House of Representatives
3 September 1957

22nd Parliament · 2nd Session

Mr. SPEAKER (Hon. John McLeay) took the chair at 2.33 p.m., and read prayers.

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– I desire to inform the House that His Excellency Ngo Dinh Diem, President of the Republic of Viet Nam, is within the precincts. With the concurrence of honorable members, 1 propose to provide him with a seat on the floor of the House.

Honorable Members. - Hear, hear!

His Excellency Ngo Dinh Diem thereupon entered the chamber, and was seated accordingly.

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Mr. KEARNEY presented a petition from 1,959 citizens of Australia praying that immediate consideration be given to the matter of increasing the rates of age, invalid, and widows’ pensions to at least 50 per cent, of the basic wage.

Petition received and read.

Petitions praying that pension rates be increased to 50 per cent, of the basic wage were presented as follows: -

By Mr. LUCHETTI from 2,714 citizens of Australia.

By Mr. WHITLAM from 1,863 citizens of Australia.

By Mr. FOX from certain citizens of Australia.

Petitions received.

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– 1 ask the Prime Minister whether the House can be supplied speedily with the available records of the disarmament conference in London, about which it is obvious that there must be a debate, and on the subject of which the Opposition would earnestly request a debate as soon as possible.

Prime Minister · KOOYONG, VICTORIA · LP

– I think that any available records which are in their nature public and not confidential should be made available, and I shall take steps to see that they are made available.

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– 1 direct a question to the Prime Minister. Having regard to the recent decision given by the High Court of Australia in the uniform taxation case, has the right honorable gentleman considered calling a conference of the State Premiers to discuss any implications of the decision, including the continuance or otherwise of uniform taxation?


– As far as I know, no request for a conference has been received from any Premier. 1 myself do not propose to initiate one because I am under the impression - I think rightly - that the position is in substance exactly as it was at the last Premiers conference when this matter was discussed and tax reimbursements were fixed for the year.

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Incident in Members’ Bar.


– 1 would like to ask a question without notice of you, Mr. Speaker. I desire to know whether you are aware that an incident, which could better be described as a brawl, occurred in the members’ bar in Parliament House amongst a number of Government members in the early hours of the 22nd May last, the concluding day of the last parliamentary sittings. Is it correct that some damage occurred to Commonwealth property, and if so can you say by whom the responsibility was accepted for meeting the cost of necessary repair or replacement? Are you also aware that extraordinary steps were taken by the Government to prevent publication in the press of any reference to this disgraceful occurrence - including a threat by a senior Minister to have all privileges in and about Parliament House, customarily extended to newspaper representatives, withdrawn if any dared to disobey his order? Is it a fact, Mr. Speaker, that the granting of such privileges as are enjoyed by press representatives in the Parliament House is solely a matter for your determination, and will you say whether the Minister concerned had your authority to make any such threat in an endeavour to suppress publication of an occurrence which could only bring discredit on the Government and the members concerned?

Mr Menzies:

Mr. Speaker, before you answer that question I would suggest to you that such a question should not be asked unless the honorable member is prepared to name the Minister concerned. That, I suggest to you, should certainly be done before any such vague charge is dealt with; Otherwise I would suggest that the charge is an invention.


– I will give consideration to the point raised by the honorable member for East Sydney, and also to the suggestion made by the Prime Minister.

Mr Ward:

– I have no objection to naming the Minister concerned.

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– I ask a question of the Minister for Air. Is it correct that the Royal Australian Air Force station at Pearce, Western Australia, will be used for training purposes? In view of the fact that Pearce is designed as an operational base, will the Minister indicate whether its use as a training school will be permanent and whether this will curtail its use as a permanent base for operational aircraft?

Minister for Air · EVANS, NEW SOUTH WALES · LP

– It is correct that present Air Force plans provide for the temporary use of the station at Pearce in Western Australia for training purposes. The Advanced Flying Training School will be transferred to Western Australia and will be based at Pearce from some period in 1958 on a temporary basis. The reasons for this change are that during 1958 the Advanced Flying Training School will be re-equipped with Vampire jet trainers and the school’s present base at Point Cook, Victoria, has not a suitable airfield for jet flying. Other suitable bases are at present occupied for other training purposes and Pearce is the appropriate place to send the school until a permanent base for jet flying training is prepared in the eastern States.

The move will be temporary for two reasons; first because it is contrary to Air Force policy to have operational functions and training functions on the same establishment; and secondly, in the interests of economy and efficiency, it is necessary to have the school close to the other Air Force training establishments in the south-east of Australia. The Government is conscious of the need to carry out flying training activities widely throughout Australia and, until the techniques of mobility are somewhat overcome by the introduction of modern transport aircraft towards the end of next year, this is a useful opportunity to carry on some training functions of the Air Force in Western Australia.

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– I ask the Minister for Social Services whether, in view of the increasing numbers of unemployed, he will consider granting social service medical benefits to unemployed persons and their dependants, and make a recommendation along these lines to Cabinet.

Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

– Eligibility for unemployment relief benefits is largely determined by the Department of Labour and National Service. The Department of Social Services carries out the physical task of paying these benefits when eligibility has been established. The question of the provision of free medical services will be given the consideration that the Government deems is its due.

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– I address a question to the Minister for Primary Industry, who may recall that, some time ago, I advocated that a flood and national disaster insurance scheme, on somewhat the same lines as the one operating in New Zealand, should be established in Australia. On that occasion, the Minister said that he would investigate the practicability of such a scheme. I now ask him whether he can tell us the results of that investigation.

Minister for Primary Industry · LOWE, NEW SOUTH WALES · LP

– Subsequent to the honorable gentleman asking a question about the New Zealand insurance scheme, particularly insofar as it relates to disasters such as floods, storms, tempests, earthquakes and the like, I obtained full details of the scheme, and made an investigation of the question whether it should be introduced in Australia. If my memory holds good, I think we came to the conclusion at that time that there was not a strong enough demand for the introduction of such a scheme. Apart from obtaining all the facts regarding it, I think the department came to the conclusion that the time was not ripe for the introduction of a similar scheme in Australia.

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– 1 direct a question to the Minister for Social Services. By way of explanation, let me say that before coming to Canberra for the current sessional period, I had occasion to board out my averagesized, unpedigreed dog at the dogs’ home conducted by the Royal Society for the Prevention of Cruelty to Animals, at Moore Park, Sydney. The cost of board and lodging for the dog is £3 a week. As the cost of board and lodging for a dog at a dogs’ home, living, I presume, mainly on dog biscuits, is estimated at £3 a week, will the Minister arrange for the immediate increase of all pensions to not less than £6 a week, so that pensioners may have at least double the standard of living of an average-sized, unpedigreed quadruped canine, boarding at a dogs’ home?


– It might be considered facetious to address a question of this kind to you, Mr. Speaker, and, through you, to me. At the same time, it is, in my humble opinion, a gratuitous insult to the Australian people receiving social service benefits to compare their circumstances with those of a dog.

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– Can the Minister for Health say whether it is true that the use of drugs known as mescaline and lysergic acid, and experiments being carried out in New South Wales, raise new hope for mental cases? Will this research be further developed? Will the Government also assist in the provision of facilities for psychotherapy to help the after-care of patients suffering from mental illness?


– I am not sure, from the honorable gentleman’s remarks, who is carrying out this research; but it is not, I think, being done by any organization responsible to the Department of Health. Facilities for psychotherapy are not provided by the Commonwealth, but come within the province of the States.

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– I direct a question to the Minister for Air. In connexion with the negotiations by the Ansett Airways executive for the absorption of the Australian National Airways organization, about which there has been certain con sultation with the Commonwealth Government, are extended provisions being sought for assistance with finance or new air service routes or both? In the total amount that i3 to be paid by the Ansett corporation to the A.N.A. organization, how much is foreign capital? Finally, will the Minister give an assurance that Trans-Australia Airlines will be relieved of any condition or restriction that has tied it to A.N.A. respecting passenger and freight charges, so that the people’s airline, T.A.A., can give this boasting, super-airline corporation some effective full-blooded competition?


– The matters covered by the honorable member’s question come within the administrative responsibility of my colleague, the Minister for Shipping and Transport and Minister for Civil Aviation. I shall see that the terms of the honorable gentleman’s question are referred to my colleague, who sits in another place, and who will, no doubt, answer the question in due course.

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– I ask the Minister for the Interior the following questions: Why has the war history of the Australian Imperial Force in Malaya not yet been published, in view of the fact that the galley proofs for it were ready at the end of 1955? Is it a fact that publication of the history has been held up in order that it may coincide with the publication of the British war history? If so, why? Does not the Minister realize that it is now twelve years since VP Day? Unless the history is published shortly many of the leading military personnel with whom the work is concerned are likely to die before the history sees the light of day.

Minister for the Interior · PATERSON, NEW SOUTH WALES · LP

– I am sorry that I have not the details of that matter, but I shall look into it and let the honorable gentleman have a reply to his question.

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– My question is directed to the Minister for the Army. In view of the heavy reduction in the call-up of national service trainees and the Government’s declared policy to reduce progressively its defence commitments, does he agree that this will mean the dismantling of many military establishments close to

Sydney? If so, will he inform the House whether he intends to dismantle all military initiations a; Long Bay Rifle Range and r.-i-jm that C~owa lr.r.d to the New South Wales Government so that it may be made available for the extension of that Government’s home-building programme?

Minister for the Army · BENNELONG, NEW SOUTH WALES · LP

– The honorable gentleman said in the first part of his question that it was the Government’s policy to reduce the expenditure on defence. That is not so.

Mr Curtin:

– I did not say that.


– The honorable member did say that. The honorable member is getting his facts a little confused. Whilst there has been a reduction in national service training, as was announced some time ago, that does not mean the discontinuance of certain establishments around the city of Sydney. I think he will be pleased to learn that I know of no establishment in the city and suburban areas of Sydney that will be disposed of. The rifle range raises an entirely different question, and it is one that I shall look into. Consideration of it has been going on, of course, since the rifle range was removed, but I shall look into the question and let the honorable member have a specific answer to it. So far as the other matter is concerned, I think he need have no fear.

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– In view of the very understandable desire on the part of many Australians to refrain from buying Japanese materials and goods the importation of which might endanger their own means of livelihood, can the Minister for Trade give an assurance that the branding of Japanese goods in a visible and prominent position, and in a permanent manner, will be most strictly enforced? In particular, can steps be taken to see that materials sold by the yard are branded “ Japanese “ on the selvedge?

Minister for Trade · MURRAY, VICTORIA · CP

– I think that we have an international obligation which would be a bar to our taking discriminatory action.

Mr Buchanan:

– That is not suggested.


– If what is desired is a common brand on all overseas goods, that is a matter that could be taken into consideration. I warn the honorable member. however, that it might involve a good deal of material being marked “ Made in Japan and printed in Australia”.

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– My question is directed to the Minister for the Interior. By way of preface, may I say that some five or six weeks ago the Department of Works commissioned five private firms of architects to prepare drawings of designs for new types of houses for Canberra. I ask the Minister whether it is true that fourteen designs were submitted by those five firms. Is it also, true that all fourteen designs have been rejected by the Department of Works largely on the ground either of cost or of design? Will the Minister say whether the announced intention at the time of commissioning these firms of architects to prepare home drawings was to get the ideas of other people and to introduce variety into the building programme?


– lt is quite true that, some little time ago, the Department of Works sought the submission by private architects of designs for houses for Canberra with the idea of getting some variety in them and, of course, of spreading the work of design here in Canberra. It is equally true that the National Capital Planning and Development Committee examined the private architects’ submissions and rejected them for quite a variety of reasons. But that does not close the incident at all; we are reviewing the plans and no doubt minor amendments will bring them back into consideration. I assure the honorable gentleman that we are still seeking a wider variety of house designs for Canberra.

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– From information which the Minister for the Army has given, 1 understand that the first body of the Third Battalion has left Australia to take up duty in Malaya. Can the Minister inform me when the main body of the Second Battalion, which is about to be relieved, will arrive in Australia, and whether arrangements are being made to receive the battalion in such a way that the Australian people can welcome them and express the gratitude that is in their minds for the service and devotion to duty that the troops have displayed during their tour of duty in Malaya?


– Whilst certain small portions of the battalion will be coming back individually, the great bulk of it will return towards the end of this month - I have not the exact date in my mind - and arrangements are being made in the City of Sydney to receive them. They will march in the streets so that the public may be able to accord them the proper tribute that they should receive for the great work that they have done during their stay in Malaya.

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– I ask the Minister acting for the Minister in charge of the Commonwealth Scientific and Industrial Research Organization whether a survey which is being made of vast, vacant, pastoral areas in the Wiluna-Meekatharra area can be extended to the Leonora and Laverton districts. In these districts there is an enormous area of country which, in the opinion of the Laverton Road Board, could be made available for settlement and development.


– For reasons which I think the honorable member will appreciate, 1 have no personal knowledge of the details of the inquiry to which he has referred. 1 shall take up with the Commonwealth Scientific and Industrial Research Organization the points raised by the honorable gentleman, and see whether his request can be met.

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– Last week, in answer to a question, the Postmaster-General said that from 45 per cent, to 61 per cent, of Australian television programmes were of Australian content. I now ask the PostmasterGeneral whether it is not a fact that this 45 per cent, to 61 per cent, consists only of quiz sessions, amateur talent shows, sport, cookery and similar demonstrations, ls it not a fact that of approximately 60 hours drama telecast each week by the commercial stations, there is no Australian drama whatever, the entire content being imported?

Postmaster-General · DAWSON, QUEENSLAND · CP

– It is correct, as stated by the honorable member for Yarra, that the figures of from 45 per cent, to 61 per cent, that I quoted do include all programmes which have an Australian content. May I make it plain to the House that it is the objective of the Government, the Australian Broadcasting Control Board, and the Australian Broadcasting Commission, in the development of television, to develop a medium which will portray, not only to Australian viewers, but also to visitors from overseas, the typical Australian way of life. Therefore, in talking about the Australian content, we include all those programmes which show the Australian way of life. That, I think, is quite proper.

Dr Evatt:

– Even though they are American made?


– Such programmes do not portray the Australian way of life. As I have said before, the proper portrayal of drama and similar productions demands a pretty complete studio organization, which the licensees have not yet been able to develop, but which is being developed. The Australian Broadcasting Commission has already produced several Australian dramas, which are a credit to the commission, and which will be extensively increased when facilities that are being made available, both to commercial stations and the Australian Broadcasting Commission, have been completed.

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– From information received, I understand that arrangements are now being made for the shipment of live cattle from Darwin to the Philippines. Can the Minister for Territories indicate whether the information is correct? Are port facilities at Darwin suitable for the shipment of cattle? Will this open up a prospect for a suitable outlet which would assist the cattle industry in the Northern Territory?

Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– The export of live cattle from the northern part of the Northern Territory to the Philippines has always been valued as a market for a comparatively small proportion of the cattle produced in the Northern Territory. In previous years, shipments have taken place and I understand that some cattle are to be shipped this year. Of course, there are certain limitations on the number of cattle which can be shipped. On the particular point which the honorable member has raised about the facilities in the port, I will make inquiries and give him what information I can obtain.

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– I ask the Prime Minister whether it is a fact that well over two years ago an all-party committee of the Parliament of Western Australia put forward a number of proposals in connexion with the development of the north-west of that State, including a proposal for the construction of a dam on the Ord River, road development-


– Order! The honorable member’s question is on the notice-paper; therefore, it is out of order.


– But Mr. Speaker, I want to know when it will be answered.


– Order! The honorable member will resume his seat.

Dr Evatt:

– On a point of order, Mr. Speaker, cannot the honorable member explain why he has asked this question?


– Order! The honorable member was asking a question, and he was out of order in doing so. If he is seeking information as to when he might get a reply to a question appearing on the notice-paper he will be in order.


– I ask the Prime Minister when I am likely to get a reply to a question which has appeared on the notice-paper since 26th March, and which has been asked repeatedly in this House?


– Order! The right honorable the Prime Minister.

Mr Curtin:

– He has been away for two years.


– Order! The honorable member for Kingsford-Smith will cease interjecting.


– It is better to be temporarily absent than permanently absent. The answer to the honorable member’s question is, “ As soon as possible “.

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– I ask the Minister for Supply whether he can give an assurance that every effort is being made by the governments of the United Kingdom and the United States of America to coordinate their nuclear testing programmes in order to minimize the risk of polluting the atmosphere and of causing danger to life.

Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– My knowledge of the matter leads me to believe that a good deal of discussion and collaboration has taken place between these two governments on the question of nuclear tests. I would not hesitate to believe that the collaboration goes to the extent of ensuring that there is no danger to human life resulting from these tests. I shall have inquiries made, and if there is any information I can give the honorable member it will be made available to him.

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– I ask the Minister for the Army whether he is satisfied with the number of members of the Australian Regular Army who refuse to re-enlist when their term of service expires. Is it a fact that each of these members is given a form and is asked to state his reasons for not re-enlisting for a second term? Is the Minister satisfied with the numbers who are re-enlisting? If not, can he give the House the reasons why most of the men refuse to re-enlist for a second term?


– I should be a very strange Minister if I were satisfied. As a matter of fact, I am not very satisfied with the number of re-enlistments, although it is not inconsiderable.

Mr Edmonds:

– What would be the proportion?


– 1 have not the exact number, but I will supply it if the honorable member desires. There are a variety of reasons for non-re-enlistment, and these have been checked. I should say that the main reason is the economic buoyancy that has existed in this country as a result of good government for so long and the availability of more remunerative jobs. In the opinion of the Army personnel these offer better money than they receive in the Army. However, I can assure the honorable member that the position is being checked all the time and that continuous surveys are being made of the conditions in the Army. These are quite good and compare favorably with those in any other armed forces in the world. We hope, because of this fact, that the percentage of re-enlistments will be lifted. Whilst I cannot say that I am satisfied, the position is not as bad as the honorable member apparently wants to indicate.

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– My question is directed to the Postmaster-General. A few minutes ago he remarked that he hoped that the Australian content of television programmes would soon be increased as the result of the building of new studios. Will he inform the House how Australian artists can possibly compete with dumped American programmes, which are being sold in Australia at less than 1 per cent, of the original cost of production?


– The honorable member for Wills said that I had spoken about the building of new studios. Let me correct any misconception my remarks may have produced in the honorable member’s mind. I was not speaking about the building of new studios; I was speaking about the completion of studios which were planned and which are coming into operation now for the national stations in Sydney and Melbourne and for commercial stations. In that way the development of live productions in Australia will be assisted. The honorable member also asked me a question about the amount of employment likely to accrue to members of Actors Equity. To that I can say only that a deputation from this and kindred organizations waited on the Australian Broadcasting Control Board yesterday or the day before. The general overall position was explained to the deputation and the representations that it made are receiving consideration.

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– Has the Minister for Supply investigated reports that a nonpetroleum fuel, known as William Harthill’s synthetic petrol, and also a synthetic diesel fuel, have satisfactorily survived exhaustive tests conducted by the proprietors of a periodical known as “ Modern Motor “? Has his attention been attracted to claims that tests show a performance equal to standard pump petrol and that the fuel, which is cheaper than conventional fuel, consists of three principal ingredients readily available in Australia? Will he give careful consideration to this matter and, in view of Australia’s dependence on oil from the Middle East and other trouble centres, determine its value to Australia? Will he also consider the possibility of the Government assisting with scientific research and possible commercial production?


– The honorable member’s question should be addressed to my colleague, the Minister for National Development, but as I represent him in this House, I shall most certainly draw his attention to the question and see that the honorable gentleman receives a reply.

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– My question, which is directed to the Treasurer, refers to a question I asked of the Minister for Health last week, when I inquired whether he had received a letter from the Premier of South Australia concerning a ward at the Dawesroad General Repatriation Hospital which had been closed, though many exservicemen and women were unable to obtain treatment at the Royal Adelaide Hospital. I have now ascertained that the communication was addressed to the Treasurer when he was acting as Prime Minister some time ago. I ask the Treasurer whether, if no decision has been made on the possibility of opening the ward at the repatriation hospital for the general treatment of exservicemen, he will take up the matter immediately with the Minister for Repatriation and see whether an immediate reply can be given to the Premier of South Australia?


– The answer to the honorable member’s question is, “ Yes “.

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– My question is directed to the Postmaster-General. In view of the substantial profit made by the Telephone Branch of his department, will he take action to overcome the lag in the provision of telephone services to the many thousands of people awaiting this necessary facility? Further, will he investigate the undue delay in making trunk line calls from Canberra and, if necessary, order that additional lines be provided?


– I feel- and I am sure the honorable member will agree - that the answer to his question, as far as the policy of the department for the next twelve months is concerned, will be given when the budget proposals are presented to this House. I am hopeful that the honorable member will find that this Government, as it has done for many years, is giving proper attention this year to the need for the development of trunk line services and the installation of telephone services.

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Prime Minister · Kooyong · LP

– by leave - During recent months the Government has made a comprehensive review of civil aviation policy, the results of which it would now be appropriate to report to the House. The financial crisis in Australian National Airways which has received so much publicity in recent weeks was not peculiar to that company, but was in our view symptomatic of the economic condition of the entire air transport industry. Most airlines have been incurring deficits or operating under extremely marginal conditions, and even Trans-Australia Airlines’s profit was relatively small judged by normal commercial standards.

This situation has been brought about by two quite unrelated causes. The first cause is that the airlines have been unable to make profitable returns on DC3 aircraft, which still comprise in numbers the main element of the Australian aircraft fleet. This has adversely affected the small operators of intra-state feeder services and has also contributed to the marginal results achieved by trunk route operators. The second cause is that overlapping and duplicated services on certain trunk routes have reduced load factors to uneconomic levels. The Government considers it necessary to eliminate these causes of instability in the industry and has taken a number of decisions towards this end.

In the case of feeder services, it is willing to extend subsidy assistance to the operators of essential air services in rural areas. It is also prepared to help selected operators obtain suitable replacement aircraft for the DC3. In order to qualify for this assistance, the airlines concerned must agree to provide air services to specified areas at frequencies, fares and freight rates approved by the Minister. The policy adopted in the case of trunk route operations is basically the same in concept as that embodied in the 1952 Civil Aviation Agreement Act - that of providing fair and equal conditions of competition for two major operators. The private airline concerned will be given continued access to Government mail and business and assistance for re-equipment purposes. It will, however, be necessary to eliminate the wasteful effects of uneconomic competition on trunk routes by strengthening the rationalization provisions of the Civil Aviation Agreement Act. Under these conditions the Government believes that the trunk route operators should be able to make reasonable profits and yet provide at the same time the highly competitive type of service for which Australian airlines are noted.

Our belief that stability in the industry can be achieved under this pattern of development is supported by experience in the United States of America where the industry has been organized on a similar basis for many years. Certainly the powers of the Civil Aeronautics Board in the United States to control and regulate air services are greater than our own but I believe we can quite fairly assume some more effective control as a contractual condition of our very extensive support for this industry. During the last 30 years, the Commonwealth has spent £40,000,000 on the capital development of ground facilities for civil aviation, and has provided, either directly or through guarantees, £17,500,000 in capital for aircraft purchases. It is currently subsidizing outback, or developmental, services to the extent of about £350,000 a year, and is spending annually more than £7,000,000 on the maintenance and operation of the ground safety system. In return, it receives less than £2,000,000 a year in revenue from fuel tax and air navigation charges.

It is not very rewarding in these circumstances to find a financial crisis developing in the industry every few years. Although we fully recognize, through our financial support, the important part which civil aviation plays in the daily lives of most Australians, it is important that we establish as soon as possible a stable pattern for future development which gives some prospect of the industry emerging as a selfsufficient arm of our transport services. Our policy has that objective and I want to make it clear to the House that we considered all the recent approaches made to us about the future of A.N. A. in the light of that policy.

While we naturally viewed with concern the possible liquidation of a pioneer airline which had done so much for Australian civil aviation, we could not accept the proposal of A.N. A. for the formation of a holding company to “ hold “ both of the major competitors. Apart from other considerations, this proposal had, in our view, the inherent defect of substantially reducing, if not eliminating, the competitive element so essential to the future success of airline operations. Nor could we agree to assist any particular purchaser in its attempts to acquire A.N.A., for this would have constituted an unwarranted interference by the Government in what was in essence a purely private business negotiation. We did, however, make clear to all the parties concerned that it was our firm belief that the trunkroute system could not support more than two major operators. We indicated that we were prepared to relieve these operators of the economic burden of unprofitable feedertype operations, if they desired it, and also to continue under certain conditions the type of assistance provided under the Civil Aviation Agreement Act. This is still the position, and will, of course, be the basis on which we consider further representations made to us by Ansett Transport Industries Limited - the probable purchasers of A.N.A. I say “ probable “ because the transaction is not yet complete. The Ansett company will automatically assume the financial obligations of A.N.A. under the Civil Aviation Agreement Act if it purchases the shareholding in that company. For this reason, if for no other, we will want to see our basic policy requirements satisfied for the future development of a stable and financially healthy industry.

In reviewing civil aviation policy, the Government also gave consideration to its very extensive responsibility for the provision and operation of ground facilities, especially airports. It noted the considerable financial outlay which would be required to develop DC3 aerodromes to take larger types of aircraft, and concluded that there was no real justification for aerodrome development on this scale. Modern, pressurized aircraft, like the Handley Page Herald or Fokker Friendship, which I mention merely as two examples, will soon be available for purchase for rural air routes. In addition to bringing greatly improved standards of comfort, speed and capacity, to such routes, they have the all-important ability to use existing aerodromes. The Government recognizes the very commendable efforts made by local authorities in recent years to develop aerodromes ia country areas, and where such projects fulfil the previously declared conditions for Commonwealth acquisition, is prepared to provide funds progressively for this purpose. Some 50 aerodromes are involved, and altogether £800,000 will have to be outlaid over a period of several years. Close consideration has also been given to the rising costs of aerodrome maintenance, and to the burden which this imposes upon the owners of licensed aerodromes used on regular air services. As a result, the Government has decided to increase its. maintenance grants to levels which bear a. more realistic relation to present-day costs. At Commonwealth-owned aerodromes,, however, the Government intends to reduce its own costs by requiring airline companies” and other agencies to take full responsibility for the provision of any ground facility required for the specific use of such airline or agency. That, of course, refers not to aids to navigation, but to hangars, offices, terminal buildings, and the like. No change is contemplated in the Commonwealth’s responsibility for the provision of essential safety services - radio, air traffic control, regulatory services and so on. These activities have contributed much to Australia’s outstanding air-safety record, and are accepted as an appropriate field of Commonwealth endeavour.

I should now like to turn to the international field, where the Government has continued its policy of maintaining and expanding the operation of air services to and from Australia. Qantas Empire Airways Limited was authorized last year to place orders for seven Boeing jet aircraft for delivery in 1959, and these aircraft, together with the existing fleet of Super Constellations, should enable the airline to maintain its very high standards of service at the competitive level desired by the Government. In his speech to both Houses of the Parliament at the opening of this session, His Excellency the Governor-General mentioned the Government’s intention to strengthen Australia’s air links with both the United Kingdom and the United States of America, and stated that to this end endeavours would be made to establish an Australian air service through the United States. I am pleased to be able to report that early last month an agreement with the United States Government was signed in Washington which provides the necessary authority, as far as the United States is concerned, for the establishment of an Australian air service to the United Kingdom and Europe through the United States. In return, the United States has been granted approval for its airline to extend its services from Australia to Antarctica, South-East Asia and Africa.

The Government is conscious of the fact that a major political disturbance in the Middle East could easily disrupt the operation of our present air services to the United Kingdom, and attaches great importance to the security which the alternative routing through. North America gives to our external air communications. The commercial value of a route to Europe serving San Franscisco on the west coast of the United States, and the great city of New York in the east, also needs little emphasis.

The Government is anxious that Qantas should commence its services to the United Kingdom through North America before the end of this year, but it is necessary first of all to obtain the approval of the United Kingdom Government for the necessary traffic rights at London on the North American routing. The United Kingdom Government has agreed to discuss this matter with an Australian delegation which the Government will send to London immediately for this purpose. I am confident that the United Kingdom Government will have a ready understanding of the vital importance which we attach to the operation of Australian air services on this route and that the London discussions will result in the conclusion of arrangements of great mutual benefit to both countries.

In the field of aviation, as in all other matters, Australia has always maintained very close relations with our sister member of the Commonwealth in the Pacific, New Zealand. In exchange for the right for Qantas to operate through New York the Australian Government agreed to grant to a United States carrier the right to take on and discharge in Australia trans-Tasman traffic. As this was of particular significance to the New Zealand Government, steps were taken immediately to confer with the New Zealand authorities, who raised no objection to the grant by Australia of trans-Tasman rights to an airline of the United States.

Air services between Australia and New Zealand are at present operated by Tasman Empire Airways, which is jointly owned by the Australian and New Zealand Governments. A conference at ministerial level has been arranged to discuss re-equipment plans for T.E.A.L. and to consider the possibility of closer association with Qantas so as to ensure adequate and economic utilisation of existing and future T.E.A.L. equipment. The Australian Government realizes the importance for New Zealand’s defence policy to have long-range transport aircraft on the New Zealand register and to have maintenance facilities in New Zealand and a reserve of New Zealand operating crew. Full weight will be given to these considerations - which are also of indirect strategic importance to Australia - in the forthcoming inter-governmental discussions.

At present the focal point for Australia’s international air services is Sydney. From Sydney air services radiate across the Pacific to the United States and Canada, through South-East Asia and the Middle East to European points, including London, to South Africa and also to the Philippines and Japan. Apart from one service a week to the United Kingdom which operates through Perth, all Qantas services to the United Kingdom and to the Far East at present leave Australia through Darwin. The Government believes that it is in the interests of the Australian public for Australia’s international airline to serve more Australian cities and accordingly the Government has approved a plan under which Perth will obtain improved connexions with Europe, and Melbourne direct connexions with both Europe and North America. In addition to this, a call at Brisbane on Qantas’s services to London will be authorized. Detailed arrangements for these new services have still to be worked out, but it is hoped that improvements I have mentioned in overseas air connexions by Qantas from Melbourne, Perth and Brisbane will be in operation by January next year.

