Minister for Civil Aviation (Senator Cotton) who, properly, put before the Senate figures relating to the percentage of overseas capital coming into Australia. He suggested that 12 per cent of our total investment came from overseas. However it would be unwise to dismiss this matter on that sheer statistic as being all that was involved. What we have to discover - this could be done by a future Senate select committee - is how much of that 12 per cent is involved in specific industries in order to gain control of them. Let us remember that in the economies of all countries most investment is carried out in small companies in spite of what people may think. I think it has been proved that in the United States alone the economy is based on enterprises that employ fewer than 10 people in the main. Actually the big companies are the exception rather than the rule. What we have to be careful

One indication of this today is an industry with which I had a very personal association because I worked in it as a tradesman for many years. I refer to the shoe manufacturing industry in Australia, an industry in which a quarter of a century ago you could not have found an overseas company engaged. I refer to the headline in the financial pages of today’s Melbourne Age’: ‘Shoemaker’s square feet turned into assets’. Beneath that heading, is a story about one of the oldest shoe manufacturing companies in Australia by the name of Bedggood and Co. which owns premises adjacent to the Melbourne Cricket Ground. At one time the original cottage occupied by the Governors of Victoria was right next door to the factory. Some 2 or 3 years ago that factory was taken over by a British company which bought out the family interests of Bedggood Pty Ltd which had been on that site for 100 years. That British company also bought several other shoe manufacturing companies. Now it has decided to sei] out with a view to using the sites of the factories for commercial enterprise, for the construction of huge blocks of offices or fiats. It is suggested that the site of the former Bedggood factory is now worth $2m.

That is not the only shoe factory that has been taken over by overseas industry. Ivor Trescowthick, manufacturer of one of the best men’s shoes in Australia - Julius Marlow - was taken over some years ago by overseas interests which incorporated not only that organisation but Joyce and Howes Pty Ltd, which had purchased the name of Marshall shoes which older members of the Senate would know was a household name in shoe manufacturing. This has happened in an industry which is highly protected by tariffs from overseas competition because of its very high labour content. High labour charges make shoes very expensive to produce. More recently that same company bought out Raoul Merton Pty Ltd. Those companies now have in Australia

I think it wise that we should look at some of the figures issued by the Commonwealth Bureau of Census and Statistics on this question. Looking at the figures issued by the Bureau relating to the annua) inflow of private overseas investment in companies in Australia, and the investment income payable overseas by companies in Australia - that is the dividends that flow out of this country as a result of overseas investment - we find some remarkable statistics for the 10-year period from I960 to 1970. We find that outflowing profits, and dividends now amount to $633m whereas 10 years ago they amounted to $239m. That is a very considerable increase, one about which we should know more in relation to the future of Australian industries. I am not at any stage suggesting that overseas capital is no longer necessary or desirable, but too high a concentration of it in specific industries allowing overseas control may well mean that Australian industries are being run in the interests of overseas companies.

I take as an example activities in the mining field. An original investment may be in respect of the development of a capital asset that the company owns in another country. It could well be uranium in Canada. That company could buy a controlling interest in uranium mines in Australia not for the purpose of developing the Australian mineral resources but for the purpose of subjugating them so that those resources will not pose a threat to the market enjoyed by the company already existing in Canada. Indeed, evidence is available lo show that this sort of thing is actually going on. If it is going on, we should know about it. If we are Australians at heart with Australia’s interests in mind, and if we in this Parliament are the only

page 1844

SENATE

people who have the power to stop these practices, this Parliament should find out what is happening and, if it finds out that the indications that I have suggested are there are substantiated by fact, steps should be taken by us to stop this happening. Nobody but members of this Parliament can initiate this action.

The statistics to which I have been referring set out quite clearly annual inflow of private overseas investment in companies in Australia. This document goes on to say:

Duringthe period of 10 years, the total income payable overseas did not exceed the sum of portfolio and new direct investment in any one year.

So, in the actual statistics the situation that I have pointed to does not become very apparent even with respect to the last year for which statistics are available, 1969-70. In that year, the value of dividends on overseas investments in Australian companies sent abroad totalled $633m. In the same period, new investments worth $421m flowed into Australia. The high interest rates about which I have had plenty to say on other issues are a contributing factor to that inflow. But I will not deal with that matter now. In the periodthat I have just mentioned, $273m flowed into Australia in the form of ordinary portfolio investments, making the inflow of overseas capital for this purpose alone greater than the outflow of profit for this year. Surely what we, as Australians seriously interested in our country, must consider is that further investment totalling nearly $700m entered Australia, exceeding slightly the total outflow of profits on investments from overseas. In the future profits on that capital will have to be paid too, or that capital will not remain here. It will return to the country from which it came.

I think that abundant evidence has been produced in this debate to support what Senator Byrne has proposed. This is a matter of urgency. Whether we are completely in favour of overseas investment or whether we do not favour it at all, I think that either of those attitudes is extreme. There must be a balance and a searching inquiry is needed to establish that balance. Because the Senate has now discussed this matter at great length, because all points of view have been put before the Senate and because I feel that, as Australians, honourable senators will wish to express the opinion that this action should be taken, I move:

Question resolved in the affirmative.

Original question resolved in the affirmative.

page 1845

ASSENT TO BILLS

Assent to the following Bills reported:

Wool (Deficiency Payments) Bill 1971.

Supply Bill (No. 3) 1971-72.

page 1845

RESTRICTIVE TRADE PRACTICES BILL 1971

In Committee

Consideration resumed from 9 November (vide page 1792).

Clause 48 (Commissioner to consult parties with a view to avoiding proceedings).

Clause agreed to.

Clauses 49 to 98 - by leave - taken together.

