House of Representatives
8 April 1965

25th Parliament · 1st Session

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

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– I ask the Minister for Trade and Industry: Has Cabinet under consideration a request by Ansett-A.N.A. for permission to import two airliners duty free from the United States of America? Do the Department of Customs and Excise and the Treasury support the application and does the Department of Trade and Industry oppose it, first because the purchase of these aircraft will mean a loss in revenue and, secondly, because their purchase will upset the United Kingdom Government, which will regard it as a breach of the trade agreements between Australia and the United Kingdom?

Minister for Trade and Industry · MURRAY, VICTORIA · CP

– I would not comment on the observation as to the attitudes of the various Departments other than that it gives me an opportunity to say that the honorable gentleman’s suggestion is wrong. As for the main part of the question, I think it is publicly known that with regard to certain aircraft imported by each of the main airlines from a non-British country the normal practice is followed of taking security for duty pending a determination whether the by-law provisions of the United Kingdom trade agreement Should be applied. This clearly is a matter which must engage and has engaged the consideration of the Government. The issues which bear upon it arc, I think, quite clear. I have no doubt that, at the correct time, the Government will reach and announce a decision on the matter.



– I ask the Minister for Air a question. I refer to reports that the United Kingdom Government has scrapped production of the TSR2 fighter-bomber and is now arranging to purchase from the United States of America the Fill to fulfil its requirements. In the light of the Opposition’s attitude that Australia should have given preference to the TSR2, will the Minister say whether the advice of our aviation experts, on which the Government acted, has been justified? Further, how far down the drain would our replacement of the Canberra now be if we had followed the Opposition’s advice and ordered the TSR2?

Minister for Air · FAWKNER, VICTORIA · LP

– The only definite information that I have on the subject is that the contract for development of the TSR2 has been cancelled and that the United Kingdom Government has been offered an option to purchase Fill aircraft. In due course the United Kingdom Government will make a decision about exercising that option. All I can say, as I have said so often in the House, is that the decision of the Australian Government to purchase the FI 11 was based on our judgment that it was the aircraft best suited to our needs. I still believe that the TSR2 would have been a good aircraft. This whole incident demonstrates what a saving in unit costs there is when long production runs can be achieved. This is, of course, a matter which affects our own aircraft industry as well. It also shows what a rapid increase in research and development costs can incur if there are long delays during the development of an aircraft. Rapid changes occur in aircraft design. The development of the variable wing hn§, effected a revolutionary change in aircraft performance. Any new aircraft which did not incorporate this feature would soon be obsolescent, as has been shown in this instance. The only consolation is that all air forces have to make difficult decisions. We have been fortunate that our decisions have turned out to be correct.

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– I address my question to the Minister for Primary Industry. Are reports correct that the Australian Wheat Board has made arrangements with Communist China and Soviet Russia for the sale of wheat to the value of £51 million? Are the prices received for wheat as published in the “ Monthly Bulletin of Overseas Trade Statistics “, namely, £27 a ton from the United Kingdom, £26.15s.4d. from the Union of Soviet Socialist Republic and £26.8s.9d. from mainland China? Is it anticipated that there will be a loss of £22 million on the sale of wheat overseas and that £12 million of this will be on the sale of wheat to China and Russia? Finally, will the Minister say why Wheat is sold at a lower price to China than to Russia, and at a higher price to the United Kingdom than to both China and Russia?

Minister for Primary Industry · FISHER, QUEENSLAND · CP

– The Chairman of the Australian Wheat Board made a public statement concerning the sales of wheat to mainland China and to Russia. In each case two parcels of wheat were sold. There was an earlier consignment to Russia of 750,000 tons, plus a JO per cent, option, and a later one of 600,000 tons, plus a 10 per cent, option. In the case of mainland China, there was a contract for 1,500,000 tons of wheat to be delivered by the end of April and the recent sale is a contract for 1,200,000 tons, plus an option of 10 per cent. The suggestion that the contract prices for the sales to China ate less than for the other two countries, is not correct. I say that because of the depression of prices - if I might use that term as such - since Canada and the United States of America have reduced prices, or, rather, since the United States has increased its subsidy and therefore forced other countries to reduce prices, all recent sales have been based on the minimum prices associated with the International Wheat Agreement.

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– I direct my question to the Minister representing the Minister for Civil Aviation. Has the Minister received a complaint from residents in the Rockdale area concerning damage to the roof of a church at Rockdale due to low flying aircraft approaching Sydney airport? Is this one of a number of complaints from people in the St. George electorate over the years concerning aircraft noise? What progress is being made towards providing relief from noise by completion of the north-south runway to enable a greater use of approach and take-off over Botany Bay?

Minister for National Development · FARRER, NEW SOUTH WALES · LP

– I understand that my colleague, the Minister for Civil Aviation, has received a number of complaints - not a large number - about low flying aircraft in the area to which the honorable member refers. These are being investigated at the present time. The problem in this area is caused by the fact that the north-south runway is at present only about 5,000 feet long and is not sufficiently long for 707’s, and even, on some occasions, for 727’s to land. The result is that they have to go in over the houses. As the honorable member knows, that runway is being extended to 8,000 feet and this will enable jets to land and take off over the sea in all conditions of wind except where the side wind component is more than 20 knots. The north-south runway will be completed according to schedule in, I think, about July 1967. This will enable aircraft to land and take off over Botany Bay and thus considerably reduce the noise level.

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– I address a question to the Prime Minister. Is it true that during last March, for the first time, if not in history, then at least since 1952, Australia, as well as having a huge adverse balance of payments, received less capital from overseas than the amount that left Australia to meet commitments overseas; that is, the outflow of capital was greater than the inflow? As drought conditions will considerably reduce the volume of exportable goods in the near future, and as there is every evidence that reduced prices will be obtained for goods sold overseas, what plan or plans has the Government to protect the Australian economy, other than pleading with other countries to increase the flow of capital to this country or freezing in Australia dividends payable overseas - which amounts to repudiation?

Prime Minister · KOOYONG, VICTORIA · LP

– I am sure the honorable gentleman does not imagine that this is really a question without notice. I shall be happy to read it with great care on the notice paper.

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– I ask the Minister for Air, whether there is any truth in a report that the United States Air Force has advised all operators of Sabre aircraft to strengthen a number of areas in the wings of those aircraft. If so, is this because the areas are prone to fatigue cracking after they have been in service for long periods? Will this curtail the Sabre operations of the Royal Australian Air Force?


– Yes, it is true that the United States Air Force has found some evidence that metal fatigue will occur in the wings of some Sabre aircraft that have been in operation for a number of years.

However, a modification has been devised for the wing and centre sections that will overcome this problem. We have ordered some modification kits from the United States on high priority, and as soon as they arrive we shall commence fitting them as the aircraft become due for regular inspection in our aircraft depots. This will mean that, fortunately, at no time will there be any more than a few of the aircraft out of service and certainly there will be no reduction in Sabre operations at any time. Of course, we will continue to carry out regular inspections to ensure that any sign of cracking is detected immediately.

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– I ask the

Postmaster-General whether the Australian Broadcasting Commission reported in its news session on 5th April that a four page advertisement of protest against the war in Vietnam was recently inserted in the “ New York Times” by 1,550 American Ministers of Religion. Is it true that the report was not repeated in any of the subsequent news sessions? If so, was this omission due to censorship by the Government in order to prevent the Australian public from learning that there was widespread world support for the request of certain Australian bishops for Government action in support of a proposal to endeavour to bring an end to the terrible war in Vietnam?

Postmaster-General · PETRIE, QUEENSLAND · LP

– As to the principal points raised in the early part of the question, if the honorable member will put them on the notice paper I will make inquiries about them. However, I do want to say that while I have been Postmaster-General there has been no attempt by the Government to censor either the news programmes or other programmes of the Australian Broadcasting Commission.

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– My question is directed to the Minister for Territories. The Minister will be aware that Parramatta Rotary, at its own expense, has recently brought a New Guinea teacher, Mr. Naga Raga, to Australia for training and for teaching. He is attached to a local high school. I ask the Minister whether the Government is contributing to the upkeep of Mr. Naga Raga while he is in Australia. Further, will the Minister take steps to encourage other voluntary bodies, if necessary by offering financial assistance, to follow the example of Parramatta Rotary?

Minister for Territories · MCPHERSON, QUEENSLAND · CP

– Yes, the Government is subsidising the visit of Mr. Naga Raga to Australia. I may add that the Government does this on many occasions when private bodies take this kind of action and ask for assistance. On each such occasion, the proposition is examined on its merits, one of the main questions to be answered being how much the sponsoring body will put up to augment the assistance given by the Commonwealth. Commonwealth assistance, of course, is limited by the funds available. We are very appreciative of the efforts of these bodies in trying to educate and advance the people of Papua and New Guinea.

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– Is the Minister for Health aware that certain hospital benefit funds refuse to pay hospital benefits to aged members who are compelled to enter private hospitals? If the Minister is not aware of this practice will he make investigations and take action to deregister those hospital benefit funds which refuse to honour their obligations?

Minister for Health · DARLING DOWNS, QUEENSLAND · LP

– Under the pensioner medical scheme hospital service in public wards is subsidised by the Commonwealth, and also under the hospital benefits scheme arrangements are made for Commonwealth benefit and fund benefit to be paid to persons who enter hospital, whatever wards they are in. I cannot quite understand the import of the question. If the honorable member refers to a person who is entitled to free hospital service in a public ward and is then provided with service in a private ward, that would be a different situation. If the honorable member can give me details of a case that he has in mind I will make investigations.

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– I ask a question of the Minister for External Affairs, In view of threats by Communist China’s foreign minister that his country will attack Thailand this year by guerrilla methods, and as Thailand is one of our allies in the South East Asia Treaty Organisation and shares a border wilh Malaysia, I ask, first, whether the Minister will ensure that this House is quickly and fully informed of any signs of this threat being fulfilled; secondly, whether he will consider, as a matter of urgency, ways in which more honorable members from both sides of the House can get first hand knowledge of conditions inside Thailand and so help to combat the flood of propaganda which will enter that country should the Chinese attacks begin; and thirdly, whether he will discuss with the Government the necessity to meet any such attack with an immediate acceleration of our own defence preparations.

Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– The mainland Chinese Government has never made any secret of its aggressive intentions. In fact, it has stated those intentions so plainly that it remains a mystery why so many Australians seem to disbelieve what the Chinese themselves say about their intentions. They have said - and I made reference to this in my recent statement to the House - that they were planning conquest by subversion of Thailand, and subsequently another statement was issued to the effect outlined by the honorable member. This, of course, gives the Australian Government a great deal of concern. As I have tried to stress in statements to the House, we see it as part of a total pattern which requires the whole attention of the Australian Government and its allies, not directed to one country of South East Asia alone, but directed to the whole South East Asian situation. Thailand is, of course, associated wilh us in the South East Asian Treaty Organisation. As members of S.E.A.T.O. we have opportunities both of entering into joint planning and of sharing information regarding the situation in Thailand. I will certainly give attention to the other aspects of the honorable member’s question. However, I may add for his general information that already the Australian Government is giving assistance to Thailand. An example of this is that during the current period of five years we will be contributing £2 million for feeder roads in this north eastern area of Thailand which is immediately under threat.

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– I ask the Minister for National Development whether the current negotiations between the Queensland

Government and the Federal Government about Queensland development projects include any works on the Burdekin River. If they do not, will the Minister see whether something can be done to implement the Burdekin scheme? The present state of the underground water in the Burdekin delta will put the £14 million sugar production of that area in jeopardy very soon?


– The current applications to the Commonwealth Government, which are being examined, do not include an application for a project on the Burdekin River. I understand that the State Government is examining certain projects with a view to recharging the aquifers under the sugar area. However, I will obtain further details from the Queensland Government for the honorable member.

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– My question is directed to the Minister for Health. In view of the prevalence in Indonesia of foot and mouth disease, which is readily transferable by wearing apparel and personal effects, can an assurance be given that adequate precautions are being taken to prevent the entry of the disease into Australia, particularly in the north and north west of Australia at . such points as Darwin, Wyndham and Broome?


– This is a very important matter and is causing the Government a good deal of concern at present. It is a fact that foot and mouth disease is prevalent in certain areas of Indonesia. Understanding that, every possible precaution is being taken to prevent its spread either across a land border or through the first port of entry, particularly, as the honorable member has said, in the northern regions of Australia. However, there is very little direct contact by shipping with the ports in northern Australia. Even so, quarantine precautions are being taken and the regulations are being most strictly applied. In fact, only recently we have tightened them up to the extent that, when a person enters Australia, whether he comes by air or by sea, he is now required to state whether he has been in an area where foot and mouth disease is rife and whether he has been, within three months prior to his entry into Australia in an abattoir or farming area that might be affected. If he has been in such an abattoir or area his footwear and certain items of clothing are disinfected. In addition, of course, the normal strict precautions apply. I can assure the honorable member that Australia’s quarantine precautions are equal to the best in the world.

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– My question is addressed to the Attorney-General. Has his attention been directed to the high costs involved in appeals that go from Australian courts of law to the Privy Council in the United Kingdom? Are such costs sometimes crippling to litigants? In particular, has the Minister’s attention been directed to a libel action - “Jones v. Skelton” - which went on appeal to the Privy Council and which concerned a letter that had been published in the “ Manly-Warringah News “ under a nom de plume? Will the Attorney-General investigate and ascertain whether costs incurred by the defendant, which now have to be met by his widow, amount to £14,000 for an ultimate verdict of £500? Also, will he inquire whether the anonymous letter found to be libellous was written to the newspaper by the present Leader of the Opposition in the New South Wales Parliament?

Attorney-General · BRUCE, VICTORIA · LP

– Even before Federation, appeals went to the Privy Council from the various Australian States. Since Federation, the position has not been changed. I hold the view that it is the general will of the Australian public that appeals to the Council should continue. The other matters raised by the honorable gentleman relate to the facts of the particular case. I do not believe that it would be proper for me to investigate the facts of an individual case.

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– I wish to ask the Minister for Housing a question. Has he seen reports of the proposed establishment in Australia of a new company which would insure mortgages on houses and which would be an offshoot of the Mortgage Guaranty Insurance Corporation of Milwaukee in the United States of America? Would the operations of the proposed company cut across those of the Housing Loans Insurance Corporation about to be established by act of this Parliament?

Minister for Housing · WENTWORTH, NEW SOUTH WALES · LP

– The aim of the Government in establishing the Housing Loans Insurance Corporation is to fill a very large gap which now exists and which is covered neither by private enterprise nor by the somewhat limited mortgage insurance schemes already established by several of the States.. The representatives of the company in question saw me not very long ago. It conducts quite extensive operations in the United States of America parallel with those of the Federal Housing Administration, and has developed a number of very useful and novel financial techniques. Indirectly, its operations have had the effect of bringing into the housing field a quite large volume of investment funds that otherwise would not be devoted to housing.

This matter has to be considered against the background of the fact that, over about the next 25 years, we shall build about 3 million dwelling units at a reasonably conservative estimate. In addition, we shall have the problem of financing the exchange of existing houses. In this kind of picture, there is room for many kinds of operations, and the activities of any reputable people who have useful and constructive contributions to make will be extremely welcome. This is particularly so if they import into the situation additional investment funds that would not otherwise be available.

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– My question is addressed to the Minister for Trade and Industry. The right honorable gentlemen will recall that some little time ago he was strongly advocating the setting up of a multi-national organisation designed to accumulate and hold buffer stocks of foodstuffs, particularly cereals, for the relief of famine in drought stricken countries. Is the right honorable gentleman in a position to give some information to the House regarding the present state of negotiations and the prospects for a successful outcome? Can he also indicate what he would regard as the desirable features of such a scheme, particularly in regard to the identity of the donor countries that might be expected to participate, and the terms upon which foodstuffs would be acquired and distributed by the organisation?


– 1 recall the matter to which the honorable member refers. although he is not completely correct in representing what I said. I was proposing that at a point of time, over several years, there ought to be a multi-nation contribution of funds which could be used to purchase certain foodstuffs. I was speaking particularly of wheat, but not only of wheat, to be either given or sold on concessional terms to those who, by reason of their exchange position or need, require such treatment. This idea has been canvassed. I was taking the view partly that while the needs of such people must be recognised and ought to be attended to, the responsibility should not fall only on those countries which produce an item, such as wheat, in surplus, but that all the wealthier countries should join together. I suggested that those who grow wheat in surplus might be doing the right thing to those in need and would be making an appropriate contribution if they were prepared to sell wheat to such an international organisation for this purpose at something less than the going commercial price at the time. This was the general thesis that I have been speaking of for some three years now.

To bring the matter to a point, I may say to the House that there is now scheduled a resumption of the discussions in the G.A.T.T. Kennedy Round in what is known as the Cereals Group where discussions on international arrangements for wheat will recommence. Australia will be represented at these discussions by the permanent head of the Department of Trade and Industry, the deputy secretary of the Department of Trade and Industry, the permanent head of the Department of Primary Industry and other officers who left last weekend to go overseas. They will convey the policy suggestions of the Australian Government. They will enter into negotiations with other countries, both producers of wheat in surplus and those who may be described as importers of wheat, but comparatively rich countries; and part of the discussions that they will advance, authorised by the Government, will be in conformity with this general thesis that the honorable member has referred to.

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– I ask the PostmasterGeneral a question. Is he aware that one of my constituents who owns and operates a laundry has been refused a telephone service for the last two weeks, despite the fact that he has paid his telephone account? In that account was a charge of £50 for trunk calls which he claims he never had. He went to the Postal Department and signed an application for the matter to be looked into to ascertain who had had the calls. His telephone bill over the last three years has never been more than from £12 to £14. On this occasion he paid the Department £14 and that amount was accepted.


– Order! Is the honorable member seeking information or giving it?


– I am giving some information. I have done my duty. I rang the telephone people and I have written from my office to them, but I received no answer, nor did my constituent. With all respect to the Standing Orders and to you, Mr. Speaker, my constituent is not satisfied. The question that I now ask is: Will the Minister get in touch with his Department and ask it to do something about this matter, since the requests that I and my constituent have made have been refused?


– If the facts of the case mentioned by the honorable member are as stated by him, then I am not satisfied either. I will have a look at this matter and advise him about it. However, I would say that the Post Office usually extends the utmost courtesy to people who make inquiries of this nature. If there has been an overcharge, the Post Office usually investigates the matter as quickly as possible and informs the customer.

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– Has the Minister for External Affairs seen in Tuesday’s Press a report which was prepared by a gentleman named Smark and in which he refers to the Australian Volunteers Abroad programme run by the Overseas Service Bureau in Melbourne? Mr. Smark claims that among the “ countries “ being assisted by the volunteer movement are Nigeria and Tasmania. He claims that five volunteers are in Tasmania, pursuing the primary aim of the movement, which is “ to befriend small local groups of underdeveloped people “. Will the Minister accept my assurance that the Tasmanian natives, with the exception of the State Minister for Health who apparently regards any criticism of the

State Government as sedition, are, compared with people in many places in the world, enlightened and not in need of solicitude from the mainland?


– On visits to Tasmania I have sometimes become aware that Tasmanians think the mainland is occupied by underprivileged people. I assure the honorable member that people on the mainland do not think that the people of Tasmania are underprivileged. I can only express the fervent wish that Tasmania will never suffer any error in reporting, other than typographical errors.

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– My question, which is addressed to the Prime Mininster, relates to the widespread request for an amendment of the part of section 51 of the Constitution which refers to Aborigines. The Prime Minister, in his speech in the House last Thursday, made it clear that he had not yet been convinced and was still open to conviction on this subject. I wonder whether he will set up some machinery for canvassing the subject further. For instance, he could appoint a select committee to consider it. Will he receive a delegation from the Aboriginal people themselves, or will he create an opportunity for a free and open discussion of the matter in the House before there is a referendum on section 127 of the Constitution.


– Let me take the suggestions in reverse order. The honorable member knows that there can be no referendum without the introduction and debating of a bill in this place. Therefore, there would be ample opportunity for discussion in the Parliament before any referendum occurred. The second suggestion that he put related to my receiving a deputation. He will recall that he introduced one to me and that I had a long discussion - I hope it was a useful one - with the representatives. In the course of the discussion I pointed out my view on section 51 in terms no doubt similar to those which I employed in the House last Thursday. In regard to his first suggestion, I really do not think that what is really a problem of interpretation of the Constitution lends itself to select committee activity. The honorable member may be assured that I am pursuing this matter in order to find out whether there is a countervailing view which might be effective.

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– I direct a question to the Prime Minister. Has a proposal for the erection of the new headquarters of the Radiophysics Division of the Commonwealth Scientific and Industrial Research Organisation at Epping in Sydney been submitted? Could consideration be given to the selection of a site at Parkes in New South Wales, which is the location of one of the Radiophysics Division’s key research centres, namely the Australian National Radio Astronomy Observatory, which is better known as the Parkes radio telescope, and where a first class Commonwealth owned aerodrome is available for use in any rainmaking experiments?


– I understand that the proposal relating to Epping is at present before the Public Works Committee, but I will certainly have pleasure in conveying to the CS.I.R.O. the honorable member’s views and his suggestion about Parkes.

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– I address a question to the Minister for National Development. Has consideration been given to the future employment, as a national development task force, of the highly skilled group of workers presently employed on the Snowy Mountains scheme? Is it a fact that over 100 professional employees engaged in the exploratory, survey and planning tasks on the scheme will have completed their operations in a little over one year’s time? Is the Minister aware that the Snowy Mountains Authority not only places great value on these employees as individuals but has very special regard for them as constituting a highly skilled and integrated team? Finally, will the Government act quickly to ensure that this fine organisation of workers will not dissolve, as is threatened, through lack of assured employment by the Commonwealth in the future, particularly as I understand it is very difficult to recruit replacements for present wastage?


– This is a matter which has exercised the Government for some considerable time. It is actively under consideration at present. I point out that the Snowy Mountains Authority will not complete its work until 1975, although the honorable member is correct in saying that certain sections of its work force will complete their work very much sooner than that.

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– Will the Prime Minister indicate when he expects the Commonwealth Office of Education’s annual report for 1964 to be presented to the Parliament?


– Quite frankly, I do not know, but I will have an inquiry made right away and I will inform the House.

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– Is the Minister for Labour and National Service aware that his Department has had considerable difficulty in placing junior female school leavers in employment? Is it a fact that unemployed junior females outnumber unemployed junior males by two to one? If the Minister’s repeated statements in this House are correct, that there are numerous unfilled vacancies for apprentices in the various trades, has he or his Department approached the unions and industry about 8 apprenticing to suitable trades girls with the necessary education standard, bearing in mind that women in industry today now operate machines which were previously operated exclusively by men and that during World War II women did work normally performed by male tradesmen? For instance, my own union, and the union of the honorable member for Kingsford-Smith, the Boilermakers Society of Australia, admitted female members.

Minister for Labour and National Service · LOWE, NEW SOUTH WALES · LP

– I did say on Tuesday in the House that we had had little difficulty this year in placing school leavers in employment. However, as one would expect, we have had some difficulty in some areas and with some trades. We have not had special difficulty in placing young women school leavers in employment. The honorable gentleman can be assured that I will again have a look at the problems and as soon as I can I will notify the honorable member. As to the second part of his question about young women becoming apprenticed, I have never had what I would call a willing and co-operative attitude oh the part of the major unions when considering the employment of women in jobs which are now occupied by men, although on the factsand this applies particularly to the PostmasterGeneral’s Department - one would think that there were abundant opportunities for men to be placed in other jobs so that women could take their place in jobs which they could do just as well as or, in some instances, better than men. I will have the second part of the honorable member’s question looked into. It is a valuable suggestion and he can rest assured that the Department will examine it.

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– I ask the Treasurer a question. I refer to reports that the United Kingdom has introduced a budget proposal to limit investment overseas. Is the Treasurer in a position to give details of the effect of this or other proposals on Australia’s balance of payments position and policies of development? v


– 1 am not sure that I clearly apprehended the last part of the honorable gentleman’s question when he referred to this and any other proposal. However, I will give him such general comment as I can on the matter. It would appear from reports so far about the terms of the United Kingdom Budget that the restraints which apply to investment overseas do not apply to investment inside the sterling area. There are other provisions which could have some inhibitive effect on « overseas investment even inside the sterling area. For example, they may affect folio investment and perhaps serve as a slight disincentive because investment would be less profitable in some directions. But from Australia’s standpoint the main consideration is that investment generally inside the sterling area is not to be subject to restraints which apply in these other directions. That is as far as I should try to take the matter at present. I should be in a position to give a good deal more information as time goes on.

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Leader of the Opposition · Melbourne

Mr. Speaker, I wish to make a personal explanation. I was misrepresented at question time by the honorable member for Maribyrnong (Mr. Stokes) in a question that he addressed to the

Minister for Air (Mr. Howson). The honorable member said that the Opposition and I had claimed that the TFX bomber was not a good bomber and that the TSR2 was a better bomber. What we said was that Australia needed a replacement for the Canberra at an early date and that the TSR2 was available whereas the TFX would not be ready for some considerable time. If the Government’s case rested on the need to get an early replacement, we wanted the bomber that was available. We offered no opinions in a technical way as to the relative values of the TSR2 and the TFX. Our real opposition to the Government’s proposal was that the TFX bomber would not be available until 1969 at the earliest and if there was danger we wanted a bomber immediately.

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– I present the following reports of the Public Accounts Committee -

Sixty-ninth report - Index to the First to the Sixty-eighth Reports of the Committee.

Seventieth report - Reports of the AuditorGeneral Financial Year 1963-64. 1 ask for leave to make a short statement.


– Order! There being no objection, leave is granted.


– Over many years, successive Committees have recognised the need to provide members of the Parliament, departments, universities and other institutes of research with a current index of their reports. With this in mind, reports have been presented by your committee in 1958, 1959 and 1962 comprising a progressive index of its reports brought before the Parliament. The sixty-ninth report, comprising a revised index, covers the first 68 reports submitted by the Committee. The method of compilation of this index is similar to that adopted previously. Topics have been listed under main headings and the number of report and page or the first of a succession of pages in that report where the topic concerned may be found is then indicated.

The seventieth report relates to the reports of the Auditor-General for the year ended 30th June 1964. As honorable members will know, your committee is specifically directed bythe Public Accounts Committee

Act of 1951 to examine each statement and report of the Auditor-General. This seventieth report relates to a detailed examination of criticisms raised by the Auditor-General and public inquiries subsequently held by the Committee.

The seventieth report relates to only four matters referred to by the Auditor-General in his reports for 1963-64. We believe that this reflects the value of the work of the Committee in this field in recent years and indicates generally that improvements have occurred in the quality of the work subject to audit by the Auditor-General. At the same time, however, the present inquiry has highlighted the need for your committee to continue, each year, to examine the reports of the Auditor-General as provided for under the Act. But for the present examination, the matters relating to telephone debtors of the Postmaster-General’s Department, referred to in Chapter II of the report, might have passed unnoticed.

In regard to telephone debtors we found that, commencing in 1960, the Department had taken a decision to abolish the system whereby telephone services were transferred from one subscriber to another. In making the change, however, the Department failed to collect telephone rentals in advance from successive subscribers to the service. Your Committee is of the opinion that, in setting aside this important principle which has characterised Post Office services generally over many years, the Department lost its valuable deterrent against defaulting subscribers, permitted accounts to be established without the protection of any prepayments, and placed an undue strain on the resources of the Commonwealth Police Force and the Crown Solicitor’s Office due to their involvement in the recovery processes.

The other matter of major importance to which I would refer, arising from this report is your Committee’s inquiry into the financial statements of the Defence Forces Retirement Benefits Board and the Superannuation Board. This aspect of the inquiry, which showed that for many years these boards have operated under considerable difficulties occasioned by large fluctuations of work loads arising mainly from changes in legislation and pay codes, enabled your Committee to undertake a thorough examination of the circumstances of the boards. We feel that apart from dealing with the problems of immediate concern, this chapter of the report will be of considerable interest to honorable members and to those sections of the community which have a direct and continuing interest in the operations of both boards.

Ordered that the paper be printed.

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Report of Public Works Committee


– In accordance with the provisions of the Public Works Committee Act 1913-1960 I present the report relating to the following proposed work -

Provision of engineering services to Casuarina subdivision, Darwin, Northern Territory.

Ordered to be printed.

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Motion (by Mr. Fairhall) agreed to -

That the House, at its rising, adjourn until Tuesday, 27th April, at 2.30 p.m.

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Bill presented by Mr. McMahon, and read a first time.

Second Reading

Minister for Labour and National Service · Lowe · LP

I move -

That the Bill be now read a second time.

The Bill now before the House puts into effect proposals which I explained in some detail in a statement I made here on 11th November last. It was pointed out then that the Government had been considering proposals by the Australian Council of Trade Unions. These proposals related to the sanctions provisions contained in sections 109 and 111 of the Conciliation and Arbitration Act. I also considered the views of the national employers’ organisations. Sections 109 and 111 enable the Commonweath Industrial Court to enjoin breaches of awards or order compliance with awards and to deal with contempt of its orders.

During the course of the November speech a number of propositions were stated: First, sanctions are an essential part of our arbitration system in one form or another. The Government has no intention of removing them. Secondly, proceedings before the Commonwealth Industrial Court under sections 109 and 111 should be used only as a last resort. Thirdly, the Government wishes, in its positive approach to industrial relations to encourage responsible discussions between the parties when claims are made, and wants to encourage the parties to take full advantage of the conciliation machinery provided in the Conciliation and Arbitration Act. It is axiomatic that conciliation is to be preferred to arbitration. These propositions are equally valid today.

I think it is necessary that we keep the sanctions provisions of our legislation in perspective. In fact they have a minor place, if an inevitable and necessary one. Let me demonstrate this. Over the last fifteen years the time lost by every wage and salary earner in Australia has averaged just under 21/2 hours a year. Of course, there have been fluctuations. Last year, the figures showed a worse record than the previous seven years. Of course the record in some industries is well above the average of industry at large. The stevedoring industry is a notoriously bad example of an atypical performance.

The following sets of figures covering the last fifteen years illustrate the extent to which the sanctions provisions have been used: The number of strikes per annum has averaged 1248 and the number of applications under section 109, and its predecessor section 29, have averaged 26. To carry the illustration still further, the number of orders made absolute on applications under the sections I have mentioned has averaged 14. Now, it is difficult to argue from these figures that there has been an excessive resort to sanctions. The figures relating to sanctions are, of course, confined to proceedings under our Act whereas the loss of man hours and strike figures relate to all jurisdictions, Commonwealth and State. Even when account is taken of this, the point still stands.

I have no hesitation in saying that the unions have the right to try to improve the wages and conditions of employment of their members. Accepting this, there must be a limit to the kind of industrial action a sophisticated community like ours can be expected to tolerate. This is particularly so where there is highly developed machinery for determining wages and conditions of employment. In some cases real grievances have existed. Most cases which have led ultimately to resort to the sanctions provisions have involved claims for more than the award provided. There have been cases where advantage has been taken of the shortage of labour to make irresponsible and excessive demands. In other cases industrial issues have been the cloak for the promotion of dubious political objectives. lt is not surprising that, faced with some situations, employers have felt obliged to resort to the sanctions provisions. I often hear the argument that the mere resort to the sanctions provisions, let alone their existence, contributes to industrial unrest. This is the type of propaganda which seeks to confuse the symptom with the illness. What is necessary is that an attempt should be made to cure the illness. It will not be denied that in some industrial disputes individual employers have failed to show the wisdom of Solomon. Even Solomon would not have sustained his reputation if he had had to deal with the thorny problems which arise in the field of industrial relations.

As a Government, faced with the responsibility of protecting the community’s interest, our problem has been to seek a solution which will, first, encourage responsible discussions when claims are made and, as necessary, resort to the conciliation machinery provided for by the Conciliation and Arbitration Act; secondly, therefore reduce the risks of work stoppages; and thirdly, therefore reduce the need for resort to sanctions.

Let me make it clear that the Bill is based on the assumption that reasonable people should act responsibly. Conciliation can only function in these circumstances and whether or not it is between the parties directly concerned or is done with the aid of a conciliator. Of course conciliation involving the most responsible people may lead to stalemate. It may lead to a stalemate because there is no infallible reason why claims should always be conceded in whole or in part. If there is merit in the claim then there is a reason for meeting it in whole or in part.

This Bill deals only with a situation where a breach of an award has not occurred. If one side or the other has decided, in effect, to take the law into its own hands it must take the consequences. The consequences of such actions are those for which the existing legislation provides. In contrast, if there is a claim with the threat of a strike or some other form of direct action but not an actual breach, this Bill will apply. It says in effect that the Commonwealth Industrial Court cannot commence to hear an application for an injunction against somebody from committing a breach or non-observance of an award unless it is satisfied that three conditions have been fulfilled.

The first condition is that the Conciliation and Arbitration Commission has been notified that a breach or non-observance is likely to occur. The second is that that notification was given without delay or, where there is delay, the Commission has certified that there is reasonable cause for it. We do not base our thinking on the assumption that where an argument starts the employer must immediately notify the Commission. The employer may very well consider that given the opportunity for discussion with the union the threatened breach will not eventuate. With this in mind, if the employer commences discussions and they are abortive, then the employer should not be denied his remedy simply because he has failed to notify the Commission when the matter first arose. This is the sort of situation in which the Commission would certify that there was reasonable cause for the delay in giving the notification.

The third condition is that a period of fourteen days or such longer period as the Commission has determined must elapse since the notification was given to the Commission. What is in mind is that if the Commission in its conciliation function felt that it was possible to settle the dispute it would clearly be sensible to allow the necessary extra time. In this situation, the Commission would doubtless expect assurances of sensible behaviour on both sides and particularly so that work would proceed.

The Bill does not place any obligation on the Commission to act in a particular way. As I have said the Commission’s function will largely be one of conciliation. It could be that the Commission is so well informed of the circumstances it can draw the conclusion that there is nothing useful it can do. In some circumstances, it could be that the situation would justify the exercise of an arbitral function. To this third condition there is a proviso. It is that the period of fourteen days shall not apply if the applicant for the injunction is able to satisfy the Industrial Court that the breach or nonobservance is likely to occur within the next ten days. This proviso is another aspect of what I said a moment ago - that what we are trying to do is to provide for reasonable people behaving responsibly. If a union has no intention of giving any opportunity for conciliation, whether outside, or with the assistance of, the Commission, then the employer against whom the threat is made should not be deprived of his remedy.

Honorable members will notice that the Bill places no compulsion on a party to notify the Conciliation and Arbitration Commission at all. If the party does not, then of course he cannot secure an injunction against the threatened breach or nonobservance of the award. When in fact there is a breach, the party aggrieved will have the remedy of an injunction against continued breach or a mandamus to observe the award. In this case a party taking action under section 109 for such an injunction or mandamus will not be entitled to his costs. This will be covered by regulation under provisions included in the Bill relating to the making of regulations as to costs. It will be an incentive to notify the Commission of any threatened breach.

While on the subject of costs - and clauses 8 and 14 are relevant - it is proposed, when the regulations are being made, to provide first, that in order that a party should be encouraged to make the maximum use of the processes of conciliation as envisaged by this Bill, no costs will be allowed where action is taken under section 109 in respect of a threatened breach and the breach does not take place. Secondly, it is also proposed that costs of representation in relation to proceedings under sections 109 and 111 will be limited to junior counsel unless the Industrial Court considers that issues of such a nature are involved that the use of senior counsel is justified. These proposals as to costs should be seen as an integral part of our approach to the whole problem.

If matters get to the contempt stage then clearly the party in contempt should carry the full responsibility. Our proposals limiting costs to those of junior counsel, except where special circumstances exist, are based on our study of past practice. They will remove any justification for the argument that costs of sanctions proceedings have been deliberately inflated by use of senior counsel.

It may be said that the provisions of the Bill do no more than lay down the sort of practice that is followed by those employers and unions who now behave responsibly. Our objective is that this legislation will provide the opportunity for all employers and all unions to behave more responsibly. The Bill seeks to remove obstacles, either real or imaginary, in the way of the Act’s functioning in accordance with its expressed objectives contained in section 2 of the Act. It will expand the opportunities for those genuinely interested in the conduct of industrial relations to pursue and protect their interests in a spirit of responsibility. No comfort will he found in this Bill by those in the industrial relations area who advocate or resort to direct action for the achievement of their claims.

I have now dealt with the principal provisions of the Bill; that is to say, the provisions that appear in clauses 6, 8 and 14. The Bill also tidies up certain provisions of the legislation and deals with some procedural problems. I need Only refer to some of these. Clause 3 and clauses 9 to 12 deal with the Inspectorate under the Conciliation and Arbitration Act and facilitate the recovery of sums due under awards. We have inspectors who are officers of my Department and we have arrangements with some of the States under which State labour inspectors perform inspection functions under our legislation. The Bill takes power to enable the Minister for Labour and National Service to authorise officers of the Public Service of the Commonwealth other than of my Department to perform the duties of an inspector under the Act. There may be situations, for example, in the Northern Territory where it would be much more convenient to use officers of the Department of Territories as inspectors rather than have officers of my Department stationed there. This would, of course, involve agreement with the Minister concerned.

The Act, as it now stands, prevents inspectors taking action in respect of a breach of an award, including recovery of wages if proceedings are not commenced within six months of the breach of an award. In complicated cases this is sometimes too short a period to allow inspectors to complete their investigations. So the amendment made by clause 9 will permit proceedings to be commenced at any time within twelve months after the commission of the breach.

The second provision to which I want to refer is found in clause 4. Under section 44a of the Act the President may, in the circumstances there described, constitute a joint session of the Commission where benches differently constituted have before them common matters for consideration. In short, as section 44a now stands, the President may for example, where one bench has been constituted to deal with a reference under section 34 and another bench to deal with an appeal under section 35, direct that there be a joint session of both benches to take evidence and hear argument that is common to both cases. The present provision does not authorise a joint session where matters under section 33 such as the basic wage are concurrently before the Commission with reference of appeals.

Honorable members will remember that in 1964 the President found a device for meeting this problem. In 1964 the basic wage bench was composed of four presidential members and the total wage bench of the same four presidential members and a lay commissioner. The lay commissioner sat in as an observer to hear argument that was common to both cases. This device met the circumstances; it was, however, contrived. The Bill’s provisions will enable this type of case to be dealt with without resort to such an artifice. They will also permit the President to constitute a joint session whenever there are matters common to different proceedings before different elements of the Commission and the President considers a joint session would facilitate the hearing and deliberations of these matters. This provision will facilitate the Commission’s work and should be welcomed not only on this account but also in saving the parties having to present the same case twice.

Debate (on motion by Mr. Webb) adjourned.

page 761


Bill presented by Mr. Opperman, and read a first time.

Second Reading

Minister for Immigration · Corio · LP

– I move -

That the Bill be now read a second time.

This is a short Bill designed to amend the Aliens Act 1947-59 to require aliens resident in Australia, in addition to their obligation to register initially under the Act, to notify the Department of Immigration annually, at a specified time, of their address, occupation and marital status. This requirement will replace the present obligation to notify a change of address or occupation within a specified time of any change in such details taking place.

