Senate
20 October 1961

23rd Parliament · 3rd Session

  1. Senate
  2. 23rd Parliament
  3. 1961

The PRESIDENT (Senator lite Hon. Sir Alister McMuIIin) took the chair at 10 a.m., and read prayers.

page 1341

QUESTION

WOOL

Senator MCCALLUM:
NEW SOUTH WALES · LP

– I should like to direct a question to the Leader of the Government. Has he been informed that a sum equal to £A 1 ,250,000 has been made available for wool promotion by the French Association of Wool Manufacturers - the Union Francaise des Fabricants de Peignes de Laine?

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

– I have not seen the report to which Senator McCallum refers. I heard of this matter and made some inquiries from the Minister for Trade. My colleague is in the same position as I am. He has not seen the report, but he regards as an encouraging development the expansion of wool promotion in France or in any other country. The whole of the Australian wool clip is sold each year. If France builds additional woollen mills, that may not increase the export of wool from Australia, but the added demand that that would produce might have a beneficial effect in Australia in that it might strengthen the price of wool.

page 1341

QUESTION

SEARCH FOR OIL

Senator SCOTT:
WESTERN AUSTRALIA

– My question is directed to the Minister for National Development. 1 preface it by stating that recently a bill was passed in the Senate known as the Oil Search Subsidy Bill. It contained a clause which provided that drilling companies in Australia could apply for a drilling subsidy on a footage basis. I ask the Minister whether a formula has yet been worked out to cover the amount of payment that drilling companies can expect from the Government if they elect to obtain their drilling subsidy on a footage basis.

Senator SPOONER:
LP

– The answer to Senator Scott’s question is, “ Yes “. 1 have approved of the rate of subsidy on a footage basis. I cannot make the provision operative until the legislation becomes effective - it is not yet through the House of

Representatives. Immediately the bill receives royal assent regulations will be prescribed setting out those footage rates.

page 1341

QUESTION

AUSTRALIAN AIRLINES

Senator McKELLAR:
NEW SOUTH WALES

– My question is directed to the Leader of the Government and refers to a statement made by the Deputy Premier of New South Wales regarding allegations made by the manager of East-West Airlines. I ask the Minister whether he is of the opinion that the Minister for Civil Aviation in this place is telling the truth in this matter.

Senator SPOONER:
LP

– Mr. President, some of us have been in the Senate for a long while and, friends or enemies, character conies out when we are in such close contact. 1 do not think that any honorable senator believes that there is anything in Senator Paltridge’s nature which would cause him to refrain from telling the truth. That there is confidence in Senator Paltridge on both sides of this chamber is evidenced by the fact that there has been no question on this point from members of the Opposition. They have not played it dirty. As I have said, there is confidence in Senator Paltridge on both sides. Clearly Mr. Renshaw is trying to make some political capital in circumstances in which such an attempt is quite unjustifiable. All of us here will, I think, agree in that.

page 1341

QUESTION

TUBERCULOSIS

Senator TANGNEY:
WESTERN AUSTRALIA

– I ask a question of the Minister representing the Minister for Health. Has the Minister read in Perth newspapers a statement by a high-ranking doctor that the incidence of tuberculosis in Australia is on the increase? If this is so, will the Government consider resuming the anti-T.B. campaign, the very success of which, 1 feel, lulled people into a sense of false security on this matter? This doctor also stated that there is a clanger of tuberculosis being introduced by people coming into Australia from SouthEast Asia. If this is true, will the Minister ensure that: very strict quarantine measures are enforced at points of entry?

Senator HENTY:
Minister for Customs and Excise · TASMANIA · LP

– I did not see the article to which the honorable senator refers because 1 usually do not read the Western Australian news unless I am over there, and then I find it very interesting. However, I would be surprised if tuberculosis were on the increase in Australia. I thought the anti-T.B. campaign had resulted in quite the opposite trend. I am not questioning what the honorable senator has said, because I have not the facts before me, but I will certainly bring the matter to the attention of the Minister for Health and ask him to have a look at it. As to quarantine measures I can only say that whenever the Customs authorities have worked in cooperation with the quarantine officers, we have found them very keen in their work. They enforce the quarantine regulations very strictly and are alert in their efforts to check the entry of all diseases, including T.B. I will bring this matter to the attention of the Minister for Health and will then advise the honorable senator directly.

page 1342

QUESTION

AVIATION

Senator KENDALL:
QUEENSLAND

– I direct a question to the Minister for Civil Aviation. Will the honorable gentleman have inquiries made into the possibility of having identification marks painted on the roofs of station homesteads, so that pilots of small aircraft can find their way more easily than they can at the present time? I am obviously not speaking of passenger-carrying aircraft on regular routes because they have all the necessary aids to navigation. I suggest that the signs could have some sort of geographical basis. For instance the mark “ Q1 “ could be used for the most northerly Queensland homestead, and so on. I ask the Minister if he could have some inquiries the Minister whether he could have some inquiries made into this matter.

Senator PALTRIDGE:
Minister for Civil Aviation · WESTERN AUSTRALIA · LP

– I recall that some years ago this suggestion was made and a fairly comprehensive report was prepared in connexion with it. I must confess that it is now so long ago that I do not recall at this moment the precise reasons for the conclusion which, broadly speaking, was that the system suggested by Senator Kendall - that of numbering or in some other way identifying homesteads - did not have the advantages that it might appear to have.

I shall have a look at the report again because I recall that I was most interested in reading it. If possible, I shall let Senator Kendall also have a look at it.

page 1342

QUESTION

CIVIL AVIATION

Senator VINCENT:
WESTERN AUSTRALIA

– I preface my question to the Minister for Civil Aviation by stating that no doubt he is aware of certain very interesting developments at the Perth airport, including the provision of runways for jet aircraft. Is a secondary airport or airstrip for jet planes in Western Australia contemplated following the construction of the Guildford airport? If so, where is it proposed to provide the alternative airstrip? Is it contemplated that the airport at Kalgoorlie will be modified for this purpose?

Senator PALTRIDGE:
LP

– The question of alternative airports for jet operations necessarily .must be examined in conjunction with the introduction of jet aircraft. But I remind the honorable senator that as jet aircraft have a far greater range than most of the aircraft currently in use, it is not to be assumed that an alternative airport necessarily would be placed as close to Perth as is Kalgoorlie.

page 1342

QUESTION

JAPANESE MOTOR CAR

Senator TANGNEY:

– I address my question to the Minister representing the Minister for Trade. Is it a fact that Japan is manufacturing a car which is to be named “ Benley “? If so, and in view of the fact that the name of this car quite easily could be confused with the British car “ Bentley “, does the Minister consider the Japanese action to be a fair trading practice? If this car is imported into Australia, will the Minister ensure that due notification is given of the place of origin?

Senator SPOONER:
LP

– I would not care to express an opinion on whether there is sufficient similarity between the names Benley and “Bentley” to justify a judgment that the Japanese action is an unfair trading practice. I think the only thing that we can do is to leave it to the Bentley company to make some allegation first if it feels that there is an unfair trading practice.

page 1342

QUESTION

LLANHERNE AIRPORT

Senator MARRIOTT:
TASMANIA

– Can the Minister for Civil Aviation tell me whether the runways at Llanherne airport, near Hobart, or at Western Junction airport, near Launceston, are capable of taking jet aircraft?

If not, what plans are being prepared by his department to make those airports suitable for jet aircraft?

Senator PALTRIDGE:
LP

– To answer the honorable senator’s question precisely I shall have to obtain technical information from my officers, butI understand that in case of need Hobart airport can be used by jet aircraft.

page 1343

QUESTION

DENTISTS

Senator ROBERTSON:
WESTERN AUSTRALIA

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

  1. Will the Minister investigate statements made that many of Australia’s fully trained dentists have gone to the United Kingdom because of better opportunities offering there under the health scheme, thereby causing a grave shortage of qualified dentists in Australia?
  2. Will he see whether it is possible to offer better inducements to our trained people to remain in Australia?
Senator HENTY:
LP

– The Minister for Health has furnished the following reply: -

  1. and 2. lt docs not appear that this is a matter within the jurisdiction ofthe Commonwealth.

page 1343

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– ] move -

That the bill be now read a second time.

In the course of his Budget Speech delivered on 15th August last, the Treasurer (Mr. Harold Holt) outlined a number of proposals to amend the income tax law. This bill is designed to give effect to those proposals. At the outsetI mention two proposals of particular interest to primary producers. The first of these proposals is that income tax deductions be authorized for capital expenditure incurred by primary producers on the purchase of pipes to be placed underground for use in conveying water required in a business of primary production. The deduction, which will be available for the year in which the expenditude is incurred, will also extend to the cost of laying the pipes underground. The other proposal relates to cases where, in order to control or eradicate disease, livestock owned by a primary producer is destroyed. The new provision will also apply if live-stock dies of a disease and there is, in Australia or its Territories, a law concerning the compulsory destruction to live-stock suffering from that disease.

Compensation received by the primary producer in these cases, together with proceeds of the sale of the hide or other part of the animal, is assessable income for tax purposes. If the amount of the income exceeds the cost of the livestock or its taxation value at the beginning of the income year, the difference represents a profit taxable in the year it is derived. Taxation of the whole of the profit in that year may leave the primary producer with insufficient funds for the replacement of the live-stock. The bill will enable a primary producer to elect that profit arising in the circumstances outlined be taxed over a period of five years. Thus, where an election is made, one-fifth of the profit will bc included in the assessable income of the year in which the stock dic or are destroyed and a like amount will bc taxed in each of the next four years. Tf the right of election is not exercised, the present practice of taxing the profit in the year it is derived will not bc disturbed. The new provisions will commence to apply for the 1 960-6 1 income year and the right of election will be available in relation to animals destroyed in consequence of the recent outbreak of swine fever.

A further proposal announced in the Budget speech relates to the income tax deduction for one-third of calls paid to companies engaged principally in mining, prospecting or afforestation in Australia or the Territory of Papua and New Guinea. The deduction does not, however, extend to capital subscribed by one company to an interposed company that, in turn, pays calls to a mining, prospecting or afforestation company. It is proposed to amend the law to enable the interposed company entitled to a deduction for one-third of the calls to forego that deduction so that it may be passed back to the company which provided share capital out of which the calls were paid. The application of the new provision will be conditional upon the mining, prospecting or afforestation company being a wholly-owned subsidiary of the interposed company. A further test will be that the company to which the deduction is transferred owns at least 50. per cent, of the paid-up capital of the interposed company.

Honorable senators will be aware that the deduction available for medical, including dental, expenses in respect of a taxpayer and each of his dependants is, in general, limited to £150 for each person. Within that overall limit a ceiling of £30 per person has hitherto been placed on the deduction for dental expenses. It is proposed in the bill that this latter limit be removed. The general limit of £150 for all medical expenses will not, however, be varied.

The bill also gives effect to the previously announced decision to allow as income tax deductions gifts of £1 and upwards to the Ian Clunies Ross Memorial Foundation.

Further proposals contained in the bill make minor changes relating to residents of Australia who derive income from sources in the Territory of Papua and New Guinea. Under the present laws, both Australian and Territory tax is payable on that income. Double taxation is, however, relieved by allowing against the Australian tax a credit in respect of the Territory tax paid. This procedure involves the separate lodgment of tax returns and separate payment of tax for Australian and Territory tax purposes by such taxpayers. The amendments now proposed are designed to facilitate arrangements that will remove the need for certain taxpayers to lodge returns of income in the Territory.

It is envisaged that the new arrangements will apply where Australian residents who are not also resident in the Territory derive from the Territory income consisting of dividends, debenture interest or pensions on account of service with the Territory Administration. In these cases, the Commissioner of Taxation will collect the full amount of Australian tax before the allowance of the credit to relieve double taxation. The amount of the credit will then be ascertained and will be applied in payment of the Territory tax due on Terri tory income. The taxpayer to whose income the new procedures apply will thus be able to satisfy his Australian and Territory tax obligations by lodging one return of income in Australia and making one payment of tax to the Commissioner of Taxation. The amendments proposed will not vary the aggregate of the Australian and Territory taxes payable.

Further explanations of the proposed amendments are contained in a memorandum which is being circulated for the information of honorable senators. In these circumstances I do not propose, at this stage, to speak at greater length on. the bill, which I now commend to the Senate.

Debate (on motion by Senator Poke) adjourned.

page 1344

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION BILL 1961

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE (Western Australia - Minister for Civil Aviation [10.25]. - I move -

That the bill be now read a second time.

The purpose of this bill is to declare the rates at which income tax and social services contribution will be payable for the current financial year 1961-62. The proposed rates for both individuals and companies are the same as those enacted for the 1960-61 financial year. The bill does, however, specify for the first time the rates of tax to be payable by trustees of superannuation funds deriving investment income on which tax is payable in accordance with legislation passed earlier this year. These rates are 5s. in the £1 on the first £5,000 of the investment income on which tax is payable, and 7s. in the £1 on the balance of that income. Honorable senators will observe that these rates are the same as those payable by mutual life assurance companies.

The bill also proposes an increase in the amounts of income that are exempt from tax by reason of the age allowance. These- increases accord with the recent increase in age pensions. For the 1961-62 financial year no tax will be payable by an aged person residing in Australia whose net income does not exceed £455. For married couples, both qualified by age and residence in Australia, no tax will bc payable if their combined net income does not exceed £910. The previous exemption points were £442 and £884 respectively.

As in the past, the bill also proposes some relief from tax for persons of pensionable age whose net incomes are somewhat in excess of the new exemption limits. For a single aged person, this relief will extend up to a net income of £520. At present, this limit is set at £502. For a married aged person contributing to the maintenance of his or her spouse who also satisfies the age qualification, relief may be available if his net income does not exceed £1,293. The limit to which this relief at present applies is £1,236. The cost to revenue of these extensions of the age allowance are estimated to be £385.000 in a full year and £230,000 in 1961-62. Other provisions of the bill correspond, in substance, with those enacted last year, and I do not propose to embark upon explanations of them. I commend the bill to the Senate.

Debate (on motion by Senator Poke) adjourned.

page 1345

SUPERANNUATION (PENSION INCREASES) BILL 1961

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– I move -

That the billbe now read a second time.

Changing conditions since the last war have led to periodic reviews of pensions payable under the Superannuation Act, and this bill provides for further increases in certain pensions as a result of the review made by the Government when framing the 1961-62 Budget.

Eligibility for superannuation pension is related to the salary of the contributor. As the salary increases so, too, does the entitlement to contribute for a greater number of units of pension, up to the limit of salary at which the maximum pension is reached. Thus the post-war increase in prices has meant that those who retired many years ago, and whose pension entitlements were governed by the lower salaries of those times, have been more seriously affected than those who retired more recently on higher salaries. Progressive increases in the value of the unit from 10s. in 1922 to 17s. 6d. in 1954 provided some relief to pensioners, but because of the lower salaries of earlier retirees, adjustments by this method do not provide a satisfactory solution. Flat increases in unit value also involve substantial increases in the future entitlement of current contributors despite the automatic adjustment of entitlements as salaries increase.

Recognizing the shortcomings in the earlier pattern of adjustments, the Government, in 1957, introduced a sliding scale of increases for pensioners who retired before 1947 and who were therefore at a serious disadvantage compared with those who became entitled to take up additional units of pension as a result of the marginal increases in salaries in 1947. The scale provided higher rates of increase for earlier retirees and was designed to afford a similar measure of relief to all pensioners. This adjustment undoubtedly provided greater all-round justice than the earlier flat increases in unit value, but some anomalies did result because certain small groups of pensioners, for different reasons, had not received the progressive adjustments of unit entitlement that were generally available.

A careful examination was made of the possibility of again applying a sliding scale of increases, with some further refinements, but it was clear that some serious anomalies could not be avoided if the same scale was applied to pensioners at all levels because salary movements since 1947 have not been uniform for all classes of employees. The bill therefore provides for individual determination of each pension. The available funds will again be applied to relieve the position of earlier retirees and the aim of the adjustment is to bring the Consolidated

Revenue component of earlier pensions up to the level which would now apply if the pension had commenced in 1954.

Details of the adjustment will be explained in the committee stage, but the following is a broad outline of the manner in which the increases will be calculated. For each pensioner who retired at an earlier date, a notional 1954 salary will be determined, having regard to general increases in salaries that occurred after the date of retirement and prior to 1954. By reference to the scale of units contained in the 1954 act. the number of units of pension applicable to that notional salary will be ascertained. The basic increase will be 12s. 6d. per week - the normal Consolidated Revenue component - in respect of each unit of pension by which the number of units applicable to the notional 1954 salary exceeds the number of units applicable to the retiring salary. The principal qualifications are that those who did not avail themselves of all the units of pension to which their salaries entitled them will receive an appropriate proportion of the basic increase, as will those in receipt of actuarial equivalent pensions and partial invalidity pensions; that widows will receive five-eighths of the increase to which their husbands would have been entitled if they were still alive; and, that increases payable under the 1957 act will be absorbed in the current adjustment.

The increase has been designed to absorb the 1957 act adjustments in order to remove the few anomalies which resulted therefrom and to place all pre- 1954 pensions on a common basis. In no case yet examined will a pensioner who benefited in 1957 fail to receive some further increase under the bill but, in the event’ of a case arising in which the current increase is insufficient to absorb the earlier adjustment, the bill has been drafted to ensure that the existing rate of pension will apply.

In effect, the adjustment will equate the employer’s share of pension in respect of all earlier employees who rendered similar service but at different times. It therefore represents the fairest form of adjustment yet devised; and at the same time it will remove a number of existing anomalies and should provide a sound basis for future considerations.

The bill also provides for new rates of pension in respect of certain former members of the Defence Forces who were retired before the introduction of the Defence Forces Retirement Benefits Act and were granted special pensions. These pensions have been adjusted from time to time when other pensions under the Superannuation Act have been increased and the new rates set out in the schedule have been calculated by applying the principles contained in the bill. I commend the bill to honorable senators.

Debate (on motion by Senator Sandford) adjourned.

page 1346

DEFENCE FORCES RETIREMENT BENEFITS (PENSION INCREASES) BILL 1961

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP

– I move -

That the bill bc now read a second time.

The bill which I have pleasure in introducing provides for increases in the rates of pension payable under the Defence Forces Retirement Benefits Act to certain retired members of the Permanent Defence Forces. Pensions under this act are of two classes - those payable directly in respect of the number of units for which the member was contributing at retirement, and those payable in respect of the member’s rank and period of service, the amounts of which are governed by the member’s unit entitlement. Increases in pay subsequent to the introduction of the Act in 1948 have increased the number of units for which members are eligible to contribute so that those persons who retired in later years are receiving higher rates of pension than those who retired earlier. The earlier retiree has therefore bee’n more seriously affected by the post-war increases in prices.

Some measure of relief has been granted to pensioners by increasing the value of a unit of pension from 12s. 6d. to 15s. and later to 17s. 6d. with consequent adjustment of pensions payable for rank and period of service. This method of adjustment is not altogether satisfactory because the earlier retiree, by reason of his smaller number of units receives a lesser increase in pension, and because it involves a substantial increase in the future entitlement of current contributors who, in any case, receive higher pensions by reason of increased unit entitlement. The Government, therefore, decided that any method of adjustment now adopted should be such that the funds available from the 1961-62 Budget should be applied to relieve the position of those who retired in the earlier years of operation of the scheme.