Another development in the international air transport field in which the Government has been taking a deep interest is the arrangement of air services in Malaya and Singapore which are in the process of important constitutional developments. Air services radiating from Singapore through

Malaya to countries in the near north, to the Philippines and Hong Kong and to Indonesia are provided by Malayan Airways, which is a company registered in Singapore. Coincident with the development of selfgovernment in Singapore and Malaya, new plans are being considered for the future operation of air services by Malayan Airways. Last year, the Australian representatives in Singapore, Kuala Lumpur and London were asked to inform the governments to which they were accredited that the Australian Government was prepared to give its support, in principle, to any arrangements which would result in a strengthening of the traditional aviation interest which Qantas Empire Airways had held for many years in the Malay Peninsula. As a result of this, Qantas Empire Airways has associated itself with B.O.A.C. in negotiations with representatives of the Singapore, Malaya and Borneo Governments on the question of the future arrangements for Malayan Airways services. The precise details have not yet been completed, but it is proposed to authorize Qantas to make an investment in Malayan Airways equal to that to be made by the United Kingdom airline, B.O.A.C. The investment will not exceed £400,000 and will ensure that Qantas shares equally with its partner on the Kangaroo route in the development of air communications on behalf of these Commonwealth countries in such close and vital proximity to Australia.

Before concluding, I should also mention that the special problems associated with air transport in the Territory of Papua-New Guinea have not been overlooked. A complete review of air services is being undertaken, and as soon as possible a policy will be announced which caters for the special needs of services within, as well as to and from, that area.

I think it will be apparent to the House from this outline of civil aviation policy that the Government has fully recognized the unique importance of airline services to a country of such great distances and remoteness from other centres of world population as Australia. I- could, perhaps, have dealt at greater length with other aspects of our existing policy, for we are subsidizing flying training in the aero clubs; we are assisting financially that great humanitarian project, the Royal Flying Doctor Service; and we are making it possible, through our financial support, for people in the outback areas of Western Australia, the Northern Territory, Central Australia and Western Queensland to receive regular air services. All these things are being done because we appreciate the great potential of aviation in the future development of this country. Our philosophy is to see that each section of the aviation industry gets a fair and equal opportunity to play its part in the development, and the policy I have outlined is directed towards this end. My colleague, the Minister for Civil Aviation, will give that policy such elaboration as is needed in a statement he proposes to make in another place.

I feel I should apologize to the House for taking so much time, but I hope that it will be helpful to honorable members to have a comprehensive statement of what the Government is doing and why it is doing it.

Leader of the Opposition · Barton

– by leave. - Far from believing that the Prime Minister (Mr. Menzies) needed to apologize for the length of his statement, I complain that the statement has many gaps in it. It covers an enormous field, lt covers overseas air communication as well as internal air communication and it needs careful consideration by Parliament before the final and vital steps are taken.

I will give one illustration. The Opposition agrees entirely with the Government’s assessment of the contribution made by the air services of Australia, and particularly by the technicians who make those services possible. We in the Parliament all recognize the value of those services, but they are sometimes slow to gain recognition where salaries and allowances are fixed. One point I wish to bring to the attention of the House is this cool assumption that the Government can, by its own decision, transfer from Australian National Airways Proprietary Limited to another organization the rights contained in the 1952 statute. I strongly dispute the Government’s right to do this. The 1952 statute was supposed to be a permanent settlement of the problem. An arbitrator was appointed to allocate routes and determine charges and A.N.A., whose shareholders primarily are overseas or interstate shipping companies, was given the right to share in government traffic - airmail and freight traffic as well as passenger traffic. Never was a private concern given

Such rights before. The Opposition protested against it. I am not criticizing the management of A.N.A. - I do not know enough about it - nor do I hesitate to pay the same tribute to the air crews of that company as I pay to those of Trans-Australia Airlines, whose pilots, I suppose, rank amongst the best in the world.

I submit that we should not approach this problem in a casual way. The Prime Minister has dealt with 20 or 30 subjects in this short statement, and they must all be considered.

Some honorable members of this House, and some honorable senators in the other House, have a wide experience of this subject. Honorable members on this side were in office when T.A.A. was established, and we remained in office for some time after that. We do not want a situation to develop such as that which developed recently, when A.N.A. hawked its shares round, looking for someone to buy them. It is a very serious position. Great debts have been incurred. Of course, the Government has the interests of aviation at heart. It must have, because Australia’s future depends upon aviation. We have all known this, and T.A.A. was established to give an effective service. It has done so.

All the provisions of the 1952 act must be looked at again. The purpose of that act was not to divide the traffic between T.A.A. and any other company that happened to come along. The companies involved at that time were T.A.A., which was a new and progressive undertaking, and A.N.A. I submit that the Government should not merely issue a statement of this kind, announcing its intention to take certain action. I have not, of course, had an opportunity of discussing this question with other members of the Opposition. These are most important matters, and I beg the Prime Minister and the Government to proceed slowly and to let the question be fully debated. Otherwise, further mistakes will be made. I do not agree with the Prime Minister that the present system has maintained competition. I believe that the act at present in operation was designed to prevent competition and to create a statutory cartel, a combination in which T.A.A. would be debarred from engaging in full competition. But, whether that be so or not, I beg the Government not to adopt the practice of making plans, deciding to carry them out and then presenting them to the Parliament. Let usall consider this question, because it is a non-party question of great significance. That is the only reason why I have risen to make this appeal to the Government.

page 194


Motion (by Mr. Harold Holt) agreed to -

That leave of absence for two months be given to the honorable member for Bradfield (Mr. Turner) on the ground of ill health.

page 194



Debate resumed from 29th August (vide page 172), on motion by Mr. McEwen -

That the following paper be printed: -

Agreement on Commerce between the Commonwealth of Australia and Japan, signed on 6th July, 1957.

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

That the following words be added to the motion: - “ and this House expresses its disapproval of the Agreement on Commerce between the Commonwealth of Australia and Japan “.


– Last week the Minister for Trade (Mr. McEwen) submitted to the House reasons why it should endorse the new trade treaty with Japan. I put it to honorable members that in any discussion centred on the trade treaty we should keep in mind that it is most important that Australia should not be left vulnerable to intense competition from Japanese manufacturers. The Minister, anticipating this argument, stated that the Government had taken special precautions in the treaty to protect the interests of Australian industry. I may be pardoned for saying that those remarks were received with profound scepticism by Australian manufacturing industries, which were not deceived by the sophistry and platitudes mouthed by the Minister. The Australian Labour party believes that the fears expressed by the manufacturers are real fears. We believe that the alleged safeguards supposedly incorporated in the agreement are not substantial or efficacious enough to allay the feelings of mistrust and perturbation that have been aroused in the minds of literally millions of Australian citizens. The Minister, of course, scoffs at the apprehension expressed by the manufacturers, but the fears of the manufacturers have been increased rather than dispelled by the explanation that he gave in this Parliament.

I realize the vital part that is played by primary industries in Australia’s economy, but I should like to stress the fact that secondary industries also are vital to our economic welfare. Any policy that results in one section of our industry scoring at the expense of another - which is what will result from this Japanese trade treaty - must ultimately bring irretrievable disaster to our economic structure. It is incontrovertible that this treaty strikes a body blow at many branches of Australian industry. Unfortunately, this thrust at Australian industry comes at a most important period of Australia’s economic development. On one hand, we are encouraging the importation of overseas capital for the purpose of establishing a variety of secondary industries. We are sending goodwill missions here, there and everywhere. One went recently from Victoria to the United States of America. As a matter of fact, goodwill missions are the order of the day. Their purpose is to hold out all sorts of inducements so that overseas capital will be used to establish secondary industries in Australia. I suggest that Gilbert, of Gilbert and Sullivan, in his most humorous moments, never concocted a more absurd plot than that which is inherent in this trade treaty. On one hand, we are encouraging the establishment of secondary industries with overseas capital. On the other hand, we propose to initiate legislation which will gnaw at the vitals of those industries as soon as they are established.

This treaty must inevitably slow down industrial development, and that, of course, will result in fewer employment opportunities in our secondary industries. The lower standard of living, the cheap labour and the long working hours in Japan allow Japanese industries to compete in a way that is a menace to our own secondary industries.

The Minister for Trade based his case on the fact that Japan buys £140,000,000 worth of commodities from us each year and that we buy from Japan only £13,000,000 worth. He suggests that such a state of affairs cannot be allowed to continue for much longer. The Leader of the Opposition (Dr. Evatt) stated, in reply, that the question was not by any means as simple as that. He suggested that the sterling blocs and the dollar bloc had to be taken into consideration. The Minister for Labour and National Service (Mr. Harold Holt) scoffed at those arguments. I should like to cite, however, some figures to prove that the observations of the Leader of the Opposition were quite sound. The information that I shall give is contained in the monthly foreign exchange statistics issued by the control department of the Bank of Japan. It will be seen that the advene trade balance about which the Minister has prated so much, and which, he says, will affect our economic structure, is actually a figment of his imagination. The figures cited by this Japanese publication show that in 1951-52, 1954-55 and 1955-56 Japan had a very favorable overall trade balance. She had an adverse trade balance in 1952-53, and also in the January to May portion of the present year. The adverse balance in all currencies for January to May this year is 285,000,000 dollars. But of this, only 24,000,000 dollars is an adverse balance with the sterling bloc, to which Australia belongs. There is a deficit of 203,000,000 dollars in the dollar area and a deficit of 58,000,000 dollars in other currencies. In other words, despite the fact that although this year Japan may have an adverse trade balance with Australia, its deficit in trade with Australia is offset by its favorable trade balances with other countries in the sterling bloc. Its position is nothing like what the Minister attempted to have us believe when he gave us the figure of Japan’s adverse balance with Australia. Twentyfour million dollars represents about £11,000,000 or £12,000,000, but the Minister talked about an adverse trade balance with Australia of £120,000,000 to £130,000,000. He did not mention Japan’s favorable trade balance with Great Britain.

So it can be seen, on a little examination, that the reasons advanced by the Minister for our entering into this arrangement with Japan are completely fallacious in view of Japan’s overall trade position. Japan’s favourable trade balance with the world as a whole destroys the argument submitted by the Minister last week. The Japanese figures to which I have already alluded show that, with the exception of 1952-53, Japan has done very well in world trade. I suggest that the Minister should abandon the argument he used last week in favour of the treaty, because it will not stand examination.

I should say that the problem confronting this country is: How far can we lower our guard in any trade agreement without leaving our local industries vulnerable to excessive competition by Japanese exporters. Unfortunately, the Government is obsessed by the dangers of collapse of our Japanese markets, with the result that this treaty proposes to lower our guard far too much. Surely, the past should have its lessons for us. We should clearly remember how Japanese imports flooded Australia twenty years ago. To-day, under this treaty, the threat to Australian manufacturers is even greater than it was then. It is true that Japan’s internal cost structure is higher than it was before the war - but it is still far below our cost structure. Japan is a nation with a tremendous potential, and still has an alarming capacity for cheap mass production. Moreover, her difficulty in competing with countries which can undersell her in some lines, such as India, has intensified her anxiety to break into the Australian market.

Recent experience -in the United States indicates that any weaknesses in this treaty will be exploited fully by the wily Japanese exporters - and there are numerous weaknesses in it, as I shall demonstrate in a moment. America, for example, found that a flood of Japanese textiles upset her domestic industry before Japan voluntarily imposed quotas. Other Japanese goods are now beginning to compete seriously in the American market. It is true that the trade relationship between America and Japan differs from that between Australia and Japan, but the example cannot be ignored by us. We are told by the Minister that the treaty is imperative in order to maintain our volume of wool sales to Japan. Japan certainly buys our wool in quantity, and she buys good quality. But she buys it of necessity, just as she buys other goods for the same reason. Japan’s adverse trade balance with us is given as the main reason for the treaty, but that adverse balance is not the big bad wolf that we are asked to believe. I do not seriously believe that the Australian wool trade with Japan would suffer as a result of the present circumstances operating between the two countries.

All honorable members have received a great deal of adverse criticism of the treaty from manufacturing interests in Australia. I must confess, as one who has not always agreed with the point of view of the manufacturing interests of Australia, that their submissions show that they have given very close study to the problem and have submitted a very strong case against the implementation of the treaty. Their submissions to the Government and to honorable members have been ignored by the Government, because of the Government’s inflexible determination to ensure the retention of the Japanese market for wool and other primary products, and also to open a new market for our f.a.q. wheat. That the Government’s objective in this direction will severely jeopardize many branches of Australian industry is apparently of no moment to the Government because of its obsession with the sale of primary products.

The manufacturing interests in this country have submitted too many arguments against the treaty, and expressed too many fears, for me to deal with them all in a short time. However, I shall deal with a few of the most vital. The first point is that under this treaty every Australian importer will be allowed to devote his whole quota of import licences to the purchase of Japanese goods. Because of the low prices in Japan, an importer will be able to purchase, with the amount of his quota, three times the volume of Japanese goods that he would be able to purchase in Great Britain. This will mean that British goods will face in Australia three times the competition from Japanese goods that they would have to face if these goods were being sold at the same price as the British goods. That is a point that was not mentioned by the Minister when he attempted to induce the House to condone his action in signing this agreement. Secondly, the low-cost Japanese structure will put an intolerable strain on Australian industries, especially the textile industry, which will have to compete on the Australian market with Japanese textiles. One reason for the low cost of Japanese goods is that Japanese workers do not have their hours of work limited by any awards, and do not enjoy the benefit of annual leave, sick leave and the other amenities that Australian workers have. As a result, thousands of workers in Australia will find their continuance in employment placed in great danger by this treaty. The textile industry, which was mentioned by the leader of the Opposition (Dr. Evatt) last week, will be the first to be hit by Japanese competition.

Another important point is that Japanese goods coming into Australia will bear the same low rates of duty as are borne by goods coming from European countries with a much higher cost structure than that of Japan. These rates of duty, which are designed to afford Australian industries barely adequate protection against European manufactures, must, of necessity, be totally inadequate to protect them from Japanese manufactures. The Government’s assurances that it will protect the interests of local industries will not bear examination in the light of previous experience.

I should like finally to refer to Article V. of the treaty, which is supposed to give protection to Australian industries. I had an opportunity of studying the minutes of the negotiations between the Australian and the Japanese delegations, and I found that the Australian delegation said that its expectation that serious damage to Australian industry would be avoided was based on the following promise -

That exports from Japan in particular lines, especially products of Australian industries which are historically or potentially particularly liable to disruption in the event of undue increase in the volume of imports from Japan, would not he allowed to reach such volume or to be shipped under such conditions as would cause or threaten serious damage of this kind.

The document from which I am quoting continues -

The Australian delegation said it would welcome the co-operation of the Japanese authorities in dealing with these situations and considered that early and effective arrangement, if undertaken by Japan, could make a substantial contribution to their solution.

What did the Japanese delegation say in reply? Instead of all these cast-iron assurances we have had from the Minister, the Japanese delegation pointed out that, under Japanese legislation, export was free in principle, and that the Japanese Government could take only limited measures to deal with these problems. Apparently, the Minister has more faith in the Japanese power to legislate to control dumping in this country than has the Japanese Government itself. The Japanese delegation went on to say that it would use its very best endeavours, within its constitutional authority to do certain things. We know what the words “ within its constitutional authority “ mean. They are a “ let-out “, a loophole. It was stated that the Japanese Government would use its best endeavours to see that exports from Japan to Australia were conducted in such a way as to remedy damage or avoid the prospect of damage. When we consider those remarks in the light of the comments made by the Minister, it can be seen that his comments were just so many fairy tales, because the Japanese delegates themselves said that they were limited by the Japanese Constitution, and under Japanese legislation, in attempting to control the dumping of goods in this country.

Then the Japanese delegation asked for assurances that the Australian Government would not unreasonably take special action to avoid damage or threat of damage to Australian industries. It said that the Japanese Government, having placed on record its inability to do much about it, agreed that exports from Japan should be conducted in an orderly manner so as to avoid serious damage to Australian industry. At this stage, we might have expected that the Australian delegation would have said, just as the Japanese Government had acknowledged that constitutional limitations prevented it from exercising any control over exports, that the Australian Goverment acknowledged its responsibility for governing Australia and that, having agreed upon Article V. being an integral part of the agreement, it could not honestly hedge that article round with provisions which would tie its hands. But it did not say that.

The Australian Government said that in view of the mutual expectation which had been referred to, certain considerations would apply in respect of any action by Australia under Article V, and then followed five conditions: - First, such action would not be taken except after consultation. In every case, consultation would be as far in advance as practicable. Secondly, such action would not be taken lightly and would be taken only where the consultation process failed to provide a mutually acceptable alternative solution to the problem. In cases where urgency might require action to be taken before the consultation process was completed, consultation would be continued in an endeavour to find a mutually acceptable solution. How long would that take? If I know anything of government haggling in these matters, it would take months, and in the meantime another Australian industry would have gone to the wall.

The third condition was that, so far as was administratively practicable, such action would apply only to those specific goods in respect of which the action was necessary to correct the particular situation; and the fourth was that such action would apply only for as long as was necessary to correct the particular situation, and would be discontinued immediately this was achieved. It will be seen that that condition offsets the third condition.

Under the fourth condition we can, perhaps, visualize, at the end of the Japanese winter, which coincides with the beginning of our winter, the Japanese flooding our market with wool textiles. After those textiles had landed in Australia, our Government could take action calculated to prevent more Japanese wool textiles coming in until the position had righted itself.

Mr. Lawrence

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


.- I am still trying to work out, as a problem of practical politics, the significance of the amendment moved by the Leader of the Opposition (Dr. Evatt) to the motion presented to this House by the Minister for Trade (Mr. McEwen). The House will recall that, on Thursday night last, the Leader of the Opposition moved an amendment to the effect that this House express its disapproval of the agreement on commerce between Australia and Japan. At the risk of getting a pretty dull answer, I ask myself this question: What would be the result if the House carried the amendment? Would it have any effect upon the agreement? Would it bring to a halt the movement that was commenced when the Minister for Trade signed the agreement in Tokyo.

It may seem at first blush to be a problem of academic politics, with no real or practical application. I do not incline to that view. This is, I believe, a unique circumstance and situation. Here is an agreement presented to this House that does not require the ratification of the Parliament to give it effect. I do not know whether there has been any other similar case, but I believe that honorable gentlemen on both sides of the House might do well to try to get at the significance and. indeed, the possibilities of a treaty of commerce between two countries becoming operative without the ratification or the approval of the legislature concerned.

In this case the treaty, as such, fills me with no great degree of concern or alarm. I believe that it has been negotiated by safe and sensitive bands and minds, but I do want to put this question forward-

Mr Haylen:

– How kind!


– I put it forward also for the benefit of the honorable member for Parkes (Mr. Haylen), so that it may challenge his heavily disguised capacity. What would be the possibilities of the use of the treaty in the hands of a strong-minded socialist Minister? As I see the situation, it would be possible for a strong-minded socialist Minister or, indeed, a weak-minded socialist Minister surrounded by strong and persuasive public servants, without consulting the Parliament, to enter into an agreement of a contractual nature that virtually could destroy the economy of this nation.

When I was thinking of this problem I was reminded of a case in which the right honorable member for Barton played a distinguished role. I refer to the Burgess case, when the right honorable gentleman was a member of the High Court of this country, and even though some may say that his views were not accepted on that occasion, I believe that the House could do worse than to give some consideration to what he had to say. In his judgment, together with Mr. Justice McTiernan, the right honorable gentleman, who was then Mr. Justice Evatt, said -

It would seem clear, therefore, that the legislative power of the Commonwealth over external affairs certainly includes the power to execute within the Commonwealth treaties and conventions entered into with foreign powers. The legislative power in Section 51 is granted “subject to this Constitution “… But it is not to be assumed that the legislative power over “ external affairs “ is limited to the execution of treaties or conventions; and, to pursue the illustration previously referred to-

This dealt with Part XIII. of the Treaty of Versailles, declaring that universal peace could be established only if it were based upon social justice - the Parliament may well be deemed competent to legislate for the carrying out of “ recommendations “ as well as the “ draft international conventions “ resolved upon by the International Labour Organization or of other international recommendations or requests upon other subject matters of concern to Australia as a member of the family of nations. The power is a great and important one.

That was in 1936, prior to this country’s ratification of the Statute of Westminster.

In 1944, in this chamber, the right honorable gentleman declared - . . I now wish to remind the House that the “ external affairs “ power, contained in section 51 (xxix) of the Constitution may reasonably be expected to confer on the Commonwealth Parliament full power to carry out any legal obligations regarding production which rest upon it by virtue of international treaties or conventions to which Australia is a party. This will be so even though the subject-matter of such treaties :md conventions is ordinarily a matter of exclusive State jurisdiction, such as production.

I want to put that point to one side by saying this: I believe that this is a particular circumstance that the Constitution Review Committee, which was set up by the resolution of this Parliament, could well examine. As I understand the situation, the treaty-making power is a prerogative power that is exercised by a Minister or Ministers, in consultation with the Executive Council.

I return to the point that I made two moments ago - that this power, in the hands of a person lacking in judgment and discrimination, could be an exceedingly dangerous power. I suggest to honorable members that they should consider this point earnestly, because it is a matter of some consequence, and I put it forward not in any partisan spirit. I believe that this Parliament has been presented with a unique circumstance - a treaty becoming operative without the ratification of the Parliament.

As to the treaty itself, I do not share the sombre and melancholy outlook of the honorable member for Batman (Mr. Bird) who preceded me nor, indeed, of any other honorable gentleman who has spoken from the Opposition benches in this debate so far. Australia, unhappily, has been cursed by a balance-of-payments problem for many years. We have, as it were, been passing through a series of crises as far as our balance-of-payments position has been concerned. We have seen the development, from time to time, of a circumstance so acute in its character that the Government has been forced, reluctantly, but nevertheless properly, to introduce severe and seemingly harsh import restrictions. I think that every one in this Parliament, no matter what his politics, may well instantly agree that the problem of the balance of payments is one which will only be solved by exporting more. I think we would do well to remind ourselves that increased trade is basic to the welfare of this nation’s economy, and to the welfare of every Australian. If we turn aside from that fact, I believe that we turn aside from, and shun reality in all its forms.

The Japanese Trade Agreement provides, among other things, that no penal duty shall be levied on Australian wool. I hope that I do not do the honorable member for Batman an injustice when I saythat he said, in effect, “Why should we worry about that? Japan has been a great buyer of Australian wool, but why should we be particularly disturbed about the possibility of an import duty? If Japan were to impose a savage and harsh duty on imports of Australian wool to-morrow the effect of that action would be felt throughout the length and breadth of this country. Let us assume, for the purpose of argument and illustration, that Japan were to impose a duty of 20 per cent, on Australian WOOl which, in effect, would reduce the value of Australian wool exports to Japan by 20 per cent. What would be the effect of that action on this nation’s balance of trade? Surely it would exacerbate our economic difficulties and lead to pockets of unemployment in various industries, because the Government or the Parliament would have to impose further import restrictions. Again, the treaty has opened up possibilities for the development of further markets for sugar, wheat and butter, apart from other primary products.

I have listened to a number of honorable gentlemen opposite, when declaiming against the treaty, dwelling on all its apparent weaknesses, but very seldom indeed, if ever, has any one of them referred to the immense advantages which Australia will get from this agreement on commerce with Japan. I repeat that this treaty offers immense advantages to Australia. It has fascinated me to listen to honorable members opposite say that the agreement has been made with a country which has no wage standards, poor working conditions, and low living conditions. If one were to apply that principle overall, in other words if one were to discriminate in the application of principles and not use them as a matter of opportunity, then it seems to me that we would refuse, or be a little tardy about accepting into this country, imports from Ceylon, India or Indonesia and, as the Minister for Labour and National Service (Mr. Harold Holt) pointed out recently, we could not advocate trade with red China. 1 do not think that one can say, “It is convenient for me to use this principle now, but it is not convenient for me to use it on another occasion”.

May I presume to weary the House by reciting some figures by way of illustration. They relate to imports and exports between Australia and certain other countries, and they are as follows: -

Honorable gentlemen will be able to see at once the disparity between imports from and exports to those countries. Quite clearly, there are several conclusions to be drawn from these figures. The first is that only on three occasions in six years has Australia had a favorable balance of trade with lowwage countries, with the exception of.Japan. During the year 1954-55, imports from the nations to which I have referred, excepting Japan, amounted to £95,953,000. Exports to those four nations amounted to £33,864,000, a ratio of over three to one, unfavorable to Australia. For the three years to which I have referred, imports from Japan amounted to £29,659,000, whilst exports to Japan amounted to £198,220,000. In other words, there was a favorable ratio of seven to one. If honorable members opposite are completely and irresistibly attracted to the application of the theory that we must not trade with a low-wage nation or import from a low-wage nation, they must be prepared to extend the application of that theory. They cannot use it as a matter of convenience. The fact is that, over the years, Japan has been our second or third best customer, at least since the end of the war. One can readily understand the deepseated emotions of many Australians towards Japan, but the fact remains that we are at peace with Japan to-day and nothing will be gained by stirring up ancient and anachronistic emotions. We must face the reality that Japan is, indeed, one of our best customers; and by ensuring that the Japanese authorities will not impose a duty upon, in particular, Australian wool, T believe that this nation is gaining a singular advance.

I confess, quite unblushingly, that when I first looked at the treaty I did share some of the concern that has been expressed by honorable members opposite, particularly so far as the wool and textile industry is concerned. But when one sets out to get the facts of the matter, one comes to an entirely different conclusion. The simple truth of the matter, as the Minister for Trade pointed out with such clarity the other evening, is that the woollen and textile industry in Australia has not suffered from Japanese competition in recent years, despite the fact that there has been no import licensing discrimination against Japan. I think the facts mentioned by the Minister are worth mentioning again. He pointed out that during the last year the number of blankets imported from Japan was practically negligible.

Mr Peters:

– What was the duty on them last year?


– Import duty on blankets from Japan last year amounted to £492. Piece goods worth £1,000,000 were imported last year, but only £500 worth of them came from Japan. In the current year licences have been issued for £900,000 worth of woollen piece goods, and of that sum only £1,000 worth have been issued against Japanese exports. These figures are a most convincing and attractive argument. They are not a superficial argument. They tell the real facts of the matter, and a little greater appreciation of these facts on the part of some honorable members in this House would possibly put them in a position in which they would command a greater measure of respect from the people of Australia than they do at the moment. Finally, the Minister for Trade mentioned that over the last three years the Australian market has been asked to supply 94,000,000 square yards of woollen piece goods, and of that quantity the total orders from abroad have amounted to only 6,000,000 square yards. That, again, is a very substantial and attractive argument.

Now, I come to the safeguards contained in the treaty. In my judgment, imperfect though it may be, there has been very little attempt made by honorable members opposite to examine these safeguards thoroughly. It is not a scrap of use pointing to the safeguards - merely mentioning them and saying that they are useless and cannot become operative or that the mechanism is too unwieldy. That is not the case at all. Let us look at the facts again. In the first place, there would be a restraint-


Order! The honorable member’s time has expired.


.- I rise to support the amendment moved by the Leader of the Opposition (Dr. Evatt), which is as follows: -

That the following words be added to the motion: “and this House expresses its disapproval of the Agreement on Commerce between the Commonwealth of Australia and Japan.”

The honorable member for Moreton (Mr. Killen) said he was trying to work out what was meant by the amendment. It is quite clear. Honorable members on this side of the House want the treaty withdrawn and another treaty drawn up which will be more acceptable not only to this House but also to the people of Australia. We say that, in order to protect our industries, any treaty with Japan should provide that the only goods to be admitted from Japan should be goods that are not available within Australia or are in short supply. Quotas should then be established to control the importation of such goods. That is our attitude towards this agreement.

This agreement is detrimental to Australian industry. Goods coming into Australia from Japan will bear the same low rate of duty as goods that come from other countries with a higher cost structure than that of Japan. For example, goods from European countries are admitted under the most-favoured-nation tariff, which this Government is now offering Japan. But the costs of production are much higher in those countries than costs in Japan. Yet, the present rates of import duty on goods coming from those countries give our industries only just sufficient protection against European manufacturers. Consequently, such duties will be useless as protection against Japanese lower-cost goods. It has been pointed out to the House that Japanese workers are still in the sweated stage. The textile industry is an example. Evidence was given before the Tariff Board which showed that the average hourly rate paid to Australian workers in the textile industry was 78. 5d.. whereas the average rate paid to Japanese workers in the same trade was 13.4d. Thus, the Australian rate is six times the Japanese rate. Apart from the low rate of wages in Japan, a far greater proportion of females and juveniles are engaged in that industry than in the Australian industry. These facts are an indication of what Australia is up against. Of the seniors employed in the textile industry in Japan, 20 per cent, are males and 80 per cent, are females. That is a further indication of the competition against the Australian industry. In Japan the number of hours worked is much greater than in Australia in the same industry, namely, 196.7 a month, that is an average of 50 hours a week. A similar comparison can be made in respect of other industries. In effect, every £2 spent on Japanese goods in Australian shops could easily put an Australian worker out of employment for approximately one week.

Attention should be directed also to our protected industries, particularly the groups which are considered to be most likely to suffer if unprotected against a flood of Japanese low-wage products. I shall refer to a list of industries taken from Bulletin No. 49, for 1954-55, issued by the Commonwealth Bureau of Census and Statistics, and then quote the total number of workers employed in such industries in Australia and Japan. They are as follows: -

Portland cement, clothing (including footwear, hosiery and knitting), cycles and accessories, earthenware, chinaware, &c, electrical machinery, cables and apparatus, glass and glassware (excluding bottles), jewellery, watches and clocks, photographic material, sewing machines, textiles and textile goods (not clothing or footwear and excluding hosiery and knitting), toys, games and sports requisites, plastic moulding and products (a large volume of toys are produced in this industry), paper manufacturing, manufactured stationery, pencils, pen-holders, pens, chalks, crayons, rubber goods, including tyres.

The total number employed in these industries in Australia in 1954-55 was 278,281, and in 1955-56 the total number employed in them was 279,521, whilst the total number employed in all Australian factories was 1,031,082. The industries I mentioned are not all the industries concerned with Japanese competition. About 25 per cent, of the employees in all factories in Australia will be affected. That is what we face with this agreement. The employment of those workers will be endangered if this agreement is approved. Our economy is already delicately balanced. That has been admitted in this chamber by Ministers. The Minister for Labour and National Service (Mr. Harold Holt) agrees that more than 53,000 unemployed are registered at the present time. Thousands of other unemployed are not registered, for various reasons, and many thousands more are working only part time. We have been advised also that, because of the uncertainty of trading conditions following the signing of this agreement, many firm orders in the textile industry have already been cancelled and, as a result, some hundreds of textile workers have lost their employment. Information received this morning shows that more than half the workers in the textile industry are already on short time. It is true that the States that have been worst affected so far are Tasmania and New South Wales, but the effects of this agreement will be felt very quickly in the other States.

Mr Coutts:

– They received the first blow.


