House of Representatives
31 August 1965

25th Parliament · 1st Session

Mr, SPEAKER (Hon. Sir John McLeay) took the chair at 2.30 p.m., and read prayers.

page 575


Prime Minister · KooyongPrime Minister · LP

– The Minister for Civil Aviation, Senator Henty, left Australia on Friday of last week on a brief visit to Malaysia and Singapore. He will return on Thursday next. For a variety of reasons, it has been thought necessary to have an Acting Minister. During Senator Henty’s absence Senator Paltridge, Minister for Defence, will act as Minister for Civil Aviation.

page 575




– I ask the Treasurer a question. In the course of a television interview in Melbourne on Sunday, 22nd August, the Treasurer said -

There is a possibility that defence costs could escalate during the year.

He further said -

The Government felt we should take some precautions to cover any eventuality from that “cause.

I ask: Does this mean that the Budget allocation for defence is more than the Government really intends to spend unless there is an emergency of some kind, or does it mean that the defence allocation is smaller than the Government thinks will be needed and that the Government intends to make further budgetary arrangements early in the New Year to cover increased defence costs?


– I am glad the honorable gentleman has given me this opportunity to state what I actually did say. He is not so much quoting what I said as giving the necessarily abbreviated newspaper account of what was said. A question had been put to me along these lines: The Government had budgeted for a surplus that was slightly larger than the amount it expected to raise from the increase of 2i per cent, that was imposed on personal income tax. My questioner asked me whether, as we could have secured a balanced budget without this additional 21 per cent, of tax, the extra imposition could be regarded as an action of prudence by the Government to cover any increase in costs that occurred during the year. I said that that was one element in the decision that had been taken, but there was also the psychological factor and the desire to spread the increased charges as fairly as we conveniently could. I was asked whether there was any likelihood of an escalation of defence costs. I said that this was a possibility and this, of course, is always a possibility in a situation such as that in which we currently find ourselves. Indeed, subsequent to the introduction of the Budget, the Government announced the decision to send additional troops to Vietnam and to extend the call-up for national service. In a general answer of this kind, that is the outline I give of the way the matter was put. My remarks had no other significance and I ask the House not to read any other significance into them.

page 575




– My question is directed to the Minister for Territories and refers to the phosphate deposits on the Island of Nauru. In his statement of 10th June on the talks with Nauruan leaders, the Minister mentioned that in relation to the ownership of phosphates at Nauru the Australian delegation had restated the view of the partner Governments that the rights were legally vested in the British Phosphate Commission. Could the Minister expand on this statement and explain whether he referred to the actual ownership of the deposits or to the continuing right of the Commission to work them? If the former, why is it necessary to remain subject to recurrent pressures from the Nauruans for increased royalties and other payments?

Minister for Territories · MCPHERSON, QUEENSLAND · CP

– As the honorable member for Corangamite rightly says, Australia works the Nauru deposits with the partner Governments of the United Kingdom and New Zealand. The phosphate deposits were originally taken over by a British company after the period of German occupation and eventually they were transferred to the British Phosphate Commission. On the occasion of our recent negotiations with the Nauruans, we permitted them to have a legal adviser as well as an economic adviser. In the course of discussions, our legal situation was challenged but we were able to establish the full legality of our position. I would point out to the honorable member that on all occasions in our negotiations we do not rely on the legal situation but rather on a fair basis of dealing with the Nauruans as well as being conscious, of course, of our obligations to primary producers, in Australia.

page 576




– I ask the Minister for Territories the following question: In view of the increase in enrolments at the school at Norfolk Island from 140 in 1960 to approximately 200 this year, and the consequent overcrowding at present, have facilities at the school been improved to meet the expanded requirements? What assistance, if any, is given to gifted students to enable them to acquire higher education in Australia?


– I appreciate the interest of the honorable member for Braddon in Norfolk Island. I realise he made a trip there recently. I point out to him that the school at Norfolk Island is conducted on behalf of the Commonwealth by the New South Wales Department of Education. As he pointed out, the school population has risen quite considerably. I think the present number is about 187, of whom 47 are secondary school children. Dr. Wyndham, the Director-General of Education in N.S.W., visited the island in 1963 to report on the prospects of bringing the curriculum into line with that of New South Wales. As a result of that visit, new classrooms have been added to the present school and these will provide for science classes, manual arts, home economics and all these sorts of things. This year the estimates provide for furnishings for the new classrooms. Regarding the second part of the question, the Commonwealth has provided scholarships and bursaries for a number of years for Norfolk Island children coming to Australia to further their education. These scholarships have risen in value to the sum of £200.

page 576




– I address my question to the Minister for Primary Industry in order to clear up one of the points that arose in the adjournment debate last week on the Wool Marketing Committee of

Enquiry. Did the Committee, in fact, recommend any change in the marketing of Australian wool or is the proposed wool reserve prices plan only one of a whole series of suggestions on which the Committee merely submitted evidence placed before it?

Minister for Primary Industry · FISHER, QUEENSLAND · CP

– The Australian Wool Board was empowered under the Wool Industry Act to appoint a Wool Marketing Committee. The Committee made recommendations to the Board and, according to the Chairman of the Australian Wool Industry Conference, the report made by the Wool Marketing Committee was, except in some small details, identical with the report presented by the Wool Board to the Wool Industry Conference. So all I can say is that since the Wool Board has recommended a change in marketing by use of the wool reserve price plan, the Wool Marketing Committee made that recommendation to the Wool Board.

page 576




– My question is directed to the Minister for Trade and Industry. I refer to a statement made by the Minister on 19th May last relative to tariff preferences for less developed countries. I ask: Will the Tariff preferences for the less developed countries mean that cricket bats imported from India and Pakistan will be among the items of preference in the nominated lists? If so, why is it that a firm in my electorate which employs 30 people, and indirectly gives employment to many others, which more than 60 years ago pioneered the cricket bat industry in Australia against severe overseas competition and financial burdens and which is now the largest manufacturer of cricket bats in the Southern Hemisphere, has not received protection against the influx of inferior grade bats from India and Pakistan which will occur? Is the Minister aware that such an influx of cheap bats into Australia could seriously interfere with the long range plans of the State Rivers and Water Supply Commission of Victoria?


– Order! The honorable member had better ask his question or he will be no-balled.


– If the Minister is not aware of the matters I have placed before him, will he investigate them and take immediate action to prevent the destruction of a very fine Australian industry which is both a Government and private industry?

Minister for Trade and Industry · MURRAY, VICTORIA · CP

– I would have hoped that the honorable member could legitimately defend the interests of an industry in his electorate without reflecting upon a similar industry in countries which are friends of ours. I think it is possible to do this-


– There is no reflection about this. Men are worried about their employment.


– Order!


– I do not recall whether cricket bats are included in the arrangement. That is a matter of fact. The tariff preference, as I explained to the House on two occasions when I spoke formerly on it, is a preference on items that is calculated not to harm Australian industry. There will be quotas for those items which are accorded a preference - quotas that, in a sense, would be related to sustaining Australian industries. No preference will be given if it has the effect of seriously damaging an Australian industry. We cannot really continue to talk about how we would like to help our brothers and yet do nothing in that direction.

page 577




– I address a question to the Minister for Primary Industry seeking information concerning the reserve price scheme for wool. Has the Minister seen statements alleging that the proposed marketing authority, once having expended the capital set aside for buying in wool, can then use, for the purpose of buying in wool, the funds being raised for research and promotion, thus leading to a diminution of moneys available for such vital research and promotion? Can the Minister say whether there is any truth in these allegations?


– The position is that the moneys collected for research funds under the Wool Industry A. et are prescribed by law to be used for particular purposes and cannot be used in the way mentioned by the honorable gentleman. That applies to both the levies collected - that for promotion and that for research. The Act pre scribes that these contributions can be levied to a maximum of 2 per cent. That covers both promotion and research. The expenditure of the money is protected by the measure which we passed in this Parliament.

page 577




– Has the Minister for the Navy made any progress in meeting my request for additional naval ship building and refit work to be given to Queensland shipyards?

Minister for the Navy · PERTH, WESTERN AUSTRALIA · LP

– Since the Second World War no shipyard in Australia has been given any refit work on vessels of the Royal Australian Navy, although Australian shipyards have been given construction work. I am pleased to tell the honorable member for Brisbane that only at the end of last week a contract was let through the Department of Supply to Evans Deakin and Co. Pty. Ltd., in Brisbane, for the refitting of H.M.A.S. “ Supply “.

page 577




– Has the Minister for Primary Industry ever seen the report of the Wool Marketing Committee of the Australian Wool Board? If he has not, will he obtain a copy of the report so that he can assure the House himself that it is practically identical with the Australian Wool Board’s recommendation to the Australian Wool Industry Conference?


– I have not seen the report. I presume that it is a function of the members of any board to appoint a committee and to get information from whatever source they might deem appropriate so that they can inform their own minds and come to a conclusion. I have not sought a copy of the report. But, on behalf of the Government, I have, of course, discussed every aspect of the matter with the wool .industry representatives.

page 577




– I ask the Minister for Territories whether the Government has expressed any view on the recently formed political party in New Guinea, and whether the decision of Mr. John Guise and his two colleagues, who recently resigned from that party, was brought about by any pressure from the Department of Territories.


– I am unable to give the honorable member any information about this new party that has been formed. This is no concern of the Government; it is a matter for the members of the House of Assembly themselves. But one thing of which I can definitely assure the honorable member is that absolutely no influence has been used on Mr. Guise and his colleagues.

page 578




– My question is addressed to the Minister for Trade and Industry. I refer to a statement which was made in this House in the course of the recent foreign affairs debate and which appears in “Hansard” dated 19th August, at page 277-


– Order! The honorable member will not be in order in basing a question on a debate in the House during the current session.


– I bow to your ruling, Mr. Speaker. The honorable member for Fremantle referred to exports from Australia to mainland China, not only of wheat and wool but of steel and lead. Can the right honorable gentleman say whether the statement is true; and, if it is, can he give to this House and to the nation, whose sons are deeply involved in life and limb, an unqualified assurance that such potentially lethal exports at least, however minimal, will be absolutely banned?


– The policy that the Government follows in this respect is one that is commonly followed by what one might describe as the Western powers, with the exception only of the United States which permits no trade whatever with mainland China. The policy is that the Western powers are agreed upon a list of items - the list is not incapable of being altered - which are classified as strategic items, and there is an absolute embargo on the export of those items to Communist countries. In the list there is a differentiation between China and other Communist countries - the European Communist countries. However, the list exists and there is not only a refusal to permit the export to Communist China - to which the honorable member’s question relates - of items on that list but also a refusal to permit such items to be exported anywhere, except with a satisfactory assurance that they will not be re-exported to Communist China. Included among the items on which there is an embargo are certain classifications of steel. The embargo does not apply to some other classifications of steel, such as tin plate and certain merchant bars. These may be exported.

Mr Turner:

– What about lead?


– Lead may be exported. The value of lead exports may have been a few thousand pounds. I will obtain the precise figures for the honorable member.

Mr Turner:

– The- statistics were from the Department of Trade and Industry.


– Well, the honorable member can let me have them.

page 578




– Will the Prime Minister say when the Commonwealth Government will give a decision on the request made nine months ago by the Premier of Tasmania for assistance in relation to the Poatina irrigation project in northern Tasmania? The Minister for National Development visited the area a month or two ago and was deeply impressed with the possibilities of the area.


– I know that this matter is currently under examination. I hope to be able to give the honorable member a reply within the next few days.

page 578




– Is the Minister for Trade and Industry able to make a statement about the reported imposition by Japan of a quarantine embargo on all imported meats following the detection of typhoid-like germs in two shipments of meat from Argentina? Will Australian meat exported to Japan in future be subjected to bacteriological examination by Japanese authorities before import clearance is granted?


– My information is that some paratyphus germs were discovered in a consignment of horse meat from Argentina to Japan. As a result of this discovery the Japanese authorities made more stringent their quarantine and health inspections of all importations of meat. No embargo has been imposed, but there is a more stringent inspection of meat coming from all sources. On the advice given to me this action may slow down our exports to some extent but will in no sense prevent us exporting to Japan.

page 579




– I ask the AttorneyGeneral a question. My question is prompted by the honorable gentleman’s paper to the Commonwealth Law Conference last Wednesday on the subject of ministerial responsibility in modern parliamentary government, in which he draws a distinction between a Minister’s responsibility for what he does or decides himself and his responsibility for what his officers do or decide on his behalf, and a further distinction between his responsibility for what he does or decides himself and his responsibility for what the Cabinet as a whole decides or agrees should be done by him and through his department. I therefore ask the AttorneyGeneral whether he himself accepts responsibility for the instruction to the Parliamentary Draftsman on 24th June last to draft amendments to the Customs (Prohibited Imports) Regulations concerning the importation of aircraft and whether the Cabinet approved the instructions before or after that date.

Attorney-General · BRUCE, VICTORIA · LP

– The instruction to the Parliamentary Draftsman was given by me on 24th June so that if a decision was later taken by the Government that the regulation should be amended, the regulation would then be prepared.

page 579




– Has the attention of the Postmaster-General been drawn to the offensive and unpardonable reference by Gordon Chater in the “Mavis Bramston Show” on Channel 7 to the communion service of Christian denominations? Is there any way to restrain this vulgar entertainer from trespassing on the finer feelings of a vast audience and to make him observe common decency? Will the Minister look into this matter and see what can be done?

Postmaster-General · PETRIE, QUEENSLAND · LP

– I have not seen the report of the statement to which the honorable member refers. I point out that, of course, this is a satirical programme, and I understand that within this area certain licence is allowed; but I believe that in regard to the matter to which the honorable member has referred more than reasonable courtesy should be extended to the majority of people in the community. I will refer this matter to the Australian Broadcasting Control Board to see to what degree this occurrence fits within the standards that the Board has laid down for decency in conduct, and I will inform the honorable member of the result.

page 579




– Did the AttorneyGeneral, on attending the Commonwealth Law Conference last week, note the preponderance of opinion from delegates in opposition to the Judicial Committee of the Privy Council being a final court of appeal for the Commonwealth? Has he further taken note of the expression of opinion from the Australian public that the High Court of Australia should be our national final court of appeal, and the growing criticism that it is not so? Will the honorable gentleman give the people of Australia an opportunity of expressing their opinion on this matter at the forthcoming referendum, by putting an appropriate question to them?


– I do not readily accept the words used by the honorable gentleman that the “ preponderance of opinion “ was against appeals to the Judicial Committee of the Privy Council. Some of the countries that make up the Commonwealth of Nations have ceased to allow appeals to this tribunal. Other Commonwealth countries continue to allow them. This was not a topic of discussion at all as far as the substance of the issue went. The substance of the issue went to an entirely different point, and it was on the entirely different point - a regional or broad Commonwealth court of appeal - that there was some discussion. I would not say that it related to the matter the honorable gentleman has raised. As to the second part of the question, about giving the people of Australia an opportunity to vote on the matter at some forthcoming referendum, I think I should say that I have not become aware of any real attitude of mind on the part of the public of Australia that there should not be appeals to the Judicial Committee of the Privy Council.

page 580




– My question is directed to the Minister for External Affairs. Has the Minister’s attention been directed to the fact that last week in Saigon the representatives of the South Vietnamese students, who were highly critical of their country’s Government, took the view that its policy against the Communists was not sufficiently vigorous, and stated in their official communique that “ the cause of the war in Vietnam is Red China which should be bombed to cut off the supply of weapons to North Vietnam”? I ask the Minister: Does not this give the lie direct to the Communist thesis that the opponents of the Government in South Vietnam are supporters of the Communist National Liberation Front - a Communist thesis which, incidentally, is being peddled by the honorable member for Yarra and his satellites on the Opposition?


– Order!

Mr Calwell:

– It is time that these slanders were stopped.

Mr. SPEAKER__ Order! The honorable member for Mackellar will withdraw the remark.


– Which remark? As a matter of fact the honorable member for Yarra has peddled this thesis-


– Order! Does the honorable member for Mackellar refuse to withdraw his remark?


– No, Sir. I withdraw it.

Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– I did see the report of the statement ascribed to students in South Vietnam and I do agree with the honorable member that it confirms a fact to which I have drawn the attention of this House and which other speakers have asserted - that although there is opposition to the Government in South Vietnam, none of that opposition has taken the form of sympathy with the Communist aggressor. Indeed, successive governments formed in South Vietnam have all continued to oppose the Communist aggressor. If I may say so, that part of the honorable member’s question was well founded.

page 580




– I ask the Prime Minister whether he is aware that life assurance companies operating in Australia have decided, first, that all proposals written on

Regular Army personnel on a whole-of-life basis must have the following war clause inserted -

Should the death of the life assured occur either directly or indirectly as a result of war service whether war be declared or not, the amount payable shall be limited to a return of premiums paid or the surrender value whichever is the greater.

Is he aware that a maximum of £1,000 has been fixed for all policies, that premiums are loaded by £25 a year, that premiums must be paid in one sum yearly -


– Orderl I think the honorable member had better direct his question. It is becoming far too lengthy.


– Does the Prime Minister consider that these restrictive trade practices are prejudicial to recruiting? If so, what is he going to do about the matter?


– The honorable member knows perfectly well that this is not a matter that I administer; nor is it a matter with which I could be expected to be familiar. I, therefore, regret that, instead of engaging in propaganda against these groups in the House, he did not get in touch with me and ask me to find out whether the statements were true.

page 580




– I direct a question to the Minister for Primary Industry. As there appears to be some confusion regarding the recent poultry industry legislation, will the Minister state whether a person who has 20 hens or fewer and therefore does not pay the poultry industry levy, can sell eggs commercially? Will he also state whether a person who has more than 20 hens but does not sell commercially the eggs from those hens must pay the levy on all hens in excess of 20?


– Under the legislation, a person who has up to 20 hens is exempt from paying the levy even though he sells commercially the eggs laid by those hens. If a person has more than 20 hens, but does not sell commercially the eggs produced by those hens, he still does not pay any levy.

page 580




– I direct to the Prime Minister a question supplementary to that asked by the honorable member for Scullin. Irrespective of whether, in the view of the Prime Minister, the honorable member for

Scullin brought this matter to his attention properly, I now ask the right honorable gentleman: In view of the serious allegation contained in the question asked by the honorable member - that insurance companies are refusing to insure soldiers serving in South Vietnam and are re-writing policies so that soldiers in South Vietnam will “have less protection than they would have had if they had remained in Australia as civilians - will he investigate the matter, either himself or through his subordinate Ministers, and then make a statement to the House in order that the public of Australia might know what the position is with regard to insurance policies on persons who are serving Australia in the armed services anywhere in the world?


– 1 take no exception to the form in which the question was put. I just point out to the honorable gentleman that I shall need to inquire not only what the existing practice is but also what the practice has been in the past because this is not the first operation of war in our history. I shall be very happy to find out what the past practice ‘has been, what the present practice is, and, if necessary, the reasons that existed or exist for those practices.

page 581




– I address a question to the Minister for National Development. Is the Minister in a position to explain to the House the liaison between his Department and the North-West Department of the Western Australian Government in relation to recent achievements on the Ord River? Can he assure the House that full information on the recent excellent cotton crop has been obtained and is receiving urgent consideration in connection with the determination of future Government policy?

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

– I had some discussion on Friday with Mr. Court, the Minister for the North-West in the Western Australian Government, on a number of matters. I had a very short discussion with him on the Ord River project. He informed me that the crop has not yet been completely harvested, and also that there will be a ratoon crop which will be harvested later in the year. He told me that as soon as he has the full returns he will pass the information on to me.

page 581




– Has the Minister for the Army received any authoritative reports to substantiate the claim made by two senior Army officers that Indonesian reconnaissance parties may have penetrated northern Australia? Does the Minister consider that these reports justify the proposal that an Aboriginal para-military force should be formed to help track down infiltrators?

Minister Assisting the Treasurer · BARKER, SOUTH AUSTRALIA · LP

– No such proposal is contemplated by the Army, and the Army has absolutely no evidence that there has been infiltration or surveillance from the sea.

page 581




– My question is addressed to the Minister for Territories. It concerns reports that a West Irianese family has sought political asylum. Can the Minister give the House any information concerning these reports? In particular, can he say whether an application for asylum was made and, if it was made and was declined, in what respect the application was deficient?


– There have been reports of these applications for political asylum from time to time. Investigations of recent applications have shown no grounds on which they should be accepted. These matters are rather difficult because, as I have pointed out before, many people living close to the border between West Irian and New Guinea have for generations been in the habit of travelling backwards and forwards across the border. I point out also that Australia has international obligations with respect to persons from other countries coming into terrritory controlled by Australia. We have to subscribe to these international conventions. I assure the honorable gentleman that so far as I know no hardship has in any case been caused to these people by refusing them admittance to New Guinea.

page 581




– I address a question to the Minister for External Affairs. It has reference to the question of negotiations between the warring people in Vietnam. What steps has the Minister taken personally or on behalf of Australia to initiate or attempt to open negotiations between the hostile forces in Vietnam? Has he approached the authorities in Hanoi? Has he approached the authorities in Peking? Has he approached the National Liberation Front in South Vietnam? Has he initiated discussions in any way, for instance with the Russian Government, or has he left all the initiative to other nations?


– As the honorable gentleman well knows, persistent attempts to bring about negotiations have been made by a succession of people, some of whom have contacts much more direct than any Australian government can have. Australia is not in diplomatic relations with Hanoi. We are not in diplomatic relations with Peking. Those governments with which we are associated and which have diplomatic relations with Hanoi and Peking have attempted to make the necessary contacts. Every attempt has met with a rebuff. We have been very closely associated with what our allies have been doing, and we have been kept very fully informed. As the honorable member knows, at the recent Commonwealth Prime Ministers’ Conference the Australian Prime Minister, with other Prime Ministers, took a prominent part in initiating a proposal to send a mission to Hanoi to bring about the particular result for which the honorable member professes to hope. He and the House can be assured that the Australian Government has used every opportunity that has come to it. The honorable member’s approach is quite out of keeping with diplomatic reality if he suggests that I, as Australian Minister for External Affairs, should be writing letters to Hanoi or Peking, or entering into negotiations with the National Liberation Front for South Vietnam, which is a Communist stooge organisation, in an attempt to promote discussions when other much more worthwhile efforts are being made. provide a supplementary answer, I ask: Can such an answer now be given?


– I do not know whether I intimated in my previous answer that an interdepartmental committee had been examining the question of the general availability of credit for rural borrowers. After the honorable member asked his question I inquired whether finality had been reached in the discussions that that committee had been holding. I have not yet been supplied with a report. However, I shall pursue the matter and let the honorable gentleman have an answer as soon as I conveniently can.

page 582




– I direct my question to the Postmaster-General. Can he advise me when the necessary money will be made available for the building of a modern post office at Matraville in the Kingsford-Smith electorate? Is he aware that the temporary structure that was built there 10 or 12 years ago to serve the good citizens of Matraville as a post office is now falling to pieces and is in a most dangerous condition? Is the Minister aware also that the population of the now modern suburb of Matraville has doubled in the last decade and that the facility of a modern post office is anxiously awaited by the residents?


– I am not able to give particular information concerning this post office, but I assure the honorable member that the demands on Post Office resources to meet the needs of the many developing areas in Australia are considerable. However, I shall examine the programme and see whether I can intimate when he may expect a new post office to be provided at Matraville.

page 582




– My question, which is directed to the Treasurer, relates to the question that I asked last week concerning bank finance for primary producers affected by drought, particularly farmers who have not sufficient equity or financial capacity to enable them to make repayments on normal banking terms. In view of the Treasurer’s remark that, to the extent that the Prime Minister’s statement on drought relief did not cover this aspect adequately, he would

page 582




– I direct a question to the Minister for Shipping and Transport. I ask: Has the Australian National Line prepared detailed proposals for its entry into overseas trade with fast vessels which will be designed to carry palletised refrigerated cargo and will be highly efficient and capable of holding their own in any competition? Have such proposals been presented to the Government and have the Conference lines followed up by submitting short term counter proposals designed to influence the Government to reject the National Line’s plan? Will the Minister assure the House that any plan to export Australian products in Australian ships will receive urgent and sympathetic consideration?

Minister for Shipping and Transport · FORREST, WESTERN AUSTRALIA · LP

– I am not aware of any details of plans to enter overseas trade with the kind of ships mentioned by the honorable gentleman. 1 know that there has been a fairly continuous period of study of the possibility of Australian vessels taking part in various phases of international cargo trade. No detailed proposals have been submitted to the Government and I am not aware of any detailed proposals submitted by private shipping interests either.

page 583



– I inform honorable members that today the New ZealandAustralia Free Trade Agreement has been signed. For the information of honorable members, I present the following paper -

New Zealand-Australia Free Trade Agreement, signed 31st August 1965.

page 583




– When answering a question asked by the honorable member for Bradfield, I was without certain factual information regarding trade between Australia and mainland China. With the concurrence of honorable members, I shall incorporate that information in “ Hansard “. I point out that’ the Australian Government does not send any items of trade to mainland China. Within the policy I have described, commercial transactions take place. A table has been prepared showing Australian exports to mainland China in the years 1960- 61 to 1964-65. Some exports of iron and steel plate and sheet have been made in each year. Exports of lead valued at about £2,000 and £5,000 were made in 1961- 62 and 1963-64 respectively. There were no recorded exports in other years. Substantial exports of wheat have been made in each year.

These commodities are, of course, not sent to China by the Australian Government. They are sent by private commercial traders and by the Australian Wheat Board. Australian exports to China are subject to controls. Some items are banned, and some may be exported only with approval at time of shipment. Non-strategic items are freely exportable. For mainland China the list of strategic items and the policy in respect of exports are stricter in Australia than in most Western countries except the United States which imposes a complete trade embargo. The table is as follows -

page 584


Ministerial Statement

Minister for Territories · Mcpherson · CP

– by leave - Honorable members will recall that on 5th May 1965 I made a statement to the House in which I outlined to honorable members the Government’s policy with regard to the recommendations made by the World Bank Mission in their Report on the Economic Development of Papua and New Guinea. I informed honorable members then that in particular the Government concurred with the Mission’s recommendation that developmental credit should be made readily available in the Territory to promote rapid expansion of private enterprise and especially to finance the production of cash crops by indigenous agriculturists.

I am pleased to be able to inform honorable members today further that the Government has approved the setting up of a development credit institution for the Territory. The new institution will be a local Papua and New Guinea one financed through the Territory’s Budget and designed to serve the productive development of all sectors of the Territory’s economy. Accordingly a bill will be introduced by the Administration into the House of Assembly of Papua and New Guinea at its next meeting providing for the establishment of the new credit institution.

The broad charter of the proposed institution will be to stimulate development in the private sector of the Territory economy and to promote more rapid growth of indigenous business enterprises. It is intended that the Bank will provide financial assistance for development in cases where such assistance is not available on suitable terms from other sources. The purpose here is that the new institution will augment and not replace currently existing credit facilities. The institution will provide credit on terms and conditions suited to the Territory economic situation and, in determining whether or not finance will be provided, it will have regard primarily to the prospects of success of a proposed business venture and will not necessarily have regard to the value of the security available. Honorable members will be aware that this provision is one that the Government incorporated in the constitution of the Commonwealth Development Bank and one that has contributed much to the outstanding success of that institution. But of course the economic conditions and needs of Papua and New Guinea differ in many respects widely from those of Australia; and in designing a development bank institution to serve these needs we shall be proposing a number of quite novel features, lt is intended for example that the institution will have powers to provide financial assistance in quite a number of ways. It will be able to make loans, give guarantees and purchase debentures; und it will be able to purchase equity shares in enterprises.

