21st Parliament · 1st Session
The President (Senator the Hon. A. H. McMullin) took the chair at 11 a.m., and read prayers.
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– Did the Minister for Shipping and Transport investigate the marketing of Australian-produced goods in Britain in the early part of this year? If he did, has he furnished a report on the matter to the Prime Minister? “Will the report be tabled in the Senate?
– While I was in the United Kingdom, I did take the opportunity to investigate the marketing of Australian goods. Various ‘ reports have .been submitted to the Cabinet from time to time, and as matters of interest arise, reports will be made direct to the Senate.
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– Has the Minister for National Development seen the report of a statement, by the MurrayMurrumbidgee Development Committee to the effect that widespread erosion has taken, place in the Snowy Mountains catchment area and that this erosion, if allowed to continue, would seriously damage the Snowy Mountains hydro-electric project? Can the Minister state the views of his department on the problem? Can he inform the Senate what action his department is taking or will take to overcome the problem ?
– The committee to which the honorable senator has referred did me the courtesy of sending me a copy of its report, which I have sent to the Snowy Mountains Hydro-electric Authority for its investigation. Speaking as a layman, I say that it is a good report, but I point out that many of the problems that arise in connexion with the Snowy Mountains scheme are not news to the Snowy . Mountains Hydro-electric Authority. The problem of soD erosion has been dealt with since the work of the authority commenced. The erosion can be divided into two categories. There is the erosion that has been occurring for many years as a result of excessive use of snow leases and other areas in the highest part of the Snowy Mountains. That is a very old problem. Then there is the erosion that has occurred as a result of the work of the Snowy Mountains Hydro-electric Authority itself. As the authority does work that is likely to cause erosion, it forthwith undertakes operations designed to stop erosion. The erosion which results from over-grazing and bush fires on the snow leases in the higher areas is a problem which requires a joint approach by the governmental authorities concerned.
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– As the Minister for Shipping and Transport is uo doubt aware, publicity has been given to the fact that a new, modern train is now running between Sydney and Canberra. In view of the complaints that have been made by people in other States who have visited the Australian Capital Territory by train in the past, will the Minister take appropriate action to see chat this new service is well advertised in other States, so that people who wish to visit the national capital may know that the past discomforts have been, to a large extent, removed?
– I appreciate the importance of the question asked by the honorable senator, because from time to time I have the opportunity to examine that portion of the line between Queanbeyan and Canberra, which belongs to the Commonwealth. Only this morning, I had a report from the Commissioner which indicated that, every quarter, we incur a considerable loss in respect of that part of the railway. I hope that, with the new diesel train, the result will be the same as in other parts of Australia where diesel services have been provided, and that the loss will be turned into a profit. To date, the New South Wales Government has been giving very wide publicity to this new service, and I shall see that we do all that we can to advertise its efficiency.
– I preface a question to the Minister for Shipping and Transport by stating that some time ago, on behalf of the Bishop of Kalgoorlie, Dr, C. E. Muschamp, I requested that a railway carriage be made available on the Trans-Australia railway, suitably fitted as a travelling chapel for the Use of the clergy when visiting the remote towns on that line. At the time, the Minister informed me that no carriage was available for this purpose but that I should renew my representations later. I now ask whether a carriage has been made available for the purpose I have mentioned?
– Traffic on the Commonwealth railways, particularly on the line from. Port Pirie and Kalgoorlie, has increased enormously, due to the provision of a faster and more efficient service and better accommodation. The Commonwealth Railways Commissioner recently stated in his reports that sufficient carriages are not available to cope with the number of persons who desire to travel on that railway. The repair of some old carriages has been so rushed in order to meet the emergency that complaints about the condition of the carriages have been received from passengers. However, the commissioner has assured me that he is in agreement with the honorable senator’s proposition and that, as soon as possible, he will make a carriage available for this very important purpose.
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– I address a question to the Minister for Shipping and Transport relative to a statement attributed by the press to Mr. Justice Foster yesterday, to the effect that seamen are now receiving remuneration at the rate of 62 hours’ pay for a total of 28 hours’ work a week. I ask the Minister whether that statement was actually made by the judge, whether he can give an explanation of that anomalous position, and also whether he can give the Senate an appreciation of the effect of that situation on freight rates.
– It is obvious that the restrictive practices followed by the representatives of the Seamen’s Union, particularly, have had a very disastrous effect on freight rates on the Australian coast.
– The rates are to rise by 10 per cent.
– As Senator Ashley has suggested, a 10 per cent, rise on overseas freights is a considerable increase, and I think it is regrettable and unfortunate at this time. I remind the Senate that, in 1939, the freight rate on the Australian coast, for general cargo from Melbourne to Sydney, was £1 a ton. That has increased to £6 13s. a ton. Having regard to what was going on, and as the result of an examination of costs, it was obvious that the excessive charges for loading and unloading, and the restrictive practices indulged in by the seamen, called for appropriate action. Honorable senators will remember that I took the first opportunity I could to have (the Navigation -Act amended, in order that these problems might be placed ‘Under the control of ja -judge of the Arbitration Court, ‘arbitration -still ,being supported by -.both the main political parties in .this country. I am pleased that we took ‘such action <on that occasion, .and I was very surprised that -members of the Opposition :saW .-fit -to vote against ‘.that legislation. I did see .the report in the press last week concerning .the ‘draft award made -by .the judge, ‘and wishing to have (full ‘details, I asked the manager of the Australian Shipping ‘Board to state in detail how these ‘hours were made up. Yesterday, he sent me a report that is of very -great interest, having regard to the importance of sea transport ito the general economy. .T,he report (reads as if oliows : -
Referring to Mie judge’s statement that seamen are only doing 28 hours work for 04 hours pay, the position ,is that their wages , are based on a 40-hour week, but they are also entitled to two days off a week in their home port which, -in ‘most eases, cannot “be given, and are ,therefore -paid ‘for at time ;and a half, equivalent to :24 ‘hours .at .ordinary tate, or :a total of (i4 hours. In regard to actual hours of work, the judge’s Statement -was based on evidence placed ‘before ‘him by shipowners, including .ourselves. Although the old award provided -for an eight-hour .day to -be .worked between 7 a.m. and 5 p.m. in .port, the men get an hour for “breakfast and an hour for mid-day -meal, hut practices have .crept into the industry whereby .they ,take smoke-oh breaks of half-an-hour ‘in the morning and “half-an-hour in the .afternoon and cease work for ‘Che day ‘at 4 p:m. or in some -ships -even before that time, ‘in practice it lis .’seldom that they commence promptly at the hour at starting time and after meal-breaks, and another ‘five or tcn minutes is lost at each resumption. They also ta’ke ‘“.washing-time “ prior ito ceasing work before the .meal-breaks mid .before knocking off for the day.’ ,Once a ‘fortnight, -when ‘they are paid “their wages, they -demand the afternoon -off, .ostensibly for ohe purpose ;of (sending -money home ‘and so on, and once .a month - as .is now provided .in the award - they get the morning off for their regular stop-work meeting. In ‘the aggregate, these non-working periods ‘reduce the average working time spread over a seven-day -week to a .total :of >28 hours, or four hours a day.
At; sea where -the men are -keeping watches, although .the watch-keepers get smoke-oh “breaks, the overall time lost is not so .great in the aggregate, ‘and the average working time spread over -a seven-day -week totals approximately 35 -hours, or five hours a -day. -But .few interstate ships are ,at sea for seven days consecutively and consequently, over all the ‘28-hour working week is “the usual thing.
Although ‘smoke-ohs “ tare not provided for in the current .award, they have been the practice in interstate -ships ‘for many ‘years, land the ‘new ‘award now -.proposes to ‘give recognition :to them ‘hut on the pre-war basis :of fifteen minutes .only, morning .and afternoon. Other practices,, however, such as early knocking-off and -late starting ‘have crept in during .and since ‘the war, often by pressure on masters and officers lin .individual ships and .have not .come to the .shipowner’s notice until they have become an established fact in that -particular ‘ship. Seamen who have served in that vessel have ‘then gone ‘to other ships -and used the ‘precedent ito (extend ‘the -practice.
That condition lis ‘deplorable, and has a disastrous effect on -freight -rates. The action taken by this ‘Government ‘to place these matters under tie control .of the Arbitration Court - although opposed by Senator Ashley - .was a .step in the .right direction.
– I address a question to the Minister “for .”Shipping and Transport similar -to the one ‘he has just answered relating to freight rates. It is a matter of perhaps more significance to Western Australia than ito the ‘other States. .If, as appears likely if rom recent ^announcements in the press, overseas shipping freight rates rise, will the ‘Minister inform -rae ‘Whether ;suc’h ‘rise will have any consequential effect on our intra-state and interstate shipping freight -rates?
– If we can get the seamen and the waterside workers “to work, we will be able to get the freight rates down. The ‘draft award -is being studied in detail., and :it is hoped that when the report of the Stevedoring Industry ‘Committee o’f ‘Inquiry -is presented, the ‘Government will be .able to ta’ke appropriate action to see -&at freight rates are reduced.
– When -win .that ..be.?
– SE hope this year. Of .course, the :question of freight rates on overseas ships is quite -different from that of the rates >on .ships trading on ‘.the Australian coast. The Australian Shipping Board does not -operate ‘overseas. It must be realized that since 1939 the freight rates -on our :coasta’l “ships have arisen considerably more thiam .have those con overseas (ships. .If we can .get the judges ‘to restore :common sense and decent practices in these two industries, wewillbeinapositiontomakeavery substantialreductionoffreight rates.
SenatorO’BYRNE.- Is it not a fact that overseas vessels are manned bycrewswhicharesignedon in other parts ofthe world,and that the attackon thepr actices of seamen on the Australiancoast doesnot justify the proposed10 percent. increase of overseas shipping freights, which the Ministeris apparently endeavouringto justify?
– It is hardly f airplayforSenatorO’Byrne to say that I am doingmy best to justifythe increase. Ihavedone all inmy powertosee what canbe done to reduce shipping freight rates. The plain fact is that we are not working aswe should be working. Overseas ships work under entirely different conditions from those on the Australian coast,andwehave nocontrol over them.
-Thequestion that I wish to directtotheMinister for Shipping and Transport issimilar to the one which was asked by SenatorWright and which Ihadintendedto askmyself. Perhaps Imight prefacemy remarksby stating thatwhile Idonot condone, in any way, the frivolous strikes and disputes-
– Order ! Isuggest that thehonorable senator askhis question.
SenatorKENDALL. - Supplementary to thequestionaskedby Senator Wright, andon thebasis of thefigures given by the Minister for Shippingand Transport inreply tothehonorable senator,would theMinister agree thatsuchaposition hasbeenbroughtaboutby thefact that shipowners,particularly the executives ofthe Commonwealthshipping line, frequently overruledecisions and discip- linaryaction takenby their shipmasters? If so, willthe Minister take action, so far as government ships are concerned, toensure thatshipmasters aresupported in their attempts to maintain discipline instead ofbeing penalizedastheyare frequentlyat present.
– Inmy close association with theformergeneral manager of the Australian Shipping
Board,Mr. Dewey, and hisassistant, Mr. Larkins, who is now acting general manager, I have been keptinformed from time totime ona number ofissues such as thosementionedby the honorable senator. Ibelieve thatthey have insisted upondiscipline being observed and upon the decisionsof themasters beingupheld. I havehad brought to mynotice cases in which the masters of shipsbelieved that theyhad notreceived a fair deal. I promptlyhadthosematters investigated, and onewas submitted to Judge Foster intheCommonwealthCourtof Conciliation andArbitration. Aletter was subsequentlyreceivedfrom the Merchant ServiceGuild indicatingthat it was quite satisfiedafter the matterhad been submitted to a judge of the Arbitration Court and his decisionhad been given on it. I have statedfrom time to timethat the masters ofthe ships have to be supported and that discipline must be observed.If therehas been any laxity inan isolated case, I am pleased that Senator Kendallhas directedmy attention to : the matter. I can assure him that disciplinewill be observed and that masters willbe supported.
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– As agricultural shows serve a very useful purpose by carrying on essential functionsthroughout Aus- tralia, andasthey are non-profit making organizations,which form an important partofthe community life, will the Ministerrepresenting the Treasurer urge the right honorable gentleman to approve the request by show councils that donationsto show societies shall be allowable deductions for income tax purposes?
– Knowing the honorable senator’s greatinterest in this matter, Ishall personally convey his representationsto the Treasurer and requestthattheybe considered when the next budget is being prepared.
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– I wish to direct aquestion to the Ministerrepresenting the Postmaster-General, in thelight of the information that he supplied tome yesterdayin answer toa question that I had asked, upon notice,in relation to the curtailment of children’s sessions broadcast fromthe studios of the Australian Broadcasting Commission in Perth. Will the Minister inform me whether, when the lady who was in charge of the “ Kindergarten of the Air “ session asked to be relieved of her dutieson two days weekly, any request was made to the Kindergarten Union of Western Australia to provide teachers on those- days? Has cognizance been takenof the protests that have been made, and the petitions that have been presented by children in connexion with the curtailment of the sessions and of the activities of the Argonauts Club? Since thechildren’s sessions have been on a national basis, the friendly, pleasant, Western Australian feeling seems to have gone fromthem, and the children regret it very much. I should like to know what saving, ifany, has been made to the Australian Broadcasting Commission, what saving in salaries has been made, and howmany people have been displaced from their jobs?
– As replies; to the honorable senator’s questions will involve a considerable amount of research, I shall place them before the PostmasterGeneral and ask him to give the honorable senator a considered reply.
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– Can the Minister representing the Ministerfor Commerce and Agriculture say whetherthe precise terms of the stabilization scheme for the dried fruits industry are yet available for study by honorable senators? If they are not yet available, can he say when they are likely to be ready for honorable senators to study?
– That matter is now being examined on a departmental level. I hope that the recommendations of the officers will be available about the end of this month.
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– Will the AttorneyGeneral say whether it isdue to good management on the part of the tory Government that, during the present election campaign in Victoria, certain evidencegiventhree months ago in camera before the Royal Commission on Espionage is now being published for the first time ?
