House of Representatives
13 September 1956

22nd Parliament · 1st Session

  1. House of Representatives
  2. 22nd Parliament
  3. 1956

Mr. SPEAKER (Hon. John McLeay) took the chair at 10.30 a.m., and read prayers.

page 477

HOUSING AND PUBLIC WORKS

Petition

Mr. WARD presented a petition from 6,091 citizens of the Commonwealth praying that the House will take action to enable the defence allocations and additional finance to be used for the implementation of a full-scale programme of housing and public works.

Petition received and read.

page 477

QUESTION

SUEZ CANAL

Dr EVATT:
BARTON, NEW SOUTH WALES

– I desire to ask the Acting Prime Minister whether he, as acting leader of the Government, was informed or consulted by the representatives of the United Kingdom Government or by the Prime Minister, who is in London, as to the course of action indicated by the Prime Minister of the United Kingdom in his speech in the debate in the House of Commons. Has any consideration been given to these proposals by the Australian Government? In [he circumstances, will arrangements be made for a debate on this vital matter in this House? I think that the time has now come for such a debate.

Sir ARTHUR FADDEN:
Treasurer · MCPHERSON, QUEENSLAND · CP

– The Australian Government was not consulted with regard to the suggested committee to be set up, but the Government will give the closest consideration to the proposals. As to the problem of the Suez Canal being the subject of debate, I am sure that the Prime Minister will take the first opportunity after his arrival next week to bring that about. I have received an official communication on this subject this morning and, with the permission of the House, I shall make a statement in connexion with it.

Sir ARTHUR FADDEN (McphersonActing Prime Minister and Treasurer). - by leave - The Prime Minister of the United Kingdom announced in a speech to the House of Commons yesterday afternoon a plan to form a new organization of users of the Suez Canal. Sir Anthony Eden explained that the operation of the canal by the Suez Canal Company was an essential part of the system to ensure the use of the canal by all powers as provided by the convention of 1888. But he added also that the rights of user countries had not derived only from the convention. They have been established by long and uninterrupted use, and include not only free passage but also the efficient operation, administration and maintenance of the canal without discrimination. Consequently, the United Kingdom Government, together with the Governments of the United States of America and France, has decided to set up a users’ association to exercise these rights. The other principal users of the canal will be invited by those three governments to join the association. The association will make arrangements for the co-ordination of traffic through the canal, the provision of pilots, and the exercise of other rights, and will collect the transit dues payable by the nationals of its member countries. Egypt will be called upon to co-operate, and will be entitled to an appropriate payment for the facilities provided by it. Sir Anthony Eden added that the United Kingdom Government believes that this system will enable a substantial volume of shipping to move through the canal, and will limit the economic dislocation which might otherwise occur in both Europe and Asia. If the Egyptian Government seeks to interfere with the operations of the association it will be in breach of the convention of 1888. The United Kingdom will invite all the governments concerned to join the proposed association. The Australian Government will, of course, give full and immediate consideration to this proposal.

Dr. EVATT (Barton - Leader of the Opposition). - by leave - I propose to say very little. The question of the desirability of the proposed arrangement is one thing. There will be room for debate on it, and I do not wish to anticipate it. Egypt will be asked to co-operate in this entirely novel arrangement. The proposal seems to me to be contrary to the international agreement, but that is a question of international law, and I say nothing further about it. The serious thing is the implication that if Egypt does not co-operate force will be used to compel it to do so. I do not know the facts-

Sir Arthur Fadden:

– I do not know whether that can be read into the proposal.

Dr EVATT:
BARTON, NEW SOUTH WALES · ALP

– I think that is its intended meaning. 1 hope it is not. lt is the duty of I he governments concerned to consult each other, and the Acting Prime Minister should have been consulted before such a proposal was made, particularly as the Prime Minister was on the scene. I ask the Acting Prime Minister to have the matter considered most carefully before irrevocable action is taken contrary to the wishes of the Government, the Parliament and the people of Australia.

page 478

QUESTION

AVON SABRE AIRCRAFT

Mr BOSTOCK:
INDI, VICTORIA

– Has the Minister for Air seen a statement attributed to the Commander-in-Chief of the United Kingdom Bomber Command, who is at present visiting Australia, to the effect that the Australian Avon Sabre could not intercept bombers of the same class as the Vulcan? Will the Minister comment on this statement, and can he give me details of the respective performances of these two aircraft?

Mr TOWNLEY:
Minister for Air · DENISON, TASMANIA · LP

– I did see in this morning’s press a statement attributed to the gallant and distinguished CommanderinChief of Bomber Command, Sir Harry Broadhurst. It was to the effect that the Australian-built Avon Sabre could not handle an aircraft of the Vulcan jet type. It is not possible for me to state the performances of these two aircraft, because both are still on the secret list. I am at a loss to understand how a man so well informed as Sir Harry Broadhurst could make such a statement without qualifying it in some way. But if he is of the opinion that the Australian-built Avon Sabre could not handle the Vulcan or similar aircraft, I can say only that the secrets of the performance of the Avon Sabre have been much bettter kept than the secrets of the Vulcan’s performance have been.

page 478

QUESTION

WIDOW PENSIONS

Mr THOMPSON:
PORT ADELAIDE, SOUTH AUSTRALIA

– I direct to the Minister for Social Services a question, the subject-matter of which I should like him to consider when provisions in the social services legislation to be introduced consequent on the budget, to give effect to the Treasurer’s statement in the budget speech in respect of A class widows, are being prepared. You will recall, Mr. Speaker, that the Treasurer stated that it was proposed to grant entitlement to widow’s B class pension to those widows between the ages of 45 and 50 years who would become disentitled to A class widow’s pensions as a result of the attainment by a dependent child, in each case, of 16 years of age. Will the Minister consider the extension of this proposed provision to widows between the ages of 45 and 50 years who are now not entitled to any pension, but who would have been entitled to come under the new provisions had those provisions been in effect at the time when they became disentitled to pensions? Perhaps the Minister has already considered this matter. If not, I should like him to do so in order that we shall not have one widow of 47 years of age who has ceased to receive the A class pension, say twelve months ago, not receiving the B class pension, whilst another widow of a similar age is entitled to it because her child reached the age of 16 years perhaps only recently.

Mr ROBERTON:
Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

– I can assure the honorable member that all the matters that he raises in his question have had the constant consideration of the Government. They are still under consideration, and, in the fullness of time, when the necessary legislation is brought down, the honorable member, together with other honorable members in the House, will be fully informed.

page 478

QUESTION

POTATOES

Mr DRUMMOND:
NEW ENGLAND, NEW SOUTH WALES

– Has the attention of the Minister for Primary Industry beer drawn to the abnormally high prices obtaining for potatoes throughout Australia? Can he say whether these prices, which have obtained for some time, would have a marked effect on the calculations on which the basic wage is fixed? Is it a fact that the abnormal shortage of potatoes, which has led to the abnormally high prices, is due to several factors; first, the failure of the Commonwealth during the war period to honour effectively its promise in regard to potatoes produced; secondly, the failure of the State marketing boards to have regard to ordinary common sense and fair practice in the administration of potato marketing, particularly in New South Wales; and, thirdly, the series of floods and other natural disasters which have ruined the potato crop?

Potatoes are an abnormally difficult crop to keep within bounds as regards the tonnage which may be produced in any one year, because of seasonal and other vagaries. Can the Minister inform the House whether any research has been carried out into the possibility of canning surplus potatoes in periods of excess production, so that a more even flow of this product will be made available to the people?

Mr McMAHON:
Minister for Primary Industry · LOWE, NEW SOUTH WALES · LP

– I can immediately confirm the statement made by thé honorable gentleman that potatoes and onions have, unfortunately, a big impact on the C series index. There is the second unfortunate fact, well known to the Treasurer and the Government, that if the C series index figure rises and pulls the basic wage up with it, then, despite a subsequent fall of the prices of potatoes and onions, the base has risen and does not fall again with those prices. That is an unfortunate fact, and I confirm what the honorable gentleman has said. He asked four questions, if my memory holds good. The first one related to an undertaking given by the Commonwealth during the war years. I have heard nothing of it, and, frankly, I believe his statement to be incorrect. In my personal view, no government has stood up to its promises as religiously as the Menzies-Fadden Administration had done - certainly in relation to primary industries. The second question related to State marketing boards. I have no responsibility for them. Having no responsibility, I am not prepared to say anything about them - good, bad or indifferent. 1 think the honorable gentleman is quite correct when he says that on this occasion seasonal conditions have caused the trouble. Those conditions prevailed throughout the eastern States and also, unfortunately, in our traditional alternative source of supply during periods of difficulty - that is, New Zealand. The New Zealanders are having much the same troubles as we are, and four or five months ago they asked us whether we could help them out of a temporary difficulty. The next question 1 have forgotten, unfortunately, but I shall look it up in “ Hansard “ and I shall let the honorable member have an answer to it. The final question related to research. This problem was discussed at a recent meeting of the Australian Agricultural Council and was given the closest consideration, but, due to the fact that no State government was prepared to limit acreages under certain conditions or to use compulsion to extend acreages under other conditions, it was thought that no practical action could be taken to ensure that there would be a constant supply of potatoes sufficient to meet Australia’s needs.

HYDRO-METEOROLOGiCAL SERVICE.

Mr CAIRNS:
YARRA, VICTORIA

– Recently I addressed a question to the Acting Prime Minister about the availability of data on rainfall, run-off, soil absorption, evaporation, river flows, and matters of a like nature. In a written answer to my question, 1 have been informed that the Commonwealth Scientific and Industrial Research Organization is not responsible for the collection of statistical information about those matters, and that it is unfortunately true that there is inadequate data available in Australia. 1 have been informed also that at a recent conference of the Australian Academy of Science these deficiencies were pointed to and that the conference deplored the nonexistence in Australia of a competent hydrometeorological service and recommended that such a service be established as a matter of urgency. I now ask the Acting Prime Minister: Will he take steps to see that a service of this kind will be established in Australia and that members of it will be given opportunities to go to the United States, where advanced work has been done in the Mississippi and Tennessee valleys? This work is of great importance to Australia.

Sir ARTHUR FADDEN:
CP

– I appreciate the observations made by the honorable gentleman and the interest that he has exhibited in this matter. I shall have inquiries made to see whether anything can be done along the lines that he has suggested.

page 479

QUESTION

THE PARLIAMENT

Mr JEFF BATE:
MACARTHUR, NEW SOUTH WALES

– I address a question to you, Mr. Speaker. I refer to Standing Order 81, which states that no member shall refer to another member by his name, but only by the name of the electoral division that he represents. Is this procedure out of line with the procedure of the House of Commons, with the procedure of another House of this Parliament, with the procedure of committees of the New South Wales Parliament, with “ Hansard “ reports - which gives the names of members - with reports by the press and all other media for the dissemination of news, except broadcasting stations, and with common sense? Does this procedure confuse and mislead people who listen to the parliamentary broadcasts? Was the standing order brought into force before the proceedings of this Parliament were broadcast? Will you bring it before the Standing Orders Committee, so that the committee may consider the desirability of changing it in order that an ancient, archaic and antediluvian tradition may be successfully and usefully reformed?

Mr SPEAKER:

– 1 shall have a look at the question raised by the honorable gentleman and, after consideration, I shall furnish him with a reply.

page 480

QUESTION

PETROL RATIONING

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

– Has the Minister for Trade any information that he can give to the House in connexion with a current rumour in Sydney that petrol ration tickets have been printed? If they are printed, will it have any bearing on the Suez Canal dispute?

Mr McEWEN:
Minister for Trade · MURRAY, VICTORIA · CP

– 1 certainly cannot give any information on this subject. I have never heard of any such suggestion.

page 480

QUESTION

MYXOMATOSIS

Mr FAILES:
LAWSON, NEW SOUTH WALES

– My question relates to the experiments and work carried out by the Commonwealth Scientific and Industrial Research Organization in developing myxomatosis, which has decimated the rabbit population of Australia. Of late there have been reports that rabbits have developed immunity to the original virus, and 1 ask the Minister for External Affairs whether the Commonwealth Scientific and Industrial Research Organization is continuing its experiments, and whether it has been able to develop a stronger strain, which will overcome the disability which I have mentioned.

Mr CASEY:
Minister for External Affairs · LP

– As 1 have said on previous occasions, there has been a certain falling off in the killing power of the myxomatosis virus, which is now widespread amongst the rabbit population of Australia. The period of greatest spread is, of course, in the spring and the summer, which are now approaching. Consideration is being given by the

Commonwealth Scientific and Industrial Research Organization, the State authorities and the universities concerned, to carrying out, on a vigorous and wide scale, a considerably increased programme of redistribution of the original full strength laboratory virus. In the course of the 4 or 5 years since rabbits were first inoculated with the virus its potency has gradually diminished. The reinoculation of rabbits with the original laboratory virus would, it is believed, jack up the killing power of the whole campaign. A conference of the bodies which I have mentioned is being held next week to consider the inauguration of a campaign, on a wide scale, for the re-inoculation of rabbits with the original and most potent virus.

page 480

QUESTION

TAXATION

Mr CLARK:
DARLING, NEW SOUTH WALES

– I ask the Treasurer whether his attention has been drawn to the report by Mr. Dickinson, of the South Australian Mines Department, on the great development of mining that has taken place in Canada as a result of that country’s policy of granting taxation concessions to new mining ventures. In view of the importance of mining in Australia and the prospects of producing great national income from it. will the Treasurer consider bringing down taxation amendments to give immediate encouragement to new mining ventures?

Sir ARTHUR FADDEN:
CP

– The honorable member for Darling was good enough to advise me that he was going to ask this question.

Honorable members. - Oh!

Sir ARTHUR FADDEN:

– Well, this is a matter of great interest and the honorable member’s action merely shows that there is still some decency left in this chamber. The report to which he referred has been received by me and has been subjected to close and detailed examination by my officers. The taxation of the mining industry is to some extent parallel in the two countries. It is true, of course, that Canada makes some allowances which are not granted by Australia. It is true, also, that some of the allowances provided in Australia to the mining industries are not provided in Canada. On a balanced assessment of conditions prevailing in the two countries, I do not think that Australia lags behind Canada in offering tax concessions as incentives to increased mining production.

page 481

QUESTION

COMMONWEALTH AID TO WESTERN AUSTRALIA

Mr FREETH:
FORREST, WESTERN AUSTRALIA

– My question is directed to the Acting Prime Minister and refers to correspondence between him and the Premier of Western Australia on the subject of special assistance for that State. I ask him whether the most recent letter from the Premier of Western Australia was actually tabled in the Western Australian Parliament, and its contents published, before it was received by the Acting Prime Minister. ls the amount of £4,000,000 demanded by the Premier as special assistance for Western Australia very similar to the amount overspent by the Western Australian Government last year, for which it has issued I O U’s that are now falling due? ls the demand being made for the purpose of redeeming those I O U’s rather than of providing employment in Western Australia? When the Premier speaks of a plot to sabotage Western Australia’s claim for assistance, does this allegation indicate anything more than a desire on his part to prevent the true facts being made known to the people of Western Australia?

Sir ARTHUR FADDEN:
CP

– It is regrettable that financial relations between the States and the Commonwealth have become over-shadowed by political considerations. This matter was opened up last week by the honorable member for Stirling, and it was obvious from the very nature of his question that he acted as the mouthpiece of the Premier of Western Australia. The position is as has been outlined by the honorable member for Forrest. The Western Australian Government made out a case for financial assistance, and, as I explained the other day, I, as Treasurer of the Commonwealth, was seised of the necessity to help that State financially, because this Government and the Western Australian Government represent the same people, and I considered that the matter transcended party political considerations. The Premiers assembled in conference agreed with the suggestion that I made, that special con.sideraton should be given to the circumstances of Western Australia, and that any special assistance extended to that State should not interfere with the allocations to the States, including Western Australia. In other words, it was agreed that financial assistance to Western Australia should be given by the Australian Government out of its own resources, and that the amount available for distribution to the States should not be reduced thereby. Naturally, the Western Australian Government has had to put up proposals, and those proposals have not been very satisfactorily put forward. The suggestions made by the honorable member for Forrest are well founded. The Western Australian Government got itself into its present position by ignoring the fact that available loan funds were limited. It embarked on a scheme of hire-purchase finance for its own home building programme, using a system of deferred payment. Of course, if one robs Peter, and Paul, too, at least one of them will demand payment, and the Western Australian Government is now finding the crows coming home to roost.

Mr Webb:

– The Treasurer should ensure that they do not roost on his shoulder.

Mr Hamilton:

– One can see where they have been on the shoulder of the honorable member for Stirling.

Sir ARTHUR FADDEN:

– The honorable member for Stirling should join the other eagles. It is regrettable, and beyond my comprehension, that the circumstances surrounding the correspondence that passed between the Premier of Western Australia and me are as the honorable member for Forrest has stated. I received a letter on Tuesday last.

Mr Webb:

– Why does not the Treasurer table it?

Sir ARTHUR FADDEN:

– I suggest the honorable member should get on to a perch. The letter that I received, which was in reply to a letter requesting definite information so that this matter might be considered properly and responsibly by the Cabinet, is dated 5th September. It is beyond doubt that a copy of that letter was tabled in the Western Australian Parliament on 6th September, that its contents appeared in the newspaper “ West Australian “ on 7th September, and that it was received in my office on the afternoon of Friday, 7th September. This letter, which was on a Premier to Prime Minister basis, was tabled in the State Parliament and appeared in the local press before I received it.

page 482

QUESTION

TAXATION

Mr KEARNEY:
CUNNINGHAM, NEW SOUTH WALES

– I ask the Treasurer whether it is a fact that the cost of purchasing, maintaining and running motor cars by commercial and industrial establishments for use by their directors and managerial staffs, including transport to and from their places of business, is an allowable deduction for taxation purposes. If so, will the Treasurer explain why train, tram and bus fares expended by workers in going to and from their work are not similarly classified as allowable deductions for taxation purposes? Finally, will he take early action to rectify this obvious injustice to workers?

Sir ARTHUR FADDEN:
CP

– The subject raised by the honorable member has been under consideration by various governments and, indeed, by the previous Government. This Government has adopted exactly the same attitude as that adopted by the Government with which the honorable member for East Sydney was associated. It is a matter of policy that is constantly under consideration.

page 482

TARIFF BOARD

Annual Report

Mr McEWEN:
CP

– I lay on the table of the House the following paper: -

Tariff Board Act - Tariff Board - Report for year 1955-56. together with summary of recommendations.

The report is accompanied by an annexure which summarizes the recommendations made by the board and shows the action taken in respect of each of them. It is not proposed to print the annexure. Copies of the report are not yet available for distribution, but will be circulated as soon as possible.

Ordered that the report only be printed.

page 482

TEMPORARY CHAIRMEN OF COMMITTEES

Mr SPEAKER:

– Pursuant to Standing Order 17, I lay on the table my warrant nominating Mr. Clark, Mr. Makin, Mr. Peters and Mr. Webb to act as Temporary Chairmen of Committees when requested so to do by the Chairman of Committees.

page 482

QUESTION

BUDGET 1956-57

In Committee of Supply: Consideration resumed from 12th September (vide page 472), on motion by Sir Arthur Fadden -

That the first item in the Estimates under Division No. 1 - The Senate - namely, “ Salaries and allowances, £26,500 “, be agreed to.

Upon which Dr. Evatt had moved by way of amendment -

That the first item be reduced by £1.

Mr BRYANT:
Wills

– A short time ago, we were able to stand on the roof of this building and see passing overhead one of the triumphs of man’s ingenuity, his workmanship, his skill and his inventiveness. 1 must say that I received some thrill at the sight of the Avro Vulcan bomber passing overhead. I could not help thinking, as it dipped in salute over the Parliament of the Commonwealth, how man’s jet age creation circulated around the seat of government of the most primitive, backward and backsliding government that has sat on the treasury bench in 50 years. Seven months ago when I took my seat in this chamber, there was a line up on the front ministerial bench of about twenty Cabinet Ministers who sat very happily and laughed and joked with one another. Now they sit there day after day squirming and trying to avoid questions from Opposition members. I do not blame them. If we consider the position which the nation has reached, we must admit that our international status has fallen. The Prime Minister of this country is now a messenger boy, the leader of a “ yes-man “ committee appointed for the purpose of trying to restore colonial status to Egypt; he is a kind of misguided missile of our own making.

Inflation has become the be-all and end-all of political discussion. It is behind every one’s thoughts; it is the reason why people stand up and talk. Economic restrictions have mounted so that the person who is buying a home is saddled with debt, as a result of this Government’s primitive economic policy. Our sterling funds have practically collapsed. We have a weak loan market. No longer can we appeal to the people of Australia to finance loans for our public works as we could ten. twelve or thirteen years ago, or even as recently as six years ago. The falling export market has placed our overseas reserves in a perilous condition, so that the Government has had to enforce import controls; but it has done so in a haphazard, on again, off again fashion, and in such a way that it has embarrassed businesses, large and small, but particularly small businessesall over the country.

Our wage system has reached the stage where we are unable to cope with it. There is ill feeling throughout the trade union movement because people working under State awards are receiving upwards of £1 a week more than others working nearby, in the same kind of job under Commonwealth awards. There is no agreement and the Government has no policy on the matter. There is no hope of justice, so far as the trade unionists are concerned.

It has been pointed out that the average diet standards of the Australian people are falling, and that the amount of protein taken by Australians is now less than it used to be. This condition exists in a country which has unlimited space to produce food, which is able - on figures, anyhow - to increase its national output, and which is able to bring here many people from overseas and give them homes. The immigration scheme which, ten years ago, was Australia’s pride, has become an embarrassment. It is creating ill feeling throughout the community, quite unnecessarily, because the only reason why immigration, or any other policy of expansion, should embarrass the Government is the Government’s own ineptitude, lt is time that it recaptured the spirit that prevailed when it took over the treasury bench.

One of the most grievous features of all is the growing unemployment. The Government itself is discharging men from positions in industry which they believed, and which they had the right to believe, were theirs for life. They are being discharged at a week or a fortnight’s notice. The same thing is happening in private industry. In Western Australia, unemployment has become a problem of some magnitude. This is happening in a country which ten or twelve years ago was one of the few countries where every person could find security of employment, a country that had the proud record of ensuring, against the opposition of many other countries, that the objective of full employment was written into the United Nations Charter. These are matters that the Government cannot overlook. lt is time we turned our glances to the policies of this Government and sought the reasons why we apparently are going back.

We have seen Ministers in this chamber attempting to explain astronomical de fence expenditure, which has reached £1,000,000,000 in the last five years. Yet, it is readily admitted, by people who know, that we could not possibly mobilize any form of defence force. Not so very long ago the Prime Minister (Mr. Menzies) was telling us that war was going to occur within three years. He is now on parade - perhaps he is on parole - after visiting the Middle East, and is attempting to show that we have a mailed fist even though the rest of the world wants peace.

We have a paralysing tax structure which places a grievous burden on the family man. It is designed to take most from the people who have least and to protect the people with the .greatest industrial and financial power. I cannot say too often how primitive and backward I think this Government is. In 1949, when it took office, we had international status. Australia’s Minister for External Affairs had been President of the United Nations General Assembly. Australia was the leader of the middle group of powers and a force to be reckoned with. The people of Indonesia, for instance, looked to this country as one that could guide and help them. We had overseas credits. We had millions of pounds of credits in England. We were able to buy where we wished. The country was under control and expanding. We had a humanitarian immigration scheme, one of the creations of the honorable member for Melbourne (Mr. Calwell), and something of which he may be proud. We had a buoyant loan market. Our defence morale was high. After all, it was the Labour government which established the Regular Army, the Fleet Air Arm, and the Long Range Weapons Establishment at Woomera. Labour is often accused of not being defence conscious. All that we want to ensure in return for our defence expenditure is, first, that our defence is adequate, secondly, that we get value for our money, and thirdly, that the persons who spend their lives working in defence factories, when threatened with dismissal because of retrenchment or some other cause, at least receive common humane, decent treatment, by having the Commonwealth Employment Service find work for them before they are asked to leave. This is something which the Minister for Labour and National Service (Mr. Harold Holt), virtually refused to do. His attitude is a disgrace to any government. At Lucas Heights, a multimillion pound project, 250 men were dismissed a few months ago, but our raising the matter in this chamber hardly produced a ripple. Let us contrast the attitude of the present Government with the enterprising and progressive attitude of the Labour government of 1949 in fields great and small. Recently, I was browsing through files of the “ National Geographic Magazine “ and found details of a visit by a party of explorers to Arnhem Land. They did not come to look into the Government’s economic policies. The article reads -

Ten Australians and five Americans made ours the largest purely scientific expedition ever to take the field in Australia. Original plans’ called for a much smaller group. However, through the personal attention of the Commonwealth Minister for Immigration and Information the party expanded; the Honorable Arthur A. Calwell was anxious to further collaboration between the scientists of his country and the visiting ones.

In that matter a Labour Minister was enterprising and helpful. Nobody could find one comment of that nature about any of the 22 occupants of the Government front bench to-day.

Similarly, in great national matters Labour’s achievements stand unparalleled. We have the Snowy Mountains hydroelectric scheme, which I understand the leaders of the present Government boycotted. In demobilization after the war, 1,000,000 men and women who served in the forces were replaced in industry in better conditions than they had ever had before; in saying this, I speak from personal experience. They were given opportunities which had been denied to them previously; again, I speak from experience. To-day, 200 men released from a munitions factory find that there is no place for them to go. Labour established Trans-Australia Airlines. . In this regard I pay a special tribute to the former Labour member for Maribyrnong, the then Minister for Civil Aviation, Mr. Drakeford, for his creative work. The Government airline had its tenth birthday only a week or so ago. 1 hope that Mr. Drakeford’s successor in Maribyrnong will establish such a record of creativeness, but doubt whether he will have the chance, Labour established the Woomera range, the Australian Fleet Air Arm, the Regular Army, and the Australian National University, the lastmentioned being, I understand, principally the creation of the Minister for Post-War Reconstruction, the then honorable member for Corio, Mr. Dedman. I am fairly certain that Mr. Dedman’s successor in Corio will, not do any creative work of that nature. Labour’s policy of granting financial assistance to universities opened the doors of these institutions and started a new social revolution. Places that were locked to us pre-war were opened to us and to our children. Asian students came to Australia in 1947 and 1948. Among the smaller nations, Australia was one of the leaders in the formation of the United Nations organization, and the Leader of the Opposition (Dr. Evatt) was responsible for Aus,tralia’s leadership. In those days Australia was not the yes-man country in international affairs that it is to-day. Labour achieved full employment, which was one of its proudest accomplishments and is always a necessary social objective. Looking through the pages of the history of 6,000 years during which human beings have congregated together in large numbers, one finds recorded only one or two places where and occasions when every person was able to be fully employed and to find security for himself. The only occasions that I have been able to find recorded are in respect of Australia and New Zealand under Labour governments in the post-war era. That has been damaged by the archaic policies of this Government.

The budget debate has revolved a good deal upon social services. We heard the Minister for Social Services (Mr. Roberton) make some claims that the things that the Government had done were creative, marvellous and wonderful. At the conclusion of budget speeches, charts have been printed showing the social services available in Australia. If honorable members look at these charts, they will find listed age pensions which the Labour minority in this House many years ago insisted should be introduced. It was the first or second plank in the first platform of the Labour party when it entered the field of national politics more than 50 years ago. The Fisher Government, I think it was, then introduced the maternity allowance in 1912. A Labour government provided the widows pension in 1942, although a war was on and the Japanese were at our door. The whole of Australia was mobilized and turning its efforts to keeping its enemies out, yet the Labour government had time to embark on imaginative and creative social services plans.

The years between 1941 and 1949 were a creative period in the field of social services. That statement cannot bc denied, and it cannot be repeated too often, because the people of Australia are inclined to think that this Government lives up to its words.

Mr Chambers:

– If talk were pensions, we should all be well off.

Mr BRYANT:

– Yes. What happened to hospital benefits and the Labour government’s medical scheme under this regime? They were sabotaged. The rental rebate and the Commonwealth and State Housing Agreement are also going the way of all flesh. After all, that is the position that is created when people with archaic economic attitudes are put into the Government of Australia. A federal government has a creative role to play.

The Minister for External Affairs (Mr. Casey) last night saved himself the trouble of making his own speech by reading most of Professor Arndt’s opinions. That is a labour-saving device and he is to be congratulated on thinking of it.

Mr Osborne:

– Professor Arndt thought that he was engaged in the same occupation - of trying to save Labour.

Mr BRYANT:

– lt was the publication of his lecture. The Minister for External Affairs pointed out that there was something like £1,300,000,000 of private investment in the community but that public investment only amounted to about £400,000,000 or £500,000,000. This is an important matter, in this community, where roads, schools, hospitals, electricity, water, gas, postal communications, and much of the wireless programmes are created by public enterprise. The average Australian lives in a community in which it is more important for the public works constructed by public enterprise to work efficiently than it is for private enterprise lo work efficiently. It matters not a bit to a person that General Motors-Holden’s Limited is turning out 80,000 or 90,000 Holdens a year if there are no roads to drive them on. Anyhow, the average Australian cannot buy these things. We have to overcome the bias of the present Government towards private enterprise and all the things that private enterprise is interested in. Supporters of private enterprise say often enough that they are interested only in profit, and that is their motive. We shall have to give greater attention to the taxation structure in relation to public enterprise.

The school to which I send my children, the street upon which my wife walks to the shop, the train in which I can travel if I can manage to get a seat, the telephone that I would use if it were not so expensive, the water in which I have my bath are all as much a part of my standard of living as the carpets on the floor or the Holden that 1 have not got in the garage. The initiating and the creative role of the federal government, sitting, as it does, in the box seat of Australian finance, has to be understood, reiterated and pepped up. But we cannot expect much. In the 56 years of federation, nothing creative has come from a liberal government. It is rather interesting that the only new construction that has taken place under the Liberal Government in Victoria is a new prison wall at Pentridge Gaol- -symbolic of the Liberal party’s attitude.

Priorities are out of focus. I have a copy of the annual report of Qantas Empire Airways Limited. It is a beautiful publication, yet I am mindful that we cannot produce a school book. Plans can be made to build £3,000,000 hotels, but the school rooms all over the country are bulging to the doors and children cannot get in. We saw the jet bomber that went overhead an hour ago. The cost of aircraft is tremendous, and while we are meeting it, we have a collapsing road system. We may have some pride in these aircraft creations, but such pride does not enable us to forget the deplorable state of the roads. An honorable member says it is a fine British aircraft. It will not be long before the Government tries to buy aircraft from the United States of America, and we shall have to pay dollars for them. This will be at the expense of our road system.

I think it is profitable to turn back to the last eight or ten budget speeches. If honorable members will look at each budget speech made by the late Mr. Chifley as Treasurer, they will find that he always looked forward to the next year. A Chifley budget speech explained, and planned and promised for the next year. The last six or seven budget speeches of the present Treasurer have tried to explain why the Government did not do things in the past year. In the Chifley budget of 1947 was included a gift of £25,000,000 to the United Kingdom. This was made at a time when we were busy demobilizing our troops and rebuilding a peaceful society. The thread of inflation runs through the last seven or eight budget speeches. We have the classic announcement of the present Prime Minister - fighting the 1949 election as Leader of the Opposition -

Every housewife knows how grievous this problem is. The greatest task, therefore, is to get value back into the £1.

In 1950 the Treasurer said -

Because inflation tends to scatter and waste resources, this budget has been planned, as part of the general economic policy of the Government to restrain inflationary pressures.

In 1951 he said-

The recent steep rise in prices and costs bears witness to the acuteness of the problem of inflation.

In 1952 he said-

It is true that what is called “ cost inflation “ continues. Under our closely geared industrial system, rising wages and costs tend to become self-propelling.

In 1953 he said -

We would, however, be deluding ourselves to suppose that the road ahead will or can be easy. At this moment there are problems with us which could thwart our efforts to expand just as effectively as inflation did.

In 1954 he said -

Good though recent times have been, there can be no mistaking the signs that stresses are again threatening to develop in our economy.

In 1955 he said -

Yet, thriving though it was on all these counts, the year 1954-55 brought gathering signs of strain in the economy.

In 1956 he said - it is common ground thai costs and prices have been tending to rise for the past couple of years and that latterly the rate of increase has become more rapid.

The Treasurer says that we are suffering from cost inflation. The honorable member for Yarra (Mr. Cairns) has described it as profit inflation. The honorable member for Hume (Mr. Anderson) has called it wage inflation. 1 say that Australia is suffering from budget inflation. We have to reorient our tax structure. We have to line it up with ability to pay. We have to line it up with the system which means that the person who gets the most out of the community and has the most to give foots the bill. If we base it on this, we have to reorient our tax structure towards capital and income. Income tax is fairly easy to compute. But it has been pointed out this morning, in the question asked by the honorable member for Cunningham (Mr. Kearney), that the people who get the biggest incomes are able to avoid paying their share of the tax. We shall have to raise income tax. reintroduce land tax. and take a good look at estate duty. We shall have to abolish pay-roll tax and sales tax because in their very essence they are inflationary.

Let us examine the pay-roll tax for a moment. The Victorian State Electricity Commission paid £470,000 in pay-roll tax last financial year. It has 532,000 consumers. So, its payments of pay-roll tax represent 17s. for each consumer. In effect, every consumer pays to the Commonwealth in pay-roll tax 4s. on every quarterly account. The Brunswick City Council paid £5,508 - the equivalent of the cost of half a mile of road - and the Coburg City Council £3,330 in pay-roll tax last financial year. Let us see how this tax affects the ordinary citizen. On a weatherboard house costing about £3,500 - an average Australian citizen’s home - about £60 or £70 is paid in pay-roll tax alone. These figures were given to me by a good accountant who ordinarily votes Liberal, although I think he is going to give’ up that habit. By the time interest is added, the additional charge to the home-buyer is doubled. This year, people who own war service homes will pay back £5,400,000 in principal, anc! approximately £6.200,000 in interest. So. the home-owner is vitally affected by these extra costs.

The pay-roll lax has an unfortunate effect upon organizations which provide serviceor produce goods the cost of which has :i high labour content. Ninety-seven per cen of the outlay of a Brunswick firm which pressed hosiery represented labour costs. The pay-roll tax put it out of business. This tax falls equally on the rich and thi” poor alike, and it affects the cost of everything. Even the shoes I wear have a payroll tax content of 5d.. as I found when I investigated the matter at ‘the’ factory where they were produced. If the labour content of the goods manufactured by a factory represents £10, the pay-roll tax is 5s. The manufacturer adds a 25 per cent, mark-up, and the 5s. becomes 6s. 3d. If the goods are, say, window blinds, which are subject to sales tax at 12i per cent., the 6s. 3d. is increased to 7s. when the tax is added. The retailer marks up the price by 50 per cent., and so the original 5s. payroll tax becomes a charge of 10s. 6d. to the ultimate purchaser. Everything bought in the community is affected similarly. 1 turn now to the income tax. There is no gainsaying the fact that we must reorientate our tax system and base it upon ability to pay. The budget papers show that thousands of people in Australia have incomes of more than £10,000 a year. An Australian taxpayer with an income of £10,000 a year pays about £1,300 less in income tax than is paid in England. The collections of the income tax could be increased by millions of pounds simply by altering the taxation schedules. A total of 63 taxpayers in Australia have incomes of more than £50,000 a year, 36 of them being engaged in primary production. No doubt they are supporters of the Australian Country party. We should redesign our income tax schedules to benefit the family man. If my own income tax were increased by £50. £60 or £100, I should not mind provided age pensions were increased to a level that would enable pensioners to enjoy a proper standard of living, and the prices of petrol, motor cars and household necessities such as window blinds were reduced, it would be worth while.

This Government abolished the land tax. In this connexion, 1 shall read an extract from the following report, which appeared in the “ Australian Financial Review “ of 7th August, 1952:-

The third concession, abandonment of land-tax, will be appreciated by a few small land-owning companies as well as by the great brewery propertyowners and the chain stores and theatre groups.

Seventy-five per cent, of the land tax collections came from people who owned big city properties. It is essential that the people who profit by national development should make some return for their profit. We could institute a national development fund based on similar principles to the

National Welfare Fund. Contributions to it could be made according to the unimproved capital value of land. Under this system the electors of Hume, who will benefit directly from the Snowy Mountains scheme, would contribute more towards it than the people of Brisbane would, lt is difficult for people who pay land tax to pass it on. A man with a business in Bourke-street, Melbourne, who paid more land tax than a man with a business in Sydney-road, in my electorate, could not compete with the latter if he added the land tax to his prices. The principles I have stated are fundamental.

If this Government does not get to work in a creative and constructive fashion, the country can only continue in the present way. The Australian Labour party is not a low-tax party. It is a just-tax party. If the Government shows its faith in the people of Australia, they will have no hesitation in paying for development. In a town in which I formerly lived I was associated with a local project for the construction of a public hall. We asked the local property-owners to agree to their rates being increased by £1 a year for ten years to pay for the hall, and 500 of them agreed in one day. Of course, there was a Labour majority in that small community, and many of the people had the proper socialist outlook and understood that if one wants things one must pay for them. The Australian Labour party has these, things to offer: To begin with, faith in the people; a just attitude to social services and taxation; and a constructive and creative record over the last 40 or 50 years which is second to none.

