22nd Parliament · 1st Session
Mr. Deputy Speaker (Mr. C. F. Adermann) took the chair at 2.30 p.m., and read prayers.
– -Regarding the notice of motion standing in my name on the business paper, under Standing Order L33 a seconder is required. I now ask if any member of the House values free speech enough to second the motion so that the matter may be discussed. Is there any member who will second this notice of motion?
– Don’t ask us. “We are against the honorable member.
– Order ! The honorable member for Macarthur must do something about his notice of motion, because, without a seconder, it is out of order.
– If no one will second the motion-
– To give a rebel a chance, I will second it.
Motion (by Mr. Jeff Bate) proposed -
That so much of the Standing Orders be suspended as would .prevent notice of motion No. 1. General Business, being proceeded with forthwith and the bill consequent thereon being passed through all stages without delay.
– Is there a seconder to the honorable member’s motion for the suspension of the Standing Orders ?
No honorable member having risen,
– There being no seconder, the motion is out of order. Are there any further notices of motion?
– I draw the attention of the Treasurer, in the absence of the Prime Minister, to notice of motion No. 1, General Business, for Thursday, the 17th May. The motion, which stands in the name of the honorable member for Hindmarsh, reads as follows: -
That this House resolves that lack of finance for war service homes is defeating the purposes nf the War Service Bornes Act, and that inordinate delays in granting loans are creating a black market in interest rates, depriving exservicemen of their right to own their own hemes in breach of the solemn undertaking given by the Government to the men and women who defended this country against foreign aggression.
I ask the Treasurer to try to arrange with the Prime Minister for an opportunity to be given to debate - even if not at length - this important notice of motion which my colleague will move on behalf of the Opposition.
– I will bring the matter under the notice of the Prime Minister.
– My question is directed to the Minister for Customs and Excise. Is the Minister aware of suggestions, which have been made in Sydney and other places, that counterfeit £5 notes in circulation in Australia have been printed from plates made in Italy, and that quantities of forged notes have been smuggled into this country? Is it correct, as has been suggested, that forged bank notes are not prohibited imports and that customs officers cannot, unless armed with a warrant, search people suspected of smuggling them?
– I have read the suggestion to which the honorable member referred. I cannot say whether the forged notes circulating in Australia were imported or not. I can only say that they certainly have not passed under the surveillance of any customs officer. The suggestion that forged bank-notes are not a prohibited import is quite incorrect. They are expressly prohibited under the terms of the Customs (Prohibited Imports) Regulations - and anything likely to deceive the public into thinking that it is a bank-note is also prohibited. A plate to make forged bank-notes would clearly be a prohibited import under the general provision that anything which, in the opinion of the Minister, is likely to deceive the public or is likely to be harmful is a prohibited import. I can tell the honorable member for Parkes, who is apparently interested in this matter, that customs officers have full power to seize and search people who are suspected of attempting to smuggle goods into the country. Such persons can, if they wish, ask to be taken before the Collector of Customs or a justice, but the customs officer does not have to let them go in the interval. It is not the customs law that is at fault in this matter, if there is a fault. It is the perennial difficulty of apprehending rogues and vagabonds.
– Has the attention of the Treasurer been drawn to the fact that, the Rural Bank of New South Wales has raised its interest rate from 5 per cent to a flat rate of 5i per cent.? If so, is this action in keeping with federal government policy in regard to bank interest rates on advances to primary producers?
– The Rural Bank of New South Wales is a. government bank, and is outside the jurisdiction of the banking legislation of this Commonwealth.
– I desire to ask the Minister for the Army a question in relation to information which is now public that a large number of blankets have been stolen from the Moorebank army stores. I understand from the Minister’s own report on the matter that thefts have been taking place over a period of time. Does not that indicate *hat stocks are too large in many of these stores and, that being so, that pilfering can go on periodically without being noticed? Would it not be better if the department examined the quantities of clothing and other stores in hand and reduced its stocks so that these huge robberies could not take place? I think that the Minister will admit that theft has been going on for quite a time now, and that articles as well as blankets have been stolen. I feel that if stocks were smaller, the losses would be noticed sooner and the taxpayer would not be failed upon to bpa.r the cost of these huge discrepancies that have taken place in the branches of the services concerned. I should like the Minister to examine the matter in order to see whether it would not be beneficial to the services to have some stricter control of stock.
– I cannot say at this stage whether there is very much excess stock held by the Army. I think it must be borne in mind that, since the honorable member for Adelaide, who asked this question, was himself Minister for the Army, there has been tremendous development in the training of national service trainees, which requires the holding of considerable stocks of necessaries, particularly of blankets. It may be interesting to the honorable member and the House to know that the special working stock of blankets at 2 Base Ordnance Depot, at Liverpool, which is the depot concerned, is 50,000 blankets. That is a special issue on hand for exchange with soiled blankets as they come in. To give the House some idea of the immensity of the problem posed by national service training in respect of blankets alone, T need only say that the blankets in use have to be handled in and out of the depot no fewer than four times on each occasion when it is necessary to change them - once when they come back soiled, once when they are sent for cleaning from thu depot, again when they are returned clean to the depot, and again when they are reissued to the troops. In the last eighteen months, the total handling of blankets numbered 256,150. That immense figure will give honorable members some idea of the magnitude of this problem. Now, the number of blankets that were obviously stolen was 6,758, with a value of approximately £15,000. I look upon this as a very serious matter. The shortage was discovered in the course of a check of stock. As I say, the total number of blankets at the depot is 50,000, and the discrepancy was discovered without there being any apparent explanation or compensating circumstances for it. I have ordered the holding within the Army of a special court of inquiry in connexion with this matter. In addition, the civil police, as well as Army officials, are inquiring into it. The wider issue raised by the honorable member for Adelaide is a matter that is receiving my consideration, and I am having a thorough check made of the stocks right throughout the Army services.
– Is the PostmasterGeneral aware that there is considerable disquiet among rank-and-file officers of the New South Wales Department of Railways who fear that their telephone conversations may be tapped by their own departmental executives? My question arises from the fact that two officers of the New South Wales Department of Railways were recently dismissed from the service, and reports are current that conversations they held with newspaper reporters were recorded. Will the PostmasterGeneral state his department’s attitude to this matter?
– I noticed in the press, last week I think it was, some reference to the matter submitted to me by the honorable member for Mitchell.
– The question is based on a press report.
– Although, as my friend, the honorable member for Canning, reminds me, the honorable member’s question is based on a press statement - and I have found that press statements are very unreliable - I shall nevertheless give some information in reply to the question. The position is that the PostmasterGeneral’s Department has no knowledge of any action which might have been taken by the New South Wales Department of Railways in this matter. I want to point out to the House, however, that there is a provision in regulations under the Posts and Telegraph Act which imposes a penalty of, I think, £25, on any one who can be shown to have taken action designed either to tap, or to record, any conversation over a telephone which is under the control of the PostmasterGeneral’s Department. That provision is very strictly implemented by the department, and I want that fact to be very clearly understood. The act also contains a special provision, however, that the State departments of railways may install, maintain and operate within their own boundaries telephone systems radiating from a central exchange provided by the Postal Department; but the Postal Department has little, or no, supervision of the operation of the telephone systems within the boundaries of the Department of Railways. Some further provision may be needed. As a result of the recent press reports, the officers of the department are preparing a full report for me. Since I have not yet received it, I think it would be improper for me to make any comment that may imply that some one has been guilty of this practice. I do not know whether any one has been guilty of it, and I do not so assume. But I assure the honorable member for Mitchell, and those on whose behalf he has asked the question, that the Postmaster-General’s Department religiously observes the regulations under which it ensures complete privacy for telephone conversations.
– Is the Minister for Trade aware that, in Victoria, at least one very enterprising gentleman has established a farm, or developed an area of land, where he keeps Australian animals and birds that he has collected, such as wallabies, opossums, emus, and, perhaps worst of all, the strawnecked ibis, which destroys large numbers of grasshoppers? Is the Minister aware, also, that up to £30 a head is offered for some birds, and that it is alleged that goldfinches are available for sale for export and that a very large export trade in this class of fauna has already been developed? I do not know what category of exports some of these creatures are included in, but, in view of the verygreat value of some of our native birds and animals, and in view of the fact that their numbers are rapidly diminishing, will the Minister take steps to ensure that no licences for the export of any of Australia’s birds or animals are granted, except in approved circumstances, such as for the export of birds and animals to zoos in other countries? As this matter is so important, Mr. Deputy Speaker. I am sure you will permit me to say that I recently read that one enterprising gentleman had even gone to the extent of caging frilled lizards and blue-tongue lizards, that a business in the breeding of these animals had been established, and that they were being exported, I think to Germany. .1 do not know whether these small creatures do any harm. I should imagine that they do not cause any damage, but that, on the contrary, they may be of substantial benefit to this country. . In these circumstances, will the Minister tell the House, first, whether an export trade such as I have mentioned exists, and, secondly, whether licences for it are being issued? If they are being issued, will he immediately take steps to ensure that existing licences are cancelled and that no more are granted?
– I concede that this is a matter of considerable public interest. Having said that, I have to confess that I am not aware what regulations exist relative to it, nor by which department, whether Commonwealth or even perhaps State, they are controlled. But I undertake to ascertain the facts and to inform the honorable member of them.
-! ask the Minister for External Affairs whether it is a fact that Soviet Russia has recently admitted the truth of what a number of us have been saying about the Soviet regime, and now professes penitence for the murders, tortures and slave labour that characterized Stalinism. Does the Minister think that any professions of penitence on Russia’s part are genuine, and would any light be thrown on the genuineness of these protestations by the fact that the Chinese Communists, whose leaders have indulged, and are still indulging, in similar practices, are still in power, and are still in favour in Moscow with those Russian leaders who profess now to be so shocked at the Stalinism in which they themselves participated ?
– I rise to order. I have previously asked you, Mr. Deputy Speaker, for a ruling on questions that seek expressions of opinion from Ministers. I have since read the Standing Orders, and I have found it clearly stated in them that such questions are out of order. Do you, sir, agree with rae?
– I agree with what Mr. Speaker has said repeatedly - that is, that if we were to observe strictly all the Standing Orders relating, to questions, very few of the questionssought to be asked would be permitted.
– It is common knowledge that there has been an abrupt shift of major policy on the part of those in charge of the affairs of Soviet Russia. Far be it from me to give any interpretation of the genuineness of that change of policy. I think that all that any of us can be sure of is that nothing is done by Soviet Russia which is not done with a purpose. What the purpose may be in this case is anybody’s guess. The honorable gentleman linked that up with the attitude of mind, the policy and the practices of the Government of the People’s Republic of China. I find myself unable to throw any light on the question that the honorable gentleman asks, although I appreciate the significance of it. The reason for that is that I do not happen to be at the moment in the confidence of the President of the People’s Republic of China.
– Is the Minister for Trade aware of the unfairness of the present system of import licensing, under which many licensees have very much greater quotas than they can possibly use in their own businesses, to the detriment of men in the same type of business, whose businesses, as a result, must suffer appreciably ?
– I am aware that there is, I think it is correct to say, a widespread sense of grievance in certain trading circles in respect of the impact of the administration of import licensing, as it is conducted at present and as it has been conducted for some time. I think it would be impossible to administer this difficult matter in such a way as to meet the requests and desires of all the interested parties and remove completely a sense of grievance. The twofold objective of the Government is to direct itself positively and urgently to constructive measures which will enable us to escape from the necessity for import licensing and, in the meantime, to keep administrative practices under constant review, so that the best can be done for all who are interested, having regard to the constriction caused by our present limited resources of overseas funds.
– I ask the Minister for Trade : What was the date of the economic conference held at the Hotel Australia some time ago? Was the Minister present at that conference? Did he make protests about the operation of the Ottawa agreement and the exclusion of certain Australian goods from the United Kingdom?Did the British Minister reply that there was provision in the agreement for a review of such matters, and did he tell the Minister for Trade that, if he put his protests in writing, they would be considered ? If that is so, why does the Minister protest now about the operation of the Ottawa agreement, if he took no action, under the provisions of the agreement, to have it reviewed ?
– The honorable member has notidentified the conference to which he is referring:
– The one held at the Hotel Australia, at which you were present.
– It is in no sense with a desire to escape the question that I say I am unable to identify the conference. There was a conference held - where was it?
– The Hotel Australia.
– I thought the honorable member said the Hotel Canberra. If you make up your minds which conference it was, I shall try to answer the questions.
– I ask the Treasurer whether it is a fact that dollars have been expended for the purchase,out of government funds, of two second-hand Convair aircraft that are due to arrive in Australia within the next few days. If it is a fact, is there any good reason why dollars were expended for the purchase of what might be regarded as obsolete Convair aircraft as opposed to the use of non-dollar funds for the purchase of equipment that may have been obtained from the sterling area ?
– I am unaware of the details of the transaction to which the honorable member has referred. I shall investigate the matter, and let him know the result.
– My question is direct ted to the Minister for External Affairs, who is in charge of the Commonwealth Scientific and Industrial Research Organization. Disturbing rumours are being circulated concerning the alleged decline of the effectiveness of myxomatosis as a rabbit exterminator: Can the right honorable gentleman say what the actual position is?
– I can only repeat, as I have already stated in the House and elsewhere, that there is grave danger of myxomatosis losing its potency as a rabbit killer. The danger arises, first, from a falling off of the effectiveness of the virus over the years and, secondly, because of a rise in the resistance of the rabbit. That state of affairs has been reflected lately in some work that has been done by Professor Fenner, the renowned professor of micro-biology at the Australian National University, who performed large-scale laboratory tests that were designed to discover whether there was any such decline. The tests, which were performed on a number of rabbits in the Lake Urana district in the northern Riverina, showed; I think, the alarming fact that over three years there had been a decline of the killing power of the virus from 90 per cent. to 50 per cent. A decline from 90 per cent. to 80 per cent. or 85 per cent. would not be of very great moment, but a decline from 90 per cent. to 50 per cent. means that the writing is on the wall for Australian primary producers, and that theymust do something about it. The Commonwealth Scientific and Industrial Research Organization is attempting to do something by re-introducing the original virus in as many districts as possible. That, however, is a slow process; and is unlikely to keep pace with the general decline of the killing power of the virus observed in all rabbit infested areas of Australia. Perhaps I shall be allowed to take advantage of this opportunity to point out, that; no matter what the land-holders may do to exterminate rabbits by methods other than the use of myxomatosis, a lot still remains to be done by the authorities that are in charge of the implementation of verminextinction laws in the various States, perhaps not the least of them being the State governments. Very many people, including farmers, have asked me, “ What is the use of our doing everything possible to exterminate rabbits by supplementing the use of myxomatosis with other methods when in unoccupied adjacent Crown lands relatively nothing is done ? “ Without pointing the bone at any particular State government - I think more than one is involved - I believe that all of them should wake up to their responsibility to the farming community of Australia and do everything possible to employ the accepted and orthodox means of exterminating rabbits; otherwise, within a relatively limited period of years, we shall find ourselves where we were originally. During the first two or three years of the use of myxomatosis, the discovery of which was one of the miracles that occasionally happens, Australia was saved at least £50,000,000 a year. But, as I have stated, the effectiveness of the virus is now falling off, and I think all of us, particularly the primary producing community, would be most unwise not to use every possible means to retrieve the situation. Myxomatosis will continue to have a potency, although it may be a declining one. If rabbits are to be wiped out in any and every area, which is the only solution, then every other means - trapping, dogging, poisoning, and the rest - has to be used with the utmost .vigour both by land-holders and by State governments in respect of Crown lands.