Senator MURPHY:
New South WalesLeader of the Opposition

– Mr Chairman certain amendments which we proposeto move with respect to some of the clauses that follow on from this group have been circulated. The Opposition has no specific objection to intervening clauses up to and including clause 98.

Clauses agreed to.

Clause 99. (1.) A person who suffers loss or damage by an act of another person that -

  1. was done in contravention of an order of the Tribunal in proceedings under Part VI;
  2. constitutes the practice of resale price maintenance; or
  3. was done in contravention of section 96 or 97 of this Act, may recover the amount of the loss or damage by action against that other person.
Senator MURPHY:
New South WalesLeader of the Opposition

– I move:

The effect of this amendment would be that the kind of remedy which was provided in the old Australian Industries Preservation Act - perhaps I should not say old’ because it seems that it may still have some force - would be available to a person who has been injured by the carrying on of an improper restrictive practice. In other words, a person could sue and could recover treble damages for the loss or damage which has been suffered by him. This is the kind of provision which existed not only in the Australian Industries Preservation Act but also in the Sherman Act and related Acts in the United States of America. The person who has been injured would be able to recover treble damages in respect of the injury that he suffered. We feel that this is a salutory form of enforcement because it means that the persons in industry or commerce who are actually suffering the damage will be alert to see to it that the improper practices and agreements that would affect them are not entered into or carried out. The Commissioner would not be left to his own devices. Vigilance would be exercised right throughout industry and commerce. Those who had suffered would have considerable incentive to see to it that the illegal practices were stamped out. I commend the amendment to the Senate.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– The Government will oppose this amendment, lt does not believe that the arguments advanced by Senator Murphy have produced any cogent case as to why the Senate should regard this amendment as advantageous. Under clause 99 there is a provision which states: (1.) A person who suffers loss or damage by an act of another person that -

  1. was done in contravention of an order of the Tribunal in proceedings under Part IV-

Shortly, that is a proceeding where the Tribunal has decided that an examinable act or an examinable practice is contrary to the public interest -

  1. constitutes the practice of resale price maintenance; or
  2. was done in contravention of section 96 or 97 of this Act-

Those sections relate to collusive tendering or collusive bidding - may recover the amount of the loss or damage by action against that other person.

It is quite clear that a remedy is conferred by this clause upon persons who suffer loss as a result of any of the acts done in the categories I have mentioned. What Senator Murphy has moved in his amendment is not really an innovation in regard to the type of acts for which the remedy is provided. The honourable senator’s amendment suggests that for any act done in con.travention of any of the provisions of part X of the Act a person may sue for and recover treble damages. I leave aside for the moment the issue of treble damages. But any act done in contravention of any of the provisions of part X of the Act is, I think, comprehensively covered by the reference already appearing to section 96 or 97 of the Act.” I do not know what further advantage Sentaor Murphy feels is gained by adding section 98 to the Act. If he addresses himself to this matter he might indicate what he had in mind. But to me that is a relatively non-consequential factor in the argument I put forward. My basic objection to the proposal is that Senator Murphy, on behalf of the Australian Labor Party, is suggesting that a person should be able to recover treble damages.

Senator MURPHY:
Leader of the Opposition · New South Wales

– It is wonderful to hear the Attorney-General (Senator Greenwood) speak with such tenderness when we are dealing with offenders against the trade practices law. He does not speak about those offenders in the same way as he speaks of those little people who might be demonstrating in the streets. He speaks of law and order and how offenders have to be crunched and dealt with. When it comes to dealing with those who are breaking the laws in respects which injure the whole community - those rt is predicated who would be breaking laws which are set there to prevent inflation and prevent the sickness which is destroying the rural economy and which is going right through our community hurting us all - the Minister starts to speak with great tenderness. He says: ‘Do not really be too harsh’. It would be a terrible thing if we in Australia were to adopt the remedy which has been adopted by other countries. We are not dealing in some of these cases with the examples that we have of a few people out in the street, of demonstrators or something like that. Let me remind the Attorney-General of what was said by Mr Justice Schaeffer in the. United States in connection with the breaches of law, even when in the United States they had strong laws against the kind of practices that we are concerned with. The incentive is so great for some of these corporations that what they are prepared to do to evade the laws reads like a James Bond story. Mr Justice Schaeffer said:

Recently there has been the spectacular situation with tremendous conspiracy of the major electric companies - General Electric and Westinghouse. These men, not in most cases the presidents of the companies, but vice-presidents and sales managers, would meet incognito, and would use codes and communicate with one another but not on the stationery of the company, and they would alter their expense accounts to conceal the place where they had met, and they would telephone one another from public telephone booths to the home of the other, instead of to the office, and they had codes, and one of the codes dealt with the allocation of contracts, and was referred to under the code title of ‘Phases of the Moon’. It would be the phase of this company or that company. There were 29 companies indicted and 45 executives of those companies. All of them pleaded guilty or made a plea which had that effect. They were found guilty ai?d they were fined total fines of almost two million dollars and 7 executives were sentenced to 30 days imprisonment.

That is the situation where there were strong laws. The Attorney-General wants a position where we will have weak laws. Then he says: ‘Senator Murphy, do not suggest that there should be anything more done than this’. He says: ‘Turn to clause 97. Why, we are providing for a penalty of $10,000. Surely that will be enough. That will stop everything. Why be concerned? Why be so harsh in respect of these people? Is there no softness in you towards those who would break these laws?’ May I suggest, with respect, whatever may be the fate of this proposal, in the national interest, in order to protect the economy, the councils, the governments who are being subjected to the restrictive practices in a situation where they are unlawful, where the consumers are being hurt by collusive tendering and collusive bidding against the Commonwealth law, that it is not too much to say that the traditional remedy which was in the Australian Industries Preservation Act, the American Acts, the Sherman Acts and others, should be availed of here so that there will be an incentive in the citizen to see to it that the illegal practices are stamped out. That is all we are suggesting.

