25th Parliament · 1st Session
Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 10.30 a.m., and read prayers.
– On 27th April 1965, I asked the Prime Minister what action, if any, is proposed regarding the provision of docking and ship repair facilities on the Western Australian coast. I pointed out that I understood that certain discussions had taken place concerning this matter, and the right honorable gentleman promised to let me have some information on it. So far, I have not heard anything.
– That is quite true. I propose to carry out my promise but, at the moment, the information is not quite ready.
– I address a question to the Minister for Health. The Minister will remember that he recently announced a ban on the importation of pig meat and live pigs from New Zealand. I ask: What is the reason for this ban, and what is the position regarding stud pigs which had previously been brought in from New Zealand?
– The ban was applied because of an outbreak of a parasitic disease known as trichinosis in New Zealand. We received advice from our colleagues in New Zealand to this effect, and we pay tribute to them for advising us before we actually had notification of it ourselves here. We were able, then, to implement a ban under our quarantine law. New Zealand was the last country that, up to that stage, was exporting pig meat and live pigs to us. A question has been raised regarding the use of stud pigs already imported from New Zealand. The position is that these pigs will be permitted to carry on their normal activities but, because this particular disease is only transmitted on the consumption of the flesh itself, after the end of their useful life, the pigs cannot be sold for pig meat and must be destroyed. In the meantime, they must be kept under quarantine control.
– I address a question to the Minister representing the Minister for Civil Aviation. Some time ago, I was assured by the Minister that air navigation facilities were being improved and that Queensland would be as safe for the air travelling public as anywhere else in Australia. Pilots operating in north Queensland are of the opinion that air navigation facilities there are nowhere nearly as good as they should be. Will the Minister investigate those charges and, if they are justified, as I believe they are, take action immediately to have the position rectified in the interests of the safety of the air travelling public in the Cape York Peninsula?
– If the honorable member will give me the full details that have been supplied to him, I shall be happy to pass them on to the Minister whom I represent and see that whatever action can be taken is taken as soon as possible.
– My question is directed to the Minister for Primary Industry. I wish to raise again the subject of increased Federal Government participation in agricultural extension services. Can the Minister tell me what progress has been made towards bringing to finality negotiations with the States on this very urgent question?
– I know of the honorable member’s intense interest in this subject. He made a trip overseas recently and thoroughly investigated the whole process of extension services in America, and I thank him for the report he sent me to help us in our discussions in the Cabinet. The Government has given favorable consideration to the matter but finality cannot be reached until I can arrange for a conference with State Ministers. I have endeavoured to do this but the State Ministers cannot agree on a date mutually convenient for them to come to Canberra. I think the matter will have to wait until the meeting of the Australian Agricultural Council to be held in July, when I will confer with all tha State Ministers.
– I ask the Treasurer a question. Will he not now be presenting this week the bills to amend the Public Service Superannuation Act and the Defence Forces Retirement Benefits Act, and will honorable members thus, once again, bc denied the opportunity of consulting with organisations interested in these Acts before having to debate the Bills in the last days of a session? I also ask him when he proposes that the first refunds from the Commonwealth Superannuation Fund will be made to public servants.
– It has been my desire to introduce these Bills before the session concludes. However, the Parliamentary Draftsman and his staff have been working under very great pressure on a number of other bills which have a higher degree of urgency. Indeed, honorable members will have noticed that there is quite a spate of sizeable bills coming to the Parliament now as a result of the work that those people have been doing. The honorable gentleman makes something of an issue of the proposition that the Opposition is not able to consult organisations concerned in these matters. As to the Public Service matter, what has been involved has been quite clearly and fully stated publicly by me. There should be no great problem involved in discussing that subject with those likely to be affected, so I do not think there is much substance in the honorable member’s comment on that matter. As to the defence forces retirement benefits legislation, the main provision, and the one which I think will attract the widest interest, is that which affects those whom we call the pre- 1959 entrants, and again the attitude of the Government on that matter has already been fully disclosed.
– When will the first refunds be made from the Commonwealth Superannuation Fund?
– That may have to wait until the Budget session.
– 1 address a question to the Minister for National Development concerning stream gauging. It is apparent that methods of stream gauging currently in use are accurate only in certain reasonably restricted conditions.
– Order! I think I ought to point out to the honorable member and the House that 1 have noticed a tendency to give information at question time. I suggest that the honorable member direct a question which seeks information.
– I intended, Mr. Speaker, to ask my question after an extremely brief explanatory comment.
– Such a comment would still be out of order.
– I ask the Minister whether he will investigate methods which would be more efficacious in measuring the flow of streams in northern areas where, when our maximum precipitation occurs, the streams usually overflow their banks, thus rendering the present method of stream gauging ineffective.
– I thank the honorable member for the information he has furnished. I point out to him that the methods of stream gauging are those selected by the States, with whom the constitutional responsibility rests. We, as the Commonwealth Government, through the Australian Water Resources Council, have made a considerable sum of money available to the States to increase this stream gauging, but the actual method by which it should be done rests with the States. However, I will discuss this matter when it is brought before the Australian Water Resources Council at its meeting at Kununurra in about six weeks time.
– My question is addressed to the Minister for the Navy. Is it a fact that sick bay attendants in the Royal Navy are allowed to study and become qualified male nurses and on their discharge from the Royal Navy their certificate permits them to take up positions as male nurses in public hospitals? Is it also a fact that no similar arrangements exist in the Royal Australian Navy? Would it be possible for the Minister to arrange for similar conditions tq prevail in the Royal Australian Navy so that a person who has finished his time in the Navy could take a job as a qualified male nurse in a public hospital?
– I must admit that I am not aware of the system that operates in the Royal Navy, but 1 will have some inquiries made about it. I think the honorable member will be aware that all the Services arc extremely anxious to introduce systems that will help servicemen to lit themselves into civilian occupations when they are discharged. I will examine the suggestion made by the honorable member to see whether it can be adopted with some advantage, and I will give him a reply later.
– I address a question to the Minister for Trade and Industry. Can the right honorable gentleman say whether there is any substance in the reports of proposals to link the European Free Trade Area with the European Economic Community? If there is, are details of the proposals available?
– I have no knowledge of any organisational relationship proposed or intended, but it is quite understandable that the so-called European Free Trade Area of the seven countries would wish to have a smooth trading relationship with the six countries of the European Common Market. To the best of my knowledge, no more than customary discussions are proceeding and no organisational issue is intended.
– My question is directed to the Treasurer. It relates to the incidence of sales tax now being imposed on all school text books and other educational requirements. It is obvious that this form of taxation is adding significantly to the cost of education. I ask the Treasurer whether the previous representations that have been made in respect of this matter requesting the complete elimination of sales tax from these items will be further considered together with the other budgetary considerations that normally take place at this time of the year.
– As the honorable member will be aware, this matter has been carefully considered on a number of occasions. There are some practical difficulties in the way of its implementation, quite apart from the revenue aspect. The Government has shown a practical sympathy for the plight of parents who must meet expenses that arise from the schooling of their children. We introduced, as an innovation in Australian taxation policy, the deduction that is available to the parent for a child at school, and it has been increased on a number of occasions. Although the proposal of the honorable gentleman was not adopted when it was considered previously, it will again be included in the list of requests which have been received by the Government and which will be under review in the course of our Budget discussions.
– My question is directed to the Minister for Social Services. I ask: Tn view of the parlous position of many hundreds of rural workers, share farmers and small crop growers caused by the unprecedented drought conditions in New South Wales, will he take steps to ensure that the Department of Social Services deals sympathetically with applications for unemployment relief in every instance in which a genuine application for such relief is made and the person concerned is properly registered with the Department of Labour and National Service for employment but is unable to obtain a job?
– As the honorable member has said, conditions in a great deal of the eastern half of Australia are at present extremely parlous. In his electorate and in my own, conditions are as severe as they have ever been. For this reason, a number of applications for unemployment benefit have been submitted to the Department of Social Services. I can assure the honorable member that, in each instance, all possible consideration is extended to the applicant. However, I point out to him that many primary producers cannot completely comply with the requirements of eligibility for unemployment benefit. In every instance in which an applicant is able to comply with the requirements stipulated in the Social Services Act, unemployment benefit is paid to him.
– In directing my question to the Prime Minister, I refer to reports that an application to the International Olympic Committee is being prepared to have Sydney named as the host city for the 1972 Olympic Games. Will the right honorable gentleman give an early indication that such an application will have the enthusiastic backing of the Commonwealth?
– I will wait until I have heard whether an application has been made.
– I should like to address a question to the Prime Minister. I refer to the predominant population growth in the major cities of Australia and the drift of population from country areas. Will the right honorable gentleman consider establishing a Cabinet committee to work out further positive policies to correct this unbalanced development?
– I thought it had been made fairly clear, as a result of recent questions and discussions, that the Cabinet devotes a great deal of attention to this matter. By this, I mean that the Cabinet will continue to do so.
– I address my question to the Treasurer. Just prior to the conclusion of the last Parliament, he expressed himself as being anxious to see the Commonwealth Employees’ Compensation Act brought into line with modern requirements and he suggested that recent amendments had been only interim measures. Can the Minister now say whether any serious moves to bring this antiquated Act into line with modern requirements have been made and whether we may expect action in the near future? Will the trade union movement be consulted?
– I do not go along with the unfavorable comment made by the honorable gentleman. The workers’ compensation legislation, I suppose, like enactments on many other subjects, will never please everybody. Indeed, the Commonwealth Government must have some regard for the legislation of the various States, which varies to some degree. A Commonwealth enactment that completely ignored State legislation could produce both embarrassment as between governments and inequities as between fellow Australians. However, I know that a great deal of work has been done on this matter. I shall ascertain the present stage of progress and give the honorable gentleman an answer after my inquiries have been made.
– My question is addressed to the Minister for Trade and Industry. Is it correct that, as has been reported, at Warwick, Queensland, on 28th April, he called for a concerted effort to make better provision against the effects of drought? As this subject is of great importance to many Australians, I ask the right honorable gentleman whether he can give information about the better provision to which he is said to have referred.
- Mr. Speaker, while speaking in Queensland at the time of a very serious developing drought in that State, and indeed far beyond that State, I made the point, which I think is quite valid, that conditions which are regarded as drought are normal in the Australian environment, but that we ought not to accept that we are powerless to make any substantial provision to meet the inevitable recurring consequences. I referred to the need for better water supplies, provided both by the Government and on farming properties. I referred to the need for assured and reasonably cheap transport facilities for moving stock from drought areas to less affected areas. I referred to the need for better fodder conservation and said that I was not an advocate of grandiose national governmental fodder conservation but that much could be done by the farmers on their properties. I said that these considerations all involved all governments in Australia and credit institutions. That was the character of the statement I made. I believe it is desirable that the attention of all people and bodies who are responsible for the well being of the economy of this country ought to be directed to those matters.
– My question is directed to the Minister for Trade and Industry. I ask the Minister: When is the Tariff Board report on the vehicle industry likely to be tabled? What was the total sale in Australia of Japanese four wheel drive vehicles for each of the past three years? Finally, is the Minister aware that because of falling sales Pressed Metal Corporation Limited in Sydney, which produces the British Land Rover, has been compelled to reduce its labour force this week and as a result 36 employees have been dismissed.
– I do not know when the Tariff Board report on the automotive industry will be available because the Tariff Board has not yet, to my knowledge, concluded consideration of it. I can say that as soon as the report is concluded and, in pursuance of the usual custom, put in the possession of the Department of Trade and Industry and other departments for study, there will he no avoidable delay in bringing the report before the Government and presenting it to the Parliament in due course. I shall treat the part of the honorable member’s question seeking the number of imports of four wheel drive Japanese vehicles as being a question on notice and will reply to him in that way. I am not aware of the other point in respect of the industry in Sydney to which the honorable member referred but I will ascertain the facts.
– I address this question to the Minister for Labour and National Service. It is commonly assumed that this year 10,000 men will be required to harvest sugar cane in the north. Does the Minister feel that this requirement will be met. If there is to be a shortage of men, how far will the labour force fall short of requirements?
- Mr. Speaker, I was informed earlier in the week that there would be a very heavy demand for employees for the forthcoming harvest of the sugar crop in Queensland. I was also informed that my Department was working strenuously in order to ensure that all the vacancies were filled. I have not yet the exact details of the number of jobs that will be available or the number of men that we will be able to find. However, I have been informed also that there are reasonable prospects that sufficient labour will be found for the job.
– My question is directed to the Minister for the Army. Has any decision been reached on the renewal of the Commonwealth subsidy after June this year to the rifle shooting movement? Does the Minister agree that the rifle shooting movement has provided, and is providing, valuable training for Australian defence, and that the subsidy is essential if this work is to be continued effectively?
– The answer to the honorable member’s question is: “ Yes “. A decision has been reached to confirm the decision made by the Government five years ago to withdraw subsidies from the rifle club movement at the end of June this year.
– My question to the Prime Minister concerns Southern Rhodesia. Is the right honorable gentleman in a position to confirm the hitherto declared policy of the Australian Government that if there is a move at the Commonwealth Prime Ministers’ Conference to raise the position of Southern Rhodesia he will, on behalf of this Government, declare that this is a matter for settlement between the United Kingdom and the Southern Rhodesian Government and is not a matter for open debate within the Prime Ministers’ Conference?
– The honorable gentleman may recall that at the last Prime Ministers’ Conference this question arose. My view has always been perfectly simple. This is a matter between Great Britain and the Government of Southern Rhodesia. Indeed, after a long discussion - some of which seemed to me to be out of order - it was agreed in the communique that it was a matter between Great Britain and Southern Rhodesia, but a certain amount of advice was then given in the communique - presumably to both governments - as to how they should conduct themselves. I did not associate myself with that advice although in many respects I agreed with it. My view was, and is, that this is a matter between the two Governments, and while any of us may offer advice of a friendly kind, as we do, it is not a matter that can be determined by people other than the parties concerned.
– My question is directed to the Minister for Health. I ask the Minister: Will he see to it that speedy determinations are made in respect of applications for the inclusion of necessary life saving drugs in the pharmaceutical formulary? I direct the Minister’s attention to numerous representations made by honorable members and myself. I point out the long delays which have occurred and ask that action be taken to rectify the position.
– I appreciate the interest of the honorable member in this matter and the problems that do sometimes arise. I can assure him that everything possible is done to expedite consideration of this matter, but a very big task is undertaken by the Pharmaceutical Benefits Advisory Committee, the members of which, in many cases, act in an honorary capacity and in most cases at great loss and inconvenience to themselves. The Committee meets at regular intervals and has a considerable amount of work to do. A number of items have to be considered on each occasion, both for inclusion and deletion. Everything possible is being done to expedite consideration of these matters.
– My question to the Minister for Primary Industry is supplementary to a question asked by the honorable member for Mallee of the Minister for Trade and Industry. It relates to the same subject as did a number of other questions that have been asked and that is the widespread effect of the current drought on Australia’s primary industry. In view of the importance of these industries to the national economy, would the Minister be willing to raise at the next meeting of the Australian Agricultural Council the question of an integrated comprehensive policy designed to bring about the best practical provisions to meet drought conditions? I refer particularly to more adequate water supplies particularly-
– Order! I think that the honorable member is now getting out of order.
– I ask also: Will the Minister invite a discussion on the adequacy of transport facilities, both rail and road, to move stock quickly and inexpensively from drought stricken areas?
– The answer to both matters raised by the honorable member’s question is, “Yes”. I shall certainly take this subject for consideration to the Australian Agricultural Council. I believe that it is already on the agenda for discussion. The remarks made by the Minister for Trade and Industry and the suggestion in the honorable member’s question give the right slant to this problem. In previous discussions in the Agricultural Council on fodder schemes there seemed to be no support for an overall national and centralised fodder storage scheme as that would never meet the purpose. We must obviously get down to something more practicable and consider the approach from the point of view of the individual farmer. We must consider also the provision of water. The current drought has revealed a serious shortage of water storage throughout many areas.
– My question is directed to the Minister representing the Minister for Civil Aviation. Now that the Government has decided that airline companies must pay customs duties on the purchase of Boeing 727 aircraft, is it a fact that representations have been made to the Government by the favourite airline company to increase interstate fares to offset this duty?
– I have not heard of any representations along the lines suggested by the honorable member. I will make inquiries and let the honorable member know.
– I address a question to the Postmaster-General. I ask: Is there provision within his Department for a regular review of old post office buildings? Is the Minister in a position to assure me that temporary aluminium type post offices in several parts of my electorate will be replaced with permanent modern structures within a reasonable period of time?
– I regret that I am unable to give the assurance for which the honorable member asks. As I mentioned in the House some little time ago, many buildings, particularly in the outback areas of Queensland, are wooden structures and have ‘been there for perhaps 60, 70 or 80 years. It would be expected, perhaps, that these structures would be replaced before some of the more modern aluminium type buildings. I give the honorable member an assurance that the Post Office is continually giving consideration within its works programme to priorities in regard to these matters.
– My question is addressed to the Prime Minister. A few minutes ago, in response to a question about Rhodesia, he indicated that he did not think it was any concern of his to assist the British Government in attempting to bring to Rhodesia a democratic government, where millions of Africans-
– Order! The honorable member is now making comment. He must direct his question.
– Can the Prime Minister explain the contradiction between that and his policy on Veitnam where an equally undemocratic government has aroused his absolute and unqualified support?
– I take leave to point out that the statement made by the honorable gentleman about my answer was completely false. If he will devote his efforts to reading the report in “ Hansard “ he will see how utterly false his statement was.
– Can the Minister for Supply inform me whether the European Launcher Development Organisation programme at Woomera is proceeding according to plan and what is the nature of the next major phase in the plan?
– There was some little difficulty with the E.L.D.O. programme early in the year, as the honor able gentleman will know, but at a conference held in Paris a month ago it was decided to resume the present E.L.D.O. programme with, perhaps, a little tighter control over the financial side of it. That not only affected the Australian programme to a minor extent but was also reflected more seriously in what was happening in Europe among the partners in E.L.D.O. A working party has been set up to review the concluding stages of the present programme and to lay down the second programme. This conference is due to convene in Paris again in, I think, late September or early October. At the moment the programme is proceeding on the original plan.
– My question is addressed to the Minister for Health. Is he aware of the existence of a form of cigarette advertising involving the sale of bubble gum in the shape of cigarettes contained in packets which honorable members will see are identical with packets containing particular brands of cigarettes? Is it not obvious that this type of advertising is specially directed at children?
– Mr. Speaker, I raise a point of order. Is the honorable member entitled to advertise this product in the Parliament?
– Order! There is no substance in the point of order; but I ask the honorable member for Barton not to give information.
– I assure you, Mr. Speaker, that I am not receiving any gratuitous packages of cigarettes. I further ask: In view of the authoritative medical evidence linking smoking with cancer, does the Minister consider that this type of advertising - and also a good deal of television, radio and newspaper cigarette advertising - is to be deplored? In view of the fact that the packages to which I have referred are imported from Italy, will the Minister confer with his colleagues with a view to preventing the importation of such items?
– I had not seen the product to which the honorable member referred until he produced it in the House this morning. On the question of cigarette advertising, I point out that at the moment the States have in hand a programme for the education of children in relation to the dangers of lung cancer associated with smoking. The Commonwealth has given some assistance in this field in the past. However, I cannot give any further information on the particular matter that the honorable member has raised until I have had an opportunity to look at it.
– Has the Minister for Labour and National Service seen in the Press this morning a report that the Seamen’s Union of Australia in Melbourne refused to allow tugs to assist in the berthing of the two United States vessels which are visiting Melbourne for the anniversary of the Battle of the Coral Sea? Is the Seamen’s Union a Communist controlled union? Does the Minister expect an acceleration of this type of action? If he does, what does the Government intend to do about it?
– Yesterday I received a report that the seamen on the tugs in Melbourne had refused to assist in the berthing of the two United States ships to which the honorable gentleman referred. A little later I was informed that the ships had berthed without tugs. During the last three or four days I have received from my Department several reports about the activities both of the Seamen’s Union and the Waterside Workers Federation and their attitude to the Vietnam problem. At the present moment, with my Department, I am looking into this matter. Probably, I will have to consult the Prime Minister about it at a later date.
– My question is directed to the Postmaster*General. I draw his attention to a question that I have had on the notice paper since 17th March. It is No. 824. I asked -
I now ask the Minister whether he is yet in a position to reply to that question.
– A considerable amount of detail is involved in this question. I am not in a position to say whether it can be answered completely. The issue of die proofs was approved in 1948 when the party to which the honorable member belongs was in government. The practice was continued until recently when, after the matter came under my notice, it was discontinued. So, at present there are no issues of any nature from the Post Office, for which full charges are not received by the Post Office.
– My question, directed to the Treasurer, concerns the investment of Australian capital overseas in underdeveloped countries. Has the Government received many inquiries from Australian companies showing an interest in investing abroad in joint ventures with local interests in underdeveloped countries? Would the Government encourage such ventures or would it regard the short term run on overseas balances resulting from them as an inhibiting factor in encouraging these proposals?
– -Although applications by Australian residents to make investments overseas are considered on their individual merits, approval is normally given to investment of a kind which would assist with the development or extension of a market for Australian exports. In fact, approval has been given over the last two or three years to a number of applications for direct investment by Australian residents in joint ventures with local interests in South East Asia. Such investment proposals are considered primarily from the standpoint of the likely advantages they will produce for Australia’s balance of payments in terms of increased export earnings rather than from the standpoint of the immediate capital outlay of the investment involved. I might mention that it was announced some time ago - I think by my colleague the Minister for Trade and Industry - that the Government was examining the introduction of a scheme for the insurance of direct overseas investment by Australian residents. Plans for the introduction of such a scheme are well advanced.
– When does the AttorneyGeneral hope to give legislative effect to the report of the Copyright Law Review Committee which was given to the Government 5i years ago, and to the report of the Bankruptcy Law Committee of 2i years ago?
– Order! Is this question on the notice paper? The Attorney-General assures me that it is on the notice paper; therefore it is out of order.
– Last night I signed an answer to a question which will be appearing in “ Hansard “.
– Will there be an answer to the question about the Bankruptcy Law Committee, too?
– I ask a question of the Minister for the Army. I refer to the tragic disappearance of one of the best known sawmillers of the north coast, Mr. Eric William Haydon, in forest country in my electorate some days ago. In view of the unsuccessful search made by a number of people for this highly respected citizen, will the Minister consider offering assistance through his Department and bringing into the search Army facilities in an endeavour to find this missing man? Will he also bear in mind that the search yesterday resulted in a tragic accident in which this man’s son was seriously injured.
– I think I am correct in saying that the Army has already played a part in this search by the provision of light aircraft. However, if the Army can do anything further I shall be only too glad to examine the possibility and treat it as a matter of urgency.
– I ask the Minister for Labour and National Service a question. Has a survey been carried out or is one in progress to ascertain the extent of suitable labour from Aboriginal sources for projects such as iron ore mining and associated works in Western Australia? If so, will the Minister make the results of the survey available to honorable members? If no action has been taken in this regard will the Minister arrange for a survey to be carried out soon?
– I am not aware of any survey carried out by my own Department as to the prospect of using Aborigines for iron ore exploitation in Western Australia. One may have been carried out by the Western Australian Government or by the Western Australian Employers Federation (Inc.). I will make inquiries from both the Western Australian Government and the Western Australian Employers Federation, and if I can get any useful information from them I will let the honorable gentleman know. I shall also see that my own Department looks into it and when I get a report I shall send that to him also.
– I ask the Minister for Trade and Industry whether he has seen a report quoting the President of the Victorian Chamber of Manufacturers as saying that if a plan-
– Order! The honorable member is out of order if he is quoting from the report to which he refers.
– I ask the Minister whether he has received a complaint about the harmful effect on Australia’s industries of the dumping of overseas goods. I ask whether his Department has investigated the matter or whether an investigation into it could be undertaken by his Department.
– Any action actually taken with respect to dumping is taken by my colleague, the Minister for Customs and Excise who administers the dumping legislation. The arrangement is that the broad policies which guide such actions are determined within the Department of Trade and Industry on the basis, of course, of authority from the Cabinet. So complaints do not customarily come to me; they would come to the Minister for Customs and Excise, and he has his own authority to act. If a new policy were involved, the matter would come to the Department of Trade and Industry. In those total circumstances, studies have recently been conducted to determine whether we ought to alter and, to some extent, tighten up the total provisions for safeguarding Australian industries against dumping.
Bill received from the Senate, and read a first time.
Bill received from the Senate, and read a first time.
.- I move -
That, in the opinion of this House, the Government should seriously and urgently explore the practicability of establishing a Common Market with New Zealand, having regard to the long term and overall advantages and disadvantages (if any) likely to accrue to each country, the desirable transitional steps and appropriate timetable and the arrangements that the Government may be able to make to ease any problems of transition.
I emphasise that this motion seeks merely the opinion of the House and seeks to import some urgency into the consideration of this important issue. It is not in any sense a Government motion, or a motion upon which honorable members may feel that they are bound to vote for or against the Government on party lines. I do not want to occupy the whole of the time allotted to me because I think it is important that as wide a spectrum of opinion of this House as possible be voiced in the course of the debate, not only by back benchers who are interested in this matter but also by spokesmen for the Government and leaders of the Opposition.
As I say, the object is to import some degree of urgency into a consideration of this important matter because, as time goes by, as indeed it has gone by, you tend to get established more and more vested interests on either side of the Tasman that are hostile to this proposal and this, I believe, is not in .the best interests of either of the countries concerned. Indeed, I make it clear that no common market is possible unless it is to the advantage of both countries. That is true of any good bargain.
I believe that the Government should, as was advocated by .the honorable member for Mackellar (Mr. Wentworth), take steps to appoint a select committee of this Parliament to go into the question and that it should give the members of the committee facilities to visit New Zealand, and discuss the matter with members of the New Zealand Parliament and the New Zealand Government, and with the interests particularly concerned in New Zealand. It seems to me extraordinary that, whereas honorable members are given facilities to visit New Guinea, for example, no facilities exist for them to visit New Zealand, and the interchange of Parliamentary delegations between the two countries has been almost non-existent.
I want to make it clear that my proposal is for the establishment of a common market by appropriate transitional stages. I do not advocate and never have advocated, as I think my honorable friend from Mackellar has done in the past, that New Zealand should become the seventh State of Australia. I think that is something which no New Zealander would wish to see. The New Zealanders are proud of their national identity, as indeed are we of ours, and there is no necessity whatever for a proposal which would be ill received there and is not necessary for the purpose which I have in mind. So I make it quite clear that I am not advocating anything in the nature of a political union. Of course, this does not mean that if we establish a common market we would not have to establish also certain institutional forms for co-ordination of the policies of the two countries in certain fields. For example, it would be necessary to have some form of co-ordination of policies in the field of finance, in Treasury matters and banking, particularly development banking, in the field of trade obviously, in the field of external tariffs and in the field of defence. But in any event, these matters do not involve any real loss of national identity.
If it has been possible for the countries of Europe, with their different languages, their separate histories and cultures, and with all their animosities over generations, to come together in a common market and reconcile all their divergent economic interests - they are certainly no less divergent than those between Australia and New Zealand - then surely it is possible for us on each side of the Tasman who speak the same language, even almost in the same fashion, and who have a common cultural heritage and so many other things in common, to make the effort that the Europeans have succeeded in bringing to a successful conclusion under much more adverse circumstances.
I referred a moment ago to the divergency of economic interests. There could be no greater divergency between the farmers of Australia and New Zealand than between the farmers of France and Germany, yet even these differences have been reconciled in Europe.
I would like at the outset to quote an Article of the General Agreement on Tariffs and Trade, which is most relevant to our discussion this morning. Part III, Article XXIV, paragraph 8 reads -
For the purposes of this Agreement -
A customs union shall be understood to mean the substitution of a single customs territory for two or more customs territories, so that -
duties and other restrictive regulations of commerce … are eliminated with respect to substantially all the trade between the constituent territories of the union . . .
It is important that we should understand this because it is clear that we cannot advance step by step by freeing trade in individual commodities and hope thereby to arrive at a common market. Under G.A.T.T., which I should imagine Australia, for other good reasons, would not wish to abrogate, we cannot proceed in that way. We must make up our minds whether we propose to move towards a common market or whether we do not. It is not possible to progress to a common market by little steps because G.A.T.T. prevents us from granting preferences for particular commodities to New Zealand and New Zealand from granting preferences for particular commodities to us. We have to make up our minds, therefore, whether we will move towards a common market or whether we will not. But again under the G.A.T.T. arrangement it is not necessary to do this in one fell blow. Provided there is a genuine movement towards a common market by stages that are set out, then the movement can proceed by transitional stages; but there must be the intention to form a complete common market, and nothing else will serve the purpose.
There have been certain factors militating against the establishment of the common market; if there were not, the market would have been established before now. Both Australia and New Zealand have been protected by the A.N.Z.U.S. and S.E.A.T.O. agreements We have been protected by the
American shield, and so there has been no urgency on our part to get together with New Zealand, or on the part of New Zealand to get together with us, for the purposes of security and defence arrangements. Why should we bother to do so if we are both protected under the umbrella provided by the Americans? Again, the machinery of Commonwealth consultation has been such that consultations between the two dominions have proceeded by way of London rather than direct. Further, our economies tend to be in competition rather than complementary to each other, and our trade has flowed in parallel channels rather than between the two countries except in respect of certain not unimportant commodities. Then, of course, New Zealanders have felt keen to preserve their sense of nationhood and particularly their sentimental link with Britain. Perhaps they have felt that we in Australia have been less loyal to the mother country than they are. These are small matters but they do in the aggregate have some affect on the situation.
Of course, there have been the vested interests that have opposed any common market. In Australia vested interests in the dairying industry have worked to preclude the entry into Australia of dairy products from more efficient producers in New Zealand. In New Zealand there have been growing up - and this is one reason why the matter is so urgent - manufacturing industries that have been concerned about competition from Australian manufacturers. On the other hand there are many factors that make it desirable to achieve some closer form of economic and other co-operation. For example, there is the matter of security. No longer will Australia and New Zealand feel safe and secure under the protection of the British Navy. The days are gone when we had that kind of security. Although we have American friends we do not, perhaps, have the same degree of reliance upon them as we had in the past on the British. We feel rather alone in this part of the world. For this reason both countries would wish to strengthen their economies in order to strengthen their common defence. Indeed, I might mention that we have common interests in the Pacific Ocean.
The islands of the Pacific that are now becoming independent are, of course, subject to all those outside influences in the world that could in some circumstances be inimical to the defence interests of both Australia and New Zealand. Again, on both sides of the Tasman we have noted a growing political and economic regionalism in Europe - a political regionalism which may well mean that there is less concern in Europe for the security of this part of the world, and an economic regionalism which tends to block out the principle primary products both of New Zealand and of Australia. The adverse effects of this regionalism could be greatly accentuated if, as I think most of us believe, Britain enters the European Common Market, as she may do in the not very distant future.
The economic advantages of a customs union, of course, are evident. They exist in any customs union. They have constituted the driving force in Europe itself. First, there would be the advantages of increased specialisation in the two countries, both in farming and in secondary industries. New Zealand, for example, has an advantage in the dairying industry; Australia has an advantage in production of commodities like wheat, sugar, dried fruits and so on. New Zealand has certain advantages, with its cheaper power, in manufactures and, indeed, has built up a considerable consumer goods industry. With a wider market in Australia for New Zealand goods there is no doubt that the consumer goods manufacturing industry in New Zealand could become more efficient. On the other hand, Australia in the manufacturing field has an advantage, perhaps, in the heavy industries and in the possession of raw materials with which New Zealand is not so generously endowed.
In the field of transport, as we all know, there has been a revolution in ocean transport. The structure of ships and the methods of loading and unloading have been revolutionised. This revolution has proceeded around the coasts both of Australia and New Zealand, and, indeed, the Union Steamship Company of New Zealand has been in the forefront of this development. There are, then, not very great disadvantages - certainly by no means insuperable disadvantages - in transporting goods from one side of the Tasman to the other. It can be done cheaply and competitively.
Another advantage of a common market that I shall touch on lightly is that resulting from the economies of scale. A common market would mean larger markets, a larger volume of production, more efficient equipment, and all these would give cheaper goods. Finally, you would have the stimulus of efficiency through competition.