Honorable members will appreciate that the power to participate on an equity basis in new enterprises will be of particular significance for Papua and New Guinea. In this way it will be possible for the bank as a local Territory institution to acquire an interest in the establishment of new and the expansion of existing Territory enterprises in which there might not otherwise be any Territory participation. One of the key functions of the proposed institution will be the provision of small scale loans to indigenous agriculturalists and business enterprises. The new finance institution would naturally find it difficult and expensive to supervise directly small loans to a large number of widely dispersed farmers and small businesses. To overcome this difficulty it is intended that the institution will have the power to provide small scale finance through appropriate intermediary bodies such as the co-operative societies or the savings and loan societies which are a promising recent development. Through the use of such intermediaries who, as it were, will retail credit to its final users, it is hoped to channel finance into the economy more effectively, speedily and at lower cost than would otherwise be possible.

It is intended that the new institution should be set up with an initial capital of £1 million. Further funds will be provided from time to time. The institution will be empowered to raise funds from private sources though it is intended that its capital resources will be predominantly supplied from Government sources through the Territory Budget. The institution will have power to accept loans from overseas institutions, private or inter-governmental, to the extent that such loans are available on reasonable terms and conditions. Australian institutional lenders to the new Papua and New Guinea institution will qualify for the taxation concession which applies to lenders who hold 30 per cent of their assets in public securities. The new institution should not have as its major aim to make a profit. The success of the institution and the value of its contribution to the Territory’s economy will be measured rather by the new enterprises and the industrial and commercial activities which it will sponsor. Any profits which may be made by the institution, however, will be retained as pal of its resources.

It is proposed that the new credit institution should have power to accept deposits which in time could make a significant contribution to the institution’s resources, lt is envisaged that initially the institution would accept fixed term deposits offered to it but that it would not compete actively with other institutions for such deposits. The policy of the new institution will be determined by a board of directors who will be required to operate in close liaison with the relevant Administration departments and to keep the Administrator informed of its policy from time to time. Should at any time a serious difference of opinion arise between the Administration and the board they would endeavour to settle this and in the event of their failing to do so the matter would be referred to the Minister for Territories. The board of directors will include representatives of private enterprise both in the Territory and in Australia and there will be a majority of Territory residents. It is the Government’s confident belief that the creation of this new institution will be warmly welcomed by people of Papua and New Guinea both native and expatriate and that when set up the new institution will quickly assume a key role in the commercial life and progress of the Territory.

I present the following paper -

Papua and New Guinea - Development Credit Institution - Ministerial Statement, 31st August 1965- and move -

That the House take note of the paper.

Debate (on motion by Mr. Whitlam) adjourned.

page 585


page 585


Report of Public Works Committee


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

Provision of operations and control tower buildings at Sydney (Kingsford-Smith) Airport. 1 move -

That the report be printed.


.- Mr. Speaker-


– Order! The honorable member should realise that the motion is only that the report be printed.


– Yes, Mr. Speaker. I want to go into reasons why I oppose the printing of the report.


– The honorable member will not be in order in dealing with the content of the report.


– You will be able to stop me if I deal with it, Mr. Speaker. I oppose the resolution that the report be printed. I do so because I believe that the Public Works Committee is placing the cart before the horse in presenting this report prior to reporting on earlier references associated with the same project. This report is one of two references concerning work at Sydney (Kingsford-Smith) Airport which have been under study by the Public Works Committee and which were secondary proposals to two earlier references. One of these concerned site preparation and the other concerned the international terminal, runways and pavements. I believe that the earlier proposal covering the site preparation is the key proposal to all the works involved as it envisages the spending of about £4 million on reclamation and pile driving activity. In my opinion, should Cabinet deal with and approve of the works in this report-


– Order! The honorable member must not get away from the printing of the report.


– I do not think I am doing that.


– The honorable member has done so. I directed his attention to this point when he began. This is a very narrow debate. He has had a little latitude and I do not think he would want to take advantage of it.


– I am not trying to take advantage of any latitude. If Cabinet deals with this matter and resolves that it is expedient to carry out this work, and at a later-


– Order! What the honorable member is saying has nothing to do with the printing of the report.


– This report involves other works. I hope you will give me an opportunity, Mr. Speaker-


– Order! The honorable member is out of order.

Question resolved in the affirmative.

page 586



Mr J R Fraser:

Mr. Speaker, on behalf of the Joint Committee on the Australian Capital Territory I present the Committee’s report relating to the following subject -

The Supply of Residential Blocks in Canberra.

This matter was referred to the Committee by the Minister for the Interior on 8th April 1965.I ask leave to make a short statement.


– There being no objection, leave is granted.

Mr J R Fraser:

- Mr. Speaker, the Committee believes that its findings and recommendation, which was achieved unanimously, will be of value to the Parliament and to the community. The Committee recognised the causes of the grave shortage of residential sites in Canberra. It did not seek to apportion blame for the situation which had arisen. This, I believe, would have been an unprofitable venture. The Committee looked at the situation as it existed and for the future. In its report it makes proposals which it feels, if adopted, could remedy the evil. The Committee dealt with the inquiry entrusted to it with, I think, commendable despatch. Commencing its work after the last land auction in June, it now presents its report to the Parliament before the next quarterly sale of leases which is to be held in September.

The Committee heard all witnesses who came forward on three consecutive days of sitting. In addition, its members studied extensive written submissions and gave full weight to all views put forward on a question which had caused very grave concern in Canberra.

Ordered -

That the report be printed.

page 586


Second Reading. (Budget Debate.)

Debate resumed from 26th August (vide page 568), on motion by Mr. Harold Holt -

That the Bill be now read a second time.

Upon which Mr. Calwell had moved by way of amendment -

That all words after “That” be omitted with a view to inserting the following words in place thereof - “ this House condemns the Budget because -

Such taxation increases as it contains add further burdens to wage and salary earners whose living standards have already been eroded by price rises and the Government’s active intervention against wage increases;

Such meagre social service benefits as it proposes are inadequate, belated and partial in their application; and

The Budget fails entirely to deal with such problems as increases in imports and Australia’s dependence on foreign capital.

This House further declares that only by proper economic planning can Australia rapidly expand the resources required to meet its urgent needs in the fields of defence, development, education and social welfare”.


.- Mr. Deputy Speaker, in reviewing a Budget of the magnitude of this one for the year 1965- 66 - it relates to a sum of £2,667 millionone looks for continued growth and development within Australia. Perhaps this is more so today than previously because I feel that in various respects the Commonwealth is moving ahead at an extremely rapid rate, perhaps more so in my own State of Western Australia. At the same time, however, we look for some protection from adverse conditions which are a part of the environment of this nation. At this time in the eastern

States people are suffering from a seasonal setback, as we have heard on a number of occasions. These seasonal setbacks occur from time to time but they have not been experienced in recent years. During recent years we have taken advantage, of course, of research and various other developments within our agricultural areas to a very large extent. We have continually built up production and this is a credit to the primary producers. The primary producing industry is one of the chief industries in Australia and it has demonstrated that it can produce vast quantities of extra export goods with less manpower.

But in doing this the industry has not been protected, perhaps, to the extent that it should have been protected. I believe that we cannot afford to neglect this aspect any longer in Australia. We must look for measures which will adequately protect the Australian agricultural industries. I refer principally to our stock industries. In past years, particularly in the last part of the last century, we have seen some great losses of stock. If my memory serves me correctly, Australia lost almost one third of its sheep population through drought at that time. Perhaps this was acceptable in those days but it is not acceptable today when we have at our disposal facilities for storing fodder in various forms such as vertical silos, especially in the eastern States - if I might remind honorable members - where there is exceptionally cheap power such as that coming from the Snowy Mountains Hydroelectric Authority. Such power is very necessary for the storage of grain with modern techniques. With a little cement, plenty of imagination and power we are able to store grain indefinitely. I feel that this is a field of endeavour which we must look at in the future if we are to build our stock numbers, as we must. We must protect men on the land against those adverse seasonal conditions which will, of course, occur again. They may occur next year or it may be in 10 or 20 years time but those conditions will turn up again.

In Western Australia we are enjoying at this time excellent seasonal conditions. I suggest that with good spring rains there could be record harvests of grains. The total grain production in Western Australia could exceed 100 million bushels. At this time, we have to combat adverse balance of payments and this is a situation we cannot afford to extend. We must do something about it. I have appealed to the Government to look at this matter in relation to finance made available over the last few years and in relation to the future, of course, taking the last few years as an example for the export industries. As I have said, we are faced with adverse seasonal conditions in the eastern States and this situation will not be rectified until we have adequate finance for the purpose. It is necessary to have long term capital to be able to surmount this hurdle.

We have seen the reverse situation in Western Australia during the last two seasons. In some areas we saw that too much rain had resulted in the complete failure of crops, and about two or two and a half years ago we saw the effect of rust. These are among the many problems that occur in agriculture. But where we experience adverse seasonal conditions for two years in succession the difficulties cannot be overcome without some liberalisation of bank credit. If the Government and the banking institutions throughout Australia do not advance additional finance to enable farmers to meet this problem we continue to have an adverse export balance. I believe that there is adequate security against which additional funds can be provided. The word “ security “ is used very often. I would say that in all cases that I have investigated in Western Australia where there has been some question of security against the amount being lent by a bank there has been security that would justify increased loans where they have been required.

It is one of the facts of life today that agriculture requires more capital than ever before. As I have mentioned previously, fewer farmers than before are producing much more in aggregate. The only way in which this trend can be continued is by the employment of more capital. If a farmer has two tractors or two ploughs but only one man to drive them, what does he do? Does he leave one in the corner? No. Farmers do not do that sort of thing today. They remove the front wheels of one and couple them together so that one man can drive both machines. That is the only way to do it and this is what is happening all over Australia. We need more capital to be invested for the production of exports, so we cannot afford to let the present situation continue. Adverse seasonal conditions have been responsible for bringing us almost to the point where some areas are nonproductive, and I can see no way of improving the situation unless more capital is made available. I hope that the banks will view the problem sympathetically, because we must have export production if we are to continue to develop Australia.

We have seen several bills introduced into this chamber for the purpose of continuing our development. For example, the Ord River project, which has been discussed at great length over the last year or two, is to receive under this Budget £556,000to enable additional work to be performed. I have found while journeying about that, generally speaking, provided people know the facts of the situation, and know the way in which the Government is looking at the problem with a view to gaining experience, they are quite happy with the situation. My experience has been that those engaged in the Ord River project are equally happy with the situation. It is heartening to see the number of farmers and business people who have gone into the Ord River area with confidence. They have gone in with no small amount of capital and have been prepared to invest vast amounts of capital. They have great confidence in the future. I understand that figures at present available show that cotton growers in that area are reaching a production of about 2,000 lb. of seed cotton per acre. There is confidence in the Ord River area that this figure will be increased next year.

But I do not see the Ord River area only as a cotton growing area; I see it as the new world of the Kimberleys. We know from history that, for various reasons, the beef industry has been declining to some extent in the Kimberleys. We know also that this situation cannot continue. We know the possibilities of the Kimberleys in relation to growing beef, but we know also of the possibilities of drought. This is the position at the moment in the lower Kimberleys where, to some extent, they are experiencing a dry season. I see the Ord River as a vast project where great reserves of feed can be produced for the purpose of seeing the cattle over these dry periods. This is another way of safeguarding Australia’s rural industry.

As one moves about Western Australia one can see many projects, including the Broome jetty. The Commonwealth Government and the Western Australian Government together are spending quite a lot of money to develop a deep water port in the Broome area. Also, an amount of £625,000 has been allocated for the continuation of the comprehensive water scheme in the southern part of Western Australia. This also is a safeguard against adverse seasonal conditions in that area and in some other areas in the southern part of Western Australia. I am happy to see that money is to be provided to enable that scheme to be extended because in that area, although the seasonal conditions have been quite good, at the moment the water supply is not adequate. It is only with schemes of this type that we will be able to harness Australia’s water resources and safeguard ourselves, our nation, our balance of payments and our economy generally against the effects of adverse seasonal conditions, while at the same time building up our production. These are not things which happen in five minutes. We must plan ahead and work towards these things, and we must keep in mind projects such as the comprehensive water scheme when framing future Budgets.

This afternoon I should like to say a word or two about harbour development in Australia. An amount of £14,238,000 has been allocated in the Budget for the purpose of rail standardisation. Something more than £10 million of that amount is to be spent in Western Australia. There is provision in the Budget for road grants exceeding £70 million. This amount is made up of annual grants from the Commonwealth plus expenditure on beef roads, which will involve a considerable amount. If I remember correctly, we have passed a bill through this House to provide for an expenditure of £375 million on road construction throughout Australia over a period of five years. This amount will be the Commonwealth’s share and I understand that it is about one-third of the total amount that will be spent on roads in that period. The balance will be found by local authorities, State governments and other bodies. But where do we find ourselves in relation to harbour development? I have mentioned briefly some of the vast sums to be spent in other fields of transport. The situation is that at the moment the responsibility for harbour development lies with the States, usually through some port authority but in some cases directly through a Government department. The only finances available for harbour development come from loan allocations from the Commonwealth. These loans are in two forms - moneys advanced under the general loan agreement and approved loans to the States by the Commonwealth. Port authorities also have access to amounts collected as wharfage dues and various other rates.

Amounts made available to the States in loan allocations are required for many purposes. They are used for the construction of schools and to finance all the complicated arrangements which are the responsibility of the States. We know that the State Premiers are always saying that the States are not given enough. So it is from the loan allocation - a limited field - that we finance harbour development. In the Budget we see that an amount of £386 million is to be allocated for defence. This is a record allocation. We are taking care of all the known factors in relation to defence and this item is of first importance for the Commonwealth, but what would our positi’on be if we were faced with a serious situation in relation to defence because of the situation to the north of Australia or anywhere else? We must look at this question. The Commonwealth cannot ignore it.

At the moment, in peacetime, our ports are inadequate, not in total, but in many respects. Let me take the port of Sydney as an example. That port has grown like Topsy. It started with the small ships in the olden days and the city of Sydney grew around it. It is not unusual for ports to grow in that way. In fact, it is quite common in various parts of the world. But we reach the stage where, unless a vast amount of money is spent on reorganising the entire port area and the areas immediately surrounding the port there is complete and utter congestion.

What is happening at the moment is that transport problems are strangling the port and city of Sydney. The costs of this situation are tremendous in ordinary commercial terms, but in terms of defence they are inexcusable. If war occurred and we had a large influx of goods, what would happen in the port of Sydney? 1 venture to say that it would become a complete bottleneck, and it would not be the only Australian port in which that would happen. I do not believe that the Commonwealth Government can ignore this situation. It is far too serious.

In order to serve a port adequately in any part of the world, about 12 or 13 acres per berth is needed. When we see some of the inadequacies of our ports we start to visualise what is involved. We will not start to solve this problem until it is considered seriously, until the job is tackled seriously by engineers who know their job and until we start to move through some of the built-up areas with access to ports. This would mean the demolition of certain buildings adjacent to the ports. This is being done in some places in Australia after much work and fighting by port authorities to make the governments realise the situation. It has to be done. Surely we would rather do this ourselves than let somebody else do it from the air at some time in the future when we have in our ports a chaotic mess such as we had in times past.

This work can and will be expensive, but in my opinion it must be done. I submit that it is beyond the financial abilities and responsibilities of the States. As I see it, this is a defence measure, if nothing else. Quite apart from our trade responsibilities or anything else, from the defence standpoint we have a responsibility to see that our ports are in top order. This cannot be done in five minutes or in 12 months; it is a long term project. It can be done and it should be done. I support direct Commonwealth contributions for the maintenance of port development when it is in the national interest.

I make no apology for harping on this question of transport. I believe that in Australia, an island continent, transport will be one of our biggest problems in the future. In the modern world the transport of cargo and the transport of passengers are being separated. Cargo and passenger transport do not combine well, whether by rail, road or sea. When a ship is designed for a specific purpose it operates economically. If a ship carries a mixture of cargo and passengers it does not so operate. AH over the world there is a trend towards separation.

Overseas shipping is very important to Australia. We cannot ignore it. I have indicated very briefly some of the requirements for our ports. We should use suitable ships. In Australia today we have some specialised ships, such as general cargo carriers, but their number is not great. There are no such ships on the overseas trade. For instance, there are no seatainers moving from the shores of Australia; but we have them on the coastal trade and they work exceptionally well. Speaking entirely from memory, cargo handling rates can be improved from .8 of a ton per man-hour under the old system to about 70 tons per man-hour under the new system. We have not seen these ships on the Australian overseas trade, but they do operate in various parts of the world, including the west coast of the United States of America. They have been working there for a number of years. There is nothing new about this system, and it is time Australia really thought in these terms.

Quite recently freight rates were increased by about 10 per cent, in respect of the United States trade and by about 6.6 per cent, in respect of other overseas trade. That trend will persist while we continue to use old fashioned ships, while we continue to have old fashioned ports and until we rectify the matters that I have mentioned and some others that I will not go into at the moment. About 40 per cent, of freight costs - the percentage varies a little - are associated with the actual handling of cargo in port areas. That percentage can be reduced, but only by the investment of capital and the use of modern ideas. Sea.tainers are not uncommon. They must come in Australia in their various forms. I stress again that passengers and cargo do not mix. I believe that ships, aeroplanes, trucks or trains should be designed for one or the other. Do not let us try to mix them.

Another matter to which I wish to refer is the situation in the Postmaster-General’s Department. This matter is very important not only to Western Australia but to the whole of Australia. In Australia we have one postal organisation. If you cannot get a telephone from the Postmaster-General’s Department, you just do not get one. That places a big responsibility on the Government. In Western Australia, and in many other places in Australia, vast developmen tal work is being carried out. Our telephone system is just not keeping pace with the development. In 1964-65 more than £79 million was spent by the PostmasterGeneral’s Department on capital works. This year the Postmaster-General (Mr. Hulme) has squeezed an additional £10,318,000 out of the Treasury. This year £90 million is being allocated for capital works in the Postmaster-General’s Department. This represents a substantial increase. However, it will not cure the problems that we have today.

In Western Australia, and no doubt in many other places, some people who had telephones for years do not have them today. That is no fault of the PostmasterGeneral; it is the fault of a system that has proved inadequate. We have to use every available means in order to catch up the leeway. I believe that we members of the Parliament have an obligation to stress this matter time and time again in order to ensure that the Department does endeavour to catch up the leeway. Obviously, this matter is important to everybody. Telephone communication between the eastern States and Western Australia is far from good. There is an hour’s delay at almost any time. At about 11 o’clock the other night I was endeavouring to ring Western Australia, and it took me nearly two hours to get the person whom I wanted. That is just not good enough. I know that the Postmaster-General has in mind plans to improve the lines between Melbourne and Adelaide, where the bottleneck occurs, but it will be some time before that work is completed. We have a responsibility to see that everything possible is done to improve the present situation. People want telephones. Telephones play an important part in our cost structure. Some people, because they do not have a telephone, are obliged to drive 20 or 30 miles each way in order to deliver a simple message. They may do this several times a week. We must overtake the lag in telephone installations. To do this the Government should make special grants in order to provide lines in developing areas, such as between the east and the west. Such grants should not result in a reduction in the appropriation for the PostmasterGeneral’s Department. We must have telephones where new areas are opening up, such as in the west and also no doubt in the eastern States. As special grants are provided for the building of roads and railways in new areas, why are they not made available for the provision of communications, which are vital in our entire system of economics and production?

I should like now to refer briefly to the matter of international aid. The Budget provides a Hide more than £50 million for international aid. This is not a vast sum when compared with the amount provided by the United States of America, but it represents no mean effort. I discovered on my visit last year to Asia that our assistance under the Colombo Plan and in such matters as the Indus Basin development scheme is greatly appreciated. The people of Asia look to us for support not only with money but also in research and with ideas. These things are important to them. The people of Asia want to develop their countries but to do so they must have assistance. Development takes money. Some of these countries have a great future but there are tremendous problems to overcome. These countries are farming a lot of their land in order to feed their people, but they are using old fashioned methods. They must employ more capital in order to retrieve more from the soil. Australia is helping these people with such projects as the Indus Basin scheme. This scheme will lead to greater production not only in the agricultural sense but also in the generation of hydro-electric power and, as a consequence, in the industrial field. Australia is assisting many of these countries to overcome their difficulties. We must continue to do this because only in an atmosphere of understanding between nations can we hope to live together in peace.


.- The Budget brought down on 17th August is characterised by two iniquities which instantly meet the eye. The first is that despite an estimated surplus of £19 million, the general rate of age and invalid pensions has not been increased. The second is the heavy burden of indirect taxation by means of increased duties on beer, spirits, cigarettes, tobacco and petrol, the bulk of which will be paid by wage or salary earners and people on fixed incomes. Let us examine for a moment the plight of age and invalid pensioners. There is little need to emphasise the present record high prices “being asked for meat, groceries, vegetables, fruit, clothing and other essentials. Undoubtedly the prices of these commodities will further spiral in the ensuing twelve months due to the effects of the Budget and of the drought. It is well nigh impossible for a married pensioner couple to exist on £11 a week, or for a single pensioner to exist on £6 a week, in keeping with the Australian standard of living. With its surplus of £19 million the very least the Government could do would be to increase pensions by 10s. per week. It is true that an increase of 10s. per week means very little to a person on a big salary, but it would be a godsend to a pensioner.

The only bright spots in the Budget so far as pensioners are concerned are the removal of the means test relating to pharmaceutical and medical benefits and the increase in the supplementary allowance. For these two achievements full credit is due to the Labour Opposition, as I shall demonstrate. The Minister for Health in the Menzies-Fadden Government, the late Sir Earle Page, imposed on pharmaceutical and medical benefits a means test which has been in operation since 1st November 1955. In the intervening 10 years many members on this side of the House have agitated for the abolition of the means test. I have spoken on this subject at every opportunity. The most recent occasion was during the Grievance Day debate last May. But I cannot recall any member on the Government benches voicing a protest in the past 10 years against the means test. On the contrary, whenever my colleague, the honorable member for Bass (Mr. Barnard), has moved amendments designed to abolish the means test Government supporters have voted to retain the means test. It is said that all good deeds are worth repeating. The 120,000 pensioners previously denied pharmaceutical benefits can thank the Labour Opposition for the abolition of this means test. Similar thanks can be given for the increase in the supplementary allowance. The honorable member for EdenMonaro (Mr. Allan Fraser) has voiced in no uncertain terms the opinion of the Labour Opposition on this subject. He has pointed to the niggardly amount of the allowance and to the rigid means test applied to it. The allowance is paid only to single pensioners paying rent, or board and lodgings. lt is not paid to single pensioners who own their homes or who are paying them off, despite the fact that in many cases council rates, water rates, insurance and maintenance costs often exceed the rental that is paid by the pensioner who qualifies for the allowance.

I turn now to the increase in the pensioner funeral benefit. This social service was introduced by the Curtin Government back in 1943. The legislation provided for a payment of £10 to the person incurring the expense relating to the funeral of a pensioner. Despite the astronomical rise in the cost of funerals in the past 22 years the benefit has been increased only from £10 to £20. Such a paltry sum may just pay for a cheap coffin. But there is a catch in the payment of the benefit. The increased amount is payable only to a pensioner in respect of the funeral of a spouse. This is a very rigid restriction. The benefit is not payable in the case of sisters, brothers or a mother and daughter who live under the same roof and each of whom is in receipt of a pension. The Labour Party’s policy as announced at the 1963 elections provided for an amount of £60 to be paid to the person incurring the debt for the funeral of a pensioner. Under Labour’s policy there would be no restriction as to whom the money was paid. In concluding my remarks about social services I should like to refer to the permissible income of £3 10s. in the case of a single pensioner and £7 in the case of a married pensioner couple. The rate was last adjusted in 1954. This is an injustice to many pensioners, particularly those in receipt of superannuation. It cannot be denied that the changing rate of the pension, coupled with the inflationary spiral of the last 11 years, warrants an increase in the amount of permissible income.

Let me refer now to the increased duties on beer, spirits, cigarettes, tobacco and petrol. The Treasurer (Mr. Harold Holt) has estimated that these increases will produce an addition to revenue of £65.6 million in a full year. Of that amount wage or salary earners and people on fixed incomes will pay at least 85 per cent, or £55.8 million. This is in keeping with the Government’s policy of socking the people who can least afford to pay. One would imagine that if the Government was sincere in its desire to raise additional revenue on a fair and jus.t basis it would have first introduced an excess profits tax and a capital gains tax, thus getting the money from those who could really afford to pay. I emphasise that the wage or salary earner and the pensioner pay the same amount of excise on a glass of beer, a packet of cigarettes or a gallon of petrol as does the person on a big income. The Treasurer in his Budget speech stated that the overall rate of excise duty will, on conversion to decimal currency, give a convenient rate in dollars and cents. This statement bears no weight of evidence if the new prices of beer and spirits are taken into account.

Let us examine the new fixed charges in Sydney hotel public bars. The prices include the increased duties and an unwarranted exorbitant profit grab by the breweries. For a 7 oz. glass of beer the old price was ls. The new price is ls. Id., which equals 10.833 cents. When we change over to decimal currency will the price be reduced to 10 cents or will it be increased to 11 cents? For a 10 oz. glass of beer the old price was ls. 3d. The new price has been increased to ls. 5d. which equals 14.166 cents. Will the new charge be 14 cents or will it be 15 cents? The price of a 15 oz. glass has increased from ls. 9)d. to 2s., which equals 20 cents. The price of a 20 oz. glass of beer has increased from 2s. 2id. to 2s. 7d. or 25.833 cents. Will the price, on the change to decimal currency, be 25 cents or 26 cents? The old price of a 13 oz. bottle of beer was ls. lOd. The new price is 2s. Id. which equals 20.833 cents. Will the new charge be 20 cents or 21 cents? A 13i oz. can of beer has increased in price from 2s. to 2s. 3d., which equals 22.5 cents. Will the new charge be 22 cents or 23 cents. A 26 oz. bottle of beer has increased in price from 3s. 2d. to 3s. 7d., or 35.833 cents. Will the new charge be 35 cents or 36 cents?

I refer now to Scotch whisky. For a half nip the old price was ls. Id. The new price is ls. 3d., which equals 12.5 cents. Will the charge, on conversion to decimal currency, be 12 cents or 13 cents? For a full nip the old price was 2s. and the new price is 2s. 4d., which equals 23.333 cents. Will the new charge be 23 cents or 24 cents on the changeover? I venture to say that in most cases the fractions of cents will go to the breweries, thus adding more profits to these rapacious monopolies.

