24 September 1952

20th Parliament · 1st Session

The PRESIDENT (Senator the Hon. Edward Mattner) took the chair at 3 p.m., and read prayers.

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Senator WRIGHT:

– I- address to the Minister representing the Minister for Commerce and Agriculture a question concerning; the Tasmanian export trade in apples. During the 1952 season, considerable dissatisfaction has been felt by exporters ‘ because of failure to programme . overseas shipping so that arrivals, in the United Kingdom may be spaced with a fair prospect of supplies being absorbed uniformly by British markets. I understand that the Australian Apple and Pear Board has furnished- . a’ report on that subject to the Minister for Commerce and Agriculture arid I should like his’ representative in the Senate to inform me whether or not the report will be made available to honorable senators for perusal as early as possible.

Senator McLEAY:
Minister for Shipping and Transport · SOUTH AUSTRALIA · LP

– I shall be pleased to confer .with my colleague, the Minister for Commerce ‘and Agriculture, in order to see whether the report can be made -available. My recollection is that one of the main reasons for the irregular arrival of ships in the United Kingdom is the attitude of certain Communists in Hobart.

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Senator HENTY:

– Can the Minister representing the Minister for the Army inform me whether representatives of ‘ the Boer War Veterans Association, will be included in any Australian contingent of ex-servicemen which is sent to the Coronation next year?

Senator SPOONER:
Minister for National Development · NEW SOUTH WALES · LP

-As far as I am aware, arrangements concerning the contingent which is to be sent to the Coronation, have not yet been finalized. There .should therefore be sufficient time to permit consideration of the matter raised by the honorable senator. I shall convey his request .to the Minister for the Army.

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Senator McLEAY:

– On the 16th September, Senator Robertson asked the following question : -

Is it a fact that No. 87 Photographic Reconnaissance Squadron of the Hoya! Australian Air Force recently completed a’ survey of 180,000 square miles of the Northern Territory and has been transferred to Amberley, Queensland, from which base further survey nights will be made? Does’ the Government intend that Western Australia, especially the north-western portions of the State, shall be included in this very important work?

I now desire to furnish the following information : -

Mo. 87 Photographic Reconnaissance ‘ Squadron, of the Royal Australian Air Force recently completed a survey of 180,000 square miles of the Northern Territory, and Centralami North Queensland. This task was completed on the 20th July, 1952, following which the squadron moved to Amberley in Queensland1 from which the photography of approximately 26,000 square miles of first priority areas in south-west Queensland was undertaken. On the 10th August the squadron returned to ite home base at Canberra from which location it is- now operating. Regarding the air survey of Western- Australia, 1 hare ascertained that the whole area, north of latitude 20° south has been photographed, in addition to the entire western coastline to an average depth of approximately 30 . miles. A- first priority task of photographing an area of approximately 80,000 square miles east of Carnarvon is listed in the current Air -Survey Programme by the Commonwealth Survey Committee. Subject to confirmation of the priority by the Commonwealth Survey Committee at its next meeting, the Royal Australian Air Force will undertake this task during the first available period of favourable weather in 1953.

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Senator ASHLEY:

– Can the Minister representing the Minister acting for the Minister for Labour and National Service say whether it is true that, between November, 1951, and July of this year, the number of .persons claiming the unemployment benefit increased by 12,961? During- the same period, the number of persons in civilian employment declined by 73,700. Allowing for an increase of about 20,000 in the defence forces, the net decline was about 54,000. Is it a fact -that immigrants and the normal population increase would have added about 40,000 to the potential work force so that the real decline was about 90,000? Is it true that as none of the immigrants and few juveniles would seek the unemployment benefit, more than 50,000 people who were eligible for the benefit did not seek it during that period ?

Senator SPICER:
Attorney-General · VICTORIA · LP

– I am somewhat amazed at the honorable senator’s persistent effort to foster the belief that there 13 a large number of unemployed in this country. If the figures that he cited in relation to the recipients of the unemployment benefit were taken from the official statement issued last week, they are correct. I do not pretend to retain in my head the figures that appeared in it. One could get a. very false impression of the employment position from merely looking at the figures relating to the total number of persons in employment, because we have been through an era of over-full employment in which many overage men and married women were temporarily directed to jobs. Now that conditions are somewhat settled many of them have returned to their ordinary avocations. That fact is demonstrated to some degree by the figures relating to the total number of employed persons.

If the honorable senator over-stresses those figures lie paints a completely false picture of existing conditions.

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– Has the Minister for National Development noticed press articles directing attention to the value of t aconite in magnetic iron ore in modern methods of iron and steel production V In view of this development, will the Minister arrange for a survey to be made of the possibility of the use of the large deposits of this metal that are believed to exist on the west coast of Tasmania ?

Senator SPOONER:

– The honorable senator was good enough to advise me of his intention to ask this question. As the subject with which it deals is of a technical character, I took the opportunity to obtain the desired information from my departmental officers, who have advisedme in the following terms : -

There are no official records of large deposit* of taconite on the west coast of Tasmania, but small deposits of magnetic iron ore are known to occur. The reason why certain steel companies in the United States of America- are turning to taconite ores is that the deposits of high grade normal ores upon which they have depended in the past are exhausted. They had to decide therefore - (*) whether to set up plants near deposits of high grade ore, or (6) depend upon high grade ores from distant sources, or (c) use local low grade taconite ore. Some have decided to depend upon transported ‘ ores and some propose to use taconite. It requires four tons of taconite ore to produce the equivalent of one ton of normal 80 per cent, ore, so that no one would use taconite while high grade normal ores are economically available. There are still large reserves of high grade iron ore readily available in Australia, and therefore there is no necessity to be concerned for many years about resources of low grade ores.

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Senator WRIGHT:

– There appears in this morning’s Sydney Morning Herald a statement about the Australian delegation to Unesco, which is attributed to the Attorney-General. Will the Minister inform me whether or not he made such a statement in this chamber yesterday! What is the province and authority of the Commonwealth in deciding the composition and financing of the delegation i . If the Commonwealth has any such authority, was consideration given in any degree whatever to representations that were made in this chamber last week by Senator Cole and myself on this subject ?

Senator SPICER:

– Yesterday I read to the Senate an answer that had been supplied by the Minister for External Affairs to a question that had been asked, upon notice, on this matter. That is the statement that is attributed to me in this morning’s Sydney Morning Herald. Insofar as the honorable senator seeks to ascertain the authority of the Commonwealth to send such a delegation overseas, I would have thought, offhand, that it rested upon the powers of the Commonwealth to deal with external affairs. If the honorable senator desires further information in relation to this matter, I shall refer his question to the Minister for External Affairs.

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Senator VINCENT:

– By way of explanation of a question that I shall address to the Minister representing the Postmaster-General, I inform the Senate that I have recently received many complaints about radio interference in the country districts of Western Australia. I realize that the Commonwealth is not all-powerful in the matter of protective legislation, and that it is necessary for the States to co-operate. “Will the Minister request the Postmaster-General to. consider, in conjunction with the States, the introduction of adequate legislation to cope with this problem?

Senator COOPER:
Minister for Repatriation · QUEENSLAND · CP

– I appreciate not only the effect of interference on radio broadcasts, but also the difficulties asso- ciated with overcoming the problem. I shall be very glad to bring this matter to the notice of my colleague, the PostmasterGeneral, and endeavour to obtain a reply as early as possible.

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Senator COOPER:

– On the 18th September, Senator Henty asked the following question : -

Can the Minister representing the PostmasterGeneral say when a start willbe made with the building of the new post office at Huonville, in Tasmania? Working conditions for the staff in the present building arc unsatisfactory, and the new building has been promised for a considerable time.

The Minister acting for the PostmasterGeneral has supplied the following answer : -

The Postal Department recognizes the need to erect a new post office at Huonville. A suitable site which meets with the approval of the Huonville Municipal Council has been selected and the Department of the Interior is negotiating the purchase. Plans of a modern building will be prepared and the new structure erected as soon as circumstances permit. In the meantime working conditions for the staff willbe improved by taking over rooms in the quarters.

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asked the Minister representing the Minister for Defence, upon notice -

Will the Minister make a full statement concerning the whole subject of civildefence, especially air raid precautions and preparations for dealing with casualties, and at a future date give any relevant details which security requirements will permit?

Senator McLEAY:

– The Minister for Defence has supplied the following answer to the honorable senator’s question : -

The subject of civil defence measures is under constant review by the Defence Council and the Government.It is not proposed at this juncture to issue any comprehensive statement on the matter, but the request of the honorable senator will be borne in mind. .

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Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Spooner), read a first time.

Second Reading

Senator SPOONER:
Minister for National Development · New South Wales · LP

– I move-

That the bill be now read a second time.

The purpose of this bill is to amend section 5 of the National Welfare Fund Act 1943-50, which makes appropriations from the Consolidated Revenue Fund for purposes of the National Welfare Fund. Under the amendment, in each year, beginning with the financial year 1952-53, the payment from consolidated revenue to the National Welfare Fund will be equal to the amount expended from the fund in that year.

The present appropriation to the National Welfare Fund was approved in 1950 following the Government’s decision to merge income tax and social services contribution into a single levy. The N ational Welfare Fund Act 1950 contains a formula which was devised with the object of obtaining for the fund an income approximately equal to what its income would have been if social services contribution had continued as a separate levy. As honorable senators will recall, in 1950, when explaining the present appropriation provisions to the Senate, I mentioned that the formula embodied in the act was decided upon by the Government after many different formulae had been ‘Considered. The formula chosen by the Government and adopted by Parliament was a simple one and the best available. It was recognized, however that, it had its peculiar defects. For example, it was appreciated that any rise or fall in pay-roll tax collections could produce a corresponding movement in the total appropriation to the fund nearly five times greater.

After seeing the formula in operation and its results, it has been decided that there is a good case for changing the apropriation to the National Welfare Funa In particular, the Government wants the legislation to provide some more certain determinant of the annual appropriation to the fund. The present formula is deficient in this respect and as I shall show, is not capable of producing an income for the fund appropriate to all situations.

Under the formula which at present operates the total appropriation to the fund is determined by the amount of payroll tax collections; that is, the appropriation to the fund is directly related to aggregate earnings. This direct link could, on the one hand, result in too great an appropriation from revenue in some ‘circumstanceswhen, for example, aggregate earnings are rising because of an increase in the volume of employment or risingrates of wages and salaries, and fundexpenditure is remaining rela tively stable or even declining. On the other hand, however, when aggregate earnings were falling the appropriation from revenue would fall when fund expenditure might have increased substantially.So it will be seen that in producing an income for the fund the present formula has regard only for aggregate earnings, and that it lacks the flexibility necessary to take account of likely calls on the fund in varying circumstances.

Since the inception of the fund, except in two years, annual appropriations to the fund have exceeded substantially expenditure from the fund. This has resulted in the- building up of a balance in the fund which at the 30th June, 1952, stood at approximately £185,000,000. In further examining the question of the annual appropriation to the fund, the Government has had in mind that the existing balance provides an adequate reserve for the payment of social services and health benefits.

Thus, the Government has concluded that a more suitable method of determining the fund’s income would be the simple one of paying into the fund each year an amount equal to payments out of the fund. Such a method would have the following advantages: -

  1. Expenditure from the fund on social services and health benefits in any year will be fully covered by the appropriation from ConsolidatedRevenue in that year : and
  2. Expenditure on social services and health benefits will be accurately reflected each year in the budget itself. At present, the record of actual expenditure on these benefits is in the transactions of the National Welfare Fund. Hence, it will be easier for the Parliament and the public to understand the Commonwealth’s finances.

The amendment of section 5 of the National Welfare Fund Act proposed in the bill will thus give to the fund an annual appropriation fromConsolidated Revenue equal to expenditure from the fund ; it will leave intact the existing balance of approximately £185,000,000 in the fund, and permit its growth each year by the not inconsiderable amount of the income from its investment, which is estimated at £1,800,000 in 1952-53. This bill also proposes an amendment of section 3 of the act which will remove from the act a definition which, because of amendments of the original act, is no longer necessary.

Debate (on motion by Senator McKenna) adjourned.

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Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Spooner) read a first time.

Second Reading

Senator SPOONER:
Minister for National Development · New South Wales · LP

.- I move-

That the bill be now read a second time.

The purpose of this bill is to authorize the borrowing of a sum of up to 50,000,000 dollars from the International Bank for Reconstruction and Development, in accordance with the loan agreement concluded with the bank on the 8th July last. This is the second loan agreement which Australia has concluded with the International Bank. The first agreement, concluded on the 22nd August, 1950, was for an amount of 100,000,000 dollars. Rather more than two-thirds of that first loan has now been drawn, and drawings are expected to be completed in the first half of 1953.

The new 50,000,000 dollars loan arranged in July will enable further import licences for dollar capital goods to he issued as required, and will thus ensure continuity of the supply of such goods throughout 1953 and into 1954. The full texts of the new loan agreement and of the loan regulations appended to it are reproduced in the schedules to the bill now before the Senate. Honorable senators will notice that the preamble to the loan agreement formally records the willingness, in principle, of the bank to continue its participation in financing the development of the Australian economy over a five-year period and puts the present loan in its perspective as one of a series designed to provide the dollar component of Australia’s capital goods requirements, as needs arise year by year.

The Government embarked upon this programme of dollar borrowing two years ago, primarily to obtain additional dollars for purchasing vital types of equipment for development purposes in Australia. To suggest how valuable a contribution it has made and is still making to the progress of our economy, I need perhaps do no more than cite the main categories of equipment for which import licences have been issued under the loan. They are -

Right from the time it first took office the Government has placed the utmost emphasis on securing for this country maximum supplies of the plant and equipment necessary to develop our resources and improve our facilities for production. The dollar shortage, which in various degrees of intensity has been with , us. ever since the war, has been a major obstacle in this connexion because it has restricted severely our access to the great store bouses of production and technique available in the United States of America and Canada. By enabling us to obtain from the United States of America additional supplies of those types of equipment which cannot be procured elsewhere, the loan must be justified many times over by its ultimate resul ts.

Following a preliminary mission to Australia by officers of the bank and a brief visit by its president, the Prime Minister (Mr. Menzies) negotiated with the bank during his recent visit to Washington, and succeeded in reaching agreement on a further 50,000,000 dollars loan. The new loan is for a period of twenty years. Interest at 4$ per cent, per annum is payable half-yearly on the amount of the loan withdrawn and outstanding from time to time. This interest charge includes the 1 per cent, commission, required by the articles of agreement of the International Bank for Beconstruction and Development, for the purpose of building up the reserves of the bank in which, of course, Australia is a shareholder.

A commitment charge of f per cent, per annum is payable half-yearly on the amount of the loan which is undrawn from time to time. This charge is to accrue from the effective date of the loan or from the 30th September, 1952, whichever is the earlier, unless some other date is fixed by agreement with the bank, until the respective dates on which amounts are withdrawn - that is to say, up to the times at which we actually make drawings against the loan and from which interest at the agreed rate becomes payable on the amount of such drawings. Repayments of principal do not begin until after a deferment period of five years, the first principal repayment falling due oh the 1st June, 1957. Payments of interest and principal will then be made half-yearly, in accordance with’ an amortization schedule, on a fixed annuity basis. The final payment will fall due on the 1st December, 1972. Once the full amount of the loan has been withdrawn, interest payments during the deferment period will amount to 2,375,000 dollars or £A. 1.060,000 per annum. From 1957 onwards, annual payments of interest and principal combined will amount to 4,497,000 dollars or £A.2,008,000.

In general, the other clauses of the new loan agreement are similar to those which appeared in the 1950 loan agreement and which received the approval of the Senate at that time. On this occasion, the developmental programmes which will be assisted by the dollar capital goods to be imported under the loan have been described in greater detail, as honorable senators will see if they turn to the second schedule to the agreement.

The interest charge on the present loan - 4f per cent, for twenty years - is higher than the charge of 4£ per cent, for 25 years which applied in the case of the 1950 loan. The reason why the bank has been obliged to raise interest charges on its more recent loans is that the bank itself has had to pay higher interest charges to raise funds to lend to its member countries. As in most other countries, there has been a general upward movement of interest rates in the United States of America, and it is, of course, mainly by issuing bonds to American investors that the bank acquires the dollar funds required to continue its lending operations. However, the terms and conditions of the present- loan to Australia are in line with those of recent international bank loans to other countries. Interest and capital payments on this and our previous international bank loan are well within our capacity to repay. The amount to be provided annually for this purpose on our two loans from the bank will rise to a maximum of 11,853,000 dollars or £A.5,29i;000. These payments will completely retire the present loan by 1972 and the previous 100,000,000 dollars loan ‘will be finally paid off by 1975.

So far as operating procedures are concerned there will be no difference between the present loan and the first international bank loan. The Department of Trade and Customs has already taken steps to notify importers of the types of goods eligible for licensing under the new loan, and interested manufacturers or importers should submit applications to that department. The individual importer does not, of course, participate directly in the loan. Having secured a licence to import the goods under the loan procedures, the importer, whether a private firm or a government agency, will make payment for the goods to the overseas supplier through the normal channels. The dollars required to make the payments are provided through the Australian banking system against payment in Australian currency in the usual way. Subsequently, documents showing that the goods have been purchased and shipped to Australia will be submitted through the Australian Consul-General’s office in New York to the International Bank for Reconstrucion and Development in support of applications for drawings of an equivalent amount of dollars from the50,000,000 dollars loan account to be opened by the bank in the name of the Commonwealth of Australia. As each drawing against the loan is made, the Consul-General will arrange for the remittance of the funds to the credit of the Commonwealth Government with the Commonwealth Bank’s head office in Sydney. In effect, this means that the dollars will be transferred by the Government to the Commonwealth Bank in exchange for a credit in Australia of an equivalent amount in Australian currency. Thus, the dollar holdings of the Commonwealth Bank, which will initially have been depleted by the payments made for loan goods, will be periodically replenished.