Let us have a look at the great impediment, the vested interests on our side of the Tasman. I shall take first the position with regard to New Zealand dairy products and their entry into Australia. It is true that something has been done by way of consultation between the Governments of the two countries. In 1963 the trade Ministers of the two countries agreed to establish without delay a joint standing committee to review and study the trade between the two countries with a view to submitting, as soon as practicable, proposals for consideration by the governments for a free trade area in forest products and other items suitable for inclusion in a free trade arrangement either from the outset or subsequently. As I pointed out, such an attempt at establishing a common market in certain products is doomed to failure because it cuts right across the basic requirements of G.A.T.T. But with regard to dairy products the leader of the New Zealand delegation at discussions in Sydney, Mr. J. W. Holley said that there would be little purpose in talking about a free trade area until satisfactory trading conditions could be obtained in the commodities of concern to New Zealand. Besides dairy products, he said that New Zealand was particularly concerned at the problems in trade with Australia in peas, potatoes, onions and forest products.
It may be recalled that in August 1960 the Dairy Industry Committee of Inquiry in Australia pointed out that a relatively small number of farmers without prospect of ever becoming successful dairy farmers would need to be eased out of the industry and that others would need to become more efficient. What would be needed then would be the implementation of the recommendations of the Dairy Industry Committee and perhaps an intensification of them in order to allow scope for the entry of New Zealand dairy products. This appears to be an essential element if we are going to move towards a common market.
Of course, this would not put all dairy farmers in Australia out of business. The supply of whole milk to the great metropolitan areas is a large part of the business of dairy farmers and is no part of competitive trade with New Zealand products. Again, we import a tremendous amount of cheese from Europe and other overseas countries. There is no reason why it should not come from New Zealand. We should move towards this common market despite the enormous political obstacles, and I do not under-rate them in the least. But we must look at the lesser factors and the greater factors in a matter of this kind.
Now let us look at the vested interests on the other side of the Tasman; let us examine the position of the New Zealand manufacturers. I have before me an article written by Mr. M. Y. Walls, who significantly is Finance and Economic Consultant to the New Zealand Manufacturers Federation Inc. This is an article which appeared in an issue of the “New Zealand Manufacturer “, a periodical, which was published on 1st February 1963. I think it is very significant. He said - . . the investigation provided no evidence that, in order to engage in free trade with Australia, New Zealand must completely abandon her established secondary industries.
He also said - the value of Australian exports of manufactured goods to New Zealand would almost certainly be greater than vice versa … it may be assumed that New Zealand’s trade deficit with Australia could increase with possible adverse effects on the balance of payments. Joint agreed measures between the two countries could avoid this and other adverse economic happenings such as any marginal structural unemployment . . .
He went on to say - a reasonably long transitional period should give such firms every opportunity to become competitive before the customs union is effective.
He said further -
Pilot samples of costs of manufacture within New Zealand compared with Australian costs appear to indicate that in many cases New Zealand can produce goods as cheaply as similar goods produced in Australia . . . New Zealand manufacturers’ fears of being forced out of business if a customs union came into being would be generally unfounded.
He added -
Those Australian manufacturers competitive with New Zealand industries, mainly consumption goods, have declined in importance as New Zealand’s own industries became more efficient . . . whilst those products not so competitive, such as processed raw materials, have become more important. Australian and New Zealand manu facturing sectors appear to have become less competitive and more complementary.
New Zealand manufacturing is at a disadvantage in high overhead costs arising from small scale operations causing it to spend proportionately more on administration and management than the large firm in Australia. There is undoubted excess idle capacity in many machines which raises average costs through low machine utilisation and high fixed overheads.
It is quite clear that, if New Zealand had a wider market in Australia for these manufactures, the overhead costs could be reduced. Mr. Walls said -
Although electric power for industry is cheaper here -
That is, in New Zealand - than in Australia, yet because of its very abundance it should be much cheaper for industry instead of as at present. . .
The advantage of cheapness goes to domestic consumers rather than to industry. He went on to say -
Wage rates in New Zealand industry do not appear to be very different from wage payments made to Australian workers and it is generally agreed that the New Zealand labour force is intelligent and very adaptable.
He also said -
These two great stumbling blocks, the dairying industry in Australia and manufacturing in New Zealand, need not continue to be stumbling blocks if we are prepared to take the necessary steps to achieve the greater and wider purposes. The need clearly is to break this impasse. We shall get nowhere if we continue with negotiations about timber and this or that commodity. We cannot advance by this means towards a common market. We should set our sights on a common market and by study, industry by industry, on both sides of the Tasman, convince both sides that overall they can gain immensely from such a union and that, being placed in the world as they are today, they should have every inducement to do so. What is needed is a grand gesture from Australia more than this kind of niggling negotiation about this or that item.
We should be prepared to re-examine our dairying industry and see how far we may have to provide compensation for those marginal producers in Australia who may indeed be put out of business by competition with New Zealanders. We should see how far this would go. I do not believe that as much as 20 per cent, of the Australian dairying industry would be affected, but I pluck that figure out of the air. I do not believe that as large a sector of the dairying industry in Australia would be affected as dairymen in Australia naturally fear. For my part, I would be most generous in compensation and in the arrangements for the reorganisation of the industry in some respects to meet this situation. Indeed, I would go so far as to say that it would pay Australia to pension off the marginal dairy farmers on the Gold Coast for the rest of their lives if thereby a common market with New Zealand could be achieved.
This is an opportunity, possibly the last opportunity, for a breakthrough in this field, if we continue as we are, the obstacles will continue to build up more and more strength and when the time comes, as inevitably it will come, when this is forced upon both countries, situated where we are in the world and with the problems that we commonly face, the adjustment will be much more painful than it would be if we began the process today, setting before our minds the clear objective of a common market and setting out the stages by which we would move to it, considering the adaptations and the compensation that we and they would have to make to those interests in each country that might be adversely affected.
I hope the Government will not slam the door on this, because I believe that the vast majority of Australians and probably more and more New Zealanders are coming to this same opinion. Of course, vested interests on both sides will have their own predictable opinion, but I believe the thinking people in both countries are more and more coming to the conclusion that closer collaboration in the economic field and in defence is the requirement of history for our countries.
– Is the motion seconded?
– Yes, Sir. I have very great pleasure in seconding this valuable and constructive motion. The advantages of closer links between us and New Zealand are manifest. The general advantages of scale in industry and the fact that all over the world economic units are becoming bigger, are obvious. But there are two points - the honorable member for Bradfield (Mr. Turner) directed attention to both of them - that give this proposal particular urgency today. The first is that Great Britain, the main market for so much of New Zealand’s produce as well as our own, is likely to become more and more integrated with the European community. Whereas for Australia this would be a very great loss unless special arrangements were made to protect us, for New Zealand it would be a disaster. New Zealand does not have the same diversification either of exports or internal industry as we have, and is far more dependent upon the United Kingdom market than we are. The three staple commodities of meat, dairy products and wool, - represent the bulk of New Zealand’s exports and most of them are exported to the United Kingdom. To New Zealand, exports are, per capita, much more important than they are to Australia. So, unless special arrangements in favour of Australia and New Zealand are made when Britain enters into closer relationships with Europe, we shall lose trade, but New Zealand will face disaster. This is a new pressure.
The second factor is one, again, to which the honorable member for Bradfield directed attention. This is the question of defence. What we used to think of round about us as Mare Nostrum is now fast becoming Anybody’s Ocean. New Zealand and Australia, if they are to survive, must get much closer together. What are the forces that prevent us from getting closer together? There is in New Zealand protection of local manufacture. If honorable members look back 60 years to the select committee from New Zealand that visited Australia to investigate possible entry by New Zealand into the Australian Commonwealth, they will find that this was the original stumbling block. Mr. Seddon, the New Zealand Prime Minister, was at that stage motivated mainly, I think by the desire to protect infant New Zealand secondary industries against Australian competition. This sentiment survives in New Zealand, and the concrete will become set unless we do something about it fairly quickly and unless the New Zealanders do something about it fairly quickly. Unless they do something quickly, they will find themselves enmeshed in the toils of an economy so small, with its market of only 3 million people, as perhaps to be quite inefficient.
A second barrier is Australian pressure, as the honorable member for Bradfield said, for protection of the Australian dairy industry. I am one who thinks that we should be having another look at the Australian dairy industry though, of course, I am not in favour of doing anything that would penalise Australian dairymen. However when one considers the north coast of New South Wales, which is perhaps the richest part of the State, and realises that the people who live there, on the whole, have a rather low standard of income, one is forced to the conclusion that we have been mismanaging things and that we have not been acting in the interests of the local people or in the interests of Australia as a whole. We must not allow any parish pump considerations to promote fallacious interests believed to be the real interests of the dairymen of the north coast of New South Wales, especially if the policy followed is to the disadvantage of the whole of Australia. However, as I have said, I do not suggest anything that would penalise the inhabitants of dairying districts. I believe, as does the honorable member for Bradfield, that those people should be given the most generous help possible in a period of transition and the most generous compensation for individual losses. 1 believe that the Government, over the last 15 years, has been far too slow in tackling this problem. We have allowed the problem to drift instead of tackling it. I know the difficulties of the Australian Country Party, especially in respect of voting. But I appeal to the Deputy Prime Minister (Mr. McEwen), who is Leader of the Australian Country Party, and who is now at the table, to try to rise above the particular interests that he is fallaciously supporting and, in so doing, not backing the real interests of the people of the north coast of New South Wales. His party is trying to support fallacious interests, whereas he should try to rise above them.
The next point raises the impediment of the New Zealand attitude. This is very real. New Zealanders do not want to be swallowed up and lose their identity, perhaps, in the bigger world of Australia. We all can appreciate this. We all can appreciate how this prevents the economies of the two countries from being brought together. But, as I have pointed out, the pressures of economics and defence are likely to change this attitude in the interests of New Zealand’s very survival. Indeed, there has already been some change in that country. I instance a recent publication by the New Zealand Institute of Economic Research, which is entitled “Towards a Tasman Community “. This publication follows an earlier one entitled “Should We Have Free Trade between Australia and New Zealand?”. The New Zealanders are working in the right direction. I notice that the “ Southland Times “, of 1st May - less than two weeks ago - in an editorial, made this comment -
Incidentally, New Zealand secondary industry may not have as much to fear as some people think. Less than a month ago, on 23rd April, a Christchurch newspaper reported a protest - it seems to me a justifiable protest - against an Australian duty that prevents a Christchurch manufacturer of gumboots from exporting his product to Australia. This is silly. Although I would be in all respects in favour of protection for Australian secondary industry against imports from most countries, I suggest that we should not be trying to protect our secondary industry against imports from New Zealand. Let vested interests on both sides give way. Remove impediments. There is, as I have said, some movement in New Zealand. It should be answered by a more generous movement in Australia.
The honorable member for Bradfield asks, rightly, for the establishment eventually of a common market. This may have to be achieved by stages, and we may be able to achieve it if we keep the objective fully in mind and work towards it. Perhaps the Deputy Prime Minister, who is also Minister for Trade and Industry, will be able to tell us more about the discussions that the Department of Trade and Industry has been having with representatives of New Zealand. I look forward to hearing the details from him. Obviously, we should be buying more of our softgoods and paper pulp from New Zealand rather than from other countries. Obviously, we should be co-ordinating export arrangements with New Zealand so that the markets for our meat, wool and other primary products may be better exploited overseas in the interests of both countries. These are points that are plain in my view.
Above all, we need better leadership and more initiative in high places. The Government has not shown the necessary leadership and initiative in this matter. I know that what we seek has to come about stage by stage. I know that we must avoid trespassing too far on the susceptibilities of both New Zealand and the Australian Country Party. Here, we have to go gradually, and probably stage by stage. But we could have done more over the last 15 years, and we should be doing more. Perhaps we can do little things without much difficulty. For instance, is there a New Zealand section in the Parliamentary Library? Honorable members will find that New Zealand is not emphasised as it should be in our Library. Have we had exchange visits between this Parliament and the New Zealand Parliament? Why not? Perhaps the time may not be opportune for the establishment of a full scale select committee. I believe that this formal procedure should be adopted only by co-ordinated action on both sides of the Tasman. But surely the time has come for us, as members of this Parliament, to get together more with our opposite numbers in the New Zealand Parliament?
We in Australia have fallen down on our job. This is one of the most vital jobs that we have to do for the survival of Australia both in the economic and the physical sense. To add another three million people to our common market and to bring them closer into our defence arrangements would be equivalent to 20 or 30 years of our migration programme. This is something which is of interest both to us and to New Zealand. It is to our interests to get together more. When I use the word “ our “ in this context I do not mean Australia; I mean Australia and New Zealand. I hope, for example, that if the next GovernorGeneral of Australia is not to be an Australian he will be a New Zealander. I hope, for example, that if the next GovernorGeneral of New Zealand is not to be a New Zealander that they will do us the honour of choosing an Australian. It is in this kind of way that we can co-operate and gradually overcome the impediments that keep us apart.
I believe that a common market is the first objective. It is not, I think, the final objective, but let that matter lie with the desires of both peoples, the Australian and the New Zealand peoples, as they may develop. At any rate, let us put this in our sights as the first objective and work towards it, stage by stage, looking at it constructively, looking at the real interests of New Zealand as well as the real interests of Australia, remembering the prejudices that we have and the prejudices that the New Zealand people have, and remembering that at this time the balance of merchandise trade is very strongly in our favour so that to some extent the first moves lie with us. We, as the bigger partner or bigger prospective partner, in this alliance, should be generous. We should realise that the initiative should lie with us rather than with them. But let us also remember that the pressure of events as far as defence is concerned is equal upon both of us, and that the pressure of events so far as they concern our economies is likely to be much stronger on New Zealand than on us. So, in this narrower economic sense the factors which will operate for change in the New Zealand attitude are stronger, perhaps, than the factors which will operate for change in the Australian attitude. Under those circumstances let us forget our little vested interests and work for the interests of the Tasman community as a whole.
I commend very much the initiative of the honorable member for Bradfield in bringing this motion forward and I have every pleasure in supporting it wholeheartedly.
– The Opposition also compliments the honorable member for Bradfield (Mr. Turner) upon bringing this motion forward for discussion. Our general attitude is that in all aspects which concern New Zealand and Australia, whether they are matters of defence, diplomacy or trade, the interests of both countries will be advanced more and quicker if the two countries collaborate. If the last speaker, the honorable member for Mackellar (Mr. Wentworth) will pardon me for making a facetious remark, I will say that New Zealand, or at least the North Island, would already have been part of Australia if his eponymous ancestor’s initiative in land dealing had not been frustrated by our Imperial protectors over a century ago.
– It was the South Island, not the North Island.
– I thank the honorable member. This motion deals with a matter upon which the honorable member for Bradfield asked questions of the Minister for Trade and Industry (Mr. McEwen) in the last Budget session. It is a matter in which many honorable members have shown an interest for quite some time. It is a matter upon which the Government did take an initiative two years ago. In April 1963, there was a joint ministerial statement by our Deputy Prime Minister and Minister for Trade and the New Zealand Deputy Prime Minister and Minister for Trade. In May 1963, the Acting Minister for Trade was able to report that an inaugural meeting had been held of the joint standing committee to review and study trade between the two countries. The consultations continued. The Committee met six times. In April last year it sent a report to the two Governments. That report has not yet been published although various unofficial versions of what it proposed have been circulating. Another year has passed. There have been, I believe, no further meetings of the Committee, no meetings of the two Deputy Prime Ministers and Ministers for Trade, and no Government decisions on the matter. For over a year the whole proposal has marked time. It is not unreasonable, therefore, for us to discuss a proposition which emphasises the urgency of the matter.
This is one of the matters in which, unfortunately, the Australian Government is stultified by what is sometimes dramatically called the split personality of the Australian Minister for Trade and Industry and which, perhaps, more calmly, may be described as the conflicting interests which bear upon him officially and personally. The Minister gives the impression to the Australian public in general and to the world at large that he is a doughty fighter for Australian interests. He knows that Australia’s trade and industry have to be promoted and he will do the best to promote them. On the other hand he cannot afford to neglect his political base in the Country Party.
The problem of integration of Australia and New Zealand comes down to the pres sure brought to bear by New Zealand manufacturers and by some Australian primary producers. Previous speakers in this debate have not stressed the political integration of the two countries. There was a time when the Australian colonies and New Zealand were combined in a Federal Council of Australasia. I much prefer, and so does my party, the New Zealand constitutional position. New Zealand and Great Britain are, in our view, the two most advanced parliamentary democracies in the world. In those two countries, and those two countries alone, Parliament is supreme. As long as the electoral machinery in both cases is fair, then those two countries are likely to remain the prime examples of parliamentary democracy in the world. They are the examples which, according to our notion, Australia should emulate. I myself would not urge that New Zealand should become a seventh State, or seventh and eighth States of the Commonwealth. I would not advise any country to join the Australian Federation. I would not advise any regions of Australia to become an additional State so long as section 92 of the Constitution remains in its present form. Transport arrangements, of course, have remained chaotic in Australia because of section 92. The Tasman Sea would at least relieve New Zealand of the effects of section 92 in regard to land transport. The disadvantages of section 92 in internal marketing arrangements would be to New Zealand’s disadvantage just as they have been to Australia’s disadvantage. Politically in New Zealand - and I re-visited that kingdom last January - there is the same attitude towards Australia that one finds in Britain towards the United States - the feeling that the greater size is somehow ominous and to be resisted. One can even find among New Zealanders some of the petty attitudes towards Australia that one finds in Britain towards Americans.
The more serious trade matters, however, are, as I have said, among New Zealand manufacturers and some Australian primary producers. The New Zealand manufacturers believe that the greater scale and economy of Australian production would overcome their burgeoning industries. The Australian producers of dairy products, lamb and timber believe that the scale and economy of New Zealand production would reduce the profitability, or indeed the extent of Australian production in those fields. The feeling in these matters varies in different parts of New Zealand and in different parts of Australia. I tentatively and facetiously suggested in the South Island of New Zealand that that island might join Australia. I found that the proposition was almost seriously embraced. The South Island takes towards the North Island much the same attitude as Western Australians take towards the east and Queenslanders take towards the south of Australia. The more industrialised sections of Australia and New Zealand are envied and resented by the less industrialised sections. I find that in Western Australia section 92 of the Constitution is popular insofar as it guarantees freedom of trade from west to east and unpopular insofar as it permits freedom of trade from east to west.
One can appreciate the general economic position of the two countries by realising that New Zealand would, by joining a common market, join a community which was five times its size and Australia, in joining a common market, would become part of a unit which was increased by one quarter in size. I realise the political difficulties; I am not advocating political integration at this stage. I realise the trading difficulties; I do urge, along with the two previous speakers, that these difficulties should be more urgently and genuinely tackled by the Governments of the two countries.
There are some further aspects where more could be done. In January 1944 an Australia-New Zealand agreement was drawn up between the two countries. It covered many matters relevant to the conclusion of hostilities in which we were jointly engaged and, in addition, security and defence, civil aviation, dependencies and territories, the welfare and advancement of native peoples of the Pacific and migration. All those are matters which can still concern both countries although in none of them has our co-ordination been very good. We do not accept the laws of each country concerning naturalisation or the movement and integration of our island wards. Our relations on civil aviation have broken down. Our relations in defence are as necessary and as remote as they have been at any time in the last SO years. In all these matters we would be much more effective in the world as a whole if we were to work together. I cannot understand why we cannot have joint international airlines, joint armed forces and joint political arrangements for our trust and nonselfgoverning territories. The 1944 Agreement was to be implemented by ministerial conferences at least twice a year. The last such conference took place in November 1944.
I go further. We should be taking a much more active role in joint trade with other countries and in the joint development of our industries. It is now more than six years since the Tariff Board suggested that the Australian shipbuilding industry should be enabled to receive orders to construct ships for the New Zealand trade through the extension of the Commonwealth subsidy. Again, the New Zealand Government suggested five years ago that there should be a joint trans-Tasman shipping service. Since that time the remaining passenger ships have gone off the run and the cargo ships are still mainly in foreign hands. There is some New Zealand participation through a New Zealand subsidiary of the Peninsular and Oriental empire. Ferries across the Bass Strait and along the Tasman coast of Australia have proved remarkably successful. The ferries might well be extended across the Tasman. The ferries cater, of course, not only for passengers but also for trade in goods which are carried in trailers.
Furthermore, the more we work together in shipping the more we would be able to help each other in international shipping. Both countries depend on foreign ships to carry their goods to foreign markets. The ideal proposition for any trading country is that half of its exports should go in its own ships and half of its imports should come in its own ships, the other half of the exports going in the ships of its customers and the other half of its imports coming in the ships of its suppliers. Only Australia, among the great trading nations, depends entirely on foreign shipping. Amongst the other trading nations New Zealand relies more than most on foreign shipping.
This is a clear case where we ought to extend our horizons from trade with each other and look at the possibilities of extending the trade available to each of us by co-operating in the trade services upon which we both depend. You cannot expect rival suppliers to make their ships available to Australia and New Zealand for Australian and New Zealand supplies to be carried to markets which those rival suppliers at present have to themselves. We find this to be the case in the steel industry and we find it in all the products which we sell in competition with countries which have overseas shipping services. New Zealand, I believe, finds the position to be the same. We would have a good basis for international co-operation if we had an increasing share of trans-Tasman shipping services in New Zealand-Australian hands - Government hands or Government and private consortia.
This brings me to the next proposition, namely that of industrial development. There are some resources in which each country is plentiful but which neither country can properly develop without other resources. A clear example is the production of aluminium. Australia has among the world’s best supplies of bauxite. The cost of electricity generation in Australia, however, is not always competitive. The South Island of New Zealand has the world’s cheapest facilities for electricity generation, lt has not, however, any considerable or significant supplies of bauxite. New Zealand electricity and Australian bauxite together could produce aluminium at a lower cost than any other country or countries. This is a case where the two Governments could have entered a consortium to produce the aluminium, but they did not do so. They left it to foreign companies to do so. The consequence is that the use to be made of New Zealand electricity and Australian bauxite was not determined by Australian State Governments, the Australian National Government or the New Zealand Government; it was determined by foreign companies. Naturally, in the case of a product which is to be sold internationally, one must look for the trade outlets and these are largely in the hands of these foreign companies. Besides markets one needs knowhow. In this case one could have had a consortium between the Australian Governments concerned and the New Zealand Government and some of these large international aluminium companies from North America or western Europe. This is a field where the economies of both countries could have been promoted by co-operation between their Governments and by cooperation by those Governments with the great international aluminium cartels.
The destiny of both countries has never been more closely intertwined. We condemn - we deplore, we pity - the Balkanisation of many parts of the world which we think should, intrinsically, be one. We do it concerning central America, Latin America and the Carribean. We do it about West Africa, East Africa and the Mahgreb. We do it about the whole Arab world. In each of those countries there has been the disadvantage of political or economic division by foreign countries. Australia and New Zealand have no such disadvantages. Every historical attitude which they share in politics, culture or economics is the same. Their heritage is more alike than that of any two countries in the world. The more Australia and New Zealand pool their resources, the more they will be effective in the world and the more they will be able to look after themselves in defence, diplomacy, trade and development. The Opposition supports the motion. It will co-operate with the Government to have the earliest vote on the proposition which the Government will permit.
– I have listened with great interest to all the speeches that have been made on this matter and, as did other speakers, I congratulate the honorable member for Bradfield (Mr. Turner) for his thoughtful contribution and his initiative in bringing this matter before the House. It is quite clear that there is no difference in purpose, in objective or desire between any who have spoken, and that means between the Government and the Opposition or the Government and the private members on the Government side who have spoken in this regard. There are some details of difference or details of misunderstanding in some cases, but certainly there has been no difference in objective.
There is a belief, rightly or wrongly, that it is within the competence of the Australian Government to accelerate greatly the completion of this matter. On that I beg to differ and I shall explain the point of view that I wish to make clear. But I make it clear while speaking as Minister for Trade and Industry that I do believe that a satisfactory trading relationship between two countries can have a result in the general political relationship between the two countries even more important than the benefit to trade itself. In this regard
I cite the instance of the AustralianJapanese Trade Agreement, which I believe no thinking Australian would today deny has been the medium of producing a tremendous change in the relationship between the Australian Government and the Japanese Government and between the Australian people and the Japanese people. In addition, we have the historic intimate association with the United Kingdom which I believe has been fostered and strengthened and greatly preserved because of the tremendous trade ties between Australia and the United Kingdom. I look forward in the case of trade between Australia and New Zealand not merely to mutual benefits in the field of trade but to a betterment in the relations between the two countries. Those who have spoken with some sense of a tension between the two countries speak with complete correctness, I am sure. This does exist to a certain extent. I hope that no-one will think, in the light of my risking my whole political career in the case of the Japanese Trade Agreement, that I am unenterprising in a willingness to take some risks and to be venturesome in other aspects of trade relationships. But this has its peculiar difficulties which I venture to say, with consideration, exist far less on the Australian side than they do on the New Zealand side.
I want to make one point. The honorable member for Bradfield has spoken of a common market between Australia and New Zealand. Because we are familiar with the European Common Market, it is a term that comes easily to our lips, but in the technical use of the term in the General Agreement on Tariffs and Trade and iii other such relationships the terms “ common market “ and “ free trade area “ mean different things. Technically, a common market in G.A.T.T. means an area in which there is free trade between the component countries and a common external tariff applied by those who are members to all other trading partners. A free trade area means perhaps not complete free trade but substantial free trade within the area, but not a common external tariff. So the correct appellation in respect of what we have in mind here is a free trade area and not a common market area. I merely say this to make the point clear. I do not believe that either country has thought that there is a case for a common external tariff, and the terms that the spokesmen for both countries have used have been the terms of a limited free trade area.
– Would the Minister accept the motion if the words “limited free trade area” were substituted for the words “ common market “ in the motion?
– I do not feel that this is a motion that lends itself to the necessity to be carried by this Parliament, because the objective of the Government and the activities of the Government are directed, I am sure, in the direction that the honorable member for Bradfield and the honorable member for Mackellar (Mr. Wentworth) had in their minds when they moved this motion.
There has been constant communication between Australia and New Zealand. It is true that it is two years since I went to New Zealand and since this matter was launched. It is also true that when that was done I said, in association with the New Zealand Minister for Overseas Trade, that studies would proceed and we expected that they would be concluded in 12 months. We expected that the matter would then go before the Governments. The matter has proved to be not as simple to finalise as had been thought. I remind the House that I use the term “limited free trade area”, which is quite acceptable to New Zealand.
I have said from the outset that the Australian dairy industry, in respect of butter, could not stand up to competition from the New Zealand dairy industry, and therefore we would have to except butter from the arrangement. That has never been challenged’ or questioned by New Zealand. There has been no demur about that at all. I took the initiative by saying that I had no doubt that we would find some New Zealand industries - extant or intended - which could not stand up to Australian competition but which would be regarded by the New Zealand Government as essential. Such industries would need to be excepted from Australian competition. That has been completely agreed. The discussions have proceeded on that understanding all the time.
The discussions were interrupted at one point of time by the serious illness of the New Zealand Minister for Overseas Trade.
I have made it perfectly clear to him personally that I stand ready te go to New Zealand at any time when he wishes me to go there. He welcomes that and has said that he will come to Australia when it is propitious for him to come here. These negotiations have proceeded. We have had many telephone conversations. Our respective high commissioners have participated in discussions or communicated points of view or statements of fact. Consultation at the level of officials of the two Governments has been constant right through the period.
But, as I would expect every honorable member to appreciate, each Government has made it clear that it will operate in consultation with its own industries. One major Australian industry, which I do not propose to name, said at the outset: “We would not fear New Zealand free trade competition “; but later it said: “ We are not so sure that we would not fear New Zealand free trade competition “. It is right that we should know where we are going. I am speaking of a very great Australian industry in this regard. Its attitude has not reached the point where it is inhibiting the negotiations at all. What I have said merely illustrates the point that, acting as I believe the whole Parliament would wish us to act - that is, not in ignorance of assessments by Australian industry - we have engaged from time to time in further study. That has also been the position in New Zealand. That country has had an ambition to have an iron and steel industry. It may not have the natural advantages that Australia has. But it is an isolated country and it feels that it needs an iron and steel industry. I have doubts that such an industry could stand up to open competition with our great iron and steel industry. Here would be a prima facie case for an exception in a limited free trade area.
– What about the building of another Whyalla in New Zealand?
– That is the kind of thing that should be examined thoroughly. The last thing that we want to do is enter into an agreement which will go bad on us. I think every honorable member would agree that a delay of a year would be justifiable in order to avoid the possibility of concluding an agreement that turned out to be not a means of bringing New Zealand and Australia closer together but a means of pushing us further apart. So, I offer no apologies for proceeding with caution in close consultation with Australian industries and with a proper sense of correctness and responsibility. New Zealand has done that, too.
– Order! As it is now two hours after the time fixed for the meeting of the House, the debate on the motion is interrupted.
Motion (by Mr. Barnes) agreed to -
That the time for the discussion of notices be extended to 12.45 p.m.
– The honorable members for Bradfield and Mackellar are blunt speaking individuals in respect of this matter. They have spoken in plain terms about their belief that protection of the Australian dairy industry - which, admittedly, in certain sectors is not an efficient industry - has been a major inhibiting factor in this matter. At the outset I made the point that dairy products, particularly butter, should be excluded from the agreement. There has been no demur about that. But I make it quite clear that I have never sought - nor will I ever wish to do this - to perpetuate any inefficient industry in Australia, be it the dairy industry or any other industry.
The honorable members for Bradfield and Mackellar have made it clear that they would not wish to see ruthless action which would be cruel to Australian dairy farmers. The honorable member for Bradfield said that maybe 20 per cent, of Australian dairy farmers would suffer. I do not know whether that percentage is correct but let us take it for purposes of illustration. It represents about 16,000 Australian dairy farmers and their families. I ?.m sure that no-one would wish to treat them ruthlessly. I have no desire to perpetuate the standard of living on which these dairy farmers exist. For years I have wished to pursue a combination of two policies - to lift their efficiency or to get them out of dairying into some alternative land use. I believe that to be right.
Because the honorable members for Bradfield and Mackellar have referred to me and my leadership of the Country Party as an explanation of the perpetuation of the present state of affairs in the dairy industry, in defence I now say that, if they will lead a campaign to lift the efficiency of the dairy industry and take inefficient dairy farmers out of dairying into other land use, not only will I join them but they will be acting in line with policies that I have been endeavouring to apply for 12 years. So they would be 12 years behind me and it would be to other people, not to me, that tiny would have to direct their campaign. There are people who know whether or not I speak the truth on this matter and I would not be allowed to get away with speaking other than the truth on it. I trust that I have made my own position and the position of my party completely clear. What I have said illustrates the kind of thinking that I apply not merely to farm industries but also to manufacturing industries. I have endeavoured, in the latter field, to pursue policies designed to lift the efficiency of manufacturing industries.
Finally, let me revert to the issue of a limited free trade area with New Zealand. I am in no dispute, the Government is in no dispute - indeed we are in complete agreement - with what has been suggested by the honorable members for Bradfield and Mackellar and the Deputy Leader of the Opposition (Mr. Whitlam). I believe, as they do, that there is a harvest of improved relationships to be reaped from a successful venture of this kind, and that in the long term this may be far more valuable to both nations than the benefits derived from trade itself. We want to integrate economically; we want to integrate militarily; we want to integrate diplomatically; and we want to operate to the maximum extent as one people, even if we are two separate nations.
– I think all honorable members who have listened to it will agree that this debate has been a valuable experience. The mover and seconder of the motion are probably more than gratified at the admission latterly made by the Minister for Trade and Industry (Mr. McEwen) with respect to one aspect of the farming industry in Australia. There has been great unanimity in the debate that something ought to be done to improve the trade, social and other relationships which exist between Australia and New Zealand. Bearing in mind what the Minister has just said, I think that the difficulties are perhaps not nearly as insuperable as have been made out, provided some step is taken to follow up his suggestion.
As I see it, the biggest difficulty at the moment seems to be with respect to the dairy industry as it operates in Australia and New Zealand on the basis of comparative costs. New Zealand butter could be sold in Australia for about 3s. a pound, which would bc of inestimable value to the housewives of Australia, but might be immediately disastrous to the dairy farmers and their families. I do not think either party is in a position at the moment to commit itself to the acceptance of what the motion calls a common market. I think the Minister has done well to clarify that he does not envisage a common market in the same form as applies in the European economy. Apparently what is envisaged here - and I agree with him - is a limited free trade area. Indeed, I think there is much more freedom of trade between Australia and New Zealand than is sometimes claimed. As I see it, except for some modifications New Zealand still has a system of import licensing which, of course, I suppose is a barrier to Australain trade. On the other hand we have certain embargoes on particular goods from New Zealand.
