House of Representatives
19 May 1965

25th Parliament · 1st Session

  1. House of Representatives
  2. 25th Parliament
  3. 1965

Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 2.30 p.m., and read prayers.

page 1623

QUESTION

LEGAL ASSISTANCE IN THE AUSTRALIAN CAPITAL TERRITORY

Mr J R Fraser:
ALP

– I ask the AttorneyGeneral: Is consideration being given to the provision of some wider form of legal aid by statute in committal matters before the Supreme Court of the Australian Capital Territory? Is it recognised that, because appeals in criminal matters from the Supreme Court of the Territory must go to the Full High Court of Australia, and must be argued by counsel, a particular problem exists in relation to the legal expenses of appellants? Does the Minister know that many appeals, some of them successful, have been made possible only by the goodwill and generosity of lawyers in Canberra, Sydney and Melbourne? Does the Australian Capital Territory lag far behind most, if not all, of the States in this field of legal assistance?

Mr SNEDDEN:
Attorney-General · BRUCE, VICTORIA · LP

– The question of legal aid in the Australian Capital Territory is a matter to which I am giving close attention at the present time. A wide variety of aid in legal matters is given in the Territory, but the honorable gentleman confined his question, as I understand it, to criminal matters. In such matters, there is a procedure under which a judge certifies to the need for aid. The matter then comes to me for determination of the amount of money aid that will be granted. The honorable member, by implication, criticises this procedure, and I confess that there are grounds for criticising it. In the States, particularly South Australia and Victoria, there have been recent developments in the provision of legal aid with the assistance of the legal profession. As the honorable gentleman will realise, however, the legal profession is a much smaller body in the Australian Capital Territory than in the States. Although it is smaller, the profession here has given clear indications that it would be ready to participate in such a scheme if one could be brought into being. The problem of instituting such a scheme is occupying my attention at the present time.

page 1623

QUESTION

AUSTRALIAN ARMY

Mr TURNER:
BRADFIELD, NEW SOUTH WALES

– My question is addressed to the Minister for the Army. It has been represented to rae that the wife of a soldier ordered overseas on active service has been obliged to vacate the married quarters provided by the Army for her husband and his family. Can the honorable gentleman say what is done in such cases?

Dr FORBES:
Minister Assisting the Treasurer · BARKER, SOUTH AUSTRALIA · LP

– If this was done, it would be completely contrary to policy. If the honorable gentleman will provide me with the name of the soldier concerned, I shall immediately investigate.

page 1623

QUESTION

TRADE MISSIONS

Mr McIVOR:
GELLIBRAND, VICTORIA

– My question is directed to the Minister for Trade and Industry. I ask: Is it a fact that no significant results have been achieved by the recent Australian goodwill trade ship missions? If this is so, is it due to the fact that there has been no follow up of any consequence by merchants and industrialists in Australia? Is it true that orders obtained during the visits of the trade ships to various countries were not delivered? Has hostility been created by this neglect? Have big United States exporting and banking interests combined to prevent Australia from developing export markets in the countries visited by these ships, thus safeguarding those American exporting and banking interests to the detriment of Australia? Finally, is it true that where attempts have been made to follow up and develop the contacts made during the visits, these efforts have also failed due to the failure of the Government to provide exchange facilities overseas and to a great extent-

Mr SPEAKER:

– Order! I think the honorable member is making his question far too long. He is now giving information.

Mr McIVOR:

– I finish it on this note.

Mr SPEAKER:

– Order! Direct the question.

Mr McIVOR:

– Is it due to the fact that American banking interests have declined the business of the Australian industrialists and merchants who did endeavour to establish export trade?

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

– What may be described as recent missions by trade ships that have gone from Australia date back to 1962 when the “ Chandpara “ went to the Persian Gulf. In 1964 the “ Centaur “ went to Asia and Japan, and at present the “ Sletholm “ is in the Pacific area visiting Papua and New Guinea, Fiji and places in that locality. I have been advised that no complaints have come to the Department of Trade and Industry along the lines indicated by the honorable member and it is pretty well understood that the Department would react to complaints that were made if they had any foundation at all. I now say publicly that if there are any merchants or others who feel that there are grounds for complaint in respect of these trade missions, I and the officers of the Department stand ready to investigate them.

Insofar as American competition is concerned., my advice is that there has been no more than the vigorous commercial competition which we must expect and encounter. There is really no evidence that limited export credit facilities have inhibited the full exploitation of these trade ventures. I put the matter in perspective by saying that the Department of Trade and Industry does not initiate missions by trade ships. Others have initiated them - the Department has come in and vigorously supported them. The view of the Department is that it has pretty fully extended itself in other activities in trade promotion and trade fairs and has not rated so high in order of priority the question of trade ships to initiate them; but the Department does come in with full force and does support those launched by other parties.

page 1624

QUESTION

AUSTRALIAN FORCES IN VIETNAM

Mr ASTON:
PHILLIP, NEW SOUTH WALES

– My question is directed to the Minister for Labour and National Service. At the recent national conference of the Federated Ironworkers Association of Australia the 27 delegates representing 61,000 members unanimously supported Australian military assistance against Communists in Malaysia and South Vietnam and Britain’s help to Malaysia. Does this support bring the F.I.A. into conflict with other unions and with the State and Federal Labour Parties? Further, what is the reaction generally among trade unions to this support of the Government’s action?

Mr Calwell:

– I rise to order. Has the position of the Labour Party or trade unions anything to do with the Minister? I submit that it has nothing to do with the administration of any Minister, lt is only an expression of opinion.

Mr SPEAKER:

– I think that the point in connection with the Labour Party would be out of order but that anything in relation to some effect on the unions might come under the control of the Minister.

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

– A few days ago, the Federated Ironworkers Association of Australia passed a resolution approving of the Government’s action in combatting, or taking action to combat, Communist activities in both Vietnam and Malaysia.

Mr Griffiths:

– Did the Minister read that in a newspaper?

Mr MCMAHON:

– No, I did not. I think if honorable members read carefully the resolution passed by the Association they will see that it is an obvious attempt not to come into conflict with the policy of the Australian Council of Trade Unions. Nonetheless, I think it can be taken as implicit within the resolution passed by the Association that the resolution was in opposition to - in fact, it was completely different from - the resolution passed by the Waterside Workers Federation of Australia, which is hostile to the Government’s action and, in effect, supports the Communist activities of the Vietcong.

Dealing with the second part of the question, I say that the position of the A.C.T.U. is not what could be called completely clear. The Council is opposed to the Government’s action in sending troops to Vietnam; but at the same time it has said that it does not approve of any industrial action taken to impede the free movement of personnel and material to that country. In reply to the last question asked by the honorable gentleman, I say that this shows that there is a hopeless division within the trade union movement. The attitude taken by the Federated Ironworkers Association is different from that taken by the A.C.T.U.

page 1624

QUESTION

DEPARTMENT OF TRADE AND INDUSTRY

Mr POLLARD:
LALOR, VICTORIA

– I ask the Minister for Trade and Industry: Is it a fact that, as stated today, insistence on a salary of £6,700 per annum is preventing the implementation of the Government’s election promise to put a very senior official in charge of the industry activities of the Department of Trade and Industry?

Mr McEWEN:
CP

– No, it would be incorrect to say that. I read that in this morning’s Press.

Mr Pollard:

– It must have been a leak.

Mr McEWEN:

– It must have been. I now disclose for the first time that I did propose, for the senior and responsible officer to take charge of the Industries Division, a salary of the order stated by the honorable member. I do not remember the hundreds of pounds, but the figure was of that order. No-one in the Department of Trade and Industry, other than the Secretary of that Department, knew that; and I believe that, apart from him, no-one outside the Cabinet knew that. I want to make clear a point that emerges. The delay in the appointment of a senior and responsible officer to take charge of the Industries Division of the Department of Trade and Industry is not related to a demanded or requested salary because, so soon as I found that the issue was turning on the question of salary, I withdrew the request completely. The subsequent discussions have been conducted without any reference whatever to any salary proposed by me, other than that I said that I hoped that when, in due course, a senior and responsible officer was appointed he would not receive a salary lower than that of the second and third assistant commissioners in the National Capital Development Commission.

page 1625

QUESTION

SHEARING SCHOOL

Mr PETTITT:
HUME, NEW SOUTH WALES

– Is the Minister for Primary Industry aware of a strong move to establish a shearing school at Cootamundra for the express purpose of training shearers and shed hands? Is he further aware that the New South Wales Department of Technical Education, the shearing contractors’ association, the graziers’ association and the majority of shearers are prepared to give practical support to the establishment of such a school by providing finance and students? Will the Minister, in view of the national importance of the wool industry, seek the support and co-operation of the Federal Government in the setting up of such a shearing school, by providing financial assistance to students in line with the proposed assistance to students at technical colleges, so that this vital export industry-

Mr SPEAKER:

– Order! The honorable member’s question is far too long. I ask him to direct his question and not to comment.

Mr PETTITT:

– I ask the Minister whether he is prepared to ask the Federal Government to give financial support to such a school.

Mr ADERMANN:
Minister for Primary Industry · FISHER, QUEENSLAND · CP

– I am aware of the interest taken in the Cootamundra district in steps for the training of shearers. I am aware of that because I have received representations on the matter. I am also aware that the Department of Technical Education in New South Wales has given some assistance. This is a vital matter because it is known that there is a shortage of shearers throughout the wool industry. That shortage and its effects on the industry should concern everybody, including members of the Government. In reply to the honorable member, I say that I believe the wool industry itself and the Australian Wool Board have some responsibility to take some action to relieve the industry of this shortage. I will do what the honorable member suggests. I will consider the matter so that other members of the Government also may have a look at it.

page 1625

QUESTION

THE PARLIAMENT

Mr STEWART:
LANG, NEW SOUTH WALES

– I ask the following question of the Prime Minister: Is it a fact that Federal Parliament will meet on Friday of this week and Monday of next week with sittings extending into the early morning hours? If so, what are the reasons for such a drastic change in procedure at such short notice? Why cannot the Government arrange for the Parliament to sit for reasonable hours on normal sitting days and for as long as is necessary to ensure that important legislation can be given due and proper consideration?

Sir Robert Menzies:

– The Leader of the House will answer the question.

Mr HAROLD HOLT:
Treasurer · HIGGINS, VICTORIA · LP

– The arrangements which have been made for the concluding stages of the session have been made in consultation with the Leader of the Opposition.

Mr Webb:

– ls the Minister trying to pool the Leader of the Opposition?

Mr HAROLD HOLT:

– I am not trying to pool the Leader of the Opposition. 1 am saying only that the arrangements which were made were made in consultation with him. I have no doubt he would wish the Parliament to sit indefinitely so that he might produce some degree of unity among the ranks of his own supporters. He and other members of the Parliament are well aware of the practical problems which exist. I remind the Parliament that it has been the practice in the autumn session to sit for a run of four weeks leading up to Easter and then to continue for a period of four sitting weeks after Easter. I think that has been a fairly regular pattern in recent years. On this occasion there was the practical problem that we were to meet the Premiers in a fortnight’s time.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– But that is not next week.

Mr HAROLD HOLT:

– No, not next week. I have no doubt that the honorable member can decide policies without having to give thought to them, but the Government feels it necessary to have some reasonable period beforehand for Cabinet consideration of the proposals which will be discussed with the Premiers the following week. We have given the Premiers an assurance that there will be an opportunity for their officials to talk with officials of the Commonwealth Treasury prior to the formal conference of the Prime Minister and State Premiers. In order that the officials may talk, quite obviously there has to be a Cabinet decision on the proposals. We have set aside the week ahead of us for Cabinet discussions.

Mr Reynolds:

– Why did not the Government bring down its legislation earlier?

Mr HAROLD HOLT:

– Let me tell the honorable gentleman that prior to Easter 13 bills were introduced into this Parliament and that since Easter 21 bills have been introduced. With far more complex matters and a wider range of matters engaging an enlarged Parliament there have been increasing pressures over recent years, but as one who has been here a long time I would say that there has been no period in the history of this Parliament when legislation has proceeded in a more orderly fashion than it has over recent years, when there have been fewer occasions when honorable members were required to sit late hours and when there has been an actual achievement in legislation passed which surpasses anything we have known in earlier years. Last year a record number of bills passed through the Parliament. By the end of this session we shall have a record of legislative achievement on a number of important matters affecting the wellbeing of the country as a whole, which will make this a very fruitful session.

Within the limits of the time available we have tried to organise the business in an orderly way. I have collaborated with representatives of the Opposition for this purpose, and more recently with the Leader of the Opposition. I think most honorable members will regard it as the fairest deal which could have been made in the circumstances and most of them will welcome the opportunity for the other activities which lie ahead. Five different Parliamentary delegations are to go overseas in the winter recess, and presumably their members will be looking for some break in Parliamentary affairs to enable them to travel. We, for our part, are not idle in these matters. We are doing our best to see that the Parliament is serviced in the most effective way we can contrive.

page 1626

QUESTION

AUTOMATION

Mr LINDSAY:
FLINDERS, VICTORIA

– I direct a question to the Minister for Labour and National Service. I refer to the congress held in Melbourne on human relations, where the main subject for discussion was the impact of automation on employment. Was the survey of Australian computer installations made by the Department of Labour and National Service conducted by questionnaires and not strictly policed by the Department? Did the survey show that more than twice as many positions were reported to have been created as were abolished as a direct result of the installation of computers?

Mr McMAHON:
LP

– I did attend a most interesting and fascinating congress in Melbourne relating to the impact of automation on the work force. I was able to inform the congress that some time previously my Department had carried out a survey of the impact of computer systems on the Australian work force with the object of ascertaining whether the systems increased or decreased the demand for employees. We have found that twice as many new employees were taken on as were discharged due to the effect of this kind of automation. The reasons for this situation are, I think, interesting. It was found that the use of computers permitted a greater degree of data processing and the obtaining of better information. The use of computers also permitted a greater degree of efficiency. But, more importantly, it was found that companies could take on a greater amount of work than they could previously accept. In addition, in a growth economy such as we are now going through in Australia, employers were able, with the improvements made possible by automation, to increase their work force.

page 1627

QUESTION

BAUXITE

Mr NELSON:
NORTHERN TERRITORY, NORTHERN TERRITORY

– Will the Minister for Territories say whether a decision has been reached to name the successful applicant for the Gove bauxite leases in the Northern Territory? If so, what are the details of the undertakings given by the successful applicant? If a decision has not been made, when may we expect one to be made?

Mr BARNES:
Minister for Territories · MCPHERSON, QUEENSLAND · CP

– No decision has yet been made. When a decision is made it will be announced.

page 1627

QUESTION

MEDICAL AND HOSPITAL BENEFITS FUNDS

Mr BRIDGES-MAXWELL:
ROBERTSON, NEW SOUTH WALES

– I ask the

Minister for Health a question. What is the position of migrants who join health benefit funds on arrival or prior to arrival in this country? When does payment of the Commonwealth benefit commence?

Mr SWARTZ:
Minister for Health · DARLING DOWNS, QUEENSLAND · LP

– This is a pretty topical subject because many migrants are joining hospital and medical benefit funds before reaching Australia. The policy adopted by the Government is to treat these migrants in exactly the same way as any other Australian is treated. Therefore, eligibility for payment of Commonwealth benefits will commence from the date of the migrant’s arrival at the first port of entry.

page 1627

QUESTION

PENSIONS

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

– During the pre-Budget discussions will the Minister for Social Services give sympathetic and favourable consideration to extending the conditions applying to the payment of the supplementary rent allowance to pensioners so that those pensioners with a meagre income over and above their pensions and those with little more than the maximum permissible assets may become eligible to receive the supplementary allowance? In particular, will he consider the plight of the single blind pensioner who, because of his or her affliction, is far less capable than other pensioners of supplementing his or her income?

Mr SINCLAIR:
Minister for Social Services · NEW ENGLAND, NEW SOUTH WALES · CP

– Unfortunately, I have not the experience of my predecessor in understanding the dialect of the honorable member. However, I can assure him that I have some sympathy for the subject matter of his question. I will be happy to consider it further and to put it before the Government in due course.

page 1627

QUESTION

HEALTH

Mr KING:
WIMMERA, VICTORIA

– I wish to direct my question to the Minister for Health. In view of the great public interest in various types of treatment, such as that given by osteopaths, masseurs, dietitians and chiropractors, both registered and unregistered, I ask: Will the Minister consult with the various State Ministers of Health at an early date with a view to investigating the qualifications of such people and so prevent those who are not qualified from treating innocent people, and at the same time permitting those, such as chiropractors, who have attained a certain standard or degree, to be registered, thereby allowing patients to attend them with confidence, and also to claim a rebate of their expenses under the medical health scheme as well as allowing such expense as a taxation deduction?

Mr SWARTZ:
LP

– I will answer the last part of the honorable member’s question first. The principle adopted in the national health scheme is that persons who are members of registered health insurance fund organisations are entitled to Commonwealth and fund benefits for treatment by registered medical practitioners. From time to time, consideration has been given to the inclusion of ancillary services, but it has not been found possible up to this time to include them. This is a matter of policy which would only receive consideration at the appropriate time. The question of registration by the States is a matter for the State Governments themselves. It would not be appropriate for me to propose that this matter be included on the agenda for the conference of the State Ministers of Health, because they prepare their own agenda. I can suggest only that, if registration is to be considered, the matter be taken up with the State Governments in whatever States are involved.

page 1628

QUESTION

OVERSEAS INVESTMENTS IN AUSTRALIA

Mr CURTIN:
KINGSFORD-SMITH, NEW SOUTH WALES

– My question is directed to the Treasurer. Is it a fact that if overseas investors continue their present rate of investment in Australia they will be in possession of more than SO per cent, of Australia’s industries in the next decade? If this is so, can the Treasurer advise me of the steps that the Government is taking to halt this dangerous trend?

Mr HAROLD HOLT:
LP

– The figures given to the House earlier on this matter are to the effect that 90 per cent, of the total fixed investment in Australia comes from the savings of Australians. In some areas of industry, overseas investment represents a very much bigger percentage. This is largely due to the possession by overseas investors either of special technical knowledge or of capital on a larger scale than can readily be mustered in this country. This is not the occasion for a full scale presentation of the arguments that run both for and against this process, but undoubtedly we have a larger population and a very much more diverse economy as a result of this investment than we otherwise would have.

page 1628

QUESTION

WATER SUPPLIES

Mr JEFF BATE:
MACARTHUR, NEW SOUTH WALES

– I ask the Minister for National Development whether he is aware that a shortage of water supplies in Australia is significantly cutting rural production. Is he aware that this in turn is lowering national receipts from export income and taxation yields? Will he consider asking the Australian Water Resources Council to study methods of boosting water supplies throughout Australia through

Commonwealth financial assistance to the States? Is he aware that New South Wales has had 1,088 applications to its Farm Water Supply Branch within a few weeks for both technical and financial assistance? Is he also aware that the new Government in New South Wales is trying to overcome the lag in servicing these applications? If so, will he do something to assist in either furnishing or training additional staff to help the Branch?

Mr FAIRBAIRN:
Minister for National Development · FARRER, NEW SOUTH WALES · LP

– I am aware naturally of the very severe drought that is affecting farm water supplies in central and northern New South Wales and in southern Queensland. The matter of farm water supplies comes directly within the province of the State Governments, local government authorities and the farmers themselves. I am aware that both New South Wales and Queensland advance loans over a long period at low interest rates to help farmers step up their farm water supplies. The Commonwealth Government is assisting in whatever ways it can through the Australian Water Resources Council. The Government has made available an amount of £1,350,000 to the States over a period of three years to assist them in assessing both their surface and underground water resources. I understand that one of the projects being considered is an investigation of the great artesian basin in Queensland, New South Wales and South Australia to see whether anything can be done to improve the supplies of water from it. As to the honorable member’s request for technical assistance from the Commonwealth, I can tell him that we have only a very small number of technical assistants in the water resources branch of my Department, and I am afraid we would not be able to assist. I point out also that the Water Resources Council is assisting in association with the Commonwealth Scientific and Industrial Research Organisation in trying to prevent evaporation and to improve the process for reducing the evaporation of farm water supplies which has been discovered by the C.S.I.R.O.

page 1628

QUESTION

VIETNAM

Mr DEVINE:
EAST SYDNEY, NEW SOUTH WALES

– My question is addressed to the Prime Minister. During the recent debate on the sending of troops to Vietnam many Government supporters referred to mainland China as an enemy of Australia and said that China was supplying equipment to North Vietnam. As Australia is supplying wool, wheat, steel and other commodities to mainland China would the Prime Minister say that his Government is aiding and abetting the enemy?

Sir ROBERT MENZIES:
LP

– I have heard this proposition put up at least a dozen times. lt has been discussed at least a dozen times and I cannot think of anything to add.

page 1629

QUESTION

WOOL

Mr HUGHES:
PARKES, NEW SOUTH WALES

– Has the Minister for Primary Industry seen a recent report of an announcement by the Australian Wool Board that documented details of the Board’s proposed reserve price scheme for the marketing of wool have been released to members of the Australian Wool Industry Conference and to executives of woolgrowers’ organisations? If this report is correct will the honorable gentleman take steps to procure prompt distribution of the document to members of the Parliament so that they may study it during the forthcoming parliamentary recess?

Mr ADERMANN:
CP

– The Australian Wool Board does of necessity confer with the Wool Industry Conference and makes its recommendations to the Conference. The Wool Industry Conference has had one discussion on this vital matter and is to have a further conference next month. I would not say that the report referred to would really be available until further discussions have been held and thinking on the matter has reached finality. If there is anything that 1 can make available to the honorable member in this connection, I certainly will do so.

page 1629

QUESTION

VIETNAM

Mr DUTHIE:
WILMOT, TASMANIA

– My question is addressed to the Prime Minister in his capacity as Acting Minister for External Affairs. Has Australia a consulate or embassy in Hanoi or Saigon, or in both capitals? Has Australia at any time acted as a negotiator or mediator or offered to act as such during the 1 1 years of war in Vietnam since the French left that country, or has Australia stood silently on the sidelines in a diplomatic sense, offering only military assistance to the United States of America? Does the Government agree with the statement at the South East Asia Treaty Organisation Conference in

London last week by its Minister for External Affairs, who said that the ideological weapon was vital in finding a solution to the problems of North and South Vietnam?

Sir ROBERT MENZIES:
LP

– We are not represented in Hanoi. We are and have been for some time diplomatically represented in Saigon and also in other South East Asian countries. In each of these posts, our diplomatic representatives have been continuously active. They have not been active promoting war. They have been active trying to promote mutual understanding. But when acts of war occur, then the Government of Australia believes that it faces a realistic problem on which realistic answers have to be made.

page 1629

QUESTION

PRODUCTION PERFORMANCE ALLOWANCE SCHEME

Mr HOLTEN:
INDI, VICTORIA

– My question, which I direct to the Minister for Supply, refers to the proposal by the Government to introduce productivity performance allowances in factories of the Department of Supply in Victoria. Has this scheme been adopted, and if it has, what results are evident to date?

Mr FAIRHALL:
Minister for Supply · PATERSON, NEW SOUTH WALES · LP

– The production performance allowance scheme is one under which wages employees in the industrial plants of the Department of Supply earn an allowance when they reach an agreed and measured level of productivity. This scheme was introduced into Lithgow, as I think the House will remember, in June of last year. It ran for a trial period and, with some minor modifications, has been continued, I am glad to say, to the good content both of the employees and the organisation, because we have had an increase in productivity and the wages staff have had a 10 per cent, increase in their pay. It is now proposed to introduce this scheme into the plants of the Department of Supply in Victoria. In March, this scheme went into operation at the Albion explosives factory. It will go into operation at St. Mary’s in New South Wales in June. We hope to extend it to other plants.

As this is a scheme based on measured work performance, we have run into difficulties with at least one major trade union which objects to having the work performance of its members measured. This is an ordinary procedure in industrial work management. On a couple of occasions we have referred this matter to the Commonwealth Conciliation and Arbitration Commission. On each occasion, we have had a verdict in favour of this scheme. More recently, in one particular plant - the Government aircraft factory - the employees refused to fill in daily time sheets despite the fact that this is a well known and generally honored industrial technique. Again, this matter went to the Commission and again the verdict was given in favour of the Department of Supply. At the moment, we are dealing with the Australian Council of Trade Unions which, I am bound to say, has been very helpful in this regard. We rather hope that we will be able to iron out these difficulties with the trade unions and extend this procedure into our Victorian plants by mutual consent.

page 1630

QUESTION

MINERAL ROYALTIES

Mr WHITTORN:
BALACLAVA, VICTORIA

– I address to the Minister for National Development a question relating to the development of the national resources of Australia. Can the Minister say whether consideration will be given to the royalties received by State Governments, particularly those of Western Australia and Queensland, on exports of iron ore and other minerals before Commonwealth grants to the States are next finalised? What amounts per annum are received or expected to be received by these and other State Governments in the form of royalties?

Mr FAIRBAIRN:
LP

– The question of whether royalty payments to States should be taken into account in this connection is more one for my colleague the Treasurer and the Australian Loan Council. At the moment, the royalties are fairly small. On the mainland of Australia, New South Wales has recently had quite an increase in its royalties due to an increase in the prices of lead and zinc. That State now receives about £2,500,000 a year in royalties. None of the other mainland States gets more than £500,000 a year, and Tasmania does not collect any royalties at all. However, as the honorable member will realise, when some of the new finds of iron ore and bauxite are brought into operation very large royalties will be payable. I understand that the Western Australian Government plans to collect 6s. a ton on lump iron ore. If 200 million tons of this ore is sold, this will return about £66 million to the Western Australian Government.

page 1630

QUESTION

PAPUA AND NEW GUINEA

Mr L R JOHNSON:
HUGHES, NEW SOUTH WALES

– I ask the Minister for Territories whether it is a fact that at a recent conference of Australian and Japanese businessmen the Japanese speculated about the great financial benefits that would accrue from the exploitation of cheap labour in Papua and New Guinea. What steps have been taken to denounce this attitude and to apprise all potential investors in the Territory that such economic exploitation will not be tolerated by the Australian people, the House of Assembly of Papua and New Guinea or the indigenous people of the Territory?

Mr BARNES:
CP

– I did see something in the Press relating to the subject mentioned by the honorable member. This was a discussion between two groups completely outside my control. I should like to assure him that we have in the Territory of Papua and New Guinea laws which are designed to protect the people there. I believe those laws will provide definite protection.

page 1630

QUESTION

TAXATION

Mr FOX:
HENTY, VICTORIA

– I ask the Treasurer: Will he give consideration to granting exemption from income tax to that portion of the profits of sporting clubs operating on land leased from the Crown which has been applied to carrying out improvements on that land for the benefit of the general public? I understand that this position applied prior to the recent amendments of Division 4 of Part 3 of the Income Tax and Social Services Contribution Assessment Act.

Mr HAROLD HOLT:
LP

– The Government is currently giving consideration to representations from a wide variety of people and organisations, arising from the recent amendments to the income tax legislation. The matter raised by the honorable gentleman is one which I shall be glad to include in the range of that review.

page 1630

QUESTION

BUSINESS OF THE HOUSE

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I address a question to the Treasurer as the Leader of the House. Does the right honorable gentleman anticipate being able to vouchsafe time to the House, and if so, on what days, to debate his own valuable statement on the United States of America balance of payments programme and the bills which he has forecast to amend the Public Service Superannuation Act and the Defence Forces Retirement Benefits Act?

Mr HAROLD HOLT:
LP

– I think the first matter will depend on the expedition with which the House is able to deal with legislation. I think it will be generally agreed that legislation should take priority, because this matter has been fairly well canvassed in a series of discussions during this sessional period. Indeed, as I recall, this sessional period began, as it were, with the discussion of this general topic as a matter of urgency on a proposal by the honorable member for Scullin. I doubt whether it will be practicable to introduce legislation relating to superannuation. There is one aspect of defence forces retirement benefits on which, I am sure, all honorable members wish to see finality reached if that can be arranged. That aspect is the treatment of those who enlisted before 1959 and whose contributions at present represent a very substantial proportion of their pay. I hope that a bill dealing with that aspect of defence forces retirement benefits at least, and with a few other minor aspects, will be in front of us before the sessional period concludes. I am sure that (he Opposition would wish to give such a measure a speedy passage.

page 1631

GENERAL AGREEMENT ON TARIFFS AND TRADE

Ministerial Statement

Mr McEWEN:
Minister for Trade and Industry · Murray · CP

– by leave - I desire to inform the House of certain recent developments in the General Agreement on Tariffs and Trade, or G.A.T.T., and of the Government’s position in relation to those developments. The Government has taken two important decisions. It has decided to introduce preferential rates of import duties for a range of products of particular export interest to the less developed countries. This will enable Australia to make a positive contribution towards overcoming the trade problems of these countries. It has decided also to accept new provisions of the Agreement designed to aid the trade of less developed countries, subject to a reservation which will fully preserve our right to continue our own policies of using the tariff to assist Australian development.

Honorable members will be aware that the Agreement was drawn up and negotiated immediately after the war. The objective was to get away from the extreme economic nationalism of the 1930’s and to create a new order for international trade. Australia subscribed to this objective. However, the present Government parties - both in and out of office - have never been satisfied that the provisions actually written into the Agreement were adequate. It is a matter of history that G.A.T.T. has had only limited success in achieving its objective. Because it was motivated primarily by a desire to avoid a repetition of the sudden and sharp disruptions of international trade that characterised the pre-war period, the General Agreement was written around the pre-war experience of the major trading countries. It sought to reduce tariffs and to control the other protective measures that flourished in that period, such as import restrictions and exchange controls, state trading practices, bilateral arrangements and similar devices to establish closed markets. Its basic philosophy was that international trade should be free of measures which discriminated in favour of particular countries or groups of countries.

Its negotiators did not foresee, or make adequate provision for, the development of economic blocs among the major industrial powers. Nor did they foresee the extent to which the post war affluence of those powers would allow them to support and subsidise their very high cost and uneconomic primary production. Similarly, they made no real provision for coming to grips with the trading problems of the world’s less developed and primary producing areas. In the result, G.A.T.T. has been able to bring about reasonably satisfactory conditions for international trade only for the industrial products of importance to the major powers. It has not yet brought about any significant improvement in the trade of its primary producing and less developed members.

I have repeatedly directed attention - both here and overseas - to these short comings in the Agreement’s provisions and achievements. Our dissatisfaction was behind the efforts made by this Government to revise the Agreement about 10 years ago and, following only limited success in securing improvements on that occasion, behind the Government’s support for the holding of the United Nations Conference on Trade and Development last year. However, I do not propose to elaborate today on our continuing dissatisfaction with G.A.T.T.’s failure up to this point to bring about acceptable conditions for trade in primary products, important though that failure is to this country. Instead, I want to direct the attention of the House to recent attempts in G.A.T.T. to tackle the equally important and equally urgent problems of the trade and development needs of the less developed countries of the world.

As originally drafted in 1947, the Agreement had very few provisions directed towards these problems. It seems to have been based on the premise that rules having equal application for all members would give all countries equal opportunities to secure the benefits of international trade. This is manifestly absurd. Countries are not equal; and equal opportunities for unequals do not result in equal benefits. Some consideration was given to this point when the Agreement was revised in 1954-55. The revision resulted in some limited relaxation of the general rules for the less developed countries. It also resulted in explicit recognition that countries such as Australia, whilst obviously not in the position of less developed countries, nevertheless needed greater flexibility than the major industrialised countries in regard to the use of tariffs. However, there was no significant change in the basic philosophy underlying G.A.T.T. The less developed countries were, of course, far from satisfied with this halfhearted attempt to do something about their very real trade problems. As more and more of them achieved independence, with their own voice in international affairs, they have in recent years been able to compel G.A.T.T. and other international organs to give more attention to their needs. One result was last year’s United Nations Conference on Trade and Development. Another has been the negotiation of a series of new articles for insertion in the General Agreement. These new articles have been incorporated in a protocol of amendment which has now been opened for acceptance by GA.T.T. members.

In the negotiations leading up to the new articles, the less developed countries rightly stressed the need for arrangements that would help them to stand on their own feet, and their need for access on reasonable terms to external markets, particularly the volume markets of the major industrial nations. Improved access to these markets is essential if these less developed countries are to have any prospect of financing the volume of imports which their development demands. The less developed countries laid particular stress on three specific objectives -

Reduction and removal of tariffs and quantitative restrictions imposed on their exports;

Reduction and removal of high internal taxes maintained particularly by European countries on consumption of such products as tea, coffee and cocoa, which are of particular interest to the less developed countries; and

Preferential entry for their exports of manufactured products.

The first two of these objectives were directed mainly towards improvement in the conditions under which the less developed countries sell the products of their existing industries on world markets. The third was designed to enable them to export the products of new manufacturing industries, the establishment of which is essential to their overall development and improvement in their standards of living.

Australia gave full support to the general objectives of the less developed countries. Sharing, as we do, their problems of severely limited access to export markets for primary products and being ourselves comparatively new exporters of manufactures, we are only too well aware of the kind of obstacles which must be overcome before the countries concerned can achieve adequate and predictable returns from their exports to world markets. We live with the same problems as plague the efforts of the less developed countries to maintain and expand returns from traditional and limited export lines. We have recent and current experience of the problems of developing from a largely rural base, of establishing viable secondary industries in a small domestic market, and of developing exports of the products of these industries in the face of strong and often vicious competition from the long established and large scale industries of the mature industrial economies. The fact that Australia has progressed further than the less developed countries along the road of development, and has already achieved a high standard of living, has not destroyed our understanding of the problems which beset these countries.