As in the case of the first international bank loan, it is intended to pay the Australian currency proceeds into the National Debt Sinking Fund. This is provided for in Clause 6 of the bill, and clause7 requires the National Debt Commission to meet repayments of principal to the International Bank for Reconstruction and Development as they fall due. In effect, therefore, the loan provides its own sinking fund. Interest and other charges are to be met from the Consolidated Revenue Fund. This is provided for in clause8. Clause 9 exempts this loan from certain provisions of the National Debt Sinking Fund Act. This is necessary because, otherwise, the Commonwealth Government would be obliged to pay normal sinking fund contributions in addition to the Australian currency amounts paid in under clause 6.

I have already made a passing reference to the second schedule to the loan agreement which is headed “ Description of the Programmes “. In all, eight separate programmes are enumerated which, between them, cover the principal fields in which economic development is currently taking place in Australia. In the main, the programmes outlined are not directly the responsibility of the Australian Government. Some part of them will be carried out by Australian Government agencies but, in general, the develop mental projects of which the programmes are made up are the responsibility either of State governments or of private enterprise.

Most of the developmental projects at present proceeding, or in contemplation, in Australia, are based primarily on local resources. Apart from labour and materials, Australia now manufactures a good deal of its own requirements of capital equipment. The range of Australian production is, however, far from complete, and must be supplemented by imports of capital goods from overseas. Much of the equipment required to be imported can be obtained from nondollar sources. There is, however, an important residual range of capital goods which can be supplied within a. reasonable period only from the great manufacturing centres in North America, and it is that sector of our requirements which the loan is designed to assist in financing. I should like to make it clear, however, that dollar goods will not be licensed for importation against the loan if comparable goods are readily available from local or other non-dollar sources. Perhaps I should add that goods required for defence purposes are also not eligible for loan finance from the International Bank for Reconstruction and Development, which is limited by its charter to assisting normal economic development in its member countries..

Although the precise goods to be financed under the loan cannot as yet be itemized, a tentative allocation of the new 50,000,000 dollar loan among the eight programmes has been agreed with the International Bank for Reconstruction and Development. This tentative allocation, which may be varied from time to time by arrangement with the bank as the needs of importers emerge more clearly, is as follows: -

The. fact that 17,000,00.0- dollars of the total, of 50,0.00,000 has been provisionally allocated for the agriculture and land settlement programme is a reflection of the importance attached by the Government to the expansion of food production. The dollar equipment to be financed under the loan to increase the mechanization of existing farms, and to develop new areas, will include wheel and crawler tractors, earth moving equipment, ploughs, cultivation implements, harvesters, pick-up hay balers, side delivery hay rakes and forage harvesters.

Senator Courtice:

– Can they not be manufactured in Australia?

Senator SPOONER:

– If they could be’ made here, there would be no need to purchase them from the dollar area. Much of the equipment needed for the expansion of our agricultural output can, of course, be obtained either from Australian manufacturers or from suppliers in the United Kingdom or other non-dollar countries. There are, however, various types of tractors and other farm machinery for which we must look to the dollar area. The loan will ensure that our agricultural producers will not be hampered in expanding their output by lack of adequate supplies of essential dollar equipment.

The tentative allocation for the coalmining programme is 8,000,000 dollars. Imported equipment from the dollar area has played a large part in the recent improvement in coal output. Because of the substantial importations which have already taken place, the demand for new dollar equipment for coal-mining has diminished, and it seems likely that the amount allocated will be adequate to meet demands over the next twelve to fifteen months. The allocation for the iron and steel programme is 1,000,000 dollars. The reason why the allocation is not larger is that our steel industry does not rely to any major degree on imports of equipment from the dollar area. Types of dollar equipment eligible for loan financing under this programme include components for iron and steel furnaces and rolling mills, locomotives, cranes, instruments and other associated equipment, designs and electrical equip ment. The actual good& to. be imported will, of course, depend upon, the applications received from the interested companies after investigation of availability from non-dollar sources.

The amount of 4,000,00.0. dollars provisionally allocated for the electric power programme may be used as required to import materials and equipment for power plants, sub-stations and. distribution systems and tractors and earthmoving equipment for hydro-electric works. The 2,000,000 dollars tentatively set aside for the railways programme, may be used to purchase diesel-electric locomotives and other rolling stock and components therefor; machine tools for railway workshops, rail, maintenance machines and other like equipment;, and equipment for the coiis.truc.tion. of new tracks. The road transport programme, foi1 which an amount of 7,000,000 dollars has been allocated, includes not. only road construction and maintenance but also additions to our fleet of commercial transport vehicles. Types of goods eligible for loan-financing under this programme include industrial tractors, earth-moving equipment, graders, spreaders, heavy road transport vehicles and components for the assembly of heavy road transport vehicles. The non-ferrous metals and industrial minerals programme embraces a wide range of developmental projects connected with the extraction of base metals such as lead, zinc, tin, copper and aluminium and of minerals such as pyrites and asbestos. Although some of these are large-scale developments they depend only to a minor degree on imported dollar capital equipment, and the amount of 2,000,000 dollars tentatively allocated is likely to be adequate to meet essential needs for dollar goods in this field.

The industrial development programme is described in the loan agreement only in very general terms. An amount of 9,000,000 dollars has tentatively been allocated to it. That amount is intended to cover needs for essential dollar capital goods as they arise in connexion with projects developed by private enterprise in industries such as heavy chemicals, production of coal gas; petroleum refining, fabrication of non-ferrous metals, manufacture and assembly of tractors and earth-moving equipment, food processing, engineering, the manufacture of paper and paper-hoard and cement. This programme has been left in broad terms because the developmental plans of private firms in the general field of secondary industry are, at any given point of time, in varying stages of formulation. It was agreed with the International Bank for Reconstruction and Development that it was desirable to provide flexibility within the loan agreement so that, as new needs for dollar capital goods emerge during the current import licensing year, they may, by agreement, be brought within the scope of the loan. As particular projects are approved for inclusion under the programme, they will form sub:programmes, the dollar component of which will be eligible for loan-financing.

In short, every sector of the Australian economy will benefit either directly or indirectly, from the expansion of productive facilities that will result from operations of this second loan agreement. The new loan will not, however, in any way remove the need for continued economy in dollar expenditure. As honorable senators will know from recent statements made by the Chancellor of the Exchequer, the sterling area dollar position, although improved, remains precarious. It is clear that sustained efforts are required by all sterling countries to strengthen the position of sterling and to increase the gold and dollar reserves to a more satisfactory level. This loan will, however, provide us with a supplementary source of dollar finance tha* will bc expended on the improvement of the productive capacity of Australia. It cannot fail, therefore, to yield benefits of the utmost value to us. I have the greatest pleasure and confidence in commending the bill to the Senate.

Debate (on motion by Senator McKenna) adjourned.

page 1945


FIRST Reading.

Debate resumed from the 18th September (vide page 1681), on motion by Senator Spooner -

That tuc bill be now read a second time.

Senator MAHER:

– This bill provides for Government expenditure of an amount of £425,500,000. The Minister for National Development (Senator Spooner), in introducing the measure, submitted the reconciliation figures in which that amount is merged into the budget estimate of £959,430,000 for the current year. As the revenue for this financial year is estimated to amount to £959,890,000, a surplus “of £460,000 is therefore indicated. These are indeed tremendous sums of money, but it must be remembered that estimated expenditure on three items alone approximates onehalf of the total expenditure. The items are, defence, £200,000,000; war and repatriation services, £111,000,000; and contributions to the National “Welfare Fund, £164,000,000; making a total of £475,000,000. In view of the existing world tension honorable senators will agree that no delay should take place in preparing the defences of the country. The Government has therefore allocated the vast amount of £200,000,000 to cover all forms of defence requirements. The amount of £11-1,000,000 for war and repatriation services represents only a part of the debt that we owe to those who fought for the defence of their country in both world wars. The amount of £164,000,000 to be transferred to the National Welfare Fund has been provided to assist those least able to help themselves who, through various causes, have been handicapped in life’s stem struggle. Several very useful taxation concessions have been provided in the budget to assist our primary producers. At this time few things are of greater importance than are increased food production and the necessity to increase substantially the export of primary products in order to improve overseas credit balance. The concessions provided in this year’s budget will, I am sure, give a strong incentive to primary producers to get on with the job of increasing production in the very important fields in which they labour.

During the budget debate in the House of Representatives and again yesterday, in this chamber, a great deal of discussion took place on the subject of prices control. I shall not discuss the subject beyond stating that the Leader of the Opposition in the House of Representatives (Dr. Evatt) and the Leader of the Opposition in this chamber (Senator McKenna) have revived Labour’s advocacy of Commonwealth control of prices to overcome the problem of the inflationary trend and rising prices in this country. The Australian Council of Trades Unions, at a special conference in Melbourne recently, advocated that a referendum should be held. in 1953 on the question of granting the Commonwealth power to control prices, in the pathetic belief that the reimposition of Commonwealth prices control would solve all our immediate economic problems. That was in accordance, with the line that has been followed by the Opposition in this chamber ever since T have been a member of the Senate. Senator Morrow stated during the debate on the budget last year that if prices were controlled wages would remain steady and there would be a cessation of automatic quarterly basic wage adjustments. Labour has advanced the illogical argument that rising prices started the spiral of wage increases. On a previous occasion I demonstrated the unsoundness of that contention. In 1946, when the inflationary trend first became evident in this country, Mr. Colin Clark, the wellknown economist, stated-

We should retain wage pegging regulations if we want to prevent further rises in prices, [f costs of production are raised by an allround increase in wages, prices control will break down in confusion. A rise in wages will cause prices to go up, hot merely to the extent of the increases in the cost of production.

The previous Labour Government relaxed the wage-pegging regulations in 194(3, and by its deliberate action set in motion the inflationary spiral which is the everpresent bugbear of the Australian economy. Wages immediately began to rise, and necessarily prices rose. At first the inflationary movement was slow, but during the last three years the spiral has gained momentum. As waged rose automatically each quarter, prices continued to go up in the same ratio, and any benefit to the wage-earners as a. result of an automatic basic wage adjustment was nullified by a corresponding increase of the cost of living. The fundamental truth, from which there is no escape, is that it is absolutely impossible to stop increases of prices while a regular upward pressure of wages persists. The automatic quarterly adjustments upward of the basic wage confer no benefit on the wage-earners; on the contrary, they are scared stiff as each new quarter approaches. During a speech delivered in the Queensland Parliament on the 2Sth August, Mr. E. J. Walsh, the Labour Treasurer of Queensland, stated, inter alia -

I think it will lie agreed thai: the workers have got to the stage when they almost fear the next increase in the basie wage.

Senator Hendrickson:

– That is true.

Senator MAHER:

– Another authority. Lord Keynes, criticized the Australian basic wage system. Some years ago he stated -

The automatic quarterly increases very often force prices up to dizzy levels, then down again to awful depths.

The distinguished leader of the steel workers union in Great Britain, Mr. Lincoln Evans, is reported to have stated -

No greater calamity could befall our people than that wages and prices should start on an accelerated race to catch up with each other.

What astounds me is that the experienced leaders of the trade union movement do not see the dangers implicit in the continuance of these conditions. The workers whom they represent certainly realize the danger, and Queensland’s Labour Treasurer has realized them. While this marathon ‘ contest between wages and prices continues in this country, it is quite useless for anybody to talk about putting value back into the £1. A friend of mine recently summed up the position very well when he said- -

One of the main reasons why the Australian pound won’t do as much for us as it used to do is because we won’t do as much for an Australian pound as we used to do.

I shall now turn my attention from prices control to the problem of unemployment. It is useless for honorable senators opposite to blame the Government for recent symptoms of unemployment. Whatever degree of unemployment exists, and may yet come, derives very largely from consumer resistance to everincreasing costs.- Our greatest problem relates to the high cost structure that has developed as a result of costs chasing wages, and the ever-increasing momentum of the inflationary spiral. Many workers are being priced out of their jobs, and many employers are being costed out of their markets. This has not been caused by any action on the part of . this Government. Recently Mr. J. R. Murray, the secretary of the Federal Chamber of Automotive Industries, drew attention in Sydney to the sharp decrease of the sales of motor vehicles, which is a clear indication of consumer resistance to higher costs. On the 5 th September, the Brisbane Telegraph attributed the following statement to Mr. T. Philp, the president of the Master Builders Association: -

We look like having buyers’ resistance in Brisbane. I do not think the legitimate price will come down while the cost of wages and materials is going up.

Ee was referring to the demand for new homes and the erection of business premises. Mr. Monaghan, the president of the Queensland Branch of the Master Plumbers Association, said that his members considered that their products were becoming too dear to be purchasable and that they were having to consider the problems that arose from that circumstance.

Buyer resistance is not now confined to motor vehicles or to building construction. During the first quarter of the financial year 1951-52 11,000 refrigerator units were manufactured, although 16,000 had been made in the corresponding quarter of 1950-51. The amount of woollen cloth spun fell by a substantial number of square yards in 1951-52. The production of blankets, floor coverings and many other items in general use also fell. These reductions in output are indicative of the general malaise in the Australian economy, which is due to buyer resistance to high costs. The figures that I have cited were supplied by Mr. Withall, of the Associated Chamber of Manufactures. The decline in demand that is indicated by those figures cannot be attributed to credit restrictions, or to excessive sales tax, or to any other phase of government policy. The items that 1 have mentioned are every-day requirements, which are not affected by credit restrictions or government policy. The demand for these household needs has eased at a time when wages have never been higher. The figures apply to the quarter ended March, 1952, when employment throughout Australia was at its zenith.

How, then, can we account for this extraordinary economic phenomenon ? The movement was not due to lack of demand owing to unemployment. It was not due to the lack of good wages. It was not due to credit restrictions or to excessive sales tax. On most of these lines little or no sales tax is payable. The movement reflects changes in economic and financial conditions during the past year, particularly the tremendous fall in wool values. Side by side with the 50 per cent, fall in the value of wool in one year was the steep increase in wages and other costs. The movement to which I have referred stems’ from the fali in export income and the continuing rise in costs. The trouble can be summed up as buyer resistance to the high costs of consumer goods and services. What is the cure for this state of affairs? The power to rectify these evil conditions lies in the hands of the, big body of trade unionists and their leaders in whom a great responsibility is vested. I suggest that these leaders should face the reality of cost inflation and its effects on employment. I hope that the members of th? Australian Council of Trades Union.= and militant unionists in this country will not overlook the decisions of the British Trade Union Congress at Margate, which adopted a policy of moderation in wage claims. According to a press cable dated 5th September. 1952, delegates’ intentions were made clear by a 6,000,000 majority in favour of the general council’s motion for moderation. The Communist-led electrical union moved for the rejection of the wages restraint policy but was heavily defeated. The steelworkers’ chief, Mr. Lincoln Evans, in a warning speech, emphasized that there was no slack in the British economy to cushion new shocks. One brief extract from his speech is worth quoting because it applies in Australia with equal merit. He said -

We all pay for each other’s wage increases because it is misleading to say that every wage increase can be met from profits. There is a force hoping that the economy of Britain and America will collapse. They never trie of foretelling it and will do anything in their power to bring it about. Surely it is not our policy to help them.

I should like honorable senators to ponder over those remarks, particularly the statement that we all pay for each other’s wage increases. There is a lot of meat in those few words. The present volume of unemployment has been brought about by buyer resistance to high costs, aided and abetted by the fear propaganda which has been circulated by the Labour party generally and by Labour members of this Parliament in particular. The total work force in Australia approximates 3,500,000 persons. On the basis of the figures available, I doubt whether those at present unemployed exceed 1^ per cent, of the total work force.. This figure compares more than favorably with the corresponding figure in the United States of America where it is 2.9 per cent., in the United Kingdom where it is 2.1 per cent., and in Canada where it is 4.1 per cent. A few days ago the Prime Minister (Mr. Menzies) made a public statement to the effect that, as at the 30th August, seven persons in each 1,000 of the Australian work force were drawing unemployment benefits. .In the United Kingdom 21 in every 1,000 were drawing unemployment benefits in June, 28 in every 1,000 were drawing such benefits in the United States of America in that month, and 41 in every 1,000 were obtaining such benefits in Canada in March of this year. Thus, the position in Australia is not so bad as the

Opposition in this chamber and in another . place have tried to suggest by their calamity howling. Labour senators have, been crying “ wolf “ for twelve months when there has been no wolf. They have talked constantly of depression. Their dismal chants have been heard up and down the country. They have spread tidings of woe and disasterfar and wide, and thousands of their fellow Australians have been stricken with fear which has caused them to curtail their spending to such an extent that business turn-overs have been restricted. This factor has contributed to the dismissal of men who would have remained in their jobs had there been more confidence on the part of the community. Opposition senators have contributed a great deal to the existing unemployment. There can be full employment, and I am all for it. Apart from the inhumanity involved in unemployment, there is also the economic aspect to be considered. When men are employed, they contribute to the employment of others. When some are unemployed, there is a tendency for unemployment to spread. There should be no shortage of work if we embark upon a programme of progressive development. Australia is prosperous enough to provide full employment without using central bank credit, provided that the gap now widening between active demand and high costs can be bridged. The Australian Government is helpless in this matter, because the solution is not within the power of the Commonwealth Parliament. Trade unions and political leaders of the Labour party must sooner or later have regard to the fundamental truth that public demand for goods and services produced at excessive cost will progressively decline.

And now, what of the future? If this central problem of costs can be resolved there are abundant signs of better days ahead. Three factors helped to slow down the Australian economy during the past year. They were - (1) The drop of 50 per cent, in wool prices, representing a loss of £350,000,000 income in one year;

  1. steep increases of the basic wage; and
  2. the high value of imports, amounting to more than £1,000,000,000, for the year 1951-52. It seen, therefore, that the Australian banking system had to endure very severe strains and stresses in order to meet the overall effect of those economic factors. As a result, a monetary stringency developed during the financial year which has just ended. Money was tight. The Australian Government allowed the Commonwealth Bank to release from the special accounts of the trading banks £331,000,000 to assist banking liquidity. General credit restrictions were also eased in May last.