– I wish to address a question to the Minister for Immigration. Do the immigration officers in Europe and England have a list of known criminals, with their photographs and records, taken from the local police files in order to make a check of all migrant applicants bo »a to prevent criminals such as forgers, currency smugglers and blackmailers from getting into Australia? Is it a fact that while immigration officers are concentrating on political screening for subversive elements, undesirables such as I have mentioned are slipping through the screen simply because no one is looking for them? If Billy Hill, the English crook, could be stopped from getting into Australia-
– Order ! That part of the honorable member’s question is out of order.
– I leave it to the Minister’s imagination. Why is it that similar elements from other countries seemingly get through our screen undetected ?
– In his concluding sentence, the honorable member used the word “seemingly”. I think there is a good deal of “ seemingly “ in the substance of the question. The fact that an impartial investigation by a group of responsible people has revealed a very much lower incidence of crime on the part of migrants proportionately to their numbers than is to be found in our own native-born community suggests that our screening methods are reasonably thorough. I believe they are as thorough as we can make them, unless we are prepared to establish so vast an additional staff for the purpose that the the results would scarcely warrant the additional expense. The screening methods have been examined by independent authorities and have been commented upon favorably by them. I do not claim that there is no opportunity for an ill-doer to slip through the screen, but we are not. powerless to deal with any who do come into Australia in those circumstances. As the honorable member knows, if offences are committed against our laws, then there is opportunity for deportation in cases where that drastic course would appear to be warranted. That power is exercised from time to time. I am always only too willing to look into any case brought to my notice, but I think there is a danger of reflecting upon a very large body of law-abiding industrious people if an impression is created that Australia is getting more than its share of wrongdoers from other countries.
– I direct my question to the Minister for Supply. With reference to the announcement of new work to be taken in hand at Woomera in conjunction with the United Kingdom Government, I ask the Minister what effect this will have in terms of employment at Woomera itself and elsewhere in Australia.
– It is a fact that the new work to be undertaken will involve new buildings, new installations and new equipment, and in consequence an increased labour force to cope with those installations and buildings. I have not the figures in my mind, but the honorable member may take it that for a number of years hence a considerably increased labour- force will be necessary in order to make the improvements and extensions that are to take place. This is one of ‘the side effects, so to speak, of the important work we are undertaking, that it does offer increased opportunity for employment in Australia.
– I direct a question to the Treasurer. Did the right honorable gentleman last January authorize two private banks to conduct savings bank business on condition, among others, that they should lend up to 30 per cent, of their deposits to guaranteed building societies and for housing or other purposes on the security of land? You will appreciate, Mr. Deputy Speaker, that I have to ask the question in this way’ because the right honorable gentleman has never made a statement to the House on this subject. T now ask him whether the Bank of New South Wales Savings Bank has accumulated over £20,000,000 in deposits, and thus has over £6,000,000 available for housing. Has the right honorable gentleman learned of any housing loans that this bank has made and, if so, what was the amount of the loan or loans? Since sixteen weeks have now elapsed since he authorized the establishment of the new bank, when does he propose to. ensure that it complies with the conditions he stipulated then ?
– I shall inquire into the matter to ascertain the extent to which the banks are complying with the licences and conditions of licences granted to them, the extent to which they arc not, and why they are not, if they are not.
– I direct a question to the Minister for Labour and National Service. In view of the sensational reports in to-day’s Sydney press concerning events which took place at Midkin station, near Moree, yesterday, is the Minister in a position to give a statement-
– I rise to order. I take it that the honorable member is out of order in asking a question without notice based on. a newspaper report.
– If the honorable member has based his question on a newspaper report, it is not in order.
– It is not based on a newspaper report.
Honorable members interjecting ,
– Order ! Honorable members must remain silent while I am listening to the question.
– Is the Minister in a position to give a statement on the progress that is being made-
Honorable members interjecting,
– Order ! Honorable members must remain quiet. I want to listen to the question. The honorable member for East Sydney is not running the House.
– He said it was based on a newspaper report.
– Is the Minister in a position to give a statement on the progress that is being made towards achieving a settlement of the unnecessary, futile and costly dispute in the shearing industry ?
– I am not certain that I heard clearly the first part of the honorable gentleman’s question. He referred to a disturbance, I think, in relation to the shearing dispute. In regard to a breach of the public peace and order, which I am sure we all would deplore, the honorable gentleman will he .aware that inside the boundaries of any particular State the responsibility for the maintenance of law and order rests with the police authorities of that State, and I have no doubt that the police authorities of New South Wales will be taking such action as they think proper to prevent any disturbance which would constitute a breach of the peace. “But I have some information about the progress of negotiations, and I gather that Mr. Gunn, and certain colleagues of his in the United Graziers Association, were in conference with Mr. Bukowski and Mr. Dougherty, and, I think, other members of the Australian Workers Union, for some lengthy period on Friday and Saturday, and again on Monday. I gather that in the course of this period n statement was made by the President of the Industrial Court of Queensland, pointing out that certain proceedings were pending - I am trying to give the substance of what I understand his comment to have been - and that under those circumstances it would not be the correct thing for the parties to endeavour to go behind the back of the court in such arrangements as they might make. [ gather that subsequently a joint statement was issued by Mr. Gunn and Mr. Bukowski to the effect that this was not the case but that they were trying to negotiate .an agreement on an .entirely different basis from anything which had existed previously. My information is that the proposal presented to the Australian Workers Union representatives by Mr. ‘Gunn was that the shearers’ wage rates should be related at ,any time directly to the price of wool as determined by the Commonwealth Statistician, and should be 3.725 per cent, of the price so determined. The counter proposal, from the union side, was that it ought to be 4 per cent. That is my understanding of the proposal and counter proposal made at the time. The talks finally broke down but it should now lie abundantly clear to the union representatives that the overwhelming majority of the rank and file are anxious to have this dispute resolved and that, if their officials would withdraw the prohibition, they would be willing to accept employment at the rates prescribed by the arbitration authority.
– On the 7th March, I asked the Minister for Labour and National Service whether he would arrange for the Ministry of Labour Advisory Council to consider methods that could be applied in order to cushion the shock of the introduction of automation in Australia. The Minister said that in Australia we had not reached the stage at which the matter was of real consequence to us. Is he aware that a large-scale strike occurred at the Standard Motor Company’s works in England because automation was introduced without the prior application of necessary safeguards? Is he also aware that automation is gradually being introduced in Australian industry? In view of these matters, will he again give consideration to my question and arrange for* the Ministry of Labour Advisory Council to have preliminary talks on the matter?
– There have been earlier questions on this subject. Indeed, I answered one only last week. The honorable gentleman must have misunderstood me if he believed I said that the matter was not of real consequence in Australia at this time. What I tried to convey was that automation, as distinct from normal mechanized methods, has not progressed here to the same stage as it has in, say, the United States and the United Kingdom. The automotive process has been introduced in several instances and I have seen it in successful operation in the General Motors.Holden’s Limited plant in Adelaide. I appreciate that it is a matter of real importance, even if its manifestations are not to be seen here on any considerable scale yet. The department has been keeping a close watch on these developments in the last few years, and at the last meeting of the Ministry of Labour Advisory Council, it was intimated that the subject would be on the agenda for the next meeting, which will take place within the next fortnight. We shall then have a discussion which will, I hope, make a useful contribution to our thinking on the question of automation.
– Does the Minister for Immigration consider that a conference of representative immigrants) such as occurred recently in Melbourne, contributes to their assimilation? If so, will the holding of similar conferences be encouraged in other States?
– From such contact as I had with those present at the conference on Saturday, and also from what 1 have been able to learn of the discussion that took place, my first reaction to the honorable member’s question: is that such conferences certainly contribute to those aspects of the assimilation problem which cause difficulty or concern from time to time. I shall take up- with my officers the desirability of extending, through the Good Neighbour movement, the holding of these conferences to other States, if, as I expect, our analysis of the proceedings in Melbourne indicates that this would be of value.
– I wish to ask a short supplementary question of the Minister for Immigration relating to a recent speech by Mr. Hooke, the industrial officer of the Department of Immigration. Could the Minister ascertain, if the information is at his disposal, the percentage of immigrants who belong to registered trade unions in Australia?
– I do rot know whether it would be practicable- to take out any precise figures on that matter. I am not aware of any classification of immigrants into those who do, and those who do not, subsequently join unions. The honorable member will be aware that this Government’s policy has been to encourage immigrants to accept membership of the union appropriate to their occupation. In recent years, I have had no complaint that I can recall from any official of the trade- union movement to the effect that, generally speaking, this is not working out in practice.
– Mr. Hooke’s statement was rather to the effect that* the immigrants were Hot aware of the position.
– I got the impression, that what. Mr. Hooke wasputting was that the immigrants were not generally aware of the rights that, they enjoyed under our compensation legislation, and matters of that sort. T am not aware of any suggestion that the. Australian practice - as I pointed out here the other night, it is a very widespread practice - of accepting membership of the appropriate union has not been adopted by immigrants generally. Certainly, no complaints on that score have reached me in recent times.
Assent to the following bills reported : - Sales Tax (Exemptions and Classifications I’
Sales Tax Bills (Nos. 1 to 9) 1056. Customs Tariff Bill 1050. Excise Tariff Bill 1950. Statistics (Arrangements with States) Bill
Salaries Adjustment Bill 1956.
Superannuation Bill 1950.
Transferred Officers’ Allowances Bill 1956.
Motion (by Sir Eric Harbison) agreed’ to-
That leave of absence for two months be given to the honorable member for Warringah (Mr. Bland) on the ground of ill health.
Debate resumed from the 19th April (vide page 1543.), on motion by Mr., Davidson.
That the bill be now read a second time.
’.- TheOpposition considers that this bill is not a satisfactory measure and’ should, in some respects, be amended. The bill, as introduced, lays down the fees that shall be payable by both radio broadcasting, and television stations* The objection which is raised by the Opposition in regard, to this measure is principally in connexion with the fees that will be charged to radio broadcasting stations. The bill provides that the fee to be. paid annually shall be a lump sum of £25 plus a certain, percentage of the proceeds of the sale of broadcasting time.
As the law stands at the present moment, a radio broadcasting station pays a licence-fee of £25 annually plus a per cent, of the gross earnings per annum if a profit is made. The fee is to become £25 plus 1 per cent, on the sale of station time whether a profit is made or not. The reasons stated by the Postmaster-General (Mr. Davidson) for this increase in the fees read as follows : -
The Government considers that some increase is justified by the fact that since the fee was fixed at the present level in 1942, the gross annual earnings of commercial broadcasting stations have increased from £1,330,000 to £(3,687,000 and their profits have risen from £81,812 to £1,440,000.
The last part of the sentence indicates exactly the reason why the Government proposes that the fee should be increased. In the circumstances, it is reasonable to ask broadcasting stations to make a greater contribution than the sum of £35,000 which they are at present making to the cost of administering the broadcasting services which, of course, has risen very substantially since 1942. However, the cost of administering and running radio stations has also increased enormously and that has to be taken into consideration when one is dealing with the subject of licence-fees. The Minister stated that the amount contributed towards the cost of administering broadcast ing services was £35,000 and it is probable that the computation of that amount has been based on figures that are not available to members of the Opposition. The last figures that were supplied by the Australian Broadcasting Control Board indicated that the amount that had been raised by licence-fees was £29,344. It is interesting to notice that the Minister said - ‘
Now, the information that is given in the seventh annual report of the Australian Broadcasting Control Board indicates that more than four stations suffered a loss. On page 7 of that report, paragraph 18, which is headed “ Commercial Broadcasting Stations - Financial Results of Operations states -
It should be explained that seven of the twelve stations which made a loss were being operated on relay from capital city stations in the same ownership and that the combined accounts of the capital city stations and the relay stations showed a profit. Of the remaining five stations, three have in recent times been re-located in areas where they will have better prospects, and a fourth was operating for only part of the year and was expected to make a profit when its service was fully developed.
The same report indicates that the number of stations in operation was 106 and the figures show that the number of stations showing a loss has varied from 44 in 1941-42 to twelve in 1954-55. On occasions, the number has gone as high as eighteen and has varied between eleven and 30, apart from the first year, when losses were experienced by 44 stations out of the 97 stations then in operation. I point that out because, at a later stage, it is my intention to deal with some aspects of radio that will indicate the possibility of many stations having a loss.
The Minister has stated that profits for the year 1954-55 have been shown to total £1,060,000. It may also be pointed out that those profits have to be divided between 106 stations. If the stations which have been operating at a loss are excluded and the profit is divided amongst the remaining 94 stations that were presumably running at a profit, the average amount of profit works out at only £11,130 a station. It is quite true that some stations are extremely profitable. That . statement applies, in the main, to stations in a metropolitan area. The profits of country stations are by no means so rosy as would be suggested by the total amount of profits of all companies, or even by the amount of average profit which, I admit, is not the best way of ascertaining what profits amount to. It should be pointed out, too, in connexion with the profits made by broadcasting stations, that the owners of the station are subject to the same taxes on their profits as everybody else. It does seem to be unreasonable and unfair to suggest that, in addition to paying a licence-fee, they should be subject to an impost upon either their gross earnings, as provided in the act, or the sale of station time, as provided in the bill now before the House.
