House of Representatives
5 March 1969

26th Parliament · 2nd Session

  1. House of Representatives
  2. 26th Parliament
  3. 1969

Mr ACTING SPEAKER (Mr Lucock) took the chair at 2.30 p.m., and read prayers.

page 385

KANGAROOS

Petitions

Mr STOKES presented a petition from certain residents of Victoria showing that Australia’s largest marsupial, the kangaroo, is near extinction because of shooting, for commercial purposes, throughout Australia; laws to protect the kangaroo are inadequate; the number of men employed to enforce the law is completely inadequate to patrol the vast areas.

The petitioners pray that the exporting of all kangaroo meat be banned throughout Australia; the sale of all articles made of kangaroo hide or fur be banned throughout Australia; the number of men to enforce the laws on kangaroo shooting be increased throughout Australia; the shooting of all kangaroos be banned throughout Australia; the Government establish a Commonwealth department to preserve wildlife on a national basis.

Petition received and read.

Mr KEVIN CAIRNS presented a petition from certain residents of the State of Queensland showing that kangaroos, particularly the red kangaroo, the largest marsupial in the world has, through shooting for commerce, been seriously depleted in numbers and could face extinction if moves are not made to ensure his survival.

This State has insufficient officers to enforce effectively any legislation designed to protect native fauna in general. In the majority of cases conservation of kangaroos is left to the discretion of landholders, many of whom are prejudiced against any type of herbivorous native animal, and most of whom are ignorant of kangaroo ecology and latest scientific research which dispels widely held theories that kangaroos are the graziers’ great enemy. The kangaroo is Australia’s best-known tourist attraction and alive, as such, offers Australia a lasting economic asset.

The petitioners pray that the House will ban the shooting of kangaroos for commercial purposes; ban the export of products made from kangaroos; establish a Commonwealth Government body to co-ordinate, establish and administer laws concerning the protection, and when necessary, destruction of native fauna, by persons educated for that role, on a national basis.

Petition received.

Mr STOKES presented a petition from certain residents of the State of Victoria showing that they are distressed and deeply concerned with the diminution of all species of kangaroo due to the continued slaughter of these animals for commercial purposes.

The petitioners pray that a complete ban may be placed on the shooting and/or trapping of kangaroos for commercial purposes.

Petition received.

page 385

QUESTION

BURDEKIN DAM

Dr PATTERSON:
DAWSON, QUEENSLAND

– I preface my question, which is directed to the Minister for National Development, by saying that last year a decision was made by the Government to make an evaluation of Burdekin River proposals. Is the Minister aware that in 1948-49 the Federal Labor Government and the Queensland Government of the time placed the development of the Burdekin River as the No. 1 priority in Queensland, to the degree that the then Leader of the Australian Country Party, Sir Arthur Fadden, promised in his policy speech that a Menzies-Fadden Government would build the Burdekin Dam immediately. In view of these promises made during the last 19 years, and in view of the decision taken last year, when will this long awaited evaluation take place?

Mr FAIRBAIRN:
Minister for National Development · FARRER, NEW SOUTH WALES · LP

– Engineers from the Snowy Mountains Hydro-electric Authority are doing some work in the Burdekin Basin for the Queensland Government. The Commonwealth has announced that when these people have completed their work on the Bowen-Broken Basin, which feeds into the Burdekin, they will be available, if the Queensland Government so requires, for use in assessing a possible major Burdekin scheme but without any commitment of any sort on the part of the Commonwealth Government. So far as works in Queensland are concerned the honourable member will realise that when the Queensland Government approached the Commonwealth for funds it named the Emerald irrigation scheme as the No. 1 project. The Commonwealth has since agreed to make available on a complete grant basis $20m for this work, and this is proceeding.

page 386

QUESTION

SHIPPING

Mr HAWORTH:
ISAACS, VICTORIA

– I ask the Minister for Shipping and Transport a question. I refer to restrictions placed on foreign shipping lines carrying interstate passengers on the Australian coast. Last year the Department of Shipping and Transport promised to review the interstate regulations under which foreign shipping companies or carriers require a permit to pick up coastal passengers. This announcement followed an occasion when the law was invoked against European shipping lines to prevent an overseas ship from carrying passengers between Sydney and Melbourne because- an Australian company passenger cargo vessel was sailing on the same route within three days. Will the Minister say whether it is the Government’s intention to liberalise this law, as it is a bar to the promotion of passenger coastal trade and against the interests of the tourist industry?

Mr SINCLAIR:
Minister Assisting the Minister for Trade and Industry · NEW ENGLAND, NEW SOUTH WALES · CP

– We know full well the honourable member’s concern, and that of the tourist industry, that adequate shipping facilities should be available for the movement of people around the Australian coast. On 3rd February last some slight modification was made to the existing pattern of notification of sailing dates of overseas vessels. In particular, notification of intended scheduled sailings for the issue of voyage permits is now permitted 12 months in advance. So there is now a greater capacity for the taking of bookings around the coast in that if there is up to 12 months advance notice of sailing dates the nonBritish ships and the British ships will be able to book passengers to a greater extent than they were under the former more restrictive administrative pattern. It is also true that a number of Australian vessels operate around the coast. These have preference in picking up passengers. To date it has been thought desirable that they should be entitled to retain this preference. Since the honourable gentleman has raised this issue I will undertake to look into it again, bearing in mind the necessity to provide adequate shipping space for the tourist industry and the protection of Australian interests. It will be necessary to reconcile these two interests in order to determine the extent to which further administrative flexibility might be introduced into the present arrangements.

page 386

QUESTION

RESIGNATION OF TRADE OFFICER

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I ask the Minister for Trade and Industry a question. The right honourable gentleman will know that yesterday in another place in answer to a question on notice about the resignation of a Mr James O’Brien from the Department of Customs and Excise following inquiries into false import documents, the Minister for Customs and Excise gave a prepared reply in which he said that the question possibly referred to a Mr J. F. O’Brien who had resigned from the right honourable gentleman’s Department in September last. He will also know that the Minister who represents him in another place promised to direct to the right honourable gentleman other questions about Mr J. F. O’Brien. I now ask: Before this officer resigned were investigations held into allegations that he or other officers had forged by-law applications or other import documents? Has any money been recovered from importers as a result of these investigations? Have any proceedings been taken under the Public Service Act or the criminal law against Mr O’Brien or other officers of his Department following these investigations?

Mr McEWEN:
Deputy Prime Minister · MURRAY, VICTORIA · CP

– If the Leader of the Opposition puts his question on the notice paper I will provide him with a full, correct and very prompt reply.

page 386

QUESTION

TECHNOLOGICAL CHANGES

Mr PEACOCK:
KOOYONG, VICTORIA

– My question is directed to the Minister for Labour and National Service. I refer him to a pamphlet issued by the Department of Labour and National Service on technological changes in Australia, which outlines the research programme of the technological change section of the Department. I ask: Firstly, has any study been made of the retraining needs of labour which is made redundant by technological changes? Secondly, what progress has been made in gaining acceptance of and agreement on the need for adult training?

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

– A considerable amount of study has been done on this subject. It has been found that a good deal of retraining has been conducted within individual firms and industries, particularly for clerical work. The introduction of computers has involved the retraining of a considerable number of clerical workers. The Government is conscious that Australia is somewhat behind in this serious problem of retraining those rendered redundant. Sweden, for instance, has a very advanced scheme. I have read about Sweden’s scheme, although I have not studied it in detail. We are certainly not helped by the resolution passed in 1967 at a conference of the Australian Labor Party committing members of the Parliamentary Labor Party to oppose adult training in some fields of the labour force in which we have the scarcest supply. This impedes progress. This is a serious reflection on the completely bowyang mentality of the Labor Party towards normal industrial questions. I would not for one moment accuse all honourable members opposite of subscribing to this view, although some do. The fact is that the thirty-six faceless men who crack the whip have ordained this policy and it has become the regular policy of the Labor Party. Nor, indeed, do I for one moment accuse the Leader of the Opposition of a complete lack of intelligence in subscribing to such a policy. The simple fact is that if he took this matter up with his Party he would be torn to pieces by the faceless and the witless.

page 387

QUESTION

OVERSEAS INVESTMENT IN AUSTRALIA

Mr CLARK:
DARLING, NEW SOUTH WALES

– My question is directed to the Prime Minister. In recent months the right honourable gentleman has made a number of statements on overseas investment in Australia, each contradictory of the others, but he has made no firm statement or taken any positive action to lay down future Government policy on it. I ask: When does the Prime Minister propose to make some positive statement and to take legislative or administrative action?

Mr GORTON:
Prime Minister · HIGGINS, VICTORIA · LP

– The Government would propose, and I would propose, to make a statement on this matter after it has been properly considered in all its aspects, so that when the statement is made it will be as clear and will have been the subject of as much thought and discussion as the defence statement that I made in this House last week.

page 387

QUESTION

ELECTORAL

Mr TURNBULL:
MALLEE, VICTORIA

– My question is addressed to the Minister for the Interior. During question time yesterday the Minister said that he would soon make certain recommendations to Cabinet regarding electoral laws. I ask: Will the Minister make a special recommendation regarding the amount a candidate may spend on a campaign, urging that the present limit be increased in line with reality so that practically all members of this House may be relieved from flouting the electoral law as it now stands?

Mr NIXON:
Minister for the Interior · GIPPSLAND, VICTORIA · CP

– The honourable member will be pleased to know that this is one of the matters that have been discussed already by the Government. It is one of the matters that have been referred back to me as Minister in charge of the Electoral Act for referral to the Prime Minister for further consideration. It will be judged again on its merits when it comes before the Government.

page 387

QUESTION

OVERSEAS INVESTMENT IN AUSTRALIA

Mr WHITTORN:
BALACLAVA, VICTORIA

– I address to the Prime Minister a question which is supplementary to the question asked by the honourable member for Darling. I ask the right honourable gentleman whether he has had time to study the Eggleston Committee report which relates to the protection of Australian companies against back door take-overs by overseas financial interests. As a result of this report will the Australian uniform company laws be altered shortly in order to protect Australian investment in Australian companies?

Mr GORTON:
LP

– I understand that the report was completed only last Friday. I have only just received copies of the report so there has not been time properly to study them. The Eggleston Committee is indeed engaged in one aspect of protecting companies from back door take-overs not merely by overseas companies, but against takeovers, as far as that goes, from internal companies. Recommendations are being made by the Eggleston Committee to the standing committee of Attorneys-General who, as soon as they have considered them - which I understand is proposed to be about 7th or 8th March - will then report back to their respective governments on the recommendations made by the Committee and on any action which it is felt should be taken to alter the uniform company laws in order to comply with those recommendations.

page 388

QUESTION

F111 AIRCRAFT

Mr BARNARD:
BASS, TASMANIA

– Can the Minister for Air give the House any information about the reported crash of an F111 aircraft in the United States of America? As the Minister will know, this is the second crash of an F111 aircraft within the last month. I further ask whether this latest accident has produced any modification of the honourable gentleman’s attitude that the F111 is a beautiful plane.

Mr ERWIN:
Minister for Air · BALLAARAT, VICTORIA · LP

– Yes, there was a crash of an F111 A, No. 61. It crashed approximately 60 miles north of the Nellis air base at about 12.30 hours, their local time. Its mission was to be a chase aircraft to another F111A performing a functional check flight. The crew ejected safely. They have been rescued by helicopter and are in the Nellis base hospital under observation. They are reported to be uninjured. The F111A flying operations have not been suspended or curtailed at Nellis. A board of highly qualified officers will investigate the cause of the accident.

page 388

QUESTION

ARMY CIVIL ACTION PROJECTS

Mr BEAZLEY:
FREMANTLE, WESTERN AUSTRALIA

– Has the attention of the Minister for the Army been drawn to the comments of the Australian National University New Guinea research unit’s director, Dr Ron Crocombe, expressing fears that the Army’s civil action projects in Papua and New Guinea meant that the country was becoming accustomed to Army civil leadership and hence ultimately to military rule, subverting efforts to establish democratic government? Has careful consideration been given to Army civil action in the light of these comments? If their validity is not accepted, what are the Minister’s reasons for non-acceptance?

Mr LYNCH:
Minister for the Army · FLINDERS, VICTORIA · LP

– I have seen a Press report of comments recently made by Dr Crocombe concerning the Army’s civic work in the Territory of Papua and New Guinea, and I must say at the outset that I do not believe these comments to be valid. In fact, civic action so far as the Army is concerned in New Guinea is as important and integral a part of the Army’s programme as it is in South Vietnam. These activities in the Territory cover the building of small bridges, road construction, the provision of medical facilities and the carrying out of anti-malaria and public health campaigns. I must say that the Army consciously develops these projects because in fact they tend to identify the Army with the people. Every major operational exercise and patrol includes civic action of some form at village level. I also want to say that in all cases civic action of this type is carried out at the request of the indigenous population - certainly in conjunction with them - and also with the approval of the Administration with whom, of course, the Army works in close co-operation. So far as any question of the subverting of future civilian government is concerned, I would emphasise that tremendous stress is placed in all facets of military training on the particular position of the Army vis-a-vis legally constituted authority, as one of the Army’s two major roles in the Territory is to develop for the future a well disciplined, effective and loyal force completely subservient to legally constituted authority. In summary, Sir, far from being a divisive element in the Territory I consider the Army to be one of the unifying factors, and there is no suggestion in my mind that the Army’s present civil aid programme will in any way inhibit the authority of future civilian governments.

page 388

QUESTION

CIVIL AVIATION

Mr IRWIN:
MITCHELL, NEW SOUTH WALES

– Can the Minister for Civil Aviation inform the House whether the two national airlines, Ansett Airlines of Australia and Trans-Australia Airlines, are in competition or in co-operation one with the other? Do the companies cancel flights for economic reasons to the inconvenience and disadvantage of passengers? When present agreements and franchises expire will encouragement be given to other operators to enter the interstate air passenger and freight services? Would the Minister agree that the only guarantee present operators can give is that they will not arrive at any destination on time?

Mr SWARTZ:
Minister for Civil Aviation · DARLING DOWNS, QUEENSLAND · LP

– I would like to confirm the fact that there is quite keen competition between the two major operators of our domestic air services, that is Trans-Australia Airlines and Ansett Airlines. I should point out to the House that the two-airline policy applies to the major trunk routes and applies generally to interstate services. In addition to this, of course, there are a number of operators operating on intrastate routes, in some cases in competition and in some cases with the sole rights to operate, but when the question of economics is raised I would also draw the attention of the House to the fact that the services provided in Australia domestically are the third greatest in the world in the total number of passengers carried and in relation to freight are certainly up amongst the first group of nations. This for a nation of 12 million people is a very good performance Indeed. At the present time we are operating about 670 licensed aerodromes and somewhere between 5,000 and 6,000 authorised landing grounds, which gives one some idea of the service that is being provided throughout the length and breadth of all States of Australia today. I think we should feel quite proud of the service that is being provided when compared with many other countries, but at the same time I would be the first to admit that there will always be some deficiencies. It is our aim to provide the best possible service within the present structure of competition between the two airlines. As far as freight is concerned, when the situation is examined very carefully it will be seen that we have an over capacity at the present time in relation to the demand for freight and therefore there is quite keen competition to obtain a greater percentage of the freight that is available as compared with other means of transport. Whilst some problems are associated with the service, I stress that it is a good service which is being provided. It is certainly up to world standard.

page 389

QUESTION

COMMONWEALTH AID ROADS FUND

Mr LUCHETTI:
MACQUARIE, NEW SOUTH WALES

– I direct my question to the Treasurer and bring to his attention the concern of country shires and muni cipalities that Commonwealth aid funds for the construction of country roads may be reduced. Will the Treasurer give an assurance that the present grant for rural roads will not be less than the existing 40% of the total allocation for road construction and reconstruction?

Mr McMAHON:
Treasurer · LOWE, NEW SOUTH WALES · LP

– This matter is now before the Cabinet. When the Government has made up its mind as to what it will do on the whole problem of Commonwealth aid roads it will announce its decision. 1 believe it will do so in this House.

page 389

QUESTION

FINANCE

Mr DOBIE:
HUGHES, NEW SOUTH WALES

– Did the Treasurer see a recent Press statement attributed to one of the leading authorised market dealers in the Australian short term money market that very serious consideration must now be given to the question of quotations of Commonwealth securities in respect of dealings on the official1 market? In view of the further statement that the Australian money market was a high cost market because of the large number of centres in which it operated, is the Treasurer satisfied that the short term money market is being allowed to operate under terms and conditions most appropriate to its present needs now that the official market has operated for 10 years?

Mr McMAHON:
LP

– I have not seen the statement to which the honourable gentleman refers but, as he well says, the short term market has been operating for 10 years and I believe it has been operating efficiently. I think that the appropriate way in which this matter should be handled is for the representatives of the short term market to raise this matter at their next regular meeting with the Reserve Bank. The matter can be thoroughly considered then and a decision made by the Reserve Bank or, if the Reserve Bank thinks it necessary, the matter can be referred to the Government.

page 389

QUESTION

HMAS ‘ARUNTA

Mr JAMES:
HUNTER, NEW SOUTH WALES

– Can the Minister for Shipping and Transport say what caused the sinking of the former Australian naval vessel, HMAS ‘Arunta’, shortly after it left Sydney to be towed to Taiwan? Is it a fact that the ship is now lying in an important fish trawling area and causing extreme inconvenience to the fishing industry? Has his Government any proposals for its removal?

Mr SINCLAIR:
CP

– I am not in a position to advise the honourable member as to the reasons for the sinking of the vessel, but it is my understanding that before it sank ownership of the vessel had passed into the hands of the company which intended to wreck the ship. It is also my understanding that the depth of water at which the HMAS Arunta’ is lying is such that it is not likely to cause damage to vessels moving up and down the coast. I am not in a position to say whether or not it is likely to be of particular damage to fishing vessels. However I will look into the position and advise the honourable member in due course.

page 390

QUESTION

DROUGHT RELIEF

Mr CORBETT:
MARANOA, QUEENSLAND

– Can the Prime Minister inform me whether he has received a request from the Premier of Queensland urging the Commonwealth Government to provide drought aid for a large part of Queensland? Further, if such a request has been made, in view of the urgency of the position due to the rapidly deteriorating seasonal conditions and the closing of the wet season, can the Prime Minister advise when the Commonwealth Government’s reply is likely to be made available?

Mr GORTON:
LP

– This question is in the same terms as a question that was asked by another honourable member, the honourable member for Brisbane, in this House yesterday. I have been looking into the situation since then. The Commonwealth has received a letter from the Queensland Premier on this matter. The letter has been processed through to the Treasury. Suggestions have been made by us that the situation should be discussed by officers from the Commonwealth Government and the Queensland Government and I understand that some discussions have already taken place. That is all I can tell the honourable member at the moment.

page 390

QUESTION

PUBLIC SERVICE

Mr NICHOLLS:
BONYTHON, SOUTH AUSTRALIA

– My question is directed to the Prime Minister. The right honourable gentleman said yesterday that it was either the day before or the day before that, or within the last week, that he had first learnt that an officer of the Department of Customs and Excise had been dismissed from the Public Service last November and that the officer had resigned or might resign. Did the right honourable gentleman receive a telegram which Senator Cavanagh sent him on this matter on 13th February? What steps did he take to check the subject matter of the telegram and how promptly did he take those steps7

Mr GORTON:
LP

– Yes, I received a telegram from Senator Cavanagh demanding a statement on a Press article. I do not propose to make investigations on matters in Press articles at the demand of particular senators. This matter having been raised in a House of the Parliament, which is quite a different matter, I then directed attention to it and I believe that all the significant questions concerning it have been quite properly answered.

page 390

QUESTION

ROADS

Mr TURNER:
BRADFIELD, NEW SOUTH WALES

– I address my question to the Prime Minister. Can he give an assurance to the House and to the public that before legislation is introduced into the Parliament regarding Commonwealth aid for roads the report of the Commonwealth Bureau of Roads will be tabled in this place?

Mr GORTON:
LP

– After discussions have been held between the Commonwealth Government and the various State governments on this matter - the State governments knowing what the recommendations of the Commonwealth Bureau of Roads are - I believe there would be no difficulty in letting it be known what the report contains so that a debate can then be properly carried on as to the extent to which those recommendations have been accepted or rejected and why.

page 390

QUESTION

SECURITY

Mr CREAN:
MELBOURNE PORTS, VICTORIA

– Will the Prime Minister outline to the Parliament the steps he has taken to test the veracity of allegations that a woman was used by the Australian Security Intelligence Organisation to remove documents from the Japanese Embassy in Australia? Is he in a position to disclose his findings?

Mr GORTON:
LP

– The steps that have been taken in this matter are that I have made inquiries in the proper places and, as was

Indicated in this House yesterday, questions relating to the activities of the Australian Security Intelligence Organisation or seeking to learn who did or did not or who do or do not work for ASIO are not and never have been the subject of answers in this place or outside.

page 391

QUESTION

SOCIAL WORKERS

Mr CHANEY:
PERTH, WESTERN AUSTRALIA

– The Minister for Science and Education will be aware that the University of Western Australia offers a postgraduate diploma course in social work which is accredited by the Australian Association of Social Workers while a subdegree standard course offered by the Institute of Technology is not accepted by the relevant professional body and holders of the associateship of the Institute are not eligible for membership of the Australian Association of Social Workers. As Commonwealth funds are involved in both University and Institute expenditures, can the Minister say whether it is the policy of the Government to support the training of professional social workers at the University in preference to the Institute of Technology?

Mr Malcolm Fraser:
WANNON, VICTORIA · LP

-The honourable member is correct when he says that a small number of graduate or post-graduate students study social work of various kinds in universities such as the University of Western Australia. Having said that, I must point out that sub-graduate courses are available at the Western Australian Institute of Technology, the South Australian Institute of Technology and possibly some other institutes. I know of those two at the moment. The courses offered in the colleges or institutes are very important for practising social workers. The qualities demanded are high, but they are not necessarily related to academic attainment. If only those with degrees or post-graduate degrees were able to undertake social work, the opportunity to practise in this field might well be denied to a great number of people who are highly qualified and well suited because of their own characteristics to undertake this kind of work.

It is true that the Australian Association of Social Workers does not accord membership to those who have taken the course at the Western Australian Institute of Technology and I think also the South Australian Institute of Technology. The

Association, of course, has this right. But it should be noted that membership of the Association is not a requirement of the Western Australian Government, for example, in appointing social workers to various activities in which the Government is concerned. I am advised that the matter of recognition of institute and college courses has not been finally determined, that negotiations are likely to take place and that the institutes would be pleased to discuss these matters with the Association. It might also be worth noting that the recently appointed tertiary education commission in Western Australia is likely to keep under close examination the question of co-ordination of courses offered at the Western Australian Institute of Technology and the University of Western Australia so that possible duplication might be reduced to a minimum.

page 391

QUESTION

OIL DRILLING LEASES

Dr EVERINGHAM:
CAPRICORNIA, QUEENSLAND

– My question is directed to the Minister for National Development. Has he authority or influence in the decisions of the Queensland Cabinet in granting preferences for oil drilling leases on the Great Barrier Reef to competing companies? If so, will he use his influence with the Queensland Cabinet to oppose any preference being given to Exoil NL in which the Premier and his family have large interests?

Mr FAIRBAIRN:
LP

– I have no knowledge of the matter to which the honourable gentleman refers, but I mentioned in the House yesterday that it is unlikely that this Government will agree to any further licences being issued in respect of the Great Barrier Reef.

page 391

QUESTION

NORTHERN TERRITORY

Mr CALDER:
NORTHERN TERRITORY

– Has the Minister for the Interior seen an article in the Northern Territory ‘News’ of 1st March which states that Housing Commission rents in the Northern Territory shortly will rise by 50%? Is the Minister aware that this will strangle the business and civil1 community of Darwin and other Northern Territory centres? Will he take immediate steps to solve this awful problem of land and housing?

Mr NIXON:
CP

– I am aware of the increase in rent for Housing Commission homes in Darwin, and I share the honourable member’s concern, as does the Government. The fact is that the rents are fixed by the Housing Commission on a formula laid down under an ordinance. The elements that go Into the formul’a are the elements usually found in most other places, such as the cost of housing, increases in costs, wages and materials, and also the cost of land rent in Darwin. In the case of the Housing Commission homes in Darwin, I should point out to the honourable member that it was not a rent increase across the board for all1 Housing Commission homes but only for the last ten homes constructed by the Commission. The rent for these was affected very much by the high unimproved capital value of the land on which the houses were built. This led to a high component of land rent in the formula. The Government has been considering the position of land rent in Darwin and has a study under way which wiN come to a conclusion before there is a general reappraisal of land values in Darwin, which is due to take place in 1970. That is the first thing that the Government has done. The second thing that the Government has done, of course, is to make available $4.4m for a power house to increase the electricity supplied to new housing developments and to make available §4.7m - speaking from memory - for a sewerage scheme in Darwin. These are positive steps that the Government is taking to make more land available so that in the first place more blocks can be allocated to residents in Darwin and secondly the cost of them can come down. The problems in Darwin, as ought to be pointed out, are not caused by any decadence of the Northern Territory but rather by the tremendous growth that is taking place there at the moment.

Mr WHITLAM:

– I ask the Minister for the Interior a question supplementary to that asked by the honourable member for the Northern Territory. Are honourable members to take it from the Minister’s reply that any new Housing Commission dwellings in Darwin will show similar increases in rental over those hitherto obtaining? Are we to take it also that there will be no change in the formula which has produced these increases this year? Further, are these new rentals up to 68% higher than the present average rental set out in the answer which he gave me on Tuesday 25th February, the day Parliament resumed last week? Is the Minister aware that increases in Housing Commission rentals are already triggering increases in rentals for privately owned houses? How does he propose to replace the skilled workers who will now be forced to leave Darwin because they are unable to afford to house themselves?

Mr NIXON:

– The honourable member for the Northern Territory came to me on this question 2 or 3 days ago when it was first announced by the Housing Commission that there was to be an increase in rents. I said to him at the time that we would have an investigation made of the actual effect of the increase in rents and the reasons for it, and see what the Government could do about it. This is the immediate position in respect of the houses that have been affected. It is certainly not the Government’s wish that valuable workers should be forced out of their homes by an action of this Government. It is my intention to have a look at the matter and to see whether something can be done about it.

page 392

QUESTION

STANDARDISATION OF RAIL GAUGES

Mr JESSOP:
GREY, SOUTH AUSTRALIA

– I direct my question to the Minister for Shipping and Transport. In reply to a question on notice by the Leader of the Opposition recently the Minister indicated that it was hoped that the terms of reference for the engagement of consultants to report on the proposed standardised link from Adelaide to Port Pirie would be available in the near future. In view of the deep concern of those persons to be affected by this link, is the Minister in a position to say when the reference may be available, when the consultant firm may be expected to complete its report and when the construction of the line may actually be commenced?