From now on the general credit position should show signs of improvement as money flows back to the banks from the liquidation of imported stocks, and from the redemption of advances to importers. Receipts from the sale of wool, wheat, dairy products, sugar, beef and other primary products should make the banking position much stronger by the beginning of the new year. The current wool sales opened on a reasonably healthy note. There has been a record sowing of wheat in Queensland and in the other States. The dairy farmers have responded to the incentive provided by recent price increases, with the result that production is now increasing rapidly. It is many years since there were so many fat cattle in Queensland. In fact, the meat works are unable to handle the number of fat cattle offering. The sugar-cane harvest in Queensland is well above the estimate. The season is generally good throughout Australia, with the exception of the pastoral areas in north-west Queensland and parts of the Northern Territory, where heavy losses of cattle have occurred.

The taxation remission of 10 per cent., taken in conjunction with a number of other taxation concessions, has been well received by Australian farmers and graziers, and will encourage them to increase the production of food. For good measure, let me add that, at the end of July, 1952, savings banks deposits reached the record total of £900,069,000. Some adjustments to our economy along the lines which I have advocated are essential. I hope that commonsense will prevail, so that our economic problems may be solved for the benefit of Australian wage-earners. Where is this depression that members of the Opposition have been forecasting for the last twelve months? If the season holds good, and export prices are maintained, I believe that 1953 will be a year of prosperity for us all.

Senator AMOUR:
New South Wales

Senator Maher, who seems to he very worried about the workers, quoted from various authorities in an endeavour to show that they should be prepared to accept a reduced standard of living. He had the temerity to say that the Labour party was squealing for Commonwealth control of prices. It is now generally recognized that when the people, acting on the advice of the Liberal party and the press of Australia, rejected the Labour Government’s proposal in respect of prices control, they robbed themselves of economic security. I have no doubt that if they were given another chance they would reverse their verdict. The Government, too, is aware of that fact, but it has no desire to protect the interests of the people. Senator Maher deprecated talk of unemployment, and said that only four persons in every 100,000 were out of work, but we know that at least 100,000 persons are unemployed, and that figure does not include married women, who went into industry in order to augment the family income, and have since been forced out of employment.

Senator Maher said that the remedy for unemployment could not be applied by this Parliament. I remind him that this Parliament passed the Defence Preparations Act under which a board was set up to restrict credit, and its operations have undoubtedly affected employment. This Parliament also amended the banking legislation by providing for the setting up of a Commonwealth Bank Board, which now dominates the credit policy of the private banks, so that banking in Australia has been virtually nationalized. During the war, the gap between revenue and expenditure in the budget was bridged by the issue of national credit. The Government could, by the use of national credit, finance works that would absorb the unemployed and start the wheels of industry turning again.

The trouble is the Government has lost the confidence of the public, so that it has not been able to induce people to invest in public loans. The Government has refused to give the States the money that they urgently need for the prosecution of developmental undertakings. In the immediate post-war period, building operations, other than housing, were severely restricted because of lack of materials, and we were told that the situation was largely due to the controls then in force. Well, there is no control over building materials now, but brickyards, sawmills, and tile works are closing down all over the country. Soon the furniture manufacturers will be closing their factories. Because of the Government’s policy of credit restriction, the people lack purchasing power, with the result that unsaleable goods are piling up on the shelves of retail stores and warehouses. Senator Maher said that the number of unemployed was insignificant, but among them are men who offered their lives for their country during the 1914-1S war and the 1039-45 war. It is futile for this Government to tell the State Governments that they are responsible for unemployment. The New .South Wales Government, which desired to build dams in order to stop flooding in farming areas, was told by the Prime Minister (Mr. Menzies) that that is a matter for the State Government. State governments cannot raise the necessary finance for such works, but this Government can do so. Nevertheless, it has refused to act. The Government will never succeed in throwing upon the States the responsibility for unemployment. It is well known that the vicious credit and import restrictions which the Government has imposed have been responsible for unemployment.

I now wish to refer to the sale by the Government of undertakings associated with the defence of the country. The Government has sold its shares in Amalgamated Wireless (Australasia) Limited, although that organization was in the forefront of the development of radar and electronics. It sold the Glen Davis oil refineries because, in its opinion, petrol production by the refineries was too costly. In addition, it proposes to sell the Commonwealth line of ships and its interest in Commonwealth Oil Refineries Limited. In fact, it proposes action that is anti-Australian and in the worst interests of our people. Because Australia has a vast coast line it is essential, for our protection, that we should make ourselves as self-sufficient as possible. Yet the Government is endeavouring to sell the Commonwealth line of ships to a great shipping combine, lt has done much for the bankers and big business people because they subscribed funds to make it possible for a Liberal government to attain office.

The Government has remitted land tax for the benefit of its wealthy friends and it has reduced company tax. Yet small farmers have been forced to mortgage their properties in order to meet their provisional tax commitments. Recently I made a tour of the western division of New South Wales and spoke to farmers in many towns. They told me that that was -the position. I also visited banks in the area, and bank officials confirmed that opinion. By reducing income tax by 10 per cent, the Government is only returning to the farmers a little of the money which it took from them in the past. The Government contends that the farmers are satisfied, but I know that they are not.

Whilst the Government has been attending to its wealthy friends, it has failed to increase the permissible income of age pensioners. The paltry 7s. 6d. a week increase that is to be given to pensioners because of increasing costs will mean little to them. Nothing at all has been given to war widows. Yesterday, Senator Wright asked a question in the Senate concerning hospital charges in. Tasmania in the course of which he inquired whether a statement ‘ could be issued to make it clear that the imposition of charges in public hospitals results from a decision of the Tasmanian Government and not of the Australian Government. The Minister for Health (Sir Earle Page) has said that unless hospitals make a charge they will not be entitled to the 4s. a day subsidy paid by the Australian Government. I visited the Canberra Community Hospital to-day. Whilst there I found it is necessary to sign a card, to state one’s name and to tell all about oneself. A charge of 5s. is made if they put a little piece of rag around a sore finger. When I visited various countries some years ago I spoke proudly of the fact that we had such an excellent hospital at Canberra. Yet it now charges for treatment. Does this Government blame the New South Wales Government for the fact that the Canberra Community Hospital makes a charge for treatment ?

The rubber industry, which is of great importance to Australia, has been deteriorating for some time. In June last, I wrote to the Minister for Trade and Customs (Senator O’sullivan) asking him whether he could do something in respect of the importation of tyres. I supplied the Minister with figures relating to tyres imported from various countries overseas and asked him to take action in the matter. On the 23rd July, I again wrote to the Minister in the following terms : -

It would be appreciated if urgent consideration could be given to this matter, as the position with the tyre companies in Australia is now becoming acute as regards retaining employees, and drastic reduction in employment will have to be made while such large quantities of tyres are coming into the country.

On the 11th August, I wrote a further letter to the Minister asking if early consideration could be given to this matter. On the 20th August, he replied as follows : -

I acknowledge your further representations regarding the importation of tyres into Australia. I regret the delay in letting you have a reply in this connexion. I am following the matter up and hope to advise you at an early date.

On the 3rd September, I received from the Hardie Rubber Company Limited the following letter: -

The continuous arrival of imported tyres into Australia has crippled the industry. We have found it necessary to lay off sections of our valuable personnel and when one realizes that the tyres that came into Australia for the year ended 30th June represented three months’ production of all companies together it is a disastrous state of affairs.

The net result is that the company’s factory at Auburn has closed down. In addition, the Goodyear tyre factory has closed down, and it will not be long before other companies such as Dunlop Rubber Australia Limited and Beaurepaire Tyre Service Proprietary Limited will also be closed down.

During the month of April, tyres of a total value of £877,618 were imported into Australia from the United Kingdom, Canada, Czechoslovakia, France, Germany, Italy and the United States of America. Truck tyres came from the United Kingdom, Canada, Italy, “Western Germany and the United States of America. Tyres for earth-moving equipment came from the United Kingdom, the United States of America, Western Germany and France.

Although it is necessary to add 25 per cent, to the figure of £877,618 to cover exchange, freight and landing charges, tyres which came from Germany could be sold in Australia at 25 per cent, less than the cost of manufacture in this country. I suggest that that comes very close to dumping. The fact that tyresare being imported from Italy and Germany means that Italian and German workers are being kept in employment while Australians who served during thelast war and fought against Italians and. Germans, are being put out of employment. It is obvious that this Government has completely disregarded Australian secondary industries.

On the 15th August last the Department of Trade and Customs issued a regulation to the effect that 60 per cent.. of the base imports of rubber tyres will be imported this year. I contend that that rate of importation will cripple Australian rubber industries, which provideemployment for a great many Australians. It is possible that the Hardie Rubber Company Limited and Dunlop Rubber Australia Limited will have to close down. The Australian Labour . party accused” the political predecessors of the present. Government parties of causing unemployment during the last economic depression. The reply was that the depression, was caused by the fact that Australian commodities could not compete with overseas commodities. The Australian Labour party also contended that the banks assisted in the creation of unemployment by foreclosing on overdrafts, but the anti-Labour parties resisted that contention. Later, the anti-Labour parties admitted that they might have made certain mistakes, but assured the people that such things would never happen again in this country. We now have a similar government to that which was in office during the pre-depression years, anda similar position will soon apply. This very day there are in Australia men,, women and children who are hungry. There is insufficient food. Apparently this Government believes that that doesnot matter because unemployment in Australia is not as great as it is in Canada. As I have said, the rubber industry has received a set-back and many other industries will meet the same fate so long as this Government continues to permit the importation of commodities that could be manufactured in this country. Our industrial and commercial life has been hard hit also by credit restrictions and by- the activities’ of the National Security Resources’ Board. How can honorable senators opposite believe themselves to be justified in asking young men to’ join our armed forces’, to fight, and, if necessary, to give- their lives for a country which is so neglectful of their welfare that no work can be provided for them? We have scarcely started to develop this country. We need thousands of miles of roads and’ many hundreds of new bridges. Primary producers require better transport facilities, but nothing is being done because this Government has restricted credit. The fund’s of local-governing authorities have been seriously affected by the Commonwealth’s, financial policy. Senator Maher would have us believe that everything is rosy. It is quite clear to me that everything is not rosy. The present state of affairs is a “bad show”.

Senator SEWARD:
Western Australia

– There are many budget proposals to which I could draw attention, but, if I were to do so, I should merely be covering the ground that has already been traversed by previous speakers. Therefore, I shall confine my remarks to one or two specific matters. I believe that a great mistake was made in adjourning” the sittings of the Senate from the 6th August until last week. It would have been far better if the Senate and the House of Representatives” had considered the budget proposals simultaneously. The Senate could then have adjourned for a short- period, if necessary, while the House of Representatives dealt with the measures that will give effect to the budget proposals. We are being asked now to debate a subject that is dead. Also, the cart is being put before the horse, because last night we were called upon to debate certain States grants measures, the principles of which are outlined in the bill that we are now discussing. I was particularly impressed by the suggestion of the honorable member for Canning in the House of Representatives (Mr. Hamilton) that the Parliament should meet from Monday to Friday. Normally, the increase of the size of the Parliament should tend to prolong debates, but, under the present sitting arrangements, bills’ are introduced and passed before honorable senators have had an oppor tunity adequately to examine their contents’. I recall that, last year; two measures which affected Western Australia were introduced and passed se quickly that it was quite impossible- for me to ascertain the reactions’ of Western Australians to them before they received final approval. I believe that if we were to devote more time to our parliamentary duties, perhaps by extending the sessional periods, the work of the Parliament would be considerably improved. I realize that Ministers have onerous duties to perform, but the proposal by the honorable member for Canning was that the Parliament should meet only in the day time. Ministers would then have time to attend to their departmental work at night, and private members would have an opportunity to study the legislation that they had to debate.

Before dealing specifically with the budget proposals, I wish to refer to a misstatement that was made by one honorable senator who either wilfully endeavoured to mislead the Senate or failed completely to understand the subject with which he was dealing. He said this Government had deprived primary producers and others of the 40 per cent, initial depreciation allowance on plant and machinery and, under pressure,, had restored a depreciation allowance of 20 per cent., which was only half of . the original concession. That picture is far from accurate. Under the original scheme, a depreciation of 40 per cent, was allowed on plant and machinery in the year’ in which it was purchased. In subsequent years, however, the allowance was only about 5 per cent., or 10 per cent, of the written-down value of the asset. In other words, the total cost was not written off for 25 or 30 years. Under the system that was introduced by the present Government, there is a depreciation allowance of 20 per cent, in each of the first five years after purchase so that the entire cost is written off at the end of that period. Clearly a fair examination of the two schemes shows that the one now in operation is incomparably the better. Its benefits will be limited appreciably by the inability of producers to- obtain badly needed machinery and plant, but that limitation would have applied equally had the former initial depreciation allowance system been retained.

The second mis-statement made by the honorable senator was that this Government had done a great disservice to the farming community in particular by confining the averaging system to taxpayers whose income does not exceed £4,000 a year. That is not so. There again the honorable senator apparently did not understand the subject. It is quite true that, in the first year after the abolition of the averaging system, a farmer may have to pay much more tax than he would have been liable for had the averaging system been retained, but he will pay considerably less in subsequent years than he would otherwise have had to pay. Therefore, generally speaking, primary producers will benefit from the change. Had he remained under the averaging system, he would have had to pay. on the higher income for a period of five years whereas, under the present scheme, the high income was applicable only to the first year. I have taken this opportunity to correct the honorable senator’s mis-statements, because, if I remember rightly, they were made while the proceedings of this chamber were being broadcast, and listeners who were not sufficiently informed on the subject may have been misled.

I congratulate the Government on the 1952-53 budget. Last, year, the Government had to bring down a budget which it knew would be unpalatable to many people. The state of the nation’s economy demanded such a budget and, whilst the Government’s task was most disagreeable, to me it- is a pleasant duty to support a government that puts national interest before mere party advantage. Probably the Government could have prepared a budget that would have appealed more to taxpayers, but its ultimate effect would have been to land this country in more economic trouble. I do not suggest that all our troubles have been cured by the. 1951-52 budget, but it was a step in the right direction, and the stringent measures that it contained have enabled the Government now to reduce taxes by £50,000,000. That is particularly pleasing. None of us relishes high taxes. Regardless of anything that may be done in other countries,

I believe that taxes in Australia are far too high, and I sincerely hope that, with the subsidence of inflation, the Government will not hesitate to reduce taxes and so to relieve the people of Australia of the heavy burden that is now placed upon them.

I pay a tribute to the officers of the Taxation Branch, particularly in Perth, because that is where I have most of my dealings with the authorities. I have received great, assistance from taxation officials during the past year. It has been a particularly strenuous time for them, and I have been most reluctant at times to ask them to receive a taxpayer but, every time I have done so, they have not hesitated to make an appointment. Taxpayers are always treated sympathetically, and whilst I do not suggest that every one who has dealings with the taxation authorities is quite satisfied with the result, I know that officials will usually go to the limit of their powers under the act to assist taxpayers. Every taxpayer whom I send to see. that Deputy Commissioner of Taxation comes away with a smile on his face and expresses his appreciation of the assistance that has been rendered to him. That does not surprise me greatly because in my dealings with the Taxation Branch extending over a period of twenty years I have always received the most cordial and helpful treatment. I know that some” people do not share my views, but generally speaking, they are taxpayers who have failed to reply to correspondence that they have received from the Taxation Branch. After all, taxation officials are in duty bound to take whatever action they consider to be warranted. However, this year particularly I have received every assistance, and again I express my sincere appreciation.

I do not intend to refer in detail to the taxation proposals that are outlined in the budget. Already effect is being given to them, and I believe that the Govern-‘ ment is adopting the correct procedure. Certain concessions to primary producers will be of great assistance. I have already referred to the initial depreciation allowance. There are other concessions, too. which will lighten the heavy burden that is borne by the man on the land.

However, I wish, to suggest one or two ways in which additional relief could be granted, perhaps next year and in subsequent years. I hope that the Government will turn its attention to the gift duty. This tax does not bring in very much revenue - I think that it yields only about £1,000,000 annually- but it. frequently makes fathers most reluctant to pass on their properties to their sons. I have had brought to my notice several cases in which gift duty and income tax have left a father penniless after transferring: his property. That is having a retarding effect on production. It is only natural that a young man will be a better ;md more enthusiastic worker if he is the owner of a property and not merely his father’s employee. In some instances, the reluctance of a father to transfer his property has driven sons to seek jobs in the cities. I hope that the Government will consider abolishing gift duty altogether next year. That would be of great assistance to men who have played their part in the development of this country, and have reached the retiring age. It would also <*ive added incentive to the younger generation to which we must look for an expansion of primary production.

I object also to the pay-roll tax. This is an irksome levy, which imposes a considerable amount of work upon individuals who I. do not think should have to do it. The collection of taxes is the task of the Taxation Branch. I am particularly concerned about the effect of the pay-roll tax on local government authorities. Many local authorities, particularly in Western Australia, do not have their own road-making p’ant but have their work done under contract by men who provide their own equipment. A contractor, and his machine, are hired at, say £3 or £4 an hour. The municipal authority finds that it is liable for payroll tax on the total payment, including the sum that is included for the hire of the machine. That, of course, is increasing the cost of works and, in these circumstances, one can only expect applications by the States for larger grants. I trust that the Government will also see its way clear to abolish the pay-roll tax.