If we look at the trade figures for the two countries we see that there has been a spectacular increase of Australian exports to New Zealand and of imports from New Zealand. In fact, the latest figures show that in 1955-56 we imported from New Zealand £8.3 million worth of goods and in 1963-64 - eight years later - our imports had increased to £22.4 million. Of course there has been an equally spectacular increase in Australia’s favour for exports. In 1955-56 we exported to New Zealand £40.9 million worth of goods and services and in 1963-64 our exports had increased to £82.8 million, which is virtually a doubling of our exports.
Australian exports to New Zealand are primarily in the manufacturing field, and most of them go to New Zealand without much trade barrier. I should have liked the Minister to explain more fully what the body, which is called the AustraliaNew Zealand Consultative Committee on Trade, has done. I have a very useful document issued by the Committee for Economic Development of Australia entitled “Australia’s Export Potential “. This was published in 1964 and it states -
The Australia-New Zealand Consultative Committee on Trade has been established, under which
Ministerial talks and departmental negotiations take place.
I do not think the Minister has given us many details about these talks and what stage they have reached. He has implied that because of the illness of the New Zealand Minister for Trade progress has not been as fast as he would have liked.
– I merely said that was one interruption.
– That is true, but surely the talks have proceeded long enough at the submerged level to be brought out a little more into the open. That is the type of feeling the mover and seconder of the motion have - there is not enough public discussion of this matter. How can anybody, other than the Minister’s departmental officers, know how far the talks have gone? I think the Minister started correctly by setting aside for the time being what might be the thorny problem of dairying, but he was prepared to go ahead with forestry talks. After all Australia, with a well integrated paper industry now, ought to be a good field for New Zealand forest products. I do not know at what stage the talks are in that direction.
There are possibilities that we could act jointly in the development of mineral and metal resources. Aluminium is one metal which concerns not only New Zealand and Australia but also our responsibilities in New Guinea. I think we must have a lot more public discussion of these matters. I do not think it is indifference on the public’s part that there is not more talk about them. Trade goes on. As long as there are skilful merchants in two parts of the world they will contrive to get together to trade with each other. New Zealand is a very good customer. Our favourable trade balance with her is now of the order of £60 million a year. How much better that can get is, of course, conditioned to some extent by the problems of the trade New Zealand has with Great Britain in particular.
As the mover of the motion said, in many respects our economies are complementary. We are both primary producing countries so far as exports are concerned, and it looks as though for a number of years that will continue to be the case. Nevertheless, New Zealand has become one of the fields in which Australia has increased manufacturing exports significantly in the last five or six years. Plenty of people hold the view that in terms of Australia’s future position in the world, particularly in relation to Asian countries, it is in the field of manufacturing exports that we have to make our most significant improvements in the years ahead.
I congratulate the mover of the motion for the way in which he put his case this morning. The debate has been informative. There have been no broad disagreements and I hope that the Minister will, subject to the term “ common market “ being regarded as meaning a limited free trade area, be prepared to take a vote on this matter when I sit down. No doubt he will indicate what he intends to do.
Motion (by Mr. Turner) agreed to -
That the question be now put.
Original motion resolved in the affirmative.
– The time for precedence of general business has now expired.
Sitting suspended from 12.45 to 2.15 p.m.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the Bill be now read a second time.
The purpose of this Bill is to obtain the approval of Parliament for an increase of 100 million dollars in Australia’s quota in the International Monetary Fund. The International Monetary Agreements Act of 1947, which authorised Australia’s membership of the Fund, already provides sufficient legal authority for the Government to take the steps necessary to secure this increase in Australia’s quota. Nevertheless, in view of the importance of this transaction and of the work of the International Monetary Fund in the field of international finance, the Government felt it desirable to introduce specific legislation and so give Parliament an opportunity to discuss these matters.
The proposed increase in Australia’s quota is part of a wider proposal by the
Fund for a general increase in the quotas of all Fund members and for special additional increases in the quotas of some members. At the annual meeting of the Board of Governors of the Fund held in Tokyo last year which I attended as Governor for Australia, it was decided to request the Executive Directors to consider the question of increasing the quotas of members and to submit an appropriate proposal. The Director’s report was submitted to Governors in February and contained two recommendations: First, that the quotas of all members should be increased by 25 per cent and secondly, that there should be additional increases in the quotas of 16 members. These recommendations were adopted by the Board of Governors and it now remains for each member to determine whether it wishes to accept the proposed increase in its own quota. As Governor for Australia, I voted for Australia in favour of the recommendations and I now propose that Australia should accept the increase of 25 per cent in its own quota. For further details of the proposals, I would refer honorable members to the Executive Directors’ report which has been circulated. I should perhaps point out that the proposed special increases in the quotas of 16 members are intended to bring their quotas into line with those of other comparable countries. Australia obtained a special increase of this kind in 1960 and there were no grounds for a further special increase on this occasion.
As honorable members are aware, the Fund has played an important role during the post-war period in promoting the orderly working of the international monetary system and thereby facilitating the expansion of world trade. The Fund is perhaps best known for the assistance it provides to members experiencing temporary balance of payments difficulties. By making such assistance available, the Fund has made it easier for members to move towards solutions of their payments problems without disrupting their internal economies or imposing unnecessary restrictions on international trade and payments.
The Fund’s assistance is available to all members. In Australia’s case, we have approached the Fund on three occasions - the most recent occasion being in 1961 - and secured drawings totalling 225 million dollars which were subsequently repaid.
Quite recently, honorable members will remember that for the first time we played a creditor role in the Fund by making available Australian currency to the value of 25 million dollars for use in drawings by India. Other drawings of particular interest to us as a large holder of sterling have been those made by the United Kingdom at times when sterling has been under strain. Late in 1964, for example, the United Kingdom obtained assistance from the Fund to the extent of 1,000 million dollars. Yesterday the Fund approved a further drawing of 1,400 million dollars. The Fund has also been providing some assistance in recent times to the United States of America. As the reserve currencies play an important role in international trade and payments, it is clearly desirable that a body such as the Fund should have sufficient resources to provide the massive support that can at times be needed to prevent a serious situation developing in the world monetary system. An increase in the Fund’s resources would be particularly timely in present circumstances because, with the measures now being taken by the United Kingdom and the United States to eliminate their balance of payments deficits, we cannot expect the supply of international liquidity to continue to be augmented on the substantial scale of recent years by the large amounts of sterling and dollars which other countries have been adding to their reserves.
Honorable members will note that the Directors’ report says - in a world in which income and trade have expanded rapidly and are expected to do so, the need for the type of liquidity provided by the Fund, like the need for international liquidity in general may be expected to grow. A reasonable increase in quotas would increase the Fund’s resources relative to the calls that are likely to be made upon them and enhance confidence in the Fund’s ability to meet all justifiable requests for drawings.
There seems little doubt that if the Fund is to continue to carry out its responsibilities in the field of international liquidity, there must be a growth in the resources available to it. The last general increase in quotas took place in 1959 when quotas were increased from 9 billion dollars to 13.5 billion dollars. As a result of subsequent special increases in the quotas of some individual countries, total quotas stand at present at 15.8 billion dollars. The latest proposals would increase quotas to 21 billion dollars.
This may seem a large increase, but demands on the Fund are also growing rapidly.
I now turn to the proposed increase in Australia’s quota from 400 million dollars to 500 million dollars. In accordance with the Articles of Agreement of the Fund, 25 per cent, of the increase - 25 million dollars or about £A11 million - would be payable in gold and the balance of about £A33 million would be lodged with the Reserve Bank, as a depository of the Fund, in the form of a non-negotiable non-interest bearing security. I do not think that there can be any doubt about the advantages to Australia of the proposed increase. On occasions when we have obtained finance from the Fund in the past, this assistance has been very useful in helping us to overcome balance of payments difficulties. As our balance of payments are subject to quite marked fluctuations, similar occasions will doubtless arise in the future. With a quota of 500 million dollars our drawing rights, or second line reserves, would amount to 625 million dollars as compared with drawing rights of 500 million dollars under our present quota. As the Australian currency we provided for the recent Indian drawings adds an equivalent amount of 25 million dollars to our drawing rights, our total second fine reserves, at present 525 million dollars, would stand at 650 million dollars or £A290 million when the new quota is obtained. I commend the Bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Message from the Administrator recommending appropriation announced.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the Bill be now read a second time.
The purpose of this Bill and of the associated Appropriation (Special Expenditure) Bill is to obtain parliamentary authority for certain expenditure for which provision was not made in the Appropriation Bills 1964-65. The various items contained in this Bill can be considered in Committee, and I propose at this stage to refer only to the major provisions.
Further appropriations totalling £13.6 million are required for ordinary departmental services but because of savings under other appropriations it is estimated that the actual expenditure will not exceed the Budget provision of £321.2 million by more than £9.5 million. The additional appropriations include £2,925,000 for salaries, £1,937,000 for administrative expenses, £3,750,000 for the emergency gift of wheat to India, £2,476,000 for the expanded British migration programme, £534,000 for salary increases for the staff of the Australian National University, £394,000 for telephone rental concessions to pensioners and £368,000 for the Commonwealth scholarship scheme.
For capital works and services there is an additional requirement of £7,790,000 although after allowing for savings in other appropriations the total expenditure is not expected to exceed the Budget estimate of £201.5 million by more than £2.5 million. An amount of £3,000,000 is included in this provision for the Postmaster-General’s Department to cover mainly the increased price of copper and lead. Also included in the Bill is an amount of £2,150,000 for expenditure under the Snowy Mountains Hydro-electric Power Act. The Budget provided for an estimated expenditure of £21,650,000 in 1964-65, of which £10,750,000 was to be financed from the Loan Fund and £10,900,000 from the Consolidated Revenue Fund. The overall estimate has increased by £1,200,000 to £22,850,000 due to the accelerated progress of major contract works. It is also necessary to re-allocate the total expenditure between the funds for this financial year because of a change in the timing of the Authority’s payments to contractors in June. This switch involves a further Consolidated Revenue Fund appropriation of £950,000. Additional appropriations amounting to £1,234,000 are sought for the civil works programme, whilst £490,000 is required for loans for housing in the Australian Capital Territory.
Additional appropriations totalling £16.2 million are sought for the Service departments mainly to implement the expanded defence programme announced by the Government last year. However as a result of savings under other appropriations it is anticipated that the Budget provision of £296.8 million will be exceeded by only £8.7 million, making an estimated total expenditure of £305.5 million on defence services for the year compared with expenditure of £260.5 million for 1963-64.
Under business undertakings an amount of £2.6 million, excluding capital works and services, is sought, but savings of £900,000 in other appropriations are expected. An amount of £1,855,000 is required for the Postmaster-General’s Department mainly to cover increases in salaries and £420.000 for the Australian Broadcasting Commission for increased operational costs and salaries.
An amount of £683,000 is sought for the Territories, which includes £370,000 for the Northern Territory and £294,000 for the Australian Capital Territory. The major requirement for the Australian Capital Territory is £172,000 for payment to the Department of Education in New South Wales, which is responsible for the provision of staff in that Territory. Because of savings in. other appropriations it is estimated that the Budget provision of £46.9 million will be exceeded by only about £200,000.
When the Budget was prepared, it was estimated that receipts of the Consolidated Revenue Fund would exceed expenditures from that Fund by £65.2 million. Accordingly, provision was made in the Budget for the payment of this amount to the Loan Consolidation and Investment Reserve whence it would be available to supplement loan proceeds available for State works and housing programmes and to finance other Commonwealth commitments such as redemptions of debt. At this stage it appears likely that, on the one hand, receipts of the Consolidated Revenue Fund could exceed expenditures from the Fund by more than the £65.2 million originally estimated; but, on the other hand, receipts from public loans will be smaller and redemptions of debt greater than expected when the Budget was introduced. An additional appropriation is therefore sought for payment to the Loan Consolidation and Investment Reserve of an amount up to £85 million over and above the £65.2 million provided for in the Budget. There are still many elements of uncertainty as to the outcome of Consolidated Revenue Fund transactions for the year and this additional authority should be sufficient to meet all contingencies. It would provide against the most favourable outcome of Consolidated Revenue Fund transactions which could at present be envisaged but should not be taken as meaning that an improvement of this magnitude is expected.
I commend the Bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Message from the Administrator recommending appropriation announced.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the Bill be now read a second time. The purpose of this Bill is to obtain Parliamentary authority for additional expenditure in 1964-65 on certain items for which no provision was made in the appropriation (Special Expenditure) Bill 1964-65. Of the total appropriation of £59,422 sought in the Bill, £50,000 is for bush-fire relief in New South Wales, Victoria and South Australia.
I commend the bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Message from the Administrator recommending appropriation for proposed expenditure announced.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the Bill be now read a second time.
When presenting the Appropriation (Special Expenditure) Bill 1964-65 last August I explained that that Bill contained those appropriations for which, in the opinion of the Government and its legal advisers, a good case could not be made out for the view that they were for the ordinary annual services of the Government. At the same time I said that discussions on the classifications of appropriations were continuing. Since then there have been further discussions and as a result the Government has now decided that henceforth there will be a separate Bill, on this occasion entitled the Supply Bill (No. 2), subject to amendment by the Senate, containing appropriations for expenditure on -
The purpose of this Bill then is to seek appropriations for purposes other than those to which I have referred, totalling £398,654,000, to carry on the normal services of Government during the first five months of 1965-66. The total amount sought comprises -
In general, these amounts represent approximately five-twelfths of the 1964-65 appropriations and make no provision for new services. However, the amount of £161,676,000 for defence services makes provision for implementation of the expanded Defence programme announced by the Government last year; and also for large contractualpayments due in the first five months of the financial year.
An amount of £10,000,000 is sought for an advance to the Treasurer to make advances which will be recovered within the financial year, and to make moneys available to meet expenditure on services of the Government, particulars of which will afterwards be submitted to Parliament. I commend the Bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Message from the Administrator recommending appropriation for proposed expenditure announced.
Bill presented by Mr. Harold Holt, and read a first time.
.- I move -
That the Bill be now read a second time.
In my second reading speech on the Supply Bill (No. 1) 1965-66 I explained that appropriations for certain expenditures would henceforth be provided in a separate Bill. Accordingly the purpose of this Bill is to seek appropriations totalling £95,026,000 for such expenditures during the first five months of 1965-66. The amount sought for capital works and services is £83,990,000 and is required in general for the orderly continuation of works programmes, and £1,036,000 is for various payments to the States. An amount of £10,000,000 is sought for an advance to the Treasurer to make advances which will be recovered within the financial year, and to make moneys available to meet expenditures of the classes provided for in the Bill, particlars of which will afterwards be submitted to Parliament. I commend the Bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Bill presented by Mr. Hulme, and read a first time.
– I move -
That the Bill be now read a second time.
The primary purpose of this Bill is to amend the Broadcasting and Television Act 1942-1964 to make more effective the provisions relating to the ownership and control of television stations. Because of the extent of the amendments required it has been considered desirable to remake the whole of Division 3 of Part IV. of the Act and the opportunity has been taken, at the same time, to propose a number of incidental amendments. Certain alterations arc also proposed in respect of the way in which, in the future, problems in respect of what is termed the monopolization of programmes will be dealt with.
Honorable members may recall that on 17th December 1964 I made a statement announcing the Government’s intention to bring down legislation to deal with the position of the ownership and control of television stations. I pointed out in that statement that the Government’s policy with respect to the control of commercial television stations has been and still is, broadly, that no person, and this includes a company, should be in a position to control, either directly or indirectly, more than two licences and that, as far as practicable, licences for country television stations should be held or controlled by local interests. The present provisions of the Broadcasting and Television Act relating to this matter, which were enacted in 1960, were framed with the intention of giving effect to this policy but, notwithstanding the comprehensive provisions of the 1960 legislation, situations have developed which, though they are not in breach of the law, are in conflict with the Government’s stated policy.
It was thought, at the time the 1960 legislation was enacted, that the action being taken would ensure the effective operation of the Act to limit the extent of the control or influence which might be exercised by any one person or group over companies holding licences for television stations. There was no departure from the original concept that a person might control, directly or indirectly, two licences providing they were not both in the same capital city. The definition of control was amended first to extend to practical and commercial control by any means and secondly to fix at IS per centum the voting power which would be deemed to give control of a licensee company and of its operations. This was a sincere endeavour on the part of the Government to ensure that its policy in respect of the ownership of television stations would not be frustrated. I must, however, be frank and say that our expectations in this regard have not been completely realised. The Government has had this position under review for some time. It is a difficult area and perhaps no more than a study of the Bill is necessary to give honorable members a ready appreciation of this. Nevertheless, I am confident that the provisions of the Bill, which I now introduce, will be effective in carrying out the Government’s policy in this important field of mass communication.
I do not propose in this second reading speech to deal in any great detail with the various clauses of the Bill. They are, in general, fairly complex and can better be dealt with in the Committee stage. I propose, however, to outline for the benefit of honorable members their broad import. Before doing so, I should say that the Government has given close consideration to the position of persons or companies who, by virtue of their present shareholdings in licensee or related companies, or financial interests in licensee companies, would be in breach of the Act when amended. However, we have come to the conclusion that there would be serious difficulties in making the provisions of the Bill apply retrospectively in such cases. Apart from being required to divest themselves of interests held directly in licensee companies, the persons and companies involved would, in many instances, be required to divest themselves of shareholdings in companies other than licensee companies. The acquisition of these interests may have come about in the normal course of business and involve indirect interests in television companies which, although not significant in terms of the existing legislation, might well become significant under the new provisions. For this reason, as indicated in my statement of 17th December 1964, it is proposed that no shareholding arrangement existing as at that date will be invalidated by the new provisions or will constitute an offence against the Act as amended. However, if a person or company who has acquired excess interests prior to 17th December 1964 subsequently divests himself or itself of such interests, he or it will not thereafter be entitled to recapture those excess holdings, although he or it will be able to participate in any new issues of shares which may be made. This position is covered in proposed new section 92 of the Act which appears in clause 7 of the Bill. It has also been necessary to make provision in this proposed new section for proposals as to re-arrangements of interests in licensee companies which have been before me prior to 17th December 1964 but in respect of which my approval has not yet been given.
I rum now, Mr. Speaker, to the main features of the Bill relating to ownership and control. They must be examined against die general background that, while the present limitation that no person or company may control, directly or indirectly, more than two licences is to be continued, it is also to be provided that no person shall obtain more than a 5 per centum interest in more than two licensee companies and that, in determining the extent of the interests held by any person, interests of a financial character in the widest sense will be taken into account. I am sure honorable members will agree that considerable influence can be exercised over the affairs of a company through the medium of funds contributed in ways other than by share capital. The Bill provides protection against the possibility of control by this means.
Proposed new section 92 of the Act provides that a person shall contravene the provisions of the Act if he has a “prescribed interest “ in each of three or more commercial television stations in Australia or in two or more stations in a Territory or in the capital city of a State. Proposed new section 91 (2.), in turn, provides that a person has a prescribed interest in a licensee company if he is -
In ascertaining whether a person has a prescribed interest in a licensee company, the Bill provides, in the case of tests (iii), (iv) and (v) which I have mentioned,,. that indirect interests shall be taken into account in each case by tracing down interests through related companies in those cases in which companies are shareholders in licensee companies or are holders of loan interests in licensee companies. Proposed new section 91a (1.) provides for the tracing back of shareholding interests through a series of companies. Tracing back through voting rights was already provided for by existing section 92b, which is repeated in this Bill and proposed new section 91b provides for the tracing back of the control of loan interests.
Proposed new section 92b (1.) will extend the meaning of “ control “ of a company to embrace, in addition to 15 per centum of voting rights as at present, the holding of 15 per centum of the shares in a company carrying unrestricted voting rights or the holding of 15 per centum of the total share capital of a company. This provision, in conjunction with the provisions of proposed new section 91 (2.), which defines the “ prescribed interest “ in terms of shareholding as well as voting rights, in effect applies the principle of one share, one vote. These provisions will remove the effect of any manipulation of the articles of association of a company with the intention of restricting voting rights, no matter how large the shareholding, for the purposes of preventing a contravention of the voting rights test of control of a company for the purposes of the Act. It was, in fact, mainly by the amendment of articles of association to limit a shareholder’s voting rights to 15 per cent., no matter how large his holding, that the existing provisions which deem a person to be in control of a company if he is in a position to control more than 15 per cent, of the voting rights of the company, were circumvented.
Changes in the ownership of shares in or debentures of a company holding a licence, or shares in a company having a shareholding interest in a licensee company are dealt with in proposed new section 92f. It provides that the Minister’s approval must be sought in respect of transactions defined in that section, including the acquisition of shares or debentures which would amount to a prescribed interest and also where the holder of a prescribed interest becomes the holder of additional shares or debentures. Proposed new section 92f (4.) states the grounds on which the Minister may refuse his approval. One ground is that the transaction would be in contravention of proposed new section 92 which will restrict the interests which may be held by any one person. The other ground relates to the public interest. It would cover such cases as the undesirable take over of a licensee company.
Experience has shown that the Minister must have power to refuse approval of transactions on the grounds of public interest if the provisions are to have any real meaning. It is not difficult to imagine the many undesirable changes which could take place - quite lawfully - if the Minister were not in a position to exercise some control over the situation. It is relevant to point out that pursuant to section 86 of the Act the Minister has power to revoke a licence in the public interest. It is, to say the least, logical that the Minister have power to refuse approval of changes of control on the grounds of public interest. I should point out, in this connection, that proposed new section 92f (4.) provides that the Minister shall not refuse his approval of transactions unless there has first been an inquiry by the Australian Broadcasting Control Board. Proposed section 92fa (1.) will extend the Minister’s authority in respect of changes in the memorandum and articles of association of licensee companies.
I turn now to the provisions of the Bill concerning programme matters. Briefly, it is proposed to repeal section 105a of the Act, which was inserted by the legislation of 1960, and to extend the regulation making power under section 134 to embrace a number of aspects in this field which it is considered should be capable of being dealt with, if necessary, by regulation. In introducing the 1960 Bill to the House my predecessor explained that the provisions of section 105a were intended primarily to prevent any monopolising of television programmes. What the Government endeavoured to do was to ensure that, while avoiding any harmful effects on genuine business transactions, the ownership of programmes was not used as a means, in effect, of obtaining control of the operations of a television station. It was apprehended that unless some action was taken in this direction the policy of the Government might be frustrated by leaving an independent station in a position where it could not obtain, on just or reasonable terms, the television programmes required to maintain its service.
Experience has demonstrated that the provisions inserted in the Act in 1960 were inadequate to deal with problems which subsequently developed. In a relatively new and rapidly expanding industry, it will be appreciated that it is difficult to foresee with complete certainty the difficulties which may arise. I may say, in passing, that this is not a singular position, for in most countries where television has been developed, there has been a continuing pattern of changes in the form of regulatory controls to meet changing circumstances. It is not, I think, unrealistic to say that the capacity to exercise control of television stations through the ownership of programmes or through programming arrangements or agreements is a significant part of the overall problem and is a matter with which we will be concerned from time to time. Although it is my understanding that no licensee is at present experiencing difficulties in obtaining programmes on reasonable terms, it is nevertheless necessary that some provisions should be made in the Act to deal with situations which may develop.
It is difficult to envisage with any preciseness the nature of the difficulties which may need to be dealt with and for this reason it has been considered that the most appropriate course to adopt is to provide for power, under the Act, to make regulations in respect of the programme field. This has been done in section 134. The only aspect of this which calls for comment, at this stage, is the proposal to repeal section 16 (3.) (e) of the Act which empowers the Board to regulate the establishment of networks of stations and the making of arrangements by licensees for the provision of programmes or the broadcasting or televising of advertisements. There has always been doubt as to the application of this provision and, in fact, it is difficult to say precisely just what a network is. In these circumstances, it has been considered desirable to extend the regulation making power to cover this point.
This is necessarily a very brief account of what I believe are the main features of the Bill. Honorable members may think that it is a complicated piece of legislation but I am satisfied that it necessarily must be so if effect is to be given to our policy. In essence, however, the major effect of the Bill may be fairly succinctly stated. It provides that no person shall, in the future, acquire interests of a voting, shareholding or financial character which would result in such interests being in excess of 5 per centum in more than two licences.
I commend the Bill to the House.
Debate (on motion by Mr. Daly) adjourned.
Bill presented by Dr. Forbes, and read a first time.
– I move -
That the Bill be now read a second time. The purpose of this Bill is to remove a number of defects in the Parliamentary Retiring Allowances Act 1964 and to facilitate the administration of the legislation. I will deal first with the defects in the previous Act. The provision in the 1964 Act for lump sum payments to certain pensioners gave rise to some technical difficulties. However, the lump sums have all been calculated and paid in accordance with the Government’s intention and what was its intention in bringing down the legislation. The part of the Bill dealing with this matter does no more than restate the basis for the actuarial calculations and validate the payments already made.
Other defects relate to the reduced rates of contribution to the ministerial fund by Opposition Leaders, a provision which arose in adapting to a contributory scheme the proposals of the 1959 Richardson Committee. A longer period of contribution at the reduced rates is necessary, of course, to qualify for the pension. There should also have been a similar extension to the 14 year period after which contributions will cease, and this is now being provided. Then, again, the three Parliaments rule which, broadly, treats service in three Parliaments as the equivalent of 8 years’ service, is clearly inappropriate if 16, or 32, years’ actual service is required for the purposes of the Act. It was not intended that the provision for extended service at lower rates of contribution should be set aside by the three Parliaments rule, and this is being corrected by restricting the application of that rule to those office bearers who contribute at the full rate. The other defect now being corrected is the omission to vest the management of the ministerial fund formally in the Parliamentary Retiring Allowances Trust
Other amendments, to facilitate the administration of the legislation, provide formally for the delegation of powers generally by the Trust to a trustee and of powers of investment to an officer of the Treasury; for contributions to be expressed as monthly amounts instead of weekly amounts; for the accrual and method of calculation of payments of contributions and pensions; and for an election, or option, provided in the legislation to be revoked at any time before it has been acted upon.
I do not think I’ need to enlarge on the desirability of providing for a delegation of powers or for the way in which various calculations shall be made and it is obviously convenient to express contributions as a monthly amount when they are to be deducted from salaries which are being paid monthly. These changes will have no effect at all on the amounts contributed by members generally, but those contributing to the ministerial fund will be required to contribute a small amount more each month. I should, however, explain in relation to elections and options that the trustees have, in the past, been sympathetic to those exmembers and widows who wished to change an election or option which they had made before it had been acted upon and have in fact been permitting this in accordance with the terms of the proposed amendment. As it has been suggested that the legality of this action is in some doubt, the opportunity has been taken to make it quite clear that the trustees can act in this reasonable and helpful manner.
I commend the bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Debate resumed from 5th May (vide page 1165), on motion by Mr. McEwen -
That the Bill be now read a second time.
.- Mr. Deputy Speaker, the House is considering a very small measure designed to extend the operations of the existing 1962-65 International Wheat Agreement. The Australian Labour Party enthusiastically supports this measure. We have good reason to do so. The Labour Party, as a political organisation, was responsible for the initiation in one of the States of this country of Australia’s first organised marketing act. Since that time, similar legislation has been enacted in every Australian State and, indeed in the United Kingdom itself. But the Opposition has additional reason to support this Bill. We believe not only in organised marketing within Australia itself but also in the extension of organised marketing on an international scale. Labour was responsible in 1949 for ratifying in this Parliament the first International Wheat Agreement that actually operated. I know that in about 1933, the then Minister for Commerce - Sir Frederick Stewart, I believe - introduced an international wheat agreement bill in this Parliament. The Bill passed through Parliament, but - I am speaking subject to correction - because of the failure of the United States of America to give effect to its part of the agreement, the agreement failed to operate.
We see within the ideal international marketing arrangements something in the nature of an organised attempt, on a sensible and designed scale, to overcome the dreadful situation that occurs from time to time wherein one country has a surplus of foodstuffs while in another country there is a shocking famine. The International Wheat Agreement at least does something to ensure that there is an organisation which will endeavour to distribute wheat around the world at a price satisfactory to both consumers and producers, although the Agreement has never reached perfection in its operation.
Before I go any further, perhaps I should say that members of Parliament, and Ministers in particular who introduce legislation into this Parliament, sometimes fail to pay tribute to those men in the Public Service - heads of departments and others - who play a major part in concluding international arrangements. In connection with the International Wheat Agreement probably the greatest tribute should be paid, not to the Minister who introduced the Act - it happened to be me - but to Sir Edwin McCarthy who was the Australian delegate to Washington. He ultimately became the Chairman of the International Wheat Council. I believe, and I speak subject to correction, that he still plays a significant part in the councils of that organisation.
– He is in semi-retirement now.
– Although he is in semiretirement, I think he still takes some part in this work. Others in the Department assisted Sir Edwin McCarthy. It is significant that an Australian - a man from one of the minor wheat producing countries at the time - played such an important part in the creation of this organisation. We should take pride in the fact that people from other countries were prepared to place so much reliance in his ability and advice.
The International Wheat Agreement was introduced into this Parliament in 1949 and operated for four years. The objectives of the Agreement are well set out in a brochure issued with a later Agreement, and I think they should be included in “ Hansard “. They are -
That is very important -
Those are most desirable objectives. As I said previously, the first International
Wheat Agreement enacted by this Parliament in 1949 operated for four years. The second Agreement, similar in all respects to the first, operated from 1953 until 1956, a period of three years. The third Agreement operated from 1956 to 1959, the fourth from 1959 to 1962 and the fifth from 1962 to 1965. We now have before the Parliament a proposal to extend the existing 1962-65 Agreement in all details for another 12 months.
It is stated in the explanation that discussions are taking place, I think at Geneva, in connection with the General Agreement on Tariffs and Trade. Part of those discussions will deal with world cereal problems and will be associated with what is known as the Kennedy Round. The hope has been expressed that the discussions on wheat will lead to a satisfactory agreement to take the place of the existing International Wheat Agreement. Pending the outcome of those discussions, we have this Bill to extend the existing Act.
I must say that I am one of those who, unfortunately or otherwise, has not very much faith in any satisfactory outcome from the Kennedy Round of discussions in relation to world trade. The discussions were suggested by the late President Kennedy about 1961 or 1962. As I have said here on a previous occasion they were designed, in my opinion, to encourage the United Kingdom to join the European Common Market. They were intended to serve as a bait, but in practice no disposition is being shown by the United States of America to ease the tariff impositions that the United States itself places upon countries within its territory. However, we can only hope that the outcome of the discussions will be satisfactory and that something will be evolved which will be more effective than the International Wheat Agreement now in operation.
Vast quantities of Australian Wheat have been sold under the International Wheat Agreement, and although some dissatisfaction has been expressed by wheatgrowers about its operation and final effect on our national economy, Australia still adheres to this type of agreement as it has done over the whole range of renewals of the Agreement since 1949. The International Wheat Agreement has covered a large portion of our international sales for 16 years, and we now enter the seventeenth.
The Agreement in itself is involved and requires a good deal of study. It would be futile for me to try to go into every detail of the existing Agreement. Sufficient to say now that the 1949-53 Agreement set out the minimum and maximum prices at which wheat would be traded under the terms of the Agreement. It also set out the quantities which the growing countries would agree to trade under the Agreement.
With the passage of time, with substantial increases in wheat production, not only in Australia but also in other participating countries, improvements have been evolved until we have reached the stage with the 1 962-65 Agreement when the former quotas are no longer stated, but there are evolved quotas which will provide for the extra production on a percentage basis and by other process. However, in all cases maximum and minimum prices are stated and the bases on which the prices will be calculated as between the respective exporting countries are set out. There are references to wheat from Manitoba or Vancouver or some other place, and the countries which are exporting or importing are named in the Agreement. There are all sorts of facilities to enable countries to escape, in certain circumstances, from honouring the Agreement. Escape provisions include balance of trade difficulties, droughts and a wide range of other matters.
When the first International Wheat Agreement was before the Parliament some criticism was offered to the effect that wheat growers had not been substantially or effectively consulted. At that time the Government took it upon itself to send its advisers and officers to Washington, but in addition it did consult the Australian Wheat Growers Federation. Deputations were received from the Federation and the Agreement was explained to them. The executive of the Federation was met and was very plainly informed that the Government was not prepared to become a signatory to the 1949-53 Agreement without a statement in writing from the Federation to say that it was prepared to accept the Agreement and required the Government to sign it. There was some difficulty in securing that statement. Finally an agreement, of which I have a copy, came from Canada and the Australian Wheat Growers Federation expressed its willingness to sign it.
– To which agreement is the honorable member referring?