While I am dealing with this question, I should point out that the stations that are making a profit have had to spend hundreds of thousands of pounds on improved equipment and improved broadcasting arrangements in order to reach their present standards, and they have had to spend money in quite a number of other ways in order to secure public support. It seems to me that the proposal in this bill to fix a charge in addition to a licensing fee is extremely unfair. I know of no other industry, calling, or occupation, in respect of which a licencefee is required, and in addition, a further fee is payable in the form of a percentage of gross earnings. The PostmasterGeneral has stated that the idea, underlying this increase is that the companies shall pay a greater proportion of the cost of administering broadcasting services. That reason is totally at variance with the reason for which the additional payments were first fixed in the 1942 legislation which, in the main, followed the recommendations made by the Joint Committee on Broadcasting. On page 59 of its report the committee make certain comments in respect of station licensees and, because of their importance, and because they seem to indicate that the present payments were fixed for a reason entirely different from that given by the Minister to-day, I propose to read to the House that section of the report. The section comprises paragraphs 402 and 403 of the report, and reads -
Considering that the Government grants commercial stations what may lie termed a measure of monopoly, we have carefully considered whether or not we should recommend that they carry an increased licence-fee. We believe that one of the duties nf the proposed Parliamentary Standing Committee on Broadcasting should be to watch profits ae the industry develops. At present, however, returns are not excessive and the few cases in which they are high will be dealt with by the Taxation Commissioner.
I interpolate there that even that committee was of the opinion that profits were a matter for consideration by the Commissioner of Taxation. The report continues -
In view of the services of the Post Office to broadcasting in general, however, we do suggest a slight alteration in the licence-fees payable by commercial stations, which at present are fixed at £25 per annum. We recommend that the fiat rate of £25 be maintained, but that those stations which declare a profit pay an additional licence-fae of one-half of one per cent, of their gross revenue. We also recommend that this sum, which will probably - amount to about £5,000 a year, should be utilized for radio research.
So the intention of the Gibson committee, at any rate, was that the amount of onehalf of 1 per cent, of their gross revenue, to be paid by commercial stations which declared a profit, should be used for radio research. I can find no evidence in the last report of the Australian Broadcasting Control Board that any radio research has been carried on by that body. If it has been carried on it certainly has not been reported on. Neither does the board’s report indicate that the moneys which have been collected from station licence-fees have been used as recommended by the Gibson committee. We find, however, that the Government’s intention is to take, in addition to the taxes that the companies controlling these stations have to pay, 1 per cent, of the proceeds of the sale of station time as a further charge over and above the licence-fee of £25. I suggest that, in view of the conditions that are arising, and are likely to arise, as a consequence of the introduction of television, this surcharge is both unreasonable and unfair. The Minister, in his brief speech on this measure, certainly gave no justification for a substantial increase of licence-fees in respect of either sound broadcasting or television stations.
Now I come to a matter which I think is of great importance, and which requires the very earnest attention of the House. That is, whether or not, in view of the measure we passed last week and its effect on sound broadcasting, the provisions of the bill now before us can be regarded as reasonable and fair. There can be no possible doubt that the introduction of television as a new medium of entertainment for the Australian people will have a shattering effect on a number of other entertainment media. I suggest to the House that we might well learn from the experiences of other countries following the introduction of television. Sound broadcasting has beer; <i feature of our national life for well over 30 years, and, as a result of its monopoly of the transmission of sound over the air into the homes of people who possess broadcast receivers, there is apparently a feeling that sound broadcasting will continue for all .time to be a profitable enterprise for those who conduct it. Such a suggestion was made by the Minister. It was also suggested in the last report of the Australian Broadcasting Control Board. The experience of other countries, however, shows the shattering effect of the introduction of television on a number of other entertainment media which previously were receiving considerable support from the public.
One of the results of the introduction of television in the United States, and also in Great Britain and Canada, was a considerable decline in the amount of business transacted not only by sound broadcasting stations but also by a number of other entertainment media which had received strong public support and had been extensively used by advertisers. For instances, vaudeville shows once formed a very important part of the national life of the United States. There were scores of vaudeville theatres in every big centre in America. The introduction of television, however, has led to the closing down of hundreds of vaudeville theatres. The effect on the moving picture industry, right through from the producing end to the picture .theatres themselves, has been most pronounced. It is estimated that, after some years of the operation of television in the United States, Britain and Canada, ‘attendances at picture theatres in -those cities have fallen by about 25 per cent. So, the cinematographic industry itself has been experiencing some very disastrous results as >a consequence of the introduction of television. Of course, that has not prevented certain moving picture entrepreneurs from concentrating almost solely on the production of moving pictures for screening on television. The same decline has made itself apparent in respect of the ‘reading of newspapers and magazines, and in a number of other ways. If honorable members wish to gain some idea of the effect of television in respect of these media I suggest that they read the report headed “TV Today” issued by the National Broadcasting Commission of the United States of America. That report shows that there has been a tremendous fall in the use by the public of a number of other entertainment media. I simply point out that sound broadcasting stations will be the first to be affected by television. The commercial broadcasting stations exist on the revenue they receive from the advertisers and sponsors they can attract. But advertisers will always support the best medium for reaching the public, and if it can be shown, as it will be shown, that there is a greater response by the public to advertisements screened on television than to advertisements heard over sound broadcasting stations, the inevitable result will be greater revenue received by television stations from advertising contracts, and a falling away of advertising business secured by the sound broadcasting stations. That is the pattern that has followed in the United States of America, Canada and Great Britain. Inevitably, the same thing is bound to result here, particularly since television broadcasts will be made during the hours that are the most attractive from the stand-point of the advertiser, although the broadcasting hours will be limited initially. Presumably, we shall, find that television broadcasts will be made between 8 p.m. and 10 p.m., during the hours when there will be most viewers, -and that, as a consequence, the big advertising contracts that provide a good deal of entertainment for radio broadcasts will, in turn, go to the television companies. The result will be an immediate falling off of the business of radio broadcasting stations.
– That will happen in the metropolitan areas, but not so much in the country.
– It will happen in the country to a certain degree. I am glad the honorable member has mentioned th, matter. The range of television in both Melbourne ‘ and Sydney, which has already been illustrated, indicates that the fringes of the areas covered by a number of radio broadcasting stations will now be covered by television broadcasts. Obviously, people will prefer to watch television in order to see and hear, rather than hear only, as they do at the present time with radio. The tendency will be for the advertising contracts! to go to the television stations. Secondly, most country radio broadcasting stations enliven their programmes, as do station3DB and other stations, by broadcasting particularly attractive programmes such as those of Bob Dyer and Jack Davey, and the Caltex programme and others. The listening audiences of the country radio broadcasting stations can be held by these exceedingly attractive programmes broadcast by local radio stationsbetween 8 p.m. and 10 p.m. But the transfer of such programmes to the television companies will mean that less attractive programmes will be provided on the country radio stations. The result will be a reduction of the listening audience, which enables the country station to pay its way.
I suggest to the Postmaster-General, and to the House, that an additional licence-fee is not only unfair but also harsh to radio broadcasting stations. I suggest that, instead of persisting with this bill as drafted, it would be far better to amend it in order to protect radio broadcasting stations, which are about to enter an extremely hazardous stage of their history. Therefore, I move -
That all words after “That” be omitted with a view to inserting the following words in place thereof: - “ the bill be withdrawn and redrafted to provide: -
1 ) That the increased fees shall not apply in respect of any radio broadcasting station that the Australian Broadcasting Control Board is satisfied -
has not made a profit for the year concerned, or
would, if the fee were imposed and collected, sustain undue hardship; and
That the increased fees shall not, apply to any radio broadcasting station defined by the Australian Broadcasting Control Board as a Country Station.”
The House should consider the difficulties that will confront the radio broadcasting stations, and I believe my proposals will safeguard them from harshness such as would result from the increased licence-fees proposed in this measure.
– Is the amendment seconded?
– I second the amendment.
.- May I state briefly that the Government does not accept the amendment.
– Order! Is the Minister speaking only to the amendment ?
– I shall address myself only to the amendment. I have listened with interest to the proposals of the honorable member for Bendigo (Mr. Clarey). The position is that the Government considered it highly desirable that there should be a uniform basis for the licence-fees to be paid by all stations. I have just had time merely to glance at a copy of the amendment, but I take it that it applies only to radio broadcasting stations and not to television stations.
– That is so.
– The basic fee of £25 payable by radio broadcasting stations has not been altered since 1942, and the increase of the other portion of the licence-fee from one-half of 1 per cent. of the gross earnings to 1 per cent. of the earnings from the sale of station time is justified by present conditions. But the administrative costs of the governmental part of the service, which is absolutely essential to the development and preservation of highly efficient broadcasting and television services throughout Australia, have risen considerably since 1942. The financial returns of the radio broadcasting stations, as I pointed out in my second-reading speech, also have increased, During the last few years, the financial position of radio broadcasting stations has improved markedly. Apparently, this has been a consequence of the functioning of the Australian Broadcasting Control Board. I do not think it can be denied that the stations have benefited from the board’s attention to the difficulties experienced by some radio broadcasting stations, particularly country stations, which have been greatly assisted either by the increasing of power in order to improve their advertising value, or by other means such as the adjustment of the relationship between stations operating on clear channels and those operating on shared channels. All these things have contributed to the improved position of radio broadcasting stations generally as a result of the operations of the board. It should be remembered, also, that the radio broadcasting stations have improved their position since 1942 because they have increased their own charges to advertisers. Since the broadcasting stations have increased their own charges, it can hardly be argued that the charges imposed by the Government in order to help finance this important function of the board should not be increased.
– Increased costs have had something to do with the increased charges made by the radio broadcasting stations.
– Increased costs justified the increased charges made by the broadcasting stations. I put it to the honorable member that the increased administrative costs of the board justify the imposition of increased licence-fees on the stations to which the board gives its services.
May I point out that the principle of charging a percentage of the gross earnings of radio broadcasting stations was originally adopted because it was recommended by the Gibson committee. This principle is not new. It has been in operation for a considerable time. The only question is whether the percentage should be increased, and I have already dealt with the justification for the increase. May I point out, also, that the Government, in this measure, proposes to alter the basis on which the percentage is charged. Previously, one-half of 1 per cent, of the gross earnings of the broadcasting station was payable by the station. As the result of a request from the Australian Federation of Commercial Broadcasting Stations, the basis will be altered to 1 per cent, of the earnings from what is known as the sale of station time. The charge will be imposed, not on gross earnings, but on earnings from the sale of advertisements - not from the sale of programmes, discs, records, or other things of that sort. So it will not be a 100 per cent, increase. One cannot be precise on this matter, but I have been informed that the increase will amount to about 75 per cent., and that the overall return to the revenue - let us remember that these licence-fees go into the general revenue, not to the board - will be of the order of £35.000 to £60,000 a year. That is not as much as the Australian Broadcasting Control Board is expending on the administration of this very important function, apart altogether from the research work which is being carried out quietly by the board and also by the Postmaster-General’s Department into the important phase of development to which the honorable member referred. I refer to radio research. Let me assure him that a great deal of radio research is going on. Because of the way in which the finances are handled, I cannot pinpoint the expenditure and say that so much money is being taken from revenue from licence-fees and used for radio research. Nevertheless, I can assure the honorable member that a great deal of radio research is being carried out, particularly by the Postal Department.
I do not think there is very much else to be said, except that, if we attempted to differentiate and if we said that the board should he given power to exercise discretion with regard to stations that, had not made a profit or would suffer undue hardship as a result of these proposals, the board would have to function in some way as the. determining power with regard to the position of one station as against another. I do not think that that would be a very desirable state of affairs. I submit also that it is not essential that that be done, because there is power in, I think, section 6k of what will shortly be the Broadcasting and Television Act for the Government to grant financial assistance to any stations which encounter financial hardship and which the Government considers it would be desirable to assist in the public interest. That general provision is still in the legislation to which I have referred. Therefore, I submit that if it should so happen that a station gets into financial difficulties, the best way to proceed will be, not to differentiate between stations, but to rely on the power in the legislation. I feel that the proposals that the Government has made, and by which it stands, are sufficient to meet all the points that have been raised by the honorable member for Bendigo.
I noted that the honorable gentleman, expressed some fears about the effects which television, in particular - television is dealt with in this bill, too - might have on other forms of entertainment such as picture theatres and vaudeville shows. The information that I have received within the last few days shows that the fears that television would cause a considerable falling off in radio broadcasting have not been realized. There was a falling off at the start, but I understand that American radio broadcasters have found that they can hold their own with television, and that recently there has been a greater increase of the number of broadcasting stations established in America than of the number of television stations. So I do not think that that fear is justified. As far as the effect on entertainment is concerned–
– Order ! The Minister should not discuss that matter now, because only the fees of radio broadcasting stations are challenged by the amendment. He must speak to the amendment only. He is not replying to the second-reading debate.
– I quite agree. The point was raised by the honorable member for Bendigo and I was dealing with it briefly in conclusion. If there is any basis for the fear that other forms of entertainment, such as picture theatres, will be affected adversely, surely the position should be met, not by a. reduction of the fees charged to the people who are making the threat to those forms of entertainment, but by an increase of those fees. So I submit that the bill should stand as presented.
Question put -
That the words proposed to be omitted (Mr. Clarey’s amendment) stand part of the question.
The House divided. (Mr. Deputy Speaker - Mr. C. F. Adermann.)
Majority . . . . 20
Question so resolved in the affirmative.
Original question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill -by leave - read a third time.
Debate resumed from the 3rd May (vide page 1728), on motion by Sir Arthur Fadden -
That the bill be now read a second time.
.- I understand that the purpose of this bill is to bring the defence forces retirement benefits scheme into conformity with that of the Public Service. I feel that there is nothing that honorable members on this side of the House can say in opposition to the proposed increases. The Opposition does not oppose the measure.
Question resolved in the affirmative.
Bill read a second time, and committed !>ro forma; progress reported.
Message recommending appropriation reported.
In committee (Consideration of Governor-General’s message) :
Motion (by Sir Arthur Fadden) agreed to -
That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act tn amend the Defence Forces Retirement Benefits Act 1948-1955.
Resolution reported and adopted.
In committee; Consideration resumed.
Bill agreed to, and reported from committee without amendment or debate; report adopted.
Bill - by leave - ‘read a third time.
Debate resumed from the 3rd May (vide page 1731), on motion by Sir Arthur Fadden -
That the bill be now road a second time.
– The Opposition approves the bill. The existing legislation, which was passed in 1954, has proved to be very beneficial to the gold-mining industry in Western Australia. The Opposition had hoped that the Government, in view of its experience of the operation of the act over a period of two years and the co-operation of the Chamber of Mines of Western Australia, would have taken into consideration statistical evidence furnished by that organization find would have increased the respective bounties from £2 to £3 and £1 10s. to £2. I feel that, even at this late hour, the Treasurer ( :~-‘ir Arthur Fadden) should consider ti-“ evidence that has been furnished in support of an increase, and should alter the bounty at an early date. The position is that the act will have been in operation for two years at the end of June.. This bill, which amends the 1954 act, leaves the bounty at the same figure as it was in that year, and makes no provision whatever for the increased cost of production in the industry over those two years. The case that was submitted proved conclusively that an increase in the cost of production, exceeding 6 per cent., occurred over that period. As a consequence, it was felt that there was a good case for an increase of the existing bounty.