I should like to confine the remainder of my remarks to the future of the advanced radio and electronics industry in Australia. I shall show that if the Government persists in allowing the Department of Defence to purchase the bulk of its radio and electronic equipment overseas it will be to the detriment of our Australian industry in this field. In addition, our external and internal economies could be adversely affected and, above all, our national security would be endangered. It is interesting to note that the United States has a “ Buy America Act “ which makes it obligatory for the armed services to purchase their manufactured requirements locally. Australia, however, has no similar act to compel its Department of Defence to purchase Australian made equipment. As a result, our advanced radio and electronics industry is under-employed. As a matter of fact, I know of four enterprising firms that have gone out of business in this field because of the failure of the Government to place orders for Australian made equipment. I refer to Thom & Smith Ltd., T. S. Skillman Pty. Ltd., R. W. Steane Ltd. and Commonwealth Electronics Pty. Ltd. The purchase value of equipment ordered is approximately £15 million of which only £3 million is to be bought in Australia. Therefore 80 per cent, of Australia’s advanced radio and electronic requirements will be bought abroad although leaders of the Australian industry say that they could supply half of those needs from local plant that is currently looking for work.

The result of this is a contraction of an Australian industry that could be vital for the defence of the nation. And that contraction serves as a pretext for the defence chiefs to place even more orders abroad. The curious thing about this vicious circle is that it is perfectly familiar to at least one member of Cabinet whose portfolio should, constitutionally, give him power to deal with the position. I refer to the Minister for Supply (Mr. Fairhall) who said recently -

It is precisely in the ‘ electronics industry that experience is beginning to appear. We are in danger of being dealt out of modern electronics.

The Minister also made it perfectly clear that he was criticising the defence chiefs when he went on to say -

These techniques, now essential in defence and major electronic equipment, find little application in civilian production and Australia’s demand is therefore insufficient to encourage production.

It appears easier, cheaper and perhaps more logical to buy abroad the equipment which demands the use of highly reliable but high-cost components. At least, so runs our present philosophy, which would be acceptable but for two reasons.

First, we dare not leave ourselves dependent on any other nation for the supply of the increasingly sophisticated electronic equipment which underlies modern defence.

Secondly, the possibility of our breaking into export markets would be extremely marginal if we continue to lag behind our competitors.

The Minister for Supply concluded with a clarion call that has echoed unheeded here in Canberra. He said -

Unless some positive action is taken to develop a local capability for the manufacture of modern components, including micro-electronics, large quantities of Australian funds will be spent overseas because suitable equipment is not available from local sources.

In fact, the danger goes well beyond the spending of funds abroad. What is at stake is national independence, both military and economic, because a nation that is “dealt out of electronics “ could find itself, within 10 years, defenceless in time of war and, in time of peace, unable to modernise its industries without the help of its industrial competitors.

Other consequences make themselves felt more quickly. For example, in the electronics industry the export programme is being undermined . by contraction of the industry’s home market. To cite a case, Standard Telephones and Cables Pty. Ltd. currently is selling more Australian made electronic hardware abroad than it is selling to Australian authorities, which places its £10 million manufacturing programme at the mercy of international events. Moreover, Australian exporters are open to the following question from buyers of electronic equipment throughout Asia: “Why should we trust your products when your own Government apparently does not? “

Working at an uneconomically low level of output the industry is obliged to retrench lines of production and has difficulty in retaining highly trained technical and research staff who are in keen demand abroad. The responsibility for the atrophy of this vital industry lies, of course, with the Government, which here, as are the Governments of other countries, is the biggest consumer of electronic and radio devices. The various departments of the Commonwealth Government vary widely in their awareness of the need to nourish a local electronics industry. The Australian Post Office, by common consent, has the best record in this field, and collaboration between that most efficient Department and private industry has done something to keep alive Australia’s repute as a world leader in some branches of radio communications. However, it shows how far the bias in Canberra against Australian electronics has gone when the Australian Post Office - no doubt duc to political pressure - was involved lately in an affair that dealt a body blow to the industry and, incidentally, risked tarnishing the national image in South East Asia.

The Australian Broadcasting Commission needed three 250 kilo-watt boosters for its “ Voice of Australia “ programme. The cost to instal these boosters near Darwin was £150,000 each. Amalgamated Wireless (Australasia) Ltd. and Standard Telephones and Cables Pty. Ltd., both experienced in the art of making transmitters up to 100 kW, tendered highly competitive bids, naming reasonable delays. An Australian company, had it won the contract, would have made more than three of these transmitters so as to have one or two on the shelf. There is a good market for these transmitters in this propagandist age. Indeed, in recent weeks an Asian Government was inquiring in Australia for a 250 kilo-watt transmitter. However, the Darwin order has gone to Collins Radio of the United States - despite a reportedly higher price - on the grounds that that organisation had the equipment ready in stock and that Australian companies had not had experience in making transmitters of this size. Such reasons are sound in any one case, but only in the sense that baby cannot take his first step because he has not yet learned to walk.

United States companies looking for business in South East Asia will be the first to let it bc known that the voice of Australia has an American accent. The Darwin installation should prove the best advertisement American electronics could hope for in the region, quite apart from the fact that Asians who learn that the Australian message reaches them on American equipment might conclude that the comments show a similar influence. In sum, such decisions seem to be motivated by a combination of correct but short sighted technical reasoning and political stupidity. The Darwin affair, as noted, was exceptional in the relations of the electronics industry with such civilian authorities as the Post Office, the Department of Civil Aviation, the Overseas Telecommunications Commission, and so on.

The defence Services, in contrast, would seem to have formulated discrimination against local enterprises into a dogma. If this is so, then there is a case for putting on the statute book contrary dogma in the shape of a Buy Australian Act similar to the law that obliges the United States Forces to support American industry. Four distinct facets are vital to Australia’s future development, progress and national security. They are first, the need to provide employment to sustain our increasing population and migrant intake; secondly, the conservation of our overseas credit balances and the strengthening of our internal economy; thirdly, the need for technical know-how and skills to compete in a very competitive field in manufactured goods; and, lastly - and this is of the utmost importance - the need to become self-reliant so far as is humanly possible in defence and national security.

Let me refer now to the first facet. Today, 11 million Australians owe a great debt to the agricultural and pastoral industries which have earned the bulk of our external income. With some assistance from overseas investment, these industries have bought some of the raw materials, some of the plant, and much of the know-how that support our manufactures. But, because of the technological revolution, fewer people are now required in the primary industries to meet the home demand and to satisfy such markets as we can gain abroad. It is an economic necessity that we in Australia should seek relief from our almost total dependence upon the primary industries which have for so long sustained us in an increasingly competitive world. Australia now urgently needs a rapid increase in population together with the development of manufacturing industries necessary to sustain that population. In short, we must fix our sights on a great industrial future and strive mightily to attain it by any means possible. Our inventory for tackling the job is not particularly promising. For a developing country seeking industrialisation, we suffer the disadvantage of distance from presently developed markets. We also lack the domestic market necessary to enable us to underwrite quantity production that will permit of advanced mechanisation or automation. We are constantly short of skilled labour.

Our level of research and development is low, as is indicated by the £50 million which we pay each year to overseas companies in royalties for the use of their inventions and designs. There is only a marginal future for us in competing in export markets with bigger and more experienced manufacturers whose designs we ourselves are using unless we produce with superb efficiency. With some magnificent exceptions, we do not do that because of national attitudes to work and leisure, and the demands of a changing Australia in a changing world. We tend to seek our requirements in manufactures overseas because designs are more modern and cheaper, despite the best efforts of our tariff system to compensate for domestic disadvantage. Thus, the natural inclination is to perpetuate the wool and wheat economy. This is not the way to build a strong industrial nation. Yet there is clear evidence in a thousand cases that the Australian producer, at all levels, can do as well as, if not better than, his overseas counterpart if he really wants to. It is a question of motivation, but that is not the theme of this offering.

Despite these handicaps, we must develop an export market. This will call for specialisation and intensified effort in research and product development in which we must depart from the easier path of the copyist and become innovators. This has been done before with notable success by the Dutch, the Swiss and some Scandinavian countries. If those countries can do it, why cannot we?

The second facet - the conservation of our overseas credit balance and the strengthening of our internal economy - is entirely dependent on the type and amount of overseas investment in Australia, together with the need to. expand our export income to at least £200 million in excess of the value of our exports. This point has been debated time and time again in this House, and to good effect, by my friend and colleague, the honorable member for Scullin (Mr. Peters). Time does not permit of my elaborating further than to emphasise that the more we support the purchase of Australian manufacturing equipment the less we drain our overseas credits.

The third facet - the need for technical know-how and skills in selling our manufactured goods on a very competitive world market - is vital. However, if we are to achieve our goal in this field, we must - I emphasise the word “ must “ - encourage and foster our manufacturing industries to the greatest extent possible. We cannot afford to have industrial organisations underemployed while we import equipment that can be made in Australia. In addition, if we desire to retain our scientific researchers and highly skilled technicians in preference to losing them to overseas industries, then it is vital in the interests of the future development of Australia’s manufacturing industries that these researchers be kept fully occupied in their professions.

Finally, the fourth and most important facet is that of defence and national security. Despite the magnificent efforts of prominent people in pursuing a policy of negotiation between the countries of the world in maintaining peace, we must never be lulled into a sense of false security as we were prior to World War II. Those who are old enough to remember will recall the Munich agreement which was intended to make for peace in our time. They will remember, too, that we were told that the Maginot Line and the Singapore base were impregnable. These memories prompt a question with regard to our future. If Australia were involved in war, could we be assured of adequate supplies of essential equipment during hostilities? Can we possibly answer that question by saying: “ Yes, certainly “? I do not for one moment think that we can answer in the affirmative. Conversely, I believe that we would be more than foolish to rely on equipment from overseas, particularly if we are capable of producing it in Australia. As a consequence, it is imperative for the Government to patronise and encourage Australian manufacturing industries, especially those engaged in the field of advanced radio and electronic equipment which is the principal component of modern warfare. In concluding my remarks, let me put this to you, Mr. Deputy Speaker: It is by no means too late to repair the damage done to a vitally essential industry that served both Australia and the allied forces so well in World War II.


.- When speaking to the Budget the other night, the Leader of the Opposition (Mr. Calwell) said that the criterion of a successful Budget was not whether it was tough or mild. He said that the real standards to apply to a Budget are honesty, justice, meaning and purpose. I believe that the Government will accept those standards, and I shall prove that this Budget meets those standards. But I ask the Leader of the Opposition whether his own Budget speech could face up to those same standards. I very much doubt it. Let us take his first standard - that of honesty - and see just how honest his criticism was. He said that wage rates have been deliberately held back so that the real incomes of wage and salary earners have fallen. He said that their living standards are being continuously and steadily eroded. Is that statement honest?

Mr Griffiths:

– That is right.


– The honorable member for Shortland (Mr. Griffiths) says that it is. Let me refer now to the August issue of the “ Monthly Review of Business Statistics “. If the Leader of the Opposition will turn to page 28 of that publication he will see that, taking 1952-53 as the base year - that is the first year included in the table appearing in that publication - the basic wage has risen by 32.5 per cent, over a period of 12 years and that the total wage - that is, the basic wage plus margins, and plus loadings, has risen by more than 44 per cent, in that time. Reference to page 24 of the same publication shows that over the same period the consumer price index rose by 30.4 per cent. These figures do not support the statement of the Leader of the Opposition that real incomes have fallen and living standards are being eroded. The honorable gentleman went on to say that home building is showing every sign of falling off rapidly. I refer the House again to the August issue of the “ Monthly Review of Business Statistics “, which shows at page 33 that the monthly average of building approvals for houses and flats has never been higher. It reached an all-time high in the year ended 30th June last, rising steadily from 6,315 in 1955-56 to 10,233 for the last year, and for the month of June 1965 the figure was 11,058. Do these figures suggest that home building shows every sign of falling off rapidly?

The Leader of the Opposition then made a most amazing complaint. He said that government expenditure is increasing substantially. I wonder what he would have said if government expenditure had been reduced. Of course it is increasing. The Treasurer (Mr. Harold Holt) has provided for an additional amount of £81 million for defence. Does the Leader of the Opposition object to this? During his speech he said: “It is true that Australia needs expanded defences”. So, presumably, he does not object to this increase of £81 million in the defence vote. The Treasurer has also provided for an additional amount of £61 million in payments to or for the States. Does the Leader of the Opposition object to this? If he does, let him say so. Social service payments will increase by more than £25 million and repatriation payments by more than £13 million. Does the honorable gentleman object to these increases? Expenditure on Territories will increase by nearly £6 million and on business undertakings by more than £11 million, and as more than £8 million of this is for the Post Office and members of the Opposition are constantly complaining about insufficient telephones I cannot imagine that the Leader of the Opposition would quarrel with this increase. Another £15 million is provided to cover capital works and services, including expenditure on the Snowy Mountains scheme. Does the Leader of the Opposition object to this? A further amount of more than £8 million is provided for State works and housing programmes. Expenditure in the Department of Primary Industry will increase by nearly £15 million, due mainly to payments to the Wheat Stabilisation Fund as a result of lower export prices, extra provision for wool promotion and assistance to the poultry industry. If the Leader of the Opposition suggests that we should reduce our expenditure in the Department of Primary Industry he should say so.

Commonwealth payments to the Superannuation Fund will be more than £2 million higher than last year, more than £4 million will be provided for the equalisation of petrol prices and nearly £15 million for the introduction of decimal currency. The items I have already mentioned account for £258 million of a total increase of £275 million in the estimates for next year. I challenge the Leader of the Opposition to tell us to which of these increases he objects. His complaints about increases in Government expenditure were so much rubbish. I do not know whether his poor showing was due to a misunderstanding or to the fact that his criticisms did not measure up to his own standard of honesty. The Leader of the Opposition said, further, that the fact that imports are running at a record rate presents a problem. He is not alone in thinking along those lines. However, I believe that when a country is developing as rapidly as Australia is, it is inevitable that its imports will increase. If we analyse our import statistics we may be persuaded to look at this question in a different light.

I refer again to the “ Monthly Review of Business Statistics “ which I cited earlier and which is published by the Bureau of Census and Statistics. That publication subdivided imports into economic classes, and its analysis in the August issue shows that during the last financial year capital equipment accounted for 26.1 per cent, of our imports. Producers’ materials for use in manufacturing industry, in rural industry and in building and construction accounted for 50.2 per cent, of imports, and fuels and lubricants and auxiliary aids to production for 4.8 per cent. This means that 81.1 per cent, of all imports last year were directly related to the provision of employment for Australian workers; and this must have been a very big factor in maintaining our particularly high rate of employment. I remind the House that our record of less than 1 per cent, unemployment is one of the best in the world. Munitions and war stores accounted for 1.6 per cent, of imports, and finally only 17.3 per cent, of imports were in the form of finished consumer goods. With respect to some of these goods let me say that if we expect to sell our primary products and minerals to Japan and Italy and certain other countries, we must be prepared to buy consumer goods from them. I imagine that it is the ambition of every country to have a favorable balance of payments position, but it is obvious that this cannot be achieved by all countries. There must be winners and losers in this field and if we are short-sighted enough to attempt to restrict unduly the importation of consumer goods we should not complain if some of our debtor nations seek to purchase some of their raw materials from other countries.

It is very interesting in this connection to read what the Bank of New South Wales had to say in its June issue of “ Review “ -

The large inflow of imports in the past year has done much to absorb the inflationary pressures generated in part by the earlier build up in reserves and has been a more productive use of them than in short term investment in other countries.

The Leader of the Opposition says that this is an unjust Budget and that the income tax proposals are inequitable. He referred to what he called an unfair impact on the lower earning groups. He was referring, bear in mind, to a H per cent, increase on last year’s assessments - not a 2i per cent, increase of income tax rates as has been assumed by many speakers on the other side of the House. A few years ago the Treasurer increased the rate of income tax by 5 per cent. The honorable member for Yarra (Dr. J. F. Cairns) referred to this as a cruel burden on the working man. The following year this 5 per cent, surcharge was removed and the Leader of the Opposition had this to say on 20th August 1963, as reported at page 305 of “Hansard” -

The injustice of the so-called S per cent, reduction in income tax is shown even more clearly by the fact that it means a 10 per cent, increase in take-home pay or income, after tax, for the richest section of the community, as compared with the beggarly 9d. a week for the mass of the community.

Labour wants it both ways - a 5 per cent reduction in rates of income tax is worth a beggarly 9d. a week to the great mass of the community, and yet a 2i per cent, increase is described as having an increasingly unfair impact on the lower income groups.

It is interesting to make a comparison of income tax rates fixed by a Liberal-Country Party Government in Australia with those fixed by the Labour Government in the United Kingdom. There is no basic wage in the United Kingdom, but the United Kingdom Information Office was good enough to provide me with information concerning hours of work and earnings in that country. I was informed that on the average a totally unskilled man, excluding overtime, earned 5s. 7.7d. sterling an hour. This is equivalent to 7s. an hour in Australian currency, or £A14 a week. In other words, the man in the United Kingdom who would be on the basic wage if there was such a thing in that country, receives £A14 a week, while his counterpart in Australia receives £A15 8s. a week, or about £780 a year. Now let us look at the amounts of tax paid in the two countries. I shall consider, first, the British worker receiving £600 sterling a year, which is as near as I can get to the equivalent of £A14 a week. I ask honorable members to remember that this is under a Labour Government in the United Kingdom.

There were no changes made in the last Budget in the rates of income tax, although the Labour Government did remove the provision which allowed as a deduction the amount paid for national health insurance. If the Labour Government had considered the rates unfair to workers it should have done something about reducing them, but it did not. At present the single worker receiving £A14 a week pays £A80 in tax. Here, even under the provisions of the new Budget, a similar worker pays £59 13s.

Mr Reynolds:

– But the taxpayer in the United Kingdom gets a lot more in return.


– The honorable member has not allowed me to finish the story. In addition to that £80 the man in the United Kingdom pays about £A44 a year for national health insurance. A similar worker with a dependent . wife pays £A35 in England and £38 13s. in Australia. It is near enough to a line ball, I agree, but the man in England still has to pay the additional £A44 for national health insurance, which is calculated at the rate of 13s. 8d. a week sterling or about 17s. 6d. a week in Australian currency for each person in employment.

Mr Reynolds:

– What State and local government taxes are paid?


– A great deal more is paid in local government taxes in Great Britain than in Australia. A man with a wife and two children pays no income tax in England. Here, he pays £20 8s. a year. But when one takes into account the fact that in England a taxpayer with a wife and two children pays the equivalent of about £44 Australian a year in national insurance contributions, the Australian is very well off by comparison, even after this allegedly harsh income tax increase of 2i per cent.

The Leader of the Opposition described the increases in petrol tax and excise as an injustice to the working man. Practically every speaker on the Opposition side of the chamber who mentioned this matter described indirect taxation in these terms. Indeed, the honorable member for Griffith (Mr. Coutts) described indirect taxation as contemptible and as a system of snide taxation. Practically every other Opposition speaker has spoken in similar terms. As I have said, the Leader of the Opposition described the increases in petrol tax and excise as an injustice to the working man. He said that he can only conclude from the Government’s attempt to earn further revenue from beer, petrol and cigarettes that this its a rich man’s Government, which is determined to act as all conservative reactionary governments act. The implication is that a Labour government would not increase indirect taxation. I do not know whether the British Labour Government is really a conservative government in disguise, but it clearly increased indirect taxation which was already at rates much higher than operate in Australia, and the increases were much steeper than those imposed in this Budget.

I have mentioned income tax. We have increased petrol tax by 3d. a gallon. The Labour Government in the United Kingdom increased it by 6d. sterling a gallon, or 74d. Australian. The excise on tobacco has been increased here by 5s. Australian per lb. The increase in England was 10s. sterling per lb., or the equivalent of 12s. 6d. Australian. Furthermore, the English were already paying more for tobacco than was paid in Australia and they still had to bear an increase in excise of 10s. sterling per lb. I have no figures for beer. I attempted to obtain them, but I found that the excise on beer is calculated on the alcoholic content or the specific gravity. Apparently, this varies. So I am not able to give the House the relevant figures for beer.

The Leader of the Opposition cited the case of a tradesman who smokes half a packet of cigarettes a day. He pointed out that such a man will now pay an additional £2 5s. 6d. a year in excise because of the increase, in this Budget, of 5s. per lb. in the excise on tobacco. In Britain, the working man, who already receives less in wages, as I have demonstrated, and who is already paying excise on cigarettes at more than double the rate paid by his Australian counterpart, was subject to an increase in the excise on tobacco equivalent to 12s. 6d. Australian per lb. So the Australian worker pays an additional £2 5s. 6d. a year in excise, whereas the English worker pays an extra £5 13s. a year. I repeat that the English workman receives a lower income than his Australian counterpart.

The Leader of the Opposition pointed out that if an Australian workman drove a car, he would, at the most conservative estimate, as a direct result of the present Government’s economic policies, pay an additional £2 10s. a year in petrol tax. This is because the Government has increased the petrol tax by 3d. a gallon, to a total of ls. 2.76d. a gallon. Under the Labour Government in the United Kingdom, the British worker, whose wages, as I have pointed out, are lower than those of the Australian worker, is called on to pay an additional £6 5s. a year - not £2 10s. a year - because the British Labour Government increased the petrol tax by 6d. sterling a gallon to a total of 3s. 3d. sterling a gallon, or the equivalent of 4s. Id. Australian - more than three times the rate levied in Australia. Yet the honorable gentleman would endeavour to make us believe that Socialist governments regard indirect taxation as unjust and unfair to the worker. Let me repeat: Under the Labour Government, the British worker pays more than three times the rate of petrol tax, nearly three times the rate of excise on cigarettes and more than three times the rate of tax on spirits paid by the Australian worker.

The Leader of the Opposition criticised our social service benefits. I should like to remind the people of Australia that the record of the present Government in the field of social services is unparalleled. The rates of age, invalid and widows’ pensions have been regularly increased. What is more important, they are paid to a greater number of people, because this Government has eased the means test very considerably dur ing its term of office. Children’s allowances have been extended to student children up to the age of 21. Labour ceased paying these allowances when a child reached the age of 16. It was the present Government that introduced the Aged Persons Homes Act, which has already resulted in accommodation being provided for nearly 21,000 persons and under the terms of which the Government has paid out just on £25 million. It was this Government that introduced the pensioner medical service, which enables pensioners to be treated in their own homes by the doctor of their choice. It was this Government that extended social services to Aborigines.

It was this Government that provided free medical, hospital and dental treatment for all service pensioners, whether or not their disabilities were war caused. It was this Government that made it possible for totally and permanently incapacitated exservicemen to receive both the T.P.I, pension and the service pension. It was this Government that made war widows eligible for war service homes. And it was this Government that introduced the age allowance, which enables persons of pensionable age whose income is so great as not to permit them to receive a pension to obtain tax concessions and therefore, in terms of income tax, not to be at a disadvantage compared with pensioners. It was this Government that introduced the supplementary rent allowance paid to pensioners who pay rent. In the present Budget, this allowance is to be increased from 10s. to £1 a week. It was this Government which abolished the means test on blind pensioners and provided a mother’s allowance for class A widows, which reduced the residential qualification for age pensions from 20 to 10 years for migrants and for widows’ pensions from 5 years to 1 year where the husband died in Australia. Yet the Leader of the Opposition dares to criticise our social services policy and has the audacity to say that this Budget will perpetuate old injustices and perpetrate new ones. The thinking of this Menzies-McEwen Government is so far ahead of Labour’s ideas in the field of social services that we can say that the honorable gentleman’s criticisms do not matter. This Government has introduced social service benefits that Labour never even dreamed of.

Honorable members will recall that the Leader of the Opposition incorporated in “Hansard” a most elaborate table which the Prime Minister (Sir Robert Menzies) described as a brown study. This table set out the receipts and outlay of all Commonwealth authorities from the financial years 1953-54 to 1964-65, as a percentage of the gross national product, together with estimates for the financial year 1965-66. At the point in his speech at which the Leader of the Opposition incorporated this document in “Hansard”, he said -

Great play can be made, and has been made, by the Treasurer, in quoting expenditure figures over periods of time in money terms. This approach ignores the rise in prices, the rise in population and the rise in output per head over the period. The only realistic basis of comparison is the proportion of our available resources which we are devoting to governmental activities of each type. The simplest way to do this is to express expenditure and income as a percentage of the Commonwealth Statistician’s concept of gross national product - the total value of goods and services produced and available for consumption, investment and government use.

Mr Curtin:

– Who said that?


– The honorable member’s leader said that. He went on to say that he would refer to this table from time to time during his speech, and he later directed attention to a particular aspect of it. He said -

I wish to draw particular attention to the first line of the table, “ Current Outlay on Defence “. In 1953-54 nearly 3) per cent of our available resources were being devoted to defence. In the following, nine years of neglect and apathy this was cut by one third to a little over 21 per cent. - 6<L in the £1. In the last three years, during which this Government has had the effrontery to depict itself as defence minded, we have seen defence expenditure raised to a little over 3i per cent. - still significantly lower than 12 years ago. How reminiscent this is of this same Government’s performance from 1937 to immediately before the attack by Japan on Pearl Harbour.

I do not know whether I am of a suspicious nature or merely inquisitive, but I wondered why the honorable gentleman went back only to 1953-54. My curiosity got the better of me, and I had prepared tables dealing with Labour’s last two years of office. The Leader of the Opposition said that he had no access to governmental authorities and that any member of the Parliament who was not a member of the Ministry had no such access. I obtained my information from the Commonwealth Bureau of Census and Statistics, which supplied figures for the last two years of Labour’s term of office. The covering letter that I received when the figures were supplied to me stated -

The above statistics are based on figures published in tables 57, 60, 63 and 66 of “ Australian National Accounts, National Income and Expenditure, 1948- 49 to 1963-64”, published in February 1965.

I mention that lest honorable members think I may have made some mistake in extracting figures. I ask the House to bear in mind that the honorable gentleman referred to expenditure on defence ranging from 21 per cent, to 3i per cent, of the gross national product as neglect and apathy. What did Labour spend. Was it more than 3i per cent?

Mr Kelly:

– I doubt it


– It was not. Did it reach the despised 2i per cent.? Again it did not. In 1948-49, Labour spent on defence 1.88 per cent, of its gross national product. In the following year it spent 2.03 per cent. I am not applying my standards; I am applying the only standards that the Leader of the Opposition said were acceptable to him. He drew attention to the fact that in grants to the States the Government had allocated only 5.23 per cent, of the gross national product. He said of this -

The States have been squeezed so hard that they have been unable to meet our real educational needs. . . .

I will say a little more about education in a moment. A reference to the expenditure for the last two years of Labour’s reign shows that the Labour Government did not allocate 5.23 per cent, of the gross national product to the States. It allocated only 3.51 per cent, in 1948-49 and 3.78 per cent, in the following year. In only two out of nine items did the Labour Government allocate a greater proportion of the gross national product than did this Government. The figures relating to health and welfare should be of interest to those people who up to the present may believe that the Labour Government had the interests of the sick and poor more at heart than the LiberalAustralian Country Party Government has. The honorable member for Barton (Mr. Reynolds) said that I had not been to a pensioners’ meeting lately. I hope that he will tell the next pensioners’ meeting he attends that in the last year of office of the Labour Government, which was an election year and therefore a year in which Labour would be expected to be generous, it allocated only .11 per cent, of the gross national product to health and welfare. The allocation made by this Government, on the figures given by the Leader of the Opposition in his table, is 50 per cent, greater. I am not giving amounts; I am giving the percentage of the gross national product.

