23rd Parliament · 2nd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 3 p.m., and read prayers.
– I have received a return to the writ which I issued on 8th June, for the election of a member to serve for the electoral division of Bendigo, in the State of Victoria, to fill the vacancy caused by the death of the Honorable Percy James Clarey. By the endorsement on the writ it is certified that Noel Lawrence Beaton has been elected.
– At the end of the last period of sittings I received a letter from Percy Ernest Joske, Q.C., resigning his seat as member for the electoral division of Balaclava, in the State of Victoria, as from and including 3rd June. On 8th June, I issued a writ for the election of a member to serve for the electoral division of Balaclava. I have received a return to the writ, and, by the endorsement thereon it is certified that Raymond Harold Whittorn has been elected.
Mr. Noel Lawrence Beaton and Mr. Raymond Harold Whittorn were introduced and, in turn, made and subscribed the oath of allegiance.
– I desire to inform the House that my colleague, the Minister for Supply, is indisposed following a recent operation, and will not be able to resume his parliamentary and Ministerial duties before the end of this month. During his absence the Minister for Air will administer the Supply portfolio.
– Will the Minister for the Army make a statement to-day to the House dealing with the disaster in the Rip late last year? It will be recalled that the
Minister promised to make such a statement at the conclusion of the coroner’s inquiry. However, the House rose before that inquiry was completed, and the Minister subsequently made a statement to the press. I would like the statement to be made to the House as soon as possible and the House given an opportunity to debate it.
– I am most anxious to give the fullest possible information to the House on this tragedy, and, subject to the will of the House, I propose to make a statement - the same statement that I published after the House rose - so that the matter may be debated, as requested by the Leader of the Opposition.
– I direct a question to the Minister for Defence. As the recent mission overseas inquiring into a new fighter to re-equip the Royal Australian Air Force has returned, is the Minister in a position to say when a decision may be made on this matter?
– It is quite true that our test pilots, Group-Captain Cuming and Wing-Commander Hodges, went to the United States and to Europe and flew several of the aircraft in which we are interested. They are at present working out the results of their tests. As the honorable member will know, this involves quite a lot of mathematical calculations of aerodynamics and so on. I am hopeful that they will make their report in three or four weeks’ time, and then, of course, it will go to the Government for decision.
– I direct my question to the Treasurer whose health, I am pleased to see, has been restored. Has his attention been directed to statements by several State Housing Ministers, including the New South Wales Minister for Housing, who expressed fears that bank credit restrictions could seriously affect private home building? Will the Treasurer do everything possible to ensure that credit restriction will be confined to non-essential commodities and that there will be no reduction in the already restricted flow of credit for desperately needed home construction?
– I think honorable gentlemen are aware that in the last financial year there was record home construction in Australia and that the accelerated rate of domestic construction continues in association with a boom in commercial building. As a result, we are already noticing considerable pressure in the building industry. This has reached the point where, if my recollection is accurate, there are approximately two vacancies in the industry for each person offering for employment. Some shortages in various materials, including clay bricks and, I think, structural steel, have already developed. In these circumstances, I would think it good sense that rather than have scarcities force up the costs against home builders, in any general programme of restraint there should be some restraint also on the finance being made available for home construction.
The importance of home building is well recognized by the Government. We are proud of the fact that record home construction has occurred during our period of office, but we would also wish to guard against a situation in which the home builder, who will in many cases carry the burden of the debt on his home for the best part of a lifetime, is forced into excessive costs because of unwarranted scarcities.
– I ask the Prime Minister whether he can inform the House when it will be given an opportunity to discuss the report of the Constitutional Review Committee, which was tabled last year.
– I regret to say that 1 cannot answer the question offhand. However, just as soon as I am in a position to say something about that matter, I will.
– My question is directed to the Minister for External Affairs. Now that the Government of Malaya has declared the emergency there at an end, and since -Malaya is not a party to or covered by Seato, will he say what formal arrangements exist between Malaya and Australia concerning the Australian land and air forces based in Malaya?
– The honorable gentleman, of course, would not wish to have a rather cursory answer to that question, but would want the precise facts in relation to it. I will therefore see that they are prepared and will treat his question as being on the notice-paper for that purpose.
– My question is addressed to the Minister for Labour and National Service. First, can he tell the House whether there is any connexion between the unofficial strikes in the shipping industry in the United Kingdom and the dispute in the Australian shipping industry? Secondly, what action has the Australian Council of Trade Unions taken in the dispute? Thirdly, has the Government considered deregistration of the Seamen’s Union? ,
– I am not aware of any connexion between the strikes by the Seamen’s Union in the United Kingdom and the strikes that are now taking place in the Australian Seamen’s Union, but it is significant that when the Communists have a strike in one industry in some other part of the world we can expect similar action to be taken here. As to the second part of the question, yesterday the interstate disputes committee of the A.C.T.U. did order the seamen to take their dispute back to the Commonwealth Conciliation and Arbitration Commission, and I have every hops that the leaders of the Seamen’s Union will be wise enough to follow that instruction. I have not given consideration to the question of deregistration of the union, but I will have a look at the suggestion made by the honorable member.
– My question is directed to the Minister for Labour and National Service. I desire to know whether it is a fact that the Commonwealth Industrial Court recently fined the Boilermakers Society £5 on a contempt charge arising from a strike at the Clyde Engineering Company’s works. Is it a fact that the court declared the company’s attitude to be unreasonable and provocative? Will the Minister explain what kind of justice it is which declares one party to be responsible for the strike by its unreasonable an. I provocative action and then proceeds to fi.ic the innocent victim - in this case the Boilermakers Society? ;
– The court itself is a* judicial court and held a judicial inquiry, lt. decided that there was a contempt in’ respect of an order made by that court against the Boilermakers Society, and it fined the Boilermakers Society £5 for contempt. What the court also said was that, looking at the facts, it felt that there were certain mitigating circumstances and that there had been provocation on the part of the Clyde Engineering Company. Consequently, if the company had acted a little more reasonably, on the second day of the dispute perhaps the strike would not have continued. I think that the judgment of the court was a logical and sensible one. If the honorable gentleman imagines there is some strange novelty in it, I will be happy to let him have a copy of the judgment and I think he will find it worthwhile reading and a balanced and equitable judgment.
– Is the Minister for Labour and National Service aware that the penal clauses of the Arbitration Act have been invoked by the shipowners against the Seamen’s Union for refusing work? Is he also aware that the shipowners themselves; or the captain of the ship, fine a seaman two days’ pay for each day he refuses to work, in addition to the penalty under the penal clauses of the act, and that the Seamen’s Union feels that unless something can be done to alter this double penalty there is very little hope of peace in the industry?
– I do not agree with the conclusions of the honorable gentleman, as expressed in the last part of his question. As to the two questions that he has asked, I am well aware that the shipowners - not only the Australian National Line but also the combined steamship owners, the Broken Hill Proprietary Company Limited and other independent operators - have all approached the court for orders under sections 109 and 111 of the act. I am also aware that masters of ships are logging men for the days on which they do not man the ships. I personally feel, and I make this comment quite strongly, that the time is coming when the seamen themselves will realize that they are being led by the nose by the Communist leaders of the Seamen’s Union. If they want to stop these loggings and applications to the court, the remedy is in their own hands. They can do so only by getting rid of their Communist leaders, so that the industry may be run efficiently.
– My question is addressed to the Treasurer. Is it a fact that the credit policy recently announced by the Governor of the Reserve Bank will react adversely on primary producers, particularly wool-growers? In view of the poor income position of woolgrowers during the last two years, will the Treasurer agree that this is the wrong time to require these primary producers to reduce their overdrafts? I ask this question because strenuous efforts are sometimes made to compel producers to reduce working overdrafts at such times as the present, and the Government, and Reserve Bank credit policy generally, are often blamed.
– The recent request by the Reserve Bank of Australia for greater restraint in trading bank lending mentioned that a check over the gene: al range of lending was being sought and that banks had been asked to guard particularly against lending for speculative activities. In accordance with this request, some restraint on new lending to primary producers, including wool-growers, as well as to other prospective borrowers, must be expected. However, the banks are conscious of their traditional role as the major source of finance for the rural industries, and in particular of the need for sympathetic consideration in circumstances in which seasonal conditions are adverse, and there is no reason to expect that normal lending for ru al production will be specially affected. 1 have been informed by the Reserve Bank that new lending io rural industries has been running at high levels, and that some moderation would still leave a rate of new loans by trading banks tor rural pu-poser above that of a year or so ago. I also wish to correct the impression, evident in the question, that an actual reduction of bank overdrafts outstanding is being sought at present. The
Reserve Bank’s request was for a reduction in the rate of new lending; that is to say, in the rate at which banks are currently approving new or increased loans.
– My question, which i» addressed to the Prime Minister, relates to the Blue Streak project. I preface it by saying that when the Blue Streak project was discontinued as a military enterprise, the United Kingdom Government said it would undertake to examine the position to ascertain whether the project could be adapted for purposes of space research. Can the Prime Minister now say whether the United Kingdom Government has completed this examination of the Blue Streak project, and if so, what is the nature of the determination arrived at?
– I believe the United Kingdom Government has not yet completed its examination. However, it has proceeded far enough with the examination to be able to tell us that it proposes to send out to Australia, not only some expert officers, but also a senior Minister. The Minister will be the Right Honorable Peter Thonycroft, the newly appointed Minister for Aviation. The party will be in Australia fairly soon. It is not coming here, so far as I know, with cut and dried ideas. There will be exploratory talks. We have no commitments in relation to this matter, but we look forward very eagerly to hearing the results of the investigations so far and the nature of any proposals that may be made.
– My question is addressed to the Minister for Primary Industry: In view of the fact that within a week of the announcement by the British Government that the bank overdraft rate would be increased by 1 per cent., wool buyers in Australia, either of their own volition or on instructions from their principals in the United Kingdom, caused a lowering of the price of wool in Australia by 5 per cent., with disastrous effects on our national economy, will the Minister arrange a poll of wool-growers to ascertain their views on the implementation of a wool reserve plan or some other scheme whereby
Australia’s 90,000 wool-growers may sell as one unit and no longer be the victims of a few overseas buyers?
– If the honorable member for Lalor is referring, in the main, to the July wool sales, I remind him that this is the first occasion on which we have held wool sales in Australia over the entire twelve months of the year, and that the wool submitted for auction in July was not of the same high standard as that offered in the previous months. Some of the finer classes were withheld because the sales were an experiment. Consequently, the fall in prices at the July sales was not necessarily the result of ganging up by buyers. I remind the honorable member that countries other than the United Kingdom are regular buyers of our wool at auction. The honorable member asks whether the Government is prepared to institute a poll on a scheme for the control of wool prices. I point out that it is necessary to have a scheme before one can be submitted to the growers. Up to date, the industry has not been able to indicate that it supports any particular scheme, but when it does so I will certainly give the scheme consideration.
– I preface a question to the Treasurer by saying that in the woolgrowing district which I represent in New South Wales there is grave concern over what people believe to be- a failure fully to implement the scheme for the institution of the Commonwealth Development Bank. Can the Treasurer inform the House whether that bank is operating ? How many applications have been received and dealt with by the bank? What is the modus operandi for a would-be borrower to get in touch with the bank and its officers?
– I can assure the honorable member for New England that, not only is the Development Bank operating, but it is operating very vigorously. I believe that the rate of lending has been in excess of that of the counterpart of the bank which existed prior to the recent reorganization of the Commonwealth Bank group. The honorable member has asked for a detailed statement on various aspects of the bank’s operation. I shall see that this is supplied to him and to any other honorable member who might care to obtain a copy from my office.
– Will the Treasurer assure the House that, in the implementation of the tighter credit policy announced by the Reserve Bank of Australia recently, municipal and semi-government activities will not be curbed? Is the Treasurer aware that there is a large back-lag of work in these community enterprises and that any further diminution in their operation will be detrimental to the public interest?
– I pointed out that the directive of the Reserve Bank was aimed at the rate of new lending. Naturally, when there is a general restraint on new lending, all sections of Australian activity are likely to feel some effect from it. That is part of the purpose of the operation. But the Government is well aware of the importance of the work being carried out by municipal bodies. We have shown that in a practical way at meetings of the Australian Loan Council, both this year and last year, when we indicated our willingness to agree to a higher rate of borrowing on the part of local government authorities for their important purposes.
– I direct a question to the Minister for Trade. Is the Minister aware that certain Australian textile manufacturers have used for many years trade marks such as a sheep or a ram’s head on their products, and are now continuing to use those trade marks on synthetics? In view of the fact that the public could be misled into thinking that they were buying wool, will the Minister look into this matter and see whether it is not possible to reserve trade marks denoting sheep for pure wool goods only?
– I was not aware of the practice to which the honorable member has referred. I shall have inquiries made to ascertain within whose ministerial jurisdiction any relevant action may lie. The labelling of textiles, to the best of my recollection, comes under the administration of the Minister for Customs and Excise, whereas any infringement of the copyright law might concern the Attorney-General. However, I shall look into the substance of the matter to which the honorable member has referred.
– My question is directed to the Minister for the Interior. Is any action in progress or contemplated to increase the membership of the Australian Capital Territory Advisory Council or to widen the powers of that body? Will the Minister inform the House whether steps are being taken to provide a measure of local self-government for the people of the Australian Capital Territory?
– As to the first part of the honorable member’s question, no consideration is being given at present to increasing the membership of the Australian Capital Territory Advisory Council. Neither has any consideration been given for a long time, when these matters have been under general review, to the kind of authority that the Advisory Council should exercise. No specific details are being examined actively at present.
– 1 direct a question to the Prime Minister in his capacity as Minister for External Affairs. In view of the dramatic events that have occurred in the international field since the Parliament went into recess, and as the right honorable gentleman has attended important international conferences in the meantime, will he prepare an appreciation of the international situation as it is to-day and deliver it to this House in the form of a statement? Further, will the right honorable gentleman give the House an opportunity to debate the statement during the current sessional period?
– My friend invites me to paint on a very large canvas. I do intend to select a suitably sized piece of canvas and to paint on it as well as I can during the present session.
– Will the Treasurer make a rise in social service payments retrospective to the Budget announcement instead of holding up pensioners’ benefit for approximately three months in this cold weather? If what I have asked for can be arranged for judges, members of Parliament and the Public Service, why not treat the pensioners’ rise of a few shillings in a similar manner?
– I ask the honorable gentleman to restrain his impatience a few hours longer. The Government’s decision on Budget matters will be disclosed at 8 o’clock to-night.
– My question is directed to the Prime Minister. Has he given consideration to the proposal to institute an inquiry into Australian tariffs?
– I have given a good deal of consideration to this proposal. There are various rather complex aspects of the matter and I have had some discussions with my colleagues. I propose to renew those discussions when I have clarified the position a little further in my own mind.
– Does the Treasurer agree that the recent request of the Reserve Bank of Australia that the private trading banks exercise restraint in lending arises out of a fear felt by the private banks that hirepurchase companies in Australia have grown too rich and too strong too quickly? Does the Treasurer agree that the restraint which has been requested may cause a slight recession which, in turn, may lead to a large number of repossessions of goods obtained on hire purchase, to the great embarrassment of the hire-purchase companies?
– The honorable member has asked me first to comment on what he states is a recent request, and has then invited me to comment at some length on the likely economic repercussions of the request. At the outset I point out that the request of the Reserve Bank was not of very recent origin. It was made as long ago as May of this year but it has been published only recently in the terms to which the honorable member has directed notice. I do not think it would be within the scope of the Standing Orders, and certainly it would not be desirable at a time when the House will have ample opportunity to discuss these economic questions at length during the Budget debate, for me to embark on such a discussion at present. I ask the honorable member to reserve consideration of this matter until a more general outline of the Government’s position and its analysis of the economic situation are given this evening. Then, no doubt, we shall have the benefit of his own views as the debate proceeds.
– Can the PostmasterGeneral say how his department is progressing with its consideration of the request I made for investigation into the question of adjusting certain zones which are covered by the recently introduced Elsa scheme, with a view to improving the facilities for a few unfortunate subscribers?
– I stated on severaloccasions during the previous sittings that matters such as those to which the honorable member has referred would receive consideration and that an announcement would be made of the result of that consideration. To date we have received approximately 200 representations regarding adjustments to the scheme. This does not mean that representations have been made regarding 200 separate matters, but that about 200 representations have been made regarding alleged anomalies. Those representations are receiving consideration. It wil] be necessary to arrange with the Attorney-General’s Department for an alteration to the regulations before any adjustments can be made.
We have found that the submissions’ fall more or less into three groups. The first is the group in which the claim that an anomaly exists cannot be sustained. The second is the group in which clearly there is need for some investigation, and the third is the group in which it is obvious immediately that there is an anomaly. The third group will receive attention first and will, I should think, be dealt with by regulation in about October next.
– In view of the situation confronting the pea-growers and associated factories in Tasmania and Victoria because of the importation of peas from the United States of America, will the Minister for Trade state what action the Government intends to take to meet the situation? The Minister will recall that I made representations to him and that he undertook to investigate the position and to advise me later. ;
– The honorable member has made representations in this matter, as indeed have some other honorable members. When a member of Parliament or representatives of an industry make representations that serious damage may occur as a result of sudden importations, investigations are initiated. That has been done in this instance. I do not regard these investigations as having been concluded, but at present they indicate that imports from both New Zealand and the United States of America are intended to make up for a short-fall in Australian production of peas for packaging mainly in semi-bulk form and in individual packages. As yet, frozen peas have not been imported in large quantities, whereas, on the other hand, consumption of this product in Australia has risen very sharply indeed. It amounted to about 4,000 tons in 1957-58, 4,500 tons the next year, and 8,000 tons last year, and the indications at present are that the ensuing year may show a consumption of 10,000 or 11,000 tons of frozen peas. My information - and I say that it is not final - is that in all cases those who are importing indicate that they do not intend to make further imports once adequate local supplies are available. Contracts with local growers are being made in respect of greater acreages and at higher prices than prevailed last year.
– My question is directed to the Minister for the Interior. Is it a fact that a number of Australianproduced films have received world recognition? Is the Minister aware of the recently announced Royal Society of Arts Commonwealth Film Award which will be presented to the film judged to make the greatest contribution to the progress of either public health o- food production in the Commonwealth country of its origin? Will the honorable gentleman, through the Film Division of the News and Information Bureau, encourage Australian entries for this award?
