House of Representatives
28 October 1959

23rd Parliament · 1st Session

  1. House of Representatives
  2. 23rd Parliament
  3. 1959

Mr. DEPUTY SPEAKER (Mr. G. J. Bowden) took the chair at 2.30 p.m., and read prayers.

page 2363

QUESTION

NEWSPAPER TELEPRINTER SERVICES

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I ask the PostmasterGeneral: Has he received many protests against the increased rentals to be charged to country newspapers as from 1st November for teletype machines? Is consideration being given to modifying these increases, which, in some cases, amount to well over 100 per cent. - for instance, in the case of the “ Goulburn Evening Post “ from £540 to £1,215? Was the PostmasterGeneral himself aware of these increases before the Postmaster-General’s Department informed country newspapers of them? If so, why were not they disclosed to this Parliament at the time of the general debate on postal rates? Does not the Minister himself think that these increases are exorbitant and represent another crippling blow by this Government at country interests? If he does think so, will he, for once, act as a Country Party Minister should and do something about this matter in the interests of country people?

Mr DAVIDSON:
Postmaster-General · DAWSON, QUEENSLAND · CP

– The honorable member’s questions are directed at the recent increases in both rentals and rates applying to teleprinter and telex services throughout Australia. I shall attempt to answer the questions, not exactly in the order in which they were asked, but in the order in which I noted them. The honorable member asked why these increases were not disclosed when the proposed increases in tariffs generally were first notified to the House at the time of the Budget debate. My recollection is that although I did not make particular reference to this matter in my second-reading speech on the Post and Telegraph Rates Bill 1959 - I shall check that, but I do not think I did - nevertheless, with the roneoed copy of my secondreading speech, I circulated a very complete schedule of all the proposed increases, in which was included a list of the proposed increases in rentals for both teleprinter and telex services.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I do not think that the Minister did circulate particulars of those.

Mr DAVIDSON:

– I suggest that the honorable member allow me to answer bis questions. There is a complete answer to them, and I am trying to answer them fully. Yes, I have received protests from a number of members in this chamber and also, particularly, from some of the country newspaper services concerned, against the incidence of these increases. I want to make it plain that, in the first place, the rental increases are not exorbitant. In many cases, services have been provided on a basis which meant that, in order to provide a service for about two hours weekly to either country newspapers or other instrumentalities, the Postmaster-General’s Department has had to make available at least one channel almost exclusively for these services, and also a stand-by service in case of breakdown, under the agreements entered into between the department and individual subscribers. This position has become increasingly onerous for the department and the charges that it has had to meet to provide these increased services have become more and more out of line with the return to the department. Therefore, it has moved towards the substitution of telex for teleprinters in all instances where the telex service, which is a more recent development than the teleprinter, would provide a cheaper service for the subscriber than the teleprinter service.

I have gone into this matter very carefully and have had several discussions with those who have made representations to me. Last night, I had a departmental officer here to explain to those interested all the technical details, which are too lengthy for me to give in a reply to a question. Had I known that the honorable member was interested, I would have been glad to have had him there. However, I have several statements which I have made available to members who have inquired about this matter. They explain the position plainly, and I will make them available to the honorable member, if he wishes. I do not want to speak at length during question time, but I want to point out to the honorable member that the apparently exorbitant increase in total charges to newspapers and other interests to which he refers, arose not only from an increase in rental but also because the department has been forced to tell certain subscribers that, if they retain the teleprinter service, they must be prepared to pay on a minimum hourly basis instead of on a two-hour basis. As a result of discussions, I have reduced the minimum hourly basis and I am quite satisfied that the final result of our discussions is such that the newspapers concerned will realize that they are not being adversely affected. Their total charges are, of course, being increased consistent with the increase of all other postal and telephone charges.

As a result of discussions that have taken place arrangements have been made for representatives of the country press, particularly, throughout Victoria, New South Wales, Queensland and Tasmania to meet officials of the department in Melbourne to-morrow at 1.45 p.m. If the interests that the honorable member is representing do not know of that meeting - I think they will - I suggest that he ask them to contact the president of the Australian Provincial Daily Press Limited. He will find that the whole matter will be thoroughly and satisfactorily explained to them at this meeting.

page 2364

PARLIAMENT HOUSE

Mr CHRESBY:
GRIFFITH, QUEENSLAND

– Will the Minister for the Interior inform the House what special significance is to be attached to the fact that, in the model of the Canberra lakes scheme exhibited in Kings Hall, the proposed new Parliament House site has been allotted the traditionally superstitious number of thirteen.

Mr FREETH:
Minister for the Interior · FORREST, WESTERN AUSTRALIA · LP

– I have no idea, Mr. Deputy Speaker.

page 2364

QUESTION

STANDARDIZATION OF RAIL GAUGES

Mr CLARK:
DARLING, NEW SOUTH WALES

– I ask the Prime Minister whether his attention has been drawn to a statement by Colonel H. M. Shepard, an American engineer, who made a survey of Australian railways during World War II., that to move troops from the east coast to the west coast by rail would have taken three weeks, but with a uniform gauge the same distance could have been covered in three days, and that he believed Australia eventually would be forced to standardize rail gauges. Will the Prime Minister give early consideration to the standardization of the rail gauge between Port Pirie and Broken Hill?

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– This matter relates to a point of policy.

page 2364

QUESTION

COMMONWEALTH EMPLOYEES’ COMPENSATION

Mr DAVIS:
DEAKIN, VICTORIA

– My question to the Treasurer arises from a statement in the Budget speech of the Government’s intention to increase benefits provided under the Commonwealth Employees’ Compensation Act. Is the right honorable gentleman in a position to inform the House when the necessary measures will be introduced?

Mr HAROLD HOLT:
Treasurer · HIGGINS, VICTORIA · LP

– The honorable member will be aware that there is a group of measures, two of which are very substantial pieces of legislation, which have been considered together in the connexion to which he refers. One is the Superannuation Bill, another is the Defence Forces Retirement Benefits Bill in parthird deals with compensation payments, lt has been found by the Parliamentary Draftsman that, in the case of the Defence Forces Retirement Benefits Bill in particular, considerable practical difficulties in drafting have been encountered. At one stage it seemed unlikely that the legislation could be introduced during this sessional period. However, following discussions I have had with the Attorney-General’s Department and the making of special arrangements to allow more time for the draftsman to work on these bills, I am hopeful that each of these three measures will be introduced and disposed of before the Parliament rises.

page 2364

QUESTION

STANDARDIZATION OF RAIL GAUGES

Mr DUTHIE:
WILMOT, TASMANIA

– As the standardization of our railway gauges is to be financed largely from Consolidated Revenue, I ask the Prime Minister whether the Government will consider advancing to Tasmania a percentage of the annual expenditure on this Commonwealth project for the purpose of resuscitating and modernizing the Tasmanian railways system? I ask this, first, because Tasmania is the only State which will not share in or benefit by this project of standardization; and secondly, because in the Labour plans for standardization of gauges in 1946-47, provision was made to help Tasmania financially in the reequipment and resuscitation of its railways as that State was excluded from the standardization project.

Mr MENZIES:
LP

– I compliment the honorable member on having dug up an idea that has never been advanced by any Labour Premier of Tasmania at any Premiers’ Conference or Australian Loan Council meeting in my time. I would not hold out the slightest encouragement that even though he raises it, it will succeed.

page 2365

QUESTION

TAX AGENTS

Mr FAIRBAIRN:
FARRER, NEW SOUTH WALES

– I ask the Treasurer: Is it a fact that persons filling in income tax returns for the public are required to be registered as tax agents, and that such registration can be withdrawn at will by the Taxation Branch? In view of the fact that any tax agent so suspended would lose nearly all his clients before he had a chance to take his case to an appeals court, will the Minister consider altering the regulations so that no registered tax agent will lose his registration before his case has been heard by a court?

Mr HAROLD HOLT:
LP

– -To the best of my knowledge, the facts are as stated in the introductory part of the honorable member’s question. I am not familiar with the consequences which, in practice, have been found to flow from action taken by the Taxation Branch to suspend registration. I shall have inquiries made and in the course of them will see that consideration is given to the honorable member’s suggestion.

page 2365

QUESTION

ATOMIC LAUNCHING SITES

Mr KEARNEY:
CUNNINGHAM, NEW SOUTH WALES

– I ask the Minister for Air whether he can confirm or deny claims which have been made that the Department of Air or the Government plans to construct a number of atomic missile launching sites in the Port Kembla-Jervis Bay area?

Mr OSBORNE:
Minister for Air · EVANS, NEW SOUTH WALES · LP

– I have heard the statement to which the honorable member refers and understand that it comes from a letter of invitation, issued by a body known as the South Coast Peace Conference, in conjunction with the South Coast

Labour Conference, to a meeting, called a conference for peace and disarmament, which was to be held at Wollongong last Sunday. The statement is incorrect. There is no such proposal.

page 2365

QUESTION

AIR FARES

Mr WHEELER:
MITCHELL, NEW SOUTH WALES

– I direct a question to the Minister representing the Minister for Civil Aviation. As the introduction of each new type of passenger aeroplane seems to be followed by a rise in fares, will the Minister indicate the attitude of the Department of Civil Aviation to the professed intention of Trans-Australia Airlines to use jet-type aeroplanes on internal routes? Is it not a fact that jet aircraft will save only a little travelling time on internal routes, but will increase the noise problem at aerodromes and involve the Government in increased expense for aerodrome construction and maintenance? If the answer is given that we must keep up with progress in air travel, will the Minister for Civil Aviation use his best offices to ensure that the travelling public will have the benefits of progress without frequent fare increases? Finally, I ask: Following the introduction this week by airline operators of a charge for transporting passengers between airports and terminals, will the Minister for Civil Aviation have inquiries made into existing contracts or agreements favoring private hirecar services at Kingsford-Smith aerodrome in Sydney, and into allegations that the hire-car firms concerned are given privileged treatment in operating against the cheaper taxi services?

Mr TOWNLEY:
Minister for Defence · DENISON, TASMANIA · LP

– The honorable member has asked, not one question, but a series of very comprehensive and, I think, very thoughtful questions. They will be brought to the attention of the Minister for Civil Aviation, and I am sure that he will give the honorable member an adequate reply. Perhaps I may be permitted to refer to one part of the first question asked by the honorable member, in which he suggested that the introduction of new aircraft inevitably means an increase in fares. In some cases the introduction of new aircraft may be followed by fare increases, but I do not think that the recent increases have been due to the use of new aircraft. TransAustralia Airlines, to mention one operator, has just introduced some very modern and very good aircraft. They are also expensive aircraft. But the rise in fares has nothing to do with their introduction. Ignoring the total cost of those aircraft, we find that last year T.A.A. made a profit of about £250,000, but increases in salaries and other expenses, quite apart from the -purchase of new aircraft, this year will total £300,000. There is, therefore, a difference of £50,000, and something has to be done about it.

page 2366

QUESTION

LORD HOWE ISLAND

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

– My question is addressed to the Minister representing the Minister for Civil Aviation. Will the Minister ask his colleague to have inquiries made as to the progress that has taken place with the aircraft landing strip at Lord Howe Island, which is in my electorate of West Sydney. Many people have expressed the opinion that the present flying boat service is not satisfactory. The flying boat being used is 25 years old and is the only one of its kind in the world.

Mr TOWNLEY:
LP

– I shall ensure that the honorable member’s questions and comments are brought to the attention of the Minister.

page 2366

QUESTION

OLYMPIC GAMES

Mr HOLTEN:
INDI, VICTORIA

– My question, which is addressed to the Treasurer, refers to financial assistance for athletes who will be selected to represent Australia at the Olympic Games in Rome, or who have been selected to compete in the Winter Olympics at Squaw Valley, in the United States of America. I ask the question mainly because Mr. Dick Walpole, who lives in the electorate I represent, has had the honour to be selected to represent Australia at the Winter Olympics early next year as a skier. Can the Treasurer say, first, whether any approach has been made by officials of the Olympic Federation for assistance for these athletes, and secondly, whether the Government will give sympathetic consideration to requests for such assistance?

Mr HAROLD HOLT:
LP

– I compliment the honorable gentleman upon having a constituent who is maintaining Australia’s reputation for athletic prowess which he himself has so ably upheld in the past. T am not aware whether any request of the nature that he has mentioned has been received. I shall have some inquiries made. Of course, this Government has always shown its sympathy to those who represent Australia with distinction overseas in this, way, but there are certain rules of practicewhich have guided us in the past and I shall have to see how they can be applied in a case of this kind. When I am in a position to give that information I shall supply it to the honorable member.

page 2366

QUESTION

POSTAL CHARGES

Mr DALY:
GRAYNDLER, NEW SOUTH WALES

– I ask the PostmasterGeneral whether he studied and approved the design of the 5d. postage stamp which, is to be issued at Christmas, showing as a symbol of this holy and festive occasion the wise men riding towards Bethlehem. Is the Minister aware that, already, advertisements have been inserted in certain newspapers by persons stating that in view of the increased postage they will be unable to send out Christmas cards this year? I& the Minister also aware that the abolitionof concession rate and the imposition of a flat rate postage of 5d. for Christmas cards, has made it impossible for many peopleto buy the stamps to continue the timehonoured custom of greeting their families and friends at Christmas time? In view of these facts will the Postmaster-General indicate whether it is the Government’s intention to kill Father Christmas and destroy the real spirit of this time of peace on earth and goodwill towards men?

Mr DAVIDSON:
CP

– The first question asked by the honorable member for Grayndler was whether I saw and approved the design of the 5d. Christmas stamp1. My answer is, “ Yes, I did “. This is the third year that we have issued a Christmas stamp and T am glad to be able to report to the House that on each occasion the issue has met with great approval throughout Australia and overseas. I think that this one will, too. The reply to the second question, as to whether I have seen statements that, as a result of the increase from 3id. to 5d. for mail of this sort, people will be unable to use the stamps, is, “ Yes. I have seen those statements.” In reply to the honorable member’s third question I state that this is an increase of Hd. per article and I suppose that if it is applied to the average posting of Christmas cards throughout Australia it will amount to an infinitesimal sum over the whole year.

page 2367

QUESTION

AIRLINE MEALS

Mr OPPERMAN:
CORIO, VICTORIA

– I wish to address a question to the Minister representing the Minister for Civil Aviation. Now that the airlines have applied an austerity budget to meals in flight, and as an example, breakfast has begun to look like the feed bin of a Melbourne Cup runner, could some attention be given to a more rapid refreshment service at air terminals where, undoubtedly, extra demands will now be made by those who are anxious, when on the ground, to offset the reduced menus in the air? It would appear that the counter coffee and tea service is not adequately staffed at present in the Trans-Australia Airlines building at Essendon, as, frequently, passengers find after a long wait that they are called to the aircraft without having been served. I ask the Minister whether attention could be given to developing a faster and more efficient service.

Mr TOWNLEY:
LP

– Taking the facetious part of the honorable member’s question first, I remind him that according to advertisements for a certain breakfast food, it is the equivalent of 3 lb. of steak, a dozen eggs and a gallon of milk, as well as going “ snap, crackle, pop “. The serious side of the honorable member’s question is full of substance, and I will be pleased to convey it to my colleague in another place who-, I am sure, will examine it carefully.

page 2367

QUESTION

COMMUNIST CHINA

Mr DRURY:
RYAN, QUEENSLAND

– I ask the acting Minister for External Affairs a question. In view of the strenuous representations that have again been made by the Leader of the Opposition in favour of recognizing red China and admitting that country to the United Nations, can the Minister say whether, at the time of its recognition by Great Britain and a number of other countries, red China was in any way insistent, as it is now, that Formosa should be placed under the control of mainland China and that recognition of the Nationalist Government should be withdrawn? Were the conditions that applied at that time different from those that apply at present?

Sir GARFIELD BARWICK:
Attorney-General · PARRAMATTA, NEW SOUTH WALES · LP

– The Government’s policy on this matter was stated by the Minister for External Affairs in this House about mid-August, and the Government still adheres to that policy. I am not able to answer the honorable member’s question as to the point of time when the Chinese Communists first insisted as a solution of the problem of recognition that Formosa should be regarded as part of mainland China and recognition of the Republic of China should be withdrawn. That is Communist China’s present attitude. I am not able to pinpoint the time when it first took that attitude and so I am not able to answer precisely the honorable member’s question in the form in which he asks it. I think I should point out to the House that the United Kingdom at the moment has in Peking only what the Communist Chinese call an office of a charge d’affaires. There is no United Kingdom ambassador accredited to Peking and no Communist Chinese ambassador accredited to London, for the reason that the Communist Chinese say that their terms of recognition have not yet been fully carried out by the United Kingdom.

page 2367

QUESTION

TELEPHONE SERVICES

Mr GALVIN:
KINGSTON, SOUTH AUSTRALIA

– My question, which is addressed to the Postmaster-General, concerns a regulation, recently circulated amongst honorable members, giving discretionary powers to the Director-General, Posts and Telegraphs, to charge a fee of 3d., instead of 4d. for telephone calls made through automatic telephones leased from the department and installed in shops, hotels and similar places. Is the honorable gentleman aware that this situation allows the proprietor of a store, club, or other similar premises to make his calls through this public telephone service at a charge of 3d., whereas if he used his own private telephone in the same building he would have to pay 4d.? Does not the Minister agree that this is a rather ridiculous situation? Can he inform the House when it is proposed to make some alteration - if any alteration can be made - to the instruments? If no alteration is proposed, is it intended to purchase suitable attachments to be placed on these leased telephones so that the same fee will be charged for calls in every instance”?

Mr DAVIDSON:
CP

– This is another of the items to which I referred in my secondreading speech on the Post and Telegraph Rates Bill 1959. I explained then that there was to be a general increase from 3d. to 4d. in the base charge or unit rate for telephone calls. I said that the instruments which were leased by hotels, clubs and other such establishments, for the use of which people were then paying 4d. instead of the ordinary tariff of 3d., were not designed to take five pennies and would continue to operate on the 4d. charge, which would mean that until we got round to the task of altering the equipment in those instruments, the department would receive only 3d for a local call, instead of 4d., the lessors of the instruments continuing to take the Id. that they had always been taking.

The honorable gentleman asked me whether I did not consider it rather ridiculous that in those circumstances a person leasing such an instrument would still be able to make a local call for 3d. No, Sir, I do not think so. Only a very small amount of the total telephone revenue is involved. It is so small that it would not pay the department to deal with this as an urgent matter and make the necessary change in the equipment now.

page 2368

QUESTION

FOOD PUBLICITY CAMPAIGN

Mr BANDIDT:
WIDE BAY, QUEENSLAND

– I preface my question, which is addressed to the Minister for Trade, by saying that reference has been made frequently, in this House and elsewhere, to the Department of Trade’s extensive food publicity campaign in the United Kingdom. Can the Minister assure the House that Australian primary producers, who provide the food for Britain, are consulted on the operation of this campaign?

Mr McEWEN:
Minister for Trade · MURRAY, VICTORIA · CP

– The Australian primary producers, who contribute a substantial proportion of the funds expended on the publicity campaign, are not only consulted, but they are also, to an important extent, in control of the situation. The Overseas Trade Publicity Committee in London is technically composed of the chairmen of seven Australian statutory marketing boards and also of certain executive officers of the Department of Trade and of the Australian High Commissioner’s office in London. That is the body which finally determines the character of the campaign and allots the money. Closely associated with the committee, of course, are those Australian private exporters who participate in the campaign, and in close consultation with it are the United Kingdom importers of Australian goods, who contribute towards the cost of the campaign. For the purposes of guidance and, indeed, for the conduct of the campaign, people in the United Kingdom with a highly specialized knowledge of all the devices of publicity and trade promotion are consulted, but the Australian primary producers, through the statutory marketing boards, are principals in this matter at al) stages.

page 2368

QUESTION

TRAINEE TELEPHONE TECHNICIANS

Mr L R JOHNSON:
HUGHES, NEW SOUTH WALES

– I direct my question to the Postmaster-General. Is it a fact that in Sydney trainee telephone technicians, several thousand in number, receive their training in three totally unsuitable establishments? Is the Minister aware that these training schools, being a former piano factory, a disused warehouse and another establishment previously used as a home for the blind, are deficient by modern building and educational standards, and that they lack adequate ventilation, light and space, as well as toilet, recreational and training facilities? Will the Minister say whether any plans are in hand to replace these inadequate establishments with buildings designed for the specialized purpose of training telephone technicians?

Mr DAVIDSON:
CP

– I am not aware of the actual condition of the buildings in which trainees are being trained in the Sydney area, but I believe that I am quite correct in saying that the picture that has been drawn by the honorable member for Hughes has been somewhat overdrawn. However, I shall make a point of having the matter looked into, and shall advise the honorable member of the present condition of the buildings and of any plans that we have for their improvement.

page 2368

QUESTION

MEMORIAL AT FAIRBAIRN

Mr MACKINNON:
CORANGAMITE, VICTORIA

– I address my question to the Minister for the Interior. In 1940 a disastrous air accident occurred in the vicinity of Fairbairn airfield, in Canberra, in which Australia lost some of its most distinguished leaders. Can the Minister inform the House who was responsible for the memorial that has been erected on the site of the accident? Were any positive steps taken, to his knowledge, to notify the close relatives of the deceased persons of the position and the nature of the memorial?

Mr FREETH:
LP

– The suggestion for the erection of a memorial was made, I think, by Senator Dame Annabelle Rankin, in 1952, and the then Minister for the Interior put the matter in hand. The next of km - I think, in all cases, the widow of the deceased - were written to, and the proposal was made that a simple cairn should be erected at the point of the crash and that a plaque should be located on this cairn. After some time, the approval of all the next of kin was obtained. They were scattered throughout Australia, and at least one was in England. It was 1956 before the designs had been completed and consent had been obtained. A further letter was sent to each of the next of kin, together with a copy of the sketch plans and designs of the memorial. They all indicated their approval. The memorial was not completed finally until September last year. It is situated to the east of the airport, and access to it is available along a track which branches off the main road from the aerodrome to Queanbeyan. I do not know whether the next of kin have been told of the way to get to the memorial, but they are all aware of where it is and of what it consists.

page 2369

QUESTION

SUMMIT TALKS

Mr J R FRASER:
ALP

– I ask the AttorneyGeneral who is acting Minister for External Affairs: Has he any information which would indicate that the proposed summit conference between the heads of state of Russia, France, the United States and Great Britain is to any degree Communist sponsored? If he has no such information, will he have Brigadier Spry carry out an investigation and report to him on the matter?

Sir GARFIELD BARWICK:
LP

– I do not think that the question is serious enough to warrant a reply.

page 2369

QUESTION

COMMONWEALTH RAILWAYS

Mr BURY:
WENTWORTH, NEW SOUTH WALES

– My question, which is addressed to the Treasurer, concerns the annual report of the Commonwealth Railways for the year ended 30th June, 1959, from which it emerges that more than onethird of the stated working profit for the year is represented by an amount of £766,000 said to be the difference between the freights actually collected for the carriage of coal from Leigh Creek, and the amount to which the commissioner believes he is entitled and has claimed from the Commonwealth Treasurer. Can the Treasurer say why, and how, this apparent dispute between a Commonwealth agency and the Treasury arose, and whether the matter has now been settled? Is the amount concerned part of the direct and indirect Commonwealth subsidy that is paid to the Government of South Australia for the carriage of Leigh Creek coal?

Mr HAROLD HOLT:
LP

– Up to the financial year 1955-56, an additional payment was approved by the Commonwealth for the carriage of Leigh Creek coal to the power station at Port Augusta. In 1956, a standard-gauge railway line was opened, largely for the carriage of this coal, with the result that the freight could be carried at a very much lower cost than had formerly been the case. The actual cost of the carriage of Leigh Creek coal has not been resolved, but an inquiry into that matter is currently proceeding. Undoubtedly, the costs will be considerably lower than was formerly the case. Although I admire the dogged optimism with which the Commonwealth Railways Commissioner inserts this charge in the annual accounts of the Commonwealth railways, I can find no basis on which his sanguine expectations could reasonably rest.

page 2369

QUESTION

APPRENTICES

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES

– My question is directed to the Minister for Labour and National Service. May I preface it by saying that it has been found that, under modern technological production methods and automation, in the United States of America, the training of apprentices has been greatly neglected. I ask the Minister: Has his attention been attracted to the concern expressed by a responsible authority in New South Wales regarding the neglect of many employers to engage the maximum permissible and desirable number of apprentices? Is any action being taken by the Department of Labour and National Service, at the Commonwealth level, to investigate this situation, and is any organized method being followed in urging employers to play their full part in employing apprentices in order to meet Australia’s future requirements of trained artisans?

Mr McMAHON:
Minister for Labour and National Service · LOWE, NEW SOUTH WALES · LP

– I think that the Commonwealth and State governments, and, for that matter, the employers and the trade unions, are all well aware of the problems of apprenticeship training. The honorable gentleman will know that, two or three weeks ago, the annual apprenticeship week was held in New South Wales in order not only to make the public aware of the problem, but also to try to inspire employers to take a greater number of apprentices. The Department of Labour and National Service has taken a very active part in this by publishing documents and calling conferences, and the matter has been discussed by the Ministry of Labour Advisory Council. I can assure the honorable gentleman that we are actively engaged in trying to inspire the State governments, the technical colleges and the universities to train more technicians and apprentices, and I hope that our efforts will meet with success. This is a big problem - perhaps one of the biggest that we face in the industrial world to-day - and I can only hope that our unremitting efforts will bring some real reward.

page 2370

QUESTION

AIRLINE MEALS

Mr HAMILTON:
CANNING, WESTERN AUSTRALIA

– I ask the Minister representing the Minister for Civil Aviation a question which is supplementary to the one asked a few minutes ago by the honorable member for Corio. When making representations to the Minister for Civil Aviation in connexion with the request made by the honorable member for Corio, will the Minister suggest that the Minister for Civil Aviation look also at the position of travellers from Western Australia, more particularly that of travellers passing through Melbourne airport? Airline passengers have to leave Western Australia at the very inconvenient and unsuitable hour of midnight, Western Australian time, or 2 a.m. eastern standard time, and, under the austerity ideas that the airlines now have, such passengers will have no opportunity to get breakfast. Passengers to Canberra arrive at that centre too late for breakfast, and people journeying to Sydney and Melbourne are in a somewhat similar position, although more cafes or restaurants may be open when they arrive about 9.30 a.m. or later. Will the Minister suggest to the Minister for Civil Aviation that arrangements be made to enable through travellers to obtain breakfast at Melbourne airport between 6.30 and 8 a.m. while they are waiting for the through services to begin moving?

Mr TOWNLEY:
LP

– It is quite obvious that airline passengers from Western Australia have a peculiar problem in this respect. 1 am sure that the Minister for Civil Aviation will give it his careful attention.

page 2370

QUESTION

HOUR OF MEETING

Mr HAROLD HOLT:
Treasurer · Higgins · LP

– I move -

That the House, at its rising, adjourn until 11.30 a.m. to-morrow.

I think that the reasons for this action are well known to honorable gentlemen.

Mr Ward:

– What are they?

Mr HAROLD HOLT:

– To-morrow, we are to receive a visit from the delegates to the conference of the Commonwealth Parliamentary Association. They have expressed a desire to see question time in this Parliament actually in progress, because that is a novel feature of this legislature with which they are not familiar. The delegates do not arrive until such a time as to make it impracticable for them to be present at question time if the sitting commences at an hour earlier than that stated in the motion. The matter was discussed earlier by the executive of the Australian Commonwealth Branch of the Commonwealth Parliamentary Association, on which Opposition members were represented, and the Opposition representatives indicated their concurrence. This motion embodies the arrangement which it is felt will meet the circumstances of to-morrow’s situation.

Dr Evatt:

– This is a very exceptional thing, but I think it is of advantage. Also, the representatives on the executive have agreed to it.

Mr HAROLD HOLT:

– That is so.

Question resolved in the affirmative.

page 2371

NEW AN© OPPOSED BUSINESS AFTER 11 P.M

Mr HAROLD HOLT:
HigginsTreasurer · LP

– I move -

That Standing Order No. 104 - 11 o’clock rule - be suspended until the end of the session.

This, Mr. Deputy Speaker, is a motion which it is quite normal for the government of the day to introduce some weeks before a session of the Parliament is expected to end. Generally, there is little discussion about it, it being accepted by all members of the House as a necessary element in the orderly disposition of the business before this chamber. On this occasion, I have gathered from the Deputy Leader of the Opposition (Mr. Calwell), with whom, of course, it is my practice to discuss the business of the House each day, that honorable gentlemen opposite are taking some objection to this motion. Therefore, Mr. Deputy Speaker, I feel that it is necessary to add some words of explanation as .to why the application of the rule is deemed to be desirable.

First, Sir., this motion is proposed to-day because .of the special circumstances obtaining this week. .Because of the visit of delegates from branches of the Commonwealth Parliamentary Association in other parts of the British Commonwealth and the official function to be held to-morrow, and the need to have accommodation available for the delegates in Canberra when they arrive, it is not proposed to have the House sit to-morrow afternoon or to-morrow evening. The result is that, this week, we are in effect confined to two days of parliamentary business. I would have the House made aware that the list of business indicated to me by my Cabinet colleagues reveals that some 30 items of legislation lie ahead of us for passage before the House can rise for the Christmas recess. We have already been in session for a considerable time. Making due allowance for the fact that the Parliament will not be in session next week owing to the need to have this chamber available for the Commonwealth Parliamentary Association conference, it appears to me that the earliest point at which we can hope to dispose of the business would be 26th November. By that date, this sessional period will, I think, have been the longest which this House has sat through for several years. That being so, I feel that it will be necessary - certainly to-night because we intend to sit beyond midnight in order to make up as much of our ground as we can during this week, and possibly on other nights in the course of the weeks that lie ahead - to have some flexibility in the way in which we can introduce business to the Parliament.

It is my desire - I hope I have demonstrated it in my earlier conduct of the proceedings of the House - to give as much opportunity as practicable for representative viewpoints to be stated on the legislation that comes before us. On the other hand, we must all recognize that in a Parliament of more than 120 members, it is not feasible for every member to speak at the length .he would wish on every item that attracts his interest. There must be some organization of the business of the House if the Government’s programme which it was elected to implement, is to be brought to a satisfactory conclusion.

I am quite certain that, on reflection, honorable gentlemen will appreciate that the introduction at this stage of the traditionally accepted method of giving some flexibility in the introduction of business is desirable and indeed necessary. I hope that the House will not require very much time to dispose of the motion.

Dr EVATT:
Leader of the Opposition · Hunter

– The proposal is to suspend the Standing Order dealing with the 11 o’clock rule, not for this week only but until the end of the session. The Opposition this morning considered this proposal in the light of important legislation which is to be introduced and which should be properly considered, and unanimously thought that the proper course was not to suspend the 11 o’clock rule. Under the Standing Orders, it is always possible in an emergency for the House to act, even after 11 o’clock, because all that is provided in the relevant standing order is that no new business shall be taken after 11 o’clock unless the House otherwise orders. If situations such as those expected by the Treasurer (Mr. Harold Holt) should arise, they can be met. What the Opposition objects, to is that the Government should accept as a matter of course that new business, which may be of tremendous importance, may be introduced after 11 o’clock. We- believe that that approach is wrong in principle. We have very important legislation ahead of us.

Mr Harold Holt:

– Did you know that we have 30 bills ahead of us?

Dr EVATT:

– 1 do not know about 30 bills, but certainly there are one or two very important bills. All we say is that we can suspend the Standing Orders at the appropriate time, if the occasion warrants doing so. Yet now the Government wants a wholesale suspension of the 11 o’clock rule. This rule is a protection for honorable members. It does not prevent a bill being considered, but it ensures that a bill dealing with an important matter will not be introduced at a time when perhaps honorable members are fatigued.

Mr Harold Holt:

– This is being done for the same reason that you did it when you were in Government. You found it necessary then.

Dr EVATT:

– The circumstances of the case must be considered. I do not propose to do more than to state frankly the view of the Opposition. We oppose the motion.

Mr CALWELL:
Melbourne

.- The Opposition objects to this motion for the reasons given by the Leader of the Opposition (Dr. Evatt) and for other reasons. Almost invariably since this Government has been in office, the programme of legislation has not been ready at the beginning of a session, and it is seldom ready even half-way through the session. Even now, some measures associated with the Budget have not been introduced. It is ridiculous to expect honorable members to consider legislation in the early hours of the morning after a long day’s sitting. It is generally recognized that rushed legislation is bad legislation. Honorable members have duties associated with the work of their electorates in addition to their attendance here. They generally feel that they have done their duty to the Parliament if they attend for three days of the week, sitting on Tuesday, Wednesday and Thursday, after which they attend to their duties in the electorates. No honorable member can sit up night after night giving the attention to legislation that he should, and then go away from the Parliament to meet his electors.

The circumstances of this week should not be used as the occasion for suspending the rule for the remaining two or three weeks during which Parliament will be in session. If the Government wanted the suspension of the rule for to-night only, the Opposition would probably have offered no very strong objection. But to use the occasion of the meeting of the Commonwealth Parliamentary Association in Australia to suspend the rule is very wrong. Honorable members are being told that when they return here on 10th November they may have to sit for three weeks, or possibly two weeks, for very long hours and that legislation will be churned through as if it were being put through a sausage machine. We protest against that course being adopted.

I have a strong suspicion that many honorable members opposite want to get away by 19th November, and that the Government is under pressure from its backbenchers to close the Parliament. The Opposition, on the other hand, is prepared to stay here until Christmas Eve, if necessary. The report of the Richardson committee has been implemented and honorable members are now reasonably well paid for their services to the Parliament. They ought not to try to have it both ways - to take the advantage of increases that have recently been granted and to close the Parliament so that they can enjoy the recess. This is the National Parliament. More and more work has to pass through it and more and more responsibility is coming to it with the exigencies of circumstances and the passage of events. The United Kingdom House of Commons would not treat legislative matters in the cavalier fashion that is proposed here.