It is interesting to see that the Government will abandon what was in the Australian Industries Preservation Act, now that it is starting to be thought to be of some value. It will abandon what was in the American Acts. It is prepared to act with the great tenderness towards not only what the Australian Labor Party wants done but also what the business community as a whole wants done. It wants protection from these restrictive practices. The business community as well as the consumers are saying: ‘Let us have some action against those who are entering into these restrictive practices, driving the smaller people out of business, forcing up prices and injuring the economy right across the community’. We are saying: ‘Let us have some real remedies against this kind of action which can be availed of not only by the Government which might be subjected to all sorts of pressures, not only by those who have not the staff to carry out the activities, but also by the citizens who are being affected by it.’ This will be one of the very effective ways to stamp out the practices.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– All I desire to say is that the Government is as concerned as, if not more concerned than, the Australian Labor Party to promote a freedom and a development of competition under which the Australian community can prosper. It is the Government’s legislation which was introduced in 1965 and which was declared invalid by the High Court only 2 months ago which is embodied in this legislation. It is a little curious, I think, for the Australian Labor Party spokesman to give expression to a view which is designed to help and encourage business when the philosophy and policies of his party are entirely opposed to the concept of competition. Yet Senator Murphy would suggest that the arguments he advances have more weight and merit than those of the Government which on other occasions, in relation to other Bills, he would accuse of being too inclined to foster the competitive activities of those who are prepared to trust their skill and their judgment to the profits which they can make as a result of their enterprise and their ingenuity.

The Bill which is before the Senate now is designed to replace in a constitutionally valid form the legislation which was declared invalid by the High Court. It is designed to do that and no more. We have promised repeatedly - I do not believe anyone doubts our sincerity in this - that there will be new and strengthened legislation as soon as the results of the investigations which have been under way for the greater part of this year have been concluded. In this area I am happy to accept and to give consideration to the broad canvass of possibilities to which Senator Murphy has given expression in the course of this debate.

The clause we are considering is not a new provision which has suddenly been conjured up from nowhere and which is capable of being regarded as a tender and’ inadequate provision in terms of its penalties. It is the provision which has been in this Act, which was recently declared invalid, since it was enacted in 1965. Consonant with the promise that was made to the Senate at the beginning of September this Bill re-enacts in constitutionally valid form the provisions of the Act which was declared invalid. It does that and no more.

When Senator Murphy seeks to amend the provision by bringing in this provision for treble damages he is going against the whole tenor, the whole strain, of the development of laws which give rights to individuals to recover damages which have had expression in legislation over the last few decades. If he wishes to go back to the Sherman Act of the 1890s, if he wishes to go back to the patterns of punishment in the days of the 1900s, then that is his entitlement. But one might suppose that he could be consistent in that field. All he desires to do is to bring in a provision for treble damages and to impose that as a penalty which a person suffers, along with a penalty of$10,000, together with the penalties of imprisonment which persons may suffer if they breach certain of the injunctions which a court may impose. That is what the Labor Party in fact is suggesting with regard to this amendment.

In this particular law, in this particular area and in no other, in my recollection of amendments which the Labor Party has moved to legislation in this place, it is proposing, in addition to penalties of up to $10,000, in addition to penalties of up to 6 months imprisonment - on occasions it can be higher - that at the suit of a private individual the defendant should have to pay treble damages. I think there is the necessity for an element of fairness and balance in the type of penalties for which legislation provides. I do not think that the Labor Party’s amendment in this case does provide for that fairness and balance. The general considerations of having adequate penalties for offences which should be regarded as serious offences, I certainly accept. But in the legislation which is to be brought in in due course as part of the strengthened approach to the trade practices legislation, what Senator Murphy has said will be taken into account. But I do not think this is the proper vehicle or the proper time to introduce the amendment of the character which he has put forward.

Question put:

That the words proposed to be left out (Senator Murphy’s amendment) be left out.

The Committee divided. (The Chairman - Senator Prowse)

AYES: 24

NOES: 29

Majority . . . . 5

AYES

NOES

Question so resolved in the negative.

Clause agreed to.

Clauses 100 to 147 - by leave - taken together, and agreed to.

Clause 148.

Notwithstanding the repeal of the Acts referred to in sub-section (1.) of section 4 of this Act, the Commissioner may retain a document -

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

-I move:

In clause 148 (b), leave out ‘under’, insert ‘of. This is almost a typographical amendment and it must be obvious to anyone who reads the clause that the word ‘of’ should appear where the word ‘under’ appears.

Amendment agreed to.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– I move:

At the end of the clause, add the following sub-clause: (2.) Notwithstanding the repeal referred to in the last preceding sub-section, the Commissioner may retain a copy of, or an extract from, a document made or taken under section 104 of the Trade Practices Act 1965 or of that Act as amended, being a document referred to in paragraph (c) or (d) of that sub-section.’.

It will be noted that there is provision in this Bill for certain transitional provisions. It is provided, for example, that documents which have been legitimately required and forwarded to the Commissioner of Trade Practices may be retained by him. The purpose of the amendment isto ensure that copies or extracts of documents which were obtained by the Commissioner under the provisions of the pre-existing Trade Practices Act may in a similar way be retained by him. There was an omission in the original drafting which did not take account of that particular provision and caution has suggested that it should be so included. For these reasons I have moved this amendment. There is in principle nothing different in what is now proposed from what is set out in proposed new section 148 of the Bill.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 149 to 168 - by leave - taken together.