While I am dealing with the subject of taxation I wish also to refer to the manner in which the farming community has been heavily hit by taxation. It has been stated that taxation is responsible for the decline in primary production. That is quite untrue, because the coming harvest will be the first to be reaped since taxpayers had to meet such’ heavy commitments last year. I shall deal with the other influences that effect the position of the primary producer in a few moments. Whilst it is true that taxation has not yet been responsible for the decline in primary production, I am afraid that it will bring about that result in the future unless appropriate relief is afforded to primary producers. I do not know whether honorable senators who live in the cities realize the weight of the burden of taxation placed on primary producers. In order to inform their minds I shall cite a few examples. In one ca”e that was’ brought to my notice a farmer who, in 1950-51, had a Taxable income of £13,923, had to pay tax amounting to £14,866. In another ease a taxpayer who, in that year, had a taxable income of £7,465, had to pay tax amounting to £5,501. One case, the injustice of which particularly struck me, was that of a taxpayer who is very well known to me and has done a considerable amount of work in advancing the interests of the district in which he resides. In 1950-51, he and his son had a taxable income of £28,000 and they were presented with a total’ tax bill amounting to £36,000. I know that the taxation officers will say that the tax levied in the cases which I have cited represents tax for the current year and provisional tax for half of next year’s income. In other words the taxation is levied on two years income. That explanation carries no weight with inc. because when the primary producer receives his assessment he has to pay it whether it represents the tax for one year or two years. He receives an assessment each year and he has to meet it out of the income which he receives during the year. That the assessment covers tax on onehalf of this year’s income and one-half of last year’s income is beside the point: he has only the income of twelve months work with which to pay it. It is no consolation to tell a man with a taxable income of £28,000, who receives a bill from the Taxation Branch for £36,000, that the assessment covers tax for two years. The. man concerned wrote me a letter on the subject which reads, in part, as follows : -

My son and I, wishing to go on improving our p operty mid increase production have spent £21,0 8 - £5,743 in new plant, £0.410 in an adjoining property so that we con el destroy the rabbits that had been increasing on it an. I re-infesting our property yearly, increased our sheep values by £3,000. The writer drew £4 000 in ca h - the first return I had from my property for 30 years.

That is a long time to have to wait for a. return on his investment. In order to meet the requirements of the taxation authorities he had to dispose of assets and obtain a bank overdraft. He applied for an extension of time to pay the provisional tax levied on him. I trust that cases of the kind that I have cited will be borne in mind by the Government when it is framing its taxation proposals next year. Primary producers must accept a modicum of blame for what has happened, because they were misled into rejecting the provisions of the wool deduction plan that had been introduced during 1950. In my opinion the Wool Sale3 Deduction Act was an excellent piece of legislation under which the wool-grower had nothing to lose. He simply put into a trust fund a sufficient portion of his earnings to meet his tax commitment for the ensuing year. It is unfortunate that wool-growers opposed that plan and forced the Government to increase the tax levied upon them.

I turn now to the consideration of other matters, including food production, m respect of which I wish to direct some observations to the Government. One of the greatest difficulties under which the primary producer labours is the shortage of agricultural machinery and parts. It is exceptionally severe in Western Australia and if food production declines in that State during this year it will undoubtedly be due to that fact. I could place 500 harvesters and headers, and an equal number of ploughs, combines and haybalers in Western Australia to-morrow if they were available. Consequently, I was pleased to hear the Minister for National Development (Senator Spooner) announce in the Senate last week that coal production in Australia had greatly increased as the result of the policies applied by the Government, for on the production of coal depends the production of steel and, in turn, the manufacture of agricultural machinery and parts. Now that the validity of the capital issues regulations has been upheld by the High Court, I trust that the Government will give full effect to the provisions of the Defence Preparations Act and ensure that sufficient steel shall be directed to the manufacturers of agricultural machinery and implements to enable them to meet the urgent requirements of primary producers. Last year, thousands of acres of fertile land in Western Australia were left unsown because of the inability of farmers to obtain spare parts for their machinery. When I recently took a. trip through the rural areas, at every town at which 1 stopped I was besieged by farmers who demanded supplies of journal bolts for disc ploughs and other implements. 1 was fortunate to be able to get some of them for one farmer and had them flown over from Melbourne. I understand that no fewer than 300,000 cultivator points were on order and still awaiting delivery in March when they were urgently needed. These statements will serve to illustrate the seriousness of the position. Fortunately, Western Australia was able to obtain a small quantity of steel, but when the cultivator points were manufactured and distributed, the farmers had no bolts with which to fit them to the machines. Bolts of all kinds were unprocurable. These are some of the factors that are adversely affecting primary production. I trust that the Australian Agricultural Council will devote its attention to this matter with a view to devising means to ease these shortages.

Another matter that is great,y agitating the primary producers of Western Australia is the supply of superphosphate, lt is almost impossible for them to obtain reliable information relating to the quantity that will be made available or the quantities of sulphur or pyrites that are available for the manufacture, of. superphosphate. Available figures relating to these commodities seem to be based on guess work, and are continually changing. Western Australia, which is deficient in minerals, needs large quantities of superphosphate. Unless they are forthcoming, agriculture in that State will seriously decline. The farmers are concerned not only about the shortage of superphosphate, but also about its price. Should it be necessary to use pyrites in place of sulphur in the manufacture of superphosphate, the price will be greatly increased. At present pyrites represents only about one-third of the constituents of superphosphate. A few years ago the price of superphosphate in “Western Australia was £5 a ton; to-day it is £17 a ton. If it is necessary to use pyrites in place of sulphur the cost of superphosphate will be enormously increased because in “Western Australia pyrites has to be transported by rail from deposits 500 miles to one fertilizer works and SOO miles to another. I note that the Australian Agricultural Council is prepared to expend £200,000 in advising farmers of methods by which they can increase production. That money might better he expended by providing agricultural machinery and spare parts. If the requirements of the farmers were met they would produce all the foodstuffs that we require. They are not engaged in primary production merely for fun; they are eager to produce the nation’s food requirements and at the same time build up assets for themselves and their families. Portion of the £200,000 might be allocated to the Commonwealth Scientific and Industrial Research Organization for research into the development of cheaper methods for extracting sulphur from pyrites, or better still, to improve existing methods of manufacturing fertilizer from phosphatic rock.

I want now to refer to one of the most important portions of the budget. 1 refer to that section which deals with the financial relations between the Commonwealth and the States. I violently disagree with the present arrangements. The Treasurer has said, and his statement has been repeated by others, that the States have asked for the return of their taxing powers and that the Commonwealth has agreed to grant the request. If, in fact, some States asked for the return of their taxing powers, “Western Australia was a brilliant exception to the rule. I challenge honorable senators to point to any statement by the Government of Western Australia in which it has asked for the return of that power. It is true that during the last ten years Western Australia has persistently stressed the need for a review of the financial relations between the Commonwealth and the States. Honorable senators will readily agree that it would be disastrous for Western Australia, with a population of 600,000 persons, if its taxing power were handed back to it and it were able to levy taxes only after the Commonwealth had exploited the taxation field. Honorable senators can well imagine the position in which the Western Australian Government would find itself in such circumstances. By no means can the problems of Commonwealth and State financial relations be solved simply by returning to the States their taxing powers. These powers were taken from the States by subterfuge. Now, the Commonwealth finds that it has made a bad bargain and wants to pass the buck to the States.

During this financial year it will be necessary for the Government to use loan moneys and to issue bank credit to finance State works programmes. I am totally opposed to such a practice. I am particularly concerned about the oft repeated cry that the States are making extravagant and preposterous demands upon the Commonwealth. That is far from the truth. In 1946-47, Western. Australia received by way of tax reimbursement and special grants an amount of £3,384,000. In 1950-51, the amount received by the State from those sources was £9,400,000, or three times as much as in 1946-47. Does any honorable senator contend that costs increased only threefold during that period? Let me give an illustration to support my view that costs have increased very much more than that. In 194S, an agreement was arrived at between the Australian Government and the Government of Western Australia for the construction of the Great Southern water scheme. Under the terms of the agreement the Commonwealth was to contribute one-half of the estimated cost of the scheme with a limit of £2,150,000. When the agreement was signed the price of local steel was £25 a ton. In 1950, local steel was unprocurable and the price of imported steel was £99 a ton. When the Western Australian Government requested the Commonwealth to hear its proportion of the add”’* cost, the Commonwealth refused to do so. What has been the result of the Commonwealth’s attitude ? Only about 20 miles of the proposed Collie to Narrogin pipeline has been constructed at the Collie end, and 10 miles at the Narrogin end. It will not be possible to pump water through the pipeline until pipes have been laid over the intervening 50 miles of country. Western Australia cannot be blamed for the increase of costs. I consider that Western Australia is justified in blaming the Commonwealth authority for the present position in relation to the proposed pipeline. It would be interesting to know whether the Commonwealth authority is such a financial wizard that it has been able to ignore rising costs in connexion with Commonwealth activities. Generally speaking, Commonwealth- expenditure is not nearly so well controlled as is expenditure by the Western Australian Government. For example, we have been informed recently that the estimated cost of a new building that is being constructed for the PostmasterGeneral’s Department in Melbourne, has risen from £500,000 to £900,000. The Western Australian Government is engaged in constructing a causeway in Perth which has just been opened and which, it was estimated, would cost £500,000. The estimated cost of completion now is £700,000. I hope that a convention will be summoned to endeavour to place future Commonwealth and State financial relationships on a sound basis. It should include not only representatives of the State and Australian governments but also of the Opposition parties in these parliaments, and it should determine the fields of taxation and the loans to be allotted to the different governments.

Senator O’BYRNE:

– This vital bill has been widely canvassed. Many supporters of the Government have stated that the Government should be congratulated on its budget. I consider the present document to be one of the worst budgets that has ever been introduced by an Australian government. Senator Seward said that the States had made preposterous demands on the -Commonwealth. I consider that the Government’s policy has been designed deliberately to cause unemployment in this country. This has done more than any other factor to undermine the principle of federation. It is beyond the ability of this country to expend £200,000,000 during this year on defence. Although honorable senators opposite contend that Australia should make preparations for war, the Government has engaged in the selling of Commonwealth enterprises. It has sold its interest in the radio industry, and now intends to dispose of its ships and its shareholding in Commonwealth Oil Refineries Limited. It has rationalized the airline industry at the expense of Trans-Australia Airlines, the governmentowned airline. In many other ways, also, the Government has been acting in a manner that is contrary to the manner in which a government that is preparing for war should act. Last year’s defence vote was not wholly expended. The Government appears to be in a quandary and is unable to formulate a definite policy.

I shall now describe some of this Government’s activities which bear out my contention that its policy has been inconsistent. If the Government considers it to be necessary to expend £200,000,000 during this financial year on defence preparations, it should gear our internal economy correspondingly. The Government should not on the one hand expend a large proportion of our national income on preparations for war, fmd on the other hand dissipate the strength of the country.

I come now to banking. I have no illusion about the objectives of the private trading banks; they are in business to make profits. Most of the bis business concerns of this country assisted the present Government to gain office. Tt cannot be denied that many of the big organizations that assisted the Government parties to gain control of the treasury bench have experienced good trading results since this Government came to office. The private trading banks have been permitted to increase their interest rates. In .some instances, interest of 4) per cent, is now payable on State loan3. The six main private trading banks which assisted the Government parties to win the 1949 general election stand to gain about £3,500,000 as a. result of the increase of interest rates by § per cent. According to the Financial Review of the 7th August, they had advanced £691,242,000 as at June last. A rise of per cent, of the interest rate on those advances will increase their income by £3,456,210. From this must be deducted interest, amounting to £495,852 a year, on deposits. Therefore the net income to the banks as a result of the rise of interest rates will be about £2,960,358. They will also gain about £487,500 from the rise of i per cent, of the interest rate on their special deposits of £303,303,000. The Government’s action in raising the interest rates on bank advances was a pay-off to the private banks. Other perquisites, also, are enjoyed by the private trading banks, such as freedom from having to borrow from the Commonwealth Bank to meet excess requirements at high rates of interest, and very probably extra pickings in the way of treasury bill purchases, which, although very much liked by the trading banks, in the past have been sold, mostly by the Treasury to the central bank. It is therefore clear that the private banks will receive additional profit of from £3,000,000 to £4,000,000 during this financial year, and probably their profits will be further increased when interest rates are again raised, in accordance with the policy of the Government parties. The financial houses that have backed the anti-Labour political parties for over 100 years in this country like high interest rates, and the Government will keep its bargain with them.

This Government is a government of stagnation. It has broken a lot of eggs since it gained office. If the Government genuinely believed that the country should prepare for war, why did it decide to dispose of its shareholding in Amalgamated Wireless (Australasia) Limited, in which it had an effective say in relation to administration? Recently I was privileged to visit central Australia, where I was greatly impressed by the importance of radio. In the event of war our elec- tronics industry would have to operate at maximum efficiency. Although Amalgamated Wireless (Australasia) Limited could undertake the manufacture of radar and television equipment, the Government has seen fit to relinquish its control of that company. The Government has adopted a negative approach to our internal economy.

I turn now to shipping, which is vital in time of war. The previous Labour Government’s 1949 legislation laid it down that the Commonwealth-owned ships should be operated by a reconstituted Australian Shipping Board, and made provision for the maintenance and development of the Australian fleet and the fostering of the Australian shipbuilding. The construction of dry docks, the maintenance of a mercantile marine, and the promotion of an efficient shipbuilding industry for defence purposes were the main reasons for the introduction of this legislation. Yet the Government is in the process of hawking this shipping line for sale. Other governments of the same political colour as the present one have given away the people’s assets such as shipping lines. A shipping line which had been established by the Government of Tasmania for the purpose of maintaining that State’s important life-line with the mainland was practically given away by an anti-Labour government. It is the habit of anti-Labour governments to make hand-outs of the people’s assets as soon as they can get their hands on them. Then, in a crisis, a Labour government has to take office, sort out the mess that has been made, and build up the nation’s assets again.

Senator Robertson:

– An excellent bedtime story !

Senator O’BYRNE:

– It is not a bedtime story. It is a daylight story which Senator Robertson should remember because the people will remember it when they wake up in the morning, when they sit down to breakfast, and when they go out to buy groceries. The Government promised the housewife that she would enjoy improved conditions such rs home deliveries, yet it has even tared the little string bag in which she carries home her groceries and in which she now carries much less for her money than when the

Labour Government was in power. Thi3 is not a bed-time story. Probably, even the beds on which people sleep have had extra sales tax imposed on them by this Government, which was supposed to reduce taxation. The sale of the Commonwealth line of ships is of the utmost importance to the State of Tasmania, which I have the honour to represent. Shipping is vital to us. We rely on it to ti. great degree for importing our needs and exporting our surplus products. Unless the people of Tasmania are guaranteed a continuity of shipping they will have no certain means of selling their products.

The Government has closed the Glen Davis oil refinery. It has decided to sell its shares in Amalgamated Wireless (Australasia) Limited, Commonwealth Oil Refineries Limited arid the Commonwealth shipping line. The oil companies have received a nice windfall from the Government’s action in closing the only independent oil-producing plant in Australia. If the Government continues to pursue its present policy, the aluminium industry in Tasmania might, well fall into the hands of the international aluminium monopolists. I recently heard the view expressed that the Australian Government should return to the Tasmanian Government tho amount of its investment in the industry and that the Government of Tasmania should use that money for the development of feeder roads leading into Bell Bay where the aluminium industry ha.3 been established. If that proposal were adopted, the industry would fall into the hands of this Government, which would then have a lovely plum to offer to the international aluminium producers’ cartel. I have clone some research on the subject of international oil corncompanies which have a monopoly of the sale of oil throughout the whole of the western world. It is a very frightening fact that in 1949 the seven international petroleum companies owned 6”) per cent, of the world’s estimated crude oil reserves. Control of those reserves must give control over future oil supplies unless new reserves or synthetic fue’s are developed. Any opportunity that Australia had to develop the technique of refining synthetic oil from shale has now been effectively scotched by the Government’s action in closing the Glen Davis plant. The seven organizations which, control the greater part of the world supply of oil are the Anglo-Iranian Oil Company, the Royal Dutch Shell group of companies, the Standard Oil Company of California, the Standard Oil Company of New Jersey, the SoconyVacuum Oil Company Incorporated, the Gulf Oil Company and the Texas Oil Company. The activities of these- companies extend from exploration for oil deposits to the marketing of their products.

One of the greatest troubles of the British Commonwealth outside the Far East and Korea concerns Persia. The difficulty in Persia could have been peacefully negotiated by the Anglo-Iranian Oil Company and the Persian Government but because the Anglo-Iranian Oil Company refused to meet the growing demands -of the Persian people who live in poverty, the matter has become an international issue. These oil companies are like the supporters of the Government, in that their activities are not in the interests of the nation, or of world peace, But of profit making. That is a negative policy. No country will prosper under a government of this kind, and peace and justice will not prevail in any part of the world while this type of government is in power.

Senator Cormack:

– Fifty-one per cent of the shares in the Anglo-Iranian Oil Company were purchased by the socialist Government of the United Kingdom.

Senator O’BYRNE:

– Yet the United Kingdom Government has only three directors on the board of the company. The control over world oil cracking capacity is of greater economic significance than control over crude refining capacity. The Government stated that it would be an advantage to take the cracking plant from Glen Davis to Bell Bay in order that it could be used by the aluminium industry. Now that the people of Glen Davis have been dispersed from their places of employment it has been found that the plant cannot be economically operated at Bell Bay.

How can the members of the Government justify this backing and filling and continuous somersaulting? There must be some line of policy which they are prepared to support. Individually .they are men of good standing, yet collectively they subscribe to a zig-zagging policy which nobody can understand and which is to the detriment of the country.

It is not because the subject of food production is not of the utmost importance that I have left it to this stage of my remarks. The Government has shown no leadership in relation to this matter and has given no incentive whatever to primary producers to solve the biggest problem that faces this country. I should like the Government to explain how the expenditure of £200,000,000 on defence can be of any use if the” nation has not sufficient food to keep its armies in the line. It is probable that there will be a shortage of food for our own requirements in the forseeable future. This is a grave reflection on all of us in one respect, but it is a grave reflection on the Government in particular because the Government is responsible for ensuring greater food production. But what assurance have we that the Government is determined to develop the resources of the land? During this sessional period honorable senators will consider the subject of war service land settlement. In every State ex-servicemen have been unable to settle on the land although they have been classified as qualified to undertake primary production.


– During the eight years of power of the Labour Government it did not take any action to develop the Northern Territory.

Senator O’BYRNE:

– I shall deal with that subject at another time. Throughout the length and breadth of Australia, ex-servicemen and thousands of others are prepared to develop the land. Thousands of new Australians, who have had experience in their own countries of intense cultivation, irrigation, market.gardenng and other methods of cultivation, are looking for an opportunity to own farms in Australia.

Sitting suspended from 545 to 8 p.m.

Senator O’BYRNE:

– I ask for leave to continue my remarks at a later stage.

