House of Representatives
25 October 1967

26th Parliament · 1st Session

Mr SPEAKER (Hon. W. J. Aston) took the chair at 2.30 p.m., and read prayers.

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Prime Minister · Higgins · LP

Mr Speaker, yesterday I took the first opportunity available to me to inform the House with regret of the sudden death of Senator Hannaford and I indicated then that today I would be submitting a motion of condolence in this chamber to the wife and family of the late senator. Senator Hannaford had been a member of the Senate for the State of South Australia for 18 years. He had served continuously since his election in 1949. During his time in this Parliament, which was spread over a long period of years, he was a member of the Committee of Disputed Returns and Qualifications from 1950 until 1965, of the Printing Committee from 1950 until I960 and of the Senate Select Committee on the Development of Canberra during 1954-55. He was a member of the House Committee from 1960 until 1965 and of the Joint Committee on the Australian Capital Territory from April 1965 until November 1966. He was a member of the Australian delegation to the 14th Session of the General Assembly of the United Nations at New York in 1959.

Clive Hannaford was born in Riverton, South Australia, and lived most of his life as a sheep and cereals farmer in the Riverton district. He came from an old and respected South Australian family. Politics were in his blood because his father had been a member of the South Australian Legislative Council for 29 years. Honourable members who have been in this place for some time will recall the late senator as a quiet, earnest, sincere and conscientious man. He was respected for his strength of conviction.

Senator Hannaford displayed great moral courage in the decision he took to sever his connection with political associates and with a party organisation which had had his enduring loyalty and service for the best part of 40 years. The Liberal Party itself had not been in existence for that length of time but he had given a political service to the principles which were basically those of the Party which he later served for so many years. While we did not agree with the viewpoint he finally adopted in respect of one vital matter of policy, we respected his courage and his earnestness in the decision that he took. We can imagine the anxiety of mind which led him finally to a decision which severed his connection with his colleagues on this side of the House. It must have been a great wrench for him. I repeat: We respect the moral courage and the deep conviction which led him to that decision. This really is the kind of courage and earnestness which makes democracy function as it should, with people being willing to stand up for what they believe in regardless of the consequences.

In various parts of the two Houses of Parliament there are people who have displayed that courage - not always, I am glad to say, in a manner which has led them to sever their connection with the Party which itself holds dearly to certain principles - on a matter that touches them so vitally that they feel they can no longer loyally go along with the leadership or the policies of the party they have been elected to serve. They have decided to take another course. Senator Hannaford will be remembered for his friendliness of personality and for the character which I believe brought him the regard of those who might fundamentally have disagreed with him on some of the policy attitudes that he adopted. He had already indicated his intention hot to seek re-election at the end of his current term in the Senate. It is a matter of deep regret that he was not spared to enjoy some period of retirement with his wife and family after so long a period of service in the Parliament. I know that Senator Hannaford had been in poor health for some time and this made his continued service all the more creditable. I am sure that the sympathy of all members of the House go to his widow and family in their sad loss. I move:

That this House expresses its deep regret at the death on 24th October 1967 of Douglas Clive Hannaford, a senator for the State of South Australia, places on record its appreciation of his long and meritorious public service and tenders its profound sympathy to his widow and family in their bereavement

Leader of the Opposition · Werriwa

– I support the motion submitted by the Prime Minister. I admire the terms in which he spoke. Senator Hannaford and his father gave their State much service for many decades. They were very loyal and effective representatives of their party. Senator Hannaford was one of the two members of the Parliament who had, in the past 18 months because of crisis of conscience, left the political parties to which they had given a very long and effective period of service. Each was a man of singular courage and integrity. The decision they made must have been one of the most difficult for any person to make, particularly in such a public place as the Parliament. Senator Hannaford had made his attitude known to his party last June. He made it known to the Parliament when it assembled earlier this year. As recently as this month he bad spoken and voted in the Parliament in accordance with the principles in which he believed. We fear that his death may have been hastened by the exertion and excitement of the events of the last weekend in which be participated. My colleagues feel his passing deeply. At the meeting of the Parliamentary Labor Party this morning it was resolved that we should be represented at the funeral in Adelaide on Friday. I use no mere form of words in joining with the Prime Minister in paying tribute to a fine man; a man with whom most of the members of the Parliament at one time or another would have disagreed but for whom they, without exception, had great respect, and for whom they will have an enduring affection.

Minister for Primary Industry · Richmond · CP

Mr Speaker, the Leader of the Australian Country Party is unavoidably detained this afternoon but he has asked me to speak on his behalf and on behalf of the Party in support of the motion proposed by the Prime Minister and supported by the Leader of the Opposition. Condolence motions in this House are always sad, but I think we are all moved more deeply when the death of one of our fellow members has taken place within the Parliament itself.

Senator Hannaford passed away yesterday in another place. He was a kindly person who went about his work in a stead fast, quiet way in the interests of the nation and particularly in the interests of the people of South Australia. I can well remember faim in my earlier years in Parliament. He often came to me and spoke to me in a fatherly sort of way, giving me advice on what I should do and should not do and also to talk about rural activities. He was a man who had quite a rural background in South Australia.

Senator Hannaford became better known when he resigned from the Government parties over the Vietnam war issue. This was the action of a brave man who was prepared to stand up for his convictions. It was a decision which must have caused him the greatest heart searching and conscience searching. Whilst many of us in this place could not agree with the views that the honourable senator held, and which prompted him to leave the Government parties, I think all of us are united in admiring the loyalty that he had to his own conviction. Senator Hannaford was a man who was without guilt of deception. We respect him for the work he did in the Parliament for his State and for the nation. We feel sad that he was robbed of an enjoyable retirement after his many years of service to the nation. He was due to retire on 30th June next year. On behalf of the Leader of my Party and the members of my Party I tender our sympathy to his widow and to his family.

Minister for Health · Barker · LP

Mr Speaker, I would like to say a few words in support of this motion on behalf of my South Australian colleagues on this side of the House. Perhaps inevitably we were closely associated with Senator Hannaford in the normal round of our political life in South Australia for most of the period of his service in the Senate. I am sure we all agree with the sentiments expressed by the Prime Minister, the Leader of the Opposition and the Deputy Leader of the Country Party.

Senator Hannaford took his responsibilities as a South Australian senator very seriously indeed. He travelled widdy and continuously throughout the State during the whole of his period in the Senate.

As has been mentioned, he sprang from the land and the interests of those working in the great primary industries were always his principal preoccupation. He was I think, one of s long line of senators, if I may say so, which South Australia has sent to this Parliament who because of their background have an instinctive feeling for the problems of the vast rural areas of this continent. I believe that he added distinction to that line, and by the work that he did in this Parliament played an important part in the vital task of bringing the problems of the non-metropolitan areas of this great continent to the attention of the Parliament. I believe that all of us from South Australia would want to make mention of Mrs Hannaford whom we all know well and to extend to her our deepest sympathy. We know her as a constant, loyal, hard working, yet self-effacing supporter of her husband through all the vicissitudes of political life. I support the motion.

Mr J R Fraser:

– I would like to speak only briefly. I was privileged to sit beside Senator Hannaford on two of the committees of this Parliament. I know something of the value of the work that he did for those committees. He had a keen and probing mind. He was one who could never be fobbed off with an answer that he considered inadequate to the question he had posed. He was able to assess a situation, to reach a decision and to stand by the decision that he had made. His service to the Standing House Committee, as you, Mr Speaker, yourself would have known, and to the Joint Committee on the Australian Capital Territory was extremely valuable. He was a regular attender. He was a man who took pains to understand the questions that were being considered by the Committee and to make himself au fait with all aspects of matters to be decided. His politics were never obtrusive, and above all, he was an extremely likeable man.


– As I, myself, recall pleasant associations with Senator Hannaford and the valuable work that he did on the Rail Standardisation Committee, J would not like this to be unrecorded in the annals of this House.

Question resolved in the affirmative, honourable members standing in their places.

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Aid to Developing Countries Mr WHITLAM presented a petition from certain citizens of Australia praying that the Australian Government set 1% of the gross national product as a target for the annual allocation of aid to the developing countries.

Petition received and read.

Social Services

Mr CLARK presented a petition from certain electors of the Commonwealth praying that this House improve the well being of the aged, the infirm, the widowed, the deserted wives and dependent children and the service pensioner to parity with the national general living standard of the Australian people that they may enjoy nourishing food, warmth, clothing and shelter, and that they may live in comfort and with dignity in this land of plenty.

Petition received.

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Mr Clyde Cameron:

– My question is addressed to the Treasurer. Has he any explanation to offer for the fact that out of a total of 422 VIP flights during the period January to August 1967, the number of such flights ordered for air training, defence personnel and all the defence chiefs put together totalled only 29, compared with the 48 VIP flights ordered by the right honourable gentleman for his use alone? This excludes the six additional flights on which he was accompanied by another Minister. As thirty-eight of these flights were from Sydney to Canberra or from Canberra to Sydney, as the average number of passengers, including himself, on such flights was only four persons, and as there are thirty-four commercial SydneyCanberraSydney flights each week day, can the Treasurer state why it was necessary for him to order a VIP flight on each of the occasions referred to?


– I think it is asking a little too much to require me to give an account here and now of the details of each of these flights. During the time that I have been Treasurer of the Commonwealth - I state with great pleasure the fact that I am Treasurer of the Commonwealth - I have devoted very nearly the whole of my attention to the work of the Treasury.

I use VIP flights to get to Canberra so that I can do ray job effectively and to the best of my capacity. Frequently, too, I use VIP flights so that officials can come with me in order that I may discuss with them matters that require my immediate attention. During the course of meetings of the Australian Loan Council, Premiers Conferences and the Budget discussions, I very nearly live in Canberra. In fact, I am prepared to say that if the amount of time that I spend in Canberra is analysed, it will be found that since I have been Treasurer, excluding only the weekends, I have spent about four days each week in Canberra doing the job that I am appointed by the Prime Minister to do.

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– I wish to direct a question to the Prime Minister. Last weekend many demonstrations took place in several countries throughout the world. Will the right honourable gentleman indicate to the House whether he considers that these demonstrations were spontaneous? Do they suggest the growing anxiety of those in Australia and in other nations who know that the United States of America and her allies are pursuing the Vietnam struggle to a successful and just conclusion and who oppose this course?


– I think it would be straining credulity to believe that demonstrations so highly organised and with the number of people involved could occur in various countries at the one point of time without some co-ordination and planning between those in the countries concerned who have the same objective in view - to undermine the allied effort in resisting Communist aggression in Vietnam. There is no doubt in my mind - nor, do I believe, would there be doubt in the mind of any reasonable man or woman - that a good deal of careful planning and organisation has gone into this co-ordinated effort. Whether or not this reflects a growing feeling that the allied cause is making progress both in resisting aggression and in releasing more people who have been under Communist control or terrorism from those evils is a matter of judgment. But as to the facts, on the information available to me the allied effort has been making steady progress. No doubt this has been causing concern, and even perturbation, in the ranks of those whose objectives lie in a very different direction. For our part we have experienced some manifestations in Australia. I think most Australians are able to put their own realistic assessment of the proportion of the Australian public which lends itself to this kind of protest and of its motives.

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– I address a question to the Minister for the Interior. I applaud his predecessor’s implementation of the Australian Capital Territory Advisory Council’s suggestion that before the Council elections all the Territory’s voters be posted a pamphlet explaining the preferential voting system - ‘which is a similar method to that used in the Senate elections’. I also acknowledge the television programmes which are to be shown before the Senate election to explain the Senate voting system. In view, however, of the fact that many of the persons likely to cast informal votes are those least likely to own television sets, will the Minister have an explanatory pamphlet posted to all persons on the Senate rolls?

Minister for the Interior · GIPPSLAND, VICTORIA · CP

– In view of the time involved in implementing the proposal put forward by the Leader of the Opposition I think it is rather late to have forms printed and letters addressed to all electors on the rolls. However, I will have a look at the detail of the question and will give the honourable member a considered reply.

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– In view of the concern expressed in some of the commercial and scientific associations in the oil and natural gas industry in Australia I ask the Minister for National Development, in relation to the Petroleum (Submerged Lands) Bill 1967 and associated Bills whether it is or will be possible for any State which is adjacent to an offshore discovery of petroleum or natural gas to restrict the use of that petroleum or natural gas exclusively to itself. If such a restriction were, attempted, would it not appear to be inconsistent with the Australian constitutional concept of absolute freedom of interstate trade?

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

– The agreement between the Commonwealth and the Premiers of the States was made available by me in a booklet which was distributed to honourable members after my second reading speech on the introduction of the offshore oil legislation last week. As honourable members will have seen, there is in the agreement a clause under which a State adjacent to an offshore oil discovery has the right to put in the lease a clause requiring either the refining of the oil in the adjacent State or the use of the natural gas in that State, but such a clause cannot be implemented until after consultation with, and the agreement of, the Commonwealth. I stress that position. So far as the legal position is concerned, this is more a matter for my colleague the Attorney-General or, perhaps, for the High Court of Australia. I do just stress that whatever powers the Commonwealth had before the introduction of this agreement it still has today.

In addition, of course, the Prime Minister and the Premiers signed an annex to the agreement under which they agreed that they would encourage the interstate trade in natural gas and of oil and that they would not restrict it; and that they would confer at all times when it was desirable for the Commonwealth and the States so to do; and they declared their common intention not to discriminate against this trade. In the particular case to which the honourable member is probably referring regarding the agreement which is being sought now between a possible purchaser in Sydney and a possible seller in Victoria, it is obviously to the interests of the Victorian Government that there should be a sale of this sort. Firstly, the Victorian Government would obtain a share of the royalties in such a sale. Secondly, the basis of the cost of the natural gas supplied to the people of Melbourne and Victoria generally would depend on the quantity of gas produced. So, the more gas that is produced and sold, the lower the price will be to Victorians. In view of all these factors, I feel that it is quite obvious that it is highly unlikely that there will be any restriction of natural gas distribution interstate from the offshore areas in Victoria.

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– I ask the Minister for the Navy a question: Does the cancellation of the search for the sunken submarine reported to be located near Disaster Bay indicate that Navy authorities disbelieve the reports of the abalone divers? Has any evidence been produced to prove the existence of the submarine, or to what nation it belongs? Has the Navy any idea of the whereabouts of the missing abalone diver? Is foul play suspected, or is the whole incident a lot of baloney?

Minister for the Navy · HIGINBOTHAM, VICTORIA · LP

- Mr Speaker, whether the last statement of the honourable gentleman is correct or not, there is no question that this particular matter has aroused enormous interest throughout Australia. The facts of the matter are as follows: Last Tuesday - yesterday week - a man called Lester, an abalone fisherman, reported, among others, to the Department of Shipping and Transport that he had discovered a submarine allegedly in 70 feet of water in Disaster Bay off Eden. The Navy was requested to search for the submarine. About H days later our team arrived and was shown on a chart a spot where the alleged submarine had been seen. This spot was searched for an area of about 1 mile long by 500 yards wide, to no avail. Another area in a similar reef 200 yards further offshore was then searched, again to no avail. Further areas of the Bay area were searched, again with no result.

At this stage it was obvious that to search the whole floor of the bay would take something like 2 to 3 months. In the absence of any further specific information as to the whereabouts of the alleged submarine, it was decided it would be prudent to call off the search temporarily until such information was received. I might add that, in the meantime, the fisherman, Mr Lester, was not available for comment.

I now report to the House that at lunch time I received a report that Mr Lester is in Sydney and would be prepared under certain conditions to co-operate with the Navy in locating the wreck. No direct contact has yet been made with Mr Lester but attempts are being made to make contact with him and for a conference to be conducted between Mr Lester, Naval authorities and the Commonwealth Receiver of Wrecks. I point out that the role of the Navy in this matter is purely this: To carry out a search at the request of the appropriate authority to locate and identify the alleged wreck, and if it is there and there are any dangerous aspects to it to remove those dangers to shipping and human life.

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– I direct a question to either the Prime Minister or the Treasurer, whoever is better able to answer it. It follows on questions asked previously by me and by my colleague the honourable member for Corangamite. In view of the great concern about, and the widespread interest in, the Commonwealth assistance that will no doubt be forthcoming for Victoria and other States as a result of the serious drought conditions prevailing, can either the Treasurer or the Prime Minister tell the House what progress has been made following discussions held on Monday last between officers of the Commonwealth and of the States involved?


– As the honourable member has said, last Monday Commonwealth officials met officials of the States of Victoria and South Australia in order to draft a provisional agreement that could be presented to the Victorian and South Australian Governments and could be agreed to by the Commonwealth. I have already given my concurrence to this provisional agreement. It proposes that loans and grants will be made available to the Governments of Victoria and South Australia in the same way and on the same terms as loans and grants were provided for New South Wales and Queensland to relieve conditions resulting from the droughts in those States during recent years.

In other words, money will be provided for these two Governments on three different counts. Firstly, money will be made available to enable those affected by the drought to carry on and restock; secondly, funds will be provided at a discount for the carriage of stock and fodder to and from drought stricken areas; thirdly, money will be provided for special purposes such as cloud seeding and the provision of special water supplies. A letter has already been drafted and will, I understand, be presented to the

Prime Minister for his signature this afternoon. I hope that shortly afterwards it will be in the hands of the Victorian and South Australian Governments.

There is one other point 1 would like to make clear. We have made one provision over and above what was done in the case of New South Wales and Queensland; we have agreed to make funds immediately available to both Victoria and South Australia so that they can finance their arrangements as soon as it is practicable for them to do so.

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– My question is also addressed to the Treasurer. I point out ro him, by way of preface, that a few months ago a new 100-bed hospital costing $2. 5m was completed at Belmont in the Shortland electorate and remains idle because cash is not available to furnish, equip and staff it. Is this state of affairs either desirable or economic? Is it due to bad financial relations between the Commonwealth and the State or to bad handling by the New South Wales Government of the finances available to it? Will the Treasurer let loose some of the moths from his Treasury hoardings and undertake an examination of all Government trust accounts, including the National Welfare Fund and the Loan Consolidation and Investment Reserve, to ascertain whether some of the cash balances in those funds may be directed into a special short term loan account to meet exigencies such as the one I have referred to, provided agreement can be reached with the various State governments as to the terms and conditions for repayment of such loans?


– The House will appreciate that I, as Commonwealth Treasurer, cannot be expected to know the details of all the operations of all the State governments - and 1 do not profess to know them. The honourable member obviously labours under the misapprehension that there are surplus moneys available in trust funds that can be allocated for such purposes as he suggests.

Mr Griffiths:

– The Treasurer knows there are.


– Do 1? If the honourable member had listened to the Budget speech he would know that there are no such funds available. We budgeted for a deficit in our accounts of $595m. We have had no representations from the New South Wales Government on this matter, so far as I can recall, unless they were made while I was away. I will have a look at the files and see whether any representations have been made.

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– My question is directed to the Minister for Labour and National Service. Did he see a Press report some time ago to the effect that the Federal Conference of the Australian Labor Party in Adelaide endorsed opposition to the Government’s plan for adult training? Can the Minister say what the Government intends to do to open up opportunities for adults to improve their skills and at the same time meet the continuing shortages of skilled workers in the metal and electrical trades?

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

– I did see such a report some time ago. Naturally, being interested in what might happen, I read the text of the resolution subsequently passed by the Federal Conference of the Australian Labor Party. It was opposed to industrial training for adults. I have no information as to whether this was really seriously considered or whether it just went through in a kind of primeval bovine rush. It is certainly not true that all trade unions and their leaders are opposed to adult training.

Mr Curtin:

– Yes they are.


– Clearly the honourable member is acquainted with only one section of the trade union movement. Nor would it be true to say that all employers and other authorities in this field are in favour of it. Some time ago a working party was set up to go into the problems of apprenticeship and training for the metal, electrical and vehicle building trades. This working party, which was constituted of the best authorities we could find, laboured for a long time and produced a remarkable report which in itself is quite an historic document. The working party consisted of Mr Monk, Mr Horsburgh of the Amalgamated Engineering Union, Mr Holmes who was then the Federal Secretary of the Australasian Society of Engineers, Mr

Dolan of the Electrical Trades Union of Australia and a number of representatives of employers. It was serviced by some officers of my Department. The report, which I will happily make available to any honourable member who is interested in the subject, includes a scheme for adult training in these trades. Later the report was considered at a meeting of representatives of a number of trade unions, who were on the whole against it. However, the meeting which reviewed the report at that time included representatives of a large number of trade unions and others who had not participated in the exercise, who were not well aware of the problems and who were not representative of the unions directly concerned.

The big problem is to persuade intelligent, practical people to look at the changes that have occurred in our education system and the problems presented by the rapid pace of technological change in the society in which we now live, and view them without prejudices derived from the last century and the era before full employment. I still remain hopeful that progress is possible and that the necessary co-operation of the trade unions, the technical training authorities and the State governmental authorities will materialise. It took my predecessor a long time and considerable powers of persuasion to achieve the last reform, that in respect of apprenticeship. I remain hopeful that eventually this reform, adult training, will be introduced because modern necessity demands it.

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– ls the Minister for Works aware of a statement made at a recent conference of Australian consulting engineers to the effect that consulting engineers are suffering considerable loss of prestige and money by being deprived of opportunities to advise on works being carried out in this country? Is this discrimination costing Australia thousands of dollars and causing many consulting engineers to seek employment overseas? What action is being taken to correct this situation?


– The policy of the Department of Works, for which I am responsible, is to employ consultant engineers and architects where it has a work load which is above its capacity. It does not increase its capacity as the work load increases. It is a general policy, then, that consultants take off the peak of the design work that my Department does. In answer to a question last week I said that about 20% of our design work was done last financial year by consultants and $2.6m was spent on this work. I do not think that the consultants can claim that the Department of Works, at least, is not giving them every encouragement.

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– -My question is directed to the Minister for External Affairs. I ask: Has there been any recent improvement or change in Australia’s relations with Cambodia?

Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– There has been no recent change. So far as the Australian Government is concerned, there is nothing in our thinking that varies the friendliness that we have towards Cambodia, and that remains our attitude.

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– My question to the Minister for National Development is supplementary to that asked by the honourable member for North Sydney. I ask the Minister to defer the Petroleum (Submerged Lands) Bill 1967 until he has considered a telegram received by me from Mr Pettingell, the General Manager of the Australian Gas Light Company, in the following terms:

Seriously concerned disadvantage to NSW and to gas undertakings in that State created by offshore agreement and proposed legislation. Strongly submit need for amendment to legislation to ensure full consultation between States and Federal Government before decisions made to restrict use of petroleum or gas to State adjacent to offshore areas. Consider agreement inconsistent freedom interstate trade.


– I have received a similar telegram to that received by the honourable member. I think a number of telegrams were circulated. I do not know whether they were circulated only to honourable members from New South Wales or to the whole Parliament. I have had considerable discussions with State Ministers over the period of the last 31 years in which this offshore oil agreement has been in the process of being hammered out. The Premier of New South Wales, Mr Askin, has signed this agreement, along with all the other Premiers, and he is evidently confident that this is an agreement which will be for the good of Australia as well as his own State. I repeat the remarks which I made to the honourable member for North Sydney to the effect that although the nearest State to an offshore discovery can put a clause in a lease requiring the particular company either to refine oil or to use gas in that State, this cannot be implemented until such time as there has been consultation and agreement with the Commonwealth Government. I think that this puts the position in its proper perspective. But I mention again that, obviously, a State government is anxious to encourage the use and the sale of gas because the State gets a proportion of the royalties and it also will, in the case of Victoria, reduce the price of gas to the users. However, the honourable member has the document which I circulated and if he looks at the annex to the agreement he will see that the Governments are agreed that they will encourage and will not seek to restrict any such trade - that is Interstate trade - and with that in view they will confer from time to time as any of them requests. They declare their common intention not to discriminate against any such trade. That is signed by the Prime Minister and by the six State Premiers, the first of whom is Mr Askin, the Premier of New South Wales.

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– I direct my question to the Minister for Civil Aviation as Acting Minister for Air. I ask him whether his attention has been drawn to criticism that was voiced at the recent Returned Services League Conference in Melbourne concerning Australia’s reliance on France for the production and supply of the 30mm ammunition which is used by our Mirage aircraft. Can the Minister say whether this is a fact? Have steps been taken to ensure that we are self-sufficient in the manufacture of this type of ammunition?

Minister for Civil Aviation · DARLING DOWNS, QUEENSLAND · LP

– The subject matter of this question comes under the authority of the Royal Australian Air Force. 1 did read the statement in relation to this matter and I appreciate the interest that the Returned Services League is taking in what is a very important defence matter. The 30mm ammunition for the weapon system on the Mirage fighter aircraft operated by the RAAF has been supplied and is continuing to be supplied from France. We have no reason to doubt that the contractual arrangements that are in existence at present will be maintained. However, I add that my colleague, the Minister for Supply in another place, has arrangements well in hand for the future manufacture of this ammunition in Australia.

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– 1 wish to ask the Prime Minister a question. I refer the right honourable gentleman to a report in the British newspaper the ‘Observer’ of 15th October. The report, under the heading ‘Britain Speeds Retreat from World Role’, claims that a series of government decisions transforming Britain’s defence policy into that of a purely European power is expected before the defence White Paper is presented next February. The report also claims that last July’s announcement of the British Government’s intention to withdraw forces from Singapore and Malaysia by about 1975 was only half the picture. It states further that the February White Paper will show that the mobile capability planned to follow the withdrawal of permanent east of Suez garrisons will be severely limited in both duration and scope. Has the right honourable gentleman been informed of an expedited British withdrawal from South East Asia? Does the British Government intend to reduce British forces assigned to the South East Asian Treaty Organisation to vanishing point? Will amphibious British forces remaining in South East Asia be confined to a limited fire brigade role? If the report is correct, what is the Government doing to adapt Australia’s defence planning to the dramatic change in circumstances of British withdrawal?


– I do not think that I should be asked to comment in any detailed or authoritative way on a Press account of this character. I can tell the

House that the United Kingdom Government keeps this Government informed as to its intentions. There are consultations on these matters both at the diplomatic and at the Service level. I know of no substantial change in the plans previously announced by the United Kingdom Government. So far as our own planning is concerned, we have been informed, of course, that the United Kingdom Government, while intending to maintain a military capability in the general area of Malaysia and Singapore, does intend to withdraw the ground forces there over a phased period.

For our part, we have been in discussion with the United Kingdom and with other countries - New Zealand, for example - and we expect those consultations to continue. Australia has already indicated an intention to increase its forces in Vietnam. We believe that while the Vietnam conflict continues the pressure of Communist expansion and aggression will be centred in that area and that therefore we will not require necessarily the same strength of forces in some other part of South East Asia.

I can assure the House and the honourable gentleman that we do maintain the closest contacts with the United Kingdom. At this very moment but for the delay in concluding question time I would be in consultation with the High Commissioner for the United Kingdom. This is typical of the close association that we have. Therefore I suggest to the honourable gentleman that he should not be carried away too much by newspaper speculation.

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Mr Kevin Cairns:

– I ask the Prime Minister whether he has seen a recent review in the London ‘Financial Times’ which suggested that the Australian economy was the envy of the world’s free nations and was extremely skilfully managed? Does he consider this report to be correct? Since it received little recognition in Australia, could he take appropriate steps to make its contents known and appreciated by honourable members?


– The London Financial Times’ is a financial journal of great authority. .1 do not know of any journal throughout the world which is regarded as being more authoritative. I have not seen the particular issue to which the honourable member refers. I did see a report in one of the Sydney newspapers - the ‘Daily Telegraph’ I think - which gave an account of this article and which said that it had referred in glowing terms to the present state of the Australian economy. It quoted a passage which referred to the skill with which Government authorities and our economic managers had conducted the affairs of the Australian economy.

Whilst this was pleasing to read in a newspaper of such consequence, it did not come as any surprise to those of us who have been able to see the remarkable economic progress associated with the continuation of economic stability in this country. When one has regard to the subject matters which do form the basis of headlines in the daily Press of Australia, and which are of far less consequence than this, I confess to some disappointment - indeed, almost to some regret - that other newspapers did not see tit to give the same sort of prominence and attention to this information which, I am sure, would have been reassuring to Australians. They would welcome this recognition of how well their country is doing.

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– I ask the AttorneyGeneral a question. He will know that several grants of probate have been deferred and some refused in cases where the wills concerned had been left by soldiers under 21 years of age because the intended executors cannot or could not establish that at the time the soldiers had executed the documents they were under instructions to join an expeditionary force. I ask him whether, pending any reduction in the age of testamentary capacity to 18 years, consideration has been given to exercising this Parliament’s defence power to grant this privilege to such younger members of the Forces.


– The Leader of the Opposition will know, of course, that so far as the ordinary probate law is concerned, this would be a matter for which each of the States would have to provide in their legis lation, lt is our responsibility so far as the Territories are concerned. Just dealing with that point, I have before me in printed form at the present time a draft for a new wills ordinance which covers this amongst other matters so far as the Territory is concerned. Coming to the broader substance of the question, so far as I am aware it has not been considered that the Defence Act could be used as a vehicle for dealing with this particular probate question. .However, in the light of the question that has been asked by the Leader of the Opposition 1 will see whether consideration should be given to using that vehicle.

page 2220


Assent reported.

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Approval of Work - Public Works Committee Act

Minister for Works · Wakefield · LP

[3.321-1 move:

That, in accordance with the provisions of the Public Works Committee Act 1913-1966, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to this House: Rockhampton Airport, Queensland - Development of airfield pavements.

The proposal involves the extension of the existing runway to 6,500 feet length, strengthening of the existing taxiway and construction of a new taxiway for the larger aircraft which the domestic airlines propose to use at Rockhampton. The estimated cost is $1,100,000. To enable the runway to be extended, the Commonwealth will need to acquire a portion of the adjoining golf course. To restore its course, the Rockhampton Golf Club proposes to acquire land from the City Council and the State Government.

In reporting favourably on the proposal, the Committee has recommended that the Commonwealth should take such steps as it can to expedite completion of the negotiations for the land being sought by the Rockhampton Golf Club. The Committee has also recommended that the Commonwealth should assist the club, where possible, in replanning and re-establishing its course so that it suffers the least possible delay and inconvenience. Both the Department of Civil Aviation and my Department have noted the Committee’s recommendations and propose to take action accordingly. Upon the concurrence of this House in this resolution, detailed planning can proceed in accordance with the recommendations of the Committee.

Question resolved in the affirmative.

page 2221


Second Reading

Debate resumed from 5 October (vide page 1800), on motion by Mr Bury:

That the Bill be now read a second time.


– As the Minister for Labour and National Service (Mr Bury) stated in his second reading speech, the main purpose of this Bill is to authorise the payment in 1967-68 of special grants totalling $35,407,000 to Western Australia and Tasmania. These grants have been recommended by the Commonwealth Grants Commission in its 34th report. Under these grants, Western Australia will receive, in round figures, $l5.5m and Tasmania will receive $ 19.9m. The importance of the Grants Commission lies in its function of adjusting by added financial assistance the inferior financial positions of Western Australia and Tasmania. The fact that these States are sparsely populated, less industrialised and have less wealth at their disposal than other States means that they are faced with heavy expenditure if they are going to develop their resources in order to give them anywhere near equality with the more highly developed, more populated and wealthy States of New South Wales and Victoria.

The principle governing Slates grants is that of financial need. The principle was expressed in 1936 in the 3rd report of the Commonwealth Grants Commission and it has been repeated in paragraph 68 at page 49 of the Commission’s 34th report. It is stated as follows:

Special grants are justified when a State through financial stress from any cause is unable efficiently to discharge Its functions as a member ot the Federation and should be determined by the amount of help found necessary to make it possible for that State by reasonable effort to function al a standard not appreciably below that of other States.

The claimant States, because they must have Commonwealth financial assistance, have been forced to accept the Commission’s decisions on their claims. The acceptance of the Commission’s decisions is easier to take because they are made by a body that is more or less non-political in character and the decisions are made after hearing evidence.

The Grants Commission is supposed to be an independent body which makes its recommendations to the Commonwealth Government and the Parliament decides whether the recommendation should be accepted or not. The Commission’s recommendations have been accepted ever since its establishment in 1933. It is an improvement on the Australian Loan Council at which the States are subjected to the dictation of the Commonwealth. The very method of voting at the Loan Council acts to the detriment of the States. The Commonwealth has three votes - two deliberative votes and a casting vote - so if it has two States on its side it can inflict its will on the other four States. lt is extremely doubtful whether a similar system of voting could be found anywhere in the world - certainly not in democratic countries.

From time to time, this Government has attempted to force its political views on the Commonwealth Grants Commission. For example, in its 28th report the Commission announced a decision to adopt a standard for the year of review based on the budgetary position of New South Wales and Victoria. The then Treasurer had stated that the Government was not satisfied that the adoption of the two State standard was justified in principle and believed that the Commission should re-examine its decision. The Commission, after examining the Commonwealth’s submissions, refused to alter its previous decision and adhered to the two State standard, based on New South Wales and Victoria. However, it looks as though the Commonwealth’s will is about to prevail because the Commission has announced in its 34th report that as from 1968-69 it will base its recommendations on a standard derived from the experiences of all four non-claimant States, ft is difficult to understand why the decision was made at this point of time.

The Commission’s decision to base its recommendations on the four State principle was reached as a result of further submissions made by the Commonwealth in 1966. The representatives of two nonclaimant States strongly opposed the adoption of a standard based on the four nonclaimant States. It has been pointed out that a test of the four non-claimant States principle in respect of the financial year 1964-65 had shown that the claimant States would lose by it. The attitude of the Premier of New South Wales is made very clear in paragraph 85 on page 54 of the Commission’s report. It states:

At the Perth hearings the Honourable the Premier of Western Australia referred to the efforts of his Government to relate its legislation in relation to taxation and its control of social service standards to the average of New South Wales and Victoria, and stated that the State’s policy was geared almost completely to a two-State standard and that any change would have far reaching and vexatious consequences’. He concluded by saying that ‘I feel it is my duty to make clear to you the practicalities of the problem with which any Government of this State would be presented if the Commission were to agree to a four-State standard and I ask that you do not move from the present standard which we have accepted and to which our whole pattern of public finance is adjusted’.