– The 1949 Agreement. I understand that the present Government from time to time has not only consulted the wheat growers organisations and secured their assent to a renewal of the Agreement, but has also gone a stage further than did the Government of which I was a member. I understand that the present Government has sent representatives of the wheat growers organisations to the conference table. When I introduced the first International Wheat Agreement it was not practicable to do that. In that initial year, at least, the wheat was under acquisition by the Government and, so far as I know, at that time there were no provisions to enable the wheat growers to be so represented. Further, I am not sure that at that time it would have been desirable for them to be represented. History records that when the next Agreement was entered upon there were present at the conference representatives of the wheat growers organisations. At that conference there was a haggle which resulted in the Government of the United Kingdom excluding itself from the Agreement. I understand that it did so because the Australian representatives haggled over a mere 5d. a bushel and haggled about whether the Australian Government would accept 5d. less than the United Kingdom was prepared to pay under the terms of the agreement.
– There was a lot more involved than that.
– There may have been, but the fact remains that that is a feasible explanation. It has been stated as official that the United Kingdom Government could have been kept within the confines of the Agreement if the reduction of 5d. had been accepted. It may have been that the representatives at the conference were reasonable in holding out for a further 5d. - I do not know. However, the United Kingdom Government did not sign the Agreement and for two long periods of the Agreement -from 1953 to 1956 and from 1956 to 1959 - the United Kingdom remained outside the terms of the Agreement. As the United Kingdom was the largest consumer to have participated in the terms of the Agreement, its withdrawal substantially weakened the effectiveness of the Agreement. Fortunately the United Kingdom became a signatory to the 1959-62 Agreement and that gave the Agreement added strength. It was also fortunate that Soviet Russia became a signatory to the 1962-65 Agreement and signed up to adhere to the terms and policy of the Agreement.
It is interesting to realise that whereas in 1949 Australia’s quota of wheat covered by the Agreement was approximately 80 million bushels, every bushel of Australian wheat then available was sold under the terms of the Agreement. It is interesting to note also that on that occasion 48 consuming countries were signatories to the Agreement and five exporting countries were signatories. Australia was one of the exporting countries which was a signatory to the Agreement. Today we find that the 1962-65 Agreement has as signatories 31 exporting countries and 10 importing or consumer countries. That indicates an overall belief in the effectiveness of an international agreement of this character, a belief that is growing, or is at least not lessening. We can only hope that this type of agreement will be extended to other products and will continue in operation for as long as it gives satisfaction.
It is horrible to contemplate that over a long period it can be read in the world’s Press, in trade journals and in official documents that the United States of America has an enormous surplus of wheat, that Canada from time to time has an enormous surplus and that Australia has a huge crop. It is generally concluded when the production figures for all producing countries are added together that the whole world has a surplus of wheat which will damage sales prospects for the producing countries. But despite the so-called surpluses, since this Agreement has been in operation I have not known of any wheat producing country which has had to destroy any of the so-called surplus. All the credit for that does not go to the International Wheat Agreement; that has occurred for a variety of reasons. Nevertheless, I know of no case where surpluses have been destroyed, and I do not think my friends who are members of the Country Party will disagree with what I have said. That would indicate that there has been, and there will continue to be, an effective international organisation which will endeavour through its counsels, through the wisdom that accrues to it over the period of its work, to iron out all the problems, if there is a more satisfactory way of doing so. There has been talk of world wheat surpluses and world surpluses of other commodities.
– There is talk of Australian surpluses.
– There has been talk of Australian surpluses, but we no longer look upon a huge wheat crop as a disaster to mankind. Over a long period of years friends, wheat growers and people generally have said to me that Australia from time to time will face disaster by virtue of its ever increasing capacity to produce more wheat per acre, by reason of its ever increasing capacity to make wheat growing profitable from even marginal lands. They have said that one of these days we will meet a catastrophe.
– The honorable member should not forget farm efficiency.
– I mentioned the evergrowing capacity to produce more bushels per acre and the ever-growing capacity to make wheat growing profitable on the marginal lands. Indirectly, that is a tribute to farm efficiency. But, more .than that, it is a tribute to the scientific research workers in the State Departments of Agriculture and in the Commonwealth Scientific and Industrial Research Organisation and to the fact that the younger farmers of later generations have had better educational facilities than their parents had.
I have never accepted the proposition that disaster must result from increasing productivity. At one time an impression was made on me by a small booklet which was published by Lindley Walker Pty. Ltd. - a big firm of wheat merchants in this country - and which quoted the opinion of Broomhall, who was a world figure in the wheat trade many years ago. Broomhall from his experience of wheat gluts and shortages came to the conclusion that, generally speaking, over any ten year period the world’s wheat production tends to equal the world’s wheat consumption. If we continue to accept that as a truism, as I haveit is not necessarily infallible, but it is substantially true - we need not worry very much about our wheat surpluses.
If we continue to improve organisations such as the International Wheat Council, which directs operations under the International Wheat Agreement, as that organisation has been improved over the years since it was established, then there is a chance for salvation, there is additional hope for people who are threatened with starvation, and there is continuing hope of a satisfactory remuneration for the people who do the hard toil in producing wheat as a food for mankind.
.- The information available to us on this matter is chiefly in the International Wheat Agreement and the second reading speech made by the Minister for Trade and Industry (Mr. McEwen). That is the only definite information that we have at this stage, and most of it has been used by the honorable member for Lalor (Mr. Pollard), who has just spoken. I point out that the Minister said -
At the present time, however, -most of the trad, ing countries of the world are engaged in the Kennedy Round of G.A.T.T. trade negotiations in Geneva. In these negotiations the G.A.T.T. Cereals Group has been entrusted with the task of drawing up new world-wide arrangements which would regulate international trade in all major cereals and which, it is expected, would make redundant an international wheat agreement of the present type.
The Minister explained that the purpose of this Bill is to extend the International Wheat Agreement for another 12 months so that when the Kennedy Round negotiations have been completed a new international wheat agreement, based on conditions then existing, can be introduced. That is very wise. I believe that there will not be any opposition to that in this House.
The figures given by the honorable member for Lalor in relation to the International Wheat Agreement, which Australia signed on 14th May 1962, were not exactly right. The Agreement gives the number of importing countries that signed it as 31 and the number of exporting countries that signed it as 10. The honorable member for Lalor - I think by a slip of the tongue - described the 10 exporting countries as consuming countries.
Some mention has been made of the reason why the United Kingdom withdrew from the Agreement for a while. It is history that in this chamber the Opposition endeavoured to put the blame for the United Kingdom’s withdrawal on the Australian delegation. When we look at the voting figures for the exporting countries we find that the total number of votes is 1,000; that Australia has 125 of those votes; the United States of America has- 290; Canada also has 290; and the Union of Soviet Socialist Republics has 125, the same number as Australia. So the overwhelming power - 580 votes out of 1,000 - is with Canada and the United States of America, which work fairly closely together on occasions.
– At all times.
– No, on occasions. So, how Australia could be blamed for the United Kingdom’s withdrawal is beyond my comprehension. Of the importing countries, the United Kingdom has 339 votes; Japan has 154 votes; and the Federal Republic of Germany has 139 votes. I cannot see how the Opposition could sustain its case against Australia in regard to the United Kingdom’s withdrawal from the Agreement for a period. In fact, it could not. I noticed that today the honorable member for Lalor was not nearly as enthusiastic in trying to blame Australia as he was in those days when he thought that the Opposition might have a case. Everything is going very peacefully today and I dp not want to change that.
The honorable member for Lalor read from the objectives of the International Wheat Agreement. I believe that he was quite right in doing that. He said that the objectives should be recorded in “ Hansard “ because some people read it. Probably very few people read it, but people who want to find out about the objectives of the Agreement will be able to do so by reading “ Hansard “. Included in the objectives are -
It appears that the longer we have the International Wheat Agreement, the less wheat flour we will sell. Perhaps we cannot blame the Agreement for that. In this country many people, including the honorable member for Wimmera (Mr. King), myself and other Country Party members of the Parliament have advocated continually that we should have more markets for flour.
– What about the honorable member for Calare?
– Yes, he and other members of the Country Party have advocated that, too. The by-products that we get from wheat are tremendously valuable. They include bran and pollard which are so necessary to the poultry industry which has been discussed very fully in this chamber this week.
One of the objectives of the International Wheat Agreement is to promote sales of wheat and wheat flour. But is anything being done under the Agreement to promote Australian sales? This is vital. I suggest that the Minister for Trade and Industry is doing all that he can along these lines. I suggest that everything possible should be done to carry out this objective more favourably for Australia.
I turn now to wheat growing in Australia. It is said that at the present time our boards are bare of wheat for export and that we could sell much more wheat if only we had it. Not so long ago people were saying that we were growing too much wheat. Of course, everybody knows that it takes only a drought - and we do have droughts in Australia - to make our wheat supplies very low. The other day I was speaking to some people in the electorate that I represent. One of them was a man of about 32 years of age. When the last real drought occurred in this country he was 12 years of age. He does not clearly remember that drought. Many men of 20 to 30 years of age, who are in the wheat industry in Victoria today, have no practical knowledge of drought. They have come to the conclusion that in what they call the bad old days their fathers were not good farmers. In fact, the only reason why they have done so much better than their fathers is that good fortune has smiled on them; they have had good seasons, better farming methods and up to date machinery. All those things have combined to make wheat growing more congenial and more profitable than it used to be.
Mr. Griffiths__ When was the last drought?
– Since I have been in the Parliament - 19 years - there has not been a real drought in Victoria. I think the last drought was in the latter part of the war period. I believe that the present sale conditions have put a stop, if not definitely then for a long time, to a restriction of acreages of wheat, which we had at one time. I do not wish to go into this, but when wheat can be grown it should be grown because there is no doubt that a drought may happen at any time and at present at least the country with wheat can sell it.
The honorable member for Lalor said that the International Wheat Agreement enabled wheat to be spread from countries with large stocks to countries suffering famine. I think it does, to some extent - and I think the honorable member used the words “to some extent “. However, the real point is that wheat can be got into countries where starvation is rampant only if such countries can afford to buy it or if it is supplied as a gift. Any small thing which the International Wheat Agreement can do on these lines will be appreciated not only by the people who require wheat for food but by those countries which have plenty of wheat; not just because they get a market for it but because we believe that people all around the world are requiring more and more foodstuffs, and as a primary producing country we hope that if we produce wheat it will benefit them.
The Bill virtually repeats for a further year the legislation we considered in 1962. It has been thrashed out over and over again and the debates on it can be read in previous reports of “ Hansard “. The Australian Country Party is pleased to support this measure. In fact, it was introduced by the Country Party leader, the Minister for Trade and Industry. We hope that it will prove of even greater benefit than it has in the past to the wheat growing industry of Australia.
.- I want briefly to associate myself as a member of the Australian Labour Party - the party which has always gone out of its way to advocate the case for the primary producer in seeing that justice is done him - with the honorable member for Lalor (Mr. Pollard), who has been the spokesman of my party in supporting this Bill. The Bill breaks no new ground. As the Minister for Trade and Industry (Mr. McEwen) has said, it merely extends the fifth International Wheat Agreement, which came into operation in 1962, for a further 12 months beyond 31st July 1965. A conference is taking place in Geneva concerning the principles of the General Agreement on Tariffs and Trade, which is bound up with the Kennedy Round, and pending the outcome of that conference the Government’s proposal is to extend the operation of the International Wheat Agreement for 12 months.
Of course, this is very important to Australia, which is a big wheat producer and wheat exporter. Our wheat production is spread over all States of the Commonwealth. In recent years production has increased for two reasons: first, because of improved methods of farming and increased productivity of existing acreages and, secondly, because of the extension of the land brought under wheat cultivation. Particularly does the latter apply in my State of Queensland. While I do not represent a wheat producing constituency, coming from the heart of Brisbane, I have a kindly feeling and am well disposed to the people who produce this most important commodity, which is the basis of the staff of life.
– Is that not the honorable member’s general disposition?
– I am kindness personified. In my own electorate the principal flour producing mills of Queensland are located, so while I speak in a highminded way of wheat generally, I have perhaps some personal and political interest in those who are associated with the industry. I should like, in association with the honorable member for Mallee (Mr. Turnbull), to see an increase in the quantity of flour which is sold for export. I can, with reason, see why our flour exports are decreasing and our wheat exports are increasing. Many of the emerging countries desire to produce their own food or to establish processing industries. For this reason flour mills are being established in those countries, particularly in Malaysia and Singapore where we used to have a good market for flour. However, this market has almost disappeared. We are exporting wheat to Singapore and
Malaysia in particular, and to countries in Africa and South East Asia, for processing into flour.
We do not want to be selfish in this matter, and if we can supply wheat for these people to process into flour to ensure that the diet of the residents of those countries is raised, we should have cause for great satisfaction. By doing this we are creating a market and goodwill, which is very important, in these newly emerging and developing countries. As I said, the proposal is to extend the existing International Wheat Agreement, which came into operation in 1962, for a further 12 months. It is interesting to note which countries are associated with Australia in this Agreement. Two headings are used to describe them. It is rather important to note that the exporting countries involved in this Agreement are Argentina, Australia, Canada, France, Italy, Mexico, Spain, Sweden, the Union of Soviet Socialist Republics and the United States of America.
So far as Australia is concerned, the important countries are the importing countries, and it would be just as well for those honorable members who are not conversant with this feature of the Agreement to note which importing countries are listed in Annex C of the Agreement. There are also two countries which are not listed as importing countries. However, the importing countries listed comprise Austria, Belgium and Luxembourg, Brazil, Ceylon, Cuba, the Dominican Republic, the Federal Republic of Germany, the Federation of Rhodesia and Nyasaland, India, Indonesia, Iran, Ireland - and I take it that would include both parts of Ireland, the Republic and Northern Ireland - Israel, Japan, the Kingdom of the Netherlands, Liberia, Libya, New Zealand, Nigeria, Norway, the Philippines, Thailand, Portugal, the Republic of Korea, Saudi Arabia, Switzerland, the United Arab Republic, the United Kingdom, the Vatican City and Venezuela. There are two countries that are not mentioned as being importing countries, and I am sure you will pardon me, Mr. Deputy Speaker, if I mention them because they are very important from Australia’s point of view. They are the Union of Soviet Socialist Republics and the People’s Republic of China, which is commonly called Red China. Red China is not a party to the Agreement, but it is an importing country and imports principally from Australia.
Before dealing with the markets that we enjoy in those areas, I should like to touch on a feature that was mentioned by the honorable member for Mallee. It relates to productivity. It is good to learn that the honorable member comes from a State which, according to statistics, has an excellent record for productivity on the mainland. When I was a youth, I was always led to believe that the Mallee was akin to a desert, in which the wind had caused severe erosion, exposing: the roots of trees which found a ready market for fuel. I was led to believe that the soldier settlers there were driven from their land because of those conditions. I am pleased to know that I am in error in holding that belief. According to the figures published in 1963 in “ Year Book “ No. 49 - the latest available - the average yield per acre in the various States for the year 1961-62 was 17.4 bushels in New South Wales, 20 bushels in Victoria, 16 bushels in Queensland, 15.2 bushels in South Australia, 15 bushels in Western Australia and 22.7 bushels in the Australian Capital Territory. In fairness to my friend who sits on my right, the honorable member for Wilmot (Mr. Duthie), I must mention that little State of Tasmania which has an excellent record for consistent production. The yield in Tasmania for the year 1961-62 was 22.2 bushels to the acre. The yield varies in each State, but in my own State of Queensland, the variation has been the least of all the States.
The honorable member for Mallee spoke of the young lad who is now a farmer and who does not remember a drought. It would appear from the statistics that the year of worst yield in Victoria was 1938-39 when the yield dropped to 13.9 bushels to the acre. The highest yield in that State was in 1960-61 when it jumped to 25.3 bushels to the acre. Apparently we were experiencing a drought on the mainland in 1938-39 because productivity in all the States dropped considerably in that year. There was another severe drought in 1957-58 when the average yield per acre for Australia was only 11 bushels, but in 1958-59, when nature blessed this land, the yield jumped to 20.7 bushels to the acre. By 1959- 60, it was 16.3 bushels and in 1960- 61 it was 20.4 bushels. In 1961-62, the yield dropped to 16.8 bushels to the acre. So, as my friend from Lalor said in his speech, the production in Australia varies, but the demand usually meets- the variation. In other words, if the yield increases the demand also increases.
I feel that something should be done to encourage those nations which import our wheat to erect facilities for storing it. I am reminded of the brilliant speech delivered by the honorable member for Fremantle (Mr. Beazley) only a few nights ago during the debate on international affairs when he made it clear that great goodwill could be engendered by this nation in the countries of Asia, particularly of South East Asia, if by monetary assistance, we encouraged them to erect storage facilities for the wheat that we can export, perhaps at normal prices, perhaps at lower than normal prices or perhaps by way of gift. Such wheat could be used to sustain life in the people of those countries which experience drought from time to time. I would hope that in due course, perhaps in the immediate future, this country will see the wisdom of the observations made by the honorable member for Fremantle which, in my humble way, I have brought to the notice of honorable members on this occasion.
I wish to refer now to some of the markets to which we are exporting wheat. Whilst I have raised this matter by way of questions and received unsatisfactory answers in the past, I feel that the few who are listening to me will bear with me if I make the point again. It is a good thing to be reminded of some of the facts that hurt. I make the point that there are two countries - the Union of Soviet Socialist Republics and the People’s Republic of Red China - that are not included in the list of importing countries. I now want to deal with how we are disposing with our surplus wheat. I regard the figures which I have as being authentic. They are published by the Commonwealth Bureau of Census and Statistics and, being contained in a Commonwealth publication published with the authority of the Minister in charge of that Bureau, I must accept them as being reliable. They relate to our exports for the first eight months of this financial year compared with the corresponding eight months of last financial year and are the latest figures available. They relate to the eight months ending February of this year. They disclose that our exports for the eight months of this year are down considerably compared with those for the corresponding period last year. Nevertheless, our average exports to the various countries have remained fairly constant. The figures disclose that of the 2,926,657 tons of wheat that we exported during the eight months ended February of this year, 47.8 per cent, was exported to countries that are not listed in the wheat agreement as importing countries. That is to say, this wheat was exported to the Union of Soviet Socialist Republics and to the People’s Republic of China. The figures also disclose that our exports of wheat to the United Kingdom have decreased considerably, as they have to a few other countries. Some time ago I questioned the Minister on the matter of price and he said, in effect, that the figures supplied by the Commonwealth Statistician were distinctly unreliable. But I say to the Minister again that while I am prepared to accept his word I am in some difficulty because I find that the figures of the Statistician are at variance with the figures given by the Minister. I must cite for the information of the House the prices that we received for our wheat, as published in this bulletin. The average price for wheat exported to the United Kingdom for the eight months of this year was £26 16s. a ton. However, the average price paid for wheat exported to the People’s Republic of China - Red China - was considerably less than the price we received from our kith and kin, our blood brothers in the United Kingdom. The price paid by China was £26 8s. a ton.
Honorable members may object to this statement and say that it is unreliable. I admit that I may not be as fully informed as are honorable members of the Country Party, but I am prepared to accept the Statistician’s figures. Surely he must be accepted, he must be reliable. If the Minister in charge of the Bureau of Census and Statistics permits his officers to publish false figures for the information of the people of Australia it is a very grave matter indeed. But I am prepared to accept the figures published in the “ Monthly Bulletin of Oversea Trade Statistics “ as being reliable. I must accept them, notwithstanding what anybody says and notwithstanding the interjections by members of the corner party.
I think it is most important for us to realise that we are depending on Russia and Red China for the stability of our wheat industry. Although members of the Australian Wheat Board and other organisations associated with primary production tell us that we could sell more wheat if we had it, the fact is that wheat is being sold, under an agreement, to the countries I have mentioned, although those countries are not the traditional importers of wheat from Australia.
I hope that the talks that are proceeding in Geneva at the present time will produce benefits for the primary producers of Australia. Whether they are going well I do not know. I have to depend on the daily Press in Australia for my information about this matter. No statement has been made in the Parliament by any of the Government’s Ministers concerning the progress of the discussions. I have read, or it has been suggested, that the Minister for Trade and Industry will visit Geneva in connection with the talks that are going on, and that he will be particularly interested in cereals. I know that the Minister is a hard bargainer, or so he tells us. I know that he drove a very hard bargain in the United States of America on the sale of our beef. Unfortunately our sales of meat in that country are decreasing alarmingly. I hope that the wheat industry will achieve a degree of stability as a result of the new agreement that I hope will be negotiated after 1966.
Like my friend from Lalor who has been the spokesman for the Labour Party on this important measure, small though it is, I give my support to the Bill. I know that it will be passed by this Parliament because all honorable members, in varying degrees, are enthusiastic about the proposal. We owe a debt to our primary producers and we must do everything we can to assist them in their noble work which is obtaining for us overseas credits to help us in developing our country. Wheat is a most important commodity and the wheat industry is a most important industry. I hope that the talks in Geneva will be successful and that Australia will benefit considerably as a result of those talks.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Adermann) read a third time.
Debate resumed from 6th May (vide page 1211), on motion by Mr. Bury -
That the Bill be now read a second time.
.- This is an interesting Bill. It provides a bounty for the production in Australia of cellulose acetate flake. It is an illustration of the kind of procedure that is basic to the Australian protection system as a whole. When we in Australia deem it necessary to develop production of a certain commodity, either on a large scale or involving a technical process, we give protection to the enterprise in the early stages. We expect that efficiency will improve until finally the commodity may be produced on a basis that will allow it to compete with the production in other countries having the most advanced standards. This principle has been followed in granting protection to the production in Australia of cellulose acetate flake.
Let me remind honorable members of what this Bill is about. The Minister for Housing (Mr. Bury) introduced the legislation on 6th May 1965 and made a short speech telling us that the Government had accepted the recommendation of the Tariff Board that the rate of bounty should be reduced from 7d. per lb. to 6d. per lb., but that the annual limitation of bounty payable should toe increased from £90,000 to £112,000. This is what the Bill does. It is, of course, one of a series of bills that have for some years provided bounties for the production of cellulose acetate flake. In each case the bounty prescribed has remained in operation for a period of three years. The rate of bounty at first was l0d. per lb.; it was then reduced to 7d. per lb. and now it is to be reduced to 6d. per lb. Evidence given to the Tariff Board showed, as the Board said in its report of 8th June 1961, that there had been an improvement in the unit costs of production in the industry. I refer the House to the table on page 6 of that report, in which costs of production for successive years are compared. The base year was taken as 1955-56 and a percentage figure of 100 was given to denote costs of production in that year. There was a reduction to 94.9 in 1956-57, a slight rise to 98.9 in 1957-58, a reduction to 85.5 in 1959 and to 83.3 in 1960. In the four years from 1956 to 1960 costs of production declined by 16.7 per cent. This looks like a very satisfactory rate of progress for the industry and is no doubt the factor that has allowed the reduction in the amount of bounty per pound from lOd. to 6d., which is the rate now proposed.
It is disappointing that the last report of the Tariff Board of 30th November 1964, which refers to acetate flake, has not continued to give us information about the unit cost of production in this country since 1960. I think in the production of these reports a certain unnecessary difficulty is placed in the way of people. I remember that towards the end of last year the Tariff Board had reported on acetate flake in some way, but in the Parliamentary Papers Room and in the Library it took me an hour and ten minutes this morning to find out, amongst other things, that this subject appeared now in a Tariff Board report on acetyl products. However, there was no indication anywhere in the index that this included acetate flake. There must be some very subtle people around somewhere, one would think, who lay these traps for unsuspecting members of the Parliament who, in the limited time available to them, try to discover the information that they must have if they are to form any view at all on the subject.
I found then that the very useful tables that had appeared in the 1961 report, such as the one I have just mentioned on the unit cost of production and another on the amount of production of acetate flake, which appeared at page 5, just do not appear anywhere in the 1964 report. Yet this was a report of the Tariff Board which, amongst other things, was specially asked to look into the production of acetate flake. I would have thought that these figures - I shall refer to the others in a few minutes - would have been most necessary figures to include in the report of November 1964 and should have been continued. I still have not any satisfactory figures.
When I was searching in the Library this morning, with the assistance of the professional staff there, I found I was just not able to get the figures for the production of flake in Australia after 1961. I would have thought that the Tariff Board would have gone to some special trouble to give us these figures right up to 1964, but there is no information at all on production. This leads me to wonder whether the Tariff Board has ever taken the trouble to find out what the production figures are. It may not have considered that the quantity of production is a relevant factor when deciding whether the bounty should be continued.
I found the 1961 report very useful and interesting. It tells us that C.S.R. Chemicals Pty. Ltd. is the only producer of flake in Australia, that 60 per cent, of its shares are held by the Colonial Sugar Refining Co. Ltd. of Sydney and ‘that Distillers Co. Ltd. of London holds the balance of the shares. The company produces cellulose acetate mainly at its Rhodes factory in New South Wales and also produces a range of other items at its wholly owned subsidiary, Robert Corbett Pty. Ltd., of Lane Cove, Sydney. The acetate flake is produced by C.S.R. Chemicals Pty. Ltd. and it then goes to the next stage of production. Presumably the greatest part of the production goes to Courtaulds (Australia) Ltd., who then process it further and exude it into fibres. The report states -
The basic materials used in the production of flake in Australia are ethyl alcohol, which is a by-product of the sugar industry, and pure cellulose (wood pulp). C.S.R. Chemicals said in evidence that in some overseas plants ethylene, a product of the petro-chemical industry, is used instead of ethyl alcohol.
This is the first of the points that arise in the production process about which I would like to know more. As we have a petro-chemical industry in Australia, what is the future of the production of ethylene as a substitute, competitor or replacement for ethyl alcohol? I do not know and I do not know whether the Tariff Board knows. I do not know whether it is interested, but I think it should be. What are the relevant costs of production of these two items? What are the relevant scales of production in the sugar industry at Sarina in Queensland and in the petro-chemical industry? I should think that this is a critical aspect that needs close examination, and our information on it is deficient at this time. The report goes on -
The initial step in the Australian production process is the conversion of ethyl alcohol to acetic acid (via acetaldehyde). The acetic acid is then converted to acetic anhydride. After this, the acetic anhydride is reacted with cellulose to produce flake and dilute acetic acid. The dilute acetic acid is then concentrated and returned for further use.
The next technical point arises here. The cellulose or wood pulp, which is the most important material used in the production of flake, is imported from the United States of America. According to C.S.R. Chemicals Pty. Ltd., a high quality cellulose is required and there is no cellulose available from Australian sources that is suitable for the manufacture of flake. Here again is an important aspect for the future. Australia has plenty of wood and I would think that we have the kind of wood from which the wood pulp could be produced.
– We have not? Then I think it is time somebody said so and told us why. Apparently this is one of the factors that would restrict development of the industry in Australia.
Turning away from the technical side for a moment, we find that the volume of production is an important factor in the cost per unit. Apparently in Australia until 1961, until the credit squeeze, there was a very satisfactory rate of increase in the volume of production. The figures are contained in the following table -
The reduction in the volume of production in 1961 was probably the result of the credit squeeze and the fall in demand. As I said earlier I have not been able to find any figures anywhere that show what has happened to the volume of production of flake in Australia since 1961. Unless the volume of production continues to rise, I would think, on my reading of the technical aspects of the industry, there is not much scope for a further reduction of costs. As I read the situation, the cost reducing factor seems to be the volume of production. The capacity for the production of cellulose acetate flake by the plant of
C.S.R. Chemicals Pty. Ltd. is 7.5 million lb. per annum. This is considerably higher than the level so far reached and more than twice the output achieved in the latest year for which full figures are available. Clearly, the unit cost with a higher volume of production would be lower, although noone knows how much lower and no-one has attempted to tell us how much lower it would be if the plant produced to its full capacity of 7.5 million lb. per annum.
The next point for attention concerns the kind of thing that we could expect from the honorable member for Wakefield (Mr. Kelly). The cost of the bounty is rather high. The Tariff Board told us, in its 1961 report on cellulose acetate flake, that 117 persons were then engaged in the production of flake. The Board, in its 1964 report on acetyl products, which is in my view very much below the standard of the 1961 report, did not tell us how many people were employed in the industry in 1964. So I am not able to use figures more up to date than those provided in the 1961 report. In that year, 117 persons were engaged in the industry. The bounty is quite costly. It cost the Commonwealth £99,489 in 1956, £113,258 in 1957, £100,981 in 1958, £124,286 in 1959, £120,033 in 1960 and £97,553 in 1961 up to 31st March. So the Australian taxpayer, when he goes to bed at night, can reflect that it is costing him and his fellow taxpayers collectively well over £100,000 a year to subsidise the production of cellulose acetate flake. Adopting the method used by the honorable member for Wakefield, I find that the cost of the bounty worked out at about £850 per employee in the industry in 1956, about £975 in 1957, about £854 in 1958, about £1,062 in 1959 and about £1,025 in 1960. On the basis that the total bounty will be limited to £112,000, as provided in this Bill, and on the assumption that about 117 people are still employed in the industry, the annual cost will now be about £950 per employee.
On the face of it, the Australian taxpayer would do better to send each of the 117 employees on holiday and pay him £950 a year to do nothing, and to import all our requirements of cellulose acetate flake. However. I do not think the issue is as simple as that. Whenever the honorable member for Wakefield has used this kind of argument, I have said that I do not think the issue is so simple. But I think he is right in stating the matter in this way, because it is necessary to direct attention to the situation that exists and to illustrate it vividly. We must realise that the cost of this sort of protection is considerable. We should be willing to undertake it only if we are satisfied that it is justified. It must be justified on two grounds. It may be that, if we did not protect the Australian industry and if we purchased our requirements overseas, the difference in actual cost, as the Tariff Board’s recent report appears to indicate, would not be great. The difference, in total, would probably not represent as much as the bounty costs.
But it is highly probable that, if imports had not to compete with flake produced in Australia, the cost of imported -flake would be higher than it is now. I believe that to assume that, if we did not produce in Australia, the price of the imported material would remain the same as it is now, is to make a naive assumption. I think that very often the Australian critics of tariffs and this kind of protection make that naive assumption. It is not valid, however. I believe that very often the price of an imported commodity is influenced - even determined - by the price of the Australian product. When an overseas supplier makes spot offers to the Australian market or to any other market, he pays very close attention to the prices of competing products produced in Australia. Very often, there is altogether too much similarity between the prices of imported and of locally produced materials for this not to be so. The primary producers of whom the honorable member for Wakefield so often speaks, who use some of these basic chemical materials, would doubtless find that if it were not for the protection afforded to Australian producers overseas suppliers would adopt a very different attitude to the Australian market. The question of cost has to be considered with these circumstances in mind.
Costs have to be considered also in relation to the technical aspects of the industry, with particular attention to the possibility of using ethylene produced by the Australian petro-chemical industry and of using Australian produced cellulose staple as a raw material in the production of cellulose flake. There is also the question of the volume of production. In this respect, Courtaulds (Australia) Ltd. seems to be quite happy with the existing situation. In effect, this company says: “ Let us continue as at present. Let us have protection for C.S.R. Chemicals Pty. Ltd.” Provided that Courtaulds receives the kind of tariff protection that has been extended in the manmade fibre field, with perhaps a little more protection in the future, that being implicit, I think, in the position taken up by this company, no doubt the market in Australia will be sufficient to permit a significant increase in the volume of production. In all probability, the output of C.S.R. Chemicals will be able to come closer to the plant’s optimum capacity of 7.5 million lb. per annum.
At this stage, I wish to mention only one other point. The Minister for Housing, towards the end of his second reading speech, said -
Protective duties are regarded as the best method of assisting the industry except in the case of cellulose acetate flake.
It seems, on the face of it, that this is quite a remarkable exception. I know that cellulose acetate flake is a rather basic sort of material and that the industry is built on it. 1 know that any increase in the cost of cellulose acetate flake as a result of a tariff - and there is a tariff of, I think 7i per cent., and 15 per cent. - would be passed on through the upper reaches of the industry. Of course that is a valid argument; but is it not an argument for the wider use of subsidies than at the present time? Is it not an argument for the extension of subsidies to other equally basic raw materials? Is it not an argument for the use of subsidies on materials that are further up the scale of production? Clearly it is.