– I am aware that the Film Division of the News and Information bureau has won several international awards for films of the documentary type. Trie honorable member’s suggestion will be conveyed to the bureau, and 1 shall advise him of the decision that is reached.
– I ask the Prime Minister a question. Does the right honorable gentleman recall that on 31st March last he informed the House that we did not know sufficient of the facts relating to events in South Africa to come to any conclusions about those events? I now ask whether the Prime Minister is aware that many people in Australia are rather anxious to have his conclusions on this matter. Since he has had discussions overseas with representatives of South Africa and other countries, will he make a statement to the House as soon as possible and inform the House of his conclusions about the situation, particularly about the South African policy of apartheid?
– I stated quite clearly in the House some time ago that it was no part of our function to sit in judgment on the domestic policies of other countries, and in particular of another country of the British Commonwealth. I see no reason to alter that view.
– My question is directed to the Minister for Labour and National Service. In view of the controversy about the new seamen’s award which was made recently, will the Minister inform the House what was the comparison, in terms of cash, between the old award and the new one? Can he say when the seamen are likely to man ships continuously at week-ends?
– I think it is a fair generalization to say that it is not practicable to compare the old and the new awards of Mr. Justice Foster, because under the new award you have to take into con sideration the increased allowance of leave with pay, a 3 1 per cent, increase in margins, and other allowances that are granted to the seamen. However, what I could say, Sir, in quite specific terms, is that Mr. Justice Foster has pointed out that the average wages of seamen under the new award will be between £28 and £29 a week. Some seamen earn £60 a week, many more earn £50 a week and many more earn between £40 and £50 a week. 1 can say that if the leaders of the seamen - not the seamen themselves, because I am quite sure that many members of the Seamen’s Union are losing confidence in their leaders - are in any doubt about this matter they have the remedy open to them. That is, they can take their problem to the full Arbitration Commission.
As to the second part of the honorable gentleman’s question, 1 have some hopes that the leaders of the Seamen’s Union will obey the direction of the Australian Council of Trade Unions. I repeat that if they do not they will quickly lose the confidence of the seamen themselves, because all the evidence coming to me shows that not only are the s:amen becoming discontented with the leaders of the Seamen’s Union, but so too is a very large section of the A.C.T.U. If Mr. Elliott V. Elliott and Mr. Brennan continue their fun and games - that was the term that Elliott himself used - I repeat that if they continue their Communist fun and games for too long they will find that they have no Seamen’s Union to play any more fun and games with.
– My question is to the Minister for Primary Industry. As there appears to be some confusion and concern in the pastoral industry as to who, in the final analysis, pays the levy of 2s. a head on slaughtered cattle under the Cattle Slaughter Levy Act, will the Minister state in final and definite terms where and upon whom this responsibility rests?
– The act lays down that the person owning the beast at the time of slaughter pays the levy.
– I ask the Minister foi Primary Industry whether he has received representations from growers’ organizations for the guarantee, by the Commonwealth Government, of a loan from the Commonwealth Bank for the construction of additional storage space for export wheat. If he has received requests of this nature can he say when they will be considered by the Government?
– I cannot recall any requests from organizations for financial assistance for the erection of such storage, nor would it be their function to make such requests direct to me, because the responsible body with whom I, as Minister, would deal, is the Australian Wheat Board. After all, the Commonwealth Government has made it clear that in its view it is a traditional function of the States to provide the money for the erection of wheat storage facilities.
Private Debenture Issue
– My question is directed to the Treasurer. Is the right honorable gentleman aware that notices inviting subscriptions to the Hooker Finance Company Limited’s first debenture issue are being exhibited in branches of the Commonwealth Bank? If he is aware of this fact, does the Treasurer agree that seeking funds for a private organization represents a departure from the long established practice of the bank? Does he agree that such raisings of funds for a private organization conflict with the welfare and the well-being of public organizations which are at present urgently in need of finance? I ask the Treasurer also: Has he approved of what is taking place and, if he does approve of it, will he tell the House why he gives special and favoured treatment to the Hooker organization as against other private finance houses? Is one to accept this as being the outcome of the activities of the former Treasurer in his position as head of one of the Hooker organizations?
– I immediately repudiate the quite offensive suggestion contained in the conclusion of the honorable gentleman’s question. It is unwarranted, it is baseless, and it is quite unworthy of him. As far as the honorable gentleman’s question generally is concerned, I certainly have no knowledge of any branch of the Commonwealth Bank being used in the manner he has mentioned. I would be surprised to learn that it is so, and I invite him to give me any facts that would indicate that it is so. If he does that, I undertake to communicate with the chairman of the board of directors of the bank and ascertain for myself what the policy is, and the basis for any such policy. Speaking for myself, I would find it very difficult to believe that there has been any such occurrence as he has mentioned.
The following bills were returned from the Senate: -
Without amendment -
Appropriation (Works and Services) Bill (No. 2) 1959-60.
Supply (Works and Services) Bill 1960-61.
Without requests -
Appropriation Bill (No. 2) 1959-60 [No. 2].
Supply Bill 1960-61.
Message received from the Senate intimating that it had agreed to the amendments made by the House of Representatives in this bill.
Assent to the following bills reported: -
Appropriation Bill (No. 2) 1959-60.
Appropriation (Works and Services) Bill (No. 2). 1959-60.
Parliamentary Proceedings Broadcasting Bill 1960.
Broadcasting and Television Bill 1960.
Supply Bill 1960-61.
Supply (Works and Services) Bill 1960-61.
Air Navigation Bill 1960.
Airports (Surface Traffic) Bill 1960.
Motion (by Mr. McEwen) - by leave - agreed to -
That leave be given to bring in a bill for an act to amend the Tariff Board Act 1921-1958.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This bill is one of three which the Government is bringing forward to adapt Australia’s tariff-making machinery to meet the problems which changing world trading and economic conditions raise for Australian industry. The bills are closely related and it would probably suit the convenience of the House if I were to give a general outline of the total proposals and the Government’s reasons for recommending them to the Parliament.
The traditional policy of Government in Australia is that the levels of protective tariffs should not be determined without the issues involved having been examined and reported on by the Tariff Board. Australia has progressed tremendously under this long-standing and well-accepted policy. It is a tribute to the foresight of those who first introduced it that, after so many years and despite very considerable changes in the industrial scene both in Australia and abroad, the tariff board system of tariffmaking needs only minor modifications to continue to function effectively in presentday conditions.
Our aspirations as a nation for a much greater population with high living standards are directly related to the development of industry and factory employment. Our migration policy and the necessity of preserving our employment base from which to absorb a greatly increased work force are fundamental to Australia’s national objectives. At the same time so large a section of the community - indeed, the economy as a whole - is so dependent on exports that we cannot ever be indifferent to any factor which affects our costs. Our policies of industrialization, including our policy on tariff protection, have to be operated with full consciousness of the fact that tariffs themselves can increase costs, although it is demonstrable that they do not always do so.
The proposals which I will outline will reveal the Government’s adherence to the principles which have governed our tariff policy for over a generation. The action of the Government in introducing the proposals at this time is related to discussions to take place shortly under two of our most important trade agreements. However, the need for what is proposed is real, irrespective of these two trade agreements.
In the near future there will occur one of the periodic re-negotiations of tariff concessions under the General Agreement on Tariffs and Trad? In these important negotiations between the contracting parties to that agreement, we secure trading benefits and, in the jargon, pay for those benefits by entering into commitments ourselves. These commitments commonly take the form of agreeing to bind - that is, not to increase above specified levels - rates of import duty applicable to listed commodities. This is a procedure of great mutual advantage to member countries, but it has always been recognized in Gatt itself that a bound rate of duty could transpire to be inadequate for the protection of an industry in the importing country.
The rules of Gatt therefore provide that, in certain circumstances, a country can rapidly unbind a bound rate of duty with a view to according increased protection to one of its industries. But freedom under Gatt has little significance unless our internal procedures allow us to take advantage of that freedom in appropriate circumstances. And, for reasons which I will indicate later, our internal procedures are not completely adequate in to-day’s conditions.
More importantly and even more urgently, the whole question of our future trade relations with Japan has to be reviewed in negotiations with the Japanese Government due to commence shortly. It is essential that the Government take now whatever action may be necessary to equip itself with the legislative safeguards necessary to enable it to reach an agreement with the Japanese Government which will be satisfactory to all Australian interests - exporting, importing and manufacturing - and advantageous to the country as a whole.
These explanations, as I mentioned before, relate to the present timing of the legislation. The legislation is in no sense necessary only because of these impending trade negotiations. The modifications to our system of tariff-making which the bills propose are procedural, not fundamental. They are designed to permit the Government to take more speedy tariff action following Tariff Board reports. They also enable the machinery of both the Tariff Board and the Government to deal with problems necessitating short-term protection to industry before trie board can conduct itaccustomed comprehensive inquiry and make its report to the Government and to Parliament in the traditional manner.
It has become all the more important to remedy any inadequacies in the present tariff -making machinery now that import restrictions have been removed. There is the possibility that some industries may have to meet sudden unforeseeable competition from overseas suppliers no longer held back from the Australian market by import restrictions. Australia’s historic procedures for making tariffs are deliberately arranged so as to take some time. The potential consequences to all sections of the community of imposing standing tariffs on imports, whether at higher rates or at lower rates, are so important that it would be wrong to act hastily in these matters. For this reason, even with all delays eliminated, a considerable time must elapse before the Tariff Board, having advertised and given all interested parties, both Australian and overseas, an opportunity to prepare evidence, can conduct its open public inquiry and prepare its report, and before the Government, having received the report, can take action to change the tariff.
The issues involved affect the livelihood and employment of citizens and give rise to the same kind of considerations that have made it a fundamental principle of our parliamentary procedure, as it is in other democratic systems of government, that legislation cannot be enacted hastily and without full and deliberate consideration. Manufacturers often criticize the slowness of our tariff-making machinery. Such criticisms tend to overlook the fact that tariff-making is not necessarily tariff-increasing. In fact, it is to be expected that, as Australian industries gain in efficiency, more and more they will need less protection and their tariffs could be reduced without detriment to themselves and with benefit to the country as a whole. Manufacturers would themselves be the first to see the dangers if tariff-making generally were so organized that whilst permitting quick increases in duties it also permitted ‘hasty duty reductions.
None of this is to overlook that in a fastmoving world, circumstances can arise in which action must be taken quickly if Australian industry is nol to suffer quite serious damage whilst its case for tariff protection is being examined in accordance with the traditional existing and justifiable procedures.
This is one of the hard facts of economic life in to-day’s conditions of rapid change in technology and international trading. It is a fact recognized by the major trading nations of the world who. as I have already indicated, have written into the General Agreement on Tariffs and Trade a special article which allows a member country to suspend its obligations to its trading partners temporarily - I ask honorable members to note the word “ temporarily “ - if this is necessary to provide short-term protection to one of its industries in critical circumstances. Similar provisions were incorporated in a special article in our trade agreement with Japan.
On three or four occasions in the last few years we have had to avail ourselves of our rights under these special provisions to give short-term protection to an Australian industry whilst the Tariff Board examined its case for increased tariff protection. Such temporary protection of an industry has been contemplated in Gatt as being by temporary duty or by quantitative restriction of imports as judged to be best. Because of the existence of import licensing, we have been able on those occasions to use licensing measures as the means of providing provisional assistance to industry pending the outcome of the Tariff Board inquiries and without prejudice in any way to whatever final decisions might be made by the board and the Government. It should not be thought that the Government could at any time and on short notice introduce import licensing to protect industries with any likelihood that its licensing arrangements could operate with equity. Usually import licensing can only operate with equity with an elaborate background of records of imports by individual importers and it can only be administered by an existing organization set up for the purpose. In the case of a commodity which is imported by only a few importers, as is not infrequently the case with raw materials, it may be feasible and indeed it may be desirable to give short-term protection by restrictive licensing, rather than by a temporary duty increase, but for the reasons I have just given it is not possible in the broad context of trade in most commodities to apply licensing restrictions to accord temporary protection to an industry.
In the future, therefore, the occasions when it will be practicable and in the best public interest to use import controls to meet the kind of situation provided for in Article XIX of the General Agreement on Tariffs and Trade will, I would expect, be quite rare. In order that industry can be reasonably assured of necessary protection, we need a supplementary means of affording short-term assistance to an industry which can show that the time necessarily taken by a full Tariff Board inquiry would place it in jeopardy. The measures now brought forward by the Government provide this supplementary means. They provide a mechanism, within our traditional tariff-making machinery, by which we can do those things which Article XIX of Gatt and our trade agreement with Japan are designed to permit us to do.
The Government’s proposals are contained in three bills, but the basic objective of those bills can be stated quite briefly. It is that the Government should, in appropriate circumstances, be able to provide interim or temporary and time-limited tariff assistance pending inquiry and report by the Tariff Board and Government consideration of the board’s recommendations. At present, duties can be imposed or changed only when this House is in session. Adherence to this procedure would mean that the Government could not take action to apply temporary duties except at times when the House was in session. This would be so no matter how serious might be the consequences of any delay in according short-term protection for the threatened or injured local industry, pending the necessarily lengthy normal inquiry and report by the Tariff Board, lt is proposed therefore that, subject to a number of important safeguards, short-term assistance be accorded industry where shown necessary, by a preliminary Tariff Board inquiry and that the Government be enabled to accord such temporary assistance if the House is in recess at the relevant time.
A comparable point arises in connexion with taking action on the normal reports of the Tariff Board. Such a report made after full inquiry may say that the board is quite satisfied that the industry in question is worthy of and needs protection or increased protection against imports.
– Why cannot the House be called into session?
– It would probably be inconvenient to members, and such action is not essential to protect the interests involved. Experience is that, in the very great majority of cases, such a finding would be acceptable to the Government and the Parliament. But, under present circumstances, if such a finding is received and adopted by the Government just after the House has gone into recess, nothing can be done to give the industry the protection it needs until the House re-assembles. This is a delay which the Government considers to be undesirable and which could be unnecessarily damaging to industry and employment and one which in the opinion of the Government should be avoided, lt believes that an industry, which has, in a comprehensive inquiry, demonstrated to the satisfaction of the Tariff Board and the Government that it is entitled to tariff protection under traditional policies and that it needs such protection, should not be deprived of that protection for a further period if it is unlucky enough to have the board’s report come forward when the House is in recess.
The Government therefore proposes a procedure under which, by the publication of a notice in the “ Commonwealth Gazette “, it can give effect to its decisions on recommendations from the Tariff Board when the House is not sitting. At the same time, and to preserve completely the prerogatives of the Parliament in tariff-making, a clause in the bill will provide that any tariff changes introduced when the House is not in session must be introduced as tariff proposals in the usual way within seven sitting days of the House meeting. The Parliament will thus have preserved the traditional opportunity to debate any changes in duties introduced when it is not in session. This will be the case irrespective of whether the new duties are temporary duties, intended to operate only until the Tariff Board can make a final report, or are normal duties introduced following inquiry and final report by the board.
Provision for tariffs to be changed when the House is not in session is in conformity with normal tariff-making practice in other countries. As a matter of interest, United Kingdom tariffs are varied by the device of a Treasury Order in Council, subject to any subsequent disallowance by Parliament. The procedure in the United States of America permits the President to vary duties, with a provision that the matter may be reviewed by the Congress. And in New Zealand the tariff can be changed by an Order in Council of the Governor-Genera) although, if the change is made when the Parliament is not in session, it must be submitted to the Parliament within fifteen sitting days after the Parliament next meets. The Tariff Board Bill will require that the question of whether or not temporary assistance should be accorded an industry must be referred to the Tariff Board under a new section of the act before any action to change duties can be taken by the Government. That, of course, does not involve delay.
In these cases where application is made for temporary assistance for industry, celerity in decision, and in action, where shown to be necessary, is essential. It is proposed, therefore, that a deputy chairman of the Tariff Board will conduct a preliminary inquiry on the question of whether action should be taken to “hold the position” until a full inquiry is conducted by the board itself under its normal procedures. This is in line with the practice adopted in the last three years of referring to an independent authority, Mr. M. E. McCarthy, a former chairman of the Tariff Board, applications for special measures under the Japanese Trade Agreement. Provision is also made that the deputy chairman will be required to report to the Minister within a stipulated period of 30 days on whether the circumstances of the applicant industry are such as to warrant the accord of temporary assistance.
The reports made under this section will be tabled in the Parliament. Obviously they will not be detailed reports. The deputy chairman conducting the inquiry will simply be asked to say whether, on the evidence he has obtained during his inquiry, it is his view that having regard both to the public interest and the problems of the industryconcerned, temporary assistance should or should not be accorded. If he reports that assistance should be accorded by the imposition of temporary duties, he will also recommend appropriate rates of duty.
– He does not have to have the authority of the chairman?
– No, he is completely independent; and his report will be tabled in the Parliament.
An amendment to the Tariff Board Act will stipulate that the matter of protection for the industry concerned must also be referred to the board for full inquiry and report in the normal way before any temporary duties are imposed. In other words, if it is intended to impose a temporary duty, the statute will require that the Government, before imposing the temporary duty, must refer the matter in the normal way to the Tariff Board. The amendment will also require that such duties, which will be clearly identified in the tariff as temporary duties, shall lapse automatically three months after the Government has received the final report of the Tariff Board on its normal inquiry, if the Government has not, within that period, taken action to give effect to its decision on the board’s report.
This is the safeguard: First, the independent Deputy Chairman of the Tariff Board is required to make a report. He is required to say whether holding action ought to be taken in respect of the industry. If this holding action involves a duty, he is required to state the rate of duty. The Government is not able to proclaim a higher rate of duty than that recommended by the board. Before the Government can act in this way it must make the normal reference of the issue to the Tariff Board. The Government must, at the first opportunity, table the report of the deputy chairman. The Government must, within seven days of the Parliament being in session, table the temporary duties as tariff proposals. This puts the Parliament in charge of the situation.
That is the order of events. A chain of events is set in motion, requiring the Tariff Board in due course to make a normal recommendation to the Government and to the Parliament, and as a guarantee that the Government cannot refrain from acting on it, the statute will provide that the temporary duties shall automatically lapse three months after the Government is in possession of the final report of the Tariff Board. This is the sequence of safeguarding provisions.