The Leader of the Opposition absolutely slated the Government on its approach to national development. According to his figures, the Government this year has allocated .54 per cent, of the gross national product for this purpose. But the Government of which he was a Minister allocated only .27 per cent, in its last year of office or exactly half. The honorable gentleman talks a lot of humbug. 1 said that I would deal with education. The Leader of the Opposition said that the Commonwealth has imposed low educational standards on the States. 1 can speak only of my own State of Victoria, which fortunately has had a Liberal Government for the past 10 years. The figures are most enlightening. In 1949, when this Commonwealth Government came to power, Victoria had 48 high schools. In 1955, when the Bolte Liberal Government took office, the number had grown to 90: This was an increase of 42 in six years. This year the figure is 205 or an increase of 327 per cent, in the number of high schools in that time. The number of technical schools has increased from 35 to 86, an increase of 146 per cent. Of the increase of 51 schools, all but nine were built under the Bolte Government. In Victoria, 12,285 new class rooms have been built since 1949 and of these 9,645, or three-quarters of them, have been built since the Bolte Government took office. The number of pupils has increased from 215,852 to 511,420, an increase of 132 per cent. The number of teachers has increased from 9,017 to 24,647. The number of pupils increased by 132 per cent, and the number of teachers by 170 per cent. This has happened under the Liberal-Country Party Government.

The Leader of the Opposition and those who sit behind him are continually criticising this Government for raising too great a percentage of its revenue from indirect taxation. It is extremely interesting again to refer to the table presented by the Leader of the Opposition. It shows that in the current financial year the Government will raise in indirect taxes an amount equivalent to 8.12 per cent, of the gross national product. In its last year of office, Labour raised in indirect taxation an amount equivalent to 8.25 per cent, of the gross national product. This causes one to wonder whether Labour has two policies, one when it is in office and another when it is trying to gain office. During the course of his speech the Leader of the Opposition, when referring to the Budget, asked -

Does it have purpose as a guide and a plan for the growth, development, prosperity and security of Australia for the next year and beyond?

He apparently answered his own question to his own satisfaction a little later when he said -

This Government refuses to plan and prefers to allow the economy to drift along haphazardly and halfheartedly.

Reference to the latest issue of the “ Monthly Review of Business Statistics “ which is published by the Commonwealth Statistician shows that at present more people are in employment in Australia than ever before, they are earning more money than they have ever earned before, they have more money in the savings banks than they ever had before and they are building more houses than they ever built before. They are producing more coal and steel, generating more electricity and manufacturing more cars. If this is not prosperity, I do not know what is. I will leave it to the Australian people to judge whether the Treasurer was right when he said that the economy is running at full pitch or whether the Leader of the Opposition was right when he said that the Government is allowing the economy to drift along haphazardly and halfheartedly. For myself, I will support the Treasurer and the Budget.


.- AVe have just heard a very biased speech from the honorable member for Henty (Mr. Fox). I do not propose to spend my time worrying about his inaccuracies, but I will deal with a few of the points he raised. In the concluding portion of his speech, he laid great stress on what the marvellous Bolte LiberalCountry Party Government has done for education in Victoria. But is it not a fact that, for the first time in 54 years, the teachers in Victoria are on strike and are holding stop work meetings? Why are they doing this? Because of the inadequate wages that are paid to them, the inadequate teaching facilities that are available and the inadequate number of teachers provided to meet the requirements of the education system. At least 36 per cent. of the teachers in Victoria are casual teachers. If we keep these points in mind we will have a yardstick with which to measure the merit of the remainder of the honorable gentleman’s speech. He referred to the amount that Labour spent on defence in the last Budget of the Chifley Government. At the time the Chifley Government presented its last Budget, Australia was at peace and not at war, as the Prime Minister (Sir Robert Menzies) told his colleagues in England we are. There is no point in comparing the expenditure of a Government on defence when the country is at peace and when it has just completed the worst war that the world has known, with the expenditure on defence at this time. Everyone knows that this Liberal-Australian Country Party Government has allowed our defences to reach a deplorably bad state and only by a mad rush around the world in the last few years, buying naval ships and aircraft wherever it could, has it been able to bring some degree of respectability to our defence forces.

The honorable member mentioned social services, health and welfare. We will discuss these matters during the debate on the Estimates. His colleague, the honorable member for Bowman (Dr. Gibbs), who sits near the honorable member for Henry, agreed with everything that the honorable member had to say about health. But the honorable member for Bowman did not point out that his colleagues in the Australian Medical Association prevented the Chifley Labour Government from introducing a completely free health scheme for the people of Australia. Under the monstrous scheme in operation today it costs the people of Australia a minimum of about 12s. per week to cover themselves for hospital and medical facilities. Even at that price the scheme does not guarantee that the full cost of the fees will be met, particularly in view of the way in which doctors are increasing their fees today. In view of the way in which things are going, the Government will only be meeting approximately SO per cent. of the cost so I can understand the honorable member for Bowman walking out of the chamber. The honorable member is all right when dishing it out but he cannot take it.

The Leader of the Opposition (Mr. Calwell) has moved an amendment to the motion relating to the Budget which we are discussing in this debate. I would like to refer honorable members to the proposed amendment which reads - “this House condemns the Budget because-

  1. Such taxation increases as it contains add further burdens to wage and salary earners whose living standards have already been eroded by price rises and the Government’s active intervention against wage increases. 2 Such meagre social service benefits as it proposes are inadequate, belated and partial in their application.
  2. The Budget fails entirely to deal with such problems as increases in imports and Australia’s dependence on foreign capital.

Mr. Speaker, I support that amendment and I propose to bring forward certain arguments as to why this House should support it. The Treasurer (Mr. Harold Holt) in his Budget introduced a number of forms of unfair and vicious methods of raising taxation. There is only one fair and reasonable way of raising taxation. That is by means of income tax and company tax, based on the ability of the taxpayer to pay. The Government is not prepared to re-examine other forms of taxation while it is prepared to use the present method of indirect taxation. The Government proposes to increase income tax by 2½ per cent., which will nett £17.8 million in a full year. The Government is using the indirect form of taxation to raise an additional £25 million on petrol, an additional £20.9 million on beer, an additional £6.42 million on spirits, and an additional £13.3 million on tobacco products, a total of £65.68 million in a full year.

What it means is that a man in the lower income group, say the man on £1,000 a year, will pay the same amount of tax on the petrol he uses in his motor car, on the beer he buys, and on the tobacco he smokes as the man on an income of £3,000, £4,000, £5,000 or more a year. This is an unfair method of taxation. It is a slug on people in the lower income groups. It is not a fair method and it is not a reasonable method. We on this side of the chamber always advocate that where taxation is necessary it should be imposed on the basis of income tax and on company tax. Therefore we support very strongly any move which may be forthcoming to increase income tax and company tax rather than indirect forms of taxation.

The petrol tax is a most unfair method of taxation. 1 have advocated in this chamber that petrol tax should be increased but not as a means of increasing general revenue. I directed a question to the Treasurer last week and asked him whether this money was to be used to construct roads and thereby give some relief to local government taxpayers. He assured me that the money was not to be used in that way. Therefore, purely and simply this is a general tax imposed as a means of raising income for the Federal Budget. The Treasurer treats it as an indirect form of taxation. As I said previously, I wanted to increase petrol tax. I have no objection to its being raised provided that it is used to construct roads. Lord only knows that the roads of the Commonwealth are badly in need of improvement. The main highways are completely inadequate. Suburban roads in the cities and roads in the larger country towns likewise are completely inadequate. If the Government is to use this form of taxation at least it should put the money into the roads. The ratepayers are almost rated out of their homes because of the way rates have risen. The real reason for that is that the cost of road construction has risen. Heavier roads have had to be constructed. At one time when building a road for a normal motor car, the household car, three inches of gravel sprayed with tar would have been completely adequate. Now the road has to be excavated to a depth of 2 feet or 2£ feet to provide a surface strong enough to carry heavy transport. If the Government wishes to use this method of taxing it should divert the money raised from it for the construction of roads and in some way give some relief to ratepayers who, as I say, have been rated out of their homes.

There are many parts of this Budget which 1 would like to deal with but in the limited time available I want only to deal with a couple of phases. One is a statement by the Treasurer when he said -

Once again the terms of trade have turned heavily against the primary producing countries and already a number of them are in grave balance of payments difficulties.

Figures disclose that since this Government came into office Australia has had a favorable balance on the current account of £429 million since 1950-51 up to the current financial year but we have had accumulated deficits of £2,573 million. In other words, since this Government came to office, having been elected in December 1949, it has accumulated a deficit of £2,144 million. This has been brought about because of the bad management by this Government of the affairs of this country, its failure to do something about developing industries, and its failure to protect the Australian primary producer. We are completely at the mercy of large industrialised countries overseas who are in the position of being able to dictate what they will pay for our wool, wheat, beef, mutton and the whole of our primary exports. Today, we are in the same position as many other partly or underdeveloped countries. We are subject to the pressure of the more highly developed and industrialised countries.

We in Australia have the basic metals that are necessary for the development of industries here. For example, consider the iron and steel industry. I do not propose to deal with the profits that have been made by the companies in this industry but statistics will disclose that they have made lucrative profits over the years. No longer is the iron and steel industry one in which one is prepared to invest money and wait for years for a return on it. Today, that industry in Australia is one of the most lucrative or gilt edged forms of investment. Therefore, when we think about the iron and steel industry we think about a prosperous industry. It is one which has invested up to £50 million in Commonwealth securities when it has had lying idle such an amount of money which it has not been able to use for expansion and development in order to keep pace with the development of the country. What I want to deal with is the ability of the iron and steel industry to use the raw materials, the iron ore, coal and other minerals used to make iron and steel which are readily available in Australia, in order to keep pace with the development of this country and at the same time build up an export industry. There is no shadow of doubt in my mind that an export trade is available. From the figures I have here, it is clear that when the Government has imposed credit restrictions -and it has done so regularly in its term of office - there has been an immediate increase in the export of iron and steel. In 1952-53 and in 1953-54 we first saw an effect on Australia’s exports of steel brought about by this Government’s decision to introduce credit restrictions. In 1951-52 we exported steel to the value of £2,179,000. In the next two years our exports immediately jumped to £10,986,000 in 1952-53 and £14,276,000 in 1953-54. But as the economy picked up again our exports immediately dropped from £14,276,000 to £6,510,000 in 1954-55. When the Government introduced credit restrictions a few years later, between 1956 and 1958, we saw an immediate increase in the export of steel from £6,618,000 in 1955-56 to £26,910,000 in 1956-57.

I come now to the more recent credit restrictions of November 1960. In 1960-61 our steel exports were running at the rate of £27,511,000 per annum. In the very next year, which was the year in which Australia’s economy was hardest hit, our exports of steel jumped immediately to £43,152,000. If we can export steel at that rate when we have credit restrictions in Australia, why can we not continue to export at that rate, or even step up the outward flow of steel to an even greater figure, so that we can use this form of export to build up our overseas balances. I believe that the Broken Hill Pty. Co. Ltd. is not meeting its responsibilities to the country. It is a monopoly. There has been no attempt, nor any pressure applied by any of the major political parties, to establish additional steel industries in Australia. We accept that at this point of time one steel industry is all that Australia needs. I strongly support the opinion that there is enough room for only one steel industry in Australia. However, if this country is going to give an Australian steel industry a complete monopoly and afford it complete protection against imports, the company must play its part, not only by meeting the requirements of the Australian market but also by using its facilities and the materials available to it to build up an export market comparable with that of our primary industries.

Australia is one of the fortunate countries. We are fortunate inasmuch as we have this new industry and also because we have more than adequate supplies of the basic raw materials. We should be using these raw materials to do the things that I have suggested. From 1950-51 until 30th June this year Australia imported steel to the value of £548,397,000, but in the same period we were able to export steel to the value of only £311,991,000. That amount is totally inadequate and Australia’s iron and steel industry should be expanding at a much faster rate than it is. With the concurrence of honorable members I incorporate in “ Hansard “ a table showing Australia’s imports and exports of iron and steel from 1950-51 to 1964-65.

Compared with our steel imports our steel exports were inadequate. Some honorable members may ask how the price of steel in Australia compares with that produced overseas. To make the position clear I shall read from an article which appeared in the “Australian” on Wednesday, 26th May 1965, and which dealt with an application by the B.H.P. for an increased rate of tariff. Although I have the whole article in my possession, I shall refer to only part of it. In commenting on what some of the opponents to the application said about the price of Australian steel, the report stated -

The main opposition to the B.H.P. request has been on the grounds that the company does not need protection because its selling prices are lower than those in any of the exporting countries.

Mr. Collins said at present Canadian tinplate could enter Australia duty free. But despite this, the imported plate cost consumers 7 to 9 per cent, more than B.H.P. tinplate.

Evidence was given that local plate had a similar cost advantage over imports from Japan and the United Kingdom.

I could go on to read quite a deal about what was said, but what I have read establishes clearly that Australia produces one of the world’s cheapest steels. In fact, B.H.P. has regularly boasted that it is one of the cheapest steel producers in the world. Australia has the facilities, the raw materials and the know-how to produce steel and it is up to B.H.P., which has the monopoly in this country, to get on with the job of building this export industry to help us to alleviate some of our balance of trade problems.

The motor industry is another industry which has been established in Australia in recent years. This is another case in which we see overseas investors in Australia being concerned only with one factor, that is, to maintain their overseas markets and to make as much profit as they can from the Australian user of motor vehicles. Some figures which I have taken from a publication issued annually by the Department of Trade and Industry disclose that from 1954-55 until 30th June this year Australia imported motor vehicles, parts and accessories to the value of £977,148,000. In the same period we exported motor vehicles, parts and accessories to the paltry value of £98,798,000. With the concurrence of honorable members I incorporate in “ Hansard “ a table showing Australia’s imports, exports and production of motor vehicles, parts and accessories for the period from 1954-55 to 1964-65.

This is another instance in which Australia should be obtaining a much greater amount from the sale of motor vehicles overseas. We know that the motor vehicle companies have a monopoly. They have established markets in Asia, Africa, in the Pacific islands and elsewhere, but they have made no effort to expand their markets because they are controlled by companies in other countries. They do nothing to provide Australia with increased revenue from exports of greater quantities. The Australian motor car industry is new. It is equipped with the latest machinery that is available and it has the latest know-how that it is possible to obtain, yet it is doing nothing to increase exports. I believe that the Government should be bringing greater pressure to bear, not only on the steel industry but also on the motor car industry, to induce them to build up greater export industries. The figures in the tables that I have had incorporated in “ Hansard “ show clearly that the Government is doing nothing whatever about the situation. It is about time it did.

Still on the question of steel and our basic materials, one of the greatest scandals that has hit this country for many a day is the way that this Government has done nothing about the export of iron ore. Overseas companies have come into Australia and have established Australian counterparts. They have bought into existing Australian companies with the result that millions of tons of Australian iron ore are being exported. But at a true price? Of course not. The iron ore is exported at a price much below the average price received for iron ore throughout the world. I shall deal with that subject in a moment. Recently I addressed a question on this subject to the Minister for National Development (Mr. Fairbairn), and on 24th August I received a reply. I found that the answer contained some quite interesting information. It disclosed the percentage of foreign ownership of companies operating in Australia today. For example, foreign interests have a 50 per cent, share in Western Mining Corporation Ltd. and a 50 per cent, share also in Frances-Creek Iron Mining Corporation. The overseas interests in Mr Goldsworthy Mining Associates is 100 per cent. Overseas interests have 91 per cent, of Hamersley Iron Pty. Ltd., and Mr Newman Iron Ore Co. Ltd. is 50 per cent, foreign owned.

That might not sound too bad; but the companies with the greatest number of Australian shareholders or the greatest amount of Australian capital are exporting the lowest quantities of iron ore. For example, Hamersley Iron Pty. Ltd. is one of the largest exporters of iron ore and pellets, yet it is 91 per cent, overseas owned. Mount Goldsworthy Mining Associates has a contract for 161 million tons valued at £72 million, yet it is 100 per cent, foreign owned. It is suggested that at some time in the future the companies will allow 20 per cent, of their shares to be sold to Australian interests; but at the moment they are not allowing any Australian investors to invest in them. This is a summary of the whole position: Of the 190 million tons of iron ore, valued at £753 million, for which contracts have been signed, £523 million will be exported by foreign owned companies. In other words, 69.5 per cent, of the total amount of iron ore to be exported is owned by foreign investors.

If that were all there was to this point, the position would be bad enough; but let me state a few other facts in connection with it. This is where the trouble starts: In 1961 Japan was paying an average of 24 cents per unit c.i.f. for the iron ore that it was purchasing. The unit is the yardstick or measuring rod that is used to calculate the value of iron ore. In that year India was able to obtain 28 cents per unit for iron ore. But what have these companies in Australia been able to achieve for us in the sale of iron ore to Japan? In 1963 Hamersley Iron Pty. Ltd. signed a contract for 4 million tons of iron ore per annum at a price of 19 cents per unit. We must bear in mind that that company is 91 per cent, foreign owned. In the same year Western Mining Corporation Ltd. signed a contract at a price of 21 cents per unit. It is 50 per cent, foreign owned. Mount Goldsworthy Mining Associates signed a contract at a price of approximately 19 cents per unit. It is 100 per cent foreign owned. Mount Newman Iron Ore Co. signed a contract at a price of 18 cents per unit It is 50 per cent, foreign owned.

I ask these questions: Are the prices that have been negotiated by these companies honest and fair dinkum? What is the tie-up of these foreign owned companies with the industries that have been established in Japan? We know that United States investors have a great financial interest in the Japanese steel industry and in various other Japanese industries. Are we being taken for a ride? I suggest that this Government - particularly the Minister for Trade and Industry (Mr. McEwen) - is aware of these facts. He talks a lot about this matter, but he does nothing. When we members of the Opposition ask him questions in the House, he hedges and laughs and giggles, but he does not really answer the questions or say what the Government will do about the exploitation of Australia’s basic raw materials.

These important minerals have been discovered recently. Contracts worth £1,220 million have been signed between Australia and Japan at the prices that I have stated this afternoon, lt is estimated that because of this reduction in price Australia has lost about £300 million on iron ore and £70 million on pellets. All of the Japanese steel mills got together and sent one buyer to negotiate with the companies that are operating here. The buyer negotiated with the companies individually and, therefore, was able to beat them down one after the other. The result is that today we are selling iron ore for 5 cents a unit less than the average world price in 1961.

I ask the Government to investigate this matter and to find out whether we are being taken for a ride and whether these are genuine prices. The Government should establish a base price and give some indication of what it requires these companies to do in negotiating prices. Otherwise we will be in the position that the Minister for Trade and Industry described in an address that he made during the recent parliamentary recess. He said that we want industries in this country; we do not want holes in the ground. But that is the way we are heading at the moment as a result of these companies being permitted to handle negotiations for the sale of Australia’s basic materials.

One is led to believe that prior to the discovery of iron ore in Western Australia there was a world surplus. Yet only ten years ago Lord Boyd Orr, an international authority on natural resources, predicted that easily mined high grade iron ore would soon be exhausted in industrial countries. In fact, he forecast that by 1970 the United States of America would have used the whole of its easily mined iron ore resources.

So, we should have been in a very favourable position to negotiate a very hard and firm bargain with the Japanese buyer who came to Australia representing the Japanese industry as a whole and not the individual companies.

I believe that the Government should bc tackling these problems. We should be building up Australian industries instead ot selling our raw materials and then buying the finished products. It is up to the steel industry and the Government to do something about building up an export market by establishing the necessary industries in Australia to enable us to become a developed country and to export all the goods that it is necessary for us to export in order to improve the general standard of living of the Australian people.


.- For once I felt that I could support a few of the statements that were made by the honorable member for Newcastle (Mr. Jones). However, I want to deal with a different subject. The main characteristic of this Budget is the increased expenditure for defence purposes. In fact, defence expenditure has increased from £220 million in 1962 to £260 million in 1963, to £305 million in 1964, and to £386 million for the current year.

Mr Clyde Cameron:

– Does the honorable member think that is enough?


– I want to make it quite clear that I believe that this expenditure is thoroughly justified. The re-equipment of our military forces is an absolute necessity in view of the present strategic situation. In fact, I will be so bold as to say that the proposed expenditure is not quite enough, because I believe that the Royal Australian Navy and the Royal Australian Air Force should be strengthened to a far greater degree than is presently planned. But this afternoon I wish to direct my remarks to the Army.

The present policies in respect of the Army provide for a Regular Army component and a Citizen Military Forces organisation. The Regular Army component needed to be increased in accordance with the judgment of the Government in the light of its appreciation of the strategic situation. Later, when normal recruitment failed to achieve the target numbers in a time of over-full employment, a limited national service call-up was instituted to enable the target strength of the Army to be achieved. As honorable members know, that call-up was announced last year. The first call-up was limited in the first half year to 4,200 men. It was announced that in following years the intake would be 6,900 for the full year. The reason for these numbers was undoubtedly the limited number of officers and instructors in the Australian Regular Army available to train national servicemen. However, as honorable members know a plan was devised whereby officers and senior non-commissioned officers from the Citizen Military Forces were given the option of enlisting for a limited period in the Australian Regular Army. Thus the Government has been able to announce that the target of 6,900 can now be more than achieved and that the future annual intake will number 8,400.

As far as I am aware the present infantry strength of the Regular Army is six battalions, with ancillary support and logistic units. A seventh battalion has been authorised. This is in process of formation and will move towards completion.

Mr Clyde Cameron:

– How many men are in a battalion?


– Under the new set up there are about 800 men, plus ancillary troops. This is what is called a restricted battalion. I understand that the infantry target for the Australian Regular Army is to be eight battalions by 1967. In any case, the overall target of numbers for the A.R.A. for 1967 has been set at 24,500. That number will be increased by 16,100 national servicemen, giving a total regular component of 40,600 men. There is no doubt that when this is achieved, provided the strategic situation has not worsened we will have a reasonably dressed shop window. But my major concern is what we have in the store. In other words, I am not satisfied that the C.M.F. is being built up progressively at the same rate as the Regular Army. I. am afraid I do not see an efficient long term appreciation of the role of the C.M.F. of supplying the additional units in support of the Regular Army in a national emergency and not even of its role of training the civilian population at a time of declaration of war or national emergency.

The present plan to use C.M.F. officers and non-commissioned officers for training purposes in the Regular Army will further weaken the C.M.F. in its traditional role. We should recognise that whilst the strength of any nation’s professional army is governed by the strategic situation of the moment, by the funds available and to some extent by manpower, the civilian components of the citizen army should stay the same irrespective of whether we are at peace or war. The size of our citizen army should never be governed by the strategic situation of the moment. It should be governed only by our financial resources and the availability of manpower. It should be a general defence cover that is always in readiness. A country’s professional army is its spearhead. It is one which may be reduced or increased in size according to the strategic situation at the time.

In most developed countries defence takes the form of, first, a professional army; secondly, a volunteer civilian component; and thirdly, a conscripted civilian component. The essential quality of the professional army is its suitability for attack and aggression. It is a compact, well trained, cohesive body. Its main requirement is that it be at instant readiness. History has shown that without an efficient and properly trained civilian army of sufficient strength, ready to give early support, the regular force - the smaller part of the defence forces - cannot stand alone. Britain had this experience. In 1914 and again in 1939-40 Britain used its elite regular army. Britain did not have a sufficiently large citizen army to back up its regular army. This resulted in the retreat from Mons and the retreat at Dunkirk. What happened after that? Britain was hard pressed to muster one division to withstand the expected invasion by Nazi Germany.

In any defence set up there is always a necessity for a citizen army. It must be able to support within a reasonable time the spearhead formation. It also must be able to train the intakes from the civilian population in time of national emergency. On that point I believe the citizen army would be mobilised coincidentally with or at some short period after the commitment of the regular force. After the regular force has been committed it does not have much ability to train from its own resources the intakes that would then come of civilian volunteers. With an intake of 8,000 national service trainees a year it will take a good many years to build up the Regular Army, and we do not have that much time.

Mr Clyde Cameron:

– Does not modern warfare require better equipment and fewer men?


– That is why a country can have restricted battalions and more fire power. In any C.M.F. set up it is essential to have a certain number of full time people serving, whether they be Regular Army personnel or enlisted full time C.M.F. personnel, such as adjutants, quartermasters, storemen and fitters. But as I see the situation, in time of emergency even if the recruit training battalions of the Regular Army that we now have were duplicated and expanded they could not effectively train the large number of civilians who would be joining the colours. I am sure that the C.M.F. is the only effective instrument capable of training the intakes of civilians. The recruit training battalions of the Regular Army would be flat out training reinforcements to their own commands. The only way out of this difficulty is to see that every divisional command in the C.M.F. has its own recruit training battalion.

I stress that we should never again establish an expeditionary force patterned on those of . the last two major wars. When the C.M.F. reaches its wartime strength and a sufficient standard of proficiency it should be allotted its own formations and given its own order of battle as priorities demand. I understand that it is the Government’s intention to raise as soon as practical - at any rate by 1967 - the strength of the Regular Army to 40,000, made up as I have outlined. If that is so, and it is the Government’s intention to have 40,000-odd in the Regular Army by 1967, the C.M.F. will be absolutely inadequate to support a regular force of that size. The present strength of the C.M.F. is about 28,000 and the target is to build it up to 35,000 by mid-1967.

Mr Clyde Cameron:

– Does the honorable member think the enemy will wait until 1967?


– That is for somebody else to gauge. We have not much time; that is why I am concerned. Under the old establishment 35,000 is equivalent roughly to two divisions. The figure should be at least doubled. I think that the C.M.F. should be raised to a minimum of five divisions and - this is the important part - that the formation of the necessary Army and corps headquarters, plus supporting troops, should be undertaken immediately. Unless we have this framework it will be impossible, in a short time, to build around the C.M.F. a large intake of civilian volunteers. Unless the required force is in existence there can be no orderly transition from a peace footing to a war footing. The alternative the Government seems to be following is to try to raise this framework from the existing divisional headquarters - one Regular Army division and two C.M.F. divisions - after the emergency occurs.

I have been talking about amplifying the strength of the C.M.F. I want to emphasise that once this had been done the C.M.F. would not need to be on a full time duty basis until mobilisation. The C.M.F. does not need to be trained, fed and quartered until the emergency arises, apart from the holding of schools, annual camps and bivouacs. A fortnight per man per annum will not cause any great disruption to industry. It will not cause very great difficulty to university students who will go into camp during the university vacation. It will not cost the country very much. As a matter of interest, salaries and allowances for the Australian Regular Army of 25,000 amounted to £34 million in 1964-65. If we add the salaries and allowances of 16,000 national servicemen to that we get an amount, by progression, of £58 million. As against this, the salaries and allowances for the C.M.F. in 1964 - that is with a strength of 27,500 - was only £1.2 million. I hope I make my point.

I am convinced that the C.M.F. must be maintained as an entity and not become merely a source of reinforcement, either in individuals or sub-units, to the regular forces. There are still a lot of diehards who question the degree of training obtained under a programme of night parades, week end bivouacs and camps. Many of us who engaged in this training, particularly in the technical branches, can testify to its effici ency. General Sturdee, on speaking of the contribution of the C.M.F. to the Australian Imperial Force of 1939 is quoted as saying -

At short notice the C.M.F. provided most of the regimental officers and N.C.O’s required for the original formation of the AJ.F., and many of the staff officers as well.

