27th Parliament · 2nd Session
The DEPUTY PRESIDENT (Senator Bull) took the chair at 10 a.m.. and read prayers.
– 1 ask a question of the Minister representing the Treasurer. Is it true that there has been no adjustment of the tax scale for lower and middle income earners since the year 1954-55? Did the Prime Minister, in his policy speech for the 1’969 election, promise to reduce taxation for lower and middle income earners? Are not taxpayers in the lower and middle bracket in Australia among the most heavily taxed persons in the world? Will the Prime Minister honour his election promise to provide over 3 years, beginning with the 1970 Budget, tax relief to the extent of $200m on personal incomes? Will the Minister refute suggestions that the Prime Minister does not now propose to honour his election undertaking to give such relief to lower and middle income earners?
– lt is true, as the honourable senator indicated by his question, that it is some time since there has been an adjustment in the overall scale of taxation on incomes earned by personal exertion, lt is also true that the lower and middle income tax group has a genuine claim for consideration - perhaps more than any other group - in relation to the incidence of the tax. It is equally true that the Government and the Prime Minister have indicated that it is their intention to have a review of the scale with particular emphasis on the lower and middle income group. It is also true that the Prime Minister made reference to that in his policy speech. The honourable senator knows as well as I do that traditionally any review of tax is made at Budget time. The Budget session will commence in August. At this moment we are in the throes of trying to complete our tasks in the autumn session. Tn any event, it is not normal practice and no precedents have been established for reference to be made to Budget matters in advance of the Budget session.
– My question is directed to the Leader of the Government in the Senate. Are the people of this country to be treated like children by being told that the Government does not want to speak about Budget matters before the Budget? Did not the Prime Minister say to the people that the Government’s aim would be so to reduce personal income tax over the 3-year period beginning with the next Budget that at the end of that time it would be providing relief of about S200m to low and middle income earners? Will the Leader of the Government in the Senate assure the Senate that there will be no departure from that promise made to the people?
– An honourable senator asked me a question and 1 gave him an answer. The supplementary question does not add anything to or change anything in the answer I gave to Senator Devitt.
– My question is directed to the Leader of the Government in the Senate. I ask: Has the Government over past years had any standing committee or any area of investigation to provide information lo itself regarding any level of poverty within the Australian community? As the Minister would know, there have been various reports as to the level of poverty in the community. 1 ask the Minister whether he knows that Dr Colin Clark recently advocated a type of reverse taxation so that families who are found to be living on what may be considered to be a poverty level of income can be lifted by financial contributions from the public purse to a level of income which will allow them a reasonable living. Will the Government give serious consideration to this advice for the benefit of its citizens and the welfare of Australia?
– In the first instance the Department of Social Services has the responsibility to consider various aspects of social service benefits. This is done constantly. From time to time various groups and organisations make submissions, theses are written, surveys are carried out, and these are submitted in the normal way to the Department of Social Services which has regard to them. This session of the Parliament has reflected the Government’s desire to give to a wide variety of people in the lower income groups social service benefits, fringe health benefits and so on. That is one aspect.
The honourable senator referred to a submission written by Dr Clark on the principle of reverse taxation. That is a matter for the Department of the Treasury. Every field of revenue gathering and revenue rebating is a matter for the Treasury in the first place. There is nothing original in the proposal put by Dr Clark. Treasury officials throughout the world are well aware of the reverse taxation theory. It will have its supporters and its critics. I would say yes, the Government does consider all these matters. It has available to it abundant sources of information on every aspect to which the honourable senator referred.
– 1 ask the
Acting Minister for Immigration whether she is aware that Australia and Malta have signed an agreement designed to aid Maltese emigrating to Australia. Is she in a position to advise the Parliament what the agreement embraces? Has a reciprocal social services agreement with Malta, similar to that which operates with Britain and New Zealand, been signed? As the Minister knows, Malta is a British Commonwealth country. If she has not this information will she have inquiries made and advise the Senate as early as possible?
– I have some comment here concerning the agreement with Malta. Information in which the honourable senator is interested and which does not come within this comment I shall endeavour to obtain for him. Australia’s first assisted migration agreement with Malta became operative on 1st January 1949, and it has been renewed progressively since that date. The current agreement is due to expire on 30th June 1970. The new agreement will extend to Maltese citizens the same level of passage assistance and the same settlement conditions as are provided in recent agreements with other countries. As at the 1966 census there were approximately 55,000 Maltese born people in Australia and more than 5,000 settlers have arrived in the 4 years since that date. The population of Malta is not large. It was about 320,000 at the end of 1967. It would be unrealistic to expect very large numbers of migrants in terms of the total Australian migration programme, but in terms of the Maltese population there has been a very substantial movement. The steady movement of Maltese migrants to this country has created strong links of family relationship and friendship between our 2 countries. Those are the points that have been made in connection with the signing of the new agreement. Senator Fitzgerald has been constant in his inquiries concerning reciprocal social services arrangements. These are matters which 1 know have been under consideration. Any information I can obtain for him I will obtain.
– I ask the Minister representing the Minister for Primary Industry a question. In what losses has the Australian Wheat Board been involved as a result of mouse infested wheat? With particular reference to a statement that I made yesterday on the serious situation caused by the mice plague in northern Victoria, I ask: Is it now an achievement of the Government that Australian mice have the highest standard of living in the world?
– The honourable senator asked me a question on this subject yesterday and later sent over to me in note form the last part of the question he has now asked. The mice plague is a matter for the Australian Wheat Board and the handling authority in the State of Victoria. As to the amount of money that has been lost through mice infested wheat, I will have to approach the Minister for Primary Industry and obtain the figures for the honourable senator.
– Can the Minister for Air tell the Parliament what portion of the $US252m already committed by the Australian Government for the purchase of the Fill will be credited or returned to Australia under any buy-back arrangement if the final decision is not to proceed with the Fill deal?
Minister for Defence has said that Australia would get back SUS130 to $US150m under the buy-back arrangement to which he and the Secretary of Defence in America agreed during his recent visit to America.
– My question is directed to the Minister representing the Treasurer, ls it a fact that an Australian taxpayer is allowed the total costs incurred for medical1 services for himself or his family as deductions from his assessable income for tax purposes? Why is it that over the years costs of ambulance services in respect of such medical treatment have not been allowed as deductions? Will the Minister give consideration to amending section 82f (3.) of the Income Tax Assessment Act so that such costs will be permitted as allowable deductions in the future?
– 1 am grateful for the honourable senators question which points up the fact (hat medical expenses are allowable deductions but under section 82f(3.) of the Act ambulance service costs are noi allowable deductions. All I am prepared to do is refer the point to the Treasurer. I take it thai the honourable senator is advocating that ambulance expenses should be allowable deductions. 1 will put this suggestion to the Treasurer as a proposition which is deserving of consideration by him when the Budget is being prepared.
– My query is why such expenses have noi been included. Does the Leader of the Government know the answer?
– No, 1 do not. 1 think a considered judgment would have been made in relation to ambulance services. lt may well be thai there is an explanation. I shall inquire about this matter. However, 1 presume that the honourable senator is also advocating that such deductions should be allowable.
– My question is directed to the Minister in Charge of Tourist Activities. It relates lo the invaluable aviation collection on display at present in King’s Hall, which was officially opened by the Minister for Civil Aviation in the absence of the Minister in Charge of Tourist Activities and which 1 commend to honourable senators. I ask: ls it a fact that the Government has refused to accept this collection? Does this mean that the Government does not regard it as being invaluable or irreplaceable? Is the matter under review at present by the Minister or the Government?
– I feel that I should inform the Senate that the Government has not had an opportunity to consider this matter. The Government will be given an opportunity to consider it at the earliest opportunity as a result of a proposal which 1 have submitted today. Any suggestion that there has been either acceptance or refusal up to date is in error. In my view it is a very valuable historical collection. It is being displayed in King’s Hall with the consent of the Presiding Officers to give members of the Parliament as well as members of the public an opportunity of appreciating the intrinsic significance of the collection as an historical record as well as the obvious artistry involved in the display. The whole combination is, in my view, an outstanding and unique collection relating to a significant period in our aviation history. Therefore, to preserve this collection is of great interest to the nation. 1 have taken an interest in the matter because 1 feel that the gesture of the author of the display, Mr Byrne, deserves the utmost consideration of the Government. I have no doubt that the Government will give it that consideration at the earliest opportunity.
– I desire to direct a question to the Leader of the Government in the Senate. I direct this question to him because he was, as Chairman, a prominent member of the Senate Select Committee on Road Safety, which took evidence some years ago and made the recommendation which is the basis of my question. Has the attention of the Leader of the Government been drawn to a statement by the President of the Royal Automobile Association of South Australia, Mr R. A. Irwin, claiming that his Association and the other State automobile associations represented in the Australian Automobile Association have been pressing for years for the establishment of a body of trained experts to investigate the basic causes of road accidents in Australia and to highlight the carnage on our roads? As road deaths now constitute a national disaster, will consideration be given by the Government to consultations with the States with a view to the establishment of such a body?
– I am grateful to the honourable senator for asking this question. It is true that there was a Senate Select
Committee on Road Safety. It is also true that it was an all-party Committee and that I had the honour to be Chairman of it. The Committee put down a whole series of recommendations but it must be recognised that many of those recommendations related to matters which came within the responsibility of the sovereign States. Indeed the Committee could only make recommendations having regard to where responsibility and sovereignty lay. It is fair comment to say that many of the things recommended by the Committee at that time, which now seems so long ago, have been adopted by the States which have accepted them as pari of their traffic code. It is a fact that the Committee recommended that a research body be set up. It must be understood that the responsibilities of the Commonwealth and the States are drawn together by the Australian Transport Advisory Council of which the Minister for Shipping and Transport is Chairman. That body meets every year and draws together the views of the Commonwealth and the States. In addition the Commonwealth during the Budget period and when making other appropriations allocates certain sums of money to the States for road safety. I cannot add very much more at this time, beyond saying that I shall direct the honourable senator’s question to the Minister for Shipping and Transport to see whether he feels that there are some pertinent aspects that should attract a reply in this place.
– I address a question to the Minister representing the Minister for Education and Science. Is it a fact that a considerable amount of audio/visual material which has been provided to State high schools is lying idle owing to the fact that staff are not available to these high schools in order to operate this material? In view of the expense that has been involved in providing such material to the State high schools does the Government intend to take any action in order to rectify this position?
– The matter referred to by the honourable senator is not within my present knowledge. I shall refer it to the Minister. I am sure that inquiries will be made and information furnished as asked for by the honourable senator.
– I know that the Minister for Civil Aviation has been particularly interested in the matter to which I shall refer in this question. I wonder whether his attention could be given further to the matter and some comment made to the Senate. Is the Minister aware that preexisting land owners whose property adjoins theTullamarine Airport have, for some considerable time - indeed, for several years - been prohibited from using their land or dealing in their land as they would wish? Is this a policy which this Federal Government supports? Does the Minister feel that some land holders whose property adjoins theTullamarine Airport have been placed at a disadvantage due to the location of the airport in that area? Is it a fact that an investigating committee of the Federal and State Governments has been looking at the position for many months? What is it that requires many months of investigation? If land holders have been placed at a disadvantage due to increased municipal rates, noise levels and other factors which have arisen as a result of the placing of this airport by the Commonwealth Government, will the Commonwealth give consideration to their receiving complete compensation for their disabilities?
– This is a matter of importance and the honourable senator’s question is extremely detailed. I shall ask him to place it on the notice paper in order that he may have an adequately prepared reply.
– Is the Minister representing the Minister for National Development aware of the report in the ‘Australian’ of today’s date entitled ‘US to Bury A Waste in Salt Mine’? The article mentions that the American Atomic Energy Commission has decided to bury most radioactive atomic waste in a national depository which will cost about $45m and take some5 years to build. Has the Government given any consideration to the provision of satisfactory disposal arrangements for radioactive atomic waste from the power plant to be built at Jervis Bay? If so, will the Minister provide the Senate with detailed plans of its intention?
– I have not seen the article in the ‘Australian’ to which the honourable senator referred. I ask the honourable senator to put this question on the notice paper so that I can get a considered reply for him.
-I ask a question of the Minister representing the PostmasterGeneral. Will thePostmaster-General make a statement on serious allegations that are being made regarding the issue of a Captain Cookbi-centenary sheet of stamps? It is alleged that special arrangements - and very profitable arrangements - were made with certain private stamp dealers and that these arrangements were not extended to other dealers. As these allegations are serious and reflect on the integrity of the Post Office, I ask whether the Postmaster-General will make a statement on the position and, before making such a statement, examine an article on the question which appeared in the June 1970 issue of ‘Stamp News’ which is an Australian publication circulating among persons interested in stamps.
– I shall draw the attention of the PostmasterGeneral to the publication to which the honourable senator refers, and I shall also put before him the request for a statement to be made on the matter.
(Question No. 229)
asked the Minister representing the Minister for the Army, upon notice:
– The Minister for the Army has provided the following answer to the honourable senator’s question;
(Question No. 352)
asked the Minister representing the Minister for the Army, upon notice:
Has the Department of the Army agreed to hand over to the South Australian Highways Department certain land from the Warradale Army Camp, South Australia, in some parts as much as 45 feet wide; if so, has any consideration been given to the preservation of the gum trees included in the area surveyed, which are well over 200 years old and irreplaceable as an example of the type of gum which was prevalent in the area when originally settled, and of which there are few examples left in the area.
– The Minister for the Army has provided the following answer to the honourable senator’s question:
The Department of the Army has agreed to the disposal of land to enable the South Australian
Highways and Local Government Department to carry out certain roadworks adjacent to the Warradale Army Camp. As planning for the road is only in the design stage the actual land requirement will not be known until a survey has been completed. I am unable to comment on the removal of any trees involved in this project as this would be a matter for consideration by the South Australian Highways and Local Government Department However your request will be brought to the attention of that authority when the land is transferred.
– On 4th March 1970 Senator Milliner asked me as the Minister representing the Prime Minister if I would institute inquiries into the reason why security police officers recently visited the offices of all Queensland members of the Commonwealth Parliament situated in Brisbane, without first having the courtesy to advise such members of the proposed visit. In reply I said that 1 would seek information. The following answer has been provided by the Attorney-General:
I have caused inquiries to be made into this matter and I am informed that on 15th September 1969 officers of the Australian Security Intelligence Organisation, by arrangement with the Department of the Interior, carried out an inspection of a number of ministerial suites in the parliamentary offices in Brisbane. The suites inspected were those occupied by the Minister for External Territories, the Minister for Civil Aviation and the Minister for Primary Industry. On the same day inspections were also made of suites located elsewhere in Brisbane that are occupied by the Postmaster-General and the Minister for Housing. I am assured that none of the officers making the inspections entered any office accommodation occupied by private members.
(Question No. 341)
asked the Minister representing the Minister for Education and Science, upon notice:
– The Minister for Education and Science has provided the following replies to the honourable senator’s question:
All the funds available in 1969 were not allocated because the BrisbaneArchdiosese decided to retain a small amount to meet unforeseen needs from any schools lodging late applications for assistance. The balance remaining is available for distribution in 1970. Also, the Rockhampton diocese retained approximately $9,000 from the 1969 allocation to use in 1970, with its allocation for that year, for building grants.
(Question No. 196)
SenatorMULVIHILL asked the Minister representing the Minister for Education and Science, upon notice:
– The Minister for Education and Science has replied as follows:
(Question No. 217)
asked the Minister representingthe Prime Minister, upon notice:
– The answer to the honourable senator’s question is as follows: (1), (2) and (3) As the honourable senator will be aware, 1 announced on 5th May on behalf of the Prime Minister the details, which had been agreed between him and the Premier of Queensland, of establishing Commonwealth and State Royal Commissions to inquire into the risk of damage to the Great Barrier Reef from drilling for petroleum.
The Prime Minister, after making his announcement in another place (House of Representatives Hansard 5th May, 1970, Page 1596), said that it had been some considerable time since it was first decided that such a commission would be set up. The Prime Minister explained that there had been, during that period of time, discussion not only on who should form the members of this commission of inquiry but also some considerable discussion as to just what the terms of reference should be.
Both the Commonwealth and Queensland Governments were determined that the best men possible should be selected to conduct the inquiry and thatthe terms of reference should be comprehensive enough to allow a thorough examination of this important matter. It is natural that the settling of these matters between the two Governments should take some time.
(Question No. 322)
asked the Min ister representing the Prime Minister, upon notice:
Is a public servant who has had a heart attack preventedfrom driving a Commonwealth vehicle, even though medical practitioners have certified that he has had a complete recovery from the attack.
– The Prime Minister has provided the following answer to the honourable senator’s question:
The Public Service Board has informed me that it has not promulgated a rule which would prevent a person employed as a motor driver from returning to driving duties after recovering from a heart attack. Each casewould be considered on its merits, taking into account the nature of the attack and any degree of disability resulting from the attack.
– In accordance with the provisions of the Public Works Committee Act 1969, I present the report relating to the following proposed work:
Archives Repository at Villawood, New South Wales.
– I seek leave to make a short statement.
The DEPUTY PRESIDENT - Is leave granted? There being no objection, leave is granted.
– In this morning’s issue of the ‘Australian’ is a brief report of the tributes paid in the House of Representatives and in the Senate to the late Mr Robert Joshua a former member of the House of Representatives and President of the Australian Democratic Labor Party. The report is headed: ‘MPs Pay Tribute to ALP President’. If at all possible, I should like to find out whether that heading is just another case of bad and inaccurate reporting by this newspaper or whether it is an attempt again to smear the late Robert Joshua.
Senator DRAKE-BROCKMAN (Western
Australia - Minister for Air) - by leave - On 6th May Senator Wood gave notice that he would move a motion relating to the disallowance of the Naval Forces Regulations contained in Statutory Rules 1970, No. 35. Following discussions with the Regulations and Ordinances Committee the regulations have now been amended to meetthe objections of the Committee. Statutory Rules 1970, No. 71, being an amendment of the Naval Forces Regulations was gazetted on 2nd June 1970.
– by leave - Since Senator Wood tabled a motion for the disallowance of me Customs (Prohibited Imports) Regulations contained in Statutory Rules 1970. No. 8, officers of the Department of Health have had discussions with members of the Senate Standing Committee on Regulations and Ordinances and amendments to these regulations have been made in Statutory Rules 1970. No. 72, to meet the Committee’s wishes. I understand that the Committee has agreed with the regulations as amended.
– Mr Deputy President, another statement was to have been made by the Minister representing the Minister for the Interior.
– All I have had given to me by the Department of the Interior is a note that a toda-. meeting of the Senate Senator Wood would withdraw notice of moi k n No. .> appearing on today’s notice paper. I have nothing to add to that.
– I ask for leave to make a statement concerning the business of the Senate.
The DEPUTY PRESIDENT- ls leave granted? There being no objection, leave is granted.
– I thank the Minister for the statement he has made concerning notices of motion Nos. I and 2 which relate to the disallowance of certain regulations and ordinances. The Regulations and Ordinances Committee has had an opportunity to examine the amendments which have been made to the regulations and ordinances in question and agrees that they appear to meet the Committee’s objections. I would like to place on record the Committee’s appreciation of the cooperation which has been received from the Ministers concerned and the officers of their Departments. I now ask for leave to withdraw notices of motion Nos. I and 2 on today’s notice paper.
The DEPUTY PRESIDENT- ls leave granted? There being no objection, leave is granted.
Notices - by leave - withdrawn.
– I ask for leave to make a short statement in relation to what has just been said bv Senator Wood.
The DEPUTY PRESIDENT- Is leave granted? There being no objection, leave is granted.
– Notices of mo:ion have just been withdrawn in relation to regulations which had attracted the attention of the Regulations and Ordinances Committee.: We are indebted to the Committee for its vigilance. However, when matters are dealt with in this way I am prompted to wonder whether it would be possible for the Committee to make a full report as to what steps were taken. In that way there may be a more public record of exactly bow the objections of the Committee were met.
– That was done.
– lt is said that the objections of the Committee were met. but the way in which they were met has not been shown.
– They are statutory rules, and they could be circulated.
– It is true that some rules could be circulated, as the Minister interpolates, but it is not altogether satisfactory that people who are nol expert and not familiar with the precise problems should have to look at new statutory rules in order to find out how a matter has been resolved.
This process concerns a most important function of the Senate and of the Regulations and Ordinances Committee. If the practice if. to continue, as we see it. that often the objections of the Committee are met by some discussion with the Department which originanted the regulation or ordinance, I think it would tend to create more sa;,s action and better understanding of the role of the Committee if a report were to bc made dealing with the manner in which the objections of the Committee were met. Then not only senators but also people outside the Parliament who are interested in these subjects would be able to see that the Committee has achived ils objective and is exercising its vigilance over regulations and ordinances by insisting upon the criteria that have been laid down being met, even though the matter has not been taken to the stage of a motion in the Senate to propose disallowance of a regulation or ordinance.
Senator WOOD (Queensland) - by leave - I listened with interest to the suggestions made by Senator Murphy. I shall put them before the Regulations and Ordinances Committee for further consideration.
– I indicate that I intended to move, as I think I suggested yesterday, to bring on notice of motion No. 5 in my name dealing with the proposed Standing Committees. I have had some discussion with the Leader of the Government in the Senate (Senator Anderson) about this. I propose to bring on that notice of motion later in the day, if the Senate gives me leave, with the object of in some way having that subject matter perhaps conjoined with other matters and brought on at 8 p.m.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack> - Senator Wood, do you wish to proceed with notice of motion No. 3 now or later on in the day?
– The position is that the Minister, on my understanding, was to have presented a statement to the Senate. This was not done. I understand that certain arrangements are being made for a regulation to be promulgated. This, will meet the situation. That is what the Regulations and Ordinances Committee require. I therefore ask that the matter be postponed until tomorrow.
The ACTING DEPUTY PRESIDENT - Order! There being no objection, that course will be adopted.
Motion (by Senator Anderson) agreed to:
Thai notice of motion No. 1 be postponed until a later hour.
Motion (by Senator Cotton) agreed to:
Thai leave be given to introduce a Bill for an Act to amend the Civil Aviation (Carriers’ Liability) Act 1959-1966.
Bill presented,, and read a first time.
Standing orders suspended.’
Senator COTTON (New South WalesMinister for Civil Aviation- [10.49] - I move:
This is a Bill for an Act to amend certain provisions of the Civil Aviation (Carriers’ Liability) Act 1959-1962, which prescribes the liability of airline operators in the event of accidents occurring in the course of international and domestic aircraft operations. The right to recover damages arising from travel on international flights is primarily regulated by the Warsaw Convention, made in 1929, and the Hague Protocol to that Convention, made in 1955. Australia is one of many countries participating in these international agreements which are given the force of law in Australia by the Civil Aviation (Carriers’ Liability) Act. In addition, Part IV of the Act applies similar conditions to operations by the holders of domestic airline licences, and it is in this regard that the Government proposes the amendments incorporated in this Bill. The basic Warsaw principle, as applied to Australian domestic operations under Part IV of the Act, is that a carrier is liable for assessed damages sustained by reason of the death or personal injury of a passenger resulting from an aircraft accident. This liability of the carrier exists whether the accident was due to negligence on the part of the carrier or not, but the court may adjust the damages payable if it is proved that the passenger caused or contributed to the damages. The Act limits the liability of the carrier in respect of each passenger to §15,000.
This limit of liability is approximately equivalent to the one specified for international operations in the Hague Protocol of 1955. In recent years, the International Civil Aviation Organisation has been studying whether the limit of liability and other provisions of the Warsaw Convention should be reviewed, and it is now proposed to hold an international conference early in 1971 for this purpose. The conference will have before it a proposal to raise the international limit of liability to S89.000. In the meantime, following indications by the United States Government that it was dissatisfied with the existing limit in relation to international services to and from that country, the airlines operating those services agreed with the United States authorities, as an interim measure, that they would accept a limit of liability of $52,000 for international passengers embarking or disembarking in the United States or passing through that country. The Government gave careful consideration to these moves in the international aviation world when assessing what would be an appropriate limit of carriers’ liability for Australian domestic air services in present circumstances. The figures mentioned are related primarily to economic conditions in the United States, where personal incomes and damages awarded in accident cases are at a much higher level than they are here. Accordingly, the Government concluded that an increase of this order in the Australian domestic limit could not be justified at the present time. As the nominal average weekly earnings of adult males in Australia have approximately doubled since 1955. when the basis for the existing limit was established, the Government proposes that the same change be made in this limit of liability, that is to say, an increase from $15,000 to $30,000. This will cost the airlines some $250,000 per annum in additional insurance premiums.
If the proposed international conference results in a new convention or protocol on carriers’ liability, the Government will consider whether it is appropriate for Australia to become a party to it, in which case a suitable proposal will be submitted to the Parliament. This will also provide an opportunity to review again the domestic limit of liability in the light of what is decided internationally. I should emphasize that the maximum amounts of compensation specified by the Act:, as well as by the Warsaw Convention and Hague Protocol, are not automatic entitlements. An injured passenger, or the dependants of a deceased passenger, claiming compensation from an airline whose aircraft is involved in an accident must prove that damage has been suffered by reason of the accident, and the amount of damages is assessed in accordance with the ordinary principles of law. When the assessed damages are less than the maximum amount’ mentioned in the Act, they are recoverable in full. Otherwise the carrier’s liability is limited to that amount.
I would also point out that these arrangements and limits refer only to the liability of the air carrier to the passenger or his dependant. They do not require the carrier to insure against this liability, although as a matter of prudence this is normally done, nor do they prevent a passenger from insuring his life or person quite independently for any additional amount he chooses. There are similar provisions in the Act relating to damage or loss of passengers’ luggage. The present limit of carriers’ liability for registered baggage, that is baggage checked in with the airline and carried in the aircraft hold, is $200, and that for hand baggage, carried into the aircraft by the passenger, is S20. The Government proposes that these limits be raised to 3300 and $30 respectively. Here again, these are maximum amounts recoverable on proof of damages, but. if the luggage of a passenger is worth more than these amounts, ho has ready access to insurance facilities and can cover himself against loss for the full value.
As I have indicated earlier, the Civil Aviation (Carriers’ Liability) Act applies only to the carriage of passengers and baggage in aircraft operated by the holders of airline licences under the Air Navigation Regulations. This includes passengers carried on airline charter flights as well as on their regular services. The rights of passengers on air taxi flights, charter flights and joyrides conducted by the holders of Charter licences only, however, depend on common law and the terms of the contract between the passenger and the carrier. Commuter service operators hold charter licences and have been exempted from holding airline licences under powers conferred on the Director-General of Civil Aviation by the Air Navigation Regulations. In granting such exemptions, the Director-General hits required the operators to contract with their commuter passengers to accept liability for death or injury to the same extent as if Part IV of the Civil Aviation (Carriers’ Liability) Act applied to the carriage. This is not an entirely satisfactory method of achieving adequate protection for commuter passengers. With the general charter operators, it is common to ‘contract out’ of all liability for death or injury to passengers by including appropriate conditions on the tickets. Whether such provisions are legally effective may be open to question, but on the face of things many passengers carried by charter operators may have no redress in the event of accidents.
The Government cannot see any justification for treating passengers of (fie airlines and the charter firms any differently in respect to the carriers’ liability arrangements, and the Bill includes amendments which will apply the Act to all charter flights and commuter services subject to the Act.
As with the airlines, this will involve the charter operators in higher insurance costs. On this last point, as will be seen from a perusal of Part IV of the Act, for constitutional reasons its provisions are not applicable to intrastate services, except in the case of those operated by TransAustralia Airlines. In order to cover this situation, the Government arranged for the various States to enact legislation which effectively extends the rules under Part IV of the Act to intrastate operations. The State Premiers have been advised of the Commonwealth’s present proposals and they have indicated their willingness to amend their legislation correspondingly insofar as this is necessary, both in respect of the inclusion of all charter operations in the arrangements and the increases in the limits of liability.
Sections 14 and 37 of the Act preserve the liability of a carrier to indemnify the employer of a passenger in respect of his commitments under workers compensation legislation. The Queensland Workers Compensation Act, however, differs from the legislation in other States, as it does not impose a liability on the employer to pay compensation, the injured worker recovering directly from the State Government Insurance Office. The Premier of Queensland has asked that the Act be amended to preserve the right of the Government Insurance Office to recover from the airline any compensation paid to an employee or his dependants in appropriate cases, so that the position in Queensland will be comparable with that applicable elsewhere. In considering this particular matter it has been concluded that the sections concerned should also be modified to cover the position where a person liable to pay workers compensation is not necessarily the employer of the person injured or killed and to ensure that they are effective in all cases where this type of compensation, however described, is payable. Clauses 3 and 7 of the Bill are designed to achieve all of these objectives.
Some publicity has been given to a proposal by the Government to introduce a system of automatic interim payments to the dependent spouse and children of passengers killed in aircraft accidents. It is believed this will represent a significant improvement in the carriers’ liability arrangements, and the Government will submit suitable legislation to the Parliament to give effect to the proposal as soon as possible. It has not been practicable to do so at this time as certain legal aspects require further attention, but it was considered desirable to proceed with the basic amendments now included in the Bill rather than delay them until a later session of Parliament. The Civil Aviation (Carriers’ Liability) Act is a significant legislative measure in the functioning of the civil aviation industry in Australia, lt affords protection to passengers and their dependants on the one hand and to the operators on the other, and is based on principles recognised throughout the world. The amendments now submitted for consideration by the Parliament are aimed at improving the Act in certain important respects, in particular in relation to the limits of liability and the extension to all charter flights. I commend the Bill.
Debate (on motion by Senator Bishop) adjourned.
Motion (by Senator Cotton) agreed to:
That leave be given to introduce a Bill for an Act to repeal section 66 of the Australian National Airlines Act 1945-1966.
Bill presented, and read a first time.
Standing orders suspended.
– I move:
That the Bill be now read a second lime.
The purpose of this Bill is to repeal section 66 of the Australian National Airlines Act. This section of the Act provides that in any action brought against the Australian National Airlines Commission to recover damages for death or injury, other than in cases subject to the Civil Aviation (Damage by Aircraft) Act or the Civil Aviation (Carriers’ Liability) Act, the plaintiff is not entitled to recover more than $15,000, this limit being related to that specified in the latter Act. In an action not covered by the two Acts mentioned, therefore, such as one arising from an accident caused by a TransAustralia Airlines vehicle, the plaintiff firstly has to prove negligence on the part of the Commission and also has a ceiling on the amount of damages he can recover.
This is quite contrary to the normal common law situation, where negligence has to be proved but there is no limit on the damages recoverable, lt also differs from the carriers liability legislation principle, whereby the damages are subject to a limitation but the plaintiff does not have to prove negligence. In effect, section 66 results in an injured party having two constraint*, on his ability to recover reasonable damages. A similar provision existed formerly in the Commonwealth Railways Act, and the Parliament repealed the relevant section in 1968. The Government considers that the Austraiian National Airlines Commission should not be in a specially favoured position in this respect, and it proposes that section 66 be repealed accordingly. I commend the Bill.
Debate (on motion by Senator Bishop) adjourned.
Motion (by Senator Cotton) agreed to:
That leave be given lo introduce a Bill for an Act lo amend the Air Accidents (Commonwealth Liability) Act 1963 and the Statute Law Revision (Decimal Currency) Act 1966-1967.
Bill presented, and read a first time.
Standing Orders suspended.
– I move:
That the Bill be now read a second lime.
This Bill replaces the Air Accidents (Commonwealth Liability) Bill 1970, introduced on 19th March 1970 in another place, which has been withdrawn. That Bill was consequential on the Compensation (Commonwealth Employees) Bill 1970 and the Commonwealth Employees’ Compensation Bill 1970 and will be re-introduced in another place at a later time as the Air Accidents (Commonwealth Liability) Bill (No. 2) 1970. The purpose of this Bill is to make amendments to the Air Accidents (Commonwealth Liability) Act consequent upon the Civil Aviation (Carriers’ Liability) Bill 1970. The amendments raise the limit of liability quoted in sections 8 and 14 of the Act to keep the maximum liability of the Commonwealth or Commonwealth authorities for death or personal injury of air passengers in line with the new limit proposed in the Civil Aviation (Carriers’ Liability) Act. I commend the Bill.
Debate (on motion by Senator Bishop) adjourned.
Bill received from the House of Representatives. - Standing Orders suspended.
Bill (on motion by Senator Cotton) read a first time.
– 1 move:
That the Bill be now read a second time
With the concurrence of honourable senators I incorporate my second reading speech in Hansard:
This Bill is concerned with the first grant to be made under the new national water resources development programme which has already been announced. The Government has agreed to a request from the State of Queensland for a grant under the programme of up to $ 12.8m for specified works in the Bundaberg region.
The new national water resources development programme was announced by the Prime Minister (Mr Gorton) in October ll.’69. Under the programme, the Commonwealth proposes to make available to the States $100m over 5 years for rural water conservation and supply works, flood mitigation and water measurement, over and above the States’ own programmes for these purposes. This new programme follows the original national water programme which provided over $50m in grants to the States!
Under the division of constitutional responsibilities the assessment, development and control of water resources in the States is primarily a matter for the State Governments, and the programmes of water conservation being undertaken by the States bear ample testimony to their recognition of the need to develop and make available as much water as possible for use in rural areas as well as in towns and cities. However, following on the successful Commonwealth Slate co-operation in the accelerated programmes of water resources measurement, to which the Commonwealth is making a significant financial contribution, the Commonwealth Government decided that an acceleration of the national effort in water conservation works was called for. The Government therefore established the first programme which is resulting in a substantial increase in capital expenditure on rural water development works. The demand for assistance with these works indicated the need for an extension and accordingly the new programme was commenced.
In 1967, the Queensland Government submitted to the Commonwealth, for consideration under the original programme, a proposal for an irrigation scheme to serve the Kolan-Burnett area on the north side of the Burnett River. At the same time, a further submission dealing with the BurnettIsis area to the south of the Burnett River was foreshadowed. The Kolan-Burnett proposal was examined by the Commonwealth but was not included in the short list of projects for detailed examination in the programme. In March 1969, the State submitted a new proposal embracing in the one project most of the Bundaberg cane growing region, and superseding the earlier proposals, but at that stage the final allocations in the national water programme were being determined. In September 1969 the Queensland Government announced the allocation of $8.3m for works which were considered particularly urgent in view of the increasing seriousness of the position with regard to underground supplies in the coastal area.
Following the announcement by the Prime Minister in October 1969 that the national water programme would be extended by the provision of SI 00m over the next 5 years for water resources development in the States, the Queensland Premier submitted a request for $12. 8m, being the estimated cost of the Monduran Dam and pumping station, and inter-river connecting channel. Because the project had been under study for some time and the need for remedial measures was apparent the Queensland request received early consideration. Details of the scheme are contained in the explanatory memorandum distributed with the Bill. 1 turn now. to the Bill itself, which generally follows the pattern of measures granting financial assistance to the States and
Acts previously passed by the Parliament for particular projects assisted under the first programme. The works themselves, in respect of which a Commonwealth grant is payable, are described “in the Schedule to the Bill, and provision is made in section 5 for the Schedule to be varied if this appears desirable in terms of the objectives of the legislation. Provision for non-repayable grants is made in section 4 of the Bill. Sections 6 and 7 set out requirements in connection with the implementation of the project, and cover the provision of information requested by the Minister, ministerial approval of the works, action by the State to provide the other works which make up the total project, and approval by the Minister of contracts in excess of $500,000. Requirements for information in respect of expenditure are set out in section 8, and the usual provisions for the Treasurer to make advance payments, and for repayment of overpayments are made in sections 9 and 10.
The national water resources development programme represents a very important move towards closer collaboration between the State and Commonwealth Governments in the development of Australia’s water resources. The present legislation will give effect to the first decision of the Government in connection with the extension of this important programme and will provide support for a project of national significance. The Bundaberg region is at present suffering from 2 severe disabilities. The dry, farmed canelands are subject to wide fluctuation in yield, and under present marketing conditions farmers cannot compensate for poor years with production much above peaks in good years. The resultant inefficiency, added to the widely fluctuating income, when set against continually rising costs, is producing serious economic problems in the district. On the other hand, the bulk of the irrigation is dependent on supplies which are likely to fail if withdrawals continue at the present rate. In spite of recent rains, underground water levels in the vicinity of Bundaberg are the lowest ever recorded. On both counts therefore, remedial measures aimed at providing an assured water supply are urgently required in order to maintain the stability and prosperity of the region. I have much pleasure in commending the Bill to the Senate.
Debate (on motion by Senator Georges) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Anderson) read a first time.
– I move:
That the Bill be now read a second time.
With the concurrence of honourable senators I incorporate my second reading speech in Hansard:
The purpose of this Bill is to authorise the payment to the States this financial year of special financial assistance totalling $16m. The $l6m is made up of 3 elements: An amount of $12m, to be distributed between the 6 States in proportion to the financial assistance grants payable to them this year under the formula laid down in the States Grants Act 1965- 1 968; an additional grant of$ 1. 5m to Tasmania; further amounts, totalling $2. 5m to compensate the States for the estimated additional interest costs incurred by them up to 30th June 1970 as a result of the removal of the income tax rebate on Commonwealth loan interest in November 1968.
The grant of $l2m, which represents general budgetary assistance, was announced by the Prime Minister (Mr Gorton) at the recent Premiers’ Conference in response to representations by the States that they were facing difficult budgetary problems this financial year, due to wage rale increases and other factors. Final estimates of the financial assistance grants payable to each Stale in 1969-70 are not yet available. However, on the basis of present estimates, the distribution of the grant of $ 1 2m would be as follows:
The additional payment of $1.5m to Tasmania represents special assistance of a temporary nature to help the State finance its revenue deficit. Under the procedures of the Commonwealth Grants Commission, Tasmania will not receive the final adjusting part of its special grant in respect of 1969-70 until 1971-72. Theeffect of the extra payment of $1.5m will be to reduce the J 969-70 revenue deficit which the State would otherwise have had to carry until that time. It is part of the understanding between the Commonwealth and the State that the $1. 5m will result in the final adjusting part of the 1969-70 special grant being that much less.
When the income tax rebate on Commonwealth loan interest was removed in November 1968 it was recognised that this would result in the States having to pay higher interest rates on their borrowing programmes for works and housing. The Commonwealth Government therefore undertook to reimburse the States for the additional interest costs incurred by them up to 30th June 1970. The amounts set out in the Schedule to the Bill represent estimates of the additional cost agreed between each of the States and the Commonwealth. The proposed reimbursements total $2. 5m. The additional costs borne by the States after 30th June1970 will be taken into account in the new grants arrangements between the Commonwealth and the Slates to commence next financial year. I commend the Bill to honourable senators.
Debate (on motion by Senator Willesee) adjourned.
Hill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Dame Annabelle Rankin) read a first time.
[11.9] - I move:
That the Bill be now read a second time.