We therefore supported their general objectives and indicated our willingness to do as much as lies within our capacity to help them. However, we felt bound to maintain in respect of these new articles of G.A.T.T. what is recognised in the present Agreement - that there are significant differences between the economy of Australia and the economies of the more mature industrial countries. We made it clear that whilst we wanted to play our part in contributing to an expansion of the trade of the less developed countries, we could not be committed to obligations identical with those to bc accepted by countries which already had highly developed industrial structures. Our own development needs and policies, and our responsibilities for the development of Papua and New Guinea, set limits on our ability to help the less developed countries in the particular ways which they were seeking and which might well be the most appropriate ways for the mature industrial countries to contribute to them. We therefore pressed to have included in the new articles provisions which would carry forward G.A.T.T. recognition that there are quite significant differences between the Australian economy and the economies of the industrial powers. We sought a provision which, whilst clearly not exonerating us from action to help the trade of the less developed countries, would enable us to do so without negating our own policies on the use of the tariff to protect our own economic development, or our policies for the development of Papua and New Guinea. Our proposal on that occasion was generally acceptable to the less developed countries themselves. However, it was rejected by a few of the more powerful industrial countries.

At the same time the major industrialised countries were themselves very cautious about accepting the commitments sought from them by the less developed countries. They insisted that the new provisions relating to tariffs and quantitative restrictions be so written as to accommodate their own particular difficulties with the demands of the less developed countries. They adopted the same stand in regard to fiscal charges. And some of the more important of them completely rejected the idea of preferences for the manufactured exports of the less developed countries - preferences which we have all along been prepared to accept. In the result, the new articles make no change in the rigid G.A.T.T. embargo on new preferences. Since the volume markets of the major industrial countries were the prime target - indeed the main hope - of the less developed countries, the latter were obliged to settle for the best that they could obtain from those countries. The result is a series of rules tailored to the circumstances of the highly industrialised countries and in no way recognising that Australia’s situation is not, in fact, identical with that of the highly industrialised countries. As I have said, the absence of such recognition was not due to opposition from the less developed countries.

Let us look at the new articles which have emerged from these negotiations. The key article - and the one that presents Australia with real difficulty - is Article XXX VH, which lays down two sets of rules. The first set applies to what are described as the developed countries and the second set, which reasonably enough is fairly nominal, applies to the less developed countries. In other words, the article is based on the premise that the countries of the world fall into two - and only two - economic categories. This proposition is, of course, completely contrary to real life. Under the new Article XXXVII, the socalled developed countries are to accept certain new commitments. The main ones are -

To accord high priority to the reduction and elimination of tariff and nontariff barriers to products of actual or potential export interest to less developed countries;

To refrain from increasing tariff and non-tariff barriers against such products; and

To take similar action in regard to fiscal charges on raw or processed primary products produced in the less developed countries.

These three commitments are backed up by a further provision obligating a country to enter into consultations - really confrontations - in G.A.T.T. whenever it is unable to give full effect to them. As noted earlier, there is no provision for relaxing the G.A.T.T. ban on new tariff preferences.

We can accept the commitment on fiscal charges. But, in the absence of any provision for new preferences, the effect of the provisions on tariffs would be to curtail severely our right to increase, or even to maintain, tariffs on any products that might be designated - now or in the future - as being of actual or potential export interest to the less developed countries. Because the range of products of export interest to the less developed countries has not been established - and indeed is not likely ever to be established in the sense of being made subject to any limits - this would involve contracting out of our right to use the tariff over large and quite undefined areas of Australian production, present or future. It would involve giving a blank cheque, in a situation in which we have no real knowledge of the extent to which such action might impinge upon our own development policies. It might be argued that Australia would suffer no real detriment, if we were to remove duties from imports from less developed countries, on the ground that Australian industries are not worthy of protection if they cannot compete with the industries of these countries. This argument ignores two things. It ignores, first, the fact that there are a number of products in which some less developed countries are highly competitive, not only with Australian industry but also with the much older and much larger industries of other countries.

But, more importantly, it ignores the continuing G.A.T.T. embargo on new preferences - an embargo which, as I have already noted, certain highly industrialised countries have so far declined to amend. If Australia were to remove or reduce duties on imports from less developed countries, the existing and proposed provisions of G.A.T.T. would require us to remove or reduce also the duties on the same goods when imported from the industrialised countries. It would be those countries, rather than the less developed countries, which would receive the major benefit from duty reductions by us on this basis. Quite obviously, duty reductions on this basis would expose Australian industries to the most damaging competition from the highly developed countries. Australian industrialisation has not yet reached the stage where our industries can compete on a free trade basis with the long established, high volume industrial complexes of the major industrial powers. If it had, we would not have the need for protective tariffs at all.

To remove our protective duties in this situation would mean sacrificing much of what we have already achieved in the way of industrial development, and our hopes of further industrial development, with little or no benefit to the less developed countries. This is the crux of our difficulties with the new G.A.T.T. provisions. To accept those provisions unreservedly would place in jeopardy our future development, and much of the development we have already achieved. It would also limit our ability to use the tariff for the benefit of Papua and New Guinea.

The Government is not prepared to do this. It has therefore decided to make its acceptance of the new articles subject to a formal reservation. The effect of the reservation is to limit Australia’s obligations under the new articles to action that is consistent with our development needs and responsibilities. This does not mean that the Government is not prepared to contribute towards the solution of the urgent trade problems of the less developed countries. On the contrary, the Government is willing and anxious to help these countries to the limits of Australia’s capacity. This is made clear in the reservation that we will present.

Concurrently, with its examination of the new G.A.T.T. provisions, the Government has indeed studied what can be done, consistent with our own needs and policies, to afford real and practical help to the less developed countries in their efforts to expand their export earnings. We have never been convinced that tariff reductions applicable to the industrialised countries as well as the less developed countries, as provided for in the new G.A.T.T. articles, will in fact do very much at all to improve the trade of the less developed countries. The relative competitive position of the less developed countries will not be improved by this means. It would appear inevitable that the major part of the increase in trade flowing from across the board tariff cuts would accrue, to those countries which already have vast industrial capacity. The Government has therefore consistently backed the less developed countries in their efforts to get for themselves preferential tariff reductions on their exports.

The first serious discussion of such preferences at ministerial level was at a meeting of Commonwealth Trade Ministers in London in May 1963. At that meeting I argued that the G.A.T.T. rules needed to be changed to allow tariff preferences for selected imports from less developed countries. I advocated this at a G.A.T.T. ministerial meeting a few weeks later, and again at the United Nations Conference on Trade and Development in Geneva in 1964. There are, of course, many practical difficulties in introducing new preferential trading arrangements for a group of countries large in number and difficult to define. After very careful examination of the whole question, the Government is satisfied that arrangements for preferences that will assist the less developed countries can be devised. Protection of domestic industry would not be impaired. The essential interests of existing exporters to the Australian market would not be jeopardised.

Having reached this conclusion, the Government has decided to make provision in the Australian tariff for preferential duties on selected imports from less developed countries. This means that, for a range of products of particular export interest to less developed countries, imports into Australia from those countries will attract substantially lower rates of import duty than are payable on the same products when imported from developed countries. This will demonstrate by positive action Australia’s willingness to help overcome the trade problems of the less developed countries. It will also give a lead to other countries which may wish to use preferences to assist the less developed countries. I make it clear that this initiative is taken by the Australian Government alone at this point of time.

The Government sees these new preferences as a means of helping to offset the competitive disadvantage faced by the new industries of the less developed countries, and of putting them in a better position to compete with major industrial countries for a greater share of Australia’s import trade.

Preferential duties established on this basis would not conflict with long standing Australian policy of protection for our own economic and efficient industry. With few exceptions, protective duties in the Australian tariff have been fixed on the basis of the competition offered by producers in the industrialised countries. They are therefore frequently higher than are needed to afford reasonable protection against the generally less competitive industries of the less developed countries. So long as duties are not reduced on the products in which less developed countries are already competitive in international markets, there will be no damage to efficient Australian industries.

The real barrier to the Government taking action along these lines has been the G.A.T.T. provisions on new preferences. The Government had hoped that these would be modified as a result of recent negotiations in G.A.T.T. and at the United Nations Conference on Trade and Development. However, the position of a few of the major industrial countries has so far prevented any change. Although the question is still being debated in G.A.T.T. and U.N.C.T.A.D., there is, as yet, no assurance that it will be possible to reach early international agreement an arrangements for giving prefereneces to selected exports of less developed countries.

The Government has therefore decided to seek a waiver - or dispensation - from the provisions of G.A.T.T. relating to preferences. The waiver would cover both an initial list of products on which we would introduce preferences as soon as the waiver was granted and additional products which might be added from time to time. The initial list has been selected after consultation with representatives of Australian industry and after careful examination of the list of products which less developed countries have indicated as being of special interest to them. From this list, the Government has selected certain products on which duties on imports from less developed countries can be reduced without serious detriment to Australian industry. In some cases, individual less developed countries which export some items which are already competitive would be excluded from the benefits of the preference; that is, imports from those countries would continue to be dutiable at existing most favoured nation rates. In addition, imports from less developed countries under the preferential rates would be subject to tariff quotas.

These tariff quotas are designed to serve two purposes. They will provide an additional safeguard for Australian industry and will ensure that the preferences do not disrupt or cause serious damage to the trade of third countries. The Government has been very conscious of both these points in formulating its proposals. It has therefore decided that the preferential rates should be subject to modification as producers in less developed countries become, as we hope they shall, competitive in their own right. Accordingly, Australian industry will be free to seek to have the preferential rates reviewed under the procedures for inquiry and report laid down in the Tariff Board Act.

So far as third countries are concerned, our approach to G.A.T.T. will envisage the waiver containing provision for prior consultation with other interested supplier countries before introducing a preferential rate of duty. We will also propose to make regular reports to G.A.T.T. on developments under the waiver. These reports will provide an opportunity for countries whose trade may be significantly affected to secure reconsideration of particular preferences. If the circumstances justify it, such international reconsideration might lead to the conclusion that changes in the competitive situation of particular industries in particular less developed countries were such that the preferences enjoyed by these - and after all that is the happy ending of the exercise, should it eventuate - industries were no longer necessary, or perhaps were higher than needed, to offset the disabilities which affected their competitive position in world markets at that time.

Throughout this statement, I have made frequent reference to the less developed countries. However, despite the great amount of debate that has taken place in international meetings on what should be done to assist the less developed countries, there has been little discussion, and no agreement, on which countries fall within this group. Since a system of preferential tariffs cannot be operated without designating the countries to receive preferences, the absence of international agreement as to which countries are less developed has posed a problem. The Government would, of course, prefer to adopt a generally accepted list of countries. But in the circumstances that I have explained it has not been able to do this. It has therefore taken the countries which made up the caucus of less developed countries at the United Nations Conference on Trade and Development and has added Papua and New Guinea, and the British territories or former territories which already receive some preferences under the Australian tariff. This seems to us to be reasonable at this point of time. This question will come under discussion when G.A.T.T. considers our application for a waiver. This may well lead to the emergence of an agreed list of countries which can be regarded as being less developed for international trade purposes. In this event, the Government would certainly take into account the outcome of such G.A.T.T. deliberations.

The decisions of the Government which I have announced are important. They will enable Australia to play its part in giving practical help to the trade of the less developed countries thus aiding their growth and development. Our initiative in moving ahead on the important question of new preferences for these countries might well serve as a pattern for others in this field, thus compounding the trade benefits for the less developed countries. At the same time Australian industry, and Australia’s growth and development, will be safeguarded in a way which would not be possible were we to accept without reservation the new G.A.T.T. articles.

I now present the following papers for the information of the House -

General Agreement on Tariffs and Trade - Amendment to assist less developed countries -

Protocol to insert new articles in the Agreement.

Terms of Australia’s acceptance of, and reservation to, the protocol.

Proposed tariff preferences to less developed countries.

List of countries which will accompany Australia’s approach for a waiver from the G.A.T.T.- and move -

That the House take note of the papers.

Debate (on motion by Dr. J. F. Cairns) adjourned.

page 1637

RADIO PHYSICS LABORATORIES FOR COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION AT EPPING, NEW SOUTH WALES

Report of Public Works Committee

Mr BRIMBLECOMBE:
Maranoa

– In accordance with the provisions of the Public Works Committee Act 1913-1960, I present the report of the Parliamentary Standing Committee on Public Works relating to the following proposed work -

Erection of a Radiophysics Laboratory for the Commonwealth Scientific and Industrial Research Organization at Epping, New South Wales.

I ask for leave to make a short statement in connection with the report.

Mr DEPUTY SPEAKER (Mr Lucock:
LYNE, NEW SOUTH WALES

– There being no objection, leave is granted.

Mr BRIMBLECOMBE:

– The recommendations and conclusions of the Committee are -

  1. There is an urgent need not only to provide adequate laboratory and other accommodation and open space for the Division of Radiophysics, but to relieve the overcrowding problems of the National Standards Laboratory.
  2. The Committee recommends the reestablishment of the Division at Epping.
  3. The Committee supports the action being taken to acquire the remaining land which will give the site a continuous frontage on Pembroke and Vimiera Roads, Epping.
  4. The Committee recommends the construction of the buildings and services as proposed.
  5. The estimated cost of the proposed work is £800,000.

During the course of evidence taken by the Committee, the Chief of the Division of Radiophysics (Dr. E. G. Bowen) mentioned a matter which did not strictly relate to the construction of the new laboratory building, but touched on the functions of his Division. Dr. Bowen told the Committee that during the recent bushfires the Division undertook some cloudseeding which it is thought was instrumental in inducing rain in Victoria at a critical time. Similar efforts in New South Wales were not successful. The seeding done was only carried out after the Division had been approached and after the fires had been burning for some time.

The point to be stressed is that C.S.I.R.O’s function is confined to the development through research of rain making techniques and that the practical application of proven methods is the responsibility of another authority. The conclusion which might be drawn from these observations is that there should be consultation between Commonwealth and State governments on the application of rain making methods developed by the C.S.I.R.O.

Ordered that the report be printed.

page 1637

BILLS RETURNED FROM THE SENATE

The following Bills were returned from the Senate without amendment -

Conciliation and Arbitration Bill 1965.

Western Australia (South-West Region Water Supplies) Agreement Bill 1965.

International Wheat Agreement (Extensions) Bill 1965.

page 1637

INTERNATIONAL MONETARY AGREEMENTS BILL 1965

Second Reading

Debate resumed from 13th May (vide page 1483), on motion by Mr. Harold Holt-

That the Bill be now read a second time.

Mr CREAN:
Melbourne Ports

.- The Opposition does not offer any hindrance to the passage of this Bill because we regard the International Monetary Fund as an essential piece of mechanism for facilitating the flow of trade and international currency transactions. I think it is of some significance that this measure should be discussed in the House immediately after the statement made by the Minister for Trade and Industry (Mr. McEwen) because, in the final analysis, most of the matters concerning international currency transactions should be bound up with the proper flow of trade between countries. I wish to draw the attention of the House to some remarks contained in the report of the United Nations Conference on Trade and Development. The Conference was held in Geneva from 23rd March to 16th June 1964. The document that I have, together with related documents printed by Her Majesty’s Stationery Office, represents the final act of the Conference. I would hope that the Australian Government would do something similar and make the proceedings of the Conference, of which Australia was a member, more freely available. I came across a reference to this document in something else that I was reading and it took me quite a time to obtain the document from the Parliamentary Library. Whether the document was being processed - we referred to this matter last night- I do not know, but it was not freely available, despite the fact that it has been printed as a public document by Her Majesty’s Stationery Office. I think that the Australian public should have similar access to such documents. The report reads - lt is necessary to make provision for adequate study of international monetary issues relating to problems of trade and development with special reference to the objectives and decisions of this Conference. Studies of the future of the international monetary system should not be carried out in isolation from the examination of new trade policies. It is necessary to ensure that any decisions reached on future organisations of international monetary relationships should be made fully consistent with the purposes of the present Conference and thai any arrangements for the solution of the currency problems of the major trading countries should take fully into account the needs of developing nations.

I would have thought that, consonant with what the Minister for Trade and Industry has said, Australia would find nothing wrong with the proposition I have just cited, but when that proposition was put to a vote it was carried by 87 to 11, Australia, unfortunately, being one of the 11 members to record a dissenting vote. In other words, Australia did not seem to be prepared to accept that studies of the future of the international monetary system should not be carried out in isolation from the examination of new trade policies.

What I have to say this afternoon will to some extent substantiate that the majority view is the correct view. Because Australia is not facing up to its balance of payments difficulties - its subscription to the International Monetary Fund is nowadays described as part of its second line of reserves - many of the things that should be looked at in this country are not being considered. Under the heading “ Dollar Off the Seesaw” in “The Economist” of 3rd April 1965 appears a table which analyses the balance of payments situations in the United States of America and in Great Britain. Until recently, the dollar and the £1 sterling were described commonly as being key currencies in international transactions, but at present each of those currencies is undergoing certain onslaughts as far as other parts of the Western economy are concerned and the United States of America and Great Britain have had to take measures to correct what they describe as their balance of payments situations. The table states that the problems confronting America and Great Britain are different. It states that there are two kinds of payment deficits and describes the American payment difficulty as being one of short term capital alone. In other words, the table states that the United States balance of payments problem is not one of trade; it is one of capital transactions - the fact that its private enterprises are buying into activity in other countries and that, on the government or capital side, it regards itself somewhat as the policeman of the Western world. That is one kind of payment deficit - a capital payment deficit.

Britain’s situation is described somewhat differently. It is described as one of trade and long term investment alike. In other words, Britain has a deficit both on account of its trade and its capital transactions. Apparently Britain has been importing, if you take into account invisibles, more than it has been exporting and at the same time has been engaging in a private capital investment programme similar to that engaged in by America.

I suggest that Australia’s situation is of a third kind. As I see it, Australia’s balance of payments difficulty is essentially one of a trade deficit which for the time being has been camouflaged by an inordinate capital inflow into this country. The Opposition in recent times has criticised the Government for not paying sufficient attention to the real problem confronting this country, which is essentially one of balance of trade. That is to say, that the difference between our exports and our imports after allowing for invisible items is negatived or in deficit to the order of about £200 million. For almost the last 15 years that deficit has been financed by a flow into this country of overseas capital - about 50-50 from the United States and the United Kingdom. It is because of recent action on the part of the United States and the United Kingdom - I have indicated that their problems differ from ours - that certain reactions have been provoked in this country on the part of the Government, but so far those reactions appear to us to be the wrong ones. I think it is competent to ask at this point in time: Why should Australia, in view of its present stage of economic development, be perpetually dependent - this seems to be the view of the Government - for a balance of its international payments upon a flow into this country of capital from the United States and Great Britain? Why are we on the other side not doing something about abating the flow of imports into this country or stimulating the flow of exports or, as a third group, doing something to abate the erosion year by year in the field of invisible items? These invisibles relate to shipping transactions, insurance and the like on the merchandise that flows in and out of this country.

I think it is appropriate at this stage to ask ourselves: What are the items that one country in relation to another calls its reserve of international currency? Let us take Australia’s overseas reserves. At the moment they are in the region of £700 million Australian. The accumulation by Australia of these reserves arises historically and over a long period out of the interflow of annual capital transactions. At this point of time we appear to have freely available reserves of £700 million. However, as I pointed out in a debate some weeks ago, we should offset against these reserves the liability of between £2,500 million and £3,000 million which Australia owes to other countries as the value of their equity in Australian industries or the value of sums that the Australian Government has borrowed overseas from time to time. Be that as it may. I am now talking about the reserves which at this time amount to £700 million. They are essentially an accumulation of other currencies or of gold.

For the main part, Australia’s reserves are held in sterling. The idea of a reserve is that it can be converted into gold, if need be, or into the currency of another country to meet the cost of transactions into which we have entered. Of course, since the end of the post war period, as we term it, from 1945 onwards, there have virtually been two key currencies. They are sterling and dollars. Inevitably behind these is still the shadow of gold. For want of anything better and as a last resort, people still want to hold gold. Until recent times, perhaps in the last two or three years, most other parts of the Western world have been prepared to hold their reserves in either sterling or dollars. However, there has literally been an accumulation of certain other currencies. The two main European currencies are the deutsche mark and the franc. As recently as February of this year, President de Gaulle began to express impatience. Li some respects he is regarded as being a partner of ours in certain transactions in the defence of the Western world. I think that people who take an intense interest in foreign affairs should sometimes consider the dealings that go on between one currency and another. This is a not unimportant aspect of foreign affairs. 1 would like to direct the attention of the House to an article that I came across only recently. It is in a quite recent issue of an American magazine called “ The Reporter “. It bears the date 8th April 1965 and the article is headed “Will 1965 repeat 1931?” The article is written by Robert Triffin. Those who read about certain discussions that are taking place in the realms of international finance these days know that quite a number of moves are afoot for the reform of the international monetary system. I think the Treasurer (Mr. Harold Holt) referred to this in his rather longwinded and, if I may say so, very personal account of his trip to the United States. Somewhere in passing he referred to these discussions on increasing international liquidity.

Two or three fairly prominent names are associated with the discussions at the level of professional economists. One is Robert Triffin, another is named Stamp and a third is named Bernstein. One or two others have variants of the plans. One of the plans that is freely talked about is the Triffin plan. It is of some significance that this article appeared six weeks ago and I would like to read what Triffin said about President de Gaulle’s recent manoeuvres. Referring to President de Gaulle, he said -

His speech should rather be viewed, in my opinion, as an indication of his growing impatience with the slow pace of the Group of Ten discussions.

The group of countries to which he referred consists of France, West Germany, Italy, Belgium, the Netherlands, Sweden, the United Kingdom, Canada, Japan and the United States. The Group of Ten has been referred to in this House. The group has been discussing these schemes for international monetary reform in seminars and other learned associations. De Gaulle apparently is growing impatient with the slow pace of these discussions. The article continued - and wilh the exorbitant privilege conferred on the dollar - far more than on the pound - by the present system.

The privilege that he sees that is conferred on the dollar at the moment is that until now other countries have been happy to hold the dollar. They have regarded it as being just as good as gold. The article went on -

By their automatic underwriting of dollar deficits …

That is in fact what is happening. When one country has a deficit with another, it is assumed that the country with which the deficit has been incurred is prepared to hold accumulations of the currency of the other country. The article said -

By their automatic underwriting of dollar deficits, the foreign central banks-

That is. the central banks of Europe - are in effect called upon to finance U.S. policies in which their governments have no voice and to which they may be fundamentally opposed.

I suggest that these following words are significant -

President de Gaulle objects to the financing by the Bank of France of what he calls the expropriation of French firms by our -

That is. the United States - growing direct investments mid participation, of our aid -

That is, American aid - to Chiang Kai-shek, of our economic and military intervention in Africa, Southeast Asia, etc.

Professor Triffin goes on to note -

We may prefer our policies to his, but can wc realistically expect - or force - him to help finance them indefinitely?

That is the critical point, I would suggest, which these discussions on reform of international finance must reaoh. Professor Triffin describes the situation in this way - . . the group of Ten has nevertheless been bogged down now for months in a deep conflict between the two key currency countries on the one hand - the United States and Britain - and the major reserve holders of the Continent - particularly the French - on the other. The Continentals deny the existence of any proximate liquidity shortage and stress instead the haphazardousness, inequity, and vulnerability of a system in which the bulk of world reserve increases - three-fourths or more in recent years - depends on the unpredictable size of U.S. payments deficits and on the precarious willingness of foreign central banks to finance them through the accumulation and retention of short term dollar holdings as part and parcel of their internal monetary reserves.

In other words, the other half of continental Europe is saying that the time has gone when, in their view, the dollar and sterling should be regarded any more as key currencies. But the great dilemma is: What do you put in place of them? Do you go back to the gold standard? If we are talking about expansion of world trade the gold standard is a pretty rickety sort of structure on which to base world trade in the western world. The latest figures that 1 have available are again taken from a quite recent and reputable source, the very interesting “ Monthly Economic Letter “ of the First National City Bank of New York. In January 1965 the bank gave the estimates of gold production in .1964. The total gold production of countries other (han Russia for a 12 months period that ended in 1964 was 1,400 million dollars worth. About half of that gold, rather mysteriously, goes into private rather than into reserve holdings.

At the moment world trade is running at an aggregate figure of something like 150,000 to 160,000 million dollars and it is expected to expand at something like 5 per cent, per annum, an increase in round figures of 7,000 to 8,000 million dollars a year. How can you base a sensible expansion of world trade on the haphazard increments of reserves that would flow from a gold standard alone? Personally, I do not think there is any possibility of a return to the gold standard because I think that the Continentals - if we like to call them by that name - and Britain and the United States will realise that to divide on this sort of issue is probably just as silly as to divide on the military plane at the moment. Any division at the present time between those two economic blocs on the question of what international trade reserves should be based upon would have most disastrous effects on developing countries, including - if we put it in that category - Australia. If there is any shortage of reserves the greatest impact will fall on the annual incomes of those countries which are predominantly primary producers. It will affect the price of wool, wheat, sugar, base metals, tin, rubber and so on.

This is not just a wild idea that I have. I draw support from an article in the “ Economist “ of 13th March 1965. All the sources from which I am quoting are publications of within the last couple of months. and in some instances the last few weeks. This article is entitled “ Dangerous Waters “. The “ Economist “ has rather picturesque titles to its articles. The article says -

Most important of all, over the rest of the world, and particularly over the primary producing countries, hang the clouds of a darkening prospect for international trade. These clouds arise because, even if the United States and Britain do escape an internal recession, both these key currency countries are most definitely going to be fighting throughout 1965 against’ what they regard as their grave balance of payments crises - and both at the same time.

I think that the Treasurer rather suggested, at the end of his speech, that even though he thought he had impressed people bearing significant names in the United States of America, he still thought that they had to go along the path they had indicated, which means that both the United States and Britain are going to fight throughout 1965 against what they regard as their grave balance of payments crises.

One of the indirect effects of that fight could be unfortunate repercussions upon the interna] and external economy of Australia. Again, 1 do not subscribe to the notion that 1965 is like 1931. It is like it in one sense, but 1931 was a time when countries were deciding whether or not to go off the gold standard. It seems that in 1965 certainly some countries want to go off the dollar and sterling standard but are not quite sure upon what they should hang their currencies. Surely the significant difference between 1931 and 1965 is that we are living in a modern age economically and not in the Ice Age and are supposed to have learnt certain lessons from the experience of 1931 and subsequent years. One lesson is that if a country properly mobilises its resources internally and externally, the fact that there may bc a recession in one part of the world’ is no reason why there should be a recession in the economy of the country elsewhere that has mobilised its resources. Steps must be taken early enough to meet the situation. The great danger in the Australian situation is that the Government has not yet even got the problem into proper perspective. The Treasurer has wasted three months since the beginning of 1965, when the barriers were starting to come down shutting off capital from the United States and the United Kingdom. He is still hopefully relying on Australia getting every year the £200 million or so of foreign capital inflow that we have relied upon during the last 10 or 15 years. If we do get it, of course, we have not much to worry about.

Mr Pollard:

– He is not a realist.

Mr CREAN:

– No, he is not a realist, because as I have pointed out we have already reached this serious situation. Two of my colleagues who will support me later will elaborate this point. We have already reached the situation in Australia where the capital inflow of £200 million is matched by a capital outflow of pretty well the same amount to service the dividends on foreign equity in Australia and the interest on Government borrowing that has already been incurred. Our borrowings overseas now amount to £3,000 million. At 6 to 7 per cent, a rough estimate of the amount necessary to service this borrowing is approximately £200 million. Our problem basically is that we have either to reduce imports - which of course, will have an impact on the countries that the Minister for Trade and Industry (Mr. McEwen) spoke about an hour or so ago - or we have to do something not only to increase our exports but to make sure that the prices we get for those exports are reasonably stable.

I refer again to the document which I mentioned earlier and which relates to the United Nations Conference on Trade and Development of February 1961. At page 296, it states -

Since 1950 the value of world exports has more than doubled. . . . The countries of the world did not share proportionately in this expansion of international trade . . . exports from developing countries-

That means the poor countries economically -

  1. . declined steadily from nearly one third in 1950 to just over a quarter in 1955 and to only slightly more than one fifth in 1962.

Concurrently between 1950 and 1962 the developed market economies increased their share from three fifths to two thirds and the centrally planned economies from 8 to 13 per cent.

The exports of developing countries between 1950 and 1962 rose from 19,200 million dollars to 28,900 million dollars.

That is a 50 per cent- increase or an average annual increase of 3.4 per cent. But what did happen over the same period of time? There were variations in what are called the terms of trade. That is the relative prices of exports to imports. The terms of trade of those developing countries declined by some 17 per cent, in that period. Surely that is the problem that faces the world in what we are pleased to call the decade of development. I think that starting from 1964 or 1965 the United Nations, looking forward to the next 10 years, described the period as being “ the decade of development “. But this same United Nations report says -

Unless these measures are adopted the trade gap of the developing countries will be immense; available estimates show that, if the factors responsible for the present trend in world trade continue, the trade gap may reach an order of magnitude of about 20,000 million dollars.

In other words, the disparity between the balance of trade of the developed and underdeveloped countries and the developing and underdeveloped countries - whatever you like to call them - will be this very large figure of 20,000 million dollars. Surely that is the problem thats this Government should be looking at. That is why I am at a loss to understand the vote of the Australian Government on a sensible proposition that trade and monetary reviews could have to be separated. When the vote was put, the result was 87 to 11, and Australia was apparently numbered among the wise 11 who thought that this sort of measure ought not to be taken.

As I said, we welcome this measure such as it is. It increases Australia’s contribution to the International Monetary Fund by 100 million dollars. If other countries do as was suggested, it will mean that the capitalisation of the organisation will rise from 15,000 million dollars to 21,000 million dollars. Nevertheless, in terms of total world trade with the reserves that are available both through the International Monetary Fund and through the independently held international reserves of countries, there will be a smaller proportion of world trade. Surely there has to be some sort of indication by Australia as to where it stands. It is true that the Treasurer has occasionally breathed a word or two in this place about international liquidity. He has talked about this rather mysterious organisation, the group of 10. But never yet has he said other than: “ I have talked to the people in Washington. I have talked to the people in Tokyo.” Why does the Treasurer not talk to the Australian Parliament. Let him indicate what his views are with respect to the problem of international monetary recon struction in the years that are ahead. What is the good of being enthusiastic about large expenditures for defence if nothing at all is being done to breach that appalling difference between the rich and the poor out of which wars inevitably arise. I am not going to argue on this occasion the relative merits of expenditure on defence or the magnitudes of defence expenditure. But surely there is an obligation on the part of Australia to contribute much more than it has towards the development and the assistance of what can be called countries that are less developed than Australia.

One gets a little tired of hearing Australia described as in a special category. I prefer the categorisation of which I read recently - that there are three groups in the world. There are the under developed countries. Surely there cannot be much doubt as to the principal countries which are grouped in that category. They are countries such as India, and New Guinea if honorable members like to include it. The second group of countries is the developing group. On top of that group are what we would call the super developed countries. Certainly Australia is not in the super developed class. But if it is not careful, Australia is going to be a mere pygmy at the heels of the super developed countries. Australia does not seem to be apprehensive about the sorts of battles which are going on at the moment with sterling and dollar versus franc and deutsche mark or with the suggestion that somehow a gold standard of a sort may be resurrected in 1965 when everybody thought that it had died in 1931.

We suggest that Australia’s view ought to be of a much more forward kind in this field than has so far been indicated. We ask, as we did during a very interesting debate here the other day on New Zealand, why all these discussions have to take place at a mysterious submerged level of backroom boys. I do not like the word “ bureaucrat “ because, in my vocabulary, “bureaucrat” is only significant if it is used to describe a situation where an official has ascendency over a Minister. Perhaps that does happen sometimes in these realms. Surely these sorts of problems ought to be discussed frankly and freely, and out in the open. We ought to be given a lot more documentation than we have been given. I said at the beginning of the debate that it took a day and a half for me to get the document that 1 have in my hand out of the Library. There ought to be 50 copies of it there. A copy of it should be circulated to each member of this House. This document is entitled the “ United Nations Conference on Trade and Development “. Australia was a participant in this conference. Perhaps the Government did not want to indicate the occasion on which it voted against a proposition which seemed to have the support of pretty well the majority of the countries of the world represented at this conference.

Let us have more documentation. Let us have more opportunities for discussions of this type than we have had. After all, I think the Treasurer indicated on behalf of the Australian Government as far back as February of this year that he was willing to be a signatory to this International Monetary Fund increase. But the introduction of this Bill was left until last Thursday. It has been expected that members of the Opposition and Government backbenchers who want to participate in this debate can do all their delving and preparation in the space of a week or so. In my view, this matter and the consequences, both explicit and implied, which flow from it deserve a much more extensive airing in this House than, unfortunately, they are likely to get. We are worried enough about our internal monetary mechanisms, but if we are not also careful about our external monetary mechanisms we may find that, no matter how carefully we may think we are husbanding the internal side, the impact from the external side will rob us to the tune of hundreds of millions of pounds a year. This could happen if the terms of trade slipped against us.