Leave granted; debate adjourned.

page 1960



The PRESIDENT (Senator the Hon Edward Mattner:

– On the 17th September, Senator Brown asked me the following question : -

I gather from the latest report of the AuditorGeneral that there has been some difference of opinion between that gentleman and Mr. Speaker of the House of Representatives. I assume that yon, Mr. President, are involved in this dispute, as you have joint responsibility with Mr. Speaker for the administration of Parliament House. As the matter has not yet been finalized, I should like to know whether you will be gracious enough at some early date to give a considered statement to the Senate of your views.

I promised Senator Brown that I would answer his question later, and I take this opportunity to do so. Honorable senators have no doubt read the Auditor-General’s remarks concerning the accounts of the J Joint House Department. I assure honorable senators that the Auditor-General has always had, and still has, access to the accounts under my jurisdiction; thai is, the accounts of the Joint House Department, and I wish the public to know that also. Never at any time has the Joint House Committee, of which 1 have the honour to be chairman, wished that its accounts should be audited by any other authority. Those accounts have always been open to examination by the Auditor-General. The fact that the Auditor-General, in his report, uses the words, “ The audit 13 continuing “ is sufficient proof that the practice of having the accounts audited by the Auditor-General was never suspended.

The Joint House Committee does a great deal of work to protect the interests of members of the Parliament, and to safeguard public money. Never has the right of the Auditor-General to examine the accounts of the Joint House Department been called in question. I go further, and say that any recognized authority in the land may, with the approval of the Parliament, audit the accounts of the committee. Those accounts are clear and concise. and I pay a tribute to the accounting officers under my jurisdiction for their loyalty and honesty. On behalf of the Joint House Committee, I state emphatically that it is my wish that the accounts shall be audited by any authority approved by the Parliament, and I wish the public to know that the accounts of the department will always be open for examination by the Auditor-General. Indeed, that officer acknowledges as much in his own report

It is true that I invited the AuditorGeneral into my room to discuss certain matters. One does that sort of thing as a common courtesy. Whatever matters were discussed in my room are private. The discussions took place as between the Auditor-General, the President of the Senate, and the Speaker of the House of Representatives, irrespective of the persons who occupied those positions at the time. Therefore, I was astonished to read in the Auditor-General’s report certain statements that had been made in the course of those discussions. Many matters were discussed between the President of the Senate, Mr. Speaker of the House of Representatives, and the Auditor-General. There was some discussion of the constitutional position. I make no claim to be qualified to interpret constitutional law. I merely claim that, in the running of the Joint House Department, I shall always try to take the common-sense view. Never for a moment “was it suggested that the Auditor-General should not have the right to audit the accounts of the Joint House Department. Much has been written in the press on this subject. Much has been said by the know-alls on the subject of parliamentary procedure. Many of these authorities, these knowalls, have not yet realized that in these matters the will of the President shall, by virtue of his office, prevail. I am a man of peace, and have no wish to enter into controversies. I am concerned only to promote the smooth running of the Parliament, and I have never sought to enter into controversy with anybody; but, being in the office that I hold, I am prepared to take up the cudgels, and to see that my will shall prevail.

Where I join issue with the AuditorGeneral is in regard to the control and discipline of the staff of the Parliament.

In his report, the Auditor-General mentioned the dismissal of an officer, and thu loss of some butter. I, as chairman of the Joint House Department, am called upon, with the help of Mr. Speaker, to rim a highly complex catering organization, which provides meals and controls two liquor bars, one for members of the Parliament and another for the staff. My committee and I commissioned an outside authority, skilled in the liquor and catering trades, to advise us in the conduct of this business, in order to ensure that the service was satisfactory; that members of the Parliament were charged a fair price for the meals and other services that they received, and that the interests of the public were protected. Our purpose was to ensure that the catering service “was conducted on a strictly business basis. The report that I received from this authority is my property, and is no concern of any one else. I also wish to make it clear that the control and discipline of parliamentary officers rests with Mr. Speaker and with me, not with the Auditor-General or with any outside authority. If the Parliament wishes it to be otherwise, then the Parliament must say so.

Last May, I invited the AuditorGeneral to my room to discuss these matters. He had my assurance that I would give him every co-operation that it was possible for me to give. As for the discipline and control of the staff, that is my prerogative, and I would not move from that position. I come now to the events of last Monday. At the express direction of the Auditor-General, audit officers entered Parliament House, opened steel cabinets, and took out and examined account books, cash books, and bank slips without first seeking the permission of the responsible officers, or ensuring that those officers were present. I do not mind that at all, but it, would have been an act of courtesy for the audit officers to come to the Secretary of the Joint House Department, and to say, “ 1 desire to see your books “. Had they done so, the books would have been opened to them. I join issue with the Auditor-General over the fact that audit officers, acting- on his express orders, opened steel cabinets in this building and took out cash books, bank slips, &c.

The matter went further than that. They also demanded - or rather asked - for reports which were my own personal property, and wanted to know what duties were performed by an officer who is responsible only to the Joint House Department. That officer was in Sydney acting under my instruction. As I have said, the running of the Joint House Department is a complex matter. It is necessary to obtain supplies and equipment, and this officer was in Sydney, at my express instruction, performing certain duties. The Auditor-General had no right to ask what an officer of the Parliament, who is under my control, was doing. Honorable senators will agree that such behaviour constitutes a serious breach of privilege, and is in contempt of the Parliament.

The Parliament has installed me as master in this building, a fact that is expressly recognized in the Public Service Act. There is a clash of authority, and the matters in issue must be decided by the Parliament, which is the supreme authority in this country. I have nothing more to say, except again to assure honorable senators that the accounts of the Joint House Department have always been open for examination by the Auditor-General. The committee, of which I am chairman, has endeavoured to discharge its duties faithfully and well, to give honest service, to practise economy, and to exercise care in the expenditure of public money.

page 1962


First Reading

Debate resumed (vide page 1960).

Senator O’BYRNE (Tasmania) [8.15 . - Before I obtained leave to continue my remarks, I had pointed out to the Senate the many inconsistencies and the lack of policy of the Government during these critical times. If we of the Australian Labour party stand back and watch the Government, by its pathetic ineptitude and blundering, bring Australia to stagnation, we may perhaps be excused if we say that we attempted in the past to warn the people of the consequences of putting such a government into office. We are all aware that truth and honesty always have time on their side. It was merely a matter of time before the propaganda and dishonest promises of the Government parties returned to haunt them and many of their supporters. We do not have to delve very deeply into history to know that there is no escape from the cycle of war, boom, unemployment and depression, as long as the average person can be persuaded to vote for those who gain from that cycle.

Twenty years ago we were in a situation very similar to that in which we find ourselves to-day. At that time our knowledge of the causes of economic depressions and unemployment was most inadequate. Many people considered then that the fumbling and often disastrous policies pursued by governments and those in charge of the monetary system were due to sheer ignorance. Now, however, there appears to them to be a design on the part of the Government which, if judged on social, moral and political grounds, is bordering on the criminal.

There is insufficient time at my disposal to discuss many matters in detail, but I wish to say that if Australia is to be developed to its fullest capacity and thus become prosperous it is essential that we have a Labour government. It is ridiculous that in less than three years of the regime of this Government we should be wondering how to find jobs for men when so many jobs require to be done. It is our responsibility to face the situation and to prepare ourselves for the task that lies ahead. We of the Labour movement do not need to make fantastic promises that cannot be honoured. We must prepare our hearts and our minds for the inevitably approaching time when the Australian Labour party will be asked to get the country on to a firm foundation. The Australian Labour party has an adequate platform and programme which has been hammered Out through the years by men and women whose main motive has been the welfare of human beings. We of the Opposition must be prepared to place before the people of Australia our policy which is designed to replace the evils of the capitalist economic system and which, if faithfully pursued, will be the greatest blow to those who espouse foreign ideologies. We must place before the people of Australia our positive policy to tackle the basic threat to democracy, freedom of the individual, freedom of association, peace and our security and welfare. We must seek the support of all who honestly and courageously believe in our objectives and methods. The day when the Australian Labour party could compromise with its principles has gone. Unless we can be elected to office on our terms we should do better to leave the present Government in office.

The Opposition has a policy which is comprehensive and adequate to provide a straightforward and honest approach to our problems. Its task is to give the lead that Australia seeks. If it fails to give that lead, I fear that other political forces will take the field. On every side there is a lack of confidence in the Government, because it is apparent that it is completely lacking in leadership. The Government has failed the people. The Opposition must be prepared, by means of a social policy, to meet the challenge of the anti-social elements in the community. The supporters of the Government may call it what they like, but the people, no longer disillusioned, will call upon the Australian Labour party to give them a social lead.

Senator O’BYRNE:

– The honorable senator has not raised a point of order at all.


– Order ! I am still in the chair. Senator O’Byrne will resume his speech.

Senator O’BYRNE:

– I consider that it is very noor form for the honorable senator to interrupt my speech, which I am making in a limited time. I object to his conduct.


– Order ! I suggest that the honorable senator should make the best use of his time and continue his speech.

Senator O’BYRNE:

– I shall do so. The time has come when dilly-dallying is of no avail. This Government “ has done nothing . but dilly-dally. It has taken the country from great prosperity and a position of respect throughout the world to a position which is almost the reverse. A spokesman of the Commonwealth Bank recently stated that there were 17,000 fewer people working in Australia in June last than there were in June, 1951. In that time 80,000 immigrants had come to the country, so that there were 97,000 fewer workers than there were last year.

The challenge to the Australian Labour party is the need to save Australia for democratic socialism, as against fascism or communism. I am not certain of the political ideology of the Government, because it does not appear to have an ideology. It id merely dithering. Like a man on a raft, it is just drifting. If the challenge is to be met, there must be important changes. It will be necessary, in the economic sphere, to transfer, to the community industries which are essential to the general welfare. There must be distribution of incomes which relate to services rendered to the community, recognition of the working man as a human being, and an enlargement of his status in industry. There must also be the adoption of such planned and orderly control over the economy as may be necessary. In the political sphere, the change-over must be accomplished by the constitutional utilization of parliamentary machinery. The gains that have been made in the social and economic fields must not be outweighed by the loss of those personal and political freedoms which are as much conditions of a full life as are high living standards and social security.

The case that I nut to the Senate does not aim at the elimination of private property, equality of incomes, or the establishment of a police state. It aims at stability of employment whilst preserving economic progress, at reduction of inequality and poverty whilst maintaining individual incentive. It also aims at orderly development whilst upholding individual liberties. In essence, it espouses the belief that social organization for general welfare by increasing opportunity can enlarge individual freedom. This Government has failed completely in all those fundamentals. I am certain that in the near future the people of Australia will have the opportunity to decide whether the Government has done its job well or whether it should be thrown out of office.

Senator KENDALL (Queensland) [8.24). - After listening to the final remarks of Senator O’Byrne, I am not quite sure, whether I am a criminal, a. Communist, a fascist, or merely an ideology floating about in the ether. If I am a criminal because I subscribe fully to all the budget proposals and to the methods that this Government is taking to. try to rectify the disastrous state of affairs that was left to it by the previous Government, then I am a criminal.

I do not propose to answer all the matters that have been raised by honorable senators opposite, or even by Senator O’Byrne, but I wish to reply to the honorable sena-tor on one point. He chided the Government for selling various government undertakings. He also chided it with trying to get rid of the Commonwealth line of ships, partly because he thinks that it would be wrong to do so - and I give him that one - and partly on the ground of defence. I remind him, however, that during the 1914.-18 war and also during the 1939-45 war, the merchant service of Great Britain played a part second to none in the world. Yet it was no nationalized socialistic venture. The ships were owned by private companies. Nevertheless, they were in the vanguard.

It seems to me that a debate such as this, touching as it does on the whole of the political scene provides an excellent opportunity, to look quietly at , things in retrospect. That is what I propose to do. but before I deal with the various achievements of this Government during its term of office I should like to refer to the real position of the country when the Government came to office in 1949. There are a great many matters to talk- about, and I can touch only briefly on each item. However, when the achievements of the Government are summed up they make quite a large total.

First, when the Government took over there was a great deal of money chasing very few goods. There was a large demand for goods that had not been manufactured during the war years and a great desire on the part of the people of Australia to obtain such goods once more. Consequently, they were willing to pay fairly high prices for goods which were in short supply. Rationing of petrol, tea, butter, cream and various other commodities still applied. A great many jobs were offering, but there were very few people to fill them. State prices control, which came into operation in 1948, was operating, as it is now, but it applied only to essential commodities. It did not apply to the luxury goods which the people wanted to buy. The consequence was that manufacturers went ahead and manufactured luxury goods, paying high wages to their employees in order to attract them from the more essential industries, knowing that they could charge the public whatever prices they liked because there was no control over such prices. That is one of the fallacies of prices control where only essential goods are controlled. If the control is to operate effectively, the prices of all commodities must be controlled, particularly during a period of full employment.

At that time employers were competing with one another and also with the Government. Men were being paid, under the lap. between £5 and £10 a week over and above the basic wage to produce articles for manufacturers - for wham I must admit I have not very much, time - in order to allow them fro make large profits by supplying the goods that the people wanted. I shall always find it difficult to forgive our business community for over-ordering and overstocking. There is no doubt that practically every business firm in the country over-ordered and over-stocked because of a. desire to hold stocks and sell them a year later on a rising market. The consequence was that a completely false demand was produced. That position was not al toother one-sided. The employees knew that they were on a good wicket and that if they were sacked one day they could get another job the next. Generally sneaking, both classes, as the Opposition chooses to refer to them - employers and employees - were not playing a very ni.”e game as far *s Australia was concerned. They certainly were not helping to get Australia out of its war-caused economic troubles. Black markets were rife. Scarce commodities such as cigarettes were kept under the counter, particularly in small corner grocery shops. Our key unions and many of the smaller unions were completely under Communist control. Indeed, that was one of the major causes of the shortages. Between 1945 and 1949, under Labour rule, more than 80,000,000 man-hours were lost through industrial disputes due primarily to the activities of Communist-controlled unions. Union ballots were “ rigged “, and the honest trade unionist had little chance to get rid of the Communists. Between the three-year period 1937-39, and the corresponding period a decade later, the output of primary products fell by between 5 per cent, and 25 per cent., and exports declined by between 25 per cent, and 79 per cent. For example, our exports of beef and mutton dropped by 79 per cent, during that ten-year period. “When the Menzies Government was elected, an excellent immigration scheme was already in progress. Every one on this side of the chamber has always conceded that the immigration scheme inaugurated by the Labour party was good ; but my personal view is that, while Labour was in office, the scheme was not sufficiently selective. Too many immigrants were city workers, whereas we were sadly in need of rural workers. I believe, too, that, instead of building so many immigration centres in and around the cities, more should have been built near large country centres, so that ample labour would have been available to farmers whose greatest difficulty at that time was their inability to obtain employees. Between 1945 and the election of the Menzies Government, wages had increased by an average of 9 per cent, per annum. Coal production in 1949 was totally inadequate. That, in turn, meant that the output of pig iron, steel, galvanized iron, and other materials required by primary and secondary industries were in short supply. Housing, too, was scarce. The Labour Government had been bringing into operation its plans to turn Australia into a socialist welfare state. That, of course, is a part of the platform of the Australian Labour party, and I do not blame the Chifley Government for having acted as it did. Nevertheless, that was another problem with which we had to contend.

In our first budget we had to make provision for the redemption of treasurybills totalling £201,000,000. They were, in effect, I O U’s from the government to the government. That matter was fully debated in this chamber about a year ago. We also had to provide £70,000,000 for the payment of war gratuities. We had on our hands a line of ships that had already lost about £12,000,000 and was still losing heavily. We had an airline which had been receiving interestfree loans. When Trans-Australia Airlines was losing money the Labour Government found it very convenient to alter the mail subsidy to enable the Australian National Airlines Commission to balance its books. Those are facts which may readily be verified. We had 23 ships in New Guinea which were losing hundreds of thousands of pounds a year. We inherited from the Labour Government a health scheme about which the Leader of the Opposition (Senator McKenna) could tell us quite a lot. That scheme was going to cost, not hundreds of thousands of pounds, but millions of pounds, and we did not like it at all.

The Menzies Government took office at-a time of uneasy peace. Our Malayan and Korean commitments had not yet risen above the horizon, but we were confronted with the task of strengthening ou r defences to bring them up to the standard that had been set by other British Commonwealth countries and by the United States of America. Members of the Labour party speak with pride about the grand job of demobilization that was done by the Chifley Government. I quite agree that demobilization was carried out with efficiency and despatch, but it left Australia practically defenceless. I think it can be truly said that when the present Government was elected our defences were at the lowest ebb in our history. Due to the short-sightedness of the Labour Government, the Manus Island base, on which the United States of America had expended £100,000,000, was a complete shambles, and much money was needed to bring it back into service.

Wo also had the task of paying a subsistence allowance to former prisoners of war m the lianos of the Japanese. Repeated requests for the payment of that allowance had been rejected by the Chifley Government, mainly on the ground that if it were paid men would be encouraged to surrender to the enemy. I have never heard a worse statement than that, yet it was made in this Parliament by the then Government.

When we took over the reins of Government, this country was headed for a depression by comparison with which the depression of the 1930’s would have been regarded as a holiday. Those were the circumstances to which Senator O’Byrne referred as an “ excellent position “. Let us have a look at what this Government has accomplished during its .three years on the treasury bench. One of our first acts was to introduce a selective sales tax to curtail luxury purchases and to divert labour from non-essential to essential industry. Credit restrictions were introduced to stop the over-ordering and stock-piling to which 1 have referred. We subsidized the importation of coal and, at the same time, introduced mechanical equipment for the extraction of coal in this country. The result has been, as the Minister for National Development (Senator Spooner) so ably pointed out last week, that we now have more than 1,000,000 tons of coal at grass. This in turn has meant that steel production which was down to about 38 per cent, of capacity, is now nearly 80 per cent, of capacity, and we have every hope that, before the end of next year, and certainly before the. next general election, our- steel works at Port Kembla and Newcastle will be operating at full capacity. Secret ballots legislation has been passed, and to-day quite a number of unions automatically have their ballots conducted under the supervision nf the Registrar of the Commonwealth Court of Conciliation and Arbitration. Members of the Labour party frequently say, “ Look at what we have done to the Communists “. I realize that the Labour party has worked very hard to get rid of the Communists, but how far did it get before the introduction of the secret ballot? I know, and the people of Australia know how far it got. Ask Laurence Short how far he got before the secret ballot was introduced. He worked very hard, and good luck to him, but he would not have got anywhere at all but for the secret ballot legislation, and he has the Menzies Government to thank for that. The Labour Government refused to legislate for secret ballots. To-day, consumer goods are so abundant that there is some unemployment in the community.