There has been no increase in the price of gold since 1949. At that time, the goldmining industry received a substantial lift in the price of gold, but since 1949 it has had to carry the steep increases associated with the production of gold. It was as a result of the case that the industry was able to put before the government of the day that the Gold Mining Industry Assistance Bill was introduced, and that legislation granted a subsidy to help the industry. As I have already said, it is generally acknowledged that the act, notwithstanding its limitations, did* provide some assistance to the gold-mining industry. This industry is of great value, not only to Western Australia, but also to the Commonwealth. Its dollar earning capacity is of great concern to this country. I suggest, therefore, in view of the fact that the price of gold has remained stationary since 1949, that more vigorous representations should be made to the International Monetary Fund in order to secure an increase in the price of gold. If this increase were forthcoming, the ills of the industry would be mended. That action is vitally necessary if small marginal mines are to be kept in existence - it is vital to the country generally that they be kept in existence - and if they are to be provided with the necessary capital to continue their development and progress.
If whatever gold is in sight is” dug out and no provision is made for developmental work, mines are often accounted dead before their true period of life has run. If the necessary capital i.s available to unable underground research and development to continue during the working of the mine, then it may be kept in operation for a number of years. It is necessary to look at not only the quantity of gold that is produced, but at. the production together with the developmental work undertaken to keep mines moving. A strong case should he presented to the International Monetary Fund for an increase in the price of gold. Such an increase would be of great benefit to the industry generally.
The gold-mining industry is important to “Western Australia, not only because of the 40,000 miners that are dependent upon it for their livelihood, but also because of the business people and the towns that exist throughout the Eastern and Murchison gold-fields. This country owes very much to those people because they come from pioneering stock. They went into the back country and opened up the mines, and as a consequence the adjacent pastoral country was developed. They did a great service to the development of this country. We cannot permit an industry like this to go out of existence; it deserves all the help that this or any other government can give to it. The Western Australian Government has been very sympathetic, as far as it has been able to go, in order to keep mines moving. Ft has established State batteries in various centres to encourage prospecting. This is a point that needs to be stressed in this debate. The question of the prospector and his services to this country cannot be over-estimated. To-day the work of a prospector is totally different from what it was in earlier years. Easy gold - that is surface or alluvial gold - is not obtainable to-day and prospectors have to search for deeper gold so that new mines may take the place of other mines as they go out of existence.
Every person who has been associated with gold-mining or any other mining industry knows that a gold mine is a wasting asset. Gold, when taken out of the ground, cannot be replaced in the earth. Consequently, if new mines are to be found in order to keep the minme; industry in existence, then 11he gold-mining industry must have encouragement, including financial assistance.
The present conditions are acceptable and will provide, for the time being, worthwhile assistance to the industry. However, I feel that the position could be improved if this Government would have another look at the case that has been presented. I had the opportunity to see the figures that were presented to the Treasurer (Sir Arthur Fadden), and ] feel that the Chamber of Mines has madea strong case for an increase of thepresent bounty by at least £1 per oz. The chamber also asked that the act bc extended for five years. Three years is not long enough to plan and make arrangements far enough ahead, but three years is certainly better than two years, the term provided in the act of 1954. Therefore, it is possible that three year? will be acceptable to the industry. The only fly in the ointment is that no provision has been made for the extra money that the industry deserves.
I do not want to stress the point any longer. I just make this quiet appeal to the Treasurer to have another look at the figures that were presented. If he and his officers are satisfied that the industry has made out a case for an increase in the subsidy for each ounce of gold, I feel that it will not take very long to make a minor amendment to provide the extra allowance that we who are associated with the industry feel it justly deserves.
– Very briefly I wish to speak in support of this measure, and I should like to draw the attention of the Treasurer (Sir Arthur Fadden) to an improvement to the bill which I believe should be included. The subsidy scheme was designed primarily to assist the mining industry - and I emphasize mining. It was intended by the Government that assistance’ be given to people who are principally engaged in the production of gold-bearing materials from mines and from alluvial deposits. Honorable members may wonder why T, who represent the large wheat-growing area of “Wimmera, should speak on this measure dealing with gold, but my electorate contains an area that in the past was described as the richest alluvial gold area in the world. It produced the largest nugget ever found in Australia. As the honorable member for
Kalgoorlie (Mr. H. V. Johnson) said, gold mining deals with a wasting asset. I agree, but in my electorate is a man who is still producing gold in considerable quantities. He believes that with a stall of six men he can produce 900 ounces of gold per annum over a period of about ten years by treating old dumps. If his claim is correct, he would qualify for the subsidy on the basis of quantity, that is, he. would be producing over 500 ounces a year, but under the provisions of this measure he is not eligible for the subsidy because the gold comes from old dumps. I believe that he, and other men like him, could be important contributors to the rectification of our balance of payments situation and 1 therefore ask the Treasurer to give sympathetic consideration to having included in this measure provisions to help people who can produce gold as this man expects to do.
Question resolved in the affimative
Bill read a second time, and passed through its remaining stages without amendment or debate.
In Committee of Ways and Means: Consideration resumed from the 17th April (vide page 1369), on motion by Sir Arthur Fadden -
Mr. CREAN (Melbourne Ports) [4.24 1 . - The Opposition desires at this stage formally to oppose the resolution and to indicate its reasons in greater length when the bill upon which the resolution is founded is before the House. Briefly, our reason for opposing the resolution is not that we are opposed to increases in company taxes, if such increases are necessary, but that this particular proposal is part of the antiinflationary measures, so called, introduced by the Government in . its supplementary budget. These measures, so far as they apply to companies, will not take effect until returns are lodged after the 1st July, 1956, of the income, for the .previous twelve months. So there’ will be no gain in the revenue until those returns are assessed, which will be approximately between October, 1956, and the end of June, 1957. The Government claims that about £30,000,000 will be raised in the course of a financial year from the application of this proposal. As the increase in rates is to amount to ls. in the £1 all round, this would seem to postulate that the Government estimates that company profits during the twelve months will aggregate about £600,000,000. The Opposition objects to this proposed increase because this crude, flat rate tax, which will bear equally on all companies, big or small, does not get to the seat of what the Australian Labour party believes to be one of the contributing causes of inflation, namely, the excessive prices being charged in the community. When the bill has been introduced, we propose to develop at some length, the reasons why we think the Government should have sought a better method of levying this additional tax, and why it should not fall equally on all companies. At this stage we formally oppose the resolution. When the bill has been introduced we shall argue our submissions at length.
.- In further amplification of what has been outlined generally by the honorable member for Melbourne Ports (Mr. Crean), I point out that this proposal for a flat increase in company tax of ls. in the £1 has certain objectionable features, the first being that its incidence will be the same on large and small companies. Those of us who have had experience of proprietary companies, which in the main are family concerns desirous, in the initial stages, of taking advantage of the convenience of company administration, know that it will bear heavily and unjustly upon small companies. It is very doubtful indeed whether this tax will achieve the object hoped for by the Treasurer (Sir Arthur Fadden) and the Government. This object is to raise approximately £33,000,000 per annum in addition to the amount which we shall raise between now and the end of this financial year. The problem that the Government is attempting to overcome is, in my opinion, one of its own making. “When, in 1953, this additional tax was removed, approximately £28,000,000 was handed back to the companies. Representatives of the Chamber of Manufactures in Victoria have stressed that, because of the Government’s vacillation, the effect of its financial policy upon companies is uncertain, and the results are chaotic, or tend to be chaotic. The tax is on, it is off, then it is on again. Provision for tax has to be made before the declaration of company profits and the payment of dividends therefrom, so there is every ground for supporting the accusation made that the Government’s policy creates uncertainty and misgiving in industry generally. This is reflected in the action already taken by some companies to make provision for tax at the increased rates before declaring their profits and dividends. The method of declaring company profits after tax has been paid leads us the conclusion that, as far as company law and administration are concerned, income tax is a factor in determining the price structure to prevail in a particular industry. There is a tendency to take the tax into account when assessing the desired “ return and the dividend to be paid from over-all profits. I have taken out th, ratio of company profits to paid capital and one could draw an. analogy between ‘ that relationship and the position of the wage-earner, who is just as much a legal entity as is the company. He would be very pleased indeed to be able to receive, after paying taxation, a net 20 per cent, profit on the commodity that he has to sell, namely, his labour. I am sure that he would be equally pleased if, even before paying taxation, he could show a profit of 40 per cent, on his investment. That is the position that is disclosed here. Recently in the United States of America excessive profits earned by the General Motors Corporation were criticized in a Senate report. The same state of affairs applies in Australia. I shall not labour the point so far as this company is concerned, but an over-all review of its returns shows that the net profit, after paying taxation, is in the vicinity of 24 per cent, or 25 per cent. It is estimated that the divi dend rate is about 18 per cent. That i? not a bad return after paying income tax. “We have before us a measure which is ostensibly designed to prevent inflation. “We oppose it on the ground that it will not do so. First, we believe that inflation would be checked by something more, in the nature of an excess company profits tax. Secondly, the proposed tax does not go to the basis of the problem. It treats the effect rather than the cause. The underlying cause of inflation is excessive profits. I agree with the honorable member for Mackellar (Mr. Wentworth) that this Government’s policy is of a stop-gap character and is designed to cover up the cracks that have been created by the Government in the economic structure. Thirdly, the broad criticism of this tax is that it operates unfairly against the small company, the profit of which is in the vicinity of £2,000 per annum, as compared with the large company, the profit, of which approaches £50,000 per annum. When we consider that, of a total number of 2,300 companies, only 712 are in the higher income earning group we realize the unfair incidence of the proposed tax. It reminds one very much of the Government’s flat sales tax rate, which is imposed on all and sundry, rich and poor, high and low alike. No good purpose can be served by imposing this tax except that of bolstering up the tottering economic edifice which, the present Government has erected. I shall leave the more detailed criticism of the bill until it reaches the committee stage.
.- I should like the Treasurer to clear up one matter for me. I notice that “cooperative company “ is to have the same meaning as it has in Division 9 of Part III. of the assessment act. Then the schedule refers to the “ non-profit “ company. But the proposed increases will have general application. As I understand it, a “ co-operative “ society, under the Rochdale system, is a body of people banded together to purchase in bulk. Such societies have a balancing period of six months, at the end of which an examination is made to see whether there has been, in effect, an overcharge for commodities, which could not be assessed at the time of the sale. If a society has accumulated a surplus a rebate is made for an overcharge on commodities that could not be accurately assessed at the time of the sale. Some persons who are antagonistic to co-operatives describe that rebate as a dividend, but it is not; it is a refund for an overcharge at the time of sale. It would be very wrong of the Government to tax co-operative societies as profit-making companies. They have always been exempt from taxation in the general sense of the word. Therefore, I should like the Treasurer to say whether it is now proposed to tax co-operative societies.
– There has been no alteration in the definition. The only alteration has been in the rate.
– I am satisfied with the Treasurer’s assurance.
– There is to be no change in the basis of taxation. The change will be in the rates.
Question put -
That the motion (vide page 1367) be agreed to.
The committee divided. (The Temporary Chairman - Mr. G. j. Bowden.)
Majority . . . . 15
Question so resolved in the affirmative.
Standing Orders suspended ; resolution adopted.
That Sir Arthur Fadden and Sir Erie Harrison do prepare and bring in a bill to carry out the foregoing resolution.
Bill presented by Sir Arthur Fadden. and read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is outlined adequately in the explanation which I have given to the Committee of Ways and Means. It is designed to increase the rate of tax on company profits by1s. in the £ 1. The matter requires no further comment from me.
– As indicated at an earlier stage, the Opposition opposes this measure. In order to indicate the basis for our opposition, we need to have a look at this very important matter of company taxation as it affects our whole taxation structure. A few days ago, when other taxation measures were before the House, there was a considerable debate about the principles and the basis of taxation, and the honorable member for Mackellar (Mr. “Wentworth) presented some of his ideas as to how the income tas legislation should be altered and gave some of his thoughts on saving in the community. “When the Treasurer (Sir Arthur Fadden) explained this proposal in the Committee of Ways and Means, he estimated that an overall increase of ls. in the fi in the rate of company taxation would yield an additional £30,000,000 of revenue in the course of a complete assessment year. It would seem to me, from that statement, that his advisers anticipate that the aggregate amount of company profits earned in Australia for the financial year which will end on the 30th June, 1956, will be of the order of £600,000,000. I suggest that is a considerable sum in itself, and a considerable proportion of the national income.
In Australia, as in a great number of other countries, there are two kinds of “Companies. There are companies, with a few minor exceptions, which we call private companies, and companies which we call public companies. The only difference in method of taxing the two types of companies is this: In the Aase of public companies, the first £5,000 of taxable income is taxed at a rate which is ls. in the £1 less than the rest of the income; and in the case of private companies, the general tax is ls. less than that applicable to public companies. But, in addition, private companies are subject to a tax that is known as the undistributed profits tax. Apparently the genesis of the undistributed profits tax occurred in the early days of taxation in this country when many people found it convenient to form themselves into private or proprietary companies because, by so doing, they could evade a certain amount of tax liability. In order to close that loophole in the law, the principle of the undistributed profits tax was applied to private companies.
No undistributed profits tax applies to public companies. Apparently, the assumption underlying the taxing of those companies is that, because public companies have a lot of shareholders, the pressure of those shareholders on the boards of management and directors of the companies will be sufficient to ensure that they distribute the majority of their profits in the form of dividends. That might have been a reasonable assumption many years ago, but it is certainly not a reasonable assumption in this age which some people have described as. the age of managerial revolution where there is a divorce between what is called ownership of capital, for the one part, and th, management of capital for the other part.
Nowadays, in many of our big companies, because there is a great number of shareholders who are not a cohesive unit, the shareholders exert very little control on the management of a company. The management becomes a bureaucracy of its own which is almost self-perpetuating. Therefore, the assumption that underlay the undistributed profits taxation in the past is, perhaps, no longer valid to-day. For that reason, I think that we need to look, sometimes, at the assumptions that underlie our taxation structure generally. This bill deals with the rate* of company tax and, again, we need to look at that particular form of taxation. At the moment, in Australia, something over £500,000,000 is being collected in income tax, which comprises tax on individuals and tax on companies. Approximately two-thirds of that total comes from individuals, and about onethird from companies. I think the budget estimate for this financial year is that £187,000,000 will be derived from tax on companies. That figure seems high until it is related to the fact that those companies, after allowing for depreciation, will be presumed to have taxable incomes of the order of £600,000,000- so that, even after paying their taxes, there will still be £400,000,000 of profits left in the hands of the companies, out of which they can provide for capital expansion and for the distribution of dividends. There is, therefore, in the hands of the companies of Australia, a very important instrument affecting the future economic development of this country.