The method of adjustment now proposed by this bill will provide an increase in the pensions payable to those members who retired before 10th December, 1954. The amount of the increase is calculated by determining the number of units for which a member of the same rank would be eligible to contribute at 10th December, 1954, having regard to his pay at that time, and by granting an increase of the appropriate Consolidated Revenue component of each unit by which this number of units exceeds the number for which the pensioner was eligible to contribute at retirement. As an indication of the increases provided by the bill, I quote the following examples for the information of honorable senators. Privates at present in receipt of pensions of £155 per annum will receive an increase of £22 per annum; sergeants in receipt of £205 per annum will receive £30; majors in receipt of £505 per annum will receive £60; and colonels in receipt of £855 per annum will receive £110.

Certain modifications are necessary to cover the cases of members who were not contributing for the full number of units to which they were entitled on retirement, and pensioners who have commuted portion of their pension to a capital sum. The bill provides in those cases that the pensioner will receive an appropriate proportion of the basic increase. Widows, who at present receive five-eighths of their husband’s pension, will receive five-eighths of the increase to which their husbands would have been entitled under the bill if they were still alive.

The effect of the adjustment is to raise all earlier pensions by the Commonwealth share of the increase payable to those who retired after December, 1954. As such it represents the most equitable method of adjustment and should form a basis for any future considerations. I commend the bill to honorable senators.

Debate (on motion by Senator Drury) adjourned.

page 1347

RAILWAY AGREEMENT (WESTERN AUSTRALIA) BILL 1961

Second Reading

Debate resumed from 1.9th October (vide page 1324), on motion by Senator Spooner -

That the bill be now read a second time.

Senator WILLESEE:
Western Australia

– The bill before the Senate ratifies the agreement entered into between the Commonwealth and Western Australia to standardize the railway gauge between Kalgoorlie and Fremantle. Of course, the Opposition offers no objection to it. The Treasurer (Mr. Harold Holt) mentioned in his Budget Speech that £150,000 had been appropriated for the purpose of carrying out the preliminary surveys in connexion with the work. This bill provides for the proportion of moneys to bc found by Western Australia and the Commonwealth and also how those moneys will be paid back over the years. It is noteworthy, Mr. President, that the State will finally carry the greater burden of this amount, namely £26,800,000. and the Commonwealth will carry a burden of £13,400,000. The State will be charged interest on this money.

I raise the query that, as the primary objective of this measure is development, it seems strange that in assisting a State to develop, the Commonwealth at the same time should place a burden on the State by requiring it to pay interest on the money.

As I understand the position in regard to Joan moneys, over the last few years there has been a gap between the revenues of the States and the loan moneys required and the Commonwealth has been filling this gap from its own revenue. I assume that the money that is being made available to Western Australia - both the payment by the Commonwealth and the money that will be loaned to the State - will. come directly from revenue. In other words, it will come from taxation. The Commonwealth will lend this money to Western Australia and charge the State interest on it. I understand that the interest rate will be the long-term bond rate operating at the present time. J repeat that it seems strange to lend money for development work and at the same time place a burden on the State receiving the money to carry out that development work.

It is also noteworthy that this job has been crying out to be done over the years. During the regime of a Labour Government the Clapp report was brought down recommending the standardization of all rail gauges throughout Australia. Unfortunately, that did not come to fruition. This is not a new problem. Debates on it have filled many pages of “ Hansard “ in this Parliament over the decades. This money must also be regarded as a direct subsidy to the Broken Hill Proprietary Company Limited and as an indirect subsidy to encourage exports. I have often said in this place that the day would come when this Government would have to do substantially more to encourage export income.

It is regrettable that we had to wait for a private company to announce that it wanted to assist the set-up in Western Australia before we were able to ask the Commonwealth Government to do this vital work. At long last this work is to be undertaken and the Broken Hill organization is going to make some contribution to our overseas balances. Nevertheless, if this work had been done some years ago no doubt the Broken Hill Proprietary Company Limited would have followed in the wake of the railway. After all, the history of railways in Australia is that they have gone into the outback and development has followed at a later date. The only other point to which

I ask the Minister to reply is that, so far as I can see, the only money that is being appropriated now is £150,000. Can he give us any indication of when the main expenditure will be incurred and when we can expect a bill appropriating the money for the initial stages of the scheme?

Looking back on the proposed arrangement between the Chifley Labour Government and the State of Western Australia, it does not appear to me that the deal which that State is getting under this agreement is as generous as that offered in those days. However, even with the few flaws which I expect to be revealed in the agreement the project is a most desirable one. Undoubtedly, development will follow.

The Government should now have a look at the Clapp report and recommendations. It should set up a body to consider the standardization of all railways throughout Australia and not merely the sections now receiving attention. I believe that now is the appropriate time to look at the whole problem, including standardization of rolling-stock. One of the things about the American railway which attracted Sir Harold Clapp was the fact that, regardless of which company owned the rolling-stock or where it was located, it could all be used throughout the American railway system and in this way goods were kept flowing.

I repeat that the Opposition has no objection to this measure.

Senator BRANSON:
Western Australia

– Mr. President, I feel very privileged to be in the Senate on this occasion and to be able to speak on this measure, because I am sure that time will prove me right when I say that this legislation is history-making. I believe it is so important and will be of such great interest to the people of Western Australia in particular that with the concurrence of honorable senators I propose to have the schedules to the agreement between the Commonwealth and Western Australia incorporated in “ Hansard “. I make this request so that I will not have to bore the Senate by reading the schedules. They read as follows:-

THE SCHEDULES.

First Schedule.

Route of Railways.

Theroute of the standard gauge railway begins at the terminus of the Commonwealth standard gauge railway line atKalgoorlie and is as follows: -

Third SCHEDULE

Not only is the standardization of this railway in Western Australia important in itself, but also it makes possible, as Senator Willesee said, the setting up of an integrated iron and steel industry in that State. Every senator knows that once you have an integrated iron and steel industry, other industries naturally follow. In the course of his second-reading speech the Minister for National Development (Senator Spooner) outlined to us the financial arrangements in respect of this railway and I want briefly to traverse some of them. The estimated cost of the project is £41,200,000 and in the first instance the Commonwealth is to provide £35,000,000 of that and the State £6,200,000. Under the agreement the State will have to repay certain money to the Commonwealth. The arrangement will eventually mean that the cost of the project will be shared by the Commonwealth and the State on the following basis: The State will pay 30 per cent, of the total cost of standardization and will pay 100 per cent, of the cost of the developmental work. This payment by the State of 30 per cent, of the cost of the standardization, the remaining 70 per cent, to be paid by the Commonwealth, is in keeping with standardization agreements with other States. The overall picture is that the Commonwealth will pay 35 per cent, of the total cost of the project and the State 65 per cent, because it works out that 70 per cent, of the cost of the standardization work is 35 per cent, of the total cost of the project. The final figures under the arrangement will be that Western Australia will pay some £26,800,000 and the Commonwealth will pay £14,400,000. 1 believe that a clear understanding was reached with the Commonwealth that repayments by the State from Consolidated revenue would be treated as normal debt charges. Therefore this expenditure will be an allowable item when the Commonwealth Grants Commission examines the budgetary position of the State next year. I believe that Treasury officials have explained that this does not necessarily mean that the State will be recouped the payments through the agency of the Commonwealth Grants Commission.

I agree entirely with the view that the standardization of this railway will lead to a marked improvement in the railway finances of Western Australia and that this, in turn, will be reflected in Western Australia’s Budget. As I said earlier, both the Commonwealth Government and the State Government recognize that the project contains developmental and standardization elements and have agreed that the cost should be apportioned accordingly. The Commonwealth will provide all the finance for the standardization initially and the State will undertake to repay 30 per cent, of that money with interest, over 50 years. For the developmental work the Commonwealth will, initially, provide 70 per cent, of the money required and the State 30 per cent. The money provided by the Commonwealth will be repaid, with interest, by the State from its revenue, over a period of twenty years from the date of completion of the project. It is hoped that the work will be completed by 31st December, 1968. I understand that the survey work has already begun. I read in the press that it was hoped that it would be started last Monday, 16th October.

It is interesting to note that figures show that this is the biggest post-war railway undertaking in the free world. It will make possible the establishment by the Broken Hill Proprietary Company Limited of a fully integrated iron and steel industry at Kwinana and I believe the expected date of completion is 1978. The cost will be about £44,000,000, and the estimated value of the annual production of the industry is £18,000,000.

The effect of the standardization of this railway will be, first, that passengers will be able to travel between Perth and Port Pirie in a new air-conditioned train, without having to change trains, and secondly, that the revenue of the railways in Western Australia will exceed expenditure, including interest payments of £2,670,000 a year.

Certainly it will give young Western Australians great opportunities to carve a far wider range of careers for themselves without having to leave the State. The Premier, Mr. Brand, said that this was more than an agreement for a great railway project: it was the key to the tremendous industrial development of the State. I agree with that entirely.

On the basis of 2,000,000 tons of iron ore being loaded a year, it is estimated that railway operations will show an improvement of almost £3,000,000. The improvement in railway finances from the project will be more than enough to cover the annual repayments. The State Minister for Industrial Development, Mr. Charles Court, has estimated that with the construction of the Kalgoorlie-Kwinana standard gauge line Western Australia stands to receive substantial benefits amounting to almost £7,500,000. This amount is made up in this way: The material and stores which will become surplus by the construction of the 4 ft. 8i in. gauge line will be worth about £1,931,000, and the narrow gauge rolling stock, worth about £5.362,000, will be released and will become available for use in other parts of the State. Those are the gains from the railway aspect, lt is important also to consider what the State will gain in relation to the steel industry. It is estimated that the steel industry at Kwinana will provide employment for at least 1.000 men, and an additional 200 men will be employed at Koolyanobbing where the iron is to be obtained, ft is estimated also that a town site will be established at Koolyanobbing containing, al the start, at least 100 homes. A second township quite easily could follow.

There is some duplication of lines. The line from Kalgoorlie to Coolgardie, which will be converted to standard gauge, will have also a third rail because Kalgoorlie still will have to retain contact with the Norseman-Esperance line. The same will apply to the new line from Toodyay toMidland Junction, and also from Fremantle to Kwinana, but there a third rail will be placed on the existing 3 ft. 6 in. gauge because only a short distance is involved.

Senator McCallum:

– Will the existing sleepers carry the standard gauge?

Senator BRANSON:

– I am not qualified to say, but I imagine there will have to be some strengthening of the existing line and the ballasting.

This is an exciting project because no one at this stage can estimate what it will mean to the western third of Australia. I do not think it is drawing a long bow to say that the proposal could have some influence on any decisions which may be made in relation to the transfer of the British naval base from Singapore to Australia. If a naval base is to be established anywhere, one of the essentials is that it be located close to a ready supply of steel and iron. Another factor is that Western Australia and Tasmania now are the only two remaining claimant States. With the foreshadowed improvement in Western Australia’s financial position we may be no longer a claimant State.

This is one of the most historic pieces of legislation in relation to Western Australia which has ever been produced in this place. I know that I am being parochial because the bill applies to Western Australia, but the whole nation must benefit from it.

Senator McCallum:

– I agree.

Senator Dittmer:

– Speak for yourself. We are not parochial.

Senator BRANSON:

– I said that I am parochial and I am prepared to stand by that statement because this matter is of such great importance to Western Australia and, as Senator McCallum is gracious enough to admit, to Australia generally.

Senator Ormonde:

– And good for Peter Browne loo.

Senator BRANSON:

– So many people will be employed on the construction of that railway line that it may not be so good for Peter Browne. But since the honorable senator has mentioned his name, let me say that Peter Browne has plugged this project so much because he is a statesman-

Senator Dittmer:

– You are plugging his chances now.

Senator BRANSON:

– That is right, I am plugging his chances.

Senator Ormonde:

– ft cost £40,000,000 to put him into this Parliament.

Senator BRANSON:

– I would not say that, but the £40,000,000 will be the best money ever spent in that part of Australia.

Senator Ormonde:

– Peter Browne’s grandchildren will ride in the train.

Senator BRANSON:

– That would please me. It is a well-accepted fact that the steel industry is one of the most important elements in Australia’s development. This project will mean that we will be able to export steel, and our overseas balances must reflect the benefit of those exports. There is not much more that I can say in relation to this measure other than to repeat that it is a history-making piece of legislation. 1 support it completely.

Senator COOKE:
Western Australia

– It is pleasing that some action has been taken in relation to the establishment of a standard railway gauge from Kalgoorlie to Fremantle, presumably commencing at Parkeston. This proposal has been under consideration for very many years and for very many reasons. If it had been proceeded with years ago, the work could have been carried out at a much lower cost to the nation and on very much better terms to Western Australia. When Sir Harold Clapp’s report and recommendations were accepted, many eastern States took advantage of the offer which was made at that time by the then Commonwealth Government. That was the time when this work could have been done. However, I express gratification and pleasure that this project, which is of national interest and importance from the defence and economic points of view, is to be undertaken.

The terms under which the Commonwealth has advanced money to Western Australia are not generous. They are the terms of a money-lender. In the period of 50 years which the Commonwealth has allowed the State to amortize its debt to the Commonwealth, £20,000,000 will be paid in interest. It will be a fairly hard uphill battle to maintain the repayments, apart from meeting the expenditure involved in maintaining the railway. That places a heavy load on Western Australia for what is obviously national development. The Commonwealth Government could have been more generous because Western Australia has been a good asset to the Commonwealth. As I mentioned last night, in speaking on the Gold-Mining Industry Assistance Bill, Western Australia was the only State which conducted its economic affairs so as to give the Commonwealth £78,000,000 more overseas credit than it asked the Commonwealth to spend.

This developmental project for the export of iron ore will be of great national significance. It will help to increase Australia’s overseas balances. I believe that in the future our overseas balances will be assisted as much by minerals as they were by rural production, to which Western

Australia was also a generous contributor. Whilst Western Australia receives some benefit from this proposal, I say that the advantage to the nation is far greater than the advantage to that State. Therefore, the Commonwealth could have been much more generous in the terms for this project. It will mean that a good deal of money will go into Western Australia. The expenditure of that money will create employment and that should lead to development.

In my opinion it is drawing a rather long bow for the Government and others to say they expect a profit of £3,000,000 as a result of this standard-gauge project. It brings in its train quite a number of responsibilities and problems which have not been discussed in this Parliament or, apparently, in the State Parliament up to the present. Ore will be drawn from Koolyanobbing by the Broken Hill Proprietary Company Limited under concessional conditions. This will be of benefit to the nation, but a great benefit will be given to that company and the people interested in the mining of ore. That cannot be objected to. Ore will be drawn from Koolyanobbing to Fremantle on the standard gauge railway line. I ask the Minister whether in making the estimate of profit to which I have referred consideration has been given to the long return trip of the trucks and what will provide back-loading to Koolyanobbing. The ore-loaded trucks will make that very long haul of many hundreds of miles and then return empty, in the main. The Government might be able to explain how back-loading will be provided. I cannot see how it will be. If it cannot be provided, the economics of the proposition will be that for every tonmile hauled out of Koolyanobbing there will be a mile of empty running to bring the trucks back. That is not good railway economics in any man’s language. That would create quite a problem.

Senator Spooner:

– You cannot be serious in suggesting that the professional officers of both governments have overlooked that.

Senator COOKE:

– I do not say that. I cannot see that a profit of £3,000,000 will be made as a result of this project, as has been stated. I think that the results of the proposition have been boosted far more than they should be, in order to vindicate the haulage of iron ore. 1 believe that some development will have to take place; otherwise there will be a tremendous number of empty trucks running back from Fremantle to Koolyanobbing. Some backloading may be provided for them. If it is not, the transport costs will be pretty heavy.

I think the Government will concede that one of: the most embarrassing features of Australian trade and costing is the cost of transport. It is higher than in almost any other country. We have to give some thought to that. 1 hope that in some way provision for back-loading will be made. My main contention is that if the State is to utilize the standard-gauge line to the full extent, provision will have to be made for feeder lines to the standard-gauge line. Of course, there will be a standard-gauge feeder line from Koolyanobbing. At any point where a 3-ft. 6-in. gauge line joins the 4-ft. 81-in. gauge line the rolling-stock will not be interchangeable. In order to make full use of this railway, there will have to be either some pick-a-back arrangement or some method of transshipment which is much cheaper than the method that has been used up to date. I do not know whether special trucks will be provided to meet that situation. If this line is lo be fully utilized, some consideration will have to be given to that matter.

The Western Australian Government has ratified or practically ratified the agreement and it will become operative. I am pleased to see that something along these lines has been done. Even if the project will be much more expensive than it would have been when it was first envisaged, we cannot cry about that. We cannot stop progress. The taking of this action is commendable. But, by the same rule, I believe the Commonwealth Government should at some stage revise the conditions under which Western Australia receives this money. The interest payments for this project will be £20,000,000 over 50 years. This project is just as much for national development as it is for the development of Western Australia. I am happy to sec this development come to that State. It will bring employment to that State, but it will also bring many problems in its train, such as the main line being of the standard gauge and the feeder lines being of the 3-ft. 6-in. gauge. But those problems will be ironed out.

This move should have been made tcn or more years ago. I do not put the blame for its not being done on any particular government or political party. They all procrastinated when the project was quite practicable. Now it is a fact that the work will get under way. I hope that the construction work will start as soon as possible. The Government has given no indication as to when the work will commence and what the programme will be. I will be very interested to see it. I understand that survey work has been done and that the expenditure will not bc great for probably a year or so, until the construction of the railway gets under way.

I have pleasure in supporting the bill. I make a plea to the Government to walch the development of this matter. If the cost exceeds £41,000,000, as is quite likely- -I do not think the cost will be less than that amount - I hope that the Government will consider more reasonable terms for the Western Australian Government. Western Australia has a small population, but a tremendous potential that can bc developed and utilized for national purposes. I believe that more consideration should bc given by the Commonwealth Government to the national importance of this project from the points of view of defence and the overseas credits which will bc gained from these Western Australian assets and industries. I hope that the Government will become less of a money lender at high interest rates on this matter of national development which is part of our defence pattern and programme and which must strengthen our nation. I believe that the Government could well afford to be more generous to Western Australia in the conditions under which this money is to be advanced.

Senator DRAKE-BROCKMAN:
Western Australia

– I support this bill with very great pleasure, Mr. President. A leading citizen in Western Australia who was asked by the newspapers to comment on the announcement by the Premier of Western Australia and the Prime Minister (Mr. Menzies) here in Canberra that a standard-gauge railway was lo bc constructed between Kalgoorlie and Kwinana said, “ This is fantastic “. That is my reaction, too. This railway will mean a great deal to Western Australia.

Senator Cooke said that this line could have been built many years ago at a much lower cost. Perhaps I agree with him, but I should like to point out to him that no proposals made in the past were the same as is the present scheme. The present overall undertaking involves not only the construction of the standard-gauge railway line but also the establishment at Kwinana of a steelworks which will be of great help in promoting Australia’s export income and opening up vast areas of Western Australia as a result of an intense search for iron ore deposits. Senator Cooke said, also, that he believed that Western Australia would not get a fair deal financially under the terms of the agreement which this bill is designed to ratify. My only comment on that aspect of the matter, Sir, is that when the agreement was announced the Premier of Western Australia said that it was a very satisfactory one. I think that if the Premier of the State was satisfied with the agreement we all ought to be pretty satisfied with it.