With the concurrence of honourable senators I incorporate my second reading speech in Hansard:
The Prime Minister (Mr Gorton) in his policy speech last October, said:
We shall give capital assistance on a 2 for 1 basis to approved institutions which give training for the various kinds of handicapped children - the blind, the deaf, the spastic, the crippled and the mentally retarded.
This Bill will give effect to that promise. Although the Commonwealth bears a large share of the responsibility for looking after handicapped adults - through invalid pensions, its own rehabilitation service, its subsidies to sheltered workshops and in other ways - child welfare, broadly speaking, has been a matter for the States and the many admirable voluntary organisations that have so successfully pioneered and carried on their humanitarian work in this field. The Commonwealth Government of course provides a subsidy of $1.50 per day in respect of the accommodation away from home of certain handicapped children.
The role the States have played both directly and by assisting the voluntary organisations to continue and extend their activities is readily acknowledged. They have borne the major burden. This measure will not only provide a direct source of assistance to the voluntary organisation but it will also indirectly assist the States by freeing them from the need to provide capital subsidies to voluntary bodies or at least greatly reduce the need for them to do so. Insofar as this occurs, it will allow them to devote greater funds towards assisting handicapped children in other ways, lt will, of course, still be possible for a qualified body which receives a capital or maintenance subsidy from the Stats, to receive the Commonwealth subsidy in addition.
Because of the Commonwealth’s continuing interest in the welfare of the. disabled it is important that it should ensure that all possible help is given to handicapped people as early as possible because a child - even an infant - is easier to train than an adult. Spastics, dyslectics, autistics, the profoundly deaf, the blind, the mentally retarded - with all these and other groups, the essential thing is to start remedial action while they are still, young. To delay assistance has the effect of leaving them helpless for longer, of consuming greater resources in their rehabilitation, and of militating against the effectiveness of later training. While the measures proposed in the Bill are designed specifically to assist in providing facilities for the training of handicapped children, from pre-school onwards, it is not only the children who will benefit. Most honourable senators will know something of the problems that confront the parents of the handicapped child. Frequently the whole pattern of their lives - social activities, holidays, employment as well as ordinary domestic duties - have to be adjusted to meet the needs of the son or daughter who cannot become part of the normal family group. lt is also on these parents that much of the responsibility rests to establish many of the special schools, training centres and hostels that these children need to enable them to live as normal a life as possible. Fortunately they are assisted in this work by many good people who see these causes as the most deserving charity to which they can devote their time and energy. These people, I am sure, have earned the admiration and respect of all honourable senators. No Government could hope to duplicate the type of service that is provided by parents and those who dedicate themselves to supplying the needs of these children because no Government service could supply the love and sympathy and understanding that is every bit as necessary as the classrooms, the play areas and the special equipment that these children require. Nevertheless the measures proposed in the Bill will materially help some handicapped children to take their place in the work-force and to join fully in the life of the community; it will help others to enter sheltered employment or al least to become more a part of our society.
Many of the organisations that have already made good use of Commonwealth assistance for their sheltered workshops will no doubt bc claiming assistance under the new legislation for the benefit of the younger people for whom they care, including the provision of residential accommodation. Mr Deputy President, this Bill is a practical measure, lt takes the Commonwealth into a new area of welfare work but it will enable voluntary and religious organisations to improve and expand a service which they have been providing for many years, lt provides Ibr a $2 Federal subsidy for every $1 subscribed from private or local government funds for capital expert- diture on training centres, training equipment and hostels for handicapped children.
It contains the following provisions: Eligible organisations are non-profit bodies defined in virtually the same way as eligible organisations under the Aged Persons Homes Act and the Sheltered Employment (Assistance) Act. Expenditure which can be subsidised includes land, training centres, building additions, and alterations, specialised equipment and fixtures, and residential accommodation. ‘Children’ includes both handicapped children under 21 years of age and those who, although over 21 years of age, have received continuous training since childhood. Disabilities accepted include both physical and mental disabilities. Subsidy is payable in respect of buildings, etc. completed after 27th October 1969 - it may also, under certain circumstances, apply to land purchased before that date.
I can assure honourable senators that, in the administration of the Act, the Department of Social Services will employ the greatest flexibility, with the aim of providing effective help as soon as possible, while seeing that our resources are genuinely directed to the real needs of these children. Training, for example, will be regarded as including instruction in the activities of daily living as well as remedial, pre-vocational or vocational tuition. Where special facilities are required for general education they will also be included.
It is clear enough that there is still much to be done. There are, we estimate, some 50,000 handicapped children under 16 years of age in Australia, including both those who have some physical handicap and those who are mentally retarded. Probably under half of these are adequately catered for by existing facilities. Voluntary organisations and religious bodies want to provide a better service for handicapped children and the Commonwealth wants to help them achieve that worthy objective. State Governments too want to improve their services and to the extent that this Bill will reduce the burden of the State Governments as regards capital expenditure it will enable them to apply their resources more effectively towards other work in this area. I commend the Bill to the Senate.
Debate (on motion by Senator Fitzgerald) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator DrakeBrockman) read a first time.
– I move:
With the concurrence of honourable senators I incorporate in Hansard my second reading speech. This Bill will give effect to the Government’s intention to make available up to $25m over a period of 4 years for implementation of the marginal dairy farms reconstruction scheme. Tabled with the Bill is an agreement between the Commonwealth Government and the Government of Western Australia which will come into force immediately this Bill is enacted by Parliament. The way in which the Bill and the agreement have been drawn makes it desirable that they be read in conjunction with each other. The scheme as outlined in this Bill had its origin when the Australian Dairy Industry Council in October 1966 submitted a number of proposals to the Commonwealth Government in connection with the renewal of the industry stabilisation plan for the 5 years from 1st July 1967. The Dairy Industry Council recommended that, in addition to maintaining the already existing measures of Government support to the industry, the Federal Government should provide funds for distribution in conjunction with State governments, as combined grants and loans to provide for the reconstruction of dairy farm units which were uneconomic because of size.
The Government accepted this industry recommendation and formulated the present reconstruction plan. In its essential features, this plan is in line with the recommendation by the Industry Council. The world situation in dairying shows an overwhelming pattern of production surpluses. Butter stocks in the 10 major producing countries have risen for the fifth year in succession. The European Economic Community alone has a butter surplus of around 300,000 tons or little short of half the world’s annual trade in butter. The Six have accumulated this surplus through beggarmyneighbour policies such as high export subsidies, despite continued representations by Australia and other countries for moderation.
Britain remains the major market for Austraiian dairy products. But the British market is limited by quotas, requiring restraint to be exercised by Australia, New Zealand and other suppliers. Even that trade is in jeopardy should Britain join the EEC without first ensuring that there are adequate safeguards- for its traditional suppliers. The quotas may have resulted in a reasonably stable price for butter on the British market, but returns from that market can scarcely be called remunerative. In Australia itself, the consumption of fats and oils per person has been declining. The consumption of butterfat per person has been falling even faster. Consumption of fluid milk per head is static in most States. Competition from margarine and other spreads would create chaotic conditions but for State-imposed restrictions.
The sum total of a limited home market and an over-supplied world market means that, despite the continuation of the Government subvention of $27m per annum for butter and cheese, the equalised return to producers declined from 47.1c per lb butterfat in 1964-65 to an estimated 41.3c for the current year. Over the same period costs have risen by 161% according to the Bureau of Agricultural Economics index of prices paid by farmers. The net farm income of producers in the dairying industry has suffered severely.
In attempting to counteract this situation, farmers have made strenuous efforts to improve productivity. No matter how measured, the results arc striking. In real terms production per cow or per acre or per man or per dollar have all gone up. The structure of the dairy industry has changed substantially over the last 10 or 15 years, lt is clear that the producer has accepted the productivity challenge posed by rising costs and advancing technology. Farmers who have been able to find capital to invest or reinvest in their farms and those who have been in the forefront of productivity improvements have been able to maintain or even better their income position. However there are a substantial number of dairy farmers who, due to inadequate farm size or capital limitation or to a variety of other intractable problems, have not been able to keep pace with the changes that are going on in the industry. The economic examination of the dairy industry conducted by the BAE in 1964 shows that the average net farm income throughout the industry in Australia over the period surveyed 1961-62 to 1963-64- was $2,400. At the time, some 55% of all dairy farmers earned a net farm income of less than $2,000 per annum. In the manufacturing sector of the industry, that is among those producers who do not have access to the higher priced fluid milk market, the situation was even worse. There is no evidence of improvement in this position in the period since the survey was carried out.
The industry’s problems are aggravated by the fact that there are concentrations of low income producers in certain dairying regions, notably in south-eastern Queensland, northern New South Wales and the south-west of Western Australia, and to a lesser extent, in the south-east of South Australia. There is thus a regional problem as well as an industry problem. The whole economy of these regions is adversely affected. In south-east Queensland and northern New South Wales, the size of farms established late last century or early this century is no longer sufficient under today’s conditions. In Western Australia, development has been retarded also by the high cost of clearing land.
Dairy farmers with small holdings have no cushion of wealth to protect themselves from the impact of the drastic changes through which the industry is going, nor in most cases can they offer sufficient security to enable the farmer to borrow for farm development. Even with the greatest of effort, their holdings are no longer big enough to maintain an adequate standard of living acceptable in the Australian community. Farmers are being forced out of the industry and in many cases, these men have had to sell at sacrifice prices. Faced with this situation there are a number- of courses open to the Government and the industry. One way would be to allow economic strangulation to lake further toll of marginal dairy farmers. This course would be intolerable. Another way that some have advocated is to give, more subsidy, but this would merely produce a situation where most of the increase in subsidy would go to those whose incomes are already adequate and very little to those producers who really need assistance. The third way is to adopt arrangements specifically designed to alleviate the marginal farm problem.
The States where regional low income problems exist have not been idle. In 1956 Western Australia introduced a dairy farm improvement scheme, followed later by its dairy farm consolidation plan which is still operating. Since the inception of these arrangements, the Western Australian Government has provided rather more than $lm to assist producers in that State. Similarly New South Wales in 1963 introduced a farm build-up scheme. That scheme is available to all rural industries in New South Wales. In respect of dairy farms, the Government of that State has spent about $1.6m for the amalgamation of properties. Queensland also has a number of measures in force which more or less directly benefit the dairy industry, although there is not any dairy reconstruction plan as such operated by that State Government, nor by any State government other than the 2 that I have mentioned.
The scheme now offered by the Commonwealth is obviously of much greater magnitude with correspondingly greater potential for dealing with the low income problem that exists in the dairy industry. The objectives of the Commonwealth scheme are twofold: To enable low income dairy farmers who voluntarily wish to do so, to leave the industry and to receive a fair price for their land and improvements; and, after the writing off of redundant assets, to make the land and useful improvements available to other farmers so as to build up their properties to a viable family farm level and, where possible, diversifying the pattern of land use. The States have been asked to work with the Commonwealth in the implementation of the scheme with moneys provided by the Commonwealth.
Essentially, the Bill now before the House empowers the making of agreements with States for the operation of the scheme. The Bill specifies certain features that are to be incorporated in any such agreement. First and foremost, there is the need to define a marginal dairy farm for the purposes of the scheme. Here the Bill and the agreement apply simultaneously. Taking them together, a marginal dairy farm is defined as having the following characteristics:
These then are the 4 characteristics that define a marginal dairy farm. For the purposes of the scheme, a marginal dairy farm is a rural property running more than 20 lactating cows, and with not less than half the gross income derived from the production of milk or cream valued at the manufactured price, but being one that has an overall production insufficient to provide a reasonable level of income. 1 have already mentioned that in requiring that such a farm have at least half its gross income coming from the sale of milk or cream the Government has laid down that this will be milk or cream valued at the manufacturing price. There is very good reason for this requirement. The scheme is designed essentially to assist the low income farmer in the manufacturing sector of the dairy industry, lt is this sector which has been most severely hit. by the combination of the low level of export prices for dairy products and rising costs. By contrast, the effects of the cost price squeeze have tended to be alleviated for the whole milk sector by the adjustment of milk prices from time to time. The Bureau of Agricultural Economics survey shows that the average Australian net farm income in the manufacturing .sector was $2,001. In the whole milk sector it was just on $3,000. In every State other than Queensland, there is a significantly higher proportion of low income farmers in the manufacturing sector than in the whole milk sector. This is only to be expected when it is recognised that milk going to the fluid milk market is paid at approximately twice the price of milk for manufacturing purposes.
The adverse situation of farmers in the manufacturing sector is made even worse by the policy that operates in New South Wales whereby, in order to try to maintain their quota entitlements, dairy farmers in the milk zone are virtually compelled to produce excess milk for which the only outlet is manufactured dairy products. This excess milk swells the oversupply situation for butterfat, to the detriment of producers outside the milk zone. The contrasting fortunes of the two sectors of the industry have meant that the small farmer in the fluid milk sector who wanted to quit the industry has, as a general rule, been able to do so without loss. Entitlement to quota in the New South Wales milk zone gives the quota holder an unearned premium with a market value at present of $80 to $150 per gallon depending upon location. In other words, a relatively small quota, say 30 gallons, will produce a premium well in excess of a year’s net farm income for an average dairy farmer outside of the milk’ zone. In the manufacturing sector, by contrast, departure from the industry has commonly involved serious financial loss.
There is, however, 1 important point that must be stressed. Low income producers within the fluid milk sector are eligible to participate in the marginal dairy farms reconstruction scheme. The possession of a milk quota does not exclude them from participation, nor does mere geographical location. Such dairy farmers will be subject to exactly the same tests of eligibility as farmers in the manufacturing sector. The only other condition that an applicant must meet who wishes voluntarily to offer his land under the scheme is that he should have been operating the holding for a period of not less than 2 years. In other words he must be a bona fide dairy farmer. The agreement provides that in exceptional cases such as illness or disability, this condition could bc waived. The agreement also provides that if experience shows that some other qualifying period is warranted, the present stipulation can be altered by mutual ministerial consent.
The next feature mentioned in the Bill is that the agreement must include provision that the out-going man will receive current market value for his land and structural improvements. The State instrumentality which operates the scheme will not be required to buy the movable plant or the herd. The out-going farmer wilt be able to sell his livestock, machinery and plant on his own account. By ensuring that the man who wishes voluntarily to leave the industry will receive current market value, the scheme will protect him against having to sell his farm at a sacrifice. The out-going man will thus receive fair value for the capital and effort he has invested over the years.
In the Press and elsewhere there have been suggestions that there should also be included a retraining scheme for the farmers who decide to leave the industry. Al present the Commonwealth offers rural retraining for national servicemen. There is sound justification for providing this facility for young men whose careers have been interrupted by the need to undertake service in the defence forces. It is by no means clear that such an. additional benefit should be offered to men who are changing civilian employment. Australians, and particularly Australian farmers, have always taken some measure of pride in their ability to turn their hands to whatever is necessary. At the same time, the Government is currently giving attention to the question of vocational training, especially in regard to industrial trade training, and the Minister for Primary Industry (Mr Anthony) has stated that he is willing to look at this question again as experience accrues in the operation of the marginal dairy farms reconstruction scheme.
A further feature stipulated in the Bill is that land will not be disposed of for use primarily for dairying unless it is to be so used as part of a rural property that constitutes an economic unit. In the agreement, the maximum level specified for an economic unit exceeds the maximum level for a marginal dairy farm by some significant amount, in the case of Western Australia 25%. The purpose of this differential is to avoid the risk of built up farms falling back into the marginal category under the continuing cost-price trends that are pressing on the dairy industry. The maximum level for a marginal dairy farm in Western Australia is, as I have already said, the equivalent of 12,000 lb of butterfat on average per annum. So, an economic unit in that State for the purposes of the scheme will be one that produces annually the equivalent of at least 15,000 lb of butterfat.
The Bill and the agreement also make provision that, where necessary, the State instrumentality may acquire farms which are larger than a marginal farm, but only if both the State Minister and Commonwealth Minister are satisfied that good reason prevails. I would like to make this matter clear. Where a farm fulfils the definition of a marginal dairy farm, the State instrumentality will have full authority to acquire it should it be offered. V/here a farm is producing more than the maximum level set in the State concerned for a marginal dairy farm but less than the minimum of an economic unit, the State instrumentality will be able to acquire it provided the Commonwealth and State Ministers give consent. Where the property is already above the base level for an economic unit, it can be acquired, again with the consent of the State and Commonwealth Ministers, but this consent would be given only in most exceptional circumstances. There is one important observation to be made in this connection. The agreement sets out clearly that the State authority is not compelled to acquire any particular marginal dairy farm. Since the day to day and case by case responsibilities will be entrusted to the State authorities, they have to be given discretion in respect of the acquisition of marginal dairy farms. The State might wish, for example, to have a suitable purchaser or lessor in prospect.
I now turn to a most important matter. In making the land available for build up purposes, the disposal will be made so as to encourage the most practicable and economic use of land with a view to achieving so far as is consistent with such land use, the diversification of production. The Commonwealth has stated from the inception of its proposals for a dairy farm reconstruction scheme that the twin aims are amalgamation and diversification. There will be instances where the most practicable and economic use of land will be for it to continue in dairying. There will be other cases where it makes sense to divert the land to other forms of rural production altogether. There will be cases where the built up farms will be suited to mixed farming. There will be other instances, such as in hill country, where probably the best thing that could be done with the land would be to turn it to forestry. The Bill and the agreement are so drawn that all of these possibilities are catered for.
Another feature of the Bill is that in disposing of land, the man whose property is being built up will be able to obtain that land at current market value taking into account the nature of the proposed land use and the system of tenure. It is intended that the farmer who obtains built up land will only need to pay for those structural improvements that are useful to him. Redundant assets will be written off at Commonwealth expense less any residual value. This requirement that the incoming farmer will not need to pay for redundant assets is a unique characteristic of the marginal dairy farms reconstruction scheme. By writing off these superfluous assets, the possibility of the incoming man being saddled with a useless burden of debt is avoided. As far as the land and the useful assets are concerned, the farmer who takes them up will have the opportunity to pay for them over a spread period. The exact terms and conditions on which repayment will be made will be a matter that in each State the State authority will determine. lt will be appreciated that there are 2 aspects to the scheme. There is a CommonwealthState relationship and there is the relationship between the State or State authority and the producers. 1 have already covered most of the matters of consequence on the latter aspect. To summarise, a marginal dairy farmer wishing to leave the industry will offer his land to the authority in his State and if approved will receive payment in full as soon as the transaction is completed. The authority will then make the land available in whole or part to another farmer together with those improvements that the farmer indicates will be useful. The land and useful improvements will be sold to him at a price based on current market values in relation to the proposed use of the land. Before making the land available, the authority will ensure that after amalgamation the built up property will form an economic unit. The man whose property is built up will receive time to pay, the terms in respect of repayments being those specified by the State authority. The authority will also ensure that as long as the farmer whose land is built up owes money to the authority, there will be an undertaking given against fragmentation of the property.
The ability of the State to extend credit on reasonale terms is dependant on the extent to which the State has to make repayment to the Commonwealth. The Bill lays down that, of the financial assistance to be made available by the Commonwealth, the State will only have to repay half, and that over a period of up to 25 years. In the agreement there is an option that the Slate can postpone making repayment of capital to the Commonwealth for an initial period of up to two years if it so desires. Thus, by the time repayments are to be made to the Commonwealth, the Stale can itself be receiving moneys from farmers whose properties have been built up. In effect the Commonwealth is asking States to cooperate, at no cost lo themselves, for the benefit of farmers and of the dairy industry as a whole.
Interest will be charged on that half of the money that is repayable to the Commonwealth. A fixed rale of 6% per annum will apply on the funds repayable in respect of drawings and advances made during the four years of the current agreement. This rate is less than the long term bond rale of interest at the present time. Setting a lower rate of interest for the scheme is consistent with the action taken by the Government to avoid the recent increase in bank interest rates from being applied to rural producers. The particular rate of interest that producers on built up farms will be charged by the State authority is a mat:er for each State separately to determine. The Commonwealth’s offer is thus a generous one. The State will only have to repay half of the money and that over a lengthy period and at a favourable rate of interest. The grant portion will1 be more than sufficient to cover the write off of redundant assets and any reduction in the value of land because of change in the pattern of land use.’
Also, in bo’.h the Bill and the agreement, the Commonwealth has given the State an assurance against any overall loss falling on State revenue as a result of circumstances beyond the control of the State, and which turn out to be disadvantageous compared with past experience and normal expectation as to factors that affect farmers’ incomes. In return, the Stale would agree lo operate the scheme in such a way that taking into account its experience with other schemes of an analogous nature, and the normal expectations that 1 have just mentioned, the amounts recovered could be reasonably expected to equal the Stale’s costs of administration and payment of interest and capital to the Commonwealth. This is an equitable bargain between the Commonwealth and States, lt means that should the industry suffer a serious setback through forces beyond the control of the State, the State can expect to be protected against any overall loss falling on it by virtue of its’ co-operation in the scheme.
The total sum that the Commonwealth is prepared to make available over a 4 year period is $25m. This sum is not divided up beforehand among Slates in any set amounts, nor could this be done, since, as I have already stressed, the scheme is a voluntary one. lt is thus most difficult for the Commonwealth or any State to predict the rate at which farmers will come forward to offer their land. Instead, the Commonweatlh will make the money available as needed by the States up to the total that Parliament is asked to appropriate, namely $25m. The Commonwealth will also make an advance or advances as needed, to any State that requests -that this be done, in order that the State will always have funds in hand to operate the Scheme.
The existing schemes in New Sou:h Wales and Western Australia have helped relieve the low income problem in those States. In recognition of this, the Commonwealth is willing to make available supplementary grants to these 2 States from within the total appropriation. Western Australia has requested a grant of $35,000 a year to supplement the moneys that the Slate is providing through its dairy farm consolidation plan and this annual sum is written into the agreement. In the case of New South Wales, if that State seeks a supplementary grant it could make possible the writing off of redundant assets, a feature not presently incorporated in the State scheme. The Commonwealth and State schemes would then be virtually identical as far as the buildup of dairy farms is concerned. The low income problem is not confined however to New South Wales and Western Australia. It is a problem that affects all States. While speaking of the financial assistance which the Commonwealth will accord, to the State to operate this scheme, I want to make it quite plain, beyond any doubt, that the period of 4 years for which the $25m is available will be a common period applying to all States, commencing from the first date on which an agreement is signed with any co-operating State. Let me illustrate what I have just said. Should this Bill be enacted into law and receive royal assent on, say, 30th June 1970, and the agreement with Western Australia be signed the same day, then the 4 years will end on 30th June 1974, and no further money will be available to any State out of the present $25m after 30th June 1974, unless it relates to expenditure by a State within that period.
Clearly the task will’ not be finished by that date and at an appropriate time the Government will consider, in the light of the experience gained in the first few years, what further action it should take. In addition, it is no secret that the Government has received and is considering representations for the wider application of the principles underlying the dairy reconstruction scheme, in order to assist other rural industries that are in difficulties. However, it would be unrealistic for the Government to make any decision on these further representations until the Commonwealth has been assured of the co-operation of the States in the reconstruction of the dairy industry.
The arrangements embodied in this Bill and the accompanying agreement represent the full extent of the Commonwealth’s offer. Western Australia and Tasmania have given their co-operation; the other States are still considering their position. In fairness, it must be said that the Premiers of the other States have indicated their support for the principles of the marginal dairy farms reconstruction scheme. What is needed however, is more than in principle support. During the 2 years that the scheme has been under negotiation, over 5,000 dairy farmers have ceased to operate. There is no valid reason, particularly in the light of the assurance that the States have received against the possibility of losses due to factors beyond their control, why the benefits of the scheme should be delayed or denied to the low income sector.
Mr Deputy President, this scheme was formulated at the behest of dairy farmer organisations. It will help the dairy industry - over 50% of the dairy farmers in Australia could be eligible to participate. It will go some way towards solving a social problem in the rural sector. It will strengthen the economies of those regions where lowincome farms are concentrated and in turn the national economy. Finally the scheme reinforces the concept of the single-unit family farm as the basis of agriculture in this country. I commend the Bill to honourable senators.
I lay on the table a copy of the agreement between the. Commonwealth of Australia and the State of Western Australia in relation to the marginal dairy farms reconstruction scheme 1970.
Debate (on motion by Senator O’Byrne’ adjourned.
Debate resumed from 22 May (vide page 1807), on motion by Senator DrakeBrockman:
That the Bill be now read a second time.
– This Bill has received wide publicity and it has been the subject of a lot of controversy both in the Press and among some members of the Government parties in another place who opposed it. All in all, the Bill has received publicity at all sorts of levels in the Australian community and in the Commonwealth Parliament. Naturally, there is a great deal of background to the Bill, which has very wide ramifications. I suppose that nearly everything which anybody said about Australian development could be considered to be relevent to the Bill.
Firstly, I want to voice some criticisms of the Government in its handling of the whole question of overseas investment in Australia and the channelling of that investment. I will use this as the base for my speech in this debate. Then I want to proceed to examine the adequacy of the Bill and to deal very briefly with some of its points. I should like to record some comments in Hansard so that other speakers who follow me in the debate can indicate whether or not they agree with those comments. But in order to lay a basis for my own remarks, I shall quote some short segments from the second reading speech which was made in another place by the Deputy Prime Minister (Mr McEwen). He said:
In recent times while the value of our exports has been increasing at the rate of 8% per annum, the value of our rural exports has been increasing at less than 2% per annum.
We have to increase our industrial exports. We must get the maximum return we can’ from exports of our mineral resources.
I am skipping some sentences, but I think honourable senators will see that these quotations are relevant to what I am about to say. Further on he said:
But much more needs to be done to build in Australia an industrial structure which can be a principal source of export earnings in the future and which, in the process, will bring lower costs in Australia through the economies of larger-scale operations serving wider markets.
Then he said - and this is one of the significant things which has been the subject of Labor Party criticism of the Government for a considerable time:
Each ton of iron ore, or bauxite, or wood chips, or copper, or nickel concentrates, if processed to just one further stage would multiply its earnings many times over. Processed still further, as I believe it can be, and finding some growing access to world markets in the more highly processed form, the rewards in terms of export income would be still greater.
Capital inflow brings benefits, but also commitments. We must do everything possible to see that it is used to best advantage.
It is nevertheless a matter of national concern that overseas capital is usually obtained on terras which have resulted in predominantly foreign ownership of many of our greatest industrial enterprises and fastest growing industries.
We cannot let ourselves be lulled into feeling that all is well because comfortable aggregate statistical figures show only 20% to 25% foreign ownership of manufacturing. Manufacturing industry, in the statistical records, includes thousands of small establishments designated as factories because they have 4 or more employees or use power.
In the electrical and electronic industries, including in the total many small enterprises, overseas ownership is around 50%.
Production of alumina and aluminium is about 75% owned overseas. . . .
There are enormous difficulties for an Australian manufacturing enterprise to achieve world scale and competitiveness under substantially Australian ownership. And foreign corporations do not. by and large, have the objective of bringing Australian industry to the stage of competing on equal terms with overseas industry.
This I woul’d underline because I feel it is a tremendous criticism of the way overseas investments have been allowed to come into Australia. Mr McEwen further says:
It is increasingly evident that what is best for a multi-national giant is not necessarily best for Australia.
I now want to make a final quote which is indeed a remarkable one. He says:
I know of no important country, other than Australia, where the Government exhibits an indifference as to whether its natural resources or production opportunities are owned in whole or in part by overseas interests. In practically every other nation of the non-Communist world there are policies or procedures or institutions designed to exercise authority or influence upon ownership of industry.
I would underline particularly tha! last comment. This is the sort of criticism that has been made by the Australian Labor Party over a period of about 10 years and even before that, particularly when the mineral boom started in Australia and these tremendously large amounts of money started to flow in from overseas. But this criticism is not being made by the Australian Labor Party, it is not being made by some academic who is merely doing a ,his/: on overseas investment in Australia, it is being made by no less a person than the Deputy Prime Minister himself. Of course one can readily ask what he has been doing over all these years. This is probably a very valid criticism. For my part welcome converts, even Mr McEwen, at this late stage.
– Oh. now.
– Somebody said Oh. now.’ I do not quite get the purport of that. I say that I welcome the convert who will- make a criticism of his own government on the question of overseas imports even at this late stage. I think it is a pretty late stage in his politcal career. I do not think even Mr McEwen would say that he is a political tyro in his first few years in politics.
– He has made these statements for many years.
– The honourable senator says that maybe he is a political tyro. Well, Senator Prowse would know him belter because he is in the same Party. 1 have never put him down as a political tyro, lt is news to me. I will get back to the Bill and I promise not to be sidetracked again. 1 lay this down, as I say, because here is pretty severe criticism. After all, Mr McEwen headed his paper :A Background’ and he goes on to deal with what these problems are. What he sets out to do in this - and he sets it out quite clearly - is not to dam the flood of overseas investment in Australia but rather to reshape the type, as he terms it - a good, rich phrase - and that rather than take the overseas equity that we move into a segment of overseas loans. As he points out - I will point it out a little later on - because of this equity buying, that is. bringing money into Australia to develop these industries we will finish up with the situation where very big mining companies have up to 95% of their stock owned by overseas companies. This sounded very good in the early days when we were scared by . very big money values with a lot of noughts on the end of them, but when we started to see the amount of profits that were taken off in the first couple of years by these big mining companies we realised that these figures were merely figures after all and the investment was pretty good business anyway.
I will make some criticisms of the size of this Bill a little later but it starts oil on a very commendable effort to try, in the final analysis, to hold some of our developmental companies in the hands of Australians not only for this generation but, more importantly for the next generation. Mr McEwen mentions these things in other contexts. What is the necessity for this? Why after all these years is the Government suddenly starting to say: ‘Well, it is not such a good idea after all to be letting overseas companies control our own shows.’ I seem to remember a few years ago before he was appointed Treasurer, Mr Bury always defending this and saying that it was belter to have unlimited flow - f think I quote him correctly but I am quoting from memory - into the country because the benefits arising out of it on balance would outweight the detriments. The increments would outweight the detriments. We have always had some doubts about this and it appears that we have been proved right because this belated move of the Government is one which is welcomed by the Labor Party because it is u small and tentative step towards grappling with a tremendous problem. Mr McEwen says:
We face a growing burden of income remitted abroad. Income remitted overseas by companies in Australia has in S years risen from 8.3 Ci to 10.5% of our export earnings.
I see that that has been challenged by Mr Kevin Cairns in another place, but I think that no matter who is right - whether Mr Kevin Cairns or Mr McEwen is right - the problem still remains. Taking these figures - and I think we should be able to take’ figures in the basic second reading speech - they are alarming indeed. Dealing with the same thing Mr McEwen says:
The capital which comes from abroad into our industries is itself a major and growing element in Australia’s balance of payments. Five years ago total capital inflow was running at $50Om to $60Om in a year. In the past 2 years il has been well over $ 1,000m a year.
That is doubling over a period of 2 years, which is a pretty, alarming rate. He says, further:
Capital inflow brings benefits, but also commitments. We must do everything possible to see that it is used lo best advantage.
With that, of course, we agree. Again, giving more of these figures he said:
In 1969 alone* at least 15 Australian owned companies with assets worth $100m, disappeared from the lists of the two largest stock exchanges because of takeover by overseas interests. There are also, of course, many companies which have continued in existence but wilh the overseas ownership growing and becoming dominant.
I think the most significant thing to happen in Australia over the last few years has been not only the discovery and development of minerals but the fact that simultaneously with these the whole of our primary rural industries find themselves in so much trouble throughout the world and I think it would be a brave man indeed who would be predicting what will be our export income or what is to be the fate of such things as wheat and wool - with that one magic initial letter repeated with which we have grown up since we were schoolboys. But when the Deputy Prime Minister says what the Labor Party has been saying for many years, that if we can take these minerals to the second or third stage, this is a different thing. We have always been saying: ‘Why not do this?’ I remember some 3 or 4 election, campaigns ago - which is about 9 or 10 years ago - the Government was saying that the Japanese did not want this. It said that they did not want our second or third stage, all they wanted was the raw material and we had to put it on a market where we could sell. To me this has always been a negative approach. I believe that if it is possible for them to import, manufacture and export then surely at the pithead we ought to be able to do some form of manufacturing.
This is an interesting Bill in many ways. It is certainly not Liberal orthodoxy. It is not what the Liberals have been saying and not what they created as the Liberal Party back in 1947, 1948 and 1949. As I say, I am glad to see the change and I think that the split in the Liberal Party over this measure has been caused by those Liberals who have tried to exist on the myth of liberalism, the myth of laissez faire and the myth of a private enterprise system that providing that one lets it run along and lets the buyer and seller find their markets it will be best for everybody in the final analysis. Of course that would be all right in a world where there were no tariffs and no passports - the wonderful dream- but in a world where there are very real tariffs and very real passports and when not everyone can get on that kind of dream is not realised.
This is not Liberal orthodoxy. This is a situation in which the Government is setting up a corporation as a prime borrower, giving it the backing and prestige of a government. If this develops into what I and a lot of other people want to see it develop into, and what I think it must inevitably develop into the way Australia will go, this is far from Liberal orthodoxy. If it does develop, but not in its present form, it will be one of the most radical things that we have seen in our lifetime. One newspaper noted that this is probably the greatest economic radicalism to come to Australia since the nationalisation of banking. Whether some Liberals who were complaining about this had read that article, I do not know. Whether that happens remains to be seen, but because I want to underline what I think could be the importance of this I merely draw the distinction between what Liberals believed some years ago and the comments that some newspapers have made on the proposal.
So far many of the things we have done in similar fields have been merely a shoring and propping up of weak sisters. We have seen it in subsidies to some forms of primary industry. I am not condemning all forms of subsidy to primary industry. I merely say that many of the subsidies to primary industry, as plenty of documents in the pigeon holes of this Parliament will show, have been merely shoring up weak sisters which, no matter how much subsidy is given them, finally will not succeed. The eternal battle goes on in relation to tariffs and one wonders whether we are not erecting a tariff wall so high that behind it weak and inefficient companies are able to prosper and go ahead. One would hope that this would be avoided in the corporation. It should not happen. The Bill in its construction certainly has thrown its net very wide. There are provisions such as that no government direction will be tolerated, that the directors will be appointed and reappointed by the board and so on. The Bill states specifically that this has to be looked at from an economic point of view. This Bill will not be defeated because the whole of the Labor Party will support it and at least half of the members of the Government parties will support it as well, so there is an alliance which will ensure that the Bill is passed.
I come now lo the question of whether SI 00m capital - the corporation starts with $25m - will be sufficient to grapple with the problem before us. We wonder whether it is too late in certain areas, as 1 shall mention a little later, and whether when the Labor Party was making quite an issue of this some 10 years ago that may not have been the time to move into a corporation. There are plenty of indications that many overseas countries have done so. I quoted a little while ago from Mr McEwen’s speech where it is stated that other countries in the world have done something about controlling capital investment from overseas, lt is not merely a question of capital investment from overseas but, dealing with such areas as mining, for example, it is a question of the rate of production, the rate of growth and the rate of control that young Australians will have of their companies in the. years to come. I do not want io quote a lot of figures. I never like doing that. I mentioned $25m which will grow to $10Om. When we look at private investment in 1969 we see that over $2,500m was allowed to flow into all kinds of avenues in Australia and one wonders whether the proposed amount is enough. The estimated capital inflow last year - I never know how economists work out the exact capital inflow - was $l,l49m. If we are trying lo do battle with $100m versus $1,1 49m we are starting from a few yards behind scratch.
I said earlier that 1 wondered whether this was loo late. The figures, as accurate as they can be, indicated that already two.fifths of a lot of our big companies are controlled by foreign hands. That is a big proportion because foreign investment, the development of our minerals and the rapid expansion of Australia have been going on, not for over a century or so but certainly not earlier than since the end of the war and for a very much shorter period - for the past 10 or 15 years. This becomes vital in Western Australia, particularly in the north west section of the State, because there was a dream of developing the north, a dream that I think every good Australian had - 1 certainly had it because my birthplace was in that area - that one day we would see some development in the region. I am talking now of one section of the north west where once we had 25,000 people but shortly - in 8 or 10 years - we may have 250,000 people. Although that is not a lot of people in a very large area, I believe that 10 to 1 is a pretty good ratio of improvement.
What worries anyone who visits these places and who looks at the contracts that we have with Japan merely lo dig the minerals out of the ground and sell them, thus putting ourselves in the hands virtually of one overseas buyer and not being able then to compete if we even started to develop to the secondary and tertiary stages of development, is that we will finish up wilh a hole in the ground. There has been remarkable development. Of course there always is in mineral areas. In Western Australia which was the last of the gold producing States it was not unusual to see a clay pan develop into a very large mining town, but Western Australians became accustomed to seeing that town go back to a ghost town. That is a feeling which is always very close to people who have lived in mining districts, lt would be the greatest shame of our generation if that were allowed to happen in the northern area.
When we look at the very well known firm of Hamersley Iron Pty Ltd we see that only one-fifth of its capital is owned by Australian investors. The position becomes alarming when one goes deeper and finds that Hamersley itself is 54% owned by Conzinc Riotinto of Australia Ltd, 36% by Kaiser Steel and 10% by the Australian people. Even that does not sound too bad but when we find that CRA itself is 85% owned by overseas interests the proportion of Australian owned capital in Hame; ;!ey drops io 5%. We wonder, therefore, whether the efforts which is being made by the Government is not too little and, certainly in the case of Hamersley, too lule.
There has been some criticism about whether the corporation will duplicate the Australian Resources Development. Bank. I do not worry greatly whether that h so but. 1 did notice that there was no criticism from some of the o!d world Liberals when that Bank was introduced. All the Government had to do was to bring before the Parliament a Bill containing the name of a bank. I think that as soon as one mentions the word ‘bank’ to those outdated Liberals, that is magic and every thing is all right, but if it is “corporation’ that is Socialism and one has to be very careful of thai. The magic work ‘bank’ seemed to solace them in those days. I have noticed that since talk about the proposed corporation began the Bank has suddenly become very active. A newspaper article mentioned a borrowing by the Bank of $12m in Euro-dollars in this way:
Right on the eve of the introduction of a Bill in Federal Parliament for the formation of the rival IDC, the banker-owned Resources Bank has announced that arrangement have been completed for a further Euro-dollar borrowing of $US12m.
This follows the Bank’s previous large borrowing in the Euro-dollar market of $US20m which was announced only 3 weeks ago.
Prior to that, the only borrowing the Bank had made from overseas sources was as a participant to the extent of SUS2.4m.
At least this has galvanised the Bank into doing something as is apparent from the sudden degree of borrowings compared to the paucity of borrowings until that time. The big buyer of our wool and metals is Japan. The Japanese are nothing if not efficient. For a long time we have heard of wool pies. The Japanese buyers know exactly what they want and they do not compete with one another in the classic way that people like to think they compete on the buying market. It seems to me that the Japanese are far more efficient in their buying in all sorts of fields than Australians are in their selling.