The representatives of both claimant States declared that the adoption of a four-State standard now would create major problems of government and administration for the claimant States. Under the new system, considerable extra work will be involved for both the States and the Commonwealth Grants Commission. This is admitted by the Commission in paragraph 97 at page 59 of its report, where it pointed out the difficulties with which it will be faced with the adoption of a four-State standard.

The situation amounts to this: Both claimant States have based their standards on New South Wales and Victoria. They will now have to change those standards to fit into the pattern of the four non-claimant States. If they do not do so, they could receive an adverse financial adjustment from the Commission. In the financial year 1959-60, South Australia was not a claimant State, Western Australia and Tasmania alone being in that category. Thus, the balance between the claimant and the non-claimant States was altered. Even more important, there came into full operation a revised scheme of financial assistance pay ments which was authorised by this Parliament and which was to apply to all States. The scale of these payments was agreed on by the State governments and the Commonwealth Government in conference in 1959 before it was placed before this Parliament. Arising out of the new circumstances, there is the issue of what standards should be adopted by the Grants Commission for the purpose of its calculations. In 1961, the Commonwealth Treasurer of the day submitted certain contentions to the Commission. In summary, he said that initially the Commission should adopt as the appropriate standard for each of the purposes for which there was recourse to a standard the average derivable from the relevant finance available in the four nonclaimant States. He claimed that this standard would indicate the normal budgetary result with which the appropriate budgetary results of the claimant States would be equalised. The standard also should measure the demanded revenue effort and the acceptable level of service on the basis of which the equalisation should be calculated. The Commonwealth Treasurer went further and introduced the following qualification:

In principle it would seem that the States which are not claimant for special grants must be regarded as functioning efficiently as members of the Federation or at least as considering themselves to be doing so. On this ground it can be argued that in order to enable claimant States to function efficiently as members of the Federation, special grants need not be such as would place them in a more favourable budgetary position than any non-claimant State.

The words ‘any non-claimant State’ are worthy of note. The Commission referred to this suggestion as being ‘of great and highly novel significance’. The pressure from the Commonwealth Treasury on the Grants Commission was applied to ensure that the claimant States would receive less in value from the special grants at a time when, in fact, they needed more funds. It is clear that the action taken by the Commission has been taken as a result of prompting by the Commonwealth Treasury.

Without doubt, the change in standard adopted for 1968-69 will be to the disadvantage of the claimant States. The Commonwealth Treasury strongly criticised the Commission for its adoption of the two-State standard and argued that there had been a change in the nature of the relation and ‘the characteristics of claimancy’. The Commission, as I have pointed out, would not at that time accept the view of the Treasury. The Commission’s view was that the essence of the new agreement was the explicit recognition that all States required and were to receive financial assistance and that some States were to receive greater amounts per capita than others. There is little doubt that the Grants Commission, if left to itself, would not have varied the two-State standard, and its decision to make the change is the result of this continued pressure by the Commonwealth Treasury.

The formula for income tax reimbursements to the States is due for review not later than 1970, and the review could take place earlier. In the circumstances, the twoState standard should be allowed to remain until the formula is altered. Each State is finding it difficult to obtain the funds necessary to enable it to meet the demands of accelerated development. From this development, of course, the Commonwealth derives by far the greatest benefit. During the past 20 years, the public debt of the six States has increased from $2,044m to $7,934m, whereas the public debt of the Commonwealth has fallen from $3,732m to $3,275m. So we get the picture: The public debt of the States is increasing and that of the Commonwealth is falling, as the figures for the last 20 years clearly show.

The latest report of the Commonwealth Grants Commission emphasised the special disabilities that are experienced by the claimant States. In Chapter 11, it deals extensively with the inequalities between the States. Table 1 at page 24 shows that Western Australia has the highest rate of population growth, with the highest rate of both natural increase and net migration. This population growth means that there is a high proportion of children of school age, and this increases the total cost of education. More schools are needed to cater for the additional children and more teachers have to be placed on the payroll. The average cost of transporting each school child is higher in Western Australia than in the standard States or, for that matter, in any other State, I suppose. This is because of the long distances to be travelled, combined with the scattered population in country areas. Population growth means that more houses have to be provided. The Grants Commission, in paragraph 36 at page 34 of its report, referred to the costs of development in all States in these terms:

In recent years all the States, and especially the claimant States, have incurred heavy loan expenditures, and the cumulative total of loan expenditure has increased substantially.

Tables 13 and 14 of the report, at pages 34 and 35, show that on a per capita basis the accumulated loan expenditure is substantially higher in Tasmania, South Australia and Western Australia than in the other three States. The Commission, in paragraph 39 at page 36, referred to the per capita burden of unrecovered debt charges, which it stated was heavier in Western Australia and Tasmania than in the other States. Referring to Western Australia, it declared:

The loan expenditure items primarily responsible for the unrecovered debt charges . . . are railways, country water supplies, public buildings, harbours, development of agriculture and mining and the State Shipping Service. . . .

Concerning railway operations the report, in paragraph 42, pointed out that there was a substantial improvement in Western Australia’s results which was reflected in the lower per capita amount of unrecovered debt charges in 1965-66 as compared with 1964-65. Western Australia has been fortunate in having good seasons over recent years. This has been reflected in railway operations. A drought could easily affect the favourable result.

In paragraph 45 of the report is a reference to the nef cost to the State Budget of operating rail services over wide areas or for small populations. The report indicated that the cost was relatively high and commented on the denser traffic in Victoria and New South Wales. Table 16 of the report drew attention to the situation. It showed that in New South Wales there were 4,486 tons carried per route mile, in Victoria 2,902 tons, in Western Australia 1,703 tons and in Queensland 1,643 tons. Added costs are caused in the sparsely populated States. In 1965 Victoria increased its railway freights by 10%. Western Australia had to follow suit on that occasion. The Premier said that if Western Australia did not do so the State would be penalised by the Grants Commission. Increased freight rates mean increased costs to primary producers which, in turn, increase the costs of our exports. The two States earning export surpluses for Australia are Queensland and Western Australia. These export surpluses are swallowed up by the deficits in export trading by New South Wales and Victoria. Those two States have a high level of imports for the expansion of their industries. The export surpluses of Queensland and Western Australia assist in the expansion of industry and employment in New South Wales and Victoria. In the 10 years ended 1966 Queensland and Western Australia earned a total overseas trading surplus of $4,500m. In the same period New South Wales and Victoria had a total overseas trading deficit of $4,800m. It is clear that if it were not for the minerals, wheat, wool and beef of Western Australia and Queensland the high levels of imports into New South Wales and Victoria could not be sustained, because there has to be a balance somewhere.

Despite the huge overseas trading surplus of Western Australia during the past 10 years of $1,350m, that State has had an interstate trading deficit of $l,900m. Imports into Western Australia from the eastern States amounted to $2,850m. Western Australia is now buying $400m worth of goods annually from the eastern States. If Western Australia did not have such a big surplus of export earnings it could not buy so much from the eastern States. This would affect the development of the eastern States. Western Australia is looked upon as the hewer of wood and drawer of water for the eastern States. Now it is suggested that Western Australia is also the digger of dirt. We have in our northern areas huge mineral resources that should be used in the national interest. Overseas capital is necessary for the development of these natural resources, but Australian capital should be playing a greater part in this development. There is little or no co-ordination between the Commonwealth Government and the State Government towards a common policy on mineral development. What can we get out of it, seems to be the main attitude of the Commonwealth and State governments. The main aim of the Commonwealth Government is to squeeze the last drop of export income without regard to the profits that are being taken out of Australia. The States are concerned mainly with royalties and not with the profits that are being taken out of the country by overseas interests. The contracts that the States have made overseas have been responsible for the development of these mineral resources, but is this in the long term interest of our country? If the Commonwealth Government had been more realistic about our rich natural resources Australian interests undoubtedly would have had a greater share of those resources. Federal funds should have been made available, and assistance should have been given, to Australian companies. The wealthy interests in Australia should think more of the long term welfare of this country. The banks and the insurance companies should invest more of their assets in development and in minerals. If we are not careful, Australia will be riddled with potholes in the interests of the profits of giant overseas companies.

In paragraph 43 of the thirty-fourth report of the Commonwealth Grants Commission it is stated that the utilisation of the great resources of iron ore in Western Australia may lead in future years to a lesser dependence by that State on special grants through the recommendations of the Commission. There is no doubt that royalties from iron ore are going to play a big part in the State’s revenue, lt is expected that the population of the north west of Western Australia will increase by 25% as a result of iron ore discoveries. It is estimated that in the 14-year period 1966-1980 gross receipts from the exports of iron ore and pellets from Pilbara alone will total $1,800m. Surely this strengthens the claim of Western Australia for greater Federal financial assistance now in preparing for this development. As royalties on iron ore increase, so financial assistance from the Grants Commission declines. Some special Federal assistance is required now so that the development of the north can be expedited.

The Government’s attitude to northern development is a national disgrace. Most projects in the north have been started by private enterprise. In its 1965 report the Grants Commission drew attention to the fact that developmental projects undertaken by the States would remain largely unattempted if the States were limited to their own resources. The Commission said:

The settlement and growth of the north west region of Western Australia is one example. Others are exploitation of the mineral resources of the Pilbara region of Western Australia.

This Government’s attitude to the Ord River project is to be regretted. This project has proved itself to be a producer of highquality and high-yielding cotton. There is an abundance of water and good soil, and the area’s ability to grow a variety of crops has been proved. This should be treated as a national project similar to the Snowy Mountains scheme and should no more be considered a debit against Western Australia than the Snowy scheme is considered a debit against Victoria and New South Wales. Projects like the Ord will make Western Australia a much stronger economic unit of the Commonwealth and will result in bigger markets for eastern States goods. It will also add foreign exchange by supplying more exports. The Ord River scheme could be repeated in other areas of Western Australia. I instance the Fitzroy River, where there are areas abounding in natural resources which would support big populations as well as earn export income.

The Government is concerned primarily with looking after the more densely populated areas where the votes are located. It turns a blind eye to the north, lt forgets how close this area is to Asia with its hungry millions. While it is true that Western Australia gets more financial assistance from the Commonwealth than the Commonwealth tax collection in that State amounts to, it must be remembered that Western Australia is a huge, sparsely populated State about one third the area of the Commonwealth. Its problems stand out when compared with the much smaller area of Victoria, which is highly industrialised and which has a highly concentrated population. The nation depends on Western Australian exports and any assistance it allows that State to expand assists Australia as a whole.

The Commonwealth Government in attempting to justify itself on the development of Western Australia refers to the colossal amounts of funds that are being invested in the north west and the Kimberleys, as well as to other matters of development. What the spokesmen for the Government neglect to say is that practically all these funds are provided and owned by overseas exploiters and investors. The spokesmen conveniently ignore and do not give details of how much has been contributed by the Commonwealth Government. Even where contributions to development have been made, the Commonwealth has wanted its pound of flesh. It charges the bond rate of interest which is now 5i% on finance that it has raised by way of taxation from the people. It taxes the people and then lends this money to the States at an interest rate of 5i%.

Let me give some examples as contained, as a matter of fact, in answer to a question on page 105 of Hansard of 15th August 1967. These questions related to the Western Australian railway standardisation. We find first a non-repayable grant of $23.858m and an interest bearing loan of $34.082m, making a total of $57.940m. This State has to repay $34.082m in principal and $43.218m in interest, making a total of $77.300m. These figures are up to 30th June 1967. Regarding the comprehensive water scheme we find a non-repayable grant of $10m, an interest bearing loan of $2.5m and the interest to be paid will be $2. 256m. Regarding the Derby Jetty, the nonrepayable grant is $800,000. The interest bearing loan is also $800,000. The principal paid back is $300,000 and the interest amounts to $318,000. There is no doubt that the Commonwealth gets its pound of flesh from the finance that it lends to the State for these development works.

Since Federation, Western Australia has been receiving financial disability assistance from the Commonwealth Government. It was considered to be compensation for the loss of revenue raising rights that had been handed to the Commonwealth. Special grants were provided since about 1910 and then, in 1933, the Commonwealth Grants Commission was established. So, in one way or another, special financial assistance was available because of special disabilities in Western Australia. Now, at long last, a possibility exists that Western Australia will cease to be a claimant State. It is suggested that this stage will be reached by 1975. The trend is towards less dependence on the Commonwealth Grants Commission. The amount for Western Australia this year is $15.5m which is less than the amount last year. This amount is in recognition of the disabilities that Western Australia suffers in comparison with the standard States. We are entitled to receive that assistance as long as those disabilities exist. It would be unfortunate, however, if Western Australia was denied this assistance prematurely.

I suggested in a recent debate that the State Shipping Service in Western Australia, because of the special nature of the service, should be given a special grant to operate. At page 76 of the 1965 report on the Shipping Service it is pointed out that the operation as a whole cannot be judged by comparison with similar operations in other States in the Commonwealth. The report states:

No comparable activities are carried out in the standard States or for that matter in any other State of the Commonwealth.

Because there is no basis for comparison, surely this is a sound ground for the State Shipping Service being treated in a special category. The Western Australian Government has been forced to increase freights and fares on the ships so as to reduce the unfavourable adjustment due to the loss on this service. Paragraph 255 of the thirtyfourth report shows that the loss was $2,481,000 and because it was over $2.4m the unfavourable adjustment was $81,000. The State had to bear the loss and this cut down the finance available for other purposes. This service was established to help populate the north and as a concession to those firms and people who went there.

The report of the Loder Committee, which inquired into transportation costs in northern Australia, recommended certain concessions to the northern areas of Australia including reduced freights. These are services that are provided and that would be considered uneconomic by any commercial operator. We simply would not get commercial operators to operate them. It must be remembered that the State Shipping Service is inseparable from the big problem of northern development. It should be covered by a special additional grant taking into account the varying costs and circumstances of the State Shipping Service. Captain J. P. Williams in his investigation found no evidence of inefficiency. The operations of the Shipping Service are complicated by a lack of deep water ports in the north where tides of up to 30 feet have dictated the design of a ship capable of sitting on the bottom at low tide. A person can actually walk around a ship at low tide in some ports. About three times or four times as much cargo is carried northward as is carried southward, but the gap is widening. As the north develops there is a chance that the gap will be reduced.

There should be more public investment as far as the north is concerned and as far as developmental works in Australia are concerned. Australia’s public investment is about one-third of the total investment, but in some countries in Europe the ratio is over 40% . The present rate of public investment in Australia is not equal to the task of current demands. We know of course that all of our States are faced with tremendous financial problems. I hope that the conference listed for February next will be able to arrange a formula which will ease these problems. The fact is that the States need more public expenditure if the problems of a rapidly growing population are to be met and if there is to be an adequate and vigorous development of our resources. It is essentia] that the Commonwealth Government and State governments should be cooperating in a constructive plan for a much higher rate of economic development. A national plan is required where specific target rates will be set in the field of public investment. If this is done, private enterprise will be able to make its contribution within the framework provided by the investment of public funds. I point out to the House that the Opposition supports the Bill as it has always done. The Opposition commends the Bill to the House.

Mr Kevin Cairns:

– -As in another debate recently, it is not my intention to speak for a great length of time upon this Bill and the report of the Commonwealth Grants Commission. But there are one or two things which need to be said about the report because quite clearly it is a very important one. Having read through the substance of this document, I suggest very sincerely that it is one of the most capable reports that in fact have been presented by the Commonwealth Grants Commission. Argument in many respects is very cogent and more realistic than the argument in more recent reports. I certainly regard it as reflecting great credit on the Chairman, Sir Leslie Melville, and his two Commissioners, Mr Goodes and Mr Ron Lane who is also on the staff of the University of Queensland.

There are several features of this report which are well worth commenting upon because this document probably more than any other report of the Commission widens the scope for the development of fiscal equalisation in Australia. It widens the scope for developing equality in a fiscal sense between each State of the Federation. If it is our belief that there ought to be no area of this country which is an elite area and no area which is a poor area but that all areas are to be equal, then the principles involved in this report ought to be applied by the members of this House. I am rather sorry to find that the honourable member for Stirling (Mr Webb) obviously does not welcome some of the recommendations and advice in the 34th Report of the Commission.

The Commonwealth Grants Commission has the heavy responsibility of doing away with the horizontal imbalance between the Australian States. I use that term to distinguish between a horizontal and a vertical imbalance. The task of the Commission is to make all the States equal in terms of the general efforts of the people in those States in relation to their public services and their public expenditures. This is certainly a democratic principle and it is a very valuable one to apply to an economy such as ours. We may ask, first: How has this principle operated in the past in Australia, and how has the principle of fiscal equalisation operated in Australia when compared with the operation of like principles in other countries? We have an enviable record in this field. It is one that has not been surpassed by any other federation in the world or by any other large country.

In this connection I refer to a work titled ‘Economic Development and Cultural Change’ by a gentleman called Williamson and published under the authority of the University of Chicago. The author examined divergences between different areas of various large countries in terms of general living standards. He examined 24 countries and found that there was less divergence from area to area in Australia than in any of the other countries. He examined rich nations as well as poor ones. He did not look at countries like Venezuela or Puerto Rica; he examined countries like Australia, New Zealand, Canada, the United Kingdom, Sweden - Sweden is often held up by the Opposition as a paragon of economic virtue - Finland, Western Germany and, in short, all the great countries of the world. As I have said, from the point of view of fiscal equality between the various States of the federation Australia is surpassed by no other nation.

Mr Curtin:

– The honourable member is simply building up the Government that he supports.

Mr Kevin Cairns:

– Well, we will have a look at that suggestion in a moment It seems that the honourable member for Kingsford-Smith is now listening-

Mr Curtin:

– I am the only one who is listening.


– Order! The honourable member for Kingsford-Smith will cease interjecting.

Mr Kevin Cairns:

– I thank the honourable member, and I am very grateful for his interest in this matter. I am merely directing attention to one or two parts of this report which I believe to be important. The Commission has said that in future, when considering the level of grants to be made to Western Australia and Tasmania, it will use for comparison what it calls a four State weighted average. In other words it will use not only New South Wales and Victoria for purposes of comparison but it will include also Queensland and South Australia in determining the four State weighted average. I ask the Minister for Defence (Mr Fairhall) to tell us when he replies at the conclusion of this debate whether this average is to be weighted in terms of population or in terms of some other factors. I can understand why the honourable member for Stirling may be concerned that the comparison in the case of Western Australia will be with the average of the standards of the four nonclaimant States. After all, if a weighted average instead of a simple average had been used by the Commission in its latest inquiry, the grant in the case of Western Australia would not have been calculated at $1.20 per capita, which is the figure given in this report, but at something like 75c per capita. For this reason I can understand why the honourable member may be concerned that at least in this year a weighted average may be applied instead of a simple average of the non-claimant States.

This is obviously an important development because it also means that in future the Commonwealth Grants Commission will consider the federation as a whole. Having had lengthy discussions with the Treasurer of my own State I warmly welcome this development. I make only one further suggestion. As the consideration in the future will be of the nation as a whole, the measurements and calculations should take into account the Australian Capital Territory as well as the States. It seems to me that expenditures on public services, such as health, education and various local government services, in the Australian Capital Territory should be considered in conjunction with such expenditures in the States. I ask the Minister to consider seriously the application of this principle in future inquiries by the Commission. I believe also that a calculation should be made of the amounts contributed per capita in the Australian Capital Territory in normal community imposts other than income tax, and a comparison made with the yield per capita in the States. I am one of those who believe that the members of this community should not enjoy privileges in their daily lives over and above those that are enjoyed by other Australian citizens, and I should imagine that the people of the Australian Capital Territory would welcome a comparison of their conditions with those of the people who live in the various States. They may not.

While the investigations made by the Commonwealth Grants Commission have a great effect in developing fiscal equalisation in Australia, the measures used by the Commission are not the only ones of importance in producing fiscal equalisation. There are several other measures that must be considered in relation to one another. First, there are the usual reimbursement grants which have become known in recent years as financial assistance grants. I believe an investigation should be made of one item In the tax reimbursement formula. I refer to the annua] increase in population. We know that in some States the annual popu lation increase is due almost entirely to natural population growth. We know that in other States at least half of the population growth is due to immigration. The financial burden on a State in which the growth in population is due to natural increase is quite different from that which is placed on a State in which a large proportion of population growth is due to immigration.

Some years ago a meeting of State and Commonwealth Ministers discussed the question whether it cost more for a State to absorb migrants than to have a similar population increase from natural growth. It was found that, with many of the public services such as health, an increase in population due to immigration was less of a weight upon a State’s resources than was an equivalent increase due to births. I suggest that, as part of the activity of this body and as it fits into the Australian scheme of fiscal equalisation, the nature of the population increase between the various States be considered. I suggest that if the increase in some of the States seems to fluctuate rather widely in certain years, the simple device of taking an average over 3, 4 or 5 years be adopted. This has been done in a number of other taxation fields and does not pose a problem. I ask that it be considered, because it is important and has a bearing upon the situation in this country and between various regions in this country.

Other matters considered in the report are important. We have referred to the consideration of the four States other than Western Australia and Tasmania. We now come to a consideration of railway revenue and railway expenditure. In the past the simple measure that has been made is that, if the railway system of a State is charging lower rates than is another State railway system, the State ought to suffer an unfavourable adjustment because it is making less of an effort to raise railway revenue. Of course, the problem of railway revenue is almost intractable. Western Australia’s problems have highlighted a new consideration. In certain fields associated with the ore export and other programmes it has been found that if railway rates are reduced the system can attract traffic and economic activity that it would not have attracted otherwise. In other words, some of the traffic on the rail routes is elastic to changes in the rates. This gives rise to a different consideration of the overall effects of a railway system on a State’s Budget and upon the economy of a State. I am pleased to see that the report refers to new methods of calculating the burden of rail rates on a State’s economy and that the Commission will undertake continued investigation in this field.

One other problem that will be considered by the Commission during the coming year and which we cannot and ought not to ignore is the new Victorian tax. This tax will have an effect since it will help to determine the standard that will be applied to the claimant States in terms of their attempts to levy non-Commonwealth income tax or other taxes. It does seem that if the new Victorian tax is in no way to be either a direct or indirect substitute for a Commonwealth tax it will raise the yield from taxation that will be expected of the other States. This needs to be looked at very carefully and sincerely. It deserves to be examined by the Commission.

There is one matter concerning the reports of the Commonwealth Grants Commission which is always a little intriguing. Without a doubt the Commission is the only body in Australia that considers in an economic sense the real differences between the States, their standards of education, health and other services and their ability to raise income and other taxes. Yet the meetings that each year attract all the newspaper and other publicity regarding the Commonwealth and State financial relationships are the Premiers’ Conferences and meetings of the Australian Loan Council. The contrast is most significant. The latter are generally a lot of political play acting to a cheering audience at home in the various States. The Commonwealth Grants Commission is the body that has the expert knowledge and the ability to do the work that is appropriate to be done in this field.

When I rose it was not my intention to speak for very long. T wanted to mention one or two of the matters that this report has thrown up because they deserve to be considered by the Commonwealth and by each of the States. We can see that in future, after an appropriate rime has elapsed - the honourable member for Stirling forgot to mention this - the Com monwealth will consider the other States and it will consider them without causing undue hardship or adjustment to the Western Australian Budget system. Had the honourable member for Stirling read a little further in paragraph 85 he would have seen that the consideration of the four State standard in relation to the advance grants was postponed for a year or two to 1 968-69 so that the States could adjust their own budgetary and accounting methods. When we consider the States we can see that the Commission is the only body able to consider the difficulty of the regional economies of the nation. Not only must the States be considered but the various great regions of the nation must be considered. The Commission should have available to it a lot more data such as regional banking statistics, regional labour statistics and regional retail and commercial statistics, so that equality can be considered not only in relation to States but also in relation to some of the great regions of this nation. Now that the South Australian and Queensland governments are involved 1 hope that their representatives will press this claim constantly and that they will press this knowledge on the Commission, which is sympathetic to such considerations. They should do this urgently so that in the report for next year, and especially the report for the year after that, the Commission will be able to give us a document that will be a pre-eminent economic document in terms of preserving, in a sense, economic democracy between each citizen and each part of the Commonwealth.


– I support the Bill, which provides assistance to the States of Tasmania and Western Australia. The honourable member for Lilley (Mr Kevin Cairns) made an excellent speech on this rather complicated subject. The Commonwealth Grants Commission, during the course of its examination of the various States, brings forward a lot of information that may not otherwise be available. The Bill provides for grants amounting to $3 5.407m. One immediately asks whether these grants to the States are a good investment. I do not stand here this afternoon to speak on behalf of Tasmania, but certainly I want to say a word or two about my own State of Western Australia.

I would say that the grant to Western Australia is indeed a good investment. Western Australia occupies about one third of the whole area of the Commonwealth. For this reason alone it has some tremendous difficulties in providing services. I instance the State Shipping Service, which has been mentioned this afternoon. It is quite an achievement for a State to service such a long coastline and to make available and to maintain, sometimes with the assistance of the Commonwealth, all the ports that are needed along the coastline. This in itself is an expense, but it is one of the fields that the Commonwealth Grants Commission examines and it makes some adjustment for this shipping service.

The State of Western Australia is moving forward, as we have heard on a number of occasions, and this creates its own difficulties. The mineral explorations, for instance, in various parts of the State - not only in the north - have been tremendous and secondary industry has been growing very rapidly. This raises problems. Agricultural expansion in Western Australia has been second to none in the Commonwealth and this introduces some very real financial problems. But all these things in the long run mean that the State will add not only to its own well-being but to the well-being of the Commonwealth. We see in this field, as we have been seeing for some time over the years, that Western Australia assists the eastern States to a very large extent in their development programmes.

The adverse balance of payments between Western Australia and the eastern States is running at the rate of approximately $300m a year. This is a lot of money to be moving out of Western Australia and circulating in the east. Honourable members can see at a glance the tremendous advantage this is to the eastern States and the various factories throughout the eastern States that supply Western Australia with machinery, tools and various other items for its development and general programme. 1 think the honourable member for Stirling (Mr Webb) mentioned the overseas balance of payments with regard to Western Australia. Western Australia is very sound indeed in this respect and to a large extent it helps the rest of Australia in supplying the necessary raw materials and machinery which it would be necessary to import into this country to keep our industries going. When looking at the general situation and at investment in the State of Western Australia, I would suggest that this is an excellent investment indeed. I can see that in the future years Western Australia will move ahead very rapidly, increase its exports and be of tremendous benefit to the overall economic situation of this country.

I want to refer to one or two difficulties which we find when we look at the situation in general terms in the State of Western Australia. We do know that the population increase in Western Australia by natural increase and by immigration is greater than it is in any other State at the moment. Therefore there are tremendous pressures on many aspects of activity. Housing is one. I note from the report of the Commonwealth Grants Commission that Western Australia is well up in its housing programme. As a matter of fact, we find that Western Australia has a higher percentage of houses and flats commenced per 10,000 of population than any other State. It also has higher figures for houses and flats completed - 129 and 118 per 10,000, respectively.

This increased expansion in industry does produce problems. Obviously if this expansion rate is to continue in Western Australia we must have more people, more workmen and more families. If there are more families, obviously there must be more homes. I think that we must admit that it is a bit unusual for a State to be going ahead at this tremendous rate. The unemployment figure at this moment is running at about 0.7%, which is extremely low. Obviously jobs are available for almost everybody in Western Australia. But if this pressure is to continue - and I feel sure that it will continue with the development that is going on - some special consideration will have to be given to housing requirements.

Perhaps the Commonwealth might give some special consideration in this regard. I do not think that anybody would like to see a slowing up of the development that b occurring at the moment. If it is looked at only from the point of view of the requirements of the Commonwealth in relation to its balance of payments programme, one sees that Western Australia can continue to step up its contribution in this field. But it can continue to do so in a satisfactory manner only if it has more people. In order to have more people it needs more houses, schools, hospitals, etc. However, it cannot do this if it has a limited budget.

I do feel that as the years go by the financial situation in Western Australia will improve and assistance from the Commonwealth Grants Commission will probably not be required in the not too distant future. But to reach that point and to continue with the programme that we have in Western Australia at the moment, which everybody hopes we will continue, it is important that special consideration be given to maintaining the present situation and to bringing people to Western Australia from other places including the eastern States. 1 think that this proposal should be given very serious thought indeed by the Commonwealth Government.


– In this debate we have had speeches from two Western Australian members, one Queensland member and now a Victorian member. I say how delighted I am that these special grants are to be made to Tasmania and Western Australia. The purpose of this Bill is to grant financial assistance totalling $35,407,000 to the States of Western Australia and Tasmania during 1967-68. The honourable member for Canning (Mr Hallett) has mentioned that more population is necessary in Western Australia.I think that we all agree with that. This increased financial aid should help to bring more people to that State and this will make it more prosperous. We know that Victoria is a fairly closely settled State. Victoria requires grants every now and again for certain purposes, but it does not begrudge a State such as Western Australia or Tasmania getting grants because we all know that if we can develop large areas of country like those available in Western Australia then we can make Australia stronger. Therefore, this Government has done well in giving special grants to these areas that are not so highly populated so that they can progress substantially in the way that has been mentioned by each of the honourable members who have spoken. That is all I need to say. The Australian Country

Party supports this Bill. 1 hope that the money will be used to the best possible advantage to bring about greater progress in Tasmania and Western Australia.

Question resolved in the affirmative.

Bill read second time.

Message from the Governor-General recommending appropriation announced.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Fairhall) read a third time.

page 2231


(No. 4) 1967

Second Reading

Debate resumed from 18 October (vide page 1988), on motion by Mr Howson:

That the Bill be now read a second time.


– Is it the wish of the House to debate the subject matter of the four Bills together, as suggested by the Minister? There being no objection, I will allow that course to be followed.

Melbourne Ports

– For the most part, the amendments before the House are of a highly technical kind. They are designed in two instances to close loopholes that I believe have become evident by reason of High Court cases and in another instance to make more effective the collection of tax which could apparently be evaded by overseas interest recipients by invoking a provision which I suggest is something of a legal fiction. I refer to section 125 as it now exists and which, I understand, is to be repealed. Again, I would like to draw the attention of the House - I seem to be quoting this publication with increasing reverence - to the Taxpayers’ Bulletin’. Some amendments that are to be made in this legislation are referred to on page 10 of this publication of 10th October 1967, including the amendment dealing with withholding tax on interest. The publication directs attention to the fact that as far back as 4th May 1967 the Commonwealth Treasurer (Mr McMahon) had indicated the intention of the Government to bring in the legislation that is now before us together with one or two other matters. The publication goes on to state: lt was expected that legislation would be introduced early in the current Budget session of the Parliament. However, no mention of these proposals was made in the income tax amending Rills introduced on September 20.

I point out that Bills introduced on 20th September were passed by this House last week. As I see it, the reason why the Bill before us becomes the Income Tax Assessment Bill (No. 4) is that the Income Tax Assessment Bill (No. 3) was dealt with last week. I am at some loss to know why the two could not have been brought in at the same time. However, there may have been machinery matters involved. Arising out of the failure of the Government to have this matter included in the September legislation the council of the Taxpayers Association of New South Wares wrote to the Treasurer in the following terms:

The General Council of this Association is surprised that no reference to the proposed interest withholding tax appears in the income tax legislation introduced in the House of Representatives by your colleague Mr Howson, on September 20 1967.

The Council went on to refer to the Treasurer’s statement which he made on 4th May. The letter continued:

Your statement gave a very general outline of the classes of interest transactions that would be included or excluded and you went on to say that full details of the withholding scheme will be given when the legislation is introduced into Parliament’.

The Association then noted:

The delayed introduction of this legislation causes us concern on two points, namely:

That if the Bill is introduced much later in this session of the Parliament then there will be a risk that legislation will be hurried through all stages and we, and other interested bodies, will have little opportunity of examination and the making of, perhaps, constructive comments and suggestions; and

That little time will be given to business and financial institutions to set up accounting procedures and to advise overseas lenders of the new procedures.

The Association stated: lt appears to us that where the business community is required to collect taxes for the Government,-

The business community will be the agent for the collection of the interest withholding tax - every effort should be made to set up procedures that will operate with a minimum of inconvenience and expense, and for this reason it would be thought that, the Government having announced its decisions in principle, a useful purpose would be served if consultations were set up between your Treasury officials and the organisations representative of taxpayers, financial institutions, etc.

It is, perhaps, appropriate to draw attention to the following recommendations made by the Canadian Royal Commission on Taxation earlier this year:

I quoted some aspects of this Commission’s findings the other evening. The following comments are additional and are to be found in the ‘Taxpayers’ Bulletin’ of 10th October 1967:

  1. Provision should be made for formal and public hearings under official auspices on general and technical problems in Federal taxation.
  2. The Department of Finance should establish an advisory committee of non-governmental experts for informal discussions of general tax and fiscal policies. (Hi) A Parliamentary Committee should conduct public hearings on the details of tax legislation following introduction of tax measures in the House of Commons.

Of course, this refers to the Canadian Parliament. The letter continues:

Such a Committee might be a joint Committee drawn from both the House and the Senate.

A system of public examination of proposed taxation regulations should be instituted involving publications and hearings by the Board of Revenue Commissioners prior to adoption and scrutiny by a Parliamentary Committee after adoption. 1 commend to the attention of the Government the suggestions made toy the Canadian Royal Commission.

The measure before us was introduced into the Parliament last Thursday afternoon. At that time honourable members were scarcely at their freshest, to say the least. The Bill was accompanied by a memorandum. I am afraid that I did not get my copy of the memorandum on Thursday and

I went home without it. Since then I have had to try to digest these fifty-four very closely printed and complicated observations on the meaning of the amendments. Again, I suggest that this is not good enough in handling tax legislation. Of course, the fact that only a very few members are present in the chamber indicates that the Parliament is scarcely wildly enthusiastic about this kind of legislation. Nevertheless, the legislation is important to those who will be affected by it. I submit again that the resources that are available to ordinary members to comprehend this kind of detail are not’ sufficient. I for one would welcome it if I were able to have discussions with people outside the Parliament concerning the operation of proposed changes. I cannot see any reason why legislation of this kind cannot be laid on the table of the House for a period of at least some weeks in order that representations may be made about the substance of amendments.