Senator Cooke:

– A little display of a yes-man attitude is always good.

Senator DRAKE-BROCKMAN:

– It is all very well for the honorable senator to say that.

Since this agreement was announced, a great deal has been said about what the agreement will mean to Western Australia. Senator Branson said something about that this morning. We have been told that the agreement will mean a great deal to that State because it will result in the establishment of new industries there and a considerable increase in the population, together with more jobs, and so oh. The Minister for Industrial Development in the Western Australian Government said that the population could increase by between 60,000 and’ 70,000 as a consequence of investment decisions made by the State Government in recent years. This sort of thing will provide a great many jobs for people in Western Australia. Furthermore, the new railway line will result in employment for at least 5,000 men .over a period of years.

Senator Scott:

– Continuously?

Senator DRAKE-BROCKMAN:

– What I mean is that the railway, the steelworks and other investment developments could mean an increase of 5,000 in the work force. The railway itself will provide 12,000 man-years of work. I believe that by 1962 1,300 men will be needed, and the number could rise to 2,000 by the end of that year.

As I have said, we have heard a great deal about what the new railway will mean to Western Australia. It will mean much to secondary industry in particular. It will mean quicker transport of goods between the west and the east, and 1 believe that it will mean lower freight charges. The new line will mean a vast improvement in the economic position of the Western Australian railways. However, in all that has been said, I have heard nothing about what the new line will mean to primary producers. Many people have been telling us that the primary producers of this country must reduce their costs. 1 should think that the new standard-gauge railway between Kalgoorlie and Kwinana would mean a considerable decrease in freight charges to primary producers who could make use of it. But nothing has been said about that so far. At page three of the roneoed copy of the second-reading speech made by the Minister for National Development (Senator Spooner), I see these words -

The cost of all these railway works at current cost levels is estimated at £41,200,000. An analysis which has been made of the estimated expenditure and operating results of the line shows that, based on the carrying of 2,000,000 tons per annum of iron ore and on general traffic at existing levels, the new line should be a thoroughly sound economic proposition, and the completed work will attract additional general traffic, thus further improving the economics of the line.

What does this mean, Sir? One could read anything into it. Therefore, I have examined the agreement entered into between the Broken Hill Proprietary Company Limited and the Western Australian Government in order to see what is expected to happen to freight rates. The rates per ton-mile are expected to be as follows: -

Tons per financial year up to but not exceeding -

As I said earlier, I think that, with the construction of the standard-gauge railway between Kalgoorlie and Kwinana, primary producers could expect freight charges something like these. When the new railway is in operation, long trains loaded with iron ore will travel every day in the year to the works at Kwinana. Perhaps the wheat industry cannot expect to get quite the same service, however.

Senator Wright:

– Will the honorable senator permit a question? What is the term of the agreement between the Broken Hill Proprietary Company Limited and the Western Australian Government?

Senator DRAKE-BROCKMAN:

– It is not here before me.

If silos are available at various points along the new standard-gauge railway, we shall be able to provide whole train loads of wheat which can be taken perhaps to Kwinana where we could establish port facilities where whole train loads of wheat could be received at a time. If these facilities were adequate, we could spread the movement of wheat from the various silos to the port over a period of twelve months. 1 think that if this were possible, the wheat industry could expect a freight rate of about 1.5d. a ton-mile on wheat. This works out at something like Id. a bushel for each 25 miles. We could expect a rate of something like 8d. a bushel for the carriage of wheat to Kwinana from a point, say, 200 miles away on the standard-gauge railway. The present rate charged by the Western Australian railways for the carriage of wheat 200 miles is 17.196d. a bushel.

I think that the process could be taken a step further. When the standard-gauge railway is in operation, we shall probably find that farmers up to 60 miles north or south of the line will want to cart their wheat by road to central points along the railway. Even if the farmers have to pay for road transport to bring their goods to a central point, their overall freight costs will still be very much less than the freight charges now imposed by the railways. This standard-gauge railway can help to reduce costs in another direction. Bulk handling facilities for superphosphate can bc provided at various points along the railway line. In this way we can further reduce our costs by providing backloading in the trucks that take wheat to Kwinana. Super phosphate can bc brought back, bulk storage being provided lor it at several places along the railway line.

As I said at the beginning, I have heard no mention of developments such as these by any State or Commonwealth spokesman, and 1 believe that these things must be seriously considered. After all, this country depends to a large extent on primary production. Despite what Senator Ormonde said yesterday, to the effect that we can forget primary industry now and rely on secondary industry to carry the export burden, Australia is still dependent for 70 per cent, of its export earnings on primary industry. It must also be remembered that 80 per cent, of our export earnings is used to supply secondary industries with the goods they need to maintain production. I agree that if we are to develop our country and induce people to come here we must find jobs for them, and in order to do so we must have more and more secondary industries. I consider, therefore, that both primary and secondary industries have important parts to play in our development. I am making a plea on behalf of primary industries that they be assisted to reduce their costs of production. I have very much pleasure in supporting the bill.

Senator TANGNEY:
Western Australia

– I rise also to support the bill. I am very pleased that, at this stage in our history this step is being taken, f have only a few comments to offer in criticism of the measure. One concerns the high interest burden that will have to be carried. Senator Cooke has told us that it will finally be as much as £20,000.000. Every State government is faced at the present lime, and has been faced for many years, with a terrific interest debt incurred by the State railways. These interest payments must be mct year after year. I was very interested to read some time ago that a Country Party member of the Victorian Parliament had suggested that all interest debts on railways should be wiped out, and that the railway systems should be given a fresh start. The development of this country depends, at least in the outback areas, on railways. Despite the terrific advances that have been made in aviation, we will never develop the far-western outback areas without railways We never have been able to do so in the past. For this reason