Senator MURPHY:
New South WalesLeader of the Opposition

– I would like to refer to several of these clauses. One is clause 164, which deals with prosecutions. The clause says that proceedings before the court in which prosecutions can be brought ‘shall not be instituted except with the consent in writing of the AttorneyGeneral or of a person authorised by the Attorney-General, by writing under his hand, to give such consents’. It seems to me that more and more Acts contain provisions such as this, that is, that offences are created under various Acts. I think this is true of the Public Order (Protection of Persons and Property) Bill, which was passed into law, and of numerous other Acts. Again and again there appears the provision that a prosecution can be brought only with the consent of a Minister, generally the Attorney-General.

This raises a very great constitutional issue. It is the constitutional issue - I use the word ‘constitutional’ in the broad sense - of whether the law should be applicable to every one, whether it should be able to be set in motion by everyone or whether it could be instituted and set in motion only by the Government. This issue was one of the factors, in broad terms, which brought about the first of the great European revolutions - the English revolution. One of the complaints made then was that the British Government was constantly using its powerto dispense with the law. In other words, the Government was saying: ‘The law is not to apply to everyone. That might be stated, but if we want to say that it shall not apply to certain persons we shall dispense with it’. This kind of provision restricts the ability to set the law in motion to a Minister of the Crown. However well intentioned he might be, in a sense this means that the present Government is achieving the same capacity to dispense with the law as was achieved by the English Government prior to the English revolution.

Senator Wright:
LP

– Nobody with any knowledge would dispute that. I am asking you whether this power of consent is referred to by any text of authority as the equivalent of the dispensingpower.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– I rise only to reply to the comments which Senator Murphy has made. Clause 164 states:

Prosecutions for offences against this Act shall be brought only in the Court.

The part of the clause to which Senator Murphy has taken exception is that part which states:

Proceedings before the Court in accordance with this section . . . shall not be instituted except with the consent in writing of the AttorneyGeneral or of a person authorised by the Attorney-General, by writing under his hand, lo give such consents.

In the first place I take exception to the point which Senator Murphy sought to sustain about the increasing number of similar provisions in Acts. I am assured by those who have the responsibility for legislation in this place that this is not the case. There are very few provisions of this character. Secondly, I think that the historical analysis which Senator Murphy made, whilst it is apt for the arguments which he raised and the approach which he adopted, is not strictly accurate. The reason why this provision is inserted is that if it were not inserted any individual - a police officer, an official of the AttorneyGeneral’s Department or any person - would be free to institute proceedings. I think that there is a balance to be preserved. 1 do not think it is desirable, in the types of prosecutions which may be levelled under this Act, that the right of private prosecution should be completely unlimited. I think it is desirable to protect people from the constant harassment which can be engaged in by others who, for want of a good reason but motivated by all kinds of desires to achieve something, seek to launch these prosecutions.

Senator MURPHY:
Leader of the Opposition · New South Wales

– I move:

After clause 168, insert the following clause: 168a. - (1.) The Commissioner shall, within thirty days after the end of each quarter, furnish to the Attorney-General for presentation to the Parliament, a report with respect to his operations during that quarter and shall include in the report information as to -

the matters in which he has carried out investigations;

the matters in which he has decided to institute proceedings in the Tribunal; and

the matters in which he has decided not to institute proceedings in the Tribunal. (2.) The Attorney-General shall, as soon as practicable after every thirtieth day of June, report to Parliament on the operation of this Act in the year ending on that thirtieth day of June.

In this section ‘quarter’ means a period of three months ending on the last day of September, December, March or June.’.

In view of the way in which the Commissioner’s report has been dealt with I suggest that my amendment should cease at the end of proposed sub-clause (1.) and thatI should not proceed with proposed sub-clauses (2.) and (3.). It has been indicated to me that it will be sufficient to have merely proposed sub-clause (1.), and it has been suggested also that it might be convenient to retain proposed sub-clause (3.), which would have to be renumbered (2.).

Senator Greenwood:
LP

– The only difference is that clause 168 provides that the Commissioner shall present the report whereas the honourable senator is proposing that the Attorney-General shall report to Parliament.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– In the proposal advanced by Senator Murphy there is a germ of something which could be of much value. I do not propose to support his amendment and, therefore, the Government will oppose it. Basically the reasons for opposing the amendment are, as I reiterate, that this is legislation which the Government has brought forward as speedily as it could bring it forward to repair the vacuum which was created as a result of the High Court’s decision which invalidated the pre-existing Act. There was put into this legislation nothing which was not in the earlier legislation, except the transitional provisions which were necessary and the provisions which brought it under the corporations power of the Commonwealth, a power which the High Court declared that we had. But having said that, I must say that there is a further reason why this amendment is undesirable, lt contemplates that there shall be a veritable host of reports.

Senator Murphy proposes his amendment as an addition to the provision in clause 168, but existing clause 168 requires that the Commissioner of Trade Practices shall present a report to the AttorneyGeneral every year for presentation to the Parliament. That report, of course, is presented within 60 days. There has been comment to the effect that it is one of the very prompt reports which are forthcoming to the Parliament. Senator Murphy proposes also that in addition to that report the Commissioner shall present 4 reports in the course of a year. This necessarily would occupy his time and to a degree distract him from active work he should be pursuing. In addition to that Senator Murphy proposes that the AttorneyGeneral should present a report to the Parliament. I am not disparaging the ability of the Senate nor the work which it has done. But I suggest that if in the course of the year there are 6 reports on the Trade Practices Act, the probabilities are that each report will be the subject of a motion that the Senate take note of the report and we will never debate the matter because of the pressures of activities. I think that in practical terms those are considerations against supporting this proposal.

But I think there is a consideration of a broader character which ought to be taken into account. I think there is merit in the Trade Practices Commissioner being able to reveal to the community at large the work which he is undertaking, the examinations which he has made and the results at which he has arrived. There is no provision in the current Act for that to be done. It is one of the areas to which attention is being given. But I would have thought that if a need to meet that situation is recognised and is capable of being fulfilled it will be fulfilled in - I say this with no disrespect - a much more ample way than that proposed by Senator Murphy’s amendment. I can visualise a number of ways in which the Commissioner for Trade Practices could seek to expose and to present to the public the results of his activities. All I say to the Senate is that this again is one of the areas which is being considered at the present time.