The two main purposes of the Aliens Act, which was introduced in 1947, are, first, to ensure that the Commonwealth will have knowtedge of aliens in Australia, and, secondly, to provide basic data for analysis of Australia’s alien population to enable the Government to implement its immigration policy on sound and scientific lines.

The principal provisions of the legislation are -

  1. that a Register of Aliens shall be maintained in each State or Territory of the Commonwealth;
  2. that aliens shall be required to register;
  3. that a registered alien shall notify any change of address, or occupation, or if he marries; and
  4. that the Minister’s consent must be obtained before any alien may change his surname.

The Register of Aliens is complete so far as initial registrations are concerned, as these are effected under official supervision. However, the degree of failure to notify subsequently a change in address or occupation is high, despite endeavours to encourage compliance by aliens, and the introduction of procedures to facilitate the notification process. We have therefore been concerned for some time that the Register is far less accurate than is desirable, so far as the current address and occupation of the aliens are concerned. A recent exploratory check has confirmed this. However, to assess the degree of accuracy of the present Register would require a separate approach being made to each individual alien in the country. Apart from this there would be no other practicable method for establishing whether the addresses currently recorded are accurate or not. The requirement for an annual notification by every alien would provide a basis for an immediate check to be made with respect to those aliens who, having registered initially, fail subsequently to comply with the annual notification requirement. In this way follow-up action would be confined to actual defaulters; that is, those persons only who fail to comply with the annual notification requirement.

The Government considers that the replacement of the present ad hoc notification of changes of address and occupation as they occur by a system of annual notification by all aliens of these particulars, together with details of marital status, will result not only in a more accurate and uptodate Register of Aliens, but also that it will be a less onerous requirement for the aliens themselves, especially those who in their early years of residence frequently change their address.

It is proposed that the period in which annual notification would be required will be from 1st to 30th September in each year, with respect to any alien who was in Australia on 31st day of August that year. These dates will be prescribed by regulation. The necessity for the alien, after registering initially on arrival, subsequently to notify his address, occupation and marital status during a specified period each year would be the subject of wide publicity in advance of its being introduced. I commend the Bill to honorable members.

Debate (on motion by Mr. Daly) adjourned.

page 762


Bankruptcy - Purchase of Aircraft for Australian Airlines - Consent’ for Marriage of Persons under Marriageable Age - Army Land Holdings - Petrol Prices - Cigarette Smoking and Lung Cancer - Training of Operatives in Wool Industry.

Question proposed -

That grievances be noted.

East Sydney

.- I would like to put before the National

Parliament and the Attorney-General (Mr. Snedden) a matter which has relation to the Bankruptcy Act. I want to deal particularly with section 84 of that Act which deals with moneys to which employees of a bankrupt person are entitled for annual holidays, public holidays and long service leave. It is assumed that long service leave would be treated in the same manner as annual leave, and in this case a worker would be entitled only to long service leave accruing over a period of four months.

I bring this matter up because of the great concern that is being felt by employees in the building industry in New South Wales. One of the leading unions in the building industry, the Building Workers’ Industrial Union, which has 23,000 members in New South Wales, is most concerned about fly-by-night sub-contractors who go bankrupt leaving their employees holding the bag in the sense that they do not receive the money to which they are entitled. All that they receive is a very small amount indeed - up to about £50.

The Bankruptcy Act has been in operation since 1924 and there have been no amendments to section 84 of the Act although there have been 18 amendments to other sections of it. The number of cases of bankruptcy in Australia is increasing. The thirty-sixth annual report on bankruptcy issued by the Attorney-General to cover the period from 1st July 1963 to 30th June 1964 showed that in that period 2,678 persons in Australia went bankrupt. In New South Wales alone 116 persons connected with the building industry went bankrupt. These included brick, tile, cement and lime manufacturers and merchants, bricklayers, plasterers and masons, builders, builders’ merchants, carpenters and joiners, contractors, decorators, painters, plumbers and glaziers and labourers.

As I have said, the Building Workers’ Industrial Union is concerned about the situation in New South Wales, as is the Australian Council of Trade Unions. On one big construction job in New South Wales one of these fly-by-night subcontractors went broke, owing £700 to 14 employees, who could see no hope of getting any of that money. However, the Union conducted negotiations with the principal contractor, who made good the money. The Union is also greatly concerned about another fellow who was declared bankrupt, owing £20,000, and who is now handling the affairs of another company, the directors of which include the man’s wife and his brother. I think this is a matter that the Government should have a close look at and that the Government should make inquiries to see whether it can bring down legislation to protect employees in such circumstances so that they will be able to obtain money to which they are entitled, including payment for annual holidays and long service leave.

The Commercial Travellers’ Guild in New South Wales has also expressed concern about the situation. The secretary of the Guild wrote a letter to the Prime Minister (Sir Robert Menzies) about section 84 of the Bankruptcy Act on 10th February 1959. Although the letter was written six years ago, no attempt has been made to bring in legislation to amend section 84. In another place, a senator referred to a case in Western Australia in which money owing to employees amounted to £993 15s. Due to the operation of section 84 of the Bankruptcy Act the five employees involved received £21 between them.

I am sure that there are many other honorable members who are perturbed about this situation. It is about time the Government brought in legislation to protect employees in these circumstances. The Bankruptcy Act was first introduced in 1924. It was based on the English act of that time. In the ensuing period of 40 years we have had a recession, a world war and, according to the Government, prosperity. The Act has been amended on 18 occasions, but section 84 has remained unaltered. The British Parliament has made several amendments to the United Kingdom act, especially to that section which is equivalent to the section of the Australian Act that I have mentioned. An inquiry was conducted in England in 1957 and the amount stated in the priority section was increased to £200 sterling. In 1924 the basic wage was between £3 and £4 a week. Today it is approximately £15 8s. Commonwealth employees and most State employees receive three weeks annual leave. The New South Wales Labour Government has granted four weeks annual leave to its employees. So, the £50 mentioned in this Act would not cover even holiday pay.

The Act also provides that a claim in respect of long service leave or holiday pay is limited to the amount that may have accrued in a period of four months. This is definitely not enough. More protection should be provided for employees. The Government should ensure that employees are the first people to be paid amounts that are due to them. The Government should take immediate action. The Commercial Travellers Guild has submitted recommendations to the Prime Minister. The Australian Council of Trade Unions is discussing the matter and the Building Workers Industrial Union has made statements about its employees. I am sure that a very good case for amendment of the Act could be presented to the Government. I believe that section 84 could easily be amended to give greater protection to employees, who are being denied their right to receive payment for their services. People who have been working for any of these contractors for 10 years or so would lose a considerable amount of money through the bankruptcy of the contractor. The amount they can receive is limited by the Act to the amount that would accrue in a period of four months. This is ridiculous and it is about time that the Government amended the Act to afford protection to these people.

All the States agreed to the Companies Act of 1961-62 and the Commonwealth Government issued ordinances in respect of the Australian Capital Territory and the Northern Territory. This Act provides for a priority payment of wages to employees of £300. The amount varies in the States from £300 to £500. I say, as a member of the Opposition, that the workers in this country must be protected and should be paid all that they are entitled to receive. These fly by night contractors employ a lot of workers, get their pound of flesh and then find it easy to become bankrupt. The result is that the employees do not receive the amounts that are due to them. The employees need the protection of the Act and I ask the Government to amend it so that it gives the greatest possible protection to employees.

Mr. KILLEN (Moreton) [11.591.- I am sure my friend, the honorable member for East Sydney (Mr. Devine), would not expect me to comment in detail on the argument he has put to the House this morning. I simply say that I have been impressed with his sincerity on this matter. I am sure he will be interested to know that there is on the stocks, so to speak, a new draft Bankruptcy Bill. When that Bill will be presented is a matter of speculation, certainly for a private member. However, a very comprehensive report on bankruptcy was tendered to the Government I think some considerable time ago and I suppose, all in all, one may reasonably expect that a new Bankruptcy Bill will be presented to the House this year.

This morning I want to occupy the time of the House by saying a word or two about the buying of civil aircraft by the two major operators in Australia, Ansett-A.N.A. and Trans-Australia Airlines. Immediately, I want to express my very great concern that both of the Australian operators have shown a preference for the Douglas DC9 twin jet aircraft. - 1 want at the same time to express the hope that an opportunity will be presented to both of these companies to turn even now to the purchase of the BAC-1 1 1 . My philosophy towards life is, I hope, tolerably well known in this House. I would hope that nobody would be tinder any misapprehension about my belief that governments should stay out of matters of business. I hesitate to tender any advice to the Government to interfere in normal business operations where such interference is not necessary. But I believe that on this occasion there exists a very much pointedup state of affairs in which the Government should say quite firmly, and politely no doubt, to both Mr. Ansett and T.A.A. that they should buy the British aircraft, theBAC-1.11.

The British aircraft industry today is sick. If the Australian order for new aircraft is to be given on this occasion to the Douglas Aircraft Co. and not to the British Aircraft Corporation, an almost irreparable blow will be delivered to the British aircraft industry: People may say: “ You are dealing with matters of sentiment. You are not dealing with matters of hard business.” So be it. I will come to the matter of hard business in a moment. I think there is great danger in regarding the British aircraft industry as an industry that can be written off. If the Commonwealth of Nations and the Western world lose the skills that have been acquired by the British aircraft industry over a long period, in my judgment the Commonwealth of Nations will have been dealt a tremendous blow. No one regrets more than

I do that the British Government has found it necessary to suspend the development of the TSR2. But that is another matter and it is open to legitimate argument. In the matter of civil aircraft, there exists an overwhelming case against the purchase of the American aircraft on this occasion.

What of the merits of the two aircraft? I think that a person who says that the American aircraft, the DC9, is superior to the BAC-1 11 is standing on very shaky ground indeed. Of the 96 BAC-1 11 aircraft that have been sold or are under option of sale, 73 have gone to the United States of America. The United States, with its tremendous industrial capacity and know how, is buying 73 of these aircraft because, in the judgment of the airline operators concerned, it is a better aircraft. In my respectful submission, more experience has been had with the British aircraft than with the American aircraft. The British aircraft has been developed to the present stage for longer than the DC9 has. Let us consider the position of United Air Lines Inc. This is a very large airline operator and is one of the four largest airlines operating in the United States of America. It has placed an order for 30 short to medium haul BAC-1 1 1 aircraft to support the fleet of Boeing 727 aircraft that it presently operates. I am reliably informed that the British Aircraft Corporation has offered Trans-Australia Airlines a 96 seat version of the One-Eleven, at a price £300,000 cheaper than that of any aircraft that could be offered by its main competitor. This version, equipped with Rolls-Royce engines, is 5 per cent, cheaper to operate.

Let me turn now to the 7i per cent, margin of preference duty. If we make the immediate assumption that both the main operators in Australia would purchase the One-Eleven aircraft and that the 7i per cent, margin of preference would not be waived, this would mean a difference of approximately £500,000 between the cost of. the One-Eleven and that of the DC9. I would be very interested indeed to have somebody in the Establishment tell me how we can explain away a difference of £500,000 between the prices of two aircraft of comparable performance. If any person argues that their performance is not comparable, I would be very interested to hear his arguments.

Mr Howson:

– Can the honorable member give us the picture concerning the range of the two aircraft?


– I understand that the ranges are approximately the same. There is very little difference. In the Australian context, certainly, there would be no crucial difference between the field of operation of the DC9 and that of the One-Eleven.

If I may be allowed the impertinence, may I refer to what I thought at the time, and still think, was a very forthright speech made by a colleague who at one time sat on the back benches almost alongside me. On the occasion in question, he said -

I must say quite bluntly that, although I disagreed with the Government’s policy on aircraft buying before I went abroad, F have come back disagreeing with it even more strongly.

He went on to give various illustrations of his disagreement and he cited the case of the Government’s decision on the Caravelle aircraft. He went on to say that the fact that Tasman Empire Airways Ltd. had been forced - that was the word he used - to buy Electra aircraft represented, in his view, an anti-British move. The honorable gentleman proceeded then to say that he had discussed the matter in England with the Director of the Society of British Aircraft Constructors, who had told him -

The British aircraft industry believes that it could not sell a British aeroplane to Australia even if it had a diamond in every rivet hole.

My honorable friend, after further discussing the circumstances, stated -

This shows that what the Director of the Society of Aircraft Constructors in Britain said to me to the effect that British manufacturers believed they could not sell a British plane to Australia even if there was a diamond in every rivet hole has some strength in it.

Mr Galvin:

– Whom is the honorable member quoting?


– Be patient, please. The honorable gentleman continued - i do not say that we should always buy British aircraft. All 1 ask is that if things are even we should lean to Britain rather than to America.

I shall now relieve the anxiety of my friend, the honorable member for Kingston (Mr. Galvin), about who it was who said this. It was the very distinguished honorable member for Farrer (Mr. Fairbairn), who is now Minister for National Development. What I have read represents his views expressed as a private member. I am sorry that 1 have been put in a position in which I have had to recite those views. I hope that my honorable and gallant friend, when the matter comes before the Cabinet, will take the opportunity to recall the strength and rapture of his feelings when he sat almost alongside me on the back benches and put this case.

Sir, the Commonwealth of Nations today is desperately in need of a little more oneness, and we should take every available opportunity to achieve it. I believe that a very heavy blow would be dealt at the Commonwealth of Nations if Australian airline operators were now to scrub the BACIII and maintain a preference for United States aircraft. I hope that the Government will look at this matter very seriously, bearing in mind the value to the British aircraft industry of a decision by Australia to place orders with it.


.- Mr. Deputy Speaker, I am sure that every honorable member in this House agrees with advocacy by the honorable member for Moreton (Mr. Killen) of the purchase of more British aircraft by ( the Australian airline operators. I certainly would like to see more British aircraft bought.

Mr Duthie:

– We are already more or less regarded as the 51st State of the United States of America.


– That is’ so.

My mission in rising in this Grievance Day debate is to bring to the notice of the Parliament a matter that is causing concern to legal officers and magistrates, particularly in the Newcastle and Hunter Valley area. This matter concerns the Marriage Act 1961. The Bill for that Act caused great comment among people throughout Australia when it was introduced in this Parliament by the former honorable member for Parramatta, who is now Chief Justice of the High Court of Australia. I direct my remarks particularly to section 12 of the Act, which relates to the marriage of persons under marriageable age. Under the terms of that section, a magistrate or judge may, in his discretion, if the circumstances are so exceptional and unusual - those are the words that are the burning question - make an order authorising a person under marriageable age to marry a person of marriageable age.

Only one reported decision of the Supreme Court of New South Wales is available. I have a copy of it here. This decision was given in the case “ In re K. an infant “, which is reported in New South Wales Weekly Notes of 25th February 1964. This is the only reported decision available for the guidance of magistrates in determining what circumstances are “ so exceptional and unusual “ as to justify the granting of consent. The circumstances of this case were so unusual as to permit two quite rational interpretations of the decision. The first would support a ruling that only extremely unusual circumstances justify the granting of consent and that pregnancy alone is not a circumstance so exceptional and unusual. The second interpretation would justify a ruling that circumstances that appear to make the persons fit for married life and raise a presumption of the success of the marriage are sufficient circumstances.

These two so widely divergent attitudes adopted by magistrates in the Newcastle area are defeating what appears to be the intention of the Act in adopting uniform provisions and raising the marriageable age. It is not likely that the matter can be settled by the usual method of appeal and stated case, as no provision is made in the Act for an appeal or a rehearing of the kind provided for in section 17. Young persons applying for an order authorising them to marry cannot afford the heavy legal expense of an application to the Supreme Court. Ony because of the extremely unusual circumstances was application to that Court made in the reported case that I have mentioned. That case was heard by Mr. Justice Selby. It is unlikely that any further applications to the Supreme Court will be made, and therefore unlikely that our magistrates will receive any further guidance.

I believe that the Attorney-General (Mr. Snedden), who is now in the chamber, and the Attorney-General’s Department must have received requests to overcome this vagueness about what are circumstances so exceptional and unusual as to justify the granting of consent to a marriage. We all know that the wheels of democracy turn very slowly, but I hope that in the not too far distant future the Minister will see his way clear to clarify the situation and lay down some definition for the guidance of magistrates. I suggest to the AttorneyGeneral some apparent remedies for this situation. The first is to permit appeals against and rehearings of applications to marry which have been refused. It will be noted that under another section of the Act relating to refusal of consent by a parent of a minor of marriageable age there is a right of appeal from the decision of a magistrate who has refused an application.

Mr Reynolds:

– But there is a wait of six months.


– I understand that the Act provides that there must be a six months wait. Another remedy would be provided if the Attorney-General were to define circumstances which are so exceptional or unusual as to justify the grant of an application. Another means would be to remove the section of the Act, thus making a complete bar to the marriage of persons under the prescribed age. This step would be closely in line with the views expressed by magistrates. They take the stringent view that circumstances which are in the meaning of the section exceptional and unusual are so rare as to be almost non-existent.

Several sad cases that have arisen under this Act have been referred to me by my constituents in the electorate of Hunter. One was a case some 18 months ago in which a boy aged 17 i years and a girl aged 18 years and 3 months had been courting for about 18 months when the girl became pregnant. The old sectarian serpent raised its head again, as unfortunately it does in our community. The honorable member for Kingsford Smith (Mr. Curtin) is laughing, but he knows how true those words are. The girl’s parents refused to allow her to marry the boy because of a difference in religion and the boy stated his intention to apply to the court. The girl’s parents, who held very strong views because the boy was of a different faith, engaged a barrister to represent them in court. The magistrate refused to give the devoted young couple the right to marry. The couple then applied for a rehearing, but the barrister successfully took a legal point and the judge, in his wisdom, delayed the hearing of the case. In the meantime the boy turned 18 and the permission of the court was not necessary. In my view the court’s decision was unjust. If this unfortunate girl had committed suicide because of worry or the stigma that is placed by some people in our community on illegitimacy, I believe that religion would have been responsible for her death. I believe that a broader view should be taken by leading clerics in regard to mixed marriages. 1 hope that the Attorney-General will give serious consideration to what I have said.


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


.-! take this opportunity on Grievance Day to register once again my very strong protest and to express my great concern about the proposal of the Department of the Army to develop further building projects at Georges Heights on Middle Head in my electorate. In this protest I am not criticising the Minister for the Army (Dr. Forbes), because I am fully aware of his sympathetic appreciation of the matter upon which I am about to speak. I am protesting not only on behalf of the people in the electorate of Warringah and the people of Sydney but also on behalf of all Australians who have love in their hearts for our priceless scenic heritage such as is provided by the rugged headlands and foreshores of Sydney. I believe that these are regions of unique natural beauty of world renown. They, to wax rather poetical, are part of the scenic crown jewels of Australia. 1 have received many letters and telephone calls protesting against the Army’s intention. All protests emphasise the necessity to preserve the headlands and foreshores of Sydney Harbour in their wild state. I emphasise that this is just as important to millions of Australians as the enhancement of the national capital as a symbol of national pride. I am very firm in my conviction that the Federal Government should hold this land on the foreshores of Sydney Harbour as a trustee for the Australian people or, in accordance with the required procedures, should pass it over to the New South Wales Government so that it may be preserved as a national park. In that case, of course, it would be necessary to establish a trust in respect of the area. I am appalled at the building development that has already taken place on Middle Head. It has scarred and is destroying the wild and natural beauty of the area.

As an example of what I mean by the disfiguration and damage that is being done to Middle Head, I refer to the caption which appeared under some photographs in the “ Mosman Daily “ of 2nd April and which graphically illustrate the Army’s use - of Middle Head’s dilapidated Army homes, decaying huts, disused barracks, neglected parade grounds. . . .

Yet the Army proposes to build more of these units which means that one of the most beautiful headlands in the world is to be further despoiled, disfigured and damaged. The pictures in the newspaper tell their own depressing story. The entrance to Sydney through the heads, as you well know, Mr. Deputy Speaker, is an impressive sight which is enjoyed by thousands of tourists who come to Australia. They are immediately impressed by the grandeur of the headlands, by the majestic foreshores which are lapped by the waves rolling in through the heads. It is a magnificent and breathtaking entry to Sydney. For goodness sake, let us preserve this one good entry to Sydney in all its magnificence to compensate in a very large measure for the Mascot Airport goat track. The delightful headland area is viewed also by many thousands of pleasure seekers who man about 1,300 yachts and innumerable other small craft on Sydney Harbour during the summer months. It is viewed also by the many thousands of ferry travellers. But all this wild and natural beauty, this scenic grandeur to which I am referring, is diminishing. This great heritage is being lost to the community as a result of what in my opinion is an indiscriminate and unplanned use of the headlands by the Defence Services.

Last Friday I took a ferry trip to Manly just to refresh my memory of the way in which Middle Head, just to mention one example, is being butchered. Immediately, I was disturbed to see the power and telephone lines, with their leaning posts, on the skyline. They certainly presented an image of ugliness. As a matter of fact, power and telephone lines should not be seen on the skyline; in my view, they should be buried. Then I noted a row of unsightly barrack-like huts which, for all the world, had the appearance of a penal settlement. On the slopes of Middle Head I saw cheap, unpretentious Service houses peeping rather self-consciously through the green foliage. They presented a general picture of depression of this wonderful headland area.

I cannot agree with the Minister for the Army when he says that the erection of houses at George’s Heights is designed to promote the attractions of the Army. Obviously, these houses would not be for other ranks; they could only be for officers - and only a few officers at that. I am particularly disturbed to note that in a public statement the Minister said that 11 houses would be built on the ridge of Middle Head. Even the very best architecture and the most imaginative landscaping will not hide the butchery of the natural beauty of this area.

In my view - and I presume, in the view of legions of other people in Australia - the Army has no business to be on these headlands which face the Sydney Heads. Surely the Army is not there for any defence purpose. In the days of cannons, no doubt it was of some defence value to have the Army on the headlands; for instance, to guard the Heads against expected Russian attack. I understand that history tells us that. But, of course, the only Russian activity has been not an attack but a friendly visit by a Russian whaling fleet which came into the harbour yesterday.* I am certain that the Russians were very impressed with what they saw. In this space age, surely it must be absolutely useless to have the Army on the headlands for the original purpose.

No-one denies that Service personnel should be well and effectively housed. The Minister is well aware of my concern in that regard. But why does the Army not seek to acquire alternative sites in residential areas? Why does it not acquire home unit accommodation in suburbs such as Mosman, Cremorne, Neutral Bay and Manly. Surely these alternatives are well worth considering as propositions which would preserve headland and foreshore areas which could be’ converted into national parks for the people of Australia.

In my opinion, the arguments in favour of preserving the headlands in their natural state are compelling and unanswerable. They may be summarised as follows: First, the headlands are an integral part of the scenic beauty of the harbour. Secondly, the need to preserve open spaces close to the city for the inspiration and creative activities of future generations is urgent when we consider that in 35 years’ time, at the present rate of population growth, 5 million people will be residing in Sydney. Thirdly, I suggest that the Federal Government has a responsibility to the people of Australia to preserve the nation’s priceless scenic assets.

I conclude by reiterating my protest against further building and facility development of the headlands around Sydney Harbour by the Service departments. I suggest that the Commonwealth consider transferring the headlands to the New South Wales Government so that they can be preserved as national parks and recreation areas for the benefit of the people of Australia.


.- At the outset 1 express my wholehearted support of the remarks made by the honorable member for Hunter (Mr. James) about the very great social problem in respect of minors being permitted to marry. The legislation, as it stands, is quite vague. It has caused considerable distress in a number of cases that have been brought to my notice. I hope that the honorable member’s words will not go unheeded by the AttorneyGeneral (Mr. Snedden).

This morning, as I listened to the Canberra commercial radio station, I heard yet another advertisement by the Country Party indicating its policy points for the forthcoming State election in New South Wales. As usual, the advertisement made great play on the Country Party’s policy of decentralisation.

Mr Turnbull:

– Hear, hear!


– “ Hear, hear!” say the members of the Country Party who are in the chamber at present. But I merely ask the electors of New South Wales, particularly those in country areas, to be mindful, when they hear these enticing words and seductive phrases, of what this Commonwealth Government has and has not done to help the decentralisation of industry and population. In particular, I ask them to remember a promise that was made during the last House of Representatives election campaign.

Mr Nixon:

Mr. Deputy Speaker, I raise a point of order. Is this the place where a Labour member of this Parliament should engage in electoral propaganda?


– Order! There is no substance at all in the point of order.


– I can understand the sensitivity of the honorable member for Gippsland (Mr. Nixon), who is a member of the Country Party. Probably he can foresee that I intend to refer to the 16$ months’ delay so far in introducing legislation to implement a major promise that was made by the Federal Liberal-Country Party Government in the last House of Representatives election campaign in respect of petrol prices in country areas. A promise was solemnly made that the price of petrol in country areas would not be more than 4d. a gallon more than city prices.

Mr Wentworth:

– What about the eastern suburbs railway?


– 1 can understand the honorable member’s sensitivity. It is clear evidence of his consciousness of the Commonwealth Government’s neglect of country people in the field of decentralisation. 1 am talking not about creating something in the country but about a matter of administration, namely bringing about a nearequalisation of petrol prices. Of course, I do not need to emphasise the significance of such legislation in attracting people to country areas, in facilitating the establishment of industries in country areas and in reducing transport costs.

Of course, we remember that this promise, which was made principally at the instigation of the Country Party, was made to counter the Labour Party’s promise to bring about not just a differential of 4d. a gallon but the equalisation of petrol prices everywhere. I have mentioned that point this morning in order to help people who might be inclined to listen to the seductive words of Country Party advertisements about decentralisation. As a matter of fact, where Country Party governments have existed in their own right or in conjunction with the Liberal Party, there has been a gross lack of decentralisation. South Aus tralia is a case in point, In that State about 60 per cent, of the population lives in the metropolitan area of Adelaide.

I turn now to the principal matter about which I want to speak this morning, namely this Government’s failure to give any leadership in the matter of education of the public on smoking and its alleged association with the incidence of cancer. In comparatively recent months we have seen how the British Labour Government has set about attacking this problem, first of all, by banning television advertisements on behalf of cigarette companies, and how the United States Government, which is a Federal government like our own, is now taking action to require all cigarette packages and all advertising of cigarettes to bear a warning about the danger to health involved in smoking. These two leading Governments have taken action in this matter.

In a recent statement the Minister for Health (Mr. Swartz) said that the highest medical authorities in Great Britain and the United States had produced reports which established a definite link between cigarette smoking and lung cancer. What does this Government do about it? I have heard questions from members of the Country Party about the dangers of the introduction of foot and mouth disease and the need to enforce very stringent quarantine regulations in respect of animals coming to this country. It seems to me that the Government is more concerned about foot and mouth disease in cattle than it is about the incidence of the wretched scourge of throat and lung cancer in human beings.

Evidence of the highest order has been produced to indicate the high probability of a direct association between prolonged smoking and lung cancer. Those of us who in our public duties, and often in our private affairs, have to visit patients suffering from this disease in public hospitals must wonder how the Government can abdicate its responsibility in such a grave matter of public hygiene and public health. As a matter of interest, on 11th March 1964 in reply to a question asked by the honorable member for Kingston (Mr. Galvin) the Prime Minister (Sir Robert Menzies) said -

The Minister for Health has now informed aw that at a meeting in February

That is, in February 1964 - the Ministers of Health of the Commonwealth and the States were unanimous that the best results would be obtained by pursuing a policy of educating young people and it was decided to launch a campaign to publicise the health hazards of smoking.

Where is the campaign? Who has seen it? All I see when I get a chance to watch television is a saturated succession of seducements to cancer by the many and varied cigarette companies of this country. This, I would estimate, constitutes almost half of the advertising on television. I have not made any statistical analysis of the advertising, but I think anyone who watches it must ask why, if, as the Surgeon-General of the United States says, there is grave danger of cancer from smoking, the Australian Government, which raises £111 million annually in excise and customs duty from cigarettes, cigars and tobacco, sits by and does nothing to educate our young people, quite apart from our old people, about the grave scourge of cancer and the probability of its being caused by smoking.

If any kind of public disease raged in the community or if there were any grave deficiency in our public hygiene there would be an outcry for action; but here is something, involving millions of pounds, which is being proliferated throughout the community with not a word of leadership being given by this Government, which abdicates its responsibility by saying: “It is our job to put before the people the facts. It is up to them to do something about it”. Of course, the Government did not do this when it came to adding fluoride to the Canberra water supply. No fear; the Government took its own action. It thought that was a matter of public health which affected the people. However, in respect of smoking and its association with cancer, one becomes cynical and wonders whether the revenue which the Government gets from the tobacco industry is so great that the Government is not prepared to come out and publicise the grave dangers to the health of our community.

Mr Turnbull:

– What has the Australian Labour Party done about issuing a statement?


– Who has the funds to conduct a campaign - the New South Wales State Government, or the Common wealth Government which expects to raise £111 million this year alone in customs and excise on tobacco products? Within the next few months a public appeal, involving a door to door campaign, is being launched in Victoria to raise £500,000 to combat the scourge of cancer. While citizens in their generosity and public spiritedness will respond, the Commonwealth Government, which has all the funds necessary to try to educate public opinion, will do nothing about the problem. The Government has abdicated its responsibility and it deserves great censure for having done so.


.- One cannot but be amused by the honorable member for Barton (Mr. Reynolds). No doubt the policy speech of the Leader of the Australian Country Party in New South Wales has created so much interest that it has pricked the Australian Labour Party in a very tender spot. When one realises that the present New South Wales Labour Government has promised works costing more than £350 million for the metropolitan area and under £5 million for country areas, it gives the lie to accusations against the Country Party.

I want to deal with something far more important than the remarks of the honorable member for Barton. I refer to the importance of the training of operatives in Australia’s most important industry - the wool industry. I have spoken at length on this topic in the House, and it is a matter of vital national importance. This is our most important industry. It is the industry on which our whole economy is based. But it is an industry in which no attempt has ever been made to train or to give standing to shearers and shed hands - the operatives in the industry. In the last few years we have seen tremendous increases in the flocks throughout the Commonwealth, yet a decrease in the number of shearers. Our export income depends largely on wool. The importance of earning export income and of increasing our export income has been highlighted by the actions of the United States and British Governments in trying to limit the flow of capital from those countries. If we are to develop this country and make it industrially strong, which we must do if we are to hold it, we must increase our exports. For many years to come we will depend on our primary industries to produce export income.

In my electorate there has been a move to establish a shearing school. This will be in the nature of a pilot school and will be on similar lines to voluntary schools which have been conducted by graziers throughout New South Wales for some time. The move is being supported by the industry. Land is already available and sufficient sheep have been promised. The Graziers Association of New South Wales has promised funds to build the shearing shed. Shearing contractors are behind the move and have guaranteed to supply some students. Grazcos Cooperative Ltd., that large co-operative shearing company, has guaranteed two students for each course. The New South Wales Department of Technical Education is interested and is behind the move. I point out that despite the expansion of support by the Commonwealth Government for education, no allocation of funds has been made to this industry. There are no technical scholarships for the training of shearers or shed hands.

It has been estimated that 2,000 new shearers enter the industry every year but only a few over 1,000 remain after two years, mainly because they have to teach themselves to shear and they are not efficient at it. It has been estimated also by reliable sources that bad shearing costs this industry and the Commonwealth about £200 per shearer per annum in second cuts and in breaking of fleeces, making classing more difficult. The primary producers have shown their usual independence by going a long way towards setting up this school, but they seek Federal Government support in the form of a subsidy or scholarships. If we are able to train the men and give them some certificate of qualification it will increase their standing in the community. This is a highly skilled occupation and we are getting better types of men into it. Most of the men entering this industry will be drawn from the ranks of those who cannot afford to pay high education fees. It is proposed to pay living away from home allowances to provide for the keep of the men and to give them some spending money. A course will last about six weeks and £10 to £1 2 a week should be sufficient to cover the cost to each student. We are not asking the Government to consider providing heavy expenditure in supporting this industry, but it is an industry which is vital to Australia’s economy.


– It is now 15 minutes to 1 o’clock and in accordance with Standing Order No. 106 the debate is interrupted and I put the question -

That grievances be noted.

Question resolved in the affirmative.

Sirring suspended from 12.45 to 2.15

page 771


Ministerial Statement

Debate resumed from 1st April (vide page 551), on motion by Sir Robert Menzies -

That the House take note of the following papers -

United States of America Balance of Payments Programme - Letters, dated 12th and 24th March 1965, exchanged between the Prime Minister and the President of the United States of America

United States of America Balance of Payments Programme - Ministerial Statement, 1st April 1965.

Suspension of Standing Orders

Motion (by Mr. Fairhall) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent the Treasurer (Mr. Harold Holt) and the Leader of the Opposition (Mr. Calwell) each speaking without limitation of time.

Leader of the Opposition · Melbourne

Mr. Speaker, I thank the House for its generosity. I will not abuse its hospitality. The House has before it two documents of equal interest if, perhaps, of unequal significance. The two documents are the letter of the Prime Minister (Sir Robert Menzies) to the President of the United States of America, and the President’s reply. The Prime Minister’s letter expresses the Government’s concern that the American Government’s measures to improve the United States balance of payments position will harm the Australian economy. In his reply, the President expressed some sympathy for Australia’s position but holds out little hope for any radical change of American policy in our favour.

By far the more significant of these two documents is the Prime Minister’s letter, lt is significant because it is one of the most complete confessions of failure of national policy that the head of any government has ever publicly written to another. It is significant as a diagnosis of the many avoidable ills now ailing Australia’s economy but it is a diagnosis without a prescription. It is significant as an admission of the validity of the arguments about overseas investment that the Australian Labour Party has been urging for the past decade; and it is significant as a revelation of this Government’s apparent inability to see the point of a problem and of its incapacity to do anything about the problems facing the nation.

The first point I want to make - I will repeat it again and again so that it is fixed indelibly in the minds of members of this Parliament and, more importantly, members of the public - is that the Prime Minister’s letter really says little and can solve nothing. lt can produce no long term solution because it does not face the real problem. Even if the letter achieved everything that the Prime Minister wants it to achieve, this would not, solve the real problem.

What is the real problem? The problem is Australia’s increasing and dangerous dependence on foreign investment. The problem is, in the words of the Deputy Prime Minister (Mr. McEwen) that “ we are selling a bit of the farm year by year in order to live “. The problem is that this Government tries to meet its balance of payments difficulties by permanent disposal of natural assets to pay for short term items. This is the real problem. The Prime Minister’s letter shows that, at last, his Government must realise it, although it is never specifically stated in such terms. But though he implicitly poses this problem in his letter, the problem he explicitly states is exactly the opposite. He does not face up to realities. The Prime Minister does not want to grapple with the situation as to how we can become less dependent upon overseas capital. He asks the President, in effect, to help us to continue to be dependent - indeed, to become even more dependent - upon overseas capital.

That is why the Prime Minister’s letter can solve nothing: Because no matter how favorable the President’s reply might have been, it would have done nothing towards solving the long term problem of relieving Australia’s dependence on overseas capital. And, of course, read into it as much as one likes, the President’s reply is not particularly favorable, even as a short term answer to the short term question asked by the Prime Minister. If it is unfair to the Prime Minister to say that he has received the polite brush-off, it is fair to say that he has received, in the courteous way that we would expect from our American friends and allies, a polite warning to put his house in order. The President is saying that he can see no reason why Australia should receive a special dispensation and he makes it quite clear that while his Administration is willing to give “ a careful hearing “ to “ any particular case “ on “ specific actions “ that might harm us, he is not prepared to underwrite the Menzies Government in the rake’s progress of overseas borrowing that it has indulged in over the past 15 years.

I repeat that even if the President had given the most complete and detailed assurances that there would be no lessening of the flow of American capital into Australia, such assurances would do nothing to solve the basic problem of Australia’s reliance on foreign capital inflow. I repeat, also, that we are relying on capital inflow, not to develop, but to live from year to year, from month to month, and from day to day. This is the problem. This, is the problem as stated by the Opposition for years. This is the problem as stated again and again by the Deputy Prime Minister and Leader of the Country Party and by responsible people outside this Parliament.

Mr Harold Holt:

– You know that you misrepresent the Deputy Prime Minister.


– ‘I do not misrepresent him. If he thinks I do he will stand up and say so. He has repeated in this House the words I have just used. He has made that statement time and again. He has completely contradicted the Treasurer (Mr. Harold Holt), whose policy is that of the Prime Minister - let us get money wherever we can, even if we have to get roubles from Russia, yuan from Communist China or yen from Japan; let us have the lot. That is the Treasurer’s policy. The existence of the problem to which I was referring has always been denied by the Treasurer. This is the problem which every word in the Prime Minister’s letter poses, whether its author realises it or not.

A fundamental difference between the attitudes shown in the two letters is that the President recognises that his prime responsibility is for the American economy and that the United States Administration has the right and the duty to act in what it considers its own essential interest. The President is first and last pro-American. It is time this Government showed itself to be equally first- and last pro-Australian. And it is time that the Government realised that our fate is in our own hands - that we must act and work for ourselves and stop hoping for someone else to pull the chestnuts out of the fire for us.

The Prime Minister’s letter flows from an action of the American President to correct difficulties in the United States balance of payments position. A country that does not take steps to remedy such a position allows its internal economy to be open to the threat of being overwhelmed by events outside. There can, of course, be differing views as to why the Americans have got themselves into this position. We can differ as to whether their policies of economic aid have been benevolent or self-interested and as to whether their military assistance has been as enlightened as it ought to be. But what we cannot argue about is that America was entitled to take steps to correct its balance of payments situation.

What has to be asked in this debate is surely this: Why has Australia not faced up to the reality of its balance of payments difficulties? We on this side of the House have averted time and time again to the dangers inherent in replying on the flow of foreign capital, whether from Britain, the United States or anywhere else, to bolster our international reserves.

Mr Chipp:

– What would the honorable member do?


– I am waiting for you to plead guilty. The Government has always appeared to be gratified about the level of its international reserves and never concerned as to how they were in fact obtained.

BeforeI go further, I wish to state, once more, in general terms, the policy of the Labour Party towards overseas investment. Perhaps the honorable member for Higinbotham (Mr. Chipp) anticipated me slightly. I am not speaking only of American investment. 1 must make it clear that by foreign investment 1 mean capital that comes from Hong Kong, Japan, France, Germany, Italy, Holland, Britain, America or Timbuctoo - that is, anywhere overseas.

Our policy is this: We recognise Australia’s need, as a growing country, for some overseas capital. We welcome some forms of capital assistance for our development. We particularly welcome capital which brings with it the special advantages of research, know-how, and marketing methods new to us. But we do not, as the Government has done, welcome overseas capital uncritically. We believe, as the Treasurer himself was forced to admit here three weeks ago, that there are dangers associated with foreign capital. Unlike him, we believe it is the duty of the Government to take action to minimise and avoid as far as possible those dangers - the dangers that he realises. We believe it requires government initiative - direct and indirect - to ensure that all available capital, local and foreign, is directed into the most productive channels for the growth of Australia.