I want to deal now with the situation in overseas countries and what they have been doing in the development field for donkeys’ years. We are just beginning to take our first hesitant and tentative step in that area. Japan has organised itself not only in the field of buying but also has created a developmental bank, beginning not with $25m but a much greater sum than that. Today it has $3617m in assets. Investors wishing to enter the field in Japan soon realise that the Japanese Government does not hesitate to regulate them. The Minister for Trade and Industry (Mr McEwen) appears a little hesitant in saying in relation to this measure that investors will not be regulated. In Japan they are regulated very harshly. Through development banking the Japanese not only help their own people but also impose regulations on investors from overseas. Overseas investors will never get 50% control of a Japanese company. They will do what the Government says and invest the amount of capital that the Government directs them to invest in a particular industry.
The Australian Labor Party supports this Bill. The Leader of the Australian Labor Party (Mr Whitlam) in his last policy speech made it very clear that if we were elected as the government we would move into the development banking field, but we certainly envisaged going much further than this Bill does. Mr Whitlam said, if I remember correctly, that we would do something on the lines of the Istituto per la Ricostruzione Industriale of Italy. We said that tax concessions or tax incentives would be offered to induce the insurance companies to disgorge the tremendously large amounts of capital they hold for investment in the development field. We would have direct investment beside private enterprise in Australia. The Government does not always boggle at this procedure, as instanced by the fact that it has taken up a shareholding of $25m at Bougainville as a direct investment with a private company. It has not done so at Gove. Although a call has been made for a long time for investment capital for the Robe River project the Government has not heeded it.
Amax Iron Ore Corporation, which is operating in the extreme north of Western Australia, has offered opportunities for capital investment by Australians, but Australians are reluctant to invest because they do not know clearly what the ideas of that organisation are. Mr McEwen has indicated that overseas companies do not always set up in Australia to go full bore in a competitive sense throughout the world. A company can be set up in Australia and then be prohibited from exporting to certain areas because it would be competing there with its American or British parent company. The board of the company directs its subsidiaries not to compete in those areas. Mr McEwen has said that this policy might be very good for multi-million dollar companies but it is no good for Australia. As I gauge the feeling in regard to the Amax Corporation, although opportunities are made available for Australian capital Australian investors are reluctant to invest because they are not sure that they are putting their money into a company which will do its best at all levels for its investors.
I am not saying that what the Government did at Bougainville it should do with other private enterprise companies. I am not brash enough to say that the Government ought to invest in these things, but at least it ought to examine the possibilities of investment in the projects i have mentioned. I have referred to taxation incentives and direct investment. The third point is the setting up of a company on the lines of the Italian Istituto per la Ricostruzione Industriale. What is IRI? I suppose that when Mr Whitlam referred to that organisation many people began to conduct some research on it. In Japan, South Africa and Italy developmental finance organisations have grown out of necessity, just as this Bill has grown out of necessity. Pressure has been generated over a long period by overseas investment in Australia. The IRI is one of the most important organisations in Italy. It was forced on the Italians following the Wall Street crash in 1933, when the banks were in difficulties they could not overcome. The Italian Government had to attempt to reconstruct the banks. By the time that process was completed the Government had entered into so many activities throughout Italy that it was very difficult for it to retreat and leave the field to the banks.
Following World War If there was a very urgent need for reconstruction in Italy. There is not much doubt that the IRI is responsible for what can be described as a miracle of post-war reconstruction in Italy. The IRI has moved into a lot of fields, such as telephone services, that we take for granted. 1 would not like any Liberals to be worried that it is a highly over-socialised venture. About 450,000 Italian citizens have invested in this government cum private enterprise company. For every lira that the Italian Government invests in IRI, private investors invest 12 lira. So the proportion of private investment to government investment is 12 to 1. It is not an overloaded top-heavy government show, lt takes on tremendous jobs. For some social projects it enters under-developed regions such as the Neapolitan area of Italy, a poorer part of the country. The extent of the projects undertaken is never overwhelming so that they never become losing propositions or white elephants. From my reading on the subject it seems that that has never happened.
This sort of step has been taken in every modern country in the world. The Government has made a tentative step to introduce developmental finance in Australia in cooperation with private enterprise by its investment at Bougainville. 1 do not think any
Liberals were upset about that. It seems to me to be a very sensible move which could be repeated in other parts of Australia. The Labor Party believes that the Italian IRI should be looked al. The idea could be extended and there could be tremendous co-operation. I do not think private companies would worry about having governmental assistance. I have never heard complaints on that score from Ansett Transport Industries Ltd. That company is on good terms with the Government. The procedure seems to work very well in other parts of the world.
Away back in 1940 the Industrial Development Corporation of South Africa was set up. There are slight differences in this type of organisation in different countries. The IDC of South Africa resembles the 1RT of Italy. The South African IDC has a special Small Industries Division which was created in 1 962, in response to the level of demand by smaller businessmen. Until 1962 almost 43% of the propositions accepted by the IDC were below R50.000. 1 think that shows very clearly that it is not a socialistic enterprise. Certain social projects are welded in with the development of South Africa. Training schemes are held for people going into the Bantu areas, lt is a statutory corporation established with the aim of facilitating, promoting, guiding and assisting in the financing of new industries and industrial undertakings, schemes for the expansion, better organisation and modernisation of and the more efficient carrying out of operations in existing industries and industrial undertakings. After being established in 1940, in 1942 it developed a little further to establish and conduct any industrial undertaking. It took that extra step that inevitably this Bill will take.
I will not deal with the Bill in detail because I. have spoken a little longer than I intended, but I want to make some criticisms of the Bill. I notice that clause 16 repeats the old mistake: It is true that the salary is not fixed by just anybody and everybody but I hope that the Government will take notice of the Regulations and Ordinances Committee on this point. I hope the Government will tidy up that aspect of the Bill, but I do not think it is important enough to talk about it now. I believe the Bill certainly is a basis on which a future Labor government could work, but it is too small and too late. It should have been introduced years ago. The Government finally is standing up and recognising the problem. The Government recognises it, I think, in pretty forceful language, according to what the Minister for Trade and Industry has said.
As does every other country in the world, we have to weld happiness into prosperity because people do not get very much happiness from smoke coming out of a chimney. That may indicate prosperity. That may indicate the introduction of a lot of overseas capital into the economy and that we have been able to achieve something in the short term that we would have had to wait for the long term to be able to achieve otherwise. It indicates that. It does not indicate that many people are any happier. Some areas - and in some cases Western Australia is suffering from this - are enjoying a great industrial boom. The population in Western Australia is increasing twice as fast as the national average, but all it is producing is expensive houses and expensive land. The ordinary person in the street is not all that much better off. If factories are built in the middle of residential suburbs, the ordinary person who lives there is much worse off. As I see it, what we have to do in a rapidly developing world - and Australia is a rapidly developing country - is to weld some kind of happiness into prosperity.
In our mining areas in 30 years time we do not want to have less people than we had a few years ago, markedly less people than we have today, a great hole in the ground after the initial contracts have finished, rusting railway lines and a wharf that nobody wants to use. I think this will be the inevitable result of our mining expansion unless we do what the Minister for Trade and Industry advocated and what the Australian Labor Party advocated 10 or 15 years ago. It is not good enough for us to be the quarry for Japan. We have to enter into the other stages of development. I think it is a completely defeatist attitude to say that we cannot produce at the pithead, move into the secondary and tertiary stages and compete with these people on world markets. That is one of the things that must be done. Do not make any mistake about that. I repeat that Australia is up against tough customers. I think that in any field in which we move in the international market - whether it be in foreign affairs or in the trade area - we wilt always find competition tough. As honourable senators will have noticed, overseas countries agree to buy only about 40% of a product from a particular country. In other words, they do not get themselves in pawn to the sellers. We are inclined to be putting ourselves in pawn to the buyers. We are not as efficient as sellers as they are as buyers.
I hope that the Corporation will get off the ground. It has been damned with a lot of faint praise. It has been held back in many ways. I can see ail kinds of loopholes in the Bill, but the Australian Labor Party does not object to it. We accept it because it is the best we can get under present circumstances. We have talked about a corporation for many years. In our policy speech prior to the last general election we made it abundantly clear that we would do this and more. Therefore, we support the Bill. My personal view is that the Corporation is absolutely essential for Australia. It will develop and do a lot more than it is doing today. In spite of the fact that the capital will be small and in spite of the fact that it is hedged with all kinds of safeguards that could inhibit it in its early stages, we support the Bill for the Bill that it one day will be. We think that one day an Australian Labor Party government could make it a very worthwhile instrument for the development of Australia and finally for the happiness of its people.
– Few Australians would not agree that the Australian Government and Australian owned and based organisations have been unsuccessful in retaining an adequate ownership of indigenous Australian industries and resources. Government leaders, particularly the Minister for Trade and Industry (Mr McEwen) have expressed themselves in clear terms. Government policies which have stated guidelines in an attempt to retain Australian ownership have been successful in some instances. In other cases it has been unsuccessful to the extent that the Government has seen fit to take physical action to retain Australian ownership. The references that we have heard from some overseas countries, particularly Canada, as to their regret that such a large amount of their indigenous industries had moved into other hands have prompted us to take action in this regard. Senator Willesee indicated that he thought that this proposal contained great radicalism. I prefer the view that this legislation is perhaps the most exciting legislation to come before Parliament for some years.
It is a known fact that over the years, as certain sections of the Australian public have seen fit to criticise subsidies and subsidy payments made to certain Australian industries, others have seen fit to criticise the tariff structure that has been maintained by this and previous governments. In actual fact, were these forms of assistance not in existance we would have found that the policies of overseas countries could very easily have meant that Australian companies were put out of business. So 1 have great pleasure in supporting the Australian Industry Development Corporation Bill. There has been a great deal of controversy in the community over the establishment of the Corporation. I have received telegrams from the Melbourne Chamber of Commerce in which it expressed deep concern about the far reaching and adverse effect on private enterprise of the Australian Industrial Development Corporation. The Chamber stated that the Bill was inconsistent with the announced objectives’ of the Government and urgently requested that I support delay of the Bill or debate in the chamber so that submissions could be made to provide some alternative to the Bill. 1 accept the point of view that was expressed in this regard, as I do the statements which were made by the Chairman of the Australian Resources Development Bank Ltd, Mr Scambler, and the paper that was presented by Mr N. A. Jackson, the Chairman of the Australian Bankers Association and their comments made on this Bill. In passing 1 note that both these gentlemen and their individual banking institutions must have been in cahoots in the propositions that they put because the sheets that f obtained apparently were both typed on the one typewriter and duplicated on the one duplicator. Perhaps the interests opposing this measure are somewhat joined in their own interest. One does not deny them the right to pui their comments. ‘
The main core of the Bill is to provide an Australian Industry Development Corporation. The Minister, in introducing this measure, said that the instrument which the Government had devised to assist Australian enterprise in attaining the objectives of Australian ownership is a novel one and, in many ways, unique. The Minister claimed that it is tailored to the needs, to the opportunities and to the circumstances of our economy and that it is designed to fit in with and complement the role of existing institutions and above all - to me this is important - to be entirely in keeping with the principles and practices of our free enterprise society. In the pursuance of that objective I congratulate the Government on the introduction of this measure. I sincerely hope that the AIDC will pursue that objective. I suppose the main point involved in the establishment of this Corporation is the Australian ownership of Australian resources, lt would be the view of every member of the Government and. Iimagine, every member of the Opposition that Australian ownership should be sustained. Overseas ownership in itself is not necessarily bad. It would be impossible to maintain Australia’s present rate of economic progress without the active participation of overseas firms with their knowhow and access to world markets and the capital which they bring with them. Yet it is a matter of real concern to the nation that foreign ownership is dominant in many of the most important and faster growing of our industries. In Australia at the present time in a number of key growth sectors foreign ownership is extremely high.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - Is the honourable senator quoting? I just cannot follow when the honourable senator moves from a- quotation, ls he quoting from a document or now making his own speech?
– I think the report will show that I left the quotation when I finished the remarks of the chairman of the Australian Resources Development Bank and that of the other Australian Bankers Institution.
The ACTING DEPUTY PRESIDENT - 1 ask the honourable senator to remember the Standing Orders.
– I do not know when you look the chair, Mr Acting Deputy President, hut I am not quoting at the moment. I was making the point that in a number of the key growth sectors of Australian manufacturing industries and resources foreign ownership and control is extremely high. For instance, the production of motor vehicles is controlled almost to the extent of 90% by overseas interests. In the heavy chemical and pharmaceutical areas the figure is over S0%. Overseas ownerships of aluminium and alumina production amounts lo about 75%, and in relation to electrical and electronics production it is about 50%. 1 imagine that if the current comments in regard to the take-over of another Australian based electrical concern are correct this percentage will grow even greater. It is true that the level of overseas control of Australian manufacturing in terms of value of production may be in the vicinity of only 25% -to 30%, but these figures include many thousands of small enterprises which arc servicing local needs and which have been run mainly by local people. They are not usually what we have in mind when we speak of manufacturing industry because it is generally thought that overseas interests mainly take their accounting in Australia from the take-over of some of our larger industries.
Australians cannot’ disregard the undesirable consequences that arise where foreign ownership is excessive. For example, foreign corporations do not always aim to develop their Australian subsidiaries to the stage of their being able lo compete equally on world markets. That must be one of the most important things which we have before us at the present lime. Australia is a country of great excitement, of high standard of living, and of great opportunity, as we have found in the last few years in the expansion of not only manufacturing production but mineral resources Australia must retain control of these activities in its own hands instead of having production policy and prices dictated by countries beyond our shores. I believe that foreign interests, at times, show little concern in upgrading Australia’s raw materials before exporting them or in ensuring that the price paid by overseas affiliates is much above cost. Statements have been made regarding the amount that Australia recovers on the establishment of an overseas controlled industry. One does not have to be in business very long to know that the figures which are available in a company’s balance sheet may not necessarily contain all the factors which produce an accurate costing at the end of the period. Amounts which are paid in Australia for the services of professionals from overseas can be made particularly high so that the actual assessable income figure at the end of the period is perhaps not appropriate to what the real profit of the industry has been.
– Prices to foreign companies can be excessively low.
– That is the point I am making. By no means am 1 suggesting that we are not anxious to have overseas interests in Australia. Indeed, 1970 would not have seen Australia in the condition it is today without great encouragement from Great Britain and, in recent years, from America. 1 believe Australian industry is not lacking in inventiveness or technology, but because our domestic market is applied lo a population of 12 million we generally do not have the industrial undertakings of sufficient size to take full advantage of economies of settle of production which are available to major overseas countries. In this sphere one must realise that Germany, Japan and America became real competitors for Australian produced goods. At the present time rural exports are increasing at a rate of less than 2% a year, as Senator Willesee mentioned, and import requirements apparently continue to grow at 4 times that rate. Australians must aim to earn as much as they can from the export of our resources. It has been brought to my attention recently that in instances it is becoming impossible for Australian manufacturing industries to compete on world markets.
Though one may say that private enterprise has attempted to do what it can to make finance available, it may or it may not surprise you, Mr Acting Deputy President, to know that today when some of Australia’s heavy manufacturing industries are attempting to sell on world markets, even to some of their own affiliates, they must quote a 15% net lower cash price than that which is made available to a buyer by Japan or by suppliers in other countries. This is something which no tariff protection can provide. Subsidy cannot provide it. But there is some hope on the part of the Government that through the AIDC there will be an opportunity whereby similar terms of payment and finance which are made available through overseas governments to manufacturers in those countries will become available to Australian producers. We have encouragement from some sectors of industry, at least in the heavy manufacturing industries, who support this legislation.
The investment problem is of great concern. Five years ago investment was flowing into Australia at around $500m a year. I note that over the last 2 years capital inflow ran at .an average of over SI, 000m per annum. These are very high figures. Overseas countries have made some very pleasant pickings of profitable Australian industries over past years. This means that we will have to provide even greater funds flowing out of Australia to service that capital which has been invested. I note that it looks as though in the coming years the outflow will build up to many hundreds of millions of dollars.
One should consider the outflow that is required to service the capital originally brought into Australia as against the inflow that occurs every year. Indeed, one may liken this problem to the problems that have been created in the field of CommonwealthState financial relationships, where the borrowings of the States over the past years have been such that, whatever the Commonwealth Government gives the States by way of grants or loans, a great percentage of it is taken up by the States’ requirement to service the earlier borrowings.
I believe that the Corporation will provide those things that the Government has set down. I believe that it will come to provide something that is not available from the community at the present time. I mentioned this at the outset. I think any business person would agree that the facilities that I have mentioned are not available in Australia today. They include the granting by manufacturers who wish to supply overseas markets of a moratorium on payment by the buyer. That is not available from any source inside Australia today, but it is readily made available by manuafcturers located in Japan and other countries. A holiday in the payment of interest or repayment of capital is not available from Australian financial institutions.
Even if the statements of the Australian Resources Development Bank or the Australian Bankers Association to the effect that this Corporation will cut right across their purposes are correct, one finds it difficult to agree that our existing institutions are sufficient to provide the financial service that is required by heavy industry at the present time. I am hoping that the Corporation will lead into that field, although at the present time its purpose is to secure’ Australian ownership.
I would like to comment on a couple of points in the Bill in which I do not find great pleasure. If I mention them at this stage the Minister for Supply (Senator Anderson), who represents the Minister for Trade and Industry, may be able to ask his officers to explain them.
– They may be matters that the honourable senator might wish to raise in Committee rather than in the second reading debate.
– 1 know that we have only a few days ahead of us in which to work, and the Committee stage of the Bill may be reduced to some extent, so perhaps I should mention now one or two of the requirements laid down in respect of the Corporation. This forms part of my general comments- on the Bill. Clause 8 (3.) states:
In the performance of its functions the Corporation shall act in accordance with sound business principles and the Corporation shall not provide assistance in relation to a particular company unless it is satisfied that the company will operate in an efficient manner and on a profitable basis.
That provision says, in effect, that it is mandatory for the Corporation not to provide assistance unless it is satisfied that the company to which it is to lend will operate on a profitable basis. I suggest that that would have denied assistance to many of the resource development companies that we as Australians have wished to see controlled by Australia over the past years. Had this Corporation been in existence, because of that mandatory provision it would not have been able to help those companies.
Perhaps this relates to the reason why Australians have been reluctant to invest. They have not been reluctant to invest in the share market, but the share market investment has not really done a thing towards gaining for Australia ownership of its resources. The market fluctuations have been just a matter of profit or loss to the buyers of shares. The companies have stayed stable. Had this Corporation been in existence previously, it might have found great difficulty in establishing that a company involved in any of the large resource developments that we have seen would operate on a profitable basis. is that to say, for instance, that in 10 years time the company would be operating on a profitable basis or that the elevated position of the directors or their business acumen was such that it would give the Corporation confidence that the company would operate in an efficient manner and on a profitable basis? I believe that this is an area that needs to be taken up and made clear by the Government before the Bill is finally passed. If we are to secure Australian ownership, the idea of profitability might not necessarily apply. The second point I wish to raise also relates to clause 8 of the Bill, namely, the very interesting proposition contained in subclause (4.) which reads:
The Corporation - (a) shall not provide assistance to a company except at the request, or with the consent of that company;
The .statement of all those people in many areas of Australia who have said that this Bill represents a Socialist method of entering into this field surely is proved wrong by that requirement. This Corporation cannot move into a field until a company- asks it for assistance. So, it cannot just move into the field and start to do something on its own account. Paragraph (b) provides that the Corporation:
That is the general area lo which ] wish to direct my remarks at the moment. The Corporation can take up shares in any public or private . company, I. imagine. The Bill does not say what is to be the status of the company. I ask the Minister to say whether it is envisaged that either public company or private company shares can be taken up. If the Corporation rakes up shares it is then required to: . . at least once in each year review its holdings of shares in companies other than shares acquired as a result nf the investment of. the capital of the Corporation under sub-section (2.) of section 2& of this Act, and where … the Board is satisfied, as to any of these shares, that retention df the shares is not necessary for the proper performance of the functions of the Corporation with due regard lo the policy that the Corporation is required by sub-section (1.) of this section lo pursue, the Corporation shall endeavour (o dispose of those shares.
In reading the Bill, that was one of the very important matters that 1 found in it. Nowhere else does it state how the Corporation shall dispose of its interest in a company. Perhaps that should be spelt out, particularly as the Bill does set out how auditors will be engaged, how reports will be made to the Minister, how the Auditor-General in some instances will provide certificates although he is not the auditor for the Corporation, and so on. The disposal after a period of 8 or 10 years of shares acquired by the Corporation could be a very important matter.
The Minister should make clear the method by which the Corporation will dispose of its shares. I suggest that the best way of ensuring that the shares are not sold without the Australian public being assured that the Corporation has gained the best and most attractive figure for its interests would be for the shares to be placed through one of the national stock exchanges. I see this as being a fairly important matter. J believe that the Corporation, which will have a capital of $100m - a considerable sum - will have quite an impact on the economy if its capital is used for the purposes which the Minister has stated. But 1 do believe that the manner of disposal of the financial interest which it may hold in a company or companies should bc spelt out. 1 notice in clause 26 of the Bill that the Board of the Corporation will have power to invest as it thinks fit. Perhaps 1 should raise this matter later. This seems to be a fairly wide power. An institution such as this may, in some circumstances, as part of the requirement of the Minister to interest itself in public companies, purchase shares as an investment and not necessarily for the purposes for which the corporation is being established. I suggest that guidelines be laid down as to the areas in which the Corporation can invest. Perhaps it will invest only in trustee securities or some other appropriate form of investment, but I do notice that under clause 26 the Corporation will be free to invest as it thinks fit.
I believe that the interests of the Australian public will be well served by the AIDC. It is something which Australia has wanted for a number of years, indeed, it is something which has been proposed by my Leader for a number of years, but only in this year of 1970 has it been brought about.
– That is, your Federal Leader?
– My Federal Leader, yes.
– The State Leader would not achieve anything.
– That can be argued, particularly having regard to the status of the representation. We do not want to poke too many holes into what other people do. We can always smile although we lose. The Party which those honourable senators who have interjected represent is hardly in a position to claim that it can win seats in Victoria.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - Order! I think the honourable senator who is on his feet should pay attention to the provisions of the Bill.
– Yes, Mr Acting Deputy President. I was interrupted when making my final comments. But I do say that I am particularly pleased to be associated with the principles of this measure. The Government has indicated that it is a novel measure which is intended to bring about a greater retention of the ownership of Australian industry and resources in Australian hands. I fully support the Bill.
(12.19] - I am sure that the motives for this legislation and the purpose for which it is designed will appeal to every Australian who is desirous of seeing Australian-owned industry established and expand. I have not been unduly apprehensive about the injection of foreign capital into the exploitation of the natural resources of this country because I recognise that the risk capital available in Australia for the purposes of exploiting our natural resources is not adequate to enable us to do what overseas investment can achieve.
In the State of Queensland, which I represent in this chamber, there are several large projects which stand as monuments to what has been achieved by overseas investment. It is possible that these projects could not have been undertaken by ourselves at the time they were undertaken. I refer in particular to the great project which was undertaken by Mount Isa Mines Ltd. This project is regarded as one of the great mining undertakings in the world today. Overseas investment spurred the development of this project and provided for its expansion. The mine operated for a large number of years before a dividend was paid to the shareholders. With the aid of the State Government in Queensland, which was desirous of having an industry1 such as this one developed in a remote part of this very extensive State, the development of the project finally succeeded and commenced to reimburse those who had’ maintained such faith in it.
It is to the credit of Mount Isa Mines Ltd that as the years went on and prosperity accompanied its efforts it saw fit to convert itself into a public company and to invite Australian investors to take part in its operations. The company was principally or predominantly controlled by interests in the United States of America, although a good deal of United Kingdom money had been invested in the venture. The company did more than convert itself into a public company; it appointed Australians to its board of management and displayed what I believe to be a common sense approach by overseas investors in the exploitation of our natural resources and, for that matter, industry of any kind. Unfortunately, too many of the overseas companies which have come here for the purpose of exploiting our natural resources do very little in this regard. The result is that the question is asked: What are Australians doing to develop their own resources? Some companies put token Australian representation on their boards of management; others permit a minority subscription in shares. But the aspect of foreign owned companies which irks Australians most is that, in the main, the profits go out of Australia.
Whilst, like Senator Webster, I am concerned about certain facets of this Bill, I believe that in principle it is a genuine attempt on behalf of the Government to provide capital, which is an indispensable ingredient in the establishment of industry and the. expansion of industry in this country, in order to eliminate as far as possible, but not entirely, the taking over of Australian industries by foreign companies. There are many instances in Australia today where the Australian investor in a company or the controlling element in a company has not been able to expand to the extent that he would desire or at which he would aim because of lack of capital. In these circumstances he has been forced to encourage the invesement in his company of overseas capital with the result that there has been ultimately a takeover.
Although I said at the outset that 1 have not, up to this stage anyway, been apprehensive about the measure of overseas investment in Australia, I am conscious of the fact that the lime has now arrived when we have to do more than we have been doing to encourage the Austraiian .investor, the Australian industrialist and for thaI matter the Australian investor lo establish his own industry. At the same lime we must encourage existing Australian industries to expand and develop with a view to utilising our low cost raw materials and wilh a view lo exporting products overseas. Many demands are made on the existing financial institutions, banks and others, and it is evident that notwithstanding what the Government has tried to do through the Commonwealth Development Bank of Australia and other institutions that have been set up there is an urgent need for supplementary action in this connection. Some people in the banking world today have expressed apprehension about the effect that this legislation will have on the banking institutions. I do not share their apprehension because this will provide an additional means of making capital available to Australian industry. The corporation which is to be set up under this legislation will operate independently of the Government, but at the same lime il will have the imprimatur of the Government for the purpose of raising money- mainly overseas - and for the lending of money lo Australian industrialists to establish industry and lo expand industry.
– These other banks say that the corporation will not have lo make a profit and therefore will have an unfair advantage over them.
– The profit that will come from this corporation through ils being able to raise money and io lend money to industrialists will be seen in the great advantage to be gained in the development of Australia’s industry. From that there must accrue to the banking institutions further profits on top of what they are making already. Why is the Government required to give consideration to legislation of this kind? ls it not because of the limited financial resources available to Australias industries? lt is for no reason other than that. The Government says that whereas a company or firm of Australian industrialists might not succeed in the overseas money market, a corporation with the imprimatur of the Australian Government on it could very well succeed in raising money for a worthy project or purpose. This is conditional, of course, on the corporation acting sanely in the matter of the interest that it pays for money. That is all-important. I do not think the corporation requires me to advise it on what could be regarded as a fair rate of interest on money loaned.
From my own experience as Minister for Labour and Industry in a Stale Parliament I know that particularly in the years immediately following the war ex-servicemen and other young men who desired to establish industries on their own account, to give effect to and to provide an outlet for their own enterprise, initiative and talents, were unable to follow out their plan because of their inability to obtain capital. To some extent I was responsible for the establishment of the North Australian Cement Ltd works at. Townsville. I was a Minister in a government which grew tired of importing cement from southern States.
– You would have imported better stuff from Tasmania.
– We imported cement from Tasmania and from Japan. We were importing cement because the only cement works in Queensland at the time was unable lo supply the demands of our Slate. Finally I was able to interest the principals of several companies, including Mount lsa Mines Ltd, to join together to form a company. However, they were unable to find the necessary funds. A cement plant is a very costly undertaking, lt was necessary for the State Government to arrange for a bank guarantee to enable them to establish the cement works which, I am pleased to say, has been a marked success from the lime it was established. That was no’ i>.id effort for an allegedly Socialist Premier.
A similar situation applied to many other industries. There were times when Mount lsa Mines Ltd needed a loan, but in those cases the banks were able to provide the funds on a State Government bank guarantee. Australia has developed and has grown at such a rate that our banking institutions either do not have the money or have the money but will not lend it. In the course of my experience a number of people have come to me and to my successors in the Department of Labour and Industry, which controlled the Department of Industrial Development - a section which 1 founded many years ago - pleading for governmental aid because of their inability to obtain funds from banks. For that reason I say that the legislation is timely. It is to be hoped that the purposes of and the ideas which are contained in the Bill will work successfully and that the Australian Industry Development Corporation will not be a duplication or cut across the operations of our present banking institutions, whether it be the Austraiian Resources Development Bank or the private trading banks. It is to be hoped that the Corporation will be supplementary to those institutions and that it will provide an additional avenue of finance for those who are in need of money for the development of Australian industry. lt is ho use our continuing to complain about foreign investment in Australia unless we are prepared to do something ourselves to encourage and develop industry in Australia, not to the exclusion entirely of foreign investment. There is still room for foreign investment, but I am one who believes that a foreign company has to recognise that if it comes here to take advantage of our natural resources, in addition to paying a small royalty to a State government for the coal or uranium or bauxite or whatever it is that is being won, it should, in its own interests as well as in the interests of Australia, give some consideration to taking an Australian element into the company and at least giving Australian investors an opportunity to invest in these undertakings to a greater extent than is the case at the present time.
I think that the Deputy Leader of the Opposition (Senator Willesee) described the legislation as being very radical. I cannot see that it is very radical at all. It is a commonsense process. It is a process which has been evolved as a result of problems which have arisen, in particular, over the last few years. We have seen - and the Minister for Air (Senator Drake-Brockman) referred to this in his second reading speech - the number of major manufacturing companies, not small companies, that have been absorbed by overseas companies. They have been absorbed in the main principally because an Australian company was unable to finance the development that was imperative for the economic development of that company and for the manufacture of its product at a cost that would make it competitive in overseas markets. It has been nothing more than that. No Australian company receives any comfort or pleasure from handing over its management to an overseas company, after years of hard work, merely for money. In most cases that have come under my notice I have been satisfied that the companies would have been happy to continue to develop if finance had been available.
It is not much use banks and other lending institutions bemoaning the introduction of this legislation and reading into it a lot of dire results, at least before this experiment - one might classify it as such - has been tried. There are, and will be, many applicants for loans from banks. .1 do not think that banks have any real cause to be disturbed. Most of our manufacturing industries are small industries. Statistics indicate that factories which employ more than 20 men are not great in number. Major industries, such as the motor vehicle industry, which are employing hundreds of men are 90% foreign controlled. The industrial and heavy chemical industry and the pharmaceuticals industry have more than 80% foreign control. This might be all right, but it scarcely can be regarded as a satisfactory position. I have no doubt that we could have carried out this work just as efficiently as foreign companies have done if necessary and adequate capital had been available in Australia. In the electrical and electronic industries, including many small enterprises, overseas ownership is approximately 50% .
I have mentioned alumina. The production of alumina and aluminium is about 75% controlled by overseas companies. That raw material lay in the ground, just as uranium has done, in the northern part of Queensland for centuries. When it was discovered the risk capital was not available in Australia to exploit and develop it as it has been done by overseas companies. We have no cause to complain about overseas companies coming in and taking advantage of the discovery of these minerals. Our cause for complaint and regret is that no Australian capital was available to enable Australian enterprise to carry out this work. I suppose that the same comment applies to Mount Isa. to which I have already referred. A gouger found copper at MountIsa but he was not able to exploit it. I suppose that he was unsuccessful in trying to raise the money.
SenatorLillico - But you would need billions of dollars to rectify all that. It would not be a mere drop in the bucket.
– To rectify what?
– To constitute Australian ownership.
-I have already covered that point by saying that we are not closing the door entirely on overseas investment. But we are going to try to do something in Australia’s interest. This is only an initial step to make finance available to Australian manufacturers for the establishment of industries and the expansion of existing ones. With that I am sure no Australian could find fault or complaint and 1 hope that it works out as successfully as the Minister would like. Any proposal such as this must really of necessity find many critics because it is a new approach to the whole question of the industrial development of this country. There are a lot of people - unfortunately too many - who are too ready to look at such a proposal with apprehension and fear. I am not saying that the Bill should not be subject to a closer examination.
There are some people who have expressed the view, in correspondence received by me and by my colleagues, that the legislation is not being properly considered and that the Bill should be deferred until such time as further consideration can be given to its provisions. The Melbourne Chamber of Commerce is one organisation which I thought would have welcomed a Bill such as this but it is a body, with all due respect to it, which says that it has come to the unanimous conclusion that the passage of the Bill should be delayed so as to permit more time for its consideration and that there seems to be a strong doubt as to whether a convincing case has been made out for the establishment of the Corporation. The Chamber says:
It seems that the objectives for its establishment could be achieved by some modification in the constitution ofthe Australian Resources Development Bank.
Again I say that I appreciate that on these chambers of commerce there are many able and qualified men whose opinions must be taken into consideration. But do honourable senators not think that if the Government could achieve what it aims to achieve in this legislation by merely modifying the constitution of the Australian Resources Development Bank it would have been only loo ready and happy to take this course of action? This would have been the course that would have caused the Government less worry and would have achieved the same result, according to the Chamber of Commerce.
– It would have kept Cabinet Ministers friendly, too.
– Yes, as my colleague says, it would have kept Cabinet Ministers in greater harmony than they have been since this Bill was introduced. However, I am satisfied, as I said at the outset, that any thinking Australian whilst he might disagree with certain phases of the legislation must say that the motive for this legislation is good. It is a sincere attempt to do something and to correct something about which we have heard so much complaint over the last few years particularly, that is, that Australia was selling out to overseas companies and that the Government was giving Australia away bit by bit. That is just what has been said by so many for so long. This organisation goes on to say:
Whilst it was originally understood that the IDC would divest itself of its shareholdings as soon as possible, this does not seem to be spelt out in the Bill.
Well, what is the cause for great concern about that? There is a solution to it. Let the scheme get under way and a lot of these things will iron themselves out in good time. The organisation says further:
The proposed Corporation will be allowed to borrow in Australia, although its borrowings in the main will be obtained from overseas.
That is true. Well, these people are complaining about borrowing from overseas and now they are complaining that the Corporation is going to borrow in both places. Evidently the moneylenders - the banks and others - do not want to lose our business on the one hand and on the other hand they are saying: ‘Well, it is not right that the Corporation should borrow in Australia as well as overseas.’ The organisation continues:
When it is borrowing in Australia, it is subject apparently to rules laid down by the Reserve Bank in respect lo borrowings of overseas controlled companies. There is, we believe, an amendment passed in the House of Representatives which requires the IDC to have regard to the authorities’ monetary policy, however, in section 9 of the Bill, it is stated that the Government will have no power of direcion over the Corporation. A fear remains whether the IDC will operate for the benefit of the economy and, in addition, it could become a competitor of the States on the local money market.
I cannot see the merit of that submission at all. I cannot see that the Corporation will be a competitor with the States on the local money market. I would imagine that it would relieve to a great extent the difficulty of the States in obtaining money for essential projects on the local money market. The organisation says further:
The Corporation is supposed to be set up to help where existing banking and other financial institutions cannot meet the requirements and this would imply that the Corporation is lo be a lender of last resort. However, this is not made clear in the Bill and it is felt that the Bill allows for the Corporation to participate in the formation of a company.
When the Corporation sells its share (which is apparently the intention)-
And this is the matter raised by Senator Webster a little while ago - what guarantees are there that the shares will not end up in overseas hands and thus negate what we believe is the prime objective of the Bill?
I believe that a corporation set up under legislation of this kind could be depended upon and relied upon to attend to a matter such as that and at least I would have sufficient confidence in those who will be charged with the administration of this Corporation to attend to that factor. The organisation says:
There are several other objectionable features in the Bill which could be explained in detail if more time were available. For this reason, therefore, we would urge that you use your influence in the Senate to have consideration of the Bill deferred until bodies like the Chamber of Commerce have had lime to consider it . . .
I do not propose to make any attempt to defer the legislation. I think the Chamber of Commerce, and the Chamber of Manufactures - if it is involved in the objections - and the banks are wrong. I cannot bring myself to believe that any deferment will remedy the position at all. They have no doubt had their opportunities of making their submissions when this matter was before the other House and prior to that, and that being the case 1, on behalf of the Democratic Labor Party in this Senate, say that this legislation has our blessing. We feel that it is a genuine attempt to arrest the rapid increase of overseas investment in this country and the takeover of Australian industry.
I do not want to engage in repetition. One requires to have had only minor experience and knowledge of the difficulties that so many people in Australia suffered over the years in trying to give expression to their inventive ideas, their knowledge, their enterprise, their energy and their skill to know how they were frustrated because of the inability of banks and other lending institutions to make funds available to them. My experience is that banks are prepared to lend money provided they have a gilt edged security and that a person is already successful, making big profits and paying dividends and there is no element of risk associated with the loan.
I know a young man who during the depression years became unemployed through no fault of his own, as did so many tens of thousands of people. He was a beneficiary in an estate but there was a condition that he was not to receive his share which was on fixed deposit with one of the old private banks until he reached a certain age. The only thing that he could see in the way of employment was selfemployment. He had limited ready money so he decided to purchase a newsagency shop which had a newspaper delivery round attached. He did not have sufficient money to pay for it and the vendor naturally wanted cash because he, too, was in financial difficulties due to the depression. The man whom I knew personally went to the bank, and notwithstanding the fact that the bank was holding a large sum of money that belonged to him it was not prepared to give him financial accommodation of any kind. I do not suppose that that is a rare case. The bank argued that it had no authority although it could not deny that the money belonged to the young man provided he lived for another 12 months. The bank could have advanced a loan without risk. Business conduct such as that docs not encourage people to be very interested in the complaints of the banking institutions. One might as well ask people to cry for a bookmaker as to cry for a bank, and I do not think that anyone is likely to do that. A person might cry because he has left so much of his money with the bookmaker in his attempt to win at gambling, but that is all.
We could quote figures relating to what has taken place in Australia of recent years. The record of what has taken place reads like a romance. There are not many people in this Parliament or outside it who expected that the measure of development and progress which has taken place would take place. The credit for that must be given to some extent to overseas investors who invested money in Australia because of the inability of our own people to find the necessary capital. They can still share in the development of this country provided that they recognise that they have an obligation to allow Australians to play a part because, after all, in the first instance the bauxite, the coal and the uranium, etc., belong to the Australian people and the investors have been privileged at little or no cost to develop, exploit, produce and sell our resources.
Debate (on motion by Senator Cant) adjourned.
Sitting suspended from 1 to 2 p.m.
The DEPUTY PRESIDENT- Is leave granted? There being no objection, leave is granted.
– Notice of motion No. 3, Business of the Senate, standing in the name of Senator Wood, relates to the disallowance of Australian Capital Territory ordinances Nos 7 to 13 of 1970. The Senate Standing Committee on Regulations and Ordinances felt that fees for witnesses appearing before bodies operating under these ordinances were at the discretion of the chairmen of those bodies. Since the tabling of this notice of motion, officers of the Department of the Interior have had discussions with members of the Senate Standing Committee and amendments of the ordinances have now been prepared. The amendments specifically entitle witnesses to receive fees and travelling expenses in accordance with the scale in the Second Schedule to the Public Works Committee Regulations. I understand that the Committee has agreed with the ordinances as amended.