The speech made by the Treasurer (Sir Arthur Fadden) in presenting this budget is the first budget speech I have heard as a member of this chamber. The budget has become the sign manual of what the Government proposes to do, and I thought we should hear its plans for next year. But where are its plans for the standardization of rail gauges, for the construction of a new Parliament House, for the opening up of new areas of the continent, or for the development of an educational system fit for Australians? There is one aspect of tha budget with which I am in agreement - the expenditure on assistance to Asian people.

At this point, I should like to read an extract from a famous declaration of Labour’s attitude to the Asian people, which states -

The Labour party advocates generous assistance by Australia to Asian peoples suffering from poverty, disease and lack of educational facilities. This is only part of our task. Asian peoples also demand - in accordance with the United Nations Charter - the end of colonialism whenever and wherever the people are fit for self-government.

I thought, when I first took my seat in this chamber seven months ago, that I should have a little more influence with the Government than this budget indicates. However, I hope, with the goodwill of the electors of Wills, and the awakening of the people of the rest of Australia, to help the Australian Labour party to give the Government the best united fighting opposition it has had in seven years.

The CHAIRMAN (Mr Adermann:
FISHER, QUEENSLAND

– Order! The honorable member will have to try to exercise his influence on another occasion. His time has expired.

Mr LUCOCK:
Lyne

.- Before dealing with the budget, I should like to pay tribute, as other honorable members have done, to the Treasurer (Sir Arthur Fadden) on the presentation of his ninth budget. When we consider the difficult years during which the right honorable gentleman has been Treasurer, we must realize that he and the Parliament can be proud of his achievement in presenting nine budgets. There may have been some criticism of the Treasurer’s budgets, but we should take into consideration the conditions of the country and the circumstances of the economy under the Treasurer’s direction of Australia’s financial affairs. We should, therefore, also take into consideration certain circumstances, outside his control which, as the Treasurer of the Commonwealth, he still had to allow for. 1 pay tribute to him for the job he has done as Treasurer, and for the firm hand that he has maintained on the finances of this Commonwealth.

I concede, always, the right of the Opposition, in a democratic parliament, to criticize; hut 1 am disappointed with some of file speeches made by some members of the Opposition here, because, unfortunately, they have gone further than criticism. I feci that in many instances we can say that they have gone as far as they can in an attempt to incite people, literally, to revolt against the Commonwealth Parliament. Tn a parliamentary democracy that is a most unfortunate and most regrettable state of affairs.

Now 1 shall deal briefly with some of the remarks made by the honorable member for Wills (Mr. Bryant). 1 was disappointed with them, because in most of the speeches he has made since he became a member of. this Parliament he has made a contribution to our debates. I felt, however, that when he described the Prime Minister (Mr. Menzies) at the beginning of his speech as being a messenger boy for colonialism, he showed an unfortunate lack of sense ot reality in respect of the international situation.

Mr Mackinnon:

– ft was a most irresponsible statement.

Mr LUCOCK:

– Yes, it was a most irresponsible statement. The making of irresponsible statements seems to be a failure of not only the honorable member for Wills, but also members of the Opposition generally. It was an irresponsible statement for him to make particularly at thu time when negotiations in respect of the Suez Canal are still proceeding. At such a time unguarded statements or comments, such as those made by the honorable member for Wills and the Leader of the Opposition (Dr. Evatt) earlier to-day, can do immeasurable harm. As I see it, to describe the Prime Minister as a messenger boy for colonialism is to show a lack of appreciation of the situation now confronting the Western world. That situation is complex, and no simple answer to the problem presents itself. Honorable members will certainly not make a contribution to a solution of the problem by referring sneeringly to any negotiations that are going on, or to the people in charge of those negotiations.

The honorable member for Wills took pride in the level of Australia’s overseas balances during the Labour regime, and chided the Government for having let these balances fall. He failed to point out, however, that since the present Government came into office a tremendous amount of money from our overseas balances has been used for the purchase of machinery and other commodities needed for our development, which have been of vital importance to Australia at this stage of its history. The honorable member went on to say that there were certain commodities, such as motor cars, that the average Australian could not afford to buy. I say to you, Mr. Chairman, that if you visit the cities and country towns of this Commonwealth you will agree that the number of motor cars being driven by the people whom honorable members opposite call the workers, is a formidable number. The honorable member also said that in this country hotels could be built at vast cost, but that there was no money for the building of schools and other necessary services such as roads. I point out that these facilities are built with money provided from taxation on private enterprise, the very thing that the honorable member for Wills will condemn and scoff at. lt would be almost true to say that the argument advanced by the honorable member for Wills in this connexion is an argument in favour of asking private enterprise to take over the provision of schools, hospitals and other public buildings.

The honorable member went on to speak of the Government’s alleged failings, and used statements made in the Treasurer’s various budget speeches to suport his argument. I cannot help but feel that the statements he made were more a condemnation of the Labour party than of the Government, because almost every budget mentioned by the honorable member was brought down in a year when there was a general election for either the House of Representatives or the Senate, and at every one of those elections the Government was returned to office. Would not that fact indicate that the people considered the record of the Government, even allowing for the failures of which the honorable member for Wills has accused it, compared it with the record of the Labour party and decided that, despite any failures and weaknesses the Government might have the country would be immeasurably better off under it than with a Labour government in office under the leadership of the right honorable member for Barton. So, the remarks of the honorable member for Wills showed the Labour party, rather than the Government, in a bad light.

As I have said, I believe it is the right of the Opposition to criticize, but not to incite. I think that one could say that the speech of the Leader of the Opposition consisted, purely and simply, of an argument for a reversion to socialism and for the insti tution of controls in every sphere of life in Australia. Surely, nobody is happy about controls, because we know that all controls are evil. Controls, for example, assist the inefficient man and penalize the efficient man. Frequently a profit is made by an individual or a company because of efficiency, but there are other cases when a profit may be made as a result of inefficiency. An inefficient company can make a profit because of controls which set certain prices, certain limits, and which benefit the . inefficient and penalize the efficient. The answer to the right honorable member for Barton may be that whilst he advocates controls, all the State Premiers belonging to the same party as that led by the right honorable gentleman have turned down all suggestions and requests for the reimposition of controls. Surely, with the experience of control that these Labour Premiers have, their realization that controls are not the answer to the problem suggests that the right honorable member for Barton should have another look at the question.

I spoke earlier of the factors outside the control of the Treasurer which help to cause inflation. I believe that one of those factors is the attitude of the State Premiers. At the last Premiers conference, many of the Premiers showed a complete lack of sense of reality and responsibility. Another Premiers conference has been suggested. I hope that, if it eventuates, the Premiers will approach the problems they are to deal with from an Australian point of view, and with an Australian outlook instead of the narrow, parochial, State outlook they have adopted in the past. Unless they are prepared to face the situation in that way. a second Premiers conference will be as fruitless as was the first.

Many of the difficulties associated with inflation are accentuated by the automatic adjustment of wage rates under the wagefixing systems of the States. Yet if we criticize those in any way, the charge is levelled at us that we are against the working man. The fallacy of that contention is evident when we look at the problem. Let us take the transport industry as an example. If wages in that industry are increased - we have seen that happen in New South Wales over a period of years, but more particularly so just recently - costs, and consequently fares and freights, are increased also. Those increases have an adverse effect upon those who use the transport system. Public transport is vital to the average man. He uses it to travel to his work, for his holidays and to transport his goods from one place to another. So there is a vicious circle. Increase wages, and you increase costs. I admit that on a number of occasions some sections of big business have not played their part in the task of stabilizing the economy of the country, but, whilst admitting that, I say that we still come back to the basic principle that constant increases of wages are bad for all sections of the community. As wages are increased, so everything that one purchases costs more. lt has been said that the Government parties, because they have suggested that there should be a new approach to the problem of wage fixing, are against the wageearners. Let me read to the committee a statement which, I feel, cannot be mentioned too frequently. In 1952, Mr. Cahill said -

Something must be done to end this perpetual wage-price see-saw. In the fina! check, it is invariably found that wage and salary-earners are proportionately worse off. It is demoralizing our economy and undermining our moral and industrial stability.

No one will say that Mr. Cahill is opposed to the wage and salary earners. No one will say that Mr. Cahill is against the working man. Yet he made that realistic statement, showing that he understood that the perpetual wage-price see-saw was of no advantage to any one in the community. It is bad for the wage-earners, but it is disastrous for the people on fixed incomes.

A great deal has been said about pensioners. It has been suggested by members on the Government side that one way in which to approach the pensions problem is to make provision for adjustments to be made of pension rates in certain circumstances. I think that is a suggestion with much merit. That approach to the problem is much better than the approach made by those who say, without any real sense of responsibility, “ Let us increase pensions “. They do not seem to appreciate the effect that that would have on the economy of the nation. A substantial increase of pension rates would necessitate increased taxation. That would lead to an increase in the cost of living, and the pensioner would be penalized again. We would be giving him more money with one hand but we should be taking it away with the other hand, by reducing his ability to purchase the things he needs. I believe that the proper approach to the problem is to try to find means to keep costs down.

This problem of costs affects the man on the land, with whom I am vitally concerned. It has been said on a number of occasions that the primary producer can increase his production without necessarily increasing his costs. I admit that in many cases thai could be done. I believe that, with modern scientific methods, production in the primary field can still be improved. But we must concede that many of the costs loaded on to the man on the land are beyond his control. He has no control over freights, interest rates or wage increases which increase the cost of the machinery that he uses. So the picture of certain sections of primary industry is that of men being asked to increase their production and finding that sometimes increased production brings lower returns.

One of the economic difficulties with which we are faced is an adverse overseas trade balance. We must try. not only to increase our primary production, but also to decrease our costs, in order to avoid pricing ourselves out of overseas markets, as we have done in many instances in the past. I commend to all those who wish to study this problem seriously the speech thai was made by the Minister for Labour and National Service (Mr. Harold Holt), in which he stressed that any increase of wages should be related to the capacity of industry to pay. This Government has never advocated a freezing of wages, but it has advocated, and I hope that it will continue to advocate, an arbitration system which will consider wage increases in the light of the capacity of industry to pay. Surely that is basic to the stability of our economy.

I feel that I cannot pass from a consideration of the budget without making some criticism of this Government. It has seemed to me for some time that, although the Government continually asked everybody else to do something about inflation it has not itself done all that it could do. I have said that certain matters outside the control of the Government have accentuated inflation, but I believe that one of the faults of the Government in attacking inflation has been its inability to make decisions at the right time in many cases.

Earlier this year, the Government called a conference of the Premiers and, prior to that, the Prime Minister had presented an economic statement to the Parliament. 1 believe that the conference should have been called earlier, and that the statement should have been made earlier.

Possibly honorable members will recall that I criticized the decision to increase interest rates. That increase has not worked out in the way that was hoped for in some quarters. In theory, the raising of interest rates was the best way to achieve what was desired, but in practice, unfortunately, things have not worked out in that way. The increase has been detrimental to the average man on the land and to the ordinary business man working on a tight income. The effect of increasing interest rates has been to channel money into industries tha; are not of great value to the nation but which can afford to pay high rates of interest on borrowings. Those industries can get all the money they want, but the man on the land and the business man on a tight income cannot afford to pay high interest rates. Unfortunately, the increase has helped only industries that are not essential to the nation.

I have criticized the Postmaster-General’s Department on a number of occasions. 1 suggest now that Cabinet consider the possibility of separating the department from the Public Service Board. I suggest that it consider the possibility of establishing a commission - perhaps somewhat on the lines of the Australian National Airlines. Commission, which controls Trans-Australia Airlines - to run the postal services. That commission should be divorced completely from the Public Service Board and should be empowered - as was suggested, I think, by my colleague, the honorable member for Moore (Mr. Leslie) - to go to the public and raise loans for the development of its services in the same way as do water boards and electricity commissions.

I believe that, unfortunately, the position in the Postal Department is such that we must make a completely new approach to the problem of providing adequate telephone services throughout the country. My criticism of the Government is that it appears that on many occasions Cabinet has put off the evil day for making a decision, and that when it has been forced to make a decision by a deterioration of the situation, the decision then made has not been the right one. One almost wonders whether the honorable member for Chisholm (Mr. Kent Hughes) is now sitting in a different seat in this House - on the back benches instead of the front benches - because he tried on a number of occasions to get a concrete and positive decision from the Cabinet.

I have spoken of the difficulties which, while confronting this Government, are outside its control. I have referred, especially, to the lack of responsibility shown by the State Premiers. I regret that we have failed to hand certain taxing powers back to the States and thus give them a sense of responsibility - if that is possible - or, at any rate, make them responsible to the people in their States for the raising of revenue. A complete overhaul of the CommonwealthState relationship is needed. If we could reduce our responsibility to the States for financial assistance, concessions could be made in the taxation field. One of the greatest would be the abolition of pay-roll tax, which is costing industry nearly £50,000,000 annually. That would be a contribution towards the halting of the inflationary spiral. lt has been said that we must raise more than £100,000,000 for State purposes, yet the States can spend it without being answerable to any one. I say, quite candidly, that it is time we gave back to the States a degree of responsibility in the collection of taxes. It could be done by way of an extension of the States’ formula. The Commonwealth could vacate certain fields, or work out a scheme under which the States would receive certain moneys for certain works only, being themselves responsible for the remainder. Some way - no matter what it may be - must be found to enable the States to be given back their taxing powers. I am sure that all members of this Parliament are tired of going around their electorates and having thrown at them all the time the accusation, “ If you only gave the States more money they would be able to do this or that “. We know perfectly well that the States have wasted money on things that are not of vital importance. This is happening, notwithstanding the great problems that confront Australia, and the possibilities for development that are offering in regard to hospitals, education, roads, flood prevention and railways. These things are primarily State matters, but, because of the vast area of this Commonwealth, can only be resolved finally by co-operation between the States and the Commonwealth.

The Prime Minister (Mr. Menzies) suggested at one time that a committee should work out priorities for State public works, but Mr. Cahill, the Premier of New South Wales, said.” The Commonwealth is not going to poke its nose into our affairs “. If we are to develop the great potential of this nation, as we should, we must look again at the Commonwealth-State relationship and the problems that are confronting us.

I would like to congratulate the Public Accounts Committee upon its good work. It has shown how the opposing political parties of this Parliament can work together, and adopt a truly Commonwealth approach. The committee has done an excellent job. I am only sorry that full consideration does not appear to have been given to its reports. More notice should be taken of them. Moreover, it would be beneficial if the Public Accounts Committee, or some similar organization, were to examine our defence expenditure.

I must confess that I amnot happy about the amount that has been spent on defence, or the results that have been obtained. I hope that the Cabinet will take into consideration many of the views that have been expressed by honorable members on this side of the chamber, as well as some of those expressed by members of the Opposition. If we are to progress and develop the Government’s approach must be one of long-range principle, not shortterm expediency. Even if its adoption means losing a degree of popularity, the long-range principle is the one that will count in the future progress of our Commonwealth.

Mr STEWART:
Lang

.- During (his debate on the budget for the financial year 1956-57 honorable members on both sides of the chamber have made earnest appeals on behalf of the pensioners. I might mention, in particular, the honorable member for Eden-Monaro (Mr. Allan Fraser). Apparently these appeals are falling on deaf ears. The Treasurer (Sir Arthur Fadden), does not appear to be the least bit moved by them. The pensioners, with their £4 a week, are finding it ex tremely difficult to make ends meet. Their plight brings to mind the words of an American labour song entitled, “Too Old To Work “. The words of the chorus - and I beg the forgiveness of honorable members for speaking rather than singing them - are -

Too old to work, too old to work.

When you’re too old to work and you’re too young to die,

Who will take care of you, how’ll you get by.

When you’re too old to work and you’re too young to die.

Perhaps the pensioners of Australia should adopt it as their theme song, because the present Government does not appear to be in the least interested in whether they live or die.

I would like to add, to the many appeals that have already been made, my appeal for an increase in the amount of pension paid to our aged, invalids, and widows. I sincerely hope that, before this debate is concluded, the Government will see fit to announce to the country that the appeals on behalf of our pensioners have borne fruit, and that an all-round increase has been granted.

The budget before the committee has been criticized from almost every standpoint. Government members must be extremely disappointed with . this, the ninth effort of the Treasurer. He has demonstrated a complete lack of confidence in the future of this great south land of ours, and has made no attempt to assist industry, the workers or the pensioners. He has failed dismally in his duty to the parents of our children, and it is to this failure that I wish to direct my remarks to-day. Time and time again we are told of the need to preserve the well-being of our families. We are told of the high place which the family holds in our community, and of the need to increase our population. We read eulogies on motherhood, and of the joy of bearing and rearing children, but very little has been done to assist the mother, who rears children for the future of industry and the State, and fulfils her task as society’s trustee.

The struggle for a basic family income has played a significant part in the history of wage justice in this country, but we are not yet very much nearer achieving it. At this stage it might be opportune to trace shortly the history of attempts to provide wage justice for the family man. The starting point of the movement was the setting up, in 1919, of a royal commission on the basic wage under the chairmanship of Mr. A. B. Piddington, K.C. This commission consisted of one representative of each of the three chief employers’ organizations, and three representatives of the trade unions. The commission held 184 sittings, examined 769 witnesses, and inspected 580 exhibits. Separate inquiries were held in each capital city and separate findings made. The imaginary family, which was considered to be an average family, consisted of a man, his wife and three children. The purpose of the inquiries was to decide the wage required to assure a reasonable standard of comfort at prevailing prices. The total expenditure in the model budget which emerged varied from £5 17s. in Sydney to £5 6s. 2d. in Brisbane.

The commission recommended that a living wage of £5 16s. a week be paid to every employee, that amount being accepted by it as the actual cost of living for a man, wife and three children. The commission generally accepted the proposition that the wage should be made up of £4 a week for every male worker, whether married or single, and 12s. a week for each child. The recommendations of the commission were never put into effect. They were referred by the Prime Minister of the day to the Commonwealth Statistician, who promptly reported -

Such a wage cannot be paid to all adult employees because the whole produced wealth of the country, including all that portion of produced wealth which now goes in the shape of profits to employers, would not, if divided up equally amongst employees, yield the necessary weekly amount.

After receiving this advice, the Prime Minister announced that the government absolutely refused to set the basic wage at £5 16s. a week. Within three weeks, however, the Prime Minister announced that Commonwealth public servants would receive £4 a week. The commission’s finding was thus endorsed by the government, because £4 was the portion of the recommended basic wage allocated to a man and his wife. The Prime Minister also announced that public servants were to receive an endowment of 5s. a week for each child, but that it was not suggested that this amount was sufficient. This represented the first instance of the payment of child endowment in any country, and it commenced in December, 1920.

Between 1920 and 1927 attempts were made, particularly in New South Wales, to introduce a system of child endowment, but without success. It was not until March, 1927, that the Labour Government in New South Wales introduced legislation providing for an endowment of 5s. a week for each child. In September, 1927, the Commonwealth Government appointed a royal commission on child endowment or family allowances. This commission presented its report in December, 1928. The majority report of the commission recommended against the payment of child endowment from public funds. A minority report was submitted by two of the commissioners, Mrs. Mildred Muscio and Mr. lohn Curtin, recommending the payment of child endowment at the rate of £10 per annum for each dependent child except the first two in each family.

It was not until 1941 that the Commonwealth Government took action to introduce a system of child endowment on a Commonwealth basis. The legislation brought down at that time provided for the payment of 5s. a week for each child except the first. In subsequent years the Labour government increased the amount to 7s. 6d. a week, and in 1948 to 10s. a week for each child except the first. In 1951, the Liberal Government introduced legislation providing for the payment of 5s. a week for the first child and 10s. a week for other children. That was the last occasion on which the parents of Australian children were granted any increase in the amount of child endowment. At that time the basic wage was £5 16s. a week. If it were not pegged, the basic wage to-day would be £13 a week. The Commonwealth basic wage, based on the average of the six capital cities, is now £12 0s. 6d. a week. This is 1956, and the child endowment has not been increased since 1951. It is accepted that the basic wage provides for the needs of a man, wife and one child. Mr. Justice Beeby, of the Commonwealth Arbitration Court, admitted in 1940 that the basic wage then prevailing met the requirements of a family with one child, and that if there were two children in the family hardship was experienced, and if more than two there was actual suffering.

In October, 1953, the Arbitration Court made a clear statement that the fundamental requirement was to make an estimate of the highest amount that industrycould pay. lt is perfectly obvious, therefore, that the Arbitration Court does not take into account the needs of a family when fixing the basic wage: The original purpose of child endowment legislation was to relieve the hardship suffered by parents with more than one child. Since 1951, however, the amount paid to the mothers of Australian children by way of endowment has not been increased. If industry is merely expected to pay the highest amount that it can afford, surely it is the duty of the Government to ensure that parents shall not be required to carry the whole of the burden of raising a family.

As I have said, the last increase in the child endowment, was made in 1951, when provision was made for the payment of 5s. a week for the first child in a family. Since 1948 a payment of 10s. a week has been made for the second and subsequent children in a family. The basic wage in 1951 was £5 15s., and in 1948 it was still less. If the rate of child endowment for second and subsequent children had been maintained on a comparative basis with the basic wage, the rate now paid for second and subsequent children would be £1 2s. 6d. a week. The parents of our children are expected to make sacrifices. It is agreed that their children bring them certain joys, but the policy of expecting parents to make sacrifices can be carried too far. If we are to have a healthy, happy and contented nation we must ensure that our families, which are the foundation of our society, are healthy, happy and contented. Child endowment is a national investment. Government supporters in debates over the years have signified agreement with the principle of child endowment. Many expressions of approval of the child endowment system by the present Minister for Labour and National Service (Mr. Harold Holt) appear in the volumes of “ Hansard “. This Government, which was elected in 1949 on a promise to maintain the value of social services benefits, has made no attempt to maintain the value of child endowment, or of pensions. The promises upon which it was elected are now shown to have been worth less. Married couples in this country with young families deserve every consideration. The basic wage is intended to cover the needs of a man, wife and one child. Parents with more than one child must make extra sacrifices on behalf of their children. If the Arbitration Court will not give proper consideration to family needs when fixing the basic wage, then the Government should do so. The children of to-day are the future workers in industry. Industry should take as great an interest in the matter of child endowment as the Government, but this has not been the case. I refer the committee to an article that appeared in the “Sydney Morning Herald” of 29th August, 1956. Mr. J. McKellar White, the secretary of the Taxpayers Association of New South Wales, which consists mainly of men in industry, said that that association would oppose any immediate increase in child endowment payments. He was commenting on a request by several unions to this Government for higher payments. The unions decided on the request at ;> meeting in Sydney on the previous Monday. Mr. White said any increase in endowment would compel drastic increases in federal taxation.

The honorable member for Fremantle (Mr. Beazley) suggested in his speech that it was time that consideration was given to increasing the taxation allowances for a wife and children. He suggested that perhaps the income tax for single persons should be increased. That suggestion might draw some criticism and hostility from single people, but the time will undoubtedly come when the majority of them will marry and have families. What they pay to-day, they will get back to-morrow. I should like to criticize Mr. McKellar White and the Taxpayers Association for the attitude that they have adopted in this matter. The young married men of to-day should expect to be able to obtain a wage which would give them the necessary income to provide food, shelter and clothing for their families and also for the needs of their old age. If an army of aged pensioners is to be perpetuated, then the way to do it is to continue to underpay child endowment and not to take into consideration the needs of a family. Any couple rearing a family finds that it is utterly impossible to put aside anything for the future. At the time when their children are growing up, their expenses are at the highest, and by the time their children marry and leave home, they find it is too late to provide anything for their old age. If the Arbitration Court will not do anything about this matter, then the Government should see that something is done and that child endowment is increased noi one year in five or six, but every time the cost of living increases.

The “Sun-Herald” on Sunday, 11th March, 1956, gave the results of a gallup poll. The question asked in that poll was -

In your opinion, what’s the smallest amount a family of four - parents and two children - needs each week to keep in health and live decently - that is, the smallest amount for all expenses, including rent?

The highest estimate was £15 5s. The average estimate was £14 16s. The federal basic wage to-day is £12 6s. The unpegged basic wage would be £13. The size of the family considered in the gallup poll was a husband, wife and two children. The children would be entitled to child endowment of 15s. a week. The basic wage of £12 6s. and the child endowment of 15s. make a total of £13 ls. The average estimate to provide for a family of four was £14 1 6s. The difference between the basic wage and child endowment and the estimated amount required for such a family is £1 15s. lt may be said that few workers are on the base wage, but that is not the point. The basic wage is the minimum wage to be paid. I. am absolutely certain that no honorable member on this side of the chamber wants any worker to be on the absolute minimum. We want to raise our standards as high as we possibly can. I was amazed recently to hear the Minister for Labour and National Service (Mr. Harold Holt) say that, because there is one house to every four persons in Australia, and because the housing position in China, Japan, Indonesia and India is worse than that, we should be satisfied with our lot. The Labour party would never agree to break down conditions in this country to bring them into line with inferior conditions in any other country, lt is only by having confidence in this great south land of ours that we shall be able to take our place in future world developments. It is only by developing this great land, and by giving to the people who make sacrifices in having families the consideration that they deserve, that we will be able to play our part in world affairs.

I make an earnest appeal to the Government to see that the payment of child endowment is increased substantially. If it wishes, it can place a means test on child endowment, because there are many people drawing child endowment who do not need it. If it wants to put a means test on child endowment, it has my concurrence. Parents on the base wage are not able to meet their commitments. The payment of child endowment is a national investment and we should at all times see that the families in this great land of ours receive every consideration. 1 have endeavoured during the course of my speech to show that the determination of a just wage for a family has been the cause of a great deal of investigation and inquiry in Australia. Yet, despite all the investigations, we have not evolved a satisfactory system. I should imagine that all honorable members are well aware of the injustice and hardship suffered by parents with more than one child. In an effort to help our parents, 1 suggest that a committee be set up to investigate the fixing of a basic wage on a true needs basis. The committee could recommend that the size of the family be considered in relation to the basic wage and the amount of child endowment to be paid for each child. In that way we may be able to arrive at the point envisaged by Pitt, who, when speaking in the House of Commons in 1796, said -

Let us make relief in cases where there are a number of children a matter of right and an honour, instead of a ground for opprobrium and contempt. This will make a large family a blessing, and nol a curse; and this will draw a proper line of distinction between those who are able to provide for themselves by their labour, and those who, after having enriched their country with a number of children, have a claim upon its assistance for their support.

Mr JEFF BATE:
Macarthur

.- The honorable member for Lang (Mr. Stewart) said that no one wants to see every worker on the absolute minimum wage. We do not see every worker on the absolute minimum wage because the average wage in Australia is £17 or £18 a week, which is considerably higher than the absolute minimum. At that point, honorable members on this side differ entirely from honorable members opposite. As socialists, Opposition members want to bring everybody to the same level. They would have a situation in which the minimum was also the maximum. We on this side of the Parliament like to see men trying to earn more money and trying to get better positions, and, of course, many workers are doing so. If the socialists had their way, this country would be a dull, drab, unexciting place. Our ideology encourages men to try to earn more than tha basic wage, and because of that we have one of the most enterprising countries of the world. If, however, the colleagues of the honorable member for Lang (Mr. Stewart) were in power, they would bring about the situation I have described, in which the minimum wage would also be the highest wage that could be earned, because the socialist ideal is to level everything out.

The last line of the passage from Professor Arndt’s speech, which the Minister for External Affairs (Mr. Casey) did not read last night, is -

Labour is afraid to avow socialism because it is inexpedient, and afraid to disavow it because of the left wing elements in the party.

So that Labour does not know whether it is a socialist party or not; but if it were a socialist party and attained office, the position that I have already described in relation to wages would exist.

Honorable members on both sides of the chamber will no doubt agree that Australia is one of the most desirable, if not the most desirable, countries in which to live. Thousands of immigrants are selecting this country as the place to spend the rest of their lives. To them, Australia is a bonanza, an El Dorado, and for that reason this country is receiving more applications from prospective immigrants than is any other country. We may properly deduce from that fact that the prosperity we are experiencing is unrivalled, not only in the history of our country, but also amongst the countries of the world. At the same time, the budget speech of the Treasurer (Sir Arthur Fadden) directs attention to some dangerous trends. In referring to spectacular rises of costs, prices, imports, freights, wages, salaries, profits, rents and fares, the right honorable gentleman stated that they were combining and interacting to such a degree that it was no longer possible to pass them on. He said -

As usual, the movement is tending to weigh wilh concentrated force on export producers, some of whom have already been hit by falls in world prices for their products and most of whom face the fact that world trade is becoming more and more competitive.

These trends, combined with a 6 per cent, decline of income in our principal export industry, the farming industry, which you, Mr. Chairman, know very well, present a danger which ought not to be overlooked by those who produce the budget, or by trade union leaders and officials. If we reach the stage where we cannot compete successfully and have to sell commodities overseas at lower prices, a dangerous position will be created. There will have to be resort to bank credit and higher taxes. J suggest that people such as the honorable member for Hindmarsh (Mr. Clyde Cameron), who is a prominent trade union leader, ought to look at this matter, as the British trade union leaders are looking at it. If British trade union leaders come to this country, as they have been asked to come by Australian Labour leaders, they may well see the danger in such a situation. We have been warned of it by armchair critics for many years, but the crisis has not yet come about. However, when the cost of living increase for the September quarter deals the economy the blow that it no doubt will, the position will be really serious. I think that we ought to look at the budget in that light.

Commonwealth expenditure shown in the budget has not increased by more than a very small amount. On the other hand, one item, payments to and for the States, including provision for roads and other services which I am not criticizing, has increased from £156,900,000 to £174,000,000, or by approximately 10 per cent. It is easily the greatest increase on the expenditure side of the budget proper. The only comparable increase is that of the National Welfare Fund, which has increased by 5 per cent. All other expenditure has been held within bounds. Those people who say that the Government is not giving a lead in the fight to hold costs ought to look carefully at that position. In only one instance is there an increase of expenditure which can be criticized, and that is in respect of payments to or for the States. The provision of £108,000,000 for loan consolidation and investment reserve is 70 per cent, more than it was last year, when it was £61,000,000. The whole of that amount was used to meet the lag in loans for State public works, not for Commonwealth public works, which are financed, not from loans but from revenue. The taxpayers pay for them and thereby pay for facilities which posterity will enjoy. In this instance, the taxpayers will provide at least £60,000,000 for State public works, and possibly more. The whole of the £108,000,000 can be used to bolster State public works if the loans fail - and of course we hope that they do not fail. If they succeed, and we use only about £60,000,000 of that sum, the balance of £48,000,000 will go to meet loans maturing this year, the total of which is of a very high order indeed. Perhaps much of the money invested in maturing loans will be withdrawn because the people who have invested in them will need their money to pay for the ordinary necessaries of life, which have become so expensive.

The budget shows that provision has been made to bolster State public works, should government loans fail, so that members of this Parliament may be compelled, when they go before the public, to attempt to justify taxation and high costs of government although the people who spend the money do not have to justify those things. It seems incredible that whilst the States will be able to spend large sums, they will still be able to attack the high level of taxation. That is a denial of the first principle of democratic parliamentary government, which is that those who have the privilege of spending money ought also to have the odium attached to raising it. The Menzies Government has had this odium ad nauseam. This item in the budget is one which, in many ways, is feeding explosives to the raging flame of inflation that is sweeping the country. I am examining it, not merely because it shows the highest increase, but also because of its effect on the inflationary tendency.

When a State government is examining its expenditure it does not feel the cool wind of disapproval because of increasing taxes, although the New South Wales Government certainly felt some coolness recently when it decided to introduce a land tax. The Premier, Mr. Cahill, had the extraordinary experience of being hooted at the races, something quite new for him, because of the imposition of that tax.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– It is a tax on the rich land-owner.

Mr JEFF BATE:

– That may be so. The Premier went to the races wearing a black homburg hat. He moved amongst the wealthy people, but instead of receiving the cheers that a Premier might reasonably expect, he was hooted. He does not have to impose the taxes which raise £174,000,000, of which he receives £69,000,000, because he receives his cheque every week from Canberra. He does not have to examine the deficits in his transport system or the cost of other services in the State, because the Commonwealth Constitution retained for the States a vital economic role. I shall examine the situation in a moment and show how it affects his attitude towards his own expenditure. When persons are spending money which they do not have to raise, they are not so careful as they would be if they had to raise it. An over-generous father can bring up sons who are prodigal if he gives them a lot of money which they do not have to earn. A wise father, who makes his sons earn their incomes, will encourage wise and prudent spending. Let us consider the position of the States to-day. If any of their departments, a transport department, for example, has a deficit of £7,000,000, the State does not have to tax its own people to make good the deficit; it receives its revenue from the Commonwealth. If the States do not have to examine the causes of waste and inefficiency, inefficiency is encouraged. The very fact that a deficit is subsidized by another government produces more inefficiency, because if one has to examine waste one has to be more efficient. Better service must be given to the public as regards freights and fares. A State cannot continue to subsidize a deficit if it collects its own revenue. If a State Premier decides to keep taxes down, as the Premier of Victoria did, the State must look somewhere else for its money. If a State government, in its wisdom, wants to keep down taxes and increase fares and freights, thereby contributing to inflation, it should be the judge of its own actions. Western Australia, for instance, should be its own judge. The Constitution requires that Commonwealth taxes be uniform. Under the system of uniform, Australia-wide taxes, with all the revenue being paid into a pool, the people cannot identify the real culprit when there is waste. If a State has a wise and prudent government, that State ought to have the benefits which flow from that condition. In fair competition amongst the States, such a State ought to advance. If South Australia has some* good, flourishing industries and can attract people, that State ought to benefit, and likewise if it has an efficient railway system. We ought not to have a situation whereby, in an almost socialistic way, there is a levelling because competition is completely defeated. Payments to the States are increasing, and this is almost the only category in which expenditure is rising. If we applied for the benefit of the 570,000 age, invalid and widow pensioners in Australia the £70,000,000 by which tax reimbursement grants and special assistance to the States are rising, each pensioner would receive an additional 12s. or 13s. a week. If the £47,000,000 by which the loan consolidation reserve is rising were paid to pensioners, every one of the 570,000 would receive an additional amount of nearly £2 a week.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– Is the honorable member in favour of an increase?

Mr JEFF BATE:

– If there is no increase, we must look at where the money is going, namely, to the States. As I have said, the States have no responsibility for the raising of that money. That is an impossible situation. The system of uniform taxation produces an immoral and almost criminal attitude in government. When a Stale government is affluent and finds that it will have bulging millions in its treasury, it knows that when its Premier comes to Canberra for the Premiers conference he will not have a very good argument for raising the ante, so that government proceeds to indulge in an orgy of spending. Two or three years ago I discovered that over a period of several years in New South Wales the amounts expended from loan funds were increased each month by £3.000.000 or £4,000,000 in order to get rid of the balance. Materials were purchased and stored away for future use. What was the result of this practice? The prices of many materials which were’ needed for the building of homes became inflated and the people were deprived of them. They were lying in great government stores in New South Wales so that the Premier could come to Canberra and say, “ I have no money. I must receive more in tax reimbursement from the proceeds of uniform taxation “. In a normal situation where a State government collected its own taxes, its members would be eager to give back to the people, from whom it obtained its sovereignty, some of the funds which were not needed. That is what would happen if taxes were collected by the States, and it would be proper for it to happen, but what does in fact happen?

The money which we are forced to collect is spent in a prodigal way on the purchase of goods which are not needed but are lodged in government stores. Cypress pine for flooring, and all sorts of other materials for school building and other purposes with which a State government is concerned, are lying in store, bought with money which had to be got rid of in order to make possible another raid on Canberra. So I say to the Parliament that this is a completely immoral situation, which ought not to be tolerated and cannot be tolerated any further. This year tax reimbursement and special assistance legislation will come before the Parliament after the expiration of about a quarter of the financial year. It is now the middle of September and two and a half months of the year have gone. It will be too late this year to throw out that legislation, but we ought now to call on the Government to announce that from 1st July next year State governments will be responsible for collecting their own taxes and that tax reimbursement, special assistance, and other complementary legislation will not be presented to this Parliament.

States fill easily the most important economic role in relation to costs and prices. The Constitution established that position for them, and since federation several referendums have confirmed the sovereignty which the State governments were meant to have. The Premiers were not meant to be mouthpieces for pressure groups in their States, to come to the Commonwealth Treasury and share in the golden shower. The States were meant to be responsible for collecting their own revenue. This division of powers shows that the Commonwealth Parliament has very litle control over the economic affairs of Australia, although it seems to have prestige, reputation, influence, and all the rest of the things which come from a big press gallery and press headlines. This Parliament is so eager to undertake responsibility for everything, without possessing the powers to enable it to do so, that it is almost pathetic, because the States have the most important role.