It is not only droughts that rob primary producing countries. A country could have a most bountiful year from an agricultural point of view, but this could be offset by manipulation of prices by certain gentlemen who were simply fiddling on what is called a short term basis, pending a decision on whether to change from’ dollars to gold or whether to hold moneys in a bank in New York or in a central bank in Europe. We now have what is called the Euro-dollar. It is still a dollar, and it is still only significant if people want to hold it. At the moment, there is a tendency not to want to continue to hold sterling as the key cur- rency. Whether we like it or not, we are bound up to a great extent with the fortunes of sterling as a form of international currency. I have no doubt that when the next Budget is presented the Treasurer will have been abroad somewhere else, giving what he calls his views on this subject. They might be very interesting, but surely he ought to be expressing the views of his Government. He cannot properly express the views of his Government if there has not been public discussion and scrutiny of what it is proposed to say.

Mr WENTWORTH:
Mackellar

– In rising to support this Bill, let me first quote this sentence from the second reading speech of the Treasurer (Mr. Harold Holt)-

Nevertheless, in view of the importance of this transaction and of the work of the International Monetary Fund in the field of international finance, the Government felt it desirable to introduce specific legislation and so give Parliament an opportunity to discuss these matters.

That was a very laudable objective, but I join with the honorable member for Melbourne Ports (Mr. Crean), in regretting that the Bill was introduced at such short notice that the Parliament will not really have an adequate opportunity of discussing these things. In the press of legislation during the closing hours of these sittings, there will perhaps not be as much attention given to this Bill as there should be, particularly in view of the very definite remarks of the Treasurer at the time of introducing it.

It is well known that one effect of the Bill will be to make a relatively small increase in Australia’s contribution to the International Monetary Fund. Only a part of this increase, of course, will be in gold. A second effect will be that it will increase substantially Australia’s drawing rights from the Fund. In other words, it will increase substantially what is known as our second line of reserves, which we may need to call upon if the balance of trade reduces overmuch our overseas holdings in cash and therefore, concurrently, our internal and external liquidity.

There are two aspects from which this Bill may be considered. The first is its effect upon the Australian economy and the second is the place in the world economy of the measures which have been taken on an international scale. I would like very briefly to advert to both of those aspects. The increase of the International Monetary Fund will have a beneficial effect for Australia in that it will protect the pound and the dollar and therefore will protect the real value of Australia’s overseas reserves. These overseas reserves still approximate £700 million, and, as the House knows, the bulk of them is held in the form of sterling. If there were any devaluation of sterling, Australia, at one stroke, would lose a proportionate amount of the value of the overseas reserve which she holds in sterling. Overnight, we could lose well over £100 million under this heading.

It is therefore interesting to read in the Treasurer’s second reading speech that only within the last few days the Fund has been used to buttress sterling. Of course, this will obviate, or at any rate reduce the possibility of any sterling devaluation, which would obviously have an effect upon all holders of sterling, of whom, if my memory serves me right, Australia is the biggest. So there we have the first effect of this measure which is beneficial to Australia. It will help to protect the real value of our overseas reserves.

In the second place, it will give us an increased drawing right on the Fund. It may be argued that as things stand at the moment we do not need this drawing right, although it is only four or five years now since we had to exercise it. It may be said that, with our present ample reserves of approximately £700 million in overseas currencies, we are unlikely in the foreseeable future to need to draw much upon the Fund. I hope this is correct, but I also think we should act prudently to protect ourselves from any future moves, in view of our present balance of trade position. Our trade balance for this year will be adverse to the extent of some £400 million, although a great deal of this - perhaps over half of it - will be made good by capital inflow. Nevertheless, this capital inflow has its own disadvantages. Certainly it has its advantages, but it also has its disadvantages and it is something upon which we should not want to rely overmuch.

But whether this is so or not - you, Mr. Speaker, would be the first to rule that this is not the occasion to be discussing the details of Australia’s balance of trade - it is unlikely that we shall be able to reverse this adverse balance of £400 million a year very quickly. I feel, and I think other members of the House will agree with me, that we should be taking measures to reduce our reliance on imports. I think that the Government is already too tardy about taking such measures, and I hope that the position will not be allowed to drift so far that only drastic measures will provide an adequate remedy. None of us would like to see a repetition of the unhappy events of 1960 and of the rather inadequate economic policy which the Government pursued during 1961 and 1962. It is far better for us to act in time. I would agree that while our balance of trade is adverse we should not be curtailing capital imports. We should be taking, not drastic measures that will harm and slow down the economy, but constructive ones that will reduce this adverse balance and, therefore, reduce our present dependence on capital imports. At some later stage, though perhaps not tonight, I hope to discuss in greater detail in this House what those measures should be. This, I think, is not an appropriate time to discuss them.

I come back to the point that I was making: While we have this adverse annual balance of £400 million or so on current account, which cannot be quickly corrected without drastic, uncomfortable and undesirable measures, it is incumbent on us to give ourselves a breathing space, and time fo correction without trouble, by increasing the availability to this country of international currencies. In the trading circumstances in which Australia now finds herself, I believe that the Treasurer has done the right thing - or one of the right things - by increasing the latitude available to us in terms of international currencies. In other words, this is a good and reasonable measure for Australia, having regard to the situation in which we now find ourselves. The present situation in relation to our overseas trading balances is undesirable, but we have to face the fact that it exists. As I have said, I believe that action to reduce the present flow of imports is overdue. I do not suggest that there is any crisis yet, but action should be taken to avoid the occurrence of one at some time in the future.

There is one other matter that I should like to mention. I believe that here I shall be at variance with many Opposition members, but I ask them to take account of what I have to say and to consider it. An inflow of capital to Australia can come, basically, in one of two forms. It can come in the form of equity capital - that is, the ownership of real things in Australia. Or it can come in the form of debenture capital - that is, rights to a given sum of money, which is lent at interest. I regard debenture capital as being by far the more desirable of these two forms, because repayment is easier - not easy, but easier - and the economic effects of stopping its inflow are less dramatic. Equity capital is much harder to control and its flow can be more chancy, particularly if the holders of equity capital from abroad control any significant sector of Australian industry.

Before the war - indeed, for most of the time, going back for three quarters of a century - Australia had access to a fair amount of debenture capital. Recently, she has not. This flow of debenture capital has been replaced by a flow of equity capital. I think that, from our point of view, this is very much a change for the worse. There is a justifiable reason for our getting a certain amount of debenture capital from abroad, because of our large migration programme, which involves a good deal of necessary investment in Australia in the form of houses for migrants, factories in which they are to work, public works, roads, water supplies, electricity and everything else that services the increased population. So, from that standpoint, it is, I think, a little unreasonable that the flow of debenture capital into Australia has not been sustained over the last 25 years. I consider that this Bill is to be commended because, among other things, it will permit greater access to debenture capital as opposed to equity capital.

Having made those comments about the impact of the Bill on Australia, let me say only a little about its larger impact, namely, the sort of thing that was mentioned by the honorable member for Melbourne Ports. I do not entirely support the idea that we should be putting all the emphasis on the expansion of world trade that we are generally inclined to do. There are sound theoretical reasons for believing that an economy will be unstable if the bounds of its economic activities are very different from the bounds of its governmental authority, and that therefore there should be a conscious objective before all of us to try to bring closer together the boundaries of governmental authority and economic activity. This can be done in one of two ways - either by reducing the pro;portion of trade to the gross national product or, alternatively, as is being done in Europe, by extending the areas in which effective governmental authority is consolidated.

This is happening in the European Economic Community at present. If honorable members think back, they will realise that it happened a long time ago in the United States of America, and its happening was in fact the turning point in the economic history of that country. So I do not altogether share the uncritical adulation of the expansion of world trade exhibited by others. It would be much better, I think, to place greater emphasis on the expansion of world productivity. We do not want to be doctrinaire in this, because, to some extent, it involves an expansion of world trade. It should also, I believe, involve a reasonable aggregation of governmental authority.

After all, the International Monetary Fund is mainly a mechanism that makes certain things possible. It is not itself the initiator or maker of the movements that take place. It is, shall I say, if I may change the metaphor, the oil in the cogs of the machine. As such, of course, it is essential, but it is not itself the machine. There is danger if we concentrate only on this fund, because it can be used to slur over the international adjustments that should take place and to allow unmade but necessary adjustments to accumulate until some kind of crisis occurs, as happened, for example, in 1929 when a financial crisis overtook the world economy. It is good to have a fund that can be used as a mechanism to prevent crises from becoming difficult or unmanageable. But it is bad if that fund be used to put off the fundamental adjustments in the economy that should be made.

At the present moment, on the world scale, we have a rather anomalous situation occurring. After account is taken of lend lease and other matters of this character - I repeat, after such account is taken - the balance in the United States of America, which is the great economic centre of the world, tends to be adverse. Therefore, the

President of the United States has had to take measures to correct it. But this pressure is very largely masked by the fact that accumulating short term paper in New York is being used to prevent the necessary adjustments.

Obviously, if the balance in the United States and elsewhere is adverse, somewhere in the world there must be an exactly corresponding favourable balance. In the international balance sheet the pluses and the minuses must balance each other exactly, but what is happening, of course, at the present moment is that the favourable balances which are being accumulated, particularly by European countries, are being used in terms of short term investment in New York. This is something which is an accumulating danger to the world, and I think that the President of the United States has recognised this and that this is, perhaps, the basis of the monetary policy which he is at present pursuing. These are complicated, long term things. They are hard to debate and, as I think I have said, at the present moment it is inappropriate to debate them in this House, but if we are talking about the International Monetary Fund, this is the world in which it lives and this is the kind of thing which it was built to do.

Finally, let me advert to the point that was raised regarding undeveloped countries, the necessity for making transfers to them in order to allow countries such as India, for example, to raise quickly their living standards or, should I say, to decrease more quickly their present standards of poverty. This is something which must be done, and the International Monetary Fund is the mechanism by which it can be done. But the International Monetary Fund is only the mechanism. If these countries are to raise their living standards then they must get what, in the long term, is not investment, but gifts. Gifts have to be made from the real resources of those people who enjoy higher standards of living. Those people may be Australians, they may be Americans, they may be Frenchmen or Britishers, but in the long term it is nonsense to talk about doing this by investment. The investments will have to be written off. The transfers which we are making now we can dignify with the name of investment if we like, but, in the long run, they have to be regarded as gifts. This is something where the International Monetary Fund is vitally concerned. If it does not do these things, it simply provides the mechanism whereby they can be done, and the increase in the resources of the Fund from this point of view is, I think, one of the most desirable things. For these reasons and for many others which I have not expressed - and what I have said is, I know, inadequate because of the shortness of time - I have much pleasure in supporting the Bill.

Mr PETERS:
Scullin

.- The primary function of the International Monetary Fund is to make provision by short term financial arrangements for the balancing of the overseas trading accounts of the various nations. Its object is to iron out, as it were, the difficulties that exist in connection with balances of payments. The legislation before us asks for an increase of 25 per cent, in the contributions paid into the Fund by the various affiliated nations and the object is to increase the Fund’s resources. The Treasurer (Mr. Harold Holt) said nhat the increase would be particularly timely in present circumstances because of the measures now being taken by the United Kingdom and the United States of America to eliminate their balance of payments deficits. He said that we cannot expect the supply of international liquidity to continue to be augmented on the substantial scale of recent years by the large amounts of sterling and dollars which other countries have been adding to their reserves. In other words he has said that the difficulties that exist for the United Kingdom and the United States of America in their balance of payments are the reason for the increase in the contributions to the Fund. As the honorable member for Melbourne Ports (Mr. Crean) pointed out, the difficulties of the United States of America and of the United Kingdom arise not because their production has decreased but because they have been utilising their resources to aid other nations and because there has been an outflow of capital from the United Kingdom and from the United States to other countries.

It is very regrettable that the Parliament has not before it the Vernon Committee’s report upon the economy of Australia. Two years ago this Government referred to a committee of experts for their consideration a number of economic matters and among them was the question of the flow of capital into Australia, its effects upon our economy and the probable effects it would have on the world economy. If we had the Vernon Committee’s report before us at the present juncture, we would be in a better position to discuss this question of the flow of trade between America and Australia and the flow of trade between the United Kingdom and Australia. Although the Government has now put this economic proposition before us, it has kept in reserve, or hidden, that material which is essential to a proper discussion of the issues. I refer to the investigations and the results of the investigations of the Vernon Committee. Nevertheless, without that report, we must do our best to find out exactly what the problem is confronting Australia and the world at the present times which necessitates Australia contributing an extra amount to the International Monetary Fund.

As the Treasurer said in introducing the Bill that the increase in the Fund is necessary because of the difficulties that exist at the present time in connection with the balance of payments of the United Kingdom and of the United States, I thought I would find out exactly what their balance of payments difficulties were. I found that for the last 10 years the United Kingdom has had a total favourable balance of payments of more than £1,000 million; that is, in the current accounts of goods and services Britain has received - or has been entitled to receive - for goods and services £1,000 million more than she has had to pay out. During the same period the United States has had a favorable balance of payments of 50,000 million dollars, or more than £20,000 million, on current account. Despite the fact that those two countries have had those vast favorable balances, they are in balance of payments difficulties. Let us compare them with Australia. During the same period Australia has had an adverse balance of £1,300 million. Yet they are in difficulties and we are not in difficulties.

Why are we not in difficulties? The answer is: Because the United Kingdom and the United States have been financing other nations, including Australia. The United Kingdom has been financing Australia’s deficit. Its capital has been flowing to Australia. Since 1950 we have had an adverse balance of payments with the United Kingdom of £1,900 million and with the United States of £1,500 million; a total adverse balance of £3,400 million. This is the position of our nation: In reality, since 1950 the people of the United Kingdom and the people of the United States have been financing the operations of this nation to the extent of £1,900 million and £1,500 million, respectively. Now the United Kingdom and the United States say, in effect: “ We can no longer continue to do that “. The United States says: “ We cannot continue to send to Australia more than £100 million a year worth of goods and services for which we do not receive immediate payment “. The United Kingdom s-ivs almost the same thing. Those two countries, in order to meet their internal liabilities as well as their overseas liabilities, have to have recourse to the International Monetary Fund. The amount in the Fund, therefore, has to be increased in order to serve the purposes of those two nations.

There is a point on which I differ with the honorable member for Mackellar (Mr. Wentworth). He said that it is good for Australia to pay 100 million dollars or £44 million into the International Monetary Fund. He shrugged his shoulders as though that were an almost insignificant amount. He went on to say that such a payment gives Australia a greater drawing power in the future, when we get into balance of payments difficulties. He is right. However, the object of this increase in the Fund was not to help Australia particularly; it was to help the United Kingdom and the United States. Recently the United Kingdom drew 1,000 million dollars from the Fund. The Treasurer, in his second reading speech, said: “Yesterday the United Kingdom drew 1,400 million dollars from the Fund “. So, in a very short period the United Kingdom has drawn 2,400 million dollars from the Fund in order to meet dollar commitments abroad. But what does the United Kingdom have to do? It does not merely draw from the Fund. If it draws dollars, it has to replace them with an equivalent amount of sterling. It has drawn 2,400 million dollars from the Fund and has replaced them with some £1,000 million sterling.

Australia depends upon the flow of capital from the United Kingdom. Can that country continue to supply us with capital when, in order to overcome its own difficulties, it has had to put £ 1,000-odd million into the International Monetary Fund? That is exactly what it had to do in order to draw the 2,400 million dollars. When the United States draws on the Fund it draws in the currency of the nation in which it wants to meet obligations. If it wants to meet obligations in the sterling area it draws in sterling. If it wants to meet obligations in Germany or in Japan it draws in the currency of the country concerned. To the extent that it draws on the Fund, it has to put dollars into the Fund. If it puts dollars into the Fund to a vast extent, how can it continue to send dollars to Australia at the rate of about £100 million worth a year, as it has been doing in the past? How can it finance us to the extent to which it has been financing us in the past if it has to finance itself and its own drawings on the International Monetary Fund? How can Great Britain finance us and at the same time finance itself by putting sterling into the International Monetary Fund? Of course, they cannot do that. That is what causes Australia’s difficulties.

In 1963-64 we received from the United Kingdom £121,500,000, and we received from the United States, in dollars, the equivalent of £200 million. This year the amount of dollars that we will have to receive from the United States in order to meet our overseas obligations will be more than the equivalent of £200 million. We might not need as much as £121 million from the United Kingdom; but we will need in the vicinity of that amount. That is the problem that faces Australia. How can we continue to get people to finance us when they themselves are in difficulty and need the money that they have in order to meet their own obligations? We cannot get them to keep us without seriously damaging themselves.

The Prime Minister (Sir Robert Menzies) wrote to the President of the United States of America when the President said in February: “ There is only a limited number of means by which we can meet our overseas trading deficits. We have to increase our exports or reduce the flow of capital going from our country to other countries. That means, in effect, that we have to reduce the amount of exports which go to other countries and for which we are not paid immediately. We have to call upon other nations for our assets in those nations to be repatriated or we must see that dividends payable upon investments overseas flow back to the United States of America.”

The last suggestion, of course, was that the trade of America be transported in ships sailing under the flag of the American nation. In other words, that America should reduce the cost of invisibles. What the United States does the United Kingdom is doing also. The United Kingdom is endeavouring to increase its exports as far as it can. This is a slow process. At the same time it is reducing the amount of capital it will allow to be invested overseas. It is reducing its loans to other nations and it is calling upon its nationals who have investments abroad to repatriate, if they can, portion of those investments or, if they cannot repatriate the capital, at least to bring back in full the dividends payable on the overseas investments. This is what both nations are doing, and it is what we would have to do if we were not able to call upon capital flow from other countries.

We have called upon overseas capital, but we will not be able to continue to call upon it from the United Kingdom and the United States of America to the same extent as we have done. The United States of America and the United Kingdom have until now been the two greatest exporters of capital in the last 50 years, but their position has to be taken by some other nation if we are to obtain outside capital, as we have done in the past, to help our economy. Where will the capital come from? Will it come from West Germany? Will it come from Japan? I know that Japan is interested in the exploitation of our mineral resources. That question should be carefully examined, too, as should all capital inflow to this country.

Australia has to do what America is doing. America has been forced to do what she is doing not because her industries and her people do not produce sufficient to maintain her population comfortably and to meet her overseas obligations, but because in addition to meeting those obligations and retaining the high living standards of her people she has contributed to the improvement of the living standards of people in other countries. The same applies to the United Kingdom, which has exported capital to enable the development and utilisation of the resources of other nations and to promote the interests of those nations. The United States has promoted the industrial expansion and development of West Germany and of Japan, as it has of Australia, but it cannot continue to do this for ever. Australia’s obligation - and I now refer to a speech made in 1952 by our Prime Minister to a group of gentlemen in England - is to stand on her own feet. The Prime Minister said that Australia has to adopt the good old English practice of living within her means. Honorable members will recall that in 1952 we were facing balance of payments difficulties because we had encouraged imports to Australia. Imports had flooded in and we were not able to pay for them. Our overseas funds started to diminish and there was at that time no big flow of investment capital to Australia from overseas. The position was that we did not have investment capital to make up the gap between our imports and our exports, and the gap was being filled through the diminution of our overseas funds.

The Prime Minister pointed out to the people of Australia that our overseas funds were in danger of diminishing to such an extent that we would be facing international insolvency. Immediately after this he went overseas and while there he addressed this group of men, as I mentioned. He said then that the only way for a nation to promote its interests was to be always in a position to pay its debts. We were not in that position; we are not in that position now. I have taken advantage of the debate on this Bill to point out that all manner of reports have appeared in the Press concerning the terrible position of the United Kingdom because of her trade deficit. All kinds of statements have been made about the difficulties of the United States because of her balance of payments problem, but the balance of payments problems of those countries are chickenfeed compared with Australia’s balance of payments problem.

The position is not that the United States and the United Kingdom have to lower their living standards in order to meet their obligations, but that they must call upon their capital investments in other countries and reduce their assistance to developing nations. How can Australia square her ledger as America is doing? How can we meet our obligations? We have no overseas investments which can be repatriated. We have no overseas investments the interest from which will flow into Australia. We cannot say to Australian investors, “ Make your dividends flow in at a faster rate than they have done in the past “. We cannot improve our position by sending our goods abroad under the flag of Australia, because we have no Australian ships in which to export our goods. We cannot benefit our position by reducing our dependency upon overseas insurance companies for the insurance of goods. We still have to pay freight rates and insurance premiums to overseas concerns. Consequently our position, if we have to face up to it, is undoubtedly far more disastrous than is the position of the United Kingdom or of the United States of America unless, of course, we change our policy completely, which is what we should do.

I think the fact that the United Kingdom has said to us, “ We are going to reduce the amount that we are going to contribute towards your development”, because the United States has said the same thing, may be a blessing in disguise. As the honorable member for Mackellar pointed out, it may cause this country to say, “ No longer will we receive from other countries goods that are not essential to the development of this country “. The increase in our annual indebtedness has been due to the influx over the last 10 years of foodstuffs to the value of about £50 million per annum, toys to the value of £7 million or £8 million or more, and footwear to the value of millions of pounds. Boots and shoes to the value of £17 million have been imported into Australia in the last 15 years. In that time more than £100 million worth of made up clothing has been imported. It is these things that have put us in the position we are in today, where we find it essential to contribute the amount specified in the Bill to the International Monetary Fund because we never know how soon the difficulties that now face the United Kingdom and the United States of America will face us. When that day comes our ability to draw on the Fund will be of advantage to the people of Australia because it will provide, as it were, a breathing space to enable us to increase our development. The period during which the resources of the Fund may be used for the benefit of our overseas obligations is limited to about five years, but despite the limitation, during those five years it can be of inestimable value to be able to draw, as Australia would be able to draw, about 650 million dollars - about £300 million - from the Fund to help us in any temporary disability from which the nation may be suffering.

I emphasise that Australia is in no better position than the United Kingdom or the United States as far as its balance of payments problem is concerned. In reality we are in a much worse plight than are the United States and the United Kingdom. Because of the necessity for those countries to draw on the International Monetary Fund, as was stated by the Treasurer in his second reading speech, the difficulties from which Australia suffers will increase rapidly if we do not increase out exports, reduce the volume of our imports, obtain our own means of transporting our exports overseas and establish within this country, as a Government concern or as a private concern buttressed by the Government, insurance organisations that will insure the carriage of our exports arid imports on transportation owned or chartered by the people of this nation.

Mr CONNOR:
Cunningham

.- I rise to support the Bill. The general tenor of the debate on both sides has been one of unanimous support for the measure as far as it goes. However, as an Australian I am concerned with our present trading position. It has been said by balanced critics that we are living in a fool’s paradise as far as trade is concerned. In the last 12 years, with one exception we have consistently run an actual but concealed deficit in our balance of trade. The Government is a do-nothing government. It is a Government which fully subscribes to the principles of laissez-faire. In its economic thinking and activity it has gone very little beyond Adam Smith and “The Wealth of Nations”. Living in a fool’s paradise, this Government naturally has behaved in a most foolish manner. It has quite complacently accepted a current deficit which has always been met by an uncontrolled inflow of overseas capital.

An old Chinese proverb states that the wise ruler sits gravely on his throne and does nothing. The merit of the proverb is doubtful, but the point has undoubted application to this Government, because in the last decade it has sat very wisely on its throne. It has had all the adventitious advantages of an inflationary period - of excellent prices for exports of Australian primary produce - and has done nothing to prepare for the day of wrath. It has sown the wind and will undoubtedly reap the whirlwind. That whirlwind will finally sweep it out of office. If we go through history we will find that rulers of the British nation who were not prepared to foresee and to plan against dangers, whether they were economic or physical, were invariably swept from office and held in universal execration.

The Government has, in fact and in deed, let Australia down. It is generally accepted that our deficit on current account for the present trading year will be of the order of £170 million. What does the Government propose to do about that? The Treasurer (Mr. Harold Holt) went cap in hand to the United States of America. We had the Johnson letter, and the best possible gloss was placed on it. That was followed by a hurried trip to thi United States by the Treasurer. He has had soft words and soothing syrup but has been told in good plain English that America does not think her actions will hurt Australia too much, and, when they do, we should let America know, whereupon she will consider the situation if and when it arises. That is cold comfort to the emissary of a nation which had a trading credit with the United States of more than £160 million.

Some time ago we had a visit in this country from what is considered to be one of the naval marvels of the world - the “Big E”, the U.S.S. “Enterprise”. The “ Enterprise “ is an atomic powered aircraft carrier built at a cost of £160 million. We could well have called it the U.S.S. “ Australia “, because what we have spent in our trading relations with America would have paid for the “ Enterprise “. I am not anti-American but I am proAustralian. It is high time we did some hard thinking. In any business, when things are not going right, three courses are open to an owner. He can step up his profits by increasing the price of his goods. As an alternative, he can step up his sales. His further alternative is to reduce his overhead. It is this second alternative which we must attempt, but the Government is not prepared to do anything about it. There has been a jibe at the people of Great Britain that they dearly love a lord. This Government dearly loves a monopoly. Since the advent of this Government, the gates have been flung wide open. We have been the most backward nation in the world in terms of controlling our economic relations with other countries and controlling overseas investments within our shores. We have arrived at the point where almost 35 per cent, of our heavy industry is under direct or partial control by overseas interests. In other words, the economic policy of this country is being dictated, for better or for worse, without our concurrence and despite our timid protests, to the detriment of Australia if that policy happens to clash with the profit and advantage of the particular country which has invested in our shores. This situation cannot continue.

There are some very obvious measures that can and should be taken to reduce our overhead and our expenses, but I gravely doubt whether this Government will ever adopt them. The first consideration is our expenditure, and the figures I shall give relate to the position as at 30th June 1964. Shipping freight and insurance on imports cost exactly £169 million. To be quite fair, I should mention that we should offset against this the £98 million that was spent on providoring, wages and other expenses within Australia by the shipping firms. The net deficit is of the order of £70 million. The maritime unions, these much maligned bodies of men, should be given credit for consistently advocating the establishment of a national shipping line. Every major trading country, with the notable exception of Australia, has its own national shipping line. The excuse commonly advanced by the Government is that the costs of Australian owned vessels would be excessive. But whatever the wage structure may be, the money would be kept within Australia. It would not go abroad and we would not be under the obligation to provide a surplus of exports at a time of our greatest difficulty to offset these costs. There is an unanswerable case for an Australian shipping line.

We come now to interest, dividends, royalties and insurance. Our outgoings for these items are of the order of £200 million. Some of this is represented by our legitimate, just and lawful debts, which should, could and will be paid because the credit of Australia is still good in every part of the world. We pay our way; we honour our contracts, whatever they may be. Nevertheless, there is a case for the reduction of some of those items, particularly the item that was mentioned by the honorable member for Scullin (Mr. Peters). I think at the present time insurance on imports coming to Australia is of the order of £24 million per annum. What is being done about this? Then we have the question of the import of petroleum, refined and unrefined. This cost Australia £117 million last year. Some 15 per cent, of these imports was used in competition with our indigenous black and brown coal resources. Fuel oil was dumped on the Australian market. A matter of £17 million alone could be saved here.

I turn now to another matter. I have repeatedly raised this in questions I have addressed to the Minister for Trade and Industry (Mr. McEwen). I refer to franchises imposed by overseas firms with factories in Australia on the export of goods from Australia. The figures I have are for 1962. Later figures do not appear to be available. There are no fewer than 1,150 agreements between Australian subsidiaries and overseas firms, or the licensees of processes that are the property of overseas firms, in which a franchise is imposed. In every case, the franchise defines a restrictive area in which Australian goods can be exported. There are more of these agreements to come. The Minister recently told me that he could not give an estimate of the cost to Australian trade of these franchises. I would say from information I have received that it is between £50 million and £60 million. We do not ask people to break contracts, but a situation will develop in which some limit will have to be placed on restrictive franchises. Appropriately, the legislation to deal with restrictive trade practices is coming before the House. I do not want to anticipate the debate on the Bill, but one of the restrictive practices that must be dealt with by the Government is the imposition of these franchises.

There is a notable dichotomy between the policies of the coalition parties of the Government on the question of overseas investment. The most notable spokesman for the Government is, of course, the Treasurer, who believes in untrammelled and uninhibited overseas investment. His attitude is: “ Come one, come all. It is wide open. Australia is here to be exploited.” I would be the last to deny the advantage and the merits of some forms of overseas investment. There are obvious processes that we do not possess and cannot develop because of the limitations of our technology. Those processes and others should be welcomed. Certain types of industry or special procedures and techniques are beyond our competence. Again, they should be welcomed. But in the main there must in the future be a very close scrutiny of every form of overseas investment in Australia. I know there will be a change. I know that it can be said that this is the wrong time, in terms of maintaining our fictitious apparent trading position, to change the policy. But the longer it is delayed, the worse it will be. The Australian Country Party is prepared to take a much more patriotic and much more Australian approach. The members of this Party realise that untrammelled overseas investment is dangerous. I give credit to them for holding this view. I disagree with them on many political matters, but I give credit to them for at least trying to curb the worst excesses of overseas investment. I think every Australian, irrespective of party, would wish them well in the battle that is undoubtedly proceeding behind the scenes in the discreet conferences of the coalition parties of the Government today.

Let us now look at the Bill itself. My abiding and overriding impression of it is the archaic nature of the value that is placed on gold. Article IV of the First Schedule to the Act provides -

Section 1. Expression of par values

The par value of the currency of each member shall be expressed in terms of gold as a common denominator or in terms of the United States dollar of the weight and fineness in effect on July 1, 1944.

All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values.

Section 2. Gold purchases based on par values

The Fund shall prescribe a margin above and below par value for transactions in gold by members, and no member shall buy gold at a price above par value plus the prescribed margin, or sell gold at a price below par value minus the prescribed margin.

My colleague, the honorable member for Melbourne Ports (Mr. Crean), who led for the Opposition in this debate, correctly referred to the relatively limited world output of gold. I do not say that this is the best of the remedies, but we have had to hold the artificial position for many years when it suited the economic policy of the United States to peg the price of gold at 35 dollars per fine ounce. This price stands to this day. Other prices have varied. We have had the economic impact of a world war. We have had the effects of inflation. But today the world price of gold still stands where it was 20 years or more ago. This situation cannot continue. Because of the determination of the United States to maintain the old price for gold, we have had a concerted attack on the dollar and on the gold reserves behind the dollar by various European countries under the notable leadership of General de Gaulle. It may be an exercise in political anachronism. It may be an exercise by de Gaulle in the form of extreme nationalism. But at least he is a stark realist. He realises the fundamental inequality of the situation and he is prepared to give the present gold value a very hard and a very determined shake. The world has never been governed with very great wisdom, and while we live in a new age of science, technology and a remarkable system of world communications, we have not yet been able to evolve a unit of world currency. The resources of the International Monetary Fund are the nearest thing to it that we have as yet evolved.

It is obvious that despite the prestige of gold and the avidity with which it has been accumulated by the misers and gold hoarders, we have reached a situation where we must look for a new international monetary standard. We may differ on what it should be, but I suggest that when it is finally evolved it will be based upon the productivity of the various nations and also upon their relevant internal national assets. There must be some standard because we face a new situation in the world today. The two major currencies are those which the European economic bloc calls the

Anglo-Saxon currencies - the pound sterling and the dollar. This bloc is determined that this position will be changed. Contemporaneously we find both the dollar and the pound sterling in difficulties. In the case or the pound sterling - and I cast no aspersions upon Britain because our trading reserve eggs are literally in Britain’s economic basket - the United Kingdom is in difficulties because since the end of World War II it has attempted to maintain a world position beyond its economic, financial and industrial competence. In the future, Britain will play its part in world leadership, but it will be in the fields of scientific investigation, the art of government and the literary refinements and niceties of the English language. Britain has a part to play as the elder statesman and the adviser of the world, but in economic terms Britain is no more a world power.

In the case of the United States the situation is somewhat different. At the end of World War II the United States was literally sitting on a pyramid of gold. It held more than two-thirds of the world’s gold, buried in Fort Knox. Today, because of its foreign policy and its policy of foreign aid it is literally - in international trading terms - in a most perilous position. This position was current even during the presidency of the late John Kennedy, and is continuing to deteriorate. In this connection I think honorable members might well have regard to a comment made by Mr. L. Atkinson at the annual conference of the Associated Chambers of Commerce of Australia held in Brisbane recently. He referred to Australia’s economic difficulties and to how Australia could escape from its present position. He reminded delegates at this conference of the programme of the United States in saving and stabilising the dollar. He said that the United States intended to withdraw between three and four billion dollars from world liquidity and that the United Kingdom intended to reduce its net outflow of long term capital by £100 million sterling.

World currency today is being constricted and world trade is in the process of being severely restricted. More than that, we have come to the end of an economic era. We are coming to what the classical economists refer to as a crisis of overproduction. Consider, for instance, the countries where trade is possible today. We have had to establish the Export Payments Insurance Corporation for the purpose of insuring our overseas exports. In fact, we are getting down to what is almost a form of international hire purchase because Japan is offering terms for as long as 15 years on the purchase of her ships. This ceases to be trade and becomes a form of export of capital which is properly beyond the competence of Australia.