What factors have to be taken into account in contending against that argument? As far as I can see it, there is only one, and that is that if a tariff method is used it means that the cost of protection goes directly into the price and is paid by the consumer in proportion to the amount he consumes, without much regard to the size of his income or his capacity to purchase. A tariff is more in the nature of a flat rate tax. irrespective of income. It is a flat rate tax that is paid by the man earning £17 a week in the same say as it ‘s paid by the man receiving the highest income in the country. But if we use the subsidy method a given cost of protection will then be distributed on the community in a different way. It will be distributed in the way in which the Commonwealth has to raise its revenue, because the cost of a subsidy comes out of revenue. Therefore, the subsidy will have an incidence on the community in the way the Commonwealth raises revenue. We know that a considerable amount of revenue is raised by what is called a progressive tax - the income tax. The company tax is only slightly progressive. All the other taxes - excise, sales tax and so forth - are not progressive but are more or less based on a flat rate. But there is a difference in effect between the Commonwealth tax system being used as a way of paying for protection and the tariff system being used for this purpose. It would cost the better off people in the community relatively a little more if the cost of protection were transferred to them by use of the subsidy method.
Speaking for the Australian Labour Party, I say that this would be an acceptable alternative. We believe that there is room in Australia at the present time for methods of paying for protection, and other similar things, which tend to produce a little more equality. So, I think that when we weigh up the pros and cons of the methods of providing protection we should consider not only the effects that those methods have on production costs but also the manner in which the burden of protection is spread throughout the community.
The Opposition believes that there is another aspect of the matter. If assistance is granted by payment of a subsidy and not by tariff, the price of processed products further up the scale, which themselves are raw materials, is lower. This is an advantage to the consumer and no doubt this is one of the reasons why the honorable member for Wakefield likes the subsidy idea. The farmers are able to purchase chemicals, machinery and other requirements at a lower cost, and the difference between that cost and what the farmer would have had to pay if the tariff system were used, is borne by the taxpayer, through taxation.
As I said at the beginning of my speech, this Cellulose Acetate Flake Bounty Bill is an interesting example of the basic assumption that underlies the Australian tariff system. Production of flake is a fairly advanced technical process which requires the extension of productive capacity to get the best results. If we continue to protect the industry there will be a reduction in the cost of production and then the Australian producers will become efficient according to the best standards prevailing in the world. There is evidence that this has been happening. The cost of production fell by 16.9 per cent, between 1956 and 1960 and it has been possible to reduce the subsidy from lOd. to 6d. per lb. That indicates that there is increased efficiency in the industry.
I can find no reason in the information available to me for not supporting this Bill. I see no reason why we should not continue for another three years a bounty at the rate of 6d. per lb. with a limit of £1 12,000. The Opposition supports the Bill.
.- Mr. Speaker, on the last occasion when there was a similar tariff debate in this House, the honorable member for Yarra (Dr. J. F. Cairns) and I spent a good deal of our time abusing one another. I suppose the fault was mine to some extent. In this case, however, I would like to say that I thought his contribution to the debate was very helpful indeed. I compliment him on the research he made and on the clear way in which he examined this matter.
I would also like to support the honorable member for Yarra in his statement that the matter we are dealing with, the payment of a bounty on the production of cellulose acetate flake, is a clear example of protection working well. I am taunted frequently because I am a free trader - so people say. I am always denying that so I am going to take up the challenge and point out some cases where protection is working well. The cellulose acetate flake industry is a clear example. If honorable members look at the figures they will realise that that is so. The honorable member for Yarra complained that he could not ascertain the tonnage of Australian production. If he will look at page 10 of the Tariff Board’s report he will find the figure of about 2,000 tons. As no flake is coming into the country we can assume that this is the Australian demand. This 2,000 tons of acetate flake is all used and processed into yarn by Courtaulds (Aust.) Ltd. It is interesting to realise that this bounty of 6d. per lb. - it used to be 7d. per lb. - works out at a rate of protection of round about 5 per cent., which is delightfully low. The flake goes to Courtaulds to be made into yarn. At one time there was another bounty on the production of yarn. That bounty has just been removed. Now, the only protection the industry has is 10 per cent. British preferential tariff. Therefore, this is an example of the way in which protection can be used properly. The bounty is paid early in the production process so the user of rayon yarn is not burdened with excess costs. I commend the honorable member for Yarra for his approach to this problem, and I support his statement that a bounty such as this shows that, in some cases, protection works well.
I am glad to be able to pay a tribute to the industry. I have had the advantage of receiving the hospitality of the company concerned and I inspected its plant. I do not pretend for one moment that I am technically capable of being able to follow the processes. The mazes of tubes, taps and filters and other things that 1 saw was rather staggering. I did not realise that the basic cellulose material still has to be imported. It comes in the form of cotton lint in a rather rare form. We have not solved the immense problems inherent in this matter yet, but I would imagine that as the cotton industry develops, we will be able to obtain the quality of cotton lint that is required. However, I repeat that I am not able to speak with authority on this subject.
The thing that was hidden away in the report in relation to acetyl products - which the honorable member for Yarra mentioned - is not quite so pleasant. This whole complex makes a number of products. One is vinyl acetate monomer which is known as V.A.M. and another is acetic acid. These complicated processed products are made in the same complex. It is interesting to realise that while the acetate flake gets its protection by a bounty at the rate of 5 per cent. - and 5 per cent, seems to be sufficient - the V.A.M. gets a protective rate of 60 per cent. This report will come up for discussion again in the next sessional period. Although I congratulate the company on its success with acetate flake, its failure in connection with vinyl acetate monomer is serious because it strikes at secondary industry which uses its products.
It is queer to see things mixed up in this way. These products are all made in the same complex yet one needs 5 per cent, protection and the other 60 per cent, protection. I just cannot understand the basic reason why the two materials need such a different rate of protection. However, I should like to repeat what I said earlier, namely, that this Bill is a clear example of the way protection should work. It is given by a bounty in the early productive process. In addition, there is also the advantage that the amount of protection can be measured; we know what we are paying.
I should like firstly to congratulate the company for the success of its operation and secondly to congratulate the Government for the way it has fathered, or mothered, the whole industry up to this stage. I would think that in about three years time we will be just about at the stage - if I am still in this House when this matter comes up again, as it must come up in three years time - where the bounty will be down to about 3d., or the product may be even duty free. That is what we have to aim at, and it is obvious that that it what is happening by degrees. This sort of thing happened in the Courtaulds organisation which uses the flake. I hope that C.S.R. Chemicals Pty. Ltd. will be as successful as Courtaulds has been. I support the Bill.
– in reply - The honorable member for Yarra (Dr. J. F. Cairns) mentioned that he had difficulty in finding figures for the current output of cellulose acetate flake. In order that the figure may be available in “ Hansard “, and so easy to find, I mention that the current output is approximately 4,480,000 lb. per annum. I welcome the support given to this Bill by the Opposition.
Question resolved in the affirmative.
Bill read a second time.
Message from the Administrator recommending appropriation announced.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Bury) read a third time.
Debate resumed from 12th May (vide page 1425), on motion by Mr. Harold Holt-
That the Bill be now read a second time.
.- The Opposition, while criticising this agreement, will not vote against the measure. The Bill seeks to obtain the approval of Parliament of an agreement between the Commonwealth and the State of Western Australia for the provision of financial assistance to Western Australia to accelerate extensions to the comprehensive water supply scheme in the south-west of the State. The Treasurer (Mr. Harold Holt) mentioned in his second reading speech that the Commonwealth Government’s decision on this matter was announced in his last Budget speech. He then stated that the Commonwealth would provide finance to the State up to a maximum of £5,250,000 on a £1 for £1 basis with the State’s expenditure on the scheme.
The State Government submitted a request for aid from the Commonwealth Government following the completion of the modified scheme. That was in 1961-62. The request was for assistance in the nature of a subsidy on a £1 for £1 basis. This Bill does not provide for a subsidy but for an interest-bearing loan to the extent of one half of the expenditure by the State on the project during the eight years commencing 1st July next. The State does not have to commence its repayments until 10 years after the payments are made by the Commonwealth. The payments will then be repaid by the State over a period of 15 years but they are not required to be made until the project is completed.
This provision of a loan is a departure from the method of financing the earlier stages of the comprehensive water supply scheme. Previously the financing was done by a Commonwealth subsidy on a £1 for £1 basis. The Opposition’s objection to this agreement is that the Commonwealth’s previous policy has been departed from1. It is true that agreement has been arrived at between Western Australia and the Commonwealth Government; after all the State Government had no alternative but to arrive at an agreement. It had to reach agreement with the Commonwealth on the Commonwealth’s terms or no assistance would have been provided at all. As it is there has been a gap, or a time of waiting, for this assistance from 1962 until the time when the finance will be provided from 1st July 1965. Although requests for a subsidy for the second part of the scheme were made, no financial assistance has been available to the State Government from 1961-62 until July 1965. The State has had to carry on the financing of the scheme in a limited way from its own resources. It has been putting into that scheme an amount similar to the amount that it was paying previously when it was subsidised on a £1 for £1 basis, but that amount has come from its own resources. Finally, of course, the Commonwealth Government has now agreed to make this loan available, but I repeat that it is a loan and not a subsidy.
The Treasurer pointed out that the modified scheme was completed in 1961, and then he said that in 1963 the Government of Western Australia sought further financial assistance. He did not say that there were earlier requests for financial assistance following the completion of the modified scheme in 1961-62, but he went on to say -
The tardiness of the Commonwealth in providing finance for the scheme has been responsible for the delay of this very important project, the importance of which is without doubt. I draw attention to the comprehensive report which was submitted to the Commonwealth Government in support of the request for aid. At page 23 some reasons to show the importance of the scheme are stated. The report states -
Careful estimates made by the Department of Agriculture indicate that during the first ten years the sheep population in the scheme area can, with the benefit of the scheme, be increased from 1,586,000 to 2,790,000, an increase of 1,204,000 or 76 per cent.
The report continues - ft is estimated that within the first ten year period from the inception of the scheme the additional income with the benefit of the scheme will be £36.4 million. Without the benefit of the scheme the corresponding income will be £32.8 million.
The additional net income made possible by the scheme is, therefore, £3.6 million.
Further additional net income would continue to be earned for a further period and would reach approximately £10.7 million at the end of 21 years.
Further on the report states -
It will also provide a potential for the establishment of light industries in the towns.
The injection of capita] proposed under the scheme will assist in solving problems of unemployment.
The scheme will provide a pool of employment totalling 114,000 men-weeks, mainly in the semiskilled and unskilled categories, and the impact of the expenditure will be felt in both Government and private sectors of the economy.
That is an important aspect of the scheme because there is a pool of unemployed in Western Australia consisting mainly of semiskilled and unskilled workers. The report concludes its general approach to the scheme by saying -
There are other benefits of an indirect nature which will accrue from the scheme. For example there will be increased revenue from railway freights, taxation, and local authority rating.
The scheme will add to the stability and the prosperity of the scheme area and therefore to the State and to the Commonwealth as a whole.
Finally, the increased productivity will result in a substantial rise in the export income.
The value of the first portion of the scheme supports the claims made in the report which I have just read out. The first portion of the scheme was responsible for increasing the number of stock carried in areas where the scheme now operates. It provided an opportunity for more intensive development of country towns and so furthered the cause of decentralisation. But an important aspect of that report is that mentioned in the quotation that I just made. I refer to exports. The value of exports from Western Australia is greater than the value of imports to that State. If we can increase our agricultural potential we can help in Australia’s balance of payments problem by stepping up our exports. Of course, the scheme will help in that regard. In his second reading speech the Treasurer said -
The proposed extensions were the subject of an economic appraisal by the Bureau of Agricultural Economics. The Bureau’s survey showed that, on certain reasonable assumptions about such things as the response of farmers to the reticulated water, the areas sown to pasture, the likely increase in carrying capacity and the levels of prices and costs, the extensions to the scheme would be fully economic and would result in significant additional production of an export-earning nature.
A little later he said -
The Government is satisfied that the measure before the House will make a significant contribution to the development of an important pastoral and grain growing region of Western Australia and will lead to a significant increase in export earnings.
That shows how valuable this scheme will be so far as our exports are concerned and it makes one wonder why there was so much quibbling about assisting the State financially with the scheme, particularly between 1961 and 1965.
If the Commonwealth had continued to subsidise the scheme on a £1 for £1 basis during that period it would now be near completion and we would have the advantage of additional export earnings as a result of it. The State’s request was not extravagant when one considers how much is spent annually on the Snowy Mountains scheme, which benefits the two most populated States of Australia - Victoria and New South Wales. If my memory serves me correctly, the annual expenditure by the Commonwealth on that scheme is in the vicinity of £15 million. The Snowy scheme is a great one and nobody quibbles about that expenditure. Anything that will conserve water in Australia is of value to the country but, at the same time, it makes one wonder why there is so much quibbling about financing the important scheme in Western Australia. The history of the comprehensive water scheme goes back to 1946 when the Government of the day submitted a case to the Commonwealth Government for financial assistance. The Commonwealth Government appointed an inter-departmental committee to consider and to report upon the representations made by the State Government. As a result of the investigations made by the committee, what was known as the modified comprehensive water scheme was adopted. It was designed to serve an area of 4,100,000 acres at a cost of £10,270,000. That scheme was commenced in 1949 and was subsidised to the extent of £5 million by the Government of the day on a £1 for £1 basis. Incidentally, that was a Labour Government.
In 1960 the Government of Western Australia presented a further case for financial assistance estimated to cost £17,484,000 and serving an area of 7,600,000 acres. That submission was rejected by the present Commonwealth Government. Following the rejection of that submission the State Government embarked on a programme financed from its own loan funds to connect certain towns suffering from acute water shortages by pipelines to the mains of the modified comprehensive scheme. The amount invested by the State in that programme was equivalent to what it would have invested on a £1 for £1 basis had the Commonwealth come into the scheme. But the Commonwealth finance which was expected during that period was not forthcoming. Governments of Western Australia, regardless of political complexion, have expended £24,050,000 on water for rural areas.
The present scheme provides for a supply to a reduced area formed by selected portions of the area covered by the 1960 scheme. The Treasurer, in his second reading speech, said -
One area consists of 2.3 million acres between Dalwallinu and Quairading and will be fed from the Mundaring Weir. The other, which will draw its water from the Wellington Dam, consists of 1.4 million acres extending for about 40 miles east of Narrogin. In addition to these two areas, there are several small areas in the north which will also be supplied. The purpose of the scheme is to provide water for stock and domestic purposes only and not for irrigation.
I have already pointed out to the House that the value of this scheme will be not only in assisting the farmers and the people in the townships in the area concerned but also in assisting Australia’s drive for exports.
It is my view - I think it should be the view of all members of this Parliament - that the Commonwealth should co-operate to the full in water conservation and irrigation in Australia. This country has the second largest area of arid land in the world. Australia is the driest of all continents. It has an average annual rainfall of 16.5 inches, compared with the world average of 26 inches for all land masses. The United States with an area approximately the same as that of Australia, has an average annual rainfall of 29 inches. About 40 per cent, of Australia receives less than 10 inches a year, and only 15 per cent, has a rainfall exceeding 30 inches a year. Australia’s rainfall is known to be very erratic. The rainfall in some of the areas that have been mentioned varies considerably. According to the report prepared by the Western Australian Government, it has been very dry in these areas for a period of seven years.
As much of Australia has high temperatures, evaporation exceeds rainfall in every month over more than two-thirds of the continent. About two-thirds of Australia’s irrigated land is situated along the Murray River and its tributaries in Victoria, New South Wales and South Australia. As a result of the Snowy Mountains scheme, the Murray and Mumimbidgee Rivers will gain sufficient water to irrigate an additional 650,000 acres. Western Australia has only small irrigation projects. They are confined to areas in the south west and around the Ord River diversion dam.
I repeat, Mr. Speaker, that the Opposition supports this Bill because its purpose is to approve an agreement between Western Australia and the Commonwealth. We are critical of the Government for its delay in making finance available following the completion of the modified comprehensive water supply scheme, particularly in view of the export potential which was involved and which would ‘have assisted Australia’s balance of payments position. We also criticise the Government for giving financial assistance in the form of a loan instead of in the form of a subsidy. The Opposition supports the measure, but makes those criticisms.
.- It gives me much pleasure to support this Bill, the purpose of which is to approve an agreement between the Commonwealth and Western Australia in relation to water supplies for the south western region of that State. The Bill is in line with the Government’s policy of increasing production and increasing exports. Exports are vital to the Australian economy. If we are to continue to build up our secondary industries, as we must, we must rely to a very large extent on our exports of primary products in order to pay for the raw materials, machines and machine tools for our secondary industries. Everything that the Commonwealth can do to assist the States in increasing primary production, therefore, must not only increase primary production and our exports but also assist in the development of our secondary industries.
Water, of course, is of tremendous importance to Australia generally. In many areas there are very limited supplies of water. If we are to develop this country to the full extent, as we must, we will have to make use of every available drop of water and keep it within Australia for production and industry. In order to do that, we must expand all the schemes that we have at the moment, make use of the known potential and look for further potential. To that end, I hope that at this time the Government is looking very seriously at the Snowy Mountains Hydro-electric Authority. The Snowy Mountains scheme has been of tremendous advantage to Australia. It has been a world renowned scheme. It is a great credit to the people who have been responsible for carrying it out. But it is drawing to a close. Within the foreseeable future, within a few years, the scheme, as we know it today, will be completed. This great organisation should not be allowed just to fall apart. Surely it should be put on to a similar job elsewhere in Australia. I have no doubt that at the moment researchers and engineers are engaged in exploring other avenues of water conservation in Australia. I have no doubt that in this country there are many places where, although perhaps the Snowy Mountains scheme could not be repeated, a similar scheme could be carried out. I sincerely hope that the Government is considering water conservation throughout Australia and the position of the Snowy Mountains Hydro-electric Authority.
This Bill deals with extensions of water supply from two main sources in Western Australia - the Mundaring Weir and the Wellington Dam. The original scheme - the goldfields water supply scheme - has become quite famous over the years. It was originated in 1902 under very difficult conditions. At that time the reservoir had a capacity of 4,655 million gallons. The original scheme was designed to take water from Mundaring Weir in the hills just out of Perth to the goldfields. Later it was extended into the agricultural areas. In 1951 the capacity of the Mundaring Weir was increased to 15,154 million gallons. Later it was increased again to 16,966 million gallons by the use of gates. It became necessary to extend the scheme both to the north and to the south of the goldfields water supply line, to the agricultural areas and towns in the vicinity. This Bill will enable the scheme to be extended even further. The results of past extensions of the scheme have been so good that the Commonwealth Government has seen fit to assist Western Australia in again extending the scheme.
The other leg of this Bill concerns the Wellington Dam. The raising of the wall of that dam was completed in 1960. That gave the dam a capacity of 40,790 million gallons. At first, as far as moving water inland is concerned, water was supplied to towns on the Great Southern line between Brookton and Katanning. Those towns were growing very rapidly at that time, but their water supplies were being depleted by various things, including salt. I can assure you, Mr. Speaker, that a great boost was given to the Great Southern towns when water was brought to them from the Wellington Dam. They have never looked back since that time. This water supply has improved living standards and conditions generally in the area. Of course, since that time, the scheme has been extended further.
The first request by Western Australia to the Commonwealth for assistance in extending these water supply schemes was made in 1946. A modified scheme was agreed to under the Western Australia Grant (Water Supply) Act 1948. That was a Commonwealth act. From this time the State and the Commonwealth have been extending the water scheme in Western Australia in a joint partnership on a pound for pound basis in most cases. Up until 30th June 1962 some £10,214,496 shared equally between the Commonwealth and the State had been expended on these particular schemes. Since 1962 - as, I think, a previous speaker mentioned - the State has carried the burden from its own supply of loan moneys. However, the State made a further request of the Commonwealth for £5) million in 1963, and this Bill is concerned with that request.
It is heartening indeed to note that this request is being granted. In many ways the money is required to enable production to be increased. It will assist also in improving the living conditions of people in country areas who are entitled to living conditions equal to those enjoyed by people in the larger towns and cities of Australia. Surely all honorable members will agree with this. When we moved through some of this inland area, for instance from Merredin South where the modified scheme was taken some years ago, to service the areas of Bruce Rock, Narembeen, Kondinin and Corrigin we saw a complete revolution in farming. This is a glorious piece of country with good soils but with grave limitations of water catchments. It also has some salt problems in the lower underground reaches. We have witnessed a real boost to farming in those areas and I have no doubt that with the extension of the scheme now envisaged, production will be increased enormously. We must find, of course, a balance between research and production. A tremendous amount of research has been undertaken in Australia over the years. Discoveries have been made which we would not have dreamed of many years ago, and the results of this research are shown in our higher production and increased exports. We must balance research by this sort of scheme. Money must be spent on water schemes, roads, communications generally and all fields of production.
A number of years ago it seemed impossible to develop clovers on some of the lighter rainfall areas - districts with 12 inches of rain and sometimes less per annum. But during the last two or three years, some of the modern clovers have been developed in these areas with magnificent results. It is early, of course, to know what will happen in the future but it is perfectly obvious that the carrying capacity and the production of these areas will be lifted enormously. No-one really knows by how much. This situation would have been quite impossible without water, which is the limiting factor. With this insurance, which is how we can describe the water scheme, production will continue to increase.
Farmers should not, however, neglect their own private water schemes - dams and so forth - because it would be fatal to rely entirely on the water scheme itself. They should at all times maintain at least their present private supplies and supplement them with water from the scheme. Obviously our water supplies in Australia are limited. But with their own supplies, limited though they be, and water from the comprehensive scheme, the carrying capacity of these inland areas can be lifted by several hundred per cent. The beef industry can benefit. Areas that previously were never regarded as suitable for cattle can now branch out into this field. Beef cattle take a lot of water and it would be uneconomic to raise cattle without it.
So I endorse this Bill and sincerely hope that when this project is completed, the Commonwealth Government will supply further assistance if requested by the Western Australian Government. We do not know just how far we can go, but research and experiments that have been conducted so far indicate that by the end of the eight years over which this money will be spent, we should be stretching further into the inland areas of Western Australia and producing wheat, sheep and beef.
At present in what are considered remote areas of Western Australia, east of the rabbit proof fence and extending into the district represented by the honorable member for Kalgoorlie (Mr. Collard), we have some very successful experimental plots. The production from these plots has astounded all those associated with them. I understand that recently the Western Australian Government has been examining the possibility of discovering water supplies in these areas. What will be found is unknown at present, but we do know that this vast area, which up to now has not been touched by man, is capable of producing tremendous quantities of wheat, wool and other primary products, all reasonably close to the ports of Albany and Esperance which are being developed. I feel that in time the entire south west of Western Australia will be brought into production. Some years ago the coastal areas there were regarded as being of little or no value, but production has been developed in those areas and we are now looking to the inland areas and discovering their possibilities.
Although in Western Australia we have been developing about one million acres a year for many years, it is not beyond the realms of possibility that we will increase this acreage and continue development beyond the period originally envisaged when it was thought we would run out of land. This does not seem to be happening because research and trials have indicated that future production will be increased tremendously from the inland areas. I suggest that we do not close the book on this particular field and that when this eight year programme is completed we examine future possibilities. If the Western Australian Government applies for further assistance,
I hope the Commonwealth Government will consider it favourably. I support the Bill.
.- In supporting the Bill I register some dissatisfaction that on this occasion, contrary to previously, the Commonwealth Government is only making a loan which must be repaid over a period of 15 years commencing 10 years after the payment is made by the Commonwealth. Not only must the £5i million be repaid but the State will be obliged to pay interest on the money and in addition will be required to make an equal contribution with the Commonwealth. That is, it will still have to make its £1 for £1 contribution, and on this occasion it is also obliged to pay the money back because it is not a grant. That is, for each £1 of Commonwealth money the State will be obliged to find £1 of its own and eventually must actually find £2 of its own because, in the long run, the £1 which the Commonwealth Government will provide for the works, plus the interest which has accumulated, must be paid back to the Commonwealth.
Previously, the scheme which is an extension of the modified comprehensive scheme referred to by the Minister when introducing the Bill, and which was completed in 1961- 62, was subsidised by the Commonwealth Government on a £1 for £1 basis, but on this occasion the position has worsened as far as Western Australia is concerned because every penny the Commonwealth is providing must be repaid, plus interest.
Now, I appreciate that there is an agreement between the State and the Commonwealth that it should be done in this manner; but I should like to point out that if you fail to get what you actually ask for, or what you actually require, you must be prepared to ask for something less, or for a different arrangement. I would suggest that that is what actually happened here. In other words, this is one of those bulldozer or shotgun agreements. In effect, the Commonwealth said: “Accept this, or else”.
I think I should refer to the history of this scheme. In March 1946, the then Minister for Works and Water Supplies in Western Australia, the Hon. A. R. G. Hawke, prepared a case for submission to the Commonwealth Government for financial assistance in the construction of a comprehensive water supply scheme. This scheme was designed to serve an area of 11,607,000 acres, the estimated cost being, in 1946, about £9i million. The Commonwealth Government of the day appointed an inter-departmental committee under the chairmanship of the Director-General of Works to consider and report on the State’s submission. This Committee reported that certain areas had greater priority than others and, as a result of negotiations, the State submitted, in October 1947, a case for a reduced scheme known as the modified comprehensive scheme designed to serve an area of 4,100,000 acres, the estimated cost being about £4,300,000.
The Commonwealth Government agreed to subsidise the modified comprehensive scheme on a £1 for £1 basis and the enabling legislation was assented to on 5th December 1948. The general rise in price levels, particularly of steel and wages, resulted in an increase in the capital cost to about £10,250,000. The Commonwealth Government subsidised the modified comprehensive scheme to a maximum of £5 million on a £1 for £1 basis which was a very good thing. In 1960, the State Government - a Liberal Government on this occasion - presented a further case which was prepared by the then Minister for Works and Water Supplies, the Hon. G. P. Wild, to the Commonwealth Government for similar financial assistance with a scheme estimated to cost about £17i million and serving an area of about 7i million acres. The scheme involved virtually the completion of the 1946 proposal. The submission was rejected by the Commonwealth Government. This, of course, was a very bad position because, following this rejection, the State Government had to embark on a programme financed from its own loan funds to connect certain towns suffering from acute water shortages. The State allocated an amount of £500,000 per annum for this purpose. As at 28th February 1963, the State Government had, from its own resources, incurred a capital expenditure of £24,050,000- this included its share of the cost of the modified comprehensive scheme - in order to meet the water supply requirements of that State. So it cannot be suggested that the State of Western Australia has not pulled its weight in this regard. The present position in Western Australia in regard to this comprehensive water scheme brings great credit upon the Labour Governments of that State, for it cannot be denied - I challenge honorable members to deny it - that Labour governments have initiated all the water conservation and distribution schemes of Western Australia, even though in some cases, unfortunately, they did not remain in office long enough to complete them. But certainly it is not a sign of very great progress when a scheme which originally, in 1946, was set up to supply water for some 12 million acres is now being reduced to a scheme to supply something less than 8 million acres.
On this occasion, the purpose of the further request for financial assistance is to extend and to ‘hasten the extension of the scheme in certain areas of Western Australia, but those areas, unfortunately, are very limited. The second schedule of the Bill sets out the work which is to be carried out. It includes the enlargement of the goldfields main conduit over certain sections between Mundaring Weir and Meredin, the reinforcement of pumping equipment and regulating reservoirs on the goldfields main conduit between Mundaring Weir and Meredin; the reorganisation and reinforcement of pumping equipment on the Wellington-Narrogin main; the partial enlargement of the Narrogin-Katanning main; and the provision of auxiliary pumping stations, rising mains, service tanks, reservoirs and distribution systems. This will allow a greater quantity and greater pressure of water in those mains, or from those reservoirs which will in turn mean that waterlines can be extended further into areas away from the existing main pipelines. That is to say, it will be possible to provide for people living beyond the existing scheme, and for holdings situated beyond it which will participate in the supply of water. This, of course, will be a very good thing in the areas now considered to be marginal with regard to rainfall or water supply will become areas which the people engaged in agricultural pursuits will be able to look upon with a fair sense of security. It will also allow of a greater pressure of water and a greater drawing of water along the goldfields water supply line which should assist the farming properties situated along that particular line, but, unfortunately, it will not permit of the extension of the goldfields water line beyond the point to which it extends at present in Kalgoorlie.
Water is one of Western Australia’s greatest problems not only in the outlying areas but even in the capital city itself. There is no doubt that, as the population and industries increase, it will be necessary to increase the supply of water and the reserves of water as well as the means by which the water can be delivered. As to the outlying areas and the farming areas, the position is desperate in some cases. There is plenty of farming country available which, as a result of the development of trace elements and the progress made with fertilisers generally, together with the improvement in farming methods, can today become good productive country; but in many cases there is this big problem of water supply. If this can also be overcome, or if the existing supplies can be supplemented by way of water schemes, pipes or dams, then the position can be completely altered and areas which, a few years ago, were considered hopeless as farming properties could become good secure properties and this in turn could mean further decentralisation and more population in outlying areas.
There is a very important area of Western Australia which requires a plentiful and secure water supply. It is situated outside of the area included in the map which was referred to by the Minister and which is set out in the second schedule to the Bill. I refer to the GeraldtonGreenough area, which has an enormous productive potential but which is retarded to a large degree by the fact that it is faced with certain water problems. When the pipeline is extended through that area it will become second to none in Australia as a productive area.
Another town that is facing increasing difficulties is Morawa, where an iron ore enterprise is at present getting under way. Before the discovery and exploitation of the iron ore deposits at Koolanooka the town of Morawa was in a reasonably good position in respect of water supplies. Now, however, as a result of the exploitation of the iron ore and the resulting increase in population at Morawa, which has been very considerable and which no doubt will be even greater within a very short time, the problem of water supplies has become rather acute. I understand that the Western Mining Company, which is exploiting the Koolanooka iron ore deposit, has been obliged to cart water for distances of from 70 to 100 miles to supply its staff and the requirements of its works and, perhaps, some sections of the town itself. I understand that the Western Australian Government has been considering, and may even have a plan for, supplying the town of Morawa from some natural resource. Unfortunately supplies from these natural resources can never be looked upon as permanently safe and certain, and the possible shortage of water is having a detrimental effect on the progress of farming, mining and other industries in that area and the Geraldton area.
I am referring to these specific areas, Mr. Speaker, because, after all, the purpose of the scheme is to extend water supply lines into the various farming or mining areas. There is another very important part of Western Australia which would greatly benefit by the extension of the water scheme. I refer to the Mallee and Esperance areas which, over recent years, have proved very valuable. The time is not very far in the past when, if you suggested setting up a farming property in some parts of the Esperance district people would think you were a pretty easy mark and probably try to get your money from you in various ways. However, as a result of the encouragement given by a former Labour government to people wishing to set themselves up in the Esperance aTea, there has been steady progress around Esperance and back into the Mallee area, but water represents one of the main problems there. At present the water supply scheme extends as far as Norseman. If it could be extended a further 150 miles to Esperance, with branches running off the main line, we would see more rapid progress in that district. The town of Esperance is a very progressive one, and it has now reached the stage at which a permanent and secure supply of water would make all the difference in the world.
It is only recently that pastoralists on properties just outside Kalgoorlie - and quite close to the town - who had been established for only three or four years, unfortunately felt the impact of the severe drought and some lost practically all of their stock. It would be of immense advantage if we could extend the water supply further than its present limit at the goldfields towns. I suggest that an extension might be added along the Transcontinental Railway line. This would be of great assistance not only in providing water for railway use but also for some of the nearby pastoral properties. These property owners have all been engaged in sinking dams. I referred a moment ago to those round Kalgoorlie one of whom in particular lost almost all of his 15,000 sheep. He had plenty of dams, but unfortunately there had been no rain over the last couple of years, or certainly not enough even to wet the surface of the dams.
While supporting the Bill, I do register a protest at the requirement that the W.A. Government should repay the money provided under the legislation, because this will have the effect of forcing various districts which require an extension of the water scheme to remain as marginal areas for much longer periods than should be necessary.
.- Yesterday in another context I spoke about the co-operative spirit shown by this Commonwealth Government towards the Government of Western Australia. I think that in that context 1 must have anticipated the measure which is before us today. I said I would be surprised indeed if within a very short space of time, as another indication of this spirit of co-operation, more funds were not made available to Western Australia for this comprehensive water scheme. It is very pleasing now to have the opportunity of supporting the measure and referring to the fact that these funds are made available to enable the Western Australian Government to press forward with a most commendable scheme indeed.
Other speakers have dealt with the type of agreement embodied in the measure and have referred to the water scheme itself and its advantages as it reaches out to country areas that were previously in dire need. Let me just underline a point or two. We find that on this occasion a very impressive case has been made out by the Western Australian Government. The map that accompanied the documented case sets out the areas which will be involved, and I just point out that the total population in the areas to be served is about 12,000, of which 5,000 are in towns. There are 13 towns in the area to be served and of these 4 have previously had no organised water supply.
This scheme will be a godsend indeed to those towns and to the district as a whole.