There is no intention to introduce temporary duties lightly. Requests for temporary duties will not be referred to the Tariff Board under the new section automatically. Indeed, an industry seeking such duties will have to demonstrate that, if holding action is not taken, it would suffer serious damage before the Government could receive and act upon a normal report by the board. By serious damage is meant damage which it would be difficult to repair at a later date should the board, as a result of its full inquiry, recommend that the industry be accorded increased protection.
Moreover, the threat to the local industry from imports must be such that the industry cannot, by adjusting its own operations, itself take action to sustain its structure and to preserve its employment and production. Downward pressure on profits and prices brought about by import competition is not necessarily synonymous with serious damage. Indeed, in certain circumstances and within limits, such pressures must undoubtedly contribute to the efficiency of industry and to the advantage of the country as a whole.
Before the Tariff Board is asked to advise whether temporary assistance is warranted, an industry will have to put forward a strong case that there are sufficient grounds for seeking the board’s advice. The industry, not just isolated producers, will be required to show, prima facie, that it is being seriously damaged by imports or that serious damage is imminent. Vague fears or conjecture will not constitute adequate grounds. Nor will the quoting of low prices for overseas goods without actual evidence of damage.
The Government will do what it can to assist industry establish the facts of any particular situation. It will do this chiefly by extending the panel system originally set up as part of the machinery established to administer the protective provisions written into the trade agreement with Japan. Members will recall that, under this system, manufacturers who considered they were vulnerable to damaging competition from Japan following the conclusion of the trade agreement, were invited to set up representative panels which could speak for their industry as a whole in discussions with the Government on problems which might arise from imports. Every industry had the right to set up such a panel and, in fact, some 40 have been established. The Government will preserve this panel system, to operate where necessary to cover problems arising from competition from imports from whatever source.
Discussions under the panel system will ensure that the Government is made aware of industry’s problems and will provide a system for the exchange of information relevant to the position in particular industries. As has been the practice with panels set up under the trade agreement with Japan, the Government will help industry by supplying statistics and other relevant information which is available to it.
When the decision was taken in February to remove the great bulk of our import restrictions, it was realized that in the absence of the information previously derived from licensing statistics we would need more prompt statistics of actual imports. Arrangements were made for the Commonwealth Statistician to prepare preliminary tabulations of actual imports* at weekly intervals. These tabulations are supplied to the Department of Trade, which has been instructed to supply extracts relating to particular commodities to representative industry panels interested in those commodities. These extracts can be made available about a fortnight after the close of the week to which they relate.
I now come to procedural arrangements. The fact that the bill provides that these questions be reported upon independently by a deputy chairman of the Tariff Board does not mean that one of these members will be pre-judging the results of the normal inquiry. Essentially the deputy chairman will examine only whether immediate holding action is necessary to protect the local industry from serious damage until such time as the full board has time to examine whether the industry is entitled to protection and the degree of protection which might be justified. To avoid any fears of bias in the full inquiry, the bill provides that the deputy chairman who examines the question of interim assistance shall not be a member of the board for the purposes of the normal inquiry and report.
The Government also proposes to make certain changes in the structure of the board to enable it to carry out this new function without slowing down its normal work. The bill therefore provides for a board of eight members, including two deputy chairmen, instead of seven members with one deputy chairman which is the present composition of the board. The opportunity is also being taken to make certain other minor amendments to the Tariff Board Act.
These three bills are somewhat complicated technically, and I have thought it preferable to outline their main features rather than to deal with the individual clauses which I will be prepared to do, of course, in the committee stage. They are designed to permit more speedy action in affording tariff assistance where warranted and yet adhere to the basic principles and procedures of Australian tariff policy under which the Tariff Board is the advisory authority to the Government and the Parliament. To enable faster action when this is necessary, while still maintaining the traditional concepts and procedures, the Government has given much attention to the safeguards to be incorporated in the legislation.
Since 1921, when the Tariff Board, as the investigatory and advisory authority, was first established, there have been immense changes in overseas industries and the competitive status of trading nations. Nevertheless, there has been tremendous progress in Australian industrialization. This must indeed be gratifying to those responsible for the original concept. It must be gratifying also that the system has stood the test of time so well that, despite the great changes in the industrial scene, both in Australia and overseas, our present-day requirements can be met with only minor modifications of the Tariff Board system to adapt it to the changing tempo of to-day.
As a people we have cast ourselves for the role of a strong nation with vigorous primary and secondary industries and a population which enjoys high living standards. This means growth and diversifica-. tion of manufacturing and large investments in industry. Millions of people are now dependent for their jobs on a reliable, but not excessive, system of tariff protection. One of the revelations of the last decade has been the extent to which our primary industries find their best market in supply ing the needs of the industrial work force of Australia and the extent to which our great manufacturing industries are dependent upon primary industry, both as a customer for their factory products and as the earner of overseas exchange on which Australian manufacturing industry is so dependent.
These measures are designed to strengthen our ability to continue to be able to afford effective and reasonable tariff protection to economic and efficient industries. Without these modifications our industrial stability may well be impaired by lack of security against sudden, severe and damaging increases in competition from imports.
This question of protection is ordinarily thought of as one relating only to manufacturing industry. However, in these days, primary industry is by no means disinterested. Important primary industries, such as sugar, tobacco and cotton growing have developed under various systems of protection and at the present time quite a number of primary industries as, for example, the vegetable oil industry, are very interested in protection. There is no narrow interest under consideration in this legislation.
But the issues involved in tariff matters are wider than the relatively straightforward question of whether a particular primary or secondary industry needs protection if it is to compete with imports. For the foreseeable future, Australia must continue to earn its overseas funds principally from exports of primary products. In the interests of an overall stable economy, we can never afford to be indifferent to the cost consequences of reckless or unscientific procedures in tariff making. Against this, the tariff board system has been a well-tried bulwark.
For this reason the Government has been careful to ensure that its proposals to me;t to-day’s changing circumstances adhere entirely to the Tariff Board system. The bills are in the nature of an evolution of that system of tariff making. The powers being sought in the bills now before the House will enable adequate protection to be accorded to economic and efficient industries in to-day’s conditions. I commend this bill to the House.
Debate (on motion by Mr. Pollard) adjourned.
Motion (by Mr. McEwen) - by leave - agreed to -
That leave be given to bring in a bill for an act to amend the Customs Act 1901-1959.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This is the second of the three measures to which I referred when introducing the Tariff Board Bill. It is complementary to that bill and provides for the collection of customs duties introduced at times when this House is not sitting.
As already indicated, the proposed amendment to the Customs Act will require that a tariff proposal covering the new duties be introduced in the usual manner within seven sitting days after the House next meets. The prerogatives of the Parliament in relation to the imposition of customs duties will thus be preserved. I commend this bill to honorable members.
Debate (on motion by Mr. Ward) adjourned.
Motion (by Mr. McEwen) - by leave - agreed to -
That leave be given to bring in a bill for an act relating to duties of customs.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This bill is also complementary to the Tariff Board Bill which was introduced earlier. It deals with temporary duties.
As I have already explained, temporary duties will be introduced only where such action is necessary to prevent serious damage to a local industry whilst its case for tariff protection or increased tariff protection is being examined by the Tariff Board. Because temporary duties are intended merely to hold the position until the board’s report is received and considered by the Government, the main provision of this bill is one which will require that tem porary duties shall cease to be collected three months after the board has submitted its final report to the Minister.
I commend the bill to honorable members. I suggest that, as the three bills which I have introduced are cognate measures, when the debate on the first measure is resumed the House may consider having a general second-reading debate covering the three bills.
– The Opposition will consider the request.
Debate (on motion by Mr. Ward) adjourned.
– by leave - Now that the coroner has completed his inquiries and announced his findings in regard to the accident at the Rip in Victoria in February, 1960, involving personnel of No. 2 Commando Company, I am able to amplify my brief statement earlier in the year in which I expressed my deepest sympathy to the relatives of the bereaved, thanked all those who had helped so ably in the rescue operations and promised the very fullest of inquiries into this tragic occurrence.
No. 2 Commando Company was carrying out its annual camp at Lonsdale Bight between 6th and 21st February, 1960. As a culmination of earlier training, an exercise in raiding techniques was planned involving an across-water approach and a raid on an “ enemy “ target. The party comprised 68 officers and men carried in canoes and inflatable power driven boats and accompanied by two ducks, a workboat and a tug for control and safety purposes.
In the event, the conditions encountered during the attempted water cr ossing were much more unfavorable than had been expected. It proved impossible to complete the exercise as planned. Notwithstanding strenuous efforts by the men of the unit themselves and able outside assistance, three menlost their lives. Warrant Officer G. Drakopoulous of the 2nd Commando Company and Private E. S. Meyer of No. 41 Amphibious Platoon R.A.A.S.C. were rescued by “ Akuna “ some hours after their duck sank but although artificial respiration was applied neither could be revived. Private R. S. Wood of No. 2 Commando Company was lost at sea when being taken on board “ Toscana “ from a Zodiac. His body has not been recovered and he must be presumed drowned.
Here, on behalf of the Government, of the Army, and personally as Minister for the Army, may I again express my deepest sympathy with the relatives of these men. They were members of an elite corps, training as volunteers to be ready to play their part in the defence of this country. That they should have lost their lives while so doing is a great tragedy.
There have been two full inquiries into this accident - one by a coroner’s court sitting at Geelong last week, and the other by an Army court of inquiry which was convened immediately following the tragedy. The Army court commenced its investigations the morning after the exercise took place and submitted its final report on 21st March. The court heard evidence on oath from 47 witnesses. This report, which is a most voluminous and searching document, was immediately made available to me as Minister and was studied carefully both by me and the Army authorities. 1 did not make any public statement at the time as it would have been improper to risk the possibility of prejudicing the proceedings at the impending coroner’s inquiry. Moreover, many of those who had given evidence before the Army court would undoubtedly be, and in fact were, called before the coroner’s court.
The coroner completed his hearing on Wednesday, 1st June. An announcement of his findings appeared in the press on Thursday morning, 2nd June, and the official report was received by me on Monday evening, 6th June. Although the findings have already been published in general terms, I think it appropriate at this stage to refer specifically in summary to the following points made by the coroner -
When the exercise commenced, it seemed that the weather was reasonably calm, but later in the evening the weather worsened quickly and in the Rip area the sea became very rough. In planning the operation and plotting the course to be followed, the Officer Commanding appeared to have studied the tides and fixed the time of departure at 6.15 p.m. as he expected slack water then and for some time after. He anticipated little effect from the tide on the first leg of the journey. The tide, however, appeared to have run at a much greater rate than he had anticipated and the canoes were unable to make headway. This may have been due to the fact that the ebb tide commenced running sooner than expected, but the Officer Commanding failed to pay sufficient regard to the possibility of such a variation and it may be that he did noi give due regard to just how dangerous the Rip could be and that the utmost care should always be taken, particularly when small craft are being used in its vicinity. Nevertheless, it may still have been possible, by towing the canoes with the powered craft, to continue the exercise or, at least, for all craft to have returned to Lonsdale, but the position altered when the engines of a three-man Zodiac and the tug failed. The tide then swept some craft into the Rip and, owing to the heavy seas and the disablement of the tug, the heavier craft could not play their full role in assisting the smaller vessels. Prior to the start of the exercise, a warrant officer had misunderstood a message from the lighthouse and had not, therefore, accurately relayed it to his Officer Commanding. At 6.05 p.m., the lighthouse keeper had telephoned the unit to warn that care should be taken because of the ebb tide. It indicated a lack of care on the part of some other Army personnel that this information, which could have materially affected the Officer Commanding’s judgment as to whether to proceed with the exercise as planned, was not passed to him.
Apart from the failure to make due allowance for the tides, the exercise was properly planned.
An adequate number of safety craft was included and they were suitable for the projected exercise.
The men were properly equipped, particularly with life-jackets and all had received adequate training for the task.
In the result, the coroner recorded that the deaths of George Drakopoulous and Edward Stanley Meyer were due to misadventure.
At this stage, I should refer briefly to reasons why commando units were introduced into the Army. The two commando companies, one each in Sydney and Melbourne, were formed to meet an operational requirement for units trained in the techniques of small-scale airborne or amphibious raids deep into enemy territory. The aim is to train small, self-reliant teams capable of operating far from their base. Each commando must be a highly trained infantryman, a qualified parachutist, a small craft operator, and proficient in one or more skills such as cliff-scaling and demolitions. These are qualifications requiring courage and initiative - the coveted green beret is not lightly earned.
The responsibilities for training are clearly laid down by instructions promulgated by the Military Board. The main principles are that the commander of each unit, however small, shall be responsible for the training of his command. However, although he is made wholly responsible for all the training and efficiency of his command, his superiors must not forgo their functions of guidance and control. They are required to exercise a general and continuous supervision which, without curbing initiative or taking the form of interference, should ensure that the training shall be always on sound lines. The responsibilities for the training of 2 Commando Company are, therefore, vested in the Officer Commanding within the policy laid down by Army Head-quarters, and directly supervised by Head-quarters Southern Command.
The two officers commanding these two units are picked men, having regard to their all-round military capability and their suitability for this particular type of activity. Before taking up their appointments, they were given seven months training at special courses conducted by the Royal Marines in the United Kingdom. This covered all the aspects of commando training and culminated in participation in a three-week amphibious assault exercise with the 3rd Royal Marine Commando Brigade. In addition, each Officer Commanding was required to qualify as a parachute jumping instructor before undertaking his training in the United Kingdom.
I return now to the findings of the coroner. From these findings and the evidence given at his inquiry, and from my study of the Army court proceedings, it is clear that the general scheme of the exercise was properly conceived with due regard to the standard of training of those taking part and the adequacy of their equipment, taking into account the conditions expected to be met with during the exercise. The critical findings of the coroner are directed towards the actual plotting of the course and the failure to pass, or the confusion in passing, messages on the day of the exercise. I will deal first with the plotting of the course.
It is clear that the Officer Commanding of the unit made an error of judgment on this point in that he underestimated the effect of the unusually strong ebb tide and that the course he determined allowed no significant margin for delay or error. However, it is also apparent that the Officer
Commanding took due care and consulted the lighthouse keepers and studied the relevant information contained in tide tables before he determined the course on which the unit would sail. Competent mariners, experienced in the area, have commented that the selected course was reasonable. I should emphasize at this point that tuc course as planned would have taken the craft no nearer to the Rip than 3,000 yards
On the events of the day itself the coroner has referred to two messages from the lighthouse. The first of these war, found b-‘ the coroner to have been misunderstood by the recipient and consequently misrepresented to the Officer Commanding. The second was received in the unit but not relayed to the officer commanding because of pressure of activity and because the recipient took tV.? view that the terms cf the message added nothing to what the Officer Commanding already knew. It is, therefore, necessary to consider whether any of these actions justify disciplinary action under either the civil or military law. It will be known that the coroner has the right to direct that civil charges be preferred if he considers the evidence put before him warrants such action. In fact, although the coroner has referred to these actions in his findings, he has not seen fit to direct that civil charges be laid. The Army court also referred to the plotting of the course and to the failure to pass a message from the lighthouse. It concluded that the evidence did not justify charges under military law being brought against any officer or other rank responsible for or taking part in the exercise. After a close study of the court’s proceedings. the responsible Army officers concurred in this view. Moreover, I sought legal advice on the proceedings of that court and was informed that the evidence available was insufficient .0 justify charges under military law.
I have commented on this in some detail because, as I have repeatedly stated, my aim is to ensure that justice is done. It is my responsibility to ensure that justice is administered. impartially But it is vital to remember that in seeing to this it is just as important to ensure that no one is required to carry an unfair proportion of blame or punishment, as it is my responsibility to be satisfied that no one guilty of an offence goes unpunished. Members of the Army aTe subject to both military and civil law. I have already pointed out that the coroner has not seen fit to direct the laying of civil charges and that the findings of the Army court are in line with this, namely, that the evidence does not justify the laying of military charges.
I turn now to equipment. I (have examined reports on the age and state of all equipment used in the exercise. The ducks, the tug, the three-man Zodiacs and the life jackets had undergone inspection by the service responsible for their issue and repair, or by civil organizations, at the end of January, 1960. The canoes were engineer inspected on issue as new to the unit in 1957. Of the four ten-man Zodiacs in the exercise, which were received as new in stock into the Army in February, 1959, two were issued to the unit that month and two in April, 1959. The canoes and both types of Zodiacs are virtually unsinkable. In fact, all were recovered. The workboat had been slipped, inspected and necessary repairs carried out by a civil firm in October, 1959. The outboard engines of the three-man Zodiacs were inspected and test run on the date of issue to the unit - 18th September, 1959. These motors are known to be difficult to start, although normally reliable when running. For this reason, the Officer Commanding had ordered that any which proved difficult to start were to be withdrawn from the exercise and, in fact, this occurred in the case of one of these craft. Also, one engine did) fail after the start, but the crew and craft were recovered. The engine in the tug stopped due to a fuel blockage, which can happen to any engine. That it failed just after it was required to play its role as a safety craft was serious. The tug was carried out to sea and later was towed back inside the bay with its crew and other personnel who had been picked up.
Although considerable developments have taken place since the duck was first introduced, no suitable alternative is yet available. The duck, as used in the exercise, is still the current vehicle in the United Kingdom and the United States of America. It will be recalled that Army-manned ducks are being used constantly in ship-to-shore handling of supplies, and other work, under the most rigorous Antarctic conditions.
I think the foregoing facts refute any suggestion that the equipment was obsolete.
There were failures, but it was to provide for such contingencies that four safety craft were included.
One other aspect of the exercise which was the subject of comment by the Army court was the partial failure of the wireless communications provided to assist in the control of the exercise. The wireless sets used were of two types, both of which are in normal current use in the service. Satisfactory experiments had been made previously with the proposed wireless net, but the evidence indicates that during the exercise it did not function effectively. However, the unit had made arrangements for a system of signal flares to be used in an emergency. I feel that good communications are an important element of safety, and I have directed that in exercises where the failure of communications could prejudice safety, such exercises are not to proceed unless adequate communications are assured.
The coroner referred to the fact that all members of the unit acquitted themselves bravely when suddenly thrown into a situation of great danger. Again, the findings of the Army court confirmed this, and there can be no doubt that both officers and men displayed courage ot a high order which was entirely in keeping with the highest traditions of the service generally and of the commandos themselves.