Japan is now our major trading partner but its economy is a particularly brittle one. There is reciprocity in trade today, particularly with countries like Japan, because Japan’s total reserves of foreign exchange do not exceed between £650 million and £700 million. In other words, a great industrial country with more than eight times our population, is literally trading on a shoe string - and that country is today our major trading partner and is, in turn, an economic satellite of the United States. We are being subjected to pressure by Japan because of the obvious imbalance in the trade between us. What are we to do? Are we to substitute Japan for Britain on the basis that we will be the suppliers of the raw materials and will, in turn, become a potential market for Japan’s manufactures? I do not think we should do this, because if we have a future at all in this world it is in terms of internal development. The United States is not only the greatest industrial power but is also the major producer of farm products in the world, and in both cases its greatest market is the internal market, its goods being consumed by its own people.

Australia has a difficult path to follow. I give credit to the Minister for Trade and Industry (Mr. McEwen) for his attempts to stimulate trade. Every honorable member has received some excellent publications from him. But let us temper our enthusiasm by remembering that unless and until the people of Asia reach an average income four or five times in excess of the average at present only a very small minority in the Asian countries - those in the higher income group - will be legitimate customers for our exports.

We have yet to realise our national destiny. We have yet to think in Australian terms. We have yet to realise that neither the interests of Britain nor the interests of the United States are necessarily the interests of Australia. We must think for ourselves and stand on our own feet. I wish to sound a further note of warning. Naturally, we wish Britain well. We know what it will mean to Australia if the pound sterling is devalued. In this connection I quote from an article that appeared in the “ Sydney Morning Herald” of 15th May, in which the financial editor said -

Omitting the new I.M.F. loan from both sides of the ledger, Britain’s present external assets consist of (a) about £840 m. in gold and overseas liquid balances; (b) about £400 m. held by the Government in overseas portfolio investment - a legacy of the wartime mobilisation of British residents’ overseas investments; (c) about £4,000 m. of overseas portfolio investment still held privately by U.K. persons and companies; . . .

On the liabilities side, Britain owes about £2,600 m. to overseas countries in their short-term “ sterling balances “; and it owes £350 m. to the I.M.F. and £200 m. to the overseas Central Banks.

I understand that some 75 per cent, to 80 per cent, of our overseas balances are held by Britain. Our economic eggs, so to speak, are very definitely in Britain’s basket. Britain is still in a perilous position. I am sure that all people who speak the British language throughout the world will wish her well in the future, but at the same time we have to consider our own interests. The further payment to be made to the International Monetary Fund is certainly in the best interests of Australia and the Australian people.

Question resolved in the affirmative.

Bill read a second time.

Message from the Administrator recommending appropriation announced.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Dr. Forbes) read a third time.

page 1654

JURY EXEMPTION BILL 1965

Assent reported.

page 1654

CELLULOSE ACETATE FLAKE BOUNTY BILL 1965

Bill returned from the Senate without amendment.

Sitting suspended from 5.56 to 8 p.m.

page 1654

TRADE PRACTICES BILL 1965

Bill - by leave - presented by Mr. Snedden, and read a first time.

Second Reading

Mr SNEDDEN:
AttorneyGeneral · Bruce · LP

.- I move-

That the Bill be now read a second time. I present a Bill to the House which is the culmination of very great effort on the part of many. My predecessor, Sir Garfield Barwick, now serving with great distinction as Chief Justice of the High Court of Australia, earns and receives my great appreciation for the work he did before I came to office. The officers of my department have given without reserve their time and energy without regard to hours in keeping with the traditions of a great public service.

The purpose of this Bill is to preserve competition in Australian trade and commerce to the extent required by the public interest. Competition is an essential ingredient of any free enterprise economy. In Australia there has been a tendency for some years for businesses to be conducted on a non-competitive basis in a number of important respects. This non-competitive form of trading is commonly referred to as “orderly marketing”, under which the terms and conditions on which businesses are conducted in an industry are determined by anti-competitive agreements or practices, designed to serve the interest of the members of the industry itself, or of some of its members, without necessarily having regard to what is, or what is not, desirable in the interest of our community as a whole.

It is generally recognised that one of the inherent dangers of a free enterprise economy is the risk of the economy being distorted by businesses resorting to anticompetitive practices. But the existence of these practices in Australia today is attributable in a very large measure to the conditions that have existed during a depression and two World Wars. The depression was a period of great uncertainty for businesses. Markets were contracting and existing businesses sought to protect themselves. They found this protection in the form of anticompetitive practices. During the two World Wars, our economic resources were taxed to the limit, and a high degree of Government regulation of industry became necessary. These regulations left little scope for competitive trading as we would wish to see it in a free enterprise society. Since the Second World War, most of the wartime regulations have been repealed, thereby leaving the way open for a restoration of competitive conditions. But Australian businesses had become accustomed to noncompetitive conditions, and they have been reluctant in many circumstances to change their ways in this regard. It has not been surprising, therefore, that, as the Government regulations which, during the war, had been imposed for the good of the community as a whole were repealed, they were replaced by privately imposed restraints designed to limit competition in the relevant fields.

As this trend towards orderly marketing increased, the Government decided to legislate and committed to my predecessor, Sir Garfield Barwick, the task of formulating, for consideration, a legislative form to deal with the problem. Sir Garfield subjected the problem to painstaking research and investigation, as a result of which the House will recall that a set of Government proposals was submitted to it on 6th December 1962 in the form of a statement presented by my colleague, the Minister for Shipping and Transport, (Mr. Freeth), that had been prepared by Sir Garfield. The expressed purpose of that statement was to stimulate public discussion and representation by interested persons, and thus to assist the Government in completing the formulation of that legislation.

That statement of 6th December 1962 has served its purpose exceedingly well. The statement, together with several documents which Sir Garfield made available to assist the public to understand a complex subject, has stimulated interest and discussion and the Government has received many representations which have very greatly assisted it in this important task.

At this stage I shall recall to the House the Government’s philosophy in regard to the subject of trade practices as it was outlined in the statement made to this House on 6th December 1962. Sir Garfield said that a free enterprise society was desirable, in that it provides for its citizens to be at liberty to participate in the production and distribution of the nation’s wealth, thus ensuring competitive conditions which tend to initiative, resourcefulness, productive efficiency, high output and fair and reasonable prices to the consumer. Further, he said that the Government believed that practices which reduce competition may endanger those benefits which we properly expect and mostly enjoy from a free enterprise society. However, the Government is conscious that the lessening of competition may, in some aspects of the economy, be unavoidable; indeed, it may be not only consistent with, but a proper ingredient of, a truly free enterprise system. Reference was made in the statement to the fact that this need for some reduction of competition is more likely to exist in such a state of growth as we are experiencing and particularly when we are gearing ourselves more and more for the export of secondary goods. In short, therefore, it was stated that the Government did not subscribe to the view that there are no circumstances in which the public interest can justify a reduction in competition, but that on the contrary it believed that there may well be some practices, restrictive in nature, which are in the public interest.

The present Bill reflects no change in the philosophy that I have just recalled. In matters of detail, however, the Bill contains a number of changes from the proposals in the statement of 6th December 1962. These changes of detail have been made, after taking account of the representations that the Government received and after close and continuous study of the whole problem. The changes will, I feel sure, constitute improvements of the kind that it was hoped would emerge from the publication of the proposals. But I think I should make it clear that the changes are designed so as not to permit any dilution of the legislation such as would prevent it from achieving the purpose the Government has at all times intended it to achieve.

The Government’s purpose has, at all times, been to produce legislation that will be effective without constituting any unnecessary interference to business. The Government has recognised that the effectiveness of the legislation will depend upon the ability of the administrative machinery set up under the Act to handle the work load imposed upon it, and it has, therefore, given close consideration to the problem of devising a scheme in which the main purpose of preventing undesirable restrictions on competition can be achieved, with fairness to all, but without creating excessive administrative work loads. Accordingly, consistent wilh the earlier proposals, the Bill has been drawn so as to apply only to certain clearly defined categories of agreements and practices. Emphasis in this Bill has been laid upon those agreements that form the basis for a marketing structure in which anticompetitive practices are resorted to with great frequency. Honorable members will readily appreciate that if a basic agreement of this kind is prohibited by the legislation, there will be an automatic crumbling of those actions obvious to any person in business which are in reality the mere manifestation of the basic agreement which stands behind the act.

The Bill contains no provisions for the control of mergers or takeovers. The problem of controlling mergers and takeovers is one of great complexity. Apart from the problem of devising a satisfactory criterion for deciding whether a merger or takeover should be permitted or prohibited, there is a very real problem of the mechanics by which any system of control should be implemented. In particular, there is a question upon which great difference of opinion exists, as to whether the appropriate course is to hold up a proposed merger or takeover pending completion of an inquiry into its compatibility with the public interest, or whether, alternatively, to permit the merger or takeover to proceed for the time being but at the risk that orders may have to be made later on to restore, so far as is then practicable, the position prior to the merger or takeover - or at least to cause such a divestiture of assets as is required by the public interest. Honorable members may be interested to know that the present United Kingdom Government is proceeding with legislation under which certain mergers and takeovers will be held up pending an inquiry into their compatibility with the public interest, whereas the previous Conservative Government in the United Kingdom had advanced proposals for legislation which would have permitted questionable mergers or takeovers to be proceeded with at the risk of corrective action being taken later on in the event of an adverse finding by the Monopolies Commission. In addition to the problems relating to the mechanics by which the control of mergers and takeovers should be effected, the Government has been conscious of the developing nature of the Australian economy and the need, in our present circumstances, for businesses in some industries to be able to expand in size so as to be able to take advantage of such economies of scale as will enable them to compete effectively on world markets. With these considerations in mind the Government has decided that this Bill should not contain provisions for the control of mergers and takeovers. The Government will, of course, keep a close watch for any indications that problems in this field are arising.

The treatment of monopolisation in the Bill is consistent with the Government’s decision to omit provisions for the control of mergers and takeovers. That is to say, monopolisation has been defined for the purposes of the Bill so as not to embrace mere expansion in size. What is embraced is the taking of improper advantage of a dominant position in a market.

The Bill goes out of its way to provide administrative machinery which can proceed with the utmost informality consistent with the proper discharge of its function but without the trappings of a court, such as wigs and gowns. It provides for inquiries to be conducted into the compatibility of agreements and practices with the public interest and for those inquiries to be conducted in an atmosphere of informality uninhibited by any particular rules of evidence or procedure. Moreover, the Bill gives effect to the Government’s view that these inquiries should be conducted by a body which is presided over by a person with legal qualifications and experience but will also have as members two persons who are qualified for appointment by virtue of their knowledge of, or experience in, industry, commerce or public administration. Thus composed, a body conducting an inquiry should be able to do so in an orderly and expeditious manner; it will be in a position to cope with such questions of law as may, from time to time, arise and it will be able to evaluate the economic and business considerations with a practical appreciation of what is involved.

There are, of course, limits to the Commonwealth’s constitutional powers to enact legislation in this field. The present Bill takes full advantage of such constitutional powers as the Commonwealth does possess, but there will still be a number of practices to which it will not be applicable. It is highly desirable that, so far as possible, there should be one legislative code governing trade practices, irrespective of whether they are subject to the Commonwealth’s constitutional powers or only to the power of one or more of the States. Accordingly, the Bill is drawn in such a way that it will be possible for State Parliaments to enact complementary legislation, in which event the administrative machinery provided under the Commonwealth legislation will be available for the purpose of the complementary State legislation. By this means, the need to draw fine legal distinctions between those practices that are, and those that are not, within the Commonwealth’s constitutional competence will be reduced to a minimum.

There are a number of special problems associated with framing trade practices legislation in relation to ocean shipping. A number of the problems arise out of the fact that much of such shipping is conducted beyond our shores and is of concern to other countries as well as to Australia. The Government is giving consideration to the precise provisions needed to deal specifically with trade practices that arise in relation to ocean shipping. The nature of these provisions has not yet been finally determined by the Government and they are, accordingly, not included in the present Bill. They will, however, be introduced during the next session of Parliament so as to form an integrated part of the Act. That is to say, they will be a Part - probably Part XI - of the Act.

Honorable members will know that trade practices are already subject to control under the Australian Industries Preservation Act 1906-1950. The broad objective of that Act is much the same as that of the present Bill - though the method adopted is markedly different. The present Bill provides for more appropriate machinery for giving effect to that objective. As the Bill relates to the same subject as that of the Australian Industries Preservation Act that Act is to be repealed when the new legislation comes into operation, by which time the shipping provisions will have been incorporated in the Act which this Bill will become.

I turn now to the main provisions of the Bill. As I have already mentioned, there are a number of changes in this Bill from the scheme that w;-s proposed on 6th December 1962. However, I do not propose to trouble honorable members with a catalogue of the differences between the provisions of this Bill and the earlier published proposals. Those persons who are interested in making a comparison will find little difficulty in discerning the points at which the two schemes differ.

The Bill deals with certain closely defined agreements and practices and provides for them to be examinable by a Trade Practices Tribunal with a view to determining whether they are contrary to the public interest.

The Bill will cover five types of agreement which have certain common characteristics. For example, they must be between persons who are carrying on businesses for the supply of goods or services and those businesses must be competitive with each other. That is to say, they are agreements between businesses on the same level of the productive or distributive process. By the agreements one or more of the parties must accept a restriction on his freedom to compete - the restriction being as to one or more of five specified matters. These matters are specified in clause 35(1.) of the Bill, and, briefly stated, cover restrictions as to -

  1. the terms or conditions, including prices, on which goods or services may be supplied or acquired;
  2. the concessions or benefits etc. given or allowed in connection with deal ings in goods or services;
  3. restrictions as to quality or output;
  4. zoning restrictions; and
  5. restrictions as to the persons or classes of persons to be dealt with.

The Bill then covers four practices which are examinable if engaged in in the course of carrying on a business. They are the practices of -

  1. obtaining, by a threat or promise, discrimination in prices or terms of dealing in goods;
  2. requiring, as a condition of the supply of goods or services to another person, that that person deal with a third person;
  3. a trade association, or group of persons acting in concert, inducing a person carrying on a business to refuse to deal with a third person; and
  4. monopolisation.

The precise nature of these practices, other than the practice of monopolisation, appears from clause 36 of the Bill, while monopolisation is defined in clause 37. The practice of monopolisation is engaged in only where a person or combination is in a dominant position in a line of trade or commerce in Australia or in a part of Australia, and clause 37 provides that such a dominant position is constituted by the possession of not less than one third of the relevant market. If a person is in such a dominant position he engages in monopolisation if he does anything that falls within any one of three classes of conduct. The first is that, by virtue of, or for the purpose of maintaining, his dominant position, he does anything that is intended or calculated to prevent competitors obtaining supplies or having opportunities of marketing. The second is that, by virtue of, or for the purpose of maintaining, his dominant position, he engages in price cutting with the object of substantially damaging a competitor. The third class of conduct is constituted by a person in a dominant position taking advantage of that position in fixing his prices or other terms of dealing.

In addition to the four practices to which I have already made reference there are two practices which will be prohibited directly by the Act. That is, they will be prohibited without first being subjected to an examination to determine whether they are compatible with the public interest. These two practices are collusive tendering and collusive bidding. The relevant provisions of the Bill are clauses 85 to 87. An important qualification of the direct prohibition of collusive tendering is provided in clause 85 (4.) which provides a defence for tendering where it is in pursuance of a standing agreement, if the agreement has been registered and has not been found after examination to be contrary to the public interest. Except for collusive tendering and collusive bidding, the principle which is maintained throughout the Bill is that no agreement or practice is made illegal until it has been examined and a determination has been made that it is contrary to the public interest.

The exceptions from the operation of this legislation are all specified in the Bill itself, the relevant provisions being contained in clauses 6, 38 and 39. In brief, the exceptions cover -

  1. The Crown in right of the Commonwealth or of a State. This exception will extend to a few statutory corporations which are so closely connected with the Executive Government that they automatically enjoy the immunities of the Crown; but the exception will not extend to other statutory corporations, for example, boards for the conduct of business undertakings.
  2. Agreements and practices specifically authorised or approved by Commonwealth, State or Territory legislation.
  3. Working conditions of employees.
  4. Compliance with standards approved by the Standards Association of Australia or by some other similar prescribed association.
  5. Restrictions to protect the goodwill of a business upon its sale.
  6. Restrictions imposed in pursuance of statutory industrial property rights - patents, copyright, registered designs and trade marks. Restrictions imposed in pursuance of industrial property rights are not, however, excepted from the practice of monopolisation.

Clause 41 provides that examinable agreements must be registered if the relevant restrictions relate to the supply or acquisition of goods or of certain classes of services rendered in connection with either goods or land. The registration requirements of the Bill are confined to these examinable agreements and, in particular, do not extend to any practice. There will be a single registry but provision will be made to enable persons to comply with the registration requirements by lodging the necessary documents in any of the State capital cities. To preserve the secrecy of the register it will not be open for public inspection in any circumstances. The only persons who will have access to the register will be persons responsible for administering the legislation. To comply with the requirement to register an examinable agreement, it will be necessary to furnish a copy of the agreement, or if the agreement is not contained in a written instrument, a memorandum setting out all of the terms of the agreement. There is provision, however, for the making of regulations which will render it unnecessary to furnish certain classes of information. The relevant provisions of the Bill in this connection are contained in sub-clauses (5.), (6.) and (7.) of clause 42.

Failure to comply with the registration requirement to which I have just referred will constitute an offence punishable in proceedings before the Commonwealth Industrial Court. Such a failure will not render the agreement illegal, but it will, of course, be subject to examination by the Trade Practices Tribunal in the same manner as it would have been if it had been registered. As I have already said, illegality of an agreement or practice will depend upon a determination, after examination, that the agreement or practice is contrary to the public interest. Clause 43 (4.) provides for a defence to a charge of failing to register a registrable agreement where the failure was attributable to what I might briefly describe as honest inadvertence. Honorable members will observe that the provisions relating to this defence have been drawn so as to ensure that the defence is available only in cases where the circumstances are such that it would be undesirable that a person should be subjected to penal consequences for what was, in truth, a mere oversight and he has registered since becoming aware of the requirement to register.

Clause 9 provides for the establishment of a Trade Practices Tribunal, to consist of a President, Deputy Presidents and other members. This Tribunal will be the only body to examine agreements and practices made examinable by the legislation, and will determine whether they are contrary to the public interest. The qualification for presidential members of the Tribunal is that they be barristers or solicitors of not less than five years’ standing. The qualification for other members is that they have knowledge of, or experience in, industry, commerce or public administration. All members of the Tribunal will be appointed by the GovernorGeneral. They will be appointed to hold office for terms of not more than seven years and their salary will be as determined by the Governor-General from time to time. It cannot be diminished during the member’s term of office. Clause 17 provides that a member of the Tribunal is not to engage in paid employment outside his office. He can be removed from office only on the ground of misbehaviour or physical or mental incapacity. The Tribunal will sit in divisions, and normally a division will be constituted by one presidential member and two other members. Clause 18 (2.) enables a division to be constituted by a single presidential member if all the parties desire that it should be so constituted, and provision is made, in Division 3 of Part VI, for a Review Division to be constituted by three presidential members. I shall refer later to the functions of this Review Division.

Clause 23 provides for the appointment by the Governor-General of t Commissioner of Trade Practices. The Commissioner will be appointed for a period not exceeding seven years. He will be paid salary at a rate determined by the Governor-General, but the rate cannot be diminished during his term of office. The grounds on which he can be removed are the same as for the members of the Tribunal. The Commissioner will be the only person who will be able to bring agreements and practices before the Tribunal for examination, after he has formed the opinion that they are contrary to the public interest. Clause 48 provides that the Commissioner shall not institute proceedings, notwithstanding his opinion, unless he has first carried on, either personally or through members of his staff with adequate knowledge of, or experience in, industry or commerce, consultations with the persons who are parties to the agreement or engaging in the practice. The object of these consultations will be to render the proposed proceedings unnecessary by achieving agreement that so much of the agreement or practices as is inconsistent with the public interest will be discontinued.

The public interest criterion which the Tribunal will be required to apply when examining an agreement or practice is to be found in clause 50. Because of the importance of this provision, I will read sub-clauses (1.) and (2.) to the House. They provide - (1.) In considering whether any restriction, or any practice other than a practice of monopolization, is contrary to the public interest, the Tribunal shall take as the basis of its consideration the principle that the preservation and encouragement of competition are desirable in the public interest, but shall weigh against the detriment constituted by any proved restriction of, or tendency to restrict, competition any effect of the restriction or practice as regards any of the matters referred to in the next succeeding sub-section if that effect tends to establish that, on balance, the restriction is not contrary to the public interest. (2.) The matters that are to be taken into account in accordance with the last preceding subsection are -

  1. the needs and interests of consumers, employees, producers, distributors, importers, exporters, proprietors and investors;
  2. the needs and interests of small businesses;
  3. the promotion of new enterprises;
  4. the need to achieve the full and efficient use and distribution of labour, capital, materials, industrial capacity, industrial know-how and other resources;
  5. the need to achieve the production, pro vision, treatment and distribution, by efficient and economical means, of goods and services of such quality, quantity and price as will best meet the requirements of domestic and overseas markets; and
  6. the ability of Australian producers and exporters to compete in overseas markets.

Sub-clause (3) of clause SO adapts the public interest criterion that I have just described so as to make it appropriate for the practice of monopolisation. The adaptation is a drafting necessity because there will be some cases of monopolisation which will not involve any restriction of competition.

At the conclusion of its examination of an agreement or practice, the Tribunal will make a determination as to whether the agreement or practice is contrary to the public interest. It will be required to state the reasons which led it to this determination. A determination that a restriction in an agreement is contrary to the public interest will render that restriction unenforceable. The Tribunal will then make appropriate restraining orders in respect of the restrictions or practices that have been determined to be contrary to the public interest. In order to prevent evasion by changing the form but not the substance, the Tribunal will be able to make restrain ing orders in respect of restrictions or practices of a like kind to those which it has determined to be contrary to the public interest.

Clause 79 empowers the Tribunal to receive undertakings by a party with respect to a matter before it. Such an undertaking may be given at any time during the course of proceedings and, when given, will normally render it unnecessary for the proceedings to be further continued. The Tribunal will not have to make a determination in the proceedings, but the undertaking will not constitute an admission that the restriction or practice to which it relates is contrary to the public interest. Breach of an order of the Tribunal will by force of law be a contempt of the Tribunal and punishable as if it were a contempt of the Industrial Court. The Industrial Court is a superior court of record and has inherent power to punish contempts by fine, imprisonment or, in the case of a corporation, sequestration. Proceedings for contempt will be instituted by the AttorneyGeneral on information, and to deal with such cases the Court will be constituted by not less than three judges.

Division 3 of Part VI provides for the review of determinations of the Tribunal and for judicial determination of questions of law. Clause 62 provides for a Review Division of the Tribunal to be constituted by three presidential members, and subsequent clauses enable this Division to direct further consideration of a matter. The Review Division may direct such a reconsideration upon any of three grounds, which are set out in clause 63. They are -

  1. that the determination is based on reasons that are inconsistent with the reasons for another decision of the Tribunal;
  2. that the determination is of such importance that, in the public interest, it should be reconsidered; or
  3. that a material error of law was made by the Tribunal in the hearing or determining of the proceedings.

The Review Division is required by clause 64 to indicate the matters which, in its opinion, call for reconsideration, and the reconsideration is, so far as possible, to be confined to these matters. The reconsideration will be conducted by a Tribunal constituted by one presidential member and two other members. It probably will, but need not, be constituted by the same members as constituted the Division responsible for the original determination. In addition to the provisions for reconsideration to which I have just referred, clause 66 enables the Tribunal during the course of proceedings to refer questions of law to the Commonwealth Industrial Court. The Bill contains no provision for the awarding of costs in connection with proceedings before the Tribunal.

Division 2 of Part VI contains provisions that will enable parties to examinable agreements or practices to obtain negative clearances in respect of them. Such a clearance may be obtained, in some circumstances, through a certificate of the Commissioner that he is satisfied that the agreement or practice is not contrary to the public interest. In certain other cases, it will be open to a party to obtain an order for an accelerated determination by the Tribunal of the question whether his agreement or practice is contrary to the public interest. Accelerated determinations are available only to parties who are proposing to employ new capital in a new venture or in a substantial expansion of an existing venture, and only if (a) the agreement or practice in question is necessary to the success of the venture, and (b) the capital would be unlikely to be employed unless there was an assurance that the agreement or practice would be lawful.

Part X of the Bill provides civil remedies for persons who suffer loss or damage as a result of a contravention of an order of the Tribunal or of the provisions of clauses 85 and 86 relating to collusive tendering and collusive bidding. The amount recoverable by such a person is the amount of the loss or damage that he has suffered as a result of the contravention. The Industrial Court will be given jurisdiction to deal with such claims. Resale price maintenance, as such, is not covered by this Bill. However, the examinable agreements to which I have referred cover agreements between competitors to engage in this practice and, in some circumstances, resale price maintenance could be involved in a practice of monopolisation.

There are a few ancillary provisions in the Bill to which I would briefly draw attention. Clause 72 (2.) empowers a member of the Tribunal to summon a person before it to give evidence. Clause 73 requires that proceedings of the Tribunal shall be held in public except where this is not desirable by reason of the confidential nature of evidence to be taken. Clause 84 provides protection for the Tribunal from disturbances or disruption and clause 103 empowers the Commissioner to require the furnishing of information and the production of documents; in relation to the preparation of proceedings to be brought before the Tribunal. Finally, I draw attention to the provision in clause 33 for the appointment of a Registrar and Deputy Registrars of the Tribunal. These persons will be administrative officers of the Tribunal. Their functions will be in no way analogous to those of the Commissioner, who will have the responsibility for maintaining the register of examinable agreements.

Recognising the importance of, and widespread interest in, this Bill, the Government is anxious that the public should have ample opportunity of subjecting its provisions to scrutiny and of making representations in regard to it. Accordingly, the Government is not proposing that the Bill should be debated during the present autumn session of Parliament. My ministerial colleagues have given so many hours of so many days to this task that I can confidently commend the Bill to honorable members.

Debate (on motion by Mr. Whitlam) adjourned.

page 1661

ESTATE DUTY ASSESSMENT BILL 1965

Bill presented by Mr. Harold Holt, and read a first time.

Second Reading

Mr HAROLD HOLT:
HigginsTreasurer · LP

– I move -

That the Bill be now read a second time. lt is proposed by this Bill to amend the Estate Duty Assessment Act to ensure that gifts to the Winston Churchill Memorial Trust are exempt from estate duty. Honorable members will recall that I announced the Government’s intention to do this in a Press statement I made on 25th February 1965. In the absence of this amendment two kinds of gifts to the Trust might have become subject to estate duty. One is a gift by way of a bequest to the Trust. The other is a gift made during the lifetime of a person but within three years of the date of his death. The amendment will ensure that gifts made in either of these ways are exempt from estate duty. It may be of interest that existing provisions of the law exempt gifts to the Trust from gift duty. I would add that the estate duty exemption will apply to gifts and bequests made on and after 1st February 1965. I commend the Bill to the House.

Debate (on motion by Mr. Crean) adjourned.

page 1662

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL 1965

Bill presented by Mr. Harold Holt, and read a first time.

Second Reading

Mr HAROLD HOLT:
HigginsTreasurer · LP

– I move -

That the Bill be now read a second time.

This Bill proposes a small number of amendments to the Income Tax and Social Services Contribution Assessment Act. One amendment adds the names of two new institutions to the list of those to which gifts of £1 or more are allowable as income tax deductions. These institutions are the National Trust of Queensland and the Winston Churchill Memorial Trust. Gifts of £1 or more to the national trusts of all the other States and the Northern Territory are already allowable as income tax deductions. The National Trust of Queensland has the same objects as the other national trusts. It is, of course, appropriate that gifts to it should be given the same treatment for income tax purposes as gifts to the national trusts of other States. Honorable members will recall that I foreshadowed an amendment to treat gifts to the Winston Churchill Memorial Trust as allowable deductions in a statement I made on 25th February 1965.

Another amendment made by the Bill is of a purely formal nature. It arises from a change in the designations of the Treasury officers who carry out the function of Chairman of the Tax Agents Board in each of the States.

The remaining amendments deal with the taxation treatment of monetary benefit’s granted under the Commonwealth’s scheme for the provision of scholarships for students at secondary and technical schools. Honorable members will be familiar with the details of this scheme. The Minister in Charge of Commonwealth Activities in Education and Research (Senator Gorton) has made comprehensive statements regarding it. In these circumstances I do not propose in this speech to go into the various arrangements that have been made for the implementation of the scheme.

In a statement made by the Minister on 24th November 1964 he explained the Government’s proposals in relation to the taxation treatment of the benefits payable under the scheme. In effect, the Minister stated that the income tax law would be amended so that payments under the scheme are exempt from income tax in the hands of the recipients. He also said that a consequential amendment would be made to make it clear that a taxpayer is not entitled to a concessional deduction for the education expenses of a student that are, under the scheme, recouped to him by the Commonwealth through the payment by it of benefits related to school books and certain school fees. This Bill gives effect to these two proposals. The benefits are, of course, already being paid and, for this reason, the amendments will be operative for the first time in relation to the current income year 1964-65. A memorandum explaining the various clauses of the Bill is being made available for the information of honorable members and I do not propose to make any further comments on it at this stage. I commend the Bill to the House.

Mr Crean:

– Will the Treasurer make available copies of the statement made by Senator Gorton on 24th November 1964?

Mr HAROLD HOLT:

– Yes, I will see that the honorable member receives a copy.

Debate (on motion by Mr. Crean) adjourned.

page 1663

PROCESSED MILK PRODUCTS BOUNTY BILL 1965

Bill - by leave - presented by Mr. Adermann, and read a first time.

Second Reading

Mr ADERMANN:
Minister for Primary Industry · Fisher · CP

– I move -

That the Bill be now read a second time.

In 1962, Parliament passed the Processed Milk Products Bounty Act providing for payment of a bounty on exports in 1962-63 of milk products not eligible for assistance under the Dairying Industry Act 1962, which provides for the payment of bounty on the production of butter, cheese and related butter fat products. The bounty was made available in 1962 in order to help the Australian processors to compete with subsidised exports of processed milk products from other countries and, in addition, to divert butter fat away from the manufacture of butter which was experiencing a serious surplus position at that time. The legislation was amended in 1963 and again in 1964 to enable the bounty to be continued in each case for a period of 12 months. In the three years in which the assistance has been available, the bounty has been provided at maximum levels of £350,000 in 1962-63, £500,000 in 1963-64 and £400,000 in the current year 1964-65.

The purpose of this Bill is to extend the bounty for a further two years and to provide a maximum amount of £400,000 for this purpose for each of the years 1965-66 and 1966-67. The principal act provides that the final rate of bounty is to be no greater than the final rate of bounty payable on butter under the Dairying Industry Act 1962; the actual rate being dependent on the amount of bounty available and the quantity of butter fat contained in the products exported in any year. In 1963-64, when an amount of £500,000 was available, a bounty rate of 7.96d. per lb. of butter fat was paid for processed milk products. This equalled the final rate for butter and approximately £60,000 of the total bounty available for milk products was unexpended. In 1962-63 and 1964-65, however, the bounty rate on processed milk products will amount to about 80 per cent, of that received by the butter producers and all of the total amounts allocated will, of course, have been expended.

The benefits derived from the bounty assistance on exports of processed milk products since its inception in 1962 have been well in excess of expectation. For example, exports of butter fat in the milk products in 1962-63 amounted to 5,566 tons, compared with 3,850 tons in 1961-62, the year before the bounty was introduced. In 1963- 64 exports rose to 6,465 tons of butter fat - a gain of nearly 68 per cent, since 1961-62 - and figures in the current year indicate that the trend in exports is still rising. In the first six months of the year exports were already more than 500 tons of butter fat above those of the same period of the previous year. Export income from processed milk products increased by 38 per cent, between 1961-62 and 1963-64 when it amounted to nearly £10 million. It is expected to be in excess of this figure in the current year.

There are 18 Australian manufacturers - half of whom are co-operative companies - now sharing the bounty. The larger manufacturers are, of course, receiving the greater share; but, on the other hand, it must be remembered that they are the major contributors to the success of the scheme because of their more extensive overseas market outlets. The extension of the bounty is strongly supported by the Australian Dairy Industry Council which represents the Australian Dairy Farmers Federation, the Commonwealth Dairy Produce Equalisation Committee Limited, and the Australian Dairy Produce Board, and also by the Processed Milk Manufacturers Association of Australia Limited. I commend the Bill to the House.

Debate (on motion by Mr. Pollard) adjourned.

page 1663

SUSPENSION OF STANDING ORDERS

Motion (by Mr. Adermann) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent a Butter Fat Levy Bill, a Dairy Produce Export Control Bill, a Dairy Produce Research and Sales Promotion Bill, a Dairy Produce Export Charge Repeal Bill and a Dairy Produce Levy Repeal Bill -

being presented and read a first time together and one motion being moved without delay and one question being put in regard to, respectively, the second readings, the Committee’s report stage, and the third readings, of all the Bills together, and

the consideration of the Bills in one Com mittee of the Whole.

page 1664

BUTTER FAT LEVY BILL 1965

Bills presented by Mr. Adermann, and read a first time.

