23rd Parliament · 2nd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
John Armstrong England, Esquire, was introduced, and made and subscribed the oath required by law.
– I wish to ask the Prime Minister a question without notice. In view of the continued retrenchments of coal miners from the gas coal industry on the northern coal-fields of New South Wales, and the further anticipated retrenchment of 250 men within the next three months as mentioned by the chairman of the Joint Coal Board at a public meeting in Cessnock, called by the Cessnock Council last Friday night, will the Government consider instituting an inquiry to ascertain whether residual oil used in gas making is being sold at a price below cost to the detriment of the gas coal industry? If it is so sold, will the Government impose a tax on residual oil and thus prevent unfair competitionwith the gas coal industry?
– This matter is one of policy. That being so, I do not propose to answer the question.
– My question is directed to the Postmaster-General. In view of the important community service rendered by the Victorian civil ambulance service, will the Minister review the requirements for the payment of radio licence-fees and of rent for land lines in relation to radio communications used by the organization in its operations? By way of explanation, I add that there are 50 radio-controlled ambulances involved.
– Order! I think the honorable member is now giving information.
– I would just like to say that it is understood that any exemption granted would apply to all ambulance services that are supported by public subscription.
– It appears to me that the suggestion submitted by the honorable member for Maribyrnong opens up a much wider field than that covered by the question. If it were decided to waive the fees now paid by the Victorian ambulance services, it seems to me that consideration would have to be given to the extension of the concession to other organizations, such as fire brigades and police forces. The honorable member points out that the ambulance services are maintained by public subscription. That is quite correct, but there is, nevertheless, a similarity between the services provided by ambulance organizations and the services provided by other bodies, such as those I have mentioned. I should think that the case of ambulance services could not be determined in isolation. The question of concessions with regard to radio licences has been considered over a period of years, and I cannot hold out any great hopes that the honorable member’s request will be met. However, he has asked me if I will have a look at the matter, and I certainly shalldo so.
– I desire to ask the Attorney-General a question. Yesterday afternoon I left with the Minister’s secretary, for the honorable gentleman’s consideration, a petition signed by 286 residents of Collinsville and Scottville in Queensland, wherein the petitioners requested -
That the Crimes Bill of 1960 be withdrawn ana redrafted, because it fails to repeal objectionable features of the Crimes Act.
– Order ! I think the honorable member should ask his question.
– Has the AttorneyGeneral considered the petition? Does the Government propose to move any additional amendments which would give effect to all or any of the terms of the petition?
-I could answer the honorable member with a short negative. The fact of the matter is thatI have indicated quite clearly the amendments which I propose. I have also stated very clearly that 1 have proposed those amendments only because of the public alarm which has been caused by misconception and by misrepresentation of what the bill, as originally presented, proposed.
– Is the Minister for Trade aware that no Western Australian port has been included in the itinerary of the Japanese trade ship “Aki Maru” on its trip round Australia? Is it too late for the Minister to take some action that might encourage the Japanese Government to have the itinerary altered to include Fremantle as a port of call?
– I know of the interest of the honorable member in this matter, and I have made some inquiries about it. The Japanese authorities have informed me that this display ship will be visiting eight countries in addition to Australia, that the itinerary was fixed in the latter part of last year, and that more time will be spent in Australia than in any of the other eight countries. The Japanese authorities regret that it will not be possible to include a Western Australian port in the itinerary.
– My question, which is addressed to the Postmaster-General, relates to the report recently tabled in this Parliament concerning the issue of television licences. I ask the Minister whether the report that was tabled was the original report issued by trie Australian Broadcasting Control Board, or whether the original report was revised at any stage. If so. why was it revised?
– The report which I tabled in this House recently was the original report received from the Australian Broadcasting Control Board.
– I wish to ask the Minister for Primary Industry a question which is supplementary to those asked by the honorable member for Lawson last week and the honorable member for Gwydir yesterday. Can the Minister explain to the House the reason why the wheat year is recognized as ending on 30th November when the harvest in many northern districts of Australia is completed at about that time? Can he explain the reasons why the announcement of the first advance is always delayed, thereby causing much speculation among, and worry to, growers?
– The date at which the wheat year ends is accepted as conventional. Since the wheat stabilization plan was introduced, the Commonwealth and State governments and the industry have accepted the wheat year as commencing on 1st December and running to 30th November following. The date of payment of the first advance takes into account the risks associated with the crop. Advancing the date of payment might involve a reduction of the first advance payment because estimates would be less reliable. I suggest to the honorable member that it is far better to continue the present system, which enables us to make more reliable estimates of the total crop. For this reason, I think that the present system is more acceptable to the industry and that advancement of the date of payment which, as I have pointed out, would probably involve a reduction of the payments because of the greater risks involved, would probably be less acceptable to the industry.
– 1 ask the
Minister for Primary Industry whether his statement yesterday that the Government will safeguard the interests of the dairy industry can be accepted as an assurance that the Government will not implement the recommendations of the Dairy Industry Committee of Inquiry.
– The honorable member can accept my assurance that this Government will always sympathetically consider the problems of the dairy industry. That has been evidenced by our actions through the years. The fact that ever since 1949, when we took office, we have advanced subsidies which have now reached a total of more than £156,000,000, indicates our practical and sympathetic interest in the industry. The report mentioned is of great importance. The Government will consider it, but in fairness, the views of the industry itself should be taken into consideration when we do. Obviously, the industry has as yet had no time to examine this report.
– I ask the Minister for Primary Industry: Is it a fact that there is a strong demand for copies of the report of the Dairy Industry Committee of Inquiry and that only a limited number of copies is available? ls it a fact, also, that if full value is to be obtained from the report, many more people than have at present seen it will require it and that they should have an opportunity to study it rather than be forced to rely on sketchy press presentations of the tenor of the report? Is it a fact, further, that as yet the recommendations are merely the subjectmatter of a report and that no executive decisions have been made? Is it true that under our form of British democratic government, an honest, intelligent report can be more valuable in the long run, as a result of its influence on people, than is sudden government action?
– To date, 1,000 copies of the report have been printed. Since the demand appears likely to exceed that number, I have already discussed the matter with the chairman of the Printing Committee and suggested that he raise it at the committee’s meeting next week. Perhaps the committee will determine that the report is a parliamentary paper and have it printed as such.
– I direct my question to the Treasurer. Did the Government, before increasing the sales tax on motor cars to 40 per cent., investigate the probable extent of unemployment in the motor car industry as the result of such increase? Has the Government any positive plan for absorbing into other employment all those workers who will be the unfortunate victims of the implementing of Government policy?
– The Government, of course, gave very careful consideration to its decision on this matter. As I said last night, we are well aware of the value of the motor car industry and of its importance in our economy. Indeed, the fact that it has occupied such a large area of the economy in recent years, with a sharp increase in sales of motor vehicles and the consequent increased volume of imports necessary to sustain those sales, has increased the problem of our overseas reserves. The action we have taken is not directed to crippling the industry; it is, however, directed to slowing down the rate of construction in the industry. If in point of fact this produces some diversion of labour from the industry, it does so at a time when the number of vacancies exceeds the number of applicants for employment. While South Australia and Queensland produce substantial numbers of vehicles, other principal producing States are New South Wales and Victoria, and in those two States the recorded vacancies are about double the number of applicants for employment. Figures which my colleague, the Minister for Labour and National Service, has obtained more recently, show a further increase of vacancies of the order of 6,000 for Australia. I think it would take far more than the action we outlined last night to produce a situation in which there would be an unemployment problem in this country.
– I ask the Prime Minister whether his attention has been directed to a statement reported to have been made by the Russian Ambassador in Brisbane in which he is alleged to have claimed that the restriction on the movements of diplomats in Australia is similar to the restriction applied in the Soviet Union. Is it true that the movement of diplomats in this country is restricted to an area with a radius of 45 miles from Canberra, or is this an exceptional case?
– There are restrictions. I am not in a position at present to say precisely what they are, nor indeed do I know at the moment whether details of this kind ought to be made available. However, I will have a look at the matter.
– I desire to ask the Treasurer a question. Is it a fact that there were record motor car registrations in the Australian Capital Territory in the last week? Will the Treasurer arrange to have a list made available of the names of the applicants for motor car registrations in the Australian Capital. Territory during this period? In view of the care which the Treasurer exercised to ensure that the Leader of the Opposition was not supplied with a copy of his speech until after the closing hour of stock exchanges, will he explain how other people not connected with the Parliament were evidently able to obtain prior notice of the Government’s intentions?
– I do not know
Whether the honorable gentleman’s question is put seriously. If he has some informal lion which would suggest that there had been any impropriety on the part of any member of the Public Service or any men>ber of this Government, I would be very glad if he would give me the facts. I have no information as to what registrations were effected in Canberra this week, nor, for that matter, I imagine, has the honorable gentleman. Certainty nothing has come to my notice which would suggest any impropriety of any kind, nor would I expect it to do so. It is a fact that certain press organs have been speculating about the Government’s proposals for some time. In recent days, they have been speculating about a wide range of the items to which the sales tax applies. If some members of the public have been influenced by those speculations into making purchases of one kind or another, that does not surprise me. People have attempted to beat the Government’s announcements before in various directions, only to find that their efforts really were not very profitable for them.
As to withholding information from the Leader of the Opposition, I made it quite clear last night that a copy of my speech would be available for the Leader of the Opposition just as quickly as a complete copy was available for me personally. He had no occasion to be inconvenienced. I offered him a week’s adjournment of the debate, or any shorter time, should he wish to have it. I think it was completely unworthy of the Leader of the Opposition to suggest last night that I had deliberately withheld from him an opportunity to know what was contained in the statement.
– I wish to make a personal explanation. The Treasurer has seized upon a question for the purpose of making a personal attack upon me with respect to a matter which 1 thought we concluded last night.
– Who opened it up again?
– I did not open it again. I thought the Treasurer and I finished it last night when he made a personal explanation at about 11 o’clock and I accepted his assurance. What I said was that I expected him to offer me a copy of the speech, as was always done to my predecessors in this office and as was always done by the present Prime Minister to me and my predecessors in this office.
Apparently what annoys the Treasurer is that I followed him in the debate last night and exposed the weaknesses of his proposals, revealed the deceit of the Government, and revealed, the humbug contained in the Government’s statement.
– Order! I do not think the honorable gentleman will be in order in debating the subject again.
– All I want to say, now that the Treasurer has raised the point as to when I would have received a copy of his statement, is that although he told me last night that he did not have his speech finished until 7.30 p.m., I have reason to believe, from information given to me to-day, that he had already handed copies of his statement to the press at 7 o’clock.
– I ask the Minister for Primary Industry: Is it a fact that for some time past the costs of primary production have been rising while prices generally hia ve been falling? Has the Minister’s attention been drawn to a statement of the general manager of the Commonwealth Development Bank to the effect that there has been substantially increased primary production in a number of industrialized countries which pay heavy subsidies to domestic agriculture? In view of this development, can the Minister give an assurance that there will be no change in the Government’s policy of subsidizing certain rural industries, the dairying industry in particular, until the beneficial effects of other measures to increase their returns have been felt?
– In reply to the first part of the question asked by the honorable member, I am sure it is well known that costs affecting primary industries have risen proportionately with the costs of other industries,, consequent upon some- rises in freight charges, wage increases and the like, which have had to be passed on to primary industry. Reference has been made to the returns of our primary industries. Due to the sympathetic attitude of this Government with its stabilization acts, in some industries the price of the product has actually risen, while in others the returns have fallen. In the aggregate-, there is a lower income from primary production- as a. whole. In reply to the second part of the honorable member’s question, I did see the’ statement of the general manager of the Commonwealth Development Bank and his reference to subsidized industries in other countries. The honorable member asked for an assurance with regard to certain subsidies and more particularly with relation to the dairy industry. That is a matter of Government policy, but I repeat my statement to the honorable member for Eden-Monaro that this Government is always sympathetically disposed to the primary industries.
– My question is directed* to the Treasurer. Has he any specific- plans to curb the alleged- over-activity in the building industry, other than- the overall tightening of credit?
– I indicated in a general way last night what would be the situation,, as the Government viewed it, in the building, industry. We feel that the action we have taken in the financial field will have some effect in discouraging the more speculative type of building. Of course, much of the building which has been going on throughout Australia is valuable, such as domestic building and some of the building of a permanent kind of an industrial character. I do not feel that I can usefully advance the matter further at this point, but the general objective of the Government has, I think, been made clear.
– My question, is directed to. the Minister for Health. Is it true that many viruses have built up resistance to standard penicillin: and that research overseas has developed penicillin more potent than that currently produced by the Commonwealth Serum Laboratories? If this is so, will- this advanced penicillin be imported into Australia and will i; be be manufactured by the Commonwealth Serum Laboratories?
– Penicillin is not- active against virus diseases; it is a: live against bacterial diseases. It is. a fact that there- have been considerable problems, of penicillin- resistance and recently a newform of penicillin has been discovered or,, perhaps I should say elaborated, overseas., It is confidently expected that this, new form- will be much more potent and- will overcome many, although not all, of the problems of penicillin resistance by organisms. So far as I know, it has not yet been imported into Australia, although no doubt it soon will be. We hope to be able: £o> manufacture the new form in the Commonwealth. Serum Laboratories.
– My question is. addressed to the Treasurer. In view of his statement on the Government’s intention to direct life insurance companies to hold certain of their assets in the form of public securities, I ask him whether that legislation will require those companies to provide more money for co-operative housing, a field from which they have withdrawn since 1951.
– The Government has no policy intention going beyond that which I have announced. I pointed to the trends which had developed in investment in government securities and showed that out of a total of more than £500,000,000, over a period of years, only £4,000,000 had gone into these Commonwealth securities, in net terms. For the reasons which I then mentioned, taken in association with the fact that the Government makes a valuable tax concession to policy-holders in life insurance companies, which is an incentive to them to invest in the companies, and also gives tax concessions to- the companies themselves, we felt it was reasonable that there should be an investment of the proportion which I specified last night. If that is the purpose of the honorable gentleman’s question, I agree that it is desirable to have some degree of investment by these organizations in co-operative building societies and in other forms of housing finance, but it is not the intention of the Government to legislate along those lines.
– My question to the Minister for Trade is supplementary to the question which was asked by the honorable member for Stirling. Will the Japanese attempt to write orders during the visit of the floating fair? Will those orders come within the limits of the trade treaty with Japan? Is it a fact that this same floating fair recently visited South America and resulted in orders from Japanese manufacturers to the value of 10,000,000 dollars?
– I have no doubt that the Japanese floating fair will carry businessmen who will seek to write business here, just as Australian businessmen will seek orders when an Australian floating fair visits Asian countries in the near future. Any business that is done in Australia, whether or not it arises from the visit of the Japanese floating fair, will be within the limits of the provisions of the Japanese trade treaty. There will be no distinction whatever. I am not aware of what business was done by the Japanese in South America.
– I preface my question to the Attorney-General by directing his attention to statements which have been made to the effect that his handling of the Crimes Bill has dealt a severe blow to his political reputation; has shown him to be as contemptuous and resentful of opposition as are many of his colleagues in the Ministry-
-Order! I think that the honorable member is expressing an opinion. He may only refer to a statement; he must not quote extracts from it. In addition, he must also vouch for the accuracy of the statement. The honorable member should direct his question.
– Has the AttorneyGeneral seen statements which claim that his handling of the Crimes Bill has dealt a severe blow to his political reputation, and which make references to his integrity and the integrity and honesty of other Ministers? In view of these comments, which may be regarded as severe criticism of the Attorney-General and certain other Ministers, and which cast grave doubts on their integrity, honesty and capacity, will he inform the House what action he intends to take to silence such criticism when the Crimes Bill becomes law?
– I propose to take no steps whatever to silence such criticism. I enjoy it. I give it such value as I think is due to those who write it. In this instance, although my political career has been very short, I do not give the criticism much weight.
– I address my question to the Minister for Primary Industry. Is it a fact that the export of dairy heifers to Japan is limited to 2,400 head? If so, why does this limit exist in view of overproduction in the dairy industry?
– There is no arbitrary quantitative restriction on the export of dairy cattle to Japan or, for that matter, to any other country. Over recent years there have been exports of beef and dairy cattle and sheep. I think that last year 2,000 dairy cattle were exported to Japan. Such exports require the prior approval of the Minister for Primary Industry. To date in this financial year, 1,000 head have been exported to Japan. If any requests for additional exports are made, the potential exporters will not find me difficult to deal with.
– My question is addressed to the Minister for Social Services. Is there a gestapo at work in his department? If not, how long is it since the officers of the department commenced making demands on the estates of deceased pensioners in the terms which I shall now read? These are -
I shall be obliged also if you will kindly regard this letter as a provisional notice of claim against the late pensioner’s estate in the event of investigation showing that an over-payment of pension has occurred.
Does this practice apply to all pensioners, or are only certain cases picked out? Who is expected to meet the cost of supplying the information concerning the assets and liabilities of pensioners’ estates which the department seeks?
– The honorable member for Shortland characteristically couches his question in a manner that is always critical of the officers of the Department of Social Services. If the honorable member has any difficulty over any constituent, and if he will address his question in fair terms to me, I will give it the careful consideration that is its due. In that connexion may I be permitted to point out to the honorable member that I have now held the office of Minister for Social Services for a longer period than any other man since federation and I am in a position to judge the officers of the department. Every day I have cause to be proud of them, and of the sympathetic and generous treatment meted out to those who have to do business with the department.
– I preface a question to the Treasurer by directing the right honorable gentleman’s attention to section 82f of the Income Tax and Social Services Contribution Assessment Act, which limits the deduction for medical expenses in respect of any one person to £150 in any year, but also removes this limitation in respect of persons over the age of 65 years. Will the Treasurer consider the removal of the limit in respect of dependent persons who have been bedridden for a minimum period of, say, two years, and whose prospects of being restored to health are considered to be remote?
– I know that the honorable member for Henty appreciates that his question raises a matter of policy which would normally be considered at the appropriate time in connexion with the Budget proposals. I can assure him that it will receive adequate consideration when that time arrives.
– My question is asked of the Treasurer. Does the Treasurer’s statement last night indicate that the Development Bank can be expected to take a more sympathetic view of applications from primary producers for loans than it has taken so far? Are there grounds for hoping that many of the previously rejected applications for loans for genuine developmental work will be reconsidered now, with a greater chance of success?
– I cannot accept the proposition put forward by the honorable gentleman that the Development Bank has taken an unsympathetic attitude. The statistics which are put before me covering the bank’s activities show that there has been about an equal division of the funds made available by the bank between primary production and industrial production. The number of persons granted loans is very much greater, of course, in the case of primary production. I believe that, within the charter laid down by this Parliament, the Development Bank is fulfilling a very useful purpose, and certainly cannot be justly accused of a lack of sympathy to those whom it is intended to assist.
– My question is to you, Mr. Speaker. Would you, Sir, be good enough to make inquiries about two or three members of the public - strangers - who, just as the bells were ringing to summon honorable members to the chamber for the start of the day’s proceedings, were in the Government members’ lobby, just outside the chamber, and were endeavouring to persuade members of the Government, parties to vote against the Crimes Bill?
– I will give consideration to the question raised by the honorable member. I think that courtesy is extended to all electors who come to Canberra and visit the King’s Hall. However, it is only reasonable to insist that in no way must the freedom of any honorable member be interfered with either in the corridors or between the Senate, the House of Representatives and the Library. If we do not secure co-operation in that respect from our visitors, it will be necessary to take appropriate action.
– Is the Prime Minister aware that many local government instrumentalities in Australia have encountered such financial difficulties that they have decided to support the Australian Council of Local Government Associations in its endeavour to force the Commonwealth Government to convene a conference between Federal, State and local government representatives to formulate a new financial arrangement for local government? Has the Prime Minister, through the Minister for Immigration, already refused to see a deputation on this matter from the Council of the City of Greater Wollongong and the representatives of local organizations in that area? Will the Prime Minister reconsider this decision and agree to receive the representatives of the Greater Wollongong council and of otter councils which are anxious to ensure that the third arm of government will not continue to suffer from financial malnutrition?
– I can assure the honorable member that 1 have received many deputations in the past on this very important matter from people engaged in local government, and sometimes from the centra! body of the local government organizations. I cannot really undertake to see them all. I think I am very familiar with their view. It raises questions of policy on which, so far. the Government has found itself unable to act in the direction that they have indicated.
– Can the Minister foi Trade inform the House whether we are seeking an opportunity to sell sugar to the United States of America?
– I have announced to-day that Australia is engaged, with other British Commonwealth sugar-producing countries, in a concerted approach to the United States Administration to see whether we can enter the United States market. The United States has historically provided a market for a very big percentage of Cuban sugar and there has not previously been an opportunity for Commonwealth countries to sell sugar there. Because of the policy decision of the United States to curtail imports of sugar from Cuba, there is now quite clearly an opportunity to sell sugar to the United States and discussions have been initiated along those lines. All I can say at the present time is that the United States Administration has been made aware of what sugar could be made available by Australia and by other British sugar-producing countries without leaving them unable to serve their traditional customers. I am hopeful that some business may transpire.
– The Prime Minister will recollect that in July last year the National Radiation Advisory Committee recommended that the Commonwealth should accept full responsibility as early as possible for the legislative control of all uses of ionizing radiation and that in July of this year it gave him the full reasons he had sought from it for this strong conclusion. I ask the Prime Minister whether he has yet studied the report which the committee gave him five months ago and whether he will be able to announce his decision on it before he opens the extension of the Lucas Heights establishment on Friday.
– The answer to the final part of that question is indubitably, “ Np - not between now and Friday “. The questions involved in this matter, as the honorable member knows, are not simple and they are being examined by the relevant departments. I am not yet in a position to say what action, if any, we propose to take on the recommendation. I certainly am . not so optimistic as to expect that I will be able to say something profound on the matter on Friday morning. However, I hope the honorable gentleman will be there and encourage me by applauding whatever I do manage to think of to say between now and then.
Motion (by Mr. Menzies) agreed to -
That leave be given to bring in a bill for an act to amend the law relating to the Public Service.
Bill presented, and read a first time.
– I move -
That, in accordance with the provisions of the Public Works Committee Act 1913-1960, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report: - Construction of a new general laboratory building at Parkville, Victoria.
The proposal provides for the erection for the Department of Health of a five-story steel-framed building, with basement. It will provide general purpose laboratory accommodation to enable all types of bacterial products to be manufactured and investigated.
The ground floor will be devoted to autoclave work and the basement will accommodate service plant and heavy production equipment. Both of these floors will be ventilated with sterilized air. The four upper floors provide laboratories for research and development and require to bc air-conditioned. The estimated cost of the proposal is £470,000. I table preliminary plans of the proposed building.
Question resolved in the affirmative.
– I move -
That, in accordance with the provisions of the Public Works Committee Act 1913-1960, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report : - Construction of a new chemical physics laboratory building at Clayton, Victoria.
The proposal provides for the erection of a two-story building. Ground and first floors will accommodate the Chemical Physics Division of the Commonwealth Scientific and Industrial Research Organization and a small basement will provide accommodation for specialized activities associated with the division.
The building will be constructed with brick bearing walls, faced with selected bricks, and will have concrete floors and a low pitched contemporary style roof. The preliminary estimate of cost is £415,000. I table the plans of the proposed building.
Question resolved in the affirmative.
Debate resumed from 15th November (vide page 2879), on motion by Mr. Harold Holt-
That the following paper -
Economic Measures - Ministerial Statement - be printed.
Upon which Mr. Calwell had moved by way of amendment -
That all words after “ That “ be omitted with a view to inserting the following words in place thereof: - “ this House declares that it has no confidence in the Government’s capacity to guide the Australian economy efficiently and that the economic policies pursued by the Government over the past eleven years and in particular the measures announced to-night are an admission that the policy which the Government put into force in Februarylast has proved a failure”.
Mr.BURY (Wentworth) [3.19].- As the Treasurer (Mr. Harold Holt) indicated in his statement, Australia is certainly not in a state of economic crisis, but we are in the advanced stages of a boom and if adequate measures were not taken now to break down the recent pace of expansion we should indeed be in danger. Every sign of excessive boom has been current in the community which recently has been full of over-optimistic people. The feeling of getting rich quick has gone far and wide. The quality of credit being extended has, in many cases, tended to deteriorate, and many businessmen have got the impression that almost everything they touch will turn to gold. On the wage front there has been a steady expectation that year by year there would be further wage advances, irrespective of any increases in productivity.
This very pleasant way of living has, of course, been sustained for some time only by drawing heavily on Australia’s overseas reserves. It is quite apparent, therefore, that the processes that are evident at the moment must be slowed down. If they were not, then, apart from the internal inflation that would result, with all the dislocations that this would bring, the country would rapidly become bankrupt externally. Only those who would wish us to fall into chaos and face devaluation would suggest that the pace of the economy at the moment should not be slowed down.
We should, I think, look at the causes of this boom, not for the sake of making recriminations, but for what lessons we might learn for the future. The present boom, of course, had its foundations very largely in the events of 1959, because economic processes take a long time to work themselves out, and in so far as they are susceptible of policy treatment and conscious management, it is usually a year or eighteen months before the effects of policy measures are fully felt.
The history of last year was a most unfortunate one. The year started off with the job done by the press on the Richardson report. This was followed by a Budget which involved a deficit. In many sections of the press at that time there was a talk of a stagnant economy and suggestions that the economy needed stimulation. Despite the wonderful stability that we had enjoyed in the previous two years, and the value of the long-term investment which had been made, many people, who seem to like change for its own sake, spread the story of the stagnant economy. They made, as my colleague from Bradfield (Mr. Turner) and many others pointed out at the time, a mistake in judgment. However, these ideas were accepted by the authorities. They had widespread acceptance. The suggestion that the economy last year needed stimulation seemed nonsense to many people. It is easy to be wise after the event, but the fact is that events have confirmed the view of those people.
There followed - and in this atmosphere, perhaps, it was almost inevitable - a very considerable increase in wages awarded by the Conciliation and Arbitration Commission, which was followed in turn by a steep increase in margins. The combination of all these forces inevitably resulted in a boom, starting at the point from which they were let loose.