I feel that because this is interim legislation designed to rectify as much as the Parliament can of what the High Court recently declared invalid we should proceed on the basis that the Government has initiated; that is to carry through legislation which in fact re-enacts validly the old legislation, and allow these other matters in respect of which there is merit to be considered in the course of review to which the Government is committed.

Senator MURPHY:
New South WalesLeader of the Opposition

– May I say this: We were hoping that we would not get to the position where there would have to be the annual report which is referred to in clause 168, that is 60 days after 30th June. The only provision in the existing legislation is that there will be a report presented by the Commissioner 60 days after each financial year ending 30th June. That means that the next report would be due some time in July or August of next year. I would be extremely disturbed to think that we would have to rely upon that provision. That is the one which the Attorney-General has put forward to us. I was hoping - I suppose we were all hoping - that long before that time we would have the new legislation so it really means that unless some kind of quarterly report is presented we will just not receive any report. There will be no report before the new legislation is to be produced unless the idea of the Attorney-General about the temporary nature of this legislation is vastly different from what we have assumed.

Senator Murphy:

– I am sorry, Mr Chairman, but I think we will have to amend clause 3 to insert a new Part HIa. I do not know whether it is necessary for me to move a formal motion about this. The Senate will recall that last night the Committee resolved to insert clause 34a dealing with predatory pricing and clause 34b dealing with monopolisation, and these would be grouped into Part HIa which would cover predatory pricing and monopolisation. We are grateful that the Senate thought fit to make these considerable improvements to this temporary legislation.

Senator GREENWOOD:
VictoriaAttorneyGeneral · LP

– The Government recognises that last night the Senate gave expression to the principle of adding 2 new clauses. It is a matter which the Government will have to consider in due course. I agree with Senator Murphy that it is a tidying provision to ensure that what has been inserted is incorporated in the short title and the Parts of the Bill.

Amendment agreed to.

Remainder of the Bill - by leave - taken as a whole, and agreed to.

Bill reported with amendments; report adopted.

Third Reading

Bill (on motion by Senator Greenwood) read a third time.

page 1855

INCOME TAX BILL 1971

Second Reading

Debate resumed from 4 November (vide page 1692), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Senator WILKINSON:
Western Australia

– Before I deal with the Bill I would like to endorse the request made yesterday by Senator Devitt that we have more time available to consider Bills before they are brought on for debate. I did not take the opportunity to say anything about it yesterday because I thought I would be dealing with this Bill fairly shortly. I do not want the Leader of the Government in the Senate (Senator Sir Kenneth Anderson) to think I am being destructively critical. I am trying to be constructive. This Bill was introduced only last Thursday. We had Estimates Committee meetings on Thursday night and I attended another committee meeting on Friday. This week I had to come over from the west on Monday night. On Tuesday I was faced with the fact that this Bill was coming on for debate. It had passed through the House of Representatives only on Tuesday of last week so that there was not very much time to study it, particularly in view of other requirements of the Senate.

The Bill itself is not particularly complex. The amendment that is now being circulated will be moved by me at a later stage. The Minister for Health (Senator Sir Kenneth Anderson) represents in the Senate the Treasurer (Mr Snedden). In presenting the Bill the Minister pointed out that it seeks to make a number of alterations to the operation of the collection of income tax, particularly with regard to deductions. For example, the deduction allowed for the education expenses of a full time student is to be increased from $300 a year to $400 a year. As the Minister pointed out, a time limit is imposed for a full time student and a qualification may then operate for deductions on behalf of the person making out his income tax return. The time limit is to be raised from 21 years to 25 years of age. Several similar amendments are proposed but T will not detail them all.

Honourable senators will recall that in each of the last 4 years when speaking in debates on this legislation I have drawn attention to the fact that the income tax schedule is not being varied sufficiently to enable people in the lower income group to get the benefit they were receiving 20 or 25 years ago. At that time income tax commenced, having regard to purchasing power, at a higher level of income than at present. No change has been made in this regard although wages throughout Australia are increasing. Higher taxation is involved because the schedule remains unaltered. 1 was interested to find this point brought out in an article by Mr Leslie Bury, a former Treasurer, which appeared in the ‘National Times’ of 8th to 13th November. The article has come to my attention only today. I will quote from it a couple of paragraphs which support my argument that the schedule ought to be changed for the benefit of the lower income groups. In the article, which occupies a full page, Mr Bury wrote:

What were relatively high incomes in money terms a few years ago have now become in reality only modest incomes, but are still taxed as if they were high.

That is the point I was just making and it is supported by theformer Treasurer. He went on:

In the June quarter this year the average weekly earnings of all adult males was $89.70 per week, or some $4,500 a year. Concessional deducations vary with individuals, but say a man has a taxable income of $4,000, he will have to pay $677.30 and the special levy on top. For every dollar extra he earns he pays 31.9c until $4,800 then 34.5c in the dollar and so on. As income increases to the level of the professional groups the progression rises steeply. Many are painfully aware of its incidence. Clearly this state of affairs does 2 things. It weakens incentive and it makes Australia a less attractive country to work in. . . . The malevolent facts about the effect of our income tax situation were all publicised 2 years ago.

I have been talking about them for 4 years at least. Mr Bury went on:

The policy included in the Government election programme in 1969 included a promise to reduce personal income tax on middle and lower incomes over 3 years by $200m.