Mr SINCLAIR:
CP

– Draft terms of reference have been sent to the South Australian Government for consideration, together with a short list of consultants. Following consideration by the South Australian Government I hope that it may be possible to have both a determination of which consultant should be commissioned and the details of the terms of reference to enable an early completion of the survey to be made. Then, of course, I hope that we can proceed towards completion of the line. As the honourable member has mentioned, there is concern in his electorate and in South Australia generally regarding the advantages that might flow through from the extension of the standard gauge line to give a through service to Adelaide. However, as the honourable member will also be aware, there are some problems concerning the determination of the route of the line, the nature of the line and the exact nature of any extension of the standard gauge line that might be necessary to link Adelaide to the east-west system. These matters, of course, will all be taken into account by the consultants, and the Government will make a decision and an announcement as soon as it is in a position to do so.

page 393

QUESTION

SYDNEY GENERAL POST OFFICE

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

– I ask the PostmasterGeneral a question. Is he satisfied with the renovations, extensions and repairs that have been carried out to the interior of the Sydney General Post Office? Is he aware that many Sydney people are now saying that the outside of the building belies the look of the interior and that they are still unwilling to enter the building because of the dirty, grimy appearance of the outside? Will he, therefore, take immediate action to have the outside of the building steam cleaned?

Mr HULME:
Postmaster-General · PETRIE, QUEENSLAND · LP

– I think that the people of Sydney have been complimentary of the Sydney General Post Office since the interior of the building has been cleaned up. I think that the employees of the GPO appreciate the consideration which has been given to the restoration of the interior. As I have indicated before, the external appearance of the building conforms to the external appearance of many other buildings in Sydney and it is not necessary to do anything about it.

page 393

QUESTION

ABORIGINAL AFFAIRS

Mr ARTHUR:
BARTON, NEW SOUTH WALES

– Has the attention of the Minister-in-Charge of Aboriginal Affairs been drawn to a letter published last week in the ‘Sydney Morning Herald’ and signed by several Aboriginals, objecting to the appointment of Mr Saunders to the position of liaison officer in the Office of Aboriginal Affairs? The ground given for objecting to the appointment was that Mr Saunders had not been prominent in the campaign for Aboriginal advancement. Are there any good grounds for objection to this appointment?

Mr WENTWORTH:
Minister for Social Services · MACKELLAR, NEW SOUTH WALES · LP

– I did see the letter to which the honourable member referred and I read it with a great deal of regret. It contained the implication that appointments to the Office of Aboriginal Affairs did not have regard to the activities of people prominent among Aboriginals. Of the four Aboriginal people appointed to the Office of Aboriginal Affairs, three of whom have taken up duty and one of whom will take up duty shortly, three have been prominently connected with this movement in the past. I refer to Mr Perkins, Miss Lawrie and Mr Phillip Roberts, the Secretary of the Northern Territory Aboriginal Rights Council.

It is regrettable that that letter was published, particularly since several of the signatories were themselves unsuccessful applicants for the post of liaision officer. More importantly, there is a divisive tendency among Aboriginals, because they are people of various tribes and they do not always see themselves as a single people. It is important that these divisive tendencies be not exploited. I felt that this letter was an attempt by certain people to exploit these divisive tendencies in a way which is not to the advancement of the Aboriginal people. The attack on the appointment of Mr Saunders was a bad example of this. I felt that this attack was motivated partly by the fact that Mr Saunders had had a very distinguished career in the Australian Army. He was commissioned in 1944 and he fought in Korea where he was promoted to the rank of captain. He had been President of the local branch of the Returned Services League. These are great achievements. When I looked at the list of signatories to that letter I thought that several of them might well have thought that when Mr Saunders fought for Australia and the United Nations in the Korean War he was fighting on the wrong side because he was fighting against Communists.

page 394

DEFENCE

Discussion of Matter of Public Importance

Mr ACTING SPEAKER:

– I have received a letter from the honourable member for Bass (Mr Barnard) proposing that a matter of definite public importance be submitted to the House for discussion, namely:

The Government’s abandonment of 3-year plans for defence procurement and research.

I call upon those members who approve of the proposed discussion to rise in their places. (More than the number of members required by the Standing Orders having risen in their places.)

Mr BARNARD:
Bass

– The Opposition raises this matter for two reasons. Firstly, we invite the Minister for Defence (Mr Fairhall) to lay down precise guide lines for the future procurement by the Australian Government of defence items. Secondly, on 30th November last in this House the Prime Minister (Mr Gorton) said that the Minister for Defence was making a close study of how Australia could provide more of its defence requirements from Australian sources so that foreign exchange could be saved. The Prime Minister said also that the study was designed to make Australia more self sufficient in the event of interruptions to sea lanes or matters of that kind. In the complete absence of any statement to this House by the Minister for Defence on either of these matters the Opposition has decided to raise them as a matter of urgency and to give the Minister the opportunity to state his attitudes.

Last year the Prime Minister said that to his knowledge there had never been a system of reviewing defence policy and procurement every 3 years. He said that it was his understanding that defence policy and procurement planning was done on a rolling year to year basis. That statement completely contradicted the defence policies of his predecessors, who had adopted the practice of making reviews every 3 years and announcing new purchases of defence equipment. This was a practice that had been taken over from the Chifley Government which, after the war, initiated a system of defence programming over a 5- year period. It seems that the present Government scrapped that system, which at least established guide lines for future defence policy and gave firm indications of what purchases would be made. Today we have no knowledge of what purchases the Government intends to make to carry Australia into the 1970s and 1980s.

In a statement issued outside the House last week the Minister for Defence said that he anticipated that the Government would be able to include purchases of some major equipment items in the Budget session. He stressed that this would not be a complete programme. Apparently the Government intends to announce its future purchases in dribs and drabs without any justification of their cost effectiveness or any attempt to fit them into a balanced and coherent programme. It is unfortunate that the Minister has confined his eloquence on future defence procurement to forums outside this House. He has been notably restrained and diffident within the House regarding future procurement policy. I believe that this restraint can be attributed to a rather remarkable change of attitude on the part of the Minister for Defence, particularly towards Australia’s defence procurement. I refer to a lengthy address on defence spending and economic growth which the Minister gave to the Committee for Economic Development of Australia on 31st January 1969. Towards the end of a rather lengthy address he dealt with the negotiation of offset agreements to Australian procurement overseas. He said that the Government had been negotiating with its principal suppliers since the re-equipment programme was begun in 1965 for offset agreement arrangements aimed at neutralising the foreign exchange cost of procurement. There is not one jot of evidence to sustain any claim that there have been successful offset arrangements over the past 3 years. The available evidence is completely to the contrary. If the Government has attempted to negotiate these arrangements its efforts have been a dismal failure.

The Minister pointed to the presence of a trade commissioner in Washington to assist those Australian manufacturers who wanted to secure procurement contracts. He neglected to mention that there has been an American procurement officer in Melbourne since March 1967. This appointment was made as a sop to Australian manufacturing interests who had complained about the lack of United States procurement orders from Australia. Although this office has been in existence for almost 2 years, no major orders have been secured by Australian companies from the United States Army. Apart from money spent by United States servicemen on rest and recreation leave and a handful of orders for food items, the Australian Government has won nothing for Australian manufacturers from its fervent commitment to the Vietnam war. In fact, the United States has procured on a massive scale from Japan and Taiwan, which are countries with no military commitment in Vietnam.

Despite the Government’s total failure to get a share of American procurement for local industry the Minister talks confidently about neutralising the foreign exchange cost of overseas procurement. The Minister also said in his address that no item of equipment would be procured overseas when manufacture in Australia was economically feasible. He said that this rule would, if anything, be applied more stringently in the future. Has it ever been applied stringently in the past? Australian manufacturers do not seem to think so.

The Opposition welcomes this statement of intent by the Minister, but in view of the Government’s past laxity in applying it, the Opposition must regard his statement with some scepticism. The Minister said that there would be no major procurement programme in the future with any country that did not include offset arrangements as part of the deal. I shall quote further from the Minister’s address of 31st January 1969. He said:

This does not necessarily mean that we wish to participate directly in the manufacture of the item we are buying via local sub-contracting. But we do want an offset programme roughly equal to the foreign exchange cost of our procurement.

This is extremely ironic coming from a major spokesman of a government which negotiated the purchase of Fill aircraft without a penny of offset arrangements. The same criticism can be applied to the many hundreds of millions of dollars spent on procurement from the United States Government in the past few years. The Minister now makes confident noises about no procurement without offset arrangements to absorb foreign exchange cost. On past policy, this can only mean that the Government does not intend to procure further from the United States of America.

The fact is that the Minister is only a very recent convert to the principle of negotiating offset arrangements for overseas purchases. In the past the Minister’s attitude has been one of opposition to offset arrangements. The Minister and the Government have been too proud even to consider asking for any form of offset. They have taken the view that this would make Australia an international beggar and would limit its independence in determining its policies and its future. According to this philosophy, Australia should fork out with pride and not humble itself by insisting on a role for Australian industry to offset heavy purchases abroad. This remarkable attitude must have amazed the United States Government in recent years.

Certainly the United States drives a hard bargain, but there have been repeated examples of other countries winning offset agreements from the United States. The United Kingdom Government was able to secure offset marketing arrangements totalling $US325m for its Fill purchase, which was later cancelled. The men who negotiate America’s international arms sales have been hailed as super salesmen. In Australia’s case, there was no need for super selling; Australia quickly established itself as a super buyer. Quite obviously, the Americans expected a considerable element of bargaining in these negotiations and were quite prepared to offer offset agreements. For example, an Assistant Secretary of Defence, Mr Paul C. Warnke, in the January 1968 edition of the American technical journal ‘Armed Forces Management’ listed the principles which guided America’s military sales programme.

One objective was that the United States should sell defence equipment to financially capable free world powers, tempered by a willingness to consider co-production or licensed production abroad when the sale seemed precluded. In other words, if there were any doubt about the negotiation the United States was prepared to make offset deals to ensure its success. Did Australia ever take advantage of this principle or even make any attempt to bargain offset arrangements? Mr Warnke said further that another guideline was America’s willingness to procure selected defence equipment abroad for the United States defence forces, in return for large scale foreign purchase programmes made from the United States. What has the Australian Government done to take advantage of this principle in return for its large scale purchase of the Fill? Yet the Minister can now talk unashamedly about the Government’s insistence on offset arrangements. He has come round to a belated recognition of the importance of these arrangements at a time when the United States is admitting that it will have to make much greater concessions in future to maintain its volume of international arms sales.

The number of countries that have made successful arrangements for co-production and manufacture under licence with the United States is increasing. For example, Great Britain has a 50/50 co-operative programme for the production of the Phantom aircraft in the United Kingdom. The United States has also made co-operative arrangements for helicopters with Germany and for tanks and personnel carriers with Italy. Yet despite this immense procurement from the United States, the Australian Government so far has negotiated nothing of substance in the form of offset arrangements. There can be no confidence that the major equipment items which the Minister expects to announce later this year will be offset in any substantial way.

The United States has always been willing to negotiate offsets, and it will be even more willing in the years ahead. The Labor Party does not suggest that Australia should attempt to manufacture defence items across the board. Of course, it is debatable whether Australia could manufacture an Fill or a guided missile destroyer. But it is certainly possible for it to manufacture sub-systems and end items of these complex weapons systems. The United States expects these arrangements to be sought;, in the past it must have been a perpetual source of wonder to the United States Government that Australia did not even ask for this sort of deal. The Opposition believes that if. after careful evaluation, it is decided that a complex weapons system has to be purchased, two measures should be insisted upon. Firstly, it should be determined whether Australia can produce any of the sub-systems of the weapons system, or if any Australian end items can be incorporated. If so, this should be one of the terms of purchase. Secondly, if it is not possible for Australia to produce subsystems or end items, offset arrangements should be negotiated. Of course, it will not be possible to offset the whole of a weapons system, or even a major part of it. It should be possible to offset a reasonable part of it.

There has been a significant lack of toughness in bargaining on Australia’s weaponry, particularly with the United States. As I pointed out earlier, the United Kingdom successfully negotiated an Fill offset arrangement with the United States when it ordered the aircraft which it later cancelled. This involved contracts and arrangements, to sell the United States a miscellany of defence equipment, none of it individually significant, but in total representing a reasonable offset of the estimated total cost. This shows that a country making an important purchase of this nature is not impotent; that it can bargain effectively to ensure some reciprocity. There was not the slightest hint of this in the Australian arrangements for the FI 1 1 purchase which was negotiated willy nilly with no attempt to bargain or get offset arrangements from the United States.

With international competition in the procurement of armaments intensifying and substantial rivalry within the United States among the corporations manufacturing defence equipment, there is great scope for wheeling and dealing in the placing of orders. Australia can never do worse in overseas procurement than the efforts of recent years. Much greater access to the United States procurement contracts- and hard dollar intensified offset targets in respect of weaponry purchased from the United States must be negotiated. It is certainly no longer possible for Australia to supply the proportion of defence equipment that it manufactured in World War II and the immediate post-war years.

Mr ACTING SPEAKER:

-Order! The honourable members time has expired.

Mr FAIRHALL:
Minister for Defence · Paterson · LP

– This has been a particularly fascinating opening to a debate which was predicated on the question of whether the Government had abandoned its 3 -year programmes of procurement and research, because nothing has been said about abandoning and nothing has been said about 3-year programmes. The offering to the debate today by the Deputy Leader of the Opposition (Mr Barnard) has turned almost exclusively on purloining from statements of mine, from contributions which have been made to learned associations in Australia, and from reports to this House of what the Government has done and what it proposes to do. The honourable gentleman has filched a good deal of this from my contributions and from other Government documents, and he included it in a paper which he presented to the Fabian Society of Victoria. It would appear to me that today’s debate has been introduced solely to give the honourable gentleman a vehicle through which to put his views into Hansard. I do not mind this at all because I think it is very good to have so much of this Government’s policy now supported so happily by the Deputy Leader of the Opposition who, I understand, is making ardent efforts to become the Leader of the Opposition in his time. But as I have said, the honourable gentleman has preferred to spend a good deal of his time on the question of procurement.

First of all, let me set him and perhaps the Opposition generally at rest on one point. There never has been any 3-year programme of research in this country. On the other hand, continuous research has been taking place, particularly in the defence field. There is very much to indicate the success of that research programme. At the end of the last war, when the honourable gentleman’s own government was in power, the Australian Government negotiated with the United Kingdom a joint weapons agreement or a weapons research agreement - let me not be too precise about the title - under which Woomera and its supporting scientific complex in Adelaide were established. In the course of time a tremendous Australian effort has gone into that particular undertaking. The benefits of it have gone to enrich this country’s defence, and through it to enrich this country’s industry as, indeed, it should and as we would want it to do. With the running down of that United Kingdom-Australia defence agreement a good deal of the scientific component of that particular effort will now revert in direct support of the defence effort of Australia by re-arrangement within the Department of Defence.

Out of this research programme have come such items as the Malkara and Ikara systems, which are recognised around the world as perhaps the world’s leading antisubmarine weapons system, the Jindivik aircraft and a vast variety of projects which must be hidden under a security wrap. This country has contributed to the ABCA agreement between Australia, Britain, Canada and America, under which there is joint access to combined research in the defence field. We have entered into Project Mallard which will be of tremendous assistance to Australia and without which this country could not in the future integrate its defence operations with those of our allies. Contrary to what the honourable gentleman has to say, there have been constant efforts, and a good deal of those on my own part - if I can take a little credit - both as Minister for Supply and later as Minister for Defence to see that every possible effort was made to put into Australian industry those projects which could economically and reasonably be placed with Australian industry. The honourable gentleman is good at making broad brush attacks and then, over here, admitting that there might be some things that we cannot do. We cannot build an Fill, we cannot build a whole DDG, but we can build weapons systems or parts of systems.

The honourable gentleman must know, if he knows anything at all as a shadow Minister for Defence, that today the weapons systems in aircraft like the Fill and its counterparts are so closely integrated that sub-contracting on a wide basis is not possible. The honourable gentleman must also know that there are many projects which can be produced in Australia but which are completely uneconomic. It has been my experience in the Department of Supply to see projects for which tenders have been called from Australian industry which might have been produced at two and three times - and sometimes more - the cost of a similar article from overseas sources. This country happens to have a Treasury which is the custodian of public moneys. We also happen to have a lot of taxpayers who are very concerned that they should not pay too much for their defence equipment. This is not the way a responsible government will go about spending public moneys.

The honourable gentleman must also understand that Australia is a trading nation, that we are expected to conduct a little two-way trade with our neighbours and that economic nationalism of this kind is certainly not justified. I am reminded that the twenty patrol boats which have just been built and handed over to the Royal Australian Navy cost something like three times the price at which they might have been purchased in a Japanese shipyard. At this moment the Army is about to come into possession of a man pack radio built in this country at a vastly higher price than that at which it could have been purchased from overseas, and yet by determination of this Government it was put in Australian industry because we believed Australian industry needed the expertise involved in that particular equipment. So wherever there is a situation where a new technique is available, where new principles are involved in equipment, where research and development will upgrade the capacity of Australia to produce its own defence equipment and so on, a discretion will invariably be used by the Government - by the Departments of Defence and Supply - to see that that job is done in Australia. But we are required to be a little careful about the price.

The honourable gentleman makes a great song and dance about the fact that the United States did not provide any offset agreement for most - if not all, indeed - of the re-equipment programme which is now coming to its end. Of course, on the face of the facts one must agree that that is right. But may I also remind the honourable gentleman that the inclination and, indeed, the willingness of the United States to enter into offset agreements of the kind he has mentioned are of much more recent origin that was the Australian programme for re-equipment of the armed Services. The honourable gentleman says that we have an offset procurement agent for the United States in Melbourne. So we do. Who got him there? It was my discussions with the Secretary of State of the United States 2 years ago that brought that officer to Aus tralia, but the honourable gentleman says that we are not interested in producing offset agreements. He says that we have not sold very much to the United States because of our involvement in Vietnam. This is the gentleman who, a little while ago, was talking about ‘Dollars for Diggers1. We did not go into the Vietnam war to improve our chances of getting a little trade with the United States of America. We would not ask the United States to trade as a reciprocal basis for our going into a war in which we believed our national interests were involved. What nonsense this is. He says that the Government has not succeeded in getting any orders. It is not the Government’s business to get orders. It is the business of industry to get orders, aided and abetted by avenues which the Government is able to open up with the United States Government. This we have done. If we have not obtained orders it is because our industries have not been able to respond with the quantity of merchandise of the quality required or at a competitive price within the time scale. But strangely enough the United States as a government has a Treasury. It has some taxpayers and it has a manufacturers’ lobby, as we do. It is very insistent that the United States taxpayer will get the best value for his money in exactly the same way that our Government insists for our taxpayers that we, too, shall get the right price.

The honourable gentleman spoke about some statements I made to the Committee for Economic Development of Australia. I am glad to have made those statements. The purpose was to point out a change in attitude on the part of the United States of America for which, if the honourable gentleman does not mind, I will also take a little credit. We have had Mr Henry Kuss - the United States arms salesman, if you like to call him that - out here time after time. I opened the discussions with the Secretary of State, then Mr Robert McNamara, in the United States on this question of reciprocal buying. I continued those negotiations more recently with the then Secretary for Defence, Mr Clark Clifford. We got a very warm reception indeed, because in the intermediate time there has been a vast change in the American attitude to reciprocal purchasing. Mr Henry Kuss and, indeed, Mr Alne, who were responsible in a very large measure for American procurement, had this to say:

Defence Ministries abroad are increasingly preoccupied with making a greater technological contribution to their defence equipment. They are striving for larger development programmes at home in order to keep up with the state of the art. When development is clearly beyond their economic or technical capabilities, they wish at least to produce some portion of their equipment at home. Hence, we spend more and more of our time on the complexities of co-production or licensed production.

This represents a very vast change in the attitude of America as a government and as a manufacturing nation to the subcontracting abroad of parts, particularly for defence equipment.

I do not mind telling the honourable gentleman that it is the continued effort of the Australian Government to open up avenues of this kind and to create in the United States a climate more conducive to the placing of work in Australia. He says that he has not seen any result. Well, he has not been listening to what has been said in this House and he certainly has not been reading the trade papers. Only recently we had a major United States contractor in this country asking for orders, inviting Australian manufacturers to put in quotes for an order of perhaps $30m worth of aircraft equipment. That was for aircraft tanks. One manufacturing journal, I am sorry to say, made some quite foolish and facetious remarks about anybody being able to build tanks. These were of the most complex variety. It was a real engineering problem and the American manufacturer came out to look over our capacity to satisfy himself that we could not only do the order but that we could also do it on time and at a competitive price. This manufacturer is already manufacturing this particular line in his own factory. He is willing to negotiate with Australian manufacturers to do it, and if this does not indicate some success, some change of attitude, some heartening new approach, then I do not know what does.

Elsewhere in the aircraft industry, elsewhere in the electrical industry and elsewhere in the computer business there are growing signs that Australian contractors are being invited to make a contribution to American production in this particular way. It is true, as 1 have said publicly and as I have said in this House, that our aim in the future will certainly be to see that wherever items of major defence equipment are produced overseas - regardless of where this is - we will be seeking offset arrangements, the bigger the better, either in terms of part manufacture of the particular item or in terms of manufacture somewhere else in the line, preferably where it will improve our technological capacity, and secondly where it will make some contribution to the solution of our balance of payments problem. The honourable gentleman talks loud and long about what the United Kingdom is doing in Europe with Germany and France, for instance in co-production of military aircraft. Does this not tell the honourable gentleman something about the difficulties of the aircraft industry, when a country like Britain, which has been a pioneer and a major manufacturer of aircraft in one of the biggest markets in the world, suddenly finds it can no longer sustain this kind of production in its own country and must go looking for coproduction? How does the honourable gentleman believe that we are going to get along in an aircraft industry if we try to do that same kind of thing and find ourselves in competition with the most experienced aircraft manufacturers in the world?

He suggests that we can make our own aircraft. Does the honourable gentleman not understand the hundreds of millions of dollars which go into research and development and tooling for a military aircraft? Will the honourable gentleman be prepared to pay two or three times as much as we should pay for a military aircraft for the pleasure of having it made at home? Does the honourable gentleman not understand that the generation of requirements within our Air Force is so small that we could not keep an aircraft industry going, despite the fact that we did that? The alternative would be to go into world markets to get enough orders to keep the aircraft industry going and this would land us in competition with the most experienced producers in the world. The honourable gentleman is talking nonsense. It is a lovely thought. We would all love to do what he says we ought to be doing. Indeed, as I have indicated to him, the Department of Defence is making herculean efforts at this moment to go as far as it can in the direction I have mentioned and in the direction which he now supports, but to expect miracles, and to expect them at a price that Australia cannot reasonably afford, is arrant nonsense.

Mr WHITLAM:
Leader of the Opposition · Werriwa

(3.52] - This motion was designed to spur the Minister for Defence (Mr Fairhall) into making the statement, at last, which he should have made last Thursday night. Honourable members behind him have been so busy admiring the emperor’s new clothes that they have overlooked the equal nakedness of the Minister for Defence. The Minister for Defence has the specific responsibilities for the composition and equipment of the defence forces. Last Thursday, during the debate on the defence statement of the Prime Minister (Mr Gorton), he spoke for his allotted dme without mentioning those subjects once. Then as an afterthought he circulated a postscript - a document entitled ‘Supplementary Comment by the Hon. Allen Fairhall, M.P. - The Equipment Programme.’ The purpose of this statement was to offer an excuse for the abandonment of the concept of 3-year forward planning and to justify the Government’s failure to make any decisions on equipment at all. The Minister says in this statement: ‘No threat faces us that demands instant decisions.’

Mr Fairhall:

– You agree with that, of course?

Mr WHITLAM:

– Yes, I do. There is no threat. I agree with that. Nor are we asking for instant decisions. What is being asked is why no decisions have been made since 1964 and, in particular, why no decisions have been made since the last 3-year programme expired in June last year.

Everybody should note the remarkable new concept that the Minister has introduced into defence procurement: No immediate threat, no forward programme. Until the end of last year there was no indication that the Government had abandoned the concept of forward planning. All through last year we were promised the new 3-year programme. In June the Prime Minister, speaking at the National Press Club, promised it towards the end of the year. On 15th August he promised it before the end of the year. Sir Robert Menzies announced the last 3-year programme in November 1964. It came into operation in June 1965 and expired in June last year.

The Services are now without any forward procurement programme at all. No ships or aircraft have been ordered since last June when we ordered our last helicopter. Successive Liberal governments and successive Liberal Ministers for Defence followed, until a year ago, the pattern of defence procurement established by the Chifley Labor Government in 1947. In June of that year, the Labor Minister for Defence, Mr Dedman, introduced a 5-year defence programme designed to equip Australian forces for the defence of their country, to participate in regional security arrangements and to help maintain peace under international arrangements. His Liberal successor, Sir Phillip McBride, preferred a 3-year programme but retained the principle and practice of forward planning. So it was with Townley and Paltridge and, until a year ago, the present Minister. Programmes were announced on two occasions before the commencement of triennia and on three occasions after their commencement. On no occasion did the delay in announcing a new programme exceed 5 months. The sixth triennial defence programme is already 8 months overdue and the Minister said, in his statement outside the House:

I would anticipate that the Government would be able to include some major equipment items - although not a complete programme - within the forthcoming Budget session.

This will be 14 months later. Thus there will be no programme - no 1, 2 or 3-year programme - even by August, but there will be a little window dressing for the Budget, 2 or 3 months before the general election. All the orders for ships and aircraft have now been delivered, except for two Oberon submarines which are due for delivery in April and August of this year. There will then be nothing in the pipeline - nothing ordered before the next Budget. It would take 36 months even to equip the Navy with the additional 20 patrol boats which Admiral Crabbe asserts are required to safeguard our northern waters.

The Prime Minister and the Minister for Defence justify the Government’s failure to produce a 3-year programme, or any programme, in two ways: The future is too obscure; the events of the past year too unexpected. Yet Britain’s broad intention has been known since February 1966. Its precise details have been known since

January 1968. If planning is impossible unless the distant future is clear, then clearly we should never make any plans at all. Is the unfolding of events any more complicated or unpredictable now than in any of the years of any of the previous defence programmes between 1947 and 1964? The Prime Minister talks about the ‘imponderables of the 1980s’. What has the question of placing orders for the patrol boats got to do with the imponderables of the 1980s? What has the question of building up Australia’s defence industries or the question of rates of pay with the crucial effect on recruitment got to do with the 1980s? What have any of the orders that the Services would wish to place this year and next year, and about which they should have known a year ago, got to do with he 1 980s? The Prime Minister has given us a perfect prescription for a total paralysis of planning. The ‘imponderables of the 1980s’ is the perfect excuse for making no plans this year or last year. lt is plain what is happening. Australia is returning to those years of indecision and lack of planning in the 1950s that caused the running down of our defence forces and are still causing the running down of our defence industries. The result was that enormous increases in the defence budget and enormous burdens on the taxpayer had to be made suddenly and urgently in the last few years, lt led to the grandiose and costly gesture of the Fill with all its distortion, not only of the defence budget but of four successive genera) budgets, for a plane which wc still do not have and for which no role has yet been defined. It led to the unjust, costly and inefficient system of selective conscription. These are great dangers in terms of the economy and in terms of defence preparedness.