Sitting suspended from 12.45 to 2.15 p.m.

Mr JEFF BATE:

– Before the sitting was suspended I pointed out that the system of uniform taxation in Australia is destroying ihe sovereignty of the States. It means that ihe Commonwealth Parliament is using the powers it has got to usurp powers it has not got. Gradually, more and more strings are being tied to the issue of money by this Government to the States. The people of each State are faced with giving away their sovereignty to the Commonwealth that they were not meant to give; and because of this situation, lack of responsibility and, following it, the lack of sovereignty, we have a dangerously inflationary situation. I describe this situation as pouring explosives on the raging flames of cost rising higher prices in this country.

To support that argument, I say that the States have the positive powers in the economic sphere. The Commonwealth, at this stage, has three main powers, lt has the budgetary power, which includes the power of taxation; it has power over import restrictions; and it has some power over the regulation of credit, which has become restricted. In other words, the powers of the Commonwealth are negative powers. The positive powers, that is, the powers to encourage production, are held by the States. I refer to the fact that the States have power over primary production. They have the positive departments of agriculture which have to provide for the production which composes 85 per cent, of our exports. The States have power over transport bodies which control roads and railways, and higher freights imposed by those organizations loom large in the cost of goods landed at the sen-board. I pointed out that the action of the Commonwealth in subsidizing the States which, in turn, subsidize the deficits in the transport systems, cause the lack of proper examination of those systems and therefore encourages inefficiency in them. The result is ever higher freights and higher taxes.

I believe - and I believe many people on this side of the House think - that there should be government on the spot. The sovereignty of the States should remain. The Governments of Western Australia. South Australia and Tasmania are better able to decide the balance between fares and freights and taxes in their respective States than is the central authority. The Premier of Victoria is to ask the High Court to rule out the uniform tax laws as being invalid. That should not be the job of the court. It should be the job of this Parliament. This Parliament should be watchful of the Constitution and of its powers and ought not allow anything to happen which would take away the sovereignty of the States and create the situation that 1 have mentioned.

The States have power over arbitration machinery. In a few days we shall see another big rise in the cost of living which will benefit neither the people who receive an increased basic wage nor any one else in Australia. The States have control over electricity and power systems. In one part of the south-east of Australia the State electricity system is selling power to a local body for ten times the cost at which it can be produced locally. It is selling power at 1.994d. a unit compared with I9d. a unit which is the cost of its production by the Bega County Council. The State water schemes have only two speeds - too slow and stop. In some cases they have stopped, and we have had to bring in American private enterprise to keep them going. All these things are involved in the full economic role of the States and therefore the States should retain their sovereignty. An honorable member asks me what I did in the New South Wales Parliament. I had the novel experience of being in the Parliament of a sovereign State when it imposed its own taxation. 1 should like the Minister for Labour and National Service (Mr. Harold Holt) to remember that the taxation forms that we received at that time had two columns - one showing federal tax and one showing State tax. There is no need for these prolonged negotiations - which also have only the two speeds of dead slow and stop, between the States and the Commonwealth in order to apportion the tax field. In Canada, an amicable arrangement has already been made between the National Government and the provincial governments as to which shall have certain tax fields.

In this case, the States have put up a proposal that they should tax the higher incomes - the companies - and that the Commonwealth should tax the lower incomes. That would be a favorable situation for the States, but I think that we should reject the proposal. I believe that State income tax and the federal income tax should be returned on the one sheet. The taxpayer would not have the trouble of making two returns, as it is claimed he would in one of the specious arguments against this proposal. I appeal to the Government not to bring in after this year any more tax reimbursement bills, or legislation providing special financial assistance to the States. This system should not be prolonged any further. It is dangerous. This uniform taxation system, because it destroys the sovereignty of the States, will destroy responsible government in Australia. It is impossible for this Government or Parliament to assume responsibilities which ii has not the power to assume. By prolonging this uniform taxation system, which was brought in only as a war-time emergency measure, we continue economic difficulties that we desire to end. That is creating inflation. That is creating a lack of the responsibility which is so important.

I think that all honorable members feel that the Commonwealth ought not go into the High Court to rebut the claim of the Victorian Premier. But, of course, the Commonwealth must do that because the validity of its law must be supported. But the Commonwealth ought to try to make that High Court hearing unnecessary because it is the responsibility of Parliament to deal with this matter. In this case. Parliament is supreme - it is above the court - and Parliament should not continue legislation which puts us in that position. This argument is unanswerable except by various tedious little details arising out of difficult negotiations in the tax field and other small matters. I feel that arguments in favour of abolishing uniform taxation are tremendously strong. I think that Parliament ought to urge the Government to make it plain in every possible way that we should not go on with the system. The States should introduce their own income tax legislation to take effect from 1st July, 1957. 1 submit that this must be done. I do not think that the people on the other side of the chamber agree with this proposal. Because they believe in centralized government, they believe in uniform taxation. Some of the Labour Premiers have said that they want the restoration of taxation powers, but on certain terms. 1 think that this thing should be faced in order that we may get back to the intention of the founders of the Constitution and of all sensible people who view ordinary parliamentary practice, particularly financial matters, in the proper perspective.

Mr MINOGUE:
West Sydney

.- This is a most extraordinary budget. We have discussed it for two weeks, yet we have been told by every member who has spoken from the Liberal party or Australian Country party side of the chamber that the budget is not a good one. It must be very hard for the people who are listening to these speeches to know exactly whether the speakers from the Liberal party and the Australian Country party side are supporting the budget or not.

The Government, in this budget, has announced a surplus of £108,000,000. That is the forecast of the Treasurer (Sir Arthur Fadden), and if the previous forecasts that he has made are any indication of the reliability of this one, the surplus at the end of the next financial- year will be nearer £140,000,000. That is one matter. Another matter is that a depression threatens us. Pensioners are practically starving. 1 am glad to see the Minister for Social Services (Mr. Roberton) sitting at the table, because the people whom I represent in West Sydney have tried, and tried in vain, to meet him before the budget session commenced. They wanted to put before him humane proposals that would have improved this budget for their benefit.

Ever since the Chifley Labour Government went out of office the people of Australia have faced nothing but disaster. Members of the Liberal party will doubtless say that things are changing slowly. Certainly, disasters are slowly but surely succeeding one another. This is the second time in six years that there has been a depression in Australia. The other day, 290 trained tradesmen were sacked from Garden Island. Although we hear so much about defence, those men have been thrown on the scrap heap only four years after the Prime Minister (Mr. Menzies) told us we had to be prepared for war in three years. Conditions to-day are not what the Chifley’ Labour Government intended for Australia. That Government not only successfully fought the war, but also got to work when the war was over and rehabilitated the soldiers by training them for the teaching profession and other occupations in all walks of life. This Liberal party and Australian Country party Government has denied returned soldiers their rights ever since December, 1949. It has denied the rights also of immigrants and Australian-born men and women who were not allowed to enlist in the forces and who gave yeoman service at home. Those people have been denied the right to obtain homes.

Prior to 1949, the essence of the Commonwealth and State Housing Agreement was that the Commonwealth would provide the money and the State governments would build the homes. At that time, materials and labour were short. What happened within twelve months after this Government took office? It repudiated every agreement and slowly strangled the States through the financial control exercised by the Australian Loan Council, although the States sometimes voted four and five to one against the Commonwealth on certain matters. The Treasurer (Sir Arthur Fadden) on one occasion walked out of a meeting of the council saying, “ That is all you will get. 1 will hear you no more “. The New South Wales Government now receives only 5s. out of every £1 of taxation collected by the Commonwealth in New South Wales. The Government of that State, which has a population of 3,000,000, is expected to finance home-building and everything else, while the Australian Government lavishes oh ministerial trips abroad money that should be devoted to housing.

I have in my office hundreds of letters from returned soldiers who were given an undertaking that they would be able to build their own homes. And so they could under the Chifley Labour Government. But this Government told them, “ If you buy a block of land and have plans prepared, we will find the money “. Many of those returned servicemen have bought blocks of land and prepared plans, but they are told, when they apply for an advance, that they have no chance of getting it in less than eighteen months or two years, whereas under the Labour Government they could get it in six months. The Minister for Primary Industry (Mr. McMahon), who was formerly Minister for Social Services, has replied to honorable members who have asked questions about the matter in this chamber, “ The returned soldier can borrow the money temporarily from his own bank or from a finance company. Let him compete with the hire-purchase companies in borrowing money “. This amounted to telling returned soldiers to try to borrow money at a pawnshop. Soldiers who left this country to fight for the preservation of my home and the homes of Government supporters are entitled to better treatment from this Government.

Mr Luchetti:

– It has betrayed the returned soldiers.

Mr MINOGUE:

– It has betrayed the trust of the soldiers who went away to fight for it. The plight of people who did not go overseas in the forces is perhaps even worse. They are living in caravans and tents all round Sydney, where 60,000 people are homeless. That is solely due to the policy of this Government. When it took office we were told that it would continue Labour’s immigration policy and that, in addition, it would import homes from overseas in numbers based upon the immigration quotas. It imported a few homes, but abandoned the scheme after about six or twelve months. There are many new Australians in my electorate. If people are brought to this country from overseas, they are as much entitled to homes as any one else is. New Australians are now buying about 85 per cent, of the homes sold in the Sydney metropolitan area, and many of them are giving Australian tenants about six months to get out. Is that a fair deal?

This Government has been in office during seven years in which Australia has enjoyed the most bountiful seasons it has ever known. If it cannot govern the country better than it has done, what would it do in war-time or in a grave national emergency? It would simply walk out and leave it to Labour to take over the government. When the Minister for Primary Industry, as Minister for Social Services, introduced the Aged Persons Homes Bill 1954 some two years ago, I told him that it was of very little use to tell the people that the £l-for-£l subsidy proposed to be paid by the Commonwealth would provide old people with homes. Many homes staffed by religious orders and other organizations in Sydney cannot obtain the subsidy which would enable them to accommodate more elderly people than can be cared for in existing homes, because they cannot pay 50 per cent, of the cost of constructing additional homes. If the cause is a good one, surely the Government could pay the whole cost of construction. The Government is not only starving those people, but is even depriving them of homes to sleep in.

Perhaps the Government is confident that charity will carry the pensioners through. Well, I can assure honorable members that those unfortunate people would certainly have a hard time but for the efforts made on their behalf by charitable organizations. The Sydney City Council spends at least £20,000 a year on providing a Christmas dinner for poor people. Yet this Government morally owes the City of Sydney £80,000 a year in rates on Commonwealth properties, from payments of which it exempts itself. Yet honorable members opposite condemn the New South Wales Government for failure to carry out necessary work in New South Wales.

I turn now to the subject of social services. I hope that the Minister for Social Services (Mr. Roberton), who is now reading at the table, is not immersed in the extravagancies of a “ Deadwood Dick “, but is listening to what I have to say. The Government has never made a real attempt to meet the needs of pensioners. It has been explained to the Minister for Social Services time and time again that the funeral benefit was £10 when it was initiated many years ago, and is still only £10, despite the fact that the cost of living has increased immensely in the intervening period. We talk about settling people in this country. It would be impossible to buy a grave site in Rookwood and Botany cemeteries in Sydney for the sum of £10! Yet this hypocritical Government stands idly by and does nothing to give the unfortunate pensioners at least the assurance that they will have a decent burial. The lady who is secretary of a pensioners’ association in Sydney has to go up and down the streets collecting money every time one of the members of her association dies, in order to provide for a decent funeral. Should such a state of affairs exist in this country at a time when we are giving away our butter and wool and many other commodities to other countries? While the Government is indulging in this international generosity it is ignoring the serious plight of the pioneers who made this country what it is to-day.

Unemployment in the City of Sydney has risen in recent times. In the last few weeks most firms in Sydney have dismissed employees. There was a deputation from Garden Island on that very subject only recently. A few weeks ago I returned from Western Australia, a State which, honorable members opposite claim, has solved its housing problem. If Western Australia has solved the housing problem it has been solved in a way that is very expensive for people who want homes. I know of a man in Geraldton who got a home for himself. He is paying for a verandah flat, in a cottage, rent of no less than £5 5s. a week! There are thousands of people walking the streets of Perth who are without employment. Five hundred people were dismissed in Perth in one day recently, yet we have politicians coming to this place and trying to convince us that Western Australia has solved its housing problem and its immigration problem. Nothing is further from the truth.

During the last sessional period the Government put legislation through the Parliament to dispose of the Commonwealth’s whaling enterprise in Western Australia. Honorable members opposite rose in their places and, in effect, congratulated the previous Labour government for the establishment of such a valuable enterprise - then proceeded to support its disposal to private interests. That enterprise was returning a profit of £1,500,000 a year at least, yet the Government gave it away, in effect, just as it has given away other public assets. This Government would sell the clock at the General Post Office in Sydney if it had the chance to do so. lt has tried to sell the Commonwealth line of steamers; it has shackled the Commonwealth Bank. It has disposed of everything it could to its friends, so that they can make a profit out of former government enterprises. In fact, it has sold some of the Commonwealth ships to its friends and will no doubt dispose of the remainder when it gets the opportunity to do so. The Government is disposing of the people’s assets with all haste because honorable members opposite know that it will not bc long before the people turn them out of office. They are selling as much as they can while they have the chance.

In the last sessional period the Government kept the Parliament sitting day and night, passing contentious legislation, because at that time it had an assured majority in the Senate. One contentious measure that it put through was the Conciliation and Arbitration Bill, the provisions of which are detrimental to labour. Under that bill the functions of the former Commonwealth Court of Conciliation and Arbitration were split between two judicial bodies, one of them an entirely new one. The man who was responsible for framing that bill and piloting it through the Senate no sooner saw it become law than he resigned his position to be appointed to head the new industrial commission established by the legislation. If the Labour party had done such a thing the cry from every house-top in the land would have been that it was corrupt.

The next subject with which I wish to deal is the failure of the Government to help a portion of my electorate which is 420 miles easterly from Sydney. I refer to Lord Howe Island. I have received absolutely no result from my representations to the Government on behalf of the people of this island. The Government allowed a shipping company to withdraw the service it had operated to the island, and now claims that the provision of shipping to the island is a State matter. Another case of this Government’s shouldering of its responsibilities on to the States! Lord Howe Island is at present served by an aeroplane which operates from Rushcutters Bay in Sydney. That plane was built in 1943, and I think there is only another one of its kind in the world, which is in England. Persons who travel by it have their activities prior to departure ruled by the time of the tide at Lord Howe Island.

There are 215 people on Lord Howe Island, and something like 4,000 visitors from the mainland go there annually for their holidays. Those visitors are the support of the guest houses and boarding houses on the island. They are important to the economy of the island, yet this Government denies the islanders even an examination of the possibility of building an airstrip there. Twenty Commonwealth employees work on the island. There is a radar station conducted by the Federal Government. Federal employees send up balloons in order to obtain data relating to upper air currents, and do many other things on the island, but the federal authorities are not apparently sufficiently interested in the island to take up with the New South Wales Government the question of providing an airstrip there. People travelling from the island arrive in Sydney at night time, have to find hotel accommodation and then may be kept waiting for days beyond their expected date of departure for return to Lord Howe Island because of inadequacies in the plane service. The result is that their holiday on the mainland costs them twice as much as it should. On the last visit 1 made to the island I packed my bags to return to the mainland on Saturday but. because the aircraft had lost a wing or something a hundred miles out from Sydney and had to turn back, it was not until Tuesday, four days after the expected date of departure, that I was able to leave. There were young people there from New South Wales and from other States. They were penniless because the service had let them down. Surely such things as that should not happen. But, with this Government, anything can happen!

Let us see what the Government is doing in relation to repatriation. I know of at least half a dozen very sad cases in Sydney. Sympathy is not enough. It is hard to have to tell the people that this Government cannot see its way to help them. Let me read a typical letter that I received from the wife of an ex-serviceman. It is as follows: -

I am sorry for worrying you, but I am at a loss to know what to do. My husband is a blinded soldier from the 9th Division, 2nd A.I.F. He lost the sight of one eye in the Middle East in 1941. The Repatriation Department has his records in Grace Building, stating he was hit in the face when a mortar bomb exploded in front of him in the battlefield. I have sent two statutory declarations from men who were with him and took him to the R.A.P. He was put in Cairo Hospital and treated for his eye, and in 1942 the Repatriation Department gave him glasses. Since then he has only had one eye.

In April this year the other eye, which was very weak for years, went altogether. Now he is stone blind. Repatriation has not done anything for him - never even sent him to Concord for treatment. They refuse to accept it as a war injury. Being a friend of- they recommended that I write to you to see if you could do anything for him. He is receiving £2 7s. 6d. a fortnight and I get 17s. Id. We have to pay rent and keep ourselves out of that. I cannot go to work, as he could not get himself a cup of tea. We are just at our wits end to know what to do for the best.

That is typical of many other cases which this Government ignores. The repatriation authorities insist that this man, who is stone blind, shall prove that his blindness was due to a war injury; otherwise, they will not grant him a repatriation pension. That is a shocking state of affairs, but it is typical of what we have to put up with.

There is another matter that 1 want to bring before the committee. It involves another broken promise by the Government. 1 want to make a short reference to one government department in which there has been an amazing growth, not so much of activity as of expenditure. Last year, the cost of the department rose by nearly £2,500,000, compared with the previous year. It is true that £1,500,000 of the increase was due to the Colombo plan, which, in the view of some people, is a luxury. That £1,500,000 could, with advantage, have been spent on social security in Australia. But the point I want to make relates to our missions abroad. Australia has about 30 missions in Commonwealth and foreign countries. In each of the countries, with one notable exception - Ireland - the head of the mission is either a High Commissioner, an Ambassador or a Minister.

In an article published by the London “ Times “ recently, Mr. Costello, the Prime Minister of Ireland, told the special representative of that newspaper that relations between the Irish Government and the governments of British countries were better then than ever before. He said that association at all levels with Great Britain was close and friendly, that the same remarks applied to relations with Canada, but that, so far, the Australian Government had not seen its way to appoint an ambassador in Dublin. Mr. Costello said that Ireland was a European nation, determined to pull its full weight in international affairs.

That repudiation by this Government is another example of its two-faced attitude. We remember the previous calamitous excuse - when it sought shelter behind the skirts of the Queen. The name of Her Majesty was brought into the matter by our

Minister for External Affairs (Mr. Casey). Has the action of Canada in appointing an ambassador to Ireland caused any embarrassment? Canada did not raise a piffling quibble about the style and titles of the Head of the State, as Australia has done. What is the real reason underlying the attitude of the Australian Government to Ireland? Why cannot the Australian Government be honest and frank? There is no election in the offing. Accordingly, there is no need for political manoeuvring and double talk. The Labour government appointed a man named Dignam as Australian High Commissioner or Australian Ambassador to Ireland, but as soon as this Government came into office it cancelled that appointment. It has not fulfilled its obligation to Ireland since then. One Minister, when he went to Queensland, made a promise to a certain gentleman there that, as surely as night followed day, an ambassador would be sent to Ireland. That pledge was made, but it was broken.

We often read about what Australia owes to Ireland. Coming up to Canberra by air the other day, I read an advertising booklet published by Trans-Australia Airlines. It told us about Burke and Wills. Burke was an Irishman who lead an expedition into the heart of Australia. He found some of the seats now held by the “ cockies “ who sit opposite. He virtually founded seats such as Capricornia and others. He began his return journey after five months, but he ran short of food and water and subsequently died. He left behind him the things that have made Australia what it is. I do not think that the government of that day was to blame for Burke and Wills not having sufficient food, but this Government should be blamed and condemned for starving the pioneers of this country who have rendered great services during the last 50 years. We heard a lol about the ace flyer, Paddy Finucane, who shot down more enemy aircraft in the last war than any three other flyers together. When nineteen Victoria Cross holders left this country the other day to visit Her Majesty the Queen, there was an Irishman amongst them. Yet this hypocritical Government, which talks with its tongue in its cheek at election time, which gives the pensioners a few “ bob “ at election times but starves them for the rest of the time, refuses to appoint an ambassador to Ireland. 1 was condemned some time ago for advertising a dance that was to be held in the Sydney Town Hall in order to assist the pensioners. I am glad to be able to tell the people that that dance realized £670. I am glad also to be able to say to-day that a similar dance will be held in November. The I.N.A. Hall, which opens next month, will hold 700 people. I have been told that I can begin to make arrangements to hold a dance there, so that the proceeds can be used to do something for ihe old people.

The CHAIRMAN (Mr Adermann:

–

Order! The honorable member is a little late with his advertisement. He has exhausted his time.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– The weak speeches that we have heard from the Opposition in this debate have shown once more that the members of the Australian Labour party, with their present thinking, are totally unfitted for the treasury bench of this Parliament. Honorable members opposite have dealt in their speeches very largely with matters which are important in their proper context, but which are not important in the context of the great national problems that are facing us.

Despite determined efforts by the Government, the problems of the balance of payments and inflation persist. Some people tend to think that these problems of ours are short-term problems, but quite clearly they are not. If we look to see what factors are affecting the balance of payments, and inflation, we may discover which factors are abnormal and have, therefore, called forth the measures that have been taken by the Government.

First, let us turn to the terms of trade - the quantity of goods that we get in exchange for any given quantity of exports. In the last three or four years the terms of trade have fallen by 15 per cent, or 20 per cent., but our exporting industries are prosperous and therefore the terms of trade must be regarded as normal. We cannot expect any appreciable increase in the prices that we will get for our primary products, but if we look at the volume of exports we find that since the 1950-51 year it has increased by about 25 per cent. This has been attributable, very largely, to a succession of extremely good seasons, and to more intensive development of the land.

Importation of capital has, in the postwar years, averaged between £70,000,000 and £80,000,000 annually. It has never been appreciably greater, and therefore this must also be accepted as a relatively normal figure. The fourth thing that affects our balance of payments, our high volume of imports, cannot be regarded as normal. At the end of last year, and again in the autumn, Government spokesmen forecast that by the end of the financial year our trade should be in balance. Despite that, the August deficit was the greatest for four months. The imports in that month, on the balance of trade, were £78,000,000, though the Government’s objective had been set at £56,000,000. That occurred despite quite severe measures to correct the deficit.

The next thing that I believe one should do is to try to find out why imports are so high. The Government’s attitude towards the end of last year, and again in the autumn, tended to place the reason for excess demand, as it was then called, on the great boom in consumption spending. When we look at the various figures given in the Treasurer’s budget speech we find that over the last financial year personal consumption expenditure rose by 8 per cent., gross private expenditure on capital equipment by 8.4 per cent., and public authority spending by 9.8 per cent. When we couple that with the fact that over the last seven years the percentage of the gross national product devoted to new works or maintenance has risen from 6 per cent, to 10 per cent., wc find an indication of a boom in government spending, both State and Federal, rather than a boom in personal consumption.

Our problems arc caused in part by this great boom in national development spending and, in a vary large part, by the wrong pattern of development in the last few years. This can be seen by a few simple figures. Secondary industries earn about 1 2 per cent, of our overseas credits, but they absorb up to 80 per cent, of our overseas funds, which are very largely earned by the primary industries. This high percentage is divided between raw materials and capital equipment, without which secondary industry cannot continue to operate, and without which full employment of the industrial population cannot be maintained. The 60 per cent, of our imports that are raw materials for industry represent from 30 per cent, to 40 per cent, of all the raw materials used in Australian industry. Therefore, it is quite clear that if by some mischance in the future this figure had to be cut there would be great resultant hardship in secondary industry.

Again, our ability to export has fallen since before the war by about 6 per cent, per head. Even though the total volume of exports is up, we are exporting per head less than we exported before the war. On the other hand, the demand per head for imports would, because of the great development that has taken place, be up by about 90 per cent, but for the extremely heavy restrictions that have been imposed. Honorable members will see that here we have a fundamental structural problem which cannot be cured by mere monetary and fiscal measures.

The danger of this unbalance in our economy is that if we have a drought - and if history means anything it will come - or if the terms of trade turn against us - as they have done in the past - our export income will fall very greatly. Who knows but that the increased price for wool is not the result of the Suez crisis, and that if the dispute were satisfactorily resolved the price would fall again? Moreover, our industry is expanding daily, and creating an ever-growing demand for capital equipment and raw materials. If our export income does fall the only possible result of these factors working together will be great industrial unemployment. We must do everything that we possibly can to avoid that state of affairs.

To meet the great demand of industry for raw materials and capital equipment we have imposed harsh import restrictions. These have had several unhappy results for a certain section of the community - the importers in particular. But at some time or other the results of these restrictions are felt by every one in Australia. For instance, they can lead to bottle-necks. Only two months ago we encountered an instance of this in the primary industries. Formalin became unobtainable in Australia. Import licences for formalin had been refused, and increased consumption had dried up existing supplies. This happened despite the fact that, as people on the land well know, if formalin is not available during the spring efforts to fight footrot become abortive. That matter was adjusted about six weeks ago, but it takes two months or more for supplies to reach this country. That is just one unhappy result of import restrictions.

Secondly, import restrictions stimulate new, high-cost industries that tend to offer above-award rates of pay and thus force up costs throughout the whole of the industrial population. Thirdly, with these restrictions obtaining there is little incentive for industrialists to export, because almost any manufactured item is profitable on the Australian market, and can be sold at almost any price. Fourthly, the restrictions are a worse form of capital issues control. They place immense power in the hands of government bureaucrats. With normal capital issues control, one has permission to raise capital and, upon raising it, has an equity in a business, but with import restrictions the equity of shareholders can be, and has been, destroyed overnight by administrative action. That is something that the members of this Parliament should not contemplate with any ease of mind.

Again, the present restrictions defeat the purpose of the tariff wall because, so far as the few goods allowed in are concerned, the limiting factor is not the tariff but the import quota. Also, import restrictions tend very largely to defeat their own purpose because they stimulate the demand for capital equipment and raw materials by new industries within this country. The Australian merchants who find supplies of imported commodities drying up will place orders with local producers, and they in turn, in attempting to increase their output, will compete for the available work force, and apply for more import licences for raw materials and capital equipment. The final result of import restrictions is great inflationary pressure on our Australian economy. I sincerely believe that with import restrictions of the severity of those now in force we will never cure inflation in any satisfactory way without a considerable degree of deflation. If that deflation does occur in Australia our purpose will be defeated, because trade unions, quite understandably in those circumstances, will set their faces against immigration. That is a contingency that must be avoided at all costs.

In the last few years we have seen a pronounced unbalance between primary and secondary industries. Primary industries have been earning almost all our overseas credits, and secondary industries have been employing the greater proportion of the population. Over, a million persons have been employed in secondary industries, and only about 550,000 in primary industries. Primary industries have been supplying our export credits, and secondary industries have been absorbing them, but doing very little to earn more. At present there is quite clearly a grave danger that if the prosperity of our primary industries declines for one of the reasons that I mentioned earlier, then the prosperity of the whole country, including that of our industrial population, will also decline. 1 believe that the solution to these problems lies in reducing our immigration programme substantially, probably to the point where the gross annual immigrant intake would be no greater than 90,000. I advocate this not as a permanent measure, but as a policy to be followed for two, three or, perhaps, four years, during which time we must try, by every means in our power, to persuade and encourage secondary industries to export. The adoption of my suggestion would result, unfortunately, but, with due respect, necessarily, in a decline in the rate of growth of our economy. However, pressures of inflation would ease, and it would be possible to remove many of the injustices that now affect so harshly the people on fixed incomes. It would enable us also to press on with some of the great national projects inside Australia, which we cannot do when our resources are stretched to the utmost, as they are at present. Our roads are an example of these urgent national works. They constitute a problem that every one appreciates, and the importance of which we all realize. My suggestion will also make it possible to remove, or at least to lessen considerably, the import restrictions that have the unhappy effects that I mentioned a few moments ago.

Our purpose, however, would be defeated if, while reducing our immigration programme, we did not at the same time make every effort to break into new markets with our export industries. I believe that the Government is doing a great deal in this regard, but our whole energies and attention should, I consider, be centred on this objective, because the effectiveness of future national development programmes depends upon the ability of our secondary industries to earn £200,000,000, £300,000,000 or £400,000,000 a year from overseas sources.

Opponents of any plan to reduce immigration may argue, first, that a reduction of the programme will not reduce investment demand, at least in the short-term view. They have, indeed, at times argued in this way. I believe, however, that this argument is irrelevant, because our problems are, quite clearly, not short-term ones. They are fundamentally long-term problems, and must be met with long-term measures. If, as advocates of the present policy also argue, capital facilities are provided in advance of the arrival of immigrants in this country - and that they are is highly doubtful - a reduction of the number of immigrants over a long term would lessen the demand on the general economy for these facilities. Such advocates will again argue, as they have argued previously, that immigrants contribute greatly to production. That is quite obvious and is not denied, but it would be far more to the point if it could be argued that immigrants make a great contribution towards exports. Quite obviously, that is not the case.

The connexion between national development programmes and imports has sometimes been denied, but in this regard I should like to quote briefly from an article by Eric Lundberg, an economist who visited this country some time ago. He stated -

There is no simple mechanical relation between immigration, the need for new capital in the form of houses, stocks, machines and so on, and imports . . .

But this does little more than say that other things also affect these relationships. He then goes on to make some further remarks, which I believe were quoted last night by the honorable member for Bradfield (Mr. Turner). This is an important point, however, and one that has perhaps been overlooked. Professor Lundberg said -

However, the rate of development of the economy is determined largely by the level of exports, which have tended to decline relatively to national income. This decline tends to become more rapid when the rate of growth of the economy is accelerated by a rapidly rising population. The fundamental question is whether such a tendency is a necessary consequence of immigration. If a sufficiently large proportion of the additional supply of labour and capital (from new savings) went to export production - primary or secondary - then there should not be the kind of discrepancy between the trend of exports and imports observed above.

This seems to hit the basis of our present problems squarely, because it is quite clear that what Professor Lundberg refers to has not happened in our Australian economy. The overwhelming proportion of new capital and of immigrants have gone not to exporting industries but to domestic industries. That is why we have these problems.

There has also been argument about the difference between the effect of development on imports and of consumption on imports, and whether increased consumption will increase the demand for imports more than increased development. The only point in arguing on this question is to show again that rapid development places far greater demands upon imports than we have tended to believe in the past. I should like to quote another paragraph from the article that I mentioned a moment ago. I apologize for some of the economic jargon that it contains, but economists have a habit of using words of this kind. Professor Lundberg said -

An important factor influencing import demand seems to be the rise in the ratio of gross investment to gross national product that tends to follow from a higher rate of economic expansion. If - as seems to be the case - the average demand for imports per unit of investment expenditure is higher than the corresponding import propensity for consumption expenditure then the kind of change in the structure of national expenditure since the 1930’s - which has increased die gross investment ratio from 20 to 25 per cent. - should be a factor tending to push up the demand curve for imports.

The order of size of this effect cannot be estimated precisely. However the import content of investment expenditure appears to average about 30 per cent., compared with about 15 per cent, for consumption expenditure. A rise in the investment ratio from 20 to 25 per cent, would therefore lead to an increase of nearly 1 per cent, in the overall import propensity . . .

An article by Mr. W. M. Corden in the “ Economic Record “ of November, 1955, supports that view. On this point he said -

The increase in expenditure necessary to maintain internal balance with an increased population can be expected to lead to an increase in imports.

This is the first reason why a deficit may develop, and can be described as the “ income effect “ of the population increase on the balance of trade. Finally, it may be a reasonable presumption for Australia that the import content of marginal investment-

And this is the important point - is greater than the import content of marginal consumption. In this case an increase in investment will cause a rise in the proportion of total expenditure devoted to imports. It is therefore a further reason why the population increase can be expected to increase imports.

Advocates of the present level of immigration may argue that, for security reasons, we cannot afford to lower the level of intake. In these days of modern weapons, talking numbers and security makes nonsense. Let us assume that we could increase our population to 20,000,000 people quickly. What is a population of 20,000,000 against 1,000,000,000 people to our north? Immigration is not continuing for that reason at the present time. It is more to demonstrate to the eyes and ears of the world that we are trying to use Australia and to justify our possession of it. Therefore, I believe that in addition to absorbing as many immigrants as we can afford, we must place great importance on the economic effects of a large-scale immigration programme and we must make sure that the standard of life of Australians does not fall in the process.

Some advocates of -the present level of intake have implied that our standard of life has risen as a consequence of the immigration programme. It would be far more correct to say that the standard of life has risen as the consequence of high wool prices, of a general continuance of good seasons and of relatively stable overseas prices for our primary products. On this point, I should like to quote Mr. R. 1. Downing who, I believe, was one of the eight economists who have been mentioned so frequently. Talking of the level of immigrant intake, he said -

The economist will accept that this is a sound policy- meaning a reduction in the rate of immigration - provided that what we want is to consume more now and expand at a lower rate. If, however, we do want a high rate of expansion, then we must make sacrifices now - and these the Government’s new policy measures are designed to bring about.

He was referring to the measures introduced last autumn. The question is: How far can we afford to lower our standard of life and at the same time maintain industrial peace and prosperity throughout Australia?

One of the chief arguments for the present policy has been that industry creates import replacements; things are built here that once had to be bought abroad. But the import demands of immigrants, together with the import demands of an increased population, have on nearly every count been greater than the import replacement activity of the immigrants, lt is nonsense to compare the situation with the import replacement activity of the 1930’s. That was a period of unemployment and depression. People who were out of work were being brought into work and the population was not increasing at a great rate. I can cite figures to show how, as production of various goods has increased, the importation of like articles has also increased. 1 think that if some honorable members doubt me on this point, as my time is getting short, they can look up the figures for themselves.

Agreements with foreign countries may be pleaded as a reason for maintaining the present level of intake, but again I say that if we break our economy by trying to do too much in too short a time, those agreements will very quickly be torn up and Australia will become an unfavorable country in the view of intending immigrants. Comparison with the progress once made over a period of 70 years in the United States of America is again plain nonsense and completely false. We have not the great natural advantages, the high productivity, the mineral resources and the oil of the United States of America. Comparison with Canada, whose progress has been more nearly comparable to our own but is still greater, would be far more reasonable. Additionally, the United States of America, in its extremely rapid growth to the status of a world power, had no national welfare bill and no great defence bill. If the £400,000,000 necessarily absorbed by those two items could be spent on development, then the story would be an entirely different one. It may be claimed that other measures could be taken, that immigration should not b& made the scapegoat for inefficiency and lack of savings in this country. It may be claimed that we should work longer hours, or harder. It has been mentioned that the public service should work a 40-hour week. I ask only one question: Are any of these things politically practicable? We have not done them and we should have done them; there has been plenty of time.

I want to emphasize that my argument is not for immigration or no immigration. It is only on the level of immigrant intake. Though we want immigration on as large a scale as we can have it and as much national development as we can have, the argument is how much we can afford. Professor Lundberg again saw the alternatives before Australia most clearly. I should like to quote a final paragraph from his article. Professor Lundberg said that there are two alternative roads out of the present dilemma. He said -

One involves more central planning and economic policy co-ordination by the present Government. In order to make- import controls function over a long period and reduce the risks mentioned above, various forms of investment controls should be co-ordinated with the import regulations. One and five-year plans of economic development for the Australian economy should be drawn up as a basis for the detailed regulation of imports and investment as well as for the planning of monetary and fiscal policy. Good arguments could also be produced foi’ price and monopoly controls.

This sounds like a good piece of Labour socialist policy - something which we, as supporters of this Government, should not contemplate for a moment. Professor Lundberg continued -

The other alternative is to work through the decentralized so-called “ automatic “ forces within the market economy.

FOr us to do that, we shall have to lower the pressures on our economy so that we may re-orientate our programmes inside Australia and proceed on a more stable foundation with injustice to none.

It may be said that because I wish to slow the rate of development in this country, I have no faith in its future. That is not true1. What I said in my maiden speech is still, I believe, fundamentally the most important duty of members of this Parliament.. But we must be realistic and to be realistic, to assess our resources and to wish to use them well, is not to lack faith in the future’ of this, country. SO’ far, we have largely used short-term answers to- fundamental problems. These merely cloud the issue for a time before the problems rise again in a more acute manner. We cannot rely on another wool boom to make it possible to remove import restrictions and other controls that may become necessary.

We must maintain the standard of life of people in this country so that it will remain attractive for immigrants from Europe.

The CHAIRMAN:

– Order! The honorable member has exhausted his time.

Mr R W HOLT:
WANNON, VICTORIA · LP

.- I desire to continue where the honorable member for Wannon (Mr. Malcolm Fraser) finished. He instanced his abhorrence of a completely planned economy and almost at the end of his speech concluded with a remark that indicated he was in favour of a degree of planning in the economy, if the stresses and strains which beset us now are to be relieved, f join with him also in commending a statement made by him in an article in the Melbourne “ Age “ newspaper to-day on the subject of immigration, which he discussed. The article states -

We are no nearer to curing the real cause of our imbalance than we were 12 months ago.

With that statement, I entirely agree.