In the latter part of 1960 all these forces have come to a climax, and this year, of course, we have seen a very steep increase in bank advances, which has naturally caused considerable concern. But again, these bank advances owed their origin to the measures taken last year. Until at least the end of October and, although J have not been able to check this from public statements, even until November, the central bank was still urging the trading banks to expand their advances. But by February doubts had set in, and the reverse process was put into effect. There is no free enterprise system which you can manage properly if you go from full speed ahead to hard astern in the space of a little over three months. When you increase bank advances, or when you allow limits to be established which inevitably mean increases, the process takes a long time - at least about six months and often up to a year - before its full effect is felt.
After this big increase in advances, which was quite inevitable following the decisions of last year, the whole credit expansion procedure of last year has been thrown into reverse, and the danger is that the overadjustment which took place then is now going to be followed by an over-adjustment in the opposite direction. These things are matters of judgment, as to what effect a given measure will have over a period of time. There is extreme danger that much of the credit squeeze, upon which so much reliance has been placed, could in fact have rather excessive effects.
Even more recent factors have unfortunately provided reinforcement. The fall in wool prices is one of these factors. Most of the embarrassing results with which we now have to deal would have occurred in any case, but, of course, the position has been worsened by the fall in wool prices. Perhaps the most spectacular of all these factors has been the increase in extrabanking activities. The actual increase in the volume of money over the last twelve months or so has not been of a very high order, but the velocity of circulation - which, of course, has an effect on prices - has, as is usual in the latter stages of a boom, been increased at a very rapid rate. The volume of bank debits, which is, perhaps, the best available measure of this factor, has increased enormously, and this is in very large part a reflection of the growing intensity of the use of money by institutions which collect it from the current accounts of normal depositors with banks and apply it to hire-purchase undertakings, developmental schemes and all kinds of other schemes. When deposits are shifted from the interest-bearing category’ - where they are, from a monetary point of view, temporarily sterilized - they come into the economic system and increase the velocity of circulation.
Obviously any responsible government faced with the present situation has to take measures, and pretty sharp and immediate measures, to reduce spending power. As by far the largest single spender in the country is the Commonwealth Government, together with the Government instrumentalities, it is disappointing to find that there is to be, apparently, no immediate plan for reducing the Government’s outlay. The adjustment is to be made wholly by the private sector of the economy. However, few could quarrel with the suggestion that activity in the motor industry and in the building industry has been running at a excessively high level. Australia is now building houses at the rate of more than 100,000 a year. This is almost half the rate of house construction in the United Kingdom, where the population is five times as great.
It is in relation to the extra-banking activities that it is disappointing to see no initiative taken. In this field of extrabanking activities there seems to have grown up a sort of constipation of thought as to what might be done about the matter. Apart from the ideas of the Opposition, which, of course, would impose a host of direct controls, there are very obvious alternatives. One is that the Government itself should move into the short-term money market. If the Government were prepared to issue short-term government securities at high rates, it would undoubtedly skim off quite a large volume of credit which has gone to these institutions outside the banking system. Increases in interest rates on bank deposits would have had something of the same effect. Even if this current move comes rather late in the day, it could still be of definite benefit in this direction.
The history of the other money markets of the world, especially those of New York and London, shows that for very long periods short-term rates have been much higher than long-term rates have been. The obsession which has developed in some official quarters with respect to the longterm bond rate seems to have sterilized thinking in every other direction. There rs no doubt whatever that the Government could have pulled in part of the boom much, sooner and got more funds for the normal, use of governments had it been prepared to operate locally in the short-term market.
Another factor which sorely needs attention is that of wage policy. The tendency in Australia has been to regard this as something for the Commonwealth Conciliation and Arbitration Commission, or, as it waspreviously known, the Commonwealth Court of Conciliation and Arbitration - something that governments can conveniently siphon off and forget about. But if any government is to control the economy successfully over a long period, it must move into the wages field. However politically unpalatable movement into this field may be, it is almost inevitable in the process of the evolution of a full-employment economy. If we are not to have government participation in the field of wage policy, the economy will again be at the mercy of apparently uncontrollable forces which will have a very serious effect.
The current concept of the commission of capacity to pay is, of course, a nebulous one, and it has been applied in such a way as to permit wage increases far beyond any increases in productivity on a number of occasions. When wage increases of this order are awarded by the Commonwealth Arbitration Commission, an ensuing rise in prices and an inflationary movement are almost inevitable. We are now again approaching the time when the commission will pronounce on this matter. There is, in my mind at least, little doubt that, whatever considerations of equity or of other kinds there may be - 1 shall not argue these - are brought to bear, if the commission early next year repeats its performance of last year and injects into the economy a similar stream of spending, Australia will stare devaluation starkly in the face.
– The more wages are increased and the more credit is pumped into the system to sustain the higher wage level, the higher profits will be.
– There is no end to it.
– So long as you keep the inflationary pressure going, from whatever source it comes - whether from profits or wages - the economy moves in a vicious circle to which there is- no end. There is an end to it only when we decide as a matter of long-term national’ policy to reduce this high pressure on our available resources.
In conclusion, Sir, I say that the mistakes which have been made are, after all, of relatively small order. They have resulted very largely from an overoptimistic spirit. There is now a danger of over-adjustment, but beneath, all. these mea,sures, the Australian economy is ebullient and. strong.. Provided we keep our heads and the community generally is sufficiently mature to accept corrective measures, we can look forward to sustained national prosperity in the coming year.
.- Mr. Deputy Speaker-
– Now we shall hear- the answer to. everything.
– Most honorable members,, perhaps with the exception of the honorable member for Gippsland (Mr. Bowden), know the Biblical story of Egypt under Joseph.. During the. seven fat years, Egypt lived within its income, and when the lean years arrived the people of Egypt were able to live comfortably and Joseph was able to help his brothers and- their families. Australia has had the fat years and the lean years are inevitably ahead-. We have had ten years of the best seasons that this country has ever known. Our rural production has been greater than ever before and we have received for the. record volume of exports that we have, sent overseas higher prices than we have, ever before had. Australia’s production, per head of population as well as overall, has been greater than ever before. We have received, for our- exports over the last ten years more than £8,000,000,000, which was more than the total of what we had received for all our exports in the previous years of the Commonwealth. But during the last ten years we spent, not just £8,000,000,000 overseas. We spent nearer £10,000,000,000. Briefly, the story is this: At 30th June, 1951, Australia’s overseas balances stood at more than £800,000,000. The honorable member for Fremantle (Mr. Beazley) pointed out last evening that when the Chifley Government went out of office our overseas balances in London stood at £989,000,000. That was the equivalent of more than £1,800,000,000 to-day, because in those days every £1 had twice as much purchasing power.
– In 1949, the basic wage was only £5 8s. a week.
– That is so. The Treasurer (Mr. Harold Holt) has stated that to-day our overseas balances total £400,000;000. There has been a grave deterioration. From 1950 to 1959, our overseas debt increased by more than £100,000,000, and overseas investments in Australia by more than £900,000,000. And the lot has been spent. We have spent the proceeds of our exports, the loans that we have raised and the investment funds that have come from overseas. Is it any wonder that certain people who engaged in that spending spree have had what amounted to prosperity? Of course there has been prosperity for these people. There has been prosperity for those engaged in hire purchase. There was prosperity for the woolgrowers at one time. There has been prosperity for those who owned shares in industry and business undertakings. At 30th June, 1959, our annual obligation in the form of interest on our overseas indebtedness - the debts which we- had incurred by raising loans by the investment in this country of the funds of overseas investors - totalled £U6,000000. That was the first call upon our exports.
In February, 1960; the Government decided to make a four-pronged attack upon inflation. That inflation, of course, was due to the fact that we were spending a record income plus loans and investment money. The Government decided to do four things. With the assistance of the employers, it successfully opposed an application for an increase of the basic wage. Import restrictions, were lifted and a credit squeeze was applied. The Government later budgeted for a surplus. The Australian Labour Party made clear that it considered these measures would add to the economic difficulties of Australia, and by statements and questions kept directing attention to the continually increasing economic difficulties facing this country. Immense increases have occurred in the cost of living. In six months in Victoria, the cost of living increased by 28s. a week, according to the official figures. The position of overseas funds deteriorated gravely because of the flood of imports into this country. Primary producers and home-seekers have continually declared that they have been unable to obtain the credit necessary to carry on successful primary production or to provide homes.
From 1959, this has happened: On 30th June, 1960, Australia had an adverse balance of payments of £243,000,000, which was met by £4,000,000 from our overseas funds and by an inflow of overseas loans and investment money of £239,000,000. For the four months July, August, September and October, Australia had an adverse trade balance of £112,000,000 compared with a favorable trade balance of £4,000,000 for the same period of last year. This means that we could easily have an adverse trade balance for this year of £400,000,000- an immense sum! But to give the real financial position, we must add to the adverse trade balance the invisibles such as freight, interest on loans and dividends payable overseas. These are continually increasing. They would be about £423,000,000 for the year, and this figure must be added to the adverse trade balance of £400,000,000 to give the position of our balance of payments. I have put this on a conservative basis. We would have an adverse balance of at least £700,000,000 by the end of the year, if the present trend continues.
It may be said that I have neglected to take into account the inflow of capital from overseas, and that is right. There could be an inflow of overseas capital, and already the Treasurer has secured one loan in New York of, I think, 26,000,000 dollars. The Treasurer has suggested that the inflow of overseas capital will be about the same amount as it was last year, when the figure was £239,000,000. If we will receive only £239,000,000 in the form of overseas capital, our overseas funds will deteriorate to the extent of about £500,000,000, and this means that they will be completely wiped out. Of course, the Treasurer has pointed out that we now have power to draw on the International Monetary Fund to the extent of £200,000,000 or more. I grant that that is so, but that £200,000,000 is merely a loan that must be repaid.
The position at the end of this year will be that our overseas funds will have deteriorated immensely and we will have increased overseas obligations. These obligations in the payment of interest and dividends on overseas loans and investments amounted to £116,000,00 annually at the end of 1959, and by the end of this year they could easily be £250,000,000 annually. This means that before buying an ounce of rubber, a pint of oil or any of the items needed by our expanding industries, we could be called upon to meet overseas obligations of £250,000,000. Can we do this? What imports are necessary to permit our existing industries to continue? The Minister for Trade (Mr. McEwen) said that 80 per cent, of our imports in 1959 were necessary to carry on our industries at the rate at which they were expanding in that year. Our imports then were about £800,000,000, and this means that we need imports valued at about £600,000,000 if our industries are not to regress. But they must expand as our population is expanding. Therefore, we must export each year goods worth more than £600,000,000 to pay for essential imports. This is, of course, impossible with our mounting obligations on overseas investments and loans. It must be clear to every one that we are spending more than we are earning, and we cannot continue to do this.
The honorable member for Fremantle pointed out that investments from abroad in the days gone by helped us to develop. That, of course, is right because in those days the investments came to us from overseas in the form of locomotives, machinery, even prefabricated houses, furniture and goods that were essential while we were developing our primary industries.
– Many of them were guaranteed out of colonial bonds and they were intelligently invested by the colonial governments.
– I thank the honorable member for Fremantle for that information. lt should be obvious to any one that money coming here at present as investments or loans is not coming in the form of goods ur the development of the country. The honorable member used the term “ hot money “. The goods now coming here include Tobler’s chocolates, textiles, Brummagem jewellery, lingerie and luxury goods of every description - millions and millions of pounds worth of them. This, of course, is not adding to our capacity to find the money needed to pay dividends overseas. If foreign capital coming here helped to develop industries that would increase our export earnings, there would be little or no objection to the inflow of overseas capital. But that is not what is happening. Each year this inflow of foreign capital is becoming a greater and greater millstone around the necks of the Australian people. With that position confronting the people of Australia, the Government says, “ We have got to do something about it “. What does the Government propose doing? First, it proposes to nationalize about one-third of the moneys held by life assurance companies. It intends to say to the people who have money invested in life assurance, “ A big proportion of your funds must go into Government loans, at a lower rate of interest than you can obtain from investing in other avenues at present “. It also proposes to say, “ The sales tax on motor cars will be increased “. But what will that do? Will it reduce the number of motor cars being sold? I doubt it.
In February of this year, the Government introduced what it called a credit squeeze. AH that that credit squeeze did was to reduce the amount of money available to primary producers and to reduce the amount of money available for housing and things of that description. It did not reduce the amount available to hirepurchase and other organizations, which are making huge profits from the community. When a credit squeeze is introduced, when you reduce by 25 per cent, the amount of money that can be made available, the effect is merely to reduce by 25 per cent, the credit available to such people as primary producers, home builders and others who pay the lower rates of interest.
The proposed reduction in the amount of money to be made available by the banks for the purchase of imports will not necessarily benefit the economy of Austra lia. The reduction will be of no benefit whatever unless it is made in a most discriminatory manner. To be effective, ii will be necessary for the banks to ask those requiring money for imports what they want to buy from overseas. If the prospective borrowers say they want to import Tobler’s chocolates, the banks will have to refuse the money. If prospective borrowers want the money to import goods that are manufactured here or that could be manufactured in Australia, the banks will have to refuse the requests. If people say they want the money for goods that are necessary to help the development of the country or in order to carry on its industries, then the banks should make it available. But will the private banking institutions do that? As their main objective is to make profits for their shareholders, the banks will make the money available for either the purchase of imports or other purposes which will return to them the highest profits. That is what will happen.
If this Government wants to tackle the problem of investment from overseas, it should say to those who seek to invest money in Australia, “ What do you want to invest your money in?”. If people are seeking to invest overseas money in a new clothing factory at Ballarat, for instance, in competition with existing clothing factories, or if they are seeking to invest in the production of something that is not essential to the development of this country, the Government should say, “ No, we do not want your investment money “. That was done by the Japanese Government, which said, even to the great America, under whose thumb it was supposed to have been, “ We will not accept an unlimited investment of funds by American investors. We intend to have a system of discriminatory investment and we will refuse certain types of investment “. It did refuse certain types of investment continuously, and very carefully, over a period of years.
– And it insisted upon forced loans from insurance funds.
– That is so. It did manyother things.
– Order! The honorable member’s time has expired.
– There was one encouraging feature of the speech just delivered by the honorable member for Scullin (Mr. Peters). He spoke about capital inflow in terms which clearly indicated that he at least, if not his party, would approve of capital inflow if it were used for productive purposes. He stated that £239,000,000 had come into this country last year and that the Treasurer had indicated that roughly the same amount could be expected in this year. There seemed to be a note of regret in the honorable member’s voice at the fact that the amount expected to come in was not greater than £239,000,000.
The honorable member for Scullin clearly indicated that if the capital coming into the country were to be used tor productive purposes, he would not disapprove of it; in fact, he sard he would approve of it. This seems to be completely contrary to what he has said on previous occasions in this House and completely contrary to what other members of the Opposition have said in connexion with this matter. I realize that the information available with regard to the break-up of capital inflow - that is, where it actually goes - is not as precise or as detailed as it might be, but it certainly is not correct to say that the greater proportion of the millions upon millions of pounds of capital flowing into this country goes towards financing the importation of Tobler’s chocolates or other frivolous items. That is clearly demonstrated by the fact that approximately 80 per cent, of all the imports into this country are used either directly or indirectly to keep the wheels of industry turning. These goods represent either capital equipment or raw materials of some kind or other for use by industry, either primary or secondary. An examination of the break-up of the other 20 per cent, will disclose that there is very little room for manoeuvring in connexion with items which might be described as frivolous - items of the type mentioned by the honorable member for Scullin.
There have been criticisms of the past policies of this Government. It has been suggested that the Government has one policy at one moment and another policy six months later. Such assertions clearly demonstrate tha confusion in the minds of the critics, who cannot distinguish between policies and methods of carrying out policies. The policies of the Government have been consistent in every respect. Its policies in relation to economic matters can be stated briefly. First, it has a policy of full employment. But it is not necessary to have the same approach in connexion with bank credit al every stage of the year and throughout every year in order to maintain full employment. It is well known that the United Kingdom bank rate is altered repeatedly throughout the year, and this attracts no criticism. It attracts no criticism because the bank rate is expected to be altered to maintain an even balance in the economy.
This Government also has a policy of trying to achieve the highest possible export earnings and of encouraging export industries. But that does not mean that the methods used to encourage the export industries in any particular year must be the same as those used to encourage such industries three or four years previously. Times and the needs of the times could well have changed. In the same way, in pursuing markets abroad, getting into one market might require one method, and getting into another market in another country with different characteristics might require still another method. That does not mean that the policy has changed, but that methods to execute policy are different under different conditions. The Government has a policy of stability, in the sense that we have a stability which enables companies and individuals to make private plans for development and progress in the future; and in the private sector of the economy we have plans which will not be upset by ups and downs in the economy which could make enterprise unprofitable, with harmful effects throughout the economy and unemployment in addition.
The Government’s policy is one of rising living standards for every one in Australia. When one turns to the statistics which are available to see what the position is, one finds that there has been a steady rise in living standards for the people throughout Australia over the last decade. That, again, does not mean that the same methods’ have been applied in each year or in each budget year. Sometimes, when an incentive is needed there is a deficit budget, as there was last year. At other times when it is a question of curbing inflation and when there have been inflationary causes which perhaps were not foreseen, there is need to have a surplus budget and some restraint of credit, as there was this year. But because the methods are different, that does not mean that the policy is any way changed. The policy is in every way consistent.
Inflation appeared throughout the economy after the last Budget and earlier this year the Government announced four methods designed to try to hold inflation. These are stated not in order of importance, but the first of them was the Government’s appearance in the basic wage case, only to place the facts of the economic position before the arbitration tribunal. Every wageearner must know, in his own heart, that a higher money wage does not mean anything if costs and prices rise with it. The important thing to the wage-earner is the real wage and the amount of goods which he can buy. Therefore, the fact that the Commonwealth appeared in the Commonwealth Conciliation and Arbitration Commission last year - and may appear there again this year if it thinks fit - does not mean that it is opposed to the interests of the wage-earner. By its action it is safeguarding those interests and the interests of the economy.
The second thing which the Government did earlier this year was to take off by far the greater part of the controls over import restrictions, so that a free flow of goods into this country would make local manufactures open to a greater degree of competition than they previously had, thus having a restraining effect on prices. The Government announced that it would have a balanced Budget and indeed it has done better. It has a surplus Budget, which was surely the appropriate thing in the present circumstances, when inflation, a running-down of the reserves and other things had to be combated.
Another item was the matter of credit restraint. This policy has been pursued throughout the year and is to be reinforced at the present time. Since the recent Budget was introduced two new factors have become more plain and I believe that they alone would have been sufficient to make necessary the measures which are now being debated. I do not think any blame can be attached to the Government for not foreseeing, at the time when the Budget was framed, what has happened since then. The first of these measures was a fall of 15 per cent, in wool prices. It was not unreasonable to expect wool prices to maintain the average of last year, which 1 understand was the basis upon which the Budget was drawn up. This average was not achieved.
At the time the Budget was drawn up it was not clear, to the extent to which it has become clear since then, that bank advances have financed a great inflow of imports, thus further adding to the drain on our overseas reserves. At the same time the additional flow of bank advances has done a great deal to stimulate inflation throughout the economy. The thing which it is most important to arrest at the moment is the drain on our overseas reserves and here we have the controls that have been introduced to reinforce measures taken earlier this year.
If any one wants further evidence of boom conditions being evident in the country he has only to look at the unemployment figures which have recently been released. In New South Wales and Victoria, in particular, the number of people applying for work - 1 am talking of male applicants - is less than half the number of jobs registered as vacant. The Government has a policy of full employment, but to have full employment it is not necessary to have many more jobs available than there are people to fill them. That is the position at the present time.
If one looks at consumption spending one finds that over the June-August period of 1960, compared with the same period in 1959, radio sales increased by 78 per cent, and vacuum cleaner sales by 41 per cent. Comparing the September quarter of 1960 with the same period in 1959 we find that the sales of cars have gone up by 26 per cent, and sales of station wagons by 37 per cent. This, again, is surely evidence of boom conditions and of inflation still prevalent in the economy despite the measures taken earlier.
This Government was attacked, four or five years ago, because the level of home building had fallen to about 64,000 completed homes in one year. Since that time measures taken by the Government have raised the level to between 80.000 and 85,000 homes a year and if those present figures are maintained, homes will be completed at the rate of about 100,000 a year.
Every one wants people who wish to own their own homes to have them, but these great advances over a short space of time are surely evidence of a pressure on the economy which cannot be sustained indefinitely into the future.
If one looks at the most recent figures of bank advances available, one sees that in the manufacturing field advances, between the end of December, 1959, and the end of June, 1960, have risen from £172,000,000 to £213,000,000; in the field of finance, from £55,000,000 to £65,000,000; and in the field of commerce from £183,000,000 to £211,000,000. Those increased advances give some indication of the fields in which the boom has been most prevalent.
The Government has announced new measures for a reinforcement of measures previously announced. The first was in respect of bank credit. It was pleasing to see in the statement of the Treasurer (Mr. Harold Holt) that there is every evidence that the existing level of credit will be available to the export industries, which are largely primary industries. The Government proposes to do everything it possibly can to make sure that the banks understand the directives which will be sent to them and that they obey those directives. I think there is some evidence for saying, without being too unfair, that in the past, when there has been credit restraint in, say, the export industries, some banks or some bank managers have taken advantage of this. They have blamed the Government. They have said it has a policy of credit restraint and that therefore loans or overdrafts must be reduced. From the Treasurer’s statement this is clearly not the intention of the Government and it must be brought home to the people that that is so. I hope that any bank that does not play the game in this matter will be revealed.
In this regard the Government has made some changes in interest rates. The maximum rate is to go to 7 per cent, while the minimum rates will remain as they are - preferential treatment and rates below the average are to be made available for the exporting section of the community. It is most important that this provision should be rigidly controlled and rigidly supervised for the simple reason that if the primary producer is to get his overdraft at 5± per cent., and if the speculative enterprises in the economy which pay 7 per cent, are to be curbed, some strict control is necessary. There is a li per cent, incentive for banks to draw money out of the primary-producing sector and put it into the sector that is concerned with speculative enterprises. I hope that the Reserve Bank will be most strict in its application of this provision. If it is not, there could be a drawing-off of funds from the primary-producing sector. This would be contrary both to the Government’s expressed intention and to the policy of the Reserve Bank.
– Apparently you believe in political control of banks.
– I do not believe in political control of banks, but I do believe in the exercise of the supervision which is necessary in this modern day and age. The Government has made it possible also for the banks to pay 4£ per cent, interest on deposits for up to twelve months, thereby making bank deposits more attractive than they have been and affording some alternative investment to investment in the fringe enterprises which are outside the traditional banking sphere. There will be now a useful avenue for short-term investment. This proposal is commendable, because it will attract money back to the traditional fields from the fringe institutions. [Quorum formed.]
I was speaking of the measures that the Government has proposed in an attempt to divert money from certain fringe institutions and to make the traditional banking spheres more attractive from the depositors’ point of view. These proposals must be tied in and read with the proposals in relation to the taxing of interest paid by companies on. various forms of company borrowing. This proposal will affect only companies. It will not affect traditional bank operations. This is an estimable proposal which perhaps should have been introduced some time ago. I understand that there are difficulties associated with this matter, but it is most encouraging that the Government has taken some steps in relation to it.
The proposed legislation indicates the Government’s determination to pursue the policies which L mentioned at. the outset of my speech, irrespective of whether pursuance of those policies means that methods and approaches must be changed from time to time. They are designed to curb the present boom, to stop the run-down in our reserves and to assist the primary industries, which are largely the exporting section of our economy, to cope with reduced prices and rising costs. The new measures should do a great deal to assist primary producers, because they will arrest the rise in costs which has been a great obstacle.
I emphasize again that the Government, through the Reserve Bank, must have tight control of interest rates and the availability of credit to the primary industries to make sure that the banks play the game. It is worthy of the note that the Government’s proposals were welcomed by some sections of the reputable press in Australia as being necessary and the best measures that could be introduced in the circumstances.
.- This year of grace, 1960, has been a disastrous year for Australia. The Prime Minister (Mr. Menzies), by the attitude that he adopted at the United Nations, completely discredited Australia and, according to Australian press reports, his reputation as a world statesman was left tattered and torn on the floor of the chamber of the United Nations General Assembly. Abroad, we have been discredited. At home, the Treasurer (Mr. Harold Holt) has shown clearly that although he could cope with the portfolios of Immigration, and Labour and National Service, he has failed completely to measure up to the standards required of a treasurer in a young, progressive and developing country like Australia. Because of his failure and the Government’s failure, he has adopted a policy of dodging issues. He ran away from the Parliament after introducing his Budget because he was not able to explain what it contained.
Only a few days ago the Estimates were still being debated by the Parliament, but now the Treasurer has discovered that further measures are necessary to cope with the economic position that he did not know existed. He would still be running away from the issues and would still be overseas except that while he was absent, his portfolio was administered by the Prime Minister, who, although he has made a lot of mistakes in his time, at least listened to some of the advice that was tendered by the Opposition, and when he started to analyse the position he discovered that things were not as good as the Treasurer imagined them to be. The Prime Minister, therefore, sent a hurried message demanding that the Treasurer return to Australia to do something about our economic problems. The result is that the Treasurer now is belatedly introducing panic measures to meet the position. But his suggestions will not solve our problems because they are merely a continuation of this Government’s stop-and-start policy. All sections of the community, whether they be wageearners or businessmen, are sick and tired of this Government’s spasmodic proposals - “ Release imports; stop this; control that; remove the control “, and so on. The Government’s policies have brought complete chaos to business and it is impossible for business people to plan ahead with any assurance that they will be able to pursue their plans.
I want to mention a matter that has caused me grave concern. A few years ago this Parliament could always know with certainty what the Budget contained by reading the afternoon press prior to the introduction of the Budget at night. This was a serious state of affairs but it was not as serious as the matter which I shall mention now because at least when the Budget details were published in advance of the Treasurer’s speech most of the business houses had closed. To-day the honorable member for East Sydney (Mr. Ward) asked a question about the purchase of motor cars. I should like the Treasurer to tell us where the leak of information relating to his sales tax proposals occurred.
– Are you selling motor cars now?
– No, but I am pleased that the honorable member for Wimmera has mentioned that matter. I am not as fortunate as some honorable members and could only afford a used motor car purchased not long ago. It is shameful thai privileged men in the community - supporters of the Government including members of this Parliament - discredited themselves and the Parliament by using their prior knowledge of the Government’s proposals to benefit themselves by purchasing motor cars in the last couple of days. If it was a gamble it was a pretty accurate gamble, in that they were able to forecast the increase of sales tax on motor vehicles. In Canberra and in at least two other capital cities, friends of the Government, and members of this Parliament, purchased new motor cars.