*Railway Agreement* [20 October, 1961.] *(Western Australia) Bill.* 1357 I suggest that this proposed railway should bc regarded ' as a national developmental project, and that some different arrangement should be made tor the payment of interest on the money used in its construction. The railway should not have to carry this interest burden of £20,000,000. I was in this Parliament fourteen or fifteen years ago when the Clapp report was made available. Suggestions were made at that time that our railway systems should be standardized, lt is rather nostalgic to look back now and consider how many millions of pounds would have been saved if the various governments had agreed to undertake the task then. Besides the saving of money, the community would have had all the other advantages that flow from a standardized railway system. 1 was most interested in **Senator DrakeBrockman's** remarks about the effect this railway will have on primary producers in Western Australia. Perhaps the honorable senator could tell us how it will affect primary producers in the west who arc not in close proximity to the proposed standardgauge railway. What will be the effect on those who will still have to send their products on the existing narrow-gauge railways? Will they have the benefit of some reduction in freights, or will the farmers who can take advantage of the new standardgauge railway be in a more favorable position, particularly from the point of view of exporting their products? Will some system be evolved so that freight rates will be uniform throughout the State? In this connexion, I believe there is an agreement with the Western Australian Railways with regard to freight on wheat. I was interested, too, in the suggestion that additional port facilities should be provided at Kwinana for the shipping of wheat, and that there should be more silos throughout the country for the storage of wheat. Labour members of Parliament have been plugging for these developments for quite a long time. A couple of years ago **Senator Cooke** and I made a tour of the great south-eastern areas of Western Australia, particularly the Esperance district. We mct delegations of farmers who told us what they required for more sati&factory and more rapid disposal of their wheat crops. They said that some farmers brought their wheat to sidings and had to take it back again because the storage facilities were inadequate. Representations were made to the bulk handling authorities in Perth to have everything possible done to assist the farmers to solve these problems. We tried as best we could to have more bulk storage facilities provided, and also better export facilities at some of the *out-ports* nearest to the areas of production. All these problems are interwoven. They involve the question whether we are to have extra port facilities at Kwinana for the export of wheat, or whether we are to develop these export facilities at ports away from the metropolitan area, such as Esperance, where there is a magnificent port, or at Albany or Geraldton. Should we improve facilities at those centres, or should we concentrate on carting wheat on the standard-gauge railway for centralized shipment from Kwinana or Fremantle? We do not want this kind of centralization, because there is far too great a proportion of our population at the present time in metropolitan areas. Western Australia has particular problems with regard to railways. We speak of the State sentimentally as the western third. In area it represents a third of the Commonwealth. The State railways have done a magnificent job in opening up much of the remote country areas, but there is still a great deal to do. The railways face heavy expenditure not only for ordinary running expenses but also to meet a huge interest burden that has accrued over the years. When a railway is built the district that it serves is opened up, and when that district develops into thriving communities the road hauliers step in and try to take the traffic from the railways, although they themselves have done very little, if anything, to assist in the development that has made the thriving community possible. Expenditure per mile on railways in Western Australia is much greater than in any of the other States, even including, I think, Queensland, which is next to Western Australia in point of size, and which ha# similar difficulties in connexion with the provision of adequate railways. We welcome this standard-gauge line that will be constructed. We wish that a plan for the standardization of railways throughout Australia could be implemented. When travelling by train from Western Australia one finds that one of the biggest disadvantages results from frequent changes of railway gauge. One is required to change from train to train, carrying hand luggage on each occasion. It is not possible to board a train and settle down for a complete journey. Although this is an inconvenience to civilian passengers, it would be a menace to the safety of Australia in time of war. We talk a good deal about defence, and we do not think that war will break out again. But we did not think that the last war would occur. When it became necessary to transfer large numbers of men and large quantities of equipment from the east to the west and from the west to the east, much time was lost in transferring from one train to another because of the break in gauge. Transferring goods from one train to another adds to costs, and the construction of this railway from Kalgoorlie to Perth will eliminate handling and reduce costs. However, we must consider also what will happen to the labour force at Kalgoorlie, which is at present engaged in transferring these goods. Many associated problems will need to be examined by the authorities on the spot as they arise. We cannot leave these matters to the future and wipe our hands of them. However, these are incidental issues. The main point is that we are at last getting this railway and it will help considerably in our efforts to build up the work force in Western Australia. It will also help to build up heavy secondary industries, which have suffered in the past. This is a very worthy project, but I ask the Government to examine the possibility of easing the burden of the interest charge. This may seem all right on paper, but succeeding State governments may find themselves in a difficult position when the interest to be paid to the Commonwealth is added to the cost of running the railways. This is a major work of paramount importance to Western Australia, but it is also of very great importance to Australia as a whole. We support the bill. {: #subdebate-13-0-s5 .speaker-K5K} ##### Senator SCOTT:
Western Australia -- I also support the bill. Like Senators Branson and Drake-Brockman and other senators who have spoken, including **Senator Tangney,** I believe that this is the beginning of a new era for Western Australia, and it will be an industrial era. Western Australia in the next decade will probably change from a great primary producing State to a State producing both primary and secondary products. This will lead to a big increase in the population of the State. I visualize the time in the not very distant future when Western Australia will be the most densely populated State in the Commonwealth. That is a big statement to make, but let us remember that Victoria, for instance, could be placed three or four times in the higher rainfall area in the south-west of Western Australia. Western Australia has rich mineral resources and its potential is greater than that of any other State. That, of course, is not a parochial statement. In this project, agreement has been reached between three groups - between the Commonwealth and Western Australia, and between Western Australia and the Broken Hill Proprietary Company Limited. The expenditure involved is estimated at more than £80,000,000 up to 1968. A large number of additional jobs will be created for people in Western Australia. I believe the project is so big that we will have to import labour from other parts of the Commonwealth and if labour is not available from these sources, it will be necessary to import specialized labour for this job from overseas. Let us look at the figures. The project will create work for 1 2,000 man-years. This means that there will be a job on the construction of the railway for 1,000 men for twelve years. If married men with an average of three children are employed so that each job will involve five people, then in round figures the project will keep the wolf from the door for some 10,000 people for seven years, which is the estimated time of construction of the railway. The Broken Hill Proprietary Company Limited has agreed to establish a blast furnace and to have it producing 450,000 tons of pig iron a year by 1968. Within the next ten years, the company will be producing finished steel products at its Kwinana plant. The agreement, which has been mildly criticized by Opposition members, has the full support of the Premier of Western Australia and his Government and of every Western Australian senator on this side of the chamber. {: .speaker-KBW} ##### Senator Wright: -- Why do you confine it to Government senators from Western Australia? {: .speaker-K5K} ##### Senator SCOTT: -- I have not yet heard the views of other Government senators expressed in this chamber, but no doubt we will hear them later. **Senator Cooke** said that this was not a good idea and that we should have better terms for the State. As a Government supporter from Western Australia, 1 say that we do not need better terms; this project will stand on ils own feet and the Western Australian Government, provided it is a sensible government and manages the project properly, will make money from it. People in the whole of Australia arc being taxed to provide the finance for the construction of the railway. Of the initial £41,200,000 to be provided, £35,000,000 will come from the Commonwealth and £6,200,000 from the Western Australian Government. When the railway is finished and is carrying iron ore from Koolyanobbing to Kwinana at a price agreed upon between the Broken Hill Proprietary Company Limited and the State Government, it will earn sufficient not only to pay the interest and sinking fund on the £35,000,000 provided by the Commonwealth but also to give the State a large profit. ] understand that the Treasury officials of both the State and the Commonwealth went into this matter before the agreement was signed, and if my memory serves me right they anticipate a return on capital investment from this project in excess of 61 per cent. The interest charged by the Commonwealth to the State is at the long-term bond rate. Western Australia has obtained an excellent deal, and I look forward to the day when the railway is completed. The farming community along the line will bc able to take advantage of the cheaper freights. Provided bulk loading facilities arc made available for wheat and provided quick unloading facilities arc installed at the Fremantle end of the railway, the farmers east of Southern. Cross will be in a position to have their wheat transported to Fremantle at less than half the amount they are paying at present. The railway will give a great boost to the farming industry in these areas and to employment and development generally in Western Australia. Extra jobs will be made available in other industries that are sure to be established once the steel mill is constructed. Just imagine the number of people who will be employed in subsidiary industries at Kwinana. I think every one in this chamber will agree that the erection of the steel mill will encourage the establishment of other manufacturing industries in Western Australia. 1 envisage the day when Western Australia will not be importing motor vehicles from the eastern States but will be manufacturing them itself, and probably, because of the better type of work force in Western Australia, we will be exporting cars to the eastern States These arc all things that one can envisage as a result of this project. Only a government such as the present one could bring this project to fruition. I notice that **Senator Willesee** is laughing. He mentioned the Clapp report. What happened about the Clapp report? Could the Labour Government get the State Government of Western Australia to agree to the proposal for the standardization of railways throughout the Commonwealth? Agreement could not be reached probably because the terms offered at that time were too high for the State. All I can say is that the Minister for Railways of the State government at that time discarded the project that was put forward, ft takes a government that i< tolerant to accomplish these things. {: .speaker-KBC} ##### Senator Willesee: -- You have it completely wrong. {: .speaker-K5K} ##### Senator SCOTT: -- The honorable senator is entitled to his point of view, but that is the reason as I understand it. lt is a difficult thing for a Commonwealth government to reach complete agreement with a State government, but the present Commonwealth Government has been able to enter into this agreement with Western Australia for the standardization of the railway from Kalgoorlie to Kwinana. {: .speaker-KSS} ##### Senator Mattner: -- It has put forward something that will work. {: .speaker-K5K} ##### Senator SCOTT: -- It is a project that will work. 1 look forward to the day when, in the interests of the Commonwealth of Australia, we will have a standard-gauge railway from Fremantle - or the capital of the State, Perth - right through to Brisbane on the eastern seaboard. Then goods will be loaded on to trucks at either Brisbane or Perth and be carried 2,500-odd miles across the continent without transhipment. That is the type of development that the Government of Australia has looked forward to and is now actually carrying out. We have looked at this problem for twenty or 30 years, but now we are actually solving it. I am proud to be a member of the Commonwealth Parliament that has achieved this success, and I should like my name to be associated with this project because, as I have said at the commencement of my speech, this agreement marks the beginning of a new era for Western Australia. Great industrial development will occur as a result of the standardization of this railway line. {: #subdebate-13-0-s6 .speaker-KAC} ##### Senator VINCENT:
Western Australia -- The matter of rail standardization in Australia is, of course, not new. People actually started talking about rail standardization almost contemporaneously with the construction of the different gauges in Australia. The discussions started back at the turn of the century and have been going on ever since. Every newspaper in Australia has, from time to time, discussed the very obvious merits of rail standardization. Every would-be politician, every debating society, and probably every politician, for that matter, has at some stage or other talked about it. In fact everybody, particularly in hotel bars and places where people discuss matters of national moment, has talked about rail standardization. It has been what one would call, to use a common expression, a thing, not only in Western Australia but throughout the whole of Australia. Of course, we have such a Gilbertian system of railways in Australia that the subject of standardization very aptly lends itself to discussion and criticism. I shall not go into the history of how our extraordinary system of railways originated. It is well known and it has lent itself to letters in the press from indignant citizens from time to time, and has provided a host of interesting fields of discussion. What I am leading up to, of course, is that any fool can talk about rail standardization, and every fool has done so over the years. It is easy to talk about rail standardization but it is difficult to do something about it. The present Government is the first government in history that has done something about it. Many governments, of course, have talked about the subject, but history will acclaim the Menzies Government as being the first to do something about it. I think that even the Opposition will give this Government credit for the fact that it has done, something. I give previous governmen.ts due credit for having done the talking. During the war, for example, the government of the day did a lot of talking about the subject and produced a very fine report - one of the many reports on rail standardization - but it did nothing at all about it. This Government will be recorded as the government which carried out this project. It is now being done, instead of being talked about, and there is a great difference between the two. The first point I wish to make about this railway standardization project is that it is more than just a project to help Western Australia. It is a national project and part of a national plan. It is one of the steps necessary to give Australia its first truly national railway system, because we have not a national railway system now and have never had one. Instead, we have a series of very inefficient railway systems spread over the six States. But this national system will link five States of the Commonwealth. I place the defence factor involved in this project first in order of importance. I think any one who had anything to do with the conducting of World War II., either as a civilian or as a member of the forces, will remember the chaos which resulted from the break of rail gauges at Kalgoorlie, Port Augusta, Albury and other places. We can recall the inefficiency, the time wasted and, indirectly, the cost in men's lives because of the hopeless bungling that went on when these break of gauge points became great bottlenecks, holding up the transportation of essential munitions and supplies for our men. Knowing all those things, I regard this standardization project first and foremost as an essential defence requirement. We cannot escape the fact that eventually we will probably want this railway for defence purposes. What a great benefit it will be then, when from Brisbane to Fremantle there will be not only a standardized railway line, but also a modern and efficient rolling-stock to carry the essentials of war! Let us not overlook that aspect in any discussion of the great benefits which will flow to Western Australia from this project and with which I will deal subsequently. I am, of course, aware that **Sir Harold** Clapp brought out a very fine report on railway standardization during World WarII.I give the government of that day full credit for having done something about the matter at that time, and for its planning. But now we have the project in hand, I think that every one must be aware of the possibility of the abandonment of the great British defence base at Singapore, and the obvious possibility not only that it will be moved to Australia, but that it will go to Western Australia. Surely the standardization of railway gauges becomes of real defence significance in that context. Only this week we have read that the Government of Malaya is determined that the Singapore base will be rendered quite ineffective for defence purposes. But there has to be a base somewhere in South-East Asia, and one of the first considerations is the stability and security of the country in which it is to be built. You do not need to be a defence expert to come to the conclusion that there is only one place foritand that is in Australia. There are not many localities in Australia where a newbase can be built and 1 do not think 1 need pursue this argument much further to emphasize the tremendous importance of the Western Australian rail standardization project to the defence of Australia. There is another element of importance to our nation in the proposal which is before the House. There is the economic aspect, which affects the whole of the country and not only Western Australia. This is a national project, and for the first time in our history we will have an efficient trade route between east and west. The States at those two extremes of east and west will, I hope and expect, enjoy the benefit of cheaper freight rates on an efficient and speedy railway system. I do not know whether any honorable senator has sent a consignment of freight from Sydney to Perth by rail but, I can assure the Senate that you are lucky if it gets there in three or four weeks. What is more, it is most frustrating to try to find out where it has been held up, because the New South Wales Railways blame the Victorian Railways. They, in turn, blame the South Australian railways, and so on. As I said before, our present railway system is Gilbertian. But now, at last, we will have an efficient trade route stretching through thisland with, I hope, cheaper freights. One docs not need to canvas that aspect of this project to realize the tremendous national significance of having an efficient trade route from east to west in this continent, although I believe it does invite some speculation as to what may happen in Western Australia. I mention this in passing, because it is probably quite important to some people in Western Australia. I believe this project will undoubtedly resultincheaper freights and therefore more trade between Western Australia and the eastern States. That is an interesting thought, because it means that manufacturers in the eastern States will have greater opportunities to sell goods in Western Australia. {: .speaker-K7Y} ##### Senator Tangney: -- What about the Western Australian manufacturers? {: .speaker-KAC} ##### Senator VINCENT: -- The Western Australian manufacturers will have to look to their laurels and section 92 of the Constitution will be operating with a vengeance. I mention that because I believe our Western Australian manufacturers will have to do some thinking. These are some problems for them. There may even be some difficulties, because it is a favorite cry- not always correct - of Western Australian manufacturers that eastern States manufacturers dump goods in Western Australia. In some cases this is true. The standardization of this railway will expedite the flow of goods and will probably render more difficult this problem of the Western Australian manufacturers. I think this is important as one of the effects which will flowfrom the completion of this broad gauge line. There is another aspect of this matter at the national level whichI think deserves some comment. This is not an isolated project or an isolated scheme of this Government. Nothing of the sort! It is only one element of a great developmental plan which the Government is putting into operation. Let us recapitulate some of the other elements involved, because they are interrelated economically and sociologically. There are the great developmental roads which the Government is planning in the north and after all, whether a road is a steel road or a bitumen-surfaced road, it is still a trade route. This great system of developmental roads in the north is economically linked with the present project. There is the Mount lsa railway project;, the Commonwealth Development Bank; the plans relating to the export of iron ore and coal; and the proposed construction of modern ports and port facilities so that great ships can transport our goods. There is assistance to the great mining industry, both in relation to base metals and gold. Then there is the airways expansion and last, but not . least, the long-term plans relating to water conservation, hydroelectric power and atomic power which now is in its first stages. All these projects are part of a coherent and rather exciting pattern which the Government has drawn for this country's future development. It is a most exhilarating prospect. During the next decade Australia will see this pattern becoming a reality and not remaining merely a blue-print. This railway project, like the others which I have mentioned, is not to be regarded in isolation. It must be regarded in conjunction with the others as an illustration of the Government's determination to maintain at all costs a rate of development commensurate with our growth in population and having in mind defence and other elements which must be considered to ensure that we do not lag behind the rate of development in other countries. I have dealt with this matter in the broad, as it were, against the background of the national effects that will flow from it. Because I regard those national effects as being so important I have placed them first. But I do not intend to overlook referring to what I call the indirect effects that the project will have in Western Australia. These secondary or ancillary effects are important. The project will have amost beneficial effect upon that part of the State which I know very well - the goldfields area. It will provide cheaper freight rates for the gold-mining industry which still is Western Australia's most important industrial undertaking. One of the greatest difficulties which has confronted that industry in the last 50 years has been the continually increasing freight rates. Now we shall have an efficient railway system linking the gold-fields with the coastal ports, and it can be expected that consequently freight rates will be reduced. This will be of great benefit to the goldmining industry. Another incidental effect of great consequence is that the project not only will provide iron ore for the steel mill at Kwinana but also will open up the great Bungalbin iron ore deposits from which it is very confidently expected great tonnages will be exported. The project will play also a secondary role in providing a cheap transportation service for our iron ore export trade. I should like to know why the railway line was not put through to Bungalbin. The proposed spur line from Southern Cross to Koolyanobbing could have been continued the remaining 25 or 30 miles north to Bungalbin. Was it ever contemplated, or is it being contemplated now, that the standard-gauge line will go eventually to Bungalbin lt is possible that Bungalbin will be a great source of supply of iron ore for export purposes and the local operators who are contemplating exploiting that field will receive great benefits if the railway line is carried on to Bungalbin. The Minister might give me some information about this aspect when he is replying to the debate. Another factor which must be remembered, although it is not as important as the others, is that the broad gauge line will provide a more comfortable train journey for visitors from the eastern States. With the greatest respect to the Western Australian Government Railways I must state that I have never been one who believes that the State railway system is overcomfortable or provides tourists with the standards which they have a right to expect in a modern community. I would go so far as to say that our railway system is one of the worst I have ever seen. At least this project will provide travellers between east and west with a comfortable train journey. That is by no means insignificant when one thinks of Western Australia as a potential tourist attraction. It offers the tourist a lot of things which arc not available anywhere else in Australia. 1 expect that in the future the tourists will come to Western Australia, not only in hundreds but in hundreds of thousands. The proposed railway line will make their journey more comfortable. When the Kwinana project was under discussionI stated that it was rather unfortunate that the proposed industrial area should be placed so close to Perth. For the purpose of the record, 1 feel obliged to repeat that statement. But it is too lata now; the milk has been spilt, and it has been spilt very close to the city of Perth. {: .speaker-JXX} ##### Senator Drury: -- It is no good crying over it now. {: .speaker-KAC} ##### Senator VINCENT: -- I am not crying over it but I am putting on record that it is a matter for regret that the whole industrial area at Perth was not placed at Bunbury which is very close to the gold-fields and where there is a very much better water supply and other natural advantages which Perth does not have. The location of the area at Bunbury would have dispersed our industry and have substantiated the politicians'oftrepeated assertions about the importance of decentralization. I know that this matter has nothing to do with this Parliament or this Government, but I must repeat that we made a mistake in placing this vast industrial area at Perth. We are faced with the prospect of Perth becoming ultimately a second Sydney. {: .speaker-JZU} ##### Senator Ormonde: -- That will take 1,000 years. {: .speaker-KAC} ##### Senator VINCENT: -- Oh no! Our children will see it. I do not look forward to the prospect of Perth becoming a second Sydney, even though it, too, has some narrow streets. But that is by the way. I want to deal briefly with the main purpose of the bill, namely, the establishment of the great steel industry at Kwinana. This matter has been canvassed and recanvassed so that not only the Senate but also thepeopleof Australia generally know what is proposed. But I want to emphasize that the most important benefit which Western Australia will receive from the proposal is that it will have a balanced economy. For between 50 and 75 years, Western Australia was a little colony which relied on primary produce - a little bit of wheat and a little bit of wool. Then the gold era started. From that time onwards, Western Australia has relied exclusively on gold production and the production of wheat and wool. It has had all its eggs in a very small basket, as it were. ' We in Western Australia are always in danger of being in economic trouble because we have not a variety of industries. Now we have a heavy secondary industry starting. That will give us a very fine variety of industries or a balanced diet, as it were. I believe thai great benefit will flow from that. We in Western Australia have been through some pretty hard times because we have all our eggs in one basket. This heavy industry will attract other industries, and by the cumulative effect of this industry growing and other secondary industries starting. Western Australia will have a balanced economy. I believe that the growing primary and secondary industries of that State will give it an era of prosperity that it has not known before. There is only one difficulty, that we will face and it can be overcome.That will be the attraction of skilledworkmento Western Australia. During the next five years our State will need a very large number of not just workers - fellows who can throw a banjo around - but highly skilled workers. **Senator Wright** can laugh, but 1 do not know where we will get such workers. That will be one of our problems. Unless it is handled carefully, that could result in a high degree of inflation in Western Australia. Unless we arc very careful, we will have a condition of overfull employment in Western Australia by Christmas time. SenatorTangney. - That will be a change. {: .speaker-KAC} ##### Senator VINCENT: -- It will, but that is not an impossibility. That condition has existed before. This problem should be considered now. It is a human problem and therefore a difficult one. I believe that the bill before the Senate, which represents a great milestone in our industrial history, can be attributed, in the first place, to the Western Australian Ministers in our Cabinet. They have been great advocates of Western Australia in the Cabinet. I think every one understands how the Cabinet works and how important it is to have representation from each State in that body. 1 have no evidence to offer to the Senate on this matter, but I believe that we would not have had this proposal before the Senate to-day if we had not had the very able advocacy of the Honorable Paul Hasluck, the Honorable Gordon Freeth and our Western Australian Minister in the Senate, **Senator Paltridge,** in sponsoring the claims of that State. So, I conclude my speech by paying a tribute to the Ministers from Western Australia who have been such able advocates in getting this project for that State. 1 believe our State owes a debt of gratitude to those men for their splendid efforts on its behalf. Their efforts have not always been recognized, particularly in the press in Western Australia. Whilst they do not look for recognition, I think it is nice that they should receive that tribute and I pay it to them. Finally, I pay a tribute to this Government and the Minister for National Development **(Senator Spooner)** for the great depth of vision that encompasses this project in the pattern of development that the Government has planned. It is inspiring to think that we can go to the people in December and say: " Here we have something that is worth while. We have achieved something." For that reason I believe the Government should be congratulated. I very heartily support the measure. {: #subdebate-13-0-s7 .speaker-KSL} ##### Senator MAHER:
Queensland .- As a member of the Government parties' committee which recommended the construction of this railway link between Kalgoorlie, Fremantle and Kwinana, I should like to say a few words on this matter which is of great magnitude and importance to the people of Australia. I do not want to delay the Senate for very long, but I should like to make a few remarks about the work of the committee. This bill follows the investigations and recommendations of that committee which was set up in March, 1956, with the approval of the Government, to consider the practicability of standardizing the trunk railway lines on the Australian mainland. It was realized that previous attempts at overall standardization had failed because they had been over-ambitious and involved tremendous financial commitments. The committee's task was to see whether some limited scheme confined to main trunk lines could be devised, which would give a major part of the practical benefits of standardization without either incurring the exorbitant cost of full conversion or impeding the efficient operation of the various State systems. 1 propose to name the members of the committee. It consisted of Senators Hannaford, Henty and McCallum Messrs. Anderson, Brimblecombe, Chaney, Erwin, Fairbairn, Fox and Wentworth from the House of Representatives, and myself. **Senator Henty** was subsequently appointed to the Ministry and resigned from the committee. Much credit is due to the committee for its work. The members travelled all over Australia at their own expense apart from the cost of air and rail fares, which we did not have to meet because of our parliamentary membership. But all hotel expenses and other travelling costs were borne by the individual members of the committee. **Mr. Wentworth** was elected **chairman. Mr. Fairbairn** was elected secretary and for a period, due to the illness of **Mr. Fairbairn, Mr. Chaney** acted as secretary. **Mr. Wentworth** was an inspiring leader. He was a dynamic chairman. He gave an example of dedication to a task which inspired the other members of the committee. The committee held sittings in Sydney, Albury, Melbourne, Adelaide, Port Pirie, Port Augusta, Kalgoorlie, Perth, Fremantle, Leigh Creek, Peterborough and Broken Hill, lt interviewed a large number of State railway officers from the commissioners down and quite a number of other people. The committee was good enough to visit Queensland. It journeyed to Townsville and Mount Isa. It travelled by rail from Townsville to Mount Isa in order to observe the nature of that track. It travelled in a coach that was specially provided by the Commissioner for Railways in Queensland. From that coach we were able to view the railway line over which we travelled. As a result of our investigation, we recommended to the Government of Queensland that, in reconditioning the railway from Townsville to Mount Isa, sleepers be made sufficiently long and bridges be made sufficiently wide to provide for a standard-gauge track should it be decided at any time in the future to standardize the line from Townsville to Mount Isa and, possibly, to extend it through Camooweal across the Barkly Tableland en route to Darwin. This recommendation was made in order to prevent additional cost on this railway between Townsville and Mount Isa if at any time in the future it was to become part of a whole uniform-gauge system. I understand that the Queensland Government has adopted that suggestion and is incorporating longer sleepers and wider bridges in the work now being done on the railway. This Commonwealth Government is entitled to the nation's thanks for its acceptance of the recommendation of the Government Members Rail Standardization Committee which resulted in the agreement with the Victorian Government for the construction of a standard-gauge railway - that is, a railway with a gauge of 4 ft. 8& in. - between Wodonga and Melbourne. 1 understand that the new line will shortly be completed and officially opened. Our thanks are due to the Government also for the agreement which we are considering in the debate on this bill. This agreement between the Commonwealth and the Western Australian Government provides for the construction of a standard-gauge line from Kalgoorlie to Kwinana via Fremantle. The rail standardization committee gave almost equal priority to the line from Wodonga to Melbourne and that from Broken Hill to Port Pirie. This was because of the tremendous volume of commercial transactions every month between Sydney and Melbourne - the two greatest cities on the Australian continent. In the commerce between those two cities, many hundreds of semi-trailers and heavily laden motor trucks are cutting the highways to ribbons. This is due to the heavy loads carried and the fact that the vehicles travel in all sorts of weather. The local authorities responsible for the roads are having to spend a great deal of money on maintenance, and the Sta* governments concerned are required to make heavy contributions for road works. There was also the need to eliminate the delays and the high costs entailed in transhipping goods at Albury. The considerable increase in cost, of course, ultimately is paid for by the consumers. As I have said, the contest between the claims of the link between Wodonga and Melbourne and that between Broken Hill and Port Pirie was almost a photo finish, but, in the end, the committee gave second priority to the line from Broken Hill to Port Pirie and thence on to Adelaide. In relation to this proposal, the South Australian Premier, usually so alert to advance the interests of his State, was somewhat short-sighted. The committee was very anxious to get the full co-operation of the South Australian Government, and **Mr. Wentworth,** our energetic chairman, made two journeys to Adelaide, if I remember correctly, in an effort to stimulate the interest of the Government of South Australia and to encourage **Sir Thomas** Playford, the Premier of that State, to co-operate fully in the project and to enter into an agreement with the Commonwealth Government, if the Commonwealth was prepared to provide funds on the basis which the committee ultimately recommended. However, I regret to say that, in a matter of such importance to Australia generally, the South Australian Premier was not sufficiently co-operative at the time of which I speak. As a result, South Australia has not come into the scheme. Western Australia, of course, has profited. Things have been happening in such a big way over there as to lead this Government to consider it important and desirable to proceed with the construction of the standardgauge railway covered by the agreement which this bill will ratify. I sincerely hope however, that South Australian participation in the big national project for the standardization of rail gauges has merely been deferred and that, in due time, every capital city in Australia will be linked by railways of uniform gauge. If events turn out that way, something of very great benefit to Australia will have been achieved. In my view, a system of railways of uniform gauge would serve us well in meeting our defence needs in time of war. I may say that the Government Members Rail Standardization Committee took evidence in Perth from the managers in Western Australia of British shipping companies. At least one of these managers told us that he had conferred on this matter with his principals in London and that, in his considered view, if war were to eventuate, his company's ships would proceed only as far as Fremantle and would unload their cargoes there. He said that this would be done because his company would want to reduce to the minimum the risk of attack by submarines. If cargoes were unloaded at Fremantle, we would have to convey them to the eastern States. So we ought to be forearmed. We ought to prepare for the transport of merchandise quickly by rail from Freemantle across the continent in the event of war. 1 should like to pay a tribute to the present Minister for Civil Aviation **(Senator Paltridge),** who was previously Minister for Shipping and Transport. He was of tremendous help to the rail standardization committee. He had many discussions with the members of the committee and gave much advice and good counsel throughout the committee's investigations. I would say that much of the success of the Western Australians in obtaining this agreement with the Commonwealth for the construction of the standard-gauge railway between Kalgoorlie and Kwinana at so early a stage can be attributed to our worthy Minister for Civil Aviation. I had personal experience of his efforts, and I can speak with authority of the things he did. I pay a tribute, also, to the Minister for National Development **(Senator Spooner)** for his co-operation in and unstinted support for the committee's inquiries. Indeed, 1 pay a tribute to all the Ministers of the Government. They have really taken the big national view and embarked on a project that will be of tremendous value to the people of Australia. Western Australia will gain enormously by the construction of the steelworks and blast furnace at Kwinana by the Broken Hill Proprietary Company Limited and by the construction of a branch line to the iron ore deposits at Koolyanobbing. These arc mighty projects. Millions of pounds will be spent on both the railway and the other works. The overall scheme will really bc the making of Western Austmin. 1 wish Western Australians well in the new enterprises which will come their way following the completion of the standard-gauge rail link between the eastern and the western parts of Australia. I am sure that this railway will make Western Australia a very contented partner in the Commonwealth. {: #subdebate-13-0-s8 .speaker-KTN} ##### Senator McKENNA:
Leader of the Opposition · Tasmania -- **Mr. Acting Deputy President,** 1 rise to make a brief contribution to the debate. As previous speakers on this side of the chamber have intimated, the Opposition cordially supports this measure. There is complete unanimity in the Senate about the desirability of the project which is involved. I agree wilh those who say that it not only will have great advantages for Western Australia but also will significantly benefit the whole of Australia, lt will facilitate not only social intercourse but also trade between Western Australia and the rest of the country. I imagine that, on balance, the eastern seaboard will probably derive the greater advantage in the end. Accordingly, it is proper that the taxpayers of the whole of Australia be called on to contribute, through the Commonwealth, to this project. Therefore, 1 am moved to say a few words about the financial side of it. **Senator Vincent** pointed out that the extension of the standard-gauge railway would reduce costs. Freight charges are a very important clement in costs, and it is of great importance to all concerned that railway costs be kept low. There is so much traffic between the western and the eastern States by rail that freight charges loom very large in considerations of cost. Looking at the various railway systems throughout Australia, one finds that generally they are in deficit. The chief reason for this is that they are burdened with debt, repayments of principal and interest charges. Here is an opportunity for a close examination of the question of costs, which are so important to Australia, suffering, as it does, from high cost levels in comparison with those of other countries wilh which we must compete when selling our products. Looking at the financial side of the bill I find that in this financial year there is to be appropriated only £150,000 for surveying the new project, lt is obviously not contemplated that any work apart from the survey will be done during this financial year. The bill provides that moneys appropriated by the Parliament for the purposes of the agreement may be paid to Western Australia by way of financial assistance on the terms and conditions contained in that agreement. From this I assume that there will be appropriations from time to time by this Parliament. There may, of course, be one measure to provide for the appropriation of money to cover the whole project. In any event we shall have another opportunity to express our views on the appropriation of money. The Minister referred to the allocation of funds in his second-reading speech, lt appears that the project will cost, overall, something more than £41,000,000. Initially the amount of the cost to be borne by the Commonwealth will be £35,000,000, only £6,200,000 being borne by Western Australia. By the time the provisions of the agreement are enforced, 65 per cent, of the overall cost will have been borne by the State and 35 per cent, by the Commonwealth. On the figures supplied, this means that the project, when completed, will have been paid for by the State to the extent of £26,800,000, whilst the Commonwealth's contribution will have been £14,400,000. The point with which I am concerned is that on £35,000,000, which the State will be under an obligation to repay, or some major portion of which it will be under an obligation to repay, the Commonwealth will charge interest. Having regard to the fact that the loan moneys available will certainly not be sufficient to cover the cost of this project, as they fail even now to cover State projects and make no contribution at all to Commonwealth projects, it is quite certain that this Parliament will be asked to find these moneys from revenue. In the view I put, this money should be provided for a project of great national significance without an interest charge. It is not a matter of justifying fair competition with any other undertaking. Here is a line that is a complete government monopoly, so that you have the situation par excellence in which money being raised by the Commonwealth without interest should be made available for this project without charging interest to Western Australia. If one works out 5 per cent, interest on £35,000,000, one finds that it runs to about £1,750,000 a year. This, . together with capital repayments, will represent a substantial annual burden on the railway system, and in the view I am putting to the Senate is a quite unnecessary burden for a project that has no direct competitor and which is of advantage to the whole of Australia. No one objects to the proposition that the State in due course should repay the principal. If it is to be paid over a period of 50 years it will run to a very small contribution, only some shillings per annum for each £100, whereas there could be a very substantial burden, of the order 1 have indicated, added to the costs of the system under the arrangement now contemplated. I see no reason why a precedent should not be created in this matter. It is true that Western Australia has agreed to it, but, of course, the Commonwealth has the entire say in dictating the terms upon which it will provide money. There is no objection to the arrangement for the principal to be repaid, but why should there be, down decades, a substantial interest burden charged annually, when it is not essential and when it is not part of the true cost incurred? I know the Government is interestminded. We have had examples of that in connexion with the Post Office and other instrumentalities. Some interest charges can, up to a point, be justified. But to take the view that money has an earning capacity before it is put to work is, I contend, quite false. For a person running a business of this nature to make an interest charge is, I think, unfair from an accounting viewpoint. In this situation, when there will be a vast benefit to the State and to the whole of Australia, this is a matter that might be looked at most carefully with a view to eliminating the interest factor altogether from the deal. We are imposing a burden on future taxpayers in Western Australia who will have to find the money. This in turn will increase freight charges in which everybody in Australia is involved, and it will continue to do so down the decades. {: .speaker-KBW} ##### Senator Wright: -- Money, whoever earns it, has a value. {: .speaker-KTN} ##### Senator McKENNA: -- I do not agree with the honorable senator that money alone has a value. Just before I decided to speak on this subject I turned up a very interesting comment that I remembered from my relative youth. Away back in 1922, I studied Henry Ford's very, interesting book, " My Life and Work ". He was one of the pioneers of modern industry and had a very clear concept of the principles involved in all phases of industry. This passage from his book came immediately to my mind. At page 39 he wrote - >I have never been able to understand on what theory the original investment of money can be charged against a business. Those men in business who call themselves financiers say that money is " worth " 6 per cent, or 5 per cent, or some other per cent., and that if a business has one hundred thousands dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into the business he had put it into a savings bank or into certain securities, he could have a certain fixed return. Therefore they lay that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the product of tools. Therefore money is worth what it will help you to produce or buy and no more. If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business - or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces - and not a fixed sum according to sime scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before. I think that puts very succinctly the view 1 am now putting to the Senate. {: .speaker-KSL} ##### Senator Maher: -- That ?s '.he theory of it, but it does nol work uut in the practical use of money. {: .speaker-KTN} ##### Senator McKENNA: -- I suggest to the honorable senator that if I put money into a business, charge the business interest and ultimately make a total gross profit of 10 per cent, but reduce it to 5 per cent, on the claim that 1 am entitled to interest before 1 make any profit, I will be fooling only myself. The money has earned 10 per cent. It is a fiction that this is a financial benefit to the Commonwealth. One would not mind about that but for the fact that it adds to the cost of freights on this new line. It will add something approaching £2,000,000 per annum to freight costs, and that will be added to the charge all over Australia. I should think as a national parliament we should be concerned to keep costs down wherever we can. I repeat that freight is a very large element in costs, and here is an opportunity that this bill by-passes. I know the Government is keen on interest - it has shown that is ils policy - but this, a national project using money provided by the taxpayers, not borrowed on the market and not actually bearing interest, I think was the perfect opportunity for the Government to have said: " We will make the money available to you. lt has cost us nothing and we will not charge you interest on it. You pay it back to us in the agreed proportions." That would have been a very much better arrangement not only for the State but for the nation because of its effect in keeping freight costs down on this very important line. {: #subdebate-13-0-s9 .speaker-KT8} ##### Senator MCCALLUM:
New South Wales -- My speech will be a brief footnote to the speech of **Senator Maher.** I rise only to say that this is a great example of what a group of private members who have a clear conception of what they want to do can do. The reason this report of the committee succeeded, while previous elaborate reports had failed, was that we began by considering three things that could be done. We began with the Clapp report. We found it was rejected because all the proposals put seemed so costly that the States were reluctant to accept them. The chairman of the committee said: " There are three links. We will go to the State railways. We will discuss the possibility of each link. We will put them down with the evidence for them and we will leave it to the governments concerned to say which comes first." Obviously the link from Wodonga to Melbourne came first because the State governments and their commissioners were co-operative and it looked as though it was the one that would pay best. I thought at the time that the link from Broken Hill to the South Australian railway should have come first. It did not. For that 1 give no reason, except to say that the reason given by **Senator Maher** is possibly correct. I did not expect that the third link would come for a very long time and it is with great joy and some degree of pride that I sec it going through now. I say no more, because every aspect has been discussed by some honorable senator. 1 have followed the debate carefully. But I want to say that the committee at the end of its consideration had as much knowledge of the railways as any body of laymen possibly could have. We went into the most intricate details. We discussed the type of sleeper, the type of rail and the way to fasten the rail to the sleeper, and we discussed railways all over the world. 1 want to pay a well-earned tribute to a man who is often misunderstood. 1 certainly do not agree with some of his activities or the way in which he conducts them. However, in this instance, he showed himself to be a statesman. 1 have never been on a committee which worked more harmoniously, in which every member contributed a share and which produced so admirable a report. The Government is to be congratulated for carrying out the work, but no person who reads the masterly report can say that there is any argument against carrying through this great national project at the earliest possible moment. While with **Senator Maher** and others I can claim some degree of credit, I give the greatest degree of credit to the pilot who brought the ship through, the honorable member for Mackellar **(Mr. Wentworth).** {: #subdebate-13-0-s10 .speaker-K7A} ##### Senator SPOONER:
Vice-President of the Executive Council and Minister for National Development · New South Wales · LP -- in reply - I thank the Senate for the reception it has given the bill. 1 should like to answer some of the minor points of criticism that have been made in relation to it. I suggest I might conveniently do so after lunch. Sitting suspended from 12.52 to 2.15 p.m. {: .speaker-K7A} ##### Senator SPOONER: -- I repeat the thanks that I expressed to the Senate before the suspension for its favorable reception of this important bill. I thought at one stage that the Senate was going to create a new record by having speakers from only one State - namely, Western Australia - taking part in the debate on a measure. But we fell short of that, towards the end of this morning's discussions, when outsiders commenced to take a part. I am sure that we all share the satisfaction that the Western Australians in this chamber feel in regard to this legislation. This is another one in a long list of achievements in Western Australia over recent years. I jotted some of them down. In recent years in Western Australia we have seen the establishment of the gigantic refinery at Kwinana, the rolling mills of the Broken Hill Proprietary Company Limited at Kwinana and the asbestos industry at Wittenoom. We have seen the commencement of the Ord River scheme and the development of a great export trade to the United States in fish products. We have recently seen the commencement of the development of a bauxite-aluminium industry close to Perth. We have seen a start made on the beef roads in the Kimberley area. A contract has been let for the export of some 2,000,000 tons of iron ore from Tallering Peak. Modern port facilities for the important beef export trade have been finalized at Wyndham. Those are a few of the recent developments that occurred to me when I was thinking this position over during the lunch-hour. These are not all governmental projects. Private enterprise has made a notable contribution to many of them. As a Minister of the Menzies Government, I feel great pride in having been able to assist this outpost of Australia in the great progress it has made during the years in which that Government has been in office. This project is the greatest thing that has happened in Western Australia so far, although I believe we will see even greater development in the future. Sooner or later, I believe, oil will be found in that State, and this will make it an industrial State in every sense of the word. I suggest that we might usefully look at this proposal, because in doing so we will find the reply to most of the reservations that have been expressed about it on the Opposition side of the chamber. We do not get this proposal in perspective when we look at it in terms of the legislation alone. By all Australian standards, a single project involving an expenditure of £41,500,000 by two governments is a developmental work of great magnitude. But that is not the whole story. By an agreement between the Broken Hill company and the Western Australian Government, approved by legislation passed by the Western Australian Parliament, this expenditure of £41,500,000 is to bc matched by an expenditure of at least £40,000,000 by the company. The agreement provides that the company is to spend not less than £40,000,000 on the construction, not at some undefined date in the future but by 31st December, 1968 - that is, within the next seven years - of a blast furnace with a capacity of 450,000 tons of pig iron. Following that, within the next tcn years, the company is to build an integrated steel industry with a capacity of 330,000 tons, and concurrently it is to undertake great ancillary works in the provision of ports and the other things that are necessary to service an industry of this magnitude. When we add the proposed expenditures of £41,500,000 and £40,000,000, we do not take into consideration the ancillary industries that must undoubtedly follow the establishment of a steel industry in the west. 1 have not seen an estimate of the value or of the size of those ancillary industries, but undoubtedly, as a result of this proposal, there will be a great development of secondary industry in Western Australia. Tn those circumstances, I can only say that I sympathize with the Opposition in its difficult task, lt must support the bill, and it does support the bill, but at the tame time it has the difficult task of trying in some way to minimize the credit that is due to the Liberal and Country parties in the