This budget is so similar to the little budget of March last that one can hardly make any comment about it that was not also made then. The only impressive thing about the budget is that it is amazing that this policy should be persisted with, in the face of its obvious failure to date. As in 1952, so in 1956, when economic pressures are greater because of their volume, as well as their intensity, the supporters of this Government are expressing the opinion that they really believe in some forms of economic control. In the past, we became accustomed to hearing them claim - I believe sincerely - that they believed in a free economy and the free operation of the law of supply and demand. The Australian Labour party, on the other hand, has continued to express its belief in a controlled economy, by which is meant the minimum number of controls necessary to maintain the maximum well-being of the majority of the people. Though the basis of our criticism of the Government and its economic measures has changed little since March last, I think we can admit, in fairness to the Government, and particularly its backbench supporters, that there is recognition of the need for control, however grudgingly it may be given.

In the first flush of victory in 1949, the Menzies Government immediately abolished controls. Petrol rationing, capital issues control and import restrictions were removed, and generally, the lid was lifted. Then, in 1952, we saw recognition of the radical argument of the Labour party that controls were necessary in a well-managed economy, and so controls were re-imposed by this traditionally conservative, free economy Government. The fact that they were imposed in the wrong way, thereby causing acute personal suffering and economic dislocation, was understandable because they were imposed by a government which professed to believe in a free economy. Thereafter, the controls were gradually relaxed until September of last year, or March of this year when, for the same reasons, and in identical circumstances, this traditionally free economy government was again forced to impose controls. Since then we have heard outbursts from men with a conservative outlook, particularly businessmen, concerning the adverse effects that such a policy is having on the national life. Sir Frank Richardson, amongst others, has complained that first the lid is on, then off, then on again, so that there is no security and no certainty on which private business may plan ahead. We find that controls are being placed on the economy again to-day. For instance, we have import controls, by means of restrictions, which are threatening our export trade. Just what effect the re-imposition of drastic restrictions will have on our export trade has yet to be seen. These import restrictions threaten to become a permanent feature of our economy, unless other action is taken. They may, and probably will, supplant the whole of the tariff system.

We find, too, that petrol rationing has been reimposed by the Government. It is not a type of rationing with which we on this side of the Parliament agree, because it is rationing by pricing petrol out of the range of the small man.

Mr Wilson:

– Nonsense!

Mr R W HOLT:
WANNON, VICTORIA · LP

– The kind of nonsense to which the honorable member for Sturt (Mr. Wilson) refers also pertains in respect of credit, a matter that was referred to by the Prime Minister (Mr. Menzies) last March. By substituting a policy of dear money for Labour’s traditional policy of cheap money, the Government has imposed a form of rationing of the credit resources available to the individual, so that control has again been resorted to by a government which is, professedly, in support of a free economy and opposed to a controlled economy. It is significant that, since 1 949, when Liberal governments came to office in Australia, the bank overdraft rate has risen from 4i per cent, to 6 per cent. If that is a just form of rationing or control, then there is very little that can be said in favour of a free economy.

The Government has even shown its appreciation of the need for more controls by positively seeking from the State governments - admittedly in a timorous, halfhearted way - authority to control capital issues. Significantly again, the two State governments which refused to give this power, according to the press, were Liberal governments. I refer to the refusal of the Bolte Government of Victoria and the Playford Government of South Australia to refer to the Commonwealth the necessary power to control capital issues, despite the reported offer by the Treasurer of additional loan funds to the value of £10,000,000. I do not know whether that is correct, and I admit, in fairness to the Treasurer, that he himself has played a great part in convincing the Government of the need for a controlled economy. By the same token, while we deplore the lack of success regarding the reference of power to control capital issues, we equally deplore the success which the Government appears to have achieved with its wage-freezing policy. In this respect, I refer particularly to the recent action of the Bolte Liberal Government of Victoria. Having increased charges such as tram and train fares, insurance charges, motor registration fees, rents, gas and electricity charges and the like, the Liberal party Premier of Victoria now proposes to abolish quarterly cost of living adjustments of the basic wage, lt is difficult to reconcile this readiness to cooperate with the Commonwealth Government in regard to wage freezing with the refusal to co-operate on the far more important question of economic control of capital issues.

Normally, the function of a government in compiling a budget is to make prudent provision for the economy of the nation from year to year, to seek to co-ordinate conflicting interests within the nation, and to produce a harmonious national policy. It is difficult to discern any comprehensive ulan in the policy put forward by the Go vernment, particularly in this budget and the little budget of March last. The Government’s economic policy lacks cohesion, flexibility and planning. I do not make that statement simply because planning in itself is a good thing, but because there is now a most urgent need for a considered, over-all national economic plan. “In forcing a want-of-confidence vote on this matter, the Opposition seeks to impress on the Government the need for a plan, such as that indicated by the Leader of the Opposition (Dr. Evatt) and supporting speakers from this side of the chamber. The Opposition, comprised of members of the Australian Labour party in this chamber, has given a lead by stressing the need for the control of capital investment, prices, and profit on a national scale. That fact is borne out by the Melbourne “ Age “ in its leading article on 10th July last, lt is headed “ Powers must be national “, and reads -

What is needed is some rein on influences contributory to inflation and raising danger of over extended commitments. In one sector the capital market is more or less controlled through bond interest rate, overdraft charges and bank interest rates. In the other, or private sector, competitive bidding for investible funds goes on, with offers of interest rates that would not be matched in countries served by sound monetary management policies of their central governments and central banks. In spite of its basic philosophy, the Liberal-Country Party Government has been forced by events to apply controls in various forms.

As it is true that the Acting Prime Minister has sought control of capital issues and been refused, why then does the Government not seek those powers from the most authoritative source, that is, from the people, particularly in view of the generous offer of cooperation made by the Leader of the Opposion, who said that he would support the Government in seeking from the people power to control capital issues, profits, and prices? That support would guarantee success. We can only assume from the failure of the Government to avail itself of the offer that it does not wish to obtain the powers which, in my opinion, are necessary right now to combat a dire threat to the existence of the whole of our national economy. If any planning can be seen in this Government’s economic policy, the most that can be said is that it seeks to steer an erratic course between the extremes, on the one hand of runaway inflation such as was experienced in Germany after World War I., and on the other of mass unemployment. In other words, the Government to-day is applying the measures that it applied in 1952 more gently but equally firmly, and in a manner which is calculated to accelerate the possibility of either extreme runaway inflation or mass employment. This it seeks to achieve, without attempting to spread the burden over those sections of the community which are best able to bear it. In fact, the contrary is i.rue, insofar as the greatest impact is felt by those least able to bear it. I refer to the wage and salary earners, the recipients of social services benefits, State governments, home seekers, and generally the sections of the community which are least privileged financially, while the farming community, as the figures in the White Paper show, is fast being reduced to the same category.

With regard to the -wage-earner, I need only reiterate the injustice and confusion existing in regard to wages, which, after all, are the Government’s own doing. Simply by supporting an application by the Australian Council of Trades Unions for the restoration of quarterly cost of living adjustments, the Government would enable the adjustments to be restored and the problem of discrepancy in wages to be solved. The question then is: What would happen in this event to the spiral? If other controls were lacking, and other steps which we have advocated were not taken, certainly the effect would be adverse, but should the wage-earner be called upon to suffer simply because of the Government’s refusal to face up to its responsibilities in other directions? I believe that the answer to this question lies in the statement made by Mr. Justice Foster on the effect on wages of increasing prices. T have quoted this statement before. As reported in the “ Argus “ of 20th September, 1952, in the hours and wages case, he said -

Prices would come down if wages were the only factor, and obviously they are not. The first remedy is in the hands of the employer - greater managerial efficiency.

Actually, in the last two years, output per man hour in the Commonwealth has increased.

The next, and by far the greatest, hardship inflicted by this budget is on the aged and invalid pensioners without dependants.

The Melbourne “ Age “ in its leader of 27th August says -

Forecasts of a “ standstill “ Budget, with unchanged rates of general taxation, will cause no surprise; but there is a surprise - and a most unpleasant one - in the prediction that no relief will be given to pensioners, either by an increase in their weekly pittance of £4 or a further easing of the means test. This group has been struggling to exist in recent years on an allowance less than a third of the Melbourne and Sydney basic wage. Last year’s forward leap in prices and wages has cost them heavily in food, clothing, fuel and the barest necessities of life, but it seems that the Government is resigned to leaving them to bear the principal burden of suffering caused by inflation.

Perhaps the economic difficulties of the pensioners are best stated in the following finding of the Victorian Royal Commission on Housing, which appears at page 49 of its report: -

OLD-AGE PENSIONS.

It is self-evident that a pensioner receiving £4 per week can afford only a small part of that sum by way of rent. Figures quoted by the President of the Pensioners’ Association in evidence (and generally confirmed by other pensioner witnesses) show a necessary expenditure of £3 0s. 3d. per week on essential items other than rent, clothes, fares, entertainment and replacement of household equipment and furniture. The figures quoted appear moderate and it is clear that old-age pensioners can only be asked to pay a nominal rental in the vicinity of the present figure of 8s. 6d. per week for single pensioners and £1 2s. for those who are married.

If we add the minimum of 8s. 6d. a week to £3 0s. 3d., this leaves a bare 1 ls. 3d. for all those other items referred to in the commission’s report. That was so until the Commonwealth and State Housing Agreement abolished the Commonwealth’s responsibility for rebates in rent. Last Saturday night I had before me one instance where an aged couple, hitherto paying a rental of 16s. a week, were advised that as a result of a review of their economic circumstances the rebate had been abolished and they would now pay 57s. 6d. for a one-bedroom, two-room cottage or flat. This was subsequently reduced to 21s. 6d. That left a matter of 9s. per person for such necessaries as clothing, &c. That is bad enough for age and invalid pensioners without dependants, who are living in commission homes. What then of the others? In the greater Melbourne area, approximately 30 per cent, of the housed families are in single-bedroom units, and of the 30,250 housing commission homes built from July, 1945, to May, 1956, only 1 per cent, are single-bedroom units. The rest of the pensioners, age and invalid, are therefore housed in private accommodation, and those who are so housed pay at least 25s. a week rent for a single room. Taking the figures of the royal commission, this means that those pensioners in privately rented accommodation are out of pocket to the extent of 5s. 3d. a week, at a minimum. There is only one place where that amount can come from, and that is from the table.

The royal commission also found that the provision of this type of housing should not be left to the States, but that it was a social responsibility; in other words, it was the responsibility of , us all. For that reason it

Was found that the type of housing required by the indigent and the aged should be provided by the Commonwealth Parliament through social services legislation. When we politicians, regardless of party affiliations, have found a satisfactory answer to the question, “ Am I my brother’s keeper? “, only then will this question of housing for the aged and indigent be adequately answered. Then will be relieved, I believe, the horrors of old age and sickness and they will be less real to those of us who, in future, may be forced to suffer them.

Next 1 ask the committee to consider the burden placed on the States, particularly if we consider the provision of capital for essential services which are necessary for an expanding economy such as this Government has placed upon the nation as a whole. For the provision of essential services, such as water, sewerage, roads, health and education, the sum of £190,000,000 has been approved by the Government, as distinct from the Australian Loan Council’s allocation of £210,000,000 for this financial year, lt is the same net amount as last year. The States, as we have seen, continue their annual pilgrimage to Canberra, and a few months ago the Australian Loan Council, by Six votes to one, approved of an allocation of £210,000,000. But this Government said, in effect, “ Approve what you like in the Australian Loan Council. We will not approve more than £190,000,000 “. The effect of inflation has been to reduce this amount by £5,000,000 at least.

In addition, the semi-government and local government allocation in Victoria has actually been reduced by £450,000, with a further similar reduction brought about by inflation or the decreased purchasing power of the funds available this year, as opposed to last year. For all purposes, the Victorian Government sought an allocation for its essential services of £117,000,000. It received £75,000,000, of which £31,000,000 was for local and semigovernmental purposes. Included in the amount of £117,000,000 which the Acting Premier of Victoria, Mr. Rylah, sought were the following sums which I quote from the “ Age “ of 21st June:-

The newspaper also stated -

Mr. Rylah said this included a request for a record sum of £8,000,000 for schools, and £2,000,000 for mental hospitals.

These works the Government stressed as basic necessities, not only for the natural increase in population, but also for increases by way of immigration. The Commonwealth based its allocation to Victoria on a total amount for all States of £190,000,000. The “ Age “ of 29th June stated -

However, based on allocations for the current financial year, the actual amounts available to the States for governmental works in 19S6-S7 will be considerably less than shown in the official table.

Let us compare this report with the immigration position. The picture shows that we are exceeding the absorptive capacity of the country, which is the basis on which our immigration policy is founded. Let us assume that each immigrant requires £2,000 of capital for establishment purposes. That figure is based on the generally accepted formula that the capital requirements per head of a modern community are equal to four times the annual per capita output. With an immigration intake of 90,000 a year we find that we need a capital expenditure of approximately £180,000,000 in order to provide for immigration to this extent. Generally speaking, the effect of our adverse trade balance will not be rectified overnight. In fact, it can be thrown into further unbalance by any talk of revaluation, which could have the effect of a flight of capital from Australia.

In the White Paper on national income and expenditure we see that the annual amount of interest, funds remitted overseas, and unremitted reserves comes to about £80,000,000. As against that, we have the favorable effect on our balance of £118,000,000 of private capital which is coming into the country. With the degree of uncertainty which this budget is causing, that £118,000,000 could be chopped off by loss of confidence among overseas investors. For the same reason the funds remitted from this country - a flight of capital - will have the effect of increasing our adverse balance and making the whole amount payable out of our reserves which in this year would have been £221,000,000 instead of £73,000,000. So we are on a razor’s edge for a number of reasons, and remedies have been suggested. Professor Copland has suggested that we should have forced loans or compulsory saving. Another economist has suggested a greater use of the taxing power of the Commonwealth. Even with a limitation of the constitutional powers, we have to present a properly planned economy. I believe a far greater degree of flexibility would enable this Government to plan the economy much better insofar as by the use of our taxing power and a variable interest rate capital investment can be canaled into essential production rather than into luxury production. Man-power can be used in the production of essentials by control of capital.

While taking these steps to ensure the maximum use of the powers that it has, the Government could, at the same time, seek to get from the people those powers which are necessary in the opinion of all responsible economic authorities in the country. I. refer to the power over capital issues control which is more direct than the indirect ones which are now available and which are not being used. The general question could be resolved in that regard.

The necessity for cutting down the immigation policy is generally agreed on by all but some supporters of the Government. The States are being forced into a position where they go to the Commonwealth year by year and seek a higher allocation from uniform taxation revenues to pay interest to the Government on money which they borrowed from it. In other words the States are being forced to bear the brunt of an expanding economy and the Government, through its inability to face up to the demands of the situation for which it is responsible, has usurped its authority, and has let down the States.

The TEMPORARY CHAIRMAN (Mr Freeth:
FORREST, WESTERN AUSTRALIA

– The honorable member’s time has expired.

Mr LESLIE:
Moore

.- The honorable member for Darebin (Mr. R. W. Holt) has made out a very moderate case, and 1 commend him for not having indulged in the wild extravagances which have marked so many speeches from the other side. But what would have been a rather good case has been spoilt by a not strict adherance to facts. He mentioned that the Australian Loan Council met here in Canberra a few months ago. He did not mention that the States, in the determination of the loan programme for this year, had six votes, and that the Commonwealth’s representative had only two votes. So, decisions reached by the Australian Loan Council are decisions of the council alone. My friend, the honorable member for Darebin, said that, although the council made a certain decision about the money to be raised for the loan programme, the Commonwealth would not approve a programme of more than £190,000,000. It is not a question of whether or not the Commonwealth approves the amount. The decision is entirely in the hands of the States. What the Commonwealth did was to point out that it considered £190,000,000 was the maximum that could be raised for the loan programme this financial year. Therefore, it was not prepared to guarantee a programme of more than £190,000,000. In other words, it said, in effect, “ We are not prepared to impose additional taxation on the people of Australia to make up for the difference between the amount that will be raised and the amount that the States will irresponsibly spend “. And the Australian people are the only source from which the money is obtainable. What a blank cheque was sought by the States!

Mr R W HOLT:
WANNON, VICTORIA · LP

– The Government i*. budgeting for a surplus of £108,000,000.

Mr LESLIE:

– That is the very feature of the budget that I would condemn, because it perpetuates a principle that is clearly wrong. The surplus is to provide for the Commonwealth guarantee to the

States for their loan programmes, and it perpetuates the wrong principle of spending revenue moneys on capital works and services that should be financed out of loan funds.

Mr Cairns:

– What is wrong with that?

Mr LESLIE:

– There is a great deal wrong with it, but 1 do not propose at thi. stage to enter into an argument with th honorable member, who is a devotee of the inexact science of economics. The principle is wrong, and I object to it. The honorable member for Darebin should be honest and admit that the Commonwealth has acted generously towards the States because it is prepared to bear the odium, which Opposition members will not fail to heap upon it, of inflicting heavy taxation upon the people in order to finance the States’ irresponsible spending.

Mr R W HOLT:
WANNON, VICTORIA · LP

– It has not cut thc, heads right off.

Mr LESLIE:

– It has attempted to drum some common sense into their heads, but I am afraid it has not succeeded because the heads are too thick. I say that to the honorable member in kindly fashion only to indicate that so much of the material used by him in his argument, which sounded well, and by Opposition members generally, is not based upon fact. He and his colleagues do not tell deliberate untruths, of course, but they state the circumstances as they would have the people believe them to be. The honorable member also forgot to mention, in his discussion of the housing problems of aged people, that this is the first national government that has recognized its responsibility to initiate a scheme to house aged people, especially those who are infirm. Let me remind the committee that it is characteristic of previous governments of the same political colour as this Administration that they have initiated welfare schemes for the less favoured groups in the community. I do not propose to traverse the list of those schemes. Whereas Labour only talked of the wisdom of such schemes, governments of the type I have mentioned actually put them into effect.

Now I turn to the subject of pensions. I have been almost drowned by the flood of crocodile tears that has fallen from the eyes of Opposition members during this debate. The people of Australia should know, if they do not, that there is more material wealth among the ranks of the members of the Australian Labour party in this chamber than in the ranks of the combined Government parties.

Mr Bird:

– Who are the wealthy ones?

Opposition members interjecting.

The TEMPORARY CHAIRMAN:

–

Order! I ask the committee to come to order.

Mr LESLIE:

– I am asked who are the wealthy ones. It would be far easier for me to say which Opposition members are not wealthy, because I would not have to mention so many names. I shall leave it at that. Crocodile tears are not being wept only by Opposition members in this chamber. They are being wept also by the magnates of the press, as Labour members call them, and by members of chambers of manufactures and chambers of commerce, proprietors of big industrial enterprises, and other wealthy people. The newspapers tell the Commonwealth that it should provide a great deal more money for pensions.

Mr R W HOLT:
WANNON, VICTORIA · LP

– What about the churches?

Mr LESLIE:

– I do not question their sincerity. I leave them out because they are genuine. They weep no crocodile tears. However, the other groups that 1 have mentioned weep only crocodile tears. Not one of them has ever acknowledged the only thing required to enable pensioners to have more, and said, “ Tax me more heavily and give it to the pensioners “. The Government can make greater provision for the pensioners only by increasing taxation. If it were to increase taxation by 10 per cent, in order to raise pensions, the very people who are now hurling criticism at it for its failure to increase pensions would damn it for increasing taxation for the very purpose of helping the pensioners.

Mr Cairns:

– The Government ought to be damned, certainly.

The TEMPORARY CHAIRMAN:

–

Order! The honorable member for Yarra has been persistently interjecting. I ask him to be silent.

Mr LESLIE:

– All this propaganda about pensions is sheer hypocrisy. The people responsible for it need only say to the Government, “ You have a mandate to raise more money by means of taxation in order to. provide greater social services “. It would be easy to increase taxation. But no government can continue in office, as previous Labour governments were aware, and as the present Government and the present Opposition, which is a potential government, are aware, by imposing tremendous additional burdens on one section of the community to benefit another. Those upon whom the additional burdens would be imposed are those who make and unmake governments. But those people, if they really have generosity in their souls, have it in their power to respond to the cry that one section of the community has not enough and to remedy the situation.

This brings me to the question of whether controls and restrictions should or should not be maintained. The honorable member for Darebin discussed the question of whether we should have a planned and controlled economy and of what plans and controls should be adopted. Of course, we have a planned society. We have traffic regulations and laws, for example, but they do not prohibit us from travelling on the roads or purchasing motor cars. The purpose is to regulate our actions on the roads for the common good. T hope ours is a planned economy. It is necessary for the Government to regulate it without applying restrictive controls. Indeed, every control is restrictive. I want to say at this stage that the matter is one which lies in the hands of the people themselves. The people, and the people alone, must decide whether they want to live under a free economy - an economy which allows them liberty but not licence - or whether they want to live under an economy which will inevitably restrict and regulate them to an unbearable degree.

Mr Duthie:

– What about the monopolies that regulate things now?

Mr LESLIE:

– Monopolies! I will tell the honorable gentleman about monopolies. Under socialism there would be one supreme nationwide monopoly. Anything would be better than that. No matter how many private monopolies there may be, there is not one centralized monopoly control as there would be under socialism.

I believe that the White Paper entitled “ National Income and Expenditure 1955- 56-“, which accompanies the budget, contains information which should be read by every person in Australia, because it tells a very sorry story indeed. Let me point out to honorable members an item of the most ominous kind contained in this document. It reads -

The average level of prices of farm products has fallen in each of the last three years, resulting in substantial falls in the farm income component of national income. As a percentage of national income, farm income is now lower than in any other post-war year. All other components of personal income have been rising.

Mr Costa:

– Except the wages of the workers.

Mr LESLIE:

– They have been rising too, do not worry about that. I want to remind honorable members, and the people, that the economic depression of the 1930’s commenced with a fall in the value of farm products. This country is dependent en,tirely on its primary industries. Primary products are the only real wealth of any country, whether they be food that is grown, minerals that are extracted from the earth, or timber that is hewn. Once the reward for that wealth declines a country relying on it faces bankruptcy or something similar. It does not matter how much, wages may rise, a country faces an unsound economy if its true economic foundation is not solid and firm.

I repeat, this White Paper contains information for the people that is really ominous. I go further and say that the remedy for this state of affairs is entirely in the hands of the people. I shall read another sentence from the document, to underline this point. It reads1 -

Gross domestic expenditure at £5,334,000,000 was again greater than the gross national product of £5,194,000,000.

So, we spent more than we produced, and this excess of expenditure, as the Treasurer pointed out in the budget speech, contributed to the deficit, on current account in our balance of payments, of £221,000,000 last financial year. That, Mr. Temporary Chairman, is the quickest and surest way to bankruptcy. I cannot see any action that any government can take, short of depriving every individual of his freedom to spend, which can remedy this state of affairs. The people themselves must realize that, and must exercise voluntary restraint. If all the householders in the land will only appreciate, the fact that government finance - the national economy - is, in effect, no more complicated than the economy of the ordinary household, they will realize that carelessness in dealing with a nation’s economy will produce exactly the same result as carelessness in managing a household’s economy. A spendthrift householder soon runs into debt. The man who has an income of £1,000, and spends £1,200 will, in a matter of time, find his affairs, and all his goods and chattels, in the hands of a receiver. lt is to be hoped that the people overseas to whom we shall be looking for capital assistance in the development of Australia will not be deterred by the statements that 1 have read to the committee from that White Paper, because the facts contained in those statements would definitely give anybody the impression that we are a spendthrift nation. That is indeed something to alarm every Australian. It should alarm the people outside this Parliament ami outsit the Government, the people who purport to lead the public, who profess to help i:;c public to think along the right lines. They can do no better than point out constantly to the people that we are spending far more than we are earning, a course that can lead only to tragedy.

The Government has taken certain actions to regulate and remedy or redress the position, but what is really necessary is a change of mind, a change of attitude, a change of actions on the part of the people themselves. Some of the actions taken by the Government have been wrongly interpreted. Some of them are, in my opinion, being wrongly applied. One of the latter is the policy on import restrictions. In the import restrictions policy we have something that could well be turned into a weapon in the hands of a section of the community - protective tariffs. Honorable members in this corner of the chamber do not want to see that happen, because it would mean the exclusion of essential goods or the imposition of burdensome charges on people who would have no redress. Import restrictions can, and will, act quite satisfactorily so long as imagination is used in their application. But, as import restrictions operate to-day the policy is perfectly useless, because it appears to lean to the protection of the individual in business rather than to the protection of the national economy . So lon g as a person or a firm was importing goods previous to the operation of the restrictions the right to continue to import, albeit on a reduced scale, is given. But any other business which desires to import something which would be of substantial value to the country, and could, perhaps, be used as a means of saving further expenditure on other imports, is denied a licence if it has not already been engaged in importing. We find this sort of thing happening: Because somebody imported washing machines or refrigerators from overseas, or watches from Switzerland, silk scarves from France, or fancy doodahs from Czechoslovakia, he gets a licence to import them on a reduced scale. But let somebody who has not been engaged in importing previously apply for a licence to. import up-to-date machines that would help to increase our agricultural production, or increase the output of secondary industry, and reduce costs, and the Commonwealth almost has to be moved off its foundations before consideration will be given to the granting of permission to import.

Mr Hamilton:

– That applies even to essential parts for agricultural machinery.

Mr LESLIE:

– Yes, even the right .to import such essential parts is denied, for reasons that are simply foolish. Meanwhile, the country is flooded with imported goods which compete with Australianmade goods. They are useless to us, and only impose a burden on our economy and our overseas funds.

I believe that the Government should take another look at the administration of import restrictions, with a view to adjusting obvious anomalies and removing hindrances. The restrictions should be applied on the basis of common sense, not on the basis of strict adherence to regulations. Import permits are issued quarterly. I know that in some cases importers have applied for permission to import the whole of their quota for a year in one quarter, because the goods involved are seasonal goods. They should arrive, we will say. in September, for use shortly after then, lt would be foolish to bring in one lot in December, another lot in March and another lot in June, because the goods would remain in store for many months before they were used. But such applications have been refused. The regulations provide that there shall be quarterly quotas, and that provision is obeyed strictly. More common sense should be used in administering these controls. One of the difficulties inherent in restrictions and controls is that they tend to be applied automatically and without imagination.

I want to refer, not only to the budget papers that have been supplied to us this year, but also to a very important paper that has not been supplied to us. Last year, the Parliament was provided with a programme of the civil works under the control of the Department of Works. That document was circulated by the then Minister for Works, the honorable member for Chisholm (Mr. Kent Hughes), and I commended him for doing so. I am somewhat surprised that a similar document was not included in the budget papers given to Us this year. Perhaps it will be circulated later, when the vote for capital works and ‘ services is discussed in detail, but I had hoped that it would be presented to us with the budget papers, because the works programme is part and parcel of the overall programme of the Government.

The White Paper presented to us last year by the honorable member for Chisholm contained valuable information. It showed the amounts authorized for certain works, the amounts expended by the end of the financial year, the expenditure incurred in previous years and the anticipated expenditure in the current year. It gave details of the location and nature of the various works. 1 say here and now that if a similar document is not presented to us this year. I shall become gravely suspicious of the estimating that goes on in the departments. If we do get the document, it will disclose to us whether the works for which we voted money last year were actually carried out, and whether the money that we voted for certain works was, in fact, spent on those works, lt will enable us to see whether the estimating was practical estimating, based on a knowledge of what could be achieved, or whether it was merely wishful thinking and pious hoping by the departmental officers responsible for it. A document of that kind is most valuable. I hope that honorable members on both sides will press for it to be made available to the Parliament this year and in future years. Once again, I commend the honorable member for Chisholm for having prepared and presented the document last year.

The Department of Works has been subjected to severe criticism in the past, but it is rather significant that it is one of the only three departments which, this year, have presented the Parliament with reduced estimates for administrative expenditure. A reduction of £2.50,000 in £3,000,000 is substantial. It shows that there must have been a re-organization of the department. It is evidence that the Minister previously in charge of the department did some very fine work. He must have handed over to his successor a very fine department. Otherwise, such a praiseworthy result could not have been achieved this year.

Another matter to which I want to make reference is the schedule of salaries and allowances contained in the estimates of receipts and expenditure. The schedule shows the number of officers holding classified positions in the Public Service, and the salaries paid to them; but it does not show the number of temporary and casual employees, for whom the Parliament is asked to vote a very substantial sum. Very important information is omitted from the schedule. I know that that is in accordance with the practice that has been followed for at least the last 30 years, but that is no reason why something that is wrong should be perpetuated.

Let us look at page 182, which contains details of the News and Information Bureau. According to the schedule, the bureau consists of one director and three clerks, for whose salaries and allowances it is proposed that £20,000 shall be voted. I do not query that sum. If we refer to Division 70 on page 35, we find that £207,000 is required for temporary and casual employees. There are a director and three clerks, classified employees, who will be paid £20,000, but. in addition, there is an army of unclassified employees, who will be paid £207,000.

These papers do not tell us what the Public Service is comprised of - and that is what J want to know. I may be told that 1 can get that information from the report of the Public Service Board. The report of the board should, like the report of the Auditor-General - Heaven bless him! - accompany the budget papers, but it is not presented to us until six months after we have dealt with the budget. That is too late for the report to be of any use to us. The information that it contains should be included in the budget papers. We should know the proposed total strength of the Public Service for the year in respect of which we are asked to vote the necessary money. But we do not know that. The information is not given to us. Permanent employees comprise only a fraction of the total strength of the service. There is another matter that I want to raise before my time expires. It relates to the budget itself. I suggest to the Treasurer-

The TEMPORARY CHAIRMAN (Mr Lucock:
LYNE, NEW SOUTH WALES

– Order! The honorable member’s time has expired.

Mr CHAMBERS:
Adelaide

.- The honorable member for Moore (Mr. Leslie) has delivered rather a remarkable speech.

Mr Turnbull:

– A good one.

Mr CHAMBERS:

– If the members of the Australian Country party think it was a good speech, I shall watch closely to see how they vote when what is, in effect, our motion of censure of the Government is put to the committee. For 25 of the 30 minutes for which he spoke on the budget, the honorable member for Moore attacked the Government. Therefore, he must be opposed to the budget that we are discussing.

Mr Leslie:

– Look at the alternative!

Mr CHAMBERS:

– I listened closely to the honorable member, because I thought that he might suggest an alternative, but he did not do so. When this budget was presented to the Parliament a few days ago, the newspapers and thinking people throughout Australia referred to it as a barren budget. Honorable members listened closely to the remarkable address that was delivered last night by a senior member of Cabinet - a man who was paraded at one time as the next Prime Minister of Australia. [ refer to the Minister for External Affairs (Mr. Casey). One had a right to expect that he would discuss in this chamber last evening matters that he himself has described as important. He has said that the international situation was never graver; but what did we hear last night from this senior Minister of the Menzies-Fadden Government, who is responsible for handling our international affairs and getting decisions upon them from the Government? First, he devoted a quarter of an hour to a talk on what Professor Arndt had said in delivering the Chifley memorial lecture. He assured us that Professor Arndt was a great supporter of the Labour party and voted for it at elections. How does the Minister know how Professor Arndt or any one else votes? For that matter, who is Professor Arndt? I understand that he is a professor of the Canberra University College, and was appointed by the Menzies-Fadden Government. His remarks were quoted last night because he had attacked the Labour party. Had he said one word in favour of that party we would have had quite a different speech from the Minister.

After wasting a quarter of an hour of our time in reiterating an address which 1 understand he paid a lot of money to have reproduced so that he could use it here, he went on to charge the Opposition with having launched an attack against this budget on the basis of wages and pensions.

Mr Bowden:

– Hear, hear!

Mr CHAMBERS:

– The honorable member for Gippsland (Mr. Bowden) says, “ Hear, hear! “, but if the Labour party does not defend in this Parliament the workers and pensioners of Australia, who will do so? Who are the workers of Australia? This country could not exist without the good services of the men employed in its industries. We could not fight our battles in war-time but for the assistance of the great mass of the workers, to whom honorable members on this side of the chamber pay tribute on every occasion. If it is an offence to defend the workers of Australia, I am guilty of that offence, as, too, are all my colleagues.

Mr Turnbull:

– You have not been charged with it.

Mr CHAMBERS:

– We were charged with it last night. I, and every one of my colleagues, will plead guilty to the offence of defending the pensioners of Australia, who have been so completely neglected by this Government.

Mr Roberton:

– That is sheer hypocrisy.

Mr CHAMBERS:

– It is all right for the Minister for Social Services to call my remarks sheer hypocrisy, but it is the Government that can be charged with hypocrisy on every possible occasion. At least it can be said in favour of Labour governments that when they gave increases to the pensioners they did not give them on the eve- of an election, but from the time that this Government came into office until this very day it has given- benefits to the pensioners only on the eve of elections. In 1949 the Chifley Government went to the country and told the people that we would not bribe any voter, but that when the election was over the plight of the pensioners would be considered, and if we believed that they were entitled to an increase, they would be given it. This Government would never have taken office if it had not acted in a quite different manner and bribed the pensioners. Liberal-Australian Country party candidates made artificial promises at a time when our economy was the soundest in the world. It was so sound that hard-headed business men, after surveying the whole world situation, came here and said that they believed they could not do better than invest their capital in an Australia under a Labour government.

The Minister for External Affairs sought to remind the Australian people of certain great achievements of the Menzies-Fadden Government. What were they? The first was. that the. Government had been responsible, for a much-needed increase in population!. L remind the Minister and the people of Australia that it was a Labourgovernment which commenced the- great influx of immigrants to this country. Moreover,, it can. be said to the credit of the Australian Labour party government that whenever it brought immigrants out here it found1 employment for them. A very different situation exists to-day. Immigrants who arrived in Western Australia two or three months ago have not yet obtained a job. They have been unemployed since they arrived in Australia. Is it any wonder that Government supporters have themselves complained during this debate about the haphazard way in which immigrants are being brought into this country. We- began the immigration scheme and pui it on a sound footing, but now our groat work is being destroyed by a Government that is not capable of carrying it on in the same way. 1 he Minister also took credit for the production’ by General Motors- Holden’s Limited! of the Holden motor car.

Mr Anderson:

– When did he say that?

Mr CHAMBERS:

– Last night, the Minister, on behalf of the Government, had the audacity to take credit tor that great achievement. The first Holden car was on the road before this Government took office. It was only the support that was given to General-Motors Holden’s Limited by a- Labour government that made it possible for that industry to spring up in Australia. I want to correct a false impression that was created by the Minister for External Affairs last night. That great industry was built up because of the support given to it by the Chifley Labour Government.

Mr Bowden:

– Nonsense!

Mr CHAMBERS:

– The honorable member says, “ Nonsense “, but he obviously does not understand the position. The first Holden car that went on to the Australian roads was produced long before the Australian Labour party left office.

Mr Bowden:

– By whom?

Mr CHAMBERS:

– What does the honorable member mean? I said that the venture was supported by the Chifley Labour Government, and that the Holden enterprise was commenced because of the support of that Government.

Mr Haylen:

– By priorities.

Mr CHAMBERS:

– Yes, by priorities, and other methods which encouraged General Motors-Holden’s Limited to build the Holden car in Australia. What credit can this Government claim for the continued success of that enterprise? If it had been left to the present Menzies-Fadden Administration the company would have closed up long ago.

What is the unfortunate position of the motor industry in Australia to-day? It is being crushed by the actions of the MenziesFadden Administration. Another great organization in the motor industry that became successful in Australia because of the support that it received from the Labour government is Chrysler Australia Limited. The repressive provisions of the little budget that was brought forward early this year by the Menzies Government is destroying that organization also. Only the other day the manager of that company informed me that in the last six weeks 1,100 men in South Australia alone had been dismissed from the organization. I hope that honorable members opposite will pay due heed to that fact when they claim that there is no unemployment in Australia to-day. That information was given to me by the manager of the company only a couple of weeks ago. This Government, which is supposed to grace the treasury bench, has directly caused the dismissal of those men.

The Minister for External Affairs has taken credit on behalf of his Government for the achievements of these organizations, whose existence and success were made possible by the support they received from the Chifley Labour Government. I do not doubt for one moment that the leaders of those enterprises sincerely wish that a Labour government was again in office to-day.

Mr Anderson:

– Is the honorable member a friend of big business?

Mr CHAMBERS:

– What a cheap interjection! Am 1 the friend of big business? Is it any wonder that this country is sliding downhill when we look at the general calibre of Government supporters! I exclude a few honorable members opposite when I make these remarks, but we must conclude that it is only natural for us to reach a state of decadence in government when we look at the kind of men who rule the country to-day through this Parliament.

The Minister for External Affairs went on to speak of the great achievements of this Government in the field of defence. That is a matter that must be dealt with in this Parliament. I remind the committee that the Menzies-Fadden Administration has the most rotten record of any government in the history of the Commonwealth with regard to defence. When the situation was desperate in this country during World War II. and the Australian people needed a sound government, what did the Menzies-Fadden Administration do? Although it was occupying the treasury bench, two of its own supporters crossed the floor of the House. The Curtin Government did not come into being by the vote of the Australian people. Honorable members opposite do not like to hear these things. They are only too willing to criticize the Labour party, but when they are reminded of what happened within their own ranks they cannot take it. Two members of the Government at that time crossed the floor of the House, and it was their votes alone that brought the Labour party to office during

Australia’s most desperate period. At that time the Japanese were almost at our front door. The members of our fighting forces were being, sent overseas ill-clad and poorly equipped. Men were being trained with broomsticks at a time when we were at war.