I see that a number of new members opposite, who have accidentally arrived here, are now making their protest; but they speak from the plenitude of their ignorance and inexperience. Those who have been here a little longer know what it means to consider and debate legislation. Some of the bills that the Parliament is being asked to pass to-day are very important. The Treasurer (Mr. Harold Holt), for reasons which seem to him to be good, is anxious to pass a bill that deals with an innovation in our financial structure - the issue of short-term money bills. Had that measure been put back for a little while, the Parliament might have been asked to pass it at 1 o’clock or 2 o’clock in the morning. Opposition members have their rights, and so have Government supporters. We hope that honorable members who support the Government will not abandon their right, as representatives of the people, to discuss fully and fairly every piece of legislation that comes before the Parliament, even if this involves sitting for an additional three or four weeks. The Government has made the mistake this session of mixing its Budget measures with legislation which properly belongs to the legislation session. If it would divorce its legislation work from its budget work this sessional period might finish normally, naturally and properly on 26th November. But the Government is not going to get too much good legislation by acting in the way it is now doing. (Several honorable members having risen in their places) -

Motion (by Mr. Harold Holt) put -

That the question be now put.

The House divided. (Mr. Deputy Speaker - Mr. G. J. Bowden.)

AYES: 61

NOES: 37

Majority . . . . 24

AYES

NOES

Question so resolved in the affirmative.

Question put -

That Standing Order No. 104 - 11 o’clock rule - be suspended until the end of the session.

The House divided. (Mr. Deputy Speaker - Mr. G. J. Bowden.)

AYES: 62

NOES: 39

Majority . . 23

AYES

NOES

Question so resolved in the affirmative.

page 2374

SEAT OF GOVERNMENT (ADMINISTRATION) BILL 1959

Motion (by Mr. Freeth) agreed to -

That leave be given to bring in a bill for an act to amend the Seat of Government (Administration) Act 1910-1955.

Bill presented, and read a first time.

Second Reading

Mr FREETH:
Minister for the Interior and Minister for Works · Forrest · LP

– by leave - I move -

That the bill be now read a second time.

The Seat of Government (Administration) Act prescribes, among other things, the procedure by which the gazetted plan of layout of the city of Canberra may be modified or varied as is found necessary from time to time. Section 12a, which detailed the procedure to be followed, had as its object the exercise of parliamentary supervision of this gazetted plan. The present bill is mainly designed to amend this procedure.

The plan of layout of the National Capital was originally gazetted on 19th November, 1925. A number of modifications and variations, mostly of a minor character, have been made to the plan since that time in accordance with the procedure set out in the act which is, briefly -

  1. The Minister may modify or vary the plan, but only after giving 30 days notice of intention so to do by notification published in the Gazette.
  2. A copy of the instrument making the modification or variation must be laid before both Houses of Parliament within 15 days if Parliament is sitting, or, if not, within 15 days of the next meeting of Parliament.
  3. If either House passes a resolution of disallowance of which notice has been given within 15 sitting days after the instrument has been laid before it, the modification or variation shall cease to have effect.

Proposals for the development of Canberra that have been formulated by the National Capital Development Commission since its establishment last year, indicate the need for some substantial changes in the gazetted plan of layout of Canberra. Although it has been the practice to include a number of changes in the plan with each formal action to vary, it has become clear that the procedure required under section 12a is too protracted for efficient administration, and that with the accelerated rate of development of the city the procedure needs to be revised to enable changes in the plan, especially minor changes, to be dealt with promptly.

It is apparent that the basic intention of section 12a was to give Parliament an opportunity to consider any changes, but shorter times than those prescribed in the present act would provide adequate safeguards, particularly as all proposed variations are now referred beforehand to the Joint Parliamentary Committee on the Australian Capital Territory. It is therefore proposed by this bill to amend section 12a as follows: -

  1. To alter the period of notice of inten tion to vary the plan, required by sub-section (1.), from 30 days to twelve days.
  2. To simplify sub-section (2.) by requir ing that a copy of each instrument of variation shall be laid before each House of the Parliament within fifteen sitting days, instead of 30, and to provide in addition that it be accompanied by an explanatory statement by the Minister.
  3. To reduce from fifteen sitting days to six sitting days the period provided under sub-section (3.) within which notice of a resolution of disallowance may be given in either House.

Another minor amendment will simplify sub-section (1.) in its reference to the plan existing at the time of any future modification or variation, by substituting the words “ as previously modified or varied “ for the words “ as modified or varied prior to the date of the commencement of this section “.

It is felt that these proposed amendments to section 12a will give ample opportunity both for objections by the public after gazettal of any notice of intention to vary the plan, and for members of either House of the Parliament to consider the variations and give notice of any motion of disallowance. I may say that these proposed amendments to section 12a have been considered by the Joint Parliamentary Committee on the Australian Capital Territory, and that they give effect to the views of that committee, with two minor exceptions. The committee suggested seven days instead of the originally proposed five days for the period within which notice of disallowance could be given. Six days represents a reasonable compromise. The committee also suggested that some statutory reference to it of the proposed changes should be made. As the committee itself is not a statutory body, I have agreed to refer to it all proposed changes.

As I have mentioned, arrangements have been made for all proposed modifications or variations of the Canberra city plan to be referred to the Joint Parliamentary Committee on the Australian Capital Territory for consideration before they are incorporated in a formal instrument for execution by the Minister.

The other purpose of this bill is to amend section 12 of the act. This section provides for the making of ordinances, which constitute the main body of the law of the Territory. The section was introduced in 1910, since which time there have been only two minor amendments, the last of which was made in 1939. In the intervening period some weaknesses have been noted, and in more recent acts - the Christmas Island Act 1958, the Cocos (Keeling) Island Act 1955 and the Heard Island and the McDonald Islands Act 1953 - clearer and more complete provision has been made in connexion with the making of ordinances for a Territory. The amendments proposed by the present bill will simply correct the weak- nesses in the act and bring its provisions more into line with the other acts referred to.

The main changes in substance proposed by the bill are as follows: - First, the time within which an ordinance must be tabled would be fifteen sitting days instead of 30 days. It is more usual for a provision of this nature to provide a limit in terms of sitting days. The present act does cause some inconvenience when an ordinance is made very near the end of a parliamentary sitting, and indeed it could be impossible to comply with it if the ordinance were made on the last day of the sitting.

Secondly, an ordinance would be void and of no effect if not tabled within that time. At present the act is silent on this point, and it is doubtful what is the legal effect of failure to table as required. Thirdly, either House of Parliament would be enabled to disallow part of an ordinance, whereas at present a part of an ordinance cannot be disallowed without disallowing the whole. Fourthly, if notice of motion to disallow an ordinance or part is given, it will have to be dealt with within fifteen sitting days: otherwise the ordinance or part will be deemed to be disallowed. Under the existing act, the Government may avoid a debate on a motion to disallow an ordinance by keeping it at the bottom of the notice-paper.

Fifthly, the precise legal effect of disallowance will be made clear by a provision that a disallowance has the same effect as a repeal, except that any law repealed by the disallowed ordinance is revived. Under the present act, a disallowed ordinance “ shall cease to have effect “; but this leaves room for uncertainty, for example as to the position of accrued rights and pending litigation. Further, under the present act, the, disallowance of a provision in an ordinance which repeals a provision in another ordinance does not revive the previous provision. This is unsatisfactory in that, generally speaking, Parliament would disallow such a provision because it considered that the previous law should remain.

Sixthly, when a provision is disallowed it will not be lawful for the GovernorGeneral to make a provision the same in substance within six months after the disallowance, except with the approval of the

House concerned. The present act does not prevent the frustration of a disallowance by the making of a similar provision during a Parliamentary recess.

Finally, the Interpretation Ordinance 1937-1955 of the Territory provides that regulations made under ordinances shall be tabled and that either House has the right to disallow them. It is doubtful whether those provisions are effective, as it may well be that an ordinance cannot confer powers on the Houses of Parliament. By this bill, the provisions with regard to ordinances are applied by the act to regulations, thus putting beyond question the right of Parliament to scrutinize all Territory regulations and legislation. Honorable members will note that these provisions increase rather than diminish the control exercised by the Parliament over the making of ordinances for the Australian Capital Territory. I commend the bill to the House.

Debate (on motion by Mr. J. R. Fraser) adjourned.

page 2376

AUSTRALIAN CAPITAL TERRITORY REPRESENTATION BILL (No. 2) 1959

Motion (by Mr. Freeth) agreed to -

That leave be given to bring in a bill for an act to amend the Australian Capital Territory Representation Act 1948-49, as amended by the Australian Capital Territory Representation Act 1959.

Bill presented, and read a first time.

Second Reading

Mr FREETH:
Minister for the Interior and Minister for Works · Forrest · LP

– by leave - I move -

That the bill be now read a second time.

This bill is consequential upon the amendments proposed by the Seat of Government (Administration) Bill which I have just introduced. That bill extends the power of either House of Parliament so that it may disallow part of an ordinance or regulation as well as the whole. The bill which was passed earlier this year gave the member for the Australian Capital Territory the right to vote on a motion for the disallowance of an ordinance or regulation of the Territory. This bill gives him the right to vote on a motion for the disallowance of part of an ordinance or regulations or a motion for the disallowance of rules and by-laws. Therefore, it is an extension of his existing rights. I commend the bill to the House.

Debate (on motion by Mr. J. R. Fraser) adjourned.

page 2376

LOAN (SHORT-TERM BORROWINGS) BILL 1959

Second Reading

Debate resumed from 22nd October (vide page 2209), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Mr CREAN:
Melbourne Ports

– The Opposition opposes the bill before the House, and I feel that a much longer period of adjournment should have been given for us to consider this measure. It introduces into the structure of the Commonwealth a new type of security which is linked with that institution that was given official recognition here in February last, the short-term money market.

I should like to preface my remarks with a brief outline of the short-term money market as it operates in Australia. For the details, I am indebted to an article in the September, 1959, issue of the “Australian Quarterly” entitled “The Official Shortterm Money Market “ by Mr. W. P. Hogan, of the Newcastle University College. I also have some details of the operation of this institution which are contained in the last annual report of the Governor of the Commonwealth Bank of Australia. The details are to be found on pages 18 and 19 of that report.

The purpose of the short-term money market is to mobilize the surplus funds of financial institutions and companies - funds that are not immediately required by their owners or controllers - and to invest these funds with “ dealer companies “. That is the term given to the firms which operate in the short-term money market. The banks, which are investors of funds, use excess cash or excess liquidity, and something which, at the time, is a non-earning asset is converted into an earning asset, giving a return of between 2 per cent, and 3 per cent.

The dealer companies with which the funds are placed and which have been accredited by the Commonwealth Bank are compelled, as a condition of their accrediting, to invest all their funds in short-term government securities with maturity not exceeding three years. The point that should be noted here is that from the point of view of the dealer companies, the more securities there are with maturities shorter than three years the better is the field available to those dealer companies within which to operate. Supporters of this scheme are prone to refer to sums that are deposited on a term as short as an overnight basis. That phrase is actually used in the report of the governor of the bank. I must confess that I find some difficulty in knowing what funds deposited on an overnight basis comprise. However, they may help certain gentlemen of the stock exchange to meet commitments. Also, such loans must be in minimum sums. The loans advanced from companies to the banks or the dealers must be in minimum sums of at least £25,000.

Because the maturing of securities held by the dealers in their portfolios may not match the withdrawal of funds, there are occasions when the dealers must have recourse to the central bank for credit. What is known as a line of credit has been established between the accredited dealers and the Reserve Bank, as it now is, of which the dealers may, in certain circumstances, avail themselves. However, in order to avail themselves of this right, authorized dealers must fulfil three conditions. First, they must lodge with the central bank collateral in the form of short-term government bonds. Secondly, the amount of the line of credit available to them is conditioned by the size and structure of the individual dealer’s investment portfolio. Thirdly, a dealer company must maintain given margins with the Reserve Bank. Those margins are set out in detail on pages 18 and 19 of the annual report of the bank. They are 1 per cent, of the market value of securities having maturity for one year or less; 2 per cent, in the case of portfolio investments with maturities between one and two years; and 4 per cent, in the case of investments with maturities of between two and three years. The securities must have a maturity not exceeding three years. Therefore, it is some advantage to the dealers to have a high proportion of securities with maturities of one year and less, because a lower margin is required - 1 per cent, as against between 2 and 4 per cent. Presumably these margins are idle funds so far as the dealers are concerned. The dealers survive as business entities because they maintain a sufficient margin between the rates at which they are able to make investments and the rates at which they are able to borrow from the banks anc! other financial institutions or individuals in the community.

At the moment, as honorable members know, a person may leave his money on fixed deposit with a trading bank and money deposited on fixed deposit for three months earns interest at the rate of 2£ per cent. So, if the dealers wish to attract deposits away from the trading banks they must offer a rate of interest at least greater than 2£ per cent. At the moment the yield on short-term government securities is about 4 per cent. So, that is the kind of margin, as it were, within which the market operates at the moment. It would be of some advantage to the market if it had available to it some security of three months life or less which could be obtained at a rate lower than 2i per cent., which can be obtained at present. I understand that recently the short-term money market has been offering to pay interest at the rate of 2 J per cent, on money invested. According to the monthly statistical bulletin of the Commonwealth Bank, in August, 1959, the major trading banks had on deposit with the short-term money market £23,900,000. That is a fairly significant sum when you take into account that the market had been in existence at that stage for only about six months.

From the information that is available to me - it can be gleaned in the main only from the pages of the financial press - the total funds at present on deposit with the short-term money market are in the region of £70,000,000. It would be of value in assessing the problem that we must face in a moment if we had some idea of the origin of the difference between the £24,000,000 subscribed by the banking system to the short-term money market and the £70,000,000. That is a fairly significant sum of more than £40,000,000. One of the claims made by the defenders of this institution is that it could help to force down the interest rate on short-term government securities. For a time it appeared to be having that effect, because the yield on short-term dated bonds had fallen in August, 1959, to 3.88 per cent, as compared with a rate of 4.3 per cent, a year earlier. That was a fall of almost .5 per cent. The latest figures available indicate that the rate has commenced to climb again and the rate given in the last issue of the statistical bulletin is 3.93 per cent.

I have given that information as a background, as it were, in which to endeavour to assess this problem. The Labour Party opposes this measure because as we see it the opportunity is being given-

Mr Harold Holt:

– The Labour Premiers did not oppose it.

Mr CREAN:

– I think they probably understood it about as much as the Treasurer understood it at that time. This is a complicated matter that- is worthy of a far better explanation than has been given in the House so far. I would suggest that no adequate explanation has been given in the House of the set-up of the short-term money market in the first instance. A lot of blanks in the speech of the Treasurer (Mr. Harold Holt) require explanation. He has had a longer time, with many more resources at his disposal, to enable him to assess the problem than we, as a party, have had since Thursday night. In my view, this is a very significant matter, which warranted a much longer period of adjournment of the debate than was given.

Essentially, it seems to me that the proposition is this: As explained by the Treasurer, there are certain periods in the financial year when there are excesses of liquidity - and “ liquidity “ is one of those blessed words in economics that can often be used to conceal the real situation. Liquids, as we understand them in the banking system, are cash, treasury-bills or, sometimes, government securities. But in every instance the criterion is that they are a government instrument of some kind. Cash is pounds, shillings and pence issued by government agencies. Treasury-bills, as we have understood them in the past, are essentially short-term borrowings by the Government from the banking system, principally from the central bank. Government securities, of course, are documents which have behind them the substance of the Government as the ultimate guarantor.

But in every instance liquids are items or securities which, as it were, have the fiat or imprimatur of the Government.

The whole business of banking, whether it be from the aspect of the private trading bank or from the aspect of the central bank as the controller of the ultimate volume of money, is the manipulation of the liquids at your disposal. The private banks always must have enough to meet whatever demands may be made on them from day to day. Liquids are onerous in one sense, in that generally they give a low yield, or no yield in the case of cash, and the aim of the banking system is to get rid of as much as it can dispense with. On the other hand, the central bank uses its power to manipulate the flow of money in such a way as to ensure that the banks will have neither too much nor too little liquidity at any point of time.

It has been found from experience in Australia that there are inevitably periods when there is an excess of liquidity. There are other periods when there is a shortage of liquidity. Three instances of liquidity problems were mentioned by the Treasurer. He referred, first, to temporary borrowings by the Commonwealth from the central bank to finance government spending during those months of the financial year when revenue lags behind expenditure. Governments ordinarily spend their money fairly evenly throughout the year, but they do not collect their taxes at the same rate, and in the early stages of the year they are spending more than they are getting. In the past, governments in Australia have bridged the gap by issuing treasury-bills, which means, in effect, a borrowing from the central bank. In some circumstances, the central bank farms that out to the trading banks.

The second liquidity difficulty arises from the seasonal flow of export proceeds. There is a part of the year when our exports are just beginning to flow, when there is an imbalance between the value of exports and the value of imports, and liquidity troubles arise in consequence. The third liquidity difficulty is related to advances to growers, which are made through the Rural Credits Department of the Commonwealth Bank. Those are advances made by the Commonwealth Bank in anticipation of the proceeds from a crop. The bank pays the money in advance to the farmer, and he reimburses the bank later in the year when he has sold the crop.

Those things are nothing new in the Australian economy, and the difficulties have been overcome in the past, successfully enough, by means of the treasury-bill, which is simply a loan for the time being which the banking system makes to the Government. It has been made at the low rate - in my view, it is high enough even though it is low - of 1 per cent.

Mr Harold Holt:

– How low can you get?

Mr CREAN:

– You can get lower still. You can get down to i per cent, or i per cent., certainly lower than 1 per cent. At least this gives an earning capacity to the trading banks which they would not have had if that money had to he idle, or if it were called up to special account, as it might be in some circumstances, when it would earn only £ per cent., which is lower than the treasury-bill rate.

What this measure proposes to do is to create a new sort of government security, having a life of three months or less. It will be approximately three months in the early stages, at any rate. That new sort of security is to be called a seasonal security note. The details of the machinery for the issue of these seasonal security notes are not set out. I do not know whether the practice followed in some other countries will be followed here by the Commonwealth Bank, or the Reserve Bank, quoting a rate and calling for tenders from the market for the bills, or whether the market will be allowed to set the rate. Those things are not stated precisely here. Clause 11 of the bill provides -

Subject to the next succeeding section, seasonal securities shall be issued and sold at such prices, on such terms and conditions, in such amounts and in such manner as the Treasurer directs.

I think the Treasurer might have been a little more explicit. I understand that this bill is being rushed through so that three issues of these securities can be made before Christmas. I take it that already there has been evolved the machinery which will be used in making the first issues of the securities, and I suggest that the Treasurer ought to have given us some indication of the machinery he proposes to use. The only indication given is that they will be issued at a rate in excess of 1 per cent. The Treasurer gives a kind of indication that they will be issued at somewhere near the rate that three-month shortterm securities are yielding at the moment, which is about 4 per cent.

That means that this temporary borrowing will be undertaken in a way different from the traditional way. It will be undertaken in a much more expensive way, because instead of the money being borrowed at 1 per cent., it is to be borrowed presumably at somewhat nearer to 4 per cent., and the excess return will be shared among the sections of the community involved in the short-term money market. Presumably the trading banks, individual investors and company investors will invest money with the market at about 2i per cent, or 3 per cent. So far as the investors are banks, they will get approximately 2 per cent, more than they are getting at the moment. The difference between the borrowing rate and the rate secured on the security will go to the dealers in the markets. In other words, the major part of the benefit will go to financial institutions, and the community as a whole will bear the difference. In the past, the amount of treasury-bills has fluctuated from as high as £150,000,000 or £160,000,000 to as low as £20,000,000 or £30,000,000, but on the average for the year the figure might be presumed to be about £80,000,000 or £100,000,000. Instead of that £80,000,000 or £100,000,000 being borrowed at 1 per cent., as is the case at present, it will be borrowed at an average of at least 3 per cent, and possibly closer to 4 per cent., this will represent a difference of something like £6,000,000,000 in interest payments which, in terms of a gross national product of £1,000,000 and total Government expenditure of about £1,600,000,000 does not seem to be a very great amount of money, but nevertheless £1,000,000 is £1,000,000, and it has much more significance when the major portion of it will go to the trading banks and to financial institutions and the dealers in the short-term money market.

The Treasurer, again without being very specific, said -

We do not intend that the banks should have unrestricted access to the securities.

But it is not stated how great or how small will be the access. He went on to say that he hoped that the notes would be taken up by the public. Again, I think that we are entitled to a better definition of the “ public “, particularly when we remember that the minimum sum that may be invested in these securities is £5,000 and thereafter in multiples of £1,000. In what sense is the word “ public “ used here? Who is the “public”? Is it the man in the street? Will the man in the street with £5,000 to spare for three months be the most regular client in this kind of market? Or is “ public “ simply a name to conceal relatively large public institutions?

We have been told that the virtue of this kind of security is that it will help to mop up excess liquidity. We have been told that although the notes will be issued for a period of three months, any one wishing to cash them before maturity may do so. The Treasurer said -

Investments in the notes will therefore have the facility of being readily cashable at any time.

If the proposal were designed to soak up excess liquidity, there should be some fairly rigid restriction on the cashability of the notes. I am not suggesting that in no circumstances should a note be cashable, but the suggestion is that a week or a fortnight after issue the note may be cashed if the person who has made the deposit so desires. This seems to me largely to cut away the ground upon which the new device has been based.

We need to have a closer look at the structure of the national debt because this device is part of it. This is a new kind of government security - a short-term government security. Some rather interesting statistics on this matter are contained on page 37 of the September, 1959 issue of the statistical bulletin of the Commonwealth Bank. As at 30th June, 1959, what is called the marketable debt aggregated £2,973,000,000. What is called other funded debt totalled £176,000,000. Internal treasury-bills aggregated £270,000,000, and public treasury-bills aggregated £171,000,000. The total of those sums is £3,590,000,000. A very interesting table in the bulletin indicates the holding of this vast sum of money. Unless one looks at how that debt is held, one would obtain a false impression of what might be called the real burden as between sections of the community. One would obtain a false conception as to how much of this huge sum is held by what might be called the public or individuals. The figure of £3,590,000,000 is broken down in this way: The Commonwealth Bank which, in a sense, is the Government, holds £432,500,000 or 12.1 per cent, of the total debt; the trading banks hold £311,800,000 or 8.7 per cent.; the savings banks - a slightly different kind of government agency - hold £744,300,000 or 20.7 per cent.; life assurance offices which, to some extent, are merely investors by proxy for the policy holders, hold £218,000,000 or 6.1 per cent, of the total; other insurance offices hold £76,500,000; Government pension and provident funds hold £40,500,000, and other pension funds hold £33,900,000. The next significant group comprises Commonwealth and State Governments and local and semigovernment bodies - the Government in another form- which hold £792,300,000 or 22.1 per cent, of the total. What might be called the public holds only £671,800,000 or 18.7 per cent, of this vast sum. The significant fact is that public holdings have declined over the last four years. Despite the fact that the aggregate amount of the debt has risen, the holdings of the public have fallen quite significantly from £747,700,000 or 21.7 per cent, of the total in 1956, to £671,800,000 or 18.7 per cent, of the total in 1959.

Mr Harold Holt:

– -Is that not just reflecting redemptions of war debt?

Mr CREAN:

– It may be reflecting redemptions of war debt, but I think that it is also reflecting a loss of confidence by the small investor in the loan market. The only sensible and substantial step that was taken by this Government in an attempt to remedy that deficiency was the special security which was introduced in, I think, October last year - something that we on this side of the House had suggested four or five years ago. These special securities at least secure the integrity of the capital and a reasonable return of interest. But the ordinary small person had his fingers burned because, when the interest rate rose, the war loans at the low interest rate fell in face value. Unfortunately, many people who invested in war loans did not have the opportunity that is being given to investors on the short-term market to obtain their cash three months after having taken up a note. Irrespective of the case that an investor in the war loans may advance, he does not have the opportunity to cash his bonds.

Mr Roberton:

– It is a normal hazard.

Mr CREAN:

– It is a normal hazard that I suggest can be reduced considerably by prudent housekeeping. But that prudent housekeeping was not undertaken by this Government until many years too late. I imagine that it will be very difficult to encourage many people back into this market, even with the more safe - and, I suggest, more normal - sort of security that is now open to them.

The astonishing thing about this device, Mr. Deputy Speaker, is the quickness with which the Government jumps in to fill gaps in the economy for investment by people who can afford to invest £5,000 in these seasonal treasury-notes or £50,000 in the short-term money market. It is astonishing how quickly the Government jumps to the service of such sections of the community although it allows the poor old returned serviceman to wait for fifteen months for a loan from the War Service Homes Division, to which he has been entitled for fourteen or fifteen years. He cannot get any short-term funds at low rates of interest to tide him over. I should have thought, Mr. Deputy Speaker, that, if there were any excess liquidity in the community, this is one of the various alternatives that could have been considered. I was interested to see that the Treasurer, in his secondreading speech, said that various alternatives had been examined. Again, he did not indicate what were the various alternatives that had been examined and rejected in favour of this new device, which, in my view, confines within a very limited circle the advantages that the right honorable gentleman claims will flow from this measure. There is one alternative that could have been considered, I suggest. The Treasurer could have taken, say, £10,000,000 or £12,000,000 of these liquid funds and set such an amount aside as a short-term fund of twelve months’ duration. It could have been set aside at quarterly intervals without any great difficulty, once you got started, and these unfortunate ex-servicemen, instead of having to borrow at 10 or 12 per cent., could have been like the people who will benefit under this proposal. They will borrow at 3 per cent, and lend at 4 per cent.

Mr Harold Holt:

– That is hay-wire.

Mr CREAN:

– It is not hay-wire at all. What has happened indicates that the stronger the pressure group - and that generally means the more limited in numbers and the greater in financial strength - the quicker the Government rushes to its aid. Last week, we had the example of the petroleum industry being favoured with a government subsidy of some millions of pounds - again, so we are told, in the interests of national development. As an alternative, why not give some of the taxpayers an opportunity to pay their taxes in advance? Tax payments are one of the reasons for the liquidity problem here. People receive their tax assessments from March to June, and many of them could have been setting sums aside every month up to the time of issue of the assessment. If they were enabled to set sums aside in this manner, this would be a way of ironing out the difficulties associated with this matter, which, in the United States of America, involves what are known as tax acceptance certificates.

Mr Bury:

– This proposal will enable that to be done.

Mr CREAN:

– It is a very roundabout way of doing it, if I may say so. It seems to be a toad-in-the-hole method of approaching this problem. The suggestion that the public will benefit, when we are speaking in terms of units of £5,000 and £50,000. seems to me to be very wide of the mark.

As I have said, in my view, the treasurybill, as we have known it in Australia for a considerable number of years, has for orthodox finance only this one disadvantage: Its rate of interest is still too low. That is really what is being attacked here. I asked the Treasurer a question about this matter approximately twelve months ago, when the first little ripples concerning the short-term money market were beginning to be felt. It is amazing to see how many articles have appeared in the last twelve months on this subject in various publications. In an issue of the quarterly survey published by the Australia and New Zealand Bank Limited about twelve months ago, there was an article suggesting that the Government ought to adopt these measures. One of the things suggested was that the Government ought to introduce the kind of securities for which this bill provides. In the May, 1959, issue of the review published by the Bank of New South Wales, a similar article appeared. In the issue before the last of the “ Economic Record “ - that for May, 1959 - a rather pedestrian article by a Mr. Merry, who, I think, has some association with the Australia and New Zealand Bank Limited, pointed out the merits of a scheme such as this. These things just do not happen overnight. They happen because people have been able to get to the Government and indicate to it that they think these things are desirable. And “ desirable “, in their view, means that they will get a higher return on funds which, for the time being, may have been lying idle.

Tt may be suggested later in this debate, Mr. Deputy Speaker, that we are only developing the kind of institution that has worked successfully in the United Kingdom - the institution known generally as the discount market. Again, I commend to the Treasurer the report of the Committee on the Working of the Monetary System, in the United Kingdom - commonly known as the Radcliffe committee, because it sat under the chairmanship of Lord Radcliffe - which the Prime Minister (Mr. Menzies) was good enough to circulate to those members of the House who were interested. The members of the committee referred to the institution known as the discount market, which some people, I have no doubt, will suggest is what we are developing here. Of course, the essential difference between the discount market as it operates in the United Kingdom at present and as it operated ten of fifteen years ago is that the major part of the securities now handled by that, instrumentality is government securities, and not the traditional trade bill on London that was its stock-in-trade many years ago. Here, the Government is attempting, by means of a mesmerized copy, as it were, to build something similar into our financial institutions. which, I suggest, are somewhat different from those of the United Kingdom.

I wish to refer to what the members of the Radcliffe committee had to say at paragraph 180 of their report, Mr. Deputy Speaker, and I shall conclude on this note, because I think that, in a sense, it summarizes some of the things that I have been suggesting. At paragraph 180, the report of the Radcliffe committee states -

It would not be beyond human ingenuity to replace the work of the discount houses; but they are there, they are doing the work effectively, and they are doing it at a trifling cost in terms of labour and other real resources.

In other words, the members of the committee breathed a sort of patient sigh over the discount market and said, “ Its main functions are gone and done with, anyway “. The same functions could really be performed by what we have in Australia - treasury-bills, or, as they are called in the United Kingdom, advances on the Ways and Means Account. The discount market in Great Britain has accepted the traditional role that I have described. Here the Government is exercising its limited ingenuity to create something that is entirely foreign to the circumstances of Australia. This will confer benefit not on the great majority of the community but on a favoured financial circle, and it will do so at the expense of the Australian taxpayer. For these reasons, we feel that the measure should be rejected.

Mr CAIRNS:
Yarra

.- This legislation, which has been dealt with in detail by the honorable member for Melbourne Ports (Mr. Crean), is of great significance as an illustration of an economic principle, but it is not of much significance in its economic quantity. As the honorable member pointed out, the bill is clearly the result of writings on behalf of private trading banks in various journals, and no doubt in more direct submissions to the Government, over the past year or eighteen months. It is a response to the approaches or pressures of the private trading banks. Judging from the way in which the Treasurer (Mr. Harold Holt) answered questions during the period I have mentioned, and by his speech on the bill, it was something that the Government did not clearly understand, and the Government gave way primarily because this was acceptable to the financial institutions with which it was in contact. We in this House do not know the way in which this is done, but it is done in some way - of that we can be sure.

This bill furthers the Government’s practice of borrowing to obtain funds to cover its expenditure. The Government, like all governments, is faced with the choice of raising money directly by taxation or by borrowing. Generally speaking, the Government has endeavoured to borrow rather than to tax. Certainly, in 1956, the Government increased revenue from indirect taxes by over £100,000,000, but, broadly speaking, when it has had to meet the need for more revenue it has turned to borrowing.

As the honorable member for Melbourne Ports pointed out, the Government has not succeeded in getting the money it needs by borrowing directly from the public. He spoke ot the public debt of more than £3,500,000,000 and pointed out that of this amount only £671,000,000 or 18 per cent, had been acquired directly from the public. We will not go into the reason for that. The Minister for Social Services (Mr. Roberton) has very strong objection to any suggestion that people are not absolutely bursting to lend money to the Government; but the figures given by the honorable member for Melbourne Ports show that they are not quite bursting to lend money to the Government. In its movement towards borrowing rather than taxing, the Government has had to turn increasingly to what we could call the financial institutions, lt recognized last year and the year before that it had a very large programme of public debt conversion to meet, and perhaps its greatest economic problem was to try to manage the debt that had to be converted. And so, following the recommendations, I should imagine, of its private financial advisers as well as of its advisers in the Treasury, it made contact with a private financial structure from which it could borrow. One important development was the creation of the so-called short-term money market. It is from such private financial institutions as insurance companies and private banks in the short-term money market that the Government ha> acquired probably more than 90 per cent, of the funds that it has not been able to acquire by borrowing.

At this point, I think it is wise for the House to consider what has been happening with regard to borrowing. I pointed out that the Government, except for 1956 when it increased indirect taxation - met predominantly by supporters of this party - has refused to increase taxation. It might be argued that the level of the Government’s borrowing is not yet dangerous, and, given the continuation of creeping inflation, it is certainly not dangerous. But I think it is wise to look at the burden of the debt, and we can do so by examining the tables; of interest liability included in the Budget: papers for this year. Since the Government has been in office, there has been a striking increase in the interest payable on. public debts per head. The increase in the aggregate is most striking, but the1 average per head is equally striking. Iti 1950, the first year after the Government came into office, the interest liability per head was £10 9s. Id. Every man, woman and child in Australia in 1950 had an annual interest liability of £10 9s. Id. In 1959, it had become £14 13s. 10. lt seems to me that a rise of £4 4s. 9d. in the space of nine years is a very large increase on the burden of debt.

Mr Wilson:

– Are you referring to the Commonwealth debt or the total debt for the Commonwealth and the States?

Mr CAIRNS:

– I am referring to the total public debt in Australia of more than £3,500,000,000.

Mr Wilson:

– Most of that is the States’ debt.

Mr CAIRNS:

– That is a completely artificial definition. I do not know how long Government supporters will continue to think in terms of this artificially created division of Commonwealth and States. We live in the Commonwealth of Australia. To draw these artificial book-keeping definitions in an effort to avoid responsibility is not in any way convincing from a practical point of view.

Mr Bird:

– The same people have to pay both debts.