In the earlier stages of the development of the comprehensive water scheme it is true that subsidy moneys were provided by the Commonwealth Government. I point out, however, that at that stage the circumstances were quite different from those obtaining at present. When the subsidy was provided the scheme was in its early stages. The economics of it had not been proven. Neither the State Government nor the Commonwealth Government had very much information to guide it or from which it could make a sound assessment of the economics of the scheme.
I notice that the Western Australian Government has emphasised the point that the extension of the scheme will improve the amenities available to people in the district involved. I think it is quite proper to suggest that such amenities should be improved and I raise my voice in support of that section of the case put forward by the Western Australian Government. I see that it is suggested that towns in the area to which I have made reference will be rated on a rental valuation basis and will be encouraged to install sewerage facilities or individual septic tank systems and other amenities that depend on a reliable water supply. Let me say in passing that I never cease to wonder at the great spirit of country people in districts such as these. The honorable member for Moore (Mr. Maisey), who will follow me in this debate, comes from a line of farming families who were pioneers in areas in which in their days no amenities existed. I never cease to wonder why people like the honorable member’s forebears - and perhaps he also in his earlier years - faced these conditions and carved out of such areas farms which today are most successful indeed. I think it is only proper that a water scheme of this nature should be provided and that particular emphasis should be placed on the fact that various amenities will flow from the new installations.
I wish also to place on record my appreciation of the action of the Western Australian Government which in 1960, when the Commonwealth Government could not accede to its request because funds were just not available, said: “This does not meant a serious stoppage of our plans. We will make our own plans. We will make our sacrifices, no doubt. We will re-organise our finances and see to it that some aspect of this essential work is continued.”
So, rightly, in its case to the Commonwealth on this more recent occasion, the Western Australian Government pointed this out and said that it had pressed on with the programme financed from the State’s own loan funds to connect certain towns suffering from acute water shortages by pipelines to the mains of the modified comprehensive scheme. This necessitated the State Government allocating an amount of £500,000 per annum for the purpose. I think it is proper that we should note that the towns I named are Dalwallinu, Pithara, Ballidu and Kojonup. They were connected to the scheme and the benefits of the scheme were extended to them in this fashion because of the determination of the Western Australian Government not to postpone its plan entirely.
Having said that, I think I can come to the points of criticism made by our friends opposite. The honorable member for Stirling (Mr. Webb) said that he was unhappy about the agreement. He was unhappy, of course, that this was not a grant or a subsidy but was a loan. As a Western Australian, I too would always like to see the Western Australian Government encouraged with grants. But we have done reasonably well in this connection and I think we must recognise on this occasion that the Commonwealth Government had good grounds for framing the agreement so that the moneys used would be loan moneys refundable to the Commonwealth in due course rather than another sectional grant which other sections of the Australian public might well criticise, because the basis for a grant or a subsidy does not actually exist in this set of circumstances. My friends opposite also referred to the delay. I note that this last proposal came from the Western Australian Government in April 1963 and the current agreement embodied in this legislation was not signed until this month, May 1965.
– Other proposals were made between 1961 and 1963.
– Yes, modified proposals. I think the accusation of delay can be answered. There is a very simple reason for any delay of this kind. So I move on to the fact that, if we are under criticism as a Government for making this a loan rather than a grant, we should note what the Treasurer (Mr. Harold Holt) said in his second reading speech when introducing the Bill. The primary reason has been underlined by him. This proposition must be recognised as a fully economic one and I am sure honorable members will note that the Commonwealth Government turned to its Bureau of Agricultural Economics for an economic appraisal of the proposal put by Western Australia. The Bureau’s survey snowed what could be expected based on certain reasonable assumptions and facts such as the response of farmers in the respective areas to the acceptance and usage of the reticulated water, the success of areas that had been sown to pasture, the likely increase in the carrying capacity of the country and some reasonable assessment of the levels of prices and costs. The survey showed that this was a fully economic proposal and that it would result in significant additional production of an export earning nature.
In these circumstances, Mr. Deputy Speaker, it was not reasonable for the Commonwealth Government to make a straight out grant on a £1 for £1 subsidy, as was requested. In other words, this really became a State loan funds proposition. But a fair amount of money was required and the State of Western Australia could not reasonably be expected to proceed and work as it had done for a limited period of time with the loan funds that it had available. Being really a loan funds scheme, the proposal of the Commonwealth, which has been embodied in the agreement, was that the Commonwealth would provide the funds in this form as required year by year. So that it would be an even more economical and satisfactory proposition for Western Australia a period of 10 years was allowed before repayments with interest would need to be made. Emphasis has been placed by the Commonwealth on the fact that this will become a revenue-earning assest for Western Australia.
My friends opposite also referred in passing to the Snowy Mountains scheme. Of course, all of us should recognise that the Snowy Mountains scheme is based upon loan funds. It cannot in any way be used as a basis for suggesting that the Western Australian scheme in these circumstances should have attracted a grant or a subsidy.
I do not want to prolong my remarks. I felt that I should direct attention to the points I have made and underline the fact that the Commonwealth Government has of necessity taken time - this had been the cause of some of the delay - to allow the Bureau of Agricultural Economics to look at this proposal thoroughly. Based upon the analysis of these trained specialists, the Commonwealth Government has said: “ We support this scheme. We commend the Western Australian Government for all that it is doing in connection with this scheme, but we must recognise that this is a fully economic proposal based upon earlier experimentation. Therefore, it is now a revenue earning asset ‘that is being extended even further.” I do not think, therefore, that there is any room for sound criticism of the Commonwealth Government’s proposal to the Western Australian Government that the agreement should take the form that we see here in this legislation. Having spoken in this fashion in genuine support of this further gesture of co-operation and assistance that is being extended to Western Australia, I commend the Government for the Bill in its present form.
.- I am eager to join my Western Australian colleagues in supporting the Bill. However, whilst I support the Bill generally, I must agree with some of my colleagues who have criticised the Government for departing, in this extension of the modified comprehensive water scheme, from the financial principles of the first proposal. It has decided that in this instance the finance shall be made available as a loan rather than as a grant. I draw some comfort from the fact that repayments by the State will not be required to start until 10 years after the proposal has commenced and not until after this section of the plan is in operation. During those 10 years we should all devote ourselves to trying to persuade the Government to have another look at this proposal’ to see if it can continue the very fine principle on which this comprehensive water scheme was first conceived.
Let me say a little about the scheme itself and that part of it which has already beer* completed. The modified scheme was completed in 1961-62 and its completion has more than confirmed the advantages that it was believed would accrue to the areas it served. As one who, as the honorable member for Swan (Mr. Cleaver) said, lived in the area serviced by this modified comprehensive schema, I certainly would like to place on record my recognition of these advantages and say something about them in greater detail.
As was expected, there has been an increase in the productivity of the area because of the increased stock carrying capacity made possible by assured water supplies. Prior to the advent of this scheme, vast areas of cereal and grazing land were not being stocked to capacity because of the annually recurring problem of inadequate water supplies. In a great many instances, lack of water limited stock carrying capacity, retarded production and prevented the full utilisation of natural pastures and of the residual feed values of the cereal crops that were being grown.
This problem was intensified when, in the early 1950’s, the wheat growers of Western Australia voluntarily levied themselves id. per bushel of wheat and, with the funds so raised, commenced a research programme at the University of Western Australia with the object of developing a clover or legume that would grow quickly enough to reach maturity and set seed in the relatively short growing period experienced in these agricultural areas. This research programme, Mr. Deputy Speaker, was a purely voluntary effort on the part of the grain growers in Western Australia. It was begun by the wheat industry and later extended to cover the barley and oats industries. As you may know, it was later again extended to cover the whole of Australia and, in recognition of the effort being made by the grain growers, the Commonwealth Government decided to support the research programme with a £1 for £1 grant. It also established the Wheat Industry Research Council at the Federal level and induced the State Governments to establish State Wheat Industry Research Committees.
The research programme related to the problem of producing and developing nitrogen fixing plants succeeded beyond the expectations of many of us. It is true to say that the programme not only raised the nitrogen level of the soils, thereby permitting higher yields and the growing of wheat of higher protein content and better nutritional value, but also provided increased areas of good pastures. Today, throughout the areas served by the modified water scheme and, indeed, in and beyond the areas to be served by extensions of the scheme that will be financed out of the advances to be made to the State under the terms of the agreement that is the subject of this Bill, we find rapidly expanding pasture development, with pastures developed from either clovers or medics which have stemmed from the original university project financed by a voluntary levy on wheat growers.
It is true to say, however, that the original water supply problems in these areas have been aggravated immeasurably by this programme for the raising of soil fertility by the development of leguminous pastures. We now find that, whereas in the past we were not fully utilising natural pastures and the residual feed values of the cereal crops, we have moved to a stage at which we are either wasting improved pastures or, alternatively, utilising these pastures only by means of expensive and uneconomic carting of water. Until a few days ago, many farmers in the north eastern wheat belt were carting water for their stock up to 35 miles. It is certain beyond doubt that the further extension of the modified comprehensive water supply scheme will make possible a very substantial increase in the productivity of the areas that it will serve.
Let me repeat that, like the honorable member for Stirling (Mr. Webb), I regret that the Government has not seen fit to make these funds available by grants rather than by interest hearing loans. I believe that the additional revenue producing and income earning capacity of the areas that will be served by the scheme will ultimately be as much to the benefit of this Government as to the farmers and the community of Western Australia as a whole. Apart from the direct economic advantages associated with these water schemes, there is an aspect which although its importance cannot be measured or even assessed in terms of pounds, shillings and pence, is of tremendous value from the standpoint of humanitarian considerations and the enjoyment of life by small rural communities. Prior to the advent of the modified comprehensive water scheme, the conditions under which people existed between January and June had to be seen to be believed. This applies even now in many country towns that have not yet reticulated water supplies. It is certain that only sheer force of economic circumstances will hold people in these dry, sunbaked communities unless something is done fairly quickly to enable the local residents at least to have the benefit of a reliable supply of good drinking water and to enjoy a cold shower at the end of a long, hot, dusty day and, perhaps, even the luxury of a little patch of green lawn by the back door. The contrast between such communities and those where water supplies are now reticulated as a result of this scheme, has to be seen to be believed.
Lawns and gardens have rapidly been developed, not only around the homes, but also around the schools. In many towns there has been rapid development of septic sewerage systems. Just what a boon these are to country people only a country dweller knows. Swimming pools have appeared on the scene. What these are worth to the local communities can readily be imagined. They are tremendously important to the local children, especially in enabling them to be taught to swim. These benefits cannot be measured merely in terms of pounds, shillings and pence. The advantages resulting from the water supply scheme have been of tremendous value to entire communities. Bowling greens also have been developed. These were never even dreamed of in country towns formerly. The bowling clubs and associated amenities that now exist in many country centres add greatly to the enjoyment of social life by the local residents who, from one end of the district to the other, have been brought together in frequent close social contact whereas, previously, they might have passed almost their entire lives without speaking to one another. These developments have made a tremendous contribution to the improvement of the social life in small country communities. I could list, also, a host of other amenities that have been made possible by the provision of adequate water supplies, but time will not permit me to do so.
Let me say in conclusion, Sir, that I am greatly pleased to have the opportunity to support this Bill. However, I sincerely regret that the Government has adopted the precedent of financing the scheme by interest bearing loans to the State Government rather than by grants. I hope that, during the next 10 years, the matter will be reconsidered and the principle of grants rather than loans will be adopted, thereby removing the one objectionable feature of this legislation.
Question resolved in the affirmative.
Bill read a second time.
Message from the Administrator recommending appropriation announced.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Bury) read a third time.
Bill returned from the Senate without amendment.
Sitting suspended from 5.55 to 8 p.m.
– There being no objection, leave is granted.
– Honorable members will recall that on 10th February 1965, President Johnson made a statement to the Congress of the United States in which he announced a series of measures designed to improve the United States balance of payments. He said that four years before, the United
States Administration had launched a broadbased attack on the problem of the United States balance of payments. That attack, which had been intensified in 1963, had “ in considerable part hit its mark “. But the deficit in 1964 was too large and over half of it occurred in the final quarter of the year. The gains made through boosted commercial exports and such measures as reduced oversea dollar spending for aid or military purposes had been largely offset by a rise in the level of private capital outflow. He therefore proposed to the Congress the extension of the period of operation of the interest equalisation tax for a further two years to 31st December 1967 and this tax was made to apply, not only to purchases by United States residents of foreign securities, but also to bank and non-bank loans of a year’s duration and longer to non-residents of the United States. In addition to this legislative action, United States banks and other lenders such as pension and insurance companies were asked to limit their oversea lending to an amount not more than 5 per cent, above the 1964 level; and some 500 businesses that in 1964 exported goods worth 10 million dollars or more or had investments in developed countries of 10 million dollars or more were asked to improve their own “ balance of payments “ by 15 to 20 per cent, in 1965 as compared with the year before.
Supplementary statements were issued by the United States Secretary to the Treasury* the Secretary of Commerce and the Federal Reserve Board. The Treasury statement gave details of the amendments to the Interest Equalisation Tax Act. The Commerce statement announced the setting up of a Balance of Payments Advisory Committee of nine prominent business executives headed by Mr. Albert L. Nickerson, Chairman of the Board of Socony Mobil Oil Company as Chairman. The function of this Committee was to advise the Secretary of Commerce on the conduct of programmes of voluntary co-operation by the business community to improve the United States balance of payments position. To assist these businesses in the working out of programmes nine “ techniques “ were suggested. These included the expansion of exports, the development of hew export markets, accelerated remittance of income earned in developed countries, the avoidance or postponement of direct investment in marginal projects, restraint in financing new direct investment in developed countries with funds raised in the United States, greater use of funds raised in developed countries to finance direct investment in those countries, sale of equities in foreign subsidiaries to residents of the host countries, increased use of American flag vessels and airlines and minimising the outflow of short term financial funds and the repatriation of funds previously invested abroad.
The statement of the President of the United States Federal Reserve System said that the American banking and financing community had been assigned major roles in the President’s programme. All banks were requested to limit credits to foreigners so as to hold outstanding credits, including exports credits, during 1965 to a level not more than 5 per cent, above the level at 31st December 1964.
Some exceptions to these restrictive measures were made. The interest equalisation tax was not applied to capital raising by developing countries. The exemption applied originally to Canada was continued on the understanding that “ the policies of the Canadian Government are and will be directed towards limiting such outflows to the maintenance of a stable level of Canada’s foreign exchange reserves “; and borrowings by, or guaranteed by, the Japanese Government were exempted up to a total of 100 million dollars a year. In the guideline issued to banks, the largest priority was to be given to loans to less developed countries and restrictions were to be avoided “ that would place an undue burden on countries such as Canada and Japan, which are heavily dependent on U.S. financing, and on the United Kingdom which is suffering from balance of payments difficulties “. The quotations I have made are from statements and policies of the United States. Australia has, clearly, a very lively interest in these developments. We are a big importer from the United States, and, over recent years, ours has been the most rapidly expanding market the United States has for its exports. We are normally in substantial deficit on current account with the United States partly as a consequence of restrictions which that country’s policies have imposed upon major items of our trade with it. Until recent times we had been assisted in our overall balance of payments by borrowings in New York on Government account, and by a strong and well-sustained inflow of United States investment. The interest equalisation tax had effectively inhibited our borrowing. Now it seemed that a significant reduction in capital inflow could occur as a result of the measures announced. in none of these statements was there any indication that any exception would be made for Australia. Rather, Australia was specifically listed among the “ developed countries “ for the purposes of these programmes. By virtue of our place in the alphabet Australia headed the list. It was therefore decided that the Prime Minister should write personally to the President about the matter. This he did on 12th March 1965. He pointed out that Australia is not a developed country in the sense that the mature, capitalexporting and highly industrialised countries of Europe are developed. On the contrary, he pointed out, we have an immense task of developing a relatively under-populated continent. We have a free enterprise economy that has welcomed private oversea investment, and we have joined with other free world countries in promoting freer international trade and payments. Being predominantly an exporter of primary products, the Prime Minister said, Australia experiences large fluctuations in her export receipts and, being in a phase of rapid development, normally has a deficit in her current balance of payments, which is covered by net capital inflow, by far the greater part of it being private investment.
The Prime Minister went on to refer to Australia’s large current account deficit with the United States and contrasted the rapid expansion of United States exports to Australia with the manner in which United States policies impede Australian efforts to expand exports to the United States of some major Australian export commodities. He referred also to the deterioration in Australia’s balance of payments prospects during the present financial year and added that this deterioration could continue in the financial year ahead with adverse effects on our external reserves. We were adding considerably, he pointed out, to our defence commitments and these would involve us in large payments abroad in the years ahead. In this situation, any substantial falling off of capital inflow would be a matter of serious concern to the Australian Government.
The Prime Minister then expressed the hope, on behalf of the Government, that the United States Administration would take full account of the Australian situation in setting overseas investment targets for banks and other businesses and would not take action likely to result in any substantial reduction in the flow of private American capital to this country. He made it clear that we would not oppose the issue by United States investors of some equity capital in their subsidiaries here, but he went on to say “ that we would be troubled and embarrassed if 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 “.
In his reply of 24th March 1965, the President said that his Administration understood the great importance of external capital to Australia and attached high value to the good economic relations between the two countries. After careful review, they believed that their programmes were not likely to have a serious adverse effect on the Australian economy. That part of the programmes supervised by the Secretary of Commerce was designed to avoid any undue disruption in the growth of sound business relationships. The President acknowledged, however, that “ it is always possible that specific actions under a programme of this sort can have consequences for a friend that outweigh their value to the general programme “ and he said he had “ asked the Secretary of the Treasury and the Secretary of Commerce to give a careful hearing to Australia’s view on any particular case which might be of this sort”.
Meanwhile, we in the Government here had been watching with sympathetic concern the efforts being made by the British Government to overcome Britain’s balance of payments difficulties. Australia is the largest holder of sterling and, until very recently, Britain has been the principal source of private oversea investment in this country. I receive regular messages from the Chancellor of the Exchequer on matters of mutual interest and, after the Prime
Minister had written to the President, I sent the Chancellor a copy of the Prime Minister’s letter and told him of our concern about the effects on this country of any substantial reduction in the inflow of capital from abroad.
In his Budget Statement of 6th April 1 965, the Chancellor of the Exchequer dealt at some length with Britain’s external capital account. He made it clear that the tighter application of exchange control would not apply to the sterling area. He outlined proposals for a corporation tax, however, that would “ limit the circumstances in which “ the British Government gives “ relief for underlying tax, that is, the tax charged by an overseas Government on the profits of an overseas company out of which the dividend is paid and remitted to” Britain. The corporation tax scheme will not come into full operation until 6th April 1966. Some of its provisions will not be effective until some double taxation agreements have been re-negotiated. For example, British companies receiving income from companies in Australia in which they own less than 25 per cent, of the shares will be subject to the new British corporation tax on that income but, while the existing double taxation agreement between Britain and Australia stands, they will be entitled to a credit against the British corporation tax for the company taxation paid in Australia on that income.
Broadly stated the effects of the proposed British corporation tax on British companies with investments in Australia seem to be as follows. While our existing double taxation agreement with Britain stands, British companies with wholly-owned subsidiaries in Australia will pay Australian company tax at the rate of 42i per cent, on the taxable profits of those subsidiaries but there will be no Australian dividend withholding tax and no British corporation tax on profits received from those subsidiaries. The net disadvantage from the taxation standpoint they will suffer as compared with companies that have derived their profits from British sources is that they will have paid 42* per cent. Australian company tax as against the proposed British corporation tax, which the Chancellor does not expect to exceed 40 per cent. Where the British company owns less than 100 per cent, of the shares in an Australia subsidiary, how ever, the taxable profits of that subsidiary will not only be subject to the 42i per cent. Australian company tax but profits remitted to the parent will also bear Australian dividend withholding tax at the rate of 15 per cent. This will, of course, add to the net amount of taxation payable by such a company on income derived from Australia as compared with what it would be on income derived wholly from British sources, namely the proposed maximum corporation tax of 40 per cent. In either case from any profits distributed to British shareholders the company would then deduct and pay to the Exchequer British income tax at the standard rate of 41.25 per cent.
These effects may be contrasted with those arising under the existing British tax arrangements. British companies now pay a profits tax of 15 per cent, and income tax currently at the rate of 41.25 per cent, or 56.25 per cent, in all. From dividends distributed they deduct and retain the equivalent of the 41 .25 per cent, income tax which they have, in effect, already paid on behalf of the shareholder. Against the tax of 56.25 per cent, they obtain a credit, in respect of profits derived from an Australian subsidiary, for the amount of Australian tax paid on those profits, which would not exceed 51.125 per cent, and would in most cases be appreciably less than that.
It is clearly intended that the proposed corporation tax should discourage British investment abroad, whether in the sterling area or elsewhere, and give a taxation advantage to investment at home. Moreover it will clearly encourage 100 per cent. British ownership of subsidiaries and work against the admittance of local shareholders to these subsidiaries. What effect the tax will have, if introduced in the form now proposed, on British investment in Australia it is difficult to assess. Presumably the effect could be small so far as wholly-owned subsidiaries of British companies are concerned but, in other cases, a good deal would apparently turn on the expected profitability of an investment in Australia as compared with an alternative investment in Britain or elsewhere. I might add that the Chancellor of the Exchequer has expressed the opinion to me that the taxation proposals set out in his Budget Statement are not likely to have a serious effect on British direct investment in Australia. I believe he shares my view that it would be contrary to the best interests of both our countries - and indeed against the best interest of the Commonwealth of Nations - for British investment in this country to become a declining factor.
To complement the action taken or foreshadowed in the Budget to reduce capital outflow, Mr. George Brown, the British Minister for Economic Affairs, has written to some 300 British companies explaining the role they can play in helping to overcome Britain’s long-standing payments problem. He has told them that, among the things they can do is to scrutinise carefully overseas investment projects and to reduce, postpone or eliminate those which will not yield quick and substantial returns to the British balance of payments. With this in view, he has asked them to comb through all of their overseas investment programmes, “ wherever they may be “, to see how best to keep to a minimum those investments whose yield to the balance of payments may be small or long delayed. Regarding profits, he urges them to remit more of their earnings to Britain from overseas subsidiaries or branches; and he goes on to call for the return to Britain of all funds not immediately required abroad, even if they are to be brought back only temporarily.
Just what effect these British measures will have, either in the short-run or longrun, on British investment in Australia we cannot yet say for certain. We have, of course, got this matter under study. But what is of particular significance to us is that both of the countries from which we have been drawing most of our private overseas investment have taken action to deal with a balance of payments deficit, in part by checking capital outflow. In 1963- 64 total inflow of private overseas investment in companies in Australia amounted to £215 million. Of this amount, £98.7 million came from the United Kingdom and £98.3 million from the United States and Canada - that is, £197 million out of a total of £215 million came from those sources. With export prices substantially below the 1963-64 level and a worsening balance of payments in prospect, we could not, despite the strength of our reserves, contemplate with equanimity a substantial cutback in capital inflow even if it were only for a year or two while the United States and the United Kingdom were restoring their own balance of payments.
Moreover, we have for a considerable time been dissatisfied with some aspects of our trading relations with the United States. For many years, we have been endeavouring to negotiate a reduction in the tariff of 251 cents per lb. which the United States imposes on wool. The United States is, in fact, the only major country in the world to impose a tariff on raw wool. We have been trying also to induce the United States to take action on the quotas they imposed in 1958 on imports of lead and zinc, Australia then being the principal supplier of lead and a major supplier of zinc to the United States. The import controls then introduced restricted imports to 80 per cent, of average commercial imports in 1953-57 and these quotas are still in force although the supply situation has changed radically since 1958.
In February 1964 we signed an agreement with the United States under which we obtained import entitlements for Australian meat and we on our side undertook voluntarily to limit exports to those agreed levels. In August of that year, however, the United States Congress passed legislation limiting our exports to much lower levels than those set out in the agreement. Not being content with that, some State legislatures have passed legislation requiring imported meat to be distinctively labelled and this - as it was clearly intended to do - has seriously reduced sales of Australian meat in those States. For sugar, Australia has a quota for the United States which is far from commensurate with our status as the world’s second largest sugar exporter. Despite repeated representations, we have not yet succeeded in obtaining what we could regard as a reasonable share of the United States sugar market, which is the world’s largest, consuming nearly 10 million short tons of sugar a year.
What is more, the interest equalisation tax announced in 1963 had effectively put an end to the modest but regular and orderly approaches the Commonwealth had been making to the New York loan market. We had established a pattern of loan raisings with about two public loans in each year totalling 50 million dollars to 60 million dollars a year. Although raised in New York about half the loan money came from European sources. But the interest equalisation tax, which would add about 1 per cent, per annum to the cost of borrowing from residents of the United States, has made the cost more than we have felt able to pay. The result has been that, whereas net public borrowings by the Australian Government in the United States totalled 107 million dollars in the three years 1960-61 to 1962-63, in 1963-64 and in 1964-65 we have not only been unable to raise public loans from United States sources, but will have actually repaid more than 24 million dollars on loans previously raised in the United States.
Nor have we yet found large new loan markets opening for us elsewhere - though, as I shall later point out, there seems to be a good chance of continuing to attract European investors to Australian dollar loans and I do not dismiss the possibility that, as time goes on, the prospects of tapping other sources of capital will improve. Indeed, there is a great need for the development of new capital markets - a point I made strongly at the annual meeting of the International Bank for Reconstruction and Development in Washington in October 1963 when I urged the International Bank and the International Monetary Fund to make a study of ways and means to expand, diversify and strengthen the international capital markets. Strong capital markets established at various centres of financial strength around the world, I said, would provide to creditworthy borrowers far more than governments find themselves able to provide through such institutions as the International Bank and the International Fund. I was assured that this study would be undertaken. Some moves have been made in the right direction - for example, Germany has recently removed taxes previously imposed on foreign borrowings in that country. But as yet no real alternatives to the traditional sources of our overseas capital raisings are yet in sight.
Shortly after the interest equalisation tax had been announced, I raised with the then Secretary of the United States Treasury, Mr. Douglas Dillon, the question of an exemption from the tax for Australia. This was justified, I believed, on strong grounds, including our unfavorable trade balance with the U.S.A. and our history of moderate orderly borrowing in New York. However, it was quickly obvious that to persist with that request at that time would have been embarrassing for the United States since other countries also were then seeking exemption. Our overseas reserves were strong and rising. I did not press the issue at that time. But meantime that situation has changed materially.
Apart from this matter of borrowing by the Government, we were concerned about the effects of the American programmes on major development projects approaching the construction stage and requiring massive capital investment. Australia was on the threshhold of a great new development of mineral resources, particularly in Western Australia and Queensland but in other States also. The arrangement of contracts for the sale of these minerals overseas and the financing of the projects had been the subject of lengthy negotiation. A large part of the capital required was to have been obtained from the United States. Hundreds of millions of dollars in the aggregate were involved in respect of iron ore development and the Weipa-Gladstone project for the processing of bauxite. Plans had been made for large sums to be spent in oil exploration. Clearly it would be a major setback to Australia’s development if the United States and British measures were to frustrate these plans.
These measures could also have repercussions on international trade and payments. The United States and Britain are the world’s reserve currency countries and their balance of payments deficits - and particularly the deficit of the United States - add to the reserves of other countries which accept their currencies in settlement of financial obligations. If the flow of these currencies, more especially the United States dollar, is to be cut off, additions to the reserves of the rest of the world will likewise cease and hence increases in international liquidity would come to an end. Since the financing of expanding world trade and payments needs a continuing increase in international liquidity, the effect of such a change in the situation could be a serious threat to international trade and the international flow of capital.
To follow up questions of this kind, it was decided that I should go to Washington for talks with those members of the Cabinet and officials there who were directly responsible for the administration of the balance of payments programmes. It was not practicable for me to leave Australia until after we had conferred with the
Premiers about the revenue grant arrangements to apply for the period beginning with the coming financial year. The meeting with the Premiers was arranged for 22nd and 23rd April and I left Australia for the United States on the evening of 23rd April.
My primary purpose in making this visit, therefore, was to establish direct personal contact with the United States officials responsible for the administration of the programmes or for questions of policy related to them. On the one hand, I wished to make known to them the facts of the Australian situation and the problems that could emerge for Australia from the programmes they were administering. On the other hand, I wished to ascertain, with the clarity that can be obtained only from personal conversations, what precisely the aims of the United States authorities were in the formulation and administration of the programmes and what was the full significance of the policies they were pursuing in this matter. 1 believe that I achieved these purposes as I shall indicate in the account I shall give of the talks I had in Washington.
Before proceeding with that account, however, I must make more than a passing reference to the seminar on Australia’s prospects for development in which I participated in New York before going on to Washington. It was because I was visiting the United States for the talks in Washington that I was able to take advantage of the invitation to me to take part in this seminar. This particular task added a secondary - but by no means unimportant - purpose to my visit. Indeed, the seminar could not have been more timely, although it was discussed last year and arranged before any knowledge was held of the developments in the United States. It proved to be most valuable from the Australian standpoint. It was organised by, and on the initiative of, the Chase Manhattan Bank of New York and bad the full and active personal support of Mr. David Rockefeller, the Bank’s President, and Mr. George Champion, the Bank’s Chairman. It was attended by a large gathering of senior executives representing about 300 prominent American businesses. There was a large attendance at each session and interest was keenly sustained throughout.
The panel of speakers chosen to address the seminar on various aspects of Australian development included Sir Harold Raggatt, the former Secretary of the Department of National Development, who spoke on Australia’s mineral resources; Sir Colin York Syme, Chairman of the Broken Hill Proprietary Co. Limited, whose subject was the industrial context of Australian mineral development; Sir William Gunn, Chairman of the Australian Wool Bureau, who spoke on the role of primary industry in Australian development; the Honorable Charles Court, Minister for Industrial Development in Western Australia, whose theme was “ natural resources as a key to development and investment “; Sir Roland Wilson, the Secretary to the Commonwealth Treasury, whose address covered the field of labour and industry, trade and finance in Australia; Mr. William Miller, President of the Chase International Investment Corporation, who described the Esperance Bay project; Mr. John Parker, Chief Engineer of the Public Works Department of Western Australia, who outlined his Government’s role in providing essential engineering in Western Australia; Mr. James Voss, President of the California Texas Oil Co. Limited, whose subject was “ Australia and the oil industry “; Mr. William Moran, Manager and Vice President of Minerals Exploration Company - a subsidiary of Union Oil Company of California - who dealt with the significance of the Moonie oil field and recent oil and gas development in other areas of Australia; and Mr. William Butler, Vice President of the Chase Manhattan Bank, who spoke on United States-Australian economic development. In the course of one of the subsequent panel discussions, Mr. K. J. Townsing, Under Treasurer for Western Australia, spoke on aspects of taxation relating to development projects in that State.
I had the task of giving the introductory address to the seminar on “ Australian development - the current setting”. In this address, while devoting much of my time to aspects of development, I also dealt at some length with the measures the United States Administration was taking to reduce capital outflow and the effects that could follow for Australia and its development. Copies of this address are available in the Library. The Chase Manhattan Bank will shortly publish a booklet containing the full text of all the speeches.
At a dinner given during the seminar, Mr. David Rockefeller gave an address in which he traced the history of the United States balance of payments problem and emphasised the imperative need for the sake of the world monetary system that the United States deficit be eliminated or greatly reduced. In the process, he said the outflow of United States investment would have to be reduced, but he expressed confidence that the restraints would be temporary and not long-lasting. Australia, he added, would be high on the list of countries in which American investors would wish to place capital.
I would rate the seminar as an unqualified success from Australia’s standpoint, and that is certainly the view taken of it by its sponsors. I feel that the Australian panel made an impressive presentation of a wide range of Australian developmental potentialities. I feel confident that we shall benefit nationally from the stirring of interest which the seminar undoubtedly produced.
At the conclusion of the seminar, which ran for two days - 26th and 27th April - I went on to Washington for a crowded programme of talks with senior officials of the Administration. This programme had, necessarily, to be arranged at quite short notice and I wish to acknowledge with thanks the ready response of- the United States authorities to our request for interviews with their senior officials. Their readiness was, without a doubt, a measure of the Administration’s goodwill towards Australia and this was most evident at every meeting I had.
My first meeting was with the Secretary of State, Mr. Dean Rusk. I had particularly welcomed the opportunity of a talk with him because I knew he would fully appreciate the importance of the mutual interests to be served in this area of the world by steady economic progress by Australia. I found him, as I expected, friendly and receptive. While the particular matters I was to have discussed with his colleagues lay outside his own administration, I felt that he had absorbed our views and would not be unresponsive to them.