Commonwealth Parliament and in the Western Australian Parliament, which have negotiated and succeeded in bringing to a conclusion this deal which is of such great national importance. Labour administrations in both the Commonwealth and this State have completely failed to bring arrangements such as these to fruition. {: .speaker-K2N} ##### Senator Ridley: -- He :s not even convincing himself. {: .speaker-K7A} ##### Senator SPOONER: -- This is such a hymn of triumph that there is not need for mc to make speeches to convince any one. 1 am proud to have played some part in bringing this proposal to finality. I shall reply now to the criticism that has come from the Opposition. I think that I put the position fairly when I say that that criticism deals mainly with the charging of interest by the Commonwealth on the money that it is putting into this project. Some Opposition senators have said that interest is being charged at too high a rate. . **Senator** McKenna went further and said that no interest at all should be charged. There is, as usual, confusion of thought on the part of the Opposition. In fact, it will not be the Stale of Western Australia that will pay the interest on this money. It will bc the people who use the railway, who pay the freight on the goods that are transported on the railway. What is the effect of that proposition? The investigations made of this scheme before the agreement was reached indicated that on the basis of the freight on the railway being 2,000,000 tons of iron ore and 1,000,000 tons of general goods, freight charges, after deducting expenses, would yield 9 per cent, per annum on the total capital investment. So, as a result of transactions on the railway, there will be a return of 9 per cent, on capital investment from which the interest charge is to be deducted. But remember this: That the Commonwealth is making a grant of 35 per cent, of the total expenditure, so that the Western Australian Government is in the position that it will earn 9 per cen'. on the total capital investment, and will need to pay interest on only 65 per cent, of that total investment. By whatever road this proposal is approached Western Australia fares handsomely under- it. It is a great thing for Western Australia, from whatever angle it may be regarded. That State will get this great developmental railway, which will give it modern transport facilities over such a large slice of its area. It will get the new steel industry, lt will get all the ancillary industries which will undoubtedly, in the fullness of time, follow the establishment of the steel-making industry, and as a result it will become a State well on the way to having well-established secondary industries covering a substantial proportion of its temperate zone. The project will make a great contribution towards helping Western Australia to increase its population. Financially speaking, Western Australia is to get all of this railway project for an immediate cash outlay of £6,200,000. In order to finance this scheme, in order to help Western Australia to bring this imaginative idea to fruition, the Commonwealth is finding, as the work progresses, £35,000,000 out of the expected cost of £41,200,000. In the final analysis, the State has to repay to the Commonwealth only 65 per cent, of the money that the Commonwealth advances to it. When you remember that the proposal is so sound economically that it is going to yield the return that I have mentioned then, so far as Western Australia is concerned, this becomes a payasyouearn proposition. Remember also that the repayments to the Commonwealth are to be spread over such a long period that the freights earned by the railway will, J should imagine, meet the instalments, and make this into a proposition that pays for itself as it goes along, so far as Western Australia is concerned. The rest of Australia, which is finding the money, will benefit nationally, and above the level required to justify the appropriation of such a substantial proportion of available funds for the immediate benefit of one State. The terms of the agreement were so favorable that the State, of course, immediately accepted them, and said that it would get on with the work. That is all I have to say, **Mr. President,** in general terms. All of us have goodwill towards Western Australia and wish good fortune to that State in this, the biggest enterprise on which it has yet embarked. I propose now, **Mr. President,** although I think that I have covered most of the points that have been raised in the debate, to reply as a matter of courtesy to some of the specific points raised. **Senator Willesee** said that the State would carry the main burden. I have already given the proportions of the capital investment that will be found by the Commonwealth and the State respectively. I have pointed out that the Commonwealth is lending the money on terms whereunder the State will be well equipped to make repayments from the earnings of the railway. **Senator Willesee** also criticized the provision that the State is to pay interest on moneys advanced. The answer to that is that the railway itself will pay from its earnings the interest involved. The honorable senator also said that for years this job had been crying out to be done. The answer to that, of course, is that for many years the Labour Party was in power in Western Australia and failed to bring this proposition to fruition. It needed a Liberal-Country Party Government in the west and a government of the same political colour in the Commonwealth to have the ingenuity and the skill to negotiate this sort of contract. I think that **Senator Cooke** overstated the case that he put. He said that the terms that the Commonwealth was granting to the State were not generous, but were those that would be given by a money lender, and that the Commonwealth could be more generous. I doubt very much whether more generous terms have ever been granted by a Commonwealth government to a State government in relation to a scheme of this magnitude. **Senator Cooke** went further, and said that while Western Australia would get some advantages from the project the national advantages would be still greater. That is a matter of opinion. I do not think that there is any Western Australian who is not very well satisfied indeed with the great advantages that will come to his State. **Senator Cooke** asked whether the haul-back of empty trucks had been taken into account in the computations of the economics of the scheme. I do not propose to answer that, because I cannot imagine that the honorable senator was really serious in implying that those responsible for the investigation of the economics of a scheme like this would ignore the fact that traffic both ways on the railway has to be taken into account. T do not propose to answer **Senator McKenna** directly, because I think I have done so in general terms. I also think that the points raised by other speakers have been dealt with by me. There is one, however, that I should like to mention. One honorable senator said that there was no indication of the programme, and he raised some doubt as to whether the work would be carried out within the specific period. He was wrong to have such a doubt, because all that is inherent in two agreements. First, there is the agreement between the two governments whereunder the work is to be completed by 1968, and, secondly, there is the agreement between the Western Australian Government and Broken Hill Proprietary Company Limited, whereunder they are obligated to carry out their works within a certain period and to pay for (he haulage of certain tonnages over a period of, speaking from memory, some 30 years. An honorable senator said that this was an historic occasion for the Senate. I agree. I think that everybody in this chamber has a friendly feeling for Western Australia, which, with its small population and its great area, has made a great contribution nationally in so many directions. The things that have been happening in Western Australia over the last decade have made for a fuller and better Australia. Western Australia has shared with the other States in the wonderful development that has taken place in this country at the hands of a really good government in the past twelve years. It is a matter of great satisfaction to us all that Western Australia has shared in that development. I speak, I think, for everybody when I say that great as has been Western Australia's progress in recent years, we expect even greater progress in the years to come. Question resolved in the affirmative. Bill read a second time. In committee: The bill. {: #subdebate-13-0-s11 .speaker-KAC} ##### Senator VINCENT:
Western Australia -- The project envisages a diversion of the existing line from Northam through the Avon valley to Perth, Fremantle and Kwinana.Will the Minister for National Development **(Senator Spooner)** tell me what stage has been reached in the survey of that diversion line? 1 have many reasons for seeking this information. One is that the inhabitants of towns along the route from Northam to Kwinana are interested to know where the railway will go. An amount of £300,000 is set aside under the agreement for land resumptions. The sooner the people concerned know where the line is to go the less apprehension will be felt in some quarters. 1 would be grateful if the Minister could enlighten me on this matter. {: #subdebate-13-0-s12 .speaker-KBW} ##### Senator WRIGHT:
Tasmania .- I have listened with great interest and, I may say, with inspiration, to almost all of the second-reading debate on this bill. The bill is a practical expression of the Government's policies with regard to national development under the leadership of a most effective Minister. It must be remembered that the Senate is led by the Minister for National Development **(Senator Spooner),** who is in charge of the bill and who, undoubtedly, made effective contributions in formulating these arrangements. The deputy leader of the Senate is the former Minister for Shipping and Transport, **Senator Paltridge,** to whom **Senator Maher** paid a well-deserved tribute for the assistance that he rendered to the Government members' committee which inquired into the standardization of various rail links. I rise chiefly to endorse SenatorMaher's most appropriate remarks about the efforts of the Government members' committee. In October, 1956, that committee made recommendations for three links in the standardization of rail gauges - one in Victoria, one in South Australia and this one in Western Australia. I am glad that the debate was not left entirely to senators from Western Australia. It is good to see this true national development supported by honorable senators from all States. State representation by senators docs not imply a narrow outlook confined only to one State. A Tasmanian senator is gratified to know that Government policy supports the transfer from the eastern shores of New South Wales to the vulnerable shores of Western Australia of a steel industry so productive of defence strength and economic development. This is a day of which the Senate can be intensely proud. I think that other developments along this line will follow with the swiftness that comes from a sense of success. I rise chiefly to express my appreciation of the vigour and vision of the chairman of the Government members' committee, to whom **Senator Maher** paid such an eloquent tribute. I refer to the honorable member for Mackellar **(Mr. Wentworth).** May I ask whether the agreement between the Western Australian Government and the Broken Hill Proprietary Company Limited provides for an adjustment of the rates of royalties ? I. have seen a summary of the agreement but 1 have not had time to peruse it. I notice that it provides for a variation of rail freights, to which **Senator Drake-Brockman** referred this morning.It provides for an adjustment of rail freights according to current costs as they develop from decade to decade, lt provides also, most thoughtfully on the part of the negotiators of the Broken Hill Proprietary Company Limited, for a downward assessment as the economics of railway operation improve after the introduction of mechanization and better operating procedures. In view of the experience of Tasmania with regard to its natural resources being committed to big industries for an indefinite period, I was concerned not to find a provision in the agreement for an adjustment of the royalty rates over the period of this scheme. I would be interested to know whether that aspect is covered. {: #subdebate-13-0-s13 .speaker-K7A} ##### Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National Development · LP -- I thank **Senator Wright** for his tribute to the Government, to me and to the Minister, for Civil Aviation **(Senator Paltridge).** I know that **Senator Paltridge** expected to take part in the second-reading debate. I think everybody would have liked to hear him on this subject because of the part that he has played in bringing this proposal to fruition. But the fates ruled otherwise. He had a few difficulties to deal with during the day and was not available. As to the specific point raised by **Senator Wright,** 1 do not pretend to have an expert knowledge of the agreement entered into between the Broken Hill Proprietary Company Limited and the Western Australian Government. It is some time since 1 saw the agreement in detail but my recollection is pretty clear that the royalties vary in two directions. There is an escalator clause which, in some way that I. do not now recollect, relates royalties to the cost of production in South Australia. There is some connexion to make it equitable as between the two States. The agreement contains another clause relating to a variation of the royalties which, from the point of view of, the Western Australian Government, is designed to ensure that the Broken Hill Proprietary Company Limited will continue to develop the Koolyanobbing ore deposit and will continue to take a minimum amount of ore over the railway line for a period of 30 years in accordance with the contract. {: .speaker-JZY} ##### Senator Paltridge: -- And that a proportion shall be treated in Western Australia. {: .speaker-K7A} ##### Senator SPOONER: -- It is contemplated that some of the ore shall go to the eastern States, but **Senator Paltridge** reminds mc that the agreement contains a further provision in relation to freights and royalties to ensure that an appreciable part of the ore shall be treated in Western Australia. I cannot give a satisfactory answer to **Senator Vincent.** The construction of this railway will be a big task. The surveys have not yet been completed. As far as I know, the actual details of the route out of Northam have not yet been defined. I do not think I am wrong in saying that. In any event, although the agreement provides that the Commonwealth is to approve of the whole plan of construction, primarily it is a matter for the Western Australian Government. I do not think it would be quite proper for us at the Commonwealth level to debate this matter, which is so intimately one for the Western Australian authorities and which will attract criticism or favorable comment from those who will be affected by the route decided upon. {: #subdebate-13-0-s14 .speaker-KSS} ##### Senator MATTNER:
South Australia -- I ask the Minister whether the weight of rail to be used is the same as that which is being used for the new standard gauge railway from Albury to Melbourne. {: .speaker-K7A} ##### Senator Spooner: -- They will be of the same weight. **Senator SCOTT** (Western Australia) 1.2.48]. - 1 refer to clause I. of the agreement, which deals with definitions, and which provides - " the Minister " means the Minister of State for Shipping and Transport of the Commonwealth; Clause 9 of the agreement provides - >The State shall permit any person authorized by the Minister from time to time to enter upon and inspect (he work and to inspect, take copies of or extracts from any plans, designs, accounts, records or documents relating to the work. According to the definition I read, the person in question will be appointed by the Commonwealth Minister for Shipping and Transport. Now I direct attention to clause 15 of the agreement, which reads - >The State shall- > >keep full accounts and records of all financial transactions, work done, and plant, stores, materials and equipment used or disposed of, in connexion with the work; and > >furnish to the Minister at intervals of not more than twelve months progress reports on the performance of the work, together wilh financial statements of expenditure on the work and on each item thereof, revised estimates of cost and the estimated amounts of annual expenditure necessary to complete the work. I take that to mean that the Commonwealth Minister for Shipping and Transport shall request a member of his staff to inspect the books relating to the work being done by the State on this project and that he will receive full reports of the work done, of the expenditure made and so forth at intervals of not more than twelve months. Can we have an assurance from the Minister for National Development that the annual reports furnished by the State to the Minister for Shipping and Transport will be tabled in both Houses of this Parliament? {: #subdebate-13-0-s15 .speaker-KQQ} ##### Senator LAUGHT:
South Australia -- I desire to join others in congratulating the people of Western Australia upon the successful negotiation of the agreement which is now being ratified. I also join in paying a tribute to the Wentworth committee and to a Labour Party committee which, I understand, endorsed the recommendations of the Wentworth committee. I think I should clear up a certain impression which appears to be abroad. I shall do so by first inviting the attention of the committee to the preamble of the agreement, which reads, in part - >Whereas in pursuance of an agreement approved by Act No. 67 of 1960 of the Parliament of Western Australia the State wishes to carry out certain railway work in the State of Western Australia in conjunction with the development of iron ore, iron and steel production in that State: > >And whereas it is desirable in the interest of the people of the State of Western Australia and of the Commonwealth of Australia generally that the production of iron ore, iron and steel should bc developed: > >And whereas in order to assist in the defence and development of the Commonwealth of Australia, to facilitate interstate trade and commerce and to secure maximum efficiency and economy in railway operation, it is desirable that there should be a standard gauge railway between Kalgoorlie and Perth and other places in the State of Western Australia: I stress that preamble to point out that the project we are considering has nothing to do with the standardization of rail gauges throughout Australia as such. As I read the agreement, it is clear that this project has been triggered off by the finding of iron ore and that the negotiation of the agreement with the Broken Hill Proprietary Company Limited is designed to advance the general development of Australia. If emphasis is not placed upon the preamble to the agreement, a remark made earlier in the debate by **Senator Maher** possibly could be misconstrued. The honorable senator said that **Sir Thomas** Playford and the State of South Australia had lost their priority in railway gauge standardization because of their not having done certain things. I submit, **Sir, that** no priority has been lost. As I read the agreement, particularly the preamble, the project in Western Australia is being undertaken for an entirely different purpose from that which is applicable to the South Australian project. I repeat that what has triggered off this agreement and the legislation now before us is the development of iron ore reserves and of iron and steel production in Western Australia. No priority on rail standardization has been lost by South Australia because this agreement with Western Australia has been entered into. Bill agreed to. Bill reported without amendment; report adopted. Bill read a third time. {: .page-start } page 1374 {:#debate-14} ### STATES GRANTS (SPECIAL ASSISTANCE) BILL 1961 Bill received from the House of Representatives. Standing Orders suspended. Bill (on motion by **Senator Paltridge)** read a first time. {:#subdebate-14-0} #### Second Reading {: #subdebate-14-0-s0 .speaker-JZY} ##### Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP -- I move - >That the bill be now read a second time. The main purpose of this bill is to authorize the payment in 1961-62 of special grants totalling £11,231,000 to the States of Western Australia and Tasmania. The payment of these grants has been recommended by the Commonwealth Grants Commissionin its twenty-eighth report, which has already been tabled. The bill also authorizes (he payment of advances to Western Australia and Tasmania in the early months of 1962-63, pending the report of the commission and the authorization by Parliament of the special grants for that year. This provision is similar to the one included in fast year's legislation and in the legislation of earlier years. Under the procedures currently adopted by the commission the special grants recom mended each year are composed of two parts. One part is based on the commissions estimate of a claimant State's financial needs for the year in which the grant is to be paid, and is regarded by the commission as an advance payment subject to final adjustment two years later when the commission has completed its examination of the audited budget results of the States for that year. The other part of the grant represents the final, adjustment, positive or negative, of (he special grant paid two years earlier. The special grants which the commission has recommended for payment in 1961-62 and the special giants paid in 1960-61 are set out in the following table: - Tn total, the special grants recommended for 1961-62 arc £2,613.000 greater than those paid in 1960-61. In 1960-61 the increase in the grants recommended for Western Australia and Tasmania over those for the preceding year was £1,71 8,000. The effect of adopting the commission's recommendations would be to increase the total general revenue grants - that is, financial assistance grants plus special grants - payable to the two claimant States by about £5,595,000 this financial year, using for this purpose the preliminary esti mates of the financial assistance grants which appear in the Budget papers. For Western Australia the increase would be approximately £3,968,000 and for Tasmania approximately £1,627,000. The precise amounts payable as financial assistance grants for 1961-62 remain to be determined by the Statistician before, at the latest, 31st December of this year. The estimated amounts of total general revenue grants payable to each State in 1961-62, and the amounts paid in 1960-61, are compared in a further table, as follows: - It is of interest to note the percentage increase in total revenue grants this year, as compared with 1960-61. On the basis of the Statistician's preliminary estimates of financial assistance grants payable the total general revenue grants - financial assistance grants plus, where applicable, special grants - would, if the commission's recommendations are approved by the Parliament, rise by the following percentages this year: - The average rise in the grants of nonclaimant States is 7.81 per cent., whilst that for Western Australia is 12.29 per cent. and that for Tasmania 9.99 per cent., both the latter being noticeably higher than for any individual non-claimant State. It should be remembered that these comparisons are made by including, for the claimant States, the total special grants actually paid in 1960-61 and recommended for payment in 1961-62. Special grants paid in these years, of course, include the adjusting payments in respect of the financial years 1958-59 and 1959-60 respectively, and do not therefore strictly relate to the years in which they are paid. Since we will not know for some time the adjusting payments recommended for the years 1960-61 and 1961-62, a more strictly accurate comparison cannot be made. However, recent experience seems to show that variations in the adjusting payments are not of such magnitude as seriously to affect the conclusions I have just mentioned. The more rapid rate of increase in the estimated total revenue grants payable to the States of Western Australia and Tasmania compared to those payable to the other Slates is, of course, due primarily to the substantial increase recommended by the commission in the special grants for the claimant States. These grants as recommended for payment this year are over 30 per cent. greater than those paid in 1960-61. There is a particular question raised in the commission's report to which I desire to refer. It is related to its decision this year to depart from its long-established practice, when comparing the financial results and standards of services and efforts of claimant States with those of non-claimant States, of basing these comparisons upon the experience of all non-claimant States. Instead of using a four-State standard for these purposes, the commission has decided to adopt a two-State standard based on the experience of New South Wales and Victoria only. It has set out at length in the report its reasons for doing so. From what is said in paragraph 65 of its report, the commission is apparently of the opinion that there is no reason to believe that grants recommended as a result of using this standard would be higher than those it would recommend if the standard were derived from the experience of all four nonclaimant States. The Government is not persuaded that the adoption of a two-State standard is justified in principle, and believes that this change in procedure of the commission should be examined closely. The commission itself has indicated that it considers the matter still open for further argument by those concerned and the Government therefore proposes to instruct the Treasury to place again before the commission at the proper time its views on the appropriate standard which should be adopted by the commission for the purposes of comparing the financial results and standards of services and efforts made by the claimant States. For this year, however, the Government has decided to accept the commission's recommendations on the special grants to be paid to Western Australia and Tasmania in 1961-62. I therefore commend the bill to honorable senators. Debate (on motion by **Senator McKenna)** adjourned. {: .page-start } page 1376 {:#debate-15} ### NAVIGATION BILL 1961 Bill received from the House of Representatives. Standing Orders suspended. Bill (on motion by **Senator Paltridge)** read a first time. {:#subdebate-15-0} #### Second Reading {: #subdebate-15-0-s0 .speaker-JZY} ##### Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP -- I move - That the bill be now read a second time. Since the first Navigation Act was passed nearly 50 years ago, amending bills have been introduced from time to time, and the latest of these, which was passed in 1958, was primarily in the nature of an overhaul. As the then Minister for Shipping and Transport, when introducing that bill into this House, I undertook that the Department of Snipping and Transport would in the future maintain a continual review of the navigation legislation so that anomalies and other unsatisfactory aspects would be promptly corrected. The current bill is for this purpose and is designed to correct anomalies which have become apparent since the 1958 bill was passed. It is not necessary for me to refer in detail to every matter dealt with in the bill, as many of its particulars are of relatively minor importance. Even the more important matters covered, to which I shall now refer, do not involve policy decisions of major importance. Section 43 of the Navigation Act deals with the manning of ships, and sub-section (8.) of that section provides that a deputy director or proper authority shall not consent to a master taking his ship to sea with less than four-fifths of the engine-room staff, or less than four-fifths of the deck complement. Tt follows that authority cannot be given for a ship to go to sea one man short where the engine-room or deck complement is less than five ratings, although it is quite safe, and desirable in some cases, to allow such a ship to sail one man short. Clause 7 of this bill provides for the amendment of section 43 to enable consent to be given to the ship being taken to sea in such circumstances, but such consent can only be given if the Deputy Director or proper authority is satisfied, firstly, that all the reasonable efforts have been made by the owners or master to obtain the full number of ratings, including the seeking of the assistance of the union, and secondly, that it is safe to take the ship to sea one man short. Clause 9 of the bill repeals section 90 of the act which gives special protection to a seaman from attachment and other legal process directed at his wages. The protection now afforded in the act is seldom now availed of and is not in accordance with modern practices. Honorable senators will recall that the Matrimonial Causes Bill was amended to establish clearly the liability of a seaman for compliance with a maintenance order, and the principle has been established that it is preferable that a seaman should rely on the protection ordinarily afforded by the law rather than the provisions peculiar to the Navigation Act. Section 105 of the act is repealed by clause 10 and replaced by a new section