– Who were they?
– The honorable member for East Sydney said that the records would show who purchased the cars. I should like the Treasurer to tell us what information he may have given in Adelaide last week-end when he attended the Chamber of Manufactures dinner, when he wined and dined with the captains of industry, when he was very close to certain leaders of the motor industry. They did not agree with his proposition, but it was amazing how many people in the trade knew immediately what was going to happen.
As I have said, we have a shocking state of affairs here in Canberra. Twenty-five to 30 new cars were registered yesterday. In Adelaide, Sydney and other places it was almost impossible to purchase certain types of cars, because people knew exactly by how much the sales tax was going to be increased or they made a very accurate assessment of the increase. This matter is so serious, Mr. Deputy Speaker, that I believe it calls for an inquiry. The kind of thing involved here is the kind of thing that has forced the resignation of Ministers in other countries. I should like some attention to be given to this particular leakage of information. It is certainly true that during the term of office of a former Treasurer the press used to get budget “ leaks “. On this occasion, people outside obtained information of which they could make good use - and many of them did make good use of it.
Just what is this increase of the sales tax on motor cars going to do? It is said that it may not affect the purchase of new motor cars to any degree. It certainly will give a shot in the arm, as it were, to the used car industry. It will give that industry a fillip which was badly needed. The effect of the increase may not be as serious, and may not affect the volume of new car purchases as greatly, as might appear on the surface, and the hire-purchase companies will still reap a rich reward. Before this increase was announced, some of the hirepurchase companies were financing the purchase of £1,300 cars on as low a deposit as £75. With another couple of hundred pounds added to the purchase price of cars, the hire-purchase companies will still accept low deposits, but will spread the repayments over a longer period. The result will be that the person most affected by this increase will be the little man, the wageearner, the man who is forced to buy his car through a hire-purchase company. The big businessman, the man with money, will still be able to buy a car for cash at the higher price.
The immediate increase in the price of motor cars following this rise in the rate of sales tax will mean an immediate increase in the cost of living of many people who are forced to have a car to get them to and from their work, because of the inadequacy of public transport, in many instances, in newly developed areas. Some time ago it was rumoured - and I believe fairly accurately - that the Holden people would sell the new automatic transmission model that they were about to introduce at the same price as that for the conventional gear-change model. What will happen if the Holden interests decide not to pass on this increase of sales tax to the purchaser, but absorb it, as they could well do, since they make a profit of £15,000,000 a year? What will be the result of the increase then? The only result of the increase of sales tax will be additional revenue for the Government. Just more money for the Government to spend! If the Holden people decide to absorb this increase of sales tax themselves, instead of their capturing 54 per cent, of the new car market they will capture 84 per cent, of it, and most of the other car companies will be forced out of business. Such a decision by the Holden people would be brought about by the intense competition of the Ford Falcon, but I do not think that the Ford people would be able to match the Holden people in absorbing the increased sales tax.
The Government has expressed concern about the failure of the life assurance companies to invest in government loans, and intends to do something about that matter. The Treasurer pointed out that in 1949 68 per cent, of the funds of life assurance companies were invested in government securities, but that the proportion had since fallen to 37 per cent. That is most interesting, because at the time when 68 per cent, of these funds were invested in government securities a Labour government was in office. That was a time when it had been proven to be wise to invest in government securities. But gradually life assurance companies have dropped right out of the government securities market, and their investments in it now average only 37 per cent, of their funds. Yet the Government is not even going to ask the companies to invest 37 per cent, of their funds in government securities. Instead, it has suggested that they ought to invest 30 per cent, of their funds. Those who cannot do that can have a talk about the position with the Government’s officers and the Treasurer may approve of giving them time to fit in with the Government’s suggestions.
What I am leading up to, Mr. Deputy Speaker, is that it is time something was done, not so much about sales tax. but about the huge profits that are being made in this country and taken out of the country by companies whose headquarters are overseas. For instance, there is the General Motors-Holden’s profit of £15,000,000 a year. That company ought to be told that a certain proportion of that profit has to stay in the country, and that a certain proportion of it must be invested in government securities. It ought to be told pretty bluntly that if it continues with its present practice of draining profits out of the country Australia could drift into the same position as some overseas countries have drifted into. Companies like G.M.H. should be told that people can stand so much and no more. We have had the exhibition of Castro in Cuba taking over the American oil companies because of their exploitation of the Cuban people. It may well be that, if we let things drift, the time will arrive in this country when the people will take some positive action and will demand that the profits made by overseas companies in Australia be invested in government securities here.
The present economic position has been brought about, first, by the complete removal of import controls some time ago, and, secondly, because this Government is afraid to tackle the problem of hire-purchase. It is afraid to tackle the black market banking that goes on in this country. One can understand that because, after all, the people who control the hire-purchase companies also control the private trading banks. They are the very people who at election time finance the parties now in office. If the Government says to these people, “ You have to do this and you have to do that”, the answer will be, “ If you go ahead with this, we will not be behind you at the next election “. We have reached the time in this country when some plain, blunt speaking is called for. We need some statesmen on the other side of the chamber - men who are prepared to see the problem and face up to it as it is, and to think of Australia, not of themselves and their supporters. We want somebody who will be prepared to tackle the hire-purchase companies - not just to call them in and ask them nicely to help, but to tell them that they have to do certain things, or else!
– Or else what?
– Or else we will bring in legislation to deal with them. Do not tell me that this Government has not the necessary power to deal with hire-purchase companies. If it has not such powers generally, it at least has them in the Australian Capital Territory and the Northern Territory. But I believe that the Government has the power to deal with the hire-purchase companies, and they ought to be dealt with. If the Government feels that it has not the necessary power, then we will help it to get the power. At the very least the Government should seek the co-operation of the State governments to ensure that huge profits are not drained out of this country to countries overseas, but that a large proportion of them are channelled into government securities and into productive work which is needed so badly in Australia. Unless that action is taken and the hire-purchase companies are told straight out the serious position that has developed, we will continue .to drift.
The Government, because it did not like to attempt that, made the mistake of lifting import controls. Nobody pointed out the dangers associated with the current trend more forcibly and clearly than did the honorable ‘member for Scullin (Mr. Peters), who repeatedly urged the Government to do something about it. But the Minister for Trade (Mr. McEwen), in replying at great length to questions by the honorable member, talked about everything but the real kernel of the proposition. He does not now talk so long in answering questions because the Government is attempting to control imports by credit restriction. In so doing it is merely giving the green light to people who have plenty of money. The big people can import anything they like, but the little businessman who may want to import essential commodities will not be able to carry on because of the control of credit imposed by this Government.
What imports will be affected ‘by the Government’s measures? Some food items have been mentioned. Here are a few more, and how essential they are! Roasted caterpillars, fried grasshoppers, fried silkworms, barbecued snake meat, cooked shark fins spiced with ginger and onions, seasoned octopus tentacles, fillets of swordfish, Danish !ham preserved in Scotch whisky or cherry wine, roasted chicken from the United States of America, pheasant and partridge from Scotland, chicken in jelly from the United Kingdom, smoked eels from Japan, frog legs from France, cocktail fruits in mustard syrup from Italy, and chocolates. This Government deserves the most severe .censure that can be inflicted upon it. The motion of no confidence in this Government moved by the Leader of the Opposition is well warranted.
The opposition believes that it is speaking >on behalf of the majority of the people of Australia. Members on the Government side may laugh but those in shaky seats will not be laughing later on. Whilst Government- supporters may defeat our motion of no confidence, the final decision will be recorded by the people of Australia. Shortly, there will be a by-election in
Victoria and the electors concerned will be given an opportunity to vote on the Government’s new economic proposals. Government supporters should not mention Calare. The Government was not game to introduce these measures before the byelection in Calare. Honorable members opposite talk of prosperity and of “ Australia Unlimited “. To-day we have a Treasurer who is completely incapable. We have a Ministry which is unable to cope with the position with which it is faced. We have a Prime Minister who will not take the action necessary to give security to the people. This motion of no confidence is well warranted and deserves the support of this Parliament.
.- Mr. Deputy Speaker, I think you will agree with me that the honorable member for Kingston (Mr. Galvin) cannot see any further than the next election. He cannot even look back to last Saturday when there was a by-election in Victoria and Labour was soundly thrashed. It is said that the people had realized what was necessary long before this statement was made, so it would apply then.
– What happened to the Australian Country Party?
– You know what happened in the recent by-election in New South Wales. You know what a magnificent vote was cast for the Government parties. You know of the ignominous defeat of Labour on that occasion and in the Ballaarat electorate of Victoria. These results answer completely the statements made by the honorable member for Kingston. The only thing worthy of reply that I could find in his speech was his support for the allegation by the honorable member for East Sydney (Mr. Ward) that certain members of Parliament and certain other people in Canberra and elsewhere had prior knowledge of the increase of sales tax on motor cars and had acted accordingly for their personal benefit.
Labour members often say, “ If only the Government were honest “. The honorable member for Fremantle (Mr. Beazley) used these words. The implication is that all the honest men in Parliament are on the Opposition side. If that is so, is it not fair to ask the honorable member for East Sydney and the honorable member for Kingston to name the people whom they say have bought these cars. It is right that they should do that in the national interest, as members who have sworn allegiance to Her Majesty the Queen, and to do what is right in this great Parliament of the Commonwealth. But instead of doing that, they merely talk this sort of rot and avoid making specific accusations. I would be the first one to support them in . this matter if they named the people concerned in order to bring them to justice if the case is proven. I am making this offer to all members of the Opposition! Let them name the people concerned. As a member of the Australian Country Party, I challenge the Opposition to name these people at question time to-morrow. I can assure the House, on behalf of the Leader of the Australian Country Party (Mr. McEwen) and I believe the Prime Minister of Australia (Mr. Menzies), that a full investigation would be made, However, it is not much use my speaking on this subject at length because my time is limited.
The first thing which the Treasurer’s statement on the Government’s economic measures shows to me is the failure of secondary industry to produce economically enough to export. There has been an increase in the last ten years of about 40 per cent, in factory production and thousands more factories have been built in Australia. Exports provided by primary industry twenty years ago totalled 80 per cent, and secondary industry provided 20 per cent, of the total. To-day, despite all the great expansion of secondary industry, the percentages are the same. I do not need to go into all the figures. We have had many figures from the honorable member for Melbourne Ports (Mr. Crean), the honorable member for Wentworth (Mr. Bury) and the honorable member for Scullin (Mr. Peters). I shall not want to repeat them all. Some were right and some were wrong.
– They were all correct.
– So the figures given by the honorable member for Wentworth were perfectly correct. The honorable member for Scullin has conceded that. We have had a great boom in buying. Primary industries have suffered. Members of the Australian Country Party in this House have said on countless occasions that if the primary industries of Australia are in a sound economic position there is no need for the rest of this Commonwealth to worry. Strange to say, although a member of the Labour Party some years ago called the wool-growers the “ blood-sucking woolgrowers “, and the “ wool barons “ -
– Who said that?
-“ Hansard “ will show. Although Labour members have called the wool-growers “ wool barons “, they have been forced to the realization that primary industries are of very great importance to the welfare of this country. Of course, the Treasurer’s statement leans towards the primary industries.
We should not deal with the wide world in this debate but specifically with the Treasurer’s statement. Members generally do not seem to realize that. Speaking of the Reserve Bank, the Treasurer said -
Importantly, too, it will give much more specific guidance on the classes of borrowers whose needs are to be judged less important, and the classes of borrowers, especially certain classes of export producers, whose activities may reasonably call for extra accommodation.
The greatest export producers in this country are the primary producers - the wool-growers, the beef and mutton producers, the wheat-growers, the producers of dried vine fruits, the dairymen. The men who produce cotton and sugar save our overseas funds. These are the people who make this country, and who will have a chance, when the measures outlined in the Treasurer’s statement are implemented, to obtain greater accommodation. The Treasurer went on to say: -
There would be no sense at all in reducing bank support for the primary industries producing for export, because we want to see them, if anything, expand their output.
Every one must agree with that. I could read a lot more of the Treasurer’s statement on this aspect, but I do not want to do so at present. I want to come to the matter of interest rates. As every one knows, the maximum bank loan rate is to be increased from 6 per cent, to 7 per cent. The Treasurer said: -
The Reserve Bank will therefore request that, as a general rule, the banks should continue to provide preferential rates below the average for export producers in the rural and mining industries.
We could not have anything more favorable than that, or anything more in line with the policy that we have been advocating for quite a long time.
I am not always on the side of the Government, as honorable members know. In this case I ask: Can the provisions outlined by the Treasurer be implemented? If they can be implemented, it will be a good thing for this country. I am prepared to give the Treasurer’s plan a chance, and I will vote in favour of his motion that the statement be printed. I oppose the suggestion in the amendment of the Leader of the Opposition (Mr. Calwell) that the Government has failed for eleven years. The Leader of the Opposition has said on countless occasions, “ I am content with the decision of the people “. I forget how many elections have taken place during the last eleven years, but on each occasion the people have given their decision in favour of the present Government. Yet we have found that when an election has been held no more than a week before, members of the Opposition have said, “ If only the people had a chance to cast their votes now the situation would be different “. Such statements are completely ridiculous. The Government may not be anything special, but just look at the alternative! Look at the record of the alternative government!
– Don’t get personal!
– I am not getting personal. Just look at the policy of honorable members who comprise the Opposition. No one could ever honestly accuse me of being personal in this chamber. I attack policies, but I never attack personalities, and every member of the Opposition knows that this is true.
– You made a horrible attack on me once.
– Even the honorable member for Lalor, my old companion and political opponent, knows that what I say is true. He interjects in order to try to put me off my case, but I am not listening to him to-day, because I must get on with the job. The measures outlined in the Treasurer’s statement will give primary industries a better deal that is long overdue. As a member who represents a vast and important primary-producing area, I welcome this statement.
I want to examine some of the statements made by honorable members who have already spoken in this debate. The Leader of the Opposition said that this country is not as prosperous as other countries, such as Japan, West Germany, Great Britain and Canada. Have those countries a 40-hour working week? What wages are paid to workers in Japan? We have a country with a high standard of living. We have been more prosperous and progressive than any other country where conditions are similar. Fancy making comparisons with Japan and West Germany and other countries with vast millions of population! It is completely wrong to do so.
The Leader of the Opposition said also that the Treasurer will proceed to spend every penny of the money that is skimmed off the surplus spending power of the public, tie said that it will not be put away in the old oak chest. 1 suggest that if it were put in the old oak chest it would not do much good. I am going to request that if the Government receives any substantial amounts of money from the increase of 10 per cent, in the sales tax on motor vehicles - and I am in some agreement with the honorable member who said that he does not think that the increase will slow down sales of motor vehicles to any extent, because the country is very prosperous - that money should be made available to the Development Bank for long-term loans to primary producers. This is a matter of paramount importance. The primary producer owns the land, and he knows how to do a good job with it. He is the man who has sufficient initiative, industry and honesty to pull this country out of any difficulty in which it may find itself at present, providing we give him the opportunity and make available to him sufficient money to do the work necessary to achieve greater production.
I believe also that we could grow many more varieties of primary products than we do at present, and that these could either be sold overseas or could be used in place of goods that we now import. One such product is cotton. The Minister for Customs and Excise (Senator Henty) has said that the cotton being produced in certain parts of Australia, particularly along the Murray River, is as good as cotton produced anywhere. I believe that the cotton industry could be expanded. T believe that the Minister for Trade (Mr. McEwen) and other members of the Government should arrange for an intense investigation of overseas markets, to find out where we could sell certain products that we are not producing to the full at the present time. Action of this kind is vitally necessary, and must be taken to assist in solving the problems that now confront us.
The Leader of the Opposition said that the Government should have sought power from the people as recommended by the Constitutional Review Committee. The honorable member has said that we would have been in a most satisfactory position at the present time if the people had approved referendum proposals for price control in 1948. Now he says that if we can have the Constitution changed, to give the Commonwealth the right to fix interest rates and wages, everything will be all right. Surely, the people realize that such measures are only stepping stones to the nationalization of the whole of Australian industry, which is, of course, the objective of the Opposition. The Leader of the Opposition has himself said on countless occasions, “If we cannot get nationalization one way, we will get it another way”. It is obvious that if you have the power to fix wages, interest rates and prices, you do not have to worry about nationalization schemes being challenged in the High Court.
Every member of the Labour Party now admits to being a socialist. Once upon a time, the members of that party would try to hide the fact, but now they do so only at election time. Once upon a time, they used to keep quiet about their socialist objectives, but now they freely admit to being socialists, although when an election is approaching we never hear a word from them on the subject.
– That is not true.
– I challenge the honorable member for Lalor to go into his electorate at election time and say to the people, “ I am a socialist. If my party is elected we will proceed with our policy of socialization.” Why, the people of Sunshine, where the honorable member finds the big majority of his supporters, would throw him into Port Phillip Bay!
I refer to some of the remarks of the honorable member for Melbourne Ports (Mr. Crean), who cited, figures from the “ Treasury Information Bulletin “ relating to imports of various commodities, which had, he contended, represented an additional drain on our overseas credits. He said that imports of tractors and parts had increased from £5,000,000 to £8,000,000. I have not seen any imported tractors lying idle in this country. He referred also to imports of petroleum products and oils. What a story the mention of petroleum unfolds to those who know something of the history of the Labour Party! Let me say to the House that if the great refineries at Kwinana and other places had not been established, our imports of petroleum products and oils would now cost not £100,000,000, but many times that figure.
The honorable member for Fremantle (Mr. Beazley) said that when this Government came into office it inherited from the Chifley Government £989,000,000 of sterling balances in London. That statement was supported by the honorable member for Scullin (Mr. Peters). Why did the Chifley Government have £989,000,000 in London? The honorable member for Fremantle said that this had been brought about by the war, but the reason for these big balances in London was that the Labour Government had starved this country of many things. Labour had absolutely starved us of petrol because it had maintained petrol rationing, and no one knows that better than does the honorable member for Lalor. When Labour was in office, we could not get tractors or petrol.
Among those things which the honorable member for Melbourne Ports said should not have been imported was timber. Yet all the time Labour members cry out for more houses, which require more timber. The honorable member said that all these things which, according to him, should not have been imported could have been made in this country. When I look at the overall employment position, I wonder how the present work force could make the millions of pounds’ worth of goods that are imported. Does the Opposition suggest that workers should be diverted from the production of other goods that are at present being made here? We have only to look at the figures with respect to employment at the end of October to see what the situation is. At that time, 22,737 unfilled vacancies were registered in New South Wales and 16,820 in Victoria. In each State, this was about twice the number of persons registered for placement - 11,637 in New South Wales and 7,534 in Victoria. So the production in Australia of the goods that we have been importing would have been impossible. 1 believe that if the measures set out in the statement made last evening by the Treasurer can be successfully implemented, they will give a new deal to primary producers. They will slow down spending. I do not like the increase of 10 per cent, in the sales tax on motor cars any more than does anybody else, but the point is that if things were allowed to go on as they were going far more money would be lost to the motor industry and to other industries in Australia by the climax that would inevitably come than will be lost by those industries through the effects of the 10 per cent, increase in the sales tax.
We should give these measures a chance, I believe. We should ask the Treasurer to implement them to the full. 1 think that if he does there is every chance of righting anything that is wrong with our economy at the present time, and certainly of doing what we advocate - placing the primary producers on a more even footing with the formerly favoured secondary industries.
.- Mr. Deputy Speaker, I support the amendment moved by the Leader of the Opposition (Mr. Calwell), which constitutes a motion of no confidence in this Government. This is our method of registering a protest against the kind of administration that is now being revealed in this House. This is the second occasion in nine months on which the Opposition has found it necessary to take the step of moving what amounts to a motion of no confidence in the Government. The Governor-General’s Speech to the Parliament in February last was so devoid of mention of action to meet the challenges confronting the Government that the Opposition proposed an amendment to the motion for the adoption of the Address-in-Reply which constituted a motion of no confidence in the Government on three grounds, one of which was expressed in the following terms: -
Its failure to halt inflation with its adverse effects on wage and salary earners, on pensioners, on persons on fixed incomes, on primary producers and on home builders, particularly those with young families.
Labour also condemned the Government’s action in lifting import restrictions, because we foresaw the inevitable reaction that would follow that stupid move. The consequences to the economy of Australia which were predicted by the Opposition some nine months ago have come to pass, and we see the sorry spectacle of this Government floundering in confusion. Its conduct is described in some quarters as panic, and the oft-repeated description of this Administration as a fits-and-starts Government is substantially true. Even the newspaper empires now concede that this description is valid. Labour has long made such a claim, because our assessment of governments composed of the Liberal Party of Australia and the Australian Country Party is that they govern by improvisation and expediency. They never attempt forward planning for the attainment of long-term objectives. So long as they can keep the people reasonably quiet, they will resort to any expediency and live from week to week until they reach a stage at which some stern action is necessary. Then, of course, panic symptons develop, and with the aid of a propaganda campaign a fits-and-starts programme is sold to the people.
Not only the Australian Labour Party condemns this Government’s administrative policies. Many leading citizens and organizations have voiced their protests. The Opposition condemned the Government’s policy vigorously during the debate on the motion for the adoption of the Address-in-Reply to the GovernorGeneral’s Speech last February and March mainly on the basis of the Government failure to halt inflation and protect the welfare of the people, lt is interesting to recall that about three months later a prominent personality of the Liberal and Country League in South Australia, in the person of Sir Thomas Playford, made serious charges against the Commonwealth Government’s financial policy. On 11th May, in a public statement, Sir Thomas said -
We are living beyond our incomes - we are borrowing to make up the deficit - and we are paying the highest interest rates for the least desirable loans.
Those observations made by the South Australian Premier some six months ago were not made without good reason. It is interesting to note that they coincided with Labour’s continuing criticism of this Government’s financial policy. Unfortunately, the Treasurer (Mr. Harold Holt), in presenting the Government’s policy last evening, completely ignored these vital considerations, and the Leader of the Opposition and other Labour speakers have been left the task of directing attention to this grave weakness in the Government’s financial policy.
The measures now proposed will not solve the problems that have to be solved. Higher prices for motor cars, as a result of the increase in the sales tax, may slow down sales a little, but in the main the sales tax increase will impose an additional financial burden on the mass of Australian citizens who depend on automotive vehicles for transport. In addition, as an aftermath, we may well expect that many workers in the motor industry will be thrown out of employment. Additional tax revenue will be brought into an over-swollen treasury by means of a tax which is one of the most objectionable of all - the sales tax.
The real problem is to stop the deterioration of our overseas balances. The Minister for Trade (Mr. McEwen) told a Country Party conference recently that Australia will have to increase its export earnings by £250,000,000 a year over the next five years if the present living standards are to be maintained. The Government’s proposals make no direct attack on the problem of falling overseas balances - the kind of attack that would be made by the restriction of imports of unessential goods. But the Government’s credit restrictions will adversely affect the Australian industries that will have to be developed in order to provide the exports that we talk about so much.
The wool position is interesting. In the four months ending 31st October, 1959, 412,000,000 lb. of wool was sold for £101,000,000. In the same period of this year, 413,000,000 lb. was sold for only £83,000,000. These figures are taken from an official publication of the Australian Woolgrowers and Graziers Council. A similar thing is happening with respect to the dairy, wheat, meat and dried-fruit industries. More is produced, but less money is received because world prices are falling.
The capital which is badly needed for increasing productivity is being used for the construction of luxury hotels, motels, business offices, petrol stations and tire stations, and for the expanding of unessential industries. Control of capital issues should be reintroduced. If the Government lacks the constitutional power, Labour will support it in a referendum to obtain the necessary power. The Government should control interest rates on hire-purchase transactions so that the special advantages that now attach to this form of investment will be removed. This would also assist to divert capital into essential industries. Again, if it lacks the power to do this, Labour will support it in a referendum to obtain the power. It should* introduce a uniform company law to deal with sharp practices in company activities, such as take-overs. If it has not the constitutional power to do this, Labour will join with it in a referendum to obtain the power. It should take immediate steps to stop restrictive trade practices that result in forcing up the price structure and permit companies to enjoy excessive profits, thus causing inflationary trends in the economy. Again we say that if the Government needs additional constitutional power to deal with this, Labour will join with it in asking the people to grant the necessary powers for this purpose.
The Treasurer last night used as one of his excuses the fact that the Government lacks constitutional power to correct the wrongs now in our midst. These are at the moment the measures needed to cure the country’s ills. Instead of doing this, the Government has levelled the whole of its attack against the wage and salary earners. It has supported the court in pegging wages. It has increased sales tax on the goods that the worker has to buy. It has increased the interest rates on the money that he has to borrow to buy his home. It has increased his income tax.
It has taxed his beer, his tobacco, his petrol and almost all of his everyday needs. In short, the Government is a government of big business, lt is a government that takes from the needy and gives to the greedy. In other words, it is a government that has lost the confidence of the people and should be voted out of office.
Time and time again, the Labour movement has drawn attention to the shortcomings of the Government. Surely the day is not far distant when this Government will be removed by the will of the people and Australia may look forward once again to stability and sound government by the true representatives of the people. Labour guided the destinies of the nation in the dangerous war years. Only a similar type of government can successfully guide our destinies in time of peace.
Last night, the Treasurer presented these alleged remedial remedies. They were rightly described by the Leader of the Opposition as a maze of platitudes and contained no direct attack on the features that should be attacked. In the main, the intention of the Government is to attain the ultimate goal by devious and indirect methods. But it is always rather striking to note the vast amount of wishful thinking that accompanies any Government proposition aimed to obtain certain results. Always its indirect methods are accompanied by platitudes and expressions of wishful thinking - it hopes that the desired result will be obtained at some future time. Invariably, the Government’s policies of expediency and improvisation have no sound basis and achieve no sound result. The Opposition feels that it has a duty to bring before the people the shortcomings in the Government’s policy. We have resorted to the only form available to us in moving a motion of no confidence in the Government. We moved it in the belief that this is the majority opinion of Australian taxpayers and we hope that when the opportunity next presents itself through the secrecy of the ballot-box, the people will voice their disapproval in a practical way. In doing so, they will contribute to the future success of Australia under a proper government, namely, a Labour government.