The citizen soldier has many civilian skills. He can be absorbed in the Army very quickly and he reaches efficiency in a very short time, as has been proved in the C.M.F. in the past.

The question of equipment for an amplified and increased C.M.F. will naturally arise. If our country were committed to war at the present time we would have to use the weapons we have in store. They are currently held in ordnance stores and various depots throughout the country. Storemen and fitters and other staff are required to look after them in central areas. If this equipment were issued out to C.M.F. units in decentralised areas these men could go out to the various units. Once this equipment was in the hands of those units it would be ready for use. The delay, on mobilisation, of drawing all these stores, cleaning the jelly from them, buffing them, filling the artillery pieces with recuperating liquid and calibrating them, would take a great deal of time. I do not think that we will have as much time to mobilise and train next time as we had before. The war is much closer to our shore.

Mr Clyde Cameron:

– The honorable member does not appear to be over-happy with the Government’s efforts.


– That is so. We must have the majority of the male population as well trained as possible because it is on them that the defence of this country will finally devolve, and the C.M.F. should remain the permanent and inviolable basis for that defence.

I am afraid that for the reasons I have expressed the citizen forces are now being by-passed. There are politics in the Army just as there are politics in other major establishments. In the Army, the politics originated in the Army set-up. We had the Australian Staff Corps, the Australian Instructional Corps and the Citizen Military Forces. In the post-war years we have seen the professional officer grow in stature. We have seen the disintegration of the Australian Instructional Corps and, I am afraid, we are now seeing the emasculation of the Citizen Military Forces. What real effect can one C.M.F. member have on the Australian Military Board? What we want is a C.M.F. advisory board to advise the Cabinet and the Military Board on all matters relating to our citizen forces.

Mr Clyde Cameron:

– Would not that set-up cause nasty frictions?


– The frictions are there now. It may be cavalier for me to say so, but I think that because the Regular Army is limited in strength- due to the strategic concept, money and manpower - to one or at most two divisions, while on the other hand the C.M.F. could quite well build up to five or seven divisions, it is possible - and the professional officers see this - for the commands of the larger units to go to C.M.F. officers and not to professional officers in a time of national emergency. Whatever the reason, as far as I can ascertain there does not appear to be any great interest in Regular Army circles in a realistic build up of the C.M.F. I understand that at present the C.M.F. units are, in the main, at a fair or reasonable peace time strength in officers and N.C.O’s, but are all sadly lacking in strength in other ranks. We have the selective national service training scheme of two years for youths of 20 years of age. We have a restricted intake. The youths are trained and eventually become part of the Regular Army. After registration, a ballot of birth dates is held and then a certain number of youths are selected. They undergo a medical examination. In the recent half-yearly intake, out of 5,635 youths, 46 per cent, failed to make the grade. There is therefore a great wastage of the intake. If a larger number were examined prior to the ballot, those who were not selected for the Regular Army could be - and I say should be - drafted into the C.M.F. for five years’ active training and a further five years on the C.M.F. Reserve. If the numbers called up were too great, a second ballot for the C.M.F. could be held after the first ballot for the Australian Regular Army. Then, and only then, would we be able to build up the citizen army to a sufficient strength to give adequate support to the Regular Army when it is committed. Also, this would give the Citizen Military Forces the opportunity to establish recruit training battalions which, as I said before, should be introduced. They then would have the ability to undertake the training of the civilian volunteers in a time of emergency. This, I maintain, is a balanced approach to our defence requirements. It is true that the Government has begun a scheme of reorganisation of the Citizen Military Forces. There are to be some additional units and there are to be traditional associations with original units and geographical communities. But that is nothing. It is true, too, that if we are given several years before there is a national emergency there could be a flow back from the reserves of the A.R.A. to the C.M.F. to assist in training, but this will not supply the manpower in the other ranks which is so necessary at this moment in the C.M.F. because the voluntary system with the C.M.F. failed just as badly as it did with the A.R.A.

It is high time the Government faced the reality of the position. The C.M.F. is far too important a body to the defence of this country to be treated as the Cinderella. 1 am shaken to think that the only representation of this large and dedicated voluntary organisation is one member - one voice - on the Military Board, and that that one representative is selected by the professional commanders. Is it any wonder that, I, like many of the senior C.M.F. commanders, have grave misgivings?

I have mentioned before the need for a separate C.M.F. advisory board. This could consist of the Minister, the Chief of the General Staff, the C.M.F. member of the Military Board and perhaps three retired senior C.M.F. commanders and three active C.M.F. serving officers. At the present time, control is centralised far too much with the A.R.A. We must have depth in our defence structure. We do not have that at the moment. As I said before, at the moment we are dressing the shop window and not stocking up the stores. We have to realise that the C.M.F. must be a permanent and continuing structure. It must have the ability to train civilian volunteers in a time of national emergency. There is no depth in our defence structure, and there will not be until we give the C.M.F. its rightful place in that structure.

The relative strengths of the Navy, the A.R.A. and the Air Force are subject to strategic concepts, but the C.M.F. should never fall below what is required to support the A.R.A. component and to train the civilian volunteers in an emergency. Anything less is no insurance whatsoever. At the moment, this is all we have, and in my opinion we have not a balanced attitude to defence. I say that the C.M.F. should have full recognition and representation but, most of all, let us give it men and equipment to the best of our ability now, not when the emergency is upon us.

Many are apt to forget that in previous wars we had no regular standing army. The pattern then was to mobilise an expeditionary force from the nucleus of the Citizen Forces who volunteered and to add to that the recruits who volunteered for overseas service. The fact that we have a small regular standing army should not destroy the capability we now have in the C.M.F., in which all are now enlisted for overseas service in time of national emergency. We should not take away the ability of the C.M.F. to move in its own formations and stand on its own feet. The A.R.A. must be seen in ite proper role - that of a ready spearhead to the main force. With anything less than that, we have the tail wagging the dog.

Finally, to sum up, what I am advocating is that the C.M.F. should be built up progressively to at least five divisions by the allotment of sufficient personnel from the surplus of the national service intake. Secondly, if C.M.F. officers, warrant officers and senior non-commissioned officers are willing to accept full time service, they should serve in the C.M.F. and not the A.R.A. The main thing is that the formation of the framework of an Army headquarters and one or two corps headquarters should be undertaken immediately. I advocate, too, that an advisory Citizen Military Forces board be set up to advise the Military Board and Cabinet on C.M.F. matters. I also suggest that much of the equipment which is presently in store be issued to units and that a balanced survey of requirements to cover any shortages that may be disclosed be undertaken immediately.

It is time that counter-arguments, mainly from professional circles, that the C.M.F. could not cope with this type of set-up were well and truly nailed. In 1950, the C.M.F. had a strength of only 18,000, but in 1956 it was training almost 70,000 national servicemen. As a matter of interest, in 1923, under a compulsory call-up, the strength of the C.M.F. was 36,900. In 1950, under a voluntary call-up, it fell to 18,000. Today, it has a paper strength of only 28,000 - more than 9,000 fewer than in 1923 even though our population has more than doubled since then.

Finally, I urge the Government to listen to the opinions of many senior retired C.M.F. officers, and not to rely solely on the advice of its professional Army advisers. There is too much at stake. Those of us who experienced the inglorious schemozzle of 1939-40 do not want a repetition of that sort of thing, yet this could occur again if we allowed the advice of the presently strong to blank out the pleas of those who now have so little voice.

Sirring suspended from 5.52 to 8 p.m.


.- We have had the opportunity, Mr. Deputy Speaker, of hearing the Budget speech of the Treasurer (Mr. Harold Holt), and since then we have had the opportunity of fairly closely analysing that speech. One can only speculate with a great deal of concern, after having heard the speech and analysed it, as to what has happened to the concept of economic growth which we have heard vaunted on several occasions in recent years by the Treasurer as being an important element of the budgetary plan of his Government.

One of the things we need in a Budget, or certainly one of the th frigs the community needs, is an indication of the direction that growth will take. What is required is some indication of the plan, the objective or the goals which the Government has in mind, so that investment can proceed accordingly and projections can be made with some confidence as to the progress that will be made and the economic development that will take place under the Government’s budgetary plans. So it is with a great deal of concern that we have seen this Budget. As the

Leader of the Opposition (Mr. Calwell) very rightly pointed out, it is nothing more than a bookkeeper’s budget. There is no economic philosophy behind the outline given here. In fact it is little better than the balanced account of the corner storekeeper, with something taken out from one side and something put back on the other, with the ultimate hope that the jolly thing will come out in some sort of equilibrium.

But what has been achieved in the last 1 2 months and what will be achieved in the next 12 months? These are very important questions. What has been achieved in the last 12 months is related fairly directly to what can be achieved in the next 12 months, and so I want to point out certain aspects of the situation. The Treasurer has stood in this House and suggested that because the gross national product grew by 9 per cent, in the past 12 months at current prices some sort of significant achievement has been made. In his usual grandiloquent style, of course, he completely glossed over the fact that this was at current prices, that there was no adjustment for price movements in that 12 months, no allowance for the fact that in the past 12 months there had been an increase of 4 per cent, in prices and no allowance for the fact that in the past 12 months there had also been an increase of 4 per cent, in the work force. When one allows for these two factors one finds that in fact the growth of the gross national product has been at best no more than 1 per cent., and even this is a rather doubtful achievement.

Having discovered this I was moved to find out, if I could, just how significant or important has been the achievement, in terms of growth, of this Government during its term of office. I have, therefore, obtained a table which shows the percentage growth of gross national product from 1953-54 until the present time, the percentage growth of the consumer price index - which will show the movement of prices or the cost of living in the relevant years - and the percentage growth of the work force in those years. I then estimated the actual growth in round figures. With the concurrence of honorable members 1 shalffil have this table incorporated in “ Hansard “.

Compiled by officers of the Commonwealth Parliamentary Library Statistical Service from figures published in Commonwealth Bureau of Census and Statistics’ “ Employment and Unemployment “, “ Consumer Price Index “ and “ Australian National Accounts - National Income and Expenditure “.

Canberra, 31st August, 1965.

One important fact that emerges from this table is that, although the table covers a period of 12 years, in only five of those years did the actual growth reach or exceed 4 per cent. In fact there was only one year in which it exceeded 4 per cent.; that was 1962-63 when the growth rate reached 5 per cent. In 1961-62 in terms of growth we actually lost ground. We lost about 1 per cent. That, of course, was the time of the credit squeeze. If honorable members study this pattern of growth they will find that only on one occasion was there a 5 per cent, rate of expansion, on four other occasions there was a 4 per cent, rate, and then in the other years with great mediocrity the Government could achieve rates of only 2 per cent, and 1 per cent. These figures show a convulsive, distorted pattern, a rather blotchy and poor performance by the Government and certainly one which brings great discredit upon it. It is also clear that our achievement today is well below what it should be and what it would be if we avoided the recurrent setbacks in our economic pattern that have been occurring.

I think it was in 1962 or 1963 that we heard the Treasurer say, speaking in his usual grandiloquent style, that the ultimate aim of the Government was an annual growth rate of 5 per cent., but the Government has not achieved this, and it is notable that the Treasurer has kept pretty clear of precise growth rates in his more recent Budget statements. We are quite confident that in this country we can achieve a growth rate of 5 per cent, and, in fact, an even higher rate. As my colleague the honorable member for Melbourne Ports (Mr. Crean) has pointed out on more than one occasion, if we arrange a more efficient allocation of resources in the community we will get a far bigger return in productive output, reflected in higher living standards and a faster growth rate, than we have obtained under the rather haphazard and chancy methods to which the present Government seems so inflexibly dedicated.

In the last 12 months, then, there has been no actual growth, and the indication for the next 12 months is that there will be no actual growth. The best we can hope for is to mark time. But having looked at the Budget papers and assessed the various propositions put forward, I rather fear that there is every indication that we can expect a backslide in our economic performance. I have in mind, for instance, the much vaunted Statement No. 6 in the Budget papers, in which reference is made to the fact that the Government proposes to put in £150 million as direct expenditure in the community. Then much is made, of course, of the virtues of this and the so-called multiplier effect in the community. The suggestion is that with £150 million going into the economy and circulating, it will be responsible for a much greater degree of productive output. Portion of the statement says -

But it seems likely that, on balance, the increase in incomes stemming from the very large increase in direct expenditures on goods and services involved in the Budget will exceed the reduction in incomes resulting from the increase in taxation and other receipts (a considerable part of which will be realised only if incomes and expenditures rise strongly in 1965-66), net of internal transfer payments.

Well, this is a fairly optimistic approach and I wonder how the Treasurer or the Treasury arrived at the conclusion that £150 million of input will have a multiplier effect which will outweigh the reverse multiplier effect of the £209 million that will be taken out by the Government. Even if we allow about £60 million of that which is being taken out as coming from savings and a reduction in imports - and this seems to me a rather hefty amount to allow for these sources - we still have about £150 million that is coming out and will introduce the reverse multiplier effect, which will reduce the multiplication of consumer demand within the community. So on this basis we would have a balancing situation, with what is being taken out equating to what is being put in.

But there seems to be more implied in the situation outlined in the Budget than this. There appears to me to be a very real possibility that there will be a consolidating effect of this reverse multiplier which may even result in exceeding the effect of the £150 million which I assess rather conservatively as coming out of direct spending. The White Paper on National Income and Expenditure indicates that the increase in non-farm stocks in the community in 1964-65 amounted to £252 million. I dearly wish that we could get some breakdown showing what proportion of this represented stocks of imports. This is fairly important. We could easily have an easing down in the accelerating effect of private fixed capital investment because consumption for immediate production is easing off as stocks are being used up. This is an important consideration. It involves an easing off of the so-called accelerator effect and that will accentuate the setback. Is not this in itself an indication that in the ensuing 12 months we could easily have an easing of our fixed capital investment in the private sector owing to the cumulative effect of slowing down in economic progress?

I believe that these things represent very real economic problems for the ensuing 12 months. Nowhere in the Treasurer’s Budget speech or in the papers presented in conjunction with it do we find any statement that would calm one’s fears that we are entering on this sort of era. In fact, the further one goes in analysing the Budget, the more obvious it becomes that the economy of this country has reached a very delicate stage. We have the great problem of imports. The current account deficit last financial year was £375 million and imports increased by 22 per cent. Last financial year, we had a capital inflow of £375 million. What this means in fact is that we are living beyond our means. We are bringing in more in imports than we can afford to pay for out of our own productive capacity. In order to offset this, to a certain extent, as the Deputy Prime Minister (Mr. McEwen) has pointed out, we are selling a little of Australia each year - a small corner here and there. This may be a flour mill or some other component of our national resources. The only heritage that we have left to show for this will probably be some holes in the ground, or something of the kind.

Our overseas reserves fell last financial year by £158 million, to £696 million. The Treasurer has suggested that this is still a fairly healthy level of reserves. This might be so if only we had some indication that our reserves would be held at about the present level and not allowed to fall lower. But all the indications we can get are that our reserves are likely to nose dive to even lower levels. In the last 12 months, we have had the problem of falling export prices. At the same time, we have encountered the problem of rising import prices. This situation undoubtedly will continue. Furthermore, we have experienced a serious drought that has affected wide areas of the country and has reduced our capacity to earn export income from our exports of primary products. The total sales of wool will probably be down this year. Our wheat sales, too, will probably fall. These are the indications given in the report of the Reserve Bank of Australia. Export earnings of other sectors of primary industry also are likely to be reduced. In fact, our total output of primary products is likely to be down considerably.

Any honorable member who represents a rural electorate or has any association with primary industry realises just what has occurred in the recent drought. Farmers have been reducing the numbers of stock carried. When the time arrives for them to replace the lost numbers, stock will be fairly expensive and it will be a slow process for them to replace the animals that they have writen off. This will be reflected in lower output. So the problems in the next 12 months, I believe, will be much worse than the Treasurer has cared to paint them to the House. The Reserve

Bank, or, at least, Dr. Coombs, who, I presume, prepared the Bank’s report, apparently considers that this will be the situation, for the report for 1964-65 states -

Although Australia’s reserves at 30th June were still substantial, the run-down since June 1964 has shown again how quickly the balance of payments can change. It is always difficult to look ahead, but as we entered 196S-66 the immediate prospects suggested that the decline in reserves would continue. As a result of severe drought over wide areas, the output of wheat, wool and some other products was expected to be lower than in 1964-65, imports seemed likely to continue at high rates, and the prospects for capital inflow were more uncertain.

All these things on which the Government has so dangerously hung its hat in the past, especially the capital inflow, seem to be the core of the real threat that faces us, and they are aggravated by the problems that have grown out of the drought and the poor handling of our economy generally. Indeed, in the next 12 months, we shall probably face serious problems as a result of the policies on overseas investment now adopted in the United States of America and the United Kingdom.

The present Government, of course, has really done nothing to undertake a major offensive for the development of export industries for Australia. Once again, I refer to the attitude of the Deputy Prime Minister on this subject of overseas investment in Australia. First, I laud him on his national loyalty and his concern for the welfare of this country. Karmel and Brunt recently prepared an economic report, which has now been published. They pointed out that in 1959, of 275 companies in this country which were affiliated with United States interests and which intimated that they were interested in engaging in export trade, 40 per cent, stated that they were prevented by direction of the parent body in the United States from doing so. This underlines the fact that we have become heavily dependent on overseas investment and that by allowing this to happen the Government has allowed a very serious weakness to develop. So this Government has no plan for the economic development of Australia. It has given us no projections for the future and it has given to business no guide lines as to just what can really be expected in the next 12 months. Certainly, the Government has shown no initiative. It has given no indication of any action that would give encouragement to the business sector of the economy. So hesitancy and doubts have developed in the community.

Let me return again to the problem of the Budget and point out that last year’s Budget did not promote the growth of the economy. This year, at best the economy will not grow, and in fact it will probably slide back. Let us look at the measures that the Treasurer has adopted to meet the expenditure for which he has prepared in this shopkeeper’s Budget. Honorable members on this side of the House have pointed out on previous occasions the inequity of indirect taxes because they represent imposts that fall most heavily on the wage earning section of the community. We know, of course, that the economic policies of the present Government always bear most heavily on the wage earner. We have seen how the Commonwealth Conciliation and Arbitration Commission has been dictated to by this Government and how it is used as an instrument of the Government’s economic policy for the purpose of freezing the basic wage at about 10s. a week less than it should be, thereby cutting back the standard of living of people who are dependent on the basic wage.

From the financial year 1953-54 to the financial year 1963-64, factory production increased by 1 14.71 per cent., the basic wage by only 30.51 per cent, and average weekly earnings by only 62.08 per cent. This shows bow the standard of living of the wage earner has been cut back, despite the fact that the workers of this country have enormously increased productivity and output. But they are not sharing commensurately in the increase of productivity and output for which they have been responsible. I heard the honorable member for Melbourne Ports point out in this House last week that the wages bill of the Australian community in relation to gross national product is very low compared to the ratio in countries like the United States, the United Kingdom and New Zealand. So the economic problems with which we are confronted are not caused by the wage earners, although, in view of the way wage earners are treated, one would almost be led to believe that they are responsible for these problems.

A person with an income of £1,200 a year earns the equivalent of about £23 a week. On this, he at present pays income tax totalling £149 lis. 8d. a year, or £2 17s. 4d. a week. The Government now proposes to increase his tax by ls. 5d. a week. If this person has half a dozen 1 0 oz. glasses of beer a night, six nights a week, he has to pay an extra 3s. in excise. He already pays excise at the rate of 7d. on a 10 oz. glass. So he will now have to pay in excise on his beer a total of 24s. a week. On cigarettes, he will have to pay in additional excise ls. 9d. a week if he smokes a packet a day, which, I understand, is a moderate consumption. He already pays in excise ls. 7d. a packet. So in all, he will now have to pay a total of 12s. lOd. a week in excise on his cigarettes. The petrol tax has been increased by 3d. a gallon. Suppose the average motorist drives about 250 miles a week and has a car that gives 25 miles to the gallon. He will use 10 gallons of petrol a week and will pay an additional 2s. 6d. a week in petrol tax. He already pays Hid. a gallon petrol tax, making a total of 9s. 94d. a week for 10 gallons. So, with the increase, he will now pay a total of 12s. 3id. a week in petrol tax. Out of an income of £23 a week, he pays £2 17s. 4d. tax at the moment, plus an extra ls. 5d. He has to pay £1 ls. for his beer plus an extra 3s. He pays Ils. Id. for his cigarettes plus an extra ls. 9d. He pays 9s. 9d. for his petrol and he will pay another 2s. 6d. On these items he has been paying £4 1 9s. 2d. a week and he will pay another 8s. 8d., making a total of £5 7s. lOd. He will be left with only £17 10s. Of course, he pays indirect tax on many other items and his living standards are affected accordingly.

At the other end of the scale there are people, such as company directors, who are able to evade these increases because they are able to wield an expense account - the so-called swindle sheet. They will be able to avoid entirely the increased costs created by this Budget. These costs will be passed down the economic ladder to the person at the other end who cannot pass them any further. The buck passing ends with the wage earner, the small business man and the farmer. The companies will pass on the increases. This seems hardly fair when we recognise the concentration of economic wealth and power in this- community. The people who are really able to afford the additional costs will be better off than the masses who have to bear the burden. The people who will really benefit by avoiding these costs are the affluent and well cared for few at the top of the economic scale. The top 9 per cent, of income earners, who receive £3,000 a year or more, receive 25 per cent, of the total of incomes. lt is hardly fair that big business is so big and yet so very few are able to participate in it. The 121 companies in this country that earn profits of £1 million or more a year constitute 1.2 per cent, of the total companies, but they earn 49 per cent, of total company profits. Yet the Government makes no effort to impose a capital gains tax or an excess profits tax of to abolish the use of swindle sheets. Some action such as this has been taken in Great Britain. A capital gains tax operates with reasonable effect in the United States of America and brings in at least some money to the Treasury. We ought to be mindful of this development in Australia. We are often told that there is no such thing as class motivation -within the structure of our society. I think the recent work of C. Wright Mills, “The Power Elite”, very adequately explodes this theory. He points out the development in the United States of America, which has been paralleled in this country. He shows that the people at the lower end of the social economic scale have improved their living standards slightly but the people at the top of the scale have improved their concentration of wealth tremendously. They have done so to such effect that they employ armies of accountants, lawyers and financial advisers to tell them where their money is invested and to acquaint them from time to time of thenworth. Many of them would not know how their investments are developing. It is a case of the crumbs to the masses and the plums to the few. It is a very definite case of class distinction resulting from the policies of the Commonwealth Government.

In this country, 3.17 per cent of the firms employ more than 51.42 per cent of total factory workers. This relationship has existed for many years and is a clear indication of the unassailable heights of economic power that are being attained by the few. Unless we attack these apparently invulnerable bastions of privilege and influence that can affect the course of destiny of this country, it is difficult to comprehend how we can expect successfully to have balanced economic growth in Australia. Another example of the concentration of economic power can be found in life assurance. We have 40 life assurance companies in Australia, but five of them have 90 per cent, of the business. We have 15 cheque paying banks, but 75 per cent, of the assets are handled by the top six. If we include the Commonwealth Trading Bank, which has 15 per cent, of the assets, we find that 90 per cent, of the assets are in the hands of seven banks. Karmal and Brunt, in their work which I mentioned a while ago, said that Wheelwright, an economist, carried out a survey of 437 million voting shares representing 490,000 holdings. His findings were that 99.6 per cent, of the holdings represented less than £10,000 of nominal value. This meant that .4 per cent, of the holdings equalled 37 per cent, of the voting power. This, of course, brings out a factor that has been well established from research work in Great Britain. It is that a diffusion of shareholdings throughout the Commonwealth means that people who hold even as little as 5 per cent, of the finance of a company can wield tremendous and decisive power in the company. The diffusion of shareholding power throughout the community amongst the many other shareholders means that the other shareholders are incapable of expressing a coherent voice of opposition to or of influence in the decisions of the companies.

In industry where eight firms account for 50 per cent or more of national sales or manufacturing, it has been discovered in the United States of America that such firms employ 27 per cent, of the manufacturing work force, but in Australia’ they employ 60 per cent, of the manufacturing work force. The Government can hardly feel complacent about this situation. One can only be alarmed and indeed incredulous at the contrast between the alacrity with which the Government freezes wages, imposes industrial regulations on the trade union movement and imposes harsh penal laws, and the tortoise like pace with which it introduces, for instance, legislation to control trade practices. I have been here for four years and in that time the Government has juggled its restrictive trade practices legislation around the House. We do not seem to be any closer to a conclusion.

One of the really important aspects of our economy that the Government has not been prepared to face up to is the activities of fringe lending institutions - the hire purchase companies. Seven out of 51 of these companies have bank affiliations. During the credit squeeze, the Government used its monetary powers to cut back the amount of money that was being released into the economy from bank sources. It was able to do this under the banking legislation and the banks, as such, responded to the Government’s action. But they diverted the money through their hire purchase affiliates. Surely this exposed a glaring weakness in die Government’s power to administer economic policy. With the concurrence of honorable members, I incorporate in “ Hansard “ a table showing how, during the credit squeeze in the early part of the 1960’s, seven bank associated hire purchase companies were able to increase their profits while the profits of the other 44 fell rather startingly.

The interesting point in the table is that in 1963 - this is a consistent pattern over the years - the net profit of the seven bank associated hire purchase companies was £6.817 million and the net profit of the other 44 non-affiliated companies was only £1.214 million. It is fairly obvious that the banks are using the hire purchase companies as an extension or an arm that they are wielding with great effect in the community to increase their profit and to avoid the restrictions of the monetary policies of the Government. It is also very clearly shown that the banks are becoming more dependent on the profits of their hire purchase affiliates for a very large portion of the overall profit earning capacity of the banking groups. I again seek leave to include a table in “ Hansard “.

Mr McMahon:

– No, not another one.


– Only a minute ago the Minister agreed. This is the final one.

Mr McMahon:

– I did not think the honorable member would produce three of them.


– The Minister said earlier that I could have leave. Surely the Government is not frightened to have these facts put into “ Hansard “.

Mr McMahon:

– The honorable member has been treated generously and he has abused the generosity.


– The Minister’s will not grant leave?

Mr McMahon:

– No.


– We have at one extreme Esanda Ltd., which contributed between 59.5 and 69.5 per cent, of the consolidated bank profits in 1961 to 1963. For three of the seven banks the dividend dependence was over 40 per cent, in 1962-63. Thus in 1963 the Esanda Ltd. dividend provided 72.5 per cent, of the E. S. & A. Bank dividend. High percentage dependence was also calculated for the Bank of Adelaide and the National Bank of Australasia at 45.7 per cent, and 43.8 per cent, respectively in 1963. I must conclude on this point because of the time limitation. I can only add that 1 am astounded at the apparent alacrity with which the Government or the Minister has moved to preserve the anonymity of the activity of the hire purchase companies in this country.


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

Minister for Labour and National Service · Lowe · LP

Mr. Deputy Speaker, I think it is a fair generalisation to say that this Budget has excited less public criticism, less criticism from the Opposition and less discussion among the academic community - among the economic technicians - than any Budget I can remember during the last 15 years, and for a very good reason. First of all, we have a condition of full, if not over-full, employment in this country. Australia is prosperous. I think most people expected that this Budget would make a substantial addition to the defence vote of the nation. Against that background I think that honorable members can understand why public criticism and, for that matter, as I have said, technical criticism has been kept to the minimum.