I want now to refer to research. In 1947 14% of defence funds were earmarked for research and development under the 5-year defence programme. The present Government is spending, this year, about 5±% of the annual defence budget. The Minister for Defence is not backward in urging other departments to plan for research. It is just 4 years ago this month since he was chiding the Postmaster-General (Mr Hulme) for not carrying out research to back the electronics industry in Australia. The fact is that for every $20m which we spend on imported electronic equipment $lm is invested by the overseas suppliers on their own research. The more electronic equipment we import the better our overseas suppliers are able to keep abreast or ahead of their field, and the further Australian suppliers lag behind. In answer to my colleague, the honourable member for Corio (Mr Scholes) I point out that last October, the Minister listed, among items of equipment purchased overseas for sums in excess of $im, new radar installations for the Navy and for the Army.

I turn now to the question of regional arrangements. The Minister’s constant harping on the smallness of Australian Service requirements masks the Government’s failure to negotiate effective regional arrangements for the procurement or shared production of standardised defence equipment. Australia could and should participate in such arrangements at least with New Zealand, Malaysia and Singapore, and perhaps with Japan. New Zealand spent $l22m for defence last year; she spent in Australia $76,000. Malaysia spent SI 28m; she spent in Australia $1,333,000. Singapore spent $26m, she spent in Australia $71,000. The requirements of three, four or five nations would constitute viable production runs where those of one or two may not. We would be able, through regional procurement arrangements, to negotiate on a more favourable basis for the supply, manufacture under licence, or co-production of those items which only great powers can afford to research and develop.

A Labor government would re-organise Australian defences around highly-trained, highly-mobile professional forces. Under a Labor government, Australia would acquire the capacity to deploy its military strength within 72 hours at any point within the South East Asian region. We would maintain that capacity and affirm our involvement in regional defence by entering into joint training arrangements with our neighbour nations. We would expect our forces to train constantly throughout the region, and we would encourage the forces of other regional powers to train in Australia. A Labor government would, as a matter of the highest priority, negotiate arrangements designed to achieve a maximum standardisation of defence equipment throughout the region. We would enter into agreements with other regional powers to share the production of most of the necessary equipment, and to put procurement outside the region on a collective basis. These are policies more practical by far and more advantageous both to our neighbours and to ourselves than the pieties of the Prime Minister and the procrastination of the Minister for Defence.

Mr HUGHES:
Parkes

– It is the height of nonsense for the Leader of the Opposition (Mr Whitlam) to prate, as he just has, about affirming an involvement with our Asian allies when in the last few days of the proceedings of this Parliament every spokesman for the Australian Labor Party has denounced the idea of affirming our interest in the affairs of our Asian allies to the simple extent of doing what two of them, Malaysia and Singapore, want us to do in the way of stationing troops in their countries. This attack is conceived in hypocrisy. The motive for raising this matter this afternoon does not take much searching out. The Opposition in the defence debate has taken as good a drubbing as it has ever received in the annals of its history in recent years, so it decided that it would change the tune and would come to the question, as it has done this afternoon, of defence planning and defence procurement. The sensibilities of the honourable member for Wilmot (Mr Duthie), who is interjecting, have been hurt. The truth hurts anyone on the other side.

The Opposition’s attack this afternoon is based upon misconception. The basic premise underlying the question it has raised is that the Government has abandoned the concept of forward planning. Nothing could be further from the truth. The Opposition’s action in raising this matter is accompanied by another strange circumstance. Opposition members solemnly - they must have their tongues in their cheeks - accuse the Government of tardiness, although a publication recently put out by Labor’s spokesman on defence, the honourable member for Bass (Mr Barnard), proclaims that ‘in the foreseeable future it is impossible to conceive of any significant external threat to Australia’. Let us make that assumption for the purposes of. the argument this afternoon. If that assumption be correct, I would have thought that the consequence that inevitably flows from it is that this is a time at which it would be quite impolitic and completely unwise for any government with a sense of responsibility to plunge precipitately into future defence planning. The Opposition has been so long out of government that it probably forgets that forward planning in relation to defence supplies and defence procurements means looking ahead in the case of ships for 20 to 30 years and in the case of aircraft for 12 to 15 years.

Here we are in a situation where, because of the wise planning and the wise policies of the Government carried through in the 1964 defence review, we are equipped or about to become equipped with the most modern aircraft available to any country. So this is not a time for undue haste. It is a time to take stock. If, as the Opposition says, the events pose no threat, it is a time to watch events and to see the dust settle before we commit ourselves inflexibly to any further long-term planning. It is not as if planning has stopped because the Government has not yet proclaimed a new programme for 3 to 5 years. In the last year we have seen the most comprehensive overhaul of the organisation of the Department of Defence, and that is a piece of planning that has met with universal acclaim. We have seen the dramatic improvement in the defence science organisation, so that in the Department of Defence this organisation will undertake cooperative studies with the Department of Supply and the various Service departments, thereby assisting in the formulation of equipment requirements and in the updating of procurement policies. All these things are being done and are being usefully done. The Opposition seems completely to miss the point when it counsels what in effect would be undue and unnecessary haste in the definition of a long-term plan for the future.

Of course, the Leader of the Opposition, as is his wont, sought to develop his argument by reference to what I shall, out of a sense of kindness and I hope justice, call patent inaccuracies. We are used to hearing these inaccuracies from him and some people are at times unkind enough to describe them more harshly. However, it is not necessary for my purpose this afternoon to challenge his motives. He said there is nothing in the pipeline. What an arrant falsehood that is. I will give him the benefit of assuming that he did not know what he was talking about.

Mr Cope:

– That is good of you.

Mr HUGHES:

– I am a very kind person. I am willing to be kind even to you. The facts are that various and significant items of equipment, ordered under the last 3-year programme, have not yet been delivered. They have not yet been delivered, not because the production schedule is behind but because the scheduled time for their delivery has not yet arrived. Let me add that it is about to arrive. There are two destroyer escorts, HMAS ‘Swan’ and HMAS ‘Torrens’. ‘Swan’ is due to join the fleet in September of this year and Torrens’ in July 1970. There are two Oberon class submarines, HMAS Ovens’ and HMAS ‘Onslow’. ‘Ovens’ is due to join the fleet in April of this year and Onslow’ in August of this year. Let us consider the position of the Royal Australian Air Force. As we all know, the F111C aircraft are yet to be delivered. There is an Orion replacement to be delivered in December 1969. There are 51 Macchi jet trainers due for delivery some time this year. There are three navigation trainers, the HS748 aircraft, to be delivered in May of this year. Two replacement Caribou aircraft are due to be delivered in March 1969 and early 1970. Various naval elements have been delivered but are not yet fully operational. The fitting of the Ikara in HMAS ‘Hobart’ will be completed in August 1969 and the fitting of the system to HMAS ‘Brisbane’, another of the DDG destroyers, will be completed in June 1970. I could go on quoting hard facts, and that is something that the Opposition always shies away from doing in any debate but particularly in a debate on defence or security.

Mr Charles Jones:
NEWCASTLE, VICTORIA · ALP

– Go on, give us the list. Do not stop.

Mr HUGHES:

– I have given the honourable member a good deal of it. If time permitted, I would cure the defect in his knowledge. But I suggest that the honourable member for Newcastle make his own inquiries. There are a lot that he could make, if I might say so. I am simply exposing the patent falsehood, the absurd falsehood, pro pounded by the Leader of the Opposition in this House this afternoon when he said that there was nothing in the pipeline. If the honourable member for Newcastle is to follow me in this debate, I challenge him to get his leader back on board on this issue. Let him demonstrate - I say that he will not be able to - that the Leader of the Opposition’s statement was true in the light of the hard statistics that I have just given. These are the facts.

I should have mentioned that as a result of the 1964 defence review, which, is still being worked out in terms of delivery, the strength of the regular armed forces has been increased by 33% to a total which it is estimated will be 85,000 at the end of this financial year. As a result of the sound, sensible defence planning of the Government in relation to manpower, equipment and the procurement of supplies generally, Australia now finds itself in a situation where it has the best and the best equipped defence forces ever in its history as a federation. Let no-one on the other side of the House try to challenge that proposition, because I say that it is completely unchallengeable. It is about time that the Opposition came to grips with realities. It is about time that it did what any party that wishes to achieve government would need to do as a first step, and that is to acquire a defence policy which is agreeable in terms of ideological or philosophical concept to the electors of this country.

Mr DEPUTY SPEAKER (Hon W C Haworth:
ISAACS, VICTORIA

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

Mr SCHOLES:
Corio

– The honourable member for Parkes (Mr Hughes) has added considerable weight to the Opposition’s arguments in this debate. He read out a list of defence items which are due for delivery very shortly, and on that list only one item will have any Australian content. I refer to the Macchi jet trainer, the programme for which will be completed this year. It is interesting to consider just what part Australian industry plays in the provision of Australian defence equipment. In answer to a question last year, the Minister for Defence (Mr Fairhall) supplied me with the information I am about to give. I hope that honourable members opposite will understand the importance of the figures. In the 5-year period from 1962 to 1967 Australian purchases of defence equipment outside Australia totalled $l,036m. Purchases of defence equipment for the Australian forces within Australia totalled $7 13m, which represents some 41% of the total purchases. The Government says it is likely that we will be required to defend ourselves, although the honourable member for Parkes did agree that there was no imminent threat to Australia.

Mr Hughes:

– I said that that was the assumption.

Mr SCHOLES:

– If the honourable member for Parkes does not agree with this, then his arguments are out of court. The point which was made and which must be made is that, if defence capacity is considered to be a continuing thing which must be available to a nation - to Australia in this instance - immediately or very soon after a threat develops, the basic requirement is ability to supply the defence forces with the equipment that they would need to provide such defence. To suggest that an army of 85,000 men and women, no matter how well trained and well equipped they are at this time, represents an adequate defence force is just plain humbug. In a time of emergency 85,000 persons would represent about 10% of the nation’s potential defence forces. In the Second World War nearly a million Australian men and women were under arms. This is the type of defence force that Australia would be required to mount and which it could mount in a defence emergency. How effective this defence force would be would depend entirely on the economic and technical ability we had to provide it with the necessary equipment with which to perform its task.

It is interesting to recall what Australia produced for its own defence during the Second World War. I admit that the equipment used then was not as technologically difficult to produce as that used today, but it is most likely that at that time major difficulties were posed for Australian industry. We produced 3 destroyers, 12 frigates, 60 corvettes and about 60 smaller craft, including patrol boats. Australian shipyards and dock facilities were able to service and maintain 12,000 ships that had a total tonnage of 52 million tons. We constructed in excess of 3,000 aircraft in Australia. We produced most of the requirements of the Army.

The provision of defence capacity is based on the possibility that we will be required to defend ourselves. If we reach the situation in which we will be required to defend ourselves again in a similar type of emergency to the Second World War, we must be able to produce in Australia equipment in amounts comparable to those produced during the Second World War. If we cannot supply the people we ask to defend us, we may as well not have a defence force at all. In terms of national policy it would be hypocritical and most likely disastrous to think that the number of people in the armed forces and our current equipment position represents our ability to defend ourselves under threat. The Minister for Defence, in his remarks, quite clearly indicated that in his opinion we could not afford to maintain an aircraft industry in Australia. In all probability this is a pretty clear indication of why our aircraft industry, particularly the work at the Government Aircraft Factory, is being run down at such a rate. In 1967 in one plant, the Government Aircraft Factory at Avalon, over 400 persons were employed. Currently not much more than half that number is employed there. Persons who have acquired skills through working on the construction of the Mirage aircraft in the main are now looking for jobs in private industry. They are no longer available for the defence forces of this country, although they are just as important to our defence as is any soldier or trained technician in the armed forces.

If we cannot maintain our equipment or produce equipment at the required rate, we are not providing for the defence of the country. It may well be that the running down of purchases of defence equipment which is quite obvious at this time results from the ideas which the Prime Minister (Mr Gorton), most likely in haste, voiced shortly after he came to office. At that time he indicated quite clearly to the Australian public that in his opinion defence had to take a lower priority in Australian economic planning. At this point of time, defence is taking a much lower priority. As the Leader of the Opposition said, no new defence projects are currently being advanced by the Government. The only defence items of a major nature which remain to be delivered were ordered nearly 5 years ago. It may be an indication that the Government considers that the defence situation is so static that nothing has changed in the last 5 years. It may be that the economic liability of the increased cost of the Fill aircraft has forced the Government to stop purchasing defence equipment or to slow down planning of purchases of defence equipment until such time at it knows what the cost will be or until such time as this aircraft is or is not delivered. There may be a major change in our defence pattern if the aircraft eventually becomes only a minor part of the United States Air Force instead of the major part that was originally envisaged. It is certain that the United States Air Force will not have the 1,200 to 1,600 aircraft that it originally indicated it would purchase.

This debate is on forward planning and in the very short time that I have left I would like to say this: If the Government is serious when it talks about the defence of Australia it has to be able to tell this Parliament exactly how it will cope with the situation if our armed forces increase tenfold in a very short time as they did between 1939 and 1942. The Government has to be able to say how it will plan for the production in Australia of goods the major components of which have been purchased totally outside this country, without the technical skills that are required. It will have to tell us what sort of planning it is that decides that it is too costly for us to help develop an aircraft, or that it is too costly to purchase radio equipment in Australia even though we have some of the most important and best electronic industries in the world. I think the Government’s policy is shortsighted and is based on political expediency rather than defence necessity.

Mr ARMSTRONG:
Riverina

– At least the honourable member for Corio (Mr Scholes), who just concluded his remarks, defined what this debate is about. The Leader of the Opposition (Mr Whitlam) said that the object of the debate was to stir the Minister for Defence (Mr Fairhall) into making a statement. The honourable member for Corio (Mr Scholes) claims that the debate is on forward defence planning.

His whole thinking is confused between the forward planning of a developing nation and putting a country on a war footing. The Government has planned our defence on a forward basis. Let us look at the situation the Government has had to take into account in its forward planning both of their total defence policy and of equipment policy. In recent times Britain has changed its plans on four occasions as to whether, and when, it would partially or wholly vacate South East Asia. Also the nature of certain commitments of the United States of America has changed. It was not until 1968 that Britain laid down that it would wholly vacate South East Asia by 1971. No responsible Australian government could lay down hard and fast programmes until this eventuality was known. The only thing that is really certain about the whole situation in South East Asia today is the uncertainty that still exists. It is most important that a great degree of flexibility is maintained in our strategic planning. It was necessary, in the light of all of these facts, to make a new strategic appreciation of the situation. This was clearly and lucidly set out in the Prime Minister’s defence review which was presented to Parliament last week. The object of the Government is to establish peace and maintain stability in the South East Asian region.

It is abundantly clear that great progress has been made in the equipment of all our forces in recent times. The Minister for Defence said this afternoon that the largest re-equipment programme ever undertaken by Australia will be fulfilled within a few months. The Deputy Leader of the Opposition (Mr Barnard), and also the honourable member for Corio, made great play of statements that have been made that we do not have the capacity to produce aircraft. In fact, I think that if we look at the Defence Report of 1968 produced by the Minister for Defence and at the statements made by the Deputy Leader of the Opposition, as a spokesman of his Party on defence, we will see a great deal of similarity, except that the Deputy Leader of the Opposition says that it should be possible to build some items, particularly aircraft, in Australia. There is apparently a great deal of misunderstanding of what is involved in building modern aircraft and in building modern naval craft. The intricacies and complexities involved in the construction of modern equipment is tremendous and the amount of capital that is required is very great. To set up one isolated industry in Australia, without all the machine tools that are required to build up the industry, would involve us in something that would be beyond our economic capabilities at present. In fact, in the case of the aircraft industry, the cost of tooling would be greater than the value of the aircraft produced.

Comparisons have been made - not in this debate but on other occasions in this House by members of the Australian Labor Party - between Australia and Sweden. It has been said that we should be capable of building aircraft, as Sweden does. Sweden is a country of only 7 million people. It has not been at war for some centuries. It occupies a small area. On the other band Australia is a vast continent. It is a developing area and has taken a major part in two very recent conflicts. So we have an entirely different situation. I believe there is no parallel at all in the situations of the two countries. The whole of this debate rather indicates that the Labor Party is grasping at straws in the defence world to try and make out a case for which there is no foundation. As the honourable member for Parkes (Mr Hughes) pointed out this afternoon, the whole approach of the Leader of the Opposition is different from that of some of the members of his own Party. He said that he would produce a highly equipped and highly scientific defence force that could be taken to South East Asia to combine with our neighbours in exercises and that their forces could come to this country. We have listened time after time to members of the Labor Party saying that on no account will they have Australian servicemen leaving Australia.

It is worth repeating what the new planning arrangements are. These arrangements are set out in the Defence Report 1968 and to a large extent are similar to the three points made by the Deputy Leader of the Opposition. The four main points, as set out in the Defence Report, are as follows: to provide for a larger defence planning component within the Department of Defence which will bring to planning continuity of application and a melding of service expertise and civilian experience in a wide range of disciplines;

Surely that is an objective that cannot be questioned by anyone with a national outlook. The remaining points are as follows: to provide greater capacity for the examination and consideration of longer term planning and policy issues; to achieve greater flexibility and speedier decision-making procedures by substituting full time staffs for formal committees; to provide more positive arrangements for the full impact of scientific, political, technological, economic and psychological factors, etc., in military planning.

Those are the objects that have been put into effect, as has been amply demonstrated on a number of occasions. Future planning is abundantly clear. It is as rigid as could be expected in the light of eventualities in this country. I am sure that what we are doing and what we will continue to do will show to our allies that we are playing our part. We do enjoy the confidence of our allies, both in South East Asia and elsewhere. In relation to defence, I am quite certain that this Government enjoys the confidence of the people of Australia.

Mr Charles Jones:
NEWCASTLE, VICTORIA · ALP

– The Opposition is greatly concerned at the policy being pursued by the Government, particularly at its abandonment of the 3-year plan for defence procurement and research. Not only the Opposition is concerned. Last week’s defence statement by the Prime Minister (Mr Gorton) was more than 12 months overdue. It was not a statement of the Government’s general defence proposals. It could easily have been delivered by the Minister for External Affairs (Mr Freeth), because it was a policy statement only as to where the Government stood in one particular part of the world - South East Asia. The Opposition is concerned at the failure of the Government to give a clear statement of its policy on defence procurement for the next 3 years. The Government had previously stated that every 3 years there would be a review of policy and that a clear statement would be made as to what it proposed to do.

The Minister for Defence (Mr Fairhall) supported the Prime Minister’s defence statement, and later the same day issued a supplementary statement which apparently was an addition to his speech in this House. However, he still has not made any clear statement on the Government’s defence plans. The Opposition is concerned at the

Minister’s confidence in his own ability. The Minister says: ‘I am always right. The Opposition is always wrong. The Government always does the right thing, and whatever the Opposition suggests must be wrong. What the Opposition suggests is foolish; there is no need for it. The time is inopportune.’ Such statements are repeatedly made by the Minister for Defence. What is the Minister’s answer in relation to the Fill aircraft? As an expedient, on the eve of the 1963 election the then Prime Minister, Sir Robert Gordon Menzies, said that this was the best aircraft procurable. Now over 5 years later there is still not one Fill aircraft in this country, even though Australia has already paid out over $150m towards its cost.

Today the Minister for Air (Mr Erwin) reported to the Parliament that another FI 1 1 aircraft had crashed near Las Vegas in America. How much longer does Australia have to wait for this aircraft, which is now acknowledged not to be the same aircraft that Australia ordered in 1963? Its performance is not the same; its range, speed and everything associated with it make it a different aircraft altogether. The Minister for Defence always talks about how right he is. I would like him to explain why the Fill aircraft has not been delivered and why it is not the same aircraft that we ordered in 1963.

In his statement the Minister for Defence said: ‘We have purchased twenty patrol boats in Australia, but they cost three times as much as they would have cost if we had purchased them in a Japanese shipyard’. Why did the Minister not tell us that wages in Japan are half of what they are here, that the hours of work per week are much longer than they are here, and that the subsidies paid by the Japanese Government to assist its shipbuilding industry are greater than the subsidy paid by the Australian Government to its shipbuilding industry? The Minister talks about these ships being built in Australian shipyards at three times the cost at which they could be built in Japan. Why does he not take his argument to the extreme and man the Australian forces with Japanese, because no doubt he would be able to pay them much lower wages than he pays to members of the Australian forces?

The Opposition would like a factual statement about procurements in the future. We are concerned at the amount of equipment which is being purchased overseas. Unfortunately I have not up-to-date figures on this but, in reply to a question asked by the honourable member for Wilmot (Mr Duthie), the Minister for Defence said that in the 3 years ended 1963-66 a total of $336m worth of war materials and equipment was imported into Australia from overseas and that the value of the equipment manufactured in Australia was $3 86m. The Opposition is concerned at the fact that Australia’s industry is not being exploited to the maximum. The Opposition is also concerned as to what the Government has in mind in regard to material to be supplied to our forces. I refer to the statement of the honourable member for Parkes (Mr Hughes) as to equipment which is to be supplied. I accept his statement as being factual, but what the honourable member failed to point out was that no piece of naval, Air Force or military equipment other than the Fill is due to be delivered after 1970. I thank the honourable member for Parkes for having confirmed that the Government has no plans for the future expansion of the Australian forces.

In the supplementary statement issued by him last Thursday night the Minister for Defence said that the Government has to think in terms of 25 years for ships and of 12 to 15 years for aircraft. What has the Government in mind for the next 25 years in regard to ships? What has it in mind for the next 12 to 15 years in regard to aircraft? The Government has no plan for the supply of this equipment even though it is supposed to have adopted a policy of forward planning. The Australian Labor Party has previously pointed out that it believes that the number of troops stationed in South East Asia is inadequate.

In relation to the Navy, let us have a look at what Admiral Crabb had to say in August of last year in reply to a question put by the honourable member for Oxley (Mr Hayden) during an exercise off the Australian coast. Mr Hayden, referring to three guided missile destroyers, asked the Flag Officer commanding the Australian Fleet, Admiral G. J. B. Crabb, whether they made a viable force. The Admiral replied: ‘There have been proposals to get more. To get the full benefit we should have at least four.’ He went on to point out that the twenty patrol boats which were procured, and to which the Minister referred today, were not sufficient and that we should have 40 or 50 of these boats. At the present time we have a fleet tanker, HMAS Supply’, and a destroyer tender, HMAS Stalwart’, to service our fleet. On this point Admiral Crabb said: ‘We would require and should acquire at least two more of these vessels.’ Recently when HMAS ‘Perth’ was operating with the United States Seventh Fleet it required logistic support every day and a half on an average, yet at no time could these two supply vessels, the fleet tanker and the destroyer tender, provide the necessary support to the Australian fleet. The position today is that neither the Williamtown shipyard in Melbourne nor the Cockatoo dockyard in Sydney has a ship on the slipway. Neither of these two shipyards has an order for the construction of a ship. Why has not the Government placed an order for these two types of vessels so as to maintain necessary support for Australian naval vessels? If the Government is to have a forward plan, these are the sorts of things which it requires.

Australia has not sufficient Australian owned ships to service the requirements of Australian industry coastwise. We do not have passenger ships to transport troops from Australia to a forward position. We do not have an aircraft industry large enough to supply and service the aircraft needed to support our troops in forward positions. The Government has submitted a plan which is supposed to be a forward defence plan, but the Government does not have the equipment needed to maintain a force overseas. It has a pretty plan but no material to back up that plan. It is this state of affairs which is of concern to members of the Opposition. The Government has a plan but it is not prepared to utilise Australian industry. In the shipbuilding industry no yard has orders for work beyond 1970 with the exception of the Newcastle State Dockyard, which will hand over in February 1971 a dredge. Other than that order it has no substantial orders. The managements of Evans Deakin, Whyalla and Newcastle shipyards have approached the Government to place orders for ships. The shipyards have asked the Government to provide a reasonable subsidy on shipbuilding comparable with subsidies paid by overseas governments to maintain their shipbuilding industries. There is no more important industry than the shipbuilding industry.

Mr DEPUTY SPEAKER:

-Order! The honourable member’s time has expired.

Mr HOWSON:
Fawkner

– The Opposition has a habit of jumping on bandwagons from time to time. Sometimes those bandwagons are topical and sometimes they are rather out of date. Listening to the Deputy Leader of the Opposition (Mr Barnard) this afternoon I thought that he was a little behind the times. There were two things for which he castigated the Government. They were in respect of the obtaining of offset orders for defence equipment when placing orders abroad and the gearing of Australian industry for purposes of defence. Nobody in Australia has done more to alert us to the need for offset orders and for Australian industry to be geared for defence than has the Minister for Defence (Mr Fairhall). The first part of this debate seemed to me to be almost a Fairhall benefit. I know that the Minister has done his utmost to impress upon other countries the importance of sharing purchases in Australia so as to offset our purchases overseas. We should not forget the great work that he has done throughout the years both as Minister for Supply and Minister for Defence. As Minister for Supply he did a tremendous job in gearing Australian industry for defence production. Any delay in this process is due largely to the industry itself. There were many occasions of which I became aware when I was Minister for Air when Australian industry was requested to engage in research and development of new products for the aircraft industry, for instance, but it did hot avail itself of these opportunities. Often these opportunities were presented to Australian industry, particularly the electronics industry, but there was no reaction and eventually the orders had to be placed overseas. We must give credit to the Minister for Defence for his efforts to gear Australian industry for defence.

The Leader of the Opposition (Mr Whitlam) referred to defence programming. He said that there was a need for 3-year programmes of defence planning. Let us examine the history of the 3-year programme which started in 1964. At that time there was a sudden increased threat to the security of Australia. If we cast our minds back to the period between 1964 and 1968 we will recall firstly Indonesian confrontation of Malaysia and secondly the war in Vietnam. It is important to remember that this was a period approximately 20 years after the end of the Second World War. The 3-year programme that commenced in 1964 was geared chiefly towards large and expensive items which take some time to be delivered. For example, there were orders for the DDG destroyers and for expensive aircraft such as the Fill. All of these items were high capital cost items with a long service life - 20 to 25 years in the case of ships and 10 to 15 years in the case of aircraft. The ships that were on active duty with the Navy until about 1963 were largely of last war vintage. The Canberra bomber had just come to the end of its useful life. So at a particular period in our history it was necessary to have a long and expensive programme for the re-equipping of our defence forces at a time when the threat to our security was growing considerably, but that programme could not be encompassed in one year. So at that time a 3- year programme was important.

But the situation has changed. Is it so necessary to have a 3-year programme now rather than the present system of continually updating the programme as the situation changes? I know that the Opposition is beloved of 3-year programmes - socialised programming - but we on this side of the chamber believe that the important thing is to acquire for the Services the things they need when they need them. There has been a continuing programme for the re-equipping of the forces. Four years ago the value of equipment delivered to die forces was $200m. This year - a year in which the Opposition says there has been no re-equipment programme - the value of equipment delivered to the armed forces will be $500m. At the end of this financial year there will be an outstanding balance of a further $130m worth of equipment to be delivered, taking no account of extra orders likely to be placed between now and the end of the financial year. So what has happened is that the big items were ordered in the last 3-year programme. Now that those big items are in the process of being delivered a more even programme for the future is being built up and orders are being placed overseas and in Australia. Those orders are continually being delivered to our forces.