When the Prime Minister spoke of the economic measures for 1956, it is interesting to note that he pointed to the fact that there had been a large growth in. capital demand in the private sector of the economy and which, he suggested, was one of the principal causes that had led to the inflationary situation. It is for this kind of reason that the Opposition suggests that the imposition of the crude flat rate of ls. in the £1 company tax all round is not a means of tackling effectively this very important problem. Unfortunately, the statistics published by the Commissioner of Taxation are nearly two years behind the times, thus rendering it difficult to obtain a complete picture of the current situation. Nevertheless, each year the Commissioner discloses in his annual report the details of the situation as it was some years previously. The Commissioner’s last annual report is the 34th annual report, tabled in this House last year, which deals with the company income for the year ended the 30th June, 1953. There needs to be borne in mind the fact that the White Paper on National Income and Expenditure discloses that in that year the total profits from companies were of the order of £378,000,000. I suggested earlier that the taxation officials and the Treasury advisers are contemplating that this year taxable incomes from companies will be of the order of £600,000,000, an increase, in round figures, of from £400,000,000 to £600,000,000. I suggest that that picture be kept in mind when honorable members consider the figures that I am citing, and am about to cite. They are taken from the last report of the Commissioner for Taxation. Page 82 of that report discloses that there were 17,631 tax-paying private companies in the financial year 1952-53, with aggregate taxable incomes of £134,752,296. These figures are assessed after depreciation has already been provided for - and depreciation is expected to put a company in the same physical position at the end of the financial year as it was at the beginning of the same year. It does not allow for capital expansion, but it does provide for capital accretion and depreciation during the year. Tn the same year there were 5.242 public companies, with an aggregate taxable income of £270,505,020 after £25,315,187 had been allowed for depreciation. So, the aggregate picture in the year ended the 30th June, 1953, was that there were 22,873 tax paying companies, private and non-private, with an aggregate taxable income, of £405,257,316. There were a number of other minor companies that do not concern us here. Those private companies, whilst numbering more than three times the number of public companies, derived only one-third of the total of taxable income derived by the two sections together. That shows that the public company is by far the more significant economic unit. Further, the statistics issued by the Commissioner of Taxation give very important breakdowns of those figures into different levels of taxable income. I propose, for the purposes of this analysis, to take as the dividing line taxable income of £50,000 and to refer to companies as those with taxable income under £50,000 and those with taxable income over £50,000. In the case of private companies, 17,234 of them out of a total of 17,631 had taxable incomes of less than £50,000. Only 397 « had taxable incomes in excess of £50,000. Those with taxable incomes less than £50,000 derived an aggregate taxable income of £91,455,507, and those which derived taxable incomes of more than £50,000 each had a total taxable income of £43,296,789. In the case of public companies, 4,247 out of a total of 5,242 had taxable incomes of less than £50,000 each, and 995 had taxable incomes in excess of £50.000. Those with incomes of less than £50,000 derived a total taxable income of £39,874,496, and those with taxable incomes over £50,000, although numbering only 995 of the total of 5,242, derived an aggregate taxable income of £230.630,527. That is an indication that very few companies in this country derive the majority of the taxable incomes that are earned. Total company tax paid by the two types of company aggregated £116,650,S67, of which about £33,000,000 was paid by private companies and £83,545,848 by public companies. Again, if the division into those earning incomes of more than £50,000, annually, and those earning less than £50,000 is used, the total tax paid by private companies earning less than £50,000 was £21,353,388, and the total paid by those earning more than £50,000 was £11,795,313. Public companies which earned under £50,000 taxable income paid £11,751,451 and those that earned in excess of £50,000 paid £71,750,335 in taxes. I have these figures summarized in a table which is expressed in a form that is easy to follow and, with the consent of honorable members, I shall incorporate the fable in Hansard. It reads-
Taking the two categories together we see that of a total of 22,873 companies, only 1,392, or 6.1 per cent., had taxable incomes of over £50,000, yet they derived a total taxable income of £273,927,313 out of a total taxable income of companies of £405,257,316, or 67 per cent. of all profits earned. I repeat that 1,392 companies, or 6.1 per cent. of companies in Australia earned 67 per cent. of taxable profits. They paid taxes totalling £83,545,848 out of total company taxes of £116,650,867, or 71.6 per cent. of all taxes. Thus, setting aside for the moment these technicalities which might surround an excess profits tax, it ought to be clear that two-thirds of all capital profits are derived by approximately 1,400 companies throughout Australia, so that if profits are excessive - and we of the Labour party claim that they are excessive - then the bulk of them are concentrated in relatively few hands. Large profits and excessive profits may be presumed to go together. Let us look a little more closely at those companies which derive profits of more than £50,000 - that is, 67 per cent. of the tax field. The figures for the financial year 1952-53whichI have already cited indicate a concentration of profits in the hands of public companies with taxable incomes in excess of £50,000. Nine hundred and ninety-five, or 4.4 per cent., of public companies derived profits totalling £230,630,524, or 57 per cent. of all profits earned by companies. The concentration in the hands of private companies is not so great, although it is still disproportionate. Three hundred and ninety-seven, or 1.8 per cent., of private companies made profits totalling £43,296,789, or 10.7 per cent. of all profits.
– How many shareholders participated in those profits?
– I am coming to that, I ask the honorable member to let me indicate, first, that a very few big companies derive the bulk of the taxable income in the community. I want to make that point clear. However, when we further dissect the number of public companies with taxable incomes in excess of £50,000 into various income groups, wc find an alarming concentration of economic power in the Australian economic system, as was indicated in the foregoing table. These statistics also are taken directly from the 34th report of the Commissioner of Taxation. The report discloses that, in the financial year 1952-53, 995 public companies had taxable incomes totalling £230,630,524, compared with a total for all public companies of £270,505,020, earned by 5,242 companies. This, of course, is the income after providing for depreciation. The 995 companies paid £71,750,335 in income tax out of a total of £83,501,786 paid by all public companies. They paid in dividends £68,765,265 out of a total of £87,932,071 paid by all public companies. They purchased, during the financial year, plant worth £69,271,409, out of a total of £84,098,208 purchased by all public companies. They possessed, at the end of the financial year, plant and machinery at book values totalling £240,256,360, out of a total of £295,096,143 possessed by all public companies. They had stock on hand worth a total of £430,927,570 out of a total of £550,663,376 for all public companies. [ submit that these figures show a considerable degree of concentration, but the concentration is intensified the higher we go up the income scale.
I propose now to take the public companies in the largest income categories - those with incomes in the range from £500,001 to £1,000,000, and those with incomes over £1,000,000 - and to indicate the position in percentages and in aggregate. Eighty-five of these companies, or 1.6 Tier cent, of the total, made profits totalling £106,995,025, after allowing £9,232,917 for depreciation. These companies derived 39.55 ner cent, of the total promts, and paid taxes totalling £33,782,893, 0r 40.5 per cent, of the total tax paid by public companies. They paid dividends totalling £27,853,756, or 31.7 per cent, of the total for all public companies. They possessed plant and machinery at book values totalling £117,104,845, or 39.7 per cent, of the total for all public companies. They had stock on hand totalling £169,486,123, or 30.8 per cent, of the total for all public companies. They purchased, during the financial year, plant totalling £37,661,9-5-2, or 44.8 per cent, of the total for all public companies. They were allowed for depreciation a total of £9,232,917, or 3645> per cent, of the total for all public companies. As well as the public companieslisted, there were three private companies with taxable incomes totalling £1,886,000, which paid taxes totalling £535,183, andwhich derived taxable profits in the range from £500,001 to £1,000,000. There was also one private company with a taxable income of £1,505,000.
Let us look also at the interests from which these large profits were derived. Again, this information can be obtained’ from the 34th report of the Commissioner of Taxation. Of the 85 public companies mentioned earlier - 47 with taxable incomes in the range from £500,001 to> £1,000,000, and 38 with taxable incomes’ in excess of £1,000,000 - 66 lodge their taxation returns at the central office. This means that they derive income from, more than one State. In other words,, they are national giants. The four private companies that I have mentioned5, with profits in excess of £500,000 lodge their returns at the central office’. They;,, too, operate on a national scale. Among: the companies classified as agricultural^ grazing and dairying, two had incomesin the range from £500,001 to £1,000,000. Among those classified as mining and quarrying, two had taxable incomes in the> range from £500,001 to £1,000,000, and three had taxable incomes in excess of £1,000,000. Companies classified asmanufacturing are separated into a number of groups. In the founding, engineering and metal-working group, nine hai taxable incomes in the range from £500,001 to £1,000,000, and six had incomes in excess of £1,000,000. In thenext group - assembly repairs of ships, vehicles, parts and accessories - one had* a taxable income in the range from £500,001 to £1,000,000, and four had taxable incomes exceeding £1,000,000. Of course, we have a fairly good idea where a major part of that comes from. In 1952-53, the taxable incomes of four companies with taxable incomes in excess of £1,000,000 totalled £14,43S,000. In the last financial year, one company alone has recorded a taxable income in excess of £15,000,000. I distinguish between what some companies call their income after taxes and the amount which the Commissioner of Taxation regards as liable to tax, which is the concept that I use here.
In the textile and fibrous materials group of public companies, two had taxable incomes in the range from £500,001 to £1,000,000. In the rubber goods and leatherware group, three companies bad taxable incomes in excess of £1,000,000. In the food, drink and tobacco group, two bad taxable incomes in the range from £500,001 to £.1,000,000, and five had taxable incomes exceeding £1,000,000. In the paper, paper products, printing, bookbinding and photography group, three companies had taxable incomes in the range from £500,001 to £1,000,000. and one had a taxable income in excess of £l;000,000. In all the other manufactures group, four companies had tax able incomes in the range from £500,00.1 to £1,000,000, and two had taxable incomes exceeding £1,000,000. That coneludes the companies classified as manufacturing. In the classification of electricity, gas and the like, two companies had taxable incomes in the range from £500,001 to £1,000,000. In the shipping and stevedoring classification, one company had a taxable income in this r.ange. In the wholesale and retail trade classification, five companies had ta;able incomes in this range, and three had taxable incomes in excess of £1,000.000. In the live-stock and primary produce dealing classification, four companies had taxable incomes in the range from £.r.00,001 to £1,000,000, and three had taxable incomes exceeding £1,000,000. In the investments holding charge classification, two companies had taxable incomes in the range from £500,001 to £1.090,000. In the banking classification, one company had .a taxable income in this range, and six bad taxable incomes exceeding £1,000,000. In the life insurance classification, two companies had taxable incomes in the range from £500,001 to £1,000,000, and one had a taxable income in excess of £1,000,00”. Altogether, 47 companies had taxable incomes in the range from £500,001 to £1,000,000, and 38 companies had taxable incomes exceeding £1,000,000. Three private companies had taxable incomes in the range from £i 00,001 to £1,000,000, and one had a taxable income in excess of £1,000,000.
It must be emphasized that these figures are more than two years old, because they relate to incomes derived during the financial year ended the 30th June, 1953. Company profits have increased considerably since, a3 the last “White Paper on National Income and Expenditure indicates. In a document tabled by the Treasurer when he presented his last budget, the estimated profit for the year that ended in June, 1955, was put at £505,000,000. Apparently the Treasurer presumes that, for the year that will end in June, 1956, the figure will be £600,000,000.
The general trend, however, is clear. There is a considerable aggregation of profits in the hands of relatively few companies. We must consider, not only that concentration, but also the aggregate transactions passing through the hands of incorporated businesses in Australia. After all expenses have been deducted, clear profits amount to £600,000,000, so we can see that, if companies work on a turnover basis of 20 per cent, or something of that kind, transactions involving about £3,000,000,000 are passing through their hands. I have already indicated the kind of economic concentration that is taking place. It can be seen that the few very big companies in Australia must exert an influence out of all proportion to their number. Published figures do not reveal everything, but they do indicate general .tendencies.
When we realize that in the financial year 1952-53 profits, before depreciation, were in the region of £450,000,000, the total national income then being £4,000,000,000, we see that the actual turnover of goods and services by these concerns .must be truly gigantic - possibly of the order of more than a half of the national income. Further, during one year, these concerns purchased plant, as distinct from buildings, worth nearly £120,000,000 - a significant part of gross private investment in this field. In addition, aggregate holding of plant at over £400,000,000 and stocks at nearly £800,000,000 are also significant in influencing future economic development.
As has been suggested, if there are excessive profits - we suggest there are - the bulk of them are to be found among relatively few concerns. As profits, in any case, arise out of prices charged for goods and services, it seems obvious where we should first look for the genus excess profits “. When Labour suggested an excess profits tax during the last general election campaign, we were accused of being arbitrary because we took the starting point as at £25,000. It was said that we paid no regard to paid-up capital. That was hardly a fair description of what was intended, but it should be pointed out that the present basis of company taxation pays no regard to paid-up capital. The increases that are contemplated by this Government pay no regard to paid-up capital, but will be imposed at the same flat rate on all companies, irrespective of their paid-up capital and irrespective of the number of shareholders involved. The basis of taxation is profit made, irrespective of ra nihil employed. Apart from the first 000 of taxable income and the differential of *ls. in favour of private companies - these are subject to another tax on undistributed profits and represent only one-third of the field, in any case - big and small are taxed alike already.
Labour’s proposals at least had the merit of excluding the bulk of the taxpayers - but, of course, by no means the bulk of the tax yield - from the application of an excess profits tax. In the light of the figures that I have analysed, or must incline to the view that criticism “ ‘ our proposals was tinctured by concern for vested interest rather than actuated by principles of equity - unless the critics were ignorant of the kind of figures that T have cited. “What form an excess profit.0 tax should take may be a matter for some difference of opinion, but this much, at least, is clear - that although it is big; interests which get the most profits,, present tax methods treat big and small alike. There seems to be a case for, at least, a better graduated system of company taxation.
In Australia, profits before tax represent something in the region of oneeighth of the national income. Last year,, the figure was about £500,000,000 and this. year it is expected to be £600,000,000. In round figures, the national income, at gross product rates, is about £4,800,000,000. In the United States,, company profits aggregate about 40,000,000,000 dollars, out of a total national income of 320,000,000,000 dollars, but in that country, which is regarded as the apotheosis of private enterprise, taxes take nearly 50 per cent, of profits, whereas in Australia, prior to the present increase, taxes took less thai: one-third of profits. If American rates were in force in Australia, the currentadditional yield from company taxation might be of the order of £80,000,000. The rates in force in America do not appear to have brought bankruptcy and ruin in their train.