That view is very important because it was put by a supporter of the Government who is a former Treasurer. The next point I wish to emphasise has been raised on a number of occasions but it does not seem to register at all. I refer to the deductions allowed for a spouse, children, payments to hospital benefits funds, education and insurance expenses and matters of that sort. Let us take an example from the First Schedule and consider the deduction of $312 for a spouse. On incomes of $16,000 and over but not exceeding $20,000 the rate applicable is 62.4c. I appreciate that this is an old argument which the Minister has heard many times, but it is no less valid for that. It means that a person in the high income bracket claiming a deduction for a spouse will be relieved of taxation equal to 62.4c multiplied by 312. Let us now take a person in the bracket referred to by Mr Bury - $4,000 and not exceeding $4,800. The deduction he would receive would equal 31.9c multiplied by 312. Coming still further down the scale to the basic wage end, a person in the range of $2,000- $2,400 receives a deduction of 19.5c mul tiplied by 312. This shows that a person in a high income group is getting a very considerable deduction in income tax because he is on the higher rate.

Senator Poke:

– I second the amendment.

Senator GUILFOYLE:
Victoria

– I rise to speak briefly in support of the 2 income tax Bills at present before the Senate. The Income Tax Bill 1971 will declare the rates of income tax payable for this year, and the Income Tax Assessment Bill (No. 3) 1971 will give effect to proposals announced in the Budget Speech of the Treasurer (Mr Sneddon) to liberalise certain personal income tax deductions and to make other provisions with regard to exemptions. At the time of the preparation of the Budget, because of some cost increases the Government proposed to increase some charges. To achieve a domestic surplus of $630m. additional tax revenue of $157m is sought in this financial year and the major part of the additional income will be sought from taxes on certain company income and on personal income.

With regard to company tax, it is proposed to increase the rates of tax payable by companies for the 1971-72 financial year by 5c in the Si on the first SI 0,000 of taxable income. The Treasurer has stated that the present concessional rates are no longer warranted and this change is considered as a move not merely to produce additional revenue but also as one towards a sounder and more equitable rate of company tax. Under this Bill friendly society dispensaries, which have a uniform rate of 37± per cent, will not be affected. The general public company rate of 47 i per cent, therefore, will apply to the whole of the income of public companies other than that income which is declared at special rates. With regard to private companies, the rate of the first $10,000 of taxable income will be at 371 per cent and on the balance at 42i per cent. These changes, which will apply to the incomes of companies for the income year 1970-7 1 , will yield an estimated $24m this year.

It is appropriate at this stage to express a feeling I have about the investment allowance as it relates to companies. Whilst recognising the necessity for the Government’s financial policy to continue the withdrawal of the investment allowance at this stage, which I understand gives a saving of Government revenue of some $60m, I wonder whether this decision could be reviewed in the immediate future. It could be advantageous if this investment allowance were reintroduced in some specific areas. I refer more particularly to those companies which are involved in the major development of Australia’s resources and those companies in secondary industry where part or whole of their production is for export sale. The reintroduction of such an allowance could assist them in a competitive world market. 1 turn to personal income tax. The Government proposes to raise a large part of the balance of our revenue requirements through personal income tax rather than to add further to sales taxes or some other form of indirect taxation. The general rates of tax payable by individuals will be the same as those imposed for the 1970-71 financial year, but there is a proposal to increase the additional levy payable from 2i per cent to 5 per cent of the tax calculated in accordance with the general rates. This increase is estimated to yield $68m this year. The levy will not apply to tax calculated under the age allowance. Consequently, the upper limit of the shading-in ranges of the age allowance will increase. The age allowance provisions proposed for 1971-72 will give quite substantial taxation relief to aged persons. 1 refer next to the deductions for which provision is made in the Income Tax Assessment Bill (No. 3) 1971. The proposal to liberalise certain deductions allowed on personal income tax is welcomed. The maximum deductions allowable for education expenses of a dependent full time student child will be increased from $300 to $400 per annum. Also, education expenses will be allowable in respect of such students up to the age of 25 years instead of the present age limit of 21 years. This is still inadequate as a realistic deduction for the school fees and requirements of students at independent schools and at tertiary level institutions in respect of whom parents are making a considerable national investment in education and are finding that there is a burden of fees which will not be met by the proposed increased deductibility to the extent of $400 per student up to the age of 25 years. I hope that this sort of deduction allowance will be progressively increased.

Under this Bill it is proposed also that a deduction be allowed for legal expenses and court costs of the kind normally incurred by a taxpayer in the adoption of a child. I feel sure that this deductibility will be welcomed by the many families who incur expenses under this heading. The estimated cost of these education and adoption expense concessions in a full year will be $6m. These concessions will provide relief to taxpayers in these 2 areas of financial responsibility.

There is another area with regard to education expenses where I think some consideration could be warranted. This is with regard to education expenses of a taxpayer incurred personally for approved secondary or tertiary courses. I feel that an allowance of this type would be a valuable concession for those taxpayers in full or part time employment who pay considerable sums for self improvement in educational courses without taxation deductibility with respect to their expenses. Repeated representations have been made to me on this matter. It is hoped that some time in the quite near future consideration may be given favourably by the Government which will allow the deduction of these personally incurred expenses for self education.

In supporting these Bills, 1 wish to make the point that it is desirable that incentive is not removed by taxation measures. In a climate of rising costs and prices, with constantly rising wages, a .situation is developing in which the rising wages take the taxpayer into a higher tax bracket. This results in a large proportion of the increased income being paid in increased taxation. Such a situation creates a disincentive. Concessions such as those mentioned in these Bills do not promote sufficient incentive perhaps for the person who by personal exertion would wish to increase his income without attracting a higher level of taxation. However, I support these Bills as part of the Government’s policy outlined in the 1971-72 Budget. I welcome the concessions and increased deductions which have been provided in them.