– I ask for leave to make a statement.
The DEPUTY PRESIDENT- Is leave granted? There being no objection, leave is granted.
– In view of the Minister’s statement 1 ask for leave to withdraw notice of motion for the disallowance of Australian Capital Territory ordinances Nos 7 to 13 of 1970 standing in my name.
Notice of motion - by leave - withdrawn.
– I ask for leave to move that so much of the Standing Orders be suspended as would prevent any senator from giving notice of motion today for disallowance of the ordinances in respect of which notice of motion has just been withdrawn.
– I do not understand that.
– Perhaps I could explain it while I am asking for leave. I do not think there will be any dispute about it. As I understand the procedure, today is the last day for the giving of notice of motion in respect of the ordinances. I do not anticipate that anyone will give notice, but the time for notice will expire today. The honourable senator who gave notice of motion has withdrawn it. I think we ought to establish a standard practice whereby it will be open to any other senator to give notice and to preserve his rights when a notice of motion is withdrawn on the last day of the allowable period. I am asking for leave simply to move a motion to that effect. As I understand it, no-one will give such notice but an opportunity should be available.
– Am I to take it that Senator Murphy is treating this exercise by Senator Wood as the exercise of a senator and not of the Chairman of the Committee, o.n this occasion speaking for the Committee? Because Senator Wood has not called the Committee together, does Senator Murphy feel that is a wise precaution in case any member of the Committee later wishes to make a point?
– No. It is the right of any senator, and it is a very important right. Carefully framed conditions have been placed in the statute and I feel that what I have said is the proper course to be followed on an occasion such as this. 1 have discussed it with Senator Wood. He understands, and I think agrees, with the course .1 arn suggesting. I ask for leave to move the motion I have outlined.
The DEPUTY PR ESI DENT - ls leave granted? There being no objection leave is granted.
– I move:
Question resolved in the affirmative.
Debate resumed (vide page 2009).
– I congratulate the Minister for Trade and Industry (Mr McEwen) for bringing this Bill before the Parliament. I have closely read his second reading speech. It is not a speech I would have expected from a member of the Government, even though I appreciate that Mr McEwen has for a number of years been disturbed about the amount of overseas investment in Australia and the loss of control of Australian industries. One calls to mind, for example, his famous statement to a Country Party conference in Victoria in 1963. Despite the views expressed in that statement it has taken until now in 1970 to launch this Bill and b!ing it before the Parliament. I can appreciate some of Mr McEwen’s difficulties in a previous government when he was having trouble with the Treasurer of that time and out of which arose the Australian Resources Development Bank.
This Bill seeks to set up a corporation that has for its purpose the borrowing of moneys overseas and within Australia to finance development projects in Australia - the development of resources, manufacturing or what have you. Some limitations are placed on the finance that the Corporation will have at its disposal, lt is a little disappointing at a time when overseas investment is running at about SI20(!m that the Corporation will have available to it $200m. Nevertheless, this measure will fill some of the gap if it is not hamstrung by conservative directors or other people wishing to sabotage the scheme.
For this reason the Australian Labor Party supports the Bill, although we realise that it is not the type of legislation we would introduce if we were on the treasury bench. We would wish to see a much more virile sort of legislation brought into the Parliament because we have for a large number of years been disturbed by the amount of overseas investment in Australia and the loss of control of Australian industries. I do not want anyone to accuse me or my Party of being opposed to overseas investment. We realise that for Australia as a developing country overseas investment is necessary. We are concerned when those overseas funds enter into monopoly arrangements because that is the way that we lose control of our industries and resources. We do not think that that is the right result.
We think there should be joint ventures in this country, that Australians should be participants in the development of our resources and manufacturing industries. Australians should be given an opportunity to become partners in the development of this land. I will have something to say later on about guidelines, but at present I want to say that, whilst guidelines have been laid down at various times for overseas investment in Australia and the raising of funds in Australia for foreign companies or corporations, guidelines are of little use unless they are adhered to and policed. The tragedy that has befallen various Prime Ministers who have been in charge of the government of Australia is that constantly they have issued guidelines and principles for overseas investment and for the raising of funds in Australia. Having issued the statements, they have forgotten completely about what happens from there on.
One other point I make - and I will develop it later - with respect to overseas investment concerns the tendency towards monopoly control, particularly when the investment comes from multi-national corporations which do not want their funds distributed all over the world without having some kind of control. Also, I say that we should have regard to the value of the assets that we sell to attract overseas investment. I think very few people have really looked at this position in the context of overseas investment. This Bill is one of the bright lights of 20 years of conservative government in Australia. The bright lights in this 20-year period have been very few. 1 have always claimed that the long-term problem for Australia would be the problem of overseas investment. This is the first real attempt that has been made to try to get some Australian equity in Australian industries.
One other reason why we welcome this legislation into the statute books is that when we become the government we will amend this legislation in a form that is more in line with the policies of the Australian Labor Party. We will become the government after the next election, whenever it is held. It may be earlier than the Minister for Air (Senator Drake-Brockman) thinks because things are moving to somewhat of a crisis. It might require a little courage to take both chambers to the country within the next 6 months. Whenever the election is, I am confident that the Australian people will elect an Australian Labor Party government.
I propose to be critical of overseas investment. 1 propose to give an indication of the position in Australia at present, as far as one is able to ascertain it. I am hopeful that this legislation will cure that position. From 1948-49 to 1968-69 there have been only 4 years in those 21 years when we have had a favourable balance on current account. Generally the deficit on current account has been matched by the overseas inflow of funds. When one looks at the accounts generally, one sees another similarity in that the export and import accounts have been in balance.
The main danger to the Australian economy is the invisibles. One of the big items in the invisibles is freight rates on exports and imports. About 18 months ago one had hopes that the imbalance might be reversed somewhat. The Minister for Trade and Industry announced that the Australian National Line would charter ships to enter into the overseas trade. That has all gone by the board now because the Australian National Line has joined the overseas consortium. It will be subject to the rules of the overseas consortium and we will not get the relief we would have got through having our own shipping line. If the invisibles for the period about which I have spoken are looked at, it will be seen that there has been an enormous increase in the deficit on invisibles and that this increase has been accelerated over the past 8 to 10 years. This has been brought about mainly by the repatriation of funds and dividend?’ overseas. The inevitable result of overseas investment is that dividends have to be paid overseas and we have to finance the paying of the dividends overseas.
The present position has been brought about also by the actions of overseas governments over which we have no control. The 2 main investors in Australia are the United Kingdom and the United States of America. Both countries have placed restrictions on the expatriation of their funds. In America about 4 years ago President Johnson asked companies which had overseas investments to repatriate as much of their funds as they possibly could because the United States was running into balance of payments difficulties. We all know the difficulties that the money moguls caused for Mr Wilson in England almost from the day that he took office in 1963. Mr Wilson’s first action was to go to the International Bank for a loan of £stg3,7O0m to put the British economy into some kind of workable order. The 7 years since then have seen a battle by the British Labour Government to try to stabilise the economy of that country, with all the forces of international finance opposed to it. Decisions are taken by overseas governments over which we have no control. One of the disturbing features of having too much overseas investment in a country is that the Government cannot control the investment. Its economy is placed in such a position that the Government cannot say from day to day what its financial position will be.
The funds flowing out of Australia at present are running at about S600m a year. Even though we have had on the average during recent years about$1, 200m coming into the country, approximately 50% is going out to service investments that have been made in this country in previous years. If the current position is allowed to continue, before the end of the decade the outgoings will exceed the inflow. The Australian Labor Party welcomes this legislation because it will arrest that position to some extent. This is not the first time the Australian Labor Party has been critical of overseas investment. On several occasions in this chamber I have spoken on overseas investment. Colleagues in another place have been advocating some control of overseas investment for a good number of years. My Party will continue to be critical of uncontrolled overseas investment even though this legislation is on the statute book. I said earlierthat this measure is a very bright light in 20 years of conservative government, but the light is dimmed when one looks at it in perspective and against the position which it set out to cure. Nevertheless the Australian Labor Party believes that the legislation will serve a useful purpose. I am not persuaded by the arguments put forward by defenders of overseas investment who say that 85% to 90% of investment funds generated for Australian development are generated internally. This is a statement that is made only to avoid facing up to the problems of what overseas investment and control are doing.
One should be looking not so much at the amount of overseas investment but at the area of overseas investment. Just where do the funds which come into this country go? How are they invested? The pharmaceutical industry is 93% overseas owned. This Government has continually shirked the responsibility of having any form of price control with the result that the manufacturers of pharmaceutical goods are able to charge whatever prices they like for their products. The taxpayers pay the price. That is all it amounts to. The companies fix whatever profit margin they want for the goods they have to sell. Under the Pharmaceutical Benefits Act, Consolidated Revenue pays the price the manufacturers require.
– Require or demand?
– I think the word demand’ would be stronger. This industry is a key industry in the national health scheme, which has occupied this Senate for the last week. Yet we allow one of the key industries in our national health scheme to be in the hands of overseas monopolists. The industry not only demands profits - and in many cases the profits are exorbitant - but it adds to the price of the goods they sell today provision for future development. Those who are buying the goods today are paying for the developments which may take place in the future. Those developments may not even be within Australia. These are international companies which are developing all over the world. They often operate on an international basis, and they gather their moneys wherever it is easiest for developmental activity in other countries.
The petroleum refining and distribution industry is 96% overseas owned. This industry is the key to the Australian transport industry yet decisions can be made in this industry by boards of directors in the United States or London. We have no control over them. The lifelines of Australia depend upon the goodwill of these overseas investors. Our trains, ships, aircraft and road transport all depend upon the profits of the petroleum refining and distribution industry. But it goes a little further than that. We find that some of our own crude oil is substantially overseas owned. We have a 20% interest in the Queensland oil and gas fields. The rest is overseas owned. We have a 141/2% interest in the Western Australian oil and gas fields. It is likely that the percentage is not even that high because we do not know what overseas shareholdings there are in Ampol Exploration Pty Ltd. Ampol Exploration Pry Ltd, as a company, has a one-seventh interest in Western Australian Petroleum Pty Ltd. As to Victoria. we are told constantly that the Australian people have a 50% interest in the Bass Strait oil and gas fields. It is completely wrong for people to say that because Broken Hill Pty Co. Ltd is a half partner with Esso Exploration and Production Australia Incorporated in these fields that Australia has a 50% share. When one looks at BHP one finds that 16% of BHP shares are owned overseas. One finds that in addition to the 50% interestthat Esso has in this Bass Strait field it is the operating company and it takes 6% of production for operating expenses. Then one finds that Mr Lewis
Weeks lakes another 2i% as royalty for being a good boy and putting BHP on to the offshore areas.
If one examines the Australian holding in Bass Strait one finds that the approximate interest of the Australian people through the BHP shareholding is 35% and not 50%. In fact, if one examines the oil exploration and production industry in Australia one finds that it is 85% overseas owned. Honourable senators can see how vulnerable we are to the oil monopolies who are quite ruthless people. Anyone who likes to read their history over the years will notice that they have made and broken more governments than one can throw a stick at. They will continue to do so in the interests of profit. Through laxity the Government has allowed the refining and distribution of oil to be 96% overseas owned and exploration and production to be 85% overseas owned. That is not a very pretty picture for the Australian people to look at.
It was mooted in the Press a few days ago that the Post Office will show a loss of $19m this year and that it is likely that there will have to be increases in some postal charges. Yet the telecommunications industry is 83% overseas owned. The companies in this industry, being in this monopoly position, are able to make the charges they want to make for the goods they sell, and the Post Office has to buy them and the people have to pay for them. So again it is the Australian consumer who pays all along the line.
Australia is a fairly rich country. It has been said that Australia is a lucky country. I believe that it is a lucky country to have survived the way it has under the type of government it has had for the past 20 years.
– Now, now.
– I hope the honourable senator goes and tells the farmers that it has taken 20 years for the Government to ruin them. We put them on the boards. Everyone wanted to get into the farming industry when we were in government. It has taken this Government 20 years to ruin them.
– But it did it.
– And very successfully, too. Nevertheless I say that Australia is a lucky country to be in the position in which it is today, considering the type of government we have had and the fact that the Government has paid so little attention to the way overseas funds have been allowed to come into the country. In fact Mr McEwen, in his second reading speech, drew attention to the laxity of control.
The bauxite and aluminium industry is 75% overseas owned. We have perhaps the largest bauxite resources in the world. We are mining bauxite in large quantities. But how much processing are we doing? This is the field that we have to get into - the processing of our raw materials. Little labour is employed in working a great quarry with mechanical implements. All such industries today are becoming capital intensive. They are no longer labour intensive. The result is that little labour is employed, a whole heap of goods is taken out and all we are left with is a hole in the ground.
Actually, we do take bauxite to the first stage of processing by producing alumina; but that is as far as we go. The result of that is that we are selling a raw material overseas at a very low price, whereas if we were selling the finished article we would have employment for thousands of people in this country and the goods that we were selling overseas would be bringing a very much higher price, which would make our trade balances very much more in our favour. We have the Weipa deposit, which is supposed to be the biggest deposit of bauxite in the world. I might dispute that with some of my Queensland colleagues. 1 do not know how much we have in Western Australia but I know that people are destroying jarrah forests to get the bauxite out. Jarrah forests take hundreds of years to generate, but these people just go on ripping out the forests in order to get the bauxite out. I do not know which is the more valuable - ‘the timber or the bauxite. However, the overseas investors are there and they are taking the bauxite out.
We have large deposits of bauxite at Gove. We also have a large deposit of bauxite at a place called Admiralty Gulf on the north-west coast of Western Australia. A consortium proposes to develop it with an investment of $294m. There has been a lot of talk about it by various people, particularly by ‘Give-away Charlie’. I refer to Charlie Court, the Minister for
Industrial Development in Western Australia. He would give it all away. I do not know what he is getting for it but the Australian people are not getting very much. This consortium made provision for a 25% Australian equity interest in this deposit, but Australian investors have failed to take up their 25% interest. Of course, Mr Court says that the project will go ahead even if Australians do not take up their 25% interest. But I believe that the article to which I am about to refer may reveal why the Australian people are a little reluctant to invest in this project, lt says:
However, the real deterrent for Australian participants must be the make-up of the Amax consortium.
These are Amax itself - a sizeable aluminium producer in the US - Sumitomo Chemical and Shown Denko KK of Japan - also aluminium producers and Holland Aluminium NV and Vereinigte Aluminium-Werke AG, two of Europe’s larger producers.
Since each of the five members of the consortium are aluminium producers (and therefore large alumina consumers), production economics dictate that they obtain their alumina al the cheapest possible price.
And this in turn suggests that the Amax-led alumina refinery project may be run more as a service industry catering to ils shareholders rather than as a potential high profit earner.
I simply ask Senator Anderson, as the Minister in charge of the Bill and the Minister representing the Treasurer, this question: What will the Commissioner of Taxation say about that? If we cannot obtain an Australian equity and if we allow these people to produce alumina at the lowest possible price as a service to their aluminium industries overseas so that no profits are made here, what will the Commissioner of Taxation say about that and what will the Government say about the issue of an export licence?
The soap and detergent industry is 80% overseas owned. This is an essential industry with not only guaranteed profits for the companies in it but also guaranteed profits for the television industry. If the advertisements for soaps, detergents and cosmetics were taken off the televisions screens, every television station in Australia would go broke. Yet it is the people of Australia, the consumers of the soaps, detergents and cosmetics, who pay for the advertising on the television screens. These products are constantly advertised on television.
Then we have the chemical industry, which is 60% overseas owned. Many of its products are subsidised. In fact, the industry gobbles up the whole of the superphosphate subsidy. That subsidy is no longer passed on to the farmers. In fact, it is less of a subsidy and more of a support price for the manufacturers of superphosphate. The rest of the chemical industry operates behind high tariff barriers. The inevitable result of high tariff barriers is, of course, increased prices. Once again the Australian consumer has to meet the increase.
The motor vehicle manufacturing industry is 95% overseas owned. 1 cannot growl too much about this because it was a Labor government which persuaded General Motors to begin vehicle manufacture in Australia. In view of the anticipated growth of motor traffic it was decided that Australia needed a motor vehicle manufacturing industry. But what has happened? The Australian industry is not allowed lo produce the latest models made by the parent company because these would be sold in world competition with the parent company. lt is also not allowed to export to certain areas of the world. The industry is being dictated to by the boards of directors in Detroit. This is something that the Government should have been looking at a lot sooner.
When one comes to the essentials of life one finds that the food production industry in Australia is 50% overseas owned. But there is no form of price control. The people of Australia can be and are being exploited by overseas investors. One has only to question housewives in the various cities of Australia to find out just how price rises are accelerating. There is no control over prices. The companies in this industry can do what they like because people must cat. Because of low wages some people may have to eat substandard food, but they still have to eat.
I said earlier that I would have something to say about the assets which we sell overseas. I want to talk about the Mount Tom Price project and the Hamersley organisation in Western Australia. Hamersley started the mining of iron ore in that State. The story has been falsely spread all over Australia that Australians would not invest in the risk industry of iron ore. 1 wonder what chance the Australian people were given to invest in this industry and what was the extent of the risk money required to be invested. My information is that the amount of risk capital required was $2.5m and not the £120m which Hamersley claimed was needed to develop the industry. That is the figure which is constantly stated, but my information is that the amount of risk capital required was only $2.5m. I understand that the S2.5m was used to carry out a feasibility study of a railway line and port and conduct an examination and analysis of the ore deposits. This was done by a joint venture between the Kaiser Steel Corporation and Conzinc Riotinto of Australia Ltd in the ratio of 40% to 60%. Having found out the value of the deposit and the cost of the installations which were required they went to Japan and sold 62.5 million tons of iron ore at £4.9s.6d a ton. This provided them with all the asset backing they wanted to go on to the international market and raise the £120m for the development of the project.
We were told in this country that we had an iron ore deposit which was attracting to Australia an investment of £120m. Nothing could have been further from the truth. The amount of investment in Australia was £70m. The balance of the money was invested in Japanese steel to build a railway line and a port. The machinery for loading the ore and the heavy earth moving equipment to mine the ore came from the United States of America. All Australia got out of it was the labour involved and the cost of the housebuilding material and the jarrah sleepers to construct the railway line. We had then an investment in Australia of some $140m. But what did we give these people for their investment? We gave them 645 million tons of high grade ore at an average price overseas of $8.50 a ton. The asset which we sold for SI 40m is valued at $5, 282. 5m. If honourable senators are not satisfied with this evaluation they have only to look at the shares of these companies. Hamersley’s shares rose to $16 each on the Sydney Stock Exchange. Today they are $8 each. The value of the shareholding at $16 a share was $1.600m. The value today is $800m. This is the asset which the Government sold for an investment of $140m in Australia.
The story starts to sting a little bit more as one progresses. Having got this sort of investment and this industry afloat someone persuaded the joint venture of Kaiser and
CRA to give the Australian people an equity shareholding in this industry. In order to find out what goes on in this respect one has to look at the capitalisation of the joint venture. It was floated with 100 million shares at 50c each, which would give the joint venture a capital of $50m. Eventually, the joint venture agreed to give the Australian people a 10% shareholding. The Kaiser shareholding was dropped to 36% and the CRA shareholding was dropped to 54%. Ten million shares were sold to the Australian people for $25m, which represents $2.50 a share. So we find that, in relation to this huge asset which the Government has given away, for S25m the Kaiser Steel Corporation and CRA will retain a 90% interest and for $25m the Australian people will have a 10% interest. Is this the sort of joint venture and the sort of Australian equity that the Government is satisfied for the Australian people to have? I have explained already what the risk capital was and what risk the people took to get into this industry. But we find that it goes a little farther. Last September a new set of guidelines on overseas investment was brought down. I propose to quote only a couple of passages from what the Prime Minister (Mr Gorton) said. At page 1383 of Hansard of 16th September 1969 the Prime Minister said:
Companies wholly overseas-owned and established in Australia for periods of less than 4 years will be allowed local borrowings of up to 2i% of the increase in funds employed for each year that they have been established. Such companies will henceforth have a new base and a new percentage applied each year until they have been established here 4 years. From that time onwards they will be allowed local borrowings of up to 10% of subsequent increases in funds employed. For companies in which Australians have a share of the equity, additional borrowings to those set out above will be allowed. The extent of the additional borrowings will be determined by the share of the total equity in the company held by Australians.
Within a month of that announcement I picked up a newspaper and found that Hamersley Holdings Ltd had gone onto the Australian market to raise a $50m debenture issue in Australia. That company has a 10% shareholding only in an Australian enterprise and is not reinvesting $500m. This is why I say the guidelines announced by the Prime Minister do not count for anything unless the Government is prepared to police them and see that what if says is the pattern is adhered to. I should like now to quote from an article which was written not by a Socialist but by a member of the Liberal Party. The man to whom I refer is an economist who has paid a great deal of attention to the way that Australia is being sold.
– Was he writing about this Bill?
– No. I think he was writing the article long before this Bill was introduced. He was being critical of the Government’s handling of the economic policy of Australia.
– How can you relate that to the Bill before the Senate?
– I am talking about a Bill thatI hope the honourable senator will have the intestinal fortitude to oppose, if he does not agree with it. 1 am talking about a position which has arisen in Australia and whichI hope this Bill will cure. However, I do not think it will cure the situation because it is not strong enough and the Corporation’s finances will not be strong enough. Nevertheless, I think it will go some of the way towards curing a position that I have been complaining about. This article which was written not by me but by an economist, who is a member of the Liberal Party, states:
Having regard to the various limitations implicit in Government statistics, the table below sets out, in millions of dollars, Australia’s loss of assets and increases in debts to overseas countries:
This assumes some $1,900 will be lost from 30.6.68 to 31.12.1969. Recent figures for Australia’s loss of assets to overseas plus increases in debts are:
The deteriorationlast year meantthat each family in Australia sold out assets and raised debts overseas of more than $500. This position is not generally realised, because this over expenditure is done via the Government. It is explained away by that magical item which balances Australia’s
Balance of Payments, namely Capital Inflow.
Debts, however, plus sales of assets overseas can only rise to a certain level before credit is exhausted and there is nothing much more to sell. In 1950 Australia’s overseas currency reserves equalled 14 months imports, now they are three or four months imports (plus some drawing rights). This is the position as this economist sees it.
– Who is this mystery man you are talking about?
– Mr Ian Sykes of XL Petroleum Pty Limited. He is a man who is prepared to buck the big petrol consortiums and international combines. One other case to which I want to draw attention concerns Bass Strait oil. When Mr Weeks put the Broken Hill Pty Co. Ltd on to the off-shore areas of Victoria the company carried out its aeromagnetic and seismic surveys and considered that the area had prospects, but it did not think that the company had the necessary finance or technical know-how to be able to carry out exploration in this area. Consequently it looked about the world for a partner and eventually made a deal with Esso Standard Oil (New Jersey) Limited to spend$10m and sink 5 wells in the company’s permit areas in Bass Strait. For doing that, if they struck anything they were to have a 50% interest in whatever they struck. They are getting much more than that, of. course, as 1 explained earlier.
It is important to remember the name Esso Standard Oil (New Jersey) Limited, which is the company with which BHP contracted to perform this work and to earn this interest. Esso Standard Oil (New Jersey) Limited did not come to Australia; it formed an operating company in Australia. As I understand it, the operating company has no assets in its own right in Hemetite Petroleum Pty Limited, which is a wholly owned subsidiary of BHP and which operates in conjunction with Esso in this area. It was lucky - and all good fortune to it - to find oil and gas in Bass Strait. It wanted to exploit its discovery, and it was given permission by the then Treasurer, Mr William McMahon, and the Reserve Bank of Australia to go to the Australian people for a $30m debenture issue. But it is important to note who raised the debenture issue in Australia. It was not Esso Standard (New Jersey): it was Esso Standard (Australia) Ltd. It would be interesting to ascertain, if one were able to do so. the backing for that S30m debenture issue, because it is my opinion that Esso Standard (Australia) Ltd does not own anything; yet it was able to go on to the market in Australia and raise a S30m debenture issue. For the sake of a good name 1 do not doubt that it would be backed by Esso Standard (New Jersey), but the position is that a company without assets was allowed to go onto the market in Australia and raise a. debenture issue.
These are the sorts of practices that this Government has allowed to develop in Australia over the years. Many millions of dollars are invested in Australia at the present time, which will earn profits probably for the next 50 years. We will continue to pay out. I welcome the measure that is before the chamber today, limited though it is. I disagree with Senator Gair when he says that things happen in the evolution of time. This Corporation should have been established 10 years ago. Then we would have had some share in all these big developments that are taking place in Australia today. 1 hope the Bill is passed by the Senate.
– in reply - I do not propose to respond at any great length to the second reading debate. Senator Willesee, who led for the Opposition, indicated support for the Bill. Senator Gair, the Leader of the Australian Democratic Labor Party spoke and indicated support for the Bill. Senator Cant, who was- the last speaker in the second reading debate, indicated support for the Bill, but then he spoke at length about the capital structure of a lot of companies that have been established during the very dramatic years through which we have been passing in the discovery of minerals and oil. Much of what he said was not directly germane to the Bill. As I said, I do not want to speak at any length in replying to the second reading debate because I believe that the Senate will give passage to the legislation.
Senator Willesee recapitulated the details of the Bill and then chose to draw certain conclusions. He really go: into an argument about the inflow of overseas capital into Australia. He almost got to the point of arguing that overseas capital investment in Australia is wrong, that in fact we have been selling our natural assets. I do not think that one can make a judgment on this matter by referring to what happened on a particular day or in a particular year. We must consider overseas investment in Australia in terms of our history. Senator Willesee referred to certain statements that have been made on this question by Ministers from time to time. I do not apologise for the fact that I was one who believed that a high level of overseas investment in Australia was an essential ingredient for our development. We would never have achieved the dramatic scale of development that we have had in the last decade had it not been for overseas capital investment in Australia. 1 think that the question which we must ask is this: At what stage of a country’s development can it afford to consider resisting overseas capital? The Government believes - and it has set guidelines to which Senator Cant himself referred - that we are at a stage of development in our history which justifies our taking steps to ensure that Australian equity in our companies is preserved. But there was a time in our history when 5 million, 6 million, 7 million, 8 million, 9 million or 10 million people could never have provided the sort of capital which we needed for our development. The stage was reached when wc had, very properly, to develop this country by encouraging the inflow of overseas capital. As the development occurred at that time, this overseas investment resulted in overseas companies acquiring equity in Australian companies. So I say that we have to consider these matters in terms of history and development.
Senator Cant referred to a particular company. He spoke of the price of the shares of the company when it was floated, and of the price which the shares subsequently reached. Then he referred to the fact that at a certain stage this company offered an Australian equity of 10%, I think he said it was, and shares were offered at a premium of $2.50. The overall point I am trying to make is that Senator Cant was comparing the whole history of development of Australia with that particular company. He was referring to a time when money invested in a project could be described as risk capital, and then he referred to another time when
Australian equity was offered in a company, when it was no longer really risk capital in the sense that there was a guaranteed situation. The company had been floated and had succeeded to the point where it could almost be said to be, as the old saying goes, as safe as the Bank of England. That was the time at which an Australian equity of 10% was offered.
When we are considering overseas investment in Australia, we have to look not at a particular point of time, but at the whole progress of our development. Who would have thought 10 years ago that there would have been such a dramatic development in Australia? There has been the advent of mineral search and discovery and the advent of search for oil. both on-shore and off-shore. All these things have happened during the time most of us have been members of this Senate. Nobody in his right senses could have imagined that this development would take place. Nobody in his right senses could have imagined that Australia, with its own resources and financial structure, could have made even a modest penetration towards achieving this development. We would not have achieved this development if at a time in that period we had not encouraged a high level of overseas capital investment in Australia. We still need overseas investment in order to maintain our economy. But we have reached the stage - and I should think that there would not be any argument about this point - when we as a nation can now see that we must encourage Australian equity in our projects. The Bill is designed to achieve that objective.
I want to make only one other point. I think some reference was made to this Bill introducing a form of Socialism. I would have thought that it was a negation of that because the whole concept is to set up an organisation free of Government influence to a high degree which will operate for the purposes which 1 think are spelt out in the Bill in a very simple way. I do not think that at this time I need to develop them any further. All 1 wish to do is thank the Senate for its co-operation in the passage of this Bill. The Opposition will say it is too late, that this should have been done a long time ago and in a more dramatic way but the Government believes it is timely.
– Have you referred to any of those provisions?
– No. 1 think Senator Webster dealt with a number of matters in reference to clause 8. 1 will deal with them in the Committee stage.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 6 - by leave - taken together, and agreed to.
Clause 7 (Powers of the Corporation).
– I rise, not having spoken during the debate on the second reading of this Bill, because generally 1 support the objectives which have been stated as the objectives of this Bill but I do seek information as to clauses of the Bill and in particular as to how it is intended, in the light of these clauses, that the Corporation shall operate. I draw the attention of the Committee to clause 7 which states in sub-clause (I.):
Subject to this section, the Corporation has power to do, in Australia or elsewhere, all things necessary or convenient to be done for or in connection with the performance of its functions.
Then in sub-clause (2.) there is a provision which commences in this way:
Without limiting the generality of the last preceding sub-section but subject to the succeeding provisions of this section, the powers of the Corporation referred to in that sub-section include power . . .
The powers of the Corporation are then set out in paragraphs (a) to (k) in which specific matters are mentioned. It appears to me on a reading of that clause that thematters which are set out in paragraphs (a) to (k) merely indicate some of the matters that in no way limit the matters which the Corporation shall be concerned with. The Corporation, having regard to the expression in sub-clause (1.) of clause 7, has an enormously wide power. It may do all things necessary or convenient to be done for or in connection with the performance of its functions. Its functions are set out in clause 6 and in clause 8 and I would like to ask the Minister whether he will indicate why it is necessary that the functions of the Corporation should be expressed in such a wide form. If, as the speeches during the debate on the second reading have indicated, this Corporation is to have a broad function but nevertheless a function which is circumscribed by refer- ence to desirable objective, why is lt found necessary lo have a clause phrased in such a tremendously wide way which gives unlimited power to the Corporation in effect, as I would see it, to do whatever that Corporation wants to do.
– The powers as they appear in clause 7 (1.) are a standard formulation for all statutory corporations. They do not mean that the Corporation can do virtually what it wishes. In fact, they are very much proscribed by the powers following in clause 7 (2.), that is to say, the powers to borrow moneys and to lend moneys. In any event, the Corporation has only powers to do things in the performance of its functions. Honourable senators will see that it contains a number of restrictions on the Corporation and the Bill taken as a whole puts a limit on the generality of the power as it is expressed in clause 7(1.). As I say all statutory corporations have power in this sense. The Reserve Bank, the Commonwealth Bank and all other statutory corporations have it, 1 think, in identical terms.
– Unfortunately I missed the opportunity to speak on this Bill because I was not aware that several people listed to speak before me would be unavailable. However, I would like to ask a question of the Minister concerning the power of this Bill to prevent the manoeuvre by an overseas company to evade taxation, ls there any power within the Bill to prevent a company from becoming, as I think has been indicated previously, a service industry which will sell to an overseas arm of the company at a price below cost and so evade the payment of tax. I bring this up because it is very important.
– Which clause are you dealing with?
– Clause 7.
– This is not a Bill to manage the affairs of companies, lt is a Bill which gives assistance to individual companies.
– Then I am questioning the giving of assistance to companies unless some protection is incorporated in this Bill which will not allow companies to use the subterfuge of selling any resource below cost to an overseas subsidiary and so evade tax. I bring this matter up because Queensland in particular desperately needs the assistance of such a corporation. If we look at the history of companies in Queensland we will find that in the majority of cases they are almost entirely overseas controlled, f want to speak about 2 companies in particular and 1 want the Minister to explain whether precautions have been taken or will be taken in this regard. I will give honourable senators an example of this.
– With respect, I do not want: to inhibit the honourable senator and I realise the difficulty he is in, but we are dealing now with a clause. We are dealing wilh a particular thing and there is no reference to particular companies. This is a Bill to help companies to hold Australian ownership.
– 1 will yield this point and return subsequently.
Clause agreed to
Clause 8 (Policy of the Corporation).
– There are a number of aspects relating to this clause on which I too seek some information. I notice that clause 8(1.) is expressed in somewhat curious language, lt slates:
In providing assistance in relation to a particular company, or in relation to companies engaged or proposing lo engage in a particular industry, the Corporation shall pursue a policy directed to securing, to the greatest extent thai is practicable, participation by Australian residents in the ownership of the capital, and in the control, of tha company or of the companies engaged or proposing to engage in that industry.
I would have thought that the ordinary way in which that objective would be given effect to would be by saying that when assistance is provided to a particular company the assistance shall be given in such a way that the policy of promoting Australian ownership is aided. The language of the clause is not ‘in providing assistance to a particular company or to companies engaged or proposing to engage in a particular industry’; the language is ‘in providing assistance in relation to a particular company’. It may seem that this is a play upon words yet it may be that there is in fact no distinction between the two expressions. I, for my part, would have thought that the use of the words ‘in relation to’ obviously made the area in which assistance could be given vastly greater than if assistance were simply given to a company. 1 assume - I hope, in fact - ‘that there is some reason for it and I will be grateful if the Minister could enlighten me.
– I will respond to Senator Greenwood’s request for information on clause 8 and also will refer to matters raised by Senator Webster during the second reading debate in relation to the same clause. Senator Greenwood asked why the words ‘in relation to a particular company’ have been used instead of, for instance, ‘assistance to a particular company’. The simple answer is that assistance may not always be provided direct to a particular company. To point up the kind of thing that we have in mind let us take the hypothetical case of an Australian company with 30% holding in a $10m venture, the other 70% being held by overseas interests. It is proposed to expand the $10m venture to give it a capital of $50m. Overseas interests will raise the money but the Australian company, if it wishes to do so, can take up a proportion of the new shares to maintain its 30% overall interest. Let us suppose also that the Australian company is unable to do that. In those circumstances it may wish to approach the Australian Industry Development Corporation to help it raise the necessary capital to maintain its 30% holding in the venture. The assistance given by the Corporation is not to the venture but in relation to the venture. It has a relationship to the venture. To cover cases such as that this flexibility has been written into the clause.
Senator Webster claimed that clause 8 (3.) will deny opportunities to assist companies because it will be too hard to establish that they will be efficient and profitable. The whole principle of this legislation is that the board is required to make a judgment just as any other private enterprise company is required to make a judgment, just as Senator Webster himself in his business is required to make a judgment. It is not the intention of the Corporation to assist projects which it does not judge, after an assessment of feasibility studies and so on, to be competent of management. In other words, it is not being set up for the purpose of providing assistance; it is being set up for the purpose of providing assistance where, in its judgment, that assistance is desirable to make a venture efficient and profitable. It does not have to establish that a venture will be profitable but it has to satisfy itself - this is the distinction I want to draw - that on its own judgment the venture will be profitable. It does not have to satisfy itself according to criteria laid down in the Act or in regulations, but it has a judgment to make. It has to satisfy itself on a judgment based on information reasonably available to it that the venture will be profitable.
Turning to clause 8 (4.) (a) Senator Webster referred to investment in private company or public company shares. The Corporation can assist by investment or loan any company engaged in a venture as set out in the functions laid down. ‘Company’ is given the widest possible meaning. It includes any corporation and any unincorporated body or association of persons. Hence in thai sense the Corporation may assist a public company, a private company, a partnership, a branch or a joint venture of several firms. Therefore it is not inhibited in that way.
Senator Webster said also that clause 8 (5.) should spell out how the AIDC should dispose of its holding of shares. It would be very undesirable to restrict the board on how best to dispose of its shares having regard to the policy and intention of the organisation and its objectives in the development of Australian ownership. That is where the organisation comes into it. For example, in one venture where Australian ownership and control is assured by holdings of Australian companies it might be appropriate to sell shares via the Stock Exchange. That is a judgment that the board has to make. That is why it is so important that we get the best people to join the organisation. To sell in this way might risk the loss of Australian ownership and control through foreign owned companies buying up shares, perhaps adding to holdings they already have in the venture. So the board has to make a judgment when it decides to dispose of shares, lt has to be reasonably satisfied that it is meeting the purpose of preserving and building up Australian equity and Australian ownership.
The final matter the honourable senator raised was that there should be guidelines as to where the Corporation may invest its idle funds such as in trustee securities. Here again the legislation is drafted to ensure that the directors of the Corporation will be the very best people available for appointment. Naturally it is inherent that they would have all the skills and experience in this field and a knowledge of the day to day working and operation of a huge private enterprise. The Corporation will operate just as any private enterprise venture operates. It must be in a position to make decisions on how it will invest its capital funds to the best advantage. It is not intended to inhibit the board in that judgment because once you start to do that you begin to destroy the real concept of the functions that it will carry out and deter those whom you hope to encourage to lead it. I think that is inherent. Income is important to the Corporation so that, for example, it can give assistance to projects which may take several years to become income earning. To hobble income earning investments by rules or guidelines would restrict the Corporation’s capacity to carry out its role. With the assistance of my officers I have tried to capture the tenor of the remarks made by Senator Webster and Senator Greenwood.
– I, like Senator Greenwood, have some reservations about the inclusion of the words ‘in relation to’ in clause 8(1.). I think the subclause loses its precision by the inclusion of those words. I do not feel that the Minister’s explanation was satisfactory. 1 am interested too in clause 8(6.). As I understand the Bill, the Corporation is not intended to be a permanent or a semipermanent shareholder in a company. How then docs the Corporation maintain this movement of capital and at the same time maintain Australian equity in a company? Would not the situation arise where capital sold by the Corporation could be bought, for example, by an overseas investor and consequently the Australian equity would fall? But the Corporation would be obliged to permit that. Can the Minister explain that for me?
– The point raised by Senator Wriedt really gets back to the point about the disposal of shares raised by Senator Webster. The Corporation will not be obliged to sell its shares. It certainly would not sell its shares in circumstances in which that action would partially destroy the very purpose of its existence. As 1 explained to Senator Webster earlier, the provision has to be left very wide. For instance, to sell to an overseas company an investment in an Australian undertaking the Corporation had acquired would cut right across the purpose of the Bill and the reason for the existence of the Corporation. The short answer to Senator Wriedt is that the Corporation is free to make a judgment within the framework of this legislation which sets out its purpose. I could not imagine any circumstances in which the Corporation would be going onto the market to dispose of assets to an overseas investor, when the very reason for its existence is to act in a contrary way.