Mr CAIRNS:

– Of course they have. The Government wants to borrow increasingly to obtain money for its requirements, but it does not succeed in getting money from the general public. For various reasons which we discussed last week, the general public does not provide significant amounts for the Government. As the honorable member for Melbourne Ports pointed out, the figure of £671,000,000 has declined over the last four years. Any concern with the height of personal income - the favorite topic of the honorable member for Sturt (Mr. Wilson) - is a very poor concern if the Government wants to solve its financial problems.

What then are the economics of this measure? It creates some seasonal securities. The first question which arises is: What are these seasonal securities? They are a new form of document which will be issued, with the backing and authority of the Treasury, which can be taken up by any one who can afford to invest more than £5,000 in them, including, we are told by the Treasurer, the public. Not many members of the public will be able to buy even one of them. But they are a particular form of security which has been brought into existence for the first time and which will be taken up, in the main, or 90-odd per cent, of them, by the large financial institutions from which the Government has been mainly getting its money.

One effect of the legislation is to bring into existence these securities and to transfer investment by these large financial concerns, including the banks, from treasurybills and money held in special accounts into funds held in these seasonal securities. In other words, it will be a transfer of investment by the financial institutions either from treasury-bills at about 1 per cent., or special accounts balances, into seasonal securities at 3 per cent, or 4 per cent. The net effect of this will be that the £100,000,000 or so, which is the holding in this field, will be held in seasonal securities instead of in treasury-bills. This will cost the Government from £1,500,000 to £2,000,000 a year more. These transactions will increase the cost to the Government by about that sum . The Government will also transfer to the financial institutions which I have mentioned this selfsame amount of £1,500,000 to £2,000,000. That is a striking economic consequence of these transactions which the Treasurer in his eleven-page speech forgot to mention.

One could have a little more respect for the honesty of the Government in making these proposals if it would tell us the full consequences of them. Instead, it gives us the jargon which characterized the Treasurer’s speech. I wonder whether he himself wrote it. He said -

These wide variations in liquidity present uncertainties to the banking system in its management of funds, cause disturbances in the flow of funds in the capital market and, in this and other ways, tend to impede the efficient operation of credit policy.

That is the kind of jargon we get from people who have spent a few years in the study of economics and, no doubt, pass it on to the Treasurer.

Mr Lindsay:

– Did you study economics?

Mr CAIRNS:

– I did not learn jargon. It is rather significant that the fact that this proposal will cost the Government £1,500,000 to £2,000,000 more, by which amount the financial institutions will benefit, is for some reason or other overlooked in the eleven-page speech of the Treasurer. In addition, this measure, creating seasonal securities instead of treasury-bills, will mean that the holding of these two different kinds of securities will be different in the end. One reason given for this measure - that which I have just quoted - is that there are wide variations in the amount of liquid funds held in public and bank holdings. On the first page of his speech, the Treasurer said -

There are several causes which combine to produce the marked changes that occur from one season of the year to another in both public and bank holdings of liquid assets.

Certainly, there are. The first that is pointed out is the temporary borrowings by the Commonwealth from the central bank. That is the primary one with which we are concerned here. In other words, after this measure is passed the Government is not going to borrow so much temporarily from the central bank, but it will borrow temporarily much more from the financial institutions - the short-term money market - and private banks, and it will pay them from £1,500,000 to £2,000,000 more for that than it has to pay to the central bank. That is a very neat bit of financial jiggery-pokery.

Mr Harold Holt:

– The honorable member does not seem to recall that his colleagues in the State governments subscribed unanimously to this proposal.

Mr CAIRNS:

– As the honorable member for Melbourne Ports pointed out, our colleagues in the State governments knew as much about this as the Treasurer did. If we could have had as much opportunity to talk to our colleagues in the State governments as we have had to talk to the Treasurer about it, I think they would have learned much faster. The Treasurer suggests that some of our colleagues in the State governments did not object to this proposal. This seems to me to be his last and only line of defence. The position is that these temporary borrowings by the Commonwealth from the central bank have largely brought about the fluctuations in the level of holdings in treasury-bills. They will be reduced in the future for the simple reason that the Government is going to borrow from the financial institutions by means of these seasonal securities.

This is put forward as a sophisticated and more advanced form of financial development because it is the kind of thing which is done in London. Evidently the Treasurer thinks it is more sophisticated to have in Australia the kind of practice that is followed in London. It is also more inequitable, more sectional and gives more power to a small financial section. That is the kind of thing by which London is very largely characterized. If that is sophistication, then the Government is producing a sophisticated measure and a more advanced piece of financial machinery, but I suggest that it is nothing much more than a piece of financial manipulation which will give from £1,500,000 or £2,000,000 more to the financial interests with whom the Government is in very close touch.

Another matter I want to mention in passing is the question that is invariably raised when we consider methods of public finance. It is the argument that if the Government borrows from private individuals the result is not so inflationary as when it borrows from the central bank. I believe that a few minutes’ consideration of this proposition will show that there is not much in it at all. The question of borrowing and its effect upon inflation is influenced by a couple of things. One is whether the borrowing takes out of current expenditure a volume of money which is not also put back into current expenditure. All the money which the Government acquired inthe last financial year, and in practically every financial year since it has been in office, however it has been acquired, hasbeen put back into expenditure. There hasbeen no effective surplus, with the exception of a year or two. The Government has spent the money it has obtained, irrespective of the source from which it has obtained it. There has been no significant dis-inflationary effect.

Secondly, it has been argued that if this money is raised through the banking machinery, the effect is more inflationary than if the money is obtained from members of the public. But this very procedure which the Government is turning to now was associated last year with a very significant release of funds from the special accounts of the trading banks which, in turn, found its way into the short-term money market, directly or indirectly, and in turn, was lent back to the Commonwealth Government. In other words, the Government used the central bank procedure to create new money in the first place to make it available to the private banking institutions and then that money was borrowed back by the Government.

That is one question concerning inflation. Other things being equal, the lower the rate of interest the less inflationary will be the finance. If the Government is going to borrow at 1 per cent, from the central bank, then, other things being equal, it will have a less inflationary effect than if it borrows at 4 per cent., 5 per cent., 6 per cent., 7 per cent., or 10 per cent, from other concerns. What the Government is proposing to do here is to borrow at 3 per cent, or 4 per cent, instead of at 1 per cent. So, other things being equal, this proposal is more likely to be inflationary than alternative methods.

The final point I want to deal with in relation to this bill is the argument implicit in the Treasurer’s speech in justification of the creation of these seasonal securities - that they will give greater facilities to the banking system, some more appropriate rate of supply of funds to the Government, and they will have a more stabilizing influence on the economy as a whole.

The Governor of the Commonwealth Bank gave a lecture in Perth. On 26th August, 1959, Dr. Coombs was concerned, among other things, with precisely this question that I have been discussing. As is shown on pages 10 and 11 of the report of his lecture, he pointed out that for various reasons it is becoming increasingly difficult for the central bank or the Government to exercise a stabilizing influence on the economy. He said -

However, our experience suggests the money supply and the velocity of circulation are capable of some automatic adjustment.

He meant, in other words, some adjustment which is natural in itself and is outside the control of the central bank or the Government. He continued -

A sense of increased need on the part of business enterprises for a larger money supply will tend to produce the desired increase, and even to the extent that it does not there are a variety of means by which the existing money “supply can be made to turn over more rapidly.

Because of this more sophisticated development of money supplies in the economy, it is becoming more difficult for the central bank and the Government to exercise the desirable measure of control. This very development - the creation of seasonal securities and the associated creation of the short-term money market - will lead to the rapid development of something which is even further away from the control of the central bank. Answers to questions asked in the House recently have revealed that since 1952 a total of 98 companies have been granted exemptions from the operations of the 1945 Banking Act. In other words, 98 companies have been created since 1952 which are really carrying on banking business, but which have been exempted from the provisions of the legislation. One important field in this connexion is the short-term money market, and in this regard I again quote Dr. Coombs. In speaking of these factors which make control more difficult, Dr. Coombs said -

We have seen in recent years institutional developments which have increased the rate of turnover of the money supply. Outstanding mus.trations would be the development of hirepurchase companies financed largely by short-term borrowing and the emergence of firms specializing in the short-term money market.

What Dr. Coombs was saying was that the development of these short-term money- market firms has contributed something to the increased difficulties that he, at the central bank, meets in trying to regulate and make more uniform the operation of the economy. He went on to say -

These elements of flexibility in the money supply and the tendency for it to respond to some extent automatically to the demands which the moneyusing community makes on it mean that the outline I have given of the influence of management decisions in the formation of prices is not inconsistent with monetary theory.

In other words, what is happening in the economy to produce creeping inflation, according to Dr. Coombs, is made more difficult to handle because of the development of these relatively new financial institutions outside the control of the central bank. The creation of these new securities is strengthening the institutions that are outside such control.

I suggest that the truth of the matter is the exact opposite of what has been put forward by the Minister. Rather than contributing some measure of stability, some means by which the money supply can be more appropriately adjusted to meet the requirements of stability, this measure will make such a result even more difficult to achieve. It seems to me that when the Government drafts legislation of this kind it is not concerned with what is desirable from the point of view of the public as a means of financial control of the operations of the economy, loose and general as that control is already. It is not concerned with getting money at the lowest cost. It is not concerned with using its own central bank to the fullest possible advantage consistent with the necessity to control inflation. It is almost solely concerned with responding to the pressures or persuasions of the private financial institutions, which have, no doubt, been in touch with the Government in relation to this campaign that they have been running during the past eighteen months.

I think it is significant that in the explanation of the measure given by the Minister - it Was inadequate, as the honorable member for Melbourne Ports (Mr. Crean) has pointed out - no information has been provided as to the real economic consequences of the provisions of the measure. There has been no suggestion of how they will affect the shift of holdings from treasurybills at low rates of interest to seasonal securities at rates of interest four or five times those applicable to treasury-bills. The Government has clearly responded to private pressure and not to public need, and I believe that this characterizes everything the Government has done in recent years. To suggest that it is merely following the pattern of this apparently more sophisticated development of the short-term money market in London is no justification whatever. The financial institutions of a country are historical products. The institution in London has grown out of a historical situation which has, fortunately, never existed in Australia. This Government is doing all it can to introduce the same iniquitous kind of financial machinery which has benefited a section of the people of England, very often at great cost, as we saw in the late 1920’s and early 1930’s, to the vast majority of the people. The development of this kind of financial institution in Australia will be of no benefit to our people and will probably cost them dearly in the years to come.

I have endeavoured to find some kind of justification, from a financial or monetary point of view, for the creation of this shortterm money market and the supply of seasonal securities to meet the requirements of that market, but I have been unable to do so. I believe that the position remains as it was on 26th February, 1959, when the Treasurer (Mr. Harold Holt), in answer to a question by the honorable member for Melbourne Ports regarding the short-term money market, concluded by saying -

To the extent that the honorable gentleman has raised particular matters which have not been covered by me, I shall see that he gets what information I can supply.

At that stage the Treasurer was not in a position to supply the information, and it seems to me that in his answers to questions since that time, and also in his speech on this measure, the Treasurer has failed to satisfy the undertaking that he gave on that date. This bill remains, from our point of view, almost completely unexplained and unjustified. However, the honorable member for Melbourne Ports has pointed out the real significance of the measure, and since we on this side of the House appreciate that significance, we are in unqualified opposition to the proposal.

Mr BURY:
Wentworth

.- Of course it is not strange to hear the honorable member for Yarra (Mr. Cairns) express his philosophic opposition to a measure Of this kind, which, of course, is a great step forward in the evolution of our monetary system, from a number of Viewpoints. In the first place, as the Treasurer (Mr. Harold Holt) explained in his secondreading speech, it is an effective way of evening out the seasonal fluctuations in the liquidity

Of the banking system, which have, almost since the beginning of the Australian banking system, plagued those concerned with problems of effective credit control, because in practice it has been extremely difficult to disentangle temporary seasonal movements from what were likely to be permanent trends. It has, therefore, been difficult for the central authorities to take effective action to implement the desired kind of credit policy.

One of the reasons why so much financial initiative has moved outside the banking system has been the persistent efforts to control rates of interest, the kind and types of borrowers to whom loans may be made, and so on. This is the kind of philosophy which motivated the last Labour Government and which, unfortunately, has lingered on since. The very inflexibility imposed on the banking system, largely by people from outside who do not understand the ordinary problems of the daytoday market have, in fact, stimulated the development of these other types of institutions. If you try to hammer life into a particular shape it will spring out in other directions. That is what has happened in the development of the Australian money market. There is a process of evolution and, as life becomes more complex, different institution arise to meet particular needs. Tn fact, the need for this measure is a product of the excessive and at times unintelligent controls which have been forced upon our banking system, largely for political reasons and with the wrong type of political philosophy behind them.

The biggest criticism to be made of this measure is that it was not introduced at least five years ago. One of the great difficulties in exercising control over the new financial market under the conditions prevailing there, has been the lack of effective short-term Government securities which can be bought and sold freely to meet the needs of individual firms and also of Government finance. Now with these securities, the authorities will be able, over a large field, to control in a flexible and indirect way, the money rates and credit policies of many ot the institutions which now compose this market.

The honorable member for Yarra said that this bill would make the task of the central bank more difficult. In fact, it will facilitate it. For many years, the idea ot an open market in treasury-bills has been advanced and this, in fact, is what is contemplated in this measure. The securities are called treasury-notes and they are only to be issued on a seasonal basis. But, of course, that is always the case with treasurybills. Although the name is different it is, in fact, nothing conceptionally different from what has been advocated for many years.

The honorable member for Yarra said that trading banks had been advocates of this system of an open market for treasurybills. The first great attempt to establish an open market in treasury-bills, to which the public could subscribe, was made in 1936. Far from the trading banks wanting it, they torpedoed it by raising their deposit rates. If the trading banks want it now, it will be interesting to know precisely what the evidence of that is. For some time - unless they have changed their attitude - it has not been a development upon which the trading banks have looked with particular favour.

The honorable member for Yarra produced some rather peculiar theories about the inflationary effect of borrowing either from the central bank or from members of the public. It is curious to think that if you borrow from the central bank without first taking out an equivalent amount of purchasing power from the public, that has a less inflationary effect than doing so. The honorable member’s argument is completely opposite to the view held by most thinkers on monetary policy.

The honorable member for Yarra also charged the Government with borrowing rather than taxing. On this side of the House, we believe that taxation is quite heavy enough, if not too heavy. If is unfortunate that, even now, we cannot borrow enough to finance our huge programme of capital expenditure on various things which, in themselves, would yield additional in come. To borrow to finance this process is sound. The public debt of Australia is still by no means large in relation to our income and our prospects.

It is all very well for the honorable member for Melbourne Ports (Mr. Crean) to complain about not being given enough notice of this bill, and about a lack of information on it. Notice was given in the Budget speech a long time ago. In any case, the issues involved in introducing treasury notes of this kind have been debated for many years in esoteric circles, and people such as the honorable member for Yarra and the honorable member for Melbourne Ports are well informed on these matters and know all the issues involved. The only things that they could not know are the precise details such as when the notes will be issued, by whom they can be bought, whether they will be cashable and so on. By and large, they have known about this proposal and as far as the rest of honorable members opposite are concerned, if they had known they would be very little wiser.

I shall pass on to some of the other points made by the honorable member for Melbourne Ports, one of which concerned cashability. Surely, behind this, there must be cashability with the central bank if these notes are to achieve their purpose. What is not mentioned is the fact that if they are to be cashed at a time which is not suitable to the central authorities there will very probably be a penal provision. Presumably, the Commonwealth Bank, will operate in the same way as the Bank of England and other central banking institutions operate, and impose a rate appropriate to particular circumstances.

Once again, the honorable member for Melbourne Ports has raised the old bogy about the value of bonds being destroyed by this Government. This is an example, if one were required, of the folly and, almost, the crime, of bottling up economic forces because you have particular controls at a certain time when, inevitably, the period for which you can apply them must run out. The Labour government, in its day, used its controls over capital issues to force large numbers of people to subscribe to bonds at 3i per cent. This rate of interest was far below what could possibly be expected to be the proper prevailing long-term rate of interest in a country as capital hungry as Australia. Forcing the rate down to 31/8 per cent, was, in fact, the real crime as far as the prices of bonds were concerned. First of all, it had the effect, in the Labour government’s day, of chiselling investors, many of whom were small, of their proper returns. It then trapped them for twelve years and torpedoed in advance the capital value of their investment. The forcing down of interest rates to 31/8 per cent, by strict central bank controls and capital issue was part miscalculation and part deliberate policy, and it made inevitable the destruction of the capital values of bonds as soon as interest rates reached more realistic levels. If investors want the real reason for their heavy loss in capital values they should look to the people who tried to impose, as a permanent feature of the Australian economic landscape, an interest rate of 31/8 per cent.

The honorable member for Melbourne Ports asked, “Who are the public?” In fact, many small people, indirectly through institutions, will be involved in this process and their savings will operate through the firms that will be in the market. Clearly, nothing smaller than £5,000 as the minimum subscription is practical good sense. The fact that these securities will mop up a great deal of the excess liquidity in the community will certainly make the task of central control much easier than it would otherwise be. In addition, relatively more resources will be directed into government hands and less into private hands - a process which indirectly will enable a lower rate of tax to be imposed, which would greatly upset the predictions of the honorable member for Yarra.

Great play was made of the fact that instead of borrowing at the old rate of 1 per cent., which applies to the central bank and the trading banks, the Government would in fact be paying more for its money. This is a very old argument - whether narrow, immediate Treasury considerations of obtaining money at the lowest possible rate should be taken into consideration as against the wider factors of monetary control. It has been a main issue between treasuries and central banks all over the world. It was very potent in the immediate post-war years in the United Kingdom and particularly in the

United States of America between the federal reserve and the United States Treasury. The result of trying to force down interest rates below a reasonable level is to defeat overall credit control and inevitably to encourage inflation in the process. Forcing interest rates down is, unless you are in a position to control the whole range of credit, a highly inflationary practice.

I support the bill. Apart from giving the central bank authorities greater facility to control the general structure of banking credit in this country and a greater influence on our growing money markets, it also provides a very useful method whereby in the future many firms, and even individuals, indirectly may meet this horrible swing which occurs between income and tax outgoings. For the reasons I have stated, this bill should be strongly supported by this House.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Deputy Speaker - Mr. P. E. Lucock.)

AYES: 57

NOES: 39

Majority . . . . 18

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee (Consideration of GovernorGeneral’s message):

Motion (by Mr, Harold Holt) agreed to -

That it is expedient that an appropriation of revenue and moneys be made for the purposes of a bill for an act to authorize the borrowing of money by the Commonwealth for short periods and the expending of the money so borrowed.

Resolution reported and adopted.

In committee: Consideration resumed.

Bill - by leave - taken as a whole, and agreed to.

Bill reported without amendment; report adopted.

Bill - by leave - read a third time.

page 2390

STATES GRANTS BILL 1959

Second Reading

Debate resumed from 22nd October (vide page 2203), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Mr CREAN:
Melbourne Ports

.- This bill seeks to replace the old machinery in operation for reimbursing to the States the amounts they are entitled to for having foregone the right to collect income tax.

As a matter of historical notice, the Treasurer (Mr. Harold Holt) has indicated that the term “ reimbursement “ is now to be dropped and the term “ financial assistance “ is to take its place. Whether this is a sign that at last the Government recognizes the permanency of the uniform taxation arrangement I would not care to say, Mr. Deputy Speaker, but for our part we emphasize again that we believe in the uniform taxation system as the most logical method of collecting the major revenue item in the Commonwealth to-day - the proceeds of the income tax levied both on individuals and companies, and which does not lend itself very easily to collection by six separate taxing authorities. However, agreeing with uniform taxation as a principle does not mean that one necessarily accepts the formula or the sums agreed upon as the amounts to be paid to the individual States in order to enable them to carry -out their constitutional responsibilities.

This bill is significant for one or two new features to which I should like to point. 1 doubt whether the measure will mean the end of the wranglings between the States and the Commonwealth about the proper distribution of the total income tax resources of the Commonwealth. The intention of the bill is that its provisions will operate until the end of 1965. I do not know whether that means that year by year the Commonwealth will now simply point to the act and say to the States, “ You will get your amount this year as set out in the act, varied by the increase in population and adjusted according to the rise in wages “. I do not know whether it is, going to be as easy as that in future. However, T think those distinctive features ought to be noted. The Treasurer drew attention to them, but I think that they are worthy of being pointed to again.

The old formula arrived at an aggregate sum which the Commonwealth thought should be paid to the States, and it was left for the States to agree among themselveshow much would go to New South Wales, and how much would go to Victoria, Queensland, South Australia. Western Australia and Tasmania. This bill specifies, a starting-off sum for each of the States.. That will be the starting point for the next six years in determining what each State- will receive in that period. The amounts are stated in clause 5 as follows: -

This is a sum which, making allowance for the fact that South Australia now withdraws from the special grants field under section 96 of the Constitution, is £26,000,000 greater than was paid to the States last year. But what we have to take into account always, of course, is that there will inevitably be some rise year by year. Population is increasing at the rate of some 3 per cent, a year, and on the aggregate sum of over £200,000,000 this means an increase of at least £6,000,000 to £7,000,000 to allow for the increased population to be maintained at the same standard per head. Also, prices over the past several years have never risen by less than 2 per cent, to 3 per cent, a year, and again an additional sum will be required every year, because this year’s £1 does not buy the same as last year’s. This increase, therefore, has become necessary on two counts. It is necessary first, because of the rise in population, and secondly, because of the fall in the value of money. These sums will be varied in the future according to the increase in population in each State. Under the old formula the payment was adjusted on a factor which took into account sparsity of population and other matters. It is now presumed that that factor has been written into the original grant, and that in future the grant will be varied according to the actual rise in population in the States.

The second condition on which the increase has been granted - I suggest that this is a matter of some significance, and I ask members on the Government side to note the implications rather carefully - is that if there is an increase in the average wage per person employed during the year - that is a figure which is worked out by the Commonwealth Statistician - and if the average wage at the end of a financial year is greater than the average wage at the end of the previous year, an adjustment will be made; but the adjustment will be 10 per cent, greater than the actual increase in the wage. This means that if, for instance, the wage rises this year by 5 per cent, as compared with last year, the increase factor will not be 5 per cent, of the grant but five multiplied by eleventenths, or in this example,51/2 per cent.

According to the Treasurer, this proposal was written into the agreement at the suggestion of the representative of the Tasmanian Government, and it indicates that at least the Premiers realize that prices rise more rapidly than do wages, and that merely to adjust the grant on the basis of wage increases will not do justice to the States. They have had a prosperity loading, as it were, written into their adjustment, as a result of which their grant will be increased by 10 per cent, more than the wage index shows. The Premiers have been reasonably astute in having that factor written into the agreement, and the fact that such a clause had to be introduced indicates that inflation is almost taken for granted now. I ask honorable members on the Government side to mark that factor.

Mr Haylen:

– It is built in.

Mr CREAN:

– It is built in here as a safety device for the States. One or two other factors should be noted also. The States, of course, would have preferred a greater sum than that provided for by this legislation. Although it is £26,000,000 greater than the allocation for last year, the States still complain that they have not sufficient resources available to meet the demands that their citizens make upon them. We know the difficulties confronting the States in the building and staffing of schools and hospitals, improving rail services and so on, part of the cost of which is met out of loan funds and part out of revenue.

We should observe here some of the factors that are creeping into the structure of government finance in Australia. Apparently the Treasurer was able to get the States to agree that because their reimbursement was being increased they would not raise any objection to the continuance of the pay-roll tax. It will be remembered that the States have perpetually pointed to the anomaly that they, as State instrumentalities, are asked to pay a Commonwealth pay-roll tax on the wages of their own employees. They have suggested that this is a rather stupid bookkeeping arrangement because, if they pay £6,000,000 or £7,000,000 in pay-roll tax, they have to obtain a correspondingly increased reimbursement. That is one factor.

Another factor that I think should be looked at is the burden that has been thrust upon the States by interest charges on the State debt. If honorable members refer to the twenty-sixth report of the Commonwealth Grants Commission, they will find some very interesting statistics. At this point, I should like to congratulate the persons responsible for the compilation of that report upon the succinct way in which they bring together so many statistics relating to Commonwealth and State taxation. The table on page 126 of the report indicates that in 1949-50 the State debt charges, that is, on the portion of the debt that is applicable to the States and their undertakings, aggregated just under £44,000,000. By 1957-58, the latest year for which statistics had been collected, the interest burden had risen to £96,000,000, an increase of £52,000,000. If honorable members then turn to the table on page 115 of the report relating to payments by the Commonwealth to or for the States, they will find that, in 1949-50, taxation reimbursement amounted to £62,000,000, but by 1957-58 the figure had risen to £190,000,000, an increase of £128,000,000. Of this increase, £52,000,000 was due to the increase in the State debt charges. This indicates the peculiar bookkeeping that goes on at times which inflates the amount that the Commonwealth has to pay to the States. The increase of £52,000,000 is paid into the National Debt Sinking Fund but, because of the increase of £52,000,000 over the eight-year period to which I have referred, the Commonwealth has had to increase the reimbursements by a similar amount. This means that £52,000,000, which is near enough to 40 per cent, of the increased taxation reimbursement of £128,000,000, has been due to the CommonwealthState arrangement in relation to debt, interest charges and services. This problem is similar to the problem that has arisen in respect of pay-roll tax.

I do not know whether this is regarded as the tidiest method of bookkeeping and solving these problems, but it makes it very difficult to evaluate the real problems confronting the States. The Commonwealth could quite well say to the States, “ We have increased our grants to you, under the uniform taxation arrangement by £128,000,000 “. I concede that that is only portion of the amount that is allocated to the States by the Commonwealth. As a counter-balance to the suggestion of the Commonwealth, the States might well retort, “ We would have wanted only £76,000,000 if you had kept the interest rate lower “. Those are the kind of problems that exist at the various levels of government and which always call for some co-operation between the Commonwealth and the States. I do not know whether this kind of problem has been taken into account in arriving at this formula, because the tendency has been for the average rate of interest payable by the States to rise over the last several years, for the simple reason that so much of the debt, when it is reconverted, has to be reconverted at a higher interest rate than was the original debt. This imposes an additional burden on the States.

The States may come back in a year or two and say that it is all very well for the formula to be adjusted up to 1965 on the basis of population and wage increases, but that no allowance has been made for the fact that the average bond rate has increased by one-half of 1 per cent., or 1 per cent., as the case may be. I am only trying to suggest to the Treasurer that I doubt whether he will get eternal peace at the annual meetings with the State Premiers.

Mr Harold Holt:

– Does the honorable member think that I will get peace for six years?

Mr CREAN:

– I doubt it. Again, I do not want to chide the right honorable gentleman unduly about this factor of inflation, but I do not think that we have had the end of inflation. And, because we have not had the end of inflation, we shall not have the end of these difficulties that face the States. They have guarded against them - or they think that they have guarded against them to some extent - by that escalator clause with regard to wages. But I should not be so optimistic as to suggest that that will encompass all the ills that flow to the States as a result of inflation on a national scale. I still think that you may have your wrangles. If you do not have them over the level of the income tax reimbursement - or the financial assistance, as you now call it - you will continue to have them over the basis of the loan adjustment.

Quite a large part of that interest charge that I have referred to is notionally charged in the Commonwealth accounts to the States - although they have actually to pay it - on moneys that the Commonwealth has advanced to the States out of revenue. Between 1951 and 1956, those sums amounted to £500,000,000. At the average rate of interest of about 4 per cent., that meant an additional burden on the States of £20,000,000 in interest charges. That might have been obviated. If it had been, the net position of the States would have been £20,000,000 better and the net position of the Commonwealth would have been £20,000,000 worse. If the Commonwealth had told the States to take the money and charge it how it liked in its instrumentalities, the net effect on Australia as a whole would have been no different, but the picture, as between the States and the Commonwealth, would have altered, whichever method had been adopted. In this case, you charge the interest to the States and you have to give them, over the period, another £20,000,000 in reimbursements.

That is why I say that it is difficult to evaluate the pattern of this problem, which arises in every federation. Apparently, it arises more particularly in the Australian federation than in the Canadian and United States federations, which, I suppose, are the two federations most comparable with our own. Our division of revenues is very much different from that which applies in either Canada or the United States of America. In Canada, local petrol taxes and local sales taxes may still be levied, but the levying of such taxes locally is constitutionally prohibited here. The taking into the Commonwealth structure of income tax, which is the principal modern tax, has severely limited the mobility of the States with regard to the raising of additional revenues for themselves. I think that we still find creeping into the federal structure the problem of a kind of marginal starvation - I have used that phrase before - of the States, which, every year, are hard up and must consider very carefully the expenditure of every penny that they can find.

The Commonwealth, because of the financial resources available to it, has been able to sponsor a new division of funds, not, I suggest, carelessly or recklessly, but on its merits. The States, however, have not the same luxury of choice. The things that the States are suffering from most to-day do not in the aggregate mean very much, but they are of considerable significance in the social and cultural life of the States. I refer particularly to activities such as library development. Eighteen months ago, the Victorian Government had to restrict the subsidy available to municipal libraries. It was able to allocate only £200,000 although the demands of the various municipal libraries totalled £220,000. As I have already indicated this afternoon, the national income now totals approximately £6,000,000,000. By comparison, an amount of £20,000 is really ridiculously insignificant. Nevertheless, this illustration indicates the kind of marginal problems that we are getting at the State level. The States are literally forced to say, “If we devoted that £20,000 to the development of libraries, we should have £20,000 less to spend on something else “.

We recently had the example of the amounts payable in respect of State universities in accordance with the recommendations of the Murray committee. The Commonwealth said that it would pay certain amounts provided that the States paid certain amounts. Both the University of Tasmania and the University of Melbourne failed to qualify for the full Commonwealth funds because they had spent insufficient State funds. It may be said that they did not have the need for the extra money. I think that, in one case, at any rate, the State took the view that, if the money were spent on universities, some other activity would languish as a consequence. That is a real and quite serious problem. It does not appear to be very significant in the aggregate, but, as I have said, it has distinct implications for the social and cultural life of the States. It engenders the feeling in the States, not that they do not want to spend money on universities and other important fields of activity, but that the expenditure is needed more urgently for other things.

I hope that there will in future be a greater measure of co-operation and partnership between the States and the Commonwealth. I believe that the Australian federation can function properly - as long as the States and the Commonwealth remain as separate entities - as bodies not hostile to one another, but working together for the attainment of the most desirable national destiny. I doubt whether, at present, our financial arrangements permit of that.

We support the bill, Mr. Deputy Speaker. As I have said, it will maintain the principle of uniform taxation to which we as a party adhere. It will increase the amounts payable to the States in the .current financial year, and it will give some flexibility in the few years immediately ahead. But, as I have said, I doubt whether the next five or six years will be as peaceful a period as the Treasurer imagines.

Sitting suspended from 5.58 to 8 p.m.

Mr JOSKE:
Balaclava

.- This bill deals with Commonwealth and State financial arrangements. These arrangements have caused considerable concern throughout the life of the Commonwealth. Indeed, if one turns to the Constitution, one sees that no permanent arrangements were made. The Constitution made certain provisions which were to last for ten years; after that it was left to the good sense of the Commonwealth and the States to make their own arrangements. In addition, the Constitution, by section 96, provided for the Commonwealth to make grants to the States, and no doubt the Constitution founders had in mind that it would very likely be necessary from time to time to make grants to the States for various purposes.

Over the years, many different arrangements have been made between the Commonwealth and the States. At the time, they appeared to be reasonably good and for some years they worked more or less satisfactorily. However, the time came when a new arrangement had to be made. Since the days of uniform taxation, constant alterations have been made in the arrangements between the Commonwealth and the States and, although the States have received very large sums from the Com monwealth, they have constantly complained that they have never had sufficient.

The .matter reached the stage where, with three States already claimants to the Commonwealth Grants Commission, two others were contemplating becoming claimants also. Had they done so, the federal system would have been wrecked. Commonwealth officers peruse the accounts and budgetary arrangements of claimant States, and this would have meant that all these States would have been entirely under the financial control of the Commonwealth and, of course, financial control is complete control. It was, therefore, most undesirable that the present state of affairs should continue, with three claimant States and two potential claimants. Last year and in the preceding years, the Constitutional Review Committee had the matter of Commonwealth and State financial arrangements under consideration. It gave to this subject probably more attention than it gave to other subjects. After examining all projected schemes and hearing witnesses who gave expert evidence on the subject, the committee came to the conclusion that no permanent solution could be arrived at. It was in the same position as the Constitution founders were and as the statesmen from the beginning of federation to the present time have been. The committee recommended, therefore, that the Prime Minister and the Premiers confer with a view to settling present discontents on this subject and a new agreement being arrived at.

Almost immediately after this report was presented, the Prime Minister announced in his policy speech that he would call a conference of Commonwealth and State Ministers to deal with this matter anew. As a result of the conference, which was called early this year, an agreement was reached and this legislation comes to the Parliament to put it into statutory form.

It is important that we should keep the history of Commonwealth and State financial arrangements in mind and realize that no permanent solution has as yet offered itself. I agree with the honorable member for Melbourne Ports (Mr. Crean) that in all probability in a few years’ time another re-sorting of the matter will be needed. The truth of the position is that the financial conditions of the State will naturally vary in accordance with the economic conditions through which the States pass from time to time, and as those conditions vary, so will the amount of money that the States need also vary. It is likely, therefore, that a formula which to-day may be a good and just formula will be completely outmoded in a few years. The formula contained in this legislation is a more liberal formula and gives larger grants to the States. In addition, special grants are given to the weaker States. But the Federal system is not being wrecked as it would be if the proposal to have five claimant States had ever come into being. As it will be seen from what I have said that this is a sound measure, I agree with the Minister and commend the bill to the House.