Second Readings

Mr ADERMANN:
Minister for Primary Industry · Fisher · CP

– I move -

That the Bills be now read a second time. There are two statutory levies currently operating under separate Commonwealth acts which provide the Australian Dairy Produce Board with the funds for overseas market development on the one hand and for research and sales promotion activities in Australia on the other. The levy for overseas marketing development, which is applied to exports of butter and cheese, was imposed by Commonwealth legislation when the Board was originally established in 1925. The levy for research into dairy industry problems and for sales promotion of dairy products in Australia was imposed by legislation enacted in 1958 on the production by Australian factories of butter and cheese.

Some time ago, I advised the Australian Dairy Industry Council that the collection of the increasing number of primary industry levies is creating administrative problems for my Department and that I would like the Council to consider, in the interests of departmental efficiency and economy, a proposal that the two levies currently operating be fused into one levy to cover all the Board’s requirements. The matter was considered by the Council which has recommended that the current levies should be consolidated into one production levy to be based upon the butter fat content of the dairy products coming under the control of the Board.

The Council also advised me that it supported a recommendation from the Australian Dairy Farmers Federation that the income of the Board should be increased to enable it to intensify its promotion and market development activities. Five Bills are necessary to implement the proposals and I feel they can logically be discussed concurrently. The Butter Fat Levy Bill 1965, which is the main Bill, provides for a maximum rate of levy of 6s. per cwt. of butterfat to be apportioned between the three primary functions of the Australian Dairy Produce Board in the following ratio: Overseas marketing, two parts, 2s. 4id.; local promotion, two parts, 2s. 4id.; . and research, one part, ls. lid.

It has been estimated that this rate of levy would give the Board an assured income of approximately £1,100,000 if the maximum rate of levy were applied. The maximum rate of levy represents about H per cent, of the pay rate to producers by butter factories which is expected to be about 46d. per lb. commercial butter basis, equivalent to 55d. per lb. of butter fat for each of the 1963-64 and 1964-65 seasons.

The Board has considered its budget for 1965-66 and has recommended that the operative rate of levy to apply from the 1st July 1965 should be 5s. per cwt. of butter fat, estimated to give an income of approximately £900,000 and representing less than 1 per cent of the expected factory pay rates for butter for 1963-64 and 1964-65 when the pools for these two seasons are wound up. The estimated income under the current legislation for 1964-65 is about £760,000, and the increase in the Board’s budget for 1965-66 reflects the recommendation of the Australian Dairy Farmers Federation that more funds should be made available for promotion and market development.

It is proposed by the Board that, from the levy of 5s. per cwt., 2s. be allocated for overseas marketing, 2s. 24d. for local promotion and 9id. for research which should result in revenue for each purpose of £360,000, £398,000 and £132,000 respectively. This would give the Board an additional £20,000 to finance overseas market development and £118,000 more for sales promotion in Australia. The estimated revenue from the levy for research purposes in 1965-66 is £142,000 compared with £131,000 obtained in 1963-64. The increase in revenue of £11,000 is designed to bring levy payments up to the level of expenditure as small deficits in the past two years have been met from reserve funds.

The four other Bills are machinery measures and are consequential upon the Butter Fat Levy Bill 1965. The Dairy Produce Export Control Bill 1965 and the Dairy Produce Research and Sales Promotion Bill 1965 provide for the proceeds of the levy to be credited to the respective accounts of the Australian Dairy Produce Board in the proportions I indicated earlier. The Dairy Produce Export Charge Repeal Bill 1965 and the Dairy Produce Levy Repeal Bill 1965 provide for the repeal of the current legislation which the new legislation will replace.

I believe that the Council and the Board are acting prudently in planning for increased activities in the field of promotion and export market development of butterfat products. There are already signs that the European dairy industries are recovering from two lean production years and it is strongly indicated that surpluses of butterfat will be re-appearing in world markets in the not too distant future. The Government therefore supports the industry’s proposal that the Australian Dairy Produce Board be provided with additional funds for this purpose and welcomes the agreement of the Australian Dairy Industry Council to the consolidation of the dairy levies. I commend the Bills to the House.

Debate (on motion by Mr. Pollard) adjourned.

page 1665

SULPHURIC ACID BOUNTY BILL 1965

Bill - by leave - presented by Mr. Bury, and read a first time.

Second Reading

Mr BURY:
Minister for Housing · Wentworth · LP

– I move -

That the Bill be now read a second time. The purpose of this Bill is to extend the operation of the Sulphuric Acid Bounty Act 1954-1960 for a further maximum period of six months to 31st December 1965 unless an earlier date of cessation is specified by proclamation. Under the existing Act, bounty will cease to be payable after 30th June 1965. The Pyrites Bounty Act 1960 also expires on 30th June 1965 and I shall shortly introduce a similar Bill to extend that Act for a further period of six months.

The sulphuric acid and pyrites industries are closely allied. Bounty is paid on iron pyrites received into a sulphuric acid manufacturer’s premises for the purpose of being used in that manufacture and is also paid on the sulphuric acid produced from the iron pyrites. In addition sulphuric acid bounty is paid on the acid produced from lead sinter gas. Because of this close alliance, I shall deal in this speech with the reason for the extension of both Acts.

The Tariff Board is currently reviewing both industries and is examining the general questions of what assistance should be extended to the producers of sulphuric acid and iron pyrites in Australia. It appears unlikely, however, in view of the complexities of some of the considerations involved, that the relevant report of the Tariff Board will be received so as to allow the Government sufficient time to consider and act upon it before the expiry of both Acts on 30th June 1965. The Bill, therefore, extends the operation of the current sulphuric acid bounty legislation to 31st December 1965 or to an earlier proclaimed date. This will enable continuation of the present level of assistance to the industry, pending receipt and consideration of the Tariff Board’s report by the Government. I commend the Bill to honorable members.

Debate (on motion by Mr. Pollard) adjourned.

page 1665

PYRITES BOUNTY BILL 1965

Bill - by leave - presented by Mr. Bury, and read a first time.

Second Reading

Mr BURY:
Minister for Housing · Wentworth · LP

– I move -

That the Bill be now read a second time.

It is proposed to extend the operation of the Pyrites Bounty Act 1960 for a further maximum period of six months to 31st December 1965 unless an earlier date of cessation is specified by proclamation. The purpose of this Bill is to implement the proposal. I have already outlined the reasons for this extension in my speech concerning the extension of the Sulphuric Acid Bounty Act. I commend the Bill to honorable members.

Debate (on motion by Mr. Pollard) adjourned.

page 1666

STATES GRANTS (PETROLEUM PRODUCTS) BILL 1965

Second Reading

Debate resumed from 12th May (vide page 1429), on motion by Mr. Fairbairn -

That the Bill be now read a second time.

Mr LUCHETTI:
Macquarie

.- Mr. Deputy Speaker, for 17 months people living in country districts have waited for the Government to honour a promise made by the Prime Minister (Sir Robert Menzies) in his 1963 election policy speech to reduce the price of petrol to country consumers. This Bill has as its objective the redemption of the Prime Minister’s promise. The Bill seeks, with the co-operation of the States and the oil companies, to establish a petrol policy for the States and to make it possible by this means for people to purchase petrol throughout each State at a price which will be no higher than 4d. a gallon above the ruling capital city prices. The Opposition deplores the delay in the presentation of this measure and regrets that consumers will have to wait until 1st October - almost two years after the promise was made - to obtain petrol at lower prices.

The Opposition, whose policy was to obtain a uniform price for petrol throughout Australia, does not oppose the Bill. I commend the Minister for National Development (Mr. Fairbairn) for the frankness with which he presented the Bill and for the manner in which he indicated the shortcomings, pitfalls and difficulties inherent in legislation of this kind. We know that cheaper petroleum products will be welcomed by many people in country districts throughout Australia and that in some small way they will ease the burden of those people. The reduction in the prices of motor spirit, power kerosene, automotive distillate, aviation gasoline and aviation turbine fuel will have a direct bearing in reducing costs to industry. This factor will have a special significance in remote rural areas. What we as an Opposition are concerned about is the apparent lack of essential machinery to make absolutely sure that the advantages obtained by operatives as a result of the reduced prices will be passed on to the community. If the airlines - Ansett-A.N.A. as a case in point - benefit from substantial reductions in the price of aviation spirit we may expect fares to come down or services to improve. As one who recently travelled to Hay in an aircraft operated by Airlines of New South Wales Pty. Ltd. I can testify to the need for considerable improvement in the type of service given to country people.

The scheme will function under the control of the Minister for Customs and Excise. Grants will be made to the States to subsidise sales of certain petroleum products in country areas. I sincerely trust that the legislation will be provided with teeth so that it may become effective. In his second reading speech the Minister said -

The Bill provides for the grant of financial assistance to a State of amounts equal to amounts expended by the State in making payments to distributors, provided that those payments are made in accordance with a scheme formulated by the Minister for Customs and Excise in relation to that State.

It will be a condition of registration that the company will enter into a written agreement with the Commonwealth and State whereby the company undertakes that the full benefit of all subsidy paid to it in respect of any sale of a petroleum product shall be fully passed on by it-

The effect of those words is that the oil company shall pass on the full benefit of any subsidy by reducing the country wholesale price. We will say more about that later. The Minister said in a memorandum of explanation -

The sales to bc subsidised are those made at locations contained in a Schedule to the scheme . The rates of subsidy payable on sales made at these locations of the five products to be subsidised are also contained in the Schedule and are equal to the difference between the wholesale price ruling at the location and ruling in the relevant capital city on 31st December 1964, less 4d.

That is an important consideration. It does not go the whole distance desired by the Opposition. We are particularly concerned to see that the benefit is passed on to those who at present enjoy advantages under the existing trading arrangements.

We have noted that the coat of the scheme will be £6 million - quite a substantial sum of money. The significant feature of the Bill is that the Australian taxpayers are to find the £6 million required for the full year’s operation of the scheme. This is the product of 17 months of labour by the Government and I wonder whether other proposals were considered. It seems to me obvious that this was the easy way out. The easy way, of course, is to go to Consolidated Revenue, to go to the Treasury and dip into the public purse, to finance a proposal such as this. But it seems to me that, if the whole field had been explored, this scheme could have been financed through other avenues to the advantage of the people. The fine conception of uniform rates of electricity to country councils and distributors in New South Wales was surely worthy of being followed by the Government. Under a former Labour government, rural electricity was made available from the central authority at a uniform rate throughout the whole of New South Wales. The answer, of course, is clear; that which could be achieved by public enterprise and by public organisation could not be achieved by the Government when it had to deal with the overseas monopolists, the oil organisations.

In the course of his speech, the Minister said -

The industry has nothing, at any rate directly, to gain from this subsidy; nor for that matter has it anything to lose.

I might add that it has not done anything to help to establish the scheme that we are now considering. I have looked through the various features of the legislation, but before we can consider the scheme we must reach a bedrock basis for it. We must consider whether the present prices of petrol are just and reasonable. Are they established on fair and equitable lines? If this legislation is to have real purpose for the consumers and if the difference of 4d. per gallon is to mean anything, the scheme must have a sound foundation.

The table presented by the Minister in his second reading speech shows that the wholesale price per gallon to resellers in New South Wales is 2s. 9d. and the resellers’ margin per gallon is 5$d. In Melbourne for some inexplicable reason the wholesale price is 2s. 10 ¼d. and the resellers’ margin is 6id. Why is there a difference between the Sydney and Melbourne prices? This seems an extraordinary state of affairs. We obtain substantial quantities of petrol from Indonesia, but the bulk of our requirements comes from the Middle East. The tankers would pass the port of Melbourne before proceeding to Sydney and one would expect that the wholesale price of petrol would be lower in Melbourne than in Sydney. In Brisbane the wholesale price is 2s. 10¼d. and the resellers’ margin is 5id. In Adelaide the wholesale price is 2s. 9£d. and the resellers’ margin is 5d. This is the lowest of all the prices. In Perth the wholesale price is 2s. 10¼d. and the resellers’ margin is 6Jd. In Hobart the wholesale price is 2s. 10¼d. and the resellers’ margin is 7id.

This seems to reveal an unsatisfactory state of affairs. We all know that the affairs of petrol companies are shrouded in mystery and secrecy. It is extremely difficult to obtain any conclusive information. Only sketchy figures relating to profits are made available from time to time. A full and detailed statement is most difficult to obtain. This is not at all surprising when one considers the ramifications of the oil companies, their parentage and the profits they make. Another disturbing feature, which will be dealt with more effectively and in more detail by the honorable members for Kalgoorlie (Mr. Collard), Grey (Mr. Mortimer), Kennedy (Mr. Riordan) and others, is the difference between the prices charged in various country centres. Here again there seems to be an abdication to those who control the oil industry. I would have thought that the Government would have established a clear cut basis of operation and, with the concurrence of the oil companies and the States, would have set out the prices that would be adhered to. But that is not the basis for the future operations of the scheme. The Minister said in his speech -

However, there are places, especially in Western Australia and the Northern Territory, where country resellers’ margins exceed capital city margins by varying amounts. Indeed, in some small centres, resellers’ margins vary within the same township. Tn such cases the result will be that, if the retailer decides to retain his higher margin, the retail price may still be more than 4d. above the capital city retail price, although of course reduced by the amount of the subsidy paid.

Where does that get us? The taxpayers of Australia will have their money paid into a fund for the purpose of reducing the price of petrol in country areas so that it will not be more than 4d. per gallon above the price in the capital city of the State. Yet, because resellers in certain centres have taken for themselves the privilege of fixing their own prices for petrol, the scheme will not operate in these centres. Instead, the easy, go as you please, happy go lucky way of the reseller will obtain and the full effectiveness of this legislation will not prevail for the public good. This is a most disturbing feature and I think that at some time during this debate, or perhaps during the committee stage, the Minister should examine this aspect a little more closely.

The Minister also said -

The rates of subsidy, as they are set out in the Schedule, will not be varied to take account of day to day changes in marketing costs or other circumstances.

This is another serious admission. Despite any changes in costs, there will be no alteration to the subsidy. Figures could be presented to show that the costs of hauliers or other costs have increased. Oil companies may present a case to show that their costs have risen, and the £6 million taken from the community will be whittled away to the detriment of the consumers. The Minister went on to say -

It is the Government’s hope that increases in railway freights, road taxes or other distribution costs of the petroleum products will be avoided as far as possible.

What a pious hope that is. Is that sufficient in a law being made to benefit the people of the community where £6 million of the taxpayers’ money is to be spent? From my point of view it is hopeless and inadequate. It does not meet the situation at all.

If one rejects that as a means of doing the job, 1 come back to the point I was endeavouring to make at an earlier stage in this debate. That was that other avenues might have been explored to find a way of dealing in an effective manner with the fixation of the price of petroleum products in this country. The Opposition has long advocated the need for a national fuel policy. Under such a policy the price of petroleum products and other forms of energy and power could be fixed throughout the country. Such a thing, of course, is a long way off under the present administration. Efforts have been made to bring it about.

Another method of bringing about what this Bill seeks to achieve has already received considerable attention by service station organisations and others. It is that there ought to be a fixed price for petrol throughout Australia which could be financed by a very small increase in the price of petroleum products in the densely populated centres of the nation. That would be a simple way of getting over the whole problem. The Government could fix a price and adhere to it if it were to make a fractional increase in prices in the areas of dense population. That would solve this problem. Apparently, it has not been considered. The Minister did not refer to it but it is one of the thoughts that has captivated the minds of many people who are deeply interested in this problem. Why was the proposal rejected? Was it unacceptable to the oil companies? Were there technical difficulties? If there were, I cannot see them. The only difficulty, of course, is that it would be necessary to institute price control of petroleum products and the oil companies, their distributors and re-sellers would be obliged to see that petrol and other petroleum products were sold at the fixed price throughout the country. Surely that is not an unreasonable proposition.

Country people have every justification to complain about the problem of freight charges. In the electorate of Macquarie which I have the honour and privilege to represent the freight.charge for transporting petrol from Sydney to Bathurst is 6d. a gallon or about £15 16s. a ton. Surely it does not cost that much to transport a ton of petrol from Sydney to Bathurst. Surely the petrol could be transported at a considerably lower rate than that but the oil companies adopt the attitude that it cannot be done and they stick to their point. Because of the secrecy they adopt in relation to their books, very little can be done about the matter. The country people know that they have to foot the bill for all these things. They have to pay the freight to the market on the goods they produce and they have to pay the freight on the goods they receive from the capital cities. If it is good enough for country people to pay freight in this way surely some consideration should be given to balancing out charges to that people in the densely populated centres can bear some share of the burden by paying a little extra for their petrol.

Other people have put forward the idea that a tariff should be imposed on all imported petroleum products. Such a tariff would provide a worthwhile sum. This is not my own particular thought but there are people who believe that it would be a useful method, particularly as it would provide an umbrella for the Australian oil industry and give it some protection within this scheme.

The idea is certainly worthy of consideration and I should very much like to have heard the Minister refer to this matter during the course of his second reading speech.

It is necessary to examine the effectiveness of this Bill before considering its wider aspects. What legal authority is there to compel resellers not to charge more than 4d. a gallon more than the capital city price? The Minister made it clear, of course, that there is no effective law to compel them to do this. The worst the Minister can do is to threaten those engaged in the wholesale business with the withdrawal of their subsidy. There is nothing else that he can do. But would such action help a person engaged in a haulier’s or a crop dusting business? Would it help a person who is using a tractor to develop his land if the Minister were merely to withdraw the subsidy from a wholesaler? Surely there is a better, more efficient and clear cut way of grappling with this problem than the method that has been presented to us by this legislation?

It is the Government’s hope that there will be no increase in railway freights. We know that such increases have taken place. I believe that a searching inquiry into the whole of the ramifications of the oil industry is required. It is necessary to conduct such an inquiry in order to obtain the basic facts required for legislation such as this. It is also necessary, of course, if the Government ever wishes to formulate a national fuel and energy policy. Such a policy is necessary to maintain the economic life of this country.

We all know that with the exception of the organization controlling the Moonie field the oil companies are owned by overseas monopolies. The people who operate in Australia owe everything to their parent companies abroad. The only opportunity we had to look into the window, as it were, of the petroleum industry, was through the Commonwealth Oil Refineries Limited which was sold by the present Government. The Glen Davis project was also sold and destroyed by this Government. R. W. Miller and Co. Pty. Ltd. tried to establish a fleet of tankers so as to reduce the price of Moonie oil but the strength of the overseas monopolists was too great. It is little wonder when one realises the ramifications of the oil companies throughout the world. Let me refer to some of the companies in Australia with which we are dealing. Rated first in profit* is Ampol Petroleum Ltd. The revealed profit of this company is £4,476,000. After allowing for taxation the profit is shown as £2,502,000. That is quite a small profit, of course! Mobil Oil of Australia show a total profit of £4,080,000 and a profit of £2,319,000 after allowing for taxation. H. C. Sleigh Ltd. discloses a profit of £3,778,000 and a profit of £1,876,000 after taxation. The Shell Company of Australia Ltd. - the Australian branch of one of the major oil companies of the world - discloses a profit of £3,626,000 and a profit, after allowing for taxation, of £1,717,000.

When one takes a peep at the parent companies of these Australian organisations one appreciates the great difficulty with which we are faced. I sympathise with the Minister. I wish him well in trying to do something to reduce the price of petrol paid by people in country districts. I would have much preferred the Government to have fixed an overall uniform price but I do understand the difficulties with which it is faced when dealing with these oil companies. The Minister said that they gave away nothing. They certainly do not. These oil companies have done very well for themselves. Looking over the oil companies of the United States of America - and these are the parent companies of the Australian oil companies - we find that Standard Oil (New Jersey), whose industry is petroleum products, had sales of 10,264,343,000 dollars and a net profit of 1,019,469,000 dollars. Socony Mobil Oil had sales of 4,352,1 19,000 dollars and a net profit of 271,852,000 dollars. I come next to the Royal Dutch-Shell company, which has its offspring in Australia, and which is ranked as No. 1 company on the list of the top 100 industrial firms outside the United States of America, with sales of 6,521,292,000 dollars and with a net profit of 601,292,000 dollars. All of this information has been disclosed. What information has not been disclosed would certainly be interesting indeed.

We know that the prices of oil and petroleum products in this country are cheaper than the prices for those products in many countries in the world. We admit that the price of those products is one of the cheapest in the world. Our prices are cheaper because our excise and tariff duties are lower than those duties in other countries. Our excise and tariff duty charges are down among some of the lowest of those charges in the world. Surely all of these facts give room for a Government with enterprise and initiative to enter the field and try to do something to extend an overall policy which would really bring about decentralisation and also develop the country by giving to the people in country districts the same petroleum prices as people in the cities enjoy. Be it remembered that the people in the country districts will buy petrol in the city and people in the city will buy petrol in the country. They do not own their motor vehicles in order to have them stationary. Our people traverse the whole country. Australia is a country of nomadic people. We like to travel. We like to go great distances. Uniform petrol prices would be a boon to everyone. For that reason, I regret that uniform petrol prices will not be introduced under this legislation.

What I have said clearly shows that something could have been done in this regard. I regret that the Government has not gone quite as far as it might have gone. I regret very much indeed also that this legislation is just a little bit less effective than it might have been. The Minister’s omissions and his admissions of his difficulties with respect to Western Australia and some parts of the Northern Territory can in the course of time be applied to other centres throughout Australia. These are the most disturbing features affecting this legislation. If we are to believe that there will be a 4d. differential between the city price and the country price of petrol, then we would like to think that that differential is rigid; that the price will not vary; and that that will be the price wherever we travel. In those circumstances we would all know that the price of petrol would be 4d. dearer in the country compared with the city price. We would know what price we would have to pay. Under this legislation, as costs rise and changes take place a seller in Western Australia could take an independent attitude. He could do this without any serious difficulty as far as this legislation is concerned.

I put it to the House this evening that if the cost of this scheme has to be borne, the people who ought to bear the cost are those who can afford to bear it - firstly, the oil companies. The Minister could not make a deal with the oil companies. Surely he can reach an agreement on a basis in relation to most centres of population, and the oil companies between them could carry it out. Petrol users have had to pay a pretty steep price over the years, but I consider that what has taken place in the past has been a very healthy development. Country people have paid up pretty manfully. Their work in developing Australia deserves to be acknowledged in a most effective way. What this legislation proposes to do is quite useful, but I am asking that the Minister look into the matters I have mentioned, go into the affairs of the oil companies, and see to it that the advantages of this legislation are passed on to the consumers. As petrol will be cheaper to road hauliers, we should ask: What can they do to stimulate the economy by reducing charges? What about the airline companies? What can they do either to provide better services or cheaper fares in order to help the economy of this country? All of these things are of very great value in stimulating our economy and help to develop the inland areas.

These are most important matters indeed and I can only hope that the Minister will give careful consideration in his usual courteous and thoughtful way te what I have said and to the other comments which will be made by honorable members on both sides of the House and see whether, out of this piece of legislation, a more effective law can be drafted that will give a guarantee to the people in country centres that the 4d. difference between city and country petrol prices which the Minister proposes will be the effective differential.

As I said before, we regret that a uniform petrol price is not being established. The United Kingdom and other countries of the world have been able to do this. Yet, Australia seems to be lagging behind them. This legislation is a step forward in the direction of the proposal by the Australian Labour Party for a uniform petrol price throughout Australia. To achieve a uniform price it is necessary to have price control. A gentlemen’s agreement will net achieve this objective. A bald subsidy is not an adequate disciplinary measure. There must be teeth in legislation of this kind if it is to be effective. How the advantages of this helpful legislation may be lost was admitted by the Minister. There is no need for me to recapitulate those thoughts. I can only hope that action will be taken to rectify the anomalies that now exist. The Opposition believes that the Government is subservient to the oil companies which nave made no financial contribution to this legislation. We can only hope that the Government will seek the support of the Opposition in having a searching inquiry into the ramifications of the oil companies and that the Government will try to evolve a workable and acceptable formula which will serve the people of this country.

Mr IAN ALLAN:
Gwydir

.- The honorable member for Macquarie (Mr. Luchetti) spoke for quite a long time. The longer he spoke, the more he indicated how deserving of praise the Minister for National Development (Mr. Fairbairn) is for bringing this Bill before us now. This is an extremely intricate and complex piece of legislation. As the Minister himself said in his second reading speech, the production of the Bill involved negotiations with oil companies and with State Governments. It has taken quite a considerable period of time to devise this Bill. I am sure that, far f:om quibbling at the fact that a uniform price is not established in the sense that this expression was used by the previous speaker, country people who will benefit from the working of this new system will be extremely grateful for it. Of course, a uniform petrol price is not practical in modern times for the simple reason that we do not exercise prices control from this Parliament. We cannot exercise prices control even if we wish to do so. We have no control over prices charged by petrol companies. This is a thoroughly practical scheme which has now been devised. I am sure it will yield far reaching benefits right throughout Australia.

I am particularly pleased about this legislation because this is something for which we in my Party have been campaigning as long as I can recall. We have pleaded year after year, month, after month, and week after week for a practical scheme of this kind which would encourage decentralisation in the way in which decentralisation can be achieved most effectively - by producing a benefit for the country people - country townsfolk predominantly - and for the small landholders. Over the past few years we have been able to produce benefits of one kind or another which have helped the large landholders - the grazier, the large wheat grower, the sugarcane farmer and so on. Taxation concessions and a number of other benefits have been devised and given to people who farm on a large scale, or who farm in a form which requires a great deal of capital. Now, for the first time, we are producing something which .is going to be of very direct and definite benefit to the small landholder who deserves to be protected, and who must be protected in the interests of the national economy.

We have a very heavy investment in primary production in Australia in terms of capital, railways, roads, aerodromes, buildings and things of that sort. There is excess capacity on the railways and most of those other capital investments. Unless we have true decentralisation of our people - I am speaking now of decentralisation in the temperate well watered zone of Australia, where agriculture is possible and where permanent settlement has been a feature for many years - then the capital investment which we have made over the years and which we are continuing to make is going to become an increasing burden for the nation to carry. We need to have a greater flow of goods on our railways; we need greater usage of our road system, of our aerodromes and of our telephone services in country areas if our early investments and our present investments are to pay dividends. So I welcome this move. It is a small move, but it is one that hits the spot. If through measures of this kind we can encourage more people either to settle or remain in our country towns, if we can encourage landholders on the small holdings surrounding those country towns to remain there, or if we can encourage the settlement of a greater number of small land holders around those towns, we shall increase the traffic flowing over our railway system, our roads and so forth and in this way move towards a lowering of costs generally in the countryside.

Of course, we intend to go on with further schemes for producing effective decentralisation in Australia. We have examples in Great Britain and certain European countries which have offered attractive incentives to industries to establish themselves in certain selected areas. We have done something along those lines in Papua and New Guinea. I am sure that it is only a matter of time before we adopt similar schemes for application in the more closely settled parts of the Australian mainland and in that way move even further towards the ideal goal of lowering costs of transportation in this temperate, well watered and well settled zone of Australia. Although I call it a well settled zone, it has to be remembered that at the present time 90 per cent, of the continent carries 8 per cent, of the population and 10 per cent, of the area carries 92 per cent, of the people. This 10 per cent, which presently carries 92 per cent, of the people could probably be extended to about 30 per cent, of the area of the continent, for it is in the zone which can be looked upon as the most suitable climatically for settlement. It is the zone upon which we should concentrate any plans that we may have for decentralisation of industry and population.

Without wishing to prolong the debate, I conclude by praising the Bill. In my opinion, it is a very satisfactory Bill. As I have said, it will do much to help those people who need assistance most at this time - the people who live in country towns and the people who live on small holdings surrounding the country towns. It will lower their cost structure considerably and in addition will yield benefits far outside those areas by lowering the total overhead costs of roads, railways and the various other forms of capital investment in the country.

Mr COLLARD:
Kalgoorlie

.- I was surprised when the Minister introduced this measure to hear that the cost to the Commonwealth for a full year would be only about £6 million. As one who has a very good knowledge of petrol prices over most of Western Australia, I would not have been surprised if the cost of this scheme had been somewhere between £3 million and £4 million a year for Western Australia alone, especially as the oil companies are not making any financial contribution whatsoever. But when I checked the schedule of subsidy payments against actual prices in the country areas of Western Australia I very soon realised why the costs of the scheme will not be anywhere near as high as I expected them to be. They will not be as high as I expected for the very simple reason that the Bill falls very far short of what the Government promised during the 1963 election campaign.

Honorable members will recall that in 1963 the Prime Minister (Sir Robert Menzies) told the people that if his Government was returned to office it would bring down legislation which would ensure that petrol prices in country areas would be no more than 4d. a gallon above the prices charged in the relevant capital cities. That promise by the Prime Minister was repeated by Government supporters and Government candidates over the air, in speeches and even in casual conversation. It was also repeated as recently as the Senate election last year, when Government senators and Government candidates were telling the people (hat immediately Parliament resumed legislation would be introduced to honour the promise made by the Prime Minister and the Government and that, as a result of that legislation, petrol prices in country areas would not be more than 4d. a gallon above those charged in the cities. We all heard them telling that story, and we all know that they were most emphatic about the 4d. Quite naturally, the people in the country areas expected that when this legislation was at last introduced the promise made by the Prime Minister and his colleagues would be honoured; but, unfortunately, many of the people are going to be very sadly disappointed.

When the Government, prior to the 1963 general election, promised to reduce petrol prices, no strings were attached to the promise. There were no “ if’s “, “ but’s “ or “ maybe’s “ about it. It was just a straight out promise to the people. But, once again, this Government has failed to honour a promise. Once again, it has brought down legislation that will give far less than it promised the people in an election campaign. We find that this Bill will still leave petrol prices in many places much more than 4d. a gallon above capital city prices. I have taken the trouble to obtain information about the price of petrol at places throughout most of the Kalgoorlie electorate, which, as every honorable member knows, takes in some nine tenths of the large State of Western Australia. On checking prices and subsidy payments, I find that over almost the whole of the electorate the price of petrol will be more than 4d. a gallon above the price in Perth. At some places, it will be 5d. a gallon higher and in others it will be as much as ls. lid. a gallon higher, or 9id. a gallon dearer than the Government promised the people it would be. In some isolated places in respect of which I have not been able to check prices, it could be even higher, and that would not surprise me.

Mr Turnbull:

– It could be lower, too.

Mr COLLARD:

– I shall let the honorable member know what the position is. The Minister for National Development (Mr. Fairbairn) has said that resellers’ margins represent the reason why the Government has fallen down on its promise, but it can find no legitimate excuse there. I find also that the subsidy is to be paid on wholesale rather than retail prices. I hope to have something to say about that a little later. What I want to say now is that when Government supporters in this Parliament, and candidates of the Government parties, were putting their election promises before the people in 1963, and again last year, there was no suggestion that, because of resellers’ margins, prices in some country areas might be more than 4d. a gallon above city prices. Nor was it ever suggested that the differential of 4d. a gallon would apply only to wholesale prices. Therefore, Sir, on behalf of the people of the Kalgoorlie electorate, I want to record a very strong protest at the shabby trick that has been played on so many of them by the Government as shown by this measure. Every resident of the Kalgoorlie constituency had been led to believe that, long before this, legislation would be introduced to ensure that in every country town in Western Australia the price of petrol would be no more than 4d. a gallon above the Perth price.

I wish briefly to describe what the actual position will be in the Kalgoorlie electorate. This electorate has an area of some 900,000 square miles. It is much larger than New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory combined. Though I may not speak for as many people as there are living in those States and the Territory, I speak at least for those people who occupy a very large part of Australia’s total area. According to the information that I have received, after this measure becomes law the price of petrol in Broome will be 7d. a gallon above the price in Perth, the price in Boulder will be 5d. a gallon higher than the Perth price and the price in Carnarvon will be lOd. a gallon higher. Honorable members may be interested to know that in Carnarvon, although the price will be lOd. a gallon above the price in Perth, a subsidy of only id. a gallon will be paid. This, to my way of thinking, is a very clear example of an instance in which the Government should have considered resellers’ margins if it had really wished to honour its election promise. Apparently, the wholesale price in Carnarvon is 4id. a gallon above the wholesale price in Perth. No doubt, the reason why the difference is only 4id. a gallon is that Carnarvon is a port with bulk handling facilities.

However, the wholesale cost would not be the only cost incurred by the reseller that would be higher than Perth costs. The cost of retailing petrol in Carnarvon would be much higher than the retailing cost in Perth. This, also, should have been considered by the Government. The margin in Carnarvon above the Perth retail margin may or may not be too high. I do not know. But there is no doubt that it should be above the Perth figure. The Government, during the 17 months in which it has been playing about with the preparation of this measure, has had plenty of time to go into these things and to decide what would be a fair margin. It should at least have paid a subsidy that would ensure a fair margin, and this should have applied to every distribution point.