These facts cannot be denied. Some of the Government supporters who are smiling now were too young even to understand the desperate situation of Australia in those days. The position became so desperate that two members of the Menzies-Fadden Administration voted the Labour party into power, and throughout the war it was the Labour government that organized Australia for an all-out effort. What part did the Libera] and Australian Country parties play in the organization of that war effort? We went through those years and emerged triumphant. The Labour government enjoyed the co-operation of all the Australian people. When the war finished it was left with the difficult task of rehabilitation. So I say to honorable members who suggest that the Labour party is a party of Communists, or is dominated by some other organization, that if it had not been for the present Opposition the Japanese would have invaded Australia, and Australia would have been an occupied country.

In 1943 the Australian people were so delighted with the achievements of the Labour Government that they returned it to power with, a substantial majority. Then in 1946 they again returned a Labour government.

Mr Buchanan:

– How did we come to be elected?

Mr CHAMBERS:

– I shall tell the honorable member how his Government came to power. The present Government parties squibbed the issue when there were difficult tasks confronting Australia, but when the war was over and those tasks had been completed, and after the difficult job of rehabilitation hail been done, the Liberal and Austraiian Country parties came together again and said, “ We must get back on to the treasury bench. We must get back the profits and high prices that were denied during the war to the people whom we represent.’ That was not the only treachery perpetrated by the Liberal and Australian Country parties. “

Mr Turnbull:

– “Treachery” is a nasty word.

Mr CHAMBERS:

– It is a nasty word, but it describes the nasty action of the members of the present Government. That Government has done some nasty things, so nasty, in fact, that Australia to-day is in serious difficulties because of mismanagement and bad government. Besides its other achievements during the war period the Labour government introduced a system of Commonwealth prices control.

Mr Buchanan:

– Shame on you!

Mr CHAMBERS:

– “ Shame on you”, says the honorable member, but I suggest that he should put the question again to the Australian people in order to decide whether they want the system reintroduced. It is all very well for honorable members to sit here and say that the people will not have it. I suggest that they should try them out. I submit that it was a further act of treachery when the members of the Liberal and Australian Country parties stumped Australia and asked the people to vote “ No “ on the prices referendum.

Mr Anderson:

– What about the Communists? What did the honorable member do about them?

Mr CHAMBERS:

– That interjection reflects the mentality of the Government to-day. lt will side-step every issue, but the real issue to-day is the damage that is caused by inflation. The inflation now experienced in Australia is due to the actions of the Menzies-Fadden Administration and its supporters. They went out and stumped the country during the prices referendum. They said that the States could control prices better than the Commonwealth. The story told by Government supporters, who were then in Opposition, was entirely false. It is proved beyond doubt that, when they asked the Australian people to record a vote against the prices referendum, they did Australia the greatest amount of damage that ever could be done to it.

The honorable member for the Australian Capital Territory (Mr. J. R. Fraser) gave figures last night that proved conclusively that the cost of living has risen beyond all imagination. Honorable members on the other side often speak about increases in pensions granted by this Government and pretend that pensioners are better off to-day than they were under a Labour administra tion. That is not true, because figures alone show that the cost of living has risen to such an extent that it is almost impossible for pensioners to survive to-day. That applies not only to age and invalid pensioners, but also to war pensioners, war widows - and I include the slight increase recently granted - and civilian pensioners. All the recipients of social services benefits to-day are suffering because a heartless government is in office.

I promised to say a word on defence. Years ago, I attacked this Government on its defence policy. I said that, whilst it was spending £200,000,000 of the taxpayers’ money, it was not giving value for that money. I again remind the committee and the people that under the Curtin Government and particularly the Chifley Labour Government, a post-war defence policy was enunciated that would have been completely adequate for the requirements of Australia over the last ten years. That policy was to cost the taxpayers £150.000,000 over a period of five years for the three services. That policy would have been totally adequate, and would have provided some real defence.

Mr Osborne:

– An expenditure ot £30.000,000 a year?

Mr CHAMBERS:

– Yes. an expenditure of £30,000.000 a year! Whatever this Government is spending it is squandering, because there is no real defence in this country to-day. I know that Government supporters do not like what I am saying, but it is factual. National service training was introduced by this Government. What benefit has it been to defence on the Army side? Infantrymen are still being trained in the same way as they were trained in World War I. Any one visiting a training centre to-day will see trainees charging with bayonets at bags of chaff, and men down in the rivers with their machine-guns. They are receiving the same training as was given in World War I. and World War IT.

Mr Duthie:

– Bows and arrows!

Mr CHAMBERS:

– Bows and arrows! That is quite true. When I came back from Japan early in 1947 I told honorable members what I had seen. I saw the damage that was done by the atomic bomb much sooner than any other member of this Parliament. I saw the damage soon after the bomb was dropped. I said here that I wished I could take all the Australian people, including members of this Parliament, to Hiroshima. 1 said that if they could sec the devastation, the destruction and the tragedy caused by one atomic bomb, there would never be talk of World War III. I said that there was one chance for the world to avoid World War III. Honorable members opposite, who are interjecting, have not seen the damage, and they should listen to what I am saying. The honorable member for Isaacs (Mr. Haworth), for example, did not see the thousands of Japanese who suffered as the result of the discharge of that one atomic bomb. He did not see the people who were to suffer lingering deaths. He did not see the destruction of Hiroshima. On my return, I said that there was one hope for the world, and that was to avoid World War III. There was one way, and one way alone, that World War III. could be avoided. That was by total disarmament with an international police force. What was the situation when war ceased in 1945? Germany was destroyed as a military power. Japan was destroyed as a military power. I believe that it was possible in those days, and even later, to achieve disarmament if all the peoples of the world and the statesmen had pressed for it. If responsible members of this Parliament, Cabinet Ministers, the Minister for External Affairs and the Prime Minister had pulled their weight with other world leaders, we could have had total disarmament. I say again as late as this hour that the only hope for the world is total disarmament.

I think back to the year 1940 when two supporters of the Government crossed the floor and put Labour back on the treasury bench. When this budget debate is completed, 1 pray that a sufficient number of Government supporters will walk across the floor of this chamber to destroy this Government. This Government stands indicted before the bar of public opinion. It has forfeited the confidence of the Australian electors and deserves the censure of this committee.

Mr TIMSON:
Higinbotham

.- Throughout this debate I have listened with great interest to what honorable members opposite have contributed. Almost invariably they adopted the line of praising the achievements of the Chifley Government when it occupied the treasury bench before the Menzies Government came into office. That is a long time ago, but it seems that in almost every speech Opposition members have gone into paeans of praise about the achievements of the Chifley regime and have asserted that the conditions of the country were much better in those days than they are to-day. 1 am afraid the honorable member for Adelaide (Mr. Chambers) has been no exception. The honorable member for Melbourne (Mr. Calwell) suggested even that standards of living in 1949 were better than they are to-day. I do not know what honorable members opposite mean by standards of living, but my recollection of conditions in 1949 is that they simply did not compare with conditions to-day. As 1 remember 1949, it was rather a terrible period to live in. I recollect shortages of almost all kinds of consumer goods. We had to have coupons before we could purchase many essential commodities. I remember the rationing of tea, sugar, and butter, and I also remember that if one wanted petrol it was necessary to produce coupons at the bowser. Other commodities were not displayed for sale, but were under the counter. They could be obtained if people were prepared to pay the price.

Mr Daly:

– What else could be expected, in war-time?

Mr TIMSON:

– I am speaking of 1949. several years after the end of the war. 1: will be remembered that, if a person wanted a new car, a refrigerator or a washing machine he had to put his name down on a list and wait a long time. I remember the blackouts of 1949, and the period before then when electric power was cut-off. to the complete disruption of industry and the great inconvenience of householders. ! also remember the gas restrictions which played havoc with industry and caused our womenfolk to squat beside fires in the backyard preparing meals for the household. I remember the great industrial upheavals ot that time which resulted in all these shortages; upheavals on the waterfront, in the snipping industry and on the coal-fields. If those are the conditions to which honorable members opposite are exhorting the Australian people to return, I am afraid they have an entirely different outlook from that of most Australians.

I wish to address myself, in this debate, to the great and urgent necessity to develop our mineral resources. I was very pleased indeed to hear the reference by the Treasurer (Sir Arthur Fadden), in the budget speech, to the development of our mineral resources. In referring to certain of Australia’s resources, which are capable of increasing our export potential, the right honorable gentleman said: -

Perhaps as notable an example as any is the growing confirmation of large and rich mineral deposits in Queensland and the Northern Territory. I have been assured that, given adequate development of known fields, new mineral production is capable of adding very substantially to our export earnings within a few years.

Almost invariably when we speak of Australia’s exports we place emphasis on primary exports, particularly wool and Wheat. They are the two things that spring to our minds immediately. To me, however, our mineral resources are, and have been ever since we got into difficulties with our balance of payments, outstandingly the most logical field from which to expect the earliest results in promoting the volume of exports. It ls rarely acknowledged that the mineral industry could assist tremendously to increase our overseas funds. I should think that most of us, particularly the supporters of the Australian Country party, are under the impression that exports of wheat give us a greater return than do exports of minerals; but that is not so. In the financial year 1955-56, the export value of minerals and non-ferrous metals - that is. in their basic forms - was £68,000,000, whereas the export value of wheat and flour was £66,000,000. I find, again from figures compiled by the Commonwealth Statistician, that for the same period - that is. to the 30th June last - the estimated total production of wheat at the mill door, so to speak, was valued at £122.000,000, whilst the estimated value of mineral production at the mine was £155,000,000.

We certainly have made progress. Much has been done and is being done to develop our mineral resources; but a great deal more encouragement and assistance could be given to the industry over a wide field. I wish to give the committee this afternoon some thoughts on developments in the Australian mining industry, but first I propose to outline the achievements in this direction in Canada in recent years.

Much of Canada’s success is attributable to government assistance in . many forms. In the first half of this year, Mr. Dickinson, the Director of Mines in South Australia, visited Canada and has since recorded his impressions of the Canadian mining industry. I have used his report freely in compiling the figures which I am about to give. In the ten years since 1945, Canada’s annual production of minerals has trebled to a value of £700,000,000, whilst exports have been worth £450,000,000. This export of minerals makes up 25 per cent, of Canada’s total export trade. To give the committee some idea of the magnitude of this trade, I point out that this export figure of £450,000,000 exceeded the total value of wool exported from Australia, in the last financial year, by approximately £110,000,000.

In recent years, a great stimulus has been given to the whole industry in Canada, with the result that its mineral resources are being discovered and developed at a pace not equalled by any other country. True, the Canadians are fortunate in having the great Mond nickel mines, which are almost the sole source of supply of nickel for the free world. Canadian discoveries of uranium in the last two years, particularly in the Blind River area of Ontario, have verged on the fabulous. I was most interested to read recently that evidence given before a Canadian parliamentary committee indicated that Canada would soon be producing uranium of an annual value of 300,000,000 dollars when all mines under contract to the Combined Development Agency of the Atomic Energy Commission come into production. If we add that figure to those I have already given, the effect on Canada’s economy will be readily apparent.

Apart from these great ventures in nickel and uranium mining, there is tremendous activity in other mining throughout Canada, over a wide range of minerals. Much of the incentive for this activity has been given by Canadian taxation policy in respect of mining. The Canadian Government has made generous concessions in relation to pre-production expenditure, actual operation expenses, and depletion. Speaking of depletion, the Canadians recognize that mines are difficult and costly to find, and that every mine has a limit on its life.

Once it comes into production it becomes a wasting asset. Canadian taxation laws have full regard to this fact, but most important of all, the Canadian Government has amended its taxation laws to give total exemption from income tax to the operators of new mines during the first three years of their operation, lt is obvious that the results of Canada’s mining successes have not been contained within the industry. As Mr. Dickinson has pointed out, taxation revenue has increased enormously, new jobs have been found, and new businesses and, indeed, new industries established. In addition, I understand that tremendously increased business has been given to transport by road, rail and sea. The great success of the Canadian mining industry has given impetus and encouragement throughout the Canadian economy.

In Australia, mining was one of the very first industries to become firmly established. To it we owe the great influx of population to this country in the fifties, sixties and seventies of the last century. One of the most depressing features is that most of our successful mining ventures were established 50 years ago, and in many cases even before that. One can point to Kalgoorlie, Mount Morgan, Mount Isa, Broken Hill, Mount Lyell and a number of other mining fields of less importance than those I . have mentioned, which were all established before the turn of the century. While we can show increased production over the whole field of mining, and greater activity in relation to some minerals, the overall picture reveals that fewer discoveries of mineral deposits are being made, and that the number of small producers in almost every kind of metalliferous mining is declining. The production of gold and tin is definitely diminishing, and there are fewer facilities, such as treatment plants and batteries, to which the small producer can sell his ore.

The greatest difficulty usually confronting the small operator is his isolation, which involves many hardships and difficulties in a country like Australia. Unless his mine is immediately shown to be rich, he struggles along on limited means, until distance, time, and physical difficulties beat him, and the enterprise perishes. On the other hand, if the mine develops it must, by virtue of its isolation, provide the ordinary everyday amenities for its labour force, install its Own power, and provide its own water and transport facilities. So it becomes a costly operation, which can be undertaken only by an enterprise with considerable financial backing.

However, I must say that the situation in Australia is by no means as depressing as might be assumed from the picture I have painted. Very great developments in some of the older mining ventures are afoot, some of our newer mining ventures are having great successes, and some most significant new discoveries have been made. But there is no doubt - this is an accepted fact in mining circles - that the whole of the mining industry of Australia needs a new and tremendous fillip. It needs to be stirred out of the lethargy in which it has lain for so many years. The Commonwealth and State governments can all render tremendous help in this respect.

Here let me pay tribute to the Bureau of Mineral Resources. The one concern of the bureau is the development of Australia’s mineral resources. It provides specialist advice and services to the industry as a whole, through its geological and geophysical surveys. It provides the basic information necessary to encourage the exploration and development of mineral deposits. The bureau sends its teams out into the field, and it is not unusual, as I should imagine the honorable member for Kalgoorlie (Mr. H. V. Johnson) can confirm, to find them conducting tests and surveys in isolated parts of Australia. It is pleasing to note that the bureau has the latest airborne magnetometer and scintillograph equipment for its surveys. One could speak at great length of the wonderful work of the bureau. Suffice it for me to say here that this country stands deeply in the debt of the men who make up this most efficient institution. The Commonwealth Scientific and Industrial Research Organization has also made great contributions in the field of mining.

What can governments, both Commonwealth and State, do to give the impetus that we so urgently need in mining? I suggest that they can help tremendously by expanding government assistance in the field of geological mapping and geophysical surveys.

The surveys which are undertaken by the Bureau of Mineral Resources are splendid, but it must be borne in mind that they provide only indications which may warrant intensive prospecting on the ground. This work involves considerable expenditure, and the exploration may or may not prove fruitful. Mining has always been a hazardous business, but if sufficient sustained prospecting is done we are assured of successes, some great, some modest. Much productive work has yet to be undertaken around old sites, which were successful in the past when worked with primitive, outmoded methods, but which were abandoned when the rich surface material was worked out, or when the price of the mineral fell to the point where mining it became no longer profitable. Tn some instances known to me, exploration below the surface by modern methods has revealed rich and extensive deposits the presence of which was not suspected in the old days, and I think it is generally conceded that, over the years, most surface indications throughout Australia have been superficially investigated. Therefore, most of our future prospecting must be done beneath the surface, and this is expensive and requires considerable capital. I doubt whether, in the last year, Australia has done one-tenth of the drilling which has been done in Canada, excluding the drilling done in prospecting for oil in each country. With these observations in mind, I recommend the subsidizing of preliminary test drilling in promising, approved ventures as being the way in which the Government can best assist prospecting and exploration.

The Government can perhaps assist also by subsidizing transport costs in outlying regions. Many useful ventures are located in districts which involve great transport difficulties. For example, the Alligator River uranium fields rely upon the road which leads down through the mountains to Goodparla and Pine Creek, where it joins the great north-south highway. This road is in extremely bad condition, and is virtually impassable in the wet. Another example is- the railway to Mount Isa, in western Queensland, which is in a very poor condition, and does not provide a good service. Indeed, towards the end of last year, coal deliveries to Mount Isa could not keep pace with consumption at the mine, with the result that the great copper and lead smelters were forced to close down for many months. I understand that certain labour difficulties were also involved, but there is no doubt that the capacity and efficiency of this railway must be improved if Mount Isa’s developmental programme is to proceed. The great Mary Kathleen uranium deposits are situated midway between Mount Isa and Cloncurry, and the field is entirely dependent on the road between those two centres. As we all know, that road is one of the worst in Australia, having become famous, or infamous, whichever way one looks at it, in the last two or three years, when it has become known as the horror stretch. Big developments have now commenced on the Mary Kathleen field. This road is essential to development. I am delighted to learn that the Acting Prime Minister has been in conference with the Premier of Queensland regarding improvements to the railway from Townsville to Mount Isa, and the road between Cloncurry and Mount Isa. As an illustration of the condition of this railway, let me say that in company with the honorable member for Braddon (Mr. Luck) and the honorable member for Mackellar (Mr. Wentworth), not very long ago, I entrained at Mount Isa after a tour of the Territory and western Queensland. On the 600 mile trip by rail from Mount Isa to Townsville, the train had not gone more than a mile before the engine and the tender ran off the rails, involving a delay of a number of hours while they were put back.

I am afraid that in the last few remarks I picked out great major ventures when referring to the assistance which could be given by way of subsidy in connexion with the great transport costs incurred by isolated mines. I have given examples involving Mount Isa, Mary Kathleen and the Alligator River uranium fields. That was not my intention. . I really meant to place the emphasis on the transport difficulties which are experienced by small mines and small operators when they are working in those isolated areas.

I commend to the attention of the Government the provision of repayable financial assistance - in other words, loans -in the early stages of development of new and promising mines. There is nothing novel in this course. It is done in a number of countries overseas. I am sure that such action would be of tremendous help in the early setting up period of a new mine.

Most important of all, perhaps, I strongly commend to the Government a broad liberalization of our taxation policy as applied to the mining industry. In all fairness, it must be conceded that over the past twenty years the financial assistance, both direct and indirect, which has been given to the industry by the Government has increased considerably. What is urgently needed is a complete review of taxation and financial assistance as at present given to the industry and the adoption of an overall policy deliberately aimed at stimulating and expanding mining in general. 1 recommend to the Government a system of taxation which presently obtains in Canada. When these principles are clearly established, then, and then only, will we see this great impetus which must be given to this industry. It will take some political courage and a long-sighted attitude but if governments can help achieve even half the results achieved by Canada we <hall be doing very well indeed.

A great part of Australia is of a barren and semi-barren nature. It was interesting to hear the Minister for Territories (Mr. Hasluck) in this committee, last week, talking of the development of the Northern Territory. We heard him say that with all possible development in grazing and agriculture these industries would never support a large number of people in this area. lt is mining which will bring population to the barren areas of Western Australia, the north of South Australia, the Territory and western Queensland. I believe, with many others, that it is in the development of their undoubtedly rich mineral resources that the future of these areas lies.

I congratulate the Treasurer upon the introduction of a record number of budgets. This one will not be his last. I particularly congratulate him on his reference to our mineral potential. With a great and continually increasing world demand for minerals, the promotion of our mineral resources is something that we should advance with all the energy of which we are capable. To my mind, it offers outstandingly the quickest and greatest contribution to the urgently needed increase in our export income.

Mr H V JOHNSON:
KALGOORLIE, WESTERN AUSTRALIA · ALP

– I think that the kindest words one can say in regard to the budget that this’ committee has been discussing for the last two weeks is that it is uninspiring, offers no incentive and does, in effect, neglect the Government’s responsibility in many ways to certain sections of the community. I have been in this Parliament for a number of years now and have consistently advocated, and endeavoured to influence the Govern ment in the development of that large portion of our country in Western Australia that extends beyond the 26th parallel. There is no limit to the great possibilities that exist there, but in the present circumstances the nature of the development necessary to bring it into production is recognized by all sections as being beyond the resources of the State Government. As a consequence, it becomes a national undertaking and is entitled to receive the sympathetic consideration of this National Government.

I also find that there is no provision in the budget for a developmental plan, despite the fact that representations have been made, particularly in the last two years, from all sections of the community to this Government with a view to enlisting its sympathy and support. These representations to the Government have not been confined to any one section of the States. Allparty committees from the Western Australian Parliament came here in an endeavour to impress the Treasurer (Sir Arthur Fadden) and the Government with the urgent necessity for the population and development of that part of the country which is considered to be, in its present state, a menace not only to Western Australia but to the whole Commonwealth. Arguments of all kinds have been used and evidence of all kinds has been produced. Volumes of reports have been tabled in the precincts of this Parliament setting out the position of the north-west of Australia. In addition to parliamentary representations, representatives from Western Australia including Liberal party, Australian Country party and Labour party representatives, have tried to make out a case to persuade the Treasurer to try to get the necessary finance for this urgent job.

I want to compliment the honorable member for Higinbotham (Mr. Timson) on the case that he has put up for the mining industry. Obviously, he has given some study to the report that has been circulated in connexion with the position confronting the mining industry to-day. I want to couple these two factors. I point out that if we are to develop the north of this country then there are possibilities, not only in mining, but in agricultural development. The Ord and the Fitzroy rivers in the Kimberleys of Western Australia, with its fertile areas, offer a possibility of great production in foodstuffs of practically every kind. If iiic arguments adduced to this Government for a tax-free period in that area north of the 26th parallel had been agreed to, it would not have cost the Commonwealth much money over the years, provided the tax-free period had been agreed to on a 60-40 basis. By that, I mean that 60 per cent, of the profits should be ploughed back into industry over a certain period. Such an arrangement would not have cost the Commonwealth very much, but would have tended to open up the country and develop and populate it. The Government, by its taxation methods in latter years, would have been repaid tenfold for the concession that had been granted over that period. But the Treasurer made no reference in his budget speech to all the arguments that have been advanced in support of the proposal.

The northern part of Western Australia is stagnant. Its population is smaller than it was 40 or 50 years ago. The people who have exploited the area are to some degree responsible for this. If 1 may use an expression that was used by Professor Marcus Oliphant and. in this chamber, by no less a person than the Prime Minister (Mr. Menzies), I would say that the stock have eaten the guts out of the country. That is a complete and proper explanation of what has occurred. The natural resources of the area have been exploited to such a degree, without proper development and the provision of additional water supplies, fencing, and other improvements, that the land adjacent to the natural waterholes has been eaten out and will not recover for many years. As a consequence of these and other factors, the population of the north has diminished alarmingly. We all, and I particularly, want that country to be developed.

The honorable member for Higinbotham suggested that the Government should adopt the- Canadian policy. The Treasurer, who is also Acting Prime Minister, in reply to a question asked this morning by my colleague, the honorable member for Darling (Mr. Clark), said that the Canadian Government’s policy in some instances is not as beneficial as is this Government’s policy towards the mining industry in the north of Western Australia. I cannot agree. Mr. S. B. Dickinson, the South Australian Director of Mines, has reported on the development of the base metal and goldmining industries, and for the benefit of honorable members I should like to read the following paragraphs of his very valuable report: - -

Overseas experience, particularly in Canada, clearly shows that the taxation provision of a tax-free period of three years on initial production for any new mine is the main reason for the amazing developments in Canadian mining in recent years. In the last ten years it has led to the investment of a total of two billion dollars in new properties. The rate of discovery and development of new properties is still increasing.

There is little doubt that once the effect of this provision in Canadian mining progress is clearly recognized and applied to Australian mining, a similar spectacular growth can be expected.

The Canadians have encouraged the development and settling of new areas by diamond-drilling and other prospecting methods, and by the provision of facilities for the treatment of ore.

The quantity and quality of the base metals available in the Pilbarra area in Western Australia are practically unknown. The district is rich in base metals of almost every description. Only the surface of the deposits has been scratched and little of the wealth hidden beneath has been reached. The only way to test and develop these deposits is to undertake diamond-drilling investigations. These are expensive, but I remind honorable members that we are dealing with the country’s assets, and that it is our job to encourage development of these areas. If we do so, we may see enterprises such as those at Broken Hill, Mount Isa and Mary Kathleen, in eastern Australia, developed in Western Australia. We must try to exploit the wealth in the north-west in the interests of the nation. No venture encourages people to settle and develop new area more quickly than mining does. A substantial influx of population follows the establishment of a mine. This is exemplified by the asbestos-mining industry at

Wittenoom Gorge, which is one of the most isolated centres in the north. It wa: a battle to establish the mine on a sound basis, but the fight has been won, and it now supports a community of more than 800 people who enjoy all the amenities of living such as good housing, good hotels and good recreation facilities, which are available to people in the cities. Abou’ twelve or fourteen years ago only a few aborigines inhabited the area. That is the way to populate our north, but we must encourage the people to go there.

Mr. Kelly, the Western Australian Minister for Mines, is at present abroad trying to obtain overseas capital for the development of the mining industry. Nothing would give greater encouragement to overseas investors to bring their capital to Australia promptly than would a decision by this Government to exempt from taxation for a period of three years income derived from mining ventures in this large area of unexplored country in the north. Such a decision would greatly assist Mr. Kelly’s mission.

Mr Duthie:

– Does he intend to go to Canada?

Mr H V JOHNSON:
KALGOORLIE, WESTERN AUSTRALIA · ALP

– He intends to visit many countries, particularly Canada, because he knows that the Canadian Government has assisted the mining industry in Canada very materially.

I turn now to the gold-mining industry. The price of gold has not been increased since the £1 was devalued in 1948. The meagre bounty that this Government has given the industry over the last few years is, I admit, of some value, but it is not enough to put this great industry on a proper footing. The gold-mining industry is failing, because, like most other industries, it faces ever-increasing costs. As a consequence, the present bounty is not sufficient to encourage the industry to expand as it should. What provision has been made in the budget in response to the many appeals to the Government to do something to develop the great northern portion of the continent? The zone allowances in A and B zones are to be increased. These allowances were introduced by the Labour Government in 1945 as the fore-runners of ? policy that it was hoped to develop with experience. Following the increase of the basic wage between 1945 and 1947, th. Labour Government increased the allowances in 1947. They have not been increased since, in spite of representations made in the Parliament every year pointing out that increases were justified. Only now have the allowances been increased from £120 to £180 in zone B and from £20 to £30 in zone A. That is an insult to the intelligence of the people of the north, and to the Government of Western Australia. It is also most insulting to the members of the private committee who worked so hard and expended so much of their own time and money on the matter. They even came to Canberra to stress to the responsible Ministers the necessity for some real and genuine help for the people of the north of Western Australia. Those men must be terribly disappointed to realize that, after giving two years of their own time, and expending much of their own money, the Government has made only a miserable adjustment of the zone allowance in respect of those taxpayers who live in remote places. As the blackfellow said. “ You can talk until you are black in the face and they won’t believe you “. In other words, the Minister does not give very serious consideration to our representations. Everything necessary to show the possibilities that exist in that portion of the country was put before the Treasurer and his officials, but they failed even to give courteous replies to those representations. So, the Ord River area is dismissed, the Fitzroy River area is dismissed, and we enter another year without any prospect of real development in the north.

Even at this eleventh hour, the Treasurer should review the incidence of taxation with a view to developing mining in the north of Western Australia. We all know that there is a possibility of great mineral wealth being won in that area, and the surface of the mineral deposits there have only been scratched. Deep boring is needed properly to develop mining there, and to find out exactly the nature of the minerals in that area. The Pilbarra district is rich in all kinds of metal ores, and if we do not do something about that country, we cannot reasonably object if other nations want to do something about it.

I now desire to detail the penalties suffered by people who are living in outback places. , According to the budget, the radio listener’s licence-fee is to be increased. That increase will apply to people who get very few good radio programmes because of the difficulty of reception, particularly on the east Murchison gold-field and in the northwest of Western Australia, lt is only in the evening that the people living in those areas can get reasonable reception of radio programmes, and yet they will be required to pay the increased licence-fees. From time to time, I have made representations to the Government with a view to having the transmission strength increased by the building of booster stations so that the people who live in remote areas will be able to properly receive radio programmes. These people live far away from cities, under arduous conditions and with few of the amenities that city dwellers enjoy. It is even difficult for them to hear the news broadcasts and other important programmes, and yet they are required to pay the full listener’s licence-fee.

The Kalgoorlie listeners depend on regional stations, but to date they have not been of much value. I have appealed on a number of occasions to the Government to rectify this position, and I believe that the new Postmaster-General (Mr. Davidson) may do something about it. Anyhow, the Kalgoorlie people hope that he will. The people who live in isolated areas have to use the telegraph and the telephone much more than city people, because it is their only means of quick communication.

Mr Leslie:

– And the telegraph and telephone are very important to them.

Mr H V JOHNSON:
KALGOORLIE, WESTERN AUSTRALIA · ALP

– That is so, and yet they are to be saddled with increased charges. The people who live in the areas I have mentioned, should be exempt from the payment of the increased radio listener’s licence-fee. Not long ago I mentioned that matter when asking the Postmaster-General a question and I hope that he will make provision for the exemption of the people outback to compensate them for the disabilities they suffer through living in isolated areas.

Another matter of great importance is the unemployment that at present exists in Western Australia. I have heard questions asked in this Parliament about that matter, and I have heard answers to some of them given by the Prime Minister (Mr. Menzies). I have also heard correspondence read in the House about the unemployment position in Western Australia. It is my opinion that additional loan moneys would have been made available to the Western Australian Government if it had not been for the interference of some honorable members of this House who went back to Western Australia and tattled about what was happening here, and tried to discredit the best government that Western Australia has had for mamyears.

Mr Leslie:

– That is a matter that can be disputed.

Mr H V JOHNSON:
KALGOORLIE, WESTERN AUSTRALIA · ALP

– All things can be disputed, but I know, and the people know, that Western Australia now has one of the best governments that it has had for a number of years. From my own knowledge, gained by travelling around in that State, I know that unemployment is a growing menace, and the sooner that the Commonwealth realizes it and comes to Western Australia’s rescue with an additional loan for works which have already been planned to absorb the unemployed, the better it will be not only for this Government but also for the country as a whole.

Unemployment is one of the worst features of life, and we do not want to go back to the black, nasty days that some of us went through in hard times previously. Unless unemployment is stopped quickly, it grows overnight. Consequently, it should be nipped in the bud. I appeal to the Government to discard all political jealousies as between governments, look at this matter from a Commonwealth viewpoint and remedy the wretched position that at present exists in Western Australia.

I do not intend to resume my seat without making an appeal on behalf of the old pioneers of this country who have done so much for it. This Government and the country itself owe those people sufficient to keep them in reasonable comfort during their declining years. Consider the single pensioner who has no home and who ha*, battled about in the bush all his life; who has carried his swag from centre to centre but who, unfortunately, finds himself to-day in need of a pension. He has to pay rent and has to pay for washing and other services because his physical condition now is such that he is not able to carry out those duties for himself. I know many people who are in that position. Since 1951 this Government has spent a grand total of £1,098,750,000 on defence.

Mr Griffiths:

– Have we got value for it?

Mr H V JOHNSON:
KALGOORLIE, WESTERN AUSTRALIA · ALP

– That is what I want to know. Have we got value for that expenditure? I have seen press criticism of the Minister for Defence (Sir Philip McBride) and of the Government in respect of the vast amount of money expended on defence. The fact is that while the Government is spending those huge sums, age pensioners have been left without adequate assistance in their declining years. Surely, from all the hundreds of millions of pounds that this Government handles every year, something more could be found for the pensioners. It would be possible to deduct something from a number of votes to make a total sufficient to give further assistance to age pensioners, who are entitled to such assistance. The Government is wasting a lot of money on unnecessary overhead charges. We. as members of Parliament, increased our own salaries. We claimed we were entitled to do so in view of the increase of costs since the level of salaries was previously established. Why should not the same consideration apply to the age pensioners?

Last week, the honorable member for Eden-Monaro (Mr. Allan Fraser) made an eloquent appeal on behalf of the pensioners. He supported his plea with facts and figures, and claimed that the Government had failed to discharge its responsibilities to the pensioners. 1 leave the matter at that.

Mr HOWSON:
Fawkner

.- Like many other honorable members, I was most interested in the speech of the honorable member for Kalgoorlie (Mr. H. V. Johnson), and in the problems of people who live in the difficult areas of north-west Australia. I am glad to see that the Government has recognized the needs of those people in the budget by increasing the income tax allowance in respect of zone A from £120 to £180. Admittedly, the need of the people in those areas is still great, but at. any rate the Government has recognized it, and has done something to help them.

To-night, I wish to speak on matters of wider import that were covered in the budget speech. I believe that in the light of the budget as a whole we should consider the continuity of economic policy which has been developed by this Government over the last five years. We should do so particularly now when we are trying to grapple with three major problems - the control of inflation, the correction of our balance of payments position, and the development of this Commonwealth as rapidly as possible.

The first point that many critics have raised about inflation is that we should do all in our power to curtail government expenditure. I think the remarks of the honorable member for Angas (Mr. Downer) last night covered that point very well, and there is no need for me to deal with it. However, I believe that there are ways in which the State governments can play their part by watching their expenditure carefully. In spite of the remarks of the honorable member for Kalgoorlie, the Western Australian Government, at any rate, could do more to help by examining its commitments prudently, in order to put them in line with the budget, instead of over-spending and then coming to the Commonwealth and asking us to pay its bills.

We are spending, at the moment, at least. 25 per cent, of the national income on development. By any standard, particularly if we compare that effort with that of any other country in the Western world, we are doing more than enough to develop this country at present. We are putting just as much as we can into development. But if we are to find 25 per cent, of the national income for investment in our future we have to see that our savings are commensurate with that expenditure. As has already been stressed by Senator Laught in another place, and by the honorable member for Sturt (Mr. Wilson), there are many ways in which we might promote an increase of saving. The first is by the introduction of a system of compulsory savings, and in this respect the Government, in its interim budget in March, aimed to create the right environment for saving, lt decided that it was necessary to reduce the consumption of luxury goods, and achieved a reduction by imposing additional sales tax on various items. It is interesting to see that the results of that policy are beginning to show. In that respect I cite, first, registrations of new private motor cars which, for the half-year from January to June, 1955, numbered 81,000, but which. lor the half-year from January to June, 1956, had fallen to 69,000 - a reduction of about 15 per cent. Similarly, there was a reduction in the consumption of beer, as can be seen by the production figures for this commodity. In the April to June quarter of 1955 no fewer than 52,300,000 gallons of beer were produced in Australia, whereas in the same quarter of this year the production was reduced to 46,900,000 gallons - a reduction of 10 per cent.

Mr Leslie:

– The weather was colder.

Mr HOWSON:

– Meteorological data show that in that quarter the weather was the same this year as it was last year. Outstanding balances in respect of hirepurchase agreements have at least ceased to expand at the rapid rate at which they had been expanding since June, 1952. In June, 1955, outstanding hire-purchase balances amounted to more than £180,000,000. By December, 1955, they had risen to nearly £208,000,000. Between December, 1955, and June, 1956, the outstanding balances had increased by only £10,000 in a total of £207,000,000- a very small increase. We can, therefore, claim justly that the previously steady increase of outstanding balances in respect of hirepurchase agreements has been virtually controlled.

We can also say from the latest statistics on retail sales that the economy, as regards that aspect of it, is at least levelling out. The compulsory reduction of luxury consumption is having an effect.

Turning to the more positive angle of the means by which voluntary savings in the community can be increased, we should, first of all, look at the performance of the Government in the loan market. We can see then that, by a policy of increasing interest rates, it has been able to raise more money from the loan market to finance necessary capital expenditure. I am glad to see that, as recommended both by the honorable member for Mitchell (Mr. Wheeler) and by me during the debate on this subject in March last, the Government instituted short-term loans. The success of investment in those loans has been most marked and I hope that, in the coming year, this policy will be continued and expanded.

Honorable members on the Opposition side have made play on the fact that the Government has budgeted for a surplus of £108,000,000 to assist it in the conversion of Commonwealth loans that will fall due in the next twelve months. They have said that that surplus is too high. I ask Opposition members: If we aim to raise this money by loans instead of by taxes, to what extent would the interest rate have to be increased to enable us to get the necessary money? We might have the interest rate increased from 5 per cent, to 6 per cent, or, possibly, to 6£ per cent., and then the arguments put forward against the rise in the interest rate in March would have greater weight. Surely we have to maintain a balance between what we can expect from the loan market and what we have to meet from taxes.

Sitting suspended from 5.58 to 8 p.m.