Mr BIRD:
Batman

.- This bill is another instalment of the interminable serial dealing with the financial conflict between the Commonwealth and the States. That conflict has been a feature of the post-war political scene, and I agree with the honorable member for Balaclava (Mr. Joske) that the ultimate solution appears to be beyond our present knowledge and anticipation. Ever since the introduction of uniform taxation in 1942, the States have developed almost complete reliance upon the Commonwealth for financial assistance additional to reimbursements under the formula. Uniform taxation has been the subject of vexed argument for many years, particularly with certain States and certain Premiers. This controversy culminated some years ago in legal action by several States. Unfortunately, the verdict of the courts left the issue completely unresolved.

Dissatisfaction resulted from the dilemma which faced both the Commonwealth and the States, and this led to Premiers’ Conferences being held in March and June of this year in an attempt to reach some amicable agreement under which the relationship between the Commonand the States could, for an appreciable time, proceed on well defined and friendly lines. The minutes of those conferences, Which have been issued to honorable members, show that many subjects were -discussed in an atmosphere which appeared to be, in the main, conducive to agreement. As a result, this bill has now been introduced and it contains a formula which is a new approach to this vexed problem. Whether it will last, only time will tell, but for the time being at least the Premiers have agreed to it. I strongly suspect that they had Hobson’s choice - this or nothing. However, we were told publicly that they had agreed to the new formula and 1 hope that following their apparent agreement we will not hear so much of this public conflict between certain State Premiers and the Commonwealth as to what is an equitable financial arrangement between the Commonwealth and the States.

Despite the fact that this system was unanimously agreed to at the June Premiers’ Conference - I state that subject to certain qualifications, one being that the States had only Hobson’s choice - Victoria is already expressing considerable disapproval. Recently the Prime Minister (Mr. Menzies) was in Melbourne and opened an automobile conference of some kind. In his speech he expressed certain views about financial responsibility, and was immediately taken to task by the Victorian Premier, Mr. Bolte, who attacked the present financial set-up. That proved that this agreement which we have been told was unanimously agreed to by the States was not unanimously supported. There was a verbal clash of arms between the Prime Minister and the Victorian Premier which I, as a member of the Opposition, quite appreciated. As an interested onlooker however, I would say that the Prime Minister won on points. He put forward a point of view which even the adroitness of Mr. Bolte could not quite counter. The solution suggested by Mr. Bolte was an easy one for him to make. It was that the Federal Government should introduce a simple bill to eliminate uniform taxation and all would be well. Unfortunately for those who have the welfare of the Commonwealth at heart that solution is not so easy as it would appear. It is easy to state the details of a problem, but it is harder to state details for its solution, paricularly with regard to uniform taxation.

The Prime Minister was on very firm ground when he said that his Government would be prepared to throw overboard uniform taxation if the six States wanted it thrown overboard. But he indicated, in reply to a question I asked in the House last week that four States out of the six desired uniform taxation. To use his own words, “ 66 per cent, of the States want uniform taxation “; and the Government was not prepared to run counter to the wishes of the majority of the States. As one who has given this question some study over the years, together with other honorable members of this House, I would say that uniform taxation has many advantages. I admit that it has some disadvantages from the point of view of State righters and State parliaments, but taking the overall position from the point of view of an Australian rather than that of a Victorian, or New South Welshman, uniform taxation has many advantages. It appears, at this stage, that it has become a permanent fixture in our taxation structure.

For example, to have uniform rates of income tax operating in every State is a much more equitable method than the old system under which each State fixed its own income tax rates. Some were high, some were low and some were much higher in their incidence than others. Under the one system which operates at the present time there is a single tax return, a single assessment, a single collection authority and a single scale of instalment deductions. That is much preferable to any other system under which there would be two types of returns and two methods of assessment and the average taxpayer would not know where he was. What is very important from my point of view in an age when the Commonwealth has the authority to implement a financial and economic policy in accordance with what it thinks is best in the interests of the Commonwealth and its people, is that it is essential that it should possess powers to implement that economic and financial policy. Complete control of income tax, including sole power to levy it, is indispensible to the Commonwealth Government in carrying out its avowed financial policy in one direction or another. It is no good a Commonwealth Parliament saying that, in the interests of economic stability, it would like to implement this or that policy if it does not possess complete legislative and administrative powers to carry out such a policy.

When the Commonwealth Parliament has complete control over the income tax field it possesses far greater legislative power to implement the policy which it considers to be in the best interests of the Australian economy and of the Australian people. In addition, uniform taxation is a policy calculated to help the development of Australia throughout the six States. It is not possible for the smaller States - that is, States which are smaller in population and resources rather than area - to plan essential development on revenues derived from within their own borders. Although we may be Victorians, Queenslanders or New South Welshmen and there may be State rivalries which are healthy and conducive to good government, when it comes to the overall development of the Commonwealth, we should always act as Australians. We should forget that we come from one State or another. Therefore, from the point of view of overall development, uniform taxation, as practised to-day by the Commonwealth, must be preferred to the single State income tax system of the pre-war days.

It is far more satisfactory to deal with company taxation on a Commonwealthwide basis. I do not think the States have made any suggestion - if they have I have not heard or read of it - that company taxation should be handed back to the States. Company taxation is on all fours with income taxation when it comes to securing the best results for the benefit of the Australian people as a whole. As far as I am concerned, any taxation measure which is debated in this Parliament or in any of the six State Parliaments should be considered in the light of its overall effect on the welfare of the Australian people. To me there is no greater consideration than that. On that basis, uniform taxation must receive preference. In an era when we are pushing ahead with the industrialization of our economy, members on both sides of the House agree that we should do everything within our power to get further industries established in this country. There is no sense in tolerating differing systems of company tax. Therefore, I hope that the time will never come when there will be an agitation for a restoration of company taxation to the States.

Having said these things in favour of the Commonwealth control of income tax and, incidentally, company tax, the Commonwealth, under the present system tends to be blamed for any State liability to provide adequate services. But, as the Prime Minister said - I think in this House - the Commonwealth collects 100 per cent, of odium for collecting taxes. In some respects the Commonwealth can be indicted in regard to its treatment of the States because it collects 100 per cent, of the tax and hands back to them only a proportion of it for their purposes. As long as I am a member of this Commonwealth Parliament I will never cease in my protestations about the present iniquitous system of handling the petrol tax. Because the Commonwealth possesses the power over customs and excise duties, it collects all the petrol tax but hands back only two-thirds of that revenue to the States.

Mr Mackinnon:

– What did your own Government do?

Mr BIRD:

– I am not concerned about what a Labour government did in the past; I am concerned about what a Labour government in the future will do. If the honorable member for Corangamite wants to live in the past, I. do not. This Government has to look to the future, and as far as an incoming Labour government is concerned, its policy on the distribution of the petrol tax will be unequivocal and definite. All the proceeds from this tax will be handed back to the States. The States do not possess power over excise and customs duties and it naturally follows that they have not any means of collecting larger amounts than they are doing to spend on roads. It is idle to suggest that the States can increase their motor vehicle registration fees to sky-high levels. Registration fees are collected on a flat rate basis. A motor-car owner pays the same fee, whether he uses his car for one hour each week or for a hundred hours. The only proper method of charging a vehicle owner according to the wear and tear that he causes to the roads is by means of the petro] tax, because then the more you use the roads the more tax you pay, and twothirds of that tax is paid back to the States for roads purposes.

The American States, of course, are in a much more advantageous position. They have the power to levy petrol tax, and they do so. In addition, the Federal Government in America has the power to levy petrol tax and it also does so. Both the Federal and State Governments in America use the whole of the amounts collected by way of petrol tax for roads purposes. Not one cent of it is used for any other purpose. In Australia the States have only one method of raising money for roads; this is by motor vehicle registration fees and, to a limited extent, drivers’ licences. There is also a small amount collected by taxing commercial vehicles. The States cannot raise in this way anything like enough revenue for roads purposes. The only fair and reasonable method of raising money for roads purposes is by means of the petrol tax, and in this regard I sympathize with the States. While I agree that the Commonwealth must have definite sovereignty in the taxation field, I believe that Commonwealth governments, of all political shades, have failed to do the right thing by the States when they have held back a proportion of the petrol tax.

How did the Commonwealth enter this field of petrol tax originally? It did so because the State governments had, by legislation, imposed petrol taxes, and this legislation became the subject of a High Court action. The States decided that they had to reach some kind of amicable agreement on the matter, and in about 1926 they agreed to allow the Commonwealth to levy a petrol tax under its customs and excise powers, as the sole collecting authority. The States are, therefore, on quite substantial ground in suggesting that Commonwealth Governments in the past have not done the fair and equitable thing by the States with regard to petrol tax.

We must remember that the States have legitimate grievances in many fields of taxation, and these grievances should be carefully considered. We should not brush them lightly aside, saying to the States, “You are just little Australians, State righters. You are parochial, and you do not believe in a great Australia. You do not believe in the principle that we should do what is required for Australia, regardless of State boundaries “. We should look at the States’ disabilities and grievances and carefully consider them.

Let us consider, for example, our public debt structure. In the last ten years, during which this Government has been in office, the States’ debts have increased by 133 per cent. They have risen from £965,000,000 to £2,248,000,000. New South Wales, for example, has to pay £5,000,000 a year interest on amounts allocated by the Commonwealth to supplement loan raisings, despite the fact that the money received from the Commonwealth in this way was raised originally by taxation, and the Commonwealth pays no interest on it whatsoever. I believe, therefore, that the States have a justifiable grievance. The Commonwealth’s debt over the last ten years has fallen by 5 per cent., while the debt of the States has increased by 133 per cent. There is no equity in this, and I agree with the States when they complain about this most undesirable state of affairs.

This bill provides for two changes in the method of assessing the amounts to be allocated to the individual States. I would say that these are definite improvements on the old set-up. The previous arrangements were very unsatisfactory, particularly for Victoria. The new system will provide for an increase in the allocation for a particular State each year in direct proportion to the increase in its population. The Commonwealth Grants Commission, in its twentysixth report, for the year 1959, in speaking of this issue said -

Firstly, the basic payments will be increased each year in direct proportion to estimated population increases, as at the end of the preceding year, whereas the tax reimbursements were allocated according to estimates of “ adjusted population “ of each State for the preceding year. Secondly, each State’s basic per capita payment will be adjusted by 1.1 times the percentage change during the preceding year in average wages for Australia as a whole. These provisions will probably tend to benefit some States relatively to others.

The procedure will benefit Victoria because in the past Victoria has been at a disadvantage as compared with other States, particularly with regard to population increases. In this connexion, I refer particularly to the post-war immigration policy. I am not attacking the Commonwealth’s immigration policy. I have always been firmly in favour of it, as, indeed, has the Labour Party itself. It was a Labour government that launched the post-war immigration programme. But the Commonwealth, because of its immigration policy, has imposed financial burdens on the States without giving them adequate compensation. The migrants have not settled in the various States in proportion to the previous population of those States. They have gone to some States in far greater numbers than they have to others. Victoria has been particularly heavily hit by increased financial burdens resulting from the high proportion of immigrants who have settled in the Queen State of the south. My contention is amply borne out by a consideration of the figures for the last two years. Population increase in the various States, brought about by immigration, during the last two years is shown in the following table: - lt can be seen that there have been marked discrepancies in the intake of immigrants in the various States, and, as a result, some States have far more acute financial problems. This bill will do something to correct the anomaly by altering the formula for allocation of tax reimbursement, so that consideration may be given to population increases. The immigration programme has imposed heavy financial burdens, the bulk of which have fallen upon the States and local governing bodies, which have had to provide for new roads, new schools, new hospitals, additional electricity schemes, more water conservation schemes, increased payments for health services, and numerous other services. These are paid for, directly or indirectly, out of the State Treasuries, and the Commonwealth grants in the past have never adequately acknowledged this burden. There has been some rough method of assessing it, but it has never been accurately assessed on what could be called a mathematically fair basis. The States that have taken most immigrants have complained about the special burdens they have carried. The figures I have given show that some States have been shouldering a far greater burden than others as a result of the immigration programme. They have never been adequately provided for, but this bill will go some way towards remedying the situation.

In other avenues, Commonwealth policy is imposing new burdens, sometimes unintentional, but always inescapable, on the States. Let us take the universities finance plan which was adopted eighteen months ago with the approval of both sides of the House. The Murray committee which was responsible for the new policy on universities made it perfectly clear not only that the Australian university education system was inadequate, but also that the primary and secondary school systems were equally inadequate. It therefore follows that the increased assistance in university education which will be given to the States, consequent upon the adoption of the Murray report, will fail to achieve full results because the standards of primary and secondary schools will not be increased in proportion to the standards of the universities.

In other words, in order to have done the complete job, the Commonwealth should have adopted the Murray report, not only in relation to the universities, but in relation to primary and secondary schools. Somebody will have to find money if the primary and secondary schools are to keep up with the additional opportunities for university education. I am afraid that it will be the States which have to provide this money, and their financial position does not warrant much optimism about their capacity to produce beneficial results.

This bill is an indication of the changing pattern of the Australian economy insofar as South Australia is concerned. In future, that State will not normally be included in the category of States receiving special grants. It will cease to be a claimant State. The system of making special grants on the recommendation of the Commonwealth Grants Commission was launched in the depression, about 1930. Its aim was to offset the disabilities due to tariff policy which the three less populous States - South Australia, Tasmania and Western Australia - suffered compared to New South Wales, Victoria and Queensland, as partners in federation. The pattern of 1930 has changed drastically in recent years and South Australia has become, relatively, as highly industrialized as any other State. To-day, its prosperity depends more upon secondary industries than that of any other State. This gives a great deal of happiness to this Parliament because it means that our economy has been materially improved. The tariff of 30 years ago which was a disability to South Australia has become a cardinal asset because of the secondary industries of that State. Therefore, no objection can be made to the exclusion of South Australia from participation in disability grants unless special and unexpected circumstances arise.

Whilst the bill will still help the States, much has still to be done before anything like a basis of equity is established. In the matter of loan allocations, a number of anomalies prevent even-handed justice from being administered to all the State instrumentalities. Consider electricity supply undertakings. In the smaller States, the electricity supply undertaking is a State responsibility with capital funds guaranteed by the Commonwealth and allotted at Commonwealth bond rates. In Victoria, the State Electricity Commission must find its own moneys. It finds them hard to obtain because all capital must come from the loan market without help from Commonwealth surplus revenue.

I will admit that this anomaly is basically the fault of the large States, because in the early days of Australian Loan Council control, they excluded a number of important instrumentalities which thus escaped Loan Council control. Now, under the terms of the Premiers’ agreement, they are compelled to do their borrowing under Loan Council terms and direction without having the advantages of Loan Council machinery. It is high time that that anomaly was adjusted in the interests of those States that are receiving unfair treatment as far as their loans are concerned. It is absurd that key public authorities in some States, such as the Electricity Commission in Victoria, should suffer these disadvantages while similar instrumentalities in other States have the advantage of Loan Council jurisdiction and supervision. There is another anomaly. It is that money to create power in the Snowy area is assured from the federal Budget while finance needed for bulk transmission and reticulation of that power depends upon the whim of the money market. New South Wales and Victoria have to find their own loan accommodation to provide additional equipment to carry to the various areas of those States this power which is generated by a Commonwealth authority which is free from any worries in raising capital. That is unfair to the States.

Finally, as far as we can see, uniform taxation is here as a permanent part of our taxation structure. It is our duty as Australians to make our contribution to Australia’s progress by supporting development in every State. Under a system of uniform taxation we are far more assured of that than we were under the pre-war days when income tax rates were fixed by each State. It must not be overlooked that Australia’s financial problems have been created largely by the national effort in connexion with the war. I think that they can be managed adequately only on a national basis.

State-righters may condemn this measure as inimical to the rights of the States and, consequently, of the federal system. I say in reply that a condition of State parochialism could impair the progress of this country.

Mr DEPUTY SPEAKER (Mr Bowden:
GIPPSLAND, VICTORIA

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

Sir WILFRID KENT HUGHES:
Chisholm

– Mr. Deputy Speaker, the more this matter is discussed each year in this Parliament the more we realize how very complicated and difficult a problem it is. We realize also, as was clearly shown by the honorable member for Balaclava (Mr. Joske), that it is not a problem for which there is any permanent solution. As the honorable member said, the Constitutional Review Committee spent a lot of time and took a lot of evidence in trying to arrive at some recommendations which would solve the problem. Nevertheless, the fact that the problem is difficult and complicated is no reason for us to throw up our hands and say that we have reached a stage at which an irresistible force has met an immovable object and that we are not going to try any longer. Nor should I be accused, as I was accused the other night by somebody who should have known better, of having made this speech ten times before. It might be asked, “ Why waste time in saying all this again? “ My answer is that if I think a thing is right, and until it is proved otherwise, I do not mind if I say it ten times ten, and perhaps, as occurred in the parable in the Bible, it will at some time have some effect.

The first thing that I would like to da is to congratulate the Treasurer (Mr. Harold Holt) upon having achieved two very notable advances in his first year in his new office. The first one is a reconstruction of the road grant formula which has met, on the whole, with a very large measure of approval. Although the secondproblem of States’ grants is not by any means solved, apparently at the last Premiers’ Conference there was a far greater measure of agreement and approval as a. result of the recommendations made and’ the suggestions put forward by the Minister for Trade (Mr. McEwen), who was thenActing Prime Minister, and the Treasurer. They are the matters for which the Treasurer and the Government should be congratulated. On the other hand, I must confess that I cannot see why the Premierswere as happy as they seemed to be or less gloomy than usual. The first thing that this proposal did - and this was a wise move - was to recast the system of revenuegrants. With regard to this, the Treasurer, in his second-reading speech said - . . we came no closer to finding a practicalsolution to that intractable problem. Indeed, it appeared that the only feasible way of improvingexisting financial arrangements between the Commonwealth and the States would be to recast thesystem of revenue grants.

That was done on a new basis. The second thing that was done was to abandon theterm “ tax reimbursements “ in favour of the new term “ financial assistance to the States “. In my opinion a rose by any other name would smell as sweet and garlic as strong, because by abolishing the term “ tax reimbursements “ you really agree that the States have no right to the tax reimbursements and they all become mendicants looking for financial assistance. However, that is a small point and does not seem to be of any great moment. South Australia wascongratulated on having ceased to be aclaimant State. South Australia will now stand on its own feet. Well, I do not think any of the States at present are standingon their own feet.

As regards the increased grant, the base was said to be made on a more liberal1 formula for the future years. That was the first point. The second was that existing distribution formulas were altered to take -care of population changes and increases in wages and would thus be more generally acceptable. Ten per cent, has been added to the wage increases to be allowed, I presume, for inflation. Thirdly, increased allocations to South Australia, Western Australia and Tasmania are made in order to obviate the necessity of South Australia having to go to the Commonwealth Grants Commission except under very special circumstances. The increases have been made to Western Australia and Tasmania in the hope that those States will not need to make further application to the commission except in special circumstances. The hope seems to have been a little thin in this case because already Western Australia and Tasmania have been granted an extra £3,500,000 each. I am not complaining about that but merely pointing to the fact. The grant is certainly less than it was on the last occasion, but I do not think that we can hope that Western Australia or Tasmania will be able to get along without extra assistance from the Commonwealth Grants Commission.

On the original base grant as proposed by the Government an extra £1,000,000 was granted to New South Wales because that State thought that on a per capita basis it should have a higher differential than 4s. 8d. as compared with Victoria. An additional £1,000,000 was added to the South Australian base because, as the Premier of South Australia pointed out, the first part of the extra amounts made by the Grants Commission would not have been taken into account in the amount allotted to South Australia and he estimated that this year South Australia’s deficit, which the Grants Commission would be asked to make good, would be £1,000,000. Since that time the Premier of South Australia has presented his Budget, and the deficit is £1,027,000, speaking from memory. Of course, there is no shrewder campaigner than the Premier of South Australia; and I understand that half that deficit was due to the very dry year experienced in that State and the high costs incurred in pumping water from the river Murray when the reservoirs could not supply water for Adelaide. This year the increased cost may be even higher. In the last three years, South Australia’s deficits have been of the order of £49,000, £400,000 and, this year, just over £1,000,000 on account of special circumstances. I think that once again South Australia has put over a very shrewd deal and is probably £500,000 better off on its base amount for the remaining five years of the six-year agreement. As far as I am concerned, good luck to South Australia. However, that is not a very important point - except to South Australia.

When I look at the increased amount that we have given to the States, I think that the Treasurer was in error when he said that the amount was very generous. Last year tax reimbursements totalled more than £174,500,000. Supplementary grants that were made, and which have been made for some time past, amounted to £30,500,000, making a total grant of £205,000,000. But in addition special grants of £20,750,000 were made through the Grants Commission, making the total £225,750,000. This year financial assistance - which is a combination of tax reimbursements and supplementary grants - will amount to £244,500,000. To that amount must be added the special grants of £7,300,000 to Western Australia, South Australia and Tasmania, making a final total of £251,800,000.

Mr Bandidt:

– That is not too bad.

Sir WILFRID KENT HUGHES:

– No, but last year the figure was £225,750,000. As the Treasurer pointed out, during the last few years the average yearly increase in tax reimbursements and supplementary grants was £17,000,000. If you add that average yearly increase of £17,000,000 to the figure of £225,000,000, you get a figure of £242,000,000. In other words, the total net increase is £9,000,000. The increase in costs was stated at the Premiers’ Conference to be 21 per cent, per annum. If you take 2i per cent, of £205,000,000 you get £5,000,000. So it seems to me that only £4,000,000 has been added to the total grants to the States. Therefore, I do not think that the increase is quite as generous as it appears at first glance.

We must remember that the annual average increase over the last three or four years, according to the Treasurer, has been £17,000,000. If you add that to last year’s total, including special grants, you get the figure of £242,000,000. That is in a year when Commonwealth revenue has increased from £1,296,000,000 to £1,384,000,000. In other words, our revenue will increase, according to the Estimates, by £96,000,000 this year and of that sum we have allocated an extra £26,000,000 to the States. No wonder the States are in considerable financial difficulties, while our coffers are overflowing.

As the honorable member for Sturt (Mr. Wilson) pointed out, last year’s Budget was not actually a deficit Budget. If any honorable member wants to get a very clear and concise picture of the relative positions of State and Federal finances, I recommend him to read, in Queensland “Hansard”, No. 4 of 1959, the speech by the Queensland Treasurer, Mr. Hiley, on the Government Loan Bill 1959. There Mr. Hiley points out that the average annual reduction of the Commonwealth debt is about £137,000,000. When you take into account that the whole of the Commonwealth public works are being financed from revenue - last year the figure was £132,000,000 and this year it is estimated that it will be £142,000,000 - you can see that the Commonwealth is increasing its assets every year by considerably more than the so-called deficit which we are showing in our accounts. As was stated, I think, during the Queensland debate, if any private company did as we are doing, somebody would very rapidly offer to take it over. Victoria could take over the Federal Budget and reduce taxation very considerably without reducing expenditure.

Mr Bandidt:

– The States are increasing their assets too.

Sir WILFRID KENT HUGHES:

– Yes, but they are increasing their assets out of loan funds; we are increasing our assets out of revenue. Incidentally, that is the next point I wish to make. The honorable member for Batman pointed out, and the Queensland Treasurer in the speech that I have mentioned also, pointed out, very clearly and distinctly, that we are writing off about £137,000,000 of our debt every year, on an average. Quite possibly at the end of the six-year period that this measure will cover - and certainly, at the present rate, in eight years’ time - we will have completely written off our debt. The Commonwealth will then have no debt, but the States will be loaded with debt.

Although under the Financial Agreement the Commonwealth pays into the National Debt Sinking Fund on a fifty-fifty basis with the States, the States have to pay the whole of the interest. So it is only natural that State Treasurers ask, “ If the Commonwealth is to be relieved of the burden of paying interest although it has such abundant revenues that it can write off at least £100,000,000 of its debt a year, while the States go on amassing debts, what is the position going to be? “ They say to us, “ We go further and further into debt, while you get further and further into the clear “. When we have written off our debt completely, what will we do? Will we reduce taxation and continue to load debts on to the States?

Again the Queensland Treasurer pointed out, that since 1946 the Commonwealth has reduced its total indebtedness by £160,000,000, which equals minus 9 per cent. As at 30th June last, the States have increased their indebtedness by £1,486,000,000, or by 164 per cent. We are lending the States, from our revenues, money which does not cost us anything. We are financing our own works out of revenue, while the States have this increasing load of debt.

I think it is very fair to request, as Mr. Hiley has done, that there should be a review of the Financial Agreement. I was in Parliament in 1927 when the Financial Agreement first came up for discussion, and nobody ever contemplated at that time that we would reach the stage where the Federal Government would be financing its works out of revenue and the States would be carrying the whole of the loan accounts. The whole basis of the Financial Agreement was that the Commonwealth and the States should co-operate so that there would be no competition on rates when we were floating loans. The Commonwealth and the States each took responsibility for 50 per cent, of the National Debt Sinking Fund, and both the Commonwealth and the States paid their own interest in respect of the fund. Now we are not only not paying interest, but we are so rich - it is a case of the rich growing richer and the poor growing poorer - that we are writing off over £100,000,000 of our indebtedness each year.

The honorable member for Melbourne Ports (Mr. Crean), I think it was, pointed out that the interest bill of the States has doubled since 1948-49. The Treasurer (Mr. Harold Holt) has said that the payments to the States by way of tax reimbursements and special assistance have increased by £17,000,000 a year on the average. The States have been borrowing in the neighbourhood of £200,000,000 a year at 5 per cent. So we see that £10,000,000 of that £17,000,000 has to go in paying interest on the increasing State debts, without any question of the National Debt Sinking Fund payments entering into it. So, naturally, the States have not been getting richer, but have been getting into a more difficult position.

A Commonwealth Grants Commission table shows how year after year the States have been getting further and further into debt, and the amount of that debt. This table makes it very obvious that the States are still in a very difficult position. During the last ten years the total State deficits have been £36,000,000. To meet a part of that deficit, the Commonwealth paid £10,000,000 to Western Australia, South Australia and Tasmania through the Grants Commission; but there is still an increased debt, due to budget deficits, amounting to £26,000,000 in New South Wales, Victoria and Queensland. It is therefore clear that although as a result of this measure the position will be slightly better than it has been, the bill will not get the States out of their financial trouble.

I agree with the honorable member for Batman that uniform taxation has come to stay. It is easier to collect by means of only one assessment. The same applies to company tax. On the other hand, there is no reason why there should not be a wider field of taxation for the States to operate in, so that they would have greater elasticity, and therefore more responsibility, because they would have to levy their own taxes to a greater degree than at present. It would require an alteration of the Constitution to make this possible along the lines I am thinking of, but there is no reason why the Constitution must be held to be sacrosanct and never amended. Such a field of taxation exists in regard to the Canadian Provinces, and to a certain extent in regard to the States in the United States, in sales tax and excise duties. There is no reason why the same rates of sales tax should be levied in each State. That is not the case in the United States.

Mr Duthie:

– There is nothing to stop States from thinking up new taxes.

Sir WILFRID KENT HUGHES:

– If you can think up any new taxes, I should like to know what they are. I remind the honorable member, Mr. Deputy Speaker, that the State fields of taxation have been contracting. Take, for instance, the entertainments tax. We have reached the stage now where the Commonwealth is collecting an amount estimated by the Queensland Treasurer at about £20,000,000 a year in sales tax, customs duty and licence-fees on television receivers and television sets. The growth of television means that there is greater competition with the picture theatres, and so the yield from entertainment tax in the States has contracted considerably. In my State, Victoria, taxation per head within the State’s narrow limits has been the highest levied in any State, yet the Victorian deficit is the greatest among the State deficits. All States, whether they are controlled by a Labour government, a Liberal government or a Country Party government have deficits, but I cannot believe that those deficits are due in the main, or to any great degree, to inefficiency in administration. As the honorable member for Batman has pointed out, they are due, particularly in Victoria and in Western Australia, to the number of migrants, who need new homes and whose children have so increased’ the attendances at schools that new schools, homes, hospitals, &c, are necessary. These things must be provided at once, which is much more costly than to provide them to meet a steady natural increase, spread’ over a more lengthy period. The difficulties that are confronting universities may be due to the number of Asian students, who arc attending them. Whatever the cause of the deficits may be, we must all agree that the position is not satisfactory.

I suggest that the Government should review the Financial Agreement because- conditions have changed entirely. The Commonwealth Government is meeting the cost of works out of revenue and the State governments are meeting the cost of works out of loans. The Government has said already that it intends to review the general question of taxation. We all agree that that is a step in the right direction, but I should like to see a review of the Commonwealth and State financial relationships carried out by the Commonwealth Grants Commission which is now doing about one-third of the work that it did previously. With its background of long experience, the commission understands the interlocking of Commonwealth and State finances far better than does any other body, and I think that it is the most competent authority to carry out the review to which I have referred. A review of the Financial Agreement is long overdue. If it were made, and if at the same time recommendations were submitted to the Commonwealth and to the States covering the whole range of Commonwealth and State financial relations, they would go a considerable way towards solving, for a number of years at any rate, the problem that now confronts us. I urge the Government to review, not only the question of taxation but also the existing Financial Agreement, and the field of Commonwealth and State financial relations.

Mr McIVOR:
Gellibrand

.- At the outset I should like to say that I support the remarks of honorable members who have preceded me in this debate. They have outlined in a very capable manner the difficulties that are being experienced by the States. I think that, in the main, most of those difficulties stem from the intensive immigration programme that this country has undertaken.

I shall direct my remarks to what I consider to be the inadequacy of the financial aid that this Government is giving to the States. That inadequacy may be seen in the curtailment of State public works; in the inability of semi-governmental institutions to carry out their obligations to the people in the provision of water reticulation, sewerage and drainage; in the inability of the education authorities to give to the scholars of this country the amenities which are so essential, particularly when one considers the dearth of scientists in Australia to-day; and in the inability of local government authorities to carry out their obligations to the people. On this particular aspect, a report that was placed before me on Monday night last reveals that in my own particular city the local government authority is over £700,000 behind in its loan allocation. It is unable to borrow that money to enable it to carry out necessary works. But I think that the greatest deficiency lies in the inability of the States to remove what I consider to be the greatest social scourge in this country - the shortage of houses.

I have come to this point because of the criticism that has been levelled at the Opposition by the honorable member for Balaclava (Mr. Joske) and, to refute his arguments, I shall quote some of the statements that have been made by honorable members on his own side of the chamber.

Mr Joske:

– I rise to order, Mr. Deputy Speaker. I submit that the honorable member is referring to a debate on another bill, and not to the bill that we are now discussing. I did not mention housing during my speech on the bill that is now before us.

Mr DEPUTY SPEAKER:

– The honorable member for Gellibrand may not refer to a bill other than the one before the House.

Mr McIVOR:

– I was not referring to another bill. I intend to reply to the criticism that has been levelled at us by the honorable member for Balaclava. In spite of the Government’s claim that everything in the garden is rosy in relation to housing, I want to say - to use the favorite phrase of the Prime Minister - that it is abundantly clear that everything in the garden is not rosy. The position in respect of housing is becoming worse, and there is an urgent need for a re-assessment of the formula by which money is allocated to the State for this purpose. That is clearly shown in the annual report of the Victorian Housing Commission for the year 1957-58, which states -

During the year 2,414 new housing units were constructed, and of that number 220 were allocated to the Armed Services in accordance with the terms of the Commonwealth-State Housing Agreement. The number of 2,194 units available for eligible families compared with 2,338 in the previous year, and is the lowest figure of completion since 1949-50.

Mr DEPUTY SPEAKER:

– Order! I think the honorable member’s remarks are related to a different bill.

Mr McIVOR:

– I am referring to the States grants.

Mr DEPUTY SPEAKER:

– Housing was dealt with under a separate measure.

Mr McIVOR:

– I am dealing with finance for housing.

Mr DEPUTY SPEAKER:

– That was dealt with under another bill.

Mr McIVOR:

– The grants to the States are insufficient to meet requirements. The paucity of these grants is causing great inconvenience to the States, and this inconvenience is due entirely to the fact that the Government is not making sufficient money available to the States to enable them to keep pace with the great development that is going on. Due to the immigration programme, great development is taking place in both the housing and the industrial spheres. This is having its effect on the lower income groups throughout Australia. It is impossible for the States to make good this shortage, Mr. Deputy Speaker, and to meet the demands that are being made on them. The honorable member for Chisholm (Sir Wilfrid Kent Hughes) pointed out that they are being strangled by the interest debt that they are incurring.

We are told that we are living in a time of great prosperity, Sir, and nobody can deny that. But it is interesting to note that, although much money is available for industrial development, we cannot get money in order to build homes for rental purposes. All these things are reflected in the grants to the States. They are reflected in grants made out of the proceeds of the petrol tax, grants for State public works, grants for hospital purposes, and loans to semigovernment institutions and local government authorities. These things clearly indicate that it is impossible for the States to keep up with the demands that are made on them. It was reported only recently that it is almost impossible for the Melbourne and Metropolitan Board of Works to meet the demands that development in Melbourne impose on it. Something like 70,000 homes need sewerage and many miles of water reticulation and drainage services are required.

Mr Luchetti:

– And there is no money for country development.

Mr McIVOR:

– And there is no money for country development. In every phase of State activity, similar frustration occurs.

Mr Bandidt:

– How much more would the honorable member recommend?

Mr McIVOR:

– I am not going to recommend any particular amount. I agree with other honorable members that this problem will probably never be solved. We are living in extraordinary times, Mr. Deputy Speaker, and extraordinary measures are needed to overcome the difficulties of these times.