For the reasons that I have given, I support the amendment to the motion. I hope that the House will take full cognizance of it and that honorable members will support it when a vote is taken.
– The honorable member for Adelaide (Mr. Sexton) has presented an argument not dissimilar to that presented by many Opposition members during the past 24 hours. It would appear from the criticism that has been levelled at the economic statement of the Treasurer (Mr. Harold Holt), that the Opposition believes that the panacea for economic ills is a constitutional referendum. Throughout the Budget debate, the debate on the Estimates, this debate and many other debates in this House, we have been told time and time again that we must have a constitutional referendum and that Labour will support the Government in such a referendum. What apparently the Australian Labour Party will not appreciate is that the history of referenda in Australia is not very good where alterations to the Constitution are concerned. Whether a referendum has been arranged by a government of the political views of this Government, or by a Labour government, the people have generally refused any request for increased power for the Commonwealth.
– This would be the Government and the Opposition in combination.
– While it may be said by the honorable member for Bass that there would be a combination of effort by the Government and the Opposition in going to the people, I have not seen anywhere any intimation by State Labour Parties that they favour increased constitutional power for the Commonwealth Government. I have not noticed that the State Liberal Parties favour such increased power. Therefore, while we may agree here, there is no certainty that the people would agree and it is generally accepted that the people say “ No “ when they have a doubt, as most certainly they have had in most instances.
It is very easy to refer to the desirability of a uniform company law. The honorable member for Adelaide, however, overlooks the fact that in the last two or three years conferences between the State governments have been held in an effort to achieve a very high degree of uniformity in company law. In the press only recently, I saw commendatory remarks by leaders of industry concerning alterations that had recently been effected by a State government. Similar alterations are being made by other States, and to a large degree uniformity in our company law is being achieved. I appreciate that we have not the power to regulate hirepurchase rates. But the State Labour governments, and, for that matter, State Liberal governments, have not made any effort to control these interest rates or to effect a satisfactory control of deposits on goods bought under hire-purchase agreements.
There are some aspects of the economic statement made by the Treasurer last night to which I want to refer particularly this afternoon. I think I am stating a fact when I say that on all sides there is a recognition of the need to do something about the present general inflationary condition of the economy. It is well to remind ourselves of what some of the problems are. In the short period of twenty minutes, it is impossible for me to deal with all aspects of the problems, but I can at least deal with some of them. I believe that the present situation is due to four particularly important causes. The first is the increased value of imports and the reduction in our export income; the second is the high level of spending on consumer goods; the third is the improved level of employment within the Australian community over the past six or twelve months; and the fourth is the increased demand for investment capital. Over the last year or two in particular, there has been a tremendous demand by all types of industry for either share or loan capital to finance their undertakings. Many of these conditions produce high profit earnings, which in turn creates a demand for wage and salary increases. We all know that the Commonwealth Arbitration Commission determines the basic wage on the basis of the ability of industry to pay. That being so, if companies or industries are making high profits, the Arbitration Commission decides that they can afford to pay higher wages. These higher wages mean increased costs. All these things result in the conditions that we have known over the last fifteen years in
Australia, where we have had costs and prices chasing one another, and wages mixed up with them.
Having stated some of the principal problems with which we are confronted, we should next look at the people who suffer in the main because of them. They may be divided into three groups. First, we have the primary producers, who suffer in three ways. They suffer if the prices received for their products do not rise commensurately with increases in costs within the community. They also suffer if the prices of their products fall - this has been happening in some instances - at a time when prices generally are increasing. They suffer when, due to adverse seasonal conditions, their output is reduced, with a consequent reduction in income.
Then we have the fixed income group within the community. I refer in particular to superannuated persons and to pensioners. The third and very important group of people which suffers under these conditions comprises the young people who are getting married and who are seeking to establish themselves in homes. Increasing prices and wages do not help the young people who seek to build a home. The increase they receive in their wages is infinitesimal compared with the total increase in the cost of a home or of furniture. The people in this group are the principal sufferers when the economy is affected by an inflationary spiral.
Then we have the major problem of the strain put on our international funds due to a lower export income at a time when there is a tremendous increase in imports, such as the increase we have seen since February last, but especially within the last three months. Although import controls were removed in February, it has taken three or four months for the effect of the relaxation to be felt. On all sides there is an acknowledgment of the problem, but I think one is entitled to say that there is within our community a small section of people who have a vested interest in inflation. I refer to people in the commercial area such as storekeepers and so on, who are content to accept inflation because it means increased profits to them. I suggest to the House that they have a purely personal and selfish interest, and we are not particularly concerned with such people.
There is not, I believe, a generally accepted principle for dealing with this situation. There is a general criticism of the situation, together with a general acceptance of the idea that the curing of inflation is a government responsibility. I do not under any circumstances accept the contention that it is solely the responsibility of a government to cure inflation. I suggest that every individual within the community has some responsibility to help cure it. There has been criticism from the Opposition, from the press, from some sections of industry and from some sections of the public, but very few of the critics are prepared unequivocally to state the action that should be taken to solve the problem. The Government has no right to make a sectional approach, and the proposals submitted by the Treasurer (Mr. Harold Holt) certainly indicate that this Government is prepared, without fear or favour, to attack those points of the economy which are the principal causes of our problems.
In the short time left to me, let me deal with the Treasurer’s proposals. First, he has indicated that the sales tax on motor cars and station wagons is to be increased from 30 per cent, to 40 per cent. Those honorable members opposite and those members of the public who have criticized this proposal have forgotten that the motor industry has created tremendous demands on Australia’s resources. The Treasurer referred to those demands last night, and some indication of their magnitude may be gained from the average monthly motor car registrations. In 1956, the monthly average was 13,644 registrations for motor cars alone. In 1956-57, following action taken by this Government, that figure dropped to 12,481, but, by June of this year, it had increased by 50 per cent, to 18,744. I think it is reasonable to suggest that such an increase is out of all proportion to the other general development within the Australian community, and that the Government is entitled to take some action at this point. It is also proposed to increase the sales tax on motor cycles and motor scooters from I6f per cent, to 25 per cent.
The Government has also decided to encourage a selective lending policy by the banks, with emphasis on export industries and primary-producing industries. Most of us would agree that the expansion in bank advances over the past few months has been related more particularly to the importation of goods than to the stabilizing or establishing of industries, primary industries in particular, in this country. I think that considerable benefit must ensue from the adoption of a policy which takes money away from imports and makes it available for investment in export and primaryproducing industries in Australia. As the Treasurer pointed out, there has been an adjustment in bank interest rates. I have not time to go into the details of it, but it means a maximum increase of 1 per cent, and an average increase of one-half of 1 per cent, in the interest rates to be charged by the banks. There has been quite an innovation in the requirement for the investment in local authority funds of moneys of life insurance companies and superannuation and provident funds. This measure requires that 30 per cent, of the funds of those bodies shall be invested in public authority securities, in the proportions of two-thirds in Commonwealth loans and onethird in local authority loans. Over a considerable period we have had criticism from the Opposition of what it terms the Government’s inability to persuade investors to fill Commonwealth loans. I think this new measure will be a substantial help. These loan moneys are not used by the Commonwealth. As every honorable member knows, they are used by the State governments in their works programmes.
Another innovation is the non-allowance of interest on convertible notes. The Government’s view is that since the issuing of convertible notes is in fact the taking up of shares at lower rates of interest - shares which will be issued in perhaps five or seven years’ time - in reality they are share investments. The Government believes that for that reason there should not be an allowable deduction in respect of them but that they should be taxed or dealt with in the same way as the profits out of which dividends are paid. In future, interest will not be allowed as a deduction to a company in these circumstances. The tax will be collected at that point and the interest will be taxed again in the hands of the shareholder or noteholder. There will also be an adjustment in the interest payable by some of the larger companies. This is purely a temporary measure, but the basis of it is that for old-established companies the maximum deduction allowed in the current year will be interest amounting to £10,000.
I believe that these measures which are being taken by the Government to arrest our inflationary spiral at the present time commend themselves to the majority of members of the community. I appreciate that there is and will be criticism from some sections of the press and of the public, and obviously from the Opposition. What I have failed to hear from the Opposition in the eleven years during which I have been in this place is any proposal as to what measures should be taken under the present type of conditions. They were in existence when we came into office. They were a legacy which we inherited from the Chifley Government. The Labour Party was unable to deal with them and the Opposition has made no concrete proposals - in the eleven years I have been here - as to how they should be dealt with. Irrespective of the criticism levelled at the Government I believe these measures will succeed in slowing down the rise which is at present taking place in inflation and costs, and which is creating a problem within the economy overall.
I believe the vast majority of the people will accept these measures as a genuine effort by the Government to combat the inflationary conditions. Contrary to the comment made by the honorable member for Adelaide, I consider these measures will not produce, as did the measures in 1956, a very substantial increase in taxation. I know that one of the suggestions made by many people in the community when a government takes action to solve these problems is that the government is indicating that it is in a better position to spend the money than are the people themselves. I appreciate that if the Government takes money from the public by increased taxation and spends it, probably a worse situation is created than if the money were left in the hands of the people. But in this series of measures that will not be the situation. There will be a slight increase, perhaps - I do not put it at any more than a slight increase - in the sales tax on motor cars, because of the dampening down effect and the discouragement which it will give to the purchase of motor cars. I believe that many people will keep their present cars for six or twelve months longer than they otherwise would have. That is the effect which the Government desires to bring about. There may be some additional taxation as the result of the non-allowance of interest, but I think it will be a comparatively small amount. In any case, the very fact that the Government collects the money is not necessarily evidence that the Government intends to spend it. I believe that in this instance the Government will not spend the additional money it receives but will hold it for a good purpose, and particularly to keep control of the inflation which has been worrying the community.
I believe these measures will commend themselves to the people of Australia. Notwithstanding the criticisms that have been advanced, I consider that these measures will have the effect which the Government desired when bringing them before the House.
.- The Minister for Supply (Mr. Hulme) is just as confused in his thinking on economic matters as is the Government. Both he and the Government are confused because they do not know where they are going. Only a few weeks ago, when I raised the matter of debenture fund raising during the debate on the bills brought down to alter the taxation laws in accordance with the Budget proposals brought forward by the Treasurer (Mr. Harold Holt), the Minister for Supply could not agree when I pointed out that the great increase in debenture raising compared with share capital was not in the best interests of this country. We know that debenture raising has been galloping ahead of the increase in share capital. This Government has had ample time to face up to this question.
Back in 1955, the total share capital of public companies was £59,000,000 and the total of debentures was £27,000,000. By the end of June, 1957, share capital was £43,000,000 and debentures had increased to £51,000,000. Thereafter a change occurred in the pattern of capital raisings for public companies. From 30th June, 1957, until the present time this process has been going on. Honorable members on this side of the House have raised the matter time and time again and have pointed out the folly of the Government in not facing up to the position of debenture raising by many speculating companies. The Government pushed all the warnings aside, but now it is forced into facing up to the issue. We find that by 30th June, 1958, share capital amounted to only £35,000,000 while debentures had risen to £78,000,000. Then the move forward came. By 30th June, 1959, when share capital amounted to £48,000,000, debentures had risen - in a little over twelve months - to £139,000,000. At the end of June this year the share capital was £48,000,000, the same as in June of the previous year, but debenture raising by public companies had risen to £193,000,000. This warning was given also during the Budget debate, but the Treasurer ignored it completely. We pointed out at that time that the 8 per cent, debentures on the market were costing the companies only 5 per cent, because they were evading 7s. 6d. in the £1 company tax. Although the Treasurer said that he did not believe this to be possible, he knows it to be true. When I challenged him at the time he said that he would not agree with my thinking.
What is the position now? At long last the Treasurer has accepted the Opposition’s demands for something to be done in relation to debenture raising. But the measures which the Government now proposes to adopt are only temporary measures because it represents the vested interests. The Treasurer admits that there are selfish people in the community, nevertheless those are the people that he and other Government supporters represent. I join with the honorable member for Adelaide in stating that this Government is a government of the wealthy and the selfish. It represents only 5 per cent, of the taxpayers of this country - the top 5 per cent, which receives 21 per cent, of the total income. But the Government does not extract its due taxes from that 5 per cent, because there are plenty of loopholes in the law and these people are tax evaders. The Government should take notice of the great capital gains that are made by already wealthy individuals through big public companies. I shall quote to honorable members on the Government side, who are indicating that they dispute my statement, a few hard facts and figures in relation to the minority that they represent. I shall quote again some of the figures that I mentioned in a previous speech. First, I shall refer to the Baillieu family and its holdings in Broken Hill Proprietary Company Limited. On 1st January, 1954, the Baillieu family held 143,000 shares in B.H.P. Through bonus issues of shares the family’s holdings had risen to 300,000 shares by 1st January, 1960. So, the family had made a capital gain of £750,000 in that period. Then came the great bonus share issue that the B.H.P. made only a few months ago when it issued one bonus share for every two shares held. The Baillieu family was entitled to 150,000 shares which at that time were worth £5 each on the stock exchange. That meant an additional share holding valued at £750,000. The bonus shares cost £1 each so the family made a profit of £600,000, tax free, on an investment of £150,000. That is one family.
Another great concern about which this supplementary budget will do nothing, is the Myer Emporium Limited. The Myer family, which held 8,237,000 shares in the company, made a terrific profit following the recent bonus share issue of one share for each share held. Just imagine the great wealth that that family has accumulated tax free! This Government represents people in that category. It has done nothing in this supplementary budget to control the wealth of the great monopolistic concerns. It has not faced up to one vital issue.
What is the history of this Government since it has been in office? It has been a start-and-stop Government! It has had no positive policy. In the hope of curbing the inflationary trend, it introduced the horror budget in 1951 by which it increased indirect taxes and imposed credit restrictions. We know that credit restrictions affect only the small men in the community. They do not control or restrict the big financial institutions. Therefore, instead of being anti-inflationary, the horror budget was inflationary because, through indirect taxes, it caused prices to rise. The great mass of the consumers, who do not control the wealth of this nation, had to meet those increased costs.
Then we had the little horror budget in 1956, and again we saw the big splurge on indirect taxes and credit restrictions. Again the squeeze was put on the small men in the community, and the upward spiral of the inflationary trend continued. What happened while all this was going on? In November, 1953, the Commonwealth Government applied pressure on the Arbitration Court to put an end to quarterly basic wage adjustments. A couple of increases have been made in the basic wage since 1953, but when an application for an increase was made to the Arbitration Commission last year the Commonwealth Government again intervened with the result that the commission refused wage justice to the workers of Australia.
What happened then? The Government then had another brainwave. It decided to wipe import restrictions, thinking that by doing so goods would be imported’ into Australia at competitive prices thereby forcing down the cost of locally made products. But what happened? Our overseas balances immediately began to fall rapidly. The Opposition warned the Government of the drastic results that would follow its action in wiping import controls but the Government paid no heed. The Treasurer is a tragic treasurer if ever there was one. We know that the right honorable member for Cowper (Sir Earle Page) was the tragic treasurer of the ‘twenties. The present Treasurer is the tragic treasurer of the early sixties. I specify the early ‘sixties because he will not be here in the mid or late sixties. This Government will lose many votes at the next election and there will be a great swing to the Labour Party. The next Prime Minister and the next Treasurer will be members of the Labour Party.
What does the Government propose in this supplementary budget? In the first place, it does not intend to reimpose import restrictions. In the second place, it is again applying the credit squeeze on the small man who is struggling for existence.
Earlier in the year, the Treasurer said that the Government would balance its Budget. What that means, I do not know because there is still a great amount of loan money coming in and, to my mind, relying on loans is deficit budgeting. Another point in the Government’s anti-inflation proposals was the good old wage freeze which, of course, affects the workers of Australia.
The Government has known for a long time that there has been a downward trend in our overseas balances. It is a tragic government because, since it has been in office, our economy has become increasingly weaker. When the Chifley Government left the treasury bench our economy had never been healthier. Overseas balances amounted to £800,000,000. To-day, as the Treasurer stated last night, they are down to £348,000,000. I shall now relate those figures to actual values. Our favorable balance of £800,000,000 in 1950 would be worth £1 ,600,000,000 to-day. That is what the value would be to-day, compared with our present overseas fund of £348,000,000.
There are other problems concerning this issue which we have to face. One problem is our overseas debt. Even during the war, the Chifley Administration was able to reduce Australia’s overseas debt on the London market by £80,000,000 sterling. It reduced the Australian debt in New York by £A 15,000,000. Now let us look at the tragic record of the Menzies Administration. Since it came to power this Government has borrowed 318,000,000 dollars from the International Bank, it has borrowed 153,000,000 dollars from the New York Stock Exchange, it has borrowed £100,000,000 sterling from the London Stock Exchange, it has borrowed 15,000,000 dollars from Canada, and it has borrowed 240,000,000 francs, which is equal to £A 12,000,000, from Switzerland. This is apart from the two loans it has received from the International Monetary Fund.
This is a tragic story. The Government is encouraging a great inflow of foreign capital in order to try to balance its accounts. Let us look at its record in respect of our overseas trade balances. In 1949- 50, this Government finished the year with a trade deficit of £45,000,000. In 1950- 51, it had a credit of £105,000,000, and in 1951-52 it had a deficit of £579,000,000. At that time the Government panicked and introduced import restrictions. In the following year it had a credit of £192,000,000. In 1953-54, it had a deficit of £17,000,000, and in 1954- 55, a deficit of £259,000,000. In 1955- 56, the deficit was £238,000,000. In 1956- 57, we had a credit balance of £90,000,000, and in 1957-58 a deficit of £177,000,000. In 1958-59, we had a deficit of £187,000,000, and in1959-60, a deficit of £243,000,000. But what is the picture this financial year? It is estimated that this year’s trade deficit will be £400,000,000. That is the record of this Government, and it is a tragic record. The Government has put Australia’s finances in the worst condition they have ever been in.
Now, I wish to refer briefly to some of the aspects of the Government’s policy which will affect the working people of Australia. The Government has again increased the bank overdraft rate, which means that it has placed another indirect tax on the worker, because firms working on overdrafts will show the increase of the overdraft rate in increased overhead, and this will be reflected in increased prices. When the Government came to power in 1949, the bank overdraft rate was 4i per cent. To-day, it is 7 per cent. - an increase of almost 75 per cent. in the rate.
There is the Government’s record in regard to interest. As I said before, an increase in the interest rate becomes an indirect charge on the working people of this country. A worker paying off a home which he has bought or built with the aid of a loan from a bank or a co-operative building society, which he obtained at an interest rate of 4¼ per cent., will now have to pay interest at6½ per cent. or 7 per cent., which will mean at least another 25s. a week in interest, more than he had to pay when the Labour Government was in office. The present Government is a money lenders’ government. It represents the top 5 per cent. of the money earners in the community.
We opposed the Government’s proposal to increase to £400 a year the allowable deduction to a taxpayer in respect of insurance premiums. We considered that in effect the proposal meant giving a handout to the insurance companies and the top 5 per cent. of money earners. Indeed, the Treasurer said that this provision had cost the Commonwealth £35,000.000 in revenue last year. That is our money. That is £35,000,000 of the people’s money going into the hands of the insurance companies and of the wealthy people who can afford to take out high life assurance policies. In his speech last night the Treasurer said -
Whereas life companies held SO per cent. of their assets in Commonwealth and semi-government securities in 1939, and 68 per cent. in 1949, the proportion had fallen to 37 per cent. in 1959.
It is interesting to note that in 1949, when the proportion was 68 per cent., the Chifley Labour Administration was in office. I now wish to quote from the speech made by the honorable member for Melbourne Ports (Mr. Crean) on the Life Insurance Bill 1958, as reported in “Hansard” of 20th March, 1958. The honorable member said - i think that the Government should ask itself, as a matter of economic policy, why the proportion of investments in government securities to total assets of insurance companies - which, after all, represent mostly only the aggregate of the small savings of the people - has fallen from 54.8 per cent. in 1948 to 30.9 per cent. in 1955.
The honorable member for Petrie (Mr. Hulme), who has since become Minister for Supply, said at that point -
The answer is very simple, is it not?
But is the answer simple? The facts and figures produced by the Treasurer substantiate what the honorable member for Melbourne Ports then said. That honorable member said two years ago what was likely to happen.
– Order! The honorable member’s time has expired.
.-I hope that the honorable member for Reid (Mr. Uren) will not think me rude if I do not deal specifically with his statements. As a matter of fact, I listened to the honorable gentleman with a good deal of care, but I could not understand what he was talking about. I very much doubt whether he did either. Obviously, the problem which really faces us - the problem that has made it necessary for the Government to introduce these measures - is that we are threatened with an acute balance of payments position. We have difficulty in balancing our trade. I am only a farmer and I have a great deal of difficulty in following economic arguments. However. 1 can understand that imports have to be paid for with exports. I wish there were some other way of running our economy, but nobody else in the world seems to have any other way of paying for imports than by using exports to do so.
That is the problem which the Government faces. What should we do about it? Should we sit down and wait till it solves itself? That seems to be the solution that some honorable members opposite would recommend. Or should we try to do something positive about solving it? Unfortunately, in this modern age it is necessary to do something positive. In the old days they used to “ unpeg the exchange “. I am not quite sure what that means. However, with what little knowledge of economics I have, that seems to me to be desirable in theory but completely impossible in practice. It is something which cannot be done in this modern age. I am certainly not capable of expressing an informed opinion on it. All I can say is that unpegging the exchange is not a practice followed anywhere else in the world.
If we have a pegged exchange and face a balance of payments problem, we must do something about it. We have only three alternatives. First, we can reduce our standard of living. That is not a solution that appeals to me, and I do not think it would appeal to honorable members opposite. With Australia undergoing great development and engaged in a great immigration programme, the problem of maintaining both our balance of payments and our standard of living is accentuated. But a reduction of the standard of living is not a solution that any of us would support. That leaves only two other choices. We can increase our exports. Speaking as a farmer, I think that in that method lies our chief hope of solving the problem in the long term, and I believe that it is a solution’ that has great possibilities in the future. We can look with confidence to an increase in our exports in the future. It will not be easy, but I think it is possible.
In view of the avenues opened up by science in the last ten years there is the possibility that we can increase our exports. The many factors that bear hard on our exports are well known. These make it difficult for us to meet world competition. I have dealt with many of these factors in this chamber previously. To some extent, the tariff bears heavily on our export industries and again I urge the Government to recognize the wisdom of having an expert inquiry into the effect of the tariff. The last such inquiry was held in 1929 and the position has changed a great deal since then. We are not quite sure how heavily the tariff bears on our export industries.
I could mention other factors including shipping costs. In this regard, every one is quick to lay the blame at the other fellow’s door. Waterside workers and shipping companies both are blamed. One’s attitude depends a great deal on the side of the House on which one happens to sit. I would say that considerable responsibility for the rise in shipping costs must rest with the waterside workers. I am not usually given to blaming the worker in cases such as this, but in this particular instance I would think that wharf costs bear very heavily on our industries. There is a chance, if the people would get off our backs, to increase exports.
This is what worries me about honorable members opposite: I do not deny their ideals but they will not face the question of how we are to increase exports. Never once have I heard them advance a worthwhile argument on how to increase our export production. I shall leave this matter aside for the moment, but I believe that an increase in the value of our exports is the ideal solution to our economic problems.
Another way in which we can adjust our balance of trade is by reducing imports. It is as simple as that. You do one or the other. If you cannot immediately increase exports, you cut down imports. How fdp you go about doing that? The traditional way is by means of the tariff. That is a long-term measure which cannot be quickly used, particularly in view of our obligations under the General Agreement on Tariffs and Trade. Because of that agreement, we have to introduce tariffs on the recommendation of the Tariff Board. This is obviously not a quick measure which can be taken in an emergency.
Another way of adjusting our balance of payments is by means of import licensing. The Labour Party continually claims that we should adopt this measure. It sounds such a delightfully simple solution. You say, “ There are too many things coming in so we will stop them. We will license imports.” We followed this course in the 1930’s. But it is only recently that we have learnt that it does not work. Why does it not work? Stopping goods from coming in does not necessarily stop them from being consumed. Instead of being imported, they are made in Australia. That seems a very desirable state of affairs. That is the kind of solution which the Labour Party, in the past, used to say was correct. You provide employment by making commodities in this country. The trouble is that there is no one to employ.
Another trouble is that the things that you wish to make here usually have a component of imported material. It is necessary to import plant and raw materials in order to make them. Sometimes it is necessary to import capital to make them. During the last few years, 80 per cent, of imports have been brought into this country for use in our industries - mostly in secondary industries. It is sad but true that import licensing does not seem to work. It is a pity, in a way, because it is a quick and delightfully simple measure.
Assuming that it is necessary to reduce imports somehow, what do you do if import licensing does not work? First of all, let me say that one other disadvantage of import licensing is that it bears heavily on our costs. It has a similar but more severe effect than the tariff. It makes exporting difficult by increasing the costs of export industries. I think we all admit that the chief hope for our economic future is to get our export industries producing better, so how foolish it would be to increase their costs! How silly it would be to say to the farmer, “Look George, you have to produce more than that”, and, at the same time, introduce import licensing which would automatically increase his costs.
If you admit that fact - and I do not think it is open to argument - we have to look at some other way of reducing imports. The way that the Government is choosing is the right way although it is an unpopular way. The Government is dampening down demand. I do not think that any of us like doing this, but it happens to be the efficient way. It gives the export industries some hope of achieving the £250,000,000 increase in exports which we are told that we need in the next five years.
If you admit the problem, this seems to be the kind of solution that should commend itself to honorable members opposite. If I may introduce a personal note, there are many Labour politicians for whom I have high regard and the chief one would be the late Mr. Chifley, who happened to be a great friend of my family. I have a great regard for his tradition and reputation. This is the kind of measure of which I think Mr. Chifley would have approved. This is a way of facing the problem which hurts the least number of people. I should have thought that this method of attack would have appealed to honorable members opposite. I recognize that it will be unpopular but, to some extent at least, it has the advantage of being a courageous and proper attempt to face the problem.
Sitting suspended from 6 to 8 p.m.
.- The economic proposals that the House is now debating are of very great significance. They are more far-reaching and significant than any of the proposals in the budgets of 1958-59 or 1959-60, and they are more far-reaching than were the proposals made in February of this year. The fact that they are so far-reaching and significant shows that the Government is facing a serious economic crisis.