Before I touch the three subjects in the Budget which I want to discuss in the House tonight I would like to put the Budget in perspective. Last year when the Budget was being framed the Treasurer (Mr. Harold Holt) had a double responsibility. The first arose from the fact that it appeared as though the economy could become overheated. Consequently, some action - some taxation measure - had to be taken in order to reduce the strength of the forces which were leading to over-expansion and inflation. Secondly, the Treasurer had to make provision for a considerable degree of flexibility in order to permit a diversion of resources from the private sector of the economy to the defence needs of the community. I think it is true to say that immediately before the Australian Loan Council meeting this year and, for that matter, just before the Budget was prepared, we had achieved a state of delicate balance in the economy. It is fair, therefore, to say that, the objectives of the Treasurer had been substantially achieved. I think it is true to say that the principal objectives set by the Treasurer in last year’s Budget, in fact, were realised.

So it is against that background that I want to deal with the Budget itself. First of all, I want to deal with a statement made by the honorable member for Oxley (Mr. Hayden), who has just spoken, that the rate of progress in this country had slowed up and had probably turned negative. As the Treasurer pointed out in one of the papers associated with the Budget, the rate of development last year - that is, the increase in the gross national product - was not a small 1 per cent. It was not 2 per cent. In fact, as stated in this paper, it was 9 per cent. Those figures which he has given indicate in clear and in unmistakable language the degree to which honorable members can rely upon the arguments put by the Opposition.

Mr Birrell:

– Why did you not put that up to the Conciliation and Arbitration Commission?


– I shall leave that question to another day. This is the perspective and background against which the present Budget has to be judged. Before I touch the Budget itself, may I say something about national priorities? Unless we understand what are our national priorities it is impossible fully to understand what the Treasurer proposed in the Budget and what the Government hopes to achieve.

The first priority in any Budget must be national growth and national development. In other words, unless we have full employment of our manpower and our resources and unless we can be certain of strong and steady economic growth, we can never hope to build upon that a programme of social justice, nor can we hope to develop our defence potential. So we must always expect, as an implicit assumption in any Budget developed by a Liberal-Country Party Government, that economic growth, national development and full employment must take priority of place. If honorable members look at this Budget - and I hope to deal with this subject later on as the main thesis of my statement to the House - they will find that it is expansionary and is designed to ensure that national production and national development continue at a steady, and even a strong, rate.

This year while the Government had as its objectives these implicit objectives of national development, national growth and full employment, undoubtedly people expected a substantial improvement in defence capability. This is a subject I want to touch on later because I believe that honorable members will find that the emphasis here, both in political and in financial terms, has been heavily weighted for defence. In other words, the economic objective remains the same - rapid and strong development - but the political objective is one of substantial improvement in our defence capacity.

Therefore, as I now turn to the Budget, I want to ask myself one question: Can we be certain that this Budget itself and the associated financial measures will make a contribution to what I choose to call progress? In other words, will it make a contribution to the growth of the economy and, at the same time, does it mean that we have a humanitarian social service policy and will it make a real contribution to the defence needs that I have previously spoken about? First of all, as to the problem of economic growth, I have to turn to the tables presented by the Treasurer. If we look at the two sets of figures which are indicative of whether or not the Budget is expansionary, I think we must come to this conclusion. The previous speaker, the honorable member for Oxley, mentioned that the gross addition to the demand for goods and services as a result of this Budget was something of the order of £150 million. He also mentioned that expenditure of this kind - expenditure on goods and services - has what is called a “ multiplier “ effect. In other words, as the money spent on goods and services is spent it has a continuing effect in other avenues. Instead of having a net increased demand of £150 million, the increase will be much more substantial than £150 million. It could well be of the order of £50 million to £60 million more than that figure. I do not want to be precise about a sum. I merely mention that it has a multiplier effect. So we can say that, on the demand side alone, there will be a substantial net addition to demand.

On the other side, the taxation side, there will be an increase in taxation - leaving out what are called “ transfer “ payments of £77 million- of the order of £209 million. That amount must be set off to some extent against the increase of £150 million, plus any actual multiplier effect on demand itself. No person can actually state what effect that increase in taxation is likely to have because no-one can estimate perfectly what the result is likely to be in terms of a gross reduction in effective demand within the community. Putting the two sets of figures together, I come to these conclusions: First, I believe that in the early parts of the year, perhaps during the first nine months of the year, the net impact of the Budget itself will be expansionary. I say that against the background that we have a delicately poised, delicately balanced economy, brought about in large measure by the Budget and financial and central banking activities last year. I think that the net addition to the demand in the first nine months or so of this financial year will be expansionary and that in the last two, three or four months, when taxation has to be paid, there could be a slightly moderating effect. But the net effect immediately, I believe, will be one of expansion.

However, the point that I want to make here, because I think that unfortunately it has escaped public attention for too long, is that I do not regard the impact of the Budget as having a decisive effect upon the trend of the economy. I think there are certain influences that could have an effect but that are not being felt now. At the moment those influences are unpredictable. Without doubt, the most important, to which the Treasurer drew attention on one or two occasions in the Budget, is the impact on the internal economy of the deficit in our balance of payments. Last year the deficit was of the order of £158 million. This year, for obvious reasons, we have not attempted to estimate the deficit, but I would be very surprised if it were not at least as great as we had last year. The impact of such a deficit on the economy can, of course, be substantial. I will not attempt to estimate that impact now because, as I have said, it is unpredictable. It is one of the elements to which constant attention must be given by the Government.

The second element to which we must pay attention relates, to capital movements into Australia. Those who have watched the economy carefully during the course of the last few years will by now have accepted the view that we could not have restricted the private capital inflow into this country unless we were prepared to slow up national development. None of us is prepared to make that decision. This year, because of decisions that have been taken by the Governments of the United States and the United Kingdom, there is - I put it in this way - a possibility, not from our action but from the actions of other countries, of a restriction of the free flow of capital into Australia. If that happens it can have a moderating effect upon our development. Again, I make no precise estimate about the possible effect of these influences because these, too, are unpredictable.

The last influence that I wish to refer to relates to what is called the change that is occurring in our terms of trade. I refer there to the fall in international prices for commodities that Australia sells and the consequent change that can occur in the farm incomes of Australia. Again, at the moment this is not a predictable element. If these elements change substantially we could find them making a decisive impact on the economy. I can say that these elements are cautiously watched by the Government. If it should so happen that changes occur and they do not have too great an effect, counter action can be taken quickly to ensure a healthy rate of progress and to ensure also that our defence expenditure is maintained at a high level.

The situation can also be looked at in a different way. No individual or country can do more than his or its resources permit. Achievement is always restricted by the manpower, the materials and the equipment available for progress. So we can usually look at our prospects for the future against what I would call the supply of materials, the supply of equipment and the supply of manpower, and against the possible demand. If we are to prevent overheating and achieve the best results it is desirable, in the nation’s interest, that supply and demand be kept in near equilibrium. This year, whilst we do not expect development to take place, or the gross national product to rise, at the same rate as last year, we expect a substantial increase on the supply side - not as large as in the preceding year, but nonetheless a large Increase.

I base my opinion on these facts: First, there will be an increase of about 120,000 people in the work force. This is a big increase. It is not as big as last year’s, but nonetheless it is big. Secondly, as I have said previously, imports are bound to remain high. Lastly, the production figures released by the Government Statistician during the course of the last few days show that production is steadily increasing and, whilst we may not reach the same rate of increase as last year we can be certain that this year production will increase substantially. So, although I do not want to labour the question too much in terms of supply and demand, I think we can be certain that national development will be at a high level, though perhaps not at the high level that we had last year when there were considerable unemployed resources that we could take up.

I turn now to two other aspects that I have mentioned. I have used the word “progress” because I think that this Budget has to be assessed not only on the rate of economic growth but also on whether we have introduced what I would regard as an enlightened social services policy. That policy has to be judged on two criteria. The first is that we could not spend a great deal more in terms of consumption expenditure because it was in the rate of growth of consumption expenditure that there had to be some restriction. Secondly, we follow this principle - one that has been so frequently mentioned by my colleague from Sturt - that whenever we have a limited amount of money to apply to social service benefits we want to apply it in the areas where there is the greatest need and where the greatest contribution can be made to welfare. I want to mention three avenues of social service where this Budget makes a notable contribution. The first one relates to what we call supplementary assistance. This I think is of great importance. Some years ago the Menzies Government decided to give supplementary assistance to single pensioners who pay rent and who have little or no other income. The amount was then fixed at 10s. a week. This year we have decided to double the assistance to £1 per week. This is an improvement that benefits the most needy and most deserving section of the community. Secondly, it has been decided that it will not be available exclusively to the single pensioner but will also be available to some married people.

Mr Curtin:

– Only to some of them.


– Yes, it is true that it will be available only to some. In cases where a pensioner has a wife who is receiving a wife’s allowance, the special assistance of £1 per week will also apply. The pension payable to such a married pensioner will be increased to £6 per week, which is the same as the pension for a single pensioner. The effect will be to give up to £1 10s. a week additional to this deserving type of pensioner. As I have said before, it is part of our social philosophy to give where the need is greatest. I am of the opinion that this is one section of the Budget that all people should applaud.

The second point that I want to make relates to another section of our social services programme that 1 think has met with universal approval. I refer to the abolition of the means test on eligibility for the pensioner medical service. Until this year there was such a means test.

Mr Barnard:

– Since 1955 there has been.


– Order! The honorable member for Bass will cease interjecting.


– Yes, since 1955 there has been a means test which prevented some pensioners from obtaining the benefits of the pensioner medical service. The restriction was that if a single pensioner had an income of £2 or more a week he was not entitled to the benefits of the pensioner medical service; if a married pensioner couple had an income of £4 or more a week they were not entitled to those benefits; and if a married couple, one of whom was a pensioner, had an income of £5 or more a week they were not entitled to those benefits.

What we have done in this Budget is to remove completely the means test on age, invalid, widow and service pensioners and on people in receipt of the tuberculosis allowance. This is one reform contained in this Budget which has given an enormous amount of pleasure in my own electorate and which I am certain has met with widespread approval throughout the Australian community. These are two measures in our social services policy which, I believe, make a contribution to the most needy sections of the community and which show that the humanitarian policy of this Government has been implemented and, in fact, will be continued.

The second point with which I wish to deal is the charge made by the Leader of the Opposition (Mr. Calwell) to the effect that we have wrongly classified this Budget as a defence Budget and that, to use his own words, we have been guilty of deceit. I want to analyse that proposition. I think it can be truthfully said that, whilst we do not argue and never would want to argue that this is wholly a defence Budget, the absolute increase in defence expenditure is greater than that in any other avenue of expenditure, including social services and payments to the State Governments.

The actual increase in defence expenditure this year will be of the order of £81 million. Our defence expenditure will have risen from about £190 million in 1958-59 to £386 million, which is the Budget figure for this year. No-one could deny that those figures are large. The proof of the case that I wish to put - namely, that we have given special emphasis to defence and, apart from national development, have given priority to defence - is contained in these figures: This year the increase in taxation revenue will be of the order of £72 million. As our defence expenditure will rise by £81 million, that proves that had it not been for the increased defence expenditure we would not have had to increase taxation at all. Therefore, we are entitled - and justly entitled - to claim that, apart from the other matters that I have mentioned, priority has been given to defence. Let us look at the matter in another way, namely in terms of the demand on resources within Australia. This year indirect taxation will be increased by £54 million. Of the additional £81 million that will be spent on defence this year, approximately £58 million will be spent internally. That shows, that additional internal defence expenditure will be higher than additional revenue from indirect taxation.

But that does not end the story. Already the Prime Minister (Sir Robert Menzies) has announced in the House that another 300 troops will be sent overseas. In fact, that decision was made after the Budget had been prepared. We also decided after the Budget had been prepared that our national service training programme would be increased and, for the time being anyhow, would be maintained at about 8,400 trainees a year. That makes a notable increase in our defence capacity and our defence capability. So we are not restricted to the actual figures contained in the Budget itself. Should the need arise and should the strategic necessity exist, we would have no hesitation at all in increasing the defence vote. Already we have given an indication of our intentions and of our good will, and if the necessity arose we would have no hesitation at all in increasing defence expenditure.

So, I think we are entitled to say not only that we have ensured that economic development will continue and that our social services policy will be effective but also that we have made a significant increase in the defence capability of this country. I will not refer to any great extent to our defence programme itself. I think honorable members who have been in this House for at least 15 years will know that never before - other than in time of war or in time of defence emergency - have we been able to mount a defence effort equal to what we have today. By the end of next year we will have a fully trained, fully equipped and mobile army force of about 40,000 people. In other words, we will be able to put the equivalent of seven full battalions in the field.

The last matter that I want to mention is the criticism that the Leader of the Opposition levelled at the taxation measures. He called those measures unfair and inequitable. I wish to point out the degree of inconsistency in argument of the Leader of the Opposition - inconsistency in argument about matters that are outside his ken. Three or four years ago, during a time of slight recession, the Treasurer decided that the economy needed some incentive for expansion. Consequently, a tax rebate of 5 per cent, was granted. At that time the Leader of the Opposition said that that action was contrary to the interests of the wage earners and that all the benefits would flow to people whose income exceeded £24 a week. I do not argue about that. It may or may not be true. What I want to point out is the inconsistency in his argument.

Last year that 5 per cent, rebate was withdrawn and income tax was increased by 5 per cent. If the argument was that the 5 per cent, rebate was against the interests of the worker and in favour of the man on the higher income, he had to argue that the cancellation of the rebate had exactly the opposite effect and that it was just to the worker and unjust to, or acted against the interests of, the wealthier person. If he argued in that way, surely it was consistent for him to argue, when income tax was being increased by a further 5 per cent., that that was very just, and in the interests of the working man. I believe that we are entitled to say that it was very just.

I wish to quote some figures that have just been given to me to prove the point. I take the case of a man with a taxable income of £10,000 a year. In 1954-55 he paid personal income tax of about £4,600, or 46 per cent, of his taxable income. This year that man will pay £6,600, or well over 51 per cent, of his taxable income. Therefore, can it be claimed that this increase works in favour of the man on the higher income, or are we justified in arguing that the man on the higher income will bear the hurden of the increase in personal income tax? 1 am not arguing on the merits one way or the other, I am merely trying to point out the inconsistency in the argument of the Leader of the Opposition.

Coming to a point which I regard as much more fundamental, I take the case of the man on the small income. I have the figures here. They are revealing. The gentleman to whom I have referred will pay a substantial increase in tax - an extra £115 - but the man with a taxable income of £600 a year will pay only an extra £1 a year. This Budget is just and equitable, not only for the reasons I have stated but also in terms of the contribution that it makes to national welfare, social services and the defence of this country. It deserves the full approval of the Australian community.


.- The Minister for Labour and National Service (Mr. McMahon) has come to take a remarkably more rosy view of the economy than he did a few months ago. Officers of his Department were in constant attendance at the basic wage hearing last March before the Commonwealth Conciliation and Arbitration Commission. The Minister presumably was responsible for the following phrases in the Commonwealth’s submissions to the Commission -

No easing of the current strain on productive resources is at present in sight.

Externally our situation has taken a distinct change for the worse.

By now the price movement has reached a significant momentum.

Prices have been rising for a year or more and the movement has gathered pace.

There is not in sight any trend or development which might ease the pressures on the economy, whereas a wage increase would certainly add to them.

An increase in the basic wage at this juncture would be fraught with great danger for the economy.

What has happened in the few intervening months since last March to cause the Minister to give such a completely different picture of the economy? As the Australian

Council of Trade Unions said to the Prime Minister (Sir Robert Menzies) a couple of months ago, the Commonwealth’s submissions to the Arbitration Commission made the prophecies of Jeremiah look like the ravings of an unbridled optimist.

The Minister for Labour and National Service referred to economic growth. In his Budget speech a fortnight ago the Treasurer (Mr. Harold Holt) referred to economic growth. One would expect that an increase in real output would be an important factor in determining any increase in wages and salaries, on which the vast majority of our fellow citizens depend for their living. On almost every occasion in the last year the Treasurer has pointed to economic growth. In his Budget speech he said -

Cross National Product at current prices showed an increase of 9 per cent

The Minister for Labour and National Service again referred tonight to the growth which has occurred, yet before the Commission the Commonwealth was very reticent about the increase in output. It misled the Commission. It told the Commission one story for its economic purposes. In the Budget debate it has been telling the public another story for its electoral purposes. On what occasions are we to believe this Government?

Mr Beaton:

– It is a Jekyll and Hyde government.


– As the honorable member for Bendigo has said, there is a schizophrenic or Jekyll and Hyde character about the Treasurer and the Minister for Labour and National Service, who hopes to succeed the present Treasurer.

This is not the first time the Government has misled the Arbitration Commission or told the Commission a story different from that which it has told the public. Eighteen months ago I pointed out that in the 1963 basic wage case the Commonwealth made quite dishonest submissions to the Commission. In August 1962 the Treasurer had budgeted for a deficit of £118 million, which he claimed was just the amount required to ensure expansion of the economy. In the course of the year it became clear that exceptional loan raisings would mean that there would be a much smaller deficit. The Commonwealth then became afraid that the Arbitration Commission would think that the Budget had not been as expansionary as intended and that an increase in wages was warranted to lift spending in the community. Thereupon, before the Commission, the Commonwealth asserted that the former figure - a £118 million deficit: - was quite meaningless. The Commonwealth introduced a new yardstick which ignored the exceptional loan raisings. So it is on this occasion. To discourage the Commission from granting any increase in wages at this time the Commonwealth went out of its way to discount the deflationary nature which it had attributed to last year’s Budget. The Commonwealth hoped that the Commission would believe that, as last year’s Budget was not deflationary, the Commission should use its power to ensure that no inflationary wage increase was granted. The Commonwealth suppressed the deflationary Budget impact in the hope that the Commission would then assume this unpalatable task.

It is true that the Minister for Labour and National Service admitted that there was some difficulty in our balance of payments situations this year. This was the one cloud he saw on the horizon. It is on this issue that he knows the Treasurer has taken a big gamble. The Treasurer spoke of a weakening external position and a possible substantial reduction in our overseas reserves. In his Budget speech last year the Treasurer pointed out that our overseas reserves had risen by £228 million during the preceding year. This time he reported that they had dropped by £158 million. The Minister for Labour and National Service said that he could not predict by how much they would drop this year but that he would be surprised if the drop were not as great as last year. Well might he be surprised if it were not as great. Over the last three months imports have been running at the record rate of £130 million. It would not be surprising if at the end of next June our overseas reserves stand at only half what they were two years before. The Reserve Bank of Australia is not very optimistic about the situation. This is the only economic report we have had for use in this debate from sources other than the Treasurer. The Bank said -

As we entered 1965-66 the immediate prospects suggested that the decline in reserves would continue

This is the one matter upon which the Minister for Labour and National Service will express any misgivings.

We cannot really understand this Budget unless we view it against the stresses and strains within the coalition. The Minister for Labour and National Service was staking his claim to be the next Treasurer. He was making his run, as the present Treasurer said in an aside. In the statements accompanying the Budget speech the Treasurer went out of his way to make it clear that despite his earlier warnings - he gave very grim warnings before his earlier visit to Bingil Bay two months ago - about the new tax increases, the Budget was really expansionary.

Mr L R Johnson:

– The Treasurer was talking through his snorkel.


– I think it is only fair that listeners should hear the interjection, because it seems to have stirred the Treasurer, who is himself now interjecting.


– The Treasurer is forever blowing bubbles.


– Yes. This Budget is more concerned with the Treasurer’s prospects than with those of the economy. He left it to the Arbitration Commission to do much of this disagreeable work - work that should have been performed on a national basis in the Budget, where the interests of all sections of the community are dealt with, and not just at the expense of the wage and salary earners. The Treasurer believed that a loss of confidence by the trade union movement and the white collar unions was a small price to pay for his aspirations in the Liberal Party. He believed that his prospects were so important as to make it worth while taking a risk with our balance of payments. He felt that he could let the next Treasurerthe Minister for Labour and National Service - clear up the heritage that he would leave. This is what the Minister for Labour and National Service fears. He gingerly danced around the balance of payments problem tonight.

In all this jockeying for position the last consideration is to the real needs of the economy and the people of Australia. The Treasurer keeps looking over his shoulder at the Deputy Prime Minister, the Minister for Trade and Industry (Mr. McEwen). The

Deputy Prime Minister delights in making things as difficult as possible for the Treasurer. He elbows his way into one Liberal portfolio after another. The Minister for Labour and National Service looks covetously at the Treasury portfolio, hoping that the Minister for Housing (Mr. Bury) will not be able to improve his position sufficiently to achieve it and that the PostmasterGeneral (Mr. Hulme) will not succeed with his offer to the present Treasurer of Liberal votes from Queensland in return for the Treasurership. The Minister for Labour and National Service needs little convincing that if the Government is looking for a weak Treasurer he will not get the job. That is, he fears that in the cut up between the Treasurer and the Minister for Trade and Industry he will miss out on the Treasury portfolio.

I have referred to these stresses in the coalition. In the field of general economic policy the Country Party does its best to dissociate itself from Liberal Party policy. The Deputy Prime .Minister - the other Prime Minister as he calls himself - let it be known in as many ways as he could during the 1961 credit squeeze that he had nothing to do with it. He styles himself the leader of the nationally minded and the growth conscious section of the Cabinet. I notice that his colleagues the members of the Country Party applaud my remarks. The implication which the right honorable gentleman makes is that the Treasurer himself is neither nationally minded nor growth conscious. At least once a month the Minister for Trade and Industry makes a major speech on the economy. If no better forum is available to him he chooses some Country Party conference. The Treasurer speaks on these matters only in reply to the Deputy Prime Minister.

The most publicised difference between the two right honorable gentlemen concerns overseas investment. The Treasurer said a fortnight ago that there has been a sharp check to the international flow of capital for investment As the honorable member for Oxley (Mr. Hayden) said earlier tonight, the Country Party leader continues to warn of our selling of our birthright to overseas interests. This. Country Party Cassandra, the Deputy Prime Minister, is eloquent in foretelling our doom, but he has proved just as helpless as the Treasurer in averting it. The Treasurer’s replies to the Deputy Prime

Minister on this subject have become more immediate and forceful. The recent Treasury White Paper on overseas investment, in May 1965, and the last half of the latest Treasury economic survey, were aimed straight at the Deputy Prime Minister. The increased firmness of the Treasury has now apparently persuaded the Deputy Prime Minister that a change of tactics is required. He has turned his attack on this general question of overseas investment away from the Treasury and on to the Department of National Development. He is now developing an interest in the takeover of our minerals. I shall come to that in a moment.

The biggest empire building operation of the Department of Trade is in respect of tariffs - the protection of our secondary industries. Tariff protection is closely related to the question of overseas investment. The Minister for Trade and Industry takes a contradictory stand on it. The Tariff Board is being fashioned as a major policy-making body in the hands of the Minister for Trade and Industry. He has adopted the practice of writing the policy into the reference which he makes to the Board on any subject. The strategy behind the recent and current big industry surveys being undertaken by the Tariff Board is plainly to impose Government - that is Department of Trade and Industry - plans on industry groups. The Tariff Board could indeed do very valuable work in encouraging structural changes in industry where there is already inefficiency, but the Minister for Trade and Industry makes little or no attempt to dovetail tariff policy with the policies of the Reserve Bank or the Treasury. The highest protection seems to be reserved for large overseas companies in the petroleum, textiles, chemical and motor car manufacturing fields.

Through tariff protection the Minister for Trade and Industry is providing a guaranteed market for these big foreign groups and so assists them to expand their stake in the Australian economy. On one hand he protests about foreign takeovers which are permitted by the Treasurer’s open door investment policy, and on the other hand he himself facilitates these takeovers with generous tariff protection. Just where is the policy of protection leading us? For how long can the feather bedding of these industries continue? For how long can tariff protection be used to compensate some industries for the continuous rise in internal costs? Thus on one hand the Minister for Trade and Industry sees the problem of overseas takeovers and on the other hand, facilitates and encourages these takeovers.

The Minister for Labour and National Service referred to national development. He said that national development continues at a steady and strong rate. This does not appear from the Budget. This year’s Budget provides smaller State grants for northern development than last year’s did, and much less than the Budget of the year before that. It provides, in fact, less money than was provided in any Budget over the last five years. The Government’s interest in northern development in particular and in national development in general varies inversely with the size of its majority in the Mouse and the proximity of an election. In 1960- 61 the amount spent on northern development in the States was £1.2 million. In 1961-62, when the Government had a majority of one, it spent £6.6 million. In 1963-64 it rose to more than £11 million. This year it is budgeting for an expenditure of £6 million.

Let me be specific on these northern projects. There has been £11 1/2 million spent on the beef roads project which began in 1961- 62. Only one-quarter of a million pounds remains to be spent on the project. In a few months time not another penny will be available for beef roads in the States. In Western Australia, work on the Ord River project and the Broome and Wyndham jetties began back in the 1958-59 financial year. On these projects the Commonwealth has spent £8± million. Only £300,000 remains to be spent. That means thai all the Commonwealth assistance for northern projects in Western Australia will peter out in the course of the next few months. There are two projects which will continue to receive Commonwealth help throughout the year, to wit the Brigalow project and the Weipa development. They will both peter out next financial year. Such projects require planning. They require some time to get under way, but the Government has undertaken no plans to extend such projects. The Government has made no appropriations for any new projects to get under way. So whatever the

Minister for Labour and National Service may say about the ability to carry on national development there is no question that the Government has made no provision for carrying it on in the north.

Last week the Prime Minister (Sir Robert Menzies) lamented the bad accounting practices of the Liberal Government in Western Australia concerning the Kwinana and Kalgoorlie proposals. The one project on which the Government will spend, this financial year, more than it spent a few years ago will have this increased expenditure only because of this bad budgeting of the State Government in Western Australia. So no thanks to a Commonwealth Liberal Government that this is so. As my colleague from Macquarie (Mr. Luchetti) has said on so many occasions, there are still no plans for carrying on work with the workforce, the skills and the equipment of the Snowy Mountains Hydro-electric Authority. Our Federal Government makes no proposal to act as the United States Bureau of Reclamation does. It makes no proposals to have a regional and temporary body converted into a permanent and national one. What is all this talk about national development? There is no planning and no provision for it.