I feel, at this stage, that 1 should again express my appreciation to all those who assisted in the rescue operations. The vigilance and initiative of the assistant lighthouse keeper on duty has already been commented on by the coroner. In addition, I would refer very appreciatively to the work and assistance rendered by the masters and crews of the pilot ship “ Akuna “, “Toscana”, “Age”, and Sinkiang “, also to the crew of the Queenscliff lifeboat, other members of the lighthouse staff, members of the Police Force stationed at Queenscliff, the owners and crew of the ferry boat ‘* Mari Ann “ and the shark boat “ Acquilla “, and others who in a variety of ways helped in the rescue operations.
In all my searching study and inquiry and in making this lengthy statement, it has been my purpose to review the facts objectively and impartially, to determine whether responsibility was properly exercised and to consider what action properly should be taken to provide additional safeguards to reduce even further the possibility of similar accidents in the future. A tragedy has occurred, and one that is deeply regretted by the Army and by me. It is, however, undeniable that there is by the nature of the role for which they are trained an element of risk in commando activities. This is why they are an 61ite corps. They know their standards have to be high. In war they accept great risks and it is only by long, arduous and realistic training in peace-time that in war they will be adequately prepared. It is also undeniable, for the reasons I have given earlier, that the modern Army is not complete without commando units.
I have given long personal consideration co what restrictions should be placed on this kind of training. That it must continue I am convinced, but the question is, what steps can be taken to minimize to the greatest extent practicable the risk without, at the same time, unduly inhibiting this vital training and the self-reliance which is an essential characteristic of commandos? I have reviewed in detail the training policy and the safety precautions, and I am satisfied that these are soundly based. I have, however, determined that major exercises of this nature will be held in future only on the personal authority of the G.O.C. of the command, whose responsibility it will be to ensure that they are necessary for the proper training of the unit and that the risk involved is within acceptable limits.
I lay on the table the following paper: -
Army training accident at the Rip, Port Phillip Bay - Ministerial statement, 16th August, 1960.
Motion (by Mr. Osborne) proposed -
That the paper be printed.
.- The Minister for the Army (Mr. Cramer) has contributed nothing to our knowledge of this event. Not one sentence of his statement adds one iota to the information that this House obtained long before this through other sources.
My first comment is that this is no way to treat the Parliament. The accident occurred on 17th February and the coroner’s finding was published on, I think, 8th or 9th June. The Minister issued a statement to the press at the same time, the Parlia ment having gone safely into recess. The Minister this afternoon has repeated that statement almost word for word. He has not given us any information which would help us to evaluate the suitability of the exercise, the suitability of the equipment used or the general conduct of the exercise as a whole.
The Opposition is not concerned with attacking the Army officers and personnel who were responsible for the immediate conduct of the exercise. We want to know how it is that this sort of thing can happen in the people’s army. For this is a people’s army. Most of the young men involved in the Rip exercise had come straight from civilian life to take part in it. They were asked to face the rigours of the Rip, in Victoria, with equipment which obviously was incapable of doing the job for which it was used. One has only to examine the Minister’s statement to see that the equipment used just does not cope with the problems posed by a piece of sea such as the Rip, and we can only conjecture that this equipment will not suffice to overcome any great difficulties if it is used on active service.
This afternoon, the Minister for the Army has given us only a re-hash of the findings of the coroner’s inquiry. The findings of that inquiry do not answer the questions asked in this House about the Army and its administration. The purpose of that inquiry was to see whether any blame was apportionable, and to decide whether charges could be laid against any one under the law of the land. Therefore, the findings of the coroner’s inquiry cannot answer our questions. The coroner himself used terms of great vagueness. In the Minister’s statement, we find the following expression used in reference to points made by the coroner: -
When the exercise commenced it seemed that the weather was reasonably calm . . .
Things are described as appearing to have occurred. We find the following: -
The tide, however, appeared to have run at a much greater rate . . . This may have been due . . .
The expressions “ may be “ and “ it may still have been “ are then used a little later. They are imprecise. The coroner’s job is to apportion blame, but not necessarily blame that would cause persons to be charged.
It is the Minister’s job to explain exactly why the equipment did not measure up to the job before it. and to tell us what steps he proposes to take to ensure that these things will not happen in- the future. We have heard no mention of any steps that he or the Government proposes to take. This is the Government responsible for the fiascos of H.M.A.S. “ Hobart “, national service training, the St. Mary’s ammunition filling factory and the Blue Streak missile. Therefore, we are not content with a simple statement by the Minister for the Army that he has read all the evidence given at the inquiries into the Rip disaster and that he is satisfied. He proposes to do nothing that will satisfy the needs of the nation in the future.
The Minister told us that he had received a voluminous report from the Army. He has read it. Why is it not available to us? Why is it not made available to the Parliament so that the Parliament can discuss the question properly? This is not a simple matter of the loss of three lives in an Army exercise. It is a matter of national comment. It immediately gave great concern to all whose sons serve in the forces, and it immediately commanded the attention of this Parliament. Question after question was directed at Ministers, but we did not get satisfactory answers. Therefore, we are completely dissatisfied with the way in which the Parliament has been treated in this matter. The Minister is able to come here armed with advice received from professionally trained people. He hides behind the voluminous reports with which he is armed and tries to stifle criticism from this side of the House I suppose that the only hope one has is to heed the instruction contained in the note at the end of the roneoed copy of the Minister’s statement, which is as follows: - (Lists A, B, C and D) Further Information Mr. C. A. Nicol, DPR (M2209) Home (7-1349)
Whether that indicates that Mr. Nicol prepared this statement for the Minister, I do not know. Does it mean that if one wants any information for this Parliament one must telephone some public servant? I do not know whether that is what it means, but the whole thing is completely unsatisfactory, looked at from our stand-point. The Minister and the Government generally are indictable for their failure to put the facts before the Parliament, to give to the Parliament the text of the report of the inquiry conducted by the Army, and to explain what steps the Government proposes to take to improve the Army’s equipment.
Let us examine for a moment the equipment position. I think the technical term used to describe the amphibious vehicles that took part in this Rip exercise is “trucks amphibious, 2±-ton, 1942”. The Minister has said that these vehicles are not obsolete and that it is nonsense to describe them as being obsolescent. Does the Minister ride in a 1942 model car or fly in a 1942 model aeroplane? Of course he does not. Does he suggest that there has been no advance in the design of amphibious vehicles in the last eighteen years? Such a suggestion would not be accurate. Surely it has been possible for the authorities to improve on what, after all, was the result of a crash programme in 1942 for the equipment of the Allied forces. Yet, with the Army duck, apparently we have made no progress. This is a sign of the defeatism in design and everything else of which this Government is continually guilty.
The Minister for the Army is waiting for the United States of America or the United Kingdom to produce something which we can adopt for the Australian Army. What would be wrong with producing for ourselves equipment capable of dealing with Australia’s own particular problems? The Government has no solution to these problems. It will be answerable to the electorate for its expenditure on defence over the last ten years. In that period, this Government has spent £1,700,000,000 on defence, but so far as members of this House can see it has apparently paid no attention to design problems. It is the duty of the Army authorities to equip the Australian Army and develop its training procedures in order that it may meet Australia’s particular needs. We on this side of the House agree that commando units are essential in the Australian Army, and if the Australian services are to make water crossings, we should develop our own equipment, if necessary, in order to undertake such crossings satisfactorily.
What is the position in respect of the Army duck? Here again, the Minister has not told us what is its speed in the water.
I have an idea that it is 4 or 5 knots. What is the speed of the tide in the Rip? We are not told about that, either, but I understand that it runs at 8 or 10 knots. Therefore, it would be impossible for an Army duck to cross the Rip when the tide started to run properly. So I ask, first: Why are not we given this data so that we can make our own judgment? I am not an expert on tides and so on, but my inquiries lead me to believe that the duck is incapable of dealing with a fully running tide in the Rip between the heads of Port Phillip Bay. Therefore, such vehicles are inadequate for the job for which they have been used.
The Minister mentioned that the engines with which some of the vehicles were fitted were known to be difficult to start. The Minister knows that they are hard to start, and 1 presume that the Army authorities, especially those in charge of engineering services, know that these engines are difficult to start. What cheek it is to equip any fighting vehicle with a motor that is difficult to start. In any circumstances, whether on the sea or anywhere else, the liability of machinery to failure makes servicemen liable to instant death. In my view, the single admission by the authorities that they know that the engines of some of these vehicles may stop and may be difficult to start indicates that the engines are unsuitable for these vehicles and that tha lives of servicemen may be lost. This is a condemnation of the authorities, particularly those in charge of engineering services in the Army, and of all who are responsible for this state of affairs. No excuses or smiles from honorable members on the other side of the House can possibly gloss over that. If the Army authorities knew that the equipment was unsuitable or inadequate, they should have taken steps to remedy the situation.
Evidence was given before the coroner that lifebelts, for some mysterious reason, apparently were responsible for the drowning of two of the men. The lifebelts evidently were too tight. How is it that such equipment is used in circumstances like these? It may be all right for civilian purposes, but it does not suffice for the particular conditions with which servicemen are faced when they are in action. If equipment will not meet even the needs of peace, how can it meet the needs of war? We say that the simple tests of external evidence and observation from afar off, and the meagre evidence given to us by the Minister and the authorities, indicate that there are faults in equipment and design, and that the Army authorities have not discharged the task of equipping the Australian Army with the vehicles and equipment that it needs. So the Minister had better find some explanation for that.
The other question concerns the locality of the exercise. Why was the Rip chosen? It is obvious that commando troops - all troops, all Australian troops and servicemen - ought to be trained in the art of crossing water obstacles and landing on beaches and so on. But why pick one of the most dangerous stretches of water on the Australian coast?
– The most dangerous.
– My friend, the honorable member for Shortland, who has some experience of these things, says that it is the most dangerous stretch of water. Was this decision the responsibility of the officer on the spot? Of course not! I do not know what experience the honorable member for Perth (Mr. Chaney), who is interjecting, has in these matters, but you do not train men to handle difficulties by throwing them into the water first. There are plenty of sheets of water even around Victoria where men could be trained adequately in water crossings, the handling of ducks and so on. The people who are facing this task are not professionals in the field - they are amateur part-time servicemen, in the main. Therefore, we should make sure that the places in which they can train are fit for them to perform the tasks imposed on them.
It is obvious that it was the officer’s duty to train his men in water crossing. But why did he have to go to the Rip? I estimate that he went to the Rip because in the Queenscliff area there are military installations, and in order to keep inside the training vote of the Army organization to which he belonged he had to go to some spot where there was an established Army unit. As a result, these men had to train on one of the most dangerous stretches of water on the Australian coast. I want to know what it is in the Australian Army’s procedures which denies officers in charge of units the opportunity to travel far afield and find the most suitable spots for training troops. What if they had chosen some of the spots along the Queensland coast where there are islands which might be suitable for this kind of exercise?
– Surfers Paradise.
– They would probably have found you and most of your colleagues up there, and you might have observed the exercise at close hand. The point is that if the officers had chosen some such place, probably the £2,000 or £3,000 involved in transport costs would have ruled their choice out. Therefore, they had to go to the most easily accessible military location. They had to carry out the exercise with great regard to cost. They had to carry out this training for war in an area which is extremely dangerous even in peace. What are the Army procedures which have placed these men in this position? It is not the job or the responsibility of the officer on the spot. It is the responsibility of Army leaders, and finally of the Minister himself.
We say that the Rip was unsuitable for this kind of exercise. But what of the rest of the equipment? We find that the wireless failed. In our long experience in armies - -.and many of us have had such experience, particularly in the Australian Army and in the use of wireless - we have found that the wireless nearly always fails. It is nearly time that something of a highly specialized nature was done about that. You can get into any taxi in Melbourne or Sydney and find that it is always on call. The taxi procedures are first class and their wireless equipment seems to be first class. But Australian soldiers had to go to sea with equipment which involves problems which have not been solved. Every Australian serviceman of the last war knows that a lot of the ordinary wireless equipment with which the Australian Army is equipped is inadequate.
So, I am looking particularly at the question of the design and development of better and more efficient equipment. This exercise has shown, in three points at least - the duck itself, the lifebelts, and the wireless equipment - that at the moment the Army is not capable of putting soldiers into the field adequately equipped to face really difficult and dangerous tasks. On these points the Army, or the directorate of design, or the Department of Supply, or whichever authority has responsibility for this side of defence, is indictable.
Then there is the question of the tugboat and the work boat. I think it was the tugboat whose fuel line failed, so that the tugboat found itself out in the Rip helpless, and was washed out to sea. Why did that happen? Then we had the work boat. What kind of work boat? I ask the Minister to say what speeds these vessels are capable of. Are they capable of going against the fastest tide in the Rip? I doubt it. There are not too many boats of this kind, according to my understanding of it - and again I am not a professional in the field of seamanship - that are likely to be able to face a tide of 10 or 12 knots.
Where were the R.A.A.F. crash boats which were available a day or so later? Why is it that the civilian organization - the lifeboat service - can take to sea and cross the Rip at any time, while the Army is incapable of crossing it? How many times has the Rip been crossed in daylight in this kind of exercise? You will find that the answer to that question is simple - that the people who are training Australia’s citizen forces are hamstrung to a great extent by a lack of funds for training and by the nature of the equipment and facilities at their disposal to carry out continuous training of this nature. It will be found that, in order to cut down expenses, they had to proceed to some spot handy to Melbourne. They had to proceed to some spot which fitted in handily with the time allowed for the training. They had to cut down the cost and time of travelling to and from the point of training.
These are the questions that are posed by this exercise. The honorable member for Barker (Mr. Forbes), who is interjecting, may make his contribution later. He may well be able to answer these questions. He may be one of those singularly fortunate people to whom the Minister has entrusted the report for perusal, but I doubt whether he can answer the questions. I know that he will come out barking vigorously on his side, because he will be trying to toe the line. One of these days we will develop some original thought, and we may have some original contribution from him and his colleagues.
These are the questions the Opposition poses, and we think that the Minister on this occasion has failed to answer them. We think that the design of the equipment for the Australian Army is shown in a poor light, and that there is no excuse whatsoever for Australian soldiers having to take part in peace-time training with other than the best equipment that the world can offer. If the world does not offer adequate equipment it is up to Australia to produce it. Australians in their time have shown their ability to produce special equipment. So the plaintive remarks of the Minister that the United States of America and the United Kingdom have not produced satisfactory equipment for this kind of exercise fall very harshly on our ears.
On this occasion the Army is on- trial. We want to know what it is doing about giving its servicemen greater mobility, more reliable equipment, and more adequate training. These are the questions which are posed by the disaster at the Rip, and which the Minister has not answered. Nothing that the Minister has placed before the Parliament has answered them. I deplore the haphazard, offhand and cavalier way in which the Parliament has been treated in a matter which has become of national moment.
– I personally think it is to be deplored that some one like the honorable member for Wills (Mr. Bryant) comes into this House and, where human life and human suffering are involved, attempts to make political capital of what was an unavoidable incident. Of course we regret that life has been lost as a result of a military accident. None of us in this House ever likes to think that, where it is avoidable, human life has been lost. But I think, Sir, that if you look at the statement made by the Minister and consider carefully the course of conduct followed, you must be driven to the conclusion that he has acted reasonably and responsibly.
What did the honorable gentleman for Wills want to do? He first of all stated that the facts were not adequately presented to the House and immediately contradicted himself by saying that the Minister had given a rehash of the decision of the coronial inquiry. That sets out the facts and permits us to come to certain conclusions. But the Minister has amplified that decision and has, to my way of thinking, presented an adequate case for the consideration of the House. What emerges from what the honorable gentleman for Wills has said? He is not content with a civil finding of a coronial inquiry - a judicial inquiry by a highly trained and judicial mind. He is not satisfied with the finding of an Army court of inquiry, but asks that, in place of these judicial opinions, he should be given the opportunity to decide whether there has been justice and whether proper disciplinary action has been taken against those involved. I would never be a party to a suggestion of that kind, and I feel that the honorable gen.leman himself could not have known what he was suggesting when he said that this assembly should be placed in the position of a judicial committee of inquiry.
May 1 came back to the statement that the Minister has been guilty of delay and has not adequately consulted the House? Sir, this is the first opportunity that the Minister has had to put the facts and a considered statement before the House. He could not have acted earlier. He had to ensure that justice was done not only in the public interest but also in the interest of those officers who controlled the exercise and whose sense of responsibility and status in the Army were at stake. He had to consider their interest just as much as the public interest and the interest of the Army itself. I had the good fortune to be Minister for. the Navy and Minister for Air for some years, and 1 am well aware of the ease with which the Minister could have submitted to the great public and political pressure to make a statement prematurely. But I think honorable members will agree that in these very circumstances when the future of the officers involved is being considered, the greatest restraint must be exercised and a statement must not be made prematurely. The statement of the honorable gentleman, who should have known better, is regrettable. I have taken a conside able interest in this matter and I feel that this is the first opportunity to act that the Minister had. He has, I believe, shown a high sense of responsibility and has acted in the best interests of the Army and of the men themselves.
What happened here? A coronial court of inquiry and a military court of inquiry looked at the facts and made adjudications. The honorable member for Wills has criticized the equipment, but his criticism can not be sustained in the light of what has been said by the Army court of inquiry and the coronial inquiry. It is extremely regrettable that he has not seen fit to read and to understand intelligently what the Minister has said. If he had, he would have made no complaint about the equipment. What has been decided - not by the Minister or his department but by the two inquiries? The equipment is efficient, modern and effectively maintained. The coroner said that, in the circumstances, sufficient consideration had been given to the number of safety vessels that accompanied the expedition. 1 do not want to be too critical of the honorable member, because I think that he gabbled out his speech without adequate thought to what he was saying. However, criticism has been levelled at the office s concerned. I would not for one moment be prepared to criticize the officers, because they were highly trained overseas and were regarded as highly skilled officers of the Australian Army. The evidence is perfectly clear that when they were considering this exercise, both in concept and in planning, they gave adequate attention to it. So, on all counts, we are entitled to feel that the officers efficiently planned this exercise and thought that they could carry it out efficiently.
What happened? The equipment was there; the planning was there; the officers were intelligent and capable. Frequently in military life, in peace-time and in wartime, as you, Sir, would know, an unhappy and unpleasant association of conditions occurs, and the average mind cannot always be expected to forecast this. There was the fact that the Rip was running more strongly than the officer anticipated, and it is clear that he did not make all the allowance that he should have made for the effects that this would have on the craft engaged in the exercise. Any one can make an error of judgment of this kind. I can, you can, Sir, and the honorable gentleman for Wills can. If I am asked where my sympathies lie in this case, I must say that they lie with the officers concerned.