I want to close on this note, Sir, because you have gagged me and prevented me from discussing a matter which I think relates to States grants: It is high time this Government took heed of the demands being made on it. I agree with the honorable member for Chisholm and the honorable member for Batman (Mr. Bird) that uniform taxation is here to stay, but it is most necessary that more money be made available to the States in order that they may meet the demands made upon them.

Mr CHANEY:
Perth

.- Mr. Deputy Speaker, having received so many requests from honorable members on both sides of the House to speak, I could hardly remain seated. I shall detain the House for only a minute or two. In the four years during which I have been a member of this House, I have become a little tired of hearing the complaints of certain Victorian members about what the supposedly wicked Commonwealth is doing to their State. The honorable member for Gellibrand (Mr. Mclvor), who has just concluded his speech, said that this problem will probably never be solved. I am sure that, if it is ever solved, those who cry out loudest will be some Victorians. I ask them to keep in mind the disabilities under which Western Australia suffers - disabilities which work to the great advantage of Victoria.

Mr Bryant:

– Disabilities, principally, of misrepresentation.

Mr CHANEY:

– The honorable member should remain quiet on that point. The statistics of trade between Western Australia and the eastern States indicate that there is an adverse balance against Western Australia in the proportion of seven to one. It has just been pointed out to me this evening that if the Commonwealth arranges, for example, to assist Western Australia in overcoming its disabilities, and makes to that State a grant of £1,000,000 for certain works, most of that money returns to the -eastern States in payments for food, clothing and other requirements. Those who complain most bitterly about the apportionment of the funds provided by the Commonwealth should bear in mind that, in addition to the amounts received from the Commonwealth by the eastern States, those States receive a great deal back from the States with special disabilities, and especially from Western Australia.

I think that those who are loudest in “their complaints in this matter, and who talk most about the constitutional procedures which could be adopted in order to overcome these difficulties, would get a rude shock if somebody made a real attack on the constitutional aspect of the problem and found that it was possible for Western Australia to impose tariff barriers in respect of trade with the eastern States. Such a thing would act to the great disadvantage of the eastern States, and the complaints would be louder than those which we have heard in respect of things about which there is really little reason for the eastern States to complain. The blame for every failing on the part of the States is placed at the door of the Commonwealth. It has been stated this evening that local government authorities cannot get enough money.

Mr Uren:

– They cannot, either.

Mr CHANEY:

– Most of them are imposing rates based on 1930 values.

Mr McIVOR:
GELLIBRAND, VICTORIA · ALP

– No.

Mr CHANEY:

– That is true. They ought to bring their valuations up to date. We hear now, Mr. Deputy Speaker, how loudly these people cry about justice. They would cry a lot louder if they got it. They ought to face up to the facts. Instead, they do the simple thing, and blame the Commonwealth. It is about time a few more members of this Parliament adopted a national outlook instead of the parochial one of those whose vision is bounded by the boundaries of their own State.

Mr REYNOLDS:
Barton

.- Mr. Deputy Speaker, when 1 return to the Barton electorate at the end of this week, I shall have great delight in telling the people there that at least one Liberal member of this House thinks, not that the rates which they are paying are high, but that they are far too low. I can imagine how popular he will be with the citizens of Barton.

I think that the whole principle of this measure is expressed in its title, which reads -

A Bill for an Act to grant Financial Assistance to the States.

Its very title suggests inferiority and dependence of the part of the States. It seems to me to connote a hand-out by a rich uncle to nephews in poor circumstances, as it were. I think that the Treasurer (Mr. Harold Holt) and the Minister for Trade (Mr. McEwen), who was Acting Prime Minister at the time of the last Premiers’ Conference, ought to be heartily congratulated on their wizardry in persuading the States, not only to accept a deal such as they have received, but also, according to reports, to feel glad about it. Like the honorable member for Chisholm (Sir Wilfrid Kent Hughes) I cannot understand how the States could feel glad about an arrangement such as this. We have been told that this so-called new deal will be a lot better for the States, but the fact is that, between the lot of them, they are to receive only about £26,000,000 more in reimbursements in the current financial year than they received last financial year. As the honorable member for Chisholm quite rightly pointed out, under the old system, based on the average over previous years, the States could have expected to get £17,000,000 more in this financial year than they received last financial year. So the net result is that, out of this much vaunted new deal, they will receive an additional amount of only £9,000,000.

Mr Turnbull:

– That is a lot of money.

Mr REYNOLDS:

– It may be a lot of money, but it is only about half what the Post Office expects to get in one year from the increased postal charges imposed in accordance with the new deal for that instrumentality. The six States are to be given, between them, an additional amount equal to about half the additional revenue for the Post Office in one year. Yet Government supporters say that that is generous. I think that the States will reconsider their position, and it will not be very long before they begin to realize that they are still labouring under a gross injustice in respect of financial relations between them and the Commonwealth. As I say, the net result is that an extra £9,000,000 will be available to the States, but in fact this should be reduced to a real net increase of £4,000,000 or £5,000,000. Contrast that with the increase of taxation revenue to the Commonwealth - the rich uncle - in this year of £96,000,000. One Commonwealth instrumentality, the Postal Department, will have an increase of revenue of £17,000,000 in a full year. But all that the States will receive out of the national income of more than £5,000,000,000 is a net increase of £9,000,000.

In a consideration of all national priorities, this amount could be compared with the £20,000,000 in taxation relief given by the Government to people who did not need it - and in many instances I do not think they asked for it. We can look at this also in the light of the fact that the Commonwealth was helped in this last year by a much more buoyant loan market. The loan market last year realized £209,000,000, which was considerably .above the Commonwealth’s expectations and, indeed, probably above anybody’s expectations. It is time that the Commonwealth Government accepted some of the burden of financing capital works from loan moneys. I know that this is being done to an extent with defence, but the Commonwealth Government should consider the facts stated by Opposition members and by some members on the Government side of the House. The Commonwealth is leaving the tremendous burden of loan repayments and interest payments to the States which are not able to bear them.

This burden is additional to other burdens principally associated with our immigration programme. We all applaud immigration, but every government in Australia should bear its fair share of the resulting burden. I think that all States, whether they be Liberal or Labour, are unanimous in their condemnation of the Commonwealth for saddling them with the major part of the burden of immigration. This burden arises from the need to provide education, housing and hospitals. I know that in Victoria - the position is probably the same in other States - public hospitals are to-day overburdened with debts. As a matter of fact, I had representations made to me on Monday, before I came here, from unfortunate people who have no money but who are being pressed by public hospitals which must of necessity seek to collect their debts. I have mentioned education on previous occasions, and, like the honorable member for Chisholm, if a comment is fair I do not mind repeating it. In the field of education, we must realize that much more must be done before we begin to put ourselves into the picture with other advanced countries.

Mr Chaney:

– Nonsense!

Mr REYNOLDS:

– I suggest that the honorable member talk to people who are pressing the Commonwealth to help overcome the shortage of scientists, technologists and technicians. It was my pleasure last week to be a member of a parliamentary delegation to Woomera. Honorable members who have been there will know that there is a pressing need in Australia to-day for more scientists, technologists and technicians. As a matter of fact, our attention was directed to the fact that, in our short-sighted policy, we are taking scientists away from teaching to serve the immediate purpose of meeting the shortage of scientists doing research work either in government instrumentalities or in private enterprise. If we take them away from teaching, , W]C future supply of scientists and other skilled men and women is in jeopardy. It is a short-sighted policy. If members of the community outside were asked, they would say that the needs of education should be met as a first priority.

It is one thing to agree on the disbursement of money, but it is wholly another thing to agree on how the money will be spent. Short of having one body to plan all of these things through decentralized agencies, we need a much closer integration and co-ordination of Commonwealth and State plans. If that were possible, a huge wastage of resources could be saved. Those things necessary for the future development of Australia could then be given appropriate priorities. We have had the suggestion made that, even within the one field of education, we have no integration or co-ordination of plans in respect of tertiary education on the one hand and primary, secondary and technical education on the other. It should be possible for this Australian community to make a deliberate and conscious choice between say, spending £17,000,000 on improving Post Office facilities or maybe spending a little more on research, on education, or on hospitals.

I say that, short of having one authority to evaluate on behalf of the community all the various items in the scale of priorities, we should try to reach agreement between the Commonwealth and the States on the integration and co-ordination of plans. If we produced a five-year plan of co-ordinated development in all its facets between the Commonwealth and the States, we would use our comparatively scarce resources much more efficiently and much more effectively in the development of Australia.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2408

STATES GRANTS (SPECIAL ASSISTANCE) BILL 1959

Second Reading

Debate resumed from 22nd October (vide page 2204), on motion by Mr. Harold Holt-

That the bill be now read a second time.

Mr BARNARD:
Bass

.- The purpose of the States Grants (Special Assistance) Bill which is now before the House is to make special grants to the claimant States of South Australia, Western Australia and Tasmania during the current financial year, amounting to £7,299,000. The Opposition does not oppose this measure. Indeed, we might accept the principle that all governments in the past have followed the recommendations of the Commonwealth Grants Commission and implemented them, as the Government proposes to do this year.

The commission has recommended a sum to be granted to the claimant States this financial year which is approximately £13,400,000 lower than the sum made available during the financial year 1957-58. One reason for the reduction is that South Australia has decided to withdraw as a claimant State. As a result this is the last year in which that State will be included in the recommendations of the commission.

At 30th June, 1959, the population of Tasmania was 342,315, and although it may be said that there has been considerable development in that State during the last twenty years, the geographical and population factors have prevented its government from providing sufficient finance to develop it as rapidly as it should be. On this account, therefore, Tasmania has been a recipient each year of a special grant recommended by the Commonwealth Grants Commission following an investigation of its needs. In the past Tasmania, Western Australia and, to a lesser degree, South Australia have been completely dependent upon these special grants* Earlier to-day speakers on both sides of the House debated Commonwealth-State financial relations, and this matter should be given further consideration by the Government. In the case of public works, for example, the Commonwealth Government is the only authority in Australia which is able to expend revenue from taxation for this purpose. The Opposition does not quarrel with that. We believe that public works, as far as possible, should be financed from taxation revenue. That principle should be followed in the States also, but they are in a different position from the Commonwealth, which is the sole taxing authority. The States derive their revenue by way of annual grants from the Commonwealth under the tax reimbursement formula. But that formula, based on a 2i per cent, increase in population in previous years, has not been commensurate with the degree of development or increase in population that has taken place in the States. It is obvious therefore that they have not received adequate financial grants each year from the Commonwealth for their developmental programmes.

In the case of public works generally, the Commonwealth is responsible for approximately one-third of the work undertaken and the States for the remaining two-thirds.

In my opinion the resources of the Commonwealth should be pooled with those of the States for public works and a greater degree of interest-free taxation revenue made available to them. As it is, loan moneys, provided by the Commonwealth, bear interest which the States have to pay to the Commonwealth. If the Commonwealth would provide for the States more money for public works from taxation revenue, there is no reason why it should not be interest-free. This point was stressed at the last Premiers’ conference, and it certainly should be considered further by the Government. The States should not be expected to finance their public works programmes from money on which they must pay interest to the Commonwealth Government, while at the same time the Commonwealth Government can finance all its public works from taxation revenue. As a result of the present arrangement there have been substantial deficits in each of the States, particularly the claimant States of South Australia, Western Australia and Tasmania in the financial years 1956-57 and 1957- 58 and, if I remember correctly, in Tasmania and Western Australia again in 1958- 59. During the last financial year the States were able to collect in revenue, including that from semi-government sources, £228,000,000, but in the same year their expenditure under all headings was £736,000,000. That figure includes expenditure on semi-governmental utilities. As a result, the States’ debt is steadily increasing each year in proportion to the amount of money that has to be borrowed from the Commonwealth Government.

Returning to the Commonwealth Grants Commission, I wish to say that, in my opinion, its members have devoted themselves with diligence and common sense to the investigation of the affairs of the States which have been referred to the commission. I know that as far as Tasmania is concerned - and I have no doubt that the same can be said about the other claimant States - they have gone to a great deal of trouble to make themselves familiar with its problems. I remember that on one occasion the Commonwealth Grants Commission visited Flinders Island, in order to investigate some of the problems there and for which the State of Tasmania is responsible. I believe that the Grants Commis sion has devoted a great deal of time and consideration to the problems of the claimant States. But, as I have said before, I believe that the commission faces a difficulty in assessing the extent to which a particular State should be assisted to carry out its social service and other programmes.

I think it was in its third report that the commission stated that it had asked the Treasury to define its duties in this regard. I cannot give the exact words of the reply received from the Treasury, butit was broadly to the effect that the commission should not be expected to conduct an extensive investigation into the efficiency of the administration of the various States in order to determine whether economies could be effected. The Treasury went on to say, however, that items of expenditure should be examined to ascertain whether there was any significant departure from normal methods of expenditure. In the face of this definition of its functions, the Grants Commission has, I should think, no alternative but to give consideration to amounts expended by the claimant States on social services and in other directions. This being so, if a particular State decides to spend more on, say, education than another State, the Grants Commission may then consider whether that expenditure is justified.

Mr DEPUTY SPEAKER:

– Is the honorable member speaking only of the special assistance?

Mr BARNARD:

– Yes. I am referring to the States Grants (Special Assistance) Bill, Mr. Deputy Speaker, and dealing with the Grants Commission, which after all, does consider these matters. I believe that they have a bearing on the decisions that are ultimately made by the commission as to amounts to be granted to the various claimant States.

To return to the question of education, if one State decides to spend more for educational purposes than another, the expenditure then is taken into consideration by the Grants Commission. The same applies in respect of expenditure on health and social services. To substantiate my contention, let me refer to the twentysixth report of the Commonwealth Grants

Commission, for the year 1959. I refer to the table on page 122 of the report, and particularly to the item dealing with transportation of school children. In Tasmania, the cost per head of population for the conveyance of children from their homes to the area and other schools, was £1 6s. 6d. In Western Australia the cost per head of population was £1 6s. 8d., or very close to the Tasmanian figure. The amounts for the other States were a good deal lower. In South Australia, for example, the cost for this item was 9s. Id. per head of population. There seems to be a substantial discrepancy here, which might be considered important by the Grants Commission. I believe, however, that the commission should, give consideration to the educational system that the particular State has decided upon. I believe that the system in Tasmania has been recognized by educationalists as one of the best in Australia, if not in the southern hemisphere. It is a system that suits Tasmanian conditions and circumstances. It involves in country districts area schools as well as consolidated schools, and naturally the cost of conveying children from their homes to the schools must increase as population increases. Matters such as these should be carefully considered by the Grants Commission, and unfavorable conclusions should not be drawn when assessing the amount of the grant.

Similar circumstances apply to social services generally. The expenditure on social services in Tasmania has been carefully considered in the past by the Grants Commission when making its recommendations as to the amount of the grant. A comparison of the amounts made available by the various States for social services is extremely interesting. In New South Wales, according to the same report of the Commonwealth Grants Commission, the amount spent on education per head of population was £10 19s. 4d. In Victoria it was £10 lis. 7d.; in. Queensland £8 12s. 5d.; in South Australia £10 6s. 8d.; in Western Australia £12 12s. 6d, and in Tasmania £12 16s. The commission would no doubt give careful consideration to the fact that the amount spent by the claimant States greatly exceeded that spent in the other States. The position with regard to health, hospitals and charities is rather similar. The difference in the amounts expended in the various States is. quite pronounced. In New South Wales the amount spent per capita was £6 12s. lid. In Victoria it was £7 3s. Id., in Queensland £8 6s. 4d., and in South Australia £6 5s. Id.

Mr DEPUTY SPEAKER:

– Order! Are you trying to justify the special assistance? You appear to be making a speech on the bill that has just been passed.

Mr BARNARD:

– Mr. Deputy Speaker, I must accept your ruling, but would emphasize that the bill which we are now debating is directly connected with the report from which I am now quoting.

Mr DEPUTY SPEAKER:

-Order! It is not a ruling. I am just asking you a question.

Mr BARNARD:

– I am referring to the report of the Grants Commission, and am actually quoting from it.

Mr DEPUTY SPEAKER:

– It was quoted from extensively in the debate on the previous bill. We are now on a bill dealing with special assistance only. T do not mind your pointing out why the special assistance is necessary, but I would suggest that you should not canvass the whole field.

Mr BARNARD:

– Well, I will leave that point, and conclude on that aspect by saying that the expenditure in Tasmania on health, hospitals and charities was £8 3s. 9d. per head of population.

The point I wanted to make is that there will always be variations in the amounts spent by different States on education, health, hospitals and other services, and that in the past these ‘differences have been taken into consideration by the Grants Commission. I know the position that applies in Tasmania. There is always the danger in these matters that if too much money is expended on educational services, particularly on the conveyance of children, these matters will be taken into consideration by the Commonwealth Grants Commission.

Let me turn to another point that I believe is applicable to the claimant States to which I have referred and which the Grants Commission has recognized as requiring special assistance. Again, I turn to the third report of the Commonwealth Grants Commission which dealt with the needs of the claimant States in 1936. At that time the need for special assistance to the State of Tasmania was probably more pronounced, and the commission had this to say -

Unfortunately Tasmania has allowed her assets to run down. Railways need rehabilitation; forests are depleted, and there is also evidence of soil exhaustion. There seems to have been some lack of foresight and enterprise in these directions, but few positive faults of policy can be found. Tasmania is thus a State of poor resources. She benefits from the federal connexion. The strain of keeping up to the industrial and social standards of the rest of the Commonwealth imposes a heavy burden upon her.

That period followed immediately upon 25 years of uninterrupted rule by nonLabour governments. In 1936 it was found by the Commonwealth Grants Commission that Tasmania’s resources had been depleted and that the State was in need of special assistance. Although, in the last twenty years, great developments have been made in hydro-electric power and in industry generally, including primary industry, Tasmania still has a special need. After all, we suffer disabilities which are not apparent in other States. There is, for example, the difficulty of transport. Tasmania has been completely dependent upon sea transport for the goods which it imports and exports.

All the progress that has been made in hydro-electric development in Tasmania has been made entirely from moneys raised by means of interest bearing loans. That, of course, is directly opposite to the state of affairs that has existed so far as the Snowy Mountains Hydro-Electric Authority is concerned. Approximately £80,000,000 has been made available to that authority by the Commonwealth Government in the form of loans from taxation revenue. Of course, we do not quarrel with that provision. After all, it was a Labour government that decided to proceed with the Snowy Mountains scheme. But the point I want to emphasize is that if the Commonwealth can provide money for a hydroelectric scheme on the mainland, obviously it should be in a position to assist in industrial development, perhaps to a lesser extent, in Tasmania.

That brings me to the question of the aluminium industry at Bell Bay. In this industry the Commonwealth Government admittedly has an interest to the extent of approximately £9,500,000. But despite the protests that have been made by me and by other Tasmanians who are interested in the development of this great industry, the Commonwealth Government has refused to accept its responsibility in that respect. Therefore, in this financial year Tasmania proposes to make an additional £1,500,000 available for the development of the aluminium industry. Obviously, that is a responsibility that should be accepted by the Commonwealth Government. Surely it ought to be able to recognize that the aluminium industry is of extreme importance to this country, not only in time of war but also in time of peace. Therefore, I believe that this matter should receive far greater consideration from the Government than it has received in the past.

Mr. Deputy Speaker, Tasmania can find £1,500,000 only with great difficulty and certainly at the expense of other important commitments that also require assistance. The Australian Aluminium Production Commission at Bell Bay is producing approximately 12,000 tons of aluminium ingot annually. That represents only about 40 per cent, of the aluminium requirements of this country. The Australian demand is now 31,000 tons annually. Australian production fell from approximately 60 per cent, of Australia’s requirements in 1957-58 to approximately 40 per cent, of those requirements in 1958-59. Therefore, negotiations have been commenced by the Premier of Tasmania with the Minister for National Development (Senator Spooner) with a view to expanding the industry. It is anticipated that production will be increased to approximately 16,000 tons a year. But that quantity will not represent even half of the aluminium requirements of this country in the next financial year. In order to emphasize how short-sighted is this policy of the Commonwealth Government in respect of the aluminium industry, let me deal for a moment with the imports of aluminium into this country.

Mr DEPUTY SPEAKER:

– Order! I think the honorable member is getting a little bit wide of the bill. Imports of aluminium have nothing to do with it.

Mr BARNARD:

– I shall return to the point that I made originally - that the aluminium industry is an essential industry and that this year Tasmania will be obliged to find approximately £1,500,000 to extend an industry which, in my opinion, should be the responsibility of the Commonwealth Government. As a matter of fact, the grant that will be made available to Tasmania this year, as I indicated at the commencement of my speech, will be substantially less than the amount made available during the last financial year. In my opinion the extension of the aluminium industry is one feature that should have been considered by the Commonwealth Grants Commission in arriving at its decision. I merely emphasize again that although I give full credit to the efficiency of the commission for the energy with which it devotes itself to its activities, I believe that expenditure by the States on the matters to which I have referred - social services, education, health and public utilities - should not be taken into consideration by the commission in assessing the amounts that will be made available each year to the claimant States. I agree at once that it will be necessary, possibly for many years, for Tasmania and Western Australia to rely on the Commonwealth Grants Commission. That has been so in the past and I have no doubt that it will be so in the future until, in the case of Tasmania at least, its population is substantially greater than it is to-day.

I conclude by appealing to the Government to revise the Treasury’s recommendation to the Commonwealth Grants Commission defining so clearly the matters that should be considered by the commission in assessing the amounts to be made available each year to the claimant States. I ask that these matters be taken into consideration. I ask the Government to give greater consideration to the extension of the aluminium industry at Bell Bay, having regard to the fact that that industry is essential to supply Australia’s future requirements of aluminium and the fact that this financial year Tasmania will be obliged to find £1,500,000 which quite properly should have been made available in that State to other essential utilities.

Mr THOMPSON:
Port Adelaide

– I want to say a few words on this bill with regard to the position of South Australia. The Treasurer (Mr. Harold Holt) in his speech referred to the long period during which South Australia was a claimant State. He stated that this year it had withdrawn its claim for special payments through the Commonwealth Grants Commission.

The bill provides for a grant of £399,000 to South Australia for adjustments in respect of 1957-58. It will be appreciated that, in the past, the commission has recommended special grants to the States on the basis of the Budgets to be presented by those States, but those grants have frequently been adjusted after those Budgets have been presented. Those adjustments are made some time after the special grants are provided and that is why the adjustment for 1957-58 in respect of South Australia will be made in this current year. The Treasurer stated that during the year the commission may be able to make the adjustment for 1958-59 in order to finalize the payment to South Australia. In his second-reading speech the Treasurer said -

South Australia, which for a period of 30 years was a regular claimant under the Grants Commission arrangements, has now emerged to the status of a non-claimant State. It was agreed that, while South Australia and Queensland should not be denied some right of access to the Grants Commission, these two States should exercise this privilege only in special or unexpected circumstances which endangered their budgetary position relative to that of other States.

It is unfortunate that immediately South Australia decided to become a nonclaimant State it experienced a year of drought. In most parts of the State there will be very little return, if any, from primary production. The honorable member for Wakefield (Mr. Kelly) may be better informed on this matter than I am, but I know that the farming community of South Australia faces a catastrophe. The abattoirs in that State cannot handle the large numbers of sheep being sent to them for slaughter. Some graziers have been told that if they send sheep to the abattoirs for slaughter they will be lucky to recoup their transport costs. About six weeks ago, I was getting petrol at a garage and the bowser attendant told me about a man who had sent lambs to the market and had received 3s. 9d. a head for them. But that same man had to pay 3s. 6d. a pound for lamb chops in the shops. That is a terrible state of affairs. If the market had been normal, that man would have received a better price for his Iambs. I have seen reports of people offering to give sheep away, and I have heard of sheep being sold for 6d. a head.

I do not know how South Australia will be able to carry on this year without special assistance through the Commonwealth Grants Commission. I hope we will be able to do so; but we have decided to become a non-claimant State, believing that we will be able to carry on because of the buoyant condition of our industries. I have not heard of any statement by the Premier of South Australia on this matter, but I have had sufficient experience to know that he must be very worried as to the outcome this year.

I do not wish to debate this matter at length. I know, from my experience in the South Australian Parliament, what a wonderful help the Commonwealth Grants Commission has been to South Australia. Going back about 30 years, before South Australia received grants through the commission, great difficulty was experienced in paying public servants in that State a salary comparable with salaries being paid in other States. From time to time, South Australia had difficulty in holding good men in its Public Service because the salary paid to them was nothing like the salary they could get in other States which were in a better financial position. The grants received by South Australia were of untold assistance to it. Western Australian and Tasmanian members of this Parliament must feel grateful for this legislation because the grants paid to those States have enabled them to function on something like an even keel. The honorable member for Bass has referred to the fact that the Grants Commission would consider the amounts that a State was expending in the education field and other fields, and if it felt that a claimant State was spending more on education than was being spent in the bigger States, it would reduce the grant accordingly. We had that principle followed in all directions. We had it followed in relation to the farmers. In South Australia farmers had the advantage of special freights on the State railways for primary produce, and other special rates also operated. When the Grants Commission examined the State budget and saw the estimated revenue from railways, waterworks and so on, it said that South Australia was not charging the users of those services rates comparable with those being charged in the eastern States, which get no grant. It told the State that it wanted to keep it on even terms with the other States, so it would have to increase its charges. The honorable member for Canning (Mr. Hamilton) knows that that is correct, because he is nodding his head. He knows the position thoroughly. So, whilst these grants have helped to bring the claimant States up to somewhat near the level of the other States, they have not enabled the claimant States to spend extravagantly, without any thought for their position in comparison with the other States.

To me, at any rate, the grants system is an expression of real Australian sentiment in that it helps the development of the poorer States, which have less chance of raising the revenues that they require than the larger States have. I should say that South Australia’s recent industrial development would not have been possible if that State had had to work on its own finances and through the years had not had the benefit of the grants made under this legislation. In those circumstances, I am very happy to support this measure. I say to the Minister and the Government that special circumstances may arise in South Australia, because of its position during the last few years, which will make assistance to that State necessary. I trust that if it is necessary for one of the States, such as South Australia, which has ceased to be a claimant State, to make a special claim again, that claim will be considered and met, as I think it should be.

Mr DUTHIE:
Wilmot

– I should like to take up a few minutes in expressing my support for this bill. The House is always very generous in passing each year a bill of this kind to help the claimant States. Up to this year, there were three claimant States, but henceforth there will be only two. If South Australia finds itself in a situation in which it needs assistance from the Commonwealth, as the honorable member for Port Adelaide (Mr. Thompson) said, I am sure that this House will give very earnest consideration to helping that State in its first year outside the category of a claimant State. I congratulate South Australia on ceasing to be a claimant State, but Tasmania, and probably Western Australia, will be claimant States for a very long time.

The honorable member for Bass (Mr. Barnard) gave in his speech some of the reasons why Tasmania is a claimant State. Tasmania’s development is dependent largely on grants provided under measures of this kind, without which it might as well wind up its economy. Tasmania is allocated £7,299,000 under the two-part system of grants of special assistance. The reason for the grants to Tasmania is given in the excellent twenty-sixth report of the Commonwealth Grants Commission. On page 26 the report states -

In its last Report … the Commission discussed the financial position of Tasmania. It has concluded that the dependence of that State on special grants arises mainly from -

  1. the relatively heavy burden of unrecouped debt charges, mainly in respect of public buildings, roads, forests and funded deficits;

    1. the operating loss of the State Railways;
    2. relatively low capacity for raising non- income taxation and miscellaneous revenues;
    3. the substantial fall in lottery revenue;
    4. relatively high costs in providing social and administrative services.

These factors are related directly either to the relatively poor resources of the State or to other circumstances such as a relatively high proportion of school children . . .

We have the highest natural birth rate in the Commonwealth - a relatively low level of income, difficult terrain and climate, and limited natural resources for agricultural and pastoral industries. Cheap hydro-electric power is being developed rapidly and is assisting industrial development; but the development of forests, another important State asset, is proceeding slowly.

That is how the commission summed up the position in Tasmania. The report went on to analyse social services, health, education, justice and other items of Tasmanian expenditure. My colleague from Bass told the House of social services expenditure in Tasmania, which has been phenomenally high - the highest of any State - over the last twelve years. This may be hard for honorable members from mainland States to understand, but though we are only a small State in population, with about 360,000 people, our outgoings per head on social services have been the highest of any State since 1946-47. It is to the credit of the Tasmanian Administration that that State has such high educational and health standards, good hospitals and extended country health services, in view of our small population.

There is one other point I wish to mention. It concerns the Treasury’s attitude to the grants system. The Treasury is the most influential section of the Government. It has, for instance, interfered in the running of the Post Office. The commission’s report, at page 32, deals with the Commonwealth Treasury’s criticism of what is known as the two-part system covering grants of assistance to Tasmania and Western Australia, and, in the past, to South Australia. Referring to the Treasury, the report says -

Its main criticism has been that, at the end of any financial year, a claimant State’s budget result is not final, because it is still subject to any recommendation which the Commonwealth Grants Commission may make … by way of adjustment of the “ advance “ included in the budget for that year. The Treasury has contended strongly that this situation is not conducive to proper exercise of financial responsibility on the part of a State government, and that financial responsibility would be strengthened if the grant payable to the State were a final payment, not subject to later review.

Incidentally, Western Australia and Tasmania disagree with the Treasury on this point. They both urge that the two-part system be retained, at least for the present, on the ground that it provides an accurate appraisal of the real needs of a State. For a long time I have contended in the debates on these measures each year that a system other than the two-part system should be employed. I feel that the commission, judging by the report from which I am quoting, is also coming to that conclusion. In a summing-up on page 34 of the report, the commission said -

The Commission has decided to retain the twopart system for the purposes of this Report, but to give further consideration to it during the coming year in the light of further discussions with the Commonwealth Treasury and the claimant States.

I believe, Mr. Deputy Speaker, that the time has come when the Treasury’s wish on this point will soon be granted, and we will get down to what we might call a straight-out grant for the year concerned, rather than having grants adjusted every second year under the two-part system, which is a very involved system in any case.

I conclude by congratulating the commission again on presenting to this Parliament one of the most helpful documents that comes before us during the year. The report is published in an attractive way, and the commission apparently has been most painstaking in ensuring that its analyses are accurate. The report is paragraphed well, and at the back are page after page of vital Commonwealth statistics in relation to State taxation resources, social services expenditure and so on. Although the personnel of the commission has changed from time to time due to the death of some of its members, it has maintained a remarkably high standard of accuracy and efficiency; it has made careful analyses of the position in each State, and it has presented to us a document that is of inestimable value in understanding the inter-related workings of Commonwealth and State economies. We are proud of the Commonwealth Grants Commission.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2415

SCIENCE AND INDUSTRY RESEARCH BILL 1959

Second Reading

Debate resumed from 20th October (vide page 2029), on motion by Dr. Donald Cameron -

That the bill be now read a second time.

Mr POLLARD:
Lalor

.- The bill is a very simple one indeed. It seeks to amend the Science and Industry Research Act 1949. As all honorable members know, the Commonwealth Scientific and Industrial Research Organization operates under the terms of this act. The Government proposes to increase the number of members on the executive of the organization from four to eight - a very modest proposal when one takes into consideration the importance of the work of the C.S.I.R.O. Part III. of the original act relates to the executive of the organization and, if the Government’s proposal is accepted, section 11 (1.) will read -

There shall be an Executive of the Organization, which shall consist of a Chairman and eight members.

The Government also proposes that at least five members of the executive shall be persons possessing scientific qualifications. At present, it is necessary that only three members of the executive shall possess such qualifications. Section 11 (5.) will also be amended to provide that the chairman and four other members of the executive specified by the Governor-General shall devote the whole of their time to the duties of their office. Under the existing set-up, it is required that only two other members of the executive shall devote the whole of their time to the duties of the office.

Section 13 (3.) of the original act provides that three members shall form a quorum at any meeting of the executive. The Government proposes to amend this section to provide that five members shall form a quorum at any such meeting.

The bill before us provides that section 32 of the act shall be amended by the omission of the word “ external “ after the words “ Minister of State for “. This proposal will clarify the position and bring the act up to date. Since the 1950 consolidation of the statute, there have been some changes in ministerial responsibilities. The section, if amended, will read -

Any exercise of a power or function by the Organization . . . shall be subject to the approval of the Minister and . . . the Minister shall consult with the Minister of State for Territories.

The Opposition takes no exception to the proposed change in the executive of the organization. When we consider the vast range of research operations associated with the work of the C.S.I.R.O., the obvious results of the work of the organization in industrial, agricultural and pastoral research, and the wonderful benefits that industry has derived from the work of the organization, we can only say that this, of all governmental institutions, deserves the greatest commendation.

As far as I can recollect, there has been practically no criticism of the managerial authority of the organization during the lengthy period that it has been operating. This is most gratifying and altogether admirable when we consider that the organization, in the course of its work, must of necessity proceed in very close cooperation with the various State departments of agriculture and other bodies interested in industrial and scientific research. It very often happens that where there are crossing lines, as we might term them, between the functions of Commonwealth and State departments, intense and very strong jealousies are engendered from time to time, much to the disadvantage of the work that should be carried out for the benefit of the people of this country.

I do not wish to say any more about the proposed amendments. It is amazing how four executive members of the organization

Mr Adermann:

– That is in addition to the chairman. There are five members altogether.

Mr POLLARD:

– That is right. It is amazing how the existing executive of a chairman and four members has been able to cope with the ever-increasing work of the organization with all of its attendant problems. I do not know how they have managed to do it. The proposal to increase the executive by four members is exceedingly modest. However, it should enable those who have borne the heat and burden of the day in keeping the show going in the past, at least to take some leisure and to spread the responsibilities of management and direction among a greater number of people.