The Minister for Trade and Industry takes an interest in national development, or northern development, insofar as minerals are concerned. The Treasury has remained inflexible, in fact, some people might say stubborn, in the face of the complaints of the Minister for Trade and Industry about overseas takeovers of our industries, more particularly and ominously the overseas taking over and ownership of our postwar and particularly of our larger industries. So the Minister for Trade and Industry has diverted his interest to national development. He thinks this is an appropriate time to do so because Sir Harold Raggatt, the previous head of the Department of National Development, has been succeeded by a new man, and Senator Sir William Spooner, a stolid, determined character, has been suceeded by a new Minister - a Minister who, moreover, has committed the offence, in the eyes of the Minister of Trade and Industry, of being a Liberal member holding a country electorate. The Minister for Trade and Industry sees this department as being wide open for a takeover. The Minister for Trade and Industry has now taken an interest in minerals as a means of embarrassing his colleagues. He is not interested in northern development; he is interested only in minerals. His department pressed for an inter-departmental committee, composed of representatives of his own department and the Department of National Development, on minerals. Naturally the Deputy Prime Minister’s nominee chairs the committee. Could there be a simpler way of moving into the Department of National Development? It is no coincidence that the Deputy Prime Minister has been talking very much lately on minerals. He has warned about the unplanned development of mineral deposits with overseas capital, which will leave us with only holes in the ground. This was obviously aimed at the Department of National Development. There is no doubt that the Minister for Trade and Industry and his senior officers believe that recent sales of iron ore by Western Australia were made at ridiculously low prices and that they were made without imposing stringent enough conditions for processing within Australia. The Minister always sees the problem but baulks at its solution. He knows that minerals are being used purely as a source of export income; that they are not being used as they should be - as a source of national development and of new employment and new skills. Yet he does not make any provision for this.

We have in Australia all the minerals and all the skills necessary to become one of the great manufacturing countries in steel, and in aluminium. Steel manufacture in the world is now increasingly carried out by government enterprise and quite clearly there should be Commonwealth participation in the manufacture of steel in Australia. The Minister for Trade and Industry knows we have the materials, he knows they should be processed to develop the country and to provide employment, and he knows that Government investment in northern development is tapering off. Next financial year, it will be completely cut out, unless new projects are undertaken. People always ask: “Where will the money come from?” Where did it come from three years ago when we provided £1 1 million for northern development? Eleven million pounds over a couple of years - certainly over three years - would set up the steel works necessary to spur the proper processing in our northern areas. The Minister sees the problem and shies away from it

A decision must soon be made on the question of who gets the lease for the Gove bauxite deposits in the Northern Territory. On the one side there is the C.S.R.AlusuisseA.M.P. group which, with the support of the Minister for Labour and National Service (Mr. McMahon), virtually had the lease. Now the Minister for Trade and Industry has intervened on behalf of the B.H.P.-Reynolds group. So we have a McMahon-McEwen fission on this subject For all his grandstanding about growth and development, the Deputy Prime Minister will not lift a finger to push northern development. Only when he or one of his party colleagues gets control of the northern division of the Department of National Development will he show any interest in this subject. This may be the price which he will demand for support of the Treasurer in future.

There are some other matters in which the Minister for Trade and Industry is interfering or, shall I say, extending his influence into Liberal portfolios. He is doing it in external affairs. The Treasurer referred, with natural brevity, to our record in foreign atd comparing favourably with that of any other country. Of course, it is the Minister for Trade and Industry who is now handling these problems. He undertook Australian representation at the United Nations Conference on Trade and Development last year, not the Minister for External Affairs. Trade and aid are closely related, as the Treasurer will admit How much easier is it, then, for trade to move into this field? Trade is moving into the field of commercial relations with under-developed countries. A couple of weeks ago the Minister for Trade and Industry announced his plans of commercial diplomacy and foreign aid by way of preferential tariffs.

The Minister is now going into the shipping field. He knows what a disadvantage it is that Australia alone among the big trading countries in the world depends entirely upon foreign companies to carry all its exports. We are 10th or 11th among the trading countries of the world. We are the only country among the 40 top trading countries in the world - some of them landlocked like Czechoslovakia and Switzerland - that does not own a single ship engaged in overseas trade. As he does with overseas trade, as he does with minerals, so the Deputy Prime -Minister does with shipping.

He sees the problem and shies away from it. Here again the natural thing would be at least to have some Commonwealth participation in shipping.

What is the Minister doing? He is coming into restrictive trade practices. Later this sessional period we are going to have the long awaited addition of shipping sections to the still longer awaited Trade Practices Bill which used to be called the Restrictive Trade Practices Bill, when it was in embryo over the last six years; that is, we are at last going to have a Sherman Act of an emasculated or bowdlerised kind. We are catching up with the American Federation after a lapse of seven or eight decades. The procedure that is to be adopted is that any of the conference lines will be able to engage in regular trips to or from Australia only if they have a licence from the Commonwealth Government. And what Department does the House think is to issue the licences?

Mr Curtin:

– The Department of Trade.


– The Department of Trade and Industry. Honorable members may suspect that this is an extension of the feud which the Minister for Trade and Industry has for so long had with the former Minister for the Interior, now Minister for Shipping and Transport (Mr. Freeth) who, while administering his former portfolio, had charge of the electoral laws and at least tried to keep them straight in States other than his own. So the Minister for Trade and Industry is intruding into this further Libera! portfolio.

Since honorable members have too embarrassing recollections of it, I need not go into the one matter on which the Minister for Trade and Industry has been thwarted by the Liberal Party. It will be remembered that after the last election bis Department became the Department of Trade and Industry whereas formerly it had been only the Department of Trade. In 1956, the Department of Trade took over the Industrial Development Division of the old Department of Commerce and Agriculture. At the last election, the Prime Minister promised to set up a new secondary industry division within the Department of Trade, but, after months of agitation and answering Dorothy Dix questions from his own members, the Minister for Trade and Industry has had to admit that there is in fact no further top staff in this section at all; there has been a re-arrangement. He has been thwarted as regards secondary industry.

I shall conclude on the general policy of this Budget. The Government still regards wages and salaries as the only variables in the economy and profits, rents and dividends as immutable. It is usually assumed that the social objective of budgets is to take from the few and give to the many. One must concede that the Treasurer has developed a high degree of political proficiency in seeing that as many people as possible suffer from his Budgets, but only just sufficiently as to minimise complaints. With very great dexterity and adroitness, he has included some commendable assistance for a few highly deserving sections of the community. There will be an additional £67 million in income from increases in income tax, excise and petrol tax. Of this £67 million, £5 million will be devoted to new social services. The Minister for Labour and National Service, who can look at family responsibilities with a certain amount of indifference, refers to this as an enlightened social services policy. Five million pounds out of £67 million!

The Minister went on to refer to priorities. Where has the Government set priorities in any of the matters upon which governments can, in fact, plan ahead? We all know that there are matters for which the Government makes grants to the States - housing and roads for instance. This year £51 million will be given by the Commonwealth Government to the States for housing and the Commonwealth itself will spend £35 million on housing. Seventy million pounds will come out of the petrol tax for State roads. These are very large sums and represent part of quinquennial appropriations. But is there any planning on these matters at all? The Treasurer could scarcely conceal his relief at the fact that the amount of money to be spent on housing this year will decline. It will decline much more than he admits because in June this year the amount of . savings bank deposits actually dropped, and it is from these that private loans for housing come.

In all these matters, in fact, where there is claimed to be planning with direct government allocations or regulation, there is no planning at all. What assistance does the Government give for living in the cities, which is where most Australians choose to live, or where most migrants choose to live? What could we do with these vast sums if we had an appropriate list of priorities? What does the Government do about priorities? There is not a single mention of them. The Government in fact does no planning at all. It has had the Vernon Committee’s report for the last four months, having waited three years for it. The public and the Parliament know the views of the Treasurer and the Reserve Bank. The Tariff Board’s report has been signed, but the Minister for Trade and Industry will not table it. The Commonwealth Grants Commission’s report has been signed, but the Treasurer will not table it. The Vernon Committee’s report has been in the Prime Minister’s hands since 5th May; it deals with all our long term problems of population, resources, investment and growth and it is being withheld from us.


.- I have listened with a degree of interest to the speech of the Deputy Leader of the Opposition (Mr. Whitlam) and as far as I could see it consisted mainly of trying to stir up some form of enmity between two senior members of the Cabinet, both of whom, to my observation, are quite well able to look after their affairs. During the remainder of his speech the Deputy Leader of the Opposition appeared to be trying to drive a wedge between the parties on this side of the House. However, the element of surprise has gone from this exercise because it has been practised for at least the last 14 years, and the two government parties can still combine to give the country the government it appears to want, and also to bring down a Budget which has aroused less criticism, to my knowledge, from either the public or the Opposition, than any other Budget that I have seen presented during the time I have been in this Parliament, which admittedly is not very long.

Having paid the mover of the amendment the compliment of studying it, and having moved around in my electorate as much as I have been able to do since the Budget has been presented, I must oppose the amendment and support the Budget, because I believe that is what the people I represent would want me to do. They do exhibit a thought for the men who are in Borneo, in Vietnam and in Malaya. They know that there is a quite positive increase in men and materials in the Services, in warships, aeroplanes and weapons, and that all these things have to be paid for. They envisage at least some increase in the pay-out from the National Welfare Fund, and in addition they foresee nothing that will inhibit the growth and development of this country which has gone on in the past.

In discussing this 1965-66 Budget I want to talk about the pattern of Australia’s development. Many people have raised the subject which is commonly described as decentralisation. In the past I have given some study to this subject and have tried to ascertain what is in people’s minds when they speak of decentralisation. The subject has been talked about by individuals, by groups - some of which have been formed especially for the purpose - and also by governments, both State and Federal. Undoubtedly State and Federal Governments have at times introduced legislation which they have believed would have the desired effect. But I ask: What do people mean, what do they strive for and what do they aim at when they talk about decentralisation? To an extent I think that the word “decentralisation” is a misnomer because what people want, in effect, is concentration. They want to live with more people around them. They want access to bigger concentrations of people - and for very good reasons. One of the reasons why people in country areas particularly want more people and more industry around them is because they and their children will have more job opportunities and they will not necessarily have to break up their homes in order to accept employment. People want a certain amount of selectivity in their employment, and I believe that if this is not available an unsatisfactory situation is inevitable. If a specialist has only one employer in a particular town or provincial city who can use his special qualifications, the situation is satisfactory neither for the specialist nor for the employer.

People also want better educational facilities. They want access to better secondary education centres. In New South Wales the Wyndham report has presented a further problem, because children are now required, and rightly so, to remain at school for a further year, with the result that many smaller country towns will not be able to offer a full high school course. These are some of the matters connected with education that people are concerned with. Now let me turn to tertiary education. I think I am right in saying that there is only one university in Australia that could be called a provincial university. That is the University of New England at Armidale, and I am pretty sure that it has not a medical faculty. I have already referred to technical education, and I want also to mention that people look for better facilities for the education of handicapped or retarded children and slow learners.

There is another very real need in the medical field. People want the benefits of specialist attention, in the medical, dental and optical fields, without having to travel hundreds of miles to get it. They want such medical attention, for instance, as will correct speech difficulties in children. These are the kinds of things that people in the country are looking for. In New South Wales there is a move at the moment towards the rationalisation - horrible word - of the medical system, with some of the main hospitals having their medical facilities improved all the time and some of the other smaller ones being turned into what might be called casualty clearing stations. Not much money is being spent on those smaller hospitals because of the high cost of providing buildings and facilities for specialised surgery.

People also look for better recreation and sporting facilities, and also facilities for the improvement of the mind. I have in mind such activities as drama and the arts. I also think of better libraries, museums of all kinds, art galleries, facilities for the presentation of symphony concerts, the ballet, access to choral societies and choirs. These are the things that country people now have to travel long distances to enjoy. Let me repeat that all these improvements are wanted by country people but at the same time they do not want any breaking up of their homes. At the present time the breaking up of homes in country areas is almost inevitable. It is perhaps the saddest feature of country life and it happens with all country families.

I have been talking in terms of concentration, and I have tried to show why I think the word “ decentralisation “ is a misnomer. What people are actually looking for is concentration of primary industry and the build up of secondary, tertiary and service industries. We are moving towards concentration of primary industry by trying to develop more diversified and intensive farming and thus achieve greatly increased production. In short, what we are looking for is more production and more people per country acre, and that is concentration. We want a build up of secondary, tertiary and service industries in the inland, and in coastal areas also, away from the metropolitan areas. This should be achieved not at the expense of the cities. There should be no intention to denude the cities. I think that our object should be achieved along with a strong element of growth in the cities. What we need is growth all over Australia. We need balanced growth. I think the words “ balanced growth “ are far more appropriate than the word “ decentralisation “.

Who wants this balanced development? Of course the country people want it, particularly the country business community. Then there are many people in the cities who want it, particularly those who do not have the responsibility of trying to achieve it. One can easily advance a logical argument that balanced development is necessary, but it is much harder to advance an economically persuasive argument that will compel people to do what is necessary to bring it about. I think it is necessary, first, to state the causes of this lopsided development that we see in Australia. Certain geographical features of the Australian continent give rise to it. Quite properly and quite understandably, people want to live on what may be described as the sea cooled fringes of this great arid continent. So the population is thickest on the coastal fringes, gradually decreasing inland as conditions deteriorate. This is quite natural. The presence of ports is another geographical reason for the concentration of population at points on the coastline. Another reason is the absence of navigable rivers compared to the situation in other continents such as North America arid Europe.

So much for the main geographical features that contribute to the lopsided development that we have. Another contributing factor has been the decline in the primary work force. This has been largely due to mechanisation. We all know of the magnificent record and high efficiency of primary producers. They have been greatly assisted by the agricultural scientists who have worked alongside them. All this has resulted in the depletion of the primary work force. We know that for centuries the British farmer has been gaining experience in producing foodstuffs from the land. Yet each American farmer feeds far more people than does his British counterpart. The statistics prove beyond doubt that the Australian farmer leaves even the American farmer for dead in this respect.

The third reason for our present unbalanced development is the concentration of secondary industries in the coastal regions. This also is understandable, because entrepreneurs want to establish industries close to labour sources and markets at locations where they have easy access to raw materials. In this respect, we think quickly of industries that use supplies of rock phosphate, rubber and iron ore. Many of these raw materials have to be transported from the far side of the continent to points in proximity to the markets. On the other hand, there are advantages to be found in taking industry inland, particularly processing activities related to our great natural industries. These processing activities would gain much from being located at centres in proximity to the sources of their major raw materials. Furthermore, we know, as has been proved over and over again, that in inland regions the labour force is more contented and more stable.

Surely we should strive, by adopting whatever incentives we can think of, to build up manufacturing enterprises based on our great natural industries in inland regions beside the sources of supply of raw materials, and to maintain them there. For example, we have a tendency now to decentralise our wool selling centres. Let us do all we can to encourage the establishment of wool scouring and other plants engaged in various phases of wool manufacturing adjacent to these centres. We should do all we can to encourage the establishment in country regions of meat processing establishments, using both raw and prepared meat. We should promote the establishment in country areas of canning plants, all kinds of food processing establishments, flour mills, timber mills and plants using the raw materials supplied by our mining industry.

Surely, by some form of incentive, we can encourage business not to remain in the metropolitan areas and to go further afield and establish plants beside the sources of supply of raw materials. I know that the Department of Trade and Industry is making a large scale study of incentives that could be adopted. It already has a long list of secondary industries that could make profits if they were to move to the country. By “ profits “, I do not necessarily mean satisfactory ones. Another group of establishments, including heavy industries, could operate only at a loss. But surely incentives could do much with this very big group of undertakings that could make some sort of profit if conducted m country areas. Surely we could find some sort of incentive that would result in a profit of some kind being converted into a profit satisfactory to the shareholders.

At this point, let me mention a seminar on decentralisation that was conducted in the city of Orange some weeks ago. A number of honorable members attended. The honorable member for Macquarie (Mr. Luchetti) represented the Opposition. The honorable member for Robertson (Mr. Bridges-Maxwell), the honorable member for Wakefield (Mr. Kelly) and the honorable member for Lilley (Mr. Kevin Cairns) represented the Liberal Party of Australia. My colleagues, the honorable member for Indi (Mr. Holten) and the honorable member for Hume (Mr. Pettitt), and I represented the Australian Country Party. I want to repeat one sentence from a speech made by the Deputy Prime Minister (Mr. McEwen) when he opened that seminar. He said

I regard it as bad, and indeed dangerous, for

Australia to accept the prospect of having half of our population in Melbourne and Sydney by the end of the century.

I want to direct my remarks particularly to the word “dangerous”. This is not a pleasant task, but I believe that I should amplify that a little and try to bring home to the House and the people generally some of the dangers that exist in this terrific concentration of population on the coastline. Anybody can find out for himself the nature of atomic weapons. We all know of the power of the atomic weapons used at Hiroshima and Nagasaki. The Commonwealth Civil Defence School adopts as its standard for the purpose of perfecting civil defence measures a bomb SOO times as powerful as the nominal atomic weapons used against Japan in the last war. Even this is not equivalent to the capacity of the most powerful nuclear bomb that has been tested. The 10 megaton bomb has been adopted as the standard and I want honorable members to consider the destruction that a bomb of even this power could, do to the Australian economy. Australia, with its seaport cities, is in a very vulnerable position. The capabilities of this bomb. are rather terrifying, lt leaves a crater one mite across and its area of total destruction is seven to eight miles across. The area of irreparable damage to buildings and everything in them is 14 miles across. The area of primary fires is 26 miles across. Primary fires are those lit instantaneously by the intense heat radiated by the fireball at the time of explosion.

Let us consider first the problems of medical services. It is no secret that the five major hospitals in Melbourne all are within the area of total destruction of a bomb of this size dropped over the centre of the city. An ordinary street directory will show anybody that no fewer than 10 major hospitals in Sydney are within the area of total destruction of this kind of weapon if dropped over the centre of the city. I have the list here and could name them all if I had time. The Repatriation General Hospital at Concord and no fewer than 15 suburban district hospitals, including the Western Suburbs District Hospital, the Eastern Suburbs District Hospital, the Mater Misericordiae Hospital at North Sydney and the Manly District Hospital, are within the area of primary fire damage. A similar nasty picture can be painted with respect to other cities.

I ask honorable members, if they wish to verify this, to find out for themselves the specifications of the destructive capacity of a bomb of the power accepted as the standard by the Civil Defence School and to examine the second report to the Australian Universities Commission prepared by the Committee on Teaching Costs of Medical Hospitals. This report was presented to the Parliament last week. Facing page 14, there is a map of Sydney with every teaching hospital and university marked on it. Somebody has conveniently marked in concentric rings spreading outwards from the centre of the city at two mile intervals. On the following three pages, there are similar diagrams for the other State capitals. These will give honorable members the full picture if they care to look at them. They can imagine for themselves what would happen if an atomic weapon were dropped on one of these cities without any warning and with no time for evacuation of the population. We all can imagine what would happen to the high concentration of surgeons, physicians and other highly trained and skilled medical men and women, including nurses, to say nothing of the patients, if an atomic weapon were dropped without warning between, say, 8 and 10 a.m. on a week morning. This situation, to me, screams out the warning that we should disperse and decentralise our medical institutions.

When the world famed Mayo Clinic was established in Rochester, Minnesota, in 1950, the city had a population of 30,000 and in 1960 the population had grown to 40,000. Medical centres can be established in small towns; they do not have to go into the larger cities. Surely we should be trying to exploit the one big natural military asset that we have and that is our ability to disperse. I could go on at length on this subject, but I should like to deal now with the education side of it. With the exception of the New England University, every university in Australia is within the area of total destruction or the area of primary fires of a standard bomb dropped on the centre of the city. This is also the situation with the teaching hospitals that I have been able to check. The only one about which I am not sure is the Fremantle Hospital in Western Australia.

What is being done and what remains to be done to improve our situation? The Government has done much to develop a concentration of primary industries. It has used such methods as special depreciation allowances, the averaging of incomes, investment allowances, bounties, subsidies, additions to the stabilisation schemes, beef roads, brigalow development, jetties, port facilities and special grants for the development of water schemes including the Snowy, Ord, Chowilla and Blowering. These are some of the moves the Government has made in an effort to concentrate primary industry. What is to be done? Let me start with some of the less radical suggestions. We should develop a national water policy. The Constitution places the control of water in the hands of the States, but the great Snowy scheme, which is an excellent example of decentralisation, shows us that water developments can be undertaken on a Federal scale. Water does not recognise State boundaries and we should get together to develop a national water policy. We should lift the Water Resources Council to a higher level and get on to the executive side. If we do this, we will be getting somewhere. A national water policy is needed not only to supply water for irrigation but also to provide cheap power for inland areas.

Our transport facilities should be extended. Large sums are being spent on the standardisation of rail systems, and this is going well. It will not be long before the Government will need to set up a nuclear reactor, partly for the provision of power but substantially so that people engaged in this field will have thorough training and experience in handling these installations. We should encourage the decentralisation of our administration. The Department administered by the Minister for Social Services (Mr. Sinclair), who is now at the table, has given a good lead by decentralising its administration. The PostmasterGeneral’s Department and to some extent the Department of Labour and National Service also have undertaken some decentralisation. I have spoken about this before and I will keep speaking about it. I do not see any reason why the Taxation Branch of the Treasury cannot be decentralised more than it now is. The taxation weapon could be used to foster decentralisation. It is used throughout the world. Some people may say that its use is unconstitutional, but it is widely used.

Some form of rider or codicil, whatever the legal term may be, should be attached to some of the grants to the States. This would help moves to encourage decentralisation. This Parliament has granted substantial funds for a third university to be established in New South Wales. But where will this Macquarie University be established? It will be placed right in the area of primary fires from one standard bomb. We should attach a tail to these grants and, when we give money to the States, exercise some authority over the siting of buildings for which the money will be used. We should make more use of the Commonwealth Development Bank. It should have some impact on balanced development.

We are not the first country to undertake decentralisation. Russia limits new and growing cities to a population of 500,000. It has in view civil defence and defence against air attack. We cannot use these restrictive methods here and I do not suggest that we do. Russia has a different way of handling its people. But I think we should be able to make progress by using other forms of incentives. Great Britain has its own policy for the distribution of industry. We have heard about it before. The Government of Great Britain builds its own factories and leases them to interested people. France, as well as having incentives, has disincentives. A tax or levy is imposed on floor space in factories built in Paris. Norway has a north Norwegian fund into which firms can pay money before taxation for use in developing branches or industries in northern Norway. A penalty is attached to this procedure. If funds set aside for this purpose are not used for developments in northern Norway, a double penalty is imposed. Norway also has a regional planning scheme to overcome the seasonal unemployment problem in the north of Norway and to provide people with an opportunity to develop industry in areas that have not attracted industry before.

The Commonwealth Parliament has given income tax concessions to new manufacturing and service industries established in Papua and New Guinea and this encouragement should be extended. Malaysia is teaching us something. It fixes a pioneer status to new industries and this status attracts freedom from income tax for periods up to five years. Italy has a wide selection of methods, including grants, exemptions, loans and duty free imports of certain types of machinery for the development of industries in areas specified by the Government.

This is the fourth Budget debate in which I have suggested that more consideration should be given to the rationalisation of telephone charges. This matter should be examined. I know of charges that are being paid by industries that are trying to develop branches in country areas. There is a great need for vigorous policies and a great need to educate the Australian people in the advantages of decentralisation and in the dangers of our present lopsided development. The country Press is playing its part in this education programme and I hope that the city Press will follow. I am sure that every honorable member in this corner of the House will agree that there is a great need to ensure that areas away from the metropolises maintain a fair political representation. We know that decentralisation is the subject of inter-departmental study on the Commonwealth level at the moment. It has been the subject of study for a long time. What stage the inquiry has reached or what will come out of it, and when, I do not know. We are watching progress closely, but I would like to see it accelerated.

This Budget has made some provision for balanced development. Looking at it in the broad, we notice that a very small sum has been set aside at this stage for the Northern Division of the Department of National Development. We know that this is a developing division. We look forward to seeing that amount greatly increased in future Budgets. I urge the Government to produce more dynamic policies in the next Budget in order to bring about decentralisation of population and industry. I turn the amendment moved by the Opposition aside and I support the Budget.


.- Mr. Deputy Speaker, I rise to support the amendment moved by the Leader of the Opposition (Mr. Calwell). The Budget papers and the Budget debate are no longer merely a set of proposals for raising revenue and stating proposed expenditure. They affect young and old, rich and poor, and have important social and economic consequences for Australia. The Budget debate is, in fact, the grand assize of Australian opinion when the Government is arraigned for its administration and its policy, and is subject to the spotlight of criticism and answers to the nation.

The Treasurer (Mr. Harold Holt) has stated that his objectives in this Budget are is follow: First, the steady growth of Australia’s population and output. That of course is a consummation greatly to be desired. Secondly, to maintain a high standard of living. That is somewhat at variance with certain representations made by this Government recently before the Commonwealth Conciliation and Arbitration Commission. Thirdly, stability of prices - a strange remark in the light of recent post-budgetary price grabs. Fourthly, a strong external balance of payments, although the Treasurer himself contemplates a steady run down in our overseas reserves. Fifthly, increased national security and greater defence. The Treasurer, in his Budget speech, laid special stress on the increase of 9 per cent, in our gross national product and the disproportionate increase in gross national expenditure of 1 3 per cent. He has seized upon this as a justification for curtailment of consumption. His fiscal objective is to spend an additional £275 million with a net increase of indebtedness of £53 million.

Let me put the Budget objectives in more simple terms. I am indebted to the report included in the Budget papers which I use because there is no doubt as to its authenticity. In this year of grace 1965, it is proposed to extract in taxation £196 per capita from the people of Australia. That is an increase of £20 per capita on last year. Applying that to the average family of four people, it represents an increase of £85 a year, or approximately 33s. a week. Analyse it from another point of view and we find that for the average family of 4.4 people it represents a total taxation impost of about £840 a year or £16 a week. This is occurring at a time when the Commonwealth Statistician informs us that the average male wage in Australia is £26 a week. The £10 surplus over the £16 is, of course, available for dissipation. It will be more than enough - I do not think - for food, clothing, rent and the other necessities of life. Hence the reason for so many married women being forced out, willy nilly, on the local labour market.

Let us examine this Budget from another point of view: Who contributes what and how little comes from the giants of commerce and industry? For 1964-65 company tax - and this was from the giants of industry - amounted to £354 million. The consumers of beer, spirits, tobacco and petrol contributed £315 million. People stand aghast at the announced profits of some of the major monopolies of Australia but, in point of fact, the ordinary consumer is achieving an economic miracle. The whole burden is being placed on his back by this Government

Let us get down to the real fundamentals and objectives of this Budget. This Government is quietly moving towards a long term policy of forced deferment of consumption to allow an increase in the proportion of the national income which is to be devoted to savings and investments. It aims to reduce reliance - and it must do it willy nilly - on overseas capital investment. It is significant that the proposed increase in taxation is approximately equal to the anticipated fall in the inflow of overseas investment in the forthcoming year. This Government has been floating along in a most carefree fashion, ever since it came into office. on a flood of overseas investment which, in the last seven or eight years, approximated 10 or 12 per cent, of our total capital investment. If a slogan were to be assigned to this Budget it would be: Guns before if un. Next year we will be told that the slogan will be: Guns before butter. The patriotism of the Australian people is being abused. This is not essentially a defence Budget because only £80 million out of a total expenditure of £270 million is to be used for that purpose. Whatever the merits or demerits of defence expenditure, this is not a defence Budget.

Investment rather than consumption is to dominate Australia’s economic pattern in the future. Taxation on consumers is to pay for Government spending and investment. Australia’s drinkers, smokers and drivers are to pay, not only for defence in the sum of £80 million, but also for a healthy increase in handouts to the Government’s rural allies. By forced draught saving, the Government is transferring funds from private consumption to public investment. Why not impose a super tax for defence purposes on those who have the greatest stake in this country?