– I most emphatically repudiate the suggestion that lies behind the honorable senator’s question. The releaseofevidencegiven before the royal commission is a matter entirely in the hands of the royalcommissioners. Certain evidence was given in camera, andthe commissioners have decided to release it. Itwas proper forthem to release itat some time or other, and they have now done so. That action was taken by the royal commissioners themselves. No- one else has had a hand in it. Senator Grant.- It was good timing.
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– On the 4th May, Senator Seward asked a questionconcerning rural automatictelephone exchanges. Ihave how received from the Postmaster-General the following reply to the honorable senators question: -
The funds allotted for the purchase and installation of automatic telephone equipment are related to the total approved by Parliament for the overallworks programmeof the post office in any one year . This programme must cater for allclasses of installations in country districts and metropolitanareas. The installation of a rural automatic exchange represents only a smallproportion of the total work necessary to establish an exchange network.Additionaltrunk lines must be provided from the rural automatic exchange to the controlling exchange whilst the standard of construction of the subscribers lines has to be raised. This work of upgradingthe lines of itself involves considerableeffort and the expenditure of substantial amounts of money on poles, wire, cable, telephones, instruments and labour. Moreover, thedepartment’s overall resources must cater for additional trunk lines, the extension of existing exchanges and the provision ofnew ones, additional radio and. long line equipment, new pole routes and underground cables and the installation of subscribers services in metropolitan and country areas. The department has not overlooked the needs of Western Australia, and, having regard toall factors, progress there has been equal to thatof other States. The honorable senator isassuredthat in framing the programmeof works of 1955-56, provision will bemade for the installation of a reasonablenumberofautomatic exchanges in Western Australia.
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– Is the Minister representing the Postmaster-General awareof the conditionsunderwhich themembers of the staffare working in the post office at Railton, Tasmania ? They have occupied temporary premises fora number of years. Can the Minister say when it is expected that thenew post office will be erected on the site purchased for the purposesome years ago?
-I am not able to give the honorable senator a reply to his question immediately, but I shall submit it to the Postmaster-General and obtain a considered reply.
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– Will the Minister f or Trade and Customs inform the Senate whether it is a factas stated in the press, that regardless of the drop in the price of tea in Ceylon, Australian housewives andother consumers can expect no relieffor two to three months from the high price of tea? The reason ostensibly, is that the stocks in hand were bought at a high price. If that is correct, will the Minister ensure that, in future, this process will work in reverse, and that when a rise in the price of an essential commodity is announced, it will not take effect until stocks bought at the lower price are exhausted?
– The proposition inherent in the honorable senator’s question has already been put into force by the Government.Some time elapses before a variationof the price of a commodity takeseffect,whether it is up or down.On occasions when the price of tea has risen, tea instockhas been sold at the lower price. That has been the practice of the Tea Control Board. .
Shipping.
-In viewof the previousstatement of the Minister for Shippingand Transport onthe subject of shipping, will he inform the Senate what profit theCommonwealth shipping line made on interstate trading in the financial year 1953-54?What profit did variousinterstate shipping companies make, and what dividend did they pay to their shareholders ? Does the Minister know of any major interstate shipping company, trading on the Australian coast, thatdid not make a profit last year ?
– I have kept a close watch on the matter to which the honorable senator has referred.
– That is about all the Minister could do.
-From my observations,the only Minister who made a loss on the Commonwealth shipping line was Senator Ashley. Obviously, a man of socialistic tendencies is not concerned about profits being made for a government shipping line. His attitude is different when he is looking after his own interests. The Australian Shipping Board has made a modest profit for the last three years. As the private steamship companies charge the same freight rates as the Commonwealth shipping line, if the former have made a substantial profit it is because they are more efficient than is the Commonwealth line. But I am satisfied that their margin of profit has been reasonable. Of course, the socialists are alwayseager to raise the subject of exorbitant profits. They fail to realize that most of the profit that has been made by private shipping companies has been made on investments outside shipping. According to a recent newspaper report, although a well known shipping company made a nett profit for the year, unfortunately the major portion of its shipping transactions resulted in a loss.
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asked the Minister representing the Minister for SocialServices, upon notice -
In connexion with the payment of pensions to widows with dependent children, will the Minister consider raising the limit of permissible income to such widows to the equivalent of the basic wage?
– The Minister for Social Services has supplied the following answer to the honorable senator’s question: -
The honorable senator’s question involves Government policy which it is not usual to disclose in replying to questions. It may be explained, however, that the permissible incomefor widows with dependent children is at present £310s. a week plus 10s. in respect of each dependent child under sixteen years. A widow with, say, two children may therefore Have an income of £4 10s. a week; apart from child endowment of 15s., and receive the full pension of £3 l5s. a week, making a total of £9 a week.
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– I lay on the table the following paper: -
Stevedoring Industry Act - Australian Stevedoring Industry Board - Fifth Annual Report and financial accounts, for year 1953-54.
In a covering letter, the chairman of the board has made the following statement. -
In the light of the setting up byyour government of a committee of inquiry to inquire into and report upon the facts relating to a number of matters, including the function of the stevedoring industry, it was thought proper that the report should be recast so as to exclude matters which would be the subject of disputation before the committee. Accordingly, the contentshave been limited to the financial accounts, summary of strikes and stoppages and the usual statistical information.
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Bill received from the House of Represenatives.
Standing Orders suspended. Bill. (on motion by Senator Spooner) read a first time.
– I move-
That the bill be nowread a second time.
The purpose of this bill is to authorize the borrowing of a sum of 54,500,000 dollars from the International Bank for Reconstruction and Development, in accordance with the loan agreement con- cluded with the bank on the 18 th March last. This is the fourth loan Australia has obtained from the International Bank and brings the total of our borrowing arrangements with the bank to 258,500,000 dollars. The first loan of 100,000,000 dollars, obtained in August, 1950, was fully usedby the end of 1953, and the second loan of 50,000,000 dollars by September last year. Import licences have already been issued for the full amount of the third loan of 54,000,000 dollars made twelve months ago, and the greater part of the equipment licensed under this loan has been imported into Australia.
The new 54,500,000 dollar loan will enablelicences to be issued for further imports of a range of essential capital equipment from the dollar area and will ensure that we have the dollars to pay for a continuing supply of this equipment until 195 6. Thefull text of the new loan agreement is reproduced in the schedule to the bill now before the Senate. The text of the loan regulations referred to in the agreement may be found in the second schedule to the Loan (International Bank for Reconstruction and Development) Act1954. The Government believes that a measure of, external financial assistance is desirable, if a satisfactory rate of development of. Australia’s economic resources is to be maintained. Although the bulk of the resources, both financial and material, required for our development is found locally, imported equipment of various kinds is essential for expansion and. modernization in many fields. Thelarger part of these imports comes from nondollar sources. There remains, however some vital equipment which canbe obtained only from the dollar area, and International Bank finance provides additional dollars to pay for part of this equipment.
Honorable senators willbe interested to hear a few figures which high-light the uses to which the first three International Bank loans have been put, and which indicate the valuable contribution these loans have made and are still making to our economic progress. One hundred and ninety-four million dollars of the total of 204,000,000 dollars provided under these loans has already been used and we expect the balance to be used over the next six months. Of the total, more than 60,000,000 dollars, or almost one-third; has been allocated to the purchase of tractors, agricultural machinery and earth-moving equipment for the improvement of farming techniqueson existing farms and the opening up of new lands. Recent marked improvements in productivity in our primary industries undoubtedly have been due, in no small measure, to the increased supply of modern American farming equipment, such as pick-up hay balers, combine, forage and other harvesting machinery and specialized tractors.
Almost 20,000,000 dollars has been allocated to the modernization of railways. A large proportion of this has been used to pay for components for diesel electric locomotives, the operations of which have resulted in big economies and improved services in the railway using them. About 30,000,000 dollars has been spent on electrical equipment, mainly package power plants. These plants have been set up in areas where acute power shortages were previously dislocating industrial activity. Import licences valued at about 30,000,000 dollars have been issued for tractors and road construction equipment, and for trucks and components for the manufacture of trucks in Australia. Twelve modern long-range aircraft and spares, worth 27,000,000”dollars, for use on both our overseas and domestic air routes, are being paid for out of the proceeds of the second and third loans. The forestry and rnining industries have been allotted about 5,000,000 dollars and 10,000,000 dollars respectively, and about 20,000,000 dollars has been, or will be, used to pay for a wide variety of equipment for the modernization and expansion of our manufacturing industries.
Every bit of the equipment obtained under our International Bank loans is essential. Much of it is being used to assist export, production, not only directly, as in agriculture, mining, and various secondary industries, but also indirectly, by supplying cheaper power and transport. The Australian economy to-day is markedly more efficient as a result of the goods paid for with International Bank finance. The fourth loan will ensure continued access by public authorities and private industry to that productive equipment and technique which is available, generally speaking, only in the United States and Canada.
The new loan is for a period of fifteen years, the same period as for the third loan, but the interest rate of 4f per cent. per annum is $ per cent, less than the rate on the third loan. Interest is payable half-yearly on the amount of the loan withdrawn and outstanding from time to time, and the interest charge includes the 1 per cent, commission which, under its articles of agreement, the bank is required to charge and pay to its reserves. A commitment charge of £ per cent, per annum is payable half-yearly on the amount undrawn from time to time. This charge is to accrue from the date the loan becomes available or the 17th May, 1955, whichever is the earlier. Repayments of principal do not commence until three years after signature, the first principal repayment falling due on the 15th March, 1958. Payments of interest and principal will then be made halfyearly in accordance with an amortization schedule on a fixed annuity basis. The final payment will fall due on the 15th March, 1970. Under the loan agreement, once the full amount of the loan has been withdrawn, and until amortization payments commence in 195S, interest will amount to 2,520,000 dollars, or £A.1,125,000 per annum; from 1958 onwards annual payments of interest and principal combined will amount to 5,790,000 dollars or £A.2,585,000.
In general, the other clauses of the new loan agreement are similar to those in the 1950, 1952 and 1954 loan agreements, each of which received the approval of the Parliament; and the terms and conditions of the present loan to Australia are in line with those of recent International Bank loans to other countries. There is, however, one feature outside the loan agreement to which I wish to direct the attention of honorable senators. As was indicated in the press announcement of the loan, the International Bank has arranged to sell, without its guarantee, 10,400,000 dollars of the loan to eleven private banks in the United States. This amount represents those parts of the loan which are repayable between March, 195S, and September, 1960. The sale of the earlier maturities to commercial banks is now common to almost all loans made by the International Bank, although the number of banks concerned on this occasion is the largest number ever to participate in such a transaction. These sales to private banks have advantages for the International Bank’s borrowers, as well as for the bank itself. They increase the bank’s loanable funds and, consequently, the number and size of the loans the bank may make, and they reduce the cost to the borrower because, when the bank arranges sales without its guarantee, it forgoes portion of the interest which would otherwise be payable. The sales provide, of course, additional evidence of the strength of our credit standing in the United States.
As with previous International Bank loans, it is intended to pay the Australian currency proceeds of our fourth loan into the National Debt Sinking Fund. This is provided for in clause 6 of the bill, and clause 7 requires the National Debt Commission to meet repayments of principal to the International Bank as they fall due. In effect, therefore, the loan provides its own sinking fund. Payments of interest and other charges are to be met from the Consolidated Revenue Fund. This is provided for in clause 8. Clause 9 exempts this loan from certain provisions of the National Debt Sinking Fund Act. This is necessary because, otherwise, the Australian Government would be obliged to make normal Sinking Fund contributions. Schedule 2 of the loan agreement describes the development programmes to which the equipment financed under the loan will contribute. It also gives examples of the types of equipment which will be financed from the proceeds of the loan.
Although the goods to be procured have not, as yet, been precisely determined, an allocation of the new 54,500,000 dollars loan among the six programmes has been tentatively agreed with the International Bank. This tentative allocation, which may be varied from time to time with the agreement of the bank, as the needs of importers become clearer, is as follows : -
As was done in respect of earlier loans, agriculture will receive a substantial share of the total. Although much of the equipment needed to develop new areas and increase output from existing holdings can be obtained either from Australian manufacture or from suppliers in countries outside the dollar area, there are certain types of tractors and other farm machinery which are available only from the United States and Canada. . The loan will ensure that our producers do not suffer by lack of access to the latest technological developments in the agricultural machinery field. Tractors and logging equipment for the forestry industry are also eligible for International Bank finance. Imports of electricity generating equipment, especially package power plants, financed under our first and second International Bank loans, together with generating plant obtained from the United Kingdom and Europe, have been successful in eliminating the acute peak-load shortages which hampered production and caused so much inconvenience during post-war years. Although demand for electric power continues to expand, the bulk of new generating equipment is being supplied from the traditional non-dollar sources, and consequently the requirements from the dollar area are now small.
As was the case in respect of the third loan, transport equipment represents relatively a much larger proportion of the total value of the goods to be financed under the present loan than under the first two borrowings from the International Bank. Honorable senators will readily appreciate the vital need to expand and improve transport facilities by air, road and rail in a contingent as large as ours, and with widely scattered centres of population and production. Moreover, Australia’s geographical position, at a considerable distance from existing and potential markets, emphasises our dependence upon efficient international air communications. The road transport programme, for which an amount of 14,000,000 dollars has been tentatively allocated, includes, not only equipment for the construction and maintenance of roads and bridges, but also additions to and replacements of this country’s fleet of trucks. The amount set aside for the railway programme will be used largely to purchase components for the manufacture of diesel electric locomotives and diesel rail cars in Australia.
Because the value of an air service depends largely on the performance and efficiency of the aircraft used, it is important that Australian airlines should be in a position to take advantage of improvements in aircraft design and performance. For this reason it will he recalled that aircraft for Qantas were included in the last bank loan to enable Qantas to meet its expanded overseas route commitments in competition with other international airline operators. The present loan programme will complete a further stage in Qantas’s re-equipment with modern aircraft. Some honorable senators may be wondering why the Government proposes to sanction the expenditure of dollars on aircraft, in view of the splendid achievements of British aircraft designers. I assure the Senate that the new types of aircraft which will become available from the United Kingdom over the next few years have not been overlooked. Certain Australian airlines have already placed orders for some of these. However, delivery of the aircraft covered under the loan will be completed early in 1956 in advance of similar-purpose British aircraft.