Senator Tangney:

– People have no money to pay for them.

Senator KENDALL:

– There is plenty o.’ money to pay for them. 3?or evidence o.” that one has only to look at the sales of lottery tickets and the consumption o’’ beer and spirits during the last couple of years. Every time the basic wage rises, sales of lottery tickets increase by 100,000 a week. That is how much the standard of living is being raised by the inflationary spiral. The Menzies Government removed customs duties, from building materials imported from British sources, and substantially reduced the duties on foreign building materials. The result was that housing programmes progressed tremendously. Since this Government came to office, war service homes have been built at the rate of 14,000 a year, whereas, during the period from the inception of this scheme in 1920 until 1949, the average was 2,000 a year. It is nonsense to say that this Government has done nothing, and 1 cannot understand such talk. When the price of wool rose steeply, we introduced a wool tax pre-payment plan to soften the impact that the enormously increased income would have upon our economy. When that plan was no longer needed, it was abandoned, just as credit restrictions have now been removed because they are no longer necessary. It is all very well for the .Opposition to say that the Government has changed its mind. Of course it has. Any man who stubbornly refuses to change his mind although it is clearly necessary for him to do so, is a fool. No country can be governed adequately under a static policy. A? circumstances change so methods must be changed.

Honorable senators opposite have made much of the proposed abolition of the land tax. They say that it will benefit the big city interests. Of course it will, and good luck to them! The abolition of the tax is an anti-inflationary measure. Costs will be reduced, and a contribution will thus be made to the stabilization of our economy.

Senator Cameron:

– Prices have not been reduced.

Senator KENDALL:

– They are being reduced. Apparently the honorable senator does not do much shopping or he would be better informed. For the benefit of country dwellers the Government has granted several worth-while concessions in the last twelve months. It has allowed primary producers to deduct from their incomes for taxation purposes amounts spent on the provision of living accommoda tion from farm employees and for the purchase of farm implements and irrigation improvements. It has abolished the tax imposed on export wheat during the current harvest. It has introduced the self-assessment principle in respect of provisional tax, which has been in operation in Canada for very many years. It has brought about a substantial increase in the production of dairy products. It has granted two increases in the price of sugar which will greatly benefit the Queensland sugar industry. It has fixed a guaranteed price of cotton at 91/2d. per lb. - a price which for the last twenty years Queensland cotton-growers have sought to obtain. In 1945 Queensland was producing less cotton than it produced 50 years ago. Now, the industry is enjoying a period of boom. As the result of developments in Queensland, Australia may well be on the way to becoming self-supporting in cotton. New life has been injected into the industry. The Government has also decided that the proportion of Australian tobacco to be blended with imported leaf shall be increased by 100 per cent., to the great advantage of the tobacco-grower3 at Mareeba and at other centres to the west of Cairns.

On the defence side we have accepted our full obligations as a member of the British Commonwealth. We have forces fighting in Korea and Malaya, and a Royal Australian Air Force squadron has been posted to Malta. The restoration of the defence installations at Manns Island is proceeding steadily, but insufficient money is available to restore them to the perfected state in which the Americans left them. During the last two years I have visited Manus Island on two occasions. The Government is doing a great deal of work to clear up the mess that was left by the Chinese when they took away from the island the huge quantities of defence equipment that they had bought from the Labour Government. The claims of former prisoners of war for the payment of subsistence allowance has been temporarily settled by the grant of £250,000, pending the receipt of reparations from the Japanese, when appropriate final payments will be made. The guided weapons testing range at Woomera is now in operation. Naval and air force expansion has proceeded fairly well. I am not completely satisfied about the Navy, but this is not the appropriate time to express my views on that subject. I trust that an opportunity will be afforded to us in the near future to discuss that matter because I believe that the present composition of our naval forces is not in keeping with the kind of war in which we are likely to be engaged. The only country with which we expect to be at war is estimated to have 260 divisions of trained troops, 20,000 front-line combat aircraft and 300 0 submarines. I do not believe that any Australian would advocate the reduction of the amount provided by the Government this year for defence preparations.

The national service scheme has been successfully established. I have visited a number of training camps in which our young lads are undergoing short periods of training. I have noted the pride with which they carry out their military manoeuvres. Their sole complaint appears to be that military training makes them so fit that they could “ eat a horse “ and that food supplies might be a little more generous. Their parents seem to be satisfied with the scheme. In my own family my elder sons complain because they are too old to be included in the scheme.

The inquiry into the possibility of the abolition of the means test in relation to social services benefits has been proceeding for some time: The Government is hopeful that it will be able to honour its promise gradually to abolish the means test. I am not an accountant and I know very little about the intricacies of that problem, but I understand that tremendous’ difficulties would confront the Government if it abolished the means test, as it would involve the provision of an additional £110,000,000 a year. I understand that alternative proposals are under consideration.

The simplification of income tax returns promised by the Government is an accomplished fact. In New Guinea the ‘ administration is at last settling down to some semblance of common sense and routine action. Our territories were in a shocking mess when this Government assumed office. I based my maiden speech on that very point. I am proud to say that the Minister for Territories (Mr. Hasluck) is- acting along the lines that I indicated in that speech. Australia has also made great strides in thi! field of international affairs. I do not think that any Australian would complain about the Colombo plan or the Pacific pact. Australia’s commitments i under the Colombo plan represent only

I ho beginning of action to be taken by i ll is country to assist the people of SouthEast Asia. It is a start in the right ° direction. ‘ The Minister for External Affairs (Mr. Casey) has done a remarkably good job not only in connexion with the Colombo plan and the Pacific pact, but also in fostering good relations with neighbouring countries both far and near.

The Government’s health and medical benefit scheme is already being partly implemented. Free life-saving drugs are now available to the people and free medicine and medical attention are provided for pensioners. The Government lias sponsored medical and hospital benefits insurance schemes at low rate3 so that the people may not have to bear unaided the tremendous cost of medical and hospital treatment. As I understand that the complete scheme will bo in operation early next year I shall not discuss that subject further nt this stage. Practically every Opposition senator has charged the Government with having broken its promises to the people. Let me remind them that the term of office of the Government does not expire until April, 1954, and that it has still another eighteen months in which to redeem those outstanding promises. I am confident that it will redeem most, if not all, of them. Certainly the spiral of inflation will be broken before it vacates office. I leave this final thought in the minds of Opposition senators. If the introduction of secret ballots into trade union elections in Australia represented the sole act of this Government it has justified its occupation of the Treasury bench for three years. I support the bill.

Senator COLE:

.- Senator Kendall has said that if his support of the budget in its entirety makes him a criminal, he is a criminal. His support of the budget, far from being evidence of criminality is evidence of insanity. To those who give thought to the administration of their country, the present time is a crucial period in our social and economic life. This is budget time, when policies are enunciated and decisions are reached. The Treasurer has introduced what has been termed a “ gaiety “ budget, which he hopes will bring joy to the hearts of his constituents. When I listened to the cheers of his supporters when he presented it, I recalled how small boys whistle in the dark to bolster their courage. After sober reflection one might well ask: What relief has this budget brought to the. people of Australia? Last year the Government placed a heavy impost on the people. This year it has granted a small measure of relief. It appears to me to be a game of Aunt Sally. In one year set up an Aunt Sally and in the following year knock it down. But in. this instance the Aunt Sally was given merely a slight twist. Let . us consider, for instance, the paucity of the relief granted in the budget in respect of sales tax which amounted to only £6,000,000 out of a total collection of £8S,000,000. Such a gesture on the part of the Government may make good reading for unthinking people, but an examination of the amended sales tax schedules shows that the remissions granted will be of little benefit to the community. Why cannot the Government be realistic and remove the tax from essential items, or better still, abolish the tax altogether? The sales tax is an invidious way of taxing the family man. By abolishing the special levy of 10 per cent, on assessed incomes the Government did no more than everybody in the community expected it to do. Not only is much money being filched from the people by taxation, but Commonweatlh expenditure is steadily increasing. The. policy of the Australian Labour party in relation to employment differs from that of the Government parties. Labour considers that it is absolutely essential in a young country to maintain full employment.

Senator Wedgwood:

– So do the Government parties.

Senator COLE:

– The profit motive is always uppermost in the minds of the opponents of Labour. I shall now traverse the reasons for the growth of unemployment in this country and endeavour to show where culpability lies. Under its ant i -inflation programme, the Government has endeavoured to divert labour from unessential industries, including luxury and mushroom industries, to the coal, steel, transport and building industries, by a drastic control of credit, and the control of capital issues. It declared an open season for the importation of very many commodities which, to the dismay of Australian manufaturers and trade unions, continued throughout 1951. However, much of the labour that was displaced from the unessential and less essential industries of this country was unsuitable to be absorbed by the basic industries. Furthermore, many of our basic industries had not reached such a stage of development as to permit of a large scale transference of labour to them.

SenatorRobertson. - How does the honorable senator account for the increase of labour on the coal-fields?

Senator COLE:

– The Government’s plan to divert labour from the unessential industries to the basic industries could have been applied with greater discretion. The Government not only permitted, but also encouraged the importation of unessential, goods to this country, with the result that the home market was lost to our light industries. Many of the people who were displaced from those industries were prevented by advanced age and lack of training from obtaining employment in the basic industries, and consequently unemployment manifested itself. The greatly increased prices of foodstuffs have also caused unemployment. As a greater part of the family income is now spent on food than formerly, the people have less money with which to purchase goods that are manufactured by the light industries. The prices of food and groceries are now 27.7 per cent, higher than they were during last year, and are still rising. Many employees of the light industries have been dismissed. The Government should realize that prices control and wages control are essential, if further increases of prices are to be obviated. By prices control, I mean the control of the prices of all ingredients in an article, as well as the control of the price of the finished article to the consumer. Such control can be attained only by a Commonwealth system. To a degree, wages are controlled by the Commonwealth Court of Conciliation and Arbitration.

I come now to another important factor in relation to unemployment. The present shortage of raw materials has been caused by the Government’s import restrictions. By clamping down suddenly on the importation of raw materials, the Government did a great disservice to Australia. This would not have become necessary had not the Government allowed the almost unrestricted importation of luxury goods into Australia last year. During a brilliant address to the Senate last week, Senator Byrne referred to propaganda based on the doctrine of inevitability, by which the opponents of Labour hope to win the next general election. This is a clever way to try to convince the people that it was inevitable that the things that have happened must have happened. I have already disproved that contention. I remind honorable senators that 70 per cent, of our imports comprise essential raw materials and capital equipment, without which Australian manufactures cannot be produced. In order to maintain full employment in this country, the Government should have permitted the continued importation of raw materials until our own rural production became sufficient to satisfy Australia’s requirements. The curtailment of the importation of raw materials has had a serious effect on the employment position in this country. The growing rate of unemployment is attributable to the present Government’s unrealistic approach to national problems. The basic cause of our unemployment situation has been the Government’s inability to stabilize the Australian economy. Although the opponents of Labour have stated that the Commonwealth has made as much money available to the States for this financial year as it did . in the last financial year, 1 point out that, due to increased costs, that amount will not permit of the same volume of work being undertaken by the States this year as formerly.

Almost daily there are newspaper announcements about dismissals of employees from industry. This is an indictment of the economic policy of the Government. What would Labour do if it were in office and faced with such a position ?

Senator Robertson:

– It would socialize everything.

Senator COLE:

– I doubt very much whether the condition of affairs that exists to-day could have arisen under the leadership of such a realist as the late Mr. Chifley. However, we must accept the ‘fact that the people saw fit to elect a government which was unprepared to govern in an economic crisis. Senator Robertson’s interjection was partly correct. Labour would use the national credit to take up the slack in order to make Australia economically strong, h would not engage in the hit or miss methods that have been applied by the present Government. Labour believes that Australia’s credit should be used not for the benefit of only a few, but for the benefit of the whole of the community.

T have dealt with the causes of the present unemployment situation and the culpability of the present Government in that connexion. I shall now suggest to the Government a means to overcome its difficulties. Australia’s export industry has failed to earn sufficient foreign exchange with which to pay for the essential imports of raw materials that we require. Although the steel industry of this country has a productive capacity of about 2,000,000 tons a year, owing to a shortage of skilled workers it could not attain full production last year. In the ten months ended April, 1952, it was necessary for Australia to import £66,000,000 worth of steel. As a result of the import cuts, less steel is now being imported, and the State governments will be unable to carry out their developmental programmes. As I have already pointed out, about 70 per cent, of our imports comprise essential raw materials. The only way in which we can gain sufficient credit overseas to enable a continuance of the importation of those essential raw materials, in order to help to prevent further industrial unemployment, is to expand our rural industries. About 90 per cent, of our overseas earnings are derived from our exports of primary products. If we wish to increase our overseas funds we must develop our rural industries. But these exports are falling at an amazing rate. The Commonwealth Statistician’s bulletin indicates that in the nine months ended March, 1952, compared with the same period of 1951, our exports fell as follows: - Butter by 83- per cent., beef by 30 per cent., mutton and lamb by 50 per cent, and wheat by 26 per cent.

It is essential to full employment that “an effort should be made to raise the output of rural industries. Why should there be this rapid decline in rural production ? The fact is that the farmer is not producing as much as he should produce and, with the rapid rise in our population in the last few years, there has been less for export. Why will not the farmer produce more? Somebody has said that there is a shortage of labour for farms. It is not because of a labour shortage that the farmer has not produced more. Labour has been offered to the farmer and it has been refused. That is because the farmer fears the future. It is only in the last five years that he has received an adequate return for his produce. In 1938-39 the average annual income of farmers was £140. In 1.950-51 it was £2,520. Before the 1939-45 war, 96.5 per cent, of farmers earned under £500 a year, and .8 per cent, earned over £1,000 a year. But in the financial year 1951-52, only 54.6 per cent, of the farmers earned under £1,U00, 33.1 per cent, earned between £1,000 and £4,000, 5.4 per cent, earned between £4,000 and £6,000 and 0.9 per cent, earned over £6,000. From these figures it must be clear that taxation on the farmers’ marginal rate of profit prevent him from expanding his industry. On an income of over £1,000, income tax is payable at the rate of 5s. 4d. in the £1. On income over £1,400 it is payable at the rate of 7s. 4d. in the £1. On income in excess of £2,000 the rate is 9s. 6d. in the £1, and on income in excess of £5,000 it is 14s. 8d. in the £1. The farmer who increased production would increase his income tax liability. Increased production would involve him in increased investment in machinery. So when the farmer finds that his taxable income is over £1,500 a year he consider)! that the game is not worth the candle.

Although land may be available for cultivation on farms that have already been developed it remains idle. What can we do about this difficulty? Large numbers of new farmers must be placed on the land. It has been estimated that 100,000 new farmers would be adequate to the task. It has also been estimated that it costs over £10,000 to purchase an extensive improved holding. Nothing must be left undone in order to enable returned soldier settlers to receive their just due. However, production from new farms is necessarily very small, mainly because of the time that it takes to bring them into full production and also because of the annual expenditure that they require. Consequently, schemes other than those for soldier settlement must be devised in order to settle suitable people on the land. To place 100,000 farmers on the land at a cost of £10,000 a holding would require the expenditure of £1,000,000,000, which would be a financial impossibility at present. We must place people on the land at as small a capital cost as possible. If we desire to prevent industrial unemployment by increasing the quantity of our exports we must bring thousands of rural immigrants from Western Europe and use them for intensive cultivation of the soil. Such a policy would require the acquisition of large estates in good climatic areas so that fertile land might be used to its full capacity.

I do not advocate that our own people should be excluded from any scheme of land development. Under the scheme that I shall put forward preference should be given to Australians; but, unfortunately, Australians still think of land in terms of broad acres. My proposal is that an area of land with a good water supply, either from an irrigation system or natural rainfall should be selected. A township should be built in a central position unless the area is in the vicinity of an existing town. In the township should be the industries needed to undertake the processing of the products of the area. Around the town 3 or 4 acre blocks of land should be provided for industrial and agricultural workers. These blocks could be worked as parttime farms by seasonal labour. Then there would be a hinterland of farms, modelled on the European pattern of the family farm, the size of which would depend on the fertility of the land. In good areas these farms would embrace about 30 or 40 acres. The economic development of the settlement should be undertaken by a co-operative organization and its administration should be undertaken by local government institutions. The tenure of the farms should bo perpetual lease. If a person decided to sell his farm, the co-operative should have the first right to purchase .”o as to prevent the concentration of ownership which is the bugbear of Australia to-day.

This scheme would bring much of our fertile land into production at a low capital cost. The outline that I have given is rather sketchy, but we must take action to counteract the increasing shortages of primary products. The unemployment which is likely to arise from the absorption of our overseas balances and our consequent inability to import raw materials makes it necessary that we should develop our rural industries. It is also important that Australia should produce more so as to meet its commitments under the Colombo plan. There is a moral obligation upon u« to work hard and produce more so that the nation may be economically strong and able to del end itself. There is a moral obligation upon us to work hard and produce more so that the hungry people of the world may be fed.

Senator WORDSWORTH (Tasmania) “9.2S. - The small amount of time which has been devoted by honorable senators opposite to the subject of defence during this debate has amazed me. The Government’s proposal to spend the sum of £200,000,000 on defence deserves either praise or criticism. But what have we heard from the other side of the chamber? Senator McKenna apologized for not having enough time to talk about defence. Apparently, he would like to have discussed the subject, but was so busy discussing smaller matters that he did not have the time. He did insinuate that the sum proposed to be expended was a little too much. Another Opposition senator’s contribution to the subject of defence was the statement that an Army car had remained in a street in Perth for three hours whilst its driver waited for a lady who was doing her shopping. Such an incident would occur under any government. However, he did say that we were making Australia less prepared for war because we were selling, or trying to sell, the Commonwealth line of ships. As one honorable senator on this side pointed out, all Australianowned ships would be placed under government control within a few hours of the declaration of war. That happened in the last war, and it would happen if there should be another war.