During the period spent in Washington - 28th to 30th April - I talked with the members of the President’s Cabinet who are responsible for the administration of the measure aimed at correcting the United States balance of payments; the Secretary of the United States Treasury, the Honorable H. H. Fowler, and the Secretary of Commerce, the Honorable John Connor, as well as some of their principal assistants. I also had an opportunity to talk at length with Mr. Connor at a dinner arranged by our Australian Ambassador in Washington, Mr. Keith Waller, and conversed with Mr. Barr, Assistant Secretary of the United States Treasury, at a working luncheon which he gave in my honour and which was attended by other senior officials from the Treasury and the State Department.
With members of the Federal Reserve Board - Governor C. Canby Balderston Vice President, and Governor Robertson - I discussed the programmes relating to lending by banks, for the administration of which Governor Robertson is directly responsible, and their possible effect on the Australian situation. At the White House, I discussed the programmes and the Australian situation with Mr. Gardner Ackley, Chairman of the Council of Economic Advisers, and Mr. Francis Bator, a Presidential Assistant specially assigned to a study of Australian views. The Council of Economic Advisers, I might add for the information of the House, is responsible to the President for analysing and interpreting current and prospective economic developments and trends and for developing and recommending economic policies that will promote the goals of maximum employment, production and purchasing power in the United States. The Council consults and works closely with other members of the Executive Office and the White House staff and with numerous government departments and agencies in analysing domestic and international issues and in formulating appropriate recommendations. Mr. Ackley as Chairman of the Council, regularly attends meetings of the Cabinet. He is a Chairman of the Cabinet Committee on Economic Growth and a member of the Cabinet Committee on the Balance of Payments.
I took the opportunity also of consulting Mr. Pierre-Paul Schweitzer, Managing Director of the International Monetary Fund and, in the absence of the President, Mr. George Woods, I conferred with the senior Vice President of the International Bank, Mr. J. Burke Knapp, and Mr. Wilson, Vice President. At these meetings, I pointed out that, although Australia had enjoyed a particularly favourable balance of payments in 1963-64 and had considerably strengthened its external reserves during that period, its situation had changed quite rapidly since then. Export prices had fallen and the external reserves were running down. We faced the prospects of the most serious drought for about 20 years and the deterioration in our balance of payments which had occurred in the present financial year seemed likely to continue in the year ahead. Defence expenditure was being greatly increased and large orders for defence equipment had been, and were being, placed abroad, a large part in the United States.
Being a rapidly developing country, I pointed out, Australia ordinarily runs a current account deficit in her balance of payments which is more or less offset by the favourable balance on capital account. With the United States, Australia has a chronic current account deficit which is partly offset by capital inflow from the United States. Australia has become the most rapidly growing market for United States exports but Australia’s attempts to increase sales to the United States market run against formidable trade barriers; I instanced the tariff on wool, the quotas on lead and zinc, the sugar quota which is not commensurate with our status as the second biggest exporter of this commodity, the quotas on meat and the State labelling legislation which has been driving Australian meat off the market in some areas and I spoke of the ludicrously small quota for Australian butter - a quota of nine tons per annum. If to these obstacles were now to be added the effect of measures to restrain capital outflow, Australia would in this respect be subject to a three-way squeeze: Through the restriction of new investment, through increased remittances of profits or the repatriation of capital, and through greater recourse to the Australian market for capital needs.
In referring to the interest equalisation tax, I pointed out that it had put an end to the regular but modest approaches Australia had been making to the New York capital market where we had been raising 50 million dollars or 60 million dollars a year. We had debt maturities falling due in the years immediately ahead and these would make substantial calls on our external balances if we were unable to undertake refinancing operations on the New York market. I gave particular emphasis to this matter in my talk with Mr. Fowler, the Secretary of the Treasury, and I made it clear that the Australian Government could not regard the question of some exemption from the interest equalisation tax as being closed. He emphasised the determination of the Administration to make the programmes successful. He was confident they would achieve rapid results but the results must be clearly evident before modifications could be contemplated.
I drew attention in most of my talks to the fact that by far the greater part of the capital requirements of both private business and public authorities in Australia is met from internal savings. I wanted to point out that it would not be practicable in my view for recourse to be made heavily on our local market for the financing of overseas owned enterprises. But I pointed out, although the rate of saving in Australia is high, the local capital market is limited and could not meet any large increase in the demand for funds that might be made by overseas businesses operating in Australia. It had to meet not only the needs of local private business but a considerable part of the requirements of public authorities which for historical and not doctrinal reasons provided public utility services that to a much greater extent were in the hands of private enterprise in the United States.
I found the Secretary of Commerce, Mr. Jack Connor, very well informed on the Australian situation. We went over the ground of the trade items I had raised. The wool duty, he said, would be brought into the Kennedy Round of negotiations. The lead and zinc quotas had been referred to the United States Tariff Commission and its report was awaited. Quotas for sugar would shortly be determined and Australia’s case was well understood by the Administration. The meat labelling legislation passed by some States was under challenge from the legal standpoint. The Administration wished to be helpful on this problem. On the projects for mineral development in Australia - and this was something which had created apprehension and uncertainty for us - his information was that the financial arrangements from the United States end had been cleared. It was his view that, with finance forthcoming for these projects added to other capital flows to Australia, the total volume of United States direct investment in Australia might well increase rather than fall off in the period ahead. He saw no difficulties for Australia arising from the programmes his Department was administering but promised a quick response to any difficulties that we might refer to him and he would exercise an initiative in taking up with us any difficulty for us that might come to his notice.
I found the Administration very mindful of the possible effects on international liquidity of the elimination of the United States balance of payments deficit which has been adding dollars to the reserves of other countries. The United States can be relied upon to play an active part in seeking a solution to the problems of international liquidity but, meanwhile, we can take it that the efforts being made to correct the United States balance of payments will not be relaxed. However, the talks I had in Washington - in fact, what I said at the Seminar in New York to which the United States State Department and the Treasury sent observers - did undoubtedly help to focus the attention of the Administration on Australia’s situation. They were thus a logical and, I believe, effective followup to the correspondence between the Prime Minister and the President.
But the results did not by any means stop there. The way having been opened by the correspondence between the Prime Minister and the President, I was able to establish the direct contacts I sought and to reach personal understandings. I was able also to gain insights into the intentions of the Administration and the nature of the policies to which they are seeking to give effect through the balance of payments programmes.
I was repeatedly assured that it is far from the intention of the United States Administration to do any harm to the Australian economy. It was confidently asserted to me that on their assessment we would not be harmed. It is true that the businesses subject to programmes are free within the general guide-lines to determine for them selves how they effect the desired improvements in their own “ balance of payments “ and this conceivably could, despite the intentions of the Administration, work to Australia’s disadvantage. But I was assured, in relation both to bank lending and direct investment, that on the evidence at present available to the United States authorities, detrimental effects on Australia seem most unlikely. It was pointed out that overseas lending by United States banks is not to be cut back by comparison with the relatively high level of 1964 but may be expanded within a limit of 105 per cent, of the 1964 level. Some institutions that have already exceeded this limit will have to cut back but, for 1965 as a whole, bank lending abroad will rise by 5 per cent.
As for direct investment, it has been conveyed to corporations subject to the programmes that, in adjusting their own position, they should cut back the more speculative sort of investment rather than that which is forward-going and productive. Indeed, the Administration has indicated that it wishes to encourage rather than discourage investment which develops valuable natural resources.
But from these quite encouraging responses to my inquiries it would be a mistake to rush to the conclusion that all of our apprehensions have proved quite groundless. The responses to the Prime Minister’s letter to businesses in Australia with United States connections - and most replies have now been received - do not suggest that the United States programmes will have any appreciable effects on our position. I think it is important for the House to note this. Nevertheless, we cannot yet be absolutely sure that we shall not suffer any adverse effects whether from direct or indirect causes. If, however, any signs of adverse effects of a direct kind show up, we have the assurance of immediate access to the United States Administration and the assurance also of prompt and sympathetic consideration of particular cases. We have also prepared the ground for continuing consultations so that we can each keep the other informed of the progress of events. These are real and valuable gains which should make for close and harmonious working relationships in the economic and financial field.
Altogether, then, 1 feel following my necessarily hurried visit to the United States, much easier in mind and much better equipped to deal with whatever problems lie ahead of us. A lot was achieved in understanding on both sides. Lines of communication have been opened up and we shall use them. Ground has been well cultivated in advance of the talks the Prime Minister will be having with President Johnson next month.
I have been heartened too, to find the United States economy sustaining its buoyancy and general prosperity. The state of the United States economy has an important bearing on the level of international trade. About 1.5 million persons were added to the employed workforce in the past year and unemployment was reduced. In the international institutions I visited the opinion was held that, although the balance of payments programmes of the United States and the United Kingdom could possibly have some impact on countries like Australia or Japan or, perhaps through commodity prices, on the developing countries, they were unlikely to have marked effects on economic activity in the industrialised countries of Western Europe. One of the fears has been that these measures might have touched off a series of chain reactions. But they did not foresee any serious disruption to world trade. At the same time, they could not see much progress being made on discussion about international monetary liquidity until the United States had restored a balance in its external payments.
I was impressed by the number of leading American businessmen who told me of the plans they had for further investment in Australia. Another good augury is the successful loan operation we have just undertaken through a group of underwriters in New York, London and Europe headed by our regular fiscal agents, Morgan Stanley and Company of New York. The loan was a relatively small one - 25 million dollars - and it was designed to attract subscriptions in dollars from non-residents of the United States. It met immediately with a favourable response and is currently selling at a premium. This is a solid endorsement of Australia’s credit standing in Europe and has opened up the prospect of further regular borrowings of this kind in the future.
Against this background, 1 may now refer to a particular aspect of the investment question on which recent developments have focussed attention - the efforts by overseas enterprises to raise money in Australia to finance their activities in this country. Such transactions can of course take various forms. Before I left for the United States I arranged for our lending institutions to mark time on loans to businesses with overseas ownership until a clearer view of the situation emerged. In the light of the assessment we have since been able to make, from our own study, and from the replies which have come to us from those to whom we addressed our letters of inquiry, I am now able to indicate the Government’s general attitude.
We have at various times made it plain that we welcome arrangements which provide for Australian equity participation in undertakings that would otherwise be financed wholly by overseas capital. It seems to us that there are important advantages to be gained from this sort of association between overseas and Australian enterprises and resources. Local borrowings by overseas controlled organisations are, on the other hand, different in certain respects from share issues by such bodies since they carry a commitment to pay interest, normally at fixed rates, instead of dividends and the Australian lenders have no standing in the management of the enterprise.
We would not, for example, wish to see money borrowed in Australia by overseas interests for the purpose of facilitating the remittance of funds abroad. That would amount to an export of capital and, in the main, we are not in a position to become exporters of capital except perhaps for limited and specific purposes which are of clear advantage to Australia. Nor would we, as a general rule, be keen to see overseas interests borrowing money here where it is evidently in substitution for funds which normally they would have obtained from overseas sources.
It can be a different matter, on the other hand, where overseas businesses have been well established here over a long period. Often enough such businesses will have brought in substantial capital and have reinvested to a considerable extent from the profits they have earned in Australia. In all probability, they will have made and will still be making a real contribution to the progress of our economy and are doing so on terms which we can only regard as being fair to ourselves, even though they are also profitable to the overseas interests concerned. In such cases, we have long regarded it as quite the normal and proper thing for such enterprises to borrow to some extent from Australian banks or other institutions or on the market. They are, in other words, using and paying for the ordinary financial facilities of the country just as locally owned firms do and we can see no reason why they should not be able to use such facilities.
Again, there can be the case of new ventures starting up here which are bringing in capital of their own but which are also providing for substantial Australian participation in the shareholding of the enterprises. They may also contemplate borrowing in Australia a certain amount of the money they require for the development of their undertakings as well as borrowing from sources abroad. Within the limits of our capital market to accommodate such borrowings, and keeping in view the needs of our own enterprises, we are inclined to regard this as also being a fair and reasonable arrangement.
Necessarily, of course, arrangements for the financing of enterprises in Australia will take many different forms and it would not be possible to lay down detailed criteria as to what we would regard as acceptable in each and every case. What I have said is simply by way of providing broad guidance in the matter but we think it would be helpful both to ourselves and to the interests concerned if they were to consult generally with the Reserve Bank of Australia as to the calls they envisage making on the market and especially where there is any doubt as to whether the particular arrangements they have in view would be comfortable with the Government viewpoint.
Most of what I have said tonight relates to problems in the economic field which have arisen for us, or which may arise, from the United States and United Kingdom measures. Australia is no stranger to problems in its external trading experience. Although we are a country of less than 12 million people, we rank amongst the 12 top trading nations of the world. We export 16 per cent, of our gross national product.
This contrasts with an export of 4 per cent, of its gross national product by the United States. We are accustomed to having to meet wide swings in our balance of payments. Not even the best management of our own affairs can insulate us against adverse seasons or declining commodity prices. But we have dealt successfully in the main with our difficulties as we have encountered them, and we shall continue to do so in the future. I could conclude appropriately by re-stating here a passage from my address to the Seminar in New York. I told my audience -
You will know from your own American experience how strong a stimulus for development the influx of people and capital provides. At the time of our first settlement on 26th January 1788, the population of the United Stales was a mere 4 million people. While we have grown to something over 11 millions, you have built a population of 193 millions, lt was the rapid inflow of people and capital, particularly in the 19th century, which enabled you to surge onwards towards your present strength and greatness. I have sometimes wondered whether there would be a free world today if your national leaders of those times bad halted- or even faltered - in the process of nation building. In more modern times, there has been a remarkable growth of population and industry in California, as people and capital have flowed in from other parts of the United States of America.
About 25 years ago, Australia and California had the same population of 7 million people. To-day, while we are just over 11 million, they have increased to over 18 million. I said, further -
Perhaps it is a recollection of these experiences, the challenges that had to be met, the rich dividends gained in terms of national prosperity and national strength, which creates so much interest among thoughtful Americans about the potentialities of Australia.
In the course of his short talk at the Seminar, Mr. George Champion, of Chase, Manhattan, referred approvingly, and with enthusiasm, to the great contribution made to the growth of the United States by the investment capital which had flowed in from Great Britain and the countries of Europe at earlier periods of its development. I believe that American businessmen, recalling the history of their own national growth, will continue to see in Australia, with its friendly and favorable environment, and its political and economic stability, a magnetic attraction for investment I believe, also, that there is widespread recognition throughout the United States Administration of the mutuality of interests our countries have in this area of the world and of the contribution a growing Australia can make to its prosperity and its security. We shall have our fluctuations of fortune along the road, but who can doubt that a greater Australia lies ahead for us?
I present the following paper -
United States of America Balance of Payments Programme - Visit of Treasurer to United States of America - Ministerial Statement, 13th May 1965 - and move -
That the House take note of the paper.
Debate (on motion by Mr. Crean) adjourned.
APPROPRIATION BILL (No. 3) 1964-65. Second Reading.
Debate resumed (vide page 1484).
– I ask for the indulgence of the House to raise a point of procedure before the debate is resumed. It may suit the convenience of the House to have a general debate covering the Appropriation Bill (No. 3) 1964-65, the Appropriation (Special Expenditure) Bill (No. 2) 1964-65, the Supply Bill (No. 1) 1965-66 and the Supply Bill (No. 2) 1965-66. I suggest, Mr. Deputy Speaker, that you permit the subject matter of the four Bills to be discussed in this debate.
– There being no objection, that course will be followed.
.- It is with some reluctance that I rise to discuss bills that were introduced into the House as late as 3 o’clock this afternoon. However, that is as it is. Of the four measures that are before us, two deal with the financial year 1964-65, while the other two are Supply Bills to allow the processes of government to continue between the time when this House rises in a week or so and the time when it resumes for the Budget session in August of this year. The two Supply Bills provide supply for the period from 1st July 1965 until the end of November 1965, a period of five months. By that time the Parliament will have resumed, the Budget debate will have been concluded, and legislation to give effect to the terms of the Budget will have been enacted to cover, amongst other matters, supply to the end of June 1966.
I wish to direct attention, first, to what I suppose is to some extent a matter of procedure, although it seems to involve the relations between the two Houses of the Parliament. The Bills for the 1965-66 period are described as Supply Bill (No. 1) and Supply Bill (No. 2). A distinction is made between what is described as capital expenditure on the one hand and, on the other hand, expenditure that is considered as being incurred for the ordinary services of the Government. The constitutional position in relation to money bills is that a bill covering expenditure for ordinary services of government cannot be amended by the Senate. The Senate can pass such a bill or reject it, but cannot alter it. That is the position with regard to bills covering expenditure for the ordinary services of government. A distinction is drawn between those expenditures and expenditures which the Treasurer (Mr. Harold Holt) listed in the speech he made this afternoon on Supply Bill (No. 1). He listed a number of categories: (a) the construction of public works and buildings, (b) the acquisition of sites and buildings, (c) items of plant and equipment which are clearly definable as capital expenditure, (d) grants to the States under Section 96 of the Constitution, and (e) new policies not authorised by special legislation. The Treasurer said -
Subsequent appropriations for such items will be included in the Appropriation Bill not subject to amendment by the Senate.
I should hope that some day this House will assert its proper ascendancy and that we will then not have this distinction made between what are called ordinary expenditures and what might, according to the line that is now drawn, be called capital expenditure.
The Commonwealth Government now controls a gigantic undertaking. I think this financial year the total expenditure by the Commonwealth Government, both on ordinary revenue account and loan account, will be about £2,500 million. In my view it is meaningless to distinguish between two sets of transactions, calling one set ordinary financial transactions and the other capital transactions. When we are dealing with operations of the magnitude of those controlled by this Government the distinction that perhaps can be made in a small enterprise between capital and ordinary annual expenditure is not capable of being drawn. In any year, a government has to build schools and hospitals and it has to provide telephone services and all sorts of other things on a continuing basis. It is the job of the Parliament, and in my view the job of the House of Representatives in particular, to assume complete responsibility for the total amounts of expenditure.
I regret that this House has yielded to the extent that it has allowed the distinction to be drawn between the two kinds of transactions. In my view the line that is drawn is a meaningless one according to correct concepts of expenditures in a modern community such as the Australian community. I hope that when consideration is given in the future to amending the Constitution, approval will be sought for the inclusion of a provision giving the Senate as little power over money bills as the House of Lords now has over such bills in the parliamentary system of Great Britain. The House of Lords can discuss a money bill, if it wishes to do so, for a month or so, but whether it passes the bill does not matter. The decision is taken in the responsible House in our system, the lower House, and the upper House is given the courtesy of looking at what is being done. I make that comment here, because apparently legal advice has been taken by the Government and it is of the opinion that the measures had to be presented in this way. We have two Bills; the Senate cannot amend one of them but can amend the other if this House agrees to change its decision when the amended Bill is returned to it.
In the speech that the Treasurer made this afternoon on the Appropriation Bill (No. 3), which deals with the current financial position, he said that the outcome of the Budget at 30th June 1965 will be substantially different from the outcome that was expected when the Budget was introduced on 11th August 1964. When the Budget was brought before us last year, the total revenue of the Commonwealth Government from taxation, business undertakings and several other sources that are available to it, was anticipated to be £2,150 million and the anticipated expenditure was some £65 million less than that. The difference of £65 million was to be transferred to a fund known as the Loan Con solidation and Investment Reserve, lt seems, now that 10 months of the financial year have passed, that the net position will be some £85 million different from the result that was contemplated at 11th August 1964. The Treasurer has intimated that he intends later to bring down another bill - I suppose it will be the Loan Consolidation and Investment Reserve Bill (No. 2) - in which he will ask for sanction to transfer to this account a sum as high as £85 million in addition to the £65 million that was contemplated at 11th August. In the short time that I had available to me this afternoon, it was difficult to work out what the position is, but at least it seems that there is a margin of error in the Budget, if I may use that term, of £85 million in a total of about £2,150 million.
I do not at this stage complain much about the degree of error that seems to have emerged. I do not think it is always possible at the beginning of a Budget year to forecast very accurately what the final outcome will be. It can only be an estimate at best. Events can change the situation, and events affecting Australia have changed considerably. All I would note at this point is how silly it is for a Treasurer at the beginning of a financial year to try to take great credit to himself, circumstantially in one year because he may have a deficit and in another year because he may have a surplus. It is foolish for a Treasurer to try to make a virtue out of that necessity. It is pretty foolish to try to stand upon that sort of demonstration at the beginning of a Budget year.
It was regarded as prudent at 11th August to predict that the difference between revenue and expenditure would be £65 million. But this is not the whole story. Loan transactions have not been taken into account. In the current year, the Government has not raised as much on the loan market as it had expected. Redemptions of loans falling due during the financial year have been greater than was expected and apparently the yields from taxation have been somewhat higher than was expected. Perhaps we ought to ask: Why is the loan market not as buoyant in 1965 as the Treasurer thought it would be in the latter half of 1964? Why are taxation yields higher in total than was expected? What is happening in the Australian economy to cause these changes?
There seems to be a sort of thesis in some quarters at the moment which suggests that the economic situation in Australia in 1965 is somewhat similar to the circumstances that existed in the ‘thirties. Personally, I think this is a foolish assessment of the position, but I am not sure that this feeling has not been created by the actions of the Government. The feeling has been created by the sort of circumstance that was dealt with by the Treasurer tonight, and that is the drying up of the flow of capital into Australia. People who take this circumstance to mean that the situation in 1965 is similar to the situation in the ‘thirties have a depression complex, as far as the development of economies is concerned. Surely if any lesson ought to have been learned from the revolution in economic thinking that took place in the six or seven years that followed the depression of the ‘thirties it is that any country that takes prudent action early enough can insulate itself against events in other parts of the world. Sometimes, of course, it is more difficult for one country to take action than it is for another.
It seems to me that the Government is still fearful of the outcome if we do not have this flow of capital into Australia from foreign places. The Treasurer is thrown into his present state of confusion merely because two other countries, the United Kingdom and the United States of America, have prudently taken the sort of action that the Australian Government ought to be taking, and that is to make the economy more self-reliant. The Treasurer seems to be very gratified about what he has done, hut I do not think he has any reason for gratification. The Government ought to be grappling with the problems that could perplex this country unless some more definite action is taken. I do not want to go into this matter now because we will have the opportunity next week to debate the statement made tonight by the Treasurer. The Opposition will then give its reasons for believing that the course taken by the Government is wrong.
When a Supply Bill is being debated, honorable members have the opportunity to talk about anything at all that falls within the province of the Commonwealth Government. The debate can be a wide one or it can be directed to specific matters that concern honorable members. As I have said, I am at some disadvantage this evening because I have not had time properly to contemplate these measures. It looks as though we are to be faced next week with the sort of situation that seems to arise in this Parliament towards the close of every sessional period. We usually coast along for several weeks with very little legislation before us and then, all at once, in the last week of the sessional period, a spate of measures is thrust before us. I do not consider that this is an intelligent way to discharge the business of the Parliament. It is certainly a slight on the Parliament that this is done. It is of particular disadvantage to an Opposition party, which should at least be given the courtesy of being allowed time for the party to examine measures before they are debated.
The only reason why these Supply Bills and Appropriation Bills are being debated this evening is that, as I have mentioned, the debates on these measures affords an opportunity for any honorable member to discuss any subject. It is suggested, presumably, that, therefore, little preparation of speeches is needed. We are now debating these Bills because the Government wanted and expected the Opposition to debate today several Bills that were introduced only yesterday. That is not a fair way to conduct the business of the Parliament, and the Opposition protested. One of these measures is the States Grants (Petroleum Products) Bill 1965, which is designed to give effect to a promise that the Government made during the election campaign away back in November 1963. Apparently, it has taken all the time between the election, which was actually held in December 1963, and 12th May 1965 to prepare the measure. Yet the Opposition is expected to debate it on the day after it is introduced. This scarcely seems a sensible way of conducting the Parliament’s business.
Another Bill, which the Minister for the Army (Dr. Forbes), who is now at the table, had hoped to bring into the House this evening has been delayed in the Senate, where an amendment has been inserted in it. The Bill had to be reprinted because it had been amended, and therefore it could not be brought into this House early enough this evening for the Minister to make his second reading speech. I suggest, again, that this is not the way to conduct the business of this place. About 3 o’clock this afternoon, these Supply Bills and Appropriation Bills were introduced, as were the International Monetary Agreements Bill 1965, which relates to an important adjustment of the quotas of members of the International Monetary Fund, the Broadcasting and Television Bill 1965, relating to licences for commercial television stations, and another measure. Apparently, we are expected to dispose of all this legislation by Thursday of next week. In my view, this is not the right and proper way to transact the business of the Parliament.
At this stage, however, the Opposition offers no objection to the passage of these financial measures. The Appropriation Bill will appropriate funds for expenditures that were not foreseen when the Budget was presented last year. These expenditures require supplementary appropriation now. Because of the curious constitutional procedures that apply in this Parliament, the Supply Bills are of two kinds. They will sanction supply from 1st July 1965 to 30th November 1965. I leave the matter there, Mr. Deputy Speaker. Once again, on behalf of the Opposition, I express dissatisfaction at the way in which business is thrust on the House at short notice.
– 1 call the honorable member for Riverina (Mr. Armstrong) and remind the House that he will be making his maiden speech and should therefore be heard in complete silence.
.- Mr. Deputy Speaker, first, I should like to pay tribute to my predecessor as the representative of Riverina, the Hon. Hugh Roberton. Tributes were paid to him in this House by the Prime Minister (Sir Robert Menzies), the Leader of the Opposition (Mr. Calwell) and the honorable member for Mallee (Mr. Turnbull) some weeks ago. I endorse all that was said on that occasion, and I should like to add, on behalf of the residents of the Riverina electorate, that Hugh Roberton’s long and faithful service as their representative is deeply appreciated. I am sure that they would like me to add to those good wishes already expressed my good wishes to him in his new sphere. He certainly has gone to greener pastures than we have in the Riverina at present. It happens that the
Riverina electorate has chosen as its new representative one whose blood lines are similar to those of the former member. Hugh Roberton is a Scot who was imported into this country. I happen to be of Scots descent and to have been born here. Whether the people of Riverina have been wise or unwise in their choice, only my future efforts will prove.
The name “ Riverina “ is used rather loosely to designate a somewhat indeterminate area, Sir. Slightly more than one fifth of the region generally accepted as being the Riverina is not in my electorate. The area known by this name is unique because it is the only part of Australia that is coveted by the Premier of one State and desired by the Premier of another who wishes that it were held by his State, whereas the residents themselves would be well satisfied if they had still to look after themselves. There is good reason for this circumstance. What I am about to say is not intended in any way as an advertisement for the region that I have the honour to represent, for it needs little advertisement. It is approximately 300 miles by 200, and it produces 8 per cent, of Australia’s wheat crop. The great increase in productivity that has taken place there as well as in the rest of Australia is due to three things. It is due, first to science, which has been largely responsible for this great advance. It is due also to the availability of water supplies. Originally, of course, our water falls from the skies and is reticulated by the ingenuity of man to the land where it is required. The main reason for the Riverina’s progress, however, is to be found in the industry and thrift of the individual who applies himself to production by the utilisation of the resources of the region.
We have heard a good deal today about the great increase in wheat production. It has been due largely to the efforts of botanists and engineers. We produce three times as much wheat as we use, and we have a large surplus for export. I want to emphasise that, Sir, because its significance is not generally realised, even in this House. We talk a great deal about the need for a large population in this country. I agree that only by increasing our population on a great scale can we preserve this democratic way of life that we so prize. If, within the next 20 years, we are to increase our population to 20 million, we can do so only by maintaining the natural increase and the increase due to the intake of migrants at the same rates as at present. I may say in passing that the population of China will reach 1,000 million in the same time. If we are to expand our population to the figure that I have mentioned, we shall have to overcome great problems in feeding our people.
I have said that we produce more wheat than we require for our own needs. We produce more of other cereals than we require. The Riverina produces 99 per cent, of the rice grown in Australia, and Australians consume only 25 per cent, of their total output of this grain. Disposal of the surplus may seem to present a problem. I point out that if the Indonesian people consumed 2 lb. a head a year more than at present - their consumption would still be less than the average in this country - they would eat our rice surplus in six months. Another crop that is now being grown on a considerable scale in the Riverina, though not as widely as in the electorate represented by my colleague, the honorable member for Gwydir (Mr. Ian Allan), is cotton, with which 7,000 acres in the Riverina are now planted. Almost all of it is grown in the Murrumbidgee Irrigation Area. The harvest this year would equal any in the south of the United States of America and averaged a bale and a half per acre. Cotton production in this area will have a great effect on Australia’s economy. It will save us a lot of the money now spent on imports.
I want to refer now to the contents of two documents that I have in my possession. They are extraordinary documents considering that Australia suffers severe droughts and is the driest continent in the world. It is amazing to me that a professor of economics at a university should voice the opinion that irrigation is too costly. I mention this because there is a good deal of evidence to suggest that this opinion, which is supported by some other people of similar status in the academic world, has shaded, if not clouded, the thinking of some of our financial institutions. It is quite a remarkable opinion to put forward in this country. Nowhere could that opinion be better refuted than in the electorate which I have the honour to represent. It would not be an exaggeration to say that whilst today there is a population of 50,000 people in the Murrumbidgee Irrigation Area and the immediately adjoining localities, without irrigation the population would not be more than 5,000. There is a great diversification of rural products in that area. In the southern regions of the Riverina dairying is quickly growing to major proportions. In the last financial year the dairying industry there was worth £2,500,000 gross, and it is growing all the time. The dairying lands are under irrigation and, therefore, have a great advantage over other areas in that they can be worked round the calendar. There is much talk today of decentralisation and diversification of industry. Well, this part of New South Wales produces a wide variety of fruits including citrus and stone fruits. It has its own canning industry. Another industry that has greatly expanded in the last 10 or 15 years is the wine industry. These are all examples of things that can be done in tha Riverina and adjacent areas.
I want to refer now to research. The Commonwealth Scientific and Industrial Research Organisation is rather a unique institution. I mention this because amongst some academics there seems to be a great deal of jealousy of the Organisation. This, I suppose, is natural because the mere fact that a person has an academic mind does not mean that he is devoid of normal human feelings. I am well aware that a good deal of the research work being carried out in Australia could be streamlined. A lot of the research work done by the C.S.I.R.O. could be termed fringe research. When officers are carrying out research and experimentation they are often sidetracked into something that is of lesser importance and the main problem may not be pursued. However, I hope that whatever jealousy exists will not result in the fragmentation of this great institution which has done so much for this country.
It would ill become me to be so presumptuous as to make any criticism of the Martin Committee’s Report on the Future of Tertiary Education in Australia. It was an excellent report. However, I want to refer to an opinion expressed in Volume I at page 57. The Report stated -
A continuous drive for excellence is easier to sustain in universities than in laboratories staffed wholly with permanent employees. It is by individuals and groups in the universities that many of the major discoveries in science, and in some branches of technology, have been made in the years since the war.
I would not presume to contradict that statement, but I say that if that thinking were carried out to its extreme it could have a bad effect on the C.S.I.R.O. I have seen the results of work done by the C.S.I.R.O. in pastoral and agricultural areas in every State of the Commonwealth. To me, the Organisation is basically an institution that pursues long term research whereas the universities, by the very nature of their setup, are more fitted for short term research. The two branches of research should be complementary and need not be in opposition. That is not just an idle opinion which my learner’s licence permits me to pursue. The opinion is held much more widely than a lot of people realise. I am sure that the Government always has been very well aware of the benefits that have come from the C.S.I.R.O. I hope that at least in the agricultural and pastoral fields - the ones on which I am able to speak personally and with some degree of knowledge - we will continue to enlarge our research and not diminish it.
I would like to draw the attention of honorable members to two or three things which have been done by the C.S.I.R.O. The first is the use of myxomatosis. The Organisation did not discover it. It was brought to Australia, but it was the Organisation that made it available. There were some initial difficulties that the Organisation had to tackle and I think it would be fair to say that, basically, it was. due to the efforts of Dame Jean Macnamara, Lord Casey and the late Sir Ian Clunies-Ross that myxomatosis was finally used with such good effect. But for myxomatosis, which initially cut down the rabbit population in Australia - other means have assisted to keep it down since - the sheep population of this country would be at least 25 per cent, lower than it is, and therefore our gross national income would be down by at least £150 million a year. That is a conservative estimate.