I am sure that they did their job and no one, I should imagine, regrets more bitterly than they do that this exercise led to the loss of three lives. So, I think we are driven to the conclusion that this is, to use the coroner’s words, death by misadventure. It is a series of unfortunate circumstances. We have the fact, also, that unfortunately the engines of two of the ships failed - the tug and one of the other craft. In the case of the second type of craft, it is known that the engines are difficult to start, but they are modern and every known test was made to ensure that only the efficient craft were used on this expedition. Further, there was a failure by a warrant officer to convey to the commanding officer a signal sent to him by the lighthouse keeper, and there was a failure of some of the signal equipment.
Of course, we regret that this has happened, but we cannot deduce from these failures that there had been a failure by the commanding officer or that the equipment of the Army is bad and is obsolescent. The Minister can go into greater detail on this question than I can, and I am sure that he will be able to prove to the satisfaction of the House that never before has the equipment of the Army been better in peace-time than it is now. It is being steadily improved under the three-year plan announced by the Minister for Defence (Mr. Townley). I do take part in the discussions in Cabinet. One of our objectives, as the House well knows, is to increase steadily the equipment of the Army and to give priority to that equipment which will increase the effectiveness of the man-power.
There are the facts, as I see them. What emerges from the facts is this: After a civil inquiry, the coroner stated that there was no ground on which action could be commenced in the civil courts. That is the way in which this problem should have been dealt with, and it has been dealt with effectively, I think, by a civil court of inquiry, which exonerated those who took part in the exercise, who planned it and who commanded it. When a wider inquiry was held, particularly on the point of the technical equipment and other aspects, the effect of the decision was that there were no grounds on which disciplinary action could have been taken against the men involved. So, we find here what can be regarded as an effective presentation of the facts to the House. It is designed to show, in the first place, that the Minister acted with responsibility and as quickly as he could; and secondly, that the officers engaged in the exercise were proficient and highly regarded. Whilst there is some ground for thinking that perhaps if there had been a greater degree of flexibility and greater precautions had been taken the loss of life would have been avoided, we can all be wise after the event. I feel that the best thing we can hope for is that the Army command in Victoria will, in future, ensure that greater safety precautions are taken.
Finally I come to the question of the equipment itself. I am bold enough to say that, whenever I can, I do my best to see that the Army is given a preferential place in regard to equipment in my thinking about the future of the defence forces. I think it is true to say that the equipment here was good and that the Minister for Defence (Mr. Townley) and the Minister for the Army are doing all they can to improve the equipment of the Australian Military Forces. I bitterly regret there has been loss of life; but, having said that, we must recognize that these commandoes are a unique corps; they are men of much better than average mental ability and physical attainments. They know the risks they have to take in exercises of this kind. It is a regrettable risk of war and training for war, but I think that you, Sir, and most other people would agree, after hearing the Minister for the Army speak, that whilst it is regrettable that this accident took place, it was due to an unfortunate combination of circumstances and human error. I doubt whether very much more could have been done beforehand to avoid the disaster. I am glad that the Minister has tightened up the control system, and I hope that much more consideration will be given to the provision of safety craft in the future because we, as a government, do want to prevent a repetition of this sort of accident.
.- The Minister for Labour and National Service (Mr. McMahon) has established a reputation in this House for interposing in debates and talking empty platitudes on subjects about which he knows little and about which the
Government apparently knows little. The Minister has succeeded in living up to his reputation in that respect in the debate on this matter. He hardly mentioned a matter of substance. His speech was a series of statements of praise of the Minister for the Army (Mr. Cramer), which told the House nothing about the subject which we are discussing. He indulged in a cheap political trick - he deplored the fact that the honor”able member for Wills (Mr. Bryant) had tried to make party political capital out of an incident which involved the loss of human life. I deplore the fact that when human life is involved the Government tries to obscure the issue and refuses to divulge relevant information. That fact must be deplored before anything else.
It is rather empty to suggest when the Opposition is doing its work in putting facts and questioning the Minister for the Army and his administration before the House, to say that that is a party political trick. That is not making political capital out of the situation. We are questioning the conduct and efficiency of the Minister - something which has been questioned from one end of Australia to the other upon this matter and other matters; and I refer the House to a couple of examples. In the “Sydney Morning Herald” of 19th June, 1960, we read the headline, “ The Army Can’t Explain “. On 19th February, 1960, there appeared in the Melbourne “ Age “ the heading “Army Criticized by Rescuers in Rip Tragedy”. Newspapers all over Australia at that time were full of criticism of the Minister for the Army and of those responsible for this incident. There is no party political capital involved when the Opposition points out the defects in the administration of the Minister and the faults in his department.
The Minister for Labour and National Service said that the honorable member for Wills ought to be satisfied because the Army inquired into the matter and was satisfied. How do we know what the Army inquiry revealed? The Minister said that it produced a report; but nobody apparently has seen it except the Army and the Minister. How do we know what that report contained, and whether it is satisfactory? The Minister for Labour and National Service said that we should be sympathetic with the Officers concerned in this matter. Of course, we should be sympathetic with them in having a Minister such as they have and in having to undertake an exercise of this kind in the place where they had to do it and at the time when they had to do it. We should be very sympathetic with them because of the fact that after the Government has spent £1,700,000,000 on defence they have no equipment better than a duck with which to undertake an adventure of this sort. That is where our sympathy should lie.
The Opposition has made it very clear that in this matter we are not concerned with particular defects or errors of judgment on the part of members of the Army. That is not a matter for debate in the National Parliament; but we are concerned with the administration of this Government and, if any one is to be shot as the result of this incident it should not be any major or sergeant in the Army but the Minister for the Army. We say, first of all, that the inquiries held into this matter have been totally inadequate. First, there was the Army inquiry, but we do not know what its nature was; we do not know what its scope was or what its findings were. The Minister speaks of this mysterious inquiry. We had the report a few days after the inquiry was completed, but it has not been tabled in this House, and nobody - apart from the Minister and those concerned with it - knows what it contains. That report should be tabled in this House so that honorable members and others concerned can see what it involved. But the Army inquiry was very limited and inadequate because it was made by those who were concerned with the training of the commandos. Whether they were concerned with the training at that time or subsequently is beside the point; they were inquiring into something for the administration of which they themselves were responsible in the past, or are now responsible or will be responsible in the future. It is improper to ask officers to carry out an inquiry of that kind and expect them to find fault with those over whom they are in control or will be in control. That is a completely inadequate basis for any inquiry.
As far as we know, this inquiry by the Army was not concerned to inquire into the adequacy of the equipment used or its maintenance, or whether better equipment was available. The Minister has pointedly said nothing about whether the Army inquiry discussed those matters or was in any way concerned with them. He did say that the coroner made some reference to the adequacy of the equipment; but he left aside any mention of whether the Army inquiry was concerned with that aspect. The coroner was asked to endeavour to discover the cause of this unfortunate accident. He was not asked to inquire whether better equipment was available or should have been available. None of these matters, which are so important to the Parliament, were subject to inquiry by the coroner. Therefore we say that there has been no inquiry of a kind that is necessary to enable the Parliament to reach conclusions on this matter.
As I said at the beginning, we are not concerned with errors of judgment by those members of the Army who were involved. The problems which are connected with this matter are problems of equipment, and those are the problems with which this Parliament should be mainly concerned. No evidence has been placed before us at any stage of this debate to indicate whether the equipment in use was adequate or not. The general attitude of the Army in these matters is that if no advances have been made overseas, then the Australian situation is satisfactory. Presumably after this incident - and only after this incident - inquiries were made overseas as to the nature of the equipment used in these crossings of open water. To suggest that a vessel designed in 1942 is the best available at the present time is ridiculous. No one with any knowledge of the development of land, sea or air craft can possibly accept that suggestion.
I believe the general attitude of the Army is at fault with regard to this matter. Incidents such as these are not taken nearly seriously enough. We had an earlier example in the unfortunate accident at Stockton in 1954. Since then, as far as we are aware, no concern has been expressed regarding the adequacy of these ducks for crossings of the kind involved in the exercise in question. These vessels were designed to transport troops from ships or landing barges close inshore. They were designed to travel short distances to the beaches, assisted by the flow of the water.
They were not designed in any way for the purpose for which they were used in this exercise. It is obvious that these ducks could not adequately cope with the situation, and that the Army totally underestimated the job the vessels would have to do.
It is obvious that in the Australian Army there is all too prevalent an attitude such as that which, as is obvious from their interjections in this debate, is adopted by the honorable member for Perth (Mr. Chaney) and the honorable member for Barker (Mr. Forbes). It is an attitude that stresses the necessity for toughness. It implies that you have to be thrown into the water before you can swim. This may be all right for tough gentlemen like those honorable members opposite, but it is not very satisfactory for the mothers and fathers of young men who are placed in precarious situations by officers who tend to underestimate to a considerable extent the hazards of situations in which they are placed.
The Army must perform tasks of this nature. Its members must cross water in approaching various kinds of objectives. It is pretty clear that training should be done at places where personnel can acquire ability and improve technique without undue danger to themselves. It is also obvious that the Rip in Victoria is not such a place. The Rip was chosen for this exercise because there is an Army establishment close by - and it was chosen for no other reason. Such locations should be chosen for their suitability for training, and not simply because an Army establishment is in existence nearby. The Army must be able to perform such tasks, but training should not be carried out at such places. If the Army has to perform these tasks at places as dangerous as the Rip, then it must be provided with suitable equipment. If the British and the American armies have not developed such equipment, then it is the job of the Australian Army to do so.
That these vessels are not satisfactory for this work has been demonstrated over and over again. There have been many sinkings of Army ducks in recent years. There was the incident at Stockton Bight, and there was the Carrow Brook incident near Singleton in 1956. Ducks are not made for such purposes as that for which they were used in the exercise at the Rip. They are old vessels. But there are vessels in existence that can cross such stretches of water - and they are small vessels. The Queenscliff lifeboat is capable of doing such work, as is Akuna’s whaleboat and Acquilla’s shark boat. These vessels would have been capable of handling the situation, but the vessels that the Army had were not. If the Army has to perform such tasks under practical conditions, as may well be necessary, it must realize that ducks are not adequate for the job. If suitable vessels could not be obtained overseas with some of the £1,700,000,000 that has been spent on defence in recent years, then surely they could be obtained in Australia.
– What about the ebb tide?
– The ebb tide was completely overlooked. The decision to undertake the crossing 300 yards or more inside the Rip completely ignored the fact that when the tide is flowing out any vessel attempting to cross in that position will be carried into the Rip. This is knowledge that is available to almost any one in the Queenscliff district; yet it was not understood by those who were arranging the exercise.
There are several other points that I wish to mention. What is the position of those who have suffered because of the death of their loved ones in this exercise? We all know that the provisions for compensation for Commonwealth employees and members of the Army are vastly inferior to those covering the public servants of most of the States. In such matters as these endless legal negotiations are carried on. I am sure that those who have suffered as a result of this exercise will have great difficulty in arranging settlement of the affairs of the deceased soldiers. It was pointed out in relation to the Stockton Bight tragedy that a period of seven years elapses before the affairs of a person who is lost, and whose body is not recovered, can be finalized. At the time of that tragedy in 1954 the then Minister for the Army undertook to raise this matter with the Attorney-General. As far as can be ascertained from “ Hansard “, we in this House have received no information as to whether the Minister for the Army at that time, or his predecessor, has ever raised this matter with the AttorneyGeneral or intends to do so. Is it a fact that the affairs of a member of the services who is lost and whose body is not recovered cannot be finalized for seven years? Is it a fact that the Minister for the Army in 1954 undertook to consult the Attorney-General on the matter and endeavour to effect some improvement? If so, why is it that no member of the Government has seen fit to make any statement to the House, or to any one else, on this matter?
It may of some significance to point out that the Minister for the Army, when making his statement to the House concerning this incident, mentioned quite a number of matters that appeared in the findings of the coroner, and said that, in the result, the coroner reported that the deaths of George Drakopoulos and Edward Stanley Meyer were due to misadventure. But what was the coroner’s finding with regard to the unfortunate Army member whose body was not recovered? Why is it that the Minister made no reference whatever to that matter in his statement to the House this afternoon?
– He was presumed lost. That is in the coroner’s report.
– Why was that matter excluded when the Minister made reference to the deaths of the other two men? From the beginning this incident has called for an adequate inquiry. Our submission is that no adequate inquiry has been undertaken, either by the Army or by the coroner. We say, further, that whatever the result of the Army inquiry, the Minister has, for some reason of his own, failed or refused to produce the report of that Army inquiry for examination by honorable members of this Parliament. We are entitled to an explanation why that report has not been produced. What is there in the report that the Minister is afraid of? Why is he keeping it secret? The House is entitled to probe this matter further. The Opposition says that although there may be faults on the part of the Army personnel concerned in this incident, those faults are not of such a nature that they should lead to any disciplinary action.
We are satisfied that none of them was serious enough for that. We are not making out a case against members of the
Army. They were asked, in effect, by a Minister and by a department, to undertake a task that they should not have been asked to undertake. The responsibility does not lie with those people whatever rank they may hold. The responsibility lies with the Minister for the Army and those directly under his control. No fault on the part of any one in the ranks of the Army can be taken as the real cause of this accident. The accident was caused by something which is the responsibility of the Minister himself.
We say that the exercise should not have taken place where it was held. The Rip is the most dangerous water in Australia and it is not suitable for Army exercises. We say that the inquiries held were not adequate, and we say that the equipment was not adequate. We believe that the Army should be adequately equipped to undertake water crossings. Practice of this kind may be necessary but the Army should be effectively equipped for the task. The Australian Army does not possess such equipment at the present time.
It is no answer for the Minister to say that better equipment does not exist elsewhere in the world. If it is possible for us to spend millions of pounds on vessels, on rockets and on aeroplanes, surely it is possible for us to spend a few thousand pounds on producing a vessel which is capable of crossing water of this kind. If the Army cannot do that it does not deserve our confidence. If the Minister cannot see that better is done than has been done he does not deserve our confidence and he certainly does not have it in this case.
Finally, with regard to Army administration, I submit that the inspection of the equipment was not adequate. It is no use listing the failure of the radio, the failure of the engine in the tug, and the failure of the lifebelt equipment, and to say that these things can happen anywhere at any time. Far too many of them happened at this time and, therefore, brought about this accident. Those of us who know about the operations of the Army know that these breakdowns are frequent, and that they occur because of inadequate inspection.
– Order! The honorable member’s time has expired.
.- 1 support the statement by the Minister for Labour and National Service (Mr. McMahon) that the Opposition is trying to make political capital out of this case. I do not think there is any doubt whatever about that. The honorable member for Yarra (Mr. Cairns) went to great lengths to argue that no blame whatsoever should be attached to members of the forces. He wants the Minister for the Army to be the only one to bear the blame. He says, “ Put all the blame on the Minister “. Yet he also says that he does not want to make any political capital out of the case! His speech was nothing but an attempt to make political capital out of a very unfortunate training incident.
Any one would think, to listen to the honorable member for Wills (Mr. Bryant) and the honorable member for Yarra, that the Minister sits in this House and plans in detail the operations of individual Army companies in distant parts of Australia and that he could not care less about dispatching men off to their death. Nothing could be more ridiculous or further from the truth. The Minister does not know what every company in the Army is doing at each moment. Nor could any Minister for the Army know that. It is not his place to know. He has a responsible chain of Army command. From time to time, we have unfortunate incidents of this nature.
The honorable member for Wills said that the Minister for the Army had contributed nothing to our knowledge of the incident. I would very much like to know what he expected the Minister to contribute. He did not make that very plain. One would almost have thought that the honorable member expected the Minister to inspect all troops before they went off on such an exercise to make sure that their boots were clean and their buttons done up. It is utterly ridiculous to attack the Minister for this sort of event. It was not the Minister’s fault. It was certainly an unfortunate incident. I know that the honorable member for Wills does not need reminding that war is an extremely dangerous game and that, in order to achieve efficiency, training for war must be realistic. If errors are made, that is only human. A human error was made on this occasion. It is utterly ridiculous to blame the Minister for a happening of which he could not have had any knowledge at the time. The Minister is responsible for over-all Army policy but not for the detailed events of every day.
The honorable member for Wills also said that the equipment used in the exercise was inadequate. He knows full well that Army equipment is not changed week by week or year by year. There is extremely efficient testing of new equipment. The Army must be very cautious in making changes. It must keep in line with what our allies are doing, and equipment must be watched very carefully before it is adopted. Tremendous time is taken in usage trials before equipment is changed. Honorable members opposite would be the first to squeal and yell if, because of an accident of this nature, we scrapped that procedure and curtailed testing of new equipment.
– This is very old equipment.
– Certainly, but it is very effective and it is still being used by the principal armies of the world. There is no argument when it is brought out to rescue someone in a flood. We do not say, “ Do not use that. You will be risking lives “. People are very pleased to see the equipment used, but when something goes wrong, as it did on this occasion - once in the many hundreds of times it has been used - honorable members opposite jump up in horror, blaming the Minister and talking of inefficiency. It is utterly ridiculous. The duck is not obsolete although it is old. No better piece of equipment of its type has yet been put into service. The honorable member for Yarra is always complaining about the £1,700,000,000 that has been spent on defence. He knows full well that the Americans have spent a great deal more than that on defence and are still using the duck quite effectively.
The honorable member for Wills said that the Army is hamstrung by lack of money. What an extraordinary statement! If the defence estimates were raised as he apparently would like to see them raised in this connexion, what a squeal there would be from the other side of the House. Just imagine what the reaction of the honorable member for East Sydney (Mr. Ward) would be!
The honorable member for Wills also said that the Army was on trial in this matter. But there have been two very full inquiries - the coronial inquiry and the inquiry by the Army court which heard evidence on oath from 47 witnesses. The court’s report is most voluminous. It is a searching document which was immediately made available to the Minister and was studied carefully by him and by the Army authorities. Reports of Army courts of inquiry are not released to the public.
– They should be. The public pays for them.
– Then why did the Labour Party not change the procedure when it was in office?
– We won the war.