So far as I have been able to examine this matter, it seems to me that these amendments close up loopholes in one or two instances dealing with liquidation of companies and the payment of what were thought to be dividends but which proved to be, on interpretation of the High Court, not dividends at all but a return of capital, despite the fact, apparently, that the amount involved was well in excess of the reduction of capital. I do not try to suggest how the judge concerned came to his decision. Perhaps my friend and colleague on the Government side, the Minister for Civil Aviation (Mr Swartz), knows more about that than I do. At least the objective here is to close loopholes in order to protect the revenue and I for one am satisfied about that proposal.

I now turn to the question of the withholding interest tax which is to be imposed. Again I submit that more information should be provided by the Minister about this aspect. I will now deal with what seems to me to be the broad situation. It is governed at present by section 125 of the Income Tax Assessment Act. It is pretty hard to find section 125. I have to wade through ten pages of what turns out to be section 121 a. This must be the longest, or almost the longest, section of any Act of Parliament. Section 121a commences on page 291 and ends on age 301. The numbering of the section commences with 121a; it progresses through a number of small letters, capital letters and joint capital letters, and ends with 121e ten pages further on. I submit it is about time there was some codification of this Act or at least a departure from this peculiar numbering of sections. Fortunately section 125 is much easier to pursue. This portion of the Act is headed ‘Division 11. - Interest Paid by Companies.’ The section applies to non-residents who receive income via companies in Australia. The section states that where interest is paid or credited by a company to any person who is not a resident of Australia or of the Territory of Papua and New Guinea, firstly, on moneys secured by debentures of the company and, secondly, on money lodged at interest in Australia with the company, the company is liable to collect the tax. As I understand it, a tax can be levied at the moment at the company rate, namely 8s 6d in the £1 in the old currency or 85c for every $2. Expressed as a percentage the rate would be 424%, There is an escape provision in sub-section (3.) of section 125 which states:

Where a company establishes, to the satisfaction of the Commissioner, that a person can enforce payment, without any reduction under this section, of interest on any such money secured by debentures, or on money lodged at interest with it, this section shall not apply in respect of the interest paid or credited to that person.

In other words, presumably if an agreement or contract is entered into by two parties - the foreign lender and the internal company - in which it is stated that the interest is to be free of tax, the tax can be evaded. Apparently those who are in the know get this benefit and those who are not in the know are paying at the rate of 424%. But the other aspect of this section is that it applies only to interest paid by companies. Any other person who is a non-resident of Australia and receives interest from a source in Australia is covered by section 25(1.) of the Act. The section states:

The assessable income of a taxpayer shall include -

where the taxpayer is a resident - the gross income -

That applies to everybody; we are taxed on our gross income. derived directly or indirectly from :tQ sources whether in or out of Australia; and

  1. where the taxpayer is a non-resident - the gross income derived directly or indirectly from all sources in Australia, which is not exempt income.

Except in very few cases the individual resident in Australia who pays interest to a non-resident of Australia apparently is not liable to collect the tax in advance. Therefore in most cases that source goes free of tax, because nobody can get hold of the taxpayer outside Australia, unless he is honest enough to lodge a return in Australia. It seems to me that the reasons given by the Minister were good enough; that on balance we will lose some of the 421% of tax paid by those who are not shrewd enough to invoke section 125 (3.) but on the other hand we will now automatically net 10% of the incomes that formerly went free of tax. Presumably on balance we could be better off and there is a simpler system of collection in any case. I should like to be given, if possible, firstly some indication of the loss of revenue suffered at present by having the 10% rate instead of the 421% . There must be a loss of revenue in that direction at least. Secondly, I should like to be given, if possible, estimates of how much is evaded or avoided or not paid. Some people do not like such a word as ‘evaded’ and think that ‘avoided’ has a different meaning. I am not sure of the meanings. In any event some people dodged tax that they might otherwise have had to pay and presumably the revenue is now to be protected. That goes also for the other one or two variations in liquidations and in dividends that purported to be paid out of capital; that that part of them which is not paid out of capital but which is really a payment of profits earned should be treated as a dividend and subject to tax.

There is another aspect of the legislation which deals with an amendment to the payroll tax occasioned, I think, because an American organisation that has done good cultural and educational work in Australia has changed its name. It now operates under a different name and the former name is being deleted. The organisation was exempt from tax before, both income tax and payroll tax. I think the organisation is now referred to as the AustralianAmerican Educational Foundation. The Opposition offers no objection to this amendment,

Mr Deputy Speaker, we commend these measures, but again I make a protest and concur with what, the writer said in the Taxpayers Bulletin’, that this is not a very efficient way of amending the Income Tax Assessment Act which, after all, applies to what is tax and what is not tax for a body that yields something of the order of $3,000m. It is applied to individuals and companies, residents and non-residents and on other types of economic endeavour. lt seems to me that there ought to be better mechanisms for dealing with amendments which, in many cases, are introduced to correct anomalies, or attempts to circumvent what the Government or the Parliament thinks should be payable. When all is said and done, it is the Parliament that passes the taxation laws. I think that often amendments have to be of such a complicated nature that they are not easily understood. With all due respect to the parliamentary draftsmen and even the experts in the departments who legally assist the draftsmen. I suggest that sometimes an outside view on these propositions may be worthwhile. I am not quite sure what the mechanism should be.

Personally I think that there ought to be a committee on taxation consisting of members from both Houses of the Parliament. Income tax legislation could be presented in the Parliament and then adjourned for a month or two to enable the committee to meet, to call on the departmental experts to give their explanation and to allow any witnesses from the outside public who were anxious to support or oppose the propositions to come and put their view before the committee. The committee could then present to Parliament a report on its recommendations. That seems to me to be a feasible type of procedure. I am not one who likes outside committees. Parliamentary legislation should be passed by Parliament, but when it is passed I think it should be understood by Parliament. At least it ought to be tried out on a representative group of members of Parliament rather than be brought into the House without any such examination. Debate on these measures is participated in only by those who happen to represent their parties on the measures. Most other members say: The measure does not concern me. I will vote for or against it according to your recommendation.’ That does not seem to me to be a very satisfactory way in which to deal with legislation. When we remember that over the years honourable members of this Parliament have been responsible for the Income Tax Act in its present form, in many respects I do not think that we ought to be very proud of this document.


– The House has before it three Bills relating to income tax and a fourth Bill relating to payroll tax. I wish to refer particularly to the Income Tax Assessment Bill (No. 4) and in particular to those provisions of the Bill which relate to distributions made by a company upon the reduction of capital or upon the informal winding up of the company. Those two matters are specifically referred to in the Bill. I have not made a particular study of the other provisions of this Bill, nor of the other Bills now before the House. But so far as my knowledge and understanding of them extends, I believe that they merit the favourable consideration of the House and I commend them to the House.

The particular provisions, to which I intend to refer, of the Income Tas Assessment Bill (No. 4) which amends the principal Act in certain respects, were necessitated by two decisions of the High Court of Australia. The first decision was given in 1965 in the case of the Commissioner of Taxation of the Commonwealth of Australia and Uther, which is reported in volume 112, Commonwealth Law Reports at page 630. The second decision was given in what is known as Blakely’s case, which is reported in volume 82 of the Commonwealth Law Reports at page 388. The decision was given as far back as 1951. The decision first mentioned related to a matter of distribution made upon a reduction of capital. The second referred to a distribution made upon an informal winding up of a company in which the principals, instead of going to court for a formal winding up, simply paid the debts and pocketed the assets of the company without paying the tax which they would normally have had to pay if the moneys had been distributed either by way of dividend or upon the formal winding up of the company.

As regards the amendment directed towards overcoming the effect of the decision of the High Court in Uther’s case, the

Minister for Air and Minister assisting the Treasurer (Mr Howson) had this to say in his second reading speech:

As to distributions in association with a reduction of capital, I mention that for more than a quarter of a century our taxation law has, in broad terms, treated as dividends, and therefore as income subject to tax in shareholders’ hands, any distribution made by a company as a going concern, other than a return of paid up capital. A majority decision of the High Court -

He refers, of course, to the decision given in Uther’s case -

  1. . has in recent years, however, ruled that the law is not effective ‘ to tax amounts - greatly in excess of actual paid up capital returned - that are paid to shareholders when a company reduces its capital. This means that a company can, by reducing its capital, pay profits out to shareholders free of tax which would be subject to tax in the shareholders’ hands if distributed by way of a conventional dividend.

The Government considers that this situation constitutes a real threat to revenue and to the general principles on which the taxation law is based. It also considers it gives an unwarranted advantage to shareholders in companies in a position to execute this type of plan as against companies not so fortunately placed, lt has, therefore, decided to remedy this deficiency in the law. In broad terms, what is proposed by the Bill is that a distribution made in a reduction of paid up capital will be subject to tax to the extent that it exceeds the sum of the reduction in nominal paidup capital and any distribution out of share premium account.

Then, in relation to the second proposal which is designed to overcome the effect of the decision given in 1951 in Blakely’s case, the Minister had this to say:

As to liquidations, the position is that distributions made by a liquidator in the course of a formal liquidation are taxable in the hands of shareholders to the extent that they are made out of income. Some companies are not, however, formally liquidated. Shareholders wishing to wind up a company sometimes merely take possession of the company’s tangible assets, collect and retain debts due to it and discharge debts due by it. and then treat the company as wound up. Where these informal procedures are followed, distributions made out of income of the company are not taxable although they would be if made in the course of a formal liquidation.

The Bill proposes that distributions made in these informal liquidations will in future be taxed in the same way as distributions in an orthodox liquidation. The amendments relating to distributions by companies will apply to distributions’ made after today.

That latter quotation, as I say, was directed towards Blakely’s case, and the amendments in question are designed to overcome the effect of that case. 1 rose to my feet on this occasion mainly to make some brief but, 1 believe, not unimportant comments arising out of these amendments which I take merely by way of example of the kind of amendments which from time to time are necessary in tax legislation. I believe that this House would welcome the taking of speedy and effective steps to fill the gaps which from time to time are revealed in tax legislation by our judicial tribunals or by practices which are adopted by tax avoiders - I say ‘avoiders’, not ‘evaders’, of which I will have more to say anon - and which come to the notice of the Taxation Branch. For not less than 16 years the legal and accountancy professions have been aware of the reported decision in Blakely’s case and its obvious implications for tax avoiders. It is only now that the provisions of this Bill will overcome the effect of the decision in Blakely’s case.

One hesitates to inquire how many millions of dollars or hundreds of thousands of dollars - I know not which, but certainly it is one or the other - have been lost to the revenue during that period due to the failure to amend the law to overcome this obvious gap which had been revealed by the decision in Blakely’s case. The delay in the other case is indeed much less and 1 believe not by any means catastrophic. The decision of the High Court was followed by an announcement by the Prime Minister of the day that the law would be amended, lt has taken the best part of a couple of years to secure that amendment by the Bill which I trust will be passed by this House this afternoon. I am given to understand that the announcement was almost as effective as an amendment of the law and that to the best of the knowledge of the Commissioner of Taxation no further attempts have been made, by recourse to the procedure that was adopted in Uther’s case, to escape tax that would otherwise be leviable. So perhaps we have not lost very much or have not lost anything. At least let us hope that we have lost nothing by the delay that has occurred in the presenting of an amendment designed to overcome the effects of Uther’s case.

I take these merely as illustrations of the kind of amendment that is necessary and the delays that sometimes occur in relation to amendments that everyone who is expert in the field recognises as being necessary and desirable. Other illustrations could readily be given in the field of estate duty and gift duty. There are longstanding decisions of the High Court of Australia, particularly in Grimwade v. Federal Commissioner of Taxation (1949), 78 Commonwealth Law Reports, at page 199, and Robertson v. Federal Commissioner of Taxation (1952), 86 CLR, at page 463, that leave the gate wide open for the evasion of estate duty and gift duty. The gate being wide open, it necessarily follows that people pass through it in great numbers, and 1 would undertake to say that many millions of dollars have been lost and are being lost by the failure to close these gateways. Opinions about this may differ, but I can speak from personal experience and personal knowledge of this matter. I would undertake to say that quite vast sums may have been lost by the failure to pass remedial legislation to overcome the effects of those decisions. 1 hope that these matters will receive the speedy and earnest attention of the Taxation Branch and the Treasurer (Mr McMahon).

Income tax legislation - indeed, all tax legislation - is notoriously complex, lt is difficult - indeed, probably impossible - for draftsmen to close every loophole. A whole army of professional people such as accountants, solicitors and barristers, all very expert and. highly remunerated people, are constantly at work on behalf of their clients in endeavours to avoid the incidence of tax. 1 say again ‘avoid’, not ‘evade’. They are not doing anything that is criminal. They are not doing anything that is regarded even as improper. Indeed, courts of the highest authority have gone out of their way over and over again to say that any man is at liberty so to arrange his affairs as to avoid the incidence of tax. It has been said with equal authority that professional advisers are quite at liberty to assist their clients in that endeavour, and their conduct, if they do so, is not unprofessional or improper in any way. But the result, Mr Deputy Speaker, is that ordinary men pay their taxes and wealthy men and wealthy companies often are able - quite properly, in the view of the law - so to arrange their affairs, with this kind of expert assistance, as to avoid or greatly minimise the taxes and duties that otherwise they would be liable to pay. This applies to the whole field of income tax, death and estate duties, gift duty, stamp duty and all the other taxes and assessments to which man is subject in the Australian or any other community. This has always been and will always be.

What we ask of the Government - I believe it is a request that the Government would welcome - is that prompt and effective steps be taken to close the breaches whenever and wherever they occur. There are always difficulties, of course, with drafting, and there are difficulties in obtaining the necessary legislative time. But I believe that if the Government were bold in this matter and were to take time by the forelock and initiate speedy and effective steps to cure this kind of mischief that is revealed by the decisions of the courts or by the practices of tax avoiders and their advisers, the endeavour would be welcomed not only by this House but also by the whole Australian community. I believe that the Commissioner of Taxation should not be loath to use the services of the most highly qualified experts in this field. The professional fees that would be paid to them for assisting him would be, in the common phrase, chicken feed compared to the sums that would be saved. It would be unfair to the professions involved, Mr Deputy Speaker, to describe this process in the terms of the old saying that it takes a fox to catch a fox. I believe that the professional advisers who are so astute to assist their clients in the avoidance of tax would be equally astute and equally eager to assist the Government in closing the loopholes. I believe that I can speak at least for the legal profession when I say that, provided a proper fee is paid, at any rate, it is prepared to assist either party to the transaction.

I am sure that great assistance could be derived by the Commissioner from the services of persons who are expert in this field and who spend a great part of their waking time advising on ways and means of avoiding tax. These are the people who know where the law can be and should be amended. While ever they practise their professions and must earn their livings they will naturally use their skill for the benefit of their clients. But if the Commissioner were to engage their services as a client, they would be equally willing and equally happy, if not more so, to assist him in proposing and drafting amendments to the law that would have the desired effect of preventing the continuation of the kinds of practices with which we are here concerned.

May I say at this point that if amending measures of the kind now before us are genuinely designed to remove anomalies, to close loopholes and to ensure that the tax burden, which these days is very great, is more equally distributed, this kind of legislation will, I am sure, always be assured of a speedy passage through this House. Nor is this to be regarded as a one-way traffic. Quite often it is discovered, by judicial decision or otherwise, that provisions in tax legislation operate in a manner which is quite anomalous, unexpected, unjust and unequal and which is unfair to a taxpayer or particular classes of taxpayers. I believe that here exactly the same zeal should be shown in amending the law to remove those anomalies and injustices. Glaring examples could be given of instances in which the government - I speak of governments in general, not of this Government - has remained supine in the face of court decisions that have revealed obvious injustices and anomalies. Many of these have been pointed out in express terms by the courts; yet the law has gone unamended year after year without any attempt being made to put it in order.

In fact, this is part of the whole problem of law reform in this community which has been for so long neglected. I am glad to say that at long last there are signs that not only the legal profession but governments also are becoming more conscious of the need for zealous and continuous endeavours to reform the law. Reform is always necessary. Changing circumstances and the course of judicial decisions constantly require changes in the law - not only the tax laws - and I believe that governments and lawyers in general must be astute to ensure that the law continues to be a fair and just instrument for maintaining our free and democratic way of life and ensuring proper justice and equality between man and man. I would say that there would be no difficulty in the passage of legislation designed to ensure justice to the taxpayer as well as justice to the revenue and the community.

Finally, Mr Deputy Speaker, I would just like to say a word or two about the thoughtful and intelligent remarks made by the honourable member for Melbourne Ports (Mr Crean). He asked that proper time be allowed for the consideration of tax Bills. I believe that this is very necessary and desirable in relation to tax measures above all others. Proper time should be allowed for consideration by the Parliament and for the making of representations by interested bodies. It necessarily takes some time for copies of Bills to be distributed and considered by professional and other bodies and by people in business and the like. I believe that the Government might well take heed of the suggestion by the honourable member that a parliamentary committee be appointed to consider tax measures. They should be, and I believe that they almost always are, non-political and non-party, for the object of the Government and the object of the Opposition in relation to tax measures are surely identical. In broad terms, the object of both is to ensure a just and equal distribution of the tax burden. I believe that an all party committee could play a very useful part in considering tax Bills that are brought before this House and in ensuring that they are properly understood by honourable members and that, if they are genuinely designed to achieve the purposes that I have outlined, they receive a speedy passage through this House. I would urge the Commissioner of Taxation, his officers and the Treasurer not to let time run away but to be prompt in bringing forward amendments that are found to be necessary to do justice to the taxpayer and to ensure a fair and equal distribution of the tax burden.

Minister for Civil Aviation · Darling Downs · LP

– Firstly, I thank the honourable members for Warringah (Mr St John) and Melbourne Ports (Mr Crean) for their constructive contributions to the debate on this important legislation. The honourable member for Warringah referred to amendments to the taxation laws following court decisions. This matter, of course, is under constant consideration. However, I will see that the points he raised are brought to the attention of my colleague the Treasurer (Mr McMahon). The honourable member for Melbourne Ports questioned this series of Bills, particularly Income Tax Assessment Bill (No. 4), being introduced at relatively short notice and not in conjunction with other Bills that were passed by the Parliament last week. I can assure the honourable member that there was no problem associated with the legislation other than the question of drafting the Bills in time. He referred to the possibility of laying such Bills on the table of the House so that honourable members might have an opportunity to consider them before debating them and also to the possibility of giving opportunity for their consideration by public bodies. This is covered, to some degree, by the fact that on 4th May last the Government announced the proposal for the withholding tax, which is the principal matter concerning us now. Although the Bill was not drafted until some time later, the broad details of the proposal were given on 4th May and since then the public and interested bodies have had the opportunity to consider the broad outline and to make any suggestions. I know it would be more desirable for them to have the actual text of the legislation to work oh, but that was not possible in the circumstances.

The honourable member for Melbourne Ports referred also to the variation between the 42£% of the gross amount which at present is payable in the form of withholding tax and the proposed change to 10% of the gross interest. He asked whether it could be indicated what amount would be involved in lost revenue. Unfortunately there is no way to dissect the figures at present, so I cannot supply that information. My understanding is that it will not be as large a variation as might seem to be indicated by the percentage change, because of the nature of the tax and because of the additional amounts which would be involved in the 10% levy. The honourable member asked whether any figures related to tax avoidance were available. I am sorry that it is not possible to have this information at present. I cannot say whether it will be available in the future, but I will see whether further information can be secured, although it may not be possible to actually dissect the figures. It is considered that the amount now to be levied will produce a reasonable contribution to revenue. This has some significance, because the 424% previously applying was higher than the tax imposed in most other countries. Some disadvantages were seen in that charge, because we are endeavouring to attract as much overseas capital as possible, and anything which adversely affects the introduction of overseas capital has to be carefully considered. It was felt that the present proposal held some advantages and would not adversely affect the general availability of such capital.

The Bill is designed to simplify the method of collecting taxation. I am sure that the constructive contributions which have been made in this debate will help the passage of the Bills and will indicate the interest of the Parliament in these important measures.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion of Mr Swartz) read a third time.

page 2239


Second Reading

Consideration resumed fi om 18 October (vide page 1988), on motion by Mr Howson:

That the Bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Swartz) read a third time.

page 2239


Second Reading

Consideration resumed from 18 October (Vide page 1989), on motion by Mr Howson:

That the Bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Swartz) read a third time.

page 2239


Second Reading

Consideration resumed from 18 October (vide page 1989), on motion by Mr Howson:

That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Swartz) read a third time.

page 2239


Second Reading

Debate resumed from 17th October (vide page 1 870), on motion by Mr McEwen:

That the Bill be now read a second time.


-Is it the wish of the House to adopt the course suggested by the Minister and consider the two Bills together? There being no objection, that course will be followed.

Dr J F Cairns:

- Mr Deputy Speaker, these two Bills are very brief in themselves. The International Grains Arrangement Bill and the International Wheat Agreement (Extension) Bill seek the approval of the House to a certain course of action taken by the Government.

Clause 4 of the International Grains Arrangement Bill and Clause 3 of the International Wheat Agreement (Extension) Bill provide for the House to approve the signature and acceptance by Australia of the International Grains Arrangement 1967. The Opposition approves this and supports the two Bills.

Wheat has been the subject of international negotiations longer than any other commodity. International discussion and agreements about wheat go back prior to World War II. International wheat agreements were signed in 1949, 1953, 1956, 1959, 1962 and 1967. The number of countries interested and taking part in these discussions and signing these agreements has increased. In 1962 there were 48 countries and in 1967 there were 53 countries. Still a significant number of countries engaged in either the production or the importing and consumption of wheat have not been in attendance at the conferences; nor have they taken part in any negotiations or signed an agreement. This is to be regretted. Two of the most important countries in this category now are the Soviet Union and China. It is hoped that sooner or later they will be willing and able to participate in negotiations and will become involved in world arrangements respecting this important commodity.

Australia has been in attendance at the discussions, participated in the negotiations and signed the agreements from the beginning. Indeed, I think it is fair to say that Australia has taken a role greater than in proportion to her size either as a wheat producer or as a nation. This is to the credit of a succession of Australian governments that have been drawn from each of the main Australian political parties. Broadly speaking, there has been complete agreement on each side of the House, no matter which party was in government, about the desirability of this course. The basic objective of these agreements and arrangements is to assure supplies of wheat and flour to importing countries, and markets for wheat and wheat-flour for exporting countries at equitable and stable prices.

It is an interesting but important exercise to attempt to discover just how these two sides of the equation - the producing and exporting country or the importing country - have or have not benefited relatively from the arrangements that have been made over the years. Through this time, conditions have not remained the same. They have changed very considerably. Immediately after World War II there was a shortage of wheat supplies. This was a characteristic feature of the production and marketing of wheat in the world. The 1949 International Grains Arrangement, could have been expected to help wheat importing countries against the prospect of unduly high prices which could have been expected to follow the post World War II shortage. This shortage was caused by many factors, one only of which - and perhaps the most important one - was the dislocation of production caused by the war particularly in Europe and the Soviet Union. I think that it is fair to say that the operation of the agreements in the immediate post war years was to achieve this end and to protect to some extent the importing countries from the effects of the shortages. Criticism was made in this country - a producing and an exporting country - of some of these agreements because they had this effect. But I think that Australia during that time played a proper role in being willing to be a party to agreements that probably had this effect.

Things have changed considerably since then. World wheat use has increased from about 5,600 million bushels to about 10,000 million bushels. This has been the order of the increase at least over the last decade. But in the years from 1956 to 1966 the world has consumed some 50 million metric tons of wheat more than it has produced. The problem was not shortage as it had been in 1945 to 1953. In the last decade the problem has been surplus. The fact that the world consumed 50 million metric tons more than it produced in this decade was possibly only because of the large and excessive stocks accumulated from the surplus of production in earlier years. Hence the 1956-66 problem was not shortage of supplies but excess stocks.

The problem now is not excess stocks either. A strong demand exists for wheat, and stocks of wheat have been cut very considerably. In some respects these stocks are not in excess of the normal carryover requirements. At this point I want to raise something which is of considerable significance. Because of the favourable strong demands for wheat and because of the running down of stocks to approximately the normal carryover situation, a very optimistic atmosphere is being created in Australia. Recently, the ‘Australian’ reported the remarks of Dr A. R. Callaghan, the Chairman of the Australian Wheat Board. The report begins:

Australia should continue to expand food production to the limit of its resources, the chairman of the Wheat Board, Dr A. R. Callaghan, said yesterday.

His statement was one of the strongest official stands taken in recent years against suggestions - particularly in the Liberal Party- that wheat production should be cut back.

Hie suggestions have been based on the political implications of expanding production on sales to China and the Soviet Union.

Several Liberal MPs have criticised the Government for allowing dependence on Communist trade.

Then the article in the ‘Australian’ goes back to quoting Dr Callaghan:

The era of surplus production by the world’s great exporters is rapidly drawing to a close’, said Dr Callaghan. ‘All our energies will be required to face the problem of those in urgent need. Since 1961 world wheat stocks have fallen from 2,200 million bushels to 1,300 million bushels in 1964 and they are still falling,’ he said.

The article goes on:

The United States surplus has fallen from 1,41 1 million bushels in 1961 to an anticipated 600 to 700 million bushels next June.

As their annual home consumption is about 673 million bushels, this is no more than a reasonable carry-over,’ he said.

On Australian production, the drought in Queensland and New South Wales had cut wheat production by approximately 100 million bushels, and receivals anticipated for this year were 233 million bushels.

Leaving aside the immediate effects of the drought - and this may in fact make wheat production in Australia this year considerably less - it is the overall position in which I am interested. The Chairman of the Australian Wheat Board has in fact said to Australia: ‘Go flat out and produce as much wheat as you can.’ We know that the circumstances of Australian wheat production have changed. We have the general situation, of which I have spoken, of a change from a surplus and an accumulation of stocks to the using up of stocks and finally to a position in which stocks are little in excess of normal requirements, and apparently there is an excess demand for wheat. But now the Australian position needs to be looked at a little more carefully, and I shall endeavour to enumerate the relevant aspects of the Australian situation.

Western Europe is now importing much less wheat than it did formerly, and certainly much less from Australia. This change in our pattern of wheat exports to Western Europe is consistent with the change in the pattern of exports of every other commodity. A characteristic feature of the whole of Australia’s export trade over the last 15 years has been a shift away from Western Europe and into the Pacific area and the United States. This pattern is general, but it certainly applies in the case of wheat. I think it is beyond doubt that nothing in the future can change this trend. I think the proportion of our wheat that we export to Europe will continue to decline. Certainly it is not going to increase. The situation is favourable not only for wheat but for every other item of Australia’s export’s, and it is favourable for our balance of payments position. If it were not for this shift in the pattern of our export trade we would be in a very difficult situation, little better than that of Great Britain, with balance of payments problems and with unemployment. The shift is towards Asia, which is now by far the largest importer of Australian wheat. For Australia in particular China has assumed great significance.

Not only China, Japan and the United States, but also Africa and Eastern European countries have ceased to be exporters of wheat and are now increasingly importing wheat. Lastly, Latin America is now increasing its imports of wheat, but not to a very large volume and not at a very significant rate. While it is pretty certain that Australian exports to Africa and Eastern Europe will continue to rise, perhaps in the long run more in respect of the African market than the Eastern European market and the Latin American market, it is very true that Asia plays a significant and even critical role in absorbing Australian wheat exports. It is difficult to forecast the future situation of these markets. The cause of the changes that have taken place in them is clearly population increase, but population increase alone is not enough to sustain the position. If, having been born, people are going to consume wheat they must have money to buy it. They do not get it free. Far too many people are being born in the world these days who, if they are going to have wheat, will have to get it free, because they cannot afford to buy it. These people will have to be given the capacity for effective demand before they can enter into the wheat market. I will say something more about that in a few moments. But here we see a factor favourable to increased demand for wheat. It is a long term factor explaining the overall trend in what I have described as the demand for wheat in the post-World War period.

The next factor is the European Common Market, which has an opposite effect. This represents one reason why Australian exports to Western Europe have considerably declined. Another factor - which is not normally taken into account although it is always implicit - and a favourable factor in world demand for wheat has been the occurrence of revolutions in the Soviet Union, in Eastern Europe and in China, lt is conceivable that if revolutions as fundamental as the Communist revolutions in these countries had not taken place there could have been some other course of events that would have caused those countries to buy more wheat. This might have happened, but the fact is that they have bought more wheat because they have had revolutions as fundamental as the ones that have taken place.

Mr Curtin:

– The Country Party will not believe that.

Dr J F Cairns:

– I think this has to be recognised and I think the members of the Country Party do recognise it, although perhaps they do not want to say so in public. Had Chiang Kai-shek remained in control of China that country would not have Imported $863m worth of wheat from Australia in the last 5 years. We can be quite sure of that.

Mr Anthony:

– The Chinese might have produced more for themselves.

Dr J F Cairns:

– I think that is extremely doubtful. While Chaing Kaishek was in control - and he was there for a long time - production of wheat in China almost completely disappeared. No previous Government of China in the last 1,000 years has ever imported wheat. If China was short of food, the normal thing, the conventional thing and the accepted thing under every Government prior to the present one was for her people to die of starvation. This is the first time in the history of China that this has not happened. Honourable members opposite may describe Communist Governments in whatever terms they like, with all the barbarity that the honourable member for Mackellar (Mr Wentworth) is capable of, but this is the first time in the history of China that it has had a Government prepared to import wheat in large quantities for its people. At any rate this is a significant factor in bringing about the present situation. I am not considering the motives or morals or anything else of the countries concerned; all 1 am saying is that following their revolutions this is the role they have played in world trade.

Mr Maisey:

– Stable government!

Dr J F Cairns:

– Yes, and in this context it does not matter whether this is in a moral sense a good thing or a bad thing. In this material sense I have no hesitation in saying that the Government of China today is doing fur more for its people than any other government of China in the history of that country has done.

Mr Kevin Cairns:

– The honourable member would be lacking evidence to sustain that contention.

Dr J F Cairns:

– When it has imported $863m worth of wheat from Australia in 5 years?

Mr Kevin Cairns:

– I say you would be lacking in evidence to sustain your proposition that the Chinese Government is doing more for her people than any previous Chinese government has ever done.

Dr J F Cairns:

– I am merely giving you the evidence. China has imported $863m worth of Australian wheat in 5 years when never before in history has any Chinese government ever done anything like that.

Mr Kevin Cairns:

– There is no evidence that the standard of living of the people there is any higher now than it was in the 1930s.

Dr J F Cairns:

– The honourable member for Lilley (Mr Kevin Cairns) would find it very difficult to give up his well known prejudice on this subject, but he would find it difficult, too, to assert that $863m worth of Australian wheat has not been of some value to the Chinese during that time. The value of the wheat imported is considerably in excess of the value of the wheat that would have been imported had any other government been in control in China. But I will leave the honourable member for Lilley to think about his own prejudices. This is a piece of factual evidence that even he would find difficult to overlook.

Mr Curtin:

– It is a lot of loaves of bread.

Dr J F Cairns:

– Many loaves of bread would have been made from the Australian wheat. The point I am making here is that the factor that seems to operate in the increasing world demand for wheat of a significant order is the occurrence of revolution in the countries I have mentioned - the Soviet Union, Eastern Europe and China. China is the most significant for Australia. The Soviet Union seems to be of declining influence as a world exporter, or for that matter importer, of wheat. Purchases by the Soviet Union, it appears, will not grow; they may cease. That country exported, I think, 4 million tons in 1965-66.

I am concerned particularly with China. Having explained the role and the significance of China, I want to relate it to the statement made by the Chairman of the Australian Wheat Board and the report in the newspaper ‘Australian’ about influences that may be brought to bear on wheat production in Australia. Looking at the present level of world demand and the running down of stocks, Dr Callaghan said to the Australian people: ‘Produce all the wheat you can’. Is this not what he said? I read the lecture upon which this was based and I thought the report in the ‘Australian’ was not unfair. The ‘Australian’ reported that Dr Callaghan said:

Australia should continue to expand food production to the limit of its resources … All our energies will tie required to face the problem of those in urgent need.

It is pretty clear that Dr Callaghan, the official spokesman and Chairman of the Australian Wheat Board, says this. What I want to know is: If the Australian wheat grower takes notice of this will he be let down and will he be misled?

I do not want to say that the problem is one of anticipating what China will do. I think the problem is anticipating what the Liberal Party will do. We know that the Liberal Party is entering a period of increasing embarrassment. It is relying on the threat of Asian Communism to Australia as its main election winning issue. This will, I think, last at least as long as the Vietnam war lasts. Anyone who predicts the determination of that war in less than 10 years is extremely optimistic. So it will be the business of the Liberal Party to stress that Communism is a vital and significant threat to Australia. If it is, how much longer can the Liberal Party go on selling massive quantities of wheat to the country that is such a basic threat to us? That is the kind of prediction with which the Australian Wheat Board and the Australian wheat grower should concern themselves. I want to know from the Liberal Party, if it has a spokesman on this subject, what its attitude is. Does the Liberal Party back Dr Callaghan? I know it is very difficult to find a Liberal Party spokesman. Wheat is the business of the Australian Country Party. I have no objection, not one scrap of objection, to the way the Australian Country Party has handled Australia’s wheat in recent years through its Minister for Trade and Industry (Mr McEwen) and his assistant. I have not one word of objection to offer about it. But I want to know how the Red baiters in the Parliament will stand, because I do not want the Australian wheat grower to be the victim of the Wentworths and the Kent Hugheses of this Parliament. The Australian wheat grower is entitled to know where the Government stands on this question.

Mr Corbett:

– Where does the Labor Party stand on it?

Dr J F Cairns:

– We stand with the Country Party on this and we hope the Country Party stands with us. This is the most significant question that the agreement raises for the Parliament, but, of course, it raises many others. China is significant.