I now come to other places. The price in Derby will be 8d. a gallon above the Perth price, or just double the differential that the Government promised. The price in Esperance will be 5id. a gallon above the Perth price. Let me point out here that no subsidy at all is to be paid at Esperance. The price at Hall’s Creek will be 9d. a gallon above the Perth price. This is another clear instance in which resellers’ margins should have been considered. The wholesale price at Hall’s Creek, apparently, is 2s. 2d. a gallon above the price in Perth. Yet the Government expects a reseller at that centre, which is some 2,000 miles from Perth by road, to retail petrol at the same margin as in Perth, where the reseller’s margin is 6d. a gallon. The Government evidently considers that a reseller at Hall’s Creek should be able to retail at a similar margin. If this is not the Government’s opinion, why has it not allowed, in the calculation of the subsidy, some extra amount for resellers’ margins in places like Hall’s Creek, Carnarvon and the other centres that I have mentioned? Surely the Government does not suggest that, when it promised the people that it would reduce petrol prices in rural areas to no more than 4d. a gallon above capital city prices, it did not know of the higher resellers’ margins in country areas? If it did not know, this proves that when the promise was made, the Government did not know how it was to be honoured.

Let me continue with petrol prices in various country centres. The price in Kalgoorlie will be 5d. a gallon more than the Perth price, Leonora 7d., Menzies and Mullewa 6id., Marble Bar, Morawa and Norseman 5id., Southern Cross, Wiluna and Wyndham 6d., Onslow 7id., Roebourne 8id., Port Hedland 9id., Wittenoom Hid., Nullagine ls. lid. and Laverton ls. Odd These figures and margins that I have quoted show a position vastly different from that promised by the Prime Minister and his colleagues just before the 1963 general election when they were desperately chasing votes. The people in all the places that I have mentioned were assured that they would pay the same price for petrol. They all expected that, after the passage of this measure, the price that they would pay would be no more than 4d. a gallon above the price in Perth. But, as I have pointed out, in many instances, they now find that they will have to pay much more than 4d. a gallon above the Perth price.

I think that I should also point out that, as recently as 29th April, the Minister for Labour and National Service (Mr. McMahon), speaking in this House on an Opposition motion on balanced development, said -

I should have mentioned when I was dealing with the question of transportation in country areas that already the Government has decided on measures to reduce the differential between petrol prices in capital cities and country areas to 4d. a gallon.

So, Mr. Deputy Speaker, only a couple of weeks ago, we had a Minister in this Government still telling the people that the maximum price for petrol in country areas would be no more than 4d. a gallon above the price in the capital city of the relevant State. It would seem, therefore, that the story has been told so often and so emphatically as not only to mislead many of the people but also to fool a Minister into believing what the Government has been saying.

The Minister for National Development certainly cannot claim that the subsidy to be paid will make any wonderful difference to costs in Western Australia, because, in the main, the total amount of subsidy paid in each locality will be very small. I have analysed the subsidy schedule for Western Australia, and I find that it lists a total of 480 localities. It apparently is not supposed to list all localities, because I have noticed that several are missing from it. Of the 480 places listed, 240, or half, will receive a subsidy of no more than Id. a gallon. Of this 240, 107 will receive no subsidy at all. Of the localities listed, 120 will receive more than 2d. a gallon. The remaining 13 will receive either lid. or 2d. a gallon. Only 34 localities will receive more than 6d. a gallon and only 46 will receive from 3d. up to and including 6d. a gallon. So I suggest that, in Western Australia, there is plenty of room for an increase of the subsidy to offset some of the high prices which I cited earlier and which will be well in excess of the promised figure of 4d. a gallon above the Perth price.

I would like to point out also that just because 107 localities are not receiving any subsidy, it does not mean that all those localities will have a price which is only 4d., or no more than 4d., above the Perth price. Very many of them will have a price that is more than 4d. above the Perth price. For instance, Esperance, which does not receive any subsidy, will still pay 5id. above the Perth price. When introducing this measure last week the Minister said -

In his 1963 policy speech, the Prime Minister (Sir Robert Menzies) undertook to do something about the burden placed upon rural costs by the higher prices of petroleum products in the more remote areas. He proposed that we-

That is, the Government - should bring it about that the normal price of these products would nowhere in Australia be more than 4d. a gallon above the level of capital city prices.

In that statement the Minister used the words “ normal price “. It seems to me that this is an escape for the Government’s failure to honour its promise. At no time did we hear the Prime Minister or any Government supporter use the word “ normal “ or state any explanation of what “ normal “ would mean. But, even so, “ normal “ to country consumers in Australia would mean the normal price that they paid for petrol either out of the drum or bowser or direct from the wholesaler. Surely that would be a logical conclusion for them to arrive at. For instance, the people at Derby who have been paying 4s. 5d. a gallon from the bowser would consider 4s. 5d. to be the normal price for petrol in Derby and, therefore, even if the word “ normal “ had been used - we all know that it was not - the people in Derby and elsewhere would naturally have expected that, following the passing of the legislation, the petrol from the bowser in Derby would cost no more than 4d. above the price charged in Perth. In other words, they would have expected that the normal price in Derby would become, at the most, 3s. 9d., if the normal price in Perth was 3s. 5d. But apparently the Government has decided to introduce this aspect of a normal price and put upon it an interpretation to mean the wholesale price. There was certainly no reason for the Government to do that, unless it wanted to use it as an escape provision. The Minister said also -

The purpose of the subsidy is the reduction of transport costs to country people and country industry . . . 1 know that that sounds very good, but I ask the Minister: What burden will be removed, as mentioned by the Prime Minister, and what reduction in transport costs, which were referred to by himself, will be brought about in Carnarvon when the Government, with great generosity, grants a subsidy of a id. a gallon to people and industry? Carnarvon is 600 miles from the capital city, and by granting only a id. that town is left with a price of petrol still lOd. above the capital city price. I know that the Minister’s reply will be that it is the wholesale price that is referred to, but at no time during the 1963 election campaign did the Prime Minister or Government supporters even suggest that it would be only the wholesale price on which the subsidy would be paid. But now we find the Minister saying -

The subsidy is concerned with the reduction of wholesale prices and, through them, of retail prices.

So the retail price, apparently, is only a secondary consideration. There is no provision to ensure that the retail price will be reduced by the amount of the subsidy. There is nothing to prevent resellers from increasing their margin and absorbing some part of that subsidy. Had the Government promised this legislation only a couple of months ago it could, perhaps, have been forgiven for failing to honour the promises completely, provided, of course, that it gave an assurance that it would rectify any of its failures at an early date. But there can be no excuse when the Government has been playing about with this measure for about 17 months and then, after that time, brings in a measure which is very far short of what it told the people it would do. The Minister went on to say -

In most country places it will not matter that we are dealing directly with wholesale rather than retail prices, because resellers’ margins are for the most part the same as those in the city. However, there are places, especially in Western Australia and the Northern Territory, where country resellers’ margins exceed capital city margins by varying amounts. … In such cases the result will be -that, if the retailer decides to retain his higher margin, the retail price may still be more than 4d. above the capital city retail price . . .

There is no suggestion in those words that the higher price will be rectified. It is, apparently, just bad luck for the consumers in those areas. Although everyone has been thinking that the 17 months delay was due to the Government striking obstacles that it had to remove to enable it to honour the election promise, it seems that it is more likely that the Government was seeking ways and means by which it could avoid meeting its promise and finally pounced on the wholesale price rather than the retail price as a means of doing so. It seems to me that the Government was looking for some cheap way out of its promise.

The Minister has made it quite clear that the wholesale price in country areas will be no more than 4d. above the wholesale price in the relevant capital city, and in admitting that it can be more than 4d. above the capital city price on retail sales he blames the resellers’ margin as the cause of any such higher price. This is a rather interesting position because the subsidy, I presume, will be paid on the wholesale price that was operating during the inquiry into this scheme. If such is the case, I would like to know whether the Government made a searching inquiry to ensure that the wholesale prices in the several places were fair prices. Did it examine the prices to ascertain what percentage of profit, if any, the companies make on the country wholesale prices as against the city wholesale price? I would not imagine for a moment that the oil companies, in arriving at a wholesale price of, say, 2s. above the city price, were simply covering the additional cost of freight, insurance and so on. I would be surprised if in that 2s. there was not some percentage of profit. If this is so, the Government has apparently raised no objection and is prepared to pay a subsidy on the wholesale price decided by the oil company. If that is so, if there is some percentage over and above the actual cost of distributing petrol in some particular place, why has not the Government also been prepared to allow the retailer or reseller in that particular place some percentage above the city resellers’ margin and fix a subsidy accordingly?

If a reseller in a capital city is entitled to a margin of 6Jd., a reseller in an area several hundred miles from the city, one who has to pay a much higher wholesale price, must surely be entitled to something above what the city man receives. Even if the wholesale price in the country was the same as in the city, I suggest that the reseller in the country should be entitled, because of cost burdens and other conditions from which he has to suffer, to recover something above what the city man receives. It is fairly obvious that the people are at the mercy of the big oil companies in this instance. The big oil companies have called the tune.

In one part of his speech the Minister admitted that the oil companies had expressed themselves as being unwilling to meet certain conditions which the Government wanted, and their grounds of refusal were that they felt there would be some costs involved and that there may be some market disorganisation. All that the companies had been asked to do was to set up agencies on certain pastoral properties and to undertake to invoice supplies to the agent at a delivered price. It is rather interesting to note that the Minister has stated that the oil companies will have nothing to gain from this subsidy, but that he hastily added: “ Not directly, any way “. The Minister pointed out also that the companies will have nothing to lose from this legislation, so it is obvious that they have made no financial contribution to the scheme. Their attitude has been that they will not be able to recover any contribution that they make, as I said a while ago, and so have refused to do anything which would involve a cost which they could not recover.

With regard to direct or indirect benefit we should examine paragraph A5 of Part A “ Preliminary “ in the document distributed with the Bill. Paragraph A5 states - (1.) Where petroleum products are made available for its own consumption by a registered oil company at a place at which, if the petroleum products were sold by the oil company would entitle it to payment under this scheme in respect of the sale, the oil company shall be entitled to claim under Part D payment in respect of so much of the petroleum products so made available as are consumed in the course of carrying out its business at that place.

I may be wrong, but it appears to me that in that Part there is a real and direct benefit to the oil companies. As I interpret that paragraph it would mean that an oil company operating at, say, Wittenoom, which is one of the places about which I have spoken, and distributing motor fuel at a wholesale price of 4s. 8d. would be entitled to receive a subsidy of ls. 5id. per gallon on each gallon of fuel that it used in the course of its own business. It also would receive a subsidy on any power kerosene, dieseline or aviation fuel that it used for its own purposes. If that is so, it could mean - I should think it would mean - that such a company would be paid a subsidy on money which is actually profit to it; that is, the profit that it makes on the portion of the wholesale price charged at Wittenoom in excess of the wholesale price in Perth. However, whichever way it works out, if the company is to receive a subsidy on fuel that it uses in its own business, that subsidy will be something that it has not received previously. If that is so, surely the subsidy must be a direct aid to the company. If I am wrong in my interpretation of that paragraph I hope that the Minister for National Development will take a little time to explain to the House just how the paragraph will work and why it will not be of benefit to the oil companies.

I also would be interested to hear whether the Government has examined the wholesale costs at country distributing points and, if it has, whether it is satisfied that the wholesale costs are no more than they should be. Further, I would be interested to know whether, on those wholesale costs, the companies are making a profit on their outlays. If they are, I ask: Why have not the resellers’ margins been treated in a like manner? Why has nol some percentage of the subsidy been allowed to cover what the Government considers is a fair resellers’ margin? 1 suggest that this legislation should be amended immediately to ensure that the promise that the Government made to the people in 1963 is honoured. 1 wish to refer again to paragraph A5. of Part A of the scheme. That paragraph relates to the entitlement of an oil company to claim subsidy in respect of fuel that it uses itself. I would like to know whether an oil company would have that entitlement in respect of costs of carting fuel to outlying areas and from depots to bowsers, and that sort of thing. If so, will it mean a reduction in the costs of the oil companies for that sort of thing? If it will, does it mean that there will be a corresponding reduction in wholesale prices in many country areas? Will it also mean that there will be a reduction in the subsidy; will it mean that the subsidy quoted in the Schedule will remain and that a further reduction will be made in the price to the consumer or the reselling price; or will it simply mean some additional benefit or profit for the oil companies?

It seems to me that the Government should have made an examination of oil company profits and, if they were unreasonable, the oil companies should have played a part in this scheme by reducing their wholesale charges in country areas, thereby relieving the taxpayers of some of the burden. But whatever the position of oil companies or resellers in country areas is, there can be no doubt that resellers in country areas are entitled to something above the margin that city resellers take. That being so, in order to be honest and fair to country consumers the subsidy should have been paid on the resellers’ margin and the retail price and not simply on the wholesale price. 1 will be interested to see how this legislation will affect airline fares and freights in the north and north west of Western Australia. 1 notice that a fairly large subsidy will be paid on the wholesale price of aviation fuel in those areas. Incidentally, one wonders why the wholesale price of aviation fuel in any particular place should be so much greater than that of ordinary motor spirit. However, it looks as if MacRobertson Miller Airlines Limited, with which Mr. Ansett is associated, will receive considerable benefit from this measure. It will certainly be very interesting to see whether there will be a commensurate reduction in air fares and air freights.

Mr HALLETT:
Canning

.- It gives me much pleasure this evening to support the Bill now before the House, which is a Bill for an Act to grant financial assistance to the States in connection with the prices of certain petroleum products. I sincerely hope that this is the first step in bringing about uniform prices of fuels throughout Australia. I believe that it is only reasonable to expect that in a large country such as Australia uniform fuel prices should be brought about in due course. The largest single factor in our cost structure today is freight. I think it accounts for more than 30 per cent, of the cost of every article that changes hands, from the time of its manufacture or production until the time of its consumption. In a country with distances as vast as those in Australia the man in the outback is at a tremendous disadvantage. For many years it has been the policy of the Country Party to bring about uniform prices for petrol and other fuels that are used in outback areas. I sincerely hope that that will occur in the not too distant future.

In my book, it is not good enough that the people whose occupations commit them to the disadvantages of distance should be called upon to bear the full burden of freight costs. We have seen many examples of that happening throughout Australia. The annual report on the Northern Territory for 1963- 64 highlights the situation in some of our outback areas. The report states -

Transport difficulties present one of the main problems in the development of the Territory. Settlement is widely dispersed and distant from the main centres of the nation’s population and industry. Most plant, equipment, building materials and foodstuffs have to be imported into the Territory by long road and rail hauls. Darwin is tha only port with facilities for large ships to be brought close in to shore. Consumer goods and development requirements for districts many hundreds of miles inland enter by this port. For example the mines at Tennant Creek, over 600 miles to the south, draw their generator and transport fuels from Darwin. The above factors necessarily result in high freight costs to and from inland centres and have an important effect on the economy of the Territory.

That deals with only one of many such situations which exist in many parts of Australia - not only in the Territories but also in Queensland, in parts of New South Wales and, to no mean extent, in Western Australia. That State has a vast area - about one third of the Commonwealth - and is subject to tremendous disadvantages in relation to distances and freights.

The Schedule indicates some of the advantages that will accrue from this legislation. The honorable member for Kalgoorlie (Mr. Collard) said that he considers the advantages should be greater. I am’ quite sure that if there are any anomalies in this legislation they will be rectified. He pointed out that at Halls Creek, which is in his electorate, there will be savings of 22d. a gallon on petrol, 33d. a gallon on power kerosene - that is a tremendous saving - and 22d. on automotive distillate. In my electorate, which is very large but not nearly as large as the electorate of Kalgoorlie, of course, there will also be considerable savings. At Hopetoun the savings will be 6d. a gallon on motor spirit, 8d. a gallon on power kerosene and 6d. a gallon on automotive distillate. Hyden is a fast developing area in the wheat and sheep belt of my electorate. It has been battling against high costs in order to develop. Of course, costs will still be high, but people in that area will benefit to the tune of 3£d. a gallon on motor spirit, Sd. a gallon on power kerosene and 4id. a gallon on automotive distillate.

These savings will benefit these districts tremendously, because the people there are up against the tremendous and ever increasing cost burden. If we really want to get on with the job of developing Australia measures of this sort should reach this House far more often than they do. Jacup is a new area which has been carved out of the virgin soil. It is in my electorate. People in that area will make savings of 3d. a gallon on motor spirit, 4id. a gallon on power kerosene and 4id. a gallon on auto motive distillate. Many areas similar to this one are being developed in Western Australia at present. This area was allocated only two or three years ago. All of these areas will benefit from this legislation.

There are many disadvantages in our inland areas and there are disadvantages resulting from our distance from markets. Some of our markets are drawing closer than they were a number of years ago, but we still have to contend with great distances in getting our goods - bulk commodities and so forth - overseas. In some respects we have advantages, which I may have mentioned previously in this House. In respect of wheat, for instance, we have enjoyed freight reductions in the last few years. This situation has been brought about through modern shipping techniques - by the user of larger ships - self-trimmers as we call them - which load faster and easier and carry larger cargoes. We have not yet had the advantage of a reduction in general freight rates, but 1 sincerely hope that we do so in the years ahead.

We have witnessed improvements in our coastal shipping facilities. For instance, seatainer have been introduced on the MelbourneFremantle run and handling costs have been reduced considerably. These factors should be examined in relation to our overseas trade. We must make all possible improvements in our shipping facilities and also in our railway facilities. With the implementation of the broad gauge in Western Australia some rail freight rates must decrease, but at some point of time goods must be transported by road, so we will have the cost of road transport ever with us. At some time all of our wheat has to be transported by road. Our wool meets the same fate. Any reduction in the price of fuel will undoubtedly assist our cost structure.

On this question of cost structure, I had my accountants take out some figures in relation to the freight burden on various properties in Western Australia. My accountants were somewhat surprised when they started extracting these figures. For one particular property of 9,000 acres the freight bill for one year was almost £6,000, and this figure did not include all the freight charges. This indicates the freight burden on pastoral properties. This particular property is 160 miles from the port of Fremantle. I could mention several other properties to indicate the freight burden. A sheep property, 16 miles from a rail connection in Western Australia, comprising 4,000 acres of which only 1,500 have been sown to pasture, had a freight bill of almost £2,400. This property is 207 miles from Perth. Another wheat and sheep property 8 miles from a rail siding and 174 miles from Perth with an acreage of 3,500 acres of arable land had a freight burden of £2,068.

These figures indicate the tremendous burden which is being placed on farmers. Unless we can do something about reducing this cost we are heading for trouble because whether or not we can sell our goods overseas, or for that matter on the home market, often hinges on the final costs involved in getting the goods to market. This applies not only to farming but to all industries. We are battling to develop secondary industries and to find markets for their produce overseas. The success or otherwise of our efforts will undoubtedly hinge on whether we can produce goods at a cost which is competitive with overseas industries. Present freight costs impose a tremendous burden. Frequently industries which have an opportunity of tendering for overseas contracts that involve the supply of goods have found that only by reducing transport costs - wharfage, handling and freight costs - can they compete. This Bill will be the first step in bringing about some reduction in freight charges.

I am interested to know whether the Government, in preparing the subsidy schedule before us, took into account the transportation of fuel itself to our outback areas. Has this been considered in determining the final cost of fuel at a point of destination which may be many hundreds of miles beyond the 4d. barrier, if we can call it that? If not, this could further reduce the cost of fuel at the point of destination. I have pleasure in supporting the Bill and sincerely hope that it is only the first step in bringing about a uniform fuel price throughout Australia.

Mr MORTIMER:
Grey

.- There can be no doubt that the differentials contained in this Bill must have given the Minister for National Development (Mr. Fairbairn) and his departmental officers much cause for thought and must have in volved them in much research. Undoubtedly, every aspect of the differentials has been closely examined by the Minister. In fact, the Minister, as reported in “ Hansard “, has provided the differences in both wholesale and retail prices in capital cities. This shows that he is well conversant with the differentials and that dealing with them was a real problem. However, he gave no indication in his second reading speech that he was at all concerned with the staggered prices on which this whole scheme is based.

Long haulage and handling charges are readily accepted as causing price differences in the inland, but there seems no rhyme or reason for the price differences in capital cities. These prices seem to be in no way related to transport costs incurred by the oil companies in supplying the commodity to their particular storage bases at a deep sea port. For instance - and I think the honorable member for Macquarie (Mr. Luchetti) mentioned this - Sydney, Melbourne and Adelaide, which are not so far apart when bulk sea transport is used, have different prices. They are on the same seaboard. Strangely enough Melbourne, the largest user of the commodity - indeed, by Australian standards Melbourne could be described as a huge consumer of fuel - is wedged between Adelaide and Sydney and yet pays the highest price. I do not know whether the honorable member for Macquarie mentioned wholesale prices, but the Melbourne wholesale price is Id. above the Adelaide price and id. above the Sydney price. Of course, the retail prices fluctuate similarly. It is to be noted that the price in Newcastle, which is 100 miles from Sydney, is the same as the Sydney price and that the price in Townsville, which is 900 miles from Brisbane, is the same as the Brisbane price, yet the wholesale price in Perth and in Brisbane - one city on the opposite side of the continent and the other so far to the north - is on a par with the Melbourne price, while in Hobart, which is virtually just across Bass Strait, the price is id. higher.

The Minister may pass off this factor as a States problem but we on this side of the House feel that the Government should have some control over these prices. This is a matter that cannot be lightly brushed aside. It is a matter for national concern and merits investigation. Having regard to the enormous profits made by overseas oil companies - this matter was referred to by the honorable member for Macquarie - and the fact that any profit made beyond a reasonable margin represents a further drain on the Australian economy, I ask the Minister to consider this matter. Is the Minister concerned about the difference in prices? Is this not a matter that might well be discussed at a Premiers’ Conference so that a proper overall base rate could be fixed not only for capital cities but for all deep sea bulk storage ports where proper delivery facilities are available? Other honorable members have referred to the fact that Adelaide retains the lowest wholesale price for petroleum products. It is therefore pertinent to look briefly at the facilities available at the port of Adelaide in order to ascertain whether in fact a saving can be made at that port by a fast turn round of vessels.

At Port Adelaide the majority of oil companies have bulk installations fronting the Port River. The South Australian Harbours Board has provided isolated berthing facilities which are sufficient and possibly ideal for unloading purposes. Delays at this point are prolonged only on the odd occasion when the arrival of a tanker coincides with the departure of another tanker or, as sometimes happens, when two tankers wish to use the same company’s berth. The Port River has, however, very lengthy dredged channels which limit draught to a maximum of 27i feet. The main shipping channel may be described only as confined in many places. The larger vessels departing or arriving must be carefully controlled. This control involves the use of pilots and tugs as well as the observance of the inevitable speed limits which go hand in hand with the regulation of shipping under these conditions.

Costly holdups are minimised by a very efficient Harbours Board staff, but they do occur. In fact, the approaches to berthing facilities at Port Adelaide do not compare favourably with those of many other deep sea bulk storage ports. It must be noted also that the Port Stanvac refinery, which is built as close to the city as is possible, has made no difference to Adelaide standard prices since it came into production. Port Stanvac, if it can be described as a port, fronts the open ocean. Vessels stand well out to sea, connect to pipes on the ocean bed and pump oil ashore. There is no protection for vessels and in bad weather they must lie off sometimes for days before being able to connect up and begin unloading operations.

By no stretch of imagination can the oil companies claim that deliveries of their commodity are made to Adelaide at less cost than to other capital cities, yet Adelaide has been blessed with the lowest price for these products. Taking a step further base rates charged for the product, we find that there is another increase over and above capital city prices for petroleum products discharged from vessels at deep sea out-ports. I understand that this occurs fairly generally around the Australian coast but I refer to those places in South Australia with which I am more conversant and which incidentally are in my electorate.

I have never been convinced that Port Lincoln, where all port facilities compare very favourably with any other point of delivery in Australia and which is certainly the best and most convenient port in South Australia for bulk delivery of petroleum products, should have imposed on it an additional base rate over and above that which is charged for petroleum products in Adelaide. I must admit, however, that over the last 10 or 1 2 years the differential in Adelaide and Port Lincoln prices has dropped from 6d. to its present level of Id. a gallon.

Consider the facilities made available at Port Lincoln for the handling of this product - the easy accessibility, the protection offered to a vessel in the harbour, the mean draught of 32 feet, a storage capacity of 6,700,000 gallons, a walk-up start guaranteed by employees of both fuel companies and the Harbours Board at any hour of the day or night, plus a specially constructed tanker berth which is probably Utopia to a mariner and which is away from the main shipping stream and parallel with the direction of travel of a vessel entering or leaving the port and which does not require the use of a tug. Having regard to those facilities, I must admit that I am unable to offer any reason why Port Lincoln petroleum prices should not be on a par with or even lower than those ruling in South Australia’s capital. It could be argued that Port Lincoln is slightly off the main sea route or it could be said that, as it is some 140 sea miles from Adelaide, in some instances it is further from the place of loading. But the counter to this argument, I am reliably informed by employees of the Harbours Board, is that quite often tankers call at Port Lincoln to unload sufficient of their cargo to permit the vessels to reduce their draughts to enable them to get up the Port River to the oil companies bulk storage depots.

Roughly half way along the coast between Port Adelaide and Port Lincoln is the bulk fuel storage port of Port Pirie. Admittedly Port Pirie has a short dredged channel to a very well protected harbour. Port Pirie compares rather favourably with Port Adelaide. It has a storage capacity for bulk fuel products in excess of 24 million gallons or roughly four times the storage capacity available at Port Lincoln. Port Pirie consumers also start their base rate at Id. a gallon in excess of the Adelaide rate.

The whole system is wrong. The zoning of areas with the minimum price fixed on capital cities is wrong. When sufficient of a commodity can be transported in bulk at relatively cheap sea rates to a point of delivery where proper berthing and other modern facilities for quick and uninterrupted discharge have been made available at the expense of the people of a State of the Commonwealth, the imposition of an additional charge for that commodity simply because the port is an out-port is wrong and smacks of modern trade piracy. This situation should give any responsible government much food for thought.

My concern is centred not only on the slug of an added differential paid by the users of this commodity at or near the ports of delivery mentioned but also on the fact that from all of the ports I have mentioned great quantities of petroleum products are transported inland, to every gallon of which is added the differential price which we all know to be improper.

By the good graces of the South Australian Harbours Board I have been able to obtain details of the tonnages of fuel oils delivered to Port Lincoln over the past few years. These figures are important because from them may be ascertained the difference or additional amount paid by Port Lincoln consumers as compared with Adelaide consumers. I have been kind, even gracious, to the oil companies and have gone back only to 1961 for the figures, when the differential had dropped from its original 6d. to as low as 2id. a gallon. In the following year - 1962 - the differential dropped to Id. a gallon, at which rate it has remained ever since. The figures prove that little fish are sweet and give weight to the old adage that we should look after the pennies.

From July 1961 to June 1962, 42,732 tons were delivered at Port Lincoln at 2id. per gallon differential. This represents a take home bonus for the oil companies over and above normal freights, in round figures, of £123,000. Had the companies been persuaded to drop the differential that year to Id. per gallon instead of waiting until the following year, the users of fuel at Port Lincoln would have been saved £72,000. In 1962-63, 41,881 tons were delivered at a differential of Id., representing £48,000; in 1963-64, 45,619 tons were delivered at the same differential, representing £52,000; and up to May of this year 34,788 tons have been delivered at the same differential, representing £40,000. In under four years well in excess of £250,000 has been taken out of the bulk fuel deep sea port in differential charges alone.

Without wearying the House with the figures relating to Port Pirie, I would point out that it seems reasonable to expect that the bulk deep sea depot at that port, having a capacity four times greater than that of Port Lincoln, would handle four times as much cargo and in the same period could well realise, as a take away differential bonus, the very nice round figure of £1 million. I must repeat that the £1 million and £250,000 represent a State differential charged to the accounts of customers of oil companies over a period of less than four years at two ports which are little further from Adelaide than Sydney is from Newcastle and which is closer to Adelaide than Townsville is to Brisbane.

The added profits of oil companies that are permitted to indulge in the present differential racket must be enormous. This is evidenced in almost every town to which one travels. Small towns have a dozen company owned service stations within a very short distance of one another, on opposite corners or side by side, and many of the proprietors are struggling to make a decent living. Yet in the same town one or other of the companies, wishing to get rid of some excess profits, provides the town and the travelling public with another service station that they could well do without. A classic example of this was brought to my notice at the weekend. Three modern shops on a corner block were pulled down and a service station was in course of being erected on what was previously vacant land behind the shops. The shops were valued at £15,000 and the additional land at £5,000 and the cost of erecting the station was £7,000, making an estimated total cost to the company of £27,000.

The local service station proprietors in this town and in many others are concerned to know where this practice will end. Towns that a few years ago had been serviced by three service stations, each making a comfortable income, now have a round dozen service stations. When the earlier proprietors entered into agreements with their own companies, they felt that some security had been offered to them. What they did not anticipate was that some other company could build a larger and more modern station right at their front door and that they would then have some difficulty in paying rent and other commitments. There seems to be no reason in the mad surge of building undertaken by oil companies, unless it is that excess profits made by the companies must be turned into capital assets to avoid taxation.

I ask the Minister to comment on this matter and to seek through all the channels available to him ways of enticing the oil companies to agree to deliver their products to all reasonably established deep sea ports in South Australia at a price based on what they would accept for delivery to bulk terminals in Adelaide. 1 ask him also to cause an investigation to be made of the spate of building activities undertaken by oil companies in an effort to protect the established businesses in some way. If this is not entirely within his province will he make this a matter for consideration at a Premiers’ Conference? 1 have perhaps transgressed by mentioning some matters that may come within the province of the States. However, I wish to refer briefly to another matter that causes me concern. I was unable to find some resellers listed in the schedule of subsidies. 1 take Eucla, Koonalda and Nundroo as examples. These towns could well have been included by the honorable member for Kal goorlie (Mr. Collard) in the speech he made. Eucla is really over the border in Western Australia. I know the price charged for standard grade petrol is about 6s. a gallon in this region. I assume that the resellers must be registered, because they receive supplies from Port Lincoln, although they may receive their supplies at irregular intervals. They were operating for some time before 30th June 1964 and were giving a worthwhile 24 hour service to the public. They are no doubt listed in the books of the oil companies as receivers of petroleum products at wholesale rates. 1 trust that the distributing points I have mentioned and other established resellers who have also been excluded from the subsidies schedule are not amongst those places to which the Minister referred when he said that others who were not recognised distributing centres will only enjoy the subsidy to the nearest recognised distributing point. The depot from which this region is supplied is Port Lincoln, which would be anything between 300 and 600 miles away. As I understand the position, there is no other agent and the service stations deal directly with the companies.

Inquiries I have made show pretty clearly that a number of the places in question should not have been called de facto distributing points on 30th June. They are not included in the subsidy schedule, however, and I ask the Minister to cause inquiries to be made and to correct this anomalous position before the scheme comes into operation.

I would also like to take the case of Ivy Tanks. I was reminded of this when the honorable member for Kalgoorlie was speaking, lt is much further out than the outer Barcoo. It could be said to be “ on a track seldom crossed ,—. by them that are lost “. That just about describes the situation in this area. A handsome subsidy of 10¼d. a gallon has been provided for Ivy Tanks. I have some knowledge of the area and I know that 6s. a gallon is about the minimum price for standard grade petrol. I checked with the proprietor of the service station, because it was listed, and I found, as I had expected, that no allowances had been made for the less frequented or out of the way places and the proprietor of a service station in the middle of nowhere is being given a subsidy to cover only the same reseller margin as would be permitted to a reseller with a large service station in the heart of a busy city. The Minister said quite frankly that he has closely examined the possibility of covering retailers. He has said in several places in his speech that slightly higher prices at a few country centres deterred him from doing anything about it.

The Bill does provide some relief for country areas, however, and surely any government that is completely honest in its intentions will give proper consideration to the problems that will arise when the scheme is operating.

Mr KING:
Wimmera

.- In view of the lateness of the hour and the desire of the Government to have this Bill passed tonight, I assure the House that I will not take very much time. I congratulate the Government on introducing the scheme dealt with in this legislation. I appreciate that the promise of the Prime Minister (Sir Robert Menzies) was made some time ago, but I think all honorable members will realise that the framing of this legislation has not been easy. Many issues have had to be considered and I am sure that the Minister for National Development (Mr. Fairbairn), who introduced the Bill, has had much difficulty in settling the finer points. I congratulate him on the way he has prepared the Bill.

I join with the honorable member for Gwydir (Mr. Ian Allan) in expressing pleasure at the introduction of the Bill. As he said, this scheme has been part of the policy of the Australian Country Party for a number of years. I pay a tribute to our leader, the Minister for Trade and Industry (Mr. McEwen), who has taken no small part in ensuring that the legislation was introduced. Naturally enough, like many members representing rural electorates, where we have varying prices of petrol, I am very keen that the price be kept as close to the metropolitan price as possible. As a Victorian I can say also that Victoria will not be receiving anything like the same benefit as some of the other States. I refer mainly to Western Australia, parts of South Australia and Queensland. However, I am not objecting to that because, on looking through this schedule. I notice that some of those places have been paying exorbitant prices for petrol over the years. I would be the first to agree that they should have some consideration.