So instead of the Opposition’s beloved fixed and inflexible 3-year programme we have a continuing and flexible programme meeting the needs of our armed forces from year to year. AH 1 can say to anybody who claims that our defence programme was unwise is that he should look at the state of our armed forces today. He will see that purchases that have been made and delivered over the last 3 or 4 years have been entirely wise and meet the present needs of the forces. There are no immediate deficiencies in the Services. As the former threat to our nation recedes and as possible future threats are being assessed there is no need for undue haste. Haste in ordering large items of equipment is not warranted. It is much wiser to pursue a policy of continually updating defence orders. This is the policy which the Government has adopted while it carefully makes a long term assessment of our future needs.

The honourable member for Corio (Mr Scholes) referred to the aircraft industry. Inherent in an aircraft industry, whether in Australia or overseas, is a fluctuating load, particularly in respect of delivery of military aircraft. As aircraft are likely to last for 10 to 15 years, there must of necessity be peaks and valleys in factory production. The honourable member for Corio failed to inform the House that there is a large, stable maintenance load for the aircraft industry. Those in the industry who are involved solely in producing new aircraft are few compared with the number who maintain aircraft already in operation. This maintenance load is spread not only over the Government Aircraft Factories and the Commonwealth Aircraft Corporation but also over a widespread and large number of other aircraft factories, which are now benefiting in one way or another from doing maintenance work for the Royal Australian Air Force on aircraft already in operation. The honourable member also referred to the fact that workers are being displaced at the Government Aircraft Factory at Avalon. It should be remembered that a large number of these displaced workers are going into industries where the skills they have learned in the aircraft industry can be put to tremendous advantage. The honourable member failed to mention that in the event of an emergency these displaced workers can be withdrawn from their present employment and put to work at Avalon. The skills they have learned over the years will still be with them.

Mr DEPUTY SPEAKER:

– Order! The honourable member’s time has expired and the time for the debate has expired.

page 410

PUBLIC SERVICE ARBITRATION BILL 1969

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

Second Reading

Mr BURY:
Minister for Labour and National Service · Wentworth · LP

– I move:

That the Bill be now read a second time. The principal Bill in the group I am now introducing to the House seeks to amend the Public Service Arbitration Act 1920- 1968. The amendments to legislation proposed by the other four Bills are made necessary largely by the changes proposed by the Public Service Arbitration Bill. For this reason I believe it would suit the convenience of the House if the five Bills were debated together. The main purpose of these Bills is to augment the Public Service arbitration tribunal by the appointment of deputy arbitrators so that it can cope more effectively with the growing volume and variety of work coming before it.

Legislation to provide a system of arbitration for the determination of claims about wages and conditions of employment in the Commonwealth Public Service was first enacted in 1911 by the Arbitration (Public Service) Act. Under that Act, the Commonwealth Court of Conciliation and Arbitration was given jurisdiction to deal with claims made on behalf of those employed by the Commonwealth. In 1920, the system for determining such claims was changed by the Public Service Arbitration Act to the form in which it exists today. Under the Act of 1920, the statutory office of Public Service Arbitrator was established. In 1952, the Act was amended to provide for appeals and references from the Arbitrator to the then Commonwealth Court of Conciliation and Arbitration, which was later replaced by the Commonwealth Conciliation and Arbitration Commission. In that particular respect, the Public Service Arbitration Act was brought into line with the Conciliation and Arbitration Act.

The system created in 1920 was designed for a very different set of circumstances from those now existing. There was then a very much smaller and more homogeneous Commonwealth Public Service, with most employees being engaged in administrative and clerical duties. Today, more than a quarter of a million employees or a little over 6% of the total number of wage and salary earners in Australia come within the jurisdiction of the Public Service Arbitrator. The administrative-clerical employee, the traditional type of public servant, no longer predominates because of the growth of industrial employment with the Commonwealth in departments and instrumentalities such as the Department of Works, the Department of the Navy, the Department of Supply, the Post Office and Commonwealth Railways. The stage has been reached, with this growth in the number and variety of occupations, whereby one arbitrator cannot be expected to deal with the volume of business which comes within his jurisdiction.

Use has been made of section 15 of the Act, which enables the Arbitrator to refer to a person authorised by the GovernorGeneral a claim or application for investigation and report. Some years ago, an officer of the Commonwealth Public Service was appointed to undertake this work on a regular basis. He became known as the Assistant to the Arbitrator. In August 1966, this arrangement was extended when one of the conciliators from the Conciliation and Arbitration Commission was made available to assist the Arbitrator on a part-time basis. More recently - in September last - I announced that two members of the Concilation and Arbitration Commission, one of whom was formerly the Conciliator to whom I have just referred, would assist the Public Service Arbitrator pursuant to section 15 of the Public Service Arbitration Act. In approving of this action, the Government had in mind that the Act would be amended, as now proposed, to provide for the appointment of deputy arbitrators and so strengthen the resources of the tribunal.

There will be no limit specified as to the number of deputy arbitrators who may be appointed. This will enable appointments to be considered as circumstances warrant. It is the Government’s intention to make two appointments on the passage of this legislation. Deputy arbitrators will be statutory officers appointed for a term not exceeding 7 years, as is now the case with the Arbitrator. A deputy arbitrator will be able to hear and determine matters coming before him in accordance with the procedures of the present Act. However, as it is essential that there be broad consistency of approach in dealing with industrial issues involving employment in the service of the Commonwealth Government, the Bill provides for determinations made by deputy arbitrators to be with the concurrence of the Arbitrator.

Another major provision in the Bill which is designed to bring the Act more into line with current needs deals with the date of operation of determinations of the Arbitrator. As the Act now stands, a determination can only come into operation after a period of 30 days from the date on which it is tabled before both Houses of Parliament. Either House may resolve against a determination which is not in accord with a law of the Commonwealth. It is proposed, therefore, that the Arbitrator be empowered to decide when a determination shall come into operation. However, the existing provision will be retained whereby all determinations are placed before Parliament and either House will still have the power of resolving against a determination not in accord with Commonwealth law.

The Bill also provides for some minor amendments of an essentially machinery character. These include, for example, provisions which are necessary because of the proposed appointment of deputy arbitrators; provisions as to the preservation of rights of certain officers appointed as arbitrator or deputy arbitrators; provisions having to do with the resignation of the Arbitrator, the appointment of an acting arbitrator, the protection of the office of Arbitrator and of deputy arbitrator, the oath of office and continuation of hearings in the absence of either the Arbitrator or a deputy arbitrator. The amendments proposed by the Bills to amend the Officers’ Rights Declaration Act, the Superannuation Act and the Commonwealth Employees Compensation Act flow from the proposal to appoint deputy arbitrators.

The short Bill to amend the Conciliation and Arbitration Act also contains essentially machinery amendments. One of these flows from the proposal to appoint deputy arbitrators and the remainder have to do with matters such as the preservation of the rights of commissioners and conciliators on appointment, clarify the intention of subsection (2) of section 41a and protect the Commission when exercising jurisdiction under the Public Service Arbitration Act. I commend the Bills to honourable members.

Debate (on motion by Mr Webb) adjourned.

page 411

COMMONWEALTH EMPLOYEES’ COMPENSATION BILL 1969

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

Second Reading

Mr BURY:
Minister for Labour and National Service · Wentworth · LP

– I move:

That the Bill be now read a second time.

The purpose of this Bill is to amend section 15 of the Commonwealth Employees’ Compensation Act consequent upon the provision in the Public Service Arbitration Bill for the appointment of deputy public service arbitrators.

Section 15 is concerned with any determination of the Public Service Arbitrator that, in relation to persons who come within the scope of the Commonwealth Employees’ Compensation Act, makes provision for the grant of compensation or other benefits in respect of personal injury by accident arising out of or in the course of their employment. The section provides that a person is not entitled to compensation or benefits both under such a determination and the Act. The amendment being made by this Bill will ensure that section 15 will apply also to a determination made by a deputy public service arbitrator. I commend the Bill to the House.

Debate (on motion by Mr Webb) adjourned.

page 412

CONCILIATION AND ARBITRATION BILL 1969

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

Second Reading

Mr BURY (Wentworth - Minister for

Labour and National Service) [5.4] - I move:

That the Bill be sow read a second time.

This Bill amends the Conciliation and Arbitration Act 1904-1968. I have already referred to the proposals made by the Bill in my second reading speech in relation to the Public Service Arbitration Bill 1969 and I commend the Bill to the House.

Debate (on motion by Mr Webb) adjourned.

page 412

OFFICERS’ RIGHTS DECLARATION BILL 1969

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

Second Reading

Mr BURY:
Minister for Labour and National Service · Wentworth · LP

– I move:

That the Bill be now read a second time.

This Bill amends the Officers’ Rights Declaration Act 1928-1968 and it flows from one of the provisions of the Public Service Arbitration Bill just introduced - that is, the proposed appointment of deputy Public Service arbitrators. I commend the Bill to the House.

Debate (on motion by Mr Webb) adjourned.

page 412

SUPERANNUATION BILL 1969

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

Second Reading

Mr BURY:
Minister for Labour and National Service · Wentworth · LP

– 1 move:

That the Bill be now read a second time.

The purpose of this Bill, which is consequent upon the Public Service Arbitration Bill, is to vary the definition of Public Service Arbitrator in the Superannuation Act to include a deputy Public Service arbitrator. I commend the Bill to the House.

Debate (on motion by Mr Webb) adjourned.

page 412

LOAN (SUPPLEMENTARY BORROWING) BILL 1969

Second Reading

Debate resumed from 26 February (vide page 174), on motion by Mr Swartz:

That the Billbenow read a second time.

Mr CREAN:
Melbourne Ports

– As the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) indicated when he introduced this measure, it makes provision, additional to that now contained in the two 1968 Loan (Housing) Acts which we passed in the last Budget session, for the appropriation of the proceeds of Commonwealth borrowings. He went on to observe that the additional appropriation is needed because further opportunities for Commonwealth borrowings abroad are expected to arise in the remaining months of this financial year. I think that later on he said that those expectations are of the magnitude of $150m. Subsequently in his speech he observed that while no specific legislative authority is necessary to raise further loans and credit the proceeds to the Loan Fund, the money cannot be appropriated without parliamentary authority. It is a very good saving clause which provides that moneys cannot be appropriated without parliamentary authority. Nevertheless, if that authority is to be properly exercised, I think that occasionally we need to look at the whole framework of Government finance.

It is a very difficult matter to make an appraisal of this question when we are involved in a Federal system which is virtually a three tier system of Government and when, in addition to internal transactions, we also have external transactions which we endeavour to evaluate. I do not want to say a great deal about the question of foreign borrowing this evening because several of my colleagues will go into more detail on that later in the debate. In the existing circumstances of the Australian economy we have allowed ourselves to become dependent on money raised abroad. The margin between our exports and imports is about$ 1,000m and that has been bridged in recent times only by an inflow of capital from overseas. This $ 1,000m is about the same measure as the level of our overseas reserves, so if we did not get it in a particular year we would soon be facing difficulties in paying for essential imports.

What we have drawn attention to is that we have allowed ourselves increasingly to become dependent upon this level of investment and there seems to be very little attempt on the part of the Government to indicate whether something should not be done to alter the structure of the Australian economy so as to make it less dependent on a capital inflow of that kind. It is not always realised just how dependent in particular sections of the economy we have become upon these now fairly regular inflows of capital, and I would draw the attention of the House to the latest statistics that have been issued. They are headed Not to be published before noon on Thursday 20th February 1969’. so they are recent enough, and they show ‘Capital Expenditure by Private Business in Australia for the December Quarter of 1968 - Preliminary’. They give the actual results for the 12 months ended June 1968. They include expenditures that were of a separate magnitude, in each case, of $500,000 or more.

They exclude small transactions like the individual building of houses, small factories and so on. So for the most part what is contained in the statistics is the substantial part of capital equipment for the period concerned.

For the year ended June 1968 new building aggregated $675m and other new capital equipment aggregated $l,J97m, which made a total of $ 1,872m. It is this category of other new capital equipment that is the source of future growth in the Australian economy. This sum of $ 1, 872m which was divided between building and other new equipment was also separately divided by the Statistician between manufacturing and non-manufacturing activity. Manufacturing activity for the 12 months accounted for $831m and nonmanufacturing SI, 041m, of which mining represented $325m. If honourable members would relate those figures, as I believe they ought to relate them, to the statistics that arc published with regard to overseas investment for 1967-68 - the periods are comparable - in table 5 they will find the annual inflow of direct private overseas investment in companies in Australia, showing the industry in which the capital was invested and the category of the investment.

In the field of undistributed income, in manufacturing there was an investment of S129m, and other direct investment amounting to S81m, making a total of $2 10m. In the category of primary production - which includes mining - the figures were 316m and $126m respectively, making a total of S142m. I think it should be taken that most of what is called capital inflow in the section other than portfolio investment goes directly into the accumulating of assets in Australia or the creating of new assets and that is why this question of foreign investment is much more important than the broad figures indicate. The Treasurer is disposed to say: Oh, well, it is only $ 1,000m and this is only about one-sixth of our annual capital investment, anyway’. But what is ignored in this kind of simple analysis are the sections to which the investment is going. There is no doubt, I would suggest, that these are things which ought to be more carefully statisically defined. 1 can see no reason, for instance, why this compilation of the capita! expenditure by private businesses in Australia by the Statistician should not have a separate category as to which part of ii relates to businesses which, whilst in Australia, are not directly owned in Australia.

If those statistics were given - and I do not think they would be difficult to obtain - at least there would be a greater awareness of where - or the strategic seat, if you like - foreign investment is beginning to get in the whole structure of Australian industries. As I said, I do not want to go into too much detail on that because it will bc developed by others afterwards, but what we have said on this side is that if for the time being we do have to have a certain amount of foreign investment we ought to be more careful as to the type of it. We have suggested that it is better to have government to government borrowing on a terminable basis than to have an undue spate of direct investment that can virtually stay in the country for ever as far as assets are concerned but will take ils toll in the form of profits, interest, patent rights and so on. That is why we prefer borrowing by the Commonwealth Government from other governments overseas on a set period - say 5 or 10 years - to the ether pattern. But, nevertheless, we do say that we ought to be taking the long perspective as to the future situation.

We should be much more critical than we are. We should not just say that we are lucky this year that we have bridged our balance of payments deficit by a capital inflow which it does not seem one can calculate for several months after it has actually occurred. Of course, it has increasingly been going into the portfolio field, and much of what goes into that field - according to experts such as the Australia and New Zealand Bank Ltd in its last quarterly survey, it is what might be called hot money - will flow out just as rapidly as it came in, which may have deleterious effects on the balance of payments or on the level of overseas reserves. That is why at this stage the Treasurer seems to think it prudent to borrow overseas anything that he can borrow. In order to get parliamentary sanction for it he has to relate it somehow to the works programmes of the States and local authorities in Australia. That seems to be the kind of fiction that is involved in this measure. It is an opportunity, at least, to look at the totality of government accounting in Australia. I want to talk in particular of what I think is the raw deal that the States are getting. Also involved is the other level of government - the amount that local authorities are receiving by reason of existing financial arrangements. 1 suggest that honourable members should consult some of the rather voluminous material that is now submitted with the Budget. A lot of material does not arrive until after the Budget, and one such document, which arrived a few days ago, is described as the ‘Supplement to the Treasury Information Bulletin - National Accounting Estimates of Public Authority Receipts and Expenditure’ and is dated December 1968. 1 think this was in the hands of most honourable members a few weeks ago. It contains, in a table described as table 9, the receipts and outlay of all public authorities from the financial year 1959-60 and the estimated figures for 1968-69. This relates to expenditure at all levels of government in Australia - expenditure by the Commonwealth Government, State governments and local authorities. The estimated total outlay at those three levels for 1968-69 is $8,664m, which is a substantial sum in terms of a gross national product of about $25,000mnear enough, for rough calculations, to one-third of the gross national product in

Australia being outlaid by the Commonwealth, the States and the local authorities. To meet that great outlay, $6,592m is collected in taxes at all levels, from the Commonwealth to the States. Other receipts - the surpluses of public utility undertakings - aggregate $ 1,204m, which gives a sum total of $7,796m and indicates an overall deficit of $868m. It is that overall deficit on total account that I want to speak about, now.

We no longer live in simple days when every government neatly balanced its own budget year by year. We still talk about a balanced budget but we balance it now by bringing into account a lot of items that in earlier days would have been described as capital transactions as distinct from income transactions. Nowadays all transactions are scrambled together. In some respects there is a certain degree of logic about this. After all there is a great deal of difference between an individual who buys a motor car and hopes that it will last him 3 or 4 years - and it is prudent for his own finances that he should account for that over a period of 4 years rather than 1 year - and governments that each year are buying thousands of motor cars, new rolling stock for railways and are building new hospitals, schools and so on. Even though the buildings may last for a number of years the sort of accounting principles that might be applicable to an individual, private firm or even a large company, certainly are not applicable to the total finances of government. Therefore I, for one, can never see any great need to wrangle about the fact that some of what is called ‘capital works’ is paid for from what is rather simply called ‘revenue’.

The Minister assisting the Treasurer (Mr Swartz) provided some rather interesting figures - even startling figures. He related the history from 1950-51, which is really the time when this Government had its first full budget, up to the present time. He said that in that period the Commonwealth Government has found, from its own resources, $2, 187m to meet the short fall in approved programmes - Joan programmes - and has, as well, financed over $5,400m of Commonwealth capital expenditure from revenue. I know that there are some people who say that if that had been financed out of loan funds instead of out of revenue we would have been able to have had so much less in taxation. I suggest that this is rather an over-simplification of the situation. The Government has available to it the power to tax if it wants to do so. It has available to it the prestige of raising loans from its citizens, although very little of loans these days is raised from what might be called John Citizen. Most of what appears in the loan accounts is shovellings between one financial institution and another. In fact it is surprising how much of what is called the ‘Commonwealth debt’ is actually owned by the Commonwealth itself. Of course, there is a certain sense of injustice on the part of the States that they have to pay interest on a lot of the money that really belongs to the Commonwealth. Again, this is one of the untidy ends of CommonwealthState financial relationships.

It is interesting to refer to the interest figures which can be found in the table to which I referred earlier concerning the transactions of all public authorities. The interest burden on the States is now somewhere of an annual magnitude of $460m. If honourable members devoted their time to chasing information as to where a lot of that money goes they would find that it goes back in one remove or another to one of the Commonwealth’s pockets. Of course it is said that if we did not do that then the Commonwealth would have so much less available for making reimbursements and so on. It is not easy to get a tidy, simple picture of the whole transaction, but because it is not easy to get a simple picture of the whole transaction it is easy for the situation to become camouflaged. I would submit that that camouflage is occasioned largely because the Commonwealth undoubtedly is the -financial master of the situation. But it is still the States which are responsible for carrying out many of the major functions - education, health, irrigation systems, water works, railways and so on. These are all State responsibilities. In fact, if we take out of the Commonwealth’s transactions the two big fields of defence and social service payments, the actual transactions of the States are far greater than those of the Commonwealth. I think this is the point at which we are now getting so much friction.

At the other end we have a good deal of untidiness in what might be described as the poor relation of the system, and that is local government. I do not think it is always quite apprehended that very close to half of Australia’s population of 12 million people is contained in the two cities of Melbourne and Sydney. Whether that is good or bad, I do not know. The other day I read a book about urban economics that contained a rather tragic note, at least for those who talk hopefully about decentralisation. The author was dealing with America. He said that he could not find any example in American history of a city, having reached a population of 50,000, ever becoming smaller. All the cities became bigger. In Australia, far more than half of whatever growth in population is taking place - it is significant enough - goes into the cities rather than the rural areas. So the problem is becoming greater rather than lesser. We face the horrible prospect of Melbourne and Sydney, probably in our lifetimes, reaching a population of more than 5 million each, and goodness knows they seem to be in a devastating enough mess already.

Whether the problems that must be faced by the large metropolises will be met through the existing financial arrangements, I, for one, have grave doubts. When we speak about the difficulties in Australia, we tend to speak only about this Government. It has been in office for so long unfortunately that we tend to identify everything with it. It has been in office for near enough to 20 years. One of the big difficulties in Australia is that we do not tend to anticipate problems; we grapple with them only when they become crises. If a situation is left until it becomes a crisis, it is not always possible to get the best solution. In relation to the metropolitan areas and the non-metropolitan areas and also in relation to the financial responsibilities of the States as against the Commonwealth, we have a situation that is deteriorating instead of improving. How does this sort of difficulty arise?

It seems to rae that a suitable case study to use is an article published in Vol. 8, No. 2 of ‘Farm Policy’ for September 1968. This should be of interest to members of the Australian Country Party who, 1 take it, are interested in farm policy. The article was written by Mr K. M. Mckenna, who is the Senior Research Officer of the State Treasury Department, Perth, Western

Australia, and it is entitled ‘StatesCommonwealth budgeting problems for development projects’. Mr McKenna refers in detail to what is known as the Comprehensive Water Supply Scheme in Western Australia. What he says is very relevant to the situation in the whole of Australia. He says:

In the first place Commonwealth special purpose assistance is always confined to a specific project which is fairly narrowly defined for the purpose of the aid. As a result States cannot avoid the capital and running costs of the support structure necessary to make the project viable. Quite often it is these expenditures, rather than outlay on the project itself, which are critical in the decision whether to proceed, and it is really a temporary relief to get only part of the total requirements.

He then goes on to say that if an authority builds a dam somebody else is responsible for building the roads. That somebody else is either the local authority or the State. The State is responsible for building the new school that is needed in the town and so on.

Dealing with the Comprehensive Water Supply Scheme, he says:

From the State point of view the benefits of this project were primarily indirect-

By ‘indirect’ I am afraid that he means not directly financial but really the sorts of things that are qualitative rather than quantitative to community life. He goes on to say: in that some decentralisation of population could be effected, and assured water supplies on farms would provide more stability in sheep population, wool production, and rural income. This could be expected to have some beneficial effect on the Western Australian economy through a steadier demand from the rural sector. These are all advantages, but have no tangible financial return to offset the financial outlays involved. However, the Commonwealth could expect a direct benefit from taxation on improved rural incomes and sales tax on the higher financial turnover of the community.

That seems to me to describe the situation very well. Towards the end of the article he summarises the real difficulty from the point of view of the States. It is true that he gives some offsetting disadvantages that the Commonwealth may meet, but at this stage I want to speak about the difficulties of the States. The annual wrangling that goes on is not producing any solution to the problems. The Leader of the Opposition (Mr Whitlam) in his speech during the Budget debate referred to the need for what he called programmed budgeting. He meant that an appraisal of this sort cannot be done on the curiosity of the calendar; that it should have more to do with the life cycle of the projects involved. Mr McKenna summarised the situation from the point of view of the States in this way:

  1. Funds, for both capital and operating, are limited and substantially determined by exogenous factors.

They are factors outside the control of the States-

  1. Expenditure responsibilities constantly outstrip available funds.
  2. Special project assistance from the Commonwealth is usually subject to a matching contribution, does not extend to the necessary support structure, and is a drain on future State capital funds.
  3. Whether the whole project is financially a net cost or net benefit to the nation, the cost falls on the State while the direct financial return accrues in the main to the Commonwealth.

That seems to me to be a fair enough summary of the difficulties that affect the States. in some respects it is true to say these days that it is impossible to tell whether the Budget balances the economy or the economy balances the Budget. I suppose it does not matter a great deal anyway, but the way the final accounts are drawn together makes it impossible to tell until towards the end of the year whether we will rely on private capital expansion or public capital expansion, on private borrowing or on Reserve Bank credit and so on. These are matters of nicety of timing. But the financial initiative in all these directions lies with the Commonwealth. It collects the major taxes - the income tax and the company tax. I am one who believes in the continuance of what is called uniform taxation, although I do not agree with the mechanisms by which the amount that is collected is distributed to the place where it is needed. The Commonwealth is responsible for the monetary policy of the nation through the operation of the Reserve Bank and so on.

The other way in which some initiative can be taken by the States as distinct from the Commonwealth is in the tidying up of the existing nexus of local government authorities. In many respects local government authorities are historical accidents. I have said in this House before that if 1 were the Treasurer - I hope some day that I might be - I would be very reluctant to give sums of money to the Melbourne

City Council because of the way it is presently constituted. I believe that to ensure proper development the boundaries of the old local government authorities should be varied. That is an area where the initiative lies with the States, because local government authorities are the creations of State legislation. The States created them and the States can vary them. Nevertheless it is at this third level of government, which is distinct from State government as a whole but perhaps greater than the small municipal form of government, that people live together in the community at present. It is here that the needs for social development are greatest but development at the moment is weighed down by a rather archaic system of property rating which is no longer adequate for the need.

Therefore 1 welcome this opportunity, and I hope that many honourable members will take advantage of it when the House does not have a great deal of other business before it, to explore some of the ramifications of this question of overall supervision of the public accounts. There are obvious deficiencies in the methods of distributing what we collect. At the moment the sufferers are the States, with their direct constitutional responsibilities, and the local government authorities. They are trying to provide services for people who are citizens of Australia. One great difficulty is that while we as a nation are quite widely dispersed, our population is still preponderantly gathered together in two great cities. That is where the majority of the needs are. It is certainly where the majority of social problems are to be found. It is at this level that, if there is no recognition of problems, the situation is likely to deteriorate, not improve. We can point to continual growth in the gross national product year by year, but we can over-emphasise the quantitative result and ignore the deterioration in the quality of community living.

Mr DOBIE:
Hughes

– Mr Deputy Speaker, as this is basically a machinery Bill, it is not my intention to take much of the time of the House in discussing it. But I do believe that it is a favourable sign of the activities of this Government, and one that should be known and emphasised, that the Government is achieving great success with its overseas borrowing programme. That we are being asked to approve this Bill, which will authorise the borrowing of up to $150ni overseas, illustrates that we are not only taking advantage of opportunities to borrow overseas on acceptable terms but, additionally, that such is the reputation of this Government that we are obtaining these loans at the very best terms available to any borrower on overseas markets at this time. This is particularly true of the German money market, and if we were not to take advantage of the position as it now stands this Government would be doing less than its financial duty.

In fact, in contradiction to the remarks of the honourable member for Melbourne Ports (Mr Crean) about encouraging only government to government borrowing, 1 would hope that our private institutions were looking also to the extremely favourable conditions that exist in Germany today for those seeking loan funds and that they were as successful as the Commonwealth Government has been in that field. For the Australian Labor Party to advocate otherwise is its traditional attitude, but it is also typically ill-considered and irresponsible. Perhaps it is just because of Labor’s lack of experience in these matters. In point of fact, the differences in philosophy between the Government and Opposition Parties are never more clearly defined than when this House debates overseas borrowing in any form. To encourage the thought, as the Australian Labor Party does, that all funds should be raised in Australia or that an attempt should be made to achieve this is to hold no regard for the inflationary pressures that such a policy would release or for the problems it would raise in regard to levels of interest rates or the scarcity of loan funds for individual Australians wanting to finance their homes or other personal needs. Perhaps it is part of the Opposition’s philosophy that it does not matter whether we are strangled by inflationary pressures or not, provided - this seems to be the great proviso - we do not borrow unduly overseas.