The warnings that the Australian Labour Party has given on the disadvantages of overseas investment, and the reasons we have given for some measure of regulation of the nature and direction of overseas investment, have been based on four grounds. Firstly, we have given the general warning that no nation can afford to pursue an economic policy which requires exploitation of key national assets in order to pay its way from year to year. Secondly, we have given a particular warning that the day would soon arrive when the outflow of capital in the form of dividends to foreign capitalists would equal or exceed (he inflow of new foreign investment. That day is arriving. Thirdly, we have sought Australian equity and Australian participation in the ownership of foreign owned companies. And fourthly, we have warned that as vital sectors of the economy came under foreign control, and as the reliance on the maintenance of capital inflow developed, then Australian industry and the Australian economy would be less and less determined by decisions made here in Australia, and more and more determined by decisions of companies, interests and governments overseas.

Each of these warnings is justified by every line in the Prime Minister’s letter. But, though the need for this letter proves that we were right, the Prime Minister is still unwilling to come to grips with the real problems at issue. He stated in his letter - we would be troubled and embarrassed if the United States investors were to begin repatriating capital, substantially increasing the proportion of profits remitted, or adding largely to their fixed interest borrowings or other forms of capital raising in Australia which gave Australian investors no equity share in the businesses in question.

The Prime Minister continued -

Developments such as these could very well force upon us the need to reconsider the policies we have hitherto followed in these areas.

Those are important words. I wonder if the Prime Minister even yet realises what a damning indictment of his Government’s indecisive policies that paragraph contains. He recognises at last that changes in policy by overseas companies or overseas governments, quite beyond our control, may embarrass the Australian economy. He further admits that we are at present powerless against such changes. And then, in a kind of gambler’s last throw, he declares that the Australian Government might actually be forced to develop some kind of policy for the protection of its own economy, unless somebody helps us out. Even at this late stage, even when the Prime Minister has to make a special plea to the United States Government not to be too difficult, he still does not seem to realise that action must be taken now. He still does not seem to realise that the situation that - to use his own words - “ would trouble and embarrass’” us is actually upon us. It is with us right now, and it is here to stay until a way out is found. It is our duty, not that of the United States, the United Kingdom, or any other country, to find the solutions to our problems.

In the last three years, 1962, 1963 and 1964, for instance, what the Commonwealth Statistician describes as “ Investment income payable overseas by companies in Australia “ was £97.6 million, £127.8 million and £133.2 million, respectively, against new “ direct investment “ of £78 million, £126.1 million and £131.7 million respectively. We are now a net exporter of capital. We seem to be reaching the point of no return.

From the text of the Prime Minister’s letter, it is apparent that he is more con cerned that the flow of capital from America will cease than about the situation that has been reached with America, in particular, although the facts of that situation are detailed in the letter. The Prime Minister’s letter was dated 12th March 1965, but in a sense he was not telling the President a thing about our position because the official United States publication “ Survey of Current Business “ for January 1965, in an article on the United States balance of payments, had noted -

Export gains by country were widespread throughout the world with especially large advances in shipments to the United Kingdom, Australia and South Africa.

And on the other side -

The reduction in meat imports resulted in substantial declines in imports from Australia and New Zealand in 1964.

In other words, the very things which our Prime Minister regards as bad have been regarded as good in the United States. Of course, the reason is obvious. The same article also went on to imply that the United States had already looked at another factor which the President has taken into account in his recent actions - the position of the reserves of international currency of various countries. It said -

Most ot the increases (of gold and foreign exchange) entered the reserves of continental European countries, mainly France, although reserves of Canada and Australia also rose notably.

In his reply, the President stated -

We intend to emphasise primarily the need to curb the outflow of such funds to industrialised countries already rich in reserves.

The President is clearly referring to countries of the kind which he believes Australia to be. The Prime Minister seems to rely on a special sympathy being extended to Australia because we lie in some special category between the developed and underdeveloped nations. The President is relying upon voluntary co-operation from investors and the American banking system. Unlike the case of direct government action, it will be extremely difficult to allow particular exceptions to the general rule. The proposal relies for its effectiveness on a clear understanding of a clearly defined policy.

The Prime Minister gives no inkling that he really understands the nature of the enterprise in which the President is engaged. It is to be hoped that the Treasurer will have comprehended all that is involved by the time he visits Washington and, maybe, when he goes on to London. I think he ought .to go on to London because the position of Australia in regard to Britain is just not as good as he seems to think, or as his advisers tell him it is. But whatever the results of his visit - we cannot be optimistic on this score - no real solution of the real problem will have been found. There will be no solution, and no move towards a solution, until the Government acts to reduce our dependence on foreign capital. Members of the Government sometimes speak as if it were almost impossible to raise capital within Australia. In fact, four-fifths of all new private capital expenditure here is Australian in origin. But in all too many cases, that one-fifth foreign capital has skimmed the cream of Australian industry, and picked the eyes out of investment opportunity, if I may change the metaphor. More importantly, foreign investment controls the most vital sectors of the economy.

At a recent symposium organised by the Melbourne Stock Exchange, Senator Gorton, a prominent Minister in this Government, dismissed the problem as of virtually no account, on the ground that only one quarter of Australian secondary industry was owned and controlled overseas. But replying to Senator Gorton, Mr. J. C. Wilson, a Managing Director of Australian Paper Mills, showed how superficial Senator Gorton’s approach really was - and Mr. Wilson is not a member of the Australian Labour Party; he is a strong supporter of the Liberal Party.

Mr. Wilson pointed out that almost all of that 25 per cent, was invested in key industries, and that absolutely vital industries such as petroleum refining, drugs, telecommunications, motor vehicle manufacture and oil exploration and production were almost 100 per cent, in overseas hands. The tragedy of this nation is that we have allowed ourselves to drift into a stage of dependency on foreign assistance to the extent that it has paralysed us from doing what we ought to do, and what we could do for ourselves.

Overseas research and know how is important, but that does not mean we should not be doing much more in this field ourselves and for ourselves. The rich private companies of this nation should be doing more, and the Government should be assisting industry to do more. We have allowed vast natural resources to be tied up for years and released for development only on terms dictated by overseas interests. These interests do not share our national aims and aspirations. Their only interest is to make profits on the grand scale and to make them quickly. The development of iron ore in Queensland, New South Wales and Western Australia, and the development of coal exports, are cases in point. The same thing threatens oil exploration and exploitation.

The Treasurer speaks as if we had only two choices - either to become a rich quarry to be mined for the profit of, and at the convenience of, foreign monopolists, or to allow our great natural resources to lie forever idle. If that sort of defeatist thinking had paralysed the Chifley Labour Government there would be no Snowy Mountains scheme today. In the implementation of that scheme we have used overseas skill and knowledge to the limit - but ownership, control and all the benefits remain, inalienably, in the hands of the people of Australia. We need a national development authority along those lines which will really get on with the job of developing our resources. In this task there is a place for both Australian private capital and for Government endeavour.

In his letter to the President, the Prime Minister describes Australia as a free enterprise economy. Unfortunately, there has been far too little enterprise on the part of Australian business. This, rather than shortage of local capital, is the reason why so many of our key industries - the most important as well as the most profitable - have fallen under the ownership and control of foreign interests. The entire strategy of encouraging and rewarding the enterprising, and penalising the inefficient, has been neglected by this Government because of its slavish adherence to outmoded laissez faire philosophies and its wilful refusal to institute genuine economic planning. The field of export credits has been equally neglected, and too slowly and unimaginatively developed. And the import policy of the Government also must be overhauled, if we are to live within our means.

These are the things that should have been done in the period this Government has held office. And these are the things that should be done now. Because they have not been done, we are now faced with an emergency which will be part of a chronically ill crisis until our domestic economy is developed on a soundly planned national basis. The degree of dependence this Government has allowed to be grafted on to our economy may be difficult to remove immediately but it is time to act now.

It is no more anti- American for us to take steps to remedy our balance of payments situation than it is anti-Australian for President Johnson to have done what he has done, lt is no more anti-British for us to act in assertion of our national interests than it is anti-Australian for the Chancellor of the Exchequer in Britain to have done the same for Britain. Our sister dominions, Canada and New Zealand, have taken legislative action to grapple with capital inflow. Why should Australia not so act? If the American curtailment of capital outflow is thought to be the real problem, then we will be viewing things through the wrong end of the telescope. This is only one aspect of the problem of our reliance on foreign capital, which in turn is only one aspect of our failure to develop a self-reliant economy. If the President’s action awakens the Government to the dangers of its present policy, then far from doing Australia harm, the President will have done us a tremendous service.

Treasurer · Higgins · LP

– I thank the House for the opportunity to discuss the important matter before us at rather greater length than is permissible under the Standing Orders. I hope that what I have to say is informative and not too tedious by its length. Seeing that I go abroad for discussions in Washington not merely as a member of this Government, but representing, I hope, Australia as a whole, it would have suited me personally better, and I think the purpose that we have in mind in common as fellow Australians, if the discussion today could have concentrated on what is in substance the motion before us. It will be recalled that when the Prime Minister (Sir Robert Menzies) tabled the exchange of correspondence between himself and the President of the United States of America, he did not comment on that correspondence at the time; but the Opposition indicated a wish to discuss the letters, and we were only too glad to provide that opportunity.

Rather than concentrate on the terms of the correspondence and what is directly implicit in it, the Leader of the Opposition (Mr. Calwell) has seen lit to deliver a speech on the policy of the Australian Labour Party on overseas investment in Australia. I do not begrudge him that opportunity. Indeed, I invited the Opposition to do this some time earlier in the session. The Leader of the Opposition having made a quite blatantly party political speech, a highly critical speech, much of it vague, most of it groundless, and a good deal of it emotional, it becomes necessary, before I get down to the particular matters which are raised in the correspondence with the President, and other matters which I feel it desirable to discuss while in Washington, to do a little ground clearing. I apologise if, in doing so, I find it necessary to introduce a fairly large quotation by myself. But I think it is as well to clear the ground on where the Government stands in relation to overseas investment and, I hope, to destroy on this occasion, so that I will not have to go on doing so, the misrepresentation about the position of myself and other members of the Government which has provided Opposition members with opportunity for a good deal of mischief and has served for them the purpose of allowing them to misrepresent to the public mind just where we stand on this very important question of policy.

I preface my remarks on this aspect of the subject by reminding the House that the Government is now in its 16th year and that throughout its term of office it has consistently pursued a policy of encouraging the inflow of capital from overseas for the development of this continent. We have been endeavouring to increase our population by an active and vigorously pursued programme of immigration - a programme supported on both sides of the House. Most sensible people realise that it is a corollary of this situation that as we bring more people in - and more than 2,250,000 immigrants have come here since the programme got under way - we encourage the inflow of capita] which will enable us to employ those people - to absorb them and to expand the economic base so that this process can go on. There has been a very happy association in harness of the capital which has come, to us from overseas and the people who have come to us from overseas. For honorable gentlemen opposite to deny virtue in this process would be absurd. I doubt that any of them, with the possible exception of the honorable member for Scullin (Mr. Peters) would deny that we have derived great national advantage from this capital inflow.

Mr Peters:

– I never denied that. Misrepresentation is your stock in trade.


– Well, I am glad to have the honorable gentleman’s assurance that he has not denied this. It makes the House unanimous in the belief that at least the nation has derived great advantage from the inflow of capital. The honorable gentleman talks about misrepresentation. I think I can claim to have experienced something of that myself. It was only three weeks ago that when I talked about some of the risks associated with capital inflow the honorable member for Yarra (Dr. J. F. Cairns) commented that this was the first time he had ever heard me say that I recognised that there were any risks. Again, today, the Leader of the Opposition has repeated that comment. In the course of his speech the Leader of the Opposition sought to make great play of what he alleged to be differences existing between members of the Government. Let us just try to clear the ground on this aspect of the matter for a moment or two. Let me turn, first, to a statement I made in 1963 when I was replying to some remarks of the Deputy Leader of the Opposition (Mr. Whitlam). The date of this statement was 12th July 1963. I shall not quote the full text of it, but it is available for any Opposition member who wants to see it. I said -

Over more recent years, the field of investment interest has widened with increased activity from the United States and a growing investment from Europe and Asia. Our post-war growth owes much to the strong flow of loans and funds from these sources. Investors have been attracted by the political stability they have found in this country and their assessment of its growth potential. Undoubtedly also, they have been attracted by an environment and economic climate favourable to private enterprise.

Capital goes where it is welcome and stays where it is well treated. Overseas interests which put capital into a country are themselves giving hostages. They become subject to our domestic policies, laws and tax systems. There is a worldwide shortage of capital for development pur poses. It has been Australia’s good fortune and great national advantage to have succeeded in attracting this large and continuous flow of investment funds against the competition of other developing countries, themselves offering all manner of inducements to secure the development capital they need. Capital inflow has been of great assistance to us over a period in which the terms of trade had moved heavily against us. It has enabled us to absorb our migrant intake. It has accelerated and vastly diversified our industrial expansion.

We have gained access to more resources, tha use of valuable techniques, the fruits of continuous research conducted overseas, new managerial vigour and sharpened competition.

Labour has little regard for overseas invest; ment. Some of its spokesmen are openly hostile to it. A Labour Government following methods implicit in Mr. Whitlam’s statement would inevitably produce doubts and hesitations amongst those already sensitive to the risks they run when they invest in another country. Confidence, once shaken, would not be easily restored.

Then followed the point that I am now leading to -

The Government is not unmindful of Australia’s risks and problems associated with overseas investment. There is, of course, the problem of servicing the interest payment on overseas loans or of financing the remittance abroad of profits earned in Australia. We have found ourselves the more comfortably able to meet these payments by the expansion of the nation’s industrial base so materially assisted by overseas investment.

Just pausing there, the problem of our national product and the level of our export income required to finance these obligations is no greater today than it was when the process began. In other words, we have expanded our economic base as the capital has come to us. My statement continued -

But there are other problems as well, including that of Australia’s participation in enterprise financed from overseas.

The Government has at all times made known its wish to see an effective partnership between those investing from overseas and Australian interests.

Australia remains a largely underdeveloped and underpopulated continent. We do not have unlimited time in which we are left free to populate our country, and exploit its resources. We can speed these processes by the additional resources which come to us from overseas. Whatever risks we accept in encouraging this investment on however substantial a scale, they are of minor order when set against the risks we run if we fail to populate and develop our country as speedily as we can.

I think that was a quite balanced account of the attitude, not only of myself, but also of the Government of which I am a member. I mentioned the date, 12th July 1963, and I direct the attention of the

House to the policy speech delivered by the Prime Minister (Sir Robert Menzies) on 12th November 1963. He spoke of investment from overseas, and the policy he enunciated was the policy which had been subscribed to by all members of the Government. I in my turn had been following, as Treasurer, the policy pursued during his nine years of office by my predecessor, the then Leader of the Country Party. We have pursued substantially the same policy since that time, and it was expressed in the policy speech made by the Prime Minister in 1963, when he said -

Investment from overseas countries has taken an important place in our economy. Over the last IS years it has amounted to over £1,500 million. This investment has produced great advantages, but under some circumstances produces problems which need to be handled with care and understanding. As, from a national Australian point of view, we would wish to see new capital from overseas employed for the great purpose of developing new industries or extending existing ones with all the benefit of overseas skills and experience, we will always have a particularly warm welcome for new capital designed to these ends. We also believe that fears and misunderstandings are least where there is an Australian participation in shareholding and management, and most when there fs no more than a mere change of ownership without more. There is, we believe, a growing recognition of this in the minds of intending investors.

The Terms of Reference to the Committee of Economic Enquiry include “Overseas investment in Australia (including likely sources and trends and an assessment of its significance to the Australian economy) “. The Committee’s findings will be of great value and interest.

I hope that is clear enough. That is where this Government stands and where all members on this side stand.

I come to another matter that I would like to get out of the way before turning to what might appear to be the more relevant matters before us this afternoon. The honorable gentleman said: “ The problem is Australia’s increasing and dangerous dependence on foreign investment “. This was probably one of those rhetorical phrases that come so easily from him. I do not know whether he had troubled to study the facts, but if he had done so he could not have made that statement. I have before me the table of total capital inflow into Australia for the latest complete five financial years - that is, 1959-60 to 1963-64 inclusive. The table gives these figures for the five years: £194.5 million, £253.3 million, £148.9 million, £222.5 million and £215 million. I think the feature that will strike most honorable members is how steady that inflow has been, coming as it has from a variety of sources. I repeat that, as a percentage of our export income and of our gross national product, it remains still within comfortable manageable proportions.

The honorable gentleman also spoke about the rake’s progress of our reliance on overseas borrowing. I do not think that is a very happy phrase to use about the Government of one’s country. Its representative is going abroad to discuss the country’s need for capital from the United States. Fortunately, I think that those in the United States who read his speech might not pay much more attention to it than we do. But is that a fair description of the Australian people? The fact is that we have established a remarkable savings record over the years in which this Government has been in office. Again I would like to quote some facts on this matter from the statistics published by the Organisation for Economic Co-operation and Development. Over the five years 1959-60 to 1963-64, gross investment expenditure in Australia, including that financed from overseas sources, amounted to 26 per cent, of gross national expenditure. The figures from the O.E.C.D. for the years 1958 to 1962 show that the corresponding proportion in the United States and the United Kingdom was 17 per cent., in Canada 22 per cent, and in the European Economic Community 24 per cent. Of total investment expenditure in Australia, about ninetenths has been financed out of domestic savings and about one-tenth from overseas sources.

Of course, it is true that in particular areas of industry the overseas investment is a good deal higher than that proportion would suggest. It is very high indeed in some sections of industry. But these are the industries that we have not been able to provide for ourselves. It has not been just a matter of capital; it has been a matter of know-how, of technique and of the knowledge of how to deal with these businesses. The opportunity has been there for Australian investment. I do not know how people in Australia’s secondary industries will react to the charge of the Leader of the Opposition that they have been lacking in enterprise. I think that the Australian entrepreneur, considering the size of the continent, the problems of transportation, the limited domestic market and the fact that we have not had these vast resources of equipment, capital and technique to draw upon, has done a remarkable job of building up Australian industry to a point where we can go out with many products now and compete on the markets of the world. So do not let us decry our own capacities or our own people. But we cannot do all that is necessary and it has suited us to take what assistance we can from this capital that has reached us from overseas.

Anyone with any common sense or any knowledge of these matters must know, as I certainly have known, that it would not be a comfortable, easy road all along the way; we would have our rocky passages and there would be times when inflow would fluctuate and fluctuate perhaps quite substantially. As against this, it has been the Australian experience that the companies established here have ploughed back a very considerable proportion of their Australian earnings, and no group of investors has done this more than have investors from the United States. Taking the inflow from 1947-48 to 1963-64 by domicile of investors, we find that the undistributed income is 41.2 per cent, in the case of the United States and Canada. That is quite the highest percentage of any of the countries listed with us and it shows that a very considerable proportion of the profits earned in Australia are ploughed back, giving additional employment and added industrial strength to the whole economy.

I have now completed what I may describe as a ground clearing operation and I turn to the matters that are covered in more detail in the correspondence. One of the substantial points we have made is that we have a great task of development and we have been assisted considerably in our tasks of growth by what has come to us from the United States of America. Last year, it amounted to 45 per cent, of the total intake of capital into this country. Now, because we now encounter some difficulty from the policy measures adopted by the United States, the Leader of the Opposition describes the letter of the Prime Minister as a confession of failure with national policy. He tells us that we seem to rely on some special sympathy from the United

States. We do not rely on special sympathy. Australia does not go, nor will I go, as a suppliant asking for some special consideration because we have some sort of a problem ourselves. There is a special relationship between this country and the United States. It is a relationship, so far as this part of the world is concerned anyhow, with a degree of interdependence. We can make, are making and will make a contribution to the strength and stability of this area, and this contributes very materially to the general policies that the United States has in this part of the world. That is well known. First, though, there is our trading relationship. We have proved ourselves to be a very satisfactory customer for United States products. The Prime Minister said this in his letter, pointing out that in the half year to December 1964 Australia’s recorded exports to the United States were 153.2 million dollars compared with 180.3 million dollars for the same period of 1963, a decline of 15 per cent., whereas Australia’s recorded imports from the United States increased as between these two periods from 273.7 million dollars to 392 million dollars, a rise of 43 per cent.

So we have with the United States a trading relationship that is very heavily in its favour. 1 am quite certain that it would not strike the Americans themselves as very sound policy to adopt economic measures that would reduce the capacity of their customers to continue to buy from them. Quite clearly, unless we can go ahead with our development and expansion at much the same pace as in the past, we shall not be able to make overseas purchases on the scale at which we have bought overseas in recent years.

The other aspect of the situation that I think is worth spending a moment or two on is the fact that, as is well known, the Australian Government has borrowed in New York on a number of occasions. We have raised loans from the International Bank for Reconstruction and Development, but, compared to our total borrowings within Australia, these sums have not been large. However, this borrowing has enabled us to make a very useful addition to our overseas resources and has assisted us in overcoming our budgetary problems. The Prime Minister, in his letter to President Johnson stated -

An additional consideration is that the Australian Government has commitments of nearly $200 million in the United States over the next five years in respect of debt maturities and sinking fund commitments. This figure is exclusive of instalment repayments of approximately $130 million due to the International Bank over that period.

One of the points of interest about our borrowings in New York is that these did not represent any drain on dollars supplied from within the United States, as the level of borrowing might suggest, because, in the result, about half the total came through New York from European investors. So, when we remit these repayments in full, we experience some drain ourselves and the dollar holdings of the United States build up. No doubt, those who hold bonds in Europe are able in turn to draw on dollars. But you would get a quite misleading picture of what we have drawn in New York from dollar supplies from within the U.S.A. if you took the overall figure. I believe, Sir, that there is a very strong case for Australia to be permitted access to the New York market without being subject to this interest equalisation tax. This would assist us in meeting these maturing loans and other commitments, the meeting of which will benefit the dollar earnings of the United States.

I discussed this matter with the Secretary of the Treasury in the United States of America when I was there last. At that time, special arrangements had been made to assist Canada. I did not seek exemption from the tax because I realised, as a result of my discussions in the United States, that this could embarrass that country in its relations with Japan, which are very important for both countries and also for Australia. Since that time, the United States has come to an arrangement with Japan that enables the latter country to have access to the American capital market to the extent of 100 million dollars a year. This is a new feature of the situation which, I think, we would find it proper to discuss when I am in Washington.

The other aspect of what I have described as a special relationship concerns the situation of Japan. In this area of the world are three powerful forces making for stability. First, we have the United States, which is a great Pacific power and the strongest economic and military force in the world today. Then there is Japan, which, year by year, is rising in importance its an industrial force in this part of the world.

Next, we, as suppliers of raw materials and foodstuffs to Japan, form an important element in this sort of triangular relationship. We normally have an unfavourable trade balance with the U.S.A. and Japan has a favourable trade balance with that country.We, in turn, have a favourable balance of trade with Japan. The growing prosperity of each of these three elements has a very definite bearing on the welfare of Japan and Australia. Also, we believe, our welfare is of material significance to the United States in relation to its international policies, particularly in South East Asia and Asia generally.

Finally, Sir, there is the very special relationship that derives from the fact that we are allies. Australia is an ally of the United States in the security treaty between Australia, New Zealand and the United States, which we know as the A.N.Z.U.S. Treaty, and in the South East Asia Treaty Organisation. We have been making a direct material contribution to the discharge of our obligations in both those alliances. Arising from our recognition of these obligations, we have recently committed ourselves to a considerably enlarged defence programme. We have virtually doubled our budgetary provision for defence. This, too, was mentioned by the Prime Minister in his letter to President Johnson, in these words -

Oversea expenditure in 1965-66 and later years arising from existing defence commitments and the new three years defence programme is estimated at about £400 million or the equivalent of about $880 million, of which about £250 million or some $550 million will relate to procurement in the United States. Although recent arrangements reached with you to phase payments for some major items over a longer period will ease the burden to some extent, it will still be considerable. At the time we undertook these commitments we had no reason to anticipate that our payments position vis-a-vis the United States would be altered for the worse by action of the kind you have since announced.

We believe that these circumstances put us in a special situation that justifies our having talks related to Australia’s economic programme and its bearing on the aspects of our relationship with the United States that I have mentioned. I am sure that these matters are well understood in Washington. I do not share the attitude of the Leader of the Opposition in this matter. T think we all felt encouraged by. the tone of the President’s letter and I, for my part, am quite optimistic that there will be a useful outcome from the talks that we will have.

Before I conclude, let me refer again to the speech made by the Leader of the Opposition when he talked about the President’s responsibility. As I recall it, he said that the President is first and last pro-American, that the President’s prime responsibility is for the American economy. But why did he not go on to say, what is undoubtedly the truth, that the President recognises the responsibility that he has from his high office and from the country he leads for a large influence on the economic well-being of the rest of the world. He will not take a course of action in the United States of America unmindful, reckless or regardless of the effects of that upon the rest of the world. But I do have apprehensions that the combined effects of the action taken in the United States of America and the action which the United Kingdom has felt it necessary to take in order to strengthen its own position - with these things coming together at the same time from the two reserve currencies of the world - can have quite serious repercussions around the rest of the world, not just on Australia but on the international economy as a whole. I hope in the course of talks in the United States of America to find out, not merely from officers of the Department of State but from the International Monetary Fund and from others, what view is taken of the consequences of these measures and what courses are being studied or are proposed in order to avoid any international recession which otherwise might develop out of action on this scale. There used to be a saying some years ago that if the United States sneezes the rest of the world gets pneumonia. We are rather more robust than that at the present time, but what happens in the United States still has a tremendous weight and significance on the world economy as a whole.

Finally, on that aspect I conclude by saying that our first and most direct interest in this matter lies in the effects the United States and United Kingdom measures could have on the net inflow of capital to Australia. Those two countries have been our main sources of overseas capital. They have both set out now to reduce substantially and rapidly the overall amount of net capital outflow from their respective coun tries and we are concerned, in the first place, with the particular impact that their actions could have on the amount of capital coming to Australia. Clearly, however, the situation has wider possibilities and must be seen in a wider context. As a major exporting country, we are vitally interested in the volume and value of world trade, especially trade in raw materials and foodstuffs. But one of the main factors which influence world trade is the condition of international liquidity. Essentially, it is the same as the influence of internal monetary liquidity within a domestic economy where the amount which people can and will spend on goods and services within a given period depends not only on what they earn but also on what they can borrow and what they can draw from bank balances and other cash resources. International liquidity is usually measured and discussed in terms of the foreign exchange reserves held by various countries and of the credits and drawing rights of various kinds upon which they can call to supplement their own reserves.

By and large, if world trade is to increase, then the available amount of international liquidity should also increase. Over recent years international liquidity has been increasing and that has helped to make possible a rising volume and value of world trade. One of the main reasons why international liquidity has been increasing has been that the United States has been running a deficit in its balance of payments and this has led to a net outflow of dollars from that country. As the dollar is regarded as a reserve currency, these have found their way into the official reserves of other countries and have thereby increased the funds available for international trade and payments. On a smaller scale this also has been happening in the case of the United Kingdom.

If now this process is to be put into reverse, obviously there can be a check to the growth of international liquidity and this could, in turn, check the growth of world trade in point of both volume and value. Generally, it could have a tightening effect on the whole network of international trade and commerce. World prices could be affected - among them the prices of raw materials and foodstuffs such as still form the greater part of our exports. At least, consequences of these kinds could follow unless, in one way or another, means can be found to ensure a continuing increase in the level of international liquidity. In this connection, the proposed increase in International Monetary Fund quotas and hence in the ability of the Fund to extend credit to countries suffering temporary balance of payments difficulties must obviously be regarded as a very timely move. As I have said, we are concerned in this developing situation in more ways than one. A reduction in capital inflow could go against us from the standpoints of both our balance of payments position and the rate of economic growth we can sustain. But besides this, it could have a redoubled effect upon our balance of payments and upon growth if it were to restrict expansion of world trade, cause commodity prices to fall and so reduce our export earnings.

I think honorable gentlemen will agree that probably what I have said in the last few minutes are matters of rather more immediate importance to us than the political argument in the first portion of my remarks. It is on these latter matters that we shall need to concentrate a good deal of our attention constructively together over the years immediately ahead and, indeed, in the months immediately ahead. I feel that the House will, as a result of the Prime Minister’s letter and the supplementary items that I have added to his narrative today, realise the consequence for Australia of a satisfactory outcome from my discussions and a better knowledge on our part of the international ramifications of the policies which the United States has adopted and the view taken of those policies by authorities of the Administration. It will be tremendously valuable to have talks on these matters. I look forward to reporting to the House the outcome, as soon as I can conveniently do so after my return.

Melbourne Ports

.- J do not know what effect the Treasurer (Mr. Harold Holt) will have on the President of the United States of America. I do not think he has done much so far to convince honorable members on this side of the House that he has even recognised what the problem is. First, I should like to indicate that there are some mines that have been said by honorable members on this side of the chamber which show that we recognise that historically it cannot be denied that some benefit or advantages have flowed from foreign investment. But I do not think that that is the question at issue. The question at issue, so far as the Labour Party can see in this immediate context, is why we should need to continue to rely on foreign investment in Australia. We are not facing an immediate balance of payments crisis. I do not think the Treasurer will say that we are. The latest figures that I have show that yesterday Australia’s gold and foreign exchange reserves were in the region of £700 million. So there is no foreseeable financial crisis due to our failure to be able to meet balance of payments obligations.

I am sure that the House welcomes the opportunity to debate this matter, and I hope that an opportunity will be given later to discuss separately the matter that the Treasurer raised at the end of his speech, namely the problem of improving what is called overall international liquidity. I do not want to get that debate mixed up with the present debate. I believe that they are separate matters. I hope that on an early occasion, after the Treasurer has returned after Easter, the House will be given an opportunity to debate that problem separately.

What we members of the Opposition abhor is the attitude of the Government that foreign investment has to continue, and has to continue at the same levels as in the past. The Prime Minister (Sir Robert Menzies), iri his letter to the President of the United States, quoted certain figures. He quoted them in dollars. I will convert them to pounds Australian. The Prime Minister said that in the eight years from 1956-57 to 1963-64 the accumulated deficit on current account transactions was 2,417 million dollars, or £A. 1,070 million. In the same period the flow of private overseas investment into Australia, primarily from the United States and the United Kingdom, amounted to 3,022 million dollars, or £A. 1,350 million. In other words, the inflow of capital over that eight year period was at the rate of nearly £200 million a year. It is only that flow of capital that has built up Australia’s overseas reserves to their present level of about £700 million.

The first point I wish to make - I reiterate it - is that there is no immediate balance of payments crisis for Australia. What we are concerned about in this instance is the statement by the Prime Minister of Australia, on behalf of the Government of the Commonwealth of Australia, that he is worried about the repercussions in Australia of the action that the President of the United States has taken, legitimately enough in terms of his own Government’s responsibilities. Somewhat the same sort of action has been taken within the last day or two by the United Kingdom Chancellor of the Exchequer. The President and the Chancellor have taken action to correct balance of payments difficulties.

What we want to do, and what the Leader of the Opposition (Mr. Calwell) did in his speech, is point out that it is time Australia took action to correct its balance of payments position. In an effort to put this matter somewhat in perspective, I will quote a limited number of figures. I believe that they put in perspective our reliance on foreign investment and the dangers that such reliance can constitute to our economy if we are not careful and if we do not take steps to remedy the situation.

I wish to quote three sets of figures. First, I will quote some figures that are supplied annually in the United States. They are contained in the “ Survey of Current Business “ of August 1964. The figures show that at the end of 1963 the amount of direct private investment in Australia by American firms had reached 1,277 million dollars, or approximately £A600 million. Those figures relate to the ownership by American firms of undertakings carrying on economic activity of one kind or another in Australia.

The second set of figures is contained in a United Kingdom publication - the “ Board of Trade Journal” of 7th August 1964. These figures are reasonably up to date, too. They show that at the end of 1963 the amount of direct private investment in Australia by United Kingdom undertakings was £A662 million. So the total United States and United Kingdom private investment in Australia is £A 1,250 million. That is a significant sum. The United Kingdom figures exclude oil company and banking activities which naturally would increase the total.

The other figures that I wish to quote are contained in one of our official publications - “ Government Securities on Issue at 30th June 1964”. The figures show that at that date Australia owed £772 million in Australian currency to governments outside Australia, and we still owed £112 million that we had borrowed from the International Monetary Fund and the International Bank for Reconstruction and Development. Those two sums total near enough to £900 million. The total of the figures for direct United Kingdom investment in Australia, direct United States investment in Australia and what the Australian Government owes to residents outside Australia is about £2,250 million. Those figures do not include what is called portfolio investment, which could well aggregate hundreds of millions of pounds. Let us say that the figure is £250 million. I do not think that is an unreal figure. That means that the flow of money into Australia from foreign sources has totalled £2,500 million.

Even if the return on that sum were only 5 per cent., the annual interest and profit liability would be at least £125 million. In fact, the liability is a great deal more than that because the United States figures indicate that the gross return on American investment is not a mere 5 per cent, but well over 10 per cent. Those aggregate figures are borne out by figures published by the Commonwealth Statistician in another official publication. These figures were quoted by the Leader of the Opposition. They show that in the year ended June 1964 the investment income payable overseas by private companies in Australia totalled £133 million. That does not include Government indebtedness. The figures supplied by the Treasurer indicate that the annual interest outgoing on the Government incurred liability is £40 million - £34i million on securities and £5i million on borrowings from the International Bank for Reconstruction and Development. That means that last year the annual bill for servicing this capital was near enough to £180 million. Let us look at the other side of the picture, the new investment in Australia. Again my figures are for 1964. They indicate that when unremitted profits are excluded - and, of course, they are not new moneys - the new investment totalled £131.7 million, so we were down the drain by more than £45 million last year. As the Leader of the Opposition (Mr. Calwell) said, on the capital side we are paying out more now than we are getting in, yet this Government wants this type of situation to continue. Surely the time must come when a country must take stock of its position.

We are not asking the Treasurer to go to the United States of America to sue for mercy because of a step which has to be taken in that country to protect its position. We are saying to the Treasurer, as the custodian of the nation’s finance: “Why don’t you do something in Australia to make us less dependent on this flow of foreign investment, because if you do not take stock we will continue with the situation where we pay out more than we get? “ Are we to be a perpetual traveller to the pawnbrokers, as it were? Surely there comes a day of reckoning and of repayment. When it does come we will have a crisis with our balance of payments. We must do something to make Australia self-reliant on its international account, and basically the only way is by increasing the quantity of goods exported from Australia. This is the type of thing that must be done, but what is happening? I cite what I regard as an appalling situation described in the most recent issue of the overseas journal “ The Banker “. It relates to a new firm which is being formed in the United Kingdom by a merger of two old banking concerns, merchant bankers and discount houses - M. Samuel and Philip Hill. About Philip Hill the article states -

Philip Hill is well established in South Africa, Rhodesia and Australia.

What are the duties of Philip Hill? The article continues -

Philip Hill has been more active in the takeover field, in domestic new issues, and in property.

Why do we need in Australia the machinations of a firm like Philip Hill - a specialist in take-overs? At least the New Zealand Government took action in this regard. I have an example in my electorate at present whereby a firm which has been established in Australia almost since Australians learned to wash - J. Kitchen & Sons Pty. Ltd., makers of soap - has been recently taken over by Unilever (Aust.) Pty. Ltd., an overseas octopus which has decided that in future it will manufacture soap not in Melbourne but in Sydney, while the Melbourne side of its activity will process food. That is a remarkable decision to be made in London, but its impact here will affect the employment of 300 people in my elec torate. It would be easy for the Minister for Housing (Mr. Bury) to say that those workers can shift from Melbourne to Sydney, but why should they have to go from Melbourne to Sydney? Why has a decision of this type been made overseas at all? The Commonwealth Government apparently is doing nothing to stop this sort of thing. I should say that no honorable member knew what the firm of Philip Hill was or what it did, but apparently that firm knows what it can do in Australia because of the inactivity of the Government.

We have taken this opportunity to point out to the Government that we are not making one, two, three or ten points about what should be done but are suggesting that the Government should at least take stock now and should not be begging the United States of America to make inapplicable to Australia conditions it thinks should be applied to safeguard its balance of payments situation. We ask the Government: Why not do as the United States of America has done and as the United Kingdom has done - recognise that this is a critical problem?

We believe that much of the money which comes to Australia - and which is referred to as private foreign investment - is applied to doing what we could be doing ourselves if some of our Australian firms got off their tails and became active instead of taking things easy. It is all right for the Treasurer to suggest that the Opposition is making an attack on secondary industry. We are not attacking secondary industry at large, but some sections of Australia’s secondary industry deserve to be attacked for their inactivity.

Can the Minister at the table - the Minister for Housing - tell me why we need overseas interests to exploit our iron ore resources in Western Australia? Can the honorable members who represent electorates in Sydney tell me why we need a consortium of Japanese, American and English firms to export coal from New South Wales? These overseas interests are apparently clever enough to export in unison and they play one colliery against another to get the best price. This is to the detriment of Australia’s overseas earnings. This is the sort of problem of whose existence, we claim, the Government should be aware, and for which it should be taking remedial action.

The Leader of the Opposition concluded his remarks with words that I think are worth emphasising. He said, in effect, now that we can see the last few years of the Snowy Mountains Authority, why do we not establish that Authority as a permanent national development commission to conduct examinations and investigations in other parts of Australia. There is not one honorable member who represents an electorate outside the metropolises of Sydney and Melbourne who could not point to a project which could be examined in his electorate. It may be a developmental project on a river, an enlargement of transport facilities or the provision of power, but it would be advantageous to have it examined by a national development commission.

The Opposition welcomes this opportunity to debate this measure but we regard the fact that the Government is sending the Treasurer overseas to do what he is being sent to do as failure on the part of the Government to recognise the economic problem which is obsessing Australia. The Government should do something to promote our own development and to use our own national resources. We have the know-how and if we need assistance we should import the minimum requirement. Most of our growth and most of the promotion of our development should be done from internal and not external sources.

Mr DEPUTY SPEAKER (Mr Mackinnon:

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

Minister for Housing · Wentworth · LP

– After listening to the Leader of the Opposition (Mr. Calwell) and the honorable member for Melbourne Ports (Mr. Crean) I should like to make a suggestion to the Deputy Leader of the Opposition - who at the moment is in the chamber but not, so to speak, of it - because he is waging a valiant struggle to bring the Australian Labour Party up to date. I invite the Leader of the Opposition to take his nose out of Labour and Socialist text books written 30 or 40 years ago and study instead what has been happening in science and industry in the last ten years. It so happens that Britain and increasing numbers of British industries are finding that an economy of 50 million people, with such markets as they already have in the rest of the world, which are quite extensive, is too small to contain many of the industries which they hope to develop. The computing experts are finding that in some specialties even the economy of the United States is insufficient or too small.

I do not wish to labour this point too much - I have other matters to talk about - but what is happening is that specialisation in industry is becoming larger in scale and industry more international in character. These are the facts of life. These are the things that are happening in the most buoyant sectors - the frontiers of progress where innovation is taking place. The doctrine of the Leader of the Opposition, logically applied, means that we cut ourselves off and become a little economic backwater. I say that that is his ambition, because the only way many of these advanced industries can be established in Australia or even in Britain, Germany or many other countries, is as branch plants or offshoots of something that is much larger. They depend on the volume of research and know-how which can only exist as part of a huge complex. Whether we like this or not, it is a fact of life.