Last night we heard a most stern-faced government speaking to supporters who sat in stony silence to hear announcements of increased sales tax and increased bank overdraft rates, which indicated that the Government had at last come to the point of recognizing the serious state of affairs that exists in the Australian economy. But the trends that the Government acknowledges now - the serious fall in overseas reserves, increased bank advances, the vast growth of the so-called fringe financial institutions, the diversion of life assurance company funds to less essential purposes than those for which they were previously employed, and the growth of debenture fund raising because of the tax differential - have been present in the Australian economy, unrecognized by the Government. unadmitted by the Government and untreated by the Government, for six or seven years. These trends have been pointed out time and time again by the Labour Party Opposition in this House and elsewhere, but the Government has refused to recognize their existence.
The Government takes, as it always has taken in this country, the easy, vote-winning way. Instead of recognizing a condition when it first becomes apparent, the Government puts off the recognition as long as possible and only when an emergency arises will it risk taking action which might lose it votes. When it has to make a choice between ensuring the health of the Australian economy and preserving votes, the Government invariably comes down on the side of vote preservation.
The Government’s February proposals were ineffective and they have failed. They were the proposals for increased imports, for a wage freeze, for credit restriction and for a balanced Budget. Labour said at the time that those proposals would fail and we gave the reasons for our contention. With regard to the lifting of import restrictions, we said that this would endanger our overseas funds, and this is precisely what has occurred. Because it has occurred the Government is now forced to take emergency measures. We also said that the freeing of imports would waste our funds on unessentials, and we now see our shops filled with unessentials. Our overseas funds have not been used to purchase capital equipment which would contribute to the development of the country; they have been used to far too great an extent to purchase unessentials which make no contribution to the task of dealing with inflation. The position is clear: These goods are bought and are brought to Australia, and all that happens subsequently is that money changes hands when they are purchased. They make no contribution whatever to the task of dealing with inflation.
All these eventual results were pointed out to the Government last year by the Opposition. We said, first, that the Government’s economic proposals would endanger the Australian economy, and we know what has happened in that regard. Because of the flood of imports and the increased stocks that are held of imported goods, one Australian industry after another has had to curtail its operations. I do not suggest that industries have had to close down completely, but many plants have curtailed employment to four days or four and a half days a week.
Why have these proposals been brought forward? Why was the proposal made in February to remove import controls? I suggest that closely bound up with the Government’s decision was the Treasury attachment to the policy of freer trade and internationalism - this principle which the Government has now elevated to the status of dogma. The Opposition says that when it comes to a choice between the international free trade dogma and the interests of Australian industry, those interests should prevail. This Government has made the contrary decision.
We said also that the Government’s move in going to the Commonwealth Conciliation and Arbitration Commission and urging the freezing of wages would also fail in its purpose because, as we contended, it was not wage increases that caused inflation. We said that wage increases were the result of inflation. We said that what the economy was suffering from was profit inflation, and that any move to freeze wages would not deal with the fundamental dynamic of inflation. We pointed this out to the Government all too clearly. We asked this question: If the Government succeeded in cutting hire-purchase transactions at the same time as it enforced a wage freeze, where would the products of Australian industry be sold? We showed that the wage cheque would not be large enough to cover the purchase of Australian manufactured goods. In fact, the wage cheque has not proved big enough in the past, so that the workers have had to turn to hire-purchase companies and pay high interest rates on borrowings from those organizations amounting to £500,000,000. If you cut your hire-purchase funds while pursuing a policy of wage freezing, you will not leave enough purchasing power in the community to clear the products of Australian industry.
Lastly, despite the Government’s avowed intention, the Budget was not balanced. It has had a £200,000,000 gap in it, which has been filled by funds borrowed from the central bank and the trading banks, and in the short-term money market. The Government has always turned to inflationary finance to fill a gap, and, having done so, it has said, “ The Budget is balanced “.
Why has the Government failed in its economic policies? Why has it failed continuously for eleven years to deal with inflation? I say that it has failed because it has refused to plan. It will not apply its decisions. Any businessman knows that no one can succeed unless he makes a plan and applies it. This Government believes in the planning of individual businesses, but not in the planning of the Australian economy, and that is basically what is wrong with the Government. No problem of inflation can be dealt with unless a national plan is devised, on which the methods to be used can be based and for which those methods can be applied.
The Government has also permitted and encouraged expansion, which is another word for inflation. On every occasion on which Government spokesmen use the word “ expansion “, the word “ inflation “ should be used instead. The Government has even permitted, during the last twelve months, the expansion - again “ inflation “ is the correct word - of bank credit by £150,000,000. This was part of the Government’s policy. The Treasurer (.Mr. Harold Holt) last night seemed mystified at the fact that suddenly bank advances had gone up by £150,000,000. If you aim to increase your flow of imports in order to deal with inflation, how can you expect to do so unless there is an expansion of bank credit? Obviously, it had to expand, and it went up to the extent of £150,000,000. The Treasurer says, meekly, “ Frankly, we did not reckon on this “. If he knows nothing of economics, surely some of his advisers do.
We have been suffering from a profit expansion or inflation. Profits have been at record heights. There have been record tax avoidances. All kinds of allowances and concessions have been fitted into the Australian economy at the managerial level in order to increase income without increasing the amount of tax to be paid upon it. There have been record bonus share issues in almost every one of our large industrial and financial concerns. Lastly, there has been the development of the fringe institutions. What a wonderful word, “ fringe “ !
– It has been used for years.
– Once upon a time, it was a fringe. It accounted for about 10 per cent, of the total lending, and that was when you first heard of it. But now it covers about 80 per cent, of the total lending in Australia, and it is no longer a fringe.
– A pretty heavy fringe!
– Yes, a pretty heavy fringe. The Government has failed in this job because it has been prepared to accept profit inflation. It has been prepared to allow the development of these fringe money-creating institutions, which themselves have been responsible for speculation. In other words, the Government has permitted sectional expansion or sectional inflation. The large profiteering concerns have been allowed to operate unchecked, and the Government has done nothing to prevent the import of large quantities of unessentials, the expansion of bank credit and the development of the fringe institutions responsible for sectional inflation. Now, it seeks to restrict, suppress or restrain by a policy which hits sections of the community. It has allowed sectional expansion, and now it is adopting a policy which also deals with sections. The only thing wrong with that policy is that it deals with different sections from those that have been responsible for the expansion. There is a distortion between the sections which have caused the trouble and the sections with which the Government now proposes to deal. It proposes to hit these sections by means which themselves are inflationary - increased sales tax, increased interest rates, and credit restrictions. In order to stop inflation, the Government proposes to make things more expensive. That has been its policy in a nutshell in recent years. Whenever we have an inflationary situation, the Government tries to cure it by making things more expensive.
The sales tax on motor cars will be increased from 30 per cent, to 40 per cent, and that on motor cycles and other things from 16$ per cent, to 25 per cent. This will increase the prices of Holden and Falcon motor cars, for instance, by £80 or £90, or perhaps a little less if the manufacturers cannot pass on all of the increase. Interest rates will go up by 1 per cent.
The basic credit restriction will force more borrowers out of the basic credit field into the uncontrolled fringe field where the rates of borrowing and the costs of borrowing are more significant. But right at the root of this Government’s inflationary record is this distortion of uncontrolled lending compared to basic-controlled credit, running to some extent controlled but not altogether controlled. The basic borrowers are squeezed, but the banks which lend to them have not been so much squeezed, because in the last twelve months £150,000,000 has been allowed to come from those banks. So it is no wonder that the Treasurer is puzzled about the situation of the credit squeeze. He says that the banks have increased lending by £150,000,000, and so they have, but the credit squeeze is upon those borrowers who have not obtained money from those banks. Where did that £150,000,000 go? The Treasurer asked the question, but he did not answer it. That money did not go to the ordinary borrowers who had small businesses. It did not go to the farmers who had small farms. It did not go to the workers who wanted to build houses. Nol It went to the big concerns that were importing unessential goods, among other things, into this country. So there has been a credit squeeze on the small farmer, the worker and the owners of small factories and businesses, but there has not been a credit squeeze on the trading banks. They have been able to put out £150,000,000 more in the last twelve months.
As I said, the Government recognizes inflation. It does so all the time. But in order to cure inflation, it takes action which makes things more expensive. The increased sales tax and increased interest rate proposals are wrong and iniquitous, and they will cause more inflation. In addition to their inflationary consequences, they will cause industrial dislocation in the basic sections of, for instance, the motor industry. They will cause increased costs there which will be translated throughout the economy, as transport costs represent about 30 per cent, of our total costs in Australia. There will be further discrimination against the basic low-interest borrowers, and the credit squeeze will force them away from the trading banks and send them around the corner to the hire-purchase institutions, which will lend to them at higher rates of interest.
In respect of the recognition of the need for selective regulation of credit, regulation of life assurance companies and regulation of borrowing by public companies, the Government has at last made progress. These three basic propositions have been put forward by the Australian Labour Party, in this Parliament and elsewhere, continuously over the last five or six years. The Government has made very belated progress in this direction. It also recognizes for the first time that not all people and not all sections of industry contribute equally to inflation. In the statement made by the Treasurer last evening, we find this passage -
At the present time it can be said that demand is much too high; but that is true only in an aggregate sense. It is not true of all sectors of the economy or of all people. Undoubtedly, some people are spending much more than usual but others are not.
What a dramatic discovery the Treasurer has made! He continued -
Similarly, the demands that industry is making on resources are not universally too great. Some industries are running along quite normally . . The excess demand for resources is most evident, and over-expansion has been most pronounced, in certain sectors.
So the Government has made a dramatic discovery! Up to date, it has been talking in terms of excessive demand everywhere and excessive spending by every one in the community, as though every one was in the same position. But it still leaves completely unanswered the question: Whose spending is not greater than usual? There is no answer by the Treasurer to this question. I shall give him an answer. The people whose spending is not too great are family wage-earners and pensioners. There is no excess spending by them. Whose spending is greater than usual? There is an implied answer in what the Treasurer had to say. He said that the spending of speculators in the building industry and in the motor car industry was far too great. But how will the Government discriminate between speculative and essential building? Its only answer to that problem is contained in a rather rambling proposal put forward by the Treasurer. Referring to the Reserve Bank of Australia, he said -
Importantly, too, it will give much more specific guidance on the classes of borrowers whose needs are to be judged less important, and the classes of borrowers, especially certain classes of export producers, whose activities may reasonably call for extra accommodation. In other words, the object will be to see that bank credit is not excessive in total, and that it is not diverted from those who can make good use of it to others whose activities in current circumstances are making undue demands on the country’s resources.
That is ali very well as a broad preamble, but what will be done about it? We are told that bank credit will not be allowed to become too great in total. That is what the Government said last year. But it has found this year that bank lending has been £150,000,000 greater in total than it expected. Is the Government going to change this year, and if so, in what way? Will it get tough with the trading banks, or will it keep its kid gloves on? I think the House would be interested to hear an answer to that question. How will the Government distinguish between the classes who should receive credit and those who should not? How will it ensure that the trading banks do not provide funds for speculative builders and that they do finance essential building? Will it supervise this carefully, or will it have another gentlemen’s agreement like the one it had two years ago with the hire-purchase companies? If the gentlemen’s agreement is broken, what will the Government do?
When we turn to the motor car industry, we find that the Government’s proposal is to increase the sales tax on standard models of popular vehicles by about £80 or £90 a car. This will be the increase on the cars that most Australians buy. This is indeed a discrimination against the standard models. Those who purchase these models can less afford to pay £80 or £90 more than the wealthy can afford to pay £200 or £250 more for the cars that they buy. There is here a clear discrimination against the buyer of the standard model.
There is another discrimination. The object of the exercise, as the Prime Minister would say, is to discriminate against imports. But the standard models, against which the Government discriminates most, have the greatest Australian component. The luxury models with imported bodies, which will not be discriminated against so much, are more commonly imported.
The Government is right in its proposals with respect to the regulation of the activities of the life assurance companies. They have raised £562,000,000 in the last ten years. The Government tells us that £481,000,000 of this has gone into private investment - into other than government securities - £77,000,000 into semigovernment securities and £4,000,000 into Commonwealth Government securities. So at last the Government intends to regulate this most important class of lending institution - the life assurance companies - which have been diverting funds into the wrong channels. Labour has long said that this class of lending institution must be regulated. Ministers like the Minister for Supply (Mr. Hulme), of course, have poohpoohed this suggestion from time to time as it has been made here. We have been told that the life assurance companies were devoting their funds to the best purpose. But the Government now proposes to lay down a rule that they must put at least 30 per cent, of their investments into government securities. That is a complete contradiction of the position taken up by the Minister for Supply and by other Ministers over the years. But the Government is using kid-glove methods here, too. It says that the present average level of investment by life assurance companies in government securities is 37 per cent, of their investments. So all that the Government is doing is to say that from some indefinite time in the future these companies have to put 30 per cent, of their investments into government securities. That is 7 per cent, less than they now put into government securities, although the Government says that the present situation is unsatisfactory.
The Government is taking correct steps, also, with regard to debenture procedures. The Minister for Supply was the chief opponent of this policy in this House time and again, but he sits here still as a member of a government which is now putting into operation something that represents a complete contradiction of the position that he has taken up. The moves made by the Government which may be effective are moves which are consistent with Labour Party policy, but the others will increase inflation, not reduce it.
Order! The honorable gentleman’s time has expired.
Suspension of Standing Orders.
Motion (by Mr. Downer) - by leave - agreed to -
That so much of the Standing Orders be suspended as would prevent the Prime Minister (Mr. Menzies) and the honorable member for Werriwa (Mr. Whitlam) each speaking for a period not exceeding 30 minutes.
– I would like to compliment the previous speaker, the honorable member for Yarra (Mr. Cairns), who has just resumed his seat, on his close knowledge of the motor car trade, to which he appears to have given considerable study. I take time merely to say that at the end of eleven years of this Government, 1,000 motor cars a day are being added to the stock of those produced, whereas when his party was in office, the person who could afford a motor car was a rare bird. But, Sir, I do not propose to occupy any of my precious 30 minutes in dealing with him, because he is of no significance. I want to direct my remarks, as I should, to the speech made last night by the Leader of the Opposition (Mr. Calwell), my principal opponent and the prospective leader of an alternative government. It is proper, therefore, that 1 should say something about his speech with great courtesy and about the rather remarkable amendment that he has moved in this House.
– - His speech made even you laugh!
– I enjoyed it. The first note I made was that it was an enjoyable speech. So it was. It was garnished with frogs’ legs in aspic and other innocent buffoonery. But as a serious, destructive - to say nothing of constructive - attack, 1 venture to say, with infinite submission, that it was hopeless. The amendment moved by the Leader of the Opposition has not had the attention that it deserves, because it succeeds in a very remarkable task. Have a look at the words. It invites this House to declare - that the economic policies pursued by the Government over the past eleven years and in particular the measures announced to-night are an admission that the policy which the Government put into force in February last has proved a failure. 1 think that is a very remarkable performance. The policies that we have adopted for eleven years have proved, so he says, that the policy announced in February, 1960, was a complete failure. As an exercise in syntax, of which I say nothing, it is quite astonishing; but as an argument of substance it is, of course, quite ridiculous. Either the honorable gentleman believes that the policies of the last eleven years, up to February, were right and he is relying on that fact to prove that the February policy was a failure - or what is he asking the House to say?
– That you are a failure!
– Now, Reggie, you behave yourself.
Apart from the absurdities of language, in reality what the Leader of the Opposition is asking the House to do is, retrospectively as it were, to condemn the economic policies of the Government. That is why he or his compatriots dragged in the reference to the last eleven years. “ Make it a good job “, they said, “ bring in the last eleven years “.
– Now come to the point.
– I am coming to the point and it is a point that I hope you will remember. If we are to be told now by this Opposition that our policies in the last eleven years have been a failure, if we are to be told that as a result of these policies great damage has been done to the Australian people, then I take leave to remind the Opposition that on four occasions in the last eleven years - in 1951, 1954, 1955 and 1958- the people, having been given their chance to say what they thought about this, have returned this Government with overwhelming majorities. So, Sir, these genial optimists opposite have their work in front of them. They are now setting out to persuade the people, almost retrospectively, that they made an awful blunder and that they did not know in those years how badly off they were. Even at the end of that period of eleven years, the Leader of the Opposition - I must do him justice - admits, though with some regret 1 must say, that the country is prosperous. After that, the Opposition comes along and produces this extraordinary amendment.
In order to bolster up this astonishing proposition, the Leader of the Opposition allowed his mind to wander abroad. He became so taken up with his envious reference to my summer holidays in the northern hemisphere and to my meeting the Treasurer (Mr. Harold Holt) in New York that his mind moved to West Germany and Japan. He said to us last night that Australia is not progressing in production as these countries are. I wonder what that means. Does it mean that the Leader of the Australian Labour Party is proposing that we should have their working hours and their conditions of labour? Is this the idea, when he speaks in chiding terms about Australia’s performance? He said, in effect, “ If we did the same as they do in Japan and in West Germany, if we had the same kind of government as they have and the same conditions as they have, our production development would be much greater “. Having made this simple allusion to these two countries, he will be found in some suitable public place before very long advocating that we should increase our production in this country by adopting a 35-hour week.
I turn now to what has really fascinated me in this discussion, and that is what I choose to call Labour Party folk lore. Opposition members keep on saying certain things on the principle that if you say them frequently enough you will begin to believe them, and if you say them even more frequently other people may believe them. The Leader of the Opposition referred to 1951-52. His precise words were -
That is my Government - wasted all the balances that the Chifley Labour Government had built up.
– Hear, hear!
Mfr. MENZIES. - The honorable member says “ Hear, hear! “ It is part of Labour’s folk lore that the Chifley Government built up enormous reserves and that we blew them up - or is it blued them - in 1951-52 and presumably since. The honorable member for Fremantle (Mr. Beazley) ventured into this field and said -
We had £989,000,000 in London on the day the Labour Government fell.
So that I am comparing like with like, I compare this with the Treasurer’s statement that more than £400,000,000 is held in gold and foreign exchange. So it was £989,000,000 on the day that the Labour Government fell, and it is something over £400,000,000 to-day. The answer to this kind of thing is just to have a fact or two, and I did not invent the facts I am about to mention. They are facts received by me from the Treasury and from the Reserve Bank of Australia. In 1948, in those halcyon days when the Chifley Labour Government was in office, Australian holdings of gold and foreign exchange at the end of June - 1 am taking the financial year - were £280,900,000. At the end of June, 1949, they were £446,000,000. I shall leave out the odd thousands. When the Labour Government fell-
– What about 1950?
– Wait a moment! Be patient! When the Labour Government fell in 1949, the figure was not £989,000,000, but £528,000,000. I know that the honorable member for Reid (Mr. Uren), who is interjecting, is bound to go galloping off on some excuse, but I am taking the figures and if he is not afraid of them, he will listen to them. I know that he is not quite game enough to face up to them.
In 1950, at the end of the first financial year of the present Government’s regime, the figure was not £528,000,000, but £629,000,000. That is how we were wasting these reserves! In 1951, they totalled £803,000,000, the highest figure ever reached.
– That was during the wool boom.
– Of course it was. I am not so stupid as not to know that. You would not dream of making such a silly statement, but when one of your colleagues makes a silly statement, let it be nailed. In 1951, our overseas reserves were at the highest figure ever reached. They stood at £803,000,000. Then we had to take strong measures, much criticized by the Opposition, and by some other people, to counteract the enormous inflationary boom that that created and the enormous and unprecedented demand for imports generated by this tremendous price for wool and our tremendous export income. As a result of those measures - which were taken not to buy votes, but in spite of the fact that we knew they would lose them - our overseas reserves fell to £372,000,000 by 1952. As it has been said that we have thrown away our reserves abroad, I will just tell honorable members, if they are interested, that in the following year, as a result of the stabilization that was produced by the powerful and unpopular measures taken by us, our reserves stood at £56 1, 000,000. In the following year they increased to £570,000,000 and then dropped in the next year to £428,000,000. In 1955-56, there was some difficulty that had to be coped with, and our reserves fell to £355,000,000. In 1957, they were back to £566,000,000. In 1958 they stood at £525,000,000 and in 1959 at £516,000,000. By the middle of this calendar year, that is to say, by 30th June, they were £512,000,000. I venture to say to honorable members who are interested in these matters that those figures are remarkable proof not of the wasting of reserves overseas, but of their management by a well-balanced economic policy.
– What were the international payments over the last seven years? They were over £1,000,000,000!
– The honorable member might as well keep his interjections to himself. If he will look at the figures that I have given to the House, and which are beyond challenge, he may succeed in learning a good deal from them.
The next thing I want to say is this: lt is said by some critics that the Government has a policy that proceeds by fits and starts. I saw a rather amusing cartoon to that effect in one of the lesser newspapers this morning. I meet that criticism. Our economic policy has remained constant from beginning to end. A policy of the kind which is aimed at stability, at preserving the balance of payments, and preserving employment, is a constant policy. But there are some people in the world, including those chattering people on the front bench opposite, who think that a policy ought not to express itself by varying acts under varying circumstances. Let me mention to those people, as a superb example, the actions of the central bank. It has immense responsibilities given to it by this Parliament. It is concerned with credit control; it is concerned with the monetary problem; it is concerned with all the mechanisms that have a bearing on credit control and on the market for bonds. All those things are governed by central bank techniques. And what is its policy? Its policy is to preserve, so far as it can, stability, a proper degree of liquidity, and a proper opportunity for the expansion of the country. It has never shrunk, in my experience of it, from that responsibility. That is its policy.
But in the performance of this policy, the central bank does not sit down stupidly, month by month, ignoring what may occur. It knows that to-day it may have to call money into special reserve deposit from the trading banks if deposits are high, and that in three months it may be releasing them to the trading banks. It knows that to-day, in the circumstances of the market, it may need to engage in open market buying operations. It is not deterred from doing that by the knowledge that in three months’ or six months’ time it may be selling on the bond market in order to take liquidity out of that market. That is elementary to anybody who knows the very rudiments of the central bank’s responsibility. Nobody in possession of his five wits professes that, because, under its broad policy and its broad charter, the central bank buys to-day and sells on another occasion, and expands and contracts, it does not know its own mind, that it is proceeding by fits and starts. Although I say it myself, this country has been very fortunate in having a few people here who understand that unless you are flexible in your treatment of economic circumstances as they arise, unless you realize that the position of Australia can fluctuate violently with the price of wool or in a drought year, or with some other circumstance, you are not fit to be entrusted with the responsibility of what I will call, in concession to some people, economic management.
The Treasurer made a statement which was extremely carefully considered. In the course of that statement, he pointed OUt to the House and, I hope, to the people, that circumstances had developed up to the present time which were not identical with circumstances that had existed previously, and that there had been changes. I want to mention, not all of them, but one or two of them. There had been, for example - since the policy of February - quite a substantial fall in the price of wool, involving a substantial fall in the export income by which we hope to pay for our imports. Did the Opposition foresee the fall in the price of wool? I do not remember it.
– We warned you.
– The honorable member has warned us about calamities for so long that I have almost ceased to listen to him. It is amusing to have the Opposition saying, in effect, “ We could have told you. We are the wool experts.” Members of the Opposition are experts in woolly thinking, but not in wool-growing or selling.
– What about the existence of the pies?
– My dear fellow, do not talk about pies. I have already had dinner.
– Do not do any more acting. Do a bit of work.
– Order! The honorable member for Kingsford-Smith will keep order.
– It is all right, Mr. Speaker. If the only answer that can be made to the arguments I am putting forward is the kind of chitter-chatter that is going on over there, the people will be well able to judge it.
The Treasurer pointed out to us that in the six months from June to December - the period is not quite finished yet - spending on new buildings and structures other than homes was expected to increase by 38 per cent, compared with actual expenditure in the first six months of the year. Did anybody opposite anticipate that? It would have been interesting to hear it, if anybody had. This is a new circumstance and one which brings to bear an inflationary pressure on the structure at the very moment when the wool income is falling and when our export earnings are moving downwards.
I take two of these things, by way of example, to show how fantastic it is for people to say that we should have known all about this months ago. Sir, I want to point two things out to the House. One of them is that we are perhaps too much in the habit of thinking that the Budget contains all the economic measures which may operate in course of the year. It does not and it cannot. The Budget is the fiscal document of the year. Any government which said, “We produce our Budget and that is the whole of our political planning for the year and nothing else will occur until next August or September “, would be an irresponsible government. It is the duty of a government to live day by day and month by month with the economic problems of the country.
On top of that, let me remind the House that at the time of the Budget there were many uncertainties. For example, the freeing of imports and the abolition, in substance, of import licensing, had not had time to be fully reflected in the actual imports. Let me say that there was a belief, in some quarters, that when import licensing came off there would be a sudden, steep rise in imports and then the level would go down again. To use a phrase with which we have become familiar, some people thought there would be a hump in the graph of imports. But, in point of fact, so high is the purchasing power of this country that there was not a hump in the graph, but a rise to a high plateau, and the volume of importations, as a result, has exceeded what anybody could reasonably have anticipated a few months ago.
That is a matter which we knew had to be tested experimentally. We knew that if the import movement turned out to be rather more massive than we had anticipated, we could find ourselves called upon to do something about it.
The second matter was this: The restrictive directives to the trading banks had been given. At that time it was not possible to know how far they were going to succeed and how far what has been called the credit squeeze was going to be successful. We now know, as the result of months of experience, that for a variety of reasons which I need not canvass, the increase in bank advances far exceeded anything which could have been anticipated. These are the kinds of elements which we knew we would have to consider in due course and which might very well bring us - and it turns out that they have brought us - to the point of producing supplementary ideas on top of the main Budget.
I want to say a few words on one other aspect of this matter before I run out of time. The Treasurer’s statement, made last night, was the product of long, elaborate and thoughtful consideration in Cabinet. No hasty conclusions were reached, nor was there - I say this not to disappoint some people - the slightest atmosphere of panic. We devoted weeks to this matter and, in the end result, days of concentrated work on documents and in discussion. We recognized that we were called upon to deal with problems arising from prosperity and arising from quick development at home.
– Where is all this prosperity?