As an indication of what a reduction of company tax meant in this country a year or two ago, let me quote a passage from the budget speech delivered by the Treasurer on the 9th September, 1953. In the course of that speech, the right honorable gentleman said -
It is proposed that the rates of tax payable by public companies on incomes of the year ended the 30th June, 1053, will be 6s. in the £1 on the first £5.0°0 of taxable income and 7s. in the £1 on the balance of taxable income. As it is not proposed to re-enact the additional levy of 2s. in the £1 in 1951-52 and 1952- 53, the proposed rates represent, in the generality of cases, a reduction in tax of ls. in the £1 on the first £5,000 of taxable income and 2s. in the £1 on the balance of taxable income.
A reduction of. ls. in the £1 was also made in the rate of tax applicable Uprivate companies. The effect of these reductions was that in the financial year 1953- 54 the yield from income tax on companies was £134,000,000, as against £167,000,000 in the previous year. That represented a concession in that year from the figures I have given we can see where the bulk of the concession went - of £33,000,000. I suggest that that concession, given then, aggravated the inflation that still rages unabated in this country, due to the policies of this Government.
The Government proposes now to reimpose a half of that 2s. in the £1 reduction. It is estimated that the increase will yield another £30,000,000. In the year to which the figures that I cited previously referred, total taxable profits were about £400,000,000. The tax paid was about £105,000,000 and dividends amounted to about £120,000,000. So there was still left in the hands of the companies approximately £175,000,000, over the spending of which they had full control. That determined, very largely, the pattern of investment in this country. It is the pattern of investment here which certain people regard as being a disturbing element of the economy at the moment. On page 15 of the Treasury bulletin that was tabled a few days ago, it was stated that in the year ended in June, 1955, the net amount of cash raised from investors by Australian companies listed on the stock exchange was £S6,200,000. Let us assume that total profits this year will be £600,000,000, that tax will be £220,000,000 and that dividends will be £120,000,000. That means that the major portion of the finance necessary for company expansion in Australia does not come from new investment. It comes from profits ploughed back by existing companies. That means that in Australia, because of the aggregation of interests in very few hands, the’ pattern of future economic development is dictated by a very small group indeed. Reinvestments of profits is about three times as great as new company investment.
I submit that in this country, in which there is a need for national development, some private and some public, there ought to be rather more public and less private development, because private development is extending in directions that are not always the be3t for the economic health of this community. We have seen the dilemma in which the Government has found itself in trying to- restrict the import of motor car parts while there is operating in Australia a company that earned last year a gross profit, after allowing for depreciation, of the order of £15,000,000. On this it paid £6,000,000 in taxes, and then remitted £4,000,000 to overseas shareholders, which was a drain on our dollar reserve. The residue has been ploughed back to earn even greater profits in the future, and the company is following that course at a time when the Government is trying to cut down expenditure on motor cars and parts. That is the kind of difficulty into which a government gets when it practises the gospel of private enterprise, holding up its hands at any suggestions of economic planning. This great country cannot develop unless there is intelligent co-ordination of the various developmental activities.
I wish to reply briefly to the honorable member for Gwydir (Mr. Ian Allan), who suggested that the big companies were really the preserve of the widows and orphans. Unfortunately, the Commissioner of Taxation did not furnish us with very up-to-date information about Australian dividends. The Commissioner’s 33rd report, which was for the year ended June, 1952, showed that in that year income from dividends amounting to £52,000,000 was included in taxable income. Of that sum, £41,000,000 was received by people with incomes of over £1,000. In the same year, of 2,700,000 taxpayers, only 270,000 had incomes in excess of £1,000, and 150,000 of those had no income from property. Assuming that all the remaining 120,000 persons received some dividends, they would represent only a very small proportion of the Australian population. As a matter of reality, nothing like that number of persons are shareholders. Sometimes people try to advance the myth that these big companies are actually comprised of a large number of small people. I suggest that, so far as the major public companies of Australia are concerned, that is not true. If those companies were honest and published a list of their share holders - at most of the State registeries such lists can be searched for a couple of shillings - it would be found that they are controlled by a very few people. In any case, because of what has been called the managerial revolution, there is a wide gulf between ownership and control. The average small shareholder has virtually no say in electing the board of directors of the company of which he is supposed to be a part owner. The election is out and dried, from the start, and the shareholder has virtually no control.
Our principal reason for opposing the bill is that this measure, which the Government has introduced as- part of its anti-inflation proposals, is not hitting the source of large profits- It seeks to impose a flat increase of ls. in the £1 irrespective of the size of the companies. It bears with equal, force upon the- 1,000 or more companies that earn, two-thirds of the total amount of company profits as it does upon the 21,000 companies, which earn the remaining, one-third. On that ground alone, this proposed increase of company tax’ is unjust in its incidence.
As the measure will not become operative until returns are lodged after the. 1st Inly, and’ as the Prime Minister (Mr. Menzies) has recently directed attention to the fact that one of the most disturbing factors making for inflation was the growth of capital demand in the private sector of the economy, the Government ought to give more serious consideration to this matter. I remind honorable members that the greater part of the growth of capital demand in the- private sector represents the ploughed-back profits of these economic giants in our midst. The decision about how much shall be ploughed back and where it shall be re-applied rests with the management of these companies, who form a very small section of the community. It is they who determine how much shall be ploughed back or held in reserve, and how much shall be distributed in dividends.
In Australia, the pattern seems to be that a little more than one-quarter of profits is paid in taxes, approximately one-quarter is paid out as dividends, and slightly less than one-half is re-invested in the enterprise. We say that those profits are the result of excessive prices, and that one thing that the companies could do, if they were philanthropic cowards- the small people, would be to give some benefit to them in the form of lower prices for the goods that they sell over their counters. If they did that, they would be doing something to abate the effects of inflation and to restore the standard of living of the average Australian, who is- a wage-earner or pensioner dependent on a fixed, income. As an alternative to increasing his wages, one methodof raising his standard of living would be to charge lower prices for the goods and services upon which he chooses tospend his income.
’. - This bill, which seeks to impose a flat increase of company tax, is one of the economic measures that were announced by the Prime Minister- (Mr; Menzies) on the 14th March. It is one in which, even supporters of the Government can take no great pleasure, but- must re,gard it as a. means of” dealing with certaineconomic problems’ with which we areconfronted. I listened with considerable interest to- the very scholarly speech of the honorable member for Melbourne Ports (Mr: Crean), and. I should like to compliment: him on the amount of effort that he put into preparing the various statements that he- placed before the House ; but it was- with a certain amount of disappointment that I waited for the arguments that should have proceeded from the- presentation of that mass of detail. It seemed to me that, beyond sayingthat a flat-rate increase would be less disadvantageous to a large and successful company than to a- smaller one, he did not suggest why he opposed the measure: The honorable member, as far as I can> see, did not really touch on any alternative to solve the problems with which we are faced, although he admitted that be believes in development under Government auspices probably more so than under private auspices. When I analysethe mass of detail that he prepared in order to see what came out of it, I find’, with a certain amount of disappointment, that the eagle has hatched a very small egg-
I said before that I personally have no great pleasure in supporting any measurethat involves increased taxation, but I think everyone will agree that the development of certain economic conditions in Australia has imposed obligations on the Government. This increase in company tax- is one of the measures by which the Government hopes to solve one pressing problem in connexion with the bridging- of the gap between the available- funds from public investment sources and the requirements of the States to carry on their developmental works, which the Commonwealth has virtually underwritten. The honorable member for Melbourne Ports said that he believed in development, so theoretically he should believe in any measure that would assist with that problem. This matter has been thrashed out fairly thoroughly in previous debates, so I do not want to dwell on the necessity for providing sufficient sums to bridge the gap between the money available from investment sources and the amount required to carry out State works programmes.
I have been in this House when four alterations have been made in company taxation. If I remember rightly, it was reduced in 1950-51, increased in 1952, and reduced again in 1953, and now additional company tax is being imposed. So we can only hope that the pendulum will swing again in the right direction and that in due course, when the ship of State has steered clear of the rocks represented by lack of investment money, action will be taken to reduce company tax once more. The honorable member for Melbourne Ports made rather a sweeping generalization when he said he considered that large profits and excessive profits went hand in hand. That is one of the basic weaknesses of the Labour party in its approach to development, particularly the private side of development, in this Commonwealth of ours. There is a tendency to regard anything that is large and successful in the community as frightening, something that must be dealt with before it gets too big. Et seems to me that that is a basic weakness in a country like Australia which, to achieve its dynamic future possibilities, must, by the very nature of things, build up institutions and corporations of great strength financially so that they can stand up to the recessions that may occur from time to time.
– Where does the little man come in?
– I suggest to the honorable member for Yarra that out of small things big things arise. It would be hard to find a small concern in Australia to-day that did not hope in due course to expand and have a greater impact on the general financial structure of the country. If we were discussing that subject, I would say that the biggest monopolist in the community to-day is that person who believes sincerely in the form of socialism where the whole control of everything is under one great socialist structure. Let us have less of this rubbish about monopolies from those who support the State monopoly to the full!
When this question of profits comes up, my mind turns back to the debates in this House when the last reduction of company tax took place. I recall that Opposition members said in indignant tones that this was a terrific windfall for General Motors-Holden’s Limited and certain other large public corporations. In fact, Opposition members said it was wrong to reduce the company tax because the effect would be to return to a number of corporations - and Opposition members always pick on the big successful ones - something that they should not receive. It is an extraordinary paradox that they are now reversing their argument. They oppose an increase of company tax for the opposite reason. However, they are consistent in their inconsistency.
Let me touch on the point I made before - the one that attacks the large corporation. I believe that large and successful corporations develop in Australia mainly because the public want that type of thing. I admit the socialist does not want it, but the general public of Australia believe that the amalgamation of institutions within reasonable limits - not to produce a complete monopoly - provides for security and makes a much better contribution ‘ to the general national economy. I believe that those people who work in big industries also support them because an institution, by its financial stability, can afford to provide better conditions of employ- ment and, more importantly, will, by its own financial strength, guarantee employees a greater measure of security. Those people who attack such institutions as the large top-hamper institutions that the honorable member for Melbourne Ports has referred to, would find that the people working for those corporations, companies, or whatever they be, would be the last to suggest that they would be better off if they were working for smaller firms.
There is another point that must not be lost sight of in connexion with this matter. By virtue of their strength, the big companies can bring about a far higher degree of efficiency in production. That is possibly the most valuable argument to-day, when Australia is trying to deal with rising costs and produce articles for export in competition with the manufactures of other parts of the world. The high degree of efficiency that can be produced by a bigger turnover is a major point, and one that con.cerns vitally the national economy.
I do not want to weary the House, but I should like to conclude on this note: I, for one, take no pleasure in increasing taxes, and I hope that the pendulum will swing when this Government, by its -successful measures, has steered the ship of State again to still waters.
.- It is debatable just how long the economy, sunder the present system, can stand the effects of the lack of direction over private investment. Direction is necessary to restore to the- economy generally that degree of stability which will engender a re-creation of confidence in the nation and its ability to overcome the difficulties that look like surmounting it at present. We hear once again from members on the Government side an apparent contradiction when they state the motive behind this and other measures which purport to be designed to overcome the difficulty of inflation. The honorable member for Corangamite (Mr. Mackinnon) described this measure as an effort to bridge the gap between the amount of money needed for public works and the amount of loan money available for that purpose. “We con- “ elude, therefore, that the success of the effort is, to say the least, uncertain. On the one hand, this measure is revenueproducing, and on the other it is essential to combat inflation. The honorable member alleged that honorable members on this side of the House believed in one great monopoly, but he also advanced the opinion that the Australian people prefer the formation of large concerns or monopolies in particular industries. It is indeed strange that in the United Kingdom there is an excess profits tax designed to produce the desirable state which the honorable member for Melbourne Ports (Mr. Crean) has so expertly described, and that America has anti-trust legislation designed for the very same purpose. The Sydney Morning Herald of the 26th April contained reference to the report of a United States Senate committee criticizing the profits of the General Motors Corporation. The corporation was called upon to cut its ill-earned profits and to give something back to the people. The Senate committee considered this advisable and desirable in the interests of the economy as a whole. The report noted that the corporation made a profit in 1955 of 31 per cent, on paid capital after payment of taxes. The committee considered that, in view of the extremely high level of profits over such a long period, the interests of the consumer should receive stronger recognition by the company in the form of lower prices.
All that the honorable member for Melbourne Ports has asked is that we should have some similar legislation in this country. In the absence of such legislation, the Treasurer (Sir Arthur Fadden) has in his control, through the budget, a very effective means of imposing upon private enterprise the curbs which are so necessary to a proper social conception of the budget as a whole. The budget should be applied for the benefit of the people as a whole, and not for the benefit of a particular industry. Therein lies the main objection of honorable members on this side of the House to the proposed increase in company tax of ls. in the £1. If we accept as correct the statement of the Prime Minister (Mr. Menzies) that the measure is designed to combat inflation, it is amazing to recall that the Treasurer, in his budget speech of the 9th September, 1953, in which he announced the lifting of this very impost, said that the reduction of income and company taxation would benefit almost everybody, and that the object was to encourage effort, enterprise and saving. Now, the very reverse procedure is being adopted in order to stop inflation and te encourage saving, and to achieve the effects which were then desired but which obviously were not achieved. In other words, the present situation is a kind of Frankenstein monster created by the Government by its inactivity and inability to cope with the problem. As the honorable member for Mackellar (Mr. Wentworth) said, the measure is designed to patch up the cracks appearing in the economy.
The only other point which I desire to stress is the adverse effect which this tax will have upon the economy of the country generally. Companies can, to a certain extent, make provision for passing on this tax. The assessing of companies’ profits after the deduction of tax does give them some means of making provision for taxation, and therefore this measure will have the reverse effect to that intended by the Government. Its effect will be to increase, not to reduce, prices. Recently various companies have increased prices, but the wage structure has not contributed to these rises. I submit that increased sales and company tax will have exactly the opposite effect to that which the Government says is intended. They will not have an antiinflationary effect. Figures cited by the honorable member for Melbourne Ports show that we have approximately 23,000 companies, 60 per cent, of whose income is earned by 700 of them. This discloses a serious aggregation of . the nation’s wealth in the hands of a privileged few.