I would like to develop some of the points mentioned by the Treasurer (Mr. Harold Holt). We should consider the present situation very seriously. What we are really debating arises out of the measures taken by the United States to protect its balance of payments. The United States is in a position where it has been in deficit and where an influential part of the rest of the world has ceased to be content to hold dollars. Therefore the United States was obliged to take action which has reduced the dollar earnings of other people. This capital measure is one symptom of this situation and as a symptom it is something serious.

Across the Atlantic the United Kingdom has been forced into a similar position. Because its balance of payments is adverse it is forced to take action to restrict its international payments. The very success of the United States measure in restricting the flow of dollars to the rest of the world and limiting its own deficit will impose increasing strain on sterling. The measures such as the United Kingdom has now been forced to adopt will impose increasing strain on all those who earn sterling or international currency or who make their living by trade, which is the rest of the world. What we face is much more serious than the impact of these immediate measures. We face a downward spiral on international payments and international trade. This situation recalls the events of the 1920’s and 1930’s when deficit countries started trying to cure their deficits, which in turn rendered a surplus on the part of others impossible because a deficit country involves a surplus country, and nobody can have a surplus unless someone has a deficit.

Mr Duthie:

– Where was there a country with a surplus in those years?


– The honorable member for Wilmot may treat this matter lightly, but he is old enough to remember, as I am, the vicious process of one nation protecting its payments against another which in turn embarrassed the next nation and so on. This was the kind of situation which exported the depressed conditions of one country to another. Not only that, it also bred an atmosphere of international hostility because one country resented the measures taken by another. This situation, in fact, played a large part in the circumstances which gave Hitler his great opportunity.

Why is it that we have escaped such a danger since the war? One of the main factors has been the fact that the United States has nourished the rest of the world with dollars. For a time the United States dollar was the scarce currency. For the last few years, the United States has been running a deficit in its payments. That deficit has enabled other countries to expand their trade, to have ready access to the means of payment and to enjoy the investment resources which have flowed from this situation. Unfortunately - though it may be fortunate from some points of view - what has happened has been that the balance has swung round so that the creditor countries of the current situation are largely those of Europe, particularly France and West Germany.

Having worked in the United States for almost six years amongst the people who control these matters. I can say that nowhere else in the world is such a responsible view taken of what happens to the world economy, the Western political world and the other things which depend fundamentally on a healthy economic situation. This situation was quite healthy as long as the Western European countries were content to hold dollars. Let us recall that the United States dollar is a pretty sound currency. Prices have remained very stable. While it continues to be accepted as a means of exchange and while other countries are content to hold dollars, a United States deficit is one of those mechanisms by which the world gains added means of payment. But when de Gaulle and others who think like him - the more hard-money minded men of Europe - suddenly, because they have accumulated large dollar balances, demand in this situation a settlement in gold, this reduces the United States gold reserves and induce nervousness on their part. People are inclined to become nervous when their gold flows out. If this situation is extended far enough, if the European creditor position lasts long enough and if settlement is demanded continuously in gold, the whole structure of international trade and payment will freeze up and will be directly dependent only on gold, which still remains the only means of finally settling international accounts.

The action taken by the United States and Britain will have dangers also for the rest of the world. This is nothing new. The International Monetary Fund has been pointing out this impending danger to the world for some time. This is the kind of situation envisaged by Keynes, who, I might remind the House, is perhaps the originator of the term “ full employment “. This kind of situation which he envisaged caused him to suggest that when international monetary arrangements were established after the war there should be an international currency bank which all countries would be willing to hold and in which they would be willing to conduct their settlements. For various reasons of a long and complicated character, this proposition did not at the time prove acceptable. Fortunately, in the post-war era so far, the United States dollar has come along to fill this gap. But, eventually, a payments situation depends largely upon the behaviour of the creditors. If the creditors start demanding settlement in gold that enforces a tightening up of credit everywhere else. This is a serious danger. No one stands to lose more by the progressive contraction of international trade and payments than does Australia. Of course, this involves not only economic matters but the disastrous political consequences which flow if depression spreads through large numbers of countries which are unable to pay their way internationally.

In the circumstances which have developed, let us express some sympathy with the position of the United States. It is this position which the Treasurer will be discussing immediately with the United States authorities. In this situation of the growing demand for settlement in gold, which is coming from Europe, particularly France, the United States is faced with two alternatives. Either it corrects its dollar payments so that it no longer is in deficit - in other words, it contracts the extra means of payment accruing to other countries, including Australia - or it severs the connection between the dollar and gold, which in itself would be an extremely drastic step. In this position the United States naturally turns to one of those things which currently, or in the recent past, has been one of the causes of her deficit, and that is the export of capital, because this is perhaps the readiest and the least disruptive remedy to which she can apply. We can be very grateful that America has turned her back on another possible course, which is to make substantial cuts in her foreign aid programmes to the less developed countries of the world. So in this situation the United States has no alternative but to endeavour to correct her payments position, although, from her own domestic point of view, the dollar is sound and her own situation certainly does not call for any measures of a deflationary character.

Tn this situation, we can at least say that Australia is a small element; that what America does in connection with, say, the outflow of her capital, will have very much greater effect on Western Europethan on us. Therefore, we might reasonably have a special case to plead, particularly as on current trade certainly, we are one of the countries which help America’s balance of payments situation. That is because we have a trade deficit with her. So we have every reason for making a special call in these circumstances. Similarly, with the United

Kingdom we are fortunate that her measures are not applied to the sterling area. This is essentially one of the great advantages of belonging to the sterling area and holding reserves in London. The United Kingdom is more willing to allow capital to flow to sterling countries than to the rest of the world. If we were not prepared to hold sterling we would, of course, be in the same position as the other countries outside the sterling area. We hold sterling because we realise that there are swings and balances in international trade and international payments.

Dr J F Cairns:

– We have not much alternative at present.


– We ebb and flow. Perhaps we have bigger swings in our payments than most other countries. But we take a long patient view. It is only to be hoped that gradually the creditor countries of Western Europe will become enlightened themselves and when they are accumulating a surplus with the rest of the world they will see that it is put to productive use and invest it in other countries. If a means could be found by which some of this current surplus could be diverted to sound borrowing countries such as Australia this would ease not only our own position but that of international payments generally.

The Treasurer is confronted with a complex and difficult situation. One of the worst things to happen would be for a spirit of retaliation to develop in these matters. If other countries are forced to restrict their payments, and then contrary action is taken which is not strictly necessary, this tends to breed an atmosphere of mutual retaliation. This is one of the most unhealthy things which could happen and one of the sets of circumstances in which Australia could be one of the countries to suffer most.

I conclude by wishing the Treasurer well in his difficult mission in which Australia has a very strong interest. It is not only the question of immediate capital flowing to Australia which is involved, but, at second remove, the whole question of international trade and payment in which our interest is even more profound.

Debate (on motion by Dr. J. F. Cairns) adjourned.

page 788


Customs Tariff Proposals (No. 35)

Minister for Housing · Wentworth · LP

.- I move- [Customs Tariff Proposals (No. 35).]

  1. That the Schedule to the Customs Tariff 1933-1964, as proposed to be amended by Customs Tariff Proposals, be further amended as set out in the Schedule to these Proposals and that, on and after the ninth day of April, One thousand nine hundred and sixty-five, Duties of Customs be collected accordingly.
  2. That in these Proposals, “ Customs Tariff Proposals “ mean the Customs Tariff Proposals introduced into the House of Representatives on the following dates: - 9th November, 1964; 12th November, 1964; 17th March, 1965; 18th March, 1965; and 23rd March, 1965.

page 788


Mr. Speaker, Customs Tariff Proposals No. 35, which I have just tabled, relate to proposed amendments of the Customs Tariff 1933-1964 and give effect to the Government’s decisions in respect of the Tariff Board’s reports on umbrellas and sunshades; static transformers; laboratory, hygienic and pharmaceutical glassware; and continuous filament acetate yarn. The new duties will take effect from tomorrow morning. At a later stage I shall table the relevant reports.

The Board’s report on umbrellas and sunshades indicates that the Australian industry produces articles of unquestioned quality that compare favourably with the best produced anywhere in the world and that the industry has increased its production and sales over the past three years. In the Board’s opinion, the present duties are more than are required to enable the more efficient producers to obtain a reasonable return on funds employed. On its recommendation, therefore, the duties on ordinary umbrellas are being reduced by 71/2 per cent. ad valorem and other types of umbrellas are being grouped under one item at rates about equivalent to the present level.

The Board, in its report on high voltage static transformers, has recommended extension of the present protective rates of duty to cover all transformers with ratings exceeding 50 kVA. This will remove the upper capacity limit from the protected range and obviate the need for periodic reviews of the industry as the capacity to produce larger transformers is developed. In place of an upper limit in the protected range it is proposed that any transformers of a type or size not reasonably available from local production should be admitted at concessional rates of duty under customs bylaw in accordance with normal bylaw criteria. In addition, transformers which are on firm contract overseas on or before today, and which would otherwise have been dutiable at non-protective rates, will be admitted at concessional rates of duty under Customs bylaw.

The Tariff Board has recommended continuation of the current level of assistance accorded the manufacture of laboratory glassware and recommends that hygienic and pharmaceutical glassware be made dutiable at the same rates, namely 20 per cent. ad valorem under the British preferential tariff and 30 per cent. ad valorem otherwise.

In arriving at its conclusions, the Board had regard for the fact that the industry provides considerable employment, uses indigenous raw materials and is an important sector of an integrated glassware industry.

Two references were considered by the Tariff Board in regard to the production of continuous filament acetate yarn. The first arose from the need to review the bounty of 9d. per lb. which was recommended by the Board in March, 1962, and the second arose from alleged dumping of acetate yarn in this country. The Board has found that marked increases in production, coupled with greater efficiency, have substantially reduced costs in Australia and allowed improved returns on funds employed. The Board has therefore recommended that the bounty be discontinued as from 30th June, 1965, that the existing duties on secondary acetate yarn - 10 per cent. ad valorem British preferential and 221/2 per cent. ad valorem otherwise - be not varied, and that minimum rates should be applied to triacetate yarn which is not produced in this country. The Board found that dumping of continuous filament secondary acetate yarn had occurred and appropriate action is therefore being taken by my colleague, the Minister for Customs and Excise under the Customs Tariff (Dumping and Subsidies) Act. I commend the proposals to honorable members.

Debate (on motion by Dr. J. F. Cairns) adjourned.

page 789


Reports on Items.

Minister for Housing · Wentworth · LP

– I present reports by the Tariff Board on the following subjects -

Continuous filament acetate yarn.

Laboratory, hygienic and pharmaceutical glassware.

Static transformers.

Umbrellas and sunshades.

Ordered to be printed.

page 790


Ministerial Statement

Debate resumed (vide page 787).

Dr J F Cairns:

.- It has been obvious during the course of the examination of this problem over the last week or two, and today, that the Government considers that the Australian economy and, in turn, the Government of Australia, are facing a very serious situation because of the changed policy in the United States of America and elsewhere with respect to the export of capital, including its export to Australia. We have had the advantage of listening to the Treasurer (Mr. Harold Holt) spend some considerable time delivering one of the most suppressed speeches I have ever heard him make in this chamber. We know he is facing a difficult situation. We have just heard an admission from the Minister for Housing (Mir. Bury) that the Treasurer is facing a complex and difficult situation. He wished the Treasurer well on his difficult mission.

Having listened to the Treasurer, and having had the opportunity to evaluate his attitude to this question of capital inflow, I do not think the Secretary to the Treasury in the United States, Mr. Dillon, has anything to worry about with respect to the strength, relevance or significance of the effect that the Treasurer of the Commonwealth of Australia will have on him. I hold this opinion because the Treasurer of the Commonwealth of Australia, Mr. Harold Holt, does not fully appreciate the difficulties and risks that are imposed upon our economy by the importation of foreign capital into it.

The Treasurer went to some trouble this afternoon to point out that he had searched through the records and found one occasion - 12th July 1963 - on which he had had something to say about the risks of capital inflow. He said he had done this because, over a period of months, he had been challenged by me and others to give some evidence that he was even aware of the risks and difficulties involved. After searching through “ Hansard “, he was able to find one occasion - 12th July 1963 - when he had said something about the risks of capital inflow. We heard him read from what he said on that occasion. The astonishing thing was that he began with a great eulogy of capital inflow. He told us about the need for it to maintain growth and stability in Australia. He said that capital goes where it is welcomed, and, of course, it was welcomed to an unlimited extent in Australia, and that it stays where it is well treated. It has certainly been well treated in Australia. He said that capital inflow was of great assistance in maintaining our balance of payments, in carrying out our immigration programme, in developing our resources, in enabling us to carry out better research work and in enabling us to introduce new managerial techniques. In fact, he used about 600 words on praising foreign capital. Then he added about 150 words of criticism of the Australian Labour Party for its attitude to the question. Finally, in a mere 100 words or so, he said something about some of the risks that were involved. Only about one-tenth of his total time was spent in telling us something about the risks.

Then he said that the Government was not unmindful of the risks, and he referred to the difficulty of servicing the interest bill and of financing the export of profits. He referred also to the question of Australian participation in industries. After having said so little on the question he returned to a eulogy of foreign capital and said -

The risks are minor compared to the risks of not encouraging capital inflow.

If the occasion to which the Treasurer referred is the only one he can discover on which he said something about the risks of capital inflow, I have very little hope for his mission to the United States of America.

But that is not the only thing. The Treasurer said that on one occasion in 1963 he had had something to say about the risks of capital inflow. But ever since then - in fact, since 15 years ago, 10 years ago or even 5 years ago - the Government has followed the same policy. It has never changed its favourable policy towards nil capital inflow. Even today it is following the same policy as it did years ago. Although on one occasion the Treasurer might have recognised some of the risks of capital inflow, the policy of this Government has remained the same. Tt has remained the same despite the clear and vivid warning given by the Minister for Trade and

Industry (Mr. McEwen), a member of the same party as that to which the Minister who will be following me in this debate belongs. I should like to know what the Minister who will follow me thinks of the contrast in the attitudes of the Minister for Trade and Industry and the Treasurer on this matter. I should like to know whether the Minister for Social Services (Mr. Sinclair) who is to follow me, is satisfied with the Government’s inactivity with respect to a policy on these matters and the fact that it has done nothing to discourage takeovers in Australia or to discourage our selling of our heritage - a little bit of the farm every year, as the Minister for Trade and Industry put it on one occasion. I should like to know how the Country Party Minister for Social Services reconciles these things.

The Treasurer then went on to criticise the Leader of the Opposition (Mr. Calwell) for saying that we had a dangerous dependence on capital inflow, and he quoted figures relating to capital inflow from the year 1959-60 to the year 1963-64, when capital inflow totalled £215 million. The Treasurer stated that during these years the capital inflow had been steady and that the figures showed no indication of an increasing dependence upon it. The honorable member for Melbourne Ports (Mr. Crean) completely disposed of this argument, and the Minister for Housing, who obviously did not prepare his speech well, ignored completely what the honorable member for Melbourne Ports had said. He ignored the fact that the honorable member for Melbourne Ports had completely demolished the Treasurer’s criticism of the Leader of the Opposition.

The honorable member for Melbourne Ports pointed out that we had an increasing dependence upon capital inflow because, despite the fact that the inflow itself was good, the outflow had now reached a point where it exceeded the inflow and that therefore the inflow was making no net contribution to the balance of payments at all. In this way he proved that we must have an increasing dependence upon capital inflow to maintain our balance of payments. What I want to know, and what the Opposition and the people of Australia have a right to know, is whether the Treasurer is aware of this and whether the Minister for Housing, who is said to have had experience in Treasury matters, is aware of it. Why is it that we find the Treasurer being proved wrong in one case and in the other case the Minister for Housing completely ignoring the effective criticism of the honorable member for Melbourne Ports? What kind of Government is it that allows a debate of this kind to pass in this fashion?

A little while ago the Minister for Housing , chose to attack the Leader of the Opposition. He said that the Leader of tha Opposition should bring himself up to date. We are living, he said, in a world economy in which the best results can be achieved only in a large country. He said that 50 million people are not enough. How are we going to get 50 million people in Australia at this rate? In any case the Minister for Housing said that this was not enough, that we are living in a world economy, that the Leader of the Opposition has cut himself off from it and wanted to cut us off, too. When a country is in difficulties over its balance of payments it may adopt one of two alternative procedures. If it is short of overseas currency it can adopt a policy of restricting expenditure at home which reduces income and employment until, having restricted expenditure everywhere at home, on things that are essential as well as on other things, it must restrict also its expenditure on imports until the balance of payments is brought back into line. This is implicit in the position of the Minister for Housing. The Minister is living in the 1930’s, with his head in ancient textbooks. What the world has seen since that time is the alternative method of dealing with a balance of payments problem. That method is not to impose a credit squeeze to restrict expenditure in every section of the economy and so bring employment and income down; the method involves taking a much more sensible attitude towards your balance of payments and saying: “We are not going to be dictated to completely by our balance of payments and we are not going to see unemployment rise as it did in the 1930’s “. That sort of development only produces a Hitler, as the Minister for Housing has already said; it results inevitably in what happened in 1961, a situation which almost brought about the defeat of the Government.

However much the members of the Government including the Minister for Housing who still follows the textbooks of the 1930’s and earlier dislike the fact, they cannot follow that kind of policy because if they do they will be swept out of office. The Minister for Social Services and the honorable member for Wannon (Mr. Malcolm Fraser), who also lives in the 1930’s as far as economic textbooks are concerned, will have their opportunities to deal with this matter later, and I challenge them to do so. We now need something much more permanent than the haphazard credit squeeze policy to which the Government is dedicated.

Let me return to the situation that brought about this debate. The Australian Prime Minister (Sir Robert Menzies) considered that Australia’s economic situation was so serious that he had to direct to the President of the United States of America a letter which I do not think has been equalled in modern times in Australia as a statement of the severity of the difficulties that face this country. I will refer to that letter in a few minutes. It points out vividly and in detail the difficulties that Australia faces at the present time. It makes out a strong case to support the contention that the situation is serious and urgent. Would the Prime Minister of Australia direct such a letter to the President of the United States if he did not think the situation was serious and urgent? Then what reply did he receive from the President of the United States? He received an answer which showed that the Prime Minister’s view of the situation is as far removed from that of the President of the U.S. as the Prime Minister’s view about negotiations in South Vietnam yesterday was from that of the President of the U.S. today. The Prime Minister said that he was forever opposed to negotiation in South Vietnam and denounced negotiation, but today the President of the U.S. has said that he is in favour of unconditional negotiation in South Vietnam. The reply received by the Prime Minister to his letter about the economic situation shows that his view is very different from that of the President of the U.S. Is this an illustration of the special relationship between Australia and the U.S. about which the Treasurer was so concerned a few moments ago?

Let me now turn to the letter sent to the President of the U.S. Having looked at the Prime Minister’s letter which said that the economic situation in Australia was serious and difficult, the President said -

We believe, therefore, that this programme will not impose undue strain on Australia.

Who is right, the Prime Minister of Australia or the President of the U.S.? The point I want to make as clearly as I can is that these two letters show a fundamental difference between the diagnoses by the two gentlemen of the Australian situation, lt is the responsibility of the Government, of the Treasurer, the Minister for Housing, the Minister for Social Services and whoever will be following him to deal with this fundamental difference between the leaders of the two countries. Nobody on the Government side so far has considered it necessary to mention the matter. Let us look at the Prime Minister’s letter and see whether we can form some judgment ourselves as to how serious the situation is. The letter began with an illustration of the difficulties. It said at page A -

For the financial year ahead, the signs point to a continued drain on our external reserves.

The Prime Minister said that we will be in difficulties because of this continuing drain. On page 5 he said -

In what at present appears to be a deteriorating balance of payments situation, any substantial falling off in capital inflow would be a matter of serious concern to the Australian Government.

The Prime Minister said that if there is a falling off in capital inflow - and there is no doubt that there will be - it will be a matter of serious concern to the Australian Government. He said, further -

On the other hand, however, we would be troubled and embarrassed if United States investors were to begin repatriating capital.

Is this an illustration of the special relationship that Australia has established with the United States? The Prime Minister also said on page 4 of his letter that Australia had agreed to spend 550 million dollars on procurement in the United States. He said that this undertaking was entered into without any realisation that America was going to change her policy in respect of capital outflow. Have we here another illustration of the special relationship that exists between Australia and the United States? We commit ourselves to spending 550 million dollars in the United States on defence procurement and then the United States Government changes its policy in relation to the export of capital. Surely we can establish a little better relationship than that with the United States.

What this country needs is not sycophancy; it needs a government that will stand up for Australian interests for a change. If we had a Government that would do this we would achieve much better results with the United States, because whatever you may say about the United States Government it is always ready to listen to people who speak clearly about their own interests. I do not think that the American Government appreciates the subservience that has been demonstrated by the leaders of this country in their dealings with the United States in recent years. The Prime Minister went on to mention the general deficit that Australia has suffered for so long. He pointed out that we have been living on capital inflow for 14 or 15 years. He gave the details and astonishingly high figures were revealed. Then he referred to the particular position with respect to the United States and he said -

In the half year to December 1964 Australia’s recorded exports to the United States were 153.2 million dollars compared with 180.3 million dollars for the same period of 1963, a decline of IS per cent., whereas Australia’s recorded imports from the United States increased as between these two periods from 273.7 million dollars to 392 million dollars, a rise of 43 per cent.

Does this give us an illustration of the special relationship that exists between Australia and the United States and upon which the Treasurer has laid so much stress? If the Government cannot do something better than this in respect of the export to the United States of the critical commodities of wool, lead, zinc, meat and sugar, then it cannot claim to have established any special relationship with that country. I think we must face the fact that Australia cannot afford to waste its resources. We have for too long conducted ourselves with a sort of affluence consciousness. We do not believe that Australia really must be careful with her resources. But we must be careful with our resources and we must devise an economic policy that will reflect this care.

I will turn for a minute or two to some of the steps that we can take to exercise this care. I think the situation is a serious one.

The letter written by the Prime Minister to the President shows the seriousness of the situation. What we need in this country is not a reduction of productive capital from overseas. I believe we want someone who will stand up for Australian interests and who will not be subservient. I believe we want someone who will be able to distinguish between one form of capital inflow and another. I believe we want more Australian control of the kind of capital we are getting. We want productive capital, but we do not want portfolio or takeover capital. The honorable member for Melbourne Ports spoke of the firm of Philip Hill, which has established itself in Rhodesia, South Africa and Australia as take-over specialists. We do not want any take-over specialist in this country. The Minister for Trade and Industry has for a long time been stressing that something must be done to discourage portfolio and takeover capital, whatever we may do about productive capital. I am sure the Minister for Social Services, who will follow me in this debate, cannot ignore this. When will the Government, which the Minister for Trade and Industry and the Minister for Social Services so consistently support, take action on the lines made so clear by the Minister for Trade and Industry and by the Australian Labour Party?

I believe that we want more control over the type of capital coming into this country. We want all the productive capital we can get, because we need to expand our economy as much as possible. In addition, we need to consider the industrial policy of the foreign capital investment. We have recently had the example of the stoppage at Mount Isa, which has devastated part of the Australian economy for a considerable time. That stoppage came about because of the policy of the American company that owns Mount Isa. It is a policy that will not allow any industrial democracy in that industry. It is a policy which means that the decisions made about the employment of men in this country will be made by experts acting on behalf of the company, and the men will never have an opportunity to speak for themselves. We have to be concerned to know whether we will accept this kind of industrial steamroller on our economic conditions or whether we will be prepared to stand for industrial democracy on the part of the Australian worker. I can understand the Fascist type of mentalities of those who react to this type of thing, who are activated by foreign ideas and foreign ideologies, and who are prepared to see Australian democracy broken down by the monopolies that come from overseas.

I suggest that we must also give up relying on monetary policy and fiscal policy, because these methods of trying to regulate the economy have failed so significantly in recent years. We must not rely any longer on a credit squeeze policy; we must realise that there are more successful ways of controlling and developing the Australian economy in the future and that these are closely related to the problems that arise out of foreign capital and investment.


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

Minister for Social Services · New England · CP

– It is indeed surprising in a debate of this nature to hear the honorable member for Yarra (Dr. J. F. Cairns) being so bold as to mention the Mr Isa dispute, because Australia’s economic progress has been significantly disturbed by the quite unwarranted dispute at Mr Isa. The honorable member for Yarra probably knows more of this dispute than does any other honorable member in this House. I believe that if we are really to consider the future of our country, we must ensure that we continue to receive large amounts of overseas capital. When capital is invested in this country, as it has been invested by the American Smelting and Refining Co. in the Mr Isa project, we can really get the best out of this great undeveloped land of ours.

In this debate this afternoon, the Treasurer (Mr. Harold Holt) mentioned some peculiar problems that we have in Australia. He mentioned the great land mass and the relatively undeveloped interior of the country. It is because of these peculiar problems that it is essential for us to have overseas capital. I think this is probably more true in an area such as Mr Isa than it is in any other centre. A tremendous amount has been done by overseas investment for the progress and the economic prosperity of this land. I for one believe that the industrial unrest that has been caused at Mr Isa is typical of the attitude of some members of the community who believe that, because overseas capital has come into the country, it is necessarily bad, and because it is overseas capital these people apparently are prepared to cause unrest and to prevent production, without any consideration whatever for the overall effect on the Australian economy. If we look at the consequential effects of the Mr Isa dispute on the price of copper, for example, and the price of goods sold in the stores right throughout the country, there can be no doubt that the Mr Isa struggle, if you like to call it that, has had a disastrous effect on every section of the Australian economy. The men and women in the street, the people whom Opposition members claim they represent, are probably being more affected than most.

The debate this afternoon is related to a series of letters, written by the Prime Minister (Sir Robert Menzies) and the President of the United States. Opposition members have spent most of their time this afternoon arguing to and fro about the relative merits of overseas investment in Australia. There is no doubt that Australia’s present prosperity is due to a considerable extent to this overseas investment. Indeed, in his letter to the Prime Minister, the President of the United States refers to the high standard of living that we enjoy in Australia and to the way in which this high standard of living is related back to United States investment and to other overseas investment in this country, ft is not only the President of the United States who is aware of this considerable effect that overseas investment has had on our overall prosperity. The “Canberra Times” on Wednesday, 17th March last reported a speech made by the United States Secretary of Commerce, Mr. Connor, who referred to the effects on the Australian economy of the United States investment in General Motors-Holden’s Pty. Ltd. Referring to Mr. Connor, the newspaper article stated - “ Including dealer outlets and direct suppliers, that operation provides a livelihood for about 74.000 Australians and their families,” he said. “ Many of these have emigrated to Australia, bringing with them different skills in many fields, and through their diverse cultures adding to Australia’s maturity as a leading member of the community of nations.”

This, of course, is the other side of the investment argument. It is all very well for Opposition members to say that nothing has been contributed over the past years by overseas investment in this country. In fact,

I think overseas investment has made two notable contributions. The first, of course, is the improved living standards and the other is the development of other means of production and of industries that otherwise we may have found it impossible to start. The industry at Mount Isa, which was mentioned this afternoon by the honorable member for Yarra, is more notable than most. But for overseas investment, Mount Isa would not have been the prosperous community of yesteryear or the community we hope will be prosperous tomorrow. Without overseas investment, Mount Isa would never have existed, and it is for this reason that I completely deplore the honorable member’s reference to the Mount Isa situation.

In terms of the present and future of this country, we will continually be dependent, at least in the immediate future, upon the import of capital. Considerable reference has been made to this by the Minister for Housing (Mr. Bury) and the Treasurer. If we look at the statistics of Australian trade in the immediate future, the necessity for the continuation of overseas investment is even further emphasised. Unfortunately, the prices that we are at present receiving for so many Australia exports seem to be declining. When we compare the picture of last financial year’s trade receipts with receipts in the eight months to February of this financial year, it seems that the future position will be considerably worse than it otherwise might have been.

As all honorable members are only too well aware, Mr. Deputy Speaker, approximately 78.5 per cent, of Australia’s export income is earned by our great primary products. This percentage, of course, is made up by a wide range of products, but notably wool and sugar, and these are the two commodities that I wish to mention particularly. The figures for the eight months period to February 1965, compared with the figures in the export price indices, show that wool export earnings have fallen by 12.2 per cent, and sugar export earnings by 41.7 per cent. This decline must have a considerable effect on Australia’s net export income in the current year. Our export earnings will be even more affected if the dry time through which so much of eastern Australia is passing at present is prolonged. If not only the prices that we receive for our primary products but also the volume that we produce declines, our situation will be considerably worse than it otherwise might be. For this reason, I believe that of more moment, probably, than the latter parts of the letter written by the Prime Minister to President Johnson of the United States of America are those parts that refer to Australia’s trade relations with the United States. You, Mr. Deputy Speaker, will recall that the Prime Minister referred in particular to wool, which I have just mentioned. He mentioned also lead and zinc, meat and sugar.

I thought I might take up a few minutes of the time of the House in describing what I think is the situation and the reasons why I think that as important as any part of the negotiations conducted by the Treasurer in the United States of America will be that part concerned with obtaining greater access to the United States market for Australia’s major exports. As honorable members are only too well aware, as a result of the inauguration of the European Economic Community, the balance of payments situation of the United States vis-a-vis Europe came under deep consideration in the United States of America. As a result of this, during 1962, the late President Kennedy developed a proposal for negotiations on the basis of a 50 per cent, across the board cut in tariffs, coupled with simultaneous negotiations on non-tariff barriers to trade - that is, import quotas, etc. At a meeting of the General Agreement on Tariffs and Trade held in Geneva in May 1963, it was decided that certain principles would be adopted as a basis on which the Kennedy Round of negotiations could proceed. These principles were: The tariff negotiations should be based on a substantial across the board linear cut, with a minimum of excepted items. The negotiations should deal with agricultural products with a view to providing expanded free world markets for these products. The negotiations should deal with non-tariff barriers - that is, quotas, etc. - as well as tariff barriers, and every effort should be made to reduce barriers to exports of the less developed countries.

Fortunately, as a result of the efforts of representatives of the Australian Government, led by the Minister for Trade and Industry (Mr. McEwen), it was possible to secure recognition of the peculiar situation in which Australia found herself. This was a situation in which Australia was not quite one of the developed countries; nor was she one of the under-developed countries. This situation arose from the tremendous preponderance of primary products in our export trade. Because of this situation and the fact that we were trying to develop our exports of manufactured goods, Australia’s situation was seen as somewhat different from that of the other countries concerned. Certainly, a tremendous amount has been achieved in recent years in the expansion of our export trade in manufactured goods. This is an aspect of the situation that I want to emphasise before I conclude.

With respect to the Kennedy Round of negotiations, Mr. Deputy Speaker, I believe that the United States has shown her apparent willingness to open across the board negotiations and to reduce tariffs and trade barriers. Unfortunately, in our trade relations with that country, certain of our primary products are not earning as much in dollar currency as might otherwise be the case. The first instance that comes to mind, for example, is that of sugar. I understand that Australia is the second largest sugar exporting country at present. Honorable members are only too well aware of the situation that arose after the breach with Cuba. Since that breach occurred, Australia has built up a very valuable trade in sugar with the United. States, which, I understand, is now our third largest sugar market, coming after only the United Kingdom and Japan. Under the terms of the United States Sugar Act of 1962, certain allocations of sugar quotas were made for specific countries. Australia’s quota is not a specific one. It comes under a section of the United States Act which, I understand, is described in the phrase “ other country quotas “. This makes no recognition of the substantial size of our exports of sugar to the United States and no real recognition of the very considerable part that sugar exports play in our developing economy.

But not only sugar exports are affected. The United States has imposed restrictions also on imports of meat. The Prime Minister’s letter to President Johnson mentions the effect of the meat quota that was applied some years ago. As honorable members know only too well, at one stage, Australia’s exports of meat to the United

States increased considerably and, but for the very buoyant situation that arose in the United Kingdom and Europe, the restrictions imposed by the U.S.A. might well have severely affected our overall meat exports. As it happened, although we voluntarily limited exports to the United States the considerable increase in our exports to Western Europe and the United Kingdom meant that these quota restrictions in the United States had no real effect on our total meat exports. In fact, there was a reduction in Australia’s exports of meat to that country which was caused solely by the rise in prices on the United Kingdom and European markets, with a consequential diversion of our meat exports from the American market to those markets. But for this rise in prices in the United Kingdom and Europe, Australia may have been considerably affected by the American quota restrictions. One of the things about which some people in Australia were perturbed at that time was the fact that, following these voluntary restrictions and substantial agreement between the Governments of the U.S.A. and Australia on this matter, the United States Congress, in August 1964, passed legislation that imposed meat import quota restrictions in certain circumstances. This is another instance of restrictions imposed by the United States on imports of Australian exports affecting our balance of payments position with respect to that country.

I believe that the situation is perhaps more acute in respect of wool than any other product. Unfortunately, at present, the United States, though it does not impose quota restrictions on wool imports, maintains a heavy duty on imports of raw wool. I understand that at present the duty is 254 cents per lb. of clean content finer than 44’s, greasy or washed. This very heavy import duty has meant that Australia is not able to export to the United States as much raw wool as we would otherwise be able to sell in that country. One of the problems that arises is that there is a consequential reduction in the demand by American manufacturers for raw wool and a turning towards artificial fibres. In fact, the U.S.A. is the only highly industrialised country that today imposes a heavy duty on wool imports. While we do not deny for one moment the right of a country to maintain a reasonable level of protection for domestic

Industries - there is no doubt that perhaps in many ways the wool industry in the United States has been in need of some duty restrictions on the imports of wool in the past - it does seem that there is a basis for consideration by the United States Administration at this stage of some lifting of the present rates of duty. Surely if this were done Australia would be in a better position to improve its balance of payment situation because of the trade between the two countries.

Quantitative restrictions apply to dairy products and apply also to lead and zinc. The situation in regard to lead and zinc is probably worse than it might have been because since 1st October 1958 imports of lead and zinc by the U.S.A. have been restricted to 80 per cent, of the average commercial imports in a period between 1953 and 1957. Since 1958 there has been considerable internal development in Australia in our capacity to manufacture lead and zinc with the result that greater quantities of lead and zinc have been available for export. I do not think Australia can be accused, as honorable members opposite have suggested, of going cap in hand to the United States and suggesting that Australia will be in a disastrous position unless we are able to achieve some lightening of the implications of the measures which are to be introduced by the United States Administration. Within Australia a tremendous amount has been done to stimulate exports by Australian manufacturers and to stimulate interest in exports among other people in Australia. 1 was somewhat intrigued this morning to read the editorial in the “Australian” under the heading “Go it with Exports”. In the article emphasis is given to the fact that the whole future of Australia depends upon our increasing ability to fend for ourselves, on our increasing ability to be able to earn by exporting and on our increasing ability to be not dependent upon the inflow of overseas capital to offset the adverse balance of trade but to earn by increased trade a more favourable position. This is what we all hope will occur in the future. But as the Prime Minister very rightly pointed out in his letter, Australia has not sought aid in the past. We have not at any stage participated in the tremendous foreign aid programmes of the United States

Administration. Rather, we have supplied aid to underdeveloped countries. This is a country that has stood on its own two feet. It is a young country and a developing country. For this reason I feel that we must continue to have considerable amounts of overseas capital coming into Australia. I believe that it would bc disastrous to our whole future development if excessive restrictions were imposed by friendly countries such as the United States on the continued export of their capital. I believe that our trading position could well be improved if we could only get greater access to the United States market.


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


.- The Minister for Social Services (Mr. Sinclair), who has just resumed his seat, quoted at some length remarks made by the Minister for Trade and Industry (Mr. McEwen). He also introduced into the debate a number of matters associated with Australia’s trade with other countries. Naturally that subject must form part of this discussion. But where is the Minister for Trade and Industry? Why is he not taking part in a discussion that, fundamentally, is concerned with the Department that he administers? I am reminded of a picture of a negro fleeing from a bear and saying: “ Oh Lord, if you cannot help me, for God’s sake don’t help that there bear”. The Minister for Trade and Industry has evidently said to the Government: “I certainly cannot go into that House and help you in this debate; the best I can do is not help that bear - the Opposition in this Parliament”. That is quite evident.

What is the problem that faces Australia today? Is it as grievous as the Prime Minister (Sir Robert Menzies) set out in his communication to the President of the United States of America? Is it of such importance that the Treasurer (Mr. Harold Holt) must immediately drop everything that he is doing in Australia and make a frantic dash to the United States in an endeavour to do what the Prime Minister’s communication has failed to do? Is the problem such that the Treasurer should then go to No. 10 Downing Street to plead for preferential treatment for Australia to save our economy from disaster?

Mr Nixon:

– What does the honorable member think?


– I think that most certainly is the position. Our trading operations with other countries this year have been such that we will have a deficit in our balance of payments of about £400 million. Only once in our history have we had a greater deficit in our balance of payments. How is that deficit to be met? How has it been met in the past? It has been met by the inflow of capital from other countries. Obviously, if we are not to be in a worse position at the end of the year than we were at the beginning of the year £400 million of overseas capital must flow into Australia.

During question time today I asked the Prime Minister whether it was true that during the March quarter of this year there had been not an inflow of capital - to liquidate that deficit of £400 million there should have been a capital inflow of about £48 million a month or £120 million for the March quarter - but the reverse, with the outflow of capital exceeding by £17 million the inflow of capital. Unless that situation is rectified it spells disaster. The flow of capital in that period has been brought about merely as an immediate result of the appeal by the President of the United States to the business interests of that country and the action taken by the U.S.A. to reduce the flow of capital from America to Australia and to increase the flow of dividends due to Americans from Australia to the United States. Since the United Kingdom Budget to reduce the outflow of capital from the United Kingdom by at least £125 million a year has become operative, and because a big proportion of that capital comes to Australia, our difficulties have multiplied. That is why the Treasurer, at the behest of the Prime Minister, has dropped all that he has been doing to go to the President of the United States in an attempt to do what the Prime Minister could not do by means of his written communication. That is why, as I said previously, the Treasurer will have to go to the United Kingdom as a suppliant at the feet of the Labour Prime Minister to secure some sort of preferential treatmentat the expense, let us remember, of the people of Great Britain - to promote activity in Australia and to keep our nation solvent. The President of the United States of America and the Labour Prime Minister of Great Britain are entitled to say to

Australia’s representatives: “ The wounds of your country are wounds that have been inflicted by your Government “.

In 1950, when this Government took control of the treasury bench, Australia hid full employment and was free of debt to the rest of the world. We had overseas obligations amounting to approximately £500 million but we had overseas funds totalling about £600 million; so we had a favourable overseas balance of about £100 million. At that time the overseas investments in Australia which had accumulated throughout its history totalled between £100 million and £200 million. As I say, in 1950 Australia was free of debt, it had full employment and was self reliant. But since then we have drifted until we have become suppliants at No. 10 Downing Street in London and at the White House in Washington.

The inflow of capital into Australia during the past five years, encouraged deliberately by Commonwealth and State Governments by tax concessions and other means, amounted to a little over £1,000 million. In the previous five years the total was a little over £500 million. In the five years before that it was about £290 million. Every five years the inflow of capital has doubled but the capacity of Australia to meet the demands created by that inflow of capital and to pay off any portion of it has not increased proportionately.