– And you kept details of Army courts of inquiry to yourselves. What were the findings of the coroner’s inquiry? I do not argue with them. It seems extraordinary to seek to do so. Apart from failure to make due allowance for the tide, the exercise was properly planned. Who is to be blamed for the planning of this operation? Surely the Opposition is not going to blame the Minister for the Army. If any blame is to be attached to anybody, it should be directed against the Officer Commanding, but we know that the qualifications of the officer concerned in this unfortunate accident are very high indeed. An error was made, and I suppose that errors always will be made. The coroner stated in his finding -
An adequate number of safety craft was included and they were suitable for the projected exercise.
Are we to complain about that? The coroner also stated -
The men were properly equipped, particularly with life jackets, and all had received adequate training for the task.
Finally, the coroner found that the deaths were due to misadventure. The honorable member for Yarra said the Minister for Labour and National Service (Mr. McMahon) and the Government generally knew little about these matters. It might be as well if the honorable member for Yarra outlined his personal qualifications for criticizing those concerned in this incident. The honorable member also complained about political capital being made out of the tragedy. Actually, he himself attempted to make political capital by directing blame at the Minister for the
Army. The Minister is not responsible for the detailed planning of operations such as this. In his statement, the Minister explained why commando units were introduced into the Army, and he said -
The two commando companies, one each in Sydney and Melbourne, were formed to meet an operation requirement for units trained in the techniques of small-scale air-borne or amphibious raids deep into enemy territory.
The aim is to train small self-reliant teams capable of operating far from their base. Each commando must be a highly trained infantry man, a qualified parachutist, a small craft operator and proficient in one or more skills such as cliffscaling and demolitions. These are qualifications requiring courage and initiative; the coveted green beret is not lightly earned.
That is very true. The honorable member for Yarra waved press cuttings in the air and said that the Australian press and the public were horrified by this accident. In fact, what was the sequel to the unfortunate incident? Applications for enlistment in the commando units rose rapidly overnight and they have not diminished. The men who form these units know very well why they are given training of this nature. 1 remember clearly that only three or four years ago, two officers and warrant-officers were selected from the Australian forces to go overseas to be trained by the Royal Marines for work in commando units. They were to return to Australia to train Australian commandos. During their training overseas, which lasted about nine months, one officer was killed and another officer broke a leg. Only one of the selected men finished the course. Did we hear any squeal from the Opposition about the toughness of that training?
– The Opposition are a lot of cream puffs.
– That is true. Judging from the remarks of members of the Opposition, one would expect to hear more from them about girl guide captains. This commando training is extremely tough and the accident rate is high; but nobody squeals about it. What about other branches of the armed forces? Do we hear a great outcry from the Opposition when a fighter pilot in training crashes a Sabre jet? Do we hear criticisms directed against the Minister for Air? Tn this case, a proper inquiry was held.
– It was a cover-up inquiry.
– That is a scandalous statement. Of course, risks are involved in training. As you train, so do you fight. If we want our servicemen to be properly equipped for war, they must take risks in training. This was an unfortunate event, but training with the same equipment is being continued all over the Commonwealth practically every day of the year. Seldom does anything go wrong. Reference has been made to the signals equipment that was used. The honorable member for Wills might be interested to know that 1 recently completed a camp at which no line signals equipment was used. We used only wireless equipment and all of it worked efficiently for the duration of the brigade camp. All exercises were carried out with standard wireless equipment such as that used during the exercise we are discussing. The fact is that this wireless equipment works efficiently.
It is unfortunate that honorable members opposite should attack the Minister for the Army and waste the time of this House in such a debate. In the light of the Minister’s explanation it was not necessary to raise these matters. The Opposition should be satisfied with the statement. Honorable members opposite should be reminded that if our servicemen are to be trained effectively, they must be trained realistically. They cannot be trained without taking risks. The Opposition has simply tried to make political capital out of an unfortunate affair.
Debate (on motion by Mr. Haylen) adjourned.
Sitting suspended from 5.58 to 8 p.m.
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, 1961; and recommending appropriations accordingly.
Ordered to be printed, and referred to the Committee of Supply forthwith.
– It is my duty to place before the House to-night estimates of receipts and expenditure for the financial year 1960-61 and to explain various proposals related to those estimates.
More than ever these days, the Commonwealth Budget has to be regarded as a means to guide the broad trend of the economy in the direction of certain wellestablished goals. It is common ground with all of us that we want to see a strong continuous growth of population and industry, rising standards of living, full employment of labour and such a degree of stability as will promote these aims and safeguard the share in the gains of progress to which every one is entitled. These goals have to be sought steadily whatever the changes in conditions - changes which sometimes favour them, sometimes run counter to them - and policy measures have to be adapted to meet such changes.
The Budget is not the only instrument of policy - monetary policy and trade policy have highly important roles to play - and there must be consistency between all three. But the Budget has a great and pervasive influence and. when a Commonwealth government frames its Budget, it must, above all, try to ensure that it serves the paramount common purposes. A host of particular claims and interests has to be considered and weighed. The final criterion must however be whether, at the time, those claims and interests can be reconciled with the general interests and aspirations of the economy as a whole.
In its Budget for this year the Government aims to achieve a surplus of total receipts over total expenditures. To make this possible it is keeping expenditure commitments to a minimum and it proposes also to increase taxation and charges sufficiently to yield an additional £40,900,000 in a full year and £36,900,000 in 1960-61.
Thus, in the matter of the Budget, the Government is following through the broad programme of economic policy measures announced by the Prime Minister last February. Honorable members will recall the main courses of action then proposed. One was to strengthen resistance to the rise in prices and costs and, in particular, to prevent large increases in the factors which affect costs generally. That was why the Government intervened in the basic wage proceedings and advised the Conciliation and Arbitration Commission of some of the consequences of granting further large wage increases before the economy had had time to absorb those made not long before.
Next, the Government decided to remove import licensing controls so that, apart from certain licensing arrangements to meet special problems, the flow of imports into Australia would be unrestricted except for the customs tariff. This would add, through greater imports, to the supply of goods. It would also give Australian industry and trade the widest access to overseas supplies of materials, equipment and finished goods and so help to improve efficiency and keep down costs.
Thirdly, the Government expressed its approval of the action being taken by the Reserve Bank of Australia to prevent any increase in the liquidity of the banking system over the year and said that it would continue to support a policy of restraining excessive liquidity.
Finally, it undertook to do all in its power to avoid deficit finance in 1960-61. This would prevent any further boost to demand of the kind which occurs when Government expenditure runs ahead of revenues and public borrowings.
We did not expect these measures to produce immediately all the results at which we were aiming. It was obvious, for example, that prices and costs would rise further, if only because the big wage increases made earlier would take time to work through the price structure. Indeed, we wished to avoid action which would strike at any of the sound and valuable expansion currently going on in Australia. As the Prime Minister said, the aim was rather to bring strong and increasing pressure against those forces which were tending to throw the economy out of balance; and we saw this pressure taking effect gradually over a period.
The Government has now taken stock of the position again in the light of recent trends and of the prospects ahead, so far as these can be seen. Clearly, a strong upthrust of activity is still very much under way. Much of this activity - probably most of it - is desirable in every sense of the word. In point of employment, output and growth of capacity for production, 1 959-60 was, without doubt, a notable year. Employment rose by more than 90,000 and unemployment fell to low figures. There was no difficulty at any stage in absorbing the new labour, migrant or locally-born, which came forward. Output increased in almost every manufacturing industry, quite remarkably in some, and it was a good all-round year for rural production. The building industry achieved records, both in the construction of houses and flats and in other forms of building. It was, in a word, a year of fine achievement, one in which all sections of the community strove hard and well and effectively.
That is the favorable side of the picture. It shows the economy driving ahead, full of enterprise, eager to accomplish real things and big things. But there is another side of the picture, not so favorable. Prices and costs rose sharply over last year and, so far, the rate of increase does not seem to be slackening. Shortages of key materials and of some classes of labour have appeared - clear signs that, once again, our efforts to expand are, in some directions, over-reaching our resources. The recent rate of imports also suggests that, notably though local supplies have increased, they are failing to match the rise in demand and this, in consequence, is spilling over into demand for imports. Speculation in shares and other securities and in land is disturbingly active and prevalent.
These features of the position are all matters for concern and each betokens, in its own way, a lack of balance between overall demand and supply. The price and cost movement is, it is true, self-generating in one sense. Sometimes it is a series of particular cost increases - the edging up of a charge here, a profit margin there, a rent or the price of a service somewhere else. Sometimes it is a general wage increase. They all accumulate, however, and the trend gathers strength - with all too rarely a price or cost reduction anywhere to slow its pace. This is the cost inflation aspect which the Government has in mind when it calls for greater all-round resistance to price and cost increases. The price level does not rise of its own accord; it rises because people raise prices or do not seek furniture enough to offset cost increases with economies instead of passing them on. The impetus, however, does not all come from the side of costs; the state of demand has much to do with it. Price increases are made more readily and resistance to them is weaker when demand, in the shape of community spending, is rising faster than supply.
Expenditure, in its various forms, has been rising very fast. In the paper on National Income and Expenditure, which I am tabling to-night, it is estimated that, in 1959-60, personal consumption spending increased over 1958-59 by 9 per cent., private investment spending on capital equipment by 14 per cent, and public authority spending on goods and services by 9 per cent.
Within these totals, some items increased very strikingly. In the consumption field, expenditure on hardware, electrical goods and furniture rose by 1 3 per cent., expenditure on tobacco and cigarettes by 7 per cent, and on alcohol by 6 per cent. In the private investment field, expenditure on dwelling construction rose by 11 per cent., on other new buildings by 19 per cent, and on motor cars, station wagons and cycles by 26 per cent.
This adds up to a considerable boom in expenditure; and the rates of increase have been, if anything faster in recent times than earlier. The volume of supplies has also Increased but not as fast as spending.
For the future, it is true, as always, that expansion must be kept moving and resources fully employed. Our population continues to grow rapidly and, again this year, there will be a considerable body of new workers to find occupations - some of them migrants, the majority young people leaving school. To meet the needs of such expansion, it would be quite normal for some rise in levels of expenditure to occur; but there would be clear dangers if the rise continued at the pace of recent months.
One such danger would be a speeding up rather than a slowing-down of price and cost increases. No doubt, with imports running freely and some scope for still greater local output, we can reckon upon a further increase in total supplies. But demand, on its recent showing could outdistance any such increase and then we would have a scramble for scarce materials and all the other conditions in which price inflation thrives.
A second danger would be a rise in imports to levels higher than we can afford. I shall say more presently on the balance of payments and our attitude towards it. Here, however, I may say that we have been prepared all along to see, and indeed to welcome, a rise in imports to meet real deficiences in local requirements long denied full access to overseas supplies; and we have been prepared to use a fair amount of our quite large overseas reserves to finance such imports. But it would be an altogether different thing to dissipate these reserves on imports to feed a domestic boom.
As the Government sees it, then, the situation clearly requires a steadying-down in the rates of increase in expenditure. This is necessary to ensure a stiffening of resistance to price and cost increases; it is necessary to avoid critical shortages of key materials and labour; it is necessary to prevent an excessive rise of imports. In this, there is no thought of holding back wellbased expansion; on the contrary, output should have a better chance to grow, productivity to improve and exports to increase if we can lessen some of the more extreme pressures on our system.
Imports will be considerably greater this year than last and that should help to correct the situation because of the contribution it will make towards meeting demand. It will, almost certainly, involve a substantial running down of our international reserves; for even if exports and capital inflow are as high this year as last, we will have a larger import bill to meet. I do, however, want to make it quite clear how the Government views this prospect. We moved out of import controls last February, firmly intending to keep out of them and believing that, given reasonable success in trading abroad and in attracting overseas investment, we should be able to do so. Nothing whatever has happened since then to alter that belief and the move has so far be°n every bit as successful as we hoped. There seems to have been a minimum of dislocation to local industry. Our own reserves of gold and foreign exchange at the end of 1959-60 were quite as high as we had expected and, having recently obtained a still larger quota in the International Monetary Fund, with a corresponding addition to our drawing rights, our total reserves position is now really strong. We are certainly well placed to stand a considerable fall in reserves and the Government is prepared for this. On behalf of the Government I am stating this in case there are doubts in any minds as to what our attitude or intentions might be.
Of course, world trends are generally unpredictable and we have no control over them. We do, however, have some control over the demands we ourselves make upon external resources and it is there particularly that the situation needs a steadying hand. Since import controls were lifted, the rate of imports has increased to some extent. This increase has not been inordinate and certainly no more than we expected. Indeed, considering how local demand has risen lately, the surprising thing may be that imports have not risen faster. But the rate has been carried upward by the rise in local expenditure and that is the vital point. It can be said, truly enough, that we could not afford imports to go on rising indefinitely as they have done; neither, however, could we afford local expenditure to keep on rising as it has done. Plainly, if we are to keep imports within limits we can afford, the growth of demand must be restrained.
Within the province of the Commonwealth, such restraint has to be sought chiefly through monetary and budgetary action. For the past year or more, monetary conditions in Australia have been all too easy and this has contributed to the rise in expenditures. The supply of money, technically so-called, rose by 8 per cent, in 1959-60, following a rise of 5 per cent, in 1958-59. This was due partly to deficit financing and partly to increased lending and investment by the banks. There has also been a sharp increase in the rate of money turnover.
In 1959-60 the central bank sought, by firm use of its power over bank reserves, to prevent any increase in banking liquidity over the year and, if possible, to bring about some reduction. It succeeded in doing this, to the extent that the ratio of liquid assets and government securities held by the major trading banks fell from 22.3 per cent, in June, 1959, to 18.9 per cent, in June, 1960. However, trading bank advances have risen steeply in recent months and, for the year as a whole, showed a total increase of £99,000,000. This is quite contrary to the needs of our current situation and the Reserve Bank some time ago quite properly requested the trading banks to make an immediate and significant reduction in their rates of new lending. ;
In the coming months, the fall in our overseas reserves will tend to reduce liquidity both of the public and of the banking system and the sharper the fall in reserves the greater the decline in liquidity will be. We have necessarily taken account of this prospect in shaping our policy for the year. It is one of the consequences which increased imports will have for our situation, others being, of course, the increase in available supplies and the advantage of obtaining, quite possibly, some goods and materials at more competitive prices.
Between monetary conditions and the Budget there is, of course, a close and important connexion. For if a cash deficit has to be financed with bank credit, the effect is to add to the supply of money. Last year, the deficit was approximately £29,000,000, whereas the original estimate had been £61,000,000. Having in mind how activity rose through 1959-60, I may perhaps be allowed to recall that, at the time of our last Budget, some commentators said that a deficit o”f £61,000,000 was not large enough to give the economy the stimulus it needed.
However that may have been twelve months ago, there could be no thought, under present conditions, of doing anything less than balance the Budget and there is a case for doing more than that. It is essentially the case for the Government taking its due part in the process of moderating demand. As I have already said, we have approached the matter, first, by keeping expenditure commitments down so that, although there will inevitably be an increase in expenditure over last year, it will be a much smaller increase than occurred in 1959-60. Besides this, we have decided to increase taxation along lines I shall explain later.
I shall now explain the principal estimates of expenditure by the Commonwealth in this financial year. The Consolidated Revenue Fund estimates are explained in detail in Statement No. 3 attached to the Budget speech. There will also be found in Statement No. 1 details of last year’s Budget results.
In 1959-60, defence expenditure was £193,585,000. For expenditure this year we have fixed a ceiling of £198,153,000, so allowing for an increase of £4,568,000. Here perhaps I need only mention that the additional costs of the defence services this year attributable to margins increases are estimated to be £2,300,000.
At existing rates of pensions and other benefits, it is estimated that expenditure on war and repatriation services in 1960-61 would be £96,243,000, an increase of £9,392,000 on expenditure in 1959-60.
However, despite the general need to limit expenditures this year, the Government has decided to make certain increases in repatriation benefits, including rates of pensions and provision of medical treatment.
The special rate war pension for totally and permanently incapacitated exservicemen will be increased by 10s. a week, bringing the total payable to a single man to £12 15s. a week.
Tn addition, war widows pension will be increased by 5s. a week,- making the rate £5 10s. a week, and the domestic allowance payable to widows with children under age sixteen and certain other classes will also be increased by 5s. a week to £3 a week.
The service pension payable to certain classes of ex-servicemen and women will be increased by 5s. a week to a maximum weekly rate of £5. Service pensioners will also receive the benefit of the new means test in the manner I shall presently describe as applicable to social service pensions.
The Government has also agreed to provide free medical treatment for disabilities not due to war service to service pensioners, including Boer War veterans, and this benefit will operate as soon as administrative arrangements can be made. I am sure that this will give great satisfaction to returned servicemen’s organizations and to many members of this House who for some years have pressed for this concession.
The cost of these increased benefits is estimated to be £2,374,000 in a full year and £1,734,000 in 1960-61.
If present scales of benefits were to remain as they are, it is estimated that total expenditure from the National Welfare Fund in this year would be £322,355,000, which would be approximately £23,000,000 greater than expenditure in 1959-60. I stress that, because some critics say that we should balance our Budget by keeping our expenses where they were last year. Well, without any movement in pension rates, and due only to the increase in the number of pensions, there would be an increase of £23,000,000 in a year. 1 may point out that, of this very large total, some £163,000,000 would be for age. invalid and widows’ pensions, £74,000,000 for child endowment and £74,000,000 for the various health services, including tuberculosis benefits.
Again, however, the Government has decided that, despite the overall objective of keeping commitments down, it should make some additional provision for those members of the community who, through age or other circumstances, are least able to assist themselves.
A further increase in age, invalid and widows’ pension rates will be made this year. They will be raised by 5s. per week, making the new maximum pension rates, exclusive of any further pension payable for children, as follows: -
In addition, of course, single pensioners who have no income other than their pension, and who pay rent, are able to obtain supplementary assistance of 10s. per week.
The cost of these increases is estimated at £9,100,000 for a full year and £7,000,000 for 1960-61.
Since it assumed office, the Government has done a great deal to extend the eligibility for pension benefits of various classes of people by its successive relaxations of the means test. A further important step is now proposed. A structural change will be made in the means test which will remove what has been widely regarded as an anomaly in the operation of the means test on property as compared with the means test on income.
This matter has had the attention of the Government over a considerable period and my colleague, the Minister for Social Services (Mr. Roberton), has been most active in seeking a solution for a complex problem. I am happy to say that the Government has now been able to evolve a scheme whereby income and property may be merged for the purposes of assessing pension entitlement on a common basis.