An amount of 7,000,000 dollars has been tentatively allocated to an industrial development programme. This is intended to meet most of the needs for essential dollar capital equipment in the iron and steel, food processing, mining and engineering industries. Investment in the manufacturing field is undertaken largely by private enterprise, and the development plans of private firms at any given time are in varying stages of formulation and execution. This has been recognized by the bank and, in order to provide a measure of flexibility, a fixed sum has not been allocated to each sector of this programme.
Any sections of the Australian economy will benefit directly from the loan, and all sections will benefit indirectly from the improvement in the productive capacity which it will make possible. Efforts to expand export production will be aided by the loan which should also help to reduce Australia’s dependence upon imports. By and large it should enable
Australian industries to become more efficient producers. There will be no difference in operating procedures between the present and earlier International Bank loans. 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 importers should submit applications to that department. As was provided in respect of previous loans, the importer will pay for the goods supplied through normal banking channels.
I make it clear that the new loan does not remove the need for continued economy in dollar expenditure. In general, dollar goods will not be licensed for importation against the loan if comparable goods are readily available from local or other non-dollar sources. This further loan demonstrates the International Bank’s appreciation of Australia’s continuing need to develop its resources and its confidence in the future of the Australian economy. The loan will make possible the more rapid utilization of resources whose development is urgent and vital. It will therefore benefit all Australians. I have the greatest pleasure in commending this bill to the Senate.
Debate (on motion by Senator McKenna) adjourned.
page 347
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
.- I move-
That the bill be now read a second time.
The purpose of this bill is to obtain parliamentary approval for a ‘loan of 60,000,000 Swiss francs raised by the Commonwealth in Switzerland, and to make arrangements for dealing with the. proceeds. The Australian Government has now raised two loans in Switzerland, totalling approximately £12,000,000. The first loan was issued in November, 1953. and was a complete success, closing fully subscribed within a few days. The Australian bonds proved very popular on the Swiss market and, since their issue, they have been selling consistently at a premium.
Following the success of the first loan, the Swiss banks which arranged that issue sent representatives to Australia late last year, and on behalf of the Government the Treasurer (Sir Arthur Fadden) commenced negotiations for the flotation of a second loan. Negotiations were completed after the consent of the Australian Loan Council had been obtained, and the new loan was issued early in February. It was again successful, and was over-subscribed.
The bill now before the Senate provides the necessary legal framework of the loan. It is designed to approve the borrowing and the issue of securities, and to set up machinery for making the loan proceeds available for the purpose of assisting Australian development, and for the servicing and repayment of the loan. The loan agreement which contains the terms and conditions of the loan, is reproduced as a schedule to the bill.
To the maximum extent possible, we have been financing Australia’s development from our own capital resources. However, our efforts to develop are made so much the easier if savings in Australia can be supplemented by investment from overseas. Accordingly, we have borrowed overseas as opportunities for borrowing on reasonable terms have offered and, in the last few years, we have been able to raise these two loans in Switzerland of about £12,000,000, and four loans from the International Bank for Reconstruction and Development totalling £116,000,000. Honorable senators will appreciate that these loans have supplemented our holdings of overseas currency. The Swiss franc is one of the strongest currencies in the world, and may be converted without restriction into any currency which Australia requires to finance its international transactions. The terms of the loan, as set out in the agreement, were approved by the Australian Loan Council before the loan agreement was signed. The main terms and conditions are as follows: -
Interest - 33/4 per cent. per annum payable half-yearly.
Currency - Fifteen years, with an option to redeem after ten years. Issue price - 991/2 per cent.
In accordance with our existing income tax laws, payments of interest and capital are to be free of Australian taxes and duties for bondholders not resident in Australia. The agreement sots out the costs of the borrowing which are to be met by the Commonwealth, and gives details of procedural matters such as underwriting and management, the preparation of the prospectus, issue of bonds, listing on Swiss stock exchanges, and arrangements for the payment of interest and repayment of capital. Honorable senators should also note the exclusion of the “ double currency “ clause, which was included in the first Swiss loan agreement. This means that bonds and interest of the new loan are payable only in Swiss francs, and that bondholders do not have the option available in the first loan of requiring payment either in Australian pounds or in a foreign currency equivalent of Australian pounds. These terms and conditions of the new loan are much more favorable to the Commonwealth than those for the first Swiss loan, when the interest rate was 4 per cent. and the issue price was 99 per cent. They are, in fact, quite close to those for the refinancing loan which was raised in New York in December, 1954, at an interest rate of 33/4 per cent., an issue price 99 per cent., and term fifteen years. The confidence of both the Swiss bankers and the Swiss investing public in the credit of Australia is apparent.
After paying borrowing expenses, the Government sold the net Swiss franc proceeds of the loan to the Commonwealth Bank, receiving in return an equivalent amount of Australian currency. These proceeds are now held in the Loan Fund and, in the bill now under consideration, it is proposed to transfer them to the Swiss Loan Trust Account set up under the Loan (Swiss Francs) Act 1954. These trust funds will, in turn, be invested later in Commonwealth loans, thus assisting the Loan Council borrowing programme for the current financial year. The Trust. Account will also form a sinking fund for both loans. When the time comes for repayment of each loan, the realization of the Trust Account investments, plus the interest earned on them, will be available to provide funds for that purpose. Any balance remaining in the account after repayment of the loans will be transferred to Consolidated Revenue, as provided in the Audit Act. Because of this arrangement, it will not be necessary to make normal sinking fund contributions in respect of this loan, and the bill accordingly exempts the loan from the provisions of the National Debt Sinking Fund Act. Current interest payments on the loan will be met from ConsolidatedRevenue. The raising of this loan represents a further positive step in our endeavours to develop this country and will assist us to utilize our national resources to the fullest possible extent. I commend the bill to honorable senators.
Debate (on motion by Senator McKenn a ) adjourned.
page 349
Debate resumed from the 11th May (vide page 338), on motion by Senator O’Sullivan -
That the following paper be printed: - Foreign affairs and defence - Statement made by the right honorable the Prime Minister in the House of Representatives on the 20th April, 1955.
Upon which Senator Armstrong had moved by way of amendment -
That all the words after the word “that” be left out with a view to insert in lieu thereof the following words: - “this House rejects the Government’s proposals to despatch Australian armed forces to Malaya as set out in the paper read by the Prime Minister”.
– As other honorable senators desire to participate in the debate, I shall content myself by protesting against the action that the Government has taken without consulting the Parliament. I am greatly concerned about the statement of the Minister for National Development (Senator Spooner) last night - which he emphasized - that the Government considered, in peace-time, that Australia’s front line of defence was in Malaya. That extraordinary statement will not be to the advantage of the Commonwealth. However, the Government has made its decision and we shall have to abide by it. I consider that very little can be achieved by a prolonged discussion on this mater.
Very heartening news in relation to world affairs has appeared in the press over the last few days. There appears to be a real break in the clouds. This news has justified, in my mind, the feeling of faith and confidence that I have had. I have always thought that this Government drags behind the people in the matter of positive action to ensure a continuance of peace. Supporters of the Government are convinced - andI give them credit for their sincerity - that the only way of achieving understanding and peace in the world is by the use of force, but that idea is losing favour with the people. It was a pleasure to read in this morning’s newspapers that the leaders of the world had expressed the view that the prospects for peace were most promising. In a speech in “Washington yesterday, President Eisenhower said that he believed that the prospects for peace on a lasting basis were on the upswing. It was not safe to speak in that way in this Parliament a little time ago. According to Reuter’s diplomatic correspondent in Paris, the forthcomnig conference is a great diplomatic victory for Britain, which for two years has pressed President Eisenhower to agree to such a meeting.
I believe that good progress has been made towards a better state of affairs in the world. That is due largely to the fact that down in the hearts of people everywhere there is a great desire for peace. In some cases it may be because they realize what the alternative would be. We have had our suspicions about Russia, but even in that country I believe the people are eager for peace. Some time ago, I heard an English general say that 10,000,000 Russians between the ages of eighteen and 26 years were killed in the last war. When I heard that, I felt sure that the mothers and fathers, brothers and sisters, wives and sweethearts of those men must have a deepseated hatred of war. Consequently, there must be in Russia, as well as in other countries, a great feeling of relief that there is a possibility of much good coming from the meeting of the leaders of the nations.
I believe that the Australian Government has failed because it has not kept in tune more with the Government of the
United Kingdom. There is no great difference of opinion among the political parties in the United Kingdom. Sir Winston Churchill and Mr. Attlee have been as one in their efforts to secure world peace. That has not been the position in Australia. In this country, we have not been able to achieve anything like that unity in our approach to world problems. Surely we, in this Parliament, particularly in the Senate, should be able to reach common ground in regard to matters of such tremendous importance.
– The party to which the honorable senator belongs has not tried very hard.
– I have been disappointed at the Government’s attitude towards India. When the late Mr. Chifley returned from a visit overseas, he told me that he had formed a very high opinion of the Prime Minister of India, Mr. Nehru. He believed that Mr. Nehru was well disposed towards the United Kingdom and Australia. Mr. Chifley went on to say that in India Mr. Nehru faced tremendous difficulties in improving the condition of his own people, and that he was so engrossed in his activities in that direction that he was not concerned about war. Indeed, he was hostile to war. Mr. Nehru is probably the greatest figure in the world to-day, because of his influence for peace in Asia. I do not want to criticize the Australian Prime Minister unduly in regard to these matters, but I wonder why the Prime Minister of India was not invited to visit Australia. Had an invitation been extended to Mr. Nehru to come here, I am sure that it would have had the support of the United Kingdom Government and of the Australian people, and would have done much to influence world opinion in favour of peace. The Government failed to take advantage of the opportunity.
It has failed also in its attitude towards China. When any one speaks of the important place of China in the world to-day, he is liable to be accused of speaking against the interests of the Western countries, and against the best interests of Australia. I believe that if Australia had tuned in more to Great Britain, and had recognized the Chinese Government, a lot of misunderstanding would have been avoided. We must have a positive policy for peace. I believe that the Government has made a mistake. In discussing a matter of such importance I speak with great restraint. I believe that the Government is sincere, and believe that it wishes to act in the best interests of the English-speaking peoples of the world, and indeed, of the world as a whole, but I also believe that it has made many mistakes.
The Government has been over-anxious to embrace Japan as an ally. Its actions will react detrimentally to the economy of the United Kingdom. Australia is active in building up the economic strength of Japan, so that that nation may become a great military power. Japan cannot be strong militarily without such outside assistance. However, it is a dangerous policy. In this matter the Government has disregarded the sentiment of the people of Australia. I have no hatred of the Japanese, although I have good reasons for hating them, because I remember how they treated many Australians, and I reflect on what they would have done had they been able to invade this country. I have always been suspicious of Japan. My suspicion is based on my experiences 40 years ago in Queensland, when a number of Japanese worked in the sugar industry there. They repeatedly said in my hearing, “ Some day Australia will belong to us “. The people of Queensland have a deep-seated fear of Japanese aggression. Instead of being so keen to embrace Japan, the Government would have done well to devote more attention to making friends with China.
It is, as I have said, heartening to read in our newspapers that the view that there are better prospects for peace is gaining ground throughout the world. That is partly due to the growing conviction on the part of men and women everywhere that the only alternative to living together in peace is something too terrible to contemplate. The Government does not realize this upsurge of feeling on the part of the people of Australia, and of the world. If the Government were to get closer to the minds of the people, its members would receive a shock. I have moved among the people, and I find that the churches and the people generally are agreed that more must be done in the interests of peace. That is the only way to save civilization. For that reason I believe that it is unwise to send troops to Malaya at this juncture. One Government supporter in another place, a man of high reputation with a great war record, does not approve of the Government’s action.
– Who is he?
– Air ViceMarshal Bostock, who represents the division of Indi. He is a man with a close understanding of these matters. We can only form our opinions on our reading and from hearsay. I believe there was no justification for the action of the Government. The Opposition is prepared to support any defence policy of the Government that is for the benefit of Australia because we realize that no nation could object to another nation preparing for its own defence; but the Government runs a grave risk by sending troops to a distant land in time of peace, na this Government proposes to do. I also question the value of its decision from a military point of view, and fear the effect that it will have on Australia.
.- Some honorable senators who have preceded me in this debate have made some extraordinary and extravagant statements. Those statements have not been supported by a tittle of evidence.
– What about the honorable senator himself? He has had plenty to say in the past.
– Any statements I have made have been in order, and I cannot say the same for Senator Donald Cameron. I fear that some honorable senators cannot overcome party affiliations and allegiances. Surely the matter that is under discussion is beyond party politics. The very existence of Australia as a nation might be involved. I suggest to honorable senators that they should divorce themselves from party politics on this occasion, and discuss this matter from the national point of view.
– Why does not Senator Guy take his own advice?
– Senator Grant is mumbling away to himself. I hope that when he speaks in this chamber again he will bring an interpreter with him. Some honorable senators on the Opposition side have stated that a previous Menzies Government left Australia in a state of unpreparedness at the outbreak of World War II. That is quite untrue.
– It is true.
– If. Senator Cameron would examine the records, he would find that the government of that day made magnificent preparations for the war effort. Even Mr. John Curtin, who succeeded Mr. Menzies as Prime Minister at the head of a Labour Government, congratulated the previous government on the magnificent foundation it had laid for an all-in war effort.
– In the circumstances, would he be critical of the Menzies Government that had preceded him?