The development of our resources while those resources are in demand in the world market must take place. Surely we do not have to save and pay for everything from cash or to hold back our development because we do not have a favourable balance of trade. Contrary to what the honourable member for Melbourne Ports said, this Government is trying to change the situation so that we are not dependent on capital inflow and overseas borrowing. But with a need to repay maturing debts overseas and a need to meet our balance of payments problems, as distinct from the balance of trade, we will be dependent upon, and will be required to borrow, overseas funds whenever we can do so on acceptable terms, and we should continue to do so. In fact, we must do so to meet a financial responsibility. One day it may be within the power of the honourable member for Melbourne Ports to realise that, in the interests of Australia’s financial problems, it is necessary to borrow overseas whenever the terms are right. I hope that when the honourable member does achieve his ambition to become Treasurer he will use this as his philosophy. In briefly mentioning this matter, I would like to say that I believe the Government and the Treasurer (Mr McMahon) are to be congratulated not only for obtaining the loan funds and having the opportunities as forecast in this Bill but also for establishing a reputation that allows us to do so.

Mr PETERS:
Scullin

– The honourable member for Hughes (Mr Dobie) said that we should borrow money overseas, that we should continue to do so and, apparently, borrow as much as we can because the conditions overseas, particularly in Germany, are very favourable at the present time. If I remember rightly, the last loan that was raised in West Germany bore an interest rate of 7%. That 7% was free of all Australian taxation. As we frantically seek for loans overseas, in West Germany and elsewhere, probably the interest rate will increase; it will certainly not diminish. Does the honourable member for Hughes consider that the negotiation of a loan from Germany at an interest rate of 7%, free of all Australian taxation, which in reality would be equivalent to a rate of 10% on a loan raised in Australia, is a favourable method of raising loans and that therefore loans should be raised to an unlimited extent at this time by the Government of this country? The Australian Government has raised loans overseas for the purchase of aircraft, for the purchase of ships and for other specific purposes. It has raised loans in the United States of America, and the United Kingdom and elsewhere. The moneys raised were paid to those providing the aircraft or other Australian needs. Australia then repaid those loans with interest over a period of years. These are simple straightforward trading operations that can be understood. Whether the ordinary Australian agrees with the purposes of these loans, he or she understands the transactions; there is nothing complicated about them.

The Bill before us is to authorise the raising overseas of loans up to $150m to be paid to the credit of the Loan Consolidation and Investment Reserve. There is no indication whatsoever in the Bill as to when and upon what these moneys are to be expended. As far as the Bill is concerned these moneys can be used at any time and in any way; they can be raised under any conditions and any rate of interest may be paid for the loan or loans. I have the Bill before me. I point out to the honourable member for Hughes (Mr Dobie) that it consists of four sections and none of these sections specifies in any way the manner in which the $150m is to be spent. The Minister Assisting the Treasurer (Mr Swartz) when introducing the Bill made a speech about as brief as the Bill itself. The Minister said:

In 1966-67 and 1967-68 the Commonwealth’s approved programme for housing purposes was adequate to cover its borrowing overseas. This year it will not be sufficient.

While no specific legislative authority is necessary to raise further loans and credit and proceeds to the Loan Fund, the money cannot be appropriated without parliamentary authority. This Bill will provide legislative authority to appropriate loan funds up to a maximum of $150m to enable the proceeds of any further overseas loans to be credited to the Loan Consolidation and Investment Reserve-

That is what the Bill says - in which they would then be available for investment in the special loan to be raised later in the year to complete the financing of the States’ share of the 1968-69 works and housing programme approved by the Loan Council. The effect will be to make available to the States the proceeds of overseas loans at Australian rates of interest.

What does this mean?

Mr Dobie:

– Would the honourable member tell us?

Mr PETERS:

– Yow guess is as good as mine. Does it mean that these specific loans will be raised for the purpose of housing and public works and that the moneys will be expended only upon housing and public works? Will they be treated in the same way as loans that are raised overseas to pay for aircraft and for ships? According to the Minister’s second reading speech, the Government alleges that the Si 50m that ii intends to raise overseas will be used for housing and public works. Is this fiction or fact? Would the Government have to obtain this loan overseas if housing and public works programmes did not exist? Will the housing that is to be provided in this country be constructed with Australian materials? Will the employment provided be the employment of Australians in Australia and be paid for in Australia by the Australian Government? Of course it will.

Everyone in this Parliament must know that throughout Australia, in shops in our cities and country towns, there are immense quantities of boots, textiles and manufactured clothing imported from such countries as Britain, the United States, Japan and China. These goods cannot be paid for by the money available to Australians overseas. This money must be acquired. The Government of Australia obtains loans overseas which it is alleged are to be employed for Government purposes. But these funds are used to pay for boots, textiles and other goods imported from other lands. The importers make funds available in Australia for the Government in return for the financial accommodation made available overseas. That of course is exactly what happens. The sum of $ J 50m - and the honourable member for Melbourne Ports (Mr Crean) went to some lengths to point this out very clearly this afternoon - is being raised because of overseas trading balance difficulties. The loans are not to be used for any Government purpose or for the development of this country, but to pay for imported goods. This practice has prevented expansion in the past and will prevent expansion in the future. The effect of the policy lauded by the honourable member for Hughes will be to curtail and reduce the operations of Australian industry.

The Minister for Trade and Industry (Mr McEwen) said on 12th December 1967 in a long and strongly worded statement that

Australia had avoided devaluation by massive foreign capital being poured into this country. That, of course, is not my statement; it is the statement of the Deputy Prime Minister of this country. At that time he was rebuking his own Government for not devaluing the Australian currency along with sterling, which had then been devalued by the Government of the United Kingdom.

Mr Arthur:

– Would the honourable member have devalued our currency?

Mr PETERS:

– Certainly not. Devaluation is only another Premiers’ Plan. Devaluation is a method whereby we make workers, and the community generally, pay for the huge profits and dividends that have gone to industry as a result of the importation of foreign capital. The statement by the Deputy Prime Minister implied that if for some reason the pouring in of massive capital was stopped, devaluation of Australian currency would be inevitable. 1 believe that this is obvious. He said that devaluation has been avoided only because of the massive inflow of foreign capital. Then if foreign capital ceases to come here in massive amounts devaluation, in the words of the Deputy Prime Minister, is what faces Australia. The frantic efforts of our Government to induce capital to this country under any conditions, including obtaining loans anywhere in the world at immense and increasing rates of interest, is due to the need for foreign capital.

Sitting suspended from 6 to 8 p.m.

Mr PETERS:

– When the sitting was suspended for dinner I was pointing out that the Government was raising loans overseas allegedly for the purpose of building houses in Australia and of carrying out public works programmes, that in reality the loans would not be used to finance the building of houses or to carry out public works but rather to buttress Australia’s overseas funds which are being depleted because of the excess of imports over exports in our trading operations. I have said that the frantic efforts of this Government to induce capital to this country, including the obtaining of loans anywhere in the world at immensely increasing rates of interest, is due to the need for foreign capital. This arises from the necessity to prevent the people of this country from being confronted by conditions which the Deputy Prime Minister has said should bc solved by devaluation of the Australian currency. 1 repeat that the loans being secured from overseas allegedly to promote housing and public works will not be expended in obtaining one item necessary for Australian housing or public works schemes. If neither housing nor works programmes had to be financed in Australia, the Government would still have had to secure capital overseas. This massive capital inflow is necessary to finance our adverse balance of payments, and a massive inflow will continue to be necessary so long as Australia has an unfavourable balance of payments. The loans being raised overseas will be needed to finance the inflow of unnecessary goods, of luxury goods and goods that menace the existence of Australian industries.

Last year Australia had an adverse balance of payments of about $1,1 00m; this year it will be greater. Already our unfavourable balance is more than $200m greater than it was at this time last financial year. There are three ways in which any business can finance its trading deficit. It can pay with the funds which it has in reserve; it can pay with loans; or it can sell assets to meet obligations. There is no other way of meeting trading deficits. Australia is a big trading concern. This, too, is the procedure that must be followed by this nation in connection with its trading deficits. It must finance its deficit balance of payments by using reserve funds, by raising loans, or by selling interests in assets. This latter is called capital flow for investment purposes. This year Australia will finance adverse trading balances amounting to at least SI, 200m. It cannot finance these from reserve funds. It has a little over $l,100m in its overseas reserves, which sum it is essential to retain to finance its trading operations. The history of trade in this country shows that under existing circumstances we need overseas reserves of approximately $l,100m or more. Therefore we must use overseas loans or investment moneys to finance the deficit. This is why the Government is seeking loans overseas wherever it can secure them, f repeat that the sole reason for this borrowing is the necessity to finance trading deficits. This is why this Bill deliberately neglects to state the purpose of the SI 50m loan in question.

More and more overseas money is essential to prevent devaluation of the Australian currency or overseas insolvency. The Government pays more and more for the accommodation it seeks overseas. Let me refer to an example of what it now costs Australia to obtain loan moneys overseas. A loan was raised in West Germany at an interest rate of 7%. The interest payable overseas is free of all Australian taxation. A loan raised in Australia which would give, after payment of taxation, a clear return of 7% to the investor would have to bear an interest rate of 7% plus the amount of tax. This would mean a total of about 10%. To make it clearer, if the Commonwealth Government raised $100,n overseas at 7%, iri the first year it would cost Australia $7m in interest. If the Government raised $100m in Australia at 7% it would pay $7m in interest. The return to the Government, in the form of taxation, on that sum of $7m would be about $2m. The difference between the cost of an overseas loan and of a loan raised in Australia is immense, yet the honourable member for Hughes had the audacity to say that it is because of the admirable conditions for raising loans that this Government is seeking to raise loans - not for a housing programme or a public works programme but for some project in the distant future.

In connection with devaluation, I have pointed out the position that confronts this country as a result of the lack of balance in our trading operations. If, as the Deputy Prime Minister mentioned, we could not get sufficient money overseas to balance our trading operations - if we could not get it by an inflow of capital or could not raise the money by way of loan - then we would be confronted with devaluation. What does that mean? It means that we would have to sell our goods more cheaply overseas than previously. It means that we have to send to Germany more goods than we previously sent in order to pay the 7%. But that is not the only difficulty, nor is it perhaps the more immediate difficulty.

One of the advantages of having one’s speech interrupted by the suspension of the sitting for the evening meal is that one has the opportunity to confer with one’s colleagues. During the suspension the honourable member for Melbourne Ports (Mr Crean) pointed out to me that because of its financial position West Germany is considering not devaluation of its currency but revaluation. That is, West Germany is considering increasing the value of its currency. If West Germany increases the value of its currency the effect will be the same as Australia’s devaluing its currency. The effect will be that Australia will have to export more and more goods in order to meet our interest commitments on loans which this Government is raising overseas. The honourable member for Hughes had the audacity to say that the Government is raising these loans because conditions overseas are favourable for the raising of loans.

I set out these things in order to show clearly how costly it has become to raise loans to meet our current expenses. It will become much more costly in the future. The alleged purpose of these loan raisings is to assist housing in this country. Can Australia afford to pay the equivalent of 10% on a loan raised overseas to finance housing projects? As I hold the views that I obviously do one might ask why I do not oppose this Bill outright. I do not oppose it. I criticise it.I point out the difficulties that arise. Why do I not oppose it? Much more is necessary to solve the problems facing Australia due to our dependence on overseas capital than merely to refuse the Government power to raise loans overseas. The Deputy Prime Minister said:

The acceptance of large amounts of foreign investment in Australia is like taking cocaine. It may be a good thing and a necessary thing but, by gosh, you do not want to become dependent upon it.

He might also have said: ‘Having become dependent upon the drug of overseas capital you cannot cut off suddenly all supplies of the drug without doing serious harm to the drug addict.’ That is why I. do not oppose the legislation altogether. Having reached the stage we have reached in the sell-out of Australia I say that it is necessary to take action other than the immediate cutting off of the flow of loan moneys or investment moneys to this country. It is essential that we take immediate action to review the position with the object ultimately of reducing our dependence upon overseas nations. It is necessary also that in introducing legislation to raise$1 50m to be placed in reserve overseas the Government seek not to mislead the people of Australia into believing that that money is being expended upon public works or housing projects in the community. The Government should be frank and honest with the people. It should say: ‘We must raise this money. We must increase our capacity to meet overseas obligations incurred as the result of goods of all descriptions - manufactured clothing, textiles, furniture, boots and other things - flooding into the country. These goods must be paid for.’ Government money raised overseas is being used to finance the purchase overseas of those goods. Then the importers of those goods make available to the Government the amount that has been made available to them overseas. That is what happens. I for one protest because inevitably, as the Deputy Pime Minister has said, the result of the massive inflow of capital into this country, not curtailed since he made his statement but increased, will lead inevitably to devaluation or something equivalent to devaluation of Australian currency so that we may do what Great Britain is doing to rectify her balance of payments problems. Britain’s balance of payments problems are similar to ours, but on a per capita basis not nearly as serious as the difficulties that confront Australia.

Dr PATTERSON:
Dawson

– This Bill will make provision, additional to that now contained in the two 1968 Loan (Housing) Acts, for the appropriation of the proceeds of Commonwealth borrowings. In his second reading speech the Minister for Civil Aviation and Minister Assisting the Treasurer (Mr Swartz) pointed out that the Commonwealth had found from its own resources $2,1 87m to meet the shortfall in the various programmes of development in Australia and has, as well, financed more than $5,400m of Commonwealth capital expenditure on development. He told us also that this year the Australian Loan Council has approved a borrowing programme for the Commonwealth of $l26m to cover advances to the States under the Commonwealth and State Housing Agreement.

The honourable member for Melbourne Ports (Mr Crean) dealt at some length with the application of loan funds to various development projects in Australia and with payments by the Commonwealth to the States for developmental purposes. He referred to the comprehensive water scheme in Western Australia by which water will be reticulated from coastal areas to inland areas. There are four types of development finance provided by the Commonwealth to the States. Firstly there is the straightout grant which the Commonwealth provides to a State with no strings attached. There are no repayment conditions and no conditions as regards to the time of completion of the development project. It is a grant for a particular development project such as water conservation and roads. The second type of finance is the interest bearing loan which the State must repay to the Commonwealth, with interest, over a stated period. Thirdly we have the matching grant whereby the Commonwealth rnakes to the State a grant of money provided that the grant is matched by the State. This grant is made for a particular project. Fourthly there is in some instances an interest free loan.

All of these types of grants and loans are provided by the Commonwealth to the States for particular projects or development programmes. In the past there have been various types of projects, such as revenue earning projects, which usually dictate that a loan will be made rather than a grant. I regard a revenue earning project as one from which the State receives income direct, such as the reticulation of water - the selling of water - housing or power. Where a State does not receive from a project an income which can be specifically defined - roads are an example - finance is provided by the Commonwealth by way of a straightout grant or a matching grant rather than an interest bearing loan. One can instance the general principle which has been applied by the Commonwealth towards State finances in regard to water reticulation, which was an example given by the honourable member for Melbourne Ports. Water reticulation virtually involves the selling of water. This usually means that it attracts an interest bearing loan because the State is receiving revenue from it. But assisting finance for the headworks of an irrigation project, which are regarded as a national asset, is usually classified as a grant rather than a loan. To my knowledge this has been the case with all Commonwealth payments to the States for the headworks of dams for specific projects.

One of the most important spheres of Commonwealth-State finances that indirectly involves the Loan Council is finance for roads. I think that this is one of the most important fields of Commonwealth-State relations in regard to the earning of export income. Under the Commonwealth Aid Roads Act 1964, a total of $750m has been made available to the States, subject to certain limitations and qualifications, over a period of 5 years. This money has been divided between the States according to a certain formula. Since 1954 - 15 years ago - the Commonwealth aid roads legislation has contained a provision that 40% of Commonwealth grants to the States must be spent on roads in rural areas other than highways, main roads or trunk roads.

Mr Stokes:

– The honourable member is a bit wide of the Bill, is he not?

Dr PATTERSON:

– The Bill concerns supplementary loan finance for public works. If roads are not public works then 1 do not know what are. Roads may not be important in the honourable member’s electorate but they are certainly important in my electorate and in most other electorates. The Bill makes provision for the borrowing of $126m to cover advances to the States for certain development. But what I was leading up to was the allocation of finance for roads. I believe that the 40% allocation for rural areas, which has been in existence for 15 years, should be increased. Because of their export earning capacity, the rural areas of Australia are entitled to an increased allocation. In fact, one could argue that the figure should be increased to 50% or more. If the allocation cannot be increased, specific grants should be made available to the States for roads in rural areas. I am sure that everyone recognises that primary industries, and to a greater degree as time goes on the mineral industry, will be the backbone of our economy in regard to export income. I do not think that this can be denied, despite the exaggerated claims of the scope of secondary industry exports. Because of Australia’s relatively low population, which, of course, means that economies of scale or throughput are not possible, the main role of the secondary industries in Australia will be confined to import substitution and the satisfying of the wants of Australian consumers.

As the principal role of meeting Australia’s balance of payments requirements will be confined to the primary industries and the mineral industry. I believe that every effort must be made to stabilise or reduce costs of production in the main export areas of Australia, which are the rural areas. It should be remembered that it is the expert income of a nation which determines its economic health. If it were not for our export earning industries we would have much smaller cities. This is a fundamental economic maxim. Therefore, there must be a balance between the cities and the rural areas. As far as public works are concerned, I. would classify road development in rural areas as one of the most lucrative forms of investment that could be made by the Commonwealth Government.

If there is any need to justify what I am saying one has only to examine the economic analyses of the beef roads scheme to see what benefit it has been to Australia in recent years. I do not know of any person, nor have I met any person, who is critical of the beef roads scheme. There may be people who will argue whether a particular road should run in a certain direction but no-one will criticise the scheme itself. It is one project with which the Commonwealth Treasury is happy because export income can be generated directly and indirectly from public investment in roads. Of course, the beef roads are in rural areas. It is recognised that in the long term, although there may be ups and downs, of all primary industries in Australia the beef industry is the one with the soundest future. This is simply due to comparative economics of production. No matter what country one compares Australia with one will find that in terms of cost of production - providing incentives are given to curtail the cost of production - and potential Australia’s beef industry leads the world. But an incentive must be given at all times to rural industries in order that they can continue to withstand the insidious increase of costs which is going on all the time. One of the best ways to reduce costs of production is to increase expenditure on roads and railways in rural areas.

I have always taken the view that it is fallacious to argue that in rural areas a better return can be obtained by constructing unsealed roads. Although one may get greater mileage of unsealed roads in the short term, every analysis that I know of shows that in the long term sealed roads are better economically. This is principally due to the effects on roads of the harsher climate in outback and rural areas. There is no need for a great deal of traffic to travel over certain roads before damage occurs. Before long there are deep corrugations in the road which present road construction problems. One of the most important spheres of Commonwealth-State finance with respect to loans is the payment of money to the States for road construction under the Commonwealth Aid Roads Act 1964. I believe that the 40% allocation of funds for rural roads should be revised when we consider the export earning capacity of the areas which surely must be one of the most important criteria.

I am quite certain that the honourable member for Reid (Mr Uren) will deal with this point, but it would seem to me that this country will have to rely more and more on earning export income or reducing imports if this deficit on overseas current account is to be reduced. The only economic way in which this can be done, as I see it, is to maintain progressive and continual development of our rural areas, our rural production and our mineral production. If any honourable member wants to argue against that position I ask him to consider the number of secondary industries which can compete on the export market. They are few and far between because they have not got the economies of scale. They cannot compete on the market with Russia, Germany and the United Kingdom, in terms of through-put. If we take what is termed the cost curve, we are on the higher part of it rather than on the lower part. Whether it be chemicals, cement or motor cars, the possibility for us to earn export income will be limited.

Mr Swartz:

– The honourable member refers to volume of production?

Dr PATTERSON:

– Yes. On the other hand, the possibility for us to earn export income from minerals and primary production is as good as it was when Australia was first discovered.

Mr UREN:
Reid

– The Bill before us is a part of the financial arrangements of the Government to finance the deficit Budget which was introduced some 6 months ago. If honourable members examine the Budget papers or page 11 of the Treasury information bulletin of January 1969. they will note that this Government budgeted for a deficit of $547m. Although the Bill which we have before us is called the Loan (Supplementary Borrowing) Bill 1969, that is really a camouflage because the Bill is part of the overall budgeting requirements of the Government. This Government always severely criticises the Australian Labor Party for putting forward its proposals at election time. The Government points out how much deficit budgeting will be involved in implementing the Labor Party’s proposals, that they will create great inflationary trends and that the country cannot afford them. Yet by this Bill the Government is in fact trying to finance a deficit of $547m.

There are two aspects of this question which 1 want to discuss. One aspect concerns the overall balance of payments position or the deficit on the balance of current account during the period which this Government has been in power. The other aspect concerns the loan moneys which are raised by revenue and supplied to State governments, to semi-government concerns such as water and electricity authorities, and to local government - the councils and shires. As regards the first aspect, that is, the balance of payments position, between 1st July 1950 and 30th June 1968 this Government had a deficit of some $7, 2 69m on the balance of current account. This deficit can be met either by private capital inflow or by government loans.

We on this side of the chamber have always believed that if money is to be raised by foreign borrowing, this is best done by seeking foreign government loans at a reasonable rate of interest. With today’s money values ‘a reasonable rate of interest’ could be a rate of 6% to 7% on the international money market. One must say that 6% to 7% is a very high interest rate. But I think that it is a very low rate when we compare it with the cost of allowing private capital inflow into this country. A great section of the private capital inflow that is coming into this country is earning exorbitant profits. In fact, only a couple of years ago the ‘Sydney Morning Herald’ disclosed that one company alone was earning more than 600% on original investment.

As 1 have said, this Government has had a deficit of approximately $7,000m since 1950. This deficit has been met by the inflow into this country of unplanned and uncontrolled foreign investment. The Prime Minister (Mr Gorton) has made outbursts to the effect that we must keep a certain amount of Australian equity in Australian companies, but so far - and I do not want to be insulting to the Prime Minister - those words have been only hot air. There has been only talk. No legislative plan has come forward from the Commonwealth Parliament to give any real guidelines to foreign investors in this country. In this country we find that foreign investors move into a special sector of the economy. Generally, some 3 or 4 companies monopolise approximately 90% to 95% of an industry. Whether it be the motor car industry, the petroleum industry, the cosmetic industry or the soap and detergent industry, it is controlled by 3 or 4 companies.

We find that the Colgate-Palmolive group, which is an American combine, advertises several particular lines on television and that the Lever-Kitchener group, which is a British combine, advertises some 5 to 6 lines, but in true fact these groups belong to the same foreign oligopoly. If one company controls a particular industry it is called a monopoly, but if 3 or 4 companies control a particular industry it is called an oligopoly. These foreign oligopolies are controlling and planning our industries. We find that these companies, because they work on what is called a ‘restrictive franchise’, produce goods for the Australian market. They not only create a profit which they send to their overseas shareholders; they also set in the cost structure of their goods, which the Australian consumers buy, an extra profit for capital to enable these companies to develop and expand in this country in the future. In other words, oligopolistic groups impose an indirect tax which the Australian people have to pay in order to allow these groups to develop in this country in the future. There has been little control and there has been no planning by the Government to stop this type of foreign investment and to protect our great natural resources, for instance Hamersley iron. By 1970 the outward flow of dividends from Hamersley iron alone will be in excess of $20m a year. In 1950-51 the invisibles were costing $257m a year. In 1967-68 they amounted to $839m; in 1966-67, $746m; and in 1965-66, $61 lm. So one can see that they are rising by about Si 00m a year. I estimate that this year invisibles will cost us about SI, 000m. In other words, if we export the same amount of goods as we import we will still be in the red to the extent of % 1,000m, which must be made up somehow. Either we pay it by raising Government loans overseas or we continue to allow unplanned, uncontrolled foreign investment. The Deputy Prime Minister (Mr McEwen), who is Leader of the Country Party, said as far back as April 1963 at a Country Party conference that we were selling a bit of the farm every year. In other words, we are selling a bit of our heritage every year to balance our current account. Yet now - nearly 6 years later- - the Government has not taken any action to control or plan foreign investment.

One of the invisibles is the cost of carriage of our goods - either exported or imported - by foreign shipping monopolies. We have been pressing the Government year after year to enter the overseas shipping trade. It has now done so. It has a couple of ships and it will be a partner in the Conference line. But this is an insignificant move. It will be only a crumb falling from the table. We need to move into the overseas shipping business to a greater extent if we are to solve these problems of the balance of payment and freight charges. Another aspect of invisibles is insurance on our imports and exports. The insurance companies, too, are mostly foreign owned. We on this side of the House have been urging the Commonwealth Government to move into the export insurance business. If it did, we would be able to save a great deal of money. A further aspect of the invisibles, is, of course, the cost of foreign travel. One does not want to interfere with foreign travel by the private individual, but certainly we will nave to buck up and be more positive about tourism. We must get more tourists to come to Australia. The Government has been pretty neglectful of that aspect.

The great bulk of this SI, 000m a year spent as invisibles - a small portion, of course, is the interest burden on Government loans - is private capital outflow to private investors. They are not charitable institutions. These foreign companies do not invest in Australia because they think we are a wonderful country and they want to help us; they are in here because it is a good business proposition and they find they can earn a very favourable return. As a matter of fact, a few years ago a State Premier went to the United States of America to advocate investment in Australia and boasted of the fact that in Australia foreign investment earned a return of up to 30%. This is not bad, but in one instance I referred to a company earning up to 600% on the original investment. This is our problem.

This loan is a part of the Government’s deficit budgeting policy. We should have been planning years ago. If we look at the deficit on current account we find that in 1951-52 - which was the worst deficit year of this Administration - it was $l,165m. At that time we did not have the foreign capital inflow and consequently there had to be a credit squeeze. Everybody can remember the little horror budget. Last financial year we had a deficit of $l,058m. It was the second worst deficit in the record of the three governments that have held office since 1950. One would have thought that there would have been some internal economic control but, fortunately for the Government, this was not necessary because $1,1 00m flowed in from overseas last year. I said earlier that there had been an inflow of $7 ,000m in about 20 years. But last year alone it was $ 1,100m.