Another successful campaign with which the C.S.I.R.O. was associated was the use of cactoblastis to combat prickly pear. The eradication of this pest was of inestimable value to Queensland. Then there was the discovery of trace elements. Again it is impossible to estimate what has been gained through this discovery. We only have to look at Western Australia to see what has been done. In the course of ten years Western Australia doubled its sheep population, increased its wool output by two and a half times, and nearly trebled its cereal output, although admittedly the production of cereals diminished slightly due to drought after that ten-year period. The development in Western Australia made possible by the use of trace elements is only just beginning. I believe that the sand plain country north of Perth has just as good prospects as the Esperance area. There are millions of acres which do not carry any stock now but which could be improved to carry sheep. Coming closer to home, in the immediate area beside my property there are now more cows being carried to the acre than there were sheep some years ago before these discoveries. All these things are very important and make a valuable contribution to our national income but wool, sheep, mutton and lamb represent 40 per cent, of our export income, and if you add the returns from wheat and beef to that income, you account for 50 per cent, of it.
I have referred to the value of science, and having built up a castle I do not intend to knock it down again. What has been done in the animal world by biologists and by means of curative and preventative medicines has been of tremendous value. However, in one field - genetics - scientists will take a long time to catch up with the practical man. lt is an unfortunate fact that a great many of our scientists in their enthusiasm tend to become merely statisticians.
Sheep and cattle are the two main products in the domestic economy throughout the world, although pigs and other products must not be overlooked. I propose to direct my remarks to sheep. In this context, I hasten to say that I do not underrate what has been done by scientists. Such things as fleece weighing, fibre measuring and the calculation of weights gained in cattle have been of tremendous value, but in my opinion young scientists cannot comprehend that the practical man has an instinctive genius for choosing a sire with qualities of prepotency so that its offspring are better than its kind. In these matters, there is a big gulf between the scientists and the practical men which needs to be overcome. Actually the improvements in species in animal husbandry has been brought about by only a very few people. Three men in Scotland - Bates, Cruickshank and Batewell - achieved improvements in British breeds of sheep and cattle. These breeds are now spread all over the world.
There are three examples of this work in Australia that I shall mention without using names. It would not be fair for me to do so as at least half of our top Merino studs are in the electorate I represent. There are two parent studs there from which 85 per cent, of the best fine wool sheep in Australia have had an infusion. In this connection, I might mention the Peppin blood. However, I shall cite several examples of what I might call instinctive genius in stock breeding. I know that success in breeding cannot be proved by short term results. To support such a case one has to study the results over a long term. A good example is a flock of sheep in the Riverina totalling 60,000. Between 1890 and 1900 the return from this flock was improved from 6.4 lb. to 10.1 lb. in the weight of fleece. This result was obtained at a time when the sheep population in Australia had actually declined in numbers so it was not due to good seasons. The weight of the whole clip at that time gained on an average one-fifth of a lb. and it is right up to the average weight of clips today. These results were achieved by what I have called the instinctive genius of men who had the ability to pick a sire which could produce better than its own kind. Incidentally it is interesting to note that the best sheep selected by the owner of that stud cost 200 guineas whereas a sire which was a complete and utter failure cost 1,500 guineas. I am not saying these things to decry scientists, but to put these matters into proper perspective. In the final analysis the top breeders are those who breed animals to improve the kind. We ordinary stock people are merely reproducers of the animals they breed.
The other example I wish to cite concerns a man who brought a flock up to top standard. His failing was that he was more fond of liquid than solids, and as a result he lost his job. He went on to a neighbouring place and in 10 years he won all the top prizes at the Royal Sydney Show. His failing overcame him again and he was lost to the industry. He was living in obscurity in Sydney when a member of a prominent sheep breeding family bought a property in the north of New South Wales. He had a very good flock and decided to give this man another chance. His new employer said that if this man gave him good service for two months in a year he would be worth the high salary he was going to pay him. This man turned that flock into one of Australia’s best. This proves what can be done with instinctive genius in stock breeding - something that is possessed by very few people. Actually only a handful of people have been responsible for the great excellence of our merino sheep which earn for us £300 million a year in export income.
Scientists have become terribly wrapped up in fleece weighing and I am prepared to admit that this is of great value as a guide. But one of our eminent breeders told me recently that of seven great sires he had known in his life, he would have discarded four if he had selected on the basis of fleece weighing. You can experiment with metals and botanical things because they are static, but it is difficult to experiment with an animal that moves over a wide area and the merino is the most adaptable animal in the world. It will thrive on snow covered peaks or in arid areas. Results of experiments achieved with merino sheep in a confined area can be completely contradicted by experiments conducted under natural conditions.
All these things are very important because if we increase our population there is something else we must do if we are to justify ourselves in the eyes of our friends and thwart the envy of our enemies who are jealous of our occupancy of this great land - one of the greatest heritages that has ever been handed down to mankind. We must feed our people. To support a population of 20 million we must produce 80 per cent, more mutton and lamb than we are producing now. That might sound odd, but it does not mean that we have to increase our sheep population to that extent. It does mean, however, that we must increase the number of sheep available for killing. At present we slaughter 36 million sheep a year, but we would need to slaughter another 20 million or more to support the population I have mentioned. This means we must increase our sheep population by 50 million. We must increase our number of beef cattle for slaughter by nearly 5 million, which would represent an increase of about 40 per cent. It would be necessary to double our vegetable output and to increase our dairy output by 60 per cent. I suggest that to do all these things and to have a continuity of supply it must be done largely in Australia’s irrigated areas.
Honorable members have heard about the great sufferings experienced from drought, which is a recurring phenomenon. This morning we heard the Minister for Trade and Industry (Mr. McEwen) say that we must do something to overcome the problem. I agree with him wholeheartedly, but I suggest that there is a vast area in Australia in which it is very difficult to do anything about drought by using only natural resources. Drought is one of the big things with which the man on the land is confronted. The other major problem is a rising cost structure. This is a very difficult problem in a country with an expanding population and an expanding economy. As was mentioned this morning, better transport and better roads are necessary to lessen the effects of drought. The provision of these facilities is not without difficulties. It would require considerable finance. However, it is quite true that today sheep which are being sold for shillings in Queensland would be worth pounds in southern New South Wales. This is in some measure due to what has been done by this Government and by the industry in finding better markets which have encouraged greater production. The effect of the drought will not be as great as it used to be because of the cushioning influence of increased production. There is now greater demand for the leaner type of meat. This has brought with it a demand for the older sheep and older cattle and has provided a great outlet. Stock which otherwise would have been allowed to die are now being sold for quite considerable sums and that results in more room being available for other stock.
I should like to make one general observation about the situation of Australia as a nation. It is my belief that as time goes on we will be called upon to be the leaders in thought in this part of the world if we are to justify ourselves as a European population in an Asian setting. I have listened with great interest over recent weeks to the remarks that have been made in this place.
It would ill become me to comment on those remarks, but I believe that it will be necessary for Australia to provide a lead. What will evolve in this way of life in which we believe and which we have been so gifted with and privileged to enjoy? I believe that all shades of endeavour in Australia - not only from Parliamentarians but also from all people of responsibility - will be necessary if we are to achieve the things that I have mentioned. The items that I have chosen at random are small things in the overall contribution if we are to be able to build up a big population. To do so we must have a balanced economy and we must build up big industries. This goes without saying. The population engaged in primary industries is declining and will continue to decline. With a population twoandahalf times as large as we once had we have fewer people engaged in primary industries. We must look to secondary industries to provide employment that will enable us to build up our population, but to do this we must have more people at more levels of endeavour caring far less about who gets the praise.
.- I wish to congratulate very sincerely the honorable member for Riverina (Mr. Armstrong) upon his maiden speech. I can say with absolute honesty that he is a Phar Lap in a field of hacks. The honorable member said that Australia needs rapidly to increase its production. He pointed out that we had to increase the production of lambs and of beef and had to double the production of vegetables. Before I have finished my remarks honorable members will realise with what deep sincerity I commend the speech made by the honorable member for Riverina. This Government, of course, should not be granted supply. The Supply Bill that has been put before the House provides for an increase on the supply granted in previous years. The costs of every department have increased. I have before me figures relating to the Department of Trade and Industry. Last year the supply for that Department was £5,100,000 and this year the amount is £5,500,000- an increase of £400,000, and a supplementary measure has been produced to increase that amount.
The position in every department is the same. There is an immense increase in the cost ot administering the Department of Primary Industry. Nobody would object to the increase in costs if the departments created production that was proportionate to the increase in their costs. But what is the position? Through the years this Government has not satisfactorily conducted the control of Australia. When the Government took office in 1950 it had as its Treasurer Sir Arthur Fadden. At that time Sir Arthur Fadden paid tribute to the heritage ‘hat his Government was receiving. He said, in effect: “ We are receiving a country with full employment. We are receiving a country that has the confidence of the other countries of the world. The result is that if we desire money from any other country we can secure it. Migrants are pouring into this country from other parts of the world and are helping in the development of this nation.” In view of what Sir Arthur Fadden said I ask: What was that development and what development has since occurred? In 1950 we had full employment in Australia. We had overseas funds totalling £600 million and public debts overseas to the extent of £500 million, which gave us an advantage of £100 million. In addition, at that time money had been invested in Australia - that is bits of this country had been sold to people overseas - to the extent of £150 million.
– Put on a new record.
– The honorable member asks me to put on a new record. This is the story of what this Government has done to the people of Australia. When this Government took office Australia was debt free as a nation and was self reliant. Further, we had full employment. As a former Treasurer of the Government said, the country was developing and expanding in all directions at the time this Government took office. What has happened since then? Since 1950 this country has enjoyed the best series of seasons that it has ever enjoyed. Nature has never been more bountiful. We have received higher prices overseas for our commodities than ever before. The population has increased by nearly two million. The work force has increased by about one million. Science and invention have increased production per head in this community as in other communities.
What has been the result of all of that? I have before me the official figures which bear out the statement that was made by the honorable member for Riverina tonight. In 1950 the value of rural production per head of population was £124. In 1964 the figure was £120. So there was a decrease of £4. But in 1950 the basic wage was £6 9s., and today it is £15 8s. That represents an increase of 154 per cent. So, since 1950 the value of money has decreased by more than 150 per cent. That means that, when the 1 950 figure is equated to present day values, the value of rural production per head of population has decreased by about £180.
– What was the increase in population between 1950 and 1964?
– What does that matter? The figures are peT head of population. If you have two heads to feed you have to have twice as much food as for one head. The value of other primary production per head of population has increased from about £10 to £21. Overall, the value of primary production per head of population has decreased by £1 40-odd.
Members of the Country Party say that primary production is the backbone of this country.
– Of course it is.
– Of course it is. Upon it, the Treasurer (Mr. Harold Holt) said, depends what we can purchase overseas. He said that 80 per cent, of our overseas funds come from rural production. Yet today rural production per head of population is £180, in terms of today’s currency, less than it was in 1950. Someone might say that that does not tell the whole story and that there are other types of production, such as secondary production. In 1950 the value of all production per head of population was £239 16s., and today it is £480. When we equate the 1950 figure to 1964 values, we find that the value of all production per head of population has decreased by about £100.
That is a very serious position. Can anybody point to any method by which any country meets its obligations, provides for its people, feeds them, clothes them, educates them and provides for its defence, other than out of the proceeds of its primary and secondary production? If a country’s primary and secondary production has decreased, that country has not improved. Tonight the Treasurer said that evidence of the improvement of Australia, as compared with other countries - he quoted the U.S.A. - was that Australia exported 16 per cent, of its production whilst the United States exported only 4 per cent, of its production.
Would the Treasurer contend that the more of your production you export, the better off you are? Of course he would not. If a country exports 50 per cent, of its production, it is not necessarily better off. If more than or the equivalent of the value of those exports does not flow into the country in return, its position becomes worse. That is the situation of this country. Every year Australia is accumulating greater and greater deficits overseas. It is not a question of incurring a deficit one year and then making it up the next year by having a bumper sale of goods overseas. This nation suffers from a continuous series of adverse balances of payments. Our adverse balances of payments are not getting less as time goes on; they are getting greater.
Quite a number of people have asserted that it is desirable to borrow money overseas or to allow the investment of funds within your own country. I agree that that is desirable, so long as we make a profit on the money that we borrow or on the money that we get for the assets that we sell. The proof of whether or not a nation makes a profit is its production as a result of the inflow of moneys from overseas, whether they be loan moneys or an increase in invested moneys. If production has not increased, then the moneys that have come from overseas have not increased the development of the country. The moneys that have come into Australia have not expanded our essential industries. They have been channelled into devious departments. Perhaps they have added temporarily to the standard of living of quite a lot of members of the community, including even workers. But they have not added to the production of the community, nor have they added to our capacity to increase production.
That is the indictment that is made against this Government. That is the reason why the Treasurer had to come into the House tonight and read a long statement in which he definitely obfuscated the issue. He hid from the view of the ordinary members of the Australian community exactly what is happening in regard to the trading and productive activity of this nation. If I am wrong, and if the figures I have given are incorrect, I should like to hear the honorable member for Mallee (Mr. Turnbull), the Treasurer, the Minister for Primary Industry (Mr. Adermann) or some other honorable member opposite denounce this document issued by the Commonwealth Bureau of Census and Statistics. If there has not been a reduction of £180 per head in the value of rural production in Australia since 1950 I challenge the honorable member for Mallee to tell me the exact position.
– What about the bulk of goods; has that been reduced, too?
– I have pointed out in this House how there are about 70,000 fewer milking cows in Australia today than there were in 1950. I have pointed out that while the number of beef cattle has increased by 6 per cent, our population in the same period has increased by about 16 per cent.
– Answer my question.
– I answered the honorable member’s question. I told him that while our population has increased our production of goods has diminished. Vegetable production has been seriously reduced. There is now a smaller production of beans, beetroot, cabbages and cauliflowers. The honorable gentleman laughs.
– Get on to wheat and some of the big things.
– The production of wheat is only one facet in the whole question of production. While wheat production has increased, the value of that production has not increased in proportion to the value of money or in proportion to the increase in population. It has just about held its own. It is the one commodity the honorable member can mention as having held its own in the fight which is being waged by Australia to meet its overseas commitments and to maintain its standard of living.
– What about dried fruit?
– Dried fruit is another form of production in which there has been a small diminution on a per capita basis. If any honorable member is sufficiently interested to go to the Parliamentary Library and secure a volume on primary and rural production he will find that the present story is one of increasing costs in connection with the whole apparatus of government. It is a question of increasing costs for defence, and diminishing returns from secondary and primary industries. Of course, some people might ask: “ But where are ail the people who have come here from other countries employed? “ They are employed in constructing vast buildings for overseas firms upon street corners in every capital city in Australia. They are employed in sedentary and non productive occupations which depend upon import industries. They are employed in a vast number of ways but they are not producing the goods that are the basis for the development of this country, for the improvement of the welfare of our people and for our security in time of war. lt is deplorable that the Prime Minister (Sir Robert Menzies) - the political head of a nation such as ours - should have to write the letter of a suppliant to the President of the United States of America. Tt is terrible that he should have to write begging letters to the Prime Minister of Great Britain. These were followed by a visit by our Treasurer to America. The letters were not effective, and the visit was not effective, so the Prime Minister then wrote to people who had invested money in Australia asking them to do things to help Australia out of the difficulties that had been created by the present Government. Apparently they have refused, so he is going to a Prime Ministers’ Conference in England, but he is going via New York so that he can chew the car of the American President more effectively than did the Treasurer. That is the position, so why should we be called upon at a minute’s notice, more or less, to pass appropriations covering millions of pounds when no opportunity is provided for an exact analysis of the figures and when there is such evidence available that something serious should be done about the lack of production in Australia and our increasing overseas deficits.
It is evident to everyone that the warning given by the Opposition at the commencement of this year was correct and that there had been a balance of payments deficit in the vicinity of £400 million. We pointed out that the proof that funds received from other countries are being properly used is that they are creating wealth from which the moneys borrowed can be repaid and a margin of profit can be shown. If that cannot be done we are on a loser, and this nation has been on a loser for a number of years, as we have pointed out. Figures indicate that in the last five years £1,000 million has flowed into Australia from overseas to help us; that in the previous five years £500 million flowed in, and that in the five years before that £250 million flowed in. Now, in one year, £400 million has flowed in. In the next five years £2,000 million will flow in from overseas to help this country meet its commitments without increasing its production. We should take notice of what the honorable member for Riverina said tonight and we should increase our rural production.
On another occasion I pointed out that in 1939 there were 253,000 farms in Australia whereas today there are about 252,000. In Australia today there are fewer rural workers than there were in 1939. The value of rural production per head of population is immeasurably less than it was in 1950. It is all very well for the Treasurer to get up in this House and talk about terms of trade. It is all very well for him to say that international liquidity is not as good as it should be or that international liquidity is better than it was six months ago, or that the terms of trade are not in our favour today but they were in our favour some time ago. I think he deliberately uses terminology designed to confuse. After all, it is a question of simple buying and selling.
In the document which he used in his address to this House tonight, the Treasurer said that, in days gone by, the United States of America had used the capital of Great Britain in order to promote its development and to expand its industries. Of course, he was right. The United States of America did expand its industries, it did promote its development and it did increase its production. The whole of central America was developed. Rural production in America increased tenfold. Indeed, it increased out of all proportion to the debts that had to be paid by way of interest and repayment of loans that the United States had secured from Britain and elsewhere. If it did sell for investment purposes to investors from overseas part of the industries of America, at least, ultimately, as a result of the wise investment of those moneys, and the channelling of those moneys in proper directions, development and expansion of industry in the United States was so immense that today the United States of America is the wealthiest nation in the world. This country could utilise moneys that Americans, the British or anybody else might want to invest in this country. It could use those moneys in a way that would promote the development of Australia and the welfare of its people. If investment in Australia appeared in the form of tractors, in the form of vast pieces of machinery, in the form of aeroplanes or other things that we cannot manufacture, or if it appeared in the form of raw materials, all would be well. But how do these investment moneys, as the moneys that we get from overseas are called, come into this country? They come in the form of boots manufactured in Italy; they come in the form of suits of clothes manufactured in various parts of the world; they come in the form of packaged peas from Holland; they come in the form of canned chicken from Chicago; they come in the form of cheese; they come in the form of canned fruits and canned vegetables from California; and they come in the form of citrus fruits and citrus juices; while on the opposite benches of this Parliament sit members of the Country Party who claim to represent the primary producers of this country and the members of the Liberal Party who would have us believe they represent the industries of this country. The members of the Country Party do not represent the primary producers, and the members of the Liberal Party do not represent the industries of this country. What they represent is predatory wealth, whether it be the predatory wealth of the Australian born or the predatory wealth of capitalists from other countries of the world.
Debate (on motion by Mr. Turnbull) adjourned.
Bill received from the Senate, and read a first time.
– I move-
That the Bill be now read a second time.
In introducing the Defence Bill, I mention that there are three other bills, the National Service Bill, the Naval Defence Bill and the Air Force Bill which cover related matters. I deal now with the Defence Bill. The other three bills will be introduced later. In the last session, Parliament enacted amending national service legislation providing for the introduction of selective national service comprising two years continuous full time service in the Regular Army Supplement and three years part time service in the Regular Army Reserve. Complementary legislation is necessary to amend the Defence Act to take national servicemen out of the Citizen Military Forces and to include them in the Regular Forces. Consequential amendments to other sections of the Defence Act are also necessary. The inclusion of national servicemen in the Regular Army Supplement and Regular Army Reserve, renders them liable for overseas service in accordance with the policy announced when the national service legislation was introduced into the Parliament last year.
Under the existing provisions of the Defence Act, persons who are called up under part IV of the Act for compulsory service in the Citizen Military Forces in time of war are not required to serve overseas unless they volunteer to do so. This provision was made many years ago when strategic circumstances were quite different from those of today. It imposes a limitation on the military effectiveness of our forces which is completely unacceptable in the light of the range of situations which Australia may have to face simultaneously in wartime, lt is essential that in war the defence forces should be available for service in any location required. The Government has examined this position most carefully and has concluded that restriction of wartime service to Australia and its territories should not remain. It is clear that, on military grounds, a liability for overseas service should be mandatory for all persons called up in wartime.
Honorable members will recall that, during the 1939-45 war, special legislation - the Defence (Citizen Military Forces) Act 1943 - was enacted, providing that members of the Citizen Military Forces could be required to serve beyond the limits of Australia in the south west Pacific zone. I would point out that countries with which we are associated in defence arrangements, for example, the United States of America, the United Kingdom, and New Zealand, already impose a comparable obligation. An obligation of this kind exists in most European and Asian countries.
The revised section 50 (c) of the Defence Act accordingly provides that all members of the military forces will be required to serve either within or beyond the territorial limits of Australia. The provisions of part IV of the Defence Act have been extended to apply to service in the Navy and the Air Force as well as the Army and the amendments to the Naval Defence Act and the Air Force Act provide for this. Part IV of the Defence Act is also being amended to remove obsolete provisions dealing with registration, allotment and exemption from compulsory service in time of war. These are being replaced with up to date provisions based on the principles embodied in comparable provisions in the National Service Act.
The Defence Bill also deals with the availability of intoxicating liquor to national servicemen in military establishments. During the former national service training scheme, when trainees were called up at the age of eighteen, the supply of intoxicating liquor to national servicemen was prohibited. Under the new scheme, national servicemen will be at least in their 21st year and will serve continuously for the first two years in Regular Army units where wet canteens are a normal amenity. A ban on serving liquor to national servicemen in an Army canteen, where sale and consumption are strictly supervised, would be unreasonable as other soldiers of the same age group serving with them would not be subject to the ban. In New South Wales and Victoria, the States where the vast majority of national servicemen will be trained, the liquor laws permit men of eighteen to buy and consume liquor. The amendment now proposed to the Defence Act will remove the restriction con cerning the supply of liquor to national servicemen.
The principles of part XII of the Defence Act, which provides for the protection of the rights of members of the citizen forces and reserves in relation to civil employment, are being incorporated in new comprehensive legislation dealing with the reestablishment in civil life of national servicemen and members of the citizen forces and reserves. When this new legislation comes into force part XII will no longer be necessary, and the Bill accordingly provides for its repeal at a date to be fixed.
I refer briefly to other matters which are dealt with in the Defence Bill; first, I refer to the protection of military decorations. The present law contained in the Defence Act relating to military decorations is defective in relation to the control over the manufacture and sale of these items and is difficult to enforce. The amendment to the Defence Act will remedy this situation by giving the Minister for Defence full control over the manufacture and sale of military decorations, and the conditions relating to them.
I refer, secondly, to the appointment of officers. Section 148 of the Defence Act limits officer appointments in the Australian Regular Army to graduates of the Royal Military College with certain exceptions. In addition to graduates from the Royal Military College the Army requires persons with degrees in both the sciences and arts as well as doctors, dentists, lawyers, school teachers, psychologists and surveyors. Section 148 of the Act is out of date and, in its general intention, conflicts with section 10 as amended last year. The Bill provides for it to be repealed.
Thirdly, I refer to exemption from jury service. Section 43 of the Act relates to the exemption of members of the defence forces from jury service. This matter is covered by a Jury Exemption Bill which has been introduced into Parliament. When this new Bill becomes law section 43 will be unnecessary, and the Bill provides for its repeal at a later date.
I commend the Defence Bill to honorable members.
Debate (on motion by Mr. Galvin) adjourned.
Bill received from the Senate, and read a first time.
– I move-
That the Bill be now read a second time.
Under existing legislation national servicemen will serve for two years’ full-time duty in the Regular Army Supplement and will then serve for three years in the Regular Army Reserve or, if they volunteer and are accepted, in the Regular Army Emergency Reserve for four years. The Bill provides for the extension of the period of full-time service in the Regular Army Supplement in two major contingencies. The first of these is time of war when the period of full-time service of the national serviceman, as of any other serviceman, would be extended for the duration of hostilities. The second contingency is time of defence emergency. The Bill provides that a national serviceman may be required to serve on full-time duty in a time of defence emergency for longer than two years but not for a period in excess of his statutory obligation to render five years’ total service.
It could lead to unacceptable administrative difficulty in a time of defence emergency if a member has to be discharged from the Regular Army Supplement and must then be served with call-up papers for full-time duty as a member of the Regular Army Reserve, particularly if he is serving in a forward area. Such transfers could have a disruptive effect on the formations in which the national servicemen are serving. lt is proposed therefore that they should remain as members of the Regular Army Supplement, and the Bill makes provision for this.
Provision is also being made to extend a national serviceman’s service in the Regular Army Supplement to allow him to volunteer for full-time service beyond two years if he so desires. A member’s obligation to serve three years in the Reserve would be reduced by the term of any voluntary fulltime service. The Bill also makes provision to allow a member to remain on full-time duty to complete medical treatment which has begun prior to discharge. In such circumstances he would thus be entitled to pay and allowances under the same provisions that relate to members of the Regular Army and the Regular Army Supplement.
In addition to the existing provisions which enable a national serviceman to volunteer to carry out the Reserve element of his service with the Regular Army Emergency Reserve, a new provision is being made to permit a member, if he so desires, to volunteer for the Citizen Military Forces for three years in substitution for his Reserve service.
National servicemen may be commissioned as officers and accordingly would be discharged from their obligation to serve as soldiers under the National Service Act. The Bill contains provisions to ensure that the period of service which is undertaken as an officer shall be the same as that which would have applied had the national serviceman continued as a soldier.
The opportunity has also been taken to effect some minor amendments to the National Service Act which experience has shown to be desirable. I commend the National Service Bill to honorable members.
Debate (on motion by Mr. Galvin) adjourned.
.- I move-
That the Bill be now read a second time.
The Naval Defence Bill is complementary to the Defence Bill and makes in regard to the naval forces such corresponding provisions as are appropriate. Its main purpose is to provide that persons called up in time of war under part IV of the Defence Act and allocated to the Navy may be required to serve overseas. This is related to the Government’s decision that national servicemen are to be liable for overseas service and its general policy that a liability for overseas service should be mandatory for all persons called up in wartime.
The nature of naval service necessarily demands that all members be available for service outside Australia. The existing section 24 of the Naval Defence Act accordingly provides that the Navy is to be raised by voluntary entry and ensures that persons called up under part IV of the Defence Act shall not be required to serve in the
Navy unless they voluntarily agree to do so. This bill now removes this restriction on service in the Navy in wartime whilst still providing that the Navy in peacetime will be raised by voluntary entry.
When amendments were being drafted to the Defence Act to make proper provision for short service commissions for National servicemen and the continuation in time of war of such commissions which might otherwise expire, it was found desirable to reframe the existing provisions for short service commissions and soldiers’ engagements generally and appropriate amendments have now been put forward in the Defence Bill.
Although the existing section 31 of the Naval Defence Act make provision for the continuation of a term of appointment otherwise expiring during a period of war, of national emergency or during which the Naval Emergency Reserve is called out for continuous service, it was considered preferable that the provisions on this matter should be uniform, and this is the reason for the amendment now proposed to sections 9, 28 and 31 of the Naval Defence Act. Arising out of the manner in which these revised provisions are drafted, in that they provide for periods of engagements to be deemed to be extended during such times, it was considered desirable to amend section 30 of the Act to state, in a more precise manner than at present, the power to discharge a sailor prior to the expiration of hisengagement.
Finally, the Bill provides for the appropriate formal amendment to section 5 of the Act which applies certain provisions of the Defence Act to the naval forces. This has become necessary due to the transfer of those provisions relating to exemption from service on juries and rehabilitation provisions for members of the citizen forces and reserves to separate legislation.
I commend the Naval Defence Bill to honorable members.
Debate (on motion by Mr. Galvin) adjourned.
.- I move-
That the Bill be now read a second time.
My colleague the Minister for the Army (Dr. Forbes) has introduced into the House a Bill to amend the Defence Act 1903- 1964 relating, amongst other things, to the liability of persons specified in part IV of that Act when those persons are called out by proclamation in time of war.
The Air Force Act 1923-1964 makes provision for voluntary entry into the Air Force. Provision is also made that a person called up under part IV of the Defence Act to enlist and serve in the Defence Force shall not be required, unless he voluntarily agrees to do so, to enlist and serve in the Citizen Air Force.
It is considered essential that persons called up under part IV of the Defence Act who may possess skills or qualifications which would fit them for service in the Air Force should be required to serve in the Air Force if the Air Force authorities so require. The purpose of this Bill, therefore, is to remove from the Air Force Act the requirement that, in respect of persons called up under part IV of the Defence Act, only those who volunteer may be required to serve in the Air Force. I commend the Bill to the House.
Debate (on motion by Mr. Galvin) adjourned.
Mouse adjourned at 10.44 p.m.
The following answers to questions upon notice were circulated -
son asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows -
t asked the Minister for Social Services, upon notice -
Is an Australian mother living in the Territory of Papua and New Guinea entitled to receive a maternity allowance and child endowment; if not why not?
– The answer to the honorable member’s question is as follows -
Under the provisions of the Social Services Act maternity allowance and child endowment are not payable to a woman if she or her husband receive the benefit of the residency exemption of Section 7 of the Income Tax and Social Services Contribution Assessment Act. The territories of Papua and New Guinea are specified by Section 7. If an Australian mother or her husband are not receiving the benefit of this exemption maternity allowance and child endowment may be payable.
m asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows -
n asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows -
asked the Minister for Primary Industry, upon notice -
– The answers to the honorable member’s questions are as follows - 1, 2 and 3. On 29th December 1964, the Australian Wool Board received a cable from Peking signed by Chen Cheng-Chung, Director of the China National Textile Import and Export Corporation. The cable sought support for a campaign to protest to Brazilian authorities against the gaoling of nine Chinese nationals. After considering the cable, the Wool Board decided to take no action on the request from Peking and to refrain from replying. In making this decision, the Board wished to avoid becoming involved in a controversy of this nature.
m asked the Minister representing the Minister for Customs and Excise, upon notice -
Has consideration been given to making regulations under the Commerce (Trade Descriptions) Act to prohibit the importation of pianos unless they are labelled with the name of the country in which they were made?
– The Minister for Customs and Excise has furnished the following answer to the honorable member’s question -
Consideration is currently being given to representations to bring pianos within the ambit of the Commerce (Imports) Regulations made under the Commerce (Trade Descriptions) Act. Amongst other factors these considerations will take into account whether legislation exists in the various States to require the marking of locally produced pianos.
t asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows -
s asked the Minister for Shipping and Transport, upon notice -
– The answers to the honorable member’s questions are as follows -
Taxation. (Question No. 10S7.)
son asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows - 1 (a). In a statement I made to the House on 28th October 1963 (“Hansard”, pages 2366-7), I outlined the principles governing the taxation of income derived by clubs. As I said then, a club is liable to tax on income derived by it from the investment of its funds and from trading with non-members. This applies to all types of clubs other than those that are specifically exempt from income tax, and is a long-established feature of the income tax law. (b) Clubs which do no more than provide liquor, meals, accommodation or other facilities for their own members are not liable to tax on the income received from members, but are subject to tax on income from their investments. The income tax law specifically exempts the whole of the income of any club which is not carried on for the purposes of profit or gain to its individual members and which is established for the encouragement of music, art, science, literature or athletic games or sports in which human beings are the sole participants.
y asked the Prime Minister, upon notice -
– The answer to the honorable member’s questions is as follows -
Eligibility for Commonwealth scholarships, both tertiary and secondary, is based on permanent residence in Australia, not on nationality. There would therefore be some cases of unnaturalised persons or aliens who are or have been eligible for these scholarships. Since awards are not based on nationality, statistics are not maintained on the numbers of these students.
t. - Yesterday the honorable member for Kalgoorlie (Mr. Collard) asked me a question concerning the registration of taxi-meters for conversion to operate in decimal currency and whether any compensation would be payable in respect of the conversion cost involved.
On 31st December 1964, I announced that the Government will pay an amount in cash to owners of each taxi-meter installed when new on or after 1st January 1951, as a substantial contribution towards the conversion cost of the meters. The precise amounts were to be announced later, following appropriate cost investigations by the Decimal Currency Board. Records of taxi-meters are held by various State and local government licencing authorities, and I am advised that no registration programme will therefore be required for taxi-meters. The Decimal Currency Board’s cost investigations have now been taken as far as they can before new taxi fare rates expressed in decimal currency have been determined by the authorities concerned. As soon as these rates have been settled, the Decimal Currency Board will be in a position to make recommendations to the Government. I can assure the honorable member that the Government will make an announcement of its proposed compensation arrangements as soon as possible after receiving them from the Board.
Cite as: Australia, House of Representatives, Debates, 13 May 1965, viewed 22 October 2017, <http://historichansard.net/hofreps/1965/19650513_reps_25_hor46/>.