It is true that the Commonwealth Scientific and Industrial Research Organization has functioned satisfactorily. The Minister for Health (Dr. Donald Cameron) told us, in his second-reading speech, that the organization is at present working on a budget of £8,500,000 a year. I consider that the work that it is doing on a budget of that size is extraordinary. When we consider the service that the C.S.I.R.O. has rendered and the contribution that it has made, by way of research work, to the total production of Australia, we must come to the conclusion that the £8,500,000 voted by this Parliament for the organization’s expenditure in the current financial year is altogether too small for the kind of work in which it is engaged, especially when we think that our total annual budget is about £1,600,000,000. Compared with that amount the vote for the C.S.I.R.O. is a mere drop in the bucket. We cannot really measure, in terms of finance, the exact value of the work of this organization to Australia’s national production.

My only criticism in this matter, Mr. Deputy Speaker, is that I have good reason to believe - and I think that most members of this House will concur in what I am about to say - that a great many of the research workers and scientists employed by the organization are not receiving the salaries that they should receive and that they are entitled to. It is my very humble opinion, taking into account the net effect of the work of these research workers and scientists, with their very good qualifications, that, by comparison with others in the community - with special reference to their scale of income - members of this organization are getting a very raw deal indeed. As a result, they will eventually be lost to the C.S.I.R.O. Some of them will be absorbed by industry in Australia. They will not be lost to this country, of course, and their skills will not be dissipated, but they will be lost to this organizaion. Others will be lost to other countries.

From time to time, we hear that scientific and research workers employed by the organization have accepted high and important executive research posts in other countries. We can only say that this is regrettable and that their departure is a great loss to Australia. I do not suggest for a moment that scientists and research workers should be prevented or deterred from going abroad if they feel that the interests of their own welfare and their duties and responsibilities can best be served in other countries. That is admirable in many respects. After all, we in this country receive the benefits of research done by scientists who have come here from other parts of the world and offered their services to Australia. But it is too bad that highly qualified scientists and research workers should virtually be driven out of Australia because the Commonwealth Government - I do not care what may be its political colour - does not give the C.S.I.R.O. sufficient funds to enable it adequately to recompense its staff.

I commend the bill to the House, Mr. Deputy Speaker. I can only hope that the proposed changes will ensure that the work of the C.S.I.R.O. continues in the future as satisfactorily as it has been performed in the past.

Mr JOSKE:
Balaclava

.- Mr. Deputy Speaker, this measure, which will amend the Science and Industry Research Act 1949, aims at strengthening the executive of the Commonwealth Scientific and Industrial Research Organization, and it is indicative of the tremendous expansion that has taken place in scientific and industrial research in Australia, not only in respect of the work of this organization, but also in respect of various bodies administered by many Commonwealth departments. For example, we have the Bureau of Agricultural Economics, within the Department of Primary Industry. The Department of National Development looks after the: Bureau of Mineral Resources, Geology and Geophysics. The Department of Health, under the administration of the Minister for Health (Dr. Donald Cameron), administers bodies such as the Commonwealth Serum Laboratories, the Commonwealth X-ray and Radium Laboratory, the School of Public Health and Tropical Medicine, and the Australian Institute of Child Health, which conducts research into the illnesses of children. The Department of

Supply controls the Weapons Research Establishment, at Salisbury, in South Australia, the Woomera rocket range, and so on. In addition, we have the Australian Atomic Energy Commission, with its experimental nuclear reactor at Lucas Heights, near Sydney.

The point that I wish to make in mentioning these other research bodies is that Commonwealth research instrumentalities, with the exception of the Commonwealth Scientific and Industrial Research Organization, come within the jurisdiction of a particular department of state. Consequently, their existence can be justified constitutionally on the ground that they carry out certain functions of the Commonwealth. The work which they do is incidental to the exercise of the powers expressly vested in the Commonwealth under the Australian Constitution. But, when we come to the Commonwealth Scientific and Industrial Research Organization, we find that its powers are given in very general terms indeed. Although they are wide and very important powers, they are not given in relation to any particular department. They are entirely vested in the organization, of itself and not in association with any department of state. The question of whether there is any constitutional justification for the existence of this organization has been raised in a very serious way. It has done magnificent work and it continues to do magnificent work. Therefore, any doubt as to whether it is constitutional, and as to whether it should be allowed to continue to function, should be removed.

The Constitutional Review Committee has recommended to the Parliament that, inasmuch as the Commonwealth has no specific power to carry on scientific and industrial research, this Parliament should be vested with power to make laws for the carrying on and promotion of scientific and industrial research, because the Commonwealth Scientific and Industrial Research Organization is so important and is doing such wonderful work. This matter is far too important to be left up in the air as it is left up in the air at present. Among constitutional lawyers, there is a serious doubt as to whether this important and valuable body is legal or illegal, constitutional or unconstitutional. It fact, the dicta of the judges of the High Court of Australia, so far as they bear on this matter, indicate that this body perhaps is not constitutional. I bring this matter to the attention of the House because I think it is important that the House should realize, when it is strengthening the executive of the C.S.I.R.O., that perhaps it should be doing far more - that perhaps it should be providing for an amendment of the Constitution in order that there shall be no doubt about the legality of the organization.

Mr HAYLEN:
Parkes

.- Mr. Deputy Speaker, I have listened with interest to the comments made by the honorable member for Balaclava (Mr. Joske) on the constitutional limitations of the Commonwealth Scientific and Industrial Research Organization. I should like to say, before I really address myself to this bill, that the honorable member’s comments bring vividly before our minds an awareness of the fact that we have a Constitution which is redolent of the horse and buggy days. Fancy having to be so much concerned about the question of whether the Commonwealth should be able to undertake scientific research and investigation, when countries like Russia are putting luniks on the moon and the world is full of nuclear research, with physicists working miracles - in many instances, dark and devious miracles. The constitutional limitations have put us into a sort of back-water of a forgotten land. I hope that members of the Constitutional Review Committee, such as the honorable member for Balaclava, will stand up to their words and ensure that, in the drive forward for constitutional reform, we shall do something for this most extraordinary organization.

I have always been interested to note that in reading the records of this House we see reference to so much work that has been done by the C.S.I.R.O. It has done rural research and has produced papers on almost every industry. The honorable members for Balaclava and Lalor (Mr.

Pollard) have referred to this. Its research has produced some fascinating little stories. For instance, the Australian land mass is deficient in certain trace elements. But instead of putting these elements directly into the land, the C.S.I.R.O. has experimented in putting them into the outer stomach of sheep by using a cobalt pill. The cobalt bomb is one thing, but the cobalt pill is peculiarly and essentially Australian. These experiments have captured the imagination of people overseas who require some trace elements in the land on which they graze their cattle and sheep. The cobalt pill has been quite a minor triumph for the C.S.I.R.O. It is an interesting development. Instead of incurring the expense of scattering trace elements over vast acres of land, and having them leached and washed away by the rains or eroded by the winds, a pellet is dropped into the constituent which, in this instance, is the grazing merino. In this way it balances its own diet and has its own built-in regulator for its vitamins, as it were.

The same sort of fascinating research has been done with myxomatosis. Australia has been saved from disaster in droughts in the past few years because the competition of rabbits was eliminated by the use of myxomatosis. It is interesting to note the way in which the C.S.I.R.O. follows up its experiments. It realized that nothing is so persistent as pests of any kind and that the strength of myxomatosis would wane. A new method of control, called 10/80, has been developed. Small aeroplanes drop the bait in inaccessible mountain ranges and keep the war against the rabbit moving. This is really a way to protect Australia from erosion, the depletion of flocks and herds in droughts, and the destruction of crops, by controlling the rabbit. This again has been a triumph for the C.S.I.R.O.

In looking at the work of the C.S.I.R.O., we find that experiments have been conducted into wool to give it drip-dry qualities. This is an important measure and enables wool to take the war against synthetics right into the camp of those who make synthetics. These manufacturers shave been surprised, and the wool-growers are getting a worthwhile return for the part of their income that they contribute to research. The C.S.I.R.O. has come forward with some dramatic ideas. Every little pond in Australia could be stocked with fish, if we followed the suggestion of the C.S.I.R.O. This has been done in China and can supplement the food of farming communities. Many noxious weeds have been rendered less potent or eradicated by the work of the C.S.I.R.O. This organization has also done work on other matters such as standards.

The debate on the bill now before the House gives us an opportunity, which we rarely have, to express our pride in the scientific work of this organization. I do not think that in the ordinary scientific field there are any better general scientists in Australia than these men. They may not so far have been credited with great and glittering developments of a new and fascinating nature, but, in the ordinary runofthemill working out of scientific solutions of serious problems, this highly efficient organization has produced some miraculous results. The results are published in book form, and we see that the scientists of the C.S.I.R.O. have done research into such matters as food preservation, trout fisheries, marine and fresh water life, plant life, and another matter which has an important bearing on our future in this dry, semi-arid land - Mansfield process for reducing evaporation from small dams. I was personally interested in this research. This means that precious water is conserved during the summer months by means of a little boat which has a constituent of oil in it. This is put on the surface of the water and reduces the rapid evaporation. This is a small but essential development, and is indeed a brilliant concept. It is one of the many fascinating ideas developed by C.S.I.R.O. that we all like to mention.

We have an opportunity to-night to express our appreciation of what has been done. I refer again to the drip-dry process in wool. This could be an important feature in maintaining the market for our greatest primary product. The war of the synthetic fibres on the woollen industry is merciless and continuous and, although we comfort ourselves by saying that synthetic fibres have not the flexibility of wool, its tensile strength, its warmth or its animality - if I may coin a word - we cannot close our eyes to the marvellous goods that are made with rayon and other synthetics, lt is heartening to know that the woollen industry is not losing every battle. The wool technologists have been using their vast knowledge to give to woollen goods qualities that are equal to, or even better than those of synthetics. Wool is a natural and a much more flexible material than synthetic fibre. The honorable member for Lalor, who has charge of this bill for the Opposition, has pointed out that we owe a great deal to the C.S.I.R.O. for devising special processes for dying jute bags and giving us special dyes for wool which wash out. In 101 different ways, primary production has been helped by the work of the C.S.I.R.O. Secondary industry, too, is receiving great benefit. This, all told, is a minor miracle and one of which we should be justly proud.

We on this side of the House felt that we should say something about our great Australian institution and that we should not let this opportunity pass without adding to what has been said by the honorable member for Lalor about this small but effective bill. We also express our deep regret at the passing of Sir Ian Clunies-Ross, who was a great leader of scientific research in Australia. He did incalculable good for the land that he loved so well. We on this side of the House are proud to add our voice to the general chorus of approval of this good and true Australian who did a mighty job, and did it quietly and efficiently in the best traditions of our land.

We know that his predecessor was also a great scientist. I refer to Sir David Rivett who, during the days of the Labour Government, headed the organization which was then known as the Council for Scientific and Industrial Research. Out of that beginning has grown this wonderful scientific group, which immediately springs to action if a problem needs to be solved. Whether it is a problem of primary production, such as a new noxious weed or a pest to be controlled, or a problem of standards, of mechanics or chemistry, we have the trained personnel to tackle it.

I finally repeat what has already been said by the honorable member for Lalor. It is a tragedy that this trained, highly efficient and excellent band of crusaders for better living should be paid like office boys. Though they are scientists, they do not draw what could be called a man’s salary. They must have a sense of dedication to undertake this work for the Government. Despite our huge budgets and our generous handouts in other directions, we are never able to realize how much we owe to our teachers, our doctors, our scientists and, if I may coin a dialectical word which does not always meet with approval in this House, to the elite of Australians who are properly trained. No scientists are better trained than the scientists gathered together under the control and direction of the C.S.I.R.O. 1 hope that when new scales are being made, as they are always being made in the progressive democracy in which we live, we shall cease to talk about our great scientists but reward them for the magnificent worK they have done in pushing progress along in this country. This has been a country which has been settled everywhere but it requires development. It needs money and Government aid to push controls, to push settlement and push progress in order to achieve that great development which we require.

Behind us all the time have been the scientists of C.S.I.R.O. and the scientists of industry generally. To-night we are dealing with a bill to strengthen the mechanical side and the personnel side of C.S.I.R.O. The honorable member for Lalor and myself take this opportunity to say to the House that we thoroughly approve of this bill and of any proposal that will strengthen the organization financially and otherwise. Any such provision will have the support of this side of the House. We support the bill to the full in appreciation of the splendid national job that has been done for this country by the C.S.I.R.O.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– I was very glad to notice that the honorable member for Parkes (Mr. Haylen) mentioned Sir Ian Clunies Ross who for so long controlled the destinies of the Commonwealth Scientific and Industrial Research Organization. It is perhaps unfortunate that the executive of the Commonwealth Scientific and Industrial Research Organization had not been strengthened many years ago. If it had been, I think it not improbable that Sir Ian would still be with us to-day. I am quite sure that the great complexity and importance of the work that the Commonwealth Scientific and Industrial Research Organization did in the past and the increasingly heavy burden that was placed upon his shoulders as chairman of the organization led to his death at a relatively early age. The work of the executive has been growing in importance and complexity and the time is long past when the executive should have been strengthened, as is now proposed, from five to nine members. There will now be five instead of three permanent members of the executive and the quorum will be increased from three to five. The bill provides also that at least five members of the executive shall be scientists. When one considers the extreme technicality of most of the work which the Commonwealth Scientific and Industrial Research Organization does, the need for specialist members of the executive is obvious.

The honorable member for Parkes and others who have participated in this debate have spoken of the notable achievements of the Commonwealth Scientific and Industrial Research Organization. I do not want to repeat what has been said already on those matters. The work of the organization is extremely well known, and it is expanding. The finance available to it over the last eight or nine years has increased from £2,000,000 to about £8,500,000 annually, and it is remarkable what this organization has achieved with that amount of money. I think the honorable member for Lalor (Mr. Pollard) was inclined to say that it should have been given more money. I agree with that, but there is a very definite limit to the amount of money which can be put into this kind of organization in one year, unless it is able to attract capable scientists and technicians to use the money in an effective manner. Of necessity, an organization like the

Commonwealth Scientific and Industrial Research Organization can be expanded only slowly.

Even though it has achieved a great deal - perhaps more than anything else it has helped the primary producers to lower their costs - much more remains to be done. Many new problems are coming to light each day. The work of the organization will have to be even more intensified if primary producers are not to continue to be faced with difficulties to which they do not know the answer. Some problems have been with us for a very long time - some simple, some damaging ones such as footrot - for which there is no easy or cheap cure. At present the only known treatment for footrot involves an immense amount of work and cost, and even then we cannot be certain that it will be of permanent benefit.

Blow fly strike in sheep is another problem. About eighteen months or two years ago the Commonwealth Scientific and Industrial Research Organization and the Australian sheep farmers generally were jubilant because they thought that this problem had been solved by the discovery of aldrin, dieldrin and diazinon. But last summer it came as a rude shock to the farmers to find that, within an amazingly short period of time, the blow fly had bred an immunity to these new drugs or disinfectants or whatever their correct technical description may be. In this coming summer it is highly probable that farmers will have to engage in the expensive, heart-breaking and back-breaking work of going around their flocks almost daily during the fly season. This experience serves to show how problems can recur; although they may appear to be solved, they re-appear with startling suddenness two or three years later. 1 wish to concentrate briefly on two matters. The first is the new problems which arise from pasture improvement and the need for new and increased research into them; and the second is the relation of the organization with the State Departments of Agriculture and the ability of those departments to transmit to the farmer the knowledge discovered by it. In regard to this second point, much research and examination needs to be undertaken because we are losing a great deal of the value of research that has already been done.

On the question of pasture improvement and new problems that arise from it, it may not be generally known that when the numbers of cattle or sheep increase on any particular piece of land, the number of problems increases also. One is worms in sheep and cattle. It is probably not generally realized that in the higher rainfall areas of Australia there is no thoroughly satisfactory drench for the control of worms in cattle, lt is a different matter with sheep, because we know how to look after them. But unless the C.S.I.R.O. can produce something, so far there is no satisfactory drench for cattle. Another problem connected with the increase in numbers of cattle or sheep on a piece of land is the severe attacks of lice. This can necessitate spraying once a fortnight or on two or three or four occasions. It is an expensive business, and the spraying that is done is not particularly effective. Many farmers in Victoria are now spending a great deal of money to instal permanent sprays in an effort to control this particular problem. The C.S.I.R.O. may be able to find a cheaper method of lice control.

But more important than either of these is the fact that as the numbers of sheep and cattle rise severe problems of nutrition occur among weaner lambs and young cattle to which no one at present knows the answer, lt is my belief that on some of these things not a great deal of work is being done. I know that for the last two or three winters many farmers have had problems with their young cattle which have been tested for every known disease and found to be pretty well clear, but in some cases for no known reason they have not just been doing well. When pasture experts have come along and the farmer has asked, “ What is the matter with my pastures and the feed I have given to my stock? Why are these cattle not doing well? “, the experts have taken tests and said, “ Your pastures are all right, they are not short of trace elements, they are good pastures “. But still the answer has not been found to the problem. It calls for a great deal of attention.

Then there is the question of fertility, Farmers in many areas of Australia are having considerable trouble in this respect, among sheep and cattle. The strange thing is that sheep which do well on one property and are apparently healthy give an extremely low percentage yield - about 60 per cent, or 65 per cent. But if they are taken to a property 200 or 300 miles away, although they appear to be no healthier and their reactions are the same, the lambing percentage might increase to 90 per cent., 95 per cent, or even 100 per cent. Why is this? Again we do not know the answer.

As cattle numbers increase in Victoria, people have been struck with this problem of falling percentages and many of them have not known the answer. After a great deal of investigation they have found four types of venereal disease which very severely affect the percentage of calves born. But information on these diseases is not readily available. Not a great deal of work has been done on the subject. The methods of detection and control are extremely difficult.

One of the diseases is vibriosis. I understand that 80 per cent, of all herds tested throughout Australia have been found to be infected with the disease. It is an extremely common disease, and it is one that can be controlled and cured, but with a great amount of difficulty. There may be a great number of people throughout this country who have been content with 80 per cent, or 85 per cent, calvings and who could greatly improve these percentages if they knew that the problems existed and could be tackled. If you do not know about these things you cannot expect to improve the position. A person might be getting anything from 10 per cent, to 40 per cent, fewer calves than he should each year. He would know, of course, if he was losing 40 per cent., but he could be losing up to 10 per cent, in a quiet way each year without realizing the cause. In these days of severe competition and lower prices this could well mean the difference between profit or loss in the accounts of a particular property.

I am not convinced that sufficient research is being done in these directions.

The position has reached a stage at which some farmers - and unfortunately the small farmers are handicapped in this connexion - are doing their own research. 1 know of one particular mob of cattle that is branded with about a dozen different colours. It looks like a rainbow when you go into the paddock. The farmer in question keeps a diary, and every colour means a different drench or trace element with which he has treated his cattle, to try to find out what has been wrong with them and why they have not been doing well. This is all very well for certain individual farmers, but it is an inefficient way of conducting research, and it should be unnecessary. The farmers should be able to ask for information from a central research organization, but at the present time there is, unfortunately, insufficient knowledge of the problems and methods of solving them.

One of the most important aspects of the question is the relationship between the Commonwealth Scientific and Industrial Research Organization and the State Departments of Agriculture. At present there is considerable wastage of our very scarce scientific resources. The council has a charter which confines it to fundamental research. It cannot go out into the field and tell farmers of the results of its research. Furthermore, its functions do not include local research into conditions peculiar to a particular area of, say, Victoria or Queensland or Western Australia. It is confined to fundamental research that may be applied to the whole of Australia. This is the broad interpretation of its functions under the charter, and I think that, in general, the council sticks to this charter. In many cases, however, after the council has done its work on a particular problem, the States duplicate the work of the council, because they say, “ We have to make quite sure that what you have found is applicable to our particular area.” In some cases, and in two that I know of particularly, the State departments have duplicated every test made by the council, wasting time and, at the same time, denying farmers the benefits of the results obtained by the Commonwealth Scientific and Industrial Research Organization.

One example of this concerns a cattle drench called Neguvon, which was origin ally developed in Germany, and which, in my experience, is considerably better than the product of Imperial Chemical Industries Ltd., phenathiazine. The Commonwealth Scientific and Industrial Research Organization was quite happy with this drench, and was prepared to recommend it to people who could follow directions and use it properly. There were some dangers attached to it, in that under certain conditions it might have some toxic effects. Losses have occurred possibly because the people who used the drench did not follow the directions closely. The Department of Agriculture in Victoria was not prepared to accept the findings of the Commonwealth Scientific and Industrial Research Organization with regard to this drench, and it started to do its own research from scratch.

Another example of this wastage of scientific resources concerns a grass called sorghum allum which was found to have great potentialities in Queensland. The Commonwealth Scientific and Industrial Research Organization was quite satisfied with its work and believed that this was a thoroughly safe grass. The council knew that the grass could grow well and that it was thoroughly nutritious. But again, under certain doubtful conditions, it could have some toxic effect on horses. The Queensland Department of Agriculture would not accept the work of the Commonwealth Scientific and Industrial Research Organization and I believe that it is now in the process of repeating every test that the council has made. This is a complete waste of effort.

I know quite well that the States have the responsibility of selling the results of research to farmers, and that this could make them cautious. The kick-back from the farmer who gets the wrong advice is directed at the State Department of Agriculture. But if we have the faith in the Commonwealth Scientific and Industrial Research Organization that we should have, and which has been professed in this House, it should not be necessary for State authorities to duplicate the work of the council.

For many years there has been an emphasis on research as distinct from extension work, and in the past this has had a beneficial effect. The results of research work have been quite good, even though much is left to be done. However, at the same time there have been unfortunate results flowing from this emphasis on research as opposed to extension work, or, to bring it down to practical terms, on the Commonwealth Scientific and Industrial Research Organization as opposed to State departments. The Commonwealth Scientific and Industrial Research Organization has now become the glamour boy, while the State departments are the poor country cousins. As a result, the salaries of scientists employed by the council are much higher, on the average, for every age group, than those paid in the State Departments of Agriculture. The salaries in the council compare favourably with those of agricultural scientists in industry, but the salaries of scientists in the various Departments of Agriculture compare most unfavourably with those of agricultural scientists in any other occupation. It is said that the council has better scientists, but I do not believe that this is necessarily true. One group of scientists undertakes pure research, while other scientists, who are, perhaps, in some ways more patient, are needed to get the results of research work across to farmers. This can be a difficult job. Different kinds of persons would be attracted to the different occupations, and to say that one kind is better than the other is, I believe, nonsense.

Our extension services are now becoming inadequate for the job of imparting the knowledge gained by research to the farmers. I believe that the Commonwealth will have to do more, by way of increased extension grants, if we are not to fall further and further behind in this field. At the present time the States cannot fully use the knowledge that we have gained. The problem of vibriosis, which I mentioned previously, is an example of this. A certain amount is known about this disease. To take an example from Victoria, it is known that the disease is common in dairy herds and in some beef herds, but if the department set itself the task of eradicating vibriosis, which would confer great benefits and would mean an increased turnout of stock throughout the State, it would have a quite impossible task, from the point of view of manpower, in supervising the skilled work that has to be done. It would be utterly impossible for the department, unless it has recently appointed a veterinary officer. There has been only one veterinary officer in western Victoria, stationed in Warrnambool. 1 believe his area extended north to Horsham and across through Ballarat - quite an impossible area for one person to cover. Private veterinarians have done what they can to help, but very often what are needed are not simply veterinary experts, but persons skilled in animal husbandry, who know how to turn pastures into good healthy stock. We do not want just grass experts or just veterinary officers; we want people who could be described as crosses between the two.

The fault in all these matters does not lie with the individuals concerned. Every person doing these jobs does what he can to the best of his ability. It is a matter of shortage of facilities and skilled staff. In many cases farmers have to analyse their own problems and conduct their own research. As honorable members can well imagine, this becomes very much a hit and miss affair. In the future there must be an equal emphasis placed on extension work as there is on research work if we are to use our knowledge properly and if the future health of our animal industries is not to be jeopardized. In the past the C.S.I.R.O. has done good work but that work has been restricted by the charter of the organization. A general examination is needed of the relationship between the C.S.I.R.O. and the State Departments of Agriculture. In particular an examination is needed to see whether the results of present research are getting through to the farmers. I feel there is a delay somewhere along the line.

Further, I emphasize the need to tackle quickly new problems arising out of pasture improvements. This must be done before farmers in highly improved areas are faced with ever-increasing difficulties.

Mr BRYANT:
Wills

.- I think the honorable member for Wannon (Mr. Malcolm Fraser) made a valuable contribution to the debate. We on this side of the House are as proud as any other Australians of the activities of the Commonwealth Scientific and Industrial Research Organization and we pay due tribute to the work of its leaders over the years, particularly that of its chairman.

I want to develop the theme that has been raised by two honorable members opposite - the constitutional difficulties and problems that confront scientific research in this country to-day. As was pointed out by the honorable member for Wannon, our wretched constitutional position prevents us from carrying out effective research work. I hope that in that respect the honorable member for Balaclava (Mr. Joske) will use all his powers of persuasion with the Government. One point that probably escapes the notice of most honorable members is the extraordinary breadth of the Commonwealth’s research activities. Some Commonwealth public servants are among the world’s outstanding scientists and it is important that we should understand something about their work. The first thing that intrigues me about this matter is that the Science and Industry Research Act comes within the ambit of the Prime Minister’s Department. We know that the Minister for External Affairs is the Minister in Charge of the C.S.I.R.O. We know also that the organization can only be a sideline to his other activities. This Parliament must turn its attention to the development of a scientific policy. We must examine our administrative arrangements to see how we can overcome present difficulties.

About eighteen acts of this Parliament confer upon some authority the function of carrying out research of some kind. At least seven Ministers are responsible for research in this country. Not only have we six State Departments of Agriculture but we have at least seven Ministers in this Government who are responsible for research. That state of affairs is denying us a coherent and flexible research policy. Research is everybody’s business and therefore nobody’s business. At question time in this House if one wishes to ask a question about research one must give some consideration as to the Minister to whom the question should be directed. In any event an honorable member may find that he has directed his question to a minister to whom the responsibility is only incidental. We should examine our administrative structure and take steps to bring all the research activities of the Commonwealth under one head.

I have before me about a dozen acts which confer research functions on certain bodies. I shall list a few of them. The Australian National University has a council of some 30 members. That council is responsible to the Prime Minister, not that he proposes to allow any debate on the university. The Prime Minister is a busy man. He has dozens of other matters on his plate and he cannot turn his attention to scientific research policy. The seven members of the Australian Wool Testing Authority are responsible to the Minister for Primary Industry. A great many of the activities of the C.S.I.R.O. are associated with primary industry. The honorable member for Wannon stated that the C.S.I.R.O. should have more money at its disposal. He also outlined some of the great advantages that have accrued to our primary industries as a result of the work of the organization. It may be worth while to consider the imposition of a land improvement tax to help pay for further research.

The Minister for Primary Industry has under his control quite a number of advisory committees. These include the Australian Wool Testing Authority, the Central Tobacco Advisory Committee, the Dairy Produce Research Committee and the Wheat Industry Research Council. The Government in the last few years has been developing more of these research organizations, but behind all this I sense a lack of coherent direction. There is no conscious research policy; and this gives one the feeling that our very limited resources are not being applied in the best channels. The Australian Wine Research Institute is registered under the Companies Act in South Australia. That body is responsible for research. We have the Wool Research Committee and the Australian Atomic Energy Commission. The Atomic Energy Commission is charged with carrying out important and fundamental research, and it should come under some direct ministerial head. Medical research is carried out under the auspices of the Minister for Health. The National Health and Medical Research Council and the Medical Research Endowment Act are the responsibility of the Minister for Health. This diversification of research activity must seriously react against the efficient use of our limited research capacity. Forestry research is the responsibility of the Minister for the Interior. The Department of Supply has almost extravagant research facilities at its disposal on the defence side.

We in this country should take the steps that have been taken overseas. I look in vain for provisions similar to those applied by the Government of the United Kingdom. I understand that during the recent election campaign in the United Kingdom the Prime Minister of Great Britain undertook to set up a Ministry of Science. In the United Kingdom there is at present, in effect, a Department of Scientific and Industrial Research. A document entitled “ Government Scientific Organization in the Civilian Field “, published by the United Kingdom Stationery Office, states -

The principles underlying Government scientific organization may be stated as follows: -

The Lord President of the Council is responsible for the formulation and execution of Government scientific policy. He is advised by the Advisory Council on Scientific Policy on general questions which relate to the whole field of civil science, and by the Privy Council Committees for Scientific and Industrial Research, Medical Research, and Agricultural Research and Nature Conservation on questions which lie within the spheres of interests of these bodies.

That statement outlines a coherent policy being pursued under the direction of one Minister of the Crown. The lack of that central control is one of the serious administrative deficiencies that flow from this Government’s activities over the last ten years. It has diversified its activities through authorities that are not directly responsible to the Parliament. Even when they are under a responsible Minister, they are diversified in such a way that one has the feeling that they are not functioning directly under the Government. I believe that it would be of great advantage to the Commonwealth to have all our research bodies - the Commonwealth Scientific and Industrial Research Organization, the Australian National University, the Australian Atomic Energy Commission, and the various bodies carrying out research into the primary industries - brought under the same control, whether it be called a ministry for research, a ministry for science, or a ministry for scientific and industrial research. That should be the principal job of the minister in charge, not a sideline to his main portfolio. Perhaps all these activities could be put under the control of the Minister for National Development. In any event, it is high time the Government gave serious consideration to the proper concentration of our research facilities under one head, so that we will get full value, not only for the money we spend, but also from the even more valuable and rare intellectual resources that are at our disposal.

Mr TURNBULL:
Mallee

.- This is one of the very pleasant occasions when the whole of the Parliament agrees with a bill and will vote for it. I am very happy to be in full agreement with members of the Opposition on this occasion. Many things have been said in this debate, and I do not want to repeat them. However, I want to mention one or two matters which I think are of vital importance, lest some of the things that matter most be overlooked.

We know that the greatest crop that we have in Australia is grass. That is our most valuable crop. Through myxomatosis, the Commonwealth Scientific and Industrial Research Organization, in association with Dr. Jean McNamara, has done a wonderful work in saving our grass - not just in saving what the rabbits would otherwise have eaten, but also in saving what the rabbits would have destroyed had myxomatosis not destroyed the rabbits, and in preventing the erosion caused by rabbits which destroys the very roots of the grass.

I support the bill, and members of the Australian Country Party behind me also give it full support. It is a well-known fact that every member of the Country Party represents a rural constituency, and is therefore vitally interested in the important functions of the C.S.I.R.O. that have been instanced to-night by many honorable members. I want to mention one or two things into which I should like to see the C.S.I.R.O. continue very definite research. One of them is the bee-keeping industry. Some people do not think that bees are of great importance but, in fact, bees have a great value in the pollination of many of our most valuable crops. At the present time, the bee industry is being menaced by a disease called nosema. The Waite Institute and the C.S.I.R.O. are conducting research into this disease in an effort to overcome it, but it is a mystery disease and its cause is difficult to discover. A bee-keeper may not know that he has it in his hives until some day when he goes to collect the honey he perhaps finds that many bees have been killed by the disease and that his production is down. Such is the importance of bees in the pollination of crops that in many places apiarists are paid by growers to keep their bees in the vicinity of growing crops. One crop which relies to a great extent on bee pollination is lucerne. 1 ask the C.S.I.R.O. and the Waite Institute to intensify their research into this disease, so that the bee population of Australia may be preserved, because by our preserving the bee population our productivity will not only be maintained, but can be extended.

The C.S.I.R.O. operates chiefly in two ways - first, in bringing about greater production and also in preserving what we have produced in the way of stock, sheep and cattle, and what we are in the course of producing, such as crops. A man may have a crop of vine fruit, wheat or some other cereal, potatoes or any other primary product, and just when it is nearly ready to harvest, and would give the primary producer the return he looks for, as well as help to feed the population, his crop is menaced by some disease. Therefore, it is of vital importance that the C.S.I.R.O. operate in order to save crops menaced by disease. The primary producer goes to much expense in raising crops to a certain stage, but, having reached that stage, they are often destroyed by disease, and the work and expense of the producer, and the food benefit to the Australian community as a whole, are lost.

Honorable members have mentioned several things to-night that are necessary to increase the activities of the C.S.I.R.O. I suggest that the present measure will do much to overcome some of the difficulties mentioned by honorable members. It is stated in the Minister’s second-reading speech that the extent of the load which the executive of the C.S.I.R.O. is now carrying can be gauged from the fact that the organization’s budget has grown from £2,000,000 in 1949, when the principal act was passed, to more than £8,500,000 in the current year. The present executive of the C.S.I.R.O. has been carrying a heavy burden, but with the addition of the executive officers for which the bill makes provision, I believe many of the difficulties that have been mentioned by honorable members will be overcome. At this late hour it is not my intention to speak at length. Everybody knows that on many occasions in this House I have paid tribute to the Commonwealth Scientific and Industrial Research Organization and have advocated that the Government give it more financial assistance and every aid possible.

It will be remembered that on one occasion I had under my desk in the House a skeleton weed plant. Many honorable members did not know what skeleton weed was, but when I was able to show a skeleton weed in this House they realized the menace that that plant holds for our crops. I wish to refer to that menace briefly, because in my electorate, around Hopetoun, skeleton weed is becoming a menace to cereal crops.

People in some parts of the Riverina ask of the skeleton weed, “ Is it a boon or is it a curse? “ That is because when skeleton weed reaches the stage where it prevents the satisfactory growth of cereal crops, fat sheep or lambs can be turned on to the skeleton weed and in some districts the plant proves very beneficial for its fattening qualities. But in a wheat-growing district skeleton weed must be kept down. I have asked the C.S.I.R.O. to look into the matter of fighting skeleton weed in the wheatgrowing areas of Victoria. This is very necessary.