– Mr. Curtin was a man who spoke the truth. I heartily support the statement on foreign affairs and defence that has been made by the Prime Minister (Mr. Menzies) and the policy of the Government in this matter. I definitely reject the amendment that has been submitted on behalf of the Australian Labour party. At this late stage in the debate, it is difficult to break new ground, but I wish to place on record my views on the momentous announcement of the Prime Minister. I am sure that all honorable senators will agree that the first and paramount duty of any nation is to preserve its national security and its survival. The safety of the people is our first consideration. How can we achieve those desirable objectives? I believe we can do so by making preparations. In the final analysis, that is the policy of the Government as announced by the Prime Minister. We must be prepared. Preparedness will act as a deterrent to any nation that has territorial ambitions. We must be prepared to defend ourselves against aggression. Admittedly, we must seek peace, but I am not one of those who believe in peace at any price. I believe in peace with honour and justice. We have no territorial ambitions, and our expenditure on armaments is designed for defence against aggression. Our first duty is to take defensive measures to protect our native land. We will not interfere with the internal affairs of other countries, provided they do not interfere with our internal affairs.
Some countries are preaching coexistence, but are preparing, at the same time, for the overthrow of the governments of other countries.
– Does Senator Guy believe in preparedness as he has stated?
– Of course, I believe in preparedness.
– Then the honorable senator cannot blame other nations for holding similar views.
– Recently, two men who are outstanding in military affairs in. the United States of America, stated that, despite all talk of peace, Russian preparations for war had continued unabated. Those American military leaders recently told the United States Congress that the Red Army was equipped and disposed to go to war at short notice. They said that the air force of red China could be doubled overnight with Russian help, and that the strength of the Red Army, which was the largest in the world, had been increased by nuclear weapons. They also stated that the armies of satellites of Russia were being modernized effectively. The authors of those statements were General Ridgway, the Army Chief of Staff, and General Twining, Chief of Staff of the United States Air Force. General Twining also said that, from a military stand-point, there had been no lessening of Communist pressure during the last year but that, on the contrary, the military strength of the whole Communist bloc, Particularly the air strength, had expanded. He further warned that, if hostilities developed in the Far East, which is our near-north, the Russians could rush planes in a matter of hours to their rapidly expanding system of air bases in red China.
Can we afford to ignore these dangers? T am sure that such a course pf action would be illogical and abhorrent to the vast majority of Australians. If we become involved in war in our own defence, we must ensure that we have powerful friends. How are we, then, to cultivate powerful and willing friends who will assist us? We cannot rely too much on the United Nations organization. The only power that the United Nations organization has to marshal forces to resist aggression lies in the Security Council. The Security Council cannot act except with the unanimous agreement of its members. Unfortunately, the power of veto exists, and Soviet Russia has repeatedly exercised that power of veto. No Security Council decision against Communist aggression can be made without the agreement of the Soviet. Can any honorable senator visualize Soviet Russia agreeing to such a proposal? As long as the veto operates, the Security Council will be able to marshal only opinions. It cannot marshal arms and defeat aggression. Thus, our only hope lies in the exercise of our own initiative and our own endeavours. It is most gratifying to know that we have many good friends among the free nations of the world. I congratulate the Government on cultivating the friendship of those nations and on entering into certain treaties. The North Atlantic treaty has brought together the United States, Canada, the United Kingdom and a number of western European and Medi.terrean nations. The United States and. New Zealand have also participated with Australia in the Anzus pact. The latest, of such treaties has been the Manila treaty in which the United Kingdom, the United States, New Zealand and the free nations of South-East Asia such as Pakistan, Thailand and the Philippines have participated. Those nations haveagreed, not only to resist Communist aggression against themselves, but to assist other free nations if they are threatened. It has been said that the non-Communist countries are apprehensive of our intentions, as well they might be after Korea, the uneasy truce in Indo-China, and the long delayed struggle in Malaya.
In my opinion the danger centre is moving closer to Australia with the southward march of the Communists. It is unbelievable that any section of a civilized country should disagree with the need for preparation for defence. It is unbelievable that any one should disagree that it is necessary to prepare to fend off from our shores any attack that may come. It is equally incredible that any political party should fail to give its support to that general world community which has been formed to prevent further Communist aggression. It would be shameful, to say the least, if other free nations were given the impression that Australia had failed to play its part and had, in effect, deserted its friends who are already in Malaya. Yet the Opposition is apparently prepared to do that. Wittingly or otherwise, it is prepared to play the game on the Communist side. Communists generally have applauded the attitude of the Opposition towards the sending of troops to Malaya which might well be our first line of defence. The Opposition admits that the terrorists, rebels, or bandits in Malaya are Communists or Communist controlled. During World War II., the Allies pledged themselves to assist the nationalists of Malaya to secure selfgovernment. Are we not then in duty bound to protect Malaya, which, after all, is a British protectorate? There is overwhelming evidence that an outright attempt is being made to seize power in Malaya. That is condemned by the Malayan people who are looking forward to the arrival of Australian troops in order to help them defend their country. The only effort that is being made to prevent self-government in Malaya is the activities of the Communists in that country. There are dangers in SouthEast Asia which we cannot ignore. The Communists hope to conquer Asia before they. put pressure on Europe. It is common knowledge that the “ Commos “ are on the march. If war ensues, the further north our lines of defence are, the better for Australia.
How best can we defend ourselves? Certainly not in our own country, but as far away from our shores as possible. If one sees an aggressor approaching one does not wait until he has passed the threshold. One goes out to meet the enemy, and unless we take very definite action we may have the utmost difficulty in stopping the reds from advancing to Darwin. What valid objection can there be to providing troops for Malaya? I am positive that the Australian people are not craven enough to consider that the United Kingdom should provide the men and fight our battle. It was most pleasing to hear the Prime Minister (Mr. Menzies) say that our great friend the United States of America, has agreed that if the United Kingdom, Australia and New Zealand undertake to station substantial forces in Malaya, the United States would be prepared to give effective co-operation.
In conclusion, I wish to refer to a passage in the Prime Minister’s statement in which the right honorable gentleman referred to a statement that had been agreed to by him and the United States Secretary of State, Mr. Dulles. The passage reads - 1 feel assured of complete co-operation between our two nations in the defence of our common security and in resistance to any further acts of Communist aggression.
We have that sense of security and that is of tremendous satisfaction to all who have the welfare of Australia at heart.
– My remarks in connexion with this matter will be very brief, and for that reason it may be that I am about to make the best speech I have ever made in this chamber. I wish to refer to some of the remarks made by Senator Courtice in the Senate this morning. 1 think that the honorable senator made those remarks in all sincerity, with great earnestness, and a considerable degree of conviction. He referred to the news, which has been conveyed to us by the newspapers in the last 24 hours, that there seems to be a ray of sunshine, as he described it, in the international situation. The honorable senator suggested that the reason for what ultimately may be revealed as a change of heart on the part of Russia and other iron curtain countries, is a tremendous upsurge of desire for peace in the hearts of people through.01]t the world. He could not see any other reason than that. Whilst I agree with the honorable senator that there is such a. desire for peace throughout the’ world, I think there is a. further reason which we must bear in mind when we are considering this possible change of front. If there has been a change of heart on the part of Russia, and time will reveal whether it is a real change or otherwise, has it not been because of the attitude that the Western democracies have adopted during the last few years ? Has it not been because of the strength which has been developed by the countries which subscribe to Nato? Russia may be on the verge of realizing that perhaps the die is cast and that time is running out. Russia may appreciate that it is useless to continue the policy by which it has so long menaced the peace of the world.
I think that Senator Courtice painted only one side of the picture and that he gave honorable senators only one reason for this alleged change of heart. It seems to me that a far more weighty reason - and I have no doubt, the real reason - which actuated those in the Kremlin to-day, is that Great Britain, America and the other Nato countries are rapidly becoming so strong that Russia dare not pursue a reckless policy of threatening the peace of the world. If that is the real reason for Russia’s new policy, does it not support our contention that the countries of South-East Asia must attempt to put themselves in a position similar to that of the countries of Europe? Yet, what have we heard in this chamber recently from members of the Opposition in regard to the Government’s proposals and the efforts which are being made to develop defensive strength in the SouthEast Asian area to-day? We have heard nothing but criticism of efforts which are aimed, not at threatening anybody, but simply at putting ourselves in a position where we shall not be continually negotiating from weakness.
The attitude expressed on behalf of the Government by the Prime Minister (Mr. Menzies) recently, simply conformed to our belief that we cannot negotiate with these people, whether they be Russian Communists or Chinese Communists, from a position of weakness. Australia must play its part in building up strength, not for any aggressive purpose, but for the reason which Great Britain, America and the other Nato countries have built up strength. Those countries, which now include Western Germany, have made that effort at great expense and considerable sacrifice. We in Australia must be prepared also to make sacrifices to place ourselves in such a position that the Chinese, or other possible aggressors in South-East Asia, will treat us with the respect with which Russia now seems to be treating the people of Europe and America. I am sure that if the matter is put to the people of Australia in the proper way, they will be fully prepared to make those sacrifices. When it comes to the test, I think it will be found that the people of this country are not unwilling to send troops to Malaya, because I believe they support the view of the Government. Members of the Opposition have missed the bus in adopting the line which, they have followed during this debate. Unfortunately, the ideas expressed by honorable senators opposite are the same as those expressed in the Communist press week after week. I should be the last to say that any honorable senator opposite was a Communist, and I hope I shall not be charged with making any such accusation.
– That is the most gracious thing that has been said from the honorable senator’s side of the chamber for a long time.
– I think that all my colleagues on this side subscribe to the view that there are no Communists amongst the honorable senators opposite. Nevertheless, when I heard Senator O’Byrne speaking in the Senate last night, I realized that almost everything he said was what the Communist Tribune has been saying week after week.
– Is the honorable senator implying that Senator O’Byrne is a Communist?
– God forbid that I should do so. I have not even said that Senator Ashley is a Communist. On the contrary, I have been at some pains to point out that I do not charge any honorable senator opposite with being a Communist, but I do say that the attitude which honorable senators opposite have adopted in this debate is that of the Communists, and if Labour policy is in line with Communist policy, it cannot be good for Australia. If the Opposition supports the Communists, either on internal or external policy, it must be wrong on all counts, because the Communists are no friends of Australia.
I am not an authority on foreign affairs, and I do not pose as one. However, I wish to refer to remarks made by Senator Aylett in this chamber recently. The honorable senator and I were privileged, some time ago, to attend a certain conference at Nairobi. On the way, we passed through various countries, including Ceylon, India and Pakistan. As a result of that very brief contact with those countries, Senator Aylett has set himself up as an expert on them and has condemned many things which he saw there as indicating what British colonialism really means. I wish to ask the honorable senator a few questions, and I am sorry he is not in the chamber at the moment. From what I saw in Ceylon, for instance, I wondered whether selfgovernment had not been conferred on that country a little prematurely. I suggest that it is not possible to be in Ceylon for more than 24 hours without appreciating that the people are battling, in their efforts at self-government, in more ways than one. I agree with Senator Aylett that they are doing a fine job and facing up well to the task, but the people of Ceylon are the first to admit that the privilege which has been granted to them involves heavy responsibilities and that they are finding their work cut out in facing up to those responsibilities. One of the greatest problems facing the Government of Ceylon is the black market. [ say again that I am sorry that Senator Aylett is not here, because I think he would agree it ill becomes visitors to Ceylon to indulge in its great enemy, the black market.
From what I saw of Uganda, Kenya and Tanganyika, it would be useless to suggest that the people of those countries are capable of governing themselves at this stage. Yet, certain Labour members of Parliament, including . a former Colonial Secretary, went about openly suggesting, as Senator Grant may remember, that a timetable should be fixed for the people of those countries to be given self-government. In my opinion, if that were done the people would be the victims, because I think that such action would be premature. They should not be given self-government until they are worthy of it.
Senator Aylett said that we had exploited the native populations of Uganda and Kenya. Is the honorable senator unaware of the great development which has taken place in those countries during the last 50 years, the period of European interest there ? Is he aware of the efforts to combat slavery, which began the European settlement in Uganda? Does he appreciate that a railway was built inland from Mombasa, over 300 miles of terrible country, for the purpose of combating slavery, and that not one penny of revenue was received from it for many years? Is the honorable senator aware of the efforts made by young men sent out by the British Colonial Office to improve the methods of land husbandry in those countries? For what purpose-
– Profit!
– I wish that I had half an hour to spend with Senator Cameron in discussing that matter. No profit accrues to those consecrated, dedicated young fellows who live their lives in loneliness amongst the natives in order to improve the standard of living in those countries.
– What about all the British settlers in the highlands who occupy all the best land?
– -I do not think they do. I ask for leave to continue my remarks at a later stage.
Leave granted, debate adjourned.
Sitting suspended from 12. ,54 to 2.15 p.m.
page 355
Motion (by Senator O’Sullivan) - by leave - proposed -
That the orders of the Senate fixing the resumption of the debate on the following bills as orders of the day for the next day of sitting, be rescinded and that the resumption _ of the debate be orders of -the day for this day: - Loan (International Bank for Reconstruction and Development) Bill 1055, and Loan (Swiss Francs) Bill 1955.
– On behalf of the Opposition, I support’ the motion. The Senate will recognize that these two bills are of great importance. This morning, the Senate agreed to my application to adjourn further debate on the measures until the next day of sitting. Had that happened, far more adequate time would have been available for their consideration, which involves a perusal of lengthy and complicated agreements. However, in the interim, the Leader of the Senate (Senator O’sullivan) pointed out to me that interest will begin to run on the loan from the International Bank on the undrawn amounts as from next Tuesday, the 17th May, and preferred the request, to which we have acceded, that, in those circumstances, the Government should have, at once, confirmation of the agreement by the passage of the bill. The Opposition joins with the Government in enabling that purpose to be fulfilled. We recognize that the Government has committed the country to the loan agreements involved in the two bills, and, although we do not favour them, we recognize that the machinery of government must go on, consequently we support the motion. Whilst I regret that the members of the Opposition have not had adequate time to prepare their speeches on the subject matter of the two bills, we readily waive our opportunity to do so in the circumstances.
Question resolved in the affirmative.
page 356
Debate resumed (vide page 347). .
– This measure authorizes the fourth of a series of loans from the International Bank. It proposes a loan of 54,500,000 dollars equivalent to about £A.22,700,000, at 4f per cent, interest, for a term of fifteen years. The Opposition opposes the measure, and points first of all to the contrast between the borrowing activities of this Government and those of its predecessors, the Curtin and Chifley Labour governments. Throughout the war period of eight years there was no overseas borrowing by those administrations, and the whole of the war effort was financed from loans raised within the country. In addition, £400,000,000 of overseas indebtedness was repatriated to Australia. Those are performances of really outstanding merit, and are in sharp contrast to the record of the present Government, which follows a policy of borrowing when the economy of the country is in difficulty.