Let me deal now with the deficit balance of trade. For the 6 months ended 3 1st December 1967, excluding invisibles, there was a deficit of $38m. For the first 6 months of this trading year there was a deficit of $156m. So far this trading year there is a deficit of $11 8m. This means, of course, that we will end the year with a deficit on current account - if it continues on the plane- of $l,150m to $l,200m, possibly the worst deficit on current account in the history of the three administrations. Last October I predicted that the Government would be forced to hold an election on 30th November. At that time financiers such as Sir Ian Potter of the

Stock Exchange estimated that there would be only about $700m capital inflow this year with, as I say, an estimated deficit on current account of $l,200m. Therefore, our reserves would have fallen by some $500m this financial year. I thought that the Government would have been forced to hold an election on 30th November and that there would have been a credit squeeze this year. But we were not to know that the international money market would crash, that there would be a run on the franc, and that there would be instability in sterling, with the result that in the months of October, November and December there was a great run by the international financiers to get their money out of Europe into Australia where there was no immediate danger of devaluation. Consequently, instead of our foreign investment falling we look like receiving the same amount of capital inflow as we received last year. They call this a lucky country but, believe me, this is a lucky Government. All it can do is to allow uncontrolled and unplanned foreign investment to come into this country. As the Deputy Prime Minister (Mr McEwen) said about 6 years ago, we are selling a little bit of the farm every year and we are losing a little bit more of our heritage every day. There has been no planning or control by this Government. This is a criminal aspect, if I may use that term. It is a worrying aspect for Australia’s future.

Yesterday we discussed the defence estimates and mention was made of the question of invasion. There are two ways of losing control of a country - one is militarily and the other is economically. The former Secretary of State of the United States of America, John Foster Dulles, said this. We are certainly losing control of Australia economically. There is less chance of a military invasion of Australia because such is not necessary. The international financiers are looking after that aspect.

I turn briefly to the question of the allocation of money to the States from Commonwealth revenue. I know that it can be said that some of this money will be used for housing loans in the States. Housing is a State responsibility and this contention will be used to camouflage this Bill and to give it respectability. However, when we deal with a Bill such as this, we have to look at the overall budgetary policy, and that policy was disclosed in the second reading speech of the Minister Assisting the Treasurer (Mr Swartz) when he said:

In each year from 1951-52, except in 1962-63 and 1963-64, Commonwealth borrowings in Australia and overseas have fallen short of the full amount of the approved programmes. The Commonwealth has found from its own resources $2,1 87m to meet the shortfall in these programmes and has as well financed over $5,400m of Commonwealth capital expenditure from revenue.

Of course, much of this money has been allocated to State governments, local governments and semi-governmental concerns. Much of it has come from Commonwealth revenue. What does the Commonwealth do? It gets money from the taxpayers, lends it to the States and charges them interest on it. It seems to me that we are different types of citizens. When we are controlled by the Commonwealth we are one type; when we are controlled by the State governments we are another type; when we are concerned with local government we are still another type; and when we are dealing with semigovernment concerns we are a further type.

The figures that I shaM quote now relate to the period from 1950 to 1965, which is the last year for which figures are available from the Bureau of Census and Statistics for Commonwealth, State government, local government and semi-government concerns. In 1950 the amount owing by the Commonwealth to the people of Australia was S3,730m, but by 1965 that amount had fallen to $3, 133m. In other words, during this period the money on loan to the Commonwealth decreased. However, during the same period, State indebtedness had increased from $2,300m in 1950 to S7,090m in 1965- a more than threefold increase. By 1968 State indebtedness had increased to S8,300m, or by over $i,200m in the 3 years from 1965. Local government indebtedness in 1950 was SI 88m but by 1965 it had risen to S820m- The indebtedness of semi-government authorities increased from S593m in 1950 to $4,532m in 1965. How do the various authorities raise finance to service these debts? State governments increased transport charges; local government authorities increase their rates; semi-government concerns increase charges for electricity, water and sewerage. This is the indirect taxation that the Commonwealth Government is forcing on to

State governments and local government and semi-government concerns. This is the policy of the Government. In 1950 it cost the Commonwealth Government $105m to service its debt. This cost had risen to $U9m in 1965. In 1950 it cost the State governments $75m to service their debts, but in 1965 the figure had risen to $323m and in 1968 it was $402m. It was costing tocal government $7. 8m in interest charges in 1950 and $42m in 1965, while the interest costs for semi-government authorities increased from $23m in 1950 to $217m in 1965.

It is about time that the citizens of Australia, through their State governments, local government authorities and semigovernment concerns were given a fair go by the Commonwealth Government. The Commonwealth Government raises money from the people by way of taxation, but when it distributes that money to the State and local authorities that revenue is regarded as loan money. It costs the Commonwealth Government nothing yet it charges interest on the money it loans to the States, the local government and semigovernment concerns. The Commonwealth wants to make a profit on this money. There is only one solution to the problem. We should be working on the basis of cooperation at all levels. The treatment should be the same whether we are considering Commonwealth Government, State government, local government or semi-government expenditure. It is about time there was a fair go all round. The Government should stop this hypocrisy about it being a Liberal Government. It is an ultra-conservative government which represents a sectional interest in the community. It represents the wealthy monopolies. In passing, I point out that 55,000 companies are making a profit in Australia - a profit of about $ 1,400m last financial year - but 1% of those 55,000 companies is making 55% of that profit and the remaining 99% is sharing 45%. Of course, this Government more and more is encouraging monopoly control or oligopoly control in this country.

This is the new look Conservative Government. The new broom came in and said: ‘I will do new things. I will have a new defence policy. I will have a new policy on foreign investment’. But what happened? He did not understand the system he represented. He was told: ‘Look, son, you will do what you are told’. He conformed to the policy of the Government of the past and he toed the line. I see the Minister for External Territories (Mr Barnes) sitting in the benches of the Australian Country Party. We know that even that man of valour, the Minister for Social Services and MinisterinCharge of Aboriginal Affairs (Mr Wentworth), said he wanted a new deal for the Gurindji tribe and the Aboriginals generally. He advocated a new policy. But what happened? When he went to Cabinet he came up against the old hard-liners such as the Minister for External Territories, who represents the wealthy interests of the Northern Territory. What happened? The Minister-in-Charge of Aboriginal Affairs was floored and the poor old Gurindji tribe did not get its dream land.

I just make the comment in passing that this is the same old Conservative Government, the same old sectional Government. The Bill that is before us is just a part of its budgetary policy. It is conservative. It can afford to have a deficit of $547m. That is all right, but it is criminal for the Labor Parry to propose some progressive policy during an election campaign!

Mr CONNOR:
Cunningham

– One of the features of the debate on this Bill has been the reluctance of members of either of the Government parties to participate in it. Of course, in a matter of this nature discretion can be the better part of valour, particularly in view of the marked reversal of form, if I may use racing parlance, of the Prime Minister (Mr Gorton) last week. One of the paradoxes of the post-war period has been the emergence of the Deutsche mark as one of the hardest of the hard currencies of the world. At the end of World War II, Germany, its industry and its economy were in ruins. Inflation was rampant. But today we find that Germany, which worked to a plan and which has been under competent management, is one of the major financial powers in the world. It has reached the point where the Deutsche mark is too strong and pressures have been applied in the European Common Market and amongst the financial powers of the world for the upvaluing of the Deutsche mark. That being so, we are in the position that is well expressed in the old saying that runs: ‘He who sups with the devil needs to use a very long handled spoon’. 1 make no reflection on the West German Government, but the point is that we are playing with fire. It is not a matter of whether but when the Deutsche mark will be up-valued. I venture to say that the Australian dollar will certainly not follow it, nor will any of the other major currencies of the world. Therefore, we must contemplate paying not only an astronomically high interest rate but one soaring right into the stratosphere.

There is today a very marked measure ot international financial stringency. The world volume of money is not sufficient to finance the turnover of world trade. Various efforts have been made to evolve a new form of world currency. To date they have not been successful and it is very debatable whether they will be. The discount rate on prime bills in the United Kingdom, for instance, is up to a record of 8%. In the United States, which was our other major source of borrowing, the charge for prime borrowers from the leading trading banks and similar institutions is 7%, and that is the highest it has been since the Civil War. With the exception of Germany with the Deutsche mark and Switzerland with its franc, there are very few places in the world today where money can be borrowed. Therefore, it is a matter of needs must when the devil drives. Wc have had to meet the terms that have been imposed in respect of this loan.

The Government for its own purposes, perhaps rather astutely - it tried the gambit once before and chooses to repeat it - claims that this money is being borrowed specifically for housing purposes. That is arrant nonsense. The best we can say about it is that it may be a pious fraud. In point of fact, it is hard currency that the Government itself needs and it will need to borrow this currency in ever increasing amounts to meet its commitments for defence purchases. Hard currency is what the United States requires because of ils own balance of payments problem. I think it is pretty common knowledge to all’ honourable members that for many years the United States has imposed an interest equalisation tax which is designed specifically, together wilh guide lines, to prevent the outflow of American investment funds. However. as the Government has nominated that this money is for housing, it is appropriate to touch briefly on housing and the position today throughout Australia.

This Government has achieved the highest degree of inflation of any government in Australian federal history. More than 23% of the total housing finance is provided by the Government through State housing authorities and its own War Service Homes Division. In addition the Commonwealth Government provides building societies with half of their funds. Banks, which are directly under Commonwealth control, provide more than 50% of housing finance. Life assurance companies provide another 7%. The Commonwealth can regulate both bank and insurance interest through its own express constitutional power. Directly or indirectly then the Government is in a position to regulate 90% of housing finance. Whilst I do not suggest that it is intended to bc used immediately, it is a very nice argument to have up its sleeve, if the Government wants to curtail Housing Commission construction and construction by similar authorities, to be able to say: ‘Look at the price we had to pay. In the past our policy has been to give a 1 % concession in respect of housing funds for those in the sub-standard income groups. After all we do have some measure of conscience and those funds have to be provided.’

Young people in Australia must make a grim choice between having a family or investing in a home. They can have cither. Whilst I would be the last person to decry the immigration policy, T would say that the best of all new Australians is the Australian baby born in an Australian home to Australian parents or to other people who choose to come here and share the responsibility of developing this country. Pre-war the cost of land represented from 10% to 12% or, at the very outside, 15% of the total cost of a home. Today it represents 30% 35% or even 40%. Interest costs have soared. In the post-war period interest rates were of an average of 41% to 4J%. Now they are up % on that, if you can get them on the stringent conditions that are imposed by the various lending authorities, which in turn are under the direct control of this Government.

In my own area the problem is one of the most acute in Australia, and no member of Parliament there can be sure whether he is in fact merely a member of Parliament and not also a housing agent because of the incessant nature of the demands. The distortion there has gone to the point where heavy industry has deliberately, as a matter of policy, chosen to employ single men and to house them in barracks so that at least it will get its labour force. Social problems have arisen from this, but I will not dilate on them at this juncture. The point is that if the Government chooses to say that the money it proposes to borrow under this Bill is for housing, it had better be pretty careful about what it is doing in the way of interest rates, as already we have seen that in all the successive agreements that have been negotiated between the Commonwealth and State governments the burden has been further increased.

An increase in housing commission rentals represents a direct attack on the living standard of the average Australian substandard family. Today it is literally impossible for 40% of the Australian community ever to accumulate the necessary deposit to acquire homes of their own. The position is worsening: it is not improving, it is true that the Government in selfjustification often says that 80% of the people of Australia own their homes. They do not. They are trying to pay off their homes. They are forced to do so mainly because there is no alternative. The Government, with uncontrolled inflation over the years, is responsible for that situation. Inflation is a thief of savings, and this Government has literally thieved the savings of the Australian people. Whether they be in. the form of savings bank deposits, superannuation or life insurance policies, the net result is the same. I have suggested that the Government had very good reasons for wanting to borrow hard currency. It is worth reminding honourable members of the words used by the Minister in his second reading speech. He said:

Since 1950-51. overseas loans have provided the equivalent of more than $ 1,050m for borrowing programmes approved by the Australian Loan Council for State works and housing. Nevertheless, in each year from 1951-52, except in 1962-63 and 1963-64, Commonwealth borrowings in Australia and overseas have fallen short of the full amount of the approved programmes. The Commonwealth has found from ils own resources- and it takes great pride in this - $2,187m to meet the shortfall in these programmes and has as well financed over $5,400m of Commonwealth capital expenditure from revenue. There are very good reasons, therefore, for the Commonwealth to take advantage of opportunities to borrow overseas when loans are available on acceptable terms.

It is interesting to note in passing that at a conference of the Young Liberals that was held last weekend or the weekend before, a resolution was passed that imports of capital were being used to cover the chronic deficits in the balance of payments on current account of this Government. That is the hard truth. Borrowing overseas with the state of Australia’s finances today is a financial rake’s progress. The Minister, in his second reading speech, went on to say:

This Bill will provide legislative authority to appropriate loan funds up to a maximum of $J50m to enable the proceeds of any further overseas loans to be credited to the Loan Consolidation and Investment Reserve, in which they would then be available for investment in the special loan to be raised later in the year to complete the financing of the Slates’ share of the 1968-69 works and housing programme approved by tha Loan Council.

I want to deal with the Loan Consolidation and Investment Reserve. In that regard I wish to put on record a most intriguing article that was published on 7th October 1967 in the ‘Bulletin’, which is a weekly publication. The article was written by Mr W. J. Campbell, a former Auditor-General in New South Wales, and he really put the cat amongst the pigeons. Under the heading ‘Commonwealth-State Relations - a New Era out of Strife?’ Mr Campbell had this to say:

How much of Federal Budget conservatism over the years has been directed simply to national economic betterment? How much has resulted in financial build-up, and how much has gone into what would be regarded in accountancy parlance as financial reserves?

In total, Federal expenditure from Consolidated Revenue on what are termed capital works and services amount to quite some billions of dollars. There would be no point in stressing the highly pleasing fact that the Commonwealth has managed to finance capital projects without recourse to borrowing, except by way of contrast wilh practice among the States.

This pointed contrast in revenue and capital financing practice between the Commonwealth and the States highlights a hard fact in the division of the nation’s revenue resources at two levels of government. With the total Government bondraising capacity virtually reserved to the works programmes of the States and their instrumentalities, the Commonwealth looks, perforce, to its revenues for the financing of capital works. It seems then that the Commonwealth is destined to continue building up for its future, while the States are destined to continue pledging theirs.

If proof of that is required, I quote the figures for movements in Commonwealth and State debts. In 1946 securities on issue by the Commonwealth amounted to $3,670m. In 1968 they amounted to $3,600m. They had been reduced by $70m. The total of securities on issue by all the States at 30th June 1946 was $2,005m. That would be approximately 55% of the then Commonwealth securities on issue. By 1968 the total of securities on issue on account of the States had soared to $8,317m. It had quadrupled. One of the most regrettable facts is that the burden had fallen very heavily on the third and weakest tier of administration in Australia. I refer to local government. In fact, local government indebtedness today, when it has added to it some semi-governmental borrowings, is just slightly more than the Commonwealth total debt. I wish to quote further from the article by Mr Campbell. He was speaking of the Commonwealth continuing to build up its future and the States being destined to continue pledging theirs. He went on to say:

None of this means, of course, that the Commonwealth is setting up its own Fort Knox, or that it has something like a Treasury chest of olden times buried away in Canberra. All the same, it has managed to accumulate some nice nest-eggs.

He is speaking of 1967. The article continues:

An amount of more than $400m shows in the National Welfare Fund. It is true that the Welfare Fund has been applied in internal financing - that is to say, absorbed in the Treasury complex of revenue and loan raisings and spendings, floating debt contraction and expansion, and so on. All the same, the Fund is to be regarded as a substantial revenue standby, to be drawn up if need be.

The return from the Snowy Mountains Scheme of something like $800m (predominantly revenue financed) will provide a regular budget windfall in the years ahead, as it comes in, with interest added, from charges on State electricity generating authorities. There is also the big investment from revenue in the war service homes organisation, and in various income earning business undertakings. If it could be claimed that these items do not mean so much in the present day $6 billion budget, there is one other which cannot be dismissed so lightly. It is the so-called Loan Consolidation and Investment Reserve which, after receiving $227m from the 1966-67 Budget and paying out $15Om in liquidating Federal debt in the same Budget year, had a remaining credit balance of $9 15m.

The credit today is well over $1,1 00m.

Euphonic, but imprecise, the wording of this reserve affords little guide to its role in FederalState financial relationships, namely the so-called underwriting of State loan programmes. The reserve is built up by regular annual appropriations from Federal revenue, and together with other Treasury cash resources it has been used to a large extent towards making good the shortfall in receipts from public loans against the Loan Council’s yearly borrowing approval. Operating through the reserve-

And this is of utmost importance - the Commonwealth itself becomes a subscriber to the loans. In the outcome of many years, the Commonwealth has grown into quite a large-scale bond holder in the ever-growing debt structures of the Stales.

If allowance be made for the present investment by the Commonwealth in State loans and other set-off to the existing fixed term debt of the Commonwealth, there would seem to be not so much of this debt left to be paid off from future Federal revenues. Celebrating this happy state, the Parliament recently enacted a large scale reduction in the annual sinking fund charge on the Budget.

I suppose that might be charitably termed sharp practice in ordinary orthodox business. But this is the measure of the morality of Commonwealth-State financial relations today. It was said by Deakin that Commonwealth-State relations would ultimately lead to the point where the States would be tied to the financial chariot wheels of the Federal Government. That point has been reached today.

In the time that is left to me I want to deal briefly with a couple of other matters. I am particularly concerned with the failure of the Government to control major overseas companies which come into Australia and borrow large amounts of money. I refer here to the recent borrowing of $30m by Esso for its activities in Australia. This company is one of the largest in the world and its borrowings are very relevant to the Commonwealth’s overseas borrowings because the measure of the repatriation of its profits will determine the need for future borrowings by the Commonwealth. With the discovery of flow oil in Bass Strait in a field of world ranking we come to the point where paradoxically again we may face a situation in which the outflow of dividends on oil development will exceed the ultimate potential savings in foreign exchange resulting from a reduction of oil imports from overseas. Only yesterday the financial editor of the ‘Sydney Morning Herald’, who is a highly respected gentleman, gave some measure of encouragement to the shareholders of Broken Hill Pty Co. Ltd in suggesting that it was well accepted amongst the leading cognoscenti in the financial world that the production cost of oil in Bass Strait did not exceed SOc per barrel. This would mean a very high profit, when one considers that the guaranteed price is $2.06 per barrel for a term of 5 years. The admitted reserves are conservatively estimated, of course, at 1,400 million barrels of crude oil. The question arises: What is to be the income tax relationship between this Government and Esso-BHP? Are we to be told that the import parity price of $2.06 is to be the cost price?

Mr DEPUTY SPEAKER:

-I hope the honourable member can link his remarks up with this Bill.

Mr CONNOR:

– I can because the profits that Esso-BHP will make will have an extremely adverse affect in relation to the interest payments that must be made on our present borrowings overseas. There is a serious need for an immediate investigation of the true cost of production of this oil. Let us get right down to fundamentals. We want something better than the hit and miss arrangement that has existed for many years between the representatives of the Commissioner of Taxation - and I do not reflect on them because they are going into the fight with their hands tied - and the petroleum companies when some attempt is made to assess their profits.

I would now like to pass on to other matters. We have come almost to the point of no return and this Government must surely regret, if it has any feelings of shame at all, that it treated the report of the Vernon Committee of Economic Inquiry in such cavalier fashion. Surely it is inevitable that we are coming to the point where the outflow of interest on dividends, remittances for copyright and other forms of payment, for franchises and the like, will exceed the inflow of capital into Australia. I do not look upon overseas investment as something that is fundamentally obscene. But like all things it is a matter to be treated with caution. The point to be made is that Australia does in toto generally, or did until recently, generate 90% of its capital requirements by its own savings. Of course, that comes from the higher income groups. Only about 10% of total capital requirements have come from overseas. But as a result of the expertise, sophistication and experience of the people we have allowed to come in we find that they have literally acquired a stranglehold on the major sections of our economy. I want to see that people coming into Australia get a fair go with investment. But I think, too, that we are entitled to see that Australia itself gets a fair go. It will not get a fair go under the policy of this Government because this Government - and again I repeat the findings of the Young Liberal Convention - has relied very heavily on imports of capital to cover its chronic deficits in balance of payments on current account.

There is another defect in the Government’s policy and administration, and it is a serious one. The Government fails to realise that today we are in the world of the international corporation. It is not good enough to follow the experience of the United States of America which, over some generations, could afford to allow, as a growing country, practically unlimited amounts of capital to come in. We live today in a new world, in the world of the international corporation which is capable of running its own affairs. Some of them are bigger, or have more financial resources, than the countries in which they operate. Esso is a case in point. Its Budget and its assets are greater than those of most of the middle sized countries in which it trades. Consequently, we find the development policy of some countries being determined outside those countries. This is a situation which, if allowed to develop in Australia, can only result in our continuing to be a captive. We will be tied to the chariot wheels, if I may paraphrase what Deakin said, of overseas capital. There is a line to be drawn. This Government has failed to identify the amount of capital coming in. It has failed to quantify it. It has failed to assess the fields in which it could legitimately come in and bring benefits, particularly benefits of technology, financial expertise and sophistication. If it does not bring these things there is no case for its admission. That is the basis of our policy and that is the one that we will be presenting to the people at the end of this year.

Mr IRWIN:
Mitchell

– We have heard much piffle and waffle from the honourable member for Cunningham (Mr Connor). Of course he would know all about oil1. He used to mix it with petrol and sell it during the war years under the name NRMA or something like that. He would be an expert on oil.

Mr Connor:

– I rise to a point of order, Mr Deputy Speaker. I am not going to be vilified and blackguarded by this individual. Make him withdraw it.

Mr DEPUTY SPEAKER:

– My attention was distracted and I did not hear what the honourable member for Mitchell said. I ask him to repeat what he said. Then I wil be in a position to decide.

Mr IRWIN:

– I always like to tell the truth, Mr Deputy Speaker, and what I am saying is the truth.

Mr DEPUTY SPEAKER:

-Order! I have not yet heard what the honourable member said.

Mr IRWIN:

– I said something on these lines: The honourable member for Cunningham would be an expert on oil because he used to mix it with petrol and kerosene and sell it under the name something like NRMA or MRNA.

Mr Connor:

– I ask for a withdrawal of that statement.

Mr DEPUTY SPEAKER:

-Order! In accordance with standing order 75 the honourable member for Mitchell must withdraw those remarks, because they are offensive to the honourable member for Cunningham.

Mr Connor:

– And scurrilous.

Mr IRWIN:

– They are not scurrilous; they are true. But I will withdraw them.

Mr DEPUTY SPEAKER:

-Order! The honourable member for Mitchell will withdraw those remarks.

Mr IRWIN:

– I withdraw them.

Mr Connor:

– Withdraw them unreservedly.

Mr DEPUTY SPEAKER:

-I think the honourable member for Mitchell said he withdrew the remarks.

Mr IRWIN:

– The honourable member for Cunningham spoke about the inflation of land values in the metropolitan area and in the Wollongong and Newcastle areas. Of course he well knows that the New South Wales government of which he was once a member created a black market in land with the supposedly green belt, which now does not exist, and that by manipulation and otherwise it forced land values up in the metropolitan area so much so that young married couples have not a possible chance of ever owning a home. His Party is responsible for this unfortunate situation, because once a black market is created the very worthwhile low-wage earners and young married couples are prevented from owning their own land. This is an undeniable fact. During the existence of the Cumberland County Council land could be purchased for £250 or $500 a block; but now it is could not be purchased for $4,000, simply because of the embargo placed on land zoned outside the residential area. The bribery and corruption that took place during this regime is almost too frightening to think about. It was so frightening that the then government, which knew of the position, inaugurated the State Planning Authority of New South Wales, which superseded the Cumberland County Council, and so hushed up the things that were going on in regard to land development in New South Wales.

Australia is very fortunate in that it can attract overseas money for the development of the country. The people of Australia should realise that if perchance the Opposition came to power that supply would be cut off forthwith, because the sensitivity of the money market is such that there must be honesty in dealing with people overseas. Let me refer to Texas. A period of 140 years is not long in the life of a nation. Less than 140 years ago - perhaps 120 years - the whole of Texas was financed by Scottish capital and was manned by Scottish migrants, and within a reasonable time between wars the whole of the indebtedness to Scotland was redeemed. We now find that the Texans are coming to the north of Australia and are bringing their knowhow and cattle. No doubt they will become good Australians. They are bringing money for the development of our great northern lands. Of course, the practical commonsense of this would be over the heads of Opposition members. What they forget is that when this money arrives in Australia, be it in the form of Deutsche marks, dollars or sterling, on the day it arrives in Australia it becomes Australian money and therefore Australian capital. Although this Government has told the people who are investing in this country that there are no strings whatever attached to investment in Australia, if the time should arrive when Australia requires some control over its money under our monetary regulations we could prevent dividends going back to the countries in question by requiring them to be reinvested in Australia.

Confidence in trade and in business is one of the greatest ingredients Australia can have, and it is the confidence of the international money market which enables Australia to attract this money. What happens to this money when it comes to Australia? What does it do? It creates employment; it creates prosperity; and it increases our standard of living. Does the Opposition want to depart from that? Of course we could go along as we did in the horse and buggy days; we could go along slowly with this capital which is available and open up our continent piecemeal, but in this day and age that is not enough. We should get on with the business of extracting untold millions of tons of iron ore from our soil. It will take hundreds of years to extract this ore. How foolish we would be to sit on the sideline and allow this immense wealth not to be extracted and used for the benefit of the Australian people.

A lot of hogwash has been spoken in regard to this matter. National finance is not much different from running one’s own home, farm or business. Commonsense prevails. I would naturally prefer Australians, if we had the wherewithal, to own the equity in their own country and for the money that comes in from overseas to come in as loan funds. Of course there is a risk attached to investment in all concerns, and naturally people overseas are looking for good investment by gaining equity in our concerns.

I do not agree with what my friend the honourable member for Scullin (Mr Peters) said in regard to the money raised in Germany. Although I do not agree with his ideas, I know that he inwardly believes what he is saying and what he thinks to be true. But other people say these things for political advantage and purposes of political opportunism in an endeavour to ingratiate themselves with those uninitiated in matters of finance.

A good deal has been said about the amount of revenue raised by the Commonwealth by way of taxation. Over the last 3 or 4 years the Government has had to raise for defence purposes up to $ 1,000m by way of extra taxes. Surely nobody in his right senses believes that the States should get a proportion of revenue raised by taxes for the specific purpose of financing the purchase of defence materials. Of course, the States are entitled to their share of other revenue and over the years they have received it. But they are not entitled to a share of revenue raised by the Commonwealth from time to time for special purposes. The Opposition does not tell us about the amounts made available to the States by way of free grants to assist them in meeting their commitments. The Opposition does not say a word about the money raised specifically on behalf of the States and made available to them as loans carrying an interest rate of 1% above the bond rate or 1% to li% below the rate paid by the Commonwealth for the money so raised.

It is about time we settled down and took a realistic view of money coming into this country. I ask the Opposition: What would our position be if this money did not come into the country? Would we now be experiencing the vast development that is taking place in Australia? The inflow of capital from overseas is very difficult to control - I hate that word as applied to economic or personal life - unless we control imports. If we did this immediately there would be an increase in consumer goods manufactured in Australia and before long we would be faced with the difficult situation of a shortage of labour, technical know-how and the materials used in the manufacture of consumer goods that are now imported. Of course it would be wonderful if we could live as a nation unto ourselves but we are an integral part of a vast complex system of the free world. Unless we play our part in this system things will be difficult.