– As the honorable member for Griffith said, they received the first blow, but the other States will be affected similarly, according to the degree of employment in industries in those States. If we are not careful, we will be faced with a situation similar to that which applied in the 1920’s, when Japanese competition absolutely knocked the textile industry. The industry would then have ceased to exist but for the drastic tariff which was introduced by the Scullin Administration. Despite the harm that has already been done to this industry, the Government has refused to increase the rates of duty on imported wool textiles, though that action has already been recommended by the Tariff Board. Those duties are now lower than they were between 1932 and 1949. Up to the present, the textile industry and many others have been saved from the dangers of imports from other countries by import restrictions, but the Minister for Trade (Mr. McEwen) has already relaxed those restrictions. I do not question the advisability of that, but he has intimated that they will be relaxed further. Consequently, our industries will be further exposed to the dangers arising from imports. With cheap Japanese goods coming into the country, import restrictions relaxed and inadequate duties imposed despite the recommendations of the Tariff Board, the future looks very bleak indeed for Australian industry. The MenziesHytten unemployment pool will develop into a flood that will burst its banks and destroy our economy if something is not done very quickly.

Tariff protection requires an immediate review to protect our industries further. We cannot forget that about 60 per cent, of the 1,031,082 persons employed in our factories depend on their industry receiving some degree of protection from oversea competition. This trade agreement has emphasised how necessary an immediate review of those duties is.

This agreement, as the House well knows, has been negotiated by a Country party Minister, with the applause of Country party members, though there are not many here to applaud him at the moment. The agreement suits primary producers. The reason is the sale of wheat and wool. For the time being our wheat sales to Japan have risen. That is admittedly a good thing, but there is nothing to say that Japan will continue to buy large quantities of Australian wheat. A similar bargaining point was used when an agreement was signed with Canada. If we take wool as an example, we need to be very wary. In 1955-56, the Japanese bought wool worth only £59,000,000, but in 1956-57 they bought wool worth £92,000,000. The press, manufacturers and others suggest that Japanese traders deliberately over-bought last year because they had this trade agreement in mind.

Mr Anderson:

– Rubbish! That is hot air!


– Time will tell. We can wait and see. If anybody has any hot air, the honorable member for Hume (Mr. Anderson) is well in advance. At the Brisbane sales at the beginning of this season the Japanese were not bidding as freely as they were last year. The Sydney sales show that bidding has improved, but may that not be because this agreement is being debated in this chamber at the present time? I shall not worry about that now, but shall wait and see what happens as the season advances after the agreement has been dealt with in the Parliament. Japan does not buy our wool for our benefit, but because Japanese manufacturers want it to turn into goods for export.

Mr Turnbull:

– Everybody does that.


– Of course they do. While our wool is being returned to us from Japan in the form of goods, many hundreds of Australian workers are being deprived of their jobs or are working part-time because mills are closing or have reduced their output.

Mr Howson:

– What mills have been closed?


– The agreement is not in operation yet, but information received this morning shows that 50 per cent, of the workers in the textile industry are on parttime. Country party members should remember that many mills are in towns in. their electorates. If those mills close, the employment of many hundreds of country people will be affected. Instead of our wool being made into textiles in this country, Japan will be doing the job for us, selling those goods back to us, and putting our people out of work. The fact is that Japan imports the raw materials it cannot produce in sufficient quantities itself. It imports them because it has to import them to survive. I repeat that Japan does not. import Australian wool for the love of Australian primary producers, but because it needs the wool.

The honorable member for Moreton suggested that some embargo might be imposed on Australian wool if this trade treaty is not signed. That is a stupid statement. If the Japanese want the wool they will buy it, and they will buy only what they want. That applies also to any wheat that Japan may purchase. It will get what it wants, no more and no less, and this agreement will not make Japan buy any more. A fuss has been made of the fact that the balance of payment is in Australia’s favour. It has to be in our favour with some countries, surely! If it were not, Australia would not survive. Our trade balance is very much against us with some other countries and, like us, Japan needs more products from some countries than she does from others. As the honorable member for Batman (Mr. Bird) has already pointed out, international trade is not a system in which every two countries balance imports and exports with each other; it is the over-ali balance over a given period that must be looked at. A good way of measuring the balance of payments with Japan is to take the sterling area as a whole, a reasonable balance exists there.

We must remember that many Japanese industries are American-owned. I ask the Minister for Trade whether this fact does not raise the question of our dollar balances. Should not they come into the picture, too, because great amounts of Wall-street capital are being invested in Japanese industry by businesses looking for cheap labour? This has been the trend for some time. It is making Japanese industry a rival of British industry, and is threatening British industries and living standards. It is a threat to employment and living standards in Australia also.

This trade agreement is causing considerable anxiety in Britain, particularly to the British textile industry, which expects a cut of about 60 per cent, in its trade in cotton goods with Australia. The rayon weaving industry is similarly concerned. Before the advent of this agreement, the duty on cotton piece goods entering Australia from Japan was 2id. a square yard, compared with a duty of id. a square yard on similar goods from Britain. Under this agreement, the duty on the Japanese commodity will be id. a square yard. What we have to remember is that these goods are manufactured in Japan much more cheaply, and will sell on the Australian market much more cheaply than comparable British goods, and they will drive British goods off the market gradually, just as they will Australian goods. This House should show some loyalty at least to the British people, who live in a country where living standards are much higher than those of the Japanese.

I turn now to another matter. The Melbourne “ Herald “, of 27th March, 1954, reported Mr. Sabura Kawazoe, of the Foreign Department of the Kobe Bank, who was then visiting Australia, as having said -

The Japanese Government would favour big business against the Trade Unions to reduce manufacturing costs. We are planning a big export drive and in a year our sterling position will be much better.

The Japanese have been very effectively improving their sterling position. I have already indicated that Japan’s trade with the sterling area is reasonably well balanced. The trade pact with Japan entered into by Canada in 1954 has already had detrimental effects on Canadian industry, although the Canadian people were given the same assurances as our gullible Minister for Trade has accepted on behalf of Australia. The Canadians were told that Japan did not intend to export large quantities of cheap goods to Canada to the detriment of Canadian industry. However, the organization known as the Associated Woollen and Worsted Textile Manufacturers of Australia cites two classes of clothing in respect of which imports from Japan have severely damaged Canadian industries. One of these is clothing made from woven fabric. In the first nine months of 1954, 57,000 dollars worth of such clothing was imported into Canada from J:pAn. In the first nine months of 1956, the total was 3,198,000 dollars. So the forecast made by the representative of the Kobe Bank has been fulfilled. This should serve as a warning to honorable members in this House. We hear much talk of Japan practising selfrestraint in these matters, but I direct the attention of the Minister to the publication “ Industrial Victoria “, at page 323, for a description of Japan’s failure to practise the self-restraint that was supposed to be practised in exports to Canada.

The Japanese Government is favouring big business in opposition to the trade unions, and the big combines are gradually extending their industrial and political ramifications. The big Japanese combine known as Zaibatsu is in control, as it was before World War II., when it controlled more than three-quarters of the capital invested in Japanese industry. It is now well in the saddle again.


Order! The honorable member’s time has expired.


.- I should like to begin by saying that, believing as I do that adequate safeguards for the reasonable protection of Australian industry are incorporated in this agreement, 1 support it unreservedly. Indeed, I shall go further, and say that it is an important contribution to the future development and stability of this country, and a responsible act on Australia’s part to ensure Japan’s retention as a member of the free world. I congratulate the Government, and particularly the Minister for Trade (Mr. McEwen), on a statesmanlike achievement.

I think that, in estimating the importance and effect of our trading relations with Japan, it is worth looking briefly at the situation that existed in the past. Contrary to some of the statements made by Opposition members, Japan played a major part in assisting Australia to climb out of the great depression of the 1930’s. It was the only country in the world which actually increased its imports of Australian goods during the depression. Every other country drastically reduced them. The percentage of Australia’s total wool exports sold to Japan increased from 13 per cent, in 1929 to 20 per cent, in 1934. Throughout the depression, the balance of trade with Japan was overwhelmingly in Australia’s favour. The importance of this was not lost upon the government of the day. In 1935, it appointed a Minister with the extraordinary title of Minister without portfolio, directing negotiations for trade treaties, who opened negotiations for a treaty with Japan, presumably on much the same lines as the agreement we are now discussing. Such a treaty would have been an excellent thing if it had come about, but it did not. Without warning, the Australian Government abruptly broke off negotiations and announced a trade diversion policy, which, in the interests of Great Britain, involved savage prohibitions against the entry of Japanese goods.

Both the political and the economic effects of that policy were unfortunate for Australia. Only Manchester received comfort from it. The Australian Government was forced to modify the policy as soon as its effects became apparent, but by the time it did so, the damage had been done. Economically, a balance of trade heavily in Australia’s favour had, by 1938, turned into one slightly favorable to Japan. Only 4 per cent, of Australia’s exports went to Japan in 1938. Politically, this caused resentment in Japan, and hastened that country’s determination to reduce its dependence on overseas sources of supply which were not, directly or indirectly, under its control. In other words, that situation -added to Japan’s growing conviction that, if it was to continue to live and to raise the standard of living of its people, it must acquire independent sources of supply - by conquest, if necessary. Mr. Acting Deputy Speaker, I do not condone Japan’s decision to resort to force; that was inexcusable. Indeed, much of the responsibility for the restrictive policies adopted by Australia and other countries must be borne by the Japanese themselves, for such policies stemmed largely from their own aggressive trading policies at the time. But if we are to devise policies which are in the best interests of Australia, from the stand-point of both our economic position and our security, we can, I think, learn from our experience in the 1930’s.

Japan is even more dependent on trade now than before the war. With an evergrowing population, and a higher standard of living, trade is a condition of that country’s continued existence. Strategically, Japan’s situation is now very much different from what it was during the pre-war years. The change in the balance of power in the post-war world, and Japan’s proximity to China and Russia, make Japan’s continued detachment from the Communist bloc a matter of vital importance to the free world. The same factors, I think, make it unlikely that Japan could directly threaten Australia without first defeating Russia and China, and that is inconceivable. The only circumstance in which Japan could threaten this country is if she joined the Communist bloc. Then she would be a very great threat indeed. Therefore, Australia has a most decided interest in Japan’s continued independence.

One thing is certain: Japan will do whatever she considers to be in her interests. Make no mistake about that! However, other things being equal. I cannot see that she could conceive her interests to be with the Communist bloc. On the contrary, I should have thought that her experience with the Soviet Union, her tradition of independence and her very strong urge to retain her customary way of life, would suggest that her interest lay with the West. But other things must be equal. The one thing that could drive Japan into the Communist bloc would be sheer economic necessity. That economic necessity will come if Japan is not allowed a reasonable share of the world’s trade. Moreover, as Japan has announced her determination to conform to the conventions of world trade, continued discrimination against her on grounds of prejudice and narrow shortterm advantage would have very great psychological dangers.

Not only Australia has recognized the lessons of pre-war experience in this respect. Canada, the United States of America, and other countries have done the same. Their goal, like ours, is security from Communist aggression. The price of achieving that goal is to allow Japan a small share in their markets so that she may continue to exist. If it is not too big a price for Canada and the United States to pay, then it is not too big for Australia. I should have thought that such a liberal, long-sighted view of the very real problem in international relations would have appealed to the Opposition. The Opposition is always preaching sweetness and light, the brotherhood of man, and enlightened self-interest in our relations with other countries, but when it comes to the point this aura of good intentions evaporates and is replaced by a policy based on ugly prejudice and short-term political advantage.

Whilst listening to the Leader of the Opposition (Dr. Evatt) the other night I could not help thinking how often his judgment is distorted by highly emotional and irrelevant considerations. There are capitalists and ruling classes in Japan, he has told us. These people are, by their nature, evil, so the argument runs. Therefore, the motives of the country to which they belong must be disparaged and distrusted. Even if such an arrangement as this one is in the best interests of your own country, it must be rejected for those reasons. The same considerations affect the right honorable gentleman’s attitude to the South-East Asia Treaty Organization. Seato happens to contain a few members whose social and political systems the right honorable gentleman does not like. Therefore he attacks them, whatever the effect may be on the security of this country. All I can say is that rigid adherence to such irrelevant considerations does not make for sound statemanship or balanced judgment. 1 said a moment ago that the maintenance of our security was not too big a price to pay for granting Japan a small share in our markets. But in this case I do not believe that it will involve paying a price, because, as has been stated many times by the Minister for Trade and others, this agreement will result in very great benefits to the Australian economy. Honorable members opposite have made much of the disastrous effect the agreement will have on Australian industry. If I were to attempt an estimate based on the Canadian and American experience and on the demand for Japanese goods in this country I should say that about double the present value of Japanese goods will be imported into this country in the next twelve months - that is to say, £25,000,000 to £30,000,000 worthand that imports will remain at that figure for the foreseeable future. This is only 3 per cent, of our total imports even under licensing. Is this going to ruin Australian industry and result in widespread unemployment? I just do not believe it.

To set against that we have the greater stability and to some extent the greater opportunities which the agreement gives to our export-earning industries. Honorable gentlemen opposite have actually tried to suggest that this will benefit no one except a handful of primary producers who are principally responsible for Australia’s export income. The official Opposition view on this point was expressed by the seconder of the amendment, the honorable member for Scullin (Mr. Peters), when he accused the Minister for Trade “ of selling this country’s opportunities to develop and to expand its population, in order to obtain a market for a mess of second-grade wheat produced by the ‘ cockies ‘ and to bolster the free trade Australian Country party politically “. Well, 1 am not a member of the Australian Country party, but I hope the “ cockies “ whom the honorable member for Scullin so obviously despises will take note of his views, and I hope, also, that the rest of the community will take note of this deliberate attempt - I think it must be deliberate - on the part of the Australian Labour party to mislead it. The fact is that the enormous expansion which has taken place in our secondary industries in the last fifteen years or so just would not have been possible without a high level of overseas earnings. It has already been stated in this debate that over 75 per cent, of the machinery and raw materials used in industry is imported. I do not think it is over-stating the case to say that a high level of overseas earnings has been and will continue to be an absolute pre-condition of our industrial growth. As we industrialize, our demand for essential imports will increase rather than decrease. This is just another way of saying that, despite industrialization, every man, woman and child in Australia is just as dependent upon the primary producer as ever.

It has been said in this debate that this agreement will lead to a slowing down of the rate of population increase, to widespread unemployment, and to industrial stagnation. My contention is that such arguments neglect the important, indeed crucial, role played by our export income. It is not Japanese competition, but a sudden fall in our overseas earnings, that will lead directly and immediately to unemployment, to a slowing down of population growth, and to industrial stagnation. This agreement is designed to stabilize and increase our overseas earnings, and to oppose it in the name of its effect on our industrial development seems to me to be just plain madness.


– I approached this debate with a perfectly open mind, but, having listened to the very poor explanation of the proposed trade treaty with Japan given by the Minister for Trade (Mr. McEwen) and the able speech given by the Leader of the Opposition (Dr. Evatt), I am convinced that logic demands that I support the amendment moved by the Leader of the Opposition. I support the amendment, not because it was moved by the Leader of the Opposition, but because I am proud to be an Australian and because I am prepared to stand up for those who are building this nation.

I tried to follow the explanation given by the Minister for Trade (Mr. McEwen), who negotiated this treaty. His explanation was most unsatisfactory. He was hesitant; he could give no definite figures and no guarantees. He assumes that the Japanese Government will restrain itself, and that it will use reason. What honorable member could ever assume, after considering the history of the last twenty years, that the Japanese Government will use reason or restraint? The Japanese Government will be concerned, as this Government should be, with the welfare of its own nationals. I am afraid that I must say, because I believe it to be true, that, of the two governments that are parties to this agreement, the only one that is looking after the interests of its own nationals is the Japanese Government. The Australian Government is concerned only with two or three electorates in the southern part of Australia. Many of the manufacturers in the large cities are being thrown to the wolves by the policy that is being followed at the behest

Of the Australian Country party, which is the minor party in this coalition Government, and with the approval of Liberal party supporters, who are sitting back and saying nothing, but who, no doubt, privately disapprove of what is being done.

We have been told by the Minister that it is desirable that the treaty be agreed to in the interests of two primary industries, the wool industry and the wheat industry. I am afraid that we will hear no more of this treaty by way of legislation. I am informed by the reliable correspondent of the Brisbane “ Sunday Mail “, Mr. Harold Cox, that the Government does not intend to introduce legislation to ratify the treaty. I am told that the Minister, as a member of the Cabinet, has complete power to approve of the treaty and agree to it, and I believe that this is the last we will hear of it in this place. We have an opportunity merely to vote on the motion that the paper be printed, and to vote either for or against the very worthwhile amendment moved by the Leader of the Opposition. As I have said, I am bound by reasons of loyalty to my nation and to my fellow workers, and by reasons of logic, to support the amendment.

The suggestion that it is necessary to enter into this agreement for the sake of the wool industry is quite farcical, and the Minister has insulted the intelligence of every honorable member by making such an observation. Every one knows that throughout the world insufficient wool is being produced. That is why Australia’s wool cheque is so large. The wool cheque forms the largest part of our income from exports. The Australian Wool Growers Council tells us that receipts from the sale of wool constitute 49 per cent, of Australia’s total export income. With our wool being sold at auction on the open market, it is obvious that there is no foundation for the Minister’s suggestion that it is desirable or necessary to enter into this agreement in order to enable Japan to buy our wool. I believe that the nigger in the woodpile is the fact that in some of the southern parts of Australia certain producers insist on growing a soft type of wheat that is a drug on the market. Those growers who insist on producing a wheat for which there is no demand, and which must be sold at the expense of other products, should be forced by economic sanctions to produce a type of wheat that can compete with the wheat produced by other nations and by other growers in Australia. My own State of Queensland produces a wheat that does not need the protection that will be provided under this treaty. The wheat produced in Queensland is equivalent in quality to the best Canadian wheat. Every bushel of wheat produced on the Darling Downs and farther north can readily be sold in any part of the world. lt is true that we have extensive trade relations with Japan, and that those relations are improving. The extension of our trading with Japan, however, is in relation to only certain commodities. Sales of wool to Japan in 1957 as compared with 1956 have shown a greater increase than sales of any other product. In 1956 we exported to Japan £64,000,000 worth of wool, and in 1957 this was increased to £104,000,000 worth. The honorable member for Gwydir (Mr. Ian Allan), an Australian Country party member loyally supporting the Minister for Trade, has explained why our sales of wool to Japan have increased. He has said it is because the Japanese have decided to wear western dress. We know now that the reason why our exports of wool to Japan have increased from £64,000,000 to £104,000,000 is that Japanese men have decided to wear trousers instead of kimonoes. At least that is what we are told by the honorable member for Gwydir. Of course, this suggestion is too absurd. It is a pretty poor explanation, and a hopeless attempt at justification of the attitude of the Minister.

Mr Ian Allan:

– Eighty per cent, of our wool is consumed domestically.


– Following the honorable member’s suggestion to a logical conclusion, let me ask what would happen if the Japanese people decided to abandon trousers and go back to kimonoes. Would the economy of our wool industry collapse as a result? If the honorable member for Gwydir is correct, I can only hope that the Japanese men will continue to wear trousers.

I realize that we should buy from countries that buy from us, but I do not agree that we should sacrifice our own industries for the sake merely of providing a market for the producers of another country.

I have said that our export trade with Japan has increased over the last twelve months; but it has increased in respect of a few commodities only. The increase in value of our exports of beef to Japan has been a mere £900,000, whilst our sales of butter have increased by about £500,000. The increase of barley sales was worthwhile, being £2,700,000. But the increase in the value of wool sold to Japan in the last twelve months was £39,000,000 compared with the value sold in the preceding year. I suggest that Japan is importing wool from Australia because Japanese industrialists want it; it is a commodity they can use for manufacturing, exporting the finished products to other countries in Asia. Japan is buying our wool simply because there is a demand for it.

If it is necessary to have a trade treaty with Japan to bolster up our wool market in that country, and because Japan is buying a great volume of our wool, we can reasonably expect that in the next few months we will be asked to approve of trade treaties with France, Italy, and the Federal Republic of Germany, because with each of those nations we have a very favorable trade balance. These various favorable trade balances are: France £83,000,000; Italy £43,000,000; and the Federal Republic of Germany £16,000,000. Wool accounts for about £90,000,000 worth of the £92,000,000 worth of goods we have sold to France in 1957. Of the total value of £53,000,000 of goods we have sold to Italy in 1957, £48,000,000 was in respect of wool, whilst of the total value of £47,000,000 of goods which we exported to the Federal Republic of Germany in 1957, £34,000,000 was in respect of wool. The argument of the Minister for Trade about the necessity for this treaty in order to sustain our wool trade with Japan would apply with equal force to France, Italy and the Federal Republic of Germany. So, as I have said, we can reasonably expect to be asked toeffect similar trade agreements with thoseEuropean countries.

Who is to get the benefit of the treaty that has been signed on this occasion, and: of other treaties which will be signed in-, the future? There was a time immediately after World War II. when certain industrial commodities were in very short supply in Australia. Steel is an example. On nooccasion was Japan prepared to supply steel to Australia at competitive prices. She was prepared to supply steel to us at very inflated prices, because she knew wewere short of it. But to-day Japan is prepared to supply textiles, cement and many other commodities to Australia, not at prices that are fairly competitive with theprices of the Australian-made products, but at prices very much lower than our pricesThere is a tragic position developing in Australian politics to-day. I regret to make this statement, but I am sorry to say that my observations compel me to make it. There is only one party in Australian politics to-day which is still wholeheartedly supporting the White Australia policy. The attitude of the Government parties shows that they have completely abandoned the White Australia policy in relation to industrialization and the production of commodities in Australia. The Democratic Labour party, which has two representatives in the Senate and probably a third, has already declared itself as being opposed to the White Australia policy. We in the Australian Labour party believe that our first loyalty is to the workers and producers of Australia who have invested their savings in the commodities and the industries of Australia.

What has happened to another country which, three years ago, did what Australia is doing to-day, or at least, what the Minister did a few weeks ago by virtue of the powers vested in him? In 1954, Canada entered into a trade agreement with Japan, similar to this agreement. That agreement was to work so that the ratio of textile imports would be in the proportion of one Japanese to six Canadian. But we find now that it has not worked that way, that the Japanese do not exercise the restraint that the Minister said they will exercise in relation to this trade agreement. The result is that Japan to-day is exporting to Canada one-half of Canada’s total requirements of textiles. Already, Canadian manufacturers of toys, jewellery, rubber boots, cement and plywood are protesting that they cannot compete against the Japanese manufactures. The average wage of a Canadian worker in a manufacturing industry is 2 dollars 25 cents an hour, whereas a Japanese machinist earns 1 dollar a day. Japan can land its manufactured exports at any Canadian port, with all duties paid, at much less than the Canadian cost of production.

A similar tragic position will be developing within Australia within a few months. It is all very well for the Minister to say that Japan will exercise restraint, and that either party to the agreement has power to terminate it. I feel that the Minister is just bolstering up his courage; he is like the boy who whistles as he passes a graveyard. Wool is being used in this argument in Australia as wheat was used as a lever in Canada. It is being used to place Australia in a position in which manufacturing development is being sacrificed to promote the sale of primary products. But there is no need to promote the sale of wool, because there is a great demand for it in the world’s markets. We know that there is not enough good wool produced in the world to meet the existing demand. The real reason why this agreement has been signed by the Minister is to bolster the sale of soft wheat, an inferior commodity produced mainly in the electorate of Murray, which is the Minister’s electorate, and in the electorate of Mallee.

Mr McEwen:

– Do not talk such nonsense.


– I regret that this Parliament is being forced to subscribe to a treaty of this nature. I feel that the Australian people will rue the day when the Minister signed this agreement with the Japanese Government.

Mr Pearce:

– Cheer up!


– I have no cause to cheer up. I feel very depressed over the matter. Our secondary industries will suffer many severe setbacks as a result of this agreement, and there will be serious unemployment in Australia. Already, we can see what has happened in the Australian textile industry. We had 100 mills employing 22,000 people, occupying buildings of a value of £45,000,000, with an annual production valued at £62,000,000. The principal product that will be exported to Australia from the sweated home industries of Japan will be textiles. Our ability to absorb immi grants will be severely affected, and the people who are crying out for more immigrants will realize that this Government has done the country a great dis-service.

Mr. ACTING DEPUTY SPEAKER (Mr. Freeth). - Order! The honorable gentleman’s time has expired.


.- It is obvious from the debate that the Australian Labour party is committed to an attempt to destroy this trade agreement with Japan. It also is obvious that it is having a great struggle in trying to do so, because the rambling statements that have come from honorable members opposite so far have been of little value in a debate of this kind. The honorable member for Griffith (Mr. Coutts) said that trade with Japan was improving, but we all know that such trade is greatly in our favour. Japan purchases approximately £140,000,000 worth of goods from us each year, while we purchase from Japan only £13,000,000 worth. Can such a state of affairs continue? Honorable members opposite try to destroy the agreement, but they offer nothing in its place except discrimination and protective duties.

As soon as the chilly winds of competition are felt in our protected markets we find this panic and fear clouding our thinking. The short-term view of this trade agreement, which has been taken by its opponents, has been inspired almost solely by the fear of unemployment. Every attack has turned on that aspect. A counsel of fear is never of much advantage to any one. In its approach to almost every problem the Labour Opposition introduces the depression. Since it does so, we might ask ourselves what caused the depression. It was caused by Australia’s inability to sell its primary products at remunerative prices. Because Australia could not do that, the whole economy of the nation was affected. I suggest that if honorable members opposite want to use the bugbear of depression all the time they should think of the real cause of the depression. If we are to learn from history, surely the lesson of the depression is that it was caused by our failure to sell our primary products at remunerative prices. Honorable members opposite refuse to learn that lesson; instead they use the depression to engender fear and thereby do a great deal of harm. Retailers have closed their doors because they have heeded the fears of commercial interests that local commodities would be undersold by Japanese piece-goods, and so on. Thus we have a condition of manmade unemployment, a condition that is being aggravated by the Opposition.

The supporters of the Labour party are opportunists. Only recently, when we were discussing import restrictions, honorable members opposite attacked the Government. I suggest that if there were no import restrictions, and if we had all the imports we could bring into the country, they would create difficulties for the manufacturing industries. We have import restrictions and honorable members opposite attack them; if we removed the restrictions, they would attack us for doing that. They want everything their way. As I have said, the present unemployment has been brought about largely by the manufacturers themselves creating fear in the minds of the retailers.

Let me indicate the effect of primary industries on the general economy of the country. Last year was a high income year, and that being so, it is reasonable to expect that a considerable sum of money would be flowing through the economy and that the economy would be reaping the benefit of that money. Yet, because the season was unfavorable, that money has not been circulating through the economy, and that is one of the reasons why, at the present moment, there is some degree of unemployment. The unemployment is due in part, to uncertainty in the primary industries. Nothing affects our economy more than does the condition of our primary industries. No nation can be prosperous unless its primary industries also are prosperous.

Turning to the manner of negotiation of the agreement, do honorable members opposite really suppose that any sensible person would expect to negotiate a treaty which was entirely one-sided? Apparently, that is what the Labour party would do if it were in government. If honorable members opposite are to be believed, they would go along to Japan and say, “ We want to negotiate a treaty with you by means of which we shall derive enormous benefits. You, however, will not be nearly so lucky “. Such an approach obviously is silly. When a treaty is being negotiated, it is reasonable to suppose that both participants will expect to obtain adequate security. Japan must benefit from this treaty to some degree, but it was the task of the Minister for Trade (Mr. McEwen) and of the Government to ensure that the benefits that Japan got would not be obtained at the expense of Australian industry. For that reason, there are suitable safeguards in the agreement. What would the Labour parly offer to Japan by way of advantage for her? We have heard that the primary industries will benefit under this agreement, but we have heard nothing about anything being offered to Japan.

It has been said that our textile industries will suffer most from Japanese competition, but if we are to be successful in negotiating a treaty with Japan we must offer something in return for the benefits we are to get. So far, no honorable member opposite has suggested any alternative to the benefits offered to Japan in the agreement. It appears that honorable members opposite are watching only their own canoe. Of course, that is the usual attitude of the Opposition, and it is evident in their negotiations in all walks of life. They seem to take the view that their interests are paramount. In negotiating wage agreements and matters of that kind they never stop to think that the other side should have something in return. In relation to this agreement, all their arguments are onesided.

The long-term view, of course, is to ask, “ Why is it necessary that we should have security in our trade with Japan? “. The Minister has stated that approximately 80 per cent, of the value of our exports comes back in raw materials, new plant and other imports required by the secondary industries. Therefore, approximately 80 per cent, of what we earn overseas is used directly in the secondary industries in which the Labour party is so interested. We have an expanding economy. As our economy expands, so our requirements of imports increases. If we are to expand our economy, we must export more products, and if our exports are to increase in a competitive market, we must try to arrange treaties whereby we may be assured of a degree of stability in prices and markets. We cannot expand our internal industries unless we have more imports.

I think all honorable members will agree that it is of paramount importance to Australia to increase its population. If we do that, it will mean that a greater proportion of immigrants can be absorbed more cheaply and more readily in our secondary industries. As honorable members are no doubt aware, the capital cost of settling immigrants on the land is much greater than is the capital cost of absorbing them in secondary industries. We need increased population. We must maintain the flow of immigrants and as the flow continues, so must our requirement of overseas imports increase. That is a condition for which a wise government plans accordingly. The need to secure markets overseas for the vital commodities that we have for sale becomes more and more evident.

I do not think anybody will deny that certain industries will experience difficulty in meeting the competition from Japan, but I cannot believe counsels of fear will help them to meet their difficulties. There must be some way by which we can reorganize the industries concerned and encourage the production of the goods they manufacture, so that they will be able to compete effectively.

The Opposition has stated that Australian industry could not compete with Japan because of the low wages in that country. I have indicated in this House, dozens of times, that the main cost factor in producing an article is wages and, each time, the Opposition has derided me, saying that that was nonsense and that profits were the main cost factor. Now, Opposition members contend that Japanese goods are cheaper than Australian goods because wages are lower in Japan. I remind Opposition members that, in debate, they cannot change from one point to another like a bird in flight. Some benefits are derived by Japanese industries from lower wages, but members of the Opposition must look on the bright side of things. Housewives who want to buy more cheaply the things that they need for their homes will welcome Japanese goods. Their importation will affect our cost of living. That is a point which, so far, no member of the Opposition has mentioned.

Opposition members have regarded the Japanese only as a grave menace, and have not mentioned any advantage that will flow from bringing the cost of living down, which, in turn, will assist our cost structure The Labour party has always stated that the people to whom it is loyal are the textile workers and other workers. It is extraordinary, now, to hear them implying that they are loyal to the business men and manufacturers whom they have continually attacked as monopolists. They are now alleging that we, who are supposed to be the friends of big business, are making conditions difficult for big business.