– After listening to the aspects to which the Minister has just referred I feel no doubt that there is a conflict as to what the functions of the Corporation are to be. A consideration of clause 8 by itself shows that the Corporation is to pursue a policy, expressing it shortly, of promoting Australian ownership; but equally, the Corporation is to act in accordance wilh sound business principles and is not to provide assistance in relation to a particular company unless it is satisfied that the company will operate in an efficient manner and on a profitable basis. The clause has twin objectives, the first of which is to promote Australian ownership. The other objective is to ensure that assistance is given only where satisfaction is expressed by the directors that the company will operate in an efficient manner and on a profitable basis.
The real area of challenge appears to me to arise in regard to sub-clause (5.) of clause 8, because I could visualise a situation arising where, in the annual review which the Corporation makes of ils shareholding, it has to make up its mind as between alternatives. It may feel that the company is not being carried on in an efficient manner and on a profitable basis and that whatever the Corporation seeks to do. it cannot as a matter of business judgment visualise efficient operations in future. On the other hand, it may well recognise that to dispose of its shares in that company could be acting contrary to its objective of promoting Australian ownership. That is a very nice decision to be taken by any board of directors.
I would not regard it as desirable policy for any corporation established by the Government to pursue the promotion of Australian ownership at the expense of efficiency and profitability of operations. That sort of situation ultimately must lead to problems which will enhance the particular difficulties that the measure is designed to overcome. Sub-clause (3.) of clause 8 sets out that the Corporation is obliged to have regard only to questions of efficiency and profitability of operations when it provides assistance. There is nothing in the clause to indicate that when the Corporation determines whether it is to hold or to dispose of shares it shall have regard to whether the continuance of the holding would permit the company to operate in an efficient manner and on a profitable basis.
I do not know whether a decision has been made upon this issue in respect of which the Minister could make a statement. It seems to me that inherent in the guidelines set out in clause 8 is the risk of conflict. If a corporation of this character was given freedom to operate as it judged best in all the circumstances it would probably say that efficiency and profitability of operations represent the desirable criteria to be observed. But once we start giving emphasis to the need to have regard to whether there is to be a disposal of shares - and the yardstick there is the extent to which participation by Australian residents in the ownership of the capital or in the control of the company shall be reduced - we start putting a premium on Australian ownership irrespective of efficiency and reducing what ought to be the normal conduct of the Corporation to a subordinate level. That is my impression. I would be glad to hear the Minister’s comments.
– I want to make it perfectly clear that in my view Senator Greenwood has based his comments on a completely false premise. He started off by saying that the policy expressed twin objectives - Australian ownership anil sound business principles. This is not so. The purpose of the Bill is to encourage Australian ownership, and sound business principles are written into its function. It is an argument I do not follow. He simply says that we are introducing a Bill to set up sound business principles. The terms of the Bill are quite clear and they have as their purpose the encouragement of Australian ownership. Into the Bill we have written certain safeguards which suggest that sound business principles should be applied. This goes back to where we started in our discussions on clause 8. A judgment has to be made. 1 have had some association with companies, corporations, partnerships and family affairs. They do not have a code which sets down everything to be done. An executive is not necessary if a book of words is to set out everything to be done in all circumstances. Safeguards have been written into the Bill but right throughout a judgment has to be made. I feel that Senator Greenwood, in a legal sense, is trying to put things into the Bill which he believes might be safeguards. But I believe, and so would the Government, that such things would act as inhibitions to achieving the purpose of the Bill. There is not a doubt in the world that it has to be that way. The debate on this clause started on the use of the words ‘in relation to’. It is not a watertight situation. There are so many variants, one of which I mentioned before; that is, giving a guarantee in relation to a company. These conditions require certain safeguards, but fundamentally there has to be a flexibility of judgment in relation to situations where so many contingencies might arise.
– I was very interested to hear the Minister’s comments and his expression that a judgement is left to the Corporation as to whether it should assist particular companies. Perhaps this is just expressing a different point of view in relation to the situation I outlined in the debate on the second reading of the Bill. In referring to sub-clause (3.) of clause 8 the Minister said that a judgment is left to the Corporation, but 1 believe that is completely negated by the terms of that sub-clause. No area of judgment is left to the Corporation as to whether a business undertaking can be entered into with the view that it ‘may’ become profitable or efficient. The criterion set down in this legislation is that in the performance of its function the Corporation ‘shall’ act in accordance with sound business principles, lt is mandatory.
– Go on and read a little more of that clause.
– I mentioned this in my speech on the debate on the second reading of the Bill. I hope the Minister might be able to curtail discussion on this point by providing an answer. The instruction to this body is mandatory, lt shall not provide assistance to a particular company unless it is satisfied about certain requirements. There is a requirement that the directors of this Corporation shall be satisfied about certain matters. The points which the Minister put were quite laudable. There is an area of judgment left to the directors of this Corporation as to whether or not they should invest. My reading of this clause is that the Corporation shall not provide assistance unless it is satisfied about certain requirements. In particular the point I raised was that it must be satisfied that the company in which it is investing will operate on a profitable basis.
The reason why I raised this is that the Government and myself have been most anxious to say that this Corporation is needed and if it had been in existence earlier a number of our basic resources may not have been lost because we could have invested at an early stage. We all know that the Australian investment in the resources which we have commenced to mine has been lagging because the judgment at the outset was whether to take a business risk which in the final conclusion would have been profitable in relation to the lease to mine iron ore, bauxite or whatever mineral may have been mined. 1 include also the low grade superphosphate areas that we have, lt was the judgment of the overseas corporations that to pour in the millions would in the end become a profitable business venture.
This Corporation is restricted. I only pointed out that in future this matter may be looked at with interest when the directors study their instructions and find out that the Corporation shall not provide assistance to a particular company unless it is satisfied that the company will operate in an efficient manner and on a profitable basis. The company must be profitable for the Corporation to be satisfied.
– ls the honourable senator suggesting that some people might be satisfied more easily than others?
– No. The only satisfaction I have is that I think I am right in what I say. That is self-satisfaction, of course. It will be interesting to see whether 1 am right. I recall a number of Bills thaI were not introduced in a correct manner. I recall the problems associated with the restrictive trade practices legislation. Its provisions negated the Bill entirely when it was passed.
– Order! Senator Webster, you will speak to the clause.
– The Minister and other honourable senators asked whether I was satisfied. I find satisfaction in saying that this Corporation is restricted in that in which it will invest to find Australian ownership. I think some review should be made of that matter. Undoubtedly the Minister will do this.
– Suppose the- judgment is that the company is operating on a profitable basis, assistance is given and then it is ascertained that the company Ls not operating on a profitable basis, what does the honourable senator say is the obligation of the directors then?
– My view of that proposition is that the risk cannot be taken.
– No. That is not right.
– 1 am very pleased to hear the Minister. Undoubtedly this matter can be looked at in future. I could be wrong or the Minister could bc wrong. But I say that the clause makes it mandatory t h:, t this Corporation must be satisfied about certain things.
– That was a lawyer’s question, too, by the way.
– I did not think it was a lawyer’s question. Perhaps if the Government wished, some other terminology could be used. But the Minister is quite satisfied that the terminology is wide enough and that a risk can be taken in the early stages of the development of some proposition and a judgment can be made. I again press the point that it is mandatory on this Corporation that it shall be satisfied that the business venture will be profitable. 1 do not think anybody can argue against that proposition. The other point in which 1 was interested - and it is an old accounting proposition - was this: Clause 8, which deals with the policy of the Corporation, requires the Corporation to take part in the control of the company. What does the word ‘control’ mean? Perhaps without speaking to that matter I could ask the Minister what he believes to be the case in relation to this clause. The word is mentioned several times.
The third matter which excited my interest was the two areas of investment for this Corporation. If the directors go about their business correctly, it will have $100m as its capital. That capital can be invested. As I understand the working of sub-section (5.), it is:
Subject to the next succeeding sub-section, the Corporation shall, at least once in each year, review its holdings of shares in companies other than shares acquired as a result of the investment of the capital of the Corporation.
There are 2 areas. The Corporation will have capital which it can invest. It will hold shares, lt is not required to review that holding, which is a very interesting proposition. It may borrow some hundreds of millions. I think the terms arc supposed to be - if one can elucidate what is the general restriction on the Corporation as to how it will go about borrowing - that it can borrow 4 times its capital and resources. The wording there is most interesting. It will, by borrowing, avail itself of the opportunity of purchasing shares by which, 1 take it, it will gain control of, or Australian equity for someone, in a business venture. It must review that shareholding and decide, when it has reached a point that that shareholding can be lost, that it shall dispose of shares. I question how the shares could be disposed of.
I see a great area left to the discretion of the directors. I do not know whether it will be in the interests of very large financial institutions to stay very close to this body so that an outside institution, having Si 00m to spare, can say: ‘We are anxious to take up that 15% equity you may have established in this now thriving, efficient and profitable bus;ness in which you, the Corporation, entered’. That can be done as a private deal. I think the Corporation should be required to dispose of its shares in a manner which would enable the public to see how that disposal was made.
– In relation lo the previous question 1 asked, I wonder whether the Minister for Supply (Senator Anderson) would express an opinion as to whether, in sub-clause (5.), the difficulty to which 1 drew his attention would not be overcome - or, if it is not overcome, the expression of it might be enhanced - if in clause (5.) (b), after the words ‘sub-section (1.)’, where they there appear, the expression ‘sub-section (3.)’ were added. I ask that because one of the things which the Corporation must do each year is to satisfy itself as to whether the retention of any shares it holds is necessary for the proper performance of the functions of the Corporation with due regard to the policy thai the Corporation is required, by sub-section (1.) of this section to pursue. Sub-section (1.) relates to the policy of permitting Australian ownership. Sub-section (3.) relates to what I would describe as the policy of permitting assistance to be provided to efficient and profitable operations’.
I would have thought that one thing which the Corporation would have been required to do would have been to have some regard to the efficiency and profitability of operations as well as to the Australian ownership in deciding whether it would hold its shares. 1 cannot conceive that anybody in this chamber, in pursuit of a policy of Australian ownership, would say that if an operation is being conducted inefficiently, a corporation of this character must hold on to those shares otherwise there might be a reduction in the quantum of Australian ownership. That is the area about which I. am concerned. If this Corporation is to achieve this admirable cause which it is designed to achieve, when points like this arise, I think it is prudent to have them examined. I will be grateful for the Minister’s reactions.
– I have discussed with my advisers the matter raised by Senator Greenwood. They tell me that it would not be appropriate to include ‘subsection (3.)’ in clause (5.) (b). I take it that the two things are separate functions. Subsection (3.) refers to one function, and clause (5.) (b) refers to a different function.
The draftsman’s advisers have informed me that in their view it is not appropriate for that reason.
– I regret thai the Minister and his advisers do not see this in the light in which 1 have expressed it because without assuming an arrogance in any particular view I would think it is fairly clear that under sub-clause (5.) of clause 8 the Corporation in the discharge of its function is expressly to have regard to one aspect of policy and is not under any express requirement to have regard to other aspects of policy. 1 would have thought it was desirable, for the reasons 1 have given, to have regard to both heads of policy. 1 come to what I regard as one of the most curious and yet alarming features of clause 8. I refer to sub-clause (7.). I appreciate that sub-clause (7.) as it appeared in the Bill when it was originally introduced in the other place was in a different form. It was amended during the course of the debate, but in my view what now appears is scarcely different from what originally appeared. Clause 8 (7.) states:
Without prejudice to the duty of the Corporation to comply wilh the provisions of this section, a contract entered into, or other thing done, by the Corporation is not invalidated by reason of a provision of this section nol having been complied with by the Corporation.
As I view that it means that if the Corporation fails to observe any one of the obligations which it is required to observe in subclauses (1.) to (6.) of clause 8, that does not matter, if a contract has been entered into or something else has been done which would be challengeable because there has been a failure to observe those provisions. Let me give an express example. Clause 8 (4.) states:
The Corporation -
shall nol provide assistance to a company by subscribing for shares in that company except al the request, or with the consent, of that company;
The board of directors may feel that there is a company which has a prospectus or which is having a flotation in regard to which it should make some application in pursuance of its policy of promoting Australian ownership. As clause 8 (4.) (b) reads it may not do that unless it has a request or unless it obtains the consent of that particular company. One may conceive that if the company has an existing ownership in which there is a predominance of foreign owners it may not be too enthusiastic about making a request or giving consent. But as I see it that would be immaterial. The Corporation could subscribe and if it did subscribe in contravention of what appears in clause 8 (4.) (b), then by virtue of sub-clause (7.) which I have just read it would be a thing done by the Corporation which would not be invalidated by reason of a provision of this section not having been complied with by the Corporation. 1 appreciate that when one enters into a contract in defiance of or without having regard to the earlier provisions of this clause that contract likewise would not be invalidated by virtue of bypassing these provisions. Perhaps that is not quite so objectionable as the other example 1 gave because there certainly has to be some agreement, some consensual arrangement before a contract is duly created. I sense that this is a clause so wide as to nullify in particular cases the effect of the earlier paragraphs of this clause. There must be some good reason for this; otherwise it would not be in the Bill. I am very anxious to hear what the reason is because 1 feel that as it stands at the present time it makes a mockery of the earlier provisions of this paragraph.
– I am grateful to Senator Greenwood for indicating that he had a special interest in this clause. I was able to obtain some facts from my advisers in relation to it. This clause which was amended in another place was inserted only for the protection of a person dealing with the Corporation. There was a very good reason why the clause should be in the Bill. In normal circumstances a lender abroad has to satisfy himself that the borrower has done all things that are necessary to make his actions legal and valid. If we look at the provisions of clause 8 we find a number of obligations and restrictions on the Corporation. I think Senator Greenwood referred to them. It would be very difficult to satisfy a foreign lender that each and every one of these obligations, for instance, had been fulfilled. The clause is therefore inserted to put it beyond question that the Corporation in its dealings with others can protect others against legal challenge on the ground that it had not complied with its obligation under clause 8.
Honourable senators will see that the clause is so drafted as to indicate quite clearly that the Corporation cannot escape its duty to comply with the provisions of clause 8. The purpose of clause 8 (7.) therefore is to ensure that a person dealing with the Corporation is not required to ascertain whether the Corporation has complied with the requirement of clause 8 in relation to that dealing. For example, a person who lends money to an Australian company in reliance upon a guarantee by the Corporation will know that the guarantee is valid - this is the important thing - and that the Corporation cannot escape its liability under the guarantee if it should have failed to satisfy itself under clause 8 (3.) that the company would operate in an efficient manner and on a profitable basis. The provision refers both to contracts with the Corporation such as the contract of guarantee just mentioned and to other things done by the Corporation. The latter reference is to acts other than contracts such as subscribing for shares, making an offer, executing a conveyance or charge transfer, releasing a person from a liability and so on. The Corporation’s business would be hamstrung if persons dealing with it were not protected in this way. Clause 8 (7.) in no way affects the duty of the Corporation to comply with its obligation under the clause.
– Clause 8 (4.) (c) allows me to ask again the question which 1 was asking before. Am I to understandthat this clause does not give the Corporation any power whatsoever over the policy of the company or the enterprise to which it subscribes? Does this clause indicate that the Corporation will have no power to control the method by which the company operates or the price at which it sells and, therefore, the Corporation will not be able to control a situation where the company to which it subscribes sells at a price below the market price so that it can establish its profit overseas? I would like the Minister to answer me and to indicate whether if this is not done the Corporation, by this clause, is concerned only with ownership of shares and is not concerned with the policy or the operation of that company and with what it does with the environment which surrounds its operations.
– The Corporation would not enter into an agreement or would not give assistance to an Australian company if it felt there was any risk. That is a matter of judgment. But it may well be that in certain circumstances the Corporation and the Australian component combined could in fact have control.
– But you say that that is not desirable.
– It is not desirable. Senator Georges wants to import into the Bill a function which is not the intention or the Corporation’s prime purpose. He wants to import into the Bill something to say that it should be used as a vehicle to control certain aspects of the sale or disposal of materials, manufactured goods or whatever they may be. That is another purpose of the Bill. The purpose of the Bill is to assist Australian equity into the industry concerned. I sense that Senator Georges is looking for some purpose beyond the intention of the legislation.
– I do not know whether the Minister or his advisers will be able to say anything further on the point I have just raised, but I would be grateful if they could do so. I. believe that the point that has been raised by the Minister in answer to the questions I asked with reference to sub-clause (7.) of clause 8 merely serves to emphasise the problems and difficulties that I believe this clause creates.I know that in its unamended form it was one that caused considerable controversy among those who had some doubts as to what this Corporation was to do.
As I. understood the Minister, the answer he gave was that this provision is desirable because if the Corporationborrows money overseas it is necessary that the lender be assured in some way that the borrowing by the Corporation is within its charter or powers, andthat insome way this is required in order to give a business efficacy to the transaction. As I understood the Minister, it is as if the Corporation could not borrow unless this provision were in the Bill.I know that that, on the face of it, sounds like an argumentof tremendous weight, but I suggest to him that it is possibly not as weighty as it would appear to be, because the Corporation is a corporation which is set up by statute and which in clause 7 is given the widest possible powers to do anything that it considers necessary or convenient to be done for the performance of its functions. Those functions, as T see them, can be limited only by the Constitution of the Commonwealth. In other words, it is said that in some way the Corporation is being asked to do things which constitutionally it cannot do because constitutionally the Commonwealth cannot grant the power to such a corporation.
If that be a real or relevant consideration, it appears to me that neither the Bill nor any clause of it will make constitutional that which, as a matter of power, is unconstitutional. If there should be overseas a lender who is sufficiently alive to what he may regard as problems of power, he will not be persuaded simply because, when he looks at the legislation, he sees a provision which says that a contract will not be invalidated. He will be concerned as to whether the Corporation is acting within constitutional power, and on that question he will rely upon his lawyers and not upon what appears in the legislation.
I say that this is the relevant area because, if we consider it purely from the viewpoint of the legislation and assume that the legislation is completely valid, clause 7 gives the widest possible power which would justify what the Corporation is proposing to do. Accordingly I then come back to sub-clause (7.) of clause 8. Accepting the Minister’s explanation of it, if it is designed to validate a contract that may be entered inco outside power, that to me fortifies or emphasises the point I made originally. If its purpose is to validate something that may be outside the powers granted to the Corporation by this clause, it obviously means that those powers are being overridden, and that is the validating effect that sub-clause (7.) must achieve.
I believe that when we reach that point it is irrelevant that the opening words of the sub-clause, which read: ‘Without prejudice to the duty of the Corporation to comply with the provisions of this section’, are included. Once they are included and it is said: ‘Neverhtless a contract entered into, or other thing done by the Corporation which, by reason of the provisions of this section not having been complied with would be invalidated, is not to be invalidated’, those prefatory words are rendered meaningless. 1 am sorry that this would appear to be a lawyer’s argument addressed to the Minister. I sympathise with him in his problems. But 1 suggest to him that, having regard to what has been said and to the challenges that I have had directed to me as to the impact of this clause, it ought not to be regarded as a matter of no consequence. I quote the following extract with reference to clause 8 (3.) from the second reading speech made in this chamber:
The sub-clause makes it clear that the Corporation cannot go around imposing itself on anyone, whether by the provision of loan moneys or by the subscription of equity capital, in addition, the Corporation is firmly directed to steer clear from acquiring or holding controlling interests in companies it assists. Who, therefore, would have anything whatever to fear from the operations of AIDC?
I believe that those words represent the intention of the Government and the hope of at least honourable senators on this side of the chamber and most honourable senators on the other side of the chamber, too. But, if in fact those requirements can be overridden in the way in which I believe they can be overridden by the board of a corporation that seeks to avail itself of or to rely upon what is contained in subclause (7.), those words cease to have the forcefulness which, as they appear in the statements made about this Corporation, they appear to have. For those reasons, as I said when I opened, I would be grateful if the Minister, with the assistance of his advisers, could elaborate on what he said earlier.
– I cannot add very much. I am assured again by my advisers and the draftsman of the Bill that the Corporation cannot under the terms of sub-clause (7.) ignore the provisions of clause 8, and that sub-clause (7.) is included in relation to those people who may feel some reluctance in carrying out transactions with the Corporation because of the very conditions which are required by the clause and which are obligatory on the Corporation.
Clause agreed to.
– Clause 9 reads:
In the exercise of ils powers the Corporation is not subject to direction by or on behalf of the Commonwealth.
I have reservations about this provision and 1 would like to voice them for the record. ] am not one of those who believe that this Corporation might serve the purposes of the Labor Party when it comes to power. I am of the opinion that such a wide power as that given in this clause will permit the Corporation, without any reference whatsoever to the Parliament, to use moneys provided by the Parliament at its own discretion. In my view, this is somewhat related to the methods that were used in Germany before the Second World War, when public finances were used to bolster up the finances of private companies for their benefit. I consider the giving lo a corporation of such power as is given in this clause to be very reprehensible.
– I would say that the point which Senator Georges has raised is not completely valid, although he is entitled to interpret the provision as he wishes. Clause 9 does little beyond stating that the Corporation shall be independent of the Government. In respect of its operations, therefore, the Corporation will not be subject to direction by the Commonwealth or anybody on behalf of the Commonwealth. This does not mean, however, that the Corporation will not have to comply with Commonwealth and, for that matter, State laws which apply to the type of business which the Corporation will conduct, lt certainly does not mean that the Corporation will bypass the banking or foreign exchange regulations. The Corporation will, in the same way as any other borrower of foreign currency, have to apply to the appropriate banking institution for the appropriate exemptions. This is the relationship between the Corporation and the Government. It is nothing more than that. I suggest that it is within the character of the whole purpose of this provision that the Corporation shall not be regarded as a Government instrumentality.
– I wish to refer briefly to clause 9 which has been also referred to by Senator Georges. The second reading speech of the Minister indicates that the intention of the
Government is to divorce the Corporation from any direction of or accountability - I think ‘accountability’ is the pertinent term to use - to the Commonwealth Parliament and therefore to the people of the Commonwealth. I rise because there are certain conditions associated with the-
– Accountability is dealt with in clause 37 of the Bill.
– If that is the case, I will wait until the Committee is considering clause 37 of the Bill.
– I wish to ask a question of the Leader of the Government (Senator Anderson) in regard to clause 9. The Government is making great play of the fact that the Corporation will nol be subject to a direction by or on behalf of the Commonwealth. There are certain dangers in this Bill. 1 should like to know whether the Leader of the Government is able to give the Committee any assurance in regard to what may happen if there is a change of government. I believe that as this provision can be deleted from the legislation there is no way in which the Government can give such a guarantee. However, I would like to know what assurances we can have.
Senator ANDERSON (New South Wales -Minister for Supply) [4. 13 - The simple answer to Senator Wood’s question is that 1 can give no guarantee. However, the Bill is not unique in this regard. Any legislation which a government puts down is subject to the will of all subsequent governments. Changes can be made to any legislation as long as they are within the framework of the Constitution. The short answer to the honourable senator’s question is thaI 1 can no guarantee in relation lo this provision. A subsequent government, regardless of its political persuasion, could amend or even repeal the legislation.
– What [ am getting at :s that dangers are inherent in building up an edifice such as this Corporation. I do not think that there is any need for the Corporation. I am of the opinion that the Australian Resources Development Bank would be able to do what this Corporation is intended to do.
Clause agreed to.
Clauses 10 to 15 - by leave - taken together, and agreed to.
Clause 16 (Remuneration of Directors).
– Clause 16 states:
A Director shall be paid such remuneration as the Governor-General determines.
Upon seeing a clause such as this it is only natural that I should express the view which I have expressed previously in relation to provisions which take out of the scrutiny of the Parliament the remuneration paid to statutory offices. Provisions of this nature should not be included in legislation. 1 note, however, that the position of members of the Corporation will be somewhat different from that of, for example, Parliamentary Counsel or persons who perform statutory functions that 1 would regard as being more of a service variety. Having said that, I invite the Minister for Supply (Senator Anderson), if he is willing, to say why in this case the provision is inserted that the remuneration shall be fixed by the Governor-General and not by prescription. ls there any reason for such a provision in this case?
– Senator Greenwood has pointed out that the Corporation will be a rather unique type of organisation. 1 think the whole matter can be adequately summed up by saying that there is a need for flexibility, particularly in an organisation of this nature. I could give a dissertation on this matter. If the provision were that the remuneration be fixed, as Senator Greenwood has suggested, by prescription, there would not be the flexibility that is the very essence of the matter. I do not think that it is desirable to have the rigidity that would occur if the salaries of directors of the Corporation were fixed by an Act of Parliament.
The Corporation is designed to operate as a private enterprise company. It must have the same flexibility as a normal public company. Only the best qualified people should occupy places on the Board. These people will be, in the main, drawn from the fields of private industry, finance and commerce. The Corporation should be able to negotiate salaries in order that it will get the best people available. Of course, it will have to negotiate in competition with other private enterprise companies moreover, the membership of the Board must be flexible, which is the theme 1 referred to earlier, lt is essential to have on the Board at all times members who have the right training and a mixture of complementary skills, with each individual being eminent in his own field. In this way the members will comprise a team which can and will work together to give the Corporation the skilful and effective management it needs. Without going into the other notes 1 have in front of me, I think I have really captured the intention of the proposal.
– I am not satisfied with the explanation given by the Leader of the Government (Senator Anderson). I think the clause is a usurpation of the powers of the Parliament. I cannot see any reason why the fees of the members of the Board cannot be fixed in the same way as the fees of members of the other organisations and authorities which this Parliament has established. To say that there must be flexibility is an indication that things are likely to change very quickly. As one who knows something about directorates of companies and so on, I cannot visualise any changes taking place in the fees with the remarkable rapidity thai the Leader of the Government envisages. I cannot see any reason why the fees of the members of the Corporation cannot be fixed in the same way as other fees are fixed by the Parliament.
One of the things for which honourable senators have fought for some time and have brought to the attention of the Parliament is the necessity to get as much power as possible over expenditure in the hands of the Parliament. I think that the Parliament would be neglecting its duties if it did not take some stand in relation to this type of thing. This clause is the easy way out. The departments like it this way and apparently the ministerial members who are responsible for the administration of the Government like it this way, too. Having regard to my experience of directorships and so on, I think that to suggest that the matter must be handled in this way in order to provide for elasticity and rapidity of change is to treat us as children. I do not agree in the slightest with the explanation which has been given.
– I gave this provision of the Bill serious consideration when examining it earlier. 1 appreciate Senator Wood’s reaction. He has had a lot of experience in this field as Chairman of the Regulations and Ordinance Committee. In my many years as a member of that Committee I found that the Committee came across this matter several times. As I understand the situation the Government has cast a wide net in many respects in this Bill. At first I was inclined to be critical of the Bill. I am still critical of some provisions of it, but 1 appreciate the problems which the Government has encountered.
I understand that the Regulations and Ordinances Committee is making a survey of the cases which would come within the provision of clause 9 of this Bill. In other words, it is determining what salaries are fixed by the Governor-General in this manner and what salaries come under the scrutiny of the Parliament, either by way of subordinate legislation or substantive legislation. Because of this I did not raise this question earlier. I am sure that the Regulations and Ordinance Committee will give the matter the consideration it deserves when it comes before the Committee. I do not know whether it will come before the Committee in the form of substantive legislation or subordinate legislation. However, 1 hope that the Government will lay down certain guidelines. I take it that when this happens the clear view would be that the provisions would be subject to amendments from time to time. I would expect that when we have established the datum peg, that would be the time to amend the provision. This is a matter that we have raised from time to time when dealing with other Bills of this nature. These are the reasons that we gave on other occasions and the reasons why we gave this matter much consideration but decided not to oppose it.
– 1 also sense that in this area there is possibly less justification for insistence upon the rule which 1 think has commended itself to the Senate in the past, that these matters should be as prescribed as in other cases. 1 say that with some hesitation as I am not altogether certain that on an examination of what ought to be the proper principles to be applied that must be so in this case. I have in view that one of the problems which the Government obviously must be facing is to have the people with the expertise, the skill and knowledge to fulfil these positions. 1 should imagine that having regard to what some of these people can expect to receive in private occupations, the payment they are receiving may well be in excess of what the most well paid persons in the Commonwealth apparently receive. We will be getting up into the range of §30,000, $40,000 or $50,000 as remuneration to be paid. I do not know whether the flexibility that the Minister refers to suggests that directors shall be paid different fees. I shall be grateful for his advice on th:,t
– The answer is yes, in certain circumstances.
– I can understand that if it is a matter of bargaining to get the best people, that is what they are asking and that is what the Government is looking for, perhaps the provision should be in this form. On the other hand, this matter raises a very interesting question of policy as to whether this is the appropriate way in which the members of a board of a statutory corporation should be remunerated. This is an area in which not only the Government but also senators are treading somewhat new ground. I think the whole area of the new relationship between the Parliament and a statutory corporation has never satisfactorily been examined, and certainly it. has not satisfactorily been resolved over the 40 or 50 years that the corporation has been emerging, first of all in the States and then in the Commonwealth, lt appears to me to raise speculative questions as to whether what is being done now is not a course which ought to be thoroughly condemned. On the other hand, is there any other purpose behind this? I merely rise to express doubts as to whether what is being done is the correct course.
– In this provision a discretion is given to the Executive. I think we have to keep in mind in considering the various clauses of this Bill that the corporation is essentially a business undertaking and the principles which apply to business generally must be applied in the special circumstances of this particular setup. So I think a discretion as contained in the clause is necessary in these circumstances.
Clause agreed to.
Clauses 17 to 36 - by leave - taken together, and agreed to.
Clause 37 (Report and financial statements).
– I regard this as one of the vital clauses of the Bill because this is the way in which Parliament is given some opportunity to survey what the corporation does. If the Parliament is to have any knowledge of the activities of the corporation it can get it in this way only. The clause requires a report to be furnished to the Minister every 12 months and it requires the Minister to report to the Parliament whenever he feels that there has been some departure by the board from the functions and charter of the corporation and after he has exercised his role of calling a special meeting of the board at which his view is indicated to the board. It is therefore an area in which there is some parliamentary supervision.
When 1 read this clause I thought it was an unsatisfactory situation when all that is required of the board is that it shall prepare and furnish to the Minister a report as soon as practicable after the 30th day of June in each year. I should have thought that this provision means that we may wait 3 months for a report or perhaps 6 or 9 months. However, I have been assured in response to my inquiries that the provision appears in this form in respect of many other boards which have to submit a report. I should be grateful if the Minister would indicate whether there is any intention or policy laid down as to when this report is to be received. In particular, what is his contemplation of the steps that would have to be taken and the time that will elapse before the report is required?
The second aspect to which I refer is the character of a report. I have drawn attention to what I. feel are real problems involved in clause 8 of the Bill. I should expect that if assistance is given to companies, if shares are subscribed for, if contracts are entered into and things done which are saved from invalidity, these matters ought to be reported upon. There is, as I understand it, no express provision as to where and how these matters shall be reported to the Parliament. There is a comprehensive statement that there shall be furnished a report of the operations of the corporation, together with financial statements in respect of the year, in such form as the Treasurer approves. I should have felt that the Parliament ought to be given as much exact information as it can be given in respect of the operations of a statutory corporation such as this. It should be informed of the type of assistance which has been rendered and should have some specific indication as to how the corporation is making progress in pursuit of its major policy objective of promoting Australian ownership. I appreciate that this may come in the form of a general report and I appreciate also that what may appear when the first report is presented is a precise detailing of the assistance which has been given and progress which has been made. - I would certainly hope so. It is, in a sense, to give what encouragement 1 backbench senator can give to the presentation of material like that in a report that I have risen. I would be grateful for whatever comment the Minister is able to make on these 2 matters.
– Senator Greenwood has suggested that the corporation should be required to furnish its report within a certain time. This is not a requirement that other statutory corporations have to fulfil. This obligation is not imposed upon them. The honourable senator is suggesting something which is not normally required of a corporation. However, I feel that he believes that a corporation might deliberately delay a report to the Auditor-General or to whoever the report has to be made. I suppose this could easily happen with the establishment of a new corporation. Naturally, in the formative period of any organisation there would be a lot of loose ends which of necessity would have to be tidied up. But ultimately a corporation or a company or a statutory authority will fall into a normal pattern, and once it does this and becomes organised, that is the path which normally it would be expected to follow. The reason why a fixed date for the submission of a report would be undesirable is that the preparation of the report depends upon the co-operation of so many people outside the Corporation, such as auditors and accountants, ft is felt, particularly in the formative period of this
Corporation, that it would be most undesirable to impose a time limit on the submission of a report.
As to the Treasury’s requirements in the preparation of financial statements, I have been informed that such requirements are very comprehensive and rigid. All I can say to Senator Greenwood is that if at some future stage in the Corporation’s history it is thought thai there are some shortcomings, steps will be taken to rectify the situation. 1 think it would be disastrous to include a particular requirement in the Bill at a lime when the Corporation is coming into being. Let us face it: In the formative period of the Corporation a lot of information will be required by the Treasury and by the directors of the Corporation. We must remember that we are considering the creation of what is in fact a quite unique corporation. Whilst I am grateful to Senator Greenwood for raising these points, 1 really do nol think that we should interfere with the present drafting of the Bill.
– I, too, refer to the detailed nature of the statement which is to be submitted, lt seems to me, with due respect to the Minister, that he has given a completely inadequate answer. Nothing is expressed in the Bill-
– ls the honourable senator dealing wilh the whole of the clause or wilh a sub-clause?
– We are dealing with clause 37.
– You are dealing generally wilh the clause?
– Yes. Surely we would expect a properly detailed statement of the Corporation’s activities to be submitted as a matter of course, but there is nothing in the Bill to commit the Corporation to supply such a statement. It seems to me, from the comments which the Minister has made, that the whole thing is left up in the air, like so many other provisions are.
– I gave the wrong impression if 1 said that. I meant to convey the impression that the Treasury would require a very detailed report.
– That was not my impression. I -thought the Minister was going to go off on that tack, but then he seemed to deviate and become quite abstract. The only other comment I want to make is that it amazes me that the Minister should be given a fair opportunity at a meeting of stating the matters in respect of which he is satisfied that the Corporation has failed to comply with its obligations, if he has requested the meeting. That is referred to in sub-clause (8.) of clause 37. lt seems to me to be a strange expression. It may be a customary expression, I do not know. Perhaps the Minister could advise me. I should have thought that the Minister, being a parliamentary representative, would have a greater access to the Corporation. It almost seems condescension that he should be allowed to go before thc Corporation. The wording seems to me to be strange. Perhaps it is consistent with the provisions in other Acts relating to statutory corporations.
Senator ANDERSON (New South Wales - Minister for Supply) [4.351 - Actually, the Minister has tremendous powers. He is, in effect, a lord high executioner. As I understand the Bill, in certain circumstances he can dismiss the whole Board of the Corporation. That is provided for in clause 19 (2) (e).
– He has to tell Parliament about it.
– He has to give reasons to the Parliament.
– He puts his own head on the chopping block.
– That is right. Apropos the question which Senator Wriedt raised, I envisage that the Corporation will be giving as much attention as it can to its report in order to show the magnitude of its operations and the success which it has been able to achieve for Australia. In common with most honourable senators, I have been associated with various organisations in which reports are presented as a show piece. They give information and point up ali the work which the organisation has been able to do within the framework of its charter.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Motion (by Senator Anderson) proposed:
That the Bill be now read a third time.
– I cannot allow the opportunity to pass without expressing my disappointment at the Bill. 1 had hoped that at least there would be a constructive move by the Government to lake some firm action to control overseas investment in Australia and the introduction into Australia of overseas companies. But the further we got into the Bill, the more 1 realised that it was not the Government’s intention to do anything constructive or concrete. In fact, I believe the Bill to be a fantastic one. Not only does it deny the opportunity to take the initiative to obtain some control of the exploitation of our assets by overseas ownership; but it indicates that the Government is prepared to wait until the initiative is taken by a particular enterprise which seeks financial assistance in order to become established. But even after a company has accepted the initiative to ask the Government to participate in an operation, the Government promptly abdicates any responsibility for ownership of shares or control over the operation. I had hoped that the Australian Industry Development Corporation would have protected Australian assets and Australian interests.
In particular, I want to refer to the great need for an active corporation ofthat type. There is a great need for such a corporation to participate in the development of Queensland where increasing exploitation of mineral resources is being allowed to rest in the hands of overseas concerns and combines. But I wanted, because this has been canvassed by other speakers, merely to bring up an example where there is need for a corporation of this type not only to take the initiative but to accept the full responsibility of ownership and participation, that is. not only how it operates the concern andat what price it sells the commodity but also the general method of operation, the general manner in which it extracts the product. In one case just recently there is evidence of just how great a need there is. 1 want to speak about the Cooloola sands area in Queensland which is subject to an application for development by 2 companies, one which is called Queensland
Titanium Mines Pty Ltd - honourable senators should not be deceived by the name because in spite of that it is 100% American owned - and another which is called Cudgen Rutile (No. 2) Pty Ltd which is only 85% American owned: Australians have 15%. I thought that the corporation would have taken steps to protect the environment in which we have to live. Honourable members should remember this, that the overseas concerns are not worried about our environment at all because they do not have to live in it. They are not concerned at the methods they use to extract their product. If one goes to Moura one can see an example of the worst mining husbandry that one could imagine. The coal is extracted by the most inefficient methodthat one could imagine.At a recent Mining Warden’s Court hearing at Gympie from 1 1th to 21th May 1970 matters were raised that should be of interest to all honourable senators. Before the court were representatives of the AustralianConservation Foundation and oft he 2 companies which I mentioned which wish to mine the sands of the Cooloola area, including the uniqueTeewah sands, commonly known as the Noosa coloured sands.
If this Corporation we are setting up were to function as it should then there would be, I imagine, some concern on the part of the Commonwealth Government that no action would be taken to disturb an area which is unique to Australia. In other words, it is more than financial control we are looking for. We are looking also for policy control and this Bill does not give it. Anyone who is in any way familiar with the area agree that it has strong claims for such recognition. I wish to quote from a paper prepared by an ecologist who appeared before the court, Dr A. G. Harrold. He states:
With its rain forests, its hardwood forest reserves, its coloured sands, its wildflower heaths and plains, its fresh water lakes and the long even stretches of the Noosa River Cooloola is a complex ecological mosaic.
Yet we have permitted this area to be completely at the mercy of an overseas concern. Expert witness after expert witness testified to the area’s unique characteristics, all of which combine to allow the opportunity to establish a national park of great educational, scientific and recreational value. Today more and more people who live in cities wish to experience this type of environment and yet it is continually being destroyed by overseas companies because we do not control their policy and they are not concerned about our environment. I had hoped - and J say it again - that participation by the Commonwealth through this Corporation would have been a participation in policy also, not just a participation in money supply. The cost of allowing the mining companies into the area is destruction. Company representatives before the court were unable to give an example of the successful rebuilding of sandhills to the degree of elevation prevalent at Cooloola, nor were they concerned. Additionally, the Government Botanist, Mr S. L. Everist, stated that satisfactory revegetation was impossible so the area once interfered with by an outside concern over which we have no control could not be re-established. There are supposed to be other benefits which would flow from the mining operations at Cooloola. Suppose we were prepared to accept the destruction of this area? The 2 companies, as J stated before, were Queensland Titanium Mines and Cudgen Rutile (No. 2) Pty Ltd. The record of Queensland Titanium Mines gives us just one more example of the matter on which this Parliament should take action.