which provides that, where a court, instead of imposing a penalty on a seaman guilty of desertion or absence without leave from duty, at the request of the shipowner causes him to be conveyed on. board his ship, the seaman shall not suffer' any greater forfeiture of wages, for the purpose of recouping the shipowner's out-of-pocket expenses, than he would have suffered if the penalty had been imposed. This amendment is therefore chiefly designed to ensure that any forfeiture of accrued wages to meet such expenses shall not exceed the amount of the maximum penalty that could otherwise have been imposed. The amendment proposed by clause 14 to section 171 of the act is designed to remove matters of minor detail from the act and to require that what is at present prescribed therein will instead be covered in the regulations. This is considered a more appropriate place to deal with the subject of requiring an official log-book to bc kept and prescribing the nature of the entries therein. The Minister for Shipping and Transport has given an assurance that all that is at present prescribed in the act for the protection of masters and seamen in this matter will be covered in tha regulations. It is considered that two other matters of detail now in the act would be more appropriately dealt with by regulations. Clauses 21 and 22 amend sections 229 and 230 of the act, which deal with signals of distress and urgency, so that the necessary provisions can be prescribed by regulations. Clauses 25 and 26 allow the matters concerning hospital accommodation at present prescribed in the act to be dealt with in the regulations, and in this regard also the Minister for Shipping and Transport has undertaken to ensure that the matters prescribed in the act will, in substance, be carried on in the regulations. The bil), in clauses 15, 16 and 17, deals with what are known as running surveys, which are surveys carried out continuously over a period of twelve months during which various parts of the ship are surveyed periodically to avoid delay to the ship. The amendments introduced by these clauses will provide statutory authority for such running surveys, having regard to the relevant requirements Of the International Convention for the Safety of Life at Sea, and will ensure that, in keeping with the established annual survey principle, each part of a ship surveyed at different times is again surveyed within a period of twelve months. Section 2I9h of the act deals with the submersion of load lines, and a maximum fine of £500 is at present provided in respect of offences against these essential safety provisions designed to prevent the overloading of ships. However, it has been a matter of some concern that prosecutions in cases of serious offences have resulted in only relatively light fines being imposed, lt is an indication of the serious view taken of this type of offence that by clause 20 of the bill it is proposed to increase the maximum penalty to £1,000. Clause 30 concerns appeals against the suspension or cancellation by a court of marine inquiry of the certificate of a ship's master or officer. In the past such courts, which are constituted under the Navigation Act, have been constituted by a judge of the Supreme Court of the Australian Capital Territory. The Chief Judge of the Commonwealth Industrial Court now constitutes these courts, and the AttorneyGeneral is of the opinion that if they are to be presided over by a judge of Supreme Court status, it is inappropriate that an appeal should be to another Supreme Court Judge, as at present provided in section 375b of the act. Clause 30 therefore provides that appeals from a court of marine inquiry will lie to the Commonwealth Industrial Court. By clause 32 of the bill section 420 of the act is repealed and replaced by a new section which extends in three desirable respects the ministerial power to cancel or suspend certificates of competency of masters, mates and engineers of ships. First, because the United Nations Economic and Social Council has recommended that the certificates of a merchant seafarer be cancelled if he is convicted of an offence against narcotic laws, the amendment enables the Minister to deal with a certificate irrespective of where the holder has been convicted, instead of being limited to action in respect of a conviction in a Commonwealth country, as is now the case. Secondly, the Minister will be enabled to reissue a certificate in a case where a certificate has been cancelled, or to grant a certificate of a lower grade if he thinks the justice of the case requires it. Thirdly, he will be empowered to deal with a certificate of competency issued under the Navigation Act which a court of marine inquiry or other tribunal, established under the law of a State, has cancelled so far as concerns its validity within the State. References in the Navigation Act to " the Director " and " Deputy Director " refer to officers who hold Public Service offices within the Department of Shipping and Transport. While such references remain, it is necessary, in order to give meaning to them, that these specific Public Service titles be retained, and this has the undesirable effect of hampering the processes of review and improvement in the departmental organization and procedures. A recent review of the organization has in fact drawn attention to the necessity to have greater flexibility in this regard. Clause 34a of the bill therefore provides that necessary flexibility in respect of the Navigation Act by replacing references to " the Director " and " Deputy Director " with a reference to the Minister or to a proper authority or a prescribed officer. Other matters dealt with by the bill are chiefly minor drafting amendments and improvements to enable the sections concerned to operate more effectively. It is intended to continue the policy of making regular amendments to the Navigation Act at fairly short intervals, as it is of great importance that legislation affecting the safe operation of our ships and the welfare of the persons who man them be kept up to date and made as effective as possible. The present bill has this aim and will, I feel sure, have the support of honorable senators on both sides of the chamber. Debate (on motion by **Senator Willesee)** adjourned. {: .page-start } page 1379 {:#debate-16} ### NORTHERN TERRITORY (ADMINISTRATION) BILL 1961 {:#subdebate-16-0} #### Second Reading Debate resumed from 19th October (vide page 1328), on motion by **Senator Paltridge** - >That the bill be now read a second time. {: #subdebate-16-0-s0 .speaker-JYA} ##### Senator O'BYRNE:
Tasmania .- In his second-reading speech, the Minister for Civil Aviation **(Senator Paltridge)** stated - >This bill is to provide that royalties on timber cut on reserves for wards in the Northern Territory - that is, those reserves set aside for aborigines - shall bc paid into a trust fund which is applied for the benefit of the wards including the making of grants to aboriginal institutions. It appears that the aboriginal population is now coming under much closer scrutiny than in the past, and a bill such as this gives us an opportunity to reflect on the problem in this connexion that has faced and is facing the people of Australia. Very little has been done about it. The report of the Select Committee on tha Voting Rights of Aborigines contains some interesting observations on aborigines generally. At the beginning of its report, the committee has stated - >The aboriginal people are increasing in numbers. Changes have occurred in the customs of the great majority which ensure, in the words of one of our witnesses, "that they will never tend to die out again ". Their children are numerous and healthy right across the north of this continent. Education in hygiene is reducing the incidence of disease, and prolonging life, while the birthrate is rising and marriage is tending to be influenced by Christian concepts. The bill provides that royalties on timber cut on reserves will bc paid into a fund and made available to the various institutions that are trying in their own way to assist the aborigines. A similar measure was introduced in 1952 relating to minerals. There arc approximately 17,000 aborigines in the Northern Territory and only 89 of them arc not wards of the State. The report of the select committee shows that though the aboriginal population has been small in numbers, the aborigines have a will to live, lt is a national responsibility to ensure that they have every opportunity for integration and development. This measure docs not approach the problem as widely as I would like. In his secondreading speech the Minister stated - >The need for this bill has arisen largely because of the steps being taken to improve the control of timber-getting and for promoting afforestation in the Northern Territory. The natural stands of commercial timber in the Northern Territory - mostly cypress pine - are limited, but it is planned to add to them considerably by forestry work and to establish new forests. I believe that this would be a splendid opportunity for us not merely to think in terms of the payment of royalties on timber taken from aboriginal reserves, but to plan a timber industry for the Arnhem Land area. {: .speaker-K5K} ##### Senator Scott: -- Have you seen the area? {: .speaker-JYA} ##### Senator O'BYRNE: -- I am informed that the area is equal to about half the size of Tasmania and that the quantity of cypress pine growing there is very limited. This bill will not produce very much in the way of extra revenue to the aboriginal institutions. Possibly the bill is timely but it will not produce much revenue. If we approach this matter in a statesmanlike manner, we will embark on a re-afforestation programme in Arnhem Land. The Minister has admitted that this is the most suitable area for timber production and there will be an increase in the demand for timber as the northern part of Australia develops. We have a chance to give the aborigines in the Northern Territory an opportunity to use their own land. It is the only land that still belongs to them by right. This would give them an opportunity to engage in a trade best suited to (heir capacity and ability. The welfare institutions in the Northern Territory could adopt this as a primary project to assist the aborigines to increase their status. 1 have seen the natives in New Guinea adapt themselves to the mechanical side of timber production. They have shown great promise in that field whereas in other fields they are not so bright. I understand that quite a number of aborigines are associated with the limber industry - small though it is - in the Northern Territory. This was borne out by the Minister when he said - >It is envisaged that, in the carrying out of the programme, considerable employment for the wards will be created. The provision of employment should be only secondary. The primary consideration should be to establish the industry in which the aborigines could specialize. This programme could be carried out in their own area. Information I have gathered suggests that the re-afforestation under way is very limited. A few thousand trees have been planted and the development is of little consequence. We must provide for future needs by means of a re-afforestation programme. {: .speaker-K5K} ##### Senator Scott: -- Will trees grow well there? {: .speaker-JYA} ##### Senator O'BYRNE: -- I should say so. The cypress pine appears to be the main type of commercial timber grown there. As **Senator Scott** knows, that is one of the best types of wood for a tropical country, because it has such a high resinous content, lt is white-ant proof and it lasts a very long time. I have dug up cypress pine posts that had been in the ground for 50 years and found still on the bottom of the posts the chip marks made by the axe when the posts were cut. That is proof to me that cypress pine has qualities and characteristics that make it very suitable for the moist, humid climate of the Northern Territory. Royalties are to be paid on cypress pine in the reserve areas. I hope that these steps will be taken by those who are responsible for the welfare of the aboriginal people in the Territory. From recent surveys and observations that have been made, there seems to be new hope for the aboriginal people. I agree with the conclusion of the select committee that if the native people are treated humanely and given incentives, they will be assimilated into and integrated with our society over a period. Traditionally, they have been not second-class citizens, but tenth-class citizens. Only yesterday, legislation was introduced into the Senate to allow aborigines to handle mails. This is an historical step in the treatment of these people. In this day and age, we have only just got round to removing from them the provisions of the Dog Act and allowing them to hold Government contracts for the delivery of mail. The Minister said - >It is intended to provide opportunities for private enterprise to cut logs and mill timber in reserves under licence, provided that the licensee's activities fit in with the programme of the Welfare Branch for development of forestry on reserves for wards. Here is an opportunity for the Welfare Branch to give greater protection to the rights of aborigines generally. Although Arnhem Land has an area of 15,000 or 16,000 square miles, there are only a few mission stations scattered around the coast, and the population is not very large. With the establishment of an industry by the Welfare Branch of the Administration, there will be an opportunity for aborigines to go there who now live in sub-standard conditions in other areas. Some missions have done similar work in relation to other primary industries. This will provide an incentive for aborigines, in their own industry, to establish a type of apprenticeship system for young men of fourteen or fifteen years of age. The report of the select committee states - >Your Committee found that the period between the ages of fourteen and twenty-one is a difficult one during which more needs to be done for the aboriginal youth and suggests that every effort should bc made by the Commonwealth Government to ensure that free secondary and technical education is readily available . . . Hie aborigines need a considerable capital investment in education, including technical and agricultural education, in industries, land tenure and housing. I believe that that recommendation can be implemented, to a degree, along the lines suggested by this legislation. Instead of merely making provision for the payment of royalties, the Commonwealth has a responsibility to establish a properly organized forestry industry, in which the needs of the future are foreseen and the necessary plantings are made. The aborigines themselves can be trained in the ancient art of silviculture. They should have opportunities to learn the techniques of logging, milling and seasoning. In this way they would be given the incentive that is so necessary if they are to be assimilated into the community in the manner which seems to be desired by all people throughout Australia. The Minister stated also - >The opportunity has also been taken ... to introduce one other unrelated amendment. The bill proposes to make certain formal changes in the principal act as a result of the enactment by the Parliament earlier this year of the Northern Territory Supreme Court Act 1961. That act established the Supreme Court of the Northern Territory of Australia in place of the Supreme Court of the Northern Territory. As a consequence it is necessary to amend the references in the principal act . . . This is a desirable recognition of the need to add the words " of Australia " to the title of the Northern Territory. In the past, the term " Northern Territory " had no specific meaning. to people who were not residents of Australia. We hear of the territories of Canada, Hawaii, and Papua and New Guinea, but the designation of our Northern Territory was not specific. This is quite an important matter. There will now be a recognition of the Northern Territory as a part of Australia in its own right. I hope that the Commonwealth will see the writing on the wall and realize that it must recognize residents of the Northern Territory of Australia to a much greater degree. They must be given a greater measure of self-determination and greater incentives towards the achievement of true citizenship. One of the great problems of the Territory is the moving population. Instead of coming, seeing and conquering, they come, have a look, see what appears to be only a floating, temporary show, and then move out. This is a great pity. Plans have been made for better educational facilities to help the youngsters now there, who will, we hope, be the future citizens of, for instance, Darwin. In every other field, action must be taken to provide in the Territory proper conditions for people who want to settle there. The Territory is a great challenge to Australia. Its coastline is the part of Australia nearest to our northern, Asian neighbours. It is almost unoccupied, and warnings have been issued that some day it may be occupied by other people. It is important not only that we develop it in our own way, but also that the people who are there in their own right, the aborigines, share in the task of developing and populating, in order to justify our occupation of that vast area. The Opposition does not oppose the measure. {: #subdebate-16-0-s1 .speaker-KTL} ##### Senator McKELLAR:
New South Wales -- I have pleasure in supporting the bill and I am very glad that the Opposition, too, supports it. I think we all agree that the payment of mining and timber royalties into a welfare fund for aborigines of the Northern Territory will be of great benefit to them. After all, we must remember that the aborigines of the Northern Territory play a very large part in the running of the cattle industry there, and are particularly well adapted to that kind of work. It is taken for granted that aborigines are horsemen; indeed, nine out of ten of them are pretty good horsemen, some very good. I find that there is a striking difference between the natives in the central part of the Northern Territory and those we see here in the south of the continent, and also those in the Darwin area. This is possibly, so far as Darwin is concerned, because we have more of the island type of native there than we have in the central areas of the Northern Territory around Alice Springs. The native of that part has come to be regarded as the true Australian aboriginal. Around Alice Springs many of the native men are of good physique. In fact, about half of them are 6 feet in height or taller. Their womenfolk are also well built. The natives there seem to have more poise than the natives elsewhere. {: .speaker-KAC} ##### Senator Vincent: -- Are you speaking of the Darwin natives? {: .speaker-KTL} ##### Senator MCKELLAR: -- No, I am speaking of those in the central area around Alice Springs. I should think that their better poise stems from the fact that they realize that they are doing something that is of value, not only to themselves, but also to the community. I think it is a very fine thing that they have such an outlook. We are accustomed to aborigines down in the south going about giving people the impression that nobody wants them. They have a " Don't care " look about them. So it is refreshing to see, not only the difference in physique, but also the difference in general outlook among those who live in the central area. Something else that interested me up there was the number of blonde-headed women and babies. At first, I thought this could be accounted for, perhaps, by some property of the area in which they live, or some chemical quality of their food, but my curiosity was satisfied, and I felt somewhat deflated, when I found from a medical man who knows the area that the answer is peroxide. I hear an honorable senator interject. I know that some people say that that is not true, but there are others who say it is. I also found up there that the native population, particularly around Alice Springs, all seem to be well cared for. That was very pleasant to see. There is a part of the Hermannsburg Mission operating in Alice Springs, and in it there is quite a number of decent houses inhabited by aborigines. I am also interested in the fact, mentioned in connexion with the bill before us yesterday, that these people will now have the right to employment in the PostmasterGeneral's Department. One interesting thing I saw in that area was two women, one aboriginal and one white, pushing a pram ahead of them along the street. In the pram were two children - one was aboriginal and one white. There you have assimilation at its best. As I said earlier, the aborigines up there are of great value to the cattle industry, and we hope that in any development that takes place there they will continue to play a part. Unfortunately, history shows us that as civilization spreads into such areas the native people very often suffer in the process. I hope that that will not happen there. Down in the south, we seem to have a lot of what I can only class as woollyheaded thinking about assimilation. We have people who mean well and set out to work for assimilation according to their lights, because they feel we should assimilate the natives. That theory is all right, but it does not work out in practice with the aborigines we have in the south. Admittedly, the southern aborigines are not full-bloods, or as near to being full-bloods as those of whom I have been speaking in this central area. The great pity seems to be that a lot of them are incapable of dealing with money intelligently, and have no idea of providing for the morrow. They live for to-day alone, and any money they get is spent just as soon as they can manage to spend it. That seems to be part of their way of life, and it is difficult to overcome. It may well be that over the years their ways can be changed, and we hope that that will be so. {: .speaker-KBW} ##### Senator Wright: -- We also hope that if we do change them it will be for their good. {: .speaker-KTL} ##### Senator McKELLAR: -- Quite so. That is a good observation. Yesterday, the report and recommendations of the Select Committee on Voting Rights of Aboriginals was tabled, to which **Senator 0'Byrne** referred earlier. This committee performed a painstaking task, travelling many thousands of miles in a short time, and it has brought down a recommendation that voting rights be extended to the aboriginal population. The chief value of this, I think, may be that it will give great satisfaction to those people to know that they have those rights, whether or not they exercise them. If they do exercise them enthusiastically they will be acting differently from a lot of white people who have those rights but who, in many instances, regard enrolment and voting as a bore imposed upon them by the law. A striking difference between the natives of Australia and the natives of New Guinea is that our people are hunters of game, whereas the New Guinea natives are agriculturalists. I think that the Australian aborigines suffer very much on that account, because as the wild game on which they live decreases in numbers their means of livelihood vanishes. Although it is not a matter that comes within the scope of the bill I think I should mention the long-range development of the Northern Territory. This is absolutely essential, not only for the native people, but also in our own interest. I am one of those who think we should be getting on with the job of planning a long-range policy for the development of Australia as a whole - not the provision of a few million pounds here and a few million pounds there, but a long-range plan. Once we have that plan it should be implemented with the utmost vigour. Perhaps £5,000,000 spent up in the Northern Territory or in the centre would provide us with a much greater return in the long run than the spending of the extra £5,000,000 which has just been made available for the Snowy Mountains scheme. That may seem to the Minister for National Development **(Senator Spooner)** to be sacrilege, but that is the way I feel. {: .speaker-K2N} ##### Senator Ridley: -- We will need a change of government to get that. {: .speaker-KTL} ##### Senator McKELLAR: -- I do not know about that. This Government has done a good job up there, and I hope it will continue to do a good job. **Senator O'Byrne** spoke about timber. A statement made by the Minister in his second-reading speech was that the supply of timber is limited. I cannot see why the supply cannot be augmented by timber grown in some areas which have good rainfall, though, of course, the cost of transporting the timber might be so costly that by the time the timber gets to the market it would be too dear. That is a difficulty that has to be faced. **Senator O'Byrne** also mentioned cypress pine timber. **Senator O'Byrne** spoke of digging up a post that had been in the ground for SO years and finding the marks of the axe still on it. This timber, like other types of timber, has its peculiarities. As **Senator O'Byrne** said, in some areas it will last for SO years, but in other areas it will last for only seven or eight years. In most areas of New South Wales, particularly in the central west, one type of timber will last for many years whereas another type will not last for very long at all. I am very glad to support this measure. I hope that the aims for which it is designed will be achieved. Question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. {: .page-start } page 1383 {:#debate-17} ### AUDIT BILL 1961 Bill received from the House of Representatives. Standing Orders suspended. Bill (on motion by **Senator Paltridge)** read a first time. {:#subdebate-17-0} #### Second Reading {: #subdebate-17-0-s0 .speaker-JZY} ##### Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP -- I move - >That the bill be now read a second time. This bill contains a number of amendments to the Audit Act. Some of the amendments have been recommended by the Joint Committee of Public Accounts and others have been agreed upon between the Treasury and the Auditor-General. Of the new provisions which the bill seeks to insert, clause 11 deals with commercial accounts of departments. The Joint Committee of Public Accounts, when investigating these accounts, has drawn attention to the absence of clear legislative authority governing them. The clause proposes to authorize the Treasurer to direct a department to keep accounts for such of its operations and to prepare financial statements in such form as he determines. The section also provides that the books, accounts and statements kept and prepared pursuant to a determination by the Treasurer shall be subject to inspection, examination and audit by the AuditorGeneral. Section 5 1a, which the bill also amends, will authorize the AuditorGeneral to report to the Parliament the results of his audit. Clause 10, which has the support of the Joint Committee of Public Accounts, proposes a new section to contain a special appropriation of the Consolidated Revenue Fund for refunds of revenue not covered by other acts. The necessary appropriation for these refunds is now contained in the annual Appropriation Act. A special appropriation is likewise proposed for refunds from the Loan Fund and an amendment of section 62a of the act is included to give authority for the refund of amounts standing to the credit of the Trust Fund. It has been recognized for some time that section 63 of the act, which deals with the making of arrangements for the accounting and control of moneys outside the Commonwealth, does not contain any authority relating to stores. This is now to be remedied. In conjunction with this amendment, the section has been redrafted to make it clear, in the first place, that the provisions of the Audit Act apply to the operations of Commonwealth departments in the external territories of the Commonwealth - but not so as to apply to the various Territory administrations - and secondly, that the provisions of the act apply to Commonwealth operations in overseas countries except as modified by directions given by the Governor-General. It is proposed that this amendment shall operate from a date to be proclaimed by the Governor-General, to enable suitable amendments to be made to what are now the Overseas Accounts Arrangements. Honorable senators may recall that, some years ago, the right of. access by the Auditor-General to the accounts of the Parliament, and in particular to the accounts of the Parliamentary Refreshment Rooms, was in question. Amendments to the act are now proposed to remove any doubt as to the authority of the AuditorGeneral to audit the public money transactions of the parliamentary departments. The audit of the transactions of the Parliamentary Refreshment Rooms bank account, which do not come within the scope of the act, will continue to be by arrangement between the presiding officers and the Auditor-General. In its fortieth report the Joint Committee of Public Accounts commented favorably upon a proposal to publish the Treasurer's Finance Statement omitting the shillings and pence and the details of lapsed appropriations. The statement has been prepared in this form since 1957-58, but the committee asked that the relevant provisions of the act be reviewed, and if necessary, amended to give full authority for the practice. Clause 13 of the bill seeks to confirm in the statute the improvements and economies effected by this departure from tradition. For some years the Auditor-General has, as honorable senators are aware, adopted the practice of presenting a report on the Treasurer's Finance Statement early in the Budget session and later, a supplementary report upon accounts which were not available at the time of preparation of the main report. The Auditor-General feels that, although this practice has been endorsed and welcomed by this Parliament, it may not be in accordance with the strict letter of the law. He has, therefore, asked that the Parliament, by an amendment of the act, recognize the principle of an early report on the Finance Statement and supplementary reports upon other accounts, the audit of which was not completed in time for inclusion in the earlier report. The proposed amendments will so provide. An amendment is also necessary to section 71 which deals with the regulationmaking powers "under the act. It was pointed out during the course of the inquiry by the Joint Committee of Public Accounts into Treasury Regulation 52, that section 71 of the act does not confer any authority to make regulations in respect of works and services carried out for the purposes of the Commonwealth. Regulations applying equally to stores, works and services, have been made from time to time, and the purpose of this amendment is to enable these regulations to be continued. Paragraph (d) of clause 23 amends section 71 to provide express power to authorize the Secretary to the Treasury to give directions, relating to public moneys and stores, to persons employed in the service of the Commonwealth or to other persons subject to the provisions of the Audit Act. A Treasury regulation which has been in operation for many years purports to confer this authority on the Secretary to the Treasury, but the SolicitorGeneral has recently advised that it is desirable that the regulation-making section of the act include this express provision to remove any doubt as to the validity of the authority to give directions. Other clauses which amend existing provisions deal mainly with machinery matters. Clause 6, for example, remedies an omission in a section introduced in 1948. Clause 7 allows the Auditor-General to call for returns of receipts if he required them. Clause 12 enables the Auditor-General to authorize officers of his staff to allow or admit defective vouchers under section 47 of the act. Any further information desired by honorable senators on these amendments can be supplied during the debate in the committee stages. I commend the bill to honorable senators. Debate (on motion by **Senator McKenna)** adjourned. {: .page-start } page 1384 {:#debate-18} ### INTERNATIONAL FINANCE CORPORATION BILL 1961 {:#subdebate-18-0} #### Second Reading Debate resumed from 19th October (vide page 1276), on motion by **Senator Paltridge** - >That the bill be now read a second time. {: #subdebate-18-0-s0 .speaker-KTN} ##### Senator McKENNA:
Leader of the Opposition · Tasmania .- The bill before the Senate is designed to amend the International Finance Corporation Act 1955. I say at once that the Opposition opposes the measure, just as it opposed the original measure of 1955 which was designed to authorize Australia's acceptance of the charter of the International Finance Corporation and to permit our entry to membership of that body. We opposed the 1955 legislation for reasons that we then stated and which I shall put in a few words now. The purpose of the corporation, in the terms of Article I. of its charter, is to further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less-developed areas. If I had had any doubts at the time of the wisdom of our opposition to that measure, they would have been resolved in favour of the opposition by the events that have taken place in the intervening period. At that time we thought that a wrong approach was being adopted to the very great problem of providing aid to under-developed countries. We recognize that throughout the world there are hundreds of millions of people who are emerging into self-government, who are moving gradually or even rapidly in that direction, whose standards of living are exceedingly low and who Jack any kind of full life. Generally, throughout the world there is the feeling that something should be done to bring the living conditions of those people up to the more fortunate standards of the older, established countries. We of the Opposition believed that the creation of an international body with an exceedingly small capital, having regard to international finance standards, of 100,000,000 dollars was a most inadequate contribution to a solution of the vast problem which existed. We thought that the wise thing to do was to have international financial assistance upon a much bigger scale and to devote it to things that were fundamental. We thought that the best course to take was to direct international finance largely to the governments of the under-developed countries to enable fundamental things to be done, such as the establishment of roads, communications, railways, power and water supplies, and to provide educational and health facilities. Our belief was that the provision of those facilities should precede the fostering of private production for profit and that the best opportunity to expand would be given to private enterprise by having these basic public activities undertaken first. So the Opposition thought, first, that the establishment of this corporation with such a small capital was an insignificant contribution to a major programme and, secondly, that it was beginning at the wrong end. **Sir Arthur** Fadden at that time directed attention to the emphasis that should be placed upon helping the underdeveloped countries. He said - >The corporation can be regarded as an additional agency for channelling the flow of investments from the older industrial countries of the world to those in the early stage of development. We assumed that the under-developed countries - those with a low standard of living - would be particularly helped. But that has not been so. Of its capital of 100,000,000 dollars established five years ago, the corporation has expended on investments only about 40,000,000 dollars. In the opinion of the Opposition, that is a very insignificant contribution to overcoming the problem. I believe the problem has been tackled basically in the wrong way and, secondly, that there seems to be an obvious lack of need for this kind of help. Australia has made her contribution. One hundred million dollars are at the disposal of this body, but that sum has not been put to work to any adequate extent since it was made available. I should like to cite figures that have been supplied by my colleague in another place, **Mr. Crean.** I rely completely upon his judgment and accuracy. A consideration of what he has said shows just how insignificant is this contribution of 40,000,000 dollars in a period of five years. **Mr. Crean** pointed out that in the five years ended in 1949 the United States of America had provided economic assistance to under-developed countries amounting to 12,025,000,000 dollars and that nations other than the United States had provided 5,904,000,000 dollars in the same period. The total contribution from the West, or the better developed countries, was 17,929,000,000 dollars- a truly colossal figure. The October letter of the First National City Bank of New York showed that Russia is providing to under-developed countries economic aid amounting to 1,000,000,000 dollars a year. Obviously such a sum is inadequate to meet the needs of the under-developed nations. Yet we find that the International Finance Corporation, which was much vaunted at the time of its flotation, has provided only 40,000,000 dollars over a period of five yeaTS for the encouragement of productive private enterprise! {: .speaker-KBW} ##### Senator Wright: -- To what underdeveloped countries is Russia supplying 1,000,000,000 dollars a year? {: .speaker-KTN} ##### Senator McKENNA: -- She is helping other countries. I think Russia's contribution runs fairly widely over the world. She has helped Indonesia. In fact, she has helped many countries. {: .speaker-KOW} ##### Senator Henty: -- Including Cuba. {: .speaker-KTN} ##### Senator McKENNA: -- Yes. I am talking about finance at the moment, not about politics or ideologies. {: .speaker-KBW} ##### Senator Wright: -- I am only seeking information. {: .speaker-KTN} ##### Senator McKENNA: -- I realize that. I am not putting up any argument in favour of the purpose for which Russia is making these contributions. I am merely comparing the various contributions that have been made throughout the world and am saying just how insignificant has been the contribution made by the International Finance Corporation. In five years that body has contributed only 40,000,000 dollars. {: .speaker-K5K} ##### Senator Scott: -- Is not the constitution of the corporation being amended to make it easier to invest money? {: .speaker-KTN} ##### Senator McKENNA: -- That is the alleged purpose of the change. 1 doubt the legitimacy of that argument, as I shall demonstrate in a moment. I should like now to refer to the fact that, although it is implicit that the industries of any member government of this body may participate by obtaining loans, advances or help from it, the last thing I expected to find was that Australian industries were participating. In the course of his speech in 1955, **Sir Arthur** Fadden intimated that Australia might benefit in the long term, but he made it very clear that we could not expect to benefit in the immediate future, having regard to the greater needs of other countries. He said - >The funds available will therefore be limited and the under-developed countries will have first priority on their use. In the short term, it would be unwise to expect too much in the way of direct investment in Australia by the corporation. But when we turn to the latest report available from the International Finance Corporation we find Australia figuring in its operations in that two undertakings apply for and obtain almost 1,000,000 American dollars. One of those undertakings was a lumber and mill products company and the other a rubber company. I am impelled to say that I feel somewhat humiliated to find our own country having recourse to that body at all. After all is said and done, that body was intended to help people whose standard of living was far lower than our own and, by no measurement, can we be regarded as a low-standard country. I suggest that any business proposition that has a chance of viability at all in Australia would have no difficulty in attracting necessary capital from either local sources or the normal foreign sources. The thing that staggers me, when I look upon this body as one that ought to be concerned with raising the standards of people when there was no other source from which help could be obtained is the terms upon which it makes loans. If honorable senators will refer to pages 12 and 13 of the corporation's last report, they will see that the corporation charges as much as 10 per cent, interest. The lowest rate charged - and this applies to only one out of 37 instances in which help was given - is 5 per cent. It shocks me to think that a body that is out to help under-developed countries should be charging 6 per cent., 7 per cent., 9 per cent, and as high as 10 per cent, interest. And it does not stop there! In almost every case, there are two other elements of return to the International Finance Corporation. The terms which it puts up, for instance, are, in one case, 7 per cent, interest and additional payments contingent on profits. It goes even one step further, and asks for an option on shares. So that the three elements of return to this body, which is supposed to be conferring benefits largely upon underdeveloped countries, are interest, additional payments contingent upon profits and an option on shares. I have not seen the terms of any of these agreements, but the broad terms of each transaction are set down, in the corporation's report. I doubt whether there is one that has not three elements of return. There may be one or two, but the same conditions seem to apply in every case. For instance, the conditions in one case are 7 per cent, interest, participation in profits and an option on shares. That sounds to me like the toughest kind of bargain that a hardheaded money lender would drive. I do not think there is any other way of looking at it. One would expect a measure of generosity from a corporation such as this. I expected to find exceedingly low, even nominal, rates of interest that would be a help to under-developed countries, but I tell honorable senators frankly that when I picked up this document and saw what was in it I was deeply shocked. {: .speaker-KBW} ##### Senator Wright: -- What are the terms of repayment of the principal. {: .speaker-KTN} ##### Senator McKENNA: -- That is not indicated in the document 1 am looking at, although it does mention maturity dates in each case. For instance, in the case in which the interest rate is 10 per cent., the maturity date is 1965-70. That transaction was made in June, 1960, so that it is a short-term loan. The next one, which was at 7 per cent., made in 1960, matures in 1962-71. That is an even shorter-term loan. {: .speaker-K5K} ##### Senator Scott: -- What is the security? {: .speaker-KTN} ##### Senator McKENNA: -- That is not indicated, either. All I say on that point is that it was intended that this organization would be free to make unsecured loans. There is no doubt that there is an element of risk and, in normal circumstances, one looks for higher interest if the risk is great, but surely it must be a shock to honorable senators, as it was to me, to learn that this corporation which is set up to help under-developed countries to develop their industries is not only charging 10 per cent., but is also demanding a share in profits and an option over shares. In other words, if the undertaking that is being helped is successful, the shares are likely to rise, and probably the corporation would make a very substantial profit because, no doubt, the option would be taken on the shares at par. That seems to me to be completely against the spirit that should animate these international bodies when it comes to helping countries in distress. I will confess that I did have some misgivings about the wisdom of our action at the time we rejected this International Finance Corporation membership in 1955 but, looking down the intervening years, and looking at the latest report of the corporation, I am more convinced than ever that the attitude the Opposition took then was right. **Senator Scott** reminds me that the purpose of this bill is to correct a position that appeared under the 1955 membership when, by section 2 of Article III., it was provided that the corporation's financing should not take the form of investment in capital stock. In other words, the corporation was forbidden to buy stock. From that, I understood that it was not to trade in stock, and I should say that the transactions disclosed in the latest report of the corporation are a contravention of that provision. If the corporation takes options over shares, then surely it is dealing in investments, for the taking of an option over shares is an equity investment. I should say that transactions of the type mentioned in that document are an offence against the spirit, if not the exact letter, of the article. The reason put to us for making the change proposed now - that this corporation now wants to be in a position where it can make investments in shares - is just about the weakest thing I have ever heard. {: .speaker-KBW} ##### Senator Wright: -- Is that the effect ot this bill? {: .speaker-KTN} ##### Senator McKENNA: -- That is the effect. There are two particular provisions. I refer the honorable senator to the schedule to the bill which says - >The Corporation may make investments of its funds in such form or forms as it may deem appropriate in the circumstances. That is the first great change. The second change relates to the negativing of the corporation's right to take any part in the managerial responsibilities of the undertakings it finances. {: .speaker-KBW} ##### Senator Wright: -- That is the one that I thought was the substance of the bill. {: .speaker-KTN} ##### Senator McKENNA: -- No. I suggest that the fundamental thing is the form of financing. The other has been preserved in relatively similar form throughout because, in the original charter, the corporation was not only forbidden to invest in the stock of the concerns with which it dealt, but it was also denied the opportunity to take any part in their management. The second schedule provides - >The Corporation shall not assume responsibility for managing any enterprise in which it has invested and shall not exercise voting rights for such purpose or for any other purpose which, in its opinion, properly is within the scope of managerial control. In my opinion, that is only a repetition of the provision contained in the original bill. Let me come to the reasons that are given for proposing to make this fundamental change. The Minister stated in his second' reading speech - >Being prohibited from making normal equity investments, the International Finance Corporation was forced to make use of forms or techniques of financing which sometimes appeared complicated and unusual. Its terms normally provided for unsecured loans at a moderate fixed interest rate, but also carrying some additional income related to profits or options on shares. Such conditions are unknown or unfamiliar to businessmen in many of the less developed countries in which the corporation operates. Is the argument that such conditions are unknown or unfamiliar to businessmen in those countries a reflection on them and on the managers of the two corporations? When one considers the bodies with which they have been negotiating, one finds that they all are corporations or companies. I have not checked the matter to the last detail, but the impression left on my mind is that they are all corporations. Corporations understand company matters; they understand quite clearly what is meant by options on shares, and they also understand what is meant by a share of profits. What is complicated about those things to anybody with the faintest knowledge of business matters? In Mexico, Pakistan, Peru, India, or any other country, there are keen business minds which understand these matters as well as we know our alphabet. I think that the reason stated for the proposed change is a false one. It is obvious that the various associations throughout the world that have been assisted by finance of this kind understood what they were doing when they granted options on shares. They would have to understand company matters before they could do that. In any language, people understand what is meant by participation in profits. I consider that the reason that has been adduced for the change lacks validity. I do not believe that it is the real reason, but I cannot imagine what the real reason is. Therefore, I do not suggest one, but I certainly do not accept the reason that has been assigned. I am not the least impressed by the fact that 94 per cent, of the voting strength of the signatories to the charter supported the change. On the evidence that is before the Senate at the moment, this amending bill merely justifies and confirms the attitude that the Opposition took some five or six years ago. In conclusion, I ask the Minister whether he is in a position to tell us something about the agreements. Is the format of one of the agreements before him? Over what portion of the shares of a company does this corporation seek an option when it decides to take an option, as it does in almost every case? I should also like to know the share of the anticipated profits that it demands, in addition to the 9 per cent., 10 per cent, interest and the rest. {: .speaker-JZY} ##### Senator Paltridge: -- And 5 per cent. {: .speaker-KTN} ##### Senator McKENNA: -- Yes, I concede that in one case it is 5 per cent. I mentioned that earlier in my remarks. Does the corporation ask for one-third, one-quarter, one-half, or only a nominal or insignificant share of profits? That is the kind of information that we ought to have before us, now that the operations of this body over a five-year period are being reviewed. We on this side of the Senate shall content ourselves with my announcement that we strongly oppose the bill for the reasons I have given: First, because the justification for the change, as it has been served up to us, is completely inadequate; secondly, because of the manner in which the body is operating; thirdly, because of the inadequacy of its scope and activities; and fourthly, because the money is devoted to purposes that are not fundamental and which could well be left to private enterprise. {: #subdebate-18-0-s1 .speaker-JZY} ##### Senator PALTRIDGE:
'Minister for Civil Aviation · Western Australia · LP -- in reply - The Opposition, having opposed the introduction of the original measure in 1955, naturally should oppose the amending bill that is now before the chamber. When the legislation was introduced a few years ago the Opposition, in accordance with its established political philosophy, I imagine, opposed the principle of establishing a corporation of this nature, an international organization the purpose of which was to assist private enterprise. **Senator McKenna** has to-day developed and expanded that attitude in advancing, as one of his principal points of criticism, the fact that this corporation does not exist for the purpose of assisting financially what he refers to as basic undertakings - undertakings of a kind which are almost always embarked upon by governments, such as the provision of water supplies, power, reservoirs, education and soil conservation services, and the other matters that he referred to. There are other people in the world, and in Australia, too, including the supporters of the parties that form this Government, who do not see development in those sectors as being restricted to government enterprise. They see such development as being an undertaking to be shared by governments on the one hand and private enterprise on the other. That is the purpose of this corporation. It avails nothing for the Leader of the Opposition to refer to its activities in scornful terms and to say that its lending has been insignificant. The point, of course, is that the loans have been most important to those elements of private enterprise which have sought that form of assistance. I think that the most cursory examination of the report will indicate to any one who looks at it with an unbiased mind that the corporation, during its five years of existence, has fulfilled a very important function in a number of countries. {: .speaker-KNR} ##### Senator Hannaford: -- Including our own. {: .speaker-JZY} ##### Senator PALTRIDGE: -- Yes, including our own. Let me say in passing that while the bulk of the activities of this organization have been directed to countries which are less developed than ours, Australia was never excluded from the activities of the corporation. Australia, by any standards, cannot be regarded as a fully developed country. It is at mid-point, I presume, between underdevelopment and full development. It would be foolish to attempt to exclude us from the activities of a corporation of this kind on the score that we were not in the category of undeveloped nations. Let me refer briefly to some of the countries and projects which have been benefited by this organization. The countries are Argentina, Brazil, Chile, Colombia, El Salvador, Finland, Guatemala, India, Iran, Italy, Jamaica, Mexico, Pakistan, Peru, Tanganyika, Thailand and Venezuela. Private enterprise in all those countries has availed itself of the facilities which this organization provides and has done so in a manner which has not only benefited the particular enterprises concerned but also the countries in which they are situated. The types of industry and the undertakings that have been assisted are extremely diverse and range from steel to automotive transmitters, electrical equipment, pulp and paper, motor vehicles, cement, food products, fibre board, metal cans, fertilizers, twist drills and industrial equipment. These are all produced in countries such as I have indicated. Not surprisingly the Leader of the Opposition returned to the theme which he almost always adopts when we have a measure before us which concerns lending and borrowing. I refer to rates of interest. I do not think it can be said that this organization in any way imposes terms which are or could be regarded as being harsh. The terms are commensurate with the estimate of the risks involved. In the articles of agreement, the operational principles provide - >That the corporation shall undertake its financing on terms and conditions which it considers appropriate taking into account the requirements of the enterprise, the risks being undertaken by the corporation and the terms and conditions normally obtained by private investors for similar finance. Having regard to the fact that its borrowers are people engaged in private enterprise, I can see nothing objectionable in that principle nor in the method of assessing the rates of interest on loans which are extended. It is completely normal. The Leader of the Opposition has suggested that in other ways the door is open for the International Finance Corporation to impose upon its borrowers harsh and unnecessarily restrictive practices. It is my experience that where a lending organization indulges in that sort of thing, whether it be done domestically or on an international scale, invariably it brings the undertaking to a discreditable end. Unfortunately, I am not able to reply definitely, but I have asked whether the provision for taking options over shares has ever been exercised or whether it has been exercised in a way that might be considered harsh. I am informed that no case is known where this has occurred. {: .speaker-KTN} ##### Senator McKenna: -- Why take the options? {: .speaker-JZY} ##### Senator PALTRIDGE: -- Because it is, as described in the bill, the completely normal practice so to do. The Leader of the Opposition asked whether there was available the format of the agreement between the corporation and the borrower. I am informed that it is not available and for the very good reason, I think most people would agree, that the agreements are a matter between the corporation and the company concerned - the borrower - in the same way as an agreement might be entered into in respect of the lending and borrowing of money between any other two parties. {: .speaker-KTN} ##### Senator McKenna: -- I asked for the format or form and not for the details, such as names. {: .speaker-JZY} ##### Senator PALTRIDGE: -- Even the format need not necessarily be the same in all cases. {: .speaker-KTN} ##### Senator McKenna: -- It would be very close. {: .speaker-JZY} ##### Senator PALTRIDGE: -- I doubt it; but in any case it is not available and it is regarded as a document that is confidential between the organization and the people who raise the money. Despite what the Leader of the Opposition has said about this organization, I think it must be accepted after its few years of operation that it has filled a place in the general machinery of international lending and borrowing very capably, efficiently and effectively. On the score of insignificance, let me say just this: It was never intended nor is it anywhere stated that this International Finance Corporation should do anything other than supplement the general international arrangements which are carried out in relation to the larger and basic products by the International Bank and the International Development Association in cases where international balances are a consideration. This is meant to be a supplement, and a supplement only acting within a necessarily narrow and restricted field but in a field which is of first-class importance, particularly to those people who have regard for and an admiration of the activities of private enterprise throughout theworld. Question resolved in the affirmative. Bill read a second time. In committee: The bill. {: #subdebate-18-0-s2 .speaker-KTN} ##### Senator McKENNA:
Leader of the Opposition · Tasmania -- I am looking at: appendix B at page 25 of the fourth annual report of the International Finance Corporation. It has two sources of incomewhich are shown at that page. In 1959-60 these were: Income from United States Government obligations, 2,662,003 dollars; income from operational investments,. 1,116,122 dollars. I can readily understand what is income from operational investments. Can the Minister for Civil Aviation **(Senator Paltridge)** tell me the nature of the other source of income? I do not follow that. I point out that if the corporation were to rely on income from operational investments, it would be very heavily in debt. It earned over 1,100,000 dollars from investments and the expenses of conducting its activities totalled 1,702,898 dollars. {: #subdebate-18-0-s3 .speaker-JZY} ##### Senator PALTRIDGE:
Minister for Civil Aviation · Western Australia · LP -- The item referred to - income from United States Government obligations, 2,662,003 dollars - is income from the investment of American capital not yet lent to clients. Bill agreed to. Bill reported without amendment; report adopted. Bill read a third time. Senate adjourned at 4.36 p.m.

Cite as: Australia, Senate, Debates, 20 October 1961, viewed 22 October 2017, <http://historichansard.net/senate/1961/19611020_senate_23_s20/>.

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