The honorable member for Barker (Mr. Forbes) made a good point when he asked whether we could afford to go on discriminating against Japan in the matter of trade. The fact that Japan is a part of the free world is of enormous significance to Australia in opposing the Communist menace. The fact that Japan, a virile nation, is on the flank of China, is of great importance to us. Do we think it wise that we should not have understanding and friendship with Japan? Do we think it wise that we should discourage trade with Japan, and allow mass unemployment in that country? Do we not think that, by discriminating against Japan, we shall force that country into the Communist bloc? There is no suggestion in the Opposition’s argument that Japan should have any trade facilities with this country. The Opposition suggests that we should protect ourselves at the expense of Japan, but honorable members must look at the matter in broad perspective. Are we to force unemployment on Japan, and to allow that country no trade benefits?

Mr Makin:

– The honorable member seems to be more concerned about Japan than about Australia.


– I am very concerned about making jobs available for more and more people who will come to Australia. The Opposition takes the short-term view, and does not worry about the employment of the tens of thousands of immigrants whom we wish to bring to this country. The position of Japan is vital to our security. It would be disastrous for us to have mass unemployment in Japan.

The important point about this agreement is that we are planning for the future. We are trying, to secure more markets for our exports. That is the best way to further our development. The more money that comes into this country the better markets we can provide for local production. Another aspect of the Labour party’s point of view which is extraordinary in this. The Labour party has always declared itself in support of workers, not only in this country, but throughout the world. Its slogan has been, “ Workers of the world, unite “. But Labour members are completely indifferent to the Japanese worker. How can the Japanese worker reach a decent standard of living unless his country’s trade is increased? Japan has to rely on other countries for important raw materials with which to manufacture its exports. Will the Labour party continue to say that it represents the workers of the world and remain completely indifferent to the way in which this trade agreement will affect the workers of Japan?

There have been several attempts to show that the Australian Country party will be the gainers by this agreement. This is a snide attempt to take political advantage of the position of the Australian Country party. The Liberal party and the Australian Country party are united in government, and have no disagreement over this matter. The Australian Country party has a wide, national outlook. Consequently, we regard it as necessary to increase our exports in order to expand our secondary industries. Now that we are feeling the first chilly breeze of competition, it has become necessary for us to examine our cost structure as we have been asked to examine it for years. Costs have been mounting all the time.

I was interested to read an item about the building industry in yesterday’s paper. This country is short of homes for the workers. In addition, industry has to be geared to meet competition in a competitive world. Yet, this is how the Labour party, and the trade unions with which it is associated, force industry to build up its cost structure. The building workers group of unions struck yesterday in Sydney. There is no industry in which wages have increased more than they have increased in the building industry, yet the group of unions is demanding a margin of £6 a week for tradesmen, £4 for labourers, a £2 a week industry allowance, a wet weather allowance, a guarantee of 52 working weeks a year, a multi-story allowance, and other concessions. The cost of housing affects other costs because it is added to rent. All our costs will be affected if the demands of these unions are met. They are making these demands regardless of the fact that many workers have no homes. The same thing is occurring in other trade unions throughout the nation. They are making it harder for us to compete with Japanese goods. The Labour party, with which these unions are associated, is supposed to be a reputable party, and this is its contribution towards overcoming the difficulty of meeting competition.

I understand that the announcement of this trade agreement is the first occasion on which the Communist “ Tribune “ has not given a direction as to what its policy will be. Consequently, to my mind, the Opposition is struggling to find a reason for opposing the trade agreement.

Port Adelaide

– 1 was sorry to hear the honorable member for Hume (Mr. Anderson) cast a reflection on the Labour party. He said, “ It is supposed to be a reputable party “. I take from that remark that the honorable member does not think we are a reputable party. Perhaps, some honorable members on the Government side agree with thai view. But in reply to the honorable member’s remark about a “ reputable party “ I say that it is the reputation of the Labour party that counts in the interests of Australia. The honorable member said also that mass unemployment in Japan would be disastrous for Australia. I take it that he wants Australia to buy a lot of goods so as to provide plenty of employment for the Japanese, but Australia will have to put up with the consequences.

Mr McEwen:

– The honorable member knows that he did not mean that.


– He might not have meant that, but that is what he said. 1 quite appreciate the difficulties facing the Government and the Minister in connexion with this trade agreement. Today, honorable members on the Government side have been talking of nothing but the big deficit Japan has in her trade with Australia. If we were to take that as a criterion for trading we would soon get into difficulties with other countries. A day or two ago facts and figures came to hand which relate to the position as at 30th June, 1956. In that year Australia bought from Japan £22,000,000 worth of goods and Japan bought from Australia £86,000,000 worth. That was one of the beginnings of renewed trade with Japan. Admittedly, the difference in this past year was much greater than in the previous year; but if treaties are to be made to get over Japan’s trade deficit with Australia I ask honorable members to consider Australia’s trade balance with Italy. Australian imports from Italy in 1956 amounted to £11,000,000, and in that year Italy bought £34,000,000 from Australia. Is a trade agreement between Australia and Italy needed to square that position? Arc we going to suggest that mass unemployment in Italy would be disastrous to Australia and that we will have to buy more goods from Italy so that Italy’s purchasing power will be strengthened? When examined figures of Australian trade- with France I found that for the year ended 30th June, 1956, Australia bought £15,000,000 worth of French goods and France bought £67,000,000 worth from Australia. Is it necessary for us to make an agreement with France so that we may have balanced twoway trade? I agree that there must be twoway trade.

My mind goes back to 25 years ago when Mr. Lang was the great man in politics in New South Wales. I attended a big meeting in South Australia which he addressed, and of all he said that night only one phrase has remained with me; he said, “ International finance knows no country “. It is a fact that international finance is not concerned with any particular country. It is concerned with the overall distribution of finance among all countries. When we talk about what we are purchasing from other countries, I invite honorable members to consider our trade with Indonesia. Last year, Australia purchased £22,000,000 worth of goods from Indonesia and that country purchased £6,000,000 worth from Australia. If we were to examine the value of goods purchased by Indonesia from Japan and compare it with the value of goods purchased by Japan from Indonesia, we might find that a certain amount of levelling up was needed between those two countries. If we examine trade throughout the world we will find that it is almost impossible to equalize exports and imports between any two particular countries.

I support the amendment moved by the Leader of the Opposition (Dr. Evatt). I agree that we must have a suitable arrangement with Japan, but I consider that this treaty does not provide sufficient protection for Australia. It contains no effective provision to regulate trade coming from Japan to Australia. Last year, we had a certain amount of control over goods coming from other countries, by reason of our import restrictions. Just now, the honorable member for Hume said that the Labour party blamed the Government for imposing import restrictions and also for taking them off. I have always been blaming this Government since it came into office for its “ onandoff “ policy in respect of import restrictions. The only hope of keeping our trade balance on a proper level is to use import restrictions.

The effect on Australia of this trade agreement with Japan will be felt in the very near future. Members of the Labour party have already received shoals of letters and submissions from people in the textile industry, and their arguments do not appeal to me too strongly. When a set of people use pressure or power politics, as they have been using them, I am not too keen about it. I feel that, usually, such people are looking after their own interests. In this case, I think they have rather overdone it. However, I appreciate very much the effect that this trade agreement with Japan can have on the textile industry.

Let us consider what can happen to our industries when imports from abroad are unrestricted. The Government took office in 1949, and when it began to put its policy into effect in 1950 it lifted import restrictions. In my district a manufacturer came to me and said that in his industry, as a result of the lifting of those restrictions, he could not get orders because imported goods were coming in. He said, “ It looks like ruin for my business “. It was a great worry for him to contemplate what would happen to his industry in which he had placed all his own capital as well as further capital that he had borrowed to purchase plant. Later, when the Government found it necessary to impose import restrictions and issue import licences, back came the orders to this man from Australian traders and his business went ahead again. Australia will suffer economically as a result of this treaty with Japan. I have no hatred for Japan. I hate the things that the Japanese army did in World War II., but I realize there are many people in Japan who are entirely innocent of responsibility for those actions. But I feel that my first duty is to Australia. I ask honorable members on the Government side which is the biggest industrial country to-day, with the greatest production and export trade in the world. The United States of America stands out. Can the Minister say that the United States would let us send as much wool, meat, butter or other products as we liked to that country without restriction? We know that it has huge supplies, but it also has a control system for the protection of its own production.

I feel that we are justified in objecting to this treaty. I know that we cannot do anything effective. The item on the noticepaper is -

Agreement on commerce between Australia and Japan - Motion for printing paper.

The Minister has presented the paper and moved that it be printed, so that we will have the opportunity to debate it. But this Parliament has no say at all on whether the agreement should be accepted. We are merely holding a post mortem on what the Minister has done with the consent of the Government. He has made an agreement and has now told us what he has done. The Government does not ask us for our approval. It does not move that the agreement be approved, much less ratified, but leaves it to the Opposition to move that we do not approve of the agreement. The Opposition is not hypocritical. We contend that the agreement should have come to Parliament for ratification, no matter what the law says at the moment. If we believe in democracy and in the will of the people being expressed through the elected representatives, the agreement should have been presented to the Parliament to be debated and dealt with. Honorable members opposite may say that we could move a no confidence motion. We know that we could do that, but Government supporters would not adopt a similar attitude. I was pleased when the honorable member for Moreton (Mr. Killen) raised this matter. I am sure he agrees with me that, before anything is done that would bind us and might have the effect of ruining the country - and I am not speaking of this agreement at the moment - it should first be considered by the Parliament.

Japan does not take anything from us solely to make Australia better off. Japan can insist that, if it deals with us, we must deal with it. What are the main exports from Australia to Japan? I shall not go through all the items mentioned by the Minister, but shall take the main ones. Last year, our main export was wool. Now there are wheat and barley, and a prospect of participating in 40 per cent, of Japan’s sugar imports. The Minister told us that Japan has already arranged with other countries for the supply of 60 per cent, of its requirements, but we can compete for the 40 per cent, that is left. Has the Minister any agreement with Japan that it will pay the cost of production if it buys sugar from us, or must we compete with lower-wage countries? If Japan can buy wheat at a figure lower than the cost of production in this country, can the Minister say that Japan must pay our cost of production? I admit that South Australia is very interested in the sale of barley to Japan, which is one of the biggest buyers of our barley at present.

In South Australia, barley is grown on large areas of land that were previously sown for wheat. Years ago, we were sending barley to Belgium. At that time a proposal was put forward to establish an industry to make ordinary sheet glass so that work could be found for unemployed in South Australia. However, Belgium said, “ If you do not take our sheet glass, we will not take your barley “. The production of sheet glass had to be abandoned, though the industry would have been established but for the threat held out to us by Belgium.

If we are to do anything worth while to cover the difference between our exports to Japan and our imports from that country, we will need to make a big contribution. What will we get from Japan? Can anybody say that we will get from Japan goods that we do not already make in Australia or already import from other countries? We may be able to get from Japan some delicate machinery that we already import from France. We may be able to get from Japan some silk goods that we obtain from France. Who will be the sufferer? France will be. Our own industries will suffer also. A recent statistical statement showed that during the last twelve months the production of washing machines, electric heaters and refrigerators and other electrical goods declined. I wonder what will happen to the factories of Philips Electrical Industries Proprietary Limited at Hendon, in my electorate. At Hendon we also had two big factories for the production of .303 ammunition when the honorable member for Bonython (Mr. Makin) was a Minister. Almost the entire Sydney factory of Philips was transferred to Hendon, and ordinary light globes and television sets are now made there. What will happen there when electrical goods are imported?

Though I appreciate the Minister’s difficulties, I consider that the balance of payments problem with Japan could have been met in a much better way than is foreshadowed in this agreement. Though now we can only express our disapproval of the agreement, 1 ask the Minister to arrange imports from Japan on a quantitative basis. He should use import licensing to restrict the import of those goods we make in this country. If he can do that, he may be able to overcome some of the difficulties. I shall not go into the question of remedies because I have not the time, but I say that the Government of Japan cannot .determine this matter according to the production of its industries.

Debate (on motion by Mr. Howson) adjourned.

Sitting suspended from 6 to 8 p.m.

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Messages from the Governor-General reported transmitting Estimates of Revenue and Expenditure and Estimates of Expenditure for Additions, New Works and Other Services involving Capital Expenditure for the year ending 30th June, 1958, and recommending appropriations accordingly.

Ordered to be printed, and referred to Committee of Supply forthwith.

page 215

BUDGET 1957-58

In Committee of Supply:

Treasurer · Mcpherson · CP

– It is my duty to place before the House to-night estimates of revenue and expenditure for the financial year 1957-58. I desire also to explain a number of proposals, affecting both the revenue and expenditure, which the Government has decided to make.

page 215


During the past year our economy has gained greatly in stability and strength. Twelve months ago, despite signs that infla- tionary pressures were easing, costs and prices were still rising fairly strongly. Our international reserves had by then ceased to fall, but we were maintaining extern-il balance only by .the use of «drastic import restrictions, -and there seemed little early prospect of relieving the position. To-day it can ‘be said -that inflationary pressures have .been reduced and the movement of costs and prices has slowed down. We have .added more than £200,000,000 to -our overseas -reserves and import controls have already been relaxed to .a considerable extent.

There was, -during J 956, -some sagging ot activity in a number of industries and the rate of dwelling construction declined. In recent months, however, there has been a degree of revival in most of these sectors and housing, in particular, is now well on the way up again. Clearly, too, sales of most classes of consumer goods are rising and, in the meantime, the output of most of the basic secondary industries has continued to increase. In the .primary field, the outstanding feature has been the great rise in wool production, and this .promises to continue. Although total employment showed only a small increase during the year, it remains much on a par with the exceptionally high level of the boom period. There has been sortie increase in .unemployment, but it appears to arise from adjustments going on within particular industries and localities rather than from any general weakness of labour demand.

We have, in brief, reached a state of substantial balance, both internal and external, at a high level of trade and industrial activity. The problem, now as always, is to preserve such a state of balance and at the same time keep up an adequate, though not excessive, rate of growth in terms of population, industrial capacity, living standards and defensive strength. The supply of resources will increase and so will the demand for resources - the vital thing is to keep the two in step. We can expect, for example, that a fair number of additional workers will become available this year, both from immigration and from local sources. It is important that these additional workers should be absorbed into industry. There is also, we are told, some unused capacity in factories, construction plant and the like and, of course, new capacity is constantly being added. This extra capacity should also be brought into use.

With further resources entering production and with the gains in productivity that are undoubtedly taking place, especially in some industries, we have reason to expect an appreciable rise in local output. Moreover, through the easing of import restrictions, there will be some addition this year to imported supplies of both finished goods and equipment and materials for industry.

On the side of demand, consumption expenditure appears to be rising at a fair rate and there will also be some increase in public expenditure this year, both on works and on current services. In the private investment field, home construction is now running at a relatively high level. Other forms of building may have declined to some extent, though it should be remembered that this branch of activity has for some time past been exceptionally high. Expenditure on motor vehicles is considerably greater now than it was a year ago. There seems to have been rather less spent on farm equipment in 1956-57 than in the previous year but the rise in farm income may bring some improvement in that quarter. Expenditure on capital equipment in other industries seems to have kept more or less to a steady level.

We cannot, of course, foretell precisely what the magnitude of these trends in supply and demand will be; they will in any case be affected later in the year by developments now unforeseen. The balance of payments is likely to be particularly influential and, at this stage, prospects seem promising. We are certain of another large wool clip this year and, if wool prices hold, our export income will again be high. This could obviously have an important impact, directly on incomes and monetary conditions and indirectly on attitudes towards investment and consumer spending. On the other hand, it would make possible a further relaxation of import controls, although the effect of this, in terms of larger imports, would be felt only after an interval of some months.

I should perhaps refer at this point to certain factors, other than the buoyant wool market, which have been operating to strengthen our balance of payments position. One is, of course, the great increase in wool production. Another is the expansion of manufactures which, on the one hand, are proving an already sizeable volume of exports and, on the other hand, are meeting local demand for commodities we formerly imported. The steel industry is the most conspicuous example, but numerous other industries are now making that kind of contribution. Somewhat later on, the mining industry also seems likely to become important in that regard. Much valuable work is being done through the negotiation of trade arrangements and through the trade promotion efforts both of the Government and of private enterprise to develop market outlets for our products abroad. All this adds up to an encouraging change in our capacity to export, one which we should greatly welcome, because, for a long time past, a major question-mark on our prospect for continued growth has been the doubt whether we could balance our earnings abroad with the import requirements of our expanding economy.

Nevertheless, despite our sound present situation and the encouraging tendencies it shows, I hear it said that enterprise is hesitant about the future and needs a stimulus. This, frankly, is something 1 find it difficult to understand. On a broad view, the outlook is very favorable to enterprise. Industrial activity is, as I have said, relatively high. The trend of costs and prices has been much steadier, a fact which should of itself be encouraging to enterprise. Population is increasing at a fairly rapid rate. Our balance of payments and overseas reserves are in a sounder condition and, so far as we can see, external prospects are good. The share market has been rising for a considerable time past and is at present very strong. With so many favorable portents I cannot, to repeat, see why there should be any hesitancy about the future. So far as Government policy is concerned, I believe the best assurance that business can have is that policy will be directed primarily towards preserving stability, a stability which has been gained not without some cost, but which has certainly not so far proved incompatible with sound progress.

The budget does not cover the whole range of policy. Banking policy is important, too, and so is trade policy; perhaps most significant of all is the attitude of the business world and the community at large. Yet the budget occupies a central position and its range of influence is wide. It was chiefly to budgetary measures that we turned when, eighteen months ago, the economy had become unbalanced and we had to lay a restraining hand on the excessive rate of business and community spending. The question of prime interest in budgetary policy this year is whether we should modify to any extent the measures then adopted and, if so, how far. Before I go on to discuss that problem, however, it is necessary first to explain what the budget outlook is.

page 217


On the basis of existing legislation, revenue from taxation in 1957-58 is estimated to be nearly £107,000,000 greater than revenue last year. Collections from all forms of taxation are expected to increase, but the greater part of the total increase is attributable to income tax on individuals.

With higher wool prices last year, the income of wool-growers rose sharply and, although some other classes of farm income declined, the total income of primary producers earned in 1956-57 and subject to assessment in the current financial year was substantially greater than in 1955-56. With higher employment and earnings in prospect, pay-as-you-earn collections during 1957-58 are also expected to be higher. Collections in 1957-58 will also benefit from the general increase in professional and business earnings last year. Because of these factors, income tax collections from individuals are estimated to increase this year by £71,300,000.

Revenue from company taxation increased by £29,700,000 last year, but this was mainly due to the higher rates of company tax imposed in March, 1956, and only in a small degree to the increase in company income in 1955-56. Company income is estimated to have been a little higher in 1956-57 than in 1955-56 and income tax collections from this source are expected to be £6,400,000 greater than last year.

Customs revenue is estimated to be £5,400,000 greater this year, mainly because recent relaxations in import restrictions will allow a larger flow of imports. Excise collections are estimated to increase by £11,600,000 and revenue from sales tax by £6,700,000. Sales of most goods subject to these taxes are expected to increase.

With rising wage and salary payments, the yield of pay-roll tax is estimated to increase by £3,800,000.

Miscellaneous revenue is estimated at £34,600,000. This figure includes a transfer of £2,000,000 from sundry trust account balances. Last year, transfers totalling £69,800,000 from trust accounts increased this item to £106,500,000.

Post Office revenue is expected to increase by £6,300,000 and revenue from broadcasting and television services by £1,250,000.

At existing rates of taxation and other charges, total revenue from all sources in 1957-58 is estimated to be £1,347,000,000. If the transfers from trust accounts in 1956-57 are excluded, this represents an increase on last year’s revenue of almost £113,000,000.

Further details of both the revenue and expenditure estimates for 1957-58 are given in Statement No. 2 attached to this speech. Details of the financial results for 1956-57 are set out in Statement No. 1. With the concurrence of honorable members I shall have these and other statements referred to in my speech incorporated in “ Hansard “.

page 217


Defence Services

Last financial year, the Government provided £190,000,000 for defence. The actual expenditure for the year was £188,497,000. A vote of £190,000,000 is again being provided in the current financial year to meet the requirements of the defence programme. This amount includes a substantial element to meet commitments incurred in previous years as well as current expenditure.

The programme gives effect to the decisions on defence policy announced earlier this year. To meet the needs of the strategic situation, the emphasis will be on mobile, well-equipped regular forces. At the same time a sound basic defence organization, including adequate reserve forces, will be maintained to permit rapid expansion in an emergency. Related to these objectives are the modifications recently effected in the national service training scheme and the measures being taken for the re-organization of the Army with priority to the building up of the brigade group of the regular field force, Mobility wilt be further developed by the procurement of modern medium-range transport aircraft.

Financial provision is being made for the maintenance of the forces generally and for their requirements of munitions, aircraft and other equipment, including the completion of the filling factory at St. Mary’s. Substantial amounts are also being allotted’ for the naval shipbuilding programme and the defence works programme. In the field of defence research and development, the joint United Kingdom/Australia longrange weapons project continues to be the major item. Provision is also being made for commitments, in respect of the Australian component of the Commonwealth Strategic Reserve in Malaya.

War and Repatriation Services

The Government proposes to increase war and service pensions and certain reestablishment benefits.

The special rate war pension for cases, of total, and permanent incapacity will be increased by £1 5s. a week, making the pension £1.1 a week; the 100 per cent, general rate- war pension will be increased1 by 7s. 6d. a week with proportionate increases for pensioners in receipt of partial pension; and the service pension will be increased by 7s. 6d. to £4 7s. 6d. a week.

The- war widow’s pension will also be increased by 7s. 6d. to £4 17s. 6d. a week. In addition, the domestic allowance payable to certain war widows, mainly those with children, will be increased by 5s. 6d. to- £2 a week.

The new rates of pensions and allowances will be paid from the first pay-day after the necessary legislation has been passed.

It is also proposed to increase by 7s. 6d. a week the living allowances payable to settlers under the war service land settlement scheme and trainees undergoing fulltime vocational training under the Commonwealth reconstruction training scheme, the Korea and Malaya training scheme and the disabled members’ and widows’ training scheme.

Altogether, these proposals are estimated to cost £4,100,000 in a full year and £2,737,000 in 1957-58.

Total expenditure on war and service pensions and; widow’s allowances in 1:957-58 is estimated at £59,228,000 or £6,6,19,00.0 more than last year. This increase is due not only to the cost of the increased pensions I have just announced but also to such factors as increases in the number of pensioners and re-assessments of incapacity.

On the other hand, as a result of redemptions, interest and sinking fund payments on war debt will be £3,150,000 less this year. I should mention also that redemptions of war savings and savings certificates, which amounted to £3,3.22,000 last year, are not expected to be charged to Consolidated Revenue Fund this year.

Total expenditure on war. and repatriation services in l’957’-58 is estimated’ at £129,067,000 or £3,371,000 more than in

1956- 57.

National- Welfare Fund

On the basis of existing legislation,, expenditure from, the National Welfare Fund in 1957- 58 would rise by just over £10,000,000. In addition, certain increases in existing rates of benefit are proposed.

Proposed Increases in Benefits.

Age and Invalid Pensions will be increased by 7s. 6d. a week to a new maximum of £4 7s. 6d’. a week. The same increase will be granted in widows’ pensions,, raising, the pension for widows with one or more children to £4 12s. 6d. per week and for other widows to £3 15s. a week.

Unemployment and sickness benefits rates will be increased by 15s. a week for a single adult, 22s. 6d. for a man and wife and 27s. 6d. for a man with a wife and one. or more children. The new weekly rates of benefit will be £3 5s. for a single adult person, £5 12s. 6d. for a married person and £6 2s. 6d. for a married person with one or more children. It is also proposed to raise from £1 to £2 the weekly income which is allowed from other sources without reduction of these rates of benefit.

Allowances payable to single and married sufferers from tuberculosis will be increased by 7s. 6d. and 15s. a week repectively to £6 10s. and £10 7s. 6. a week.

The increases proposed in pensions and other benefits will become payable on the first pay-day after the amending legislation is passed.

The Government also proposes to increase the assistance given by the Commonwealth to hospital patients to meet their accounts for hospital treatment. At present the Commonwealth pays a general hospital benefit of 8s. a day and, where a patient is a member of a hospital insurance organization, an additional benefit of 4s. a day. Legislation will be introduced providing for the payment of additional benefit of 12s. a day, in lieu of 4s. a day, where a hospital patient is entitled to receive hospital insurance benefit of 16s. a day or more. The amounts of certain benefits payable under the medical benefits scheme will also be revised.

The increases in the rates of benefits which I have just mentioned are expected to cost £15,980,000 for a full year and £9,531,000 this year. Taking this latter figure into account and making provision, for the normal growth in the numbers of social service beneficiaries, the total outlay from the National Welfare Fund in 1957-58 is expected to reach £243,572,000, which is £19,649,000 more than actual expenditure last year. Details of the National Welfare Fund estimates are contained in Statement No. 4.

Homes for the Aged.

The Government proposes to double the contributions it is at present making towards the capital costs incurred by religious, charitable and other approved organizations in building homes for the aged. Instead of contributing £1, the Commonwealth will contribute £2 for each £1 found by an organization towards the cost of housing projects. Further, the Government will raise from £1,500,000 to £3,000,000 the maximum contribution it is prepared to make for homes for the aged in any single year. Details of the Government’s proposals are still being worked out, but amending legislation will be brought before Parliament at an early date. Provision has been made for an increase of £1,049,000 in expenditure under this heading in this financial year.

Commonwealth Scholarship Scheme

The living allowances payable to holders of Commonwealth scholarships will be increased by 10s. to £3 15s. a week for a scholar living at home and by £1 2s. 6d. to £5 15s. a week for a scholar living away from home. The increases’ will take effect from 1st January, 1958, and are estimated to cost £50,000 in this financial year.

Payments to the States.

Total payments to the States in the present year are estimated at £266,739,000, or £22,662,000 more than last year.

The tax reimbursement grant payable to the States in 1957-58 under the formula embodied in existing legislation is estimated at £166,200,000. As already announced, however, the Commonwealth has agreed to provide a special financial assistance grant sufficient to bring the total tax reimbursement payments to £190,000,000, or almost £16,000,000 more than last year. Legislation authorizing the payment of this grant will be introduced shortly.

Following the recommendation by the Commonwealth Grants Commission, an amount of £19,500,000, or £1,000,000 more than last year, has been included in the Estimates for special grants to South Australia, Western Australia and Tasmania. A bill to authorize the payment of the special grants will be introduced when copies of the commission’s report become available.

Payments under the Commonwealth Aid Roads legislation are expected to reach £34,000,000 this year, or £1,782,000 more than in 1956-57. The existing Commonwealth aid roads legislation is due to expire on 30th June, 1959, and the Government proposes to review the whole question of Commonwealth assistance for roads before that date. In the meantime, however, the Government has decided that some further assistance should be provided for roads.

The Government has been impressed by the fact that operators of diesel-powered road vehicles, as compared with operators of petrol-driven vehicles, are not making a reasonable contribution to the cost of building and maintaining the roads they use. The Government has decided, therefore, to impose customs and excise duties equivalent to ls. a gallon on automotive diesel oil consumed by road users. This is expected to yield about £2,000,000 in this financial year and £3,000,000 in a full year. Legislation to authorize the imposition of this tax will be introduced later to-night.

Although the proceeds of this tax will yield only about £2,000,000 in 1957-58, the Government has decided that £3,000,000 should be made available as special assistance for roads in both 1957-58 and 1958-59. Legislation to authorize the provision of this special assistance for roads will be introduced shortly. This special assistance should be regarded as an interim measure which will be reviewed, together with the Commonwealth aid roads legislation, before that legislation expires at the end of the next financial year.

The arrangements under which the Commonwealth is assisting the State of Western Australia to finance the cost of the comprehensive water supply scheme have been reviewed, and it has been decided that assistance on a larger scale should be granted. Accordingly, it is proposed to remove the limits on the Commonwealth’s annual contributions towards the cost of the scheme and also to increase the aggregate limit of those contributions from £4,000,000 to £5,000,000. Amending legislation will shortly be introduced. In 1956-57 contributions by the Commonwealth towards the cost of the scheme amounted to £462,500. Under the proposed new arrangements the Commonwealth’s contributions in 1957-58 are estimated at £572,000.

The Government has, in the context of its general review of Australian transport policy, considered the question of assisting in the provision of a 4-ft. 8i-in. gauge rail link between Melbourne and Wodonga to enable the unbroken flow of the large quantities of goods passing between Sydney and Melbourne.

The Commonwealth is already meeting half the estimated cost of the preliminary surveying for this work, and it has now been decided in principle to provide some financial assistance for the carrying out of the work itself. Discussions on the nature and amount of the assistance to be provided will take place shortly between the Commonwealth and State governments concerned.

Business Undertakings

Ordinary expenditure by business undertakings - post office, railways and broadcasting and television - is estimated at £110,336,000, or £8,193,000 more than last year. Practically the whole of this increase will be covered by increased revenue from these undertakings. The main increase relates to post office expenditure, which is estimated to rise by £6,888,000, chiefly because of wage increases and additional staff required to handle extra business.


Expenditure in 1957-58 on ordinary services in the territories is estimated at £19,340,000, which is £2,830,000 greater than actual expenditure of £16,510,000 in 1956-57. The increase reflects the expansion taking place in governmental activity in the Northern Territory and in the Territory of Papua and New Guinea.

Capital Works and Services

The provision for capital works and services is £122,403,000, or £14,601,000 more than expenditure last year.

The amount to be provided this year for war service homes is being increased by £5,000,000 to £35,000,000. This additional allocation should result in a reduction in the number of outstanding applications and in the period that applicants have to wait for loans.

The territories are to receive £3,280,000 more than last year’s expenditure of £8,027,000. The vote for the Australian Capital Territory has been increased by £2,867,000 to make possible an acceleration of the building programme in anticipation of the transfer to Canberra of the personnel of the defence departments. The effect of this transfer will be to release a substantial amount of housing resources in Melbourne. The vote for the Northern Territory has also been increased by £563,000 to a total of £3,361,000 to provide for expansion of building and engineering services, developmental roads and further health facilities.

Funds for the capital works programme of the Postmaster-General’s Department are being increased by £3,659,000 to a total of £34,380.000. Of the increase, £2,548,000 will be applied to installing new telephone connexions and to improving trunk line and telegraph services. Additional expenditure on sites and buildings accounts for the remainder of the increase.

Payments in connexion with Christmas Island, a source of phosphate in the Indian Ocean, are estimated at £1.770,000, or £1,435,000 more than in 1956-57. The larger allocation is for payments connected with the proposed transfer of sovereignty of the island to Australia. In this, and in the expenditure aimed at raising phosphate production, Australia and New Zealand are sharing equally.

To meet increased expenditure on plant and equipment and other expenses, the amount provided for the Snowy Mountains hydro-electric scheme is ‘ being increased from £18,000,000 in 1956-57 to £18,350,000 in this financial year.