– There was no trouble in obtaining gold then.
– But dollar? were not easy to obtain then. Lendlease was in operation, and I remind honorable senators that it was two-way traffic. At the end of the war only a minor adjustment had to be made between Australia and the United State? of America. I concede that the circumstances were different in that there was a war and Australia had allies ; but these present loans are being raised by the Government at the wrong time. No honorable senator on this side of the chamber overlooks for a moment the need for capital goods, many of which are available only from dollar countries. We do not suggest that Australia should not have these goods, but other avenues should have been fully explored before recourse was had to borrowing.
During the luncheon adjournment, 1 glanced through my remarks on the debate on the Loan (International Bank for Reconstruction and Development) Bill 1954, about this time last year, and I affirm all that I said on that occasion. I directed attention to the bad background of our internal economy, and to Australia’s overseas balances. When I examine the present background, I find that Australia again has an adverse overseas balance. Inflation is at its height in this country, and the upward trend has not yet been conquered. We are in difficulty about the sale of many of our goods, particularly manufactured lines. We cannot sell all of our products. We are having great difficulty with the disposal of export wheat, and again, as last year, there are fresh import restrictions. Those factors do not create the best background for borrowing. It is a spendthrift performance when a country with internal economic troubles and an adverse overseas trade balance resorts to borrowing. It is a foolish policy to seek to adjust the annual budget by external borrowing. The broad result of that policy is merely to add to the burden carried by the taxpayers, particularly in relation to short-term loans.
The Minister, in his second-reading speech, intimated that we must pay interest up to 195S at the rate of £1,250,000 per annum, and that from then until the loan falls completely due, principal and interest payments will involve £2,5S5,000 a year. In a budget of £1,000,000,000. such figures are not colossal, but the burden on the budget is being increased for a short term of fifteen years to that extent, and it is not unsubstantial.
– Does that figure include sinking fund payments?
– The second figure I mentioned does. I said that interest until 3958 will amount to £1,250,000 a year, and that, when the amortization payments begin from that date, the total payment will be about £2,500,000 per annum. Unquestionably, that is an additional burden upon the budget. Another feature of this shortterm borrowing that the Opposition does not like is that, the loan is to be expended not upon capital assets that will endure for a half century or a century, but upon capital assets of a wasting nature. That is one reason why the loan is made for a limited period, in some way commensurate with the life of those assets. There is a great contrast between overseas borrowing and borrowing upon our local market for any purpose. When money is raised on the local market, there is a term of 53 years in which it will be repaid, and the annual burden upon the taxpayers of the country is not heavy. It is spread over a 53-year term. I should not have to argue very much further to the Senate that, when a loan has to be amortized over fifteen years, there is a disproportionate burden on the taxpayers during that ‘period. Accordingly, a short-term loan is onerous, as far as the people of Australia are concerned.
Some improvement is made in the interest rate, compared with the rate for last year’s loan. This time it is to be 4f per cent., compared with 4J per cent, on the last occasion. Again, we have the unhappy position that we are paying threequarters of 1 per cent., as from next Tuesday, on any portion of the loan that may not be drawn. When I think back to the first loan of 100,000,000 dollars made to us by the International Bank, and remember that it took three years to draw the whole of it, and that throughout the whole of that time we were paying If per cent, interest on the undrawn balance as well as 4# per cent, interest on the moneys we drew, I am astounded at the burden of interest that has been placed on the taxpayers of this country. The second loan took, I think, about two years to expend. The third loan, as the Minister said in his second-reading speech, has been appropriated - I do not know whether it has been expended - in a shorter time.
I hope there is a clear view of the goods which this money is being borrowed to purchase from dollar sources, and I trust that we shall proceed to save ourselves as much as possible of that three-quarters of 1 per cent, interest. When our total borrowing at an interest rate of 4f per cent, is topped up with another threequarters of 1 per cent, interest on the undrawn balance, the burden becomes unduly onerous. I suggest two things. 1 asked on the last occasion that a similar measure was before this chamber, what the Government had done to make sure that we were getting a fair allocation from the Empire dollar pool. I received no answer. I now ask what steps will be taken to ensure that we receive credit for dollars earned in the United Kingdom.
– “We are in debit over-all. We have drawn more than we have put in.
– I should be glad to see a statement of the position, giving us credit for the raw materials that we send to Great Britain to be converted into manufactured goods and sold. for dollars.
– It is taken into account.
– This is the first time that I have received any information on the subject, if the Minister commits himself on that point.
– I do.
– I am glad to hear that. A statement should be made to the Parliament on the subject. I do not remember a statement ever being made to the Senate explaining exactly our position in relation to the Empire dollar pool.
– Not even when the Leader of the Opposition was a Minister in the former Labour Government?
– I do not remember it at all. However, I am referring to the activities of the present Government. I am not asking for an explanation on behalf of a previous government. It behoves the Government to inform the Senate of the present position.
Another aspect of the matter is that we import about £80,000,000 worth of goods from the United States of America, but sell goods of a considerably less value to that country. Has the Government made any survey of the consumer goods that we import from America, or Canada ? Could the list be restricted, without damaging the economy of this country? I suggest that a close examination of the list might result in a substantial saving of dollars without any damage being done to industries which depend upon imports from dollar sources. The Minister made no reference to that possible approach to the solution of our dollar problem. I should be glad to hear his comment on that aspect.
I was pleased when the Minister gave some information about how the earlier loans from the pool, totalling approximately 204,000,000 dollars, had been expended. This is the first occasion, I think, on which we have been given such a survey.
– No.
– Senator Laught might be thinking of a prior loan agreement in which there was a schedule setting out the kind of goods and activities on which the loan had to be expended. But now we have a broad allocation of dollars under various heads. The Minister stated in his second-reading speech that 60,000,000 dollars was required for farming requisites, 20.000.000 dollars for railway needs, 30,000,000 dollars for packet power plants, 30,000,000 dollars for tractors and road construction machinery, 27;000,000 dollars for aircraft, 5,000,000 dollars in connexion with forestry, 10,000,000 in connexion with the mining industry and 20,000,000 dollars in connexion with our manufacturing industries. I point out that the manufacturing industries will receive a relatively minor share of the total allocation of 202,000,000 dollars. It may be that they will receive their proper proportion, but it seems to me that they lag behind some of the other allocations, particularly those in relation to farming requirements.
We of the Opposition oppose general overseas borrowing. As a matter of broad Labour policy, I affirm the proposition that the right time to borrow i3 when things are going well and it is desired to develop and expand. I contend that against the background that I have briefly sketched, things are not going well in this country to-day.
– The honorable senator has made similar statements during the last five and a half years. Australia is now more prosperous than it has ever been.
– I do not agree with that assertion. The honorable senator overlooks all sorts of things. He overlooks the hardship that has been wrought by unchecked inflation in this country, not only to individuals but also to our manufacturing industries and our export trade, and which has precipitated the acute problem with which we are now confronted as a result of the fall in our overseas balances.
– And the guaranteed price for wheat.
– Senator Hannaford claims that everything is all right.
– I did not say that.
– I am happy to hear that. The fact that I keep on repeating these things emphasizes the truth of them. How happy can the honorable senator be when he thinks back to the time when import restrictions were last imposed, and we repudiated our overseas contracts, at the instigation of this Government, for the first time in Australia’s history. That was the worst, blow ever struck at our prestige abroad. The
Government has nothing to be proud of about our standing overseas or our credit in England. I remind honorable senators that a little over a year ago a London loan failed because only 56 per cent, of the amount required was subscribed. That is a fair indication of the prestige of this Government on the London loan market. Then we had the spectacular action of the Treasurer (.Sir Arthur Fadden), going over the channel to borrow a paltry 60,000,000 francs, the equivalent of about £6,000,000 in Australian currency, from Switzerland. I referred to this matter a year ago, when I said that it was the most undignified thing ever done on behalf of an. Australian government. “We shall see a repetition of such action. The fact that the present loan is being floated at a premium is ‘no credit to the Government, Indeed, it shows what a bad bargain the Government struck on that occasion.
– “What would the honorable senator say if the loan had been floated at, a discount?
– The mere fact that the loan is to be floated at £99 10s. as against £99, and that the rate of interest is lower, shows what a bad bargain the Government made in relation to that petty cash loan.
– The Swiss are the best businessmen in the world.
– They certainly outsmarted the Australian Government. I have never ceased to regret that Australia exposed itself like that to the gaze of the world in order to obtain such a paltry amount.
I shall not keep the Senate long because I have already expressed opposition to this measure. I spoke at length on the same subject last year, and any one who may be interested to compare what I said then with what I have said to-day is welcome to do so.
– To-day’s speech is about the same as that which the honorable gentleman delivered last year. I read it.
– I congratulate the Minister, and am flattered to think that he should so usefully engage himself. I have brighter hopes for his future now that I know he indulges in such activities. The Opposition realizes that, no matter what its members say, Australia is committed to this loan, which now merely awaits parliamentary approval. “We cannot restrain the Government, which is committed to the loan. All we can do is to register our protest.
– Does the honorable senator protest on behalf of the State Labour Premiers?
– I have no authority from the Australian Loan Council to speak on its behalf, or on behalf of any of its members ; but I know that the high interest rates encouraged by this Government have struck a death blow at borrowing, and have inflicted considerable hardships on patriotic war-time investors. I know that the State Premiers have so many projects on hand that they are obliged to take anything they can get from the Commonwealth. I am aware that the terms of this loan, and of the loan from Switzerland, were approved by the Australian Loan Council, but I am reminded that “ needs must when the devil drives “. The States, with their developmental projects, are in such urgent need of cash that they must accept it wherever they can get it. The difficulties created by this Government in the loan market have forced the States into that position.
I shall not keep the Senate longer. I record Labour’s opposition to the bill by way of a general protest. We do not want to be taken as overlooking the need for capital goods, but we are not convinced that the Government has explored all other sources of obtaining the money, such as a saving on consumer goods, and the promotion of our export trade. We should like to have heard something along those lines. We should like to know, too, the position of the dollar pool, and whether we shall get full credit. We have heard nothing about those matters. We do not like the additional burden which this loan will place on Australian taxpayers. Now that our loans from the International Bank amount to 258,000,000 dollars, we are reaching the time when the tempo of amortization payments, with interest, is rising rapidly and cumulatively, and is constituting a real burden.
– I rise in support of the measure. As I understood the Leader of the
Opposition (Senator McKenna), he rose in opposition to it. One or two of the things he said were completely beyond my understanding. He endeavoured to contrast the borrowing activities of this Government with the borrowing activities of the Chifley Government which was in office at the conclusion of the war. It should be remembered that conditions were entirely different then. At that time there was complete control of the economy under National Security Regulations Consequently, a citizen could not move in any developmental project without first obtaining the approval of some authority, or complying with some regulation passed by that Government. There was no freedom whatsoever in the Australian economy. It was possible for the Government to borrow within Australia vast sums of money, because no other opportunities for investment were open to private citizens who had funds to invest. They had to lend it to the Government at whatever rate of interest the Government prescribed. For that reason, we cannot compare the present relatively free economy of Australia with the iron-bound economy of that era. At the conclusion of World War II. there was practically no building activity, and no agricultural development, and virtually no new implements were coming into Australia. Honorable senators will remember the high prices then paid for second-hand cars, tractors, trucks and ploughs.
The second point raised by the Leader of the Opposition was that this money was being raised at the wrong time. In my opinion, the money is being raised on very favorable terms, when we have regard to the world market at the present time. If anything, the terms are more favorable than those of a year ago. A significant point is that this money is being raised without all the trappings associated with the normal activities of the International Bank. It is of great interest to me to read, in the United Nations Review of November, 1954, of the role played by the International Bank in the economic development of various countries. I note that all the formalities normally required by the bank in lending money to other countries were not insisted on in connexion with the loan under review. From my reading of the terms of the loan, the raising of this loan is not attended by any obligation on the part of the bank to inspect the Australian economy. The strength of Australia’s economy is well known to Mr. Eugene Black, who is at the head of this organization, and the other officers of the bank. Australia’s economic strength is fairly reflected in the fact that the terms of the loan now under review are more favorable than those of any previous loan. Loans of this nature are essential to the development of the country. They should not be opposed by any section of the Australian people, particularly the Australian Labour party. The capital equipment that will be bought with the money raised by the loan will increase the productivity of Australia and lift our standard of living. As those developments occur, there will be every prospect that the standard of living in other countries will improve as well, because of the products that Australia will thus be enabled to supply to them.
The Australian Labour party and its supporters in this Parliament will have to stand up and be counted by their vote on this matter. The programme for which the money is to be used is set out under interesting headings and in opposing the loan, honorable senators opposite will, in effect, be opposing the adequate financing of the expansion of Australia’s agricultural and forestry programmes. The second schedule to the bill states -
This programme comprises the development throughout Australia of agriculture by increased mechanization and more intensified development of existing farms, land development and closer settlement.
Honorable senators opposite have often declared their great interest in closer settlement, yet now they intend to oppose the provision of essential equipment through this dollar loan. That equipment will be used for closer settlement, irrigation, water conservation works, afforestation and timber-getting. Widespread employment is involved in forestry activities which are carried on mainly by government instrumentalities. Forestry, in particular, means decentralization of population and employment in distant rural areas. Honorable senators opposite must be prepared to stand by their virtual opposition to such development. The development of electric power is envisaged by means of the equipment that will be bought with the proposed dollar loan. A railway programme is also envisaged. That is interesting because honorable senators should recall that portion of the first dollar loan was used immediately to procure diesel rollingstock for the Trans-Australian railway. That railway, which formerly failed to pay working expenses, is now more than able to meet them. At the same time, with new and better equipment, it has almost doubled the service that could be provided five or six years ago. “With the influx of equipment bought by dollar loans in the last five years, there has been a corresponding improvement in the welfare of the Australian people and in their facilities for travel. Overseas visitors are also attracted by these improved travel facilities. Honorable senators opposite must be prepared to face up to their responsibilities by virtually voting against such a programme. In effect, they oppose the introduction of equipment for diesel electric locomotives which will be assembled in Australian workshops. The components of those locomotives are in the main imported, and the assembly of rolling-stock and equipment is clone by Australian workmen. From every point of view, the policy of the Opposition in this matter is shortsighted.