Senator LITTLE:
Victoria

1971 are some of the means of raising portion of the revenue which will be spent through the Budget in the current financial year. We were among those who thought that sufficient was not done for the people of this country in some specific avenues with respect to social services.

Therefore, we consider that at this time it would be improper for us to assert ourselves as a bloc and to vote against this revenue being raised in the manner which the Government thinks to be the appropriate one for the purposes of meeting Budget commitments. As I have stated, we believe that some Budget provisions at least were insufficient.

We can be assured that, if there are anomalies with respect to the Income Tax Assessment Bill (No. 3) - there inevitably will be anomalies - some attempt is made to equate the rate of taxation to the rate of income. Indeed, in the broad general sense, this is by far the fairest way of taxing the community to meet the commitments of the community by collecting revenue to meet the expenditure that goes with government and particularly with the social service commitments with respect to which we feel the Government, in the interests of the whole community, should enter into. Whilst the Income Tax Assessment Bill (No. 3) may contain some small anomalies, they in no way can measure up to the anomalies that exist in other tax structures and particularly the indirect way of raising taxes by imposing a broad general rate of tax such as sales tax on commodities that are purchased by the people in general. Such taxing methods always operate much more harshly against the family man. They affect particularly larger sized families because those families have more commitments to meet. Probably they spend the whole of their income. In any case a far greater percentage of their income is absorbed by indirect taxation than is taken by direct taxation levy under an Income Tax Assessment Bill in which allowances are made for the commitments of the individual.

For these reasons, the Australian Democratic Labor Party does not support the amendment which seeks the withdrawal and redrafting of the Income Tax Bill 1971, If this amendment were carried it would hold up the source of revenue from which money has already been spent in many fields including those that I have mentioned. No doubt we agree that the Bill contains some anomalies. Anomalies always exist in an income tax structure. But we do not think that these anomalies are of sufficient importance at this time for us to obstruct the Government in the performance of its proper functions including the raising of revenue to meet commitments although we believe that the Government’s measures are insufficient to meet the requirements of those in the community who are deprived of certain needs. We support the Bill.

Senator Wilkinson:

– What is the honourable senator’s authority?

The Senate divided. (The President - Senator Sir Magnus Cormack)

AYES: 24

NOES: 29

Majority . . . . 5

AYES

NOES

Question so resolved in the negative.

Original question resolved in the affirmative.

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

page 1861

INCOME TAX ASSESSMENT BILL (No. 3) 1971

Second Reading

Consideration resumed from 4 November (vide page 1693), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Question resolvedin the affirmative.

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

page 1861

EXPORT PAYMENTS INSURANCE CORPORATION BILL (No. 2) 1971

Second Reading

Debate resumed from 6 October (vide page 1 178), on motion by Senator Cotton:

That the Bill be now read a second time.

Senator WILKINSON:
Western Australia

– In order to fill in the last 24 minutes of this evening’s proceedings this Bill has been brought on out of its right order, but that is not objected to. I think we might be able to dispose of the Bill in the time available, unless we have considerable delay whichI do not envisage. 1 shall take only a few minutes, but I think the points that I want to bring out in regard to the Export Payments Insurance Corporation are important. The legislation was introduced originally in the House of Representatives on 3rd May 1956. If we look back to 1956 to ascertain the Government’s idea in introducing the Bill we find two very interesting things. I have wondered how an Export Payments Insurance Corporation could come into being as a result of some legislative thinking on the part of the Government without any pressure being applied from some quarter or other.I notice on page 1761 of the House of Representatives Hansard of 3rd May 1956 that Mr McEwen, the then Minister for Trade and Industry, said in his second reading speech:

It-

That is the Government- has also been impressed by the case for such an arrangement that has been placed before it by a wide spread of commercial and industrial interests.

Later he said:

For some time past the Government has received representations from Australian exporters and manufacturers who have claimed that export payments insurance would greatly help them in building up export trade.

It is quite easy then to follow the purport of the legislation at that time because obviously the normal banking interests did not wish to take on this type of insurance cover. In exporting to countries on a long term payment basis realisation of the amount owing might extend as far as10 years and the exporters were not able to carry this themselves. Banks, insurance companies and other normal financial agencies which normally covered such a situation were not willing to take a risk when they were dealing with another country whereas they might have taken a risk of a similar nature within the borders of Australia. So representations were made to the Government that it should be prepared to bring into being the Exports Payments Insurance Corporation which would operate up to a limit of $50m.

It is interesting to see the purpose of the Corporation which was further mentioned in the speech made by Mr McEwen on 3rd May 1956 and which is reported on page 1 764 of Hansard. He said:

Marketing boards which export as owners of the product and all those merchants or organisations which export wool, wool tops, grains and the whole range of primary products will be able to insure with the corporation against the risks I have mentioned . . .

In the introducing of the present Bill, the Minister said that the purpose of the legislation was largely to assist the exporters of capital goods. But we find that originally the legislation was intended to meet the needs of exporters of primary products. It is very hard to see why one would need to get insurance cover over a long period on, say, wheat, which is exported and eaten very quickly. However, I understand that the wool industry is using EPIC to cover quite a number of its transactions at the present time. I mentioned during the debate on the Export Insurance Payments Corporation Bill in May of this year that the Corporation has increased in importance since 1956. The Corporation began operations with a maximum coverage of $50m. In 1959 this amount was increased to $10Om; in 1964 it was increased to $150m; in 1965 it was increased to $200m: in June of last year it was increased to $300m; and in May of this year it was increased to $500m. When one speaks of S500m one is getting into pretty big money.