Departmental Expenditure

Departmental expenditure for 1957-58 is estimated at £61,313,000, an increase of £5,352,000 over last year. About half of this increase is due to increased expenditure on the research and technical services provided by departments and authorities such as Civil Aviation, the Bureau of Mineral Resources, the Atomic Energy Commission and the Commonwealth Scientific and Industrial Research Organization. Estimates of administrative expenditure also reflect increased wages, salaries and other costs. The Government has decided to make a full review of the functions of all Commonwealth departments and has established a committee of Cabinet for the purpose. This committee will examine the functions performed by each department from the stand-point of cost and of public need and will report its conclusions to Cabinet.

Bounties and Subsidies

Expenditure on bounties and subsidies is estimated at £15,150,000, or £136,000 more than last year. The main item is the dairy products bounty which will remain unchanged at £13,500,000. It has been decided to seek an amendment of the Goldmining Industry Assistance Act to increase from £2 to £2 15s. per ounce the maximum rate of subsidy payable to large producers. Small producers (those whose output is not more than 500 oz. per annum) will be entitled to claim subsidy at a new fixed rate of £2 per ounce. At the same time the maximum allowance for development expenditure in arriving at cost of production for gold subsidy purposes will be raised from £3 10s. to £5 5s. per ounce. These increases will operate from 1st July last and their annual cost is estimated at £100,000.


In introducing the 1956-57 budget, I announced that the Government had decided to aim at a level of net immigration equivalent to I per cent, of population per year and that the target figure for gross permanent immigration in 1956-57 had been set at 115,000. The actual intake, however, was some 6,000 in excess of this, because the number of unassisted immigrants was greater than we had expected.

For this financial year the planned intake is again 115,000, which is expected to result in a level of net immigration somewhat less than the ratio of 1 per cent, of population. However, with an increase in the proportion of British immigrants in the programme and higher passage costs, expenditure on immigration is estimated to rise by £1,450,000.

International Development and Relief

The amount provided for international development and relief in 1957-58 is £5,850,000 compared with actual expenditure in 1956-57 of £5,668,000. Colombo plan expenditure will be greater this year because of the need to meet an accumulation of outstanding commitments. On the other hand our total contributions to United Nations and relief agencies are expected to be slightly lower because expenditure last year included a substantial amount for Hungarian relief.

The Search for Oil

In order to accelerate the search for oil in Australia, the Government has decided to offer to meet portion of the cost of deep stratigraphic drilling. This assistance will be limited to not more than half the cost of each hole drilled at sites approved by the Government. These sites will be in areas not previously investigated at depth. The annual limit on the Government’s contribution will be £500,000. A sum of £300,000 for this purpose has been included in this year’s estimates.

Commonwealth Superannuation

The Government has also decided to provide some relief to those Commonwealth superannuation pensioners whose pension entitlements commenced a number of years ago. Increases will be made on a sliding scale of 5s. per unit to those who retired prior to 14th May, 1942, reducing to 3s. 6d. per unit for those who retired on 5th April, 1947, or thereafter with a pension entitlement which had not been increased by salary adjustments.

Other Miscellaneous Expenditure

Other miscellaneous expenditure in 1957-58 is expected to be lower than last year, mainly because expenditure in 1956-57 included a number of special payments such as subscriptions to the International Bank, the International Finance Corporation and the Exports Payment Insurance Corporation.

Total Expenditure

The various items of expenditure that 1 have outlined are expected to total £1,202,337,000, which is £79,506,000 more than the comparable total for 1956-57. Of this increase, £19,649,000 is for increased expenditure from the National Welfare Fund, £6,619,000 for increased expenditure on war and service pensions, £22,662,000 for additional payments to the States, £14,601,000 for capital works and £8,193,000 for business undertakings.

Other Commitments

There are certain other major commitments which must also be considered.

An estimated amount of £8,000,000 will be needed to finance advances to the States for capital expenditure on war service land settlement whilst a very large but as yet unknown amount will also be required to assist the borrowing programme of £200,000,000 for State works and housing approved at the meeting of the Loan Council in May, 1957. Further details are given in Statement No. 3.

Last year, when the Loan Council borrowing programme was £8,000,000 less than this year, the Commonwealth assisted the Loan Council programme by investing in a special loan the Australian currency proceeds amounting to £3,000,000 obtained from International Bank loans, together with a large part of the moneys which had been appropriated during the year to the Loan Consolidation and Investment Reserve. The amount invested in the special loan for this purpose and for war service land settlement amounted to no less than £99,000,000. Indeed, in terms of the cash outlay required for these purposes during 1956-57, the amount provided by the Commonwealth exceeded £100,000,000 - mainly because portion of the subscriptions to the public loans floated in 1956-57 and made available for the Loan Council programme was not received during the financial year.

At this stage, it is impossible to say with any precision what amount the Commonwealth will need to find for the Loan Council borrowing programme and for war service land settlement. For the time being, the Commonwealth has agreed to make monthly advances to the States at an annual rate of £200,000,000. The position will be reviewed in January, 1958, by which time the Commonwealth will be in a better position to decide on the amount of special assistance which it may provide.

I should mention, however, that apart from any direct assistance it may provide for the States’ works and housing programmes of £200,000,000, the Commonwealth has also offered to arrange, to the maximum possible extent, for the refinancing of maturing loans that may not be fully converted.

Besides the £150,000,000 of 3* per cent, securities of which conversion has already been sought, further loans totalling some £265,000,000 will fall due during the remainder of the financial year. Of this amount, approximately £110,000,000 is held by- the Commonwealth Trust Fund, but the remainder presents a formidable redemption problem. Even though the response to the recent conversion offer has been encouraging, the amount of cash required this year to pay off non-convertors may well exceed by a substantial amount the current receipts of the National Debt Sinking Fund. There is also a loan of approximately £20,000,000 sterling which falls due in London, in April, 1958. A further small amount will also be required to finance redemptions of war savings certificates and saving certificates.

I think that I should make special reference here to the growing magnitude of the problem of maturing debt. During the next few years an immense amount of debt falls due, much of it the result of war-time borrowings by the Commonwealth. The amount is continually being increased by new borrowings or conversions. In recent years, investors and convertors have sought short-term securities to a much greater extent than they formerly did, and the result of this tendency is, of course, to add to the total of early maturing debt. As loans fall due, our first object is to arrange conversions for as large a part of them as possible and, given stability of financial conditions, there is no reason why we should not have a large degree of success in that direction. With any weakening of conditions, however, we could find ourselves faced with the need to redeem very large amounts of securities. The Government has given close thought to this problem over a long period, and for this reason established the Loan Consolidation and Investment Reserve by legislation three years ago. The resources available in the reserve have already proved useful in assisting to meet maturing loans and to reduce the total of outstanding debt. We have progressively added to the resources of the reserve and they now stand at a considerable figure; measured against the potential magnitude of the problem, however, they are not large, and it is the aim of the Government to add further to them as and when opportunity occurs.

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These, then, in broad outline, are the main elements in our budget problem for 1957-58. On the one hand, we have to provide for increased expenditure on account of the Commonwealth itself, including increases in social service and war repatriation benefits. As in recent years, also, we have to make provision for a potentially very large amount of assistance to State loan programmes. As I have just recounted, moreover, we have pressing hard upon us an immense and fast-growing problem of debt maturities, and it is no more than common prudence to build up resources as far as we can in advance of liabilities which, in a less favorable situation, may fall in upon us. On the other hand, revenue prospects for the year are relatively buoyant although, as I have mentioned, we owe a considerable part of this to the good fortune of a high wool market last financial year. Above and apart from these financial aspects of the position there is the broad question of what direction policy ought to take in the light of the economic possibilities I discussed earlier.

I then suggested that probably the soundest encouragement the Government could give at this juncture to the business world and the community in general would be the assurance that, in the matter of the budget, as well as elsewhere, its policy would aim to preserve, above everything else, the high degree of stability we have achieved. We are in a position to give some taxation relief and we propose to give it. But we do not feel called upon to start undoing, step for step, the measures we undertook eighteen months ago for the very purpose of correcting an unbalanced situation and bringing about the kind of well-adjusted situation we now enjoy. Neither do we judge it necessary or desirable to give a wholesale boost to activity and expenditure.. Within the total amount of tax reduction we are able to make we find it possible togive some relief to certain classes of taxpayers whose claims for relief have a high/ degree of priority - in particular, the family man and the person setting up a homeand we can also make a very useful contribution towards the problem of strengthening Australian industry to meet the keener overseas competition of which my colleague, the Minister for Trade, has spoken. In particular, we have given attention to depreciation allowances as a means to encourage and facilitate re-equipment of industry. Beyond that we will be able to correct a number of anomalies in the present taxation system which, however, will not entail any large cost to revenue. We believe that, in their own fields, these will all be timely and effective measures.

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The taxation proposals the Government has decided to make are as follows: -

Income Tax,

Dependants’ Allowances. lt is proposed to increase by £13 the concessional allowances for maintenance of dependants. This increase will apply to the whole field of dependants’ allowances. By way of example, the allowance for a spouse will be increased from £130 to £143.

The increased deductions will be allowed in assessments based on income of the current year 1957-58. In the case of salary and wage earners, the increased allowances will be reflected in reduced tax instalments expected to be operative on or about 1st November next.

At present a taxpayer who wholly maintains a parent is entitled to deduct £130. This deduction will, of course, be increased in consonance with the other dependants’ deductions and will also be liberalized by extending the concession to those taxpayers who maintain parents-in-law.

It is further proposed that, for income tax purposes, adopted children and other children towards whom a taxpayer has all the legal obligations of parenthood will be treated in the same manner as the taxpayer’s own children. Similar action will be taken for gift duty and estate duty purposes.

The revenue costs of these expanded concessions for income tax purposes is estimated at £8,425,000 in a full year and about £7,700,000 in 1957-58.

Age Allowance

The effect of the present age allowance is that no tax is payable by a single person who is a resident of Australia and qualified by age (men 65 years and women 60 years) if his or her net income does not exceed £390. In the case of married couples both qualified by residence and age, no tax is payable if their combined net incomes do not exceed £780.

These exemption limits coincide with the total of the present annual rate of pension and maximum permissible income for Commonwealth age pension purposes.

In consequence of the proposed increase of 7s. 6d. a week in the age pension, the exemption limits for the age allowance will be correspondingly raised by £20 to £410 in the case of single persons and by £39 to £819 in the case of married couples.

The increased allowances will begin to apply in the current income year 1957-58 at a cost to revenue of £450,000 in a full year and £250,000 this year.


It is proposed to widen the scope of the income tax concessions for gifts to include certain cultural and industrial research organizations. These are the National Trust in each of the States of New South Wales, Victoria and South Australia, public libraries and art galleries, the Sydney Opera House Appeal Fund, the Sidney Myer Music Bowl and the Australian Industrial Design Council. Amounts of £1 and upwards donated to these organizations on anc! from 1st July, 1957, will be allowable deductions.

The revenue cost is estimated at £157,000 in a full year, but there will be little or no cost in this financial year.

Company Taxation

It is proposed to reduce rates of company taxation by 6d. in the £1. The reduced rates which will apply to incomes of the 1956-57 year, will be, for public companies, 6s. 6d. in the £1 on the first £5,000 of taxable income and 7s. 6d. in the £1 on the balance of taxable income. The comparable rates for private companies will be 4s. 6d. and 6s. 6d.

In the case of friendly society dispensaries, the current rates are 6s. and 8s. The rates are those applicable to non-profit companies and were chosen as part of a plan to equate as far as possible the tax liabilities of friendly society dispensaries with those of individual pharmacists. It has been pointed out, however, that many of the friendly society dispensaries conduct their businesses through a number of branches any one of which would not earn profit in excess of £5,000 and that the higher rate of tax on income over £5,000 due to aggregation should not apply to friendly society dispensaries. It has accordingly been decided that the lower non-profit rate of 5s. 6d. should apply to the whole of friendly society dispensaries income.

The revenue cost of these reductions will be £14.500,000 in a full year and £13,000,000 in 1957-58.


This important feature of our taxation system was examined in 1955 by the Commonwealth Committee on Rates of Depreciation under the capable chairmanship of my colleague the honorable member for Petrie (Mr. Hulme).

Certain of the recommendations of the committee were adopted last year and it is now proposed to give effect to some others.

The main proposal is an increase of 50 per cent, in the depreciation rates applied in what is known as the diminishing value method.

A further recommendation of the committee which it is proposed to adopt relates to the taxation of depreciation balancing adjustments.

These adjustments are made when plant is sold. If the sale price does not reach the written down value, a deduction of the difference is allowed. On the other hand, if the sale price is more than the written down value, the excess depreciation is brought back into assessable income and subjected to taxation in the year of sale. Consequently, amounts allowed as depreciation in a number of years sometimes become taxable in one year and at rates greater than those obtaining when the deductions were allowed.

It is proposed that, instead of being taxed on any surplus as at present, the taxpayer may elect to reduce the value of other plant by that amount. The effect is that, although in the ultimate taxable income under both methods is the same, the full impact of taxation in one year is modified.

These measures relating to depreciation allowances will commence to apply to the income year 1957-8. The cost to revenue is estimated at £26,400,000 in a full year and £2,000,000 in 1957-8.

With-holding Tax.

The Government has had representations from investors concerning the method of taxing dividends paid to shareholders residing outside Australia. Opinion generally is that a with-holding tax at a flat percentage would be far preferable to the present system of taxing the dividends by way of assessment at ordinary rates.

Overseas investors point to the fact that a with-holding tax system is operated by Canada, the United States and South Africa and is favoured by both governments and investors alike.

The advantages of the with-holding tax are its simplicity, certainty of liability and promptness of payment.

The Government has considered the representations and believes that overseas investment in Australia would be encouraged and administration would be simplified by the adoption of this method of collection and is examining proposals for the introduction of such a system in Australia.

Any system that may be adopted will not operate before 1st July, 1958. Accordingly, there will be no cost to revenue this year.

Sales Tax

Certain exemptions and reductions in the sales tax rates are proposed.

Of major importance to householders is the reduction in the rate from 10 per cent, to 8i per cent, on purchases of household furniture and equipment such as domestic refrigerators, washing machines and vacuum cleaners.

The rate of sales tax on handbags, baskets, travelling bags and other travel goods is to be reduced from 25 per cent, to the general rate of 12i per cent.

Industrial gases and the cylinders in which those gases are marketed as well as steel strapping of a kind used in binding containers will be exempt from sales tax.

So also will certain classes of equipment for use on ships and equipment for use in servicing and repairing ships and railway rolling stock. Fire-fighting equipment is also to be exempted.

Exemption will also apply to carbonated beverages containing 5 per cent, or more of pure fruit juice.

There is a considerable number of other proposals relating to sales tax which will be explained when the necessary resolutions and bills are introduced at a later hour.

The new exemptions and rate reductions will commence to apply to wholesale transactions from the commencement of business to-morrow.

The revenue cost will be about £4,000,000 in a full year and £3,000,000 this year.

Pay-roll Tax.

The exemption from pay-roll tax is to be raised from £6,240 to £10,400. Only those employers who pay salaries and wages in excess of £200 weekly will be liable for the tax in future. One of the effects of the increase in the exemption will be a reduction from about 39,000 to 23,000 in the number of pay-roll taxpayers.

The higher exemption will operate in respect of salaries and wages payable on and from 1st September, 1957.

The revenue cost is estimated at £2,750,000 in a full year and £2,000,000 in 1957-58.

Estate Duty

It is proposed that a measure of relief be granted where the value of property becomes liable for estate duty on two or more occasions within a period of five years.

For this purpose, the value of the estate subjected to duty on the first and the second succession and the amount of duty involved in each assessment will be ascertained. The relief proposed will be based on the lower of the two duties.

If the second succession occurs within one year after the first, 50 per cent. of the duty will be rebated; if within two years, a rebate of 40 per cent. of the duty will be allowed. The rebate will be reduced progressively according to the period of time intervening between the two successions. If the second succession occurs in the fifth year after the first, the rebate will be 10 per cent. of the lower of the two duties.

It is also proposed to extend the exemptions from duty to property passing to the National Trust in each of the States of New South Wales, Victoria and South Australia, public libraries, hospitals conducted by nonprofit organizations and the Australian Council for Educational Research.

The estate duty concessions will apply from the date of assent to the amending legislation and are estimated to cost revenue £168,000 in a full year and £50,000 in 1957-58.

Summary of Taxation Concessions

The estimated cost to revenue of the taxation concessions I have outlined may be summarized as follows: -

Other Revenue Proposals

I have already mentioned that the Government proposes to impose a tax of1s. a gallon on automotive diesel oil consumed by road users. This tax is expected to yield about £2,000,000 in this financial year and £3,000,000 in a full year.

During recent years, airlines have been making increased use of aviation kerosene which, up to the present, has been substantially tax free. In the meantime, there has been customs duty of l0d. a gallon on imported aviation petrol and excise of 8½d. a gallon on locally produced aviation petrol. It is only fair that commercial operators using aviation kerosene should make a reasonable contribution to the heavy costs of providing airport and air route facilities and the Government has therefore decided that duties equivalent to 6½d. a gallon should be imposed on that type of fuel. The necessary resolution will be introduced later this evening by the Minister representing the Minister for Customs and Excise. The yield to revenue is estimated to be £290,000 this financial year and £400,000 in a full year. In addition, legislation will be introduced later in the session to increase the present scale of air navigation charges by 10 per cent.

page 226


The effect of the various revenue proposals that I have just outlined is to reduce the estimated receipts of the Consolidated Revenue Fund from £1,347,410,000 to £1,321,700,000. It is intended to appropriate an amount of £119,363,000 to the Loan Consolidation and Investment Reserve which will assist in meeting the various commitments to which I have already referred. Taking this appropriation into account, estimated revenue and expenditure of the Consolidated Revenue Fund will be in balance.

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It can be seen then that the budget for this year reflects strongly the fact that our economy is growing at a fairly rapid rate. We have had to provide for larger services in both Commonwealth and State fields to meet the needs of an expanding population and industry. Programmes of basic works and housing are also increasing and we have to provide funds on a large scale towards their cost. This, of course, is investment expenditure, and it will help to enlarge productive capacity and output of commodities and services in future years. In the meantime the money has to be found or the work will not be done. We are, however, able to finance these requirements and at the same time to give some additional assistance to older people and others in need, and also to provide a useful measure of tax relief. In part our ability to do this is due, as I have pointed out, to fortunate circumstances on the continuance of which we cannot rely. But it is also due in part to the improved balance of the economy, and any hope of further progress in those directions depends upon preservation of that balance. It is an illusory idea that inflation makes public finance easy. The years when we have had to increase taxation have been years in which inflationary conditions prevailed, and the years in which we have been able to reduce taxation have been years of stability. This is a sober fact of experience that we will all do well to keep in view.



In the financial year 1956-57 total cash receipts of the Commonwealth Government exceeded total cash payments by £16,992,000. Of this amount, £15,000,000 was used to redeem TreasuryBills, leaving an increase of £1,992,000 in cash balances.

When the 1956-57 Budget was introduced, it was estimated that an amount of £108,500,000 would be available for appropriation to the Loan Consolidation and Investment Reserve to assist in meeting various loan commitments. In the event, the amount which actually became available for this purpose was £111,612,000.

An amount of £83,182,000 was also credited to the Loan Consolidation and Investment Reserve as a result of transactions during the year involving certain Trust Fund balances. Thus an amount of £13,400,000, standing to the credit of the War Pensions Trust Account at 1st July, 1956, was used for the payment of war pensions and expenditure for that purpose from the Consolidated Revenue Fund was reduced correspondingly. An amount of £66,047,000 was paid to Consolidated Revenue Fund as a result of the closure of the Strategic Stores and Equipment Reserve and the Defence Equipment and Supplies Trust Account. A further sum of £3,735,000 was also paid into the Consolidated Revenue Fund from other Trust Accounts, representing balances no longer required for the purposes of those Accounts.

The effect of these transactions was to increase by£83,182,000 the appropriation from the Consolidated Revenue Fund to the Loan Consolidation and Investment Reserve, while reducing other Trust Fund balances to the same extent. The transactions did not in any way affect the overall cash result for the year.

Details of the Consolidated Revenue Fund results are given in Part B of this Statement.

The Loan Council borrowing programme Tor State works and housing in 1956-57 was £192,000,000. Towards financing this programme an amount of £97,672,000 was available from public loan raisings in Australia, State domestic raisings yielded £1,150,000, whilst new cash to the extent of £1,293,000 became available for the Loan Council programme from a refinancing loan floated in New York in March, 1957. To complete the programme and thereby discharge its undertaking to the Loan Council, the Commonwealth provided an amount of £91,885,000. These funds, together with an amount of £7,115,000 required by the Commonwealth for War Service Land Settlement, were made available by means of a special loan of £99,000,000 which was issued at the end of the financial year. Subscriptions to this loan comprised £96,000,000 invested from the Loan Consolidation and Investment Reserve and £3,000,000 invested by the National Debt Sinking Fund from the Australian currency proceeds of International Bank loans.

The cash outlay by the Commonwealth during the year in respect of the LoanCouncil programme and War Service Land Settlement was somewhat higher than the amount of £99,000,000 subscribed to the special loan. In terms of cash actually received during the financial year, public loan raisings in Australia amounted to £93,755,000 - that is, £3,917,000 less than the total subscriptions to the three public loans floated during the year. (This arises mainly because advance subscriptions and outstanding instalments in respect of public loans are not all received during the financial year in which the loans are floated.) Furthermore, War Service Land Settlement expenditure to the extent of £903,000 was financed from balances of earlier years. On the other hand, the amount of £3,000,000 subscribed by the National Debt Sinking Fund to the special loan was covered to the extent of £2,699,000 by the net proceeds which accrued during the year in respect of International Bank loans. After allowing for these adjustments (amounting to £2,121,000) the cash outlay by the Commonwealth in respect of the Loan Council programme and War Service Land Settlement amounted to £101,121,000.

The overall result for the year, in terms of cash, can therefore be depicted as follows: -

Cash outlay required for Loan Council programme and War Service Land Settlement -

Further details of Loan Transactions and Public Debt in 1956-57 are given in Part C of this Statement.


The Consolidated Revenue Fund results for 1956-57 are compared in the following table with the Budget estimates for the year. To facilitate this comparison, the actual results for 1956-57 have been adjusted to exclude the effects on Con solidated Revenue of certain Trust Fund transactions which have been referred to above. The effect of these transactions on the Consolidated Revenue Fund was to reduce expenditure on War and Repatriation Services by £13,400,000, to increase Miscellaneous Revenue by £69,782,000, and to increase the appropriation to the Loan Consolidation and Investment Reserve by £83,182,000.


Apart from the effects of the Trust Fund transactions referred to above, total revenue in 1956-57 amounted to £1,234,443,000 or £4,290,000 more than the Budget estimate. Total taxation revenue, at £1,095,415,000, concided almost exactly with the Budget estimate of £1,095,160,000, while other revenue exceeded the estimate by £4,035,000.

Customs revenue fell short of the Budget estimate by £11,403,000. This shortfall was due largely to a decline in clearances of imported petrol resulting from a marked increase in the local refining of petrol in 1956-57, and to the generally heavier incidence of import restrictions. The decrease in Customs collections was offset to some extent by an increase of £5,229,000 in Excise collections as compared with the Budget estimate. This rise can be attributed largely to the increased local production of petrol.

Sales Tax fell short of the Budget estimate of £130,000,000 by £4,249,000. There was a decline in 1956-57 in sales of some taxable goods, including household and electrical appliances and motor vehicles.

Income Tax collections from companies exceeded the estimate by £6,571,000. The incomes of companies in 1955-56 were slightly greater than had been estimated while the rate of collection of company tax was also somewhat greater than expected. Collections from Income Tax on individuals exceeded the estimate by £1,977,000. Total Income Tax was £620,298,000 compared with the Budget estimate of £611,750,000.

Pay-roll Tax and Gift Duty collections showed minor variations on the Budget estimates, while revenue from Estate Duty exceeded the estimate by £1,712,000.

Miscellaneous Revenue exceeded the Budget estimate by £4,813,000. Sales of surplus defence equipment yielded £772,000 more than was expected while Shipping and Transport revenue was increased by £604,000 from the sale of vessels. Receipts from investments by the Note Issue Branch of the Commonwealth Bank exceeded the estimate by almost £1,000,000 while interest from the investment of General Trust Fund moneys was greater than the estimate by £506,000.

Total revenue collections from Business Undertakings were £894,000, or rather less than 1 per cent, below the Budget estimate. Revenues from the Railways and the Post Office fell short of the estimates by £281,000 and £626,000 respectively. Revenue from Broadcasting and Television coincided almost exactly with the Budget estimate.

Revenue from the Territories exceeded the Budget estimate by £116,000.


Excluding the appropriation to the Loan Consolidation and Investment Reserve, total expenditure was £1,401,000 above the estimate.

Defence expenditure for the year amounted to £188,497.000, which was £1,503,000 below the Budget estimate.

The over-expenditure of £2,587,000 on War and Repatriation Services was mainly due to the redemption of war savings and savings certificates to the value of £3,322,000 from Consolidated Revenue instead of Loan Fund. There was also a shortfall of £579,000 in recoveries from Other Administrations. These items were offset partly by under- expenditure on a number of items, the main one being £668,000 in respect of War Service Land Settlement.

Payments from the National Welfare Fund were £2,697,000 below the estimate, and the payment to the Fund from Consolidated Revenue was reduced accordingly. Expenditures on Age and Invalid Pensions and on Pharmaceutical Benefits were respectively £2,646,000 and £1,676,000 less than expected. Expenditure on Unemployment and Sickness Benefits exceeded the estimate by £1,399,000.

Departmental expenditure was £79,000 below the estimate while Bounties and Subsidies payments were £164,000 above the estimate.

There were relatively small variations from the estimates for the individual Business Undertakings. Total expenditure on these items, at £102,143,000, was practically identical with the ‘Budget estimate of £102,082,000.

Payments to or for the States were £307,000 above the estimates. Expenditures on financial assistance to Universities and reimbursement of the Commonwealth’s proportion of capital expenditure on tuberculosis hospitals were somewhat higher than estimated.

Expenditure on Capital Works and Services was £1,936,000 less than the Budget estimate of £109,738,000. The reduction was mainly accounted for by savings in the Works Department Programme.

The estimate for the appropriation to the Loan Consolidation and Investment Reserve was £108,500,000. Excluding the additional payments to the Reserve of £83,182,000 resulting from the Trust Fund transactions mentioned above, the appropriation from revenue amounted to £111,612,000.

page 229


page 229

PUBLIC DEBT, 1956-57

Loan Commitments, 1956-57

At a meeting in June, 1956, the Loan Council approved a resolution providing for a governmental borrowing programme of £210,000,000 for State works and housing in 1956-57. The Commonwealth did not support this resolution but indicated that it would be prepared, subject to certain conditions, to make monthly advances to the States at an annual rate of £190,000,000 for the first six months of the financial year, after which time the position would be reviewed and the extent of Commonwealth assistance to the Loan Council programme determined.

In October, 1956, the Commonwealth agreed to make available to Western Australia from its own resources an additional amount of £2,000,000. This increase, which had been agreed to in principle by the other Premiers at the June meeting of the Loan Council, raised the annual rate at which the Commonwealth was making advances to the States to £192,000,000.

After reviewing the position in January, 1957, the Commonwealth informed the States that it would be prepared to continue making advances for the remainder of the financial year at the annual rate of £192,000,000. At a meeting in May, 1957, the Loan Council decided that the approved borrowing programme for 1956-57 should be £192,000,000.

In order to complete the Loan Council- borrowing programme of £192,000,000; the Commonwealth found it necessary to provide £91-,88-5-,000, of which £3,000,000 represented- the Australian currency proceeds of International Bank loans.

In addition, Commonwealth commitments relating to War Service Land Settlement amounted to £8,018,000, whilst finance was also required for redemptions and for other sundry loan- commitments.

Loan Raisings, 1956-57

The Commonwealth issued three cash loans in Australia during the year, each issue being associated with a conversion offer to holders of maturing securties. Cash and conversion loans in August, 1956, offered’ Ji per cent, securities maturing in one year at an issue price of £99 I5s. and 5 per cent. . securities maturing in seven and twenty years issued at prices of £99 15s. and par respectively. In a combined cash and conversion loan in October-November, 1956, 4 per cent, securities maturing in eighteen months were issued at a price of £99 10s., together with 5 per cent, securities maturing in eight and nineteen years, issued at par. In the March-April, 1957, cash and conversion loans, 4 per cent, securities matur ing in thirteen months were offered at pir and 5 per cent, securities maturing in eight and nineteen years were also offered’ at par.

In- the cash loans, a total of £94,184,000 was sought. Subscriptions totalled £97,802,000 (face value) and, after allowing for discounts on applications for securities (£130;000), the net cash- proceeds available for the Loan Council programme amounted to £97,672,000. State domestic raisings contributed a further £1,150,000, bringing the total raisings from Australian sources to £98,822,000.

Of maturing securities amounting to £252,921,000, conversions amounted to £222,435,000. Redemptions of £30,035,000 were met from the National Debt Sinking Fund’, and securities totalling £451,000 were outstanding on 30th June, 1957. In addition, £5,575,000 securities maturing on 31st December, 1956, were converted privately into 4 per cent, securities issued at £99 12s. 6d. maturing in May, 1958, and into 5 per cent, securities maturing in April, 1976, issued at par.

Details of public loan raisings in Australia in 1956-57 are shown in the following table: -

In addition to loan raisings in Australia, new cash to the extent of £1,293,000 became available for the Loan. Council programme from a $20,000,000 loan floated in New York in March, 1957, to re-finance $17,114,000 of securities maturing on 1st June, 1957.

The amounts raised to complete the Loan Council borrowing programme of £192,000,000 for 1956-57 were therefore as follows: -

The assistance given by the Commonwealth to the Loan Council programme for 1956-57 was provided through a special loan floated in June, 1957. The terms and conditions of the loan were the same as for the public loan issued in March-April. Subscriptions totalled £99,000,000, comprising £96,000,000 invested from Commonwealth Trust Fund moneys held by the Loan Consolidation and Investment Reserve and £3,000,000 invested by the National Debt Sinking Fund from the Australian currency proceeds of International Bank loans. From the proceeds of this loan an amount of £7,115,000 was allocated to assist in financing expenditure of £3,018,000 on War Service Land Settlement and the balance of £91,885,000 was used to complete the Loan Council borrowing programme for 1956-57.