Senator O’Byrne said that the Government had ruined Trans-Australia Airlines as an instrument of defence. I go so far as to say that the Government has strengthened Trans-Australia Airlines, and also Australian National Airways Proprietary Limited. The defences of the country have been strengthened because both companies have been placed in a better economic position. Senator O’Byrne complained because the Government had sold the Commonweal th’3 interest in Amalgamated Wireless (Australasia”) Limited. Does the honorable senator believe that there are fewer persons employed in that company now than when the majority of its shares were held by the Government? I am sure that that is not so, and the honorable senator’s argument is without foundation.

The Leader of the Opposition (Senator McKenna) said that our national leaders were incapable of planning ahead. Well, let us for a moment consider the record of the Labour Government. When it went out of power, its defence policy was based entirely on the principle of voluntary enlistment, and at that time there were fewer men in the defence forces than there were before federation, when each of the States had its own little private army. The Labour Government had a programme of defence expenditure, of which it was very proud, that provided for the expenditure of £50,000,000, over a period of five years. The present Government has introduced compulsory military traint ing, which is going extremely well. Its defence programme provides for the expenditure of £1,000,000,000, over a period of five years. The Government has been accused of being unable to plan ahead, but I claim- that its defence programme is the best that has been evolved in the whole history of. the Commonwealth.

Let us examine the world situation in the light of the insinuations of’ the Leader of the Opposition that this Government is doing too much in the way of defence. It is proposed to expend £200,000,000 on defence this year, which represents 20 per cent, of budget receipts. Let “ honorable senators compare that with the American budget. The Americans do not throw money away just for the fun of it. They have common sense, and are keen businessmen. They do not waste money. The Government of the United States of America is expending 60 per cent, of its income on the armed services, and another 11 per cent, on strengthening the defences of its allies. That represents a total of 71 per cent., as compared with 20 per cent, in Australia, and yet we are accused of doing too much.

Is the world situation better or worse than it was in 1949? Is there less chance of war? Is there less danger to the people of Australia? Has there been any change in the policy of Russia during the last three years, because it is Russia that we have to fear? Why has war not started before now, as many people expected it would ? The first reason i3 that Russia is not economically ready for war. I do not believe that Russia has any chance of winning a war quickly, and it is not prepared for a long war. Everybody acknowledges Russia’s superiority in what one might call the old-fashioned armaments, but it is deficient in scientific weapons of war, and that is one of the reasons why a third world war has not already begun. Another reason is that Russia is having such success in the cold war, and in the active war now in progress in Korea. Russia is undoubtedly increasing its own military strength, and the strength of its allies, at a faster rate than the Western Powers are increasing their strength. However, perhaps the principal reason why there ha3 been no general war up to date is that Russia has been stopped in Europe. As a result, Russia has embarked on a policy of “ Asia first “, a fact which means a great deal to Australia. A good many years ago, Lenin wrote that the road from Moscow to Berlin, Paris and London was through Peking, Shanghai and Calcutta.

In Korea, the democracies are being bled. We are pouring out blood and treasure, while Russia is accumulating treasure by selling arms and war materiel to China. The war is also serving to train the armies of China, which now number over 5,000,000 men, who are completely under Russian control. Every man we lose, every cartridge we fire and every pound we spend weakens our war potential. That being so, is there any reason to imagine that Russia will allow the war in Korea to end ? Of course there is not. Russia will take good care to ensure that the war in Korea goes on, and that war will be carried to other parts of the world, if possible.

What is the war in Korea costing Australia? We have only two battalions in Korea, but this year it will cost us £2.901.000 to maintain them. In addition, the Air Force in Korea will cost us £2.650.000. I cannot find any mention in the budget of the cost of naval operations in Korean waters, but the Army and the Air For”e alone will co.=t us 017Pr £5.500.000. -We have suffered over 1,000 casualties in the Korean fight ing, and the United States of America has suffered 150,000 casualties. That indicates how the. Western democracies are being weakened, and it also indicates the degree of Russia’s success. The peace negotiations in Korea will come to nothing, and any Australian who thinks that they will succeed is indulging in wishful thinking.

But that is not the worst part. Let us now consider the position in Indo-China, which is closer to Australia. There, the French are making a very big effort. The war in Indo-China is costing the French £1,500,000 a day, and they have suffered heavier casualties in their war than the Americans have suffered in Korea. The French, being a hard-headed people, are getting tired of the war, and at any moment they might pull out of IndoChina. It would take very little to tip the scales against the French at the present time. Moreover, a very considerable Chinese army is waiting just across the Indo-Chinese border. It is not difficult to imagine what would happen . if the call were to go out to the Chinese for volunteers to fight in Indo-China. The result would be disastrous. Either the French would pull out, or they would have to be heavily reinforced and supported. Australia would have to do its share, and its commitments would be much greater than two battalions and two squadrons of the Royal Australian Air Force. As a matter of fact, we must be prepared to take an active part in Indo-China at any time. If Indo-China were to fall, the Communists would be getting perilously close to Australia. ^However, that is not the only danger point. The Chinese border also marches with that of Burma, where the position at present is far from satisfactory. In Burma, the Communist party is large and powerful, and just over the border in China there is another large Chinese army. Unfortunately, there is in Burma a small remnant of the forces of Chiang Kai-shek, which would serve as an excuse for the “ red “ Chinese forces to invade the country, and engage in a “ fight for freedom “. I do not say for a moment that it will be necessary for Australians to go to Burma to assist that country, but if Indo-China and Burma go, Malaya « ill be completely outranked. The effort which Great Britain is making in that part of the world is very great indeed. I.f Malaya were attacked, Australia would again be obliged to send forces to that country to help restore thi situation. “We could not afford to remain out of it. Of course, we might be forced out.

If the whole of South-East Asia goes, what will be the effect on Indonesia, which is even closer to Australia? Imagine the effect on Indonesia, where Communists are already fairly strongly entrenched, of a South-East Asia completely dominated by Communists. If Indonesia did not go completely into the Communist camp, at least the Communists would enforce the right to establish aerodromes and submarine bases on Indonesian territory. Because of the modern methods of warfare, such a situation could be extremely unpleasant for Australia. Already at Tsing-tao the Russians have established a submarine base, and pens for 40 submarines have been built. We know also that at Hainan, which is a small island off the South-East coast of China, the military establishment has been increased in the last year by more than 80,000 troops. It is known that a large proportion of the garrison consists of Russian naval personnel. It does not take a great deal of imagination to work out what that means. Hainan also is relatively close to the shores of Australia.

Thank God that this Government is able to look forward, despite what the Leader of the Opposition (Senator McKenna) says. Thank God it has had the foresight to re-establish Manus Island, which was so wrongly and tragically handed back to the United States of America after it had been offered to us “almost as a gift. I only wish that the previous Government had had the ability to look forward in that respect. Had it been able to do so, a good deal of expense could have been avoided. The harm that might be done to Australia from Indonesia, should another war break out, is incalculable. We must keep an efficient air force, navy’ and army in order to counter such a situation.

I should like to have sufficient time to discuss this matter in greater detail.

For instance, I should like to be able to speak about India and to point out that Russia has looked covetously at India for 100 years. The Indian seed bed is ripe for communism. In these days of modern warfare it would be far easier to capture India as a continent than it was 50 or 100 years ago. I should also like to be able to speak about the Middle East, about Persia, and about the possible result of Russian intervention in that country, which may well come about if the Tudeh party gets into power. It is interesting to speculate on the future of the Middle East. We cannot afford to get out of that area or to allow its resources to come under Communist control. If we did so it would be like fighting a war with one hand tied behind our back. I should like, for a moment, to discuss Germany.

Senator Cameron:

– Why not come back to Australia, for a change?


– I suggest that if the honorable senator listens to my remarks he may learn something. Germany is to-day divided in the same way as Korea was divided before the conflict broke out in that country. On one side of the line is East Germany, behind the Iron Curtain, being rearmed by Russia. On the other side is West Germany, which is backed by the western democracies. It would not astound me if, in the next year or so, a conflict similar to the Korean war broke out in Germany. The success which Russia is enjoying with its cold or semi-hot war methods is being achieved without the loss of a single Russian. Russia supplies its puppets with the - equipment of war and is winning wars without, firing a shot.

I contend that the position of Australia is much worse now than it was when this Government came to power. Indeed, it is so bad that in my opinion defence expenditure of £200,000,000 a year, or £1,000,000,000 over 5 years is warranted.

Thank God we have in office a government which looks forward and is prepared to accept its responsibilities. The main responsibility of any government is the defence of its country. What does it matter whether the rate of sales tax is 5 per cent, or 20 per cent, if the defences of the country are neglected? Big things must come first. Defence is one of the big things. I am proud to support this budget which provides for the expenditure of £200,000,000 for the defence of Australia.

Senator NICHOLLS (South Australia) “9.52]. - This budget, which the Government claims to be an incentive budget, will not contribute anything towards restoring our economy to a stable basis. Its only touch with present economic realities is that it proposes to increase the unemployment benefit. Unemployment and sickness benefits will now be doubled, which indicates that the Government admits the existence of a substantial number of unemployed persons throughout Australia. The exact number of unemployed persons is exceedingly difficult to ascertain, because apparently the Government has issued a direction that figures concerning unemployment relief are not to be released to any one. The optimistic figures cited by Government spokesmen from time to time are certainly not indicative of the true position. Such figures are not accepted by honorable senators on this side of the chamber or by the general public, which feels that it is being misled by the Government. In attempting to implement a policy of concealment, embracing a censorship blackout of unemployment figures, the Govern.mont must inevitably incur a f further loss of public confidence. I cannot see any reason why such figures should not be released. Surely the Government does not believe that a policy of this kind will assist in restoring confidence in this country. Yet confidence must be restored if economic stability is to be achieved.

I have looked in vain in this budget for something that will encourage primary producers to co-operate with the Government in increasing primary production, notwithstanding the fact that before leaving London recently the Prime Minister (Mr. Menzies) is reported to have com-, mitted Australia to a policy of increased food production. According to press reports of the Prime Minister’s statement, food production is now to receive a new priority, both during the present cold war and also in the event of a hot war. It is to be given an essential priority equivalent to that of defence and coal. Unfortunately, the Government has done nothing about that priority, apart from the intimation of the Prime Minister that immediate studies are to be made in London in order to work out the food targets at which Great Britain desires that Australia should aim. The right honorable gentleman is also reported to have said that a much-needed increase of food production in Australia will require substantial efforts in the field of transport, rural housing accommodation, water supply, fertilizer production, the supply of farm implements and other matters.

The statement made by the right honorable gentleman in London had a distinctly familiar ring to the people of Australia. He has used similar words in this Parliament many times. However, notwithstanding his fluence and the hundreds of blue-prints that have been prepared. there is no concrete evidence that any progress has been made in increasing primary production. As a matter of fact, primary production declines further each day and will continue to do so as long as this Government is in office. It is incredibly ironic and fantastic that experts in London should bc called upon to work out food production targets for Australia. Surely this Government has the necessary qualifications to work out its own food targets, even though it may be unable to achieve them. It is regrettable that the Prime Minister appears to have given Great Britain the right to work out food production plans for Australia. Apparently the right honorable gentleman and the British Government overlooked the fact that primary producers in Australia will, themselves, determine whether there shall be an increase of primary production. I submit that their decision will be governed by the economic incentive that is given to them. If such an incentive is adequate, I have no doubt that Australian primary producers will not be found wanting. But time marches on and primary production continues to decline.

A brief summary of the salient features of that decline is illuminating. In New South Wales this year, it appears that the wheat acreage will be approximately 500,000 acres less than the abnormally small total of approximately 2,700,000 acres last season. Floods and bush fires are blamed for the position in “Xcw South Wales, but a similar state of affairs exists in every other State. Is this serious decline in wheat production the answer to the appeal made by the Prime Minister (Mr.- Menzies) a few months ago for an all-out effort to increase food production? Figures released by the Commonwealth Statistician relating to the production and export of certain basic primary products during the first ten months of the current financial year tell the whole story. The production of whole milk in that period was 1.5 per cent, lower than it was in the corresponding period of the preceding year. The same downward trend was reflected in the production of cheese and butter. In the field of exports - the key in our whole economic situation and the most important factor in our balance of payments programme - the decline has reached catastrophic dimensions. Exports of butter fell in the period that I have mentioned by approximately 87 per cent. Exports of mutton and lamb declined by M per cent., beef and veal by 38 per cent., scoured wool by 40 per cent., greasy wool by 17 per cent., and wheat by approximately 6 per cent. That is the unsatisfactory state of our export trade which, as I have said, is the key to the whole economic situation. In view of the Prime Minister’s statement about the substantial efforts that are needed in the field of water supply if food production is to be increased, present events are most difficult to .understand. Work on the great Eildon dam has been slowed. That dam on the Goulburn River in Victoria was to have been completed by September, 1955. The additional storage capacity that it will provide is expected to double the irrigated acreage in the rich food-producing Goulburn Valley and to boost annual production to £26,000,000, but lack of finance has brought the undertaking virtually to a standstill. It is only one of many projects throughout the Commonwealth for which adequate finance cannot be provided. Every State could submit its own examples of frustration, hardship and difficulty in completing urgent and essential national work. At the same time, extremely valuable and highly successful soldier settlement schemes throughout the Commonwealth are all feeling the sharp edgeof the economic pruning knife. In Queensland, due to lack of finance, the State Government is strugglingto meet its obligation to settlers under the Wandoan-Taroom land settlement scheme. For the same reason, it is extremely unlikely that any new work will be done on the Mareeba-Dimbulah tobacco-growing scheme and activity on the Tully Falls and Burdekin Riverschemes is also likely to be restricted.

The only remedy that the Government can offer for its economic problems is its naive belief in appeals by the Prime Minister - appeals to primary producers togrow more wheat - appeals consisting of millions of words, but leading to no positive action to assist primary producers to do the job. The Prime Minister’s approach reflects the fatal inability of thewhole Cabinet to face the problem of food production. Clearly, the only solution is more producers. If the number of primary producers can be increased,, greater output will be a logical sequence. The great success that has been achieved in war service land settlement schemes throughout the Commonwealth has proved that-; yet in Victoria alone there ure no less than 6,000 outstanding applications for war service land settlement blocks. The applicants have .all the necessary qualifications to become efficient farmers. They have had the necessary experience, and they are willing to undertake primary production as soon as holdings can be made available to ‘them. It is useless to place more settlers on the land unless they can be provided with everything that they require to do a good job. We must make sure that primary producers shall receive a fair reward for their efforts so that they will be able to pay for the labour that they require. Without additional labour, there can be no significant increase of primary production. Prices must be sufficiently high also to enable primary producers to provide their employees with adequate housing and all the other amenities that they need to make them happy and contented workers. It is estimated that approximately 70,000 rural workers have left the land in the last ten years. If conditions of employment on the land are improved in the way I have suggested, I am sure that rural workers will not be lacking.

We must not lose sight of the fact that the alarming decrease of primary production in this country has occurred during our most favorable seasons. Should a serious drought occur, not only would we have nothing to export, but also we should be struggling to feed our own people. The possibility that we shall be involved in war in a time of serious drought must not be overlooked. I think it was Henry Lawson who wrote -

An enemy at the harbour gate,

And a raging drought behind.

We all know what happened to Henry Lawson. Australia let Henry Lawson starve, but after his death a bronze statue was erected to his memory. In the days when Henry Lawson lived, the people of this country knew little about soil erosion and the other factors that have caused a decline of primary production. They did not heed Henry Lawson’s warning. After all, what could a mere poet know about soil erosion and national defence? But there is no such excuse for the Government to-day. The advice of experts is readily available to it. The late Dr. Brad field, Ion Idriess, William Hatfield, F. R. V. Timbrey, Brunsdon Fletcher, and many other authors have dealt at length with the problem of soil erosion and have suggested what they consider to be solutions to it. It is estimated that more than one-third of the land formerly under cultivation in Australia has been rendered useless by soil erosion, and this wastage is continuing at the rate of approximately 2,000,000 acres a year. Surely this problem demands our immediate attention. The Bradfield plan, the Idriess “ Boomerang” plan, and other proposals, should be exhaustively surveyed and immediate action taken, not merely to arrest, but also to remove for all time this menace that threatens to destroy vast areas of our continent. Experts appear to agree that the fundamental cause of the problem is to be found in the interior - the so-called dead heart of Australia.In more settled areas, soil erosion has been caused by overstocking and, in agricultural districts, particularly in the Mallee, it has been caused by incorrect methods of farming and the removal of trees, shrubs and other herbage which provide a natural binding for the soil. However, there are many other contributory causes. Most of them no doubt are known to the experts. Water conservation, reafforestation, irrigation, reticulation and education are all part and parcel of the solution. There are many other problems that must be solved if primary production is to be increased as we hope it will be. I have pointed out before that, even if the production drive were started now, significant results could not be expected for at least two years. Therefore, the two years of procrastination by this Government means that we shall be starting four years behind scratch in our efforts to tackle the problem.

I cannot find anything in the budget that will assist in any way to place our economy back on a stable basis. I cannot find anything that will encourage primary producers to co-operate in the Government’s efforts to increase primary production. I cannot find anything that will assist in any way to arrest inflation. That is my experience of this so-called “incentive” budget. I leave the matter there. In conclusion, I repeat that primary production is declining further and further every day and will continue to decline just so long as this Government remains in office. The only solution is a change of government. I am sure that after the next general election a Labour government will be elected to grapple with these problems and to restore our economy to a stable basis. The people are waiting for an opportunity to pass judgment on the Government for its maladministration of the affairs of the nation. They are eager to record their condemnation of its failure to honour its promises to put value back into the £1, to increase the purchasing power of wages, to reduce taxation, and to lower the cost of living. They will show their resentment against the Government in no uncertain manner as soon as they are given the opportunity to do so.