Honorable senators opposite have not proved that the terms of the loan are unfavorable. They have delved into history in an endeavour to prove that the terms of the proposed loan are not as good as those under which money was borrowed when Mr. Chifley was Prime Minister; but their argument is not sound. If we do not introduce the capital goods we can buy with dollars, we shall have to raise more money by taxes or make less loan money available to the States. The Australian Loan Council is composed largely of Labour State Premiers. Five of the six Premiers are supporters of the Labour party who can vote against the Australian Government’s representatives and the Premier of South Australia who oppose them politically. Those five Premiers, however, insist upon the provision of this kind of finance because they realize that the States must obtain more money from federal sources and revenue. They insist that the Australian Government shall borrow dollars, as is proposed under the bill now before the Senate. Therefore, it is rather strange that the Leader of the Opposition should oppose the loan on behalf of the Australian Labour party. I wonder how the five Labour State Premiers will react to the attitude of their political colleagues in this chamber.
The people of Australia appreciate the developments that have resulted from the dollar loan policy of this Government. Farming people have used equipment bought with dollars for the conservation of fodder. Municipal officers have gained great benefit for their shires and districts through the use of earthmoving equipment which could only be obtained in the dollar area. Ordinary citizens have enjoyed the benefits of uninterrupted electricity supplies that are maintained by the use of up-to-date generating plant which also could only be bought with dollars. Supporters of the Labour party will be out on a limb as a result of their opposition to this loan, because the people of Australia realize how essential it is to procure more dollars quickly for the development of the nation.
– I propose to deal with the bill in general terms because insufficient opportunity has been given honorable senators to study the measure in detail. Apparently, supporters of the Government are prepared to allow themselves to be used as rubber stamps. Once the Government affixes its imprimatur to a proposal, they are prepared to accept it at its face value. I believe that they will live to regret taking such an attitude because I foresee, owing to the careless and ignorant approach of the Government to the problem of finance, the development of a position similar to, or possibly worse than, that which existed in the 1930’s. Overseas loans are secured by importing unemployed capital. If that capital could be employed in its homeland at a higher rate of interest than it could earn in Australia, no loan would be forthcoming. Maximum profit is the determining factor to those who possess capital for investment, and they will not invest where the profit rate is low or the risk is great if more profitable and safer investments are offering in their own country. Consequently, I do not believe that loans are made for altruistic reasons.
I object to overseas borrowing for the obvious reason that the creditors call the tune from overseas, just as creditors in Australia call the tune. It is the financial obligations of the Victorian railways that determine the policy of those railways. That is one of the reasons why there is not a uniform gauge for Australian railways. It is also one of the reasons why the condition of the railways is deteriorating. Throughout Australia, the financial requirements of the railways do not leave any margin for the reconstruction that is required from time to time. The capital cost of the Victorian railways since 18S4 has been about £94,000,000. So far, the interest payments on that loan have been approximately £152,000,000, and the principal amount is still owing. That is the way in which government undertakings of this country have been financed. In this way a colossal national debt is being built up. Of course, the term “ national income “ is a misnomer because it is really an aggregate of private incomes. The term “ national income “ is used for the purpose of misleading unfortunate men and women who do not know its true meaning, and who accept what is said by the Government and the banks. There is a bank known as the National Bank of Australasia, but it is not a national bank. It is a privately owned bank.
As I have said, the creditors call the tune, whether they are outside or inside Australia. And creditors outside Australia are not taxed by the Australian Government. A book entitled The Evolution of Banking, which was published by R. H. Howie in 1915, contains a chapter dealing with national debts. It explains that if a country eventually becomes unable to pay its debt, an army of occupation takes control, and the creditors direct the policy of the government. That is the position that will develop in Australia if the Government continues in its present policy. The existence of a colossal national debt results in a lifelong tribute having to be paid by the people, particularly wage-earners. They are born in debt, they live in debt, and they die in debt. The proposals contained in the bill before the Senate will make the position a great deal worse than it is at the moment.
Senator Laught alleged that Senator McKenna had objected to paying an American loan with dollars. What Senator McKenna actually said was that we should have a system of lend-lease similar to that which existed during the war. Under that system, Australia provided goods and services in return for goods and services. That system was adopted because the capitalist economy which now operates became unworkable in the days of war. When hostilities ceased in 1945, the lend-lease system came to an abrupt end, with the result that the economy of the United Kingdom and other allied countries was thrown into a state of chaos. Australia was little better off. But the lendlease system was terminated because it was not as profitable to the money-lenders as is the system of borrowing. There is no reason- why Australia should deliberately increase its indebtedness, particularly to overseas creditors. Most of the capital goods that will be imported can be manufactured in Australia. In 1941, when I was appointed Minister for Aircraft Production, the engineering industry in this country was 60 years behind the times. Almost immediately, we began to re-organize the industry and manufacture aircraft engines which we formerly imported. These engines were just as good, and in many cases better, than those we had imported. Admittedly, that was done by arrangement with overseas manufacturers. We manufactured the engines under licence, before and after sending technicians abroad to learn how to make them. If honorable senators opposite want, some information about the quality of the engines that were manufactired in Amenca during World Wor TT.. T commend them to a report of th<» United State1’ Senate Committee. of which exPresident Truman was chairman. They will find that that report made the most scathing And damaging comment regarding the badly constructed engines that were being manufactured for America’s aircraft and for those of other countries. Of course, that is what happens in time of war, when people are trying to get a rake-off. As I have told the Senate on previous occasions, the Department of Aircraft Production was able to recover, during World War II., at least £1,000,000, which had been wrongly debited to the Government in respect of aircraft. Had I had the assistance of additional costing experts at that time perhaps £2,000,000 or £3,000,000 would have been recovered. That experience throws an interesting light on the patriotism of some so-called reputable citizens under the system of private enterprise. It was necessary for national security regulations to be promulgated by an anti-Labour government, because it realized that, in time of war, drastic laws were necessary to deal with the enemy both inside and outside of Australia.
The Minister’s second-reading speech sta tes -
As indicated in the press announcement of the loan, the International Bank has arranged to sell, without its guarantee, 10,400,000 dollars of the loan to eleven private banks in the United States.
That is the technique. The banks in the United States will direct Australian financial policy, to the extent that that can be clone, just as the Australian banks are directing it to-day. That is all a part of the capitalist system based on .private enterprise.
The Leader of the Opposition (Senator McKenna) referred to inflation, as I have done in this chamber on many occasions. I am perfectly certain that nothing will be done by the Government to halt inflation until the economy reaches an unworkable stage. When that stage is reached, as it has been reached in other countries, the supporters of the Government will run for cover. Unchecked inflation mean3 unchecked costs and profits. As the Lender of the Opposition pointed out, inflation means that when you redeem your bonds, for every pound - worth only, say, 10s. - that you put in, you will receive back a pound that will then be worth only 5s. Inflation increases the interest rate but reduces the purchasing power of the bonds; yet nothing is being done by this Government, and inflation continues.
How does the worker get. on during a time of inflated costs? I have heard Ministers in this chamber say frequently that costs of production and of services are enormous. Of course, that is only half the truth. When the basic wage was ls. an hour, a worker could buy a good meal for ls.; but the worker to-day, on 6s. an hour, does not earn sufficient, by an hour’s work, to pay for a meal, because meals in Sydney and Melbourne cost 8s. or 9s. When I was working at a trade, just before World War I., and receiving £3 10s. a week, the payment for a week’s work was sufficient to buy a suit of clothes. Now, I should have to work more than seven days to pay for a suit. That is only elementary economics applied to meals, suits of clothes, boots, and particularly to housing. In terms of inflated currency, the wage paid to workers to-day is higher than it ever was ; but in terms of goods it was never lower. How long do supporters of the Government think that that state of affairs is going to last ?
As far as I can see, the supporters of the Government think that although the price of a suit of clothes is higher than it was once, wages also are higher; but reduced to terms of labour time, the wages they receive are lower than they were before. Just . how long do honorable senators opposite think we can continue to increase inflation on the one hand and build up a colossal national debt on other? What is their remedy for that state of affairs? I have frequently challenged economists at Melbourne University, and in other places, on this point. They know what should be done - I am not suggesting that they are entirely ignorant - but they are afraid to say what should be done, because if they did so, their services would no longer be required. If this position is allowed to continue, we shall reach again the stage that was reached in the ‘thirties. Under the present system, economic depressions constantly recur. I remember the slump of 1S93, when I was a lad of fifteen. I remember also the depressions of 1907, of the period just before World War I., and yet again in the 1920’s and 1930’s. The economy of this country has never been organized to avoid such crises. When they come, most of the learned economists attribute them to the fact that the workers have not worked hard enough or fast enough. As a matter of fact, the harder and faster the workers work, the lower their relative wages. That is how it works out.
In this and every other country, there are, in effect, two states in the same territory. On the one hand, there are the owners of the country’s capital or financial resources, who are in the minority, and the non-owners, who form the majority. Australia is practically undeveloped in comparison with many other countries of the world. If it were developed, as those countries are, and did not provide opportunities for investment of capital to the extent that it does, the position here would be similar to that of less fortunate countries overseas. The owners of capital in America and in other capitalist countries have colossal surpluses which they must get rid of somehow, and they also have increasing unemployment. In no country that I know of has there been the reorganizing of the internal economy necessary to establish a satisfactory basis of international trading, but that must be done. In 1896, a well-known professor in the University of Rome, Antonio Labriola, when reviewing the position as [ am attempting to do, said that there were times when we had to wait for the hard school of disillusion to educate which it does better than reasonings can do. The Australian Government will have to do that, because its present borrowing policy will result ultimately in colossal costs and chaos. Unfortunately, it is disinclined to face the situation in a realistic manner. Those who would challenge the capitalist economy effectively, are always resisted and oppressed. That has happened in many countries, and it will happen in Australia. Last year, Professor Donald Cochrane said at the Melbourne University that the Australian economy was stable. It is stable for the owners of capital, but it is unstable for the non-owners. A state of disequilibrium, to use ‘the fashionable expression, is coming into being, and that will result in a crisis or a war. Leading world journals such as the New York
Times have said more than once that thiKorean war was a godsend because it enabled Americans to get rid of their surplus production. Nothing was said about the hundreds of thousands of lives that were destroyed. Capitalist economy relies on a depression or a war, and in the last analysis it prefers war. That is why the Australian Government wants to send troops to Malaya.
– Honorable senators have listened with interest to the Leader of the Opposition (Senator McKenna), who, from a wide experience usually gives a sound interpretation of financial policy. Personally, ] always pay great attention to his remarks. I listened with interest to Senator Cameron also, and particularly to his point about Australia borrowing money overseas. The honorable senator said that if Australia did not pay its debts - and the Opposition predicts that it will not be able to do so - ultimately the lending country would send an army of occupation to take control of Australia.
– The honorable senator did not mean that the lending country would send an army of soldiers.
– The Senate ‘ has already approved a proposal to borrow Swiss francs. I wonder how the Swiss Government would take over Australia. Perhaps it would send the Swiss Navy.
Senator Grant interjecting,
– Senator Grant will have his opportunity later. I know that he will be unable to discuss this measure because he knows nothing about finance, but honorable senators will listen to him when he speaks on a subject about which he knows something. The Leader of the Opposition said that Australia was borrowing at the wrong time. My experience of financial matters has led me to the conclusion that the only time to borrow is when money is needed and can be obtained.
– I am glad that the honorable senator mentioned the last condition.
– This Government has been at least able to obtain money from abroad, which is more than Labour administrations have been able to do. Other countries would not lend to an
Australian Labour government. To borrow dollars now to purchase capital goods is a sound proposition. Senator McKenna claimed that Autralia was losing its export trade, and for that reason, he said, this was the wrong time to borrow. On more than one occasion a business in Australia has failed through lack of capital, but when a newcomer has invested fresh capital in machinery and equipment, the business has prospered. That is the position in regard to Australia’s borrowing abroad. If capital goods such as machinery and equipment are purchased, Australia will soon be able to repay the loan with the proceeds from the goods produced with that machinery. Honorable senators know that Americans are masters in the production of heavy machinery.
– English manufacturers of heavy machinery are doing well, also.
– I agree, but I am interested particularly in heavy machinery. I illustrate my point with the experience of a municipal council. Two or three years ago, that council purchased from America an enormous bulldozer. Its performance was such that the cost of the work on which it was employed, was greatly reduced. and far more work could be done in a given time. The alternative was to obtain three or four small Australian bulldozers, which would not have done the work as quickly or as cheaply.
– The same argument has been used for 50 years.
– The argument of the Opposition that Australia is going bankrupt is answered by the fact that it is becoming more prosperous each year, [f the Opposition preaches its policy long enough it will win, and the worst day for Australia will be when a Labour administration is elected to office. Senator Cameron said that it was bad policy for the Government to borrow this money over a long term. His reason was interesting. He said the Government had been borrowing pounds worth 10s. and paying them back when they were worth only 5s. If I could borrow fi for 10s. and repay it when it was worth 5s., I should think I had made a good bargain. I have always watched with keen interest the approach of the Opposition to the borrowing of money. As Senator McKenna said, its traditional policy is not to borrow overseas. Honorable senators opposite were afraid to do so. They were afraid to borrow money because they thought that some day somebody would come along and ask for repayment. They have no faith in this great country. We have not yet got beyond the fringe of development here. We should be able to borrow a lot more money before having to consider our ability to repay loans. We have to get back to work on a sound basis. When we do so, we shall be able to borrow immense amounts of money. We should have a proper understanding and appreciation of the wealth and value of this country. We must realize that there is a vast amount of work to be done, and get on with the job. I was also interested in another aspect of the matter towhich the Leader of the Opposition referred. It would appear that he has not been in Tasmania for a long time.