Capital is of use to Australia only if it is invested here in such a way that it reproduces itself and if it created goods and services with which to repay the capital and pay dividends. But that is not the position. If it were, periodically our exports would become more immense. They would grow so much that the income from them would exceed the cost of imports plus the cost of invisibles. Instead of becoming increasingly a debtor nation, increasingly under obligations to foreign exploiters, Australia would become a creditor nation, levying toll upon the other nations of the world. I do not want that to happen, but I do want to see Australia stand on its own feet. I want it to be able to meet its obligations overseas by the toil of its people, the utilisation of its manpower and the development of its resources. I do not want to see Australia becoming more and more dependent upon more and more money invested here from overseas.

To a great extent, the inflow of capital to Australia has not helped in our development. I have always said, and I say now, that insofar as the inflow of capital is of advantage to the Australian people and to the development of the nation, it should be welcomed and encouraged. There is no limit to the amount of wealth of other peoples of the world that we could utilise to develop this nation and its resources to make it more secure in the face of the dangers we must expect in the future.

But the capital that has flowed into Australia has not done that. As I have said, it comes into Australia in the form of goods which are unnecessary and unwanted. If it comes in the form of exotic foodstuffs, not to the tune of £5 million, £10 million or £100 million, but to the tune of £1,000 million during 10 years, then the mere entrance of that capital into Australia does not improve our resources or help us in any way. I was horrified the other day to read that it is necessary for the Government of Victoria to go overseas to get manufactured trams to run along the tram lines in the City of Melbourne. That is utterly preposterous. When we want something like that we should not have to look elsewhere.

Of course, a considerable proportion of the capital that has come to Australia has been diverted into channels which have constructed large skyscrapers. Manpower and resources in the capital cities and throughout the length and breadth of Australia have been used to build on practically every street corner buildings 20 storeys high for insurance companies, oil companies, hotel companies and organisations of that sort. This has created only surplus office accommodation but it is an avenue of investment for the insurance companies, oil companies and other organisations which have made vast profits here. These things do not add to the production of Australia. They will not enable us to defend ourselves in the hour of danger. They do not create those things that are necessary to enable us to pay our overseas debts. . .

It is not only in that way that capital coming into’ Australia had been dissipated and wasted. It has been utilised in vast import organisations which stretch from one end of this country to the other. They are of no use to the ordinary individual in the community and contribute nothing to the general welfare of the nation.

These things are to be deplored. But they are not like the rains that fall from heaven, over which we have little or no control. They are the direct result of the policies of this Government, which has been warned not once but 50 times in the course of the last 15 years that the policies would cause the disaster that confronts us today, if the Government did not change them. But the Government would not listen to the warnings. It would not listen because it is the jumping jack of pressure groups and the sensitive political instrument of predatory capitalist interests throughout the world, and therefore does the things which capitalism wants it to do and the things which pressure groups and exploiters want it to do and for which ultimately the people of Australia have to pay.

I listened with horror to the Minister for Housing (Mr. Bury), who traced what happened in the 1920’s and 1930’s, when, because of the failure to use properly the resources that had come to this country, something that people call a world depression occurred. Of course, in reality the depression was not caused by there not being enough goods in the world. It has been said that difficulties have occurred because the overseas prices of primary products had fallen and there were too few primary products. The Minister for Social Services said that the prices of sugar and wool had decreased already and that, because of droughts, the quantity and quality of goods for overseas will be much lower in the future than in the past.

Therefore, in the future, within the resources of this country, we will be less able to finance the smooth working of the Australian economy and the importation of the raw materials and other commodities that are essential to the employment of our people and the smooth working of our economy. That is the position into which this Government has got us. Despite the fact that today the Treasurer said: “I saw that there were some inherent dangers in the inflow of capital and I mentioned them “, what did he do or suggest should be done in order to prevent those inherent dangers bringing about disaster? All he did was to ridicule the Labour Party when we suggested that measures similar to those which operate in Japan and other countries should be adopted. Other governments regulate the flow of capital and goods into their countries, so that they receive only capital and goods which will promote the development of the country and the welfare of the people and preserve the country’s inter; national solvency.


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


.- I feel that in this debate so far there has not been the necessary realism from either side of the House, because honorable members have not faced up to the root of the problem that confronts us. There has been a change in the world, particularly in London and New York - two great capital markets. It would seem that no longer will the flow of capital available to us in Australia be the same as it has been in the past. We cannot entirely control that situation. We arc not masters of the decisions of overseas investors and businessmen who make these decisions in their own interests or in their companies’ interests. Australians cannot expect to control their policies. We had better concentrate on controlling our own destiny.

The investment of foreign capital in Australia has been praised and denounced; but the reality has not been recognised. The reality is that when you have an adverse balance of payments on current account you have to get in overseas investment, or you have to draw on your international reserves, if any, and if it is not possible to draw on international reserves you must just go bankrupt. Those are the choices which lie before countries which have adverse trade balances.

Australia’s trade balances have been adverse. Therefore, we need capital coming into the country unless we are able to draw on our international reserves which at present stand at more than £700 million. As we have these international reserves, the situation is serious enough, but it is not critical. We do have manoeuvring time, but we had better not waste it. I want honorable members to consider our trade balance figures over the last seven years. They are as follows -

Those figures add up to an adverse balance of nearly £1,200 million. The adverse balance has been more than offset by the capital inflow of approximately £1,500 million over the same period. So we have added £300 million, in round figures, to our international reserves in the last seven years.

However, I want honorable members to look forward a little. For this financial year we will have an adverse balance in excess of £350 million. Honorable members will have seen the trade figures for the first nine months of this financial year. They show a deterioration of £250 million as compared with the same period last year, and we ended last year with a deficit of £19 million. I want honorable members to remember also two or three other matters which make the picture rather worse than it appears at first sight. In the first place, over the last seven years we have had a run of exceptionally good seasons. We cannot hope that that run will continue indefinitely. Indeed, it may have ended already. These deficits - they are very large deficits - have been accumulated during a period when our primary industries on which we depend for our export earnings have been enjoying a remarkably favourable run. I will not say anything about the prices that they have enjoyed. It is difficult to forecast what the level of prices will be.

However, one other thing should be said: During this period our expenditure on defence has been very much smaller than it has to be in the future. The United Kingdom Budget for defence for this year is more than £A50 a head. Defence expenditure in Australia is less than £30 a head. So to get even up to the United Kingdom level- we are in a lot more danger than is the United Kingdom at the moment - we will have to increase our defence expenditure by two-thirds, a lot of which will have to be used to purchase equipment from overseas. So the long term or medium term prognosis in respect of our balance of trade is not favourable.

In extenuation, we may urge two things. First, we may argue that we have been absorbing a number of migrants and that the increase in population has put a strain on our interna] resources. Secondly, although not so cogently, we may argue that the rate of development in Australia has been very great. I do not intend to discuss that matter, because there is not sufficient time in which to do so. I summarise my thoughts by saying that, in comparison with the rate of development in other countries, I believe we flatter ourselves when we speak of our rate of development. We come back to this point: If we are to be less dependent upon capital imports - I hope we will be - we must do something about our trade balance. That means that we must either increase our exports or decrease our imports.

Of course, we should try to increase our exports, but our capacity to do this is rather limited by cirumstances in the outside world. We already find it difficult to sell surpluses of some of our primary products, and if we were to increase our production of others very likely we would cause a world suplus and a world slip in prices. We could increase our exports of manufactured goods. We should do so discriminate^ and within limits, because it would be quite silly for us to try to send manufactured goods to Asia when we do not enjoy in Australia some special inherent advantage in regard to location or materials or skill. The Government’s export policy in regard to manufactured goods has, unhappily, been rather indiscriminate and not well judged.

If we are to close our trade gap - we must do so if we are not to maintain our dependence upon imports of capital - we must decrease our imports of goods. This means, unfortunately, that we must look in Australia for a concerted plan of import replacement. Adoption of such a plan is well and truly overdue. I urge the Government to take this matter in hand before it is too late. There is no need for panic now, because we have overseas reserves of £700 million or even more, including our second line reserves. We must not allow these reserves to be fritted away, unless we use the time available to us to put into effect a concerted plan of import replacement. This would mean going through the schedule of our imports with a fine tooth comb. We must impose tariffs or adopt other means, to substitute local manufactures for imported goods. As I have said, this means that we must adopt a real plan to drive the manufacturing industries forward. They alone can enable us to close our dangerous trade gap.

Earlier today some of us were discussing the subject of oil. We import far too much oil because we do not process it in the way in which we should. Our refineries produce far too much furnace oil and far too little petrol from every barrel of crude that they import. It is necessary for us to ensure that our refineries change their practices so that we may use an indigenous fuel such as coal, or better still indigenous oil and gas when we get them, in place of the oil that we import at present. This is the kind of thing we must do. We must cease to import a number of items that we can make in Australia, even though we may produce them more expensively and perhaps not as well.

How are we to do this? At the present time we have virtually no unemployed workers; we have full employment in Austraia. There may be some new resources that we can draw upon. For example, we may be able to draw upon elderly, retired people. I know of one sphere in which there are large numbers of women who require employment. We could do more by making better use of our idle machinery. Australian factories work very short hours. Because of idiotic restrictions that are imposed in many cases, our factories are unable to work around the clock when they should, with the result that our costs of production are being driven up. In our present emergency we cannot tolerate this sort of thing. We must see that the machinery that is already in our factories and which does not call for new investment works longer hours. We must get greater efficiency in secondary output. I do not intend to go into the details of how it should be done. There is no general solution of the problem. The little things in hundreds of industries make the difference. Let us resolve to get rid of all artificial impediments to increasing the efficiency of production in secondary industry. To do all this and to reduce our imports - -they must be reduced - will mean shortages and a tendency to a rise in prices.

I come now to another factor that honorable members on both sides of the House have refused to face up to - the inadequacy of the savings ratio. This is an endemic trouble in Australian industry. It is fairly obvious that our savings are insufficient. A few moments ago in this place the Treasurer (Mr. Harold Holt) said otherwise. But he was demonstrably wrong. If our savings were sufficient, we would not be in the position of requiring foreign capital to be imported in order to keep going. The Government, using its power to control finance in various ways, must set its sights on an increased savings ratio in the Australian community. There are many ways in which this can be achieved, but I shall mention only two.

The time is long overdue to do more to alleviate the pensions means test. The means test has two undesirable features so far as the problem we are now discussing is concerned. The operation of the means test is responsible for removing from productive effort people who would like to work, perhaps only part time, but who adopt the attitude that if they earn additional income they will get nothing extra in the long run because their pension will be reduced and they will lose the benefit of medical and other services. Secondly, the means test in its present form is an impediment to saving and, in some cases, a cause of dis-saving. All honorable members know of instances where constituents have come to them and said: “ We have spent our money - dissipated it. We would not have bought these things if we had not to qualify for the pension “. Every honorable member, if he is honest, will admit that this goes on. It is high time that the Government turned its attention to doing something about the means test which is an impediment to saving and production and is one of the causes behind the balance of trade difficulty with which the Government is labouring and which made it so essential for the Prime Minister to address himself to President Johnson as he did.

The second possible approach to the savings problem concerns taxation. We could amend our taxation legislation in such a way as to increase the savings in the community by putting a premium on savings. I have endeavoured to bring forward something of this nature in this House on other occasions and when next our income tax legislation is before us I intend again to move an amendment along these lines, and I hope it will get support. We cannot go on drifting in our present manner. We should not allow ourselves to drift, in this economic sense. This is not a crisis. We have £700 million in kitty in overseas reserves. This allows us manouevring room. It give us time to make the necessary reforms.

We cannot expect to continue to maintain adverse balances of trade which, over the past seven years have averaged about £170 million annually and which, for the present year, will be at least twice that sum. We should be tackling the evil at its source. We have to do something. I am afraid we may have to restrict imports to put the fires under our manufacturing industries and drive them forward-. At the same time we should be undertaking, at the Government level, these measures which will increase savings in the community.


.- The honorable member for Mackellar (Mr. Wentworth) showed an unexpectedly reasonable approach to this subject. If one looks through his discourse one will see some threads of Australianism in it. He was not completely pessimistic. He did not suggest that even under this Government there is nothing Australia can do to mend its position. This, I think, is partly in the Wentworth tradition, which goes back to his great grandfather. Unfortunately, few honorable members opposite speak and think this way. I would, however, challenge some of his approaches. I think the means test is very important. After all, to place a higher value upon savings than upon wages imposes a burden on the people who live on wages - those who have to live on the inadequate basic wage and on the lower income levels generally. However, on the whole I think there were some messages that other honorable members opposite ought to read and learn from the honorable member’s speech.

I want to challenge the whole basis upon which this debate has proceeded from members opposite. In the last 15 years there has been a serious collapse in the national morale. I am an Australian and I do not think we need to crawl to anyone. Australia is one of the world’s wealthiest nations. I wonder how it was that our grandparents and great grandparents managed to create some of the assets of which we make use today. It would be worthwhile for some honorable members to take a look at Australian history. Let them consider how the overland telegraph line was built in 1872, or thereabouts, when the population of this country was a couple of million people. Let them take a look at some of the railway lines - thousands upon thousands of miles spanning the continent - which were built when the population was only a half or one-third of what it is today.

How is it that a country with the defects and disabilities which honorable members opposite seem to see is able to operate an airline like Qantas? How is it able to construct and develop projects like the Snowy Mountains scheme? Of course, it was symptomatic of the whole philosophy of the conservative parties over the last generation that they could not see any hope in that project. It is worth canvassing history to recall that they thought that the project was a waste of money. Hardly any members of the present Government parties attended the opening ceremony. In many other fields this nation has made an impact beyond its mere numbers. I discard the idea that we cannot become more self-reliant.

We are one of the world’s largest exporters of sugar. We are the world’s largest fine wool producer. We are one of the world’s largest trading countries. We are told that our steel industry is first class and that at various levels it is one of the world’s best. These achievements have been accomplished primarily by Australians. We had no need to import anything more than the knowhow and technical knowledge. We have kept our minds open and Australian management has been capable of meeting the situation. In 1949, this Government inherited a very strong economy. The honorable member for Scullin (Mr. Peters) pointed out some of its features. Our overseas balances were a trifle larger than our overseas indebtedness - we had a balance of payments in our favour - and despite the rigours of war we had been able to liquidate many of our past difficulties.

Australia is a nation with a great deal of internal strength and with people well equipped in health, physical vigour, personality and vitality to tackle any problem with which they are faced. I challenge the whole premise upon which this Government has been operating in so many fields, of which this is only one. I challenge the Government’s encouragement of foreign investment. Actually it has been not just encouragement, but a pleading for it. Our whole financial philosophy has been based upon foreign investment. This applies all through our foreign policies and defence policies, and I challenge them, too.

The honorable member for Mackellar says that the Government is not facing the problem. How can it? It has its head in the sand on these questions. Australia is one of the few nations which have not tackled the problem of controlling their economy. Honorable members opposite say: “ You cannot control these things “. How is it that New Zealand has managed to control its economy and overseas investment? What about India, a new nation in a sense? It has found no difficulty in getting Indian shareholdings in some of the American companies. For instance, the International Harvester Co. which operates here, I think exclusively under American management and with American shareholding, in India operates with some Indian shareholding.

Other countries with long traditions and long histories have found it necessary and advisable to exercise controls. I instance Holland and Japan. Japan is one of the world’s great trading nations. If Japan has found control necessary, and has been able to exercise it, why cannot we do it? This goes for France, and a number of other countries, too. I want to know what is wrong with our commercial intelligence. The Minister for Housing (Mr. Bury) spent many years in the United States of America and he took part in international financial dicussions. He indicated that we had received advice; that warnings had gone out over the last few years intimating that what is happening now was likely to happen. Why did we not look and act before now?

Why have we so continually abdicated our nationhood in this way? When will we ever learn? Surely it is one of the simple elements of economic policy that governments take internal action to preserve their external position. Of course, the American Government, is very conservative. That it would leave action until late in the day was logical. But it is illogical that the Australian Government should not have seen that this would happen. Of course, this is one of the most doctrinaire governments in the Western or free world. It is stricken with doctrines which have been discarded practically everywhere in the world.

The Minister for Housing says that this is the world of the bigger and bigger country. He says that even Great Britain will not be able to control its own destiny in this way. The logical deduction to be drawn from his remarks is that eventually and inevitably there will be a takeover by the Chinese. What nonsense this is. Do representatives of other nations speak in this pettifogging and pussyfooting way? Can honorable members imagine an Israeli, a Swiss, a Swede, a Dutchman or a Belgian speaking that way? Of course not. They have tiny countries; but history has not been made by the big battalions. England was only a tiny country when it started to impress itself upon the history of the last 300 or 400 years.

What is wrong with us? Why must we plead with people to pour their money into this country? And do they pour it in? Examine for a moment General MotorsHolden’s Pty. Ltd. which has established a magnificent industry under first class management, though occasionally it has rows with the industrial unions. But what did it bring to this country? Is it not true that its initial investment was a loan of £2.5 million from an Australian bank to launch the industry? Now its capital value is about £78 million, which has all been obtained from Australian customers, from the happy owners of Holden vehicles. In return, Australia has acquired a millstone of debt in repayment of the investment. What did Australia gain that was worth £76 million over and above the £2i million borrowed from an Australian bank?

Consider the case of the Mount Isa railway. The Queensland Government was at the time of its reconstruction, and is now, very conservative. A few years ago it was unable to find from its own resources the means to remodel the Mount Isa railway. So it pleaded to the Commonwealth Treasurer who in turn pleaded to the World Bank. The World Bank said: “ You are one of the wealthy countries of the world. Do it yourself “. And we found that we were able to do the job. What would have happened if we had borrowed money overseas for the purpose? Would we have imported one sleeper, one rail, one pound of ballast or one engineer? No. We would have gained only a millstone of debt for every railroad user in that area for years to come.

So I regard the document we are discussing as one of the most humiliating documents placed before the Australian Parliament for a long time past. I repeat: What is wrong with us? The Prime Minister, repeating the Treasurer’s words, writes to the President of the United States of America -

Australia is not a “ developed “ country. . . .

That is absolute nonsense. We have three million square miles of territory and we have eleven million people with greater personal wealth than almost any other nation. We have a greater investment in railways, telephone systems and roads a head of population than almost any other country in the world. We may well say that there are lots of jobs still to be done. So there are, everywhere.

I visited the tiny country of Israel, with a population of two million people - fewer than Melbourne - and a territory of eight thousand square miles. This is not equal to a decent sized Federal electorate. The Israelis are able to find plenty to do there. It is a case of humanity, not a question of space and having it all. It is a question of the vitality of the people and its Government. The Australian Government has deserted its post. So we find in the letter admissions of past improvidence and we are pleading for help because we have to pay back overseas debts. A debt of 200 million dollars matures in the next five years; 130 million dollars is due for repayment to the International Bank in that period. Whose fault is that? What was the great profit to Australia when we acquired most of these debts under the present regime? Is this the way in which a sovereign, national government should place its case before another nation?. Of course not. The Prime Minister said in his correspondence- - any substantial falling off in capital inflow would be a matter of serious concern. . . .

Why is that so? Because the Minister for Trade (Mr. McEwen) has said on occasions, we have to sell part of the farm to pay off the mortgage and the interest burden. We are creating a future storm for later generations to weather. The Prime Minister, who at one point in time ventured onto the world stage to solve a lot of problems, writes that we would be troubled and embarrassed by a cessation or diminution of the inflow of capital. We have 11 million people. We are one of the world’s largest trading nations. We can buy aircraft worth £3 million each by the half dozen, yet our Prime Minister says that we would be troubled if the inflow of capital dropped by perhaps £50 million or £100 million in a year. We would be troubled only because we have failed to face the facts and the problems that would flow from such a consequence and because we have not taken the action we ought to have taken. I come now to the most touching part of the letter, a part which ought to insult every Australian. The Prime Minister said -

Our own policies in these important fields have, we believe, had the encouragement and approval of successive United States’ Administrations.

The tame colonial boys. The new generation of colonial spirits. The people who have had to have the approval of somebody else bestowed upon them.

Defence projects are mentioned. A lot of them are ones for which necessarily we would have to acquire equipment overseas, but a great deal of them can be challenged, I think, on the ground that they should have been completed here. One of our largest investments overseas is in the construction of destroyers which could well have been built in this country. What did the President of the United States think? He said - . . we believe after careful review that our Balance of Payments Program is not likely to have a serious adverse effect on the Australian economy.

But, of course, he did not know with whom he was dealing - with people unable to learn any of the lessons of history. Any nation with any sense of its own security takes corrective action and planning action. We do not need to go very far to find the answer. It was in all the history books when I went to school. Most honorable members opposite probably learnt about the British Navigation Acts. They may not have been as successful as some historians say, but this goes back over 700 or 800 years during which time the British protected their trading position by special acts of Parliament and special regulation of trade.

What about the United States of America, the home of private enterprise and free flowing capital? In his letter ihe Prime Minister pointed out that American wool tariffs are a serious inhibition of our trade. America’s attitude toward our exports of lead and zinc has prevented us expanding our trade. The Minister for Trade constantly pleads for Americans to buy more meat from us. They will not do so because they are protecting their own home producers. The United States, obviously the world’s most powerful industrial country, has found it necessary and expedient throughout its history to protect its national position by innumerable methods and pieces of legislative machinery. It has usually been a high tariff country. It was pointed out at question time this morning that America is paying a subsidy to wheat producers. It has its own shipping industry.

One of the basic reasons why Australia is continually in trouble is because we have failed to establish our own shipping line. The United States has realised that shipping is vital to its commerce and defence, and substantial support has been given to its shipping industries in all sorts of ways for many years. Construction subsidies are paid, loans granted and preferences granted for certain cargoes. If the great nation of the United States and almost every other nation on this planet throughout history have been conscious of the necessity to protect their trading position and interests by implementing controls of all sorts, why has not this Government controlled overseas investment in Australia over the last 15 years? Britain, Switzerland, New Zealand, India and France have done so. You might say that everybody is doing so except us. But the present Government never learns. The Opposition believes that it is the duty of every country to take an active interest in determining its own destiny. I say that is the Socialist view. It includes political action. Our political policies flow from this type of thinking. So it is in economics. We must be selfreliant in the economic field. But the Government has ensured that in so many fields we cannot be self-reliant. We are always crying poor and pleading that we cannot do it.

Australia should have its own shipping line. Sweden, with a population of about seven million, is able to do these things. The Australian continent is rapidly becoming just another Japanese quarry. Our mining interests are falling increasingly into the hands of foreign investors. Of the 500 largest companies in Australia, 225 are controlled as to more than 51 per cent, of their capital by non-Australians. How can we tolerate such a position? This is a problem that the whole world will have to face. These multi-national corporations are getting beyond the control of even the most powerful governments because, by operating across national frontiers, they are becoming supra-national. This is a challenge to all of us. This is not just something that challenges people like members of the Opposition, who are Socialists and who believe that this kind of enterprise should be controlled. It challenges anybody with any national spirit and concern for his sovereignty.

We are constantly conscious of decisions made elsewhere affecting our welfare. We have one of the largest motor car industries in the world. If decisions are made to make retrenchments in the industry, those decisions will be made in Detroit, London, Hamburg or elsewhere but not in the board rooms of Melbourne and Sydney or the directorates of Canberra. The same thing applies to shipping freights. Recently the freight on apples was increased to 16s. a case. That must have been a bitter blow to Tasmanian interests. Who made that decision? Did any Australians participate in it? Of course, a few people represented by those who sit opposite- Government agencies and so on - were conniving in it, but the decision was made by other people.

The honorable member for Melbourne Ports (Mr. Crean) referred to Kitchens, the soap people. I have mentioned bauxite. Australia possesses 3,000 million tons of the world’s 10,000 million tons of bauxite reserves. Those 3,000 million tons are almost completely alienated to foreign investment and foreign capital control. No nation with any sense and spirit should tolerate such a position any longer.

One of the reasons why I hope the people of Australia will pay earnest attention to this debate is because the Government has completely abdicated its duties. It has sold out Australia’s interests in the name of financial doctrines. It is living in the past so far as these matters are concerned, denying all the lessons of history - of our own history - and lessons of common practice in every other nation. It should no longer have the confidence of this country.

Debate (on motion by Mr. Fox) adjourned.

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Ministerial Statement

Mr. HULME (Petrie - PosmasterGeneral’ - by leave. - In view of newspaper references to possible interruption of Post Office services by the members of certain unions employed in the telegraph and postal services areas of the Department, I feel that honorable members will be interested in the situation which has been reached in this connection.

The salaries of all members of the Post Office staff are fixed either directly by the Commonwealth Public Service Board under the Public Service Act or through cases being referred to the Commonwealth Public Service Arbitrator. There are a very large number of unions numbered among the the 90,000 odd full-time employees of the Post Office and there is a very wide variety of types of work carried out. It follows through that the fixing of appropriate salaries from time to time is frequently a very complex matter.

In the present instance the Public Service Board was approached in November 1963 by the union, which is called the Third Division Telegraphists and Postal Clerks Union. A formal claim for increased salaries was left with the Board on that occasion. Because there are other telegraphists and postal clerks, however, in the Fourth Division of the Service, it was necessary that their interests should be considered as part of the one operation. The second union, known as the Fourth Division Postmasters, Postal Clerks and Telegraphists Union joined with the first union in lodging claims with the Board for similar increases in February 1964.

In June 1964 the Public Service Board informed the unions that on the material put forward it could not agree that any increase was justified. The Board did, of course, give the unions the opportunity to think the matter over and bring forward any new material if they were so inclined. In August 1964 the Third Division union submitted what was regarded by it as additional material. The Board suggested that a joint conference including the Fourth Division union, but the Third Division union was unwilling to agree to such a joint discussion. A conference was finally arranged in February 1965 with the Fourth Division union only.

Numerous meetings took place between the Department and the Board and on 9th March 1965 they again met and discussed jointly the claims of both unions. A meeting was then arranged between the two unions on the one hand, and the Department and Public Service Board on the other for 29th March. At the opening of the conference, the Board informed the unions of the increases it considered to be justified. A whole week was then spent discussing the Board’s proposals and details of evidence put forward by the unions in support of their claims. At the end of the week, the Board responded to the points made by the unions by improving the proposals in certain respects and indicated that arrangements could be made for the increased pay to commence in about two weeks time if the unions co-operated. The unions, of course would lose absolutely nothing by accepting these offers since they still retain the legal right to continue with their plaint before the Public Service Arbitrator if finally they felt that the offer from the Board was not in accordance with the evidence which they would be able to put before the Arbitrator.

Members would be interested to know that telegraphists, postal clerks and senior postal clerks have all participated in the rises in salary which have occurred in recent years due to increases in the basic wage or to increases in margins for skill. As an example, the salary of a telegraphist has been increased by £377 per annum during the last ten years. Postal clerks have had increases of up to £435 per annum, while senior postal clerks have had rises between £505 and £707 per annum. These figures include the increase now proposed by the Board.

I present the following paper -

Post Office Salaries - Ministerial Statement, 8th April 1965- and move -

That the House take note of the paper.

Debate (on motion by Mr. Webb) adjourned.

page 807



– I present the sixth report of the Printing Committee.

Report - by leave - adopted.

Sitting suspended from 5.55 to 8 p.m.

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Ministerial Statement

Debate resumed.


.- On 11th February President Johnson informed Congress that he proposed to take certain measures to improve the external payments position of the United States of America. I have not seen the text of that statement but I have read the report of it which appeared in the international edition of the “ New York Times” of Thursday, 11th February. The article stated that the United States had incurred an international payments deficit for 1964 of 3 billion dollars and that more than half of this deficit had occurred in the final quarter of that year, partly because of what the President described as special and temporary factors. This probably explains why an article which appeared in the “Federal Reserve Bulletin” of October 1964, on the United States balance of payments for 1963-64, began by stating that the overall deficit in the United States balance of payments from mid-1963 to mid- 1964 was smaller than that for any corresponding period of the preceding six years and was less than half the exceptionally large deficit recorded in the period from mid-1962 to mid-1963. The article states a little later on that the United States balance of payments position this year represents a marked improvement over that of five years ago.

In his statement the President asked both the Secretary to the Treasury and the Secretary of Commerce to enlist the leaders of industry in a campaign to curtail direct plant investment and to limit their deposits in foreign banks and their holdings of foreign assets until their efforts, in his words, “ have restored balance in the country’s international accounts “. No-one would deny to the United States the right to correct its balance of payments position, but I believe that the Australian Government is in a very strong position in presenting to the United States President reasons why the restrictions proposed by him should not apply to this country. First, Australia has not contributed to the troubles of the United States of America in this direction. On the contrary, we must be numbered amongst the best customers of the United States, not perhaps in terms of the value of the imports which we make from that country but in terms of the amount of money which actually changes hands between our two countries.

For as long as I can remember, the balance of payments has always been against us. I have obtained from the Bureau of Census and Statistics figures relating to our exports to and our imports from the United States over the past 10 or 11 years. As I could not obtain complete figures in relation to the financial year 1963-64, I wish to cite figures for the 10-year period between 1953-54 and 1962-63. I believe that President Johnson should give careful consideration to these figures when he is considering the case that will be presented to him by our Treasurer (Mr. Harold Holt) in the very near future, because they show that in this 10-year period our actual trading deficit with the United States of America was approximately £828 million, or an average of nearly £83 million a year. In the year 1963-64, which I have not included, the trading deficit against us was £137 million.

Over the same 10-year period the amount of investment income payable by companies in Australia to the United States and Canada was approximately £394 million. I was unable to obtain a split-up between these two countries because of the rather complicated capital mix-up of some of the companies, particularly those related to the automobile industry. The figures that I cite relate to North America, but I have been assured that the Canadian content is very small. This made a total outgoing from Australia of £1,222 million. Against this there was a capital inflow from North America over this period of £502 million. This includes some profits which have been re-invested in Australia. Altogether, this left a net result in favour of the United States of £720 million, or an average of £70 million a year over the 10-year period. It is of interest to note that our trading deficit over the past three years has been gradually increasing. For instance, in 1962 it was £65 million; in 1963 it had risen to £98 million; and in 1964 it had risen to £137 million.

I should like to cite some figures from a publication called “ Survey of Current Business “. I think that the honorable member for Melbourne Ports (Mr. Crean) quoted from it earlier. I quote from the December 1964 issue. Under the heading “Summary, United States Balance of Payments “, this deals with United States financial transactions with all foreign countries. It covers the nine months period to the end of September for both the year 1963 and the year 1964. In 1963 the United States had a favourable balance on its trading with all countries amounting to 476 billion dollars. This was more than offset by an outflow of capital of 3.8 billion dollars and also unilateral transfers to foreign countries, including military aid, amounting to 3.26 billion dollars. Overall, bringing into account one or two other items, the net unfavourable balance for the United States for the nine months period in 1963 was 2.3 billion dollars. It is very interesting to have a look at the section which relates to this part of the world. Unfortunately, there are no sepaarte figures for Australia, because Australia, New Zealand and South Africa are all grouped together. They show that in that same period the favourable trade balance of the United States was 200 million dollars. Whereas the United States finished up with a world deficit of 2.3 billion dollars, in respect of this part of the world it was 151 million dollars in credit. The figures for 1964 are not complete, but the total result is shown. The overall deficit of the United States for the nine months period in 1964 was reduced to 1.2 billion dollars, but there was a favourable trade balance against this area of 386 million dollars. This is explained by the fact that we get very little of the foreign aid, but it also shows me that we are helping to finance the United States deficit with the rest of the world.

Another of the measures which was announced by President Johnson was “ a call for redoubled efforts to promote exports “. This is fair enough, but as far as I am concerned it should not be directed towards increased exports to Australia unless the United States is prepared to reciprocate by granting Australia easier access to its markets. At the present time, I believe, every one of our exports to the United States is subject to a quota. This applies to butter, cheese, sugar, meat, skimmed milk powder, butter oil, lead and zinc. I remember the trouble we had only a few years aso at Mr Isa because of the severe restrictions placed by the United

States at that time on imports of lead and zinc. By these actions the United States was able to transfer some of its unemployment problems from that country to Australia. On 25th February the Minister for Trade and Industry (Mr. McEwen) said -

In the last few years, Australia has been the most rapidly growing market for American exports. At the same time, the gap between Australian exports to and imports from the United States has been progressively widening in favour of the United States.

This is very true. Our Government is doing everything possible to encourage exports by offering incentives in various forms, but our efforts to increase our exports to the United States are being frustrated by United States policies. The United States maintains a duty of 25i cents per lb. on Australian wool, and this is the only high wool duty in the world. A fact sheet or bulletin issued by the Commonwealth Bureau of Census and Statistics on 22nd March shows that the value of our wool exports to the United States for the first eight months of the current year amounts to less than £15 million out of a total of £246 million worth of wool exports. The figures also show that the total value of greasy wool exports from Australia over this same period had fallen by £47 million when compared with the same period last year. Unfortunately, we have our own problems in relation to balance of payments and, if my calculations are correct, every penny change in the price of greasy wool affects our export income by over £6 million.

On 17th February the Minister for Trade and Industry spoke on the subject, “ Investment in Australia with Emphasis on the Next Decade”. He did this at a symposium banquet conducted by the Stock Exchange of Melbourne. He said -

All the indications show that over the next decade our economy will become more capital hungry and the population growth for which we aim will require an accelerating investment of capital.

The plain fact of the matter is that if Australia is to continue its rate of development and if we are to pursue our current immigration programme we will not be able to obtain all the capital that we require from our own resources although, as the Prime Minister (Sir Robert Menzies) pointed out in his letter to the President of the United States, we are at the present time generat ing four-fifths of the capital which we require from our own savings.

I believe that we need foreign capital today more than ever before but I agree with the Minister for Trade when he says that we must borrow but we should not sell out. We are grateful for the capital and know-how which we have received from the United States but surely it is in the interests of the Americans that Australia is strong financially and industrially because, apart from Japan, we represent the strongest bastion of democracy in the South East Asian region. I hope that the Treasurer will be able to persuade President Johnson to do nothing which will interfere with the present rate of capital inflow into Australia. But if he is unable to do so I believe that we will have to take whatever steps are necessary to protect our own balance of payments position.

From figures obtained from the Commonwealth Bureau of Census and Statistics I learned that during an 11 year period, from 1953-54 until 1963-64, we imported from the United States motor vehicles and parts to the value of £156 million. We imported cinematograph films to the value of £14 million and tobacco, cigarettes and cigars to the value of £103 million. If I know the American people, they are hard headed business men. I believe they will listen if we point out to them that all of these commodities can be obtained from other sources. They can be obtained from countries with whom we have favorable trade balances. We can obtain cars from the United Kingdom, and heaven knows that she has problems which, I believe, are far greater than the economic problems of the United States. Likewise, we can purchase whatever films we require from the United Kingdom and European sources or we can spend some of the money which we spend on imports in encouraging our own film industry. We can obtain tobacco and cigarettes from the United Kingdom or Europe or we can increase the content of Australian tobacco in cigarettes manufactured in Australia and thereby encourage our own tobacco growers.

I am not anti-American. I have a great respect for the Americans. I am pro- American but I am even more pro- Australian. I believe that if we present our case strongly, fearlessly and to the limit of our ability to the President of the United States the American people will respect us for it and our relations with the United States will become even more cordial and our ties with that country will become even stronger than they are at the present time.


– Three years ago Government members would have had us believe that it was Great Britain that let us down. The issue then was Britain’s application to join the Common Market. On that occasion it was the Minister for Trade and Industry (Mr. McEwen) who had to go abroad and plead for our salvation. The Treasurer (Mr. Harold Holt) at that time was not quite so concerned at the prospects. His assistant Minister, now the Minister for Housing (Mr. Bury), expressed the Liberal hesitations at the Australian Country Party cries of “wolf”. The Australian Labour Party merely pointed out that Britain’s application to join the Common Market highlighted a position into which Australia had been drifting for years. Now, Government members would have us believe that it is the United States of America which has let Australia down. This time it is the Treasurer who is to go abroad and plead for our salvation. The Minister for Housing is supporting his mission. This time the Minister for Trade and Industry (Mr. McEwen) abstains from participation in the debate and abstains from attendance at it. Only one member of the Country Party has spoken and he has contented himself with giving advice to the Treasurer on the arguments which might appeal, if not to the President of the United States, at least to Country Party supporters in Australia.

The Treasurer practised on us this afternoon, I gather, the arguments that he will put to Mr. Dillon and to President Johnson. I do not think honorable members were very reassured at the figure - the mendicant figure - he would cut as he fluttered from one financial centre to another in the hope of a handout or a reprieve. We are all bound, in the interests of the country, united in patriotism, to wish him luck as we wave him goodbye. If anybody is so ungracious as to criticise the Government’s lack of foresight in this matter and its lack of planning to obviate the situation which has now arisen then he is letting the country down! It is poor taste to point out that it is the Government which has been in power for 15 years which is letting us down in this case, and which would have let us down if Britain’s application to join the Common Market had succeeded.

As the Minister for Housing pointed out this afternoon, the tax equalisation proposals of the United States Government which have occasioned this debate, and now the United Kingdom Budget, must be viewed against the background of international liquidity problems in general. Both America and Britain have been running deficits for years. Since dollars and sterling are the two international currencies, this has placed Britain and America in a special position where they must protect the strength of both their currencies. Australians cannot object to this. Financially and diplomatically Australia is so involved with both America and Britain that she is directly involved in their liquidity problems almost as much today as she was in the 1920’s and the 1930’s. We must try to break down this dependence. We should do more to convert the financial institutions of the United Nations into an authentic world bank and to develop an international currency.

But this is a wider problem. We are concerned at the moment with investigating the immediate and very serious position developing in our balance of payments. The Treasurer was whistling this afternoon in order to keep up his courage. He misses the whole point at issue if he believes that if only America will relent for a while then all will be well. The American action is only a warning, a symptom of a fundamental problem - our failure to pay our own way and to reduce our dependence on overseas investment. He has ignored the serious dangers of our dependence on overseas investment and the extent to which it props up our balance of payments. Our balance of payment statistics are ominous. In June last year our international reserves stood at £854 million. Of this sum £806 million was held by the Reserve Bank and £48 million was held by banking institutions. By the end of March this year the Reserve Bank holdings had fallen to £699 million. They had, in fact, fallen £49 million in the previous five weeks. By June this year our total reserves are likely to be only £700 million, a fall of £150 million in one year.

The reasons for the fall in our reserves are manifold. There is the growing level of our imports. In the first nine months of this financial year the value of our imports was £204 million higher than in the first nine months of the last financial year. Secondly, the value of our exports was down, mainly due to lower prices for primary products - wool and sugar. Our exports were £46 million lower in the first nine months of this financial year than in the first nine months of last financial year. The net effect of these two factors - our imports and exports - is that our trade balance is £250 million worse off in the nine months’ period than in the corresponding period a year before. The third factor is the fall in capital inflow, which in the December quarter of last year was only £57 million compared with £88 million in the December quarter of the year before.