The manner in which the State works and housing programmes have been financed since 1951-52 (when the Commonwealth first provided special assistance to the Loan Council borrowing programme) is shown in the following table: - Loan Redemptions and the Public Debt. As mentioned above, securities offered for conversion in public loans during 1956-57 amounted to £252,921,000, of which £30,035,000 were redeemed by the National Debt Sinking Fund. Other securities were redeemed through the normal operations of the Sinking Fund and the total reduction of Commonwealth and State debt through Sinking Fund operations in 1956-57 was £57,855,000. In addition, £45,801,000 (face value) of Commonwealth debt was redeemed through the operations of the Loan Consolidation and Investment *Reserve,* and war savings and savings certificates amounting to £3,322,000 were redeemed from Consolidated Revenue. The public debt of Australia (Commonwealth and State) on 30th June, 1957, is compared below with the public debt on 30th June, 1956:- {: .page-start } page 232 {:#debate-40} ### STATEMENT No 2- CONSOLIDATED REVENUE FUND ESTIMATES, 1957-58 Notes on Revenue Estimates. The estimates of revenue for 1957-58 shown budget speech. The effect of those proposals in the table above include the effect of the on the revenue estimates is shown in the followvarious revenue proposals announced in the ing table: - Details of these revenue proposals, together with estimates of their effect in a full year, are as follows: - On the basis of existing legislation, total revenue in 1957-58 is estimated at £1,347,410,000, or £112,967,000 more than last year. An explanation of the various items of revenue making up this estimate is given in the following notes. For purposes of these notes no account has been taken of the possible effect on revenue of the various revenue proposals listed above. {:#subdebate-40-0} #### Item No. 1. - Customs Revenue In 1957-58 Customs Revenue is estimated at £74,000,000, or £5,403,000 more than in 1956-57. A rise in revenue is expected as a result of increased imports following relaxations in import restrictions. The recent abolition of primage on petrol will cause a loss of revenue of approximately £1,400,000, although this may be partially offset by increased imports of petrol during the year. *Item No. 2.* - *Excise Revenue.* Excise collections in 1956-57 amounted to £217,440,000. In 1957-58 they are expected to yield £229,000,000, the increase of £11,560,000 being spread over most items. Excise revenue from petrol in 1957-58 is expected to increase by about £2,600,000 as a result of increased output by local refineries. Beer consumption declined after the imposition of the higher duties in March, 1956, but some increase in consumption is expected in 1957-58. Clearances in 1957-58 are estimated to yield an increase of £6,500,000 on last year's collections of £103,500,000. Revenue from duties on cigarettes and tobacco is estimated at £66,500,000 for 1957-58, as compared with £65,200,000 in 1956-57. The other items subject to Excise duty are expected to yield, in total, about £1,100,000 more than in 1956-57. Increased collections from sales of spirits and of cathode ray tubes used in television sets are the main items contributing to this rise. {:#subdebate-40-1} #### Item No. 3.- Sales Tax On the basis of existing legislation, Sales Tax revenue is estimated at £132,500,000. This represents an increase of £6,749,000 or 5 per cent, on the 1956-57 collections. The estimate is based mainly on the assumption that there will be a genera] increase in sales of taxable goods, and that, in particular, sales of motor vehicles, television sets and home furnishings will be greater than in 1956-57. {:#subdebate-40-2} #### Hem No. 4. - Income Tax Last year, Income Tax collections from individuals amounted to £403,727,000, or £16,597,000 more than in 1955-56. This financial year, on the basis of existing legislation, collections from Income Tax on individuals are estimated at £475,000,000- an increase of £71,273,000 or 17.6 per cent, on last year. Pay-as-you-earn collections are expected to rise in view of the prospects of higher average earnings and employment than in 1956-57. In respect of taxable incomes earned in 1956-57 and assessable this year, the main factor accounting for the estimated increase in collections is the substantial increase in wool incomes, against which are offset the lower incomes derived from some other rural products such as wheat, meat and fruit. Business and professional incomes also rose generally during 1956-57. Income Tax collections from companies in 1956-57 amounted to £216,571,000 or £29,713,000 more than in 1955-56. This increase was due mainly to the increase in company tax rates announced in March, 1956. Collections from companies are derived largely from assessments based on company incomes in the previous year. The level of taxable incomes of companies in 1956-57 has been estimated to have been slightly higher than in the previous year and, on the basis of existing legislation, Income Tax collections from companies in 1957-58 are estimated to increase by £6,429,000. *Hem No.* 5. - *Pay-roll Tax.* Pay-roll tax collections in 1956-57 rose by £3,132,000. On the basis of existing legislation, Pay-roll tax in 1957-58 is estimated to yield £52,500,000, an increase of £3,825,000. The estimate allows for a higher level of wage and salary payments in 1957-58. {:#subdebate-40-3} #### Item No. 6. - Other Taxes In 1957-58, revenue from Estate Duty and Gift Duty is estimated to rise from £14,652,000 to £16,350,000 on account of increases in the number and value of estates and of gifts. Defence. - Receipts from disposals of surplus defence equipment, rents, *&c,* are expected to be £386,000 lower this year. Civil Aviation. - These receipts include Air Navigation Charges, dividend from Qantas Empire Airways Limited, payment out of the profit of the Australian National Airlines Commission and sundry miscellaneous receipts. The estimate includes provision for some additional revenue resulting from the proposed increase in Air Navigation Charges announced in the Budget Speech. Shipping and Transport. - Estimated revenue this year is £339,000 lower than in 1956-57, principally because revenue last year included a substantial amount from the sale of vessels. Profit from Note Issue.- The rise of £146,000 in the estimated profit from the note issue reflects a small increase in interest returns on investments of the Note Issue Department of the Commonwealth Bank. Interest - War Service Homes. - Interest received on loans made under the War Service Homes scheme has been increasing each year with the increase in the total amount of loans outstanding. Interest - General Trust Fund. - The sharp fall of £4,243,000 in the estimated amount of interest on investments of the General Trust Fund is due primarily to the repayment to Consolidated Revenue in 1956-57 of £69,782,000 of trust account balances no longer required for the purposes for which they were originally appropriated. A corresponding amount was appropriated from Consolidated Revenue to the Loan Consolidation and Investment Reserve. Interest derived from investment of this amount is now credited to the Reserve. Interest - Other. - The estimated increase of £425,000 reflects the receipt of two years' interest payments from the Snowy Mountains Authority this year. Last year's payment was received too late in the year to include in the 1956-57 figures. Repayments - Joint Coal Board. - Repayments by the Joint Coal Board have been declining as the sale of surplus plant and equipment nears completion. Repayments - Japanese Assets Distribution. - The final repayment in respect of this item was made in 1956-57. Nitrogenous Fertilizer - Sale of Stocks. - No further receipts from this source are anticipated, the Commonwealth having withdrawn from marketing arrangements in respect of nitrogenous fertilizer. Australian Whaling Commission - Disposal of Assets. - This amount represents a further progress payment by the Nor'West Whaling Company Limited in respect of the purchase of the assets of the Australian Whaling Commission. Commonwealth Engineering Company - Sale of Shares. - The amount of £602,000 represents the proceeds of the disposal of the Commonwealth shareholdings in Commonwealth Engineering Limited. Balances of Trust Accounts. - It is estimated that £2,000,000 will be available from Trust Fund in 1957-58 for transfer to revenue. {:#subdebate-40-4} #### Item No. 8. - Business Undertakings Revenue The estimated increase in Railways revenue of £472,000 this year reflects a further increase in traffic, particularly on the Trans-Australian Railway. Post Office receipts are estimated to increase by £6,326,000 to a total of £96,400,000 this year. The increase is partly due to the full year operation of the higher postal, telephone and telegraph charges introduced, last year and partly to the expansion of postal and telephone services. Broadcasting and television revenue, estimated at £6,555,000 for this year, is £1,255,000 higher than last year. Revenue from broadcast listeners' licence-fees will benefit from the operation for a full year of the higher rate of licence-fee. This was increased from £2 to £2 l'5s. per annum in the last Budget. Also, a substantial increase is expected this year in the number of television viewers' licences. {:#subdebate-40-5} #### Item No. 9. - Territories Revenue Territories revenue in 1957-58 is estimated at £2,617,000 as compared with £2,513,000 last year. Of the increase of £104,000, approximately half reflects rising proceeds from the sale of houses in the Australian Capital Territory and the Northern Territory, while the other half is largely due to the continued expansion of services in those Territories. The total provision of £190,000,000 for Defence Services this year is £1,503,000 more than expenditure in 1956-57. The main reductions in expenditure result from a decline in the rate of intake of National Service trainees and a tapering-off of constructional activity at St. Mary's, New South Wales, as the new filling factory approaches completion. These factors are more than offset by increased expenditure on the purchase of aircraft and associated equipment, increased expenditure on naval construction and higher expenditure on a number of other items, including economic assistance to support the defence programmes of S.E.A.T.O. Member Countries. Interest and Sinking Fund. - This provision relates to Commonwealth war debt only. (Total debt charges on Commonwealth war and civil debt are estimated at £65,948,000 for 1957-58 compared with £67,992,000 in 1956-57.) The decline in charges on war debt this year reflects substantial redemptions of Commonwealth debt made last year by the Sinking Fund and the Loan Consolidation and Investment Reserve. War and Service Pensions and Widows' Allowances. - Of the increase of £6,619,000, an amount of £2,674,000 is due to the increases in pensions now proposed. Of the balance of £3,945,000, an amount of £1,700,000 is attributable to the fact that a fifth twelve-weekly payment has to be made in 1957-58, and the remaining £2,245,000 largely to expected increases in the number of pensioners and in the rates of existing pensions through re-assessments of incapacity. Repatriation - Administrative - The expected increase of £152,000 reflects the increase in the basic wage in May, 1957, and the full year effect of staff appointments made during 1956-57. Repatriation Benefits - Practically the whole of the expenditure under this item relates to repatriation institutions, the provision of medical treatment for ex-servicemen with war-caused injuries, and the Soldiers' Children's Education Scheme. The expected increase in expenditure in 1957-58 of £722,000 is due to such factors as the increase in the basic wage in May, 1957, an increase in the average price and number of prescriptions for medicines, the full year cost of the higher rates of allowances payable from 1st January, 1957, under the Soldiers' Children's Education Scheme, increased expenditure on medical sustenance, and a fall in recoveries from Service Departments and other miscellaneous receipts. War Service Homes - Administrative. - The cumulative increase in the number of houses financed under this scheme involves a steady growth in the volume of transactions and some increase in total administrative costs is therefore expected in 1957-58. Reconstruction and Rehabilitation. - The greater part of the increase of £551,000 is in respect of War Service Land Settlement. Provision is made for the Commonwealth's share of losses incurred in writing down excess costs of developing land holdings under this scheme. There are outstanding claims, principally from Victoria, to be settled this year and expenditure is expected to increase by £478,000. Redemption of Savings Certificates. - In 1957-58 it is not proposed to charge the redemption of war savings and savings certificates, for which the estimate is £3,250,000, to Consolidated Revenue. Credits - Other Administrations. - This item shows the excess of recoveries over expenditure on items relating mainly to supplies and services provided for the United Kingdom and other Governments. Recoveries in 1957-58 are expected to exceed expenditure by £1,150,000 as a result of payments in 1957-58 for supplies and services provided in previous years. *Item No. 12.* - *Payment to National Welfare Fund.* The National Welfare Fund Act 1952 provides that the payment from Consolidated Revenue to the National Welfare Fund each year should be equal to the actual expenditure from the Fund in that year. It is estimated that, after allowing for the effect of the proposed increases in rates of benefit, expenditure from the Fund this year will total £243,572,000 as compared with £223,923,000 in 1956-57- an increase of £19,649,000. Further details are set out in Statement No. 4 - National Welfare Fund Estimates 1957-58. The increase of £5,352,100 in estimated departmental expenditure this year reflects mainly - {: type="a" start="a"} 0. Increased expenditure on research and technical services such as are provided by Civil Aviation, National Development, the Atomic Energy Commission and the Commonwealth Scientific and Industrial Research Organization. 1. An increase in total wages and salaries because of the basic wage increase of 10s. per week which took effect from May, 1957. 2. Some expansion of normal services with increasing population and some increase in costs such as higher postal charges and air fares. Details of some of the more important factors affecting the expenditure of departments are set out below: - Treasury. - The integration of the statistical services of New South Wales, South Australia and Western Australia with the Bureau of Census and Statistics involves additional administrative costs estimated at £306,000 for the year. Much of this additional Commonwealth expenditure will relieve the Budgets of the States concerned. Interior. - The main increases this year are in respect of the printing of electoral rolls (£93,000) and the provision of an additional £129,000 for instruments and apparatus for the Meteorological Branch. Civil Aviation. - The development vote this year is £386,000 higher than last year, mainly because of a larger cash contribution to the cost of ground facilities in the Pacific. An estimated increase of £405,000 in expenditure on the maintenance and operation of civil aviation facilities is required mainly to overcome a back-log of essential aerodrome resealing work. There has also been some increase in the charge for meteorological services. Health. - There has been a general increase in activities of the Department. Trade. - The increase reflects some expansion in the work of the Department and in the commercial intelligence services abroad. Territories. - The increase reflects the recruitment of additional staff to cope with increased activity in the Northern Territory and in Papua and New Guinea. National Development. - Additional amounts are required for an oil drilling programme in Western Australia and for aerial photography. Commonwealth Scientific and Industrial Research Organization. - The increase includes provision for the recruitment of additional staff in 1957-58, more extensive rain-making experiments, and more equipment. Atomic Energy Commission. - The increase of £712,000 is due almost wholly to the commencement in 1957-58 of operations of the experimental atomic reactor and associated research laboratories at Lucas Heights. Cotton Bounty. - Under the Cotton Bounty Act 1951-57 a bounty is payable on seed cotton delivered by growers to processors up to 31st December, 1958, The rate of bounty is designed to give growers an average return of 14d. per lb., and under an amendment made earlier this year interim payments of bounty can be made. As the 1957 crop is expected to be smaller and of higher quality than that of the previous year, 1957-58 bounty payments are estimated to be lower than in 1956-57. Tractor Bounty. - The Tractor Bounty Act 1939-56 provides for the payment of bounty on wheel-type tractors produced in Australia during the three years commencing 24th October, 1955. The bounty rates vary from £80 to £240 per tractor according to the horse-power and the proportion of Australian materials used. The Act was amended in 1956 to extend the bounty to larger tractors (those falling within the 55-70 horse-power range). Expenditure of £158,000 in 1956-57 was high because it included retrospective payments of bounty in respect of these larger tractors for about eight months of the previous year. Expenditure in 1957-58 is estimated to remain at about the same level because of an expected increase in production and of the operation for a full year of the amendment of the Act. Sulphuric Acid Bounty. - The Sulphuric Acid Bounty Act 1954-57 and Regulations thereunder provide for the payment of a bounty on sulphuric acid produced in Australia from indigenous pyrites and lead sinter gas, during the five years from 1st July, 1954. The rate of bounty is £2 per ton when the landed cost of imported brimstone is £20 10s. per ton and rises or falls by ls. 9d. for each 5s. by which the landed cost of brimstone is below or above £20 10s. per ton. It is estimated that expenditure in 1957-58 will be £79,000 higher than in 1956-57, partly because production should be higher in 1957-58 and partly because the bounty has recently been extended to acid produced from lead sinter gas. Gold-Mining Industry Assistance. - Under the Gold-Mining Industry Assistance Act 1954-56, a subsidy is payable under certain conditions on gold produced during the five years ending 30th June, 1959. Small producers (those with an annual output of less than 500 ounces) receive a flat rate of subsidy of £1 10s. per ounce. Large producers are paid at a rate equal to three-quarters of the amount by which their cost of production exceeds £13 10s. per ounce, with a subsidy limit of £2 per ounce. Under the proposed amendments to the Act these rates will be increased to £2 per ounce for small producers and a maximum of £2 15s. per ounce for large producers. With these amendments, the estimated expenditure of £600,000 in 1957-58 is £105,000 greater than in 1956-57. Flax Fibre Bounty. - The Flax Fibre Bounty Act 1954-57 authorizes the payment of a bounty on flax fibre produced in Australia up to 31st October, 1957. The rate of bounty varies inversely with movements in the landed cost of imported flax fibre and is calculated, subject to limits, to give producers a return of £365 per ton. Bounty expenditure in 1957-58 up to 31st October, 1957, when the present Act expires is estimated at £60,000. (The bulk of the bounty payments is made in the early months of the financial year.) The higher estimated expenditure in 1957-58 is attributable to the lower landed cost of imported fibre. Rayon Yam Bounty. - The Rayon Yarn Bounty Act 1954-56 provides for payment of a bounty of 6d. per lb. on continuous filament acetate rayon yarn produced and sold in Australia up to 30th June, 1959. Estimated expenditure in 1957-58 of £100,000 is £40,000 higher than actual expenditure in 1956-57 because of an expected increase in production. Cellulose Acetate Flake Bounty. - The Cellulose Acetate Flake Bounty Act 1956 authorizes payment of a bounty of lOd. per lb. on cellulose acetate flake produced in Australia and sold for local use during the three-year period commencing 1st July, 1955. It is estimated that payments under this Act will be £140,000 in 1957-58. This estimate, although allowing for increased production, is £39,000 lower than actual expenditure in 1956- 57 which included a large retrospective payment in respect of 1955-56. Dairy Products Bounty. - The Dairying Industry Act 1957 provides for the payment of a bounty on butter and cheese for a further period of five years from 1st July, 1957. The payment of bounty ensures that, in respect of butter and cheese consumed in Australia plus 20 per cent, of those quantities, dairy-farmers receive a return based on the cost of efficient production as determined annually. Expenditure on the bounty in 1956-57 was £13,500,000. The same provision is made for 1957- 58. Prime Minister's Department. - The estimates for this year includes £100,000 for the remaining expenditure on the Olympic Games compared with £575,000 provided last year. Provision for flood relief is £202,000 less than actual expenditure in 1956-57. As against these reductions, it is expected that the grant to the Australian National University will increase from £640,000 to £852,000, and that expenditure on the Commonwealth scholarship scheme will increase from £1,190,000 to £1,270,000 mainly on account of the proposed increase in allowances under the scheme. Department of External Affairs. - Expenditure last year included an advance to the United Nations of £449,000 towards the cost of clearing the Suez Canal. On the other hand, expenditure this year on the Antarctic Research Expedition is expected to be somewhat higher. International Development and Relief. - An amount of £5,245,000 has been provided this year for expenditure under the Colombo Plan. (Expenditure last year amounted to £5,038,000.) Of this amount £3,945,000 is in respect of economic development and £1,300,000 is for technical assistance. Provision has also been made for Australia's contributions to United Nations Technical Assistance and United Nations International Children's Fund (£475,000), United Nations Relief and Works Agency for Palestine Refugees in the Near East (£50,000), United Nations Refugees' Emergency Fund (£50,000), International Red Cross (£5,000), and Relief for Hungarian Refugees (£25,000). Department of the Treasury. - Refunds and remissions of taxes and fines are estimated at £270,000 this year compared with £215,000 last year. Expenditure on a Census of retail establishments is estimated at £50,000 as against only £3,000 in 1956-57. Department of Health. - The grant for cattle tick eradication in New South Wales of £570,000 this year is £105,000 lower than last year. Department of Trade. - The provision for trade publicity is £410,000 as compared with £320,000 in 1956-57. Department of Social Services. - The increase is almost wholly in respect of financial assistance for the building of homes for the aged. At present, the Government is contributing on a £1 for £1 basis with approved organizations towards the capital cost of building homes for the aged. It is now proposed to double the Commonwealth's contribution to £2 for each £1 contributed by such organizations. The provision for this year is £1,800,000 compared with actual expenditure of £751,000 in 1956-57. Department of Shipping and Transport. - The shipbuilding subsidy vote is £421,000 higher this year and reflects a higher rate of ship construction, and the placing of more orders under the increased subsidy rate of 33J per cent, of cost. Of the other items under this head, increased provision is required to meet the cost of the coastal radio service and demolition of a dual-purpose jetty at Townsville. These increases are offset by a reduction in the Tasmanian shipping subsidy and the Papua-New Guinea shipping subsidy, which ends this year. Department of National Development. - Last year's expenditure included an amount of £175,000 for compensation for cancellation of open-cut coal-mining contracts. This year'sexpenditure includes an amount of £300,000 for deep stratigraphic drilling for oil. Department of Immigration. - Expenditure on immigration in 1957-58 is estimated at £1,450,000- higher than in 1956-57 because of an increase in the number of assisted British migrants and inthe cost of sea passages for British migrants. Subscriptions to Various Organizations. - Last year's expenditure included subscriptions paid to the International Finance Corporation, the International Bank and the Export Payments Insurance Corporation. These subscriptions totalled in all £2,463,000. No provision is made in the estimates for payments of this nature in 1957-58. Public Service Pensions and Retiring Allowances. - The Government contribution to the Superannuation Fund is estimated at £2,255,000 in 1957- 58, an increase of £681,000 on the amount paid last year. The increased provision in 1957-58 as compared with expenditure in 1956-57 is partly due to the re-payment from the Fund in 1956-57 of an amount of £251,000 under Section 11 of the Superannuation Act in respect of interest on investments, and in part reflects the normal increase in Commonwealth contribution and the proposed increases in certain rates of superannuation. Public Debt Charges. - Included under this item are all debt charges other than those on Commonwealth war debt and on works debt in respect of Business Undertakings and Territories. The increase represents mainly increased interest subsidy to the States on housing advances under the CommonwealthState Housing Agreement. The Commonwealth recovers from the States interest at the rate of 3 per cent, on advances made in each year up to and including 1955-56 and 4 per cent, on advances made in 1956-57 and subsequently. However, maturing loans have been converted into higher interest bearing securities so that the difference between the rate of interest paid by the Commonwealth on borrowings for State housing and the rate of interest recovered from the States has tended to widen. Interest on International Bank loans is also estimated to increase to £5,195,000 this year compared with £4,986,000 in 1956-57 due to an increase in the total amount drawn. Wool Research.- The provision of £990,000 represents the Commonwealth's contribution to the Wool Research Trust Fund in accordance with the Wool Research Act 1957. During 1956-57 the Commonwealth contributed £489,000 to wool research under provisions of the Wool Use Promotion Act which have been repealed. Special Payment to National Debt Sinking Fund. - In 1956-57, an amount of £700,000 was paid to Sinking Fund from Consolidated Revenue. A similar amount had been paid to Revenue from the Enemy Subjects Trust Account out of the proceeds of German enemy assets acquired under the Reparations Agreement. No provision is made for any similar payments in 1957-58. Other. - This item includes Parliamentary Allowances and other statutory payments of salaries and allowances, and contributions under the Australian National University Act and the Fishing Industry Act. Railways. - The increase of £631,000 is mainly in salaries and wages, and reflects the employment of more labour to handle increased traffic and to give concentrated attention to maintenance of the permanent way, including re-sleepering, repairs to bridges and other structures. It is expected that the increased expenditure will be offset by extra revenue from additional traffic. Post Office. - Total expenditure is expected to increase by £6,888,000 in 1957-58. Wages and salaries are expected to cost £4,934,000 more than last year, because of wage increases and additional staff to handle extra traffic. Higher prices and increased quantities are expected to increase the cost of stores and materials by £736,000. Provision for general expenses has been increased by £1,149,000 mainly because of more vehicles and units of plant to be maintained, higher fares and travelling allowances and increased provision for superannuation pensions and printing of directories. The provision for debt charges is £231,000 below last year's expenditure because some loans have been redeemed. Broadcasting and Television. - Most of the estimated increase of £675,000 is due to increased expenditure on television which commenced in 1956-57 and will operate for a full year in 1957-58. (An amount of £1,553,000 is included for expenditure on television in 1957-58 compared with expenditure last year of £923,000.) The cost of servicing additional broadcasting stations in country areas will also contribute to the higher expenditure. Northern Territory. - The estimated increase of £897,000 in expenditure in the Northern Territory includes an additional £212,000 for aboriginal welfare and a further £223,000 for salaries. Increased expenditure is also envisaged in 1957-58 on educational and health services and in respect of the subsidy to the Darwin Municipal Council. Australian Capital Territory. - Expenditure under this head is expected to rise in 1957-58 by £242,000 mainly because of increased expenditure on repairs and maintenance and on health and educational services. Papua and New Guinea. - Practically the whole of this expenditure takes the form of a grant by the Commonwealth to the Administration of the Territory of Papua and New Guinea to meet the deficiency between local revenue and expenditure in the Territory. Expenditure in 1957-58 is expected to exceed that in 1956-57 by £1,685,000 mainly because of increased expenditure on health and educational services, repairs and maintenance, residential accommodation and roads and bridges. Tax Reimbursement Grants Determined under Formula. - Under the States Grants (Tax Reimbursement) Act 1946-1948 the tax reimbursement grants were fixed at a total of £40,000,000 in 1946-47 and £45,000,000 in 1947-48, while in respect of subsequent years the Act provides for the aggregate grant of £45,000,000 to be varied in accordance with a formula which takes account of:- {: type="a" start="a"} 0. variations in the States' populations since 1st July, 1947; and 1. the percentage increase in the level of average wages per person employed over the level of 1945-46. Prior to 1957-58 the grant was distributed among the States partly in proportion to the distribution in 1947-48 and partly in proportion to the States' populations as adjusted for numbers of school children and for relative sparsity of population. In 1957-58, and each subsequent year, the whole of the tax reimbursement grant will be distributed in proportion to the States' adjusted populations. The amount paid to the States in 1956-57 in accordance with the formula was £154,645,000 while it is estimated that the amount payable under the formula in 1957-58 will be £166,200,000. The estimated grants payable to individual States in 1957-58 and the grants paid in the six previous years are compared below: - The tax reimbursement grant payable to each State: in each year is reduced by the amount of any arrears of State income taxation which may be received in that year by the State. In 1956-57 these arrears amounted to £23,084. Supplementary Grants. - In- 1949-50 and each subsequent year payments have been made by the Commonwealth to supplement the grants determined under the tax reimbursement formula. The. following table shows the actual payments made in each year since 1949-50 together with the estimated- payments in 1957-58. At a Premiers" Conference held in May, 1957', the Commonwealth-, agreed to: make available to the; States, a- special financial assistance grant sufficient to bring the- total payment for. 1957-58 to £190,000,000: As the amount payable in- 1957.-58 under the tax reimbursement formula is estimated at £166,200,000 this, involves a supplementary grant of approximately £23,800,000. The whole, of this, supplementary- grant, will be- distributed among, the States in the. same- way as the formula grant for 195.7-58.. The total payments of the reimbursement and supplementary grants to individual States in each of the last, six years and the estimated payments, in 1957-58 are shown in the table below: - Special Grants. - Special grants have been paid annually by the Commonwealth to. Western Australia since 1.910, to Tasmania since 1912 and to South Australia since 1929. Since the establishment of the Commonwealth Grants Commission in 1933', the special grants paid each year to these States have been the subject of recommendations by the Commission. The special grants paid to the States during the last six years, together with the grants recommended by- the Grants Commission for payment in 1957-58, are shown in the following table: - Payments under Financial Agreement. - Under the Financial Agreement, which was entered into by the Commonwealth and the States in 1927, the Commonwealth agreed to contribute certain amounts towards meeting the interest and sinking fund payments in respect of the States' debts. The Agreement provides that the Commonwealth will in each year during the period of 58 years commencing on 1st July, 1927, contribute a fixed amount of £7,584,912 towards the interest payable on the States' debts. This amount is distributed among the States as follows: - The sinking fund contributions made by the Commonwealth in respect of the States' debts vary according to the nature of the borrowings. The Commonwealth contributions in respect of sinking fund on States' debts are paid direct to the National Debt Sinking Fund. In 1956-57 these contributions amounted to £4,640,043, while the contributions in 1957-58 are estimated at £5,045,088. Commonwealth Aid Roads. - Payments under this scheme are governed by the provisions of the Commonwealth Aid Roads Act 1954-1956. The 1954 legislation, which replaced the Commonwealth Aid Roads Act 1950, increased the allocations from Petrol Tax for roads purposes from 6d. a gallon on imported petrol and 3 id. a gallon on locally refined petrol to 7d. a gallon on both imported and locally refined petrol (excluding aviation spirit). The legislation also provided for an increase from 35 per cent, to 40 per cent, in the minimum proportion of the allocations to be spent on rural roads and an increase from £500,000 to £800,000 per annum in the amount set aside for strategic roads, roads of access to Commonwealth property and other roads serving Commonwealth purposes. The legislation was amended on two occasions during 1955-56. The first of these amendments provided for the amount set aside from the total roads allocations for road safety purposes to be increased from £100,000 to £150,000 per annum. A second amendment increased the allocations from Petrol Tax for roads purposes from 7d. a gallon to 8d. a gallon on both imported and locally refined petrol (excluding aviation spirit). This amendment took effect as from 1st April, 1956. The estimated allocations for Commonwealth Aid Roads purposes in 1957-58, compared with actual allocations in 1956-57, are as follows: - The Commonwealth Aid Roads grants received by each of the States in recent years are compared below with the estimated grants for 1957-58. These figures exclude the amounts set aside each year for strategic roads and road safety. Commonwealth Aid Roads - Special Assistance. - Legislation will be introduced shortly to authorize a special allocation for roads purposes of £3,000,000 in the current financial year and also in 1958-59. To help finance this special allocation, which will be additional to the funds provided under the Commonwealth Aid Roads Act 1954-1956, it is proposed to impose a tax on automotive diesel oil consumed by road users. Western Australian Waterworks Grant. - Under the Western Australian Grant (Water Supply) Act 1948-1955 the Commonwealth is, within specified limits, assisting the State of Western Australia to finance the cost of constructing the Comprehensive Water Supply Scheme. The scheme involves the reticulation of water to townships and homesteads in a wheat belt area of about 4,000,000 acres inland from Perth; reticulation of water to towns along the Great Southern Railway from Beverley to Katanning; and increasing the supply of water to the Eastern Goldfields area of the State. During 1956-57 payments to Western Australia under this legislation amounted to £462,500, bringing total payments by the Commonwealth in respect of the Scheme up to £2,612,500. It is proposed to amend the Act to remove the limits on the annual contributions by the Commonwealth towards the cost of the Scheme and also to increase the aggregate limit of those contributions from £4,000,000 to £5,000,000. It is estimated that *payments to* the State in 1957-58 will amount to £572,000. Payments in each year since the inception of the arrangements are set out below: - Encouragement of Meat Production. - As a means of stimulating pastoral development, the provision of new and improved facilities for the movement of cattle both by road and stock route is proceeding in the channel country of southwest Queensland and in the area serving the meatworks at Wyndham, Western Australia. The Governments of Queensland and Western Australia are responsible for the constructional work within their respective States, and Commonwealth financial assistance is being afforded them in accordance with the States Grants (Encouragement of Meat Production) Act 1949-1954. Payments under the Act are estimated at £127,000 in 1957-58 as compared with £134,000 in 1956-57. The distribution of the grants in each year since their commencement in 1950-51 is shown below: - Mental Institutions - Contribution to Capital Expenditure. - In 1955 the Commonwealth agreed to provide financial assistance of up to £10,000,000 towards capital expenditure incurred by the States on mental institutions. The Commonwealth offered to pay £1 for every £2 spent by the States. Expenditure by the Commonwealth in 1956-57 amounted to £1,248,000 and brought total Commonwealth expenditure under the scheme to £2,021,000. The estimated expenditure in 1957-58 is £1,450,000. The following table shows the actual payments to each State under the scheme in the last two years and the estimated payments in 1957-58: - Tuberculosis Hospitals - Reimbursement of Capital Expenditure. - Under the Tuberculosis Act 1948 the Commonwealth undertook to reimburse the States for capital expenditure on buildings, furnishings, equipment and plant for the diagnosis, treatment and control of tuberculosis. In 1957-58 expenditure is