Mr HOWSON:

– Having dealt, to some extent, with government savings, I should like to turn now to the question of savings by the people. There are some very interesting statistics relating to deposits in savings banks. At the risk of wearying the committee, I shall take them State by State. In July, 1955, the average savings per head of population in New South Wales were £103.6, and by June, 1956, they had grown to £110.1. In New South Wales, the savings per head of population rose by £6.5 in that period of twelve months. In Victoria, they rose from £146 to £150 - a growth of £4 per head of population. In Queensland, they rose from £95.1 to £98.9 - a growth of £3.8. In South Australia, there was a slight diminution from £162.9 to £162.1. There was a fall there of £0.8 per head. In Western Australia, the savings rose from £83 to £85.8 per head - a growth of 2.8. In Tasmania, there was a rise of £2; savings rose from £115.1 to £117,1 per head. In the Australian Capital Territory and the Northern Territory, there was a rise from £88.5 to £91.8 - a growth of £3.3. Throughout the Commonwealth, the average savings per head of population in that year rose from £118.1 to £122.6 - a growth of £4.5.

There was a general increase in savings throughout the Commonwealth, except in South Australia. The interesting fact is that the greatest growth of savings occurred in New South Wales, Victoria and Queensland. Curiously enough, those are the States in which, during this year, there has been a growth of competition among savings banks. The Australia and New Zealand Bank and the Bank of New South Wales started to operate savings banks in those States in competition with the Commonwealth Savings Bank. As a result, there has been a tremendous increase of savings there.

Mr Thompson:

– A transfer from one account to another.

Mr HOWSON:

– There has been a general increase of savings, not a transfer from one bank to others. It would seem that where there is competition, whore organizations set out to stimulate saving by the people, there is a general increase of savings. That tempts me to believe that if we provide incentives and the right environment for saving in Australia, the people will respond to such stimulus and the level of savings will rise. 1 was interested to read some remarks that were made in another place by Senator Laught. He proposed certain ways in which the Commonwealth could encourage savings. He suggested that, from now on, people who invest in Commonwealth loans should be permitted to use their securities for the payment of probate duty. A system of that kind operated in this country until about fifteen years ago. Due, possibly, to errors in the regulations, the system was misused, but I think that, with proper regulations, such a system could provide a significant incentive to people to invest in Commonwealth loans.

As honorable members know, interest on government loans attracts a rebate of 2s. in the £1 for income tax purposes. Senator Laught has suggested a variable rate, of rebate - from 2s. in the £.1 on 5 per cent, securities up to, possibly, 3s. 9d. in the £1 on 3i per cent, securities. He has suggested also that we have another look at the desirability of variable interest rates on savings up to, say, a total of £1,000. Such a system is in operation in certain ‘other countries now.

Before the suspension of the sitting, I referred to the success of the short-term loans launched by the Government earlier this year; Senator Laught has suggested some ways, in which the Commonwealth could give a lead in encouraging saving by investment in government loans, and I commend them to the Government for what they are worth. I believe that the Government has given a lead by raising from £200 to £300 the maximum deduction for income tax purposes in respect of premiums on life insurance policies. I am certain that that concession will encourage people to save their money by investing it in life insurance policies, rather than to; spend it on day to day luxuries. I believe that the Commonwealth and State Housing Agreement, which we discussed last June, will encourage people to invest in co- operative housing societies. The money made available for housing by the Government will be augmented by the savings of the people who join those societies. The results of the savings drive during the last six months show that the people of this country will respond to stimulus and incentive - that they will save their money today in order to secure the development of Australia to-morrow.

Turning again to the Government’s measures to retard inflation, I should like to refer to the success of the credit squeeze operated through the central bank since last September. There has been a slight falling back of the rate of capital investment by private enterprise in the last six months. I believe that business organizations, and possibly State governments also, are being forced to examine each project very closely in order to ensure that the highest priority shall be given to those projects that are most necessary and that money shall be invested only in projects that are really essential to the continued development of Australia.

I welcome the steps taken by the Government to make its own enterprises pay their way, particularly the post office. I believe that, if governments engage in business enterprises, they should make them as efficient as private enterprises. If the post office is losing money, it is right that charges should be raised and that the people who use the services should pay for them. I was glad to hear last night from the Minister for External Affairs (Mr. Casey) that the New South Wales Government, at last, is taking steps to make some of its enterprises pay their way. I hope that other States, particularly Victoria, will endeavour to make their State enterprises especially their railways, pay their way in the years to come.

Having examined the Government’s measures for the control of inflation, it is interesting to see that there is still an underlying confidence in the future of this country, lt is shown by the continued steady expansion of base commodities, the rate at which the production of electricity has continued to rise steadily throughout this difficult period, and also by the rate at which steel production continued to rise throughout last year. Again, it is demonstrated by the way in which essential capital works are gaining ground over minor works that have been retarded. Labour has been transferred to those works and they are now being completed ahead of schedule. No panic has occurred in this change-over, no major unemployment has occurred, but, instead, all the really essential works are being completed more rapidly. One has only to read the annual report of the Broken Hill Proprietary Company Limited to see how steel production in this country is to be developed more rapidly than was at first thought possible. Then, honorable members will remember that the Treasurer said in his speech that the Snowy Mountains project will be completed ahead of schedule because more labour is available as a result of the measures that have been taken. So much money will not be tied up during a long period of development since the project will be completed more quickly and put into use at an earlier date.

Speaking generally on this subject, on the home front there are signs that the Government’s policy is having the desired result. The consumption of luxuries is being reduced, the volume of savings is gradually rising, the degree of investment is becoming more realistic and completion dates are being brought forward. The housing position, although a slight drop occurred towards the end of last financial year, is again showing signs of maintaining a steady level of 75,000 completed houses a year. Against that progress all the Opposition can say at the moment is that instead of being more prudent in our expenditure we should spend more and find the requisite money from company profits. Those profits, directly or indirectly, have paid for most of the investment that is taking place in this country to-day. The Opposition says we should be spending more money on houses, social services and increased wages. What every citizen to-day really desires above everything else is to see inflation controlled. He desires that, possibly more than daytoday wage increases. It is evident from this debate that the only policy that is really designed to deal with this matter determinedly and realistically is that put forward by the Menzies Government. If State governments would take a lead from Victoria and come into line with the wage policy introduced by the Federal Government, I feel certain that the control of inflation throughout Australia would be well on the way to being realized.

I turn now to certain important details in the budget. I agree with the Opposition that a case does exist for an increase in pensions. In my own electorate of Fawkner many people need assistance. However, I believe, as we heard last night from the honorable member for Bradfield (Mr. Turner), that we should look particularly at the special cases of people who live in rented rooms - people who live alone - rather than married couples. I could cite instances in my own electorate. In the coming year we should try to help those people and I hope the Government will see its way clear in due course, when it has overcome its major problems, to look into these special cases. I hope also that the Government will have a look at the problem of depreciation of business machinery. 1 am glad to see in the budget that the Government has dealt with the first recommendation of the Hulme committee’s report and has taken positive means to deal with depreciation as a result of damage caused by fire. I hope that is just the first step in the implementation of that report. I have already referred to the importance of zone A and zone B, those difficult areas in the north of Australia, and also in the southwest of Tasmania, which are mentioned in this budget. I hope that possibly King Island and the Furneaux Group of islands in Bass Strait, referred to by the honorable member for Braddon (Mr. Luck), will receive special consideration, possibly later this session.

I should like finally to deal with the other main questions in the budget. Along with the problem of inflation is that of the balance of payments, and, as set out in the budget, that subject divides itself into three parts. First of all, is the problem of imports. We know that it has been necessary this year to control imports. There is no need at the moment to reiterate the reasons that have brought about this control. We all realize now that import controls are likely to be with us for some months ahead. I hope that will not be the case, but if it is, business enterprises need to be told of the firm principles that should be established in the issuing of import licences so that they can plan their future in line with positive government policy. In this regard, those industries that can aid our export trade should receive priority for import licences. 1 know that the Government is giving further consideration to this important subject at the moment, and I hope it will be able to inform the people of this Commonwealth of the principles on which these import licences are being issued.

I referred to exports in a speech 1 made in March, and to the need for increasing incentives for businesses engaged in the export trade. Only the other day, the Minister for Trade (Mr. McEwen) referred to certain businesses that have been indulging in an export trade on the basis of manufacturing costs. Without being technical, 1 think I can show honorable members how these businesses, with enough goods possibly for one shift - manufacturing only for the home market - can, by expanding into the export trade, spread their overhead and manufacture sufficient goods to fill a second shift. They can export portion of their production at the cost of manufacture and, at the same time, make a greater profit over-all. That is the way in which the United Kingdom built up its export trade, by using its surplus production for export at no, or very little, profit. If we are to develop our export trade, we shall have to adopt a similar attitude towards the export market.

In conclusion, I firmly believe that the two matters which are important above all others are the control of inflation and the correction of our balance of payments. The Government has taken the right measures to deal with these vital problems. At the same time, it has set a firm course to continue the great development of this country which it started in 1949. We can see in this budget that its attitude towards immigration is to be continued in an orderly way on the basis of an annual intake of 1 per cent, of the population. The Government’s attitude is also shown by the encouragement it gives to the continued rate of high capital investment. All this has meant that the Government has had to ask the people of Australia to reduce their present consumption of day-to-day luxuries in order to set aside funds for investment in Australia’s future. The results of our policy since March show that this course has been accepted willingly by the majority of the community.

The Government has demonstrated that it has a dynamic faith in our future. This same faith is shared by the majority of all true Australians. This budget is another example of faith in that future in that it has. as its main object the promotion of the necessary environment for our development to continue in a planned and ordered fashion. We all want to see the day when controls can be relaxed, pensions raised, and the other desirable things advocated by the Opposition brought to pass. However, I believe that this budget sets the only course by which these ideals can eventually be achieved. I, therefore, commend the Government and hope that the same faith in our future which it has demonstrated will continue to be shared by the people of Australia.

Mr CLAREY:
Bendigo

.- I agree with the honorable member for Fawkner (Mr. Howson) that the problem of inflation must be tackled and solved by the people of Australia. I do not agree however that the Menzies-Fadden Government has either tackled it or solved it. When one is dealing with a budget one remembers that it gives an opportunity to honorable members to debate the general economic state of the nation. It also indicates to Parliament, and to the people, the measures which the Government proposes to take in order to stabilize the economic position and correct such unbalances as may exist.

It is interesting, also, to bear in mind that this budget was presented after a conference between the Acting Prime Minister (Sir Arthur Fadden) and the State Premiers, at which the question of the action to be taken by either the Commonwealth or the States to halt inflation was discussed. The only major suggestion put forward by this Government for dealing with inflation was that the States should, by legislation or by such other means as they could adopt, prevent further wage adjustments. That was the Government’s battle cry - “ Abolish wage adjustment”, the suggestion being that if wage adjustment ended there might be some chance of controlling the inflationary trend.

The same idea is raised by the Treasurer in his budget speech, when he says -

As I have said, it is partly the delayed result of earlier pressures but it is certainly being accentuated by factors such as the automatic adjustment of wage rates under some State wage-fixing systems. It was to eliminate that factor, which is having widespread harmful effects - not least on the interests of wage-earners themselves - that the Government proposed to the States concerned that they should abandon the system, this as the first step to achieving a more, orderly and rational system of wage adjustment throughout Australia.

The Treasurer mentioned many other factors which contribute to inflation, but the budget is significantly silent on the question of how the Government proposes to deal with those factors, all of importance and substance.

I believe that the abolition of wage adjustment is wrong, is detrimental to living standards, and cannot stop the inflationary trend. I further submit that this is demonstrated, both by the history of wages and the history of prices since the arbitration court was established in Australia. The first thing that has to be remembered about the adjustment system is that wages do not, and cannot, rise until there has first been a rise in prices. Similarly, once a certain wage standard has been fixed, it cannot fall until there has first been a fall in prices. The history of wage adjustment, and its relationship to prices, is well tabulated and documented in the bulletins, covering a period of 32 years, which are issued by the Commonwealth Government. During those years we have had periods of inflation and periods of deflation. One must watch the whole trend of both prices and wages to test the truth of the Government’s claim that the control of wages, through the abolition of adjustments, can bring about a reduction in prices.

I would first refer honorable members to “ Labour Report “, a booklet issued by the Commonwealth Statistician, in which this very question of wages and prices is extensively examined. I refer honorable members to page 14 of report No. 42, which was published in 1953. There, one finds an account of the periods of economic stress, and the percentage increase in prices. Elsewhere one finds the history of wages. In the period from the beginning of World

War I. to the end of World War I., prices rose by 32 per cent. Between November, 1918, and November, 1920, prices rose by a further 29 per cent., making a total increase of 61 per cent, since the beginning of World War I.

Some honorable members, especially those representing country electorates, will doubtless recall the recession that took place at the end of 1920, and continued until the beginning of 1922. It was our first taste of what was to happen in later years, because there was at that stage a fall in the prices of primary products. Wheat and wool were substantially affected. This resulted in a 16 per cent, decline in prices over a period of two years though, at the beginning of the period, wages were actually rising. One can demonstrate how the same thing has happened at later stages. Wages have risen but, because of other factors, prices have begun to fall. The result has been, of course, that wages have then begun to fall in their turn.

One may take the period from 1929 to 1933, known as the depression, when we reached the very trough of our troubles. In those years prices fell by 22 per cent., but wages fell by 33 per cent. At the end of 1929 wages were still rising because an automatic adjustment was operating. Overseas prices commenced to fall. This affected our export income, and in a little more than two years prices fell by 22 per cent. I repeat, however, that in the beginning, wages were rising and prices were falling. Then a 10 per cent, cut was made in wages, and at the end of three years prices had fallen by 22 per cent., but wages had fallen by 33 per cent.

If time permitted one could deal with what took place during World War II., when, though wages were frozen, adjustments continued, so that no worker’s standard of living would fall below the recognized level. Rigid economic controls were not imposed until 1943, but between that year and 1945 prices were actually falling. For eighteen months the basic wage was stationary at 96s. a week, having fallen from the higher rate of 98s. a week. This indicates that where effective controls are in operation, and the Government is determined to see that prices are kept in check, an actual reduction in the nominal wage rate can be brought about. 1 am not suggesting, nor does the Labour party, that at present it is necessary to have anything like the rigid controls that were placed on the national economy in the 1942-1945 period, but I do suggest that, in view of what happened on that occasion, we should agree that there is a necessity for a greater measure of control than is being exercised at present.

Having indicated some of the fluctuations in prices during the last 30 years or so, 1 propose now to deal briefly with the history of wage adjustment. The wage adjustment that was discontinued in September, 1953, was gradually evolved by trial and error. In the early stages before adjustments came in - and I have pointed out that during this period prices were rising fast - wages were deliberately kept low, and although the Commonwealth Arbitration Court used the Statistician’s figures to assess the purchasing power and value of wages, instead of awarding a wage on the prices operating at the time the award was made, it fixed the wage on the average of prices for the twelve calendar months preceding the making of the award. It was not until 1919, when prices were soaring fast and inflation was evident throughout the Commonwealth, that wages were fixed on the average of prices for the twelve months immediately preceding the making of the award.

Honorable members who were associated with the trade union movement in the years 1919 and 1920, will recollect that it was a period of unending industrial trouble. Prices were rising much faster than wages, and the consequence was that from one end of Australia to the other workers were on strike because of the insufficiency of their earnings. For two years, a number of organizations, including one of which I was an official, made an agreement with the employers to adjust wages every six months in accordance with what was then known as the A series figures of the Commonwealth Statistician. It was not until 1921 - and I stress the significance of this date because of something which I propose to say later - that the Arbitration Court put into operation the system of quarterly adjustment of wages so as to enable the Harvester standard to be kept intact. That was done in the Enginedrivers and Firemen’s case, and in 1922 with the gas em ployees. Mr. Justice Powers, in fixing the wage upon the Statistician’s figures for the quarter ending 31st December, 1921, only, decided to add 3s. to the wage so that during any period of rising prices the wage would not fall below the Harvester standard in any one quarter.

It was then found that because of the recessions of which I spoke previously, wages began to fall. Between the years 1922 and 1929, when the A series figures were still being used, the wage varied from 78s. as a minimum to 90s. 6d. as the maximum in 1929. During that period, however, prices in some quarters rose, and as a consequence, in the next quarter the wage rose also. In the next quarter prices would fall again, and down would come the wage. If one examines figures during that period of seven years, one finds that the graph of wage levels goes in a zigzag line - in one quarter wages were up and in the next quarter they were down, and finally, in 1929, they reached their peak.

At the time that the wages adjustment came into operation, the employers wanted it because of the tendency of prices to fall, and they desired to have a ready means of adjusting wages so that they would fit in, more or less, with price levels. Then came the depression, and at the beginning of it the court made a 10 per cent. cut. In addition to that, it decided that wages should be adjusted every quarter so that any fall in prices would be reflected in wages. Consequently, there was a steady fall in wages from 1930 to 1934, because the court believed that industry was entitled, at that stage, to receive the benefit of falling prices, in the shape of lower wages.

It was in 1934 that the C series figures were first used as a means of adjusting wages. This was done by the court because it had found, during the depression period, that the A series figures used had exaggerated the fall in the cost of living, because it covered only roughly 60 per cent, of the expenditure of the average household. In 1934, the C series, which gave a more reliable guide to the trend of prices, was used by the court for the purpose of adjustment, and was continued as the means of adjustment until 1953.

I now wish to deal with the position during the war period and after it. Wages were frozen in 1942. The edict was promulgated by regulation that the Arbitration Court was not to increase the wages of any workers except in circumstances that were exceedingly hard to meet. Nevertheless, the government of the day decided that, although wages were frozen, there should be no departure from the standard of living given by the court’s basic wage decision. Consequently, from 1942 onwards, although wages themselves could not be increased, whether for margins or for any other purpose, they were adjusted, and as I pointed out previously they actually fell from 98s. to 96s. That wage operated for a period of close on eighteen months. Even in wartime it was felt by the government of the day that the wage standard should not be tinkered with as a consequence of rising or falling prices. 1 shall now deal with the C series index so that people can understand how it operates. We hear a great deal about the C series, and the Minister for Labour and National Service (Mr. Harold Holt) said that if the price of potatoes rose to some freakish level it did not necessarily follow that industry should pay a higher wage. An increase in the price of potatoes caused disturbances in the basic wage level in the I920’s and it will cause a disturbance again.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– But at that time the court was not obliged to consider capacity to pay.

Mr CLAREY:

– I shall deal later with the capacity to pay. All I am saying is that to suggest that because the price of potatoes rises to a high level there must necessarily follow an extraordinary rise in wages reveals a lack of knowledge of how the C series is compiled and used for the adjustment of wages. The C series, as well as the A series and other series that were used, represents a market basket of commodities. In ascertaining the percentage by which prices rise or fall, no fewer than 171 commodities or items, and their consumption by the community as a whole over a period of five years, are taken into consideration. These commodities are not taken as single units. In this way we get a reliable guide to the extent to which all these commodities are used in the community. Every one of the items is given a weight for calculation purposes, in accord ance with the extent to which it is used in the community. A 2-lb. load of bread is given a weight of 100,- because it is in much wider demand than some other foodstuffs. The 7 lb. of potatoes, which make up another item in the regimen, has ;i weight of 18. The prices of all these commodities have to be multiplied in accordance with the mass unit system, and a complete set of percentages is worked out.

No one commodity can cause an extraordinarily large rise in the basic wage. Bui if it does, as has been suggested, as a consequence of seasonal conditions, in a particular quarter, then in all probability in the next quarter, or the following one at the latest, the price of that commodity will come down again, the reduction will be reflected in the figures and in the basicwage, and the position will correct itself. That frequently happens in the case of certain commodities, the prices of which fluctuate seasonally. Meat is one commodity of that kind.

The C series index is a scientifically calculated table. It is worked out on strict mathematical lines. Tt covers a market basket of commodities, and it is the best and surest way of measuring changes in the prices of the commodities that are used in the ordinary household. Of all the methods that could be adopted with the assistance of the statistician’s figures, the C series index best fills the need for a reliable guide to increases in retail prices 1 now wish to deal with the matter of the capacity of industry to pay, which was raised by the Minister for Labour and National Service (Mr. Harold Holt). The capacity of industry to pay should, I think, have been obvious to the Minister because for 31 years, in good times and bad. in prosperous times and times of depression, industry has been able to pay adjusted wage rates. It cannot be shown that the economic fabric of the country has been subjected to strain because of the operation of the system of quarterly adjustment of the basic wage. Let me now deal with what was said by the court and by the Minister.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Does the honorable member want to return to the needs basis?

Mr CLAREY:

– I shall come to that, too.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Surely he is not seriously advocating that procedure!

Mr CLAREY:

– The case against quarterly adjustment of wages is based on the following declaration of the court: -

There is no reason as far as the court is aware to think that the capacity of industry as a whole to pay increased wages rises with increased prices as shown by the C series figures.

The Minister for Labour and National Service, speaking of the Government’s policy that there should be regular reviews by the court of the capacity of industry to pay and that wages should be adjusted accordingly, said -

There is no inconsistency between that approach and saying to the Premiers, “ If you accept the principle of the capacity of industry to pay, cannot you see the absurdity and the danger of maintaining a system of quarterly adjustments which has no relationship at all to the capacity of industry to pay? “

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– That is right.

Mr CLAREY:

– The Minister went on to say -

If we have a freak season and the price of potatoes shoots up beyond the reach of the ordinary family budget, does that increase the capacity of industry to pay a higher wage? Of course, it does not!

The basic wage has not been fixed by the Arbitration Court on the basis of needs since 1920. Mr. Justice Higgins made that clear in the Moonah Gold Mine case, when he refused to increase wages because the industry could not pay. In the following year Mr. Justice Powers again made that point clear, when he refused to give the gas workers a basic wage of £5 16s., as had been recommended by the royal commission that was appointed to inquire into the basic wage. He refused the application because he said the economy could not afford it. The late Mr. Knibbs and the late Mr. Piddington, K.C., both submitted memoranda on the subject. From that time onwards, although the phrase “ living wage “ has frequently been mentioned, and although various States have fixed minimum family needs, the State and Commonwealth courts have always fixed the basic wage as the highest amount that they considered industry could afford to pay. I suggest that both the Minister for Labour and National Service and the Minister for Supply (Mr. Beale) should read a book, a copy of which I have here, that was written by Mr. Sawkins, who was a New South Wales Government Statistician. Mr. Sawkins makes it very clear that what I have said is correct. If honorable members still have any doubt about the matter, I refer them to the case in 1930 that resulted in a 10 per cent, reduction of the basic wage, when the Arbitration Court again made it very clear that it adopted the basis of industry’s capacity to pay.

The long history of the matter, therefore, indicates that the court has been unwilling to fix a basic wage beyond the amount that it considered industry could pay. lt was after the pronouncements of Mr. Justice Higgins and Mr. Justice Power, to which I have referred, that the system of wage adjustments came into operation in 1921 or 1922.

In a consideration of this problem, we can test the capacity to pay theory by asking ourselves what is happening in the nation’s economy. Are profits falling? We all know, and the budget tells us, that in the last twelve months profits have increased by 5 per cent. Has production declined? Production certainly has not, and speaker after speaker on the Government side has pointed with considerable pride to the fact that production has increased during the life of the Menzies Government. In fact, one would have gained the impression that all the members of the Cabinet had gone into the workshops and increased production personally. They gave not a word of praise to the men and women working in the factories who were responsible for the increase of production; all their praise went to the Menzies Government. Whichever way we consider the situation, we find that profits and production have increased. New industries are being commenced. Public investment is at a high level, and last year over 8 per cent, of it was in new capital equipment. Many other factors indicate a sound state of the economy. In view of these facts it is absurd to suggest that industry cannot afford to meet wage adjustments that at least would keep the worker’s standard of living at a level relative to that which he has enjoyed over the years.

The Government, because of its lack of positive policy, has lost its golden opportunity to grapple effectively with inflation. At the end of 1953, immediately after the court’s decision to abolish quarterly wage adjustments, the Government should have held a conference with the States to decide on concerted action with regard to all fac, tors affecting costs. Once wages, as an element in costs, are subjected to control, then logically all other elements must be similarly treated. To decline to do so is to court failure. The constitutional limitations of the Commonwealth are recognized, and they make co-operation with the States imperative if control of other factors, such as profits, prices, capital issues and hirepurchase interest rates is to be effective. The Government, obsessed as it is with the theory that wage pegging has a magical capacity to curb inflation, showed lamentable lack of leadership, and took no action two years ago when positive action was necessary. Some of the States adopted wage pegging, but prices continued to rise, so that the States concerned reverted to the system of quarterly adjustments, in order to give some measure of justice to wage and salary earners. To this Government prices and profits are sacrosanct; to the Opposition, wages and salaries and quarterly adjustments are sacrosanct. We object to the workers and the producers being called upon to make all the sacrifices in order to right our economic ills. Those who reap the benefits of constantly rising prices and greatly swollen profits must be subject to control. For that reason, I support the amendment moved by the Leader of the Opposition.

Mr BEALE:
Minister for Supply · Parramatta · LP

– I happen to be an admirer of the honorable member for Bendigo (Mr. Clarey) and I usually listen to his speeches, which are thoughtful and carefully worked out, with more pleasure than I listen to some other speakers, but to-night he has not done himself justice. Notwithstanding the superficially moderate and deliberate way in which he has presented this matter, he has in fact presented as facts things which are not facts at all. I am here to-night to fry other fish because I rise to discuss a specific matter which has been raised in connexion with the budget; but, first, I should like to give one or two illustrations of what I mean when referring to the honorable member’s approach to this question. He referred to the conference of Premiers and Commonwealth representatives held in Canberra some weeks ago, just before the budget was presented, as a conference to cure inflation. He said that the only suggestion which the Commonwealth Government had put to the conference through its Ministers was the question of wage adjustments. Nothing could be further from the truth. It did not pretend to be such a conference at all. It was a conference of State Premiers and Commonwealth Government representatives called for the specific and limited purpose of dealing with the question of the desirability of having uniformity in matters of wage fixation. To describe it as a general conference to which the Commonwealth Government advanced only that single limited proposal is to falsify the facts.

Again, in quoting something that a man named Sawkins, who flourished in the 1920’s, said in a small book in an effort to disprove what the Minister for Labour and National Service (Mr. Harold Holt) said recently about recent developments in the reasoning of the Commonwealth Arbitration Court, the honorable member presented a wrong picture. I remind honorable, members that we do not fix the wages; they are fixed by the Commonwealth Arbitration Court, which is the great wagefixing authority. Wages are not fixed by the Parliament of this country. I hope the opportunity will occur later to have an exchange of views across this table, or anywhere else, on some of the matters that the honorable member for Bendigo has mentioned. I know he will welcome such an opportunity; but when he speaks as he did to-night, he gives a false impression and does not do justice to his very high reputation as a debater in this chamber.

I rise for the specific purpose of answering a matter which has been put forward by honorable members opposite, and by the right honorable Leader of the Opposition in particular. It relates to the problem of how best to deal with rising costs and prices. Every honorable members knows, although all sections of the public may not know it, that a budget is nothing more or less than a piece of national housekeeping. It is the estimate which the Government puts before the Parliament, and therefore before the people, as to what it expects to get by way of revenue from all sources! together with its proposals as to how that revenue is to be expended in the national interest.

Mr Ward:

– You do not say!

Mr BEALE:

– It is not necessary to tell most people, but, from the quality and calibre of his speeches, it is clearly necessary to repeat that again and again for the benefit of the honorable member for East Sydney (Mr. Ward). A budget is no different in principle from the process through which the ordinary householder or head of a family goes periodically in assessing his income and prospective expenditure, in estimating how he can raise the wind here and there and how he will have to cut his coat according to his cloth. That is all we are debating to-night.

Before a government brings down its budget, it goes through some extremely detailed and laborious efforts in examining all facets and aspects of the national economy. It must not be thought that budgets just sort of make themselves and get presented to the Cabinet and eventually to the Parliament. Before it is presented, there are weeks and months of most exacting and painstaking work by officials and advisers in collaboration with Ministers and heads of departments to determine what are all the factors which are likely to affect the collection of money and the expenditure of funds in the forthcoming year.

Mr Ward:

– What point is the Minister trying to make?

Mr BEALE:

– I shall come to the point, and I hope that the honorable member for East Sydney is capable of understanding it. The honorable member ought to know what takes place, because I suppose he sat in at seven, or eight, budget discussions during the Labour Government’s term of office. He might not have been able to understand what took place, but he was supposed to be at those discussions, as was the right honorable the Leader of the Opposition (Dr. Evatt). It is because of some of the observations made by the right honorable gentleman that 1 am introducing this matter at the moment.

We have before us a mass of detailed papers on such matters as defence, productivity, trends in employment and in industry, the impact of immigration on the country, the pluses and the minuses of immigration, the movements of prices in both primary and secondary industries, the movement of our balance of payments and forecasts as to how they are likely to move with or without action in this or that direc- tion, the various trends of trade, the state of the loan market and forecasts as to how the loan market is likely to go for the forthcoming year, the prospects of external borrowing, what are to be the demands upon the cash that comes into the coffers of the Treasurer, the demands of social services, defence and repatriation, and the demands of the States and of the servicing and repayment of public debts, a matter which has struck us so unfortunately in this particular year. All those matters come before the Cabinet in a series of agendas and papers. It is out of all that discussion, which goes on for weeks in a most exhaustive and detailed manner, that the budget is born and finally comes on to the table of this House. The Leader of the Opposition, who has sat in at seven or eight of such annual budget discussions knows of these processes. He knows that irrespective of whether it is a Labour or Liberal government, the same people advise the Government, that the same experts disinterestedly put the data before it. Yet, there was nothing in his speech which indicated in any shape or form that he understood the problems at all. Any one listening to the speeches delivered by the right honorable the Leader of the Opposition or any other honorable member opposite cannot help but come to the conclusion that they do not understand the problem of national housekeeping, that they do not appreciate the need to deal with the multifarious and often contradictory problems that arise. This is particularly self-evident in the great point which the right honorable the Leader of the Opposition made during his speech concerning rising costs and prices. His panacea - his particular bottle of pills - for rising costs and inflation was nothing more nor less than prices control.

I am glad to hear another honorable member on the Labour side say “Hear, hear “ because it shows that the Leader of the Opposition is at least not alone in his folly. He is nothing if not versatile. Two years ago it was not prices control that he advocated; it was something like £20,000.000 or £30,000,000 in depreciation allowances and reduced taxation for companies. They are the very same wicked companies that he now denounces as the profiteers of this country. The bottle of pills of two years ago has been tossed into the cupboard and, like the quack at the country fair, the bottle he is waving before his audience this time is prices control. That is not my simile. It was used by a good Labour man, Professor Arndt, who, at a recent conference, said -

This too is a problem which cannot be cured with the old liver pills from Labour’s medicine chest - profit control, price control, excess profits tax.

For that presumption, I understand the Labour party is proposing to throw Professor Arndt out of its ranks. As I say, the simile is not mine; it is Professor Arndt’s.

When the Leader of the Opposition and Labour members talk about prices control, let it be remembered that they are not talking about some local, partial form of control on a few essential commodities; they are talking about nation-wide, completely regimented prices control.

God forbid that we should have that again! We had it during the war. I propose to give a few illustrations of what happened under that system. Apart from the National Security Act, the Blackmarketing Act, a few other odd acts and a great number of other regulations, all of which were of the nature of price control, we had in particular the Price Control Regulations which contained some 50 sections under which no fewer than 3,500 orders were issued, each with the force of law. The orders streamed from the printing presses with the most bewildering rapidity, and the ordinary member of the community literally did not know where he was. Under those regulations, 2,000 inspectors ranged up and down the country seeking whom they might devour, if I might misquote a biblical phrase. There were 17,000 prosecutions of Australian citizens and 13,000 convictions. Apart from prison sentences, nearly £200,000 was collected in fines and, blessed be the name of lawyers, £40,000 in costs! That was the result of prices control.

These rules and regulations for the regimentation of the citizens were not simple or easy to understand. In many cases, as we all know from our experience - and I had considerable experience of this matter - the regulations were often completely and hopelessly incomprehensible. I have one here that has been quoted before. There are a hundred of them just as bad. I ask honor able members to listen to this description of a first-quality egg in the Egg Industry Order of 28th June, 1943 - “ First quality “ eggs shall consist of eggs -

  1. the shells of which are clean, uncracked and free from stain-

That sounds like the old hymn - which are not thin or misshapen-

It does not say who is to decide whether the shell is thin or misshapen. It does not say whether it is the householder holding up the egg or the judge or the snooper.

Mr Roberton:

– The hen, perhaps!

Mr BEALE:

– The hen has no say in it. She is not called as a witness! The order continues -

  1. which when candled are free from blood spots-

Spots before the eyes, one should say, for the ordinary trader - the yolks of which are translucent or but faintly visible-

Who is to decide whether they are faintly visible? the whites of which are translucent and firm, and the air cells of which are slightly tremulous-

That sounds like the members who went to the Air Force dinner last night - and are not more than one-quarter of an inch in depth.

That was a national security regulation under which an ordinary, honest-to-God citizen was supposed to conduct his business. Honorable members will be very glad to hear that, at that stage, the draftsman gave it away, because when he had to describe a duck egg he merely said - “ First quality “ duck eggs shall consist of eggs which are fit for human consumption and are not cracked.

That is somewhat different, I might say, from the gentleman who drafted the regulation or the Labour party which propounded it. That is the sort of regulation we had.

One of the desperate weaknesses of the prices control system under which the community had to live during this period was ambiguity and unintelligibility. Many judges in dozens of cases denounced this sort of thing. I shall give one or two instances. In one case, the Chief Justice of New South Wales, Sir Frederick Jordan, after commenting very sarcastically on the complete unintelligibility of the regulation under which a trader was prosecuted, said -

Pausing only to admire the courage of any trader who still ventures to sell anything without having a lawyer and actuary at his elbow, 1 proceed to deal with the submissions which have been made.

A little later he described the various amended regulations as no more stable than shifting sands.

Mr Ward:

– Well, what about that!

Mr BEALE:

– The honorable member knows something about judges; he knows a Jot about judges. In another case, the Chief Justice, after criticizing orders of this sort, said -

But this Order is addressed to retail tradespeople. Speaking for myself, even after having had the benefit of the formulation of the three categories by counsel, I found some difficulty in disentangling them from the provisions of the Order. If retail traders, with no experience in construing legal documents, are able to do so, they are to be congratulated.

In another case, the presiding judge, after a very long explanation occupying three pages in which he gathers together all the elements that some unfortunate seller of bananas has to take into consideration in order to decide what a regulation means, said -

At this point, I feel relieved at being able to part company with him. Assuming him to be a man of undaunted courage, and prepared to face the risks and uncertainties to which I have referred, he would next have to address himself to clause 7 (b).

Then he goes on for another page to deal with all the intricacies and mysteries of clause 7 (b). He concludes by saying -

I find it difficult to understand how any responsible person could have promulgated such an impractical, unintelligible jumble as a price-fixing measure. If it were valid, it would be impossible for the most anxiously law-abiding retail fruit seller to know whether, when selling bananas, he was breaking the law or not.

What I have quoted to the committee in those three instances can be multiplied 100 times and indeed, in the experience of citizens during the war, could be multiplied thousands of times. Far too many decent men and women trading in the community were prosecuted and convicted during the war. The great army of inspectors included some good men, many of them doing their best, but in the nature of things they were but a few. Very many were untrained men, incapable of collecting evidence, incapable by their temperament of impartiality, and some of them were very undesirable men. The result was that 17,000 citizens, not all of whom I am prepared to believe were either technically or morally guilty, were haled before the courts, and 13,000 convicted.

In the land sales control office - a branch of prices control - there was a fantastic situation. Land sales were pegged at 1939 valuations, and I believe that more than 90 per cent, of the people who sold land did so at above the pegged prices. All the prosecutions in the world could not stop them from doing so. There were some very peculiar people administering some aspects of land sales control. In one instance, as some honorable members might remember, a man who had been convicted on seventeen charges of forgery, an exsolicitor, who had served a gaol sentence, held a responsible position in the land sales control office. Had he not been exposed in the Parliament, I am convinced that he would have continued to occupy that position for the whole of the period of the war. In other sections of the administration, also, there were people who had served gaol terms. There were ex-solicitors - men who had been struck off the roll - and all sorts of dubious people who were just inside the law. That was the system under which ordinary people had to try to conduct their business.

Conversation on the Opposition benches being audible,

Mr BEALE:

– In view of the interruption that is coming from the front bench of the Opposition, it is evident that my remarks have got under the skin of the occupants of that bench. It is little wonder that they have done so, because my statements happen to be documented, and one cannot get away from the written record. No one will deny that plenty of rogues were prosecuted and convicted under the price control regulations, but I do not believe that most of the people who were proceeded against were any different from the ordinary, average Australian citizen who wanted to obey the law but found it impossible to do so, because they were caught up with unintelligibility, ambiguity and weaknesses of administration.