– The honorable member may regard my statement as rr bish, but I submit that that is not the correct attitude to adopt when considering the proposed increase. The payment of terrifically high taxes is not rubbish, and I direct the honorable member’s attention to some figures which I have compiled in respect of various companies selected at random. In all cases, these figures show a tremendous salting away into reserves of excess profits upon which tax has been paid. These reserves constitute an immense reservoir which could, in the hands of a capable Treasurer in an efficient government, be turned to the benefit of society as a whole. Humes Limited, which has a paid capital of £2,000,000, made a net profit of £705,000 in 1955 after payment of tax, or 35 per cent, of paid capital, and declared a dividend of 17£ per cent. Waugh and Josephson Limited, with a paid capital of £500,000, declared a dividend of 12£ per cent, out of a net profit of £207,000, representing 40 per cent, profit on “paid capital. Macphersons Limited, with a paid capital of £3,000,000, finished 1955 with a modest net profit of 22 per cent, on paid capital. Electrolytic Zinc Company (Australia) Limited, with a paid capital of £3,000,000, made a net profit in 1955 of approximately £2,400,000, after paying tax. It declared a dividend of 55 per cent, which, in ratio to the capital invested, shows a net profit of 80 per cent, for the year 1954. These figures show the truth of what the honorable member for Melbourne Ports (Mr. Crean) has said. They certainly show that there is ground for considering the imposition of a system of taxation which would take a fairer proportion from those most able to pay, and have a lesser impact on those least able to pay. On that ground alone, we believe, this proposal should not be supported.
.- The bill is designed to increase company tax by ls. in the £1. It is expected that this will produce in revenue about £30,000,000 in the course of a full financial year. Measures of this sort are vital to the policy of the Opposition. They reveal, as have so many other tax measures, the extent to which the Government is out to protect large corporations and monopolies. Our opposition to them reveals the extent, to which Labour desires to ensure that taxation shall be imposed in general relation to ability to pay. The main increases in tax proposed by the Prime Minister on the 14th March last merely throws the burden upon the consumer. But we are told that the purpose of this tax proposal: is, first, to control inflation and, secondly, to raise revenue. We take the view that it will not effectively control inflation, and that £30,000,000 revenue could be raised in a better way.
Let us first examine the tax as a measure to control inflation. The Prime Minister’s analysis of the causes of the- present inflationary situation placed the greatest stress upon consumption expenditure. If this assumption is accepted there is a natural tendency to rely upon taxes on consumption, and to control hire purchase. The Labour party disagrees with that interpretation, and has shown clearly enough that our inflation is really a profit inflation. In the course of this debate the honorable member for Melbourne Ports has shown the enormous extent of company profits and the honorable member for Darebin (Mr. R. W. Holt) has given us individual company returns. I do not think that at any other stage in Australian history have rates of profit been so fantastically high, or have such huge aggregate profits been taken out of the Australian economy in the form of dividends or undistributed profits held back for later investment. Many of those who apparently support this kind of thing - for instance farmers and small producers - are more damaged by it than are other sections of the community. “Wages and costs have, only too obviously, risen less rapidly since 1953 than have prices and, consequently, the margin between prices and costs has widened. This has already been shown by the figures produced during this debate. The Financial Review, a newspaper devoted to the production of such information, reveals that as at the beginning of this year 1,080 companies had received an average return of 18£ per cent, on capital invested. They included a great many small companies, the net profits of which were considerably less than 18-^ per cent., and large companies such as were described by the honorable member for Darebin, and the returns of which were more than 40 per cent. Therefore, the Opposition says that the type of company taxation that is proposed in the bill is inappropriate to cope with excess profits, which are the real cause of our present inflation. It is inappropriate because it is a flat-rate tax which imposes upon the companies with small rates, and small aggregates, of profit the same burden as it imposes upon mammoth concerns which are profiteering so extensively. A flat rate is the opposite to tax on excess profits. We say that there should be a graduated tax upon profits. The honor able member for Corangamite (Mr. Mackinnon) asked for certain information, but was so disinterested in the debate that he left the chamber after making his contribution to it. I have now much pleasure in providing the information that he sought. To check inflation the highest taxation should be imposed on the companies earning the highest profits. It is upon that fundamental point thai we base our case for the control of inflation. The tax proposed by this bill is inconsistent with that. I ask for leave to continue my remarks at a later stage.
Leave granted; debate adjourned.
Sitting suspended from 5.58 to 8 p.m.
Debate resumed from the 3rd May (ride page 1764), on motion by Mr. McEwen -
That the bill be now read a second time.
.- This measure has been cited as the Export Payments Insurance Corporation Bill 1956. We learn from the preamble that the measure is designed to promote export trade with other countries and that the medium for the promotion of this trade is to be the Export Payments Insurance Corporation. It is intended that the corporation shall function in such a manner as to provide insurance against those risks which are not normally covered by ordinary commercial insurance. That is, briefly, the ostensible purpose of this measure.
I think that it can be confirmed by a perusal of the second-reading speech of the Minister for Trade (Mr. McEwen) that the real reason for the introduction of this measure at this time is the critical position in which the Government finds itself in regard to the balance of payments position. It is perfectly obvious that the terms of trade between Australia and the rest of the world are not good. We have been importing, and, I believe, are still importing more goods than we are exporting, in the monetary sense, to pay for them. In those circumstances, any government must cast around to see by what manner of means it could remedy such a state of affairs. Among other steps which the Government proposes to take is this measure.
It will be readily seen from the Minister’s explanatory speech that something is to be undertaken which will involve this country in an obligation to the people who export goods from it. In order to emphasize that fact, the bill indicates that the measure of assistance or relief proposed will directly fasten a responsibility, eventually, upon the Government and the people. In the first instance - and it may be final in some cases - the responsibility of a financial character will reside with the Australian Government itself, lt is strange but, nevertheless, true that the measure provides a cover only for that type of insurance risk which the commercial insurance companies do not normally undertake. In other words, in the state of society under which we live, when the Government bumps up against a difficult financial problem that is due to the fact that private enterprise which is ordinarily engaged in the covering of insurance risks will not undertake a responsibility that may become unpayable, the Government - under the terms of this measure, anyhow - says, “ We shall undertake the responsibility. We shall set up an organization. “We shall back it to the extent of £500,000 initial capital. And we shall see to it that at no one stage shall the liability undertaken by this guarantee corporation exceed £25,000,000.”
May I say, at this stage, that it seems strange - but I suppose it is understandable in regard to a government with the political philosophy of this Government - that the Government should seek to undertake possibly unprofitable business which no commercial concern would undertake and, at the same time, avoid and evade the undertaking of commercial insurance? Surely, in these circumstances, when private enterprise needs the Government to carry the baby, a wise government will ensure that it also enjoys the pickings which are available in the form of ordinary commercial insurance. Every exporter and every primary producer knows that there are types of risk in relation to our export trade which are covered by commercial insurance companies. The exporter goes to an insurance company and insures against marine risks. He insures against risk of theft. He probably insures against risk of shipwreck, and he can obtain other forms of insurance. But he is not able to insure against the type of risk which is to be undertaken by the corporation which is to be set up and backed by the Australian Government. “We have been told that the types of insurance that the Government corporation will undertake will cover risks that occur in regard to the insolvency of a purchaser of Australian goods in an overseas country. An overseas purchaser might go insolvent. An overseas government might change its exchange rate. A government might block the exchange of its currency. There might be rebellion. There might be war. There might be revolution. That is the type of risk that the Government proposes to cover in this measure. Her Majesty’s Opposition does not object to a coverage of that type, but we do say that if the Government undertakes the most risky business, it would be good business and wise, practice also to engage in the ordinary, very profitable marine and other insurance in which commercial companies engage.
– Tell us the old. old story.
– I knew that the Vice-President of the Executive Council (Sir Eric Harrison) would say, “ Tell us the old, old story”, because this Government believes that all the pickings, all the profits, all the high dividends, and all the profiteering activity should go to private enterprise. If one makes a wide and wise survey of the present situation, one finds that we are involved in o.ur present balance of payments difficulties, directly and indirectly, by virtue of the lack of business acumen of this Government, which believes in leaving everything to private enterprise, including the payment of excessive dividends and including the right to reap excessive profits; including the right to put up prices to any level that is desired; including the right of interstate shipping companies to bleed the primary producers; including the right of every faction that desires to take advantage of the common people in order to suck their blood. The Government believes that private enterprise should have an open slather. If one reason is more important than another for our adverse balance of trade, it is that.
I am not surprised that the VicePresident of the Executive Council glories in that state of affairs, but the time has come when drastic measures have to be taken by the Government, measures of a character which will substantially harm primary producers and which will substantially harm commercial concerns in this country. And more important still, they will substantially harm the workers of this country - the labouring, the artisan, the professional, the clerical and the scientific sections of the community. The Government’s remedies will bring hardship to those people, whereas, if the Government had intruded its measures at an earlier stage, such hardships would not necessarily have had to be imposed on them. When the Government comes to the last ditch, it talks about remedial action. And the remedial action, of course, is of a rather arduous and .difficult character. Strange as it seems, Mr. Deputy Speaker, we find that this type of legislation is not exclusive to Australia. The United Kingdom, Canada, France and Germany - the Minister himself has confirmed this - have been from time to time over the years - some over a long period of time and some over a shorter period of time - engaging in this kind of insurance to assist their exporters to gain markets in other countries. In some instances the terms of the insurance cover, the guarantees given to the exporter, are substantially better than are the terms of the guarantees to be given under this measure. As a matter of fact, I understand that the. Canadian export authority can engage in all forms of export insurance, including marine and fire risks. Put this Government is more narrow in its approach. It takes the first step, and I may say that the Opposition looks on the bill as what might be called a mere bag of b”“ps with no meat - just a skeleton! Desiring to be constructive in relation to this matter, because we favour the general principle involved, realizing the need in this poor old world for us to compete in overseas markets and establish export credits in order that we may be able to pay for our imports, we support the measure, in general terms, but on to this bag of bare old bones, before the debate is concluded we shall endeavour to put more meat and muscle. We shall try to improve it.
I have dealt with the general principle of the measure. Before I go further let me say that it would appear, at this stage of human development, that in every country where there is a capitalist government, or a dictatorship either of the left or the right, mankind, particularly in what we would call the most civilized section of the world, has shown itself capable of solving, and indeed has almost solved, the problems of production, but has not solved in any country, including Australia, the great problem of distribution. We have the shocking state of affairs that many countries, particularly the United States, are producing surpluses of goods and, as was pointed out. by the Minister for Trade in his speech on the Address-in-Reply, are throwing their surpluses on to the world’s markets. . In that great country which has probably solved more of the problems of production than any other country, production is now so extravagantly high - I refer, of course, to the United States - that it is throwing its surpluses on to the world’s markets, in some cases giving them away, to the detriment of the producers and exporters of Australia and other countries. To some extent our primary industry is producing in excess of our own needs, and the time may come when our secondary industry also will be producing in excess of our needs. Over-production is now common to many countries, and I think it can be said without fear of just contradiction that none of those countries has so far shown that it can solve satisfactorily any of the great problems of distribution. All of them have to resort to measures of this sort. They have to resort to dumping and other unfair trade practices, to all sorts of pact arrangements, barter arrangements, three-way traffic arrangements and so on, with each and every one striving to take some unfair advantage of its competitors in the export field. So desperate has this competition become that we Australians have at last found that we have to take some positive steps to look after ourselves. During the war years to an. extent, and in the immediate post-war era, and up to recent years, whereas we had ready markets in any country in the world that could find the chips to pay for our products–
– What has this to do with the bill?
– The honorable member can explain all about the bill later on, and say whether he likes it or not. I am explaining it in my own way. It is quite obvious that the honorable member is perturbed because I have illustrated the fact that no country in the capitalist world to-day has solved the problem, which ought to be easy to solve, of distributing in a fair, equitable and just manner without resort to unfair trade practices such as those in use to-day, the goods produced by its workers.
At this stage let me remind the Minister for Trade that Australia, under its present Government, is one of the countries that have been complaining of unfair trade practices. In that astonishing speech that he made during the debate on the Address-in-Reply the Minister criticized in the severest terms the United Kingdom Government - people who are our own kith and kin. fie even went so far as to say that in the post-war period, in government-to-government trading between the United Kingdom and Australia, the United Kingdom had enjoyed substantial trade advantages over Australia. I question very much indeed the accuracy of that statement, because my belief is that in government-to-government trading between the Labour Government in Australia and the Labour Government in Great Britain in the post-war years, we enjoyed the most advantageous trade agreements and prices for our primary products, in terms of then money values, that we had ever enjoyed - and more advantageous than we are likely to enjoy in the future. That is perhaps one reason why conservative governments in the United Kingdom threw aside government-to-government trading and resorted to trading between private traders in the United Kingdom and Australia. The Minister even complained bitterly that the United Kingdom Government was subsidizing the production of foodstuffs in Great Britain. All those things are wrapped up in the causation of this measure. That was one of the Minister’s main complaints. He certainly complained of the Ottawa Agreement. Just fancy a Minister of the Crown in Australia complaining of what he called unfair subsidies on home-grown foodstuffs in the United Kingdom, a country which, in this unsettled time, faces the possibility of war at any tick of the clock ! The United Kingdom Government must have the very security, the very lives of its citizens, always in mind. It has to protect them against the sudden advent of war, because in a war Great Britain’s food supplies from overseas could be cut off almost immediately. If the British Government did not subsidize and encourage the production of wheat, sugar beet, butter, meat, eggs and other products in the United Kingdom, it would possibly be confronted with a situation in which one-half of the British population would face starvation. The Minister knows that himself, ye, when he found himself in difficulties, because he thought that some propaganda of this sort might place him in an advantageous position when he makes his forthcoming trip overseas, he uttered these criticisms, which were substantially unfair.
One should not forget that this country itself, under various governments whose political colour it is not necessary to name, has from time to time subsidized unprofitable and uneconomic industries. One has only to instance two or three such industries. At this moment the Government is possibly paying a guaranteed price for the Australian-produced flax, not because it is enamoured of flax, or because farmers like growing it, but because it realizes that the outbreak of war could cut off almost immediately, as happened during World War II., our supplies of that most essential product. From time to time we have before us bills to give a guaranteed price to cottongrowers in Queensland, although under existing circumstances we are not sure whether economic production of cotton in Queensland, in competition with Egyptian cotton, is possible. I support that kind of protection and assistance to primary producers. But it ill becomes us to point the bone at the Government, the merchants and the people of the United Kingdom in respect of government subsidies to producers when, over our long history, we have indulged in similar practices ourselves. There is an old saying that it is wise to bargain and negotiate; but it is also always very wise to have a look at our own trade practices and see if we cannot be fair when we attend the conference table with the representatives of other countries with whom, generally speaking, we do a great portion of our trade in primary products.