– If you are not a proof of the prosperity, I would like to know who is. Those problems were of two kinds. The first is inflation caused by great pressure on our human and material resources, and the steady fall in our external reserves caused by a fall in export income - I will say something about that later on - and a remarkably sustained rise, as I have pointed out, in the demand for imports. The second problem, that of our international trade insofar as it arises from increased import demands is, in a real sense, the outcome of inflation at home. Bank advances not having adequately responded either to the directives or to the fall in the overseas reserves, measures additional were necessary and prudent. The Treasurer has stated them. I would have thought that this was important. Our approach is not merely negative or restrictive. The Treasurer indicated this towards the end of his statement. We believe the balance of payments problem could recur from time to time, having regard to inevitable fluctuations in our export income from primary products, unless we maintain, as a major element of policy, the opening and developing of overseas markets not only for wool, wheat and meat, but also for processed and manufactured goods.
The Department of Trade is well aware of this challenge, and during its relatively brief history has achieved a great deal. Our policy has been and will be to continue to intensify the drive for exports. New methods are always being investigated. We will not be deterred by precedent or orthodoxy, for the export problem is vital.
I conclude by pointing out to Australian manufacturers, whose achievements are already so notable, that they may find that by increasing their turnover in relation to their overhead, the development of exports may well help them to meet the pressure of rising costs in Australia.
.- For some years past the Prime Minister (Mr. Menzies) has adopted the technique, during Budget and Supply debates, of not justifying his Government’s policy but analysing the speech made by the Leader of the Opposition at the time. His technique is to take a day or couple of days to pore over the speech and then try to reduce it to the absurd. To-night he went so far as to say that the Leader of the Opposition (Mr. Calwell) had spoken like a buffoon last night. The Prime Minister decided to adopt in this chamber the technique that Mr. Nehru used on him in the United Nations, although Mr. Nehru referred to the Prime Minister in slightly more dignified terms. If I may recall those rather more glacial but no less effective remarks, Mr. Nehru said that our Prime Minister’s speech verged on absurdity; that he was viewing the situation from a superficial point of view; that he was trying to cover up the main issue with a jumble of words, and was this not rather a trivia] way of dealing with a vital question.
The Prime Minister is one prophet who is without honour in other countries. Because he has got away with it on five previous occasions he hopes that he can get away with it again. He hopes that at least he will be a prophet with honour in this country. He is not a buffoon; he is the sage statesman, the grave and reverend seignior, the ponderous potentate and. when required, the devious demagogue.
The only point in the speech of the Leader of the Opposition with which the Prime Minister joined issue was in relation to inflation. The Prime Minister tried to rationalize Australia’s performance by comparing it with the position in Japan and in West Germany. My leader stated quite properly that whereas in the last ten years prices in Australia had risen by 105 per cent., in West Germany they had risen by 1 8 per cent, and in Japan at a much lower rate than they had in Australia. The Prime Minister’s excuse for this is founded on working hours. He asks, “ But would we work the hours that they do? “ The plain fact is that there has been no change in the respective hours of work in Japan, West Germany and Australia in the last ten years.
Apparently the Prime Minister now is preparing to support the application to the Arbitration Commission by employers’ organizations for an increase in our working hours to 42 a week. Workers in other countries in the world also enjoy the 40-hour week, and have enjoyed it for much longer than have the workers of Australia, but over die last ten years the incidence of inflation in those countries has been much less than it has been in Australia. The United States of America has the 40-hour week, and has had it for a quarter of a century. Prices in that country had risen by 20 per cent., not by 105 per cent, as they had in Australia in the ten-year period. Canada has had the 40-hour week for a quarter of a century and prices in that country had risen by only 24 per cent, in the last ten years. For the benefit of honorable members on the Government side who apparently dispute the accuracy of my statements, the figures in relation to inflation which I have mentioned appear in the 1959 United Nations statistical year book. The Leader of the Opposition has been proved to be correct on the only aspect of his speech to which the Prime Minister referred - that inflation in Australia is worse than in any other country. It is twice, four or five times as high as it is in other comparable industrial or trading countries.
The policies which the Government enunciated last February were four-fold. The first was to peg wages. The Government asked the Arbitration Commission to deal with wages - not with hours - on that occasion and the commission acceded to the Government’s request. That policy has been singularly fruitless because in the first quarter thereafter the C series index rose by 3 per cent. - more than it had risen in the previous twelve months. In the following quarter it rose by a further 2i per cent. In other words, in the six months after the Government’s intervention before the Arbitration Commission the basic wage rose by more than it had risen in the previous two years.
The next step taken was to end import controls. The Government stated that this also would make its contribution to ending inflation. What has been the result? The October issue of the “ Treasury Information Bulletin “ states that whereas in the quarter from July to September last year our balance of trade was adverse to the extent of £5,000,000, in the quarter from July to September this year it was adverse to the extent of £88,000,000.
The third item of policy that the Government laid down last February was designed to curb bank lending. Reading again from the “ Treasury Information Bulletin “, we find that in the year ended September last there was an increase of £147,900,000 in bank overdrafts compared with the figure for the year ended September, 1959. So, none of the Government’s proposals in relation to this matter has succeeded.
The fourth proposal was to balance the Budget. I suppose that has been achieved. The Prime Minister has not explained why it has been necessary to introduce a supplementary budget at this stage, even before the debate on the Budget has been completed in the other place and before the Estimates have been passed by the other place. He made some play with claim that on occasions the Government has been bold and courageous in financial measures. It has been bold and courageous on two occasions. In 1951, eighteen months after it was returned to office at the 1949 election, it had another election - a premature election. It was bold then, immediately after an election at which its boldness had not been forecast. The horror budget was introduced. After the 1955 electionanother premature election eighteen months after the previous one although the Government then had a majority in both Houses - the Government again was bold in a way which had not been forecast at the election. The little horror budget was introduced in
March, 1956. It is true that the Government has been bold on two previous occasions, but it has been bold when it has been safest to be bold. It has never been bold in an election year.
When the Budget was introduced, why were we not told that a supplementary budget would be brought down? Was it not expected then that such a step would be necessary? According to the October issue of the “ Treasury Information Bulletin “, the export price index for last August - the month when the Budget was introduced - was 7.1 per cent. lower than it was for the previous May. In other words, in the quarter between May and August the Government knew that our balance of trade had declined to the extent of over £70,000,000, but nothing was done about it.
We learn now that the interplay between the second and the third of the budgetary measures which were forecast last February - the lifting of import controls and the restraint on bank credit - operated in a way which was unexpected. Instead of restraining their advances, the banks increased them to pay for the greater flow of imports. The proper thing to do then - and the Government now belatedly is trying to do it - was to encourage bank lending, if at all, to increase exports. When you have such an adverse balance of trade as we have had -£200,000,000 a year on the average during the term of office of this Government - surely the sensible thing to do, when you increase your imports, is to take some steps to increase your exports to match them. The contrary occurred. Bank credit was used to facilitate the flow of imports.
Although the Prime Minister did not participate in the debate when the Government’s proposals were put forward last February, and although he said very little to-night about the Government’s proposals which were announced last night, he did participate in the Budget debate. As recently as 25th August last when referring to the Budget he prophesied -
Tt is aptly fashioned to slow down and arrest inflation and to maintain development . . .
Sir, he either did not know the facts or he concealed them, because it is quite plain that the Budget was not geared to arrest inflation. Inflation is maintained as it was in the earlier half of this year - that is, at very much more than it was for some years past - and development is, of course, in a few basic ways not being maintained at all.
The Prime Minister did not come to the basic thing in our economy - the most serious thing in our economy - but I hope that the Minister for Trade (Mr. McEwen), who will speak later, will do so. I am referring to a feature to which the Treasurer did not direct any attention either, last night - the balance of payments. Less and less as the years go by are we paying our way. We are, in fact, using capital borrowings for current expenditure. If it were not for the fact that foreigners are lending us money, or investing money in Australia and not taking out the dividends, our balance of payments position would be very much worse than it is. And the only measure the Government is taking to remedy the position, or to cover it up further, is to arrange another draw of £200,000,000, if required, with the International Monetary Fund. We have thus prepared a further method of borrowing capital moneys in order to pay our way. The Treasurer makes no reference to that. The Prime Minister makes no reference to it.
Sir, I will devote attention now to those matters which the Treasurer’s speech last night did, in fact, touch upon. First of all we are now to have a selective form of bank lending. The Government is now returning to the method of determining what sort of things will be financed by the banks - the form of control or guidance of the banking system which the Government took over in 1949 and abandoned in 1951-52. At that time the Government yielded to the pressure of the private banks. It allowed them to determine what the credit policy of the country should be, rather than determining the policy itself. The Government did not back up the central bank at that time, and completely changed the function of central banking. Now, Sir, it is going back to that method. This is another example of how the Government has moved by fits and starts!
In the meantime, the Government has determined that the amount of the advances by the banks will be determined by the Reserve Bank, but there will be no determination of the nature of their advances.
The banks have not been required to lend for exports, or for development, or for primary industries. All too frequently the banks have lent money on the things on which they will make the quickest return, with their established customers satisfied instead of new customers being set up in business. Moreover, the banks themselves have been permitted and encouraged to invest in those very forms of consumer spending which the Government is now belatedly seeking to curb. The difference on this occasion - and it is a difference we applaud - is that, as the Treasurer said, the Government will be standing behind the Reserve Bank and lending it support and encouragement. The Treasurer went on to say -
The Government will stand squarely behind the existing initiative of the Reserve Bank in maintaining pressure on the liquidity of the trading banks until the desired results are secured.
There are some other methods which surely we should take, and which other countries take. It is said that the increase of bank credit since the February statement - which is £150,000,000 - has been due partly to the increased lending to finance the new imports which are permitted, but also partly due to the fact that unused overdrafts have been used. The Government says that it has been caught by surprise there. But it should not be caught by surprise. Canada and New Zealand regularly publish figures of the overdraft limits which the banks have granted, and of the extent to which those limits have been drawn on. The governments in those countries know what may be the possible increase in lending during any period. We have not done that.
Then, Sir, the Government is going to increase bank interest. It has done this twice before. Bank interest went up in 1952. It went up again in 1956. It is going up again at the regular quadrennium. But it never goes down. There can be a case made out - there is certainly a case urged from time to time - for varying interest rates through the banking system on deposits and loans so as to guide the economy in order to curb or encourage it. But in Australia, under the Menzies Government, the interest rate always goes up. It never goes down. Next, we are now going to have the fixed interest payments, which companies can claim as deductions from their taxable income, frozen at the present figure, or £10,000, whichever is the greater. That, Sir, is a long overdue reform. But the Government has known for ten years that this would be required. This has been a constant trend throughout the Government’s term of office - the trend towards borrowing money by debentures, unsecured notes and the like, instead of borrowing by the issuance of shares. If companies want to raise funds they are actively encouraged now to borrow on debentures and unsecured notes, and the tendency has gone further and further during this Government’s term of office. In 1952-53 companies in Australia raised, by share capital, £26,500,000, and by debentures, registered notes and deposits, £11,900,000. Last year the respective figures were £48,200,000 and £193,600,000. That is, the amount that they raised in shares between 1952 and 1960 did not even double, but the amount they raised by debentures went up by sixteen times. Whereas in 1952-53 the proportion of their new capital raised in debentures was less than one-third - it was 30 per cent. - last year it was 80 per cent. So the Government has known the trend all along. It should not have had to wait until now to decide to do something about it.
Capital raising techniques in Australia have been transformed. They have been completely reversed as between fixed interest and share methods of raising finance, during the last eight years - in the period since the horror Budget. The consequence, of course, is that private loan raisings, as against government loan raisings, during the same period have similarly become distorted. In 1952-53 private companies raised by both methods £38,000,000. Commonwealth bonds in that year attracted £206,000,000. Last year companies raised by both methods £242,000,000 and Commonwealth bonds attracted £203,000,000. Thus, in the eight years the amount that was raised by private companies by their new methods of attracting capital went up more than six times, while the amount that Commonwealth bonds drew in fact slightly declined. So again, Sir, that is a trend which the Government has known. This has been steady, year in and year out, and nothing has been done about it until this day.
Another feature of the economy which the Government will now control is hire purchase and consumer expenditure in general. At the end of June. 1953 - to take the year which I have been using for comparison throughout - hire-purchase outstandings of companies that dealt in that business, not including trading companies which carried their own hire purchase, were £89,000,000. At the end of last June the figure had risen to £422,000,000. Trading bank advances and so on increased from £662,000,000 to £1,015,000,000 in the same period. I have dealt, first, with the transformation of the method by which capital has been raised by companies. Secondly, I have dealt with the way capital has been secured by companies as distinct from governments. Thirdly, I have given the measure of the transformation of credit in this country. Hire-purchase advances have increased in the last eight years by 370 per cent, and bank lending has increased by 54 per cent. The trend has been constant for the past eight years in all these matters with which the Government is now belatedly dealing. The Government has known all about it the whole time and has done nothing. To the extent to which it is doing something now, no objection can be taken. It is the method that is adopted which is underhand and distasteful in that nothing was said about it at the time of the Budget when the trend was already known.
The Government is still doing nothing about the terrific decline in the balance of payments. Here, too, the trend is easily documented. It is not the first time that the Menzies Government has changed its import policy. When it was first elected to office, import restrictions were removed but after the 1951 election, severe import restrictions were suddenly imposed without any warning or any mandate. Before the 1 954 election, import restrictions were eased off. In 1955, new import restrictions were imposed, but the elections were held before their effect could be felt. In 1956, when the effect of them was already being felt but the election was safely past, the import restrictions were made more severe still. They were eased in 1957 and again last year, and at the beginning of this year they were practically entirely removed.
What has been the position during that period? When this Government came to office, as honorable members will recall, it had a balance of payments surplus. It had a record credit overseas. In the period between 1951-52 and this financial year, it is calculated, there will have accumulated a deficit in our current account of £1 ,800,000,000. There were two years since 1951-52- in 1953-54 and 1956-57- when there was a surplus. In every other year there has been a deficit. The “ Australian Financial Review “ estimates that this financial year the deficit on current account will be £350,000,000, the second largest in history. The largest in history was in 1951-52. Last year it was £243,000,000. The year before it was £207,000,000 and in the year before that £107,000,000. In 1956-57, there was a surplus of £89,000,000.
There has been a constant decline in every matter with which this Budget deals. The Government has known for eight years that there has been a decline in the balance of payments, in the credit system of the country, in the capital-raising system of companies or in the capital-raising systems of governments. The proportion of money that comes to the Government in every case has declined and the Government has known of this decline, because it has been a steady decline for eight years.
Then we learnt only last night - because these figures are not readily available and we are indebted to the Treasurer for releasing them - that one of the basic traditional forms of lending for government bonds, local government and co-operative housing - the life insurance companies - has been similarly distorted over the same period. We were told last night that only 9 per cent, of the amount which the life insurance companies attracted last year from the public went into government bonds. This year, none of it went into that avenue of investment. Quite reasonably, the Government is saying now that 30 per cent, of that money at any rate should go into government bonds. When this Government came into office, the life assurance companies were investing two-thirds of their new capital every year in government bonds
It is regrettably true that there is a limit to what the Government can do to guide the Australian economy. It has to guide the economy largely through its power over the banking system, insurance, imports and taxation. Now, after several previous experiments, the Government has abandoned import controls. For the first time, it is using its power over the lending policies of the insurance companies. For the second time, it is using the system which applied until 1952 of selecting the type of bank credit and guiding the deposits and the advances of the banks. Again, for the first time, it is using, in many respects, its power over taxation to guide the economy by deciding that it will equate the position of convertible notes to the position of shares and reduce the advantage that fixed interest raisings have over shares. All these measures have been available to the Government throughout its term of office and it has done nothing about them.
The Government frequently says - although it has been careful not to say it on this occasion - that there is a limit to its economic powers. On other occasions, and this week, the Government has claimed that regrettably it has no power over hirepurchase itself and over capital issues. Last week the Attorney-General (Sir Garfield Barwick) asserted for the second time this year that we had only the most limited power over restrictive practices. Again and again we have been told that we have no power over marketing and that only the States have power over companies. AH these are economic matters on which every other comparable trading and industrial country in the world already enjoys power to act. These are matters upon which an all-party committee of both Houses of this Parliament reported. At least eleven of the twelve members of that committee reported in favour of all the proposals and on most of the proposals all twelve members reported unanimously that the Government should seek power from the Australian people. That committee reported two years ago to the Parliament and one year ago it gave full reasons for all its recommendations.
All these matters with which the Government is dealing belatedly, sharply and suddenly in this little budget which the Treasurer announced last night, could be more frankly, honestly and effectively dealt with by the Australian Parliament if the recommendations of the all-party committee were adopted. If the Government had a greater variety of powers, it would not have to exercise any of them was severely as it is now doing.
The Australian Labour Party asks and urges that the Australian people should be given the opportunity to decide whether this Parliament should be given those powers. The State Parliaments can exercise some of those powers if they act unanimously, but the State Parliaments have never acted unanimously on any economic matter. Any State Parliament which acts in isolation diverts investment and employment to other States which are not so severe. Consequently, the States are held to ransom, one by one.
If there is to be any effective economic legislation in this country it should be effected by the National Parliament. That is what happens in the United Kingdom, the United States of America, all the countries of Western Europe and Japan, the only highly industrialized country in Asia. All those countries have such powers and exercise them. When the Commonwealth Parliament has had the powers - as it did in war-time and during the Korean War - it has exercised them. If we are to have steady and stable government in Australia, we need not only a frank and consistent government but also contemporary machinery of government.
– Order! The honorable gentleman’s time has expired.
– I have listened attentively to the Deputy Leader of the Opposition (Mr. Whitlam) who seems to find great fault with the fact that we have had on occasions an adverse balance of trade during the term of office of this Government. Does not the honorable gentleman want this country to expand, or does he want it to expand only at the pace of its own savings? There can be no dynamic expansion of a country or a business unless it establishes a climate which attracts to it the investment of other people. Then you really get pace in development. That is what the Government has done.
What was the record of Labour in office? Nothing but austerity! You could not build a house of more than ten squares; you could not have a shirt with a tail on it; you could not put pink colouring in the Christmas icing. This was the imagination of Labour in office - to expand at the pace you could save money by building tiny houses so that you could have more tiny little houses, and by austerity measure such as the making of shirts without tails on them!
I am glad to say that this Government has rather more imagination than that. I am glad to say that this Government sets out to attract the aid of people in other countries; to give new industries to this country, and to create new jobs in this country. We have been very successful. Not only have we had immense unprecedented earnings from the sale of our Australian products but we have established a climate over the years which has brought in overseas investment totalling more than £1,000,000,000. To-day there are gigantic industries in Australia, attracted by the climate fostered by this Government. In those industries are tens of thousands of jobs for the members of the unions that support the Labour Party.
What was the contribution of the Deputy Leader of the Opposition to this debate? Mere calamity howling! Australia, he says, has the greatest inflation of any country in the world. Last night his leader said that we could pay for our imports for only one more year and then calamity would overtake us. If investors and industrialists overseas believed half of what these Labour leaders say there would be a complete cessation of capital investment in this country. However, people overseas have enough savvy and nous and understanding of the facts of the Australian economic scene to know that all this is nonsense. They are continuing to pour in capital, not at the rate of £100,000,000 a year, but at the rate of more than £120,000,000 as was the case last year. That indicates the estimate by the great, wealthy and experienced industrialists in other parts of the world of the likelihood of calamity in the Australian scene.
Opposition speeches illustrate the contribution to the Australian economy that Labour in office would make. Labour in
Opposition attempts to stultify this country’s development for its own political advantage. It attempts to get votes here and there by pretending that some disaster is imminent. The price of Labour’s economic policy would be a cessation of the inflow of capital upon which this country is fast expanding.
I shall not occupy what time I have left, Mr. Deputy Speaker, by dealing any further with the baseless allegations that come from the Labour side. I want to state in more positive terms the policy of the Government. As the Treasurer (Mr. Harold Holt) and the Prime Minister (Mr. Menzies) have said, and as I have no hesitation in confirming, our policies are constant, but our actions change according to changing circumstances. The high objective of the Government never changes. That objective is to develop this country, to sustain a high standard of living and a high standard of prosperity. Every single policy action that is ever taken by the Government is relatable to that high objective.
The economic strength of the country which we are so determined to preserve is to be found pardy in the domestic scene and partly in our economic situation internationally. The very level of our prosperity, from time to time, produces a pressure upon costs. This is the situation at the present time. Boom conditions generate a demand for imports and so tend to run down our overseas balances. As a result we seek to place a new emphasis on sustaining the climate that attracts capital into the country, whether for the Government or for private business. This, in turn, enhances the ability of our own industries to export competitively with the rest of the world. That is the kind of job that we have to do in order to assist our economy to maintain our overseas balances.
We need a level of costs that will enable us to produce at competitive prices. We have to produce the right item of the right quality and at the right price for trade overseas. There has to be salesmanship behind these items, and we require access to overseas markets finally to achieve our sales. In all this we have been very successful. True, this success has been achieved only at the price of constant effort by industries that produce for export, but Government aid has been given in prising open new markets and in enabling our products to get to overseas markets.
At home, the Government can exercise an important influence on the economic scene by its own policies - policies to expand credit or to contract credit; a tax to encourage and a tax to deter; these are the economic weapons used here and in all civilized countries. But they cannot be used in respect of overseas trade. There, you are finally confronted with the cold arithmetic of your balance of payments situation. That is why it is essential to provide the climate that is necessary to strengthen our position in the two fields that I have mentioned - borrowing or capital inflow, and the sale of our exports.
The Prime Minister (Mr. Menzies) has said that we have a constant policy, but that we have flexibility in our attitudes from time to time. That is completely true. Consider our alternatives as a big international trader with changing economic conditions due to varying seasons and fluctuating prices. When the tide is running adversely to our external trading, we could sustain the comfort of our position at home by dampening down our expansion programme. In short, we could change our major policy objectives in the interests of the comfort of people at home. But we do not believe that Australians want that. We believe that Australians want us to maintain the drive towards the expansion and development of this country even if it means that, from time to time, temporarily unpalatable policies which impinge on the comfort of people have to be adopted. The Government has not hesitated to adopt such policies from time to time, and political history shows that the Australian people have always stood behind their government when it has felt impelled to adopt some policy which momentarily is unpalatable though necessary to strengthen the economy.
What has been the success of this system? The success has been amazing. There has been an increase, during this Government’s eleven years of life, in the number of people in this country by 2,400,000 - all with jobs, all with homes, and all with comfortable prospects for the future.
There has been phenomenal development. Every year 3,500,000 tons of steel are being produced in this country. Around 300,000 motor vehicles are being manufactured each year. The development of public utilities has kept pace with this manufacturing activity. In the field of rural production, although the work force is rather smaller than it was pre-war, production is 50 per cent, greater than it was pre-war.
These are the actualities that no speeches can deny. These are the results that have flowed from the policies of this Government. We have from time to time been willing to take quite dramatic steps to sustain the stability of the economy. In 1952 we budgeted with the object of achieving a surplus of £100,000,000 as an anti-inflationary measure. In 1958 we were willing to budget for a cash deficit of £110,000,000 in order to sustain economic stability. These are dramatic figures, but they explain why, in the face of fluctuating external economic conditions, there has been been a quite incredible internal stability in our economy.
We have adopted wheat stabilization plans, which have resulted in payments being made for wheat when that product could not be sold. The wheat grower suffered no interruption of his regular income, and the people who depend on the wheat-grower for their livelihood were not inconvenienced. We have sponsored dairying industry stabilization plans in order to sustain that great industry, notwithstanding the vagaries of its overseas marketing. There have been, of course, immense difficulties experienced from time to time in finding opportunities of selling our goods overseas. Traditionally the great markets for Australian products have been in the United Kingdom and in western European countries, countries in which the population has grown, in which prosperity has flowed, but in which the markets for our goods have contracted almost unbelievably. Western Europe and the United Kingdom to-day import 1,500,000 tons less bread grains than they did before the war, 700,000 tons less meat and 200,000 tons less sugar. In major food items the United Kingdom and western Europe import 4,000,000 tons less than they did before the war. This change in the situation could have wrecked the Australian economy. It has not done so, because we have geared our policies to meet the situation.
The United States of America used to be an important buyer of our wool, but it has now almost disappeared from the scene. Our economy has not been shattered, because we have adopted trade policies that have penetrated these contracting markets. Our share of the United Kingdom and western European market to-day is greater than our share was in the 1930’s, and in the case of a number of items our exports to those markets are, in the absolute sense, greater than they were in the 1930’s.
Then we have turned to other markets, for instance Japan. I can stand here and say that I have a very vivid memory of the night on which I introduced the Japanese Trade Agreement into this Parliament. Predictions of calamity came out of the mouth of every Labour speaker - we were going to be ruined, there was going to be widespread unemployment. That trade agreement has proved to be one of the most effective stabilizing actions that have been taken in the recent history of this country. This Government was willing to act with some courage, and with some confidence in the common sense of the Australian people. It was found that the Australian people at large had far more common sense and were far more courageous and farsighted than the members of the Labour Party in the Commonwealth Parliament.
Throughout our term of office there has not been any device that we have not been willing to have a go at in order to protect our balance of payments position. There have been trade treaties and trade negotiations, arguments in the General Agreement on Tariffs and Trade organization, arguments with the Americans about their surplus disposals, arguments with the French and the Germans to persuade them to stand out of our flour markets in the east. In every case we have been successful. We have entered into long-term meat agreements. We have arranged sales of meat to the United States of America which have resulted in a boom in beef values. We have sold 100,000 tons of flour to Ceylon. I am just skipping from point to point to illustrate the kind of successes we have achieved in our trading activity, knowing all the time that the high policy objective we have set for Australia, a policy of expansion and stability, could not be achieved unless we sustained our overseas balances at a satisfactory level. This has been done.