There is a cardinal rule which all lawmakers know, or ought to know, and that is that in a democracy, except in times of great national emergency, laws should not be too far ahead of public opinion. You can have that in a dictatorship, of course, because you have the knout and the firing squad, but in a democracy you cannot have laws too far ahead of public opinion in time of peace. If you do, you get law breaking, black marketing and corruption. We endured controls in time of war, but as the war position eased, the controls became less and less effective, and virtually broke down for the reasons I have indicated. So, having had a crystal-clear demonstration of where closely integrated regulation leads to, the Australian community will never swallow that one again. I do not believe that, in their hearts, the members of the Labour party really want it. It is a sort of shibboleth which, I know, the intelligent and sensible members of that party do not want.

Mr Davis:

– Who are they?

Mr BEALE:

– I was listening for an interjection from the other side which might have enabled me to answer the honorable member for Deakin (Mr. Davis). Of course, they say that the next time it will not be like that, that controls will be more limited, and that the administration will be more kind and more tolerant. Well, by their deeds ye shall know them. I say that what has happened in the past is about to happen again in Western Australia. In that State, if the press reports are to be believed, the Labour Government is about to bring in a prices and profiteering control bill - I think that that is its title - under which it is proposed to appoint a commissoner with enormous powers, including full power to enter private premises and residences.

Mr Ward:

– Hear, hear!

Mr BEALE:

– The honorable member for East Sydney says “ Hear, hear! “. He has the brand upon him. At least we know where he stands on these matters. This gentleman will have power to impound and seize private documents, as well as to fix prices, either generally or with respect to specific traders or specific articles. There shall be no appeal from his decision. He is to be prosecutor, judge and jury.

Mr Ward:

– That is not true.

Mr BEALE:

– We shall soon see about that. He will be empowered to determine fines for breaches, and to make decisions as to what are fair prices for commodities. He will not be bound by legal rules of evidence or procedure, so the last bulwark protecting the citizen is broken down. Finally, I understand that he . will have power, if he finds a man guilty, to brand his premises publicly - a pleasant innovation! The Australian Labour Government did not quite get to that one last time, but the Western Australian Labour Government is going to have a go at it this time. Anybody who has any doubt as to how a socialist government in Canberra would exercise prices control if the people gave them the power will now know from what their fellow socialists in Western Australia are doing. They will now know precisely what to expect. Whatever remedies you may think are appropriate for the very real problem of rising costs and prices, many of which we have introduced here in this budget and elsewhere - and there is plenty of room for discussion and disagreement amongst honest citizens as to whether this or that remedy is appropriate - I say that at least one thing is certain: That is, that regimentation and restriction of the ordinary citizen in the way that the socialist Labour party is proposing, as indicated in the speeches of honorable members opposite on the budget, is no remedy at all, and in no circumstances will the people of Australia have a bar of it.

Mr WHITLAM:
Werriwa

.- We are indebted to the Minister for Supply (Mr. Beale) for an excellent exposition - a translucent exposition, he would probably say - of what figures the budget papers should contain and what questions the budget speech should explain. Still more, we are indebted to the Minister for the diversion that he produced by quoting from the law books current at the time when he practised. I must say that Sir Frederick Jordan himself expounded those passages with greater eloquence than the Minister. I might be forgiven for saying, however, that the High Court never found the national security regulations so difficult to understand as did the Supreme Court of New South Wales, let alone the honorable gentleman. It might be somewhat ungrateful on his part to abuse so heartily the clients for whom he appeared so regularly before the tribunals at that time and who, with sickening regularity, were convicted of offences under those regulations. It appeared to me that, in quoting Professor Arndt and Sir Frederick Jordan, the honorable gentleman was not so much translucent as tremulous. I prefer the clear accents with which the Minister for External Affairs (Mr. Casey) quoted from Professor Arndt last night. I thought that there was more sting and point in his remarks. His remarks, of course, had the advantage of dealing with the budget.

Taking the test provided by the Minister for Supply, this budget is a complete failure because it changes nothing and shows no way out of the problems which it analyses. To take the other portion, the more diverting portion, of the Minister’s speech, he showed once again that sham aversion to controls which characterizes so many of the speeches from the supporters of the conservative parties in this place. When I say “ sham aversion to controls “, I mean sham aversion to public controls, to democratically imposed controls. He showed very clearly that he was particularly averse to such controls being imposed where that is still possible under our Constitution, such as in Western Australia. He has, however, no aversion whatever to those private controls which the Western Australian act is designed to curb. Not only has the Western Australian Government sought to introduce such legislation, but also the conservative Government in the United Kingdom has already introduced it. That Government has enacted legislation to deal with restrictive practices - not the restrictive practices imposed by democratically elected parliaments, but restrictive practices imposed by company directors meeting in private, responsible to no one and self-perpetuating.

We have prices control in this country, but the prices control we have now is imposed by manufacturers and retailers. Nobody can supervise their unilateral control which is exercised not in the public interest but in their own. The only interests that are not considered are those of the people who have to purchase the goods. Every public body in Australia knows the vicious practice of common tendering. Tenders are called overseas, or in Australia, and half a dozen companies tender. But the tender prices are exactly the same in pounds, shillings and pence. That is a restrictive practice adopted by private capital. What the Minister is objecting to is not objected to in the United States of America where, for more than fifty years, there has been the Sherman Act to deal with that form of exploitation. Also the United States of America has for much longer had an interstate commerce commission to deal with that kind of practice. We have provision in our Constitution to set up such an interstate commerce commission, but the Government has allowed it to remain unused for the last generation. The Eden Government in the United Kingdom has introduced legislation exactly along the lines of that of the Labour Government of Western Australia, to which the Minister referred.

If we are to have controls in this country it is better to have public controls imposed by public officials who are responsible to a parliament than to have controls imposed by persons who are not so responsible. The Minister prefers the latter; we prefer the former. This aversion to controls comes very poorly, I submit, from a government which has imposed stricter controls on bank credit and on those organizations which get their money from banks than has any previous Australian govermnent. It comes very poorly from a Government which has imposed the strictest import controls this country has ever had; a government which, quite deliberately, has exercised its taxation powers to curb the economy. The only controls to which the Minister objects are those which the Commonwealth has no power, as yet, to exercise, and which it refuses to accept from the States. Approximately a month ago, the States, practically unanimously, offered such controls to this Government.

The speech of the Minister for Supply indicated the usual alibis one expects from a conservative government. If we on this side of the chamber refer, by way of a question or in the course of a speech, to the restriction of public funds for the States and local government authorities in Australia, we are told that that is a matter for the decision of the Australian Loan Council, on which the States have twelve votes and the Commonwealth only two and a casting vote. The Government, of course, is sufficiently dishonest not to refer to the fact that it does not carry out the decisions of the Australian Loan Council. To be specific, this year the Australian Loan Council decided that the States should receive £210,000,000 for their purposes, but this Government has said, “We will not carry out that decision. You will get £190,000,000 only”. By the same token, the Government claims credit for financing its own public works out of revenue.

Mr Anderson:

– Why does not the honorable member tell the truth?

Mr WHITLAM:

– If that remark came from a more responsible person than the honorable member for Hume (Mr. Anderson), I should ask for its withdrawal. If he cares to read the budget papers he will see that the Government said that it would find £190,000,000 of the amount upon which the Australian Loan Council resolved, namely £210,000,000.

Mr Anderson:

– That is what 1 said previously.

Mr WHITLAM:

– If the honorable gentleman performs the further intellectual exercise of reading the Constitution - and the Minister for Supply, or some honorable members on this side of the chamber could help him to do so - he will see that the Treasurer is in fact bound to carry out the decisions of the Australian Loan Council.

The supporters of the Government say, “ We pay for all our works out of revenue “, and they regard that as a virtue. If the amount of money raised from loans in Australia is not sufficient to pay for all public works, then at least State and municipal works, which are just as necessary for the comfort of individual citizens and for the development of the Australian economy as are Commonwealth public works, should have the privilege of getting the same interest-free assistance as we take as a monopoly for ourselves. Although we give some tax revenue to the States, we do not give it to local government. And although we give it to the States for their public works, we charge them interest on it.

Tax reimbursement, it is said, is arranged according to a formula. Of course it is. but for the last eight years there have been special assistance grants in addition to the payments under the formula, and in every case those grants have been made at the sole discretion of the Commonwealth.

I come now to banking policy. Very frequently, the Treasurer (Sir Arthur Fadden), and those who sit behind him, take refuge by saying that the policy of restriction of credit is a matter upon which the central bank and the trading banks have agreed. I asked the right honorable gentleman, two days ago, whether he disapproved of such a restriction in regard to loans by the banks for homes, and he said that he did not object to it. I asked him further, “ If you disapprove of it, will you have the policy altered, as you are entitled to have it altered under the Commonwealth Bank Act of 1945 and the Banking Act of 1945?” He said, “ No “. There can be no refuge behind the decisions of the banks. Those acts make it perfectly plain that the Treasurer can overrule decisions in respect of which the banks have put their heads together.

The Minister for Supply referred to decisions made by the Commonwealth Arbitration Court, as it then was, concerning the freezing of wages and margins. He surely cannot take refuge behind the gowns of the judges of the Arbitration Court in that regard, because the Government of which he is a member connived at that freezing. It briefed Queen’s Counsel to appear before the Arbitration Court to advocate the freezing of wages in 1953, and to increase margins for the top half only of wage-earning groups last year. How can the Government complain when the submissions put by its senior counsel were adopted by the court?

Let me refer to one final alibi which the Government always pleads. It is often said by Ministers in this place that such and such a matter is a State matter. That is usually the answer when questions are asked concerning housing, schools, hospitals and transport. We are told that the Constitution gives control of those matters to the States. Of course, the Constitution does nothing of the kind. It does not give control of them to the Commonwealth; it does not mention any of those subjects. At the time of federation, the States spent extraordinarily little on schools, whereas they now spend half their budgets on schools. At that time, they spent practically nothing on hospitals and roads, and nothing at all on housing. Because the Constitution does not give power over these vital matters to the Commonwealth, the Government, instead of assisting the States with them, lets them wither on the vine and says they are State matters. Never let us forget that the Constitution does not mention them at all. I said that this budget achieves nothing. Perhaps I was unjust. There are a few items of first-class farce with which it deals. Let me refer to them. First, we are told that there will be additional war and repatriation services. Soldiers’ children will have more expended on them for their education, and persons who served overseas on World War II., Malaya, or Korea, will have more expended on them for their rehabilitation. The total cost in this financial year of these massive concessions will be £116,000. We are also told of certain increases in social services benefits. The children of widows and of invalids will receive larger payments, and in respect of those payments we shall incur in this financial year expenditure of £576,000. There are certain tax remissions. The revenue will lose £15,000 this year, because we shall be able to deduct from our income the sum of £300 instead of £200 for life assurance premiums. The revenue will lose £215,000 because people who live in the far north will be able to deduct from their income £180 instead of only £120. The revenue will lose £20,000 because we shall be able to deduct from our income £100 instead of £70 of our children’s educational expenses. The sum total of these remissions, the expenditure incurred, the revenue foregone, will be under £1,000,000 in a budget of £1,200,000,000. 1 do not want to be anything but scrupulously factual. The budget does change the position to that extent, but it offers no hope for the future. We were told in the Prime Minister’s eloquent statement of a year ago that it was expected that by 30th June last we would be in a state of trade balance, and (hat by the end of that month we’ would be importing goods at the rate of only £55,000,000 a month. In actual fact, by the end of June we were still importing goods at the rate of £63,500,000 a month, at the end of July of £57,800,000, and at the end of August of £78,700,000. During the last five months, the average monthly imports have been £68,000,000, still £13,000,000 more than the amount promised by the Prime Minister a year ago. So far have his predictions fallen short and his policies failed, and what remedy is forecast? We are still no nearer to balancing our international trade.

Mr Ward:

– We are £10,000,000 on the wrong side for the first two months.

Mr WHITLAM:

– More than that, £25,000,000. I shall go further and say that the budget actively misrepresents some positions. It is, of course, a political document. On the very first page we are told that last year there was an average rise of 9 per cent, in wages and of 5 per cent, in company income. The justxaposition, of course, is meant to counter the Labour argument that in the last few years company incomes have risen very much more than personal incomes, wages, salaries, and so on. Is it not fairer to take the position over the last three years, since 30th June, 1953, when, through the sudden, unannounced, and very harsh policy in the horror budget of 1951, inflation had been brought to a stop, and the Government was able to indulge in that series of pre-election benefits and remissions which enabled it to hold on to office after the elections of 1954. On 30th June, 1953, we were in a state of trade balance, a state where deflation and inflation cancelled out. In the last three years wages and salaries have risen by 25.5 per cent, and company profits by 45.5 per cent.

I notice that the Minister for Trade (Mr. McEwen), who was formerly the Minister for Commerce and Agriculture, is in the chamber. He still belongs to the Australian Country party, and one would expect him to be solicitous of the interests of the Australian primary producers, upon whose labours and products we depend principally, in fact nearly wholly, for our overseas balances.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– And upon whose votes he gets into Parliament.

Mr WHITLAM:

– Upon whose votes he has been able to sponge for over twenty years. The budget states that farm incomes fell by 6 per cent, in the last year. That figure is not typical, because in the three years to which I have referred they fell by 29 per cent. What remedy is there for our adverse trade balance when the incomes of those upon whom we depend are falling constantly? Not only does the budget misrepresent some positions, but also to many matters it makes no reference at all. That omission would ordinarily be cured by the statutory reports which we are entitled, in fact bound, to receive, because by a very wise provision most of the activities of the Commonwealth require an annual report to be presented to the Parliament. Yesterday, the Treasurer tabled the balance- sheets of the Commonwealth Bank, the central bank, the bank which determines the credit policy, the investment policy of the country, so far as it depends on the banks. They were not circulated; they were not available. We received them as part of the bank’s report through the post to-day, on the second last day of the budget debate. To-day, the Minister tabled the Tariff Board report. It is an improvement on the Tariff Board report of last year, because every member of the board was prepared to sign this year’s report, whereas last year, as we remember, two of them did not sign the report and their dissenting opinions were suppressed. But the Tariff Board report is of no assistance to us. The Clerk was handed a carbon copy of a typewritten report, and the Minister bad the gall to say that copies were not available for honorable members. Last year the printed report was tabled after the budget and Estimates debates had been con.Iuded. The same result is achieved this year by tabling the report but not printing it. We are still unable to have a full discussion of the state of our secondary industries. The Tariff Board, like the Arbitration Court, is an impartial,’ expert body, upon whose advice we can rely, in preference to the political comment made from year to year by the Treasurer.

Let me refer to some of the other information which we have not yet had. We are asked to sanction grants of £18,500,000 to the three smaller States. We have not yet been given the report of the Commonwealth Grants Commission. Last year the commission’s report was not given to us until the debates on the budget and the Estimates had been concluded. The PostmasterGeneral’s Department is, in turnover and capital expenditure, the biggest business in Australia. This year its expenditure will rise from £86,000,000 to £91,000,000, and capital expenditure from £29,000,000 to £31,000,000, but we have not received the Postmaster-General’s annual statutory report. In fact, the report in respect of the preceding year was tabled only last May.

Expenditure on the Public Service this year will rise from £53,000,000 to £56,000,000. We depend on the reports of the Public Service Board to assess the staffing and the efficiency of the Public Service. We have not received the report for last year; we did not receive the report for the previous year until last February. Repatriation services still bulk very largely in our budget. This year we shall be expending £124,000,000, which is the same amount as we expended last year, but we have not the report of the Repatriation Commission; we did not receive the report for the previous year until last March. Social services bulk larger than any other item in our budget. Expenditure on them this year will reach £226,000,000. We have not yet received the director’s report; last year we did not receive it until after the conclusion of the debates on the budget and the Estimates. We have not yet received the report of the Commissioner of Taxation, so we do not know how efficiently taxes are being collected or what is the incidence of our taxation. We expect to raise £130,000,000 from sales tax, £402,000,000 from personal income tax, £210,000,000 from company tax, £48,000,000 from pay-roll tax. £11,000,000 from estate duty, and £2,000,000 from gift duty. But we are given no details.

The final report to which I wish to refer is that of the Director of War Service Homes. We have not yet received it. There is to be an increased, expenditure this year of £5,000,000. The vote is to go from £30,000,000 to £35,000,000, an increase of one-sixth. We are not yet told officially how many homes are needed and what the waiting list is. All we know is that the waiting time has doubled in the last twelve years. A person wanting to buy a house waits fifteen months instead of nine.

Mr Pollard:

– All these instrumentalities are ashamed of the situation.

Mr WHITLAM:

– I believe that there is a deliberate policy of suppressing their reports until the embarrassing time has passed. I mentioned the waiting time for people who want to buy a house. The time for those who want to build a house has increased, in the last twelve months, from fifteen to 24 months. Surely these annual reports are: as. important to us as the political statement made by the Treasurer in presenting the budget every year. They are not meant to be historical records. The statutory requirements mean that we should be able to discuss them.

Of course, there are many things that we are never allowed to discuss. We are not given any statement of the proceedings of the Australian Loan Council upon whose deliberations public investment in Australia depends. The council meets in secret, and we are never given a transcript of the discussions. We are not given a report of the discussion nor is any statement made to us of what happens at Premiers conferences. We have to rely on the newspaper reports. We cannot discuss the country’s policy in that connexion. We are not given the text of the bank directives. We cannot discuss the bank credit policy of the country. We are just told what has taken place; for example, that there has been an agreement with the hire-purchase companies. I suppose that we get supine about the fact that Parliament is not consulted in these matters.

At this very moment the Government is apparently actively aiding and abetting the United Kingdom Government in the most irresponsible and inflammatory action which any British government has pursued since the Boer War. Until the Prime Minister chooses to return from his peregrinations, we will not be able to discuss a policy which, even if it does not involve us in a third world war, may well, in view of the events of the last couple of days, and the statement of the British Prime Minister within the last 24 hours, drive India, Pakistan and Ceylon, before the end of the year out of our Commonwealth of Nations and all the countries of the Middle East securely within the Russian sphere of influence. And we are given no opportunity to discuss the matter at all! There is a conspiracy of silence and we, all alike, the elected representatives of the Australian people, are not consulted. The people themselves are being conditioned by extra-parliamentary methods. 1 referred to the Commonwealth Bank report which was posted to us to-day. It is very revealing, but I can only briefly leaf through it. The net gold and foreign exchange holdings of Australia at the moment, particulars of which appear at page 8, are £335,000,000. They were 803,700,000 at 30th June, 1951. I turn to page 13, and find details of public loan raisings. Cash loans last year amounted to £100,000,000. The previous year we raised £128,000,000 in cash. Last year we were able to convert £120,000,000. The previous year we were able to convert £254,000,000. Treasury-bills- the I.O.U’s - now amount to £165,000,000. They amounted to £108,000,000 at the end of the Government’s first year of office. If one turns to page 19 one finds that the trading banks’ holdings of government and municipal securities have dropped by £5,000,000, which is about 7 per cent, of the amount that local government receives.

I wish to conclude by reference to the report of the Director of War Service Homes which I touched on a moment ago. I find, from a report which came to hand to-day from the Department of National Development, that at 30th June last, 2,111 houses were under construction for customers of the War Service Homes Division. A year before, 3,547 houses were under construction. That is of a piece with the general housing position in Australia, because the building statistics for the June quarter show that fewer houses were commenced in the June quarter of this year than in the June quarter of any of the preceding years under this Government; and fewer houses were under construction in that quarter than were under construction in any preceding quarter of this Government’s term of office.

This budget makes no reference to the most pressing social problem in this country - that of getting the Australian people housing within their means and within their life-time. It makes no reference to the most pressing economic problem - the position of our transport. One would have thought, in view of the chaos caused by the restrictions on public finance and by court decisions in the last two years, that at least we would have some plan to deal with Australian roads. But there is no reference to roads in the whole budget. There is not a reference to ports. There is a reference to railways which involves no expenditure this year. Yet we find, on this question of transport, upon which our costs and our trade so greatly depend, the Government has no policy. As the Government knows from its own reports, a third of the Australian national income is spent on transport in each and every year. I would expect the Minister for Trade (Mr. McEwen), who is about to rise, to speak on the biggest single contribution the Government can make to increase our income and decrease our costs by co-ordinating and modernizing our ports, railways and highways.

The TEMPORARY CHAIRMAN:

- (Mr. Lawrence). Order! The honorable member’s time has expired.

Mr McEWEN:
Minister for Trade · Murray · CP

– I have listened with some interest to the honorable member for Werriwa (Mr. Whitlam), particularly to his reference to trade matters. I am bound to say that. I was quite astonished to hear him complain that we were permitting goods to come into the country at the rate of about ?60,000,000 worth a month as against the level of imports which, apparently, he claims should be pegged down to ?56,000,000 a month.

Mr Whitlam:

– That is what the Prime Minister said.

Mr McEWEN:

– Is the honorable member guided by what some one said a year ago or by the general good of the Australian community to-day? Surely that is the test. There is ample evidence to-day of the effect of import restrictions on the Australian trading community - particularly the manufacturing section of our community. Import restrictions are hard enough now without following what is apparently the policy of some Labour members of pegging them down with greater stricture than ever. The truth of the matter is that improved trading conditions have permitted some letting out of import restrictions. To-day, imports are being permitted in an immeasurably greater amount than it was feared, six or eight months ago, it would be possible to permit.

Of course, the policy of the Government in respect of trade matters is to protect the currency and our overseas reserves, as is necessary by import restrictions and to devote its constructive efforts to enabling the country to escape from the necessity for these restrictions by an expansion of our trade. On that point, I think it is right that I should tell honorable members, on this occasion, of the trade negotiations with the United Kingdom in which I have been engaged with the Prime Minister (Mr. Menzies). Our proposals to the United Kingdom Government originated through our balance of payment circumstances which had led to the unwelcome necessity for import licensing. As a nation, we are faced with the immediate and urgent necessity of increasing our export earnings. To improve them we clearly must produce, at the right cost, more of those goods which are saleable in the world’s markets. We must secure the right to sell them in overseas countries, and we must sell them on the most advantageous terms achievable. These points are elementary, but to translate them, into results involves not only efforts on the farm and in the factory, but also very much study at the government level, where arrangements must be visualized, and later negotiated, to enable our products to be sold in overseas markets on the best terms. This, of course, is the explanation of the negotiations in which we have been involved. Wool is our dominant exchange earner. Wheat comes next. The United Kingdom is overwhelmingly our biggest purchaser, and Japan comes next. The United Kingdom last year took about one-third of our total exports, and Japan took 11 per cent. France followed, with 8? per cent., and the United States of America was next with 7 per cent.

Our external trade is dominated by two great trade treaties. One is the General Agreement on Tariffs and Trade, to which Australia, in company with 34 other nations, is a signatory. This agreement is designed to promote a freer flow of world trade and generally to inhibit changes in the pattern of international trade brought about by new preferences being given or protective duties being increased above levels bound in trade negotiations under the agreement. On the other hand, what we call the Ottawa agreement is a trade agreement between Australia and our greatest trading partner, the United Kingdom. The essence of this agreement is a system of mutual tariff preferences. In contrast with the General Agreement on Tariffs and Trade, it prevents the reduction of the Australian tariffs on foreign goods below duties arrived at by adding the stipulated margins of preferences to the British rates in our tariff schedule. Insofar as additional trade or better trade is to be achieved by negotiations with foreign governments, these two agreements critically determine our opportunity. Taken in combination, these two trade treaties result in a quite extraordinary rigidity, inhibiting the negotiation of new trade opportunities with foreign countries achieved through tariff bargaining. Of course, nothing that I say in this context bears upon the Government’s policy of protecting Australian industry against overseas competition.

Superimposed upon this tariff scene we have at the present time, not by choice, but by inescapable necessity, a wide system of import licensing. In theory this could be used as a bargaining factor in negotiating trade arrangements, but for most powerful reasons we are against this as a policy. Nothing could be more provocative or, in the end, more complicating. But, in addition, we are also engaged contractually as a member of the General Agreement on Tariffs and Trade to operate import licensing in a non-discriminatory manner as between countries, although not necessarily as between currencies. To add one more factor to the complexities of our external trade situation, most of our exports are raw materials such as wool, wheat and other grains, and ‘base metals which enter most countries under terms of free or near-free entry, whereas the overwhelming percentage of our imports from foreign countries is subject to tariffs.

My remarks are designed to deal with that aspect of trade opportunity which can be negotiated only by the Government with other governments. At this level, we want, first, assured rights of continued access and opportunity in a market where we now have access, and preferential tariff terms as justified by reciprocal preferences given. We want also the assurance, as intended under the General Agreement on Tariffs and Trade, of protection against discriminatory tariff obstructions to our trade. We want protection against distortion of the normal pattern of our trade through the disposal of surpluses on non-commercial terms, and against distortion by export subsidies. We want stability in world trade in important commodities, which can be assured by contracts such as the International Wheat Agreement. We want an assurance of protection against dumping in an established market, for which we are prepared to guarantee reciprocally the trade of an established customer against dumping in our market. We want sufficient flexibility in our tariff commitments to leave some elbow-room for the negotiation of new export trade opportunities. Finally, and hardly less important than any of these requirements that 1 have mentioned, we need the opportunity to buy from overseas on terms which will avoid inflating our own costs unless there is a clear balancing benefit to compensate.

These are the requirements of our situation which have been constantly in mind in all our recent tariff and trade negotiations. They represented the Australian case at the review session of the General Agreement on Tariffs and Trade about twenty months ago. Our negotiations then produced substantial modifications of rules under the agreement which recognized a number of these points. Our one complete failure on that occasion was the failure to have the rules amended so as to permit improved adjustment of the United Kingdom preferences accorded to a number of our exports to that country. The finality of this General Agreement on Tariffs and Trade situation has largely shaped our approach this year to the United Kingdom in which we proposed comprehensive adjustments of the contractual trading arrangements between ourselves and that country, each being the other’s greatest customer. We have claimed - and I have not the slightest doubt that we can substantiate our claim - that the Ottawa agreement of 1932 has, for a variety of reasons, come to operate with an advantage to United Kingdom trade in Australia very much greater than the advantages to Australian trade in the United Kingdom. Our thinking on this, and what in our opinion was necessary to re-establish a balance of advantage, was pointed out late in 1954 by the present Minister for the Navy (Senator O’sullivan), who was then Minister for Trade and Customs, and myself to all the Ministers in the United Kingdom Cabinet who .were concerned with our trading or general relationships. We felt that some improvement of our trading relationships could be achieved without the alteration of contractual relations, principally in our wheat trade.

This year, with our balance of payments problem becoming if anything more acute, or at least taking on an air of greater permanence, the Government decided to approach the problem of our external trade situation in more formal contractual terms. Consequently, after months of quite intense study here, the Prime Minister and I opened negotiations with the United Kingdom Government in June. The Australian proposal was that the current Ottawa agreement should be replaced by a more comprehensive agreement, which would embody the principle of preferences under the Ottawa agreement, protecting existing Australian rights in the United Kingdom, but modifying the United Kingdom rights in Australia to a level nearer to the balance of advantage. In addition, we proposed that Australian exports to the United Kingdom should be accorded some new protection - by that I do not mean tariff protection - for instance, against the competition of goods sold with the advantage of subsidies by foreign governments, protection against noncommercial transactions made possible by foreign governments, and mutual protection against dumping. One result intended to flow from this was an assured reestablishment of the historic position of Australian wheat in the total pattern of British wheat imports.

Having reached a certain point of understanding late in July, the negotiations were interrupted, principally to permit the United Kingdom Government to engage in certain detailed studies. The Australian request, from the outset, had been that all issues to be negotiated in determining the trade relationship between the two countries should not be negotiated in separable compartments but as one total issue embodied in one trade treaty. In late July agreement was reached with the United Kingdom Government that this should be the objective of the two governments - one comprehensive trade agreement to replace the current Ottawa agreement, and also embody whatever other trade arrangements were agreed upon. Mr. Crawford, the permanent head of the Department of Trade, with other Australian officials, is expected to return to London in a few weeks’ time to carry further forward details of arrangements for final consideration by the two governments. It is agreed that if sufficient progress is made to warrant it, I will then return to London with the object of endeavouring to reduce the new arrangement to final contractual terms.

Broadly, this trade arrangement at which we aim is designed to achieve three results. First, protection of our normal trade with the United Kingdom. Wheat is our second largest export, and honorable members will be aware of the extent to which our share of the United Kingdom’s wheat imports has shrunk over the last few years. Secondly, to secure new or improved negotiated trade opportunities, principally with foreign countries. To negotiate concessions with foreign countries we require greater freedom in our tariff than we now have. Thirdly, to ensure that we do not burden ourselves, through contractual commitments, with greater import costs than are justified by compensating contractual benefits. In a country with indications of inflationary problems at home and which must be cost conscious in exports, this cost factor in out objective is rated as highly important. These are our objectives. In return we offer the United Kingdom continuance of contractual reciprocal preferences, so that he great export industries may continue to enjoy a preferred position in this their most important market. We also offer reciprocal protection against trade dislocation b dumped goods.

Let me take our three objectives again. The first is to protect our existing trade. In the last few years, the actions of various governments have held great threat to some of our main exports and, indeed, we have suffered great damage on occasions. We argue with the United States against trade distortions through the non-commercial disposal of surpluses. We argue with the United Kingdom that if it is to be accorded great and valuable protection in our market, it should be unwilling to receive goods on non-commercial terms which would damage our commercial trading. Let me say this has not happened in the United Kingdom in respect of American surpluses to an> measurable extent, but we continually feel that here is one great threat overlying our trade in all our markets which would aggravate the difficulties which we already face from the more straightforward subsidies on exports. Governments have manipulated multiple exchange rates on occasions with dislocating effects. Some of our exports, the principal example being wheat, have encountered, with serious consequences, the competition of government subsidized exports. These are examples of the kind of thing we have in mind in seeking firm protection for our existing trade, so long as we can quote on commercially competitive terms.

The second objective is to secure new trade opportunities. What we have principally in mind here is that the measure of protection accorded many United Kingdom products in this market as against their foreign competitors is higher than is necessary to preserve reasonable trade opportunity here for the British product. But the Ottawa agreement stipulates rigidly the margin of preference which must be accorded. Our thinking here is that there should be a selective narrowing of the tariff margins agreed in 1932. A narrowing of the contractual margins in a new agreement would not itself alter a single item in our tariff schedule. It would, however, restore to us a freedom to narrow the margin on items. This freedom would be employed as a negotiating point with perhaps the principal alternative foreign supplier of an item, in order to secure for our export trade a new opportunity in that market. The operation of the General Agreement on Tariffs and Trade would, of course, mean that any reduction of the mostfavourednation duties in our tariff would be universally applied to all members of that agreement. We believe that there will be found many instances where, without serious impairment of British trade here, a sufficient encouragement can be given to a’ foreign country by this means to secure for us valuable new export opportunities.

Then the third objective, reduction in our costs. To-day, 52 per cent, of all of our imports are materials essential for production here, and a further 24 per cent, of our imports consists of capital goods. These figures make it clear that any contractual tariff loading of the landed cost of this huge category and volume of imports can importantly run through our internal cost structure. This can be justified only where compensating contractual benefits have been secured. I again make it clear at this point that these remarks have no reference to our tariff protection of Australian industry.

By far the greater part of our export earnings comes from our primary industries, but the projection of our requirements of export income for, say, five or ten years ahead, on the assumption of the continued population growth of recent years, seems to show that the most we can expect from the primary industries in added income would not be sufficient to permit us to escape from import controls. Secondary industry must therefore contribute increasingly to export income. There are already encouraging signs here. The proportion of manufactured goods to our other exports has steadily increased over the past few years. They now account for some 10 per cent, of our exports. By 1961 they must be in the region of 20 per cent, of our exports if we are to finance imports at a level considered necessary for our expanded economy. The continued expansion of manufactured exports is an urgent national need. I have already put it to manufacturers that they should make every effort to sell overseas, pointing out that they must sometimes export even on a bare cost basis. It is in their self-interest to do so. There have been some responses from manufacturers which are very heartening, but we must have more of them. No unwarranted cost burdens should be imposed on our industries, both primary and secondary, which affect their ability to sell abroad at competitive prices. It will be clear therefore why part of our negotiations is designed to secure as much cost relief as can be achieved within an overall balancing AustraliaUnited Kingdom trade agreement. These negotiations have not involved tariff discussions on individual items. If successfully concluded, the final outcome for Australia should be a much greater protection of our external trade, valuable new trade opportunities and important relief from the impact on our internal costs of imported items.

I have been quite candid in stating to British Ministers that the obectives which I have outlined to-night could result in a somewhat greater percentage of our imports being secured from foreign sources. However, if our objective is successful and the recent dramatic rate of our national expansion is therefore enabled to continue, the total volume of imports from the United Kingdom will be on the increase, even though in percentage it may be somewhat reduced. I think that that aspect has been clearly understood by the British Board of Trade and the British Cabinet.

The United Kingdom is not the only country with which we have entered into trade discussions. While in London, I took the opportunity to discuss trade possibilities with representatives of several Eastern European countries. I also accepted an invitation from the Czechoslovak Government to visit Prague, where we had exploratory talks about the development of increased mutual trade.

Our most important export market, the United Kingdom, and a number of our other large export markets, lie at a great distance from Australia. But there are other markets geographically much closer to Australia which offer bright possibilities for our exports. We have already made great progress in New Zealand, which is now our principal market for manufactured goods. We must vigorously develop our exports to other neighbouring markets. Japan is our greatest customer in the Pacific area. It is now our second leading world market. We recently began formal trade negotiations with it. We hope that the outcome of these negotiations will be an arrangement which will provide a satisfactory long-term basis for our trading relationships with Japan, ft is clearly necessary for great trading partners such as Australia and Japan to have some stability, formality and predictability determining the current circumstances, import controls, licensing and so on.

We have many problems to overcome in our drive for greater markets. But we are making real progress. Our exports are steadily increasing. We are developing a new national export consciousness. Exports of manufactured goods are rising, and new items are appearing among our exports. We are breaking into completely new markets. We have legislated for an exports payments insurance scheme. This will provide valuable facilities for exporters.

These are noteworthy achievements. But we cannot rest there. We must intensify our efforts and step up the rate of our export expansion. The Government will play its part. We will vigorously pursue our trade promotion activities, and the Trade Commissioner Service will give all appropriate assistance to our exporters to the many overseas markets where our trade commissioners are now established.

It is the policy of the Government to borrow overseas on sound terms. Economic stability here will encourage the inflow of overseas investment funds. These two sources of overseas funds can supplement our increased earnings from exports. Increased overseas income, together with the progressive avoidance of the necessity to import as Australian industry expands, are components of the Government’s constructive planning for the solution of our balance of payments problems and, in due course, an escape from the constrictions and irritations of import licensing.

The Australian economy is basically sound. We are a young country trying to do so much, so quickly, with so few people, to develop a continent, yet at the same time determined to sustain standards as high as any in the world. I believe that history contains no parallel to the achievement of the Australian development and industrialization of a continent by so few people. In the course of this achievement no section of the community has been subject to the exploitation which, so often in history, has gone hand-in-hand with the development of great national economic strength. I can see no reason why we should not, at the same time, be proud of our achievement and be still impatient to do better.

After all, discontent with the existing state of affairs is the very soil from which progress grows. However, do not let us confuse that kind of discontent with pessimism. It would be too much to expect that we shall never experience some ups and downs in our fortunes. Do not let us mistake a manageable and passing phase for a whole change of the economic scene. I am completely optimistic of our future progress and stability, but optimism and achievement are not the same thing. A contentment that would condone rising costs would be serious. To sustain the tempo of our expansion we must have additional export income. To be sure of additional export income the whole nation must become cost conscious as well as export conscious.

Mr POLLARD:
Lalor

.- T have listened with very great interest to the speech of the Minister for Trade (Mr. McEwen), and I think I can say that, summed up, all it means is that if the countries with which we trade are prepared to forsake the methods that they adopt to protect their own people, everything in Australia will be O.K. Surely, after a trip abroad lasting three months, visits to the United States of America, long talks with responsible American authorities, long conferences with the authorities in the United Kingdom, long talks with the responsible authorities in France, Italy and practically every other country in the world, by the Minister for Trade, this Parliament could reasonably expect to hear something more concrete and practicable from this Minister, who, after all, is the most responsible Minister concerned with our trade, than it has heard to-night.

We are told of a vast mountain of difficulties. If some country will forsake its subsidization policy, if some other country will abrogate an honorable agreement we entered into in 1932 regarding an exchange of trade preferences, because at this moment, due to our own stupidity, we find ourselves in great difficulty, and if somebody else will do something in relation to wheat, we might be more able to trade with some other countries of the world. If we get the United Kingdom, which has been our traditional market over the centuries, to do something which will advantage us and disadvantage the British people, we might be able to do more extensive trade with our traditional enemies, including our recently very virile enemies, the Japanese.