It is very difficult to anticipate what will happen in China, politically or economically. I do not think the future of a Communist government in China is seriously in question. There can be many very significant variations, ranges and alternatives that will still be broadly Communist. It is very difficult at this stage to anticipate what will happen in respect of these alternatives and possibilities. Beyond that it is very difficult, too, to try to predict what will happen in China. A country like Australia, which is becoming increasingly dependent upon China, needs a more objective attitude to that country. At the moment our attitude is very emotional and the problem is dismissed without a very careful observation. Whether China will emerge as an enemy, oppressing Australia, aggressive to Australia and attacking Australia - whether the worst or the best will happen - there is no question that Australia needs an objective attitude towards China and the ability to find out as accurately as possible what is happening in that country so that we will have the best possible chance of predicting its future. This is beyond dispute. If we are going to be involved in war against China, it is necessary for us to know as much as we can about China. We should not have our ideas formed mainly by the reflection of prejudice, but as a reflection of a consideration of the best facts that we can obtain.

The Liberal Party and many of its supporters are not capable of doing this. They have a fantastic blind spot to China. It is more pronounced than their blind spot to the Soviet Union, and this is rapidly disappearing. Not one member of the Liberal Party in this House could honestly deny that this blind spot exists. When we try to anticipate what will happen in China, we need to think about her geography. We need to think of the competing use of her resources in respect of the production of wheat, because there is no doubt that she will go increasingly into the production of wheat in the future. We want to know something about her policies and the debates on those policies. Is there anyone in the Department of External Affairs or in the Department of Trade and Industry whose job it is to objectively study these things? I doubt if there is. Is there anyone who objectively studies these things and advises the Liberal Party? I doubt that there is.

The change which has taken place in the Soviet Union and which brought about a situation in which she is no longer an importer of wheat but an exporter is a change which has taken place over the last 10 years. The change in the Soviet Union’s world wheat trading position could easily have been anticipated. I suppose that it was anticipated by the Australian Wheat Board. It is a result of a changed agricultural policy and a system of better incentives for producers. Some of the basic weaknesses of Communist agricultural policy have been removed in the Soviet Union. It has now been historically established in Communist countries that the basic weakness in their economy is their agricultural production. Because of their ideological prejudices they have not been able to devise the best way of achieving satisfactory agricultural production. But in the Soviet Union in recent times there have been improvements.

I think the weakness in China up to date has been more on the side of agriculture than industry. She has made more industrial progress than agricultural progress. This has been true of every Communist country. Their weakness has been their agricultural industry. These factors have been overcome to some extent in the Soviet Union but show no signs of being overcome in China, as J understand it. There has been greater use of fertilisers in the Soviet Union. There is still a medieval position in China in this regard. Of course, there have been good seasons recently in the Soviet Union. I must confess that I cannot predict what will happen in regard to China’s position as a wheat importer, but I think that it is of vital importance that the Australian Government should employ people to study China objectively and put aside for a while the ideological glasses through which most of its members and supporters look because I think with due fairness to everyone that when those glasses are used inaccuracy is registered.

The Wheat Trade Convention continues a number of things - the marketing arrangements of the past, the administrative machinery, the International Wheat Council and the price range principle. But it provides a more substantial and probably more effective way of putting that price principle into operation. I suppose this is the most significant achievement of the 1967 arrangement. This is a result of the dissatisfaction of wheat exporting countries and their expression of that dissatisfaction in a constructive proposal. All previous agreements provided minimum and maximum prices for only one type of wreat Canadian No. 1 Manitoba Northern, and prices for other wheats were not specified, but the Convention sets out that equivalent minimum and maximum prices could be determined for other types of wheat based alone on Canadian No. 1 Manitoba Northern. This meant that the determination of equivalents for other types of wheat was difficult because no allowance was defined for differences in quality and Canadian No. 1 Manitoba Northern was traded in very limited quantities and provided a very unsatisfactory base because of this. Also, trade in Canadian No. 1 Manitoba Northern was from Canadian lake ports only, which were closed for part of the winter months. Therefore, another factor of difficulty entered into this matter.

These factors meant that Canadian No. 1 Manitoba Northern was a very unsatisfactory basis for the measuring of equivalents. The 1967 Convention provides thirteen additional types of wheat, and insofar as there is a base wheat it is to be No. 2 Hard Red Winter Wheat Ordinary Protein, grown in the United States of America and exported from ports in the Gulf of Mexico, which are open all the year round. The minimum price for this type of wheat has been fixed at $US1.73. Assuming this price is effective as a base, then the new minimum price is US 19c a bushel above the minimum price in the International Wheat Agreement 1962. The Minister did not say whether he was satisfied with this price. I suppose that it was the best that could be obtained from the producers point of view. In paragraph 19 of his circulated speech, the Minister defined the way in which the price would be determined. This is a perfectly clear and understandable way but it has no bearing at all upon the determination of the price of Australian wheat sold to China.

Mr Anthony:

– It has a minimum price.

Dr J F Cairns:

– It does have bearing? Well, that is not clear in the speech. I would like to have that made more clear because there has been much criticism of the price at which Australian wheat is sold to China and therefore I think it is in the interests of all those who have a sensible attitude to this question, and not a purely ideological attitude, that this explanation should be made clear to the Australian people so that this kind of ideological propaganda, which has been not ineffective in recent times, will have the maximum amount of difficulty in operating.

The maximum price for No. 2 Hard Red Winter Wheat ordinary protein is set out in the Agreement as SUS2.13, which means $US2.08 for Australian wheat, I take it. Again the Minister did not say whether he was satisfied with this. This is going to be a much more effective maximum price, I take it, than any we have had before, ls it expected that it may restrict Australian ability to get a price during the course of the Agreement?

Under the International Grains Arrangement’ importing countries undertake to purchase from member countries a specified percentage of their total commercial purchases of wheat and exporting countries undertake to make wheat available at prices which are consistent with the agreed price range. These commercial transactions are seen to take place on a well ordered and rational basis. But in addition there are concessional transactions. The International Grains Arrangement Bill provides for a Food Aid Convention. It is this point that I want finally to mention in what I have to say about the two Bills.

Prior to this Convention, wheat growing and exporting countries have from time to time made wheat available to countries in need, such as India, for which the main cost or in some cases the sole cost has been paid by the supplying country. The reasonable argument was put that this arrangement should continue and that if it did continue then the cost should be shared by the countries that are interested in wheat or in any other way desire to assist in the provision of wheat to those countries in need. The Food Aid Convention now provides for 4.5 million metric tons of grain for human consumption in each of the 3 years of the Arrangement to be provided to the countries in need of aid. I have tried to make a comparison between the 4.5 million metric tons provided each year with what has been provided in the past. It seems to be more than has been provided in any one year in the past. However, I am not sure of this.

Mr Anthony:

– I think some countries have made bigger contributions than they have been committed to.

Dr J F Cairns:

– I am talking about the aggregate. How does the aggregate compare in each year with what has been provided in the past?

Mr Anthony:

– I do not think it is as great. New countries are being introduced here that have not participated before.

Dr J F Cairns:

– Yes. Twelve countries have agreed to take part in this convention. The Minister mentioned only some, but there are twelve. They are to supply either grain directly or cash. I think the countries and the amounts that they have agreed to contribute can be found in the second article of the agreement.

In conclusion, I would like to list the countries concerned. They are as follows:

As I said at the beginning of my speech, the Opposition approves of and supports the measure before the House. In the circumstances I believe we can say that the Minister has achieved a very creditable performance. I think that this is the best wheat agreement the world has had to date. It certainly could have been better from the points of view of both the importing and exporting countries. However, it seems to me that whilst a great many legitimate and effective criticisms can be made of it, in the circumstances of the reality that had to be faced it is an achievement that this House can welcome.


– We have just listened to the honourable member for Yarra (Dr J. F. Cairns) speak on the International Grains Arrangement Bill. However, the honourable member spent a great deal of the 45 minutes for which he occupied the floor in commending the Communist Chinese Government and the great work it was doing. One might be forgiven for thinking that the Chinese Government was, in the opinion of the honourable member, an ideal type of government. He said that in recent times China had imported a great deal of wheat and that this had never happened before. A great deal of progress has been taking place throughout the world and things are happening today that have not happened before. There is no guarantee at all that had there been a different government in China an even greater effort might have been made to provide food for the people of China.

The Australian Labor Party has criticised the Government for sending wheat to China, while, at the same time, Australia has forces in Vietnam endeavouring to protect that country from aggression. This criticism has come constantly by way of interjection and we get the impression that the Labor Party does not approve of that position. I have asked, also by interjection, what the Labor Party’s policy was. There has been no answer. At least the honourable member for Yarra has said that his Party stands where we stand. I doubt whether that is correct. I think that the Labor Party goes a lot further than we do in regard to trade with Red China. One of the fears that has been expressed about this trade is that we could become too dependent upon Red China in regard to wheat. I believe that if the electors of Australia were ever to make the great mistake of returning the Labor Party to office we would be in very real danger of becoming much more dependent upon trade with Red China than we want to become. I certainly do not want to see Australia become any more dependent on trade with Red China than we are today. At the same time, I believe that the sales that have already been made to Red China have not affected in any way Australia’s aims and ambitions in any field. However, I say that we have to look for markets other than those that exist at the moment.

It would be hard to overstate the importance of the International Grains Arrangement in relation to Australia’s development and export income. With regard to export income, it is worth mentioning that wheat alone earns about $300m in foreign exchange in normal years and the prospects are that this figure could be increased by greater utlisation of land which is suitable for wheat production. This could be achieved by improved farming techniques and by better farm machinery. A great deal of Australia has not been used for wheat production. Indeed, a great deal of land within the wheat areas is not being fully utilised. If we are to increase our production of wheat it is vitally important that we have an International Grains Arrangement. It is also vitally necessary for the wheat industry and for Australia that orderly marketing should be continued. The Bill before the House ensures that this will be done. It ensures that not only will orderly marketing be continued but also that Australia will benefit from the fact that the new minimum prices which have been agreed to are some 19 United States cents higher than those provided in the International Wheat Agreement of .1962. The actual rise in world wheat prices is hard to estimate accurately. However, it has been suggested by people who are competent to do so that this arrangement could mean a rise of from 8 to 16 United States cents a bushel. The point was made by the honourable member for Yarra that the arrangement will be of benefit both to exporting and importing nations. I believe that this is true. What we want in Australia is orderly marketing. We need a stabilised wheat industry.

The prosperity of the primary producer is of vital importance to the Australian economy. I do not think that this can be emphasised too much. Great developments in primary industry are taking place these days. There have been important developments in the mining industry which is a type of primary industry. Because of this I believe that sometimes there is a tendency to overlook the value of rural industry to Australia. It is interesting to note that only yesterday the Minister for Trade and Industry (Mr McEwen), who has done so much for Australia in negotiating trade agreements throughout the world, when addressing the Federal Conference of the

National Farmers Union is reported to have said that:

Australia would not grow and expand unless the farm industries continued to attract additional investment. The financial sections of the community must be made aware that unless farming industries could be maintained at a profitable level, nothing could sustain the profitability of Australia.

Unless we have a sound and solid wheat industry in particular we are not going to receive the investment in this industry that is desirable. The new arrangement has retained most, if not all, of the advantages of the 1962 International Wheat Agreement and has provided for a number of additional advantages. For instance, it has provided for the introduction of minimum and maximum prices for a number of wheats. I believe that something like 10 varieties of wheat are now included. This will make for a much easier and more effective operation of the new arrangement.

There is one point about the International Grains Arrangement which is a great disappointment to most people concerned about the progress of the wheat industry and the need for a reasonably stable world market for wheat; it is that the Union of Soviet Socialist Republics has not become a party to it. The Soviet Union was not a party to the international arrangements in the first instance and to my knowledge has not come in since. I think it would be a tremendous advantage to the world in general if the USSR were persuaded to accept the responsibilities and benefits applying to an arrangement of this kind. But whether the USSR does or does not become a party, the International Grains Arrangement will be of tremendous value to wheat exporting nations and to the wheal importing nations because it guarantees a degree of stability. This could be of great importance if all nations took part. In the circumstances we can do no more than hope that Russia and some other countries will be included later. Whether or not they do join, I believe that Australia must continue to explore markets.

I am sure that the Minister for Trade and Industry, the Department of Trade and Industry and the trade representatives throughout the world’ will continue to use their best endeavours to explore new markets. It is very necessary that we do this. In the examination of alternative markets for wheat I believe that consideration should be given to supplying wheat in the form of rice substitutes, and in other forms also, for our Asian neighbours. Wheat, in the form of a rice substitute, is more acceptable to our Asian neighbours. Greater efforts should be made to encourage our Asian neighbours to use wheat in this form. It has greater food value than rice and is cheaper. Because of the desperate economic circumstances in many Asian countries today it would be to their benefit to encourage a greater use of wheat for food than at the present time.

Australia’s participation in the International Grains Arrangement was in the hands of the Minister for Trade and Industry. I doubt whether the Minister, during his long and outstanding service to Australia as Minister for Trade and Industry and in other fields, ever concluded a more succesful agreement, under difficult conditions, than when he negotiated on the International Grains Arrangement on our behalf at Geneva. I believe the Australian people, and the wheat growers in particular, should feel very grateful indeed that they had as their advocate a man of the calibre, ability and experience of our Minister for Trade and Industry. I have already emphasised the dependence of Australia upon the wheat growing industry. Whether or not it is desirable that we produce wheat to the fullest extent of our capacity is a matter for the Government to decide. I believe it is desirable that we produce wheat and other products to the limit of our resources provided there is a reasonable prospect of finding markets. I support the view that Australia, which has the opportunity of producing food for a hungry world, should look very closely at any suggestion about reducing the production of our rural industries. If Australia progresses and develops at the current rate in the field of secondary industries^ - and I am sure it will - a time will come when there will be greater demands on wheat growers and other grain producers, lt is important that on the one hand we ensure that we have reasonable markets for our products. On the other hand, we are capable of contributing to the overall food production in the world in which we live and it is necessary that we make this contribution.

I believe that the International Grains Arrangement will be of tremendous importance to our national development over the next 3 years. 1 believe it will contribute as much as anything else to the stability of the Australian economy. I hope that the effective operation of the Arrangement will be assisted by close co-operation on the part of all the nations that do not take part in it.

Before concluding I should like to refer to one matter which is particularly worthy; it is that for the first time there is to be the Food Aid Convention. This ties in with what I said earlier about the necessity for Australia, as a food producing country, to consider the need to provide food for hungry nations. Australia has agreed to contribute about 5% of a total of 4.5 million metric tons of grain for needy countries. This will amount to about 225,000 tons. Countries which cannot contribute wheat or coarse grain to this international scheme will be permitted to make a cash contribution or to help in some other way. This scheme will create good will and will help promote peace throughout the world, today and in the future. The Food Aid Convention is a very valuable part of the International Grains Arrangement. I congratulate the Minister and all those responsible for bringing into being, in very difficult circumstances, this International Grains Arrangement.

Debate (on motion by Mr Ian Allan) adjourned.

Sitting suspended from 6.28 to 8 p.m.

page 2248


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

Second Reading

Treasurer · Lowe · LP

– I move:

That the Bill be now read a second time. The purpose of this Bill is to obtain the approval of Parliament to an agreement between the Commonwealth and the State of Queensland. The agreement concerns the provision of financial assistance to the State for the purpose of enabling it to assist the sugar industry in respect of the 1967 season’s No. 1 pool sugar. Under the agreement, the Commonwealth undertakes to make available financial assistance of up to $15m depending on prices realised for export sales of sugar. The State undertakes to repay the Commonwealth by 30th June 1980.

Last year, at the request of the industry and the Queensland Government, the Commonwealth agreed to make a loan of almost $20m to the State to enable it to meet interest and repayment obligations in respect of advances by the Reserve Bank to the Queensland Sugar Board relating to 1966 season’s No. 1 pool sugar. This agreement was approved in the Sugar Marketing Assistance Agreement Act 1967.

Continuation of low world market prices for sugar led to a request this year from the industry and the Queensland Government for a further loan from the Commonwealth. It was announced in the Budget speech that the Commonwealth Government had agreed to provide further financial assistance and provision of $10m was made in the Estimates for this purpose. It was, however, indicated that the Commonwealth would be prepared to increase this assistance up to a total amount not exceeding SI 5m, depending on prices realised for export sales.

The request by the industry for a loan in respect of the 1967 season’s No. 1 pool sugar was accompanied by proposals for an increase in the domestic price of sugar and a 1 year extension of the Commonwealth and Queensland Sugar Agreement. As indicated by the former Minister for Primary Industry (Mr Adermann) when introducing the Sugar Agreement Bill 1967 in this House on 20th September, these proposals were agreed to by the State and the Commonwealth.

The further agreement between the Commonwealth and the State, for which the approval of the Parliament is now being sought, sets out the terms and conditions on which financial assistance will be provided to the State. Advance payments may be made to the State. No interest accrues up to 1st July 1970. Thereafter it will accrue at the medium-term bond rate. The financial assistance, together with interest, is to be repaid in ten equal annual instalments commencing on 30th June 1971. 1 commend the Bill to honourable members.

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

page 2249


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

Second Reading

Treasurer · Lowe · LP

– I move:

That the Bill be now read a second time. This Bill seeks the approval of Parliament for an amendment to the New South Wales Grant (Flood Mitigation) Act of 1964 to raise the upper limit on the Commonwealth’s financial assistance payable under the Act from $5.5m to $8m. Under this Act the Commonwealth is making available to the State non-repayable grants over the 6 year period ending June 1969, as a general financial contribution towards the cost of flood mitigation works on certain coastal rivers in the State. The financial assistance is made available on the basis of matching dollar for dollar the State Government’s contribution. The State contributes $3 for every $1 spent by the local authority in the case of the Hunter River, and $2 for every Si spent by local authorities in the case of the Macleay, Richmond, Clarence, Tweed and Shoalhaven Rivers. The Commonwealth assistance is being provided in recognition of the national importance of flood mitigation on these particular rivers.

Over the 4-year period to June 1967, a total amount of $4.2m has been paid to the State by the Commonwealth under the Act. The State Government recently advised that the flood mitigation programme on the six rivers over the 6 year period will cost more than had been originally estimated when the scheme commenced in 1963. Because of this, the Commonwealth Government, following discussions with the State Government, has agreed to seek approval for the maximum Commonwealth contribution to these works to be increased by $2.5m, that is, from $5.5m to S8m.

Taking into account also the amount still available to the State under the existing Act, namely $1.3m, there would be a total of $3. 8m available to the State from the Commonwealth for expenditure on these works this financial year and next I commend the Bill to honourable members.

Debate (on motion by Dr 3. F. Cairns) adjourned.

page 2250


Second Reading

Debate resumed.


– The new International Grains Arrangement represents a substantial improvement on previous international wheat agreements. We now have a substantially improved price. In this new Arrangement we have provision for a periodic review of price ranges. The bases for the establishment of these price ranges are to be increased in number. So in that one respect there is a marked improvement on the previous agreements that have operated for a number of years to ensure the orderly marketing in the world of this very important crop. Another advantage appears for the first time in this Arrangement which is that non-signatory countries to the Arrangement must be treated by member countries in the same way as full members. This ensures that no matter whether dealings are made within the community of nations which are signatories to the Arrangement or outside, among those countries which do not belong to the Arrangement, there will be uniformity in prices between the exporters and importers. This is a very significant improvement on previous agreements.

There is also attached to this Arrangement a Food Aid Convention which, for the first time, brings into being some machinery for the disposal of surpluses to needy nations. This also represents a very considerable advance over previous agreements.It is something for which we have fought as a country and for which we have fought within my own Party. It is something for which the Leader of our Party, the Deputy Prime Minister and Minister for Trade and Industry (Mr McEwen) has fought in a number of international forums. The convention is not perfect but it is breaking new ground and I feel that it will do a large measure of good. It can be modified and improved as the years go by.

On the debit side, it is regrettable that the Union of Soviet Socialist Republics is not a party to the new Arrangement. It was a party to the previous International Wheat Agreement, but on this occasion, for reasons best known to itself, it has abstained. As it could be a very large exporter of wheat, I trust that it will in the course of time participate in the Arrangement and sign the Wheat Trade Convention. It is a pity also that we were not able to ensure that this new Arrangement would follow on immediately from the termination of the last International Wheat Agreement. In fact, there is to be a hiatus or gap of almost 1 year between these two international commodity arrangements. This means that at the present time, when tremendous downward pressure on world wheat prices is being exerted, there is no floor to ensure that they do not go below the cost of production. We can only hope that during the current year the exporters of wheat throughout the world will act in the spirit of the Arrangement to which they are committed and will maintain a fair level of prices to ensure their own protection and the protection of all countries that are parties to this Arrangement in future years. The new Arrangement will not come into force until the 1st July 1968. So we must trust to the good sense of the exporting countries principally and hope that they will maintain a reasonable sense of proportion in their dealings during the current year.

There is one feature of the second part of the International Grains Arrangement that I regret greatly. Clause (5) of Article II of the Food Aid Convention is in these terms:

Countries party to this Convention may, in respect of their contribution to the food aid programme, specify a recipient country or countries.

That is an unfortunate provision, because there is a great danger of waste in the proliferation of international agencies for the giving of aid by the wealthier countries to the poorer countries. Australia is a party to a total of more than a score of arrangements for the giving of aid to developing countries. I have a list of them with me. It is extraordinarily wide and diverse. The new arrangement now proposes to add to the list a new piece of machinery for the giving of a form of aid to developing countries.I believe that this is an extremely extravagant method of giving aid and that we should watch this sort of thing very carefully. I would like to see our contribution under the provisions of this Convention made through the World Food Programme of the United Nations Food and Agriculture Organisation. We are already contributing some $500,000 worth of goods and cash to that Programme. I believe that if we were to add to that contribution the aid that we have pledged under the new Convention, we would be doing a service to FAO and the United Nations itself. We would also be doing a service to the developing countries. Millions of words have been expended on this topic in the last few years, and everyone who has considered the subject carefully agrees that multilateral aid is far more effective in raising the standards, the capacity and the welfare of developing countries than bilateral aid could ever be. If Australia were to give the aid provided for in the Food Aid Convention through the FAO World Food Programme, as the Scandinavian countries have done, we would help to set an example to other donor countries that are wealthier than Australia is, and we would also help to strengthen that agency of the United Nations. Though we may decry the United Nations at times, we must at least pay a tribute to the effectiveness of some of its agencies and particularly of the Food and Agriculture Organisation in trying, generally successfully, to bring help to the needy countries. 1 do not propose to speak much longer, but I would like to touch briefly on a third matter before, I finish. Under the new Arrangement, we are promising to give something like 225,000 metric tons of wheat a year as aid to other countries. This is a substantial quantity and when we assess it against Australia’s production of wheat, we see that it is significant, because it represents about half our annual carryover. The carryover was 17.7 million bushels in 1963, 23.3 million bushels in 1964, 20.4 million bushels in 1965 and 24.4 million bushels in 1966, and the carryover for 1967 is provisionally estimated at 16.5 million bushels. So the promise of 225,000 metric tons, or 8,325,000 bushels, a year represents about half our carryover. I believe that this annual carryover is quite inadequate to meet the additional strain that will be imposed by the arrangements for the disposal of wheat. In view of the wide fluctuations in production levels in this country, in our own interests we should now substantially increase the quantities that we hold over from year to year. Special provision will have to be made for this. If it is to be done the Government will have to take positive action to ensure that there is a substantial carryover of wheat and that it is held preferably in the areas that are most sensitive to drought, so that it may serve as a fodder reserve against the contingency of a dry season or a drought. I believe that at very small cost the Government could achieve a greatly increased carryover of wheat and ensure that the supplies were distributed in the areas susceptible to dry seasons in as advantageous a manner as the experts in this field could devise. I put that thought to the Government and to the Minister for Primary Industry (Mr Anthony), who is at the table now. I trust that he will consider it earnestly.

I commend this Bill. This is such a large subject that 1 regret that my time to speak on it is limited. It is a subject on which I have expended many words during the past few years. I am pleased to see that we are at last achieving a breakthrough. It is not a breakthrough of the order that I would like to see. I would like there to be a far more substantial attempt to raise the living standards of the people of Asia than is envisaged by this Bill, but let us be thankful that this is a start. At last the wealthy countries are combining in an effort to provide food as a means of helping the production and development of the underdeveloped countries.

Minister for Primary Industry · Richmond · CP

– I am pleased to be associated with this Bill, which is probably one of the most important to come before this House for a long time. It gives some assurance to Australian wheat producers that they will get at least a certain minimum price for their wheat. It breaks new ground in the orderly distribution of food to undernourished countries. AH parties have expressed agreement with this legislation. All approve it. The honourable members for Gwydir (Mr Ian Allan) and Maranoa (Mr Corbett) have spoken in glowing terms of its importance and have raised various questions that I hope to answer in the course of my speech.

The honourable member for Yarra (Dr J. F. Cairns) made a most interesting speech. It was well prepared and, if I may give him credit for this, it was very clever in some ways because of the slants he employed in it. It was clearly a speech on which he had done much work. He had examined the implications of the legislation. I should like to touch on some of his points. The first matter he mentioned was a statement by Dr Callaghan that Australia should expand its food production as much as possible. Naturally Dr Callaghan, as Chairman of the Australian Wheat Board, was speaking on behalf of the wheat industry. The Government does not tell farmers how much they should grow of this or that commodity. As a Conservative government we believe the farmers know their own business best and are best able to make a judgment. What the Government does is to try to create an atmosphere both at home and abroad to encourage farmers to produce in the knowledge that they will be able to sell their produce. At home we try to give taxation incentives and try to create orderly marketing, stabilisation schemes and many other forms of assistance, such as bounties and subsidies on fertilisers that they use and on the articles that they produce. Abroad we try to negotiate trade arrangements or agreements to give guaranteed markets or access to markets. I believe that in both of these fields the Government can take credit for having encouraged Australian producers to continue their expansion programmes. I would hate to think that the Government was going to tell them what they ought to do and what they ought to produce. Any Government that did this would soon find itself on the rocks.

We do not tell the farmers’ marketing organisations how and where they should sell their produce. If the Australian Wheat Board wants to sell its produce in various markets, including mainland China, it can do so. If the Government finds reasons to intervene, it will intervene. We see no reason whatsoever why, under present conditions, the Government should intervene in the trade of wheat with Communist China. It is very hard to find out why the Opposition wants to lampoon the Government about trade with Communist China. One must try to analyse the situation. The Opposition claims that it has no disagreement with trade with Communist China. It is the Government’s policy to trade with Communist China, mainland China, call it what we may, provided it is not trade in strategic material.

Mr Daly:

– What is wheat and wool?


– Not strategic material. If Australia were to limit its sale of wheat to Communist China there would be plenty of other wheat producing countries which would accept the benefit of that trade. We are not in direct conflict with Communist China, so there is no reason why we should limit our trade in food with that country. The Government’s policy is to trade with Communist China in non-strategic materials. It is also the Government’s policy to resist Communist aggression in Vietnam. That is firm Government policy which has been stated clearly. If the Australian Labor Party tries to embarrass the Government then we must analyse where the difference is in our policies. Apparently the Labor Party agrees that it is all right to trade with Communist China. Following that sort of logic it must not be right to be resisting Communist aggression in South Vietnam. That is the only conclusion one can come to. 1 enjoyed listening to the honourable member for Yarra philosophising on Communism and saying how Communism had brought great benefits to the Soviet Union, Communist China and other countries. Somehow or other, mysteriously or by some miracle, Communism had brought about a new way of life. He tried to justify on economic terms - 1 certainly hope he would not try to do it on moral terms - that it was of benefit to the people of those countries. I agree that there has been a lift in living standards in the Soviet Union and in China; but there has been a remarkable lift in living standards and in the way of life in most countries. We need only reflect on what has happened in Australia in the last half century. The progress that has been made is incredible. I can remember our having at home a radio which worked sometimes, and which sometimes did not work. We did not have electricity at home and it was not until I was about 6 years of age that I saw a sewerage system. We have seen the development of many great things which are now commonplace to almost every person in Australia. There has been remarkable progress, no more so than in the production of food. It is in this area of development that the Western world really excels. We are well ahead of the Communist’ countries.

In Australia, in the life of this Government, meat production has increased by 65%. Wool production has gone up by 60%. Our factory production has increased two-and-a-half times. There are about 1.5 million new homes. Wheat production has increased two-and-a-half times. There has been remarkable growth in production. One of the features of Communism in a controlled state is that it has not found a solution to its agricultural problems. The honourable member for Yarra makes the point very clearly in his speech that the Soviet Union is making ground and is increasing its agricultural production. But it is strange that the method the Soviet Union is using to increase agricultural production is to forsake its basic principles of Communism by having to abolish its ideas of collectivised farms and communes. What the Soviet Union has had to do is to come into the field and give incentives to the farmers to use their own judgments to produce and to get the rewards for their efforts.

This is the great thing about the farming game or profession. I like to think of farming as a profession because today it is becoming a very skilled occupation requiring a great deal of technical knowledge and. indeed, a large amount of capital. But to make farming succeed we must have a man on the spot who is responsible for making day to day decisions for every beast, for every acre of ground and for the operation of each piece of equipment. Unless a man can get a reward for making such decisions, agriculture will not succeed. From what I have read, the thing that astounded Mr Khrushchev, a former Premier of the USSR, when he visited the State of Ohio in the United States of America was to see the great wealth of agricultural production. When Mr Khrushchev saw the acres of corn and wheat and the numbers of pigs and cattle he realised that there was something missing in the Soviet system. When he returned to the Soviet Union, he suggested that a bonus or incentive system be introduced to encourage and help production in that country.

In China there has been a shortage of food. Sure, there may have been shortages of food in the past. I would not deny that.

China has always been a hungry country. But from what I can gather China’s food situation has not improved with the Communist regime. This regime has been putting too much emphasis on industrialised production and in the direction of labour and certain forms of agricultural production. This policy has caused chaos and shortages.

What happened in Cuba? A revolution occurred in a country which was the biggest producer of sugar in the world. Cuba was producing approximately 7 million tons of sugar a year. Today, some 6 years or 7 years after the takeover by Castro, sugar production in Cuba has not yet reached the former figure. I only entered this argument or philosophising about Communism versus capitalism because the honourable member for Yarra introduced the subject. I thought that his remarks deserved a reply. I think that the facts I have given are fairly salient.

The honourable member for Yarra asked a number of questions about price to which I would like to give some replies. I can divorce myself now from the political part of this speech just as he divorced himself from the political part of his speech half way through his speech. Under this new International Grains Agreement a lift will take place in the minimum price of wheat. To quote the actual lift in price, I think it is best to refer to the c.i.f. price in the United Kingdom which was £Stg22 17s 4d under the 1962 International Wheat Agreement. Under the new 1967 International Grains Agreement, the price will be £Stg26 5s 4d, c.i.f. in the United Kingdom. This is a considerable lift. I think the honourable member for Yarra asked me what the price in Australia will be. The price for Australian f.a.q. wheat at United States gulf ports will be Si. 68 a bushel. Converting that to the Australian f.o.b. price - I hope to explain that in a minute - at the current freight it works out at close to SA1.44 a bushel.

The honourable member for Gwyder mentioned that between the old agreement and the new agreement there will be a hiatus of 12 months without any minimum price operating. The International Wheat Agreement will still operate, only the regulatory provisions which include the price clause will be dropped. So, there will not be a minimum price during this period. The main exporting countries had to take a calculated risk during the Kennedy Round negotiations for a new grains agreement whether to accept an extension of the old International Wheat Agreement in its entirety. The thing was that if they accepted an extension of the old prices for 1 year it looked as if they would not get an increase in the price. So, the main exporting countries took what one might call a punt. Fortunately, they got an agreement. They got an agreement which lifted the minimum price for Hard Winter Ordinaries No. 2 wheat at Gulf of Mexico ports by about US 19c per bushel above the minimum price under the old International Wheat Agreement.

During the coming year in which there will not be this minimum price a number of factors arise which one might look at. I think one can say that prices will remain firm during the year. There is a low carryover of wheat in the United States. The Canadian crop is down on last year’s crop. The Australian crop this year looks like being down by about 200 million bushels. The major exporting countries have agreed on the desirability of trying to observe the minimum International Grains Agreement price. So, it seems quite likely that although there will be no fixed International Wheat Agreement price during the next few months the price will not drop unduly.

The honourable member for Yarra asked the Government whether it was satisfied with the price. This is a fair enough question. I suppose that one could ask any farmer whether he was satisfied with the price and that no farmer would ever say yes. I think the Government would probably say: ‘Well, we are not as happy or as satisfied as we might like to be, but international negotiations require some degree of compromise. We have come to a price which is a compromise price but a price which is certainly better than was operating under the old agreement.’ I mentioned that the new minimum price will be US19c above the old price. This could mean that the price to Australian producers will go up by approximately US8c to US16c per bushel. This will mean extra foreign exchange for this nation of something between $A22 and $A44 a year. The variation between the minimum and maximum prices under the old International Wheat Agreement of 40c will remain under this new agreement.

The honourable member for Yarra also asked me what would be the minimum price under the new Arrangement and what would be the price to be paid in mainland China. I can tell the honourable member what the minimum price will be for China. This is worked out according to a certain formula. First of all, there is a new base price, as the honourable member himself explained. The wheat shipping centre is being transferred from the Great Lakes of Canada to the Gulf of Mexico. This change is being made mainly to enable wheat to be transported in the very big tankers that are now coming into operation. Some of these are 100,000 ton vessels or even larger. They cannot get into the Great Lakes, so it was decided to select another point at which they could pick up the wheat and take it to various parts of the world. The new price was based on an American grade of wheat known as No. 2 Hard Red Winter Wheat Ordinary Protein.

A price is established at the Gulf. This price, as has already been stated, is SUS1.73. Then 5c is deducted; this is the quality differential between Hard Red Winter and Australian f.a.q. grade wheat. The freight cost to the UK is then added. We then subtract the freight charged from the UK to Australia. This gives the f.o.b. Australian price. This is known as the Australian minimum price. The minimum price for sale c.i.f. in other countries is this Australian minimum price plus the freight charge to the market concerned. There will be variations in actual market prices according to the quality of wheat being sold and according to the competition prevailing in the markets in which it is being sold. But at least we know what the minimum price will be. China was not a signatory to the old International Wheat Agreement, nor is she a signatory to the new International Grains Arrangement, but all the major suppliers of wheat to China are expected to concur in the new International Grains Arrangement and all of them, including Australia, must observe the conditions of this new Arrangement.