Now we have found that our greatest export product, wool, has fallen in value. This does not fill us with dismay and despair or make us retreat into our shells. It merely leads us to conclude, “ Here is a new challenge”. The machinery that we have devised, the Department of Trade, the Trade Commissioner service, and the help that we have obtained from industry and commerce, from the Export Development Council and the Manufacturing Industries Advisory Council, will have to be availed of even more freely than has been the case hitherto. We have got to come to grips with the problem, as the Prime Minister (Mr. Menzies) has said, in the traditional manner. We will have to defend our markets and enter new ones. If necessary we will be prepared to adopt any means that appear advisable, even if they be unorthodox, to achieve our end. We have done it before and we will do it again. We went to little New Zealand and made that country the biggest market for Australian manufactured goods, selling £60,000,000 worth a year to that country. This achievement was brought about by the sheer drive of the co-operative efforts of Australian commerce and the Australian Government. Now we are studying markets in other parts of the world. One of our missions has just returned from South America, and we will have a go at that region. It is true, however, that there has been a deterioration in the terms of trade between countries like Australia, which depend on export sales of the great bulk of their commodities, and the industrialized countries to which they sell. We have a sharp problem here, but it will not dismay us. We will tackle it and, I believe, we will overcome it.
The problem is not tackled solely in the field of exports. In the sphere of import savings the record of this Government is most praiseworthy. To pay for our petroleum products we need £35.000,000 a year less now than we would have done if we bad not persuaded the industry to establish great oil refineries in this country. It would cost between £200,000,000 and £300,000,000 a year to import the motor cars that are now being made in Australia. Within a year or so synthetic rubber will be made here because we have attracted a great enterprise to establish a plant here for the manufacture of this product. When we took over from Labour the Australian cigarette contained 2 per cent, of Australian leaf. Now it will contain 35 per cent, of Australian leaf.
These are the kinds of actual achievements that the Government can point to on its record in the field of import savings and of export earnings. There will be no timidity on our part, despite the measure of the problem with which we are confronted. We will become even keener in our drive for exports, and I have high confidence that the Australian people, knowing what has flowed from the determination of this Government, and its steady, inflexible drive to ensure the expansion and the greatness of our country, will stand behind policies of the kind that have proved so successful in the past.
– Order! The Minister’s time has expired.
Mr. WARD (East Sydney) 19.40].- Mr. Deputy Speaker, we have heard a couple of extraordinary speeches from the ranks of the Government this evening. The speech made by .the Prime Minister (Mr. Menzies) reminded me of something that I have read which was written about him by an overseas journalist who visited this country. According to this- journalist, the Prime Minister on one occasion told him that early in his life he had had an ambition to become an actor. I think that perhaps the right honorable gentleman has succeeded in achieving his ambition, although I do not know whether one- would call him an actor in the real sense. He would probably be better qualified for what is known as “ The Goon Show “. No wonder Mr. Khrushchev became so hilarious when he was Iistening to the Prime Minister’s speech to the United Nations General Assembly that, according to the right honorable gentleman, he took off his shoe and pounded his desk.
The Prime Minister, however, made one or two statements that warrant a reply. He said that this Government has had the same policy for the past eleven years. That policy has brought us to the dangerous situation that now exists in Australia, and it is about time that the Government changed its policy. The right honorable gentleman said that the Government has won five successive elections. That is perfectly true. It is a matter of history. But how did the Government win them? It won them by deceiving the people into believing that it had brought about an era of prosperity in this country. But there has been only an illusion of prosperity. The Government was merely gambling with the country’s future, as is now being proved to be the case, and it has brought Australia’s economy almost to the brink of disaster.
The Prime Minister talked about our overseas reserves. He said that the Labour Government had not left to this Government the abundant overseas reserves that some Opposition speakers had claimed. But the right honorable gentleman put the matter beyond doubt himself. He admitted that our overseas reserves had increased from £528,000,000 in 1949 to £803,000,000 in 1951. If we convert these figures into present-day values, they are much greater still in comparison with the funds that we now have in reserve overseas. But the reserves that we had in 1951, which the Prime Minister said were a record figure, were the result of the prudent policy which had been followed by the Curtin Government during the war and the Chifley Government which succeeded it and governed in the post-war years.
The Prime Minister then said that our present difficulties are due to a fall in the price of wool. He asked how the Government could have foreseen the fall in the price of wool. Opposition members have continually warned the Government that unless it set out to get additional markets the price of wool inevitably would fall. If the Government had taken the Opposition’s advice and sought other markets in various parts of the world where they were obtainable, we should not have had the calamitous fall in the price of wool which has now occurred. So it is this Government’s bungling which has brought about the present situation.
Let me now turn to the speech made by the Minister for Trade (Mr. McEwen), who made some extraordinary statements. He referred to an austerity campaign which he said had been adopted by Labour, and he attempted to ridicule the suggestions that members of the Australian Labour Party have made in this debate. The austerity campaign of the Labour Government was adopted during the war years when we were fighting desperately to preserve the security of this country, after a government of which the present Minister for Trade was a member, and which was led by the present Prime Minister, had been rejected by the people of this country - a government which declared that the war should be conducted on the principle, “ Business as usual “.
The Minister for Trade suggested that the flow of overseas capital into Australia demonstrated that this Government’s policies are sound and that overseas investors have complete confidence in this country. But those investors no doubt will be just as shocked as were the Australian people by the speech made last evening by the Treasurer (Mr. Harold Holt). When overseas investors begin to see how precarious is the economic position of this country, we shall be talking not about the inflow of capital into this country but about the outflow of capital, because overseas investors will most likely be anxious to get out of Australia, if they possibly can, the capital that they have already invested here.
The Minister talked also about the level of employment and said that to-day most people in Australia are able to find jobs. That is not what concerns the Australian people to-day. What they want to know is: What will be the employment situation in the next twelve months? What we heard last evening is not the end of the Government’s policy. It is being given to us piecemeal, because the Government believes that the Australian community would not be prepared to swallow all that it wants to give them at one dose. So, early next year, we shall undoubtedly see another budget introduced some months before the one that we expect in August, and the Government will then give us the next instalment of its plans.
The Minister for Trade said that there is incredible stability in this country and that the Government has been successful in expanding markets overseas. If it has had so much success, why has it panicked now and adopted the proposals that we now have before us? The mere fact that it has had to adopt these proposals shows that its policy has failed lamentably and that it has panicked. The Prime Minister may talk as much as he likes about the series of Cabinet meetings held before the Government made its decision and announced its plans. The announcement should have been made some weeks ago when these plans were agreed on, but was deliberately withheld until the Calare by-election was out of the way. That is the reason why the Government delayed the announcement of its intentions.
Now let me turn to the Government’s decision itself. Why the suddenness of this decision? We had no warning from the Treasurer. Even as late as a day or two before the Government’s plans were announced the Treasurer was saying that the economy continued to expand strongly. Everything was all right! Then, suddenly, almost overnight, we received the announcement of these new plans. No matter how much the Government tries now to disguise the fact, there is no doubt that it panicked. I regret having to say this, but I believe that it has every cause to panic, because it has brought Australia’s economy to a very precarious condition.
This Government has been very lucky. During the eleven years in which it has been in office, it has had a succession of good seasons. It has had good markets overseas and good prices. But its luck is beginning to run out. Some of my colleagues have pointed out that even under these most favorable conditions, in seven out of the last eight years we have accumulated a total trade deficit of £1,500,000,000, in round figures, and we have been able to carry on, despite the favorable seasonal and other conditions, only because we have been attracting capital from overseas and have been raising overseas loans. Is it not quite obvious to any reasonable and sensible member of the Australian community that the more the Government builds up our overseas indebtedness, whether by attracting investment from overseas or by raising government loans abroad, the more we shall drain our export income? The overseas investors who put their money into this country do not want to take their dividends in Australian currency. If they are American investors, they want dollars. If they are
British investors, they want sterling. This means that every new investment of overseas capital in Australia increases the drain on our export income. As a result, we now find ourselves in a very precarious position.
We are told that our overseas reserves will reach the danger mark when they fall to about £300,000,000. We are not very far from that dangerous situation now. Let me tell the House how rapidly the position is deteriorating. In the first eighteen weeks of the current financial year, there has been an average fall in our overseas reserves of £5,500,000 a week. The latest figures that I have been able to obtain indicate that the Reserve Bank of Australia has a total of £349,000,000 in credit overseas. About £71,000,000 is held overseas by the trading banks. They regard this as their working balance, and obviously the Government could not take all of the working capital of the trading banks in order to meet its own requirements without putting them out of business completely. But even if we conceded that this £71,000,000 was available to the Government, it would have available a total of £420,000,000, which is only £120,000,000 above what the financial experts regard as the danger mark.
The Treasurer said, of course, that, in addition, we can draw on the International Monetary Fund to the extent of £211.000,000. But let me tell the House something that the Treasurer did not tell it: The International Monetary Fund does not make long-term loans. It makes a loan only to enable a member country to overcome an immediate difficulty in its balance of payments position, and the longest period over which repayments may be spread is from three to five years. So, if the Government were obliged, in order to keep the ship afloat, to borrow from the fund, it would increase Australia’s difficulties tremendously over the next three to five years. But the Treasurer and other Government speakers did not mention that.
Since last May, our overseas reserves have declined by approximately £120,000,000. This is the most precipitate fall ever in our overseas reserves. Even in the difficult times of 1951-52, our overseas reserves fell by only £72,000,000 in the first fourteen weeks of that financial year. In the same period of 1959-60, the fall was £107,700,000. What is the position for this financial year? We have already had adverse trade balances amounting to £113,500,000. Let us do a little calculating to see what could happen to our economy in the next twelve months. If the adverse trade balance continues at the same rate, we will experience a fall for the full year of more than £340,000,000. If the invisibles, which include payment of dividends, freight and insurance overseas, are taken into account - taking the figure for last year and allowing for no increase - we would add an estimated £215,000,000. If we had to depend on our export income with which to pay for our imports, we would be on the adverse side to the extent of £555,000,000.
The Treasurer said that he is expecting the same amount of overseas capital to be invested this year as was invested last year, and that is an amount of approximately £200,000,000. I will assume that the Government will be able this year to obtain that amount from overseas, but I am rather doubtful about this. An overseas investor is not different from a local investor in this country; if he believes that the economy is in difficulties, he will not invest. It may be found this year, therefore, that overseas investors will be taking another look at Australia as a place in which to invest. However, conceding that the Government will obtain £200,000,000, as it did last year, at the end of this year our overseas reserves will have fallen by £355,000,000. As I have already pointed out, even allowing for the amount held by the Reserve Bank and the working capital of the trading banks, our overseas funds will have been almost completely exhausted.
What does the Government propose as the solution? It has either to increase our export income or to decrease the cost of our imports. There appears to be no other way. A few months ago the Government removed import restrictions and there was a burst of imports into this country. We were told that this was only a temporary feature, that people were now buying goods that they had been denied for several years and warehouses were stocking up. The Government was whistling to keep up its courage. It said that the rate of imports would fall shortly, but the rate has not fallen. The Government is not prepared to admit that it was wrong when it removed import restrictions completely in February last. Now, to keep imports down to a manageable level, the Government has set out on a policy of what is termed restricting demand. How does the Government propose to restrict demand? The Treasurer spoke with great pleasure and pride about the Government’s intervention before the Arbitration Commission to secure the pegging of the basic wage. The Government secured the rejection of the claim by the unions for an adjustment of the basic wage. But I think it is impudent for the Government to talk about its success in having wages pegged when not long before it did so it increased substantially the wages of members, in accordance with the terms of the Richardson report. To say that this burst of inflation commenced when the metal trades margins were adjusted is utter rubbish. This spurt of inflation commenced from the very moment that the Government substantially increased the salaries of members of the Parliament, particularly members of the Cabinet, following the Richardson report.
Now the Government proposes to embark on a campaign of increasing interest rates. What will this lead to? It must obviously lead to an increase of unemployment. Does any Government supporter argue that under this policy the present rate of development can be maintained? Whilst the Government is blocking many avenues of essential expenditure and damping down the economy, it proposes to continue with its immigration policy of bringing 115,000 new settlers to this country each year. What happens when a new settler is brought here? Does this not create a demand for essential services provided by governments to the community? Does this not increase the demand for the products of our export industries? Our present overseas problems arise from the fact that our export income is inadequate, and by proceeding with its present immigration policy without expanding exports, the Government is actually putting us in greater difficulty than ever before. It is utter rubbish for the Government to implement its present economic policy when it argues that it is necessary to continue with its immigration programme.
Let me deal briefly, because time goes on, with the subject of Government loans. Opposition members have repeatedly pointed out to the Government the dishonesty of its action in trying to induce people to invest in long-term loans in a period when inflation is rapidly increasing. When the loans mature, those who invest in them not only receive much less than they invested in actual value, but if a correct adjustment is made it is found that they had, in effect, lent their money without receiving any interest at all. So we find that the investors have lost confidence in Government loans.
In 1959-60, the Government was able to raise by public subscription a bare £56,000,000. Although our population has greatly increased since 1949-50, the Government in that year was able to secure by this means no less than £100,000,000. How does the Government propose to correct this situation? It has chosen the life assurance companies for special notice. I remind honorable members that most of the life assurance companies are mutual associations. They are companies in which the workers invest their savings by taking out assurance policies. These companies must be efficiently run, They must give service to those who take out policies with them and they regulate their affairs according to the amount they can obtain by the investment of surplus funds. Why should the life assurance companies be placed in any position different from that of any other company, whether engaged in insurance, banking or any other form of business activities? But this Government, which took office with a policy of no controls, has said that the life assurance companies must invest 30 per cent, of their funds in Government securities. This is a type of compulsory loan and comes rather peculiarly from a government that has always argued against this type of activity.
Let me turn to what the Minister for Trade said not very long ago. He said that our export income in the next five years must be increased by £250,000,000 in order to maintain our present living standards - not to improve them but to maintain them. Let us look at how this will be achieved. Everybody knows, and it has been admitted repeatedly in this House, that Australia’s export income depends largely - almost exclusively - on the prosperity and expansion of our rural industries. I think it was Mr. Chislett, secretary of the Australian Woolgrowers and Graziers Council, who said recently that the wool industry is in such a precarious position that it is rapidly reaching the stage where it will have to appeal to the Government for subsidies in order to carry on. With regard to our other major export industry, wheat, I read recently where Mr. Warren McDonald-
– Order! The honorable gentleman’s time has expired.
.- The honorable member for East Sydney (Mr. Ward) has delivered the usual tirade, to which this House has become accustomed. He, like other members of his party, is infatuated with horror of overseas capital and is mesmerized by the size of our overseas reserves. The Opposition seems to regard our overseas reserves as an end in themselves rather than a means. It seems to regard them as something to be kept up just for the sake of keeping them up. This country has not grown and expanded in the way it has over the last eleven years by adopting such a policy as that. As has been explained to-night, this Government’s approach to our overseas position has been much more positive. It has attempted to increase our overseas income and, having done that, ‘ to use the money for the importation of capital goods and other things essential to the expansion of the Australian economy.
The Deputy Leader of the Opposition referred to what had happened in connexion with overseas reserves while this Government has been in office and pointed gloatingly to the fact that in the last year of the Chifley Government’s term export income had exceeded expenditure on imports by £18,000,000. I point out that the Chifley Government achieved that position by keeping the economy in a straitjacket, by fostering shortages, and by imposing controls. That is how it built up its sacred cow, the overseas reserves, by £18,000,000. I point out also that in the year in which this £18,000,000 was achieved, the economy of Australia was stagnant, shortages were rife and the standards of living of the Australian people were very much below what they are to-day.
The honorable member for East Sydney (Mr. Ward) said that the overseas investor, who has played such a remarkable part in the development of Australia in recent years, will be shocked at the Government’s policy. I suggest that the overseas investor will be re-assured by this Government’s determination to take even unpopular measures in order to keep the economy on an even keel. The overseas investor wants stability in the Australian position. Although I am not a betting man, I am prepared to say that the overseas capital flowing into Australia in the coming year will be at least equal to the £200,000,000- odd that came in last year, and even that figure was a remarkable achievement.
As I have listened to Opposition speakers in this debate, and as I have read the criticisms of individuals and interested groups outside this Parliament, I h’ave become more than ever proud to belong to this Government which has the courage to take the steps proposed by the Treasurer for stabilizing the economy. After examining those criticisms, I have become convinced that the members of this Government are the only people whose sole purpose is the promotion of the welfare of Australia and its people. All these other groups - I am not referring to the Australian Labour Party now, although what I am about to say applies equally to it - wrap up their ideas and criticisms in a parcel labelled “ national interest “, but when we sift the contents of that parcel we find that all their arguments boil down to their own narrow short-term interest. Many of the groups whose leaders have expressed opinions in the press in the last day or two are people who benefit, at least in the short term, from inflation, and who welcome its continuance.
The particular form of deceit practised by the Opposition is of the same order, although the objective is different. The objective of the groups to which I have referred is more money in their pockets. I would not say that is the objective of the Labour Party. Its objective is political advantage.
Let me now test the Opposition’s criticism of the Government’s alleged failure to control inflation against its attitude to the anti-inflationary policies of the Government. Every one of the policies introduced by this Government in the past year or two with a view to controlling inflation has been opposed by the Opposition. It opposed the credit squeeze that the Government imposed earlier, and it opposed our intervention before the Commonwealth Conciliation and Arbitration Commission. To-night, the honorable member for East Sydney beat the Government over the head for taking that necessary step to safeguard the real living standards and the real wages of the Australian wage-earner. The Opposition also opposed our abandonment of import controls. We abandoned them as an anti-inflationary step and, during this debate, the Opposition has gloated over the fact that it has been necessary to take the measures proposed by the Treasurer.
Honorable members opposite say that the fact that we find these new measures necessary is proof that the Opposition has been right and the Government has been wrong. In arguing that way, the Opposition ignores the fact that the Government’s objective in abandoning import licensing was to reduce inflation, keep costs down and to reduce the pressure on our export industries, the rural industries in particular. The fact that other factors intervened to prevent the Government’s achieving that objective does not necessarily mean that we should now abandon attempts to achieve that objective. If we did that and re-imposed import licensing the effect would be to add to the high-cost situation. The obvious thing to do in the circumstances which have arisen is to strike at the factor which rendered the abandonment of import licensing ineffective in the short run.
The Opposition’s attitude to the Budget was exactly the same as its attitude towards these proposals. Our Budget was a deflationary instrument, and it will continue to be a deflationary instrument because we have budgeted for a surplus. Despite that fact, every speaker on the Opposition side criticized the size of the Government’s expenditures during the Budget debate. They want us to increase our expenditure, yet they criticize us for not doing something about inflation. Exactly the same can be said - this point has been made by many other speakers on this side of the House and so I will not make it again, as I have not the time - about the anti-infla tionary measures that we are now taking. Members of the Opposition are opposed to virtually every one of them and yet the Leader of the Opposition submits what is, in effect, a motion of censure against the Government for its failure, as he calls it, to deal with the inflationary situation.
It is very difficult to find out what the Labour Party’s alternative is. If members of the Opposition do not agree with our measures for controlling inflation in Australia and keeping the economy stable, what would they do? Some suggestions have been made, which give one a clue. The honorable member for Yarra (Mr. Cairns) said to-night that what the Labour Party would do would be to plan - to produce a plan. We know what a plan means to the Australian economy and to the Australian people. One assumes there was a plan in existence when the Labour Party was in office on the last occasion. What did it mean on that occasion? The socalled plan meant that the Labour Government of that day planned to keep the Australian economy in a strait-jacket, to keep shortages in existence, to create under-the-counter shortages and generally to keep the living standards of the Australian people down. That is the sort of alternative which the Australian Labour Party suggests to us.
Let us look at some of the general criticisms which have been made of the Government’s actions. I take these phrases straight out of this debate and from statements that have been made by prominent people outside the House and in the newspapers. This is the sort of thing that is suggested: “ Why cannot the Government leave things alone?” “ It will work itself out all right without any intervention from the Government.” “ Things will right themselves in three or four months’ time.” “ Everybody is prosperous. Why should the Government interfere? “ “ You will destroy confidence if you do that sort of thing.” I mention those statements so as to indicate the type of argument with which I am dealing.
There is one simple answer to arguments of this sort. That answer is the situation in the great rural industries in Australia, and particularly the wool industry. Whatever our critics say, those industries, temporarily, are not prosperous. They have been squeezed for years mainly as the result of the inflationary situation, and while all these people outside - apart from the Government, but including the Opposition when we boil it down - are so complacent about it, those industries cannot wait. The wool industry cannot wait for three or four months while things work themselves out. It is that industry, for example, which these measures are designed to assist, and I believe it should be assisted.
Even if people in other sections of the Australian community are not interested in the economic position of their fellows on the land, I find it extraordinary that they should be so blind to the effect on their own long-term interests of the situation of prosperity in the rural industries. If the rural industries are priced out of overseas markets, their expansion is retarded; and that is the effect of internal inflation in Australia on the rural industries. If that happens it will, in the long run, depress the standard of living of every man, woman and child in Australia. I hope that when these leaders of the other sections of the Australian community, who have been so critical of the Government’s actions, can tear themselves away from their own immediate selfish and short-term interests which appear - I say “ appear “ advisedlyto be served by boom conditions, they will stand back and see their own long-term interests in perspective and admit the wisdom of the Government’s measures.
Another broad criticism of the Government’s policy which has been made, and which was dealt with most effectively by the Prime Minister (Mr. Menzies) to-night, is that the Government, by bringing down these measures so soon after the Budget, is proceeding in fits and starts; that by bringing in further measures it admits that it was mistaken earlier. That is one of the stupidest arguments I have ever heard. The Government’s job is to keep the boat on an even keel, not to capsize it by taking corrective measures before circumstances make them necessary.
What are the implications of this kind of criticism? They are that the Government should, once a year - and only once, presumably at the time of the Budget - take measures which are designed to carry the economy through the whole year without alteration by any means, and whatever might happen in the meantime. The implication is that you should do that, before you know what is going to happen to the level of wool prices, the terms of trade, the rate of bank lending and a multitude of other factors which influence the economy. I cannot imagine anything more designed to put the economy in a strait-jacket, dampen initiative and retard development. If you adopted that policy you would have to take such a pessimistic view of all these factors that the economy would stagnate and could not possibly advance.
Another reason why this argument is absolute nonsense is that it is often said that the degree of inflation in Australia has been higher than in other countries. I believe that in relation to some countries that can be said to be marginally - and not in any way to the degree stated by the Oppositioncorrect. One thing which the critics always forget, and which the Labour Party in particular forgets when it brings this argument forward, is the employment situation in Australia. The Deputy Leader of the Opposition (Mr. Whitlam) to-night spoke about the rate of inflation in the United States of America and in Canada. What he forgot to say was that that situation has been achieved by a very high degree of unemployment in both those countries - judged by our standards - amounting to anything from 6 per cent, 8 per cent, or even 9 per cent, in some cases.
There is a very close connexion between those two factors, full employment and inflation. If you believe, as we do, that employment should be high and full, it is much more difficult to stabilize your economic situation. Full employment is a professed article of faith with the Australian Labour Party. One would expect members of the Opposition to think more about that when they criticize the Government for the degree of inflation which is taking place in Australia. But they do not.
– Order! The honorable member’s time has expired.
.- Last night the panic-stricken Treasurer (Mr. Harold Holt) outlined to the Parliament proposals which provide for increased sales tax on motor vehicles, tighter controls over bank credit, increased bank interest rates, changes in company taxation methods designed to stop speculation and one or two other measures. He said that those measures were necessary to check inflation, because of the Government’s financial policy. There has been an outburst in the press to-day by all sections of the community about the Government’s proposals. As the honorable member for Barker took the trouble to quote statements by certain people outside this place, I shall read statements that have appeared in the press and which have particular reference to certain members of the Liberal Party. To-day’s Sydney “ Sun “ carried a report in these terms -
Finance and industrial leaders joined with the man in the street in puzzled resentment at the harshness of the Government’s economic curbs . . all expressed shocked amazement that such restrictions should be imposed within days, of hearing Cabinet Ministers at the Calare byelection laud Australia’s prosperity.
It went on to say - the honorable member for Barker reminds - me of this - that depression among Federal Liberal Party members is great. One honorable member is reported in this way -
Mr. Holt has destroyed the image created tor him as a future leader. As a Treasurer he has proved a complete dud.
After having heard the speech which was made by the honorable member for Barker, who rarely has been heard to greater disadvantage, I can only assume that he is the person who made that very cutting and biting comment. Undoubtedly, to-night he has run away from a subject on which he should be very fluent.
The Government has said that it is not concerned at the charges that have been made against it. Why then to-night did it produce the elite of the Ministry to defend its policy? All of us saw the Prime Minister (Mr. Menzies) walk into the chamber. In his very arrogant way he referred to the speech which was made last night by the Leader of the Opposition (Mr. Calwell) as buffoonery. I have watched the Prime Minister on many occasions but particularly when he returned from the United Nations and to-night. He walked into the chamber, raised his dark eyebrows, looked around in a smug way, waved his hand now and again, bowed to the lackeys behind him, and all this which passes for humour and wit was applauded by those behind him. But his audience in this place is different from the audience that confronted him at the United Nations. The Prime Minister has accused the Leader of the Opposition of buffoonery, but on the two occasions to which I have referred the Prime Minister acted more as a buffoon than anyone else ever has. I have watched similar acts of buffoonery on television, and when I closed my eyes on those two occasions I thought that I was listening to television again.
Why are we in this critical position? I am pleased to see that the Treasurer (Mr. Harold Holt) is in the chamber. In this country we have a part-time treasurer, a part-time ministry and a part-time government. Is it any wonder that our economy is in danger? Is it any wonder that our financial position is in a state of chaos as is exemplified by the proposals that we are now discussing.
A couple of months ago the Treasurer introduced the Budget. He then waved good-bye to the Parliament and scurried across to the other side of the world. He did not even wait to hear the Estimates debated, so busy was he calling on diplomats, resting in the hills of Tokyo, buying transistor radios, attending conferences and bowing to diplomats everywhere from Tokyo to Capri - this at a time when we were discussing the Estimates. With complete contempt for his responsibilities as Treasurer, he flitted between the various conferences and capitals. He was feted, and he wined and dined with the elite of social and financial interests abroad when he should have been in this Parliament. He even took time off to attend the United Nations and to comfort the Prime Minister during his tragic and depressing appearance before that august body. In this period the Treasurer, at the one time perhaps when he should have been in the country to pilot his Budget through the Parliament, could not have cared less.
The treasurership rs an onerous and responsible portfolio. It requires endless hours of study and toil for the Treasurer to administer efficiently the country’s financial policy. A treasurer who is not prepared to give his full time te the task cannot do justice to the position, and it is clear from the state of our economy and from the announcements that were made by the
Treasurer last night, that he has failed the nation and is unable to cope with this responsible portfolio.