Western Australia

– It is a notable but regrettable fact that when Senator

Wordsworth was addressing the Senate a little while ago on the important subject of defence, notwithstanding that he is a distinguished authority on the subject, his speech was listened to by only a mere handful of Opposition senators and that when Senator Nicholls rose he immediately climbed on the back of the old horse that will not gallop - the unemployment horse - and completely ignored the most informative contribution to the debate that had been made by Senator Wordsworth. Senator Nicholls contended that published figures in relation to unemployment concealed the true position and that no public statements were being made on the subject. I refer the honorable senator to the public statement that wa3 made recently by the Prima Minister (Mr. Menzies) in which the right honorable gentleman said that on the 30th August seven persons in every 1,000 in the work force of Australia were drawing the unemployment benefit, while in the United Kingdom 21 out of every 1,000 were unemployed, and in Canada 41 per cent, of the work force was unemployed. The Prime Minister also directed attention to the fact that in 1937, when a prosperity loading was granted to the workers of Australia, 93 out of every 1,000 workers were unemployed. To add further point to my remarks I refer the honorable senator to the statement made last Sunday by Mr. Monk, the president of the Australian Council of Trades Unions, that in recent weeks the number of unemployed in Australia had been progressively and consistently reduced.

One purpose of a budget debate - probably not its least important purpose - is to afford to . the Opposition an opportunity to examine the financial plans of the Government and to criticize the whole range of its activities and particularly those points of policy and administration with which it is at variance, lt is the established practice that the Opposition, in expressing criticism of that kind, should exhibit a certain degree of unanimity, or at least present a consistent lino of thought. On this occasion, for political party purposes and for such purposes only, the Opposition decided that the budget must be attacked, but there appears to be little unanimity of thought among its members. The Opposition is confused and bewildered by the success that has attended the efforts of the Government to restore financial stability to Australia by the budget of last year and its associated measures. On this occasion the Opposition is confronted with a budget equally realistic and equally appropriate to the times and one which bids fair to meet with even more success than did the budget of last year. The frustraton of the Opposition has led to the emergence of unusual contradictions. The Leader of the Opposition in another place (Dr. Evatt) apparently suffered a great deal of mental anguish before he decided what particular line of criticism he should offer. His first statement, made on the morning of the 7th August, was to the effect that the budget would do nothing to control the inflationary forces that adversely affect our economy, and that, on the contrary, it would, in fact, strengthen those forces and result in even greater inflation. A week later, the right honorable gentleman changed his mind. He apparently decided that more political party capital could be gained by taking the line that the budget was deflationary to the degree that it would cause widespread unemployment. He dubbed it an “ unemployment budget “. The unemployment story was plugged by the Opposition night and day until, to the acute embarrassment of the members of the Labour party, Mr. Monk, the president of the Australian Council of Trades Unions, speaking without political bias and in sworn testimony before the court, averred that although there had been a re-adjustment in economic activity, which he said was still proceeding the economy of Australia was fundamentally sound. He added that there had been a notable increase of employment in heavy engineering, plant’ equipment and machinery, railway rolling stock, chemicals and fertilizers, the building industry, agricultural machinery, shipbuilding and repairs, aircraft manufacture and repair and in the munitions rector of industry. He also said that confidence in industry and in the stability of the economy was not being undermined. On the contrary, he said definitely that conditions were basically favorable for enterprise. That statement was not only a complete denial of the truth of many of the statements that have been made by members of the -Labour party but was also a significant commendation of the policy applied by this Government during the last twelve months. Notwithstanding the refutation contained in Mr. Monk’s statement, members of the Labour party, no doubt believing that they had been committed to a course of attack designed to undermine confidence, to create a depression psychology and instil fear into the minds of the people, persevered with it for some time in the vain hope that the constant repetition of their charges would ultimately make some impact on public opinion. They were apparently encouraged by the success of the tactics employed by the infamous German opagandists of earlier years.

When the statement on the budget and Estimates was read in this chamber there was another change of direction on the part of the Opposition. In a speech of one hour’s duration, the Leader of the Opposition (Senator McKenna) devoted 42 minutes of his time to a philosophic study of what he regarded to be the characteristics required for national leadership and political intelligence. The calm, calculated and unruffled exterior of the Leader of the Opposition failed completely to conceal the disappointment he obviously felt at the change that has taken place in the economic affairs of Australia since the budget was introduced; and he was compelled to restort to the old legal practice of talking about everything but the subject under discussion. The honorable senator knows that this is a good budget. He knows that the people realize that it is appropriate to the time and that it has been received by the Australian press with enthusiasm, notwithstanding the fact that during the last twelve months the press has not always been kind in its criticism of the financial measures of this Government. I content myself with reading only one press statement, because so many have already been read in this chamber. The Sydney Sunday Telegraph, in an editorial published in its issue of the 14th September, has had this to say about the budget -

The Australian economy is on the forward mardi again. And it’s not just spring fever. Nobody suggests that we are bounding into another boom - better so.

But with the new wool season well under way at price levels holding around the second best figures ever, retail trade definitely reviving, the note issues up and credit somewhat easier, the .Jeremiahs are at last on the run.

Confidence has returned, and the neverjustified fears of a depression are going back into cold storage.

The purpose of the budget has been plainly and simply, described by the Treasurer as financial policy designed to follow a middle course between extreme inflation on the one hand and unemployment on the other. It was drafted in 1952 to meet the conditions of 1952. It is a realistic budget which, on the one hand will avoid inflation, and on the other hand, will guard against the reaction that comes after inflation with its consequent dislocations and upsets.

The record of the Government during the last twelve months proves conclusively that during the next twelve months should any change of circumstance indicate that it is necessary for modifications of Government policy to be introduced, consistent with the Government’s long-range plan to introduce real stability into the economy and to contribute to the real progress of Australia, they will be promptly introduced. Modifications will be introduced as and when required. Honorable senators opposite have commented on Australia’s balance of trade, and have criticized the Government’s policy of import restrictions. It will be remembered that our overseas funds increased from approximately £500,000,000 to approximately £800,000,000. That increase was attributable largely to the exceptionally high prices that were obtained for our wool during one season. The reaction- to that increase of our overseas funds was an increase of overseas buying. That reaction was increased in intensity by a number of circumstances abroad, over which Australia had no control. I refer particularly to the contraction of markets for British goods, and the greater availability of shipping to convey goods to the Australian market. The net result was that our overseas balances were being run down too fast. Tn order to preserve them at a level consistent with safety, the Government introduced a system of quantitive restriction of imports. In this chamber last week. Senator Byrne attacked the Government’s policy of import restrictions. This evening, Senator Cole also referred to that policy. Senator Byrne contended that a down-turn of our imports of either raw materials or capital goods would be reflected by a slackening of activity throughout our whole economy, and that unemployment would .follow. No supporter of the Government needs to be convinced of the necessity for imports in an expanding economy. Indeed, I think it can be fairly claimed that the Government parties were insisting on the necessity to maintain imports when many members of the Opposition were resisting that view on the grounds that the use of imports could seriously jeopardize the Australian manufacturing industries and could adversely affect the employment position in this country. Incidentally, that opinion was directly opposed to the view that has been advanced by Senator Byrne.

The maintenance of a high intake of imports, or indeed of any intake of imports at all, depends necessarily on our ability to export goods in order to enable us to pay for the imports that we so badly need. It is obvious that Senator Byrne recognized that fact because, in an almost casual reference, he stated that we should need to import less if we produced more of such goods as tobacco, flax and cotton. The honorable senator also stated that if primary production were increased, more funds would be made available overseas, and as a result we would be able to purchase more. Nobody will quarrel with that proposition. It is a basic and elementary corollary that is recognized by every one. But fi. programme that cannot reach fruition for up to five years could not grapple with the present problem. The establishment of long-term correctives, however necessary, would fail completely to recognize the urgency of the position to-day. The very heart of the problem of international dealings is prompt settlement on due date. Great Britain can no longer extend to Australia or any other country the ‘trade credit that it extended in years gone by, when Australia was in its initial stage of development. Great Britain then occupied a powerful commercial position, and had ample funds readily available. However, there areother and more compelling reasons why we should now maintain trading equilibrium with the outside world. I remind the Senate of the decision of the Commonwealth finance Ministers, taken a few months ago, that the sterling bloc should be in balance with the remainder of the world by the-end of this year at the latest. The increased economic peril in the imbalance that has existed between the two great currency blocs in the postwar years has been recognized by the decision of the finance Ministers, which imposes on each of the Commonwealth nations the responsibility to stabilize its economy as soon as possible. Further, Australia is expanding probably at a faster rate than any other country.. That expansion requires the investment here of overseas capital, a fact that Senator Byrne acknowledged the other evening, but which, I imagine, would find little acceptance in the minds of many members of the Labour party, if their statements during this debate have been sincere. If capital is to be attracted to this country, surely it is necessary for us to demonstrate’ to the people who are most likely to invest here our solvency and our liquidity. A country that cannot pay its trade bills has as little chance of getting finance as has a business that cannot pay its creditors on the due date. It isnow, more than ever before, necessary that we should demonstrate to the world our liquidity and- solvency. It is difficult to reconcile the criticism of honorable senators opposite with the declared policy of the Australian Labour party on the important subjects of trade balance and import restrictions. They have expressed their belief in a policy which is identical substantially with the one that has been pursued by this Government in recent months. In a White Paperon full employment that was published in 1945 under the guiding influence of Mr. Dedman, who was then Minister for Post-war Reconstruction in the former Labour Government–

Senator Ashley:

– It will not be long before Mr. Dedman is again a member of the Parliament.


– I hope that Senator Ashley does not send himself silly by crystal-gazing. The White Paper contained the following statement : -

Australiahas always been a heavy importer of material s and, with an expanding national income, will continue to be so in the future. But the amount we can spend on imports’ is limited by the amount of export proceeds, together with reserves of overseas funds, which are available for this purpose.

That is, the necessity to maintain the export-import balance.

Senator Hendrickson:

– That is right.


– The statement continued -

Australia must be prepared for some fluctuations in the balance of payments. . . . Minor fluctuations in export income will, as in the past, be met by running down oversea reserves in poor export years, and building them up in good years.

I suggest that has been done in recent years. It has been a continuing experience throughout the history of the Australian economy.

Senator Hendrickson:

– Only under anti-Labour governments.


– Perhaps Senator Hendrickson did not listen very attentively. The statement went on to say -

In the past, necessary reductions in imports have usually been allowed to come about by permitting a fall in export incomes to result in reduced spending by export producers, thus bringing about unemployment and a general fall in incomes to the extent necessary to reduce imports to the level at which they could be paid for from export income. This deflationary method is inconsistent with a full employment policy, and serves the interests neither of the people of Australia nor of the people of the countries with which Australia trades. The Government will not countenance this method in future. Other means of reducing imports will thusbe required.

Honorable senators will notice that there was an insistence on the necessity to reduce imports. The statement continued -

If the deficit in the balance of payments is primarily due to a permanent decline in oversea demand for Australian products, and if it is not possible to restore export income by shifts of productive resources to meet changes in world demands, an alteration in the exchange rate may be the appropriate method of correction.

We have not yet come to that.

Senator Hendrickson:

– But the Government will come to it.


– Would thehonorable senator support it?

Senator Hendrickson:

– No !


– The statement went on -

If, however, the fall in export income is one which, although prolonged and severe, is not permanent, the more appropriate method may be quantitative restriction of imports.

It will be seen that the policy of the Labour party, as laid down in that White-. Paper is letter for letter the policy that has been pursued by this Government. It can only be concluded that the criticism of honorable senators opposite has been prompted by their desire to extract political capital from the present situation, even at the cost of denying Labour’s policy.

Any study at all of the subject of imports, trade balances, and import-export balance leads us inexorably back to the problem of production in this country. It can be claimed that, during its short period in office, the Government has made remarkable headway. I am convinced that even Senator Ashley would agree that the progress in relation to coal production has been remarkable. The production of steel, iron, superphosphate, cement, timber and bricks has also been most satisfactory. Furthermore, within the last twelve months, £85,000,000 of new capital has been attracted to this country for investment in industries that will make valuable contributions to our economy. A few years ago, under the former Labour Government, now fortunately deceased, petrol was rationed in this country.. To-day, however, all of the major petrol companies are building, or have in prospect refineries, the combined capacity of which will meet the requirements of the Australian market. This will do away entirely with the necessity to expend our overseas funds to purchase petrol.

Opposition senators interjecting,


– Order ! I ask. honorable senators on my left to refrain from interjecting.


– Primary products will remain the traditional exports of this country, but I believe that we should endeavour to broaden the field that will add to our quantum of exports.

It has been suggested that the new uranium strikes at Radium Hill and Rum Jungle may provide some amelioration of the position. Even the mention of those two finds emphasizes the fact that the mineral resources of this country are largely untapped. We must encourage and intensify the search for such important industrial and strategic minerals as lead, tungsten, manganese and oil, because the export of minerals will have an immediate effect on our overseas balances. As I have already stated, the problem is not restricted to finding over-seas funds; we must provide them quickly. Upon the solution of our export-import problem depends tuc maintenance of full employment in this country, the expansion and development of the economy, the increase in the population by immigration as well as the efficient defence of this country which was so capably dealt with by Senator Wordsworth. The defence of this country is necessary so that we may hold it as an integral part of the free world. The progress that has been made by the Government in providing for the basic needs of immigration, employment and defence has led me to believe that the budget will provide a solution of our difficul He? and I enthusiastically support it.

Senator FRASER:
From the misstatements that have been made by Government supporters, particularly Senator Paltridge, it would appear that the Government” is running a lost race. I remember the time when honorable senators opposite, referred to the astronomical figures of the last Chifley budget. The Government promised the electors that it would reduce taxation and put value, back into the £1. Senator Wright, in speaking on the proposed appropriation of £1,087,000 for the administration of prices control by the States, said that the Labour government left froth and bubble behind it. The last Labour government’s budget totalled £567,000,000. The people will not be misled at the next election. Instead of reducing taxation the Government has increased it by £474,000,000. During his budget speech the Treasurer (Sir Arthur Fadden · Western Australia! [10.46].

, said -

A very different outlook prevails to-day and there is in some quarters a good deal of fear about the economic future. I believe it to be basically unfounded, but the fact that it exists i.i something we cannot ignore.

The Government has failed miserably. Senator Wright said that it inherited the bubble and froth of the Labour government. The last budget of the Labour Government was condemned by the present Government parties. The present budget exceeds £J,0C0,0C0,C00.

Senator Scott:

– The honorable senator is wrong. The amount is under £1,000,000,000.

Senator FRASER:

– I am not wrong. Senator Maher said that we should not attempt to control prices because prices followed wages. Any one in his right senses know’s that the basic wage is assessed by the Courts. During his policy speech the Prime Minister said -

Every housewife knows how grievous this problem is. The statistician will conservatively allow that the pound of 1039 is now worth only 12s. 2d. in purchasing power. But on the true cost of household requirements it would be nearer the mark to say that it is worth only 10s. The greatest task, therefore, is to get value back into the pound, that is, to get prices down.

Prices do not follow wages. The basic wage is not increased in proportion to increases in prices for three months after those increases have occurred. In addition, since wages and prices have been increasing, the margins for skilled workers have not increased in many industries and that has caused a great deal of trouble. In order to obtain increased margins, skilled workers must approach the Arbitration Court and substantiate their claims. That is a very difficult procedure. Margins are not increased in the same way as is the basic wage. In 1939 the basic wage was £3 19s. In August, 1950, it rose to £C 18s. ; in November, 1950, it was £7 2s. ; in December, 1950, £8 2s. ; in February. 1951, £8 9s.; in May, 1951, £8 16s.: in August. 1951. £9 9e. It is now £11 7s. 8d. Those figures illustrate the extent to which the Government has put value back into the £1. From time to time the Opposition has stressed the necessity for prices control. During the war every visitor to this country from the United Kingdom, the United States of America or New Zealand said that under a Labour government we had the best regulated economy in the world.

Senator Maher said that the present economic position was the responsibility of the trade union movement. He did not blame the employers.

We hear a lot about communism at present. Yesterday, in this chamber, I asked the Attorney-General a question concerning the delegation to the Peking conference.I asked if the Government had discussed with the Government of New Zealand the passports which had been issued to the delegates from New Zealand. The Minister said that such discussions had not taken place.

The responsibility for the economic position of. this country is solely that of the Government, which has failed to give effect to any policy that would curtail price increases or standardize wages. In the course of this debate, honorable senators have referred to Amalgamated Wireless (Australasia) Limited, Commonwealth Oil Refineries Limited and the Commonwealth shipping line. The Government set itself out to give certain plums to its friends. It has given £5,000,000 to the pastoralists which it could well have given to the age and invalid pensioners. I do not know whether the Commonwealth has sold its ships or not. In reply to a question which he asked in this chamber yesterday, Senator Ashley was informed that the ships had not been sold. At page553 of Volume II. of the official History of. Australia in the War, the following passage appears: -

Chiefly through public outcry against profiteering and threats, the British Government was, in January, 1916, forced to ado pt two measures. The first was to cutdown unnecessary expenditure, and the second was to transfer the main control of merchant shipping froma number of separate departments and committees of the Admiralty and the Board of Trade to a central shipping control committee.

Debate interrupted.

page 1983



– Order ! In conformity with the sessional order relating to the adjournment of the Senate, I. formally put the question -

That the Senate do now adjourn.

Question resolved in the affirmative.

page 1983


The following papers were pre sented : -

Lands Acquisition Act - Land acquired for Department of Civil Aviation purposes - Merimbula, New South Wales.

Public Service Act - Appointments - Department -

Commerce and Agriculture - A. N. Egan. Health- K. A. Steele.

Science and Industry Endowment Act - Report by the Auditor-General on the Accounts of the Science and Industry Endowment Fund for year 1951-52.

Senate adjourned at 11 p.m.

Cite as: Australia, Senate, Debates, 24 September 1952, viewed 22 October 2017, <>.