I believe, however, that there are some anomalies in the legislation. Perhaps I should not call them anomalies, but for want of a better word I refer to them as such. They are brought about chiefly by the freight rates in the various States. The Minister has explained in his second reading speech that the whole basis of the subsidy to be paid to the oil companies is the freight cost of fuel to the various centres. Any cost more than 4d. a gallon above the metropolitan cost is to be subsidised. I should like to direct the Minister’s attention to a few anomalies. The town of Serviceton situated on the South Australian-Victorian border is some 300 miles from Melbourne. The cost of freight is 4id. a gallon so the subsidy paid will be id. a gallon. We come down to Horsham which is 180 miles from Melbourne. Evidently the freight cost there is 4d. because no subsidy at all is to be paid. Moving closer to Melbourne we come to Stawell which is 130 miles from the capital. The subsidy is id. Moving in the direction of the electorate of the honorable member for Mallee (Mr. Turnbull) we come to the town of Brim which is 230 miles from Melbourne. Evidently the freight cost to Brim is 4id. a gallon because the subsidy is to be id. A town approximately 10 miles further north is to get a subsidy of lid. This is an area that I know fairly well as I lived in the district most of my life. I appreciate that fuel is delivered from a point a few miles south, namely Warracknabeal. I should like to know - possibly the Minister will not be able to give the reason at short notice - why there has been such a terrific increase in freight cost for such a small increase in distance.

In the same area there is another place that has not even got a mention in the subsidy schedule. It is situated some 160 or 170 miles from Melbourne. Other towns about 120 or 130 miles from Melbourne will be in receipt of a subsidy of a id. lt may be that these other towns are in the happy position of having their fuel delivered at a low rate, such as obtains in the Horsham area. It seems strange to me also that in relation to Horsham no subsidy will be paid on normal fuel whereas there will be a subsidy for aviation fuel. What about Murtoa? I notice that almost every town mentioned in the schedule is paid a subsidy for avia tion fuel. I believe that Murtoa is one centre that might have been overlooked.

In his second reading speech, when referring to clause 6, the Minister said that provision was made for the Minister for Customs and Excise to have a look at these matters. I shall quote the Minister’s speech. He said -

Under clause 6 of the Bill, the Commonwealth Minister concerned with the administration of the subsidy, who will be the Minister for Customs and Excise, will have a discretion to add to the Schedule additional distribution centres and to determine rates of payment in respect of sales at those centres if he is satisfied that new centres of distribution have been established. He will also have authority to add a new centre to the Schedule, and to determine a rate for it, or to vary the rate provided for a centre already in the Schedule.

I would request the Minister to have a look at the town I have just mentioned. 1 appreciate that the things I have mentioned are only minor problems in comparison with the overall principle dealt with in the Bill. To my mind this is the first step that has been taken to put into practice the meaning of a word we hear so much about in theory but know very little about in practice. I refer to the word “ decentralisation “, which relates to a form of balanced economy. It was only a few days, ago that the honorable member for Scullin (Mr. Peters) made some reference to a lag in primary production. I think, perhaps, that the honorable member for Scullin should be reminded that there might be a lag in profit margins brought about by a lag in valuations and also by the high costs that primary producers have to bear. This legislation will have a tendency to curb such costs.

I said that I was going to speak for only a few minutes and I shall keep my word. The honorable member for Macquarie (Mr. Luchetti) made reference to the equalisation of prices and urged some form of price control. I think it has been proved over the years that price control is most unsatisfactory. As a Government we believe in free enterprise and we want to see that principle adhered to. I close, Mr. Speaker on the note on which I commenced. I congratulate the Government on the introduc tion of this legislation, and I wish the Minister well. I think that he will find, over the next six months, that many anomalies will make themselves apparent. Maybe in the not too distant future the Government may give consideration to further equalising the price of petrol in the city and the country by reducing the margin of 4d. to 2d. or even by removing it altogether.

Mr RIORDAN:
Kennedy

.- I rise to support the Bill. I want also to support the remarks of the honorable member for Macquarie (Mr. Luchetti). The legislation before the House at the moment has a very interesting background. Australian Country Party members ought to know about this background just as well as those on this side of the Parliament. Over the years there has been a demand by people living in country areas for a uniform price of petrol throughout the Commonwealth. This was not a matter for this Parliament but a matter for State Governments. The Brisbane “ Courier Mail “ in an article published on 5th May said -

The wholesale price of petrol based on import costs and not on local production costs is fixed by State price commissioners in New South Wales, Queensland and South Australia, and in much the same way in other States. Retail margins vary slightly from State to State.

State price fixing commissioners fix the price. Applications have been made to the State Governments. If there were no price controls and the course advocated by the honorable member for Wimmera (Mr. King) who supports free enterprise were adopted so that the price of petrol would be raised in the city and lowered in the country, the oil companies would want to sell all their petrol in the capital cities and no supplies would be available for the country areas. In other words, there was no other course of action but for the legislation to be taken in the way in which it has been taken at this time.

The immediate background of this legislation is that the Leader of the Opposition (Mr. Calwell), on the occasion of the 1963 Federal election, delivering his policy speech before the Prime Minister (Sir Robert Menzies) delivered the policy speech of the Government, stated that the Australian Labour Party would bring about a uniform petrol price throughout the Commonwealth. A few days later, when the Prime Minister opened his campaign, he said that the price of petrol in country districts would be reduced to not more than 4d. over the relevant capital city price. Now, what I want to know, and what a number of other people would like to know, is this: Why did the Prime Minister not make the amount 3d. or 6d.? That has never been explained. We have never been told how or why the Government reached this price of 4d.

The Minister for National Development (Mr. Fairbairn), in his second reading speech when dealing with the speech by the Prime Minister in 1963, said -

He-

That is, the Prime Minister -

  1. . proposed that we should bring it about that the normal price of these products would nowhere in Australia be more than 4d. a gallon above the level of capital city prices

I say to Country Party members, and particularly to those members of that Party who have spoken in this debate tonight, that it is all very well for them to make speeches here, but they will have to go back into their electorates, into those centres where the price of petrol will be more than 4d. over the relevant capital city price, and explain to their electors how and why this legislation is not in conformity with the promise that was made by the Prime Minister in his election speech in 1963.

The Australian Labour Party recognised the fact that the only way in which this uniform price that we were after could be achieved would be by way of subsidy. That is why we are supporting this measure. It goes a long way towards the objective that we want to attain, which is a uniform petrol price right throughout Australia. Reference has been made tonight by the honorable member for Macquarie to the fact that the people expected after the 1963 election that it would be a question of only a month or so before everything in the garden would be lovely and the price of petrol in country areas would be reduced to not more than 4d. over the capital city price. A number of people outside this Parliament have made the same statement. We had to wait 17 months for this legislation. I do not blame the Minister for National Development. As a matter of fact, I sympathise with him because a perusal of his speech, and a perusal of the relevant documents which he has supplied to the House, indicate that he and his advisers have had a pretty tough 17 months dealing with the oil companies in trying to formulate and obtain some sort of scheme. According to my reading, a perusal of the scheme shows that it is a scheme by the oil companies for the oil companies at the cost of the taxpayer.

I wish to refer to one or two sections of the Minister’s speech to indicate how the oil companies are associated with this scheme and why there has been this delay of 17 months after the scheme had been promised, in which time negotiations have taken place between the Minister and his advisers and the oil companies. The oil companies did not give too much away, as the Minister himself indicated. To come quickly to one of my points, I mention that the Minister has said that the oil companies have nothing to gain in this Bill. They have nothing to lose, either. That is what they were so concerned about - that they had nothing to lose. What I would like to know from the Minister is how much of this scheme is based upon what the Government wanted and how much of the scheme is based on what the oil companies wanted. In other words, is it a compromise scheme or is it a straight-out oil companies scheme. The Minister said that they have nothing to gain by this scheme. But they have nothing to lose either. I have not a suspicious turn of mind, but this scheme, according to what I can see of it, and as I said a while ago, is a scheme by the oil companies for the oil companies.

I do not want to delay the House at this late hour, but I wish to refer, as I have said, to parts of the speech made by the Minister which, to my way of thinking, indicate just how much the oil companies have nothing to lose. At page 1429 of “ Hansard “, the Minister said -

There is one aspect of the operation of the subsidy plan that I have put before the House in which it seems that it may, initially at least, fall short of what the Government would wish to achieve.

Well, Mr. Speaker, if this scheme falls short of what the Government would wish to achieve, is this a compromise scheme? If it is not a compromise scheme, is it a scheme devised for the purpose purely and simply of assisting the oil companies at the expense of the taxpayers. The Minister goes on to say -

This is the extent to which the subsidy covers outback properties, by which I mean pastoral properties situated in the more remote regions of the continent.

I wish to make one or two small observations in regard to that statement. The Minister says that the scheme falls short of what the Government wishes to achieve in the extent to which the subsidy covers outback properties. He refers to pastoral properties in remote areas. At page 1425 of “ Hansard “, in the second sentence of his speech, the Minister said -

In his 1963 policy speech, the Prime Minister (Sir Robert Menzies) undertook to do something about the burden placed upon rural costs by the higher prices of petroleum products in the more remote areas.

Where are we going? First, the Minister suggests that something is to be done for these people living in more remote areas and then he says that what is being done would fall short of what the Government would like to do. I, too, say it falls short. I hope that the Minister is not using an extreme case in trying to prove his point and, in effect, to cover up for the oil companies.

Again, on page 1429 of “ Hansard “, the Minister said -

A number of these properties were covered by differentials established by the industry, and these arc fully covered by subsidy rates set out in the schedule. Others, however, were not so recognised and are not established distribution centres. These will enjoy the benefit of subsidy, in effect, only to the nearest recognised distribution point.

Now, Mr. Speaker, why does the Minister raise all these queries about oil companies and recognised distribution centres? 1 am aware that the Minister knows the back country as well as I do. So does the honorable member for Corangamite (Mr. Mackinnon). The distance from a distribution centre to a property may be a couple of hundred miles. A station vehicle is driven in to the centre and the petroleum product is collected in 44-gallon drums. Further on in his second reading speech the Minister said -

We have put it to the oil companies that we are prepared to provide for these properties within the subsidy plan if we were satisfied that a company had made the property an agent by the contractual agreement, -

That is fair enough - the agent had undertaken to supply products to the public and the company had undertaken to invoice supplies to the agent at the delivered price.

So far as these properties are concerned, they supply the public with fuel today. Any person driving past a property in one of the more remote parts of the Commonwealth and requiring petrol, or food for that matter, is immediately accommodated. The properties do not even charge for the petrol they supply in such circumstances. In other words, they are accommodating the public today. It is true that members of the public travelling in the vicinity of those properties are few and far between. But the point is that the properties are already supplying petrol and are prepared to continue to do so. Incidentally, most of these properties are owned by companies. The Government is prepared to bring them within the subsidy scheme but only if the oil companies will make them their agents.

The Minister went on to say -

The companies, however, have expressed themselves as unwilling to meet these conditions, on the grounds of the costs involved in setting up such agencies and the distribution and market disorganisation that they felt would result. But the Bill before the House provides for the inclusion of new centres of distribution in the Schedule and it will be open to any company to initiate arrangements with an outback property to have it admitted as such a centre.

What a pious hope is expressed in the words “ lt will be open for any company to initiate arrangements with an outback property.” It is either a pious hope or a reason to be given to outback people why they have to travel 200 miles to the nearest distribution centre in order to buy petrol at a price not more than 4d. a gallon above the capital city price. As I said a while ago, and as the Minister said in the early part of his speech, these are the very people that this Bill is supposed to help. I hope that the Minister will also recognise the fact that on these properties, which are, generally speaking, owned by companies, there are managers, overseers and other workers employed. Because of their remoteness most of the employees own vehicles so that they are not wholly dependent on station vehicles to get away from the property. In order to take advantage of this arrangement and buy petrol at a price not more than 4d. above the price at Brisbane they may have to travel 200 miles to fill the tanks of their vehicles; that is, unless they are able to come to some arrangement with the company owning the property. Good

Lord, it would cost them a tankful of petrol to get there and a tankful to get back home. Government supporters laugh when I say that this is a Bill dictated by the oil companies for the oil companies at the expense of the taxpayers. We have a glaring example of that in the fact that if the oil companies are willing then the Government is prepared to recognise these places as distribution centres. The whole trouble in connection with this question of remote areas is the fact that whereas at the present time the station lorry does perhaps come in 200 miles to the distribution point - and nobody knows what the distribution point is - there is no guarantee under the Bill that the companies will not say that instead of remaining at its present situation 200 miles from the property the distribution point will in future be 200 miles further along the road. I have looked through the Bill to discover whether there was any way in which the distribution centre could be pegged down, but I could not find any. The question that appears to be involved here is who is going to bear the cost of transporting petroleum products from the distribution centre to the various properties. These poor oil companies - nearly all of them are broke - cannot afford the extra cost of appointing properties as their agents to supply the travelling public. Incidentally, most of these properties have better workshops than will be found in some of the suburbs of our big cities. The oil companies want the property owners still to come in to pick up supplies because, if the companies appoint the property owners their agents the companies will have to supply lorries, provide wages for the drivers and bear the cost of transporting the products from the existing distribution centre to the new agencies on the properties. This Bill provides a means by which the oil companies will be able to evade the cost of distribution from the depot. That is why we have the statement: “ If the companies are prepared to agree “. Did you ever hear anything so silly! The important point is that the Minister said in his second reading speech: “We want to cover those people living in remote areas “.

What does the Minister mean when he talks about established distribution centres? If property owners have been in the practice of going to certain centres for their supplies, are such centres to be regarded as distribution centres henceforth, or does “distribution centre” mean the nearest depot of the oil company? If the term refers to the centre where the consumer now goes for his supplies, all will be well. But what guarantee is there that, for the purposes of this Bill, the distribution centre will not be the oil company’s depot at some place? The Minister said that the oil companies may negotiate arrangements with the pastoralists. This indicates to me that the Minister is aware that this Bill certainly does satisfy the oil companies. We hear a good deal of talk in this place about the strength of trade unions, but I will guarantee that the union of the oil companies is far stronger than, or at least strong as, any trade union. Tonight, the Attorney-General (Mr. Snedden) introduced a measure dealing with restraint on trade. The oil companies will be particularly interested in that, as will some of the local municipal authorities in respect of tenders for the supply of oil. It is true that in implementing this policy of co-operation the oil companies proved themselves to be tough negotiators and that is why earlier I expressed sympathy with the Minister in the task that has confronted him. The Minister stated that this measure would cost £6 million. I do not know what a uniform price for petrol throughout Australia would cost by way of subsidy, but at the time of the general election in 1963, I was informed that it would cost in the vicinity of £8 million. We are importing into Australia 15 million tons of crude oil each year at a cost of £6 per ton. Twenty-five per cent, of that oil comes from Indonesia, 3 per cent, from Borneo and 72 per cent, from Persia, while only 2 per cent, of our requirements is home grown so to speak, and is obtained from the Moonie oilfield.

Not very long ago the Queensland Government, which is not a Labour government - it is a Country Party-Liberal Government and not a Liberal-Country Party Government - had difficulty in getting overseas oil interests to buy Australian crude oil produced at the Moonie field, because they said the price was too high. There is a world glut of petroleum products at present. Why should not the consumers of Australia or any other country for that matter have the full benefit of that glut?

They have to pay the full price when there in an acute shortage.

The oil companies have invested a lot of money in this country. The “ Australian “ published details of 1,000 companies in Australia and I took the opportunity of taking out the figures for eight oil companies. They revealed that in 1963 the eight companies had a capital investment of £352,344,000 in Australia and the total profits of five of them that year amounted to £16 million. It is all very well to say that they made a profit of £16 million, but how many millions have they tied up in grandiose service stations where some poor unfortunate individuals have to work nearly 24 hours a day to get a crust? Service station managers, or whatever they are called, are at present before the State Industrial Commission of Queensland, in Brisbane, pointing out that because there are too many service stations, particularly in Brisbane, those operating them cannot obtain a reasonable return.

The consumption of petroleum products In Australia doubles every eight years and what a glorious Christmas party the oil companies must have during that period; yet they cry poor mouth and want to come into this scheme without making any contribution except the machinery that already exists. And so the wrangle goes on over the formulation of the scheme which is now before this Parliament.

I said earlier that the oil company executives are tough businessmen, particularly when dealing with those outside the trade. Look at the trouble that was experienced up at the Moonie field. Since the consumption of oil products in Australia doubles every eight years why do not the companies establish goodwill with their customers by going out into the more remote areas and giving the people there good service instead of building elaborate service stations in the cities? After all, the cost of transport from the distribution centre to the customer’s property is only the running cost. If the companies bore this cost they would establish goodwill with property owners, who would get their petrol at only 4d. per gallon above the Brisbane price.

I want now to deal with aviation spirit. Airlines will receive the benefit of the subsidy on the aviation spirit that they use. All that I want to say to both the major airlines is that the people of western Queensland will be looking to see what they do. If the fares are not reduced, the people will look for some sort of concession on freights. I am sure, too, that people in country areas who depend on bus services will get right on the backs of the proprietors of the services in an effort to see that those who use the service receive the benefit of a reduction in fares.

The Minister for National Development mentioned the difficulties associated with the inauguration of this scheme, and referred to the co-operation of the State Governments and the oil companies. I think that I have dealt with those matters adequately. He stated, also, that the industry - that is really the oil companies - has nothing to gain from the subsidy. For that matter, it has nothing to lose, either. We all are aware that the oil companies lose nothing anywhere when it comes to business.

I quote again from the “ Courier-Mail “ of 5th May. Referring to an inquiry by the Tariff Board, it stated -

Having no power to fix a price for crude oil, the Government last November instructed the Tariff Board to determine what protection should be given to Australian crude oil.

We hope that the Board’s investigation will enable the people of Australia to get more information - we want a lot more information - about the machinations of the oil companies. I support the Bill, though I would prefer prices to be uniform throughout the Commonwealth.

Mr HANSEN:
Wide Bay

.- Mr. Deputy Speaker, last Wednesday, the Minister for National Development (Mr. Fairbairn) introduced this measure, which was promised some 17 months ago in the policy speech delivered by the Prime Minister (Sir Robert Menzies) in the 1963 general election campaign. We appreciate the work that the Minister and the Department of National Development have undertaken in determining details of the subsidies that will be paid at various distribution points throughout Australia. A number of honorable members have already looked through the subsidy schedules and found that various centres that they would have expected to see listed are missing. I, too, looked through the schedules and paid particular attention to places in the Wide Bay electorate and in adjoining areas. I found something that I would not have expected to see. This concerns Noosa, in the electorate of Fisher, which is represented by the Minister for Primary Industry (Mr. Adermann). He knows how far it is from Noosa to Noosaville. He could walk from one place to the other in 10 minutes. He knows, too, that the distance from Noosaville to Tewantin is not much greater.

A subsidy of 3d. a gallon is to be paid on motor spirit sold at all three centres. There is to be a subsidy of 2id. a gallon on power kerosene sold at Noosaville and Tewantin but there is no mention of a subsidy on power kerosene sold at Noosa. There is no mention of a subsidy on automotive distillate sold there, but a subsidy of lid. a gallon is to be paid on sales of this product at both Noosaville and Tewantin. I understand that there is no sale for either power kerosene or automotive distillate at Noosa. But there is no sale for aviation spirit there, either. Yet a subsidy of 3d. a gallon is to be paid on aviation spirit sold there as well as at Noosaville and Tewantin. I wonder where this information came from and why there is no provision in the schedule for subsidies on power kerosene and automotive distillate sold at Noosa. If someone attempts to sell these products there, only about H miles from Noosaville, will he be eligible for the subsidy or will he not?

The honorable member for Kennedy (Mr. Riordan) mentioned the differential of 4d. a gallon between the price of petrol in country centres and in State capital cities. This has puzzled me ever since it was announced by the Prime Minister. Why is the price in country areas to be 4d. a gallon above capital city prices? I thought at first that this figure might have something to do with decimal currency, but 4d. will not convert to a whole number of cents. Therefore, this differential figure does not tie in with decimal currency. A differential of 3d. a gallon would, however, because it will become 2 cents. So this could be converted easily, whereas 4d. will be equivalent to H cents. This Bill is being introduced at a time which is closer to C Day than to the date on which the Prime Minister announced during his policy speech for the 1963 election that this scheme would be introduced. Before the 1963 election the Prime

Minister knew that the Government had already decided that the dollar would be worth 10s. Having decided on that value for the dollar it followed that there would be a difference between the value of Id. and the value of a cent. If the Government wanted to pick a figure for the price differential, why could it not have been a figure easily transferable from our present currency to decimal currency? Why was 4d. chosen? I do not know whether the Minister can explain that for me. I would be very pleased to know the explanation.

As has been said by other honorable members, a uniform petrol price was incorporated in the policy of the Australian Labour Party announced during the 1963 general election campaign. For many years motor tyres have been sold at a uniform price right throughout Australia, and that situation has applied also to matches, cigarettes, sweets, chocolates and a number of other lines of merchandise. In those instances the manufacturers have fixed a retail price for their commodity and in all parts of Australia the commodity is sold at that price. I have often wondered during the several occasions when this matter has been discussed why there should not be a uniform price for petrol throughout Australia. The Minister has said that the cost of this scheme for the first year of its operation will be £6 million, which means that the taxpayers of Australia will be asked to foot this bill of £6 million. Yet to my knowledge, and to the knowledge of all other honorable members, there has been no inquiry into the ability of the oil companies to contribute to the cost of the scheme. If such an inquiry has been made, it certainly has not been made known to honorable members.

The honorable member for Kennedy mentioned what a tough crowd the oil companies are to deal with. They have bucked the State Governments on a number of occasions, the latest one being when they refused to buy Moonie crude oil. It was only after much tough negotiation by the then Minister for Mines, Mr. Evans, and because he stood fast on this issue, that some settlement was eventually reached. What is the ability of the oil companies to contribute to the scheme? They seem to have plenty of ability to pay high prices for expensive sites for service stations. After building the service stations they put in proprietors who are charged a high rental to enable the oil companies to redeem their original capital outlay. The proprietors of these service stations are working, in many cases, 12 and 14 hours a day, including week-ends, trying to make a living. In the city of Melbourne alone within the last 12 months I have known of at least six service station proprietors who have walked out. One was a former publican. He stayed in the job for three weeks and then said that he would sooner walk out and lose £2,000 than stay there, lose the £2,000 and starve as well. This is typical of the experience of many people who have gone into business in service stations. When they take over the position they pay a fee to the oil company and, before they know what is happening, they are working all sorts of hours. They find that they cannot afford to employ staff because of the poor return that they are getting, mainly because of their capital outlay in paying the oil company a fee and also because of the high rental that the company charges to enable it to redeem its investment in the service station and the high price that it has paid for the site.

A reference has been made to an inquiry being held in Brisbane. I refer to today’s edition of the Brisbane “Courier-Mail” in which there appears a report which states -

A glut of petrol reselling points had resulted from the installation of coin-operated pumps and over-building of service stations by oil companies, the State Industrial Commission Full Bench was told yesterday.

This situation had affected the economic position of the service station leaseholder to the extent where he was now financially worse off than when regulated trading hours were first instituted.

This statement was made by Mr. T. P. Smith, the Assistant Secretary of the Queensland Motor Trade Association. The report continued -

  1. . this over-abundance of petrol outlets had come about in recent months.

The report goes on to say that Mr. Holmes, the advocate for the Queensland Employers Federation, said that in a free society there should be no restriction on petrol and oil sales at garages and that there was no need for rostering of operators of petrol outlets. The report continued -

He said the £1,000 installation cost of coinoperated pumps was beyond many private operators, particularly those whose incomes had been slashed by rostering provisions.

Service station proprietors are continuing to work all hours of the day in order to earn a living, yet the oil companies, to whom they are indebted and to whom they will be indebted for many years to come, sit back and are catered for in this legislation by the Government at the expense of the taxpayer. The scheme has its good points. There is no question about that. The idea of a uniform petrol price, which will mean that people in the outback areas will get cheaper petrol, power kerosene, distillate and aviation spirit is good, but I would feel much happier about supporting this measure if I knew that some investigation had been made into the ability of the oil companies to contribute towards this scheme. Nothing has yet been indicated in that regard.

Now let me deal with the margins that retailers are allowed. Mainly as a result of the high rentals charged for service stations, the retailers are finding it very hard to manage on the margins which are fixed, at any rate in Queensland, New South Wales and South Australia, by the Prices Commissioners. Apparently in other States they have an open go. The Minister has referred to a difference in prices even in the same country town where a particular reseller may allow himself a higher margin of profit than does his competitor. It is interesting to learn that in such a case the purchaser will have to meet the increased margin in States where prices and margins are not fixed. There could very well be a case for a higher margin in country areas where sales are not as high as they are in the cities, but this has been defeated by the glut of service stations which have sprung up on every street corner. If one company erects a service station on one corner there is fierce competition by the other companies to set up a service station on the opposite corner.

Some companies have catered for people in outback areas by establishing local centres and passing on the increased cost to the consumers, but other companies prefer to operate only in the capital cities and larger towns. They are not prepared to provide a service for the people in the outback. Perhaps this is one of the problems confronting the Minister in his attempt to get some agreement among the oil companies.

It is to be hoped that the proposed reduction in price will also apply to the oil companies. Section A5. (1.) of the report covering the scheme is in these terms -

Where petroleum products are made available for its own consumption by a registered oil company at a place at which, if the petroleum products were sold by the oil company would entitle it to payment under this scheme in respect of the sale, the oil company shall be entitled to claim under Part D payment in respect of so much of the petroleum products so made available as are consumed in the course of carrying out its business at that place.

Over a period, this should result in a reduction in the price of petrol because the cost of transportation will be reduced. There should also be a reduction in freight charges levied by airline operators and road hauliers who transport goods to western areas. It will be interesting to learn what the Prices Commissioners will have to say about that aspect. I do not think they have any control over this and I doubt whether they are interested in seeing whether the reduction in the price of fuel to airline operators and road hauliers will be passed on to the consumers. Let us hope that it will be.

Today there are very few owners of rural properties who do not use fuel of some type. The days when properties were worked with horses have gone. Now even scooters and light aircraft, on the larger properties, are being used for mustering. So more and more people in the outback and in rural areas are dependent on fuel. There is a need to supply cheap fuel to them. Paragraph E4., sub-paragraph (1.) states -

The State may, at the request of a registered oil company and in accordance with arrangements approved by the Minister, from time to time make advances to the oil company on account of amounts the oil company will claim under this scheme.

There is a practice - it dates back to wartime - of oil companies demanding cash payment for petrol before they empty it into the tanks at the service stations. They want to be paid cash on the dot. Apparently they have been able to get away with this practice. It has always surprised me. Most wholesalers or distributors will always give people 30 days in which to pay accounts. However, this practice developed and it is continuing. I suppose that if the oil companies can get away with it there is no reason why they should not continue it. Almost before the hoses are coupled up to the tanks at the service stations, they want a cheque in payment for the petrol, distillate or whatever it is that they are discharging into the tanks.

In hot weather there must be a certain amount of evaporation in the tanks. I understand from friends of mine who are service station proprietors that once upon a time allowance was made for this evaporation. It might be argued that in cold or rainy weather there would be a certain amount of condensation which might increase the amount in the tanks. I am not quite sure about that; but I know that over a period of, say, a week in the summer months there must be a certain amount of evaporation. The service station proprietor is expected to bear the cost of that. He is expected to pay cash on the dot. I suggest that on petrol, distillate and power kerosene that the oil companies supply in bulk they will be subsidised to an even greater extent than is envisaged. They will receive subsidies in respect of petrol, distillate or power kerosene that will never be used because it evaporates in the heat.

There are many points that would bear investigation. I refer particularly to the ability of the oil companies to contribute to the subsidy. I believe that at the same time as the Government was considering this scheme it could have investigated that matter. The Prime Minister told me that one of the matters that the Government was investigating was retailers’ margins. I believe that that matter and the practice to which I have just referred - namely, the service station proprietor having to pay cash before the product is put into his tanks - could be investigated. The Minister for National Development indicated to me that there was a reason why the amount of 4d. a gallon was decided upon. I look forward to hearing him on that point.

Mr JAMES:
Hunter

.- I wish to make a contribution to this debate on the States Grants (Petroleum Products) Bill 1965. This legislation is designed to implement part of the Government’s policy that was announced prior to the last general election, namely, to bring about uniform prices for petroleum products throughout Australia, so that users would not pay more than 4d. a gallon above city prices. Members of the Opposition welcome this legislation. Speakers from this side of the House have claimed that the oil companies should be making a substantial contribution to this £6 million subsidy which the Australian taxpayers will have to pay each year in order to put this part of the Government’s policy into effect.

I wish to demonstrate in the time available to me why the Opposition claims that the oil companies should contribute towards financing this scheme. We do not believe that the taxpayers should be asked to contribute £6 million. The honorable member for Gwydir (Mr. Ian Allan), one of the few speakers in this debate from the Government side of the chamber, said that his party had been asking for this legislation year in and year out. I think he would concede in private, if not in the House, that this legislation would not have been introduced but for the promise made before the last Federal election only because the Government had such a small majority in this chamber. I suggest that had the Labour Party occupied the treasury bench in the years that the Government has been in office, this kind of legislation would have been placed on the statute book long before today.

Members of the Labour Party do not believe that one section of the community should be exploited for the benefit of another section. I think the honorable member for Wimmera (Mr. King) also pointed out that his party for a number of years had been striving for the introduction of legislation of the type now before us. The honorable member for Gwydir referred to the urgent need for decentralisation. He stated that the reduction of prices for petrol in outlying areas would assist decentralisation. No government has tried harder in a practical way to assist decentralisation than the last Labour Government of New South Wales. Unfortunately, it was defeated at the recent election. It proved the sincerity of its attitude towards decentralisation by setting up a special department. The New South Wales Labour Government attempted to assist East-West Airlines Ltd., the only decentralised airline in New South Wales, by dividing air routes between that company and Airlines of New South Wales Pty. Ltd., a subsidiary of the Ansett organisation.

I regret that the people of some territories will not benefit from this legislation. I refer in particular to the population of about 800 on Norfolk Island whose earning capacity could have been increased by a reduction in the price of petrol. Norfolk Islanders are engaged in the lucrative fishing industry and also use petrol in boats which take out tourist parties. Honorable members may have heard of the increasing number of tourists visiting Norfolk Island. At present Norfolk Islanders must pay out of their very low incomes between 6s. and 7s. a gallon for petrol. I regret that the Government has not seen fit to extend to the Territory of Nauru the benefits to be given under this legislation. It might be claimed that we have to some extent exploited the phosphate deposits of Nauru. I have not visited Nauru and I do not know the price at which petrol is sold there. I guess it would be about the same as the price paid by Norfolk Islanders. I hope it is not too late for the Government to widen the terms of the legislation to include Cocos Island, Nauru and Norfolk Island. As I said earlier, the Australian taxpayer is to be taxed to the tune of £6 million a year. The honorable member for Kennedy (Mr. Riordan) told me that the people of Burketown in his electorate pay 6s. 6d. a gallon for petrol so no doubt they will be very happy with this legislation. However, they probably do not know of the burden which is being placed on the Australian taxpayer to enable this privilege to be provided.

The Australian Labour Party does not oppose this Bill. We welcome it. It is long overdue. We would have implemented it long ago had we control of the treasury bench. If the Labour Party had occupied the treasury bench the oil companies, predominantly foreign owned, would have been induced to pay their rightful share towards the subsidy that will enable mainland Australians to get petrol, oil, kerosene and diesel oil at a maximum price of 4d. a gallon above city prices. The fact regarding the background and identity of foreign oil companies in Australia should be placed on the records of the Parliament. The oil industry here, like the car manufacturing industry - and we all know the history of the Holden motor car - is dominated by American and United Kingdom capital. It presents a picture of monopolies existing side by side with and ruling over free competition. The competition is expressed in the motorist’s choice of at least 10 different brands of fuel, but under the oil companies’ borrow and loan policies one can be confident that most of the petrols come out of the one bulk storage tank. Is not monopoly expressed in their uniform high price?

What are these oil companies which dictate to governments not only in Australia but in many countries? The Shell Company of Australia Ltd. is a wholly owned subsidiary of the Royal Dutch Shell Company which has part British and part Dutch capital. The Neptune Oil Co. Pty. Ltd. is a wholly owned subsidiary of the Shell company. BP Australia Ltd. is a company in which all shares are held by British Petroleum Co. in which the United Kingdom Government is a shareholder. Formerly BP Australia Ltd. was Commonwealth Oil Refineries, but we know the history of C.O.R. in Australia. The Commonwealth Government held half the shares until the company was sold out by the Menzies Government in 1952. The Atlantic Union Oil Company Pty. Ltd. is a wholly owned subsidiary of the Standard Oil Company of New Jersey, United States of America. The Rockefeller family claim to have become multi-millionaires through their investment in the Standard Oil Company. Later I intend to say something further about the Standard Oil Company.

Vacuum Oil Company Pty. Ltd. is a wholly owned subsidiary of the Socony Mobil Oil Company of the United States of America. Caltex Oil (Aust.) Pty. Ltd. is a subsidiary of the California-Texas Corporation of the United States of America. Total Oil Products (Aust.) Ltd. is a subsidiary of the French oil cartel. H. C. Sleigh Ltd. is an Australian company registered in Melbourne, and Caltex has a big minority interest in it. Ampol Petroleum Ltd. is an Australian company which is registered in Sydney. Caltex also has a minority interest in it. At this point I pay to Ampol Petroleum Ltd. the tribute that when requested it has responded in a very worthwhile fashion to calls from charities. It is a very good giver in that field. I regret its attitude in the case of the ship “P. J. Adams”, which was built substantially with the aid of a Government subsidy but was manned by a dark crew to the detriment of Australian seamen. However, I have more sympathy and respect for Ampol Petroleum Ltd. than for any of the other companies.