Thanks to our Treasurer (Mr McMahon) Australia’s standing in international financial circles is high. The Treasurer could be described as one of the greatest Treasurers not only of Australia but of the world. He is recognised throughout the world as one of the greatest Treasures of the free world. When the Americans get into trouble whom do they send for? They send for William McMahon, Treasurer of Australia. They seek his advice. These are facts. I do not make statements unless they are true. Billy McMahon’s advice has been sought by the Treasury of the United States. America has not had to worry much about finance since the end of World War II owing to the strength of the dollar and the huge assets accumulated by America throughout Europe and the United Kingdom. America has not had to worry much about financial or economic affairs until the last 2 or 3 years. The man who has assisted America and given it advice in recent times is our Treasurer, William McMahon. Now Australia is endeavouring to generate a vast sum of money. Our Treasurer played an important role in the establishment of a fund within the free world in which millions of dollars will be created annually and from which member nations will be able to draw under a quota system. The creation of this fund is designed to break the power of gold. If it is successful it will be of great assistance in overcoming the transitory difficulties that nations experience in meeting their balance of payments. The scheme was evolved last year. It is now in its formative stages. It may be able to do something to prevent the periods of hardship and difficulty that occur, in most cases only for a transitory period, in respect of the balance of payments.

I welcome the inflow of capital from overseas. I would rather have it by way of loan and endeavour to get the Australian people to take up more equity. But let us be candid. Over the years we as a nation and as individuals have been afraid to risk our capital in the formation of new companies. We or our forebears have had to work hard for what we have got. We have been very loath to take any risk with new ventures, especially in mining. Mining was generally looked upon as a risk. Most Australians, because of early experiences in mining, were not prepared to take that risk. It was not until people from overseas realised what opportunities existed here that the great resources under the earth were exploited. We had the opportunity to exploit those resources ourselves but because of the fear of losing what we had - this is a dominant part of the Australian character; do not let anybody tell you differently - we were not prepared to do so. We were apprehensive about anything connected with mining. This apprehension was created by the early gold rushes and the salting of gold mines. I remember how in 1932 or 1933 people were induced to invest in the Nullamor mine, which had been salted from the tailings of many other mines in the area. The price of shares rose to great heights but within a week the whole thing collapsed. With experiences such as this is it any wonder that the Australians who want to invest money follow the traditional lines of investing? We have often heard the Leader of the Opposition (Mr Whitlam) give a discourse on finance and economics. I have found that most legal men cannot get a grasp of economics but are always looking for something that is not there. They are frightened. It is so simple that they cannot fathom it. The Leader of the Opposition has stated that he would divert money from insurance companies and banks towards the development of Australia. But what he forgets to say is what the traditional borrowers from the insurance companies and banks would do if he diverted that money into different avenues. It would be necessary to borrow from overseas to meet the demands of those who traditionally borrow from insurance companies and banks.

I am pleased to be associated with a government which encourages overseas investment in Australia. I hope that money will continue to flow into Australia. As I said earlier in my discourse, overseas investors in Australia know that there are no strings attached to any money loaned to Australia. They are aware that under our monetary regulations we have full control of the money once it arrives in Australia but that we will play the game. I trust that we will always play the game and that if an individual or a company who, in good faith, has loaned us money is in drastic circumstances we will always meet our obligations. But these people know the circumstances surrounding their investments, and they trust the Government. As I said earlier,

Australia is in the happy position of being able to attract money from overseas because the Government is held in great respect and overseas investors have great confidence in it.

Mr JAMES:
Hunter

– It was not my intention to contribute to this debate, but, due to the remarks of the honourable member for Mitchell (Mr Irwin), I must in all conscience say something. Two or three times during his speech the honourable member welcomed the uncontrolled inflow of capital into Australia. For some years the Australian Labor Party has been warning the Government that if capital inflow into Australia is allowed to go uncontrolled the position will be reached where we will be living in a country which is owned by investors who live thousands of miles away. The stage has been reached where some honourable members opposite are heeding the Opposition’s warning.

I will give an example of the effect of uncontrolled overseas investment. The position was reached in Mexico where the country was virtually controlled by overseas investors and the Mexican Government had to introduce legislation to provide that foreign investment would not be permitted to control more than 49% of the shares of any industry in Mexico. Honourable members are well aware that foreign investment has dominated South American countries to such a degree that the people of these countries have had little say in their own political affairs. The armies rule and they are dictated to by foreign powers. One has only to see what has happened in Brazil and in other South American countries where the people have elected progressive governments. A coup d’etat has resulted from the influence of foreign investors on the military. To my mind such coups are organised to protect foreign investment in these countries. Of course, we have the sorry spectacle that if foreign investment is not controlled the situation is reached where there is a revolution. We do not want to see this happen in Australia. One of the principal causes of the revolution in Cuba was that the Cuban economy was virtually controlled by another country. We know that the people of Canada and the Canadian Government have been expressing great concern in recent times at their country being controlled by foreign investors.

I wish to go on record as saying that for some time I have been concerned - as have many honourable members on this side of the House - with the uncontrolled overseas investment which has been flowing into Australia. Not so long ago I was on an aircraft which was flying between Brisbane and Townsville and I met an executive officer of a Texas company which owns vast tracts of land in Australia. He told me that he controlled cattle properties in Cuba prior to the revolution and that as a result of the takeover there by the Castro Socialist or Communist regime his company had to get out. Of course, it cams to Australia. It will be a sorry day for Australia if organisations such as this can perpetrate in this country the actions that brought about the revolution in Cuba. The honourable member for Mitchell warmly welcomes overseas investment in Australia and hopes that it will continue, but I say that it will be a sorry day for Australia if it is not soon controlled. The honourable member for Mitchell paid great tribute to the Texans and what they are doing to develop the Northern Territory. I am an Australian and I hold a lot of the principles that Henry Lawson held. Henry Lawson was one of our great Australians. Many years ago he wrote a poem about foreigners coming to Australia. Time will not permit me to read the whole of it, but I will read a few verses. It is entitled ‘A Word to Texas Jack’ and reads as follows:

What? You’ve come to learn the natives how to sit a horse’s back!

Learn the bloomin’ cornstalk ridin’? W’at yer giv’n us, Texas Jack?

Learn the cornstalk! Flamin’ jumptupl Now where has my country gone?

Why, the cornstalk’s mother often rides the day afore he’s bornl

Further on the poem continues:

As poet and as YankeeI will greet you, Texas Jack,

For it isn’t no ill-feelin’ that is gettin’ up my back;

But 1 won’t sec this land crowded by each

Yank and British cuss

Who takes it in his head to come a-civilizin’ us.

Though on your own great continent there’s misery in the towns,

An’ not a few untitled lords, and kings without their crowns,

I will admit your countrymen is busted big, an’ free,

An’ great on ekal rites of men and great on liberty:

I will admit your fathers punched the gory tyrant’s head -

But then we’ve got our heroes, too, the diggers that is dead,

The plucky men of Ballarat, who toed the scratch so well,

And broke the nose of Tyranny and made his peepers swell,

For yankin’ Lib’s gold tresses in the roarin’ days gone by,

An’ doublin’ up his dirty first to black her bonny eye;

We want to get back to the Australian way of life. I would like to place on the record of the Parliament the concluding verse of Henry Lawson’s poem. It reads:

So when it comes to ridin’ mokes, or hoistin’ out the Chow,

Or stickin’ up for labour’s rights, we don’t want showin’ how.

They came to learn us cricket in the days of long ago,

An’ Hanlan came from Canada to learn us how to row,

An’ ‘doctors’ come from Frisco just to learn us how to skite,

An’ pugs from all the lands on earth to learn us how to fight;

An’ when they go, as like as not, we find we’re taken in,

They’ve left behind no learnin’- but they’ve carried off our tin.

That is what will happen to this country if this uncontrolled foreign investment is allowed to come in. General MotorsHoldens Pty Ltd is taking out approximately $18m a year in profit. The honourable member for Reid (Mr Uren) this afternoon referred to the profits made by foreign investors. If members of the Liberal Party continue with their financial policies which they have been pursuing for some years and continue to give away this country as they have been doing we, the true Australians, will finish up only living in this country. Members of the Liberal Party will go down in history as the greatest traitors of government that this country has ever known.

Mr SWARTZ:
Minister for Civil Aviation and Minister assisting the Treasurer · Darling Downs · LP

– in reply - I am afraid that I will have to revert to prose to reply very briefly to one or two of the points that have been raised by the Opposition. I refer to those points which deal with the Bill. First of all, the honourable member for Cunningham (Mr Connor) made a factual statement that I think is worth recording. He referred to the fact that 90% of capital investment in Australia came from Australian sources. I think this is the first admission of this fact from the Opposition, and it is worth while recording it during this debate. I will not refer to the other 10% to which the honourable member referred tonight because he appeared indoctrinated by the philosophy of some publications which have been published by the honourable member for Scullin (Mr Peters).

The honourable member for Cunningham referred to the recent borrowings in Deutsche mark and suggested fairly firmly to the House that there would be some form of appreciation. This perhaps is a suggestion which may be applied when there is any stable form of currency around the world, but at the present time there is not the slightest suggestion to confirm what has been proposed to the House by the honourable member for Cunningham. He also referred to a high rate of interest. It is interesting to note that the rate of interest which was obtained was about the lowest that could be obtained on any money market in the world. I will shortly refer to that point again. But to finish with the remarks of the honourable member for Cunningham, he referred to the use of revenue for Commonwealth works programmes. It is rather interesting to see this newly developed opposition by members of the Opposition to this particular policy that has been adopted for some years. It was adopted as an emergency measure some years ago when the money market was not producing sufficient to cover all the requirements of the Commonwealth and the States. If the Commonwealth had not adopted the policy at that time of using revenue for that purpose, Commonwealth and State works programmes would have virtually come to a halt. Since then there has been some continuation of this policy which at that time was fully approved by the Opposition. It is rather interesting to note that under these circumstances there is a change in the Opposition’s philosophy or, perhaps, that one section of the Party is opposed to the policy.

The principal spokesman on economic matters for the Opposition, the honourable member for Melbourne Ports (Mr Crean), posed the question: Can anything be done to make the Australian economy less dependent on overseas capital? He did not pursue it any further than to pose the question. Of course, if he had pursued it further perhaps he would have said that the alternative to borrowing overseas is to do without the additional resources that these loans provide for the Australian economy. The loans permit a higher rate of growth than could be achieved without them. At the same time the level of Commonwealth borrowing overseas has not led to a situation that can in any way be described economically as dangerous. In fact, the interest liability on overseas debt expressed as a percentage of the gross national product has fallen from .9% in June 1949 to 4% in June 1968. I think that this is some justification for the policy that has been adopted during this period. Also, the interest liability has fallen, when expressed as a percentage of export earnings, from 3.3% of 1948-49 exports to 2.6% of 1967-68 exports. So if we examine these particular facts we can appreciate that we are in a far better position to meet our foreign interest bill than we were 20 years ago.

The honourable member for Scullin referred to the recent Deutsche mark loan which was raised with an interest rate of 7%. I think this statement must be corrected, because the rate was 64%. Following this he said that the Bill’ that we are debating at the present time did not specify the use of the loans for a particular purpose and did not indicate the interest rate. Of course, this shows, perhaps, that he has not studied the Bill. If he has studied it, he has not an understanding of the situation in relation to it because, as I pointed out quite clearly in my second reading speech, the Bill1 asks for authority to borrow $l50m. Clause 3 of the Bill authorises the Treasurer to arrange borrowings not in excess of this amount. This particular clause is in the standard form for loan Acts. It is necessary to attract the application of section 3 of the Loans Securities Act 1919-68, which provides the procedure to be followed for settling terms and arranging the issue of securities for overseas loans. This is set out quite clearly in the Bill which is before the House.

In relation to the application of moneys, there is a clause in the Bill which authorises the money borrowed under this Bill, when it is enacted, to be applied to the payment of the costs of borrowing or paid to the Loan Consolidation and Investment Reserve. The Loan Consolidation and Investment Reserve Act 1955, which established the Reserve, authorises moneys standing to the credit of the Reserve to be used for the redemption and cancellation of securities, and for investment in securities issued or guaranteed by the Commonwealth. The Australian currency equivalent of the proceeds of loans raised under this Bill, when it is enacted, will be available in the Loan Consolidation and Investment Reserve for investment in the special loan to be raised later in the year to complete the financing of the States’ share of the 1968-69 works and housing programme which has been approved by the Loan Council. I shall conclude with the closing remarks of my second reading speech at the opening of this debate, which clearly set out the situation:

The effect will be to make available to the States the proceeds of overseas loans at Australian rates of interest. The concurrence of all State Premiers has been obtained to this course.

Again, as I did at the outset, I commend this Bill to the House.

Question resolved in the affirmative.

Bill read a 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 Swartz) read a third time.

page 437

CUSTOMS TARIFF BILL 1969

Second Reading

Debate resumed from 26 February (vide page 178), on motion by Mr Nixon:

That the Bill bc now read a second time.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– The Opposition will not vote against any of the proposals in this Bill. None of them is very important, and the proposals collectively are not of much substance. They are the result of four proposals last year, Nos 17, 18, 19 and 20, the details of which are set out in the second reading speech of the Minister for the Interior (Mr Nixon), and four proposals this year, Nos 1 to 4.

These come as a result of ten Tariff Board reports and two reports by the Special Advisory Authority. I want to say something about several of these matters, not because what is being proposed by the Tariff Board, the Special Advisory Authority or the Government is of any great significance, but partly because in three cases the Government is doing something contrary to what was recommended and in the case of one Australian industry - that of mushrooms - I think what is happening is worth the attention of the House.

The protection to the growing of mushrooms in Australia before this legislation was about 18% to 22% ad valorem and it is now going up to about 35% ad valorem. There are one or two points about the mushroom situation that ought to be mentioned. First of all, the Board’s report indicates that mushroom growing in Australia has not yet become significant enough to appear in the statistics of the Commonwealth Statistician. The Australian Mushroom Growers Association estimates that in 1966 mushrooms were produced on 230 farms of which 74 were engaged in full time mushroom growing. One hundred and ninety of the 230 farms were in New South Wales. No longer is the random gathering of mushrooms in paddocks of any significance. The bulk of local production is of mature, full flavoured mushrooms with dark gills known as fiats. A small proportion of the output consists of mushrooms harvested at an earlier stage of growth and most of them - about 80% - are processed and canned. There has been a growth in the production of mushrooms in Australia which is fairly significant. The quantity used by Australian processors has risen from 2.707.000 lb in 1963 to 4,104,000 lb in 1966.

When we turn to the question of efficiency in the growing of mushrooms in Australia, which is the kind of thing with which we would expect the Board to be concerned, and also the Government when it is arriving at its decision, we have the advice that Professor Kneebone of the Pennsylvania State University believes that a yield of 10 lb of mushrooms and upwards per basic square foot is regarded as an indicator of efficiency. Only five of the growers who gave evidence show that they have achieved this standard of 10 lb per square foot in Australia. There is evidence that a number of other farms in 1967 - I do not know whether they are supposed to be representative - were averaging 7.17 lb per basic square foot. The question of efficiency is relevant to this when we realise where imported mushrooms come from. The overwhelmingly large proportion of imported mushrooms comes from Taiwan, and it surprises me that the honourable member for Chisholm (Sir Wilfrid Kent Hughes) is not here to say something against the imposition of a tariff on something from Taiwan.

Mr Stokes:

– -They are a small champignon - a different type of mushroom from the field types of mushroom we get here.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– In any case, one mushroom is competitive with another. The Board is aware of this and regards the comparison with Taiwan of such significance that it makes special reference to it. The honourable member for Maribyrnong (Mr Stokes) will see that on page 9 of the report. The latest figures, which are for July-December 1967, show that $144,440 worth of mushrooms were imported from Taiwan. Again, one would expect these figures to have some significance and, of course, they must. Other imports included $10,908 worth from mainland China and $19,619 worth from France. The total value of imports in that period was $188,520. This is important, because the Board goes on to mention on page 9 that Australian growers have serious cost disadvantages vis-a-vis their Taiwanese counterparts, particularly in regard to labour and materials. Labour costs in Taiwan average about 3.1c per lb for champignons as compared with the estimated average of 12.6c per lb in Australia.

Mr Stokes:

– The labour content is low in growing mushrooms.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– Of course. On the other hand the Board points out on page 11 of the Report that yields and technology in the Australian mushroom growing industry appear to be almost equal to those in the American industry and this suggests that the local industry has reached a reasonable level of efficiency. I think this statement probably can be made in respect of a very large section of Australian industry. If you compare it to a country where wage levels are comparable, then a very large section of Australian industry in fact is efficient. Increasingly the inefficiency becomes apparent - this is as true of secondary industry as it is of primary industry, and I would expect people who take the primary industry point of view to be aware of it - when we compare Australian standards of efficiency with the standards in Taiwan, South Korea or Hong Kong. It is then that we find this inefficiency in a striking form because the wage levels are very low in those countries. I have been saying for some time about the secondary field that it is not sufficient to make a comparison of efficiency of that sort and therefore disqualify the Australian industry. We have here a primary industry - the growing of mushrooms - in which the same thing is being said by the Board and endorsed by the Government. Anyway, I do not think the proposal is unreasonable. It is to increase the ad valorem rate from about 18% or 22% up to an equivalent of about 35% . It does not seem to me to be unreasonable and the Opposition does not intend to vote against that proposal.

Next I want to mention the question of olive oil and peanut oil. We have here two recommendations by the Board and, in both cases, the Government is not accepting the Board’s recommendations. These were made in the report of 30th September 1968. The Board looked at both sections of the production in some considerable detail and recommended that there should be no increase in the duties, but the Government is going to ignore the recommendation. Regarding peanut oil, on page 22 of its report, the Board said:

Because local production of substitutable oils is still less than total domestic requirements, phasing out of assistance for peanut oil in the manner suggested will not, in the Board’s view, adversely affect their development.

The Board wanted to phase out this assistance and did not think that the phasing out would affect the situation because production is far less than total domestic requirements, yet the Government is saying: We won’t have it phased out’. It is proposing, in fact, to maintain the level of protection for peanut oil longer than the Board thinks it ought to be maintained. As in all these matters where the Government does not accept the Board’s report, we are never given any reason why. Since I have been a member here I do not think I have known an instance where the Minister has given any reason why.

Mr Peacock:

– A reason was given in respect of olive oil.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– Yes, I know, but it was not a reason that explained what had happened, if my memory is right. But certainly no mention was made of peanut oil. In the case of olive oil - and this is what I come to next - this is a bit more significant. The Olive Growers Association of Australia apparently pointed out, as the Board informs us on page 28 of its report, that olive oil comes mainly from olives grown in two places. Mr R. M. Fisher, a Western Australian grower, gave information about the small irrigated plantings of young olive trees in that State. I do not think that in respect of olive oil production Western Australia is yet of any significance. The Board’s report states:

Five growers are developing about 700 acres of olives under irrigation in the Murray and Murrumbidgee Irrigation districts - the largest being Oliveholme at Robinvale, Victoria, which has 362 acres.

It is possible that the location might have something to do with the reason for the Government’s decision. However, I refer honourable members who may be interested enough to have a copy of the Board’s report to page 32 of that report where it is stated:

In 1965 the Board found that the olive oil industry had not developed at the rate which had been expected and only about 3% of the market was being supplied by locally produced olive oil. Production cost information supplied at the inquiry was not sufficiently detailed and reliable to allow the industry’s protective need to be assessed but the Board stated in connection with the industry’s request for protection at the rate of $1.20 per gallon, that it would have grave doubts about the worth of the industry if it required assistance to that extent . . .

The Board received satisfactory cost data on this occasion from one producer, Oliveholme. As Oliveholme is the largest local producer and is apparently representative of the most efficient production of olives under irrigation, the Board agrees with the industry’s suggestion that the Board’s assessments be based on that company’s operations.

The Board mentioned the Association’s suggestion that technical advances will bring about falling costs and stated:

These forecasts appear optimistic; although certain technological improvements may be in prospect, the Board can see no sound indications of future viability in the local industry.

That was the Board’s opinion, but the Government does not go along with it. The Government is not going to phase out the protection. The protection is going to remain. Those who are concerned with the industry ought to be aware of what the Board has said. The Board can see no sound indication of future viability in the local industry. What is the local industry going to do? Is it going to try to phase itself out and go into some other production, or is it going to continue? Why did the Government take this view of the olive oil industry? What are is reasons? I should like to hear something more about this than we have heard. Does the Government agree with what the Board said? If it does not agree with what I have just quoted from the report, why does it not agree with it? What does the Government propose to do? Does it think that this duty is going to remain for 1 year, 2 years or 5 years? Is it not desirable for the Government to give to the industry some indication of what it thinks the industry’s future is? When we talk about the future of an Australian industry it is not a matter of whether we simply accept some general rules that the Tariff Board has put forward like this new 50 and over rule; it is how we deal with specific cases like this one and what we say that allows the industry to plan its own future. There are times when this is not taken into account at all, and undoubtedly this is one of those times.

The only other matter to which 1 want to refer at this stage is the other report with which the Government is disagreeing, namely, the Tariff Board’s report of 10th October 1968 on hot water bags. This can hardly be called an industry because hot water bags are produced in Australia by only one producer, the Ansell Rubber Co. Pty Ltd which is located in Burnley in my present electorate in Victoria. Ansell employs twenty-six persons in the production and marketing of bags, whereas 2 years previously it employed forty-four persons. An sell’s costs have not been behaving in a manner that enables comparisons to indicate an improvement. Production is not going down although the labour force has gone down. Some changed productive processes have been introduced and these explain the decrease in the number of employees, but the company is still not able to turn out a cheaper product. A lot of people in Australia still use hot Water bags. Not everybody can afford an electric blanket. Most of the people who use hot water bags are poor people and most of them are old. By keeping out of Australia a cheaper hot water bag we are going to make those people pay the additional cost. I would think this cost would be about onethird or 40% of what it might otherwise be. As I understand it, and I am not sure thatI am right about this, Ansell is not particularly anxious to keep this protection. Although the management of the company sought protection, as everyone who is affected does, as I understand the position they would not lose much sleep if they did not keep it. This is not an important matter.

Mr Irwin:

– The old people would miss their hot water bottles.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– They would buy the imported products if they could not get the hot water bottles made by Ansell.

Mr Bosman:

– But it is an important principle.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– That is right. We do not intend to vote against the Bill. I would think that on balance if Ansell had been given some notice the sensible thing to do is not what has been done. Those are the only matters I want to raise. The Opposition will not vote against any of the proposals.

Debate (on motion by Mr Andrew Jones) adjourned.

page 440

ADJOURNMENT

Container Method of Handling Cargo - The Parliament

Motion (by Mr Erwin) proposed:

That the House do now adjourn.

Mr DUTHIE:
Wilmot

– I appreciate the desire of the new Leader of the House (Mr Erwin) to terminate Government business earlier than has been the custom so that we will have a chance to speak on the motion for the adjournment. I have a very important and serious matter to raise. It relates to the announcement of freights for goods shipped in containers. An announcement was made in the Tasmanian Press this morning by the Master Warden of the Hobart Marine Board, Mr R. J. Gibson. I hope that the Minister for

Trade and Industry (Mr McEwen) is listening in his office, because this should concern him. Mr Gibson dropped this bombshell in the Press this morning. He said that Tasmania will be able to participate in the container method of shipping cargo only if she pays extra for the privilege, Hobart being the only Australian capital city port so placed. I will give a run down of his statement so that honourable members will know what this is all about.

The Marine Board sent a fact finding mission to the mainland and it has just concluded its work. Mr Gibson described the situation as sounding the death knell of Tasmania’s export industry. He used words such as ‘grim’ and ‘alarming information’ in his statement to the Press. He said that there were grim indications that unless determined action were taken events in the shipping world in the next few months could sound the death knell of the export industry of Tasmania and other regions, bringing about an inevitable reduction in the standard of living. His statement followed a conference between representatives of the Board, the Chamber of Commerce and the Chamber of Manufactures in Hobart. He said that the objective of the conference was to consider the alarming information obtained by the fact finding mission, which was told that Tasmania could participate in the container ship service only if it paid extra for the privilege. He went on to give some historical data about the introduction of container shipping for Tasmania.

At this point I want to give some of the history of this matter. We assumed when containerisation was accepted by the Government and the three main ports were established - Fremantle, Melbourne and Sydney - that all the feeder services for Queensland, South Australia and Tasmania would have an equal freight rate for shipping to the three main ports. In other words, there would be a standard rate of freight for the whole of the Commonwealth irrespective of the port from which the goods came. If the information obtained recently by the fact finding mission from Tasmania that we will have to pay additional freight to get our goods to Melbourne is true, this is indeed the most dangerous situation that Tasmania has faced for many years. It will increase the cost of our exports to such an extent that our goods, including apples, minerals, metals and other primary products, will have no hope of competing on overseas markets. This is an outrageous repudiation of promises definitely made to this Government.

Mr Pearsall:

– Your colleague in his statement to the ‘Mercury’ last week said apples would not be affected.

Mr DUTHIE:

– I cannot go along with that statement. I believe that somewhere along the line the shipment of our apples will be affected.

Mr Pearsall:

– I agree, but your colleague does not.

Mr DUTHIE:

– After all, the use of containers for apples is still in the discussion stages. Our apples will probably be the most difficult cargo for which containers will be used. The whole of our apple industry at the moment is anxious about this situation. On top of this worry, we have the announcement that Tasmania will not be included in the scheme of equalised freight rates. Hobart is the only capital city that will be excluded from it. People in Brisbane will have to pay extra to get their goods to Sydney and the people in Adelaide may have to pay extra to get their goods to Melbourne by rail. I have been studying the report on this subject and it would seem that the main exports from South Australia in the early stages at any rate will go by rail and not by ship to Melbourne.

Let us have a look at the history of this proposal. The Minister for Trade and Industry organised an important conference here in May 1966 and representatives of all the big shipping consortia attended it. They were assured at this conference organised by Sir Alan Westerman, who was a great apostle of containerisation, that there would be one freight rate for all Australian ports. This led the Australian people to think: ‘We will be well treated, this is an excellent idea. There will be no discrimination anywhere in the Commonwealth”. In the next year, on 23rd February 1967, the Minister in answer to a question asked by the honourable member for Canning (Mr Hallett) said:

This great combination of British shipping companies has stated that it will proceed to build six container ships - very sizeable ships - and commence a specialised container service to and from Australia. The ships will be delivered in 1969.

The first ship is the ‘Encounter Bay’. If it is not already on its way to Australia, it will not be long before it leaves England for its first visit to this country. The Minister continued:

This will have the result of providing a service to Australia every 10 days by a container ship. The ships will load and unload in only three Australian ports - Sydney. Melbourne and Fremantle - and there will be feeder container services from all Australian ports to these major terminal ports.

This next sentence is important:

The cost of the feeder services will be absorbed so that there will be a single Australian freight rate. This is a very important aspect.