The honourable member for Yarra asked also whether the amount of food aid for the hungry countries of the world, of 4.5 million metric tons of wheat, is as great as it has been in the past, and I said that it was not. Concessional wheat supplies to these countries for the year 1965-66 totalled 17 million metric tons, very much more than the 4.5 million metric tons being provided under the Food Aid Convention. But I do not want the House to think that the amount of aid going to these countries will be decreased. The food aid provided under this Convention will go side by side with the aid that is being given by the Americans under their Public Law 480 programme and the extra aid that is being given by Canada and other countries. The significant point is that for the first time we will have an orderly method by which the wealthy countries, the ‘have’ countries, will give assistance to the ‘have not’ countries. We will have certain countries like Japan and some of the European countries giving to the programme, although instead of giving in kind they may be giving in cash to help feed the hungry countries.I believe this to be a major breakthrough.

I want to take a moment to give credit to the Leader of the Australian Country Party (Mr McEwen). I have heard him on numerous occasions over the last 6 or 7 years claiming that it should not be just the food producing countries of the world that give aid to the hungry countries, but that all the wealthy countries should in some fashion provide finance so that the food producing countries can provide food for the hungry countries.

It is for these reasons that I say this is a Bill of great significance and great importance. It is a measure that is humanitarian in the extreme. I believe it will lead to greater production in this country of wheat, the basic staff of life that is needed by so many people in the world today.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Anthony) read a third time.

page 2255


Second Reading

Consideration resumed from 17 th October (vide page 1871), on motion by Mr McEwen:

That the Bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Anthony) read a third time.

page 2255


Second Reading

Debate resumed from 19th October (vide page 2068), on motion by Mr Bury:

That the Bill be now read a second time.

Melbourne Ports

This Bill is titled ‘A Bill for an Act Relating to the Papua and New Guinea Development Bank and to the Australian Resources Development Bank Ltd’. As the Minister for Labour and National Service (Mr Bury) stated in his second reading speech:

The main purpose of the Bill is to confer bank status on the Australian Resources Development Bank Ltd. The bank has now been incorporated in Victoria by the eight major trading banks, with the aim of providing finance to Australian enterprises engaged in large scale developments of Australia’s national resources.

The Opposition will oppose this measure for reasons which I shall outline. In the first place, we think it is most presumptuous that a non-government institution should take to itself the title of ‘Australian Resources Development Bank Ltd’. According to my understanding of the uniform companies legislation recently implemented, and in fact the various Companies Acts that have operated in Australia over a number of years, no private concern is entitled to use in its name such words as Commonwealth’, ‘Federal’ or ‘Australia’. Here we find what is virtually a consortium of the private trading banks, plus the Commonwealth Trading Bank, and with a certain amount–

Mr Bury:

– The Reserve Bank.


– Please allow me to make this point in my own way - and with a certain amount of financial participation - but not share participation - on the part of the Reserve Bank of Australia. In other words, this is an arrangement among the private trading banks and the Commonwealth Trading Bank and it is to be given the distinguished title of the ‘Australian Resources Development Bank Ltd’. Clause 3 of the Bill amends section 5 of the principal Act by inserting the following definition:

Australian Resources Development Bank Ltd’ means the company of that name incorporated in the Stale of Victoria.

We are giving national recognition to what at this stage is nothing else but a company registered according to company law in the State of Victoria. That is the first point to which I wish to draw attention. 1 suggest with all respect that ‘Australian’ should not have been allowed to be part of the title of this institution. It could have been called the ‘Resources Development Bank Ltd’, but certainly not the ‘Australian Resources Development Bank Ltd’. I hope that later we will be told why an institution that is in essence nothing else but a public company registered in the State of Victoria is allowed to attach to its title the word ‘Australian’.

I come now to the second point. As the Minister for Labour and National Service said in his second reading speech, now that this company has been formed in Victoria as a joint company with share participation by the eight trading banks, including the Commonwealth Trading Bank, the Federal Parliament is to confer bank status on it. I simply point out how easy it is, apparently, to confer bank status on anything, provided the Commonwealth Government decides to do so. This raises some rather curious overtones. I wonder why some attempt has not been made to delineate the functions in the total financial arrangements of certain other institutions which now occupy a very significant place in the economic life of the community. I refer to those institutions that are described as fringe institutions. I simply note that on the side, in passing.

The Government apparently is concerned about what it thinks are certain credit gaps in the institutional arrangements in Australia. The field in which it says these deficiencies exist is the large scale development of Australia’s natural resources. Nowhere in the Bill is any attempt made to define Australia’s natural resources, for the purposes of this bank. 1 suppose the only place in which any attempt at definition would be found would be in the memorandum and articles of association of the company registered in Victoria and known as the Australian Resources Development Bank Ltd’. Again the purport of the arrangement is that this institution which is now to be designated a bank will assist in the large scale development of Australia’s natural resources. I do not think that anyone would deny that in some respects there may still be deficiencies in the institutional arrangements as we find them in Australia, although it is interesting to note that the Vernon Committee in chapter 10, paragraph 53, of its report said:

We have seen no evidence to suggest that the general rate of growth of the economy has been held back by mismanagement of the credit machine. There have, however, been difficulties from time to time. . . .

All I would suggest is that up to date no case has been proven to show that in terms of the totality of credit arrangements as we find them in Australia there is need to create this new institution and that, even conceding that there may be some case for it in some circumstances, it should be given the status of a bank with all the advantages that go with such recognition.

I begin by saying - I am sure the Minister will agree with me - that at any time in any economy there is a limit on the total amount of credit that can be made available. Unless care is taken, when facilities for credit are made easier for one group in one direction it is probably being made more difficult for other groups in some other directions to get the credit to which they feel they are entitled. This kind of situation has been very well brought out in an article - I do not claim to know the gentleman who wrote it - in the issue of the Australian Quarterly’ for September 1967, Volume 39, No. 3. The article is written by Mr P. E. Stonham. B.Sc. (Econ.), M.Sc. (Econ.), University of London, who is now a lecturer in economics at the University of Newcastle, with specific reference to money and banking and international economics. His current research is in the area of Asian development and trade. Mr Stonham has contributed an article called ‘Australian Development Banking - the First Steps’. Obviously his article was written at a time when the precise form of an institution or two institutions that were likely to be created in the Australian economy was not clear. There had, as we know, been talk about something that was called a refinance corporation by the Treasurer (Mr McMahon) and another institution supported by the Deputy Prime Minister (Mr McEwen) called a development bank. I remember many months ago - I think about April or May of this year - asking the Deputy Prime Minister, who was then Acting Prime Minister in the absence of the Prime Minister (Mr Harold Holt), whether the intention was to create two institutions or whether they were to be integrated institutions, and what was to be the function of each part. He intimated at that stage that the matters were still being discussed within the Treasury.

In the course of his second reading speech, the Minister for Labour and National Service, on behalf of the Government, said:

Studies by the Australian trading banks of possible forms of a new institution of this kind were commenced in mid-1965.

That was two years ago. He continued:

After discussion with the Reserve Bank, an outline of a proposal was conveyed to the then Treasurer towards the end of the year.

That was towards the end of 1965. The then Treasurer is now the Prime Minister. The Minister went on:

In the light of his comments, there was further examination of the nature of the problems involved and of various possible approaches to these problems. Officers of the Reserve Bank and the Treasury worked closely with the trading banks. By mid-1966 the Treasurer was able to inform bis colleagues that a scheme had been formulated having the aim of marshalling finance, both local and overseas, for the development of Australian national resources on terms that would promote greater Australian participation in large-scale projects.

Here we have a mixture of two things. The internal development of Australia and also the fact that the internal development of Australia can be facilitated by what is called foreign investment. I do not deny that Australia’s current level of investment, economic growth and capital provision would not have been as great as it is in 1967 if, over the last 10 years or so, there had not been a considerable inflow of foreign capital. I do not deny that. But I suggest that we have to begin to make an assessment of the burden of this particular form of finance and its implications.

Nevertheless, I do not think that we should lose sight of the other very real facts that are brought out by statistics in official Government publications. The latest statistics are contained in a document entitled ‘National Income and Expenditure 1966-67’. On page 15 of that document is a table that shows the total capital funds that accrued in Australia for the 12 months ended June 1967 and how those funds were expended. The total capital funds available were $6,487m, which is about 27% or 28% of what is known as the gross national product’. This amount was made up from depreciation allowances, $ 1,900m; increase in dividend and income tax provisions, $27m; undistributed company income accruing to residents, $659m; retained investment income of life insurance funds, $337m; personal savings, $l,572m; public authority grants towards private capital expenditure, $54m; public authorities surplus on current account, $l,283m; deficit on current account overseas and withdrawals from overseas monetary reserve, $125m; and the net apparent capital inflow from overseas, $530m. The total of $6,487m is a fairly substantial sum but if we took out the $530m of foreign investment we are left with an amount a shade under $6,000m, which is more than 25% of the gross national product for capital funds provided internally.

Before deciding to argue about whether a new credit institution should be provided we should ask: ls not there already a fairly reasonable mobilisation in terms of total credit? Surely this raises the very real question that if we create a new institution with favoured circumstances - and I suggest this is a new institution with favoured circumstances - these favoured circumstances will work to the detriment of other groups in the community who require credit. That is why I think that the remarks made by Mr Stonham in the September 1967 issue of the ‘Australian Quarterly’ are very relevant. He said:

The danger in the Australian case is the erection of ad hoc institutions-

And nothing can be more ad hoc than this particular thing called the ‘Australian Resources Development Bank Limited’, which was set up as a private company in the first place and which is now to be given the status of a bank by this Parliament - for financial problems which in fact are part of much larger questions, in this case, the whole question of industrial financing in Australia from foreign and domestic sources, the diversification of the country’s structure of production, and how far this financing should be publicly controlled or directed. It is clear that the creation of new institutions to broaden the capital market are only part of the answer to these questions. Economic policy in many aspects can be used to influence the pattern of investment - domestic monetary policy, tariff policy, company taxation and banking attitudes are some of these.

I suggest that this is the kind of question we ought to be examining at the moment in Australia. At this stage I want to ignore what seem to be quite real differences between the Treasury and the Department of Trade.

Mr Bury:

– Whose statement was that?


– This statement was made by Mr Stonham in the September 1967 issue of the ‘Australian Quarterly’. Mr Stonham is a lecturer at the University of Newcastle. Ignoring for the moment the significant differences between the Treasury and the Department of Trade over the precise form and purpose of the new bank - and it seems the Treasurer as father of this institution has won out as father of the year over the Minister for Trade and Industry (Mr McEwen) whose institution apparently has been stillborn - it is at least pertinent to ask quite a few questions. I suggest that these are the pertinent questions: Why in- 1967 is it suddenly found necessary to specially promote large development projects in Australia? I would think that the fact that the realisation is sudden - and it seems to be sudden - points to the fact that this Government has been recreant over a great number of years in planning forward in any consecutive sense the economic and natural development of resources in this country. Secondly, if it is necessary to promote large development projects in Australia, does such promotion require a new institution? If so, why should the new institution be fathered by the existing trading banks, including the Government’s bank, the Commonwealth Trading Bank of Australia? Does the granting of credits in large amounts - and I suggest it is intended to mobilise credits in fairly large amounts - and for relatively longer periods of time than is customary for banks mean that there will be some favoured clients? If there are favoured big clients, and I suggest that there will be, may not some small clients suffer where there are distinct limits to total credit? I believe the Minister at the table would suggest that in terms of the Australian economy and what it can generate internally, plus what it is able to obtain externally, there are still limits to the totality of credit. May not monopoly tendencies in industry be greatly aggravated?

These are the sort of problems that we ought to look at. I believe we can look at Japan for some sort of comparison as to what can happen as a result of the creating of an institution such as this. Recently, the Prime Minister of Japan visited this country. We have noted that Japan has in terms of industrialised societies one of the best growth performances of recent times - that is to say, in the last 10 years. The Australian Government, in the annual publication it brings out called the Economic Survey’, in the 1967 issue takes great credit to itself in terms of total investment, public and private, which is, as I indicated earlier, over 25% of the gross national product. Australia has one of the best saving or investing records, whichever way we like to look at it, in the world. I believe that Japan is slightly ahead of us. Where Australian investment and saving represents about 25% to 26% of the gross national product, the figure in Japan is 28% to 29%. When we invest we hope to increase the rate of our productivity. However, our rate of productivity performance is pretty poor whereas the growth in the real productivity of Japan, measured on a per capita basis, for many years has been as high as 7% to 9%.

In arriving at a figure for increased productivity we have to allow both for an increase in the work force and variations in prices. Despite the injection of so much capital investment into the economy, Australia has one of the poorest returns as far as productivity is concerned. Over a 10- year period it does not average much more on a per capita basis than about. 2%. This is pretty poor by any kind of relative standard.

Mr Donald Cameron:

– It has improved in recent years.


– I am talking about the last 10 years. This Government has a habit of creating a slump. Australia goes on record as having in 1961 the only self-induced slump in the economic history of any modern community. Production declined and the Government took great credit in 1962 and 1963 when it got out of the trough and on to the bench. It said how much it had done. The honourable member for Griffith (Mr Donald Cameron) has not been here very long and I am not sure that he will be here for very long. When we look at the situation as we ought to look at it over a 10-year period, I do not think that anyone here can assert that the Australian performance has been a good one, despite the fact that Government supporters want to brag about how much capital they have mobilised. I will shortly show how we have mobilised it in the wrong direction. I suggest that this is pertinent when we come to consider the particular proposition that is before us.

I now wish to refer to the book entitled Post War Economic Growth in Japan’, which is available in the Parliamentary Library. It was published 12 months ago and is a compilation of selected papers of the first conference of the Tokyo Economic Research Centre. The first paper in the book is entitled “Fiscal and Monetary Policy’ and is written by Mr Ryuichiro Tachi. In his article he discusses what has happened in Japan to produce the sort of results that have happened. We can argue about why results are produced in certain ways and whether they are necessarily desirable. Mr Tachi states:

The postwar, low interest-rate policy-

I am with him in regard to a low interestrate policy. Australia has become a high interest-rate country in terms of Western economies. The article continues: thus differed considerably from a more traditional, easy-credit policy because it attempted to keep the interest rates low not through a sufficient increase in the money supply, but rather by limiting the supply of loanable funds while regulating the legal, maximum loan rates and terms of issuance of corporate bonds under the Emergency Interest Rates Adjustment Act and other similar legislative means. In essence*-

This is the important part: - one might argue - this policy, insofar as its results were concerned, differed little from ons of direct government subsidies to priority firms. It also was a policy that gave a strategic advantage to investments within large-seals industries.

I submit that this is the kind of danger that is inherent within this scheme. It enables the mobilisation of credit under respectable bona fides. Taking into account that the totality is limited and seeing that credit is to be mobilised in such largo quantities and under the aegis of the private trading banks, with favoured clients, it could amount to direct Govern’ ment subsidies to private firms. If this is what the Government of Australia wants, let it say so. In all fairness I doubt whether that is what it wants.

The Japanese policy gave strategic advantage to investment within large-scale industries. If the Government believes - and if it does, it ought to say so - that strategic advantage should be given to investment within large-scale industries, then this is the ideal way to do it. I suggest that these are the sort of things that ought to be faced up to. Do members of the Country Party, for instance, believe that priorities should be given to mineral development at the expense of established rural industries, or do they believe that there should be some choice?

Mr Katter:

– The honourable member cannot divide us against ourselves.


– I am not trying to do so. I am trying to make members of the Country Party think instead of chattering among themselves. Surely that is important. The honourable member for Kennedy (Mr Katter) belongs to an area that calls out more than others for systematic development. The attitude of members of the Country Party to systematic development is enunciated in a very interesting article in the ‘Financial Review’ of 24th October 1967. The article I refer to is headed Cape York: Focus for Northern Development Controversy’. I wish to quote from the article and in doing so I hope that I am not misquoting the gentleman concerned. Sir William Gunn is reported to have spoken about the development of the Cape York Peninsula and investment in terms of some hundreds of millions of dollars on say a 4, 5 or 6-year basis.

The article stated:

Sir William said Government participation should be confined to communications and transport.

All we want from the Government is reasonable tenure of land and a road and then they can get out of our hair.’

Is that the attitude of the Country Party towards development of that part of Australia? Is this the attitude of the Government? Country Party members can answer the question in a moment. It is not the attitude of the Labor Party. The attitude of the Labor Party is for priorities in development, just as Mr Stonham suggested in his article in the ‘Australian Quarterly’. Is the view of Sir William Gunn the right one? He says: ‘Give us all the money we want’ - in economic terms this would be the infra structure - ‘and then get out of our hair’. I can well understand what Sir William means by the phrase ‘get out of our hair’. The newspaper article continued:

He told the Cairns conference: ‘The return on the dollar spent is the most important criterion because on all the properties for which we are responsible we are spending someone else’s money’.

I am sure the honourable member for Kennedy knows what this conference was about. The report continued: “They don’t necessarily want to take it home but they want to know that their money is invested in a profitable undertaking.’

Then this is what these people call a profitable undertaking:

They want IS to 20 per cent and I see no difficulty in achieving this. We aim to get 20 per cent in two years from now.’

Sir William went on to say:

In fact, in some cases we hope to get 30 per cent at the end of 10 years.’

Seriously, does any Party in this Parliament believe that equitable and sensible economic development of Australia would result in the Government putting in this road and then ‘getting out of their hair’ ? ‘Getting out of their hair’ means that certain people can earn 15%, 20% or 30% on the capital that they invest. This is not my idea of development. If that kind of development is allowed to have its head - and after all, Sir William Gunn is on the Board of the Reserve Bank of Australia-

Mr Calder:

– What makes the honourable member think that we believe Sir William Gunn knows what he is talking about?


– Well I hope that the honourable member for the Northern Territory can say that he does not believe this. All I am suggesting is that Sir William Gunn is one of the people responsible for this particular institution being established.

Mr Calder:

– Here is his conqueror?


– I am glad to know that he has a conqueror here but I hope that the conqueror is not mute. I hope that he will say something about this. If an honourable member present is the conqueror of Sir William Gunn then he will want to see people in the north of Australia. The honourable member will say that he does not believe that Cape York Peninsula would be best developed by the Government putting through a road and then ‘getting out of their hair* and allowing Sir William Gunn to get a return of 15%, 20% or 30% over a period of 10 years. The honourable member probably wants cattle as well as people in the north. Sir William Gunn wants cattle but he is not worried about the people.

Mr Katter:

– We three members in this corner have been doing something about this.


– It looks as if I have some admirers in the Country Party. I do not mind this. I hope that they will make some serious criticism about this. All I am suggesting is that Sir William Gunn is a sponsor, together with the trading banks, of this particular institution.

Mr Graham:

– How much is this road going to cost? Is it going to cost a lot of money?


– I am not interested in the road at this stage. I am interested in the Australian Resources Development Bank Ltd - or what is to be called a bank. I suggest it will not be a bank at all. Once before in the House I told a story about somebody who once asked the late Lord Keynes whether he could distinguish between what was called the International Monetary Fund and what was called the International Bank for Reconstruction and Development. Lord Keynes replied that the easiest way to understand the Fund was to think of it as a bank, and the easiest way to understand the Bank was to think of it as a fund.

The Labor Party suggests, with all respect, that the Australian Resources Development Bank Ltd will be a fund and not a bank. It is a re-finance corporation. In my view it does not need the status of a bank and ought not to have the status of a bank - in the terms of the grandiloquent title of the Australian Resources Development Bank Ltd - when in fact it Is nothing but a consortium of the banking system of Australia. It is to be a go-between, if honourable members prefer that expression. This is the burden of the Opposition’s complaint. It is not that we do not suggest that economic development in Australia has not been as adequate as it ought to be. It has probably been better than it might have been, considering the kind of government we have suffered under for the last 1.6 years or so.

Mr Arthur:

– The honourable member does not believe that.


– I hope the honourable member for Barton will stand up and indicate the virtues of this particular scheme. By certain carefully selected standards Australia does not seem to have done too badly so far as development is concerned. It does not seem to have done too badly when the position is considered against what we have invested. But it has done very badly when considered in the light of the fruits of the investment. 1 suggest that this question should be seriously faced. Why do we not get the same sort of return as do some other communities? I am not quoting the Japanese example with approval. I am suggesting that sometimes a penalty may be paid. I am suggesting that in this case the penalty would be to allow the Sir William Gunn type of activity to be perpetrated upon the Australian community at the expense of many other kinds of development that are just as necessary.

We in the Labor Party have argued always that these sorts of things ought to be social priorities; that we just cannot determine whether we are to get a 15% or 30% return. If we get 30%, are we twice as successful as if we get 15%? Possibly this is so, in terms of the pocket. But what about the nation? After all, let us look at the rather curious sort of scramble that has gone on in recent times on the stock exchange with respect to the Broken Hill Pty Co. Ltd and the Great Boulder Mine. Are the Broken Hill Co. and the Great Boulder Mine organisation better off because people want to pay SI 5 a share instead of $5, in the case of BHP or $5 for shares in the Great Boulder organisation which at one stage were worth 50c? Is the proposition a better one because people are foolish enough? If this kind of money is available for investment does this not show that there is something wrong with the way in which we are mobilising the credit of the nation? So far as I can see, in the long run the only justification for this kind of institution is the one that Mr Stonham hinted at in his article. He said that a bank of this sort may make it easier for the Reserve Bank of Australia to exercise control over the fringe aspects of the market. Surely this shows that what the Government ought to be doing is not to sanction a new bank. The Government is creating a new bank. It is becoming the father of a new bank. It is giving the bank a name - and I will not reflect upon the origins of the child - and is giving it respectability by calling it a bank. But why does the Government not do something about what are called the fringe institutions? Sometimes it is rather peculiar to find what these fringe institutions are.

There has been a lot of agitation in recent times on the part of certain foreign banks. I hope that never will any sanction be given by any government in Australia for the establishment of a foreign bank in this country. We now have more banks than we need. They can erect buildings as opulent as they like when schools, hospitals and other institutions find it difficult to build at all. We are getting this little nesting of institutions that are not very far removed from being banks. It is stated in an article in the ‘Financial Review’ of 2 days ago:

The decision by N. M. Rothschild and Sons, the London merchant bank to set up an investmentcummerchant bank in Sydney, in partnership with Charter Consolidated and the Sydney broking house Hordern Utz and Bode is seen in London as reinforcing the challenge to the power of the eight leading Australian commercial banks.

If the Government claims that this sort of institution is set up to give strength to the arm of the eight trading banks, let it say so. But I suggest that the Government should be a little careful about some of the institutions that are being allowed into Australia at the present time. I refer to a chapter entitled ‘The Development Institutions’ which is contained in a very interesting book entitled ‘Studies in the Australian Capital Market*, which was published some years ago and which was edited by Mr R. R. Hirst, a Reader in Economics at the University of Adelaide. He said:

The totality of funds available in the capital market is of great importance but of even greater importance is the distribution and allocation of these funds. The significance of the lending of the development institutions is out of all proportion to their size.

I commend to the attention of honourable members six pages that are provided as an appendix to this chapter. It is entitled Selection of Australian Development Corporations, 1963’. It lists a number of corporations, the significance of which is out of all proportion to their size. Some major shareholders in a corporation known as the Australian United Corporation Ltd are as follows: Carl M. Loeb Rhoades, New York; Charterhouse Finance Corporation, London; Lazard Bros and Co. Ltd; Morgan Grenfell and Co.; Lazard Freres and Co.; Morgan Guarantee International; Finance Corporation, New York; and the Bank of New South Wales.

Mr Graham:

– They are merchant bankers.


– Exactly. They are foreigners who are showing us what we ought to be able to do for ourselves. They are charging us, by reason of tax concessions, more than we ought to be charged. On this ground I suggest that we should oppose the measure before the House.

Mr DEPUTY SPEAKER (Mr Drury)Order) The honourable member’s time has expired.


– I do not disagree with everything, that the honourable member for Melbourne Ports (Mr Crean) has said although I think I would draw rather different conclusions to those which he has brought forward. As honourable members will observe, there is very little in this Bill itself. What is important is what is done under it. This is not provided for by this House, although the Minister for Labour and National Service (Mr Bury) in introducing the measure did make some remarks in regard to it. The question before the House is really what will be done with the administration of the new Australian Resources Development Bank Ltd. There are two things which should concern us. Here I feel that the analysis of the honourable member for Melbourne Ports, so far as it goes, is on the right line. We do need more investible funds - I am talking of the totality of investment - and we do need to invest them better. But let us remember that if the first condition is fulfilled and the totality of the investible funds is fixed, then by investing in one thing we are unable to invest in another. There is a plus and a minus.

Investible funds in Australia can come from three sources. First, they can come from our local savings; secondly, they can come from overseas investment; and thirdly, they can come, to some extent although only in the short term, from changes in the credit structure in Australia. The measure which is before the House does not, I think, influence the totality of savings in Australia. But it may affect the other two matters. I would therefore lay down this general rule, that the success or failure of this Bank will depend upon how it does these three things: How it gets more local credit; how it gets more debenture money from overseas; and how it allows greater amounts of Australian investible funds to be directed towards high risk ventures which from the national point of view are the most desirable of all ventures if they are properly chosen. It is to these matters that I wish to direct the attention of the House for a moment.

I think that I can dismiss the question of credit in a few words. The Reserve Bank will not participate in this venture. Consequently, there will be some small release of bank credit. It may be that by reason or the better mobilisation of trading bank funds this effect will be augmented and multiplied. But I want to place my emphasis on the question of overseas debenture money. Australia in her present condition needs money from overseas because our balance on current account of our foreign transactions is negative. We overrun by some $700m or $800m a year. That is to say, when we put our imports, our exports and our invisible transactions on current account together, there is a deficit.

This deficit, unless we are to go bankrupt, has to be made good by overseas investment in Australia.

That overseas investment can take one of two forms. It can be either debenture investment, that is, investment in fixed loans, bonds and things of that nature which have their money value fixed; or equity investment - that is to say, ownership of real things in Australia, whether they be factories or land or shares. Perhaps the House may not realise the importance of this distinction because it goes, I think, to the root of a great number of the financial troubles which we have experienced. I have had the Library statistical service get out for me some very valuable figures in this regard. They show that in Australia, up until about 1928, there was, through Government funds and Government bonds, a large inflow of debenture money annually into Australia.

The flow was very significant in regard to the whole Australian economy and the nature of the transactions which then characterised it. The consequence of this was fairly simple. Because governments were raising this debenture money overseas, the banking system in Australia was liquid and it was able to lend equity funds to Australians in order to develop their ventures - whether farm ventures, mining ventures, industrial ventures, or equity in such things as the house which a man and his family own. Until about 1928, this was the nature of the Australian economy. It was justified by the fact that we had a large intake of migrants. Honourable members may have forgotten that in terms of the percentage increase in the population, Australian migration was greater after the First World War than it has been since the Second World War. Because of this flow of migrants and because capital was needed to absorb them - today, an average of perhaps $6,000 of capital for each migrant is needed to meet the cost of the house in which he lives, the factory in which he works, the roads that he uses and the like - there was a parallel flow of debenture capital coming in through government borrowing overseas, these funds being made available through the Australian banking system to entrepreneurs and family investors in Australia, for business ventures, home ownership and similar uses.

Mr Peters:

– When did this occur?


– I am talking now of the period leading up to 1928. In that year, two things happened: First, a world wide depression started and, secondly, the Financial Agreement came into existence in Australia. One unfortunate consequence of that Agreement was that we developed some kind of self righteous repugnance towards borrowing overseas by governments. This was a tragedy, for this attitude has ever since stultified the growth of the Australian economy. I do not propose now to discuss the details of the Financial Agreement or the way in which it has operated. It was conceived in the kind of economic silliness that brought on the depression. It was based on a pre-Keynesian idea that we could get ourselves out of a depression by cutting down our expenditure. This was an idea that snowballed and made the depression worse as it proceeded. But let me leave that. I come to the point that the Australian economy at that time ceased to do what it should have been doing - borrowing money on debenture overseas so that it could be made available to Australians through the Australian banking system. I do not propose to discuss figures relating to the time since 1928. It is sufficient to say that we virtually stopped borrowing on debenture overseas. When we look at the operations of the National Debt Sinking Fund and deduct from our overseas loan indebtedness the London and other overseas funds that we have built up - for these are negative investment in a debenture form - we find that Australia has practically ceased to raise debenture money overseas.

Because of this, two things have happened: first, we have become dependent on equity money from overseas. Since we are not getting debenture money, if we had not obtained this equity money we would long ago have gone bankrupt. Secondly, almost continuously since the Second World War, the Australian banking system has been in a strait jacket. We have not had a free banking system. It has not been able to operate as it should because of this chronic shortage of funds and the control exercised through the central bank. Given all the other factors, the central bank had no alternative to the imposition of this control. But one thing in particular was wrong and even yet we have not corrected it: Our mistake ever since the war has been that we have taken overseas money m the form of equity, not in the form of debenture. By so doing, we have kept the Australian banking system in a strait jacket, and this has reacted on businessmen and home owners. It has created a kind of anti-investment climate that is entirely inappropriate to this country, with its boundless opportunities. We have made a great mistake there. It is not easy to correct this mistake now. In the postwar period, it was easy to raise money on debenture overseas and now it is difficult to do so. The lush years have gone, I am afraid, and our opportunities have been wasted.

The honourable member for Melbourne Ports instanced Japan. He may be interested to recall that Japan has financed her tremendous postwar expansion almost exclusively on debenture money. Japan did what Australia should have done: she obtained her foreign funds in the form of debentures. Indeed, during most of this formative period, she imposed strict curbs on the investment of overseas capital in equities in Japan. These curbs are now being relaxed to some extent, though not entirely so, because they are no longer needed. Japan has built up her industries under local ownership to a point at which the)’ are virtually invulnerable to foreign takeovers. Perhaps that is an exaggeration and I should have said that they are now less vulnerable to foreign takeovers than Australian industries would be. In this, I believe, Japan has pursued a wise policy that we have not understood and have not ourselves adopted. Japan has taken its necessary foreign funds in the form of debentures, not equities. During the crucial formative period of industrial growth, she held in check foreign equity participation in local concerns.

I now come back to the Bill, Sir. One of the criteria by which we shall judge the success or failure of the proposed Australian Resources Development Bank Ltd will be its ability to raise overseas moneys on debenture account. If it can do that, it will be justified. Let me now turn to the other side of the equation, which was mentioned by the honourable member for Melbourne Ports - the function of the direction of investment. What is lacking in Australia is high risk capital. This is the most profitable of all capital, but it is not always profitable. If we take the losses and gains together, high risk capital is more profitable in total than low risk capital. But for the individual transaction that is not true, because the individual transaction may well result in total loss. This is what high risk capital means. One of the troubles of the banking system has been its inability to finance this high risk capital. One can understand from a banker’s point of view exactly why this should be. Suppose there are ten loans of $1,000 to be made and of those loans nine result in transactions where the whole of the capital is lost, but the tenth results in a transaction which makes a profit of $20,000. Looking at these transactions as a whole, there is a profit. This is the nature of high risk capital. But looking at the situation from the bank’s point of view, if the bank financed the transactions there would be a loss to the bank, because it would lose on the nine ventures which went bankrupt and on the tenth venture it would get its own $1,000 back. In those circumstances who would blame the bank for not backing high risk capital?

As I have said, I think the Australian investor has had the guts kicked out of him by the fact that the banking system has been in a straitjacket for so long. The Australian investor might be able to take advantage of the banking system because the individual man would have other assets and he would be able to put up the necessary security to ensure that the bank did not lose. But what happens now? The Australian investor who wants to go in for a high risk venture cannot get money from the bank, because the bank is unable, through central bank policy brought on necessarily by the failure of the Government to raise loans overseas, to give the normal banking service of unquestioned loans on assets of unquestioned value. This normal banking service is so far behind us in the past in Australia that we have almost forgotten that it is a normal banking service. So in Australia we have the anomalous position where the high risk capital - the capital which is nationally productive - comes from overseas. The mining ventures very largely are financed by overseas. Some of them will be total losses and total writeoffs, but in total these are the ventures which will pay off best. These are the ventures which we should have kept in Australian hands. We have failed to do so.

I am not clear from the Minister’s second reading speech, which did mention equity holdings, to what extent the bank will be able to remedy this position. It may be that it will be able to operate by the simple expedient of making loans to a company on condition that it will have the option of converting them into ordinary shares in that company if it so chooses. This perhaps would not be a normal banking transaction, but unless the Bill is to be entirely nugatory in its effect this is not to be a normal bank. And I am not clear from the Minister’s second reading speech, which mentioned equity investment, exactly how the Minister sees this new bank helping to service the high risk capital which is needed to make the Australian economy really go forward to raise our rate of industrial and other productivity and to ensure, as far as we can, the ownership in Australian hands of those ventures which are most profitable.

I conclude by repeating that this Bill, by itself, tells us very little. We are present at the founding of an institution which will perhaps do a lot of good. Whether it does so will depend entirely on the ways in which it is administered. The criteria we have to apply to it are, to what extent it can help to expand local credit; to what extent it can hope to get in debenture money from overseas; and to what extent it can help to make certain that Australian capital is directed into these profitable high risk ventures.


– Tonight is an agreeable night. The honourable member for Mackellar (Mr Wentworth) agreed with much that the honourable member for Melbourne Ports (Mr Crean) put to the House, and I agree with much that the honourable member for Mackellar put to the House. I think, however, that he is a little astray in his history. Australia should depend to a bigger extent upon the financing of its development with overseas funds - from overseas funds raised in the form of loans, as was suggested by the honourable member for Mackellar, as he said was done prior to 1928, and which ceased to be done on account of the depression. In reality that method of financing Australia’s development continued up until the cessation of the last World War. Figures show that as at 1950 we had debts overseas - that is both State and Commonwealth - of $ 1,099m. Today we have $l,500m. But at that particular time we had overseas investment in Australia - that is, equity investment - of $800m. Today we have over $5,000m. While we had S800m investment in Australian companies from overseas, the investment of Australians in overseas interests considerably reduced that liability against Australia. I agree with the honourable gentleman that the better method of financing the development of Australia is the method of loans. The Japanese nation, as he said, has been able to do that for itself. I have quoted in this House before a statement that appeared in an economic review of the Commercial Bank of Australia in June last, as follows:

Of course, private capital may be raised in two forms - equity (direct and portfolio investment) and fixed terms. Fixed term borrowings are less volatile than equity, an advantage which Australia and New Zealand are now appreciating. Japan is an example of a country which has borrowed on fixed terms. Since World War II, the Japanese have preferred to obtain overseas finance in the form of medium terra loans. To the extent that this form of financing is obtainable - and it has been for Japan - it is another part of the answer to capital inflow problems. Foreign control would be reduced, yet overseas skill and finance would be available.