– What has this to do with the Bill for raising money overseas? This is a discussion on conservation in Queensland.
– No, it is concerned with this Bill because I am strongly protesting that this Bill is not taking the precautions which it ought to take. The Government claims that it is seeking ownership but it is denying ownership. Here we have an example of a monopoly-
– It is a matter for your State Mines Department to lav down the conditions of the lease.
– No, lt is not quite. Let me go on further.
– I handled the leases on the south coast when they mined the sands for rutile and zircon.
– Perhaps, but I do not think the person who has interjected anticipated just how the mining company would operate. Let us forget about the fact that they are about to interfere with a potential national park, and that perhaps is the concern of Queensland but if it is the concern of Queensland it ought to be the concern of the rest of Australia. At a superficial glance Queensland Titanium Mines would please those who are worried about the remission of profit overseas because it does not make a profit. This is where the Commonwealth should be concerned. The reason for the company making a loss is simple. Mr A. Griffen, who retired as a director in May and was a former manager of Queensland Titanium Mines, revealed before the Mining Warden’s Court that Queensland Titanium Mines sells to its American parent at a price sufficiently below the open market price to ensure that it makes a paper loss in Australia and thereby avoids paying tax. lt is at this point that we are very concerned because not only does this company do this but Comalco also, through its operations at Gladstone, does exactly the same thing. Senator Cant outlined this previously.
The point I am making is that these companies not only have no concern for the environment but also they have no concern for the financial position of this country. Now, if this Corporation is not going to take the initiative to make certain that these companies do not monopolise one of our assets then I think the whole of the Bill is a failure. I would also point out that the Commonwealth must take responsibility because in certain cases the States are not accepting the full responsibility. 1 will make another point here, too. The honourable senator said that this is a State responsibility.
– They function under a State lease, do they not?
– lt functions under State legislation, but we have as members of the Queensland Cabinet men who have a financial interest in the concerns with which they are dealing. In particular, a Mr Hodges, who is the Minister for Works and Housing in Queensland, owns 500 shares in Mineral Deposits which is a sister company of Queensland Titanium Mines.
– What Minister did you say that was?
– The Minister for Works and Housing, Mr Hodges, owns 500 shares in Mineral Deposits which is a sister company of Queensland Titanium Mines, one of the applicants for the Cooloola leases. He is a member of the Cabinet which has to make a decision on these issues.
– That has nothing to do with this Bill.
– Yes, it has.
– Why do you not expose it in the right and proper place?
– I am exposing it at the present time, because the Commonwealth Government must take the initiative through legislation similar to this. The Bill does not properly provide for the protection of our national assets and no longer can these assets be divided State by State. J clearly make the statement that the legislation should have provided for an initiative to be taken by the Corporation to protect these assets against over exploitation from overseas. That is the basis of my approach. J am very disappointed that the legislation has not gone sufficiently far. 1 know that I should have spoken during the second reading debate. Since this is the third reading stage I do not intend to take up the time of the Senate any further but 1 did feel strongly that I should express my point of view in this regard to indicate my belief that the Corporation which is being set up by the Government is merely a timid approach to a vital problem. If the States will not properly protect their assets the Commonwealth must take the initiative. Having listened to the second reading debate and the proceedings during the Committee Stage I say that the Government has again failed to do what it should do in this regard.
– I regret that I have to speak during the third reading stage of this Bill. I was set down to speak during the second reading stage but because of some moves that were made, because there were so many speakers during the Committee stage and because I had an appointment which precluded my being here then, 1 express myself now. At the outset I want to say that 1 am as keen as anyone that we Australians should own as much of our industry as possible. I pay a tribute to the Deputy Prime Minister, the Minister for Trade and Industry (Mr McEwen), because 1 know that this is something about which he is very keen. No doubt from that thought stems the Bill which we have before us now. 1 have still to be convinced that there is a necessity for the proposed organisation, the Australian Industry Development Corporation. No one has convinced me of the necessity for it and I still have not heard any real argument as to why it should be established. I know that its basis is to retain as much as possible of Australian industry and development in the hands of the Australian people. That is a very fine ideal but let us look at the position.
In the first place, it takes a lot of money to develop Australian mining companies and other organisations. In my opinion the organisation which this Bill sets up will have only peanuts compared to what is really needed for the development of this country in total. So often we have said that Australians should invest in their own country. I think it is to the credit of the Australian people that now for the first time in our history they have really invested money in mining organisations to the degree which is necessary. I know that lots of people, some of the gloomy writers in financial journals, some of our foolish brokers and others have given people overseas the wrong impression by saying that a lot of the companies are rubbishy companies.
Before Western Mining Corporation Ltd found nickel you could hardly sell a share because it was all gold, and although brokers sent out circulars no one wim ted the shares. However, then the company struck nickel there was a boom and people realised that here was a bonanza, something which was very profitable. From being a company in which no one was very keen to invest money - although it was a company of long standing it did not have market appeal - today in the eyes’ of the people who spoke about rubbishy companies Western Mining Corporation is one of the fine big companies. Then there is a Poseidon organisation. Less than 12 months ago Poseidon was looked upon by some people as being one of the rubbishy companies but today it is a bonanza and no doubt will become even greater in the minds of the people than some people today think it will be. No doubt many of the smaller companies in which money has been invested will prove in the long run, with proper research, to be just as good as are Western Mining Corporation and Poseidon. lt is only by investing money that you can put down the holes to find oil, minerals or whatever you are looking for in the ground. So it is essential that the Australian people invest as much as possible but there is a limitation to what they can do and a lack of, shall I say, permanency in the minds of a lot of Australian people about investment in mining corporations. The Australian people, probably because of their newness in this kind of thing, very often in this field and often in business look for very quick returns. But returns do not always come quickly. Sometimes in some of these ventures it takes a long time before they are brought to fruition and before they become profitable. We have read about 1 of the big companies investigating on Bougainville. Eventually there will be a mine on the island. The company has been there for some considerable time and has spent a lot of money to reach its present stage, but its ultimate objective still has not been attained. That will take time and a great deal more money.
Another company is investigating deposits of copper and so on in Papua and New Guinea. Already it has spent many millions of dollars and it is expected that by the time the venture is brought to fruition probably $300m will have been invested. That is big money. People with big capital are needed if these things are to be done. Small people or small shows very often cannot do them. When we think of this country of ours we feel a great importance about our people. In my opinion there is not a better country in the world in which to live but we do not have the large population and the huge amounts of money necessary to develop these undertakings on our own. Therefore we need assistance in the form of investment from other countries. No doubt the desire is to hold as much as possible of the investment and the title to our assets in our own hands but, because of the lack of perhaps stability in the finances of our people, or perhaps it may be one of our characteristics that we are impatient to get returns, we do not see out the long distances as some of the big companies do. In my own State of Queensland we have Mt Isa Mines Limited. No doubt Senator Gair, who for a number of years was Premier of Queensland, and other Queensland senators have had a lot of contact with the company and they would know that today Mt Isa is one of the most successful mining companies anywhere. We in Australia are proud of it because of its achievements.
– How much of the Mt lsa company do we own?
– We do own a percentage of the company but I just cannot tell you what it is. The company is on the Australian stock market and its shares can be bought at any time. The point I am getting at is that Mt lsa is a glamour stock. It is a very successful company. In relation to the minerals that it is mining it will be the biggest company anywhere in the world. I think Senator Gair will support me when 1 say that in the early days the Queensland Government had to assist the company in many respects, but the important point is that it was working on and developing the mine, lt did not pay a dividend for at least 20 years. When we talk about investing in companies, how many of us here would be prepared to invest money knowing that we would not receive a dividend for 20 years?
– ft would have been a headache for CRA for a long time. The company was so far in that it had to stick to the venture.
– That is what I am saying. How many Australian organisations would be prepared to do what Conzinc Riotinto of Australia did? How many Australian people, how many of us in the Senate, would be prepared to say: ‘We will invest our money for 20 years and in 20 years we will be paid a dividend’?
– Do you believe that this Corporation can do that?
– No, I do not. I do not think that the Corporation can do any more than can be done at present. Senator Webster has reminded me of an aspect that I have in mind with regard to the organisation. Suppose that the AIDC ran into a few companies like Mt lsa in their initial stages. Suppose that hundreds of millions of dollars were invested in them from which no return was received for about 20 years. Who would be paying the interest on this money from overseas that some honourable senators have been talking about bringing into this country to finance such ventures, plus the taxpayers’ money which is used to start it off? If an organisation such as the Corporation we are to set up had a few investments like Mount Isa Mines Ltd on its books at the start this Parliament would be looking askance at a wait of many years before any return came from those companies even to pay the interest on the money borrowed for the purpose.
There has been a lot of nice talk about the Corporation, but it is loose talk. People say: ‘We should be doing this and we should be doing that’. So far as Australian development is concerned we should have what we can afford to have. 1 believe that the percentage that we can buy and retain of our Australian development is not as large as many people think it is. Many of the Corporations established in Australia today are of great magnitude. To purchase 30% of the shareholding, as some people suggest, would require many hundreds of millions of dollars. I cannot see this country doing it. We have to be sensible about this venture and approach it according to our means.
The Government speaks about the Australian Industry Development Corporation as an organisation which can retain for us ownership in Australian companies. But what is the necessity for it? The Australian Development Resources Bank can do exactly what the Corporation plans to do. Why do we need a second instrumentality for the purpose? The Australian taxpayers are to put in S25m to start the Corporation, and I believe that is to be followed by another S25m. Then it will be necessary to borrow money overseas. What will happen then? Interest will have to be paid to the overseas lenders of the money. What difference is there between paying interest overseas and paying dividends to overseas owners through the successful working of companies? I would be very pleased to hear an explanation of the difference.
The money of Australian taxpayers is to be used to set up the Corporation. This will add another pressure to the existing situation. The Government has told us that it is necessary to cut down expenditure because of strong pressures, ls the establishment of the Corporation evidence of the desire of the Government to cut down expenditure? Of course not. As I said, the Australian Development Resources Bank could do exactly the same job as is to be asked of the Corporation. If I remember correctly, the Chairman of that Bank made a statement along those lines. Why is it necessary to set up an extra instrumentality? It seems to be Government policy to have as many instrumentalities as possible, but it takes money to run them. Private organisations would be prepared to make the son of investment planned for the Corporation.
Not so long ago an organisation comprised entirely, I think, of Australian companies approached me and said to me in my capacity as a director of some companies that if nickel was found, that organisation was prepared to establish the mine, put in the housing, and even build the smelter if necessary, involving a capital investment of about S50m. That indicates that there are people in this country who are prepared lo do that sort of thing. I have here a prospectus sent to me by Castlereagh Securities Ltd. This company is bi-ing floated for the same purpose as the Corporation is to be set up. The prospectus states:
Castlereagh Securities’ main objects are to meet the rapidly growing need for Australianowned groups capable both of assisting worth while mining ventures with developmental or exploration finance and technical expertise, and of I a king a positive role in the expansion of dynamic Australian industrial enterprises. In addition, the scope for substantial benefits from able investment in these areas is far greater in the current investment climate than lor some time.
That company is being flouted at present. Already reports in the Press have indicated that it has had a big subscription. Sixty million ordinary shares are being issued with the right to accept an oversubscription of another 60 million ordinary shares. When all these shares are paid up a capital of S30m will be provided for that one company. The Government is rushing into this field when there are private bodies which could do the very job we are asking the Corporation to do. I have always taken the view that if someone else will do the job, let him. I. remember quite some years ago in Queensland there was a rush by local authorities to take over bus services. Somebody said to me: ‘Why do we not do it?’ I said ‘No, somebody else will do it. Let them do it.’ 1 think Senator Gair, a former Premier of Queensland, will remember that quite a lot of those councils that took over bus services have paid dearly for them in deficits over a period of years. Bodies like Castlereagh Securities Ltd would operate better in this field than the Corporation.
– Who did you say would do it better?
– Companies like Castlereagh Securities Ltd, when it is floated, would have to make a success of it. Otherwise the people who subscribed would not get dividends. They would probably achieve greater success than would a government instrumentality. Some people speak about not having overseas investment. The very structure of the Corporation, apart from the contribution of taxpayers’ money, is to be built through borrowing money overseas. What is the difference? There are other ways in which the Government could help if it set its mind squarely on the subject. If we want to utilise Australian investment money to the fullest possible extent why does not the Government prevent overseas owned companies from borrowing capital in this country? They should be made to bring the money from their home countries. That would leave a wider field for our own investment money in Australian development.
– Are you going to recommend that suggestion to your Government?
– I am quite in accord with it. Overseas companies should be made to get their money from overseas if they do not have Australian shareholders. They should definitely secure their money from overseas. I have nothing against overseas investment in Australia because it creates work for Australians and encourages development. More money is available for the people here to enjoy.
– Why do they not allow Australian investors to put their money in these companies?
– I am coming to that point.
– Why do they not let Australians on to their boards of management?
– I agree. I think that is a very good point. These foreign companies should allow some Australian investment. The Government has not made that mandatory.
– They pay a little royalty, exploit our resources and send the profits out of the country.
– I think it would be a very desirable move to have Australian investment in those companies. The process that is being set up to get the Corporation established by borrowing money overseas reminds me of using a sledgehammer to crack a peanut. The Government has the means in its own hands by which it can develop our resources, as Senator Gair has suggested, through Australian investment. If the Government really felt strongly about this matter it. could decree that according to the capacity of the people to invest, a percentage of each company should be held by Australian investors. That is a blanket way of doing it. It is not necessary lo set up expensive structures such as the Australian Industry Development Corporation. That would be an easy way to tackle the problem.
If 1 remember rightly, the Canadian Government has decreed that Canadians are to hold at least 30% of the shareholding in each company. A certain percentage must be set. From the information I have and from my general observation I doubt that we have in this country sufficient money available to secure 30% of all companies. But if the Government was in earnest and went about it in a proper way by setting a percentage to bs owned by Australians, that would be the easiest way out. There is nothing to stop the Government setting the level at 10% or 15% and increasing it as the country and the people became richer and better able to invest in companies. If the Government stopped overseas companies from borrowing in this country, permitting more capital to be available for Australian development and if it made it mandatory that overseas companies should have some percentage of Australian content, the Government would be doing a lot more than this legislation envisages.
I know that a lot of people object to overseas investment but we have to be realistic. If it were not for overseas investment we could not develop as fast as we are. 1 know that my Queensland colleagues would agree with me on this. About 8 or 9 miles south of my own city of Mackay, a combined American-Japanese organisation is building a railway line a distance of about 175 miles to the west in order to bring coal to the coast. The organisation is building a harbour, lt will ship coal overseas. In turn, that will bring more money into this country. Further south, near Rockhampton, a similar setup is to be created by these people. Further south. Thiess Brothers Pty Ltd are establishing a similar setup. Right along the coast of Queensland this type of development is taking place, lt is taking place right around Australia.
This involves a terrific sum of money. In one place S200m is spent and in another place S300m is spent. They are big sums for any country. I cannot see how this Corporation will accommodate propositions such as this. I do not think there is anything wrong with the investment of this type of money in Australia because it is creating development. If it is creating work for and giving money to our people it is doing something worthwhile. Honourable senators should not think that because this money comes from overseas we will never have anything of our own. Things change over a period of time. Our increasing affluence means that the people can invest more. There is nothing to slop Australians investing and taking shares in these companies if they want to. Even if the companies arc overseas companies, there are various methods by which Australians can participate.
Other countries have succeeded with imported capital. Great Britain is one. Over the years it has imported lots of capital to help it develop its businesses and its industries. The great United States of America that we see today that is pouring so much investment into this country, in relation to which there seems to be some opposition, was built up through people bringing money into the country and investing it there. I recall to the minds of those honourable senators who remember the last World War that, when Britain was on her knees because of the fight that she and her allies were putting up for democracy and for the freedom of the people, she had to sell a lot of her assets in America in order to pay her commitments to America. The sum she realised on her assets was a very large one. That indicates that British investors were in the United States to a very great extent. I still think that in the United States - and I believe this to be correct - there is still a lot of money which has been imported from other countries and which has been invested which is helping to develop the United States even further.
Looking at the Bill, I think the Corporation is an expensive proposition and an extra instrumentality which is not necessary because we have the Australian Resources Development Bank Ltd. I do not think there is any need for the Corporation because if 1 bank can handle these financial matters why do we need a second institution to provide the kind of money that will he required to carry out what is in the minds of a lot of people? Australians should help in the preparation of industry in this country. I do not think it would be possible for the Corporation to secure the amounts required. Thousands of millions of dollars are necessary. 1 am quite sure that the Corporation will not be able to find such large amounts. 1 have had approaches from people whom I have known in business and as a director of a company. Castlereagh Securities is one firm that is raising this kind of money today. Why do we want to be in this business when others will do it and when we already have the Resources Bank which can carry out this business at present? 1 think the legislation contains some dangerous propositions. One of the best articles I. have seen on this legislation was an article in ‘Jobson’s Digest’. The article is a rather interesting one. lt states:
As if lo ensure that the Corporation has complete freedom of manoeuvre to do just what it likes wilh Australian business, there is the truly amazing and most extraordinary clause of all in the Bill, designed obviously lo put it completely beyond any legal challenge. This is clause 8, section 6 which should be read over and over again by Australian businessmen and all who are concerned lo know about possible involvements by Government in their business affairs. referring to clause 8 (6.) the article continues:
The exercise of any powers by the Corporation is not valid, and shall not be called into question, by reason of any failure of the Corporation to comply wilh any of its obligations under this section.
Honourable senators heard Senator Greenwood speak very fluently and very ably on that today. The article continues:
In other words even the vague safeguards involved in the sub-sections quoted above - the: safeguard provided by consent being required before a company can be ‘assisted’ by the Corporation - can be overriden through 8 (6.). which will validate any action whatever by the Corporation. This is the basis for fears that the Corporation will be a vehicle for undue interference in the affairs of companies and a vehicle ultimately for nationalisation.
There are no real safeguards against any action by the Corporation on account of any of the apparent ‘safeguards’ written into clause 8 of the Bill because they are all negated by 8 (6.).
I register my opposition to the Bill. I did not have the opportunity to do so during the debate on the second reading of the Bill. I register my opposition because I do not think the Corporation is necessary. If it were not for overseas investment at present this country would not be increasing its exports and earning overseas credit to the extent that it is. According to the estimates released by the Minister for National development (Mr Swartz), it will not be many years before our income from projects financed by overseas capital will increase very greatly. Ultimately it will put this country on a much better footing than it is now. Over the years one of the most crippling things in this country - one of its greatest drawbacks - has been an adverse balance of trade. I believe that when this trend can be reversed and we have a credit in our overseas trading it will be a great day for this country. If the Government were really keen about bringing in more Australian investment, there are ways of doing this. By legislation the Government would make it mandatory for companies to have a percentage of Australian capital instead of using this legislation. It would be much easier to do.
If the Government thinks that some overseas companies are getting away with certain things, such as our primary products, without doing enough, why does it not bring in legislation by which these companies can be made to process the raw materials in this country. That is one way by which national income from overseas could be increased greatly. The Government could get overseas companies to process the goods in this country. In some cases the value of the primary materials would rise astronomically and would make a wonderful difference to our overseas credit balance. I oppose the legislation because I think there is no necessity for it. We already have the Resources Bank which will do everything that has been set for it. I believe that the necessity will be to import overseas capital on which we will have to pay interest. That is very little different from paying dividends on money which is brought into this country by way of investment. I do not think that the Corporation could profitably invest money in companies that had to wait a long time to show returns from big projects. This has happened with Mount. Isa Mines Ltd and with the other big projects which I mentioned earlier. This Corporation is another instrumentality for which there is no necessity. This country could concentrate in other directions by which the people could obtain a greater participation in companies. As I mentioned earlier, if the Government wants to keep as much Australian capital as possible for Australian investment it should stop overseas companies from raising loans in Australia. This is something which should be looked at in a more businesslike way. The overall picture should be looked at to decide what might be done for the enlargement, of Australian capital in overseas firms which come here. Other countries such as Canada have done this. If that were done here it would be simpler and much more beneficial.
– Why is it that so many companies look to the State Government industrial departments for financial aid to establish industries?
– Australian companies or overseas companies?
– No doubt certain companies ask for aid. I think by the means which 1 have put forward a lot of this could be cured.
– When I say aid I am speaking of financial accommodation.
– Financial accommodation, yes. That indicates to me just what I have said. The Australian people have to learn about investment. It is now a few years since Senator Gair moved out of the sphere he was in and in which, no doubt, he had contact with the situation. I think the situation has changed greatly from what it was then. As I mentioned earlier in my speech, never before have the Australian people really invested in mining and oil development to the extent to which they have now.
– There are other types of industry apart from mining and oil.
– I know there are other industries. There is no doubt that mining companies are raising sufficient money on the stock market for these sorts of things. Even big companies such as Mount Isa
Mines Ltd needed something, as Senator Gair would know because of certain assistance he gave in days gone by.
– I wish I had some shares in the company.
– Yes, of course. That was an overseas investment. If a company is to expand the only way in which it can do so is to float sufficient capital. However, I cannot see the necessity for this Corporation. I have pointed out other means by which I think a much more sensible effort could be made. Probably, as time goes on, we may see a conflict between this Corporation and the Australian Resources Development Bank.
– Competition, not conflict.
– Why the 2 instrumentalities are necessary I do not know. The Government is duplicating expense by having 2 set-ups, 2 staffs, and so on. The Federal authorities have grandiose ideas. Money is nothing to them. Honourable senators see the way money is spent around this place. We see it spent around other places. We see SI 00m given here and a few million dollars given to another country. We see fountains being built here when people in the outlying places of Queensland cannot even get water, roads, and things like these. It is the Government’s job to have a business outlook and to make the greatest use of the money it has. The Government is telling everybody to restrict their spending because things are tough, and it does not want any pressure. This Commonwealth Government should set an example but it does not set the example. It wants everyone else to cut down on expenditure but it has the most grandiose ideas of expenditure at a time when it is telling people things are tough.
I remember back in the 1960s when this Government introduced credit squeeze measures, which I opposed. What was it doing? It was spending money on the cutting down of trees in avenues in this city of Canberra, and it was doing other things. Everybody else had to be on short rations, but not the Commonwealth Government. It is time it learnt its own lesson and set an example to other people before it asks them to do what it does not do itself. I oppose this legislation. 16320/70- S.-lSl]
– After hearing that fine attack on the Government by one of its own members Senator Wood, I am still at a loss to know what he believes in but I gather that as a successful investor he feels that the intervention of overseas capital is probably to his advantage. I suggest to Senator Wood through you. Mr Acting Deputy President, that it is in the Party room that he should exercise his right to attack the Government. Like the speakers before me I apologise for speaking at the third reading stage. As honourable senators probably know there were Government speakers to speak before the Labor Party’s speakers on the second reading but for some reason they had to withdraw or, alternatively, they decided that it was not a very satisfactory Bill to speak on and they did not pursue it. I want to speak in fairly general terms without indulging in too many figures.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - But in relation to the Bill?
– Yes, in relation to the Bill. I want to quote 2 paragraphs.
– Do not range a little wide like Senator Georges did.
– I will range a little wide too. I think it was an honourable senator on the opposite side of the chamber who said that Senator Georges used this third reading as an excuse to speak. When Senator Georges speaks he speaks sense. When the Minister for Air (Senator DrakeBrockman) introduced this Bill into this chamber he said:
In introducing this legislation to create an Australian Industry Development Corporation the Government believes - indeed is firmly convinced - that it has taken a significantly new and important initiative for the development of Australia, and for greater Australian ownership of our industries and resources. That there is a need for positive and effective action by Government in these fields is patently clear. No-one could doubt that there is throughout the community a strong national desire that means could be found to devise and put into effect a consistent policy which would be directed towards both maximising our industrial development and maximising Australia’s participation in it.
As Senator Willesee said when he spoke at the second reading stage and as my colleague Senator Georges said a little while ago, this Bill whilst it is satisfactory in principle certainly does not go far enough
However, as the Leader of the Opposition Mr Whitlam in another place said quite recently a Labor Government will be able to make these adaptations to make sure that the Bill will set out to do what it ought to be doing for the community.
The Australian Labor Party is not opposing the Bill. I take this opportunity to point out what wc feel are some of the weaknesses and where we feel the Government has gone wrong. Some of the weaknesses probably showed up in previous financial policy and they ought to have been corrected at that time, lt is significant, too. that in both Houses of Parliament and in the Government party rooms this Bill has caused a considerable amount of disenchantment; the extreme right wing of the Liberal Parly is opposing it tooth and nail. But this is not the only Bi 11 which has caused trouble during the session. There have been others. Probably many honourable senators from the Government parties will remember that famous black Friday only 2 or 3 weeks ago when the off-shore legislation was being discussed. Opportunity was taken to move an amendment and a group of rebels decided that it did not matter what happened to the Prime Minister.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - -I think the honourable senator had better confine his attention to the Bill.
– I am doing that.
The ACTING DEPUTY PRESIDENT - You are following a circuitous road.
– I am trying to point out by example that there is a wide division in the Government parties over this Bill when there ought to be unanimity because of its implication for the economy of this country, for the encouragement of Australian capital participation and for the encouragement of the establishment of business in Australia.
On the famous Friday to which I just referred, things reached the stage where the County Party had to hold out the olive branch and release the white doves. But when it came to a showdown a few days later it was the County Party that decided that the legislation ought to be the subject of further consultation. It is significant that again on this occasion the County Party, probably through the initiative of the Deputy Prime Minister (Mr McEwen), has propped up this Bill. This situation does not make for the good government of this country. One doubts very seriously that many members of the Government parlies are interested in seeing that this piece of legislation is passed. One wonders how many of them have given it their undivided support.
Let us now look at a couple of other aspects of it, including the reason why it was initiated in the way it was initiated, and publicised to the Australian public, lt is now many weeks since a leak was made to the Press that this Bill and a couple of other Bills would be part of the legislative programme for this session. One Government backbencher is reported to have criticised yesterday this method of government - publicising projected legislation in order lo find out what the public feeling on it is before it actually comes before either chamber of the Parliament in the shape of a Bill. If that is the method of government being used, it may suit the Government parties, but quite frankly I do noi think it is suiting many members of the Australian public.
This type of legislation has a lot of support among the public generally, particularly the small businessmen and the small investors. This afternoon 1 heard an interjection from a member of the Democratic Labor Party, pointing out that in Queensland there is a government department that assists in providing the necessary Australian capital to set up small businesses and small operators generally. Senator Wood, in his most caustic references to the Bill, said that there was no Australian capital for investment of this nature and that this was an expensive way of spending the taxpayers’ money. Quite frankly, 1 fail to see the logic in his argument or the reasoning that led up to his argument. In Australia there is plenty of capital, but it is going into the wrong channels. The Government must accept its share of responsibility for that. The Government. with the stop and go financial policies that it has adopted over the last 20 years, has provided the sort of example that we ought not to see in an affluent country such as Australia.
We see the channelling of capital into the banking system. Perhaps this is where our greatest criticism ought to be directed. There is a great responsibility on the banking institutions of Australia to participate in the development of this country. There is a great responsibility on the insurance companies in Australia to participate financially in the development of Australia. But what do we find? We find the major banking institutions diverting a large portion of their funds into hire purchase organisations.
The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - Order! I ask honourable senators on the Government side to stop caucusing.
– They are members of the dissident group in the Government parties. They are wondering how they will vote. If I may be allowed to continue my speech, I wish to point out that the channelling of money into the consumer goods field - that is where it goes - is very profitable for the banking system because the banks can obtain double and sometimes treble the interest that they can earn in developmental projects on money that they lend for the purchase of consumer goods. This is a field in which the Government ought to provide some advice, some guidance and, if necessary, some direction.
The average working man who has to purchase a refrigerator, a washing machine or a motor car has to pay through the nose for it because he is expected to repay money over periods of 3, 4 or 5 years at exorbitant rates of interest. If a person has the cash in the first place, of course, he can go to a discount firm. Electrical goods in particular, which are essential in every home, can be purchased for two-thirds and in some cases one-half of the price at which they are retailed to people who have to borrow the money to buy them. So, if it does nothing else, the setting up of this Corporation might cause some of the financial institutions to have another look at what they will do with their money, particularly the surpluses which they have and which they are able to direct into these channels.
Earlier in the debate today I heard a Government senator say that the banks were complaining because the Corporation would not have to make a profit. I suppose that as long as it pays its way it is the sort of institution which ought to be set up. Mr Acting Deputy President, would you mind cancelling some of the Caucus meetings being held on the Government side of the chamber?
The ACTING DEPUTY PRESIDENT - Order! The honourable senators concerned are under instructions.
– At least we have freedom of expression.
– 1 would be happier if they went into their party room if they have something to discuss. I have just referred to a complaint that was mentioned by a Government senator earlier today. He said that the banks were complaining because the Corporation did not have to make a profit. If we look at some of the reports published by the banks from time to time we will see that, particularly in the field of money lending, they make very substantial profits, they would probably be better advised to devote some of their profits to the development of this nation.
Let me refer now to another field, which is quite a new aspect. First of all, I refer to the 1960-61 mini-depression. The Government, being in financial difficulties, endeavoured to dampen down the economy by imposing substantial increases in the rates of sales tax on a number of commodities, particularly in the so-called luxury field - motor cars, etc. On this occasion we have heard the Minister for Housing (Senator Dame Annabelle Rankin) apologising for what is happening in the housing field. This is the area in which a dampening of the economy is now taking place by the imposition of higher interest rates and by the failure of the Government to provide sufficient funds for the construction of homes in each of the States.
One of the worst examples of that is in the War Service Homes Division. In a written reply given to a member of the House of Representatives, the Minister said that in order to catch up with the lag $5m was needed. In terms of the spending by this Government, %5m is merely a small amount of petty cash. We have heard that under the buy-back arrangement in respect of the Fill, if the deal does not come off, we will probably lose $100m. So, either the Government or its advisers are to blame for the mishandling of the economy. I am not sure just who is to blame. Maybe people outside the Government who are advising it are ro blame. But the Government certainly is not doing the right thing by the people of Australia.
The housing crisis is a national scandal. The reason why I am introducing this aspect is to prove that, at least if something like what is proposed in the Bill is done, it does something to sustain the economy by keeping small people in business. If the Government exercises this sort of restraint in one field - som: terrific juggling must be going on in attempting to find out what the Government will put in the Budget to be presented in August - then the Government will probably spread the restraint to other fields afterwards. The people who will feel the effects worst of all are those who felt them in 1960-61. namely, the small businessmen and the small operators who need capital in order merely to exist. lt is significant that those who have been most vocal on this legislation in the areas outside the Government are those who represent the captains of big business. Only a few minutes ago we heard Senator Wood speaking very fluently on their behalf. If that is the son of altitude that is being adopted, one can understand why the Government is seriously divided over the implementation of this type of legislation. We should seriously consider what is to be done with the funds to be provided under this proposal. The Corporation could be of considerable benefit to Australia. I appreciate that complaints have been made that the initial capital to be provided is too small; but it will not necessarily remain at that level. In fact, I think that the Corporation would operate very effectively indeed under a Labor government.
The oil and gas industry in Australia is completely controlled, except for about onehalf of 1%, by capital which has been imported. Needless to say, the profits of that capital are being exported expeditiously. As a result, the small operators, explorers and developers are not able to find the finance which is necessary to do the job which has to be done. There are two or three ways in which Australian capital can bc injected into the business system. It can be done, firstly, by the sale of shares on the stock exchange, lt can be done, secondly, through a Corporation of this nature, as has been set out in detail in the second reading speech of the Minister. Thirdly, it can be done by Government participation. These three methods are all democratic methods and can be quite effective providing they are properly planned, on behalf of the economy and the people of Australia.
In the food field we find that nearly every slice of bread or biscuit we eat is made by companies which are almost completely owned by parent companies outside of Australia. But it goes even further than this. The motor car industry is basically owned by people outside of Australia. Every year we see the flight of profits derived in this country lo other countries, such as the United Stales of America. Britain and France. There is no need for this lo be happening, lt would not happen if there were greater capital participation by Australians in these industries. However, the companies concerned are reluctant lo allow this to happen. If one accepts the statements which were made by Senator Wood a moment ago, and I hope that in some of his remarks he was speaking on behalf of the Government Parties, then this is another atea which can be explored and, if necessary, exploited by the Government.
– I was speaking on behalf of myself.
– Either the Government Parties have disowned Senator Wood or he has disowned them because it would now appear that he was making a personal statement. I regret that this is so. I thought that there may have been more authority behind his remarks. The spare parts section of the motor car industry is probably one of the greatest rackets of the lot. Perhaps the supporters of the Government are able to trade their cars in every 6 months and do not have to worry about spare pans but there are honourable senators on this side of the chamber who have to keep their cars on the road for a long time. When one goes lo a spare parts organisation to buy a gearbox, an engine, a differential or any other major part of a motor car one finds that the cost is a substantial portion of the original cost of the motor car. I know that many spare parts are manufactured outside Australia but there is no reason why, with proper encouragement and proper Australian participation, more manufacturing plants could noi be set up in Australia. This would provide employment for
Australians and keep profits in Australia. Unless there is an international ring in operation in this industry which is keeping prices at a high level, as there is in other industries, the establishment of a spare parts industry in Australia would result in keeping prices at a reasonable level.
The chief spokesman of the Government, even if he was speaking on his own behalf, referred to the mining industry. In almost every area in which iron ore is mined in this country the industry is to a large degree owned by overseas interests. The export coal industry in Queensland is owned by interests outside of Australia. It is significant that the Government is able to make roads and build houses in mining communities but the people who live in the suburban areas of Brisbane and in the provincial cities of Queensland have to go without homes. The Government is able, through the provision of funds to housing instrumentalities in the States, to develop mining areas. Equally significant is the fact that the people who are making the profits from mining are not Australians. If there is any Australian content it is minimal. The oil industry, as I mentioned earlier, is controlled almost completely by overseas companies.
Reference has been made to the Mount Isa project. The majority of the shareholding in Mount Isa Mines Ltd is held by foreign interests. The same applies to the nickel industry and the lead industry. Any uranium mined in Australia is exported. It depends upon the type of reactor which is installed at the proposed nuclear power station in New South Wales whether some of the Australian production of raw uranium or the derivatives of raw uranium can be used. We have some of the richest, if not the richest, bauxite fields in the world. But the profits from these deposits are all going out of the country. Almost all mining in Australia is controlled by overseas interests.
The same applies to beach sands. A moment ago my colleague, Senator Georges, referred to mining of this nature in the Cooloola area. People who have been involved in court cases over this area and other areas in Queensland have admitted publicly that the majority of the shareholding in their companies is held by people outside of Australia.
We are giving away the raw materials which our children and grandchildren will need in the future. There might be some justification for doing this if something substantial were coming into the Australian economy, but it is not. This is just a passing phase. The prices at which we sell our raw materials is barely sufficient to lift our export earnings. The return in most instances would not fill the gap which has been caused by the drop in wool prices. At the moment iron ore is about at the top of the market. Nickel mining is another area in which Australia will go ahead but it is a great pity that we have to send the nickel ore out of this country. Perhaps there would be some saving if it were processed here but unless encouragement is given in some quarter, whether by the private sector, the banking field or the Government, we will not see the development of the sort of organisations, companies and plants that are necessary to carry out this sort of refining.
My remarks have been fairly general, Mr Acting Deputy President. This Bill has many good qualities, although it has many shortcomings, and I believe that it should be supported. Its passage will result in the introduction of some sort of framework which could be expanded in the future for the good not only of the country but also for everybody who lives in it.
– I shall detain the Senate for only a moment. When Senator Keeffe commenced his speech he made some remarks concerning what had happened during the debate on the motion for the second reading of the Bill. He implied that the Government had withdrawn some of its speakers from the debate. I want to make it quite clear that the debate on the motion for the second reading of the Bill concluded early, not through any trick or stunt on the part of the Government.
– What happened?
– I shall inform the honourable senator what happened. A list of the speakers who were to take part in the debate this afternoon was placed on the table in front of the occupant of the Chair. The names ran in this order: Senator Cant, Senator Turnbull, Senator Wriedt, Senator Young, Senator Keeffe, Senator Wood and Senator Georges. Senator Cant concluded his speech at, I think, approximately 3 o’clock. The occupant of the Chair then looked around the chamber but could not see any of the persons whom 1 have named.
– But I had made an arrangement wilh the honourable senator.
– All I am saying is that Senators Turnbull, Wriedt, Young, Keeffe and Georges were not present to receive the call, so the Minister for Supply (Senator Anderson) stood up to reply. Nobody else stood. The honourable senators who would have followed Senator Cant according to the list - which is not immutable but is purely a guide - would have been Senator Turnbull and then Senator Wriedt. As no honourable senator was present in the chamber and nobody desired to take the call, it was not the Government’s fault that this happened, nor was it the fault of the Deputy President who occupied the chair at the time, lt was just one of those incidents. As 1 have said, it is not my duty to round up speakers on both sides of the Senate in order to keep a debate going.
– 1 am conscious that we have many Bills to deal with so I shall be brief. There are many reasons why I am keen to enter this debate. One reason for doing so is to express my support for the Bill before the Senate and another reason is to clarify Senator Keeffe’s mind. The honourable senator suggested that there is confusion on the Government side, but I want him to know that on this side of the chamber we always have at least an ability and an opportunity to express our independent points of view. If Senator Keeffe is confused as to what might go on among Government supporters 1 can appreciate his confusion because we work in a free area whereas he works by compulsion.
The proposed Australian Industry Development Corporation is something which enters a completely new field of finance. It has been said that the Australian Resources Development Bank could easily fill the need to be catered for by the Industry Development Corporation. The Resources Development Bank has done an excellent job and is doing an excellent job, but that bank has concentrated mainly on borrowing money internally. Lately it has been operating more externally. It has been a lender to any enterprise and has worked as a banking institution. The point I make is that the IDC is entering the field to borrow money overseas which it will have the ability to do. This money will be in the form of repayable loans. But the IDC goes much further than this. The whole idea of the Corporation is to encourage Australian participation in and development of industry, lt will not be a lender in the way that banking institutions are; it will be working in the area of repayable loans, but not involving the same types of security as existing financial institutions require. Basically it will be a money lender of the last resort. If companies are considered to bc sound, to have potential and to be under good management they will be given the opportunity to receive assistance from the Industry Development Corporation. Another very important aspect is that the IDC will support the maximum Australian participation within these industries and enterprises which will be developed. This is a great area and is an area in which many people in this country will give their wholehearted support.