expected to total £2,550,000, being the amount the States are likely to claim during the year in reimbursement of their expenditure on approved capital items. Expenditure in 1956-57 was £2,381,000. The distribution of Commonwealth grants under the Tuberculosis Act 1948 in recent years is shown in the table below: - Coal Mining Industry - Long Service Leave. - In the States where coal-miners have been awarded long service leave by industrial tribunals the State governments agreed to reimburse employers the costs they incur in granting this leave. The Commonwealth in turn agreed to reimburse the States the amounts paid and the administrative costs incurred by the States in giving effect to these arrangements. To provide the funds required for these purposes an excise was imposed on coal under the Coal Excise Act 1949. An amount equivalent to the proceeds of the excise is appro priated to a Trust Account under the States Grants (Coal Mining Industry Long Service Leave) Act 1945-1956. The appropriation is estimated at £609,000 in 1957-58 compared with actual expenditure of £597,000 in 1956-57. The amounts of excise collections credited to the Coal Mining Industry Long Service Leave Fund in respect of individual States in each of the last six years, and the estimated credits to the Fund for those States in 1957-58, are -compared in the table below: - States Grants - Imported Houses. - Under the States Grants (Imported Houses) Act 1950 the Commonwealth provided for the payment to the States of a subsidy on imported prefabricated houses of up -to £300 a house. Expenditure to 30th June, 19.57, amounted to £4,193,000, and it is estimated that the provision of £1,000 in 1957-58 will complete the scheme. {:#subdebate-40-6} #### Financial Assistance for Universities. - The States Grants (Universities) Act 1957 authorizes the Commonwealth to make grants to the States for university purposes of up to £2,300,000 in each of the calendar years 1957 and 1958. Expenditure in the financial year 1957-58 is estimated at £2,300,000, compared with £2,262,000 in 1956-57. The estimated grants to individual States in 1957-58 are compared with the actual grants paid in recent years in the following table: - Port Pirie Railway. - Under the Port Augusta to Port Pirie Railway Act 1935-1950 the Commonwealth agreed to pay £20,000 per annum for twenty years as a contribution towards the expenses incurred by the South Australian Government in building the railway from Port Augusta to Port Pirie. The agreement expired at the end of 1956-57. Items the estimates for which show major variation from expenditure in 1956-57 are - Treasury. - Additional expenditure by the Government Printing Office on plant and machinery mainly accounts for the increased provision of £104,000. Attorney-General's. - The additional provision relates to the construction of the new Arbitration Court building in Melbourne. Interior. - The increase of £441,000 is in respect of buildings for Commonwealth offices in Melbourne and Canberra. Works. - The provision for plant and equipment is £251,000 greater than actual expenditure last year, against which must be offset reductions in other capital items amounting to £24,000. Civil Aviation. - The provision of £2,619,000 for works, sites and buildings includes £2,340,000 for the works programme and £279,000 for the acquisition of sites and buildings, and in each case represents some increase over last year's expenditure. The provision of £1,650,000 for technical equipment includes £1,360,000 to be spent against outstanding commitments arising from orders placed in previous years, the balance of £290,000 being for new projects, mainly vehicles and fire-fighting equipment for use on aerodromes. The increase of £270,000 over 1956-57 is mainly accounted for by an uneven incidence of payments on long-term orders. Capital for Qantas and T.A.A. - This provision covers £1,250,000 for Qantas Empire Airways Limited and £500,000 for the Australian National Airlines Commission (Trans-Australia Airlines). In each case the requirement arises from the general expansion of activities and the obligation placed on both airlines to provide buildings and other ground facilities from their capital funds. The provision for Qantas is £250,000 less than in 1956-57, while in the case of Trans-Australia Airlines the £500,000 represents the first addition to its capital since 1948-49. Health. - The greater part of the increase is required for the purchase of laboratory equipment for the Commonwealth Serum Laboratories. Construction of Merchant Ships. - The need for a provision under this heading has disappeared with the establishment of. the Australian Coastal Shipping Commission (see below), which now meets expenditure on new ships being built for its fleet. Australian Coastal Shipping Commission. - The Commission has operated as a business undertaking since the beginning of 1957, its capital consisting of the value of transferred ships (including expenditure on ships under construction) and some cash funds transferred from the Australian Shipping Board. The programme of new ship construction results in the Commission having significant commitments for future payments, and while these can be met largely from profits and depreciation recoveries, there is a requirement for additional capital from time to time. The provision of £500,000 in 1957-58 is needed to allow the Commission to meet this year's payments in full. Standardization of Railway Gauges. - This provision relates to work being carried out in South Australia under the 1949 Standardization Agreement. The 1956-57 vote of £400,000 was supplemented by South Australia using in full a working advance of £100,000, total expenditure on the project thus being £500,000. The 1957-58 provision allows for restoration of £50,000 of the working advance, plus an extra £50,000 to allow work to proceed this year at a rate of £550,000. Christmas Island. - The increased provision for Christmas Island (Indian Ocean) arises from the proposed transfer of sovereignty over the Island to Australia, and from the need to increase the output of phosphate. Australia and New Zealand are sharing equally in both these expenditures. War Service Homes. - The increase from £30,000,000 last year to £35,000,000 this year will enable more homes to be financed and should mean some reduction in the waiting time for advances and in the number of outstanding applications. Snowy Mountains Hydro-Electric Authority. - The greater part of expenditure by the Authority relates to the major contracts - the construction of the Adaminaby Dam, the Eucumbene-Tumut tunnel and the T.l project. Expenditure under these contracts may be lower than last year, but this reduction will be more than offset by increased non-contract expenditure such as on plant and equipment, stores and materials, wages and general expenses. Expenditure under River Murray Waters Act. - The present programme of the Commission, to which the Commonwealth contributes 25 per cent, of the cost, includes increasing the capacity of the Hume Reservoir from 2,000,000 to 2,500,000 acre feet and the associated removal of the Tallangatta township. The Commonwealth's contribution this year is £575,000 compared with £492,500 for 1956-57. Commonwealth Scientific and Industrial Research Organization. - The increased provision is required mainly for new buildings and aircraft for rainmaking experiments. Australian Atomic Energy Commission. - The increase of £159,000 over actual expenditure in 1956- 57 relates mainly to the research reactor project at Lucas Heights, which is expected to be a complete working establishment by February, 1958. The remainder includes part of the cost of headquarters for the Australian Institute of Nuclear Science and Engineering at Lucas Heights, structural alterations to the Commission's head office, capital equipment at Rum Jungle and plant for use in the search for uranium. Railways. - The decrease of £305,000 under this head is due to the pending completion of the standard gauge railway from Stirling North to Marree, the 1957-58 provision being £1,035,000 against 1956-57 expenditure of £1,500,000 on this project. However, expenditure on other railways capital works, including new rolling-stock, ballasting of the Trans-Australian, Central and North Australia Railways, new housing and workshop equipment, is estimated to be £2,082,000 in 1957- 58, or £157,000 more than last year. Post Office. - The vote for technical equipment is to be increased by £2,548,000 to £30,000,000 to enable larger numbers of subscribers' telephone connexions to be installed. Trunk line and telegraph services are also to be improved. The provision for works projects is also increased, by £1,163.000, to £4,000,000, whilst the provision for the acquisition of sites and buildings is slightly reduced. Broadcasting and Television. - The decrease in expenditure under this head is due to the fact that the bulk of the expenditure on establishing national television in Sydney and Melbourne, which commenced late in 1956, was incurred in 1956-57. Expenditure on television equipment was £1,296,000 in 1956-57 compared with estimated expenditure of £520,000 in 1957-58. Sites and buildings for television cost £763,000 in 1956-57, the estimated expenditure in 1957-58 being £497,000. Territories. - The increase of £2,867,000 in the provision for the Australian Capital Territory reflects an acceleration of the building programme to provide for the transfer to Canberra of the personnel of the Defence departments. Expenditure in the Northern Territory is also expected to increase with an expansion in building and engineering services and developmental road construction, and in the provision of health facilities. {:#subdebate-40-7} #### Item No. 20. - Loan Consolidation and Investment Reserve In 1956-57 an amount of £194,793,000 was appropriated from Consolidated Revenue to the Loan Consolidation and Investment Reserve. Of this amount, £83,182,000 was credited to the Reserve as a result of certain Trust Fund transactions. Apart from expenditure from the Reserve on loan repurchases and redemptions, an amount of £96,000,000 was invested from the Reserve in a special loan to assist in financing State works and housing programmes and War Service Land Settlement. It is necessary to make provision again this year to meet commitments in respect of State works and housing programmes, War Service Land Settlement and debt redemption. An amount of £119,363,000 has been included in the Estimates for appropriation to the Reserve this year. {: .page-start } page 249 {:#debate-41} ### STATEMENT No. 3. - LOAN TRANSACTIONS, 1957-58 {: .page-start } page 249 {:#debate-42} ### LOAN COUNCIL BORROWING PROGRAMMES, 1957-58 At a meeting in May, 1957, the Loan Council approved a total governmental borrowing programme of £200,000,000 for 1957-58. The Loan Council also approed total borrowing programmes for 1957-58 of £89,000,000 for semi-governmental and local authorities. The approved governmental programme for 1957-58 compares with the actual programme for last financial year as follows: - The resolution approving a total governmental borrowing programme of £200,000,000 was supported by the Commonwealth on the understanding that the State Governments would fulfil certain conditions designed to promote governmental loan raisings in 1957-58. On that understanding, the Commonwealth indicated that it would also be prepared to take the following steps to assist that programme: - {: .page-start } page 249 {:#debate-43} ### DEBT MATURING IN 1957-58 In 1956-57, Commonwealth securities redeem able in Australia and totalling £258,500,000 reached their final maturity dates. The amount outstanding at 30th June, 1957, and maturing in 1957-58 is £419,671,000. Details are as follows:- The securities maturing in August, 1957, and May, 1958, were taken up in cash or conversion loans between May, 1956, and June, 1957, as short-term securities, while the November, 1957, securities (of which £42,000,000 is war debt) were issued mainly *hi* a cash and conversion loan in October, 1941. Holders of the securities maturing in August, 1957, have already been invited to convert their holdings, the new securities offered being 4 per cent, securities maturing in May, 1959, issued at £99 5s., and 5 per cent, securities maturing in April, 1965, and in April, 1976, issued at par. The same securities were offered in a cash loan which opened on 8th August. In addition to the securities maturing in Australia, an Australian loan of £Stg.20,090,200 will fall due in London on 15th April, 1958. Other Loan Commitments in 1957-58. Apart from its commitments in relation to the Loan Council borrowing programme, and in relation to the financing of redemptions of maturing, loans and of war savings certificates and savings certificates, the Commonwealth will need to find finance in 1957-58 for advances to States in respect of War Service Land Settlement. These advances are estimated at £8,000,000. The estimated amounts which will be made available by the Commonwealth to individual States in 1957-58 for capital expenditure on War Service Land Settlement and the actual amounts, made available in 1956-57 are as follows: - {:#subdebate-43-0} #### Receipts The National Welfare Fund Act 1952 requires an appropriation from Consolidated Revenue to the Fund each year of an amount equal to expenditure from the Fund in that year. The increase of £19,736,000 in estimated receipts for 1957-58 reflects an estimated increase in expenditure from the Fund in 1957-58 of £19,649,000 plus an estimated increase of £87,000 in interest received from the investment of the balance in the *Fund.* {:#subdebate-43-1} #### Expenditure Of the expected increase in expenditure from the National Welfare Fund of £19,649,000 in 1957-58, £9,531,000 is due to the cost in 1957-58 of the proposed increases in social service and health benefits. The cost of the new proposals in 1957-58 and in a full year are as follows: - Comments on particular items of expenditure where the estimate for 1957-58 varies substantially from actual expenditure in 1956-57 are set out below: - Age and Invalid Pensions. - It is estimated that expenditure on age and invalid pensions in 1957-58 will increase by £12,590,000. The proposed increases in pension are estimated to cost £7,500,000 in 1957-58, whilst the balance of the increase (namely, £5,090,000) provides for an increased number of pensioners and for an advance payment of £760,000 to the Post Office in respect of the pension pay-day on 3rd July, 1958. Widows' Pensions. - Of the estimated increase in expenditure of £1,268,000 on widows' pensions in 1957-58, £630,000 represents the estimated cost of the higher pensions now proposed, whilst the remaining £638,000 allows for an increase in the number of widows entitled to pension and for the full year effect of the concessions granted in widows' pensions in 1956-57. Child Endowment. - The increased provision of £2,563,000 reflects the growth in the number of children and an increase in the proportion of second and later children. Unemployment and Sickness Benefits. - The estimated increase of £700,000 is due to the increases proposed in the rates of benefit. Hospital Benefits. - Expenditure on hospital benefits in 1957-58 is estimated to be £1,117,000 greater than in 1956-57 because of the increase in benefit now proposed and the increase in the number of beneficiaries. Pharmaceutical Benefits. - The estimated increase of £666,000 is mainly attributable to an increase in the number of prescriptions (£394,000), an increase in the average price of prescriptions (£159,000) and an increase in the payment to hospitals for drugs provided from their dispensaries (£98,000). Medical Benefits. - Of the estimated increase in expenditure of £380,000 in 1957-58, £354,000 is attributable to a continued growth in the number of persons participating in the Medical Benefits Scheme and £26,000 to the proposed revision of the amounts of certain medical benefits. Medical Benefits for Pensioners. - The estimated increase in expenditure of £106,000 provides for the greater number of pensioners and their dependants entitled to the benefits. Pharmaceutical Benefits for Pensioners. - It is estimated that expenditure will rise by £127,000 in 1957-58 because of increases in the average price and number of prescriptions. Nutrition of Children. - An increase in the number of children benefiting under the scheme lifts the estimated level of expenditure in 1957-58 to £249,000 more than in 1956-57. Miscellaneous Health Services. - Increased production of vaccine for poliomyelitis immunization and the development of home nursing services (introduced in 1956-57) are largely responsible for the estimated rise in expenditure of £162,000. Tuberculosis Benefits. - An estimated increase in expenditure in 1957-58 on tuberculosis allowances of £109,000, including £75,000 for the increases in allowances proposed in the Budget, will be more than offset by lower expenditure on the maintenance of tuberculosis institutions. Expenditure on maintenance in 1956-57 was abnormally high because the Commonwealth reimbursed Queensland for expenditure incurred in two years -1955-56 and 1956-57. The reduction in the 1957-58 provision on this account is £470,000. A further reduction of £80,000 in 1957-58 is expected because of a decline in the length of stay of patients in institutions. Overall, the net reduction in expenditure is estimated at £441,000. I move - >That the first item in the estimates under Division No. 1 - The Senate - namely, " Salaries and allowances £30,000 ", be agreed to. Progress reported. {: .page-start } page 253 {:#debate-44} ### BUDGET PAPERS The following papers were presented: - >The Budget 1957-58 - Papers presented by the Right Honorable **Sir Arthur** Fadden, M.P., for the information of honorable members on the occasion of the Budget of 1957-58. > >National Income and Expenditure 1956-57. Ordered to be printed. {: .page-start } page 253 {:#debate-45} ### PAY-ROLL TAX ASSESSMENT BILL 1957 Motion (by **Sir Arthur** Fadden) - by leave - agreed to - >That leave be given to bring in a billfor an act to amend the Pay-roll Tax Assessment Act 1941-1954. Bill presented, and read a first time. {:#subdebate-45-0} #### Second Reading {: #subdebate-45-0-s0 .speaker-F4T} ##### Sir ARTHUR FADDEN:
McPhersonTreasurer · CP -- by leave - I move - >That the bill be now read a second time. This bill has one purpose only, and that is to raise the amount of the statutory exemption from pay-roll tax from its present level of £6,240 per annum to £10,400 per annum. In other words, whereas the existing law imposes tax on employers whose pay-roll exceeds £520 per month, in future the tax will fall only on thoe who pay wages in excess of £86613s 4d. per month. It is proposed that the increased exemption shall apply in respect of wages paid or payable on or after the 1st September, 1957, so that it will be applicable for the first time in the monthly pay-roll tax returns to be lodged in October in respect of September wages. The increase in the exemption will involve a loss of revenue of £2,750,000 in a full year, or £2,000,000 in the current year. It will relieve approximately 16,000 employers from liability to pay-roll tax, as well as allowing a greater margin of exemption to all employers who remain liable to pay the tax. The latter are required to pay tax only on the excess of the wages paid by them over and above the amount of the exemption. I commend the bill to honorable members. Debate (on motion by **Mr. Calwell)** adjourned. {: .page-start } page 253 {:#debate-46} ### SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL 1957 Motion (by **Sir Arthur** Fadden) - by leave - agreed to - >That leave be given to bring in a bill for an act to amend the Sales Tax (Exemptions and Classifications) Act 1935-1956. Bill presented, and read a first time. {:#subdebate-46-0} #### Second Reading {: #subdebate-46-0-s0 .speaker-F4T} ##### Sir ARTHUR FADDEN:
McPhersonTreasurer · CP -- by leave - I move - >That the bill be now read a second time. Together with the resolution and rates bills which will follow, this bill is designed to give effect to the sales tax proposals which were foreshadowed in the budget speech. The major item of relief is the reduction to 8 per cent. of the tax on household furniture and equipment which are at present taxed at the rate of 10 per cent. The goods affected include domestic refrigerators, washing machines, radiators, crockery and cutlery, as well as kitchen utensils and hardware. The rate of tax is also being reduced to 12½ per cent. in respect of the complete range of handbags, travelling bags, attache cases, suit cases and comparable goods which at present bears 25 per cent. tax. A corresponding reduction is proposed in respect of baskets of a kind used for private, personal, domestic or office purposes. As previously indicated, a measure of relief to industry is being afforded by an exemption of industrial gases, and of cylinders in which such gases are marketed. Exemption is proposed also in respect of equipment for use on ships, other than goods of a kind ordinarily used for household purposes. Industrial equipment used in servicing, repairing or conditioning ships or railway rolling-stock will gain exemption, as also will fire extinguishers and other firefighting equipment. Another new exemption is that relating to carbonated beverages containing not less than 5 per cent pure fruit juice. This, it is hoped, will prove to be of benefit to the fruit-growing industry. The existing exemptions of equipment used by primary producers are being extended to cover acetylene gas generators, and associated equipment. Another item of interest to primary producers is the provision for exemption of preparations which have recently been evolved for the reduction of water evaporation in dams. An anomaly is being disposed of by way of exemption of steel strapping of a kind used to secure goods for marketing or delivery. This strapping is used in competition with wire and lashing which was rendered exempt from tax by earlier amendments of the law. A number of other amendments is proposed with the object of removing anomalies and administrative difficulties and with a view to clarifying certain provisions of the law. Details of the amendments are set out in an explanatory statement which is being circulated for the information of honorable members. As is customary in these matters, the amendments are to take effect on and from to-morrow, 4th September, except where some earlier date is indicated in the circulated statement. The concessions proposed involve an annual loss of revenue amounting to approximately £4,000,000 per annum, or £3,000,000 for the current financial year. I commend the bill to honorable members. Debate (on motion by **Mr. Calwell)** adjourned. SALES TAX BILLS (Nos. 1 to 9) 1957. In Committee of Ways and Means: {: #subdebate-46-0-s1 .speaker-F4T} ##### Sir ARTHUR FADDEN:
McPhersonTreasurer · CP -- I move - {: type="1" start="1"} 0. That, on and after the fourth day of September, One thousand nine hundred and fiftyseven, the rate of sales tax in respect of goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act be81/3 per centum. 1. That, for the purposes of this resolution, " the Sales Tax (Exemptions and Classifications) Act " mean the Sales Tax (Exemptions and Classifications) Act 1935-1956, as proposed to be amended by the Sales Tax (Exemptions and Classifications) Bill 1957. This resolution, and the bills which are to follow, are merely machinery measures which are necessary to effectuate the Government's proposal to reduce the rate of tax on household furniture and equipment from 10 per cent, to *81/3* per cent., as already mentioned. These measures have no other effect and are complementary to the Sales Tax (Exemptions and Classifications) Bill 1957, which has already been explained to honorable members. Progress reported. {: .page-start } page 254 {:#debate-47} ### TARIFF PROPOSALS 1957 {:#subdebate-47-0} #### Customs Tariff Amendment (No. 5); Excise Tariff Amendment (No. 1) {:#subdebate-47-1} #### In Committee of Ways and Means: {: #subdebate-47-1-s0 .speaker-KMD} ##### Mr OSBORNE:
Minister for Air · Evans · LP .- I move- [Customs Tariff Amendment (No. 5).] That the Schedule to the Customs Tariff 1933-1956, as proposed to be amended by Customs Tariff Proposals introduced into the House of Representatives on the twenty-second day of May, One thousand nine hundred and fifty-seven, be further amended as set out in the Schedule to these Proposals, and that on and after the fourth day of September, One thousand nine hundred and fifty-seven, at nine o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Customs be collected in pursuance of the Customs Tariff 1933-1956 as so amended. [Excise Tariff Amendment (No. 1).] That the Schedule to the Excise Tariff 1921-1956 be amended as set out in the Schedule to these Proposals, and that on and after the fourth day of September, One thousand nine hundred and fifty-seven, at five o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Excise be collected in pursuance of the Excise Tariff 1921-1956 as so amended. The Customs Tariff Proposals and Excise Tariff Proposals which I have just introduced were foreshadowed earlier this evening by the Treasurer **(Sir Arthur Fadden)** in his speech on the budget. The proposals give effect to the Government's decision to impose duties of 6id. a gallon on both imported and locally-produced aviation turbine kerosene, and ls. a gallon on imported and Australian automotive diesel fuel used in road vehicles. The proposed amendments will operate as from to-morrow morning. At the present time, both commodities are not subject to excise duty if produced in Australia, and when imported are subject only to primage duty of 10 per cent, ad valorem. The comparative statement which has been circulated to honorable members shows in detail the changes effected by the proposals. As pointed out earlier by the Treasurer, during recent years airlines have been making increased use of aviation kerosene which is substantially tax-free. Petrol used in aircraft is subject to a customs duty of lOd. a gallon when imported and to an excise duty of 8id. a gallon if locally refined. It seems equitable that commercial airlines using aviation kerosene should make a further contribution to the heavy costs of providing airport and air-route facilities, and the Government has therefore decided to impose customs and excise duties of 6id. a gallon on this type of fuel, which will yield to revenue approximately £400,000 per annum. The object of the proposed duty df ls. a gallon on diesel fuel requires little explanation. As honorable members know, the use of diesel-powered vehicles in Australia is increasing, and it has been a matter of concern to the Government that operators of those vehicles, as compared with operators of petrol-driven vehicles, are not making a reasonable contribution to the cost of building and maintaining roads. It is expected that the new duty will yield about £2,000,000 in this financial year, and £3,000,000 in a full year. In order to ensure that the new duty is collected on all diesel fuel consumed in road vehicles, it is necessary to provide for the imposition of the duty on all automotive-type diesel fuel regardless of the purpose for which it will be used. However, arrangements have been made whereby persons who use this type of fuel for purposes other than the operation of road vehicles may be reimbursed to the extent of the ls. a gallon duty paid on that fuel. Honorable members will note that, in Customs Tariff Proposals No. 5, certain amendments other than the provision for the new duties on aviation turbine kerosene and diesel fuel are proposed. These are drafting amendments only, and no change in duties is involved. The House will be given an opportunity to debate the two proposals at an early date. {: .speaker-BV8} ##### Mr Calwell: -- Will the Minister be good enough to provide, before the debate on these proposals is resumed, information showing how the consumption of aviation kerosene is divided between the various airline companies? {: .speaker-KMD} ##### Mr OSBORNE: -- I do not give an undertaking to do so. {: .speaker-BV8} ##### Mr Calwell: -- Will the Minister try to do it? {: .speaker-KMD} ##### Mr OSBORNE: -- I shall refer the matter to the Minister for Customs and Excise **(Senator Henty),** whom I merely represent in this chamber. Progress reported. {: .page-start } page 256 {:#debate-48} ### QUESTION {:#subdebate-48-0} #### JAPANESE TRADE AGREEMENT Debate resumed (vide page 215). {: #subdebate-48-0-s0 .speaker-0095J} ##### Mr HOWSON:
Fawkner .- I believe that the first important thing that I should say about this trade agreement between Australia and Japan is that, in my opinion, it is vitally necessary. It is in the interests of both countries, and particularly of Australia at the present time. It is of no use to go back 25 years into history, as did the honorable member for Port Adelaide **(Mr. Thompson).** The important thing is to look at the features of international trade, as we see them in this post war world. If we consider the developments that have taken place, and the way in which nations now trade with each other, we can see that it is important for governments to take a greater interest, and to play a more active part, in international trading. I do not refer to the trade carried on by nations behind the iron curtain by international barter agreements and the like. If we consider the trading that takes place between the nations of the Western world, we shall see how, since World War II., it has been necessary for governments to take a greater interest, and play a more active part, in international trading. We have only to see what has been happening in relation to the formation of the European Common Market to learn how active a part the governments of the European countries comprising the common market are taking in international trade. More important still from the British and Australian stand-point is the role that the United Kingdom is playing in the European Common Market. Whether or not the British like it, Britain will have to take an increasing interest in trade with Europe. Therefore, it is likely that the volume of trade between the United Kingdom and Australia will dwindle, and it will be important for Australia to replace that trade by trade with the nations of Asia. We shall also see how the United States has carried out trade during the last ten years and how the Government of that country has taken a great part in those activities. The way in which the United States has disposed of trade surpluses by international agreement has shown how important it is that a government should play its part. I do not for a moment advocate the policy adopted by the United States with regard to its disposal of surpluses. The United States has also imposed definite quotas on imports and while members opposite, including the honorable member for Port Adelaide **(Mr. Thompson),** advocate that this Government should impose quotas on imports, I feel that particularly the woollen and worsted manufacturers, who have advocated such a course, would be the first people to criticise the imposition by the United States of quota restrictions on the import of woollen and worsted products. The United States has destroyed any hope that our manufacturers might have had of exporting woollen materials to that country. If we adopt such a view when the United States imposes restrictions, how can we advocate a similar course of action in this country? While, as a member of the Liberal party, I would always believe in the development of trade internationally being as free as possible, I believe that in this post-war pattern of nation to nation trading, with governments playing an increasing part, if there are rules under which the game of international trade is played, then we must play the game according to those rules. 1 believe there are only two courses open - to have a completely planned economy, which is the one thing we should avoid at all costs, or for government and private enterprise to consult together as much as possible in the development of international trade. The Minister for Trade **(Mr. McEwen)** in his speech on this agreement suggested such a course, and I hope that this consultation with industry will develop to a great extent in coming months. 1 suggest that this treaty is a pattern on which Australian trade with other nations in Asia can be expanded. As the honorable member for Barker **(Mr. Forbes)** this afternoon showed, we made many mistakes in the development of such trade in the 1930's. It is to be hoped that we have learned from those mistakes and that in this new approach to trade with Asia, we shall be able to benefit from the past and make use of the pattern that is already shown in this present agreement. It is important for us that we should develop trade with all nations of Asia, not only for commercial reasons, which are vitally important, but also in the interests of our general relations with those nations. It may be possible, for instance, before long to develop a trade treaty with the federation of Malaya. I, therefore, hope that the Japanese trade agreement will be a pattern for other trade agreements which will be negotiated in the months to come, and that we will be able to increase not only our exports of primary products, but also our exports of manufactured goods to the countries of the Asian mainland. The House has been told of the advantages to Australia in this treaty and how the export of our main primary products will be expanded during the coming months. There will be advantages not only to the wool-grower and the wheat-grower, but also to those people who are growing barley and sugar. The whole object of this agreement is that there shall be no sudden dis ruption of our export trade, particularly our major exports, and I believe that the Minister is to be congratulated on the way in which he has negotiated these benefits to the primary producer. I think it is important to see what Australia has given in exchange. First, do not let us exaggerate, as honorable members opposite have done, what actually has been given. There are three main aspects to consider. The first is that imports from Japan have been changed from the general rate of tariff to the intermediate or mostfavourednation rate. This represents an average reduction of about *Ti* per cent. The second aspect is that non-dollar import licence quotas available to people importing from non-dollar countries are now available 100 per cent, in Japan and not only an average of 25 per cent., as heretofore. The third aspect is that Australia has made arrangements to investigate the possibility of allowing and helping Japan to enter into Gatt within the next three years. In essence, we have tried to ensure that there shall be no discrimination against Japanese goods entering the Australian market. It is in these clauses that the Opposition has found its main objections to the treaty. The questions which I think we should ask are whether the objections are valid and what, in effect, are the safeguards that have been imposed by the Minister. In considering this we should look at the two conditions - first, while import licensing is still in operation, and secondly, when the import licensing regulations have finally been removed altogether. Import licensing is still in existence and therefore if no greater monetary volume of imports is permitted to enter this country, there can only be one effect on Australian industry, and that is that if certain imports from Japan are cheaper, unit for unit, than imports from other places, then possibly, say, one and a half units can come in where only one unit came in before. In this case I suggest that the major sufferer would be the United Kingdom and the actual danger to Australian industry should not be very great. That is while import licensing remains at its present level. There is the danger that importers will put all their eggs into one basket, but it must be remembered that in 1952 some of them made this mistake and suffered for it. It takes two people to make a contract - the importer in Australia and the exporter in Japan - and I believe that it is in the interests of the Australian importer to spread the imports as much as possible. He should not consider importing only items in category B. There are many Opportunities for importing raw materials and durable goods. Only two or three years ago, large quantities of cement, iron, and steel products were imported from Japan, and it is possible that other durable goods could also be imported in the months to come. Surely it is not likely that the whole of the increase in imports from Japan will be in category B goods. But even if the Australian importers to-day do put all their eggs in one basket and import certain lines which will hurt Australian industry, I suggest that an additional safeguard lies in the fact that the Japanese manufacturers also will realize the facts of life. They realize that by concentrating their exports to this country in specific lines they will be harming not only the whole spirit of the trade agreement but also themselves. They know that those exports can be cut off at a moment's notice. I am sure, therefore, that it is in the best interests of the Japanese industrialists to spread their exports to Australia as widely as possible. If that second safeguard fails, there is a third one. The Minister himself can take rapid action at a moment's notice. We have also been told, however, that before emergency action becomes necessary the Minister may set up consultation committees, on which will be represented individual industries, which can overlook the applications being made for the import of certain goods. It will be possible for industry to ascertain, at least three months in advance, what goods are likely to be coming to this country, and they may take any necessary action within that time. How different was the situation of industry, say twenty years ago, when an international trade situation developed with practically no warning. By the use of these committees that the Minister has agreed to establish, it will be possible to receive warning of what is to take place three months or more before it actually happens. Plans may be made and action taken to deal with the situation. I believe that these consultation committees will provide the main safeguards for Australian industry. It is tremendously important that the statistics to be provided by the Government should be as up to date as possible, and I am sure they will be. But it is also im portant that industry itself should take steps to provide reasonably accurate statistics of its production. The Associated Chambers of Manufactures and the various individual sections of the Chambers of Manufactures can do a lot to help themselves and the Government in this respect. I agree that strict vigilance will be necessary on the part of all concerned, but with the prior warnings that will be available through consultations, and with all the safeguards that I have referred to, there is every prospect that industry will be able to overcome the difficulties that it may encounter in the coming months. The prior warning that may be received from the consultation committees can be transmitted to the Japanese Government. With warnings available to everybody concerned of a situation that may arise three months hence, we will be able to take the necessary action to deal with it. The whole spirit of the agreement will be preserved, I believe, through the various actions that have been suggested by the Minister. Finally, as I have said before, if all else fails and an Australian industry is immediately threatened, rapid action can, and, I am sure, will be taken. We must all realize that we will benefit considerably if this agreement remains in operation for its full term. It is important that we should not at this stage assert that unemployment is increasing in Australian industry. Nothing is likely to harm an industry more than the assertion that unemployment in that industry is increasing. We should, instead, make use of the chance of this slight breeze of competition that has been referred to. I am sure that increased competition would help many industries to increase their productivity, and so long as the breeze remains a breeze, I believe that it will assist Australian industry. The onus is on the Government to prevent that breeze from turning into a tornado. I feel sure that we can rely on the Government to take all the action necessary to protect Australian industries. I believe there is no cause for any concern while the import licensing system is still with us, because we can rely on the safeguards that have already been enumerated. If, however, the system of import licensing is removed, I believe that we will need a new series of safeguards. First, I think the time is approaching when we should completely review our tariff-making machine. We should have an authority that can act reasonably quickly. We should make use of the breathing space that we will have while import licensing is still with us to develop the machinery for consultation between the Minister and industry. This will be of great assistance in the development of a workable system when import licensing is removed. I believe that the quota system is not the answer. Instead we should plan for a complete review of our tariff-making machinery. {: #subdebate-48-0-s1 .speaker-JLR} ##### Mr DEPUTY SPEAKER (Mr Adermann:
FISHER, QUEENSLAND -- Order! The honorable member's time has expired. {: #subdebate-48-0-s2 .speaker-JUP} ##### Mr CLAREY:
Bendigo .- I cannot regard this treaty with the same complacency as the honorable member for Fawkner **(Mr. Howson).** The treaty is designed to encourage trade between Australia and Japan, and one must view it from the standpoint of its meaning to both countries. Japan is a great manufacturing nation. Australia is also a great manufacturing nation. It is true that we produce raw materials, which we export, but it is equally true that substantially more employment is provided in Australia in manufacturing industries than in the production of raw materials. When, therefore, a pact to encourage trade between two manufacturing nations is before us it must receive careful scrutiny, because we have developed our own Australian way of life, and it is necessary for us to see whether the treaty threatens that way of life. The first point which we should consider is the advantages that Japan will receive as a consequence of the treaty. The two main advantages are, first, that Japan will receive the tariff advantages that it would have received had it been a party to the General Agreement on Tariffs and Trade. In other words, it will now be treated on a mostfavourednation basis instead of on the general tariff basis. The second advantage is that there will be no further discrimination against Japan in respect of import licensing. The fact that Japan has not had those advantages has acted as a safeguard for Australian industry during the period of import licensing and while the General Agreement on Tariffs and Trade has been in operation. So, with the gaining of these advantages by Japan, the safeguards that have protected Australian industry are, in effect, swept away. I wish to make it clear also that, whilst it is true that in the past Japan had a reputation for manufacturing flimsy and shoddy goods, that is no longer true. Japan is a great manufacturing nation which, due to the technical and financial assistance she has received from America, in addition to the American know-how that has been available to her, is to-day able to produce goods equal to the world's best. Australia also is able to produce goods of high quality, and is an efficient industrial nation. The question is whether under the provisions of the agreement it will be possible for Australian goods to compete in the home market with Japanese imports brought in under the agreement. A simple analysis of our way of life and the manner in which we have developed our standard of living will indicate the tremendous task that will face Australian industry in holding its own against Japanese competition made possible by the agreement. Let us look at the difference between the working conditions under which goods are produced in Australia and those under which they are produced in Japan. The Commonwealth Statistician states that in the financial year ended 30th June, 1956, the average weekly wage for an Australian adult male was £17 10s. and the hours of labour were 40 a week. In addition to that wage there are overtime payments which are regarded as satisfactory, payment for public holidays, higher rates for shift workers, sick pay, annual leave and longservice leave. We in this country have developed a policy that as Australian industry expands and progresses, its employees shall share in that expansion and progress. On the other hand, according to the International Labour Organization's figures, hours of labour in Japan can be up to 60 a week, with the average somewhere about 48i a week, whilst the average weekly wage for males is £5 a week. In many instances the other additional benefits, such as various kinds of leave and extra pay, which are available to Australian workers simply do not exist in Japan. In that country, in cases where there is some additional payment to workers over the ordinary base rate, it is by no means anywhere near the rates fixed in this country. We simply cannot ignore the facts that the living standards and housing conditions of the workers in Japan are shockingly low compared with those in Australia, and that the Japanese worker does not share in the expansion and progress of Japanese industry as the Australian worker does in the expansion and progress of Australian industry. When these facts are realized and when one appreciates that the advantages which in the past have protected both the Australian manufacturer and the Australian worker are now taken away, it is not hard to see that it is necessary for us to visualise the effect of this agreement. One of the first industries to be affected by the agreement will be the textile industry. That is a well-established industry which employs about 22,000 people in Australia, probably more. It is one of the most decentralized of our industries, because its units are scattered throughout our provincial towns where they provide employment for people who would otherwise be forced to move to the large cities. Millions of pounds of capital are invested in this industry. Since Japan is a great textileproducing nation we have to consider what the effect on the Australian textile industry of the agreement will be. One thing we must bear in mind is that the physical volume of Japanese goods imported under the agreement will be considerably greater than has been entering the country under the import licensing provisions, because of the low prices at which these goods are produced. I wish to compare for a few moments the conditions in the Japanese textile industry with those in the Australian textile industry in order to emphasize the tremendous threat this trade agreement contains for the Australian textile industry and employment in it. I propose to cite certain figures that were placed before the Tariff Board by Australian employers on the question of the necessity to protect the cotton textile industry. These figures show that of every 100 workers in the Japanese cotton textile industry 80 are females and only twenty are males. In Australia the comparable figures are 52.5 females and 47.5 per cent, males. So, whereas in Japan the preponderance of labour in that industry is female, in Australia the proportions of males and females employed in it are almost equal, with females slightly in the majority. A comparison of the rates of pay in the two countries gives some startling results. The hourly rate of pay for females in the Japanese cotton textile industry is Hid. The corresponding rate in Australia is 5s. 8d. The male hourly rate in Japan, in that industry, is ls. 8id. and in Australia it is 7s. lOd. The average hourly rate of pay of males and females combined in the Japanese industry is ls. lid., whilst the comparable figure in Australia is 6s. 6d. In other words, the Australian worker is receiving about six times the hourly rate of pay that is received by the Japanese worker. Do not forget that there is, in addition to the difference between the wages element in the cost of production in the two countries, the cost of the provision in Australia of a shorter working week, sick leave, annual leave, long service leave and other industrial conditions. From the facts and figures I have given the extent to which the Australian textile industry is immediately threatened as a result of this agreement and of the difference between wages and working conditions in the two countries will be immediately evident to the House. The two advantages of most-favoured-nation tariff rates and non-discrimination in respect of licensing, which have been given to Japan, represent a very serious threat indeed to the Australian textile industry. Of course, the textile industry is not the only industry that will be affected. In Japan, manufacturers are advertising to the effect that they are prepared to supply all types of goods anywhere in the world. Naturally, they will seek markets where the purchasing power is greatest. For that reason we find them concentrating on the markets in America, Canada and the United Kingdom. Shortly, they will be concentrating also on Australia and New Zealand, because in those countries the purchasing power is great and the Japanese hope that the best returns will quickly be secured. In addition to the textile industry, a host of other Australian industries also may be affected, including the industries which manufacture toys, footwear, electrical equipment, electrical goods, hand tools hardware, ceramics, all types of machinery, rubber goods, radios and sewing machines. Goods of high quality may come from Japan to this country, and because of the superior working conditions that operate here, the Australian industries may be unable to compete with the Japanese manufacturers. It is not unreasonable to suppose that, at the end of three years, many Australian industries will be very sick as a result of this treaty. The safeguards that have been referred to by the Minister are altogether too cumbersome and complicated. As one looks at the treaty, it becomes clear that, when an industry is seriously affected, consultation may take place. Some industries are threatened already, but the Government is not prepared to take action. An industry must be " seriously affected " before action will be taken, and when that happens there will be consultation between the parties. Such consultation could extend over a lengthy period, but the really important question is: What is meant by " seriously affected "? If one factory closes down, does that mean that the industry concerned is seriously affected? Is it necessary for factories to close down entirely, or will they be deemed to be seriously affected if they are working half time, or with only half their normal number of employees? The more one thinks of these safeguards, of which honorable members opposite have spoken with such complacency, the more one appreciates the difficulty of determining the meaning of " serious " in this connexion and how long it may be before action is taken. I point out that while a serious position was developing in an industry, the Australian market could be flooded with Japanese goods, so that when the action was taken it might be too late for the industry to be restored to its former position. Similar pacts have been made with other countries - with what result? Because of the rapid importation of Japanese goods into the United States eventually a quota system had to be devised. In Canada, Japanese goods were imported at a terrific rate, with the result that the Canadian textile industry is now struggling to prevent itself from being strangled. We have seen the importation of Japanese goods into Africa, a market that once belonged to the United Kingdom and which, in the last two years, has been lost to it altogether. We know that those things are going on. The evidence of them is before this House and the people of Australia to-day; yet, here we are talking about making a pact of this kind! It seems to me that when action is taken by the Government because of the serious position that is bound to develop in various industries, it will be too late, because the unemployment which has been increasing so noticeably in Australia during the last nine or twelve months will have become very much greater. My own thought is that Japanese purchases of our wool, both this year and next year, will be on a considerably smaller scale than they were in the past, because the Japanese have been able to establish, from a bargaining standpoint, the fact that the gap in the trade between the two countries is already too great. 1 conclude by saying that the more one studies the pact the more one is convinced that it is a serious threat to Australian industry. The House should indicate in a most emphatic manner that it will have none of it. In these days of increasing unemployment it is *folly* of the worst kind to open the door to destruction of Australian industries and the Australian way of life by entering into a pact of this kind. {: #subdebate-48-0-s3 .speaker-KWE} ##### Mr TIMSON:
Higinbotham .- I rise to give my support to this new agreement on commerce between the Commonwealth of Australia and Japan for the next three years. The honorable member for Bendigo **(Mr. Clarey)** dwelt at some length on the possible effects of increased Japanese exports of a cheap kind of textile upon the Australian textile industry, which is an established industry, and during the course of my speech I shall make some comment on the situation as I see it, or perhaps I should say, as I foresee it. I want to say something about the reference of the honorable member for Bendigo to the South African textile market which, he said, had been gained by Japan during the last few years that she had had access to it, at the expense of the United Kingdom. I think that that was an inaccurate statement. {: .speaker-JUP} ##### Mr Clarey: -- I said " African ", noi " South African ". {: .speaker-KWE} ##### Mr TIMSON: -- If the honorable member had been referring to South Africa, where one might imagine that cheap Japanese textiles would be attractive, let me inform him that the experience has been of entirely the opposite kind. I cannot, of course, speak of the whole of the African market, which is very wide and variable, but South Africa no doubt would account for a very good proportion of the total African market. There is in South Africa no quota system, no limitation of the quantity of goods that may come into the country. There are no import restrictions such as we have in Australia. Certainly, when the Japanese goods were first admitted there was an enthusiasm for them, but it faded after the first twelve months, and now Japanese textiles hold only a very small percentage of the total South African market. This agreement provides distinct advantages for both countries. In moving about amongst the people and the merchants of Melbourne, my home city, it has seemed to me that there is wide misunderstanding in the public mind about this agreement, not so much amongst the merchants who are familiar with its details and its possible effects, as amongst the people generally, many of whom seem to think that Japan will enjoy some special privilege not enjoyed by other countries from which we import. This is entirely erroneous. Indeed, Japan is the only country in the world against which we have exercised, until now, a most severe discrimination in our import policy. This agreement does away wilh that discrimination and places Japan in the same category as all other foreign countries. It has always been a source of wonder to me that Communist countries and other for'mer enemy countries have enjoyed a great advantage over Japan in the Australian market. The iron curtain countries such as Yugoslavia, Roumania, Czechoslovakia, Hungary, Bulgaria, Germany, both West and East, Poland, Italy, Austria, Soviet Russia and red China, all have enjoyed this advantage over Japan in our import policy, both in the quantity of goods that they can export to Australia and in our tariff imposts, in spite of the fact that Japan is our second largest customer. This agreement now places Japan on the same basis as the countries that I have mentioned and all other foreign countries. The Minister for Labour and National Service **(Mr. Harold Holt)** made a very good point in speaking in this debate recently when he pointed out that the Opposition has constantly advocated increased trade with red China to which we export only a very small percentage of our trade. It seems that the Opposition is prepared to promote trade with Communist China on an unrestricted basis but would continue the severe restrictions on trade with democratic Japan which is our second best customer. The precise details of this agreement have been discussed at length during the course of this debate and have been clearly explained to the House by the Minister for Trade **(Mr. McEwen).** Suffice for me to give, in the briefest form, a summary of the advantages to Australia. This agreement protects our export trade with Japan in wool, wheat and flour and protects other products from discrimination by Japan in her tariff and quota restrictions. It opens up most attractive new market opportunities for wheat, sugar, and many other products. Opposition criticism, which we heard this evening and last Thursday, appeared to me to ignore the great benefits to Australia and the contributions which the agreement makes to our overseas trading position and which it will make, therefore, to our balance of payments in our general international trade. Without such guarantees by Japan concerning discrimination against Australia's products, we have been quite unable to make predictions with anything like the accuracy necessary in our forward national planning. On the other hand this agreement provides that the Japanese will have the same basis of trading with us in future as do other foreign countries, both in licensing and in tariff treatment. In order to protect those Australian secondary industries which may be seriously affected by an influx of cheaper Japanese goods, important protective provisions have been written into the agreement. As the Minister for Trade has explained, the Japanese Government recognizes the importance of restraining imports so that they do not reach a level where serious injury is caused or threatened to any Australian industry. I shall have something to say upon this matter of restraint a little later. If, in the opinion of the Australian Government, this restraint at the Japanese end is ineffective and the position warrants it, the Government is free, in the terms of the agreement, to impose emergency duties or quantitative restrictions against the Japanese goods concerned without delay. Concern has been expressed by a number of Australian secondary industries that the agreement will enable our manufacturers to be under-sold. I wish to devote some brief remarks to the textile industry because it is this industry - particularly the woollen and worsted manufacturers - which has been the most vociferous in its opposition to the agreement. The Leader of the Opposition **(Dr. Evatt)** concentrated upon this industry in his rather tedious and unconvincing speech. Firstly, let me say something about cotton textiles, in the main, printed cottons. Perhaps I should explain that, prior to this agreement, importers held licences for, shall we say, 100 units. Twenty-five of these units could be used to import Japanese cottons and the balance of 75 units for imports from other sterling countries. This agreement now makes it possible for importers to devote the whole 100 units to imports from Japan if they so desire. Also, under existing tariff schedules, importers of Japanese cottons have been paying a duty of 3?d. a yard, whereas the duty on similar piecegoods from other foreign countries has been 2d. a yard. This agreement bring Japan into line with all other foreign countries and her cotton piecegoods will now be dutiable at 2d. a yard. A considerable quantity of cottons and rayons presently come to Australia from the United Kingdom, Holland and Germany, but quantities are also coming from Czechslovakia, Hungary and Poland. Imports from Yugoslavia are small but growing, and even Roumania is coming into the picture. Italy, of course, is another country from which we import a considerable quantity of cotton piecegoods. The imports of cottons from Holland and Germany have grown tremendously at the expense, mainly, of the United Kingdom. I am informed by a number of importers and, from my own experience, I would say that continental printed cottons, particularly the Dutch and German, have better designs and are cheaper than the British equivalent and have stolen much of the United Kingdom's trade throughout the world. Indeed, in the cheaper bracket of cottons and rayons I do not think it is realized, particularly in this House, that many other countries are now offering full competition to Japan. I should like to suggest to the House that the country which may well become, in a relatively short time, the dominant country in the manufacture of cotton textiles, is Communist China. She founded her textile industry on machinery from Russia and adapted it and improved it to the point at which she is now able to undersell Japan in the world market for cotton textiles. In silks, of course, red China can beat the world, including Japan. The cotton textile printing industry in Australia, I have always felt, is not firmly based. The companies which are engaged in printing cottons import the basic material, grey cloth as it is called, almost duty free, mainly from Japan, and print and finish that material here. If the grey cloth were woven in Australia then my attitude to the cotton textile printing industry would, of course, be entirely different. Rayons printed in Australia are already heavily protected by our tariff schedules. The foreign rayons are dutiable at ls. 8id. a yard and Japanese rayons, now dutiable at the same figure, were formerly dutiable at 2s. Hd. a yard. I feel that the reduction in duty on Japanese printed *cottons* should not unduly affect the printers here because the price of Japanese materials, even with the operation of the higher duty of 3?d. a yard, which has been reduced to 2d., was considerably lower than that of cottons printed in Australia. With regard to the woollen textile industry, it is difficult to understand why our manufacturers are displaying such a sensitive reaction to this agreement. Unlike cottons, rayons and many other items, woollen textiles from Japan have not been the subject of discrimination since 1954; also, this agreement does not vary significantly the tariff duties which have been applied to woollens during the last three years. So, from the point of view of both quantity and tariff, there is very little change in the conditions which have obtained since 1954. No one, having examined the figures, could say that the woollen textile industry in Australia has suffered from imports from Japan in that time. As the Minister pointed out, the imports from Japan in woollen yarns, blankets and piece goods have been so small as to be inconsiderable. Why, with conditions almost unchanged, should we find a sudden burst of imports of these goods from Japan? **Mr. Speaker,** I am very proud and J should think that every Australian is of our Australian woollen textile industry. li has grown into a major industry. It is efficient and produces goods of excellent quality. I suppose that I could truthfully say that I am a protectionist where protection can be justifiably and intelligently applied. This industry is one, which, in its early days, was nurtured under stringent protective measures. It has proved itself completely. I am not of the opinion that it need be unduly disturbed by the terms of this agreement. However, I do feel that there is a threat to made-up woollen goods such as knitted items of wearing apparel, and similar types of goods. Imports of these will have to be watched carefully. The same might apply to certain items of clothing made of cotton. No one could deny the possibility that certain industries will be threatened by Japanese imports and that they will need protection through appropriate action taken as provided for in the agreement. I am sure that industries which feel concerned will be re-assured by the Minister's offer of industry consultation with himself and officials of the Department of Trade. In addition the Minister told us that the Government proposes to establish a . special advisory authority to make recommendations to the Minister responsible for the protection of Australian industries. For myself, I was very pleased to hear him say that he proposed to invite the chambers of commerce and chambers of manufactures to discuss with him the form which this advisory authority should take. I mentioned earlier thai Japan recognized the necessity for restraint in her exports to Australia where these could menace Australian industry. I have seen correspondence within the last few days which provides positive proof that, over the whole textile field, Japanese exporters are refusing to quote our importers because they have reached the quantitative restriction imposed by their Government. This would indicate that Japan is watching closely her commitments under this agreement. There is proof also that not only the quantity is carefully checked but the price structure also. **Mr. Speaker,** this agreement does not provide for any increase in our total imports. It allows our importers to buy less from other countries and more from Japan if they wish to do so. In no way whatsoever is the preferred position of the United Kingdom in the Australian market altered; that remains quite unchanged. I say again that this trade treaty does away with an ugly, unhealthy discrimination which was directed at only one country in the world - Japan - which is the second largest buyer in the world of Australian products. Trade between nations is, in these days, full of complexities, but one of the first principles to be observed is that such trade is a twoway business. I am sure that Australia will gain the benefits provided for in this agreement without sacrificing the interests of Australian industry. Debate (on motion by **Mr. Nelson)** adjourned. {: .page-start } page 264 {:#debate-49} ### ADJOURNMENT Motion (by **Mr.** Osborne) proposed - >That the House do now adjourn. {: #debate-49-s0 .speaker-KX7} ##### Mr WARD:
East Sydney **.- Mr. Speaker-** Motion (by **Mr. Harold** Holt) put - >That the question be now put. The House divided. (Mr. Speaker - Hon. John McLeay). AYES: 57 NOES: 29 Majority . . . . 28 AYES NOES Question so resolved in the affirmative. Original question resolved in the affirmative. House adjourned at 10.35 p.m. {: .page-start } page 265 {:#debate-50} ### ANSWERS TO QUESTIONS The following answers to questions were circulated: - {:#subdebate-50-0} #### Public Service {: #subdebate-50-0-s0 .speaker-KX7} ##### Mr Ward: d asked the Prime Minister, upon notice - >How many persons, showing temporary and permanent employees separately, were employed in the Commonwealth Public Service at the following times: - > >the outbreak of war in 1939? > >when the Labour Government came into office in 1941? > >when the Labour Government was defeated in 1949? and > >the latest date for which figures are available? {: #subdebate-50-0-s1 .speaker-N76} ##### Mr Menzies:
LP -- The employment figures asked for are as follows: - {:#subdebate-50-1} #### Recognition of Communist China {: #subdebate-50-1-s0 .speaker-KX7} ##### Mr Ward: d asked the Prime Minister, acting for the Minister for External Affairs, upon notice - >What nations have recognized and established diplomatic relationship with the Government of the mainland of China? {: #subdebate-50-1-s1 .speaker-N76} ##### Mr Menzies:
LP -- The answer to the honorable member's question is as follows: - >The following Governments (not all of which are recognized by Australia) have recognized the Government of the People's Republic of China established on the mainland of China: - Afghanistan, Albania, Bulgaria, Burma, Ceylon, Czechoslovakia, Denmark, Egypt, Finland, East Germany, Hungary, India, Indonesia, Israel, Nepal, North Korea, North Viet Nam, Outer Mongolia, > >Netherlands, Norway, Pakistan, Poland, Roumania, Sweden, Syria, Switzerland, United Kingdom, Union of Soviet Socialist Republics, Yemen and Yugoslavia. Diplomatic missions have been accredited by all the foregoing except Israel and Yemen. {:#subdebate-50-2} #### Government Loans and Finance {: #subdebate-50-2-s0 .speaker-KDA} ##### Mr Duthie:
WILMOT, TASMANIA e asked the Treasurer, upon notice - {: type="1" start="1"} 0. What surplus revenues have been placed in the National Debt Sinking Fund, National Welfare Fund, or any other fund since 1950? 1. How much of this total has been loaned to the States as re-investment up to June, 1956? 2. What was the interest charged in connexion with each loan? 3. What has been the total interest paid by the States to the Commonwealth on these loans? 4. What are the total invested surpluses of the Government up to July, 1956? {: #subdebate-50-2-s1 .speaker-F4T} ##### Sir Arthur Fadden:
CP -- The answers to the honorable member's questions are as follows: - {: type="1" start="1"} 0. There have been no surplus revenues since 1950. The honorable member may, however, be referring to appropriations of the Consolidated Revenue Fund, under which payments have been made to a number of trust accounts within the Trust Fund. A statement of the receipts of the Trust Fund is provided in Table No. 10 of the Annual Finance Statement. Included among the appropriations of the Consolidated Revenue Fund since 1950 are - {: type="1" start="2"} 0. Amounts have been invested from the Trust Fund in special Commonwealth loans raised at the end of the financial year 1951-52 and at the end of each subsequent financial year to complete the Commonwealth and State borrowing programmes approved by the Australian Loan Council. The net cash proceeds of these special loans have been allocated partly to the Commonwealth loan programme and partly to the loan programmes of the State governments, as follows: - {: type="a" start="a"} 0. After allowing for discounts on issue prices of securities. 1. Includes £155,762,000 utilized to finance advances made by the Commonwealth to the States on terms and conditions provided for in the Commonwealth-State Housing Agreement and the Housing Agreement, and £3,182,000 for emergency wheat storage. The subscriptions which, after deduction of discounts on issue prices of securities, provided the amount of £602,249,000 shown above came from the following sources: - {: type="a" start="a"} 0. The assets of the Debt Redemption Reserve were transferred to the Loan Consolidation and Investment Reserve under the provisions of the Loan Consolidation and Investment Reserve Act 1955. {: type="1" start="3"} 0. The interest rates for the special loan mentioned above, and the amounts subscribed at each interest rate, are shown in the following table: - Some of these securities have matured and have been converted into securities of new loans at rates of interest different from those for the original investments. The investments of the Trust Fund have also been varied by purchases and sales of securities. {: type="1" start="4"} 0. Neither the securities originally acquired in respect of the subscriptions from the particular sources listed in 2 above nor the securities held following subsequent variations in investments are identified with particular loan raisings on behalf of the States nor can they be allocated between the Commonwealth and the States in the same way as total subscriptions to the special loans are allocated in 2 above. It is not, therefore, possible to calculate the interest which has been paid by the States on the investments, including the current forms of investments, of the moneys shown in 2 above as subscriptions to special loans. 1. See answer to 1. {:#subdebate-50-3} #### Trade with India {: #subdebate-50-3-s0 .speaker-KX7} ##### Mr Ward: d asked the Minister for Trade, upon notice - >What (a) quantity and (b) value of Australian wheat and flour has been exported to the Indian market in each of the last ten years? {: #subdebate-50-3-s1 .speaker-009MB} ##### Mr McEwen:
CP -- The answer to the honorable member's question is as follows: - {:#subdebate-50-4} #### Benefits Payments to Immigrants {: #subdebate-50-4-s0 .speaker-6U4} ##### Mr Whitlam:
WERRIWA, NEW SOUTH WALES m asked the Minister for Social Services, upon notice - >How many migrants in reception and training centres were receiving special benefits on the last Saturday in each month since July, 1956? {: #subdebate-50-4-s1 .speaker-KZE} ##### Mr Roberton:
CP -- The answer to the honorable member's question is as follows: - >The numbers of special benefits payable to migrants in reception and training centres awaiting first placement in employment on the last Saturday of each month since July, 1956, were as follows: - {:#subdebate-50-5} #### Unemployment Benefits {: #subdebate-50-5-s0 .speaker-6V4} ##### Mr Daly: y asked the Minister for Social Services, upon notice - {: type="1" start="1"} 0. How many persons in Australia received unemployment benefit for any period during 1953-54, 1954-55, 1955-56 and 1956-57 respectively? 1. What was the (a) longest and (b) average period of payment? 2. How many (a) men and (b) women received benefits during this period? {: #subdebate-50-5-s1 .speaker-KZE} ##### Mr Roberton:
CP -- The answers to the honorable member's questions are as follows: - {: type="1" start="1"} 0. Admissions to unemployment benefit during the years in question were - In some cases the same person may have been admitted to benefit on more than one occasion during the year. Also some persons admitted to benefit at the commencement of the following year. The exact figures sought by the honorable member are not available. {: type="1" start="2"} 0. Figures of the duration of benefit periods are not available. 1. The information sought is included in the answer to question 1. {:#subdebate-50-6} #### The Committee on the Retiring Age {: #subdebate-50-6-s0 .speaker-KX7} ##### Mr Ward: d asked the Minister for Social Services, upon notice - {: type="1" start="1"} 0. When was the Inter-departmental Committee on the Retiring Age appointed? 1. When did the committee submit its report to him? 2. What action has he since taken in the matter? 3. When is it expected that the findings of this committee will be made known? 4. Will he state the reason for his action in maintaining the strictest secrecy regarding the findings of this committee, and say why they could not have been made available for public information as soon as possible after the report was received by him? {: #subdebate-50-6-s1 .speaker-KZE} ##### Mr Roberton:
CP -- The answers to the honorable member's questions are as follows: - {: type="1" start="1"} 0. The Committee on the Retiring Age was appointed in 1955. The committee held its first meeting on 18th November, 1955. 1. 15th July, 1957. 2. A submission has been made to Cabinet regarding the committee's findings and is at present under consideration. 3. In the usual run of things inter-departmental committees report for the information of the Government. They are different in nature from royal commissions or public inquiries. Whether the findings are made public will be decided by the Government. 4. See answer to item 4. {:#subdebate-50-7} #### Dental Health {: #subdebate-50-7-s0 .speaker-KXI} ##### Mr Webb: b asked the Minister for Health, upon notice - {: type="1" start="1"} 0. Did **Sir Kingsley** Norris, the former DirectorGeneral of Medical Services, Australian Military Forces, highlight a public health problem of national importance when he revealed that because of dental disease, 88 per cent. of national service trainees are unfit for active service? 1. If so, has his department any plan for improving the dental health of the community? {: #subdebate-50-7-s1 .speaker-JU8} ##### Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP -- The answers to the honorable member's questions are as follows: - {: type="1" start="1"} 0. The statement mentioned had not been previously brought to my notice. 1. In the last financial year, the National Health and Medical Research Council provided a grant of £4,271 to the Institute of Dental Research, Sydney, for scientific research into dental decay. The Commonwealth Health Department operates a comprehensive dental service for all sections of the Northern Territory and a dental health service for children in the Australian Capital Territory where clinical research in preventive dentistry is carried out. Dental health in the States is, of course, the responsibility of the State authorities.

Cite as: Australia, House of Representatives, Debates, 3 September 1957, viewed 22 October 2017, <>.