The Prime Minister, in his letter to the President, speaking of external reserves, said -

These seem certain to decline over the year as a -whole by appreciably more than £100 million.

It looks as though they will decline by £150 million. A fall in international reserves in 1965-66 is likely to be even greater than in the current year. I quote again from the Prime Minister’s letter. He wrote -

For the financial year ahead, the signs point to a continued drain on our external reserves.

The first reason for this, in addition to the factors already operating, which I have mentioned, is seasonal conditions in eastern Australia. The second reason is heavy defence expenditure overseas. Again I quote the Prime Minister’s letter -

Overseas expenditure in 1965-66 and later years arising from existing defence commitments and the new three-year defence programme is estimated at about £400 million.

The third additional factor this coming year is that we will have maturing debts in America of 200 million dollars in the next five years, and the fourth additional factor is the decline in capital inflow, worsened by the action of America and Britain in correcting their balance of payments situation.

Next financial year our international reserves are likely to fall by £250 million. That is £100 million more than in the present year if the present trends continue. By June next year our reserves are likely to be about £450 million or £400 million below the figure of June last year. This is a worrying prospect. It is obviously what prompted the Prime Minister to write to the President.

Quite apart from the result of American and British action to limit capital outflow, some action would have to be taken to correct our own balance of payments situation. This would have involved some measure of deflation or recession. Recent action by America and Britain will now make this adjustment more painful. Once again we see how vulnerable our economy is to a change in the attitude of overseas investors towards Australia. This is likely to occur at a time, such as the present, when our balance of payments situation is already deteriorating. Too often the Government emphasises the value of capital inflow to the balance of payments without giving similar prominence to the outflow of dividends and profits. Leaving aside undistributed profits, which are treated both as an inflow and an outflow, there was an inflow of new capital of £1,200 million in the 16 years from 1947 to 1963. In that period profits and dividends remitted totalled £650 million. Thus there was an investment balance of £550 million or £34 million on an average each year - hardly a great amount of new money at all.

Overseas investment is excellent as a stimulant, but not as a drug. The Australian Government has become addicted to it. When it is withdrawn or reduced the Treasurer gets the shakes. It is no good the Government crying “ wolf “ over recent actions by the British and American Governments as it did over the European Common Market. The Government has itself to blame for our trade failures and our dependence on overseas investment. It has had sufficient warning to get its house in order and reduce our dependence on overseas financiers, but it has foolishly continued on hoping that all would be well. It lived from day to day hoping for the best. This is no way to run even a finance company like Reid Murray, let alone a national economy.

In the last 10 years Australia has had a £1,540 million deficit on current account in its balance of payments. The inflow of private overseas investment in that period was £1,570 million. The Government was borrowing capital in order to pay current expenses. This was what the Deputy Prime

Minister called selling a bit of our heritage every year. That is why he is out of the House now. His presence would be too embarrassing to his Liberal colleagues.

The Government believes that the methods pursued so disastrously by the Reid Murray group internally can be used successfully in international finance. Both concerns - Reid Murray and the Australian Government - work on the principle of borrowing fast enough to keep ahead of repayments. But this only postpones the day of reckoning. Sooner or later the inflow is likely to be seriously reduced, and it is likely to be reduced when our balance of payments can least stand it. In the 1930’s and in the three credit squeezes we saw this situation occur. In 1951-52 the inflow was £86 million; the next year it was £25 million. In 1955-56 the inflow was £117 million; the next year it was £104 million. In 1961 the inflow was £235 million; the next year it was £149 million. There has not been the steady inflow that the Treasurer suggests. The inflow has fluctuated and it fluctuates against us when we need it most.

Furthermore, as the amount of overseas owned assets build up in this country, so the figure of remitted profits will grow and become a heavy drain on the balance of payments. This has been the trend in the post-war period during which overseas investment has been concentrated in the fastest growing and most profitable sections of the economy. In the long term, capital inflow is not likely to grow as fast as remitted profits. Between 1947-50 and 1961-64 - those two triennia - capital inflow from overseas increased by 290 per cent, but the income payable on that investment increased by 330 per cent.

In 1961-62 the following industries remitted more in profits than they brought in - 1. Founding, engineering, metal working, vehicle parts and accessories. 2. Food, drink and tobacco. 3. Finance and property, in 1956-59 the income payable overseas on North American investment in Australia was £46 million. The capital inflow from North America in that period was only £28 million. Both figures exclude unremitted profits. Income payable overseas will increase steadily, and the Government is now faced with having to ensure a high level of inflow to service that debt.

American action is a clear warning to us to put our own house in order, to reduce our dependence on overseas investment and to recognise the long term problems as well as the short term gains of such investment. This situation has occurred because the Government has failed to plan the long term growth of our economy, and because of its uncritical “ open door “ policy to all overseas investment. It is so uncritical of overseas investment that it has failed to maintain even a register of overseas investment.

The Government has no continuing and overall plan. Such planning is not an end in itself but an essential means to an end. The Australian economy cannot progress without such planning. Control must be exercised in accordance with a coherent and co-ordinated plan, designed to achieve the development of Australia on the basis of proper social and economic priorities, one of them being expanded exports to reduce dependence on overseas capital. Overseas investment must be regulated in conformity with these plans. We should insist as far as possible that such investment establish new industries, introduce new techniques, allow genuine export promotion and import replacement, and provide Australian participation in ownership.

It is the height of folly to permit the unplanned growth of our economy and to allow overseas investment to come and go as it pleases. No businessman worth his salt allows his business to be so dependent on the whims of outside financiers as does the Menzies Government. A detailed assessment should be made of all overseas investment - its relative advantages and disadvantages to this country. There will be a financial reckoning for this Government’s shortsightedness, and it may come very soon.

In the Budget debate last year I said that the Government should establish an overseas investment trust. The functions of this trust would be, mainly, twofold. I mentioned one of them last August. First, it should arrange a transfer of equity in overseas companies to Australians. I said that there should be an initial transfer of a 10 per cent, equity in fully owned overseas enterprises. At that time our balance of payments could have afforded the £250 million remittance required. Our balance of payments situation has now deteriorated. But the policy for the future should bc clearly laid down and the machinery for its implementation set up, even though it might have to remain dormant until our balance of payment situation improved. Overseas companies, of course, would be given a certain period in which to adjust their shareholdings. They would be obliged to do this either by taxation inducements or direct statutory prescriptions.

When I say that an equity should be transferred to Australians, I do not mean transferring shareholdings from a group of wealthy overseas shareholders to a group of wealthy Australian shareholders. I believe that the trust should retain the majority of transferred shares itself. In this way the whole community would benefit from the profits and share in the losses of these overseas companies. It would also give the Government, through the trust’s shareholdings, a voice in the policy of the companies concerned.

Even more importantly, the trust should, for the future, promote the co-operation of Australian and overseas capital in joint ventures or consortiums. In some cases it could co-operate with local companies in raising loans overseas and employing experts in order to establish a particular industry which we require. Far too often we have to wait until an overseas company is prepared to develop new resources in Australia. Then we pay a high price for its investment. This dependence is objectionable. In the end, it involves handing over the control of our resources to overseas companies. It is not good enough, as the Minister for Housing (Mr. Bury) suggested this afternoon, that our future should depend on being the site for some branch offices or branch factories of international monopolies.

In other cases it would be necessary for the trust to co-operate with an overseas company to establish a new industry or enterprise. Without the overseas company the new enterprise might be denied access to techniques, supplies or markets. I am thinking here particularly of the mineral industry. In his letter President Johnson said -

  1. . certain large direct investments in the production of iron ore in Australia are planned for the near future.

We believe that there should be a significant Australian public participation in such enterprises as these. An overseas investment trust could help us reap the benefits of overseas investment and overseas know-how whilst at the same time protecting our national interests and ensuring that company policy conforms to the general lines laid down by government economic policy.

There are problems of financing such a trust, but it could be built up steadily as funds became available. It should be able to draw upon the capital market in all the ways open to private concerns. In Italy, Istituto per la Ricostruzione Industriale, commonly called I.R.I., has shown the way. This is the way that we can develop our resources. We can avail ourselves of international skills. In this way we can help make ourselves invulnerable and impervious to the decisions made in Britain and America, without consultation with us and without solicitude for us. Our big allies, economically and diplomatically, expect us to look after ourselves more than we have done in the past.

Minister for Labour and National Service and VicePresident of the Executive Council · Lowe · LP

– At the moment we are debating the actions that have recently been taken by the United States Government in order to slow up the movement of international capital out of the United States into other countries. When the late John Kennedy was the President of the United States, he became worried about the constant movement of capital out of the country. He imposed what was called an interest equalisation tax. The purpose of that tax was to compel United States business interests overseas to repatriate their dividends and capital and to prevent a too rapid expansion of United States companies in overseas countries.

It had an immediate impact, and I am sure it will have a continuing impact, on what we call the portfolio market in Australian securities. In the course of the last few weeks, following the practices that were adopted by President Kennedy, President Johnson decided that he would call together a large number of United States companies - I think about 370 in all - and recommend to them that they take action on a threefold basis in order to prevent the drain on American payments. The bases on which he recommended that they should act were these: First, he wanted the slowing up of capital investment in other countries; secondly, he wanted the repatriation of both dividends and capital overseas; and thirdly, he wanted United States capital, where practicable, to be raised in the overseas countries rather than in the United States itself.

I think that we should immediately ask the question, that has not yet been asked: What was the reason for the action by the United States Government? If one looks at the total trade and finance transactions of the United States over the last few years, one will see that it can be divided into three sections. In the first section, which is called its balance of trade on current account - I will not go into the details of it, but it is really the United States trade relations - one finds that over the years the United States has had a credit surplus of the order of three billion - that is, three thousand million - dollars per annum. To offset that, it has had on capital account, which is the movement of U.S. capital investment and the buildup of its investment in other countries, of the order of three billion dollars per annum. That balances its normal payments. But, and this is the important point, its defence and aid expenditure also has been of the order of three billion dollars per annum. So over the years, one finds this deficiency in total payments, mainly due to the fact that there has been this extraordinary increase in defence and aid expenditure.

Of recent years a change has occurred. What I choose to call the end of the post war era has occurred. That has had problems for the United States, as it has had problems for other countries. Western Europe, under the influence of the economic union - the European Economic Community - has found that in industrial terms it can now compete in many ways with the United States. It does not need the vast capital inflow that it required before.

I do not want to be critical, and I hope that others will not be critical of the actions of the United States. If it had not been for that country in the post war years it is doubtful whether, from a defence point of view, Western Europe would have survived. Equally true, it is doubtful whether Western

Europe would have been able to build up its economic structure and its industrial reconstruction to permit it to again become a force in world affairs. What can be said about Western Europe can also be said of Japan and of other countries. In other words, none of us wants to be critical of the United States. Many of us want to pay credit to the United States for its generous contributions which have brought world safety and world development.

I have said that the post-war era has passed. Now we find that the economics of Western Europe, including the European Economic Community, are expanding. There is a gradual shift of financial and other economic resources to Western Europe and this, in itself, has created an additional balance of payments problem for the United States.

I think the figures can be summed up in’ this way. Over the last 15 years the United States has had a total deficit of 34,000 million dollars, but her total out-payments or loss of gold have been in the vicinity of 9,000 million dollars. The reason for this is that the United States is a centre of world finance and its currency is a reserve currency and an international trading currency. Many of the countries which earn dollars deposit them in United States banks or United States organisations. By this means America has been able to maintain her substantial foreign reserves.

Conditions have changed. In the changed conditions there were many in the United States who held the view that the time had come for capital outflow to be reduced and, in some cases, substantially reduced. I am not, for the moment at least, entirely convinced that the appropriate time had been reached when the United States needed to have taken that action. In discussions with a number of very important financial authorities in the United States I learned that they felt that perhaps the action, if it were taken - I point out that I was discussing this matter in January of this year - might be premature. Nonetheless, it was on the stocks at that time and was the subject of thought.

What I want the House to recognise is that fundamentally the problem arises because of America’s consistent surplus in its balance of trade with the rest of the world. This surplus amounts to £3,000 million a year. That is what is known in economic language as a fundamental cause of disequilibrium. Sooner or later there must be a recognition of the fact that this trade balance must move a little, or substantially, against the United States, and - that other countries must be given the capacity to trade rather than be faced with the necessity of obtaining aid. We are hopeful that the Kennedy Round of negotiations, negotiations that were commenced by the late President Kennedy - a man of considerable talent and genius - will permit a greater flow of international trade and that that greater flow will help other countries, and incidentally the United States itself, to solve their problems.

Let me now apply this problem to Australia. Over the last six or seven years our imports of foreign capital have been running at the rate of £200 million a year. Over the last few years we have had an annual deficit in our trading account with the United States of about 400 million dollars and a credit on our capital account of 200 million dollars. Therefore, we have had a deficiency running in favour of the United States of about 200 million dollars a year. As I have said, we have had a capital inflow of about £200 million a year or, over five years, something of the order of £1,000 million. The question that we have to ask and the question that the Labour Party has to consider is: What has this meant to us? The answer is that we have been able to implement a migration programme which now brings to Australia about 150,000 people a year. We have been able to expand in a way that few other countries have been able to expand. Over the last couple of years we have had a rate of growth in our national income of 5 per cent, per annum. I do not know of any other country in the western world that has, at fixed prices, been able, unless it is in the process of reviving from wartime devastation or has been prostrated as a result of inflation or from some other cause, to maintain a growth rate of 5 per cent, per annum or, if you go back six years, of 4 per cent, per annum. We have been able to establish standards of living and rates of growth that are a matter of pride for everyone in this country, certainly everyone in this chamber sitting on the right of the Speaker.

The important fact is that we could not have achieved these purposes to the extent we have or increased our expenditure on education and national development, as well as implementing a policy which gave us full employment more or less constantly for the whole period that the Menzies Government has been in office if we had not relied substantially upon the inflow of foreign capital. This foreign capital provided for us the ability to build schools, provide social services and ensure full employment. What members of the Labour Party, including the honorable member for Yarra and the unfortunate member who spoke before me, who read his speech but did not understand it, have to answer is this simple question: If you want to cut down foreign investment, what activities in this country do you also cut down? Is the cut to be in the field of employment? Is it to be in the field of social services? Is it to be in our national growth and development? Do we cut down investment in our iron ore deposits in Western Australia? Are we to stop the oil companies establishing refineries here? Shall we cut down foreign investment which has permitted us to attain standards of living about which every Australian should be proud?

I turn to the next question: What are the problems that we have to solve? If we wanted to sustain our education programme and our rate of development at the high rate we achieved and at the same time mount a massive defence effort of a kind not previously known in peace time in Australia’s history, we could not have managed without this capital inflow.

The problems that engage my attention are these: The Prime Minister, in his letter to the United States President, pointed out the deficiency in our balance of payments to which I have just referred and stated that if there were a restriction on capital inflow to Australia - capital outflow from the United States to Australia - at a time when we were confronted with balance of payments problems, there could be a compounding effect and we would have to look very seriously at our trade with the United States.

I have said that I have no wish to be critical of the United States. I believe that in the postwar years she has acted magnificently, sometimes, as is true of all countries, a little selfishly, and sometimes considering her own self interest. Perhaps this is putting it a little too high, but few people of a responsible frame of mind would be prepared to be strong in their criticism of the actions of the United States. We have pointed out that we have this chronic deficit. I regret to state that in the last six months that deficit has grown worse. So we pointed out to the United States that the position regarding the commodities that we export to America, which are in the class of exports that earn about 80 per cent, of our export income, should be looked at.

Let us consider the major items such as sugar, lead and zinc, wool, meat and one or two others. The United States imposes quota restrictions that are not in our interests. Although our letter contained no specific request, we pointed out the contrast between our policy and the policy of the United States. In other words, we have pointed out that we maintain a truly open door policy for imports and that there are quota restrictions on very few items. We say to the rest of the world: “ Come, bring your goods here. We need them because 85 per cent, of our imports are raw materials necessary for our manufacturing industries.” We allow those commodities to come in, but we say to the United States: “ If you go ahead with this policy of restricting capital inflow to Australia you must think of the consequences and consider what policies we must adopt if you insist that there is not an open door policy for the raw materials and the foodstuffs produced in Australia “. That is the position as I see it.

There are two other matters to which I wish to refer. I believe that we could press somewhat more strenuously than we have for Australian equity participation in American companies in Australia. I also think that we are entitled to ask of the United States that, if investment does take place here, there must be a greater degree of processing here. In other words, we would like, for instance, to see bauxite converted to alumina and then to aluminium, and the day must come when the whole of this process is carried out in Australia. Equally, too, we are entitled to say in the case of iron ore that we want the iron and steel to be produced here and that we want further processing and manufacturing completed in Australia.

What of the future? What is to happen? Have we the means at our disposal to over come difficulties, should they emerge? These are the questions that I think we should be answering tonight. First of all, I want to make it clear that at the present time we have healthy reserves, so that we have plenty of time, or adequate time within which to make changes if they should become necessary. Nevertheless there are some questions that should be answered. First, under no circumstances oan we now be thinking in terms of establishing a formula that can be rigidly adopted. We cannot think of that formula for the good and sufficient reason that we do not know yet what is likely to happen. We become better informed, and that is why my colleague, the Treasurer (Mr. Harold Holt) will be proceeding to the United States in order to find out from the Americans what they intend to do in connection with capital repatriation and interest repatriation and how they intend to finance the future building up of American industry in this country.

The second thing that we need, and it is something that I regard as essential, is economic and financial intelligence. In other words, we must rely first of all on the integrity of stock exchanges, business houses and trading banks to adopt a realistic policy, and we must ask the American corporations to adopt realistic policies when they are in fact raising capital on the Australian market for expansion in Australia for the benefit of American overseas investors. We have other methods that we can adopt in order to ensure that, should difficulties emerge, remedies will be available provided we have, as I have said, the fundamental economic and financial intelligence upon which to base our action.

We have not contemplated what action we may take. It has not yet become necessary. One kind of action that might be taken is action through the banking system, through the Reserve Bank, and the life offices to ensure that too much of our lending capacity is not diverted to American institutions which are expanding here. We can also in the same way as has been done in both the United Kingdom and the United States of America, ensure that the taxation mechanism is used for exactly similar purposes. In other words, we have the means. I cannot go into them in detail, but I have mentioned two methods that might be used. If rime permitted, I would be able to show that we have a wide range of economic weapons that would permit us to minimise the influence of a sharp fall in capital inflow from the United States. We do not think this will continue in the long term. We believe this country of ours provides too rich an opportunity for overseas investors. It provides a wonderful opportunity for them and a wonderful opportunity for our own development and progress. We hope that the United States will see the light and will be only too ready to co-operate with us in the continued growth and prosperity of this country.


.- I think it is true to say that there is a great deal of concern amongst Government members over the impending action of the United States of America. Surely during the 15 years for which this Government has been in office it should have foreseen what is now about to happen. Here I think it is as well to put on record just how much foreign ownership of industries there is in Australia. The figures I have disclose that from 25 per cent, to 30 per cent, of Australia’s secondary industries are controlled by foreign ownership. The amount of foreign ownership in the pharmaceutical industry is 97 per cent., in petroleum refining and distribution 95 per cent., in motor vehicle manufacture 95 per cent., In oil exploration and production 85 per cent., in telecommunications 83 per cent., in soaps and detergents 80 per cent., in bauxite and aluminium 75 per cent., in iron ore, except for Broken Hill Pty. Co. Ltd., 75 per cent., in chemicals 60 per cent., in motor vehicle parts 55 per cent., in food 50 per cent., in lead, zinc, copper and mineral sands, from 45 per cent, to 50 per cent., in heavy engineering 30 per cent., in sugar milling and refining 15 per cent., in glass 15 per cent., in papermaking 10 per cent, and in iron and steel 10 per cent.

Although that is the present position, I have not yet heard one honorable member on the Government side explain to this House why the Government found it necessary to dispose of such Australian national instrumentalities as Commonwealth Oil Refineries Ltd., Amalgamated Wireless (Australasia) Ltd., and our interest in the aluminium industry. All these undertakings were flourishing in Australia. A.W.A. was playing a most important part in the defence of this country. One thing that I always remember is that when the Japanese were only 32 miles from Port Moresby, A.W.A. was supplying the scientific instruments that were installed in such defence components as aircraft and ships for the defence of this country. But, during its 15 years of office, this Government has seen fit to dispose of its interests in A.W.A. It has also seen fit to dispose of C.O.R. and has been content to say: “We will not refine oil in this country; it will not be under Australian ownership. We will bring in foreign companies to refine oil here.”

Mr Barnard:

– They sold out our interest in the aluminium industry.


– The Government did the same with that. I have not the time to go through all of them, but that is the sort of thing that has happened to all of them. I am like the honorable member for Henty (Mr. Fox). He said that first he wants to be a good Australian, and that he is not anti-American. I am not anti-American, but I do want to be a good Australian. I think we should all bear in mind these famous lines which were penned by Scott -

Breathes there a man, with soul so dead,

Who never to himself hath said,

This is my own, my native land?

If we allow things to go on in the way in which they are going, it will not be long before we dp not have a native land. I shall say something about that later.

We are debating two letters - one from the Prime Minister (Sir Robert Menzies) to the President of the United States of America, and the reply from the President to our Prime Minister. The Prime Minister, in his letter, which he chose to describe as direct and clear, pointed out that Australia is a free enterprise country that has welcomed private overseas investment and treated it with exactly the same consideration that it gives to private investment of Australian origin. He also pointed out our present commitments to the United States and those for the year 1963-64. He said that in that year the value of our exports to the United States was 312.9 million dollars as against imports from the United States amounting to 555.9 million dollars and that, we also had net invisible payments amounting to 194.7 million dollars. All this means that we had a deficit of 441.7 million dollars with the United States.

In his rather short reply of one and a half pages to our Prime Minister’s letter of five and a quarter pages, the President of the United States gives no sign of yielding to the Prime Minister’s request. I will quote from the President’s letter a passage which I think goes to the crux of the whole matter. The President said -

Indeed, I understand that certain large direct investments in the production of iron ore in Australia are planned for the near future. And in the case of loans by our banks and financial corporations, we intend to emphasise primarily the need to curb the outflow of such funds to industrialised countries already rich in reserves.

We believe, therefore that this programme will not impose undue strain in Australia.

I wish to emphasise a point that President Johnson made. Let me repeat it. He said - we intend to emphasise primarily the need to curb the outflow of such funds to industrialised countries already rich in reserves.

The President was talking about Australia, which is a country already rich in reserves. The President’s action could be good for Australia in the long run because if the United States is not going to find the money we need to assist our development, we will have to find it ourselves. Surely the Com-, monwealth Bank, other lending institutions and the people of this country generally can find the wherewithal for our development.

Dr Gibbs:

– I suppose the honorable member will print some more money.


– This is not a poor country. I hear talk about Socialists. Has the honorable member for Bowman (Dr. Gibbs) ever seen a Liberal collecting his Socialist cheque. Has the honorable member ever seen that? Why does not the Government start to do away with that? Why does not the honorable member look at ‘the meaning of the word Socialist?

Dr Gibbs:

– I said that the honorable member would print his own money.


– Australia is not a poor country. On the contrary, it is a prosperous country and, as such, should not be requiring or seeking outside finance. We do not need foreign money to build roads, ports, ships and iron ore quarries. That is the point that the President of the United States is making. I think he is trying to tell us in a decent way: “. For goodness sake, get off my back and do a bit yourself “. But since this Government has been in power it has said: “ Let us get some more money from Dad. Let us get some more money from Uncle Sam.” At present a Western Australian Minister is in Japan. I quote from a newspaper of today’s date which says -

Tokyo, Wednesday

Western Australia will sell some 200 million tons of iron ore to Japan over the next 20 years, according to Western Australia Industrial Development Minister, Charles W. Court.

Mr. Court, here on a fortnight tour of Japan, told newsmen yesterday that an iron ore import agreement between leading Japanese steel interests and three Australian mining concerns would mean 200 million U.S. dollars in iron exports over the next two decades.

As I said before, Australia owes the United States vast sums of money because this Government will not allow Australia to stand on its own feet. Look at defence commitments to the United States. I am a great believer in defence for this country; I cannot speak about it enough. If we want to save Australia from aggression, we must have the wherewithal to do so. But we must get it into our heads that defence must be built, not bought. Any country that starts running around the world saying “ I will have some of these and some of those items of defence equipment “ will get into trouble. I am very glad that we are getting three destroyers from the United States, but I am not glad that we are sending £100 million out of the country to get them, because these ships, as every honorable member knows, could well be built in this country.


– We could get them as quickly as we wanted them as long as we put a workforce on to do the job. The honorable member for Wannon (Mr. Malcolm Fraser) knows this.

Mr Malcolm Fraser:

– What about the electronic equipment in the ships? It is complicated.


– The honorable member should not knock his own nation.

Mr Malcolm Fraser:

– I am not. I am just asking that question.


– Be loyal to your own country. Australian workmen can do the job as well as any workmen in the world. It is wrong for any honorable member to rise in his place and knock them by asking how long it would take to build those ships here.

I want to say something about the aircraft industry. Australia is getting aircraft from America at present. These aircraft should be built in this country. I know that when the Second World War finished, we were building a pretty poor type of aircraft, but actually we were then growing up in the aircraft industry. We were then in much the same position as Sweden, a country with 7 to 8 million people. We are not even now building any aircraft with what I may term an Australian flavour. Indeed, we are not building any aircraft at all. Actually, we are assembling some French aircraft. But we should be planning and building our own aircraft. Until we do things like that, we will be in trouble continuously because we cannot rely on other people to provide our defence needs.

Surely we should be doing something in this Parliament to make this country sound for its inhabitants, not for overseas interests. In conjunction with the various States, we should be overhauling the various Companies Acts so as to keep Australia’s natural resources in our own hands for all time. Most developing countries have such legislation, but Australia does not. I was speaking to an important official of a big company not so long ago and he said it was remarkable that any overseas investor who came to Australia, said that he could bring money into the country and asked what he would be given if he did so, could get practically what he liked.

We had the position in this country - I think it has just been rectified - that foreign interests were taking over the iron ore industry whilst an Australian company, Broken Hill Pty. Co. Ltd., was not allowed to export iron ore. I do not want anyone to think that I am standing here sticking up for B.H.P. Far from it. But it is wrong that a Japanese company and an American company can commence operations here and export iron ore against the interests of an Australian company. I have not heard whether this situation has been rectified yet, but I understand that B.H.P. is about to be given permission to ship iron ore from Yampi Sound in the near future. As far as Japan and the United States of America are concerned, there is a fait accompli; the permission has already been granted.

There are some things which I consider should be socialised. I know that that word is not very nice in the ears of some of my friends opposite. A country like Sweden says that defence production, timber rights, mineral rights and forestry rights must be in the hands of the government. And they are. I say that this country would be in a much sounder position if we worked somewhat along the lines that Sweden has worked. We get the shakes every now and again and think we are about to be invaded or to become involved in a war. What happens when there is a war? Ships and aircraft are taken over and are used in national service. It is said that we cannot find the money needed to develop our country, but what would happen if a war broke out tomorrow? Would we be able to manage, or would we have to say: “We have not the money, so there will be no war “?

Honorable members are well aware that the Commonwealth Development Bank was established by this Government - and I am very pleased that the Government did establish it - in 1959 to supplement the activities of the trading banks and other institutions. In my opinion, the decision to establish this organisation was sound and farseeing, but I ask honorable members whether the bank has been allowed to act as it should. It began operations in 1960 and until June 1963 it had approved of only £90 million in loans to approved applicants. In other words, it has made loans to approved applicants to the extent of only £30 million a year, and this is the bank that was formed, as its name surely suggests, for the development of this country. I am glad that the Government founded this somewhat hamstrung institution, but I often wonder what would have been said - and I think this is important - had a Labour Government been in office and founded a bank of this kind. I think that at the time the bank was established it was said in the Press that it was a good job that a Liberal Government founded the bank and not a Labour Government, because if it had been a Labour Government its members would have been accused of extreme socialism.

Surely it is a matter of urgency for us to develop this country. The Government says that we have not the necessary money, but I repeat that if war came the necessary money to wage it would be found immediately. It appears to me that a country must go to war and be defeated if it wants to make progress. That has certainly been the experience of Germany and Japan. Japan has modernised her industrial techniques during the last 20 years and in many respects has led the world. Now this Australian Government has offered Japan preferential treatment and is going to allow Japan to take huge quantities of our iron ore, thus discriminating against this country and in favour of Japan.

A situation of this kind can last only for a limited time. Eventually, a strong spirit of nationalism must arise, and when that happens overseas interests which have become entrenched find themselves legislated against and in some cases taken over. I have not the time to point out everything that has happened along these lines in various parts of the world. No doubt honorable members will recall what happened, for instance, in Persia, when the Persians took over the Anglo-Iranian oil interests. They may also remember what happened in Mexico when the Mexicans took over foreign oil interests in that country. Now we in Australia are looking to our north and it is not necessary for me to point out what has been happening in Indonesia with regard to the interests of foreign investors in that country.

I do not want to see happen here what has happened in those other countries. I want to see foreign investment come to Australia, but I believe that the people who come and invest in this country should give the people here a chance to participate in their enterprises. Until overseas investors offer Australians this opportunity there will always be a feeling of unrest in this country and the time will come - it will certainly not be in my time - when, as I have said, a strong spirit of nationalism will arise and the people will say “ Surely this belongs to us.” We do not want such a situation to arise, but I am afraid it will unless overseas investors give Australians a chance to join in their enterprises in this country.


.- I cannot allow to go unchallenged an extraordinary statement which has just been made by my friend the honorable member for Batman (Mr. Benson) when he spoke about the construction of Australian warships. He was questioning the wisdom of having those ships built in the United States of America and other countries. My friend the honorable member for Wannon (Mr. Malcolm Fraser) interjected and said: “That would take far too long; the delivery dates would be far too distant “. The honorable member for Batman retorted: “It is wrong to knock Australian workmen by asking how long it would take “. I do find that an extraordinary statement. The honorable member foresees a critical military situation arising in which this country would be involved, and in that situation he says that it does not matter how long it takes to build these ships, the only requirement being that they should be built by Australian workmen.

Leaving aside for a moment the naive and almost amusing quality of that remark, let me suggest to decent members of the Labour Party, like the honorable member for Batman and some others, that the time taken in the construction of ships, which may be increased for lack of facilities, is not the only factor involved. The fundamental problem is the infiltration into various unions whose members build ships in this country of members of the Communist Party. I make that statement categorically, and it is up to people such as the honorable member for KingsfordSmith (Mr. Curtin), who is seeking to interject and who has been a member of one of those unions, and also the honorable member for Batman and others to do something about this great evil that is apparent in Australian industry today. Almost every State branch of the Labour Party allows and practically encourages members to stand for election to office in the unions on tickets alongside members of the Communist Party.

Tonight we are debating the important questions of overseas investment and the balance of payments, and perhaps one concrete suggestion that could have been made by the Opposition, but which was not made, concerns some means of reducing our invisibles, perhaps by considering the feasibility of building an Australan overseas shipping line. I know that this proposition is often trotted out by the Opposition, but would any Government in its right mind - would any person in his right mind - allow Australian ships plying international routes to be manned by members of a union that I say here is run by Communists who are assisted in gaining election to office in the union by members of the Labour Party? The extent of Communist domination of these unions is known to everybody, and it has been described by a former Labour leader as a running sore in the Labour Party.

As we know, the United States of America Administration recently announced restrictive measures to apply to American companies that invest or intend to invest in overseas countries. The actual terms of the restrictions have not been cited for some time and I would like to repeat them briefly. First, American investors or companies have been instructed to avoid or postpone direct investment in developed countries. Secondly, they have been asked or instructed to finance overseas investments with funds raised overseas. Thirdly, they have been asked to remit more of their dividends to the United States of America. We can see from the letter of the Prime Minister (Sir Robert Menzies) which we are discussing that if these restrictions are implemented they will have a serious effect on our economy. The word “ economy “ is one that rolls rather glibly off our tongues in this House. Never let us forget that when we use this word we are talking about the community and that every family in this country is affected by a deterioration in the state of of our economy. As I say, we must not forget in this debate tonight that we are talking about human beings in Australia whose standard of living may be adversely affected.

The fact is that during the last eight years we have had a deficit in our trading account of more than 2,400 million dollars. This means that the price we have had to pay for our imports has greatly exceeded the total amount we have received from overseas for our exports. I find nothing extraordinary in this, for a country in the state of development in which Australia at present finds itself. As the Treasurer (Mr. Harold Holt) said this afternoon, to sustain such an immigration programme and such a rate of development as we have been able to achieve, as a nation primarily still reliant on primary production to earn our export income, this is not an extraordinary state of affairs. As one who has been concerned in some way with the business community, I do not know any business or, in fact, any family which can develop from a young and unsophisticated family or business into a more prosperous one existing on its own resources at the root of its development.

So I find nothing extraordinary or wrong about the situation in which Australia finds itself today.

To compensate for the loss of trade deficit in the past eight years there has been an inflow of private investment, including unremitted profits, of over 3,000 million dollars. This means that, overall, our dollar reserves have increased by 600 million in that time. Of this 3,000 million dollars, about one-third came from the United States of America. Surely it is not a difficult exercise for anybody to understand, if during that eight years one-third of our total private investment came from the United States of America, the serious implications of these restrictions which the United States Administration now intends to place on investors. Is it then unnatural for the Prime Minister to write a letter such as he did to the United States Administration? Is it unnatural for the Treasurer to make personal representations, in the light of the most friendly reply received from the President of the United States and to go there and make personal representations on behalf of this country? I would have hoped - perhaps it is a futile hope - that when the Leader of the Opposition (Mr. Calwell) rose in his place today he would have seized the opportunity to make a respectable impact on the Australian people by looking at this problem in an objective way. But we were disappointed, because again he succumbed to the obvious temptation of trying to make cheap political capital out of the situation for his own party, and I must say that he did not succeed in doing that.

Mr Curtin:

– Does the honorable member object to what he said?


– Does the honorable member for Kingsford-Smith, as a fairminded Australian, agree that this was a fair thing for the Leader of the Opposition to say in public in respect of the Treasurer who is about to go overseas and make representations on behalf of his country and on behalf of every family and citizen in it? The Leader of the Opposition said, in a sneering voice: “The United States of America is not prepared to indulge the Menzies Government any further in its rake’s progress of overseas borrowing “. 1 regard that as a contemptible statement and one which is not worthy of either the Leader of the Opposition or the pretender to the throne of the Prime Minister of this country. I venture to suggest in all sincerity that, if the honorable gentleman by some mischance had been Prime Minister of Australia in these circumstances today, he would have written precisely the same letter as the Prime Minister wrote. If the honorable member for Melbourne Ports (Mr. Crean) - again by the same mischance - had been Treasurer of this country today, instead of making the speech he did he would have been on the next plane to to the United States to make representations on behalf of his country.

We had no interesting appraisal of the Australian economy today by the Leader of the Opposition. We heard all the old adjectives and statements that the country is in chaos and that calamity is just around the corner. Again, not for the first time, I find the Leader of the Opposition in disagreement with the President of the United States. For the sake of the record it is worth repeating one paragraph from the President’s letter to our Prime Minister with regard to the chaotic state of our economy. He had this to say -

We understand, of course, that external capital is of great importance to Australia. In terms of the high standard of living of the Australian people, and the remarkable pace of advance during the past decade, Australia must be counted one of the advanced countries of the world.

I am now quoting the President of the United States who, surely, has no axe to grind in the internal politics of this country. The President’s letter continued -

As an old friend and ally, we have watched with admiration your record of achievement, and we know the importance of continued Australian success.

That is what the President said about our economy. I have been fascinated to sit here and listen to six or seven Labour speakers on this vexed question which I repeat, at the risk of being tedious, affects every family in Australia. With one classic exception, to which I will come in a moment, Opposition speakers made not one concrete suggestion as to how the situation in which we find ourselves should be corrected. I would have, thought this would have been the forum for the most interesting, objective and con-, structive debate on methods which could be used by Australia to solve the intractable problem of her balance of payments situation. But did we hear one member of the Labour Party suggest the old classic, that we should devalue our currency? No, we did not hear it. Did any honorable member opposite suggest that we should re-introduce heavy import controls? I understand that the honorable member for Yarra (Dr. J. F. Cairns) - true to form - suggested this, but he did not go on to say that the reintroduction of heavy import controls would inevitably mean unemployment in a great section of the Australian community, because the great bulk of income from our exports is now used to obtain raw materials to sustain our manufactures. Did we hear any Labour speaker suggest prohibitive tariffs or credit restrictions? Here is a way in which we could dampen down our imports. We heard many members of the Labour Party waxing eloquent on the evils of this course, but no honorable member opposite suggested credit restrictions.

Did any honorable member opposite go into the question of more double taxation agreements? I think this is an area where this Government might examine more fully the possibility of increasing overseas investment in Australia. We heard the honorable member for Melbourne Ports and his colleagues come into this House and criticise the double taxation agreements which Australia has with overseas countries. We heard no demand from the Opposition to increase indirect taxation so as to dampen down demand in the economy. With one exception, to which I will come in a moment, we have not heard one concrete suggestion from any Opposition speaker, including the Leader of the Opposition, the shadow Treasurer - the honorable member for Melbourne Ports - the honorable member for Yarra and others, as to how Australia might get out of its dilemma. We got this pearl from the Leader of the Opposition: “We would direct” - that is a favourite word with him - “ both foreign and local capital into the most productive of channels “. Let the business community hear these words and understand what they mean. This is direct advocacy of the reintroduction of a capital issues control board, to tell people where they might invest their money and where they might not. The honorable gentleman then said, rather amusingly: “ There is no need to go to the United States of America. We could probably raise all the capital here”. He said: “We raise four-fifths of it here now. Why cannot we raise it all here? “ I do not know what is the honorable gentleman’s association with business, but let me quote one example, oil - and one could quote many - from the evidence which the Department of National Development, through the Bureau of Mineral Resources, recently gave at a Tariff Board inquiry on crude oil. It had this to say about Australia being selfsufficient in oil or petroleum products -

The minimum reserves required to support production are commonly regarded as equal to 15 years production. If Australia is to become selfsufficient in oil, therefore, reserves of at least 2,000,000,000 barrels are required now and by 1970 about 3,000,000,000 barrels.

It went on to say later -

Assuming a future discovery cost of 10s. per barrel of reserves, the cost of finding our required reserves by 1970 should therefore be about £1,500.000,000.

Mr Benson:

– That is right.


– That is a fantastic figure. Do the honorable member for Batman, who confirms that figure, and the Leader of the Opposition have the naivete to believe that this kind of money could be found in Australia in five years. It is £300 million a year for this one project alone. I have not time to quote from the other publications in which we see projects of £150 million by Alcoa of Australia Pty. Ltd., £53 million by Comalco Industries Pty. Ltd. and £100 million by the Gove mining organisation. Does anybody really suggest that, with all our other commitments, this money could be found from within Australia? I find this proposition completely impossible to accept.