The Boral company is 40 per cent, owned by the Broken Hill Pty. Co. Ltd., which has the second largest interest. Australian Oil and Gas Ltd. is the company which struck oil at Moonie, as partner in an undertaking in which the Union-Kern organisation of America owns an 80 per cent, interest. We know that it had difficulty in getting the oil refined. It is reported that the former Minister for National Development, Senator Sir William Spooner, who was succeeded by the Minister who is now at the table, had some difficulty in getting the oil refinery in Brisbane to accept and refine Moonie oil. I understand - I hope I shall be corrected if I am wrong - that the Moonie undertaking is being paid less for its oil than the price for which the company refining it would sell the oil if it owned the Moonie resources.

We know that there have been gigantic strides in the oil industry in Australia since 1950, when the foreign oil companies embarked on a great expansion programme. In 1950 Australia refined about 14 per cent, of our total requirements of petrol. By 1960 we were refining 89 per cent, of our total needs. We are told today that there is a surplus of refining capacity. New refineries are still being erected. One was recently completed at Kurnell and another at Brisbane. The honorable member for Wide Bay (Mr. Hansen) referred to the number of service stations that are shooting up like mushrooms all over the country. Despite the grievous shortage of housing, we find that overnight homes are being bulldozed down and service stations are being erected in their place. This sort of thing is wrong when there is such a grievous shortage of houses. If the people who own homes refuse to sell them to the oil companies, someone on the opposite side of the street or elsewhere nearby will sell a home or land at a ridiculously high price. The person who refused in the first instance will regret that he remains poor as a result of maintaining his principles. We can see that there is a surplus of service stations in Australia, particularly in New South Wales.

No doubt in an effort to reduce tax and to establish greater asset values, oil companies have actually built brick walls around their properties to prevent other companies from encroaching on their preserves. A friend of mine who is a manufacturer told me that in the manufacturing game the two great difficulties were, first, to produce a good article and, secondly, to market it successfully. I have this in mind when I see garages shooting up all over the place. We know that the Union of Soviet Socialist Republics offered oil to Australia at a landed price of ls. 4id. a gallon. We know that if the Government ever decided to allow U.S.S.R. oil into Australia the great difficulty would be in marketing it. We know that the Parramatta City Council and a number of other councils got together and negotiated with the U.S.S.R. to ascertain the price at which Russian petrol could be landed in Australia. They were told that it could be landed here at ls. 4id. a gallon. But one would never expect this Government to allow petroleum products from a Socialist country such as the U.S.S.R. to be landed here to the detriment of the international oil cartel.

Today, the oil industry may be regarded as almost our second largest industry. According to the “ Petroleum Gazette “ of 1962 the total capital investment in the industry in 1961 was £439 million. That amount was sub-divided into refining, £146 million; marketing. £224 million and exploration, £69 million. We know that the production side of the oil industry provides relatively few employment opportunities having regard to the amount of capital invested. With a capital investment of £146 million in refining, only 4,464 workers were employed. Compare those figures with the figures for the Broken Hill Pty. Ltd. which, with a capital investment of £112 million, employs 37,800 persons. About four times as many workers are employed in the marketing of oil products as in the refining of them. The “ Petroleum Gazette “ gives the number employed in marketing in 1961 as 17,915. In addition, 10,015 agents were employed in selling petroleum on commission.

There is no way to ascertain the profits extracted from Australia by foreign oil monopolies because no balance sheets have to be published. But one may get some guidance as to the amount of the profits from the financial results of the two Australian companies engaged in marketing oil products in Australia - Ampol Petroleum Ltd. and H. C. Sleigh Ltd. In 1961 Ampol with a capital of £17 million earned a net profit of £2.3 million. H. C. Sleigh, with a capital of £13.7 million, earned a net profit of £1.1 million. Are we not fully justified in asking that the oil companies should contribute a substantial proportion of the £6 million annual subsidy which the Australian taxpayer is to be asked to shell out in order to make this legislation operative and provide petrol users throughout the country with petrol at a price no more than 4d. higher than capital city prices?

Mr Cockle:

– That is rubbish.

Mr JAMES:

– It is not rubbish. Will the honorable member contradict the figures I have cited? He would not have the courage to do so. The combined capital of the two Australian companies is £30.7 million. Their aggregate profits amounted to £3.4 million in 1961. The combined capital of Ampol and H. C. Sleigh represents about 14 per cent, of the total capital of £224 million invested in the marketing of oil products in 1961. Applying to the other oil monopolies the ratio of profits to capital invested in the case of Ampol and H. C. Sleigh it is reasonable to assume that they made at least £21 million profit in 1961. The biggest part of that sum would have gone to the Shell, Caltex and Atlantic organisations, which are the major sellers. Actually the total profits of the foreign oil monopolies would amount to many times the figure of £21 million because in addition to profits from marketing they receive profits from refining, from tanker freights and from production at the source, which is the most profitable by far of all aspects of the oil industry. More than three fifths of all oil imported into Australia for refining - this matter was referred to a short time ago by a previous speaker from this side - comes from the Middle East. There is no doubt about that. In the Middle East costs of production are only one twentieth of production costs in Texas. However, the price fixing formula for crude oil that was adopted by the international oil cartel in 1928 determines that the Texas price shall prevail irrespective of where the oil comes out of the ground. This is free enterprise, which of course is supported by this Government. This is a free enterprise Government; it allows monopolies to go unharnessed, unbridled and uncontrolled.

The report of the Commissioner of Taxation affords a guide to the profits of the oil companies. It shows that 12 oil companies were amongst the 83 companies which in 1959-60 had a taxable income of more than £1 million. The total taxable income of those 12 oil companies was £33 million. That would cover only their income from refining and marketing activities in Australia and would not include the bigger profits from production in the Middle East, Indonesia and North Borneo, and from transporting crude oil in their own tankers to Australia. The foreign oil monopolies have a long history of ruthless exploitation of the Australian people and of violent opposition to anybody who encroaches upon their reserves.

In an attempt to free Australia from complete dependence upon foreign oil, the Hughes Government entered into an agreement in 1920 with the Anglo-Iranian Oil Company to establish Commonwealth Oil Refineries Ltd. in Australia. Under the terms of the agreement the Australian Government held 250,001 shares in C.O.R. and appointed three directors while the Anglo-Iranian Oil Company, in which the United Kingdom Government had a half share, held 249,449 shares and appointed four directors. The arrangement failed to achieve its purpose of freeing Australia from the grip of the foreign oil companies. A report that was submitted to the Government in 1931 revealed that, while the landed cost of petrol in Australia was 4d. a gallon, the Anglo-Iranian Oil Company was selling to C.O.R. at 6id. a gallon.

The Commonwealth Oil Refineries also adhered to the price fixing agreement of the oil cartel and sold petrol at the same price as the other oil companies. Furthermore, C.O.R. took part with the foreign oil monopolies in swindling the Government out of customs revenue by importing enriched crude oil which contained twice as much petrol as the quantity that was allowed to enable crude to qualify for duty free entry. Could something similar not be happening today? I suggest that it may well be happening. Why would not the Anglo-Iranian Oil Company reap the full benefit of its years of manoeuvring with C.O.R. when the Menzies Government sold the company its half share for £2,800,000? Soon afterwards the Anglo-Iranian Oil Company became the British Petroleum organisation and raised its capital to £15 million. John Darling of the Broken Hill Pty. Co. Ltd. is a director of British Petroleum Australia Ltd. Hence the saying that there will always be a Menzies while there is a B.H.P. Of course there will be.

We know the harm that oil has done to the coal industry in my electorate. For that reason and for many others I shall never show the oil companies any sympathy. Out of their profits they could well have subsidised the sweeping changes that were necessary to remove the hardship that has been imposed on people in the electorate ot Hunter due to the repeated closure of coal mines and the need for the coal miners to sell their homes at half of what they cost. All of these men have had the objective of owning one home in their lifetime.

We know the history of the Standard Oil in South America, in Australia and in other Western countries. We know that the international oil cartel recently reduced prices in India when the U.S.S.R. offered oil to the Indian Government at substantially lower prices than were charged by the cartel. The Indian Government threatened to shut off supplies of foreign oil. As a result, the foreign oil companies reduced the price of petrol by 10 to 15 per cent. We know that any positive steps taken by a Government in Australia to interfere with the international oil cartels could bring the United States Marines to our shores. This has happened in many other countries. But we know that the United States Marines will never be sent here while the Prime Minister (Sir Robert Menzies) and the type of yahoos on the other side who are interjecting are here to protect the international oil cartels. That is the reason why they came into this Parliament.

Mr DEPUTY SPEAKER (Mr Lucock:

– Order! The honorable member for Hunter will withdraw the remark he made.

Mr JAMES:

– What remark was that?

Mr DEPUTY SPEAKER:

– The word “ yahoos “.

Mr JAMES:

– I withdraw it, Mr. Deputy Speaker. To support my allegations, I will read a statement from the book “ Cuba, Anatomy of a Revolution “ by Huberman and Sweezy. The statement was made by Major-General Smedley D. Butler, who was in a position to know and who leaves no doubt about the position. In a footnote at page 16 of the book, Major-General Butler is said to have given the following testimony -

I spent thirty-three years and four months in active service as a member of our country’s most agile military force - the Marine Corps. I served in all commissioned ranks from second lieutenant to major-general. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street, and for the bankers. In short, I was a racketeer for capitalism. . . .

Thus I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. . .

This is the sort of activity that honorable members on the Government side of the House support. The footnote continued -

I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912.

I brought light to the Dominican Republic-

The Marines are there again now - for American sugar interests in 1916. I helped make Honduras “right” for American fruit companies in 1903.

I hope this makes honorable members opposite proud of their action in protecting the big oil monopolies -

In China in 1927 I helped to see to it that Standard Oil went its way unmolested.

I have referred to Standard Oil in my speech. We will not need the Marines here when we have people of the type who sit on the opposite side of the House. They are led by the Prime Minister. No-one can interfere with Standard Oil; it belongs to the most powerful monopoly in the world. The footnote added -

During those years I had, as the boys in the back room would say, a swell racket. I was rewarded with honours, medals, promotion. Looking back on it, I feel I might have given Al Capone a few hints. The best he could do was to operate his racket in three city districts. We Marines operated on three continents.

This testimony was printed in an American magazine called “ Common Sense “ in November 1935. When honorable members opposite go home to bed tonight and when they go to church next Sunday, if any of them do, I hope they will wrestle with their consciences.

Mr DEPUTY SPEAKER:

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

Thursday, 20 May 1956

Mr CONNOR:
Cunningham

– I apologise to honorable members for trespassing on their tolerance at this late hour, but I represent a constituency which produces more than seven million tons of black coal a year and which has a vital interest in the welfare of coal production. The Bill is rather complex. It is a legal artifice to get around the difficulties created by the abdication of the Government in 1949 from the responsibility of price control. To that extent the Minister has my sympathy. The Bill gets round, in a most cumbersome way, the obvious difficulties of price control and investigation of prices, but nevertheless the Government has complacently accepted the data given by the oil companies.

One of the most obvious fundamental weaknesses of the Bill is that while it establishes a price differential of 4d. a gallon over the capital city price in respect of certain areas it does not in any way prevent the major oil companies from increasing the retail price of petrol at a later stage. Nothing can be done about that and nothing will be done because this Government dearly loves a monopoly. The celebrated “ Engine Charlie “ Wilson, when he was in charge of the General Motors organisation and was charged with profiteering said: “ What is good for General Motors is good for the United States”. Obviously, what is good for the oil companies is good for the present Government.

The Country Party is welcome to the Bill for what it is worth. The Country Party members have won their point. They are going to get some reduction in the price of petrol, but they are straining at a gnat while swallowing a camel, because there has been no proper investigation at any stage anywhere into the price structure of petrol in this country. It is significant that the Bill is being introduced at this stage, because at the present time we have, thanks to the national spirit of the Leader of the Country Party (Mr. McEwen), for the first time an inquiry being conducted by the Tariff Board which could lead to a rudimentary national fuel policy. I commend to every honorable member the full text of the submissions made by the Joint Coal Board to that body. To prove my point I will quote a statement by Senator Sir William Spooner when he was Minister for National Development. In this Parliament on 14th May 1964 he said -

I have said previously in the Senate that over a long period of time I have made representations to oil refining companies upon the basis that they are importing to a greater extent than is necessary and are thus unnecessarily expending foreign exchange. Notwithstanding those representations, one of the companies continues to import fuel oil, despite the large production of fuel oil in Australia. Other companies are continuing to import refined oil products. These could be produced in Australia if the total available refining capacity was utilised in some competitive fashion. In my view, this creates unfair competition with coal and as a result T am putting the position before the Government.

There is today - I weigh my words and speak advisedly - a genuine conspiracy by the international oil companies to destroy the black coal industry, not merely in Australia but in every part of the world. Today, when the ascertained and proved resources of crude oil are at an all time high, there is a general curtailment of production in most of the other continents. In some cases oil is being produced for only eight days in the month. The companies have unlimited supplies and want an unlimited market. Their way of securing that market is the dumping of surplus fuel oil to the detriment of black and brown coal production.

Evidence was given before the Tariff Board some three months ago - and it was opposed with frenzy by the oil company representatives - as to exactly what was happening in this Commonwealth in respect of oil.

Mr Kelly:

– What has this to do with it?

Mr CONNOR:

– lt has everything to do with it, because packed on to the retail price of petrol is a component which allows the oil companies to dump their surplus fuel oil below cost of production and in fact at fantastically low prices.

Dr Mackay:

– What is the price of petrol in Britain under the British Labour Government?

Mr CONNOR:

– The honorable member will have his chance to speak later. In the meantime he might do me the courtesy of listening. Quite deliberately, a relatively small percentage of petrol - about 81 or 82 per cent. - is being refined from the crude oil. It is possible with existing practices to refine as high as 90 per cent., but that does not suit the book or the policy of the international oil companies.

From the 80 per cent, which is being extracted, the oil companies are able by overpricing to obtain sufficient return to ensure that they can dump oil in this coun try to the detriment of the black coal industry. The farmers, who are the constituents of the members of the Australian Country Party, are being taken for a ride as are the rest of the people of Australia. They are being asked to subsidise the dumping of fuel oil. In 1957, the price of fuel oil in Australia was £16 per ton. Today, it is being sold for a fraction over £6 10s. on ascertained figures produced before the Tariff Board by the Joint Coal Board, which is a Government instrumentality, but fuel oil cannot be produced in Australia at less than approximately £8 a ton. In other words, dumping of fuel oil is going on.

The cry has gone up in every part of the world where there is a black coal industry. Every Government is being asked for protection. The Australian coal industry is entitled to protection too. This Government has been lax in the extreme. It has failed to introduce a national fuel policy. Some ten years ago, the black and brown coal industry was supplying 65 per cent, of Australia’s total fuel and power needs. Today, this figure has been reduced to 50 per cent. The other 50 per cent, is being absorbed, of course, by the petroleum interests and this process will continue. The petroleum interests are after the other 50 per cent, of the market too.

I have listened ad nauseam to members of the Government who have given their version of the physical defence of Australia. I would like to hear their thoughts on the economic defence of Australia. Our international monetary reserves are still substantial, but if they should continue to decline at the present rate for another 12 months, we will be down to danger point. What is the Government going to do about this matter? What is the Minister for National Development going to do about it? He is a patriotic Australian. He is not a bad fellow, and I have a good deal of respect for him. But it is up to him and it is up to the Government to act in the interests of Australia. The Government and the Minister have to forget this clap-trap about private enterprise. The coal industry is entitled to protection. Spokesmen from the coalfields will raise this point again and again in every Parliament in this Commonwealth until they obtain the protection to which they are entitled.

What economies could be made? Let us have a look at advertising expenditure. It is a major disgrace. We are getting piffle and rubbish on television. There are soap operas and there are petrol pantomimes - anything of that description that you like to name. Today, the ostensible competitors are in a ring. They will not cut their prices, but at least they will compete with one another by advertising. The cigarette companies have agreed to reduce their advertising expenditure as a matter of commonsense. It is up to this Government to encourage the oil companies to do the same. It is time that their advertising expenditure was curbed. The television advertising that we see today is an affront to the collective intelligence of the Australian community. The information leaked out on one occasion that 43 per cent, of the retail price in the United States of America of a soap product produced by Proctor and Gamble, who advertise soaps on television and who, I think, produce Ivory soap, was being expended on advertising. I would like to know the figures in respect of advertising by petrol companies in Australia today. This is another economy that could be made if the Government chose to wipe advertising expenditure as a company tax concession.

Let me say in conclusion on the question of company tax that it was not until the Companies Act was amended in 1961 by the various State Governments and the Commonwealth Government that we were able to obtain for the first time a balance sheet for the information of the public from any of the petrol companies. They had all traded, with one or two minor exceptions, as subsidiary proprietary companies and as the law then stood, they were under no obligation to provide ah annual balance sheet.

I know the hour is late, Mr. Deputy Speaker, but I thought I should make my contribution to the debate and voice my protest. This is a serious matter. It is a national disgrace and could lead to a national calamity.

Mr WHITLAM:
Werriwa

– Mr. Deputy Speaker, it is many years since there was such a disparity in the cost of obtaining electricity in any part of Australia as there is in the cost of obtaining petrol in any part of Australia. Governments are responsible for the production and distribution of electricity. Governments, therefore, have ensured that electricity is increasingly available anywhere in Australia at substantially the same wholesale price. The contrast with the oil companies is marked. This is an industry which is completely in the hands of private enterprise. Accordingly, people in the country areas have had to bear entirely themselves the cost of distribution of this basic fuel. The Bill we are discussing, the States Grants (Petroleum Products) Bill, at least has the virtue of taking some steps to ensure that consumers of petrol and associated products will be able to secure them without too great a burden of distribution costs. In this respect the Bill is beneficial.

Nevertheless, the way that this objective is being achieved is deplorable. The Government has decided that the taxpayers will subsidise the existing cost structure of the oil industry. No attempt has been made, as far as one can tell from the second reading speech of the Minister for National Development (Mr. Fairbairn), to ascertain whether the cost of petrol and associated products anywhere in Australia is justified. He made no reference to the cost of transporting crude oil to Australia or of refining it ia Australia. Again, he made no reference to the cost of distributing petrol within Australia. All that the Government is doing is saying: “ We will subsidise the existing structure “.

I realise there are some difficulties in handling the oil companies in this matter. Some of the difficulties are ones of equity in that some oil companies have undertaken a universal distribution system in Australia while others have concentrated on the centres of large population on the coast. Accordingly, it might be thought inequitable to make the oil companies themselves distribute their products everywhere in Australia at the same price or roughly the same price. The burden would fall on those companies which have built up the large distribution systems. Nevertheless, the larger reason why the Government has not tackled the oil companies is the fact that the companies have, as a matter of deliberate policy, influenced the Government parties, particularly the Liberal Party. A former director of the Shell Co. of Australia Ltd. was the first Federal President of the Liberal Party; he has since been placed by the Liberal Party on the Board of the Reserve Bank of

Australia. One could give many more obscure instances, more discreet instances, of the interest of the oil companies in the Liberal Party.

There have been some investigations into this industry by the Tariff Board and by the Commissioner of Taxation. The Tariff Board’s report is awaited. It is not for me to presume to assess the voluminous and often conflicting evidence which was given to the Tariff Board on the costs of the industry, of transport, of refining and distribution, and the competing economies of this industry with coal, or electricity, and so on. But there were at least two witnesses who gave apparently very telling evidence on this matter. Mr. Jan van Olphen, a top official of the Shell International Petroleum Company, is reported as saying that posted prices did not reflect the true market price for oil. Further, he is reported as saying that the actual prices paid for crudes were usually set as a matter of convenience at a percentage discounted from the posted price. Another witness, Mr. Ian G. Sykes, an economist employed by the Australian Associated Oil Group, claimed before the Tariff Board that the oil companies are importing crude oil to Australia at a cost of some 19 per cent, to 25 per cent, above the current world price.

In due course, we will learn what the Tariff Board found on the evidence given to it in the case on which it reserved decision. The Minister, of course, will find this out well before the Parliament does because it is within the discretion of the Minister for Trade and Industry (Mr. McEwen) when he will disclose, or whether he will disclose the report to Parliament.

The position is more difficult as regards the Taxation Commissioner. He cannot report to Parliament on individual cases. He is bound by oath not to do so unless there is some suspected evasion or, of course, unless there has been some prosecution. Nevertheless, the Taxation Commissioner, as is well known, has been concerned for many years at the policy which the oil companies have pursued of minimising their profits in Australia. The companies pay unnecessarily high prices for crude oil and thus make, through their shipping subsidiaries or their subsidiaries in the extracting countries, profits for their principals and minimise the profits which they make from refining and distribution in Australia where taxation systems are more assidously applied. By this process, of course, the Australian consumer has paid for the establishment of the oil industry in Australia.

Since 1955, there has been a glut on the world oil market and the oil cartel has increasingly been forced to grant rebates and discounts to independent purchasers. It is for this reason that independent companies like Ampol Petroleum Ltd. and Boral Bitumen, which are not linked to overseas companies, have been able to expand their activities in this country without reducing their profits. These independent companies, however, represent only a small part of the market. If the large companies were as independent as Ampol and Boral, they would be able to force reductions in the price of oil in Australia. Instead, their principals overseas compel them to maintain fictitious and high prices here.

The Government has landed itself in this position concerning investigations of the cost structure of the oil industry because it sold its interest in Commonwealth Oil Refineries Ltd. When it had its shares in Commonwealth Oil Refineries, not only was it able to ascertain at first hand the cost of refining and distributing in Australia but it was able also to find through its partner, the Anglo-Iranian Oil Company, formerly the Anglo-Persian Oil Company, the cost of buying crude oil in other countries and transporting it here. The Commonwealth knew this at first hand but it divested and deprived itself of the means of finding how much it cost to find this oil overseas and transport it to Australia. Accordingly, we have to rely on secondary sources. Sometimes one can find them in other countries. In this regard I will quote from a United States official publication entitled “ Business Investment in Foreign Countries “, which states -

It should be noted that some industries, particularly the petroleum industry, derive much of their earnings from international shipments of basic commodities or other products, with earnings and income receipts generally allocated mainly to enterprises in the countries where the basic production takes place. Such allocations of earnings are necessarily somewhat arbitrary depending on internal pricing policies within the integrated enterprises, and varying methods of distributing overhead costs.

More recently - in June last year - an Australian publication entitled “Costs and

Economics of the Australian Process Industries”, by Buchanan and Sinclair, gave particular attention to the petroleum industry. In it the authors state -

This industry has a present capital investment now approaching £200 million and with the exception or BORAL and AMPOL, is in the hands of overseas concerns. When the secret rebates on crude oil of the order of 15 to 20 per cent, are considered (i.e. about £20 to £30 million per year at present) it can bc shown that this development has on the whole been paid for by the Australian public.

In another passage the authors say that the petroleum and motor industries return -

The highest profit margin of any major industrial group.

When all aspects of the refining industry are viewed together it can be deduced that the average return on capital is of the order of 25 per cent, or higher. This Bill just preserves the present cost structure. The Australian public - through the operations of the principal oil companies all of which are controlled from overseas - is compelled to pay more for petrol products, because the price which we pay for our crude oil overseas is set for us at an artificially high level and the price we pay for freight on those products to these shores is also set at an artificially high level. Distribution costs in Australia are not investigated and so we are just subsidising - in fact we are sanctifying - the present cost structure. On top of this, we pay and the oil companies levy from us - the last figures I have are for 1963 - £2 million for advertising on television, over the radio and in the Press. On top of this bountiful subsidy which the oil companies exact from us they are to receive from the Australian taxpayer, the Minister estimates, another £6 million a year. What is the immunity that this industry - the most profitable industry in Australia and one which, more than most others, is controlled from overseas - has? What is the influence that this industry can cast over Liberal and Country Party Governments? Not only do we refrain from investigating the cost structure of these companies; not only did we divest ourselves of the public instrument by which we were able to measure it, but on top of all this we decide that we will pay the oil companies a subsidy of £6 million from taxes.

The industry has already done extraordinary well out of the Australian consumers, and the taxpayers are now being asked to give it still greater benefits. The consequence to rural purchasers of petrol will undoubtedly be considerable. The whole Australian community is now paying for this benefit although the oil companies themselves could well have afforded to give it. If the Government were free of their malign influence and had preserved its own stake in the industry, this position would have been clear to the Australian public many years ago.

Question resolved in the affirmative.

Bill read a second time.

Message from the Administrator recommending appropriation announced.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr. Fairbairn) read a third time.

House adjourned at 12.42 a.m. (Thursday).

page 1701

ANSWERS TO QUESTIONS UPON NOTICE

The following answers to questions upon notice were circulated -

Issue of Die Proofs. (Question No. 824.)

Mr Webb:

b asked the Postmaster-General, upon notice -

  1. Is it a fact that sunken die proofs are issued free to members of the Stamp Advisory Committee and that the market value of these die proofs exceeds £25,000?
  2. If so, who originally authorised this distribution?
  3. When was the system introduced, and what is the total number of die proofs distributed since that date?
  4. What are the names of all the recipients, and what is the number of items each has received?
  5. Have there been any unauthorised leakages of these items from the department?
Mr Hulme:
Postmaster-General · PETRIE, QUEENSLAND · LP

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

  1. Die proofs have been issued to nondepartmental members of the Stamp Advisory Committee as a measure of recognition of their services. However, I am unable to say what the market value of the proofs might be.
  2. The distribution of the proofs was authorised by the Director-General of the day.
  3. The system was introduced in 1948. Since that time, a total of 600 die proofs has been distributed to such members.
  4. The recipients and number of items are as follows: -
  1. None is known.

Aborigines. (Question No. 1006.)

Mr Whitlam:

m asked the Minister for

Social Services, upon notice -

How many (a) government settlements (b) church missions and (c) pastoral properties receive the payments of (i) age and invalid pensions (ii) wives’ allowances and (iii) widows’ pensions set out in his predecessor’s reply to me on the 1st September, 1964, (“Hansard”, page 832)?

Mr Sinclair:
CP

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

The payments of (i) age and invalid pensions, (ii) wives’ allowances and (iii) widows’ pensions set out in my predecessor’s reply of 1st September, 1964 to the honorable member (“ Hansard “, page 832) are received by (a) 19 government settlements, (b) 40 church missions and (c) 121 pastoral properties.

Prohibited Imports: American Magazine. (Question No. 1052.)

Mr Whitlam:

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

  1. Which issues of the American magazine “ Fact “ have been excluded under the Customs (Prohibited Imports) Regulations?
  2. Which issues were excluded because they unduly emphasised matters of respectively (a) sex, (b) horror, (c) violence and (d) crime?
Mr Bury:
LP

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

  1. Vol. 1, Issue No. 2; Vol. 1, Issue No. 4- Vol. 1, Issue No. 6; Vol. 2, Issue No. 1; Vol. 2, Issue No. 2. Of these, one issue only, Vol. 1, No. 6, has subsequently been released following my review of its prohibition.
  2. Each prohibited issue is considered to contravene the terms of Item 22 of the Second Schedule to the Customs (Prohibited Imports) Regulations dealing with literature which unduly emphasises matters of sex, violence, horror or crime.

Repatriation Benefits. (Question No. 1060.)

Mr Jones:
NEWCASTLE, VICTORIA

s asked the Minister representing the Minister for Repatriation, upon notice -

  1. When a totally and permanently incapacitated pensioner dies, does his widow automatically receive a war widow’s pension which entitles her to free hospital and medical treatment?
  2. If so, why does she have to wait until her husband dies before she is entitled to free hospital and medical treatment?
Mr Swartz:
LP

– The Minister for Repatriation has supplied the following information -

  1. Yes.
  2. The rate of totally and permanently incapacitated pension is fixed by the Government at a level which is intended to meet reasonable needs. This level enables the husband during his lifetime to provide for the cost of medical care for his wife in the normal way by contributing for the benefits available under the National Health Scheme.

Homes Savings Grant. (Question No. 1015.)

Mr Daly:
GRAYNDLER, NEW SOUTH WALES

y asked the Minister for Housing, upon notice -

  1. ls it a fact that Chinese students in Australia on a non-immigrant basis who marry are eligible for the £250 Homes Savings Grant?
  2. If so, how many of these students have (a) applied for and (b) received a grant since the commencement of the scheme?
  3. What qualifications must an alien have by way of residence, etc., in order to qualify for the grant?
Mr Bury:
LP

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

  1. A Chinese student, who has been admitted with temporary residence status, would not receive the Home Savings Grant by virtue of marriage in Australia, unless the department is satisfied, after consulting with the Department of Immigration, thai the student has by reason of that marriage qualified for permanent residence status (for example, as the spouse of an Australian citizen).
  2. Statistics of the number or nationalities of non-Australian citizens who (a) apply for, or (b) receive grants are not maintained as a matter of course. However, so far as can be ascertained the figures in relation to Chinese students are (a) four; and (b) two.
  3. An alien, in addition to meeting the general requirements of the Homes Savings Grant Act in regard to eligibility for the grant, must have resided in Australia throughout the period of three years immediately preceding the date he entered into the contract to buy or build his home, or the date construction of the home commenced if that is earlier. This requirement, in addition to the general requirement that an applicant must have saved money throughout this period to be eligible for a grant, is presumed to provide sufficient indication in most instances of the intention of the applicant, although he has not yet qualified for Australian citizenship, to continue to reside in Australia. However, this of course is not the case with Chinese and other overseas students who are admitted to Australia for purposes of study on the understanding that they will return to their own countries on completing their studies (subject to the exception referred to in 1 above).

Homes for the Aged. (Question No. 1059.)

Mr L R Johnson:

son asked the Minister for Housing, upon notice -

  1. Is he able to say how many applications for aged persons’ units are current with each State housing authority?
  2. How many aged persons’ units have been built by each State housing authority during each of the last five years?
Mr Bury:
LP

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

  1. Figures of applications from aged persons for accommodation are available in the 1963-64 annual reports of the State housing authorities except for Queensland and South Australia. The available figures are as follows -

New South WalesApplications held at 30th June 1964 for aged persons accommodation totalled 6,676, consisting of 5,415 from single persons and 1,261 from couples.

Victoria -

Applications held, presumably at 30th June 1964 for aged persons’ accommodation totalled 2,731, consisting of 2,295 from single persons and 436 from couples.

Western Australia - The annual report stales that “ 420 applications from pensioner widows and other female applicants for single-unit accommodation, eligible under the present criteria were outstanding “. The report does not state whether the “other female applicants “ are all elderly nor does it give figures of applications from elderly males and elderly couples.

Tasmania - Applications held at 30th June 1964 from aged single persons, predominantly female, totalled 115. The annual report gives no figures for aged couples but states that the number of applications held “ is relatively small “.

  1. Figures of completion of aged persons’ units are available in the annual reports of the State housing authorities except for Queensland. The available completion figures are shown in the following table. However, it is pointed out that the State housing authorities supply accommodation to aged persons by the re-allotment of vacated units in addition to the provision of newly-completed units.

NUMBER OF COMPLETIONS OF DWELLING UNITS FOR AGED PERSONS BY STATE HOUSING AUTHORITIES.

  1. The State housing authority reports that it builds aged persons’ units both for its own applicants and for charitable institutions. The figures cover both groups.

Medical Benefits. (Question No. 1070.)

Mr Reynolds:

s asked the Minister for Health, upon notice -

  1. Are the Commonwealth and Fund benefits payable for second and subsequent specialist consultations less than half those payable in respect of first consultations?
  2. Is it a fact that many specialists charge a uniform fee for all consultations?
  3. If so, will he consider recommending that benefits more commensurate with fees charged be paid for consultations subsequent to the first?
Mr Swartz:
LP

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

  1. The combined Commonwealth and fund benefits vary according to the table of benefits to which a person contributes. The benefits payable for specialist consultations in respect of contributors to the high table operated in each State are - 2 and 3. The fee charged for a second and subsequent specialist consultation is generally substantially lower than the fee for a first consultation. The most common fee for a subsequent consultation is £2 2s. in all States, whereas for a first consultation it is £4 4s. in New South Wales and £3 3s. in all other States.

Social Services. (Question No. 1065.)

Mr Webb:

b asked the Minister for Health, upon notice -

  1. Is it a fact that all pensioners who were drawing pensions prior to October 19SS, are able to receive medical entitlements irrespective of other income, whereas those who qualified for a pension after October 1955, and who have income in excess of £2 per week are ineligible for the entitlement?
  2. If so, and as two classes of pensioners are created in this way, will he, when the Budget is being considered, take steps to repeal the means test so that all pensioners irrespective of income can receive medical entitlement?
Mr Swartz:
LP

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

  1. Yes - subject to certain exceptions in the case of special groups to which different means tests apply.
  2. I cannot give any indication at this stage of the Government’s policies and decisions in the forthcoming budget.

Cite as: Australia, House of Representatives, Debates, 19 May 1965, viewed 22 October 2017, <http://historichansard.net/hofreps/1965/19650519_reps_25_hor46/>.

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