Mr Calder:

– Can the honourable member explain that?


– Yes. Briefly, it means this: If a country is sold it is gone permanently. If a loan is secured that loan is repayable out of the products of that country, as the year goes by. A country does not sell its means’ of producing capital. That is the position. But, of course, it is very difficult to explain anything so simply that members of the Country Party can understand. I realise that fact. I return to a discussion of this legislation in connection with the establishment of this banking institution.

Why does Australia need another bank? The attitude of the Government seems to be that if the country is suffering from troubles and economic problems; if the production of the country is not as great as it ought to be; and if the country is dependent upon people of other countries of the world, it should establish another so called bank. That is what the Government does. But does this accomplish anything? Does it necessarily add to production? Of course it does not.

The Australian Government, through all of its mouthpieces, has been repeating continually that the development of Australia is proceeding at a rate unequalled in its history and that there is full employment. The Government says that all the people are employed. If all of the Australian people are fully employed in developing all the industries that they can possibly develop, how can the creation of the bank promote further development? Of course, the reason why this Government decided to establish this institution was not because it thought that development was not progressing as it ought to progress in Australia. It was not because it though that unemployment, which ought to be solved, existed throughout the length and breadth of the nation. The Government proposes to establish this bank in order to reduce the dependence of Australia upon overseas finance. The Government has taken this action because it has followed the example of the Canadian Government. The Government of Canada was in difficulties because 50% to 60% of Canada’s industries were owned by the United States of America. Canada was seeking to devise some means whereby it could reduce its dependence upon the United States.

Mr Bury:

– What was that percentage?


– 1 said that between 50% and 60% of the industrial companies of Canada were in the hands of United States financiers. Because of this fact the Canadian Government looked around for some devious means whereby it could relieve the dependence of its nation upon the financial institutions of the United States. So, Canada decided to establish what it called the Canadian Corporation. The Canadian Corporation was not to produce more capital. Tt was not to put to work Canadians who were out of work. The objective of the Corporation was to utilise the resources of Canada in order that it would not have to rely upon the finances and the capital of the United States to the extent that it was relying upon them at thai time.

Australia, of course, is not in exactly the same position as Canada was. The industries of this nation are not owned by overseas nations to the extent of 60%. They are owned by overseas nations only to the extent of between 25% to 30%. But despite the pretensions of the members of the Government, the people who sit behind the Government - the brains trust of this nation; the public servants - have been warning the

Government that it cannot continue forever selling a bit more and bit more of Australia in order to carry out the ordinary responsibilities it has of developing the nation. As the honourable member for Mackellar said, if it had not been for this inflow of overseas capital Australia would have been internationally bankrupt years ago.

Mr Calder:

– The honourable member is dead right. But who owned Texas in 1900?


– The honourable member for the Northern Territory says that I am dead right and then asks me who owned Texas in 1900.

Mr Calder:

– Well, who did? The English owned Texas.


– That has nothing to do with my particular argument. The position that I want to put before this Parliament is that the amount of overseas capital inflow has been increasing year by year until today between 25% and 30% of Australian industries are owned overseas. This Government said that it would establish a commission to inquire into this matter. The Government said that it would call it the Committee of Economic Inquiry. It was commonly known as the Vernon Committee. The Government said that it would select businessmen of this nation to serve on the Committee. The Committee would comprise the greatest business minds and public servants. The Government said that it would call upon a professor of economics. Professor Karmel of South Australia was the professor of economics upon whom the Government called. It appointed to the Committee Mr Ken Myer who was a businessman and Sir John Crawford who was a public servant. The Chairman of the Committee, Sir James Vernon, is a big businessman in this nation.

The Vernon Committee investigated the question of overseas capital in Australia. As my friend, the honourable member for Melbourne Ports, said, the Vernon Committee held that there was a sufficient inflow of overseas capital into Australia to maintain development. There was sufficient investment. Development in Australia was not being held back because of lack of investment. The Vernon Committee said that development was proceeding. The Vernon Committee could not suggest how more of the population could be employed because all of the population was employed. I wish to read to the House a further statement from the Vernon Committee. This is a most important statement. The Vernon Committee said at page 293 of its report: . . a continuation of the recent level of new overseas investment of about £150 million a year would not be sufficient to prevent a worsening of the balance-of-payments position, possibly to an extent that could not be tolerated.

But this is the point:

On the other hand, it would be sufficient to produce a gradual increase in the proportion of Australian company assets owned overseas, perhaps to something like 46% by 1974-75.

Mr Barnard:

– Was that from the report of the Vernon Committee?


– That was from the report of the Vernon Committee. This means that if the inflow of foreign capital continues at the rate of $300m a year, by 1974-75 46% of all industrial companies in Australia will be owned overseas. What has happened? Since that report was put before the Australian Government, the inflow of overseas capital has not been restricted to $300m a year. I have not the figures for 1966-67. I tried to obtain them from the Bureau of Census and Statistics but I was told that they were not available yet. But in 1964-65 and 1965-66 the inflow of capital from overseas into Australia was not $300m a year. It was over $600m a year. This is twice the amount necessary, according to the Vernon Committee, to place in the hands of foreign investors 46% of all the industrial companies within Australia by 1975. If investment at the rate of $300m a year will mean that 46% of our assets will be in the hands of overseas investors, what will an investment level of $600m a year mean? It will mean that by 1975 at least 60% and perhaps as much as 70% of all the industrial wealth of this country will be controlled and dominated by other nations.

Mr Adermann:

– They bought you too, Ted, for that price.


– My friend makes the inane remark that they bought me too for that price. But the fact is that the Government which he supports is not satisfied with what has already been done. It does not say: ‘Now we are going to stabilise the inflow of foreign capital at $600m a year’. It says: ‘We will go to Japan - or Japan will come to us - and we will negotiate with Japan a double taxation agreement that will encourage the takeover by that country of Australia’s industries and natural resources at an even more rapid rate than the United States has been taking them over’. The Vernon Committee said not only that we should not negotiate further double taxation agreements but also that we should not renegotiate - that was the Committee’s exact word - the ones already in existence; in other words, that we should get rid of them. The Vernon Committee gave its opinion that this method of encouraging overseas capital to take over the industries of this country is not in the interests of either the existing generation or of generations yet unborn.

The proposal to establish this new bank could have only one virtue. It would conceivably have a virtue if the proposed organisation were able, by its functions and its activities, to lessen Australia’s financial dependence upon other nations. But will this new so-called bank do such a thing? Although the Minister for Labour and National Service (Mr Bury) said in his second reading speech that this is one of the Government’s objectives, he went on further to say:

The institution will be able to attract funds from the Australian public and short and medium term funds from some overseas investors.

In other words it will do, in relation to overseas investors, what was suggested by the honourable member for Mackellar, and it will at the same time use more effectively and more vigorously the resources available within this country. I do not hesitate to say that if the taxation advantages and all the other kind of concessions that are offered to foreign capital were given to Australian capital, then Australian capital would be invested to a much greater extent than it is at the present time and there would be more investment savings available to the Australian people.

The honourable member for Melbourne Ports pointed out that there are numerous banks in this country. There are many private banks and there is the. Commonwealth Bank, and there are branches of the Commonwealth Bank. There is the Reserve Bank, there is the Commonwealth Trading Bank, there is the Commonwealth Development Bank and there are other bank*.

Mr Calder:

– Nationalise the lot. That’s the shot.


– Our friend says: Nationalise the lot’. But he and his colleagues say, of course, that whatever we do we must not interfere with the free enterprise banks. You, Mr Deputy Speaker, have seen the advertisements on the television screen every night extolling the competition that exists between the private banking institutions and telling us how that competition is a safeguard for the investor. The advertisements show pictures that almost bring tears to one’s eyes, emphasising the competition between the trading banks. But what are the trading banks going to do in connection with the organisation which is the subject of this Bill? This organisation will be a private organisation, but it will not be a private organisation of one bank. It will not be a number of private organisations that will be additions or addendums or amendments to existing banks; it will be one big organisation controlled by all the private banks without competition.

Mr Robinson:

– What would the honourable member do?


– I would use the Commonwealth Bank which, to the credit of the nation, saved this country in the days of war, which built the east-west railway, which enabled the Snowy Mountains scheme to be undertaken, which was behind all the major works carried out in Australia not in the interests of profit but in the interests of the development of the nation. That is the bank that 1 would use to serve the people of this country, and this, of course, could be done.

It is only natural for banks that are established as private banks to look first and almost solely at the aspect of profit. Pro-fit and more profit is the demand of their shareholders and their directors. They do not ask: ‘How can we use in the best interests of the nation and for the development of the country and the improvement of the conditions of the people the money over which we have control?’ Their major consideration, as one would expect it to be, is the opposite of the major consideration of a banking institution created by the people of Australia, through the Commonwealth Government, to serve the interests of the nation, to think not in terms of profit but in terms of the development and progress of Australia.

It is because of these considerations that we on this side of the House oppose what is, after all, only so much financial camouflage. This institution will accomplish very little, if anything. There was one member of the Government, the Deputy Prime Minister and Leader of the Country Party (Mr McEwen), who did have a scheme which was directed towards the creation of an organisation, whether attached to the Commonwealth Government or not, which would have only one object - to use the resources available within Australia so that our dependence upon overseas money might be reduced or eliminated. That was what the Deputy Prime Minister had in mind. He went to meetings of the Country Party and tried to make the members of that Party understand. He went to a meeting, for instance, at Lakes Entrance to explain the things for which he stood. He said: ‘We cannot depend any longer, if we are to preserve our freedom as a people and our independence as a nation, upon more and more overseas funds.’ Then he thought deeply on the matter and he came forward with a proposition for a corporation not designed merely to summon forth more overseas funds but to be used to organise the resources within this nation in order to promote the development of the nation.

Mr Calder:

– He must have got advice from the honourable member.


– No, he did not get advice from me. He was a light shining in the darkness of the Country Party. He shows a certain amount of independence on some issues. But what happened? Immediately the banking institutions got to work, and they said to the Treasurer (Mr McMahon): ‘You must stop this. You must put up a counter proposition. You must propose another organisation’, and for a while we thought there would be two organisations. We thought there would be a McEwen organisation and a McMahon organisation.

Mr Curtin:

– McMahon won.


– Yes. The powers of private enterprise and of predatory capitalism that this Government represents on the treasury bench was able to defeat the Deputy Prime Minsiter and his proposition went by the board. But his was the worthier and the nobler proposition of the two.

T do not want to say any more on this subject. If 1 have not made myself clear to the members of the Australian Country Party I recommend that they read the speech delivered a few years ago by the Leader of their Party to the conference of the Australian Country Party held at Lakes Entrance, Victoria. They should also read later speeches made by him. I remember his speech very well. He said: ‘We in this organisation are members of the Australian Country Party. We are farmers. We can live comfortably if we make enough every year from our farm. We can live on the fruits of our labours. We can also live comfortably if year by year we sell a little bit of the farm.’ He told members of his Party that Australia was doing this, that Australia was selling a bit of the farm each year, and that he did not stand for it. He said: T know that well established industries that have been in families for generations are being taken over by overseas investors. Flour mills, dairy co-operatives, all sorts of industries that have existed for years, have been taken over holus bolus by foreign investors. This is undesirable. In this way we lose our liberty as a people and our independence as a nation.’ I agree with him. I do not think that this specious banking proposition that was merely put up to destroy the proposition of the Deputy Prime Minister is in the interests of the nation.


– In rising to oppose the Bill on behalf of the Opposition 1 remind the House that there exists the Commonwealth Banking Corporation, which is the creature of this Government, that within its structure there is the Commonwealth Development Bank and that the functions of that Bank, as set out in section 72 of the Commonwealth Banks Act, clearly provide for every one of the purposes for which this new institution is created. Section 72 provides:

The functions of the Development Bank are - (a) to provide finance for persons -

for the purposes of primary production; or

for the establishment or development of industrial undertakings, particularly small undertakings, in cases where, in the opinion of the Development Bank, the provision of fin- ance is desirable and the finance would not otherwise be available on reasonable and suitable terms and conditions; and (b) to provide advice and assistance with a view to promoting the efficient organisation and conduct of primary production or of industrial undertakings.

The second reading speech of the Minister for Labour and National Development (Mr Bury) expresses a quite laudable sentiment. The new institution is to mobilise capital for Australian enterprise from Australian sources on a scale needed for large developments. The Minister duly made obeisance to existing organisations and the part they have played in financing development. He said that the sums to be mobilised would require negotiations with a considerable number of lenders and expressed a pious hope that capital from abroad would continue to be contributed for the development of Australia. The object of the Bill, as stated by him, is to ensure that this institution will provide for this protection of Australian ownership of natural resources and that ownership will not be prejudiced by inability to obtain capital locally in large amounts. What is the picture in Australia? lt is briefly this: Some 26% or 27% of our gross national product is invested. This is a very high rate of investment. About 90% of the capital for development is financed by local savings and only 10% comes from overseas. So all this huffing and puffing and blowing relates to the mobilisation of the extra 10%.

The Commonwealth has progressively lost, to a large extent, effective control of the Australian banking structure. The Commonwealth Banking Corporation exists, but the whole history of banking since this Government came to office in 1949 has been a history of other organisations setting up, diving out from under Commonwealth control and proliferating. In particular we have the black market banking system, the hire purchase companies, whose advances today are about 60% of the total advances of the major trading banks. The trading banks themselves are in this racket. We have merchant banks proliferating like mushrooms. As the Opposition secs the position everything achieved by this Bill could have been achieved by appropriate amendments of the Commonwealth Banks Act and a slight improvement or broadening of the powers of the

Commonwealth Development Bank. Traditionally the conservatives of Australia have been implacably opposed to the Commonwealth Bank, which was the product of the fertile financial imagination of the Australian Labor Party. It has developed into one of the world’s major banks and there is nothing that the Commonwealth Bank could not do that this bank which is now being set up will do. We see this as an erosion of the powers and functions of the Commonwealth Banking Corporation.

Of course, we have been interested spectators in the byplay between the Minister for Trade and Industry (Mr McEwen) and the Treasurer (Mr McMahon). As the honourable member for Scullin (Mr Peters) said, the Treasurer won. But let us have a further look at this Australian Resources Development Bank Ltd. I do not accuse the Minister in any way of concealing the facts, but there is much more in it than can be obtained by an examination of the memorandum and articles of association than appears in either the Bill or the Minister’s speech. In that regard I will quote from and comment on a most delightful article that appeared in the financial section of the ‘Sydney Morning Herald’. It was written by that redoubtable commenator the Financial Editor. It appeared on 13th September 1967. He starts off by saying:

Why in heaven’s name should the so-called Australian Resources Development Bank Ltd have a board of directors consisting of eight general managers of the trading banks, to the absolute exclusion of anyone else?

This was supposed to be a great new institution to take on a big national job.

He comments: lt ends up with the narrowest, not to say most ludicrously constituted, board of any limited company in the land.

That is a rather sweeping observation from the financial editor of a most conservative and authoritative journal. He goes on:

Not one of these general managers of the selfstyled free enterprise bank sits on the board of his own bank.

As he said, not one of these eight very worthy gentlemen sits on the board of his own bank to participate in the formation of its policy. Yet they are ostensibly to be the men who formulate the policy or examine the substantive merits of major development projects in this nation. This article continued:

The ‘Australian Resources Development Bank’ is not going to have its general manager on the board, either, even though it is a board of managers. This appointee of theirs will be in the status of a servant of the servants.

That is the more depressing because the chief executive will be dealing with a board who know all about the realities of power.

By its constitution the Australian Resources Development Bank seems to be emphasising that it is being launched as a refinancing instrument of the existing banks with Reserve Bank backing in the initial stages.

At a later period of its gestation a decision was taken, against the original desire of the trading banks, that the new body should have the legal and titular status of a bank.

This is most interesting because banking charters are not to be sneezed at today. The article continued:

The main reason for this was to assist its image as an overseas borrower and thwart Mr McEwen’s plans to set up a different institution for overseas borrowing purposes.

I would like to hear the Minister’s comment on that point. The article continued:

None of our trading bankers has experience of overseas borrowing markets. Yet they have not seen fit to second on to their board a single person with that kind of background or one with a direct acquaintance with the national development which it is the new bank’s object to promote.

. Consideration number one is that the new bank, as a potential acceptor of deposits, should dovetail technically and smoothly into the existing banking system.

In other words, I repeat, it is a banker’s bank, run by bankers for bankers and controlled by bankers. The article continued:

Nobody would question that a number of technical issues will arise. The most interesting will be the introduction of transferable deposit certificates (a well known US banking technique) as a form of fixed-interest borrowing by the new institution-

That is quite an innovation and one that conceivably could be welcomed. In the United States of America deposits are made generally, I think, on the basis of 3 to 10 years and receipts for these deposits are given impressed with the character of full negotiability. It is quite a innovation. At least it is one of the few attempts that have been made to modernise the Australian banking structure. But that raises other considerations as to the nature of the competition that this bank will create for existing funds and the interest rates that will be paid on these deposits. Will they be greater than for fixed deposits under the existing banking system? Will they exceed those of the national bond rates? Will they even soar to the empyrean heights of the hire purchase companies? To put it another way: What will be the effect of this bank’s operations upon the Commonwealth bond market? I would like to hear the Minister answer that question.

Just how will this institution fit in if it is to operate as effectively as the Government anticipates that it will? Let us examine, it from another point of view: To what extent will it compete with the hire purchase institutions? After all, are the bankers going to defeat their own puppet companies in which every major trading bank has a substantial interest, or, in some cases, of which the bank has complete ownership? Putting the control of the new bank completely in the hands of the existing bank management will mean that mineral prospectors and other developers will be able to see little or no chance of an independent re-appraisal of their propositions. The financial editor of the ‘Sydney Morning Herald’ stated:

Individually, our senior bankers and their directors are very likeable gentlemen. They are strong and upright in some of the old-fashioned virtues.

This comment is made at the conclusion of what I consider to be a most valuable article. The writer is most acute in his observation and analysis. In conclsuion the article stated:

The absolute prohibition of new entry into the Australian banking system - the psychological consequences of the known impossibility of that - appears to be the most important part of the trouble. In the interests of everyone, especially people in the banks, the appearance of a new entrant or two has become very desirable.

I would not necessarily subscribe to these sentiments. But this is the point: Today, as never before, we have hammering at the door of the Government all sorts of overseas institutions which are seeking to acquire charters under the existing banking legislation. We can take as a case in point, the recent visit of the Prime Minister (Mr Harold Holt) abroad when he sought to negotiate some lessening of the wool duties and for moneys to start to flow into Australia again. It was put to him very plainly by no less a person than the President of the United States: What about allowing some of these American banking companies to come to Australia and operate? By the same token the Japanese interests are seeking to obtain a full banking charter here.

In the meantime we have quite a spate of merchant banks and developmental banks, so styled, which are discharging most of the functions of banking but not the major one. We even had the Rothschilds coming in here recently. They have a keen nose for where the profit lies. I am not attempting in any way to reflect on these people but this is the situation today. Why could not the Government adopt some of the techniques used by the Federal Reserve Bank in the United States, which has always been able to indicate guide lines to the American banking system. Could the Government not lean more heavily on the banks, breath down their necks if necessary, and tell them precisely what ought to bc done? What does the Government intend to do about the superannuation funds where money is being mobilised on a fantastic scale? It is true that many of the life assurance societies are interested today in equity investment but I would say that straight out capital investment in some of the major projects of national development ought to be within their functions and scope and that the Government should be using a little gentle persuasion or even a little more than gentle persuasion in that regard.

In conclusion as I see the picture, I fail to see the need for this bankers’ bank, controlled by the managers of banks who themselves are not even participating in the making of policy in their own banks. It is rather a negative organisation. If someone were uncharitable enough to say so - and I will be - quite conceivably the banks see the opportunity of lending money out to developmental projects at a higher interest rate than they can possibly get through ordinary banking transactions, at the same time usurping to themselves control of the Australian credit structure to the detriment of the present Commonwealth Banking Corporation.

Minister for Labour and National Service · Wentworth · LP

– If I may reply to the remarks made during this debate, I will begin with those made by the honourable member for Cunningham (Mr Connor), who quoted extensively from one newspaper report. A number of other honourable members quoted from other newspaper reports. These reports are valuable up to a point as a comment. The main object of newspapers is to present the news but it is also to write stories, and it is the story that makes for good circulation. This is a regular function of the Press, and everyone should understand that. Perhaps I should mention at this stage one subject that was raised by the honourable member for Cunningham and I think, touched on by the honourable member for Melbourne Ports (Mr Crean). That is the question of overseas banks operating in Australia. There is a long standing policy adopted by successive Australian Governments on this point. In our view, the control of the banking system is a vital control over the economic system. We believe that the control as exercised by the Reserve Bank is vital to the stability of economic policy of this country. The function of banking involves both the acquiring and directing of resources along economic lines on a large scale. Our own banking system is subject to the direction of the Reserve Bank in this connection. Overseas banks would not necessarily be in this position. That is why, without discrimination against any particular country whether it be the United States of America, the United Kingdom, Japan or any other country, that is now the policy.

Mr Connor:

– Keep them out, too.


– This is our policy. This particular item is rather different from foreign investment of this kind. I would point out to the honourable member for Cunningham (Mr Connor) that unless things have changed very much in the United States since I was there the power and direction exercised by the Reserve Bank and the general guidance and guide lines over the Australian banking system are a great deal tighter than the control of the United States Federal reserve system over American banks. The honourable member also asked about the effect of the new institution on fund raising for Commonwealth bond issues, hire purchase companies and so on. The finance to be raised by this new institution is likely to be mainly of a relatively short term character. It is unlikely to compete with the kind of funds that go into Government bonds. Tn other words, it is not a competitor with Government bonds. I remind the honourable member for Cunningham that the new bank will also be subject in its advance policy to the guidance of the Reserve Bank.

The honourable member also asked what the position was vis-a-vis hire purchase companies and other finance companies raising money. The new bank will be in the market. It will raise money on commercial terms like any other properly established financial institution. To this extent it will also, in practice, draw off funds which might have gone to hire purchase companies or in other directions. The honourable member for Cunningham referred at some length to the management of the bank. He made the suggestion, based on newspaper reports, that the management might be too conservative, that it might inhibit the bank’s operation and so forth. The general managers and staff of the trading banks do in fact serve on a number of subordinate institutions which have been set up by the trading banks. There is nothing novel about this. As the funds will be raised largely by the trading banks it is quite natural that the general managers of these institutions should guide and safeguard the new bank. The proof of the value of the new institution, as in other things, will lie in what happens. If in fact, large sums are raised and are properly invested in directions which promote the growth of Australia in accordance with the objectives of the bank, then this will mean success.

The idea of establishing this bank has been thought over for a long time. I believe it is rather strange that the Australian Labor Party, which for so long has stressed that too many of our resources are falling into overseas hands, should now decry this arrangement. Now we have a carefully thought out and capable institution which potentially can raise very large sums of money required to finance the development of our vast mineral and other resources. This, to me, is an extraordinary attitude for the Opposition to take. I should have thought that members of the Labor Party would have said: ‘Hooray, here at last is an Australian institution to do the kind of things we say should be done by an Australian institution’.

The honourable member for Mackellar (Mr Wentworth) asked about the kind of investments that the bank would make. It is envisaged that the bank will sometimes participate in the raising and lending, of a mixture of equity and medium term loan money which, coupled with long term loans from other sources, will enable new projects to be financed. In other words, what the honourable member for Mackellar had in mind is provided for. Equity holdings will be a distinct possibility. They are in view, both on their own and mixed with loan moneys. The honourable member expressed at some length his theories of borrowing by debentures rather than by equities.

We also had a notable contribution from one of the leading Labor spokesmen on trade and finance - the honourable member for Scullin (Mr Peters). The honourable member said one or two things about foreign investment and the wickedness of it. In the course of his remarks he referred to Canada. I understood him to say that the Canadians were concerned because about 50% or 60% of their industry had fallen into American and other hands. I suggest that the honourable member look carefully at Hansard because he said that the Canadians were pursuing ‘devious’ means to remedy the situation.

Mr Peters:

– ‘Devious’ means ‘different’.


– 1 do not really think he meant this. However, I suggest that he makes his meaning clear on this point. He said that if the bank in some way would lessen our dependence on overseas investment it would do some good. That happens to be the basic purpose which generated the establishment of this bank. If that is what the honourable member thinks, then I cannot understand his attitude to the rest of it.

The honourable member for Melbourne Ports (Mr Crean) raised a number of questions. Firstly, he referred to the title of the bank. He warned to know why the word ‘Australian’ was used in the title. Of course, the name of the bank has to be passed by the Registrar of Companies in Victoria. If the title of the new institution closely resembled that of an established concern then, of course, the Registrar of Companies would tend to rule it out. This would also apply if the title was misleading.

Nothing can be misleading about the word Australian’ attached to a company which is owned by a group of Australian banks. The origin of most of these banks goes back-

Mr Crean:

– The company law states that we are not supposed to use the words national’, ‘commercial’ or ‘Australian’. What astonishes me is that a private institution is able to use the word ‘Australian’.


– This may be so if it is something which is confined to Victoria, but this new institution will be operating throughout Australia. No doubt, if it had not been operating and was not designed to operate throughout Australia the Registrar would have rejected the title. However, this is fundamentally a matter for the authorities in Victoria. I see nothing wrong with it. After all, banks are a part of the history and development of Australia. The Bank of New South Wales opened its doors in 1817 and operated all over Australia when, although the name Australia’ existed, it certainly was not generally applied. He is an example of a great national institution that is stuck with the name of the mother State although it operated all over Australia before the name ‘Australia’ was generally adopted.

Mr Crean:

– At one time any country pub could call itself the ‘Commonwealth Hotel’. Now there is a barrier in the Companies Act against the use of such words words as ‘Commonwealth’, ‘Australia’, etc. It astonishes me that the Minister should do this.


– The honourable member for Melbourne Ports can disagree with me. Anyway, this matter is not before the House tonight. This bank has been incorporated with the name of Australia. It will sail under this colour and I think it will wear the flag extremely well. The honourable member for Melbourne Ports referred to gaps in our financial system. There has been a big gap in the system because hitherto, when really large sums have been required to finance a particular project, it has not been possible to raise the money in Australia. It has been necessary to go overseas and, with the atd of other financial consortia attached to interests in Australia, comb the market to acquire the necessary funds. The creation of this institution means that potentially we now have in our midst something which can raise funds for projects of an enormous scale and still keep our natural resources in our own hands. This is the object of creating this Bank.

What surprises me is that the Labor Party is now opposed to the proposal. Honourable members opposite have preached in favour of some such institution of this kind for many years. I would have thought that the Labor Party would be in favour of this institution. A number of Labor spokesmen drew a red herring across the trail and tried to stir up our friends and stalwart allies of the Country Party by referring to Sir William Gunn. They were drawing a herring, or a whale, across the track. Fortunately members of the Country Party recognised these remarks for what they were because they contained a certain degree of nonsense.

This institution has been evolved over quite a long time. I think the proposition originally was worked out by the banks and then discussed in general terms. For various reasons it did not meet with the Government’s approval originally. However, the banks have worked on the project since and have come up with this institution. This does not necessarily end all Government thinking on the promotion of institutions to raise funds, either in Australia or overseas, or for the development of Australian resources. The honourable mem* ber for Melbourne Ports rather deplored the view that financial institutions should be conceived ad hoc to do particular jobs. I think that when a need does arise, one which is recognised by practical people close to the problems, this is the sensible and practical way to go about it. When the need arises we should create an institution to meet the situation.

The honourable member for Melbourne Ports quoted at length a very able man, Mr Stonham. Unfortunately I am at the disadvantage of not having read the article referred to and I do not know the context from which the quotation was taken. When a practical institution is required to do a job which everybody wants to see done, I gather that the honourable member for Melbourne Ports - and I hope I am not misrepresenting him - would hold the project up until it met with some rather general abstract criteria that he has of the way that Australian resources should be developed and about what sort of institutions should be conceived. The fact is that we have institutions in the financial business. They know this business. It seems to the Government to be highly sensible to get together the practical people conversant with this field and then facilitate what they aim to do; and that is to set up an institution which can raise funds to achieve the kind of development we need in Australia.

In this connection the honourable member for Melbourne Ports referred to our development of natural resources and said that it was unplanned. Well, planned or unplanned, while he has been waiting for abstract plans evolved by professors, which may or may not meet a theoretical problem which has been posed, in a practical kind of way the natural resources of Australia have been developed at very high and almost world record speeds, considering the size of this country. The fact is that once again, whatever the theory, practical results have been forthcoming. To throw away all those useful things in the name of some theoretical approach, which may or may not work anyway, does not seem to the Government to be the sensible course to follow.

The honourable member for Melbourne Ports strayed a little when he spoke about various growth rates and international comparisons of statistics. He spoke about the great increase of productivity in Japan. The institutional setup and the state of economic development in Japan a few years ago are not the sort of things to be reasonably compared with Australia. He said that the productivity growth in Australia was not more than about 2%. He deplored this as being a low rate of increase in productivity. I would have put the rate at a little higher than 2%. But there are very few countries which can sustain over a longish period a rate of growth in productivity of more than 2i%. In fact, there are’ great illusions about productivity growth in Australia. It is one of the problems to be faced when dealing with the wage fixing machinery in Australia. People fondly imagine that productivity is increasing by about 10% each year. This is a fond illusion of some people who claim increases in salary. In one way we have faced disadvantages in productivity growth because of the fact that for some time past the terms of trade have been moving against us. This makes a great deal of difference to national productivity and it is something over which we have little or no control.

So far as the increase in the gross national product at constant prices is concerned, let us consider the last 5-year period. In 1962-63 the increase in the gross national product at constant prices over the previous year was about 6%; in 1963-64 it was 7%; in 1964-65 it was 7%; in 1965-66 it was 2% - that was when we were suffering from a widespread drought - and last year it was about 5.6%. So the productivity of Australia, according to the gross national product at constant prices, is certainly increasing fairly rapidly. In addition, there is much evidence to prove that the standard of living in Australia is increasing and that welfare and average real wages earned are increasing at quite a fast pace.

The honourable member for Melbourne Ports quoted Lord Keynes* remark about the International Monetary Fund really being a bank and the International Bank for Reconstruction and Development really being a fund. I appreciate these half-truths. This one is nice to dally round. I remind the honourable member of another saying of a fellow economist about Lord Keynes before he became a lord - that wherever six economists gathered together there were seven opinions, two of which belonged to Mr Keynes. But this Bank is more than a refinancing institution. I am sure that the honourable member for Melbourne Ports, when he reads fully ail the papers about it - I do not accuse him of not doing so - will realise that it is far more than this. It will re-finance projects wheeled up by the banks, but as an institution it will also be able to take initiative of its own and start ab initio with projects.

At this stage in his speech the honourable member for Melbourne Ports wandered into the field of social priorities. This was fair enough. We all have our social priorities and our own thoughts as to how resources should be directed and so forth. But what I do not like about this approach of the honourable member for Melbourne Ports is that apparently he wants all life to stop while someone draws up magnificent plans and gets all the statistics together.

Then he will shuffle these things around in order to get a plan. I suggest that the political reality of plans is a different thing from plans drawn up by economists while sitting comfortably in a room. It is very different in practice when all the active forces at work come to bear. This type of planning would be all very nice if economists had the objective view that the honourable member occasionally has when he is permitted in one way or another to abstract himself from the party and political arena. No doubt he would do his job very honourably and sincerely. In practice, however, this kind of approach does not lead to very successful results.

The honourable member referred, in passing, to other merchant bankers setting up business in Australia. He referred to the recent visit of Mr Rothschild. I believe that this merchant banking institution is to be controlled or run mainly by Australians. Any merchant banker who sets up here and who does not have a very strong Australian association and influence is not likely to advance very far. As has happened with so many other organisations, these institutions will certainly bring a new financial expertise to the coutry and channel resources in a profitable direction. To some of these institutions this is a specialised business. There is no doubt that they will add to the sophistication of the Australian financial scene which in turn does produce results in the matter of additional real resources.

I could not really detect substantially, in the remarks of the honourable member for Melbourne Ports, any real opposition to the proposal, when one considers, on the one hand, what he wanted to do and, on the other hand, what this measure sets out to do« The honourable member for Cunningham (Mr Connor) said: ‘We have the power ready. We have the Commonwealth Banking Corporation. AH we have to do is to fiddle with that and we will get this result. It will be safely under the control of any incoming Australian Labor Government.’ Sometimes I wonder what an incoming Labor Government would do with all this delightful power and resources controlled by a state bank. This would certainly be a very dangerous power to have in this form, if it were improperly used. We believe in diffusing throughout much wider circles these essential decisions on the direction of Australian investment. The establishment of this Resources Bank is a notable step forward. It is not the end of the road so far as new Australian institutions go. In introducing this measure we have decided to confer banking status on an institution well conceived. The banks have consulted many other organisations in bringing this institution together. I feel confident that it will add considerably to the Australian economic scene and ensure that more Australian resources are controlled and developed by Australians.

Question put:

That the Bill be now read a second time.

The House divided.

AYES: 65

NOES: 30

Majority 35

(Mr Deputy Speaker - Mr P. E. Lucock)



Question so resolved in the affirmative. Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Bury) read a third time.

page 2276



-I have received advice from the Right Honourable the Prime Minister that he has appointed the Minister for the Interior (Mr Nixon) to be a member of the Joint Select Committee on the New and Permanent Parliament House in the place of the Minister for Primary Industry (Mr Anthony).

page 2276


Second Reading

Debate resumed from 18 October (vide page 1985), on motion by Mr Bury:

That the Bill be now read a second time.