Some people have criticised the amount of overseas capital that has come into Australia. I do not think anybody can justifiably criticise or condemn overseas capital coming into Australia to assist in our development which could not have been achieved without it. There are many who have shown concern for the fact that this overseas capital has come in for the purpose of establishing overseas companies and corporations. Through the IDC we see an opportunity for Australian companies to be assisted with overseas capital: so instead of it being an overseas company it will be to a maximum extent an Australian company which has been established and developed here. As I mentioned before, 2 areas of assistance are involved. The first is on the basis of a repayable loan and the second is on the basis of the IDC taking up shares in various companies. These shares can be held until such time as the company is established and is a going concern, at which time, as has been shown very clearly, they will have to be sold wherever possible to Australians. So Australian equity will be maintained within these companies.
I am very much in favour of what the IDC can do to assist the development of so many of our secondary industries and enterprises which in the future will develop along with our mining enterprises. I feel that as time goes on, because we will generate from the profitability of these enterprises more credit and capital within Australia, this will encourage and assist further development and further Australian participation in the development of this country. One of the main areas of doubt with regard to the establishment of the IDC springs from the fear among some people that this is perhaps the beginning of a nationalisation of finance in this country by which the Government will gain control of so many Australian enterprises that have been established throughout this country. This fear is based on statements that have been made in another place by the Leader of the Opposition (Mr Whitlam) and some of his supporters. I do not hold this fear. We must be realistic about this.
If ever the Opposition were to get into power with its planks and platforms it would be endeavouring to nationalise. So there is a fear from that point of view - I emphasise the word ‘fear’ - among the Australian public. Having established the IDC on a free enterprise basis to achieve a maximum of Australian participation and equity in companies under a system of free enterprise, no doubt the corporation will work extremely well and will prove its worth to the people of Australia. Woe betide the Opposition if ever it tries to put a few more little props into this to make it a means of nationalising the finance and development of this country. Years ago the Labor Party decided that it would nationalise banking. We saw then very clearly the attitude of the Australian people. Consequently, I discount the fear held by some people in the community that the AIDC could be the beginning of something which will lead to a nationalisation of our financial resources.
In the brief time available to me I should like to add that I shall lend my wholehearted support to the Industry Development Corporation. I feel that it has a very important part to play, not only in bringing more overseas finance and capital to this country to enable further development but also in providing an opportunity for Australians to participate in the development of all areas of free enterprise, in the growth and further development of the industries which will follow. I support the Bill.
Question resolved in the affirmative.
Bill read a third time.
Sitting suspended from 5.58 to 8 p.m.
General Business Taking Precedence of Government Business
– I propose to move that so much of the Standing Orders be suspended as would prevent me from moving now the motion in my name, that is notice of motion No. 5 under General Business. I suggest that, cognate with the discussion of that motion, notice of motion No. 1 under Government Business and Order of the Day No. 23, that is, the report of the Standing Orders Committees on standing committees, be taken into consideration. I could move my motion, because we are dealing with General Business, then the Leader of the Government in the .Senate (Senator Anderson) might move his motion, and at the same time we might consider the report of the Standing Orders Committee. At the end of the discussion the motions could be put one by one.
– We will discuss them together?
– We will discuss them together, and at the end of the discussion we will vote upon them in a reasonable way in order to determine what is the view of the Senate upon the various proposals that might be made.
The DEPUTY PRESIDENT- Senator Murphy, I suggest that you should seek leave to move the suspension of the Standing Orders.
– I propose to ask for leave to move for the suspension of the Standing Orders. My motion would probably read:
That so much of the Standing Orders be suspended as would enable mc to move the motton in my name now, and also would enable the Leader of the Government in the Senate, during the same debate, to move his motion.
We would also consider Order of the Day No. 23 under Government Business. We would discuss them as cognate matters, if that is the appropriate term, deal with them together, and at the end of the discussion we put them to a vole in some way which will determine appropriately the view of the Senate.
I.8.4J - I should like to speak to the motion for the suspension of the Standing Orders. I wholeheartedly agree with the proposal of the Leader of the Opposition (Senator Murphy), that his motion under General Business, notice of motion No. 5 under Government Business and Order of the Day No. 23 should be discussed in a cognate debate. I really think that we need to have a motion before the Chair for the purpose of debating these matters, because if we do not we will have a discussion which in form has some unusual features about it. I do not imagine that such revolutionary proposals as we are discussing will be resolved very quickly. Probably we will need to devote to this question a much longer period of time before we rise for the winter recess. Perhaps it would be logical at this point of time to have a debate on the basis of the morion that the Senate take note of the papers - the papers being the motion moved by Senator Murphy, the motion moved bv myself, and Order of the Day No. 23.
– What does that mean?
– If we do not do that, we will be in the situation where Senator Murphy will have, to move his motion, I will have lo move my motion, and then as Leader of the Government in the Senate 1 will have to introduce Order of the Day No. 23. lt would facilitate debate at this point of lime if we had a motion before the Chair to which we could address ourselves. We could deal with this matter by discussing a motion that the Senate take note of the papers.
– As Leader of the Australian Democratic Labor Party I desire to inform the Senate that it is my intention to move a motion concerning this matter, copies of which will be circulated shortly.
– Am 1 lo understand that that motion will be included in the discussion?
– would be prepared to agree to that motion being dealt with at the same time.
– Thai would make the discussion even wider.
– May 1 speak by leave at this juncture?
The DEPUTY PRESIDENT (Senator hail) - ls leave granted? There being no objection, leave is granted.
Senator MURPHY (New South Wales - Leader of the Opposition) - In view of what has been said by Senator Gair, perhaps the easiest way would be for mc to move the suspension of the Standing Orders in order to enable my motion to be debated, and if the Leader of the Government in the Senate (Senator Anderson) wants to move his motion, it could be dealt with cognately. If the Leader of the Australian Democratic Labor Party (Senator Gair) wishes lo move a motion, there will be no objection to that being dealt with cognately. This will be the easiest way to do it.
– Where does the Clerk’s recommendation come into this?
– We would deal wilh il on the same basis. This would enable us to deal with the whole matter in a reasonable way. I ask for leave lo reframe my motion.
The DEPUTY PRESIDENT- ls leave granted? There being no objection, leave is granted.
– I move:
Question resolved in (he affirmative.
– The motion of which I have given notice reads as follows:
The following Standing Committees be appointed, lo be known, unless the Senate otherwise orders, as -
The DEPUTY PRESIDENT- There being no objection, leave is granted.
The following Standing Committees be appointed, to bc known, unless the Senate otherwise orders, as -
Environment (this shall include Housing, Transport, Communications and the provision of other facilities): and
The Standing Committee on Primary’ and Secondary Industry and Trade.
That is a very important occasion for the Senate because we are considering a matter about which we have been concerned for many years. There is no copyright on the proposals to set up standing committees in a legislature. Proposals have come from the Government. The Standing Orders Committee has sought the advice of the Clerk and it has been given. My own Party, through me, has put forward this proposal and we have heard a proposal suggested by the Australian Democratic Labor Party. It is clear from all this that the time has arrived when this Senate thinks that its functions can better be carried out by the establishment of a system of standing committees. Of course this is right.
The experience all over the world has been that legislative chambers can operate better in a modern world by the establishment of standing committees. What are they, after all? They are samples of the chamber itself. It means that we can set up a small group which can investigate, which can hear the submissions of witnesses and which can deliberate upon matters in better circumstances than can a chamber at large. It has also the advantage that when we have not 1 committee but a system of committees the. functions of the chamber can be multiplied and we can escape from the bottleneck which affects us all. If we do not have committees we then operate through a chamber where 1 man speaks and 59 listen and that means that we can achieve very little. Now, this served the purposes of the Senate and perhaps those of other legislative chambers when there was not very much to do, but in 1970 and the years that are to follow we shall find the pressure of work more and more onerous. We have experienced that at the end of each sitting and certainly at the end of each sessional period there is a great deal of work that has not been dealt with.
All of us want to preserve the system whereby honourable senators can speak. We do not want any limitations upon the times for debate and we want to deal with each matter thoroughly, but if we are going to deal with them in 1 chamber with 1 man speaking at a time and with everything having to be sieved through here then it just cannot be done. If we are to have the freedom to discuss each matter fully, and it is a very important freedom - it is very important that this be done by a legislative chamber - it means that if it is all done in the I chamber then we cannot deal with very much. That is our experience. We are trying our best. We work in the Committee stage of this Senate very well, I think. We have had a good experience in the last few days when the Committee of the Senate discussed the National Health Bill. We went through it clause by eta use and we did the best that we could to improve it. But it is impossible to do that with every subject matter. It is impossible to do that with every Bill. A Committee of the whole cannot do it and the only solution is to subdivide the Senate. Indeed, this is essentially what the standing committee system means. It means that we subdivide. We set up a number of committees exercising the functions which might be exercised by a committee of the whole and in that way we amplify our activities. We are able to do so much more. There is not a grant of any more power to the standing committees. Every power that a standing committee would have, that is, the power to call’ witnesses, the power to call for documents and the power to do any of these things, all of these powers reside in the Senate and in the Committees of the Senate but because of our numbers it would be cumbrous to do that.
We cannot really set out to call witnesses here and to ask them questions. With 60 persons this would be embarrassing. It would be impossible to do this. The way which has been found overseas - and there is no doubt that it is the way which will be found here; it is being forced upon us by the pressure of events - is to adopt the committee system.
– It is to be hoped that the members of the Liberal Party attend these committees better than they are attending this most important discussion tonight. I thin!, it is a scandal.
– I will not say anything about that because I do not know. Sometimes it occurs that one has arrangements or some most important matter to be discussed, lt has happened to us on occasions. The Senate in its proceedings as a whole and in ils proceedings in Committee is trying to do its best and I think that over the last few years we have seen a great improvement in the performance of this legislative chamber. We are all very proud of it and we are trying to do our best in improving ,he performance because there is a demand for improved performance all over the world. It may be manifested in some places in riots, in demonstrations and in other ways in a less violent manner, but a demand for institutions such as ours to carry out their work efficiently is becoming apparent. People around the world are becoming more educated and they will not tolerate the kind of nonsense that goes on where legislative bodies deal with important matters and at the end of a sitting or a sessional period have not got through a fraction of the business. They just will nol tolerate it and if we do not see that this democratic system works then it will be replaced. 1 think it can be worked. I am sure it can be. Here is a great representative body, as there is across the corridor, and I think both of them can work. They can work if they start to adopt efficient procedures and the standing committee system is the efficient procedure. We have over the last 3 years had select committees and these have been very valuable but I think they suffer from some defects. Those defects are that a task - and often a very big task - is sent to a committee and we require it to report. We expect a definitive report. We expect everything on that subject to be answered almost for all time - in our context anyway - by that committee.
– Purely ad hoc.
– Yes, it is ad hoc. It means that we put a tremendous pressure upon the committee to investigate everything, to come up with everything all at the one time and it is hard, therefore, 10 get it to bring in its report within time. 1 think these committees have done wonderfully well but there is no doubt, from the experience of those who have served on them, that this has imposed a tremendous pressure upon the people doing it. I think it would be better for us to adopt the standing committees in general lo which work is referred. When a Bill or an estimate or a petition comes in, and when the Senate decides - and only then - that it should be referred to the Committee let the committee deal with that. I think in our references to the committees we should put strict time limits on them. We do not want Bills sent to a committee and locked up for 6 or 12 months. That is not the nature of our parliamentary process. It may happen in other places where they do not have the parliamentary process but not here, and we would want to see to it that there were prompt reports, especially on Bills. 1 feel that some of these Bills which have taken weeks to pass through the Parliament could have been dealt with in hours, certainly days, if they had been sent to a select committee. I think that would be a very valuable process. I think in other ways we could start to see to it that this Senate was freed from many of the technicalities.
We would send off the proposals which came before us. Many of them are extremely valuable but they never have been dealt with properly because of the limitations of time. Bills could be dealt with in committee in an atmosphere which would be conducive to speed and other matters could be dealt with by continuing surveillance. The Senate Select Committee on Medical and Hospital Costs - the Wedgwood Committee - suggested that there should be continuing surveillance over medical and hospital costs. I think that is right. That continuing surveillance would not mean that the committee would have to report everything relating to medical and hospital costs at the one time. The committee needs to be there to watch the position as it develops and to report to the Senate from time to time.
There are many other spheres in which they would operate. I think we would gain from the introduction of this system. That is what has percolated through the Senate. T believe that the discissions which have taken place here in depth, the reading which honourable senators have been in the habit of doing in relation to the operation of this system elsewhere, the observations of the operations of standing committees which honourable senators have made in their journeys overseas, have brought almost all of us to the conclusion that the committees should be set up.
– They would function all through the year, would they not?
– They will be part of the structure of the Senate.
– They will be part of the structure of the Senate which means that even when the Parliament goes into recess the committees will be there able to carry on their functions. As is the case in some countries, when the Parliament is sitting they can have regular meeting days which can be set and co-ordinated. Some problems may arise but we will deal with them. The logical way to do this is to have a system of committees which spreads over the functions of the Senate. I have had the advantage of reading the excellent report by the Clerk of the Senate which came through the Standing Orders Committee. 1 have had the advantage also of reading the reports which have been presented to me by the Legislative Reference Service of the Parliamentary Library in response to my request to the Service to prepare for me independently a number of reports. Over 6 months I have received 4 reports which involved quite deep research into the theoretical and practical problems of establishing committees in the Senate. I have also had the advantage of observing somewhat closely the operation of the system in other parts of the world and of reading about it.
There is no doubt that anyone who sets out to set up a system of standing committees will be faced with the same problems as would anyone who set out to catalogue the books of the world. However you try to categorise them, however you try to split them up, you will find tremendous problems. You will find problems of overlapping, problems which are insoluble. You cannot find any simple system for devising standing committees which is perfection. I would defy anyone to divide the whole area of the activities of the Senate or of any other body in a way which would satisfy everyone. It is not possible. 1 have considered this matter and have done the best 1 could to get a system of division. I do not think that matters really. If we decide upon the principle of establishing standing committees it does not matter to me how they are subdivided or how they are categorised. I think experience will teach us. We may need to group some subjects together rather than others. In the proposals that I have submitted I have done my best. I have had a lot of assistance and have thought a lot about the matter. I can readily concede that someone may suggest something which is better than my proposal. If we adopt the principle of standing committees to cover the functions of the Senate, whatever system we try, experience will teach us and we may alter it to provide a somewhat better system.
– Would you comment on the Odgers proposal? Why is your proposal preferable to the Odgers proposal?
– If you are asking me about it in detail, I think that there is somewhat more coverage of activities.
– 1 feel bound to say that I have an obligation to put the broad principles of the Odgers proposal.
– I understand that. I am acting on the basis that all honourable senators have had these principles before them. My proposal is that we act on the basis of a system which will cover the responsibilities of the Senate. I think that what I have put does that. As I indicated on the day on which I gave notice of motion, the categories are not the important matter. What is important is to set up the system.
– The principle.
– The principle. I think we should set up the system forthwith. For a long time we have been operating without the efficiency that we would have if we had the standing committees. I know that the Leader of the Government in the Senate (Senator Anderson) will suggest another system but I am firmly of the view that we now should seize the opportunity to set up a system of standing committees.
Let us gain experience. We will have no difficulties when we come to the Budget session of assigning the Estimates to the system which is suggested. Wc can send the committees some or all of the Estimates. We do not have to send all of them. There are no problems. If we have a system of 7 standing committees the Senate in its wisdom can despatch to those committees any of the Estimates, any petitions, any Bills. Of course sometimes a Bill might be sent to 2 committees. For example, there might be rural Bills such as excited the attention of the Senate last year. Those Bills contained certain provisions about entry into premises. Such Bills might be sent to 2 committees for consideration - the committee concerned with industry and the committee concerned with constitutional and legal matters. This is for us to determine when we have the problem before us, but we need the vehicles whether for Estimates, whether for petitions or whether for other matters.
– Would it bc appropriate at this stage to comment on when these committees should meet or will we deal with that later?
– I would think the committees should meet regularly. Some might have more work than others but I would think the sensible course would be for the committees to set down definite days for meeting because 1 believe that would improve their efficiency. Of course that would depend on the allocation of matters to the committees by the Senate. Some have thought that by establishing the committees at this juncture we might be rushing too far into matters. I emphasise that that is not so. Under the proposal which was made the committees would be there as vehicles ready lo receive what, was sent to them by the Senate but until then they would have nothing. On each occasion the Senate would have to determine what would be done. A Bill would come to the Senate and we would determine perhaps to send that to a committee. A petition, a statement of a Minister, or some other matter might be referred. But on each occasion it would be for our decision. So it is nol as though we were setting up 7 committees which would run off in all directions. This would not occur, lt would require a resolution of the Senate before the committees could start to investigate any matter at all.
– 1 was referring to the sitting hours of the committees. Would we have to change the pattern.
– This could well be so. lt could require a disturbance of our pattern of sitting, lt could be that on a particular morning or on some mornings committees of the Senate would sit. 1 think this would be desirable. Perhaps I should refer to the motion to explain some of the mailers it contains. There is a proposal for a spread of committees.
– Before you explain the various committees, could you indicate to the Senate how you see the committees working in 2 areas, one in relation to the list, males and one in relation to normal legislation? How would you expect the Senate as a body to deal with those reports?
- Senator Webster has asked firstly about the Estimates. The Estimates, of course, are documents which accompany a Bill, lt is open to the Senate to refer all or any of the Estimates io the appropriate committees. The Senate could decide to send ofl’ the various estimates to these committees and there would be no difficulty in that. Take, for example, the committee dealing with foreign affairs and defence. If the Senate desired, it could .send lo that committee for its consideration the estimates of the Department of External Affairs and of the various defence departments. The committee would then meet, lt could have the Minister there. if lie was a member of the Senate. If a Minister from the other House desired to attend he might need the leave of the other House to do so; or he could send officers of his Department. The procedure that is handled in a rather clumsy fashion in the Senate would bc handled in a belter way before the Committee.
Senators could make speeches before the committee in the way that they make them here. The proposal is thai proceedings would not be restricted to senators who are serving on the committee. Other senators could attend if they so desired. Let us suppose that Senator Webster was a member of the committee dealing with foreign affairs and defence matters and wanted to ask some questions on defence. He could attend that committee and ask .questions.
– Unless the Committee said otherwise.
– That is so.
– I would like to ask a question about paragraph (5.) of your motion. You refer to voting. On what would the committee be voting?
– Paragraph 5 states:
A senator, though not a member of a standing committee, may attend and participate in its public sessions and question witnesses, unless the committee orders otherwise, but shall not vote.
– On what will the Committee be voting?
– At the end of a committee’s deliberations it may decide to report, just as the Committee of the Whole reports on the Estimates. The committee would then send the matter back to the Senate. After considering a petition a committee may decide that this should be dealt with in some way, and that decision ought to be confined to the members of the committee.
– I am interested in what the committee will vote on. The Estimates would be part of the Budget. So how could the members of the committee vote?
– The members of the committee would vole upon their report. They would report to the Senate in exactly the same way as the Wedgwood Committee dealt with the matters which were referred to it. The members of any committee would vote on the recommendations that they are to make to the Senate. Of course, such a vote would not be conclusive upon the Senate. It is only a report or recommendation or proposal to the Senate. It is nol in any way conclusive.
We have standing committees. We have the Standing Committee on Regulations and Ordinances, which is a substantive committee. It votes on various matters, but what it does is not conclusive upon the Senate. Let us suppose that we were to extend - it is not suggested that we would - those particular suggestions to the Regulations and Ordinances Committee. It would mean that other senators could attend the Committee and make submissions. They might ask questions, but they would not be entitled to vote upon the report which the Committee finally made. We have in mind that matters such as the Estimates and petitions would be dealt with by the proposed committees. The idea is to enable the greatest participation of senators in the various matters being considered by the committees.
The notion, as in other countries, is to multiply the activities of the Senate. The setting up of a system of committees each with a chairman and some regularity of proceedings would establish the order which is necessary for the proper conduct of proceedings of a deliberative body such as the Senate. We need to multiply the activities, and that is the essence of a standing committee. It does not mean greater powers. It means the multiplication of activities and, by having a smaller number of members, the ability to entertain submissions and the examination of witnesses which cannot be undertaken in the larger body.
– Could we call it a case of divide and rule?
– Abraham Lincoln referred to government of the people, by the people, for the people. Yes, it probably does mean that. The representatives of the people will endeavour to rule or govern on behalf of the people. Most of us here feel that by adopting both procedures we could carry out our functions on behalf of the people better than we are doing now. One of the advantages of such a system is that we would be able to undertake more activities. We would be able to have a body to which the people would be able to come and put their submissions. We would be able to listen to them, make a report, and do a much better job. I am sure that Senator Marriott as a representative of the people of Tasmania would like an opportunity to engage in more activities, to have more done for the people of Tasmania and to follow the experience which has been pursued in other countries.
– Is your proposal an invitation to senators to come along and give the benefit of their knowledge on the various subjects?
– Yes. That is the idea. We want to subdivide the activities of the Senate. It would be like creating 7 little Senates. The notion was to have the committees conducted in an orderly fashion and for them to have some structure by which to work. The idea was to exclude on as few occasions as possible members of the
Senate from participating in the deliberations. I think the proposals of the Leader of the Government in the Senate include a suggestion that other honourable senators attend and participate. I have an idea that in the other place a similar suggestion was made. This seems to be accepted by all hands. Paragraph (8) states:
Members of the public and representatives of the news media may attend, record and report any public session of a Standing Committee, unless the Committee otherwise orders.
This means that hearings would be open to the public, as are meetings of the Senate. Submissions made and evidence given could be recorded and reported in the same way as debates in the Senate and evidence given before committees of the Senate are recorded and reported - no more and no less.
– Why does the honourable senator want to include the restriction that members of the Senate who are not members of the particular committee can be excluded from attending the committee? Under paragraph (5). they may attend and participate, etc., unless the Committee orders otherwise.
– 1 suppose that what Senator Rae is suggesting may be so. The intention was that they would be able to attend. The intention of the drafter - myself - was that they may not participate. The honourable senator has raised a fine point which is probably correct. Paragraph (5) may exclude honourable senators who are not members of the committee from participation. From a quick glance at the paragraph, I think the honourable senator is right. He has probably studied it closer than 1 have. This may need the deletion of the words ‘attend and’, lt is the participation which ought to bc the subject of the control of the committee. 1 think the honourable senator is correct. I am convinced that he is right. At the appropriate time - which may be now - I shall move to delete those words. I ask leave lo delete the words attend and’.
The ACTING DEPUTY PRESIDENT (Senator Laucke) - Order! There being no objection, leave is granted.
– Paragraph (5) will now read:
A Senator, though not a member of a Standing Committee, may participate in its public sessions and question witnesses, unless the Committee orders otherwise, but shall not vote. 1 thank Senator Rae for raising that matter. The idea is that honourable senators could attend, along with other members of the public, but they would be able to participate unless the committee ordered otherwise. A situation may arise whereby a committee thinks that it should present a report or deal with a matter and the time has arrived when it wants to deal expeditiously with the business. I think that right of exclusion should be left to the discretion of those in control of the Committee.
– The committee might be taking evidence in camera.
– Where the hearing is in camera, there is no provision for other honourable senators to attend, lt is only when the hearing is in public session that they may, as members of the public, attend. As senators they may participate unless the committee orders otherwise. Honourable senators have the opportunity to examine the procedures which are set out. This is designed to make public the proceedings and to enable greater participation by honourable senators in the proceedings. We are trying to break through the deadlock which has been occurring in the Senate. So much business has been introduced that we are not able to attend to all of it. I think we should emulate the example of people elsewhere. I think that in recent years Parliament has not functioned anywhere near as efficiently as it might have. With our experience of work of the select committees, we are anxious to continue in this vein. We would like to have the opportunity of experimenting with a full system of standing committees.
In parliamentary institutions there is a great reluctance to change. Many people in this Parliament have adopted a rigid attitude that they do not want any change. All through this Parliament there are authoritarians who want to centralise all activities and who want to see to it that Parliament is conducted as a rubber stamp. There are those who think that legislation emanating from the Public Service should be introduced, that Cabinet should have as little to do with it as possible, the Parties even less, and the 2 chambers nothing except to put the rubber stamp upon it. I think there is a different feeling in this Parliament. During the last 2 or 3 years there has been a revolution in thinking. Members of Parliament are determined to exercise their legislative functions. Under the Constitution, and by the decision of the people, we are elected to make laws. That is our function. We are elected to make the laws which govern the community. We are supposed to investigate to ensure that those laws are the best possible laws. It is no excuse for us to say, when somebody points out that a law is a bad one, that it emanated from somewhere else and came through here. Each of us has a legislative responsibility. The Executive has its responsibility to carry out those laws. The legislative power is vested in us. We should carry it out. We have not the machinery to do it properly. Now is the time to adopt that machinery.
– Having responsibility for the law, I take it that it is not right for us to induce people to break it?
– 1 suppose that if we are responsible, the honourable senator and I, we could say that it is our law or 1 could say that it is my law, I voted for it and I am responsible for it. I would hardly think that I would induce any person to break a law that I made, lt may happen, but I would think it very unlikely. This is the legislative chamber. This is the chamber that is responsible, as is the other place, for supervision of administration. With these twin functions we need better procedures and better machinery than we have. We know what we should adopt. It is for the consideration of the Senate that these proposals are submitted. I think they are reasonable proposals which are designed to cover the responsibilities of the Senate. A great deal of care has been taken. They are not beyond the capacity of the Senate in terms of numbers. Everyone is conscious of the numbers in the Senate, of the other tasks that honourable senators have to perform, of the number of other committees and of the capacity of honourable senators. Bearing that in mind, I think these committees should be set up.
I think the success of the committees will depend to a very great degree upon the staffing of the committees. No system of committees will be successful unless we have the staff and the facilities to enable them to operate. This has been at least part of the secret of the success of the
Regulations and Ordinances Committee. It certainly has been the reason for the great success of committees overseas. It is incumbent upon the Senate to do everything in its power to see that committees which are set up have the backing of competent and sufficient staff. 1 feel that in this Senate there is a will to work. Honourable senators want to carry out their responsibilities; they want to improve the legislation; they want to supervise the administration. It is for us to decide this question. We have the opportunity and we ought to vote for ourselves to see that we adopt the machinery to enable us to carry out our task.
– Do you mean a free vote in the Senate to decide this question when you say ‘ourselves’?
– If we had a free vote in this Senate 1 could hardly imagine any honourable senator - there may be 2 or 3 - who would vote against a system of standing committees to carry out the responsibility of the Senate.
– Do you think the number of committees you have proposed could interfere with the operation of the select committee system?
– That is a very good question. In the proposals I have made I have said that a standing committee should take care not to interfere with the work of a Select Committee. My motion states:
The Senate has appointed a number of select committees such as the Senate Select Committee on Medical and Hospital Costs which has just presented its report; the Senate Select Committee on Water Pollution which is about to present a report; the Senate Select Committee on Off-Shore Petroleum Resources which I hope one day will present a report: the Senate Select Committee on Air Pollution which has presented its report; the Senate Select Committee on Securities and Exchange which I am quite sure will present a report; and the Senate Select Committee on Drug Trafficking and Drug Abuse.
– That is, provided some of the members do not get carried out beforehand.
– Yes, unless the members of the Drug Committee get carried away into some fugue of their own dictated by the subject matter they are considering. I think the Committee is expected to report in its own dimension. For those reasons I ask the Senate to adopt the system but not accept any proposal which will have the effect of delaying the establishment of a permanent system of select committees.
– I have a dual responsibility in this debate. I have the responsibility as the Leader of the Government in the Senate to speak to the proposals outlined by Senator Murphy. 1 want to speak to the proposals put down myself and 1 have a responsibility to bring to the consideration of the Senate the report from the Standing Orders Committee relating to standing committees which was tabled by the President and which is Order of the Day No. 23 on the notice paper. Senator Gair, the Leader of the Australian Democratic Labor Party has indicated that he wishes to speak. 1 have been given a copy of his set of proposals which I presume he will move and speak to after I have concluded, in fairness to Senator Murphy and myself 1 feel bound to say that since we are speaking before the Leader of the DLP has put his proposals it may be that we will want leave at some subsequent stage in the debate to advert to his proposals. I am sure the Senate will agree to that as a reasonable proposition. it should be made clear at the outset that there is a commonalty of view in relation to this proposal, a view which postulates some form of committee work for the future management of the Senate in addition to the work we are already doing. Before I speak to the substance of the proposals I think I have an obligation to refer to Order of the Day No. 23, Government Business, which was the report from the Standing Orders Committee relating to standing committees. The report was tabled on 17th March 1970. I think I should bring out the points of the Clerk’s proposals which were put to the Standing Orders Committee. They should be put down in a recorded form so that they will not be lost in any debate which we have. Then 1 wish to speak in the generality to my own proposals and theo speak generally to the 3 proposals. The report states:
During the 26th Parliament the Standing Orders Committee began a consideration of the standing committee system and that consideration has continued during the present 27th Parliament
To assist a consideration of this matter, the Clerk of the Senate was asked lo prepare a Report on Standing Committees. The Report was submitted in three Paris, dated November 1969, January and March 1970, respectively.
The Standing Orders Committee resolved that the Clerk’s Report be referred to the Senate for consideration. The Report is appended. 1 hope all honourable senators have a copy of the document. They can call for it and have it with their papers for any discussions we are having in these matters. The report continued:
The Committee makes no recommendation in regard to the Clerk’s Report and submits it without comment.
All honourable senators know who were the members of the Committee. They were the President (Sir Alister McMullin) who presided, myself as the Leader of the Government in the Senate, the Chairman of Committees (Senator Bull), the Leader of the Opposition (Senator Murphy), and Senators Cavanagh, Sir Magnus Cormack, Lacey, Withers and Wright. 1 will read the introduction to the report which sets the pattern, lt states:
In August 1969 the Standing Orders Committee asked the Clerk of the Senate to submit a Paper on Standing Committees.
The essence of the Report is thai a standing committee system is standard and essential equipment of the modern legislature. Work-load alone is a compelling reason. Equally important to Parliament in its consideration of public affairs is that the legislature may, through its committees, call upon scholarly research and advice equal in competence to that relied upon by the Government.
The report had Part 1 which was superceded by Part 2, and Part 3 tended to summarise the position. In essence the proposal was that 6 standing committees should be set up for the allocation of departmental estimates and that there should be a standing committee on statutory corporations. That is, there would be 6 legislative and general purpose standing committees and a standing committee on statutory corporations. It was recommended that consideration of the Standing Orders be amended to provide that at the commencement of each Parliament the following 6 standing committees be appointed to deal with Bills and other matters: The Standing Committee on External Affairs and Defence; the Standing Committee on Transport and Communications: the Standing Committee on Trade. Industry and Labour: the Standing Committee on Legal. Constitutional and Home Affairs; the Standing Committee on Health. Welfare. Education and Science; and the Standing Committee on National Finance and Development. As I said, a standing committee to examine statutory corporations would also be set up. The report states:
The six legislative and general purpose standing committees would cover the activities of all the departments of government and would stand ready to consider any Bills. Estimates, petitions, inquiries, papers or other matters which the Senate may refer to such committees, on motion.
Let me now take a couple of general comments out of the report. It makes reference to what has happened in other countries such as the United Kingdom, Canada and New Zealand, lt also states:
If legislative committees of the Australian Senate were appointed, it is unlikely that a great many Bills would bc referred to the committees. A number of Bills are of a machinery nature and attract no debate in Committee of the whole. In 1 969, as an illustration, 75% of Bills were agreed to in Committee of the Whole without any debate, lt is important, therefore, that Bills should not be referred automatically, but only by resolution of the House. If desired, the resolution may impose a time limit for inquiry and report.
The report then makes reference to comparisons with other countries. It is a comprehensive report. I believe that in fairness 1 should say - this is agreed here tonight - that in any consideration of this matter the report by the Clerk, Mr Odgers, should be given consideration.
Having said that. I turn lo the motion of which I gave notice several days ago. lt includes a fairly simple explanation of the mechanics. I think that can be disposed of before I speak to the substance of the motion. Whereas the Odgers recommendation provides for 7 standing committees including the one on statutory corporations, my proposal is directed to a consideration of the Estimates, with which in normal circumstances we deal twice a year. We deal with them during the Budget session, when we deal with them in depth and in great detail. We also deal with them in the autumn session in the form of supply Bills in which provision is made for five-twelfths of the year ahead.
– Do you see any conflict between your proposition and the other propositions?
– I would like to develop the background before I come to the substance of the matter. My proposal provides for Estimates Committees A, B, C, D and E. In fact in can be easily understood by honourable senators because the Committees follow the representations by Ministers in this place. For instance, Estimates Committee A would cover the department that I, as Leader of the Government, represent in this place, namely, the Department of Supply, the Parliament, the Prime Ministers Department and the Departments of the Cabinet Office, Trade and Industry, External Affairs, the Treasury and Defence. Al the other end of the list, Estimates Committee E would cover the Departments of Air, Primary Industry, the Army and the Navy and the Repatriation Department. They are the departments represented by the Minister for Air (Senator Drake-Brockman).
– But they are limited lo the Estimates.
– Yes, with which we normally deal twice a year.
– Not an inquiry into the department.
– No, they are limited to the Estimates. Then the prodecural matters are dealt with in paragraphs (2) to (15). I think it could be said for the purposes of the debate here tonight that broadly they cover the same sort of mechanical machinery as do the proposals made by the Leader of the Opposition. I do not propose to discuss them because I do not think that is the issue at the moment. In fact, they provide the normal machinery for the management of committees. They provide, of course, that the Government shall have a majority on each committee. They also make provisions in respect of quorums, the appointment of chairmen and all the other normal things.
Therefore, at this point of time we are confronted with 3 proposals, with 1 yet to come. I want to speak to the 3 now. Very naturally, I will want to speak later to the fourth, when Senator Gair brings it forward. I make the point, first of all, that what Senator Murphy said earlier would probably be quite true: If we were just having a vote in the general sense on whether we believe that there is a case for the appointment of additional committees, I do not think there would be any argument or any different view. The proposal made by the Leader of the Opposition goes a certain distance. The one made by the Leader of the Government goes a certain lesser distance; and the Odgers proposal goes a greater distance in some respects but a lesser distance in others.
I wish to draw one significant fact to the minds of honourable senators. The Senate is the second chamber and, whether this Government remains in office - I nope that it will do so for many years to come - for a quarter of a century or any other period, I believe that we can accept the inevitability of the fact that as long as we have a Cabinet system with a bicameral system, with the other House being the executive house in that sense, there will never be in this place any more than a certain fraction or percentage of the members of the Cabinet and the Ministry. As honourable senators know, at the present time in a Ministry of 26 there are 5 Ministers in this chamber. I believe that we all accept the general principle that the Senate inevitably will have only a limited number of the total number of Ministers in any Parliament.
– The honourable senator did nol listen to what I said, and now he interrupts. I said that the Senate must always have a certain percentage - whether the number is 5, 6, 7 or 8 - of the number of Ministers in the 2 Houses. That is axiomatic. I do not think it needs to be argued. At the present time we have 5 Ministers here. In order to appease Senator Georges I will call it 7 if he likes, but that is not relevant to the argument, I suggest with great respect.
– We would receive better service.
– Even with 17 Senator Georges would not get in.
– I am making a very important point. I suggest that honourable senators let me make it. If they speak later they may attack it if they like The fact is that the Senate will have only a certain percentage of the number of Ministers in the 2 Houses. Therefore, the proposal that I have made postulates that when we do have committees they will fall into line with the responsibilities of the Ministers of the Executive Government who sit in this place. When a proposal is made for a series of committees which not only will relate to those responsibilities of Ministers but also spread out into other portfolios, I say with great respect that it is just not humanly possible, lt would not weaken my argument if there were 7 or 8 Ministers in the Senate instead of the 5 Ministers we have at present as long as there are 26 portfolios in the Ministry. It may be necessary in the future to have a much larger Ministry. This would only make the problem greater because of the fact that there are only 60 senators in this chamber at present.
I believe that any new proposal in relation to a committee system will place greater responsibility upon the honourable senators who conduct the affairs of this place and will create additional problems. That is why the proposal I have put down in relation to the Estimates has been geared to the group of portfolios for which each Minister in this chamber is responsible. During question time honourable senators put questions to Ministers in this chamber on all sorts of subjects. Sometimes honourable senators are aggrieved when they do not receive a reply, but for the most part they recognise that Ministers in this chamber cannot give answers off the cuff in relation to many subjects for which a Minister in another place is primarily responsible and for which they are responsible in this chamber. I believe that if additional responsibility is placed upon Ministers in this chamber the system would be unworkable. The Odgers proposal and the Leader of the Opposition’s proposal are for a series of committees which are not, in some cases, definitive. For example, a standing committee on constitutional and legal affairs has been proposed. I have been through the mill today dealing with just one Bill which involved some legal problems. I found it to be quite an ordeal.
– I am sorry that the Minister should say that.
– I was going on to say that yesterday and the day before as well as the previous week of the sitting the Senate debated the National Health Bill, which has involved all sorts of implications and ordeals. I would suggest that if Senator Murphy’s proposal for a wide ranging standing committee on constitutional and legal affairs were to be accepted-
– You could put all the lawyers on that committee and then the rest of us could get some work done.
– Senator Little suggests that we should put all the lawyers on such a committee and lock the door and hope and pray. I hope I am not being offensive to them. A standing committee on foreign affairs and defence has been proposed. Because these subjects cover such a broad spectrum the proposed standing COm.mittee would bc a colossus. The same position applies wilh some of the other proposals.
If honourable senators look at the notice paper of the Senate, and I am sure all honourable senators have one on their desks, in front of them they will find that there are no less than 16 committees constituted at present. 1 have taken into consideration the standing committees, the joint statutory committees, the joint committees and the Senate select committees. In other words, there are no less than 16 committees on which some of the 60 senators in this chamber are required to sit. One has to lake into consideration also that the 60 senators include the Presiding Officer and the Chairman of Committees, 5 Ministers, the Leader of the Opposition and the Deputy Lender of the Opposition, the Leader of the Australian Democratic Labor Party and 3 Whips.
– Some committees never meet.
– I will come to the question of whether they meet in a moment. The honourable senator should not try to anticipate what I am going to say. He has made me forget the number of office bearers I have named. Perhaps I had better start again.
– The Minister was up lo 13. including the Whips.
– Thank you. This is another example of the responsibility which will be imposed on the remaining honourable senators. I forgot to mention Senator Turnbull. I do not think he is a member of any committee at the moment. Anyway, out of a strength of 60 honourable senators one has to take something like 1 6. which represents the number of honourable senators who have higher responsibilities in relation to the management of the Senate.
– Which leaves 44.
– Yes. In addition, one has to take into account that some of those 44 honourable senators are already members of committees of some nature. Senator Cavanagh interjected earlier and said that some of these committees to which I have referred do not sit. I shall go through the committees which are listed in the notice paper.