There is also a disease that is menacing the dried fruits industry. The name of that disease is nematodes. The nematodes attack the very root of the vine, and it is not long before the whole vine perishes. Vines which are being brought into production in country where the disease is rife can be attacked by this disease, and the whole crop be lost.

Sitting suspended from 11.30 p.m. to 12 midnight.

Thursday, 29th October 1959.

Mr TURNBULL:

– In summing up, let me say this: [Quorum formed.] I have directed attention to one or two of the diseases that are perhaps not well known to most people. I have spoken about the need to preserve the bee population, and I have referred to the value of bees in the pollination of our crops. I have asked that more intensive research be made into the disease nosema, and I have referred to nematodes, of which probably many people have never heard, but which are menacing our vines and fruit trees. I have pointed out also that skeleton weed is menacing a large area of Victoria’s wheat land, and I have asked that intense action be taken to eradicate it.

I am a member of the Australian Country Party and, on behalf of the thousands of primary producers whom I and my colleagues represent, I congratulate the Commonwealth Scientific and Industrial Research Organization on its achievements. We shall continue to give it every support. We hope that this bill will do much to extend the organization’s activities. We wish it every success.

Mr KEARNEY:
Cunningham

– I join with the honorable member for Lalor (Mr. Pollard) in supporting this bill. It is abundantly clear that the Commonwealth Scientific and Industrial Research Organization is a government institution which reflects the greatest credit upon those who control it. I regard the Commonwealth Scientific and Industrial Research Organization as probably the most valuable government instrumentality in this country. It is projecting its work into the future; it is revealing, by scientific research, facts that were previously unknown, and it is contributing to the overall wealth of many industries by the discoveries that it has made. As it continues to extend its activity, it will continue to improve our standard of living by increasing income and reducing working hours.

The fact that the Commonwealth Scientific and Industrial Research Organization this year is attracting an expenditure of £8,500,000, as compared with an expenditure of £2,000,000 when it commenced operations, is only a normal development. I concur in the suggestion that has been made during this debate by honorable members on both sides of the House that every impetus should be given to the organization to enable it to expand its activities in as many avenues as possible.

I suggest that the Commonwealth Scientific and Industrial Research Organization could supplement the research that is being done in New South Wales into the elimination of smog. Port Kembla, which is the home of the steel industry on the south coast of New South Wales, is in my electorate, and there we have the highest smog density in the world, lt is greater than that of Pittsburg, the Ruhr and the industrial areas of Great Britain. That has been established by tests that have been carried out. Production is growing in the area. Australian Iron and Steel Ltd., and other companies in the steel industry, have indicated that within the next two years the production target will be increased by some 2,750,000 tons. This means that Australia will maintain its position among the world’s steel producing countries. During the last five years our steel production, relatively speaking, has been greater than that of any nation in the world.

Smog is killing people and, for that reason, we must try to eliminate it. Industry as a whole, and State authorities, are making contributions towards the elimination of smog, but those contributions are to date sluggish in their effect. If the Minister in charge of the C.S.I.R.O. were to analyse this matter closely, I am sure that he would come to the conclusion that the organization should direct some of its efforts towards this field. The same applies to the production of metallurgical coke. Developments in this field indicate that new methods are having some effect. Great changes are taking place in this aspect of the coal industry due to our increased knowledge of various matters. Coke is an important adjunct of the activities on the south coast coalfields and is basic to the steel industry. The C.S.I.R.O., through its research establishments, is already making a contribution, in a general sense, to these developments. I do not criticise in any way the extent of that contribution, but I emphasize the need for an acceleration of the organization’s activities. I should like to see the Government introdce a proposal to increase expenditure for this purpose. 1 wish to refer to another important matter in relation to our vast coastline and the adjacent sea-bed. Untold wealth is to be obtained by a greater degree of exploration, as it were, and the acquisition of scientific knowledge of seaweed and other growths on our coastline. Chemicals and food, perhaps, can be produced from them. As a result of the extraction of some ingredients from seaweed, a direct contribution has been made in the United States of America towards the relief and ultimate elimination of ulcer conditions. Initial tests have proved to be successful, and large scale clinical trials are now in progress. The activities in America have opened up a field which justifies some emphasis and attention in Australia.

We have not yet reached the end of the road in regard to the materials that are used in the construction of houses. Despite what was said during a recent debate, housing remains one of our major problems. The fact is that we have not been able to produce in Australia a home for the average person at a reasonable cost. Although the C.S.I.R.O. has made some contribution in this field - I refer to the advances that have been made in concrete and earth construction - it should increase its research activities for new materials. This matter must be emphasized. Private industry enters these fields with reluctance unless it can see the prospect of bringing into being a new material which will return a greater profit than any existing material does. If the profit motive is destroyed, private enterprise does not pursue any project. That is why private industry has failed in conducting research into various matters. The expenditure on research by most private organizations is niggardly when measured against the wealth that is taken out of industry.

The C.S.I.R.O. has produced dramatic results in Australia, and I feel quite justified in supporting the remarks of the honorable member for Lalor. I was pleased to hear the honorable member of Mallee (Mr. Turnbull) say that this is a red letter day in his political history, because this is the first occasion since I have been here that I have heard him agree with any suggestion that has come from this side of the House. I am in full agreement with his remarks about the activities of the Common wealth Scientific and Industrial Research Organization and the need to continue its work on the destruction of weeds. According to authoritative statements, weeds are costing this country anything from £50,000,000 to £100,000,000 a year in losses in many ways. What the honorable member for Mallee said is very true. He, of course, is an expert on this subject. I support his remarks generally and I emphasize that the pastoral and agricultural industries are losing a great deal every year as a result of weed infestation.

It is said that the wool industry loses some £30,000,000 a year as a result of vegetable and other faults in the fleeces due to the presence of burrs and weed seeds in the wool. This is an important factor. Each year, the wheat industry loses something like £10,000,000 because of the intrusion of weeds which vie with the crops for nutriment and reduce the yield from each acre. This is of great importance to this country. The dairying industry, also, is similarly affected. Weeds are a great pest in that industry and they retard the development of the industry in many ways.

I was recently on the Atherton Tableland, in north Queensland, and I found that the dairy farmers in the Malanda area were greatly concerned about their pastures. They pointed out that they were not able to grow certain highly effective pastures which were of great value in many other parts of Australia. Those pastures were not suited to the conditions of high rainfall and high temperature in that area. At the time, these dairy farmers were pressing for the C.S.I.R.O. to establish a research station in the district in order to undertake research for the benefit of the dairying industry, which is very important to Australia and to the Atherton Tableland - an area which, although of vast size and having tremendous potential wealth, at present supports a comparatively small population.

In these fields which I have mentioned, the C.S.I.R.O. is making a positive contribution to Australia’s welfare, Mr. Deputy Speaker. I reaffirm the support that we of the Australian Labour Party give to this organization and its work. However, I close on a note of criticism. Every endeavour should be made to accelerate the development of the potential of the

C.S.I.R.O. and of its practical work in the fields named by previous speakers and by me.

Mr IAN ALLAN:
Gwydir

– Mr. Deputy Speaker, I rise to make a brief contribution to this debate in respect of one of the activities of the Commonwealth Scientific and Industrial Research Organization which I regard as most important. I want to discuss it now because it was not mentioned in the secondreading speech made by the Minister for Health (Dr. Donald Cameron). I refer to the Soils Division of the organization. I know, from my own experience in trying to enlist the support of the C.S.I.R.O. in certain work in my own area, that this division is desperately short of trained staff. The division undertakes work which could unlock tremendous resources for the development of agriculture in Australia.

In my own district, there is an area of about 50,000 square miles of black-soil country. It is well watered, but nobody knows what its potential is, because the soil has never been tested adequately in order to ascertain whether it is suitable for irrigation. Such work can be done only by scientists of the C.S.I.R.O. with their special equipment and resources. We need research stations to test the suitability of the blacksoil country in the Gwydir River basin, along the Barwon River and in the Namoi River valley, for the growing of valuable crops under irrigation. But the staff of the Soils Division is so limited that the staff available in New South Wales has to be concentrated, at present, on a long-term project in the Kempsey area, on the coast. At the present rate of progress, unless the staff of the division is augmented, it will be many years before the area of which I speak, and in which I am particularly interested, because I believe that it has the greatest potential in Australia for its size, will be surveyed and studied by the trained and highly skilled officers of the C.S.I.R.O.

We must have that kind of study before we can proceed to the construction of dams for the water conservation and irrigation schemes which we need, and which, in themselves, are long-term projects. The first essential is to establish the factual data which will justify the building of dams, and for that, we look to the C.S.I.R.O. We need its assistance in order to prove beyond doubt that, under irrigation, our black soil, in the north-west of New South Wales, will grow valuable crops. When we have that data, we can advance further and request the New South Wales authorities to build dams. We can then show them that the returns from the crops grown under irrigation will soon pay for the dams.

I am sure that, in this vast, well-watered plain, there is to be found tremendous wealth for Australia. This area is ready to be unlocked, and if this bill will increase the ability of the Soils Division of the C.S.I.R.O. to undertake studies of this kind, the expenditure envisaged under this measure will be repaid many hundreds of times over during the next generation or two.

Mr BANDIDT:
Wide Bay

– Mr. Deputy Speaker, I, too, should like’ to congratulate the Commonwealth Scientific and Industrial Research Organization on the excellent work that it is doing. Honorable members in all parts of the House have paid well deserved tributes to this organization. I remind the House that there is still more work to be done, and that it will entail the expenditure of much more money. As the Minister for Health (Dr. Donald Cameron) has said, the organization’s budget has grown from £2,000,000 in 1949, when the existing act was passed, to more than £8,500,000 in the current financial year. That may seem a large sum, but, as has already been mentioned, the losses caused in Australia by ticks alone exceed £10,000,000 a year.

I should like to mention two matters with which I believe the organization ought to be increasingly concerned in the future. The first is the eradication of ticks. In the Wide Bay Division, there are certain small areas in which it is claimed that ticks will not thrive. The same claim is made for small areas of country in an adjoining division. The question is: Why do ticks thrive in one area and why do they apparently not live at all in other small areas? When I inquired about this, I found that, because the C.S.I.R.O. did not have enough resources and enough staff it could not pursue this interesting inquiry as to why there are no ticks in certain areas.

I should like to mention another field in which the organization can render increasing service - that of the study of trace elements. I know of one property in the central west of Queensland where, through the application of scientific knowledge and for the expenditure of less than £40, the value of the fleece of more than 6,000 sheep was increased by over £6,000 in one year. This was done by overcoming a trace element deficiency in the soil. I know of other parts of Queensland where similar good results have been achieved by supplying trace elements.

I know that it will be a very big job for any body of scientists to classify our soils according to the deficiency of trace elements, but the advantage of such a classification can well be understood when we realize that once soils are classified a farmer or a grazier can go straight ahead and, instead of having to experiment over a considerable period, he will know what trace elements are required to get the maximum results. I believe that once our soils are classified, even if only from the point of view of trace element deficiency, our wealth will be greatly increased. One difficulty is that the deficiency of trace elements for growing purposes cannot be established merely by an analysis of the soil. It is necessary for investigations to be conducted over a period. I trust, therefore, that in the future money and experienced staff will be made available so that we can get the knowledge that we need to improve our soils.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

Bill - by leave - read a third time.

page 2431

INTERNATIONAL WHEAT AGREEMENT BILL 1959

Second Reading

Debate resumed from 12th August (vide page 153), on motion by Mr. McEwen - That the bill be now read a second time.

Mr POLLARD:
Lalor

.The bill provides for the repeal of the International Wheat Agreement Act 1956 and for approval to be given to acceptance by Australia of the International Wheat Agree ment 1959, signed on behalf of Australia at Washington in the United States of America on 24th April, 1959, in accordance with Article 35 of that agreement. It is a very short bill, but it is of very great importance to the wheat-growers of Australia and, of course, to the people of Australia. Taking the wider view, it is a bill that has some significance to wheatgrowers all over the world. It is the outcome of efforts to solve most unsatisfactory problems surrounding the wheat industry in many countries.

The struggle to obtain an international wheat agreement amongst the wheat-growing countries, and to bring them into association with consumers in other countries, goes a long way back. I understand that the first effort to get the wheat exporters of the world together with a view to arriving at some arrangement which would give stability to wheat production and to wheat marketing, was made when a conference was held in Rome under the auspices of the International Agricultural Organization. That conference decided to call another conference at a later date, and in 1933 the Canadians called such a conference. It was attended by exporters and importers. For a long period further endeavours were made to reach agreement on the best way to handle the problems of the wheat industry and to effect some stability in price. Between 1942 and 1947, efforts were again made to get the countries most concerned to agree to some international arrangement covering their marketing operations.

In 1949, this Parliament enacted legislation to provide for Australian participation in an international wheat agreement. A price range was set out, and the quantity of wheat to be disposed of under the terms of the agreement amounted, in round figures, to some 500,000,000 bushels. The participating exporters were the United States, Canada and Australia. The participating importers included the United Kingdom, which was the largest importer under the agreement, and many other European and Asian countries. That agreement, the first ever to be successfully implemented, was implemented by the Labour Government of the day. That was perhaps due more to fortuitous circumstances than to any particular virtue in the

Labour Government, except that it can be said that it was a government that was successful at Washington. I believe that this success, in the main, was due to the efforts of the competent public servants that the Government was able to send to Washington to participate in the discussions that ultimately were successful.

It is worth noting that on the occasion when the first bill to provide for a workable international agreement was introduced, the present Minister for Trade (Mr. McEwen), who then led the debate for the Opposition, said that the Opposition viewed the measure as one taking this country along the road to socialism. That agreement ran from 1949 to 1953. In 1953 the Minister for Trade introduced a measure to re-enact the International Wheat Agreement. He introduced similar bills in 1956 and in 1959. It appears that all the tints of socialism have been somewhat miraculously swept out of the bill. It is one of those strange turns of the wheel of political fortune that something that is introduced by one government, a socialistic enactment, becomes almost a capitalistic virtue when introduced by the same individual placed in other circumstances in the Parliament of this country. However, I think it can be said that the agreement of 1949, which ran to 1953, was a factor in substantially stabilizing wheat markets around the world. That it was re-enacted in 1953 shows that the Government which was then directing the activities of this country, and which is the present Government, as well as the governments of all the other participating countries considered it was worthwhile. The same goes for its re-enactment in 1956, and again in 1959.

It is true that this measure does not provoke the same debate in this Parliament to-night as it did in 1949. I would say that this is due to a set of circumstances which are rather wonderful in themselves, when one looks back, factually, over the period from 1949 to 1959 - ten long years - and finds that despite the fact that in the latter part of that period and, indeed, right up to the present date, the wheat industry around the world has been confronted with some very difficult circumstances. In the first place there has been a huge over-supply, which the under-nourished peoples of the world at least could not buy, stored in the great wheat-producing countries, in the absence of an agreement of this type which, in itself, has some inherent virtues. Indirectly it has been a factor in bringing together heads of governments and representatives of exporting and importing countries and has enabled them to find a solution to the difficulty which has confronted the world during the last ten years. That has been achieved, not without difficulties to governments but without difficulties which were known to wheat-growers in the period from 1920 to 1949.

That was a period when there was practically no international co-operation, no international wheat agreement and, as far as this country is concerned, no local organized marketing scheme. It may be just a strange coincidence - and that is putting it modestly - or, in a boasting sense, something of a constructive nature, when we look back on the facts and find that as far as the International Wheat Agreement was concerned, the Labour Government of the day played a magnificent part. The Labour Government was the founder of the organized marketing of wheat in this country and put into operation the first post-war wheat marketing scheme that this country has ever known. It still operates successfully to the benefit of the national economy, the wheat farmers and all those who are dependent upon them.

One naturally looks at the circumstances surrounding the price factor over the last few years and asks oneself seriously what would have happened here about two years ago, when we had substantial crops and substantial quantities of wheat in store, in the absence of the International Wheat Agreement and a willingness on the part of the wheat growing countries to confer. Over and above that again, there was the protection of a guaranteed price for all home consumed wheat at the cost of production and, in addition, on 100,000,000 bushels of wheat for export. What would be happening now without the protection of the local Wheat Stabilization Act and, to some extent, the International Wheat Agreement, when there are 94,000,000 bushels of wheat stored in the silos of this country and, given favorable weather next month, at least 200,000,000 bushels will be added to those stocks?

Every wheat-grower in Australia knows he has the protection of the guarantee afforded by this agreement that he will receive not less than the cost of production of what he sells in Australia and up to 100,000,00 bushels exported. He stands in a sound economic position. So does his local store-keeper, and so do all those to whom he has financial obligations. Perhaps more important still, so do his hearth and home. If losses should be sustained, because we cannot quit the vast volume of surplus wheat that threatens to bank up in this country, they will be borne not by the wheat-grower, who has given of his best in labour and capital, but by the citizens of this country as a whole in accordance with their ability to pay.

These are the facts that one has to look at in comparing the advantages of organized marketing on an international scale and internally. The granaries of America are bursting with grain. They have an all-time record quantity of wheat stored up; and a similar condition is found in Canada. It will probably be the same in Australia also. But because the International Wheat Agreement has brought importers, exporters and responsible Government Ministers into conference, there is not the panic that there used to be. There is some restraint at least and some protection for the man, wherever he may be residing, who is responsible for producing this great staple foodstuff. There is also some degree of protection for the consumers all around the world. Nobody will be affected by the crashes which occur in agricultural production, particularly the food consumers of the various countries concerned.

I know that the Government of this country and the governments of all countries producing wheat to-day must be feeling some concern about the position which could exist and which, indeed, is looming up. I once read a truism which emanated from Broomhill, who was looked upon as one of the great authorities in the wheat industry. Broomhill said that experience in wheat-growing countries had shown that, taken over a period of ten years, the world’s wheat supplies tended to equate consumption. As far as I can see, during the last ten years and in the decade which preceded them, this view has been substantially borne out in fact. It may be that this country has to store two years’ supply of wheat, and that may happen in other parts of the world also.

It is substantially true to say that Australia is fortunately placed concerning American competition in the wheat industry. Geographically, it is situated on the fringe of available markets in which America, with its vast surpluses, cannot become a menace. I know that some people think that by threat, rather than by negotiation, people can be bluffed out of dumping or under-selling or under-cutting. Some countries have boasted that they have done that with the United States of America. I refer honorable members to a statement in the last issue of “ The Wheat Situation”, No. 15, dated September, 1959. Notwithstanding the fact that we have been told that the Americans will not indulge in any practices that will damage us, the writer of this article says -

Disposals of wheat and wheat flout under Title II of P.L. 480, which provides for urgent relief donations to foreign countries, were valued at 5.5 million dollars in the second half of 1958. Of this, wheat valued at 5 million dollars was for Tunisia and flour at 0.5 million dollars for political refugees in Austria.

Donations through non-profit voluntary relief agencies under Section 302 of Title III totalled 402,000 bushels for wheat and 182,000 tons for flour while under Section 303, 3.4 million bushels of wheat were bartered for strategic materials, for goods required in foreign assistance programmes, or for construction in overseas countries. In the first half of 1958, a total of 6.3 million bushels were bartered under this Title. In February, 1959, some details were announced of a barter deal with eight West African countries-

Incidentally, these are markets contiguous to Australia - for the barter of U.S. flour for industrial diamonds valued at between 8 million dollars and 10 million dollars, delivery of the flour to take place before the end of 1959. The countries involved include Ghana, Belgian Congo, Sierra Leone and Nigeria, while the quantity of flour likely to be shipped is estimated at between 112,000 and 140,000 tons.

I ask honorable members to note this -

The Administration has requested Congress to extend Title I of P.L. 480 for a further twelve months from 1 January, 1960, wilh further funds totalling 1,500 million dollars.

That is the equivalent of about £750,000,000 in Australian currency. So those who think that the Americans are going to refrain from disposing of their wheat to foreign countries either by way of straight-out gift or dumping prices have another think coming to them. But I still think that the International Wheat Agreement is valuable. After all, it has worked satisfactorily for ten years and the fact that in the past we have not had from it the advantages which we had hoped to enjoy, was due largely to the fact that prices remained good and the protection accorded by the agreement was not as high as it would have been if prices had collapsed.

Let us look at what this agreement means to Australia. First, let us consider the countries which are parties to the agreement as exporters. It will give honorable members some idea of the change taking place in the pattern of wheat production throughout tha world. Italy is now an exporter. Immediately after the war Italy was one of Australia’s best customers. Mexico comes into the agreement as an exporter, as does Spain, which was formerly an importing country. One of the old exporters is Canada. Argentina came into the last agreement as an exporter. The United States is one of the original exporters. France was an importer under the first agreement. She is now an exporter. And, of all countries in the world, Sweden now becomes an exporter. In all, there are 30 importing countries parties to the agreement. The most valuable among them is the United Kingdom, which has undertaken to take about 4,000,000 tons of wheat. If we multiply that by 36, we arrive at the number of bushels involved. It is approximately 140,000,000.

The price factor is important. Under the agreement, the minimum price is to be 1 .50 dollars, or approximately 13s. 6d. f.o.b. Australia. That is the same minimum as was fixed under the previous agreement. The maximum price is to be 1.90 dollars, or approximately 17s. f.o.b. Australia. Both prices are subject to increase or decrease according to the freight rates which the people who take the wheat have to pay for the transport of the wheat from Australia to the United Kingdom. In 1954, I think the freight rate on wheat from Australia to the United Kingdom was about 2s. 6d. a bushel. Within about seven or eight months, it increased to about 7s. a bushel. One can understand the tremendous impact it would have on the minimum of 13s. 6d. and the maximum of 17s. fixed under the agreement if freight rates again rose to 7s. a bushel.

At the moment, freight rates are at an alltime low, but they will remain there for only so long as the people who own the charter ships are not offered higher prices for the transport of other products to other countries. The wheat-growers can be protected from exploitation and consequent damage to the agreement only if this and other governments see to it that there are always sufficient ships available under the control of the Australian Coastal Shipping Commission capable of transporting and willing to transport the wheat for Australians to other parts of the world as they did in the past.

Another factor which could affect the minimum and maximum prices is the payment of a premium for quality. I think the Opposition can say truthfully that it welcomes the return of the United Kingdom as a party to the International Wheat Agreement. The United Kingdom has always been a most valuable party. It was a tragedy indeed when the present Australian Government, by its rapacity and lack of commonsense in insisting upon a maximum of 5d. a bushel more than the United Kingdom was prepared to pay in 1953 forced the United Kingdom to withdraw from the agreement in that year.

Mr Turnbull:

– Which government are you referring to?

Mr POLLARD:

– The government of which your colleague, the Minister for Trade (Mr. McEwen), is a member.

Mr Turnbull:

– That is quite wrong.

Mr POLLARD:

– It is quite right. The United Kingdom was driven out of participation in the agreement because Australia ganged up with the United States and Canada in pressing the United Kingdom for a maximum of 5d. a bushel more than she was prepared to pay.

Mr Turnbull:

– You cannot blame this Government.

Mr POLLARD:

– Of course I can blame this Government. What are you talking about? This Government negotiated the second wheat agreement. This Government was in office in 1953. Who else could you blame? The gravity of the mistake is obvious now at a time when the world is bulging with wheat. On this occasion, the Government has wisely agreed to accept a maximum of 1.90 dollars instead of 2.05 dollars as provided under the previous agreement, and, had it shown the same wisdom in 1953 the United Kingdom Government would not have withdrawn from the agreement.

Mr Turnbull:

– That is completely wrong and you know it.

Mr POLLARD:

– It is not completely wrong. The records are there. How is it wrong? I am stating facts. I shall explain the whole thing to the honorable member privately afterwards.

There are some differences in the operative provisions of the agreement. For instance, countries which were parties to the old agreement were allotted certain fixed quotas which they could sell to importing countries at the minimum or the maximum price or at any price between the minimum and the maximum. Under the new agreement, the quantities which may be taken by importers from exporters are fixed at a certain percentage of their previous commercial transactions. Speaking from memory, I think that under the old agreement the United Kingdom would have a contract to take about 177,000,000 bushels.

We find that in the agreement, which should be a schedule to the bill - and I will have something to say about that in a moment - the United Kingdom is committed to take 80 per cent, of her normal commercial requirements of wheat. Japan has booked up for 50 per cent, of her normal requirements, and it is said that Japan is binding herself to only 50 per cent., because of annoyance at her inability to obtain a lower minimum price. New Zealand is committed for 90 per cent, of her requirements. This is understandable. Being so close to Australia, and this country being her traditional source of supply, she comes close to the 100 per cent, mark. Strangely enough, the only signatory to the agreement that has booked up for 100 per cent, of requirements is the Vatican City. This is probably a very wise move. To make sure that there is no fiddling about and no speculating in futures, the Vatican has booked up immediately with Australia for 100 per cent, of requirements.

Mr Adermann:

– Not necessarily with Australia.

Mr POLLARD:

– Not with Australia, but with the exporters. Apparently the Vatican City recognizes the great value of co-operative selling and buying.

When I first obtained the bill, and the brochure associated with it, headed “ International Wheat Agreement “ and giving details of the agreement that is to be signed eventually by all the countries that agree to come in, I wondered - and the Minister may be able to inform me - why the practice followed in the past has not been adopted, and why the agreement has not been incorporated as a schedule to the bill. This was done in 1949 and it has been done, I think, since that time - although I speak subject to correction. This method gives honorable members a right to debate the schedule to the bill. I do not know where I will stand in the committee stages. Rightly or wrongly, I assume that in the committee stages honorable members will be able to debate only the actual clauses of the bill, about four in number. I do not know what the position is with regard to debating all the articles and all the clauses of the agreement itself. We find that there are 37 articles, and there are sub-clauses and clauses. I do not know just what privileges the Parliament will accord me or any other honorable member.

Perhaps the Minister can tell us why the new practice has been adopted, because this agreement covers subject-matters which, if the House is interested in this all-important subject, should be subjected to very critical examination. They are the very meat of the agreement. Therein are contained the provisions for signatories to the agreement to observe the requirements of prices and percentages, and to lodge with the International Wheat Council information concerning all transactions inside or outside the terms of the agreement. The agreement sets out the way in which the International Wheat Council will continue its existence. The council carried out practically all the administrative work under the previous agreement. The agreement also lists the countries concerned. Perhaps the Minister can enlighten me as to where we stand. I am sure that honorable members on the Labour side who are present in the chamber - and they are very numerous when compared with those present in the Country Party corner or on the Liberal side - would like to contribute to the debate and have the opportunity of discussing these important articles in the agreement.

Mr Adermann:

– I cannot see why clause 4 would not include the agreement.

Mr POLLARD:

– This may help us out. When we come to a discussion of clause 4, I may be able to make some comments on article 7, and on article 14, which establishes the datum quantities. I may be able to get some clear opinion on what that phrase means. I spent quite some time in considering it.

Mr Adermann:

– Clause 4 involves the agreement.

Mr POLLARD:

– Then when clause 4 is discussed we can say anything about the agreement. I think the Minister has solved our problem, and I am sure that honorable members in all parts of the House will avail themselves of the opportunity they will have when clause 4 comes up for discussion.

I would like to say that those responsible for the first agreement showed great wisdom with regard to the form and composition of the council that administers the agreement. The general administration is dealt with under article 22, the constitution of the council being set out. Then we turn to article 24, where we find how the voting powers are exercised. We find that there are 1,000 votes for the exporting countries, split up fairly accurately in accordance with the proportion of supplies that they provide as exporters. Then there are 1,000 votes split up amongst the importing countries. One of the most valuable features of the agreement is the provision for consultations by representatives of the exporting and importing countries.

I will say no more on the matter. The measure has the blessing of the Opposition. We were the founding fathers of the agreement in this Parliament. We met very hostile criticism from the members of the Country Party at that time. They offered the most embittered opposition. We were accused of railroading the country down to the furnace of socialism. It is most satisfying to see that the Minister and his colleagues are quite prepared to come down to the fiery furnace of socialism with us.

They have moved right over, if this is indeed what one can justly call a socialistic measure.

Mr FAIRBAIRN:
Farrer

– I must apologize for detaining the House at this late hour, and I will try to get through my remarks as quickly as possible. The honorable member for Lalor (Mr. Pollard) has said this is a most important measure and that we should subject it to critical anamination, because the wheat industry throughout the world is facing some very severe problems. I think we should congratulate the Minister who was responsible, in conjunction with representatives of the other wheat importing and exporting countries, for re-negotiating this wheat agreement, because of the tremendous problems that are being faced. The honorable member for Lalor has pointed to many of them. One arises from the tremendous surpluses that are being held by many countries, and because of this alone it must have been particularly difficult to re-negotiate the agreement in this form.

There were very many difficulties in the previous agreements. For one thing, as the honorable member for Lalor has pointed out, the United Kingdom was not a party to the last two agreements. The honorable member rather accused this Government of elbowing the United Kingdom out. He must realize, of course, that the two great wheat exporting countries of the world who were responsible for deciding the price that was to be put in the last agreement were the United States of America and Canada. Obviously those are the two countries that decided the price. Australia, being a very small exporter by comparison, would not have a say in what the price was to be. To suggest that this Government had elbowed the United Kingdom out was quite absurd.

There was the problem also of surplus disposal deals. This problem is going to be with us for a long time, because, unfortunately, the further we go the greater these surpluses appear to be. There was also the problem that only a small percentage of the world trade in wheat was covered in the last agreement. Obviously, if this was to be a really satisfactory wheat agreement, the area covered had to be increased. As we all know, the Minister for Trade (Mr. McEwen) went to Washington and put

Australia’s views on the disposal of the surplus stocks, and on the sale of wheat generally. He then sent over the Department of Trade officials who took part in these discussions.

The present re-negotiation of this agreement is particularly satisfactory. For one thing, the floor price has not been dropped, in spite of the fact that there are enormous surpluses and, normally speaking, under the law of supply and demand one would expect great pressure to be placed on the exporting countries to have prices reduced. Admittedly, the price has been reduced on the maximum scale by some ten cents, but on the minimum scale it has not been reduced at all. It has remained where it is. Secondly, the United Kingdom, the world’s greatest importer of wheat, has been brought into this plan and is to take about 80 per cent, of its requirements of wheat through the International Wheat Agreement. This has resulted in the total area which will be covered by the agreement being stepped up to provide about 420,000,000 bushels, whereas previously the amount was about 295,000,000 bushels.

Lastly, the new agreement, if it does nothing else, will assist in the disposal of this enormous surplus of wheat - mainly disposals by the United States, but also to a certain extent by Canada. The disposal of this surplus wheat is probably the greatest problem that the wheat industry is facing to-day. The problem is how to continue normal orderly commercial marketing and at the same time dispose of these tremendous surpluses. The United States alone is expected to have a carryover of 1,341,000,000 bushels, which is 190,000,000 larger than the whole world trade in wheat and flour during the year 1957-58. That is the carry-over in one country, not taking into consideration Canada, Australia and other countries. It makes us realize the tremendous difficulties involved in storing and disposing of this product.

The Minister in his second-reading speech gave us his views of the noncommercial terms on which the United States has been offering this wheat. It is a particularly difficult problem. You have on the one hand the United States with its colossal store of wheat, and you have on the other hand Asians who are short of food and short of the finance necessary to buy that food. The Americans are a particularly generous people. I think they have been more generous than any other people in the world’s history. They have been assisting under-developed countries. In doing so they see a means of reducing their surpluses while at the same time assisting some of the under-developed countries. But this poses terrific problems, particularly in the case of India, which is a country to which Australia used to sell something like 37,500,000 bushels. Canada has agreed to supply wheat to India on non-commercial terms. No payment is required for three years, and very long terms were given. The United States also came in and more or less gave an amount of 100,000,000 bushels to the Indians.

This may be very good for India, but it poses tremendous problems for Australia, which used to sell a large proportion of its wheat to India. During the last year we sold 500,000 bushels of wheat to India whereas previously we sold 37,500,000 bushels a year to that country. It sounds very well to say that you are giving wheat to under-developed countries, but in actual fact the person who is starving or on very low rations does not get the wheat given to those countries, as we know. When wheat is given to the Indian Government, or to the government of any other country, that government sells it to the public in exactly the same manner as normal commercial wheat would be sold. The profits from the sale are placed in a special fund’ known as a counterpart fund. This is the system that the United States uses, and it is. also the system which the Australian Government has used under the Colombo Plan. This special counterpart fund is then used’ as a long-term loan in the country concerned. It all boils down to the fact that in these disposals the United States is not donating wheat at all. What it is really doing is to make a monetary loan, at thesame time using this system as a meansof getting rid of its surplus wheat, at theexpense of Australian wheat or wheat fromsome other countries which used to be sold’ to India in accordance with normal marketing principles.

So we have to consider what chance Australia has of selling its wheat when we are completely undermined by the dumping of large quantities of American and Canadian wheat into markets which are traditionally ours. If I may give an illustration, the same position would exist if Qantas, for example, were to decide that it had a lot more aircraft than it needed and handed over to the Indian Government half a dozen of its Boeings. In those circumstances, what chance would the Boeing company have of selling its aircraft to India? Australia would have already saturated, with gift aircraft, a market in which normally the Boeing company might expect to sell its aircraft. Exactly the same sort of thing is happening in regard to wheat. We are trying to sell wheat in a market where wheat is being given away in tremendous quantities. The result is that we are cut out of the market completely. 1 think we have to ask the United States to consider the problem caused by its dumping of its surplus wheat. After all, this surplus has been built up as a result of a support price paid by the American Government to American wheat-growers. This support price has encouraged the production of wheat in considerably larger quantities than can ever be used by the world. The United States will have to take some action. It has tried this year what is called the soil bank system. The funny thing is that with the soil bank system growers have discovered that when they withdraw many acres from production they produce more on the remaining acres than they produced before they withdrew land from production.