Whereas in the past two independent means tests operated - one on income and one on property - the new means test will take into account one composite figure representing the pensioner’s “ means as assessed “.
In the case of age and invalid pensioners and widows with no dependent child or children, “ means as assessed “ will comprise the pensioner’s income, which by definition does not include income from property, together with a property component. This property component will be £1 for each complete £10 of the pensioner’s property in excess of the £200 disregarded. The ra.e of pension payable will be the maximum rate less the amount by which “ means as assessed “ exceeds £182 per annum. The property bar of £2,250 beyond which no pension is now payable will be removed.
The new means test will ensure that no pe son who qualifies for an age, invalid or widows pension will receive less than the maximum rate until income and/or the property component exceeds the present amount of permissible income - £182 per year. The pension will then, in the normal way, be reduced by the amount of the excess.
A widow with a child or children may now have property up to £2,250 without the rate of her pension being affected. If the value of her property exceeds this figure, no pension is payable. Under the new means test, where a widow’s property does not exceed £2,250 it will continue to be disregarded. Where it exceeds £2,250, £1,000 will be disregarded and the new means test applied, as in the case of age and invalid pensioners.
The new proposal offers an inducement to save, to acquire and to retain property in exactly the same way as people are encouraged to employ their resources and energies to provide income. The t treatment of income and property under th; means test will thus be brought into closer harmony.
Perhaps this is not easy for honorable gentlemen to follow, or for people who may be listening outside, but a more detailed explanation will be given by my colleague the Minister for Social Services in a statement he proposes to issue to-morrow morning.
The new means test will add £4,200,000 to the cost of pensions for a fu’.l year and £1,500,000 in 1960-61.
At present, women whose husbands are in prison are, in certain circumstances, eligible for a maximum pension of £4 2s. 6d. per week. They will, as far as rates and means tests go, be treated in future on the same basis as widows and, if there are any children, may receive a basic rate up to £5 5s. per week, with a further 10s. for each child after the first.
The increased rate of pensions will be applied on the first pension pay-day following the passing of the necessary legislation. It will take some time for the Department of Social Services to make the arrangements required for the opera. ion of the new means test. It will commence from a date to be proclaimed which is expected to be in early March, 1961.
The total cost of these additional benefits is estimated to be £13,300,000 in a full year and £8,500,000 in 1960-61. On the other hand, the repatriation proposals in relation to medical treatment will involve a saving in expenditure f om the Welfare Fund of £157,000 in 1960-61. After allowing for these factors, to. al expenditure from the National Welfare Fund in 1960-61 is estimated at £330,698,000 or £31,335,000 more than last year. Further details of the National Welfare Fund estimates are contained in Statement No. 5.
The estimate of departmental expenditure in 1960-61 is £79,305,000, an increase of £3,760,000 over expenditure in 1959-60. The increase due to the full year cost of wage and salary margins increases is £2,000,000. On the other hand, there will be one less pay day this year than last, which involves a saving of £1,800,000. i Business Undertakings.
Margins increases will also have a considerable effect on expenditures by the various business undertakings, although here again there will be one less pay-day. Post Office expenditure on ordinary services is estimated to be £112,296,000, an increase of £2,099,000 on 1959-60. Expenditure of the Commonwealth Railways is expected to be £554,000 greater than last year and expenditure on broadcasting and television £1.363,000 greater.
The total amount to be provided for the Territories in 1960-61 is £26,439,000, which is £2,881,000 greater than expenditure last year. Within this total, £6,822,000 is for expenditure in the Northern Territory and £14,500,000 represents a grant towards expenditure of the Papua and New Guinea administration. The grant last year was £12,808,000.
Payments to the States.
Payments to the States in 1960-61 are estimated to total £350,607,000, which is £29,192,000 greater than the comparable payments in 1959-60.
Financial assistance grants payable under the new financial arrangements, which came into operation in 1959-60, are tentatively estimated to be £267,622,000, an increase of £23,122,000 on last year. It is worthy of mention here that in 1959-60, the first year of the new arrangements, the finances of the States showed an improvement, despite the heavy increase in costs through margins increases. Indeed, New South Wales and Victoria had budget surpluses.
The net increase in Commonwealth aid roads grants this year over last year will be £2,077,000. Actually, the Commonwealth aid roads legislation provides for an increase of £4,000,000, but last year there were non-recurring payments amounting to £1,923,000.
The amount recommended by the Commonwealth Grants Commission for special grants to Western Australia and Tasmania this year is £8,618,000, which is £292,000 more than the total special grants last year.
The Government has had the benefit of the preliminary views of the Australian Universities Commission on future university needs, and quite clearly considerably higher provision will be necessary in this important direction. When the report of the commission is available later in the year the Government will examine the position further. In the meantime we have included £11,000,000 in the Budget to permit the continued development of State universities in the current financial year in co-operation with the States. It will be some indication of the importance we attach to this matter when I mention that this £11,000,000, in a year in which we have had to place a tight hand on expenditures generally, compares with the actual expenditure by the Commonwealth of £7,628,000 in 1959-60.
An amount of £1,000,000 is being provided this year for development in the northern part of Western Australia, compared with expenditure last year of £484,000.
Expenditure on capital works and services in 1960-61 is estimated to be £139,921,000, compared with £142,060,000 in 1959-60. There is thus an estimated reduction of £2,139,000.
Amongst the various items, some of which show increases and some decreases on expenditure in 1959-60, the largest reduction is in the estimate for the Snowy Mountains Hydro-electric Authority. Actual expenditure by the authority last financial year was £28,250,000. This included £2,650,000 provided in additional estimates to meet expenditures due to exceptionally rapid progress on some of the major contracts. The amount to be provided this year is £18,500,000.
Provision of £37,300,000 is being made for expenditure on Post Office technical equipment. This represents an increase of £1,642,000 on expenditure in 1959-60.
Expenditure on civil works to be carried out by the Department of Works in 1960-61 is estimated at £16,887,000. an increase of £3,298,000 on last year when expenditure fell considerably below the Budget estimate.
An amount of £4,750,000 is being provided for the Albury-Melbourne rail standardization project. Expenditure last year was £3,672,000.
In 1959-60, payments totalling £11,812,000 were made to the International Monetary Fund and the International Bank for Reconstruction and Development on account of our increased subscriptions to these institutions. There will be no comparable payment this year. We are, however, providing an amount of £2,072,000 to meet our initial subscription to the International Development Association.
Expenditure on International Relief and Development which includes contributions under the Colombo Plan and to various United Nations organizations, is estimated to be £5,553,000 in 1960-61, compared with £5,221,000 in 1959-60.
In June, the Australian Loan Council approved for 1960-61 a governmental borrowing programme for State works and housing of £230,000,000, which is £10,000,000 greater than the 1959-60 programme. It was considered that, when allowance is made for increased costs and other factors, the amount approved for the year will permit a volume of works and housing construction about the same as that of last year. Subject to various conditions, the Commonwealth has undertaken to support the programme, if necessary, from its own resources. Details of the Loan Council borrowing programmes are given in Statement No. 6.
Again this year, we face large debt maturities and have to provide against the possibility of heavy redemptions. The loans falling due within Australia totalled £337,000,000 at 30th June last. Besides these, a loan of £20,600,000 sterling matures in London next June. Last year, redemptions in Australia and abroad totalled £77,400,000 which was £7,400,000 greater than the Budget estimate. In the circumstances of this year, redemptions could hi somewhat greater and we have therefore included in our reckoning an amount of £80,000,000 on this account.
The amount to be provided by the Commonwealth for war service land settlement this year is estimated at £2,750,000, which is £4,187,000 less than expenditure in
Further details of loan transactions in 1960- 61 are contained in Statement No. 4.
In total, expenditure ordinarily charged to the Consolidated Revenue Fund is estimated to be £1,483,753,000 which is £61,331,000 greater than comparable expenditure in 1959-60. The other items I have mentioned - Loan Council borrowing programmes, debt redemptions and war service land settlement - add up to £312,750,000 which is £8,380,000 greater than last year. All told, therefore, the estimated expenditure for which we have to provide amounts to £1,796,503,000. This is £89,711,000 above actual expenditure in 1959-60.
I may point out that total expenditure in 1959-60 was approximately £122,000,000 greater than the year before so that the estimated increase of £89,700,000 this year is some £32,000,000 less than the increase which occurred last year.
It is instructive to consider what goes to make up the estimated increase of £89,700,000 in 1960-61. I would stress this particularly for those people who say that the Commonwealth should be able to hold its expenditure steady. The addition to Loan Council works and housing programmes accounts for £10,000,000 of it and the proposed increases in social service and repatriation benefits for a further £10,100,000. Within the balance of £69,600,000 there are such items as increased payments to the States, £29,200,000 - the amount to which we are committed under our formula; increased cost of social service benefits at existing rates, £23,000,000; increased cost of repatriation benefits at existing rates - again to a larger number of beneficiaries - £8,100,000; increased debt charges £3,500,000; and increased provision for redemptions £2,600,000. These items, all of which arise from pre-existing commitments, add up to £66,400,000, within that balance which I mentioned of £69,600,000. If these facts are borne in mind, I think it becomes evident that the Government has lived up to its undertaking to keep expenditure to a minimum. Indeed, it can be said that the only new commitments of any size are those relating to the Loan Council programmes and the additional social service and repatriation benefits and these, I would maintain, are entirely defensible on their merits.
On the basis of existing taxation rates, total revenue in 1960-61 is estimated to be £1,572,600,000 which is £140,800,000 greater than actual revenue in 1959-60.
Of this total increase, £121,400,000 represents taxation revenue, £16,100,000 revenue of business undertakings and £3,300,000 other revenue.
The estimates of taxation revenue reflect, in part, the 1959-60 incomes of companies and other taxpayers and, in part, anticipations as to the trend in employment, earnings, sales and trade in 1960-61.
Customs revenue this year is expected to be £13,600,000 greater than last year. This, of course, is based on the assumption that total imports will be considerably higher.
Excise revenue is estimated to show an increase of £12,600,000 over last year. Some increase is expected from the main items subject to excise, such as petrol, beer, and cigarettes.
The estimate of sales tax revenue is £14,800,000 above the amount obtained from this tax in 1959-60, the assumption being that sales of goods subject to this tax will again rise considerably, even if not by as much as last year.
Collections of income tax on individuals are estimated to be £47,800,000 greater than in 1959-60. Part of this, of course, would come from assessments this year on incomes of last year and part of it from pay-as-you-earn collections in 1960-61.
Income tax on companies at present rates would yield £21,900,000 more than in 1959-60.
There will be a certain amount of revenue -estimated at £4,500,000- from the withholding tax in this financial year.
On the assumption that employment and earnings will increase significantly in 1960-61, revenue from pay-roll tax is estimated to be £4,800,000 higher this year than last.
An increase of £14,000,000 is expected this year in Post Office revenue, partly through increased business and partly through the full year effect of the increased charges applied last year. Revenue from railways, broadcasting and television is estimated to rise by £2,100,000.
Details of the revenue estimates are contained in Statement No. 3 attached to this speech.
In 1959-60 we borrowed £189,800,030, which was approximately the amount estimated in the Budget. But it appears certain that we will not be able to raise as much as that during 1960-61.
Last year, we secured four cash loans abroad - two in New York for a to:al of £21,000,000, one in London for £15,000,000, and one in Switzerland for £6,000,000. This made an overseas total of £42,000,000. This year, however, we will not be able to obtain any new money loans in London because of the maturities we have there. As to other centres, we will certainly borrow there if we can, so long as the terms and conditions are acceptably but it is obvious enough that we cannot count upon getting anything like the same amount abroad this year as last.
Within Australia, the outstanding feature of our loan raisings last year was the amount of subscriptions from savings banks. These totalled £41,000,000. The basic reason for this was the exceptionally large increase in savings bank deposits during the year. Although we can expect further substantial support from the savings banks this year, it would be optimistic to expect this to be as high as the contribution mads in 1959-60.
Taking all considerations into account, the Government does not feel that it could rely upon ob ainingmore than £150,000,000 from loan raisings in 1960-61. That is to say, we have to reckon upon a shortfall in loan raisings of about £40,000,000 by comparison with 1959-60.
We est imate that receipts of the National Debt Sinking Fund which will be available for redemption of maturing debt will be of the order of £52,500,000.
It does not appear that there will be any net amount available from other sources. There will be a certain amount of income accruing to various trust accounts. On the other hand, a payment of £7,200,000 will have to be met this year from the Wheat Prices Stabilization Fund.
Adding together the estimates of £1,572,600,000 for revenue at existing tax rates, loan raisings of £150,000,000 and Sinking Fund receipts available for redemptions of £52,500,000, the total estimate of receipts at this stage becomes £1,775,100,000.
If total expenditure for the year is to be £1,796,500,000 and total receipts were £1,775,100,000, we would have a cash deficit of £21,400,000. As I have said earlier, we think it would be entirely wrong under present circumstances to budget for a deficit. We go further than this, however, and say that the Commonwealth Budget should do something towards reducing the current pressure of demand in the economy. This implies that we should budget for a cash surplus, even if not a large one, and if that is to be done, there is clearly no alternative to raising appreciably more revenue by way of taxation. We have therefore decided upon the following proposals: -
Income Tax. companies.
It is proposed to increase by 6d. in the £1 the rates of tax payable on incomes derived by companies during the income year 1959-60. The rate of 10s. in the £1 payable on insufficient distribution of incomes of private companies will remain.
The gain in revenue from the increased rates is estimated to be £18,000,000 in a full year and £16,600,000 in 1960-61. individuals.
In the Budget last year, a rebate of1s. in the £1 was allowed against the tax payable by individuals on 1959-60 incomes. Under the altered circumstances of this year, the Government finds itself unable to continue this rebate in respect of 1960-61 incomes. Appropriate adjustments will accordingly be made to the instalments deducted from salaries and wages and to provisional tax for 1960-61.
Discontinuance of the rebate is estimated to result in additional revenue of £22,750,000 for a full year and £20,250,000 for this financial year. aged persons.
In consonance with the increase in age pensions, it is proposed to raise the level of the income tax age allowance to residents of Australia who meet the age qualification, which is 65 years for men and 60 years for women.
At present no tax is payable by an aged person whose net income does not exceed £429. In future, the exemption will apply to net incomes not exceeding £442. In the case of a married couple, both qualified by age, the present exemption level for the combined net incomes of the couple will be increased from £858 to £884.
The cost to revenue of these adjustments will be £375,000 in a full year and £215,000 in 1960-61. gifts.
Income tax deductions are to be allowed for gifts of £1 and upwards to -
I may say that the latter body has been established to promote greater productivity in industry. These activities should complement in a useful way the work started some years ago by the Standing Committee on Productivity which is being carried forward by the Department of Labour and National Service.
It is also proposed to allow deductions for gifts made exclusively for the purposes of medical research or education to the following: -
Australian Council of the College of General Practitioners.
Australian Postgraduate Federation in Medicine.
It is estimated that the cost to revenue of these allowances will be £15,000 in a full year. There will be no cost in 1960-61.
It is proposed to increase the allowance for periodical subscriptions paid for membership of a trade, business or professional association. At present, the deduction for an annual subscription to any one organization is limited to £10 10s. This limit is to be increased to £21.
The cost to revenue of this proposal will be £25,000 in a full year, but there will be no cost in 1960-61.
An increase is proposed in the amount upon which the special 20 per cent. depreciation may be claimed in respect of residential accommodation provided for employees, share-farmers and tenants engaged in agricultural, pastoral or pearling activities.
The 20 per cent. allowance is at present available on amounts up to £2,750 expended on housing provided for employees, &c., on agricultural or pastoral properties or in the vicinity of a port or harbour from which pearling operations are conducted. For the 1960-61 and subsequent income years, the 20 per cent. depreciation will apply to expenditure up to £3,250 for each employee, share-farmer or tenant. Expenditure in excess of £3,250 will be subject to depreciation allowance at normal rates. The estimated cost to revenue for a full year is £10,000, but there will be no cost for 1960-61.
To assist certain classes of disabled persons, it is proposed to provide an exemption from sales tax on motor cars for use in personal transportation to and. from gainful employment. The exemption is to apply where a person has lost the use of a leg to such an extent that, in the opinion of the Director-General of Social Services, he is unable to use public transport. This measure of taxation relief will assist a considerable number of persons to become usefully employed. The exemption will, it is estimated, involve a revenue loss of £265,000 in a full year and £210,000 for 1960-61.
A reduction of the rate of tax from 25 per cent. to 12½ per cent. is proposed for silver-plated ware pewter and cut-glass ware. The estimated cost of these reductions is £150,000 in a full year and£ 120,000 in 1960-61.
The dairying industry will be assisted by a proposed exemption of tanks which form part of bulk milk tankers used in transporting bulk milk from farms. The exemption will not apply to motor vehicles to which the tanks are fitted. The estimated loss of revenue is £20,000 for a full year and £16,000 this financial year.
It is further proposed to grant exemption of water de-salting apparatus and of certain classes of goods imported from Christmas Island. Exemption is also to be allowed in respect of goods imported into Australia by the International Atomic Energy Agency and by certain officials of that organization. These exemptions are estimated to involvea loss of £6,000 in a full year and £5,000 for 1960-61.
A change is proposed in the method of taxing radio valves. At present, valves made in Australia are exempt from sales tax but are subject to excise duty of 2s. 9d. each. Imported valves bear a similar levy embodied in the customs duty to which they are subject. It is proposed that the excise duty, and that part of the customs duty which is equivalent to the excise duty, shall be superseded by a sales tax of 25 per cent. This is the rate of sales tax which is payable on wireless receiving sets. An exception will be made for certain valves of a kind which are used only in transmission. These valves will be subject to sales tax at the general rate of 12½ per cent. The net effect on revenue is estimated to be a gain of £300,000 for a full year and £100,000 for the current financial year.
An increase in the rate of sales tax on electric shavers from 12£ per cent, to 25 per cent, is proposed. This will remove the competitive advantage those goods now have over safety razors and safety razor blades which are already taxed at 25 per cent. The estimated gain to revenue is £290,000 in a full year and £230,000 for 1960-61.
In total, the net effect of the foregoing proposals is estimated to be an addition of £40,500,000 in a full year and £36,600,000 in this financial year.
At present the annual cost of maintaining and operating the airport and airway facilities used by the air transport industry exceeds £13,000,000 and it has been rising year by year. Against this outlay, the users pay some £700,000 a year in air navigation charges. There is thus a heavy net burden on the Commonwealth Budget and it is growing.