What a policy of despair! After all, this Parliament knows full well, and should take full cognizance of, the fact that every country in the world adopts the trade policies that are most advantageous to its own nationals. It is the traditional policy of the United Kingdom, necessarily so, to buy in the cheapest possible market. If succeeding governments of the United Kingdom did not follow that policy the British people would face starvation. The British must trade in the cheapest markets of the world, whether they be in South America, the United States of America, the Far East or anywhere else, and make the best bargains they can. Fortunately, over a long period of years, both in peace and war, it has been most advantageous, in the main, for Britain to trade with the Commonwealth of Australia. Possibly no country has been more advantaged by such a fortunate situation than has the Commonwealth of Australia. I make bold to say that in war-time no country was more fortunately situated in respect of trade with the United Kingdom than was Australia. Whilst it is true that in the initial agreements for the sale of our products to the United Kingdom,, which were made when the first Menzies Government was in office, the price received for our products, with some reservations regarding review, was substantially below the cost of production, even at those prices we were lucky to be assured that for the duration of the war, unless Britain was defeated, we could rely on these guaranteed prices and that guaranteed market for our products.

Those are the facts. Now we find, after much talk in this Parliament and in the primary producers’ press, and after many peregrinations abroad, the Minister has returned and has stated, in effect, though without saying it directly, that all his missions and negotiations have ended in complete and utter failure. How could they end otherwise? The plain fact is that he has tackled the situation from the wrong end. He has said to the United States of America, to the United Kingdom and to France, in effect, “ Look here, you are indulging in a very nefarious practice. You are indulging in subsidization “. If the Minister wanted to say that to the representatives of other countries, as he did, he should at least know why they are indulging in subsidization.

The Minister knows very well that the United Kingdom and France are adopting that practice because they fear war. They are afraid that, within 24 hours, hostilities will cut them off completely from the traditional markets upon which they depend for food. The have acted wisely in the interests of their nationals to ensure that, for at least six, nine or twelve months, whatever it may be, they will be independent of outside markets, and will be able to exist while they are rallying their friends, and strengthening themselves, and opening the sea lanes so as to bring to their countries the requirements of human life.

The Minister has actually abused the United Kingdom and France because of their policy of subsidization. He did that in February or March of this year, when he made a long- winded speech on trade negotiations. He might very well look at the traditional policy that we ourselves have been applying for the past half century. It is a policy which the Minister himself endorses to some extent. The Labour Government, which followed an administration of which he was a member, also endorsed and reinforced that policy.

Let us consider the butter industry. We have guaranteed to butter producers a costofproduction price, based upon all the factors that enter into the cost of production.

We have told them that, in respect of at least 20 per cent, of the butter consumed in Australia, irrespective of what they obtain for their butter on the world’s markets, we will pay them the full cost of production. For example, let us suppose that the cost of production in Australia is 5s. per lb. and the prevailing selling price in the United Kingdom is 3s. After taking into consideration 20 per cent, of the butter consumed locally, if it is found that the dairy producers are suffering a deficit of ls. per lb., they are subsidized by that amount.

The Minister for Trade - I think 1 shall call him the Minister for Blatherskite - knows, when he sits at the table with representatives of the United Kingdom, that he is vulnerable, because is is practising the very policy that he condemns those representatives for adopting under much more justifiable circumstances than ours. We are in the same position with wheat. We have guaranteed to wheat producers, thanks to Labour policy, the full cost of production of wheat, come what may. It does not matter whether the price of wheat on world markets falls to 5s. a bushel. If a quantity of wheat of less than 100,000,000 bushels is involved, and the net result of export trading for the year is 5s. 6d. a bushel, the Commonwealth Government is committed to pay the difference between 5s. 6d. and the cost of production, which might be 13s. 6d.

How stupid it is, and how utterly dishonest for a man of the status of the present Minister for Trade to try to pump into intelligent representatives of other nations a story that he and his fellow countrymen are being done an injustice by a subsidization policy, when we are practising that policy ourselves. It is humbug.

Not once has the Minister touched upon the basic problems of Australia. I am one of those who believe that we should avail ourselves of every possible opportunity to expand our overseas trade, but let us do it honestly. Let us treat the people with whom we negotiate as people who have intelligence at least as high as, and perhaps higher than, ours. Let us realize that they are not fools, and we might arrive at a more satisfactory conclusion to our negotiations than the present Minister for Trade has reached in three and a half months of an expensive tour.

Let us consider the important matters that he should have been studying, such as the cost factor within Australia. If the Minister and every other member of the Government had stayed at home, and devoted all their attention to the internal economy of Australia, we would have been in a more advantageous position than we are to-day. In 1949, a very good wage return was ensured to the workers. It was not enough because it is never enough, but it was a very good return considering the fact that we were in the immediate postwar period. The cost of producing wheat was 7s. Id. a bushel. In the meantime we have had good seasons. There has not been a bad one among them. Providence has been bountiful, but this Government of incompetents has so mismanaged the Australian economy that the cost of producing wheat is 13s. 4d. or 13s. 6d. a bushel - a few pence do not matter - based on a calculation identical with that used in 1949.

The cost of producing butter has increased similarly, although I concede that the Minister, by a variation of the formula, may have helped the dairy-farmers to the extent of 2d. or 4d. or 6d. per lb. The cost of producing butter, as ascertained by almost the same authorities, was 2s. 2d. per lb. in 1949. To-day, it is about 5s. or 6s. Surely the Minister and his colleagues would have been better engaged studying inflationary tendencies in Australia, instead of going abroad and abusing other people.

Let us have a look at one factor affecting our costs - a factor that this Government, with all the advantages that it has enjoyed, could have done something to control. In August, 1954, it cost 2s. 3d. to transport a bushel of Australian wheat to the United Kingdom, but in December, 1955, the cost was 6s. 2d. a bushel. The latest quote is about 6s. 6d. a bushel. So, the freight on wheat sent to the United Kingdom has risen from 2s. 3d. to 6s. 6d. a bushel since August, 1954.

Some questions were asked in the Parliament about th.Qt increase. Placidly, without stressing the importance of the matter to Australia, the Minister for Trade rose on his hind legs and said, “ Freights have gone up, but, of course, there has been a great demand for ships to transport coal across the Atlantic”. He did not say that the freight increases were justified because the cost of ships had increased, because the cost of running ships had increased, because harbour dues had increased, or because the salaries of ships’ officers had increased. He said that there was an increased demand for ships to carry coal across the Atlantic. That, apparently, is the reason why Australia has to pay 4s. 3d. more than in 1954 to send a bushel of wheat to the United Kingdom. A price margin of that kind would put our wheat-growers in a very advantageous position.

Did the Minister say that that sort of practice had to cease? Did he say that freight charges of that order could be compared with a charge of £170 for a ton of potatoes - a figure that has no relation to the cost of production? Did he say that we were being robbed? For our protection in peace and war it is essential that this Government, right now, shall embark on a vast and comprehensive policy of building ships, either here or overseas, to transport our goods to the markets of the world. Probably somebody on the other side of the chamber will rise in his place shortly and say that we had experience of Commonwealthowned ships after World War I., when the late William Morris Hughes, on behalf of the Commonwealth, bought ships to transport our products overseas, but the result was that they lost millions of pounds a year.

Even if, after the establishment of, so to speak, a protective line of Commonwealth ships to carry cargoes of Australian wheat, wool and other products to the markets of the world, the Government found that, at the end of one year’s operation, there was a deficit of £2,000,000 or £3,000,000, it would have to bear in mind that it would be impossible to assess the indirect gain to Australia by virtue of the fact that the very existence of the Commonwealth ships had prevented people from robbing us shamefully when, for example, there was a demand for ships to carry coal across the Atlantic.

But the Government has not said a word about doing that. We know its policy. Only recently a measure was introduced which bound the Commonwealth-owned ships operating around the coast of Australia with conditions that were very advantageous to the private shipping companies, despite the fact that those ships had been built in this country - in the main, by the Labour governments of the war period and the post-war period - to ensure that we should have efficient shipping services round our coast. The Government has thrown discretion to the wind. The outcome of that measure will be that in the sphere of interstate shipping, as in the sphere of overseas shipping, we shall be subjected to profiteering and extortionate charges. What applies to the freights on wheat applies also to the freights on wool, butter, eggs and every other product that we export. We have not heard a word from the Government about what we should do to protect ourselves. The Minister is not interested in that. He wants to go on glorious tours, staying at the best hotels and meeting the best people. But when Mr. Crawford, the Minister’s chief departmental officer, goes to London he finds that he has to negotiate with just as stubborn a Sphinx as the Minister found that he was up against when he visited London. We have heard a long dissertation about the Ottawa Agreement, the General Agreement on Tariffs and Trade, and preferences. The Minister has explained that he told the British Government that we wanted this and that. Heavens above, let us have a look at what is wrong with the situation here at home!

I want to direct the attention of the committee to a few of the things that have been said about this budget. I have dealt for so long with the Minister that I have not much time left to deal with the budget. I want to say that the treatment meted out to repatriation pensioners and invalid pensioners by this Government is disgraceful. I shall not go into details, because the matter has been dealt with very adequately by other honorable members on this side. Let us have a look at what Fadden says.

The TEMPORARY CHAIRMAN (Mr Bowden:
GIPPSLAND, VICTORIA

– Order! The honorable member must refer to Ministers by their titles.

Mr POLLARD:

– The Acting Prime Minister said that the object of the Government was to prevent a recurrence of inflationary demand and of the conditions that led to excessive imports and the running down of our reserves. Later in his speech, he said -

Yet another primary condition is to bring our costs and price situation under control.

The emphasis should be on control. Then he said -

We have no exact measure of the cost and price changes over the whole field of our economy-

How profound! He continued - lt is beginning to affect seriously the whole economy.

How lovely! And yet we talk about producing more, and increasing our exports to the markets of the world. Let me quote a statement made in February, 1956, by Mr. Crawford, the Secretary of the former Department of Commerce and Agriculture, to show how impossible the present situation has become for young Australians and how difficult are the problems of placing more men on the land in order to produce more goods to ship overseas and so redress our adverse trade balance. Mr. Crawford, addressing the West Australian Chambers of Commerce, said -

The provision of capital has become especially important, particularly in the case of new ventures. A moderate wheat farm, producing about 4,000 bushels and running 400 ewes, now requires land, equipment and stock of about £20,000, compared with about £9,000 in 1945.

Everybody knows that between 1945 and 1949 Labour was in power in this Parliament, but in 1949 the cost of establishing a man on a farm was not one-half of £20,000 - the figure mentioned by Mr. Crawford. He went on to say -

For wool-growing and fat lambs (1,000 ewes), about £18,500, compared with £9,500; and for dairying (50 cows), about £12,000, as against £6,000 in 1945.

Mr. Crawford further pointed out, in a very able address to, no doubt, an attentive audience - he is a man of great ability - that between 1939 and 1951 our population had increased by 22 per cent, and in the same time agricultural production had risen by only 4 per cent. Let us see what the position is in 1956. I think it is fair to say that since 1939 our population has increased by about 25 per cent., but our agricultural production, to be generous to the incompetent Minister, has increased - most of the increase being due to the incentives and well-laid plans of the Labour governments of the war years and the postwar years - by, perhaps, 6 per cent, or 7 per cent. At present it costs £20,000 to establish a man on a wheat farm and £18,000 on a wool farm. We want increased production. Our population has increased since 1939 by about 25 per cent., or by approximately 1,250,000 people. Research workers have shown that to produce sufficient food for 1,000,000 people, at least 23,000 farmers are required. Immigration is increasing, natural increase is going on and, in order to feed our increasing population and provide for our immigralion intake, we need at least another 25,000 farmers in Australia. The obstacle against putting men on farming lands in this country at the present time is the excessive cost.

I want to mention just one thing more. If honorable members desire any reinforcement, of a non-partisan character, of the condemnation of the impotence of this Government, let me quote the Liberal honorable member for Wannon (Mr. Malcolm Fraser). In to-day’s Melbourne “ Age “ there appeared, from his point of view, a very honest and competent argument. He referred to the recurrent economic crises, and said -

We:-

That is his mob, this Government -

We have attacked symptoms, nol causes. Government measures are short-term ones and expedients that offer only temporary relief.

That is what the Liberal member for Wannon said. Never mind about our partisan criticism. He went on to say -

We are no nearer to curing the real cause of our unbalance than we were twelve months ago.

The Government’s budget, according to the honorable member, insofar as it deals with our economic problems, is not worth two bob. He added -

If anything, the signs of inflation are worse than they were then.

How is that? He went on to give the causes, and included among them the spectacular development of the past few years. He suggested cures, and then he went off the rails. He said that we should curtail immigration. Up to a point 1 agree with him; but then he said that some form of deflation is necessary. The Labour movement will have nothing to do with deflation; we support stabilization.

This Government promised to put value back into the £1 in 1949. Even if it had not wholly honoured that promise, at least it would have stabilized the value of the Australian currency at that time, to wit, 1 2s. lid.; but we find that to-day its value is 5s. Hence the economic crisis in which we find ourselves and which was so caustically dealt with by the honorable member for Wannon. I shall leave it at that. I hope that I have convinced members on the Government side that they are hopelessly incompetent.

One final word. I hope that the Government, with the State Premiers, will grapple with the problem of capital issues control. Recently, 1 stood in one of the main streets of Melbourne, and after observing certain things that were going on in some of the great emporiums, I went into one of them to check up more thoroughly. I found that three of them, during the last twelve months, have indulged in an expenditure of at least £1,000,000 in structural alterations - fancy shop windows and so on. These alterations were made to buildings that were already very substantial and durable. That is £1,000,000 in terms of labour, structural steel, cement, bricks, and services, professional and otherwise. Under capital issues control, that sum, the expenditure of which in the direction I have indicated, was wholly unnecessary, would have financed the building of at least 250 homes valued at £4,000 each. And what goes for the three Melbourne emporiums, 1 have no doubt, goes for a number of Brisbane and Sydney emporiums, and for a whole lot of structural alterations to buildings and for all sorts of works going on all over this Commonwealth. Labour and materials are being wasted when they could be diverted to build homes, roads, sewerage installations, hospitals, schools and other public utilities. I leave it at that. I hope that in due course the people will awake to the fact that this Government is incompetent and hopeless in its attempt to rectify the problems that confront Australia to-day.

Mr SNEDDEN:
Bruce

.- The gyrating genius from Lalor will be pleased to know that on this occasion I agree with something that he has said. I agree with the honorable member for Lalor (Mr. Pollard) that Australia has a need for ships, but I do not agree that the ships that Aus tralia needs should be government-owned. I wish to refer to the budget speech of the Treasurer (Sir Arthur Fadden) in which he refers to the £175,000,000 invisible deficits. Unfortunately, the figures for 1955-56 were not available to me. However, those for 1954-55 were available and in that year the deficit from invisibles was £173,000,000. Because of the similarity of the figures, it is reasonable to take the breakdown of the invisible deficit for the 1954-55 financial year. On the debit side of the invisibles was a sum of £308,000,000. On the credit side was a sum of £135,000,000 making a net deficit of £173,000,000. Included in the £308,000,000 on the debit side is one transcending item tor freights, insurance and passenger berths amounting to £103,000,000.

It is a tremendous and staggering amount. To balance against that £103,000,000 one looks to the credit side and finds a sum of £58,000,000 for providoring by overseas shipping lines in Australia. Add to that £58,000,000 the only other comparable item, which is £4,000,000 freight charges earned by Australian ships carrying cargo overseas. I assume that those earnings were by ships on charter to such organizations as the Australian Wheat Board. By adding the £4,000,000 to the £58,000,000 on the credit side we reach the total of £62,000,000. On the debit side is the sum of £103,000,000. To subtract them is an easy matter, and we get the figure of £41,000,000 which is a handicap of great proportions when we consider the balance of trade situation. I suggest to the Government that that is too great an amount to be allowed to remain. I suggest that by a policy of flexible taxation it should encourage shipping line profits to remain in Australia. [Quorum formed.] Before the interruption occurred, I was referring to the breakdown of the invisibles in the balance of trade situation. On the debit side is a total of £308,000,000 and on the credit side a total of £135,000,000, leaving a deficit of £173,000,000 for the 1954-55 financial year. Transcending everything else in importance, there is, on the debit side, an item of £103,000,000 for freight, insurance and passenger fares. On the credit side is an item of £58,000,000 - the biggest single item - for the providoring of overseas ships in Australia. The only comparable item on the credit side to add to the £58,000,000, is one of £4,000,000 for freight earned by Australian ships carrying cargo overseas. That gives us a total of £62,000,000, which, when subtracted from the sum of £103,000,000, leaves a net deficit of £41,000,000, which has been occasioned by the transportation of imports to Australia.

I suggest that the Government should pursue a policy of taxation that would encourage the creation of an Australian shipping line to carry our goods throughout the world. The position could be analagous to that in the gold-mining industry, where profits, at both company and investor level, are exempt from taxation. The formation in Australia of a shipping line to operate on overseas routes would reduce dramatically the amount of £41,000,000 to which I have referred.

There is also the other outstanding fact that we earn only £3,000,000 from tourist traffic to this country, whilst Australian tourists spend £19,000,000 overseas. If, to the difference of £16,000,000, is added the figure of £41,000,000, we are presented with a staggering total that is not far short of the sum which import controls are designed to save. By the formation of an Australian shipping line, we would dramatically cut down these invisible items and contribute materially to the development of Australia’s tourist industry - a course which has often been advocated in this House.

Mr Calwell:

– The honorable member should come over here.

Mr SNEDDEN:

– I will not go over there because I want to see an Australian shipping line established. Moreover, I. hope that the honorable member for Melbourne (Mr. Calwell) will never be over here to convert a private enterprise of that kind into one of Labour’s losing undertakings. I shall never be over there, and I suggest that if honorable members opposite continue to pursue their present policy, they will never be over here. We have an invisible deficit of £173,000,000. It is far too large, and should be attacked by the Government. I have suggested a method by which that can be done - a flexible taxation policy, analagous to that operating in the gold-mining industry, to encourage the establishment of an Australian shipping line which would eventually challenge the monopolist combine that to-day carries Australian goods overseas.

In the 1954-55 financial year imports totalled £847,000,000, but exports totalled only £761,000,000, leaving a deficit of £86,000,000. If to that is added the deficit from invisibles, we have a total of £259,000,000. One might reasonably have expected that the overseas credits would have been reduced accordingly but, in fact, they were not. On 30th June, 1954, overseas credits stood at £571,000,000. At 30th June, 1955, overseas credits stood at £428,000,000. There was, in fact, a reduction of £143,000,000 though we might well have expected a reduction of £259,000,000.

The difference between those two figures - £116,000,000 - presents a most interesting study. That sum represents a variety of items, the most important of which is the favorable movement of currencies in relation to Australia. To counteract the expected reduction in overseas credits, government loans totalling about £12,000,000 were floated overseas. What the Treasury people of this and other countries describe by the glorious title “ the balancing item “. amounted to £30,000,000. Apparently it varies, and depends principally upon the point of time at which the exporter or importer either pays or receives the money.

One of two important items that prevented the diminution of overseas credits was an amount of £30,000,000, which represented the undistributed profits of overseas companies. That is most important in view of the criticisms from the other side of the chamber of the profits earned in Australia by overseas companies. That sum helped us to offset the diminution in overseas credits. The other important item represented new investment from overseas, which amounted to £43,000,000. That was an extraordinarily high figure. The Treasurer said that unfortunately we could not anticipate that that level of investment would continue. I hope that it will continue, and I feel that the Government’s policy of providing proper trading facilities for overseas investors will ensure this.

Honorable members opposite have offered no reasonable criticism of the budget. Instead, they have offered merely a chorus of inanities. There is no doubt that if ever they come over to this side the worst fears of the Treasurer will be realized, and there will be a cessation of private investment from overseas. I repeat that in the financial year 1954-55 overseas investment in Australia totalled £43,000,000.

It was most gratifying to me, andI am sure to the vast majority of the Australian people who have the welfare of this country foremost in their minds, to hear the Treasurer announce that the Government had approved a forward immigration programme, and had decided that, for general planning purposes, a net annual immigration figure equivalent to 1 per cent of the population should be its aim. It is not a question of considering immigration, but rather one of considering population. I would like to see the Government set a populaiton target, to be reached within a certain period, and thereafter adjust the net intake in accordance with the target. I am afraid that the figure of 1 per cent. does not satisfy me. I would have liked to see it much higher, but it is certainly an earnest of the Government’s attitude in this matter. Government supporters realize that it is necessary to lay down a firm programme and adhere to it. The Government has expressed itself on this point, but it is most gratifying to know also that there is at least one item of policy which, in the American term, is by-partisan in this Commonwealth Parliament. According to the “ Hansard “ record for 2nd August, 1945, the Deputy Leader of the Opposition (Mr. Calwell), in the course of a debate on immigration, said -

It would be prudent for us, therefore, not to ignore the possibility of a further formidable challenge within the next quarter of a century, to our right to hold this land. We may have only ihese next twenty-five years in which to make the best possible use of our second chance to survive. Our first requirement is additional population.

I emphasize those words of the Deputy Leader of the Opposition -

We need it for reasons of defence and for the fullest expansion of our economy. We can increase our 7,000,000 by an increased birth-rate and by a policy of planned immigration within the limits of our existing legislation.

It is most pleasing to the majority of members of this House, despite the sporadic criticism of immigration, to know that if the Opposition ever moved to the government side of the House, the by-partisan policy of immigration, for the development of this nation and the growth of its population, will remain.

Progress reported.

page 561

CUSTOMS TARIFF (PAPUA AND NEW GUINEA PREFERENCE) BILL 1956

Bill returned from the Senate without requests.

page 561

ADJOURNMENT

Commonwealth Shipping Line - Mr. Vladimir Petrov’s Book - Employment

Motion (by Mr. Harold Holt) proposed -

The the House do now adjourn.

Mr WARD:
East Sydney

– I take this opportunity to raise a couple of urgent matters that I believe require the attention of the Government. In the debate this evening something was said about shipping and I direct the attention of the Minister for Labour and National Service (Mr. Harold Holt) to a deliberate act of discrimination against ships of the Commonwealth shipping line. Recently, in the port of Cairns there has been a shortage of sugar for loading because of an industrial dispute. Three vessels were loading at the one time in this port. One was “ Obra “, which had completed its loading, and the other two were “ Burwah “, a vessel of the Howard Smith Company, and “ River Murray “, of the Commonwealth shipping line. They were loading at exactly the same rate and at the same time - that is, the same tonnage of sugar per hour was being put aboard, and each ship was employing the same number of men. In the case of “ River Murray “ all the men engaged in loading her were sacked, and one gang loading “ Burwah “ was sacked also. The argument advanced by those in charge of the operations was that these men were deemed guilty of insufficient effort. But in the case of the private ship no sacking took place, and this indicates a clear discrimination against the vessel of the Commonwealth line.

The authorities controlling Commonwealth ships are exercising discrimination because of the limited supply of sugar available for loading in the north of Queensland so that no interruption in loading private ships will be caused. In this instance, the privately owned vessel was employing the same number of men who were loading at the same rate, but the men loading the Commonwealth ship were sacked on the ground that they were making insufficient effort. The real reason was to ensure that, of the limited quantity of sugar available for loading, sufficient should be available to load the privately owned ship, lt is about time that this Government did something about the sabotaging of Commonwealth ships by the authorities who exercise control over stevedoring operations.

The second matter relates to an insolent reply which I received from the Acting Prime Minister (Sir Arthur Fadden) to a question that I placed on the notice-paper. For the information of honorable members, 1 will read the question so that they may be assured that it was phrased in proper language. H was as follows: -

  1. Did a senior officer of the Australian Security Intelligence Organization assist Mr. Vladimir Petrov to prepare for publication a book entitled ‘ Empire of Fear “, of which the latter is listed as author?
  2. If so, did the officer concerned act with departmental or governmental authority?
  3. Is it a fact that the manuscript was sent to the Commonwealth legal authorities for checking, and that certain passages were withdrawn at the request or direction of the Commonwealth Solicitor-General or some other Commonwealth legal officer?
  4. If so, will he make the withdrawn sections available to the Parliament for the information of honorable members?

There was nothing wrong with the way in which those questions were phrased and directed to the Acting Prime Minister. I now invite the attention of honorable members to the replies that he gave. I can understand that the Government is a bit punch-drunk at the moment, and that, no doubt, the Acting Prime Minister is a bit rattled. However, I ask honorable members to listen to these replies from the man who is, in the governmental sense, the leader of this country to-day. This is what he said -

  1. Yes. An officer of the Australian Security Intelligence Organization, who was in the course of his duties engaged in the collection and dissemination of security intelligence from Mr. and Mrs. Petrov, did ‘ give assistance to these people in writing their most interesting and revealing book “ The Empire of Fear “. I commend it to the honorable member.
  2. The arrangement was made upon the authority of the Director-General of Security. By way of explanation, since it is obviously the intention of the honorable member to discredit our security organization, I add that it was plainly necessary from the security point of view that advice should, be available to Mr. and Mrs. Petrov as to the use for publication of material which on the one hand might be of intelligence value to other democracies and on the other hand might be required in evidence before the then current

Royal Commission on Espionage. The only effective way in which this advice could be made available was by assisting Mr. and Mrs. Petrov from within the resources of the Australian Security Intelligence Organization.

The Acting Prime Minister was trying to hide the fact that a senior officer in the Commonwealth security service was made available to assist Mr. Petrov in the preparation, writing and publication of his book. What had that to do with the security service of Australia? Who is to benefit from the publication of this book? Will the Commonwealth receive any payment from the sales of it? Will the officer from the security service who is engaged on this matter be given anything from the proceeds? The Government is probably a little worried as to where I obtained this information in regard to the activities of certain government bodies. The officer who was allocated for this particular type of work visited Canberra, not in connexion with his security work, but in connexion with the preparation and publication of this book. Actually, the taxpayers of Australia paid so that Mr. Petrov might be assisted in the publication of a book from which he, individually, would reap a financial benefit. That is an improper use of the services of a Commonwealth officer. It is no wonder that the Acting Prime Minister became a little annoyed about the matter, because he had to admit that what I had been told, and what I suggested by my question, had actually taken place. Therefore I say that the reply given to me can be considered as unsatisfactory, not only to this Parliament, but also to the people of Australia generally.

In the few minutes that I have at my disposal I wish to say something about the Minister for Labour and National Service (Mr. Harold Holt) and his attempts to mislead the Australian community regarding the employment situation to-day. I am sick and tired of hearing the Minister citing the figures on the subject which he says are released periodically by the Department of Labour and National Service, and which he knows, as well as any other person in Australia, do not state correctly the employment situation. I give honorable members an illustration of this. The Minister is always talking about the number of unfilled vacancies that exist. He tries to create the impression that if a man happens to receive notice from his present employment there is no need to worry, because he can go immediately to the Commonwealth Employment Service and be given another job. Recently, 290 employees were dismissed from the Garden Island naval establishment. They sent a deputation to the Minister for the Navy (Senator O’sullivan) to make what I consider to be a very proper request. The representatives of these men asked the Minister to withdraw the dismissal notices until the Department of Labour and National Service, which claims that there are about 40,000 unfilled positions, could provide them with other work. The Minister for the Navy could not give that assurance. They were likewise unable to obtain such an assurance from the Minister for Labour and National Service. Most of these 290 men were skilled workmen. It cannot be said that they were unskilled, and therefore difficult to place. What was the obvious thing for the Minister to do? This matter must have been raised in the Cabinet, lt must have been known to the Minister for Labour and National Service, and he should have been using the facilities of his department, if these vacancies actually exist, to absorb the men dismissed from Garden Island. He knows, though, that it is almost useless to apply to the Commonwealth Employment Service to-day for employment.

When the Minister tells us about the number of persons in receipt of the unemployment benefit, he and every member of this Parliament and people generally throughout Australia know full well that a means test is applied to applicants for unemployment benefit. If a man knows that he cannot qualify because his wife or some other member of the family is earning an income, he will not apply for the unemployment benefit. There are thousands of people in that position in Australia to-day. We have heard in this Parliament about the unemployment position in Western Australia. There are Italian immigrants in that State-

Mr SPEAKER (Hon John McLeay:
BOOTHBY, SOUTH AUSTRALIA

Order! The honorable member’s time has expired.

Mr HAROLD HOLT:
Minister for Labour and National Service and Minister for Immigration · HIGGINS, VICTORIA · LP

– in reply - The matters to which the honorable mem ber for East Sydney (Mr. Ward) addressed himself in the early portion of his speech will, of course, be considered in due course by my colleagues who are concerned with them. I should not have risen but for the honorable member’s concluding remarks, in which he tried to cast some doubt upon the bona fides of the Department of Labour and National Service, and of myself as its ministerial head, in connexion with the statements that we release periodically indicating employment trends in Australia.

Frankly, I cannot fathom what is in the minds of some honorable members opposite in relation to this matter. Are they really concerned with the problem of unemployment? Are they really concerned to see that people who have the misfortune to be out of work at any time secure jobs, or are they merely trying to create an atmosphere of concern and panic among workers and members of the commercial community in order to score a few political points for themselves? I cannot imagine anything less likely to promote conditions favorable to continuing employment than these repeated references to the unsatisfactory state of Australian industry or the employment market. If a man is available for employment it does not help his position to tell employers that there are so many men offering for employment that the employers can pick and choose and take their time about engaging labour. We on this side of the House have not only refrained from trying to create that atmosphere; but we have also quite frankly put forward the facts, which we believe indicate that there are opportunities available for people who have skill or effort to offer.

I do not want to traverse again ground that has been covered, often enough I hope, in this Parliament, concerning the state of affairs in the employment field since we took office. In 1947, when the Labour Government of which the honorable member for East Sydney was a member, was in office, a census was taken which showed that, throughout Australia, some 83.000 people were recorded as unemployed. We did not raise a cry at that time that a depression was upon us. We all recognized that the year 1947 was one of great prosperity. When the honorable member for Parkes (Mr. Haylen) a few years ago said that if we had no more than 5 per cent, of our work force unemployed, for all practical purposes that could be taken as substantially full employment, he did not speak as a defeatist.

Mr Ward:

– Of course the Minister knows that he did not say that.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– He did say it. 1 do not want to worry the House with a repetition of this matter. I merely refer the honorable member to the facts as recorded in the official account of the happenings in this place. The plain fact is that by every standard recognized by any authority of consequence throughout the Englishspeaking world this country has known full employment throughout the time of office of this Government.

The honorable member for East Sydney made a reference to Western Australia. Although, as I pointed out earlier, the number of people receiving unemployment benefit in Western Australia has never at any stage exceeded 1 per cent, of the working population in that State, I may inform the honorable member that in every one of the last three weeks the number of people receiving the benefit in Western Australia has been reduced, if only slightly. That has occurred in the slack period of the year from employment.

We have taken such action as we could to ensure that a buoyant economy would be maintained, and that there would be opportunities for persons to secure employment as their circumstances required. The figures that are released each month by the Department of Labour and National Service do not purport to do anything more than indicate employment trends. The figures relating to unemployment benefit are not a complete answer in themselves. The figures showing the number of people registered .for employment do not provide a complete answer in themselves, because they may change the day after they are released, as some applicants are placed in jobs The trends, however, are there for us to see. 1 repeat again - and I hope I shall not have to go on repeating it - that the policy of this Government is one of full employment, and the record of this Government is a record of full employment, throughout the seven years that we have been in office. That policy is still our policy, and that record remains our record.

Mr Ward:

– What about Garden Island’.’

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– As to the

Garden Island employees, to whom the honorable member has referred, it is true that because we have decided this year not to increase the amount available for the defence programme, and because within that programme there are certain items that inevitably involve us in increased expenditure, such as the St. Mary’s and Maralinga projects, it has become necessary to retrench in certain other directions. But do honorable gentleman opposite condemn that fact? If I have understood one thing that they have said in this budget debate, it is that we should have reduced defence expenditure very much more than we have done. I heard one of them only yesterday suggest that we should have reduced it b> £25,000,000 or £30,000,000 more than we have done. If people are displaced by our holding the programme to the same figure as last year, there is certainly an obligation upon us to do what we can to see that they are replaced in employment. I told honorable members opposite quite recently that I would see to it that representatives of the Commonwealth Employment Service were available at each of those establishments to discuss the employment needs of any man who had been given notice of retrenchment. We expected very little difficulty in placing skilled and semi-skilled workers, and I have yet to learn that the great majority of them have not been placed in employment. The figures certainly do not suggest that there has been any considerable increase in the number of unemployed.

We do not suggest that we live in a static economy. Changes are taking place in all directions; and it is our purpose as a government so to maintain the economy and employment situation that those willing and able to work will find an opportunity to do so. We are prepared to point to the record of our six, or seven, years of office as witness to the fact that the undertaking we gave to the Australian people when we were elected has been honoured not by lipservice but by actual performance; and that will continue to be the objective and achievement of this Government.

Question resolved in the affirmative.

House adjourned at 11.22 p.m.

page 565

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Primary Industries

Mr Ward:

d asked the Minister for Primary Industry, upon notice -

What was the total acreage of land in use for (a) agricultural production and (b) pastoral pursuits, and what labour force was employed in these industries, in each of the years 1939, 1941 and 1949, and during the latest period for which figures are available?

Mr McMahon:
LP

– The following information, obtained from the Commonwealth Statistician, is submitted in reply to the honorable member’s question: -

  1. The following table shows the total area ot land used for rural purposes .in each of the year.’ 1938-39, 1940-41, 1949-50 and 1953-54. Subclassifications are areas of crops, fallow and sown grasses and clover. The residual item includes other land in various stages of development which is used for grazing as well as land used for other purposes or lying idle. More detailed information on land actually used for grazing is noi available.
  1. The table below shows persons working on rural holdings. It may be noted that information is collected as at 31st March each year. Details collected have varied during the period under review. Statistics relating to employment according to type of farming are not now collected, data relating to temporary employees are available only from 1950 onwards and no such data were obtained in 1940-41.

Merino Sheep

Mr Lawrence:
WIMMERA, VICTORIA

e asked the Minister for Primary Industry, upon notice -

  1. How many merino rams have been exported from Australia in each of the last five years?
  2. To which countries have they been sent?
  3. What were the prices paid for them?
  4. What is the number of ewes joined with these rams and the number of lambs born?
  5. What has been done with these lambs?
  6. What is the number of current applications from abroad for licences to import merino rams from Australia?
Mr McMahon:
LP

– The answers to the honorable member’s questions are as follows: - 1, 2 and 3. Answers to questions 1, 2 and 3 have been set out in table form for clarity of analysis -

4 and 5. (a) Reports on the utilization of the three rams sent to the Animal Breeding and Research Organization, Edinburgh, are awaited and no specific information relating to ewes mated and lambs born is available at present. (b) With regard to the four merino rams sent to the Grootfontein Research Station, South Africa, 216lambs were born in the autumn of 1956 following the 1955 matings, and 321 ewes are due to lamb this spring following the autumn 1956 matings. The lambs are being retained on the research station and will be utilized for research into the influence of environment on the development of merino sheep. (c) The rams sent to New Zealand are mainly used for grade flock improvement purposes and information is not available on the breeding records of these sheep. (d) The four grade rams sent to EromangaIsland in 1952 were also used for flock improvement purposes. A small grade flock of merino sheep has been maintained on EromangaIsland for many years and all production from this flock is disposed of in Australia. No information is available onthe breeding records of these rams.

  1. Current applications for approval to export merino rams are for ten stud and six grade rams for the south island of New Zealand.

Trade with Japan.

Sir Arthur Fadden:
CP

– On 5th September, the honorable member for Kingsford-Smith (Mr. Curtin) asked the following question: -

Is the Acting Prime Minister aware that the Mitsui Bussan Trading Company of Tokio has concluded a contract with the Broken Hill Proprietary Company Limited for the sale of 942,000 tonsof Australian steel, including 17,000 tons of shipbuilding plates? In view of the grave shortage of steel generally in Australia, which is affecting heavy industry, particularly shipbuilding, and is causing severe unemployment which, in turn, is giving rise to great concern within the trade union movement, will the right honorable gentleman give consideration to these factors before issuing the necessary permission for the export of this very essential product?

I am aware that Japanese buyers have concluded a contract with the Broken Hill Proprietary Limited, for the supply of the following steel: - Plates, 17,000 tons; sheet bar, 25,000 tons; total, 42,000 tons. The capacity to produce plates is more than sufficient to meet the total local demand. Current production is in fact in excess of full requirements. It was therefore agreed that the above-mentioned quantity which can be made available from surplus production during the next four months could be exported to Japan. Approval was also given to export 25,000 tons of sheet bar which will be available from surplus production at Newcastle over the same period after the full requirements of the sheet rolling mills have been satisfied. The steel used in the production of plates and sheet bar could not be diverted to the production of other categories of steel in short supply because other rolling mills are working to capacity. I can assure the honorable member that the Government appreciates full well the need to ensure adequate supplies of steel to local users and that approval has been given to export this steel only because it will be surplus to Australian requirements.

Cite as: Australia, House of Representatives, Debates, 13 September 1956, viewed 22 October 2017, <http://historichansard.net/hofreps/1956/19560913_reps_22_hor12/>.

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