In 1967, the Senate Select Committee on the Container Method of Handling Cargo made a survey throughout Australia and the following year presented an excellent report. On page 17 we read this:

As the cellular ships of the British consortia will operate only from the ports of Fremantle, Melbourne and Sydney, a comprehensive service of ‘feeder’ ships is planned to cope with trade from as far apart as Darwin and Tasmania. The Committee was given assurances by the shipping companies concerned that there would be a uniform rate applicable to cargoes from main ports and feeder ports. The Committee is adamant that, in accordance with these assurances, there should be no differential rates applied to cargoes from feeder ports.

This latest statement is a complete repudiation of what the shipping consortia promised this country and, in particular, the ports involved in feeder services. It will be a grave economic loss to Tasmania if the Government, through the Prime Minister (Mr Gorton) and the Minister for Trade and Industry, does not take this matter up immediately with the shipping consortia. I am convinced that they were tricking us with dishonest promises when they told us 3 years ago, and have not repudiated it until now, that there would be no differential in freights anywhere in the Commonwealth. It is an outrageous development for this new containerisation system of freighting. We realise that if we have to resort to any other form of shipping it will be the oldfashioned residual ships. If we have to resort to conventional ships to carry freight from here to England, our trade will be affected enormously. I have raised this matter tonight because it concerns Tasmania as nothing else has concerned it for years. I feel that it is up to the Government to make sure that there is no differential at all between freight rates anywhere in the Commonwealth, as we were all led to believe right through the last 3 years would be the case.

Mr McLEAY:
Boothby

– I would like to draw the attention of the House at this moment to the number of members sitting on the Opposition benches. The honourable member for Wilmot (Mr Duthie), who has just resumed his seat, is sitting in isolation. There is not a single member of the shadow cabinet nor any other Opposition backbencher in this place. As the honourable member for Wilmot is the Whip of his Party, I would like to draw to his attention and ask him to pass on to the other members of his Party the fact that the time of this House has been wasted in the 5 days we have been sitting. During those 5 silting days four matters of public importance have been raised. On the day that we came back there was a matter in the name of the honourable member for Melbourne Ports (Mr Crean) stating that the Government had failed to identify and regulate overseas investment and so on. That was a quite frivolous resolution and was thrown out neck and crop. On the second day of our sittings, 26th February, there was a matter of public importance called on in the name of the Leader of the Opposition (Mr Whitlam). It dealt with patronage in the appointment of Ministers. I thought that the Opposition should have learned from that, after taking a proper thrashing. On 4th March, the first sitting duy of this week, the fourth matter of socalled public importance was raised in the name of the honourable member for Dawson (Dr Patterson). It dealt with the Great Barrier Reef. The matter raised today in the name of the Deputy Leader of the Opposition (Mr Barnard) dealt with the Government’s abandonment of the 3- year plan for defence. That was really the only thing that has promoted debate.

I am concerned because at the end of the last session honourable members opposite, and in particular the honourable member for Hindmarsh (Mr Clyde Cameron) - I would be interested to know where he is at the moment - wasted a great deal of time after II o’clock in complaining about the imposition of the 11 o’clock rule. On 13th November 1968 the honourable member for Hindmarsh had something to say about the resolution standing in the name of the then Leader of the House. Referring to the 11 o’clock rule, he said:

If the Minister wants to prostitute the Parliament of this country, that is one thing; but he should not try to get us to agree to that course.

I say that we would be entitled, as backbenchers, to substitute ‘Opposition’ for’the Minister’ and say: ‘If the Opposition wants to prostitute the Parliament of this country’ - and that is what I say it is doing - ‘that is one thing; but it should not try to get us to agree to that course’. I understand that there has been a tacit agreement for us to finish at a reasonable hour so that we can make an intelligent contribution to the debates. Later in the same speech the honourable member for Hindmarsh, referring to the Leader of the Opposition, said:

We on this side of the Parliament-

Let me be clear that this is the Opposition side - do not have any staff at all for typing purposes after 5 p.m.

That was a reasonable complaint. We on this side have now been given the services of a typist after 5 p.m., and I am quite sure that one has been made available to honourable members on the other side, so that complaint has been disposed of. He went on:

How much longer are we to tolerate this?

He was referring to the wasting of time. He said:

How much longer are we to let the twelve rajahs who call themselves Cabinet Ministers run this country and treat us as nuisances and humbugs who should not be here?

I would like to say: How long are we on this side to allow the twelve rajahs on that side who call themselves the shadow cabinet to run this Parliament and treat us as nuisances and humbugs who should not be here? The honourable member for Hindmarsh said:

They tolerate us only because the Constitution says they have to put up with us.

I would think that a fair substitution there would be: They tolerate us only because the caucus says it has to put up with us’. I am happy to say that there are now three honourable members on the Opposition benches. I am impressed with the audience

I have dredged up. I am concerned because there are speakers on this side of the House who wish to speak to the very important defence debate. The position really is that the Opposition has run out of speakers and hopes to drag on and on with this interminable delay in the hope that Government members will just give it away and not bother to come forward in the debate. I can assure honourable members opposite that that will not be so. Government supporters will talk the debate out, and when the Opposition complains at the end of the year we will remind honourable members opposite of the proceedings that have taken place tonight and during this last fortnight. I intended to speak briefly on this matter last year. The same thing happened towards the end of the last session. I hope that the Opposition Whip, who has been generous enough to stay during this short speech of mine, will listen to the backbenchers of his Party. I implore the backbenchers of the Opposition side to front up to the rajahs in the shadow cabinet and take some sort of control.

In the last weeks of the last session the grievance debate was almost permanently abolished, I know to my own cost, because I had put my name down on several occasions to speak. Whether honourable members sit on this side of the House or that side of the House, the grievance debate is one of the few forms of the House left to them to enable them to speak on whatever subject they wish and to speak directly to the electorate of Australia. Any tactics of honourable members opposite or anybody else to destroy that right are reprehensible. There is no other way for a member to get his message on some issues to the electorate. I do ask backbenchers on the other side of the House to show a little initiative and to front up to the rajahs on their front bench. The Ministers who sit on our front bench have obligations and are working all the time. They have responsibilities of government. I would like to know where the rajahs as well as the backbenchers of the Australian Labor Party are. I make the point that these rajahs are free to come and go and that they are rajahs operating without any responsibility.

Question resolved in the affirmative.

House adjourned at 10.50 p.m.

page 444

ANSWERS TO QUESTIONS UPON NOTICE

The following answers to questions upon notice were circulated:

Commonwealth Employees: Workers Compensation Laws (Question No. 884)

Mr Whitlam:

asked the Prime Minister, upon notice:

  1. What Commonwealth, Stale and Territorial workers’ compensation laws covered Commonwealth employees?
  2. How many Commonwealth employees are covered by each Act and Ordinance?
Mr Gorton:
LP

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

On the assumption that the term ‘Commonwealth employee’ includes employees of authorities of the Commonwealth, the Treasurer has provided the information given in section (1), (2) (a) and (2) (b) of the answer set out below:

  1. Subject to the exceptions indicated hereunder, Commonwealth employees, including members of the Defence Force on non-operational service, are covered by the Commonwealth Employees’ Compensation Act 1930-1968. Seagoing personnel employed by the Australian National Line are covered by the Seamen’s Compensation Act 1911-1968. The following are covered by the Papua and New Guinea Workers’ Compensation Ordinance 1958- 1967:

    1. Commonwealth officers granted leave without pay from the Commonwealth Public Service and serving in the Public Service of Papua and New Guinea, or appointed by the Governor-General to statutory offices in the Territory of Papua or in the Territory of New Guinea; and
    2. Indigenous inhabitants of the Territory of Papua or of the Territory of New Guinea who are members of a part of the Defence Force consisting, or consisting mainly, of such inhabitants, i.e., members of the Papua-New Guinea Division of the Royal Australian Navy, or members of the Pacific Islands Regiment or other Army Unit whose members comprise indigenousinhabitants enlisted locally in Papua-New Guinea.

There are some Commonwealth employees, e.g., certain persons employed in the Trade Commissioner Service, the holders of some statutory offices and others, who are either not ‘employees’ for purposes of the Commonwealth Employees’ Compensation Act or there is some doubt whether they are ‘employees’. There are others in respect of whom even if they are technically ‘employees’, there is a doubt whether an injury sustained in the particular service in which they are engaged could be said to be a personal injury by accident arising out of or in the course of employment with the Commonwealth. It has been the practice to extend the provisions of the Act to such persons as an Act of Grace. No Commonwealth employees are covered by State workers’ compensation legislation. 2. (a) Commonwealth Employees’ Compensation Act 1930-1968 - The number of employees varies, but for the year ended 30 June 1968 the monthly average of persons, including members of Defence Force on non-operational service, covered by this legislation was 364,708.

  1. Seamen’s Compensation Act 1911-1968 - Here too the number varies, but the Australian National Line advises that if all its 36 ships were fully manned, the number of seagoing personnel covered by this legislation would be 1,398.
  2. Papua and New Guinea Workers’ Compensation Ordinance 1958-1967- The relevant departments have provided a composite figure of approximately 3,505 as at December 1968 for persons covered by this Ordinance.

The figure comprises the aggregate of the following:

  1. The approximate number of Commonwealth officers on leave-without-pay serving in the Public Service of Papua and New Guinea or appointed to statutory offices in the Territory of Papua or the Territory of New Guinea;
  2. The number of members of the Papua-New Guinea Division of the Royal Australian Navy;
  3. The numbers of indigenous inhabitants enlisted locally in Army units.

Commonwealth Business Undertakings: Salaries of Officers (Question No. 987}

Mr Whitlam:

asked the Prime Minister, upon notice:

How many officers of each Commonwealth Government business undertaking receive salaries comparable with the salaries of officers at each level of the Second Division of the Commonwealth Public Service?

Mr Gorton:
LP

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

For the purposes of this question the salary limits used are those applying prior to any adjustment as a result of the 1968 National Wage Case. The reasons for adopting these salary limits is to obtain a uniform basis for comparison as some undertakings have not as yet adjusted salaries in the light of that decision. In this context, the relevant Ministers have provided the following information in answer to the honourable member’s question:

Imports of Steel (Question No. 1039)

Mr Charles Jones:
NEWCASTLE, VICTORIA · ALP

asked the Minister for Trade and Industry, upon notice:

  1. From which countries was steel imported during 1966-67 and 1967-68?
  2. Could this steel have been manufactured in Australia?
  3. If so, why was it imported, and how did the price per ton of locally manufactured steel compare with that imported?
Mr McEwen:
CP

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

  1. The Commonwealth Statistician has advised that details of imports of steel, as such, are not separately recorded. Information relating to the more common product grouping ‘iron and steel’ is available however, and the following table shows imports of iron and steel by country of origin for the years 1966-67 and 1967-68.
  1. Australia’s imports of iron and steel include a wide variety of types and forms, as is shown in the table below which classifies iron and steel imports according to the nature and form of the imports. It is possible that some, if not the greater proportion of these imports, could be manufactured in Australia although in practice to do so might not be economically or commercially desirable, from either the national viewpoint or the viewpoint of the steel-using industries.
  1. There are a number of reasons why steel is imported into Australia even where the particular type involved could be manufactured here. In some cases there is an unexpected rise in demand for steels of a certain type or form and the capacity of local production facilities to meet this demand may be exceeded. Imports would then occur. Other reasons are that in some instances the imported product may be cheaper or the buyer may have a preference for an imported steel (on grounds of quality or performance). Because of the range of iron and steel products involved (sec table above) it is not possible to make a simple comparison between prices of locally manufactured steel and imported steel.

China (Question No. 1168)

Mr Hayden:
OXLEY, QUEENSLAND

asked the Minister for External Affairs, upon notice:

  1. Has his attention been drawn to an article in the ‘Australian’ dated 27th November 1968, including a photograph of National Chinese commandos with a caption stating that the commandos cross from the Nationalist island of Taiwan to the Chinese mainland where they collect information for the Government of Chiang Kai-shek and that they also carry out systematic sabotage of Communist installations?
  2. Has his Department investigated the correctness of this claim of externally directed sabotage against mainland China carried out at the direction of Nationalist China?
  3. If the claim is correct, has the Government taken any action condemning this provocative behaviour?
Mr Freeth:
Minister for External Affairs · FORREST, WESTERN AUSTRALIA · LP

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

  1. Yes.
  2. It is not the practice of the Australian Government to investigate the accuracy of newspaper reports on the actions of friendly governments.
  3. See answer to question 2.

Australian Economy (Question No. 942)

Dr Everingham:

asked the Prime Minister, upon notice:

  1. Did he state recently in the Robertson electoral division that (a) Australia is progressing geometrically, (b) this is limited only by the availability of capital, of overseas manpower and of national skills and (c) the national government should give a lead in providing comparable standards of education and health services throughout Australia?
  2. Is government spending on public health and education services, per head of population, growing in geometrical progression?
  3. If not, can he furnish any evidence that economic progression can continue to be geometrical if progression in education and national skills is not of this order?
Mr Gorton:
LP

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

  1. The two parts of my speech on 18th October 1968 in the Robertson electorate to which the honourable member is presumably referring are: “Then we have, here now in this nation, a sort of excitement, an opportunity for development which has never been known in it before. For a long time we grew gradually. Yes, there were gold rushes. People suddenly came here. They built ghost towns. They mined the gold. They went away, and the population increased as they came and decreased as they left. Apart from that, there was just a gradual development of industry, a gradual development of agriculture, a gradual increase in the size of towns and cities.

All of a sudden, we are finding all throughout Australia new things - iron ore, which will bring us in enormous overseas income - oil in Bass Strait . . . maybe oil in this electorate, who knows? We hope so. Maybe oil off-shore from this electorate. It doesn’t matter . . . oil for Australia. Iron ore for Australia. Nickel for Australia. New townships being built, new ports being dredged, new railways being constructed, the whole face of the north of Australia being changed. Along with it, we have the great development in our own industrial capacity inside Australia, the great requirement for people with new technological skills, the desire for people who will work and who have knowledge. This requires billions - not millions but billions of dollars of private investment and millions, perhaps hundreds of millions of government investment. But the point is that instead of the gradual progress which for so long continued, we are now progressing geometrically. The sky is the limit now, as long as we can get the capital from outside, or from inside, and the manpower from outside, and the technological skills from inside to take advantage of all the opportunities which suddenly have opened up to us.

This is a thing that has only happened in the last few years and this is a thing we must reach out and grasp because in grasping it and in using the opportunity so grasped properly lies the decision of what we will be in two or three or four decades ahead as a nation. We will be by the turn of the century, twenty-eight million people - not the twelve we are now, and the turn of the century is only some thirty years ahead which in the life of a nation, is but the blinking of an eye. Yet what we do now to seize that opportunity will decide whether, at that time, we have achieved all that it is possible for us to do or whether those living then will say “Thirty years ago people didn’t have vision. They didn’t see what was possible. They didn’t take the measures that were necessary. They fell short, and we would have been a greater nation had they not fallen short.”’ I subsequently went on to say:

I think there is growing in our population as I think there ought to be growing in our population, a requirement that the educational facilities available to a child should be of roughly comparable standard, whether that child is born in Western Australia or New South Wales or Queensland or wherever it may be. I think that there is growing in our population a requirement that if somebody becomes ill and is in need of care, then they should be able to get roughly comparable care, no matter in what division of this nation they may become ill. If I am wrong in this, thenI am wrong, but these are things which you should think about, because they are things that I am thinking about, because they are things the Liberal Party will have to think about if it is to move with the times.

I give only those examples, there are many others - but in giving them, I do not want to be accused, as I have been accused, of being a centralist. I am not. I think the administration of all these matters should remain in governments closer to the people than any government in Canberra can be. But think about whether the goals that I have suggested, the provision of finances that I have suggested for special purposes in education or in roads or in transport or in health ought not really to be something in which an Australian Government has a leading part and in which a Stale government has the administration and the disbursement of the funds. ‘ 2 and 3. The net annual expenditure of all public authorities in Australia on education’ increased from $7.57 per head in 1948-49 to $70.60 per head in 1967-68. The net annual expenditure of all public authorities in Australia on health and welfare increased from $6.93 per head in 1958-49 to $37.16 per head in 1967-68.

Commonwealth Employees: Appeal Tribunals (Question No. 1019)

Mr Whitlam:

asked the Prime Minister, upon notice:

  1. What are the names of the persons who constitute the Promotions Appeal Committee, Boards of Inquiry, Appeals Boards, Disciplinary Appeal Boards and Promotions Appeal Boards listed in his answer to me on 15th October 1968 (Hansard, page 1978)?
  2. When were these persons appointed?
  3. What are their industrial or professional qualifications?
  4. On how many (a) days and. (b) appeals has each board sat in the last 10 years?
  5. What fees and allowances have been paid in respect of each board in the last 10 years?
Mr Gorton:
LP

– The Ministers administering the relevant Statutes have provided the following information in answer to the honourable member’s questions:

PUBLIC SERVICE ACT 1922-1968

Promotions Appeal Committees Section 50

The Committees constitued under this Section of the Act comprise:

a Chairman appointed by the Public Service Board;

an officer nominated by the Permanent Head of the department in which the provisional promotion has been made; and

an officer nominated by the appropriate staff association.

Departmental and association representation varies from case to case and summary records are not maintained of their names and qualifications.

The following details, however, are furnished in relation to Chairmen:

and 2.

Palmer, B. C. (Tas.), 18.1.56.

Hodgins, P. R. (Vic), 2.1.63.

Thorley, W. L. (W.A.), 29.1.63.

Young, V. H. (N.S.W.), 5.4.63.

Watson, J. H. (A.C.T.), 2.7.63; (N.S.W.), 20.12.65.

Le Mesurier, E. J. (A.C.T.), 12.8.63.

Howe,W . A. T. (Qld), 6.10.64; (S.A.), 8.9.66.

Moore, F. W. C. (Vic), 7.6.65.

Moriarty, M.F. (Qld), 13.3.67.

Haupt, S. J. (N.T.), 9.12.68.

Whilst a number of Chairmen hold formal academic qualifications, persons appointed as fulltime Chairmen have been selected primarily on the basis of their capabilities and/or relevant experience in personnel administration and/or staff association activities. 4. (a) Records are not maintained of the numbers of sitting days of individual Committees. (b) Statistical records of the numbers of appeals dealt with in each State have not been retained beyond the last 3 years, nor are statistics maintained for individual Committees. The total number of appeals for all States and Territories is, however, shown in the following table:

  1. Members of Committees are not remunerated on a fee basis but are paid annual salaries, according to the classifications of their normal Public Service positions. All Chairmen are paid as Clerks (Class 11), the actual salary range of which is $8,296-$8,603. Provision exists for payment of travelling alowance where Committee members are required to be absent overnight from their normal station, but records of such payments are not maintained.

Appeal Boards

Sections 55 and 82aa

Appeal Boards constituted under these sections comprise:

  1. a Chairman, appointed by the Public Service Board;
  2. an officer of the department to which the appellant belongs, appointed by the Chief Officer of the department for the purpose of the particular appeal to be heard; and
  3. an officer elected by and from the officers of the Division in which the appellant is included, in the State in which the appellant performs his duties.

Appeal Board Chairmen are appointed and Divisional Representatives are elected for all Slates, with the Chairman in New South Wales and South Australia also serving for the Australian Capital Territory and the Northern Territory respectively. Departmental representation varies from case to case at the discretion of departmental Chief Officers.

The following information is provided in relation to Chairmen and Divisional Representatives:

Chairmen 1 and 2.

Smith, A. G. (W.A.) 25.10.54.

Clarke, L. E. (S.A. and N.T.), 22.8.60.

Turner, R. F. (Tas.), 28.5.63.

McCauley, M. J. (N.S.W. and A.C.T.), 13.6.63.

Pearce, E. E. J. (Qld.), 25.10.67.

Divisional Representatives

  1. All the above Representatives were elected for a three year term, effective from 1st December 1968.
  2. Chairman of Appeal Boards must hold the qualifications of Stipendary or Police Magistrate, beyond this records are not maintained of the qualifications of Appeal Boards. 4. (a) Records are not maintained of the number of sitting days of individual Appeal Boards. (b)
  1. Appeal Board Chairmen are remunerated on a fee basis, at the rate of $30.00 per day, for each sitting day. Departmental and Divisional Representatives do not receive fees but continue to receive the salaries appropriate to their normal Public Service positions. All Appeal Board members are entitled to payment of travelling allowance when required to travel on Appeal Board duties. Specific records, however, are not maintained of any of the above fee or allowance payments.

Boards of Inquiry

Section 56

Boards of Inquiry are appointed by the Public Service Board as required. In the last ten years, it has been necessary to appoint only one such Board. 1. (a) The Honourable Mr Justice Richard M. Eggleston (Chairman).

  1. Sir Patrick McGovern (member).

  2. Mr F. P. O’Grady (member).

    1. June 1961. 3. (a) Judge of the Commonwealth Industrial Court.
  3. Former Commissioner of Taxation, retired.
  4. Then Deputy Director-General of Posts and Telegraphs.

No additional qualification details are recorded. 4. (a) 3 days.

  1. 1 appeal.

    1. The Chairman continued to receive normal remuneration as a Judge. Sir Patrick McGovern received fees of 10 guineas for each sitting day. Mr O’Grady continued to receive the salary appropriate to his Public Service position. Sir Patrick McGovern also received travelling allowance at the rate of 6 guineas per day.

page 450

BROADCASTING AND TELEVISION ACT 1942-1968

Promotions Appeal Board Section 50

Details of sittings between 1958 and 1961 are not readily available.

Disciplinary Appeal Board

Section 58

Mr K. W. Fraser, 14.3.68.

Officers’ Representatives, 1.7.68(for 3 years).

Mr K. W. Fraser, Controller of News, A.B.C., Sydney.

Mr B. Oliver Sporting Supervisor, A.B.C., Sydney.

Mr J. D. Watson Senior Technician, A. B.C., Sydney. 4. (a) 16 days;

page 451

COMMONWEALTH POLICE ACT 1957-1966

Appeal Board

Commonwealth Police Regulations

The Commonwealth Police Appeal Board was established in 1960 and it is an ad hoc board which is constituted each time an appeal is made. Under the Commonwealth Police Regulations the Chairman of the Board is appointed by the Secretary of the Attorney-General’s Department, one of the members is appointed by the Commssioner of the Commonwealth Police Force and one memberis elected by and from the members of the Police Force.

There are no records kept in relation to this Board as such and the information requested, Insofar as it concerns this board, was obtained from a number of sources and then collated. At a result, although every effort was made to obtain all the information, it is possible that something may have been overlooked.

Subject to the above the answers are as follows: Chairmen

Mr C. McLean, C.B.E. Former Chief Stipendiary Magistrate and former Chairman of the Commonwealth Public Service Appeal Board in Victoria.

Mr M. J. McCauley Former Stipendiary Magistrate and Chairman of the Commonwealth Public Service Appeal Board in New South Wales and the Australian Capital Territory.

Mr C. T. Permazel Qualified solicitor and former Assistant Deputy Crown Solicitor in Victoria,

Commissioners Representatives

Elected Members

page 451

OVERSEAS TELECOMMUNICATIONS ACT 1946-1968

Disciplinary Appeal Board

Section 31

page 451

PROMOTIONS APPEAL BOARD

Section 23

Promotions Appeal Board

page 451

COMMONWEALTH BANKS ACT 1959-1968

Apart from information relating to appointments made by and determinations of the GovernorGeneral, the following information has been provided by the Commonwealth Banking Corporation which under the Commonwealth Banks Act 1959- 1968 is the responsible authority for the matters concerned.

Promotions Appeal Board

Section 101

Chairman - Arthur Henry Hann.

Managing Director’s Appointee - Robert Lloyd Croaker.

Representative elected by Staff - Lloyd Gore Ormsby.

The Deputy of the Staff Representative is Noel Henry Morrow.

Managing Director’s Appointee - For an indefinite period commencing 18th October 1967.

Staff Representative (and Deputy of the Staff Representative) - Elected by the officers of Commonwealth Banking Corporation Service for a period of one year commencing 1st December 1968.

Chairman - Is a Fellow of the Australian Society of Accountants. Completed a long and distinguished career with the New South Wales Public Service when he retired from the position of Chief Inspector, New South Wales Public Service Board in May 1967.

Managing Director’s Appointee - No professional qualifications. Has had extensive experience in the staff management field including service as Staff Manager for the States of Victoria and Queensland.

Staff Representative - No professional qualifications.Is currently a Relieving Manager.

The Deputy of the Staff Representative has no professional qualifications. He is a Senior Loans Officer at the Commonwealth Trading Bank’s Sydney Office.

A total of $40,690 has been paid to the various Chairmen during this period. No allowances are payable to the Chairman but the Corporation meets any out-of-pocket expenses incurred by him while carrying out the duties of his office, e.g., when the Board sits other than in Sydney. The positions of Managing Director’s Appointee and Staff Representative carry no remuneration.

Disciplinary Appeal Board

Section 109

Chairman - Alexander John Paton.

Managing Director’s Appointee - Ivan McNicol Cameron.

Representative elected by Staff - James Joseph Sydes.

The Deputy of the Staff Representative is - Geoffrey Thornthwaite.

Chairman - By the Governor-General for a period of 2 years commencing 1st September 1967.

Managing Director’s Appointee - For an indefinite period commencing 1st December 1967.

Staff Representative (and Deputy of the Staff Representative) - Elected by the officers of the Commonwealth Banking Corporttion Service for a period of 1 year commencing 1st December 1968.

Chairman - Retired from the Metropolitan Bench of Magistrates in Sydney in January 1966. At time of his retirement was Stipendiary Magistrate at Hornsby, New South Wales.

Managing Director’s Appointee - No professional qualifications. Assistant General Manager, Commonwealth Savings Bank.

Staff Representative - No professional qualifications. Senior Agency Liaison Officer, Commonwealth Savings Bank.

The Deputy of the Staff Representative has no professional qualifications. He is currently Manager of the Corporation’s Torrensville, South Australia, branch.

A total of $2,000 has been paid to the various Chairmen during this period. No allowances are payable to the Chairman but the Corporation meets any out-of-pocket expenses incurred by him while carrying out the duties of his office, e.g. when the Board sits other than in Sydney. The positions of Managing Director’s Appointee and Staff Representative carry no remuneration.

  1. (a) 74 days; (b) 20 appeals.

page 453

SUPPLY AND DEVELOPMENT ACT 1939-1966

Appeal Board

Supply and Development Regulation 47

This regulation provides that for the purpose of that regulation an Appeal Board shall consist of a person who holds, or has held, office as a Police, Stipendiary or Special Magistrate, who shall be the Chairman and who shall be appointed to that office by the Secretary, an officer of the Department who shall be appointed by the Secretary for the purposes of the particular appeal to be heard, and the officer who, in the State or part of the State in which the appellant was employed, is the elected representative of the Fourth Division of the Commonwealth Public Service. There is an Appeal Board for each State except Tasmania.

  1. (a) 4 days; (b) 1 appeal.

page 453

COMMONWEALTH RAILWAYS ACT 1917-1968

Appeals Board

Section 53

Cite as: Australia, House of Representatives, Debates, 5 March 1969, viewed 22 October 2017, <http://historichansard.net/hofreps/1969/19690305_reps_26_hor62/>.

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