The balance sheet of the operations of EPIC indicates that it has been able to make a reasonable coverage over this period. The balance sheet also shows that the Corporation has been able to operate with a slight profit although - and this was important in the original Bill - it was supposed not to do anything more than just cover expenses. The Corporation has been able to do this with very little risk. Indeed, it has been able to cover its risk over these years. It has been shown by practice that this is very good business. I can quite understand what has happened. Business houses - banks and insurance companies - have seen this business going away from them and further representations have been made to the Government. In my opinion, this is the reason why the Government has decided to amend the Act so as to enable private business houses such as banks, insurance companies and other organisations which can lend money to be covered by the Government. The Government will now insure those lending establishments against the risks that they are going to take. To me this seems to be a surprising changeover which apparently was not envisaged in May of this year, because the Act is to be amended quite considerably.

As far as the export arrangements are concerned and the advantage that they give to exporters, I am in favour, and so is the Opposition, of the Bill. The measure will assist exporters in providing Australian credit overseas. This is very important. But there is some doubt in my mind as to why these alterations are to be made.

The alteration that is to be made is in respect of buyers’ credit, which will enable buyers overseas to obtain cover here, provided there is a certain percentage of Australian content in the goods that are sold abroad. An interesting situation arises here. An overseas firm which is manufacturing goods some part of which has been made in Australia can obtain from Australia some cover in order to insure the products that it is making for sale somewhere else. The same situation applies if an Australian company brings in some goods and then sells its product overseas, provided there is a certain amount of Australian content. The Minister explained this requirement in his second reading speech.

The Opposition feels that the provisions of the Bill are a worth while extension of the operation of the Act. However, I felt that some points had to be brought out. and I have done that.

Senator WEBSTER:
.Victoria

– This is a Bill which relates to insurance. In this instance we are dealing with the fifteenth year of operation of the Export Payments Insurance Corporation. By the legislation before us the Government has decided to make 2 substantial areas of insurance available to this Corporation. One is in the field of buyers’ credit and the other is in re-insurance. Both are particularly important areas. As Senator Wilkinson commented, quite a lenghty discussion took place during the last sessional period of Parliament when the volume of the insurable amount carried by the Corporation was increased previously.

The origin of the matters before us was promoted by the Export Development Council, about which all of us know quite a deal, and the consultative council of the Export Payments Insurance Corporation. Those 2 bodies informed the Government that it was necessary that buyers’ credit be established for the benefit of Australian exporters.

Senator BYRNE:
Queensland

– The Australian Democratic Labor Party supports the proposals contained in the Bill. It is an indication of the growing sophistication of international trade and of the difficulties that necessarily arise and accompany such sophistication. The Bill contains a complete change in emphasis as against the method that has been operating prior to the acceptance of its provisions. Under the prevailing system the guarantees were given to the exporter. Now the loans will be provided to the buyer. The reason for that is a very obvious and a very natural one. Previously the exporter selling capital goods on long term conditions, with a guarantee from the Export Payments Insurance Corporation, naturally had to carry for a long time a contingent liability which would severely circumscribe his ability to obtain finance for other transactions. We know that in modern commercial transactions so much of the business is conducted on what we might call revolving credit, that once there is a stoppage in the pipeline of credit there is a stultification of the whole commercial process. That operated under the prevailing system, lt has been beneficial and valuable, but nevertheless it has exposed weaknesses which the Bill sets out to obviate.

I do not pay particular attention to the other aspect of the Bill which has been canvassed by other honourable senators, but I do welcome this provision because it will facilitate the revolving of credit and the transactions between exporters in this country and purchasers overseas, lt is a much more modern method. I am gratified to find that other countries have institutions similar to the Corporation which will provide to the counterpart to the supplier in the country of purchase similar opportunities to those that are provided in this country by the Corporation under this legislation, lt is a salutory and an encouraging thought that international trade has reached such a condition of sophistication - 1 use that term again - that institutions which have grown up in one country, and which might be under one political and social system, can find a reflection and an emergence in a different political and social system but a pattern of operation of the same kind which undoubtedly will result in a much freer flow of world trade and which will enable an interchange of goods and money at a much more rapid rate and, therefore, with a much more fruitful and worth while result.

For those reasons the Democratic Labor Party welcomes the Bill. The Democratic Labor Party welcomes it because it indicates the Government’s alertness to a developing situation, the Government’s recognition of the difficulties that have arisen, and that the Government has moved to meet them. We hope that the Bill will result in a further improvement in our export trade which is of such vital importance to Australia in a very difficult economic era when the whole pattern of Australia’s export trade is changing, and when some of our traditional exports are now in a state of decline. It is important that alternative exports should find their place and their accommodation. By the operation of a corporation such as this, that supply of goods will be advanced. Therefore, on behalf of the Democratic Labor Party, I have much pleasure in supporting the Bill.

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– in reply - lt is very pleasant to have to deal with a Bill with which the Senate is in unanimous support. I thank those senators who have spoken for their comments and for the brevity of their remarks. Senator Wilkinson suggested that the Bill would mean a change which would result in the Export Payments Insurance Corporation covering the risks of banks and other lenders, lt is true that that is the case, but subject to EPIC being satisfied that the risks involved are acceptable it will give guarantees of repayment of loans made by banks and other lenders. But this is nol a new concept. For many years - since 1964, in fact - EPIC has had this authority and has used it. The only difference is that until now the Corporation could guarantee only loans made to Australian exporters. He also suggested that the original purpose of EPIC was to provide insurance cover for exports of rural produce. The situation was not quite like that. The Corporation was established to assist all exporters, but exports of rural products in 1956 represented about 80 per cent of total exports. Since then the relative importance of rural exports has declined to about 50 per cent of the total, whereas manufactured exports have increased to about 25 per cent of the total. But that is symptomatic of the change that is taking place. That is how it is.

page 1865

ADJOURNMENT

Cite as: Australia, Senate, Debates, 10 November 1971, viewed 22 October 2017, <http://historichansard.net/senate/1971/19711110_senate_27_s50/>.

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