– I saw him in, Tasmania a fortnight ago.
– He must have been there on a holiday. The Leader of the Opposition should visit Tasmania and inspect the Australian Aluminium Production Commission’s works at Bell’ Bay. Despite the colossal blunders of the previous Labour Government, thisGovernment has managed to finish the job, and I am sure the project will be successful. From the stage of airy fairy blue-prints, this Government has brought the project to the production stage. 1 have no doubt that it will be successful,, as a result of this Government’s interest in it.
I should also like the Leader of the Opposition to have a look at the mining and forestry industries in Tasmania. If he did so, he would see the machinery that was bought with the proceeds of previous dollar loans. He would seeenormous carry-all trucks from North America. Those industries have benefited tremendously from the use of these vehicles. The cost of production hasbeen reduced. It is well known that several large industries in Tasmania had reached a stage when their continuance- was doubtful. The Leader of the Opposition will also see other valuable machinery that was bought with the borrowed dollars.
– That applies all over Australia.
– Particularly in South Australia.
– Yes. However, I am referring to Tasmanian industries, about which I know most. I pay a great tribute to this Government for negotiating this dollar loan. Amongst other things, it will make possible the purchase from America of land-clearing machinery. [ have seen the specifications of the latest American machinery for this kind of work. The machines will ditch, clear, load, and, in fact, do every kind of work entailed in preparing land for farming pursuits. I understand that a small number of these machines has been allotted to Tasmania. They will be utilized for land clearance work which, at present, is proceeding by private enterprise. Thanks to this Government’s wisdom in borrowing the dollars to pay for those machines, the work of preparing the land for farming will be speeded up immensely.
The Leader of the Opposition decries our credit every time a bill of this kind comes before the Senate: I contend that the lender is the best judge of that. If the hard-headed Americans and Swiss are prepared to lend us dollars-
– The hard-headed Australians will not lend the Government money.
– That is an absurd interjection. The hard-headed Australians do not possess dollars to lend to the Government. I think that both the Americans and the Swiss have made good deals in lending us dollars, and it gives me great pleasure to support the bill. I congratulate the Government on its outlook and its approach to this problem.
Senator O’FLAHERTY (South Australia) [3.32 J. - There was no need for Senator Henty to get hot under the collar. Machinery, similar to the machinery that Tasmania has obtained from America, could be manufactured in Australia. Senator Laught stated that the Australian Loan Council was responsible for the borrowing of dollars. By implication, he traduced the Australian Labour party because, as he said, the majority of the State Premiers who attend Loan Council meetings belong to the Labour party. However, Senator Henty said that this Government had arranged the borrowing of dollars. Who did borrow them? Was it the Australian Loan Council, or this Government? The statements that have been made by supporters of the Government in this connexion are most contradictory. I do not think that the Loan Council has anything to do with the method of borrowing money. The practice is for the States to inform the Commonwealth of their requirements and, in due course, the Commonwealth, through the Loan Council, informs them of their loan allocations. The Government arranges the details and borrows the money. Therefore, it must accept its share of responsibility for any odium attached to the borrowing of dollars from the United States of America. I think that Senator Henty was right when he said that this Government borrowed the dollars.
When the original dollar loan was arranged, the Labour party accepted the word of the opponents of Labour that Australia was in dire need of dollars. Subsequently, there was a great deal of waste of goods bought out of the dollar loan. Many of the articles purchased with dollar loan funds lay idle all over Australia. When we examined those idle machines, we saw that many of them could have been made in Australia without borrowing one penny piece. Is there any honorable senator on the Government side of the chamber who will say that most of that plant and machinery obtained with dollars could not have been manufactured in Australia, or obtained from countries with an easier currency, or that the money could not have been borrowed on better terms than we could borrow dollars? I refer mainly to agricultural machinery, such as harvesters and combines. In this field of manufacture, we had a wonderful industry in the past. Even to-day, Australian manufacturers are making all kinds of agricultural implements, but their business is declining steadily, because they are being forced to meet the competition of American goods brought here under the borrowing system. We are told that Australian manufacturers ought to be able to compete with overseas manufacturers. Why cannot they do so? ‘ The reason is that, when we float a dollar loan in another country Ave merely obtain so much credit. We do not get one dollar in Australia. All we get is credit in the dollar country, and we have to pay for that accommodation. Persons engaged in private business are told that if they want anything they should ask for it, and they will be given a permit to bring it in from abroad. Arrangements are made, and a firm order is issued. It, does not cost people engaged in private enterprise one penny piece to get suitable credits in dollar countries with which to buy the materials they require . But when those materials arrive, they have to be paid for in Australian currency. The importer does not pay any interest; the interest is paid by the people of Australia. That means that private importers get an advantage, at the expense of the people of Australia, which enables them to compete against Australian manufacturers who, if they borrow money in their own country, have to pay charges on it. That is why Australian manufactures are declining.
Senator Laught referred to diesel engines. These engines can be obtained from sterling areas, and without Australia having to borrow sterling. All we have to do is to exchange credits. At the present time, Australia’s surplus this year amounts to approximately £40,000,000. What would be wrong with using some of that surplus to buy sterling? We could get sterling amounting to £30,000.000 during the currency of this loan, and that would enable us to buy all the goods we require. If it is claimed that, in the field of electrical goods, American manufacturers are outstanding, I reply that they are not. We can get electrical goods from sterling countries without paying interest or the other charges that are listed in connexion with this loan. That is where we on this side differ from the Government and its supporters. We will stand up to that view, notwithstanding the tirade of abuse we have heard from Senator Laught. The people of Australia will agree with us that there is no necessity for private enterprise to get goods from dollar countries. That is especially true when we remember that the dollar countries will not buy much from us. We cannot get their goods on an exchange basis. All we can get is credit for the purchase of their goods, but that leaves us in a worse position than we were in before.
Any one who studies the history of loanraising in Australia, both by the States and by the Commonwealth, will find that very few loans are repaid. Most of them are converted, and that means paying more interest for the additional credits made available. The proposal now before us is for a loan of 54,500,000 dollars. If the loan is repayed after fifteen years, Australia will have paid about 26,000,000 dollars in interest and other charges. That means that, in order to obtain credit, we will eventually have to pay not only the 54,500,000 dollars borrowed, but also expenses and interest during the whole of the period of the loan. Surely honorable senators opposite can see that that can be done without paying such extraordinary amounts by way of interest to banking institutions overseas. We are faced again with the old problem of the dictatorship of the banks. Unless we are careful, we shall again get into the position in which Australia was placed in 1931, when its economic policy was controlled by banks and other financial institutions. Honorable senators will remember the time when those institutions dictated Australia’s economic policy, and they may also recall that the present Prime Minister (Mr. Menzies) condemned the action of some of the people concerned. We on this side say plainly and bluntly that Australia could use the surplus standing to its credit abroad, or could get the money from taxation. The people will have to pay in the long run, and they might as well pay it to-day as in ten years’ time, with exorbitant interest rates added. As I have said, we could exchange our surplus for sterling, and with the credits so obtained we could purchase the machinery we require, with the exception of a few extraordinary or big machines the patents for which are held in the United States of America. Until about two years ago, some of those big machines were not obtainable outside the United States. “Who wanted those machines in Australia? Most of them are rusting and going to waste. We have no spare parts for them and when they break down, we have to send to the United States or Canada for parts. We are not allowed to touch them in Australia or employ engineers to make spare parts because by that means we would be establishing an industry to compete with the American makers. One of the reasons for the loan under discussion is to obtain spare parts for the machinery that is already in Australia. We could make the spare parts ourselves. The Government would be acting to better advantage if it used the £40,000,000 I have mentioned to obtain sterling and buy the goods we want in the sterling area. It would not have to pay a penny in interest charges. We could get the spare parts required and keep the machinery working. It is all very well for Government supporters to state that the loan is required to buy spare parts. That aspect of the matter should have been studied in the first place, and steps taken to ensure that the spare parts problem would not arise.
Reference has been made by Senator Laught to the Trans-Australian railway and to the improved equipment that has been bought for it. But the train that runs on that railway was built by a Berlin firm and was bought with sterling currency.
– I was referring to the engine.
– The honorable senator said that persons who rode on the train had a comfortable ride. The train was built by Germans. It has numerous German pictures on the walls of the carriages; and it was bought with sterling. Is it necessary to go to the United States or Canada to get diesel engines? We have always been able to get them from the sterling area, and we could get them there now. Reference has been made to earth-moving equipment. I have said before in this chamber that the Government would ruin the manufacture of earth-moving equipment in Australia by importing machinery, and that has happened. Australian firms are prepared to manufacture heavy earthmoving equipment. They have been manufacturing small machines already. Some firms are building traction engines. Honorable senators on the Government side cannot convince me that the earthmoving equipment made in Australia is not suitable for Australian conditions and that we must buy tractors from dollar countries. That is not correct. We can get anything we like from the sterling area; and what is wrong with building them in Australia?
Honorable senators who support the Government have stated that we must expand. We will develop Australian industries if we build the machinery we want in Australia, just as we did during World War II. Starting from nothing, and using Australian credit, we manufactured many goods in Australia during the war. Some of them were made by private enterprise. The necessity of the times dictated that development. By using technicians from overseas, we could teach Australian workmen to make the goods we want instead of paying exorbitant interest rates and charges to American firms which thus gain a hold in Australia at the expense of Australian industries. That is the essence of the differences that exist between the points of view of the Government and the Opposition.
The time will come when the Government will realize that it does not need dollars either from Canada or the United States. If Ave could expand our trade with those countries, we could get our requirements without borrowing dollars ; but our trade balance with them is unfavorable to us. We have to draw continually on the dollar pool to meet our commitments in the dollar areas. Our currency is exchangeable with sterling, and with sterling we can buy any currency, including Swiss francs. Reference has been made to electricity undertakings. We could get all the electrical equipment we want in Sweden with Australian currency converted into sterling. The Government has gone to Scandinavian countries for men and machines to construct theSnowy Mountains hydro-electric project. That proves that we can get what we want from sterling areas without having to borrow from the hard currency area. We have already raised a loan in Switzerland. We do not sell many of our products to Switzerland because it does not want them, but with sterling, we could buy all we want of Swiss commodities without borrowing a penny.
The Minister for National Development (Senator Spooner) stated in his flamboyant speech that it was necessary to get more machinery and plant so that we could increase our exports. He also stated that we had obtained some millions of dollars from the United States and Canada, and that our total commitments now exceeded more than 200,000,000 dollars. The honorable gentleman added that the first loan of 53,000,000 dollars had already been expended and that the proceeds of the second loan had been spent and the machinery procured with it was in Australia. It is remarkable that our exports, apart from some primary products, have decreased although it was expected that they would expand.
I do not think that the borrowing of money will result in an expansion of production. There are economic reasons why Australia is losing export markets. Those reasons have nothing to do with dollars, but it is incorrect to state that borrowing will assist in the expansion of our export markets in view of the fact that primary production for export is in the doldrums and the prices that are being received for our exports are declining. It has been stated that certain of our goods sold overseas are not of good quality or are not well packed. I do not know whether that is the fault of the Australian Government or of the State governments. However, Australian overseas balances have fallen by about £60,000,000 this year, and have reached the low figure of £350,000,000. Actually, the position is worse than is indicated by that figure because, in order to arrive at our true overseas indebtedness, the amount proposed to be borrowed under this bill should be subtracted from that £350,000,000. Sooner or later, sterling funds will have to be used in order to repay this loan, because Australia belongs to the sterling area.
Past experience does not support the Government’s contention that this loan will enable plant to be brought into pro duction in order to make goods for export. Australia is not now sending as many manufactured goods to South Africa as it sent previously. We were told that our production of manufactured goods would be increased by the importation of American machinery, but Australia is not now selling as many manufactured goods as it sold previously. A similar state of affairs exists in primary production, apart from wheat and wool.
The Australian Labour party believes that the Government should not borrow from overseas at all. It believes that there is a formula by the use of which the Government could obviate the necessity for overseas borrowing. That was proved during the war, when the Labour Government obtained its overseas requirements under the lend-lease agreement. That action was taken in order to deal with a specific occurrence. The Labour Government did not borrow money from overseas, and I think that everybody will admit that a good job was done during the war by all the governments of Australia., State and Federal. Surely such a policy could still be applied. The Labour Government did borrow money within Australia. That borrowing served a good purpose, because the interest which was paid to those who lent the money to the Government was used for industrial development. Some of the expansion that is still taking place in Australia is due to the financial policy which tile Labour Government adopted during the war. I am opposed to the bill.
– I understand that Senator O’Flaherty is opposed to the proposal to borrow American dollars from the International Bank for Reconstruction and Development because he believes that such a procedure would interfere with local manufacturing industry or hinder its growth. He also appeared to believe that, even if overseas borrowing were necessary, it would be better for Australia to borrow in Britain or other soft currency countries. Senator O’Flaherty said that the proposed loan constituted a. threat to Australian manufacturers. I challenge Senator O’Flaherty to indicate items which have been purchased with the dollars that were formerly borrowed and which are now made in Australia, or which could be produced in Australia within a measurable time.
– One such item is tractors.
– The type of tractor that is being bought with overseas funds is not the type of tractor that is being manufactured in Australia. The only valid reason for buying tractors from America or any other country is that they are not available in Australia. I challenge Senator O’Flaherty to examine the list of developmental machinery which has been bought with the dollars that were formerly borrowed, and to tell the Senate what item among them is now manufactured in Australia or will be manufactured in the foreseeable future.
– I have told the honorable senator, tractors.
– I have already answered that interjection.
It is all very well for Senator O’Flaherty to project his mind forward to the time when this country will be self-contained and able to produce all the things we now have to buy from overseas. But what Senator O’Flaherty so frequently loses sight of is the fact that our economy is in the developmental stage, a.nd that from time immemorial, economies, in the developmental stage, have had to have support and succour.