What happened while he was away? Was another Treasurer appointed? No! One would have thought that the Prime Minister would have appointed another Treasurer. Instead, he took over the portfolio and we had the amazing spectacle of the Prime Minister acting as part-time Treasurer, parttime Minister for External Affairs and parttime Prime Minister. In the middle of this, he also took off like a rocket on his illfated excursion to New York. We then had the Deputy Prime Minister acting as Acting-Acting Treasurer. Has there ever been in any country of the world such a spectacle as this during a Budget session when a budget providing for a record expenditure of over £1,700,000,000 has been introduced?
The arrogance, the contempt, the inefficiency and the downright neglect of the Treasurer, the Prime Minister and the Government of their responsibilities to this country, as exemplified by their actions, calls for censure by this Parliament. Clearly, they are not fit to be trusted with the responsibility of office, particularly when countless thousands of Australians will now suffer economically because of this neglect and incompetence. Australia has a Government which is led by a Prime Minister who is rarely in Australia; a Treasurer who circles the globe like a sputnik and goes overseas in the middle of the Budget session; a Cabinet which is the most travelled of our time and, in general, an Administration that internally and externally has completely destroyed the economic stability and reputation of this country. These statements are based on fact because to-night we are debating proposals which have been introduced hardly before the debate on the Estimates has been concluded. This is the result of the failure of the financial policy that has been announced and implemented by these much-travelled personages. The Treasurer should remain in this country and administer the high office that he holds. If he did so, countless thousands of people would not be suffering because of his inefficiency.
If I had sufficient time at my disposal I would devote my whole speech to the Treasurer, To keep up with him one would have to be like the man on the flying; trapeze. The Treasurer changes his mindevery day and his policy every hour. Thishas been the case, since he has been in-‘ office, during the short periods he has beer* in the country. Can any one in this country follow the Government’s policy om finance? The Treasurer introduced the Budget a couple of months ago before flitting across the world. He said that the Budget would provide the cure for all our economic ills. Ten days ago he praised the state of our economy. On Saturday last he spoke about immediate action to meet excessive demands on the economy. A few days later he stated that the financial measures which had been introduced earlier this year had failed. The policy of the Treasurer and of the Prime Minister is to confuse, to scare and to destroy confidence.
Let us consider the Government’s sorry record on finance. It restrained the banks from lending; it intervened in the basic wage case to prevent the workers from gaining any increase in wages; it removed import restrictions, and in its Budget it provided for a profit. This was the Government’s anti-inflationary policy. In the midst of these policy changes the Treasurer was in doubt, undecided, uncertain and did not know what to do next. As you look at him to-night, you see that he is still pondering where he is going from here. The Government has stated continually that we are developing at a record rate but, according to the splendid speech which was delivered to-night by the Deputy Leader of the Opposition (Mr. Whitlam) no country in the world is lagging as far behind in its development as is Australia. This is the direct result of the Government’s policies. Countries which were devastated during the last great conflict - Germany, Japan and others - to-day are going ahead at a tremendous rate and are leaving us far behind in the great race for development. Our expansion and development are proceeding at a snail’s pace.
This is a tragic state of affairs which reflects clearly the incompetence and in-‘ ability of the Government, particularly in the financial sphere, and indicates the need for sound dynamic leadership and planning. The Liberal-Country Party Government has failed completely to produce a sound financial policy. Last February it removed almost entirely import controls. Now, nine months later, it re-imposes restrictions. It is no good the Government saying that it is not re-imposing them. It will be done by the banks in a way that no doubt will suit the banks. It injected credit into the financial system and now has restricted credit to a greater degree than ever. It has allowed firms on what is termed the fringe outside the banking system to borrow and to lend at will, and to create a secondary field of finance. What is the Treasurer doing about these organizations? Lombard (Australia) Limited is offering 7 per cent, interest on deposits for six months; Retailers Acceptance Limited is offering 9 per cent, per annum; Mercantile Credits Limited is offering 9 per cent.; Latec Finance Proprietary Limited is offering 8 per cent, on secured notes; the Sydney Guarantee Corporation Limited is offering 10 per cent., and I could name dozens of other organizations. Two pages of to-day’s “ Sydney Morning Herald “ carry advertisements worth thousands of pounds seeking investment in these companies. And the Treasurer has raised bank interest rates! I believe that a strong case can be made against the Treasurer’s action which is opposed to Labour’s policy. But no matter how high he raises bank interest rates he cannot get at these fringe organizations which are offering interest at the figures that I have mentioned. The truth of the matter is that this Government only goes into action in the economic field against those people who have only their labour to sell. It intervenes in court hearings to protest against the workers getting an increase in the basic wage, but it closes its eyes to the exploiters, the speculators and the profiteers who get their huge rake-off. It is all right for people to get all they can from land speculation and other things of that nature, but the man who gets £30 a week out of his job is an enemy in the Government’s eyes, because, according to the Government, he is causing inflation. That is the policy of the Government.
It has instructed the banks in the way in which they should lend money, yet these fringe organizations can do anything at all, without any restriction or control, and because the interests behind them are the interests which put this Government into office, the Treasurer refuses to take any action against them. Our country is being developed in an unplanned way. The Government’s policy has been one of panic - of stopping development and then suddenly opening the throttle and going full-speed ahead. It is a policy of fits and starts, of stop and go. When things look good, the Government boasts of the expansion it has achieved and when things are going wrong the Government blames everybody else for its own shortcomings and, as it were, takes it out on the people.
This Government has whittled away the credit resources of the nation, particularly our overseas credits, which are so necessary from time to time. Irrespective of what the Prime Minister had to say to-night, I want to say a few words about our overseas balances and imports and exports. When the Chifley Government went out of office, this country had a credit balance overseas of about £800,000,000. Within a couple of years of this Government’s taking office, £600,000,000 of that money had gone. Then, in conjunction with the “ horror “ budget, the Government introduced the most restrictive form of import controls. Those controls were necessary because the Government had dissipated our overseas funds on a lot of unnecessary imports. People who desired to expand their businesses and required capital goods were unable to obtain them because, as a result of the Government’s policy, the funds were not there to buy them. I am indebted to the honorable member for Kingston (Mr. Galvin) for showing us the shocking way in which our hard-won overseas resources have been depleted again.
I will repeat now something that was mentioned by the honorable member for Kingston to-night, because it is worth repeating. It is reported that in Adelaide now you can buy barbecued snake meat, roasted caterpillars, fried grasshoppers and fried silkworms, all imported at great expense.
– When your party was in office we had rationing of petrol.
– I am sure that the Treasurer knows all about the delicacies I am mentioning. He probably had them over in Capri, but I do not think we want them here. The report from Adelaide from which I am reading states -
In fact, one city store is temporarily out of stock of roasted caterpillars and barbecued snake meat.
You can have fillets of swordfish, if you want them. If you want something really tasty, you can have octopus tentacles, which are said to taste like crayfish, only stronger. The Treasurer is laughing. This would be humorous perhaps if these things were not costing us money which we have in credits overseas. Men in my electorate are being forced out of business because honorable members opposite and their friends want to be able to have roasted caterpillars and such things brought in from some overseas country. The report from which I have been quoting continues -
Heated and served as a baked ham or ham steak the wine jelly becomes a delicious readytoserve sauce.
If you want to finish the meal off nicely in this particular restaurant you can have Japanese smoked eels, French frog legs or Italian cocktail fruits in mustard syrup. What a lot of tripe! That is the kind of stuff the Treasurer is subsidizing at this particular time. That is the kind of stuff he is allowing to be brought into this country. It is all very well for the Prime Minister and’ for the Minister for Trade (Mr. McEwen) to say that people could not get motor cars or things of that nature in 1949. At that time we were just emerging from the great war-time crisis, but now we want money for investment in development. If any honorable member opposite can convince me that any contribution is made to our development by the importation of fried grasshoppers or Japanese smoked eels or French frog legs, he will have done a wonderful job of convincing.
These matters are worth mentioning. Recently the Government lifted import restrictions. It based its case on the fact that last year there was an excessive inflow of capital of more than £200,000,000. The Government maintained that it could keep up that inflow consistently, and at the same time it let the economy run loose, as it were. Every one with an ounce of sense would have known that it was impossible to continue that inflow of capital at that rate indefinitely. It was apparent to every body, except perhaps to members of the Australian Country Party, that wool prices might fall and that immediately a fall in export prices, particularly wool prices, occurred, the economy of the country would be in danger. That is precisely what has happened under this Government’s policy. In lifting import restrictions, the Government relied on things which could not be substantiated. It should have been apparent to the Government’s advisers and to the Treasurer that it was impossible for Australia to balance its import budget unless the high rate of overseas capital inflow continued and the level of export prices was maintained. This proved not to be the case. The revenue from exports has dropped, and so we have come to our present economic plight. As a matter of fact, the Government is using credit to bolster its resources and enable the purchase of imports. Our overseas reserves are falling alarmingly. Imports are still coming into the country, while our exports are declining. The result will be, as the honorable member for East Sydney (Mr. Ward) has said, that our overseas balances will be well below the minimum required in the immediate future.
The Government is in a peculiar position. Our exports to all countries except Communist countries have declined tremendously. During 1960, exports to Commonwealth countries were down by £43,000,000, compared with 1956-57. The following table shows the decline in exports to various countries last year as compared with the figures in 1956-57: -
Our exports to Indonesia were down by 50 per cent. Now let us look at how, under his Government, we are trading with the Communist countries. I hope that the members of the Country Party will not have a restless night or a nightmare over this. Our exports to the Union of Soviet Socialist Republics increased from £8,590 to £12,589,000. Our exports to Yugoslavia trebled. Our exports to Hungary increased by nearly 700 per cent. Our exports to
East Germany increased from £61,992 to £2,223,887 and our exports to Communist China increased from £6,438,000 to £15,132.342. In other words, the Communist nations have saved the Menzies Government from an even worse situation regarding our overseas reserves than the present situation.
– What is your authority for all this?
– These figures are taken from an official publication issued by the Department of Trade. According to the International Monetary Fund, world exports between 1953 and 1959 rose by 36 per cent. The United States of America’s share rose by 11 per cent., Canada’s by 24 per cent., France’s by 47 per cent., West Germany’s by 120 per cent., Japan’s by 170 per cent., and the United Kingdom’s by 30 per cent. Australia’s share increased by only I per cent. That is the result of the great trade drive by this Government!
Is it any wonder that we are in real trouble to-day because of the imports position? The Government’s policy has been proved wrong and much of the work that is needed for development cannot be carried out because of the failure of that policy. The honorable member for Canning (Mr. Hamilton) is interjecting again. This member of the Australian Country Party is resigning in disgust from the Parliament at the end of the next sessional period. He can study in the International Monetary Fund’s journal the figures I have been quoting. I think we will have to explain them to him, because he is not a good reader and the figures have a long way to penetrate. 1 conclude by saying that this country to-day is being run by a part-time government and by a Treasurer who does not give his attention to the job and changes his policy as quickly as the weather changes. I say that Australia has a great future. Our country can develop into one of the most progressive and soundest of nations provided that those who control our destinies act with vision, capacity and honesty. This applies particularly to our economic policies. Clearly the present Liberal-Country Party Government has betrayed its great responsibilities and by its incompetence has brought this country to the brink of economic doom. Its panic-stricken, changing financial policies are unworthy of a Commonwealth Government and are deserving of the censure of this Parliament.
.- 1 sit very close to members of the Labour Party and I hope that I do not catch the germ of gloom that some of them seem to have. Every speaker on the Opposition side seems to give us nothing but gloom. The Labour Party is certainly a gloomy party at the moment. I think the reason is that the Government is putting the brakes on inflation, and the Labour Party really believes in having inflation. The Labour Party really believes in inflation. Its whole policy is inflationary. At a time of boom, it has given its support to increased leave and shorter working hours. These may be worthy objectives but surely in a time of boom their introduction would make the situation worse. The Labour Party believes in cheap money. What could be more inflationary? lt believes in give-away budgets, deficit financing, and wild extravagant policies that lead to more inflation. The Labour Party has given out that policy at general elections, but it has not convinced the Australian people.
It is no wonder the Opposition is so gloomy when this Government is putting brakes on further inflation. The Labour Party is completely devoid of a practical, positive economic policy to meet our current problems. It remains completely bankrupt and members of the Opposition are trying to discharge their bankruptcy by insolvent, worn-out Labour policies. The Labour Party - the alternative government - would certainly be a depressing government. It would not attract any overseas capital. It would depress the urge to increase production. It would only bring in socialistic controls and directions which ultimately would lead to inefficiency of production and unemployment.
Honorable members on the Opposition side who are interjecting noisily ask me what I am talking about. I am talking about the statement of the Treasurer (Mr. Harold Holt) and I say wholeheartedly that I support it to the hilt. Why? Because I think it is a statesmanlike document. It will be unpopular with many sections of the community, but we believe in doing
What is right for the nation. The Treasurer is not going to appeal to popular opinion when there are urgent measures to be put forward.
What does this policy mean? First, it is going to curb inflation. Is there anything wrong with that? The Labour Party thinks it is wrong. Secondly, the Government’s policy is going to reduce speculative enterprise in the community. Is there anything wrong with that? Certainly not! Thirdly, this policy will attract more money into the banking system so that it will be available to deserving people, to homebuilders and to primary producers. Is there anything wrong with that? Fourthly, it will help to protect the loan market and fill loans so that we can carry out Government projects such as schools, hospitals, roads and other essential requirements without taxing the people to get the money. Fifthly, the Government’s policy will restrain the importation of goods and so safeguard our overseas reserves. Is that wrong? No, it is very practical. Sixthly, this policy will give confidence to overseas investors. They can see that we are determined to keep the currency stable and they will see Australia as an attractive country in which to invest.
I know the Opposition does not like this. That is evident from the hubbub on the other side. But as the final speaker, I am covering the salient points.
Mr. SPEAKER (Hon. John McLeay).Order! I ask the honorable gentleman, to direct his remarks to the Chair, and I also ask other honorable members to cease interjecting.
– We will accept the point that the Australian currency has depreciated over the last few years, but look at the problems with which we have had to deal. First, there has been a tremendous influx of immigrants, and that is inflationary. There has been a tremendous growth of secondary industry giving employment to people and that tends to be inflationary. We have had a very high degree of expenditure on defence and that is very inflationary. Further, we have had high Government spending to meet demands of immigrants, to build up the standard of living, and to provide sewerage and water schemes and other services. All these things are inflationary.
Lastly, the terms of trade have been running against us.
So considering all factors, we have done a very good job. We have never let up on the job and every time there has been a need to bring down controls and to curb potential inflation, we have gone forward. We have had all types of budgets, and they have been unpleasant, but the people have accepted them. The task of dealing with continued inflation is the most important job the Government has had to do because all fiscal and economic problems stem from inflation. It should never be treated lightly even in times of prosperity, and we are not dealing with it lightly. I have constantly stressed the importance of inflation and the need for continued vigilance against this very dangerous economic law.
At present, we have a boom. We have over-demand for goods particularly in the luxury industries, building, real estate and land speculation. These are the things we are trying to curb with these economic measures that the Treasurer has brought down. The demand in those spheres is causing a severe drain on supplies of finance, services and labour from other sectors of the community, particularly the primary and mining export industries. Shortages of finance, labour and supplies are inhibiting the proper functioning of the economy, and overdemand is causing inflation. As I pointed out before, we are trying to divert the excess finance, services and supplies that are going into those industries. If we can curb that trend, these things will be made available to primary producers and to the mining export industries.
However, I give a word of caution. We should not brake too hard because we risk running into the chasms of a recession. But this Government has stated that it has a flexible mind on these matters. It has said there is not one single policy to control inflation. We have to use a whole series of weapons in respect of fiscal policy, central bank policy and import licensing. If we find it necessary, even in two weeks’ time, to alter what we have already done, this Government will do it. We must act on a day-to-day basis. That is the only way to control the situation. Therefore. 1 have no fear that we will run into a recession because this Government will immediately ease up, lower the interest rates. make more finance and more imports and all the other things available that are necessary to boost the economy.
This Government has been aware of the inflationary pressures, and last February it brought down a four-point plan to curb them. 1 believe those measures are working effectively and they will continue to work effectively for the rest of this financial year. Just imagine where the inflationary pressure would have been if we had not intervened in the arbitration commission, and if there had been an increase of £1 a week in wages! I would like to see wages as high as possible always, but let us be sane and realistic. Inflationary pressures are higher than they have been for many years. If such an increase had been granted, the pressures would have been twice as bad. We might not have had the means to bring them under control.
The easing of import licensing has contributed to this curbing of inflation more than any other item. I am glad that the Government did not even consider reimposing import licensing. It has lowered liquidity by a couple of hundred million pounds in a short time. We have upheld our international obligations to such things as the General Agreement on Tariffs and Trade. We have always said that as soon as we felt the economy could be free of import licensing, we would free it. The Government has also brought monopolistic controls in industry down to sanity.
It was particularly noticeable that while we had import licensing manufacturers were not worrying about increased costs because they could pass them on. But now that they have to compete with the outside world they are worrying. Mr. Anderson, the Director of the Associated Chambers of Manufactures of Australia, does not now say, “Well, what is wrong with a little inflation? Maybe it is a good thing.” He has changed his point of view since we removed import licensing. The manufacturer now has to meet reality. He has to face outside competition.
I have said that inflationary pressures are running at a high level. What causes inflationary pressures? Two things cause them. One is liquidity and the second is the velocity of money. I have done a little study on this question of the velocity of money. I cannot agree with the Govern ment that liquidity has been high. Really, liquidity is at its lowest point for the last ten years. One cannot measure liquidity in actual amounts of money. It has to be taken as a ratio between our national product and the amount of money in the community. In 1949-50 the ratio was .68 and it has decreased each year until in 1959-60 it is .47.
What is outstanding is the velocity of money. One can obtain a measure of the velocity of money by dividing the debits to customer accounts by current account deposits in all cheque-paying banks. In 1949-50 the turnover of money was 17.9 times per year. It had increased by 1957-58 to 23.8, but in the last year it increased to 27.8 times per year. That generates terrific inflationary pressures. We have to look at this problem of velocity If we are to control inflationary pressures. What causes this great turnover of money in the community? One of the biggest factors is speculation on the stock exchange. Another is the short-term money market. People give their money for two or three months, then draw it out and put it somewhere else. Then there is speculation in real estate. These are some of the factors that tend to generate the increased turnover of money. The Treasurer is trying to curb these factors which are increasing the velocity of money.
Even in savings bank accounts there is a fair indication of the velocity of money if one compares withdrawals with deposits. Last year more money was being drawn out of savings bank accounts than was being put into them. The only increases being made in savings bank accounts were due to the interest which the banks were paying into the accounts. This shows that there, too, money has been turning over at a tremendous speed.
I think it is important that under the measures outlined by the Treasurer none of the exporting industries will be harmed in any way. Interest rates will rise, but the increased rates will not be paid by export industries which are being given every consideration to encourage them to produce to the maximum of their capacity. The Treasurer has stated that the banks must give accommodation to our exporting industries. The increase in sales tax will apply only to motor cars, not to commercial vehicles used by the farmer such as utilities. The measures, generally speaking, will channel money back into the banking system upon which the farmers rely so much for finance to run their properties. 1 would like to point out the distortion in the finances of this country which have taken place in the last year. The Treasurer’s report indicates that in the last three years savings bank accounts have increased by 18 per cent.; pastoral companies have increased their loans by 8.6 per cent.; consumer credit extended by hire-purchase companies has risen by 46 per cent.; and new raisings by Australian companies have increased by 67 per cent. The Government’s new policy will ease the big development that has taken place in hire purchase and in new capital raisings by Australian companies. It will do this because it will not permit taxation concessions on the interest which companies pay on debentures and on notes over a certain amount. Companies which convert their shares over a number of years will not get any deduction. So the great build-up of new capital in companies will ease down considerably and there will be a build-up in the savings banks, in the deposits of ordinary banks and in pastoral companies.
Another important point is that these measures will not hurt the small man greatly. The Treasurer has indicated that the sales tax imposts are temporary. As soon as we can ease the demand for cars, we will ease the sales tax. This does not mean that some people will not be able to buy a car. There are plenty of secondhand cars on the market. The people who will get hurt the most are the big land speculators and the people who have been borrowing money on debentures and on unsecured notes. As soon as the public understands what the Treasurer has done it will welcome these actions.
I want to conclude by saying that it is most important that when controlling inflation we should convince the Australian people that we are not going to allow the Australian currency to depreciate further. If we can use that psychological weapon, they will not go in for speculation. They will go in for genuine investment in genuine industry. So we will get an air of stability which will allow our primary industries to use their efficiency to get greater incomes by means of greater production. Thus our overseas balances will increase.
Question put -
That the words proposed to be omitted (Mr. Calwell’s amendment) stand part of the question.
The House divided. (Mr. Speaker - Hon. John McLeay.)
Majority . . . . 30
Question so resolved in the affirmative.
Mr. Whitlam.- No
– Is a division required?
– The House will divide.
– I raise a point of order, Mr. Speaker. It relates to the procedure of the House. I had informed the Deputy Leader of the Opposition (Mr. Whitlam) that as the statement made by me had already been printed in “ Hansard “ and circulated, I was proposing to withdraw the motion as it would be an unnecessary expense to print the paper. The honorable member told me that he would consult his leader. The Leader of the Opposition (Mr. Calwell) then indicated that the Opposition wanted the motion put. If honorable gentlemen opposite do not want the paper printed, neither do we, and we will resolve the question with a negative vote. (The House proceeded to divide.)
– Order! There being no honorable member voting on the side of the “ Ayes “, I declare the question resolved in the negative.
The following bills were returned from the Senate: -
With an amendment -
Sales Tax (Exemptions and Classifications) Bill 1960.
Without requests -
Customs Tariff Bill (No. 3) 1960.
Customs Tariff (Canadian Preference) Bill (No. 2) 1960.
Customs Tariff (Canada Preference) Bill 1960.
Customs Tariff (New Zealand Preference) Bill (No. 2) 1960.
Customs Tariff (Federation of Rhodesia and Nyasaland Preference) Bill (No. 2) 1960.
Excise Tariff Bill (No. 2) 1960.
Income Tax and Social Services Contribution Bill (No. 2) 1960.
Without amendment -
Income Tax and Social Services Contribution Assessment Bill (No. 2) 1960.
The Parliament - Statement in Debate.
Motion (by Mr. Downer) proposed -
That the House do now adjourn.
.- In a recent debate in this Parliament the honorable member for Kingston (Mr. Galvin) made certain charges against members of the Parliament and some of their friends. He said that some members and their friends were aware of certain imposts that might be applied on a commodity that is available for purchase by the public, and that they had taken advantage of this knowledge to make purchases before the imposts were introduced. A perusal of “ Hansard “ will readily show to what he was referring. I do not want to detain the House on this matter, but I would like to see it cleared up, if this can be done, because the honorable member made a charge against this institution itself rather than against individual members of it.
I think that if we wish to support the idea of democracy, to which there is a challenge throughout the world at the present time, those of us who live in democracies and who enjoy the right of free elections, and everything else that goes with democracy, should jealously guard these privileges that we have and see that they are not infringed. Therefore, we should clear up any insinuation of this kind that is made at any time.
I do not know how far this matter can be investigated or dealt with, Sir. I personally resent the charge that has been made in the debate to-day, and I seek your guidance as to whether it would not be proper for this Parliament itself to investigate the charges that have been made. I suggest that if some members of the Parliament and their friends have been guilty of the actions mentioned, they should pay the penalty that applies in respect of misdemeanours of this kind. The institution of Parliament is bigger than any of the individuals in it, regardless of the party to which they belong, and it is bigger than any of the people who support those of us who are in this Parliament. I think it is completely wrong, improper and quite undemocratic for members to come into this Parliament and make insinuations such as those which have been made in the debate to-day.
– Be more specific.
– There is no need for that. Honorable members all know what this is about. With respect to the suggestion by my colleague that I be more specific, I say that I am prepared to follow this up later. 1 think that this Parliament should take full cognizance of any attempt by any member of the Parliament to use, in order to defeat the law, any information that is within his knowledge. The Parliament should see that such a matter is investigated and that those who make wrong charges and those who are guilty of the things charged against them are dealt with appropriately.
For the moment, I leave the matter in your hands, Mr. Speaker. I just want to add this: If it comes to my knowledge that any member of the Parliament has committed a misdemeanour of this kind, I shall not sit quiet in this House and let these things go on.
.- Mr. Speaker, the Prime Minister (Mr. Menzies), in his speech on the Australian economy this evening, directed attention to an erroneous figure which I had used in my speech last evening. On checking, I found, of course, that the Prime Minister was quite right and that I was quite wrong. I wish to apologize to the House for using a wrong figure in relation to Australia’s sterling balances, and to say that that figure was used in good faith. It was used solely as the result of an error on my part and not with any intention to deceive.
Question resolved in the affirmative.
House adjourned at 11.14 p.m.
The following answers to questions were circulated: -
m asked the Treasurer, upon notice -
What directions has the Statistician been given under section 59 of the Banking Act to prepare and publish statements from the information contained in the balance-sheets and statements delivered to him by trading and savings banks?
– The answer to the honorable member’s question is as follows: -
No directions have been issued to the Commonwealth Statistician under section 59 of the Banking Act 1959. However, in addition to the statements required to be published in the “ Commonwealth Gazette “ under section 58 of the Banking Act, the Commonwealth Statistician, with the approval of the Treasurer, prepares and publishes regular statements from the information contained in the balance-sheets and statements in accordance with Forms A, B,D, E, G, I and J furnished by the banks under the act.
d asked the Treasurer upon notice -
When does he expectto make known the result of the inquiries which the Acting Treasurer, when replying to my question without notice on 13th October last, undertook to make regarding the case of Mr. Lance Davis, farmer, of “ Airlie “, Bendemeer, New South Wales, who had certain agricultural machinery repossessed by the Commonwealth Development Bank?
– The answer to the honorable member’s question is as follows: - 1 have conveyed the results of therelevant inquiries to the honorable member by letter.
n asked the Minister for Labour and National Service, upon notice -
– The answers to the honorable member’s questions are as follows: -
Cite as: Australia, House of Representatives, Debates, 16 November 1960, viewed 22 October 2017, <http://historichansard.net/hofreps/1960/19601116_reps_23_hor29/>.