Mr Deputy Speaker, the Opposition supports the general principle of this Bill, but we are critical of certain aspects of it. The Government has chosen to make certain minor changes in the principal Act, covering a wide range of benefits to national servicemen discharged after their term of duty. The Opposition supported the original measure when it was introduced, though we had certain reservations about the scope of the benefits being provided. One of our major objections was removed when the Government, as announced by the Treasurer (Mr McMahon), in his Budget Speech, made national servicemen who served in Vietnam eligible for defence forces retirement benefits. This decision will result in considerable improvement of the circumstances of national servicemen who, on their discharge after service in Vietnam, are considered to be totally and permanently incapacitated as a result of their service there. The measure now before us provides for a greater degree of flexibility in the granting of loans to national servicemen after discharge.

As the Minister for Labour and National Service (Mr Bury) pointed out in his second reading speech, the main purpose of the Bill is to provide for those cases in which a national serviceman on his discharge wishes to engage in either rural or business activity of a kind in which he had been engaged previously, though not immediately prior to call-up. The measure will correct an existing anomaly. It is clearly just that flexibility of the kind envisaged in this measure should operate. We believe that it would be tragic if national servicemen were denied these benefits because of technicalities, and I think it is obvious to all honourable members, as a result of the explanation given by the Minister in his second reading speech, that technicalities sometimes stood in the way. We welcome the discretion that is to be conferred on those responsible for the granting of loans. This will help to eliminate the possibility of injustice.

The second feature of the Bill is that it will validate a decision by the Government to make the first $100 of a re-establishment loan free of interest. The Opposition welcomes this proposal, but we believe that the Government ought to have taken the opportunity to allow a greater sum free of interest. The sum of $100 is insignificant in relation to loans of up to $6,000, which may be made under the provisions of the principal Act. It is difficult to understand the Government’s attitude and its apparent lack of generosity. What sort of generosity is it on the Government’s part to allow the first $100 to be free of interest when the loan is for the sum of, say, $3,000? I am not certain how the interest will be calculated, but let us suppose that interest at the rate of 4.5% provided for in the Act is charged on $2,900, the first $100 being interest free. This means that the interest charge will be $130.50. If interest at the same rate were charged on the full sum of $3,000, the national serviceman would pay $135 in interest. So the Government’s generosity amounts to a reduction of only $4.50 in the interest charge on a loan of $3,000. The Government may use a different method of calculating the interest payable, but the basis that I have taken as an illustration indicates the real measure of its generosity. The Opposition does not see anything very generous in this.

As I have said, this Bill will merely validate a decision that the Government has already taken, for it appears that at present the Government has no legal authority to allow the first $100 of a reestablishment loan to be interest free. I am sure that the Minister for Labour and National Service, who has had considerable experience with interest rates, knows exactly what they mean and will understand what this proposal means in hard cash to national servicemen. Doubtless he will agree that the Government’s proposal could not be described as generous. A limit of $3,000 is fixed under the terms of the principal Act for a business loan, and surely an interest free limit of $500 would have been more realistic at this level, to say nothing of the limit of $6,000 for loans for agricultural pursuits. In the case of those national servicemen who receive a loan of $6,000 for farming, surely a more realistic figure would have been $1,000 interest free. This would be a just and equitable concession for the Government to make. It is disappointing that the Government did not take the opportunity to reduce the interest rate on reestablishment loans. I have already pointed out that the interest rate now charged by the Government is 4i%. The ruling rate applying to war service homes loans is only 3*%. The Opposition believes that the interest rate on re-establishment loans should be no more than 3i%.

The Minister must appreciate that there will be some persons eligible for war service homes assistance who will receive loans of $7,000 at 3£% interest, while the reestablishment loans granted to those who need that kind of assistance will be at 4i%. Why the discrimination? Surely if it is good enough to provide a loan at 3i% to a national serviceman who qualifies under the war service homes legislation the same situation could reasonably be expected to apply to re-establishment loans. Perhaps the Minister will explain the Government’s attitude on this question of interest rates. Those receiving re-establishment loans are not so favourably treated as those receiving war service homes loans. Of course, those national servicemen who qualify under the terms of the special service overseas regulations - that is, those who served in Vietnam or other special areas - are eligible for war service homes loans. Other national servicemen are eligible only for re-establishment loans for 10 years at 41/2%. In other words, some national servicemen will be eligible for assistance from the War Service Homes Division and others will be eligible for reestablishment loans, but two different rates of interest will apply. The re-establishment loan terms compare unfavourably with the war service homes loan terms. The loan for a war service home is up to $7,000 for 45 years at 33/4%. The Government should have taken this opportunity to liberalise the reestablishment loans.

There are other areas of re-establishment benefits where improvements could be made, and it is regrettable that the Government did not take this opportunity to do so. Most notable is the lack of a war service land settlement scheme similar to the scheme available to returned servicemen who fought in the First World War, the Second World War and later in the Korean and Malayan Wars.

Mr Bury:

– Has the honourable member looked at the title of the Bill?


– The Minister obviously wants to say something on this question. I have no doubt he will take the opportunity to reply.

Mr Bury:

– I was referring to the contents of the Bill. I thought the honourable member was going to wander.


– That is not a matter for the Minister to decide. I am talking about the question of re-establishment and if the Minister does not agree that reestablishment is a question for discussion under the terms of this legislation then I disagree with him. I was referring, in passing, to the question of war service land settlement schemes. The Government has consistently refused, when this matter has been represented to the Prime Minister (Mr Harold Holt) in the Parliament, to provide a scheme of war service land settlement for those who are now serving in Vietnam and other special areas. Why should there be discrimination? We have accepted the prin ciple that returned servicemen from the First and Second World Wars, and from other wars in which Australia has been engaged, should be entitled to assistance under the war service land settlement scheme. The Government has received numerous requests to provide the same kind of assistance for those who return to Australia after service in Vietnam and other special areas. Those national servicemen who will be serving in special areas are entitled to a reasonable reply from the Government as to why it is not prepared to provide the same kind of assistance to them. It is unfortunate that the previous scheme has reached the stage where allotment of land is finished. The only functions remaining are the administration of finance and the supervision of properties.

There must be substantial numbers of regular soldiers and national servicemen who have served in Vietnam and other special areas who want to settle on the land. Regular soldiers returning from Vietnam are placed in a position markedly inferior to that of national servicemen. Under the provisions of this legislation national servicemen will be eligible for loans of up to $6,000 for rural resettlement irrespective of where they have served overseas. Under the provisions of the 1965 Act national servicemen may be granted a period of training for rural work. However, regular soldiers who complete their term of service - after soldiering in Vietnam - are not entitled to these benefits. Once again there is discrimination. Although the Minister claims to be somewhat dismayed that this question should be raised in this debate, I believe the Government has a case to answer. The Minister should provide an answer to these questions, which are of extreme importance and certainly of great interest to those who are serving in these special areas. Regular soldiers who complete their period of service in Vietnam can expect no assistance from the Government. There is no war service land settlement scheme to assist them.


– Order! I remind the Deputy Leader of the Opposition that this Bill amends the Defence (Re-establishment) Act and relates to re-establishmentloans. The honourable member is justified in making points about the proposed amendments but my ruling is that this should not develop into a full scale debate on matters relating to loans under the war service homes legislation and in other respects.


– I appreciate your ruling, Sir. I have made my point and am happy to have been able to do so. I hope that the Minister will display the same courtesy when he replies to what are obviously important questions. I was dealing with re-establishment benefits. We say that there is no way at present whereby regular soldiers who are discharged after a period of service in special areas can obtain land and establish themselves on properties. This is an inexplicable anomaly and it should be possible for the Government to extend the benefits of war service land settlement schemes to veterans of the Vietnam war.

Sitting suspended from 11.30 p.m. to 12 midnight.

Thursday, 26 October 1967


-r- I now come to the question of vocational training.

Mr Bury:

– I will take a point of order if the honourable member continues to deal with this matter. It is right outside the ambit of the Bill.


– I am talking about reestablishment loans. I think that they are for vocational training. I think that this matter is part of the legislation. Training is provided for national servicemen who have been discharged where this would assist in their effective resettlement. The Bill provides one year of full time training for national servicemen at a technical college, an agricultural college, a university or an approved training institution. Alternatively, it provides for 2 years part time or correspondence training. The Bill does not compensate national servicemen for the training time that they have lost because of their induction into the Army.

The only point that I want to make here is that it does seem peculiar to me and to the Opposition that the Government requires 2 years military service from a national serviceman and gives him in return only 1 year full time training. Surely national servicemen who want vocational training should be entitled to 2 years full time training, the equivalent of the time which has been taken from an ordinarily productive period in their lives by national service training. Honourable members will recall that after World War II servicemen were given facilities for fun vocational training up to graduation. This would mean anything from 3 years to 6 years. Certainly veterans of World War II served this country for a substantially longer period than 2 years, but, on a proportionate basis, it would be just to give national servicemen full time vocational training for 2 years if they wished it, in view of their service. This year, two national service intakes totalling more than 3,000 national servicemen have been discharged. This flow of discharged national servicemen will increase substantially in 1968. In these circumstances, the Opposition regrets that the Government has not taken this opportunity to rationalise and improve benefits for those being discharged.

The Opposition supports the improvements that this legislation makes. We urge the Government to extend the provisions of the legislation to deal with the weaknesses and anomalies that I have indicated. I have referred to a number of them. Firstly, there is the interest free loan of $100 on the loans of up to $3,000 and $6,000 that the Government provides in two categories. The Opposition believes that the Government might have taken the opportunity to provide a much more generous contribution in this respect. Secondly, we appreciate the fact that the Government has decided to remove an obvious anomaly from the Act and that it will be possible now for a national serviceman to receive re-establishment loans in an occupation in which he was not engaged immediately prior to his callup. The Government has moved in this Bill to remove this anomaly. For this reason, we support the legislation.

Minister for Labour and National Service · Wentworth · LP

– in reply - Mr Speaker,- the purpose of this Bill is simple. It is to make two corrections. One is that, as originally drafted, the Bill is a little too tight administratively for the purposes of the Act to be carried out as originally intended. The other part of the Bill is to rectify a clause which was incorrectly drafted in the first place. Those are the limited purposes of the Bill. Although most of the remarks of the Deputy Leader of the Opposition (Mr Barnard) were irrelevant, I do thank him for his support of this Bill.

Question resolved in the affirmative. Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Bury) read a third time.

page 2280


Second Reading

Debate resumed from 18 October (vide page 1991), on motion by Mr Howson:

That the Bill be now read a second time.


-Order! There being no objection, that course will be followed.


– In his second reading speech the Minister for Air (Mr Howson) in his capacity as Minister assisting the Treasurer (Mr McMahon) said:

The main purpose of this Bill is to provide some improvements in the furlough entitlement of those who derive their furlough benefits from the Commonwealth Employees’ Furlough Act 1943-1959 rather than from the furlough provisions in the Public Service Act 1922-1967.

He pointed out that the provisions of the Commonwealth Employees’ Furlough Act are administered by the Treasury while those in the Public Service Act are administered by the Public Service Board, and that the effect of this Bill will be to eliminate all the differences between the two schemes thus bringing all those employed within the broad sphere of Commonwealth employment onder the same conditions for eligibility for furlough. This measure provides for a common administering authority. From now on that authority will be the Public Service Board, except in the case of persons employed in the parliamentary departments who, as the House knows, are covered by a separate administration.

This measure has the support of the Opposition although at a later stage I will propose amendments to certain clauses. Certain other provisions, I think, need explaining. However, if the proposed amendments are defeated we will not oppose the Bill; we will support it. The benefits which will flow from this Bill to those employees who come within the provisions of the Commonwealth Employees’ Furlough Act are of some advantage but there is still room for improvement.

The Opposition is concerned about the long delay in bringing down this amending Bill. On 20th September this year the honourable member for Blaxland (Mr E. James Harrison) directed a question to the Prime Minister (Mr Harold Holt) in which he pointed out that in October 1964, 3 years ago, when the right honourable gentleman was Treasurer, he approved amendments to the Act. it has taken 3 years for this amending Bill to come before the Parliament. The House is aware, of course, that a similar delay has taken place in regard to the Commonwealth Employees’ Compensation Act. Amendments to that Act were promised in 1964 and we are still waiting for them. The last information we had was that an amending Bill would be introduced during this sessional period. If we have been informed correctly, only 1 week remains in this sessional period and we still have not seen any sign of this Bill.

Last year the Public Service Act was amended to provide authority for payment in lieu of furlough where an officer with at least 10 years but less than 15 years continuous service is ceasing duty on account of domestic or other pressing necessity. The Minister said in his second reading speech:

This Bill provides for the same concession in relation to termination of service on account of domestic or other pressing necessity and for the same adjustment in the pro rata scale as was made in the Public Service Act.

The Commonwealth Employees’ Furlough Act now specifies 8 years as the minimum qualifying period in cases of death or retirement because of permanent ill health. The Bill provides for this qualifying period to be reduced to 4 years, bringing it into line with the Public Service Act. I will have something to say at a later stage about workers who may be retrenched. The Bill also eliminates the provisions which require deductions from recreation leave on account of furlough being granted. The Commonwealth Conciliation and Arbitration Commission’s decisions on long service leave had already supported this principle to which the Minister referred, but the Conciliation and Arbitration Commission also supported other principles which the Government had seen fit to ignore. Our amendments will make this clear to the Parliament. The Minister said:

The Bill provides for the repeal of the provision under which a period of prior service terminated by age retirement is treated differently from a period of prior service terminated for other reasons. This provision has been found to operate unfairly against permanent officers by comparison with temporary employees and anomalies arise particularly in relation to former permanent officers and members of the permanent forces who. subsequent to their retirement on age grounds are re-engaged in a temporary capacity or are appointed to a statutory office.

An important amendment is the repeal of the provision that imposes a limitation on the amount of prior State employment or employment by an authority of a State which may be counted for furlough purposes. Here again we propose an amendment. We believe that an employee of a local governing body should be treated similarly to an employee of a State Government or a State instrumentality. The prior employment of a person who leaves a local governing body to take employment with the Commonwealth should be treated in exactly the same way as the prior employment of a person who leaves the employ of a State Government or a State instrumentality to take up a position with the Commonwealth.

The Bill provides that a break of service exceeding 12 months shall not break continuity of service for the purposes of the Act in a case in which an employee ceases duty because of ill health and resumes full time employment with the Commonwealth or an authority of the Commonwealth not more than 12 months after his health becomes sufficiently restored to enable him to engage in full time employment. Under the existing Act a period of absence from duty exceeding 12 months breaks continuity of service. The Minister directed attention to what I believed to be a glaring anomaly when he said:

An employee who ceases duty due to ill health which is serious but not permanent after, say, 14 years service has no entitlement to furlough. Should his restoration to health take longer than 12 months, upon subsequent re-employment by the Commonwealth he can receive no recognition for furlough purposes of his prior service.

Later the Minister said:

I mention here that, through the operation of section 75(b) of the Public Service Act, this amendment will apply automatically in the cases of officers who have been retired on the grounds of ill health and who are subsequently re-appointed after an absence of more than 12 months.

This has been an anomaly to which the honourable member for Blaxland has repeatedly directed attention, and I am pleased to see that something has been done about it. The Minister pointed out:

Both the Public Service Act and the Commonwealth Employees’ Furlough Act provide for pro rata benefits to be granted to persons who retire after attaining 60 years of age with 8 but less than 15 years service.

However, in some of the Commonwealth authorities there is a compulsory retiring age lower than 60 years and it is not always practicable for an employee to complete 15 years service. The Minister mentioned air hostesses, for instance, who cannot be employed unless they are at least 21 years of age and who are compulsorily retired at 35 years of age. The Bill looks after these people. They can get pro rata leave if they are under age 60, provided they have completed 8 years’ service.

Clause 5 of the Commonwealth Employees Furlough Bill provides a new section 4a and deals with the delegation of power by the Public Service Board. I hope that the Minister will take note of this because it is important. This delegation of power is all right provided it is absolute and provided the exercise of the power does not have to be referred back to the Public Service Board. I raise this point because delays could occur if full power is not delegated to the officer in the respective department or authority. If there is a delegated power it should be an absolute power. I draw attention to the Commonwealth Employees’ Compensation Act, which allows the Commissioner to delegate limited power to others. Invariably unnecessary delay occurs in settling claims. If he intends to reply in the debate the Minister might advise the House on this point, which I have been asked to stress.

The amendments to the Commonwealth Employees* Furlough Act will ensure that temporary employees working for authorities or instrumentalities will now enjoy the same conditions as apply under the Public Service Act and which until now have applied only to permanent public servants. However, a major deficiency is still carried on in this amending Bril.’ I refer to the perpetuation of the definition of ‘authority of a State*, lt covers employees of a State instrumentality who may transfer to the Commonwealth but specifically excludes local government employees who may transfer. This is an important matter and the Opposition intends to move an amendment to deal with it. We are of the opinion that local government employees who are taken over by the Commonwealth should be able to carry with them their service with local government authorities. Many local government employees have high qualifications and they could perform a valuable service for the Commonwealth. Recently the Minister for Social Services (Mr Sinclair) referred to a worker taking his superannuation benefits with him when he transferred to another department or another type of employment. The position with regard to furlough, or long service leave as it is sometimes called, is similar.

I do not want the opportunity to pass without mentioning some of the history of the Commonwealth Employees’ Furlough Act. I remind honourable members that the Chifley Government brought temporary employees of the Commonwealth within the provisions of the Act. Formerly thousands of temporary employees, some with 20 or more years service, were not covered by the Act. The legislation enacted in 1944 by the Labor Government brought all employees of the Commonwealth Public Service within the provisions of the Act and gave them the benefits of long service leave. Prior to that only permanent employees were entitled to furlough benefits. However, the 1944 legislation did not affect the rights of any person who was previously covered by other regulations or by-laws the provisions of which bestowed greater benefits than did the 1944 Com* monwealth Employees’ Furlough Act When the Chifley Government was defeated in 1949 and the Menzies Government assumed office, employees of the Commonwealth Railways were entitled to 3 months long service leave after 10 years service. In 1952 the Government, through the Treasurer, instructed the Commonwealth Railways that rights which had been enjoyed by railway employees were to be taken away from them. They had enjoyed these rights since 1937. The Labor Government did not intend that the Commonwealth Employees’ Furlough Act should supersede the by-laws in respect of long service leave that accrued to railway employees. But this Government saw fit to alter that, even though the employees were enjoying the higher standard when the Commonwealth Employees’ Furlough Act was introduced. Despite representations that were then made by honourable members on this side of the House on behalf of railways employees, the Treasurer still persisted with the instruction. In consequence, Commonwealth railway employees, instead of becoming entitled to long service leave after 10 years, had to wait until they had served for 15 years. At that time employees who had worked for more than a year were entitled to pro rata leave. Under this Bill, they must now wait until they have served for 4 years.

I will refer now to another point that I consider is very important. I hope the Minister will reply at the appropriate time. I refer to clause 8 of the Bill. On reading the Minister’s second reading speech one would think that every amendment made by the Bill to the Commonwealth Employees’ Furlough Act is an improvement on the existing provision.

Mr Stokes:

– And so it is.


– I will point out to the honourable member that it is not and I will ask him to analyse it.

Mr Stokes:

– I will not analyse it.


– I ask the honourable member now to study clause 8, which amends section 8 of the principal Act. The side heading reads:

Grant of extended leave or pay in lieu to Commonwealth employees not entitled to furlough.

Mr Stokes:

– Is that not an improvement?


– Just a moment. Just be patient and I will show how it is not an improvement. I will then accept the honourable member’s apology. If we analyse the position for each year of service from 8 years to 15 years on retirement or retrenchment we get an interesting result. I draw the attention of the House to clause 8(l.)(b). This relates to years of service and the effect of the amendment is this: If the employee has served for 8, 9 or 10 years, he will be entitled to 3 months long service leave. If he has served for 11 years, he is entitled under existing legislation to 3 months leave. Under the amending Bill he will be entitled to 3 months and 3 / 10ths of a month. That is an improvement. After 12 years he is now entitled under the Act to 4 months but under the amending Bill he will be entitled to 3 months and 6/ 10ths of a month. After 13 years he is now entitled to 4 months, but under the Bill he will be entitled to 3 months and 9/ 10ths of a month. In both instances, the employees lose leave to which they were formerly entitled. Their previously entitlement of 4 months will be reduced by 4/ 10ths of a month in one instance and l/10th of a month in the other.

It is true that the Commonwealth Employees’ Furlough Act is being brought into line with the Public Service Act. But would it not have been better to have brought the Public Service Act in these respects up to the standard that employees enjoyed formerly under the Commonwealth Employees’ Furlough Act? Employees who have served for 14 years are entitled under the existing Act to 4 months leave. Their position will be improved by the Bill, which provides that they receive 4 months and two-tenths of a month. After 15 years they were entitled to 4J months and they will now be entitled under the amending legislation to 41 months. But surely there is no ground for introducing legislation that places employees in a worse position than they were formerly in. I ask the Minister to note this point, because I think it is very important. Clause 8 (1.) (d) refers to the qualifying period for long service leave if the employee’s retirement is due to invalidity. The qualifying period has been reduced from 8 years to 4 years to bring it into line with the provisions of the Public Service Act. This is a good amendment. But let us analyse the result year by year. Again we find that after some years of service a worker can be worse off than he is under the present Act. For example, an employee who has had between 4 and 7 years of service would get nothing under the present legislation, but under the provisions of this Bill he will be entitled to 2 months leave. This is an improvement.

Mr Stokes:

– The honourable member is on my side.


– If the honourable member will just listen he will realise that .1 do not want to mislead the House. I want to point out some anomalies which I believe should be corrected. The honourable member for Maribyrnong should take note of this. I draw attention to the situation of a worker who has had 8, 9 or 10 years of service. Under the existing Act he is entitled to 3 months leave and under this Bill he will still be entitled to 3 months. The worker with 11 years service gets 3 months under the existing provisions but will be entitled to 3 3/ 10ths months under the new provisions, which is an improvement. The worker who has had 12 years service and who at the moment is entitled to 4 months leave will have an entitlement of only 3 6/ 10ths months under the new provisions, so he suffers a reduction of four-tenths of a month in his entitlement. A worker with 13 years service is now entitled to 4 months leave, but under the provisions of this Bill his entitlement will be reduced to 3 9/10ths months. A person with either 12 or 13 years service will find that his entitlement under the amending Bill will be less than it was under the provisions now in force. In those two cases why not leave the entitlement at 4 months and amend the Public Service Act to provide that entitlement? The situation of a worker with 14 years service improves. Honourable members will notice that I am pointing out improvements brought about by this Bill as well as drawing attention to ways in which it falls down. After 14 years service a worker who is now entitled to 4 months will become entitled under the new provisions to 4 2/ 10ths months. A person with 15 years service who is now entitled to 4i months will still have an entitlement of 4± months under the new provisions. 1 should like the Minister to take note of some of these points because when he was introducing the Bill he told us how the conditions for all these workers would improve. I have shown that there will not be an improvement for all workers. I refer now to clause 8 (e) in which provision is made for a person with moTe than 4 years service who has ceased to be a Commonwealth employee because of death or retirement through invalidity. I point out to the Minister that nothing has been done for an employee who may be retrenched. Under the New South Wales legislation workers who are retrenched receive pro rata long service leave after 5 years service. I suggest that a similar provision should be inserted in this Bill. I remind the Minister that it is a well-established principle throughout the States that workers who are retrenched shall receive pro rata leave after 5 years service. In support of this suggestion I refer to Industrial Information Bulletin, Volume 19, No. 12, of December 1964 which refers to amendments to State industrial legislation. The Bulletin states:

The Industrial Conciliation and Arbitration Acts Amendment Act of 1964, assented to on December 23. 1964, makes a number of amendments to the Queensland Industrial Conciliation and Arbitration Acts, 1961 to 1963.

It describes the main amendments and continues:

The long service leave provisions of the Principal Act have been amended to bring the Queensland provisions info line with the Federal Metal Trades (Long Service Leave) Award 1964 and Graphic Arts (Long Service Leave) Award 1964. This follows similar legislative action already taken in New South Wales and Western Australia, and more recently in Tasmania.

The article continues, and this is the important point:

The Amending Act accordingly provides fox employees under State awards in Queensland to become entitled to 13 weeks’ long service leave after 15 years’ continuous service instead of 20 years as previously. It further provides for an employee to become entitled to pro rata leave, on the basis of 13 weeks for 15 years’ service, where employment is terminated after 5 years’ service (instead of 10 years as previously). 1 draw attention to that because I believe it is important that we should know where this Bill falls short of State legislation in the same field. What will be the situation of waterside workers who may be retrenched as a result of amendments to the Stevedoring Industry Act? Many of these workers could be retrenched because they will become redundant. I should like the Minister to explain also what is meant by clause 8 (2) which states:

The amendments made by paragraphs (b) and (d) of the last preceding sub-section do not apply in relation to a Commonwealth employee whose period of service was, at the date on which this Act received the Royal Assent, not less than ten years.

How will this affect the new stevedoring legislation and the men who may be coming to the Commonwealth, for instance, with 9 years service? How will they get on? The present legislation could affect the stevedoring legislation which I understand will shortly be coming before Parliament. I should like the Minister to give attention to what I have said in the last few minutes and 1 should also like to receive some assurance that these matters will be investigated because they are very important indeed and they affect quite a number of employees.

I do not want to say much about the Bill to amend the Public Service Act with respect to certain furlough entitlements because the amendments are mainly consequential to the Commonwealth Employees’ Furlough Bill. When the Minister assisting the Treasurer introduced the Commonwealth Employees’ Furlough Bill he mentioned with respect to new section 3c thai a similar amendment would be required to the Public Service Act. This Bill provides that amendment. The Minister for Immigration (Mr Snedden), who introduced the Public Service Bill (No. 2) 1967, stated:

White the Public Service Act is before the House the opportunity is also being taken to remove a limitation placed on the Public Service Board as to the length of the periods of leave which it may grant to officers of the Commonwealth Service to permit them to perform services for prescribed international organisations or with certain governments.

He pointed out:

At present, leave for this purpose cannot be granted for a period exceeding 3 years.

This Bill enables the period or periods of leave to be extended beyond 3 years. While these Bills arc under consideration, I want to take the opportunity to amend the Commonwealth Employees’ Furlough Act 1943- 1959 and section 73 of the Public Service Act 1922-1967 by deleting the word ‘may’ and inserting .the word ‘shall’. I will explain this matter when I move the amendments. The objective is to bring the Public

Service Act into line with awards of the Commonwealth Conciliation and Arbitration Commission, which has ruled that employees under its awards shall have the right to long service leave after 15 years service, even if dismissed for misconduct. The Public Service Act leaves to the discretion of the Public Service Board whether a Commonwealth public servant is to receive long service leave after 15 years service. The word ‘may’ gives that discretion of the Public Service Board whether an employee could have completed more than 15 years service and if he is dismissed for misconduct he could be deprived of his long service leave. The amendments that we propose will ensure that Commonwealth public servants will have the same right to long service leave as all persons covered by awards of the Commonwealth Conciliation and Arbitration Commission. This furlough provision will be a right after 15 years service regardless of the reason for which a person leaves the service.

I do not want to say any more at this point of time in regard to this matter except to state that we support the legislation because it brings conditions into line with the Public Service Act. I ask the Minister to give serious consideration to the points that I have raised because without doubt some of the employees are losing a certain amount of ground as a result of this amendment and rather than have that standard reduced we feel it would be better to change the Public Service Act. We particularly want the Minister to look at the matter of pro rata leave for workers who may be retrenched because there is a great danger of retrenchment as the result of automation being introduced into quite a number of departments. I leave the matter at that. Mr Speaker.


– In the first instance T wish to compliment the Government on introducing this amending legislation. These are matters in respect of which there have been anomalies and injustices for quite some time. I am pleased that the Government has at last introduced this legislation, which will to a great extent arrange for these matters to be brought into a better light. I think that at his stage I should pay tribute to the work of the honourable member for Blaxland (Mr E. James Harrison). Unfortunately he has not been present in the chamber today. For quite a long time now he has been a campaigner for improvements in the two Acts with which we are dealing tonight. I trust that he is satisfied that the amending legislation now before us covers the points he has raised over the years. The Minister for Air (Mr Howson), in his second reading speech, referred to one particular matter to which 1 wish to address the balance of my remarks tonight. He said:

Unless an employee is granted leave of absence for certain specified purposes, any period of absence from duty exceeding 12 months in a continuous period breaks continuity of service for the purposes of the Act. Under other provisions, an employee who ceases duty due to ill health is nol entitled to furlough benefits unless the ill health is permanent or he has completed at least IS years service. The combined effect of these provisions is that an employee who ceases duly due to ill health which is serious but not permanent after, say, 14 years service has no entitlement to furlough. Should his restoration to health take longer than 12 months, upon subsequent re-employment by the Commonwealth he cun receive no recognition for furlough purposes of his prior service. The Government decided that this state of affairs should not be allowed to continue and accordingly the Bill provides that a break of service exceeding 12 months shall not break continuity of service where an employee ceases duty due to ill health and resumes full-time employment with the Commonwealth or an Authority of the Commonwealth not more than 12 months after his health becomes sufficiently restored to enable him to engage in full-time employment.

This matter is one about which I have made personal representations to the Treasury and I am pleased that the Government has brought down an amendment which corrects an anomaly which has existed under the Act.

I wish now to quote the case of one of my constituents because it is relevant to this debate and was the reason lor my approaching the Treasury. On the 6th December 1963, I referred to the Treasury the matter of an employee of the Department of Supply who commenced duty in July 1938. He contracted pulmonary tuberculosis and was invalided out in July 1952, 14 years after his commencement of service in the department. I wrote to the Treasury and said:

As at that time the methods of treating tuberculosis were not as advanced as they are today, the Commonwealth medical officer recommended that after 12 months the position be reviewed.

His own doctor, within 11 months, said he was fit to resume duty. However, the Commonwealth doctor said that not until 14 or 15 months after could he resume.

The result was that he resumed duty in 1953, 15* months after his original break of service. I wrote to the Treasury and said:

It would appear to me that the action of the Treasury in disregarding 14 years of service prior to the contraction of an illness outside his control is harsh in the extreme.

I understand that this matter was previously referred to the Treasurer in 1958 and the ruling was that, for furlough purposes, service commenced from the resumption of duty. I wrote and said:

I shall be pleased if you will advise me the basis of such a decision and whether there is any possibility of a better deal in a case of this nature.

This respresentation was made by me on 6th December 1963. I was advised of the investigation of this particular matter and other matters by reply from the Treasury on 14th January 1964. I waited, knowing government departments, until 30th April 1964 when I wrote and asked what the present position was. I was advised on 5th May that year that the delay was due to consideration of similar provisions in the Public Service Act. On 8th May I was advised that a submission had been made to the Treasurer that this position be rectified. Nothing happened. On 27th July 1964 I again referred the matter to the Treasury. On 3rd August I was advised that a submission would be made to the Treasurer in the course of that current week. I waited patiently for another 3 months.

On 2nd November the matter was again referred to the Treasury. I was advised on 4th November that the Treasurer proposed to recommend amendments to meet this problem. Nothing happened. On 24th March 1965 I referred the matter again and on 2nd April I was advised that other amendments were being considered and that it was the intention of the Government to seek one amending Bill. I could find no fault with this and I agreed to accept this position. Two months later, on 1st June, I asked whether the amending legislation was likely to be introduced in the next session. On 3rd June I was informed that I would be given this information when Treasury had better knowledge of the timetable. On 8th October 1965 I referred the matter again. In other words, I waited 4 months, from June till 8th October when I referred the matter again. I was told by letter on 12th October that the

Department had no definite knowledge as yet. On 22nd December I referred the matter again and I was advised on 30th December 1965 that the Minister, in reply to the honourable member for Blaxland (Mr E. J. Harrison), had said during December that he hoped to introduce this amending legislation in the autumn session. That would be between March and June 1966.

Mr Duthie:

– And they sent you overseas?


– That is not right. On 6th June 1966 I referred the matter again. On 22nd June I was advised that presentation of the Bill was delayed because of amendments to related provisions in the Public Service Act. The Government hoped that the matter would be resolved in the very near future.

Mr Bowen:

– Come to the point.


– It is all right for the Attorney-General to interject. I will get to the point in my own good time; I do not need help from anybody else. On 22nd June 1966 I was informed that because of related provisions in the Public Service Act further matters had to be resolved. I did not mind this delay. On 5th September, 3 months later, I again referred the matter to the Treasury and sought an assurance that the matter affecting my constituent, which is now covered in this legislation, was included in the proposed amendment. On 8 th September I was advised that the covering submission did include an amendment relating to the particular matter that I had raised. I was very patient; I waited and waited. I heard questions asked by the honourable member for Blaxland and I heard answers given. I waited for approximately 9 months. On 30th May this year I again referred the matter to the Treasury and complained of the 9 months delay, not without a certain amount of reason. In June of this year I received a reply. The reply from the First Assistant Secretary of the Treasury said:

The drafting of a bill incorporating the amendment in which you are interested is nearing finality.

That is a glorious statement. He went on to say:

At one stage it was thought that it would have been possible to introduce the Bill during the last session, but it is now anticipated that the amending legislation will be introduced during the Budget session.