I want to quote from a statement made last April in a speech by the Minister for Housing (Mr. Bury). He said -

We face a downward spiral on international payments and international trade. This situation recalls the events of the 1920’s and 1930’s when deficit countries started trying to cure their deficits. . . . This was the kind of situation which exported the depressed conditions of one country to another. . . This situation, in fact, played a large part in the circumstances which gave Hitler his great opportunity.

The Treasurer gave vague hints of a darkening economic future. He, of course, is whistling in the financial darkness to keep up his courage as this Government passes the world economic graveyard. The halcyon days of post-war economic boom have ended. The Government is being pushed out of the land of the economic lotus eaters and can no longer claim spurious credit for favorable economic trends in the post-war economic boom which it did nothing to promote or control. Here are the facts of economic life for Australia in this year of grace 1965. First, a deficit in the country’s trading account of £375 million, the second largest in the history of this nation. The record of £554 million was in 1952. We have record imports, with an increase from £1,225 million to £1,375 million. At the same time we have a reduction in exports from £1,370 million to £1,296 million. Are we to have a repetition of 1960-61, when a considerable portion of the payments for imports was deferred and had a devastating impact in the following fiscal year? At the present time a very considerable part of Australia’s imports are on a basis of intercompany credit and will be reflected devastatingly in the Government’s accounts presented with the next Budget.

Freight charges in 1962-63 for overseas shipping cost Australia £155 million. Last year the figure was £199 million. After allowing for expenditure by overseas shipping companies within Australia on the purchase of supplies and the payment of wages the net loss to Australia was £100 million. To that we can add an unauthorised and genuinely resented increase of 6.6 per cent, on overseas shipping freights. Another nasty fact of economic life which this Government has chosen to gloss over is the threat of sterling devaluation. We have no less than £500 million of our reserves held in sterling and there will be a cool loss of £100 million if devaluation of sterling occurs. The effects could be even worse, because at the present time the United Kingdom has to depend very heavily upon United States assistance for sterling and the quid pro quo is, of course, a subjection of its foreign policy to the needs of the United States.

Again, in passing the economic graveyard, the Government fears the prospect of Britain joining the European Common Market. Perhaps it is not a question of whether, but when Britain will join. Added to these is a drop in world prices for world produce and commodities. The effects of the drought have been well canvassed in this chamber on many occasions. To that we can add the absence of an acceptable world currency to continue the flow of overseas trade. Both the dollars and sterling, the major world currencies, are fully absorbed in protective action. Only yesterday there was a publicised warning from the International .Monetary Fund. In a statement from Washington it said -

A fundamental change in the international payments situation will occur if the United States succeeds in eliminating its payments deficit. Such a development would require deliberate international action to increase liquidity. Exceptionally large imbalance has been concentrated in the last quarter in the two main reserve centres. The economic prospects for the year ure much more uncertain.

We have had perfervid advocacy from the Minister for Trade and Industry (Mr. McEwen) of the expansion of Australia’s trade. Let us consider the realities there. There are no fewer than 1,150 Australian companies which have their links with overseas principals or with overseas owners of licences or patents. In the case of 800 of those companies a franchise rs imposed either to prohibit any exports from Australia in competition with the parent company or to limit exports to Oceania or the nearer areas of the Pacific. What hope has the Department of Trade and Industry or the Minister of ever achieving a true trading balance for Australia when this situation exists? And on the question of trade, we find ourselves in. what is, I suppose, the most competitive situation of the post war era with Japan, for example, offering 10 and even 15 year terms to export markets for the purchase of heavy capital goods. What hope have we of competing?

A survey of industrial trends by the Bank of New South Wales and the Associated Chambers of Commerce has revealed that production is rising slightly but is tending to slacken, and that the number of manufacturers working at a satisfactory rate has declined from 65 per cent, to 60 per cent. In another field we find that import restrictions are being canvassed, even by the Department of Trade and Industry. Tenderers are being asked whether they can establish an import quota if import restrictions are imposed. We can pass over the crashes which have such a notable feature of the hire purchase world and pass on to the fact that we have today record bank interest rates and a very acute tightness of financial liquidity. There has been a serious drop in stock exchange prices. Without doubt, there will be the gravest difficulty for the Government in filling its reduced loan quotas and its conversion loans unless it is prepared to offer higher interest rates.

So much for the Treasurer’s objectives. What are the Government’s plans if sterling’ is devalued? What does it consider to be the danger point in the rundown of Australia’s overseas reserves? Is it even capable of assessing world economic trends? When will the Vernon Committee’s report be presented for the information of this House? I say advisedly that our best friend in a period of adversity will be a substantial balance in our overseas reserves. The Government should be applying itself diligently to that end instead of contemplating and accepting the possibility or probability of a substantial rundown. We are at the end of one of the booms which have been historically a feature of capitalist production. We are approaching one of the cyclical crises of depression. Will it be a working depression? In fact, have we not already a blueprint for it? We live in a world of economic planners, a world of scientific control of investment, but our preparedness and the economic thinking of this Government have not advanced beyond Adam Smith and “The Wealth of Nations “. Let us add together the intervention of this Government in the recent basic wage case, the incidence of taxation in the Budget to provide for a curtailment of consumption, and the proposals for the mobilisation of capital investment. This is not merely a blueprint for a depression but is a master plan already in operation. There has been very good timing. The Treasurer is to be congratulated for his political astuteness on the joint release of the Budget and the report of the Reserve Bank. Notoriously the bearers of bad tidings are always unpopular, and the Reserve Bank in this case is to become the Treasurer’s whipping boy. To paraphrase a biblical passage, the hand will be the hand of Esau but the voice will be the voice of Jacob. Unpopular news will be announced by the Reserve Bank.

What is the position today of the average trade unionist? He is a mixture of fear and hope. He hopes that he can achieve a just living wage, but fears that when he gets it more will be taken back from him than has been handed to him. What is the effect of the recent Federal basic wage decision? The effect is the complete destruction of every principle of wage fixation that has been established by the successive judgments and the combined policy of a succession of judges over a period of 60 years. Today “ arbitration “ is a misnomer and faith in our system of wage fixation has been destroyed. Australians can be led but they cannot be driven. Today, more than ever, there is an emphasis on the need for price control. The worker must abandon the Commonwealth Conciliation and Arbitration Commission. He must think in terms of collective bargaining and he must think also in terms of political action and in terms of a prices referendum. One of the biggest confidence tricks ever perpetrated on the people of Australia was the 1949 prices referendum when we were told that control of prices could best be left to the tender mercies of the respective State Governments, with their diversities of opinion and their diversities of development and political maturity. There is a need for a prices referendum and for a Federal system of price control on at least the basic commodities of life.

Tonight we heard the Minister for Labour and National Service (Mr. McMahon) attempting to extort some vicarious benefit or credit from the Government’s improvements in the social services of this nation. What are the facts? The Budget provides for an increase of £5 million in a total social services allocation of £480 million. Age and invalid pensioners have reached the depths of degradation and new dimensions of despair. Last year’s pension increases have been snatched back from them. There is a cynical disregard for pensioners’ needs for the next year. But, in due course, when an election is in the offing, appropriate bait will be given; increases will be offered in an attempt to gull the people once again, if possible.

What are the remedies for Australia’s present position? What should we do to correct our imbalance of trade? First, we must have a truly independent national economic policy of growth and development without subordinating our true interests to those of any other country. Are we mesmerised when some international investor looms on the scene? Are we as susceptible to economic exploitation as some Polynesians are to certain of our minor diseases? Are we economic infants in our thinking? Do we love an overseas investor as dearly as the English are reputed to love a lord? I remind honorable members of some words of the Deputy Prime Minister (Mr. McEwen). Recently, when addressing a gathering in Australia, he said -

Australia should not become a quarry for over seas industrial complexes.

Australia is indeed a quarry; it is indeed a target for overseas financial exploitation, with a permanent open hunting season and free hunting licences gladly issued by this Government.

Selective and controlled overseas investment is welcome. If overseas investors can bring to this country suitable techniques, that we do not possess, of course they are welcome. But financial ju-jitsu, in which our internal economic strength is used by astute overseas investors to their advantage, must be fought at all costs. Between 1956 and 1965 the apparent net capital inflow to Australia was £2,144 million. The price of that inflow is overseas control of major sectors of our industry, of major sectors of our resources and, worst of all, of our economic policy. In fields such as chemicals, petroleum, motors and food processing we are completely dominated.

Trade is as vital to Australia as it is to any country. Australia is the world’s 12th largest trading nation. We are traditionally susceptible to overseas trade variations. In an address on 9th June the Deputy Prime Minister said -

Quite clearly, wool growing and farming will not by themselves develop this country. Rural production in the last 15 years has increased by 60 per cent, whilst the rural work force has dropped by 10 per cent.

We must multiply manpower by horsepower and, above all, we must provide an increased internal market as well as an increased external market. For that reason, migration must be maintained. In the light of Great Britain’s likely economic difficulties we must encourage United Kingdom migrants to come here, not merely as individuals, but as groups and industries.

Whilst, naturally, we welcome trade with Japan, it is dangerous for us to become overdependent on that country, because its economy is essentially a brittle one. lt is a hothouse product, lt has not the stability or maturity of the economies of the older and more advanced countries. Already pressures are being exerted on us. I would hate to see us ultimately manoeuvred into a position in which once again we were the supplier of raw materials to, and a market for manufactured products from a larger and dominant economy. I think any Australian would agree with me there

Two-thirds of the world’s people live around the shores of the Pacific and Indian Oceans. Australia is an island continent. Its destiny is to be one of the world’s major common carriers, one of the great maritime nations of the world and a major industrial nation of the Pacific. Above all, we need a national overseas shipping line. We have a proven capacity to build ships which will hold their own with any other ship in the world, as far as serviceability and workmanship are concerned. We could save up to £100 million a year, for a start, on bur present overseas freight bill. We could go further. We could earn further foreign exchange by carrying the goods of other nations. In addition, we could confer competitive advantages on our own goods.

At the present time our goods are being carried in the ships of our competitors. There is definite discrimination against us in freight rates on our exports to countries when we might be competing with the goods of those countries. In the interim, until our merchant marine is built - and that day will come - the Government might at least adopt one of its own precepts by putting Australia’s freight bill on a competitive basis. Today, when a very considerable portion of shipping is outside the control of the overseas shipping conferences, I can see no reason why we could not call tenders on a national basis for the carriage of our exports and imports?

A major contribution towards correcting our imbalance of trade can be made by the steel industry. I quote from the “ Sydney Morning Herald “ of Friday, 25th September 1 964. The comment has even more force today than it had at that time. In a leading article headed “ The Real Criticism of the B.H.P. “, that newspaper stated -

It is not so easy to say how the third interested party in B.HP.’s affairs, the expanding, steelconsuming nation, can secure redress of its complaint that B.H.P.’s output capacity is chronically inadequate. The complaint is justified and serious and it is of long standing.

B.H.P. enjoys an absolute monopoly of steelmaking in a country with some of the most favourable natural advantages in the world. In that country it has been entrusted with most of the richest iron-ore deposits. Its cost advantages over all Western nations are at present unbeatable: quotations for steel imports from Britain or America are some 40 to 50 per cent, higher than B.H.P.’s list prices, even though B.H.P. includes a very considerable profit margin per ton produced . . .

In its ability to supply or not to supply enough steel for our requirements, B.H.P. holds a key to the whole economy. It has more power than most Government departments and seems unable to realise that its very great privileges carry commensurate responsibilities. The failure of steel exports and the upsweep m steel imports during 1960 played a principal part in causing the balanceofpayments crisis and all that followed . . .

To point to the absolute growth in steel output in recent years is not good enough. B.H.P. seems to hanker for a capacity rate somewhat below the average market requirements when it should long ago have determined to provide a clear and continuous margin of excess capacity. In B.H.P.’s circumstances any economic disadvantages from having a margin of excess capacity are truly negligible.’

In other words, we have a national steel production today of a little more than five million tons a year. We should be achieving an export production of at least another two million tons a year, which would earn us an additional £100 million a year, thus making a very substantial contribution to our trading position.

Turning to another field, we must consider seriously where we are going with our exports of hard coking coal. The recently appointed New South Wales Minister for Mines, has sounded a note of warning in this regard. Existing contracts must be honoured, but at best we have proven reserves of no more than 700 million tons.

Mr Curtin:

– He is a Liberal Minister.


– That is so. By 1970 we will be exporting and consuming for steel producing purposes more than IS million tons of coal a year. At that rate of consumption our proven reserves will be exhausted by 2000. I am glad to see the Minister for National Development (Mr. Fairbairn) at the table. I know that he is a good Australian and that he will give this matter every attention. The very future of the steel industry will depend upon his decisions and the action he takes.

Debate (on motion by Mr. Kevin Cairns) adjourned.

House adjourned at 10.32 p.m.

page 639


The following answers to questions upon notice were circulated -

Papua and New Guinea. (Question No. 1049.)

Mr Whitlam:

m asked the Minister for Territories, upon notice -

Why does the Territory of Papua and New Guinea incoming passenger card (aircraft) still include the question on racial origin which the Commonwealth of Australia card has omitted since 1958?

Mr Barnes:

– The answer to the honorable member’s question is as follows -

The question on racial origin (which appears on the outgoing as well as the incoming passenger cards for Papua and New Guinea) was included for statistical purposes. The information obtained is used to maintain progressive figures of the indigenous and non-indigenous components of the population.

Oil and Petrol. (Question No. 1076.)

Mr Costa:

a asked the Prime Minister, upon notice -

  1. What action is being taken to increase our stocks of petrol and crude oil so that, in the event of war, savage restrictions will not have to be imposed on industry, public transport and the motoring public? “ 2. Are there in Australia any storage facilities for petrol and crude oil which are not sow being fully utilised?
  2. Is the storage position such that, if a critical situation develops, Australia will not be able to store even six months supply of these vital commodities?
Sir Robert Menzies:

– The answer to the honorable member’s questions is as follows -

When reviewing the Government’s defence policy in November 1964, I stated that Australian defence preparations were based on the continuing belief that general or global war would be unlikely except as the result of miscalculation. Nevertheless, as a matter of routine defence planning, a rationing scheme is being prepared which could be put into operation if it became difficult to obtain the amount of fuel required to maintain stocks at reasonable levels.

At present, all storages in Australia are being utilised. It should, however, be understood that in commercial use they will never all be filled at any one time. As mentioned in Parliament by my colleague the Minister for National Development on 11th May 1965, action which could be taken if fuel supplies become difficult to obtain is being considered in consultation with the oil companies and representatives of the State Governments.

F.8226/65.- R.- 124)

Civil Aviation. (Question iVo. 1096.)

Mr Wentworth:

h asked the Minister representing the acting Minister for Civil Aviation, upon notice -

  1. Has the Minister’s attention been drawn to the statement made on 15th May 1965, by the Parliamentary Secretary to the British Ministry of Aviation, in which he made the points that it would be disastrous for the major airlines of the world to be dependent upon one major supplier which would be able to dictate the terms of the market and, in such circumstances, hold airlines and their passengers to ransom, that in the field of civil aircraft Britain was now producing every type - long and short-haul jets, feeder and executive aircraft - the Super VC-10 attracting new glory every day on the North Atlantic, the short-haul jets like the Trident and the BAC 1-11 being absolutely outstanding, and’ the HS-125, which is selling like hot cakes in the United States, being in a class by itself, and that these aircraft are practical demonstrations of Britain’s ability to produce the planes the world needs?
  2. Have the considerations mentioned in this statement been given due weight in the purchase of aircraft for Australian civil routes?
  3. Are the current decisions not to purchase

British aircraft irrevocable; if so, on what are they based?

Mr Fairbairn:

– The acting Minister for Civil Aviation has supplied the following answer -

As has been stated on several occasions, tha Government does not endeavour to dictate choice of equipment to airline operators. The operator makes an exhaustive examination on technical and commercial bases, and then exercises freedom to select the equipment regarded as best suited to the particular operation.

Teacher Training. (Question No. 1118.)

Mr Webb:

b asked the Prime Minister, upon notice -

  1. Has he received from the State School Teachers Union of Western Australia a request that the section of the Martin Report dealing with the training of teachers be reconsidered?
  2. If so, is any further action intended?
Sir Robert Menzies:

– The answers to the honorable member’s questions are as follows -

  1. Yes.
  2. The Government’s attitude was explained in my statement to the House on 24th March last.

Naturalisation. (Question No. 1130.)

Mr Webb:

b asked the Minister for Immigration, upon notice -

  1. How many migrants at this date are unnaturalised?
  2. What action is being taken to encourage these migrants to become naturalised?
Mr Opperman:
Minister for Immigration · CORIO, VICTORIA · LP

– The answers to the honorable member’s questions are as follows -

  1. As at 31st December 1964, 402,495 persons over the age of sixteen years were registered as aliens. It is estimated that of these, 191,500 would have been resident in Australia for the five years required for naturalisation.
  2. The department actively encourages eligible alien migrants to become naturalised in the following ways -

    1. Adult aliens who have resided in Australia for four and a half years receive a letter from me reminding them of their eligibility for naturalisation and inviting them to apply. A simple form of application is enclosed with the letter, together with informative literature and a reply-paid envelope.
    2. Aliens under twenty-one years of age receive a similar letter after two years’ residence, at which time they are eligible to apply for naturalisation.
    3. Commencing in October next, a further letter of invitation will be sent to all aliens when they have lived in Australia for six and a half years. The decision to send another letter at the end of six and a half years’ residence is based on the fact that recent surveys have shown that the average period of residence before naturalisation is over seven years.
    4. The department has recently appointed a

Naturalisation Promotion Officer in New South Wales and will shortly appoint a similar officer in Victoria. The activities of these officers will place them in touch with national groups, employer and employee organisations, the Good Neighbour Councils and other organisations interested in the integration of migrants. It is hoped that, as a result of the efforts of these officers, employers will in time agree to allow naturalisation interviews to be carried out at the place of employment and thus save applicants loss of lime from work and the inconvenience of lengthy journeys for interview purposes.

  1. Display posters and information leaflets on the subject of naturalisation are distributed to migrants through Post Offices, Offices of the Department of Labour and National Service, various State Government offices, local government offices, banks, Good Neighbour Council offices, and places of employment throughout Australia.

    1. The department arranges for feature articles on the subject to appear in newspapers and other journals as often as possible.

Television Film. (Question No. 1139.)

Mr Webb:

b asked the Postmaster-General, upon notice -

For the benefit of many honorable members who, because of their parliamentary duties, have never had an opportunity of viewing the Channel 2 Impact programme dealing with automation, will he take the necessary steps to arrange for a special screening at Parliament House of this programme?

Mr Hulme:

– The answer to the honorable member’s question is as follows -

The programme to which the honorable member refers was produced by the Columbia Broadcasting System of the United States of America under the title “ The Next Revolution “. It runs for one hour. The C.B.S. Representative in Australia has agreed that the Australian Broadcasting Commission can make a 16 m.m. print of this programme available for screening. However the decision to screen the film in Parliament House rests with the Presiding Officers.

War Service Homes. (Question No. 1140.)

Mr Webb:

b asked the Minister for Housing, upon notice -

Will he consider making available war service homes to representatives of the Salvation Army who were accredited to the Australian Army and Air Force and are holders of the returned servicemen’s badge?

Mr Bury:
Minister for Housing · WENTWORTH, NEW SOUTH WALES · LP

– The answer to the honorable member’s question is as follows -

Any proposal to amend the War Service Homes Act to extend the categories of persons eligible to receive assistance under the Act involves a question of future Government policy and as it is not the practice to give answers to questions of this nature, it is impracticable to provide an answer to the honorable member’s question.

Sales Tax. (Question No. 1148.)

Mr L R Johnson:

son asked the Treasurer, upon notice -

  1. What is the rate of sales tax applying to-

    1. blankets,
    2. mattress overlays,
    3. electric blankets,
    4. electric radiators?
  2. If electric blankets are subject to a higher rate of sales tax than the other articles referred to, what is the reason for discriminating against electric blankets in this way?
  3. In view of the use made by aged and invalid pensioners and sick and elderly persons of electric blankets, will consideration be given to reducing the sales tax payable on these blankets?
Mr Harold Holt:

– The answers to the honorable member’s questions are as follows -

  1. The rates of sales tax on the classes of goods mentioned are -

    1. (i) blankets falling under the broad heading of drapery or soft furnishings are exempt from sales tax;
    2. on other blankets for use as bedding the rate is 2½ per cent.
    3. (i) mattress overlays designed for use primarily as mattress protectors are exempt from sales tax;
    4. on other mattress overlays for use as bedding the rate is 2½ per cent.
    5. 2½ per cent.
    6. 2½ per cent.
  2. Goods are classified for sales tax purposes in the light of circumstances prevailing at the time of classification. The position is, however, reviewed where this is appropriate in the light of changed circumstances.

When originally sold in Australia, electric blankets were classified as electrical appliances and this led to sales tax being payable at a rate of 12½ per cent. The Commissioner of Taxation informs me that, with the more general use of electric blankets as a normal bedding, electric blankets have been reclassified. They are now classified as overlays for use as bedding. The rate of sales tax on electric blankets is accordingly2½ per cent.

  1. See 1 and 2.

Naturalisation. (Question No. 1157.)

Mr Peters:

s asked the Minister for Immigration, upon notice -

  1. Is it a fact that there are 17,000 migrants in Australia who have been refused naturalisation?
  2. If not, how many migrants have been so refused?
  3. How many naturalised aliens are there in Australia at this date?
  4. What steps are being taken by him to encourage aliens to become naturalised?
Mr Opperman:

– The answers to the honorable member’s questions are as follows - 1 and 2. During the period 1st January 1949 and 30th June 1965, 18,065 applicants for naturalisation had their applications either deferred or rejected. The majority of these applications were deferred because of the inability of the applicants to meet the language requirements of the Nationality and Citizenship Act. Many of these have, of course, since been approved when the applications were revived after the applicants had acquired an adequate knowledge of English.

  1. Naturalisation has been conferred upon 464,596 persons during the period 1st January 1945 to 30th June 1965. There would also be living in Australia many thousands of persons who were naturalised prior to 1945.
  2. The department actively encourages eligible alien migrants to become naturalised in the following ways -

    1. Adult aliens who have resided in Australia for four and a half years receive a letter from me reminding them of their eligibility for naturalisation and inviting them to apply. A simple form of application is enclosed with the letter, together with informative literature and a reply-paid envelope.
    2. Aliens under 21 years of age receive a similar letter after two years residence, at which time they are eligible to apply for naturalisation.
    3. Commencing in October next, a further letter of invitation will be sent to all aliens when they have lived in Australia for six and a half years. The decision to send another letter at the end of six and a half years residence is based on the fact that recent surveys have shown that the average period of residence before naturalisation is over seven years.
    4. The Department has recently appointed a Naturalisation Promotion Officer in New South Wales and will shortly appoint a similar officer in Victoria. The activities of these officers will place them in touch with national groups, employer and employee organizations, the Good Neighbour Councils and other organizations interested in the integration of migrants. It is hoped that, as a result of the efforts of these officers, employers will in time agree to allow naturalisation interviews to be carried out at the place of employment and thus save applicants loss of time from work and the inconvenience of lengthy journeys for interview purposes.
    5. Display posters and information leaflets on the subject of naturalisation are distributed to migrants through Post Offices, Offices of the Department of Labour and National Service, various State Government offices, local government offices’, banks, Good Neighbour Council offices and places of employment throughout Australia.
    6. The Department arranges for feature articles on the subject to appear in newspapers and other journals.

Vietnam. (Question No. 1192.)

Dr J F Cairns:

rns asked the Minister for

External Affairs, upon notice -

  1. Does the Government agree that no government engaged in fighting in Vietnam could be expected to enter into negotiations to end the war unless it had formed ideas about conditions with respect to the negotiations and about conditions which could be expected to prevail in

South Vietnam after the war, such as who should be parties to the negotiations, military intervention by both sides, and the supervision of boundaries, the composition of the government and the future of minorities in South Vietnam after the war?

  1. Has the Government formed any ideas as to the conditions which should apply?
  2. If so, what are they?
  3. If not, does the Government propose to leave the matter to be dealt with by the United States alone?

Mr. Hasluck: The answer to the honorable member’s questions is as follows -

We cannot speak for other governments. We do not know what is in the mind of the authorities in North Vietnam other than their “four points” (see pp. 45-46 of Select Documents on International Affairs No. 2 of 1965, “Vietnam - First Half of 1965 “). The Government is in close and frequent consultation with friendly countries on matters affecting the conduct of operations in Vietnam and the prospects of a peaceful settlement. It would clearly not be in our interests to disclose confidential consultations with other Governments.

Vietnam. (Question No. 1193.)

Dr J F Cairns:

rns asked the Minister for External Affairs, upon notice -

  1. Has he made an interpretation of the offer of the President of the United States to enter into “unconditional discussions” about the war in Vietnam?
  2. If so, did he say that the sense of what the President said was plainly that he would not accept the condition which North Vietnam wished to impose, that American troops must withdraw before any discussion takes place?
  3. Was this the only condition imposed by the President of the United States?
  4. If not, what are the other conditions?
  5. Can he say whether the United States is prepared to accept in the negotiations an independent National Liberation Front representative?
  6. Is he able to say (a) when and in what form North Vietnam stated the condition that American troops must withdraw before any discussion takes place and (b) what attitude has been taken by

    1. North Vietnam and (ii) the South Vietnamese Liberation Front with respect to this condition and to any others?
Mr Hasluck:

k. - The answers to the honorable member’s questions are as follows - 1 to 4. President Johnson’s statement of 7th April 1965 was in clear terms, viz. - “The only path for reasonable men is the path of peaceful settlement. “ Such peace demands an independent South Vietnam - securely guaranteed and able to shape its own relationships to all others - free from outside interference - tied to no alliance- a military base for no other country. “ These are the essentials of any . final settlement. We will never be second in the search for such a peaceful settlement in Vietnam. “There may be many ways to this kind of peace; in discussion or negotiation with the governments concerned; in large groups or in small ones; in the reaffirmation of old agreements or their strengthening with new ones. “ We have stated this position over and over again 50 times and more to friend and foe alike. And we remain ready with this purpose for unconditional discussions.”

On 28th July President Johnson offered to discuss Hanoi’s “proposals and our proposals or any proposals of any government whose people may be affected “, but his offer has not been accepted.

  1. At a press conference on 4th July, the United States Secretary of State, Mr. Rusk, said, in answer to a question about Viet Cong representation at international discussions on the Vietnam problem, that “ we’re prepared to discuss this problem with the governments concerned, because it is the governments who have been responsible for the problems and governments can make themselves responsible for the solution. Now, who represents governments, who acts for governments will be for those governments to determine. If they (North Vietnam) want to bring some Viet Cong or National Liberation Front people with them that’s fine, we have no objection.”
  2. The North Vietnamese authorities have repeatedly stated that the “ four points “ which they put forward on 8th April, 1965, and the “fivepoint” statement by the “National Liberation Front “ on 22nd March are the “ only correct solution “ to the Vietnam question.. These points have been presented as demands (see pages 45-46 and 21-22 of Select Documents on International Affairs No. 2 of 1965 “ Vietnam- First Half of 1965 “).

Cite as: Australia, House of Representatives, Debates, 31 August 1965, viewed 22 October 2017, <>.