I want to come now to possibly the most startling statement from the Deputy Leader of the Opposition (Mr. Whitlam) that I have ever heard. Most of us on this side of the House are not unaccustomed to hearing startling statements from the Deputy Leader of the Opposition. He said that he advocated this proposition when he spoke during the Budget debate. 1 do not doubt the honorable gentleman, but I must say that either I did not read his speech carefully enough or I did not read into it what he said tonight. He has the solution to this problem. He devoted 17 minutes of his speech to the diagnosis of the problem. He concluded that we are short of funds in our current account. Anybody could have come to this conclusion by simply reading the second paragraph of the Prime Minister’s letter.

The last three minutes of the honorable member’s speech were full of fascination. He said he would institute - presumably if he were in government - an overseas investment trust. That is a nice sounding title. He went on to state the functions of the trust. I must admire the wording he used. He said that this trust would arrange - what a beautiful word - for the transfer of 10 per cent, of the equity in all foreign companies to the trust. I wonder what that means. As one who, I think, reasonably understands the English language, I would interpret it to mean that this government trust would be formed and would be given power to acquire, compulsorily, a 10 per cent, equity in every foreign company in this country. Can any honorable gentleman on the Opposition side who has confidence in the Deputy Leader of the Opposition - I know I am speaking to a restricted group there - confirm that that is what the honorable gentleman means? I have never heard a more monstrous suggestion come from the honorable gentleman’s lips. This proposal is not dissimilar in any way from the action that caused every Australian to condemn President Sukarno when just a week or two ago in Indonesia he confiscated foreign assets.

Mr Cope:

– Rubbish.


– Do honorable members opposite want to be tarred with the same brush? Perhaps the honorable member for Watson, who says that this is rubbish, will tell me at some time what the suggestion means if it does not mean a compulsory acquisition of foreign shares here. When these companies came to Australia, it was not good enough for people here to seek participation in them, but once they have made good, once they have made a profit and once they have shown that they are successful, the Opposition wants the Government to come in and say: “ Now that you are successful, we will grab 10 per cent, of what you have.” Does the honorable gentleman really believe that if the Government adopted these tactics one more penny of foreign investment would come into Australia? If he believes that, he is more naive than I thought he was. I and every honorable member on this side of the chamber wish the Treasurer every success and every sort of goodwill on his trip. He will be trying to perform a duty of importance to every Australian family.


.- No-one could afford to spend his full 20 minutes in this debate recounting the points made by the honorable member for Higinbotham (Mr. Chipp), putting right the inaccuracies, the misinterpretations and the misrepresentations he made. However, I want to deal with two points he made. His last point related to the suggestion of the Deputy Leader of the Opposition (Mr. Whitlam) that we should establish an authority which would provide for an Australian holding in overseas investments in this country. The honorable member seemed to think that this suggestion had something radical about it, something extreme, something far out on the left wing. He made a rather frightening but quite inaccurate comparison. What he does not seem to realise is that the Brisbane Stock Exchange recommended last year that this very action be taken, and its recommendation was publicised in the daily Press. If I recollect correctly, the Melbourne Stock Exchange also made a similar recommendation to the community. It is certainly not a novel proposition. It has been aired in this House before by the Deputy Leader of the Opposition, and it has been aired outside not only by members of the Australian Labour Party but also by leaders in the business world.

The other point made by the honorable member for Higinbotham - he made it with a great deal of passion - was this: Where would we raise £300 million in one year for a certain project? This was one of the figures he mentioned. But surely it is not a matter of raising the money; it is a matter of whether the resources are available locally, whether the workers are available locally, whether the equipment is available locally, whether the job can be done with the local tools that are available, be they workers, machinery or technical ability. When we examine what is being done in this country by many firms that are controlled by foreign capita], we find that these things could easily have been done by an Australian investment in the first place. The honorable member for Batman (Mr. Benson), my very good friend on this side of the House, suggested a while ago that the money could be found and an honorable member on the other side, I think it was the honorable member for Bowman (Dr. Gibbs), apparently thought that this was a rather juvenile and humorous suggestion and said something about printing our own notes. But does not the Government do this when it has a deficit in its Budget at the end of the year? Does it not make a fiduciary issue?

Let me move on to. the position in which this Government finds itself now. We certainly now have a chastened Prime Minister (Sir Robert Menzies) and a chastened Government. The Prime Minister and the Government are now faced with the situation that the Australian Labour Party has been saying for many years could arise. Some of the things we said could happen are happening, but with much more emphasis. The Prime Minister and other honorable members on the other side have come into this House and delivered a pleasant little homily in a pedantic style about all the virtues that will be derived from overseas investment, assuring all and sundry that there are no blemishes to ruffle the surface of this flow of overseas investment and that nothing could disturb the security and welfare of this country. But today the Government finds that the things it said would not happen have happened. If we read the letter written by the Prime Minister to the President of the United States of America, we find that it is not written in forceful, confident tones, such as we have heard the Prime Minister use in the House on previous occasions when discussing foreign investment. This letter i’s the plea or the bleating of a person who has had his confidence sadly set back.

There is another intriguing point. The Prime Minister has endeavoured to project on the community the image of a grand alliance between himself and the President of the United States. He has tried to create the’ image of Bob and Lyndon striding manfully forth, taking the lead on the road of progess for the world’s destiny; of Bob and Lyndon discussing world affairs before decisions are made. Unfortunately, the President of the United States has not heard of this story. He made his decision on the control of overseas investments without referring the matter to this country in the first place, just as he made his decision to seek a negotiated settlement in the Vietnam dispute, and announced it to the world today, without conferring with the Australian Prime Minister first, and despite the Prime Minister’s statement that he would, if necessary, be the last Prime Minister to oppose a negotiated settlement.

Two arguments were put forward by the Government. One was that it is necessary to have overseas investment in this country so that we can build up our overseas reserves and the other was that overseas investment brings with it technical knowhow which is necessary for our internal development. What honorable members opposite repeatedly and consistently ignore is the need to discuss the obligations that are concomitant with the acceptance of overseas investment. Among these obligations is the servicing in perpetuity of the overseas investment capital that comes into Australia. To illustrate the point that foreign investment can become an increasing burden on a country, let me point out that between 1948 and 1960 Australia’s gross national product increased three and a half times. Total private debt, however, increased five times. Payments abroad to service our obligations increased eight times.

The proportion of our exports that is required to service our overseas debt is increasing all the time, and this is becoming quite a problem. Indeed, one can scarcely see the value of overseas investment if its main purpose is only for the building up of reserves. One can hardly see the value of continuing this kind of economic activity when we can just as easily build up our reserves by promoting exports. In the year ended 30th June 1964, our external payments on private capital were £133 million and our payments abroad on government debt were £40 million, making a total of £173 million. This is getting fairly close to £200 million a year, which is approximately the level of the inflow from abroad. So one cancels the other. For the life of me, I can not see that any advantage is to be derived from this situation.

Another thing that honorable members opposite ought to realise is that profits are made from the investment in industry of the capital that flows into Australia. A certain percentage of this profit is remitted overseas, but a percentage is re-invested here. This means that the Australian assets of foreign firms are much larger than is indicated by the figures showing the bare inflow of capital. This is the significant factor that we must consider when we are thinking about the repayments that we shall have to meet. From the end of World War II to 30th June 1963, the net capital inflow into Australia totalled £2,195 million. The chief components of this total were £574 million of undistributed profits, £880 million of direct investment, about £200 million of portfolio investment and £99 million of net government borrowing. These figures illustrate the importance of looking beyond the bare inflow figures.

It is doubtful whether we derive any great advantage, in terms of our overseas reserves, from the inflow of investment from the United States of America. Between 1948 and 1960, we received from the United States 17 per cent, of our total capital inflow. Twenty-six per cent, of the profits remitted from this country went to the United States and 48 per cent, of the profits on overseas investment retained in this country derived from the investment of American capital. But only 2 per cent, of the net gain in foreign currency came from our transactions with the United States. Obviously, our relationship with that country is pretty expensive for us. This is a pretty expensive way of getting foreign currency. Furthermore, when one looks at a breakdown of the figures relating to the United States at the present time - and this is the specific situation that is giving the Government cause for concern just now - and compare that situation with the situation relative to other countries, we find that United States investment in this country has one of the highest profit earning rates enjoyed by overseas investors. I think the rate of profit earned by United States investment here is about two or three times better than that of United Kingdom capital.

Members of the Government suggest that the overseas investment that has taken place here has caused no problems. They say than only 25 per cent, of foreign capital invested in Australia is under overseas control. The important point is that the proportion is rising, and rising fast, lt has increased about 5 per cent, in the last five years. Another important factor is the strategic concentration of this investment in the economy. Overseas investors in this country are raising themselves to the commanding heights of economic power within Australia. Because of their strategic economic situation, they will be able to pressurise, direct and ignore the Government on matters of internal economic policy. They will be able to do this, as I have said, first, because of their strategic situation in relation to the economy. Secondly, and more importantly, because they are subsidiaries of overseas firms, irrespective of internal economic controls, they will be able to obtain from parent companies outside Australia all the financial support that they need.

Let us look at some of the relevant figures. In Australia at present, 95 per cent, of the motor vehicle industry is controlled overseas, as is 55 per cent, of the motor parts and accessories industry, 82 per cent, of the telecommunications equipment industry, 95 per cent, of the manufacture of pharmaceuticals and toilet preparations, 80 per cent, of soap and detergent production and 95 per cent, of petroleum refining and distributing activities. Foreign ownership also dominates mining, oil exploration, aluminium extraction and fabrication and copper production. The foreign companies concerned do not always operate in the best interests of Australia. Because of international ties with overseas firms, the economic activity of a foreign owned company within Australia usually is geared to the overall international activities of the parent organisation.

Let me illustrate how huge and powerful these big international organisations are. The world wide sales of the General Motors enterprise in 1964 totalled 17 billion dollars. This was 10 per cent, more than Holland’s gross national product. This will give honorable members some idea of the size and ramifications of this firm. Incidentally, 17 billion dollars is probably only a little more than the gross national product of Australia each year. When we talk about how big and important we are and how we shall control these overseas firms that invest here, we ought to reflect a little and remember that these firms, economically, are every bit as big and powerful as we are as a nation and perhaps much more powerful in the sense that they are able to exert tremendous pressure through their associated Australian and international concerns.

In fact, the available evidence shows that a number of these firms that are exploiting our minerals and our other national resources are doing so by adopting a sort of double standard. They pay us low prices for our minerals and the major return on the product is obtained at the stage of secondary production. These concerns regulate their production and their exports. Indeed, some of them do not even export from this country, because such exports would interfere with the well regulated international trading arrangements that they have developed. To this extent, Australia suffers. I see no advantage to the internal development of Australia to be derived from a situation in which international firms are allowed to operate here, as they do, and indulge in takeovers of existing Australian enterprises. The Deputy Prime Minister (Mr. McEwen) has described the process by which we permit this to happen as, I think, selling a little of the farm each year to meet the mortgage.

These activities that I have outlined are some of the things that are taking place. However, the Government has been amazingly inactive, or else it is unaware of what is happening. I refuse to believe that it is really unaware of events. I cannot understand the amazing attraction which overseas investment has for it and which leads it completely to ignore the important implications for the future of Australia. We are told that our natural resources are being exploited by overseas companies for the benefit of the Australian nation. The coking coal of north Queensland and the tremendous iron ore deposits of the north west of Western Australia are only some of the minerals that are being exploited by overseas firms. All we are getting in return is a small rental payment, as it were. We are being provided only with potholes in the ground for posterity.

The major benefit derived from the exploitation of our minerals and other natural resources is not coming to us. It is going to the concerns that are exploiting our raw materials in secondary treatment processes in other lands. It is not good enough for anybody to say that we have not the necessary technical know-how and that we have to import foreign capital. It is of no use to say that we have not the necessary industrial capacity to exploit our resources ourselves. Other countries are exploiting their own resources. There is no need for us in Australia to import this so called technical know-how by foreign investment and have to pay for it in perpetuity. There is no need for us to cripple ourselves by accumulating an ever increasing burden of debt. Our overseas debt has now reached the stage at which we are only just able to meet it, and it will soon be so great as to be beyond our capacity to meet.

One of the things we could do is to look at the possibility of hiring and firing technical advice, of having some establishment from overseas come into this country. If we want to start a steelworks, for instance, we could have people come in as technical advisers, pay them for their technical advice in establishing a steelworks, or some other industry or project that we have in mind, and when their commitment to this project is finished dismiss them because the term of their contract has run out. This is not something novel but something which Premier Nehru conducted in India during his lifetime and with some success. He established steelworks there with German technical advice which was hired and then fired when the term of the contract had run out. This is a far more responsible way of conducting the internal affairs of this country.

I can recollect a discussion that took place at the Federal level on the need to develop north Queensland. It was suggested that to rebuild the Mount Isa railway line we would have to import capital from some source or other. An application was made to the International Bank for Reconstruction and Development for this money. The application was refused and the money was eventually found within Australia because precisely the things that we were going to use to carry out this reconstruction were available here. All the productive resources which were necessary for the job were available in Australia. But the muddled thinking which pervades the attitude of the Government, and particularly that of the Prime Minister and the

Treasurer (Mr. Harold Holt), never ceases to amaze me. I remember last year when there was a discussion about raising a loan of a relatively small sum in terms of national spending for Qantas Empire Airways Ltd. If my memory serves me correctly the amount required was about £10 million. Instead of drawing on our overseas reserves at the time when they were fairly healthy and when the future prospects indicated that we were not likely to run into any trouble - in fact, they indicated that conditions would become much better - the Treasurer told the country that he was going to borrow the money overseas and pay interest on it. He did not say why this was necessary.

First of all I cancel out the possibility that it might have been necessary to preserve our international reserves because they were climbing. Secondly, he did not suggest that we would invest £10 million of our reserves at better interest rates to pay for this loan and so enable us to be better off. He mentioned no alternative to borrowing the money overseas. There seems to be some sort of peculiar, sacrosanct, holy cow attitude to overseas reserves, an attitude that we must continually go into this crippling debt to carry the country along. The suggestion is that this overseas investment takes place in our community to enable us to develop the country. There is a fairly large body of evidence to suggest that most of the foreign investment that comes into Australia, or a large part of it, takes over local or existing industries. We can do a major part of the development ourselves. The finance which is coming in is not so much for the development of the very fundamental state of the economy; it is coming in for the establishment of a sort of import replacement for industry hiding behind the tariff barriers which, I rather regret, seem to encourage a certain degree of inefficiency and some slothfulness in some sections of industry. Productive resources are being attracted away from our export industries at a time when we need our resources to be directed to them.

If we are going to get on top of this problem we must do some central planning and give some direction to the economy. We must allocate our resources efficiently. I agree with the sentiment that perhaps the decision of the Government of the United

States of America to restrict overseas investment has virtues for this country because we will have to start putting our thinking caps on to devise means of using our industrial resources for maximum benefit. We will have to start thinking of priorities, of building roads instead of service stations which are too numerous already, of building hospitals before hotels, and schools and universities before television stations of which there are already all too many in the community. Last of all the Government has to sit down and do some broad thinking on the economic situation in Australia today. Apart from the problem of our overseas balances deteriorating further on present trends, we also have some internal economic- problems. We have a very serious problem in primary industry with wool being sold for 10 per cent, less in the last 7 months according to the export price index. Sugar is also down 40 per cent, for the same period, and the position for wool will become worse because of the drought. Rural holdings are overvalued in relation to the return that they are providing. This is a bubble which may burst very soon.

Mr. DEPUTY SPEAKER__ Order! The honorable member’s time has expired.

Mr Malcolm Fraser:

– There are occasions when any Opposition would do itself credit in trying to take a point of view that would strengthen not necessarily the Government’s position but the country’s position in an intricate and possibly difficult negotiation with some foreign power. If, in this debate, the Opposition had taken such a point of view in relation to these financial problems, it would have done itself a great deal more credit than it has achieved in the debate. The Leader of the Opposition (Mr. Calwell) and those who followed him quite truly put a most reactionary point of view in relation to these particular economic problems. They might well have been talking in the 1920’s or 1930’s, as though they could shut the doors and bring down the barriers on one particular country to insulate and isolate it from everything that has happened in regard to prices, trade or capital movements overseas.

This is a difficult proposition to sustain in a great trading country like Australia where employment and development depend on our trading ability, on the prices we can persuade other people to pay for our goods and on the capital that we can attract here to assist in our development. The point of view that the Opposition has put in trying to erect barriers to cut us off from other countries is one that cannot be sustained in this day and age and one that I had hoped had been forgotten by the end of the tragic depression of the 1930’s. In announcing his recent programme the President of the United States of America said that the United States had the strongest creditor position in the world, that it had 88 billion dollars in claims against foreigners, which was 37 billion dollars more than foreign claims against the United States. He said also that the United States had the world’s most favourable trade position, that its exports had increased by 27 per cent, in four years and that it had a trading surplus of 3.6 billion dollars a year. He said that the United States had the world’s largest supply of gold, holding 35 per cent, of the free world’s supply.

Despite these great marks of strength in the United States economy there has been a deficit in that country’s balance of payments of something over three billion dollars in each of the recent years. This has been reducing slowly and had been reduced to three billion dollars in 1964. But there has been this overall deficit for two particular reasons, because of the extent and size of the United States civil and military aid and, more particularly, because of an increasing outflow of investment from the United States to other countries. This outflow of investment is itself a function of the Americans’ own particular domestic problem. They have, as we know, problems of unemployment with which they have been trying to deal in a somewhat courageous manner, but their unemployment problem has been much more intractable than that in many other countries such as Australia, Britain and the countries of Europe. This is one of the main reasons why their rates of interest are kept at levels much lower than in Australia or in Europe. Thus there is an incentive for holders of American capital to send their money abroad to invest it in some other country, and this is one of the reasons for the difficulties in which the United States finds itself.

The recent improvement in the American position has come about, apparently, as a result of four measures that have been introduced in the United States in recent years. Their aid loans are now tied very largely to purchases in the United States. There has been a reduction in civil and military aid and expenditure abroad. These things have probably been cut pretty much to a minimum. There has been a highly successful export drive and there has been a campaign to sell military equipment to many foreign countries. This has been a highly successful campaign from the United States point of view. Then again their position has been improved because their profits and interest from foreign investment have increased by two billion dollars over recent years. Their gains have been, over a very short period, about 3i billion dollars a year, but this has been offset by an increase of 2i billion dollars in private capital outflow annually since 1960. This is a very substantia] increase in the rate of foreign investment from the United States, but it is clear from this picture that the United States has not in fact been living beyond its means. It has been investing beyond the capacity of its immediate foreign income, but this is quite different. There is a marked distinction between a country living beyond its means and one investing more than its immediate income can afford.

Despite this, it is clear that we must recognise that there has been a need for some action on the part of the United States. It could have tackled its problems in two or three different ways. It could have used the traditional methods of deflation, but these would have been most unsuitable in the United States having regard to its present level of unemployment. There is still room for improvement in this field. It could have cut civil and military aid, but these things have already been pruned in recent years. It could have reduced foreign investment and then tried to increase export earnings. It should cause no surprise that this was the course the United States chose to pursue.

As a result, we know it has extended the scope and the time of the equalisation tax and has instituted various voluntary restraints on the banking and business world that could have a far reaching effect indeed. The company programme, under which individual companies are asked to improve their own positions by 15 to 20 per cent, over a year, is one that could bite very deeply indeed into countries in which there are substantial United States investments. The United States Administration has asked for foreign earnings to be returned and not retained in a foreign country. It has asked that debenture capital should be raised abroad instead of funds being re-invested which could be returned to the United States. At this point, it may be pertinent to bear in mind the remarks made in the Prime Minister’s letter about debenture capital and other related matters. This is an aspect of United States policy which could have unfortunate results for Australia if it were pursued.

If the United States programme is not administered in a manner that avoids harm to Australia, it could lead to the abandonment or reduction of United States programmes here because we are certainly not obviously included in any of the exceptions which have already been announced in relation to this programme. These exceptions are Japan and Canada, as well as the United Kingdom because of her balance of payments problems. However, if the administration of this programme is directed primarily towards Europe, as apparently is the intention, it may be that the initial effect of the programme will not be great. In this connection, we can take heart from some of the things said in the President’s letter. There is no need to remind honorable members of them because I am sure they will have read these points and will have them in mind.

But the secondary effects of the United States programme could be substantial indeed, not only for Australia and Europe but for all the countries of the world, including the less developed countries, because the United States is in fact trying to institute a programme which will withdraw about four billion dollars annually from world liquidity and world reserves - reserves which are needed to finance normal day to day and week to week trade transactions. Unless that programme is thought through to the end, it is clear that this could have some results which would have disastrous consequences for many countries.

I might explain that world liquidity or world reserves can be divided into two kinds. There are assets that are readily available; they might be gold or convertible foreign currency that a country has in its own hands. Then there are assets that are available after negotiation - assets of a kind which may be made available through negotiation with the International Monetary Fund, through various bank to bank or government to government negotiations or through arrangements of one kind or another. An example of this is the underwriting of three billion dollars by a group of 10 within the International Monetary Fund to help the United Kingdom out of its particular problems round about Christmas time.

The volume of liquidity required to finance world trade depends not only on the value of world trade but also on fluctuations in that trade and in the movement of capital between one country and another. Although there is no precise mathematical relationship between these things, it is obvious that the volume of liquidity must grow as the value of trade and fluctuations in trade between countries grow. It is significant that liquidity, whatever way it is measured, has been growing much more slowly than has the value of world trade in recent years. So, even before this American action an argument could be advanced to the effect that the volume of liquidity available to finance world trade will be insufficient unless something else is done to counterbalance the scales.

It is important to note that too much liquidity or too many reserves being readily available could lead to quite a remarkable kind of inflation. It is doubtful whether second line negotiable reserves of the kind which can be made available through the International Monetary Fund can be too large. These reserves are dependent upon appropriate national policies being pursued. That is a condition on which much of the money that is made available through the International Monetary Fund is made available. These reserves are required for temporary fluctuations in trade and capital movements which otherwise would unduly strain a country’s resources. First line liquidity needs to be adequate to finance appropriate levels of trade and trade expansion and to accommodate normal capital movements between countries. Too little first line reserves, or too little liquidity of a first line nature, would certainly lead to a shortage of foreign exchange, a reduction in world trade, a reversion to the nationalist economic policies of the I930’s, with the disastrous results that were seen in those years, and to the kind of situation that developed as a result of the initial balance of payments problems of the early 1930’s under the restrictive, automatic, harsh and cruel mechanisms of the gold standard to which, for some unaccountable reason. France appears to wish to return. On the other hand, a shortage of second line liquidity would lead to an inability to deal with temporary problems and to offset large scale capital movements between countries.

Although I have tried to draw a distinction between what I have called first line liquidity and second line liquidity or first line reserves and second line reserves, it is clear that no sharp and clear cut division can be made between the two. For example, the smaller the first line reserves available to finance trade and capita] movements are, the greater is the probability that large volumes of second line reserves will be required. So there is a clear interaction between the two.

At this point I direct the attention of the House to the movements in reserves between countries in the last nine or ten years. The industrial countries of Europe have increased their reserves or their liquidity to a remarkable extent, at the expense of the United States of America in particular. The less developed countries have just about maintained their reserves at a static level. In fact, liquidity has moved from the United States of America to Europe, while the less developed countries have just maintained their position for various reasons. There is no need to go into those reasons at the present time.

In this setting the United States proposes policies which are intended to withdraw between three and four billion dollars a year from the world pool of liquidity or the world pool of reserves. Unless the programme has been thought through and unless action has been taken to balance the effects that the programme could have, it could result in a substantial shortage of first line liquidity to finance the normal international trade transactions. The President of the United States, in his statement on these financial matters, mentioned the need to watch this problem, but he made no specific suggestions about what should be done.

To the United States action must be added the restrictive policies that the United Kingdom once more finds itself forced to undertake as a result of its balance of trade problems. Although there is no immediate curb on United Kingdom investment in Australia, it is clear that the United Kingdom’s restrictive policies inside that country will mean that it will be buying less of our goods. That could lead to a reduction in the prices that we receive for various exports and it could mean that some goods that we sell will be harder to sell and that markets will be harder to find. This would not only affect us; it would affect all the countries with which the United Kingdom deals.

If the policies of the United States merely prevent further expansion of European reserves, particularly those held by France and Germany, there may well be no particular harm done. But if as could, and I believe will, happen the United States cannot confine its policies to these particular areas by administrative means, and if at the same time her policies put Europe’s balance of payments into deficit, this will provoke counter action on the part of European countries. Thus reduced United States investment in Europe could lead to reduced European purchases from many other countries. lt is likely that the European countries, especially the Common Market countries, would try to tackle their particular balance of payments problems by reduced purchases. They have an ill developed capital market; they have no real tradition of large scale capital investment overseas. The method I have just mentioned is their traditional method of curing their own balance of payment problems. Thus, despite the intentions of the United States, it is likely that her action will affect not only Europe but also the less developed countries, and indeed all the countries of the world, unless some countervailing action is taken on a world scale.

At this point it is appropriate to examine what could be done to mitigate the position. There are in existence plans to increase International Monetary Fund quotas, and those plans would certainly be supported. But the fund is ill equipped to deal with a permanent shortage of any particular currency. Surely that is emphasised by the necessity to introduce the Marshall Plan and the European Payments Union during times of acute dollar shortage. The International Monetary Fund is more able to deal with temporary shortages in trade between countries and with normal capital movements. It may well be that some of the principles of Keynes’ proposals for a Clearing Union, which were not accepted at the original Bretton Woods conference, will have to be adopted in the future. Under those proposals some responsibility was placed upon creditor nations, whereas under the International Monetary Fund all the onus is placed on the debtor nations to get themselves out of their debtor position without any real recognition being given to the fact that very often countries find themselves in that position because of a policy that has been adopted by some large and economically more powerful creditor country. Therefore, it could well be argued that some responsibility should be placed on the creditor nations. This is something that should be looked at in any future discussions.

The programme of the United States of America cannot be looked at in isolation but must be thought through to the end. We must make sure that the withdrawal by the United States of three billion or four billion dollars from world liquidity does not lead to the economic nationalism that was seen in the 1930’s. If it is just let go by default, this could well happen. The next International Monetary Fund talks may well be more important than any other talks that have been held since the original Bretton Woods conference. World liquidity for trade to correct trade imbalance and to counter capital movements may become an urgent and vital problem in the not too distant future.

Question resolved in the affirmative.

page 831


In Committee.

Consideration of Senate’s amendment.

Clause 3.

Section 4 of the Principal Act is amended -

Senate’s amendment -

In paragraph (c), after “citizen,”, insert “and the words ‘ during that period ‘ “.

Minister for Housing · Wentworth · LP

.- I move -

That the amendment be agreed to.

This is a formal drafting amendment. The committee will note that clause 3 (c) of the Bill seeks to amend paragraph (a) of subsection (5.) of section 4 of the Principal Act by omitting the words “ during a period when he was an Australian citizen,”. The omission of these words also necessitates the omission of the words “ during that period “, which occur later in that paragraph, as there is no longer any reference to a period.

Question resolved in the affirmative.

Resolution reported; report adopted.

page 832



Motion (by Mr. Bury) proposed -

That the House do now adjourn.

Deputy Leader of the Opposition · Werriwa

– During the day honorable members on the Government side took frequent opportunities to assert a special relationship between this country and the United States of America and to deplore the fact that the United States appeared to have cut the ground from underneath the Government’s policy as regards foreign investment and overseas control. For a long time the Government has been making the same claim concerning our diplomatic relations with the United States. Last week the Minister for External Affairs (Mr. Hasluck) stated, in answer to a question -

The Australian Government is in the happy position of enjoying such a state of confidence with the United States Government that it enables us to be in close and constant communication with it. I do not propose to talk about the details of private communications, but I can assure the honorable member and the House that in every phase of the operations of South Vietnam we do have the opportunity to express a view and we are in constant communication with the United States.

In the last fortnight the Prime Minister (Sir Robert Menzies), apparently without consultation with the Minister for External Affairs, has expressed himself both inside this House and outside on our relations with the United States over South Vietnam. I propose to compare his remarks on this subject with the remarks which President Johnson made at the Johns Hopkins University yesterday. The President expressed the same courageous and forthright attitude to external affairs as he has demonstrated so often in internal affairs. He said -

Once this is clear, then it should also be clear that the only path for reasonable men is the path of peaceful settlement.

Such peace demands an independent South Vietnam - securely guaranteed and able to shape its own relationships to all others - free from outside interference-tied to no alliance - a military base for no other country.

These are the essentials of any final settlement.

We will never be second in the search for such a peaceful settlement in Vietnam.

There may be many ways to this kind of peace: in discussion or negotiation with the Governments concerned - in large groups or in small ones - in the reaffirmation of old agreements or their strengthening with new ones.

We have stated this position over and over again fifty times and more-to friend and foe alike. And we remain ready - with this purpose - for unconditional discussions.

Mr James:

– Who said this?


– The President of the United States. I now quote a considered statement, full of moral indignation, in which our Prime Minister dressed down a dozen Anglican bishops on 25th March. Rhetorically he asked -

Is the United States to withdraw, and abandon South Vietnam? This would no doubt lead to a conquest which would end the armed conflict by conceding victory to the Communists.

Their lordships had not made any such suggestion nor, do I apprehend, had any other person in public life. The Prime Minister continued, in what he meant to be rhetorical terms -

Or is the United States, without withdrawal or abandonment, to negotiate for peace? With whom? About what?

These are two vital questions.

How would they negotiate with the Vietcong, well organised but hidden, practising the night attack upon villages, determined upon revolution by violence? How would they negotiate with North Vietnam, a country which had shown that it will be bound by no agreement?

How could they negotiate with Communist China, the home of aggression, except upon a basis of assured independence and freedom for South Vietnam and those other countries of South East Asia which’ are now threatened by Communist expansionism? Sir, the change of heart that is needed to lay a good foundation for a fruitful negotiation and a lasting peace must occur in the Communist bodies.

The President of the United States does not say that he will not negotiate with North Vietnam. Clearly he includes the North Vietnamese Government among the governments concerned, at least. The President does not say that he would not negotiate with Communist China. Earlier in his speech he refers to the rulers in Peking; it is open to inference that he is ready to confer with Communist China, among the governments concerned. The President is not waiting for a change of heart in the Communist bodies before he indicates his readiness to negotiate. He is taking the proper steps to force that change of heart, to expose to the world the genuineness or otherwise of the Communists’ case, should they decline to negotiate. He has anticipated that possibility of negotiation and, we hope, he is forcing it.

The Prime Minister two days ago replied to a question by the Leader of the Opposition (Mr. Calwell). Again he denounced the idea of negotiation. He said - . . negotiate with an enemy which has violated its obligations in relation to a cease Are; negotiate with a country that has ignored its international obligations; and negotiate with people who will keep on shooting when the Americans have stopped shooting. That seems to me to be a fantasy, and if I am the only Prime Minister left to denounce it, I denounce it.

The Prime Minister might have added that even if the Pope and the Anglican Bishops do not denounce the idea, he would still denounce it. What are we to think of the President of the United States, who is ready to negotiate with a country which has ignored international agreements, violated its obligations and kept on shooting? The President is prepared to negotiate, as was his predecessor at the time of the Korean conflict. No conditions were set by the President of the United States at that time. He started the negotiations which have at least prevented a recurrence of hostilities in that country.

The Prime Minister has clearly in this case once again displaced his Minister for External Affairs (Mr. Hasluck). The Minister for External Affairs takes a more responsible attitude in his answers to questions, his considered statements in the House and very often in his correspondence with people who write to him. But the Prime Minister has become established as the most conservative and bellicose head of government elected in any free elections in the world today. He is well behind every other leader in what he would call the free world. He is behind the Pope, the Prime Ministers of Canada and Great Britain, the Secretary-General of the United Nations, his good friend Pat Gordon Walker, as he describes him, and his contemporary and counterpart, General de Gaulle. He is behind the lot of them.

That is the position in which we find ourselves on Vietnam. In some other respects the Prime Minister has calmed down. I must not misrepresent the right honorable gentleman.

Mr Bryant:

– Where is he?


– He was notified an hour ago to be here. Four months ago, during the Senate election campaign, he was mounting an increasing war upon Indonesia. On 19th November the Prime Minister referred to infiltration into our side of New Guinea. He had warmed up by 23rd November when he said that President Sukarno had passed the point of reason. The following day he said that aggression by Indonesia against our territory in New Guinea would be met by armed resistance. Indonesia had now passed from infiltration to armed aggression; President Sukarno was out of his mind. On 30th November, interjectors during an election speech were told-

I see you are on Sukarno’s side.

I can assure honorable members that the attitude of the Prime Minister has had a deplorable effect on South East Asia. His attitude to interjectors has made many people in South East Asia think there is much more opposition to the Government’s help for Malaysia than in fact there is and that there are many people in this country who are, as he glibly says during an election campaign, on the Indonesian side. The panic is now over. Things have quietened down since then. Once the election was over Indonesia became more reasonable. His attitude on Vietnam, however, continued until two days ago and would have still continued if the President of the United States had not cut the ground diplomatically from under the Prime Minister’s feet as he has cut it economically from under his feet. The man of Suez and Sharpeville, the odd man out in the United Nations and the Prime Ministers’ Conference, will never be second, in the President’s phrase, in the search for a peaceful settlement in Vietnam. As long as he is head of the Government of this country, Australia will always be last in that search.

Minister for External Affairs · Curtin · LP

– I do not usually question the motives of people who speak in parliamentary debates but I must permit myself to ask what is the purpose of the Deputy Leader of the Opposition (Mr. Whitlam) in introducing a debate of this kind. Is he trying to drive a wedge between Australia and the United States of America? Does he imagine that by proving the existence of differences between Australia and the United States or trying to create an opinion among the Australian people that such differences exist he is serving the interests of our nation or the causes which I believe not only the whole membership of this side of the House but also a very large number of members opposite sincerely and warmly support?

The first point made at the outset by the honorable member was that a statement I had made about the closeness of diplomatic relations between the United States and Australia was not justified. I do not qualify in any way the statement I made. It is an exact description of that close and harmonious relationship and state of confidence which exists between the present Australian Government and the United States Government - a state of confidence and harmony which we on our side value very much and believe to be very much to the advantage of Australia and the security of our people.

The honorable member tried to make out a case that there was some kind of conflict between statements made today by President Johnson and statements which had been made on other occasions by the Prime Minister (Sir Robert Menzies) or myself. The honorable member quoted a very small passage from a very long speech but distorted the passage in such a way, particularly in the manner in which he delivered it, as to try to support the case that he was trying to make. I will repeat the passage on which the honorable member appeared to rely. In the mouth of President Johnson the passage read as follows -


That is, the Americans - have slated this position over and over againfifty times and more - to friend and foe alike. And we remain ready - with this purpose - for unconditional discussions.

I want to emphasise two words-


– Allow me to go on with my remarks. I want to emphasise the two words “ remain “ and “ unconditional “. The use of the word “ remain “ shows consistency. There is no change in the President’s policy. “We remain ready.” There is consistency and continuity in his policy. The other word to which I refer is “ unconditional “. Anybody with a fair mind and an honest intention, trying to arrive at the meaning of the President’s words, would read that passage in the context of the whole speech and would know that the President was referring to the attempt by North Vietnam to state conditions, one being that the Americans must withdraw before any discussions can take place. The sense of what the American President said is not what the Deputy Leader of the Opposition implied. The sense of what the President said was plainly this: “We will not accept the condition which North Vietnam wishes to impose, that American troops must withdraw before any discussion takes place; but if there are no conditions to discussions we remain ready to enter into those discussions.”

I emphasize the strength of that case by going to earlier passages in the President’s speech. I have the authentic, official text in my hand. At the outset of the speech, the President made it quite clear that the United States was taking up a position in Vietnam because of principles. If one were to compare some of these passages with statements made in my own statement to this chamber on external affairs and with statements made by the Prime Minister, he would find an almost complete identity of thought. It is true that the President expresses them more forcefully and more clearly than it was within my power to do, but they are the same principles. The President said -

We fight because we must fight if we are to live in a world where every country can shape its own destiny. And only in such a world will our own freedom be finally secure.

Do all members of the Opposition say that that is not also Australian sentiment? Of course it is Australian sentiment. Later on, the President said -

The first reality is that North Vietnam has attacked the independent nation of South Vietnam. Its object is total conquest.

Honorable members opposite know that most of them! believe that, too. They know that that is also what Australian leaders have said. Then the President went on -

Over this war - and all Asia- is another reality; the deepening shadow of Communist China. The rulers in Hanoi are urged on by Peking.

That is almost identical with the statements made both by the Prime Minister and by myself and by some speakers - some more thoughtful speakers - on the Opposition side. The President went on -

We have made a national pledge to help South Vietnam defend its independence, I intend to keep our promise.

He said that today -

To dishonour that pledge- to abandon this small and brave nation to its enemy - and to the terror that must follow would be .an unforgivable wrong. Wo are also there to strengthen world order. To leave Vietnam to its fate would shake the confidence of all these people in the value of American commitment.

He also said -

We are also there because there are great stakes in the balance. Let no-one think that retreat from Vietnam would bring an end to conflict. The battle would be renewed in one country and then another.

One can almost find an identical passage in my statement to this House.

Our objective- the President said - ils the independence of South Vietnam. We will do everything necessary to reach that objective.

In a later passage-

We will not be defeated. We will not grow tired. We will not withdraw, either openly or under the cloak of a meaningless agreement.

This is the sort of thing which the Prime Minister of Australia and I, in my capacity as Minister for External Affairs, have also been saying. There is identity of view in the stand taken by the President of the United States in his speech delivered in Baltimore yesterday and the statements made on behalf of Australia in this chamber and outside this chamber.

I come back to the point from which I started. What is the objective of the Deputy

Leader of the Opposition in trying to prove that there is a difference either of emphasis or of outlook between Australia and the United States? What is his purpose? What ia he trying to show? What is the purpose of those who call out behind him - that small minority of the Opposition which shouts loudly when the Deputy Leader of the Opposition courts the left wing? What are the thoughts in the minds of the members of the right wing of the Labour Party? They remain silent and probably are slightly disgusted when they see the Deputy Leader carrying on in this fashion, trying to prove that there is a difference between Australia and the country on whose alliance we depend so much, trying to prove that there is some weakness or irresolution on the part of the great power whose strength and determination is the one thing that will save South East Asia from destruction, the one thing that gives a hope of peace and stability to the people of that region?

I am at a loss to understand what can be the motive of the Deputy Leader of the Opposition. Is it a motive that belongs to the safety and the security of this country, to the peace and the welfare of the people of South East Asia, or is it some motive that has to do only with his pronounced desire to get even further to the left than the honorable member for Yarra (Dr. J. F. Cairns)?


.- One can feel sorry tonight for the Minister for External Affairs (Mr. Hasluck) because he has had to come into this House to defend the Prime Minister (Sir Robert Menzies). He has had to put forward an argument which we know he himself really does not support. Let me make it clear, for a start, that the Opposition supports every single word of the statement by the President of the United States of America. We believe there is room for negotiation.

Mr Hasluck:

– So do we.