Today is 26th October 1967. The Bill probably will not receive Royal assent until November 1967. I am not concerned about the case of my own constituent, who still has 5 years of service before retirement. My efforts on his behalf have been successful. I am concerned about those people who will not benefit under this amending legislation. I emphasise the point that a few people who have retired during the past 2 or 3 years may have had a break in service. I am concerned that such people will not be covered by the Bill. The principal basis of this amendment was accepted by the Treasurer prior to 4th November 1964. On 30th December 1965 the Treasurer stated in the House that he hoped to introduce this amending legislation in March or June 1966 during the autumn period. Cabinet approval was delayed, as 1 said, because of the consideration of the related provisions in the Public Service Act. In view of all these circumstances I consider that some special provision should be made for these few people I have mentioned who will miss out because of the delay in introducing this legislation. 1 realise as do all honourable members, the difficulty of taking retrospective action, but I ask that consideration be given to making some ex gratia payment to these few people who may be affected by the short fall in pay for furlough under the original Act. Perhaps just a few, a mere handful, who may have been retired in the last 2 or 3 years and may not be able to obtain the benefits which will flow, from this amending legislation. This would not mean much, since only a few people are involved. It would cost only a small amount, but to the individuals concerned it is an important matter. If my suggestion is adopted they will not suffer the disappointment of having missed out. It would also help them to believe that the course of justice does sometimes assist the underprivileged. These people cannot be blamed for the delay in introducing this legislation and they should not be made to suffer the consequences of that delay. As I have endeavoured to show introduction of this amending legislation has been delayed for 2 or 3 years. Even allowing for the decision to introduce one amending bill to cover all the amendments, and even allowing for the complication of dealing with the related provisions under the

Public Service Act, it is no feather in the Government’s cap that it has taken nearly 4 years from the time this inequity was first brought to the attention of the responsible Minister, and accepted in principle, for enabling legislation to be introduced.

I am very pleased indeed, Mr Speaker, to see this legislation introduced. I congratulate the Government and the Treasurer, but I still deplore the delay that has taken place. I hope that my plea for people who have retired in the last 2 or 3 years and who were affected by the former restriction will be heeded and that their cases will be considered. I hope that if those cases are reviewed some ex gratia payment will be made to those concerned to offset their present disadvantage.


– I listened to the speech of the honourable member for Maribyrnong (Mr Stokes) with some amusement and quite a bit of interest. I also listened to the speech of the honourable member for Stirling (Mr Webb). I agree with the honourable member for Maribrynong that if an injustice has been done it should be rectified. The Treasury should have no difficulty in doing this, because for many years there has been a practice of making ex gratia payments in cases where an Act did not quite prescribe for the payment of furlough. I should imagine that if there are any cases of hardship this action could be taken. The Commonwealth Employees’ Furlough Bill has been drafted in order to tidy up the Act which was first introducted in 1943. At that stage furlough or long service leave applied only to permanent officers. Six months furlough was given for each 20 years of service, with a maximum of 12 months over an officer’s lifetime. Proportional benefits were provided for an officer who had to retire because of ill health. In the case of death provision was made for payment to dependants. No such provisions were available for temporary employees. Of course, in earlier years there were very few temporary employees. They were engaged mainly to fill short gaps when permanent officers were not available or to fill positions which were not likely to last for very long.

But following World War I returned soldiers received preference for employment. Consequently people were employed in the Public Service for some years as temporary employees. Many folk who were employed in defence establishments were not really permanent employees although they really had some claim to permanency. Eventually many people with long periods of employment were given some consideration and were made eligible for furlough. That was done in 1943. It was done by the Curtin Government, not by the Chifley Government as has been claimed. Long service leave which was somewhat similar to that provided for permanent officers was introduced for temporary officers.

In the intervening years some anomalies have cropped up. They have become quite apparent. One of the main difficulties in administering the Commonwealth employees’ Furlough Act in past years has been the determination of exactly what employment can be regarded as service for the purpose of determining entitlements. It is quite clear that all Commonwealth service is accepted. But service with some of the Commonwealth instrumentalities was suspect. It was a little difficult to decide whether service with those bodies should bc accepted. Furlough was given in respect of service with the Australian Broadcasting Commission, lt was decided to go back beyond the time of its formation. Service with organisations such as the New South Wales Broadcasting Commission, the Australian Broadcasting Company Ltd, Farmer and Company and the Associated Radio Company, which were later taken over by the ABC, was taken into account for furlough purposes. Employees of Australian National Airways Pty Ltd at its Parafield establishment were taken over by the Division of Aircraft Production and were also included. People who had service with Qantas Empire Airways Ltd prior to it becoming a Commonwealth-owned company were also given furlough.

It was also decided to take into account State service. That was quite all right as far as the government departments were concerned, but problems arose in deciding whether to accept service with bodies such as hospitals in Sydney, the Broken Hill Water Board, the Maritime Services Board, the State Abattoirs at Homebush, the New South Wales Ambulance Transport Service Board and the universities. It was very difficult to say for sure whether some of these instrumentalities in fact were govern ment bodies. Most of these cases had to go to the Attorney-General’s Department for determination. In Victoria there were such bodies as the Geelong Harbour Trust, the Melbourne and Metropolitan Board of Works, the Melbourne and Metropolitan Tramways Board, the Mildura Vineyards Protection Board, the State Savings Bank of Victoria and the Melbourne Zoo. As I have mentioned, in some of these cases Treasury has decided that people who had service with these bodies had to be paid ex gratia payments. There were also difficulties in Queensland, South Australia, Western Australia and Tasmania. One can imagine the difficulty which the administration had in deciding from Canberra whether these bodies should be included for purpose of furlough. Consequently, many cases had to be submitted to the Attorney-General’s Department for legal interpretation.

The honourable member for Stirling was concerned about the delegation of power which he said must be absolute. I should think that the Act would be administered in this way: A temporary employee who decides that he wants to go on furlough will make application in the normal way through his department, and the department will either directly grant him the furlough or refer the application to the Public Service inspector. I am quite sure that in these days the Public Service Board has decentralised its activities to a sufficient extent to be able to delegate the power of granting furlough to either the department or the Public Service inspector involved. I am very pleased to see that the Act will be administered by the Public Service Board and not by the Treasury. The Board already administers the Public Service Act and issues certificates for the granting of furlough to permanent staff. As this furlough provision in the Commonwealth Employees’ Furlough Act will follow very closely the Furlough provision of the Public Service Act, the Public Service Board is the best body to decide these matters.

The honourable member for Stirling has gone very thoroughly into the Commonwealth Employees’ Furlough Act. He has picked up a few minor points, but generally speaking, I should say, the new Act will be a big improvement on the existing Act. The original Act has been tidied up considerably. I support the Bill. I am very glad, particularly for the sake of the honourable member for Maribyrnong, that the Act is at last to be tidied up.


– I do not propose to speak at any great length. 1 agree with the remarks of the honourable member for Lalor (Mr Lee), particularly those relating to local government. The honourable member for Stirling (Mr Webb) referred to various organisations which are seeking to create better and more liberal conditions for certain groups of employees, which is the purpose of this Bill. In common with all honourable members in this House, I believe that the application of the Commonwealth Employees’ Furlough Act to employees of the parliamentary departments, particularly to temporary employees who seem to drift into the limbo of forgotten people, is a very gratifying move. In view of the double page advertisements concerning air hostesses which have appeared in newspapers in the last couple of days, it is gratifying to see that air hostesses are to be covered by this legislation. Up to now they have not been able to obtain the full 15 years service which would entitle them to the full furlough concession.

I feel sure I will be forgiven if I draw the attention of the House to certain difficulties which exist at the present time regarding concessions which have been granted to people in the inland area of Queensland. 1 am sure that honourable members will not take very much convincing that people who work in remote areas under difficult climatic conditions can find life very trying and should not be subjected to unnecessary financial stress. I am equally sure that honourable members will agree that people who work in underground mines are entitled to the best possible concessions that the industry in which they work can afford and ls efficiently organised to grant. Recently a few of the major companies have decided to grant to their employees a concession that is greatly appreciated and is also enjoyed by Commonwealth public servants In the Northern Territory. T refer to the periodical granting of air fares. However, the benefit of the concession is being reduced because it is subject to additional taxation.

I have placed before the Treasurer (Mr McMahon), a case on behalf of employees of Mount Isa Mines Ltd. I was approached by an executive of one of the unions involved at Mount Isa and this led to general agitation, if I may put it that way, to secure the full advantage of the benefit of the granting of air fares by this private company. There has been great turbulence in the industrial sphere at Mount Isa. I am happy to say that this is now part of the history of the town. I am completely convinced that the present industrial climate of Mount Isa is the best that it has ever been. Indications are that it will continue. A union executive who discussed this matter with me told me that to a man with a wife and two children the total value of the air fares concession was about $318. In other words that is the total cost of their air fares from Mount Isa to Brisbane and return. Of that amount he has to pay about $114 in tax. In other words he loses about 35% of this most valuable concession.

This matter concerns not only th: Treasurer but also the Minister for National Development (Mr Fairbairn). Without contented people in the outback areas the ingredients and machinery of development will be most ineffective. It is extremely difficult to keep people in the remote areas. Honourable members who represent inland northern electorates seek at all times an overall solution to the problem of inducing people - particularly key personnel who are extremely difficult to replace - to continue working efficiently in a contented atmosphere in the outback areas. I am not speaking primarily on behalf of a particular company. I believe that the air fares concession will become fairly general for employees of large organisations. We hope that eventually the concession will be granted to most people who work in outback areas. Here the Government has a chance to play its part. We are told that at present there is considerable doubt about the constitutional machinery by which increased zone allowances and similar benefits could be given. Here is a great opportunity for the Government to grant to people in remote areas a concession which would be of very real value and which would contribute to continued industrial peace and contentment in those areas. I am pleased to have been able to use the opportunity afforded by the debate on the two measures now before us to direct attention to a concession that would be of vital importance to the area that I represent, to the industries operating there, to the progress of the region, to the maintenance of a contented industrial atmosphere there and to the development of all remote northern and inland parts of Australia.

Minister for Civil Aviation · Darling Downs · LP

Mr Speaker, the honourable member for Kennedy (Mr Katter) raised some very interesting points. Though they have no direct relation to the two Bills now before the House, I shall certainly see that they are investigated and that his suggestions are considered. Without going into details, I just want to mention that these two measures will improve the overall situation in relation to employment conditions in the Public Service. The honourable member for Stirling (Mr Webb) asked for information on a number of matters. I believe that they can be dealt with more adequately at the Committee stage when the amendments that he has foreshadowed are being considered. The furlough entitlements provided for in the Commonwealth Employees’ Furlough Bill are in line with benefits that were provided for in the Public Service Act last year. The Commonwealth Employees’ Furlough Act provides for the furlough entitlement of those employees who do not derive their entitlement from the furlough provisions in the Public Service Act. The amendments to that Act last year followed lengthy consultations between representatives of the Public Service Board and various employees organisations. These measures, in addition to extending and consolidating the range of benefits, will simplify general administration. They provide for a common administering authority - the Public Service Board. I think it is generally acknowledged that the system will work more satisfactorily on that basis.

Mr Webb:

– Will the Minister have the anomalies in relation to clause 8 of the Commonwealth Employees’ Furlough Bill looked at?


– Yes. The points that have been mentioned will be looked into. As I have said, I do not want to go into detail at this stage, because most of the matters that were raised by the honourable member can be better dealt with when the amendments that he has foreshadowed are being considered in Committee. He and the honourable member for Maribyrnong (Mr Stokes) referred to certain delays in bringing these amending measures forward. As I have said, the Commonwealth Employees’ Furlough Bill will bring the provisions in the Commonwealth Employees’ Furlough Act into line with those in the Public Service Act as amended last year and will provide for a common administering authority. However, I think we all should appreciate that matters such as these are not simple of solution. Negotiations have proceeded over a long period between representatives of the Public Service Board, the Department of the Treasury and various employee organisations. The delay that these protracted negotiations have caused is regretted, but it has not been possible to introduce these measures any earlier. I am aware that the honourable member for Maribyrnong was referring to one specific case. I understand that the person concerned has been re-employed in the Commonwealth Public Service. If he is still employed in the Public Service when this legislation is passed, he will be covered by its provisions. That may resolve the particular problem that the honourable member has in mind. However, it is not my intention to deal with many of these matters in detail. I shall have to refer to one or two items when the amendments which were foreshadowed are brought forward.

Question resolved in the affirmative.

Bill read a second time.

In Committee

The Bill.


– I seek leave to move together two amendments. The first of these relates to clause 4 which reads, in part:

After section 3 of the Principal Act the following sections are inserted: - “ 3a. Subject to the regulations made in accordance with the next succeeding section, a reference in this Act. to an authority of a State shall be read as a reference to a public authority, not being a local governing body, constituted under the law of a State for the purpose of discharging, subject to the direction or control of a Minister of State for the State, functions within the province of the Government of the State.

The second relates to clause 6, which reads, in part:

Section 6 of the Principal Act is amended - (a) by adding at the end of paragraph (b) of sub-section (3.) the word “ or “;

The CHAIRMAN (Mr Lucock:

– There being no objection, leave is granted.


– I move:

  1. la clause 4, proposed section 3a, omit ‘not being’, insert ‘including’.
  2. In clause 6, before paragraph (a) insert the following paragraph: “ (aa) by inserting in paragraph (b) of subsection (1.), after the word ‘State’, the words ‘ , including a local governing body ‘.”

The Minister mentioned that an important amendment was the repeal of a provision that imposed a limitation on the amount of prior service with a State or an authority of a State which may be counted for furlough purposes. We believe that an employee of a local governing body who transfers to the Commonwealth from such a body should have his service with it counted for furlough purposes. Why should he be treated any differently from an employee of a State or a State instrumentality? Some very capable people work for local governing bodies. If they were to transfer to the Commonwealth they could be of value. I should imagine that before a person who was working for a local governing authority transferred he would have a look at this position and it might make the difference as to whether or not the Commonwealth got his services. Men with very high qualifications are working for these authorities and H would be of advantage to the Commonwealth if it could get their services in some of the instrumentalities that are run by the Commonwealth. I have already dealt with this matter in the second reading debate and I do not think there is anything further to say.

Minister for Civil Aviation · Darling Downs · LP

– For a number of very specific reasons, the Government cannot accept the amendments which have been proposed. The general question of recognition of service with local governing authorities has been considered on a number of occasions in the past. To be recognised under section 47e of the Public Service Act a local governing body would need to come within the definition of an authority. The legal opinion is quite conclusive that these bodies are not authorities of the Commonwealth or of a State or Territory. For a number of reasons, including the historical relationship between the Commonwealth and the State Public Services, the Commonwealth has seen fit in both the Public Service Act and the Commonwealth Employees’ Furlough Act to recognise for furlough purposes only prior service with a State or an authority of a State. So for these particular reasons, which now are quite historic in their effect, the Government cannot accept these amendments.

Question put:

That the amendments (Mr Webb’s) be agreed to.

The Committee divided. (The Chairman - Mr P. E. Lucock)

AYES: 27

NOES: 59

Majority 32



Question so resolved in the negative.


- Mr Chairman, my next amendment relates to clause 7. This clause reads:

Section 7 of the Principal Act is amended by omitting from sub-section (2.) the words “ the salary for a period of leave not exceeding that which the employee could have been granted under sub-section (1.) of this section” and inserting in their stead the words “his salary for a period not exceeding the period, or the sum of the periods, of leave on full salary that could have been granted to the employee under subsection (1.) of this section if he had not ceased to be an employee”.

I move:

Omit the clause, insert the following clause: “7. Section 7 of the Principal Act is amended -

by omitting from sub-section (1.) the word ‘may’ and inserting in its stead the word ‘shall’;

by omitting from sub-section (2.) the word ‘may’ and inserting in its stead the word ‘shall’; and

by omitting from sub-section (2.) the words ‘the salary for a period of leave not exceeding that which the employee could have been granted under sub-section (1.) of this section’ and inserting in their stead the words ‘his salary for a period not exceeding the period, or the sum of the periods, of leave on full salary that could have been granted to the employee under sub-section (1.) of this section if he had not ceased to be an employee’.”.

The amendment that is proposed on this occasion is consistent with the amendment moved by the Leader of the Opposition (Mr Whitlam) in 1966, when he was Deputy Leader of the Opposition, to the Public Service Act which was then being debated. If this amendment is carried, it will make it obligatory on the Public Service Board to grant long service leave after 15 years service. On 11 May 1964, the Commonwealth Conciliation and Arbitration Commission gave two decisions affecting the metal trades industry and the print ing industry. In its decisions, the Commonwealth Conciliation and Arbitration Commission dealt with the qualifying periods for long service leave, pro rata payments, and the effect of misconduct. In one passage of its judgment, the Commission said:

An employee who has completed 10 but not 15 years’ service and whose employment is terminated by death or by the employer for any cause other than serious and wilful misconduct, or by the employee on account of illness, incapacity or domestic or other pressing necessity will be entitled to pro rata payment.

The judgment goes on:

An employee who has completed 15 years’ service and whose employment is terminated or ceases for any reason will be entitled to pro rata payment.

This Bill in fact overrides the decision of the Commission because under the award granted by the Commission it would not matter for what reason a person ceased employment after 15 years’ service because he would get his long service leave as a right. This Bill says that he may get it. It leaves the matter to the discretion of the Public Service Board.

If a public servant is dismissed after 15 years’ service his furlough depends upon the discretion of the Board. As a result, members of the Commonwealth Public Service are disadvantaged as compared with all other workers covered by awards of the Commonwealth Conciliation and Arbitration Commission. Employees under those awards receive long service leave, as I say, as a right under this Bill. But public servants receive it at the discretion of the Board if they leave the Public Service for any reason after 15 years’ service. I do not want to pursue the matter further except to say that we will move a similar amendment to the Public Service Bill when it is before us. Because it will be the same as the amendment now before the Committee, there will be no need for me to speak regarding it.

Minister for Civil Aviation · Darling Downs · LP

– As the honourable member for Stirling (Mr Webb) has stated, the effect of the proposed amendment - I take it we are considering paragraphs (a), (b) and (c) together - is to make it obligatory to grant furlough to an officer who has been employed for 15 years instead of this being granted at the discretion of the approving authority. As I mentioned earlier, when the Public Service Act was amended last year the Opposition proposed an amendment in similar terms to the one now before us. It was considered very carefully on that occasion and was not accepted by the Government. The reasons were stated quite clearly then. For the same reasons the proposed amendment is not acceptable to the Government now. Those remarks apply to paragraphs (a) and (b). The proposal contained in paragraph (c) has already been included in the Bill.

Question put:

That the clause proposed to be omitted (Mr Webb’s amendment) stand part of the Bill.

The Committee divided. (The Chairman-

AYES: 59


Majority 31



Question so resolved in the affirmative. Bill agreed to.

Bill reported without amendment; report adopted.

Third Reading

Bill (on moi ion by Mr Swartz) - by leave -read a third time.

PUBLIC SERVICE BILL (No. 2) 1967 Second Reading

Consideration resumed from 18 October (vide page 1992), on motion by Mr Snedden:

That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time.

In Committee

The Bill.

Proposed new clause 4a.


– 1 move:

That the following new clause be inserted in the Bill: “4a. Section 73 of the Principal Act is amended -

by omitting from sub-section (1.) the word may’ and inserting in its stead the word shall’.”; and

by omitting from sub-section (2.) the word may’ and inserting in its stead the word shall’.”.

The purpose of the amendment is the same as that of the amendment I moved to the Commonwealth Employees’ Furlough Bill so I will not advance any further argument on it.

Minister for Civil Aviation · Darling Downs · LP

– The existing powers have been discretionary since the original Public Service Act of 1902. The matter referred to in the proposed amendment has been considered by the Joint Council, which is an employer-employee advisory body and includes representatives of the High Council of the Public Service organisations and the Amalgamated Postal Workers Union. The matter has been considered by the Joint Council on a number of occasions. In fact, all relevant matters were considered by this body as late as 1963 and it was decided that no further action should be taken at that time. In view of this and for other reasons advanced during the debate on the Commonwealth Employees’ Furlough Bill the Government cannot accept the amendment.

Proposed new clause negatived.

Bill agreed to.

Bill reported without amendment; report adopted.

Third Reading

Bill (on morion by Mr Swartz) - by leave - read a third time.

page 2294


Mir SNEDDEN (Bruce- Minister for Immigration) - On Tuesday the Prime Minister (Mr Harold Holt), in the course of a statement by leave about Squadron 34 of the Royal Australian Air Force, indicated that at a later point of time he would table in the House answers to questions which would be made available that day in the Senate but that as a matter of courtesy to the Senate he would not table the answers until they had been tabled in the Senate. The answers were not tabled in the Senate on Tuesday because of the death of Senator Hannaford. The answers were provided earlier today, Wednesday and I now table them for the information of honourable members.

House adjourned at 1.43 a.m. (Thursday).

page 2295


The following answers to questions upon notice were circulated:

Aboriginals - Mortality Rate (Question No. 452)

Mr Collard:

asked the Minister for Health, upon notice:

  1. What is the estimated birth mortality rate amongst Aboriginals in (a) Western Australia, (b) Queensland, (c) the Northern Territory?
  2. Is the mortality rate substantially higher in some areas of Western Australia than in others? If so, in which areas, and to what extent?
  3. What action is currently being taken by his Department to reduce the mortality rate of Aboriginals in Australia?
Dr Forbes:

– The answers to the honourable member’s questions are as follows: 1 and 2. At present, the Commonwealth has no statistical information which would enable me to answer those parts of the honourable member’s question which relate to Western Australia and Queensland.

With regard to the Northern Territory, my Department maintains records concerning Aboriginal infant deaths at the four hospitals in the Territory which my Department administers; the following figures are provided in respect of the year ended 30th June 1967:

In addition to these figures, the Department of Territories recently provided details of the total numbers of births of Aboriginals and the total numbers of deaths of Aboriginals under the age of 12 months, occurring on missions, settlements and pastoral properties during the years 1965 and 1966. These figures are as follows:

  1. The Commonwealth Department of Health is directly responsible only for the health of Aboriginals living in the Northern Territory, and provides a full range of health services in that area. It makes a four-fold attack on the problem of infant mortality using research, education, prevention and treatment.

A research team under Professor G. M. Maxwell, Professor of Child Health at the University of Adelaide, regularly visits the Northern Territory in an effort to solve the basic problem of malnutrition amongst Aboriginals. Regular visits are also paid by Dr F. W. A. Clements of the Institute of Child Health in Sydney, accompanied by an anthropologist, to devise methods of both educating the Aboriginals in health affairs and controlling the problems of nutrition in the northern part of the area.

In relation to preventive measures, the Department is extending a staff of health survey nurses to a number of isolated areas to control the hygiene of the native domestic life and to teach the Aboriginals elementary hygiene. At the same time, Health Inspectors of the Department visit all missions, settlements and stations for the same purpose.

The Medical Officers of the Department visit all missions and settlements and many stations to treat the sick. Additionally, of course, missions and settlements are in contact with the medical centres by radio so that cases of sickness can receive early medical advice and treatment. Every effort is made to encourage Aboriginal women to have their babies under the supervision of trained nursing or medical care.

Sugar (Question No. 454)

Dr Patterson:

asked the Minister for Trade and Industry, upon notice:

Is it a fact that over the duration of the last two International Sugar Agreements no firm guaranteed minimum floor price existed, and during this period the actual world free price of sugar was below the hoped for minimum floor price target for approximately 50% of the total time?

Mr McEwen:
Minister for Trade and Industry · MURRAY, VICTORIA · CP

– The answer to the honourable member’s question is as follows:

The world sugar price was below the minimum prices specified in the International Sugar Agreements of 1953 and 1958 for considerable periods of time. However, these Agreements did not make provisions for a ‘guaranteed’ minimum floor price. The maximum and minimum prices specified in the Agreements could best be described as objectives rather than guarantees.

Papuan and New Guinean Students in Australia (Question No. 578)

Mr Hayden:

asked the Minister for

Territories, upon notice:

  1. How many (a) male and (b) female students from the Territory of Papua and New Guinea attended secondary schools in Australia during each of the past five years?
  2. Is it intended in the future to maintain or to decrease the number of these students attending Australian secondary schools?
  3. If it is intended to decrease the number will he state why?
  4. Is due consideration given to the benefits the pupils from the Territory obtain from attending an Australian secondary school operating in a developed, sophisticated society?
Mr Barnes:
Minister for Territories · MCPHERSON, QUEENSLAND · CP

– The answers to the honourable member’s questions are as follows:

  1. The following is a table setting out the number of Administration sponsored indigenous students at secondary level in Australia over the period 1963-1967. In addition, there has been an unknown number of privately sponsored indigenous students studying in Australia each year:
Mr Hayden:

asked the Minister for

External Affairs, upon notice:

  1. Is he able to say whether Britain and France have accepted injured Vietnamese children into their countries for specialist plastic surgery for serious body burns caused by war injuries?
  2. If so, what number of children was accepted for treatment in each country, and in which years were they accepted?
  3. Are there children remaining in Vietnam who are in need of similar specialist treatment? If so, what is the known or estimated number?
  4. Is this specialist treatment available in Vietnam for civilians, or if available, is it inadequate to meet demands?
  5. Will he immediately arrange for Australia to accept these children, or at least some of them, for specialist medical treatment?
Mr Hayden:

asked the Minister for the

Interior, upon notice:

  1. Did his Department recently lease a building in the central city area of Brisbane?
  2. If so, what is the period of the lease, and what rental is being paid per year?
  3. Can he say what was the capital cost of the building?
Mr Webb:

asked the Minister for Health, upon notice:

  1. Has his attention been drawn to a report by Sir John Walsh, Dean of the Dental Faculty at New Zealand’s Otago University, that the incidence of teeth lost by the age of fifteen was fourteen times higher in Australia than in New Zealand?
  2. What action is proposed to improve the dental health of Australian children?

page 2296


Note - The figures shown represent the total number of students in Australia each year under Administration sponsorship. 2 and 3.It is expected that a Subsidy/ Sponsorship Scheme introduced in 1967 will maintain and possibly increase the number of indigenous students who are at present supported in Australia by the Administration. I am not in a position to comment on whether privately sponsored students will increase or decrease.

Vietnamese Children: Specialist Medical Treatment (Question No. 595)

Mr Hasluck:

– The answers to the honourable member’s questions are as follows: 1 and 2. Two Vietnamese children suffering from body burns, not necessarily caused by war injuries, entered Britain for treatment by plastic surgery in each of the years 1966 and 1967. The French authorities have no record of any Vietnamese children suffering from burns, however caused, entering France for plastic surgery. 3 and 4. No figures can be given confidently, but the Vietnamese and American authorities have assessed that at any one time there would be fewer than forty children in Vietnam who could benefit from reconstruction surgery for the treatment of body burns. The Vietnam authorities are taking action to set up a reconstruction surgery unit with the capacity to treat up to forty patients.

  1. In view of the above, it is not considered that Australia would make its best contribution to relief in Vietnam by arranging for children to undergo treatment in Australia. In any event it should be kept in mind that Vietnamese, families are usually no more willing than anyone else to let injured children leave the country for treatment. It is preferable that treatment should be undertaken in Vietnam rather than in Australia or other countries, in the environment and with the family associations where the children would feel most at home and at ease.

Department of the Interior (Question No. 598)

Mr Nixon:

– The answers to the honourable member’s questions are as follows:

  1. The Executive Council under the provisions of the Lands Acquisition Act 1955-1966 recently approved the tease of a building in the central city area of Brisbane, forthe purpose of office accommodation for units of several Commonwealth Departments.
  2. The lease is for 10 years at a rental of $441,000 « year after the first year. A reduced rental is payable during the first year pending full occupancy.
  3. No, this information has not been made available by the owner.

Dental Health (Question No. till)

Dr Forbes:

– The answers to the honourable member’s questions are as follows:

  1. I have seen Press reports that a statement to this effect was made by Sir John Walsh. T am not aware of the statistical basis used by him in making this statement.
  2. The best long-term prospects of improving the dental health of Australian children lie in the fluoridation of water supplies, combined with the extension of school dental services.

Fluoridation of water supplies, which is primarily a State or local government responsibility, has been recommended by the National Health and Medical Research Council. Although only a relatively small percentage of our papulation at present uses fluoridated water, the percentage is steadily increasing. The Canberra water supply, for which the Commonwealth Government is responsible, is fluoridated.

School dental services have traditionally been accepted es a responsibility of State governments. Some States have relatively well advanced services and plans for the employment of specially trained school dental nurses. These nurses will perform routine dental examination and treatment of school children, along lines similar to the system which has operated successfully in New Zealand for many years. The Commonwealth Department of Health has decided to employ school dental nurses in the Australian Capital Territory, and is actively planning for this.

Education: Teacher Training (Question No. 620)

Mr Hayden:

asked the Minister representing the Minister for Education and Science, upon notice:

  1. In which States does an in-service training scheme for State school teachers operate?
  2. When did the scheme commence in each of these States?
  3. How many teachers in each State have participated in the scheme in each year since iti inception?
  4. What is the period of in-service training in each State?
  5. In respect of each State can he state whether the training scheme is undertaken at the teacher’s school of employment, at a centre, or elsewhere, and can he give brief details of the training provided?
Dr Forbes:

– The answers to the honourable member’s questions are as follows:

These are not matters which fall within the responsibility of the Commonwealth Department of Education and Science and the information provided below is information 1 believe .o be true but for the accuracy of which I am unable to assume responsibility.

In-service training of State school teachers is carried out in all States, but there is a considerable range of activity covered by the term in-service training’. It includes, for example, conferences, seminars, workshops, lecture courses and correspondence courses. Besides the courses provided by the Education Departments, in-service courses are also offered by other organisations including universities and associations of subject teachers.

Some form of in-service training has been carried on in the States for many years but dates for the commencement of the various types of training are not available.

Generally, detailed statistics have not been maintained. The information available is as follows:

New South Wales: During 1964, 3,276 teachers from State and non-State schools attended post-college courses of 4 to 5 days’ duration.

South Australia: In 1966” approximately 7,500 places were made available in in-service conferences.

Western Australia: In 1965 more than 2,400 State School teachers attended in-service courses.

Tasmania: During 1966 more than 2,100 State school teachers attended in-service courses.

The period of in-service training depends on the type of course. Conferences and seminars may be only half a day or several days in duration, residential courses are usually 3 to 5 days in length, and part-time lecture or correspondence courses extend over an academic year or longer. The pattern is similar for all States.

The following summary for each State sets out the information available on the venue for in-service training and details of the training provided.

page 2297



Courses are held at the In-Service Courses Centre; in schools that are conveniently situated to serve a particular area; and at teachers’ colleges, universities and university colleges.

In-Service Training Activities

page 2298



The places where courses are held include centrally located schools, teachers’ colleges, universities and a camp school.

In-Service Training Activities

Min Group conferences arranged by district inspectors in school time.

page 2298



Courses are held in centrally located schools, at Townsville University College, Kelvin Grove Teachers’ College and the agricultural college.

In-Service Training Activities

page 2298



In-Service training courses are held at Raywood In-Service Conference Centre and at local schools.

In-Service Training Activities

page 2299



Courses are held at either the In-Service centre or at centrally located schools in the metropolitan area or country districts.

In-Service Training Activities

page 2299



Courses are held at the Education Department Advanced Training Centre.

In-Service Training Activities

Colleges of Advanced Education (Question No. 627)

Mr Hayden:

asked the Minister representing the Minister for Education and Science, upon notice:

  1. Has any consideration been given to the establishment of a tertiary college at Ipswich, Queensland?
  2. If so, can the Minister say when such a college will be established, what disciplines will be included in its curricula, and what priority rating for the establishment of such a college Ipswich will have in relation to other centres?
  3. If no consideration has been given to the establishment of a tertiary college at Ipswich, will the Minister arrange for this to be done immediately?
Dr Forbes:

– The answers to the honourable member’s questions are as follows:

  1. This is a matter for the Government of Queensland.
  2. See answer to 1.
  3. Commonwealth assistance to colleges of advanced education is determined after consideration by the Commonwealth Advisory Committee on Advanced Education of submissions made by the States. The Commonwealth does not tell a State where, or when, it must develop colleges. The next submissions for colleges of advance i education will concern the 1970-1972 triennium and should be received by the Commonweath in late 1968 or early 1969. During the present triennium the Commonwealth is providing $188,140 in recurrent grants and $90,000 in capital grants (towards the erection of residential accommodation) for the development of the Queensland Agricultural College, Lawes (Gatton) near Ipswich; this College has also received under the Commonwealth’s scheme of unmatched technical training grants the following payments:

VIP Aircraft (Question No. 668)

Mr Hayden:

asked the Prime Minister, upon notice:

  1. What aircraft comprise the VIP Bight at the present time?
  2. What was the cost of each of these aircraft, and when were they purchased?
  3. What aircraft are on order for the VIP flight, and when will they become operational?
  4. What is the cost of each of these aircraft?
  5. What interior accommodation fittings have been installed in each of the aircraft, and what was the cost of the fittings in each case?
  6. What is the commercial passenger rated carrying capacity of each of the aircraft comprising, or on order for, the VIP flight?
Mr Harold Holt:

– The answers to the honourable member’s questions are as follows:

  1. The VIP flight at the present time comprises the following aircraft:

    1. 2 Metropolitan
    2. 2 Viscount
    3. 2 HS748
    4. 3 Mystere 20. 2. (a) The two Metropolitan aircraft were ordered in February 1956. The flyaway cost of one aircraft was $.790m and of the other $.804m. The total cost of the project including support was $2.194m.
    5. The two Viscount aircraft were ordered in July and August 1964. These were both second-hand aircraft. The flyaway cost of one aircraft was $.975m and of the other $t.I91m. The total project cost including support was $2.71 8m.
    6. The HS748 aircraft were ordered in April 1966. The flyaway cost of the two aircraft is $2.530m. The total estimated cost of the project including support is $4.400m.
    7. The Mystere aircraft were ordered in June 1966. The flyaway cost of the three aircraft is $3. 444m and the estimated total project cost including support is $6m.
  2. Two BACIII aircraft are on order for the VIP flight. Delivery of these aircraft is expected in December 1967 and January 1968, and they will become operational by March 1968.
  3. The flyaway cost of each aircraft is $3.744m, and the estimated total project cost including support is $ 1 1.200m.
  4. The internal configurations of the Mystere 20, HS748 and BACIII are made up from combinations of basic furnishings. The costs associated with the VIP interior fitments are included in ‘ the flyaway costs of the aircraft.
  5. The passenger capacities of commercial aircraft vary depending upon the class configurations. However, normal commercial configurations would provide for:

BACIII - 65 passengers, 16 first and 49 tourist; HS748- 40 economy class passengers or 16 first and 20 tourist; Mystere - There is no commercial configuration as the aircraft is sold as an executive transport; Viscount - 63 passengers, 28 first and 35 tourist; and

Metropolitan (Convair) - 40 passengers.

Cite as: Australia, House of Representatives, Debates, 25 October 1967, viewed 22 October 2017, <>.