Air transportation has made remarkable headway in recent years and can now be regarded as a well-established industry. There is no essential reason why it should not make a progressively greater contribution each year towards the cost of ground facilities provided at public expense. After reviewing the position, the Government has therefore decided to adopt a policy of full recovery from the users of the cost of facilities attributable to their operations. This aim will be achieved over a period of years. Each year there will be a review of the air navigation charges payable by the airlines and, as a first step, it is proposed to amend the Air Navigation Charges Act to increase the level of these charges. The additional revenue to be obtained is estimated at £450,000 in a full year and £300,000 in 1960-61.
If additional revenue of £36,900,000 is obtained this year from increased taxation and charges, total estimated cash receipts become £1,812,000,000 and, with total cash expenditures at £1,796,500,000, the net result for the year will be a surplus of £15,500,000. The principal figures can be stated as follows: -
In the Consolidated Revenue Fund estimated receipts would exceed expenditures ordinarily charged to that fund by £125,743,000. It is proposed to appropriate this amount to the Loan Consolidation and Investment Reserve where it will be available to assist in financing the amount required to support Loan Council programmes for this year and to meet other contingent expenditures that may arise, such as an excess of debt redemptions over the amount available to meet them from the National Debt Sinking Fund. So far as it is not required for these purposes, it will be used to redeem outstanding treasury-bills. The estimates of our over all financial position are set out in detail in Statement No. 2 attached to the Budget speech.
To-day, 16th August, 1960, we have entered the second half of the second decade since the war ended. The past fifteen years have seen progress in Australia without parallel in our history. The course of that progress has often been far from smooth and yet, basically, it has been remarkably continuous. It has gone forward, seldom faltering, on a strong current of energy and initiative. There have been times when it has required some temporary stimulus, but, more often, the need has been to steady its momentum and channel the flow of enterprise and effort into the most useful tasks. Essentially, that is the position to-day. The pace of expansion has become rather too fast and we have to ease it off a little. But what the Government proposes to do should in no way be taken to mean that we believe some major interruption of growth to be necessary. On the contrary, we are trying to preserve conditions in which growth of the kind we want can move on unimpeded. There are difficulties around and ahead of us, but, approached with understanding and good sense, they should prove no more formidable than many we have surmounted hitherto.
STATEMENT No. 1- BUDGET RESULTS, 1959-60.
Part A. - Summary of Budget Results, 1959-60.
Total cash payments of the Commonwealth Government in 1959-60 exceeded its total cash receipts from sources other than borrowings from the Central Bank by £28,922,000. This deficiency was financed by the issue of Treasury Bills to the Central Bank.
The overall Budget result, in terms of cash, can be summarized as follows: -
Taxation revenue, which was affected by the strong rise during the year in incomes, employment and economic activity generally, was £1,243,599,000, or £38,974,000 greater than estimated. With other revenue £7,581,000 greater than estimated, total receipts of the Consolidated Revenue Fund amounted to £1,431,818,000, or £46,555,000 more than the Budget estimate. This enabled the amount of Defence expenditure charged to Consolidated Revenue to be increased beyond the Budget estimate, thus reducing the amount chargeable to Loan Fund. (The amount of Defence expenditure charged to Loan Fund, which was estimated in the Budget at £37,000,000, was £11,986,000.) Principally because of this, expenditure from the Consolidated Revenue Fund, other than the payment to the Loan Consolidation and Investment Reserve, totalled £1,390,436,000 which was £42,173,000 greater than the Budget estimate. Thus the amount available for payment to the Loan Consolidation and Investment Reserve proved to be £41,382,000, or £4,382,000 more than the Budget estimate.
Further details of Consolidated Revenue Fund transactions are given in Part B of this Statement.
The Loan Council borrowing programme for State works and housing in 1959-60, which the Commonwealth undertook to support, was £220,000,000. At its June, 1960 meeting the Loan Council also approved additional borrowing authority of £20,000,000 for the Commonwealth to provide finance for the advances it had offered to make to Queensland for the rehabilitation of the Townsville-Mount Isa Railway. These amounts, together wilh £6,937,000 required for financing advances to the States for War Service Land Settlement, made the total borrowing requirements for the year £246,937,000. Loan proceeds received during the year were £189,767,000, compared with the Budget estimate of £190,000,000, and £2,275,000 was available from Loan Fund balances; the balance of £54,895,000 needed to meet borrowing requirements was provided by the Commonwealth subscribing, from the Loan Consolidation and Investment Reserve, to a special loan.
Redemptions of maturing securities, repayments of International Bank loans and redemptions of savings certificates totalled £77,433,000 in 1959-60, compared with the Budget estimate of £70,000,000. These outlays were met from the National Debt Sinking Fund. Current receipts of the Sinking Fund available towards financing them were £53,435,000.
Further details of loan transactions are given in Part C of this Statement.
The manner in which the various commitments of the Commonwealth were financed in 1959-60 may be summarized as follows: -
This deficiency was financed by the issue of £30,000,000 of Treasury Bills to the Central Bank, the remainder of the proceeds of this issue of Treasury Bills (£1,078,000) being added to the cash balances of the Commonwealth.
Total revenue in 1959-60 amounted to £1,431,818,000. This was £46,555000 greater than the Budget estimate. Taxation revenue was £38,974,000 greater than had been estimated, and other revenue exceeded the estimates by £7,581,000.
Customs revenue was £8,681,000 greater than the Budget estimate, mainly because of the progressive removal of import restrictions.
Excise collections exceeded the estimate by £5,889,000. Clearances of beer, cigarettes and petrol were greater than expected; clearances of tobacco, however, were less than expected.
Sales Tax collections exceeded the Budget estimate by £14,185,000. Sales of most taxable goods reached higher levels than expected, higher sales of passenger cars and station wagons accounted for nearly half of the excess of actual collections over the estimate. Collections from sales of television sets were also substantially greater than estimated.
Income Tax collections from individuals exceeded the Budget estimate by £10,839,000, mainly because wage and salary incomes, and hence “ pay-as-you-earn “ collections from these incomes, increased faster than had been expected. The increases in wage and salary margins paid to many employees in the second half of the financial year contributed largely to the rise in incomes.
Collections of Income Tax from companies fell short of the Budget estimate by £3,470,000. Collections from arrears were somewhat less than had been expected.
Pay-roll Tax collections, which were also affected by the increases in wage and salary margins granted to many employees during the year, were £1,961,000 greater than the Budget estimate.
Estate Duty and Gift Duty receipts exceeded the estimates by £453,000 and £435,000, respectively. The numbers of estates and gifts on which duties were paid during the year were greater than expected.
Total revenue from Business Undertakings was £137,238,000, or £2,498,000 greater than the Budget estimate. Receipts from the Railways, the Post Office, and from Broadcasting and Television were all somewhat in excess of the Budget estimates.
Revenue from Territories was £766,000 greater than the estimate, due to higher revenue from services which expanded to meet a rate of growth greater than expected.
Miscellaneous Revenue was £4,317,000 greater than the Budget estimate. Defence receipts were £2,000000 greater than estimated. Of this amount, £569,000 came from the sale of the Echuca ballbearing factory, £425,000 from the sale of copper ingot donated to India under the Colombo Plan, and £341,000 from sales of other plant and materials. Civil Aviation receipts exceeded the estimate by £359,000 mainly because of increased revenue from air navigation charges, increased dividends from airlines and increased revenue from the airport business concessions. Other unforeseen receipts included £350,000 repaid by the Commonwealth Superannuation Fund under Section 77 of the Superannuation Act, £315,000 from the Flax Commission in repayment of advances and approximately £650,000 from the sale of property and material. Receipts of the Snowy Mountains Hydro-Electric Authority were £255,000 less than estimated, mainly because, with a lower water supply, revenue from the Tumut 1 Station was less than expected.
Expenditure charged to Consolidated Revenue Fund amounted to £1,431,818,000 in 1959-60, which was £46,555,000 greater than the Budget estimate.
In the Budget, it was estimated that £155,800,000 of Defence expenditure would be charged to the Consolidated Revenue Fund in 1959-60 and £37,000,000 to Loan Fund, but the amount actually charged to Consolidated Revenue Fund was £181,599,000 and the amount charged to Loan Fund £11,986,000. In total, Defence expenditure was £785,000 greater than the Budget estimate of £192,800,000.
Debt Charges exceeded the Budget estimate by £2,429,000, principally because the interest dates of securities offered in the September, 1959 conversion loan differed from that of the maturing securities and because of the introduction during the year of Seasonal Treasury Notes.
Expenditure on War and Repatriation Services was £634,000 less than the estimate. The excess of recoveries over expenditure on supplies and services provided to other Governments was £945,000 greater than estimated. In addition, there was a saving of £582,000 in expenditure on Reconstruction and Rehabilitation, mainly because expend:lure on War Service Land Settlement was less than had been estimated. On the other hand, Repatriation benefits cost £845,000 more than expected; of this amount, £252,000 was for the maintenance of departmental institutions and £589,000 for medical treatment.
Payments from the National Welfare Fund were £1,422,000 less than the Budget estimate. Expenditure on Age and Invalid Pensions fell short of the estimate by £2,453,000, expenditure on Tuberculosis Benefits by £582,000 and expenditure on Unemployment and Sickness Benefits by £447,000. On the other hand, expenditure on Hospital Benefits was £1,877,000 greater than estimated and expenditure on Pharmaceutical Benefits for Pensioners £338,000 greater.
Departmental expenditure was £2,863,000 greater than the Budget estimate. Increases in wage and salary margins granted during the year fully account for this.
Expenditure on Bounties and Subsidies was £548,000 less than the Budget estimate. Because of a higher world price of copper, bounty payments of copper producers were £492,000 less than expected.
Miscellaneous Expenditure exceeded the Budget estimate by £10,534,000, mainly because of payments of £11,216,000 to the International Monetary Fund and £596,000 to the International Bank for Reconstruction and Development. These payments, which had not been provided for in the Estimates, were associated with an increase during the year in Australia’s quota in the Fund and an increase in Australia’s subscription to the Bank. On the other hand, expenditures on International Development and Relief and of the Department of National Development were below the Budget estimates by £1,038,000 and £734,000 respectively.
Railways expenditure was £71,000 more than had been estimated, and expenditure on Broadcasting and Television £357,000 greater. Post Office expenditure was £2,640,000 greater than the Budget estimate, mainly because of increases in wage and salary margins, a determination on penalty rates which was made during the year, and restoration of services after gale and storm damage. In addition, £430,000 was paid to Qantas Empire Airways Ltd. for operating mail services previously provided by other international airlines. (A considerable portion of the amount thus paid is recoverable to revenue.)
Payments to or for the States were, in total £313,000 below the Budget estimate. The outlay required to complete payments to the States under the Commonwealth Air Roads Act 1954-1956 was £421,000 less than estimated and expenditures in relation to Tuberculosis Hospitals and Mental Institutions were below the Budget estimates by £249,000 and £218,000, respectively. Financial assistance to the States for universities was £372,000 less than had been estimated. On the other hand, special grants to claimant States exceeded the estimate by £1,027,000, this being the amount paid to South Australia upon a recommendation of the Commonwealth Grants Commission, which was received in April, 1960, as a final adjustment of its special grant in respect of 1958-59.
Expenditure on Capital Works and Services was £119,000 greater than the Budget estimate. Expenditure by the Snowy Mountains HydroElectric Authority was £2,650,000 greater than estimated, because work progressed faster than had been expected, and expenditure in respect of the Post Office was £530,000 greater. On the other hand, expenditure on Railway Standardization fell short of the Budget estimate by £1,235,000, and there were also savings on several other items, including £677,000 on account of the Northern Territory and £251,000 on Commonwealth offices and other buildings outside the Australian Capital Territory by the Department of the Interior.
The amount transferred to the Loan Consolidation and Investment Reserve were £41,382,000, or £4,382,000 greater than estimated in the Budget.
At its meeting in June, 1959 the Australian Loan Council approved a governmental borrowing programme of £220,000,000 for State works and housing in 1959-60. The Commonwealth offered, subject to certain conditions, to make monthly advances to the States for the first six months of the year on the basis of that programme and indicated that it would then review the position.
In February, 1960 the Commonwealth advised the States that it was prepared to continue making advances for the remainder of the financial year at the annual rate of £220,000,000 and to provide sufficient special assistance to enable the borrowing programme to be achieved.
At the June, 1960 meeting of the Loan Council, approval was given for an additional Commonwealth borrowing of £20,000,000 to finance advances which the Commonwealth had offered to make to the State of Queensland to assist in the rehabilitation of the Mount IsaTownsvilleCollinsville railway line.
A further amount of £6,937,000 was required to finance Commonweath advances to the States for War Service Land Settlement. The total amount required to finance the Loan Council borrowing programme for the Commonwealth and for State works and housing and to finance advances to the States for War Service Land Settlement was therefore £246,937,000.
During 1959-60 the Commonwealth issued three public cash loans in Australia, two of them being associated with conversion offers to holders of maturing securities. Total subscriptions to the cash loans, including subscriptions received before 1st July, 1959, were £120,241,000. Securities eligible for the two conversion offers amounted to £295,634,000. Of these, £226,519,000 were converted, £67,807,000 were redeemed and £1,308,000 were still outstanding at 30th June, 1960.
The issue of Special Bonds - Series B was discontinued in January, 1960 and was followed by the issue of Special Bonds - Series C. Proceeds of sales of Special Bonds - Series B and C during the year were £26,177,000, while redemptions of Special Bonds - Series A and B were £3,215,000. Net cash proceeds from Special Bonds were thus £22,962,000. In addition, maturing Common-
wealth bonds and inscribed stock totalling £10,875,000 were converted into Special Bonds.
During the year four loans were raised overseas. Two of these, each for $25,000,000, were in New York, and yielded £21,649,000. Loans for £Stg.l2,000,000 in London and 60,000,000 Swiss Francs in Switzerland yielded £14,894,000 and £6,117,000, respectively. After allowing for the net amount of overseas borrowing expenditures charged during the year, the cash proceeds of overseas loans totalled £42,115,000.
In November, 1959, the first issue was made of Seasonal Treasury Notes, which were designed to moderate seasonal fluctuations in the liquidity of the banks and the public. The Notes had a currency of three months. They were issued at intervals until March, 1960, and the amount outstanding .reached a peak of £44,979,000 in February, 1960. All of the Notes matured and were repaid before the close of the financial year.
Details of public cash and conversion loans raised in 1959-60 (other than issues of Seasonal Treasury Notes) are given in the following table:-
As mentioned above, the amount of £120,241,000 subscribed to the three public cash loans issued in 1959-60 includes advance subscriptions received before 1st July, 1959. On the other hand, some of the subscriptions to the last of these loans had not been received in full by 30th June, 1960. Furthermore, the figure of £120,241,000 does not include advance subscriptions in hand at 30th June, 1960, nor does it include instalments received in 1959-60 of subscriptions to loans issued in 1958- 59. Allowing for such factors, the actual cash receipts in 1959-60 from public loan raisings in Australia were £619,000 less than shown in the preceding table. After taking account of net expenditure charged during the year, the actual cash receipts in 1959-60 from overseas loan raisings were £545,000 less than shown in the table.
In total, therefore, cash receipts in 1959-60 from public loan raisings both in Australia and overseas (including net receipts from the issue of Special Bonds) were £184,699,000. State domestic raisings yielded a further £5,068,000, thus bringing the total cash receipts from loans in 1959-60 to £189,767,000. This compares with the Budget estimate of £190,000,000.
Of the amount of £246,937,000 required to finance the Loan Council borrowing programme and advances to the States for War Service Land Settlement, £57,170,000 therefore remained to be provided by the Commonwealth. Of this, £54,895,000 was made available by the Commonwealth subscribing, from the Loan Consolidation and Investment Reserve, to a special loan of £55,000,000 (face value) issued in June, 1960. The remaining £2,275,000 was financed by the use of balances available in the Commonwealth Loan Fund.
In summary, the sources of finance for the 1959- 60 Loan Council borrowing programme and for advances to the States for War Service Land Settlement were as follows: -
LOAN REDEMPTIONS, 1959-60.
It was estimated in the Budget that redemptions of securities maturing during 1959-60, redemp tions of savings certificates and repayments of loans from the International Bank would total £70,000,000. Securities amounting to £295,634000 were offered for conversion in public loans in Australia during 1959-60 and, of these, £67,771,000 were redeemed from the National Debt Sinking Fund. Redemptions of savings certificates, costing £2,427,000, and repayments of loans from the International Bank, costing £7,235,000 ($16,187,000), were also met from the Sinking Fund, making £77,433,000 in all met from that Fund. Current receipts of the Sinking Fund were £71,024,000. After meeting repurchases, minor redemptions and repayments and discounts on conversion loans, £53,435,000 of this was available to meet the redemptions mentioned above. This was supplemented to the extent of £22,826,000 by the sale to the Loan Consolidation and Investment Reserve of securities held as investments by the Sinking Fund and to the extent of £1,172,000 by drawing on the cash balance in the Fund.
In addition to the redemptions of £77,433,000 mentioned above, the Sinking Fund expended £13,423,000 in Australia in 1959-60 on repurchases, redemptions of overdue securities and miscellaneous repayments and £4,090,000 on repurchases and repayments overseas, principally repurchases on the London market, costing £817,000, and repurchases on the New York market, costing £2,683,000. The total amount expended by the Sinking Fund in 1959-60 in reduction of debt was therefore £94,946,000, made up as follows:-
An amount of£237,000 was also paid from the Canadian Loan Trust Account for contractual repurchases in Canada. Securities with a face value of Canadian $583,000 were repurchased and cancelled.
In addition to the reduction of £84,097,000 in Commonwealth and State debt in Australia resulting from the operations of the National Debt Sinking Fund, there was a reduction of £80,365,000 in Commonwealth debt through the operations of the Loan Consolidation and Investment Reserve. With a view to reducing the large amount of Commonwealth debt, chiefly war debt, that would fall due in subsequent years, the Government established this Reserve in 1955. In practice, the Reserve exchanges medium and long term securities from its own portfolio for early maturing securities held elsewhere. The early maturing securities thus acquired are normally cancelled on receipt.
Cite as: Australia, House of Representatives, Debates, 16 August 1960, viewed 22 October 2017, <http://historichansard.net/hofreps/1960/19600816_reps_23_hor28/>.