– What about the Disputed Returns and Qualifications Committee?
– Do not anticipate what I am about to say. One has to take everything into consideration. The first committee which is listed in the notice paper is the Standing Orders Committee. Does any honourable senator suggest that it does not sit? I think its membership is S honourable senators.
– lt rarely sat until this year.
– Senator Cavanagh is a member of the Standing Orders Committee. He has a very good attendance record at its meetings.
The DEPUTY PRESIDENT (Senator Bull)- Order!
– I would suspect, Mr Deputy President, that when the pressure is applied the interruptions come in hard and fast in an attempt to bury the substance of what I am saying. I have put an ‘A’ next to the Standing Orders Committee to indicate that it is active. The next one is the Privileges Committee. I have left a blank beside it because it does not sit. I have put an ‘A’ beside the Library Committee because it is active. The Printing Committee and the Regulations and Ordinances Committee are also active.
– ls that so?
– Yes. They put down reports in this chamber. T should imagine that the Regulations and Ordinances Committee is very active. I was a member of the Disputed Returns and Qualifications Committee for 12 years and it never sat. Therefore, I have regarded it as being inactive. The Broadcasting of Parliamentary Proceedings Committee never meets. I think the Public Accounts Committee meets at least every Monday morning and sometimes it meets on Tuesday, Wednesday and Thursday mornings when it has plenty of work on its plate. T was a member of the Public Works Committee. I notice some honourable senators in the chamber who were also distinguished members of this Committee. The Public Works Committee is a very active Committee. It goes all over Australia. In fact. [ believe that it has gone to New Guinea since I left it. 1 believe that the Joint Committee on the Australian Capita! Territory is active. The Foreign Affairs Committee is very active. The Joint Committee on the New and Permanent Parliament House is active.
Honourable Seniors - Oh!
– It presented a report on 8th April 1970. Perhaps I was reading too quickly, but I think I read in the newspapers today a report of a suggestion to reactivate it. The Senate Select Committee on Off-Shore Petroleum Resources is a most active one. The Senate Select Committee on Water Pollution is, I understand, most active.
– It is due to report and finish up.
– ‘But it has been active for 18 months.
– Yes, it has been active for 18 months. The Senate Select Committee on Medical and Hospital Costs finished up the other day. It has tabled its report. The Senate Select Committee on Drug Trafficking and Drug Abuse is active. The Senate Select Committee on Securities and Exchange is active. Having disposed of the committees which appear in the notice paper, I turn to the notices of motion which appear under General Business in the notice paper. I find that notices of motion have been given for the setting up of Senate select committees.
– We will put some of those off, though.
– I see. We are going to trim our sails to meet the breeze. I am not criticising it, but it is a fact of life that notices of motion have been placed on the notice paper for the creation of new Senate select committees. This brings me to the point I want to make, Mr Deputy President. The Government believes that there is a need to look at the question of the setting up of Senate select committees on the basis of our capacity to cope with them. I do not know what happens on the Opposition side of the ship, but I do know that a tremendous strain is placed upon honourable senators on this side of the chamber. I have no doubt that the Opposition is experiencing the same difficulty in relation to the manning of Senate select committees. In considering this proposal let us take as a beginning the proposed Estimates committee. There would not be one honourable senator in this place who would not agree with me that the most difficult time that we have in this place is when we are dealing with the Estimates. During that debate a Minister will sit at the table while the Committee goes through the estimates for one department after another. In the case of the Leader of the Government-
– He wants to spend ali the money on the FI 11.
– If the honourable senator stays with this debate he will do better. The fact of the matter is that the Leader of the Government has responsibility during the Estimates debate for 5 Government departments, in addition to which he deals with the estimates for the Department of the Cabinet Office and the Parliament. So in total he is responsible for the estimates of 7 different bodies. During that debate any honourable senator at any tick of the clock, particularly when the proceedings are being broadcast, will stand up and say: ‘Last year we spent $196,000 on item 54321; next year the proposed expenditure is $242,050. Why?’ The Minister is expected to be able to give an answer immediately. If he cannot answer the question Senator Turnbull embarks on a really severe criticism and says: ‘What is the Minister doing? He should know all these things.’ When the Leader of the Government has finished dealing with the Department of Supply he may then have to deal with the Parliament and he is asked questions about that. He could be asked why a certain employee had been dismissed at a certain time in a certain area up near Bullamakanka, and where the reference to this is to be found in the Estimates. He will want an answer to his query.
– ls this why they are increasing the Minister’s pensions?
– I think this could be the reason - particularly for the Leader of the Government. The point I am making is that as a start to the proposed committee system we should begin the exercise by dealing with the Estimates. We would all agree that the present method of dealing with the Estimates is unsatisfactory. We would be able to deal with the Estimates in a far more practical way by referring them first to a committee where many of the pedestrian inquiries could be resolved after which the committee could report back to the Senate where in our discussions we could make a more direct and profound contribution to aspects of the Estimates or appropriation Bills.
– What leads you to believe that?
– The situation certainly could not bc worse than it is at present. I ask the honourable senator to consider the questions that are asked during the debate on the Estimates. When it comes to asking questions, Senator Webster is no exception.
– Are you referring to the questions or the answers?
– Both the questions and the answers. J suggest that a system could be devised by which we could cut out in the Senate much of the pedestrian detail. An Estimates committee would be provided wilh officers who would not be obliged to sit in a box almost on top of each other in the corner of the chamber, trying to work on papers and to gather information so that it is available the moment that a senator sits down. The officers would be able to work in a committee room where they could operate far more intelligently and with much greater application than at present.
– What would von say ought to be the function of the Senate when it comes to looking at the Estimates, in the body of the Senate or in committee?
– I think that much of the work that we now do in the Senate chamber could be dealt with in the committee stage, after which a report would be brought into the Senate, lt is almost certain that there would be some mutter brought up in the committee stage in respect of which someone would feel that greater explanation would be required. When we came into the Senate a senator would have a proper right to raise a matter again and it would be discussed in this place. In this way the debate on the Estimates in the Senate would be on a far broader canvas than at present, lt is the Government’s opinion that it is loo soon to adopt the complete proposal suggested by the Leader of the Opposition and too soon to adopt the complete proposals suggested in the Odgers report. However, as a first exercise, it is suggested that we could deal with the Estimates in a committee stage. Ii would not take long to discover how effective the system was because we would be dealing wilh the Estimates as a result of messages from the other place and in a matter of a fortnight or 3 weeks at the most we would have a much better appreciation of how effective the system would be. I think it is true that if the Senate were to embark on all the proposals which have been projected by the Leader of the Opposition and which appear in the Odgers report, instead of doing something to improve the parliamentary system in the Senate we would run the terrible risk of prejudicing the ultimate success of the proposals. I believe that gradualism should be the order of the day when embarking on the committee system.
– That is a conservative approach.
– It is a conservative approach, but I believe that it may well be the most effective approach in this place. The honourable senator may call that conservatism, but I call it realism.
– Yet you want to dump the Estimates on to a committee as a first step.
– Now we hear the opposite. Senator Cant says that it is conservatism but Senator Cavanagh suggests that the Estimates would be the most difficult matter to deal with, so we have 2 points of view from honourable senators opposite. The system proposed will involve a revolutionary change and I suggest that it would be very unwise to adopt all the proposals at this time. I remind honourable senators that standing order No. 196 states that any Bill at any time may be referred to a committee of the Senate. 1 do not want to say very much more at this point.
The DEPUTY PRESIDENT- Is it the Minister’s intention to move this as a motion?
– Yes, although I did not think we had reached the stage where we had agreed what we were going to move.
– I have moved mine and the Leader of the Government can now move his.
– How do we put Mr Odgers’ proposals before the Senate?
– I think they come down to Senator Gair’s proposals, so we can deal with them in that way.
– They would be dealt with as a resolution from the President.
– I should like to get my mind clear. Has Senator Murphy moved a motion?
– If that is so, we cannot have two motions before the chair. Senator Anderson will have to move his proposal as an amendment.
– I do not know whether Senator Cant was here when we discussed this matter at 8 o’clock tonight.
-I have been here right through the discussion.
The DEPUTY PRESIDENT- Order! Because the Standing Orders have been suspended Senator Anderson will be in order in moving the motion.
– In that case so we will have 2 motions before the chair, I move:
Estimates, as contained in the Papers presenting the Particulars of Proposed Expenditure, shall on motion be referred for examination and report to five Committees, which are appointed by this resolution. The Committees shall deal with the Departmental Estimates as follows:
Estimates Committee A-
Department of Supply
Prime Minister’s Department
Department of the Cabinet Office
Department of Trade and Industry
Department of External Affairs
Department of the Treasury
Department of Defence
Estimates Committee B -
Department of Housing
Department of Immigration
Department of Social Services (including Aboriginal Affairs)
Department of Health
Estimates Committee C -
Department of Works (and Tourist Activities)
Department of Labour and National Service
Department of Education and Science
Department of External Territories
Estimates Committee D -
Department of Civil Aviation
Department of the Interior
Department of National Development
Department of Shipping and Transport
Department of Customs and Excise
Estimates Committee E -
Department of Air
Department of Primary Industry
Department of the Army
Department of the Navy
I presume Senator Gair will also move his motion. Then we will have 3 motions before the chair. Then the proposal of the President will be put, so we will have 4 motions. This is the sort of situation that I foresaw when we began this debate at 8 o’clock. In Australia we have a parliamentary system which is shaped and formed broadly on the Westminster system. The committee system which is suggested is rather a movement away from that in some respects, particularly when it comes to the passage of Bills through a committee stage and then a review of them. We would not want to see Bills being constantly referred to a committee. Senator Murphy has said that it would not happen constantly and that only some would be referred, but I have been long enough in this place to know that politics are played by the rules of politics. Do not let us kid ourselves about that. I remind the Senate that it was played that way in 1951 when the Labor Party moved that a Bill be referred to a committee. The matter was left there for such a time that it failed to pass and formed the background for a double dissolution which occurred at that lime.
– This could have been done then.
– Yes, that is the point. Let us not become too self-righteous about a committee system because the facts of life are that when the chips are down and we are playing politics, although we might be very courteous we play the game pretty hard. If the Opposition wants to delay a Bill for any variety of reasons, it can always move that it be referred to a committee. Honourable senators opposite should not kid themselves or try to kid me on thai one.
There is an overwhelming desire in this place to introduce some system which will improve the procedures of the Senate, and it is believed that a committee system will do just that. My motion contains a proposal of gradualism which would enable us to establish committees firstly in the Estimates area where we will have immediate problems arising in the Budget session. That would be a nice testing ground to see how the committee system works. 1 envisage that after the system is tested there will not be so much talk about the establishment of select committees and that when the present select committees have completed their job, further select committees will not be appointed. More honourable senators will want to join the permanent committees and everybody will love everybody. This is what might happen.
– I thought that we were playing politics.
– Because of Senator Willesee’s interjection. I repeat that I believe that the standing committee system will be introduced in the Senate, and I believe that if we play our cards gradually and do not try to rush our jumps we will get a good system. But we will destroy the whole concept if we try lo speed the process up, do too much too soon and impose a tremendous burden upon all honourable senators. I believe that in this day and age, with a Senate of only 60 members, we are carrying a tremendous burden, and I do not believe that we should overload ourselves any further.
19.331 - On behalf of the Australian Democratic Labor Parly I move:
The Senate accepts and approves the principle of standing committees of the Senate appropriate lo various areas of departmental administration.
In support of that motion, I should like to point out, as is stated inthe first paragraph of the motion, that our Party accepts and approves of the principle of standing committees of the Senate because we believe that they could have the effect of expediting and facilitating the business of the Senate without taking from an individual senator the right to address himself on any matter when the report of a committee is submitted to the Senate. We also believe that no matter should be referred to a committee without the approval of the majority of the Senate. In our desire to expedite the business of this chamber it is important that we must preserve at all costs the right of an individual senator to address himself to any matter that might come before the Senate at any time.
We are confident that the committee system could prove advantageous. But we are also conscious o[ the fact that this scheme must be accepted as being a major departure from a process of business that has been in existence in the Senate, with little or no alteration, almost since federation. The proposal must be implemented with caution not with conservatism as some honourable senators said in the course of” debate by way of interjection. We must exercise legitimate and valid caution until such time as we are acquainted with the capacity of members ofthe committees to deal with questions, and also until we know from the officers of the Senate just what the position is regarding the administrative facilities and accommodation and staff requirements for the establishment of the total number of committees proposed pursuant to the Standing Orders Committee’s report.
Senator Murphy conceded that the success of these committees depended to a great deal on the officers on the committees. Any of us who have had experience on a committee recognise and appreciate to ; he full the valuable contribution which the committee officers are making to the successful working of the committees. In the mot ion we suggest that the establishment of the total number of committees pursuant to the recommendation contained in the Standing Orders Committee’s report of17th March 1970 be done over a period of not less than 12 months and not before 3 of the said committees selected by the Senate for first establishment have actually operated and a report of their deliberations has been presented to ihe Senate. Then [ believe that we would be in a much more favourable position to assess the capacity of the Senate to appoint more than 3 committees. We might find that 3 committees are more than enough. But let us experiment and adopt the suggestion of the Leader of the Government in the Senate (Senator Anderson) and have a policy of gradualism - hasten slowly and he firm in our conviction on the efficacy of the committee system before we throw the whole thing open and have 6 committees operating unsatisfactorily and with poor results. 1 think that is an approach which should appeal to all honourable senators. At least, it should appeal to the Leader of the Government in the Senate who suggested a policy of gradualism - of hastening slowly until we find our feet: until we know from the Clerk of the Senate what are the difficulties associated with implementing the proposal for the establishment of 6 committees. He might find that he has all the facilities and staff; well and good. Then we can have a look at the whole question.
I do not propose to cover the ground and arguments in favour of the setting up of the committee system. They have already been canvassed by the Leader of the Opposition (Senator Murphy) in a long outline of what he believed and hoped the committee system would bring about. The Leader of the Government in the Senate has also spoken on the matter but all the motions which have been moved accept and approve of the proposal and for that reason there is no necessity for me to cover the ground again. There is an agreement on the principle so it is just a question of how many committees we should proceed with immediately and just what process we should adopt. Senator Murphy said that the details, after all, mattered comparatively little and provided we got approval of the principle we could tidy up the other things gradually in the light of our experience and the progress that our committees made. That should appeal, 1 think, to anyone who is anxious for the success of this proposal.
If we adopted Senator Murphy’s proposal or even the recommendation contained in the report of the Standing Orders Committee in toto tonight or at any other time, and set up 6 committees plus a statutory committee, and if we found that these committees were inoperative and that they could not function because of the inability of the Parliament to provide them with staff, administrative facilities and accommodation we would be made a laughing stock in the eyes of the public. I submit that our proposal is a sound one. It is a reasonable one and it is a sensible approach to a very important departure from procedure.
– Do you propose to explain which 3 you have in mind?
– Not particularly. That is something for the Senate to decide. If this motion moved by my Party is adopted then the Senate will proceed, 1 take it, to appoint the 3 committees which it believes on a majority decision are the most important. We are not presuming to dictate which committees should be appointed. We are more concerned with the number for the present. We are concerned about the successful functioning of these committees.
– Were you referring more to perhaps 3 of the committees that would deal with the estimates?
– That would deal with the first 3 of Senator Anderson’s group?
– Not necessarily, lt is a question for the Senate to decide. I could move that the 3 committees could be so and so and someone else could move that they be so and so.
– We get the principle established first.
– We get the principle established and I think that is the process we should adopt. Our motion states that very clearly. It would probably depend upon and be influenced by a Bill or some other matter that had come before the Senate that would necessitate the appointment of a committee. That would happen and there we would have our first committee appointed on the majority decision of the Senate. 1 do not know that there is very much more that I can say in support of my motion, lt is like Bushells tea; it speaks for itself.
– Are commercials allowed in the Senate?
– We are off the air. Someone said in the course of the debate that this Senate has functioned with a greater measure of satisfaction and success of recent years. That is undeniably true, and I believe - and I say it with all due modesty - that a lot of that success is due to the fact that we have a minority party here - of 2 for a long time and now of 4 - that is not chained to any political machine and which exercises a vote on all issues according to its conscience and to ils judgment after very close and careful examination of the pros and cons of the issues that come before this Senate. I claim that credit and I believe that it is a justifiable claim on behalf of the Party that I lead. We will continue to do that and, as I said at the outset in supporting the committee system, we are nol forfeiting and do not intend to forfeit our right to address ourselves in this Senate to any matter that has been the subject of examination by a committee.
The fact that a matter is sent to a committee will not mean that we, or any other honourable senator for that matter, will be denied the right to address himself to the particular matter for or against. I would think, too, that members of a committee who have sat in conference on a certain issue should, if they feel like it, have the right to speak against the majority decision of that committee. That is democracy at work, I believe. It is not an unusual thing for minority reports to be submitted to this chamber and I suppose they will continue to be submitted from time to time. I just want to make our position clear so there will be no misunderstanding. That is how we understand the position at the present time and that is what we believe should obtain in the event of the committees being established in the near future. But I say: Let us not rush in to this in case we make a bungle of it and get bogged down. Then the committee system would be consigned to limbo, lt will never be raised because at any time anyone suggests the establishment of a committee we will be reminded that in 1970 we attempted this and because we went at it like a bull at a gate and did not have regard to the facilities available to us for successful functioning we failed in our attempt to establish the standing committee system.
Senator DEVITT (Tasmania) [9.49J- 1 would like to make a few brief comments on this subject which 1 think is extremely important. I do not wish to delay the Senate but I feel there are one or two points which ought to be made to clarify my own mind on this and perhaps to assist other honourable senators to come to a decision as to the merits of the matter that is now before us. As I see it, this is a further interesting and quite exciting chapter being written into the history of this Parliament. The purpose of the proposal that is before us at the present time is an excellent one and is consistent with what has been happening for quite some time now - the past 3 years at least - when ali of us have been quite determined and done our level best to make sure that the institution of Parliament works at the highest possible level in the service of the people of this country.
The thing then to be examined is how to achieve the purpose to which we are now directing our attention and our comments. 1 see initially that there are the kinds of problems to which Senator Gair referred during his brief comments. We have a limitation on personnel - that is, the number of senators which I think is set at 44. We have limitations on staff which has been a matter of some concern to other committees which have been operating in the Parliament and we have very serious physical deficiencies in the Parliament itself. I feel bound to say at this stage that while these deficiencies have been evident for years there appears, to the present time at least, to have been very little done to overcome or alleviate the problems which have become accentuated and which make it more difficult day by day for honourable senators really conscientiously trying to carry out their responsibilities and duties.
– The position has worsened since I came here.
– The position has worsened considerably. One finds ministerial areas crowding into private members” areas of operation. With the incidence of the committee system the problems have been accentuated, lt is extremely difficult at present for those of us who have been trying to do a reasonably efficient job - 1 think this embraces all of us - to meet the demands of our responsibilities. The Regulations and Ordinances Committee has met on 4 occasions in the past week trying to discharge its functions in that area of responsibility. At times we have met for a quarter of an hour. That has been the only time available to us to meet to try to get through business which it is important should be dealt with to a time. ;i hie. We have met in various areas of the Parliament. lt came to my notice recently that the committee functions of the Parliament have been moved progressively into an area outside the Parliament - to West Block. I believe that there have been 14 transfers from the Parliament to West Block to enable the functions of the committees and of the personnel to be carried on. lt becomes more difficult still to discharge these functions if they are being moved from the Parliament because there are problems with lines of communication and that kind of thing. Parliament is growing in importance. This will continue to occur in democratic countries throughout the world. We have to lift our sights, we have to lift our vision, we have to lift our horizons to an appreciation and understanding of the growing importance of the parliamentary system, and we have to give our thoughts and our attention to ways in which we can make the system work better.
One of the things that must be done to meet the difficulties that Senator Gair has mentioned is to change the sitting hours of the Senate. If we changed the sittings hours of the Senate we could continue to discharge our parliamentary function and be able to make better use of the 60 members of the Senate who could be dispersed to their various committee areas. There would thus be much more economical use of their time. The problem win not be overcome unless the physical appointments of this place are improved by the provision of more committee rooms. 1 suggest that by the simple expedient of a complete reorganisation of the sitting times of the Senate we could accommodate the various committee activities mentioned in the Odgers report presented through the Standing Orders Committee, and in the proposition which has been put forward by Senator Murphy. lt would be feasible and possible to carry out this function provided that we were prepared to alter the sitting arrangements of the Senate. It is essential to do that. Extremely important matters have been brought forward tonight as to the duties and responsibilities of the proposed committees - works, parliamentary responsibilities, the areas of governmental responsibility at the 3 levels and so on - to which we should be giving a great deal of attention, i am certain that we waste a tremendous amount of time here. If one looks around the chamber from time to time one will see 30, 40 or 50 senators listening to a debate.
– More like 1 0.
– No. When there are interesting debates I have often taken a count and have noticed a tremendous amount of interest. 1 believe that honourable senators generally feel that their proper place is here when debates are proceeding. I feel like that, and I think it would be the wish of honourable senators to be where the action is, as it were. In any case, this is where the laws are made, this is where legislation is discussed. I suppose that this chamber and what takes place in it stand before the work of subordinate areas of operation, if I may put it in those terms, so our responsibilities primarily are in this chamber. If we reorganised our silting hours our time would be better used, and a great many more members of this chamber would take part in the earnest, sincere and extremely important deliberations in the various areas of delegated responsibility. It can bc done. There is no question about that. With the proper economic use of the resources of this chamber - the staff resources, the membership of the chamber itself - and with a proper regard to the allocation of sufficient committee rooms within which to work these problems could be overcome.
There are severe physical limitations on this chamber at the present time. Irrespective of whether we adopt the system that we are discussing now, there are very severe physical limitations on the chamber, on the personnel of the Parliament, on the appointments of the Parliament and in the physical layout of the Parliament in relation to the availability of space and operational areas for honourable senators, lt is high time - in fact it is past time - that some proper consideration were given to this matter. 1 understand that there are plans somewhere in the offing to overcome at least some of the physical disabilities of this place. I hope that there will be a continuing interest in and a continuing understanding of the growing importance of the Parliament so that problems of this kind do not arise in the future. Let me be quite frank. So far as I am concerned, these things are seriously affecting, retarding and inhibiting the work and the functioning of this chamber.
I do not think there is any need for me to go any further. This is a new and quite exciting departure. It will give some new significance and some new importance to the Senate as a House of the national Parliament. The people of Australia require a better performance from the Parliament and I think that the people of Australia - our bosses - are entitled to a better performance from the Parliament. I think that every honourable senator, in fact every member elected to the Parliament, genuinely desires to give the utmost of his time, energy and ability to the service of the Parliament and the institution of the Parliament. I believe that by the adoption of the commitee system as has been suggested tonight we will go at least a little way towards the fulfilment of that objective.
– Will the honourable senator answer a question in order to enlarge my mind? If a decision is taken in the Labor caucus that the committee members have to oppose and perform a certain action in the context of a Senate committee, what would be the action of the Labor senators on that committee?
– I do not know what experience the honourable senator has had in these areas but I think that the best way to answer him-
– Would Labor senators be obedient to a caucus decision or to a committee decision?
– If the honourable senator does not mind I should like to answer him in my own words. The best way to answer is to invite him to take note of what is happening in the committee system at the present time. The honourable senator will find a very high level of performance in the committees. There does not appear to be any interference with the proper functioning of the committees. I would invite him to look at some of the reports which have been tabled in this place over recent months. I do nol think there will be any difficulties in that regard. 1 believe that the system can work. We have to bring our minds to bear clearly on the disabilities and difficulties from which wc are suffering at the present time. The work of the Senate and the organisation of its business has to be put on a very much sounder basis than is the case al the present time. If we are able to do that, and there is a will to do it - I hope that the Senate has the will - we will be able to carry out the parliamentary programme very much belter in the interests of the nation and its people.
– The proposal before the Senate tonight has aroused a great deal of interest, speculation and activity. I think every honourable senator desires that the Senate as a House shall function adequately and properly and shall also make its contribution io the total legislative pattern and law making processes of the Commonwealth. I share in the tendency of our trying lo find new ways to express ourselves as a Senate and individually as senators. 1 do not think we should ignore the contribution that has been made under the existing system since the establishment of the Senate 70 years ago. lt may well be that the processes which have been followed by senators who have occupied this chamber since it was established have run their full measure of time, lt may be that we have reached a period in Australia’s political and parliamentary history when we need a change. I subscribe to that view. But as we get involved in the excitement of new activity, enlarged responsibility and closer involvement with the law making processes, let us not overlook the fact that we are in a position to take this step because of the foundations laid over the years.
We have reached a very interesting period in our parliamentary and Senate history. Not only has there been conversation on the emergence of the commitee system; the committee system in perhaps a limited and lesser form than that envisaged has been emerging in the Senate in recent times. I venture to suggest that this has arisen partly because of the change in political styles and fortunes which have emerged, nol only in the Senate as a chamber but also - I think I may pui it this way - in a different kind of senator. The original Senate by its very nature had a constituency of senators who. by tradition, general acceptance of the Australian people and experience were different in their approach from contemporary senators. Perhaps they attracted certain unfortunate and uncomplimentary comments in time past, most of which I would suggest were quite unjustified. I renew my tribute to those senators not only for what they have done but also for their work of review in this place and parliamentary work as senators within their own States. 1 he Senate has changed. In recent years ils membership has been increased from 36 lo 60. I suggest that there has been a change in emphasis. I am sure we all are aware of the history of the Senate and its establishment as a States House. Everybody knows that by the evolvement of events the Party system found ils way into the Senate, has expressed itself and will continue to do so. lt is a part of history which we must recognise. The system of voting for the Senate was changed so that the composition of the Senate was changed, together with the attitude of voters to the Senate, lt allowed for a different composition in other groups, in addition to the established political parties. Differing situations have arisen.
I draw the attention of honourable senators to the situation that exists today. All I have said is by way of background because it has brought to the modern senator a certain element of dissatisfaction with his role as a legislator and as a representative of both his Party and his State. Wc have to work in this place on what I will call the repetition of the work of the other place in dealing with legislation. This element of stirring and dissatisfaction has brought a new approach to the role of the Senate and of senators. It may be that one of the ways in which this new approach emerged was our involvement with our domestic committees: that is our Opposition committees and Government committees.
All of this gave senators an idea of what committees could do and of how important and relevant the work of committees is within the Senate structure and membership. Over a period some other institutions were established, including the Regulations and Ordinances Committee which has been mentioned many times recently. It has been my privilege for some years to serve as a member of that Committee. That service has given to me and to my colleagues a very keen edge on our involvement and appreciation. The Regulations and Ordinances Committee has a great responsibility. In recent days we have shown our direct involvement with certain areas of legislation in connection with motions of disallowance, the calling together of witnesses from government departments and the referral of certain matters and material to Ministers and departments. The move to this discussion of standing committees and select committees - particularly standing committees - is a fairly natural outcome and fairly natural flow from the events that have taken place over the years. The recent establishment of select committees has given us not only a keener involvement in legislation but also has given to all of us a useful knowledge of what a committee of the Senate might well be.
My own particular connection with the field of select committees has been with the Senate Select Committee on Water Pollution. I have referred to that Committee because my experience has been with it and it forms a very useful basis on which to make a judgment of the matters which are before the Senate tonight. The committees have provided senators with areas of movement around Australia as senators and as a Senate Committee. We have enjoyed, I think, the prestige and authority of the recognition that such committees give and bring. We have had to be subjected to disciplines similar to those of the Senate. I refer to the Standing Orders, for example. We have been required to observe certain rules such as that relating to quorums and have made determinations as to whether we should sit in public or in private. We have generally maintained the standards and practices that are in broad terms followed by this Senate.
A number of matters have emerged but 1 wish to address myself particularly to 2 or 3 of them. They are related to the selection of committees, a matter referred to in the documents that are before the Senate tonight. Undoubtedly the Senate select committees that have been in existence are useful committees. I have every reason to believe that the standing committees and the committee system we hope to see established eventually will not only be useful but also will have undoubted importance. Secondly, I wish to mention the demands made upon senators who are members of committees, in terms of time, of relationship to the day to day sittings of the Senate, and of time spent in their own State in what we understand as electoral work.
As a member of a committee that has been established for about 18 months I speak feelingly and with appreciation of those factors. The terms of time as far as one’s personal involvement is concerned and one’s State and electoral work are part of a senator’s role. They are the disciplines to which a senator must subject himself and must be prepared to accept. The terms of time in relation to the sittings of the Senate are a different matter altogether. In considering the mechanics of setting up a committee system I think we have to come to terms very strongly and completely with the sittings of the Senate and sittings of Senate committees. We have to work out whether the Senate will sit on a certain day or at a certain time and whether a committee or committees will sit on a certain day or at a certain time. We have to remember that not only are we an institution which is part of parliament but also, as a parliamentary institution, we are part of the public life and the public scene. Therefore part of our activity is to sit in public in the form in which we are sitting here. If we sit in committee we have to make arrangements that we sit appropriately in public. This means, as other honourable senators have said already this evening, certain mechanical arrangements.
We have to take into account whether we transfer the kind of debate, the kind of relationship and the kind of cut and thrust argument that we have in this place, which is in the broad forum, from here to what 1 will call the ‘more intimate relationship of the committee table”. Furthermore, as political persons and personalities we are involved not only in a particular area of debate but also we are involved in an outside activity of Parliament, which means the total political philosophy to which we each subscribe. Therefore we have a kind of emotional connection with what is going on in this place, whatever activity we are engaged in elsewhere in the building, be it in conference, in committee, receiving deputations, talking to people, working, reading, writing, studying or as the case may be. I point to this in terms of whether or not it is wise that a Senate committee shall be sitting while the Senate is actually sitting and in terms of whether arrangements can be made for this to be done. I strongly suggest that it is neither practicable nor possible nor is it in accordance with decent parliamentary tradition that there should be a committee meeting, however important it may be, while the Senate is actually silting.
Having had the experience of being a member of a Senate committee - and in this I am joined by a great many members of the Senate - I use that experience and look at the 3 or 4 documents that are before us tonight. I look firstly at Mr Odgers’ report on standing committees and at the report from the Standing Orders Committee, relating to Standing Orders which is dated 17th March. In the very early sections of the report, in the introduction, there is this quotation:
The essence of the Report is that a standing committee system is standard and essential equipment of the modern legislature. Workload alone is a compelling reason. Equally important to Parliament in its consideration of public affairs is that the legislature may, through ils committees, call upon scholarly research and advice equal in competency to that relied upon by the Government.
Senator Murphy’s motion sets out in detail a plan for a standing committee system. Senator Gairs moi ion provides a gradual approach to the standing committee system. The motion moved by the Leader of the Government in the Senate (Senator Anderson) sets out a plan that may be followed for the forthcoming Budget session later this year, lt appeals to me because it provides a kind of gradual approach to the whole committee system and to the whole setting up of committees to assist with the management and with the deliberations of Parliament. If we have a large number of committees associated with the Senate, obviously the number of members on each committee will have to be kept within certain limitations. I suggest that their terms of reference, their directions or their instructions must be kepi within particular limits, otherwise members of the Senate will be completely confused because of their heavy timetable which will necessitate their going from committee to committee. We could possibly reach a stage, if a committee is given a particular assignment or if it is entrusted with too much responsibility - and perhaps that is not a very good way of describing it - at which there could be a tendency for the Senate to accept what a committee said rather than what the Senate said.
Much in the background of any of these discussions is the reference to the system in the United States of America, which over and over again is held up as a very good example of how a committee system works in a total legislature. The United States, as every honourable senator knows, has a congressional system, which is sometimes described as a ‘committee system’. This committee system has wide powers. Their chairmen in particular have great degrees of autonomy, power and importance. The committees are sometimes described as - and 1 think this is fairly accurate - ‘little legislatures with powerful chairmen? Our system is a parliamentary system which is essentially a Cabinet system with Ministers and leaders selected from the elected representatives of the people, in the United States the committee system has been going for a long lime and over a period of years the committees multiplied to such an extent that a few years ago a legislature reorganisation Act which reduced the number of Senate committees from 33 to 15 and the number of House committees from 48 to 19 was introduced because the system had reached the stage at which the com.mittees were usurping the power and the right of Congress and of the Senate, which comprised elected people who were entrusted to carry out particular duties within the framework of the established congressional system.
– Are the Senate committees allowed to move from place to place?
– The United States Senate committees are allowed to move from place to place. They are allowed to report or not to report. They have particularly wide powers, I understand, to amend legislation. They can make recommendations which will lead to the rejection of certain measures. I return to our country and to our system and look very quickly at some of the advantages that have been set out regarding the establishment of a committee system attached to the Parliament. Committees have the added advantage of making comprehensive statements and reports. If they are set up properly, they have the added advantage of keeping the public very well informed. They tend to attract to themselves a greater degree of public relations and public interest. Therefore, there is a better informed Senate, a better informed member of the Senate and a better informed public.
However, other factors have to be taken into account. These will remain for discussion in due course. The Senate and the Australian parliamentary system have grown up under what is described as the Westminister system’. They have grown up familiar with the terms of debate. The Senate has grown up with the courtesies and advantages as well as the disciplines of Parliament and it has grown up using a certain form and style of argument which can apply only to an open chamber such as this. If we transfer all this to the committee we get some problems not only with relationships between members but also in relation to the general public. Sooner or later we will have to face the possibility of an enlarged Parliament, including an enlarged Senate, which means a greater number of senators. It may well be that a future government will take certain steps with regard to representatives of the Ministry in this place. There may be more or less or even none at all.
All these things show that as we move into a new pattern of Senate activity we need to take each approach step by step and with a degree of gradualness. Undoubtedly when this system is set up and when it is moving certain areas will be at fault, and there will be certain areas in which there are difficulties and errors. The Senate needs to be working a committee system on a limited scale in the first instance so that these errors, faults, failings and difficulties can be ironed out smoothly and gradually. When the larger system of committees is established there will be experience to guide us and we will have the opportunity to take advantage of that experience. For these and many other reasons I favour the pattern which Senator Anderson has put before the Senate for the establishment of committees to deal with the Estimates in the Budget session. From this experience I am sure that not only the Senate but the people generally will gain many advantages.
– I rise to participate in this debate uncertain as to what is best for the Senate. I think all honourable senators have reached the point today where we are agreed that a committee system should operate. This system arose out of activities before the Standing Orders Committee some months ago. The Committee directed the secretary to submit a report on the possibility of standing committees operating in the Senate. From a beginning which suggested certain committees 3 reports have been presented. The third report recommended a total of 6 committees. These would be permanent committees which deal with anything the Senate referred to them. Therefore the duties of the committees would be unlimited. Senator Murphy proposed 8 committees, although I believe the number has now been reduced to 7. In some respects the activities of those committees may differ from the activities set out in the Odgers report. The Government has proposed 5 committees. Senator Gair has adopted the Odgers report but he has recommended a very slow introduction of the system. I believe he has recommended that 3 committees operate over the first period of 12 months.
AH honourable senators have expressed agreement with the committee system. But who is to say whether the allocation of duties proposed by the Clerk of the Senate or that proposed by the Leader of the Opposition (Senator Murphy) is the correct one? Having agreed upon the principle of committees surely we could co-operate on how best to allocate these duties to the committees. As I see it the fundamental difference between the proposals submitted by the Clerk of the Senate, the Leader of the Opposition, and the Government is not so much in the number of committees - the Government justifies its proposal as providing for a committee for each Minister - but as to the duties of the committees. The Government’s proposal would appear to be a rejection of the committee system as envisaged by the Clerk of the Senate and the Leader of the Opposition.
– Why do you say it involves a rejection as opposed to a deferral?
– The committee system as proposed by the Clerk of the Senate and the Leader of the Opposition was designed to take into consideration all matters referred to by the Senate. The Government proposes a system which exists for one purpose; that is, to study this year’s Estimates.
– It is in the experimental stage.
– As an experimental stage, yes. If that experiment is a success possibly the Senate will get another resolution to enlarge the committee system further. But I am not satisfied. Everyone believes that we should adopt this committee system. I am not satisfied that the operation of committees would be readily accepted by honourable senators when the committees commenced to operate and their reports came down. It is a revolutionary process in this Parliament to adopt and refer work to permanent standing committees. This committee system will not be readily accepted by every honourable senator. There should be a gradual introduction of work to the committees. Under the Government’s proposal the first committee will be landed with the most controversial question that comes before this Parliament. Possibly it is the largest, too, because of the amount of time taken for debate. Five committees each comprising 8 members will be established. The Estimates debate is one during which many queries are asked about expenditure and justification for it. Many honourable senators take the opportunity during the Estimates debate to make some address to the Senate which they want to get across to some people.
It is proposed, as I said, that each committee will consist of 8 members. More honourable senators may attend. But in view of the fact that possibly 5 committees will meet at the one time honourable senators will not be able to attend all committees. We are not going to please the other 52 members of the Senate on this Estimate debate. When the committees bring down their reports honourable senators will want to know what inquiry was made into certain expenditure. The expenditure which they are concerned about may not have been the concern of one of the 8 members of the committee and no-one asked about it. Therefore we are going to face this difficulty. The most unlikely thing to make the committee system succeed is the thrusting upon it of the Estimates in the first place. Everyone will be completely dissatisfied until such time as there is a general acceptance of the committee system following a gradual introduction. That then would be the time to consider the Estimates.
I have always supported the committee system but I have always visualised a gradual introduction of such work until honourable senators become accustomed to the system. While we should have the committee system as proposed I do not know whether there should be 6 or 7 committees. We should have the committee system and from time to time the Senate should say what work should go to the committees. It should be a gradual introduction. I am opposed to the proposal outlined by the Australian Democratic Labor Party because it accepts the adoption of a system of committees over a 12-month period. This would make it very difficult to introduce. The system would be slow in its introduction and it would be unacceptable. I think there is a great desire to see the committee system evolve. There seems to be more of a desire to say who was successful in having the system introduced than an interest in it. As all honourable senators agree on committees, surely we should get together as parties in unity and decide how many committees should be established and what should be the allowances for the committees.
– After hearing Senator Cavanagh I am not too sure what he supports. I want to make it quite clear that in principle I support the various proposals which we have before us tonight. I congratulate Mr Odgers upon the very detailed report he has prepared at the bidding of the Standing Orders Committee. This report is the basis of 2 other proposals, one by the Leader of the Opposition (Senator Murphy) and one by the Leader of the Government in the Senate (Senator Anderson).
The DEPUTY PRESIDENT (Senator Bull) - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question:
That the Senate do now adjourn.
The Senate divided. (The Deputy President - Senator Bull)
Majority .. .. 1
Question so resolved in the affirmative.
Senate adjourned at 10.36 p.m.
Cite as: Australia, Senate, Debates, 4 June 1970, viewed 22 October 2017, <http://historichansard.net/senate/1970/19700604_senate_27_s44/>.