Mr Pollard:

– That happened in Australia, too.

Mr FAIRBAIRN:

– Yes. The only system that really works is that under which we worked from 1941 to about 1948. Under that system growers were licensed. If the United States cannot limit its wheat production to a manageable volume, and cannot prevent its surplus from interfering with the normal commercial sales of other countries, it seems that the only thing it can do is to institute some system of licensing so as to limit production to the amount that can be sold.

I think also that, instead of the United States making gifts of wheat, it could make cash loans to the countries concerned, which would then be able to buy the wheat they required. This would have exactly the same result as the present practice, because, as I pointed out, the starving peasant, wherever he is, does not obtain his wheat any cheaper, whether it is a gift from the United States or is bought on normal commercial terms from Australia. The peasant still has to pay exactly the same price, but under the present system used by the Americans the government of the recipient country sells the wheat, pockets the money, and uses it for developmental purposes.

In .conclusion, I want to touch very briefly on the question of how we can make Australian wheat more competitive. After all, we still have to sell in competition with the rest of the world. The Australian wheat industry, in my opinion, is the most inefficient .of our primary industries. That is not the wheat-growers’ fault. The trouble is the way in which it is marketed and the way in which the growers are paid for it. If the Australian wheat-grower were told that he had to grow wheat of a high protein content, he would switch over to it straight away. Our marketing system encourages inefficiency. It encourages bag filler, which is very low in protein content for some reason. No government, either Federal or State, will tackle this problem. I think that if we told the wheat-growers what was necessary they would be only too anxious to co-operate with us. They have imposed a levy on themselves for research into the problems of the wheat industry. If we said to them, “You have to grow higher protein content wheat”, and we could introduce a method under which they were paid a higher price for it, I am sure that they would welcome the change with open arms.

It is a tragedy that the Australian wheat industry is so inefficient, because it has been shown that we can produce the best wool in the world and can market it in the best way. We produce at least 1,200 different varieties of wool, and the way in which it is marketed and sold abroad is highly regarded. In wheat, we have premium, f.a.q. and below f.a.q. qualities. Premium wheat is never sold abroad; it is only sold locally. For heaven’s sake, let us decide to produce the best wheat, so that we can compete with the rest of the world. I support this bill wholeheartedly.

Mr KING:
Wimmera

.- As the honorable member for Reid (Mr. Uren) has informed the House, 1 am the representative of one of the major wheatgrowing districts in the Commonwealth. Consequently, 1 feel that I would like to make a few comments regarding this bill. It seems to me a pity that such an important issue as this must be left to such a late hour - or perhaps I should say, to such an early hour. An industry that is worth over £100,000,000 is not a minor industry. Therefore, I feel that this legislation should be recognized as a very important bill to the wheat industry. 1 say at the outset that 1 support this bill. There are certainly a few anomalies the removal of which could possibly improve the industry. The set-up as far as the International Wheat Agreement is concerned could be improved. The lack of a quota system is one of the deficiencies that more or less spoil the agreement. I am very conscious of the importance of this bill, and that is why I support it. I feel it would be well for honorable members to look at the objectives of the International Wheat Agreement. I suggest that they be included in “ Hansard “.

Mr DEPUTY SPEAKER (Mr Bowden:

– Order! What does the honorable member wish to have incorporated?

Mr KING:

– The objectives of the International Wheat Agreement 1959.

Mr DEPUTY SPEAKER:

– They are not too long, are they?

Mr KING:

– No. I suggest that they could be incorporated in “ Hansard “ without my reading them.

Mr DEPUTY SPEAKER:

– Subject to there being no printing difficulties involved, leave is granted.

Mr KING:

– The objectives of the agreement are as follows: -

  1. to assure supplies of wheat and wheat-Hour to importing countries and markets for wheat and wheat-flour to exporting countries at equitable and stable prices;
  2. to promote the expansion of the international trade in wheat and wheat-flour and to secure the freest possible flow of this trade in the interests of both exporting and importing countries;
  3. to overcome the serious hardship caused to producers and consumers by burdensome surpluses and critical shortages of wheat;
  4. to encourage the use and consumption of wheat and wheat-flour generally, and in particular, so as to improve health and nutrition, in countries where the possibility of increased consumption exists; and
  5. in general to further international cooperation in connexion with world wheat problems, recognizing the relationship of the trade in wheat to the economic stability of markets for other agricultural products.

I shall now outline the improvements which I suggest are now in this legislation. As the honorable member for Lalor (Mr. Pollard) has suggested, one of the important features is the return of the United Kingdom to the agreement. I entirely agree with him. I think it is that angle of the renewal of this agreement that pleases me most. The entry of a nation with a demand for approximately 190,000,000 bushels into an agreement such as this is a very important matter. Furthermore, in the annexure to this agreement on page 31 may be seen the percentage of wheat that will be purchased by the countries that are signatories to the agreement. It is pleasing to see that the United Kingdom is going to import 80 per cent, of its requirements under this agreement. That, coupled with the other private agreement with Australia in respect of 28,000.000 bushels, and the fact that Australia’s local consumption is rising annually to the vicinity of 70,000,000 or 80,000,000 bushels, makes the disposal of our wheat much easier. It appears to me that if the population of the Commonwealth continues to increase at the present rate it will be only a matter of time before we will not be exporting wheat at all. Of course, that will be financially catastrophic to this nation. If our exports of wheat bring a return of between £50,000,000 and £60,000.000 into this country, that is not to be sneered at.

The second most important feature of this bill is the price angle. There is to be no alteration hi the minimum price of 13s. 6d. per bushel, which I think is quite a satisfactory price. To-day, there are huge surpluses of wheat in some countries. When there are large stocks of a commodity, it is very easy for the minimum price to drop. We are very pleased to see that the minimum price of 13s. 6d. has been maintained. The maximum price is of lesser importance bv virtu*; of the fact that we will be selling very little, if any, wheat at that price. The drop of 6d. per bushel in that maximum price will not affect us very greatly. As our population increases it will become easier to dispose of our wheat crop within our own country. We must not overlook the fact, however, that the less wheat we export the smaller our income will be. We are hopeful that the day when we cease to export wheat is a long way off. In the meantime it is our responsibility to see that every endeavour is made to encourage the growing of wheat rather than discourage it so that our exports can be maintained.

I direct the attention of the House to the fact that to-day Australia produces wheat more cheaply than any of the other major exporting countries. In the United States of America a huge subsidy is paid to wheat-growers. The same thing applies in Canada, France and other places, but until now the wheat industry in Australia has been self-supporting. Over a period of years the wheat industry has assisted this country’s economy to the tune of some £200,000,000. There is probably very little need for me to remind honorable members of that. When you look at the price of wheat on the overseas market and Compare it with the home consumption price since 1940 or thereabouts, you can appreciate why I say that the wheat industry has contributed considerably to our economy. In 1946-47 the price of wheat on the overseas market was 15s. 8d. a bushel and the home consumption price was 5s. 2d. That represented a loss to the grower of 10s. 6d. a bushel. In 1947-48 the overseas price was 17s. 2d. a bushel compared with 6s. 2d. on the home market - a difference of Us. 4d. In 1949-50 the loss to the grower was reduced to 7s. 6d. In 1951-52 the loss was 7s. 3d. and in 1952-53 the loss had fallen to 5s. 2d. a bushel. The overall picture seems to indicate that the economy has been assisted since the early 1940’s to the tune of something like £198,000,000. I believe that honorable members should be reminded of that fact when we are considering assistance to the wheat industry in the form of an effective stabilization plan. The industry has contributed largely to a self-supporting plan and to-day, with the low prices of overseas wheat, that reserve fund is diminishing and it could be only a matter of time before this nation will have to support that stabilization plan. So 1 suggest that honorable members, who have spoken in this debate and others should remember this when the Government is called upon to assist the industry.

I should like to say a few words about the flour industry, which is a very important facet of the wheat industry. Even honorable members opposite will agree that the flour industry is one of our major secondary industries. Unfortunately, over recent years the production of flour has decreased. The deterioration in that industry affects not only the men working in the flour mills but in some cases it affects whole country towns which rely for the employment of many of their citizens on their flour mills. Some flour mills have reduced their daily shifts from three to one and others are closing down completely. So I urge that every endeavour be made to see that in all overseas agreements concerning the sale of wheat a very high priority is given to the sale of flour.

I support this bill, and before resuming my seat I make one comment regarding the speech of the honorable member for Lalor. This may not seem a very important issue, but in his generalizing of our present stocks he stated that it was only a matter of a few weeks before we could expect approximately another 200,000,000 bushels to be harvested. I suggest that the honorable member should take a short trip through the southern States of the Commonwealth. He should go through the north-western portion of Victoria - his home State - and into South Australia. He may then change his views about a harvest of 200,000,000 bushels.

Mr IAN ALLAN:
Gwydir

– It is a pity that a bill as important as this one, dealing as it does with the International Wheat Agreement, should be debated at this ridiculous hour in the morning. Many aspects of this matter should be and could be discussed by this chamber, but, unfortunately, because of the late hour at which the debate was called on, it is quite impossible to give this bill the serious attention that it warrants. However, 1 cannot allow this occasion to pass without pointing out to the few honorable members who remain in the chamber at this late hour the peculiar significance of the International Wheat Agreement and of world commodity agreements in general.

To begin with, we must view this wheat agreement in perspective. Australia, along with Canada and possibly Argentina, to-day is the only country that produces wheat without government support and sells it on

World markets without government aid. Yet we sell only 5 per cent, of the wheat that is moved from one nation to another. The fact that we are not using our resources to the full is due largely to the agricultural policies being pursued by the large industrial nations. As was stated earlier in this debate, it is well known that the United States of America has a vast disposals programme - a vast support programme. In addition, certain countries in Europe have expensive support programmes. Italy and France have transformed themselves into major exporters of wheat since the war. That is largely the reason why manufactured goods from those countries are so costly. The manufactured goods bear the cost of these expensive commodity support programmes. The trend in recent years has been for the cost of manufactured goods to rise and for commodity prices to fall. We in Australia have, of course, felt the incidence of this trend most severely in the wool trade. Fortunately, wheat has been shielded to some extent by this agreement, and by the bilateral negotiations undertaken with other countries.

The extent of the support programmes operated by the big industrial countries is clearly indicated by a recent calculation to the effect that a 1 per cent, drop in agricultural support measures in those countries would permit the present market for wheat alone to be increased by 71 per cent. It is plain that these subsidies and supports have had a depressing effect on the prices of commodities.

There is another, and equally serious, aspect of the commodity trade generally, which should be considered. I refer to the fluctuations which occur in price levels.

In the recession which extended from 1957 to the middle of 1958 the prices of all commodities dropped by 7 or 8 per cent. - in fact, by as much as the total sum loaned by the International Bank over a period of six years. That was serious for Australia, but it was dangerous, even calamitous, for the Asian countries, which depend so greatly upon export income for their development. I repeat, wheat was shielded to some extent from the commodity drop by this agreement. However, the United Nations Organization has realized the seriousness of agricultural support programmes, which are being operated so extensively nowadays. 1 am very pleased that it has, because support programmes are slowing down the development of all the countries of the western world, as well as the underdeveloped and underpopulated areas of Asia. If the trend continues much longer those Asian countries will go under to communism. That is as sure as the fact that the sun will rise here in a few hours time.

We should allow these countries to sell their commodities at a fair price, we should shield them from the wild swinging of prices that has occurred, and allow them a fair return. If we do not, they will go under to communism. We must do what we can to curb the enthusiasm of the industrial countries for support policies, and endeavour to persuade them that the only way to prevent an otherwise inevitable war from breaking out in Asia, and to prevent communism from gaining a preponderance of power in the world, is to extend this type of agreement - the sugar agreement is another example - so as to cover all the commodities that are moved from one nation to another in the world. If we can achieve that there may be some hope of future peace and stability in the world. In fact, these agreements are really the key to lasting peace.

Mr TURNBULL:
Mallee

– In view of the lateness of the hour, I do not propose to speak for more than a few minutes, but I remind honorable members that the speakers from this corner tonight represent a vast number of wheatgrowers. The honorable member for Wimmera (Mr. King) and I represent the great majority of growers in Victoria. The honorable member for Gwydir (Mr. Ian Allan) represents a large number of wheatfarmers in New South Wales. It is only natural that we should wish to contribute to this debate. I might ask honorable members opposite whether they would not feel similarly if an important industrial matter concerning, say, the waterside workers, were before them.

I was reminded to-night of something that the Premier of Canada, Mr. Diefenbaker, said during his visit to Australia. Canada has, of course, a great surplus of wheat. Mr. Diefenbaker said, “ Birds go ‘ tweet tweet ‘, lovers say ‘ sweet sweet’, lambs go ‘bleat bleat’, but in Canada it is ‘ wheat wheat ‘ ! “ Here also it seems to be a case of “wheat wheat”.

I propose to give some figures in order to refute what was said by the honorable member for Lalor (Mr. Pollard). The honorable member said that he was pleased that the United Kingdom had once more become a party to the agreement. Naturally, we are all delighted about that, but he went on to blame the Government and the present Minister for Trade (Mr. McEwen), who was then Minister for Commerce and Agriculture, for causing the withdrawal of the United Kingdom from the agreement.

Mr Bryant:

– He was too greedy.

Mr TURNBULL:

– The honorable member for Wills, though he knows nothing whatever about this matter, is apparently prepared to support his colleague, who is completely wrong. On the occasion in question, the exporting countries had 1,000 votes. Of these, Canada had 339, and the United States of America had a similar number. So, between them, those two countries had 678 votes, or an absolute majority of 178. All the other countries together had 322 votes. Australia possessed 125 of these. The honorable member for Lalor said that Australia, with 125 votes, teamed up with Canada and the United States, which had 678 votes, and that in that way it caused the withdrawal of the United Kingdom when a price was set.

That is absolutely incorrect as I said earlier, by way of interjection. How can any one say that 125 votes influenced the withdrawal of the United Kingdom when Canada and the United States possessed between them 678 votes? A price was set, but the United Kingdom disagreed, and did not become a party to the agreement. Whether or not Australia voted with these other countries does not matter. If they had been prepared to cut the price down by, say, 5 cents, Australia would, I think, have been with them, and the United Kingdom would have come in also. It was the great exporting countries of the United States and Canada, with their substantial voting majority, which ruled in this matter. For the honorable member for

Lalor to attempt to blame the then Minister for Commerce and Agriculture is, to say the least, unfair.

Another wheat harvest is approaching. On about 1st December each year the Minister for Primary Industry announces what the first payment on wheat will be. I urge him to make that payment at least as high this year as it was last year.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment of debate; report adopted.

Bill - by leave - read a third time.

House adjourned at 1.40 a.m. (Thursday).

page 2442

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Australian Cadet Corps

Mr Daly:

y asked the Minister for the Army, upon notice -

  1. When did the Government commence the scheme to assist in the training of school cadets?
  2. What has been the cost of the scheme in each year in (a) each State and (b) Australia?
  3. How many boys have been trained (a) to date and (b) in each year in (i) each State and (ii) Australia?
  4. Is the cost of this scheme included as part of the cost of the National Service Training Scheme?
Mr Cramer:
Minister for the Army · BENNELONG, NEW SOUTH WALES · LP

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

  1. November, 1929.
  2. Costs of school cadet training in earlier years are not available, being merged in the records with the costs of other Citizen Forces training. However, the estimated cost in this financial year is £989,000. This includes cost of camp and home training, pay of cadets, pay and other maintenance costs of A.R.A. training and administrative staffs, and maintenance of equipment. On the basis of the numbers of cadets in each State, the cost, pro rata in each State, is: Queensland, £189,000: New South Wales, £329,000; Victoria, £202,000; South Australia, £55,000; Western Australia, £82,000; Tasmania, £41,000.
  3. Details of the number of boys trained prior to 1950 are not available. However, the following table shows the strengths by States in 1950 and the new enrolments in subsequent years: -

Export of Birds.

Mr Osborne:
LP

e. - On 24th September the honorable member for Lalor (Mr. Pollard) asked the Minister for Trade without notice a question concerning the export of Australian fauna. The honorable member had previously raised this matter in an adjournment debate on 12th March this year.

Cabinet recently directed that a conference of Commonwealth and State authorities be called to consider whether common policies and rules as between States could be evolved for the preservation of Australian fauna. This conference, which was attended by representatives from each of the State fauna authorities and several Commonwealth departments was held on 5th to 7th August, 1959. The recommendations made by the conference have been examined and the matter is again to be placed before Cabinet in the immediate future.

On the point of losses of fauna occasioned by trapping and transportation within the Commonwealth I would mention that the Commonwealth has no control over such matters. Except in relation to the Australian Capital Territory and the Northern Territory the questions of preservation and conservation of fauna are matters controlled by the several States. The Commonwealth does however, exercise a control over the export of fauna. This control is administered by the Minister for Customs and Excise who only permits export if the appropriate authority in the State where the fauna is trapped or bred does not object to export. I would add that in order to keep losses in transit overseas as low as possible, very strict rules have been laid down in respect of housing and feeding of fauna exported from the Commonwealth.

Aluminium

Mr Barnard:

d asked the Minister representing the Minister for Customs and Excise, upon notice -

  1. How many licences to import aluminium into Australia were issued during 1958?
  2. How many licences have been issued during this year?
  3. How many tons of aluminium were imported during 1958?
  4. What was the value of these imports and from what countries did they originate?
  5. What is the anticipated tonnage and value for 1959?
Mr Osborne:
LP

– The Minister for Customs and Excise has furnished the following answers to the honorable member’s questions: -

  1. The number of licences would convey little, since licences are issued for varying tonnages, so that the answer is better given on a tonnage basis. Licences issued in 1958 covered 12,486 tons.
  2. Licences issued to date this year covered 16,943 tons. 3 and 4. See attached sheet.
  3. Anticipated tonnage for 1959 is approximately 17,000, valued at approximately £4,500,000.

Synthetic Fibres

Mr Luchetti:

i asked the Minister repre senting the Minister for Customs and Excise, upon notice -

  1. What synthetic fibres have been imported duty free into Australia?
  2. What was the value of (a) total imports and (b) imports in each category?
  3. From what countries were imports received?
Mr Osborne:
LP

– The Minister for Customs and Excise has furnished the following answers to the honorable member’s questions: -

  1. The following synthetic fibres in the form of staple fibre or tops were admitted free of duty for the year ended 30th June, 1959: -

Viscose.

Acetate rayon.

Nylon and other polyamides.

Casein.

Orion.

Others such as polyester and acrylics and cuprammonium rayon. 2. (a) The total value of such imports was £2,837,216. (b) The break-down by classification is as follows: -

  1. Imports were made from - United Kingdom, Austria, Canada, Ceylon, France, Federal Republic of Germany, Italy, Japan, Netherlands, New Zealand. Norway, South Africa, Sweden, Switzerland, and United States of America.

Extradition

Mr Whitlam:
WERRIWA, NEW SOUTH WALES

m asked the acting Minister for External Affairs, upon notice -

With what countries does Australia have extradition treaties?

Sir Garfield Barwick:
LP

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

Albania, Argentina, Belgium, Bolivia, Chile, Colombia. Cuba, Czechoslovakia, Denmark, Ecuador, El Salvador, Estonia, Finland, France,

Greece, Guatemala, Haiti, Hungary, Iceland, Iraq, Italy, Latvia, Liberia, Lithuania, Luxembourg, Mexico, Monaco, Netherlands, Nicaragua, Norway, Panama, Paraguay, Peru, Poland, Portugal, Roumania, San Marino, Spain, Switzerland, Thailand, United States of America, Uruguay, Yugoslavia.

International Sugar Agreement

Mr Whitlam:

m asked the acting Minister for External Affairs, upon notice -

  1. Which governments have ratified or acceded to the 1953 International Sugar Agreement and the 1956 Protocol?
  2. Which of these governments have given notice that the agreement and protocol extend to their non-metropolitan territories?
Sir Garfield Barwick:
LP

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

  1. The following governments ratified or acceded to the 1953 International Sugar Agreement: -

The United Kingdom.

Commonwealth of Australia.

Union of South Africa.

Belgium.

Canada .

Republic of China.

Cuba.

Czechoslovakia.

Dominican Republic.

France.

Federal Republic of Germany.

Greece.

Haiti.

Hungary.

Japan.

Indonesia.

Lebanon.

Mexico.

Netherlands.

Nicaragua.

Panama.

Peru.

Philippine Republic.

Poland.

Portugal.

Republic of Ireland.

Soviet Union.

United States of America.

The 1956 Protocol was ratified and acceded to by the same governments with the exception of

Greece and the Lebanon who have neither ratified nor acceded to the protocol. Article 42 (1) of this agreement stated, “The duration of this Agreement shall be five years from January 1, 1954”.

  1. France gave notice that the 1953 agreement extended to its non-metropolitan territories. The United Kingdom gave notice of the extension of both the agreement and the protocol to the following non-metropolitan territories: -

Aden.

Bahamas.

Barbados.

British Guiana.

British Honduras.

Brunei.

Cyprus.

Falkland Islands.

Fiji.

Gambia.

Gibraltar.

Gold Coast (now Ghana, withdrew in March. 1957).

Jamaica.

Leeward.

Mauritius.

Nigeria.

St. Helena.

Sarawak.

Seychelles.

Sierra Leone.

Trinidad.

Western Pacific High Commission Territories.

Windward Islands.

Zanzibar Protectorate.

Bermuda.

Hong Kong.

Kenya Colony.

Somaliland Protectorate.

Tanganyika.

Uganda Protectorate.

Sugar in New Guinea

Mr Whitlam:

m asked the Minister for Terri tories, upon notice -

What action has he taken on the view expressed this year by the United Nations Trusteeship Council that special attention needs to be given to sugar cane production and to the establishment of the sugar industry in the Trust Territory of New Guinea?

Mr Hasluck:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

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

The Trusteeship Council’s recommendation on this matter was made on 3rd August, 1959. As with all views expressed by the Trusteeship Council, comment will be made on the suggestion in the next report submitted by theAdministering Authority to the Trusteeship Council.

Submarines

Mr O’Connor:
DALLEY, NEW SOUTH WALES

r asked the Minister repre senting the Minister for the Navy, upon notice -

  1. Does the Government intend to purchase from the United Kingdom submarines known as the “A” Class?
  2. If so, how many of these submarines are to be purchased, and at what cost?
  3. Has the United Kingdom Government discontinued building this class of submarine?
  4. Are more modem types being added to the Royal Navy?
  5. Why should Australia purchase the “ A “ Class submarine in preference to the more modern class?
Mr Freeth:
LP

– The Minister for the Navy has supplied the following answer: - 1, 2, 3, 4 and 5. The United Kingdom Government has discontinued the building of “ A “ Class submarines and is adding more modern types to the Royal Navy. The rest of the questions depend on assumptions as to Government policy and it is not practice to answer questions relating to policy.

Government Loans and Finance

Mr Costa:
BANKS, NEW SOUTH WALES

a askedthe Treasurer, upon notice -

  1. What were the amounts and terms of the various Commonwealth loans raised during the financial year 1958-59?
  2. In what cases did the actual subscriptions (a) exceed or (b) fall short of the amounts sought to be raised?
  3. By how much did deposits with all banks increase during this period?
  4. Who were the principal subscribers to these loans and what percentages of the loans were subscribed in each case?
Mr Harold Holt:
LP

– The answers to the honorable members questions are as follows: - 1 and 2. The amounts sought and subscribed and the terms of Commonwealth loans raised during the financial year 1958-59 are set out in the following table: -

  1. Between June, 1958, and June, 1959, the average deposits within Australia of all trading banks increased by £60,700,000 to £1,680,800,000. Between the end of June, 1958, and the end of June, 1959, the deposits of all savings banks increased by £94,500,000 to £1,391,300,000.
  2. As explained in the replies given in the House on 11th March, 8th April and 1st September, 1959, to similar questions, it has not been the policy of this Government, or of preceding governments, to release details of subscriptions to Com- monwealth loans unless publicity is specifically requested by the subscriber concerned.

Taxation

Mr Chresby:

y asked the Treasurer, upon notice -

  1. What amount of (a) direct and (b) indirect taxation has been raised in each year in each State over the last ten years?
  2. What amount was returned to each State in each year as (a) tax reimbursement and (b) loans from revenue, during the same period?
Mr Harold Holt:
LP

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

  1. The only available dissection of Commonwealth taxation by States relates to collections by office of receipt. These figures cannot be taken as reflecting the amount of taxation raised in each State as, for example, income tax on income arising in one State may be paid in another State and, in the case of indirect taxes, goods on which tax is paid in one State may be consumed or used in another State. 2. (a) The following table sets out the amount of the grants paid to each State in each year since 1949-50 under the States Grants (Tax Reimbursement) Act 1946-1948 and under the annual acts authorizing the payment of supplementary grants: -
  1. (b) It is assumed that in asking this question the honorable member has in mind the special assistance which has been given by the Commonwealth Government in each year since 1951-52 to the borrowing programmes for State works and housing approved by the Loan Council. This assistance has been provided mainly by way of Commonwealth subscriptions to special loans, which have been floated in each year since 1951-52. The amount of assistance provided in each year since 1951-52 is as follows: -

Although the amounts subscribed to the special loans have been mainly investments by Commonwealth trust funds of moneys appropriated from the Consolidated Revenue Fund, they have also included moneys derived from outer sources, such as counterpart funds of overseas loans. Moreover, the proceeds of special loans have not been used exclusively for the State works and housing programmes. Accordingly, it is not possible to specify the extent to which the special assistance provided to the States severally or individually was originally derived from the Consolidated Revenue Fund.

Wage and Unemployment Statistics

Mr Cairns:

s asked the Treasurer, upon notice -

  1. What was the (a) C series retail price index and (b) real wage, adult males, for each quarter since June, 1939?
  2. What number of persons was unemployed in each year since 1939?
Mr Harold Holt:
LP

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

  1. The Commonwealth Statistician regularly publishes tables showing the C series retail price index and the index of nominal wage rates, together with the index of “real” wage rates calculated therefrom (using the base period of three years ended 30th June, 1939, equals 1,000). I have asked the Commonwealth Statistician to supply the honorable member with the full details which he requests for each of the 80 quarters specified in his question.

  2. The Commonwealth Statistician informs me that total particulars of unemployment are recorded only at the dates of successive censuses of population and that within the period embraced by the question censuses were taken on 30th June, 1947, and 30th June, 1954. At each of these dates the census inquiry was broadened to relate to persons who normally work but who were “out of a job” at the time of the census, A supplementary inquiry asked the cause of their being “out of a job “, and the following table shows the numbers not at work and the reasons for their being “ out of a job “ at the two post-war censuses: -

    1. Mainly changing jobs or resting between jobs.

Liability for Negligence

Mr Whitlam:

m asked the Minister representing the Minister for Shipping and Transport, upon notice -

  1. Did the High Court, on 3rd May, 1957, deliver judgment in Darling Island Stevedoring and Lighterage Company Limited v. Long?
  2. Did the Minister, on 7th May, 1958, tell me that the judgment would be examined?
  3. Has he completed his consideration as to whether regulation 31 of the Navigation (Loading and Unloading) Regulations should be amended to impose the statutory duty and civil liability on the employer instead of the foreman?
  4. If he has completed his consideration, what did he decide?
  5. If he has not completed his consideration when does he expect to do so?
Mr Hulme:
Minister for Supply · PETRIE, QUEENSLAND · LP

– The Minister for Shipping and Transport has replied as follows: -

  1. Yes.
  2. Yes.
  3. Yes.
  4. It has been decided not to amend regulation 31 of the Navigation (Loading or Unloading) Regulations to impose a statutory duty and civil liability on the employer instead of on the person in charge.
  5. See answer to 4.

Shipping

Mr Whitlam:

m asked the Minister representing the Minister for Shipping and Transport, upon notice -

  1. What vessels are owned by Australian shipping companies but registered in overseas ports?
  2. In what ports are the vessels registered?
  3. For which of the vessels are crews engaged in Australia?
Mr Hulme:
LP

– The Minister for Shipping and Transport has furnished the following reply: - 1, 2 and 3. Details of the vessels over 300 tons gross owned by Australian shipping companies and registered in overseas ports are -

Note, - The British Phosphate Commissioners represent the Governments of the United Kingdom, Australia and New Zealand. Its vessels are registered in the name of the general manager, whose office is located in Melbourne. Similarly, the

Christmas Island Phosphate Commissioners represent the Governments of Australia and New Zealand, and its head-quarters are also located in Melbourne.

Mort s Dock, Sydney

Mr O’Connor:

r asked the Minister representing the Minister for Shipping and Transport, upon notice -

  1. Has the Minister’s attention been drawn to the statement by the Receiver for Mort’s Dock Engineering Company Proprietary Limited that he has received no offers to take over the company as a going concern and that proposals are now being made to use the site for purposes other than shipbuilding activities?
  2. Will the loss of this company and its site be a crippling blow to the shipbuilding potential of the Commonwealth?
  3. Will the Government, in view of the importance of the shipbuilding industry, consider taking action to prevent this company going out of existence, or will it interest itself directly in the industry as has been done by the New South Wales Government in the case of the Newcastle Dockyards?
Mr Hulme:
LP

– The Minister for Shipping and Transport has replied as follows: -

  1. I was advised by the liquidators of Mort’s Dock and Engineering Company Limited by letter dated 15th July, 1959, that many tenders were received for plant and machinery, but no tenders were received for the Balmain dock and shipyard or the Woolwich dock and slipways. I understand that proposals to use the dockyard sites for other purposes are under consideration.
  2. No new vessel has been completed by Mort’s Dock and Engineering Company Limited since “ Baralga “ was delivered in March, 1956, and existing yards are considered to be fully adequate to cater for any foreseeable demands which are likely to be made on the Australian shipbuilding industry.
  3. Prior to liquidation proceedings and the offering of the docks for sale by tender, t arranged for a survey to be made of the position, including defence aspects, likely shipbuilding demands and the docking and repair of ships in commission. The results of this inquiry confirmed that the closing of Mort’s Dock would not have any serious effects on the shipbuilding or ship repair potential of the Commonwealth, and the Government decided not to intervene in the matter.

Immigration

Mr O’Connor:

r asked the Minister for Immigration, upon notice -

  1. What has been the (a) number of persons admitted into Australia under the assisted passage scheme and (b) the cost of the scheme (i) since 1949 and (ii) for 1958-59?
  2. What number of persons, who came to Australia under the assisted passage scheme, stayed the required two years and then returned to their country of origin?
Mr Downer:
Minister for Immigration · ANGAS, SOUTH AUSTRALIA · LP

– The answers to the honorable member’s questions are as follows: - 1. (a) During the period since the end of World War II. up to and including June, 1959, Australia received 754,850 migrants under assisted passage schemes.

  1. The following amounts have been directly expended on assisted migration: - (i) From 1st July, 1949, to 30th June, 1959, £65,502,334, and (ii) during 1958-59, £7,188,068.

    1. The Commonwealth Statistician publishes figures relating to “long-term and permanent departures “ from the Commonwealth in two forms: (a) According to country of intended future residence; and (b) according to nationality. The expression “ long-term and permanent departures “ includes the following categories: - (i) Australian residents who are departing for twelve months or longer, but who intend to return to Australia; (ii) visitors departing after having been in Australia for twelve months or longer; (iii) true departures - i.e., those former residents, whether Australian-born or migrants, who depart from Australia with no intention of returning. In his published statistics the Statistician does not distinguish between these three categories and consequently it is not possible to ascertain from this source the numbers of persons departing who came here as migrants, either assisted or non-assisted, nor, consequently, the numbers of assisted migrants who departed from Australia after completing two years’ residence. Under procedures recently introduced which have as their purpose the provision on ships’ passenger lists and aircraft passenger cards of more detailed information than was formerly the case, it is hoped that a distinction can eventually be made in published statistics of long-term and permanent departures between the three categories mentioned above. It is not yet known whether the new procedures will, in fact, achieve their purpose. From its own records my department estimates that approximately 6 per cent, of assisted migrants from the United Kingdom and 3 per cent, of migrants from non-British sources have left Australia. These percentages are similar to those for migrants leaving Canada and are lower than for other countries engaged in large-scale immigration. Many migrants who leave Australia subsequently return here to settle. It should be remembered also that the return of a whole family from Australia may be caused by the inability of one member to settle down. All those departing therefore cannot be classed as discontented migrants. Although Australia’s departure rate is low considering the magnitude of our immigration programme, the position is not regarded with complacency. The Department of Immigration is at present co-operating with the Australian National University in establishing the reasons why British subjects return to the United Kingdom after having migrated to Australia.

British Immigrants

Mr Barnard:

d asked the Minister for Immigration, upon notice -

  1. How many applications from persons in the United Kingdom who wish to proceed to Australia under the assisted passage scheme, or as full-fare passengers, were rejected by the Immigration Department in each of the years 1957 and 1958?
  2. How many were rejected on (a) medical and (b) other grounds?
Mr Downer:
LP

– The answer to the honorable members questions is as follows: -

In 1957, of the total number of applications received from persons eligible for consideration under the scheme, 1,683 were rejected on medical grounds. In 1958, the number was 1,710. The reasons for rejection on other than medical grounds are contained in individual files held at Australia House, but this information is not collated. It is known, however, that rejections on medical grounds comprise the great majority of the total number of rejections for assisted passages. British subjects departing from the United Kingdom are not required to obtain prior authority to enter this country. In general, British subjects are admitted to Australia as full-fare passengers provided they are in possession of British passports and are of good character and in good health.

Cite as: Australia, House of Representatives, Debates, 28 October 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19591028_reps_23_hor25/>.

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