Senator O’Flaherty’s second proposal was that when we have to borrow money we should borrow it in Great Britain or some other soft currency country. The honorable senator must know, although he may not feel inclined to admit it, that the policy of this Government has, of sore necessity, been directed to purchasing from Great Britain and other soft currency countries rather than from dollar countries. But we have no dollars, and that is why we are to-day borrowing dollars. Had it been possible to purchase the goods in soft currency countries, most certainly that would have been done. There was a time when it was suggested that many articles which Australia needed, and was buying with former loans, should have been purchased from
Great Britain, but in point of fact, when a close examination was made - and I refer particularly to the diesel engines mentioned by Senator Laught - it was discovered that, although Great Britain was making diesel engines, none was available for export to Australia. That was in the post-war transitional period, when Great Britain required diesel engines to rehabilitate its own railways and to supply markets in other parts of the world.
The plain fact about the opposition of the Labour party to this matter is that it is Labour policy to oppose overseas borrowing, just as it is Labour policy to oppose the sending of troops to Malaya. I thought that the Leader of the Opposition (Senator McKenna) would have done greater justice to his case had he made a simple statement to that effect and then sat down, rather than try to justify his opposition to the measure. The honorable senator referred to what had happened during the Curtin and Chifley regimes. If his reference was intended to apply to the period of the war, then I think that he should admit that there is no comparison at all. The position in Australia during “World War II., as in many other countries, and as the Leader of the Opposition well knows, was that Australia, as an exporting nation, was piling up credit upon credit in every financial centre of the world and was unable to spend the money it had earned. Indeed, we had the greatest difficulty, as honorable senators will remember, in obtaining from overseas equipment and armaments which were necessary for the defence of the country and the conduct of the war.
Despite all our efforts to spend the money which we were making, it was impossible to do so. It is quite misleading for the Leader of the Opposition, or any other honorable senator opposite, to say that the improvement in our overseas capital position, which occurred during the war, was the result of governmental action. It was; solely a consequence of the war and the conditions which were created by it. But possibly the Leader of the Opposition was referring .to the post-war period when the Chifley Government was in power. Here again, we come to a most interesting period in history. That was a time when no one in Australia could invest threepence, because investment was controlled. It was impossible to establish a.n industry without government sanction, because the socialist Government of the country had clamped down on every available penny and saw to it that private enterprise was throttled as from the end of the war. That is why money was available to the Labour Government. There was no other channel of investment. The people of Australia, terrified as they were, realized that if they did not fill the loans, the big stick of compulsion would be waved at their heads.
– There would have been a capital levy.
– That is so. To compare the conditions which prevail to-day with those which prevailed during the Chifley regime, either during the war or during the post-war period, is utterly misleading.
The Leader of the Opposition also referred to the deterioration in the standing, which this country enjoyed in Great Britain and other parts of the world, since this Government came to office. I am becoming used to the honorable senator, in his particularly skilful and adroit manner, taking debating points, but I think there are times when he should relate his remarks to realities. Valuable as it is to take debating points, we should not forget that this is not just a debating society but the Parliament of the nation, and that it is dealing with realities. If the honorable senator doubts for one minute the standing of this country overseas, I suggest that he avail himself of the first opportunity to go overseas and find out what people in other countries are thinking. He should, for the sake of argument, take a quick look round Australia and find out how many British firms are trying to get British goods into Australia. He should go to various importing houses and hear the stories of those who run them concerning the eagerness with which British firms are willing to make finance available so that they may get their goods into Australia, on any terms. He should make a study of the amount of capital which has been invested in this country since this non- socialist Government has been in office. Then, he might also have a look at the Swiss loan, as an indication of Australia’s standing overseas. Having done all those things and because he is completely honest, when next he has an opportunity to discuss this sort of thing, he mus admit that on this occasion he has overstated his case, if only by the merest trifle.
The Leader of the Opposition stated that this loan was being raised at the wrong time. In support of that contention he referred to the fact that our overseas balances are not as high as they were a year or two ago. If the honorable senator is sincere in advancing that argument, he has entirely misunderstood the meaning of the run-down in our overseas balances. Any country going through a developmental period must spend funds overseas to bring in capital equipment with which to expand its economy. It is interesting to note that in the year ended June, 1954, no less than 74 per cent, of Australia’s imports consisted of unfinished articles - that is, goods coming into the country to go into further manufacture to sustain and extend the Australian manufacturing industries. A vast, amount of money has been spent in capital expansion. It is impossible to establish oil refineries in Australia without spending large sums of money overseas. No industry can be established or developed without capital outlay.
Senator McKenna criticized the fact that the loan is for a short term, and said that many of the capital items purchased would have outlived their usefulness and become obsolescent before the term of the loan had expired. I do not entirely disagree with that statement, and will not argue against it, but is that to be a reason why Australia should not import necessary capital equipment? .1 invite Senator McKenna to examine the vast light land development in this country by means of imported machinery. Even if the plant used in that development were now worn out would that be a legitimate argument for not importing it? I direct the honorable senator’s attention to the development of war service projects. He might appreciate the large amount of overseas capital that has been spent in railways rehabilitation. Does he forget that Rum Jungle has been developed in fifteen months as a result of using overseas capital goods?
Senator McKenna referred also to the interest rate of 45/8 per cent., and said that it proved that the loan raised last year at 43/4 per cent. was a shocking piece of financial negotiation. The money market, as in the case of any market, depends entirely on the conditions prevailing at the time a transaction is made, and when this loan was negotiated money was a little cheaper. It should be remembered that the rate of 45/8 per cent. includes 1 per cent. commission, as provided in the articles of association of the International Bank, so that the real rate of interest being paid is 35/8 per cent. If Senator McKenna complains about the 1 per cent. commission being included he should call a meeting of his supporters and state his grievance to it. A Labour government was in power when the agreement was made for the inclusion of the 1 per cent. interest charge. The senator complains further that the if per cent. commitment charge is excessive. He did not attempt to show why that was so, but I suggest that it is not. When money is to be held on call, but remains uncalled, normal banking practice is to make a small charge, and the if per cent. is by no means exorbitant.
A feature of this loan which strikes a new note is the fact that 10,400,000 dollars has been farmed out to eleven trading banks in America. That is an extremely healthy sign and has many advantages, as was pointed out by the Minister in his second-reading speech. When Australia resorts to borrowing, and approaches a country such as the United States of America, it has the advance assurance that its credit there, as elsewhere, is high. That is demonstrated by the fact that no fewer than 11 banks in America have agreed to contribute to this loan. Some members of the Opposition seem to be convinced that Australia can provide all the capital goods necessary for its development.
– We can provide capital for the hire-purchase system.
– When all existing forms of saving are dried up the Labour party resorts to the printing of money and so deludes itself that its financial resources have been replenished. That was demonstrated in recent years when a Labour government was in office.
– The Menzies Government increased the note issue.
– That was done to meet a particular circumstance and not as a matter of deliberate policy.
– -Does that matter?
– It does matter, indeed, that a comparatively small amount of bank credit should be issued to overcome a temporary emergency. That issue had the required effect of putting a “ shot in the arm “ into the Australian economy, and rapidly achieved its rehabilitation when it most needed it. But that is quite different from the issue of money as a matter of policy, as suggested by Senator O’Flaherty when he said that all the means necessary for the development of Australia could be provided from its own economy. Australia has seen disastrous results from such a policy, and the Labour party and this Parliament are well aware of the reaction of the Australian people to it. They rejected it out of hand.
This loan is thelast item in a programme initiated in1951 by the Right Honorable Prime Minister involving a total amount of more than 250,000,000 dollars. The next job in respect of the provision of overseas capital is to arrange for further loans, as and when required. Unlike so many members of the Australian Labour party, I do not regard with horror the prospect of having to borrow money from overseas, because I have faith in the ability of this country to develop at a rate adequate to enable us to make repayments of loans undertaken henceforth and, at the same time, maintain a balanced economy. This Government enjoys the confidence of overseas countries. I trust that, when it next approaches them for finance, it will be well received.I am sure that that will be the case.
Question resolved in the affirmative.
Bill read a second time.
In committee:
The bill.
– ParagraphI. of Schedule 2 reads, in part -
The Program, which will for the most part be carried out privately, also includes the following (among other) public projects: -
Expansion of irrigation particularly in the Riverina district of New South Wales, the Goulbum Valley in Victoria, and the Mareeba, Dimbulah and BurdekinRiver districts of Queensland.
Can the Minister indicate the extent to which the Mareeba and Dimbulah districts will benefit under the proposed loan?
I refer now to section 3.01 of Article III. of the First Schedule, which reads -
The Borrower shall cause the proceeds of the Loan to be applied exclusively to the cost of goods which will he required and used exclusively in the carrying out of the Programs as described in Schedule 2 to this Agreement. The specific goods to be purchased out of the proceeds of the Loan shall be determined by agreement between the Bank and the Borrower, and the list of such goods may be modified from time to time by agreement between them.
Apparently, there will have to be a detailed list of the goods on which this loan may be expended. Will the Minister inform me of the proportion of the proposed loan that will be expended on the developmental projects in Queensland that I have mentioned, and the purpose of the expenditure?
I come now to paragraph V. of Schedule 2, in relation to the air transport programme, which reads -
This Program consists of the modernization and expansion of the fleets of aircraft owned and operated by Qantas Empire Airways Limited, by providing to this company aircraft for use in the ordinary course of its business.
Imported equipment to be financed out of the proceeds of the Loan includes five longrange aircraft and initial spares for these aircraft.
The Minister for National Development (Senator Spooner) stated in his secondreading speech -
Twelve modern long-range aircraft and spares worth 27,000,000 dollars for use on both our overseas and domestic air routes are being paid for out of the proceeds of the second and third loans.
Will the Minister inform me why there is no reference in paragraph V. of Schedule 2 to the other seven modern long-range aircraft to which he referred in his speech?
– Arrangements with the International Bank for Reconstruction and Development are not in as specific terms as Senator Byrne, by the nature of his questions, apparently would like them to be. If my recollection is correct, the constitution of the bank provides that it may make loans for developmental purposes related to specific projects. Therefore, the bank could make a loan to a country other than Australia, for the development of a certain irrigation scheme, or a certain power house. We have conformed to the constitution of the International Bank by including in the second schedule to the bill illustrations of the kind of projects for which the money is required. However, there is a good deal of flexibility in the arrangement between the bank and the Australian Government, which enables us to expend the money as we consider best. We are not restricted to certain projects, and a list of goods that may be purchased with the money. There is not a complete link to suggest that the goods in the list are necessarily for a particular project. In those circumstances, I am unable to say specifically the goods that will be purchased out of the loan moneys for the MareebaDimbulah project or the Burdekin project. The honorable senator referred to the purchase of twelve modern long-range aircraft. Four of those aircraft are for Australian National Airways Proprietary Limited, and eight for Qantas Empire Airways Limited.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
page 373
Debate resumed (vide page 349).
– The measure now before us deals with an agreement authorizing the borrowing of 60,000,000 dollars from Swiss sources. That is the equivalent of £6.000,000 in Australian currency. The loan is for a period of fifteen years with interest at 3$ per cent., and is issued at £99 10s. or a discount of one-half of 1 per cent. When we were dealing with another measure earlier to-day - that relating to a loan from the International Bank - I made some observations on the measure now before us which apparently misled Senator Paltridge, and caused him to believe that they related to the bill then under discussion. I shall repeat those observations now, because they were applicable to this bill. I say that, when the Government negotiated a similar loan last year,- it made a bad bargain. That is proved by the fact that, immediately after the loan had closed, the bonds or securities were selling on the Swiss market at a premium. That was an indication that the terms of the loan had been too generous to Swiss investors.
It is obvious that the Government has realized that it was too generous last year, because, on this occasion, the rate of interest is 3$ per cent., compared with 4 per cent, last year. Moreover, the discount on this occasion is only £ of 1 per cent., whereas last year it was 1 per cent. I repeat that it was not to the credit of the Government that Australian bonds should have sold at a premium so soon after the previous loan was floated.
– Would it have been bettor if they had been selling at a discount ?
– It is better for the prestige of Australia that they should sell at a premium, but I repeat that the Government was too generous in its terms. Had there been close bargaining on the previous occasion, the Government might have negotiated a loan on the more favorable terms obtained in connexion with this loan.
The Minister has not given us any particular information as to how the proceeds of this loan are to be allocated, although I think he did indicate that the proceeds would be applied to assist Australia’s development. I, therefore, conclude that the loan proceeds will be applied in the same way as the proceeds of the loan from the International Bank will be applied. Nevertheless, in my opinion, it is undignified for Australia to borrow in Swiss francs the equivalent of £6,000,000 Australian. I wonder that supporters of the Government are not ashamed to sponsor an arrangement under which the Government of Australia has pledged its credit, not to the Government of Switzerland, or to financial institutions in that country, but to little investors, for a paltry £6,000,000. Could not the money have been obtained by an arrangement between the Commonwealth Bank and one of the trading banks of Switzerland? Why must the Australian Government be pictured before the world as so needy that it has to borrow, for a second time, the paltry sum of £6,000,000 in Switzerland ?
– Little fish are sweet.
– That may be so, but the amount is certainly very little. The advantage to Australia does not compensate for the damage to our prestige, and the injury to our dignity before the world. All the observations that my colleagues and I have made on the subject of borrowing from overseas apply to this measure. We oppose it for the reasons that I gave on the earlier occasion to which 1 have referred and have repeated to-day, and because of the general objection we have to overseas borrowing under present-day conditions.
Question resolved in the affirmative.
Bill read a second time, and passed through ‘ its remaining stages without amendment or debate.
page 374
Motion (by Senator 0’Sui.i.ivaij) agreed to -
That the Senate, at its rising, adjourn to Tuesday, the 24th May, at 3 p.m., unless sooner called together by the President.
page 374
The following papers were presented : -
Life Insurance Act - Ninth Annual Report of the Insurance Commissioner, for year 1954.
Public Service Act - Appointments - Department -
Repatriation - H. Davey.
Works - D. J. L. Brown, F. E. Yeates.
Senate adjourned at 4.42 p.m.
Cite as: Australia, Senate, Debates, 12 May 1955, viewed 22 October 2017, <http://historichansard.net/senate/1955/19550512_senate_21_s5/>.