– Well, you are doing little about it. The Leader of the Australian Labour Party (Mr. Calwell) expressed tha view of Australia today, I think, when ha made a Press statement just before leaving the National Capital. He said that coming two days after the Prime Minister’s denunciation of negotiation. President Johnson’s declaration was a heartening and refreshing voice of sanity and wisdom. That is what it is. The Prime Minister has turned his back on negotiation. He has said: “ It is hopeless. You cannot do it. With whom do you negotiate?” Well, he has been answered today by the President of the United States.

It is worth comparing these two gentlemen, if one can compare them for a moment. In world affairs and in the diplomatic world President Johnson is a political giant, a leader and fighter for democracy. He is a fighter who is prepared to use the weapons of war, if necessary, to preserve the small countries. But whilst fighting, he realises the need to fight for peace, negotiate for peace, and to look after the millions of people who are suffering. He has put forward to the world a proposition for peace and those who do not agree with him and those who do not support him will be judged. They can only be termed warmongers. It is no good for Government supporters to pick out members of the Labour Party or to turn the heat on somebody else. They themselves must say whether they agree with the President of the United States that you should negotiate. The Prime Minister, in his letter to the bishops, said: “With whom do you negotiate? “. If the Prime Minister would read carefully the statement of the President he would find out with whom to negotiate. It clearly points out that it is possible to negotiate with countries or with small or large groups. As the Labour Party says, nothing is given away by negotiation. You fight but you fight also for peace at the same time.

As I said earlier the President of the United States is a political giant in diplomacy. Compared to him, the Prime Minister of Australia, unfortunately, is a political pygmy when he is brought into world classifications. What we need in this country is a lead from the Government. Government supporters ask us what our objective is tonight. Our objective is to point out to the Australian people that the Government is not doing its job. It is not leading the Australian people. The Minister for External Affairs will not - or should not - satisfy this Parliament and the Australian people by saying: “ We have a constant association with the United States of America. We have a close and harmonious association.” Apparently something has gone wrong with the diplomatic channels and the Prime Minister, when he said that there was no room for negotiation, did not know that the President was going to make this statement.

Mr Hasluck:

– We knew.


– I believe that the Department of External Affairs has very skilled and expert men on its staff. It has good diplomats. I think we are fortunate to have them. But no matter how skilled a team may be and no matter how hard it works, unless it gets a lead from the Prime Minister of the nation and unless you show it that you want to negotiate and to take your place in the world, particularly in South East Asia, as a nation fighting for those unfortunate people of South Vietnam, it is not sufficient. You must also fight for peace.

The Government’s communication system seems to have gone astray. The Minister says that he knew these things. If the Prime Minister knew them, it is strange that only yesterday he should say in reply to a question that negotiation was not possible. What is wrong? It has clearly been shown in his letter to the bishops that the old camp follower has lost the last column. In world affairs the Prime Minister is a camp follower of the United States. He hangs on behind. Once he was a camp follower of the United Kingdom but he has lost contact there because a Labour Government, with Mr. Wilson as Prime Minister, has set in motion a move to send to South East Asia - this trouble spot so close to us - Patrick Gordon Walker to investigate and try to find an avenue for negotiation and a possible way to bring together the parties in a struggle for peace and not for war.

Our Prime Minister has drifted along. He thought in effect: “I am safe, I will drift along, America will foot the line.” All of a sudden President Johnson, besides fighting in Vietnam to preserve the lives of the people, has come out with a clear statement as to where America stands. America will not sacrifice the little people; it will not sacrifice the struggling South Vietnamese. But at the same time the President puts forward a positive programme, not only to bring peace to this country, but also to develop it, which is most important. It is no good having peace unless you have a plan for development

Statesmanship is again shown. Because the Soviet Union is a Communist country the President does not say that it cannot help. He is holding out the hand of friendship and the hand of co-operation and inviting the Soviet Union to plan and work for the development of this country. But the Prime Minister shrugged aside the bishops who approached him on the matter. In this House he more or less said that anyone who talks about negotiating is not right in his head. He asked: “ With whom do you negotiate?” He said that you cannot call up the kind of old peace moves that were made years ago.

It is impossible in 10 minutes, as the Minister for External Affairs found, to deal with the President’s statement. One can excuse the Minister for not having sufficient time to go fully through the statement. However, there is nothing to stop the Minister at any time from initiating a debate on this statement. Let him and the Prime Minister stand up and state whether they say what we say: “ We support completely the message of the President.” Let them say that they believe that we can negotiate for peace and that there is hope in this world. But this hope will never be achieved unless the leaders of the nations give leadership. The trouble is that Australia will not lead; it is getting no leadership.

The Prime Minister has made assertions in the House during the week but tonight he leaves it to the Minister for External Affairs to state the position of the Government, with probably his Service Ministers to fill in the gaps if necessary. I give full marks to the Minister for External Affairs. I think that he is a good Minister. If this matter were left to him we would probably get results, but the Prime Minister constantly meddles in external affairs. He has done so to the sorrow and dismay of some of his Ministers in the past. As the Deputy Leader of the Opposition (Mr. Whitlam) has said the Prime Minister has a sorry record in relation to Suez, the United Nations and South Africa. He has shown clearly that he does not measure up to the problems of external affairs. Whatever his record might bc at home, when he meddles in world affairs he is a dismal failure, as he has shown clearly again on this occasion.

The Opposition is delighted that a lead has been given. We will support it entirely. We hope that even ait this late hour the Government will wake up and that it will not be content to be a camp follower, but will say to the United States: “ We want to join you in this leadership. We will help you negotiate. We will send somebody like Patrick Gordon Walker whom the United Kingdom has sent to South East Asia. We will send someone from this Parliament to work with him to try to find a solution to the problem “. Do not let us just tag along, hoping for the best. Let us show that we believe in humanity; that we believe that a peaceful settlement can be brought about; and that we want to ensure a better standard of living for the people of these countries.

President Johnson has clearly shown the way. He is prepared to fight, if necessary, against aggression; he will give nothing away, but he is prepared to fight also for peace. He has a plan to provide for the economic security of the Vietnamese people. He believes that peaceful co-existence is possible. He has asked the Soviet Union to come in and join forces to bring about peace and to build a better world for these unfortunate people. Let the Prime Minister give way; let someone else lead this country towards peace and prosperity.


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


.- It is rather unusual to see the honorable member for Kingston (Mr. Galvin) joining in with the left wing of the Labour Party in denouncing the policy of the Australian Government towards Vietnam. It seems that he would rather have 2s. each way. The Labour Party has proved itself to be unAmerican in all its activities. It has not supported America in any of its actions, whether in Cuba, on the economic front, or in Vietnam. Yet the honorable member for Kingston claims that he supports every single word in President Johnson’s statement. On many occasions in this House he has denounced the American attitude in Vietnam, as have many other honorable members opposite who have called for the unconditional withdrawal of American troops from Vietnam.

Members of the Opposition would do well to read the answer which the Prime Minister (Sir Robert Menzies) gave to the Leader of the Opposition (Mr. Calwell). He said that the United States, instead of fighting, should negotiate. I ask honorable members opposite to bear those words in mind, because they are very important. As the Minister for External Affairs (Mr. Hasluck) has just pointed out, President Johnson has said that the United States will not be defeated, will not break the tie and will not withdraw. The Opposition has consistently said in this House that it wants an unconditional withdrawal of American troops from South Vietnam.

Mr James:

– Who said that?


– If the honorable member looks at “ Hansard “ he will see that many honorable members opposite have said it. This is what they have advocated. On an earlier occasion in this House I said that America was prepared to negotiate and that it would negotiate. That statement has been proved to be entirely correct. I would have thought that the Opposition would have welcomed President Johnson’s insistence that the South Vietnamese be given an opportunity to exercise the right of selfdetermination. This is one of the propositions which the Opposition has always advanced in relation to other countries. For the American troops to have been withdrawn from South Vietnam would have been a calamity for the South Vietnamese because they would never have had the right of self-determination. It would have been a victory for the North Vietnamese, who are the puppets of Peking.

Throughout the debate on foreign affairs the Opposition advocated the withdrawal of American troops from Vietnam. If the American troops had been withdrawn it would have meant that the whole of South Vietnam would have been deprived of the right of self-determination. The entire country would have been almost under the direct control of the Chinese Communists. From the point of view of the free world this would have been unthinkable. We have so many people on the other side of the House who have two bob each way. Let me instance this. Tonight we heard the Deputy Leader of the Opposition (Mr. Whitlam) make a completely unwarranted attack on the Prime Minister (Sir Robert

Menzies). Because of his zest for leadership - though I believe that his hope of attaining the leadership has gone - he has completely aligned himself tonight with the left wing of the Labour Party.

Mr Daly:

– Oh!


– That is right. I can see one or two members of the Opposition who belong to the right wing who are not laughing about this. They, like honorable members on this side of the House, believe that Australia comes first and that personal gain and aggrandisement come second. But not the Deputy Leader of the Opposition. I believe that he, for his own purposeful gain in remaining the Young Pretender to the Labour Party throne, would even betray Australia’s interests.

Mr Whitlam:

Mr. Speaker, I find offensive the remark of the honorable member for Phillip who said something to the effect that I would betray this country. I ask you to direct him to withdraw the remark.


– Order! If the honorable member for Phillip made that remark I must ask him to withdraw it. He must not accuse any honorable member of betraying this country.


– I will withdraw if my remarks are offensive to the Deputy Leader of the Opposition, but I think that he might be betraying the interests of his own party.

A careful reading of America’s terms for peace in Vietnam will reveal that they are precisely the same as those mentioned by the Prime Minister. Apparently many honorable members opposite have not taken the trouble to read the Prime Minister’s reply to a question asked by the Leader of the Opposition (Mr. Calwell) on 6th April 1965. For those who have not read it and who would like to compare his remarks with those of the President of the United States, the Prime Minister said -

What I was directing myself to on each of these occasions was a suggestion, about which some people have become quite vocal,-

That applies equally tonight - that the United States, instead of fighting, should negotiate -

Is not that consistent with what President Johnson has said? Can any honorable member quibble about that?

Mr Birrell:

– What else did he say?


-I will tell the honorable member. He went on to say - negotiate with an enemy which has violated its obligations in relation to a cease fire; negotiate with a country that has ignored its international obligations;

Does the Opposition advocate this? Does it suggest that we should negotiate with people who have broken the Geneva Agreement and The Hague Convention in every regard? To those honorable members opposite who are interjecting–


– Order! If honorable members do not cease interjecting I will have to take action.


– The Prime Minister continued - and negotiate with people who will keep on shooting when the Americans have stopped shooting.

That is precisely what the Prime Minister said on that occasion. Can honorable members opposite find anything in the Prime Minister’s statement about negotiations that is incompatible with President Johnson’s statement? Of course they cannot. I think the main thing is that we bring peace to South Vietnam. The President, of course, is prepared to negotiate provided that South Vietnam remains independent, provided that she is free from Communist infiltration and provided that she is free of foreign military forces. 1 believe that the Australian Labour Party is endeavouring tonight to besmirch the Prime Minister. The Deputy Leader of the Opposition laughs, but he is a past master at doing this in a subtle way. As I said earlier, leadership of the Opposition by the present Deputy Leader is something to which, I believe, it will never be his right to succeed.


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

Dr J F Cairns:

.- It has become quite clear that there is a vast difference between the position taken up by the Prime Minister (Sir Robert Menzies) and his supporters on the other side of the House, as outlined in his speech yesterday, and that adopted by the President of the United States of America. Over the last few weeks, the Prime Minister and his supporters on the Government side have consistently stated that we must not negotiate in connection with Vietnam now, or under any conditions. They have taken the view that we must go on fighting and that we must not negotiate. They have taken the view so clearly expressed by the honorable member for Bradfield (Mr. Turner) the other day when he said that the only alternatives in Vietnam were escalation or surrender and that there was no possibility of negotiation. Negotiation was, in fact, surrender because there was nothing you could negotiate about.

No one can twist the words used by the Prime Minister in answer to a question asked by the Leader of the Opposition (Mr. Calwell) in this House only yesterday with relation to negotiation. They are plain enough. The Prime Minister said -

That seems to me to be a fantasy–

That is that we can have negotiations with countries that are concerned in the war in Vietnam - and if I am the only Prime Minister left to denounce it, 1 denounce it.

Does that mean anything other than that he denounces the possibility of negotiation in Vietnam? Of course it does not. The Prime Minister takes up that attitude on the very day the President of the United States of America is saying: “We are prepared for unconditional discussions.” There is a vast difference between the attitudes of the two gentlemen.

Hoping to divert the attention of those listening from the main issue involved in this debate, the Minister for External Affairs (Mr. Hasluck) asks: “What is the purpose of the Deputy Leader of the Opposition in raising this matter?” The purpose of the Deputy Leader of the Opposition (Mr. Whitlam) is to inform the Australian people that we have a Prime Minister and a Government who are uncompromisingly committed to an aggressive course, and who are unwilling to consider negotiating in international affairs. That is the attitude adopted by the Prime Minister on every occasion on which he has entered into discussion of international affairs. We want to point out to the Australian people the differences that exist between the attitude adopted by the Prime Minister and that taken up by those who are prepared to settle the great problems of the world today peacefully by negotiation. We want to emphasise that these are the issues that the Australian people should consider when voting at elections. We want to show that there is a better alternative than the one suggested by this gentleman who is quite incapable of negotiating at the same time as he is quite incapable of fighting.

Let us consider the facts. Let us take first the speech made by the President. President Johnson said -

We will never be second in the search for a peaceful settlement in Vietnam.

Can anyone claim that the Prime Minister can say the same? Of course he cannot. He cannot say:” We will never be second in the search for a peaceful settlement in Vietnam “. Why, on the same day on which President Johnson made that statement, the Prime Minister said that he denounced the possibility of negotiation and that if he were the only Prime Minister left in the world to denounce it he would denounce it. Of course, it is impossible for the Minister for External Affairs or anyone else on the other side of the House to say that this is not the position of the Prime Minister in this matter.

Mr Hasluck:

– I do say it.

Dr J F Cairns:

– Impossible to say it truthfully.

Mr Hasluck:

– I do say it truthfully.

Dr J F Cairns:

– I think-

Mr Hasluck:

Mr. Speaker, I ask for a withdrawal of that remark. The honorable member for Yarra said, in reply to my interjection that I did say a certain thing, that I did not say it truthfully.


– Order! I must ask the honorable member for Yarra to withdraw that remark.

Dr J F Cairns:

– I withdraw the word “ truthfully “ and I say that the Minister cannot say it accurately. We now find that the President of the United States is laying down the policy that he is prepared to come into unconditional negotiations in respect of Vietnam. The Minister for External Affairs endeavours to confuse the issue by saying that what the President really means is that he is prepared to go into negotiations and that when he says he will do that unconditionally he is not referring to the North

Vietnamese demand that all the forces of the United States be withdrawn. What the President of the United States is saying is that he is now prepared to consider negotiations even if that remains the demand from North Vietnam. He is prepared to consider withdrawal because he wants a neutral South Vietnam. He is saying that the particular demand that has been made in the past on behalf of the Government of this country, and has been expressed by it - that negotiations will not be considered unless the Government of North Vietnam ceases aggression in South Vietnam - is no longer considered to be a necessary condition. The President is saying quite clearly: “We will go into negotiations of an unconditional kind “. We are going to see if we can stop aggression by negotiation. If honorable members on the other side of the House do not accept that interpretation, they are deliberately trying to twist words.

We know what the significance of this speech is. President Johnson has referred to “ unconditional discussions “. He wants to make it clear to all the parties concerned that any negotiations will be free of the conditions that were underlying negotiations before. This is the reaction of the Press of this country to the matter. The Press saw it desirable, necessary and appropriate to emphasise matters such as this in their reports covering the matter. The “ Sun “ says -

The United States is ready for unconditional discussions aimed at a peaceful settlement of the Vietnam war, President Johnson announced tonight.

That is the particular point at issue which has emerged from this statement. In Melbourne, the “Herald “ similarly stresses the same point. It says -

President Johnson said tonight that the United States remains ready for unconditional discussions aimed at a peaceful settlement of the Vietnam war.

Mr Jess:

– Cairns, you are a rat!


– Order! The honorable member for La Trobe will withdraw that remark.

Mr Jess:

– No, Sir, I will not. I will not withdraw.


– Order! I name the honorable member for La Trobe.

Motion (by Mr. Hasluck) agreed to -

That the honorable member for La Trobe be suspended from the service of the House. (The honorable member for La Trobe thereupon withdrew from the chamber.)

Dr J F Cairns:

Mr. Speaker, an additional point of great importance has been made by the President of the United States. He said -

For our part 1 will ask the Congress to join in a billion dollar American investment in this effort when it is underway.

The President also said -

I dope that all industrialised countries including the Soviet Union will join in this effort to replace despair wilh hope and terror with progress.

This also is a new development. This is the first time that we have had a proposal for a thousand million dollar development programme for South East Asia. It is a matter on which we need to know the attitude to the Australian Government. This is in line with an aspect of policy that has been propounded all the time by the Australian Labour Party. We have pointed out that military methods cannot solve problems in Asia and we have stressed continuously the importance of economic progress. Now we welcome the magnificent proposal for an economic development programme in South East Asia by tha President of the United States of America, who has said that his Government will contribute 1,000 million dollars. I ask the Australian Government at this stage to consider Australia’s position in this situation. Why should Australia not contribute, in addition to what we do now, a proportion of her gross national product equal to the proportion of the gross national product of the United States represented by the 1,000 million dollars offered by the President of that country? If Australia did contribute in this proportion it would cost this country at least £20 million for the development programme in South East Asia. 1 ask the Minister and the Government to announce that Australia will join with the United States in this significant policy development, and that Australia will undertake as a matter of official policy to support unconditional discussions for the peaceful settlement of the war in Vietnam. I ask the Government also to announce that Australia will join with the United States and contribute an appropriate proportion of her gross national product, to the extent of at least £20 million, towards the development programme in South East Asia. I submit that if the Government undertakes to adopt these two items of policy at this stage, it will be adopting a policy quite inconsistent with that followed by the Prime Minister and the Government in the past.


.- First of all, I want to refer to the remark of the honorable member for Yarra (Dr. J. F. Cairns) that it appeared that every member on the Government side of the House was opposed to any moves in Asia that would bring about peace or would bring peace closer. Let me point out that in the debate on international affairs my colleague the honorable member for Mallee (Mr. Turnbull) said -

But now that America has said: “You can go so far and no farther,” and has shown strength there is a real chance to get peace.

Later on he said -

I believe that there will come a time when we will be able from strength to negotiate an end not only to the present conflict but to general Communist aggression in this part of South East Asia.

I think the Deputy Leader of the Opposition (Mr. Whitlam) is to be congratulated tonight. It is obvious that there is a realisation amongst the members of the Opposition that one of the real sources of strength in this Government is the Prime Minister (Sir Robert Menzies), and that in this political sphere as long as the Prime Minister holds the strength and the prestige that he does in this country and overseas, the Opposition, torn asunder as it is by internal strife, will have no possibility of occupying the Treasury bench in this Parliament. Tonight I believe we have seen a very shrewd diplomatic move on the part of the Deputy Leader of the Opposition. If he can take out of its context something that was said by the Prime Minister and present it so that it appears to be completely contradictory to a. statement by the President of the United States, also taken out of its context, then he can gain a political advantage for the Opposition. As I have said, we have seen this evening a very shrewd political move.

There is no need for me on the floor of this Parliament to defend the Prime Minister. He has a prestige and a position in

Australia and overseas that has commanded the respect of many people and many nations. I can remember that in previous debates in this House members of the Opposition have referred to certain occasions on which they have said that the Prime Minister has failed. I would like to hear of any distinguished personage in international affairs who has had complete and absolute success on every occasion on which he has ever negotiated. One of the occasions on which members of the Opposition have said the Prime Minister failed was that occasion of the Suez crisis. Let us remember that on that occasion our Prime Minister was chosen by the leaders of many nations to confer and hold discussions with President Nasser. It was unfortunate that certain circumstances arose at that time, not the least of them being a presidential election in the United States, which had an effect upon the negotiations between our Prime Minister and President Nasser.

Irrespective of the result of those negotiations I, and I think many other people, believe the Prime Minister handled those negotiations in a way which brought credit to himself and credit and prestige to this country. We have seen many problems and complexities in the situation in Vietnam. One of the outstanding correspondents in Australia, Denis Warner, pointed out a few days ago that the determined action by the United States had brought about a change of heart and feeling in many of the countries of Asia which, up to this stage, had been frightened that they were going to be left out on the end of a limb by the United States and some other Western powers. I believe the policy of the United States has brought hope to many countries in Asia which, a short while ago, were walking and living in fear and trembling because of the threat of Red China. For that reason I believe this move by the United States has brought the possibility of negotiations in Vietnam closer. 1 am really amazed at times at the constant talk about an independent policy by Australia. We are an independent and proud nation and we will never forget it. For many years the men and women of our fighting forces have given evidence of that. But let us be realists. What could and would Australia do without the magnificent support of the United States? The honorable member for Watson (Mr. Cope) and the honorable member for Wilmot (Mr. Duthie) say nobody would discount that. Every time one of the members of the Opposition talks this nonsense about a complete and absolutely independent policy for Australia it is evidence of the fact that there is no realisation by honorable members opposite - or some of them - of the facts. Let us face the situation. In all these things there must be co-operation between Australia and the United States of America - co-operation between Australia and the United States of America and the United Kingdom. As I have said on the floor of this House on many occasions, God help the rest of the world if between our Commonwealth of Nations and the United States of America there ever comes a rift, because at that stage our civilisation as we know it and as we believe in it is doomed. In this regard I will refer to the words of the United Kingdom Secretary of State for Foreign Affairs, Mr. Michael Stewart. I know that quoting only part of a speech is perhaps not complimentary, but that is all I can do in the time I have. He said -

When we discuss international affairs we must necessarily say a great deal about restoring or keeping the peace. This involves frequent mention of the necessity to resist aggression and to keep up our defences.

He speaks of the situation following the settlement -

For a time both parts continued to endeavour to put themselves in order and make economic and social progress. Those possibilities remained open until, in 1959, there was a call from the Government of North Vietnam for an intensification of the Viet Cong activities in the south and for full-scale guerrilla warfare against the Government of South Vietnam. Not only did the northern government call for that, they then proceeded to help it with more weapons and military advice, as was made clear by the majority report of the International Control Commission in 1962. Faced with that situation, South Vietnam appealed to the United States for help and the United States responded.

He talks about the suggestion that the United States should withdraw -

It would further be an admission that what is in fact the aggression from the North had succeeded.

He means if the United States forces were withdrawn -

I assure the House that that event would be regarded with profound alarm by all the nonCommunist countries in that part of the world. I have noticed this among the very many letters which I have received about this matter and which my honorable friend and honorable members opposite have sent to me from their constituents that, although many of those letters ask urgently and naturally that Her Majesty’s Government should do everything possible to get a peaceful solution, very few indeed ask for the complete and unconditional withdrawal of the United States forces.

He went on to say -

More recently President Johnson has expressed the matter thus: “ It is, and will remain, the policy of the United States to furnish assistance to support South Vietnam for as long as is required to bring Communist aggression and terrorism under control. The military actions of the United States will be such, and only such, as serve that purpose at the lowest possible cost in human life to our allies, to our own men, and to our adversaries too.”

Mr. Stewart added

I do not feel that that can be regarded as the language of a man or a nation eager to engage a reckless escalation of the conflict.

In these remarks there is a determination to halt Communist aggression in this area. Taking the totality of President Johnson’s statements and the statements that have been made by others, we find they are in no way contrary to the statements made by the Prime Minister or to the policy of this Government, which is in keeping with the preservation of the safety and security of our land and future.

Mr. MclVOR (Gellibrand) [11.16]. - Evident in the speeches made by many honorable members on the Government side of the House tonight and on previous occasions is disappointment that the action of the President of the United States of America has saved the world from nuclear destruction and disappointment that bombs have not been dropped on China. Honorable members opposite can jeer if they wish. The Australian Labour Party has consistently called for negotiation. We have asked the Government to get behind U Thant, the Secretary-General of the United Nations, in an effort to stop the slaughter that has been going on in Vietnam. But the Government has said: “ We are right. There will be no negotiation.” The honorable member for Mackellar (Mr. Wentworth) advocated, practically openly, that Communist China should be denuclearised. Apparently the idea is that, if we cannot get the United Nations to say to 740 million people: “ Give us your nuclear secrets now; you are not entitled to them “, and if these people do not hand over their nuclear arms, we should drop a few bombs on them. The honorable members who are jeering tonight jeered when I spoke on a previous occasion in a similar debate. I said then -

I believe it is possible to negotiate a mutual “ hands off “ agreement between Russia, China and the Western Powers, with all parties having the ultimate aim of aiding the social and economic development of South East Asia, including Malaysia and Indonesia, without military, political or economic gain to any one party. Surely this is not a proposition too radical for the Australian Government to accept.

When I said that, honorable members opposite jeered at me. I was one of the humble fry of the Opposition. But today the President of the United States is saying exactly the same thing. Honorable members opposite claim that they are the great defenders of peace and of the underdeveloped nations. But I have never heard any of them say what President Johnson has said in his declaration that appears in the newspapers tonight. He has said that instead of spending billions of dollars on destruction, something should be spent on construction - the construction of peoples to lift them out of the morass of degradation that they are in. These are the ideals that have been postulated by Opposition members time and time again. But honorable members opposite never suggest any action for the betterment of mankind; they always seem to believe that we should drop bombs and destroy mankind.

On the previous occasion, I went on to say - 1 often wonder . . . what the attitude of the honorable member for Mackellar or any other advocate of mass destruction would be, if Australia or America or any of those advocates individually had suffered the horrors of mass destruction.

I wonder what their attitude would be if they had been in the position of the people of South Vietnam or North Vietnam. It is one thing to be the yictim of war in countries that have been cursed with persecution and whose people have faced the horrors of disease and hunger, and another to sit in a soft seat here in Canberra, as the honorable member for Mackellar does, and advocate the dropping of bombs on unfortunate people on the other side of the world.

Let us get a little realism into this debate. This evening, honorable members opposite have been hoist with their own petard and they do not know how to get out of their difficulty. Time and again, we have heard honorable members opposite rise in this chamber and advocate total war. Their attitude is: Clean out those who are on the other side. That is the sort of proposal that we have heard voiced in this place time and again. Such thoughts are sickening in this day and age. All the time, honorable members opposite know that it is only a short step from conventional war to total war, or what is described as new war, with all the accompanying horrors of nuclear destruction. Government supporters should think of that instead of asserting that Opposition members are anti-American.

Honorable members opposite should think on these matters and let the people of Australia see that both the Opposition and Government supporters are for Australia and will work to give Australia an effective voice in the affairs of the world. If we could do that and bring some wisdom into the thoughts of the warmongers, we would bring some humanity to bear on the situation. It would be much better if, instead of decrying what others have said and denying the wisdom of their words, honorable members opposite bared their souls and said that others were right and they were wrong and that, in the future, the course advocated by others would be followed. If Government supporters, instead of jeering at me when I proposed the solution to the war in Vietnam now suggested by President Johnson, had acknowledged that perhaps it was the right solution, we would not have been embroiled in the kind of discussion that we have heard here this evening.

Mr Wentworth:

– I wish to make a personal explanation, Mr. Speaker. I have been deliberately misrepresented. I have never advocated mass destruction. On the contrary, I have advocated measures to avoid mass destruction. It is the honorable member for Gellibrand (Mr. Mclvor), not I, who is warmongering.


.- Mr. Speaker, the honorable member for Gellibrand (Mr. Mclvor) has made a plea to honorable members to get a little realism into this debate. I join him in that plea and I propose, if I can, to introduce some realism. A sense of realism in this matter will be attained if we look at the attack launched by the Opposition in its proper context. That context is very interesting. In the light of what has happened this evening and of certain events of the past few sitting days, the activities of Opposition members in the field of foreign policy can be seen to fall into a very clear and well defined pattern. Let me insance certain things that form part of the pattern. First of all, we heard a lot of sententious, pompous and thoroughly insincere moralising a week or so ago about the use by the United States of America in South Vietnam of non-lethal riot control gas for the purpose of gaining control over villages and outposts controlled by the Vietcong. A more insincere and nonsensical attack could hardly have been imagined. Yet it was pressed with considerable vigour, or at least with such vigor as is left in the Opposition after its years in the political wilderness. Why was this attack pressed? It was pressed because the left wing of the Australia Labour Party, above all else, wants to drive a wedge between this country and the United Stales. I would be the first to recognise that not every member of the Labour Party wants to do that.

Mr Bryant:

– We support President Johnson.


– I shall come to the honorable member and his crocodile tears in a moment.

I now turn to the next matter. We heard from the honorable member for Hughes (Mr. L. R. Johnson) a few days ago.

Mr Bryant:

– He made a very good speech, too.


– I think it was the Deputy Leader of the Opposition (Mr. Whitlam) who said that it was a very good speech. Am I right.


– No.


– I am glad that the Deputy Leader of the Opposition does not own to the proposition that it was a good speech, because if he did he would be even further to the left than I had imagined. But the honorable member for Hughes who, after all, does represent a section of his party - whether from the lead or from the rear does not matter - said that in South Vietnam the United States was infringing the Geneva Agreement of 1954. That was another step, in this thoroughly antiAmerican approach of the left wing of the Labour Party, along the path of driving a wedge between us and our principal ally. Then what do we find tonight? We find a somewhat odd trinity of people at work leading this little skirmish from the Opposition benches.

We started off by hearing the Deputy Leader of the Opposition. He was followed by the honorable member for Kingston (Mr. Galvin) who, I may say with respect to him, I thought found himself in rather strange company, because the third member of the trinity was my friend, the honorable member for Yarra (Dr. J. F. Cairns). So there we have the right wing, the left wing, and the wobbly wonder boy in between. The Deputy Leader of the Opposition, the wobbly wonder boy of the Labour Party, was sandwiched in between. What did they do? They tried as hard as they could again to drive a wedge between us and the United States, and they did that by resorting to a freedom of interpretation of the printed word which I can only say in relation to the Deputy Leader of the Opposition was very free for somebody who has had training in the law. We can forgive, perhaps, the honorable member for Yarra, because he is at times given very much to tergiversation. But the proposition that has been put is this: Because President Johnson said that he was prepared to undertake, unconditionally, talks with a view to achieving a peaceful settlement in Vietnam, he is to be taken as consenting or submitting to the condition or term imposed by the North Vietnamese Government that the Americans must get out before any negotiations start.

I should have thought that that interpretation of what appears in tonight’s newspapers was nothing short of a perversion of the plain meaning of plain words. I was surprised and rather disappointed to find that the Deputy Leader of the Opposition, despite the necessity he finds to ride sometimes with one camp - sometimes side saddle - and sometimes with the other camp, should take this interpretation, despite the urgent necessity that besets him in his quest for leadership. Why should he do it, and do it in such strange and ill-assorted company? It is quite plain, if one reads this evening’s newspaper in a sensible way that President Johnson has said nothing that conflicts in substance or in fact with what the Prime Minister (Sir Robert Menzies) said in this House the other day in answer to a question without notice.

Dr J F Cairns:

– Is your legal training helping you now?


– I think I can do a bit better than the honorable member for Yarra, legal training or no, because I do not - at least 1 try not to - resort to plain perversion of ordinary language to make a cheap political point, as the honorable member for Yarra did tonight and as he has not infrequently done in this House. I ask honorable members to listen to what the “ Daily Mirror “ reports the President as having said -

We will not be defeated. We will not grow tired. We will not withdraw.

A point has been missed by honorable members opposite. I feel that the Opposition wants to miss this point because if its members took it into account they could not succeed in making a cheap debating point.

The point that has been missed is that the North Vietnamese Government has always said, “ No peace until the Americans get out “ and here is President Johnson saying now, “ We will not get out “. Could anything be plainer?

I turn now to another newspaper in which is published comment by American officials on President Johnson’s remarks. I have heard no reference by the Opposition to this comment -

  1. . neither the United States nor the North Vietnamese would be obliged to stop hostilities nor take action of any kind as a condition for agreeing to talks.

The Prime Minister the other day said no more in substance than this. The right honorable gentleman asked: “ Who would agree to the proposition that the Americans should negotiate after they have stopped fighting?” Is that any different from what President Johnson said? I would have thought it was exactly the same.

We are accustomed in this House to hearing strange interpretations of words by the honorable member for Yarra for his own purposes. I can only say that I am disappointed that the Deputy Leader of the Opposition should be led so far in the wrong direction in what appear to be his desperate attempts to ride two horses so that he can get to the winning post and the leadership of his party. He is an aspirant for the leadership who having started off a fairly firm favourite and continued to be one for a long time now finds the odds against him lengthening.

Motion (by Mr. Hasluck) put -

That the question be now put.

The House divided. (Mr. Speaker - Hon. Sir John McLeay)

AYES: 57

NOES: 36

Majority . . . . 21



Question so resolved in the affirmative.

Original question resolved in the affirmative.

House adjourned at 11.38 p.m. until Tuesday, 27th April 1965.

The following answers to questions upon notice were circulated -

Housing for Postal Employees. (Question No. 841.)

  1. How many houses have been (a) built and (b) bought by his department over the past live years as residences for staff in each State of the Commonwealth?
  2. Whereabouts in Western Australia are these houses situated?
  3. What increase in housing ownership in Western Australia is intended by the Department during the next twelve months, and where will the houses be situated?
  1. Since 1st July 1960, action has been taken, or is being taken, by my department to provide staff residences in the various States as follows -
  1. A residence was recently taken over on permissive occupancy from the Department of the Interior at Northam.
  2. An existing residence at Port Hedland is shortly to be converted to single men’s quarters.

Housing Conditions for Postmasters. (Question No. 842.)

  1. Are (a) air-conditioning units or (b) overhead fans installed in some houses provided for postmasters in country areas?
  2. If so, does this apply in any particular area of each State?
  3. If this is the case, which arethose areas?
  4. If such units or fans are not installed, is any other cooling system provided in high temperature areas?
  1. In 1959 approval was given for the installation of evaporative air coolers and overhead fans in all Commonwealth-owned residences, both in existing and future construction, in tropical areas.
  2. The Cabinet decision provided for the installation of these amenities in certain areas in New South Wales, Queensland, South Australia and Western Australia.
  3. These areas are defined in Department of Works Drawing HM.61/8/D, a copy of which I shall make available to the honorable member.
  4. Action is now being taken by my department progressively to implement the Cabinet decision in all residences controlled by the post office in the areas concerned. No other type of cooling is at present being provided but it is likely that there will shortly be an inter-departmental meeting to discuss the question of providing further improved amenities in Commonwealth-owned residences, including the installation of air-conditioning units, as distinct from evaporative coolers, in certain areas.

Department of Civil Aviation: Housing. (Question No. 905.)

  1. How many houses are owned by the Minister’s Department in Western Australia?
  2. Where are the houses situated and are they all occupied by departmental employees?
  3. What formula is used to determine the amount of rent to be paid for the houses?
  1. At present the Department has 79 houses of which 71 were purchased to provide accommodation for departmental employees.
  2. The houses are situated at Albany 2, Broome 11, Carnarvon 12, Derby 7, Forrest 3, Geraldton 4, Halls Creek 1, Jandakot 1, Kalgoorlie 6, Meckatharra 5, Onslow 2, Perth Airport 9, Port Hedland 11, Wyndham 5. All these houses are occupied by departmental employees except eight recently acquired to permit development of Perth Airport. These houses at Perth are to be disposed of progressively, but are at present leased to tenants.
  3. Staff occupying departmental houses at Grade 6 and 7 District Allowance localities, i.e., at Broome. Derby, Halls Creek, Port Hedland and Wyndham, are charged rental on the basis of 10 per cent. of their minimum actual salary. At other localities, except where the occupant has an incidental departmental obligation of supervision over personnel or property (e.g., a caretaking responsibility), rental is based on an economic formula. This provides for recovery of the capital cost of the house plus interest at 31/2 per cent. over the estimated life of the house in addition to the cost of maintenance, insurance, general water and sewerage rates, and a 5 per cent. administrative charge.

Australian Investment in Indonesia. (Question No. 943.)

External Affairs, upon notice -

In view of the takeover or confiscation of American oil interests in Indonesia by the Government of that country, can he say whether Australian investments in Indonesia are of large proportion, what form they take, and whether they are in jeopardy as a consequence of the recent moves by the Indonesian Government?

There is only one Australian firm which has established a subsidiary in Indonesia, and there is no other significant private investment there. The firm concerned is engaged in the manufacture of pharmaceutical products. The Indonesian Government has given no indication that this firm will be affected by the recent action taken in respect of oil companies operating in Indonesia.

Education Report

I am informed that the report is in the final stages of preparation. I am confident that in the week that Parliament resumes following the Easter recess I shall be in a position to table the report.

Shipping. (Question No. 91 6.)

Shipping and Transport, upon notice -

  1. Has consideration been given to the construction of “ Empress “ type roll-on, roll-off ships for use along the east coast between, say, Sydney and Cairns?
  2. If so, does he share the optimism of shipping authorities that such services would be in great commercial demand and would lead to immense development of the tourist trade?
  3. If no consideration has been given to the proposition, will he now examine it?
  1. The Australian Coastal Shipping Commission has actively pursued the possibility of extending its roll-on roll-off, lift-on lift-off shipping facilities around the eastern seaboard of Australia. Tenders are expected to be called for one, two or three roll-on roll-off vessels in the near future for use in selected trades on the east coast. These vessels are being designed, however, primarily as cargo vessels. 2 and 3. There is little evidence of optimism among shipping authorities that a passenger cargo vessel would be in great demand in the particular circumstances. The opportunities for the trade have been examined closely by the Australian Coastal Shipping Commission which is not satisfied that the potential demand would justify the building of a special passenger vessel for the proposed service at the present time. The Department of Shipping and Transport is not aware of any private shipowner being interested in the trade.

Commonwealth Aid Road Grants

While the terms of the Commonwealth Aid Roads legislation specify that each State must spend at least 40 per cent. of its total grant on rural roads, other than highways, trunk roads or main roads, the detailed allocation of these funds - including its distribution among particular local authorities - is determined solely by the

State Governments themselves. If, therefore, certain local authorities - such as the Shire Councils mentioned by the honorable n.ember for Hume - feel that they are not receiving an equitable share of the road grants being paid to the States by the Commonwealth Government, this is a matter which should be taken up with the State Government concerned.

The responsibility for determining that the road grants paid to the States are spent in accordance with the provisions of the Commonwealth Aid Roads legislation rests with the Minister for Shipping and Transport. To satisfy the Minister on this point, the States supply him with annual statements - certified by the State AuditorsGeneral - showing details of expenditure of the grants under the relevant sections of the Act.

The Minister for Shipping and Transport has been satisfied that over the years since the introduction of the 40 per cent. “ rural roads “ provisions in 1954, all States have in fact expended on rural roads, as defined, the required proportion of the total grants received.

I understand that there have been only two or three occasions involving very minor amounts, when the Minister for Shipping and Transport decided that expenditure on certain items - not, however, related to the “ rural roads “ provision - could not be regarded as legitimate expenditure within the provisions of the 1959 Act.

Cite as: Australia, House of Representatives, Debates, 8 April 1965, viewed 22 October 2017, <>.