After those few general words, which have some relevance to the bill, let us consider some of its provisions. We find that the people who will insure with the export payments insurance corporation will obtain an 85 per cent, cover. An exporter who takes goods from a vast variety of manufacturers will not be able to insure one class of goods, or one particular transaction, with the corporation unless he insures all the goods that he sends to the risky purchasers of Australian goods in other countries. I take it that that is so, and the Minister will correct me if I am wrong. This is where the affirmation of the Minister and the purported purpose of the bill have application. According to the Minister, who, I suppose, has been advised as a result of the readings of departmental experts, who are very capable people, and, no doubt, according to those who have had experience of this sort of thing, the cover that will be obtainable will assist trade with other countries because it will enable the exporter to obtain finance. Once he has obtained his export cover from the export payments insurance corporation, he will be able to go to the Commonwealth Bank of Australia, or to some other bank - I hope he will take his business to the Commonwealth Bank every time - present the certificate of cover against the risks of insolvency on the part of the purchaser, of anything adverse to him that the government of the purchaser’s country may do, and of war, rebellion and revolution, and, by virtue of that certificate of cover, obtain financeto carry him over until either the purchaser pays or the corporation recoups him. In itself, that appears, and I believe it to be, quite a good proposition. The Opposition does not quarrel with it. However, as I mentioned previously, we do quarrel with the fact that the exporterwill be able to place his risky business with the government instrumentality, obtain credit from the Commonwealth Bank at a reasonable rate of interest, and promptly go down the street to some private insurance company, pay a premium that is exceedingly profitable to the private company, and do with it profitable business that is not provided for in the bill. If that is not a basis for very severe criticism of the Government, I do not know what is. I am sure Government supporters will not suggest that this matter involves socialist doctrine.
– I do not know.
– No one in the House, least of all the Minister for the Army (Mr. Cramer), can accuse the Canadian Government of being a socialist government; yet it has adopted this very policy in Canada.
– The honorable member has it wrongly.
– I have not. The government instrumentality could cover the ordinary commercial risks that most exporters provide against. I notice, from a perusal of the measure, and from the Minister’s second-reading speech, that the corporation is not compelled, but must try, to obtain sufficient revenue to cover all its risks; that is to say, it must endeavour to increase its business. It must endeavour to obtain as much insurance against those risks, which are not very great, as it can possibly obtain, in order that, in the event of a risk proving to be a bad risk, it will be able to pay, out of its premium income, the compensation due to the insurer who has fallen by the wayside. One cannot quarrel with. that. We notice that the Government will find £500,000 for the initial capital of this instrumentality. This is a very kindly gesture on the part of the people’s Government. This capital will provide for the initial work such as the formation of the administrative staff, the provision of office accommodation, and all those things that are necessary to the opening of a new business.
It is provided that the corporation will be, to all intents and purposes, completely divorced from government departments and free of interference by any governmental director or any department. We of the Opposition do not quarrel with that in relation to an insurance corporation placed in a position very similar to that of the Commonwealth Bank. However, we would point out that the Government proposes to appoint a commissioner, and that provision is made also for the appointment of an acting commissioner. The salary that may be paid to an officer other than the commissioner shall be limited to £2,500. I personally do not quarrel with that. If an acting commissioner is appointed, he must receive a salary commensurate with the skill, ability and knowledge required. However, no salary is stated for the commissioner. He should be well paid, considering the responsibilities that he will have, and it will be the prerogative of the Executive Council to determine what salary he shall be paid. We should like to know, at this juncture, exactly the salary he is likely to receive.
Not only is the export payments insurance corporation to be administered by a commissioner, but also it will have the services of a consultative council of not more than ten members, who shall be appointed for a term not exceeding three years. The members of the council shall be paid such allowances for expenses as are determined by the Governor-General. There is no mention of the amounts they are likely to be paid. Even more important, there is no mention of the sections of the community from which the members may be drawn. I suggest that, in all probability, they will include representatives of exporting, manufacturing, primary-producing and agency interests, and the like. Probably, a representative of the insurance companies will be appointed. He will be available to the commissioner for consultation, and we can be sure that, having a. first duty to bis insurance company, he will be alert to see that the corporation does nothing that will intrude, or will be likely to intrude, into the fields already covered by private enterprise. I suggest that it might have been wiser, and more acceptable to the people generally, if the measure had specified the interests that should be represented. It is true, of course, that the Government need appoint only six members if it thinks fit. I am sure that the honorable member for Mallee (Mr. Turnbull), who very evidently takes considerable interest in this measure, would like a representative of the dried fruits industry to be appointed, as I also should like. A representative of that industry would be concerned with the export problems that this Government has made no concrete proposal to deal with. So much for the consultative council.
At any one time, the contingent liability of the corporation shall not. exceed £25,000,000. I assume that means that exporters covered by it may not cover their commodities for more than a total of £25,000,000. I ask the Minister whether that is correct.
– Not exactly. The £25,000,000 will represent 85 per cent, of the risks insured against.
– The corporation shall not be liable to an indebtedness of more than £25,000,000 for an 85 per cent cover against risks that no private enterprise company would ever dream of accepting, and in respect of which nothing might ever be recovered. These risks will be borne by the taxpayers who pay little and by those who pay much, and they will receive no compensation except the knowledge that the overall trade position of Australia may benefit. Let me suggest that it would be quite easy for this corporation to lose £25,000,000. In that event, in what sort of a pickle should we find ourselves? The taxpayers will be landed with the job of finding £25,000,000.
– The honorable member would like to see that happen.
– Here is a mug who says that I should like to see that happen.
– Order ! The honorable member must not use that expression.
– I withdraw the word “ mug “. I say that the honorable member for Canning (Mr. Hamilton) ought to have more intelligence than to suggest that I should like the taxpayers of this country to lose £25,000,000. My criticism of the Government in relation to this measure is that it has failed to provide that the corporation shall engage in ordinary, profitable export insurance business, and that it has rendered the taxpayers of this country liable to meet a loss of up to £25,000,000. I am not saying that this is a risk which, in the interests of general trade promotion, we should not take, but I point out to the House that the Minister indicated in his second-reading speech that the scheme will cover the various marketing instrumentalities. It will cover, for instance, transactions by the Australian Wheat Board. The corporation could very well be caught for £25,000,000 in.. regard to wheat. It may so happen that the Australian Wheat Board, being confronted with very serious difficulties in the marketing of Australian wheat, will see an opportunity to sell wheat either to the government of or to a private individual in some shaky country overseas. It may go to the commissioner of this corporation and say, “ The board has received an offer from somebody in another land to buy 100,000,000 bushels of wheat. As a board, we do not feel prepared to take all the risk of selling to him. We ask this corporation to assume 85 per cent, of the risk involved in the sale of this quantity of wheat “. Although the legislation provides that policy shall be determined by the commissioner from time to time, the Minister and the corporation might say, “Wo will take the risk, because we might not be able to sell that, wheat anywhere else “. In due course, the corporation might become liable for a loss up to the limit of £25,000,000. Then, in the absence of sufficient premiums from other insurers, up would come the Commonwealth, with responsibility for paying, if not the whole of the £25.000,000, a substantial part of it.
– Is not that equivalent to giving away surpluses?
– It is, but the trading methods and the psychology involved are entirely different. I do not hesitate to admit that I am one of those who have suggested from time to time that we should give away our surpluses, when we can afford to do so, as gestures of goodwill to starving people in other countries. But that would be very different from trying to drive a hard bargain with somebody who was hard-up, and then, having failed to secure payment, falling back on an instrumentality of this sort. In such circumstances, the opportunity to earn the goodwill of the people to whom the goods were sent would be lost entirely. What applies to wheat could apply to many other primary products. That is a very interesting possibility.
Let us have a look at the administration of this corporation. The commissioner will be appointed for a period of seven years. He will have the assistance of a consultative council. One of the most interesting features of the measure is that it provides, if not in words, then in effect that the Minister shall be a complete dictator of the whole of the operations of this instrumentality. I am wholeheartedly in favour of that. The Minister is responsible to Cabinet, and Cabinet, in turn, is responsible to the people of Australia. In the final analysis, ‘ (the ‘Minister must shoulder the whole responsibility. I could not help but notice that, in the course of his second -reading speech, the Minister went to great pains to point out that the commissioner would, in effect, control and run this organization. But when we read the speech thoroughly, we find that policy must be determined with the approval of the Minister. At any time, the Minister may, so to speak, disallow the policy then in force. In other words, he is the final controller of the whole organization.
What the Government has done, of course, is to put up a facade. It appears at first sight that the corporation will be allowed to go its own way, but we sec that if the representatives of a powerful commercial interest go to the Minister and, with tears in their eyes, suggest that they be given an insurance cover which the then policy of the commissioner will not permit, the Minister has it in his power to disallow the existing policy and indicate a new policy to be implemented in order to cover a particular phase of the operations of the people who waited upon him and pleaded with him. That is within the Minister’s power. I do not quarrel with that, but I point out that the present Minister is one who has said always that he disagrees most firmly with ministerial interference with most organizations of this type.
We note also - this indicates the philosophy and the attitude of mind of the Government - that there is provision with regard to the assets of this organization. Nobody hopes more than I do that its assets will become very substantial and that it will become a very solvent body. But we note that provision is made that the corporation may bank with or invest its money in the Commonwealth Bank or any other bank. I am not referring now to the corporation’s day-to-day transactions. There is a provision which states that the corporation may bank with instrumentalities other than the Commonwealth Bank. That is a reasonable provision, because it might so happen that a small sum of money was received at some outlandish place where there was no branch of the Commonwealth Bank. In such circumstances, one could understand that whoever received the money would want to pay it into a private bank, if there were no branch of the Commonwealth Bank there. But very different considerations arise in relation to what might be from time to time the very substantial assets of this organization. In that respect, the Government has given the corporation an “ open slather It will be able to invest its money on fixed deposit either with the Commonwealth Bank or with any other bank. The people of this country are the shareholders in the Commonwealth Bank. If there if any advantage in investing money with a bank on fixed deposit, the money of this corporation ought to be invested, not with a private bank, but with the bank that is owned by the people of Australia. I know that my friends opposite dissent from that view, but the trend of events is such that, if they continue to follow the course they are following now of shutting the people out from participation in all these sorts of things - that is very largely the cause of their present difficulties - they will see the day when they will be supplanted on the treasury-bench by people who will protect the assets and the property of the people of Australia
Will not the people who insure with this corporation do so only because they will be unable to get accommodation from a private insurance company? They will not have a chance of getting a penny piece or a “ razoo “ from a private company, so they will go to this corporation, which will have the backing of the people’s assets and the people’s money, and ask to be covered for up to 85 per cent, of the risk they are taking. But the view of the Government is that, if the corporation is successful, its profits and accrued revenue shall be invested, not with the Commonwealth Bank, but with private banks, which, in most cases, are bound to insurance companies. So private enterprise will “ cop “ it both ways. It will “cop” it through the private banks and also through the private insurance companies. The people be left holding the baby.
Will the Government go on for much longer selling profitable public undertakings? It might sell this undertaking one of these days, when it is well on its feet. The Government will probably come to this Parliament later and say, as it did in the case of the Australian Whaling Commission, “ This Export Payments Insurance Corporation “-
– Order I The honorable gentleman is getting very wide of the bill.
– I am drawing a parallel. I say that it is not beyond the bounds of possibility that in due course the Government will say, “ This corporation has a substantial credit balance. Premium income is flowing in splendidly. It could pay a dividend or, alternatively, reduce its premiums. It is so good that our friends in the private insurance companies are very interested in it. They are prepared now to take over and conduct this very profitable business”. That is the sort of thing that this Government is likely to do.
I repeat that this measure is a mere stele ton ; it has no meat or muscle. Later, the Opposition will move amendments which will indicate that we believe that this instrumentality should be clothed, not only with the powers of insurance, but also, as is provided in other countries, with the authority to grant credits other than those that can be obtained from the banking institutions. I undertake to provide some interesting discussion for the Minister during the committee stage. We want to see this scheme succeed. We know that this country is facing difficulty, and we want to co-operate. We shall indicate our beliefs by moving, in a spirit of cooperation, amendments that will be designed to improve the bill and to put some meat and muscle onto it.
.- 1 rise to support the bill. Indeed, Mr. Deputy Speaker, I welcome it, because 1 believe that it is a really constructive measure which has been designed to encourage trade with other countries. Having listened to the honorable member for Lalor (Mr. Pollard) for nearly threequarters of an hour, I feel that the Opposition seems to be supporting the bill in principle, because it has not advanced one constructive suggestion in stating its opposition to it. All it can think of is nationalized insurance. By introducing this measure, the Government is helping private enterprise, as far as possible, to carry out its job, and to do so in the face of risks that it could not otherwise afford to take. We do not see how a form of completely nationalized insurance would benefit this nation at the present time, or indeed at any time in the future. The people have already shown what they think of nationalized banking, which has been proposed by the Opposition from time to time, and they would act likewise if the Opposition were to propose a nationalized insurance scheme.
– Now conclude on that note.
– Order ! Interjections had better conclude. There have been too many of them.
– Thank you, Mr. Deputy Speaker. The purpose of the bill is to supplement private enterprise insurance. Let me say to critics of the bill outside the Parliament that the Government will not in any way be competing with private enterprise by effecting insurance that private enterprise itself would wish to effect. No private trader need use this form of insurance unless he desires to do so. The bill also provides for the setting up of a corporation that will be as free as possible from ministerial direction.
– Why, it will be wholly controlled by the Minister.
– I direct the attention of the honorable member to clause 11, which shows the freedom of action that will be allowed to the corporation and the commissioner in carrying out the day-to-day business of export insurance. In reply to other criticisms that have been levelled against the bill, let me say that at all stages during its preparation private enterprise has been consulted, and that the private banks and the private insurance companies are in complete agreement with the policy that has been adopted by the Government. Private insurance companies did not want to enter this field for very obvious reasons, with which I shall deal in a moment. As ] have indicated, the bill seeks to help traders who wish to enter the export field. The honorable member for Lalor has also criticized the Government for the degree of risk that it is undertaking. By limiting the liability of the corporation to 85 per cent., the bill ensures that the private trader shall still have an incentive to help to recover any debts that may be owing to him. He will not be able, therefore, to sit back and to say that recovery of the debt is no longer his responsibility. The honorable member has also stated that, when Labour was in office, government-to-government trading with overseas countries was profitable, but he forgets that trading on that basis was carried out during the easy years after World War II. when Australia had for sale many goods that were in short supply overseas. How different it would find things to-day if it tried to adopt that policy! It would find the boot to be very much on the other foot.
We are also confronted by the fact that trade with certain countries has been expanding. The Government has already
Cite as: Australia, House of Representatives, Debates, 15 May 1956, viewed 22 October 2017, <http://historichansard.net/hofreps/1956/19560515_reps_22_hor10/>.